Up to this time exploitation colonies were regarded as suppliers of capital, which was extracted from them in the most varied ways. Today, however, the productive power of large-scale industry and the exploitation of the working class has so enormously developed in the capitalist countries that it supplies colossal surpluses – surplus value – a large part of which is again used as new, additional accumulated capital.
The capitalist mode of production has shown itself as the most mighty means of developing the productivity of labour that history has shown up to the present. Competition and profit were its powerful mainsprings. Competition threatens every enterprise working with lower than average productivity with destruction so the striving for profit drives towards constantly increasing productivity, which brings extra profits to every undertaking producing with greater than average productivity. The capitalist mode of production no longer fulfils the function of providing a massive impetus to the development of the productive forces. In the 80s of the last century it had already arrived at a limit beyond which it increasingly acts as a brake on the further development of the productive forces. As yet this is not in the sense of making any further expansion impossible, such expansion still occurs, but rather in the sense that a mode of production has become possible in which the development of productivity proceeds more quickly than under capitalism, which is forced to place ever greater obstacles in the way of the advance of productivity in the interests of its own survival.
True, the spurs of competition and of profit remain in existence, but production continually finds itself limited by the market. If the capitalist mode of production raises the mass production of goods to the utmost, it also limits to a minimum the mass consumption of the workers who produce these goods, and therefore mass produces an ever greater surplus of goods for personal consumption, which have to be sold outside the working class. A market for them is found first of all by the destruction of primitive rural domestic manufacture and of handicrafts, first at home and then in other countries. But the extension of the market in this way proceeds far more slowly than the extension of production. The extension of production therefore continually meets with obstacles. In the 80s of the 19th century it appeared that production could immediately overtake every possible expansion of the market. The capitalist mode of production seemed to have reached the limit of its capacity for expansion, and therefore to have reached its end. It appeared as though a permanent and considerable expansion of the market for consumer goods was possible in only one way which keeps pace with the increase in productivity: by a permanent and considerable expansion of the consumption of the working class. This would have meant that the demand for an increase in working class consumption would no longer be made solely in the interests of the working class itself, but would be a demand which needed to be met for the advance of production. The overcoming of the capitalist class, whose closest interests were opposed to this expansion in proletarian consumption, and the victory of the working class, already appeared to have become an urgent economic necessity, which had to take place before long.
But the capitalist class found a series of expedients to prolong their rule; but they all come down to restricting the productivity of labour on the one hand and increasing the wastage of products on the other. On this basis production can proceed, can even on occasion take on the pace of the highest prosperity, but at the expense of the productivity of labour, which is partly restricted, and which is partly squandered uselessly.
The next remedy used was the limitation of competition, which is the mighty spur to constant improvement in production, and the securing of extra profits not through such improvements but by the creation of monopolies.
On the one hand external competition was limited by protective tariffs. In the place of free trade, which had made a triumphant procession through Europe in the 50s and 60s, came tariffs, and not merely on industrial but on agricultural goods too. The true intentions of the ruling class were thus made clear. Their aim was not to speed up industrial development, but to procure extra profits for the owners of the means of production at the expense of the consumers, that is by the limitation of consumption.
But internal competition became increasingly uncomfortable for the capitalist class. It sought to get quit of it by the introduction of organisations of entrepreneurs into the production process, by cartels and trusts. By these means the powerful drive for the increase in the productivity of labour is counteracted. Competition is limited to a minimum and a new direction is give to the striving for super profit. This is much easier than increasing the productivity of labour. The cartelised entrepreneur can now raise his profit above the average by charging monopoly prices. The determining factor for profit is no longer the perfecting of technique, but the perfecting of the organisation of entrepreneurs; all the penetration of the capitalist genius is now directed towards completing and perfecting this. Monopoly prices can only be raised to a certain level, where they do not restrict consumption too much. If they go higher, the amount of goods produced drops accordingly, that is, the level of demand on the market drops.
The cartel and trust thus do not merely set aside a series of motives for technical improvement, they often get into the position of directly limiting the performance of their undertakings in order to keep their high prices intact.
The further cartels develop and spread, the clearer the proof that the capitalist mode of production has passed beyond the stage when it was the most powerful agent for the development of the productive forces, and that it is ever more hindering this development and creating ever more unbearable conditions, as is shown by that E1 Dorado of the trusts, America. Socialism has already become an economic necessity today, only power determines when it will come. Getting this power for the proletariat through organisation and spreading consciousness is the most important task of social democracy today. Nothing is stranger than those socialists who believe it is necessary to prepare for a further development of the power of capitalism.
It is not only by restricting production that the capitalist class seeks to escape the unpleasant necessity of applying the increased productivity of labour to the multiplication of consumption goods for the working class. The capitalist class also seeks to get rid of the surplus products of their enterprises by wasting them. A very effective way of doing this is by the arms race on land and sea, that combination of militarism and marinism which has swollen to ever more enormous dimensions since the 80s of the last century. Thus inventive genius is increasingly diverted from the sphere of the productive forces to that of the destructive forces. Thanks to this, the mass of destructive forces grows ever greater, but so also does the mass of defensive forces which are set against them, and the time span gets ever shorter within which the individual weapons of destruction and defence have to be overhauled and replaced by more effective ones, which have to be mass produced at the greatest speed; and ever increasing numbers of people are drawn away from production for working class consumption to the production and servicing of these war machines. But if once this gigantic destructive mechanism were put to real use the resulting ruin would be monstrous.
Humanity has never yet seen a more abominable or colossal confinement of the productive forces than this. No other mode of production has endured anything remotely similar. The capitalist mode of production has been successful to such an extent that it needs this madness if it is to be able to continue its exploitation of the working masses. The capitalists prosper by this, and thus demand an arms race at every level, which could never have taken on such a magnitude if they were denied the resources for it.
But truly, even this system of confining the productive forces only offers a brief respite to capitalism, whose subsequent collapse must be even more terrible. For the arms race is as oppressive to the working classes, who have to bear the burden in life and property, as it is profitable to the capitalist class and its hangers on. Working class opposition to the arms race is increasingly powerful, and it brings to socialism perhaps as many supporters as the direct class struggle against capitalism. This opposition must become immediately irresistible if a world war unchains all the fearsome suffering harboured by this system.
But the abolition of militarism, like that of the system of cartels and trusts, is today only possible through socialism. It is now only in the framework of socialism, and not of capitalism, that there is room for the massive productive forces which would be released if all the men and materials drawn in to the production and servicing of destructive forces by militarism and marinism were diverted into the production and servicing of means of consumption.
There have been socialists who defend militarism by saying that it gives work to so many workers who otherwise would remain unemployed, and thus see a use in militarism When bourgeois politicians, who regard socialism as a mere dream which does not arise as a practical question, defend militarism in this way, that is understandable. But a socialist should see in the fact that capitalism is only able to ensure the continuation of production by the most frantic and murderous waste only an argument of the most forceful kind, against capitalism, and not a justification of this waste.
Besides these two methods, capitalism has a third at its disposal to rub the rouge of health and youth into its wasted cheeks; and it is this method which is bound up with our present subject.
In order to escape the necessity of producing increased means of consumption for the workers of its own country, capitalism produces means of destruction, communication and production in rising quantities for export, that is, primarily for the economically backward, agricultural countries, As these countries do not have the necessary cash to buy those goods, they are sold on credit by the capitalists of the exporting country, or the goods in question remain the property of the exporters. In other words, the capitalists do not export their products as commodities for sale to the foreign country, but as capital for the exploitation of the foreign country.
Is one then to believe that this at least advances the productive forces in the agrarian countries? But even that is not the case. In so far as an expansion of the productive forces does occur in this way, it is sooner or later more than balanced by the constriction of the productive forces.
The export of capital to agricultural countries primarily serves the advance of militarism. These countries either have to defend themselves against conquest by one of the great military powers, or, if they are already a colonial territory, be defended. Even in the latter case the colony has to pay the lion’s share of the costs, or the whole costs, as in British India, of militarism.
But, what for a highly industrialised country merely means a slowdown in the advance of its productive forces, here becomes only too easily the source of utter ruin, complete bankruptcy.
But the railways? Even these chiefly serve strategic purposes as a rule in agricultural countries with their sparse traffic. They are built with an eye to making defence easier, not production, and the interest on them then costs more than they pay.
Naturally not all railways in agricultural countries are of this kind. But even where they do serve production, they only apparently raise the productivity of agricultural labour. As long as the railway is beyond his reach, the peasant in backward countries has only little opportunity of selling his products. It is not difficult for him to keep the surplus produce in good years, which serves as a reserve for bad years. The ground is also of little value, he can easily keep a suitable amount fallow and thus avoid quickly exhausting the soil.
Now comes the train and connects him with the world market. His harvest surplus is now diverted there, no reserve remains to him for bad times, The land rises in value and the fallow thus becomes a loss. The productivity of agriculture could nevertheless gain greatly from this if the peasant were simultaneously placed in the position through increased revenue to gather up a reserve fund in money or credit and to acquire improved tools and more cattle and manure and thus balance out the loss of fallow land.
But militarism makes itself oppressively obvious in the agricultural countries. It is fed with foreign money, and even the railways are built with capital from abroad. Indebtedness to the foreign country rises and with this the necessity to raise taxes. The increased revenue of the peasants is already anticipated by the state. Without money, without improved tools the peasant must now continue the old husbandry, but without any natural provision for bad times and without fallow land. The first bad year thus becomes a catastrophe for him. Often he has to sacrifice his cattle, at least some of them; with reduced draught cattle, with less manure, he has to cultivate the soil, which is cultivated ever more badly and thus is steadily exhausted. The result: increase of bad harvests, retrogression and finally desperate decline of agriculture.
That is the picture as shown to us today by Russia. But we can observe the same process in India. There also, continual increase in famine and misery, in spite of the heavy flow of English capital to India with a consequent improvement of the Indian productive forces in places.
In his report to the International Congress, Hyndman, who is closely acquainted with India, says of this:
Impoverishment increases. Mr. Digby, an official of one of the big famine relief agencies with special opportunities of getting information, calculates that the peasants outside the areas of fixed taxation’s only get half as much to eat in a year as their grandfathers and only a third of that obtained by their grandfathers’ grandfathers. In spite of this land tax is collected with great severity and has to be paid to the government in cash, before the harvest is brought in. 
It is for this reason that England draws an ever increasing sum of money from India, which now amounts to a round 700m marks a year. (Compare this with Hyndman’s Die Ursachen der Hungernöte in British-India (“The Origins of the Famines in British India”), Neue Zeit, XVII (2), p.69.)
The same is reported from the Dutch Indies. In his article on the Zusammenbruch des holländischen Kolonialsystems (“Collapse of the Dutch Colonial System”) (Neue Zeit, XXII (1), p.425), Vliegen quotes a speech of Van Kol’s in the Dutch Parliament on Java, with which he is particularly familiar. Vliegen writes on this:
Van Kol gives a survey of Java’s distressed state, which approaches that of India. The chronic famine so long familiar in British India, has now made its entry into Java, the most fertile country in the world: One million people, according to the accounts of the authorities, are hungry. In 1860 every Javanese obtained 12.4 pikols of rice (1 pikol = 61.76 Kilograms.) In 1883 they still got 11.3 pikols, in 1900 only 9 pikols.
These are the results of the growing export of capital to the agricultural countries. Superficial observers may allow themselves to be blinded by the picture of the blessings spread by the railways, canals and other modern acquisitions in countries such as India There are even party comrades who see the famine and disease of India through rose-coloured glasses. The improvement in the means of communication and production would in fact have to significantly raise the productive forces of the economically backward nations if it did not coincide with the continual increase in military burdens and foreign indebtedness. Thanks to these factors this improvement only becomes a means of extracting more products from poorer countries than before, of extracting so much that not only is the whole of the surplus production deriving from the technical improvements soaked up, but the mass of the products remaining in the country for the producers diminishes. Under such conditions technical advance becomes a method of wasting resources and causing impoverishment.
But the capital-exporting capitalists derive rich profit from this, a double profit. They get rid of their products, which no longer can find a market at home, and they get rid of them not as simple commodities, for which they would merely receive their value, but as capitals, as means of increasing and continuing indefinitely the exploitation of the capital-less agrarian country. This continues as long as the exploited country allows it. But the pressure to throw off the burden grows at the same rate as the exploitation.
Rebellion against capitalist exploitation always begins as soon as the exploitation reaches a given level, but at home domestic capital has the reassurance of knowing that the state power is behind it protecting it, and is very often lacking abroad. And there it does not take a fundamental proletarian uprising against collective capitalist exploitation to threaten the security of foreign capital. The state power and the possessing classes of an agricultural country with debts abroad will quite happily use any good opportunity to escape the pressure of many a foreign capital, even if only in order to practise capitalist exploitation on their own account.
The English, for example, have lost countless capitals through the bankruptcy of, say, South American states, railways and mines It was not always a matter of real inability to pay, often it was only unwillingness.
Capitalists escape this danger if the agrarian territory to which they are exporting capital is under the state power of a country with European capitalist culture, that is, if it loses its independence and becomes a colony. But it is not sufficient if just any European power colonises the country, and thus secures the safety of European capital. They want the state power of their own country to do this.
If capital needs the state power to ensure it the undisturbed progress of exploitation, it often wants it to make it possible for exploitation to begin. The furnishing of defensive weapons and armoured vessels, the building of railways and canals, the opening of mines cannot be undertaken at will: they require the approval of the state power. Every state naturally prefers to use its native capitalists. Insofar as these export capital they therefore have the greatest interest in ensuring that the colonial possessions of their own state are as extensive as possible and grow as quickly as possible.
Thus a new era of colonial policy has arisen in the capitalist nations since the 80s. Germany created a colonial empire, France, England and Holland extended theirs; and scarcely had the United States reached the stage of being able to think of exporting capital when they seized several Polynesian islands and the Philippines, Puerto Rico and Cuba.
This colonial policy has nothing in common with the past policy of founding work colonies. Its object is only to establish colonies in the tropics, exploitation colonies. But it also differs from the old policy of exploitation colonies, which regarded colonies as mere places to be plundered, where riches could be amassed and carried back to the mother country to be used as capital. On the contrary, it is a policy which draws capital to the colonies and builds up civilisation in them, thus apparently no longer destroying, but advancing, culture.
But we have already seen that one must not allow oneself to be fooled by appearances, that the growth in the productive forces which eventually arises is more than taken up by the simultaneous growth of military concerns, with consequent squandering of productive forces and growth of foreign indebtedness.
In colonies where primitive production relations still govern, where communist relations predominate on the land, and the people are in possession of their means of production and make what is by their standards a comfortable living, incoming capital first requires the artificial, forcible creation of the situation which will make the population an object of its exploitation. This means that the natives have to be expropriated, forced to work, in order to provide profit for capital. Thus the abominations of the earlier colonial system repeat themselves, the time of the primitive accumulation of capital; the abominations of Cortez and Pizarro, of Clive and Warren Hastings, Such are the infamies of the Congo state, and they are closely followed by many other blossoms of modern colonial policy, whether German, French, English, Dutch or American.
The defenders of a socialist colonial policy no doubt have such phenomena in mind when they still decline to reject colonial policy on principle, when they demand the forcible retention of the colonies whilst rejecting “present methods of colonisation”.
However, things are no better in the old colonies, where developed commodity production has already appeared, as well as an impoverished and oppressed population and, accordingly, where the preconditions of capitalist exploitation do not have to be artificially produced. Here, under a strong state power, economic laws operate with sufficient power of their own to safeguard capitalist exploitation. Here the abominations can be dispensed with. Thus the administration of British India offers perhaps a much friendlier picture than that of our colonies. Here and there can be found a certain benevolence towards the natives. But even if the colonial method differs here, its effect is no less disastrous for the colonial country, And how easily personal goodwill flies to the winds, to be replaced by barbaric cruelty, when the state power, and thus the security of exploitation, is only slightly challenged, is shown by the latest English oppressive measures in Bengal and Egypt.
Even this ‘peaceful’ colonial system sooner or later matures the conditions which force populations only partly capable of resistance into uprisings. Where, however, this rebellion does not succeed, where the capitalist yoke is not to be shaken off, this new colonial system leads to financial bankruptcy. Just as Russia, where foreign capital also plays such an important role, today hovers between revolution and bankruptcy, so too will be the position of British India; whilst Java is threatened by bankruptcy without revolution.
The system of trusts and cartels and that of militarism cannot guarantee the capitalist mode of production against collapse. Neither can the export of capital with its resulting new-type colonial system, However, the new colonial system, like the system of trusts and cartels and that of militarism, has become a mighty means of holding back this collapse for several decades.
Colonial policy has become a necessity for the capitalist class, just as militarism has. But it is bad logic to conclude from this that colonial policy is now a necessity for the proletariat as well. Why should this not apply to militarism as well? It is no more necessary to the proletariat than capitalism is. And capitalism has today become an evil, not merely from the proletarian, but also from the general social, point of view. It has become a fetter on the full development of the productive forces of mankind. Likewise, colonial policy has become a means of prolonging the existence of capitalism, not through the extended development of the productive forces, but through their limitation Colonialism has become an evil which must be fought even where it appears in apparently benevolent forms.
The ethical instinct of the proletariat fills it with abhorrence of all forms of racial or class domination, of all foreign domination, and scientific investigation of the factors important to the development of the productive forces shows that this instinct is true, and that the proletarian class interest makes it the class whose permanent and particular interest today coincides with the general social interest. Furthermore, we have every reason to reject colonialism, which can be no more than foreign domination, racial domination, from the point of view of developing the productive forces of mankind.
1. The Indian peasant is either taxed individually, the Rayotwar system, which applies to 278 million acres, or he is regarded as the tenant of a “Zemindar”, upon whom a fixed tax is placed for his whole territory. 318 million acres are under the latter form of taxation. (Note by Kautsky)
Last updated on 11.12.2003