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53). He points out that four countries (in 1917) -- England, France, Germany, and the United States -- own 80 per cent of the world's finance capital; thus, in his view, the whole rest of the world is subjugated, that is, indebted to and tributary to those four "international banker countries."
Where once monopolists exported goods to other countries to make a profit, now they export finance capital. This is another symptom of the imperialistic stage of capitalism -- what to do with excess wealth? Lenin states that it would not be capitalism if the excess wealth were used to improve the quality of life for the millions of people who are still underfed and leading lives of misery. Instead, the capital is exported to "backward" countries and used to make more profits. In backward countries (now called developing nations) where there is a shortage of capital, labor is cheap, raw materials are cheap, and the price of land is low -- ideal conditions for making a profit. Investment in foreign countries brings big returns. For one thing, it accelerates the development of capitalism in those countries, and it allows the countries that are exporting capital to obtain certain advantages. For example, the investor may get "a coaling station, a contract to construct a harbour, a fat concession, or an order for guns" (p. 65). An industry that loans money to a poor country profits first from the loan itself; then, it pockets other profits from the same loan when the borrower uses the loan to buy goods from the lender (for example, to purchase railway materials from the Steel Syndicate). Instead of competition for the market, "connections" are used to make these profitable transactions: "The most usual thing is to stipulate that part of the loan that is granted shall be spent on purchases in the country of issue, particularly on orders for war materials, or for ships, etc." (p. 66).
With this development of exporting capital, the result has been gigantic international cartels, trusts, and syndicates, or monopolist capatalist combines, as Lenin calls them. Together the combine divides up the world into spheres of influence, sets prices, and shares the profits with each other, thus creating world-wide "super-monopolies."
Lenin cites the example of the electric industry at the turn of the last century. In Europe A.E.G., which consisted of seven or eight companies, each formed by combining several companies, by 1912 had become just one big combine controlling countless companies. In the United States General Electric came out on top. The result was there were only two electric companies in the world, A.E.G. And General Electric, and no other electric company anywhere could be completely independent of them. These two made an agreement to divide the world between them, and competition ended. This has happened in many industries -- oil, mercantile shipping, railroads, and steel being some examples Lenin gives. He then explains: "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 get profits" (p. 75). Capitalists then form alliances based on the economic division of the world, while parallel alliances are formed between governments in their struggles for colonies and for economic territories.
Aggressive colonization and territorial division of the world began precisely when the "old capitalism" or free competition ended and monopolies emerged. Thus, Lenin sees the development of exporting capital as inextricably linked to colonization.
Before free competition ended, the prevailing thought was that colonies would be liberated, that their separation from Britain, for example, was "inevitable and desirable" (p. 78). The colonies were regarded as burdensome. But by the turn of the century, opinion had shifted and imperialism (or acquiring new lands) was seen as a way to solve social (such as hunger and homelessness) problems. Colonial possessions (and the wealth they generated) increased enormously. Colonialism did exist before capitalism, but it was different (p. 82). With modern colonialism, monopolist combines dominate, and all sources of raw materials are under their control. The cartels make it impossible for others to compete with them. Colonial possession gives them a clear field in the subjugated country. Lenin points out: "The more capitalism is developed, the more the need for raw materials is felt, the more bitter competition becomes, and the more feverishly the hunt for raw materials proceeds throughout the whole world, the more desperate becomes the struggle for the acquisition of colonies" (p. 82). Colonial exploitation is imperialism, the final stage of capitalism.
To sum up, capitalism starts out as free competition, but through growth, cartels, and concentration of production, turns into monopoly, which is the opposite of free competition. Imperialism inevitably occurs during the monopoly stage of capitalism. Finance capital, the wealth of a few monopolist banks, leads to a division of the world into economic territories and through unhindered colonial policies, ownership of these countries. Lenin argues there are five steps or stages capitalism goes through:
The concentration of production and capital developed to such a high stage that it created monopolies which play a decisive role in economic life.
The merging of bank capital with industrial capital, and the creation, on the basis of this "finance capital," of a "financial oligarchy."
The export of capital becomes extremely important, as distinguished from the export of commodities.
The formation of international capitalist monopolies which share the world among themselves.
The territorial division of the whole world among the greatest capitalist powers is completed (p. 89).
When all these conditions have been established, imperialism is in full force. It is not just a policy carried out by countries towards other countries. It is not just a matter of annexation. It is part of an economic system in which there is rivalry between great monopolistic powers. He asks the question, "Is there under capitalism [italics his] any means of removing the disparity between the development of productive forces and the accumulation of capital on the one side, and the division of colonies and 'spheres of influence' for finance capital on the other side -- other than by resorting to war?" (p. 98). He implies there is not. Lenin maintains it is impossible to reform the system and no peace will ever be secured under it. "Imperialism is the epoch of finance capital and of monopolies, which introduce everywhere the striving for domination, not for freedom" (p. 120).
Lenin's analysis is based on his reading the work of economists, both for and against capitalism. He uses statistics to support his arguments. He also lived through and observed the second industrial revolution. He was an eye witness to aggressive colonization when countries scrambled to overtake smaller, weaker countries and thus increase their wealth. He reached the conclusion that when productive forces are aligned on one side and colonies with raw materials (dominated by finance capital) are on the other, war will ensue.
In Lenin's analysis of each stage of capitalism one cannot help but see examples everywhere of what he is claiming, so in some respect's his arguments have merit. For example, in the United States, the richest country on earth, the contradictions of capitalism are quite apparent in the suffering of homeless and destitute people who often live in areas where the temperature drops below 0 degrees (Farenheit). Furthermore, the effect of capitalism on the environment has been devastating. The fast food industry, for just one example, has been rapidly turning the rain forests into pasture land for grazing cattle, endangering the future production of oxygen these forests provide for all the world's people and animals to breathe. We also see big companies ruining their competition in a race to monopolize the market. Wal-mart, the largest retail store in the United States, does this by cutting prices so drastically that smaller stores cannot compete. Wal-mart is known for coming into a town, building on the outskirts, and destroying its "downtown" area where independent stores are put out of business. Soon the town has a depressed, boarded-up area downtown with abandoned buildings, litter, and crime.
Something Lenin failed to foresee was the development of "Agri-business." The capitalist answer to the farm problem was to completely run small farmers out of business in the United States. Agri-business raises animals in factories where animals have no quality of life and are sustained by drugs and growth hormones which make them ready for slaughter sooner, thus increasing the profits. Aside from the moral issues involved in the inhumane and cruel treatment of animals, many people in the U.S. are concerned about the quality of the food itself, which is cheap and plentiful, but full of pesticides, hormones, drugs, and preservatives which people cannot help ingesting into their human bodies. Capitalism, of course, does not concern itself with such problems.
The "out-source-ing" of jobs has become a contentious issue in recent years. Many big companies are bringing in people from developing countries who will work cheap.…[continue]
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