Part 2 of China in the age of American decrepitude
Empires and imperialism in a general sense have existed for at least two thousand years, since the time of the Roman Empire and the Qin dynasty in China, founded on slavery and tribute from conquered peoples. The capitalist empire of Britain and the mercantile empires of Portugal, Spain and Holland existed for several hundred years. The term imperialism is mostly used today in this wider, general sense, sometimes as a synonym for colonialism or militarism. But that is not what concerns us here: in discussing imperialism in the modern world, we are referring to a particular stage of development of capitalist economy that emerged only a little over one hundred years ago.
We owe the Marxist understanding of imperialism, as a distinct phase of capitalism, to Lenin, in particular his pamphlet Imperialism, the highest stage of capitalism, written in the first six months of 1916 from his place of exile in Switzerland. A familiarity with the ideas in this pamphlet is key to understanding what is happening with capitalist development in China and the world.
Lenin was in the village of Poronino, near Krakow in the Austrian sector of dismembered Poland, when Europe descended into the hell of the Great War. One of the first bloody battles was at Krasnik, less than 400 km away. Lenin was immediately arrested as a Russian national, but was released after two weeks following the intercession of Austrian Social-Democratic Member of Parliament Victor Adler, who assured the authorities that Lenin was not a supporter of the Russian tsar! He quickly made his way to neutral Switzerland, where revolutionary exiles from all parts of Europe could meet and move about with greater freedom. From Berne, and later from Zurich, he set about re-building the international revolutionary workers movement.
War had been in the air for many years – earlier crises in 1911 in Morocco, and the Balkans in 1912-13, had already brought the big European powers to the brink of war with each other. Social-Democratic congresses had adopted resolutions warning of the war danger since the early years of the twentieth century, most recently in Basle in 1912. The outbreak of war was nonetheless shocking. Still more shocking was the suddenness with which the Second International, the international working class political leadership, shattered into a thousand pieces and capitulated to the warring governments of ‘their own’ states, under the slogan ‘defence of the fatherland.’
Lenin’s first step towards re-building a new International was to draw a clear line of demarcation between those who still fought for working class internationalism on the one hand, and on the other those who directly supported the war-mongers, the open chauvinists, as well as those such as Kautsky who covered for them, under the guise of defending the unity of the International. Out of this came the pamphlet Opportunism and the Collapse of the Second International published in January 1916. The brazen chauvinism displayed by the central leadership of the Second International was an extension of the opportunism they had evinced in the previous twenty years.
“The relatively “peaceful” character of the period between 1871 and 1914 served to foster opportunism first as a mood, then as a trend, until finally it formed a group or stratum among the labour bureaucracy and petty-bourgeois fellow-travellers,” Lenin wrote.
“These elements were able to gain control of the labour movement only by paying lip-service to revolutionary aims and revolutionary tactics. They were able to win the confidence of the masses only by their protestations that all this “peaceful” work served to prepare the proletarian revolution. This contradiction was a boil which just had to burst, and burst it has. Here is the question: is it worth trying, as Kautsky and Co. are doing, to force the pus back into the body for the sake of “unity” (with the pus), or should the pus be removed as quickly and as thoroughly as possible, regardless of the pang of pain caused by the process, to help bring about the complete recovery of the body of the labour movement?
“Those who voted for war credits, entered cabinets and advocated defence of the fatherland in 1914–15 have patently betrayed socialism. Only hypocrites will deny it. This betrayal must be explained.”
Lenin then set out to explain the material roots of the betrayal. He spent the next six months in Zurich libraries preparing the pamphlet Imperialism, the highest stage of capitalism, which was completed in June 1916 and published legally in Russia in early 1917.
Imperialism, the highest stage of capitalism was the fruit of an exhaustive study of world economic data. His preparatory notes fill over 700 pages. If you have access to the English language edition of Lenin’s Collected Works, these notebooks are collected in Volume 39, and are well worth looking at. Besides Lenin’s insights, I know of nowhere else that you would find such a concise summary of world economic facts of the period. They include meticulously compiled tables of imports and exports, comparative output in different years of steel, coal, textiles, grains, length of railways, naval tonnage, and per capita consumption of grains, meat, sugar, and other necessities – in all the main capitalist powers, and their colonies, and many other countries besides. There are excerpts from and notes Lenin made on 148 books, in German, French, English and Russian, and 232 articles, drawing on and critiquing the works of bourgeois and Marxist economic writers.
For all this, Imperialism is not an economic treatise but a political pamphlet – or more precisely, it is a pamphlet demonstrating the connection between economics and politics. It is a polemic against Karl Kautsky, the chief theoretician of the Second International, whose arguments in relation to imperialism disarmed the revolutionary workers movement. “The essence of the matter is that Kautsky detaches the politics of imperialism from its economics,” Lenin declared. In order to find the explanation for the great betrayal of August 1914, Lenin had to examine economic processes and changes that had been operating for some time beneath the surface. A third, shorter pamphlet, Imperialism and the Split in Socialism, written in October 1916, made the connection explicit: “Monopoly yields superprofits,” Lenin explains, “i.e. a surplus of profits over and above the capitalist profits that are normal and customary all over the world. The capitalists can devote a part (and not a small one, at that!) of these superprofits to bribe their own workers…”
In Imperialism, the highest stage of capitalism Lenin establishes the following features of imperialism which distinguish it from earlier phases of capitalist development:
i) Monopoly in place of free competition. The rapid growth of capitalist industry in the second half of the nineteenth century had led to concentration of production – ordinary capitalist competition had caused the many small factories and businesses to give way to fewer, larger factories, with advantages of scale, and huge enterprises, the biggest combining several consecutive stages of production of a commodity, or related branches of industry in a single enterprise. From the beginning of the 20th century, competition between enterprises gives way to monopoly, and the formation of industry trusts and cartels – that is, associations of capitalists in a particular branch of industry which aim to fix prices, regulate levels of production throughout the whole industry, and similar anti-competitive practices. With monopoly control, the cartels can force compliance with their mandates by denying access to raw materials to any capitalist who defies them.
Lenin writes: “Competition becomes transformed into monopoly. The result is immense progress in the socialisation of production. … Concentration has reached the point at which it is possible to make an approximate estimate of all sources of raw materials (for example, the iron ore deposits) of a country and even, as we shall see, of several countries, or of the whole world. Not only are such estimates made, but these sources are captured by gigantic monopolist associations. An approximate estimate of the capacity of markets is also made, and the associations “divide” them up amongst themselves by agreement… Monopoly! This is the last word in the “latest phase of capitalist development.”
ii) As part of this development there arises a vastly extended role of one particular kind of monopoly, the banks.
Lenin writes: “The principal and primary function of banks is to serve as middlemen in the making of payments. In so doing they transform inactive money capital into active, that is, into capital yielding a profit; they collect all kinds of money revenues and place them at the disposal of the capitalist class. As banking develops and becomes concentrated in a small number of establishments, the banks grow from modest middlemen into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries. This transformation of numerous modest middlemen into a handful of monopolists is one of the fundamental processes in the growth of capitalism into capitalist imperialism…
“…the concentration of capital and the growth of bank turnover are radically changing the significance of the banks. Scattered capitalists are transformed into a single collective capitalist. When carrying the current accounts of a few capitalists, a bank, as it were, transacts a purely technical and exclusively auxiliary operation. When, however, this operation grows to enormous dimensions we find that a handful of monopolists subordinate to their will all the operations, both commercial and industrial, of the whole of capitalist society…
“…a personal link-up, so to speak, is established between the banks and the biggest industrial and commercial enterprises, the merging of one with another through the acquisition of shares, through the appointment of bank directors to the Supervisory Boards (or Boards of Directors) of industrial and commercial enterprises, and vice versa… The “personal link-up” between the banks and industry is supplemented by the “personal link-up” between both of them and the government.
iii) This expanded role of banks from accountants and middlemen to monopolist directors, along with the many forms of ‘personal link-ups’ leads to bank capital merging with industrial capital – finance capital. Lenin quotes the economist Hilferding: ““A steadily increasing proportion of capital in industry,” writes Hilferding, “ceases to belong to the industrialists who employ it. They obtain the use of it only through the medium of the banks which, in relation to them, represent the owners of the capital. On the other hand, the bank is forced to sink an increasing share of its funds in industry. Thus, to an ever greater degree the banker is being transformed into an industrial capitalist. This bank capital, i.e., capital in money form, which is thus actually transformed into industrial capital, I call ‘finance capital’… Finance capital is capital controlled by banks and employed by industrialists.”” Lenin adds, “This definition is incomplete insofar as it is silent on one extremely important fact—on the increase of concentration of production and of capital to such an extent that concentration is leading, and has led, to monopoly… The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry—such is the history of the rise of finance capital and such is the content of that concept.
“…Finance capital, concentrated in a few hands and exercising a virtual monopoly, exacts enormous and ever-increasing profits from the floating of companies, issue of stock, state loans, etc., strengthens the domination of the financial oligarchy and levies tribute upon the whole of society for the benefit of monopolists.
“…It is characteristic of capitalism in general that the ownership of capital is separated from the application of capital to production, that money capital is separated from industrial or productive capital, and that the rentier who lives entirely on income obtained from money capital, is separated from the entrepreneur and from all who are directly concerned in the management of capital. Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier [people whose unearned income derives purely from ownership of property, such as rents, interest payments, and suchlike – JR] and of the financial oligarchy; it means that a small number of financially “powerful” states stand out among all the rest.”
Associated with this there is a growth of many forms of usury. Lenin writes, “All the conditions of economic life are being profoundly modified by this transformation of capitalism. With a stationary population, and stagnant industry, commerce and shipping, the “country” can grow rich by usury… The extraordinarily high rate of profit obtained from the issue of bonds, which is one of the principal functions of finance capital, plays a very important part in the development and consolidation of the financial oligarchy… Speculation in land situated in the suburbs of rapidly growing big towns is a particularly profitable operation for finance capital.”
iv) These processes lead rapidly to the accumulation of vast capital in the hands of the monopolists, which can no longer be profitably invested in the national domain – and which therefore must be invested abroad. Lenin writes: “Typical of the old capitalism, when free competition held undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the export of capital. … On the threshold of the twentieth century we see the formation of a new type of monopoly: firstly, monopolist associations of capitalists in all capitalistically developed countries; secondly, the monopolist position of a few very rich countries, in which the accumulation of capital has reached gigantic proportions. An enormous “surplus of capital” has arisen in the advanced countries. …The need to export capital arises from the fact that in a few countries capitalism has become “overripe” and (owing to the backward state of agriculture and the poverty of the masses) capital cannot find a field for “profitable” investment.
v) The development of monopoly intensifies the competition for sources of raw materials; this in turn drives the partitioning of the globe among the advanced capitalist countries. Lenin continues: “… the characteristic feature of the period under review is the final partitioning of the globe—final, not in the sense that repartition is impossible; on the contrary, repartitions are possible and inevitable—but in the sense that the colonial policy of the capitalist countries has completed the seizure of the unoccupied territories on our planet…
“…Colonial policy and imperialism existed before the latest stage of capitalism, and even before capitalism. Rome, founded on slavery, pursued a colonial policy and practised imperialism. But “general” disquisitions on imperialism, which ignore, or put into the background, the fundamental difference between socio-economic formations, inevitably turn into the most vapid banality or bragging… Even the capitalist colonial policy of previous stages of capitalism is essentially different from the colonial policy of finance capital.
The principal feature of the latest stage of capitalism is the domination of monopolist associations of big employers. These monopolies are most firmly established when all the sources of raw materials are captured by one group, and we have seen with what zeal the international capitalist associations exert every effort to deprive their rivals of all opportunity of competing, to buy up, for example, ironfields, oilfields, etc. Colonial possession alone gives the monopolies complete guarantee against all contingencies in the struggle against competitors…
vi) The imperialist epoch is the epoch of the parasitism and decay of capitalism. Lenin writes: “……the deepest economic foundation of imperialism is monopoly. This is capitalist monopoly, i.e., monopoly which has grown out of capitalism and which exists in the general environment of capitalism, commodity production and competition, in permanent and insoluble contradiction to this general environment. Nevertheless, like all monopoly, it inevitably engenders a tendency of stagnation and decay. Since monopoly prices are established, even temporarily, the motive cause of technical and, consequently, of all other progress disappears to a certain extent…
… Further, imperialism is an immense accumulation of money capital in a few countries… Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by “clipping coupons”, who take no part in any enterprise whatever, whose profession is idleness. The export of capital, one of the most essential economic bases of imperialism, still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries and colonies…
It is worth noting that there is relatively little discussion in Lenin’s pamphlet on the question at the centre of much contemporary Marxist discussion on imperialism: the myriad ways in which the wealth of the colonial and semicolonial countries is siphoned off to the imperialist centres, keeping the semicolonial countries trapped in a state of permanent underdevelopment. The fact of the exploitation of oppressed nations by the imperialist powers is a central idea of Imperialism, but the mechanisms of that exploitation are not described in detail. The character of this stage of evolution of capitalism as a whole was the focus of Lenin’s attention.
In Imperialism, the chief motor force of the ‘final partitioning of the globe’ is the effort by the big monopolies to corner the sources of raw materials needed for their industries. “The more capitalism is developed, the more strongly the shortage of raw materials is felt, the more intense the competition and the hunt for sources of raw materials throughout the whole world, the more desperate the struggle for the acquisition of colonies.”
In discussing the export of capital Lenin notes that Britain’s capital exports are mainly to its own colonies, and that “In the backward countries profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap.”
He also points to the growth of usury: “Capitalism, which began its development with petty usury capital, is ending its development with gigantic usury capital… With a stationary population, and stagnant industry, commerce and shipping, the “country” can grow rich by usury… [to the point where] the world has become divided into a handful of usurer states and a vast majority of debtor states.”
However, the debtor countries are not exclusively those in the colonial and semicolonial world, but include Russia and, right up to 1914, the United States.
Export of capital, too, is by no means exclusively to the colonies. “French capital exports are invested mainly in Europe, primarily in Russia… German capital invested abroad is divided most evenly between Europe and America.”
Lenin also notes that “…The export of capital influences and greatly accelerates the development of capitalism in those countries to which it is exported. While, therefore, the export of capital may tend to a certain extent to arrest development in the capital-exporting countries, it can only do so by expanding and deepening the further development of capitalism throughout the world.”
This is not quite the picture of a ‘Third World’ locked in permanent underdevelopment that emerged later.
Nor is there anything in Imperialism to indicate that the emergence of further imperialist powers was entirely precluded – on the contrary, Lenin notes that “Capitalism is growing with the greatest rapidity in the colonies and in overseas countries. Among the latter, new imperialist powers are emerging (e.g., Japan).” Further on he adds, “Half a century ago Germany was a miserable, insignificant country, if her capitalist strength is compared with that of the Britain of that time; Japan compared with Russia in the same way. Is it “conceivable” that in ten or twenty years’ time the relative strength of the imperialist powers will have remained unchanged? It is out of the question.”
Nonetheless, there was an extended period in which membership of the exclusive club of imperialist nations was fixed and unchanging, and no new imperialist countries did, or could, emerge. For most of the century since Lenin wrote this pamphlet, the list of imperialist countries remained as it had been in the 1920s – North America, United Kingdom, Japan, Australia and New Zealand, and Germany and the countries of Europe to its north, west and south. It is worth briefly considering the conditions under which that remained the case.
After the 1917 Bolshevik revolution tore the Russian empire out of the imperialist circle, the remaining imperialist powers contended among themselves for dominance, by both peaceful and violent means. This struggle among the big powers culminated in the second world slaughter of 1939-45. That war settled the matter in favour of the United States, at the expense of not just Japan and Germany, but also of Britain and France.
Coinciding with this, an anti-colonial revolt ignited, first among the Asian peoples of the Russian empire as part of the Russian revolution of 1917, and in China. The movement grew throughout Asia, in particular, in the inter-war years, and exploded into revolutionary wars and mass actions across the globe during and following the Second World War, winning political independence for the colonies – albeit that in most cases, these ended up saddled with capitalist ruling classes at the helm.
This was the imperialist world order that emerged out of World War 2 – the world they dubbed ‘the American Century’ and the ‘Pax Americana’ – with newly-independent but economically undeveloped and exploited countries under the now unchallenged world domination of the United States. It was in this period that the imperialist club was able to guard its gates and admit no new members – thanks to the overwhelming economic and military preponderance of the Unites States. But the permanence of this world order was, in Lenin’s words, out of the question. The weakening of US world domination is the condition under which the gates have been forced part-way open. This same condition presages new wars. Lenin writes,
“The question is: what means other than war could there be under capitalism to overcome the disparity between the development of productive forces and the accumulation of capital on the one side, and the division of colonies and spheres of influence for finance capital on the other?”
So these, then, were the distinguishing features of world capitalism as the imperialist phase of capitalism opened a century ago. Many of these features had been foreshadowed in a note by Frederick Engels on the Stock Exchange that he appended to Capital Volume 3 in 1895. Lenin saw in these features that the objective conditions for a transition to a new social form, socialism, had long since ripened. This did not signal, as Kautsky suggested, that “the present imperialist policy be supplanted by a new, ultra-imperialist policy, which will introduce the joint exploitation of the world by internationally united finance capital in place of the mutual rivalries of national finance capitals…”
On the contrary, it meant that the contradictions of capitalism are raised to an even higher tension. “Production becomes social, but appropriation remains private. The social means of production remain the private property of a few. The general framework of formally recognised free competition remains, and the yoke of a few monopolists on the rest of the population becomes a hundred times heavier, more burdensome and intolerable…”
Socialist revolution was thus posed. In fact, less than a year after the pamphlet appeared, the socialist revolution opened in Russia.