![[Diagram 18: American Imperialism in Action]](diagram18-small.jpg)
MIA > Archive > Fraina/Corey Archive > Decline of Am. Cap.
THE enormous development of monopoly and finance capital in the United States after the World War was marked by an upswing in the export of capital and imperialism, which are inseparably interlocked with the underlying relations of monopoly capitalism. While an economic decline appeared in European imperialism (and capitalism), American imperialism strengthened its economic basis, sank its roots deep into the national economy, and spread its predatory interests and power throughout the world.
The dynamics of imperialism are an intensified, concentrated, more violent expression of the dynamics of capitalist production itself, whose economic law of motion is the accumulation of capital. This involves efforts to prevent a fall in the rate of profit, to raise the rate. Both accumulation and the tendency of the rate of profit to fall are identified with the increasing concentration of industry and the centralization of financial control, the aggravation of competition in spite of monopolist combinations, and the sharpening of contradictions arising out of the antagonism between production and consumption. Accumulation of capital, the production and capitalization of surplus value, depends upon the expansion of industry and markets, and is inevitably accompanied by the growth of industrial concentration and monopolist combination. The basis of concentration is an increase in the scale of production, which greatly augments the output of goods. If markets grow sufficiently, the rate of profit may rise; if not, the rate tends to fall because of the results of excess capacity and competition. New markets, foreign markets, become imperative, particularly as limitation of mass consumption is aggravated by disproportionate development of separate branches of industry. The scramble for foreign markets includes the scramble for foreign sources of raw materials. Both require an investment of capital. The export of capital, as distinguished from the export of goods, acquires constantly greater importance, as direct investment in foreign enterprises grows. The synthesis of these developments is monopoly and finance capital, whose driving force is behind attempts to monopolize markets, raw materials, and investment opportunities. As concentration and combination grow, there is an exhaustion (on a capitalist basis) of the inner long-time factors of expansion, resulting in a decreasing output and absorption of capital goods. Mass markets are still more limited. Excess capacity and surplus capital mount. The rate of profit threatens to fall disastrously. The outward thrust toward foreign outlets is strengthened. [1*] Speculation becomes more international. Capitalist production and foreign trade are more and more entangled with the economics of the export of capital and the politics of imperialism, with exploitation of the outer, the international, long-time factors of expansion. Monopoly capitalism and the exploitation of economically backward peoples are inseparable.
The export of capital and imperialism emphasize both the importance and the changing character of the world market in relation to the origin, development, and decline of capitalism. Foreign trade and colonialism were vital factors in the commercial revolution of the sixteenth and seventeenth centuries. Toward the end of the eighteenth century, however, the intrenched bourgeoisie began to revolt against colonialism, which was identified with feudal-mercantilist restriction of free enterprise and trade; for free competition was the basis of industrial capitalism. One expression of this reaction was the not very vigorous struggle Britain waged against the embattled colonists in the American revolutionary war. As Britain became the world’s workshop, with a practical monopoly of the world market because of its highly developed industrial capitalism, the interest in colonialism waned. The major exports were consumption goods, especially textiles; the major aim was merely to trade, to sell dear and buy cheap. By the 1840’s-50’s, the dominant national sentiment, voiced even by future aggressive imperialists like Disraeli, was that colonies were a millstone around Britain’s neck.
Developments within the capitalist economy, however, were preparing the basis of a new colonialism. Not only was the scale of production growing and multiplying the output of goods, but the necessarily larger masses of fixed capital forced a constantly larger scale of production. The output of means of production, of equipment and materials, became increasingly important. Many of the newer raw materials could be secured only overseas; many older materials began to be imported as inner supplies approached exhaustion (e.g., English copper, lead, zinc, tin, and iron) or because foreign supplies were cheaper. As industrialism is a metal economy, and abundant sources of metals were mainly in economically undeveloped regions, the tendency was to get control of both ownership and production, which meant an export of capital. The production of industrial equipment was limited, tending to force down the rate of profit, by exclusive dependence upon home demand: foreign demand and industrialization were stimulated. This was particularly true in the case of railroads, whose materials and construction made great demands upon capital equipment and capital investment. Railroads played as great a part in the export of capital as they did in the inner accumulation of capital: most of the British capital invested overseas was in the railroads of the six continents. Construction of railroads and exploitation of mineral resources went hand in hand. The export of capital was different, however, from the mere export of goods, for returns on the capital invested in economically undeveloped countries depended upon their political stability. Hence political control was necessary. Industrial penetration, by destroying the older industries and expropriating peasants (or tribesmen) from the soil, aroused antagonisms and revolt. The tendency toward the monopoly of foreign markets and raw materials made the necessity of political control all the stronger, including non-colonial regions, emphasized by the increasing competition of the newer industrial nations. Instead of colonialism being abandoned, control of existing colonies was tightened and a scramble for new colonies ensued. (It was significant of the new colonialism that Spain could not hold on to its American colonies, primarily because of an inability to supply industrial products and capital. Portugal held on to some of its colonies only because of an imperialist alliance with Britain.) In addition, finance capital and monopoly penetrated also the more economically developed but still relatively backward nations, where it secured control of basic enterprises and raw materials, plundered the “free” industries and distorted industrialization.
The upswing of European capitalism after the 1860’s, and particularly after the 1880’s, was bound up with the export of capital and imperialism. Export of surplus goods and capital stimulated the output and absorption of capital goods, the basis of capitalist expansion. By the 1900’s, as much as 25% of the national wealth of Britain and 15% of that of France was represented by foreign investments. The three major imperialist powers had a foreign stake of at least $35,000 million; Britain, $20,000 million, yielding a yearly income of $900 million; France, $10,000 million and an income of $400 million; Germany, $5,000 million (some estimates are higher) and an income of $250 million. [1] The rate of profit tended to move upward. During the prewar years, the rate of interest on British home investments, roughly an indication of the rate of profit, rose probably 30%, the most important cause being the export of capital. [2] In particular, the heavy export industries “earned” surplus profits, while the financial oligarchy, in control of the banks and monopolist combinations identified with imperialism, reaped an even richer harvest. But the elements of decline in imperialism appeared very clearly in its later stages. The higher rate of profit, and this becomes all the more marked in the epoch of the decline of capitalism, was accompanied by a downward movement in the curve of production, an increase in unemployment, stationary real wages, and more unequal distribution of the national income. Income from foreign investments increased much more rapidly than other forms of income. The heavy export industries were disproportionately developed in Britain, while other fields of home industry were neglected in favor of the surplus profits of overseas investment; in France, the national economy was practically stagnant. The upward movement in technical-economic efficiency began to flatten. (If this was less true in Germany, it was only because imperialism developed while inner industrialization was as yet not complete.) But these results, according to one bourgeois economist, writing early in 1914, are “no conclusive reason for a country trying to check the export of capital, because the injury to the amount of home output is likely to be more than compensated by the higher return presumably obtained on capital invested abroad.” [3] The rate of profit is the compelling power of capitalist production.
As the export of capital became increasingly an export of the interest (or profits) on existing foreign investments, the elements of decline assumed more definite shape: for export of interest represents no home production, employment, and wages, it merely piles up the capital claims of ownership. “To a larger extent every year,” wrote J.A. Hobson in 1902, in his pioneer study of imperialism, “Great Britain is becoming a nation living upon tribute from abroad, and the classes who enjoy this tribute have an ever-increasing incentive to employ the public policy, the public purse, and the public force to extend the field of their private investments and to safeguard and improve their existing investments.” [4] Economic stagnation and parasitism are characteristics of monopoly capitalism and imperialism. They were accompanied by the multiplication of rentiers and an increase in luxury production and in the occupations serving the well-to-do. Whole nations, especially France, acquired the character of rentiers. Just as a handful of monopolists exploited the nation, so a handful of monopolist nations exploited the world.
They spoke much of progress everlasting. But it was an illusion. It was based on the profits of imperialism, on the merciless exploitation of colonial and other economically backward peoples, the majority of the world’s population. Financial oligarchs feasted on the profits. The middle class received some of the juicier crumbs, especially in the form of an export of technical, managerial, and clerical employees to work in foreign imperialist enterprises, and of minor officials to govern colonies. A bone or two was thrown to the upper layers of the working class, particularly the trade-union bureaucracy. [2*] For imperialists like Joseph Chamberlain and Cecil Rhodes, seeing the aggravation of imperialist rivalry and the possibility of war, aimed to create a broader social base for imperialism by “doing something” for the workers, which in practice included only certain groups of workers. It meant making the working class the defender of imperialism, with colonial and other economically backward peoples paying the price. All reformist programs, liberal and socialist, consciously or unconsciously depended upon the “progress” of imperialism for the gradual transition to “higher” things, to a “new” social order, including socialism itself. Although American imperialism was merely in its beginnings in 1900, Franklin H. Giddings, the sociologist, identified imperialism with progress, democracy, civilization, the interests of labor, and social reform, and concluded: “If, by any mistaken policy, it [the “energy” of the American people] is denied an outlet, it may discharge itself in anarchistic, socialistic, and other destructive modes that are likely to work incalculable mischief.” [5]
But imperialist antagonisms became sharper and sharper, exploited older sentiments of national interest, and exploded in the catastrophe of the World War. Liberalism and moderate socialism rallied to the support of “their own” national imperialist governments. The illusion of progress everlasting was irretrievably shattered ...
American imperialism lagged behind the European, although concentration, combination, and finance capital were on the whole more highly developed in the United States than in Europe. This is one of the significant peculiarities of American capitalism. It was primarily due to what may be conveniently described as an inner imperialism; or, in other words, to conditions whose economics resembled those of the export of capital.
The economic relations of colonialism measurably existed between the more highly developed Northeastern regions and the inner continental areas. (The conquest of Texas and California had some of the political aspects of colonialism, although there was also an element of the slavery “imperialism” of the South.) In the earlier “colonial” stage, from the 1820’s to the 1850’s, the inner areas absorbed mainly settlers and industrial consumption goods in exchange for foodstuffs and raw materials: it was essentially a trading relation. In the later “colonial” stage, especially after the 1860’s, the emphasis was on the absorption of capital goods and on industrialization, for the great areas could not be limited to agriculture. The highly industrial Northeastern states (comparable, in resources and economic development, with Britain and Northwestern Europe, which exploited other areas) exported capital and means of production and transport to the Western regions and seized their natural resources. This was not simply the earlier, more or less limited and general industrialization as it appeared in the nations of Europe: it was on a vastly greater scale, making it possible for more than one particular industrial center to arise, was dominated by finance capital operating from the Northeastern states, and assumed sectional forms and gave a sectional twist to class struggles and ideology, which are of real importance in American history. The struggle between agriculture and industry appeared as a struggle between West and East; Western debtors, who were most active in the Populist revolts, owed money to Eastern financiers and investors, who also owned the railroads exploiting the farmers. Export of surplus goods and capital to the inner continental areas prevented a decided fall in the rate of profit, made possible a constantly greater output of capital goods. Monopolist combinations extended their control over inner markets and resources, and invested surplus profits in American branch plants as new industrial regions arose. Exploitation of immigrant (and Negro) workers was an aspect of these developments, roughly comparable to the British, German, and French importation and exploitation, after the 1890’s, of large numbers of immigrants from Russia, Poland, Austria, Spain, and Italy. [3*] The real outer imperialism was only emergent at a time when, from the 1880’s to 1910, it was being consolidated in the economy of the highly industrial nations of Europe.
The inner “export” of capital had general results similar to those of the outer variety. Highly industrial nations export goods and capital to colonial and other economically undeveloped regions. But these regions develop their own industries, either native or branch enterprises of foreign combinations. Markets are restricted and home industry adversely affected. The New England boot and shoe industry tended to decline because of the competition of new centers of production in the West. This was prevented, in the case of iron and steel, by the control of monopolist combinations. The Lancashire cotton textile industry declined because of the competition of new foreign centers of production; the New England industry began to decline, before the World War, because of the rise, after the 1890’s, of an indigenous cotton textile industry in the Southern states. No comparable developments appeared within the nations of Europe, they appeared only as between these nations and aggravated the antagonisms of imperialism. The relative economic decline of New England and imperialist Britain (in both regions there was, in addition, a decline of agriculture) is extremely significant.
But these peculiarities of American development were over by 1910, when a real outer imperialism was definitely and aggressively in operation. Nor did they prevent the appearance, in the earlier years, of the substantial beginnings of imperialism. They were scattered, the expression primarily of particular combinations and enterprisers, but they moved inexorably toward larger institutional expression ... In the 1880’s, an emergent imperialist policy was manifest: the Samoan adventure almost involved the United States, Britain, and Germany in war; combined rule of the island by the three was accompanied by the usual atrocities of colonial warfare. Congress was agitated by demands for a more aggressive foreign policy and a larger navy, and by opposition (including President Hayes) to the French building the Panama Canal. Most important of all, the emphasis on relations with Latin America changed from political to economic, expressed in proposals for a customs union directed against Europe, in line with the larger interests of capital in the United States, and eventually transformed the Monroe Doctrine ... By the 1890’s, American capitalists were promoting railroads in Mexico and other Latin-American countries in competition with the British and the French; William R. Grace, the “Pirate of Peru,” was exploiting that country’s mineral resources, railroads, finances, and politics; and Minor C. Keith was creating the economic and political empire of the United Fruit Company in the Caribbeans (the blood of exploited native workers fertilized the bananas consumed in the United States) ... Standard Oil spread its tentacles over the world, while another Rockefeller company, the Lake Superior Consolidated Mines (acquired by ruthless trickery and later absorbed by the United States Steel Corporation), owned iron mines in Cuba. So did Carnegie Steel and Bethlehem Steel. American mining interests in Cuba included manganese and nickel ... American capitalists secured asphalt concessions in Venezuela; when these were threatened, the State Department acted to protect “American rights.” ... The American Sugar Refining Company, the Sugar Trust, controlling 90% of the refining output in the United States, held substantial interests in Cuba through a subsidiary and the personal holdings of its master, H.O. Havemeyer. Mechanization of the sugar industry in Cuba compelled the import of American capital, which in 1896 amounted to $30,000,000 ... American capitalists, including Standard Oil interests, organized the American China Development Company to exploit coal mining and railroad concessions and industrial franchises ... The war began between American and British capital for control of international communications; it has since aroused extremely sharp antagonisms. After spreading a network of telegraphs and cables over Latin America in competition with the British, the Mexican Telegraph Company, organized and controlled by Americans, planned a Pacific cable to compete with the British. The House of Morgan became identified with the project, which secured Congressional support. One vice-admiral said: “It can easily be seen what an advantage this freedom of communication would prove in the great race for supremacy in China.” ... By 1900, $500 million of American capital was invested abroad, including government loans (particularly Mexican) ... An imperialist ideology was definitely being shaped, although it emphasized commercial more than financial interests, which was also true of the earlier beginnings of imperialism in Europe. In 1895, Henry Cabot Lodge said: “For the sake of our commercial supremacy in the Pacific we should control the Hawaiian Islands and maintain our influence in Samoa. Our immediate pecuniary interests in Cuba are very great. Free Cuba would mean an opportunity for American capital invited there by signal exemptions. But we have also a broader political interest in the fate of Cuba. She lies athwart the line which leads to the Nicaraguan Canal.” [6]
Out of these beginnings of imperialism arose the Spanish-American War. Some historians argue that the war was not an imperialist one, because “our” immediate economic stake in Cuba was not very large. But that is mere economic determinism, a vulgarization of the materialist conception of history. For immediate economic interests seldom bulk very large and may even be violated in the interest of policy. It is the general drift and necessity of underlying class-economic forces which are decisive, and the ideology they create. Ideology is itself a social force. An active imperialist ideology was developing under the minor pressure of immediate economic development and the major pressure of the division of the world among the European powers, clarifying the aims of emergent American imperialism and preparing it for the future. This was the decisive factor in the Cuban intervention and the acquisition of a colonial empire in the Caribbean and the Pacific, while the war itself shaped imperialist objectives and ideology. [4*] One sociologist urged American conquest and control of the tropics for their “economic possibilities.” [7] The war with Spain, according to Brooks Adams, who also identified imperialism with progress and reform, was “a link in a long chain of events which, when complete, would represent one of those memorable revolutions wherein civilizations pass from an old to a new equilibrium. Competition has entered a period of greater stress; and competition, in its acutest form, is war. America has been irresistibly impelled to produce a large industrial surplus. Upon the existence of this surplus hinges the future, for the United States must provide sure and adequate outlets for her products or be in danger of gluts more dangerous to society than many panics such as 1873 and 1893. The laws of nature are immutable. Money will flow where it earns most return, and investments once made are always protected.” [8] And the Bankers’ Magazine said in 1900, driving home the logic of the Spanish war and of American participation, with European imperialist powers, in the suppression of the Boxer Chinese revolt:
“Nations whose citizens have large interests abroad must necessarily encounter difficulties, which may sometimes be settled by diplomacy, but which frequently can be overcome only by force of arms. The employment of armies naturally drifts into what is called conquest. The United States, having become a lender of its surplus resources, must follow the methods which such development requires, and it has the advantage of the experience of other nations.” [9]
From 1900 to 1910, monopoly and finance capital tightened their grip upon the American economy, resulting in an accelerated growth of imperialism, although it did not become dominant ... Because of the backwash of inner imperialism and the absorption of surplus capital by the recapitalization of industry through trustification, which absorbed large masses of investment capital, the export of capital in the form of American purchase of foreign securities was almost negligible, although loans were floated for many Latin-American countries and for Britain, Japan, and Russia ... But direct investment abroad by monopolist combinations is also an export of capital; in fact, it is of primary importance, because it is most closely identified with efforts to monopolize markets, profitable enterprises, and natural resources ... Steel companies acquired mines in Chile and Brazil, and forced an agreement on world markets with European steel interests ... The United Fruit Company spread itself all over the Caribbeans, acquiring natural resources, building railroads and docks, making its own loans to governments ... General Electric invested capital in many parts of the world, competing with the British and the Germans in the creation and control of markets; it acquired large interests, particularly in Latin America, in light and power plants and in electrical communications ... So did, in their own lines, International Harvester and the meat packers ... Morgan-Hill efforts to extend the power of their Northwestern railroad system to Canada provoked charges that they were trying to get control of the country’s railroads and mines ... American capital secured railroad concessions in Mexico, Panama, and Bolivia ... The Guggenheims and other mining interests got increasing control of foreign mines, particularly in Mexico, Bolivia, Peru, and Chile ... Edward H. Harriman’s aggressive struggle, in direct competition with European and Japanese imperialist interests, to secure railroad and mining concessions in China was actively backed up by the State Department ... Standard Oil, assuming greater international dimensions, fought bitterly with the British for control of world sources of petroleum ... Discovery of petroleum in Mexico led to more aggressive American penetration by the 1910’s and another embittered clash with the British, involving Mexican politics and revolutions ... The monopolist combinations engaged in these imperialist struggles were associated with the great banks, which in many cases directly participated, particularly the National City Bank, whose acquisition of the National Bank of Haiti was followed by American military intervention ... Most significant of the role of finance capital in imperialism was the organization, in 1902, of the International Banking Corporation, which later became a subsidiary of the National City Bank. The International was a concentration, for imperialist purposes, of the most important factors in monopoly and finance capital: the National City Bank, Standard Oil, Harriman, and the Guggenheims, including a working alliance with the House of Morgan in the later struggles for loans and concessions in China. By 1910, the International had sixteen branches, in China, Japan, India, the Philippines, Mexico, Santo Domingo, and Panama. It was the most conscious financial force in stimulating the export of goods and capital, in securing control of foreign sources of raw materials, in unifying the scattered elements of developing American imperialism ... Still more conscious and unified was the political expression of imperialism, for the American government adopted an aggressive imperialist policy ... President Theodore Roosevelt definitely transformed the Monroe Doctrine into a weapon of imperialist aggression in Latin America; it was now intended to prevent economic, not merely political, penetration by the European powers ... Construction of the Panama Canal, an expression of imperialist policy, was accompanied by ruthless disregard of Colombian rights: “I took the Canal Zone,” Roosevelt boasted, “and let the Congress debate.” (Fraud tainted the purchase of the Canal rights from the French company, which was paid $40,000,000 by the American government through the Morgans and other financial capitalists. The question was asked at the time: “Who got the money?” It has never been answered.) ... Roosevelt used the Big Stick to enforce American financial and political “rights” in the Caribbean republics, including military intervention and the imposition of protectorates ... The tendency was to convert Latin America into the colonial basis of American imperialism, embittering the clash with British, German, and French capital ... As the antagonisms of imperialism sharpened, they converged on China, which was bludgeoned into submission by the most brutal use of financial, diplomatic, and military force. After making the Monroe Doctrine a means of limiting the penetration of European capital in Latin America, the American government insisted on realization of the “open door” in the plundering of China. Trade was emphasized in the original “open door” doctrine of Secretary Hay. From the 1880’s to the 1900’s, the growth of large-scale industry, with its multiplication of goods, made foreign markets increasingly necessary. This was urged by all the great capitalists, the Carnegies, Rockefellers, Hills (James J. Hill wanted American domination of Asiatic markets so that his Western railroads might have more goods to transport). But foreign trade becomes, under modern conditions, entangled with the export of capital and imperialism. Markets are not free, they are under measurable control. “Spheres of influence,” said Thomas W. Lamont, one of the Morgan partners, “served to divide up China commercially into almost water-tight compartments, and the nations like the United States which had no compartments could not do much trading.” So the “open door” doctrine, its emphasis shifting from trade to investment, became the form of expression of American imperialist policy in China ... In 1909, an offensive was launched by the Taft Administration, which asked and received the cooperation of the House of Morgan, of the financial oligarchy. The government made demands upon the governments of China and the five powers for an equal share in Chinese loans, mining concessions, and railroad construction. The Morgans made similar demands upon the bankers of the powers. American “dollar diplomacy” won a substantial victory, resulting in a truce and a financial protectorate over China ... President Wilson made the bankers withdraw in 1913, but at the same time he strengthened imperialist policy in Latin America, opposing, e.g., the granting of oil concessions to non-American interests as a menace to the Monroe Doctrine ... By 1913, American foreign investments amounted to $2,500 million, mainly the direct investments of dominant combinations. While comparatively small, the investments represented new capital, not an export of interest; without them the relative economic decline in the period 1900-14 might have been more marked. [10]
American imperialism came into its own during the World War and the post-war period, the development of an inherent tendency accelerated by the mishaps of European imperialism. Under pressure of a direct economic stake in the victory of the Allies (the war loans) and a larger imperialist stake in the issue of world power, the United States was thrust into the war. The war augmented industrial concentration and combination and the centralization of financial control. It also opened new foreign markets to American goods and capital, and geared industry to the export of capital on a large scale. Finance capital mobilized for world action. Shortly after the war, the House of Morgan organized the Foreign Finance Corporation, a concentration of financial interests including four Morgan banks, the National City Bank, and the Chase National Bank. Another concentration of financial forces was the formation by the Morgans, in 1922, of the Bank of Central and South America, with twenty-two branches. By 1926, eight American banks owned 107 foreign branches in the world’s strategic centers, mainly in Latin America, of which the National City Bank owned seventy-three, including twenty-two owned by its subsidiary, the International Banking Corporation. [11] The struggle for control of markets and investment opportunities was waged everywhere, anyhow. American foreign investments (excluding inter-governmental loans) rose from $2,625 million in 1914 to $17,967 million in 1932, of which more than one-half represents the direct investments of monopolist combinations; foreign investments yielded, in 1920-29, an income of $9,896 million. [12] The United States became the world’s chief exporter of capital, imperialism a dominant and inseparable aspect of the American economy. Germany’s foreign investments were wiped out (including expropriations by the Allies), French investments rose only slightly, those of the British remained stationary at $20,000 million, and only Japan scored a marked increase. World power was practically thrust upon the United States, and it was not rejected.
The upswing of American prosperity in 1923-29 was invigorated by the export of capital, which, except for the later years, was mainly an export of new capital. But it simultaneously intensified the instability of capitalist production and prosperity. For the export of capital, the financial mechanism of imperialism, is both an expression and aggravation of the contradictions and antagonisms which assume extraordinarily acute forms under monopoly capitalism and imperialism:
1. Limitation of markets, because of the increasing disparity between production and consumption, accompanied by depressed standards of living among the masses. This reflects the inability of capitalism to balance production and consumption and to develop fully all the forces of mass consumption. Competition is aggravated, prices may fall to unprofitable levels, and the rate of profit move downward. An increasing export of surplus goods becomes necessary. The instability of capitalist production is intensified. For the constant increase of exports makes the national economy dependent more and more upon fluctuations in the world market, and trade is inevitably entangled with imperialism because of colonial monopoly, spheres of influence, and other devices for the imperialist control of markets. The export of goods, moreover, tends to become subordinate to the export of capital and of interest on existing foreign investments; this is accompanied by a downward tendency in home production, which limits employment, wages, and mass consumption and makes markets still more limited.
2. Excess capacity, both cause and effect of limited markets and aggravated competition. The increasingly higher composition of capital and the relative or absolute fall in wages necessarily limit the mass markets for consumption goods. Excess capacity is augmented, as the disparity between production and consumption grows and limits the demand for consumption goods and capital goods. The rate of profit tends to move downward. It was estimated, in the pre-1929 days of prosperity, that American cotton mills should export 20% of their output to permit them to run at capacity. [13] The production of automobiles was marked by increasing excess capacity, yet the industry exported an average of 15.2% of its output in 1924-29. [14] An average of 10,000,000 tons of steel was available yearly for export, but only 20% was exported, making “excess capacity a continuous threat to the domestic price structure and to profits.” [15] This condition was most threatening in the basic heavy industries, which were particularly aggressive in the drive for foreign markets. The drive becomes an aspect of imperialism because of the imperialist division of the world. But exports are merely an evasion of the problem of excess capacity, which can be solved only by balancing production and consumption, by the planned economy of socialism. As exports rise the scale of production is enlarged; the resulting changes in the composition of capital and their effects create still more excess capacity, particularly as new foreign centers of production arise. This is all the more disastrous as world markets change suddenly under the influence of competition or break down more than home markets under the impact of depression.
3. Surplus capital, which becomes increasingly larger as capitalist production approaches exhaustion of the inner long-time factors of expansion. In the decisive class-economic sense, surplus capital is an absolute deprival of mass consumption, for it represents capital which industry does not need and cannot use without disturbing results. Hence it is the most fruitful source of capitalist instability. Surplus capital produces more excess capacity, more competition, more downward pressure on the rate of profit. If surplus capital is “distributed” in the form of higher wages, it is consumed and does not become capitalist claims upon wealth and income. If it is exported, it becomes capital or capital claims regardless of whether, and this is the beautiful thing from the capitalist angle, the importing country spends the money on consumption goods or capital goods: in either case the foreign owner of the capital receives his claims upon future production and income. Thus capital export makes possible a larger accumulation of capital, while it relieves the pressure of surplus capital on home industry and tends to raise the rate of profit. But this development assumes an antagonistic form: in the measure that the pressure is relieved and the rate of profit moves up, relative wages fall, markets are limited, and surplus capital arises anew, augmented by the income on foreign investments (which produces no corresponding home income). Export of capital becomes still more necessary. But as this is increasingly an export of interest on existing foreign investments, which is not identified with export of goods because it is not new capital, home production moves downward and the problem of surplus capital becomes more acute.
4. Monopoly, whose surplus profits are threatened by excess capacity and limited markets. Monopolist combinations are not immune to a serious fall in the rate of profit, because of the enlarged scale of production and monopoly competition. Combinations struggle aggressively for foreign markets. All industries need these markets; but in practice, owing to the barriers of tariffs and similar measures, only monopolist combinations as a rule are able to invade foreign markets. Exports are concentrated in the basic heavy industries. Where the barriers are insurmountable, combinations start their own plants in foreign countries. (In addition, foreign plants are established to take advantage of low-wage labor and of proximity to raw materials and markets.) In 1932, 711 American corporations owned 1,819 foreign branch plants, representing an invested capital of $2,178 million (out of $8,500 million of direct investments): $1,033 million in manufactures and $1,145 million in the production of raw materials. Limited as the number of companies was, the limitation of industries was still greater: $529 million, or more than half the capital in manufactures, was invested in plants making automobiles, electrical apparatus, industrial machinery, and other metal products. [16] All are industries dominated by monopolist combinations; and this is also true of mining. The outward thrust of combinations is not simply a search for new markets to absorb surplus goods, but also to absorb surplus capital. For reinvestment of the profits of monopoly within its own field is limited, it must invade non-monopoly fields and exploit the “free” industries. Both results are accomplished by means of the direct export of capital: it is invested in strategic enterprises like mining, metal manufactures, transportation, electrical communications, and light and power, whose monopoly domination permits the exploitation of “free” industries. The inflow of surplus profits from abroad tends to raise the rate of profit of monopolist combinations. Moreover, precisely because of their monopoly character, these combinations break through national barriers and become international, striving to monopolize the world’s markets, sources of raw materials, and investment opportunities. But they are merely interested in profits: anywhere, anyhow, independently of the needs of the national economy. Their direct investments in foreign enterprises usually yield profits without any export of goods (for direct investments increasingly represent reinvested foreign profits or interest, and only new capital is identified with export of goods) – emphasizing that, as the export of capital grows, it becomes more important than the export of goods.
5. Exhaustion of the inner long-time factors of expansion, the most fundamental aspect of the export of capital and imperialism. Only expansion can overcome (temporarily) the contradictions and antagonisms of capitalist production, permit an increasing accumulation of capital, and prevent a disastrous fall in the rate of profit. This means an increasing output and absorption of capital goods, the conversion of surplus value into capital, and an augmenting of capitalist claims upon production and income. It also means an increase in employment, wages, and mass consumption. But monopoly capitalism is identified with measurable exhaustion of the inner factors of expansion, with a downward tendency in the output and absorption of capital goods. As long as capitalism is on the upswing, with rising accumulation, production, and consumption, foreign trade may be an exchange of goods for goods. But when the tendency is downward, imports in general are restricted, because they can be absorbed only by raising wages and mass consumption; this means higher wages and lower profits, and is unprofitable for the capitalist. The export of surplus goods must more and more become an export of capital, that is, they must be paid for by foreigners not with other goods, but with capital claims upon their future production and income. The downward tendency in the inner absorption of capital goods must be compensated by an upward tendency in the outer. In other words, the export of capital and imperialism exploit the long-time factors of expansion in economically undeveloped countries (or the expansion possibilities of particular industries in more fully developed countries). But imperialism tends quickly to exhaust the outer long-time factors of expansion by hampering their free and full growth, even on a capitalist basis. It forces a lopsided development upon countries under its control, for imperialism is interested in quick and surplus profits and not in the economy as a whole. Agriculture and mining are overdeveloped to make profits on railroad construction and lower the prices of foodstuffs and raw materials; this results in overproduction, disastrous price falls, and the ruin of whole peoples. Monopoly controls, disturbing as they are in a highly industrial economy, are still more disturbing in a relatively undeveloped one, for they are more powerful because of the prevalence of small-scale enterprise and their foreign affiliations. The “free” industries are mercilessly exploited. Low wages, which are general and very low, and the export of profits depress local mass consumption and restrict balanced economic expansion. These conditions limit the absorption of capital goods. The non-imperialist countries are tied hand and foot to the interests of the imperialist powers, and their unbalanced economy is affected with the most destructive force by the maladjustments and disturbances of monopoly capitalism. Thus the decline and decay of capitalism thwarts economic progress where it might still move onward. This reacts upon and aggravates the decline of capitalism: the home economy becomes stagnant and parasitic, while development of the outer long-time factors of expansion, which might give capitalism a new lease on life, is hampered by monopoly and imperialism.
6. The dictatorship of finance capital, of the financial oligarchy, which dominates both the monopolist combinations making direct investments abroad and the monopolist banks originating and selling foreign securities. The most perfect fusion of industrial and banking capital appears in the export of capital and imperialism. Ownership, management, and control are separated on a colossal scale. By subordinating the export and import of goods to the production of financial and speculative profits, finance capital emphasizes that its primary interest is not the production and sale of goods. To Ivar Kreuger and his American and British associates, the match industry was merely a pretext for the construction of a world monopoly for financial and speculative purposes. Enterprises are plundered, whole peoples mercilessly exploited, stock exchanges and governments manipulated, colonial wars instigated. American capitalists, who have invested $40,000,000 in the government bonds and $73,000,000 in the tin mines, petroleum fields, and other industries of Bolivia, are encouraging and financing that country’s war with Paraguay over the Chaco, which would give Bolivia access to the sea. “American interests now suffering financial losses in Bolivia will save millions in transport charges if Bolivia captures the Chaco.” [17]) Finance capital, adventurous, speculative, international, is the driving force behind imperialism [5*] and finance capital is the form of expression of monopoly capitalism, of capitalist decline and decay.
A bourgeois economist insists: “The moving force in American capital exports is large-scale industry, mass production at its height ... The leaders of expansion are not in the realm of finance capital, but of big industrial business.” [18] This is a confusion of both fact and theory. Nearly half of American capital exports are not identified directly with monopolist combinations. Who, moreover, dominates “big industrial business”? Finance capital, the financiers, the financial oligarchy operating by control of both monopolist combinations and monopolist banks. The whole amalgam is under control of a small group of giant oligarchs. General Electric, United States Steel, Radio Corporation, and General Motors fly the flag of the Morgans and the du Ponts; Standard Oil and other corporations, of the Rockefellers and the Chase National Bank; the most important American mining interests abroad are identified with the Guggenheims and the Mellons, and both of these with the National City Bank and the Morgans, who are also identified with Anaconda Copper and the foreign interests of American Telephone and Telegraph. As in Europe, so in the United States, the great banking houses are the most active promoters of the export of capital and imperialism: J.P. Morgan and Company, the Chase National Bank, and the National City Bank, which, in addition to control or influence over the most powerful monopolist combinations, have direct investments in the banks and industrial corporations of a score of countries, particularly in Latin America. Undoubtedly American combinations are more directly active in the export of capital than in England and France; but there also the most powerful factors in the export of capital and imperialism are the metallurgical, electrical (both manufactures and power), mining, communications, and chemical combinations. This was as true in pre-war Germany as in the United States to-day, and the German combinations were closely bound up with a few dominant banks.
The activity of monopolist combinations proves, moreover, that the export of capital and imperialism are not “merely” a “policy” of finance capital. Monopoly and finance capital are inseparable, are the result of the same underlying changes in capitalist production, they grow out of and dominate a definite stage of capitalism. [6*] This is the stage where capitalism revolts against its basis, free competition, begins to decline and decay, is rotten-ripe for change. To avoid the change, which can be nothing else than socialism, monopoly capitalism turns to the export of capital and imperialism. The theory that imperialism is a “policy” of finance capital or of monopolist combinations and not a stage of capitalism itself implies that imperialism may be “reformed” out of existence by “curbing” the international financiers or the trusts, by means of struggle against their “excesses.” But as monopoly and imperialism arise out of capitalist production and intensify all its contradictions and antagonisms, the problem of their abolition is interlocked with the abolition of capitalism itself ...
The export of capital in the form of loans to foreign governments is frequently accompanied by thievery and corruption. Only part of the profits appear in the bankers’ commissions. One Latin-American government received $190,000 on a loan of $3,800,000, another $3,200,000 on a loan of $10,000,000. Loans are forced upon weak governments by means of financial and political pressure, they are often for the most sinister purposes (including provocation of war), and they are made when bankers know the governments are on the verge of bankruptcy. [7*] Deliberately false statements are made in advertising the loans. American bankers in Cuba gave “easy” jobs to Machado’s favorites, including his “perfectly useless” son; the Chase National Bank made personal loans of $400,000 to the Cuban dictator, and loans to other prominent government figures. (Machado was for years president of the Cuban subsidiary of the Electric Bond and Share Company.) In connection with a loan to Peru, the American bankers paid a “commission” of $415,000 to the dictator’s son, Juan Leguia, who lived at the rate of $250,000 to $300,000 a year; this, it was explained, is “customary.” [19] The people, the workers and peasants, pay.
Loans to foreign governments are seldom simple financial transactions. They are interwoven with imperialist economic and political objectives, the struggle for concessions and spheres of influence. This is amply clear in the series of loans made to the Chinese government, which was plundered of both its finances and its economic resources, with the help of the diplomatic and military pressure of the lending powers. Another, an American, illustration was the way a government loan and diplomacy were used to secure an immensely valuable oil concession in Colombia. This was the Barco concession, sold in 1917 to the Carib Syndicate, a company controlled by H.L. Doherty, of the Cities Service Company, and J.P. Morgan and Company. Gulf Oil, a Mellon corporation, bought the Doherty interest in 1926, when the Colombian government was threatening cancellation. The concession was cancelled. The State Department protested sharply against the violation of “American rights,” but to no avail. Colombia was denied loans, apparently with the approval of the American Government. In 1930, the new president, Olaya, asked the National City Bank for a loan; its grant was urged by the State Department, which acted as intermediary. According to Olaya, Mellon, then Secretary of the Treasury, advised him to “settle the petroleum problem to hasten Colombia’s recovery.” A syndicate formed by the National City Bank agreed to extend a credit of $20,000,000 payable in instalments and upon condition that the petroleum controversy was settled. The Mellon-Morgan interests were granted a fifty-year concession on the Barco oil fields. Telegrams from the American minister in Colombia were shown to representatives of the National City Bank, whose officials were in constant touch with the State Department. A Senate committee investigating the affair was refused one of these telegrams except “in confidence.” The following discussion between Senator Johnson and Francis White, Assistant Secretary of State, is illuminating:
JOHNSON: When you received a telegram from the minister at Bogota, it was read over the telephone to Mr. Lancaster [of counsel for the National City Bank]?
WHITE: That is right.
JOHNSON: Do you refuse to produce that telegram ?
WHITE: I will have to take the matter under advisement.
JOHNSON: Do you mean to say that your policy is that you will read a telegram over the telephone to a representative of New York bankers, and yet you will deny that same telegram to the Senate of the United States?
WHITE: I do not deny it to the Senate of the United States. But I do deny it to the press of the country.
JOHNSON: You deny it to the press of the country?
WHITE: Yes, sir.
JOHNSON: Yet you thought it very proper to read it to the representative of bankers in New York. [20]
Independent foreign corporations may float securities in the American market on a purely investment basis. Usually, however, flotations of foreign corporate securities represent either corporations under American control or in alliance with an American combination. The export of capital is bound up, directly or indirectly, with the efforts of monopoly to become international.
Monopoly capitalism and imperialism reproduce, on a world scale, the conditions of domination within the national borders. Power fuels and metals and the industries they sustain, including machinery, are basic in the modern economy; their control means supreme power. Giant monopolist combinations are in mining, iron and steel, oil, light and power, electrical manufactures, chemicals, and transportation. This is the dominant inner zone, in which the Morgans, Rockefellers, du Ponts, Guggenheims, and Mellons move and have their being; or rather, control of which, through the relations of finance capital, yields them their power. An intermediate zone is composed of variegated industries, some approaching monopoly character, most “free” industries exploited by monopoly. The outer zone of agriculture is a limbo, exploited by the inner zone and even by the intermediate. In the world economy there is an inner zone of major industrial-imperialist powers, an outer zone of producers of agricultural staples (mainly colonial), and an intermediate zone of countries approaching monopoly and imperialism, but dominated mainly by agriculture and “free” industries. [21] In addition to exploiting the agriculture and “free” industries of the outer and intermediate zones, imperialism aims to get control of the strategic resources and industries of all countries, and thereby make monopoly international.
The nature and objectives of the export of capital and imperialism necessarily mean a concentration of foreign investment in a few basic industries and enterprises. Of $2,178 million American capital invested in branch plants abroad, $1,145 million was in the production of raw materials, and that is independent of the investment in mining properties; of the capital in manufactures, more than half was in four basic industries. Over $1,000 million is invested in foreign power enterprises, whose control makes possible an exploitation of industry in general. In 1927, of $1,265 million American capital invested in Mexico, $911 million was in railroads, mining, oil production, and smelting. From 1914 to 1929, $5,113 million of foreign corporate securities were floated in the American market, the major groups being as follows: Public utilities, $1,206 million; railroads and ships, $1,004 million; banking, $700 million; mining, $646 million; manufacturers (mainly machinery, chemicals, textiles, and automobiles), $460 million. [22] Most of the corporations were owned or controlled by American interests or in alliance with them.
Minerals, which provide the metals for the construction of machines and the power to run them, are a decisive aspect of the export of capital and imperialism. (Some non-minerals, e.g., cotton, rubber, and raw sugar, are also important; the one affects British imperialist policy in Egypt, the other British, Dutch and American policy in Malaysia, the East Indies, the Philippines, and Liberia, the third, American policy in Cuba, Porto Rico, and Hawaii.) While no nation is self-sufficient in minerals, some have a larger resource endowment than others, and they are the highly industrial and imperialist nations. The world struggle for control of minerals has for its purpose either to supplement existing reserves or reserves approaching exhaustion, as in the case of the United States, Britain, and France, or to make up for a natural scarcity of essential minerals, as in the case of Italy and Japan. These purposes, under the influence of finance capital, are transformed into efforts to secure monopoly control for the mere sake of monopoly profits. Disproportions in the world economy created by the uneven distribution of mineral resources are made still greater by the monopoly controls of imperialism. [8*]
Monopoly controls affect, in general, only non-reproducible raw materials, especially oil and metals. It is more profitable to exploit “free” agriculture in the production of other materials ... British and American interests control the world’s oil reserves, 70% of which are located in economically backward countries. The ruthless struggle for supremacy, waged all over the world by one British and three or four American combinations, involves diplomacy and war ... Three nations and a handful of combinations control the world’s iron ore reserves. Two American corporations, which in ten years may need large imports of ore, own mines in Cuba, Brazil, Chile, and the Philippines; British interests own mines in Africa, Spain, and Canada, the French in North Africa, and the Japanese in Manchukuo ... No steel producing nation has sufficient resources of ferro-alloys, and they are important stakes of imperialist politics. American interests own manganese mines in Brazil and Cuba, the French in Morocco ... American interests control 38,000,000 tons of the world’s copper resources (20,000,000 tons in Latin America), the British 27,000,000 tons all in foreign countries, the Belgian 7,000,000 tons in the Congo, and the Japanese 4,000,000 tons. Part of the British reserves in Canada are owned by American capital. Ten combinations, two in the United States, control the copper industry. American efforts to acquire copper interests in Africa were repulsed by the British ... One British combination has a practical monopoly of the world’s tin, based on mines in the Malaysian colony. The United States has no tin, but one American corporation controls the tin mines of Bolivia, the only serious competitor of the British ... In alliance with two European groups, the Aluminum Company of America controls the world’s bauxite reserves; the Mellons also control the one world trust, the Alliance Aluminium Company, with a monopoly of aluminum production ... Zinc production is dominated by three American and five European companies ... The International Nickel Company of Canada, in which American interests acquired the majority stock in 1930, is a monopoly with a capacity in excess of the world’s needs. [23]
Monopoly controls of raw materials, actively supported by governments, arouse bitter antagonisms among nations. The situation is made worse by the fact that finance capital pursues a policy of monopoly profits independent of the interests of the home economy; thus the complaint is made that, because of the world interests of the copper combinations, “a program primarily designed for the American copper industry as such is impossible to conceive.” [24]
The struggle to control the world’s natural resources is interlocked with the struggle to control markets and investment opportunities in general. The most thorough form of control is colonial. All the imperialist powers have acquired large colonial empires: Britain, 13,616,000 square miles, population 417,000,000; France, 6,400,000 square miles, population 59,000,000; Belgium, Holland, Italy, and Portugal, 3,436,000 square miles, population 72,000,000; Japan, 478,000 square miles, population 25,000,000 (including Manchukuo). The “mother” country’s share in colonial trade, which has risen more in recent years than foreign trade in general, ranges from 33% in the case of Italy to 71% in the case of Japan. Manchukuo is a perfect colonial monopoly: it has absorbed more than $1,000 million of Japanese capital, 75% of its 1933 imports of $419 million were from Japan, its large resources of coal, iron, and shale oil are wholly under Japanese control, and its economic policy is decided by the South Manchuria Railway. [25] Colonial controls are being tightened. The British Empire is trying to become self-sustaining, a “closed economic system.” France is pursuing a similar policy. [26] Japan excludes other nations as much as possible from its colonial possessions. These measures constitute acts of aggression against both the colonies and other nations, and are especially resented by imperialist powers with small colonial domains.
Although the United States started late to fight for colonial empire, it has acquired a substantial share in the territorial division of the world. The share includes:
Latin America constitutes in general the colonial basis of American imperialism. Direct colonial control and its costs are avoided as much as possible; dependence is upon economic power and political overlordship. This policy may change as imperialist antagonisms sharpen. British, French, and other “alien” interests are being inexorably driven from Latin America, an enormous market for goods and capital, rich in natural resources. The American government may veto a concession to the nationals of any other power on the ground that it violates the Monroe Doctrine (which is a national doctrine of the United States and is rejected by Latin Americans). It means bolting the door against imperialist competitors. At the same time, American imperialism insists on the “open door” in China and elsewhere. While this policy appears to be one of “liberal” principles and “equality of opportunity,” it is in fact an imperialist challenge to redivide the world, to abrogate the controls of colonial monopoly, protectorates, and spheres of influence, whose abrogation might easily mean the competitive victory of American imperialism because of its enormous industrial and financial resources. The “doctrine” formulated by Secretary of State Stimson and affirmed by President Roosevelt, that violation of the “open door” in China would force the United States to adopt more aggressive measures to maintain its “rights,” was an openly imperialist threat of war.
Colonial enterprise yields large surplus profits. The major reason is low wages, the sweating of labor in the most merciless manner, including forms of forced labor indistinguishable from slavery. In 1933, when world copper prices were unprofitable, the British-Belgian copper mines in Africa made high profits: unskilled native labor was paid 15¢ a day, skilled labor $10 a month, with even lower wages in many cases. [27] These are the conditions in an American economic colony:
”How did the American tin magnates in Bolivia manage to make a profit in the face of extraordinary shipping costs? Wages were barely enough to live on, so that the Indians remained permanently in debt to the mining company. Over 50% of the population is living in peonage. Labor laws of Bolivia provide for the 8-hour day, but the 12-hour day is practiced. The 7-day week is common, while in one mine a continuous shift of thirty-six hours was the regular routine. The Patino mines, a National Lead subsidiary (an American company which controls 80% of the tin output), operated at a production cost 20% below the world average and declared 15% dividends ... The people living in this land of wealth are poverty-stricken. Only 9% of the national budget is devoted to education; 85% of the people are illiterate. Bolivia is virtually a colony of the United States; American investors own or hold mortgages on the whole land.” [28]
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These conditions are general in colonial and semi-colonial countries. The inhuman exploitation of labor yields a higher rate of profit. Low wages react and eventually produce low wages in the home country, while limited consumption limits exports and imports as financial profits grow, a tendency which is enormously strengthened by capitalist decline. The main result is an increase of capitalist parasitism and luxury.
Colonialism is only one aspect of the imperialist struggle for control of markets, natural resources, and investment opportunities. The struggle is limited to no particular part of the world; it includes agrarian and industrial countries. Imperialist capital is active wherever there are markets to control, natural resources to seize, strategic industries to monopolize, or “free” industries to plunder. French imperialism was strengthened (and a group of financial capitalists enriched) by seizure of the mining and metal industries of Alsace-Lorraine and the Saar, while German imperialism aimed to seize those of Belgium and Northern France. Where new or comparatively new industries are developing, such as electric power, aluminum, and rayon, imperialist capital penetrates even highly developed countries to secure monopoly control. British and American imperialism struggle desperately in Latin America, Canada, India, Australia, and Africa. American capital invades Britain, and measures have been taken to prevent its control of British combinations. British capital retaliates by invading the United States; the Royal Dutch strikes at Standard Oil in its own market by forming an American company, Shell Union Oil, with assets of nearly $500 million. Neither national nor colonial limits or interests hamper finance capital in its world operations, in the thrust for monopoly profits. The American Allied Chemical and Dye Corporation struggles aggressively for markets with its German and British rivals; yet, the Corporation complains, American financiers invest capital in both the British and the German chemical combinations. [29] In 1930 American and British interests formed the General Telephone and Electric Corporation to compete with the International Telephone and Telegraph Corporation, subsidiary of the American Telephone and Telegraph Company. [30] Monopoly profits become more important than the export of goods. Tariff barriers may keep out goods, but not capital. The general situation appears clearly in the distribution of American foreign investments in 1932 [31]:
In the struggle for control of the world’s markets, natural resources, and investment opportunities American monopolist combinations meet the competition of foreign combinations, with a consequent intensification of international competition and antagonisms. Even more than in the home markets monopolist combinations aggravate competition in world markets. Attempts are made to limit competition by division of markets, stock interests in competing combinations, and interlocking directorates. The Alliance Aluminium Company unites aluminum producers into a world trust; the American I.G. Chemical Corporation combines American and German chemical interests; the French and German chemical trusts make an agreement; General Electric, through its subsidiary, International General Electric, acquires substantial interests in German and French electrical manufacturing combinations; the Electric Bond and Share Company, with interests throughout the world, becomes a factor in British and International Utilities and in the Adriatica-Volpi power group. [32] These are merely a few illustrations of the interlocking of monopoly interests. In addition, cartels are formed for steel, zinc, copper, rayon, nitrates, tin. But the cartels are engaged in perpetual internecine warfare over prices and quotas, the same warfare that goes on within national cartels.
Agreements, alliances, and cartels are only armistices in the struggle for monopoly control and profits; they are repeatedly violated, especially in depression. All international cartels have been weakened or dissolved since 1929. Competition assumes more savage forms. Cooperation becomes itself a source of strife. At the head of the Bagdad Railway, one of the causes of the World War, were fifteen Germans, six Frenchmen, and three Belgians, who were perpetually struggling and intriguing for a larger share of the enterprise. [33] International finance capital prepares imperialist war.
The economic division of the world among monopolist combinations and its territorial division among imperialist powers drives fatedly to war. Imperialism resorts to the arbitrament of the sword to maintain its “right” to exploit the world’s peoples and resources, to overcome competitors. After analyzing the bitter struggle between American and British capital throughout the world, an American “liberal” imperialist concludes: “Either the supremacy of America will be recognized by Britain in peace, or that supremacy will be asserted in battles of blood.” [34] In other words: “Yield! The world is ours.” But there is no such simple yielding. Now a world power, the United States is aggressively and insolently aware of its might. It stands athwart the imperialist ambitions of Britain in Latin America, of Japan in China. A struggle looms for control of the Pacific. Conferences are held. The League of Nations invokes peace where there is no peace. The “agreements” and “understandings” parallel the maneuvers of the European powers prior to the World War. Meanwhile antagonisms multiply and the powers prepare war – against each other, against the Soviet Union, an incalculable revolutionary force, whose overthrow might yield imperialism a new lease on life. The war danger becomes momentarily more threatening.
For imperialism must aggravate international contradictions and antagonisms, precisely as monopoly does within the national economy. Monopoly defeats its own purpose if it includes all industry: there can then be no monopoly profits. Combinations must plunder each other and the “free” industries. So imperialist nations must plunder each other while they plunder the economically backward peoples. But these peoples, even if on a lower level, develop their own industrialism, with excess capacity, surplus goods, and surplus capital. These torments of capitalist production are aggravated within the imperialist nations. As the surplus of goods and capital mounts, markets are limited, and the international long-time factors of expansion are exhausted, imperialist nations must compete more aggressively with one another, in the same manner as combinations within the nation are forced to compete more aggressively. Monopolist combinations, moreover, are under pressure of the general capitalist needs of the national economy; and however much they pursue a policy independent of those needs, the pressure is still there, with frequently explosive results. There can be no unity of imperialism, no agreement to cease competition and warfare. And if, temporarily, an “ultra-imperialism” were possible, what would it mean? It would mean more ruthless exploitation of non-imperialist peoples, stagnation, low wages, and unemployment in the home economy, an accumulation of underlying contradictions and antagonisms which would inevitably explode into new wars. As the basis of imperialism narrows and the decline of capitalism becomes more acute, an intensified struggle ensues for the redivision of the world.
A liberal student of imperialism writes: “Backward countries and colonies are not necessaries but luxuries for expanding capitalism. Fundamentally, economic imperialism is a symptom of overgrown production and excessive profits. But the lag between consumption and production may be reduced either by diminishing production, or, more comfortably, by increasing consumption. This means more wages and more spending and less profits and less investing. [35] Exactly! It is, however, precisely to avoid “less profits and less investing” that monopoly capitalism resorts to the export of capital and imperialism. And the “lag” or antagonism between production and consumption is an inherent contradiction of capitalism, an inseparable aspect of the accumulation of capital. Imperialism is a means for accumulation on an ascending scale. The liberal prescription asks capitalism to commit suicide. In theory, the demagogic spokesmen of the NRA want to “adjust” consumption to production; in practice, they encourage profits, stimulate exports, fight for American “rights” in Latin America, and prepare for war. The Nazis forget Autarkie, the “closed economic system,” use government power to force exports, cast hungry eyes upon undeveloped territory, and prepare for war. Mussolini, in 1934, formulates a sixty-year program of imperialist expansion in Africa and Asia, “after which Italy will have the primacy of the world,” and prepares for war. [36] State capitalism and fascism aggravate the antagonisms of imperialism by measurably merging industry and the state, by making the state more “planfully” an organ of finance capital: the struggles of monopolist combinations to control the world become more quickly “national” issues and more easily lead to war.
Monopoly capitalism and imperialism breed reaction as well as war. Imperialism exploits a country partly in alliance with its most reactionary social groups, against the workers and peasants. They may be feudal-agrarian groups; or rising capitalist groups, who are afraid that an aggressive struggle for national liberation might result in worker-peasant revolutions. The historic policy of British imperialism is also the policy of American imperialism. Financially and politically the United States upholds the most reactionary forces in the Philippines, the unspeakable dictatorship of Gomez in Venezuela and of other Latin-American tyrants. (American capital, both loans and direct investments, were of enormous service in the consolidation of the fascist dictatorship in Italy.) The counter-revolutionary forces in Mexico were encouraged by the American government. It upheld the Machado dictatorship in Cuba; except for the American threat of intervention, according to one bourgeois commentator, “the people of Cuba would long since have driven Machado out of power. The State Department has uniformly thrown its influence against any revolt.” [37] And when the revolt took place, the State Department and its agents intrigued against the more radical governments and helped to restore a regime not much different from Machado’s. [9*] Imperialism has consumed the liberalism of American pre-imperialist international policy.
Imperialist repression and reaction in colonial and other “backward” countries react and intensify repression and reaction in the home country. For monopoly capitalism and imperialism revolt against both free competition and its liberal ideology. “The substitution of monopoly for free competition,” according to a bourgeois scholar, “has assimilated the views of the commercial classes to those held formerly by feudal aristocracies.” [38] Imperialism and fascism, which merge into one violent reactionary and aggressive force, are the most perfect expression of monopoly’s retrogressive tendency.
At the same time imperialism strengthens the tendency toward economic stagnation and parasitism. The increasingly parasitic nature of capitalist ownership is revealed most strikingly by imperialism. [10*] A handful of investors in six imperialist powers own, directly or indirectly, foreign investments of probably $55,000 million, yielding an income of at least $3,000 million yearly. Ownership is almost wholly impersonal and institutional. More than half the American foreign investments of $18,000 million are owned by combinations and nearly $1,000 million by banks, in addition to other institutional holdings. The income is received by a handful of investors, who know nothing of the source of the income. Another handful own the personal holdings: $1,250 million of German government and corporate bonds are owned by 200,000 American investors; five foreign government issues in 1923-25, totaling $380 million, were bought by only 104,713 investors. [39] (Yet the Foreign Bondholders Protective Council makes the interests of its members coextensive with those of the American people; a government corporation is urged to protect the interests.) [40] To insure the tribute of these parasitic rentiers, foreign labor is mercilessly exploited, governments increase their armaments, and wars are waged.
This parasitism is accompanied by a tendency toward stagnation in the home economy. While colonialism and the earlier imperialism emphasized the export and import of goods, later imperialism makes the export of capital more important than the export of goods. For finance capital is interested primarily in profits, not in goods or the home economy. Branch plants in foreign countries yield profits mainly independently of the home economy. Mining combinations produce minerals abroad, even if it hurts the home industry, and sell the output in any market. The bitter struggle between American and British capital for control of the world’s electrical communications, latent with the threat of war, involve only small profits on the export of equipment (although this is a factor): the main profits are “earned” independently of the export of goods. The American electrical manufacturing combinations, General Electric and Westinghouse, own or control light and power systems in Latin America, Europe, and Asia. These interests were originally acquired to provide and control markets for machinery and apparatus, but that purpose is now subordinate to the profits secured from operating revenues. The capital with which combinations operate in foreign countries is increasingly derived from reinvested profits, and tends to separate international finance capital more completely from its contacts with the home economy. Thus in Cuba, in 1928, of the American capital investment of $1,140 million, not more than $500 million represented an export of new capital [41]; the balance was capitalized profits. The interest received on American foreign investments in 1928-29 was almost as great as the export of capital in those two years. In Britain before the World War the income from foreign investments had already become more important than the net gains from foreign trade. According to the Board of Trade, the British income from foreign investments in 1933 was 155 million, the profit on the export of goods only about 35 million. [42] American exports and imports in 1920-30 amounted to $102,000 million. [43] Assuming a profit yield of 10%, the total profits from foreign trade were $10,200 million, only slightly more than the foreign investment income of $9,896 million. In 1930, the income from foreign investments was greater than the profits from foreign trade, nearly $1,000 million compared with $730 million. The income from foreign investments, which increasingly represent the export of interest on existing investments, not the export of new capital or goods, is derived from no economic activity within the home economy, produces no employment, wages, or mass consumption. It merely augments the income and strengthens the parasitism of the financial oligarchy, of rentiers: a supreme expression of the tendency of monopoly capitalism to make the production of financial and speculative profits more important than the production of goods. The workers “gain” only from greater demand for luxury goods and servants.
The parasitism of imperialism strengthens the tendency of monopoly capitalism toward economic stagnation and decay. Monopoly acts as a relative check upon production, emphasized by the exhaustion of the inner long-time factors of expansion. This is partly offset by the export of capital and imperialism, in their earlier stages; but the later stages intensify stagnation and decay. One aspect of these developments is the necessity for an imperialist nation to increase its imports; for not all the interest on foreign investments can be reinvested, part of it must be consumed. Since 1900 the British excess of imports over exports has risen enormously, tribute wrung from “backward” peoples. A similar necessity is developing in the United States. But the imports will be limited to a few categories. Monopolist combinations will not permit the import of goods which threaten their own markets. They must be primarily goods produced by the “free” industries, whose chaos and decay are aggravated. Above all, they must be goods produced by agriculture (and mining products, because monopoly can recoup itself in foreign markets). The agricultural crisis becomes more acute, the farmers thrust more rapidly downward into the peasant class. [11*] As the income from foreign investments is of foreign origin and concentrated in a handful of investors, it represents no home employment, wages, and mass purchasing power; only this income, therefore, can buy the “excess” imports (or their equivalent). Local production and goods are displaced. Employment and wages fall, particularly as, under the conditions of decline, low colonial wages exert a greater downward pressure on home wages. Thus the export of capital and imperialism, an effort to escape decline, react and intensify the decline of capitalism. This economic undermining is accompanied by political undermining; for colonial revolts against imperialism tend to become struggles against capitalism itself, a phase of the same struggle in the “mother” country.
All these contradictions and antagonisms, mass disemployment, lower standards of living, and the threat of more destructive wars result from violation of the imperative mandate of objective conditions which demand new social relations of production. Monopoly and finance capital exploit the objective socialization of production, they prevent the forces of consumption developing commensurately with the enormous forces of production of modern society, prevent a new society from emerging. Imperialism exploits the increasingly international character of industry, the constantly greater economic interdependence of nations, which is economically distorted to yield profits and is politically converted into a source of conflict and war.
Thus imperialism is the final expression of the decline and decay of capitalism. It is marked by wars and revolution. For as war comes, communism issues its call to transform the imperialist war into a civil war of the oppressed against the oppressors – a struggle for socialism ...
In the national economy, there is no going backward to small-scale production: we must go onward toward the new social relations implicit in the socialization of production, toward the planned economy of socialism. In the international economy, there is no going backward to small-scale national units of production: we must go onward toward the new international relations implicit in the economic interdependence of nations, toward the planned economy of world socialism. Both these measures necessitate abolition of the profit motive, of capitalist production. There must be a cooperative, rational, planned distribution of the world’s natural and industrial resources: regional (not merely national) planning as the basis of unified international planning.
Both internationalism and large-scale industry (which does not exclude the largest possible measure of decentralization, especially the unity of industry and agriculture) must be accepted, released from the fetters which destroy their promise. The internationalism of free competition, of industrial capitalism, was progressive in spite of its predatory aspects; it thrust the world onward to a new order. The imperialist internationalism of monopoly capitalism is wholly predatory, it thrusts the world backward to reaction and war, the strangling of progress. Socialist internationalism, arising out of objective economic necessity and the conviction that complete socialism is possible only on a world scale, is wholly progressive, the expression of an economy of abundance and peace: an internationalism which does not exclude national and regional differences in culture, for the merging of the strains makes a finer world symphony.
1*. “To the extent that foreign trade cheapens partly the elements of constant capital [equipment and materials] partly the necessities of life for which the variable capital [wages] is exchanged, it tends to raise the rate of profit by raising the rate of surplus value and lowering the value of constant capital. It exerts itself generally in this direction by permitting an expansion of the scale of production ... Capitals invested in foreign trade are in a position to yield a higher rate of profit, because they come in competition with commodities produced in other countries with lesser facilities of production, so that an advanced country is enabled to sell its goods above their value even when it sells them cheaper than the competing countries ... In the same way a manufacturer, who exploits a new invention before it has become general, undersells his competitors and yet sells his commodities above their individual values, that “is to say, he exploits the specifically higher productive power of the labor employed by him as surplus value. By this means he secures a surplus profit. On the other hand, capitals invested in colonies, etc. may yield a higher rate of profit for the simple reason that the rate of profit is higher there on account of the backward development.” Karl Marx, Capital, v.III, pp.278-79.
2*. “The receipt of monopolistically high profits by the capitalists of one of numerous branches of industry, of one of numerous countries, etc., makes it economically possible for them to bribe individual strata of the workers, and sometimes a fairly considerable minority of them, and win them to the side of the bourgeoisie of an industry or nation, against all the others. The intensification of antagonisms between imperialist nations for the partition of the world increases this tendency. 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 apparent there much earlier than in other countries.” V.I. Lenin, Imperialism, the Highest Stage of Capitalism, pp.113-14.
3*. “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 foremen and of the better-paid workers. Imperialism has the tendency to create privileged sections even among the workers, and to separate them from the main proletarian masses.” Lenin, Imperialism, p.96. The earlier manifestations of this tendency were enormously strengthened by monopoly capitalism. To-day, because of capitalist decline and the increase in the surplus population, the doors are slammed shut in the faces of immigrants.
4*. Another element in the Spanish-American War was the unrest of workers and farmers in the 1890’s. A ruling class may resort to war to stifle social discontent. The American victory was a contributing factor in the overwhelming re-election of McKinley.
5*. Of the foreign bond issues floated in the United States in 1920-30, J.P. Morgan and Company originated $1,807 million; the Guaranty Company, security affiliate of the Morgan Guaranty Trust Company, $540 million; the National City Company, affiliate of the National City Bank, $1,072 million; Chase Securities Company, affiliate of the Chase National Bank, Equitable Trust Company (absorbed by Chase National), and Harris, Forbes and Company (absorbed by Chase Securities), $1,300 million; Dillon, Read and Company, $1,491 million. U.S. Senate, Hearings Before the Senate Committee on Finance, Sales of Foreign Bonds or Securities in the United States (1932), pp.419, 501, 902, 1,263.
6*. “Imperialism is capitalism at that stage of development in which the domination of monopolies and finance capital has taken shape; in which the export of capital has acquired pronounced importance; in which the division of the world by the international trusts has begun, and in which the partition of all the territory of the earth by the greatest capitalist countries has been completed ... Imperialism, as understood in this sense, undoubtedly represents a special stage in the development of capitalism.” Lenin, Imperialism, p.81.
7*. In 1933, $1,400 million of Latin-American government bonds were in default, 60% of the total, while European government bonds suffered tremendous depreciation. This is nothing new. According to Max Winkler, Foreign Bonds: An Autopsy (1933), p.135, 54% of all foreign government obligations listed on the London Exchange were in default in 1880. Losses have been tremendous. But the losses do not affect the bankers’ profit nor the direct investments of monopolist combinations. Investors in home securities suffer similar losses. It is part of the plunder extorted by the financial oligarchy. The losses, moreover, help to keep capitalism going by destroying capital and making new investments possible, precisely as the losses of competition and depression help to maintain or restore “normal” investment and productive relations. Crazy? It is capitalist production. The losses of British investors in foreign securities did not prevent an increase in the export of capital.
8*. Some of the disproportions and monopoly controls are being broken by synthetic raw materials, but only partly, because they are as yet limited and their production requires large amounts of capital. Synthetic materials introduce new elements of instability by their effect on prices; in the case of Chile, its national economy, which had come to depend upon the production of nitrates owing to the pressure of imperialist capital, was disrupted by the competition of synthetic nitrates.
9*. The gesture of the Roosevelt Administration to “free” Cuba of the Platt Amendment is practically meaningless. This is admitted in an editorial of the New York Times, May 31, 1934: “It remains true that, with or without a treaty, the American government may lawfully intervene to protect its own nationals or their property ... Moreover, the retention of the naval base at Guantanamo is a clear indication that Cuba is embraced within the plans of the United States for national defense. Guantanamo has its relation to the Panama Canal and also to the Monroe Doctrine ... All this must be clear to intelligent Cubans. Their rejoicing over the abolition of the Platt Amendment is largely sentimental.”
10*. Imperialism is a “social parasitic process by which a moneyed interest within the state, usurping the reins of government, makes for imperial expansion in order to fasten economic suckers into foreign bodies so as to drain them of their wealth in order to support domestic luxury.” J.A. Hobson, Imperialism (1902), p.389
11*. “We are now in that blessed state of being a creditor nation. The rest of the world must every year produce at least $1,000 million of goods and services over and above local needs to pay us our pound of flesh in interest charges. It must be axiomatic that our debtors neither will be able to pay nor, what is more important, be in a position to borrow further unless they are permitted to produce those commodities they are capable of most easily. It is foolish to expect that American finance capitalism in the long run will at once subsidize American commercial agriculture and encourage other commercial agricultural economies to expand. A choice is imperative, for the world market for foods is contracting. The course England followed in the 1850’s and 1860’s, because it was dictated by necessity, is the same round we must embark on ... To keep South America and China open for American capital: to build railroads, wharfs, and power transmission lines; to finance governments so that they may embark on public construction programs; to open mines, dig oil wells, cut down forests; to lend local enterprisers money for the erection of factories: the world – and that includes the United States – must be permitted to buy Manchurian (and eventually Mongolian) wheat and soy beans, Uruguayan and Brazilian jerked beef, Argentinian wheat, corn, mutton, and chilled beef ... American commercial agriculture is doomed. No gifts of clairvoyance are required to foretell that the future of the American farmer is the characteristic one of all peasants for whom, in our present system of society, there is no hope.” Louis M. Hacker, The Farmer is Doomed (1933), pp.29-30, 31.
1. Achille Viallate, Economic Imperialism and International Relations During the Last Fifty Years (1923), p.60.
2. C.K. Hobson, The Export of Capital (1914), p.58.
3. Hobson, Export of Capital, p.59.
4. J.A. Hobson, Imperialism (1902), p.60.
5. Franklin H. Giddings, Democracy and Empire (1901), p.274.
6. Leland H. Jenks, Our Cuban Colony, A Study in Sugar (1928), pp.33-37; R.D. Gibson, Forces Mining and Undermining China (1914), pp.168-69; Leslie Bennett Tribolet, International Aspects of Electrical Communications in the Pacific Area (1929), pp.157-58; Walter Millis, The Martial Spirit (1932), pp.27, 47.
7. Giddings, Democracy and Empire, p.283-84.
8. Brooks Adams, America’s Economic Supremacy (1900), pp.1, 12, 23, 32, 222.
9. Editorial, Bankers’ Magazine, August 1900, p.160.
10. Lewis Corey, The House of Morgan (1930), pp.322-37.
11. C.W. Phelps, The Foreign Expansion of American Banks (1927), pp.146-48; Robert W. Dunn, American Foreign Investments (1926), p.161.
12. Max Winkler, Foreign Bonds: An Autopsy (1933), p.xix; Editorial, New Republic, January 27, 1932, p.283.
13. L. Bader, World Developments in the Cotton Industry (1925), p.179.
14. C.E. Fraser and G.F. Doriot, Analyzing Our Industries (1932), p.26.
15. O.H. Cheney, America in the World Steel Market, Annalist, November 25, 1927, p.819.
16. New York Times, June 22, 1933.
17. Editorial, The Economics of the Chaco War, New Republic, February 22, 1933, p.33.
18. J.F. Normano, The Struggle for South America (1931), p.66.
19. Winkler, Foreign Bonds, p.xvi; New York Times, October 25, 1933; Editorial, Wrecking a Continent, New Republic, September 27, 1932, p.276; United States Senate, Hearings Before the Senate Committee on Finance, Sales of Foreign Bonds or Securities (1932), pp.1289-95.
20. United States Senate, Sales of Foreign Bonds, pp.1849-67; Harvey O’Connor, Mellon’s Millions (1933), pp.194-206.
21. Erich W. Zimmerman, The Resource Hierarchy of Modern World Economy, Weltwirtschaftliches Archiv, April 1931, pp.458-63.
22. Department of Commerce, American Underwriting of Foreign Securities in 1929 (1930), p.14; New York Times, February 20, 1927.
23. B.R. Wallace and L.R. Edminster, International Control of Raw Materials (1930), pp.244-46; Alfred Marcus, Metals, Encyclopedia of the Social Sciences, v.X (1933), pp.364-88; C. L. James, International Control of Tin Ore, Harvard Business Review, October 1932, p.69; New York Times, December 2, 1930; J.W. Frey, Geographic Distribution of World Mineral Production, Mineral Economics (1932), pp.46-48.
24. C.H. Huff, The Copper Industry, New York World-Telegram, December 13, 1932.
25. Parker T. Moon, Imperialism and World Politics (1926), pp.515-16, 519; Business Week, January 25, 1933, p.24; New York Times, January 2, 1934; April 1, 1934.
26. New York Times, May 10, 1933.
27. New York Herald Tribune, February 11, 1934.
28. Editorial, The Economics of the Chaco War, New Republic, February 22, 1933, pp.33-34.
29. Ludwell Denny, America Conquers Britain (1930), p.332.
30. Battle for World’s Telephones, Business Week, October 20, 1930, pp.11-12.
31. Winkler, Foreign Bonds, p.xiv.
32. F.M. Turner, The Dye Industry, Annalist, December 7, 1928, p.893; New York Times, June 4, 1930; Moody’s Manual of Investments, Public Utilities, 1932, under names of the respective companies.
33. M. Pavlovitch, The Foundations of Imperialist Policy (1922), p.66.
34. Denny, America Conquers Britain, p.402.
35. Moon, Imperialism, pp.539-40.
36. New York Times, March 19, 1934.
37. Raymond Leslie Buell, New York Times, August 12, 1933.
38. M.J. Bonn, Imperialism, Encyclopedia of the Social Sciences, v.VII (1932), p.613.
39. Who Buys Foreign Bonds and Why, Literary Digest, January 29, 1927, p.60; New York Times, December 19, 1931.
40. New York Times, September 7, 1933; December 19, 1933.
41. Jenks, Our Cuban Colony, p.298.
42. New York Times, February 23, 1934.
43. Department of Commerce, Statistical Abstract of the United States, 1931, p.483.
Last updated on 29.9.2007