"Clearly, the most important blame is with the financial institutions that didn’t manage risk and the regulators who didn’t ensure that the banks did what they were supposed to. There were some other factors, such as easy money. But easy money could have been used for productive investment, so you can’t blame easy money. It was the way easy money was misused that led to the bubble.” (Joseph Stiglitz, “Thoughts on a Crisis: The Future of Capitalism,” Financial Times, May 12, 2009, 28)
Lenin’s Theory of Imperialism
Lenin wrote his famous essay on imperialism in 1916, drawing upon a variety of theorists who began to see significant changes in the way capitalism worked as an international economic and political system in the twentieth century. To him imperialism was an economic and political/military system that was driven by capital accumulation, the ability to generate more and more profit from all economic exchanges. A central source of profit was the exploitation of workers of all kinds. By the dawn of the century a multiplicity of economic actors had been consolidated such that ever-smaller numbers of economic giants dominated the economies of individual nations and the entire international economy. Multinational banks and corporations gained enormous wealth and power. The nation-states from which they came were driven to capture vital raw materials, markets, cheap sources of labor, and increasingly in the modern age, investment opportunities.
It was imperative for the capitalist system to be an international system, because it became vital for newly industrialized countries to enhance their access to raw materials that could not be acquired domestically. Similarly, with the increasing worldwide division of labor, non-Western countries became the source of valuable agricultural goods that supplied the increasingly industrializing nations with vital food stuffs. Further, labor power as a commodity was cheaper in countries victimized by foreign penetration, particularly after labor in the industrializing countries began to organize to demand a greater share of the value of what they produced. Another obvious need of burgeoning industrial capitalism was markets for products produced in the capitalist countries for which insufficient customers could be found at home because of the logic of capitalist exploitation.
The Rise of Finance Capital
Lenin stated that although capitalism continued to require raw materials and foodstuffs, cheap labor, and markets, a new need was generated by the further concentration of the capitalist economies. The concentration was manifest in the emergence of integrated banking and monopoly corporate control of the economy. Banks had assumed a particularly important place in twentieth-century capitalism, and the wealth accumulated by banks and monopoly corporations had to find investment opportunities or the system would stagnate. Therefore, as profitable investment opportunities reached their limits domestically, money capital had to find outlets abroad.
Consequently, Lenin observed, what later would be called “the Third World” was increasingly becoming absorbed into the international political economy by way of investments from joint stock companies, loans, and other investments to facilitate the overseas sale of goods and the building of production facilities to utilize cheap indigenous labor. (In our own day investment instruments would include private equity funds, hedge funds, and other speculative financial instruments). The political expression of the spread of capital worldwide was, in Lenin’s day, colonialism, or formal occupation and administration of subject territories. Later colonialism would be replaced by neo-colonialism, with the targeted land superficially ‘independent” but under the economic yoke of one or a few capitalist powers, or the entire international economy imposing its will on a dependent country’s political and economic life.
The world’s great capitalist powers were often able to establish accords dividing the world but during periods of intense economic competition conflict and war often resulted. Usually, Lenin claimed, wars were associated with the rise of new capitalist competitors to challenge the hegemony of the older ones. Given the concentration of wealth and power and the uneven character of capitalist development across countries, war was seen as a common feature of international relations in the era of monopoly capitalism.
In Lenin's Words
Lenin best captures his theory in the following graph:
“Without forgetting the condition and relative value of all definitions in general, which can never embrace all the catenations for a phenomenon in its complete development, we must give a definition of imperialism that will include the following five of its basic features: 1)the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; 2)the merging of bank capital with industrial capital, and the creation, on the basis of this ‘finance capital,’ of a financial oligarchy; 3)the export of capital as distinguished from the export of commodities acquires exceptional importance; 4)the formation of international monopolist capitalist combines which share the world among themselves; and 5) the territorial division of the whole world among the biggest capitalist powers is completed.”
And he summarizes: “Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the division of all territories of the globe among the biggest capitalist powers has been completed.”
While the Financial Times may not wish its readers to return to the classic theories of imperialism, for most of us such theories, such as Lenin’s, may provide a clarity and resonance that can help us understand the current financial crisis.