Written by Florence Oppen
In the first part of this article we explained the origins of imperialism at the turn of the 20th century, which consisted of a qualitative mutation of capitalism characterized by the rise of industrial monopolies and the domination of financial capital. The imperialist world order, however, saw important changes and restructuring after WWII. While it kept its essence, it developed new mechanisms of economic and political domination. However, before delving into WWII and the post-war period, it is important to understand the structural transformations imperialism brought to the social and political arena, in particular to the working class, and to the bourgeois democratic regime.
Imperialism, the Rise of a Labor Aristocracy and Opportunism
An often overlooked trait of the transformations brought about by monopoly capitalism is the consolidation of a labor aristocracy (that is to say a top layer of privileged workers who among other things are better off economically, and have better working conditions). Imperialism created an increasingly stratified working class, both at the national and international, with different layers of wage workers having unequal living conditions and political rights.
The concept of a “labor aristocracy” was developed first by Engels in his study of the working class in England: “the English proletariat is actually becoming more and more bourgeois, so that this most bourgeois of all nations is apparently aiming ultimately at the possession of a bourgeois aristocracy and a bourgeois prolétariat alongside the bourgeoisie.” Engels and Marx argued that the British skilled workers (iron, steel and cotton textile mills) who had managed to establish unions, and negotiated between wages and stability of employment, began to behave as a “bourgeosified” layer of the class.
Looking to explain the historic betrayal of the Second International on the eve of World War I, Lenin established the connection between the rise of imperialism and the consolidation of a labor aristocracy on the one hand, and the triumph of opportunist trends among these top layers of the European working class on the other. In “Imperialism and the Split of Socialism”, a 1916 text that complements Imperialism, 1916 Lenin asserted that because “monopoly yields superprofits, i.e., a surplus of profits over and above the capitalist profits that are normal and customary all over the world” thus “the capitalists can devote a part… of these superprofits to bribe their own workers, to create something like an alliance… between the workers of the given nation and their capitalists against the other countries.(emphasis added)”
At no time did Lenin or other revolutionary Marxists drew mechanical or reductionist conclusions on a sociological basis. Recognizing the existence of labor aristocracy does not mean to assume that automatically all of those workers are conservative, nationalist, and tend towards opportunist agreements. What revolutionary Marxists tried to understand in the early 20th century was how to explain the quick rise and consolidation of social democratic reformism. For this it was not enough to analyze the revisions Reformists did to the Marxist program (i.e. a change in the ideas), they had to look at the material roots of such transformations.
Lenin defined opportunism as, “sacrificing the fundamental interests of the masses to the temporary interests of an insignificant minority of the workers or, in other words, an alliance between a section of the workers and the bourgeoisie, directed against the mass of the proletariat.” In this sense, Lenin saw the new labor aristocracy as the social base or the fertile ground for the consolidation of a class-collaborationist union leadership, and also of reformist mass social-democratic parties in the homeland of imperialist centers. Lenin never suggested however that those pressures could not be combated by revolutionaries. Yet in order to combat material pressures one needs to recognize them and take material measures to counter them.
Thus in the imperialist epoch, these new questions (which working class sectors were organized in, and also leading the party; the material independence of the party from all state apparatus; the effects of perks and material advantages stemming from union staff positions or elected offices in city councils or parliaments etc) were deeply debated by the revolutionaries regrouped in the Third International.
Imperialism, Fascism and the Crisis of Bourgeois Parliamentarism
The second political consequence of the rise of imperialism which was widely discussed by revolutionary socialists in the Third International was the destabilization of democratic or liberal regimes. The epoch of imperialism is usually known as that of inter-imperialist rivalry and competition, of wars and revolution. It was also a new form of highly centralized capitalism that eroded and put a strain on the modern forms of the bourgeois democratic regimes, and undermined the power and authority of the elected institutions.
Next to the formation of big monopolies controlled by a financial oligarchy, their think tanks, lobbies and other forms of political organization of these key sectors of industrial and financial capital also emerged, which wanted to gain direct access to the state, and to pressure and bargain for better deals, without having to go through the trouble or risk of engaging in parliamentary and electoral politics. These very powerful organizations began to operate in a parallel fashion outside of the elected institutions, undermining the normal functioning of bourgeois democracy, where the different factions of the bourgeoisie had to compete in elections, and parliament or congress were the central spaces of political negotiation and decision making of the bourgeois class.
Further, the accumulation of super-profits in the imperialist centers allowed for the growth of the state apparatus, the consolidation of bourgeois parties, and the integration of the major social democratic workers’ parties to the bourgeois regime. All these changes allowed for the emergence of what people perceive as a self-serving elite “political class” that controls state affairs. From the early 20th century, a privilege caste of professional politicians became in charge of running the state, following the marching orders of the “executive committee of the ruling class.” The state bureaucracy with its army of civil servants, the union staffers and leaders, the paid elected positions and staff in professional politics, all of these became additional mechanisms of integration of working class organizations into the bourgeois state.
As Lenin affirmed “on the economic basis referred to above, the political institutions of modern capitalism—press, parliament associations, congresses etc.—have created political privileges and bribes for the respectful, meek, reformist and patriotic office employees and workers, corresponding to the economic privileges and bribes. Lucrative and soft jobs in the government or on the war industries committees, in parliament and on diverse committees, on the editorial staffs of “respectable”, legally published newspapers or on the management councils of no less respectable and “bourgeois law-abiding” trade unions—this is the bait by which the imperialist bourgeoisie attracts and rewards the representatives and supporters of the “bourgeois labour parties”.”
On the other hand, the imperialist economic system which has no problem with resorting to undemocratic rule, wars, and systematic oppression, showed how far it was able to go in the face of a strong working class resistance. The political crisis of the 1929 crash combined with the victory of the Russian revolution and the growth of the communist parties in Europe showed that in times of crisis, fascism is a possible alternative for the most conservative sector of the ruling class: “insofar as the proletariat proves incapable, at a given stage, of conquering power, imperialism begins regulating economic life with its own methods; the fascist party which becomes the state power is the political mechanism.” Trotsky defined fascism as “not merely a system of reprisals, of brutal force, and of police terror” but as “a particular governmental system based on the uprooting of all elements of proletarian democracy within bourgeois society.” Concluding that “the task of fascism lies not only in destroying the Communist vanguard but in holding the entire class in a state of forced disunity.”
WWII: Crisis and Reconfiguration of the Imperialist World Order
It is calculated that 70 million people lost their lives in WWII (1939-1945). This war, like WWI, was the direct product of imperialist rivalries: the confrontation of German imperialism allied with Italy (the forces of the “Axis”) with French and English imperialism (the “Allied” forces). But actually, WWII was a combination of this inter-imperialist war with a counter-revolutionary war launched by Nazi Germany and its satellites against the Soviet Union to crush the first workers’ state. The final balance of the war was therefore complex and contradictory. First, the inter-imperialist conflict was not won by one of its initial contenders, for the great winner of the war on the capitalist camp was the United States, who entered the war later, in 1941, and emerged as the new uncontested imperialist super-power. Second, from a military standpoint the Soviet Union intervention was decisive to win the war against Germany and defeat fascism, but this victory was at the expense of strengthening the prestige of the Stalinist bureaucracy.
Besides the complete devastation brought by WWII, the number of dead and injured people, the atrocities of Nazism and fascism, a new reality troubled the world ruling class at the end of the war: the complete disorganization of the capitalist system, and a moral and political crisis of legitimacy of capitalism which bred a growth of Communism. As Marxist economists, Armstrong, Glyn and Harrison have argued, “much more serious for the long term prospects of the capitalist system, than the physical destruction, was the challenge to its effective functioning as a social system. In the defeated countries the war had discredited the capitalist class: its association with the horrific consequences of fascism and war had undermined its authority in the political sphere and industrially. It could no longer control a government in the capital city nor in the factories.”
Furthermore, the internal structure of the bourgeois state was dismantled and had to be rebuilt from scratch, which created a large opening for working class self-organization and struggle. The possibility of a workers’ insurrection was present in Europe, but the Social-Democratic Parties and Stalinist CPs in France, Italy and Germany, played a treacherous role in fully cooperating with the defeated capitalist class to rebuild the bases of a bourgeois state, rooted in exploitation and “stabilized” a new social order. It was also possible because of the betrayal of the leadership of the AFL-CIO and the CPUSA, which prefered to trade the political rights of the working class, including the right to strike, for short-term economic gains. They limited the political potential of the historic strike waves in 1933-34 and 1946-47, and after the war substituted the “fight” in the electoral arena for mass direct action, depositing all their hopes for social change in the Democratic Party.
The “Good War” the Economic Boost that Projected the United States
The United States ruling class drew a tremendous economic profit from its war involvement. It was able to almost double its production capacity and drastically increase its GDP, accumulating a large number of super-profits.
Since the 1930s the U.S industrial sector “had seen major innovations in synthetic rubber, aeronautics, and electrical machinery and equipment, as well as in electrical power generation, communication services, transportation, distribution, and civil engineering.” WWII became a timely opportunity to fully put all of these new capacities to work, and this is what U.S. capitalists did by massively developing the country’s productive capacities, to the point that right after the war, 45% of the American GDP came from military production. As Saccarrelly and Vasadarajan argue, “Between 1940 and 1944 the country experienced a dramatic economic boom – industrial production shot up by 90%, agricultural output by 20%, and the overall GNP by 60%.” This drastic increase in the productive capacity and productivity of US capitalism involved many goods and technologies that could be easily converted for civilian use after the war, like all the trucks, airplanes, cars as well as household appliances.
However, the major contradiction of the U.S. industrial expansion is that while it developed some productive forces, and advanced science and technology, while generating millions of new jobs, it did so in order to win a war, that is to say to perfect the killing of people and destroying the enemy. From this industrial boom also came the atomic bomb, other sophisticated weaponry, major toxic pesticides, industrial food production, and many other “advances” that have since contributed to the destruction of humanity and our environment.
The “war effort”, which was the effort of millions of workers, women and men, who joined the production line, put the United States on a dominant position at the world level:
“By the time the dust from the mushroom clouds had settled, the United States had emerged as the dominant economic power in the globe. Home to less than 6% of the world’s population, the United States possessed almost half of the world’s wealth by means that were far from parasitic. It effectively functioned as the workshop of the world, producing about half of the world’s steel, cotton, rubber, and electrical energy, 60% of all manufactured goods, 70% of oil, and over 80% of all automobiles. The United States, put simply, was the world’s unchallenged economic titan.”
The Foundations of U.S. Imperialist Hegemony in the Postwar Period
The US emerged as the uncontested economic, military, and political power after WWII, and quickly moved to set the basic foundations of a new imperialist order under its domination. The new American imperialist hegemony in the postwar period was founded on two connected strategies, a political and economic one. The economic strategy was one of growth based on the extension of free trade all over the world, abolishing most tariffs and protections, an inflationary credit expansion, and foreign investment. The political strategy was the “containment” of the competing superpower, Soviet Union, and the spread of Communism, which gave rise to the Cold War.
This new set of economic priorities was materialized in the 1944 Bretton Woods agreements (in effect until 1971), the Marshall Plan. The Bretton Woods agreements were presented as a “New Deal of international economics” in the sense that they attempted to reach the same kind of class conciliation the Roosevelt administration had managed to impose in the US, in order to pacify insurgent labor (the rising CIO) and increase the productivity of U.S. workers and profits. The New Deal did this by making some key concessions (welfare and social programs) and regulating labor relations at the state level to prevent a massive labor insurgency. These policies also established a degree of regulation and even suppression of competition between financial institutions while reinforcing the legitimacy and domination of finance capital. This same formula was to be applied at the international level after 1944.
The geopolitical strategy was translated first into the creation of the United Nations in 1945, but more importantly, the NATO military alliance (1949) and the “Domino Theory” laid out by Eisenhower in 1954 that led to the U.S. intervention in Vietnam and Cambodia.
Bretton Woods: The New Monetary Agreement of Fixed Exchange and Credit Growth
Different agreements came out of the Bretton Woods meeting, with the participation of 44 “allied” nations, under the leadership of the United States. The first agreement was the establishment of a new international monetary system of fixed exchange between currencies based on the US dollar (by establishing the convertibility between gold and the dollar), a currency under the monopoly of the U.S. Treasury. This led to a new cycle of capitalist growth based on credit expansion: the U.S capitalists alone were able to print more bills, to expand their liquidity, allowing for the continuous creation of additional means of payment and constant cycles of investment.
This new monetary agreement, which tremendously benefited the United States, had however embedded the very limits of this cycle of growth. It set a mode of growth based on credit and growing debt bubble, involving of all sectors of society, including the US. working class, whose consumption was heavily stimulated by credit. And as Ernest Mandel showed, the percentage of American households annual income devoted to repay mortgages and consumer credit rose from 5.9% of their total income in 1946, to 11.8% in 1950 and was up to 22.8% in 1969. American workers became chronically indebted, and pursuing an artificial rhythm of consumption which burst open with the 1970s crisis.
The Imposition of Free Trade to Boost U.S. Exports and Investments
The second important agreement that came out of Bretton Woods and materialized years later, was the imposition of a new free trade ideology and the beginning of de-regulation of markets. In 1947 a General Agreement on Tariffs and Trade (GATT, which is the predecessor of the WTO) was reached with the most important imperialist countries who agreed to start working towards lowering tariffs.
Henry Morgenthau, the head of the U.S Treasury summarized in 1948 this dimension of the Bretton Woods agreements: “The purpose is very simple, wholly within the American tradition and completely outside political considerations. The United States wants, after the war, full utilization of its industries, its factories and its farms, full and steady employment of its citizens, particularly its ex-servicemen, and full prosperity and peace. It can have them only in a world with a vigorous trade.” We know full employment and peace were never achieved, but the expansion of trade did benefit tremendously U.S. multinationals.
Low tariffs and free trade were measures that particularly benefited the United States because they were able to produce and export faster and cheaper than their competitors. And as expected, the first decade after the war saw a tremendous increase of US exports “which grew from $9.5 billion in 1945 to $15.7 billion in 1953, i.e., by 66%, while in the same period the gross national product increased by less than 20% and industrial output by 30%.”
The stimulation of trade also helped the rise of U.S. investments abroad. The majority of the private super-profits made during the war were reinvested in the U.S. national market, deepening its reach into every household and stimulating credit consumption. Yet, by the end of the 1950s and throughout the 1960s, U.S. financial capital, which since the New Deal agreement was barred from investment banking activity at home, began its widespread offensive abroad, penetrating the market in Europe, Asia and Latin America. At its peak in the 1960, with a $31.9 billion in Foreign Direct Investment (FDI) “US business owned some 48.3% of outward FDI stock, nearly four times the share of its nearest rival, the UK.” And “by 1970, at least 3,500 US companies had direct foreign investments in some 15,000 enterprises” all over the world.” Most of these investments went to manufacturing in developing countries.
The New Instruments of Financial Domination (IMF, World Bank)
The third agreement that came out of Bretton Woods was the need to establish financial institutions of control and regulation at the international level, which did not exist before. This is how the International Bank for Reconstruction and Development (IBRD) (future World Bank), and the International Monetary Fund (IMF) were established in 1944 and 1945, respectively.
The IMF, which counted around 40 members in 1947, and $7,7 billions in assets, was set to operate as the new manager of world monetary and financial agreements: any modification of the exchange rate between currencies greater than 10% had to be approved by the IMF, countries in crisis or who appeared to have lost their way were “advised” which policies to follow, and more importantly the IMF was set to function as a fund to bail out countries in trouble.
Since its inception the IMF had a voting system that ensured the US and other imperialist countries would control it. In fact, the number of votes were linked to the size of each country’s subscription of gold, national currency, and government securities. In 1947, the US had 35% of the votes, and the UK 16.8%, and the countries that followed them, like France or China only 6%. Years later, in 1969, for example, the US still had 28.8%, the UK 13.6%, and then France and Germany 5.5% each, the rest (47%) being split with the remaining 65 countries.
The “Marshall Plan”
In total the Marshall Plan injected $13 billion in the European economy, (equivalent of $90 billion today). The aid went to 16 countries, mostly to the UK (26%), France (18%) and West Germany (11%). As Glyn and Panitch explain, “in the pivotal years 1948 and 1949 Marshall Plan assistance amounted to an estimated 15 percent of the combined gross domestic capital formation of the UK, Italy, and France, while for Germany it was over 25 percent.” And while the causes of the Marshall Plan that imposed financial discipline were not really respected by European governments, the political goal to contain communism was met. By 1947-48, 13 out of 16 European nations saw non-socialist governments come to power. It is important to point out that 80% of this aid (all but that was going to Germany) was given by the U.S. Treasury in the form of grants that did not have to be repaid (contrary to the IMF and WB loans that have bankrupted Third World Countries).
The Containment of Communism: The Marshall Plan
Even before entering the war, U.S. officials were worried that a long war, with its corollary economic devastation, would benefit the cause of communism. The U.S. state department was afraid that “a war lasting two or three years, or which may run on for even a longer time will place the people of Europe in such a terrible position as to produce revolutionary movements looking towards communist policies.”
U.S. capitalism wanted to bail out the broken national bourgeoisie in Europe, however the IMF proved to be quite useless to help rebuild Europe after the devastation of WWII because it lacked liquidity. Thus the “Marshall Plan” (European Recovery Plan, 1948-51) was designed by the Truman administration as a set of bilateral agreements between the U.S. and each European country, to make capital available to help rebuild the infrastructure and equipment in Europe, while opening the door for U.S. products to a new market and stimulating world trade through the injection of vasts amounts of capital. The U.S. also sent $2.2 billion in aid to Japan to help the reconstruction. The main motivation behind the massive cash inflow the US provided to rebuild European and Japanese capitalism was to prevent both regions from turning toward socialism.
An “American Proposal” – Remarketing Imperialism After WWII
The editors of Fortune, Time and Life magazines, in a joint statement titled “An American Proposal” in 1942, called for a ‘new American imperialism’ whose goal would be “to promote and foster private enterprise, by removing the barriers to its natural expansion”, by creating “an expansionist context in which tariffs, subsidies, monopolies, restrictive labour rule … and all other barriers to further expansion can be removed.” This statement summed up in a surprisingly uninhibited manner the desire to see America “emerge as the strongest single power in the postwar world,” and replace “a dead or dying imperialism,” the European, with a more modern and dynamic one:
“a new American ‘imperialism’, if it is to be called that, will—or rather can—be quite different from the British type. It can also be different from the premature American type that followed our expansion in the Spanish war. American imperialism can afford to complete the work the British started; instead of salesmen and planters, its representatives can be brains and bulldozers, technicians and machine tools. American imperialism does the project for a global capitalism not need extra-territoriality; … Nor is the US afraid to help build up industrial rivals to its own power … because we know industrialization stimulates rather than limits international trade … This American imperialism sounds very abstemious and high-minded. It is nevertheless a feasible policy for America, because friendship, not food, is what we need most from the rest of the world.”
Most of those postwar measures reshaped a new capitalist world system, which contrary to the pre-war one, was dominated by one great super-power, the United States, and had set some new international mechanisms to regulate the financial and monetary exchanges. This does not mean of course that there was no inter-imperialist rivalry or competition, but it was a very unequal one, even among imperialist economies. The core features of monopoly capitalism as outlined by Lenin, continued, and in particular the domination of finance capital did not change.
As the International Committee of the Fourth International affirmed in 1972, “What was new was the recognition that another crash on the scale of the 1930s would endanger the whole capitalist system, and the decision by the capitalists to embark on a deliberately inflationary course which they hoped would bring sufficient social stability to appease and contain the militancy of the working class. Bretton Woods was an indication of the weakness and not the strength of capitalism, and, in particular, the growing loss of confidence which the capitalist class had in the very future of its own system.”
 Engels, “Letter to Marx”, dated October 7, 1858.
 Lenin, “Imperialism and the Split of Socialism”, October 1916,
 Lenin, “The Collapse of the Second International”, 1915.
 Lenin, “Imperialism and the Split of Socialism”, October 1916,
 Trotsky, What is fascism? What it is and how to fight it?
 Philip Armstrong, Andrew Glyn and John Harrison, Capitalism Since World War II, The Making of a Breakup of the Great Boom, p, 24.
 Leo Panitch and Sam Gindin, The Making of Global Capitalism: The Political Economy of American Empire, (2012), p. 81.
 Emanuele Saccarelli and Latha Varadarajan, Imperialism, Past and Present, (2015) pp. 146 & 143
 Ernest Mandel, Late Capitalism (1972), p. 459
 Richard Peet, Unholy Trinity: The IMF, World Bank and WTO (2009), p. 55-56.
 Ernest Mandel, Late Capitalism, (1972) p. 463
 Robert Fitzgerald, The Rise of the Global Economy: Multinationals and the Making of the Modern World (2015) p. 269.
 Harold Vatter, John Walker, History of the U.S. Economy Since World War II, p. 138.
 Quoted in Capitalism Since World War II, The Making of a Breakup of the Great Boom,
 Philip Armstrong, Andrew Glyn and John Harrison, Capitalism Since World War II, The Making of a Breakup of the Great Boom, p, 96.
 “Perspectives resolution of the International Committee fourth conference”, 1972. Originally published in Fourth International, Vol 7, No. 3, Spring 1972, pp. 107-121 https://www.marxists.org/history/etol/document/fi/1950-1953/ic-issplit/02.htm
 “An American Proposal” quoted in Leo Panitch and Sam Gindin, The Making of Global Capitalism: The Political Economy of American Empire, (2012) p. 67-68.