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International Socialist Review Issue 44, November–December 2005

Classics of Marxism: VI Lenin

The Highest Stage of Capitalism


IMPERIALISM” USED to be a dirty word, associated with the humiliating colonial occupations of the people in the so-called Third World. But in the last few years, the term has made a comeback, only this time as a badge of pride, not of shame. Only a few months before the 2003 invasion of Iraq, Michael Ignatieff penned a couple of articles for the New York Times Magazine, the first called “American Empire (Get Used To It),” and the second called “Nation-Building Lite,” in which he argued:

Imperialism used to be the white man’s burden. This gave it a bad reputation. But imperialism doesn’t stop being necessary just because it becomes politically incorrect. Nations sometimes fail, and when they do, only outside help—imperial power—can get them back on their feet. Nation-building is the kind of imperialism you get in a human rights era, a time when great powers believe simultaneously in the right of small nations to govern themselves and in their own right to rule the world.1

Implicit in Ignatieff—and most writers who use the term—is the idea that imperialism is a set of (usually benevolent) policies. What he fails to grasp (or to admit) is that the same central dynamic underlies the foreign policy decisions of every nation—competition for power and profit. It was Russian revolutionary V.I. Lenin, writing almost 100 years ago, who established that great power rivalry, “imperialism,” is in fact synonymous with capitalism at its highest stage. His short, 128-page book, Imperialism: The Highest Stage of Capitalism, is a refreshing, and devastating, antidote to the professional apologists.

Lenin summarizes his definition of imperialism as follows:

1) The concentration of production and capital developed to such a high stage that it created monopolies which play a decisive role in economic life.
2) The merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital,” of a “financial oligarchy.”
3) The export of capital, which has become extremely important, as distinguished from the export of commodities.
4) The formation of international capitalist monopolies which share the world among themselves.
5) The territorial division of the whole world among the greatest capitalist powers is completed.2

Lenin’s work, by his own admission, borrows heavily from economists J. A. Hobson and Rudolph Hilferding. As Lenin was working, he also had Nikolai Bukharin’s manuscript, Imperialism and World Economy on hand, for which he wrote an introduction. Lenin’s pamphlet was intended as a “popular outline.”

While there is some debate about the significance of each of Lenin’s five points, the central thesis he shares with Bukharin can be summarized in two main attributes of imperialism: the centralization of capital and the internationalization of production.3

The centralization of capital

Free markets are becoming more and more a thing of the past. —Lenin4

Capitalism, in its “classic” phase was characterized by competing commodity producing firms within unified national markets. It is common (and understandable) today to rail against giant corporations, and support “small” businesses as an alternative. Bukharin and Lenin set out to show, however, that the era of small business competition necessarily led to the creation of giant trusts and cartels.

What is a “trust” or a “cartel” for that matter? These are simply organizations within an industry or even across industries that form to confer the advantages of monopoly on their participants. Combination means greater power to control prices, dominate entire markets, and so on. Lenin uses the example of a German coal syndicate that came to dominate 87 percent of coal output in its area in 1893, and 95 percent by 1910. There are countless modern examples. The worldwide media were controlled by fifty corporations worldwide in 1983, by 2004 there remained only five.5 Their goal is to use their immense size to destroy their competition, not increase it. By means of buying political influence, under-selling small producers, and so on, large enterprises systematically choke to death their smaller rivals. Thus, the era of “honest” competition comes to an end, and the era of monopoly begins.

Translated into ordinary human language this means that capitalism has arrived at a stage when, although commodity production still “reigns” and continues to be regarded as the basis of economic life, it has in reality been undermined and the big profits go to the “geniuses” of financial manipulation.6

The significance of this centralization is two-fold: first, there can be no return to the “good old days” of small-scale production and “free competition.” Centralization is a consequence of the anarchy of market competition, and of the boom-slump cycle that drives some businesses to the wall, forcing them to close up shop, or to be bought on the cheap by a larger rival. In the early twentieth century, the rise of “robber-barons” such as Rockefeller and Morgan was an expression of the general trend towards monopoly as a survival strategy for American industry in crisis. In the marketplace, to put it bluntly, “size matters.”

The second point of significance is that this concentration reached a point over 100 years ago where certain industries became fused with the national state. How does this occur? The banks, which provide the capital for creation and extension of enterprises, shift from disinterested lenders of seed money, to managers of whole branches of industry. As Hilferding wrote:

An increasingly large section of industrial capital does not belong to the industrialists who apply it. The right to manipulate the capital is obtained by them only through the bank which, in relation to them, appears as the owner of that capital. On the other hand, the bank is compelled to place an ever growing part of its capital in industry. In this way the bank becomes to an ever increasing degree an industrial capitalist. Bank capital, i.e., capital in money form, which has thus been in reality transformed into industrial capital, I call finance capital.7

Through the selling of shares, the ownership and control over a nation’s major enterprises becomes the common property of an increasingly unified financial oligarchy. Thus Bukharin argues that, as monopoly spreads, competition within the nation-state is reduced, and the most advanced countries effectively become “state capitalist trusts.” This tendency was taken to extreme dimensions in Stalin’s Russia and Hitler’s Germany, where the state took over “private” enterprise entirely, but where actions were remarkably similar to the measures taken by the U.S. and its allies in response to the economic crisis of the early twentieth century.

The internationalization of production

Though competition within the state is reduced by monopoly, it is not abolished. Instead, it is raised to a higher level, to competition between states.

With the formation of state capitalist trusts, competition is being almost entirely shifted to foreign countries; obviously, the organs of the struggle that is to be waged abroad, primarily state power, must therefore grow tremendously.8

Furthermore, the individual states use their military might, which they must continually develop in competition with other states, to defend their “national” interest abroad.

Whenever a question arises about changing commercial treaties, the state power of the contracting groups of capitalists appears on the scene, and the mutual relations of those states—reduced in the final analysis to the relations between their military forces—determine the treaty. When a loan is to be granted to one or the other country, the government, basing itself on military power, secures the highest possible rate of interest for its nationals, guarantees obligatory orders, stipulates concessions, struggles against foreign competitors. When the struggle begins for the exploitation by finance capital of a territory that has not been formally occupied by anybody, again the military power of the state decides who will possess that territory. In “peaceful” times the military state apparatus is hidden behind the scenes where it never stops functioning; in war times it appears on the scene most directly.9

The tendency toward monopoly now runs into direct contradiction with the internationalization of production. Bukharin took what was only a tendency, exaggerating the degree to which state and capital had fused in the system as a whole, but he did grasp here the essential contradiction between the nation state and the internationalization of capital wich is implicit in Lenin’s work.

Capitalism has always been an international system. Born in the blood of slavery and the triangular trade, industrial capitalism has always had to “nestle everywhere, settle everywhere” as Marx observed 160 years ago. Just as the economic crisis of the late nineteenth century spurred the development of large-scale monopolies, so too did it push the most powerful states to seek to acquire colonies. The colonies provided new, cheap raw materials, and importantly, new markets for industry and new outlets for capital investment.

But soon there was a problem. By the beginning of the twentieth century, the world had already been divided between the world’s major powers. Now, only redivision was possible: “For the first time the world is completely divided up, so that in the future only redivision is possible; territories can only pass from one ‘owner’ to another, instead of passing as unowned territory to an ‘owner,’”10 and there’s no “peaceful” way to sort it out.

There can be no other conceivable basis for the division of spheres of influence, of interests, of colonies, etc., than a calculation of the strength of the participants in the division, their general economic, financial, military strength, etc. And the strength of these participants in the division does not change to an equal degree, for under capitalism the development of different undertakings, trusts, brances of industry, or countries cannot be even. Half a century ago, Germany was a miserable, insignificant country, as far as its capitalist strength was concerned, compared with the strength of England at the time. Japan was similarly insignificant compared to Russia. Is it “conceivable” that in ten or twenty years’ time the relative strength of the imperialist powers will have remained unchanged? Absolutely inconceivable.11

The rise of China today gives Lenin’s words fresh relevance. Agreements and alliances, argued Lenin,

no matter what form they may assume, whether of one imperialist coalition against another, or of a general alliance embracing all the imperialist powers, are inevitably nothing more than a “truce” in periods between wars. Peaceful alliances prepare the ground for wars, and in their turn grow out of wars; the one conditions the other, producing alternating forms of peaceful and non-peaceful struggle out of one and the same basis of imperialist connections and relations within world economics and world politics.12

Like giant tectonic plates grinding against each other, rival imperialist powers are constantly butting into each other’s interests. These tensions, sooner or later, build to enormous proportions, and break out into open military conflict. Out of the ashes of the First World War, for example, the Second World War was necessary to sort out a new division of the world based on the newly developed strength of the United States and the Soviet Union.


If it were necessary to give the briefest possible definition of imperialism, we should have to say that imperialism is the monopoly stage of capitalism.

The development of capitalism led to the formation of giant monopolies. The national borders are too narrow for the growth of these industries, and they are compelled to constantly acquire new markets, new sources of raw material, and new outlets for investment outside the “home” nation. Once the world was already carved up among the world powers, they are forever pushed by market competition toward rearranging who owns what, and have no other way to settle who gets what except by force. Thus, the era of imperialism is one of constant economic competition between states that breaks out again and again into open military competition.

Each state may employ various policies—but imperialism is not reducible to a particular policy. The policies themselves must be seen as flowing form a worldwide system of imperialist competition. By analogy, it would be absurd to describe the various policies of competing businesses in terms of their “values” or “beliefs.” The fact that they are locked in a constant struggle with each other over market share is the essential context behind any policy decisions they make. Similarly, it is impossible to understand foreign policy without its real context—a worldwide struggle between competing nations.

Lenin’s analysis should not be confused with the “crude” approach that looks for a source of raw materials behind every war. There was no such “prize” to be had in Vietnam, but it was an imperialist war all the same, because it was a product of the competition between the United States and the Soviet Union over “spheres of influence.” Similarly, though the U.S. does not get most of its oil from the Middle East, the U.S. is still interested in controlling the flow of oil in the Middle East. The occupation of Iraq has less to do with American SUVs, and more to do with controlling competitors who do rely on that oil, such as China.

Imperialism today

Tragically, Lenin’s theory has been confirmed by 100 years of war and the hundreds of millions of resulting deaths. Much work has been done in this magazine and elsewhere to build, on the foundation provided by Lenin, an analysis of imperialism since the Cold War.14 Some specific features that Lenin discusses—colonies, for example—are largely absent from the world today. Nevertheless, the essential features—powerful states locked in competition for power and profits—remain. Far from refuting the validity of the theory of imperialism, the pressure of international competition on Stalin’s Russia (the ultimate “state capitalist trust”) was bound to lead it to try to “redivide” the globe in its interest.

Imperialism was written in part as a polemic against the analysis of war being put out by Karl Kautsky, the leading theoretician of the world’s largest socialist organization at the time, the German Social Democratic Party. Kautsky argued that the war did not in fact flow from the character of world capitalism. On the contrary, the growing economic interdependence of the world, he postulated, would compel capitalists into a policy of “super-imperialism” in which mutual national rivalries would be replaced by the joint exploitation of the world by “internationally united finance capital.” Lenin argued that Kautsky’s view, that inter-imperialist rivalry was being replaced by a sort of peaceful coexistence, was wishful thinking that papered over reality. Variations on this theme—that world economic interdependence is eliminating national rivalry, and that for any given state war is therefore a mistaken or idiosyncratic policy—persist in the antiwar and global justice movements today.

One of the answers that Lenin tried to come to grips with was why. Why did socialist leaders in Europe, who had before the First World War spoken out against it, become allied with their “own” ruling classes once the war broke out? Towards the end of Imperialism, Lenin argues that the material basis for the socialist movement’s capitulation (or what Lenin called “opportunism”) lay in the “super-profits” of imperialism. A small stratum of the working class within the dominant nations is “bought-off” by the spoils of war, he argues, and therefore is prevented from truly opposing the goals of empire.

Imperialism…creates the economic possibility of corrupting the upper strata of the proletariat, and thereby fosters, gives form to, and strengthens opportunism.15

And earlier,

This stratum of bourgeoisified workers, or the “labor aristocracy,” who are quite philistine in their mode of life, in the size of their earnings and in their outlook, serves as the principal prop of the Second International, and, in our days the principal social (not military) prop of the bourgeoisie.16

Lenin was attempting to uncover the material basis for opportunism. In another article written in 1916, he specified what he considered to be this privileged layer:

A few crumbs of the bourgeoisie’s huge profits may come the way of the small group of labor bureaucrats, labor aristocrats, and petty-bourgeois fellow-travelers. Social-chauvinism and opportunism have the same class basis, namely, the alliance of a small section of privileged workers with “their” national bourgeoisie against the working-class masses; the alliance between the lackeys of the bourgeoisie and the bourgeoisie against the class the latter is exploiting.17

Lenin’s argument was later adapted by Maoist radicals in the 1960s and 1970s to argue that imperialism corrupted the entire working class of the imperialist countries. According to the Maoist view, the entire American working class was “bought off,” and only the most marginal sections of society, therefore, could be allies in the struggle of oppressed peoples against imperialism. This is a distorted reading of Lenin, who considered the working class of the world central to the task of overthrowing imperialism and creating a new society.

The winds of Hurricane Katrina should have demolished any idea that the spoils of war are being passed on to the American working class as a bribe. In fact, what the floodwaters have revealed is the opposite—the imperial project has accelerated the destruction of American working-class dreams.

It is true, however, that the labor bureaucracy, the professional mediators who stand between the workers and their bosses, do have a material stake in capitalism. This social group has formed the right wing of reformist governments and organizations throughout the twentieth century that actively supported imperialist wars.

War and revolution

There’s an old saying that wars and revolutions go together. Ultimately, the significance of Imperialism is this connection. As Lenin boldly states in the preface, “Imperialism is the eve of the proletarian social revolution.”18 Not long after it was written, Russian workers initiated a revolutionary process that overthrew the Tsar, pulled Russia out of the war, and spurred European workers to revolt.

War is an enormous risk for the ruling class. Organizing the poor and working classes, giving them weapons, and asking them to kill for “democracy” always raises a potential danger for the rich: that the soldiers will formulate their own demands, use those same guns to resist the mutual slaughter, and fight for their own demands. War disrupts the “peaceful” life of capitalist society, and brings all of its contradictions out into the open in the most extreme way. Directly involving millions of people in politics necessarily means gambling with revolution. The question, therefore, as the Hungarian Marxist Georg Lukács put it,

is not whether the proletariat will or will not struggle, but in whose interest it should struggle: its own or that of the bourgeoisie. The question history places before the proletariat is not to choose between war and peace, but between imperialist war and this war: civil war.19

Despite the hysterical campaign of “terror alerts,” a solid majority does not support the occupation of Iraq. The war in Iraq has pulled thousands of Cindy Sheehans out of their homes and into the realm of “politics.” It is giving hundreds of thousands of Americans a practical education in the nature of imperialism. The movement is still some distance from achieving its goals, but the Iraq War has already given birth not only to mass protest, but to a small but growing resistance among soldiers who cannot stomach the idea of killing and being killed for oil.

If Lenin is right, as long as we live in a capitalist world, war will be a permanent feature of our lives. Hope, then, lies in a revolutionary struggle that fights not just individual wars, but for a society that ends war. Only a complete reorganization of society can ensure that human beings are never again recruited to slaughter each other for profit and power.

Brian Jones has toured across the country as Marx in Howard Zinn’s one-man play Marx in Soho since 1999. His early experiences performing Marx are chronicled in “On the road with Marx” (ISR 23). He lent his voice to the audio recording of Noam Chomsky’s book Hegemony or Survival and to several staged readings of Howard Zinn and Anthony Arnove’s new book, Voices of a People’s History of the United States. He is a teacher in Harlem, a member of the United Federation of Teachers, Teachers for a Just Contract, and the International Socialist Organization.

1 Michael Ignatieff, “Nation-Building Lite,” New York Times Magazine, Jul 28, 2002.
2 V. I. Lenin, Imperialism: The Highest Stage of Capitalism, A Popular Outline (New York: International Publishers, 1939), 89.
3 Alex Callinicos, Marxism and the New Imperialism (London: Bookmarks, 1994), 15–16.
4 Lenin, 83.
5 See Media Reform Information Center, available online at
6 Ibid, 26–27.
7 Quoted in Lenin, 47.
8 Nikolai Bukharin, Imperialism and World Economy, 1916, available online at
9 Ibid.
10 Lenin, 76.
11 Ibid, 119
12 Ibid.
13 Ibid, 88.
14 Changes in imperialism are summarized in Ahmed Shawki’s article “Bush Doctrine: Turning Point for U.S. Imperialism,” International Socialist Review 26, November–December 2002.
15 Lenin, 104.
16 Lenin, 14.
17 Lenin, Opportunism and the Collapse of the Second International, January 1916, available online at
18 Lenin, Imperialism, 14.
19 Georg Lukács, Lenin: A Study in the Unity of His Thought (London: Verso, 1997), 50.
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