What is imperialism?
By Allen Myers
The winners of capitalist competition tend to become monopolies. Monopolies, in turn, reverse the character of capitalist investment. When there was widespread competition in an industry, there was great pressure on each company to reinvest its profits in order not to be left behind technologically and thus to lose out. But once an industry is a monopoly, or divided by agreement between a few large companies, there is a motive not to reinvest the resulting super-profits. A more efficient monopoly would tend to produce more goods, which reduces their relative scarcity and thus undermines monopoly super-profits.
So, where could successful monopolists invest their profits? To some extent, they invested them in local industries that were still competitive. But this only speeded up those fields’ march towards monopoly, thus increasing a country’s need to find new areas for investment. At the same time, the richest banks were also becoming monopolies, and big industrial and banking capital increasingly combined.
From roughly 1880 onwards, the capitalist countries of Europe, North America and Australasia, plus Japan, increasingly sought these areas for investment in the less economically developed countries of the world. Previously, the international expansion of capital had focussed on obtaining raw materials and finding markets for its products. Capitalism was moving into a new era of imperialism, which was in place by the late 1890s, in which the main focus was on exporting capital that could not be invested as profitably at home.
Exporting capital involved considerably greater risks than exporting commodities. The sums invested were much greater, and they were generally tied up for longer periods as factories, mines or whatever. So the imperialists felt a strong need for political protection to ensure the safety of their capital and its profitable operations. That is, they needed to control the governments of the countries in which they invested. And they used the power of their own governments to secure that kind of control.
The imperialist scramble to dominate as much as possible of the world exploded in 1914 into the first World War and in 1939 into the second. After 1945, when the United States emerged as the overwhelmingly strongest imperialist power, the character of inter-imperialist rivalry changed, but the fundamentals of the imperialist system have remained.
The outright looting of colonies and the profits of imperialist investors, shipped back home, were no longer available for investment in the countries where imperialism gained control. Hence these countries were deprived of the resources that they needed in order to develop as the imperialist countries had done. Imperialist investment widened and made permanent the gap between the developed and underdeveloped capitalist counties.
As a result, production in the underdeveloped countries is much less efficient in capitalist terms. And because a country is less productive, it is the loser in international trade. The prices it receives for its exports are low, and the prices it pays for imports from more developed countries are high. This is a self-perpetuating vicious circle: because its industries are inefficient, a country has a low income; because it has a low income, it cannot invest in improving its industrial efficiency. The beneficiaries of this vicious circle are the capitalists of the imperialist countries, who continuously drain value from the underdeveloped countries through trade and as interest on loans in addition to any profits on investments in those countries.
Of course, there is generally some degree of economic development taking place in underdeveloped countries. But it never occurs on as large a scale as in the imperialist countries, so the gap between the two is widening, not narrowing. As the gap increases, so too does the transfer of value.
Governments of many Third World countries have attempted various ways of breaking free of imperialism. The talk of “development” pushed by imperialist governments and organisations like the World Bank has proved to be only a means for imperialist corporations to sell producer goods to these countries, which further drains them of value and leaves them still unable to compete. Measures that seriously threaten imperialist interests are generally met with destabilisation and/or outright military intervention.
Attempts to break out of this system through capitalist methods are doomed to be self-defeating, further enriching the imperialists, who dominate the world market. Escaping the imperialist grip requires revolutionary political measures, such as those that are being carried out today by the revolutionary government in Venezuela.