# Imperialism, the Last Stage of Capitalism/Chapter 7

CHAPTER VII. Imperialism as a Special Stage of Capitalism
We are now going to make an attempt to strike accounts, to summarise what we have said on the subject of imperialism.
Imperialism emerged as the development and direct continuation of the essential qualities of capitalism in general. But capitalism only became capitalist imperialism at a definite and a very high stage of its development, when certain of its essential qualities began to be transformed into their opposites, when the features of a period of transition from capitalism to a higher social and economic structure began to take shape and be revealed all along the line.
The feature that is economically essential in this process is this substitution of capitalist monopolies for capitalist free competition. Free competition is the fundamental quality of capitalism, and of commodity production generally. Monopoly is exactly the opposite of free competition; but we have seen this latter beginning to be transformed into monopoly beneath our very eyes, creating big industry and eliminating small, replacing big industry by still bigger industry, finally leading to such a concentration of production and capital that monopoly has been and is the result: cartels, combines and trusts, and, fusing with them, the power of a dozen or so banks manipulating thousands of millions. At the same time monopoly, which has sprung from free competition, does not drive the latter out of existence, but co-exists over it and ​with it, thus giving rise to a number of very acute and very great contradictions, antagonisms and conflicts. Monopoly is the transition from capitalism to a more highly developed order.
If it were necessary to give the briefest possible definition of imperialism, it would be defined as the monopoly stage of capitalism. Such a definition would include the essential feature; for, on the one hand, finance-capital is the banking capital of the few biggest monopolist banks, fused with the capital of the monopolist groups of manufacturers; and, on the other, the division of the world is a transition from a colonial policy, ceaselessly extended without encountering opposition in regions not as yet appropriated by any capitalist power, to a colonial policy of monopolised territorial possession—the sharing out of the world being completed.
But very brief definitions, although convenient because they summarise the principal data, are nevertheless insufficient if the important features of the phenomenon defined are to be characterised. And so, without forgetting the conditional and relative value of all definitions, which can never include all the manifestations of a phenomenon in its process of development, we must give a definition of imperialism embracing its five essential features:
(1) The concentration of production and capital, developed so highly that it creates monopolies which play a decisive role in economic life.
(2) The fusion of banking capital with industrial capital and the creation, on the basis of this financial capital, of a financial oligarchy.
(3) The export of capital, which has become ​extremely important, as distinguished from the export of commodities.
(4) The formation of international capitalist monopolies which share out the world amongst themselves.
(5) The territorial division of the whole earth completed by the greatest capitalist powers.
Imperialism is capitalism in that phase of its development in which the domination of monopolies and finance-capital has established itself; in which the export of capital has acquired very great importance; in which the division of the world among the big international trusts has begun; in which the partition of all the territories of the earth amongst the great capitalist powers has been completed.
We shall see later how imperialism may and must be defined if consideration is given not only to the economic factors—to which the above definition is limited—but also to the historical place of this phase of capitalism as an aspect of capitalism in general or of the relations between imperialism and the two fundamental tendencies of the working class movement. The point to be noted just now is that imperialism, as we understand it, undeniably represents a particular phase of capitalist development. To convince the reader of this fact we have deliberately quoted as often as possible bourgeois economists, who are obliged to recognise beyond dispute the facts of modern capitalist economy. With the same object we have produced detailed statistics which reveal the extent to which banking capital has developed, etc., showing how the transition from quantity to quality, from adult capitalism to imperialism, has expressed itself. Needless to say, the boundaries of all transition stages, both ​in nature and in society, are arbitrary and shifting and it would consequently be absurd to discuss the exact year or the decade in which imperialism "definitely" became established.
In this matter of defining imperialism it is chiefly with Karl Kautsky, the principal Marxist theoretician of the period of the Second International—that is, of the twenty-five years between 1889 and 1914—that issue must be joined.
Kautsky, in 1915 and even from November, 1914, decisively attacked the fundamental ideas expressed in our definition of imperialism. Kautsky said that imperialism must be considered not as a "phase" or as an economic stage, but as a policy; more precisely as the policy "preferred" by finance-capital; that imperialism cannot be "identified" with "contemporary capitalism"; that if capitalism must be taken to include "all the phenomena of contemporary capitalism"—the trusts, the cartels, protectionism, the hegemony of the financiers, and colonial policy—then the statement that imperialism is necessary to capitalism becomes reduced to "the most stale tautology"; because imperialism then becomes "naturally a vital necessity for capitalism," and so on. We shall most exactly express Kautsky's thought by quoting his definition of imperialism, which is directly opposed to the ideas which we set forth (Kautsky having known for a long time of the arguments used for many years by the German Marxians in defence of these ideas, and having known the ideas to exist as a tendency in Marxism). Kautsky's definition states:
"Imperialism is the product of highly developed industrial capitalism. It is the tendency of every ​industrial capitalist nation to annex or to bring under its control all the big agrarian regions (Kautsky's italics) irrespective of what nations inhabit those regions."
This definition is entirely wrong, because it is one-sided, i.e., it selects the national question (admittedly of the greatest importance, by itself, and in its relation to imperialism) and it relates this question arbitrarily and inaccurately to industrial capital alone, in the countries which annex other nations, while at the same time it emphasises, in an equally arbitrary and inaccurate manner, the annexation of agrarian regions.
Imperialism is a tendency to annexations—this is what the political part of Kautsky's definition amounts to. It is true, but very incomplete, for politically imperialism is a tendency to violence and reaction in general. But here we interest ourselves in the economic aspect of the question, as introduced by Kautsky in his definition. On this point he commits crying errors. Imperialism is characterised not by industrial capital, but by finance-capital. It is not by accident that the particularly rapid development of finance-capital in France, coinciding with the weakening of industrial capital, provoked, from 1880 and onwards, an extreme extension of annexationist (colonial) policy.
And it is characteristic of imperialism to strive to annex not only agricultural regions, but even highly-industrialised regions (German appetites about Belgium, French appetites for Lorraine), because (1) the fact that the world is already partitioned obliges those contemplating a new partition to stretch out their hands to every territory, and (2) because the ​rivalry of several great powers striving for hegemony, i.e., for the conquest of territory, not so much for their own advantage as to weaken the adversary and undermine his hegemony—this is an essential feature of imperialism (e.g., Belgium is chiefly necessary to Germany as a base for operations against England; England needs Bagdad as a base for operations against Germany, etc.).
Kautsky refers more especially—and many times—to English writers who, he alleges, have established the purely political meaning of the word "imperialism" in Kautsky's sense. Let us refer to Hobson's book, Imperialism, which appeared in 1902.
"The new Imperialism differs from the old, first in substituting for the ambition of a single growing empire the theory and the practice of competing empires, each motived by similar lusts of political aggrandisement and commercial gain; secondly, in the dominance of financial or investing over mercantile interests."
We thus see that Kautsky is absolutely wrong in referring to English writers (unless he means to quote the most vulgar English imperialist writers, or the direct apologists for imperialism). We see that Kautsky, while pretending to defend Marxism, is really taking a step to the rear as compared with the liberal Hobson, who justly takes account of two "historical concrete" peculiarities of modern imperialism: (1) the competition between several imperialisms and (2) the supremacy of the financier over the merchant.
Yet if it were chiefly a question of the annexation of agricultural countries by industrial coun​tries, the most important role would be played by the merchant.
But Kautsky's definition is not only false and foreign to Marxism. It serves as a basis for a whole system which breaks away all along the line from Marxian theory and practice, of which we shall speak again later. The verbal debate raised by Kautsky as to whether the modern stage of capitalism should be called "imperialism" or "the finance-capital stage" is of no importance. Call it what you will, it matters little. The important fact is that Kautsky detaches the policy 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 to be possible on the same basis of finance-capital. It appears from this that monopolies, in economics, are compatible with methods which are neither monopolistic, nor violent, nor annexationist in politics. It appears from this that the territorial division of the world, which was completed during the period of finance-capital and which determines the peculiarity of the present forms of rivalry between the great capitalist States, is compatible with a non-imperialist policy.
The result is a slurring-over and a concealment 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 Cunow, the German apologist of imperialism and annexations whose cynical and crude argument runs as follows: Imperialism is modern capitalism; the development of capitalism is inevitable and progressive; ​therefore imperialism is progressive; therefore, we should bow down before it and chant its praises. Something like the caricature which was drawn about 1894-95 by the Russian Narodniki (populists) against the Marxists.
If the Marxists, they used to say to us, consider capitalism in Russia to be inevitable and a progressive move, why don't they open a public-house and begin to encourage capitalism!
Kautsky's "reply" to Cunow is as follows: "Imperialism is not modern capitalism. It is only one of the forms of its policy. This policy we can and should fight against; we can and should fight against imperialism, annexations, etc."
The reply looks good. But it amounts in effect to nothing but a more cunning, more disguised (and, therefore, more dangerous) propaganda of reconciliation. For the "struggle" against the policy of the trusts and banks, unless it strikes at the economic basis of the trusts and banks, reduces itself to nothing but bourgeois reformism and pacifism, to innocent and benevolent expression of pious hopes. To avoid mentioning existing contradictions, to forget the most important of them instead of revealing them in their full depth—this is Kautsky's theory.
"From a 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, or of ultra-imperialism." That is, of a super-imperialism, of the union of world imperialisms and not of their struggles; a phase when wars shall cease under capitalist rule, a phase of "the exploi​tation of the earth by finance-capital internationally united."
We shall have to dwell on this "theory of ultra-imperialism" to show how definitely and utterly it breaks with Marxism. According to the plan of the present essay, let us consult in this matter the exact economic data relating to it. Is "ultra-imperialism" possible "from the purely economic point of view"?
If the "purely economic point of view" means pure abstraction, all that can be said resolves itself into the following proposition: the evolution of capitalism tends to monopolies, hence it tends to a united world monopoly, to a universal trust. This is undeniable, but it is also completely devoid of meaning.
If, on the other hand, we are discussing the "purely economic" conditions of the period of finance-capital, considered as an actual historical period at the beginning of the 20th century, then lifeless abstractions about imperialism are best refuted by the concrete economic realities of the present world situation. (Kautsky's line of argument on "ultra-imperialism," encourages, amongst other things, that profoundly mistaken idea, which only brings grist to the mill of the apologists of imperialism, that the domination of finance-capital weakens the inequalities and contradictions of world economy, whereas in reality it strengthens them.)
R. Calwer attempted in his little book, An Introduction to World Economics, to summarise the main purely economic data required to understand, in a concrete way, the internal relations of world economy at the end of the 19th and beginning ​of the 20th 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 Britain); (2) Britain; (3) Russia; (4) Eastern Asia; (5) America; and he includes the colonies in the "areas" of the State to which they belong, "setting on one side a small number of countries not yet situated in these areas, such as Persia, Afghanistan, Arabia, Morocco and Abyssinia."
Here is a summary of these economic data:
| | Area | Pop. | Transport | Transport | Trade | Industry | Industry | Industry |
| CHIEF ECONOMIC AREAS | $\scriptstyle {\overbrace {\quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad \quad \quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad \quad \quad \quad \quad } }$ | $\scriptstyle {\overbrace {\quad \quad \quad \quad \quad \quad \quad } }$ |
| CHIEF ECONOMIC AREAS | in mill'ns of sq. km. | in mill'ns | Rlys. in thous. of km. | Merch. fleet in in mills. of tons | Impt. & expt. in mlds. of Mks. | Outp't of Coal in mls. of tns. | Outp't of Iron in mls of tns. | No. of Cotton spindles (mls.) |
| Cent. Europe | 27.6 | 388 | 204 | 8 | 41 | 251 | 15 | 26 |
| | [23.6] | [146] | | | | | | |
| British | 28.9 | 398 | 140 | 11 | 25 | 249 | 9 | 51 |
| | [284] | [355] | | | | | | |
| Russian | 22.6 | 131 | 63 | 1 | 3 | 16 | 3 | 7 |
| Eastern Asia | 12 | 389 | 8 | 1 | 2 | 8 | 00.2 | 2 |
| America | 30 | 148 | 379 | 6 | 14 | 245 | 14 | 19 |
The figures in brackets show the area and population of the colonies
We notice three areas of highly developed capitalism—that is, with a high development of means of transport, of trade and of industry. They are the Central European, the British areas, and the American. Amongst them are three States which dominate the world: Germany, Britain, the United States. Imperialist rivalry and the struggle between them have become very keen because Germany only has a restricted area and few colonies; (the creation of "Central Europe" being not yet achieved, and it is being fashioned in a life-and-death struggle).
For the moment the distinctive feature of Europe is political division. In the British and American areas, on the other hand, political concentration ​is very highly-developed, but there is a tremendous disproportion between the immense colonies of the one and the insignificant colonies of the other. In the colonies, capitalism is only beginning to develop. The struggle for South America becomes more and more bitter.
There are two areas of weak capitalist development: Russia and Eastern Asia. In the former the density of population is not great, in the latter it is very high; in the former—political concentration is very high, in the latter it does not exist. The partition of China is only beginning, and the competition between Japan and the U.S.A. in connection therewith is continually gaining in intensity.
Compare the ideas of Kautsky about "peaceful" ultra-imperialism with this stern reality, with the vast diversity of economic and political conditions, with the extreme disproportion of the rate of development of different countries, with the violent struggles of the imperialist States. As for the international cartels in which Kautsky sees the embryo of ultra-imperialism, do they not provide us with an example of the partition of the world and of its re-partition—of the transition from peaceful sharing out to warlike sharing out, and vice versa? American and other finance-capital which has peacefully shared-out the world with the participation of Germany—in the international railway combine, for example, or in the international merchant marine—is it not now re-dividing the world on the basis of new alignments of forces resulting from changes which are by no means of a peaceful nature?
​Finance-capital and the trusts are aggravating instead of diminishing the differences between the rates of development of different parts in the world economy. When the alignments of forces are modified, where, under capitalism, can the solution of contradictions be found, if not in the resort to force?
We have in railway statistics some remarkably exact data on the different rates of development of capitalism and finance-capital in world economy. In the last decades of capitalist development, the total length of railways, expressed in thousands of kilometres, has altered as follows:
| | 1890 | 1890 | | 1913 | 1913 | | Increase | Increase | |
| Europe ... ... | 224 | | | 346 | | | 122 | | |
| U.S.A. ... ... | 268 | | | 411 | | | 143 | | |
| Colonies (total) .. | 82 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | | 210 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | | 128 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | |
| Independent or semi-dependent states of Asia and America | | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | 125 | | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | 347 | | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | 222 |
| | 43 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | | 137 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | | 94 | $\scriptstyle {\left.{\begin{matrix}\ \\\\\ \\\ \\\ \ \end{matrix}}\right\}\,$ | |
| | 617 | | | 1,104 | | | | | |
The development of railway lines has, therefore, been more rapid in the colonies and in the independent or semi-independent States of Asia and America. Here finance-capital of the four or five biggest capitalist States reigns undisputed. 200,000 kilometres of new railway lines in the colonies and in the other countries of Asia and America represent more than 40 milliards of marks in capital, newly-invested under particularly advantageous conditions, with special guarantees of a good return, and with fruitful orders for the steel works, etc., etc.
Capitalism is growing with the greatest rapidity of all in the colonies and in trans-oceanic countries. ​Amongst the latter new imperialist powers are emerging, (e.g., Japan). The struggle of world imperialisms is becoming aggravated. The tribute levied by finance-capital on the most proﬁtable colonial and trans-oceanic enterprises is increasing. In the process of sharing-out this booty, an exceptionally large part comes back to countries which, as far as increase of production is concerned, do not stand at the top of the list. In the case of the great powers considered with their colonies, the total length of railways (in thousands of kilometres) was as follows:
| | | | 1890 | 1913 | Increase |
| U.S.A. | ... | ... | 268 | 413 | 145 |
| British Empire | British Empire | ... | 107 | 208 | 101 |
| Russia | ... | ... | 32 | 78 | 46 |
| Germany | ... | ... | 43 | 68 | 25 |
| France | ... | ... | 41 | 63 | 22 |
| Total | ... | ... | 491 | 830 | 339 |
Eighty per cent. of the total existing railways are, therefore, concentrated in the hands of the five greatest powers. But the concentration of the ownership of these railways, that of finance-capital, is much greater still; French and English millionaires, for example, being the possessors of an enormous number of stocks and shares in American, Russian and other railways. Thanks to "its" colonies, Britain has increased its length of railways by 100,000 kilometres, four times as much as Germany. Meanwhile the development of productive forces in Germany during the same lapse of time, and especially the development of the coal and iron industries, has been much more rapid than in England—not to mention France and Russia.
​In 1892, Germany produced 4,200,000 tons of pig-iron, and Britain 6,800,000 tons; in 1912, Germany produced 17,600,000 tons and Britain 9,000,000 tons. Germany had, therefore, an overwhelming superiority over England in this matter.
We ask, was there under capitalism any means of remedying the disproportion between the development of production and the accumulation of capital on the one side, and the division of colonies and spheres of influence by finance-capital on the other side—other than by the resort to arms?
* ↑ 75.—Die Neue Zeit, 1914, p. 909, 11th September, 1914. Cf. 23rd April, 1915, 2., pp. 107 et seq.
* ↑ 76.—Hobson: "Imperialism," p. 324.
* ↑ 77.—Die Neue Zeit, 1915, v. ii., p. 144, 30th April, 1915.
* ↑ 78.—R. Calwer: "Einführung in die Weltwirtschaft," Bremen, 1906.
* ↑ 79.—"Staat Jahrbuch für das Deutsche Reich," 1915; "Archiv für Eisenbahnwesen," 1892. For the year 1890 we have to be content with an approximate figure for the colonial share in the matter of railways.
* ↑ 80.—See also Edgar Crammond: "The Economic Relations of the British and German Empires," in the Journal of the Royal Statistical Society, July, 1914, p. 777.
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