Larry Slawson received his master's degree at UNC Charlotte. He specializes in Russian and Ukrainian history.
How Did Capitalism Lead To Imperialism
Throughout the nineteenth and twentieth centuries, European and Western nations scrambled to the far corners of the globe in an attempt to establish vast imperial networks through both the conquest and exploitation of indigenous populations. By 1914, virtually no country, continent, nor locality found itself unscathed from the imperial ambitions of the West.
What explains this dramatic expansion of imperialism and competition among the European powers? Did these ambitions result from a political and nationalist desire for glory and prestige? Or was the expansion of imperialism linked to more economic factors instead—in particular, a desire for wealth and greater trade? While answers to these questions may never be fully resolved by historians, this article seeks to address the potential economic elements that led to imperialism through a cross-comparison of figures such as Karl Marx, J.A. Hobson, and Vladimir Lenin.
Why did these individuals blame the growth of capitalism for the expansion of imperialism? More specifically, why did they feel as though imperialism was inextricably linked to the growth of capitalism during the nineteenth century? Finally, and perhaps most importantly, how have modern historians interpreted the connection between capitalism and imperialism during this period of world history?
Karl Marx's Viewpoints
According to Karl Marx, the expansion of imperialism was directly linked to a growth in capitalism due to one fundamental reason: the fact that capitalism was a worldwide system and unable to be constrained within the boundaries of a single country or nation-state (Chandra, 39). This viewpoint of Marx is reiterated by historian Bipan Chandra who states: “by its very nature capitalism could not exist in only one country…it expanded to encompass the entire world, including the backward, noncapitalist countries…it was a world system” (Chandra, 39). In accordance with this view, Marx argued that capitalism required an “international division of labour,” in which the capitalists sought to convert “one part of the globe into a chiefly agricultural field of production, for supplying the other part which remains a chiefly industrial field” (Chandra, 43).
Thus, according to Marx, imperialism served as a means to extract a large amount of “raw materials” and resources in a relatively cheap manner—all at the expense (and exploitation) of the indigenous peoples of the world that came into contact with the imperial powers. Ironically, Marx viewed the expansion of capitalist societies into the world as a necessary evil that would, ultimately, shift societies toward the path of communism. For Marx—who believed that society followed a series of progressing epochs—imperialism was simply the next (and unavoidable) step for capitalism’s relentless expansion.
J.A. Hobson's View
In 1902, J.A. Hobson—a social democrat—argued along similar lines to Marx by stating that the growth of imperialism was directly correlated with an expansion of capitalism as well. According to Hobson, imperialism resulted from a capitalist desire for additional (outside) markets. As production capabilities in capitalist countries increased over time (due to competition with the rapidly developing industries of Western nations), Hobson believed that overproduction eventually outgrew consumer needs on the home front.
Hobson argued that overproduction, in turn, leads to a system in which “more goods can be produced than can be sold at a profit” (Hobson, 81). As a result, Hobson believed that the financiers of the industry—concerned only with expanding their margin of profit—began to seek out foreign regions to invest their large savings that had been acquired through years of “surplus capital” (Hobson, 82). As he states, “Imperialism is the endeavor of the great controllers of industry to broaden the channel for the flow of their surplus wealth by seeking foreign markets and foreign investments to take off the goods and capital they cannot sell or use at home” (Hobson, 85).
According to Hobson, an expanded market would afford financiers an opportunity to further expand production, while also lowering their costs; thus, allowing for an upsurge in profits since consumption would be expanded from populations in these overseas ventures (Hobson, 29). Moreover, by expanding into foreign regions protected by their governments (through imperial colonization), industries would gain a competitive edge over rival European companies seeking to expand their own consumption rates (Hobson, 81).
Unlike Marx, however, Hobson viewed these imperial endeavors as both unnecessary and avoidable. Hobson viewed imperialism—particularly in Great Britain—as a detriment to society as he felt that it led to a system in which governments were largely controlled by financiers and industrial giants. In pulling the strings of the government in this manner, Hobson’s theory alludes to an inherent risk involved with imperialism; the risk of driving European powers into potential conflict (and war) over territorial claims and rights in the future.
Vladimir Lenin's Viewpoint
In a similar manner to Hobson, Vladimir Lenin also linked the desire for foreign markets and imperial expansion to growth in capitalism as well. However, in contrast to Hobson, Lenin viewed the advent of imperialism as “a special stage of capitalism”—an unavoidable transition that inevitably set the stage for global revolution (www.marxists.org).
As capitalist corporations continued to grow over time, Lenin believed that banks, companies, and industries were quickly developing into monopolies involving “cartels, syndicates and trusts” that would expand and “manipulate thousands of millions” across the globe (www.marxists.org). According to Lenin, the growth of monopolies was, in effect, destroying capitalist “free competition…creating large-scale industry and forcing out small industry” (www.marxists.org).
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Eager to exploit “limited and protected markets” for maximum profits, Lenin’s theory argues that financiers under the monopoly-capitalist system had discovered that “it was more profitable to employ surplus capital abroad than in domestic industry,” thus, setting the stage for intense “overseas investment” through imperialist measures of colonization (Fieldhouse, 192). According to historian, D.K. Fieldhouse, Lenin firmly believed that only through complete colonization “could really comprehensive economic and political controls be imposed which would give investments their highest return” (Fieldhouse, 192). As a result of these desires, Lenin believed that imperialism represented the final stage of capitalism and marked the beginning of a worldwide revolution toward socialism and communism.
Modern Historiographical Interpretations by Leading Scholars
While it is clear that Marx, Hobson, and Lenin all understood imperialism to be a by-product of capitalism, historians remain divided over the effects that this intertwining of capitalism and imperialism had upon the world at large. This issue is particularly evident in the discussion of British rule in India from the eighteenth to the twentieth century, as scholars continue to debate whether British rule should be categorized as either a positive or negative period in Indian history.
For historians such as Morris D. Morris, British rule introduced both values and political order to India and can be viewed as a positive step for Indian society. As he states, the British ushered in an era of “stability, standardization, and efficiency…in administration” for the Indians (Morris, 611). Moreover, Morris believed that British rule “probably stimulated economic activity in a way which had never been possible before” (Morris, 611). While Morris states that “the policies of the state [British Raj] were not sufficient to permit the development during the century of all the fundamental underpinnings of an industrial revolution,” he argues that imperial conquest of India created a basis “for a renewed upward surge after [Indian] Independence" (Morris, 616).
In comparison to this view, historian Bipan Chandra found great faults with Morris’ line of reasoning. Through his analysis of Morris’ interpretation of British rule in India, Chandra rejects nearly all the positive assertions made by Morris and argues instead that “British rule was imperialistic” and that “its basic character…was to subserve Indian interests to British interests” (Chandra, 69). Chandra argues that “rationalized taxation, the pattern of commerce, law and order, and judicial system” implemented by the British all “led to an extremely regressive…agrarian structure” for India (Chandra, 47). Historian, Mike Davis’ book, Late Victorian Holocausts: El Nino Famines and the Making of the Third World offers a similar interpretation of British imperialism through his discussion of famines that were amplified by improper British rule in India. Davis points out that not only did the British use famine and drought as a means of gaining a stronger hold over the Indians (both economically and politically), but their supposed use of free-market principles served only “as a mask for colonial genocide” in that millions of Indians perished from starvation and disease from mismanagement under imperial rule (Davis, 37).
Such exploitation was not limited to only the British, however. Davis points out that other empires used drought and famine to expand their power and influence over indigenous peoples during this time as well. In a brief discussion of the Portuguese, Germans, and Americans, Davis argues that “global drought was the green light for an imperialist landrush” in which these empires would use drought and disease to suppress largely powerless people into submission (Davis, 12-13). Consequently, Davis views the millions of worldwide deaths inflicted by imperial policies as “the exact moral equivalent of bombs dropped from 18,000 feet” (Davis, 22).
What Other Factors Contributed?
In closing, the link between growth in capitalism and the expansion of imperialism remains a highly relevant issue for historians today. While it is true that political factors may have also played a role in the decision to colonize foreign lands, one cannot ignore the potential economic elements of imperialism as well.
In the end, historians will likely never agree on the consequences and impact of imperialism on the world at large—particularly in regions such as Africa and India. However, given the size and scope of imperialism across the nineteenth and twentieth centuries, it is difficult to view the policies of European expansion in a positive light when one considers the tremendous exploitation and death that followed in the wake of European conquest.
Chandra, Bipan. “Karl Marx, His Theories of Asian Societies, and Colonial Rule,” Review (Fernand Braudel Center), Vol. 5, No. 1 (Summer, 1981): 31-47.
Chandra, Bipan. “Reinterpretation of Nineteenth-Century Economic History,” Nationalism and Colonialism in British India. New Delhi: Orient Blackswan, 2010.
Davis, Mike. Late Victorian Holocausts: El Nino Famines and the Making of the Third World. London/New York: Verso, 2001.
Fieldhouse, D.K. “Imperialism: An Historiographical Revision,” The Economic History Review, Vol. 14 No. 2 (1961): 187-209.
Hobson, J.A. Imperialism: A Study. Ann Arbor: The University of Michigan Press, 1965.
Lenin, V.I. Imperialism, the Highest Stage of Capitalism (1917), https://www.marxists.org/archive/lenin/works/1916/imp-hsc/.
Morris, Morris D. “Towards a Reinterpretation of Nineteenth-Century Indian Economic History,” The Journal of Economic History, Vol. 23 No. 4 (December, 1963): 606-618.
"Karl Marx." Encyclopædia Britannica. Accessed July 29, 2017. https://www.britannica.com/biography/Karl-Marx.
"Prof. Qualls' Course Blogs." Prof Qualls Course Blogs. Accessed July 29, 2017. http://blogs.dickinson.edu/quallsk/2016/02/28/a-critique-of-imperialism/.
"Vladimir Lenin." Encyclopædia Britannica. Accessed July 29, 2017. https://www.britannica.com/biography/Vladimir-Lenin.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
Questions & Answers
Question: Was imperialism a result of overproduction and underconsumption?
Answer: As the Industrial Revolution helped various industries to expand, it also allowed for an increased production of material goods. As more and more materials entered the market, however, prices for these commodities began to fall as well (due to overproduction); resulting in a shrinkage of profit margins, as well as an overabundance of material goods, with a limited market to sell them to. Imperialism allowed countries to expand their economies outwardly, as it opened up new markets to sell/trade these goods; particularly with the development of colonies.
Question: To what extent was imperialism in the late 19th Century motivated by economic aims?
Answer: Economic gains were certainly one of the primary motivators behind 19th Century imperialism. Vladimir Lenin would likely agree with this assertion as well. As industrialization and the mass-production of goods increased throughout Europe, industries were forced to look elsewhere to sustain financial/economic growth for their expanding enterprises. Foreign lands offered countries the best means to expand their industrial output via trade and allowed for the development of foreign (cheap) labor.
Although many countries claimed that their imperial endeavors were noble in practice (i.e. to civilize the so-called savages and barbarians of foreign lands), the competition to have the largest empire (in terms of land) was also a major motivator for the European countries of this period.
© 2017 Larry Slawson