The term ‘capitalism’ was coined by its early advocates, not by its opponents. It denotes the type of society in which the class of people who own industry and commerce largely shape economic, social, cultural and political developments. This capitalist class uses its power to extract surplus value from those who are employed, namely, the working class.
The capitalists, who own the means of production (industrial and commercial plant and machinery, land, energy and raw materials, etc.), pay workers a wage in return for their labour power. But human beings have the capacity to produce more value through their labour than the value of the wage they need to buy life’s essential commodities. This ‘surplus’ value accrues to the employer when the products of that labour are sold as commodities at normal market prices. It is the source of capitalist profit, which funds share dividends, loan interest, commercial rent, expanded investment, etc. The extraction of surplus value is the essence of capitalist exploitation.
The super-exploitation of slave labour in the colonies provided much of the raw materials, the super-profits and the fresh capital vital for the industrialisation of Britain in the late 18th and early 19th centuries.
As capitalism developed, its drive to maximise profit revolutionised industry, commerce, science, technology, culture, politics and society in general. In the most advanced capitalist countries, a small number of large combines, trusts and syndicates between them came to monopolise each major branch of the economy. Crucial to this development was the contribution of women’s work in the home to creating labour power’s capacity to produce surplus value. The oppression of women in society, which maintains this role, became even more important for monopoly capital as workers organised to fight for higher wages.
Through the fusion of banking and industrial capital to form finance capital, the banks and other financial institutions came to dominate industry and commerce. Finance capitalists used key shareholdings, directorships and credit to exercise control.
The monopolies were compelled to find more investment outlets abroad for their accumulated capital. In particular, they seized control of raw materials and cheap labour, thereby pre-empting imperialist rivals. More and more of these monopolies established themselves as transnational corporations (TNCs), locating some of their operations in at least one country beyond their home base.
This extension of economic power into already-conquered colonies and ‘semi-colonies’ (nominally independent but under foreign economic domination) was backed by the state power of their ‘home’ country. Thus capitalism entered its ‘imperialist’ stage towards the end of the 19th century.
The chief characteristics of imperialism are ‘monopolisation’ (the domination of each branch of the national economy by a small number of giant companies), inter-imperialist rivalry, and colonial or – in countries that have won formal political independence – neo-colonial super-exploitation.
The conflict between British, German, French, Russian and other imperialisms culminated in the bloodbath of the First World War. In the Russian empire, the corruption and incompetence of a landlord-police state helped forge an alliance between the peasants’ struggle against landlordism and the workers’ struggle against capitalism. Out of this came the October Revolution of 1917, through which the Bolsheviks and their allies seized political state power and went on to found the Soviet Union.
In the leading capitalist countries, the demands of ‘total war’ stimulated important shifts in productive forces (plant, machinery, energy, labour, technology, etc.) and the economic relations between society’s classes. The state intervened to take command of the war economy, promoting monopolisation and methods of mass production which sharply raised the productivity of labour. The war thus accelerated the fusion between the economic power of the monopolies and the political power of the state (the government and civil service, parliament, the police and intelligence services, the armed forces, the courts and prison system, local government, etc.).
The result has been the system known as ‘state-monopoly capitalism’. Big business came to play a more prominent and direct role in state and political affairs and vice-versa. The state used its financial, diplomatic and military power to protect and promote the interests of the monopolists.
Capitalism was re-stabilised in the mid-1920s. The capitalist state mobilised to defeat trade union militancy and attempts at revolution, productive capacity grew faster than workers’ consuming power. This contradiction laid the basis for the 1929 financial crash and the Great Depression of the early 1930s. Only massive state intervention in the economy, including preparations for war, began to rebuild industry and ameliorate social conditions in Britain, the United States (US) and elsewhere.
In Germany, the ruling class turned to fascism – open terroristic dictatorship in the service of monopoly capital – to destroy the communist challenge and divide the working class movement. This was done partly in preparation for a new imperialist war to re-divide the world in favour of German monopoly capital. Initially, Nazi Germany was able to use the anti-Sovietism of the ruling classes of other imperialist countries to strengthen its own economic and military position.
In Britain, France, Spain, the US, China and elsewhere, communists led the fight during the 1930s to build a working class united front as the basis for a wider people’s front against fascism.
The Soviet government and the international communist and working class movement were able to use the divisions within imperialism – chiefly between bourgeois democracy and fascism – to prevent a united front of the main imperialist powers against the Soviet Union. This made possible the defeat of fascism in what became a war of people’s liberation.
The Second World War (1939-45) also marked the emergence of the US as the world’s leading imperialist power. It had already established its own colonies and semi-colonies in Asia and Central and South America.
The ability of the enlarged socialist bloc to ensure full employment and basic social provisions strengthened the determination of people in the capitalist world not to return to pre-war economic conditions. State-monopoly capitalism was compelled to establish or extend welfare and education systems. In Britain, for instance, essential industries and services were nationalised in order to ensure investment, economic growth and full employment. State-monopoly capitalism was rebuilt in West Germany and the basis laid for its rapid development in Japan.
Thus imperialism entered its second phase in the late 1940s, characterised nationally and internationally by the stabilisation and restructuring of capitalism. This was achieved largely through the use of capitalist state power to regulate economic demand, promote profitability and coordinate international trading and currency relations.
Capitalism’s productive forces grew at an unprecedented rate in the 1950s and 1960s, largely due to the scientific and technological revolution (STR) with its wide-scale application of computer and micro-electronic technology. The research and education needed to underpin the STR could only be organised and financed through substantial state involvement. The transnational corporations became the decisive monopolies of imperialism. In the pursuit of maximum global profit, their decisions – which sectors and markets to expand, which to contract, which productive forces to develop, which to make redundant – determined the fate not only of workforces but of whole communities, regions and nations.
Inter-imperialist rivalry was moderated by the common purpose of waging the Cold War against the Soviet Union and its allies – hence the founding of the North Atlantic Treaty Organisation (NATO) in 1949 – and ‘hot war’ in Korea and Vietnam.
Most colonies gained at least formal political independence during the post-war era. But the main imperialist powers retained a large measure of economic control through the operations of their TNCs and through such international bodies as the International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and Trade. Wherever possible, pro-imperialist regimes were installed in the semi- and ex-colonies across the world, and brutal force was used to crush progressive, left-wing and anti-imperialist movements.
The uneven economic and political development of capitalism was aggravated on a global scale by imperialist intervention and the operations of the TNCs. While capitalism grew rapidly in the newly industrialised countries of the Far East, for example, large parts of Africa and South America fell further behind in economic and social development. Western imperialism ruthlessly plundered their natural resources, exploited their labour and plunged them into debt bondage.
In the leading capitalist economies, the prolonged period of post-war expansion – made possible by state intervention, the STR and rising productivity – was based on a strategy of class collaboration. Workers would enjoy job security, social benefits, employment rights and ever-higher living standards, while their trade union and political representatives would seek only to reform capitalism, not to challenge or abolish it. But cyclical and structural crises reasserted themselves more markedly from the late 1960s. In 1973, the international oil crisis exacerbated one such cyclical downturn and at the same time signalled the onset of today’s gathering energy and ecological crisis.
Finance capital was confronted with rising prices, working class pressure to maintain living standards, military and political reverses in the Third World (the under-developed and developing countries) and the continuing political and technological challenge from the socialist countries. Moreover, the international monetary system disintegrated in the 1970s, as the main imperialist powers sought competitive advantage through currency devaluation. Speculators contributed to the instability.
In these conditions, the ideologists, economists and politicians of the ‘New Right’ gained ascendancy in US and British ruling class circles. Their aim was to restore and increase the profitability of monopoly capital through a wide-ranging onslaught against real wages, trade unionism, public and welfare services, progressive taxation, public ownership of industry and the utilities, and against banking and financial regulation. Thus imperialism began the transition to a third phase of development from the early 1980s.
Counter-revolution and the dismantling of socialism in eastern Europe and the Soviet Union from the late 1980s opened up enormous opportunities for monopoly capital to seize control of resources, transportation routes, utilities and markets in the former socialist countries and the Third World.
The result has been a prolonged and continuing world-wide imperialist offensive to maximise monopoly profit through ‘neoliberal’ policies of privatisation, deregulation, intensified exploitation of labour and the free movement of capital. This imperialist ‘globalisation’ is presented by its supporters and apologists as an inevitable economic process. However, from the outset it has been driven politically by the representatives of state-monopoly capitalism.
New and existing international agencies and mechanisms such as the World Trade Organisation, the General Agreement on Trade in Services, the IMF and the World Bank are utilised to enforce neoliberal policies. The European Union (EU) has played a leading role in this process, confirming its character as an alliance led by the most powerful state-monopoly capitalisms. It strives to overcome internal contradictions and transform itself into an imperialist ‘United States of Europe‘.
The champions of capitalist ‘globalisation’ seek to confront workers with two options: either yield to its logic of lower wages, intensified labour and permanent job insecurity – and hope to stay in work – or defy it, with allegedly dire consequences personally and for the nation’s economy.
Third World and former socialist countries whose regimes may obstruct imperialist power are demonised as ‘rogue’ or ‘failed’ states, often on the basis of racist presumptions. They are accused of frustrating the will of the ‘international community’ (which usually means the US and its allies). Consequently, bombing missions or full-scale military invasions have been launched against Iraq, Lebanon, Libya, Somalia and Yugoslavia.
Moreover, the September 2001 attacks on the US were used as the pretext to launch a bogus ‘war on terror’. US, British and NATO forces extended and deepened imperialism’s military, political and economic influence across the ‘Greater Middle East’ region, from North Africa to Pakistan, inflicting state terrorism on the peoples of Afghanistan and Iraq on a monstrous scale. The world’s biggest reserves of oil, along with vital supply routes, are located in this area, which is strategically located between China, India, Russia and the African continent.
Far from the downfall of the Soviet Union and the end of the Cold War producing a more peaceful world, the imperialist powers led by the US and Britain have since engaged in a massive escalation of armaments programmes, a non-stop series of military interventions and the expansion of NATO eastwards towards the borders of Russia. China is almost completely surrounded by imperialist military alliances and bases, while foregoing any bases of its own on foreign territory.