Link to this page: https://www.socialistparty.org.uk/issue/269/24568
Imperialism: the Highest Stage of Capitalism - V I Lenin
This socialist classic is reviewed by Jane James
Challenging The Power Of Finance Capital
THE WARMONGERING of George Bush and Tony Blair over Iraq, the recent failure of the Earth Summit to stop environmental destruction, huge corporate scandals and the mass anti-globalisation protests around the world, have all generated discussion on the pernicious role of global capitalism or what Marxists term,' imperialism'.
This is not a new phenomenon. The revolutionary socialist VI Lenin wrote the pamphlet Imperialism, the Highest Stage of Capitalism in 1916, in which he explained the development of worldwide capitalism.
Lenin wrote this while in exile in the middle of world war one which he described as an imperialist war between the most powerful nations of that time for the division of the world.
Throughout the book many statistics and reports are analysed as evidence of this new phase.
The example is given of Germany in 1907 where 586 companies employed almost one-tenth of industrial workers using nearly a third of the all steam and electric power.
As capitalism developed and more industrialisation took place so production became concentrated in fewer and larger companies. Competition is transformed into monopoly with the domination of a few powerful companies in each area of industry.
The concentration of production increased from the 1870s onwards and through the boom of the late 1890s. The economic crisis of 1900-1903 forced many smaller companies to collapse giving way to the supremacy of monopolies and cartels. The monopoly stage of capitalism - imperialism - had arrived.
During this period the strongest companies within particular industries formed cartels in which agreements were made, prices fixed and markets divided up as opposed to the earlier period of capitalism where competition between numerous companies was the general rule.
Such cartels and monopolies had huge advantages over smaller companies in terms of size, and more advanced technology. Their aim was to smash all competition.
Not only industries but also the banks went through change. From middlemen who used the investment from some companies to lend to others in order to further production - banks too became monopolies eventually controlling all of the money capital of the capitalists.
These powerful banks, through the centralisation of capital, played the role of developing national and then a world economy as well as speeding up the concentration of capital and monopolies.
Links and relationships are established between the banks, industry and government which Lenin calls the "division of the labour of the rich".
Bank and industrial capital merges to form finance capital and a powerful financial oligarchy grows up. The domination of finance capital is a key feature of imperialism.
Capitalists today denounce the fraudulent and supposedly unusual practices of Enron and World Com ignoring the fact that this has existed throughout the history of capitalism and more so since the imperialist stage.
Lenin describes the "swindling tricks of finance capital" by referring to the Spring Steel Company of Kassel in 1914. This was a very powerful company in Germany whose dividends collapsed. A dodgy loan to another company "was never mentioned in its balance sheets" which had been approved by the chairman. Some things never change!
Just as a small number of powerful companies and banks dominate one country or a particular world industry, so eventually a small number of financially powerful states dominate the world.
Lenin explained that in 1916 just four countries - Britain, the US, France and Germany - owned 80% of the world's finance capital. Most of the rest of the world were in debt to them.
Whereas previously capitalism exported goods - imperialism developed the export of capital in the form of loans and investment. With a surplus of capital - more profits could be made investing in underdeveloped countries where costs were lower.
Loans were granted on condition they were used to buy goods from the country loaning the money as a report written at the time shows:
"The construction of the Brazilian railways is being carried out chiefly by French, Belgium, British and German capital. In the financial operations connected with the construction of these railways the countries involved stipulate for orders for the necessary railway materials."
The epoch of colonial policy where the powerful countries invaded and ruled various parts of the world is also a feature of imperialism. Finance capital seeks to control not only raw materials already discovered but potential resources too, so fuelling the drive for new territories.
In 1876, 10.8% of Africa 'belonged' to the European colonial countries. This had risen to 90.4% by 1900. Lenin explained that such was the power of finance capital that it was not necessary for imperialist countries to directly rule these colonies - they could be indirectly exploited and controlled by finance capital.
This was borne out after the second world war when many colonies gained formal independence from their imperialist oppressors only to remain economically dependent on them.
Today this is more stark than ever. The programmes of the World Bank and IMF operating in the interest of the most powerful capitalist countries have devastated countries already impoverished. 600 million children live in absolute poverty while 30,000 children die each day from preventable diseases.
Once most of the world was divided up between the super powers there would be a continual struggle to re-divide the world decided by economic and military strength and decided ultimately by wars.
Lenin outlined how the monopoly stage of capitalism tends to lead to decay and parasitism. Those that own capital play less and less of a role in actual production - many just becoming richer by playing the stock exchange.
The huge profits gained from the colonies were used, particularly in Britain, to buy off or bribe the upper strata of working class in the advanced capitalist countries. These more privileged sections of the working class grew apart from the broad mass and the need to struggle.
This led to opportunism and a period of decay in the working class movement. One result was the capitulation of the leaders of social democracy when the first world war led to them supporting their own ruling class against the interests of the international working class.
Karl Kautsky (a leading social democrat) disagreed with Lenin's analysis of imperialism and believed it to be just a particular policy of capitalism which could be changed. He also speculated that imperialism could reach a phase where finance capital would unite internationally and rule a world without the need for wars.
Certain economists of the time believed it possible to return to a more progressive and fairer era of capitalism where free competition was the rule. (How similar to many in the anti-globalisation movement who for example argue that trade can be 'fairer'.)
It is not the "imperialist phase" or "globalisation" that must be changed, capitalism itself must be overthrown.
Global capitalism today is more intensive and exploitative than in 1916 but is fundamentally the imperialist stage of capitalism that Lenin described.
In 1916 Lenin spoke of three major powers' domination the world. Today the US alone is the supreme imperialist power in the world attacking states which threaten its resources or prestige and ultimately its profits.
Other powerful countries exploit and oppress weaker nations while struggles continue between big powers and regional blocs over resources and markets.
Lenin spoke of the socialisation of production as being progressive. Within capitalism can be seen the possibility of harnessing the technology, inventions and resources developed by capitalism but for the benefit of humankind. To do this production needs to be socially and not privately owned.
For an understanding of the capitalist global economy today, this pamphlet should definitely be studied.
In The Socialist 20 September 2002: