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ABC of Marxism
Large scale production needs a great deal of capital. By selling shares of ownership in the form of stocks, the corporation acquires the use of great quantities of capital. These shares entitle their owners to a part of the profits made by the corporation, which thus utilizes the savings of small capitalists. Furthermore, corporation law absolves the individual capitalist from the corporation debts if it fails, contrary to a partnership in which each partner is liable in full.
Corporations sharpen competition between capitalists. There are now fewer capitalists but each is a more powerful competitor. To prevent the suicide of long, exhaustive price-cutting wars, corporations strive to eliminate competition by combining into trusts and syndicates, hoping to dominate the market, keep prices up and centralize control of capital. We live today in an era of monopoly production by trusts.
Because huge industrial enterprises require vast amounts of capital for success, the banks become an all-important factor. Only through banks can the industrial capitalists secure the quantities of capital required to float modern enterprises. By making loans to factories, railroads, mines, etc., bank capital becomes industrial capital. In turn, industrial capital increases the growth of bank capital. Thus finance capital binds together all branches of industry.
Now, banks lend money not to one firm, but to many. They are interested to see all these firms make a profit. This means the banks must try to eliminate competition among the firms to which they lend money. The tendency of banking or finance capital, therefore, is to unite whole industries and even groups of industries under its direction. The penetration of bank capital into industry finally results in two or three financial groups assuming control of all the resources and industry of the country. In the United States for example, J.P. Morgan heads not only an all-important banking system, but also U.S. Steel Corporation, General Motors etc. Andrew Mellon’s banking house controls, among other enterprises, the Aluminum Trust. In each great capitalist country today, a financial oligarchy holds sway over the economic and financial (and, consequently, the political and military) forces of that country.
Definitions:
Syndicate is a trade agreement between competing firms as to prices and territory (you sell in once district; we in another; at set prices). A trust is a complete merging of competitors. The entire control and management of the individual companies is vested in the hands of the new Board. A combine is a union of trusts in several industries. (Example: General Electric, U.S. Steel. They control the mining, transportation, smelting and finishing industries connected with the process of production.) Finance Capital is banking capital which has penetrated industry and controls it. A capitalist country today, economically speaking, is an immense combine headed by the banks. The government is its executive committee.
In the previous lesson we learned that the capitalist tries to overcome the falling rate of profit by a more ruthless exploitation of the working class – speed-up, lowering conditions, decreased wages, increased hours – to extract more and more surplus values. Later he learned that by exporting capital to backward countries, he realizes a higher rate of profit (more variable, less constant capital).
The export of capital is a relatively recent phenomenon. In the early 19th century, the era of free competition and free trade, export was mostly in finished goods such as textiles, shoes, pots, etc. In this period, England was the dominant capitalist country of the world and “the predominant bourgeois policy of England was against colonial policy and considered the liberation of the colonies, their complete severance from England, an inevitable and useful step.” Colonies were considered milestones to progress.
By the latter half of the 19th century, England began to feel the competition of the growing industry of Germany, France and the United State. It became more profitable to exploit the cheap labor and natural resources of the backward region, to transfer production to colonial and semi-colonial countries, than to export goods to these regions. Export of capital expanded more rapidly than export of goods. But the export of capital results in the creation of competitive industry in the colonial country which tends to drive out products of the mother country. Furthermore, it creates a colonial proletariat and aggravates unemployment at home.
Because profit from export of capital is greater than that from export of goods, the struggle over investment of capital sharpens. In this struggle the capitalists of the advanced countries strive to get political as well as economic control of the backward region. They bring pressure on it through manipulating loans to get favorable treaties, restriction or excluding imperialist rivals. Furthermore, capital investments have to be protected from harm. In order to do so the capitalists have to actually own or control the backward countries they invested in.
There arises a terrific competition for the acquisition of colonies and spheres of influence. Finance capital tends to eliminate competition within the nation, but aggravates it between nations. Capitalist competition takes on a world form in which entire nations are mobilized in a contents for survival. The process of partitioning the world among the great powers cannot be a peaceful one.
“The economic wars of capitalists expansion, of tariff and exchange and armament and competitive exploitation reach a point where the attempt is made to find a political solution of the economic and social contradictions through war, open and undisguised: imperialist-inspired wars between subject nations; wars of subjugation by imperialist powers against subject peoples, and the converse of these, peoples against their imperialist oppressors; the world-wide war of the imperialist nations among themselves ... Modern war is the very essence of imperialists-capitalism, as much a part of capitalism as wage-labor. To speak of capitalism without war is like speaking of human being without lungs. The fate of one is inextricably bound to the fate of the other.” (Imperialism – Lenin)
By 1871 the division of the entire earth among the great powers was complete. Between 1898 and 1905 the first redivision of the earth had taken place. In the world war of 1914–17 occurred the second great redivision. The crisis beginning in 1929 marked the beginning of the third great redivision of the earth. Nations coming late into the imperialist arena demand a “more justifiable” redivision of world markets. Prior to 1914, Germany, having developed the most powerful industrial apparatus in Europe, aggressively faced Great Britain and France who had already taken the best portions of the world. The United States had not yet saturated its own tremendous internal market. It was still a debtor nation. The struggle for world markets was therefore chiefly between Great Britain and Germany. In order to get an outlet to Asia and Africa. Germany sought to establish a trunk line from Berlin to Bagdad. First she had to have control over Central Europe – Austria-Hungary, Serbia, Bulgaria and Turkey. Of these she had all but Serbia. The Balkan War of 1912 was fought to annex Serbia. She failed.
In 1914 Germany utilized the assasination of the Archduke of Austria as an excuse to annex Serbia. Gt. Britain and France opposed this. The War was on. American capitalism wished for the defeat of Great Britain since it was her leading rival in the Western Hemisphere. This was clearly expressed in the policy of “neutrality” of Wilson, candidate of the Rockefeller group of financiers, whose oil policy called for defeat of its most powerful oil rival, Great Britain. Since Germany was winning, neutrality aided the winner. But Germany could not reach the U.S. and the Allies could. American capitalists could not resist the juicy investments and loans at high interest afforded by the Allies. Only when these loans were threatened did it become the interest of American capitalism to side with the Allies. Although Germany was defeated in the World War, Great Britain has now a more powerful rival in the United States, which has become the world’s greatest exporter of capital. The American dollar has displaced the pound everywhere in the Western Hemisphere with the exception of Brazil and the Argentine. Even here American investments have gained at the expense of G.B. since 1914. In an attempt to win Argentina away from G.B. the U.S. organized the Pan-American conference and Roosevelt’s “Good Will” tour. She failed in the attempt.
EUROPE: Although American capital has supplanted British in Europe, she has been unable to equal the sale of goods, due to the stronger political influence of Britain. Another factor is Europe’s retaliation to the high American tariff barriers.
ASIA: British investments in Asia, Africa and Australia outweigh the American, in China, for example, five to one; but, due to U.S. industrial superiority, it sells 13 times as much for every dollar invested as does Britain. Asia will most likely be the prize over which the next world war will be fought.
JAPAN: Britain has tried to form an alliance with Japan against U.S. But they are both leading textile exporters. This weakens the alliance. When Japan invaded Manchuria in 1931–32 England was indifferent because American interests in the main, were undermined. In the present invasion, Britain is the loser. U.S. has refused to protest the bombing of Shanghai since ¾ of British investments in China are there, but caused a stir over the attack on Nanking which is an Amrican sphere of influence.
NEUTRALITY: The U.S. was for “neutrality” in the Ethiopian and Spanish wars because that helped undermine Britain. In the Sino-Japanese war, U.S. has the opposite policy, because here the danger of Japanese victory means closing the door of China to American trade. To wage war against Japan, U.S. must have an Asiatic ally, either China or the Soviet Union.
SOVIET UNION: When the Wall Street base in Manchuria was undermined in 1931–1932, American capitalism almost immediately signed the Roosevelt-Litvinoff agreement. The weakness of this type of agreement is that it means a pressure on Stalin to form an alliance with Germany. Conversely, an alliance of England and Russia is hampered by the danger of a German-Japanese bloc. A British-German bloc would break France away from England and toward Italy, bursting the Rome-Berlin axis.
The above illustrates the complexity of the preparations for the coming world war. To be prepared for war constitutes the major policy of the imperialists. They build huge armies; larger and technically superior navies and air fleets. They systematically poison the minds of the working class with nationalistic propaganda and prejudices. Disarmament conferences, League of Nations, Collective Security – all these are smokescreens behind which the real jockeying for position and alliances of one group of nations against another take place. Big armies and navies are designed not only for suppression of colonials and to defeat rival powers, but also to maintain “law and order” at home – for the suppression of strikes, demonstrations, insurrections and other “domestic disturbances.”
It has been pointed out how capitalism in its imperialist and decaying stage exploits the working class with increasing ruthlessness. This arouses the workers to resistance. To meet this resistance the capitalists turn to Fascism as a means of heading off the revolutionary will of the masses. Fascism arises when finance capital can no longer afford to hide its dictatorship behind democratic forms of government.
Fascism is not a different economic system from capitalism. It modifies certain aspects of capitalism, just as in war-time other aspects are modified. Fascism is the last resort of finance capital in defence of the system.
“Through the Fascist agency, capitalism sets in motion the masses of the crazed petty bourgeoisie, and bands of the declassed and demoralized lumpenproletariat; all the countless human beings whom finance capital itself has brought to desperation and frenzy ... The Fascist agency, by utilizing the petty bourgeoisie as a battering ram, by overwhelming all obstacles in its path, does a thorough job. After Fascism is victorious finance capital gathers into its hands, as in a vice of steel, directly and immediately, all the organs and institutions of sovereignty, the executive, administrative and educational powers of the state: the entire state apparatus together with the army, the municipalities, the universities, the schools, the press, the trade unions and the cooperatives ... it means, for the most part, that the workers organizations have been annihilated that the proletariat is disorganized; and that a system of administration is created which penetrates deeply into the masses and designed to frustrate the independent crystallization of the proletariat.”
Following the merchant and industrial stages of capitalism arose the third, imperialist stage, characterized by: industry dominated by monopoly, economy by finance capital; capital is exported; the world divided among great capitalist powers; economy is dependent on colonial and semi-colonial bases for raw material. Imperialism aggravates all the contradictions of capitalism. The ever-growing necessity of the production forces to expand confronts a continuously narrowing market and comes into the most violent conflict with the national state boundaries. The result is a general, permanent and insoluble crisis of capitalism, the permanent disemployment of more and more proletarians, the lowering of real wages and the pauperization of the masses. Imperialism is the epoch of war and revolutions: of the great powers for the redivision of the earth; of the colonial masses for national liberation; and revolutions for the overthrow of capitalism. Imperialism signifies that capitalism has exhausted its progressive possibilities and now constitutes a brake on the development of the productive forces and the advance of humanity to higher material and cultural levels. Capitalism is ripe for transformation to socialism. The world revolution stands on the order of the day.
Imperialism – Lenin
Foundations of Imperialist Policy – M. Pavlovitch
The Decline of American Capitalism – Corey; Ch. 8, 17, 19, 20, 21
Rulers of America – A. Rochester; Ch. 1–8
Capital – Marx; I – Ch. 16 and III – Ch. 15, 23, 24, 25
The American Empire – Scott Nearing, Ch. 3
Modern Corporation and Private Property – Berle and Means
Imperialism and World Politics – Moon
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Last updated: 7 August 2019