Gregory Zinoviev

What is Imperialism?

Source: New International, Vol.7 No.11, December 1941 and Vol.8 No.1, February 1942; 
Written/First Published: 1916 (approximately) in The War and the Crisis in Socialism
Online Version: Zinoviev Internet Archive, May 2002; 
Transcription: Mike Bessler (first part) and Daniel Gaido (second part); 
HTML Markup: Roland Ferguson and D. Walters; 
Public Domain: Marxists Internet Archive (2002 and 2009). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.


(Editor’s Note: In the March, 1939, New International we began publication of an essay on Wars – Defensive and Aggressive. It was from a larger volume by the late Gregory Zinoviev, The War and the Crisis in Socialism, written in enforced exile in Switzerland during the First World War. In this issue, we print for the first time in English another section from the book. Older readers will recall how fresh and topical was the first essay, even though printed almost a quarter of a century after it was written. They will surely derive the same feeling from the essay which appears herewith. Zinoviev’s book was undoubtedly written in political collaboration, at least, with Lenin, whose exile he then shared, as may easily be seen by comparing the writings of the two men during that period. The volume, taken as a whole, appeared subsequently in Russian, and, years after the Bolshevik Revolution, in German. It is a thoroughgoing, scholarly work of a brilliant Marxian publicist and its revolutionary passion often pierces through the restrained “Aesopian” language with which Russian Marxists in those days had to clothe their works in the hope of greater mercy at the hands of the czarist censor. The reader should therefore understand that the author’s references to the “social democracy” are usually to the revolutionary Marxists; and that his polemics against the social-patriots in the labor movement, who supported the imperialist war then as they are doing now, had to be more veiled than direct.)

(As is known, Zinoviev became the first chairman of the Communist International, a past he held from its foundation until his removal by the Stalin clique in 1925-26. His career during and after that period is too well known to require elaboration here. Just as well known are the facts of how he was finally framed up and brutally murdered by Stalin and his GPU gangsters. Our own differences with Zinoviev’s course during the struggle inside the Soviet Union are also a matter of record. But they do not detract by a hair from the great contributions he made to the working class and revolutionary Marxist movements, of which the present article is one of the most typical and durable.)



Before answering this question, we wish to deal briefly with this question with the question: What Is Colonial Policy? For colonial policy constitutes one of the most important parts of modern imperialism. Imperialism and the latest forms of colonial policy, in the broader sense of the word are often evenly equated. The word colony is derived from the Latin colere, which means to cultivate, to build up. Different writers have stressed various features of the concept “colonial policy” as its criteria. Roscher is of the opinion that the age of the colonization is decisive: it is always an older nation that does the colonizing, whereas a more or less new country is subjected to colonization. James Mill considers its essential feature to be that the colonists and the whole of the structure built up by them shall stand in a certain legal and political relationship to the metropolis or to the fatherland. Fallot assents that the higher stage of civilization is as essential a feature of the colonizing nation as is the backwardness of the territory subjected to colonization. Guirault, Reinsch and others hold similar views.

Wakefed writes:

By a colony I understand, not a country like India, but a country which is either not at all or only partially inhabited and which emigrants from distant lands settle. This territory then becomes a colony of the country from which the emigrants come. The latter is therefore called the homeland. This process – and only this process – by means of which colony is populated, I would call “colonization.” The subordination of the colony to the metropolis is not an essential condition for colonization. The ancient independent colonies of Greece were genuine colonies, and, in my opinion, the United States of America remain to this day colonies of England. Colonies may be divided into two categories: dependent and independent colonies.

Levis defines a colony as a territory which is governed directly by the metropolis or with the aid of a subordinate government.1) The English writers do not emphasize very strongly the direct political dependence of the colony upon the metropolis as the distinguishing feature. In a certain sense that corresponds with the practice of British colonial policy. The American politicians and writers, on the other hand. stress, first and foremost, the element of political dependence upon the metropolis on the part of the colony.

Reinsch, for example, holds this view. In an economic sense, he allows for a broader definition of colony. In this connection, he says that Canada, for instance, may in a certain sense be considered even today a French colony, or South America a Germany colony. But his political definition of a colony is as follows:

A colony is a possession of some national state situated at a certain distance from it, which is ruled by a government subordinated to the metropolis. A colony may be inhabited by citizens of the metropolis or by their progeny, or its population may, in its preponderant number, belong to another race. But in any case, the government of the colony must in one way or another recognize its subordination to the metropolis.

Another American, Snow, dismisses the higher stage of civilization as a basic feature. Through him we hear the voice of the sober business man of the bourgeoisie.

Most modern French and German colonial writers insist upon the unconditional political subordination of the colony to the metropolis as the basic trait. James Mill, Leon Say, Leroy-Beaulieu, as well as the German writer, Heeren, Dedel and Roscher, divide the colonies, economically speaking, into three groups: 1. trade colonies; 2. colonies that serve for the settling of emigrants, and 3. colonies that serve for the planting and cultivation of different crops. More recent literature on the subject seems to have reached agreement on 1. settlement colonies for emigrants, and 2. colonies for the purposes of exploitation.

Lately (1908), Leroy-Beaulieu has the classification of three groups: 1. colonies of markets for goods; 2. ordinary colonies of settlement; 3. colonies for plantation or exploitation. (Paul Leroy-Beaulieu, De la Colonisation chez les Peuples Modernes, Paris 1908, Vol.I.)

Most of the quoted definitions of “colony” are dictated by conditions prevalent in the old epoch of colonial policy. That is why they arc all less than satisfactory.

The present relationships are not embraced even by the definition which Marx gives in the first volume of Capital. Marx writes:

The cheapness of the articles produced by machinery, and the improved means of transport and communication furnish the weapons for conquering foreign markets. By ruining handicraft production in other countries, machinery forcibly converts them into fields for the supply of its raw material. In this way East India was compelled to produce cotton, wool, hemp, jute and indigo for Great Britain. By constantly making a part of the hands “super-numerary.” modern industry, in ail countries where it has taken root, gives a spur to emigration and to the colonization of foreign lands, which are thereby converted into settlements for the growing of the raw material of the mother country; just as Australia, for example, was converted into a colony for growing wool. A new and international division of labor, a division suited to the requirement of the chief center of modern industry springs up and converts one part of the globe into a chiefly agricultural field of production, for supplying the other part, which remains a chiefly industrial field. This revolution hangs together with radical changes in agriculture. (Marx, Capital, Vol. I, Pt. IV, p. 453. London, 1901. Moore-Aveling trans.)

Today the picture has changed in many respects. It suffices to point out that the countries with a highly developed industry are precisely now not distinguished by extensive emigration. On the contrary, the greatest number of emigrants today comes from agrarian countries.

Much water has since flowed under the bridge. Even the old colonial policy was not especially noted for its humanitarianism, nor for the peaceful, cultural colonization work, of which the bourgeois gentlemen like to speak in such sublime tones. We shall see further on what cruelty characterizes the present epoch.

Wilhelm Liebknecht once remarked that human culture cannot altogether be divorced from colonization. He had in mind such great events in the history of humanity as the discovery and colonization of America, among others. Today the German social-imperialists (see, for example, Noske’s Book on Colonial Policy) attempt to utilize these words as a justification of modern imperialist colonial policy. But this same Liebknecht often pointed out that the present colonial policy is inseparable from the policy of bloodshed, of rape, of pillage.

The well known German, bourgeois scholar, Dr. O. Zoepfl, offers us a definition of modern colonial policy which is not half bad. He says:

Colonies are the foreign domains of a state administered by it for world economic and world political purposes.

And he continues:

When colonies are designated a foreign domains manipulated by a state for its world economic and world political aims, then that means that the world economic aims constitute the essential element, whereas the world political aims may, but need not necessarily, enter as a factor. (G. Zoepfl, Kolonien und Kolonialpolitik, in the Handwürterbuch der Staatswissenschaften, 3rd ed., Vol.5, p.930.)

With the frankness of a business man, the author dismisses such features as “the higher level of a nation,” the cultural mission, etc. The bourgeoisie considers the colonies as objects of commerce. Colonies are sold, exchanged, given away as gifts. Their economic value, their importance for the world market, their “economic” rôle – that’s what the bourgeoisie is guided by.

The economic dependence of the colony-that’s what is essential for the bourgeoisie, for the imperialists of our time. Naturally, political dependence and direct possession by the given state is also desirable. But it is not absolutely necessary. Zoepfl is right when he speaks simply of dolllains lying outside the boundaries of a given country. This forlnulation embraces colonies which are in direct and absolute political dependence upon the metropolis (e.g.. Kiaochaow in relation to the German Empire up to 1914), as well as those which enjoy a relatively substantial political independence (e.g. Canada in relation to England).

The definition which Zoepfl, the sober bourgeois, gives of the concept “colonial policy” leads us right up to the concept “imperialism.” This word has its origin in the Latin imperilcrn (empire). In its general meaning it is the expression employed for the aspiration to form a single, powerful empire encompassing the entire world; an aspiration which one state or another may realize by conquest, or by colonization, or by a “peaceful” political unification of existing sovereign entities, or by the simultaneous application of all these methods. In this sense, we speak of the Imperium Romanum, of the empire Julius Caesar founded in 45 BC, when he extended his personal power to all Roman countries and entrenched this power by assuming the title Imperator. In a similar sense one may speak not only of the Roman Empire, but also of the Greek Empire of Alexander the Great and, later on of Charlemagne’s empire, etc.

However, when we speak of modern imperialism, we have in mind that imperialism which was raised on the soil of a highly developed capitalism, the imperialism of the capitalist bourgeoisie, that imperialism whose main prop is finance capital.

The characteristic feature of modern imperialism is the interconnection between financial and industrial capital. To evaluate correctly the historic rôle of capitalism, it is necessary ro differentiate between the various types of capital. In the third volume of Capital, Marx for the first time undertook its subdivision into industrial capital, commercial capital and money capital. Kautsky, Hilferding, Hauer, Cunow 2) and other Marxists established a new category in their further elaboration of Marx’s discovery: that of finance capital.

The chief factor of the modern industrial epoch is the immense concentration of production, the centralization of capital by monopolistic cornbinations and enterprises (trusts, syndicates, etc.). At the same time a still greater centralization and concentration of banks is in process, so that they are now most intimately interlocked with industry, gaining continually in a growing importance over the economic life of the capitalist countries and dominating it more and more. The omnipotence of finance capital is also expressed in the subordination to itself of the state power in the monarchist, as well as the republican colonies and in the extension of its dictatorship over all strata of the possessing classes.

Hilferding writes:

Industry’s dependence upon the banks is, therefore, the outgrowth of the property relations. An ever greater share of industrial capital ceases to belong to the industrialists who employ it. They are granted control over this capital only through the good graces of the bank, which, in relation to them, represents the owner. On the other hand, the bank must invest an ever greater share of its capital assets in industry. Thus the bank becomes to an even greater extent, an industrial capitalist. I call the bank capital, that is, capital in the form of money, which is in this manner actually transformed into the industrial capital-finance capital. In reality, the greatest part of this capital invested in banks is transformed into industrial, productive capital (means of production and labor power) and transfixed into the process of production. An ever greater share of the capital invested in industry is finance capital, capital controlled by the banks and operated by the industrialists.

Finance capital develops along with the development of the stock company and reaches its apex in the monopolization of industry. The industrial returns assume a more secure and more constant character. Thus possibilities for the investment of banking capital in industry are increasingly expanded. But the bank retains control over banking capital and the owners of the majority of the bank’s stocks dominate the bank. It is clear that with the increasing concentration of property, the owners of the fictitious capital which is endowed with power over the banks and of that which is endowed with power over industry tend more and more to become one. All the more so since we have seen how the centralized bank is continually acquiring the power of control over this fictitious capital.

Although, as we have seen, industry becomes ever more dependent upon banking capital, it does not at all follow there from that the industrial magnates also become deperldent upon the bank magnates. Moreover, just as capital itself, on its highest plane, becomes finance capital, so the magnate of capital, the finance capitalist, unifies his control over the entire nalioIlal capital in the form of his domination over banking capital. Here too, personal union by intermarriages’ plays an important rôle.

Through combines and trustification, finance capital attains its highest degree of power, while commercial capital sinks into the lowest depths. Thus capitalism completes a cycle. In the beginning of capitalist development, money capital plays an important rôle in the accumulation of capital as well as in the transformation of handicraft production into capitalist production. Then we witness the resistance of the “productive,” that is, of the profit-making capitalists (namely, the commercial and industrial capitalists) to the money-lending capitalists. 3)

The mobilization of capital and the ever greater expansion of credit gradually bring about a complete change in the position of the monetary capitalists. The power of the banks grows, they become the founders and finally the overlords of industry, whose profits they arrogate to themselves as finance capital, just as the old usurer did long ago with his “interest” in relation to the peasant’s crop and the rent of the landlord.... Banking capital was the negation of usury capital: it is itself negated by finance capital. The latter is the synthesis of usury capital and banking capital, and appropriates the fruits of social production on an infinitely higher stage of economic development.

The development of commercial capital is, however, entirely different. The development of industry gradually unseats it from that dominant position in the productive process which it enjoyed in the period of manufacture. But this retreat remains permanent, for the development of finance capital reduces commerce absolutely and relatively and transforms the once proud merchant into a mere agent of an industry monopolized by finance capital. (Finanzkapital, pp.283-285)

In all capitalist countries we observe a tremendous, irrepressible growth of the productive forces. Everywhere we see a strong tendency toward the internationalization, of economic life. A thousand threads link one country with another. It would seem that every new mile of railroad, even ocean cable, every new telegraph line laid, must necessarily promote internationalization. However, we live under capitalism, in its imperialist phase, to, be precise. And within the bowels of imperialism arise powerful counteracting tendencies. The bourgeoisie of every country strives to transform its “fatherland” into an independent economic organism, capable of satisfying all its wants within the framework of “national” labor and “national” production.

The system of protective tariffs developed in this latest epoch plays a very important rôle in this connection. The international division of labor formerly in force (division into industrial and agricultural countries) becomes extremely difficult. Every state is now intent upon developing itself simultaneously into an agrarian as well as an industrial (agrarian-industrial) state and upon satisfying by itself all its own economic wants. In order to protnote its own national industry, every country) – with the exception of England, which has held first rank in the industrial field – took recourse to tariffs, which at first were only “baby” tariffs, but later on became transformed into permanent tariffs. Thus the protective tariffs arose.

In 1846 England abolished the corn laws. Soon thereafter the system of free trade triumphed decisively in England. But as we have seen, today Eree trade is being displaced by the protective tariff, even in England. Even the British colonies have introduced protective tariffs for the development of their industries, which close them to their own metropolis.

In the “Sixties” the system of liberal trade agreements triumphed temporarily on the European continent. But as early as the “Seventies” there already appeared – under the influence of the general crisis-a clearly predominant tendency toward protective tariffs. It happens in every country in its own particular way. Aside from economic causes, the singularities of the political life of each country are also important factors in this development. 4)

In 1879, Germany shifts to the system of high tariffs and introduces simultaneously protective tariffs for both manufactured and farm products. Liberal trade policy goes on the rocks. In 1885 and 1887, the German tariffs are again raised. In 1902, new tariffs are elaborated, which are dictated by the landlords. This development proceeds under the sign of a most intimate alliance between the landlords and the kings of heavy industry.

In 1881, France introduced the high tariff. In 1885, these are supplemented by agrarian tariffs. In 1910 new tariffs are introduced, based on the protective system.

In the “Eighties,” Russia and America, Italy and Austria-Hungary take the same path, and in 1910 even Holland joins them.

The tariffs rise, the growth of the internal market is retarded, the prices of the most essential necessities soar, the high cost of living develops into a veritable scourge of the working class, wages (even nominally) rise very slowly.

Tariff barriers circle the entire globe. Trade agreements become instruments for the enslavement of one country to the bourgeoisie of another country. Around these trade agreements, direct brawls take place between the capitalist cliques of the different countries – brawls which must be borne on the backs of the masses of the people.

Thus the tariff wars arise.

France carries on a ten-year-long tariff war against Italy (1887), Russia against Germany (1892-1894), France against Spain and Switzerland (1893-1895), Germany against Canada (1903-1910), Austria-Hungary against Serbia (1907-1911), Bulgaria against Turkey, Austria-Hungary against Rumania (1886-1890), Austria-Hungary against Montenegro (1908-1911), Germany against Spain (1894-1899), etc.

The capitalist cliques of every country try to coordinate the imposition of tariffs on imports with a forced growth in exports. The syndicates and trusts, which theoretically are supposed to “regulate” production, are in reality preoccupied with an entirely different task – that of squeezing out super-profits. Their greatest concern is over the increasing of exports. This results in a peculiar type of export, known as “dumping” – that is, the export of products at so-called cut prices, i.e., export at extremely low prices. “Dumping” is made possible for the trusts and cartels only because, on the domestic market in which they enjoy monopoly status – that is, inside of their “fatherland” – they are able to screw up prices so as to make up for their cost of production, thus naturally throwing the burden on the shoulders of the consumers of their own country. By means of tremendous development of their production, through its quantitative growth, the monopolists succeed in lowering their costs of production. That allows them to pillage all the more energetically, the consumer mass of their own country, that is, their “own” workers, their “own” peasants, their “own petty bourgeois.”

All countries aim at a forced export. There arises a complete economic chaos. Anarchy and competition mount.

Even the international syndicates, the latest invention of economic policy, cannot preserve the capitalist world there from, for the motive force of these syndicates is likewise only profit.

The trusts and syndicates-under various titles and forms and with their altered functions-play an ever greater rôle in the life of the industrial countries. In the first rank, in so far as trustification is concerned-stands the United States. But close behind it stand England, Germany, France, Belgium and even Russia.

The domination of finance capital is characterized in the same measure by the growth of concentration and centralization, by the development of trusts and cartels, by the growing influence of the banks as well as by the displacement of free trade through the protective tariffs.

The protective tariff increases the disadvantages of the smaller economic territory extraordinarily by restricting its export, thereby decreasing the possible size of its business enterprises, counteracting socialization and raising costs of production in this manner as well as by preventing a rational international division of labor ... While the protective tariff is an obstacle to the development of the productive forces and thus of industry itself, for the capitalist class it means a direct increase in profits. Above all, free trade impedes trustification and deprives trustified industry of its monopoly on the domestic market. In this manner the extra profits which flow from a utilization of trust-protecting tariffs are lost to them. (See Hilferding, Finanzkapital, pp.390f. In a later chapter we will go further into the causes that impelled the imperialists to combat free trade.)

The protective tariff [Kautsky wrote as early as 1901 in his Handelspolitik] is only one link in the chain of this new industrial system which constitutes the latest and probably the final manifestation of the capitalist mode of production. But whoever recognizes this particular link is compelled of necessity, if he wants to be consistent, to recognize also the others with which it is joined by the force of its own logic ... In place of the spirit of free trade there arises a spirit of violence among the industrial bourgeoisie. Previously peace-loving, it had dreamed of eternal peace, condemned war as a barbaric remnant of the Middle Ages, which could serve only feudal and dynastic purposes; today it [the bourgeoisie is itself becoming constantly more infused with the spirit of violence, no matter how much some of its ideologists may lament over the fact ... The next step is the demand for the violent conquest of a market on which it enjoys a privileged position, that is, for a colonial and expansionist policy. This, in turn, leads to conflicts or the danger of conflict with the competing industrial powers; the struggle with violent economic means threatens to become a struggle with powder and lead. with dynamite and lyddite ... The furtherance of the protective tariff today means a direct furtherance of that system which results in placing all the instruments of power in the nation at the disposal of a handful of capitalists, so that the latter may be in a position to crush violently or to starve every opponent inside as well as outside of the country. K. Kautsky, Handelspolitik und Socialdemokratie, pp.41f., Berlin 1901.)

The protective tariffs impede the development of the productive forces. Yet, in spite of this, they are always and everywhere defended by the rulers of finance capital. England was for a long time the classic land of free trade. However, British imperialism of late has also begun to renounce this tradition and to turn to protectionism. It suffices merely to recall Chamberlain’s aigtation in favor of a closer unification of the metropolis with the British colonies, into a “greater” British Empire. It suffices merely to recall his struggle for the introduction of differential tariffs in the British colonies – tariffs which favor goods originating in the British metropolis as against those of other countries and which in reality can only mean the incipient substitution of the protective system for the free trade system.

The idea of introducing the protective tariff in place of free trade is gaining a constantly growing following even in the camp of British Liberalism. A mass of evidence may be found to show that the protective system enjoys increasing popularity among the Liberals. “In our country it is not only possible but has become a burning necessity to gird ourselves with a strong self-defense mechanism [by means of tariffs] against foreign states”-we read in a manifesto of the English Liberals in favor of the system of protective tariffs, in 1903. This manifesto was signed by these well-known English Liberals: the Duke of Sutherland, L.S. Amery, S. Bourne, T.A. Brassey, J.C. Dobbie, A.F. Firth, Benjanlin Kidd, H.J. MacKinder, J. Saxon Mills, James Paxman, Charles Fennant, H.E. Vollmer and others (quoted in Bernhard Braude, Die Grundlagen, etc., p.141). Since 1903 the idea of protective tariffs has made tremendous progress in England. Chamberlain’s pamphlets, Three Years of Trade and Their Lessons for Us; Four Practical Problems; Cobden, Free Trade and the Cobden League, etc., as well as his speeches enjoyed great success. A series of conferences which he arranged in the name of the British government with representatives of the British colonies, became milestones in the struggle of the British capitalists for the introduction of protective tariffs in place of free trade. In 1895, Engels asked:

What will the consequences be when continental goods and especially American goods continue to flood the market in ever-increasing quantities, when the lion’s share of the world’s provisioning, which British factories still retain, begins to contract from year to year? Answer that, free trade, thou panacea! (F. Engels, in The Commonwealth, March 1, 1885. London. Also Neue Zeit, No.6, 1885.)

Today we have the answer. It is: modern imperialism.

Gregory Zinoviev
(To be continued)5)

[This second part was translated by Daniel Gaido and not indentical to the second part of the NI version—D.Walters]

“The modern capitalist policy of expansionism […] is the heir of the old liberalism,” says Otto Bauer very correctly.6)

Wherever English capital seeks sales outlets, wherever it seeks spheres of investment, it encounters the competition of the other capitalist states. Thus, like every other state, England must today take other paths in order to reach its old objective.

The old system of English free trade was cosmopolitan. It tore down customs borders, aiming to unite the world in a single economic zone. […] This system was quite different from modern imperialism. Modern imperialism does not want to form a unified economic zone that includes all countries, but rather encloses the economic zone of the individual country within a customs border. It opens up the less developed countries and secures spheres of investment and sales areas there for the capitalists of its own country and excludes the capitalists of other countries. It does not dream of freedom, but prepares for war. [7]

The large British colonies of Canada, Australia, New Zealand, and South Africa, inhabited by white populations, are independent states. They create a barrier between themselves and the mother by means of tariff protection in order to promote their own young industry, increasingly separating themselves politically and economically. Is the day far away when they will break completely free from it, causing the British World Empire to disintegrate? The feeling of national solidarity is too weak to bind them to the United Kingdom; the mother country and the colonies must be linked by a bond of interest if the British Empire is not to disintegrate. An opportunity to maintain this link would be created if England merely abandoned the obsolete system of free trade. The mother country should surround itself with a customs border and impose lower tariffs on the products of agriculture and stockbreeding of the colonies than on the competing commodities of other states; in return, the colonies should grant the mother country preferential tariffs. [8]

Thus capital today regards free trade as superfluous and even harmful, even in the classic country of free trade. Protective tariffs damage the productive forces? What then?

It [capital] seeks to overcome the restriction of productivity resulting from the contraction of the economic territory, not by conversion to free trade, but by expanding its own economic territory and promoting the export of capital. [9]

Capital export plays a tremendous role in all of modern socio-economic life. Contemporary imperialism is characterized, not by the export of commodities, but by capital exports.

Hilferding defines “capital export” as follows:

By 'export of capital’ I mean the export of value which is intended to breed surplus value abroad. It is essential from this point of view that the surplus value should remain at the disposal of the domestic capital. If, for example, a German capitalist were to emigrate to Canada with his capital, become a producer there and never return home, that would constitute a loss for German capital, a denationalization of the capital. [10]

Capital exports are taking on ever greater proportions. Capita-rich countries export it not only to colonies, in the narrow sense of the word, but also to politically independent and autonomous countries. Thus Russia exports its capital not only to its colonies but also, for example, to the United States of America. “It is estimated,” says Sartorius in his book, Das volkswirtschaftliche System der Kapitalanlage im Auslande, [11] “that England derives a billion marks [annually] from its investments in the United States in capital profits and interest.” France exports its capital not only to its colonies but also to Russia, Spain, etc.

The struggle for capital investment spheres, i.e., for territory designed for capital export, plays a tremendous role in modern economic and political life. Which country will build railroads and obtain concessions in the colonies and in the independent countries that require imported capital?—that is the most important question in determining the foreign policy of the capitalist governments, in provoking wars, etc.

The country richest in capital, England, dominates the whole world today, although it has already lost its industrial hegemony. “England is the land of the rentiers,” says Sartorius. Schulze-Gaevernitz, in his book, Der britische Imperialismus, comes to the conclusion that at the beginning of the twentieth century there were exactly one million rentiers in England. [12] If their families are included in this calculation, they would7 constitute 10 to 11 percent of the population. This tremendous wealth of capital in England leaves its mark upon the entire life of the country, determines its fate and the policy of all parties and classes in the country. There is a grain of truth in what Sartorius says: “The United Kingdom never had any sort of Social Democracy of any significance. The tremendous wealth accumulated in England throughout the last hundred years or so has served, even though industry itself has retrogressed, as a protector of the mass of skilled workers.” And he quotes Schulze-Gaevernitz approvingly: “The skilled and highly paid working class of the great British industries has realized today that the high standard of living it has achieved with so much hardship stands and falls with England’s political power." [13]

Herein, it may be said, lies the entire philosophy of present-day social chauvinism: the workers of each “fatherland” are personally interested in the power of their native imperialism. …

Sartorius is wrong in his assumption that the Social Democracy is the party of the skilled, highly paid workers. We are not the party of the labour aristocracy, we are the party of the working class, Mr. Sartorius! But Sartorius has correctly observed the fact that, aside from all the other means at its disposal, the imperialist bourgeoisie, with its wealth of capital, can also bribe considerable strata of the labour aristocracy, demoralizing them and thus of undermining the work of Social Democracy.

However, this is only incidental. At present it is important merely to point out the tremendous role that capital exports play in modern imperialism. Competition for the newly opened investment spheres brings with it new contradictions and conflicts between the capitalist states themselves. On the other hand, the points of friction between the countries acting as objects for the exportation of capital, and the ruling classes of the countries importing this capital, are constantly growing. The ruling classes strive to subject to themselves as completely as possible the national territories into which they import their capital. The latter, on the other hand, try as much as possible to secure for themselves independence of the countries which bring their capital to them.

This independence movement threatens European capital precisely in its most valuable and promising areas of exploitation and to an increasing extent it can only maintain its domination by continually expanding its means of coercion. [14]

That accounts for the insanely rapid growth of militarism, the persistent demand of all capitalists interested in foreign countries for a strong state power which will be able to defend their interests with the mailed fist at all times and everywhere, even in the remotest corners of the globe. Export capital naturally feels most secure when the state power of its “fatherland” subjugates some new territory to itself ("annexes” it, “leases” it for a hundred years, etc.) Then its interests are best assured; it is protected against the invasion of rival export capital; it enjoys a privileged situation; the state with its army provides it with a guarantee for its invested money, its profits, etc.

Thus capital export contributed to the strengthening of imperialist policy, thus it nurtured and developed modern imperialism. [15]

At the moment, the industrially most progressive countries—Germany and the United States—are characterized by a strong tendency toward the exportation of industrial capital. Here industrial development—in its technical as well as its organizational phases—has taken on new forms. In this connection, England and Belgium stand in second place. The rest of the countries, developing along old capitalist lines, participate in capital export more in the form of loan capital than by the construction of factories, etc. In the field of loan capital exports France occupies one of the front ranks. French loans to Russia alone—according to figures given by Sartorius—amounted to nine billion marks in 1906. In 1914 amounted to 4 to 18 billion. The very same countries may at the same time import as well as export capital. The United States, for instance, exports industrial capital on a large scale to South America and at the same time imports loan capital necessary for their own industries from England, Holland, etc., in the form of bonds and other obligations. [16] And even a country like Russia, which is in constant need of capital flowing in from other countries, itself exports—even though comparatively little—capital to the Balkans, etc.

Competition for investment spheres among the various finance capitalist cliques has often faced Europe with the possibility of a world war. It is sufficient to recall Morocco. How many high-sounding “patriotic” words were uttered in Germany regarding France’s and England’s unwillingness to take into account the interests of the German “fatherland"! In reality, however, it was only a question—aside from the downright robbery perpetrated on one or another piece of African territory—of German capital desiring its share of concessions for the construction of railroads, harbours, telegraph lines, public works, etc. In the Turkish as well as in the Moroccan conflicts between Germany and France the main issue was the competition between the Banque Française and the Deutsche Bank, between Rouvier and Helfferich, between Schneider-Creuzot and Krupp. In a word, between the sharks of finance capital or, as the bourgeoisie likes to call them, between the “money marshals” of French and German capitalism. At the Algeciras peace conference these two sides haggled like petty shopkeepers until they had divided among themselves the various concessions and other advantages. The German “patriots” could not be quieted down before a certain share in the loans had been assured the German capitalists. [17] Otherwise, the German government—the loyal servant of the German imperialists—threatened France with war.

Thus finance capital becomes the agent of the idea of consolidating state power by all possible means. Thus finance capital becomes the chief driving force of militarism. The antagonism between the great imperialist powers—in the first place, between England and Germany—has for some time been assuming the sharpest forms. That this antagonism had to lead to a violent solution, that is, that it had to result in a war, was predicted by Marxists many years before the outbreak of the war in 1914.

‘This violent solution would have happened long ago,’ writes Hilferding in his Finance Capital, ‘if there had not been countervailing forces at work. The export of capital itself gives rise to tendencies which militate against such a solution by force. The unevenness of industrial development brings about a certain differentiation in the forms of capital export. […] This has as a consequence that French, Dutch, and even to a great extent English capital, for example, constitute loan capital for industries which are under German and American management. Various tendencies thus emerge which make for solidarity among international capitalist interests. French capital, in the form of loan capital, acquires an interest in the progress of German industries in South America, etc. [18]

For the progress of the industries, for the security of the moneys invested in other countries, peace is more desirable to finance capital than war.

Such a tendency—Hilferding calls it the tendency toward a solidarity of international capitalist interests—is theoretically possible, and up to a certain degree it does exist. Many writers however tend to overestimate it, and are thus led to a denial of the imperialist character of the last war. Finance capital has nothing to do with this war—agued for instance the well-known Russian historian, M. N. Pokrovsky—because finance capital is interested in peace: in war time, foreign capital is simply confiscated, etc. [19]

This point of view is completely wrong. A weak tendency toward “solidarity” exists, to be sure. But, on the other hand, there is also, as we have seen, a strongly developed tendency in the contrary direction. The decision as to which of these tendencies is to predominate—as Hilferding correctly says—differs in concrete instances and depends, above all, upon the prospects for profit opened up by a recourse to arms in this struggle.

In the first place, the capitals confiscated by the belligerent governments in the course of the last war tend, in part, to strike a balance. Secondly, these capitals are also balanced by the profits which the kings of heavy industry have pocketed already during the war and thanks to the war. Thirdly, these capitals do not count much in comparison to the advantages to be derived by the imperialists of England, let us say, or of Germany, or of France, in case of a victory won by their “fatherland” over their powerful competitors.

Aside from that, we must also keep in mind the following: the victors will undoubtedly demand the abrogation of the confiscations as one of the conditions for peace, as well as the recognition of the debt claims, which guarantees the capitalists of the victorious coalition the security of the capital they have exported to the vanquished countries. At the outbreak of the war both parties hope to emerge as victors from the struggle. Naturally, that implies a certain amount of risk to which the imperialist cliques have to reconcile themselves.

As a general rule, we can maintain that finance capital impels the governments of the various countries to constantly increased armaments, both on land and on sea; that imperialism breeds an entire era of wars, that imperialism makes the morrow appear uncertain, destroys every equilibrium and revolutionizes conditions in Europe, Asia and America with tremendous force.

Kautsky correctly described the facts when he said that industrial capital, the class of industrial entrepreneurs, displayed at first entirely different tendencies from those of commercial and finance capital. Industrial capital tended toward peace, toward the limitation of absolute state powers by means of parliamentary and democratic institutions; it tends toward thrift in the state budget and therefore turns against tariffs imposed upon necessary supplies and raw materials. It often looked upon even industrial tariffs as an outgrowth of industrial backwardness which must of necessity disappear with the growth of economic progress.

Finance capital, on the other hand, and the class of the landed gentry, stand for absolute state power, for the execution of their demands in the field of internal as well as external policy by even the most violent means. Finance capital has a particular interest precisely in the increase of state expenditures and state debts. It courts the favour of the landed gentry and does not object to their being pampered with agrarian tariffs.

Economic development has brought money capital to power much more rapidly than industrial capital. In the nineteenth century industrial capital had the power in its hand while the money capitalists were relegated to the background. But this was only a transitional stage. In the end, another form of capital gained the upper hand. The form of the stock companies—which had much earlier played a great role for commercial and money capital—entrenched itself in the field of industrial capital.

By this means, the greatest and strongest sections of industrial capital have been tied up with money capital. The trusts, as well as the centralization of the great banks, are bringing this process to its conclusion.

The political tendencies of finance capital have today become the general tendencies of the economically dominant classes in the advanced capitalist countries. [20]

And since these political tendencies of finance capital constantly lead to wars, the imperialist war policy leaves its imprint upon the entire activity of contemporary “advanced” governments, which are merely the office boys of capitalism.

The appetite of the financial cliques is insatiable. The more they own, the more they want to grab; the more daring their game. In its hunt for sales outlays and raw material markets, for investment spheres, for “spheres of influence,” for colonies and concessions, for all the possible political and social privileges for the ruling classes associated with this sort of economic policy, capital has led to the division of almost the entire world among a few “great powers” and to a bloody struggle among the latter for the best part of the booty. Thus has arisen the struggle for world domination, the tendency of the great capitalist states toward the creation of world empires, thus the imperialist struggle, into which Japan and the United States are inevitable dragged in Europe’s wake.

That classic representative of classic British imperialism, Joseph Chamberlain, closed one of his famous speeches glorifying imperialism (in Johannesburg, January 17, 1903), with the following words:

"The time of small kingdoms and of petty competition is past. The future belongs to the great states." [21] Chamberlain did not wind up as he should have: to the world empires.

Socialists also do not advocate small states. All other conditions being equal, they stand for great centralized states, but states which are socialist republics, which recognize the right of political self-determination for all nations, which rest upon the principle of complete national equality. The imperialists of all countries, on the other hand, need “great powers” as instruments in the hands of the bourgeoisie of the ruling nation for the exploitation of many millions of people who do not belong to the ruling nation, who inhabit colonies or have the misfortune of living in countries grown dependent upon the power-thirsty cliques of European capital.

The international dictators of finance capital in Europe today constitute a handful of perhaps a few hundred persons. The heads of the great banks, the stock exchange kings, the directors of the most important trusts and cartels, the steel and iron kings, the chairmen of the most important railroad companies and the other billionaires who actually decide about war and peace in Europe today could almost all be mentioned by name, so small is this clique numerically.

In 1910, Francis Delaisi made such an attempt in so far as France is concerned, in his interesting book La démocratie et les financiers. On fifteen pages of his book he presented a fairly comprehensive list of the names of the biggest representatives of French finance capital. He drew up a number of tables and presented them in such order that it is possible to glean from them at a moment’s notice just how many banks, metallurgical enterprises, railroad companies, etc, these gentry control. Gathering up all his data we get the following picture: All in all, 53 names are mentioned, among them Rothschild, Schneider, Rostand, the Baron Rostand Duval, Marquis de Froudeville, Prince de Comoudeau, Adam, Einard, René Brice, Chubonneau, etc. These gentlemen control 108 French colonial and foreign (Turkish, Dutch, etc.) banking establishments. Among them are the following great banks: Credit Lyonnais, Société Générale, Banque Ottomane, Union Parisienne, Banque de France, Comptoir d’Escompte, Banque Russo-Chinoise, Banque d’Indo-Chine, Crédit Industriel, Banque Transatlantique, Banque Tunisie, etc. Furthermore, these gentlemen dominate 105 metallurgical establishments and mining enterprises in France and her colonies, French enterprises in Russia, etc. Among them, Creuzot, the gold-mining companies in South Africa, Carmaux, the establishments in the Donetz Basin in Russia, etc. Furthermore, this handful of capitalist magnates exercises its dictatorship over 101 railroad and transportation companies and, finally, they have in their hands the destinies of 117 other enterprises and monopolies, among them the Suez Canal stock company, many important enterprises in the colonies, insurance companies, gas works, etc. [22]

It is thus evident that from 50 to 60 finance capitalists in France rule over some 108 banks, 105 big business concerns in heavy industry, 101 railroad companies and 117 other important industrial and financial enterprises—altogether 431 enterprises—each of which has assets amounting to hundreds of millions [of francs].

This is finance capital incarnate!

The same picture may be observed in England and in Germany and—mutatis mutandis—even in Russia. Five hundred big bankers hold the whole world in the palm of their hands.

Here are the figures showing the power of finance capital in North America.

On the basis of the data furnished by the Bureau of Corporations, at the end of 1912, the following big banks and banking institutes existed in the United States: [23]

Number of Directors’ PostsNumber Occupying PostsTotal Capital in Millions of Dollars
J. P. Morgan & Co. 633810,036
First National Bank of New York 894811,393
Guaranty Trust Co. of New York 160 76 17,342
Bankers Trust Co. of New York 1135511,184
National City Bank of New York 864713,205
Kuhn, Loeb & Co. 15123,011
National Bank of Commerce 1498213,165
Hanover National Bank 37297,495
Chase National Bank of New York 674811,527
Astor Trust Co. 744712,408
Blair & Co. of New York 12 11 1,784
Speyer & Co. 10102,443
Continental and Commercial
National Bank of Chicago
First National Bank of Chicago 55299,021
Illinois Trust & Savings Bank of Chicago 28224,599
Kidder, Peabody & Co. of Boston 862,395
Lee, Higginson & Co. of Boston 11---3,199

Naturally, many figures appear twice in this table, for the entire capital of each firm is quoted. If we subtract the sums that are counted twice, we get, according to Philippovich, the following results:

The owners of the firms named and their directors, altogether 180 persons, occupy the following jobs:

385 directors’ jobs in 41 banks and trusts with a total capital of 3,832 million dollars and 2,834 million dollars in deposits;

50 directors’ jobs in 11 insurance companies which control over two to six billion dollars in assets;

155 directors’ jobs in 31 railroad companies with a total capital of 12,193 million dollars and railroad yardage amounting to 271,120 kilometres;

Six directors’ jobs in two special-train companies and four in a shipping company with a total capital of 245 million dollars and a yearly income of 87 million dollars;

98 directors’ jobs in 28 industrial and commercial concerns with a total capital of 3,583 million dollars and a gross income annually of 1,145 million dollars;

48 directors’ jobs in 19 companies engaged in city services (water supply, electricity, etc.) with a total capital of 2,826 million dollars and a gross annual incomer of 428 million dollars.

Altogether, 180 bank owners and their directors occupy 746 posts in 134 different enterprises with a total capital of 25,325 million dollars. That amounts to half of the entire national wealth of America. [24]

There they are, the dictators of finance capital in America! One to two hundred billionaires and their closest collaborators share control over 50 billion dollars and hold in their hands the most important branches of industry!

This handful of finance-capitalist magnates dictates the fate not only of the wealthiest industrial country, America, but through it, also to a large extent of the entire world. It suffices to mention the tremendous role American loans played in the ranks of the Triple Entente imperialists even before America’s entry into the World War. It is sufficient to observe the role of the American billionaires since America’s entry into the war.

They are the ones to whom all governments have subordinated themselves. They are the ones who decide today whether and when a world war is to begin which costs millions of human lives.

The situation is largely the same in every imperialist country. If, for instance, we wish to know why “noble” Italy entered the war on the side of the Triple Entente, it is only necessary to look into the list of the stockholders and directors of the Banca Commerciale to be convinced of the many names of French capitalists who figure in it; and it is merely necessary to get a closer view of the sums which show the dependence of the Italian bourgeoisie upon British capital. Here lies the real reason for Italy joining England and France, not in the desire to liberate the “enslaved” brothers.

We are now in a position to sum up what has already been said and to proceed to a definition of what modern imperialism actually is.

In doing this, we must not forget that there are various types of imperialism. British imperialism does not resemble German imperialism in every feature; Russian imperialism differs from German imperialism, etc. There is a European imperialism, an Asiatic imperialism and an American imperialism; there is a white imperialism and a yellow imperialism. Japanese imperialism doesn’t resemble the French type; Russian imperialism is of quite a unique type, because it is a backward (it is not even possible any longer to say: an Asiatic) imperialism, developing on the basis of an extraordinary economic backwardness.

We must, however, emphasize what is most characteristic of modern imperialism. We must define more closely that imperialism which today lays down the law for our entire economic and political life, upon which rain and fair weather appear to depend, so to speak, and which determines the destinies of the world.

The most general formula on which Marxists have universally agreed to date is the following: Imperialism is the policy of finance capital—its economic policy, foreign policy and any other. But this formula is inadequate, precisely because it is too general.

Kautsky has proposed the following definition: “Imperialism is a product of highly developed industrial capitalism. It consists of the urge of every industrial capitalist nation to subjugate to itself and to annex an always larger agrarian territory, regardless of which nations inhabit it.” [25]

This definition is, however, altogether inadequate. Kautsky only sees one part of the phenomenon when he reduces the whole thing to “agrarian territory.” Present-day expansion does not restrict itself to agrarian territory. Above all, however, Kautsky’s definition is too academic, too anaemic. It does not contain the slightest indication that we have already reached the stage of the partition of the world among the capitalist brigands; one cannot detect in it any echo at all of those storms, those war-like convulsions and revolutions which the epoch of imperialism brings with it; it does not contain a word about the fact that imperialism is conducting its policy amidst circumstances in which the economic prerequisites for the realization of socialism have become mature in the greatest part of the advanced capitalist countries. His definition is innocuous and pallid, even though it does contain certain elements of the truth. [26]

Hilferding approaches the definition of imperialism more closely when he says:

The policy of finance capital has three objectives: (1) to establish the largest possible economic territory; (2) to close this territory to foreign competition by a wall of protective tariffs, and consequently (3) to reserve it as an area of exploitation for the national monopolistic combinations. [27]

Hilferding is right when he speaks of “the largest possible economic territory.” This expression is a good one because it comprises direct political conquests (annexations, colonial robbery) as well as economic subordination. Hilferding is also right when he brings to the foreground such characteristics as the tariff walls and the monopolistic combines (trusts and cartels). These are positively the characteristic features of imperialism.

But Hilferding’s definition restricts itself to exclusively economic concepts. It is lacking in very important—political and other—elements.

On the basis of the foregoing, we believe that a Marxist definition of modern imperialism may be expressed as follows (instead of the brief formula, we prefer to present a more thoroughgoing description of the concept.):

Modern imperialism is the social-economic policy of finance capital tending toward the creation of the most comprehensive economic territorial entities and world empires possible. It is characterized by the tendency to supplant free trade decisively with the system of protective tariffs and to subordinate economic life completely to the great monopolistic combines, such as the trusts, cartels, banking consortia, etc. Imperialism signifies the highest stage in the development of capitalism, in which not only commodity exports but capital exports as well occupy a place of quintessential importance. It characterizes an epoch in which the world is partitioned among a few great capitalist powers and in which the struggle proceeds along the lines of repartitioning it and partitioning the reminding areas, in which the economic prerequisites for the realization of socialism have matured in most of the advanced capitalist countries and in which the national state barriers hinder the future development of the productive forces, in which the bourgeoisie seeks to obtain a postponement of the approaching collapse of capitalism by means of its colonial policy and by means of bloody wars.




1) Compare with what is, in a certain sense, the classic work of the writer on colonial policy, Dr. Zoepfl, Kolonien und Kolonialpolitik, in the Handwörterbuch der Staatswissenschaften.

2) We are speaking, of course of the “old style” Kautsky, Bauer and Cunow, before their latest evolution to the right.

3) In actuality, the “Usurer” was one of the main means for the accumulation of capital, that is, his partaking of the revenues of landed property. But industrial and commercial capital go more or less hand in hand with the landowners against this old-fashioned form of capital. – Marx, Theorien über den Mehrwert, Vol.I, p.19.

4) On Germany, read the interesting material of Kautsky in his book, Handelspolitik und Sozialdemokratie. The reader will find the latest figures in the last two books by K. Renner.

5) Note from NI editorial staff: More on this point in the comprehensive work of Bernhard Braude, Die Grundlagen und die Grenzen des Chamberlainismus, published by Dr. Heinrich Heckner, Zürich 1905.

6. Otto Bauer, The Question of Nationalities and Social Democracy, ed. by Ephraim J. Nimni, Minneapolis: University of Minnesota Press, 2000, p. 378.

7. Ibid., p. 379.

8. Ibid., p. 394.

9. Hilferding, Finance Capital, p. 314.

10. Hilferding, Finance Capital, p. 314.

11. August Sartorius Freiherr von Walterhausen, Das Volkswirtschaftliche System der Kapitalanlage im Auslande, Berlin: Georg Reimer, 1907. The author of this work is conservative, imperialist and hates socialism, but his work is of great scientific value. Hilferding’s Finance Capital also owes a great deal to it.

12. Gerhart von Schulze-Gaevernitz, Britischer Imperialismus und englischer Freihandel zu Beginn des zwanzigsten Jahrhunderts, Leipzig: Duncker & Humblot, 1906, p. 323. [Rentner also means 'pensioner’]

13. Sartorius, Op. Cit., pp. 387-389.

14. Hilferding, Finance Capital, p. 322.

15. See Hilferding, Finance Capital, p. 322, 336, 346-49 and 364-70.

16. Hilferding, Finanzkapital, p. 439.

17. See the brief but very lively account of these events in the work of the Frenchman Francis Delaisi, La guerre qui vient, Paris: La guerre sociale, 1911.

18. Hilferding, Finance Capital, p. 331-32.

19. Bebel, by the way, once expressed the same view when he made the following remark at the Jena Congress (1911): “I say openly: the greatest guarantee for world peace may lie in this international export of capital.” Protokoll des Jenaer Parteitags, p. 345.

20. See Karl Kautsky, Nationalstaat, imperialistischer Staat und Staatenbund, Nürnberg: Fränkische Verlagsanstalt, 1915, p. 23.

21 [Retranslated from the German.]

22. Francis Delaisi, La démocratie et les financiers, Paris: La guerre sociale, 1910, pp. 44-59.

23. Eugen von Philippovich, “Monopole und Monopolitk,” Archiv für die Geschichte des Sozialismus und der Arbeiterbewegung (Grünbergs Archiv), 1. Jg., 1915, pp. 158ff. Philippovich’s article was based on the following works: John Bates Clark, The Problem of Monopoly: A Study of a Grave Danger and of the Natural Mode of Averting It, New York: Columbia University Press, 1904; Robert Liefmann, Beteiligungs- und Finanzierungsgesellschaften: Eine Studie über den modernen Kapitalismus und das Effektenwesen in Deutschland, den Vereinigten Staaten, der Schweiz, England, Frankreich und Belgien, 2. verm. Aufl., Jena: Fischer, 1913; J. Singer, Das Land der Monopole: Amerika oder Deutschland?, Berlin: Siemenroth, 1913; Oswald Whitman Knauth, The Policy of the United States towards Industrial Monopoly, New York, Columbia University, 1914.

24. Ibid., p. 159.

25. Karl Kautsky, “Der Imperialismus,” Die Neue Zeit, Vol. 32, No. 2 (1914), p. 909; compare also Nationalstaat, Imperialistischer Staat und Staatenbund, Nürnberg: Fränkische Verlagsanstalt, 1915, p. 15, and earlier works of Kautsky.

26. Also Cunow also criticises this definition of Kautsky’s. Not, however, from the standpoint of Marxism, but from the standpoint of social-chauvinism. Imperialism is a “historical” necessity. All that is real is rational. As imperialism is real, it is necessarily rational, progressive. Conclusion: the workers must support the imperialism of their fatherland.

27. Hilferding, Finance Capital, p. 326.


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