Term Paper on "Lenin Imperialism the Highest Stage of Capitalism"

Term Paper 12 pages (3656 words) Sources: 0

[EXCERPT] . . . .

Imperialism: The Highest Stage of Capitalism

Lenin begins Imperialism: The Highest Stage of Capitalism by describing World War I as an imperialist war, which he defines as a predatory war to plunder and annex, a war for the benefit of capitalistic moneyed interests in a struggle for monopolistic control. He sees the economic system of capitalism as "a world system of colonial oppression" which makes slaves of the majority of the world's people to profit a handful who control the wealth. The war, he states, was to decide which financial "marauders" (the Germans or the English) would gain the lion's share of the world's wealth. He argues that as long as imperialism exists, peace and reform will be impossible.

Meanwhile, tens of millions of downtrodden people are "oppressed, deceived and duped," their clear sight obscured by the contradictions of imperialism and the revolutionary crisis brewing all over the world. Once their eyes are opened, he predicts (in 1916) a proletariat revolution will take place. Lenin believes that imperialism, which he sees as a final stage of capitalism, signals decay of the system, something like the "crisis" of an illness when the body begins to lose ground and death approaches. This is my metaphor, but I think it is apt because Lenin equates capitalism with parasitism, and parasitism implies a disease. The parasites are the "less than one-tenth of the inhabitants of the globe...of very rich and very powerful states which plunder the whole world...." (p. 13).

Because of enormous profits in exports, billions of dollars over and above huge profits gained at home, capitalists have money to bribe the "labor aristocracy" who will side with the them in a revolution (because the rich, with their bribes and incentives, allow the labor aristocracy to live so comfortably). Therefore, Lenin believes the roots of the system must be exposed and its political and sociological implications recognized. This is his stated purpose for writing the book. Imperialism, he says, is the signal that social revolution is imminent. Lenin's thesis is that capitalism has evolved through clear and successive stages of development into imperialism

According to Lenin, the first stage of capitalism was the development of free competition at the beginning of industrialization around 1860. However, this stage, which he refers to as the "old" style capitalism, where manufacturers competed with each other for buyers of their goods, lasted only about 40 years. The old style gave rise to ever-larger enterprises where fewer and fewer big companies began to control more and more production. This he calls a concentration of production.

Monopolies were the intended result. Monopolies were often established through the development of cartels, trusts, and syndicates -- large combinations of enterprises which banded together to limit competition and fix prices. Cartel members agree on conditions of sale and terms of payment, and the amount of goods that will be produced. They divide the market among themselves. They fix the prices and divide the profits (p. 22).

Lenin argues that the cartels have become part of "the foundation of economic life," so that now people accept without question that "large spheres" of industry have been removed from the realm of free competition (p. 21). He shows with statistics the steady growth and proliferation of cartels. For example, the United States had 185 trusts in the year 1900; by 1907, the number of trusts had increased to 250.

He states that "Not infrequently cartels and trusts concentrate in their hands seven or eight tenths of the total output of a given branch of industry" (pp. 22-23). They gain a grip on all the business. The resulting transformation of free competition into monopolies is "a general and fundamental law of the present stage of development of capitalism" (p. 20).

When competition is transformed into a monopoly, the focus of industry shifts to technical proficiency and reducing the cost of production. Workers sometimes are offered bonuses to come up with inventions and ideas for greater, more efficient productivity. Lenin refers to this as part of the "socialization of production" (p. 25). The old free competition between manufacturers is gone at this point. Concentration has reached the point where combines can estimate sources of raw materials (who has them and how much) and capture control over them. Competitors who cannot get raw materials are forced out. The capacity of the market is also estimated, and the combines divide up the market between themselves. They gain control over transportation and monopolize skilled labor and get the best engineers. The organization and cooperation amounts to an established social order. Despite this socialization that develops, however, wealth and control remain in the hands of a few private owners.

Lenin states that cartels and combines are so powerful they throttle smaller industries. He lists eight methods cartels use for squelching competition: (1) Stop supply of raw materials; (2) stop supply of labor by means of corrupt "alliances" with trade unions, which permit their members to work only for cartels; (3) cut off deliveries; (4) close trade outlets; (5) make agreements with buyers so they only trade with the cartels; (6) cut prices to ruin outside companies (after they're ruined, raise the prices); (7) stop credit; and (8) boycott. At this stage competition is absent, and Lenin states: "...the big profits go to the 'geniuses' of financial manipulation" (p. 27). Thus, in his estimation, at this stage the most successful business person is not the one who understands the market and what customers need, but the one who has secured a dominating position through dirty tricks and unscrupulous practices.

At this point Lenin stops to discuss the pivotal role of banks in the "new capitalism." Beginning around the turn of the last century banks began to merge. Smaller banks were often absorbed and subordinated into bigger banks. As this happened, the function of banks began to change. Lenin states "The principal and primary function of banks is to serve as an intermediary in the making of payments." Part of this intermediary role was to extend credit. But a transformation took place in which numerous intermediaries were reduced to a handful of monopolists, and the old capitalism based on free competition turned into monopoly. Small banks were pushed aside by big banks, or turned into branches of big banks. The result was the development of big banking groups. These big banking groups were no longer intermediaries, but combines of monopolists. All the capital and revenues became centralized, first nationally and then internationally. This "concentration of capital..." greatly changed "the significance of banks" (p. 35).

Lenin explains that bank operations grew to enormous dimensions so that "a handful of monopolists control all the operations, both commercial and industrial, of the whole of capitalist society" (p. 35). He goes on to say that banks know the exact financial situations of various capitalists and can control them by restricting or enlarging their credit. Banks can ruin a client or "increase their capital rapidly to enormous dimensions" (p. 36); in either case, the capitalist is dependant on the bank. Where once banks were merely intermediaries, now banks are able to "intensify and accelerate the process of concentration of capital and the formation of monopolies" (p. 37). Big industry has become more and more dependant on a small number of big banking groups. Plus, he points out the growing inter-relationship between banks and industry. Big industrialists sit on the boards of banks and share in their management.

Finance capital," the most common form of capital, is raised by the sale of securities (stocks, bonds, etc.) to company shareholders. People who run the company are supposed to be responsible to the shareholders and to safeguard the shareholders' money, but this is not always what happens in actual practice. Lenin argues that the "holding system" produces a financial oligarchy, that is, a system in which a few control everything for corrupt and selfish purposes.

The holding system enables monopolists "to resort with impunity to all sorts of shady tricks to cheat the public, for the directors of the parent company are not legally responsible for the subsidiary companies, which are supposed to be 'independent'" (p. 49). The directors of the parent company control the subsidiary companies, which in turn control other subsidiaries; thus, the subsidiaries are not really independent. Balance sheets are typically indecipherable for shareholders to read or understand, and this is how the directors want it: "The simplest and, therefore, most common procedure for making balance sheets indecipherable is to divide a single business into several parts by setting up subsidiary companies" (p. 50).

Subsidiary companies are so commonplace, Lenin argues, that it would be difficult to find an important company that did not use them for various legal and illegal advantages. Lenin concludes that "Finance capital, concentrated in a few hands and exercising a virtual monopoly, exacts enormous and ever-increasing profits from the floating of companies, issue of stock, state loans, etc., tightens the grip of financial oligarchies and levies tribute upon the whole of society for… READ MORE

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