THE MARXIAN THEORY OF IMPERIALISM

But whether this is so or not, the belief that it is only in our own times that we have begun to perceive the working of the economic factor can only rest upon ignorance. The idea that thinkers of earlier epochs explained wars only in terms of disputes involving religion, love, honour and lust for power and suchlike categories, and that it was left to the sophisticated minds of our own age to understand the importance of economic motives, may be fashionable but it is false. 1 Nevertheless, there is a difference between earlier and 1 In Book II of the Republic, for instance, Plato gives an explanation of the origins of war which is couched entirely in terms of economic causes. 19 THE ECONOMIC CAUSES OF W.AR n10re recent thought on these matters - a difference both of degree of generality and type of explanation. The older wri tel'S on these topics were conten t to explain particular wars in terms of particular economic causes or, if they were attempting to discuss the causes of war in general, to indicate various types of desire for gain as one of the possible causes and to leave it at that. It is the character istic of more recent thought that it attempts to go beyond this - to describe the economic motive with greater technical precision and to explain its operation in terms of "vider generalizations relating to the whole structure of society. Its explanations are not merely incidental or classificatory, they are analytical and systematic. Whether great success has as yet attended these efforts is perhaps an open question. But that they do constitute an endeavour to achieve a wider kind of knowledge is undeniable. They are a part of the effort of the last two hundred years to achieve, in regard to the phenomena of society, a body of systematic knowledge, comparable in its generality with the propositions of the natural sciences.

Of such attempts by far the most ambitious and the most influential is the so-called Marxian theory which attributes the occurrence of war in recent times to the existence of capitalist institutions of a certain stage of development. Although, as we shall see shortly, it has a certain restriction of application in time, it is more com prehensive in its claims, more far reaching in its implica tions than any other theory relating to these matters; and it has had an influence far transcending the sphere of communist propaganda in any narrow sense. It has affected our interpretation of the past and our hopes and fears concerning the future. It has affected the course of politics; and it has even influenced - not perhaps with very felicitous results - the writing of poetry. It would be 20 MARXIAN THEORY OF IMPERIALISM difficult to overestimate the extent to which, in our war darkened days, it has don1.inated the thoughts of large numbers of people.

For this reason, and because the testing out ofa definite hypothesis is a good way of getting some order into our perceptions of a complicated body of material, it will be convenient to approach the main subject by analysing the grounds on which this theory has been supported and by attempting to test it by reference to facts. 2 General Characteristicsof the Marxian Theory There are two general characteristics of the Marxian theory which it is desirable to recognize before proceed ing to any detail. In the first place, it is a theory with an explicit historical limitation. It may be that the more general propositions of the Marxian philosophy imply that all wars are due to economic causes; certainly some versions of the materialist interpretation of history would seem to justify that view. But the theory to be examined here, the theory of imper ialism, makes no such universal claim. It professes only to interpret a particular phase of history, the period of fully developed capitalism. Only the wars of this epoch are explained in terms of this particular economic cause.

It follows, therefore, that it can only be examined within these terms of reference. It is no use attempting to refute the Marxian theory of imperialism by reference to cases of war occurring in other historical periods 'genuine' crusades, blood feuds among primitive peoples, quarrels of prestige under feudalism and so on. Whether it is right or wrong, it refers only to the wars of the capital ist epoch. But - and this is the second general characteristic to which it is necessary to draw attention - within this epoch 21 THE ECONOMIC CAUSES OF WAR its claims are comprehensive. It does urge that, within this period, all wars and international friction, or at any rate all important wars and all important frictions, are due to the existence of the capitalist form of society. It is not merely a claim that sometimes the influence of particular groups of capitalists may have led to war or the danger of war; it claims, rather, that always the underlying cause has been the existence of capitalism. It is, therefore, not merely an historical explanation of particular wars, but a general explanation of the consequences of a certain form of social organization. There will be occasion later on to cite full evidence of this claim. .But it is important that from the outset its nature should be clearly recognized.

For obviously there is all the difference in the world be tween a theory which holds that certain groups of property owners may exercise a sinister influence sometimes and a theory which holds that it is inevitable that they should do so all the time. 3 The UnderconsumptionTheory What then are the grounds by which this theory is supported? If regard is paid to the confidence with which its claims are asserted and the pivotal position which it occupies in the strategy of communist propaganda,l it might reason1 It is perhaps worth noting how pivotal it is. It is a fundamental claim of the Marxian position that under capitalism, the condition of the majority of the people is bound to deteriorate. Up tq the outbreak of the Great War of 1914-18, this seemed to be in obvious contradiction to the facts; and even since then, in those parts of the world not immediately affected by the post-war chaos, the improvement of real incomes has continued. So that it would seem to be a legitimate objection to the Marxian theory to argue that any deterioration that has taken place is chiefly to be attributed to this factor rather than to the inevitable tendencies of the dynamics of capitalist society. If, however, the Great War itself can be shown to be the inevitable result of the capitalist system, the apparent contradiction disappears and the 'theory of in creasing misery' is vindicated.

22 MARXIAN THEORY OF IMPERIALISM ably be expected that the main outlines of its analytical and historical justification would be a matter of common agreement among writers of this school, as easily access ible as the main outlines, let us say, of the labour theory of value. And there can be little doubt that the general public which discusses these matters, not to mention the many. 'bourgeois' historians who profess to have been influenced by Marxian theory, have assumed this to be the case. I myself am certainly willing to confess that, until some years ago when I began to take a special interest in these matters and to seek out the original texts, I was definitely under this impression. The Marxian theory of imperialism, I thought, rested upon a somewhat rigid form of the underconsumption theory of the trade cycle. Because there was chronic tendency for the working classes to have too little to spend, there developed a struggle for international markets which tended from time to time to culminate in war. That, I thought - and, I am sorry to say, occasionally even taught - was the Marxian theory of imperialism. But in fact this is not so. The theory of imperialism, or the . theory of catastrophe (Zusammen bruch), as it is sometimes called, is not a matter on which there is general agreement among Marxian writers. There is no clear guidance from Marx; and, as anyone who will take the trouble to consult easily accessible literature can find out for himself, among the followers of Marx, there is the sharpest possible dissension. They agree, of course, that it is capitalism which is the culprit. But on the ques tion why it is the culprit, such undeniable communists as, for instance, Rosa Luxemburg and Lenin, take radically different views and dispute among themselves with all the vigour of economists not attached to any particular party creed. They become, as it were, human beings like the rest of us, liable alike to error and occasional intellectual 23 THE ECONOMIC CAUSES OF WAR progress. Even if we discount all minor expository differ ences, it must be recognized that there are at least two communist theories. of the economic causes of war; and any survey of this question, which is to do anything like justice to the subject, must take some account of each and weigh their respective claims to be 'orthodox'. 1 We may commence with those theories which stress the alleged chronic deficiency of markets. Their origin is earlier in time; and much more than the later, and perhaps more 'orthodox', rival views, they form the basis of what is eopularly believed to be Marxian teaching on this matter. "

The general background of these theories is provided by theunderconsumption theories of Malthus and Sismondi. Sismondi in particular throws out hints which may well have furnished the basis for more systematic thought on this matter. In his Nouveaux Principesd'EconomicPolitique2 he asserts that 'By the concentration of fortunes ... ~the internal market is continually narrowing and, more and more, industry is reduced to discovering foreign markets' . Here clearly enough is the main theme of this form of the theory we are examining. But Sismondi was not a systematic writer. Moreover, perhaps, he wa~ much too much of an historian to wish to make an observation of this sort the basis of any very comprehensive theory regarding historical development . .Much more important in this respect is the German economist, Rodbertus, who, in a pamphlet of 1858,3 1 The account which follows is necessarily very limited. No attempt has been made to provide an exhaustive survey of the history of such theories - a task which would very well repay further research. An excellent summary is provided by E. M. WINSLOW, Marxian, Liberal and Sociological Theories of Imperialism, 'Journal of Political Economy', XXXIX, Decemberl931, pp. 713-18.

2 2nd edition, 1927, p. 361. 3 Die Handelskrisen und die Hypothekennoth der Grundbesitzer. 24 MARXIAN THEORY OF IMPERIALISM develops a theory of the tendencies of capitalist develop ment which sets the tone of most of what has been written on this subject ever since. It would be a mistake,he urges, to regard the crisis' which was then raging as being in any way due to lack of money. (Such repudiations of any appeal to monetary causes have been a leading feature of underconsumption theories until very recently.) The cause is, not lack of money, but a wrong distribution of income which brings it about that too much is invested, too little spent on con sumption. This maldistribution is no transitory phenome non; it is an organic disease of modern society springing essentially from the nature of the property system. It follows, therefore, that all the so-called remedies are merely palliatives. 'All that can be done to guard against future outbreaks is only the double-edged weapon of an enlarge ment of the foreign market. The present struggles to do this spring from this fundamental disease. Because pro ductivity continually rises in the home market and the purchasing power of the people remains the same, trade must find an outlet in external markets . . . Every new market thus found means a suspension of the central social problem. Colonization has the same effect ... But, be cause the world is limited, the acquisition of new markets must one day cease ... Then the social question will have to be solved.' Here, although without specific mention of the proba bility of war, we have all the essentials of the undercon sumptionist form of the theory of imperialisIJ}.. Explicit connection of the struggle for markets with. diplomatic friction and war is the work of more recent writers. Of these we may take as representative the work of Rosa Luxemburg in Germany and of Mr.]. A. Hobson in England.

THE ECONOMIC CAUSES OF WAR Rosa Luxemburg's Akkumulationdes Kapitalsis probably the most uncompromising statement of the undercon sumption theory ever put forward by an intelligent person. .A.11 saving under capitalistic conditions tends to produce stagnation and depression. Even the schemata of Volume II of Das Kapital in which Marx tries to show how, at different stages of accumulation, the process of capitalist circulation proceeds, fail to show how the pro duct can be sold at a profit if accumulation is actually taking place. The Marxian theory of capital in the techni cal sense of the term was greatly superior, she argues, to that of the classical economists.! But it is essentially static in character. It fails to show how, under dynamic conditions, surplus value can actually be realized. And in fact, she goes on to argue, under strictly capitalistic conditions the problem is actually insoluble. Under strictly capitalistic conditions, there is no one to buy those products which the capitalists wish ultimately to realize as surplus value. In order that the system may function at all there must be a buyer outside - a thirdperson, to use the phrase which the Luxemburg analysis has made famous.

There must be a non-capitalistic world side by side with the capitalistic. 1 There is indeed much to be said for the view that, in this part of his work, Marx did perceive problems which tended to be concealed by the Smithian formula that the price of the product can be resolved into wages, profits and rent. It is doubtful whether, in spite of Mr. Dobb's ingenious apologia, at the present day, there is anything much to be saved from the wreckage of the labour theory of value of Das Kapital: the verdict of economists since Jevons on this point seems in need of no very drastic revision. But while we know how to put the theory of capital much more clearly and elegantly than did Marx, it is only fair to say that, in this respect, in many points he was considerably ahead of his time. Few economists to-day seem to find time to read on into Volume II - which, considering the limited duration of human life, is perhaps not extraordinary.

But if they did, they would find that, on this point at least, Marx seems to forget Hegel and propaganda and, like the good classical economist he sometimes was, to become absorbed in the study of a purely intellectual problem.

MARXIAN THEORY OF IMPERIALISM I tis not difficult to see how such an analysis may be made the basis for a fully developed theory of imperialism; and this indeed is the culmination of Luxemburg's argument. The third person, the non-capitalistic deus ex machina, may be found in the natural economy at home; hence, in the early stages of capitalism, the continual pressure to break up the self-sufficient agricultural communities at home. But it may be found, too, overseas; hence the urge of the capitalist powers to appropriate the non-capitalist parts of the world outside Europe and North America - the Chinese wars, the scramble for Africa, the ever-increasing pressure of imperialist aggression. Hence, too, the inevita able collision of these powers as the area of non-capitalist economy still to be exploited becomes narrower and narrower. With relentless eloquence the author describes the increasing tribulations which must lead to the final catastrophe.

Mr. Hobson's view is not radically dissimilar from this, although, as might be expected, it is stated with much more subtlety and reservation and, as we shall see, the underlying theoretical analysis is perhaps capable of a more favourable interpretation. The fullest statement of his views is to be found in his Imperialism,a work. whose immediate occasion was the controversy aroused by the Boer War, but which represents a logical extension of general underconsumptionist views developed much earlier. His argument can be best stated in his own words.! 'Everywhere', he says, 'appear excessive powers of pro duction, excessive capital in search of investment. It is admitted by all business men that the growth of the powers of production in their own country exceeds the growth in consumption, that more goods can be produced than can 1 I have selected salient passages from pp. 80-8. 27 THE ECONOMIC CAUSES OF WAR be sold at a profit and that more capital exists than can find remunerative investment.

'It is this economic condition of affairs that forms the taproot of imperialism. If the consuming public in this country raised its standard of consumption to keep pace with every rise of productive powers, there would be no excess of goods or capital clamorous to use imperialism in order to find markets: foreign trade would indeed exist but there would be no difficulty in exchanging a small surplus· of our manufactures for the food and raw material we annually· absorbed and all the savings that we made could find employment, if we chose, in home industry. 'If the apportionment of income were such as to evoke no excessive saving, full constant employment for capital and labour would be furnished at home ... The struggle for markets, the greater eagerness of producers to sell than of consumers to buy is the crowning proof of a false economy of distribution.' Mr. Hobson's influence has far transcended that of any other writer on these subjects, save perhaps Lenin. It is probably from him rather than from the orthodox com munists, that the majority of lesser writers, economic historians and general political journalists have, directly or indirectly, absorbed the view that it is capitalism which in our time is responsible for international war. Whether this drastic conclusion is indeed to be drawn from Mr. Hob son's own reserved and qualified statements is perhaps an open question. But of the importance of his work in the.

formation of the intellectual atmosphere of our time there can be no doubt. 4 The LogicalSignificanceof the UnderconsumptionTheory It will be useful, before proceeding further, to pause for a moment to inquire a little into the analytical validity 28 MARXIAN THEOR Y OF IMPERIALISM of the views we have so far examined and to attempt to assess their significance in regard to the central proposition which they are supposed to support. To what extent is the underconsumption theory analytically consistent and what support does it furnish for the view that it is capitalism which is responsible for war? There can be little doubt that, in the form in which it was stated by Rosa Luxemburg, the theory is inadmissible. There is no schematic difficulty in depicting the creation of real capital; Marx was right ~ere and Rosa Luxemburg was creating imaginary difficulties. Of course, in the pro cess of capital creation, the rate of return may fall and, as we shall see when we come to examine the views of Lenin and his followers, it is quite possible to build on this a logically consistent hypothesis regarding imperialist expan sion. I But it is not correct to argue that the creation of real capital in itself produces a situation in which the final product cannot be disposed of within the closed circle of the capitalist system. A God in the machine from outside is not necessary.

Much the same strictures must apply to all those forms of the underconsumption theory - and this certainly includes some, though perhaps not' all, versions of Mr. Hobson's theory - which rely upon the assumption that too much is actually invested. Investment is a cost-reducing process and, provided that prices are allowed to fall suffi ciently, then, even with constant money incomes, there is no reason why the product o.f increased real investment should not be fully disposed of. All the examples which purport to prove the contrary are worked out on the assumption of constant prices and constant incomes. But this misconceives the problem. There is nothing in 1 It should be noted that the word hypothesis is used here. We are not yet discussing the consistency of hypotheses with the facts. 29 THE ECONOMIC CAUSES OF WAR general economic theory which justifies the belief that until the rate of return drops to zero, the product of properly directed investment cannot be disposed of at a profit.

In recent years, however, attempts have been made to justify the general underconsumptionist outlook in terms, not of excessive investment, but of a disposition to make savings which do not succeed in finding their way into investment. If the propensity to save is high and if the disposition to hold cash or cash balances is such as, with a given quantity of money, to maintain interest rates higher than the general rate of return over cost, then, by a cur tailment of money income usually accompanied by un employment and depression, the amount which is actually saved is forcibly restricted to the amount actually invested. Given the quantity of money - this is a fundamental assumption - and the other independent variables, it is possible, as Dr. Oskar Lange has shown,l to speak of an optim urn propensity to consume; and if this is not reached, then under-employment and depression may result. It is very difficult to believe that anything of this sort has been in the minds of the majority of the exponents of under consumption theories. Certainly it is quite foreign to the way of thinking of all those who have propounded theories of the kind of which that of Rosa Luxemburg is typical.

But it is arguable that it is what some at least were fumbling after. In the case of Mr. Hobson, for instance, although he has usually developed his argument in terms of excessive investment, yet from time to time, in replying to criticism, he has made sundry references to the sticki ness of interest rates, which perhaps entitle us to assume that something similar to the Keynesian analysis was also sometimes in his mind. 1 The Rate of Interest and the Optimum Propensity to Consume, 'Economica', 1938, pp. 12-32.

MARXIAN THEORY OF IMPERIALISM Now there is nothing about this form of the theory which is analytically inconsistent. It represents a state of affairs which certainly might exist in the world of reality. I t suffers from no fault of internal construction. It does not present those obvious targets to logical markmanship which are the characteristics· of earlier versions. Whether it is a state of affairs which is generally prevalent whether, as Mr. Keynes and his followers seem to think, it provides the explanation of the trade cycle, or whether, as is the view of those who adopt a more eclectic attitude, it only describes an explanation ofpossibleturning points and of a restricted phase of depressions which may have been brought about by other causes - these are matters of acute controversy upon which the verdict of empirical investigation is still ambiguous. Fortunately, for the purposes of this chapter, it is not necessary to solve these unsettled questions. Whether the theory is right or wrong, whether it fits the facts of the majority of depressions or whether it describes only certain exceptional cases, it does not prove the main contention of the Marxian case that the crisis is due to capitalism.

For, as is obvious from Dr. Lange's exposition, this form of the underconsumption theory involves appeal to essen tially monetary considerations. The deficiency it indicates is not a structural deficiency of the system of private property and free markets. It is a deficiency of the machi nery for supplying money. For if, with a given quantity of money, the general demand for cash holdings is such that the proportion of saving which is attempted is beyond the optimum, then the injection of an additional supply of money would put things right again. In practice this may be an extraordinarily difficult thing to bring about. The general stickiness of the organization of financial markets may present most formidable obstacles. But the disease, 31 THE ECONOMIC CAUSES OF WAR if it exists, is a disease of the financial system, not a disease inseparable from the existence of capitalism. It is perhaps no accident that Mr. Keynes, who must be regarded as the leading exponent in our own day of this form of under consumption theory, far from thinking that the remedies he proposes would abolish capitalism, has even claimed that they are the means of making capitalism both work able and morally acceptable. There will be something more to be said about the struggle for markets and its various causes later on. 1 But at this stage of the argument we need not pursue this form of the theory any further.

5 The Leninist Theory of Imperialism This does not mean, however, that wehave disposed of the communist explanation of imperialism. It is doubtful whether the main stream of Marxian theory has ever been underconsumptionist in character. Certainly Rosa Luxem burg was not accepted as orthodox. She was attacked most furiously on this point by Otto Bauer 2 and Bukharin;3 and her whole theory has more recently been subjected to an exhaustive-:analysis by Grossmann who purports to show that, both deductively and inductively, it is false and misleading. 4 To discover the main grounds ofthe communist theory, as it is held at the present day, we must look to another group of writers. T~e attitude ofMarx to the whole question of imperial ism is a matter of some ambiguity. In his main theoretical structure, he abstracted deliberately from considerations of foreign trade. The celebrated chapter on Colonies in Volume I of Das Kapital is designed simply to illustrate his 1 See chaps. iv and v below.

2 Neue Zeit., 1913, Nr. 24. 3 Der Imperialismus'und die Akkumulation des Kapitals, Berlin, 1926. 4 Das Akkumulations - und Zuzammenbruchsgesetz des kapitalistischen Systems, Leipzig, 1929.

MARXIAN THEORY OF IMPERIALISM general thesis regarding the exploitation of labour. There are obiter dicta on the causes of depression which were said by Rosa Luxemburg (who not unnaturally claimed to be the true interpreter of the master) to support her theory. But there seems little doubt that Marx's main theory of the trade cycle relied, not on the motive of under consumption in the mode of Malthus and Sismondi, but rather upon the motive of disproportionality in the mode of Wilson and Spiethoff; and there is a passage in Volume II where he definitely goes out of his way to repudiate any suggestion that it is a deficiency of consumers' purchasing power which is the root of the difficulty. 'It is purely a tautology', he says, 'to say that crises are caused by the scarcity of solvent consumers or of a paying consumption. The capitalist system does not know any other mode of consumption but a paying one, except that of the pauper or of the "thief". If any commodities are unsaleable, it means that no solvent purchasers have been found for them, in other words consumers ... But if one were to attempt to clothe this tautology with a semblance of a profounder justification by saying tpat the working class receive too small a portion of their own prodqct and that the evil would be remedied by giving them a larger share of it or raising their wages, we should reply that crises are always preceded by a period in which wages rise generally and the working classes actually get a larger share of the annual product expected for consumption.

From the point of view of "simple" (1) common sense, such a period should rather remove a crisis.'! Engels adds the grim footnote: 'Advocates of the theory of crisis of Rodbertus are requested to make a note of this.' At the present day it would be generally admitted by 1 Capital, vol. II, pp. 475-6. 33 THE ECONOMIC CAUSES OF WAR members of the Communist Party, that the orthodox com munist theory is to be found in Lenin's monograph on im perialism. 1 It is this work which is held to contain the real explanation of the origins of the Great War and the neces sary tendency to catastrophe of a world of capitalist states; and it is the theory underlying this analysis which must be set out and examined if we are to do justice to the main stream of communist thought on these matters. It is necessary to note, at the outset of our inquiry, that Lenin's work does not depend at all upon the constructions of the underconsumption theory. Lenin quotes Mr.

Hobson and praises his candour; and this has given rise to the view that his own contribution follows the same tradi tion. But this is not so. He quotes Mr. Hobson's facts rather than his theory. The main theoretical influence on Lenin is undoubtedly Hilferding's Finanzkapital;and, in this work the underconsumption theory is definitely rejected. The central assumption of Lenin's theory is not under consumption but the influence of monopoly finance and the struggle of capitalists to avert the secular tendency to a falling rate of profit. As capitalism develops, he argues, the organization of production tends more and more to fall into the hands of monopolies. (Lenin quotes voluminous statistics to prove that this actually happens and assumes throughout that . it is a technically inevitable development.) As these monopolies develop, they come more and more to control the governments of the various states; and 'national' policy is essentially the product of their influence. It is sound Marxian orthodoxy to assume that the state is necessarily the organ of the predominant type of economic 1 Imperialism, the Highest Stage of Capitalism. Selected Works of V. I. Lenin, vol. v. An admirable gloss on the somewhat repellent exposition of Lenin is to be found in Dr. Maurice Dobb's essay on Imperialism in his Political Economy and Capitalism.

34 MARXIAN THEORY OF IMPERIALISM organization; and it is assumed throughout Lenin's book that the state in the period of spatkapitalismusis necessarily to be regarded as the instrument of monopolist strategy. The operation of these monopolies, he goes on, is not confined to the area of the state in which they originate. Because of the economic interdependence of different areas, their interests extend far beyond the frontiers. And because there are many monopolies and many states these interests are often in conflict. This conflict is apparent in regard to raw materials. If monopoly profit is to be secure it must be immune from the control by other monopolies of essential raw material supplies. The great monopolies of the world are ceaselessly intriguing to secure for themselves, via the extension of the jurisdiction of the states they control, command over raw materials such as iron ore and oil; and Lenin thinks that part at least of the imperialist struggle is to be interpreted in this way.

But the main conflict is in the sphere of finance. Modern imperialism is essentially the clash of financial interests. The struggle for extensions ofterritory, for spheres of influence, and so on, is the struggle of rival groups of 'finance capital' seeking to extend their monopolies. It is at this point that it is necessary to realize the influence on Lenin of the work of Rudolf Hilferding. To the English-speaking reader, be he liberal or socialist in outlook, there is something odd about the peculiar status attributed to the entity called 'finance capital'. Finance he can understand. Monopoly he can understand. In spite of the vagaries ofprofessional economists, he has some concep tion ofwhat is meant by the term capital in various contexts. But the extraordinary status accorded to 'finance capital' and the special literature devoted to this entity by certain continental writers is more than a little bewildering.

The solution is to be found in the special development of 35 THE E CON 0 M ICC A USE SO F WAR the structure of German banking. As is well known, for many years before the War, the great German banks partici pated in the actual conduct of industrial enterprise to a much greater extent than anywhere else in the world. Their financial power was used more and more in carrying through the great mergers and consolidations so character istic of German industrial development; and Central European Marxists, of whom Hilferding was an outst~nd ing leader, regarded this development, not merely as con stituting a special phase of the development of German institutions, but as a special stage of the development of capitalistic institutions in general-a model to which eventually all banking development would conform. Un less this is realized, the special significance which he, and following him Lenin, attached to this technical phrase, is apt to escape notice.

Whether Lenin was actually conscious of the extent to which the phenomena of finance capital in this peculiar sense were restricted to certain European countries is not clear. It might, perhaps, be argued that he believed that, although the direct connection between finance and mono polistic industry was less obvious elsewhere, yet neverthe less such a connection existed and might be treated as coming under the same general categories. At any rate, there can be no doubt that it is to the operations of high finance, struggling desperately to escape from the falling rate of profit which resulted from the development of domestic industry, that he attributed the main clashes of modern imperialism. 'The necessity for exporting capital arises from the fact that in the main centres, capitalism has become "over-ripe" and ... capital cannot find profit able investment.' 1 'The characteristic feature of imperial ism is not industrial capital but finance capital.' 2 1 Gp. cit., p. 57. 2 Ibid., p. 83.

36 MARXIAN THEORY OF IMPERIALISM Lenin actually gives a list offive 'essential features' ofthe imperialist stage of capitalist development; and if we are to do justice to his theory, it is perhaps as well that we should set them out in his own terms. The five features are as follows: the prose style is that of Lenin's translator. (I) 'The concentration of production and capital developed to such a stage that it creates monopolies which playa decisive role in economic life.' (2) 'The merging of bank capital with industrial capital on the basis of "finance capital" of a financial oligarchy.' (3) 'The export of capital which has become extremely important as distinguished from the export ofcommodities. (4) 'The formation of international capitalist mono polieswhich share the world among themselves.' (5)· 'The territorial division of the whole world among the greatest capitalist powers is completed.' 1 Once this stage has arrived, he urges, clashes of interest and war are inevitable.

This, in short, is the positive part of his theory. But in order that there may be no mistaking his attitude, Lenin makes critical comment upon certain alternative views from which he wishes to dissociate himself. Thus he declaims against those who had urged that the characteristic of imperialism is agrarian annexation. On the contrary he urges, 'The characteristic feature of im perialism is that it strives to annex not only agricultural but even highly industrialized regions. (German appetite for Belgium, French appetite for Lorraine.)' 2 He thus dis sociates himself completely from the attitude of Rosa Luxemburg. No 'third person' in the Luxemburg sense was to be expected in these capitalistic regions. Moreover, he urges, there is nothing accidental about imperialism. The unfortunate Kautsky, who so often made lOp. cit., p. 81. 2 Ibid., p. 83. 37 THE ECONOMIC CAUSES OF WAR himself the object of Lenin's dialectical marksmanship, had argued at one stage of his career 1 that other develop ments were conceivable; and that perhaps the monopolists of various countries might realize the dangers of warfare and come together in great international combinations, thus tremendously facilitating that painless transition to socialism for which he so fervently hoped. No such easy visions were acceptable to the founder of the Soviet Re public. It was not merely muddle-headed but positively ignoble to entertain them for a moment.

'Kautsky writes,' he says - one can almost hear the snarl of contempt with which he pronounced the oppro brious surname - 'Kautsky writes that, from the purely economic point of view, it is not impossible that capitalism will go through yet another phase, that of the extension of the policy of the cartels to foreign policy, the phase of ultra-imperialism, i.e. of a super-imperialism, a union of world imperialism and not struggles among imperialisms; a phase when wars shall cease under capitalism, a phase of the joint exploitation of the world by internationally united finance capital. '... Kautsky's meaningless talk about ultra-imperialism encourages among other things that profoundly mistaken idea which only brings grist to the mills of the apologists of imperialism, viz., that the domination of finance capital lessens the unevenness and con tradictions inheren t in world economy, whereas in reality it increasesthem.' 2 Here then we have the main outlines of the central com munist theory. It must be acknowledged at once that it is analytically possible. It is quite conceivable that in order to avoid a reduction in the rate of profit, groups of 1 It is to be feared that no particular consistency is to be discovered in Kautsky's attitude. The detailed analysis of his work by Winslow and others reveals little but an interesting muddle.

2 Gp. cit., p. 87.

MARXIAN THEORY OF IMPERIALISM financiers might act in the way it suggests. It is not open to the logical objections which can be brought against most forms of the underconsumption theory. Nor can it be said to be concerned, as was that theory, with anything less than the main tendencies of capitalism. If financiers and monopolists act in the way suggested, it is not because of any incidental imperfection in the monetary mechanism. On the logical plane at least, its claim to be an indictment of a whole type of society is not inconsistent. The question to be decided, therefore, is whether it fits the facts. 39 CHAPTER III THE MARXIAN THEORY TESTED I Criteria of Verification IN the last chapter, after a brief survey of the earlier forms which have been assumed by the theory that the root cause of war is the existence of capitalism, we examined in some detail that form which has now become the settled ortho doxy of communism, Lenin's theory of imperialism. We found that this theory suffered from none of the logical deficiencies to which its predecessors were subject and that it represented a coherent explanation of what might hap pen, if its assumptions corresponded with reality. In this chapter, therefore, we must proceed to inquire whether this correspondence is actually to be discovered. Does the Leninist theory fit the known facts of history? That is the question we have to answer.