Lenin and imperialism in the 21st century

What is the significance of Lenin's critique of imperialism today? Was it marred by moralism? Nick Rogers gives his view

Mike Macnair’s three articles on imperialism demonstrate an impressive breadth of analysis (Weekly Worker July 29, August 5 and August 12). Designed in the first place to critique the Alliance for Workers’ Liberty’s ‘imperialism of free trade’ theory, they go on to offer a wide-ranging survey of Marxist theories of imperialism and point towards Mike’s own ideas of what would constitute a comprehensive theoretical understanding of the history and contemporary trajectories of global capitalism.

However, I believe some aspects of Mike’s analysis are flawed. In this article I tackle three aspects of the debate: (1) the significance of Lenin’s Imperialism, the highest stage of capitalism; (2) the nature of contemporary imperialism; (3) Mike’s discussion of the epochal limits of capitalism.

Lenin’s Imperialism
Mike obviously shares the views of those who downplay the long-lasting value of Lenin’s pamphlet of 1916. Mike also challenges the assessment of Lenin and most other Marxists at the time that capitalism had entered a new phase at the end of the 19th century and beginning of the 20th century.

Imperialism, the highest stage of capitalism makes no claim to be a groundbreaking theoretical work. It is sub-titled “a popular outline”, after all. What the pamphlet does attempt is to synthesise the theoretical work of a number of Marxists, with a mass of material gleaned from bourgeois economists and writers (most prominently Hobson) in order to attempt to explain a number of contemporary phenomena. Its purpose is above all polemical: to demonstrate that the titanic and bloody struggle between leading capitalist states raging in 1916 reflected important shifts in the nature of global capitalism. The target of Lenin’s polemics was not principally Bukharin (as Mike claims), but Karl Kautsky.

Lenin did have differences with Bukharin on the issue of the self-determination of nations and these are reflected in the divergent emphases in their works on imperialism, but Lenin thought Bukharin’s Imperialism and world economy to be a worthwhile contribution to the debate. He contributed a foreword and cites the work in his own Imperialism.

Kautsky’s thesis on the possibility of the main imperialist protagonists forming a cartel in order to jointly exploit the global economy and keep the “agrarian” colonies in check was a different matter. Lenin thought Kautsky’s anticipations a reformist trap that served as “a most reactionary method of consoling the masses with hopes of permanent peace being possible under capitalism ...”
(Imperialism, the highest stage of capitalism Beijing, p143). Lenin did not reject the possibility that, given the tendency towards concentration and cartels, such an outcome was possible in the indefinite future. He did think that to seriously project such an outcome as the aftermath of the current war was to turn away from the responsibility to work for the overthrow of capitalism.

Imperialism does contain flaws and errors of judgement. It is a work produced in the heat of political combat. However, far from focussing “on the several symptoms of imperialism as a system, rather than the dynamics of the interconnection”, as alleged by Mike, it is precisely the connections between monopoly and inter-imperialist conflict that concern Lenin.

Lenin’s case was that concentration of industrial production, the development of monopolies and the formation of cartels were proceeding with breakneck speed. Some time between the late 19th century and early 20th century the classic era of the capitalism of free competition had given way to the era of monopoly capitalism, which Lenin termed imperialism. Concentration had also taken place in the banking sector. Furthermore, given their strategic position in a capitalist economy and privileged access to information about companies throughout the economy, the banks were playing a dominant role in the new economics of monopoly and cartels. Thus Lenin affirmed Hilferding’s designation of the new era as being one of finance capital, tending towards the domination of a financial oligarchy. It is in this context that Lenin also quotes Bukharin on the “coalescence of bank and industrial capital and the growth of banks into institutions of a truly ‘universal character’” (ibid p48).

The process of forming monopolies and cartels extends to the international arena. The export of capital takes over from the export of commodities a distinguishing feature of the new era of capitalism. Competition between monopolies for sources of raw materials and markets for commodity and capital exports led in turn to the partition of the world between the main imperialist nations: “Colonial possession alone gives the monopolies complete guarantee against all contingencies in the struggle with competitors ...”

However, for Lenin monopoly capitalism did not signify an end to competition, to the struggle between mighty financial and industrial combines for the division and redivision of the world. Relative strengths were constantly changing and agreements broken. Similarly in the world of international politics, the colonial division of the world was constantly challenged by up-and-coming powers whose own capitalist monopolies and finance houses felt they deserved a greater share of the division of the world’s spoils. These were the conflicts that led to war in the era of imperialism. Any truce after the end of the world war would be a prelude to new wars.

Mike Macnair cites Wallerstein and Gunder Frank, who “trace the origins of a capitalist international division of labour, in which a centre benefits at the expense of a dependent periphery, to the 16th century development of capitalism out of feudalism”. Further, “Historical work has also found in the early modern economic oligopolies … central roles played by financial intermediaries, and major interpenetration of big capital and the state.” Thus Mike alleges that Lenin’s central thesis - that economic centralisation, linked to a new international role for capitalism, marks a new stage - is flawed. Rather than dating to the beginning of the last century, both phenomena in fact are as old as capitalism.

However, Mike misses the point. Of course capitalism early in its history created a world market. Marx and Engels celebrated that achievement in the Communist manifesto. Lenin says as much in Imperialism. Britain’s colonial empire date back to the 17th and 18th centuries. Oligopolies formed and disintegrated throughout the history of capitalism. What is significant about the period Lenin was discussing is the degree of concentration in the economies of the leading capitalist states, the massive rise in the export of capital and the complete occupation of the non-capitalist areas of the world.

Mike describes Lenin’s Imperialism as “severely empirical in character”. However, one advantage of this characteristic of the work is that we are able to examine the data on which Lenin based his analysis. For instance, on the degree of concentration in the economy, Lenin cites statistics showing that in 1907 in Germany 0.9% of enterprises employed 39.4% of workers and utilised three-quarters of steam and electrical power (ibid p13). In 1909 in the United States 1.17% of companies employed 30.5 % of the workforce and were responsible for 43.8% of output (ibid p14).

In Britain the export of capital increased from 3.6 billion francs in 1862 to 62 billion by 1902 and 75 billion by 1914. By 1914 France was exporting 60 billion francs and Germany 44 billion francs.
Colonies of European powers had long existed. But in 1876 10.8% of Africa was colonised - by 1900 this had extended to 90.4% (ibid p90). Britain’s colonial possessions increased from 2.5 million square miles in 1860 to 9.3 million square miles in 1899. France’s increased from 0.2 million to 3.7 million and Germany’s from nothing to 1 million over the same period (ibid p91).

Furthermore, the export of capital to the colonial territories transformed social relations: “The export of capital affects and greatly accelerates the development of capitalism in those countries to which it is exported” (p76). The combination of European colonisation and the export of capital in the period of classical imperialism created capitalist relations on a worldwide scale for the first time. It also provided a “solid basis for imperialist oppression and the exploitation of most of the countries and nations of the world for the capitalist parasitism of a handful of wealthy states”.

It is for Lenin’s discussion of the parasitism and decay of capitalism in the era of imperialism that Mike reserves his sternest judgement: “Moral indignation has replaced the analysis of the objective dynamics which grounded the earlier Marxists’ claim that imperialism showed capitalism at its limits.”
Now Lenin may be in error, but he applies both terms to very real aspects, as he saw them, of the society he was describing. ‘Parasitism’ refers to the rentier nature of finance capital and economies receiving the income from vast overseas investment. “The income of the rentier is five times greater than the income obtained from the foreign trade of the biggest ‘trading’ company in the world. This is the essence of imperialism and imperialist parasitism” (p121).

These profits present the ruling classes of the imperialist states with the opportunity to buy off a section of their domestic working class. Again Mike is unhappy with Lenin’s explanation for opportunism/reformism in the working class on the basis that it is moralistic. Yet Lenin grounds his conclusions in extensive quotes from Engels on the same subject.

For Lenin, ‘decay’ and ‘stagnation’ are features of monopoly. Lenin goes out of his way to describe these merely as tendencies that can only gain the upper hand in any particular industry for a limited period.

21st century imperialism
The principal objective of Mike Macnair’s articles is to dispute the ‘imperialism of free trade’ thesis articulated most clearly by the AWL’s Martin Thomas.

Mike has set out Martin Thomas’ position at great length, so I will briefly summarise. Martin argues, while accepting the validity of much of Lenin’s description of classical imperialism, that the world has moved on dramatically since 1916. No longer is the world divided into a geographically small capitalist sector and vast swathes of non-capitalist terrain. The European empires are no more. We live in a world of capitalist nation-states. It is a world of vast inequalities, but the basis for the fierce competition and conflict between the major capitalist powers of 1914 to 1945 no longer exists. From the late 1940s the United States has dominated the capitalist powers of Europe and Japan. Now US dominion extends to the whole globe.

According to Martin Thomas, “The US is the world’s biggest military power by a long way. When it wages war, it reckons to profit in prestige and influence ... But the world is not a US empire.” For “The ‘empire’ that US ‘globo-cop’ action enforces is that of big capital, not of the USA. Big capital is not a state, and it is not identical with the USA.”

When the US wages war, it is not primarily pursuing its own selfish national interests against those of rivals, but “to police the social fabric of the world - to maintain a smooth network of capitalist states covering the earth’s surface, with gaps and ‘holes’ only on the margins. The military philosophy has been to apply intense heat to meld shut any seams coming apart” (Workers’ Liberty December 2002).
Mike’s critique shares may points in common with that of Martin Thomas. The threat of the Soviet Union, a social system external to capitalism, in the period of the cold war galvanised the United States to offer vast economic assistance to western Europe and Japan after 1945. Since the collapse of the Soviet Union there is still no sign of a military challenge “by a big-power rival of the US”. So, “In that sense there will be no return to competing empires, except in the very unlikely contingency that … China becomes a military rival of the US.”

Where Mike Macnair parts company with Martin Thomas is in his discussion of the role of state structures in the articulation of different sectors of the global capitalist economy. Not that Martin Thomas makes no reference to the role of state structures in international economic relations: “At every stage of market haggling - who gets what contracts, where investment in sited and on what terms, which trade barriers remain … who gets loans on what terms, how debt will be repaid - economic, political, diplomatic and military might skews the scales” (ibid).

Mike, by contrast, emphasises the role of states as “an apparatus of direct extra-economic coercion. According to him, “The degree of genuine independence of states is given by the degree of their autonomous war-fighting capacity.”

He goes on to list productive, logistical, human and ideological resources needed to maintain this capacity. Later Mike refers to the significant levels of economic and political autonomy carved out by India (and Turkey). He points out that despite its apparent status India does not have the same “independent military production capacity which France or the US had in the first half of the 19th century - the high period of British hegemony and ‘free trade’”. He implies that this is the primary determinant of India’s subordinate role in the global economy.

Undoubtedly military might counts for much. The United States would not maintain a military colossus outstripping the military forces of all the other major nations in the world combined, if it did not. The level of military resistance Cuba could mobilise in response to a US invasion plays a part in the calculations of the US ruling class. But much has changed since Lenin wrote Imperialism.

Certainly Martin Thomas is correct to assert that decolonisation has transformed the way in which global capitalism functions. Imperialism itself contributed to the awakening of national consciousness. Lenin quotes Hilferding: “Capitalism itself gradually provides the subjugated with the means and resources for their emancipation and they set out to achieve the goal which once seemed highest to the European nations: the creation of a united national state as a means to economic and cultural freedom” (Imperialism p146).

No longer is it possible to conceive of direct colonial occupation as any kind of long-term solution for a major capitalist power seeking to assert its imperial interests. Not even the US hyperpower is in a position to conceive of establishing a colonial empire. Vietnam undercut US imperial pretensions a generation ago. Then it might have been possible to obscure the significance of the defeat by arguing that in Vietnam the United States was in fact contesting the resources of the Soviet superpower. The armed resistance of a combination of nationalists, Ba’athists and islamists to the US occupation of Iraq surely has put paid to any lingering ambitions to extend the US military presence beyond the minimum necessary length of time required to ensure a client regime.

Similarly, the occupation of India’s land mass with more than one billion people would turn into a nightmare for any prospective invader. Which is not to preclude the use of military force short of invasion to attempt to secure economic or diplomatic objectives.

Without a formal division of colonies it is easier for the major capitalist powers to resolve conflicts over economic interests and shifting balances of power by means other than war. Hence the regular meetings of bodies such as the G7, WTO, etc. To this extent Martin Thomas is correct to highlight parallels between Kautsky’s theory of ultra-imperialism and today’s global capitalism. Cartel-like agreements are reached between the major powers. Yet the differences between the economic interests of different capitalist powers remain acute. It is this factor that both Martin Thomas and Kautsky obscure.

Mike Macnair highlights the US’s manipulation of the dollar to serve US interests: “Since the 1970s the US has increasingly used its leverage in international ‘cartels’ to insist that other states must pursue a hard-money and free-trade policy, while the US itself continues to pursue a soft-money, protectionist and Keynesian demand-stimulant policy.”

Mike would appear to be influenced in this analysis by the work of Peter Gowan. Gowan coined the term, the ‘dollar Wall Street regime’, to describe the international financial system conjured into being under Richard Nixon’s administration, whereby a dollar standard was effectively put in place. In the years that followed, US pressure led to the removal of capital controls across most of the globe and a dramatic surge in the movement of short-term ‘hot money’ in search of the best interest rates. The new financial arrangements give the United States considerable freedom of manoeuvre in funding activities overseas, pulling in funds to cover balance of payments deficits, and in purchasing commodities denominated in dollars - not to mention the possibility of destabilising other economies by manipulating the exchange rate of the dollar (see The global gamble).

But Gowan goes beyond the role of dollar seigniorage to outline an economic strategy in which the US seeks to establish dominant positions in what he describes as new growth sectors in “high tech fields, especially technologies with a wide impact across economies” (Monthly Review July-August 2003, p37). The economic reach of the US provides it with many weapons in this endeavour. The role of the US military budget in funding extensive research and development, providing economies of scale and priming the pump has given the US a crucial lead in many technological sectors.

Gowan describes in detail the use the US makes of its predominant position in the international financial institutions to rein in economic rivals and pursue the interests of its own capitalists. But we do not only have to rely on Peter Gowan’s testimony. Joseph Stiglitz, chief economist at the World Bank for several years in the 1990s, spilled the dirt on his Washington rivals at the IMF in Globalisation and its discontents.

Stiglitz describes the pressure placed on economies such as South Korea and Taiwan to remove capital controls. A consequent influx of hot money to take advantage of short-term interest rates proved destabilising for the east Asian economies, and contributed to the financial crisis of 1997. The response of the IMF - high interest rates and massive loans to shore up currency levels - turned a currency crisis into a major economic slump.

Stiglitz argues that the IMF primarily serves the interests of the US financial sector - the US is the only state with a veto on the IMF’s governing body and the US treasury nominates the US representative. The reason the IMF was so anxious to maintain currency levels was to avoid reducing the value of US funds invested locally, which would have been the consequence of devaluation - even if it had forestalled the collapse of the economies involved.

Global capitalism in 2004 is not what it was in 1916. Formal empires no longer exist. The European Union builds in a piecemeal fashion a unified European capitalism in place of a continent at war. Capitalism is spread over the face of the whole globe.

Yet the world we inhabit clearly bears the stamp of the capitalism Lenin described. Contrary to the propaganda of the neoliberals, we do not live in global economy of free trade and free competition. Enormous financial and economic behemoths bestride the planet. But the vast majority operate out of a national base, where they do the largest slice of their business and hold the majority of their assets. The role of state structures, both national and international (where they are dominated by the United States), are crucial to the contours of the global economy.

Martin Thomas observes that “Capitalist development is uneven: more-developed areas attract more new investments by virtue of the greater markets, better infrastructure, more qualified workforces and centralisation of revenues” (Workers’ Liberty December 2002). His observation begs the question as to why capitalist investments should not chase the lowest wages. That is clearly what Lenin anticipated. After all, transport costs to bring commodities to market anywhere in the world are much reduced compared with 1916. In fact massive foreign investments have been made in low-wage territories - particularly in east Asia (predominantly China in recent years).

Clearly what affects the pace of capitalist economic development is a combination of government strategy, the ability of a national state to defend the interests of its own capitalists against both the demands of its working class and the challenges of economic rivals, and the way a national economy is linked into the global economy. It is probably this configuration of factors that can best explain stagnation in Latin America, economic and social catastrophe in Africa and the period of dizzying economic growth in certain east Asian economies.

These east Asian countries have implemented economic strategies involving close state direction of economic activities, close ties between state and corporations, tight controls on trade union activity, and an orientation to the export market. US economic assistance and favourable trading arrangements during the years of the cold war played an important role in the early years. High levels of investment by Japanese corporations to create productive capacity away from the constraints of Japan’s yen have contributed to a degree of regional economic cohesiveness. The 1990s have seen the US begin to challenge the internal economic regimes of the east Asian economies under the banner of neoliberalism.

The relationship of Latin America and Africa to the international economic system was never so favourable. Indeed they were hit by the debt crisis engendered by the instability of the new international financial regime described by Peter Gowan. And they were subjected to the neoliberal demands of international agencies much earlier. If neoliberalism serves to weaken the workers’ movement in the major capitalist powers, in Latin America and Africa it had an often devastating impact on local economies. In Africa the 1980s and 90s saw a culling of education and health facilities - what chance the more qualified workforce identified by Martin Thomas as a prerequisite for economic development?

Martin Thomas rejects Kautsky’s prediction that an international capitalist cartel would exploit the agrarian colonial territories. The countries of Asia, Latin America and Africa present immense diversity. Much economic development has occurred - in line with Lenin’s prediction, rather than Kautsky’s. Nevertheless, the relationship between the major capitalist powers and much of what used to be called the ‘third world’ is of a semi/neo-colonial nature.

Epochal limits
Throughout his articles Mike Macnair refers to the question of the epochal limits to capitalism. Mike suggests Marx proposed two categories of epochal limit. First, “that the forces of production grow beyond the point at which the law of value remains a rational economic regulator. In the result, the forces of production become forces of destruction and the overthrow of the capitalist order becomes a necessary act for the self-defence of society.” The second “that capital raises up in the proletariat, its own gravedigger (Weekly Worker July 29).

This is broadly correct, although Marx usually talks about capitalist relations of property becoming fetters on the forces of production - as he does in the quote selected by Mike from the preface to A contribution to the critique of political economy. Also Mike sometimes seems to separate his two limits, as if capitalism will be brought to an end by the action of just one. The working class provides the agency by which capitalism will be overthrown; capitalism’s exhaustion of its ability to develop society and its material basis in any kind of rational way, the occasion.

Mike interestingly draws parallels between the process of decline of classical antiquity and later of feudalism and processes in contemporary capitalism. He argues that, when “the development of the forces of production comes into conflict with the particular rights of the existing class elite”, the coercive-bureaucratic apparatus of the state is strengthened and swings into action to take over tasks the old ruling class has abandoned.

Mike, therefore, identifies the increasing role of the state in the management of economic affairs as the key aspect of the decline of capitalism. What he does not identify is the origin of the conflict between the forces of production brought into being by capitalism and the rule of the capitalist class.

Mike does discuss the role of the tendency of the rate of profit to decline. He rather oddly associates this law of motion with the rise and fall of global hegemons. But the lead industrial sectors with the highest organic composition of capital do not exhibit lower rates of profit than more backward sectors with lower organic compositions of capital. Marx’s equalisation of the rate of profit means that the more productive firms (usually those with highest proportions of constant capital) actually enjoy surplus profits at the expense of less productive firms. An increase in the average proportion of constant capital in an economy will result in a decline in the average rate of profit, but the more productive capitals will still be more profitable than their less successful brethren. Thus, an economic crisis will not result in “the devalorisation of previously dominant capitals”. It will be the least successful capitalists who will go to the wall - tending, therefore, to raise the average organic composition of capital.

Surely the concentration of production and the development of monopoly - precisely the tendencies identified in Lenin’s Imperialism - are the essential features of the conflict between the forces of production and capitalist property relations. As production becomes concentrated, larger and larger investments are required simply to maintain productive forces, let alone expand them. The essentially anarchic character of capitalist production means that the larger the investment and the longer the time-scale to recoup the investment and make a profit, the bigger the risk. Hence the drive to monopoly in order to minimise risk. Hence also demands by capitalists that the state take steps to protect investments - neoliberalism, rather than a break by capital with the state, is a particular strategy of state intervention in society. That is why national and international state structures play such a crucial role in shaping the global economy and determining which regions and which economic sectors will develop and which will not.

The tendency for the rate of profit to fall does present an ultimate barrier to capitalism’s development of the forces of production, for the closer technology approaches to automation, the smaller the mass of variable capital (ie, workers) from which capital can produce surplus value (ie, profits).