What Is Marxism?. Emile Burns 1939

CHAPTER IV.
THE IMPERIALIST STAGE OF CAPITALISM

In popular usage, imperialism is a policy of expansion, of the conquest of less developed countries to form an Empire. In so far as the policy is seen to be more than an abstract desire to see the country’s flag floating over as much territory as possible, it is recognised that there is some economic reason for the policy of expansion. It is sometimes said, for example, that the reason is a search for markets, or for raw materials and food, or for land where an overcrowded home population could find an outlet.

But none of these reasons is convincing, unless taken together with a much deeper analysis. Foreign countries can be perfectly good markets; the greater part of Britain’s trade is still conducted with foreign countries, in spite of the vastness of the Empire. Raw materials and food supplies can always be obtained from foreign countries or their possessions; in fact, there is almost constantly an unsaleable surplus desperately seeking a buyer. And as for land for settlement, large areas in the colonies are unsuitable for any European settlers; and where the land is suitable, settlers can hardly make a living better than in some foreign country. Thus the fascist arguments for expansion, which are sometimes repeated unthinkingly by pacifists and others, have no real foundation.

The first Marxist analysis of modern imperialism was made by Lenin. He pointed out that one of its special features was the export of capital, as distinct from the export of ordinary commodities; and he showed that this was the result of certain changes that had taken place within capitalism itself. He therefore described imperialism as a special stage of capitalism – the stage in which monopolies on a large scale had developed in the chief capitalist countries.

In the early days of industrial capitalism the factories, mines and other enterprises were very small. As a rule they were owned by a family group or a small group of partners, who were able to provide the relatively small amount of capital that was required to start up a factory or a mine. Each new technical development, however, made more capital necessary; while, on the other hand, the market for industrial products was constantly expanding – at the expense of handicraft production, first in Britain and then in other countries. The size of industrial enterprises therefore grew rapidly. With the invention of railways and steamships the iron, and later the steel, industry developed, involving enterprises of much greater size. Whatever the industry, the larger enterprise was more economical to run, and tended to make more profits and expand more rapidly. Many of the smaller enterprises could not compete, and closed down or were absorbed by their more powerful rivals.

Thus a double process was constantly at work: production tended to be more and more concentrated in larger enterprises and the proportion of production controlled by a smaller number of very rich people was constantly increasing.

Marx was well aware of the process that was taking place even in his day, and called attention to the increasing technical concentration, i.e. the concentration of production in large units, secondly, to the concentration of capital in the ownership or control of a smaller and smaller group of individuals. He saw that the inevitable result would be the replacement of free competition by monopoly, and that this would bring out all the difficulties inherent in capitalism in a more intense form.

By the beginning of this century economic writers (especially J. A. Hobson in Britain) were noting the great degree of monopoly that had already been reached in many industries. During the war Lenin (in Imperialism: the Highest Stage of Capitalism) brought together the various facts already known about the growth of monopolies, and turned his attention to the political and social as well as the purely economic features of monopoly. On the basis of the developments since Marx’s death, he was able to develop and extend the conclusions reached by Marx. Lenin showed that in the imperialist stage of capitalism, which he regarded as having developed by about 1900, there were five economic features to be noted:

(1) The concentration of production and of capital had developed to such an extent that it had created monopolies which played an important part in economic life.

This had taken place in every advanced capitalist country, but particularly in Germany and the United States. The process has, of course, continued at an increasing rate; in Britain monopolies have very greatly extended since the War. Such concerns as the London Transport Board, Imperial Chemical Industries and Unilever, each with capital nearly or over 100,000,000, are outstanding examples. (Marxists do not regard the London Transport Board or any similar so-called public bodies as in any sense socialist, since they are owned by private capitalists. They are simply monopolies, backed by Parliament). In every industry a very large proportion of the total trade is done by a few big concerns, which are usually linked together by agreements for price-fixing, quotas and so on, thus in effect exerting a joint monopoly.

(2) Bank capital had merged with industrial capital, creating a “finance-capital” oligarchy which virtually ruled each country.

This point requires some explanation. In the early days the industrial capitalists were distinct from the bankers, who had little or no direct interests in industrial concerns, although, of course, they lent money to them and took a share of the profits in the form of interest. But with the growth of industry and the wide establishment of the “share company,” the men who owned the banks also began to take shares in industrial companies, while the richer industrialists took shares in the banks. Thus the very richest capitalists, whether they started as bankers or industrialists, became banker-industrialists. This combination of capitalist functions in one and the same group enormously increased their power. (In Britain particularly, the big landowners also merged with this group). The bank, working with an industrial concern with which it was linked in this way, could help that concern by lending it money, by making loans to other companies on condition that orders were placed with the concern in which the bank was interested, and so on. Thus the finance-capital group was able rapidly to increase its wealth and its monopoly control of one section of industry after another; and, needless to say, its voice received greater attention from the State.

The best illustration of the merging of the banks with industry is the increasing number of directorships in other concerns held by the directors of banks. Of course this does not mean that the banks own the other concerns; the point is that the powerful figures in the banking world are also the powerful figures in industry and trade – they form the same group of very rich men whose capital runs through the whole of British capitalism. In 1870 the directors of the banks which later became the “Big Five” and the Bank of England held 157 other directorships; in 1913 they held 329: in 1939 they held 1,150. The full force of these figures is all the greater when it is realised that the 1939 figure includes such concerns as London Transport and I.C.I., which themselves have swallowed large numbers of smaller enterprises.

(3) The export of capital, as distinguished from the export of commodities, grew in importance.

In the earlier period of capitalism, Britain exported textile and other manufactures to other countries, and with the proceeds bought local products, thus in effect exchanging her manufactures for the raw materials and food required for British industry. But in the second half of last century, and particularly at its end, finance capital grew more and more concerned m exporting capital, with a view not to a trade exchange but to drawing interest on this capital from year to year. Such exports of capital – lending to foreign states or companies, or financing railways and harbour works, or mines in British possessions – were usually made on the condition that orders for materials, etc., were placed with the British industrial concerns with which the banks were connected. Thus the two wings of finance capital worked together, each getting very substantial profits and shutting out rivals from the transaction.

(4) International monopoly combines of capitalists were formed and divided up the world between them.

This took place in steel, oil and many other industries; it was agreed between the monopoly groups in different countries what share each should have in total foreign trade; often particular markets were allocated to each and fixed prices were agreed. The limits of such agreements are explained later.

(5) The territorial division of the world by the greatest Powers was virtually completed. (The percentage of Africa belonging to European Powers was 11 in 1876, and 90 in 1900).

The importance of this was that the easy annexation of more or less defenceless countries could no longer continue. The finance-capital groups in the wealthiest States could no longer expand the territories they controlled except at each other’s expense – that is to say, only by large-scale wars to re-divide the world in favour of the victorious state.

One of the special points made by Lenin in this connection is of particular interest today. The drive of each imperialist country for expansion had generally been treated as only aimed at colonial countries. Lenin pointed out that this was by no means essential; the drive was general, and in suitable circumstances would be directed against other states in Europe. The present drive of fascism from both Germany and Italy is a clear example of this.

On the basis of this whole analysis, the correctness of which has been confirmed by the experience of the last twenty-five years, Lenin drew the conclusion that the imperialist stage of capitalism inevitably brought with it greater economic crises, wars on a world scale and, on the other hand, working-class revolutions and the revolt of oppressed peoples in the colonies and. semi-colonial areas against exploitation by imperialists.

The concentration of capital in the hands of small groups also meant that these groups got more and more power over the State machine, so that the policy of the various countries became more closely associated with the interests of these narrow groups. It is this factor which makes it possible for the finance capital group in each country to fight their foreign rivals by tariffs, quotas and other State measures, and in the last resort by war.

Why is this conflict between rival groups inevitable? Why can they not agree to parcel out the world between themselves?

It was noted above that the monopoly groups in different countries make agreements to divide the markets of the world between them. In the abstract, this might seem to lead to the complete elimination of competition, and to a kind of international merging of interests of a permanent character. But Lenin brought forward facts to show that such international agreements were never lasting. An agreement made in 1905 would be on the basis of allocating the markets in relation to the producing power at that time of the different groups, say British, French, German and American. Unequal development, however, is a law of the growth of capital. Within a few years of such an agreement being made, the productive power of the German group, or of the American or another group, would have increased, and this group would no longer be content with its former allocation. It would denounce the agreement, and if the other groups did not immediately submit, a new and more bitter struggle for markets would begin. In fact, this is the fate of all such agreements; and as the law of unequal development applies not only to particular industrial groups, but to the capital of different countries as a whole, economic agreements are only, so to speak, armistices in a continuous trade war between the finance-capital groups of different countries.

The economic war in itself can bring no solution. Therefore the finance-capital groups, through the State machinery of their respective countries, set up tariff barriers against their rivals, fix quotas on imports, try to arrange preferential trading agreements with other countries, strive to extend the territory within which they exercise their monopoly – and arm for the war in which victory will bring them at least a temporary superiority over their rivals.

Large-scale war, war between great Powers, has been the outcome of the concentration of wealth in the hands of finance-capital groups in each country. What is apparently a purely economic process – the concentration of production and of capital – leads straight to the terrible social calamity of war. But this is not the only social calamity which the laws of capitalist development produce. The enormous growth of the productive powers, coupled with the competition between the rival monopoly groups which quickens the pace of “rationalisation,” leads to a general crisis of capitalism. Except perhaps in a war, the productive powers are never fully in use. Even at the height of “boom” periods, masses of machinery and vast areas of land are unused, and millions of workers are unemployed. The accumulation of capital in the hands of a relatively small group has led to a state of things in which production is permanently set back; privately owned capital, which at one stage helped mankind to develop its productive powers, now acts as a barrier to further development.

And further social consequences follow. In the competitive struggle between the rival imperialist groups, the workers find that their conditions grow worse. Technical rationalisation the use of labour-saving machinery – is accompanied by intense speeding up. The need for armaments and other preparations for war leads to the reduction, or at least holding back of development, in the social services. Unemployment and underemployment are widespread. The inevitable economic crises that follow each relative boom (relative, because production is only higher than the slump) are made the occasion for reducing wages. Hence the class struggle grows more acute: working-class revolution becomes a reality.

But there is another feature of the imperialist stage of capitalism which Lenin brought out in his analysis. The monopolist groups in imperialist countries are able to draw profits above the average from the exploitation of backward peoples. This is partly because of the low standard of living of these peoples, whose methods of production are primitive; partly because of the terrible conditions forced on them by completely callous rulers and capitalists; and partly because of the fact that the products of machine industry can be exchanged with handicraft products at a very specially high rate of exchange. This does not refer to money, but to the actual goods. It will be remembered that the exchange value of any product is determined by the average socially necessary labour involved in the production. The socially necessary labour time, say in Britain, to produce one yard of cloth with machinery might be only one-tenth of one-twentieth of the time taken to produce one yard of cloth on a hand loom. But when the machine-made cloth enters India, it exchanges against the value of one yard of Indian cloth; in other words, it exchanges in India at very much above its value in Britain. By the time raw materials or other Indian products equal to this higher value are brought back to Britain and sold, there is a much higher profit than if the yard of cloth had been sold in Britain. Even where the type of machinery is the same, different levels of skill produce their effect, and result in an extra profit. This extra profit, of course, applies to all transactions of this kind, not only to cloth, with the result that enormous fortunes are made by the finance-capital groups. Such immense fortunes as the Ellerman 40,000,000 and the Yule 20,000,000 come largely from this extra profit.

This extra profit arising from the exploitation of the colonial peoples has a special importance in relation to the labour movement. Marx had already pointed out that the British capitalist class, having been first in the field in selling machine-made products throughout the world, had been able to respond to the pressure of the British working class for better conditions, so far as the upper sections of skilled workers were concerned. Thus some sections of skilled engineers and cotton workers of Britain had secured far higher standards of living than workers in other countries, and along with this they tended to identify their interests with the capitalist exploitation of the colonies. Lenin showed that this occurred in each advanced industrial country when it reached !lie and that sections of workers in a relatively privileged position, especially the leaders of these sections, tended to become “opportunists,” that is, to come to terms with the capitalists on behalf of their own sections, without considering the conditions of the great mass of the workers in the country. This tendency became stronger as the imperialist stage developed, with the result that the leading sections of the labour and socialist movement became closely identified with the imperialist policy of the finance-capital group in their own country. During the War this was made clear by the association of the official labour movement everywhere (except in Russia, where the Bolsheviks remained Marxists) with the imperialist war.

This “opportunist” outlook, the identification of their own interests with those of the ruling class and consequently their rejection of the class struggle, is the main basis for the abandonment by the socialist movement in many countries of the standpoint of Marxism, and for the hostility shown by the official movement to the Communist Party, which adheres to the outlook of Marxism.

In the imperialist stage the colonial struggle for liberation also becomes more determined and widespread. The conquest and capitalist penetration of a colonial country break up the old form of production, and destroy the basis on which large numbers of the people lived. Competition from Lancashire mills destroyed the livelihood of the Indian hand-loom workers, driving them back to agriculture and increasing the pressure on the land. In the imperialist stage the pressure on the whole people is increased by taxation to meet the interest on loans and to maintain the apparatus of imperial rule, both civil and military. As a result of this double pressure on the land and the forcing down of prices of colonial products in the period of the general crisis of capitalism, poverty and literal starvation provide the basis for constant peasant struggles. In the towns industrial production is carried on under appalling conditions; working-class organisation is hampered and where possible suppressed. The middle classes, especially the intelligentsia, feel the restrictive bonds of imperial rule. Even the rising Indian capitalists see their development restricted. Thus a wide movement for independence grows. The same process goes on, though in different conditions, in every colonial country. The recent widespread strikes in the West Indies are evidence of this.

Marxists see these struggles as the inevitable result of capitalist exploitation, and that they will only end with the overthrow of the imperialist groups. They therefore make common cause with the colonial peoples against their common enemy, the finance-capital group in the imperialist country.

Thus the imperialist stage of capitalism, the stage in which capitalism is most concentrated and most organised, is also the stage when all the conflicts inherent in capitalist society come to the surface. It is the stage when economic crises and wars are also accompanied by violent struggles against the ruling class: struggles which culminate in the overthrow of the ruling class and the end of capitalism.