Monopolies, Finance Capital, and Imperialism

Monopolies, Finance Capital, and Imperialism

By Ryan Smith

raining_money

What is imperialism? Although some claim imperialism is only “a policy of extending a country’s power and influence through diplomacy or military force,” those “some” being the people who define their terms based on the first Google result that pops up, this definition is hardly complete or correct.
First, this definition fails to describe the fundamental drive behind imperialism, which is profit, and the exploitation of another region’s labor and the theft of its resources by another politically and economically dominant nation. This drive, or this quest for wealth and resources, was something characteristic of the pre-capitalist Roman, Macedonian, and Holy Roman empires, as well as the capitalist empires of Britain, France, Germany, and the United States among others. Although imperialism existed before capitalism and the industrial revolution, because the historical and material conditions of nineteenth century Europe differed from the historical and material conditions of Ancient Rome (and the eras of other pre-capitalist empires), a different kind of imperialism eventually developed as capitalism itself developed.
What is capitalist imperialism? It’s a system based on the accumulation of capital through the exploitation of foreign labor, the expropriation of foreign natural resources, and the creation of global markets. It developed in the latter half of the nineteenth century as competitive capitalism in the West transformed into monopoly capitalism. Because capital (the means of production, the financial assets used by capitalists to produce wealth) has a tendency to concentrate (see the rise of the American “robber barons” among other examples), this led to the monopolization of industrial capital in the latter half of the nineteenth century, something that was accomplished through vertical integration, the absorption of smaller, failing companies by bigger, successful ones during recessions, temporary price reductions to undercut competition, and bourgeoisie-government scheming among other things.
Also occurring around this time was the rise of monopolized banking capital and the emergence of something called “the holding system.” “The holding system” can be described as a kraken, in which a single group of financial oligarchs control one set of banks or corporations, which in turn control another set of banks or corporations, and so on. To better illustrate how banking became more monopolized and how one bank can control many others both directly and indirectly, here are some illustrations from Lenin’s Imperialism: The Highest Stage of Capitalism (all of which he cites with other credible sources). The first table shows how deposits gradually concentrated in the nine biggest German banks, which resulted in the smaller banks receiving less and less:

image1

The second table illustrates “the holding system” and how the Deutsche Bank, one of Germany’s largest banks in the early twentieth-century, controlled a large number of other banks, directly and indirectly, permanently and temporarily:

image2

 

What followed the monopolization of both industrial capital and banking capital was the emergence of finance capital, or banking capital funding and controlling monopolized industries, as banking oligarchs began to purchase the majority of the stock belonging to industrial corporations. Ultimately, this led to a suppression of domestic competition, but not international competition, since the financial oligarchs of different European countries began competing amongst each other for access to an increasingly limited supply of natural resources, land, labor, and markets. And this competition amongst finance capital led to the intensification of colonialism: nineteenth and twentieth-century imperialism.
Although Western nations like Great Britain and France had already possessed a number of colonies throughout the world prior to the emergence of finance capital, the competition for natural resources, land, labor, and markets amongst the European (and Japanese) imperial powers in the late nineteenth and early twentieth centuries led to “re-divisions of the world,” in which the finance capital of one imperialist power would use the state (military, diplomacy, etc.) to claim new colonies or new “spheres of influence,” giving that nation’s capital monopolized access to the resources it desired. To further illustrate how it was the emergence of finance capital that led to this imperialist expansion, here are more tables from Lenin’s Imperialism: The Highest Stage of Capitalism that reveals an increase in European capital being invested abroad (allowing the European financial oligarchy to control the industries, resources, labor, and markets of the European colonies) as the colonial empires of those European powers (and others) expanded:

image3image4image5

 

In Imperialism: The Highest Stage of Capitalism, Lenin uses the battle between John D. Rockefeller’s Standard Oil Company (American) and the Deutsche Bank (German), which itself developed oilfields in Austria, Romania, and the Dutch colonies, to illustrate how banking capital controlled industrial capital (thus transforming banking capital into finance capital). It also reveals the intensity and the scope of the competition between nations to secure access to a limited supply of natural resources and dominate the global market:

A struggle began for the “division of the world”, as, in fact, it is called in economic literature. On the one hand, the Rockefeller “oil trust” wanted to lay its hands on everything; it formed a “daughter company” right in Holland, and bought up oilfields in the Dutch Indies, in order to strike at its principal enemy, the Anglo-Dutch Shell trust. On the other hand, the Deutsche Bank and the other German banks aimed at “retaining” Romania “for themselves” and at uniting her with Russia against Rockefeller. The latter possessed far more capital and an excellent system of oil transportation and distribution. The struggle had to end, and did end in 1907, with the utter defeat of the Deutsche Bank, which was confronted with the alternative: either to liquidate its “oil interests” and lose millions, or submit. It chose to submit, and concluded a very disadvantageous agreement with the “oil trust”.

I chose this example because it shows how one of Germany’s largest banks, the Deutsche Bank, was able to develop its own oilfields, like any other oil company could, even though it was only a bank. It accomplished this by using its banking capital to invest in and purchase industrial capital, which it then used to industrialize regions in Austria, Romania, and the Dutch colonies. It’s a perfect example of exactly how banking capital transforms into finance capital by taking control of monopolized industries, and it’s also a perfect example of the competition between monopolies of different nationalities: the American Rockefeller versus the German Deutsche Bank. So it’s an excellent, real-world example of what the business aspects of imperialism entail.
So ultimately what does all of this show? It shows that there’s something lurking in the shadows of nineteenth, twentieth, and twenty-first century imperialism, behind all the slaughter and slavery, racism and “white men’s burdens,” exploitation, theft, and “humanitarianism,” and it’s finance capital, capitalism.
By understanding the historical conditions that led to the development of “the highest stage of capitalism,” we’re able to grasp a better understanding of a system that has benefitted a few at the expense of billions. We’re also able to see how capitalist imperialism differs from pre-capitalist imperialism; we see how the concentration of industrial capital; the emergence, export, and monopolization of finance capital; and the division of the world into colonial spheres of influences led to an international system based on the accumulation of capital through the exploitation of foreign labor, the expropriation of foreign natural resources, and the creation of global markets in peripheral, non-Western regions in the nineteenth, twentieth, and twenty-first centuries. Lastly, we also learn that unless a state engages in the ruthless exploitation and oppression of another land and people for profit, resources, or wealth, then it can’t be imperialist; it can’t be labeled in a way that Rome, Macedonia, the Holy Roman Empire, Great Britain, France, Germany, the United States, and Japan were and are.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s