What Is Imperialism?
The word “imperialism” is used colloquially to carry a wide variety of meanings: from territorial expansion of historic empires, to the use of military force by modern governments in various scenarios. If we are to truly understand our current world — and indeed if we are to change it — we must wield a precise definition of “imperialism.”
In his 1916 work “Imperialism: The Highest Stage of Capitalism,” Vladmir Lenin lays out the five essential characteristics that define imperialism:
(1) the concentration of production and capital has developed to such a high stage [i.e., the stage of imperialism] that it has created monopolies which play a decisive role in economic life;
(2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance 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 associations which share the world among themselves and
(5) the territorial division of the whole world among the biggest capitalist powers is completed.
We live in a world dominated by capitalism. To change our conditions, we need to fully understand them.
Why Does Capitalism Develop into Imperialism?
In the capitalist mode of production, companies must constantly increase profits to avoid being outcompeted and undercut by other companies with the same motivations. To increase profits, however, production must also increase; this leads to concentration and consolidation of the process of production itself.
Inevitably, this leads to smaller companies being squeezed out. The very thing every company hopes to avoid for itself it must do to others in order to survive. This cycle contributes to economic booms and busts; as constantly-expanding companies absorb/outcompete others and break new ground for themselves, smaller ones are made obsolete and workers lose jobs.
This cycle of growth also causes the number of companies in a given industry to shrink, as only the few largest can afford to keep up. Eventually, industries become heavily monopolized, which leads to a sharp reduction in competition. To continue to grow, industries need ever-increasing sums of money to reinvest in production and must seek out those that can procure these sums: banks.
The Old Role of Banks
Modern capitalist banking began in earnest with the emergence of bank notes in the late 1600s. These were essentially basic loans given to companies, typically stipulating an interest rate and date of repayment. Bank lending is what allows companies to grow. Loans allow companies to buy more production capacity than they could without them, which allows companies to expand their operations.
This increase in production allows companies to make profit in excess of the original loan-plus-interest amount. This cycle repeats, enriching both the industrial and finance capitalists. At this earlier stage in capitalism’s development, industrial capitalists – that is, those involved directly in the production of goods and materials – are the ones steering the economy. However, as capitalist industry expands, so too does bank lending; and over time, the steering of the economy changes hands from the industrial capitalists to the bank capitalists.
The New Role of Banks
Eventually, as both industry and the sums of money involved grow vast, banks began to leverage their access to these sums in order to impose more burdensome borrowing terms on their loans to industrialists. These terms could (and often do) include terms for partial ownership over the companies the banks are lending to. The constant flow of capital through banks also gives them cash needed to buy stocks, enabling them to purchase shares in firms, make profit off their investment, and accelerate the consolidation of capital within the financial sector.
This ownership of multiple companies and investment in other companies leads to a surge in the wealth controlled by banks and a growing control over the direction of industry. The role of banks transforms from facilitating production to managing industry. Thus, capital is concentrated even further from industrial monopolies to financial monopolies.
As the finance capitalists can now decide which firms receive loans and investment, industrial capitalists cease to be in control of the economy. Those companies which are deemed not to benefit the new financial class are doomed to fail when pitted against this immense monopolistic power. But, to reiterate, companies must constantly increase profits, and monopolization within a country leads to an inevitable issue: the constraint of the ability to grow.
Sending Capital Overseas
Monopolies increase their profits domestically (i.e., in their country of origin) by decreasing wages and increasing production. However, decreased wages lead to decreased consumption, constraining the market for the increased commodity production, leading to a reduction in profit. One would think that the solution is to simply increase consumption as a result – but monopolies cannot increase consumption domestically without raising wages, which would also decrease profits.
Domestic profits build up as production increases. However, the limitations of the domestic market place a limit on where these profits (capital) can be reinvested. The solution is to export capital (loans and factories) to other countries where the cost of raw materials and labor is much lower. The exporters of capital become the “core” of this new finance capital empire, and the sources of raw material and cheap labor become the exploited “periphery.”
Low-price commodities come back to the imperial core, allowing for an increase in consumption despite the domestic lowering of wages. In foreign countries, production increases, profits increase, and consumption increases. This is how capitalism spurs development abroad. However, increasing living standards in the periphery leads to the same problem faced domestically; wages rise, profits fall.
Capitalists then have to constantly find new markets, but because the world is finite, this leads to conflict among the capitalists for control of the world. To secure access to new markets, resources, and labor, capitalists are incentivized to use force.
The Role Of War
To understand war’s relation to imperialism, let us use the example of the 2001 war in Afghanistan. The US invasion and war in Afghanistan was a necessary means of preserving a peaceful world from terrorism, and by others as another senseless and unfathomable act of greed and cruelty. But like all capitalist wars, the Afghanistan war was the result of specific economic factors that are completely explainable within the context of capitalism.
The relentless bombing and destruction of Afghanistan’s infrastructure served to reduce both material and labor costs. Additionally, Afghanistan is a prime location for growing poppies, which are the source of opium. Under the US occupation, opium production skyrocketed.
While the US opposed the opium trade in rhetoric, in actuality local opium producers were encouraged by the US to serve as potential allies against the Taliban. The opium trade was lucrative for the US; Pfizer and other pharmaceutical companies capitalized on the occupation, exporting capital to serve opium production while importing opioids to sell domestically, a major cause of the early 21st-century opiate crisis in the US.
From Understanding the World to Changing It
As we’ve established, imperialism is not just a vague concept, but a specific phase in the development of capitalism, in which industrial capital becomes subordinate to bank capital, new markets are sought to sustain growth and secure cheap labor and materials, and the world is divvied up between competing capitalists. But on its own, this understanding is not enough. We need to know what to do about it.
If imperialism is a phase in the development of capitalism, an outgrowth of a specific mode of production, then the only solution is for workers to organize for socialism. Revolutionary Democratic Control By The Working Class, in which production is used for the collective benefit of society rather than profit, is necessary to stop the conflict and exploitation that capitalism, by its very nature, cannot help but cause. After all, if capitalism is dependent on the labor of the working class, then the working class has the power of life and death over the capitalist mode of production. And to exercise this power, workers must organize and mobilize.