Capitalism and Empire

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1 Imperialism Beyond Capitalism’s Borders Though imperialism’s roots were undoubtedly found in seeking out economic profits, its relation to capitalism and free trade has been more contested. In Vladimir Lenin’s Imperialism: The Highest Stage of Capitalism , he asserts that capitalism’s concentrating and centralizing tendencies inevitably led to the monopoly stage of capitalism: imperialism (Lenin 110). Citing the loss of free trade for monopolies and the replacement of the export of goods for the export of (financial) capital, Lenin views war as unavoidable in a world where almost all territory has been divided between a few imperial powers. While imperialism is undoubtedly related to (and was exacerbated by) capitalism, confining imperialism to the boundaries of capitalism neglects informal imperialism (Gallagher and Robinson), non-economic factors in imperialism, and the very colonies and regions whose non-capitalist means of production fueled capitalist imperialism (Luxemburg). While pseudo-humanitarian forces might have played a (miniscule) role in encouraging imperial nations to annex territories in Africa, Asia, and the Americas, economic incentives were undoubtedly the chief motivation (Hobson 255). As early as the sixteenth century, before European nations established formal territories in these countries, they penetrated foreign countries and markets for goods they could not obtain within their borders through the use of trading companies. Through the establishment of trading companies like the East India Company and Royal Africa Company, the foundations for the British Raj and the colonization of the Gold Coast were set (Hobson 264). As capitalism replaced feudalism across Europe in eighteenth and nineteenth centuries, these once strictly commercial trading companies became preoccupied with overseeing native agricultural and mining labor to supply their European markets (Hobson 265).

2 As such, Lenin’s attempt to view imperialism through an economic system, capitalism, has its merits. In the aftermath of WWI, Lenin sees imperialism as an inevitable progression in capitalism’s development where a few capitalist and imperialist European nations reap most of the world’s profits (Lenin 5, 9). He argues that the expansion of industry, the rapid concentration of production into larger enterprises, and economic crises have transformed free competition into monopolies—making small enterprises essentially ineffective against a handful of large ones (Lenin 13, 25). Financial capital (capital controlled by banks and employed by industrialists) has only expedited the conversion to monopolies by forming a virtual monopoly itself and has replaced the export of goods with the export of capital (Lenin 63, 74). These international capitalist monopolies now share the world among themselves, and virtually no territory remains unclaimed—making conflict and wars for the annexation of additional territory inescapable (Lenin 110). All of this, Lenin summates, marks a form of parasitic capitalism where a few strong nations exploit the rest of the world (Lenin 158). One of the principle critiques of Marx (that can be passed on to Lenin as well) is his dichotomous division of a society into capitalists and workers. In Lenin’s own reflections on imperialism and capitalism, he neglects to mention the role of non-capitalist countries and strata in the imperial system (Luxemburg 332) yet capitalism and imperialism rely on these regions heavily. As nearly all historians and economists agree on, international trade was vital to the historical existence of capitalism. For Luxemburg, international trade can be defined as exchanges between capitalist and non-capitalist modes of production (Luxemburg 340). Furthermore, argues Luxemburg, if capitalism could only depend on other capitalist countries in the small area of Western Europe that it occupied, it would not have been able to sustain itself.

3 The raw goods vital to its success are not produced by capitalist methods, and at times, the inclusion of these non-capitalist regions into closer contact with empire moves them further away from capitalism (Luxemburg 337). For example, when West African societies were encouraged by capitalist European traders to replace the chief export of slaves with the export of raw commodities like palm oil and groundnuts, this broke down capitalist aspects of their society. When slaves were the dominant export, high barriers to entry allowed large producers to form a monopoly—exacerbating the income disparity between rulers and their subjects who could be sold into slavery. The high capital and labor requirements of slave trading resulted in the rise of a very small group over a large mass of people (Hopkins 125). Once palm oil became the chief export, however, small farmers and traders were able to participate in foreign trade for the first time. Palm oil had very few barriers to entry and re-established the household as the unit of production. With access to cheap, readily available land, households with little capital were able to produce palm products that could yield a return in the same season (Hopkins 125). Despite this criticism, Luxemburg does agree with Lenin on capitalism’s role in encouraging imperialism and colonialism as capitalist production requires access to all the resources in all territories in order to develop fully (Luxemburg 343). It must be able to exploit all territories to use all possible productive forces. Similarly, the accumulation of capital requires the means of production and labor power of the entire world (Luxemburg 346). For Luxemburg, the internal market is the capitalist market where production buys its own products and supplies its own production while the external market is the non-capitalist environment that consumes the products of capitalism and supplies goods and labor power for capitalist production (Luxemburg 347). Lenin’s claim that imperialism should be understood as a stage of capitalism overlooks the non-capitalist factors required for capitalism (and imperialism) to function. It is in the colonies

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4 that run on slave labor or household units of production that supply the labor and raw materials necessary for capitalism and imperialism’s success. Furthermore, Lenin’s assertion that this late-nineteenth century imperialism marks a distinct break from the imperialism of the past as this “highest stage of capitalism” neglects to account for informal imperialism (Lenin 70). Beyond capitalism being the sole explanation for imperialism, Gallagher and Robinson argue that imperial powers like Britain had to tighten and slacken their formal political bonds with their colonies in order to maintain economic dependence and mutual good feeling (Gallagher and Robinson 4). Imperialism, as defined by the pair, is a “process of integrating new regions into the expanding economy” (Gallagher and Robinson 5). Using this definition, many more regions of the world are included in nineteenth century imperialism than under Lenin’s narrower definition. For example, while Britain was using mercantilist tactics of formal empire in India, it was also using informal free trade in Latin America (Gallagher and Robinson 6). If attention is given to where capital and credit flowed to from Britain, from 1815-1880, only one-sixth of British capital was directed into the formal empire. Furthermore, Britain’s formal empire never bought more than a third of the country’s exports (Gallagher and Robinson 5). Unlike Lenin who viewed imperialism through the lens of capitalism, Gallagher and Robinson rebuke this narrow focus and the replacement of free competition and trade for monopolies. Economic expansion (or imperialism) will flow to areas of maximum opportunity, but political considerations of security are just as important in this consideration as is potential profit (Gallagher and Robinson 6). Britain would restrict the use of its power to establish security for trade—resulting in what Gallagher and Robinson refer to as “British imperialism of free trade” (Gallagher and Robinson 6). This description of Britain’s attitude towards imperialism

5 directly contradicts Lenin’s deterministic outlook on capitalism and imperialism. Britain also combined both commercial penetration and political influence in attempting to dominate its formal and informal empires’ economies to best suit its own, revealing that economic motivators (capitalism) was not the sole driver nor tool used in imperialism (Gallagher and Robinson 11). Furthermore, Gallagher and Robinson label the treaty of free trade and friendship as Britain’s most common political technique, not the annexation and direct intervention Lenin claims will inevitably arise from this stage of capitalism (Gallagher and Robinson 11). According to Lenin, these countries where Britain was investing capital should have become part of her formal empire in the formation of her monopoly, yet one of the regions Britain most heavily invested in, Latin America, was never annexed by Britain. Most of Britain’s foreign investments were to regions outside her empire, but these regions were rarely absorbed into the formal empire as Lenin predicted (Hopkins 244). It was also in these unannexed regions where the returns on investment were highest, so (if following Lenin’s logic) why would Britain not have annexed the territories before a capitalist monopolist rival would? (Hopkins 235). In contrast to the uncontrolled and fatalistic territorial expansion of the world among the few major capitalist powers, Britain was much more reluctant to annex formal territories than Lenin asserts (Gallagher and Robinson 12). On the missions of Nyasaland in 1888, Salisbury declined to extend British rule, stating “It is not our duty to do it. We should be risking tremendous sacrifices for a very doubtful gain.” In Robinson and Gallagher’s view, establishing a formal British empire was the last resort—not as Lenin presents, the only resort. Britain would utilize informal political means to provide security before it would try to annex territory (Gallagher and Robinson 13). A key example of the role of non-economic factors in the establishment of imperialism lies in what is perhaps the best-known instance of imperialism: the scramble for Africa. Despite

6 often being presented as a one-sided depiction of European nations acting up a reactionary Africa, in order for European imperialism to establish itself (and to more importantly succeed), European powers had to depend on members within African societies to advance their cause. From its early history, the Ganda feared losing its territory, shaping it into an expansionist kingdom with the largest influence in the Lake Victoria area when the British enter (Reid 361). As such, the self-interested British endeavor to protect and expand their own power through the Gandan kingdom matched the Ganda’s own self-interested desire, and the two parties used one another to their benefit—resulting in Gandan hegemony under British overrule (Roberts 449). Complying with British imperialism also served as a form of self-protectionism for the Ganda, who by generally cooperating instead of resisting the British were able to keep almost all of their society and culture intact (Roberts 439). In Buganda, an imperial power itself, the British worked to enlarge Buganda in order to increase its foothold and influence in the Upper Nile region, much to the Ganda’s delight. (Roberts 435). Gandan imperialism (which existed long before British entry) clearly had little to do with capitalism. Though imperialism’s roots and spread are largely based in economic or financial motivators, constraining it (as Lenin does) to capitalism alone neglects much of the world beyond Western Europe’s borders. Though Lenin accurately recognizes the increasing disparities between capitalists and workers across the globe, capitalism’s parasitic relationship to the many smaller players it relies on, and the need for foreign countries’ land, labor, and markets, his assertion that this new monopolistic imperialism marks a break from imperialisms past is ill- founded. Once the world beyond Western Europe is considered, non-capitalist societies, informal colonies, and non-economic incentives for imperialism provide a more nuanced and accurate understanding of the propelling sources of imperialism.

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7 Bibliography Gallagher, J. and R. Robinson, ‘The Imperialism of Free Trade’, Economic History Review , 6, (1953). Lynn, M. ‘The “Imperialism of Free Trade” and the Case of West Africa, c. 1830 - c. 1870’, Journal of Imperial and Commonwealth History , 15 (1986). Hobson, J. A., Imperialism . A Study (1902). Hopkins, A. G.,‘Accounting for the British Empire’, Journal of Imperial and Commonwealth History 16 (1988). Hopkins, A.G., An Economic History of West Africa (London, 1973). Lenin, V. I., Imperialism, the Highest Stage of Capitalism. A Popular Outline , with an introduction by N. Lewis and J. Malone (London, 1996). Luxemburg, R., ‘The Reproduction of Capital and its Social Setting’, in idem , The Accumulation of Capital (London, 1951 [1913]). Reid, Richard., “War and Militarism in Pre-Colonial Buganda.” AZANIA: Journal of the British Institute in Eastern Africa 34:1 (1999). Roberts, A.D., ‘The Sub-Imperialism of the Baganda.’ Journal of African History 13, (1962), 438.