The second part of this article was published on our website here.
By Florence Oppen
Today many people use the word “imperialism” with a wide variety of meanings. There is however, a popular use and understanding of “imperialism”, especially in the social movement milieu, and among Black and Brown communities, which has a clearly negative connotation: “imperialism” is used to refer to a way of conducting an aggressive and militaristic foreign policy, one rooted on war, invasion and intervention in the internal affairs of other countries. In many ways, imperialism is used as a synonym for hierarchy between countries, colonial expansion, and violence. But why did these historically violent processes emerge and continue to occur? Are they a fate of human nature?
In this two-part article, we want to explore the key features of the Marxist concept of imperialism, which was first developed by Marxists inside the Second International in the 1910s, and also to give an updated understanding that applies to the 21st Century. The largest socialist parties in the 19th century were rooted in European industrialized countries, which were going through a new phase of rapid colonial expansion driven by capitalist development. The position of socialists in relation to this expansion was a point of heated debate, which, among other differences, led to the split between revolutionary socialists and reformist socialists (or social-democrats) on the eve of World War I.
In 1916, Lenin published a theoretical text (Imperialism, the Highest Stage of Capitalism) to define imperialism as an economic system and not just as a way of conducting political affairs or as “bad government”. He defined imperialism as a new phase or stage of capitalism, one that breeds violence, wars and increasing inequalities. Lenin coupled his scientific study of imperialism with political texts on the right of self-determination of oppressed nations, establishing a strong theoretical basis to regroup revolutionary workers under a clear understanding of the nature of imperialism and a common anti-imperialist strategy. These texts were foundational positions for the Third International and for the clear division between social-democracy (or reformist socialism), which ended up supporting wars and capitaluting to nationalist and racist versions of “socialism”, and revolutionary socialism that was clearly internationalist and definitely on the side of oppressed peoples, ready to fight for their liberation on a principled basis.
We argue that we still live in an imperialist world, a world of advanced and decaying capitalism as the one described by Lenin, even though some important mutations of the imperialist system developed after WWII. We think it is of utmost relevance for working people in the United States, and for union organizers and social activists, to have a clear understanding of imperialism. Our slogan as socialists and union militants is “workers of the world unite”. Yet one cannot really unite the working class in the U.S., let alone in the rest of the world, which has been divided along multiple ethnic and national lines, without questioning and combating the existing relations of oppression and over-exploitation generated by the imperialist system.
The Emergence of Imperialism as Monopoly Capitalism
The term “imperialism” emerged with the expansion wars of Napoleon III in the 1860s, and it became synonymous with the surge of European colonial conquests in the 1890s. As Lenin and other Marxists pointed out, these colonial wars did not occur in a vacuum, nor were they simply a matter of “aggressive foreign policy”. Quite the opposite, they were a response to an economic logic of the maturing industrial capitalist system that most ruling elites saw as “natural” and “inevitable”: the emergence of monopoly capitalism.
In his study of imperialism, Lenin followed Marx’s critical insights on the true nature of the capitalist economy and its inherent tendency towards the concentration and centralization of capital: “Half a century ago, when Marx was writing Capital, free competition appeared to the overwhelming majority of economists to be a ‘natural law’. Official science tried, by a conspiracy of silence, to kill the works of Marx, who by a theoretical and historical analysis of capitalism had proved that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly. Today, monopoly has become a fact.”[1]
In the early 19th Century, small and medium-sized companies abounded in each branch of industry. In that period of capitalist development, labeled as “free competition,” the tendency of markets was to increase the productivity of workers, to drive prices down, and to run companies that were unable to make sufficient profits out of business. This was a period of recurrent bankruptcies, with established businesses purchasing smaller or growing companies, and a rise of “large-scale corporations”. Lenin identified a dual process of concentration and combination of production: concentration was the absorption of smaller companies by bigger ones within a sector, and combination was the process of “grouping in a single enterprise of different branches of industry, which either represented the consecutive stages in the processing of raw materials … or are auxiliary to one another.”[2]
This twofold process of concentration and combination of the industry accelerated after the economic crisis of 1873 and peaked in the 1880s, producing as a result the consolidation of production into the hands of monopolies or trusts, where entire branches of industries were dominated by a handful of big national corporations. This process was very prominent in oil, coal and steel production, where, for example, the Rhine-Westphalian coal production in Germany controlled 86.7% of the output in 1893, and the U.S. Steel Corporation accounted for 66.3% of the total steel output in the U.S in the early 20th Century.
This defining feature of imperialism as an era of “monopoly” capitalism is still in effect today. Most of the industrial and service sectors are highly concentrated and dominated by 1 or 3 giants with no significant competition—e.g. Apple, AT&T, Chevron, GM, General Electrics, Johnson and Johnson, WarnerTimes Corporation, etc.. As Lenin pointed out, “Cartels come to an agreement on the terms of sale, dates of payment, etc. They divide the markets among themselves. They fix the quantity of goods to be produced. They fix prices. They divide the profits among the various enterprises, etc.”[3]
There are many problems with monopolies and cartels. The major one is that they control the market to keep prices high, thus ensuring profits. The antitrust laws and efforts to break monopolies apart have repeatedly failed. This is because monopolies began to gain direct political access and partial control of the state apparatus in imperialist countries in the early 20th century. This process led to the undermining of bourgeois democratic institutions and procedures, such as elections and parliament. Big cartels developed powerful think-tanks, lobbying groups, and the means to influence government through secret meetings and back-door deals. Finally, monopolies limit and subordinate technological innovation and key advances to the narrow goal of the production of profit, often burying true innovative projects that would benefit humanity (particularly in the field of public health and environmental justice) in order to protect their existing products and marketing strategies.
The Consolidation of the Banking Industry After the Financial Crisis of 2008
“Between 1992 and 2017, the number of commercial banks in the United States has decreased from 11,463 to 5,796, or approximately -49%. The decrease can be attributed to bank mergers, acquisitions and consolidations, which resulted in the fall of small banks and the growth of large and giant banks. In 2017, there are fewer than 5,700 small and mid-sized banks remaining. They collectively hold 17% of all commercial bank assets and make up only 21% of commercial loans and leases. In contrast, there is a total of 122 large and giant banks that collectively control 82% of all commercial bank assets and are responsible for making 78% of commercial loans and leases. JP Morgan Chase Bank, Bank of America, Citibank, and Wells Fargo Bank are the four largest commercial banks in the United States and collectively hold about a 41% share of total bank assets in 2017.”
Source
The Role of the Banks and Finance Capital
Banks played and continue to play a key role in the constitution of big industrial trusts and monopolies. While initially banks were only intermediaries in financial operations, by the end of the 19th century, and with the beginning of the process of concentration, they become directly involved in industrial production. Because large monopolies require huge quantities of capital to operate, they become more heavily dependent on banks. Banks, on the other hand, also utilized a similar process of concentration, which enabled them to accumulate large amounts of capital to finance the big industrial giants, mainly in the oil, infrastructure and manufacturing industries in the early 20th century.
However, a qualitative change occurred through the combination of these concentration dynamics in the two main areas of capitalist economy: commodity production and banks. The process of concentration of banks led to the emergence of giant financial entities that began to buy shares of the industrial trusts they lent money to, so they could better control their operations and “obtain fuller and more detailed information about the economic position of its client.” The result of this process is, as Lenin pointed out, “that the industrial capitalist becomes more completely dependent on the bank.”.
This fusion of monetary and industrial capital is what Lenin calls “financial capital,” which is the byproduct of this mutation of capitalism. Financial capital, the defining feature of imperialism, structures a capitalist market economy dominated by large monopolies, which in return are controlled by giant banks and financiers. Lenin remarked that “a personal link-up, so to speak, is established between the banks and the biggest industrial and commercial enterprises, the merging of one with another through the acquisition of shares, through the appointment of bank directors to the Supervisory Boards (or Boards of Directors) of industrial and commercial enterprises, and vice versa.”
A century later, this defining feature of imperialism in the early 20th century is more true than ever. A 2011 study by Swiss researchers that analyzed 43,000 transnational corporations, found that 147 of today’s corporations (less than 1% of the total surveyed) control 40% of the total global wealth. The study also shows that 75% of those companies are financial corporations (J.P. Morgan, Citigroup, BNP, HSBC or Credit Suisse being at the top).[4] And of these top 200 corporations, 122 are located in 5 imperialist countries (or rather, we call these countries imperialist because these are the homelands of those powerful corporations that control the national states and the world market).
“World’s eight richest people have same wealth as poorest 50%”
As this recent article from The Guardian shows, income inequality and the excessive concentration of global wealth into the hands of a few families, conveniently located in imperialist countries, is still a defining feature of our society, perhaps this is the most visible symptom of the decaying nature of the capitalist system:
“The world’s eight richest billionaires control the same wealth between them as the poorest half of the globe’s population, according to a charity warning of an ever-increasing and dangerous concentration of wealth.
In a report published to coincide with the start of the week-long World Economic Forum in Davos, Switzerland, Oxfam said it was “beyond grotesque” that a handful of rich men headed by the Microsoft founder Bill Gates are worth $426bn (£350bn), equivalent to the wealth of 3.6 billion people…
Last year, Oxfam said the world’s 62 richest billionaires were as wealthy as half the world’s population. However, the number has dropped to eight in 2017 because new information shows that poverty in China and India is worse than previously thought, making the bottom 50% even worse off and widening the gap between rich and poor.”
Source
Imperialism: More than Wars
Imperialism is a phase of capitalism that is intrinsically linked to wars. Big corporations are in constant need of increasing their profits and thereby expand markets and find new resources to exploit. This pressure to “expand” and make more profits, is the same pressure that led to the early 19th century wave of industrialized-led colonization and appropriation of land and human labor by European and U.S. financial capital. It also led to major wars between the European Empires over control of key regions, as was the case with WWI, a conflict that left between 9 and 11 million casualties.
However, wars, population displacement, and phases of colonisation existed before the emergence of imperialism at the end of the 19th century (e.g. the genocide of Native American peoples and the enslavement of Black slaves in the Caribbean and U.S. South). This process of dispossession and accumulation was the economic precondition for the emergence of industrial capitalism in Western Europe. The fact that it was driven by a different stage of capitalism, a capitalist economy still in formation, does not make it any less terrible or morally reproachable.
Imperialism cannot be reduced to violence, wars and domination. These have been features of every class society and necessities for the emergence of industrial capitalism in Europe and the United States. But this cannot lead us to conclude that war and violence are a constant of human nature, like the liberal economist Joseph Schumpeter asserted in 1918, right after WWI, qualifying “imperialism” as “atavism”, and the manifestation of a “will to war,” a sort of “aggressiveness in itself” which was either a pre-capitalist “heirloom of the monarchical state”, of the warrior-like characteristic of the nobility, or simply a trait of human nature.[5]
Our understanding of imperialism and wars is an historical and materialist one, rooted in the contradictions that emerge from class society. The economic interests of the elites who advocate for war are not the same as the masses who are forced to fight and suffer the consequences of these conflicts. Wars and military violence are fueled by exploitation, and the need to protect concentrated economic and geopolitical power. However, the common explanations of war – those put forward by the ruling elites – range from overt racism and demonization of ethnic and religious groups, to the fatalistic conception that violence is a given of the human condition.
This is why we say that wars under imperialism are not a merely a question of “foreign policy”, rather they are the necessary continuation of the pursuit of profits by financial capitalists who control the state machine. Let’s take for example the invasion of Iraq, where the Bush administration fabricated lies of Saddam’s supposed “weapons of mass destruction” to justify the invasion and occupation. In fact we know today that the major motive of the war was the satisfaction of the geopolitical and economic interests of the Pentagon (and allied nations) and its co-conspiratorial corporate industries, including oil extraction and weapons manufacturing.
Blood and Oil, War at the Service of Imperialist Interests
“The use of force to protect oil is not a new phenomenon. The British Empire—which had long thrived on coal—first viewed oil as a major military priority during World War I, when oil-powered ships, tanks, and planes made their debut in battle. After the war, Britain extended its military reach to the oil kingdoms of the Persian Gulf, including Iran, Iraq, and Kuwait; the Soviet Union followed a similar path in the Caucasus, then a major producing area. The pursuit of foreign reserves also shaped the strategic plans of oil-poor Germany and Japan during World War II, prompting the former’s invasion of the USSR and the latter’s assault on the Dutch East Indies. The United States got into the act after the war, when it sought to establish a protectorate over Saudi Arabia and to deny the Soviet Union access to the greater Gulf region. In 1980, the protection of Persian Gulf oil was made an explicit goal of US foreign policy when President Jimmy Carter told Congress that the United States would use “any means necessary, including military force,” to block efforts by hostile powers to cut off the flow of petroleum. This doctrine was later among those cited by President George H. W. Bush to justify the first Gulf War, and clearly it remains in force. But while the Persian Gulf remains the major focus of American concern, it is not the only oil-producing region to provoke this sort of interest: the US military is being gradually transformed into a global oil-protection service.”
Source: Michael Klare, “More Blood, Less Oil,” 2005
Imperialism: More than Colonialism
Imperialism also cannot be reduced to colonialism, understood as “acquisition of and rule over territories (colonies) outside the mother country,” (23). Colonialism has an earlier history, which began with the Greeks and Romans (the first “empires”), and later the expansions of early modern colonial powers like Spain and Portugal. Colonialism, as a political process of conquest, has been inhabited by different economic logics of exploitation. As Saccarelli and Varadarajan explain: “The internal economic engine of Britain in the late nineteenth century, for example, was substantially different from that of sixteenth-century Spain. Whereas the latter essentially looted silver from the New World to fill the coffers of the ruling monarchy, the plunder exercised by the British was of a very different character, insofar as it fed into modern capitalist circuits of accumulation and investment that were simply absent in Spain. Colonialism in Spain merely led to the accumulation of wealth, while the colonies of British imperialism led to the accumulation of capital. From this standpoint, even the early English colonialism of the seventeenth and eighteenth centuries was qualitatively different from the enterprise exercised by Cecil Rhodes, in spite of the fact both happened to involve territorial possessions.”[6]
The late 19th century wave of colonisation was a specific development of imperialism, it responded to the economic pressures resulting from increased technical innovation and productivity as well as the rise of mass production. The emerging industrial monopolies needed an unprecedented access to raw materials, cheap labor and most importantly new markets to sell their products. This phase of colonization corresponds to the first wave of capital exports, and the progressive imposition of the capitalist mode of production all over the world.
If we reduce imperialism to colonization, we would have to conclude that the decolonization process which occurred mostly in the post war period (1945-1960) meant the end of imperialism. We know that this was not true. The defining feature of imperialism, the engine of the 19th century wave of colonial expansion and 20th century wars, was still alive after the decolonization phase and became even stronger in the post-war period. After WWII, the ruling classes of imperialist countries found new ways to increase their profits. Colonization as a form of political domination between states was formally gone, but the relation of over-exploitation of former colonized countries, economic dependence, and political inequality continued to develop.
The Control of Oil and the Iraq War
On March 20, 2003 the United States invaded Iraq, sending 145,000 soldiers to seize power in Baghdad after bombing major facilities in the country. The 11-years Iraq War produced more than 600,000 casualties, mostly Iraqi civilians. But in many regards the occupation is not over, for the U.S. left an embassy and military bases, with 17,000 state personnel and 5,000 military contractors. Why did the U.S. bomb and invade Iraq?
We all know that the official reason was to destroy the “weapons of mass destruction” (WMD) held by Saddam Hussein, and enforce security and “democracy” in the region. Today the American people, and people all over the world, know these were total lies. No WMD were ever found in Iraq, and we know that the the real motive for the war was securing privileged access to the exploitation of oil in what was at the time the second largest reserve of oil, after Saudi Arabia. In his 2007 memoir former Federal Reserve Chair, Alan Greenspan, famously confessed: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: that the Iraq War is largely about oil.” The same year, GOP Senator Chuck Hagel publicly declared: “People say we’re not fighting for oil. Of course we are.”
Investigators later revealed that not only had the Bush administration lied about the motives of war, but that the plan to invade Iraq was in the works since 2001. This plan was designed by a group of neo-conservative politicians, the Project for the New American Century (PNAC), with strong ties to oil monopolies and defense private contractors. Vice-President Dick Cheney, former CEO of the oil service company Halliburton, and National Security Advisor, Condoleezza Rice, who was close to Chevron, were key players in this project. But they were not only acting illegally to serve their personal interests, they were the instrument that allowed big oil monopolies (and all the industries that depend on oil, like car and other manufacturing) to secure access to natural resources. This is why virtually all GOP House and Senate Representatives, and 39% and 58% of Democrats respectively voted for one of the most immoral and farcical war authorizations (2002 AUMF) in the history of U.S. bourgeois democracy. The Bush doctrine of “Preventive War” was just the political cover of a desperate sector of financial capital that needed to launch war in order to secure future profits.
The plan to invade Iraq emerged from a crisis in oil production during a slowdown of the global cycle of production and investment. At the turn of the century there was a sharp rise in oil demand coupled with growing fears that oil reserves were not infinite. Control over these reserves was a key stake for survival for imperialist powers. In 2003, the Department of Energy was worried that United States depended on imported oil for about two-thirds of its total demand, and that by 2025, the US would depend on foreign countries for 70% of its oil.[7] This is why, as Michael Klare stated in Blood and Oil (2005), “the Persian Gulf countries had neither the will nor the capacity to increase their petroleum output and protect its outward flow. If the administration’s energy plan was to succeed, the United States would have to become the dominant power in the region, assuming responsibility for overseeing the politics, the security and the oil output of the producing countries.”[8]
But there was a small problem: the Iraqi government had nationalized oil in 1972. U.S. war investors had calculated that Iraq had a known reserve of 112 billion barrels, and in 2002 Iraq Senior Deputy Oil Minister went even further: : “we will exceed 300 billion barrels when all Iraq’s regions are explored,” and he went on to affirm that “Iraq will [then] be the number one holder of oil reserves in the world.”[9] The operation was promising to be immediately profitable: “Assuming fifty years of production and 40% royalties, Iraq could yield annual profits of $80-90 billion per year – more than the total annual profits of the top five companies, even in the banner year of 2003.’[10]
Nonetheless, the defining factor behind the invasion was the challenge posed by French (Total), Russian (Lukoil) and other oil companies that were already signing contracts of exploitation with the Iraqi government: “One of the documents produced by the Cheney group, made public after a long court case, is a map of Iraq showing its major oil fields and a two-page list of “Foreign Suitors for Iraqi Oilfield Contracts.” The list showed more than 40 companies from 30 countries with projects agreed or under discussion, but not a single US or UK deal. The list included agreements or discussions with companies from Germany, India, Italy, Canada, Indonesia, Japan and other nations, along with the well-known French, Russian and Chinese deals. The Cheney Group’s report, released in May, warned ominously of US oil shortfalls that might “undermine our economy, our standard of living, our national security.“[11]
In the Spring of 2001, the Bush administration, in alliance with the UK, decided to invade Iraq to ensure that it would be US and UK corporations (Exxon-Mobil, BP and Shell) that would get “dibs” on Iraqi oil. And in fact when the US-UK forces invaded the country, they immediately seized the major oilfield and refineries. In Baghdad, they set up a protective cordon around the Oil Ministry, leaving the rest of government and cultural institutions unguarded, allowing their looting and burning, as was the case with the National Library and the National Museum. On May 2003, after appointing Phil Carroll, a former high-ranking US oil executive, to assume control of Iraq’s oil industry, Bush issued Executive Order 13303, giving immunity to oil companies for all activities in Iraq and deals involving Iraqi oil. And what is most indignant: “On the same day, under pressure from the US and the UK, the UN Security Council passed Resolution 1483 which lifted the former sanctions and allowed the occupation authorities to sell Iraqi oil and put the proceeds in an account they controlled.”[12]
Now, the reality of the “seize Iraqi oil” operation proved to be less satisfying. The constant insurgency and attacks on oil pipelines and pumping stations by the armed resistance, as well as the unionization of oil workers put a severe limit to the economic profitability of the operation. In September of 2003 the U.S. had to constitute a costly special Task Force Shield to protect 340 key oil installations and 4,000 miles of pipelines. And it was only in the Spring of 2004 that output reached the pre-war average production rate of 2.5 million of barrels per day, although it fell again.[13] In 2009, production reached finally reached pre-war levels. The original plan was that foreign oil companies will be reaching a production level of 12 a million barrels per day in 2018. It was of course never reached. In 2016, production peaked at around 4.5 million and now all companies that are not making enough profits are lowering their production plateaus and aiming for 7 million barrels in 2022.[14]
Bibliography
Lenin, Imperialism the Highest Stage of Capitalism, (1916).
Emanuele Saccarelli and Latha Varadarajan, Imperialism, Past and Present, (2015).
[1] Imperialism, the Highest Stage of Capitalism
[2] Imperialism, the Highest Stage of Capitalism
[3] Imperialism, the Highest Stage of Capitalism
[4] https://www.newscientist.com/article/mg21228354-500-revealed-the-capitalist-network-that-runs-the-world/
[5] Emanuele Saccarelli and Latha Varadarajan, Imperialism, Past and Present, (2015). P. 24
[6] Emanuele Saccarelli and Latha Varadarajan, Imperialism, Past and Present, (2015). P. 23.
[7] US Dept. of Energy, International Energy Outlook, 2003.
[8] Michael Klare, Blood and Oil, The Dangers and Consequences of America’s Growing Dependency on Imported Oil, (2005) p. 82.
[9] https://www.globalpolicy.org/component/content/article/185/40586.html#notes
[10] James A. Paul, “Oil Companies in Iraq,” Global Policy Forum, November 2003.
https://www.globalpolicy.org/component/content/article/185-general/40586.html
[11] James A. Paul, “Oil Companies in Iraq,” Global Policy Forum, November 2003.
[12] https://www.globalpolicy.org/component/content/article/185/40586.html
[13] Dilip Hiro, “Greenspan’s Oil Claim in Context”, Global Policy Forum, September 2007.
https://www.globalpolicy.org/component/content/article/185/40693.html
[14] https://uk.reuters.com/article/uk-iraq-oil-contracts/oil-companies-temper-iraqs-dreams-of-production-expansion-idUKKCN1GQ1HD