Imperialism, the Highest Stage of Capitalism

According to Lenin, World War I was an imperialistic war resulting primarily from conflict between British and German financial groups. Previous to this time, the world became divided into the financial capital have's and have-not's. Uneven construction of railways speeded up processes of industrial concentration in favor of monopolies and financial oligopolies. Resultant to this, the population of the masses became financially strangled and oppressed. By 1917, Lenin's revolutionary movement was a consequence of these conditions and very reflective of capitalism's decay.

Leading up to the imperialist wars, this problem of production concentration increasingly rose out of a highly regarded notion or natural law of free competition that was prevalent during the mid-nineteenth century. By 1917, though, monopoly was a fact, and combinations or grouping of single enterprises of different branches of industry to help stabilize trade and profit fluctuations became the norm. By 1890, cartels were able to fix prices and quantities of goods to be produced. The crisis of 1900, which was characterized by falling prices and demand, was distinctly noted by Lenin to be a significant time for the permanent establishment of monopolistic capitalism and production socialization as those who had a competitive advantage in production scale and technology survived. This phenomenon was unfortunate for workers because although production became social and alliances increasingly formed, appropriation remained private and workers had to struggle even more against larger and fewer enterprises for their share.

One of the most significant contributions to the transformation of capitalism into capitalist imperialism was monopolization of banks. The rapid expansion of close network of bank groups led to the centralization of all capital and revenues and had the effect of turning capitalism into a single collective, national, and then global system. As this centralization of capital and revenue occurred, it enabled huge banks to control the financial positions of capitalists including their credit and capital access and income determination. Thus, banks intensified and accelerated the process of capital concentration and the formation of monopolies.

Now, resultant to this monopolization of banks and finance capital, capital in the industry no longer belonged to industrialists. Financial oligarchy found a way to collect capital from the hands of small industrialists to form a "holding system." Soon the entire sphere of production became dominated by a comparatively small number of banks, and money capital became separated from industrial capital; a rentier class from an entrepreneur class. Big banks soon began to dominate the whole economy.

Although this new monopolistic financial capitalism continued to result in an abundant supply of capital, excess was not used to improve the standard of living of the masses, but it was reserved for the purpose of exportation and investment into third world countries. It was advantageous for capital to find investment abroad because in backward countries the price of land was relatively low, profits were usually high, labor was abundant and cheap, and raw materials tended to be less expensive. Furthermore, through capital export, this process of monopolization and centralization of industry and money capital could be extended to spread all over the world for increased domination and control.

In a monopolistic world, competition remained an important feature but it took on a new toll. Now, competition had a narrower scope and became a battle among fewer international cartels and trusts. As such, the entire world became divided in proportion to capital and pecuniary strength. By the late 19th century, the world was completely divided, and in this latest stage of capitalism, re-division was the only alternative that remained. This led to a situation where struggles for territory and conflict for capital monopolization became increasingly prevalent.

Interestingly, the struggle for territorial division of the world or imperialism started with capitalism's transition to the stage of monopoly capitalism and was highly correlated with monopolization of finance capital. The development of imperialism as a dominant feature of capitalism coincided with the transition of capitalism to its monopolistic stage.

According to Lenin, there were four basic features of imperialism: monopolistic concentration of production and capital, creation of a financial oligarchy that dominated and controlled industry, increasing importance of capital exportation, and territorial division of the whole world by the biggest capitalist powers. According to Kautsky, "ultra-imperialism" was a more advanced form of imperialism where a union of the imperialists in the world resulted in a termination of conflict and territorial struggle and could thus promote joint exploitation.

Both Lenin and Hobson described imperialism as "parasitism." According to Lenin, monopoly was the economic foundation for imperialism or monopolistic capitalism. However, Lenin strongly felt that this imperialism would lead to stagnation and decay because competition in the world could never be completely eliminated. Lenin also showed that the income of the rentiers was much greater than the economic rents obtained from foreign trade.

According to Lenin, World War I resulted from the re-division of the world by imperialists. One distinctive character of imperialism was exploitation of an increasing number of small nations by a few powerful nations. Prior to World War I, Great Britain, United States, Germany, and France were some of the few and most powerful imperialist countries. With this form of capitalism, the state became a rentier state, growth became increasingly uneven, and capitalism in the imperialist form was doomed to decay and eventual self-destruction.