Five key features of imperialism

August 16, 2023 Gary Wilson

War and Lenin in the 21st century, part 2

 

Vladimir Lenin, the revolutionary leader of the Soviet Union and a key contributor to Marxist theory, outlined his theory of imperialism in “Imperialism, the Highest Stage of Capitalism,” published in 1916. In this work, he identified five key features of imperialism in the early 20th century:

  1. The concentration of capital and production: Capitalism had reached a stage where large corporations and financial institutions were becoming dominant, leading to the concentration of production and capital in a few powerful monopolies. These monopolies played a decisive role in economic life.
  2. Finance capital: The merging of industrial capital with banking capital and the creation on this basis of a “finance capital,” a financial oligarchy. This combination allowed financial institutions to exert significant control over the economy as well as the government.
  3. Export of capital: Capitalists had been exporting goods. In the age of imperialism, there is added to this the massive export of capital itself.
  4. Monopoly and cartels: The emergence of powerful international capitalist monopolies, cartels, syndicates, and trusts that divided the world among themselves.
  5. Division of the world among the biggest capitalist powers: Lenin noted that the world had been divided into distinct spheres of influence and control among the major imperialist powers. These powers competed for dominance over colonies and territories, leading to conflicts and tensions that ultimately contributed to wars like World War I.

Do Lenin’s defining features of imperialism hold up today?

1. Concentration of capital and production

Feature number 1 is accepted as a fact of life by almost everyone. The concentration of capital and production has been a central feature of capitalism since its inception. 

This tendency has only accelerated in recent decades. For example, the top 1% in the United States now own more wealth than the bottom 90% combined. According to a 2020 report by Oxfam, the world’s 2,153 billionaires now own more wealth than the bottom 4.6 billion people combined. The level of inequality is staggering.

A handful of monopolies dominate the entire economy. The top 10 of the Fortune 500 — Walmart, Amazon, Exxon Mobil, Apple, UnitedHealth, CVS, Berkshire Hathaway, Alphabet, McKesson, Chevron — controlled an estimated 20% of the U.S. economy in 2023. This is up from 18% in 2022 and 16% in 2021. The increasing concentration of economic power in the hands of a few large companies has been going on for decades

These monopolies have become the most powerful economic and political institutions. They control the main sources of raw materials, the main means of production, and the main means of communication. They dictate to the whole of society what to produce, how to produce it, and where to sell it.

Production is becoming increasingly planned and coordinated. This is happening even though capitalists often sing the praises of “competition.”

For example, supply chain management is a system for planning, coordinating, and controlling the flow of materials, information, and finances through a network of businesses. Joint ventures are agreements between two or more businesses to share resources and knowledge.

In reality, capitalists are relying on economic planning and coordination; production is socialized.

2. Finance capital

Finance capital is “capital controlled by banks and employed by industrialists,” which develops into the dominance of finance capital and the financial oligarchy that owns but does not manage finance capital or the real economy.

Finance capital is the ownership of great concentrations of stocks, bonds, and large bank deposits.

The countries that are richest in finance capital — not necessarily richest in industrial capital — are the imperialist countries that economically exploit all other capitalist countries.

One of the changes in monopoly capitalism since Lenin’s day is that individuals still owned and managed the great mass of corporate shares back then. Today, in contrast, most stocks, bonds, and other securities are managed by institutional investors such as bank-managed trust funds, pension funds, mutual funds, hedge funds, insurance companies, and money market funds. These institutions, in turn, are increasingly owned or controlled by the few universal banks. In this way, “moneyed capital” is transformed into finance capital controlled by a few gigantic banking institutions.

A country can be poor in finance capital even if it is relatively rich in industrial capital. For example, many factories, mines, and large-scale capitalist farms might be located in such a country, making it rich in industrial capital. 

While a century ago, the U.S. was very rich in industrial capital, today, globalization has considerably reduced the relative wealth of the U.S. in industrial capital. According to a 2017 report by the Economic Policy Institute, between 1997 and 2016, the U.S. lost an estimated 6.9 million manufacturing jobs, of which 2.8 million were due to offshoring, that is, moving manufacturing operations overseas where industry pays the lowest possible wage. Technological advances — automation and AI — have made producing goods with fewer workers possible, which has led to significant job loss in manufacturing industries. This deindustrialization represents a significant loss of production capacity in the U.S.

However, the U.S. remains on top of the world in finance capital.

Since the time when Lenin wrote “Imperialism,” centralization of bank capital has proceeded well beyond what it was then. In 1914, the two largest banking groups on Wall Street were the J.P. Morgan and Company (now JPMorgan Chase), and National City Bank of New York (now Citibank). 

Today there are four megabanks towering over the U.S. economy: JPMorgan Chase (assets $3.67 Trillion), Citigroup (assets $2.3 Trillion), Bank of America (assets $3.1 Trillion), and Wells Fargo (assets $1.875 Trillion.

In addition, there is what is called the “shadow banking system,” which includes BlackRock, the largest asset manager in the world, as well as Goldman Sachs and Morgan Stanley. Shadow banks are not regulated and include hedge funds, private equity funds, mortgage lenders, and some large investment banks.

3. Export of capital

During the first phase of imperialism — the period analyzed by Lenin — the export of British capital was mostly to the settler states, mainly the United States, Canada, Australia, and New Zealand. A smaller portion of British export capital was invested in other European countries, while only a small fraction was invested in the colonies of the Global South — India, Africa, and the Caribbean. The same pattern can be observed in the export of capital of France and Germany.

While the bulk of the capital exported by the imperialist powers following World War II was to other imperialist powers, a portion of the capital was invested in the colonized and neo-colonial nations of the Global South. However, there was relatively little industrialization of the Global South countries. 

Kwame Nkrumah wrote in 1965:

“In place of colonialism, as the main instrument of imperialism, we have today neo-colonialism… [which] like colonialism, is an attempt to export the social conflicts of the capitalist countries… The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment, under neo-colonialism, increases, rather than decreases, the gap between the rich and the poor countries of the world. The struggle against neo-colonialism is not aimed at excluding the capital of the developed world from operating in less developed countries. It is also dubious in consideration of the name given being strongly related to the concept of colonialism itself. It is aimed at preventing the financial power of the developed countries being used in such a way as to impoverish the less developed. (Kwame  Nkrumah, “Introduction to Neo-Colonialism, The Last Stage of Imperialism”)

One key factor that influences where capitalists choose to invest their capital is the guarantee of their property rights and a military to enforce that. Capitalists are especially reluctant to invest large amounts of capital in countries that are not under their direct control since the danger is too great that they will lose their capital if these countries are seized by rival capitalist states or, worst of all, in the event of revolution.

An important factor that slowed down the industrial development of the countries of the Global South was that they became dumping grounds for commodities produced in the imperialist states. In “How Europe Underdeveloped Africa,” Walter Rodney explained:

“Europe exported to Africa goods which were already being produced and used in Europe itself — Dutch linen, Spanish iron, English pewter, Portuguese wines, French brandy, Venetian glass beads, German muskets, etc. Europeans were also able to unload on the African continent goods which had become unsaleable in Europe. Thus, items like old sheets, cast-off uniforms, technologically outdated firearms, and lots of odds and ends found guaranteed markets in Africa. …

“From the beginning, Europe assumed the power to make decisions within the international trading system. … European decision-making power was exercised in selecting what Africa should [import and] export — in accordance with European needs.”

Therefore, the industrialization of Africa and all the Global South countries, including China, was primarily confined to the development of railroads, seaports, and the extraction industries. 

However, the super-profits squeezed out of the working class of the colonized countries enabled the capitalists to realize super-profits above and beyond the average rate of profit. In various ways, the capitalists shared some of these super-profits with a portion of the working class in the imperialist countries. The upper layer of the workers who share in the super-profits of imperialism formed the base of the bureaucracies of the labor unions and the social democratic parties in Lenin’s time and since.

Lenin related the issue of the colonies to opportunism in the European workers’ movement:

“As a result of the extensive colonial policy, the European proletarian partly finds himself in a position when it is not his labor, but the labor of the practically enslaved natives in the colonies, that maintains the whole of society. The British bourgeoisie, for example, derives more profit from the many millions of the population of India and other colonies than from the British workers. In certain countries, this provides the material and economic basis for infecting the proletariat with colonial chauvinism. Of course, this may be only a temporary phenomenon, but the evil must nonetheless be clearly realized and its causes understood in order to be able to rally the proletariat of all countries for the struggle against such opportunism.” 

The collapse of the Social Democratic leaders and the vote for war credits by party members in the German Reichstag symbolized the disastrous consequences of the victory of opportunism. 

The dependency of the imperialist countries on the workers of the oppressed countries — those free of colonial rule but still economically exploited and militarily threatened by the imperialist countries — has qualitatively increased. 

The current stage of imperialism, where much of surplus value production has shifted from the imperialist countries to the oppressed nations — not just extracting super-profits in the Global South — is the most significant change in capitalism since the imperialist era began. 

4. Trusts and cartels

The fourth feature, the formation of monopolist capitalist associations which share the world among themselves — is generally accepted as descriptive of today’s conditions when all large corporations operate on a multinational scale.

Lenin notes that capitalist monopolies take two basic forms: trusts and cartels. 

The term “trust” was used in economics to refer to a large business enterprise controlling a significant market share. 

However, the term “trust” fell out of favor as antitrust laws were passed to break up these large monopolies The term “giant corporation” is now more commonly used to refer to these large businesses.

In contrast to a trust, a cartel is not a single legal entity. A cartel is a formal agreement between independent capitalists to fix prices, limit production, or otherwise control the market for a particular good or service. Cartels are illegal in most countries but are still common in some industries.

A form of cartelization historically tolerated in the U.S. is the organization of cartels by organized crime in industries where capital was still relatively decentralized. For example, in New York City, the garment, construction, cement, garbage collection, and longshore industries were dominated by organized crime. Even pizzerias. These cartels were built by making offers to small capitalists that they “could not refuse.” 

Donald Trump comes out of such a hotel and casino cartel in New York.

5. Imperialist division of the world

Feature number 5 of Lenin’s definition of imperialism, the territorial division of the whole world among capitalist powers, was completed around the turn of the 20th century. This is a statement of historical fact that is accepted by almost everyone.

By the end of the 19th century, the European powers had colonized most of the world. The United States and Japan also had significant colonial empires. This division of the world into spheres of influence was a major factor in the outbreak of World War I. The territorial division of the world was not static. Many wars and revolutions in the early 20th century led to changes. However, the basic division of the world into spheres of influence remained in place until after World War II.

The Russian Revolution of 1917 led to the establishment of the Soviet Union, which was the first socialist state in the world. The Soviet Union’s withdrawal from the capitalist world system ended, however, in the 1990s as the result of the Russian bourgeois counterrevolution that restored capitalism (but not the czarist feudal military empire). 

However, the rest of the 20th century had more wars, revolutions, and counterrevolutions than any preceding century in recorded history. World War II signaled a turning point in world imperialist relations. The United States emerged from WWII as the world’s most powerful imperialist country, gaining control of former European empires in Asia and Africa. The U.S. has engaged in a never-ending series of wars to maintain what the Cubans call “The Empire.”

The U.S. is currently engaged in what is called hybrid warfare to maintain its dominance. Hybrid warfare, as explained by Wikipedia, is a blend of conventional military actions with information warfare, cyber attacks, economic sanctions, political subversion, and other non-traditional means. 

Today the U.S. is openly engaged in hybrid warfare against Cuba, Venezuela, Iran, Zimbabwe, and North Korea, as well as Russia and China. There is more than that. The U.S. Africa Force, for example, has been engaged in military operations across Africa, including in Burkina Faso, Mali, Niger, Cameroon, Somalia, Libya, Djibouti, Uganda, Sudan, Rwanda, and Chad.

The United States operates a global network of military installations and is by far the largest operator of military bases in the world. Wikipedia says that the total number of foreign sites with installations and facilities that are either in active use and service or that may be activated and operated by U.S. military personnel and allies is just over 1,000.

The U.S. has over 240,000 active-duty and reserve troops in at least 172 countries and territories. Of those, some 40,000 are engaged in “classified missions,” that is secret operations, according to the New York Times.

Japan, Hawaii, and South Korea have the biggest concentration of U.S. troops: 53,973 in Japan, 40,485 in Hawaii, and 25,372 in South Korea. The other big concentration is 35,781 in Germany.

War and Lenin in the 21st century

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