Before Hitler (1938)

From the July 1938 issue of the Socialist Standard

The decade before Hitler was for German capitalism mainly a period of stabilisation and attempted recovery. Many new parties and groups were thrown up, ranging from different brands of Communism to currency reform fanatics and types of Fascism. The working class, not understanding Socialism, but merely possessing a reformist outlook and suffering deeply, alternately swung their support over to each fresh demagogue, and illusion and despondency were the inevitable result. American capitalism, after helping to smash Germany, now undertook to restore it. This served two purposes. It provided a new outlet for American investments and rebuilt a formidable competitor to Britain, as an offset against the growing Anglo-American rivalry for world dominance.

If it was possible to restore Germany to a healthy economic (capitalist) condition, the prospects would be rosy for profitable financial investment.

Through the Experts Commission (chairman, General Dawes) the chaotic reparations demands and methods of payment were regularised, and German firms, municipalities and local governments were able to obtain the foreign loans necessary to resume their former profit-making activities. The aim of the Dawes Plan was to make of Germany one vast international (and especially American) financial undertaking. American capitalists came to the rescue (on terms) of their German brethren, and in all but name Germany became an American colony. The foreign loans gave such an impetus to German trade that for five years (1924 to 1929) German capitalism was able to quite easily pay its interest claims and reparations demands. It was, however, without solid foundation, for its prosperity was only made possible with the assistance of foreign loans.

Guarantees to the American and other capitalists were included in the Dawes Plan. The State railways were taken out of the control of the Reich and placed in the hands of a company formed for the purpose. The Reichsbank was also taken away from the German Government and transformed into an instrument under “foreign” capitalist control, allowing pickings for the home capitalists, etc. French capitalism now received its reparations share regularly and withdrew its forces from the Ruhr. Herr Stresemann now devoted his energies to securing the evacuation of the Rhineland by the Allied armies, and out of this need of German capitalism was born the Locarno Pact and Germany joined the League of Nations. An era of mad speculation commenced; for the sake of American money German capitalism abolished some of its customs, including Martial Law. The Generals made way for the Dollar.

With the death of President Ebert an election took place (1925). The Social-Democratic candidate, Braun, came second with 8 million votes, withdrew their candidate and supported the nominee (Marx) of the reactionary Catholic Centre Party, as the “ lesser evil."

At the elections in 1928 the Labour Party obtained its greatest victory—over 9 million votes, and the Communists three and a quarter million—on a programme differing very little from the ordinary capitalist parties. Very few among the voters wanted or understood Socialism and were mainly captured by the promise to break the shackles of Versailles. The Social-Democrats now joined a “People’s Front" and entered the capitalist coalition government, demonstrating their political unity and ideological agreement with Stresemann and the capitalists in general. Germany had its Snowdens, MacDonalds, etc. The chief task confronting this motley crew was to make Germany “independent,” that is to say, now that German industry was yielding large profits, the home capitalists wished to limit the grip of American finance and reap the harvest for themselves. The rôle of the Social-Democrats was the same the world over—to act as the facade and to harness the working class to the capitalist machine. For this they received the usual Judas price—a share in the Government and the large salaries that go with it.

Severing became Minister of Interior, Wissell Minister of Labour and Hilferding Finance. The Dawes Plan was superseded by a definite settlement named after its chief-financier, Young. Under the Young Plan the payments to be made by Germany were definitely fixed for 60 years. German capitalism was now master in its own house and the control imposed by the Dawes Plan finished and the Army of Occupation marched out of the Rhineland. Just at this time the “world economic crisis” made its appearance. The financial smash in the New York Stock Exchange let loose a flood which swept everything before it. How this affected Germany will be seen in our concluding article.

Lew.

Grappling with Grundrisse (1979)

Book Review from the October 1979 issue of the Socialist Standard

The Making of Marx’s ‘Capital’ by Roman Rosdolsky, Pluto Press, 1977.

There has never been a time when the conditions for a transformation to a Socialist society have been so ripe. Socialism has never been as indispensable and economically feasible as it is today, (p.488)

 This is certainly not a book for the dilettante or the dabbler, but for the dedicated Marxian buff. We have here a systematic comparison of the seven large notebooks compiled by Marx during fifteen years exhaustive study of the bourgeois economists, with the published product, the Critique of Political Economy and Capital.

These notebooks came to light, somewhat mysteriously, in 1931. The source, presumably, was the archives of the German Social Democratic Party, known to be Marx’s (and Engels’) literary executors. They next turned up in Moscow at the Marx-Engels Institute, which published them, but they were not translated into English until 1973.

They are now published by Penguin under the title Die Grundrisse, referred to as ‘the rough draft of Capital’, and reading like a telephone directory or railway timetable. Here is no Karl Marx the brilliant political literateur whose searing epigrams made Capital world famous, but Dr. Marx the methodical, painstaking craftsman systematically cutting down sequentially P. Proudhon, David Ricardo, Adam Smith, J.S. Mill, J.B. Say et al.

Rosdolsky’s work is no slavish recap of Marx but a rigorously critical reappraisal. He claims that a mistake was made in The Communist Manifesto in stating that capitalism could “no longer maintain its own paupers”, and that Marx was unduly influenced by the crises of the 1850s. Leafing through Rosdolsky’s copious quotations, we can almost hear Marx’s cerebrum ticking over, following his devastating onslaught on the orthodox and radical economists to his positive conclusion — Surplus Value. Item: Adam Smith, who never understood the real nature of creative labour, calling it all ‘pain’. Item: David Ricardo, who could never accept the existence of constant capital. Item: P.J. Proudhon, with his pathetic ‘free credit’, and many others.

Not content with all this, he then embarks upon a rasping re-evaluation of the whole of the ‘Golden Age’ of Marxian literature, from 1890 to 1925. He reviews and challenges almost every writer of note: the Germans — Kautsky, Bernstein and Luxemburg; the Austrians — Hilferding and Bauer; the Russians — Plekhanov, Tugan, Lenin, Trotsky, Bukharin; Joan Robinson (Britain); and Sweezy and Baran, the Americans, are all taken to the cleaners.

It is difficult to follow Martin Nicolaus’s somewhat obscure, if not peevish, stricture in a footnote reference to Rosdolsky in his foreword to Die Grundrisse. He calls Rosdolsky’s book “quotation- ridden” and complains that ‘Ros’ has “not taken the science [of Marxism] a single step further”. How you evaluate Marx’s work without quotations is a secret known only to Mr. Nicolaus. Seeing that Rosdolsky was exposing the Stalinist economists (?) for the sycophantic fakes they were when Mr. Nicolaus was writing rubbishy pamphlets about the ‘Workers’ State’, we are satisfied that it was Rosdolsky who ‘took the science further’.

An intriguing sidelight of Die Grundrisse is the further evidence it gives on the notorious Bohm-Bawerk controversy, that is, Bohm’s claim that Marx ‘invented’ Production Price in the third volume of Capital to explain away the ‘discrepancy’ between average profit and the Labour Theory of Value in the first. We now know not merely that Marx wrote (as Hilferding proved) Production Price before Volume I was finished, but that it was in Grundrisse years before Capital was even started.

Incidentally, the little old SLP (now defunct) published Hilferding’s reply to Bohm in 1920, much to its credit; and Eden and Cedar Paul, the English translators, sparked off what Rosdolsky called a ‘splendid polemic’ between Bernstein and Hilferding (in Die Neue Zeit) over the use of the German word ‘daher’ — ‘consequently’ or ‘therefore’. Hilferding claimed that Bernstein left it out deliberately to distort Marx (p.519), but Rosdolsky points out that Engels had already put it in (in Volume I).

Rosdolsky is slightly suspect in accepting what he calls “Luxemburg’s breakdown theory”. This all turns on the precise translation of the German word ‘Zusammenbruch’ which means ‘collapse’. (Whether he means this or ‘break-down’ is arguable.)

The section on the Law of the Falling Rate of Profit and the almost complete recap of Marx’s private ruminations on the nature of the Law of Value and Labour in socialist society, are well worth re-publishing in the Socialist Standard.

‘Ros’ suggests that the notorious ‘increasing misery’ thesis refers to the industrial reserve army only, and corrects common fallacies regarding the proportion of Surplus Value to increases in Constant Capital, which is inverse.

As a result of this book, and the ‘rough draft’ on which it is based, we now know considerably more about the origin of Marx’s Capital. Certainly Lenin, Hilferding, Luxemburg and Franz Mehring (Marx’s biographer) were all unaware of its existence, as were the founders of the SPGB. Despite this, we were able (in 1904) to get it all absolutely right. Everything in Die Grundrisse proves this.

Horatio

The Goal of the Class Conscious (1941)

From the June 1941 issue of the Socialist Standard

The conflict now raging has now reached a more serious stage, and the working-class, compelled by circumstances to fight the enemy of their masters, are naturally somewhat anxious regarding the duration, even though they may, in Britain, at least, have no misgivings in regard to the outcome of the fighting.

There was a time, not so very long ago, when our masters were not so much concerned about Democracy as they appear to be at present. For instance, when the Social Democrats of Vienna were shot down by Dollfuss at the command of Mussolini; the deed received the blessing, tacitly, of the ruling class of both Britain and France. There was no protest except a pious, hypocritical gesture. Surely, if any group of men ever sacrificed their lives in the interests of Democracy it was those of the Karl Marx Flats. The Social Democrats were not revolutionaries, but they believed in liberty. They offered to give their support to Dollfuss on condition that he would restore the Democratic Constitution. He refused because Mussolini, whose tool he was, wanted to get control of Austria ahead of the Nazis. Hitler out-manoeuvred them both, and Dollfuss was assassinated.

The events now taking place in Crete and the Atlantic are so breath-absorbing that we are not very observant in regard to what is happening in the profit-making sphere. The war is as exciting as a circus, and it may be to our advantage if we look at the actions of some of the wire-pullers behind the scenes.

The United States is in the picture just now and has recently unearthed a few interesting things by means of certain investigations made by the U.S. Department of Justice.

These have been condensed in an article from the pen of Albert H. Jenkins, which appeared in the Federationist (Vancouver, May 1st): —

“War or no war, Big Business men of all nations do business with each other “as usual,” regardless of the results to their own countries. That was proved by shocking disclosures after the last World War. It is being revealed again by sensational grand jury probes now being conducted by the U.S. Department of Justice.

There are three of these investigations. First came the inquiry showing that the Mellon Aluminium Company of America’s tie-up with a German firm resulted in a serious shortage of aluminium and magnesium for aeroplanes and other defence needs of the country, while production of those strategic light metals went ahead by leaps and bounds in Germany.

Second is a probe of the drug industry, begun last July, and third, is an investigation of the chemical industry, begun this week by a grand jury in New York.

COMBINED AGAINST U.S.

The facts which are being brought out show how American and foreign corporations got together to limit production and fix prices of important products the world around, by means of patents and secret agreements, with results harmful to the interests of the United States. These international combines include many other foreign firms beside those in Germany, but the latter are particularly significant because of war and defence developments.

The latest action by the grand jury was to subpoena the books of five companies—General Aniline, Sterling Products, Winthrop Chemical, Sobering and the Swiss Bank Corporation. The subpoenas also require these companies to give the jury full information about their relations and dealings with 100 other big concerns in the United States, Germany, England, France, Italy, South America and other countries.

GIANTS UNDER FIRE.

Among these companies are such giants as duPont, Dow Chemical, American Cynamid, Lever Brothers, and practically all the other leading American and foreign drug and chemical corporations.

Grand juries do not disclose their findings until they make indictments, but some idea of what the Department of Justice officials are after can be obtained from their recent testimony before the Monopoly Committee and the House Appropriations and Patents Committees, where they were describing this probe and asking for more money to carry it on.

One of them, who was talking “off the record” and does not want his name mentioned, told the Appropriations Committee that “the German chemical trust has in this country eight affiliates, one of which is a $30,000,000 investment trust.”

UNCLE SAM IS “STOOGE.”

Since the war shut Germany off from South American markets, he said, the German chemical companies are having American companies fill their orders from South American customers. The American products are “packed in such a way that they look like German stuff.”

Thus the American companies are handling the South American markets for the German concerns, so the latter can take back those markets after the war, despite the Roosevelt administration’s attempt to expand the U.S. trade with South America.

Moreover, he continued, the American chemical companies pay “millions of dollars a year” in patent royalties to the German concerns. Some of this money is being sent secretly to Germany, and much of it is sent to South America, where the Germans use it for “penetration” of South American countries.

OTHER CONSPIRACIES PROBED

In addition to the aluminium, magnesium, drug and chemical probes, the Justice Department is acting against similar “conspiracies” involving other products which are vital to national defence.

The situation on several of these other products was described at the same House Committee hearings. One case is “an agreement between the General Electric Company of the United States and Krupp, a big German trust.”

This agreement, the witness said, covers “tungsten carbide, the key to the whole German machine-tool industry. It is harder than diamond.” Because of the agreement. “Germany produces 20 times as much tungsten carbide as the United States.”

Another interesting item in the same paper indicates that Uncle Sam is not in full sympathy with Democracy everywhere. The prosecution of the Social Democrats of Germany in Spain could be stopped if the United States made an appropriate gesture. The following is worth noting: —

“The Mexican Government has protested strongly to Vichy against the violation of the agreement that Spanish refugees were to be protected by the French Government and permitted to emigrate to Mexico.

Undoubtedly there has been connivery with Franco, who is unwilling to allow Loyalist leaders to escape, because he is afraid that one day they will return and lead a revolt against him, and is hoping that ultimately France will deliver them over to his vengeance. Progressive Americans point out that Washington could help by refusing to send foodships to Vichy or to Madrid, unless those ships could carry back the refugees to Mexico.

The fate of anti-Nazi German refugees in France is not less tragic. Recently two able German intellectuals of the Social-Democratic Party who held high office in the Weimar Republic, Breitsheid and Hilferding, were handed over to the Germans by the Vichy Government; by this time they may be dead. No one will bemoan the fate of the capitalist Thyssen, through whose money Hitler came to power and who recently was handed over by Vichy and died in a concentration camp. The betrayal of the anti-Fascist refugees to their enemies is the lowest act that Vichy has committed.”

The ruling class of this and all other countries will endeavour to do their utmost to make the world safe for capitalism after the war. Their great new world is a profit world. But there is one thing they cannot do, and that is reconcile the contradictions the present system produces. These will become ever more glaring and ever more irreconcilable.

War Savings Weeks are a means of lowering the real wages of the class to which we belong: real wages are food, clothing and shelter; these are declining in quantity and quality.

We are told that our savings will help us tide over the trying period that will follow the cessation of hostilities. This means when unemployment comes you will be able to exist on what you couldn’t buy during the war.

There is one thing, however, the ruling class forget, and that is the increased knowledge that is being imbibed by those who live by selling their labour power. The wage slaves are not all asleep. The conversations one overhears in cars, in restaurants, on the job, in fact wherever workers are gathered together, induces one to conclude they will not readily go back to the bread line after the war.

This is as it should be. The material conditions have reached the stage when the present system of production is a fetter on production. A sure harbinger of a new, and, let us hope, a better form of society, in which there will be neither wage-slave nor capitalist, nor private property in the means of life. The Socialist has heretofore lacked encouragement, but he has builded better than he realised. The issue between the capitalist-class and the working-class has been kept clear, and moving circumstance has now brought into being those conditions which make Socialism practical politics. It is the only policy that unquestionably offers peace and plenty to all mankind. It is the only policy that can be advocated honestly and without equivocation. It is true. Its triumph is inevitable. Whatever its enemies attempt in another direction will be exposed as inadequate and harmful. The common ownership of the means of life and production solely for use is our goal. Those who ask for less condone exploitation and betray the class to which we belong.

Charles Lestor

Imperialism and the ‘Labour Aristocracy’ (2020)

From the August 2020 issue of the Socialist Standard

  Given that many believe that those living in the ‘Global North’ are living off the backs of the people in the ‘Global South’, we begin a multi-part series of articles correcting this, starting with the origin of this mistaken view.

Marx and Engels’ Communist Manifesto was not just a scathing indictment of capitalism; it was also a paean to its material achievements which were seen as preparing the ground for communism.

Remarkably anticipating today’s globally interconnected world, it spoke of capitalism’s expansionist dynamic, propelling it to spread out across the world from its heartland in Western Europe:

  ‘The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production’.

These days the shoe is on the other foot: the footprint of Chinese capitalism is everywhere visible in the guise of its mass-produced commodities and those ‘Chinese walls’ have long since become just a tourist attraction. As Marx said:

  ‘The country that is more developed industrially only shows, to the less developed, the image of its own future’ (Capital, Vol 1).

However, this ‘diffusionist’ perspective has not gone unchallenged among those claiming allegiance to Marxism. In the early 1900s Trotsky developed his concept of ‘combined and uneven development’ which he coupled with another – ‘permanent revolution’ – in opposition to the ‘stageist’ model of the Mensheviks. That model maintained that a relatively backward country like Russia needed to pass sequentially through two distinct stages – a ‘bourgeois democratic’ revolution (which socialists were urged to support) followed by a socialist revolution once capitalism had become sufficiently developed.

Trotsky argued that Russia exhibited a dualistic character -– a modern urban-based capitalist sector and a vast pre-capitalist peasantry – which necessitated a quite different model. The Russian bourgeoisie were too weak to implement a ‘bourgeois democratic’ revolution themselves. Consequently, it fell to the workers’ party to do this. Concurrently, the new ‘workers’ state’ should move towards implementing a socialist revolution. Hence the idea of a continuous ‘permanent revolution’ – two revolutions rolled into one.

However, Trotsky acknowledged that Russia alone lacked the productive capacity socialism required and so opposed the concept of ‘socialism in one country’ promoted by Stalin and Bukharin. For a socialist revolution to succeed this depended on developments elsewhere – notably, the advanced countries:

  ‘We rest all our hope on the possibility that our revolution will unleash the European revolution. If the revolting peoples of Europe do not crush imperialism, then we will be crushed – that is indubitable. Either the Russian revolution will raise the whirlwind of struggle in the west, or the capitalists of all countries will crush our revolution’ (1930, History of the Russian Revolution).

The ‘European revolution’ did not occur. Nor was there any good reason to expect it might. After all, most workers there had been patriotically supporting one capitalist bloc against another in World War One. But in Russia, too, the vast majority were not socialists either (as Lenin repeatedly acknowledged) and without a conscious socialist majority you can’t have a ‘socialist revolution’. Thus, having seized power in 1917, the Bolsheviks had little option but to develop capitalism.

The unpalatable implications of this for a self-proclaimed ‘Marxist’ like Lenin helps to explain his subsequent subterfuge in trying rationalise away developments there. Though he generally did not anticipate the coming upheaval in 1917 would be socialist, it later became commonplace among Bolshevik cadres to refer to it as a ‘socialist revolution’. That was only credible if you completely redefine what socialism meant which is precisely what Lenin did – identifying it with a form of ‘state-capitalist monopoly’ made to ‘serve the interests of the whole people’ (1917, The Impending Catastrophe and How to Combat It).

This new definition grew out of Lenin’s belief that state capitalism was a ‘step forward’ for Russia. Though he distinguished between ‘socialism’ and other forms of state capitalism – such as in wartime Germany – he nevertheless endorsed the latter too, arguing that ‘our task is to study the state capitalism of the Germans, to spare no effort in copying it and not shrink from adopting dictatorial methods to hasten the copying of it’ (1918, ‘Left Wing’ Childishness).

Lenin’s semantic gymnastics help us to better understand other aspects of his worldview – most notably how he envisaged a ‘proletarian revolution’ unfolding. According to him, this was likely to first occur, not where capitalism was most advanced (as Marxists contended), but rather ‘at the weakest link in the imperialist chain’. Russia, though itself an imperialist power, was a paradigmatic example, being heavily dependent on foreign capital. By breaking that chain here this would induce a domino effect, starting in Europe and culminating in capitalism’s overthrow worldwide. When this did not happen Lenin increasingly shifted his focus from Europe to national liberation struggles against imperialism in the ‘backward’ countries as the way forward.

For Lenin, imperialism was the ‘highest stage of capitalism’, commencing in the late nineteenth century. He was not referring to imperialism in general but rather a new and virulent kind of imperialism originating in certain structural changes within capitalism itself – notably, the emergence of ‘monopoly capital’.

In his book, Imperialism: A Study (1902) which influenced Lenin, the liberal, J.A. Hobson, wrote of a shift from ‘competitive capitalism’ to ‘monopoly capitalism’, after the late nineteenth century Great Depression. Monopoly capitalism was the ‘tap-root’ of the new imperialist era exemplified by the ‘Scramble for Africa’. Hobson opposed the then establishment view that ‘trade followed the flag’, arguing instead that trade could flourish without the need for colonial conquest.

According to him, what fueled imperialism was the accumulation of surpluses of capital beyond what the advanced countries could profitably invest domestically. These surpluses arose out of extreme inequality. Given the capitalists’ ‘higher propensity to save’, redistributing wealth in their favour, not only increased their savings (‘capital’) to the point of excess; it also reduced the workers’ income and thus exerted a restraining influence on their capacity to consume.

Consequently, there was diminished scope for the capitalisation of profits, because of insufficient market demand. This depressed prices and solidified a movement toward monopoly by making it increasingly difficult for small businesses to survive.

Lenin concurred with Hobson’s ‘capital surplus’ theory but disagreed with his ‘underconsumptionism’. As Charles Barone notes, Lenin seemingly argued that capital would be exported, ‘not because it was absolutely impossible to invest in the home market but because it could obtain a higher rate of profit abroad. The variance of profits existed ostensibly because of the uneven development of capitalism where capitalism had become “overripe” in some countries’ (Marxist Thought on Imperialism: Survey and Critique, 2016).

According to the labour theory of value, a higher rate of profit initially occurs where production is more labour-intensive (typically the case in the economically backward colonies) since ‘living labour’ is the sole source of profit. This rate tends to decline with mechanisation and industrialisation (as was happening in the developed countries) though that would be compensated for by an increase in the absolute mass of profits.

Normally, under competitive capitalism, this situation would be mitigated by the tendency for profit rates to equalise through the flow of capital towards industries temporarily experiencing above average profits, thereby increasing supply and thus eventually reducing prices (and profit rates).

However, in the context of the new imperialism, Lenin held that Marx’s 19th century model of competitive capitalism no longer applied. It was being progressively replaced by monopoly capitalism which interrupted this tendency for profit rates to equalise. As Paul Sweezy contended in The Theory of Capitalist Development (1968), under monopoly capitalism, the ‘equal profit rates of competitive capitalism are turned into a hierarchy of profit rates, highest in the most completely monopolized industries and lowest in the most competitive’.

If so, we would expect investment to incrementally flow into the monopoly sector at the expense of the competitive sector. Rudolf Hilferding in Finance Capital (1910) suggested this is precisely what was happening. Bank capital and industrial capital were merging into finance capital, the ultimate form of capital most closely associated with imperialism. Centralisation of capital would eventuate in the formation of a general cartel which would fuse with the state, replacing market competition with planned production. This probably influenced Lenin’s own thinking on the allegedly progressive role of state capitalism.

For Marx, super-profits could indeed arise from monopolies (and developments like technological innovations). However, he did not go as far as Hilferding in thinking this would kill off competition: Monopoly produces competition, competition produces monopoly. Monopolists compete among themselves; competitors become monopolists (1847, The Poverty of Philosophy).

For Lenin, the primary source of super-profits originated not within the domestic economies of advanced capitalism, however, but rather from the export of capital to the colonised countries. These super-profits were enormous, being obtained over and above the profits which capitalists squeeze out of the workers in their own country (Imperialism, the Highest Stage of Capitalism).

One would expect this to be reflected in the pattern of investment given that capital tends to flow to wherever the rate of return is highest. However, the evidence suggests, firstly, that the great bulk of capital then, as now, raised in the advanced countries was invested domestically rather than abroad (as foreign direct investment – FDI). Secondly, most FDI was itself invested (as Lenin acknowledged), not in the colonies but in other advanced countries – particularly America. Thirdly, at this time there were few controls on the movement of capital internationally so it is unlikely that the equalisation of profits rates would have been significantly impeded. Finally, fluctuations in FDI flows tended to follow the same pattern as domestic investment, implying a roughly similar rate of return – a conclusion empirically supported by historians like D K Fieldhouse and others.

Bukharin, in Imperialism and World Economy (1915), wrote of two contradictory trends shaping modern imperialism. While monopoly capital made for the decline of competition domestically, internationally competition was intensifying in the guise of economic nationalism (mainly in the form of tariffs rather than capital controls).

Lenin called this state of affairs monopolistic competition – the imperialist conquest of foreign territories opened up additional markets to soak up the expanded output of domestic manufactured goods whilst affording opportunities to invest surplus capital in the primary sector of these colonies, employing a super-exploited workforce to produce cheap raw materials for export to imperialist countries themselves.

Thus, in contrast to Marxian diffusionist thinking, Lenin (following Trotsky) argued that imperialism shored up and perpetuated the ‘uneven development of capitalism’ and, with that, spatial variations in the rate of profit. Repressive colonial policies that pushed down wages, the establishment of native reserves to subsidise labour costs out of the proceeds of peasant farming and the persistence of labour-intensive production techniques constituted the material basis of these ‘imperialist super-profits’.

Before modern imperialism some countries (notably Germany) had been able to rapidly develop their economies, exploiting what Trotsky called the ‘privilege of historical backwardness’ and join the select club of imperialist powers. However, by the early twentieth century this was no longer possible. Those powers having carved up the rest of the world amongst themselves, one could only expand its sphere of influence at the expense of another. This is what led up to the First World War.

It was then, wrote Lenin, that the ‘world proletarian revolution’ was in the process of ‘clearly maturing’. The events in Russia, he suggested, could ‘only be understood as a link in a chain of socialist proletarian revolutions being caused by the imperialist war’ (The State and Revolution, 1917).

But Lenin’s reading of the situation was hopelessly misguided. A ‘socialist proletarian revolution’ would surely have entailed an emphatic widespread rejection of nationalism and, as noted, there was little evidence of that happening then. Indeed, ironically, Lenin himself was a fervent advocate of the ‘national liberation’ of ‘oppressed states’ from the ‘oppressor states’, convinced that political independence would strike a blow against imperialism and, by extension, monopoly capitalism.

Nothing could be further from the truth as the subsequent history of post-independence states in the Global South bears out.

Robin Cox

(To be continued)

Link to Part 2

‘Imperialism’: Where Lenin Went Wrong (2017)

From the May 2017 issue of the Socialist Standard

A hundred years ago last month Lenin’s pamphlet ‘Imperialism, The Highest Stage of Capitalism’ was published. We take another look at its defects.

In his introduction Lenin wrote that the pamphlet was based on the views of the English non-Marxist writer J. A. Hobson in his book Imperialism (1902) and those of the Austrian Social Democrat Rudolf Hilferding in his Finance Capital (1910). Hilferding, basing himself mainly on German experience, described how banks, through what would now be called their investment banking side, had come to merge with industrial capital, raising capital for them and not only charging for this but retaining a share for themselves. Hobson, who was an underconsumptionist, argued that what had led to imperialism, as investment and territorial expansion abroad, was a surplus of capital that could not find a profitable outlet in the home country.

Lenin combined these views to come up with a definition of imperialism as ‘the monopoly stage of capitalism’ where ‘finance capital’ as the ‘bank capital of a very few big monopolist banks’ had ‘merged with the capital of the monopolist combines of industrialists’. Accepting Hobson’s surplus capital theory, Lenin said that ‘monopoly capitalism’ led to the formation of ‘international monopolist capitalist combines which share the world amongst themselves’ and to the ‘territorial division of the whole world among the biggest capitalist powers’.

This was a passable description of some aspects of capitalism at the time, especially in Germany, and Lenin’s was correct in seeing the First World War as a war over the division of the world amongst the biggest capitalist powers. On the other hand, his acceptance of Hobson’s theory of surplus capital as an explanation for the ‘export of capital’. ie overseas investment, was dubious. A more straightforward explanation for the capital being invested abroad would be that it was more profitable to invest it there rather than at home.

Lenin was also mistaken to see the German-style merger of bank and industrial capital as ‘the highest stage of capitalism’. It was a common view amongst the Social Democratic parties at the time that capitalist competition would lead to monopoly and that what socialists had to do was to take these into common ownership and re-orient production to satisfying people’s needs rather than for profit. Karl Kautsky had speculated that the process of monopolisation could lead to a single world trust and a non-aggression arrangement between the imperialist powers, which he called ‘ultra-imperialism’. Lenin had a point when he said that this was impossible as the powers would never agree on a permanent carve-up of the world but would seek to change this as their respective strengths changed. But he failed to see that this applied to ‘monopolies’ in his ‘imperialist’ countries. The capitalist class there was not a monolithic bloc but different sections had different interests and none wanted to be held to ransom by some monopoly. Hence ‘trust-busting’ legislation in the US and nationalisation and the threat of nationalisation in Britain.

True to his polemical style, Lenin attributed a motive to Kautsky, accusing him of advocating a peaceful, united world capitalism even though Kautsky had only envisaged ‘ultra-imperialism’ as a theoretical possibility. Lenin posited a link between the ‘opportunism’ of which he accused Kautsky and ‘imperialism’, arguing that the reformism of the Social Democratic and Labour parties of Europe was due to the ‘imperialist’ powers using a part of their ‘high monopoly profits’ to bribe ‘certain sections of the workers’ into supporting both reformism and the state in which they lived. After the Bolshevik coup d'état this was developed into a full-blown theory that the top layer of workers in the countries with colonies had been bribed to support capitalism out of the super-profits of colonial exploitation and that the independence of colonial territories would undermine this, with the result that, deprived of their share of the super-profits, the workers there would abandon reformism and become revolutionary.

This was mistaken on a number of counts. First, it goes against the Marxian theory of wages that wages are the price of what workers sell and that higher wages reflect higher training and skills, not any share of surplus value as Lenin implied. Second, it led to supporting the creation of new capitalist states to the benefit of a local capitalist class. Third, it assumes that workers would become less reformist if their standard of living fell.

Lenin himself mentioned an objection, which he attributed to the anti-war Menshevik Martov, that the situation for socialists would be pretty hopeless ‘if it were precisely the best paid workers who were inclined towards opportunism’, e.g. skilled engineering workers. Lenin’s reply was, typically, to accuse Martov too of defending opportunism and reformism.

If the Bolsheviks had not retained power in Russia this work would have remained an obscure, dated pamphlet. However, due to Lenin’s position and later quasi-deification, it became inflated into a serious work of research and theory. The result was that its mistaken ideas – especially about some workers sharing in colonial exploitation and that socialists should support the ‘anti-imperialism’ of rising capitalist classes – became more widely accepted than they otherwise would have.

Adam Buick

Breakdown theory (2018)

Book Review from the February 2018 issue of the Socialist Standard

‘Capitalism’s Contradictions. Studies in economic theory before and after Marx’. By Henryk Grossman (Haymarket Paperbacks. Chicago)

For a long while it was only by reputation that Grossman was known in the English-speaking world as a collapse of capitalism theorist, as his 1929 book The Law of Accumulation and Breakdown of the Capitalist System was not available in English translation until 1992, though Paul Mattick had publicised his theory in the 1930s. Grossman was an admirer of state capitalist Russia even under Stalin and died in 1950 in East Germany.

This collection of articles lives up to its subtitle, with a useful article on some of those before Marx who put forward the view that societies differed depending on their particular system of production and changed when this changed, and another on post-Marx bourgeois economists and their theories of marginal utility arguing that left free of government interference capitalism tended towards full-employment equilibrium. Strangely there is no mention of Keynes.

Grossman took it as axiomatic that Marx held a breakdown theory of capitalism, writing in a contribution on Marxism for an encyclopaedia, reprinted here, in a matter of fact way about ‘the fundamental idea of Capital of an absolute limit to the development of the capitalist mode of production’ and of ‘Marx’s theory of the final breakdown of the capitalist system of production.’ In fact he was only promoting his own theory of this since no such theory can be found in Marx.

As exposed here at the end of this contribution, ‘it holds that once a nation’s capital exceeds a definite scale, its accumulation finds no further profitable opportunities for investment and consequently either lies idle or has to be exported.’ Grossman based his theory not so much on the falling rate of profit but on the mass of surplus value in relation to the total social capital becoming insufficient to continue capital accumulation:

   ‘…at high levels of accumulation the part of surplus value required for additional accumulation [as constant capital] will be so large that it finally absorbs almost all the surplus value.’

He seems to have thought that this stage had nearly been reached in the developed capitalist countries.

One reason why he (and Rosa Luxemburg too, though her breakdown theory was different) believed that a breakdown theory was essential was that, without it, the case for socialism would be weakened and just become a matter of moral choice, a view associated with the revisionists and reformists within the German and Austrian Social Democratic movement.  One such reformist was Rudolf Hilferding, the author of Finance Capital, who after the war became German Finance Minister on a couple of occasions. Grossman writes of him:

  ‘After the war (1927) Hilferding declared that he had always “repudiated every theory of economic breakdown”. Marx had also considered them to be false. The overthrow of the capitalist system would “not happen because of internal laws of this system” but had to be the conscious will of the working class”.’

Despite his reformism, Hilferding was right here. But it wasn’t just reformists who held this view. Anton Pannekoek, whose anti-reformist credentials are impeccable, wrote a pamphlet in 1934 refuting breakdown theories in general and Grossman’s in detail, expressing a similar point of view. It is also the view expressed in our 1932 pamphlet Why Capitalism Will Not Collapse and in our articles on this subject ever since.

Adam Buick

About Books (1953)

Book Reviews from the October 1953 issue of the Socialist Standard

The newcomer to the study of Marxian economics frequently finds that Marx's own works are rather heavy going. He searches around for books by other authors who may be able to propound Marx's theories in a more easily readable form. Unfortunately, during the past eighty years, there have been many who have sought to simplify Marx or to tell the world what, in their opinion, Marx really meant. The total product of their labours would justify Marx in demanding to be saved from his friends,

If the student is determined to approach his studies through the medium of secondhand interpretations of the theories, we can save him much wasted time by directing him to the soundest of the books on the subject.

Probably the most useful work of this nature is Karl Kautsky’s "The Economic Doctrines of Karl Marx." There is little we can say about this book except that it was written expressly for the purpose for which the student wants it and it is a job well done.

Next in order of merit is "The Theoretical System of Karl Marx" by Louis B. Boudin. Boudin does not deal exclusively with Marx's economic doctrines. He devotes a few chapters to the materialist conception of history, the social revolution and to some of Marx's critics. Boudin quite correctly makes his early chapters on the materialist conception of history serve as a brief introduction to the study of the workings of the capitalist system. The usefulness of this book to a new student is limited because the author devotes quite an amount of space to replies to critics of the Marxian doctrines. These replies are extremely useful to anyone who has a grounding in the study but are likely to leave the novice a little bewildered. All the same, the book is good and cannot be excluded from a list of this nature.

Julian Borchardt has attempted to present “Capital" in a more readily digestible form by treating it in a different manner to other writers. He has taken a number of chapters from the three volumes of "Capital” and re-arranged them in an order which, he claims, will make them more easy to assimilate. He has eliminated some of Marx's repetitiveness but has not attempted to alter the wording. Borchardt also claims, quite correctly, that the majority of those who read “Capital" do not get farther than volume one, but that volumes two and three are necessary for a complete understanding of Marx's theories. Whether Borchardt's work will be found easy going is doubtful, but for those who cannot avail themselves of the three original volumes it is useful. The only edition of this work that we are able to trace today is collected with some short writings by Frederick Engels and Lenin and Marx under the title “Capital and other Writings of Karl Marx," and published by The Moderrn Library. New York.

Ernest Untermann has written a book entitled "Marxian Economics." Untermann deals with his subject more historically than the previously mentioned authors, in fact over half of his book is devoted to an historical approach to the Marxian economic theories. It cannot be taken as a substitute for "Capital" but rather, as the author claims, a popular introduction to it. 

There is one book which, because of its title and its availability may attract a student’s attention. It is “The Meaning of Marxism" by G. D. H. Cole, published by Victor Gollancz. This is a re-hash under a new title of Mr. Cole's, “What Marx Really Meant” published in 1934. As a Marxist Mr. Cole would make a good plumber. What he thinks Marx meant is a lot different to what Marx said. A detailed criticism of “ What Marx Really Meant" appeared in the Socialist Standard in June, 1934. It stands equally well for the later book. The student should avoid Mr. Cole as an interpreter of Marxism.

Despite the good qualities of the first four books we have mentioned none of them are a real substitute for Marx's original work. If the student has time, diligence and enthusiasm we recommend that he bypasses these attempts at simplification and gets down to his studies with the three volumes of “Capital" We recognise that a study of Marxian economics is not simple and that there is some justification in the criticism that Marx's style is heavy, but his work cannot be adequately compressed into a book of a couple of hundred pages. Much of the so-called heaviness of Marx's writing is due to the fact that he approaches all his points from every conceivable angle, neglecting no avenue of argument to prove his case. It is that which gives rise to the repetitiveness that scares away some of his readers.

The best of the translations of “Capital" are those by Ernest Untermann and by Samuel Moore and Edward Aveling. The translation by Eden and Cedar Paul which is used in the Everyman's Library edition published by J. M. Dent has some minor faults but cannot be condemned because of them.

In conclusion, there is a useful little book that is worthy of mention. It gives an answer to many of the criticisms of Marx’s theory of value. “Boehm-Bawerk's Criticism of Marx" by Rudolf Hilferding published by the Socialist Labour Press. Of course, this book cannot be read until one has an understanding of Marxism, but, after the elementary phases of study, it can be useful for clearing away a number of cobwebs.

W. Waters.

Cooking the Books: Saving Private Capitalism (2016)

The Cooking the Books column from the July 2016 issue of the Socialist Standard

American capitalism is, apparently, suffering a ‘crisis of faith’, at least according to a 5-page article featured on the front cover of Time magazine (23 May). The author, Rana Foroohar, quotes the findings of an opinion poll which she finds ‘startling’:

‘… only 19% of Americans aged 18 to 29 identified themselves as “capitalists”. In the richest and most market-oriented country in the world, only 42% of that group said they “supported capitalism”. The numbers were higher among older people; still, only 26% considered themselves capitalists. A little over half supported the system as a whole.’

One of the questions must have been odd if it invited people to identify themselves as ‘capitalists’ in the same sort of way that they might have been asked if they were socialists. A capitalist is not someone who believes in capitalism. It is someone who has enough capital to be able to live without being obliged to sell their labour power for a living. In America that will be well under 5 percent.

Foroohar’s article, entitled ‘Saving Capitalism’, is taken from her forthcoming book Makers and Takers. Her argument is that the current problems of American capitalism are due to ‘financialization’. Up until the early 1970s, she says, finance served business:

‘finance took individual and corporate savings and funnelled them into productive enterprises, creating new jobs, new wealth and, ultimately, economic growth.’

However, over the past few decades this has changed:

‘finance has turned away from this traditional role. Academic research shows that only a fraction of all the money washing around the financial markets these days actually makes it to Main Street businesses…. Most of the money in the system is being used for lending against existing assets such as housing, stocks and bonds.’

She says that banks have become more interested in such ‘trading’ than in their traditional role of lending to business. But it is not just banks that have been affected. Businesses themselves have become increasingly involved in hedging, ‘tax optimization’ and offering financial services, to the detriment of productive investment. They have the money to do this because:

‘Top-tier US businesses have never enjoyed greater financial resources. They have a record $2 trillion in cash on their balance sheets – enough money combined to make them the 10^th largest economy in the world.’

Her plan to save capitalism is ‘remooring finance in the real economy’, putting ‘the financial system back in its rightful place, as a servant of business rather than its master.’

It’s not the first time in the history of capitalism that finance capital has been seen as the enemy. Before WWI the Austrian Social Democrat Rudolf Hilferding wrote Finanzkapital in which he argued that banks had come to dominate and control industry. Lenin took this up and incorporated it into his theory of imperialism.

To merely denounce ‘financial capital’ is to support ‘manufacturing capital’; which is Foroohar’s (if not the Leninists’) explicit position. She has appointed herself as a defender of manufacturing (‘the makers’) against finance capital (‘the takers’). But she doesn’t consider an alternative explanation for ‘financialization’: that it might be a consequence of slow economic growth rather than the other way round. Since previous profits are not being fully reinvested because it’s not profitable enough a part of them accumulate as cash mountains, providing the stakes for ‘trading’ and ‘hedging’. Like the Stock Exchange, these are zero sum games in which no new wealth is created but where representations of existing wealth are traded instead – where some capitalists get richer but only at the expense of other capitalists, competing against each for the largest share they can get of wealth already taken from the real wealth makers, the working class.

Cooking The Books: A Nobel Prize for Marx? (2010)

The Cooking The Books column from the April 2010 issue of the Socialist Standard

“If Karl Marx and V. I. Lenin were alive today, they would be leading contenders for the Nobel Prize in economics”, wrote Paul Craig Roberts, former editor of the Wall Street Journal and an Assistant Secretary of the Treasury under Reagan, in an article on Counterpunch last year.

“Marx”, he added in explanation, “predicted the growing misery of working people, and Lenin foresaw the subordination of the production of goods to financial capital's accumulation of profits based on the purchase and sale of paper instruments.”

Lenin first. He didn’t write much on economics but the two books he published on the subject are not too bad. Both rejected “underconsumptionism”. The first, The Development of Capitalism in Russia (1899) was a refutation of the Narodnik view that capitalism could not develop in Russia because of a lack of markets. The second, Imperialism, the Highest Stage of Capitalism (1916), argued that the imperialism that characterised the thirty or so years till the WWI was caused by profits in colonies being higher than at home. (The nonsense about some workers in the imperialist countries sharing in the exploitation of the colonies was only added in the introduction to the 1920 French and German editions). It was heavily based on a work, Finance Capital, A Study in the Latest Phase of Capitalist Development (1910), by the Austrian Social Democrat Rudolf Hilferding. So, if anyone deserves a Nobel Prize for analysing financial capital (at least in continental Europe) it would be Hilferding rather than Lenin.

As to Marx, he did write of the “increasing immiseration” of the working class as capitalism developed, but he did not intend this to be understood as the whole class necessarily becoming worse off materially. “Misery” included the quality of life and work and social factors such as the gap between rich and poor and not just the quantity of goods consumed. So misery could increase along with increased consumption. If Marx had meant “increasing pauperisation” (a view long supported by the old Communist Party) then he would have been proved wrong and so be out of the running for a Nobel Prize.

Even so, Roberts wrote that the working class in America is now materially worse off than it was twenty years ago:

“In this first decade of the 21st century there has been no increase in the real incomes of working Americans. There has been a sharp decline in their wealth. In the 21st century Americans have suffered two major stock market crashes and the destruction of their real estate wealth. Some studies have concluded that the real incomes of Americans, except for the financial oligarchy of the super rich, are less today than in the 1980s and even the 1970s. I have not examined these studies of family income to determine whether they are biased by the rise in divorce and percentage of single parent households. However, for the last decade it is clear that real take-home pay has declined.”

The explanation he offers is “financial capital’s power to force the relocation of production for domestic markets to foreign shores. Wall Street’s pressures, including pressures from takeovers, forced American manufacturing firms to ‘increase shareholders’ earnings.’ This was done by substituting cheap foreign labor for American labor.”

There could be something in this but there’s no way of reversing it. Capital will always flow where the profits are highest. That’s its nature.

Markets, Monopoly and War (1985)

Book Review from the July 1985 issue of the Socialist Standard

A new edition of Rudolf Hilferding's Finance Capital: A Study of the Latest Phase of Capitalist Development has been published in a new translation and with a useful introduction and notes by Tom Bottomore (Routledge and Kegan Paul). It provides an opportunity to consider whether the theories advanced by Hilferding and others have been confirmed in the years since the work was first published in 1910.

Towards the end of the 19th century there was a growing tendency towards the formation of trusts and combines associated with what came to be known as imperialism. Among the other books on the subject there were J.A. Hobson's Imperialism (1902) and his earlier Evolution of Modern Capitalism, Lenin's Imperialism: the Highest Stage of Capitalism and L.B. Boudin's Socialism and War (1916). Later on J.M. Keynes had something to say about it in his General Theory (1936). Hobson held that monopolistic industries restrict output in the home market, in order to raise prices and profits, and therefore have to seek foreign outlets for investment and markets. For this purpose they get governments to colonise foreign territories (Evolution of Modern Capitalism, page 26). Lenin made use of Hobson for his own Imperialism, and gave high praise to much of his works. Keynes saw in Hobson many features of his own theories set out in the General Theory.

Hobson, unlike Lenin but like Keynes, offered a remedy:

If the whole gain of improved economies passed, either to the workers in wages or to large bodies of investors in dividends, the expansion of demand in the home market would be so great as to give full employment to the productive forces of concentrated capitalism, and there would be no self-accumulating masses of profit . . . demanding external employment.

Keynes (in Chapter 24) saw "the competitive struggle for markets" as a predominant factor in "the economic causes of war". But, said Keynes, if governments followed Keynesian policies to increase demand at home and thus maintain full employment, the competitive struggle for markets as a main cause of war, would disappear.

Lenin and Hilferding gave detailed accounts of the supposedly unstoppable growth of monopoly in industry and banking but carried it much further, crediting the banks with dominating industry and the cartels with fixing prices and dividing up world markets among themselves. Lenin wrote: "Cartels become one of the foundations of the whole economic life. Capitalism has been transformed into imperialism." Hilferding wrote: "An ever-increasing proportion of the capital used in industry is finance capital, capital at the disposition of the banks which is used by the industrialists" (page 225). Lenin quoted and endorsed this. Hilferding (page 368) said that it was only necessary to take over six large Berlin banks to take possession of "the most important spheres of large-scale industry". It is worth noticing that in the depression of the 1930s most of the big German banks collapsed, or almost did so, along with the industrial companies in which the banks' money was tied up. Among other forecasts made by Lenin was that because of the dominance of finance capital "there was a decrease in the importance of the Stock Exchange".

Some social-democrats, including Kautsky, thought that the end result would be "a single world monopoly . . . a universal trust", followed by socialism. Hilferding thought that this single world monopoly was "thinkable economically, although socially and politically such a state appears unrealisable, for the antagonism of interests . . . would necessarily bring about its collapse". But Hilferding (page 343) thought that world cartels would result in "longer ... periods of prosperity" and shorter depressions. The long depression of the 1930s and the long depression since 1979 belie this.

It was Boudin in his Socialism and War who put in its most crude form the theory on imperialism and war. He argued (like Hobson and others) that the turning point was the replacement of such industries as textiles by iron and steel. He wrote (page 64):

Modern imperialism ... is the expression of the economic fact that iron and steel have taken the place of textiles as the leading industry of capitalism, and imperialism means war. Textiles, therefore mean peace, iron and steel - war.

The argument was that exports of textiles and similar consumer goods are paid for at once but iron and steel exported to build railways, factories, ports and so on are long-term investments needing the protection provided by the home government turning importing countries into colonies. Boudin's theory to explain competition for markets (page 55) was:

The basis of all capitalist industrial development is the fact that the working class produces not only more than it consumes, but more than society as a whole consumes.

Therefore, said Boudin, developed countries cannot find markets inside the capitalist world but only on the fringes of capitalism, first in primitive agriculture at home and, when that too is developed, only in the countries not yet developed. These countries themselves develop and have to seek non-existent markets for their "surplus" products.

It is only necessary to look at what actually takes place to see that Boudin's theory is demonstrably false. The working class do not produce more than society itself consumes. Or rather, they alternately produce more than society currently consumes and then less than society currently consumes. At the onset of a depression stocks pile up of the goods some industries have overproduced for their markets but later on, as recovery begins, stocks run down again, as they did early in 1985. In 1983 British exports totalled 60,534m pounds sterling. According to Boudin this was all "surplus" to demand in the home market. Who then bought the 65,993m pounds sterling of imports that were sold in this country? In the same year, 77 per cent of British exports went to countries officially classified as "developed countries" which Boudin said was impossible. Hilferding, Lenin and Hobson all failed to allow for the sectional divisions of interest in the capitalist class. Hilferding treated the monopolist industries as representing a united capitalist class.

Certainly the export industries have an interest in getting the government to promote exports. But most capitalists have no such interest. British exports represent under a third of total production; for America and Russia about 10 per cent of total production. At their conference last year the Confederation of British Industries defeated an executive resolution calling on the government to lower the exchange rate of the pound in order to promote exports. The industries making profit by selling imports in the home market, and the industries buying cheap imports rather than pay more for home products, want the exchange rate to be higher, not lower.

At a time when the Thatcher government was declaring that they wanted the pound exchange rate not to fall but to rise, and asking Reagan to help bring it about, the Financial Times published an article (14 January 1985) with the title "Industry Delighted At Fall Of Pound". It was true only of export industries not having to import raw materials, but in the article there were examples of industries having to import materials which wanted the pound exchange rate to rise and not to fall. The British Steel Corporation told the Financial Times that "every one cent decline in the value of sterling costs us 4 million pounds sterling".

The failure to recognise sectional capitalist interests applies particularly to monopoly, which raises selling prices and consequently profits for the monopolies and is viewed very differently by the rest of the capitalists, who object to being held to ransom. In the 19th century British government policy towards monopoly was to protect the interests of the rest of the capitalist class by nationalisation, as with telegraphs and telephones. Frederick Engels put the same view in his Socialism, Utopian and Scientific: "...no nation will put up with production conducted by trusts, with so barefaced an exploitation of the country by a small band of dividend-mongers". The same idea was behind the Tory railway nationalisation Act of 1844. It gave the government power to take over the railways and was used as a threat of what would happen if the railway companies continued to use their monopoly to the detriment of the rest of the capitalist class.

But in America the method used was to control monopoly by the Anti-Trust Laws, which have resulted in heavy fines and sometimes imprisonment. American Telephone and Telegraph, controllers of the near-monopoly Bell telephone system and described as the largest and richest corporation in the world, has recently fallen foul of the law and has been broken up into separate organisations, all open to competition. In Britain, the Tory government has gone over to the American system. Along with partial de-nationalisation the Telecommunication services have lost their monopoly and been thrown open to competition. The same applies to bus services. British governments long ago halted further amalgamation of the big commercial banks who now face competition from the development of ordinary banking services by the building societies, the Trustee Savings Bank and others. How far this process will go remains to be seen, but the belief of Hilferding and Lenin that competition was dead, has been disproved.

It is equally clear that Boudin and Keynes were wrong in their belief that the competitive struggle for markets results from an inbuilt deficiency of demand in the home market. The profit motive behind the search for overseas markets by the export capitalists is no different from the profit motive behind the home producers for the home market, and the import capitalists.

What then are the causes of international conflicts of interest and war? Some, but not many, wars are fought over markets. For example the opium wars, when British traders were able to get the government to go to war to compel China to allow the import of opium. In the modern world, markets take second place to strategic issues. The conflict between America and European countries on the one side and Russia on the other illustrates the point. It is not Russia but Japan, America's ally which has flooded American and European markets with their cheaper products. The point was put in proper perspective by Professor Edwin Cannan in 1915:

"Commercial interests seem to me to appear in international quarrels simply as a cover for strategic interests. Where there are not supposed to be divergent strategic interests, no amount of divergent or supposedly divergent commercial interests produces either war or preparations for war" (An Economist's Protest, page 26).

This exactly fits the relationship between America and Japan because the latter is held to be strategically so important to America's control of the Pacific against Russia. The most frequent cause of conflict and war is the effort of national sections of capitalism to obtain control of needed overseas sources of food and other materials and to protect transport routes. Petrol products have bulked large in this century. It has not been competition by oil producing countries to sell their oil that has threatened war but the importing countries' need to have dependable supplies. Two years ago, America threatened military action if the Middle East oil producing countries organised an embargo on exports to America and Europe.

Discussing the question Engels, in a letter dated 27 October 1890, pointed out that it was the search for gold which led the Portuguese to Africa, and it was not exports to India but imports from India which led to the conquest of India by the Portuguese, Dutch and English between 1500 and 1800: "Nobody dreamed of exporting anything there". Exports came later.

Lenin made a valid point in his Imperialism about some annexationist wars. He wrote that sometimes the powers try to annexe regions "not so much for their own direct advantage as to weaken an adversary and undermine its hegemony". Lenin and Hilferding both saw the growth of monopoly and its resulting wars as a prelude to socialism, and insisted that socialism was the only answer. But Hilferding found himself acting as Finance Minister in a German coalition government, trying vainly to solve the problems of German capitalism. And Lenin's "socialism" has resulted in Russia becoming a capitalist super-power.

Lenin saw "the export of capital" as the hallmark of capitalism's highest stage. It is interesting to note the role now played by Russia. The Statesman's Year Book, 1962 had this to say:

After the second world war the USSR has become one of the biggest creditor countries in the world. Between 1955 and January 1961 economic aid in the form of 2 per cent and 2? per cent loans, has been advanced for over 520 industrial and agricultural enterprises in socialist countries.

This foreign loan policy has continued since 1961.

Edgar Hardcastle

More of Edgar Hardcastle's article from the Socialist Standard can be accessed at his page at the Marxist Internet Archive.