7311854._UY200_The Imperialism study group is finally getting underway.  We have participants from Ireland, Britain, Spain, Canada, the United States, Australia and NZ.  The first two sessions are being led by Tony Norfield.  Below are his notes for the first session, in which we examine the ‘economic’ aspects of Lenin’s Imperialism: the highest stage of capitalism.  This session is taking place at 9am, Sunday, July 24 (NZ time).   Sorry Australian comrades; it’s going to be very early for you!


The following points are based around Lenin’s arguments in Imperialism, but with the intention of raising questions (and giving my answers to some of these) about what this means for imperialism today. After the more general introduction, my comments discuss the ‘economic’ aspects of imperialism; the ‘politics’ of imperialism is planned for next time.

US factory workers make 76 times as much money per hour as their Indonesian counterparts

US factory workers make 76 times as much money per hour as their Indonesian counterparts


Lenin worked on Imperialism, the Highest Stage of Capitalism in early 1916, nearly two years after World War One began. When published, it was subtitled ‘a popular outline’. It is often seen as a political response to the war, rather than a work that has much depth or much theoretical content. But this would be to underestimate two important things. Firstly, that the pamphlet grew out of more than 800 pages of notes from Lenin’s study of a wide range of material (see Collected Works, Vol 39), notes which included critical remarks on Hilferding’s research, etc. Secondly, that the pro-war position of most parties in the Second International in 1914 had come as a profound shock to Lenin (somewhat less to Luxemburg, who was better informed about Kautsky and German Social Democracy, etc). This led him over the next two years into a deep study of philosophy in order to try to get to grips with these new and unexpected developments (see ‘Philosophical Notebooks’, Collected Works, Vol 38).

The pamphlet Imperialism is relatively short, although it was based upon a solid assessment of the world. It was also written in a strident, polemical tone, not as a ‘balanced’, academic and cautious study. But note the circumstances that socialist parties had backed a war that was leading millions of workers to their deaths! For the same reason, Lenin’s work did not have to spend much time proving that imperialism led to war, when there was a war on. However, he did make those points, and also gave a critique of the views of Kautsky that there might, in future, be a different, cooperative form of ‘ultra-imperialist’ policy (we should discuss this later).

Prior to 1914, there had been little published in the Marxist/Socialist movement on the question of imperialism as a stage of capitalism, except for some material on the colonial question. Rosa Luxemburg’s Accumulation of Capital (1913) tried to link colonisation to a supposed capitalist need for ‘external’ markets. Rudolf Hilferding’s earlier work, Finance Capital (1910), focused on how the financial system promoted monopolisation and led capitalists of particular countries to have more aggressive foreign policies. There is an echo of Hilferding’s subtitle – ‘A study of the latest phase of capitalist development’ – in Lenin’s own subtitle. Lenin also often cites the English economist, J.A. Hobson’s, own Imperialism book (1902), in which that author stressed the parasitic aspects of foreign investment and the tendencies to international conflict.

In the ‘Notebooks on Imperialism’, Lenin gives the following ‘shortcomings’ of Hilferding’s Finance Capital, which had been seen by many in the Marxist movement as the ‘fourth’ volume of Marx’s Capital:

  1. Theoretical error concerning money. [Lenin said that Hilferding’s view was that money entered into exchange without already having value]
  2. Ignores (almost) the division of the world.
  3. Ignores the relationship between finance capital and parasitism.
  4. Ignores the relationship between imperialism and opportunism.

(Lenin , CW 39, p.202, p. 334)

This further suggests that there is more of a theoretical content to Lenin’s Imperialism than allowed for in the view that it is only a ‘popular outline’.

The Economics of Lenin’s Imperialism

Key points from Lenin’s characterisation:

‘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.’ (Ch VII)

He is careful to relate this concept to the capitalist system as a whole, not simply to monopolies on a national stage. The tendency towards monopoly is a natural result of competition and capital accumulation, which would appear to have little to do with any new stage of imperialism. Instead, large corporations dominating different areas of production, commerce and finance could be seen simply as a later phase of capitalist development with no clear dividing line from an earlier stage. But Lenin makes important distinctions by referring to developments in the world market. Here are the five ‘basic features’ of imperialism that he outlined:

‘(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 associations which share the world among themselves, and

(5) the territorial division of the whole world among the biggest capitalist powers is completed.

Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; 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.’ (Ch VII)

This definition of imperialism involves the control of the world economy by groups of monopolistic companies – not simply monopolised production in particular countries. It is also based on a hierarchy of nations in the world economy, with the ‘biggest capitalist powers’ dominating. The mechanism of control is where monopolistic companies can exert power over the operation of markets, whether by price fixing, by cutting prices to drive out competitors or by other means. I would question some of the details of Lenin’s analysis, and whether they are suitable for understanding modern imperialism, but think his basic logic is correct. One need only consider today the examples of the WTO, the EU, TTIP and other trade agreements managed by the leading economies, as well as patent laws, etc.


The economics of imperialism is distinguished not by monopoly per se, but by monopolistic features of the world economic system. The role of the state is critical here, because of the uneven development of world capitalism. More economically developed countries will tend to have more productive companies that are larger and stronger in the world market, and some states will have bigger resources than others. Lenin’s five features, including monopoly, were posed as the key aspects of a single system, not as independent factors.

Lenin noted ‘the formation of international monopolist capitalist associations which share the world among themselves’. But he saw these deals as unstable relationships, given the uneven pattern of capital accumulation and commercial advantage, plus economic and political changes, especially when the world economy was already largely divided up into colonial trading blocs. In this case, a redivision of economic power and influence results in war between states:

‘The capitalists divide the world, not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to obtain profits. And they divide it “in proportion to capital”, “in proportion to strength”, because there cannot be any other method of division under commodity production and capitalism. But strength varies with the degree of economic and political development. In order to understand what is taking place, it is necessary to know what questions are settled by the changes in strength.’ (Ch V, towards the end)

Monopolisation of industry, etc, got going especially in the later 19th century, with the growth of cartels and protectionism between the different powers in the world market, after the ‘apex of free competition’ in the 1860s.

Contemporary economic data fully back up the view of a trend to the monopolisation of capitalist industry, commerce and finance, with the major corporations usually belonging to the major powers.

It is important to note that this is not a fixed for all time monopolistic carve up of the world market. Although the major powers have been a similar group (eg the G7) for decades, even their positions change over time. China has also become more important, while Japan and the Europeans have tended to fall back (Italy, especially, but also France and the UK). The UK and the US nevertheless gained an extra momentum from the 1980s with their focus on, and use of, the financial system to boost their respective positions.

‘Finance capital’

Lenin borrowed the concept of ‘finance capital’ from Hilferding, although Lenin’s usage is in a different, world context. This term draws attention to the financial aspects of modern capitalism, but, at least in Hilferding’s usage, misunderstands what is (and was) happening.

In Lenin’s usage, ‘finance capital’ is often identified with financial securities, the issuance of which exploded in the late 19th century and early 20th century, and which reflected the degree to which capitalist profitability was being siphoned off to pay the relevant interest on loans or bonds, or dividends on equities. The vast issuance of securities by companies meant that industrial profit was effectively turned into the rentier income of the owners of the securities. Using contemporary examples, Lenin also stresses how ownership patterns of financial securities enabled groups of capitalists to control much more capital than they actually owned themselves (eg own 51% of the equity to control 100%, and extend this through other subsidiary ownership). Another feature is that

Much of Lenin’s material is from Hilferding and from German sources, which tends to support Hilferding’s interpretation of contemporary imperialism. Hilferding’s concept applied reasonably closely to Germany, where banks often had large industrial shareholdings, but less to the other powers of the day. It certainly did not apply to the relationships between banks and industry in Britain. Although Hilferding took the international economy into account, he did not relate the form taken by ‘finance capital’ to the position that each country had in the world market. The up and coming powers like Germany were in a different (weaker) starting position from Britain, the established one, and the relationship between financial institutions, industry and commerce differed as a result.

Hilferding’s concept also exaggerated the independent role of banks, as if they were the drivers of the capitalist system, rather than understanding how the financial system evolves to facilitate the monopolisation of capital. This is often done via the ownership of financial securities (equities and bonds). But, although banks usually issue and trade these securities, they do not necessarily own a big proportion of them. Furthermore, Hilferding did not really understand the credit-creating role of the banks, which is something separate. This was, and is, a weakness of most Marxist analysis.

In my view, a better way to understand the role of ‘finance’ under capitalism and imperialism is to trace the forms of its development alongside the world economy. This may, or may not, put an emphasis on banks in particular countries, or on commerce, or on other things, depending on the evolution of world economic power relationships.

Lenin does not say much at all on how British imperialism works, although of course he notes Britain’s colonies and foreign possessions. The commercial power of Britain – its role in trade finance, shipping and insurance – is underplayed in favour of a theme that fits more closely with Hilferding’s understanding of the rule of banks and ‘finance capital’.

Is there a ‘financial oligarchy’? This was true in Lenin’s time, and is still today, in the sense that the ‘rich’ are big owners of capital, and the ownership is usually of financial securities. There is also a close relationship between the different groups of financiers, industrialists, government ministers, etc, etc, as note both by Lenin and Hilferding. It would often be difficult to distinguish an individual big capitalist as being an industrialist as compared to being a financier of some sort. While there will be cases of the managing entrepreneur (Mark Zuckerberg of Facebook, etc), most of these characters will have a more ‘rounded’ money-capitalist presence, with multiple directorships and financial assets that draw income from a variety of sources.

It is important also to take note of the state financial policymakers in the major countries (mainly the US), whose decisions also have a big effect on the access to funds and international markets. This is another form of financial power, both for the state and for a particular country’s capitalists.

I do not use the term ‘finance capital’. Today the term is commonly used to separate out the industrial or productive capitalists from the financiers, whether they are money capitalists/rentiers, banks or other financial institutions. There is an element of this in Hilferding’s and in Lenin’s description (as in Marx’s work), and it is true that the different groups of capitalists play different roles in the system. However, this can easily go too far and become an opportunistic distinction between ‘good’ industry and ‘bad’ finance.

That view ignores how all kinds of capitalist enterprise are bound up with the financial system, using it to boost their economic power. In particular, it often ignores problems of capitalist profitability and instead argues to regulate finance to solve (national) economic problems, or to force banks, etc, to lend to industry. Notably, Hilferding himself thought that by controlling the top six Berlin banks in his day, there could be control over capitalist industry!

Export of capital

Lenin discussed investment by domestic capitalists in foreign countries, and this took several forms. It might be bank loans or bonds issued on the London market, for example, by foreign companies or governments. It also included purchasing equity securities in companies that had railway or production facilities in other countries. All of these investments attracted a dividend or interest, and this foreign income was huge for Britain in particular. This was Lenin’s definition of parasitism. It was narrower than Marx’s definition of parasitism, since it mainly focused on the international dimensions or sources of surplus value.

Even in Lenin’s day, the investments were largely in other developed economies, not necessarily that much in backward economies, except in terms of mining and some agriculture. Note that British colonial investments included Canada, Australia and New Zealand, where a lot of British investment was located. Much of the view that imperialism means exploiting poor countries (only) has come from a post-1945 discussion.

I would argue that ‘capital export’ and the search for foreign markets occurs naturally with the accumulation of capital. There is no necessary or direct link with falling profitability in general in the national economy from which the investment originates. Instead, it is better explained by the need for individual corporations to expand the scale and scope of their production and demand for their products. The richer ‘over-ripe’ capitalist countries do export capital most, but this is because they are richer and more developed. While this is also associated with lower profitability in these countries and a shift into parasitic forms of capital investment, that is not always the driver for individual corporations. There will nevertheless be a tendency for such parasitic and more speculative forms of investment, as profitability becomes a general problem in capital accumulation.

Note: there was a boom in foreign investment up to 1914; that was then interrupted by the 1914-18 war and by later, interwar turmoil. Foreign investment really took off after 1945, led by the US, and this also had much more of a ‘direct’ investment form (having stakes in foreign-located companies), rather than just being portfolio investment into foreign equities and bonds. A different surge of foreign economic links occurred from the 1980s, with many more purely commercial (buy/sell) links between major imperialist corporations and their poor economy suppliers – this is part of the discussion of ‘value chains’ and commercial power links today (see John Smith’s book).

Lenin calls ‘superprofits’ those profits arising from foreign investments, ‘over and above the profits which capitalists squeeze out of the workers of their “own” country’ used to bribe the labour leaders and the upper stratum of the labour aristocracy (1920 preface). This stratum is the agent of the bourgeoisie. It is generally taken that the extra profits are also at a higher profit rate, and there is empirical evidence for this (not in Lenin’s pamphlet).

Territorial division of the world

Lenin distinguished formal colonies from the more informal power that the major countries had over the weaker ones. For example, he noted the important example of where Britain dominated Portugal and apparently Portuguese-run colonies in trade, etc. To that extent, it is the same today, even if the colonial form has diminished. If anything, it is more true today to say that the world has been divided up: there is no significant region of the world that has not been brought into the world economy, whereas in the early 20th century there were significant areas effectively outside the world market in Africa and Asia.


  1. […] Tony’s notes for the first discussion, which is on the ‘economic’ aspects of Lenin’s Imperialism: the highest stage of capitalism are here. […]

  2. Phil F says:

    Tony’s notes for his talk at the dayschool on Imperialism organised in London by the International Initiative for Promoting Political Economy last month can be read here: http://economicsofimperialism.blogspot.co.nz/2016/07/value-theory-finance-and-imperialism.html

  3. […] Imperialism study group – notes for discussion 1 (the ‘economics’ of Lenin’s… July 20, 2016 […]