Louis Proyect: The Unrepentant Marxist

July 4, 2008

Lenin’s “Imperialism” reads like it was written yesterday

Filed under: economics,imperialism/globalization,Introduction to Marxism class — louisproyect @ 6:45 pm

When I decided to lead a reading group on the classics of Marxism, I was partially motivated to re-examine some books that I hadn’t looked at in over 40 years in some cases. One of them was Lenin’s “Imperialism, the Highest Stage of Capitalism”. As somebody who has adopted a less than worshipful stance toward the Marxist classics in recent years, I was ready to encounter all sorts of evidence that something written in 1914 cannot be a guide to our current situation. Leaving aside the big question of inter-imperialist wars, which does seem to be a thing of the past on first blush, I was amazed at how many other observations jibe with articles in the business sections of the major newspapers today devoted to the ongoing financial crisis.

A number of these observations appear in chapter 3 and 4 of Lenin’s book and I expect to run into others as I work my way through it.

For those of you who have received a proper training in ruling class ideology in freshman economics or poli sci, you will surely remember how the teacher “proved” that Karl Marx’s writings were obsolete on the basis that capitalism has become so democratized that the term “ruling class” has no meaning. This democratization is primarily expressed through pension funds, mutual funds, etc. that put the means of production in the hands of ordinary working people.

Back in 1958, when American capitalism enjoyed more of an ideological hegemony than perhaps at any point since WWII, economists and corporate executives spoke about a “people’s capitalism” that had nothing to do with the stereotype of fat cats in top hats found in Marxist literature.

Economist Marcus Nadler wrote:

The economy of the United States is rapidly assuming the character of what may be termed ‘People’s Capitalism,’ under which the production facilities of the nation—notably manufacturing—have come to be increasingly owned by people in the middle and lower income brackets or indirectly by mutual institutions which manage their savings.

Roger Blough, the chairman of U.S. Steel, wrote:

. . . the change that has occurred in the ownership of our larger enterprises. Today fewer businesses—especially our biggest businesses—are owned by a few wealthy individuals or groups, as many were back in the Nineties. They are owned by millions of people in all walks of life. In United States Steel, for example, the owners of our business outnumber the employees by a considerable margin; and no one of them holds as much as three-tenths of one per cent of the outstanding stock.

General Electric, whose television show was hosted by Ronald Reagan, ran an full-page advertisement stating:

People’s Capitalism: The 376,000 owners with savings invested in General Electric are typical of America, where nearly every citizen is a capitalist.

In a pamphlet distributed to its employees, Standard Oil advised them that Karl Marx devised a theory in which “Ownership of the mills, as with ownership of the land, was the key to the future. Ownership should, therefore, be vested not in the hands of the few, but with something he identified as The People.” But today, Karl Marx would be surprised to learn the following:

Yes, the people own the tools of production. … By his own definition, Karl Marx’ prophecy has been realized. . . . How odd to find that it is here, in the capitalism he reviled, that the promise of the tools has been fulfilled.

(The quotes above come from an excellent article refuting “People’s Capitalism” by CP economist Victor Perlo in 1958. Unfortunately, it is only available to those with access to Jstor–like myself.)

Evidently, Lenin had to contend with the same kind of crap in his day as well, as evident from this paragraph in chapter 3, titled “Finance Capital and the Financial Oligarchy”.

As a matter of fact, experience shows that it is sufficient to own 40 per cent of the shares of a company in order to direct its affairs, since in practice a certain number of small, scattered shareholders find it impossible to attend general meetings, etc. The “democratisation” of the ownership of shares, from which the bourgeois sophists and opportunist so-called “Social-Democrats” expect (or say that they expect) the “democratisation of capital”, the strengthening of the role and significance of small scale production, etc., is, in fact, one of the ways of increasing the power of the financial oligarchy. Incidentally, this is why, in the more advanced, or in the older and more “experienced” capitalist countries, the law allows the issue of shares of smaller denomination.

Not only did Lenin debunk the “people’s capitalism” of his day, he also shed light on how large corporations developed a talent for “cooking the books” in Enron/Arthur Anderson fashion. He drew attention to how holding companies were able to pull off all sorts of “shady and dirty tricks to cheat the public”. Citing a German banking review from 1914, he revealed how directors of the Spring Steel Company of Kassel dumped shares in advance of bad news, while covering their tracks through illegal accounting gimmickry.

This typical example of balance-sheet jugglery, quite common in joint-stock companies, explains why their Boards of Directors are willing to undertake risky transactions with a far lighter heart than individual businessmen. Modern methods of drawing up balance-sheets not only make it possible to conceal doubtful undertakings from the ordinary shareholder, but also allow the people most concerned to escape the consequence of unsuccessful speculation by selling their shares in time when the individual businessman risks his own skin in everything he does….

For those who followed the Enron debacle, this might ring a bell:

Among the main prosecution witnesses will be Andy Fastow, Enorn’s former finance director, who has struck a plea- bargain deal with prosecutors, and will serve a reduced jail term in exchange for testifying against his former bosses.

Mr Hueston said Mr Skilling used to hide Enron losses by selling bad assets to a web of companies controlled by Mr Fastow so that they did not appear on Enron’s balance sheet. An alleged handshake agreement between the two ensured Mr Fastow would never lose out. Other tactics included illegal use of company reserves, and misleading treatments of losses from failing divisions.

“I told you the United States would take you inside the doors of Enron to tell you what was really happening. And to do that we must bring you some insiders,” Mr Hueston said. A total of 16 former Enron executives have struck plea-bargain deals.

–Guardian (London), February 1, 2006

We also learn that–surprise, surprise–real estate swindles were taking place in 1914 just as they are today. Lenin writes:

Speculation in land situated in the suburbs of rapidly growing big towns is a particularly profitable operation for finance capital. The monopoly of the banks merges here with the monopoly of ground-rent and with monopoly of the means of communication, since the rise in the price of land and the possibility of selling it profitably in lots, etc., is mainly dependent on good means of communication with the centre of the town; and these means of communication are in the hands of large companies which are connected with these same banks through the holding system and the distribution of seats on the boards.

As a result we get what the German writer, L. Eschwege, a contributor to Die Bank who has made a special study of real estate business and mortgages, etc., calls a “bog”. Frantic speculation in suburban building lots; collapse of building enterprises like the Berlin firm of Boswau and Knauer, which acquired as much as 100 million marks with the help of the “sound and solid” Deutsche Bank—the latter, of course, acting through the holding system, i.e., secretly, behind the scenes—and got out of it with a loss of “only” 12 million marks, then the ruin of small proprietors and of workers who get nothing from the fictitious building firms, fraudulent deals with the “honest” Berlin police and administration for the purpose of gaining control of the issue of cadastral certificates, building licenses, etc., etc.

Frantic speculation in suburban building lots? Sounds rather like what I saw with my own eyes in Houston, Texas in 1973 when every computer programmer was being hustled into putting down $10,000 into some shopping mall investment get-rich-quick scheme. When the Texas economy cooled off, these folks were left holding the bag just as the German workers were in 1914. Plus ça change…plus c’est la même chose.

Turning to chapter 4 titled “Export of Capital”, I was quite surprised to learn that Lenin did not theorize imperialism as exclusively involving investments by “core” countries in the “periphery” in the standard interpretation of Maoists, for example. He did believe that the export of capital was critical to the survival of the latest stage of capitalism, but the target of that export might be just as developed as the country doing the investing. He writes:

The principal spheres of investment of British capital are the British colonies, which are very large also in America (for example, Canada), not to mention Asia, etc. In this case, enormous exports of capital are bound up most closely with vast colonies, of tile importance of which for imperialism I shall speak later. In the case of France the situation is different. French capital exports are invested mainly in Europe, primarily in Russia (at least ten thousand million francs). This is mainly loan capital, government loans, and not capital invested in industrial undertakings. Unlike British colonial imperialism, French imperialism might be termed usury imperialism. In the case of Germany, we have a third type; colonies are inconsiderable, and German capital invested abroad is divided most evenly between Europe and America.

In other words, the core-periphery paradigm familiar to those who have read A.G. Frank might be true or false, but it simply cannot be extracted from Lenin’s work. In a table analyzing capital flows, Lenin demonstrated that the total capital imperialist countries invested twice as much in other imperialist countries than in Africa, Asia and Australia. (I can’t explain why Australia was grouped with Africa and Asia, since it would seem associated more with the developed regions.) This did not undercut his main point, which was that capitalism was forced to expand beyond national borders in pursuit of profits.

I am looking forward to reporting further on Lenin’s relevance to today’s world.


  1. Keep up the good work, Lou.

    Comment by Charles — July 4, 2008 @ 8:01 pm

  2. Have you shown this to Doug H. ?


    In a table analyzing capital flows, Lenin demonstrated that the total capital imperialist countries invested twice as much in other imperialist countries than in Africa, Asia and Australia. (I can’t explain why Australia was grouped with Africa and Asia, since it would seem associated more with the developed regions.)

    Comment by Charles — July 4, 2008 @ 8:03 pm

  3. Thanks for the analysis. Having just read this book of Lenin’s and being left a bit confused (I found as a philosophy/poli-sci student that I was much more at home in ‘The State and Revolution’) the parallels to present day are great eye-openers.

    Comment by dksu — July 4, 2008 @ 8:50 pm

  4. In DECOLONIZING THE MIND, The great Kenyan marxist novelist Ngugi wa Thiong’o writes, “And before we meet to discuss all these problems, I urge you to read two books without which I believe it is impossible to understand what informs African writing, particularly novels written by Africans. They are Frantz Fanon’s THE WRETCHED OF THE EARTH, mostly the chapter titled ‘The Pitfalls of National Consciousness,’ and V. I. Lenin’s IMPERIALISM, THE HIGHEST STAGE OF CAPITALISM” (63).

    Comment by Jim Holstun — July 5, 2008 @ 12:12 am

  5. Hello Louis,

    I think the relevance of Lenin’s theory of imperialism with today’s global order mostly resides in its historical context and political practice. First of all it is a proactive critique of Kautskian “economic criticism of imperialism”, briefly; the theory envisages the imperialism without contradictions. Therefore, it seems as it is written today since an ordinary mind hysterically sensitive to politics, as a rule, approves the existing state of affairs but yet excessively testifies its discontent about the inherent contradictions. While it zealously condemns the U.S. occupation of Iraq, it also cheers on Turkish invasion of Northern Iraq in a more agitated manner. Secondly, Lenin’s political practice, I think this is the most important aspect of his theory, that, the only proper political response the global order is not “peaceful democracy” or anti-imperialism (the false exit to the daily reality… it is not a coincidence that the ordinary mind that labels itself as anti-something always preoccupies with the jam of transitory actuality just to delay the real confrontation) which was ridiculed by Lenin as the “pious wish”, but is only socialism.

    Comment by Mehmet Çagatay — July 6, 2008 @ 5:36 am

  6. Louis,

    I have not read “Imperialism” for some time, though I remember that one particular section that stood out to me when I did was Lenin’s description of immigration into imperailist counties, more or less asserting the cyclical nature of free trade and illegal immigration that we find so prominently in the United States. It’s interesting to see so many of the same trends being observed nearly a century ago.

    Comment by Dave — July 7, 2008 @ 5:44 pm

  7. Lenin’s writings, dated or otherwise,are almost indispensable to a less shock-ridden understanding of our contemporary reality. I find his observations of Russia during the years of reaction between 1906 and 1916 to be some of the most penetrating analyses of the sort of political games that emerge on the “left” as it seeks to re-shape itself without recourse to Lenin’s approach to marxist method. His writings on both the successess and the mistakes of the Bolsheviks during the years of the Civil War and the NEP are some of the most interesting marxist literature to be found anywhere. The only thing that surprises me in Lenin anymore is the sheer amount of stuff I missed in previous readings of Lenin. He is by far and away the most outstanding political thinker of the 20th century. Lenin’s work is not the last word, but the so-called “left” in the United States will crash and burn forever if it continues to refuse his contributions.

    Comment by Michael Hureaux — July 8, 2008 @ 4:31 pm

  8. I think the holy scriptures of Lenin can also be projected backwards in time, and again an amazing correspondence with history will be revealed. That’s because the language used by Lenin to provide a description of the nature of epoch is sufficiently non-specific, so you can reinterpret the scripture according to a variety of historical circumstances. In other words, Lenin provided a compelling “metaphor” about imperialism, not unlike Foucault’s metaphor about “the prison”. Lenin’s notebooks on imperialism, compiled specifically with the aim of making a political intervention in the debates about the allegedly “progressive” character of imperialism, impressively contained extracts from 148 books and 232 articles in four languages, mainly in German (he wrote a lot of this in exile in Switzerland) Even so, who can say that Lenin’s short pamphlet, abbreviated at the behest of Russian censors, can adequately capture the nature of imperialism in 2009? Scholars like Michael Barratt-Brown and Patrick O’Brien have pointed out that many of the core theses of Lenin’s pamphlet are simply not tenable in the light of historical research. But actually the main theoretical failing of Lenin’s pamphlet is that it does not develop a theory of imperialism out of an expansion of Marx’s analysis of capital, but out of empirical descriptions. Where did that lead? To the idea that a successful coup d’etat in Russia would be sufficient to trigger socialist revolutions across Western Europe. This did not happen. The Bolsheviks “dared”, as Rosa Luxemburg noted, but in fact the revolution had all kinds of unintended consequences of a type which did not really favour the position of the working class. Sure, we can debate the balance sheet of history, but the point really is that Lenin’s political and economic analysis was inadequate to understand the changing configuration of social forces. His analysis became hegemonic, only because of his tremendous political and moral authority at the time. In that case, why hail Lenin’s analysis of imperialism? The reason can only be a moral and emotional attachment to what he stood for. But shouldn’t we be using our own brains, and study living authorities rather than repeating odes to dead authorities?

    Comment by Jurriaan Bendien — September 5, 2009 @ 11:02 am

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