Was Lenin right when he called imperialism the highest stage of capitalism? Mike Macnair believes he was very wrong
I should begin by saying that this is very much ‘work in progress’, not the finished article. Aspects of it are certainly unorthodox and may well be controversial. It is also no more than a sketchy introduction to some of the issues involved.
In 2004 I engaged in a debate with the Alliance for Workers’ Liberty on the question of imperialism, in connection with the Iraq war. The political starting point was that we in the CPGB were outright defeatists in relation to the Anglo-American invasion of Iraq. We headlined: “Rather defeat for US-UK forces than their victory.”1 That is, though we had no expectation that there would actually be a military defeat of the invading British and American troops, we said as a matter of politics that the defeat of the British and American troops would be preferable to their victory. The AWL weaselled on this question, and made statements along the lines that - to paraphrase - the US is ‘reconstructing the Middle East along bourgeois democratic lines’ or is ‘creating the conditions for capitalist development in the Middle East’.
On the other hand, we did not say, unlike the Socialist Workers Party and others on the left, ‘Victory to the Iraqi resistance’. The ‘Iraqi resistance’ was a conceptual amalgam between two very different forces: Ba’athist guerrillas mounting attacks on US troops; and mosque-based militia in different localities attempting to control space on the ground. We were not particularly for their victory, but we were for the defeat of the United States.
The debate with the AWL, and the critique of ‘Victory to the resistance’, led into the question of the theory of imperialism. The AWL has in essence adopted the line of Kautsky’s infamous 1914 article on “ultra-imperialism”. The idea was that the core imperialists have overcome inter-imperialist contradictions by forming international cartels (United Nations, and so on), under which free trade is enforced. In the AWL view there remain “paleo-imperialists”: ie, old-fashioned nationalists opposed to the core ‘cartel’. Hence the military interventions of the US and its allies represent simply the enforcement of free trade, and the working class does not have an interest in opposing it.
By contrast, the SWP view on imperialism is essentially the application of the absolutely orthodox doctrine of the ‘anti-imperialist united front’, as formulated by the Third Congress of the Communist International. So the theory which underlies the SWP’s line can be summarised as: ‘Lenin’s Imperialism, the highest stage of capitalism is still true’. In a series of articles in 2004 I wrote mostly about historical developments since 1918 and the problems they pose for both AWL-style and SWP-style interpretations.2
More recently, Richard Day and Daniel Gaido have published Discovering imperialism, which gives us much more in-depth understanding of the debates in the Second International before Lenin’s Imperialism, beginning in 1896-97.3 And earlier this year we published Karl Kautsky on colonialism, a translation by Ben Lewis and Maciej Zurowski of a dreadful series of articles by Kautsky from 1898 about ‘colonial policy’, with my own highly critical introduction to the translation.
Kautsky argued that colonialism and imperialism were against the interests of industrial capital; and that when industrial capital is in the political saddle, as it was in Britain from the repeal of the Corn Laws in 1847, there is a decline of imperialism, and indeed a free-trade anti-imperialism. He claimed that in the late 19th century imperialism revived, due to the colonialist activities of the continental European powers, where the landlord class and the state bureaucracy were still in the saddle. Russia provides his classic example, but protectionism - which is central to his argument - also in his view animated French and German territorial acquisitions. British late 19th century imperialism is, he argued, merely a defensive response to continental imperialism.
The obvious big hole in this argument is that, when industrial capital in the United States got into the saddle in the 1861-65 civil war - as against the agricultural producers on the basis of slave-based agriculture in the south - the first thing the industrial capitalists did was to introduce protectionism. Quite rapidly after victory, moreover, the US started building large fleets and engaging in imperialist operations. And indeed in German politics of Kautsky’s time, it was not the Junker class, but heavy industry, which stood behind the navalist-colonialist lobby.
Because Kautsky was essentially the historian working in the Second International (the entry of Marxism into university history departments is largely a product of the Third International), the subsequent writers on imperialism mostly assumed Kautsky’s 1898 historical schema, in which Britain in the 1850s ceased to be imperialist - and so sought for an explanation a new rise of imperialism in the 1880s and 1890s. This was not Kautsky’s explanation in terms of the traditional control of the old classes, but one which was tied into the general theory of crisis and breakdown, which was widely held in the Second International: the theory of a general breakdown of capitalism on the basis of the underconsumption of broad masses, producing a tendency in capitalism towards ever greater crises. According to this account (which was most developed by Parvus before Hilferding) this secular tendency forces the capitalists to restrict production by introducing cartels. Because cartels are vulnerable to international competition, they imply protectionism. Protectionism in turn implies that states need to increase the total territory held behind their protective tariff barriers. Hilferding at quite a late stage of the discussion, in 1910, added the concept of finance capitalism as unproductive and predatory.
Then during World War I several different people - Gorter, Trotsky, Lenin, Zinoviev, Bukharin - theorised the origin of the war in terms of the development of monopoly capitalism. Lenin’s is the sharpest of them - what he did was to redefine the word ‘imperialism’ to mean ‘monopoly capitalism’ - “the highest stage of capitalism”. This is a Humpty Dumpty definition: ‘When I use a word, it means just what I choose it to mean.’ Lenin has redefined imperialism as meaning the substance of his explanation of the phenomenon.
Out of Lenin’s work come two views about the world. One is that the world is bifurcated between a small number of overdeveloped capitalisms defined by monopolies and finance capital; and, on the other hand, the rest of the world, which is subordinate. There is no hierarchy of states - some at the top, some in the middle and some at the bottom. There are just two types: imperialist countries and those who are preyed upon. But it is also a theory according to which, because it is tied in to underconsumptionism and the general breakdown, only a narrow stratum beyond the monopolists - what he calls the labour aristocracy - benefits in any sense from imperialism. Both the working class and the petty bourgeoisie, the small businesses, have interests opposing the big monopolists, which are now the incarnation of imperialist monopoly capital. In Lenin’s time we did not get these conclusions fully drawn out, but the logic of Lenin’s analysis is the alliance with the national bourgeoisie in the exploited countries; and in the imperialist countries the broad democratic alliance, including the petty bourgeoisie, against ‘monopoly capital’. These conclusions were indeed drawn by ‘official communism’.
Kautsky’s argument was absurd. It was simply not true that there was a non-imperialist period of British capitalism, or that high industrial capitalism of the middle 19th century was retreating from imperialism. Britain was not pursuing protectionism in the form of tariffs, but what are now called ‘non-tariff barriers’ were very extensively used throughout the British dependencies during the period when Britain was talking very loudly about free trade. Britain continued to acquire territories throughout this period. The idea of a non-imperialist period of British capitalism - and hence a non-imperialist period of capitalism in general - was nonsense. It was Kautsky’s nonsense in the first place, but as a result it became the nonsense of most of the actors within the Second International who debated this issue. Hence also Parvus’s nonsense, Hilferding’s nonsense, Lenin’s nonsense.
Using the language of ‘imperialism’ was a product of British politics in the 1870s, and particularly of Benjamin Disraeli, who set out to construct a pro-imperialist bloc. In doing so he shifted the meaning of the word ‘imperialism’. In the political discourse of the 1860s this meant what we would now call Bonapartism - the creation of a strong-state imperial regime around a single individual. Particularly ‘imperialism’ in France meant the imperial rule of Napoleon, and of Louis Bonaparte as his ‘heir’.
Disraeli shifts the word into an analogy with the Roman empire, as it was in the later Roman republic and before 212 AD and the constitutio Antoniniana (Antonine decree) which gave Roman citizenship to most of the free inhabitants of the empire. Before the constitutio Antoniniana, Rome had citizens, who had, in theory at least, political rights, and there were Roman citizens spread out all over the empire. The provinces were governed by imperial governors, but their inhabitants had no direct political rights. Beyond the provinces were the socii, the allies, who were governed by their traditional rulers, but whose foreign policy was controlled by Rome. So, for example, king Herod in Palestine was an ally outside Rome’s borders, but under Roman control.
In Disraeli’s imagery there is an analogy with Britain, which has colonies - parts of India, South Africa, and so on - which are directly controlled by colonial administrators, but it also has allies like Argentina and Chile, which, while subject to British imperial hegemony, are not directly controlled and administered by Britain. Britain conceives of itself as a great world empire: Rome on a larger geographical scale. It was that British imperial project, rather than Louis Bonaparte’s imperial project, which was imitated by the French, by the Germans, by the Italians, and so on, creating the age of European empires which ran down to the 1950s and which still has relics of one sort or another today.
Disraeli, however, was building political ideology on an earlier practice. Global wars did not begin in 1914. We might rechristen as ‘World War I’ the series of wars which took place between 1689 and 1714, the Nine Years War of 1688-97, the War of the Spanish succession 1701-14. ‘World War II’ is, then, the war, beginning in the colonies in the early 1750s (Carnatic wars in India from 1751, French and Indian war in North America from 1754), which became known as the Seven Years War between 1756 and 1763. ‘World War III’ is then the series of wars between 1792 and 1815 that begins with the British subsidising the Austrians and so on to attack France with a view to rolling back the French revolution. 1914-18 would then be ‘World War IV’.
These are wars fought about global territory, about the control of trade. These are wars fought about the control of colonial plantations, the great sugar plantations of the Caribbean contested by naval operations between the British and the French, and about control of Indian trade contested between British and French East India Companies and their client states in India.
A step further back is the Dutch Republic. The Dutch revolt began in 1568. In 1602 the Dutch United East India Company was formed, which created a colonial regime in Indonesia, which seized seaports in Sri Lanka, which asserted control over large parts of Indian Ocean trade, which attempted to seize Brazil from Portugal. Look at the Dutch maritime empire on a map, and it is the same sort of shape as the later British empire, but without anything like the same level of territorial acquisitions.
Just as the British had their direct colonial possessions but also their socii, so the Dutch had their subject states which were lent money to buy arms, and so on. For example, there was the tsarist regime in the 16th and 17th centuries, or the kingdom of Poland in the same period - its economy was shifted towards serf-worked agriculture, producing grain for export to feed the cities of the Netherlands.
Push back beyond that. The Portuguese colonial empire, the seizing of Malacca in 1509, the foundation of Goa in 1511, of Macau in the 1530s, the attempt of the Portuguese to assert a commercial monopoly over Pacific Ocean trade, the development of Brazil as a sugar plantation economy. Who provided the finance for this? Was it financed out of the developed domestic capital market or the thriving capitalist agriculture of Portugal? Not in the least: there was neither. It was funded by Italian, and in particular Genoese, financial capital.
Further back again, into the late Middle Ages. The Genoese state had its own little sugar plantation colonies. The Venetian state likewise had sugar plantation colonies in Cyprus and in Crete: physical capital was exported in the form of watermills to run the first-stage processing of sugar, and capital for imported slaves who do the work, rather than peasants.
So this phenomenon of organised imperial subordination of other territories - which then leads to their economy being adapted to serve that of the dominating territory - goes back to the beginnings of capitalist states, even when they are interstitial, proto-capitalist states like Venice and Genoa.
Also visible, from the time of the interstitial, proto-capitalist states on, is the phenomenon of the rise and decline of top-dog states. In the late Middle Ages Venice defeated Genoa in a series of Mediterranean-wide wars and enjoyed brief hegemony in the Mediterranean. The Dutch became in effect the top-dog state through the 17th century. In 1688, Dutch invasion made possible a British capitalism backed by a central bank, an organised financial market and a rule-of-law state - an ally in the Dutch war with France. But in the course of the wars of 1688-1714, the English became too powerful to be held in Dutch leading-reins. Hence during the 18th century, Dutch industry suffered relative decline compared to English industry and the Dutch economy became dominated by financial capital. We can in fact see the same thing earlier on, in Venice and Genoa in the 17th century: the former dominance in shipping and productive activities is displaced by financial operations. In Venice, as we see in Britain in the later 20th century, tourism becomes a major economic activity. The tendency to the displacement of dominance in industry and shipping by financial capital was a striking feature of Britain from the late 19th century and is a present feature of the US.
Is this just another way of saying that the practice of empire goes a long way back into history? No. In the case of the Roman empire, the Han or Tang dynasties in China, there is a sharp dividing line between the citizens who live within the boundaries and the ‘barbarians’ who live outside. But the social relations of production are more or less spread uniformly across the area controlled by the state within the boundaries. The ruins of Roman villas in southern England are economic entities of exactly the same sort that you can find in France, in southern Spain, in Italy, and in the Danubian provinces as well. And the same is true (with somewhat different particular forms) of the old Chinese regime.
So this phenomenon of institutionalised inequality, in which the economy of one territory is adapted to serve the economy of another, is not a characteristic of antique empires. Nor is it a characteristic of the use of the word ‘empire’ in the Middle Ages. The word ‘empire’ in the Middle Ages means one particular empire: ‘the Holy Roman Empire’, supposedly founded by Charlemagne by the coronation of Charlemagne, king of the Franks, as the western Roman emperor by the pope in 800AD. To be an imperialist or a Ghibelline in the Italian city-states was to support the holy Roman emperor and oppose the pope.
Equally, feudal territorial expansion in the Middle Ages - for example, the expansion of the English into Scotland and Wales - does not create a subordination of the Scottish or the Welsh economy to the English economy. It creates the Anglicisation of Wales, so that the Welsh economy effectively becomes part of the English economy. It creates in Scotland an imitative feudal regime, which copies the fundamental elements of English state, but which is for practical purposes its equal. The same is true of German feudal expansion. It either creates Germanisation or imitative feudal regimes in Poland, Bohemia, Scandinavia and so on.
The phenomenon we now see as ‘imperialism’ is rivalries between capitalist states, in connection with holding territories in economic as well as political subordination. This is a feature of capitalism wherever there is a capitalist state - even an interstitial, proto-capitalist state. It is not, in contrast, a feature of antique empires or of feudal territorial expansion. Wherever there is a capitalist state there will be capitalist imperialism. It is not a feature of capitalist decline - it is a feature of capitalist political rule as such.
Why does the existence of capitalist states carry with it the structuring of the world into a hierarchy of states - that is, the formation, rise and decline of hegemonic powers, and the formation of relations of state-to-state subordination, which are not just created by formal colonisation, but also by indirect subordination?
Political economy of the state
The answer to this question will necessarily involve dealing with another one: how does the state fit into Marx’s critique of political economy? We do not have an answer to this from Marx, since his critique of political economy was unfinished. The hints he gave in his early work are actually useless, because they merely attempt to transpose the dialectical move that Hegel makes from civil society to the state in the Philosophy of right onto the development of the state out of the capitalist political economy.
I start with the very basic idea that we have to understand both class arrangements and the state in terms of the social division of labour. What underlies everything is the material social division of labour: the way society is organised to carry on necessary activities. At this level we also have to start with the supposition that states are not morally necessary, produced by ‘natural’ nationalism, and so on. A state is simply a very successful protection racket, which has a sufficient preponderance of organised armed force to be able to extract protection money, called ‘tax,’ from the inhabitants of the territory.
That said, however, if the state was just a protection racket people would not put up with it for more than a limited period of time. Why they do arises in a sense out of private property. Against all the critiques, Engels is right in The origin of the family, private property and the state that the family, private property and the state are phenomena which arise together. Engels’ particular narrative of the process is too late in the historical development, because it is based on the emergence of the Greek and Roman city-states, by which time the state had already been in existence for two thousand years or more (and the family and private property probably longer).
The state does arise out of private property, however. To take a single example: how can there be private property if it is inaccessible? Alongside private property there must be public ways and spaces, and a large number of other public, collective activities of one sort and another. When the state emerges, it takes over these common, ‘sacred or public’ activities. The fact that the state takes over the common activities enables it to survive and not simply collapse as an illegitimate protection racket.
Capital presupposes the state. It arises out of feudalism - it is an illusion to suppose that capital arose out of something called ‘petty commodity production’, or that capital arose directly out of non-class society, or that the narratives about the individual and the society that are implicit in the first three chapters of Capital represent any historical reality. Capital arises out of societies that already have a state.
A state is necessary in order for money to exist. It is necessary in order to have money exchange rather than gift exchange, where it does not matter what the relative values are. Even more, for capital to rule society there must be abstract capital, capital as what makes possible all civilisation. For capital to be the source of all civilisation there must be rentier capital, abstract capital, and the idea that ‘money is fructiferous’. That is necessary for capital to rule as a class, to enjoy the same kind of rule that the feudal ruling class or the slave-owning elite had in prior societies. This, in turn, requires organised financial markets; and organised financial markets depend on the market in state debt securities.
That is why capital presupposes the state. Nonetheless, the capitalist state is necessarily subordinated to capital because of the forms of that state - the central bank, the public debt, the ‘rule of law’ - which differ from the forms of the public power in feudalism and classical antiquity.
It is also subordinated to capital because particular capitalist states are dependent on a particular group of capitals. The capitalist state does not represent capital in general. It represents the group of capitals which created that state or which continue to support that state. In Britain that meant at first tobacco, sugar, slave-trading, textile and shipping capital. These were the capitals which backed 1688, and which created the new financial markets in England in the 1690s.
The capitalist state exists for three reasons. First, the state is constituted as an institutionalised debtor through the central bank and the financial markets. This makes it dependent on its creditors. Second, the ‘rule-of-law state’ displays a new form of institutional corruption. In place of gifts to individual officials necessarily come both the ‘free market in legal services’, with the effect that ‘deeper pockets’ tend to win in litigation, and a paid legislator: either a parliament in which, at the end of the day, capitals are represented by paid politicians in proportion to political contributions, mimicking the joint-stock company, or a single-person auctioneer of policies, like Louis Bonaparte, or Mussolini or Saddam Hussein.
Third and most important is the capitalist reorganisation of warfare - what has been called the ‘military revolution’ which took place between the 14th and 17th centuries. This was a capitalist reorganisation of warfare, in which artisan armaments production by blacksmiths and local builders of castles is replaced by industrial military production: shipyards producing large vessels capable of carrying cannon founders, industrial-scale production of small firearms and so on. This military revolution has the effect that if the state of Ruritania is dependent for arms supplies on the state of Atlantica, then Ruritania is militarily, and hence politically, dependent on Atlantica. But this goes further. In order to maintain its military independence Ruritania has to have not just an arms industry, but also a sufficiently balanced economy that it can stand off blockade without catastrophe. The state therefore has to support capitals within its territory against ‘foreign’ competitors.
The alternative military line - as with Dutch policy in the 17th century, British policy between the 18th and the 20th century, and US policy since 1945 - is to have a big enough navy to defeat any other two navies. But if a state is able to achieve that status it is in effect the top-dog state. And the consequence is that its currency becomes the world number one currency, because holdings in it are safer than holdings in other currencies. The currency of the number one military state automatically tends to become the world reserve currency.
Because of their dependence on particular capitals, states are necessarily mercantilist. There is not and never has been a ‘genuine’ free-trade state unless it is a dependency of some other state. So the free-trade policy of the US before 1861 resulted from the fact that it was a dependency of Britain.
British free-trade policy in the 19th century resulted from the mercantilist interests of the shipping industry. Dutch free-trade policy in the 17th century resulted from the mercantilist interests of the Dutch shipping industry. There is no such thing as a capitalist state which is committed to free trade in any other sense than this: as a form of dependence on another state (pre-1861 US), or as a mercantilist policy in the interests of a dominant shipping industry. There can, of course, be a state which is practically intensely protectionist, but ideologically promotes free trade in order to push it on everyone else: this is the character of the US today.
What are the implications of this phenomenon for the political economy more generally? First, every state’s interests are defined against the dynamics of capital, which tends to produce both polarisation between rich and poor, and episodic crashes. In the first place, the greater the degree of polarisation, the harder it is for the state to extract revenue. The state primarily extracts revenue from the relatively poor; it is much harder to do so from the very rich, who can afford the best lawyers (and so on). It is practically impossible to extract revenue from people who are unemployed, street peddlers, and so on. Second, crashes tend to increase polarisation (it is mainly the savings of financial outsiders, not insiders, that are lost and small businesses, not large ones, that are ruined). Further, the state’s expenditures on defence and infrastructure are in effect a fixed charge that has to be paid, come rain or shine in the economy, like corporate debt. And if a crash bankrupts domestic capitals in an international market, the state will be made dependent on another state for arms, and so on. So both polarisation and economic cycles are against the interests of the state.
But the problem this poses is that, to the extent that the state successfully intervenes against polarisation and cycles, it slows up the operation of the economic dynamics of capitalism and tends to have the effect that old technology is preserved and not driven out of business. So the Dutch, for example, in the 19th century were very slow to utilise steam technology because the economy was still dominated by windmills and the use of peat for fuel, and transport by barges. In the same way, the British textile industry down to the 1960s continued to operate with late 19th century industrial technology.
The higher up states are in the international pecking order, the more effectively they can counteract capitalist dynamics. But the effect of counteracting capitalist dynamics is to drive their own economy out of industry and into finance, because the preservation of the old technology would be to make their industrial economy uncompetitive compared to other producers.
Hence the phenomena of the decline of former hegemons: the shift from shipping to finance in Genoa, or in the 18th-century Netherlands and in late 19th and early 20th century Britain from industry to finance; and now, in fact, a shift from industry to finance in the late 20th century in the United States - it has not yet gone very far in the US, but is has clearly already begun.
My underlying point, therefore, in this necessarily sketchy overview, is this. Suppose we make the effort to try to actually integrate the state among the categories of the political economy. Suppose we do so not in a way which thinks of the state as an abstract entity that enforces laws standing above all capitals, but rather one which approaches the state as a concrete aspect of the material division of labour. By doing so we have a chance of grasping the historical dynamics which the ideas of imperialism and so on were trying to grapple with. We may be successful if we do so in ways which address the weaknesses of the historical accounts developed in the ‘classical’ debates on imperialism before 1914 - accounts assumed to be sound in the renewed debates on imperialism in the 1960s and 1970s.
1. Weekly Worker March 20 2003.
2. Weekly Worker July 29, August 5, August 12, September 23 2004.
3. Leiden 2011. See my review, ‘Imperialism before Lenin’, Weekly Worker March 8 2012.