The concept of “imperialism” plays a central role in Marxist analysis of contemporary international events, yet many ostensible revolutionaries have only a fuzzy notion of the origin, historical development and essential features of this phenomenon. For years, liberal ideologues dismissed the term as an anachronistic and meaningless leftist shibboleth, on the assumption that imperialism ended when the former possessions of France, Britain and other colonial powers gained independence in the decades following World War II.
In fact, in most cases, post-war “decolonization” did little more than mask the structural inequalities of a global order forged through massive looting, slavery and genocidal assaults on indigenous peoples. The colonial empires had forcibly incorporated their overseas possessions into a mercantile trading system designed to transfer wealth from the periphery to the center. As former dependencies gained formal political independence, overt colonialism gave way to market-mediated neo-colonialism, changing the form, but not the essence, of relationships that continue to be characterized by domination and oppression.
In response to recent large-scale military interventions by the U.S. and its allies into the Middle East and Afghanistan, many prominent bourgeois academics have not only acknowledged, but embraced, the idea of global imperialism as a mechanism for social progress. In the run-up to the 2003 invasion of Iraq, the Washington Post’s neo-conservative columnist Charles Krauthammer observed that, “People are now coming out of the closet on the word empire” (New York Times, 31 March 2002). Advocates of the supposed benefits of empire ranged from British neoconservative historian Paul Johnson to former U.S. national security chief Zbigniew Brzezinski, and Michael Ignatieff, formerly a Harvard “human rights” professor and once leader of Canada’s ruling Liberal Party.
Marxists use the term “imperialism” as a characterization of global capitalism in its maturity – a social system driven by the imperatives of profit maximization to persistently deepen and expand social inequality, both at home and abroad. According to Credit Suisse’s “Global Wealth Report 2015”:
“Wealth inequality has widened in the aftermath of the  financial crisis and this year was no exception. This year’s rise in equity prices and in the size of financial assets in high-wealth countries pushed up the wealth of some of the richest countries and people, resulting in increased wealth inequality. The top percentile of wealth holders now own just over half of the world’s wealth and the richest decile 87.7 percent.”
A 2001 study by the OECD (Organization for Economic Cooperation and Development), taking a longer view, vividly illustrated the growth in the disparity between rich and poor countries over the course of two centuries of global capitalism:
“By 1820, this group [the ‘developed’ capitalist countries of Western Europe, North America, Australasia and Japan] had forged ahead to an income level twice that in the rest of the world. By 1998, the gap was 7:1. Between the United States (the present world leader) and Africa (the poorest region) the gap is now 20:1. This gap is still widening.”
—Angus Maddison, The World Economy: A Millennial Perspective
The United Nations Development Programme made a similar observation two years previously:
“World inequalities have been rising steadily for nearly two centuries. An analysis of long-term trends in world income distribution (between countries) shows that the distance between the richest and poorest country was about 3 to 1 in 1820, 11 to 1 in 1913, 35 to 1 in 1950, 44 to 1 in 1973 and 72 to 1 in 1992.”
—Human Development Report 1999
British Marxist historian Eric Hobsbawm described how the Industrial Revolution of the 19th century exponentially increased the initial technological advantage Europe’s leading capitalist powers enjoyed over their colonial possessions:
“Technology was a major cause of this gap, reinforcing it not merely economically but politically. A century after the French Revolution it was becoming increasingly evident that poorer and backward countries could easily be defeated and (unless they were very large) conquered because of the technical inferiority of their armaments. This was comparatively new. Napoleon’s invasion of Egypt in 1798 had pitted against each other French and Mamelouk armies with comparable equipment.… Yet the industrial revolution, which penetrated warfare in the middle decades of the century … tilted the balance even further in favour of the ‘advanced’ world by means of high explosives, machine-guns and steam transport.”
—The Age of Empire 1875-1914
Niall Ferguson, a prominent Scottish historian and academic apologist for imperialism, considers British colonialism to have been “an agency for imposing free markets, the rule of law, investor protection and relatively incorrupt government on roughly a quarter of the world.” On this basis, he concludes that there is “a plausible case that empire enhanced global welfare – in other words was a Good Thing” (Empire: How Britain Made the Modern World). He does concede that in India, the crown jewel of the empire, “the average Indian had not got much richer under British rule”:
“Between 1757 and 1947 British per capita gross domestic product increased in real terms by 347 per cent, Indian by a mere 14 per cent. A substantial share of the profits which accrued as the Indian economy industrialized went to British managing agencies, banks or shareholders; this despite the fact that there was no shortage of capable Indian investors and entrepreneurs. The free trade imposed on India in the nineteenth century exposed indigenous manufacturers to lethal European competition at a time when the independent United States of America sheltered its infant industries behind high tariff walls.”
He also admits that Britain’s laissez faire economic policy in India aggravated the effects of the terrible famines of 1876-8 and 1899-1900 and notes that “Indian indentured labourers supplied much of the cheap labour on which the later British imperial economy depended.” Moreover, he describes conditions for the millions of workers on tea, cotton, rubber and sugar plantations as “often little better than those inflicted on African slaves in the century before.” So while the empire may have been “a Good Thing” for Britain’s ruling class, it was clearly very different for the vast majority of its colonial subjects.
The persistent growth of the disparity between those at the top and the bottom of the global pyramid is hardly surprising, given that “development” at every stage has been shaped by the priorities of investors from the imperialist metropole. Colonial holdings were valuable both as sources of raw materials and as markets for the industrial products of the motherland. Colonies also provided profitable investments, which often took the form of loans and government securities (to pay for public works, civil and military personnel); or to develop mining and plantation agriculture (to produce commodities for foreign consumption); or to construct the railways, seaports and communication networks necessary to facilitate an export economy. The importation of cheap manufactured commodities from the metropolitan center displaced native handicraft workers, who, along with peasants pushed off their traditional lands to make way for plantations, formed an impoverished rural proletariat.
Indigenous capital tended to be employed in commerce and moneylending with the traditional native rulers remaining in many cases as a parasitical landlord caste. To maintain social stability while keeping expenditures down, colonial authorities often forged alliances with elements of these native elites – relationships that inevitably preserved and solidified forms of pre-capitalist backwardness.
The global spread of capitalist social relations from Western Europe, usually rationalized as a “civilizing mission,” produced a massive accumulation of wealth in the metropolitan centers, while retarding and distorting the development of their colonial possessions. The great Russian revolutionary Leon Trotsky perceptively described the course of this “combined and uneven” phenomenon:
“Capitalism finds various sections of mankind at different stages of development, each with its profound internal contradictions. The extreme diversity in the levels attained, and the extraordinary unevenness in the rate of development of the different sections of mankind during the various epochs, serve as the starting point of capitalism. Capitalism gains mastery only gradually over the inherited unevenness, breaking and altering it, employing therein its own means and methods. In contrast to the economic systems which preceded it, capitalism inherently and constantly aims at economic expansion, at the penetration of new territories, the surmounting of economic differences, the conversion of self-sufficient provincial and national economies into a system of financial interrelationships.”
. . .
“Imperialism, thanks to the universality, penetrability, and mobility and the break-neck speed of the formation of finance capital as the driving force of imperialism, lends vigor to both these tendencies. Imperialism links up incomparably more rapidly and more deeply the individual national and continental units into a single entity, bringing them into the closest and most vital dependence upon each other and rendering their economic methods, social forms, and levels of development more identical. At the same time, it attains this ‘goal’ by such antagonistic methods, such tiger-leaps, and such raids upon backward countries and areas that the unification and leveling of world economy which it has effected, is upset by it even more violently and convulsively than in the preceding epochs.”
—The Third International After Lenin
The grotesque disparities produced by “underdevelopment,” were treated by the pious ideologues of 19th century empire-buildings as by-products of a “white man’s burden” to bring the benefit of Christian morality, enlightenment and modernity to the benighted heathen. The cynical racism and mercenary calculations which actually motivated most colonial adventurers of the Victorian era as they set out to subjugate the “lower races” is reflected in the following lines from a satirical ditty celebrating the massacre of 1,500 spear-carrying Matabele warriors by the “Maxim” machine guns of Cecil Rhodes’ private army in 1893:
“Onward Chartered Soldiers, on to heathen lands,
Prayer books in your pockets, rifles in your hands.
Take the glorious tiding where trade can be done,
Spread the peaceful gospel – with a Maxim gun.
“Tell the wretched natives, sinful are their hearts,
Turn their heathen temples into spirit marts.
And if to your teaching they will not succumb,
Give them another sermon with the Maxim gun.”
Rhodes’ seizure of the Matabele territory (motivated by its valuable gold deposits) was one of many such episodes in the carve-up of Africa that preceded World War I.
While the colonial empires of the 19th century are long gone, the predation and subordination of most of the globe continues – today carried on under the banners of “free trade,” “human rights” and “development.” The rationalizations have changed, but the essence of the relationships remains the same – the great financial houses and transnational corporations (TNCs) of the advanced capitalist countries (often represented by inter-imperialist agencies like the World Bank and International Monetary Fund [IMF]) determine the social and economic conditions of life for the vast mass of humanity solely in accordance with calculations of their own interests.
The fact that empires existed long before capitalism developed has sometimes led to confusion about the nature of modern “imperialism,” as Trotsky observed in 1939:
“History has known the ‘imperialism’ of the Roman state based on slave labor, the imperialism of feudal land-ownership, the imperialism of commercial and industrial capital, the imperialism of the Czarist monarchy, etc. The driving force behind the Moscow bureaucracy is indubitably the tendency to expand its power, its prestige, its revenues. This is the element of ‘imperialism’ in the widest sense of the word which was a property in the past of all monarchies, oligarchies, ruling castes, medieval estates and classes. However, in contemporary literature, at least Marxist literature, imperialism is understood to mean the expansionist policy of finance capital which has a very sharply defined economic content.”
—“Again and Once More Again on the Nature of the USSR,” October 1939
In the Transitional Program, the 1938 founding document of the Fourth International, Trotsky succinctly observed that in the modern age, “Imperialism means the domination of finance capital.” This was a reiteration of a formulation employed by Lenin 22 years earlier:
“Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation [between money capital and industrial or productive capital] reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially ‘powerful’ states stand out among all the rest.”
—Imperialism, the Highest Stage of Capitalism, 1916
Lenin’s notion of “finance capital” referred to the fusion of banking and financial capital with industrial capital, which takes the form of big banks and giant multinational corporations based in the advanced capitalist countries:
“The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry – such is the history of the rise of finance capital and such is the content of that concept.”
In the early 1800s capitalism was dominated by relatively small-scale enterprises, usually involved in a single sector of production, and run by individual owner-operators. But within a few decades, as more prosperous firms absorbed their less successful rivals, larger corporate entities emerged in which decision-making was vested in salaried managers who ran the day-to-day operations without the direct involvement of the owners.
Rudolf Hilferding, a German social democrat whose work had considerable influence on Lenin, coined the phrase “finance capital” to describe the concentration of capital in Germany in the first decade of the 20th century and the role of the largest banks in orchestrating entire sectors of the economy:
“An ever-increasing part of the capital of industry does not belong to the industrialists who use it. They are able to dispose over capital only through the banks, which represent the owners. On the other side, the banks have to invest an ever-increasing part of their capital in industry, and in this way they become to a greater and greater extent industrial capitalists. I call bank capital, that is, capital in money form which is actually transformed in this way into industrial capital, finance capital.”
—Finance Capital, 1910 (1981 English translation)
Hilferding’s work drew on that of liberal British economist J.A. Hobson, who noted that the “imperial” impulse of late 19th century capitalism had arisen alongside the increasing concentration of wealth in the giant industrial concerns, trusts, cartels and syndicates in the more economically advanced countries. In his 1902 book Imperialism, A Study, Hobson cited the rapid transformation of the United States into an imperialist competitor to Britain as a demonstration of the link between the growth of oligopoly and “the adoption of Imperialism as a political policy”:
“It is sufficient to point out that the manufacturing power of a country like the United States may grow so fast as to exceed the demands of the home market. No one acquainted with trade will deny a fact which all American economists assert, that this is the condition which the United States has reached within the last few years, so far as the more developed industries are concerned. Her manufactures are saturated with capital and can absorb no more. One after another they are seeking refuge from the waste of competition in ‘combines’ which secure a measure of profitable peace by restricting the quantity of operative capital. Industrial and financial princes in oil, steel, sugar, railroads, banking, &c., are faced with the dilemma of either spending more than they knew how to spend, or forcing markets outside the home area.…
“It is this sudden demand for foreign markets for manufactures and for investments which is avowedly responsible for the adoption of Imperialism as a political policy and practice by the Republican party to which the great industrial and financial chiefs belong, and which belongs to them.”
The names of leading American monopolists of that era – Morgan, Mellon, Carnegie and Rockefeller – became household names. The abuses and excesses of these “robber barons” produced a powerful popular reaction that resulted in legislation such as the 1890 Sherman Act which was aimed at reining in the “trusts” that remained on the books for decades. In a 1948 decision, U.S. Supreme Court justice William O. Douglas wrote:
“Power that controls the economy should be in the hands of elected representatives of the people, not in the hands of an industrial oligarchy. Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men. The fact that they are not vicious men but respectable and social minded is irrelevant. That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it.”
But the U.S. Supreme Court cannot reverse the innate tendencies of capitalist development – the growth of monopoly and oligopoly is an organic expression of the inner logic of “free market” competition that will inevitably reassert itself. Better capitalized (or more successful) producers with more advanced (i.e., labor-displacing) technology are able to lower their unit cost of production, and thereby undersell their rivals. Over time, less productive enterprises are forced out of business:
“Over the corpses and the semi-corpses of small and middling capitalists, emerges an ever-decreasing number of ever more powerful capitalist overlords. Thus, out of honest, democratic, progressive competition grows irrevocably harmful, parasitic, reactionary monopoly. Its sway began to assert itself in the eighties of the past century, assuming definite shape at the turn of the present century.…
“The elimination of competition by monopoly marks the beginning of the decay of capitalist society. Competition was the creative mainspring of capitalism and the historical justification of the capitalist. By the same token the elimination of competition marks the transformation of stockholders into social parasites. Competition had to have certain liberties, a liberal atmosphere, a regime of democracy, of commercial cosmopolitanism. Monopoly needs as authoritative a government as possible, tariff walls, ‘its own’ sources of raw materials and arenas of marketing (colonies).”
—Trotsky, “Marxism In Our Time,” 1939
Lenin identified the tendency toward monopoly as the economic root of imperialism:
“If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism. Such a definition would include what is most important, for, on the one hand, finance capital is the bank capital of a few very big monopolist banks, merged with the capital of the monopolist associations of industrialists; and, on the other hand, the division of the world is the transition from a colonial policy which has extended without hindrance to territories unseized by any capitalist power, to a colonial policy of monopolist possession of the territory of the world, which has been completely divided up.”
—Imperialism, the Highest Stage of Capitalism
The growth of monopoly, which reduced competition within each individual advanced capitalist state, simultaneously intensified competition among them for market access, investment opportunities and raw materials beyond their national frontiers. In the early years of the 20th century this rivalry produced an armaments race (generating enormous short-term demand for industrialists in each of the potential belligerents) and eventually culminated in the outbreak of World War I.
As the imperialist world order emerged from the competitive system of the previous era, Lenin commented that:
“certain relations between capitalist associations grow up, based on the economic division of the world; while parallel to and in connection with it, certain relations grow up between political alliances, between states, on the basis of the territorial division of the world, of the struggle for colonies, of the ‘struggle for spheres of influence’.”
This was written in 1916, in the midst of World War I. Lenin was not the only politician to recognize that rather than a “war to end war,” the first global inter-imperialist conflict was in fact an expression of geopolitical competition between the major capitalist powers. In January 1914, eight months before the commencement of hostilities, Winston Churchill candidly reminded his cabinet colleagues that:
“We have engrossed to ourselves an altogether disproportionate share of the wealth and traffic of the world. We have got all we want in territory, and our claim to be left in the unmolested enjoyment of vast and splendid possessions, mainly acquired by violence, largely maintained by force, often seems less reasonable to others than to us.”
—cited in John Darwin, The Empire Project, 2009
The leadership of the powerful Socialist International, which had pledged to organize massive international anti-war resistance, instead ended up supporting their own rulers in the fight for the redivision of “the wealth and traffic of the world.” Under the banner of “Defense of the Fatherland,” the leaders of most sections of the international urged their followers to kill and be killed to further the claims of their rulers.
This social-patriotic treachery stunned Lenin and others who had remained true to the internationalist program of Marxism and forced them to reevaluate both their assumptions about the nature of global capitalism and the political preconditions for a socialist breakthrough. They soon concluded that World War I constituted a decisive historical turning point – capitalism had everywhere exhausted its progressive character, and a new, reactionary imperialist epoch, characterized by “wars and revolutions,” had commenced.
Lenin’s analysis of imperialism retains its essential validity, but there have been significant developments that could hardly have been anticipated in 1916, as the British Marxist Tom Kemp noted:
“Lenin, it must be remembered, was not writing an academic treatise but a tract for the times whose purpose was to explain to the international socialist movement the nature of the forces which had brought about the war and, at the same time, the collapse of the Second International.… When Lenin wrote Imperialism he was not thinking of it as the last word on the subject. The reader will note that his claims are modest and carefully qualified.”
—Studies in the Theory of Imperialism, 1972
During the two decades between the first and second world wars, global capitalism had a far more protectionist and autarkic character than it had prior to 1914. This changed after World War II, as the U.S., presiding over the liquidation of the European colonial empires, sought to unite the “free world” against the challenge posed by the expansion of the Soviet bloc and the Chinese Revolution. American planners actively discouraged protectionism among U.S. allies and were prepared to make concessions to integrate them into a new capitalist global order. During the early years of the “American Century,” Washington relied on the formal equality of the “free market” to guarantee U.S. supremacy. Under the American imperium, neocolonialism replaced direct colonial rule and economic subservience was mediated by multi-national institutions, particularly the United Nations, World Bank, IMF and General Agreement on Tariffs and Trade.
During the Cold War the Soviet Union provided a counterweight that both limited the scope of imperialist domination of the “Third World” and shaped resistance to it. This was most dramatic in the success enjoyed by insurrectionary Stalinist movements in China, Korea and Indochina (and subsequently the evolution of Cuba under Castro).
The existence of the Soviet “other” also made it easier for the capitalist rulers of countries like India and Brazil to achieve a degree of economic independence. Soviet support for Gamal Abdel Nasser’s successful seizure of the Suez Canal in 1956 opened the door for the nationalization of oil assets across the Middle East.
In many countries in this period the national bourgeoisie promoted industrialization via import substitution while others attempted to form producer cartels modeled on the Organization of the Petroleum Exporting Countries (OPEC). The destruction of the Soviet degenerated workers’ state in 1991 greatly reduced the room for such maneuvers in the “Global South.”
The steep rise in interest rates in the 1980s forced many semi-colonies to turn to the IMF to avoid defaulting on debts run up during the 1960s and 70s. The IMF seized the opportunity, opening the door for foreign investment with “Structural Adjustment Programs” that slashed subsidies for farmers and domestic manufacturers, reduced tariffs, deregulated industry and privatized utilities and other state enterprises.
This austerity package, the “Washington Consensus,” was advertised as a means to accelerate growth by lowering overheads and boosting exports. The results were rather different – living standards sank, market penetration by TNCs increased and the “developing” countries became more dependent on global capital markets. In 2001 we sketched how the IMF’s “development” program had:
“routinely increased poverty levels, as well as imperialist leverage, in those neo-colonies where it has been applied. In most cases, its implementation has resulted in reduced social services through privatization of healthcare, education, power generation and transportation. These measures are chiefly designed to create opportunities for profitable investment for foreign capitalists and their domestic partners, while also reducing the domain of the national state. The hundreds of millions of working people in Mexico, Brazil, South Korea, Thailand, etc. who have first-hand experience with IMF efforts to ‘stabilize the macro-economic framework’ have no illusions in its ‘anti-poverty programs.’”
—“Imperialist World Order: Misery for Profit,” 1917 No. 23
The cumulative effect of several decades of this export-oriented “modernization” program, is a world in which 2.5 billion people, over a third of humanity, are forced to attempt to survive on less than two dollars a day. It is estimated that more than a billion human beings are chronically malnourished and a similar number lack access to clean drinking water.
The colonial empires of the Victorian era are no more, but the competition for access to markets and raw materials and division of the world into spheres of influence remains a feature of global politics as imperialist countries seek to mitigate their own economic problems at the expense of other, weaker, components of the global economy. Even small advanced capitalist countries (like Norway, New Zealand or Luxemburg) have roles as minor subordinates that are able to benefit from the global economic “rules of the game” defined and enforced by the larger powers and their network of multinational institutions. The junior partners in the American-dominated global system are entitled to a portion of the spoils as long as they are prepared to share the overheads of foreign military expeditions, adhere to trade embargoes and generally follow the directives of the major players.
Contemporary imperialism continues to be characterized by a tendency toward monopoly, an increasing concentration of finance capital. An important 2011 study by three members of the Swiss Federal Institute of Technology in Zurich included the following:
“We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.”
—“The Network of Global Corporate Control,” Stefania Vitali, James B. Glattfelder and Stefano Battiston
While relations between imperialist countries and the neo-colonies of the periphery are generally regulated by the market rather than brute force, disparities in military power remain critical to the maintenance of the current global order. As the leader of the “Free World,” the U.S. claims the prerogative to militarily intervene anywhere on the planet to overturn regimes it finds objectionable. In some cases, this involves operating with local allies and agents (e.g., Iran 1953, Chile 1973, Nicaragua and Afghanistan in the 1980s). On other occasions, U.S. military force is employed directly (e.g., Afghanistan 2001, Iraq 2003).
In recent years the “humanitarian” cover stories for such adventures have been received with increasing skepticism, even by Washington’s traditionally credulous domestic flag-waving audience. The failed colonial wars in Iraq and Afghanistan, like the “successful” action in Libya, are understood by much of the U.S. population, along with most of the rest of the world, as attempts to gain control of strategic energy resources.
American military adventurism in the Middle East is driven by a desire to arrest the erosion of U.S. status as global hegemon. So too the recent “regime-change” interventions sponsored or supported by Washington in Ukraine, Libya and Syria. Yet the mix of threats, sabre-rattling and military/economic pressure directed at Russia, Iran and China has led them to enter into a loose defensive alliance aimed at resisting imperialist coercion. Inter-imperialist tensions have thus far remained muted, but the accelerated rearmament programs undertaken by Japan and Germany, as well as lesser imperialist powers like Canada, Denmark and the Netherlands, clearly represent an anticipation of future military confrontations on the horizon.
Lenin observed that, in political terms, it is the “division of nations into oppressor and oppressed which forms the essence of imperialism” (“The Revolutionary Proletariat and the Right of Nations to Self-Determination”). This is why when a semi-colonial country is attacked by an imperialist power, Marxists side with the oppressed against the oppressor – regardless of the character of the indigenous regime – while in conflicts between imperialist states we stand for the defeat of both sides.
The core of what Marxists define as “imperialism” is a relationship in which, over the long term, more backward, semi-colonial, countries suffer a net outflow of surplus value to the more advanced capitalists. The mechanisms for extracting value take various forms – loans, direct investment, portfolio investment, land rent, patent and licensing fees, transfer pricing – but they all systematically favor the interests of the capitalists of the advanced countries over those of more backward ones.
Neocolonies participate in the global economy on terms set by the dominant players:
“the underdeveloped countries must concentrate their production for export on commodities that they can produce most efficiently (that is, at a lower value) and/or those commodities that are peculiar to them (for instance, specific raw materials). Both of these types of export commodities will reflect a specific local advantage that will tend to compensate for the generally lower level of productive efficiency in these countries (advantages like a favourable climate, a wealth of relatively unique natural resources, and favourable geographical location). These natural absolute advantages of the export sectors of underdeveloped countries will likely attract foreign capital in search of favourable investment opportunities; consequently, the export sectors will become the main focus of foreign capital penetration. The combined result is this: first, trade with the more developed countries will bring about the ruination of traditional industries unable to compete with cheap imports, and second, it will create the conditions for such an extreme form of specialization that the economic development of the underdeveloped country will be highly distorted, in part, by foreign capital domination of the most viable export sectors.…”
—Murray E.G. Smith, Invisible Leviathan
Client states that sit atop valuable petroleum assets, like Saudi Arabia or Qatar, obtain a significant slice of the profits the oil monopolies earn on the world market. This provides the rulers of these oil sheikdoms with considerable political autonomy, but ultimately their survival is dependent on their imperialist patrons.
In the first volume of Capital, published in 1867, Karl Marx observed that the “international division of labour” established by the industrial revolution had converted “one part of the globe into a chiefly agricultural field of production, for supplying the other part, which remains a chiefly industrial field”). This remained the case for roughly a century, but has changed dramatically in recent decades, as TNCs, shifted production to areas of the globe where wages are only a fraction of those paid in the imperialist countries. In 1980, manufactured goods comprised roughly 20 percent of developing countries’ exports, but by 2000 the figure was 70 percent (UNCTAD “Trade and Development Report 2002”). In 1980, half the world’s industrial workers were still found in “developed” countries – today those countries are home to merely a fifth.
In a 2003 report, Stephen S. Roach, then chief economist at Morgan Stanley, noted that “today’s offshore manufacturing platforms offer low-cost, high-quality alternatives for goods production and labor on a scale and with a scope never seen before”:
“Wage rates in China and India range from 10% to 25% of those for comparable-quality workers in the US and the rest of the developed world. Consequently, offshore outsourcing that extracts product from relatively low-wage workers in the developing world has become an increasingly urgent survival tactic for companies in the developed economies.”
—“Outsourcing, Protectionism, and the Global Labor Arbitrage,” 11 November 2003
The utilization of workers in different countries as interchangeable units in a “global production network” that manufacture different components of a commodity or do the final assembly, has not transformed the fundamental inequality of the capitalist world economy – control remains firmly in the hands of the corporations of the imperialist centers. Yet the increasing use of super-exploited labor in the neocolonial countries has made European, North American and Japanese capitalists far more vulnerable to any disruption of supply chains through social or political instability in the “periphery.”
On the other hand, the deindustrialization of the “developed” countries has undermined the power of organized labor as employers advise workers that if they are insufficiently “flexible” in making concessions on wages or working conditions they could lose their jobs. The skilled and unskilled workers in the imperial centers are acutely aware of the erosion of their previously relatively privileged and insulated position in the global economic order – an awareness that could potentially help to erode the chauvinism and social prejudices that historically led many to identify with the interests of their oppressors. In undermining their traditionally stable “base areas,” the capitalist “masters of the universe” thus introduce new contradictions into a social order already widely regarded as inherently unjust and oppressive by the vast majority of the world’s population.
The imperative that drives economic development in the imperialist epoch is the maximization of wealth for a tiny sliver of the population – the major capitalists of the imperial heartlands. Any other outcome is excluded by the inner logic of capital accumulation itself. At this moment in human history the pursuit of short-term profit is not only accelerating global inequality, it increasingly threatens the entire ecosystem upon which all life on Earth depends.
For all the windy speeches about modernization and sustainable development, the whole history of capitalism, from its origins in the days of the conquistadors and the slave traders, demonstrates that the pursuit of profit has generally tended to increase, rather than diminish, social inequality. That is why the repeated international declarations of intent to “end poverty” and achieve various other beneficial outcomes are never realized.
Global capitalism operates as a mechanism programmed to systematically funnel wealth from poor countries for the benefit of an elite stratum of parasites in rich ones. This relationship, the central axis of the imperial world order, can only be ended through a series of explosive revolutionary struggles in which the working class and its allies overturn the existing global hierarchy, expropriate the international networks of production, transport and communication and reconstruct the world economy from the ground up on the basis of rational, socialist planning.