The Marxist Theory of Imperialism

Tom Kemp gives a presentation of the Marxist theory of imperialism. Here, the important point to be noted is that, for Marxists, ‘imperialism’ is a word taken by Lenin to describe the last, monopoly, stage of capitalism which began round about 1900 and which continues until the present day. It signifies two things: first, the theory has very little to do with the possession of empire as such, or capitalism as a world system before 1900; second, it can be used to analyse the entire development of American and European capitalism during the twentieth century.

Method and Interpretation

The question of imperialism is dominated by the Marxist writing, particularly that of Lenin. The Marxist theory of imperialism forms part of that theoretical whole known as Marxism, which is grounded in dialectical materialism, and includes its own political economy and provides the tactics and strategy of proletarian revolution. Thus, the method used and the basis of interpretation of imperialism in the Marxist schema is also the method of historical materialism. By historical materialism it meant that historical changes in human evolution do not lie in motives, not in ideologies but in the material basis of the society in question. For Marxism, imperialism is not a political or ideological phenomenon but expresses the imperative necessities of advanced capitalism.

For Marxists, therefore, the explanation of such aspects of imperialism as colonial expansion and power struggles between states has to be sought in material conditions rather than in ideology and politics. While not denying the influence of forces which are mainly superstructural, the Marxist theory rejects the view that the course of history can be explained in terms of power drives, love of war, desire for glory and the influence of outstanding personalities.

Defining Imperialism

The Marxist theory of imperialism tries to explain the characteristics displayed by the capitalist mode of production in its latest, most advanced stage as a working out of its ‘laws of motion’ discovered by Marx. The Marxist theory, thus, uses the term ‘imperialism’ to describe a special stage of capitalist development.

In ‘Capital’, Marx tried to show that the capitalist mode of production was governed not by the satisfaction of human needs but by the drive to extract surplus value from a class of wage-labourers. To realise this surplus value it was necessary to find a market for the commodities in which it was embodied and to capitalise this surplus value in new means of production. The Marxist theory of imperialism deals with the special phenomenal from which this process takes at a particular stage in the development of the capitalist mode of production.

The parts of Capital which are most relevant to explaining the new stage of the capitalist mode of production, i.e., imperialism, are the following:

  1. The production schemas in volume ii which deals with the problem of how the surplus value extracted from the working class is realised. ‘The realisation problem’, as it is known, is concerned with the varying degrees of the means of production and the means of consumption.
  2. The tendency for the rate of profit to fall which follows from the changes in the forces of production which increases the proportion of constant to variable capital, bringing a rise in what Marx called the organic composition of capital.
  3. The concentration and centralisation of capital as an inevitable outcome of the competitive struggle among the capitalist forces. This would give way to the rise of monopoly capitalism.1

The productive forces released by the capitalist mode of production could not be contained within the geographically confined areas of Europe. The rise of capitalism, and the industrialisation of the advanced countries to which it led, brought into being a world market and an international division of labour. Through their relationship with the world market, the capitalist states assumed a position of dominance while the less developed areas assumed a position of dependence upon the former. By the end of the nineteenth century most of the world had been divided into empires and spheres of influence of the dominant powers.

At the same time, the capitalist ruling class established itself politically through the national state and thus there grew up a system of states which embodied different national interests. There was, therefore, a contradiction between the international unifying tendencies of the new technologies and the constricting influence of the national state. This expressed itself in rivalries and tensions between the main powers, in colonial expansion, in alliances and preparations for war and finally in war itself. By the end of nineteenth century, Marxism claims, the epoch of imperialism had begun.

In Marx’s Capital, it is explained that-

  1. Capitalist enterprises in the advanced countries sought to expand their markets and keep up profits by pushing into the world market. They did so, with state support and/or by using their own superior bargaining power in trade with weaker partners, in obtaining concessions and so on.
  2. Other areas of the world were linked economically to the centres of advanced industry and managed to counteract the tendency for the rate of profit to fall.
  3. This required the export of capital to undeveloped areas to build infrastructures, bringing sections of their economies into dependence on the world market.
  4. These developments of the international division of labour, determined by the needs of the advanced capitalist countries, were accompanied by-notably the growth of monopolies. And, this has become the dominant forms of the capitalist mode of production in its highest stage.

Monopoly Capitalism and Imperialism

The briefest possible definition of imperialism was given by Lenin. In Lenin’s words, ‘imperialism is the monopoly stage of capitalism’.

By monopoly Marxists do not mean literally the occupation of each industry or branch of enterprise by a single firm. They use ‘monopoly capitalism’ to indicate the passage of capitalism from its earlier stage of more or less free competition to one in which giant corporations dominate the market.

Marx and Engels recognised that the laws of market themselves tended to make competition between producers inherently unstable. As Marx put it, ‘One capitalist kills many’. Through the process of centralisation of capital, Marx says, a small number of large capitals tended to dominate the market in each field of business. At the same time, by the process of centralisation, separate individual capitals were amalgamated into larger units. The whole process was indeed linked historically with the rise of joint stock companies and the growth of large deposit and investment banks and financial institutions which centralised the financial reserves of the system as a whole. This later development in the market situation was termed by Hilferding as ‘finance capital’.

In the Marxist theory, the expansionist drives of advanced capitalism are associated with the emergence of large amalgamations of capital both in the industrial form and in money form in the hands of banks and giant financial institutions. Continuing accumulation and the maintenance of profitability however demanded a large and growing market. Government contracts at home and abroad became indispensable. The growth of monopoly and finance capital was irrepressible; capitalism could not be fixed in its earlier competitive shape. The role of national states is very important in this expansionist drive.

The process of expansion into the world market inevitably assumed an internationally competitive character because of the national state form in which the dominance of the bourgeoisie as a ruling class expressed itself. It therefore took place beneath a cover of nationalism and patriotism. On the surface politics and ideology ruled; deep down it was the imperative necessities of the capitalist mode of production which exercised the determining role.

The Marxist method of historical materialism, in this way, is the method which is most likely to provide an objectively valid, scientific account of the epoch of imperialism.

The Contribution of Lenin

The Marxist theory of imperialism derives not directly from Marx but from Lenin’s application of Marx’s method to a study of the economic and political developments which brought about the First World War in his famous work, Imperialism: the Highest Stage of Capitalism (1916). Lenin gave the title ‘imperialism’ to what he considered to be the distinguishing features of the latest stage in capitalist development. It is to this meaning that the Marxist theory now generally refers. It was in a way a more complete and finished conceptual form of those traits about which Marx and Engels talked few decades ago.

Lenin stressed that monopoly capitalism was a necessary outgrowth from the old style competitive capitalism, that it took over in a very uneven way and produced new antagonisms and contradictions. He associated these new forms of capitalism, arising within the nation-state, with the division of the world into empires and spheres of economic influence and hence with the international rivalries and tensions which had produced the war. According to Lenin, ‘imperialism emerged as the development and direct continuation of the fundamental characteristics of capitalism in general’.

In the course of defining imperialism Lenin referred to the following five basic features:

  1. The high stage of the concentration of production and capital has created monopolies which play a decisive part in economic life.
  2. The merging of bank capital with industrial capital, and the creation, on the basis of this “financial capital”, of a financial oligarchy.
  3. The export of capital as distinguished from the export of commodities acquires exceptional importance.
  4. The formation of international monopolist capitalist combines which share the world among themselves.
  5. And, the territorial division of the whole world among the biggest capitalist powers is completed.

Lenin’s theory of imperialism put the emphasis on the structural changes in capitalism rather than upon the relations between the metropolitan countries and their colonies, and to suggest that they still accurately characterise the dominant features of capitalism today. The significance of Lenin’s contribution lies in his ability to bring together all the contradictory features of advanced capitalism under a single head. The Marxist theory of imperialism normally rests on his definition of imperialism.

Imperialism Today

The Second World War brought great changes in world capitalism. The influence of Britain and France has decreased to a considerable extent. On the other hand, the leading position of the United States has been reinforced; the imperialist world system now has its centre in North America. The forms of imperialist domination of the dependant countries have changed considerably. Direct rule has almost everywhere been abandoned. Part of the world has been closed to it. Over the ‘Free World’ American imperialism exercises an uneasy dominance. The great international corporations, mainly American, control the principal resources of this area of the globe. The demands of technologically advanced industry cannot be met without combing the world for raw materials. Today, the American imperialism rules over ‘an empire without frontiers’ which has no parallel in the past.

The politically independent states of Latin America, Asia and Africa remained tied to the world market in a position of economic dependence. These countries cannot follow the same path to industrialisation as was taken, historically, by the presently advanced countries. Their economic destinies are decided not by their political leaders but by giant foreign corporations and banks and their native allies.

Large areas of the world, which lack resources or potential for profitable investment and development by international capital, are condemned to stagnation and decline. American imperialism is only concerned with them so far as they may become breeding grounds for revolution and thus upset the precarious equilibrium with the Soviet bloc on which the maintenance of its world military position depends. The presence of American forces in Afghanistan, Iraq and Pakistan justifies this. And we can question why America is so silent on the issues in Myanmar which has been more than two decades. The answer is that the United States does not see anything in this land attracting its interest.

This is the characteristic of contemporary imperialism.

A Critique of Marxist Theories of Imperialism

Michael Barratt Brown

It is a critique of Marxist theories of imperialism by one who stands within the Marxian tradition. Here, Barratt Brown tries to abstract certain of Lenin’s ideas as well as some of Marx’s in order to produce a ‘Marxian’ account of the expansion of Europe in the late nineteenth century. However, he tries to rely more on some of Marx’s ideas and less on those of Lenin, particularly the former’s emphasis on the tendency of capitalist development to lead to a greater and greater concentration of capital. It was this, in Barratt Brown’s opinion, which was responsible for one of the most important characteristics of the new imperialism of the late nineteenth century, the drive for markets overseas by competing European industries backed by competing European states. It was this, too, which provides an important part of the explanation of why the expansion of Europe was accompanied by a polarisation of wealth on an international as well as a national scale, and a widening of the gap between the level of development of the industrial countries and the rest. Against this, Barratt Brown is critical of one of the central tenets of the Leninist theory: its emphasis on the importance of the export of European capital.

The Relation of Imperialism to Capitalism

Imperialism has undoubtedly been developed as a Marxist theory. As such it was used to describe and explain the spread of European capitalism throughout the world in the nineteenth century. In origin, however, it was not a Marxist word and does not appear in the writing of Marx or Engels. It was in fact first used by those who were themselves colonial powers. For example, nationalism in Britain throughout the nineteenth century was fostered not by a war of liberation, nor even by wars of domination, but by glorification of the Empire and of the common interest of the British people in it.

J. A. Hobson, who wrote the first major critique of imperialism at the turn of twentieth century, said that the economic tap root of imperialism lay in the export of capital in search of investment opportunities that were declining at home. However, Schumpeter, after analysing the British trend in 1920s, argued that the connection between capitalism and imperialism was not substantiated. Lenin, unaware of the trend, and drawing upon the facts of capital export from European countries other than Britain enthusiastically endorsed the chief elements in Hobson’s analysis. Thus, because of the differences of the facts Schumpeter and Lenin chose their interpretations also went differently.

There are diverse factors- ideological, political, social and economic- for the expansion of imperialism. Although a decaying military aristocracy and an underemployed middle class was a common feature of Britain, Japan, Austria, Germany and France, it was not a feature of the United States, or Russian, Belgium or the Netherlands. Again, there were similar sociological structures in other countries that showed no sign of outward expansion to obtain privileged positions in other lands: China provides an obvious example to this.

Marx’s Economic Model

Marx’s model of capitalist economic structures, in essential, is contained in the formula, M-C-M1 (money-commodities-money). In short, owners of money (capital) turn it into commodities for the purpose of making more money. In fact, this is the rationale of private capital ownership.

With the aid of Marx’s model Marxists have approach an understanding of international relations. The following is the list of relationships that is central in their definition of imperialism as a stage of capitalism:

  1. The widening gap in economic development between industrialised European countries and those restricted to primary production;
  2. The outward movement of labour and capital from the more developed countries to the less;
  3. The annexation of territories all over the world by the more developed nations in a competitive scramble for supposed strategic and economic advantages, especially in the last quarter of the nineteenth century;
  4. The growth of international economic rivalries and of a series of arms races leading to two world wars and threatening a third;
  5. The emergence of the international firm and the continuation of attempts by the more developed nations to maintain and extend their political, military or economic power over the less, even after the ending of direct colonial rule.

Marx’s View on Foreign Trade

Marx’s view of the expansion of Britain’s worldwide military and political power, including colonial expansion, was that this was an essential part of freeing the trade of the world to the products of the most advanced industrial producer. For such a producer, free trade, not protection or privilege, was the key to increased profit.

In the third volume of Capital, Marx writes in the following way of foreign trade as one of the counteracting forces to the tendency of the rate of profit to fall:

“Foreign trade permits an expansion of the scale of production… The expansion of foreign trade which is the basis of the capitalist mode of production in its stages of infancy, has become its own product in the further progress of capitalist development through its innate necessities, through its need for an ever expanding market… an advanced country.”

There are four stages of imperial expansion that Marx talked about especially with relation to India. First, the combined interest of merchants, army and aristocracy in the East India Company.

Second, the growing interest of the British capitalist mill-owners in expanding the market for their products.

Third, the decline of handicraft and other indigenous manufacturing industries.

Fourth, and at this last stage, a new worldwide division of labour developed in which Britain produced the manufactured goods and the rest of the world raw materials.

On such a division of labour bargaining power was strongly on the side of the more advanced economy.

According to Marx, the country that is more developed industrially only shows to the less developed the image of its own future. However, this was not true in many cases. Elsewhere, underdevelopment followed.

Hilferding’s Study of Finance Capital

Rudolf Hilferding, basing his work on Otto Bauer’s study of the National Question and Social Democracy in Austria, started from Marx’s emphasis on the centralisation of capital that takes place as the scale of production increases and as the control of big capitalists extends beyond the limits of their ownership of capital. Hilferding saw in Germany and the United States that the banks were taking the leading role in extending and controlling industrial capital. No such role was played by the banks in Britain at that time, but the merging of finance and industrial capital is a process that has since occurred in every advanced country in the twentieth century.

Hilferding’s argument was that these monopoly positions of capital in its own national market were created by state protection and developed into foreign expansion.

Hilferding saw imperial expansion as the requirement of the monopoly capitalists in each nation state for new areas to be brought under the jurisdiction of the capitalist state to develop raw material production, safeguard capital investment and guarantee markets for each national monopoly capitalist’s output.

What Hilferding emphasised was the national development of capitalism and the growing conflict of national monopolies: ‘the latest phase of capitalism’.

National monopolies might sign cartel agreements dividing up the world, but these were a temporary agreement to be abrogated as soon as any one monopoly saw the opportunity of advancing its position. The economic rivalry of the great nation states was thus seen as leading inevitably to war. But Hilferding also believed in the regenerative role of capitalism in the backward areas of the world. He believed that people of these regions who are exploited will gain national consciousness and seek liberation.

Hilferding, moreover, expected the whole process, by reducing competition, to equalise profit rates and, by promoting exports to backward countries, to equalise economic development and maintain the viability of capitalist accumulation, even though increasingly undermined by the threat of world war.

Rosa Luxemburg’s View of Nationalism and Militarism

Rosa Luxemberg’s theory of imperialism is generally dismissed as being quite simply based on a mistake. Luxemburg sought to prove that in a closed capitalist system capitalist accumulation becomes actually impossible because she assumed that consumption does not increase as investment increases. In fact, of course, it increases through increased productivity.

Part of Luxemburg’s ‘mistake’ arose through continuing to treat the national and world economy as a self regulating system. Her ‘mistake’ was to suggest an inevitable mechanical breakdown in the system rather than, as Marx had suggested, a tendency to polarisation of wealth and poverty which could lead to breakdown. However, Luxemburg’s great virtue was to suggest that this polarising process was occurring on a worldwide scale, the rich nations getting richer and the poor getting poorer, a process we can recognise very easily today.

The value of Rosa Luxemburg’s work lay in reminding people that the tendencies to crisis in the economy were still there, behind the management by national states.

Rosa Luxemburg feared nationalist economic rivalries leading to war. She doubted the revolutionary potential of exploited colonial peoples. She expected them to develop a nationalist rather than a socialist consciousness; perhaps as poor nations they might revolt against the rich nations, but in the process national consciousness would certainly overlay class consciousness.

Rosa Luxemburg was defeated in the arguments among the Russian, Polish and German communists. She was defeated also by events. Nationalism grew from strength to strength, as much in Russian communism as in German national socialism. The colonial peoples after 1945 added fifty new names to the United Nations. Only her followers with total consistency held to Rosa Luxemburg’s principle that the socialist revolution must be international or nothing.

Lenin’s “Imperialism”

Lenin’s book, “Imperialism, the Highest stage of capitalism”, was designed to prove that the First World War was on both sides an imperialist war for the partition of the world and for the distribution and redistribution of colonies, of ‘spheres of influence’ of finance, capital etc. The ‘proof’ consisted of a combination of Hilferding’s analysis of finance-capital and the analysis of J. A. Hobson.

Lenin criticised Hobson for supposing that the consuming capacity of the people could be raised under capitalism. Under capitalism, the surplus of capital would never be used to raise the standard of living of the masses. Leninists argue that what has been done in a few advanced welfare states has been necessarily at the expense of the masses in the poorer parts of the world. Their poverty is in other words still essential for capitalist accumulation.

Neo-Marxist Explanations of Imperialism

The first explanation to be considered is that of Harry Magdoff. He argues firstly that the outflow of capital even to rich developed countries involves a form of imperialism. Magdoff’s second argument is that the quantity of investment in underdeveloped lands may now be relatively small, but it is of crucial importance for U.S. capitalism because it is involved in the control over key strategic raw materials that are no longer available in the United States.

Since the underdeveloped lands are concerned only with selling these materials, there is a battle between the giant companies for control rather than a direct struggle between the advanced capitalist countries and those that are underdeveloped. This inter-capitalist rivalry must form a major element in understanding imperialism today.

The new empires are of the giant corporations. Nation states are their tools. And, their aim is still monopolistic control over foreign sources of supply and over foreign markets, enabling them to buy and sell on specially privileged terms.

The central explanation of imperialism in the thinking of modern Marxists like Paul Baran and P. M. Sweezy lies in the challenge of the Soviet Union and of communist inspired revolt. The challenge is to capitalism.

There is increased rivalry between the United States and the Soviet Union. For the U. S. competition with other capitalist powers has become secondary to competition with Soviet power. However, notwithstanding the fact that the U. S. imperialism is seen as being very similar to that of British imperialism at the end of the nineteenth century, there are two differences today. First, the major rival is what Baran and Sweezy call a ‘world of socialist system as a rival and alternative to the world capitalist system’. Second, the giant industrial firm itself now provides the finance capital from its own capital accumulation and towers over most nation states in resources and international connections.

Soviet Imperialism

The first revolution against capitalism came where a backward capitalist state collapsed under the defeats of superior arms in total war. This outcome was in total contradiction with what Marx had predicted.

The revolutions in Eastern Europe, except in Yugoslavia, which followed the Second World War, were less the result of internal communist development than of the force of the Red Army’s tanks. With exceptions of Czechoslovakia and East Germany, communist regimes were established in economically backward countries. This was true of the Chinese and Cuban revolutions. The result was that the Soviet Union tended to regard itself as the champion of the peoples whose economies had been distorted by dependence on the advanced capitalist countries, rather than as champions of the proletariat in the advanced countries themselves. Soviet influence was greatest, therefore, in the countries lying along the Soviet frontiers and in the ex-colonial countries.

Soviet imperialism is manifested from the existence of Russian rockets in Cuba and Russian tanks in Budapest, Prague or along the Chinese border. The Soviet Union tended to act as ‘caretaker’ for the proletariat in these regions. In Eastern Europe the Red Army had this role; in China the Red Guards.

Capitalism and Underdevelopment Today

Marx’s model of capitalist economic relations says that capital accumulation at one pole creates impoverishment at the other. The Marxists, including Lenin, say that the export of capital is from rich countries to poor, from places where capital is in surplus to those where labour is cheap. The reason that Lenin and others insisted on this theory of capital export is that they accepted Marx’s determinist economic model, within his general theory, that the structure of economic relations was essentially self-regulating and tended if not to inevitable breakdown at least to something near it. The theory is based on the argument that production for profit tends in a competitive situation to create accumulations of capital which cannot be profitably used because they are extracted from the very masses who have to provide the market for increased profitable production. These accumulations then have to be exported.

The export of capital partly provided a counter to the polarising process and by introducing welfare measures and Keynesian management of demand the contradictions inside the economic structure of capitalism were partly solved. But, it was only at the expense of growing national economic rivalry and of growing impoverishment and revolt among the remaining underdeveloped nations.

The two key questions following it are whether underdeveloped nations can break out of the artificial division of labour in which they are caught, and whether the advanced nations can unite to apply Keynesian measures on a world scale. The problem for the underdeveloped nations is that underdevelopment is not non-development but a distortion of development.

With the outstanding exceptions of Japan and China, economic development has been limited to the lands of Europe and of European settlement.

The revolts in the Third World undoubtedly encompass the objectives of economic development. The advanced industrial countries have tended, however, to employ military means to put down such revolts, wherever they seemed to endanger their interests. Such military intervention is widely regarded as the most obvious example of imperialism today.

What is left of Marxism in a possible theory of imperialism is Marx’s central insistence on the conflict between the growth of technology under capitalism and the economic relations-that is of the production for capitalist profit of the separate capitals-appropriate to a lower level of technology.

Modern technology pushes firms far beyond the frontiers of nations and even of national plans. The search for individual profit in a company, however big, creates anarchy in the world market when the state of technology demands planning. To replace the anarchy of the market by planning on a world scale requires a new concept of democratic social ownership of the means of production in place of the competition of the private capitals. In conclusion, only when the whole of society is involved in this control, will national antagonisms start to wither and imperialism come to an end.


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