First Published: Vanguard, Vol. 1, No. 8, September 1964.
Transcription, Editing and Markup: Ian Roberts, Paul Saba and Sam Richards
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What are the main features of the Imperialist stage of capitalist development, in which we now live? Lenin outlined them in 1916 when he wrote Imperialism, the Highest Stage of Capitalism, and for present purposes we might list them as follows:
Under pressure of intense competition, in the last quarter of the 19th century, between the capitalists of Britain, long established in world markets, and those of America, Germany, France, etc., the productive forces had been developed at an hitherto unparalleled rate, particularly in heavy industry, concerned with the production of raw materials and capital goods. (For example the new Bessemer and Open-Heath steel-making processes, machine tools, shipbuilding and engineering techniques, coal-cutting machinery, chemicals, etc.).
Only those firms capable of introducing the latest techniques of production could prosper and expand at the expense of their rivals, but this required ever increasing quantities of capital.
Thus in most branches of heavy industry a few giant firms or monopolies emerged, to dominate the market, and in a position to limit competition among themselves through cartel agreements fixing output or price, so as to earn more than average profits.
The banks also, originally established in large numbers to marry the demand for money capital with the supply of money capital, to create credit for industry, were increased in size and reduced in number (until in Britain, for example, the “big five“ already dominated joint-stock banking by 1914.)
This enabled them to emerge as an independent force, exercising a growing control over industry, based upon their power to grant or withhold credit.
A fusion took place between the industrial monopolies and the banking monopolies. Industrial capital and money capital interpenetrated, and Finance-capital was born, with leading monopolists sitting on the boards both of the big banks and of the giant industrial companies, and holding controlling interests in both.
This Financial-oligarchy dominates the economic life of the country. In Lenin’s words it “subjugates all strata of the propertied classes.”
The monopolies, having divided up the home market, turn outward in search of the higher profits available in lands where labour and raw materials are cheap and capital is scarce. The export of capital is greatly increased. The export of capital takes precedence over the export of goods; the export of goods is encouraged in order to make possible the export of capital.
For this overseas investment is directed towards producing cheap and abundant raw materials and foodstuffs for the home market, so as to reduce costs of production in industry, and strengthen the competitive position of the monopolies.
International competition between the monopolies hastens this process. Each seeks to monopolise the available supplies of raw materials. The process ends in the economic division of the world among the leading monopolies, and this buttressed by direct political rule or the establishment of “spheres of influence.” Much of the underdeveloped world is colonised by the imperialist states, although in some areas political conquest is averted through imperialist rivalry, and the great powers agree to “share out” a country while allowing it to retain nominal independence, e.g., Abyssinia, China, Persia.
The Imperialist epoch is characterised by the tendency towards the stagnation and decay of capitalism. Not only are the imperial powers parasitic, living off the tribute which pours in from the rest of the world, but their economies are retarded, held back from full development by the growing contradiction between the socialisation of production and the private relations of property. As Lenin put it in a famous passage in Imperialism:
Ownership of shares, and relations between owners of private property interlock in a haphazard way. But the underlying factor of this interlocking, its very base, is the changing social relations of production. When a big enterprise assumes gigantic proportions, and, on the basis of exact computation of mass data, organises 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 to the most suitable place of production, sometimes hundreds or thousands of miles away, in a systematic and organised manner; when a single centre directs all the successive 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... then it becomes evident that we have socialisation of production, and not mere “interlocking,” that private economic relations and private property relations constitute a shell which is no longer suitable for its contents, a shell which must inevitably begin to decay if its destruction be delayed by artificial means; a shell which may continue in a state of decay for a fairly long period, (particularly if the cure of the opportunist abscess is protracted), but which will eventually be removed.
There are one or two passages in Imperialism in which Lenin refers to an important development which also characterises this stage in the development of capitalism. For example, “the ’personal union’ between the banks and industry is completed by the ’personal union’ between both and the state.” But he elaborated his ideas on the economic role of the state in a speech in the following year to the April 1917 conference of the Bolshevik Party:
The crowding out and ruin of small and medium-sized economic enterprises is proceeding at an accelerating pace. The concentration and internationalisation of capital is making gigantic strides. Monopoly capitalism is changing into State-monopoly capitalism. Social regulation of production and distribution is under the pressure of circumstances being introduced in many countries. Some are introducing universal labour service.
Present economic conditions have caused the disappearance of planless capitalism. Up to the war there were monopolies, trusts, syndicates. Since the war we have had State monopoly.
Engels’ criticism was that when we come to the trust then planlessness disappears although there is capitalism. This remark of Engels is particularly appropriate now when we have a military state, when we have State-monopoly capitalism. The introduction of planning into industry keeps the workers enslaved none the less, although it enables the capitalists to gather in their profits in a more planful way. We now witness the metamorphosis of capitalism into a higher, regulated form of capitalism.
The state machine then is dominated by finance-capital. Its leading positions are held by members of the financial-oligarchy, it is subordinated to the interests of the monopolies. It is used by them to ensure the gathering in of maximum profit by the monopolies.
In the 1960s we still live in an Imperialist Britain, and the main characteristics of Imperialism which Lenin outlined remain. But there have been important developments. Above all, Capitalism has been thrown into general crisis by the series of workers’ and peasants’ revolutions since November, 1917, which have removed one-third of the world’s population from the political and economic grip of the monopolies. Thus:
(1) There is now not one world market but two, and the second, the Socialist, is exercising ever-growing influence; in the main through the contrast which it points between planned production for social use and anarchic production for profit.
(2) Capitalism has lost the power to exploit 1,000 million people and the resources of their lands and to that extent it has been turned in upon itself, and all its contradictions intensified.
(1) The growth of the productive forces, the concentration and centralisation of capital, the emergence of monopoly over ever-wider sectors of the economy, proceeds at an accelerating pace. No longer is monopoly confined mainly to the raw material and capital goods industries. It has long since spread its tentacles into the consumer goods industries.
The monopolies bombard us from the television screen, independent retailers are being squeezed out of existence, big brewers swallow little brewers, etc., etc. Even in building and textiles, two traditionally competitive industries, giant firms strengthen their position each year.
(2) Control over money-capital, over credit, remains in the hands of a few giant financial institutions. These include not only the joint-stock banks, with more than £7,000 million at their disposal, but also the building societies with more than £3,000 million, the insurance companies with £4,000 million, the investment trusts and the pension funds, each disposing of thousands of millions.
(3) The financial oligarchy remains in power. Those who sit on the boards of the industrial and banking monopolies, and in the key positions of the state, are the children and grandchildren of those who dominated Britain in 1916. Only the size of their industrial and financial empire has grown.
(4) The drive to export capital has been intensified. Witness the Chairman of British Petroleum in his 1960 report to shareholders:
We must therefore be prepared to continue to find large sums for capital expenditure; since to attempt to stand still would result in going backwards. This would be detrimental to our competitive position as a major British interest in the international oil industry, and also inconsistent with the development responsibilities inherent in the extent of the resources of crude oil to which we have entitlement.
In other words, if B.P. does not exploit its oil concessions, some more energetic rival will do a deal with the national bourgeois government concerned, and oust B.P.
According to The Commonwealth and Europe, a book written by the Economist Intelligence Unit in 1960, total U.K. exports of capital over the five-year period 1954 to 1958 were “in the region of £2,000 million,“ but it points out that private capital movements are “generally understated, sometimes substantially“ because of the veil of secrecy which surrounds everything to do with overseas investments. Today, as in 1916, roughly £1 in every £3 of British capitalist investment is overseas – and the monopolies account for nearly all this overseas investment. Dividends are immense, particularly from the exploitation of Middle Eastern oil. According to the Financial Times in January, 1959, 21 British oil firms, subsidiaries of the big oil trusts, made a total profit of $431 million. This was bigger than the total profits of 456 firms in the engineering, iron, steel and shipbuilding industries.
Thus although direct colonial rule over more than 750 million peoples has been ended by the national-liberation movements of Asia and Africa, neo-colonialism and “spheres of influence” remain.
Imperialist exploitation of the peoples in the underdeveloped lands within the capitalist world continues and has been intensified, but it now requires either the propping up of a government of the landed aristocracy or compradors, or the reaching of an uneasy compromise with a national-bourgeois government over the sharing of the loot. Persia illustrates the former, Egypt the latter.
(5) There is still no doubt that monopoly-capital is still parasitic in the highest degrees, but can it be said still to be decaying, moribund capitalism? The evidence overwhelmingly suggests that it can. It is true that technical innovation has proceeded quite rapidly within a number of industries, but taking the economy as a whole the drag now exercised upon economic development by private ownership is more marked than ever. One comparison helps to illustrate this. In Britain in 1959 expenditure on advertising was around £400 million, and only a little less than the total spent upon research and development, which was about £450 million. To quote Andrew Schonfield, from the Observer in 1960:
The ability to do effective research over long periods has come to be recognised increasingly as a powerful engine for producing high profits by many of the biggest and most successful firms in British industry. But with research costs going up even some of the biggest firms have found the initial expense a strain on their finances. That has provided the motive for some of the recent mergers between companies… In some industries, like aircraft, even after all the recent mergers of companies, the resources available still do not suffice for the task in hand.
Three industries, aircraft, electrical engineering and chemicals are responsible for 70% of the country’s industrial research and development. But outside these there are several industries where so little is done to keep in touch with any new advance in science and technology that it is a wonder they feel able to face international competition at all. Shipbuilding is the most striking case, where there are perhaps a total of 120 qualified men doing research and development in the whole industry. Machine tools are very little better, considering the urgent need for innovation in this industry.
(6) This leads on to the sixth characteristic of Imperialism; because in this last field as in so many others finance-capital has been compelled to call in the state. The increased economic role played by the state can be attributed to two main causes.
Firstly there is the need to intervene directly in the economy in order to tackle the effects of the growing contradiction between the socialisation of production and private property relations, which tends to result in the decay of ever wider sections of the economy, and is harmful to the capitalists both because they must compete with their rivals, and because the contrast with Socialism can no longer be ignored. Secondly there is the economic effect of the increased state expenditures needed to tackle the growing class contradictions which stem from the deepening of the basic economic contradiction and which raise a direct political threat to the whole system; a measure of Social welfare to fob off working people at home, and military expenditure to maintain Imperialism’s political and economic position in the underdeveloped lands, and if possible to restore capitalism within the Socialist world. The following two sections develop these points in more detail.
(1) State aid to the monopolies for scientific research is of growing importance. Of the total of £450 million already mentioned £300 million was spent was spent by private industry, and of this just under one half was financed by the state. Of the remaining £150 million spent outside private industry nearly all was financed by the State.
(2) In Britain the railways, the airlines, and road transport, the electricity, gas and coal industries, were all in need of reorganisation and re-equipment in 1945, on a scale requiring huge quantities of capital, which was not forthcoming under private ownership.
Capitalist nationalisation enabled these industries to be modernised with the aid of state loans so that the monopolies could obtain abundant and cheap raw materials, power and transport.
It is true that political pressure by the working class was one immediate reason for nationalisation of some industries (e.g. coal) but as carried out this nationalisation was beneficial to the capitalists alone.
Nearly £800 million, for example, was spent by the National Coal Board between 1946 and 1959, and over £600 million by the British Transport Commission between 1954 and 1960. And in one year alone (1959-60) £300 million was spent by the Electricity Board in developing productive capacity in that key industry.
When the job is done then the industry will be denationalised if this is politically possible. Witness, in this country, denationalisation of road transport, growth of private airlines, and recent moves to “decentralise“ the mining and railway industries and make them more and more directly responsible to local boards of businessmen.
Or in Italy, and I quote from the Manchester Guardian of September 21st, 1961:
Italy is the most striking example of successful state capitalism in the free world… The state dominates the three leading commercial banks, the manufacture of steel, pipes, large sections of heavy engineering, electricity, petrochemicals, and almost the entire shipbuilding industry… The business objectives of State-owned industries have been legally defined. They must ensure industrial progress and development in all fields where private industry cannot provide either the money or the management. As soon as they are viable, State-owned businesses are to be sold to the private sector.
(3) The concentration and centralisation of capital has received powerful pushes from the state in a number of ways.
Moves against restrictive trade practices and against price-fixing arrangements between firms help to push the weak to the wall and encourage amalgamation and merger and take-over bids.
A number of industries, though remaining in private hands, have been virtually compelled, by the state, to merge into larger productive units. In particular the textile industry was reorganised a few years ago, with the aid of £30 million from the state, and the aircraft industry was pushed into a number of mergers by Mr. Duncan Sandys, in 1960, who threatened to cut off Government “aid” and orders to those who did not co-operate.
(4) In all, state loans to nationalised industries, private industry, colonial agencies, and export guarantors totalled £1,000 million in the 1961 budget. They are all, in effect, aid raised from the capitalist class as a whole to help particular sections of industry whose performance is tending to retard the turnover of capital.
(5) Direct intervention in the economy reaches a peak during a war, or under Fascism, as preparation for war.
During the last war the financial oligarchy equipped the state with powers to control all sections of the economy in order to regulate consumption and investment for the worth effort. But when no longer needed these controls were scrapped.
Today in Britain, rationing of consumer goods, price-fixing, and the Capital Issues Committee, which controlled investment, have all been abandoned. Even the exchange controls upon the international movement of capital have been largely scrapped.
The monopolists recognise that a greater degree of “planning” or co-ordination of industry is required. I quote from one of Andrew Schonfield’s articles in the Observer in 1961:
What is missing in Britain is a target. At any rate that is the view of a growing body of industrialists, who have largely become disturbed by the fact that the pace of economic progress here lags steadily behind our competitors on the continent of Europe… Last autumn this new mood of the industrialists was brought right out into the open for the first time, with a formal proposal from a Committee of the Federation of British Industries… that the Government should lay down a clear production plan covering a number of years – and then give it priority over everything else... It is, for instance, impossible to decide what steel output will be need by the middle of the 1960s without taking a view on how many cars the British motor industry will then be producing for home and for export, or about the likely size of the order books of the machine makers, who are in turn dependent on the amount of industrial investment that will be undertaken in 1965.
“Planning” has almost attained respectability. But this new recognition by the ruling class of the need to draw up a national plan or target for the economy as a whole must not be misinterpreted as a move towards socialism! The plan produced by the new National Economic Development Council’s “permanent office,“ the executive body of officials (which will include no trade unionists), will not be forced upon individual monopolies. Mr. S.P. Chambers, Chairman of I.C.I. (Imperial Chemical Industries), summarised the views of the monopolies when he spoke to the annual conference of the Institute of Directors in November, 1961:
We are more likely to avoid an unhealthy build-up of misdirected capital expenditure if we have proper information about the economy as a whole than if we go on with our own rather blind individual guesses. Co-operation, forecasting, and planning in this sense would be healthy for British industry, but detailed controls should be resisted at all costs.
However this increased preoccupation with the need to “plan” does reflect the fact that as the processes of production become increasingly social, and interlock more and more closely, anarchic production increasingly hinders the monopoly-capitalist class as a whole from maximising profits by making the most efficient use of available resources and the latest techniques, and thus hold their own in the bitterly competitive capitalist world of the 1960s.
(6) The state also plays its part in the field of capital exports.
State loans and grants to underdeveloped countries have been growing in importance in recent years. They can be viewed as investment by the monopolists as a class, via the state, in lands where the national bourgeoisie will no longer permit private capital to enter on the old terms, and to create favourable conditions for subsequent exploitation by individual monopolies and international combines, e.g. development of electric power, transport and communications.
According to the National Institute Economic Review, May, 1961, between 1956 and 1959 the underdeveloped countries received from the “industrial” (that is imperialist) nations “aid“ (note the term) averaging 6 ½ billion dollars each year. Of this private capital provided only 38 per cent. (Military aid is excluded).
As the Report puts it, “countries subject to Communist pressure received a very big share of public aid,” and much of this was interest free. But Mr. Eugene Black, then President of the American-dominated World Bank, said at a meeting in Vienna:
Until a few years ago, more than half the flow of official capital to the under-developed countries had gone as outright grants. Since then the ratio being advanced on conventional credit had changed for the worse, with more aid terms. The outstanding hard debts of many countries had risen rapidly and in too many cases debt repayments were piling up in the early years. The machinery of economic development could become overloaded with a foreign debt until it sputtered to a halt amid half-built projects and mountains of discarded plans.”
Could there be a more damning exposure of the cannibalistic nature of this so-called “aid” from imperialist powers?
(1) It is the developing class struggle which necessitates the increased state expenditure upon welfare and arms. The latter has increased at a considerably more rapid rate than the former, but together they have increased the proportion of the national income spent by the Government, in Britain, appreciably as compared with the 1930s.
(2) Military and welfare expenditure are directed towards maintaining the capitalist “order” beyond and within the national frontiers. The direct economic benefit accrues to the monopolists, for most of the orders for equipment (military and welfare) are placed with the monopolies, with such firms as Vickers Ltd., the great iron, steel, engineering and shipbuilding combine. As Lord Weeks, the Chairman, remarked complacently in his 1960 annual report to shareholders, “Our profits compare not unfavourably with those in other large industries.”
(3) It must never be forgotten that such “welfare” concessions as have been won from the state by the working class in Britain have only been made possible because Britain is an imperial power. The loot which flows into Britain from half the world goes not to the British people but to the financial oligarchy. However, it has enabled this oligarchy to concede more to the working class in Britain than would have been possible did the British monopolists not loot half the world, and thus to foster the spread of illusions about the true nature of capitalism (we will return to this question in a later article).
(1)In all these fields, the state’s role fluctuates in accordance with the degree of tension prevailing at any particular time.
If private industry can find its own capital the state need not be called in. If controls are unnecessary they are scrapped. If the conditions exist for private capital exports then state capital exports decline.
If the working-class relaxes its pressure, social welfare is cut. If the former colonial peoples can be hoodwinked into permitting Imperialist exploitation to continue by agreement, then direct military suppression can be ended. (In 1955, for example, 40 British battalions were holding down colonial peoples; today the number is reduced.)
(2) In 1938 the state accounted for 30.6% of “gross capital investment” e.g. buildings, plant, machinery, etc. (This includes spending by the central government, local governments and the nationalised industries.) In 1953 the proportion was 55% and in 1958, 42%.
(3) In 1938 the annual budget totalled about 20% of the national income; in 1949 rather over 40%; and in 1959 rather over 30%. The bulk of budget expenditure is accounted for by military and welfare items.
(4) We can conclude that, as the general crisis of capitalism deepens, state intervention tends to become more and more necessary for the monopolists, but that within this long-term trend considerable fluctuations occur. We can also conclude that such intervention is at best palliative, which tackles the symptoms of capitalist decay only to deepen the basic contradiction in our society and advance the day when the working class will finally take their own hands and remove this capitalist “shell.“