Chapter 18: Imperialism: the Highest Stage of Capitalism. The Basic Economic Law of Monopoly Capitalism

The Transition to Imperialism

Pre-monopoly capitalism, with free competition predominating, attained the apex of its development in the 1860’s and 1870’s. During the last third of the nineteenth century there took place the transition from pre-monopoly to monopoly capitalism. Monopoly capitalism finally took shape towards the end of the nineteenth and the beginning of the twentieth centuries.

Monopoly capitalism, or imperialism, is the highest and last stage of capitalism, with the replacement of free competition by the dominance of monopolies as its fundamental distinguishing feature.

The transition from pre-monopoly capitalism to monopoly capitalism (imperialism) was prepared by the entire process of development of the productive forces and relations of production in bourgeois society.

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As the transition to imperialism took place the contradictions between the productive forces and the production relations of capitalism came to assume ever more acute forms. The subjection of production to the capitalists’ hunt for the highest possible profit created very many barriers to the development of the productive forces. Economic crises of overproduction began to recur more frequently, their destructive force increased, and the army of unemployed became more numerous. Alongside the growth of poverty and misery among the working masses of town and country there took place an unprecedented increase in the wealth concentrated in the hands of a small group of exploiters. The sharpening of the irreconcilable class contradictions between the bourgeoisie and the proletariat led to intensification of the economic and political struggle of the working class.

During the period of transition to imperialism the largest capitalist Powers of Europe and, America made themselves masters of huge colonial possessions by force and fraud. The ruling circles of the capitalistically developed countries transformed the majority of the inhabitants of the globe into colonial slaves who hated their oppressors and struggled against them. Colonial conquests enormously extended the field for capitalist exploitation; at the same time the degree of exploitation of the working masses steadily grew. The extreme sharpening of the contradictions of capitalism found expression in devastating imperialist wars, which carried off a host of human lives and destroyed a vast quantity of material wealth.

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In Lenin’s classic definition, the fundamental economic features of imperialism are the following:

“(1) The concentration of production and capital developed to such a high stage that it 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, which has become extremely important, as distinguished from the export of commodities;

(4) the formation of international capitalist monopolies, which share the world among themselves; and

(5) the territorial division of the whole world among the greatest capitalist Powers is completed.”[1]

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The Basic Economic Law of Monopoly Capitalism

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The main features and requirements of the basic economic law of monopoly capitalism are the following:

“The securing of the maximum capitalist profit through the exploitation, ruin and impoverishment of the majority of the population of the given country, through the enslavement and systematic robbery of the peoples of other countries, especially backward countries, and, lastly, through wars and militarization of the national economy, which are utilized for the obtaining of very high profits.”[2]

Thus, the basic economic law of capitalism, the law of surplus-value, is further developed and made concrete in the period of imperialism. In pre-monopoly capitalism free competition led to a levelling of the rate of profit of the individual capitalists, and the law of the average rate of profit prevailed. In the conditions of imperialism the monopolies secure for themselves high, monopolistic, maximum profits. It is precisely maximum profit that furnishes the driving force of monopoly capitalism. Outflow of capital from one branch to others also occurs in the monopoly stage of capitalism and the tendency to equalization of profits exists. This tendency clashes, however, with the operation of the basic economic law of monopoly capitalism, the law of maximum capitalist profit. In the epoch of imperialism commodities produced by monopolized branch of production are sold for the most part at monopoly prices, exceeding the price of production and ensuring high monopoly profits, but commodities produced by non-monopolized branches are often sold at prices below the price of production, so that the entrepreneurs concerned do not receive even the average profit.

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[1] Lenin, “Imperialism, the Highest Stage of Capitalism”, Selected Works, Vol. I, p.525.

[2] Stalin, Economic Problems of Socialism in the U.S.S.R., F.L.P.H. edition, pp. 43-44.