IMPERIALISM, THE HIGHEST STAGE OF CAPITALISM [1]
A Popular Outline
PREFACE
The pamphlet here presented to the reader was written in the spring of 1916, in Zurich.
In the conditions in which I was obliged to work there I naturally suffered somewhat from
a shortage of French and English literature and from a serious dearth of Russian
literature. However, I made use of the principal English work on imperialism, the book by
J. A. Hobson, with all the care that, in my opinion, that work deserves.
This pamphlet was written with an eye to the tsarist censorship. Hence, I was not only
forced to confine myself strictly to an exclusively theoretical, particularly economic
analysis of facts, but to formulate the few necessary observations on politics with
extreme caution, by hints, in an allegorical language--in that accursed Aesopian
language--to which tsarism compelled all revolutionaries to have recourse whenever they
took up their pens to write a "legal" work.
It is painful, in these days of liberty, to reread these passages of the pamphlet,
which have been distorted, cramped, compressed in an iron vise on account of the censor.
About the fact that imperialism is the eve of the socialist revolution; that
social-chauvinism (Socialism in words, chauvinism in deeds) is the utter betrayal of
Socialism, complete desertion to the side of the bourgeoisie, that this split in the
working-class movement is bound up with the objective conditions of imperialism, etc., I
had to speak in a "slavish" tongue, and I must refer the reader who is
interested in the subject to the articles I wrote abroad in 1914-17, a new edition of
which is soon to appear. Special attention should be drawn to a passage on pages 119-20.[2] In order to show the reader, in a guise acceptable to the censors, how
shamelessly the capitalists and the social-chauvinists who have deserted to their side
(and whom Kautsky opposes with so much inconsistency) lie on the question of annexations,
in order to show how shamelessly they screen the annexations of their capitalists,
I was forced to quote as an example--Japan! The careful reader will easily substitute
Russia for Japan, and Finland, Poland, Courland, the Ukraine, Khiva, Bokhara, Estonia or
other regions peopled by non-Great Russians, for Korea.
I trust that this pamphlet will help the reader to understand the fundamental economic
question, viz., the question of the economic essence of imperialism, for unless this is
studied, it will be impossible to understand and appraise modern war and modern politics.
Author
Petrograd
April 26, 1917
PREFACE TO THE FRENCH AND GERMAN EDITIONS [3]
I
As was indicated in the preface to the Russian edition, this pamphlet was written in
1916, with an eye to the tsarist censorship. I am unable to revise the whole text at the
present time, nor, perhaps, would this be advisable, since the main purpose of the book
was and remains: to present, on the basis of the summarized returns of irrefutable
bourgeois statistics, and the admissions of bourgeois scholars of all countries, a composite
picture of the world capitalist system in its international relationships at the
beginning of the twentieth century--on the eve of the first world imperialist war.
To a certain extent it will even be useful for many Communists in advanced capitalist
countries to convince themselves by the example of this pamphlet, legal from the
standpoint of the tsarist censor, of the possibility--and necessity--of making use of
even the slight remnants of legality which still remain at the disposal of the Communists,
say, in contemporary America or France, after the recent almost wholesale arrests of
Communists, in order to explain the utter falsity of social-pacifist views and hopes for
"world democracy." The most essential of what should be added to this censored
pamphlet I shall try to present in this preface.
II
It is proved in the pamphlet that the war of 1914-18 was imperialistic (that is, an
annexationist, predatory, plunderous war) on the part of both sides; it was a war for the
division of the world, for the partition and repartition of colonies, "spheres of
influence" of finance capital, etc.
Proof of what was the true social, or rather, the true class character of the war is
naturally to be found, not in the diplomatic history of the war, but in an analysis of the objective position of the ruling classes in all the belligerent
countries. In order to depict this objective position one must not take examples or
isolated data (in view of the extreme complexity of the phenomena of social life it is
always possible to select any number of examples or separate data to prove any
proposition), but the whole of the data concerning the basis of economic
life in all the belligerent countries and the whole world.
It is precisely irrefutable summarized data of this kind that I quoted in describing
the partition of the world in 1876 and 1914 (in Chapter VI) and the distribution
of the railways all over the world in 1890 and 1913 (in Chapter VII). Railways
are a summation of the basic capitalist industries: coal, iron and steel; a summation and
the most striking indices of the development of world trade and bourgeois-democratic
civilization. How the railways are linked up with large-scale industry, with monopolies,
syndicates, cartels, trusts, banks and the financial oligarchy is shown in the preceding
chapters of the book. The uneven distribution of the railways, their uneven
development--sums up, as it were, modern monopolist capitalism on a world-wide scale. And
this summary proves that imperialist wars are absolutely inevitable under such an
economic system, as long as private property in the means of production exists.
The building of railways seems to be a simple, natural, democratic, cultural and
civilizing enterprise; that is what it is in the opinion of bourgeois professors, who are
paid to depict capitalist slavery in bright colors, and in the opinion of petty-bourgeois
Philistines. But as a matter of fact the capitalist threads, which in thousands of
different intercrossings bind these enterprises with private property in means of
production in general, have converted this railway construction into an instrument for
oppressing a thousand million people (in the colonies and semicolonies), that is,
more than half the population of the globe inhabiting the dependent countries, as well as
the wage slaves of capital in the "civilized" countries.
Private property based on the labor of the small proprietor, free competition,
democracy, all the catchwords with which the capitalists and their press deceive the
workers and the peasants--are things of the distant past. Capitalism has
grown into a world system of colonial oppression and of the financial strangulation of the
overwhelming majority of the population of the world by a handful of "advanced"
countries. And this "booty" is shared between two or three powerful world
marauders armed to the teeth (America, Great Britain, Japan), who involve the whole world
in their war over the sharing of their booty.
III
The Brest-Litovsk Peace Treaty dictated by monarchist Germany, and the subsequent much
more brutal and despicable Versailles Treaty dictated by the "democratic"
republics of America and France and also by "free" England, have rendered a most
useful service to humanity by exposing both the hired coolies of the pen of imperialism
and the petty-bourgeois reactionaries, although they call themselves pacifists and
Socialists, who sang praises to "Wilsonism," and who insisted that peace and
reforms were possible under imperialism.
The tens of millions of dead and maimed left by the war--a war to decide whether the
British or German group of financial marauders is to receive the most booty--and those two
"peace treaties," are with unprecedented rapidity opening the eyes of the
millions and tens of millions of people who are downtrodden, oppressed, deceived and duped
by the bourgeoisie. Thus, out of the universal ruin caused by the war a world-wide
revolutionary crisis is arising which, however prolonged and arduous its stages may be,
cannot end otherwise than in a proletarian revolution and in its victory.
The Basle Manifesto of the Second International, which in 1912 gave an appraisal of the
very war that broke out in 1914 and not of war in general (there are different kinds of
wars, including revolutionary wars), this Manifesto is now a monument exposing the utter
shameful bankruptcy and treachery of the heroes of the Second International.
That is why I reproduce this Manifesto as a supplement to the present edition,[4] and again and again I urge the reader to note that the heroes of the
Second International are as assiduously avoiding the passages of this Manifesto which
speak precisely, clearly and definitely of the connection between that impending war and
the proletarian revolution, as a thief avoids the place where he has committed a theft.
IV
Special attention has been devoted in this pamphlet to a criticism of
"Kautskyism," the international ideological trend represented in all countries
of the world by the "most prominent theoreticians" and leaders of the Second
International (Otto Bauer and Co. in Austria, Ramsay MacDonald and others in England,
Albert Thomas in France, etc., etc.) and a multitude of Socialists, reformists, pacifists,
bourgeois-democrats and parsons.
This ideological trend is, on the one hand, a product of the disintegration and decay
of the Second International, and, on the other hand, the inevitable fruit of the ideology
of the petty bourgeoisie, who, by the whole of their conditions of life, are held captive
to bourgeois and democratic prejudices.
The views held by Kautsky and his like are a complete renunciation of the very
revolutionary principles of Marxism which that writer has championed for decades,
especially, by the way, in his struggle against socialist opportunism (of Bernstein,
Millerand, Hyndman, Gompers, etc.). It is not a mere accident, therefore, that the
"Kautskyans" all over the world have now united in practical politics with the
extreme opportunists (through the Second, or the Yellow International) and with the
bourgeois governments (through bourgeois coalition governments in which Socialists take
part).
The growing world proletarian revolutionary movement in general, and the Communist
movement in particular, cannot dispense with an analysis and exposure of the theoretical
errors of "Kautskyism." The more so since pacifism and "democracy" in
general, which lay no claim to Marxism whatever, but which, like Kautsky and Co., are
obscuring the profundity of the contradictions of imperialism and the inevitable
revolutionary crisis to which it gives rise, are still very widespread all over the world.
To combat these tendencies is the bounden duty of the Party of the proletariat, which must
win away from the bourgeoisie the small proprietors who are duped by them, and the
millions of toilers who have been placed under more or less petty-bourgeois conditions of
life.
V
A few words must be said about Chapter VIII entitled: "The Parasitism and Decay of
Capitalism." As already pointed out in the text, Hilferding, ex-"Marxist,"
and now a comrade-in-arms of Kautsky and one of the chief exponents of bourgeois,
reformist policy in the Independent Social-Democratic Party of Germany,[5]
has taken a step backward on this question compared with the frankly pacifist and
reformist Englishman, Hobson. The international split of the whole working-class movement
is now quite evident (the Second and the Third Internationals). The fact that armed
struggle and civil war is now raging between the two trends is also evident: the support
given to Kolchak and Denikin in Russia by the Mensheviks and
"Socialist-Revolutionaries" against the Bolsheviks; the fight the Scheidemanns,
Noskes and Co. have conducted in conjunction with the bourgeoisie against the Spartacists
[6] in Germany; the same thing in Finland, Poland, Hungary, etc. What
is the economic basis of this world-historic phenomenon?
Precisely the parasitism and decay of capitalism which are characteristic of its
highest historical stage of development, i.e., imperialism. As is proved in this pamphlet,
capitalism has now singled out a handful (less than one-tenth of the inhabitants
of the globe; less than one-fifth at a most "generous" and liberal calculation)
of exceptionally rich and powerful states which plunder the whole world simply by
"clipping coupons." Capital exports yield an income of eight to ten billion
francs per annum, at prewar prices and according to prewar bourgeois statistics. Now, of
course, they yield much more.
Obviously, out of such enormous superprofits (since they are obtained over and
above the profits which capitalists squeeze out of the workers of their "own"
country) it is possible to bribe the labor leaders and the upper stratum of the
labor aristocracy. And the capitalists of the "advanced" countries are bribing
them; they bribe them in a thousand different ways, direct and indirect, overt and covert.
This stratum of bourgeoisified workers, or the "labor aristocracy," who are
quite philistine in their mode of life, in the size of their earnings and in their entire
outlook, is the principal prop of the Second International, and, in our days, the
principal social (not military) prop of the bourgeoisie. For they are
the real agents of the bourgeoisie in the working-class movement, the labor
lieutenants of the capitalist class, real channels of reformism and chauvinism. In the
civil war between the proletariat and the bourgeoisie they inevitably, and in no small
numbers, take the side of the bourgeoisie, the "Versaillese" against the
"Communards."
Unless the economic roots of this phenomenon are understood and its political and
social significance is appreciated, not a step can be taken toward the solution of the
practical problems of the Communist movement and of the impending social revolution.
Imperialism is the eve of the social revolution of the proletariat. This has been
confirmed since 1917 on a worldwide scale.
July 6, 1920
N. Lenin
DURING the last fifteen to twenty years, especially since the Spanish-American War
(1898), and the Anglo-Boer War (1899-1902), the economic and also the political literature
of the two hemispheres has more and more often adopted the term "imperialism" in
order to describe the present era. In 1902, a book by the English economist J. A. Hobson, Imperialism, was published in London and New York. This author, whose point of view is that of
bourgeois social reformism and pacifism which, in essence, is identical with the present
point of view of the ex-Marxist, K. Kautsky, gives a very good and comprehensive
description of the principal specific economic and political features of imperialism. In
1910, there appeared in Vienna the work of the Austrian Marxist, Rudolf Hilferding, Finance
Capital (Russian edition: Moscow, 1912). In spite of the mistake the author commits
on the theory of money, and in spite of a certain inclination on his part to reconcile
Marxism with opportunism, this work gives a very valuable theoretical analysis of
"the latest phase of capitalist development," the subtitle of the book. Indeed,
what has been said of imperialism during the last few years, especially in an enormous
number of magazine and newspaper articles, and also in the resolutions, for example, of
the Chemnitz and Basle congresses which took place in the autumn of 1912,
has scarcely gone beyond the ideas expounded, or, more exactly, summed up by the two
writers mentioned above....
Later on, we shall try to show briefly, and as simply as possible, the connection and
relationships between the principal economic features of imperialism. We shall
not be able to deal with non-economic aspects of the question, however much they deserve
to be dealt with. We have put references to literature and other notes which, perhaps,
would not interest all readers, at the end of this pamphlet.[7]
I. CONCENTRATION OF PRODUCTION AND MONOPOLIES
The enormous growth of industry and the remarkably rapid process of concentration of
production in ever-larger enterprises are one of the most characteristic features of
capitalism. Modern censuses of production give most complete and most exact data on this
process.
In Germany, for example, out of every 1,000 industrial enterprises, large enterprises,
i.e., those employing more than 50 workers, numbered three in 1882, six in 1895 and nine
in 1907; and out of every 100 workers employed, this group of enterprises employed 22, 30
and 37, respectively. Concentration of production, however, is much more intense than the
concentration of workers, since labor in the large enterprises is much more productive.
This is shown by the figures on steam engines and electric motors. If we take what in
Germany is called industry in the broad sense of the term, that is, including commerce,
transport, etc., we get the following picture. Large-scale enterprises 30,588 out of a
total of 3,265,623, that is to say, 0.9 per cent. These enterprises employ 5,700,000
workers out of a total of 14,400,000, i.e., 39.4 per cent; they use 6,600,000 steam
horsepower out of a total of 8,800,000, i.e., 75.3 per cent, and 1,200,000 kilowatts of
electricity out of a total of 1,500,000, i.e., 77.2 per cent.
Less than one-hundredth of the total enterprises utilize more than three-fourths of
the total steam and electric power! Two million nine hundred and seventy thousand small
enterprises (employing up to five workers), constituting 91 per cent of the total, utilize
only 7 per cent of the total steam and electric power! Tens of thousands of huge
enterprises are everything; millions of small ones are nothing.
In 1907, there were in Germany 586 establishments employing one thousand and more
workers, nearly one-tenth (1,380,000) of the total number of
workers employed in industry, and they utilized almost one-third (32 per cent) of
the total steam and electric power.* [Figures taken from Annalen des Deutschen Reichs, 1911, Zahn.] As we shall see, money capital and the banks make this superiority of a
handful of the largest enterprises still more overwhelming, in the most literal sense of
the word, i.e., millions of small, medium and even some big "masters" are in
fact in complete subjection to some hundreds of millionaire financiers.
In another advanced country of modern capitalism, the United States of America, the
growth of the concentration of production is still greater. Here statistics single out
industry in the narrow sense of the word and group enterprises according to the value of
their annual output. In 1904 large-scale enterprises with an output of one million dollars
and over numbered 1,900 (out of 216,180, i.e., 0.9 per cent). These employed 1,400,000
workers (out of 5,500,000, i.e., 25.6 per cent) and their output amounted to
$5,600,000,000 (out of $14,800,000,000, i.e., 38 per cent). Five years later, in 1909, the
corresponding figures were: 3,060 enterprises (out of 268,491, i.e., 1.1 per cent)
employing 2,000,000 workers (out of 6,600,000, i.e., 30.5 per cent) with an output of
$9,000,000 (out of $20,700,000,000, i.e., 43.8 per cent).* [Statistical Abstract of the
United States, 1912, p. 202.]
Almost half the total production of all the enterprises of the country was carried on
by one-hundredth part of these enterprises! These 3,000 giant enterprises embrace
25 branches of industry. From this it can be seen that, at a certain stage of its
development, concentration itself, as it were, leads right up to monopoly; for a score or
so of giant enterprises can easily arrive at an agreement, while on the other hand, the
hindrance to competition, the tendency towards monopoly, arises from the very dimensions
of the enterprises. This transformation of competition into monopoly is one of the most
important--if not the most important--phenomena of modern capitalist economy, and we must
deal with it in greater detail. But first we must clear up one possible misunderstanding.
American statistics say: 3,000 giant enterprises in 250 branches of industry, as if
there were only a dozen enterprises of the largest scale for each branch of industry.
But this is not the case. Not in every branch of industry; are there large-scale
enterprises; and moreover, a very important feature of capitalism in its highest stage of
development is so-called combination of production, that is to say, the grouping
in a single enterprise of different branches of industry, which either represent the
consecutive stages in the processing of raw materials (for example, the smelting of iron
ore into pig iron, the conversion of pig iron into steel, and then, perhaps, the
manufacture of steel goods)-- or are auxiliary to one another (for example, the
utilization of scrap, or of by-products, the manufacture of packing materials, etc.).
"Combination," writes Hilferding, "levels out the fluctuations of trade
and therefore assures to the combined enterprises a more stable rate of profit. Secondly,
combination has the effect of eliminating trade. Thirdly, it has the effect of rendering
possible technical improvements, and, consequently, the acquisition of superprofits over
and above those obtained by the 'pure' (i.e., non-combined) enterprises. Fourthly,
it strengthens the position of the combined enterprises compared with that of 'pure'
enterprises, strengthens them in the competitive struggle in periods of serious
depression, when the fall in prices of raw materials does not keep pace with the fall in
prices of manufactured goods."*[Finance Capital, Russ. ed., pp. 286-87.]
The German bourgeois economist, Heymann, who has written a book especially on
"mixed," that is, combined, enterprises in the German iron
industry, says: "Pure enterprises perish, they are crushed between the high price of raw material and the low price of the finished product." Thus we get the
following picture: "There remain, on the one hand, the big coal companies, producing
millions of tons yearly, strongly organized in their coal syndicate, and on the other, the
big steel plants, closely allied to the coal mines, having their own steel syndicate.
These giant enterprises, producing 400,000 tons of steel per annum, with a tremendous
output of ore and coal and producing finished steel goods, employing 10,000 workers
quartered in company houses, and sometimes owning their own railways and ports, are the
typical representatives of the German iron and steel industry. And concentration goes on
further and further. Individual enterprises are becoming larger and larger. An
ever-increasing number of enterprises in one, or in several different industries, join
together in giant enterprises, backed up and directed by half a dozen big Berlin banks. In
relation to the German mining industry, the truth of the teachings of Karl Marx on
concentration is definitely proved, true, this applies to a country where industry is
protected by tariffs and freight rates. The German mining industry is ripe for
expropriation."*[Hans Gideon Heymann, Die gernischten Werke im deutschen
Grosseisengewerbe (Combined Plants in the German Big Iron Industry--Tr.), Stuttgart,
1904, (SS. 256, 278).]
Such is the conclusion which a conscientious bourgeois economist, and such are the
exception, had to arrive at. It must be noted that he seems to place Germany in a special
category because her industries are protected by high tariffs. But this circumstance could
only accelerate concentration and the formation of monopolist manufacturers' combines,
cartels, syndicates, etc. It is extremely important to note that in free-trade England,
concentration also leads to monopoly, although somewhat later and perhaps in
another form. Professor Hermann Levy, in his special work of research entitled Monopolies,
Cartels and Trusts, based on data on British economic development,
writes as follows:
"In Great Britain it is the size of the enterprise and its high technical level
which harbor a monopolist tendency. This, for one thing, is due to the great investment of
capital per enterprise, which gives rise to increasing demands for new capital for the new
enterprises and thereby renders their launching more difficult. Moreover (and this seems
to us to be the more important point) every new enterprise that wants to keep pace with
the gigantic enterprises that have been formed by concentration would here produce such an
enormous quantity of surplus goods that it could dispose of them only by being able to
sell them profitably as a result of an enormous increase in demand; otherwise, this
surplus would force prices down to a level that would be unprofitable both for the new
enterprise and for the monopoly combines." In England--unlike other countries where
protective tariffs facilitate the formation of cartels--monopolist alliances of
entrepreneurs, cartels and trusts arise in the majority of cases only when the number of
the chief competing enterprises is reduced to "a couple of dozen or so."
"Here the influence of the concentration movement on the formation of large
industrial monopolies in a whole sphere of industry stands out with crystal
clarity."*[Hermann Levy, Monopole, Kartelle und Trusts, Jena, 1909, SS.
286,290, 298.]
Half a century ago, when Marx was writing Capital, free competition appeared
to the overwhelming majority of economists to be a "natural law." Official
science tried, by a conspiracy of silence, to kill the works of Marx, who by a theoretical
and historical analysis of capitalism proved that free competition gives rise to the
concentration of production, which, in turn, at a certain stage of development, leads to
monopoly. Today, monopoly has become a fact. The economists are writing mountains of books
in which they describe the diverse manifestations of monopoly, and continue to declare in
chorus that "Marxism is refuted." But facts are stubborn things, as the English
proverb says, and they have to be reckoned with, whether we like it or not. The facts show
that differences between capitalist countries, e.g., in the matter of protection or free
trade, only give rise to insignificant variations in the form of monopolies or in the
moment of their appearance; and that the rise of monopolies, as the result of the
concentration of production, is a general and fundamental law of the present stage of
development of capitalism.
For Europe, the time when the new capitalism definitely superseded the old can
be established with fair precision: it was the beginning of the twentieth century. In one
of the latest compilations on the history of the "formation of monopolies," we
read:
"Isolated examples of capitalist monopoly could be cited from the period preceding
1860; in these could be discerned the embryo of the forms that are so common today; but
all this undoubtedly represents the prehistory of the cartels. The real beginning of
modern monopoly goes back, at the earliest, to the 'sixties. The first important period of
development of monopoly commenced with the international industrial depression of the
'seventies and lasted until the beginning of the 'nineties." "If we examine the
question on a European scale, we will find that the development of free competition
reached its apex in the 'sixties and 'seventies. Then it was that England completed the
construction of its old-style capitalist organization. In Germany, this organization had
entered into a fierce struggle with handicraft and domestic industry, and had begun to
create for itself its own forms of existence."
"The great revolution commenced with the crash of 1873, or rather, the depression
which followed it and which, with hardly discernible interruptions in the early 'eighties,
and the unusually violent, but short-lived boom about 1889, marks twenty-two years of
European economic history." "During the short boom of 1889-90, the system of
cartels was widely resorted to in order to take advantage of the favorable business
conditions. An ill-considered policy drove prices up still more rapidly and still higher
than would have been the case if there were no cartels, and nearly all these cartels
perished ingloriously in the smash. Another five-year period of bad trade and low prices
followed, but a new spirit reigned in industry; the depression was no longer regarded as
something to be taken for granted: it was regarded as nothing more than a pause before
another boom.
"The cartel movement entered its second epoch: instead of being a transitory
phenomenon, the cartels became one of the foundations of economic life. They are winning
one held of industry after another, primarily, the raw materials industry. At the
beginning of the 'nineties the cartel system had already acquired--in the organization of
the coke syndicate on the model of which the coal syndicate was later formed--a cartel
technique which could hardly be improved. For the first time the great boom at the close
of the nineteenth century and the crisis of 1900-03 occurred entirely--in the mining and
iron industries at least--under the aegis of the cartels. And while at that time it
appeared to be something novel, now the general public takes it for granted that large
spheres of economic life have been, as a general rule, removed from the realm of free
competition."* [Th. Vogelstein, Die finanzielle Organisation der kapitalistischen
Industrie und die Monopolbildungen (Financial Organization of the Capitalist Industry and
the Formation of Monopolies--Tr.J in Grundriss der Sozialökonomik (Outline of
Social Economics--Tr.), VI Abt., Tübingen, 1914. Cf., also by the same author: Organisationsformen
der Eisenindustrie und Textilindustrie in England und Amerika (The Organizational Forms of
the Iron and Textile Industry of England and America--Tr.), Bd. I, Lpz., 1910.]
Thus, the principal stages in the history of monopolies are the following: 1) 1860-70,
the highest stage, the apex of development of free competition; monopoly
is in the barely discernible, embryonic stage. 2) After the crisis of
1873, a lengthy period of development of cartels; but they are still the exception. They
are not yet durable. They are still a transitory phenomenon. 3) The boom at the end of the
nineteenth century and the crisis of 1900-03. Cartels become one of the foundations of the
whole of economic life. Capitalism has been transformed into imperialism.
Cartels come to an agreement on the conditions of sale, terms of payment, etc. They
divide the markets among themselves. They fix the quantity of goods to be produced. They
fix prices. They divide the profits among the various enterprises, etc.
The number of cartels in Germany was estimated at about 250 in 1896 and at 385 in 1905,
with about 12,000 firms participating.* [Dr. Riesser, Die deutschen Grossbanken und
ihre Konzentration im Zusammenhange mit der Entwicklung der Gesamtwirtschaft in
Deutschland (The German Big Banks and Their Concentration in Connection with the
Development of the General Economy in Germany--Tr.), 4. Aufl., 1912, S. 149; Robert
Liefmann, Kartelle und Trusts und die Weiterbildung der volkswirtschaftlichen
Organisation (Cartels and Trusts and the Further Development of Economic
Organization--Tr.), 2. Aufl., 1910, S. 25] But it is generally recognized
that these figures are underestimations. From the statistics of German industry for 1907
we quoted above, it is evident that even these 12,000 very big enterprises concentrate
certainly more than half the steam and electric power used in the country. In the United
States of America, the number of trusts in 1900 was 185 and in 1907, 250. American
statistics divide all industrial enterprises into those belonging to individuals, to
private firms or to corporations. The latter in 1904 comprised 23.6 per cent, and in 1909,
25.9 per cent, i.e., more than one-fourth of the total industrial enterprises in the
country. These employed in 1904, 70.6 per cent, and in 1909 75.6 per cent, i.e., more than
three-fourths of the total wage earners. Their output amounted at these two dates to
$10,900,000,000 and to $16,300,000,000, i.e., to 73.7 per cent and 79.0 per cent of the
total, respectively.
Not infrequently cartels and trusts concentrate in their hands seven- or eight-tenths
of the total output of a given branch of industry. The Rhine-Westphalian Coal Syndicate,
at its foundation in 1893, concentrated 86.7 per cent of the total coal output of the
area, and in 1910 it already concentrated 95.4 per cent.** [Dr. Fritz Kestner, Der
Organisationstwang. Eine Untersuchung über die Kampfe zwischen Kartellen und
Aussenseitern (Compulsory Organization An Investigation of the Struggle Between Cartels
and Outsiders --Tr.), Berlin, 1912, p. 11.] The monopoly so created assures enormous
profits, and leads to the formation of technical productive units of formidable magnitude.
The famous Standard Oil Company in the United States was founded in 1900: "It has an
authorized capital of $150,000,000. It issued $100,000,000 common and $106,000,000
preferred stock. From 1900 to 1907 the following dividends were paid on the latter: 48,
48, 45, 44, 36, 40, 40, 40 per cent in the respective years, i.e., in all, $367,000,000.
From 1882 to 1907, out of total net profits amounting to $889,000,000, $606,000,000 were
distributed in dividends, and the rest went to reserve capital."* [R. Liefmann, Beteiligungs-
und Finanzierungsgesellschaften. Bine Studze über den modernen Kapitalismus und das
Eflektenwesen (Holding and Finance Companies--A Study in Modern Capitalism and
Securities--Tr.), I. Aufl., Jena, 1909, p. 212.] "In 1907 the various works of
the United States Steel Corporation employed no less than 210,180 workers and other
employees. The largest enterprise in the German mining industry, the Gelsenkirchen Mining
Company (Gelsenkirchener Bergwerksgesellschaf t) in 1908 had a staff of 46,048
workers and office employees."**[Ibid., p. 218.] In 1902, the United States
Steel Corporation already produced 9,000,000 tons of steel.*** [Dr. S. Tschierschky, Kartell
und Trust, Göttingen, 1903, p 13.] Its output constituted in 1901 66.3 per cent, and
in 1908, 56.I per cent of the total output of steel in the United States.**** [Th.
Vogelstein, Organisationsformen, p. 275.] The output of ore was 43.9 per cent and
46.3 per cent, respectively.
The report of the American Government Commission on Trusts states: "Their
superiority over competitors is due to the magnitude of its enterprises and their
excellent technical equipment. Since its inception, the Tobacco Trust has devoted all its
efforts to the substitution of mechanical for manual labor on an extensive scale. With
this end in view it bought up all patents that had anything to do with the manufacture of
tobacco and spent enormous sums for this purpose. Many of these patents at first proved to
be of no use, and had to be modified by the engineers employed by the trust. At the end of
1906, two subsidiary companies were formed solely to acquire patents. With the same object
in view, the trust built its own foundries, machine shops and repair shops. One of these
establishments, that in Brooklyn, employs on the average 300 workers; here experiments are
carried out on inventions concerning the manufacture of cigarettes, cheroots, snuff,
tinfoil for packing, boxes, etc. Here, also, inventions are perfected.* [Report
of the Commissioner of Corporations on the Tobacco Industry, Washington, 1909, p.
266, cited according to Dr. Paul Tafel, Die nordamerikanischen Trusts und ibre
Wirkungen auf den Fortschritt der Technik (North American Trusts and Their Effect on
Technical Progress--Tr.), Stuttgart, 1913, p. 48.] "Other trusts also employ
so-called developing engineers whose business it is to devise new methods of production
and to test technical improvements. The United States Steel Corporation grants big bonuses
to its workers and engineers for all inventions suitable for raising technical efficiency,
or for reducing cost of production."** [Dr. P. Tafel, ibid., p. 49.]
In German large-scale industry, e.g., in the chemical industry, which has developed so
enormously during these last few decades, the promotion of technical improvement is
organized in the same way. By 1908 the process of concentration of production had already
given rise to two main "groups" which, in their way, were also in the nature of
monopolies. First these groups constituted "dual alliances" of two pairs of big
factories, each having a capital of from twenty to twenty-one million marks: on the one
hand, the former Meister Factory at Höchst and the Cassella Factory at Frankfurt am Main;
and on the other hand, the aniline and soda factory at Ludwigshafen and the former Bayer
factory at Elberfeld. Then, in 1905, one of these groups, and in 1908 the other group,
each concluded an agreement with yet another big factory. The result was the formation of
two "triple alliances," each with a capital of from forty to fifty million
marks. And these "alliances" have already begun to come "close" to one
another, to reach "an understanding" about prices, etc.* [Riesser, op. Cit., third edition, p. 547 et seq. The newspapers (June 1916) report the formation of a new
gigantic trust which combines the chemical industry of Germany.]
Competition becomes transformed into monopoly. The result is immense progress in the
socialization of production. In particular, the process of technical invention and
improvement becomes socialized.
This is something quite different from the old free competition between manufacturers,
scattered and out of touch with one another, and producing for an unknown market.
Concentration has reached the point at which it is possible to make an approximate
estimate of all sources of raw materials (for example, the iron ore deposits) of a country
and even, as we shall see, of several countries, or of the whole world. Not only are such
estimates made, but these sources are captured by gigantic monopolist combines. An
approximate estimate of the capacity of markets is also made, and the combines
"divide" them up amongst themselves by agreement. Skilled labor is monopolized,
the best engineers are engaged; the means of transport are captured: railways in America,
shipping companies in Europe and America. Capitalism in its imperialist stage leads right
up to the most comprehensive socialization of production; it, so to speak, drags the
capitalists, against their will and consciousness, into some sort of a new social order, a
transitional one from complete free competition to complete socialization.
Production becomes social, but appropriation remains private. The social means of
production remain the private property of a few. The general framework of formally
recognized free competition remains, but the yoke of a few monopolists on the rest of the
population becomes a hundred times heavier, more burdensome and intolerable.
The German economist, Kestner, has written a book especially devoted to "the
struggle between the cartels and outsiders," i.e., the capitalists outside the
cartels. He entitled his work Compulsory Organization, although, in order to
present capitalism in its true light, he should, of course, have written about compulsory
submission to monopolist combines. It is instructive to glance at least at the list of the
methods the monopolist combines resort to in the present day, the latest, the civilized
struggle for "organization": 1) stopping supplies of raw materials (. . .
"one of the most important methods of compelling adherence to the cartel"); 2)
stopping the supply of labor by means of "alliances" (i.e., of agreements
between the capitalists and the trade unions by which the latter permit their members to
work only in cartelized enterprises); 3) stopping deliveries; 4) closing of trade outlets;
5) agreements with the buyers, by which the latter undertakes to trade only with the
cartels; 6) systematic price cutting (to ruin "outside" firms, i.e., those which
refuse to submit to the monopolists. Millions are spent in order to sell goods for a
certain time below their cost price; there were instances when the price of benzine was
thus reduced from 40 to 22 marks, i.e., almost by half!); 7) stopping credits; 8) boycott.
Here we no longer have competition between small and large, technically developed and
backward enterprises. We see here the monopolists throttling those which do not submit to
them, to their yoke, to their dictation. This is how this process is reflected in the mind
of a bourgeois economist:
"Even in the purely economic sphere," writes Kestner, "a certain change
is taking place from commercial activity in the old sense of the word towards
organizational speculative activity. The greatest success no longer goes to the merchant
whose technical and commercial experience enables him best of all to estimate the needs of
the buyer and who is able to discover and, so to speak, 'awaken' a latent demand; it goes
to the speculative genius" (?!) "who knows how to estimate, or even only to
sense in advance the organizational development and the possibilities of certain
connections between individual enterprises and the banks...."
Translated into ordinary human language this means that the development of capitalism
has arrived at a stage when, although commodity production still "reigns" and
continues to be regarded as the basis of economic life, it has in reality been undermined
and the bulk of the profits go to the "geniuses" of financial manipulation. At
the basis of these manipulations and swindles lies socialized production; but the immense
progress of mankind which achieved this socialization, goes to benefit . . . the
speculators. We shall see later how "on these grounds" reactionary,
petty-bourgeois critics of capitalist imperialism dream of going back to
"free," "peaceful," and "honest" competition.
"The prolonged raising of prices which results from the formation of
cartels," says Kestner, "has hitherto been observed only in relation to the most
important means of production, particularly coal, iron and potassium, but has never been
observed in relation to manufactured goods. Similarly, the increase in profits resulting
from this raising of prices has been limited only to the industries which produce means of
production. To this observation we must add that the industries which process raw
materials (and not semimanufactures) not only secure advantages from the cartel formation
in the shape of high profits, to the detriment of the finished goods industry, but secured
also a dominating position over the latter, which did not exist under free
competition."* [Kestner, op. cit., p. 254. ]
The words which we have italicized reveal the essence of the case which the bourgeois
economists admit so reluctantly and so rarely, and which the present-day defenders of
opportunism, led by K. Kautsky, so zealously try to evade and brush aside. Domination, and
violence that is associated with it, such are the relationships that are typical of the
"latest phase of capitalist development"; this is what inevitably had to result,
and has resulted, from the formation of all-powerful economic monopolies.
We will give one more example of the methods employed by the cartels. Where it is
possible to capture all or the chief sources of raw materials, the rise of cartels and
formation of monopolies is exceptionally easy. It would be wrong, however, to assume that
monopolies do not arise in other industries in which it is impossible to corner the
sources of raw materials. The cement industry, for instance, can find its raw materials
everywhere. Yet in Germany this industry too is strongly cartelized. The cement
manufacturers have formed regional syndicates: South German, Rhine-Westphalian, etc. The
prices fixed are monopoly prices: 230 to 280 marks a carload, when the cost price is 180
marks! The enterprises pay a dividend of from 12 per cent to 16 per cent--and it must not
be forgotten that the "geniuses" of modern speculation know how to pocket big
profits besides what they draw in dividends. In order to prevent competition in such a
profitable industry, the monopolists even resort to sundry stratagems: they spread false
rumors about the bad situation in their industry; anonymous warnings are published in the
newspapers, like the following: "Capitalists, don't invest your capital in the cement
industry!"; lastly, they buy up "outsiders" (those outside the syndicates)
and pay them "compensation" of 60,000, 80,000 and even 150,000 marks.* [L.
Eschwege, "Zement" in Die Bank, 1909, Vol. 1, p. 15 et seq.] Monopoly hews a
path for itself everywhere without scruple as to the means, from paying a
"modest" sum to buy off competitors to the American device of
"employing" dynamite against them.
The statement that cartels can abolish crises is a fable spread by bourgeois economists
who at all costs desire to place capitalism in a favorable light. On the contrary,
monopoly which is created in certain branches of industry, increases and
intensifies the anarchy inherent in capitalist production as a whole disparity
between the development of agriculture and that of industry, which is characteristic of
capitalism in general, is increased. The privileged position of the most highly
cartelized, so-called heavy industry, especially coal and iron, causes "a
still greater lack of coordination" in other branches of industry--as Jeidels, the
author of one of the best works on "the relationship of the German big banks to
industry," admits.* [O. Jeidels, Das Verhaltnis der deutschen Grossbanken zur
Industrie mit besonderer Berucksichtigung der Eisenindustrie (The Relationship of the
German Big Banks to Industry, With Special Reference to the Iron Industry--Tr.), Leipzig,
1905, p. 271.]
"The more developed an economic system is," writes Liefmann, an unblushing
apologist of capitalism, "the more it resorts to risky enterprises, or enterprises
abroad, to those which need a great deal of time to develop, or finally, to those which
are only of local importance."** [R. Liefmann, Beteiligungs- und
FinanzierungsgeseUschaften, p. 434] The increased risk is connected in the long run
with the prodigious increase of capital, which overflows the brim, as it were, flows
abroad, etc. At the same time the extremely rapid rate of technical progress gives rise to
increasing elements of disparity between the various spheres of national economy, to
anarchy and crises. Liefmann is obliged to admit that: "In all probability mankind
will see further important technical revolutions in the near future which will also affect
the organization of the economic system" ... electricity and aviation.... "As a
general rule, in such periods of radical economic change, speculation develops on a large
scale." ...*** [Ibid., pp. 465-66.]
Crises of every kind--economic crises most frequently, but not only these--in their
turn increase very considerably the tendency towards concentration and towards monopoly.
In this connection, the following reflections of Jeidels on the significance of the crisis
of 1900, which, as we have already seen, marked the turning point in the history of modern
monopoly, are exceedingly instructive:
"Side by side with the gigantic plants in the basic industries, the crisis of 1900
still found many plants organized on lines that today would be considered obsolete, the
'pure' " (non-combined) "plants, which had arisen on the crest of the industrial
boom. The fall in prices and the falling off in demand put these 'pure' enterprises into a
precarious position, which did not affect the gigantic combined enterprises at all or only
affected them for a very short time. As a consequence of this the crisis of 1900 resulted
in a far greater concentration of industry than the crisis of 1873: the latter crisis also
produced a sort of selection of the best equipped enterprises, but owing to the level of
technical development at that time, this selection could not place the firms which
successfully emerged from the crisis in a position of monopoly. Such a durable monopoly
exists to a high degree in the gigantic enterprises in the modern iron and steel and
electrical industries owing to their very complicated technique far-reaching organization
and magnitude of capital, and, to a lesser degree, in the engineering industry, certain
branches of the metallurgical industry, transport, etc."* [Jeidels, op. cit., p.
108.]
Monopoly! This is the last word in the "latest phase of capitalist
development." But we shall only have a very insufficient, incomplete, and poor notion
of the real power and the significance of modern monopolies if we do not take into
consideration the part played by the banks.
II. THE BANKS AND THEIR NEW ROLE
The principal and original function of banks is to serve as middlemen in the making of
payments. In doing so they transform inactive money capital into active, that is, into
capital yielding a profit; they collect all kinds of money revenues and place them at the
disposal of the capitalist class.
As banking develops and becomes concentrated in a small number of establishments, the
banks grow from humble middlemen into powerful monopolies having at their command almost
the whole of the money capital of all the capitalists and small businessmen and also the
larger part of the means of production and of the sources of raw materials of the given
country and in a number of countries. This transformation of numerous humble middlemen
into a handful of monopolists represents one of the fundamental processes in the growth of
capitalism into capitalist imperialism; for this reason we must first of all deal with the
concentration of banking.
In 1907-08, the combined deposits of the German joint stock banks, each having a
capital of more than a million marks, amounted to 7,000,000,000 marks; in 1912-13, these
deposits already amounted to 9,800,000,000 marks. An increase of 40 per cent in five
years; and of the 2,800,000,000 increase, 2,750,000,000 was divided amongst 57 banks, each
having a capital of more than 10,000,000 marks. The distribution of the deposits between
big and small banks was as follows :*[ Alfred Lansburgh, "Funf Jahre deutsches
Bankwesen" (Five Years of German Banking--Tr.), in Die Bank, 1913,
No. 8, p. 728.]
PERCENTAGE OF TOTAL DEPOSITS
| |
In 9 Big Berlin Banks |
In the other 48 banks with a capital of more than 10 million marks |
In 115 banks with a capital of 1-10 million marks |
In the small banks (with a capital of less than 1 million marks) |
| 1907-08 |
47 |
32.5 |
16.5 |
4 |
| 1912-13 |
48 |
36 |
12 |
3 |
The small banks are being ousted by the big banks, of which nine concentrate in their
hands almost half the total deposits. But we have left out of account many important
details, for instance, the transformation of numerous small banks practically into
branches of the big banks, etc. Of this we shall speak later on.
At the end of 1913, Schulze-Gaevernitz estimated the deposits in the nine big Berlin
banks at 5,100,000,000 marks, out of a total of about 10,000,000,000 marks. Taking into
account not only the deposits, but the total bank capital, this author wrote: "At the
end of 1909, the nine big Berlin banks, together with their affiliated banks, controlled
11,300,000,000 marks, that is, about 83 per cent of the total German bank capital. The
Deutsche Bank, which together with its affiliated banks controls nearly
3,000,000,000 marks, represents, parallel with the Prussian State Railway Administration,
the biggest and also the most decentralized accumulation of capital in the old
world."* [Schulze-Gaevernitz, "Die deutsche Kreditbank" in Grundriss
der Sozialökonomik (The German Credit Bank in Outline of Social economics--Tr.), Tübingen,
1915, pp. 12 and 137.]
We have emphasized the reference to the "affiliated" banks because this is
one of the most important distinguishing features of modern capitalist concentration. The
big enterprises and the banks in particular, not only completely absorb the small ones,
but also "annex" them, subordinate them, bring them into their "own"
group or "concern" (to use the technical term) by acquiring "holdings"
in their capital, by purchasing or exchanging shares, by a system of credits, etc., etc.
Professor Liefmann has written a voluminous "work" of about 500 pages describing
modern "holding and finance companies,"* [R. Liefmann, Beteiligungs- und
Finanzierungsgesellschaften. Eine Studie über den modernen Kapitalismus und das
Effektenwesen, I. Aufl., Jena, 1909, p. 212.] unfortunately adding
"theoretical" reflections of a very poor quality to what is frequently
undigested raw material. To what results this "holding" system leads as regards
concentration is best illustrated in the book written on the big German banks by Riesser,
himself a "banker." But before examining his data, we will quote a concrete
example of the "holding" system.
The Deutsche Bank "group" is one of the biggest, if not the biggest, of the
big banking groups. In order to trace the main threads which connect all the banks in this
group, it is necessary to distinguish between "holdings" of the first, second
and third degree, or what amounts to the same thing, between dependence (of the lesser
banks on the Deutsche Bank) in the first, second and third degree. We then obtain the
following picture:** [Alfred Lansburgh, "Das Beteiligungssystem im deutschen
Bankwesen" (The Holding System in German Banking -- Tr.) in Die Bank,
1910, 1, p.500.]
The Deutsche Bank has holdings: |
|
Dependence, 1st Degree |
Dependence, 2nd Degree |
Dependence, 3rd Degree |
| Permanently |
in 17 banks |
of which 9 in 34 |
of which 4 in 7 |
| For an indefinite period |
" 5 " |
-- |
-- |
| Occasionally |
" 8 " |
" " 5 " 14 |
" 2 " 2 |
| Total |
in 30 banks |
of which 14 in 48 |
of which 6 in 9 |
Included in the eight banks dependent on the Deutsche Bank in the "first
degree," "occasionally," are three foreign banks: one Austrian (the Wiener
Bankverein) and two Russian (the Siberian Commercial Bank and the Russian Bank for Foreign
Trade). Altogether, the Deutsche Bank group comprises, directly and indirectly, partially
and totally, 87 banks; and the total capital--its own and others which it controls--is
estimated at between two and three billion marks.
It is obvious that a bank which stands at the head of such a group, and which enters
into agreement with half a dozen other banks only slightly smaller than itself for the
purpose of conducting exceptionally big and profitable financial operations like floating
state loans, has already outgrown the part of "middleman" and has become a
combine of a handful of monopolists.
The rapidity with which the concentration of banking proceeded in Germany at the end of
the nineteenth and the beginning of the twentieth centuries is shown by the following data
which we quote in an abbreviated form from Riesser:
SIX BIG BERLIN BANKS
| Year |
Branches in Germany |
Deposit banks and exchange offices |
Constant holdings in German joint-stock banks |
Total establishments |
| 1895 |
16 |
14 |
1 |
42 |
| 1900 |
21 |
40 |
8 |
80 |
| 1911 |
104 |
276 |
63 |
450 |
We see the rapid expansion of a close network of canals which cover the whole country,
centralizing all capital and all revenues, transforming
thousands and thousands of scattered economic enterprises into a single national
capitalist, and then into a world capitalist economy. The "decentralization"
that Schulze-Gaevernitz, as an exponent of present-day bourgeois political economy, speaks
of in the passage previously quoted, really means the subordination of an increasing
number of formerly relatively "independent," or rather, strictly local economic
units, to a single center. In reality it is centralization, the enhancement of
the role, the importance and the power of monopolist giants.
In the older capitalist countries this "banking network" is still more close.
In Great Britain and Ireland, in 1910, there were in all 7,151 branches of banks. Four big
banks had more than 400 branches each (from 447 to 689); four had more than 200 branches
each, and eleven more than 100 each.
In France, three very big banks, Credit Lyonnais, the Comptoir National and
the Societe Generale, extended their operations and their network of branches in the
following manner.* [Eugen Kaufmann, Das frantösische BankaDesen, Tübingen,
1911, pp. 356.]
| |
Number of branches and offices |
Capital in million francs |
| In the provinces |
In Paris |
Total |
Own capital |
Borrowed capital |
| 1870 |
47 |
17 |
64 |
200 |
427 |
| 1890 |
192 |
66 |
258 |
265 |
1245 |
| 1909 |
1033 |
196 |
1229 |
887 |
4363 |
In order to show the "connections" of a big modern bank, Riesser gives the
following figures of the number of letters dispatched and received by the
Disconto-Gesellschaft, one of the biggest banks in Germany and in the world (its capital
in 1914 amounted to 300,000,000 marks):
| |
Letters received |
Letters dispatched |
| 1852... |
6,135 |
6,292 |
| 1870... |
85,800 |
87,513 |
| 1900... |
533,102 |
626,043 |
The accounts of the big Paris bank, the Credit Lyonnais, increased from 28,535 in 1875
to 633,539 in 1912.* [Jean Lescure, L'epargne en France (Savings in France--Tr.), Paris,
1914, p. 52.]
These simple figures show perhaps better than lengthy disquisitions how the
concentration of capital and the growth of bank turnover are radically changing the
significance of the banks. Scattered capitalists are transformed into a single collective
capitalist. When carrying the current accounts of a few capitalists, a bank, as it were,
transacts a purely technical and exclusively auxiliary operation. When, however, this
operation grows to enormous dimensions we find that a handful of monopolists subordinate
to their will all the operations, both commercial and industrial, of the whole of
capitalist society; for they obtain the opportunity-- by means of their banking
connections, their current accounts and other financial operations--first, to ascertain
exactly the financial position of the various capitalists, then to control them,
to influence them by restricting or enlarging, facilitating or hindering credits, and
finally entirely determine their fate, determine their income, deprive them of
capital, or permit them to increase their capital rapidly and to enormous dimensions, etc.
We have just mentioned the 300,000,000 marks capital of the Disconto-Gesellschaft of
Berlin. This increase of the capital of the bank was one of the incidents in the struggle
for hegemony between two of the biggest Berlin banks-- the Deutsche Bank and the Disconto.
In 1870, the first was still a novice and had a capital of only 15,000,000 marks, while
the second a capital of 30,000,000 marks. In 1908, the first had a capital of 200,000,000,
while the second had 170,000,000. In 1914 the first increased its capital to 250,000,000
and the second, by merging with another first-class big bank, the Schaaffhausenscher
Bankverein, increased its capital to 300,000,000. And of course, this struggle for
hegemony went hand in hand with the more and more frequent conclusion of
"agreements" of an increasingly durable character between the two banks. The
following are the conclusions that this development of banking forces upon specialists in
banking who regard economic questions from a standpoint which does not in the least exceed
the bounds of the most moderate and cautious bourgeois reformism:
Commenting on the increase of the capital of the Disconto-Gesellschaft to 300,000,000
marks, the German review, Die Bank, wrote: "Other banks will follow this
same path and in time the three hundred men, who today govern Germany economically, will
gradually be reduced to fifty, twenty-five or still fewer. It cannot be expected that this
latest move towards concentration will be confined to banking. The close relations that
exist between individual banks naturally lead to the bringing together of the industrial
syndicates which these banks favor.... One fine morning we shall wake up in surprise to
see nothing but trusts before our eyes, and to kind ourselves faced with the necessity of
substituting state monopolies for private monopolies. However, we have nothing to reproach
ourselves with, except for having allowed things to follow their own course, slightly
accelerated by the manipulation of stocks."* [A. Lansburgh, "Die Bank mit den
300 Millionen" in Die Bank, 19!4, , p. 426.]
This is an example of the impotence of bourgeois journalism which differs from
bourgeois science only in that the latter is less sincere and strives to obscure the
essence of the matter, to conceal the wood by trees. To be "surprised " at the
results of concentration, to "reproach" the government of capitalist Germany, or
capitalist "society" ("ourselves"), to fear that the introduction of
stocks and shares might "accelerate" concentration in the same way as the German
"cartel" specialist Tschierschky fears the American trusts and
"prefers" the German cartels on the grounds that they "may not, like the
trusts, excessively accelerate technical and economic progress"* [ S. Tschierschky, op.cit.,
p.128.]--is not this impotence?
But facts remain facts. There are no trusts in Germany; there are "only"
cartels--but Germany is governed by not more than three hundred magnates of
capital, and the number of these is constantly diminishing. At all events, in all
capitalist countries, notwithstanding all the differences in their banking laws, banks
greatly intensify and accelerate the process of concentration of capital and the formation
of monopolies.
The banking system presents indeed the form of common bookkeeping and of the
distribution of means of production on a social scale, but only the form," wrote Marx
in Capital half a century ago (Russ. trans. Vol. III, part II, p. 144). [8] The figures we have quoted on the growth of bank capital, on the
increase in the number of the branches and offices of the biggest banks, the increase in
the number of their accounts, etc., present a concrete picture of this "common
bookkeeping" of the whole capitalist class; and not only of the capitalists,
for the banks collect, even though temporarily, all kinds of money revenues--of small
businessmen, office clerks, and of a tiny upper stratum of the working class. It is
"common distribution of means of production" that, from the formal aspect, grows
out of the modern banks, numbering some three to six of the biggest in France, and six to
eight in Germany, control billions and billions. In substance, however, the
distribution of means of production is by no means "common," but private, i.e.,
it conforms to the interests of big capital, and primarily, of huge, monopoly capital,
which operates under conditions in which the masses of the population live in want, in
which the whole development of agriculture hopelessly lags behind the development of
industry, while-within industry itself the "heavy industries" exact tribute from
all other branches of industry.
In the matter of socializing capitalist economy the savings banks and post offices are
beginning to compete with the banks; they are more "decentralized," i.e., their
influence extends to a greater number of localities, to more remote places, to wider
sections of the population. Here is the data collected by an American commission on the
comparative growth of deposits in banks and savings banks:* [Statistics of the
National Monetary Commission, quoted in Die Bank, 1910, I, p.1200.]
DEPOSITS (IN BILLIONS OF MARKS)
| |
England |
France |
Germany |
| Banks |
Saving Banks |
Banks |
Savings Banks |
Banks |
Credit Societies |
Savings Banks |
| 1880 . . . |
8.4 |
1.6 |
? |
0.9 |
0.5 |
0.4 |
2.6 |
| 1888 . . . |
12.4 |
2.0 |
1.5 |
2.1 |
1.1 |
0.4 |
4.5 |
| 1908 . . . |
23.2 |
4.2 |
3.7 |
4.2 |
7.1 |
2.2 |
13.9 |
As they pay interest at the rate of 4 per cent and 4.25 per cent on deposits, the savings
banks must seek "profitable" investments for their capital, they must deal in
bills, mortgages, etc. The boundaries between the banks and the savings banks "become
more and more obliterated." The Chambers of Commerce of Bochum and Erfurt, for
example, demand that savings banks be "prohibited" from engaging in
"purely" banking business, such as discounting bills; they demand the limitation
of the "banking" operations of the post office.* [Die Bank, 1913, pp.
811, 1022; 1914, p. 713.] The banking magnates seem to be afraid that state monopoly will
steal upon them from an unexpected quarter. It goes without saying, however, that this
fear is no more than the expression of the rivalry, so to speak, between two department
managers in the same office; for, on the one hand, the billions entrusted to the savings
banks are in the final analysis actually controlled by these very same bank
capital magnates, while, on the other hand, state monopoly in capitalist society is merely
a means of increasing and guaranteeing the income of millionaires in one branch of
industry or another who are on the verge of bankruptcy.
The change from the old type of capitalism, in which free competition predominated, to
the new capitalism, in which monopoly reigns, is expressed, among other things, by a
decline in the importance of the Stock Exchange. The review, Die Bank, writes:
"The Stock Exchange has long ceased to be the indispensable medium of circulation
that it was formerly when the banks were not yet able to place the bulk of new issues with
their clients."** [Die Bank, 1914, p.316. ]
"'Every bank is a Stock Exchange,' and the bigger the bank, and the more
successful the concentration of banking, the truer does this modern aphorism
become."*[Dr. Oscar Stillich, Geid- und Bankroesen, Berlin, 1907, p. 169]
"While formerly, in the 'seventies, the Stock Exchange, flushed with the exuberance
of youth" (a "subtle" allusion to the Stock Exchange crash of 1873, to the
company promotion scandals, [9] etc.), "opened the era of the
industrialization of Germany, nowadays the banks and industry are able to 'do it alone.'
The domination of our big banks over the Stock Exchange... is nothing else than the
expression of the completely organized German industrial state. If the domain of the
automatically functioning economic laws is thus restricted, and if the domain of conscious
regulation by the banks is considerably enlarged, the national economic responsibility of
a few guiding heads is immensely increased," so writes the German Professor
Schulze-Gaevernitz,**[Schulze-Gaevernit2, Die deutsche Kreditbank in Grundriss
der sozialökonomik, Tübingen, 1915, p. 101.] an apologist of German imperialism,
who is regarded as an authority by the imperialists of all countries, and who tries to
gloss over a "detail," viz., that the "conscious regulation" of
economic life by the banks consists in the fleecing of the public by a handful of
"completely organized" monopolists. The task of a bourgeois professor is not to
lay bare the entire mechanism, or to expose all the machinations of the bank monopolists,
but rather to present them in a favorable light.
In the same way, Riesser, a still more authoritative economist and himself "a
banker," makes shift with meaningless phrases in order to explain away undeniable
facts:
"... the Stock Exchange is steadily losing the feature which is absolutely
essential for national economy as a whole and for the circulation of securities in
particular--that of being not only a most exact measuring-rod, but also an almost
automatic regulator of the economic movements which converge on it."* [Riesser, op.
cit., 4th ed, p. 629.]
In other words, the old capitalism, the capitalism of free competition with its
indispensable regulator, the Stock Exchange, is passing away. A new capitalism has come to
take its place, bearing obvious features of something transient, a mixture of free
competition and monopoly. The question naturally arises: to what is this new
capitalism "passing"? But the bourgeois scholars are afraid to raise this
question.
"Thirty years ago, businessmen, freely competing against one another, performed
nine-tenths of the work connected with their business other than manual labor. At the
present time, nine-tenths of this "brain work" is performed by officials. Banking
is in the forefront of this evolution."** [Schulze-Gaevernit2, "Die deutsche
Kreditbank" in Grundriss der Socialekonomik, Tübingen, 1915, p. 151.] This
admission by Schulze-Gaevernitz brings us once again to the question: to what is this new
capitalism, capitalism in its imperialist stage, passing?
-- -- --
Among the few banks which remain at the head of all capitalist economy as a result of
the process of concentration, there is naturally to be observed an increasingly marked
tendency towards monopolist agreements, towards a bank trust. In America, not
nine, but two very big banks, those of the billionaires Rockefeller and Morgan,
control a capital of eleven billion marks.* [Die Bank, 1912, 1, p. 435.] In
Germany the absorption of the Schaaffhausenscher Bankverein by the Disconto-Gesellschaft
to which we referred above, was commented on in the following terms by the Frankfurter
Zeitung,[10] an organ of the Stock Exchange interests:
"The concentration movement of the banks is narrowing the circle of establishments
from which it is possible to obtain credits, and is consequently increasing the dependence
of big industry upon a small number of banking groups. In view of the close connection
between industry and the financial world, the freedom of movement of industrial companies
which need banking capital is restricted. For this reason, big industry is watching the
growing trustification of the banks with mixed feelings. Indeed, we have repeatedly seen
the beginnings of certain agreements between the individual big banking concerns, which
aim at restricting competition."**[Quoted by Schulze-Gaevernitz, ibid.. p. 155.]
Again and again, the final word in the development of banking is monopoly.
As regards the close connection between the banks and industry, it is precisely in this
sphere that the new role of the banks is, perhaps, most strikingly felt. When a bank
discounts a bill for a firm, opens a current account for it, etc., these operations, taken
separately, do not in the least diminish its independence, and the bank plays no other
part than that of a humble middleman. But when such operations are multiplied and become
an established practice, when the bank "collects" in its own hands enormous
amounts of capital, when the running of a current account for a given firm enables the
bank--and this is what happens--to obtain fuller and more detailed information about the
economic position of its client, the result is that the industrial capitalist becomes more
completely dependent on the bank.
At the same time a personal union, so to speak, is established between the banks and
the biggest industrial and commercial enterprises, the merging of one with another through
the acquisition of shares, through the appointment of bank directors to the Supervisory
Boards (or Boards of Directors) of industrial and commercial enterprises, and vice versa.
The German economist, Jeidels, has compiled most detailed data on this form of
concentration of capital and of enterprises. Six of the biggest Berlin banks were
represented by their directors in 344 industrial companies; and by their board members in
407 others, making a total of 751 companies. In 289 of these companies they either had two
of their representatives on each of the respective Supervisory Boards, or held the posts
of chairmen. We find these industrial and commercial companies in the most diverse
branches of industry: insurance, transport, restaurants, theaters, art industry, etc. On
the other hand, on the Supervisory Boards of these six banks (in 1910) were fifty-one of
the biggest industrialists, including the director of Krupp, of the powerful
"Hapag" (Hamburg-American Line), etc., etc. From 1895 to 1910, each of these six
banks participated in the share and bond issues of many hundreds of industrial companies
(the number ranging from 281 to 419).* [Jeidels, op. cit.; Riesser, op. cit.]
The "personal union" between the banks and industry is supplemented by the
"personal union" between both and the government. "Seats on Supervisory
Boards," writes Jeidels, "are freely offered to persons of title, also to
ex-civil servants, who are able to do a great deal to facilitate"relations with the
authorities."..."Usually, on the Supervisory Board of a big bank, there is a
member of parliament or a Berlin city councillor."
The building, 60 to speak, of the big capitalist monopolies is therefore going on full
steam ahead in all "natural" and "supernatural" ways. A sort of
division of labor is being systematically developed amongst some hundreds of kings of
finance who reign over modern capitalist society:
"Simultaneously with this widening of the sphere of activity of certain big
industrialists" (joining the boards of banks, etc.) "and with the allocation of
provincial bank managers to definite industrial regions, there is a growth of
specialization among the directors of the big banks. Generally speaking, this
specialization is only conceivable when banking is conducted on a large scale, and
particularly when it has widespread connections with industry. This division of labor
proceeds along two lines: on the one hand, relations with industry as a whole are
entrusted to one director, as his special function; on the other, each director assumes
the supervision of several separate enterprises, or of a group of enterprises in the same
branch of industry or having similar interests." ... (Capitalism has already reached
the stage of organized supervision of individual enterprises.) ... "One
specializes in German industry, sometimes even in West-German industry alone" (the
West is the most industrialized part of Germany), "others specialize in relations
with foreign states and foreign industry, in information about the personality of
industrialists and others, in Stock Exchange questions, etc. Besides, each bank director
is often assigned a special locality or a special branch of industry; one works chiefly on
Supervisory Boards of electric companies, another chemical, brewing, or beet-sugar plants,
a third in a few isolated industrial enterprises, but at the same time works on the
Supervisory Boards of insurance companies.... In short, there can be no doubt that the
growth in the dimensions and diversity of the big banks' operations is accompanied by an
increase in the division of labor among their directors with the object (and result) of,
so to speak, lifting them somewhat out of pure banking and making them better experts,
better judges of the general problems of industry and the special problems of each branch
of industry, thus making them more capable of acting within the respective bank's
industrial sphere of influence. This system is supplemented by the banks' endeavors to
elect to their Supervisory Boards men who are experts in industrial affairs, such as
industrialists, former officials, especially those formerly in the railway service or in
mining," etc.* [Jeidels, op. cit., p. 57.]
We find the same system only in a slightly different form in French banking. For
instance, one of the three biggest French banks, the Credit Lyonnais, has organized a
financial research service (service des etudes financieres), which permanently employs
over fifty engineers, statisticians, economists, lawyers, etc. This costs from six to
seven hundred thousand francs annually. The service is in turn divided into eight
departments: one specializes in collecting information concerning industrial
establishments, another studies general statistics, a third with railway and steamship
companies, a fourth, securities, a fifth, financial reports, etc.* [An article by Eug.
Kaufmann on French banks in Die Bank, 1909, p. 851 et seq.]
The result is, on the one hand, the ever growing merger, or, as N. I. Bukharin aptly
calls it, coalescence, of bank and industrial capital and, on the other hand, the growth
of the banks into institutions of a truly "universal character." On this
question we think it necessary to quote the exact terms used by Jeidels, who has best
studied the subject:
"An examination of the sum total of industrial relationships reveals the universal
character of the financial establishments working on behalf of industry. Unlike other
kinds of banks, and contrary to the demand sometimes expressed in literature that banks
should specialize in one kind of business or in one branch of industry in order to prevent
the ground from slipping from under their feet-- the big banks are striving to make their
connections with industrial enterprises as varied as possible regarding locality and
branch of industry and are striving to eliminate the unevenness in the distribution of
capital among localities and branches of industry resulting from the historical
development of individual enterprises." "One tendency is to make the connections
with industry general; another tendency is to make them durable and close. In the six big
banks both these tendencies are realized, not in full, but to a considerable extent and to
an equal degree."
Quite often industrial and commercial circles complain of the "terrorism" of
the banks. And it is not surprising that such complaints are heard, for the big banks
"command," as will be seen from the following example. On November 19, 1901, one
of the big, so-called Berlin "D" banks (the names of the four biggest banks
begin with the letter D) wrote to the Board of Directors of the German Central Northwest
Cement Syndicate in the following terms: "As we learn from the notice you
published in a certain newspaper of the 18th inst., we must reckon with the possibility
that the next general meeting of your syndicate, to be held on the 30th of this month, may
decide on measures which are likely to effect changes in your undertaking which are
unacceptable to us. We deeply regret that, for these reasons, we are obliged henceforth to
withdraw the credit which had been hitherto allowed you.... But if the said next general
meeting does not decide upon measures which are unacceptable to us, and if we receive
suitable guarantees on this matter for the future, we shall be quite willing to open
negotiations with you on the grant of a new credit."* [Dr. Oscar Stillich, Geld
und Bankwesen, Berlin, 1907, p. 148.]
As a matter of fact, this is small capital's old complaint about being
oppressed by big capital, but in this case it was a whole syndicate that fell into the
category of "small" capital! The old struggle between small and big capital is
being resumed at a new and immeasurably higher stage of development. It stands to reason
that the big banks' enterprises, worth billions, can accelerate technical progress with
means that cannot possibly be compared with those of the past. The banks, for example, set
up special technical research societies, and, of course, only "friendly"
industrial enterprises benefit from their work. To this category belong the Electric
Railway Research Association, the Central Bureau of Scientific and Technical Research,
etc.
The directors of the big banks themselves cannot fail to see that new conditions of
national economy are being created; but they are powerless in the face of these phenomena.
"Anyone who has watched, in recent years," writes Jeidels, "the changes
of incumbents of directorships and seats on the Supervisory Boards of the big banks,
cannot fail to have noticed that power is gradually passing into the hands of men who
consider the active intervention of the big banks in the general development of industry
to be necessary and of increasing importance. Between these new men and the old bank
directors, disagreements of a business and often of a personal nature are growing on this
subject. The issue is whether or not the banks, as credit institutions, will suffer from
this intervention in industry, whether they are sacrificing tried principles and an
assured profit to engage in a field of activity which has nothing in common with their
role as middlemen in providing credit, and which is leading the banks into a field where
they are more than ever before exposed to the blind forces of trade fluctuations. This is
the opinion of many of the older bank directors, while most of the young men consider
active intervention in industry to be a necessity as great as that which gave rise,
simultaneously with big modern industry, to the big banks and modern industrial banking.
The two parties are agreed only on one point: that there are neither firm principles nor a
concrete aim in the new activities of the big banks."* [Jeidels, op. cit., pp.
83-84]
The old capitalism has had its day. The new capitalism represents a transition towards
something. It is hopeless, of course, to seek for "firm principles and a concrete
aim" for the purpose of "reconciling" monopoly with free competition. The
admission of the practical men has quite a different ring from the official praises of the
charms of "organized" capitalism sung by its apologists, Schulze-Gaevernitz,
Liefmann and similar "theoreticians."
At precisely what period were the "new activities" of the big banks finally
established? Jeidels gives us a fairly exact answer to this important question:
"The connections between the banks and industrial enterprises, with their new
content, their new forms and their new organs, namely, the big banks which are organized
on both a centralized and a decentralized basis, were scarcely a characteristic economic
phenomenon before the nineties; in one sense, indeed this initial date may be advanced to
the year 1897, when the important 'mergers' took place and when, for the first time, the
new form of decentralized organization was introduced to suit the industrial policy of the
banks. This starting point could perhaps be placed at an even later date, for it was the
crisis of 1900 that enormously accelerated and intensified the process of concentration of
industry and of banking, consolidated that process, for the first time transformed the
connection with industry into the actual monopoly of the big banks, and made this
connection much closer and more active."** [lbid., p. 181. ]
Thus, the twentieth century marks the turning point from the old capitalism to the new,
from the domination of capital in general to the domination of finance capital.
III. FINANCE CAPITAL AND THE FINANCIAL OLIGARCHY
"A steadily increasing proportion of capital in industry," writes Hilferding,
"ceases to belong to the industrialists who employ it. They obtain the use of it only
through the medium of the banks which, in relation to them, represent the owners of the
capital. On the other hand, the bank is forced to sink an increasing share of its funds in
industry. Thus, to an ever-increasing degree the banker is being transformed into an
industrial capitalist. This bank capital, i.e., capital in money form, which is thus
actually transformed into industrial capital, I call 'finance capital.' "
"Finance capital is capital controlled by banks and employed by
industrialists."* [R. Hilferding, Finance Capital, Russ. ed., Moscow, 1912,
pp. 338-39.]
This definition is incomplete in so far as it is silent on one extremely important
fact: the increase of concentration of production and of capital to such an extent that
concentration leads, and has led, to monopoly. But throughout the whole of his work, and
particularly in the two chapters which precede the one from which this definition is taken
Hilferding stresses the part played by capitalist monopolies.
The concentration of production; the monopolies arising therefrom; the merging or
coalescence of the banks with industry--such is the
history of the rise of finance capital and such is the content of this term.
We now have to describe how, under the general conditions of commodity production and
private property, the "business operations" of capitalist monopolies inevitably
become the domination of a financial oligarchy. It should be noted that the
representatives of bourgeois German-- and not only German--science, like Riesser,
Schulze-Gaevernitz, Liefmann and others, are all apologists of imperialism and of finance
capital. Instead of revealing the "mechanics" of the formation of an oligarchy,
its methods, the size of its revenues "innocent and sinful," its connections
with parliaments, etc., etc., they obscure and embellish them. They evade these
"vexed questions" by pompous and vague phrases, appeals to the "sense of
responsibility" of bank directors, by praising "the sense of duty" of
Prussian officials, giving serious study to the petty details of absolutely ridiculous
parliamentary bills for the "supervision" and "regulation" of
monopolies, playing spillikins with theories, like, for example, the following
"scientific" definition, arrived at by Professor Liefmann: "Commerce is
an occupation having for its object: collecting goods, storing them and making them
available."* [R. Liefmann, op. cit., p. 476.] (The Professor's
italics.) . . . From this it would follow that commerce existed in the time of primitive
man, who knew nothing about exchange, and that it will exist under Socialism!
But the monstrous facts concerning the monstrous rule of the financial oligarchy are so
glaring that in all capitalist countries, in America, France and Germany, a whole
literature has sprung up, written from the bourgeois point of view, but which,
nevertheless, gives a fairly truthful picture and criticism--petty-bourgeois,
naturally--of this oligarchy.
The "holding system," to which we have already briefly referred above, should
be made the cornerstone. The German economist, Heymann, probably the first to call
attention to this matter, describes the essence of it in this way:
"The head of the concern controls the principal company" (literally: the
"mother company"); "the latter reigns over the subsidiary companies"
("daughter companies") "which in their turn control still other
subsidiaries" ["grandchild companies"], "etc. In this way, it is
possible with a comparatively small capital to dominate immense spheres of production.
Indeed, if holding 50 per cent of the capital is always sufficient to control a company,
the head of the concern needs only one million to control eight million in the second
subsidiaries. And if this 'interlocking' is extended, it is possible with one million to
control sixteen million, thirty-two million, etc."* [Hans Gideon Heymann, Die
gemischten Werke im deutschen Grosseisengewerbe, Stuttgart, 1904, pp. 268-69.]
As a matter of fact, experience shows that it is sufficient to own 40 per cent of the
shares of a company in order to direct its affairs,** [Liefmann, Beteiligungsgesellschaften, etc., 1st ed., p. 258.] since a certain number of small, scattered shareholders find
it impossible, in practice, to attend general meetings, etc. The
"democratization" of the ownership of shares, from which the bourgeois sophists
and opportunist so-called "Social-Democrats" expect (or say that they expect)
the "democratization of capital," the strengthening of the role and significance
of small-scale production, etc., is, in fact, one of the ways of increasing the power of
the financial oligarchy. Incidentally, this is why, in the more advanced, or in the older
and more "experienced" capitalist countries, the law allows the issue of shares
of smaller denomination. In Germany, the law does not permit the issue of shares of less
than one thousand marks denomination, and the magnates of German finance look with an
envious eye at England, where the issue of one-pound shares (= 20 marks, about 10 rubles)
is permitted. Siemens, one of the biggest industrialists and "financial kings"
in Germany, told the Reichstag on June 7, 1900, that "the one pound share is the
basis of British imperialism."* [Schulze-Gaevernitz in Grundriss da
Sozialökonomie, V, 2, p. 110.] This merchant has a much deeper and more
"Marxian" understanding of imperialism than a certain disreputable writer who is
held to be one of the founders of Russian Marxism [11] and believes
that imperialism is a bad habit of a certain nation....
But the "holding system" not only serves enormously to increase the power of
the monopolists; it also enables them to resort with impunity to all sorts of shady and
dirty tricks to cheat the public, for the directors of the "mother company" are
not legally responsible for the "daughter company," which is supposed to be
"independent," and through the medium of which they can "pull
off" anything. Here is an example taken from the German review, Die
Bank, for May 1914:
"The Spring Steel Company of Kassel was regarded some years ago as being one of
the most profitable enterprises in Germany. Through bad management its dividends fell from
15 per cent to nil. It appears that the Board, without consulting the shareholders, had
loaned six million marks to one of its 'daughter companies,' the Hassia,
Ltd., which had a nominal capital of only some hundreds of thousands of marks. This
commitment, amounting to nearly treble the capital of the 'mother company,' was never
mentioned in its balance sheets. This omission was quite legal and could be hushed up for
two whole years because it did not violate any point of company law. The chairman of the
Supervisory Board, who as the responsible head had signed the false balance sheets, was,
and still is, the president of the Kassel Chamber of Commerce. The shareholders only heard
of the loan to the Hassia, Ltd. long afterwards, when it had been proved to have been a
mistake". . . (the writer should put this word in quotation marks) . . . "and
when Spring Steel shares dropped nearly 100 per cent, because those in the know were
getting rid of them....
"This typical example of balance-sheet jugglery, quite common in
joint-stock companies, explains why their Boards of Directors are willing with a far
lighter heart to undertake risky transactions than individual businessmen. Modern methods
of drawing up balance sheets not only make it possible to conceal doubtful undertakings
from the ordinary shareholder, but also allow the people most concerned to escape the
consequence of unsuccessful speculation by selling their shares in time while the
individual businessman risks his own skin in everything he does....
"The balance sheets of many joint-stock companies put us in mind of the
palimpsests of the Middle Ages from which the visible inscription had first to be erased
in order to discover beneath it another inscription giving the real meaning of the
document." (Palimpsests are parchment documents from which the original inscription
has been obliterated and another inscription imposed.)
"The simplest and, therefore, most common procedure for making balance sheets
indecipherable is to divide a single business into several parts by setting up 'daughter
companies'--or by annexing such. The advantages of this system for various objects--legal
and illegal--are so evident that big companies which do not employ it are quite the
exception."* [L. Eschwege, "Tochtergesellschaften" (Subsidiary
companies -- Tr.) in Die Bank, 1914, I, p.545.]
As an example of a huge monopolist company that extensively employs this system, the
author quotes the famous General Electric Company (to which we shall refer again later
on). In 1912, it was calculated that this company held shares in 175 to 200 other
companies, dominating them, of course, and thus controlling a total capital of about 1,500,000,000
marks.** [Kurt Heinig, "Der Weg des Elektrotrusts" (The Path of the
Electric Trust--Tr.) in Neue Zeit, 1912, 30 Jahrg., 2, p. 484. ]
All rules of control, the publication of balance sheets, the drawing up of balance
sheets according to a definite form, the public auditing of accounts, etc., the things
about which well-intentioned professors and officials--that is, those imbued with the good
intention of defending and embellishing capitalism--discourse to the public, are of no
avail. For private property is sacred, and no one can be prohibited from buying, selling,
exchanging or mortgaging shares, etc.
The extent to which this "holding system" has developed in the big Russian
banks may be judged by the figures given by E. Agahd, who for fifteen years was an
official of the Russo-Chinese Bank and who, in May 1914 published a book, not altogether
correctly entitled Big Banks and the World Market.* [E. Agahd, Grossbanken
und Weltmark. Die wirtschaftliche und politische Bedeutung der Grossbanken im Weltmarkt
unter Berücksichtigung ibres Einflusses auf Russlands Volkswirtschaft und die
deutschrussischen Beziehungen (Big Banks and the World Market. The economic and political
significance of the big banks on the world market, with reference to their influence on
Russia's national economy and German-Russian relations.--Tr.), Berlin, 1914.] The
author divides the big Russian banks into two main categories: a) banks that come
under the "holding system," and b) "independent"
banks--"independence," however, being arbitrarily taken to mean independence of foreign banks. The author divides the first group into three sub-groups: 1) German holdings,
2) British holdings, and 3) French holdings, having in view the "holdings" and
domination of the big foreign banks of the particular country mentioned. The author
divides the capital of the banks into "productively" invested capital (in
industrial and commercial undertakings), and "speculatively" invested capital
(in Stock Exchange and financial operations), assuming, from his petty-bourgeois reformist
point of view, that it is possible, under capitalism, to separate the first form of
investment from the second and to abolish the second form.
Here are the figures he supplies:
BANK ASSETS
(According to Reports for October-November, 1913)
in millions of rubles
| Groups of Russian Banks |
Capital invested |
| Productively |
Speculatively |
Total |
| a 1) Four banks: Siberian Commercial, Russian, International, and Discount Bank |
413.7 |
859.1 |
1,272.8 |
| a 2) Two banks: Commercial and Industrial, and Russo-British |
239.3 |
169.1 |
408.4 |
| a 3) Five banks: Russian-Asiatic, St. Petersburg Private, Azov-Don, Union Moscow,
Russo-French Commercial |
711.8 |
661.2 |
1.373.0 |
| (11 banks) Total: a) = |
1,364.8 |
1,689.4 |
3.054.2 |
| b) Eight banks: Moscow Merchants, Volga-Kama, Junker and Co., St. Petersburg
Commercial (formerly Wawelberg), Bank of Moscow (formerly Ryabushinsky), Moscow Discount,
Moscow Commercial, Moscow Private |
504.2 |
391.1 |
895.3 |
| (19 banks) Total: |
1,869.0 |
2,080.5 |
3.949.5 |
According to these figures, of the approximately four billion rubles making up the
"working" capital of the big banks, more than three-fourths, more than
three billion, belonged to banks which in reality were only "daughter companies"
of foreign banks, and chiefly of the Paris banks (the famous trio: Union Parisienne, Paris
et Pays-Bas and Societe Generale), and of the Berlin banks (particularly the Deutsche Bank
and Disconto-Gesellschaft). Two of the biggest Russian banks, the Russian (Russian Bank
for Foreign Trade) and the International (St. Petersburg International Commercial Bank),
between 1906 and 1912 increased their capital from 44,000,000 to 98,000,000 rubles, and
their reserves from 15,000,000 to 39,000,000 "employing three-fourths German
capital." The first bank belongs to the Berlin Deutsche Bank "concern" and
the second to the Berlin Disconto-Gesellschaft. The worthy Agahd is deeply indignant at
the fact that the majority of the shares are held by the Berlin banks, and that,
therefore, the Russian shareholders are powerless. Naturally, the country which exports
capital skims the cream: for example, the Berlin Deutsche Bank, in placing the shares of
the Siberian Commercial Bank on the Berlin market, kept them in its portfolio for a whole
year, and then sold them at the rate of 193 for 100, that is, at nearly twice their
nominal value, "earning" a profit of nearly 6,000,000 rubles, which Hilferding
calls "promoter's profits."
Our author puts the total "capacity" of the principal St. Petersburg banks at
8,235,000,000 rubles, about 8.25 billions, and the "holdings," or rather, the
extent to which foreign banks dominated them, he estimates as follows French banks, 55 per
cent; English, 10 per cent; German 35 per cent. The author calculates that of the total of
8,235,000,000 rubles of functioning capital, 3,687,000,000 rubles, or over 40 per cent,
fall to the share of the syndicates Produgol and Prodamet [12]--and
the syndicates in the oil, metallurgical and cement industries. Thus, owing to the
formation of capitalist monopolies, the merging of bank and industrial capital has also
made enormous strides in Russia.
Finance capital, concentrated in a few hands and exercising a virtual monopoly, exacts
enormous and ever-increasing profits from the floating of companies, issue of stock, state loans, etc., strengthens the domination of the financial oligarchy and
levies tribute upon the whole of society for the benefit of monopolists. Here is an
example, taken from a multitude of others, of the "business" methods of the
American trusts, quoted by Hilferding: in 1887, Havemeyer founded the Sugar Trust by
amalgamating fifteen small firms, whose total capital amounted to 6,500,000 dollars.
Suitably "watered," as the Americans say, the capital of the trust was declared
to be 50,000,000 dollars. This "over-capitalization" anticipated the monopoly
profits, in the same way as the United States Steel Corporation anticipates its future
monopoly profits in buying up as many iron ore fields as possible. In fact, the Sugar
Trust set up monopoly prices, which secured it such profits that it could pay 10 per cent
dividend on capital "watered" sevenfold, or about 70 per cent on the capital
actually invested at the time the trust was formed! In 1909, the capital of the Sugar
Trust amounted to 90,000,000 dollars. In twenty-two years, it had increased its capital
more than tenfold.
In France the domination of the "financial oligarchy" (Against the
Financial Oligarchy in France, the title of the well-known book by Lysis, the fifth
edition of which was published in 1908) assumed a form that was only slightly different.
Four of the most powerful banks enjoy, not a relative, but an "absolute
monopoly" in the issue of bonds. In reality, this is a "trust of big
banks." And monopoly ensures monopolist profits from bond issues. Usually a borrowing
country does not get more than 90 per cent of the sum of the loan, the remaining 10 per
cent goes to the banks and other middlemen. The profit made by the banks out of the
Russo-Chinese loan of 400,000,000 francs amounted to 8 per cent; out of the Russian (1904)
loan of 800,000,000 francs the profit amounted to lo per cent; and out of the Moroccan
(1904) loan of 62,500,000 francs it amounted to 18.75 per cent. Capitalism, which began
its development with petty usury capital, is ending its development with gigantic usury
capital. "The French," says Lysis, "are the usurers of Europe." All
the conditions of economic life are being profoundly modified by this transformation of
capitalism. With a stationary population, and stagnant industry, commerce and shipping,
the "country" can grow rich by usury. "Fifty persons, representing a
capital of 8,000,000 francs, can control 2,000,000,000 francs deposited in four
banks." The "holding system," with which we are already familiar, leads to
the same result. One of the biggest banks, the Societe Generale, for instance, issues
64,000 bonds for its "daughter company," the Egyptian Sugar Refineries. The
bonds are issued at 150 per cent, i.e., the bank gains 50 centimes on the franc. The
dividends of the new company were found to be fictitious the "public" lost from
go to 100 million francs. "One of the directors of the Societe Generale was a member
of the board of directors of the Sugar Refineries." It is not surprising that the
author is driven to the conclusion that "the French Republic is a financial
monarchy"; "it is the complete domination of the financial oligarchy; the latter
dominates over the press and the government."* [Lysis, Contre l'oligarchie financiere
en France (Against the Financial Oligarchy in France--Tr.), 5 ed., Paris, 1908, pp.
11, 12, 26, 39, 40, 48.]
The extraordinary high rate of profit obtained from the issue of securities, which is
one of the principal functions of finance capital, plays a very important part in the
development and consolidation of the financial oligarchy. "There is not a single
business of this type within the country that brings in profits even approximately equal
to those obtained from the flotation of foreign loans," says the German magazine, Die
Bank.** [Die Bank, 1913, No. 7, p. 630. ]
"No banking operation brings in profits comparable with those obtained from the
issue of securities!" According to the German Economist, the average annual
profits made on the issue of industrial stock were as follows:
| |
Per cent |
|
Per cent |
| 1895 |
38.6 |
1898 |
67.7 |
| 1896 |
36.1 |
1899 |
66.9 |
| 1897 |
66.7 |
1900 |
55.2 |
"In the ten years from 1891 to 1900 more than a billion marks were 'earned'
by issuing German industrial stock."*** [Stillich, op. cit., p. 143, also W.
Sombart, Die deutscbe Volleswirtschaft im 19. Jahrhundert (German National Economy in
the Nineteenth Century--Tr.), 2. Aufl., 1909, S. 526, Anlage 8.]
During periods of industrial boom, the profits of finance capital are immense, but
during periods of depression, small and unsound businesses go out of existence; the big
banks acquire "holdings" in them by buying them up for a mere song, or
participate in profitable schemes for their "reconstruction" and
"reorganization." In the "reconstruction" of undertakings which have
been running at a loss, "the share capital is written down, that is, profits are
distributed on a smaller capital and continue to be calculated on this smaller basis. Or,
if the income has fallen to zero new capital is called in, which, combined with the old
and less remunerative capital, will bring in an adequate return. Incidentally," adds
Hilferding, "all these reorganizations and reconstructions have a twofold
significance for the banks: first, as profitable transactions; and secondly, as
opportunities for securing control of the companies in difficulties."* [Finance
Capital, p. 172.]
Here is an instance. The Union Mining Company of Dortmund was founded in 1872. Share
capital was issued to the amount of nearly 40,000,000 marks and the market price of the
shares rose to 170 after it had paid a 12 per cent dividend for its first year. Finance
capital skimmed the cream and earned a trifle of something like 28,000,000 marks. The
principal sponsor of this company was that very big German Disconto-Gesellschaft which so
successfully attained a capital of 300,000,000 marks. Later, the dividends of the Union
declined to nil: the shareholders had to consent to a "writing down" of capital,
that is, to losing some of it in order not to lose it all. By a series of
"reconstructions," more than 73,000,000 marks were written off the books of the
Union in the course of thirty years. "At the present time, the original shareholders
of the company possess only 5 per cent of the nominal value of their shares,"*
[Stillich, op. cit., p. 138, and Liefmann, p. 51.] but the banks
"earned something" out of every "reconstruction."
Speculation in land situated in the suburbs of rapidly growing big towns is a
particularly profitable operation for finance capital. The monopoly of the banks merges
here with the monopoly of ground rent and with monopoly of the means of communications,
since the rise in the price of land and the possibility of selling it profitably in
allotments, etc., is mainly dependent on good means of communication with the center of
the town; and these means of communication are in the hands of large companies which are
connected, by means of the holding system and by the distribution of positions on the
directorates, with the interested banks. As a result we get what the German writer, L.
Eschwege, a contributor to Die Bank, who has made a special study of real estate
business and mortgages, etc., calls a "bog." Frantic speculation in suburban
building lots; collapse of building enterprises (like that of the Berlin firm of Boswau
and Knauer, which raked in as much as 100,000,000 marks with the help of the "sound
and solid" Deutsche Bank-- the latter, of course, acting through the holding system,
i.e., secretly, behind the scenes, and getting out of it with a loss of "only"
12,000,000 marks), then the ruin of small proprietors and of workers who get nothing from
the fictitious building firms, fraudulent deals with the "honest" Berlin police
and administration for the purpose of gaining control of the issue of building site
tenders, building licenses, etc., etc.* [ In Die Bank, 1913, p. 952, L, Eschwege, Der Sumpf; ibid., 1912, 1, p. 223 et seq. ]
"American ethics," which the European professors and well-meaning bourgeois
so hypocritically deplore, have, in the age of finance capital, become the ethics of
literally every large city in every country.
At the beginning of 1914, there was talk in Berlin of the formation of a
"transport trust," i.e., of establishing "community of interests"
between the three Berlin transport undertakings: The city electric railway, the tramway
company and the omnibus company. "We have known," wrote Die Bank, "that
this plan is contemplated since it became known that the majority of the shares in the bus
company had been acquired by the other two transport companies.... We may fully believe
those who are pursuing this aim when they say that by uniting the transport services, they
will secure economies, part of which will in time benefit the public. But the question is
complicated by the fact that behind the transport trust that is being formed are the
banks, which, if they desire, can subordinate the means of transportation, which they have
monopolized, to the interests of their real estate business. To be convinced of the
reasonableness of such a conjecture, we need only recall that the interests of the big
bank that encouraged the formation of the Elevated Railway Company were already involved
in it at the time the company was formed. That is to say: the interests of this transport
undertaking were interlocked with the real estate interests. The point is that the eastern
line of this railway was to run through land which, when it became certain the line was to
be laid down, this bank sold at an enormous profit for itself and for several partners in
the transactions."...* ["Verkehrstrust" in Die Bank, 1914, I, p.
89. ]
A monopoly, once it is formed and controls thousands of millions, inevitably penetrates
into every sphere of public life. regardless of the form of government and all
other "details." In the economic literature of Germany one usually comes across
obsequious praise of the integrity of the Prussian bureaucracy, and allusions to the
French Panama scandal [13] and to political corruption in America. But
the fact is that even the bourgeois literature devoted to German banking matters
constantly has to go far beyond the field of purely banking operations and to speak, for
instance, about "the attraction of the banks" in reference to the increasing
frequency with which public officials take employment with the banks, as follows:
"How about the integrity of a state official who in his inmost heart is aspiring to a
soft job in the Behrenstrasse?"** ["Der Zug zur Bank" The Attraction of the
Bank--Tr.) in Die Bank, 1909, I, p. 79. ] (the street in Berlin in which the head
office of the Deutsche Bank is situated). In 1909, the publisher of Die Bank, Alfred
Lansburgh, wrote an article entitled "The Economic Significance of Byzantinism,"
in which he incidentally referred to Wilhelm II's tour of Palestine, and to "the
immediate result of this journey, the construction of the Baghdad railway, that fatal
'great product of German enterprise,' which is more responsible for the 'encirclement'
than all our political blunders put together."* [Ibid., p. 301. ] (By
encirclement is meant the policy of Edward VII to isolate Germany and surround her with an
imperialist anti-German alliance.) In 1911, Eschwege, the contributor to this same
magazine to whom we have already referred, wrote an article entitled "Plutocracy and
Bureaucracy," in which he exposed, for example, the case of a German official named
Volker, who was a zealous member of the Cartel Committee and who, it turned out some time
later, obtained a lucrative post in the biggest cartel, i.e., the Steel Syndicate. Similar
cases, by no means casual, forced this bourgeois author to admit that "the economic
liberty guaranteed by the German Constitution has become in many departments of economic
life, a meaningless phrase" and that under the existing rule of the plutocracy,
"even the widest political liberty cannot save us from being converted into a nation
of unfree people."** [Ibid 1911, 2, p. 825; 1913, 2, p. 962.]
As for Russia, we will limit ourselves to one example. Some years ago, all the
newspapers announced that Davydov, the director of the Credit Department of the Treasury,
had resigned his post to take employment with a certain big bank at a salary which,
according to the contract, was to amount to over one million rubles in the course of
several years. The Credit Department is an institution, the function of which is to
"coordinate the activities of all the credit institutions of the country" and
which grants subsidies to banks in St. Petersburg and Moscow amounting to between 800 and
1,000 million rubles.* [E. Agahd, op. cit., p. 202.]
It is characteristic of capitalism in general that the ownership of capital is
separated from the application of capital to production, that money capital is separated
from industrial or productive capital, and that the rentier who lives entirely on income
obtained from money capital is separated from the entrepreneur and from all who are
directly concerned in the management of capital. Imperialism, or the domination of finance
capital, is that highest stage of capitalism at which this separation reaches vast
proportions. The supremacy of finance capital over all other forms of capital means the
predominance of the rentier and of the financial oligarchy; it means the singling out of a
small number of financially "powerful" states from among all the rest. The
extent to which this process is going on may be judged from the statistics on emissions,
i.e., the issue of all kinds of securities.
In the Bulletin of the International Statistical Institute, A. Neymarck** [Bulletin
de l'institut international da statistique, t. XIX, livr. II, La Haye, 1912.
Data concerning small states. second column, are approximately calculated by adding 20 per
cent to the 1902 figures.] has published very comprehensive, complete and comparative
figures covering the issue of securities all over the world, which have been repeatedly
quoted in part in economic literature. The following are the totals he gives for decades:
TOTAL ISSUES IN BILLIONS OF FRANCS
(Decades)
1871-1880............76.1
1881-1890............64.5
1891-1900...........100.4
1901-1910...........197.8
In the 1870's, the total amount of issues for the whole world was high, owing
particularly to the loans floated in connection with the Franco-Prussian War, and the
company-promoting boom which set in in Germany after the war. On the whole, the increase
is relatively not very rapid during the three last decades of the nineteenth century, and
only in the first ten years of the twentieth century is an enormous increase observed of
almost 100 per cent. Thus the beginning of the twentieth century marks the turning point,
not only in regard to the growth of monopolies (cartels, syndicates, trusts), of which we
have already spoken, but also in regard to the growth of finance capital.
Neymarck estimates the total amount of issued securities current in the world in 1910
at about 815,000,000,000 francs. Deducting from this sum amounts which might have been
duplicated, he reduces the total to 575-600 billion, which is distributed among the
various countries as follows: (We will take 600,000,000,000.)
FINANCIAL SECURITIES CURRENT IN 1910
(In billions of francs)
| Great Britain |
142 |
479 |
| United States |
132 |
| France |
110 |
| Germany |
95 |
| Russia |
31 |
| Austria-Hungary |
24 |
|
| Italy |
14 |
| Japan |
12 |
| Holland |
12.5 |
| Belgium |
7.5 |
| Spain |
7.5 |
| Switzerland |
6.25 |
| Denmark |
3.75 |
| Sweden, Norway, Rumania, etc. |
2.5 |
| Total |
600 |
From these figures we at once see standing out in sharp relief four of the richest
capitalist countries, each of which holds securities to amounts ranging approximately from
100 to 150 billion francs. Of these four countries, two, England and France, are the
oldest capitalist countries, and, as we shall see, possess the most colonies; the other
two, the United States and Germany, are leading capitalist countries as regards rapidity
of development and the degree of extension of capitalist monopolies in industry. Together,
these four countries own 479,000,000,000 francs, that is, nearly 80 per cent of the
world's finance capital. In one way or another, nearly the whole of the rest of the world
is more or less the debtor to and tributary of these international banker countries, these
four "pillars" of world finance capital.
It is particularly important to examine the part which the export of capital plays in
creating the international network of dependence and connections of finance capital.
IV. THE EXPORT OF CAPITAL
Typical of the old capitalism, when free competition had undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the
export of capital.
Capitalism is commodity production at its highest stage of development, when labor
power itself becomes a commodity. The growth of internal exchange, and particularly of
international exchange, is the characteristic distinguishing feature of capitalism. Uneven
and spasmodic development of individual enterprises, of individual branches of industry
and individual countries, is inevitable under the capitalist system. England became a
capitalist country before any other, and by the middle of the nineteenth century, having
adopted free trade, claimed to be the "workshop of the world," the purveyor of
manufactured goods to all countries, which in exchange were to keep her supplied with raw
materials. But in the last quarter of the nineteenth century, this monopoly was
already undermined; for other countries, sheltering themselves by "protective"
tariffs, developed into independent capitalist states. On the threshold of the twentieth
century we see the formation of a new type of monopoly: firstly, monopolist capitalist
combines in all capitalistically developed countries; secondly, the monopolist position of
a few very rich countries, in which the accumulation of capital has reached gigantic
proportions. An enormous "superabundance of capital" has arisen in the advanced
countries.
It goes without saying that if capitalism could develop agriculture, which today
frightfully lags behind industry everywhere, if it could raise the standard of living of
the masses, who are everywhere still half-starved and poverty-stricken, in spite of the
amazing technical progress, there could be no talk of a superabundance of capital. This
"argument" is very often advanced by the petty-bourgeois critics of capitalism.
But if capitalism did these things it would not be capitalism; for both uneven development
and a semi-starvation level of existence of the masses are fundamental and inevitable
conditions and premises of this mode of production. As long as capitalism remains what it
is, surplus capital will be utilized not for the purpose of raising the standard of living
of the masses in a given country, for this would mean a decline in profits for the
capitalists, but for the purpose of increasing profits by exporting capital abroad to the
backward countries. In these backward countries profits are usually high, for capital is
scarce, the price of land is relatively low, wages are low, raw materials are cheap. The
possibility of exporting capital is created by the fact that a number of backward
countries have already been drawn into world capitalist intercourse; main railways have
either been or are being built there, the elementary conditions for industrial development
have been created, etc. The necessity for exporting capital arises from the fact that in a
few countries capitalism has become "overripe" and (owing to the backward stage
of agriculture and the impoverished state of the masses) capital cannot find a field for
"profitable" investment.
Here are approximate figures showing the amount of capital invested abroad by the three
principal countries:* [Hobson. Imperialism, London, 1902, p. 58; Riesser, op.
cit., pp. 395 and 404; P. Arndt in Weltwirtschaftlicbes Archiv, Bd. 7, 1916, S.
35, Neymarck in Bulletin; Hilferding. Finance Capital, p. 492; Lloyd
George, Speech in the House of Commons, May 4, 1915, reported in the Daily Telegraph, May
5, 1915; B. Harms, Probleme der Weltwirtschaft, Jena, 1912, S.
235 et seq., Dr. Siegmund Schilder, Entwicklungstendenzen der Weltwirtschaft (Trends
of Development of World Economy--Tr.), Berlin, 1912, Band I, S. 150; George Paish,
"Great Britain's Capital Investments, etc.," in Journal of the Royal
Statistical Society, Vol. LXXIV, 1910-11, p. 67 et seq.; Georges Diouritch, L'expansion
des barques allemandes a l'etranger, ses rapports avec le developpement economique de
1'Allemagne (Expansion of German Banks Abroad in Connection with the Economic Development
of Germany--Tr.), Paris, 1909, p. 84.]
CAPITAL INVESTED ABROAD
(In billions of francs)
| Year |
Great Britain |
France |
Germany |
| 1862 |
3.6 |
--- |
--- |
| 1872 |
15.0 |
10 (1869) |
--- |
| 1882 |
22.0 |
15 (1880) |
? |
| 1893 |
42.0 |
20 (1890) |
? |
| 1902 |
62.0 |
27-37 |
12.5 |
| 1914 |
75-100.0 |
60 |
44.0 |
This table shows that the export of capital reached formidable dimensions only in the
beginning of the twentieth century. Before the war the capital invested abroad by the
three principal countries amounted to between 175,000,000,000 and 200,000,000,000 francs.
At the modest rate of 5 per cent, the income from this sum should have reached from 8 to
10 billion francs a year. A solid basis for imperialist oppression and the exploitation of
most of the countries and nations of the world, for the capitalist parasitism of a handful
of wealthy states!
How is this capital invested abroad distributed among the various countries? Where is
it invested? Only an approximate answer can be given to this question, but one sufficient
to throw light on certain general relations and connections of modern imperialism.
APPROXIMATE DISTRIBUTION OF FOREIGN CAPITAL
(ABOUT 1910)
| |
(In billions of marks) |
| |
Great Britain |
France |
Germany |
Total |
| Europe |
4 |
23 |
18 |
45 |
| America |
37 |
4 |
10 |
51 |
| Asia, Africa and Australia |
29 |
8 |
7 |
44 |
| Total |
70 |
35 |
35 |
140 |
The principal spheres of investment of British capital are the British colonies, which
are very large also in America (for example, Canada) not to mention Asia, etc. In this
case, enormous exports of capital are bound up most closely with vast colonies, of the
importance of which for imperialism we shall speak later. In the case of France the
situation is different. French capital exports are invested mainly in Europe, primarily in
Russia (at least ten billion francs). This is mainly loan capital, government
loans and not investments in industrial undertakings. Unlike British, colonial
imperialism, French imperialism might be termed usury imperialism. In the case of Germany,
we have a third type; colonies are inconsiderable, and German capital invested abroad is
divided most evenly between Europe and America.
The export of capital affects and greatly accelerates the development of capitalism in
those countries to which it is exported. While, therefore, the export of capital may tend
to a certain extent to arrest development in the capital exporting countries, it can only
do so by expanding and deepening the further development of capitalism throughout the
world.
The countries which export capital are nearly always able to obtain certain
"advantages," the character of which throws light on the peculiarity of the
epoch of finance capital and monopoly. The following passage, for instance, occurred in
the Berlin review, Die Bank, for October 1913:
"A comedy worthy of the pen of Aristophanes is lately being played on the
international capital market. Numerous foreign countries, from Spain to the Balkan states,
from Russia to Argentina, Brazil and China, are openly or secretly coming into the big
money market with demands, sometimes very persistent, for loans. The money market-is not
very bright at the moment and the political outlook is not promising. But not a single
money market dares to refuse a foreign loan for fear that its neighbor may forestall it,
consent to grant a loan and so secure some reciprocal service. In these international
transactions the creditor nearly always manages to secure some extra benefit: a favorable
clause in a commercial treaty, a coaling station, a contract to construct a harbor, a fat
concession, or an order for guns."* [Die Bank, 1913, 2, p. 1024. ]
Finance capital has created the epoch of monopolies, and monopolies introduce
everywhere monopolist principles: the utilization of "connections" for
profitable transactions takes the place of competition on the open market. The most usual
thing is to stipulate that part of the loan that is granted shall be spent on purchases in
the creditor country, particularly on orders for war materials, or for ships, etc. In the
course of the last two decades (1890-1910), France has very often resorted to this method.
The export of capital abroad thus becomes a means for encouraging the export of
commodities. In this connection, transactions between particularly big firms assume a form
which, as Schilder** [Schilder, op. cit., pp. 346, 350 and 371.]
"mildly" puts it, "borders on corruption." Krupp in Germany, Schneider
in France, Armstrong in England are instances of firms which have close connections with
powerful banks and governments and cannot easily be "ignored" when a loan is
being arranged.
France, when granting loans to Russia, "squeezed" her in concluding the
commercial treaty of September 16, 1905, in which she stipulated for certain concessions
to run till 1917. She did the same thing when the Franco-Japanese commercial treaty was
concluded on August 19, 1911. The tariff war between Austria and Serbia, which lasted with
a seven months' interval, from 1906 to 1911, was partly caused by competition between
Austria and France for supplying Serbia with war materials. In January 1912, Paul
Deschanel stated in the Chamber of Deputies that from 1908 to 1911 French firms had
supplied war materials to Serbia to the value of 45,000,000 francs.
A report from the Austro-Hungarian Consul at Sao-Paulo (Brazil) states: "The
construction of the Brazilian railways is being carried out chiefly by French, Belgian,
British and German capital. In the financial operations connected with the construction of
these railways the countries involved stipulate for orders for the necessary railway
materials."
Thus finance capital, literally, one might say, spreads its net over all countries of
the world. An important role in this is played by banks founded in the colonies and by
their branches. German imperialists look with envy at the "old" colonizing
countries which have been particularly "successful" in providing for themselves
in this respect. In 1904 Great Britain had 50 colonial banks with 2,279 branches (in 1910
there were 72 banks with 5,449 branches), France had 20 with 136 branches; Holland 16 with
68 branches; and Germany had "only" 13 with 70 branches.* [Riesser, op. cit.,
4th ea., p. 375; Diouritch, p. 283.] The American capitalists, in their turn, are jealous
of the English and German: "In South America," they complained in 1915,
"five German banks have forty branches and five English banks have seventy
branches.... England and Germany have invested in Argentina, Brazil, and Uruguay in the
last twenty-five years approximately four thousand million dollars, and as a result enjoy
together 46 per cent of the total trade of these three countries."** [ The Annals
of the American Academy of Political and Social Science, Vol. LIX, May 1915, p. 301.
In the same volume on p. 331, we read that the well-known statistician Paish, in the last
issue of the financial magazine The Statist, estimated the amount of capital
exported by England, Germany, France, Belgium and Holland at $40,000,000,000, i.e.,
200,000,000,000 francs. ]
The capital exporting countries have divided the world among themselves in the
figurative sense of the term. But finance capital has led to the actual division
of the world.
V. THE DIVISION OF THE WORLD AMONG CAPITALIST COMBINES
Monopolist capitalist combines, cartels, syndicates and trusts divide among themselves,
first of all, the home market, seize more or less complete possession of the industry of a
country. But under capitalism the home market is inevitably bound up with the foreign
market. Capitalism long ago created a world market. As the export of capital increased,
and as the foreign and colonial connections and "spheres of influence" of the
big monopolist combines expanded in all ways, things "naturally" gravitated
towards an international agreement among these combines, and towards the formation of
international cartels.
This is a new stage of world concentration of capital and production, incomparably
higher than the preceding stages. Let us see how this supermonopoly develops.
The electrical industry is the most typical of the latest technical achievements, most
typical of capitalism at the end of the nineteenth and beginning of the twentieth
centuries.
This industry has developed most in the two most advanced of the new capitalist
countries, the United States and Germany. In Germany, the crisis of 1900 gave a
particularly strong impetus to its concentration. During the crisis, the banks, which by
this time had become fairly well merged with industry, enormously accelerated and
intensified the ruin of relatively small firms and their absorption by the large ones.
"The banks," writes Jeidels, "in refusing a helping hand to the very
companies which are in greatest need of capital bring on first a frenzied boom and then
the hopeless failure of the companies which have not been attached to them closely
enough."* [Jeidels, op. Cit., p. 232]
As a result, after 1900, concentration in Germany progressed with giant strides. Up to
1900 there had been eight or seven "groups" in the electrical industry. Each
consisted of several companies (altogether there were 28) and each was backed by from 2 to
11 banks. Between 1908 and 1912 all these groups were merged into two, or one. The diagram
below shows the process:
GROUPS IN THE ELECTRICAL INDUSTRY
| Prior to 1900: |
Felten & Guillaume |
Lahmeyer |
Union
A.E.G. |
Siemens & Halske |
Schuckert & Co. |
Bergmann |
Kummer |
| |
Felten & Lahmeyer |
A.E.G (Gen. El. Co.) |
Siemens & Halske-Schuckert |
Bergmann |
Failed in 1900 |
| By 1912: |
A.E.G. (General Electric Co.) |
Siemens & Halske-Schuckert |
|
(In close "cooperation" since 1908) |
The famous A.E.G. (General Electric Company), which grew up in this way, controls 175 to
200 companies (through the "holding" system), and a total capital of
approximately 1,500,000,000 marks. Of direct agencies abroad alone, it has
thirty-four, of which twelve are joint-stock companies, in more than ten countries. As
early as 1904 the amount of capital invested abroad by the German electrical industry was
estimated at 233,000,000 marks. Of this sum, 62,000,000 were invested in Russia. Needless
to say, the A.E.G. is a huge "combine"--its manufacturing companies alone number
no less than sixteen--producing the most diverse articles, from cables and insulators to
motor cars and flying machines.
But concentration in Europe was also a component part of the process of concentration
in America, which developed in the following way:
| |
General Electric Company |
| United States: |
Thomson-Houston Co. establishes a firm in Europe |
Edison Co. establishes in Europe the French Edison Co. which transfers its patents to
the German firm |
| Germany: |
Union Electric Co. |
General Electric Co. (A.E.G.) |
| |
General Electric Co. (A. E. G.) |
Thus, two electrical "Great Powers" were formed: "there are no
other electric companies in the world completely independent of them," wrote
Heinig in his article "The Path of the Electric Trust." An idea, although far
from complete, of the turnover and the size of the enterprises of the two
"trusts" can be obtained from the following figures:
| |
Turnover
(Mill. marks) |
No. of employees |
Net profits
(Mill. marks) |
| America: General Electric Co. (G.E.C.) |
1907: |
252 |
28,000 |
35.4 |
| 1910: |
298 |
32,000 |
45.6 |
| Germany: General Electric Co. (A. E. G.) |
1907: |
216 |
30,700 |
14.5 |
| 1911: |
362 |
60,800 |
21.7 |
Well, in 1907, the German and American trusts concluded an agreement by which they
divided the world between themselves. Competition between them ceased. The American
General Electric Company (G.E.C.) "got" the United States and Canada. The German
General Electric Company (A.E.G.) "got" Germany, Austria, Russia, Holland,
Denmark, Switzerland, Turkey and the Balkans. Special agreements, naturally secret, were
concluded regarding the penetration of "daughter companies" into new branches of
industry, into "new" countries formally not yet allotted. The two trusts were to
exchange inventions and experiments.* [Riesser, op. cit.; Diouritch, op. cit., p.
239; Kurt Heinig, op. cit.]
The difficulty of competing against this trust, which is practically world-wide,
controls a capital of several billion, and has its "branches," agencies,
representatives, connections, etc., in every corner of the world, is self-evident. But the
division of the world between two powerful trusts does not preclude redivision if
the relation of forces changes as a result of uneven development, war, bankruptcy, etc.
An instructive example of attempts at such a redivision, of the struggle for
redivision, is provided by the oil industry.
"The world oil market," wrote Jeidels in 1905, "is even today still
divided between two great financial groups--Rockefeller's American Standard Oil Co., and
Rothschild and Nobel, the controlling interests of the Russian oil fields in Baku. The two
groups are closely connected. But for several years five enemies have been threatening
their monopoly":* [Jeidels, op. cit., p. 193.] 1) The exhaustion of the
American oil fields; 2) the competition of the firm of Mantashev of Baku; 3) the Austrian
oil fields; 4) the Rumanian oil fields; 5) the overseas oil fields, particularly in the
Dutch colonies (the extremely rich firms, Samuel, and Shell, also connected with British
capital). The three last groups are connected with the big German banks, headed by the
huge Deutsche Bank. These banks independently and systematically developed the oil
industry in Rumania, for example, in order to have a foothold of their "own." In
1907, the foreign capital invested in the Rumanian oil industry was estimated at
185,000,000 francs, of which 74,000,000 was German capital.** [Diouritch, op. cit., p. 245. ]
A struggle began for the "division of the world," as, in fact, it is called
in economic literature. On one side, the Rockefeller "oil trust," wishing to
capture everything, formed a "daughter company" right in Holland,
and bought up oil fields in the Dutch Indies, in order to strike at its principal enemy,
the Anglo-Dutch Shell trust. On the other side, the Deutsche Bank and the other German
banks aimed at "retaining" Rumania "for themselves" and at uniting it
with Russia against Rockefeller. The latter possessed far more capital and an excellent
system of oil transportation and distribution. The struggle had to end, and did end in
1907, with the utter defeat of the Deutsche Bank, which was confronted with the
alternative: either to liquidate its "oil interests" and lose millions, or
submit. It chose to submit, and concluded a very disadvantageous agreement with the
"oil trust." The Deutsche Bank agreed "not to attempt anything which might
injure American interests." Provision was made however, for the annulment of the
agreement in the event of Germany establishing a state oil monopoly.
Then the "comedy of oil" began. One of the German finance kings, von Gwinner,
a director of the Deutsche Bank through his private secretary, Stauss, launched a campaign for a state oil monopoly. The gigantic machine of the huge German bank and all
its wide "connections" were set in motion. The press bubbled over with
"patriotic" indignation against the "yoke" of the American trust, and,
on March 15, 1911 the Reichstag by an almost unanimous vote, adopted a motion asking the
government to introduce a bill for the establishment of an oil monopoly. The government
seized upon this "popular" idea, and the game of the Deutsche Bank, which hoped
to cheat its American partner and improve its business by a state monopoly, appeared to
have been won. The German oil magnates already saw visions of enormous profits, which
would not be less than those of the Russian sugar refiners.... But, firstly, the big
German banks quarreled among themselves over the division of the spoils. The
Disconto-Gesellschaft exposed the covetous aims of the Deutsche Bank; secondly, the
government took fright at the prospect of a struggle with Rockefeller, for it was very
doubtful whether Germany could be sure of obtaining oil from other sources (the Rumanian
output was small); thirdly, just at that time the 1913 credits of a billion marks were
voted for Germany's war preparations. The oil monopoly project was postponed. The
Rockefeller "oil trust" came out of the struggle, for the time being,
victorious.
The Berlin review, Die Bank, wrote in this connection that Germany
could fight the oil trust only by establishing an electricity monopoly and by converting
water power into cheap electricity. "But," the author added, "the
electricity monopoly will come when the producers need it, that is to say when the next
great crash in the electrical industry will be standing at the door, and when the
gigantic, expensive electric stations which are now being put up at great cost everywhere
by private electrical 'concerns,' which are already obtaining partial monopolies from
towns, from states, etc., can no longer work at a profit. Water power will then have to be
used. But it will be impossible to convert it into cheap electricity at state expense; it
will also have to be handed over to a 'private monopoly controlled by the state,' because
private industry has already concluded a number of contracts and has stipulated for heavy
compensation.... So it was with the nitrate monopoly, so it is with the oil monopoly; so
it will be with the electric power monopoly. It is time our state
socialists, who allow themselves to be blinded by a beautiful principle, understood, at
last, that in Germany the monopolies have never pursued the aim, nor have they had the
result, of benefiting the consumer, or even of handing over to the state
part of the promoter's profits; they have served only to facilitate at the expense of the
state, the recovery of private industries which were on the verge of bankruptcy."* [Die
Bank, 1912, 1, p. 1036; 1912, 2, p. 629; 1913, 1, p. 388.]
Such are the valuable admissions which the German bourgeois economists are forced to
make. We see plainly here how private and state monopolies are interwoven in the age of
finance capital; how both are but separate links in the imperialist struggle between the
big monopolists for the division of the world.
In mercantile shipping, the tremendous development of concentration has ended also in
the division of the world. In Germany two powerful companies have come to the front: the
Hamburg-Amerika and the Norddeutscher Lloyd, each having a capital of 200,000,000 marks
(in stocks and bonds) and possessing shipping tonnage to the value of 185 to 189 million
marks. On the other side, in America, on January 1, 1903, the so-called Morgan trust, the
International Mercantile Marine Co., was formed which united nine American and British
steamship companies, and which possessed a capital of 120,000,000 dollars (480,000,000
marks). As early as 1903, the German giants and this American-British trust concluded an
agreement to divide the world in connection with the division of profits. The German
companies undertook not to compete in the Anglo-American traffic. Which ports were to be
"allotted" to each was precisely stipulated; a joint committee of control was
set up, etc. This agreement was concluded for twenty years, with the prudent provision for
its annulment in the event of war.* [Riesser, op. cit., p. 125. ]
Extremely instructive also is the story of the formation of the International Rail
Cartel. The first attempt of the British, Belgian and German rail manufacturers to form
such a cartel was made as early as 1884, during a severe industrial depression. The
manufacturers agreed not to compete with one another in the home markets of the countries
involved, and they divided the foreign markets in the following quotas: Great Britain 66
per cent; Germany 27 per cent; Belgium 7 per cent. India was reserved entirely for Great
Britain. Joint war was declared against a British firm which remained outside the cartel,
the cost of which was met by a percentage levy on all sales. But in 1886 the cartel
collapsed when two British firms retired from it. It is characteristic that agreement
could not be achieved during subsequent boom periods.
At the beginning of 1904, the German steel syndicate was formed. In November 1904, the
International Rail Cartel was revived, with the following quotas: England 53.5 per cent;
Germany 28.83 per cent; Belgium 17.67 per cent. France came in later and received 4.8 per
cent, 5.8 per cent and 6.4 per cent in the first, second and third years respectively,
over and above the 100 per cent limit, i.e., out of a total of 104.8 per cent, etc. In
1905, the United States Steel Corporation entered the cartel; then Austria and Spain.
"At the present time," wrote Vogelstein in 1910, "the division of the world
is completed, and the big consumers, primarily the state railways--since the world has
been parceled out without consideration for their interests--can now dwell like the poet
in the heaven of Jupiter."* [Vogelstein, Organisationsformen, p. 100.
]
We will mention also the International Zinc Syndicate which was established in 1909 and
which precisely apportioned output among five groups of factories: German, Belgian,
French, Spanish and British; and also the International Dynamite Trust, which, Liefmann
says, is "quite a modern, close alliance of all the German explosives manufacturers
who, with the French and American dynamite manufacturers, organized in a similar manner,
have divided the whole world among themselves, so to speak."** [Liefmann, Kartelle
und Trusts, 2. A.., p. 161.]
Liefmann calculated that in 1897 there were altogether about forty international
cartels in which Germany had a share, while in 1910 there were about a hundred.
Certain bourgeois writers (whom K. Kautsky, who has completely abandoned the Marxist
position he held, for example, in 1909, has now joined) have expressed the opinion that
international cartels, being one of the most striking expressions of the
internationalization of capital, give the hope of peace among nations under capitalism.
Theoretically, this opinion is absolutely absurd, while in practice it is sophistry and a
dishonest defense of the worst opportunism. International cartels show to what point
capitalist monopolies have developed, and the object of the struggle between the
various capitalist combines. This last circumstance is the most important, it alone shows
us the historico-economic meaning of what is taking place; for the forms of the
struggle may and do constantly change in accordance with varying, relatively particular
and temporary causes, but the substance of the struggle, its class content, positively
cannot change while classes exist. Naturally, it is in the interests of, for example, the
German bourgeoisie, to whose side Kautsky has in effect gone over in his theoretical
arguments (we will deal with this later), to obscure the substance of the present
economic struggle (the division of the world) and to emphasize now this and now another form of the struggle. Kautsky makes the same mistake. Of course, we have in mind not only
the German bourgeoisie, but the bourgeoisie all over the world. The capitalists divide the
world, not out of any particular malice, but because the degree of concentration which has
been reached forces them to adopt this method in order to obtain profits. And they divide
it "in proportion to capital," "in proportion to strength," because
there cannot be any other method of division under commodity production
and capitalism. But strength varies with the degree of economic and political development.
In order to understand what is taking place, it is necessary to know what questions are
settled by the changes in strength. The question as to whether these changes are
"purely" economic or non-economic (e.g., military) is a secondary one, which
cannot in the least affect the fundamental views on the latest epoch of capitalism. To
substitute the question of the form of the struggle and agreements (today peaceful,
tomorrow warlike, the next day warlike again) for the question of the substance of
the struggle and agreements between capitalist combines is to sink to the role of a
sophist.
The epoch of the latest stage of capitalism shows us that certain
relations between capitalist combines grow up, based on the economic division of
the world, while parallel and in connection with it, certain relations grow up between
political combines, between states, on the basis of the territorial division of the world,
of the struggle for colonies, of the "struggle for economic territory."
VI. THE DIVISION OF THE WORLD AMONG THE GREAT POWERS
In his book, on "the territorial development of the European colonies," A.
Supan,* [A. Supan, Die territoriale Entwicklung der europäischen Kolonien, 1906,
p. 254.] the geographer, gives the following brief summary of this development at the end
of the nineteenth century:
PERCENTAGE OF TERRITORY BELONGING TO THE EUROPEAN COLONIAL POWERS
(INCLUDING THE UNITED STATES)
| |
1876 |
1900 |
Increase or decrease |
| In Africa |
10.8% |
90.4% |
+ 79.6% |
| " Polynesia |
56.8% |
98.9% |
+ 42.1% |
| " Asia |
51.5% |
56.6% |
+ 5.1% |
| " Australia |
100.0% |
100.0% |
-- |
| " America |
27.5% |
27.2% |
- 0.3% |
"The characteristic feature of this period," he concludes, "is, therefore,
the division of Africa and Polynesia." As there are no unoccupied territories--that
is, territories that do not belong to any state--in Asia and America, it is necessary to
amplify Supan's conclusion and say that the characteristic feature of the period under
review is the final partition of the globe--final, not in the sense that a repartition is impossible; on the contrary, repartitions are possible and inevitable--but in the
sense that the colonial policy of the capitalist countries has completed the
seizure of the unoccupied territories on our planet. For the first time the world is
completely divided up, so that in the future only redivision is possible, i.e.,
territories can only pass from one "owner" to another, instead of passing as
ownerless territory to an "owner."
Hence, we are passing through a peculiar epoch of world colonial policy, which is most
closely connected with the "latest stage in the development of capitalism," with
finance capital. For this reason, it is essential first of all to deal in greater detail
with the facts, in order to ascertain as exactly as possible what distinguishes this epoch
from those preceding it, and what the present situation is. In the first place, two
questions of fact arise here: is an intensification of colonial policy, a sharpening of
the struggle for colonies, observed precisely in this epoch of finance capital? And how,
in this respect, is the world divided at the present time?
The American writer, Morris, in his book on the history of colonization,* [Henry C.
Morris, The History of Colonization, New York, 1900, Vol. II, p. 88; Vol. I, p.
419; Vol. II, p. 304.] has made an attempt to sum up the data on the colonial possessions
of Great Britain, France and Germany during different periods of the nineteenth century.
The following is a brief summary of the results he has obtained:
COLONIAL POSSESSIONS
| Year |
Great Britain |
France |
Germany |
| Area (mill. sq.m.) |
Pop.(mill.) |
Area (mill. sq.m.) |
Pop. (mill.) |
Area (mill. sq.m.) |
Pop. (mill.) |
| 1815-30 |
? |
126.4 |
0.02 |
0.5 |
_ |
_ |
| 1860 |
2.5 |
145.1 |
0.2 |
3.4 |
_ |
_ |
| 1880 |
7.7 |
267.9 |
0.7 |
7.5 |
_ |
_ |
| 1899 |
9.3 |
309.0 |
3.7 |
56.4 |
1.0 |
14.7 |
For Great Britain, the period of the enormous expansion of colonial conquests is that
between 1860 and 1880, and it was also very considerable in the last twenty years of the
nineteenth century. For France and Germany this period falls precisely in these twenty
years. We saw above that the development of premonopolist-capitalism, of capitalism in
which free competition was predominant, reached its limit in the 1860's and 1870's. We now
see that it is precisely after that period that the tremendous "boom"
in colonial conquests begins, and that the struggle for the territorial division of the
world becomes extraordinarily keen. It is beyond doubt, therefore, that capitalism's
transition to the stage of monopoly capitalism, to finance capital, is connected with
the intensification of the struggle for the partition of the world.
Hobson, in his work on imperialism, marks the years 1884-1900 as the epoch of
intensified "expansion" of the chief European states. According to his estimate,
Great Britain during these years acquired 3,700,000 square miles of territory with a
population of 57,000,000; France acquired 3,600,000 square miles with a population of
36,500,000; Germany 1,000,000 square miles with a population of 14,700,000; Belgium
900,000 square miles with 30,000,000 inhabitants
Portugal 800,000 square miles with 9,000,000 inhabitants. The pursuit of colonies by
all the capitalist states at the end of the nineteenth century and particularly since the
1880's is a commonly known fact in the history of diplomacy and of foreign politics.
In the most flourishing period of free competition in Great Britain, i.e., between 1840
and 1860, the leading British bourgeois politicians were opposed to colonial
policy and were of the opinion that the liberation of the colonies, their complete
separation from Britain was inevitable and desirable. M. Beer, in an article, "Modern
British Imperialism,"* [Die Neue Zeit, XVI, I, 1898, S. 302.] published in
1898, shows that in 1852, Disraeli, a statesman who was generally inclined towards
imperialism, declared: "The colonies are millstones round our necks." But at the
end of the nineteenth century the heroes of the hour in England were Cecil Rhodes and
Joseph Chamberlain, who openly advocated imperialism and applied the imperialist policy in
the most cynical manner!
It is not without interest to observe that already at that time these leading British
bourgeois politicians saw the connection between what might be called the purely economic
and the politico-social roots of modern imperialism. Chamberlain advocated imperialism as
a "true, wise and economical policy," and pointed particularly to the German,
American and Belgian competition which Great Britain was encountering in the world market.
Salvation lies in monopolies, said the capitalists as they formed cartels, syndicates and
trusts. Salvation lies in monopolies, echoed the political leaders of the bourgeoisie,
hastening to appropriate the parts of the world not yet shared out. And Cecil Rhodes, we
are informed by his intimate friend, the journalist Stead, expressed his imperialist views
to him in 1895 in the following terms: "I was in the East End of London"
(working-class quarter) "yesterday and attended a meeting of the unemployed. I
listened to the wild speeches, which were just a cry for 'bread,' 'bread!' and on my way
home I pondered over the scene and I became more than ever convinced of the importance of
imperialism.... My cherished idea is a solution for the social problem, i.e., in order to
save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial
statesmen must acquire new lands to settle the surplus population, to provide new markets
for the goods produced in the factories and mines. The Empire, as I have always said, is a
bread and butter question. If you want to avoid civil war, you must become
imperialists."* [lbid., S. 304. ]
This is what Cecil Rhodes, millionaire, a king of finance, the man who was mainly
responsible for the Anglo-Boer War, said in 1895. True, his defence of imperialism is
crude and cynical, but in substance it does not differ from the "theory"
advocated by Messrs. Maslov, Südekum, Potressov, David and the founder of Russian
Marxism, and others. Cecil Rhodes was a somewhat more honest social-chauvinist....
To present as precise a picture as possible of the territorial division of the world
and of the changes which have occurred during the last decades in this respect, we will
utilize the data furnished by Supan in the work already quoted on the colonial possessions
of all the powers of the world. Supan takes the years 1876 and 1900; we will take the year
1876 - a year very aptly selected, for it is precisely by that time that the premonopolist
stage of development of West-European capitalism can be said to have been completed, in
the main--and the year 1914, and instead of Supan's figures we will quote the more recent
statistics of Hübner's Geographical and Statistical Tables. Supan gives figures
only for colonies; we think it useful, in order to present a complete picture of the
division of the world, to add brief figures on non-colonial and semicolonial countries, in
which category we place Persia, China and Turkey: the first of these countries is already
almost completely a colony, the second and third are becoming such.
We thus get the following summary:
COLONIAL POSSESSIONS OP THE GREAT POWERS
(Million square kilometers and million inhabitants)
| |
Colonies |
Metropolitan countries |
Total |
| |
1876 |
1914 |
1914 |
1914 |
| |
Area |
Pop. |
Area |
Pop. |
Area |
Pop. |
Area |
Pop. |
| Great Britain |
22.5 |
251.9 |
33.5 |
393.5 |
0.3 |
46.5 |
33.8 |
440.0 |
| Russia |
17.0 |
15.9 |
17.4 |
33.2 |
5.4 |
136.2 |
22.8 |
169.4 |
| France |
0.9 |
6.0 |
10.6 |
55.5 |
0.5 |
39.6 |
11.1 |
95.1 |
| Germany |
-- |
-- |
2.9 |
12.3 |
0.5 |
64.9 |
3.4 |
77.2 |
| U.S.A. |
-- |
-- |
0.3 |
9.7 |
9.4 |
97.0 |
9.7 |
106.7 |
| Japan |
-- |
-- |
0.3 |
19.2 |
0.4 |
53.0 |
0.7 |
72.2 |
| Total for 6 Great Powers |
40.4 |
273.8 |
65.0 |
523.4 |
16.5 |
437.2 |
81.5 |
960.6 |
| Colonies of other powers (Belgium, Holland, etc.) |
9.9 |
45.3 |
| Semi-colonial countries (Persia, China, Turkey) |
14.5 |
361.2 |
| Other countries |
28.0 |
289.9 |
| Total for whole world |
133.9 |
1,657.0 |
We clearly see from these figures how "complete" was the partition of the world
on the border line between the nineteenth and the twentieth centuries. After 1876 colonial
possessions increased to enormous dimensions, more than fifty per cent, from 40,000,000 to
25,000,000 square kilometers in area for the six biggest powers; the
increase amounts to 25,000,000 square kilometers, fifty per cent larger than the area of
the metropolitan countries (16,500,000 square kilometers). In 1876 three powers had no
colonies, and a fourth, France, had scarcely any. By 1914 these four powers had acquired
colonies of an area of 14,100,000 square kilometers, i.e., about kitty per cent larger
than that of Europe, with a population of nearly 100,000,000. The unevenness in the rate
of expansion of colonial possessions is very great. If, for instance, we compare France,
Germany and Japan, which do not differ very much in area and population, we will see that
the first has acquired almost three times as much colonial territory as the other two
combined. In regard to finance capital, France, at the beginning of the period we are
considering, was also, perhaps, several times richer than Germany and Japan put together.
In addition to, and on the basis of, purely economic conditions, geographical and other
conditions also affect the dimensions of colonial possessions. However strong the process
of leveling the world, of leveling the economic and living conditions in different
countries, may have been in the past decades as a result of the pressure of large-scale
industry, exchange and finance capital, considerable differences still remain; and among
the six powers mentioned we see, firstly, young capitalist countries (America, Germany,
Japan) whose progress has been extraordinarily rapid; secondly, countries with an old
capitalist development (France and Great Britain), whose progress lately has been much
slower than that of the previously mentioned countries, and thirdly, a country which is
economically most backward (Russia), where modern capitalist imperialism is enmeshed, so
to speak, in a particularly close network of precapitalist relations.
Alongside the colonial possessions of the Great Powers, we have placed the small
colonies of the small states, which are, so to speak, the next objects of a possible and
probable "redivision" of colonies. Most of these small states are able to retain
their colonies only because of the conflicting interests, friction, etc., among the big
powers, which prevent them from coming to an agreement in regard to the division of the
spoils. The "semicolonial" states provide an example of the transitional forms
which are to be found in all spheres of nature and society. Finance capital is such a
great, it may be said, such a decisive force in all economic and in all international
relations, that it is capable of subjecting, and actually does subject to itself even
states enjoying the fullest political independence; we shall shortly see examples of this.
Of course, finance capital finds most "convenient," and is able to extract the
greatest profit from such a subjection as involves the loss of the political
independence of the subjected countries and peoples. In this connection, the semicolonial
countries provide a typical example of the "middle stage." It is natural that
the struggle for these semidependent countries should have become particularly bitter in
the epoch of finance capital, when the rest of the world has already been divided up.
Colonial policy and imperialism existed before this latest stage of capitalism, and
even before capitalism. Rome, founded on slavery, pursued a colonial policy and practiced
imperialism. But "general" disquisitions on imperialism, which ignore, or put
into the background, the fundamental difference between social-economic systems,
inevitably degenerate into the most vapid banality or bragging, like the comparison:
"Greater Rome and Greater Britain."* [C. P. Lucas, Greater Rome and Greater
Britain, Oxford, 1912 or the Earl of Cromer's Ancient and Modern Imperialism, London,
1910.] Even the capitalist colonial policy of previous stages of capitalism is
essentially different from the colonial policy of finance capital.
The principal feature of the latest stage of capitalism is the domination of monopolist
combines of the big capitalists. These monopolies are most firmly established when all the sources of raw materials are captured by one group, and we have seen with what
zeal the international capitalist combines exert every effort to make it impossible for
their rivals to compete with them by buying up, for example, iron ore fields, oil fields,
etc. Colonial possession alone gives the monopolies complete guarantee against all
contingencies in the struggle with competitors, including the contingency that the latter
will defend themselves by means of a law establishing a state monopoly. The more
capitalism is developed, the more strongly the shortage of raw materials is felt, the more
intense the competition and the hunt for sources of raw materials throughout the whole
world, the more desperate is the struggle for the acquisition of colonies.
"It may be asserted," writes Schilder, "although it may sound
paradoxical to some, that in the more or less discernible future the growth of the urban
and industrial population is more likely to be hindered by a shortage of raw materials for
industry than by a shortage of food." For example, there is a growing shortage of
timber--the price of which is steadily rising--of leather, and of raw materials for the
textile industry.
"Associations of manufacturers are making efforts to create an equilibrium between
agriculture and industry in the whole of world economy; as an example of this we might
mention the International Federation of Cotton Spinners' Associations in several of the
most important industrial countries, founded in 1904, and the European Federation of Flax
Spinners' Associations, founded on the same model in 1910."* [Schilder, op. cit.,
pp. 38-42.]
The bourgeois reformists, and among them particularly the present-day adherents of
Kautsky, of course, try to belittle the importance of facts of this kind by arguing that
it "would be possible" to obtain raw materials in the open market without a
"costly and dangerous" colonial policy; and that it "would be
possible" to increase the supply of raw materials to an enormous extent
"simply" by improving conditions in agriculture in general. But such arguments
become an apology for imperialism, an attempt to embellish it, because they ignore the
principal feature of the latest stage of capitalism: monopolies. Free markets are becoming
more and more a thing of the past; monopolist syndicates and trusts are restricting them
more and more every day, and "simply" improving conditions in agriculture means
improving the conditions of the masses, raising wages and reducing profits. Where, except
in the imagination of sentimental reformists, are there any trusts capable of interesting
themselves in the condition of the masses instead of the conquest of colonies?
Finance capital is interested not only in the already discovered sources of raw
materials but also in potential sources, because present-day technical development is
extremely rapid, and land which is useless today may be made fertile tomorrow if new
methods are applied (to devise these new methods a big bank can equip a special expedition
of engineers, agricultural experts, etc.), and if large amounts of capital are invested.
This also applies to prospecting for minerals, to new methods of working up and utilizing
raw materials, etc., etc. Hence, the inevitable striving of finance capital to enlarge its
economic territory and even its territory in general. In the same way that the trusts
capitalize their property at two or three times its value, taking into account its
"potential" (and not present) profits, and the further results of monopoly, so
finance capital strives in general to seize the largest possible amount of land of all
kinds in all places, and by every means, taking into account potential sources of raw
materials and fearing to be left behind in the fierce struggle for the last scraps of
undivided territory, or for the repartition of those that have been already divided.
The British capitalists are exerting every effort to develop cotton growing in their colony, Egypt (in 1904, out of 2,300,000 hectares of land under cultivation, 600,000,
or more than one-fourth, were devoted to cotton growing); the Russians are doing the same
in their colony, Turkestan, because in this way they will be in a better position
to defeat their foreign competitors, to monopolize the sources of raw materials and form a
more economical and profitable textile trust in which all the
processes of cotton production and manufacturing will be "combined" and
concentrated in the hands of one set of owners.
The interests pursued in exporting capital also give an impetus to the conquest of
colonies, for in the colonial market it is easier to employ monopolist methods (and
sometimes they are the only methods that can be employed) to eliminate competition, to
make sure of contracts, to secure the necessary "connections," etc.
The non-economic superstructure which grows up on the basis of finance capital, its
politics and its ideology, stimulates the striving for colonial conquest. "Finance
capital does not want liberty, it wants domination," as Hilferding very truly says.
And a French bourgeois writer, developing and supplementing, as it were, the ideas of
Cecil Rhodes quoted above, [14] writes that social causes should; be
added to the economic causes of modern colonial policy: "owing to the growing
complexities of life and the difficulties which weigh not only on the masses of the
workers" but also on the middle classes, 'impatience, irritation and: hatred are
accumulating in all the countries of the old civilization and are becoming a menace to
public order; the energy which is being hurled out of the definite class channel must be
given employment abroad in order to avert an explosion at home.'"* [Wahl, La
France aux colonies (France in the Colonies--Tr.), quoted by Henri Russier, Le
partage de l'Océanie (The Partition of Oceania--Tr.), Paris, 1905, p. 165]
Since we are speaking of colonial policy in the epoch of capitalist imperialism, it
must be observed that finance capital and its corresponding foreign policy, which reduces:
itself to the struggle of the Great Powers for the economic and political division of the
world, give rise to a number of transitional forms of state dependence. Typical
of this epoch is not only the two main groups of countries: those owning colonies, and
colonies, but also the diverse forms of dependent countries which, officially, are
politically independent, but in fact, are enmeshed in the net of financial and diplomatic
dependence. We have already referred to one form of dependence--the semicolony. An example
of another is provided by Argentina.
"South America, and especially Argentina," writes Schulze-Gaevernitz in his
work on British imperialism, "is so dependent financially on London that it ought to
be described as almost a British commercial colony."* [Schulze-Gaevernitz, Britischer
Imperialismus und engliseber Freihandel zu Beginn des 20-ten Jabrhunderts (British
Imperialism and English Free Trade at the Beginning of the Twentieth Century--Tr.), Leipzig,
1906, p. '18. Sartorius v. Waltershausen says the same in Das volkswirtschaftiche
System der Kapitalanlage im Auslande (The National Economic System of Capital Investments
Abroad--Tr.), Berlin, 1907, p. 46.] Basing himself on the report of the
Austro-Hungarian consul at Buenos Aires for 1909, Schilder estimates the amount of British
capital invested in Argentina at 8,750,000 francs. It is not difficult to imagine what
strong connections British finance capital (and its faithful "friend,"
diplomacy) thereby acquires with the Argentine bourgeoisie, with the circles that control
the whole of that country's economic and political life.
A somewhat different form of financial and diplomatic dependence, accompanied by
political independence, is presented by Portugal. Portugal is an independent sovereign
state, but actually, for more than two hundred years, since the war of the Spanish
Succession (1701-14), it has been a British protectorate. Great Britain has protected
Portugal and her colonies in order to fortify her own positions in the fight against her
rivals, Spain and France. In return Great Britain has received commercial privileges,
preferential conditions for importing goods and especially capital into Portugal and the
Portuguese colonies, the right to use the ports and islands of Portugal, her telegraph
cables, etc.** [Schilder, op. cit., Vol. 1, pp. 160-61.] Relations of this kind
have always existed between big and little states, but in the epoch of capitalist
imperialism they become a general system, they form part of the sum total of "divide
the world" relations, become links in the chain of operations of world finance
capital.
In order to finish with the question of the division of the world, we must make the
following additional observation. This question was raised quite openly and definitely not
only in American literature after the Spanish-American War, and in English literature
after the Anglo-Boer War, at the very end of the nineteenth century and the beginning of
the twentieth; not only has German literature, which has "most jealously"
watched "British imperialism," systematically given its appraisal of this fact;
it has also been raised in French bourgeois literature in terms as wide and definite as
they can be made from the bourgeois point of view. We will quote Driault, the historian,
who, in his book, Political and Social Problems at the End of the Nineteenth Century, in
the chapter "The Great Powers and the Division of the World," wrote the
following: "During the past few years, all the free territory of the globe, with the
exception of China, has been occupied by the powers of Europe and North America. Several
conflicts and displacements of influence have already occurred over this matter, which
foreshadow more terrible upheavals in the near future. For it is necessary to make haste.
The nations which have not yet made provision for themselves run the risk of never
receiving their share and never participating in the tremendous exploitation of the globe
which will be one of the most essential features of the next century" (i.e., the
twentieth). "That is why all Europe and America have lately been afflicted with the
fever of colonial expansion, of 'imperialism,' that most noteworthy feature of the end of
the nineteenth century." And the author added: "In this partition of the world,
in this furious hunt for the treasures and the big markets of the globe, the relative
power of the empires founded in this nineteenth century is totally out of proportion to
the place occupied in Europe by the nations which founded them. The dominant powers in
Europe, the arbiters of her destiny, are not equally preponderant in the whole
world. And, as colonial power, the hope of controlling as yet unassessed wealth, will
evidently react upon the relative strength of the European powers, the colonial
question--'imperialism,' if you will-- which has already modified the political conditions
of Europe itself, will modify them more and more."* [J. I. Driault, Problèmes
politiques et sociaux, Paris, 1907 p. 299.]
VII. IMPERIALISM, AS A SPECIAL STAGE OF CAPITALISM
We must now try to sum up, put together, what has been said above on the subject of
imperialism. Imperialism emerged as the development and direct continuation of the
fundamental characteristics of capitalism in general. But capitalism only became
capitalist imperialism at a definite and very high stage of its development, when certain
of its fundamental characteristics began to change into their opposites, when the features
of the epoch of transition from capitalism to a higher social and economic system had
taken shape and revealed themselves all along the line. Economically, the main thing in
this process is the displacement of capitalist free competition by capitalist monopoly.
Free competition is the fundamental characteristic of capitalism, and of commodity
production generally; monopoly is the exact opposite of free competition, but we have seen
the latter being transformed into monopoly before our eyes, creating large-scale industry
and forcing out small industry, replacing large-scale by still larger-scale industry, and
carrying concentration of production and capital to the point where out of it has grown
and is growing monopoly: cartels, syndicates and trusts, and merging with them, the
capital of a dozen or so banks, which manipulate thousands of millions At the same time
the monopolies, which have grown out of free competition, do not eliminate the latter, but
exist over it and alongside of it, and thereby give rise to a number of very acute,
intense antagonisms, frictions and conflicts. Monopoly is the transition from capitalism
to a higher system.
If it were necessary to give the briefest possible definition of imperialism we should
have to say that imperialism is the monopoly stage of capitalism. Such a definition would
include what is most important, for, on the one hand, finance capital is the bank capital
of a few very big monopolist banks, merged with the capital of the monopolist combines of
industrialists; and, on the other hand, the division of the world is the transition from a
colonial policy which has extended without hindrance to territories unseized by any
capitalist power, to a colonial policy of monopolistic possession of the territory of the
world which has been completely divided up.
But very brief definitions, although convenient, for they sum up the main points, are
nevertheless inadequate, since very important features of the phenomenon that has to be
defined have to be especially deduced. And so, without forgetting the conditional and
relative value of all definitions in general, which can never embrace all the
concatenations of a phenomenon in its complete development, we must give a definition of
imperialism that will include the following five of its basic features: I) the
concentration of production and capital has developed to such a high stage that it has
created monopolies which play a decisive role in economic life; ,) the merging of bank
capital with industrial capital, and the creation, on the basis of this "finance
capital," of a financial oligarchy; 3) the export of capital as distinguished from
the export of commodities acquires exceptional importance; 4) the formation of
international monopolist capitalist combines which share the world among themselves, and
5) the territorial division of the whole world among the biggest capitalist powers is
completed. Imperialism is capitalism in that stage of development in which the dominance
of monopolies and finance capital has established itself; in which the export of capital
has acquired pronounced importance; in which the division of the world among the
international trusts has begun; in which the division of all territories of the globe
among the biggest capitalist powers has been completed.
We shall see later that imperialism can and must be defined differently if we bear in
mind, not only the basic, purely economic concepts--to which the above definition is
limited--but also the historical place of this stage of capitalism in relation to
capitalism in general, or the relation between imperialism and the two main trends in the
working-class movement. The point to be noted just now is that imperialism, as interpreted
above, undoubtedly represents a special stage in the development of capitalism. To enable
the reader to obtain the most well-grounded idea of imperialism possible, we deliberately
tried to quote as largely as possible bourgeois economists who are obliged to
admit the particularly incontrovertible facts concerning the latest stage of capitalist
economy. With the same object in view, we have quoted detailed statistics which enable one
to see to what degree bank capital, etc., has grown, in what precisely the transformation
of quantity into quality, of developed capitalism into imperialism, was expressed.
Needless to say, of course, all boundaries in nature and in society are conditional and
changeable, that it would be absurd to argue, for example, about the particular year or
decade in which imperialism "definitely" became established.
In the matter of defining imperialism, however, we have to enter into controversy,
primarily, with K. Kautsky, the principal Marxian theoretician of the epoch of the
so-called Second International--that is, of the twenty-five years between 1889 and 1914.
The fundamental ideas expressed in our definition of imperialism were very resolutely
attacked by Kautsky in 1915, and even in November 1914, when he said that imperialism must
not be regarded as a "phase" or stage of economy, but as a policy, a definite
policy "preferred" by finance capital; that imperialism must not be
"identified" with "present-day capitalism"; that if imperialism is to
be understood to mean "all the phenomena of present-day capitalism"--cartels,
protection, the domination of the financiers, and colonial policy--then the question as to
whether imperialism is necessary to capitalism becomes reduced to the "flattest
tautology," because, in that case, "imperialism is naturally a vital necessity
for capitalism," and so on. The best way to present Kautsky's idea is to quote his
own definition of imperialism, which is diametrically opposed to the substance of the
ideas which we have set forth (for the objections coming from the camp of
the German Marxists, who have been advocating similar ideas for many years already, have
been long known to Kautsky as the objections of a definite trend in Marxism).
Kautsky's definition is as follows:
"Imperialism is a product of highly developed industrial capitalism. It consists
in the striving of every industrial capitalist nation to bring under its control or to
annex larger and larger areas of agrarian" (Kautsky's italics)
"territory, irrespective of what nations inhabit those regions."* [Die Neue
Zeit, 1914, 2 (Vol. 32), p. 909, Sept. 11, 1914; cf. 1915, 2, p. 107 et seq.]
This definition is utterly worthless because it one-sidedly, i.e., arbitrarily, singles
out only the national question (although the latter is extremely important in itself as
well as in its relation to imperialism), it arbitrarily and inaccurately connects
this question only with industrial capital in the countries which annex other
nations, and in an equally arbitrary and inaccurate manner pushes into the forefront
the annexation of agrarian regions.
Imperialism is a striving for annexations--this is what the political part of
Kautsky's definition amounts to. It is correct, but very incomplete, for politically,
imperialism is, in general, a striving towards violence and reaction. For the moment,
however, we are interested in the economic aspect of the question, which Kautsky himself introduced into his definition. The inaccuracies in Kautsky's definition are glaring.
The characteristic feature of imperialism is not industrial lout finance
capital. It is not an accident that in France it was precisely the extraordinarily rapid
development of finance capital, and the weakening of industrial capital, that,
from the 'eighties onwards, gave rise to the extreme intensification of annexationist
(colonial) policy. The characteristic feature of imperialism is precisely that it strives
to annex not only agrarian territories, but even most highly industrialized
regions (German appetite for Belgium; French appetite for Lorraine), because I) the fact
that the world is already divided up obliges those contemplating a redivision to
reach out for every kind of territory, and 2) an essential feature of imperialism
is the rivalry between several Great Powers in the striving for hegemony, i.e., for the
conquest of territory, not so much directly for themselves as to weaken the adversary and
undermine his hegemony. (Belgium is particularly important for Germany as a base for
operations against England; England needs Baghdad as a base for operations against
Germany, etc.)
Kautsky refers especially--and repeatedly--to Englishmen who, he alleges, have given a
purely political meaning to the word "imperialism" in the sense that he,
Kautsky, understands it. We take up the work by the Englishman Hobson, Imperialism, which
appeared in 1902, and there we read:
"The new imperialism differs from the older, first, in substituting for the
ambition of a single growing empire the theory and the practice of competing empires, each
motivated by similar lusts of political aggrandizement and commercial gain; secondly, in
the dominance of financial or investing over mercantile interests."* [Hobson, Imperialism, London, 1902, p. 324.]
We see that Kautsky is absolutely wrong in referring to Englishmen generally (unless he
meant the vulgar English imperialists, or the avowed apologists for imperialism). We see
that Kautsky, while claiming that he continues to advocate Marxism, as a matter of fact
takes a step backward compared with the social-liberal Hobson, who more
correctly takes into account two "historically concrete" (Kautsky's
definition is a mockery of historical concreteness 1) features of modern imperialism: I)
the competition between several imperialisms, and 2) the predominance of the
financier over the merchant. If it is chiefly a question of the annexation of agrarian
countries by industrial countries, then the role of the merchant is put in the forefront.
Kautsky's definition is not only wrong and un-Marxian. It serves as a basis for a whole
system of views which signify a rupture with Marxian theory and Marxian practice all along
the line. We shall refer to this later. The argument about words which Kautsky raises as
to whether the latest stage of capitalism should be called "imperialism" or
"the stage of finance capital" is absolutely frivolous. Call it what you will,
it makes no difference. The essence of the matter is that Kautsky detaches the politics of
imperialism from its economics, speaks of annexations as being a policy
"preferred" by finance capital, and opposes to it another bourgeois policy
which, he alleges, is possible on this very same basis of finance capital. It follows,
then, that monopolies in economics are compatible with non-monopolistic, non-violent,
non-annexationist methods in politics. It follows, then, that the territorial division of
the world, which was completed precisely during the epoch of finance capital, and which
constitutes the basis of the present peculiar forms of rivalry between the biggest
capitalist states, is compatible with a non-imperialist policy. The result is a
slurring-over and a blunting of the most profound contradictions of the latest stage of
capitalism, instead of an exposure of their depth; the result is bourgeois reformism
instead of Marxism.
Kautsky enters into controversy with the German apologist of imperialism and
annexations, Cunow, who clumsily and cynically argues that imperialism is present-day
capitalism; the development of capitalism is inevitable and progressive; therefore
imperialism is progressive; therefore, we should grovel before it and glorify it! This is
something like the caricature of the Russian Marxists which the Narodniks drew in 1894-95.
They argued: if the Marxists believe that capitalism is inevitable in Russia, that it is
progressive, then they ought to open a tavern and begin to implant capitalism! Kautsky's
reply to Cunow is as follows: imperialism is not present-day capitalism; it is only one of
the forms of the policy of present-day capitalism. This policy we can and should fight,
fight imperialism, annexations, etc.
The reply seems quite plausible, but in effect it is a more subtle and more disguised
(and therefore more dangerous) advocacy of conciliation with imperialism, because a
"fight" against the policy of the trusts and banks that does not affect the
basis of the economics of the trusts and banks is nothing more than bourgeois reformism
and pacifism, the benevolent and innocent expression of pious wishes. Evasion of existing
contradictions, forgetting the most important of them, instead of revealing their full
depth--such is Kautsky's theory, which has nothing in common with Marxism. Naturally, such
a "theory" can only serve the purpose of advocating unity with the Cunows!
"From the purely economic point of view," writes Kautsky, "it is not
impossible that capitalism will yet go through a new phase, that of the extension of the
policy of the cartels to foreign policy, the phase of ultra-imperialism,"* [Die
Neue Zeit, 1914, 2 (Vol. 32), p. 921, Sept. 11, 1914. Cf. 1915, p. 107 et seq.] i.e.,
of a superimperialism, of a union of the imperialisms of the whole world and not struggles
among them, a phase when wars shall cease under capitalism, a phase of "the joint
exploitation of the world by internationally united finance capital."** [Die Neue
Zeit, 1915 I, p. 144, April 30. 1915]
We shall have to deal with this "theory of ultra-imperialism" later on in
order to show in detail how definitely and utterly it breaks with Marxism. At present, in
keeping with the general plan of the present work, we must examine the exact economic data
on this question. "From the purely economic point of view," is
"ultra-imperialism" possible, or is it ultra-nonsense?
If by purely economic point of view a "pure" abstraction is meant, then all
that can be said reduces itself to the following proposition: development is proceeding
towards monopolies, hence, towards a single world monopoly, towards a single world trust.
This is indisputable, but it is also as completely meaningless as is the statement that
"development is proceeding" towards the manufacture of foodstuffs in
laboratories. In this sense the "theory" of ultra-imperialism is no less absurd
than a "theory of ultra-agriculture" would be.
If, however, we are discussing the "purely economic" conditions of the epoch
of finance capital as a historically concrete epoch which opened at the beginning of the
twentieth century, then the best reply that one can make to the lifeless abstractions of
"ultra-imperialism" (which serve exclusively a most reactionary aim: that of
diverting attention from the depth of existing antagonisms) is to contrast them
with the concrete economic realities of present-day world economy. Kautsky's utterly
meaningless talk about ultra-imperialism encourages, among other things, that profoundly
mistaken idea which only brings grist to the mill of the apologists of imperialism, viz.,
that the rule of finance capital lessens the unevenness and contradictions
inherent in world economy, whereas in reality it increases them.
R. Calwer, in his little book, An Introduction to World Economics,* [R.
Calwer, Einfûhrung in die Weltwirtschaft, Berlin, 1906.] made an attempt to
summarize the main, purely economic, data that enable one to obtain a concrete picture of
the internal relations of world economy on the border line between the nineteenth and
twentieth centuries. He divides the world into five "main economic areas," as
follows: 1) Central Europe (the whole of Europe with the exception of Russia and Great
Britain); 2) Great Britain; 3) Russia; 4) Eastern Asia; 5) America, he includes the
colonies in the "areas" of the states to which they belong and "leaves
aside" a few countries not distributed according to areas, such as Persia,
Afghanistan, and Arabia in Asia, Morocco and Abyssinia in Africa, etc.
Here is a brief summary of the economic data he quotes on these regions:
| Principal economic areas |
Area |
Pop. |
Transport |
Trade |
Industry |
| Million sq. Km. |
Millions |
Railways (thous. Km.) |
Mercantile fleet (million tons) |
Imports & exports (billion marks) |
Output |
No. of cotton spindles (millions) |
| of coal (million tons) |
of pig iron (million tons) |
| 1) Central Europe |
27.6
(23.6)* |
388
(146) |
204 |
8 |
41 |
251 |
15 |
26 |
| 2) British |
28.9
(28.6)* |
398
(355) |
140 |
11 |
25 |
249 |
9 |
51 |
| 3) Russian |
22 |
131 |
63 |
1 |
3 |
16 |
3 |
7 |
| 4) East Asian |
12 |
389 |
8 |
1 |
2 |
8 |
0.02 |
2 |
| 5) American |
30 |
148 |
379 |
6 |
14 |
245 |
14 |
19 |
* The figures in parentheses show the area and population of the colonies.
We see three areas of highly developed capitalism (high development of means of
transport, of trade and of industry): the Central European, the British and the American
areas. Among these are three states which dominate the world: Germany, Great Britain, the
United States. Imperialist rivalry and the struggle between these countries have become
extremely keen because Germany has only an insignificant area and few colonies; the
creation of "Central Europe" is still a matter for the future, it is being born
in the midst of a desperate struggle. For the moment the distinctive feature of the whole
of Europe is political incohesion. In the British and American areas, on the other hand,
political concentration is very highly developed, but there is a vast disparity between
the immense colonies of the one and the insignificant colonies of the other. In the
colonies, however, capitalism is only beginning to develop. The struggle for South America
is becoming more and more acute.
There are two areas where capitalism is little developed: Russia and Eastern Asia. In
the former, the density of population is extremely low, in the latter it is extremely
high; in the former political concentration is high, in the latter it does not exist. The
partition of China is only just beginning, and the struggle between Japan, U.S.A., etc.
for it is continually gaining in intensity.
Compare this reality--the vast diversity of economic and political conditions, the
extreme disparity in the rate of development of the various countries, etc., and the
violent struggles among the imperialist states--with Kautsky's silly little fable about
"peaceful" ultra-imperialism. Is this not the reactionary attempt of a
frightened philistine to hide from stern reality? Are not the international cartels which
Kautsky imagines are the embryos of "ultra-imperialism" (in the same way as one
"can" describe the manufacture of tabloids in a laboratory as ultra-agriculture
in embryo) an example of the division and the redivision of the world, the
transition from peaceful division to non-peaceful division and vice versa? Is not American
and other finance capital, which divided the whole world peacefully with Germany's
participation in, for example, the international rail syndicate, or in the international
mercantile shipping trust, now engaged in redividing the world on the basis of a
new relation of forces, which is being changed by methods altogether non-peaceful?Finance
capital and the trusts do not diminish but increase the differences in the rate of growth
of the various parts of the world economy. Once the relation of forces is changed, what
other solution of the contradictions can be found under capitalism than that of
force? Railway statistics* [Statistisches Jahrbuch für das deutsche Reich, 1915;
Archiv für Eisenbahnwesen, 1892 (Statistical Yearbook for the German Empire; Railroad
Archive--Tr.). Minor details for the distribution of railways among the colonies of
the various countries in 1890 had to be estimated approximately.] provide remarkably exact
data on the different rates of growth of capitalism and finance capital in world economy.
In the last decades of imperialist development, the total length of railways has changed
as follows:
RAILWAYS
(Thousand kilometers)
| |
1890 |
1913 |
+ |
| Europe |
224 |
|
346 |
|
+122 |
|
| U.S.A. |
268 |
411 |
+143 |
| All colonies |
82 |
125 |
210 |
347 |
+128 |
+222 |
| Independent and semi-independent states of Asia and America |
43 |
137 |
+94 |
| Total |
617 |
|
1,104 |
|
|
|
Thus, the development of railways has been most rapid in the colonies and in the
independent (and semi-independent) states of Asia and America. Here, as we know, the
finance capital of the four or five biggest capitalist states reigns undisputed. Two
hundred thousand kilometers of new railways in the colonies and in the other countries of
Asia and America represent more than 40,000,000,000 marks in capital, newly invested on
particularly advantageous terms, with special guarantees of a good return and with
profitable orders for steel works, etc., etc.
Capitalism is growing with the greatest rapidity in the colonies and in overseas
countries. Among the latter, new imperialist powers are emerging (e.g., Japan).
The struggle among the world imperialisms is becoming more acute. The tribute levied by
finance capital on the most profitable colonial and overseas enterprises is increasing. In
the division of this "booty," an exceptionally large part goes to countries
which do not always stand at the top of the list as far as rapidity of development of
productive forces is concerned. In the case of the biggest countries, considered with
their colonies, the total length of railways was as follows:
(Thousands of kilometers)
| |
1890 |
1913 |
|
| U.S.A. |
268 |
413 |
+145 |
| British Empire |
107 |
208 |
+101 |
| Russia |
32 |
78 |
+46 |
| Germany |
43 |
68 |
+25 |
| France |
41 |
63 |
+22 |
| Total f or 5 Powers |
491 |
830 |
+339 |
Thus, about 80 per cent of the total existing railways are concentrated in the hands of
the five biggest powers. But the concentration of the ownership of these
railways, the concentration of finance capital, is immeasurably greater, for the French
and English millionaires, for example, own an enormous amount of shares and bonds in
American, Russian and other railways.
Thanks to her colonies, Great Britain has increased the length of "her"
railways by 100,000 kilometers, four times as much as Germany. And yet, it is well known
that the development of productive forces in Germany, and especially the development of
the coal and iron industries, has been incomparably more rapid during this period than in
England--not to speak of France and Russia. In 1892, Germany produced 4,900,000 tons of
pig iron and Great Britain produced 6,800,000 tons; in 1912, Germany produced 17,600,000
tons and Great Britain, 9,000,000 tons. Germany, therefore, had an overwhelming
superiority over England in this respect.* [Cf. also Edgar Crammond, "The Economic
Relations of the British and German Empires" in The Journal of the Royal
Statistical Society, July 1914, p.777 et seq.] The question is: what means
other than war could there be under capitalism of removing the disparity between
the development of productive forces and the accumulation of capital on the one side, and
the division of colonies and "spheres of influence" for finance capital on the
other?
VIII. THE PARASITISM AND DECAY OF CAPITALISM
We now have to examine yet another very important aspect of imperialism to which,
usually, insufficient importance is attached in most of the discussions on this subject.
One of the shortcomings of the Marxist Hilferding is that he takes a step backward
compared with the non-Marxist Hobson. We refer to parasitism, which is characteristic of
imperialism.
As we have seen, the deepest economic foundation of imperialism is monopoly. This is
capitalist monopoly, i.e., monopoly which has grown out of capitalism and exists in the
general environment of capitalism, commodity production and competition, in permanent and
insoluble contradiction to this general environment. Nevertheless, like all monopoly, it
inevitably engenders a tendency to stagnation and decay. Since monopoly prices are
established, even temporarily, the motive cause of technical and, consequently, of all
progress, disappears to a certain extent and, further, the economic possibility
arises of deliberately retarding technical progress. For instance, in America, a certain
Owens invented a machine which revolutionized the manufacture of bottles. The German
bottle-manufacturing cartel purchased Owens' patent, but pigeonholed it, refrained from
utilizing it. Certainly, monopoly under capitalism can never completely, and for a very
long period of time, eliminate competition in the world market (and this, by the by, is
one of the reasons why the theory of ultra-imperialism is so absurd). Certainly, the
possibility of reducing cost of production and increasing profits by introducing technical
improvements operates in the direction of change. But the tendency to stagnation
and decay, which is characteristic of monopoly, continues to operate, and in certain
branches of industry, in certain countries, for certain periods of time, it gains the
upper hand.
The monopoly ownership of very extensive, rich or well situated colonies, operates in
the same direction.
Further, imperialism is an immense accumulation of money capital in a few countries,
amounting, as we have seen, to 100-150 billion francs in securities. Hence the
extraordinary growth of a class, or rather, of a social stratum of rentiers, i.e., people
who live by "clipping coupons," who take no part in any enterprise whatever,
whose profession is idleness. The export of capital, one of the most essential economic
bases of imperialism, still more completely isolates the rentiers from production and sets
the seal of parasitism on the whole country that lives by exploiting the labor of several
overseas countries and colonies.
"In 1893," writes Hobson, "the British capital invested abroad
represented about 15 per cent of the total wealth of the United Kingdom."* [Hobson, op.
cit., pp. 59, 60.] We will remind the reader that by 1915 this capital had increased
about two and a half times. "Aggressive imperialism," says Hobson further on,
"which costs the taxpayer so dear, which is of 60 little value to the manufacturer
and trader ... is a source of great gain to the investor.... The annual income Great
Britain derives from commissions in her whole foreign and colonial trade, import and
export, is estimated by Sir R. Giffen at £18,000,000 for 1899, taken a. 2.5 per cent,
upon a turnover of £800,000,000." Great as this sum is, it cannot explain the
aggressive imperialism of Great Britain. It is explained by the income of go to 100
million pounds sterling from "invested" capital, the income of the rentiers.
The income of the rentiers is five times greater than the income obtained from
the foreign trade of the biggest "trading" country in the world. This is the
essence of imperialism and imperialist parasitism.
For that reason the term, "rentier state" (Rentnerstaat) or usurer state, is
coming into common use in the economic literature that deals with imperialism. The world
has become divided into a handful of usurer states and a vast majority of debtor states.
"At the top of the list of foreign investments," says Schulze-Gaevernitz,
"are those placed in politically dependent or allied countries: Great Britain grants
loans to Egypt, Japan, China and South America. Her navy plays here the part of bailiff in
case of necessity. Great Britain's political power protects her from the indignation of
her debtors."* [Schulze-Gaevernitz, Britischer Imperialismus, p.320 et seq.]
Sartorius von Waltershausen in his book, The National Economic System of Foreign
Investments, cites Holland as the model "rentier state" and points out that
Great Britain and France are now becoming such.** [Sartorius von Waltershausen, Das
volkswirtschaftliche System, etc., Berlin, 1907, Buch IV.] Schilder is of the opinion
that five industrial states have become "definitely pronounced creditor
countries": Great Britain, France, Germany, Belgium and Switzerland. He does not
include Holland in this list simply because she is "industrially little
developed."*** [Schilder, op. cit., p. 393.] The United States is a creditor
only of the American countries.
"Great Britain," says Schulze-Gaevernitz, "is gradually becoming
transformed from an industrial into a creditor state. Notwithstanding the absolute
increase in industrial output and the export of manufactured goods, the relative
importance of income from interest and dividends, issues of securities, commissions and
speculation is on the increase in the whole of the national economy. In my opinion it is
precisely this that forms the economic basis of imperialist ascendancy. The creditor is
more firmly attached to the debtor than the seller is to the buyer."*
[Schulze-Gaevernitz, Britischer Imperialismus, p. 122.] In regard to Germany, A.
Lansburgh, the publisher of the Berlin Die Bank, in 1911, in an article entitled
"Germany--a Rentier State," wrote the following: "People in Germany are
ready to sneer at the yearning to become rentiers that is observed among the people in
France. But they forget that as far as the bourgeoisie is concerned the situation in
Germany is becoming more and more like that in France."** [Die Bank, 1911,
1, pp. 10-11.]
The rentier state is a state of parasitic, decaying capitalism, and this circumstance
cannot fail to influence all the social-political conditions of the countries affected in
general, and the two fundamental trends in the working-class movement, in particular. To
demonstrate this in the clearest possible manner we will quote Hobson, who is the most "reliable" witness, since he cannot be suspected of leanings towards
"Marxist orthodoxy"; on the other hand, he is an Englishman who is very well acquainted with the situation in the country which is
richest in colonies, in finance capital, and in imperialist experience.
With the Anglo-Boer War fresh in his mind, Hobson describes the connection between
imperialism and the interests of the "financiers," the growing profits from
contracts, etc., and writes: "While the directors of this definitely parasitic policy
are capitalists, the same motives appeal to special classes of the workers. In many towns,
most important trades are dependent upon government employment or contracts; the
imperialism of the metal and ship-building centers is attributed in no small degree to
this fact." In this writer's opinion there are two causes which have weakened the old
empires: 1) "economic parasitism," and 2) the formation of armies composed of
subject peoples. "There is first the habit of economic parasitism, by which the
ruling state has used its provinces, colonies, and dependencies in order to enrich its
ruling class and to bribe its lower classes into acquiescence." And we would add that
the economic possibility of such bribery, whatever its form may be, requires high
monopolist profits.
As for the second cause, Hobson writes: "One of the strangest symptoms of the
blindness of imperialism is the reckless indifference with which Great Britain, France and
other imperial nations are embarking on this perilous dependence. Great Britain has gone
farthest. Most of the fighting by which we have won our Indian Empire has been done by
natives; in India, as more recently in Egypt, great standing armies are placed under
British commanders; almost all the fighting associated with our African dominions, except
in the southern part, has been done for us by natives."
Hobson gives the following economic appraisal of the prospect of the partition of
China: "The greater part of Western Europe might then assume the appearance and
character already exhibited by tracts of country in the South of England, in the Riviera,
and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters
of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat
larger group of professional retainers and tradesmen and a large body of personal servants
and workers in the transport trade and in the final stages of production of the more
perishable goods; all the main arterial industries would have disappeared, the staple
foods and manufactures flowing in as tribute from Asia and Africa." "We have
foreshadowed the possibility of even a larger alliance of Western States, a European
federation of great powers which, so far from forwarding the cause of world civilization,
might introduce the gigantic peril of a Western parasitism, a group of advanced industrial
nations, whose upper classes drew vast tribute from Asia and Africa, with which they
supported great tame masses of retainers, no longer engaged in the staple industries of
agriculture and manufacture, but kept in the performance of personal or minor industrial
services under the control of a new financial aristocracy. Let those who would scout such
a theory" (it would be better to say: prospect) "as undeserving of consideration
examine the economic and social condition of districts in Southern England today which are
already reduced to this condition, and reflect upon the vast extension of
such a system which might be rendered feasible by the subjection of China to the economic
control of similar groups of financiers, investors, and political and business officials,
draining the greatest potential reservoir of profit the world has ever known, in order to
consume it in Europe. The situation is far too complex, the play of world-forces far too
incalculable, to render this or any other single interpretation of the future very
probable; but the influences which govern the Imperialism of Western Europe today are
moving in this direction, and, unless counteracted or diverted, make towards some such
consummation."* [Hobson, op. cit., pp. 103, 205, 144, 335, 186.]
The author is quite right: if the forces of imperialism had not been
counteracted they would have led precisely to what he has described. The significance of a
"United States of Europe" in the present imperialist situation is correctly
appraised. He should have added, however, that, also within the working-class
movement, the opportunists, who are for the moment victorious in most countries, are
"working" systematically and undeviatingly in this very direction. Imperialism,
which means the partition of the world, and the exploitation of other countries besides
China, which means high monopoly profits for a handful of very rich countries, creates the
economic possibility of bribing the upper strata of the proletariat, and thereby fosters,
gives form to, and strengthens opportunism. We must not, however, lose sight of the forces
which counteract imperialism in general, and opportunism in particular, and which,
naturally, the social-liberal Hobson is unable to perceive.
The German opportunist, Gerhard Hildebrand, who was expelled from the Party for
defending imperialism, and who could today be a leader of the so-called
"Social-Democratic" Party of Germany, supplements Hobson well by his advocacy of
a "United States of Western Europe" (without Russia) for the purpose of
"joint" action... against the African Negroes, against the "great Islamic
movement," for the maintenance of a "powerful army and
navy," against a "Sino-Japanese coalition,"* [Gerhard Hildebrand, Die
Errschutterung der Industrieherrschaft und des Industriesozialismus (The Shattering of the
Rule of Industrialism and Industrial Socialism--Tr.), 1910, p. 229 et seq.] etc.
The description of "British imperialism" in Schulze-Gaevernitz's book reveals
the same parasitical traits. The national income of Great Britain approximately doubled
from 1865 to 1898, while the income "from abroad" increased ninefold in
the same period. While the "merit" of imperialism is that it "trains the
Negro to habits of industry" (not without coercion, of course ...), the
"danger" of imperialism lies in that "Europe will shift the burden of
physical toil --first agricultural and mining, then the rougher work in industry--on to
the colored races, and itself be content with the role of rentier, and in this way,
perhaps, pave the way for the economic, and later, the political emancipation of the
colored races."
An increasing proportion of land in Great Britain is being taken out of cultivation and
used for sport, for the diversion of the rich. About Scotland--the most aristocratic
playground in the world--it is said that "it lives on its past and on Mr.
Carnegie." On horse racing and fox hunting alone Britain annually spends
£14,000,000. The number of rentiers in England is about one million. The percentage of
the productively-employed population to the total population is declining:
| |
Population |
No. of workers in basic industries |
Per cent of total population |
| (Millions) |
| 1851 |
17.9 |
4.1 |
23% |
| 1901 |
32.5 |
4.9 |
15% |
And in speaking of the British working class the bourgeois student of "British
imperialism at the beginning of the twentieth century" is obliged to distinguish
systematically between the "upper stratum" of the workers and the "lower
stratum of the proletariat proper." The upper stratum furnishes the bulk of the
membership of cooperatives, of trade unions, of sporting clubs and of numerous religious
sects. To this level is adapted the electoral system, which in Great Britain is still "sufficiently
restricted to exclude the lower stratum of the proletariat proper"!! In order to
present the condition of the British working class in a rosy light, only this upper
stratum--which constitutes a minority of the proletariat--is generally spoken of.
For instance, "the problem of unemployment is mainly a London problem and that of the
lower proletarian stratum, to which the politicians attach little importance.
..."* [Schulze-Gaevernitz, Britischer Imperialismus, p. 301.] He should
have said: to which the bourgeois politicians and the "Socialist" opportunists
attach little importance.
One of the special features of imperialism connected with the facts we are describing,
is the decline in emigration from imperialist countries and the increase in immigration
into these countries from the more backward countries where lower wages are paid. As
Hobson observes, emigration from Great Britain has been declining since 1884. In that year
the number of emigrants was 242,000, while in 1900, the number was 169,000. Emigration
from Germany reached the highest point between 1881 and 1890, with a total of 1,453,000
emigrants. In the course of the following two decades, it fell to 544,000 and to 341,000.
On the other hand, there was an increase in the number of workers entering Germany from
Austria, Italy, Russia and other countries. According to the 1907 census, these were
1,342,294 foreigners in Germany, of whom 440,800 were industrial workers and 257,329
agricultural workers.* [Schulze-Gaevernitz, Britischer Imperialismus, p. 301.] In
France, the workers employed in the mining industry are, "in great part,"
foreigners: Poles, Italians and Spaniards.** [Henger, Die Kapitalsanlage der Franzosen
(French Investments), Stuttgart, 1913.] In the United States, immigrants from Eastern
and Southern Europe are engaged in the most poorly paid occupations, while American
workers provide the highest percentage of overseers or of the better-paid workers.***
[Hourwich, Immigration and Labour, New York, 1913.] Imperialism has the tendency
to create privileged sections also among the workers, and to detach them from the broad
masses of the proletariat.
It must be observed that in Great Britain the tendency of imperialism to divide the
workers, to strengthen opportunism among them and to cause temporary decay in the
working-class movement, revealed itself much earlier than the end of the nineteenth and
the beginning of the twentieth centuries; for two important distinguishing features of
imperialism were already observed in Great Britain in the middle of the nineteenth
century, viz., vast colonial possessions and a monopolist position in the world market.
Marx and Engels traced this connection between opportunism in the working-class movement
and the imperialist features of British capitalism systematically, during the course of
several decades. For example, on October 7, 1858, Engels wrote to Marx: "The English
proletariat is becoming more and more bourgeois, so that this most bourgeois of all
nations is apparently aiming ultimately at the possession of a bourgeois aristocracy, and
a bourgeois proletariat as well as a bourgeoisie. For a nation which exploits the
whole world this is, of course, to a certain extent justifiable." [15]
Almost a quarter of a century later, in a letter dated August 11, 1881, Engels speaks of
"... the worst type of English trade unions which allow themselves to be led by men
bought by, or at least paid by, the bourgeoisie." [16] In a
letter to Kautsky, dated September 12, 1882, Engels wrote: "You ask me what the
English workers think about colonial policy? Well, exactly the same as they think about
politics in general. There is no workers' party here, there are only Conservatives and
Liberal Radicals, and the workers merrily share the feast of England's monopoly of the
colonies and the world market"* [ Briefwechsel von Marx und Engels, Bd. II, S. 290;
IV, 453--Karl Kautsky, Sozialismus und Kolonialpolitik, Berlin, 1907, p. 79; this
pamphlet was written by Kautsky in those infinitely distant days when he was still a
Marxist.] (Engels expressed similar ideas in the press in his preface to the second
edition of The Condition of the Working Class in England, which appeared in
1892).
This clearly shows the causes and effects. The causes are: 1) exploitation of the whole
world by this country; 2) its monopolistic position in the world market; 3) its colonial
monopoly. The effects are: 1) a section of the British proletariat becomes bourgeois; 2) a
section of the proletariat permits itself to be led by men bought by, or at least paid by,
the bourgeoisie. The imperialism of the beginning of the twentieth century completed the
division of the world among a handful of states, each of which today exploits (i.e., draws
superprofits from) a part of the "whole world" only a little smaller than that
which England exploited in 1858; each of them occupies a monopoly position in the world
market thanks to trusts, cartels, finance capital and creditor and debtor relations; each
of them enjoys to some degree a colonial monopoly (we have seen that out of the total of
75,000,000 sq. km., which comprise the whole colonial world, 65,000,000 sq.
km., or 86 per cent, belong to six powers; 61,000,000 sq. km., or 81 per cent,
belong to three powers).
The distinctive feature of the present situation is the prevalence of such economic and
political conditions as could not but increase the irreconcilability between opportunism
and the general and vital interests of the working-class movement: imperialism has grown
from the embryo into the predominant system; capitalist monopolies occupy first place in
economics and politics; the division of the world has been completed; on the other hand,
instead of the undivided monopoly of Great Britain, we see a few imperialist powers
contending for the right to share in this monopoly, and this struggle is characteristic of
the whole period of the beginning of the twentieth century. Opportunism cannot now be
completely triumphant in the working-class movement of one country for decades as it was
in England in the second half of the nineteenth century; but in a number of countries it
has grown ripe, overripe, and rotten, and has become completely merged with bourgeois
policy in the form of "social chauvinism."* [Russian social-chauvinism in its
avowed form represented by Messrs. the Potressovs, Chkhenkelis, Maslovs, etc., as well as
in its tacit form, as represented by Messrs. Chkheidze, Skobelev, Axelrod, Martov, etc.,
also emerged from the Russian variety of opportunism, namely, Liquidationism.]
IX. THE CRITIQUE OF IMPERIALISM
By the critique of imperialism, in the broad sense of the term, we mean the attitude
towards imperialist policy of the different classes of society in connection with their
general ideology.
The enormous dimensions of finance capital concentrated in a few hands and creating an
extraordinarily far-flung and close network of relationships and connections which
subordinates not only the small and medium, but also even the very small capitalists and
small masters, on the one hand, and the increasingly intense struggle waged against other
national state groups of financiers for the division of the world and domination over
other countries, on the other hand, cause the possessing classes to go over entirely to
the side of imperialism. "General" enthusiasm over the prospects of imperialism,
furious defense of it and painting it in the brightest colors--such are the signs of the
times. The imperialist ideology also penetrates the working class. No Chinese Wall
separates it from the other classes. The leaders of the present-day, so-called,
"Social-Democratic" Party of Germany are justly called
"social-imperialists," that is, Socialists in words and imperialists in deeds;
but as early as 1902, Hobson noted the existence in England of "Fabian
imperialists" who belonged to the opportunist Fabian Society.
Bourgeois scholars and publicists usually come out in defense of imperialism in a
somewhat veiled form; they obscure its complete domination and its profound roots, strive
to push into the forefront particular and secondary details and do their very best to
distract attention from essentials by means of absolutely ridiculous schemes for
"reform," such as police supervision of the trusts or banks, etc. Less
frequently, cynical and frank imperialists come forward who are bold enough to admit the
absurdity of the idea of reforming the fundamental characteristics of imperialism.
We will give an example. The German imperialists attempt, in the magazine Archives
of World Economy to follow the movements for national emancipation in the colonies,
particularly, of course, in colonies other than those belonging to Germany. They note the
unrest and the protest movements in India, the movement in Natal (South Africa), in the
Dutch East Indies, etc. One of them, commenting on an English report of a conference held
on June 28-30, 1910, of representatives of various subject nations and races, of peoples
of Asia, Africa and Europe who are subject to foreign rule, writes as follows in
appraising the speeches delivered at this conference: "We are told that we must fight
imperialism, that the ruling states should recognize the right of subject peoples to
independence, that an international tribunal should supervise the fulfilment of treaties
concluded between the great powers and weak peoples. Further than the expression of these
pious wishes they do not go. We see no trace of understanding of the fact that imperialism
is inseparably bound up with capitalism in its present form and that, therefore (!!), an
open struggle against imperialism would be hopeless, unless, perhaps, the fight is
confined to protests against certain of its especially abhorrent excesses."* [Weltwirtschaftliches
Archiv, Bd. II, p. 193.] Since the reform of the basis of imperialism is a deception,
a "pious wish," since the bourgeois representatives of the oppressed nations go
no "further" forward, the bourgeois representative of an oppressing nation goes
"further" backward, to servility towards imperialism under cover of the
claim to be "scientific." "Logic," indeed!
The questions as to whether it is possible to reform the basis of imperialism, whether
to go forward to the further intensification and deepening of the antagonisms which it
engenders, or backwards, towards allaying these antagonisms, are fundamental questions in
the critique of imperialism. Since the specific political features of imperialism are
reaction all along the line and increased national oppression resulting from the
oppression of the financial oligarchy and the elimination of free competition, a
petty-bourgeois-democratic opposition to imperialism arose in the beginning of the
twentieth century in nearly all imperialist countries. And the desertion of Kautsky and of
the broad international Kautskyan trend from Marxism consists precisely in the fact that
Kautsky not only did not trouble to oppose, was not only unable to oppose this
petty-bourgeois reformist opposition, which is really reactionary in its economic basis,
but became merged with it in practice.
In the United States, the imperialist war waged against Spain in 1898 stirred up the
opposition of the "anti-imperialists," the last of the Mohicans of bourgeois
democracy, who declared this war to be "criminal," regarded the annexation of
foreign territories as a violation of the Constitution, declared that the treatment of
Aguinaldo, leader of the native Filipinos (the Americans promised him the independence of
his country, but later they landed troops and annexed it) as "Jingo treachery,"
and quoted the words of Lincoln: "When the white man governs himself, that is
self-government; but when he governs himself and also governs others, it is no longer
self-government; it is despotism."* [J. Patouillet, L'impérialisme américain, Dijon,
1904, p. 272.] But while all this criticism shrank from recognizing the inseverable bond
between imperialism and the trusts, and, therefore, between imperialism and the
foundations of capitalism, while it shrank from joining the forces engendered by
large-scale capitalism and its development--it remained a "pious wish."
This is also the main attitude taken by Hobson in his critique of imperialism. Hobson
anticipated Kautsky in protesting against the "inevitability of imperialism"
argument, and in urging the necessity of "increasing the consuming capacity" of
the people (under capitalism!). The petty-bourgeois point of view in the critique of
imperialism, the omnipotence of the banks, the financial oligarchy, etc., is adopted by
the authors we have often quoted, such as Agahd, A. Lansburgh, L. Eschwege, and among the
French writers, Victor Bérard, author of a superficial book entitled England and
Imperialism which appeared in 1900. All these authors, who make no claim to be
Marxists, contrast imperialism with free competition and democracy, condemn the Baghdad
railway scheme as leading to conflicts and war, utter "pious wishes"
for peace, etc. This applies also to the compiler of international stock and share issue
statistics, A. Neymarck, who, after calculating the hundreds of billions of francs
representing "international" securities, exclaimed in 1912: "Is it possible
to believe that peace may be disturbed ... that, in the face of these enormous figures,
anyone would risk starting a war?"* [Bulletin de l'lnstitut International de
Statistique, t. XIX, livr. II p. 225.]
Such simple-mindedness on the part of the bourgeois economists is not surprising;
moreover, it is in their interest to pretend to be so naive and to talk
"seriously" about peace under imperialism. But what remains of Kautsky's
Marxism, when, in 1914, 1915 and 1916, he takes up the same bourgeois-reformist point of
view and affirms that "everybody is agreed" (imperialists, pseudo Socialists and
social-pacifists) on the matter of peace? Instead of an analysis of imperialism and an
exposure of the depths of its contradictions, we have nothing but a reformist "pious
wish" to wave them aside, to evade them.
Here is a sample of Kautsky's economic criticism of imperialism. He takes the
statistics of the British export and import trade with Egypt for 1872 and 1912; it
transpires that this export and import trade has grown more slowly than British foreign
trade as a whole. From this Kautsky concludes that: "we have no reason to suppose
that without military occupation the growth of British trade with Egypt would have been
less, simply as a result of the mere operation of economic factors." "The urge
of capital to expand . . . can be best promoted, not by the violent methods of
imperialism, but by peaceful democracy."* [Kautsky, Nationalstaat,
imperialistischer Staat und Staatenbund (National State, Imperialist State and Union of
States--Tr.), Nürnberg, pp. 72 and 70. ]
This argument of Kautsky's which is repeated in every key by his Russian armor-bearer
(and Russian shielder of the social-chauvinists), Mr. Spectator, [17]
constitutes the basis of Kautskyan critique of imperialism, and that is why we must deal
with it in greater detail. We will begin with a quotation from Hilferding, whose
conclusions Kautsky on many occasions, and notably in April 1915, has declared to have
been "unanimously adopted by all socialist theoreticians."
"It is not the business of the proletariat," writes Hilferding, "to
contrast the more progressive capitalist policy with that of the now bygone era of free
trade and of hostility towards the state. The reply of the proletariat to the economic
policy of finance capital, to imperialism, cannot be free trade, but Socialism. The aim of
proletarian policy cannot now be the ideal of restoring free competition--which has now
become a reactionary ideal--but the complete elimination of competition by the abolition
of capitalism."** [ Finance Capital, p. 567.]
Kautsky broke with Marxism by advocating in the epoch of finance capital a
"reactionary ideal," "peaceful democracy," "the mere operation of
economic factors," for objectively this ideal drags us back from monopoly to
non-monopolist capitalism, and is a reformist swindle.
Trade with Egypt (or with any other colony or semicolony) "would have grown
more" without military occupation, without imperialism, and without finance
capital. What does this mean? That capitalism would have developed more rapidly if free
competition had not been restricted by monopolies in general, or by the
"connections," yoke (i.e., also the monopoly) of finance capital, or by the
monopolist possession of colonies by certain countries?
Kautsky's argument can have no other meaning, and this "meaning" is
meaningless. Let us assume that free competition, without any sort of monopoly, would have
developed capitalism and trade more rapidly. But the more rapidly trade and capitalism
develop, the greater is the concentration of production and capital which gives rise
to monopoly. And monopolies have already arisen--precisely out of free
competition! Even if monopolies have now begun to retard progress, it is not an argument
in favour of free competition, which has become impossible after it has given rise to
monopoly.
Whichever way one turns Kautsky's argument, one will kind nothing in it except reaction
and bourgeois reformism.
Even if we correct this argument and say, as Spectator says, that the trade of the
British colonies with England is now developing more slowly than their trade with other
countries, it does not save Kautsky; for it is also monopoly, also imperialism
that is beating Great Britain, only it is the monopoly and imperialism of another country
(America, Germany). It is known that the cartels have given rise to a new and peculiar
form of protective tariffs, i.e., goods suitable for export are protected (Engels noted
this in Vol. III of Capital). [18] It is known, too,
that the cartels and finance capital have a system peculiar to themselves, that of
"exporting goods at cut-rate prices," or "dumping," as the English
call it: within a given country the cartel sells its goods at high monopoly prices, but
sells them abroad at a much lower price to undercut the competitor, to enlarge its own
production to the utmost, etc. If Germany's trade with the British colonies is developing
more rapidly than Great Britain's, it only proves that German imperialism is younger,
stronger and better organized than British imperialism, is superior to it; but it by no
means proves the "superiority" of free trade, for it is not a fight between free
trade and protection and colonial dependence, but between two rival imperialisms, two
monopolies, two groups of finance capital. The superiority of German imperialism over
British imperialism is more potent than the wall of colonial frontiers or of protective
tariffs: to use this as an "argument" in favour of free trade and
"peaceful democracy" is banal, it means forgetting the essential features and
characteristics of imperialism, substituting petty-bourgeois reformism for Marxism.
It is interesting to note that even the bourgeois economist, A. Lansburgh, whose
criticism of imperialism is as petty-bourgeois as Kautsky's, nevertheless got closer to a
more scientific study of trade statistics. He did not compare only one country, chosen at
random, and only a colony with the other countries; he examined the export trade of an
imperialist country: 1) with countries which are financially dependent upon it, which
borrow money from it; and 2) with countries which are financially independent. He obtained
the following results:
EXPORT TRADE OF GERMANY
(Million marks)
| |
1889 |
1908 |
Per cent increase |
| To Countries Financially Dependent on Germany |
Rumania |
48.2 |
70.8 |
47% |
| Portugal |
19.0 |
32.8 |
73% |
| Argentina |
60.7 |
147.0 |
143% |
| Brazil |
48.7 |
84.5 |
73% |
| Chile |
28.3 |
52.4 |
85% |
| Turkey |
29.9 |
64.0 |
114% |
| Total |
234.8 |
451.5 |
92% |
| To Countries Financially Independent of Germany |
Great Britain |
651.8 |
997.4 |
53% |
| France |
210.2 |
437.9 |
108% |
| Belgium |
137.2 |
322.8 |
135% |
| Switzerland |
177.4 |
401.1 |
127% |
| Australia |
21.2 |
64.5 |
205% |
| Dutch East Indies |
8.8 |
40.7 |
363% |
| Total |
1,206.6 |
2,264.4 |
87% |
Lansburgh did not draw conclusions and therefore, strangely enough, failed to
observe that if the figures prove anything at all, they prove that he is wrong for
the exports to countries financially dependent on Germany have grown more rapidly, if
only slightly, than those to the countries which are financially independent. (We
emphasize the "if," for Lansburgh's figures are far from complete.)
Tracing the connection between exports and loans, Lansburgh writes:
"In 1890-91 a Rumanian loan was floated through the German banks, which had
already in previous years made advances on this loan. It was used chiefly to purchase
railway materials in Germany. In 1891 German exports to Rumania amounted to 55,000,000
marks. The following year they dropped to 39,400,000 marks and, with fluctuations, to
25,400,000 in 1900. Only in very recent years have they regained the level of 1891 thanks
to two new loans.
"German exports to Portugal rose, following the loans of 1888-89, to 21,100,000
(1890); then, in the two following years, they dropped to 16,200,000 and 7,400,000, and
regained their former level only in 1903.
"The figures of German trade with Argentina are still more striking. Following the
loans floated in 1888 and 1890, German exports to Argentina reached, in 1889, 60,700,000
marks. Two years later they only reached 18,600,000 marks, less than one-third of the
previous figure. It was not until 1901 that they regained and surpassed the level of 1889,
and then only as a result of new loans floated by the state and by municipalities, with
advances to build power stations, and with other credit operations.
"Exports to Chile, as a consequence of the loan of 1889, rose to 45,200,000 marks
(in 1892) and a year later dropped to 22,500,000 marks. A new Chilean loan floated by the
German banks in 1906 was followed by a rise of exports to 84,700,000 marks in 1907, only
to fall again to 52,400,000 marks in 1908.* [Die Bank, 1909, 2 p.819 et seq.]
From these facts Lansburgh draws the amusing petty-bourgeois moral of how unstable and
irregular export trade is when it is bound up with loans, how bad it is to invest capital
abroad instead of "naturally" and "harmoniously" developing home
industry, how "costly" are the millions in backsheesh that Krupp has to pay in
floating foreign loans; etc. But the facts tell us clearly: the increase in exports is
precisely connected with the swindling tricks of finance capital, which is not
concerned with bourgeois morality, but with skinning the ox twice--first, it pockets the
profits from the loan; then it pockets other profits from the same loan which the
borrower uses to make purchases from Krupp, or to purchase railway material from the Steel
Syndicate, etc.
We repeat that we do not by any means consider Lansburgh's figures to be perfect; but
we had to quote them because they are more scientific than Kautsky's and Spectator's, and
because Lansburgh showed the correct way to approach the question. In discussing the
significance of finance capital in regard to exports, etc., one must be able to single out
the connection of exports especially and solely with the tricks of the financiers,
especially and solely with the sale of goods by cartels, etc. Simply to compare colonies
with non-colonies, one imperialism with another imperialism, one semicolony or colony
(Egypt) with all other countries, is to evade and to obscure the very essence of
the question.
Kautsky's theoretical critique of imperialism has nothing in common with Marxism and
serves only as a preamble to propaganda for peace and unity with the opportunists and the
social-chauvinists, precisely for the reason that it evades and obscures the very profound
and fundamental contradictions of imperialism: the contradictions between monopoly and
free competition which exists side by side with it, between the gigantic
"operations" (and gigantic profits) of finance capital and "honest"
trade in the free market, the contradiction between cartels and trusts, on the one hand,
and non-cartelized industry, on the other, etc.
The notorious theory of "ultraimperialism," invented by Kautsky, is just as
reactionary. Compare his arguments on this subject in 1915, with Hobson's arguments in
1902.
Kautsky: ". . . Cannot the present imperialist policy be supplanted by a new,
ultraimperialist policy, which will introduce the joint exploitation of the world by
internationally united finance capital in place of the mutual rivalries of national
finance capitals? Such a new phase of capitalism is at any rate conceivable. Can it be
achieved? Sufficient premises are still lacking to enable us to answer this
question."* [Die Neue Zeit, April 30, 1915, p. 144.]
Hobson: "Christendom thus laid out in a few great federal empires, each with a
retinue of uncivilized dependencies, seems to many the most legitimate development of
present tendencies, and one which would offer the best hope of permanent peace on an
assured basis of inter-Imperialism."
Kautsky called ultraimperialism or superimperialism what Hobson, thirteen years
earlier, described as interimperialism. Except for coining a new and clever catchword,
replacing one Latin prefix by another, the only progress Kautsky has made in the sphere of
"scientific" thought is that he gave out as Marxism what Hobson, in effect,
described as the cant of English parsons. After the Anglo-Boer War it was quite natural
for this highly honourable caste to exert their main efforts to console the
British middle class and the workers who had lost many of their relatives on the
battlefields of South Africa and who were obliged to pay higher taxes in order to
guarantee still higher profits for the British financiers. And what better consolation
could there be than the theory that imperialism is not so bad; that it stands close to
inter- (or ultra-) imperialism, which can ensure permanent peace? No matter what the good
intentions of the English parsons, or of sentimental Kautsky, may have been, the only
objective, i.e., real, social significance Kautsky's "theory" can have, is: a
most reactionary method of consoling the masses with hopes of permanent peace being
possible under capitalism, by distracting their attention from the sharp antagonisms and
acute problems of the present times, and directing it towards illusory prospects of an
imaginary "ultraimperialism" of the future. Deception of the masses--there is
nothing but this in Kautsky's "Marxian" theory.
Indeed, it is enough to compare well-known and indisputable facts to become convinced
of the utter falsity of the prospects which Kautsky tries to conjure up before the German
workers (and the workers of all lands). Let us consider India, Indo-China and China. It is
known that these three colonial and semicolonial countries, with a population of six to
seven hundred million, are subjected to the exploitation of the finance capital of several
imperialist powers: Great Britain, France, Japan, the U.S.A., etc. Let us assume that
these imperialist countries form alliances against one another in order to protect or
enlarge their possessions, their interests and their "spheres of influence" in
these Asiatic states; these alliances will be "interimperialist," or
"ultraimperialist" alliances. Let us assume that all the imperialist countries
conclude an alliance for the "peaceful" division of these parts of Asia; this
alliance would be an alliance of "internationally united finance capital." There
are actual examples of alliances of this kind in the history of the twentieth century, for
instance, the attitude of the powers to China. We ask, is it "conceivable,"
assuming that the capitalist system remains intact--and this is precisely the assumption
that Kautsky does make--that such alliances would be more than temporary, that they would
eliminate friction, conflicts and struggle in every possible form?
It is sufficient to state this question clearly to make it impossible for any reply to
be given other than in the negative; for any other basis under capitalism for the division
of spheres of influence, of interests, of colonies, etc., than a calculation of the strength of the participants in the division, their general economic, financial, military
strength, etc., is inconceivable. And the strength of these participants in the division
does not change to an equal degree, for the even development of different
undertakings, trusts, branches of industry, or countries is impossible under capitalism.
Half a century ago Germany was a miserable, insignificant country, as far as her
capitalist strength was concerned, compared with the strength of England at that time;
Japan was the same compared with Russia. Is it "conceivable" that in ten or
twenty years' time the relative strength of the imperialist powers will have remained
unchanged? Absolutely inconceivable.
Therefore, in the realities of the capitalist system, and not in the banal Philistine
fantasies of English parsons, or of the German "Marxist," Kautsky,
"interimperialist" or "ultraimperialist" alliances, no matter what
form they may assume, whether of one imperialist coalition against another, or of a
general alliance embracing all the imperialist powers, are inevitably nothing
more than a "truce" in periods between wars. Peaceful alliances prepare the
ground for wars, and in their turn grow out of wars; the one conditions the other, giving
rise to alternating forms of peaceful and non-peaceful struggle out of one and the
same basis of imperialist connections and relations within world economics and world
politics. But in order to pacify the workers and to reconcile them with the
social-chauvinists who have deserted to the side of the bourgeoisie, wise Kautsky separates one link of a single chain from the other, separates the present peaceful (and
ultraimperialist, nay, ultra-ultraimperialist) alliance of all the powers for the
"pacification" of China (remember the suppression of the Boxer Rebellion) from
the non-peaceful conflict of tomorrow, which will prepare the ground for another
"peaceful" general alliance for the partition, say, of Turkey, on the day after
tomorrow, etc., etc. Instead of showing the living connection between periods of
imperialist peace and periods of imperialist war, Kautsky presents the workers with a
lifeless abstraction in order to reconcile them to their lifeless leaders.
An American writer, Hill, in his A History of Diplomacy in the International
Development of Europe notes in his preface to the following periods in the recent
history of diplomacy: 1) the era of revolution; 2) the constitutional movement; 3) the
present era of "commercial imperialism."* [David Jayne Hill, A History of
the Diplomacy in the International Development of Europe, Vol. 1, p. x.] Another
writer divides the history of Great Britain's "world policy" since 1870 into
four periods: 1) the first Asiatic period (that of the struggle against Russian advance in
Central Asia towards India); 2) the African period (approximately 1885-1902): that of the
struggle against France for the partition of Africa (the "Fashoda incident" of
1898 which brought her within a hair's breadth of war with France); 3) the second Asiatic
period (alliance with Japan against Russia), and 4) the "European" period,
chiefly anti-German.* [Schilder, op. cit., p. 178.] "The political skirmishes of
outposts take place on the financial field," wrote the "banker," Riesser,
in 1905, in showing how French finance capital operating in Italy was preparing the way
for a political alliance of these countries, and how a conflict was developing between
Germany and Great Britain over Persia, between all the European capitalists over Chinese
loans, etc. Behold, the living reality of peaceful "ultraimperialist" alliances
in their inseverable connection with ordinary imperialist conflicts!
Kautsky's obscuring of the deepest contradictions of imperialism, which inevitably
becomes the embellishment of imperialism, leaves its traces in this writer's criticism of
the political features of imperialism. Imperialism is the epoch of finance capital and of
monopolies, which introduce everywhere the striving for domination, not for freedom. The
result of these tendencies is reaction all along the line, whatever the political system,
and an extreme intensification of existing antagonisms in this domain
also. Particularly intensified become the yoke of national oppression and the striving for
annexations, i.e., the violation of national independence (for annexation is nothing but
the violation of the right of nations to self-determination). Hilferding rightly notes the
connection between imperialism and the intensification of national oppression. "In
the newly opened up countries," he writes, "the capital imported into them
intensifies antagonisms and excites against the intruders the constantly growing
resistance of the peoples who are awakening to national consciousness; this resistance can
easily develop into dangerous measures against foreign capital. The old social relations
become completely revolutionized, the agelong agrarian isolation of 'nations without
history' is destroyed and they are drawn into the capitalist whirlpool. Capitalism itself
gradually provides the subjugated with the means and resources for their emancipation and
they set out to achieve the goal which once seemed highest to the European nations: the
creation of a united national state as a means to economic and cultural freedom. This
movement for national independence threatens European capital in its most valuable and
most promising fields of exploitation, and European capital can maintain its domination
only by continually increasing its military forces."* [Finance Capital,
p.487.]
To this must be added that it is not only in newly opened up countries, but also in the
old, that imperialism is leading to annexation, to increased national oppression, and,
consequently, also to increasing resistance. While objecting to the intensification of
political reaction by imperialism, Kautsky leaves in the shade a question that has become
particularly urgent, viz., the impossibility of unity with the opportunists in the epoch
of imperialism. While objecting to annexations, he presents his objections in a form that
is most acceptable and least offensive to the opportunists. He addresses himself to a
German audience, yet he obscures the most topical and important point, for instance, the
annexation of Alsace-Lorraine by Germany. In order to appraise this "mental
aberration" of Kautsky's we will take the following example. Let us suppose that a
Japanese is condemning the annexation of the Philippines by the Americans. The question
is: will many believe that he is doing so because he has a' horror of annexations as such.
and not because he himself has a desire to annex the Philippines? And shall we not be
constrained to admit that the "fight" the Japanese is waging against annexations
can be regarded as being sincere and politically honest only if he fights against the
annexation of Korea by Japan, and urges freedom for Korea to secede from Japan?
Kautsky's theoretical analysis of imperialism, as well as his economic and political
criticism of imperialism, are permeated through and through, with a spirit,
absolutely irreconcilable with Marxism, of obscuring and glossing over the fundamental
contradictions of imperialism and with a striving to preserve at all costs the crumbling
unity with opportunism in the European working-class movement.
X. THE PLACE OF IMPERIALISM IN HISTORY
We have seen that in its economic essence imperialism is monopoly capitalism. This in
itself determines its place in history, for monopoly that grows out of the soil of free
competition, and precisely out of free competition, is the transition from the capitalist
system to a higher social-economic order. We must take special note of the four principal
types of monopoly, or principal manifestations of monopoly capitalism, which are
characteristic of the epoch we are examining.
Firstly, monopoly arose out of a very high stage of development of the concentration of
production. This refers to the monopolist capitalist combines, cartels, syndicates and
trusts. We have seen the important part these play in present-day economic life. At the
beginning of the twentieth century, monopolies had acquired complete supremacy in the
advanced countries, and although the first steps towards the formation of the cartels were
first taken by countries enjoying the protection of high tariffs (Germany, America), Great
Britain, with her system of free trade, revealed the same basic phenomenon, only a little
later, namely, the birth of monopoly out of the concentration of production.
Secondly, monopolies have stimulated the seizure of the most important sources of raw
materials, especially for the basic and most highly cartelized industries in capitalist
society: the coal and iron industries. The monopoly of the most important sources of raw
materials has enormously increased the power of big capital, and has sharpened the
antagonism between cartelized and non-cartelized industry.
Thirdly, monopoly has sprung from the banks. The banks have developed from humble
middlemen enterprises into the monopolists of finance capital. Some three to five of the
biggest banks in each of the foremost capitalist countries have achieved the
"personal union" of industrial and bank capital, and have concentrated in their
hands the control of thousands upon thousands of millions which form the greater part of
the capital and income of entire countries. A financial oligarchy, which throws a close
network of dependence relationships over all the economic and political institutions of
present-day bourgeois society without exception--such is the most striking manifestation
of this monopoly.
Fourthly, monopoly has grown out of colonial policy. To the numerous "old"
motives of colonial policy, finance capital has added the struggle for the sources of raw
materials, for the export of capital, for "spheres of influence," i.e., for
spheres for profitable deals, concessions, monopolist profits and so on, and finally, for
economic territory in general When the colonies of the European powers in Africa, for
instance, comprised only one-tenth of that territory (as was the case in 1876), colonial
policy was able to develop by methods other than those of monopoly--by the "free
grabbing" of territories, so to speak. But when nine-tenths of Africa had been seized
(by 1900), when the whole world had been divided up, there was inevitably ushered in the
era of monopoly ownership of colonies and, consequently, of particularly intense struggle
for the division and the redivision of the world.
The extent to which monopolist capital has intensified all the contradictions of
capitalism is generally known. It is sufficient to mention the high cost of living and the
tyranny of the cartels. This intensification of contradictions constitutes the most
powerful driving force of the transitional period of history, which began from the time of
the final victory of world finance capital.
Monopolies, oligarchy, the striving for domination instead of striving for liberty, the
exploitation of an increasing number of small or weak nations by a handful of the richest
or most powerful nations--all these have given birth to those distinctive characteristics
of imperialism which compel us to define it as parasitic or decaying capitalism. More and
more prominently there emerges, as one of the tendencies of imperialism, the creation of
the "rentier state," the usurer state, in which the bourgeoisie to an ever
increasing degree lives on the proceeds of capital exports and by "clipping
coupons." It would be a mistake to believe that this tendency to decay precludes the
rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of
industry, certain strata of the bourgeoisie and certain countries betray, to a greater or
lesser degree, now one and now another of these tendencies. On the whole, capitalism is
growing far more rapidly than before; but this growth is not only becoming more and more
uneven in general, its unevenness also manifests itself, in particular, in the decay of
the countries which are richest in capital (England).
In regard to the rapidity of Germany's economic development, Riesser, the author of the
book on the big German banks, states: "The progress of the preceding period
(1848-70), which had not been exactly slow, stood in about the same ratio to the rapidity
with which the whole of Germany's national economy, and with it German banking, progressed
during this period (1870-1905) as the speed of the mail coach in the good old days stood
to the speed of the present-day automobile . . . which is whizzing past so fast that it
endangers not only innocent pedestrians in its path, but also the occupants of the
car." In its turn, this finance capital which has grown with such extraordinary
rapidity is not unwilling, precisely because it has grown so quickly, to pass on to a more
"tranquil" possession of colonies which have to be seized--and not only by
peaceful methods--from richer nations. In the United States, economic development in the
last decades has been even more rapid than in Germany, and for this very reason, the
parasitic features of modern American capitalism have stood out with particular
prominence. On the other hand, a comparison of, say, the republican American bourgeoisie
with the monarchist Japanese or German bourgeoisie shows that the most pronounced
political distinction diminishes to an extreme degree in the epoch of imperialism--not
because it is unimportant in general, but because in all these cases we are discussing a
bourgeoisie which has definite features of parasitism.
The receipt of high monopoly profits by the capitalists in one of the numerous branches
of industry, in one of the numerous countries, etc., makes it economically possible for
them to bribe certain sections of the workers, and for a time a fairly considerable
minority of them, and win them to the side of the bourgeoisie of a given industry or given
nation against all the others. The intensification of antagonisms between imperialist
nations for the division of the world increases this striving. And so there is created
that bond between imperialism and opportunism, which revealed itself first and most
clearly in England, owing to the fact that certain features of imperialist development
were observable there much earlier than in other countries. Some writers, L. Martov, for
example, are prone to wave aside the connection between imperialism and opportunism in the
working-class movement--a particularly glaring fact at the present time--by resorting to
"official optimism" (à la Kautsky and Huysmans) like the following: the cause
of the opponents of capitalism would be hopeless if it were precisely progressive
capitalism that led to the increase of opportunism, or, if it were precisely the best paid
workers who were inclined towards opportunism, etc. We must have no illusions about
"optimism" of this kind. It is optimism in regard to opportunism; it is optimism
which serves to conceal opportunism. As a matter of fact the extraordinary rapidity and
the particularly revolting character of the development of opportunism is by no means a
guarantee that its victory will be durable: the rapid growth of a malignant abscess on a
healthy body can only cause it to burst more quickly and thus relieve the body of it. The
most dangerous of all in this respect are those who do not wish to understand that the
fight against imperialism is a sham and humbug unless it is inseparably bound up with the
fight against opportunism.
From all that has been said in this book on the economic essence of imperialism, it
follows that we must define it as capitalism in transition, or, more precisely, as
moribund capitalism. It is very instructive in this respect to note that the bourgeois
economists, in describing modern capitalism, frequently employ catchwords and phrases like
"interlocking," "absence of isolation," etc.; "in conformity with
their functions and course of development," banks are "not purely private
business enterprises; they are more and more outgrowing the sphere of purely private
business regulation." And this very Riesser, who uttered the words just quoted,
declares with all seriousness that the "prophecy" of the Marxists concerning
"socialization" has "not come true"!
What then does this catchword "interlocking" express? It merely expresses the
most striking feature of the process going on before our eyes. It shows that the observer
counts the separate trees, but cannot see the wood. It slavishly copies the superficial,
the fortuitous, the chaotic. It reveals the observer as one who is overwhelmed by the mass
of raw material and is utterly incapable of appreciating its meaning and importance.
Ownership of shares, the relations between owners of private property "interlock in a
haphazard way." But underlying this interlocking, its very base, is the changing
social relations of production. When a big enterprise assumes gigantic proportions, and,
on the basis of an exact computation of mass data, organizes according to plan the supply
of primary raw materials to the extent of two-thirds, or three-fourths of all that is
necessary for tens of millions of people; when the raw materials are transported in a
systematic and organized manner to the most suitable place of production, sometimes
hundreds or thousands of miles, when a single centre directs all the consecutive stages of
work right up to the manufacture of numerous varieties of finished articles; when these
products are distributed according to a single plan among tens and hundreds of millions of
consumers (the distribution of oil in America and Germany by the American "oil
trust")-- then it becomes evident that we have socialization of production, and not
mere "interlocking"; that private economic and private property relations
constitute a shell which no longer fits its contents, a shell which must inevitably decay
if its removal by artificial means be delayed; a shell which may continue in a state of
decay for a fairly long period (if, at the worst, the cure of the opportunist abscess is
protracted), but which will inevitably be removed.
The enthusiastic admirer of German imperialism, Schulze-Gaevernitz exclaims:
"Once the supreme management of the German banks has been entrusted to the hands
of a dozen persons, their activity is even today more significant for the public good than
that of the majority of the Ministers of State." (The "interlocking" of
bankers, ministers, magnates of industry and rentiers is here conveniently forgotten.) . .
. "If we conceive of the development of those tendencies which we have noted carried
to their logical conclusion we will have: the money capital of the nation united in the
banks; the banks themselves combined into cartels; the investment capital of the nation
cast in the shape of securities. Then the forecast of that genius Saint-Simon will be
fulfilled; 'The present anarchy of production, which corresponds to the fact that economic
relations are developing without uniform regulation, must make way for organization in
production. Production will no longer be directed by isolated manufacturers, independent
of each other and ignorant of man's economic needs; that will be done by a certain public
institution. A central committee of management, being able to survey the large field of
social economy from a more elevated point of view, will regulate it for the benefit of the
whole of society, will put the means of production into suitable hands, and above all will
take care that there be constant harmony between production and consumption. Institutions
already exist which have assumed as part of their functions a certain organization of
economic labour: the banks.' We are still a long way from the fulfilment of Saint-Simon's
forecast, but we are on the way towards it: Marxism, different from what Marx imagined,
but different only in form."* [Grundriss der Sozialôkonomik, p. 146. ]
A crushing "refutation" of Marx, indeed, which retreats a step from Marx's
precise, scientific analysis to Saint-Simon's guesswork, the guesswork of a genius, but
guesswork all the same.
Written January-June 1916
Published in pamphlet form in Petrograd, April 1917
NOTES
1. Imperialism, the Highest Stage of Capitalism was written
in the first half of 1916. While Lenin was in Berne during 1915 he began to study various
works on imperialism that had been published in many countries. He started work on this
book in January 1916 and at the end of the month he moved to Zurich, where he continued
his work at the Zurich Cantonal Library. From hundreds of books, periodicals, newspapers
and statistical abstracts published in different languages he made numerous extracts,
summaries, notes and tables, which make up more than 40 printing sheets. These materials
were published as a separate pamphlet in 1939 under the title of Notebooks on Imperialism.
On June 19 (July 2) 1916 Lenin sent his completed manuscript on imperialism to the Parus Publishers. Menshevik elements among the management deleted from the book parts
sharply criticizing the opportunist theories of Kautsky and the Russian Mensheviks (Martov
and Co.). Lenin's terms pererastaniye (capitalism growing into capitalist
imperialism) was altered to prevrashcheniye (transformation); reaktsionny kharakter
(reactionary nature of the theory of Ultraimperialism) to otstaly kharakter
(backward character), etc. In early 1917 the book was printed under the title Imperialism,
tbe Latest Stage of Capitalism, by the Parus Publishers in Petrograd.
After returning to Russia, Lenin wrote a preface to the book, which finally saw the
light of day in September 1917.
On the significance of the book Imperialism, the Highest Stage of Capitalism, see
the History of the Communist Party of the Soviet Union (Bolsheviks), Short Course, Eng.
ed., Moscow, 1950, pp. 207-09. p. 1
2. See pp. 146-48 of this book. p. 2
3. This preface was first published under the title "Imperialism
and Capitalism" in Communist International, No. 18, dated October 1921. p. 3
4. The Manifesto is omitted in the present edition. p 7
5. A Centrist party set up in April 1917. The bulk of the party
consisted of the Kautskyite Labour Commonwealth. The Independents preached
"unity" with the open social-chauvinists, justified and defended them and
demanded the rejection of the class struggle.
In October 1920, a split took place at the congress of the I.S.D.P.G in Halle. In
December a considerable part of the party merged with the Communist Party of Germany. The
Right-wing elements formed a separate party and took the old name of I.S.D.P.G., which
existed until 1922. p. 8
6. The Spartacists--members of the Spartacus League, a
revolutionary organization of German Left-Wing Social-Democrats, formed in the early
period of World War I under the leadership of Karl Liebknecht, Rosa Luxemburg, Franz
Mehring, Clara Zetkin and others. It was also known as the Internationale group.
The Spartacists conducted revolutionary propaganda among the masses against the
imperialist war and exposed the predatory policy of German imperialism and the treachery
of the opportunist Social-Democratic leaders. But the Spartacists failed to free
themselves from semi-Menshevik fallacies on cardinal questions of theory and policy. They
propagated a semi-Menshevik theory of imperialism, rejected the Marxist interpretation of
the principle of self-determination of nations (i.e., up to and including secession and
the formation of independent states), denied the possibility of national liberation wars
in the imperialist epoch, underestimated the role of the revolutionary party and bowed to
the spontaneity in the working-class movement (see the History of the Communist Party
of the Soviet Union (Bolsheviks), Short Course, Eng. ed., Moscow, 1950, pp. 42-45). A
criticism of the mistakes of the German Lefts is given in Lenin's "The Junius
Pamphlet" (Collected Works, 4th Russ. ed., Vol. XXII, pp. 291-305), "A
Caricature of Marxism and 'Imperialist Economism'" (ibid., Vol. XXIII, pp.
16-64), and other works, and in Stalin's letter "Some Questions Concerning the
History of Bolshevism" (Works, Eng. ed., Moscow, 1955, Vol. XIII, pp.
86-104). In 1917 the Spartacists joined the Centrist Independent Social-Democratic Party
of Germany, but remained organizationally independent. After the revolution in Germany in
November 1918, they broke with the Independents and in December of the same year founded
the Communist Party of Germany. p. 9
7. In the present edition the author's references and notes are given
as footnotes. p. 12
8. Karl Marx, Capital, Ger. ed., Berlin, 1959, Vol. III, p.
655. p. 39
9. These occurred during the widespread establishment of joint-stock
companies in the early seventies of the nineteenth century, which was accompanied by all
manner of fraudulent operations by bourgeois businessmen, who were making a great deal of
money, and by wild speculation in real estate and securities. p. 42
10. Frankfurtet Zeitung (Frankfort Gazette)--a daily
published in Frankfort-on-Main by German petty-bourgeois democrats from 1856 to 1943. p.44
11. Lenin meant G. V. Plekhanov. p. 55
12. Produgol--an abbreviation for the Russian Society for
Trade in Mineral Fuel of the Donets Basin, founded in 1906. Prodamet--the Society
for Marketing Russian Metallurgical Goods, founded in 1901. p. 61
13. The exposure in France in 1892-93 of incredible abuses,
corruption of politicians, officials and the press bribed by the French Panama Canal
Company. p. 67
14. See pp. 93-94 of this book. p.101
15. Karl Marx and Frederick Engels, Selected Correspondence, Ger.
ed., Berlin, 1913, pp.131-32. p. 129
16. Karl Marx and Frederick Engels, Collected Correspondence, Ger.
ed., Berlin, 1950, Vol. IV, pp. 608-09. p. 129
17. The Menshevik M. I. Nakhimson. p. 136
18. Karl Marx, Capital, Ger. ed., Berlin, 1959, Vol. III,
p.142.p.137
