International Finance Capitalism : the Higher Stage of Imperialism

Chanchal Chauhan

Marx and Engels for the first time in the 19th century discovered a scientific world-view to analyse the time and space of human society, the stages of social development. They studied the past and present of various aspects of human world such as political economy, material and intellectual progress, philosophical development and then provided a scientific methodology to understand the various stages of human history. Today, we know that methodology by the name of 'dialectical materialism' and 'historical materialism'. The major part of their analysis of the political economy of world capitalism and their exposition of the complex functioning of capital is wonderful. However, it is ironical phenomenon that Marxists generally erred to analyse the stage of social development of their own times. Marx and Engels too committed that error of judgment in understanding the stage of capitalism in their own epoch. However, Engels in his later years realised that something was amiss in the understanding of the stage of capitalism of his own times. The hints to this fact can be gauged in his Preface to the 1892 American edition of the book, The Condition of the Working Class in England. The founders of Marxism, however, had the understanding that capitalism in their own time would first collapse in the developed capitalist countries and give way to a new social system based on the scientific socialism. They presumed that capitalism was 'ripe' and would fall in the most developed countries such as Britain, Germany, France, America etc. 'Ripeness is all.' However, this vision based on the dialectics of nature proved to be erroneous.

            This error of judgment was well understood by Lenin who correctly understood the new phase of world capitalism of his own epoch and wrote about it in his well-known pamphlet, Imperialism, the Highest Stage of  Capitalism (1916). He correctly formulated the features of world capitalism and negated Marx's vision of the collapse of capitalism in the most developed capitalist countries, and instead opined that revolutions under the leadership of the proletariat would be possible in the countries with the 'weakest link' of world capitalism. With this understanding the working class in Russia could be successful in October Revolution and later on, other revolutions led by the proletarian forces could be successful in various countries where capitalism was in a weak position. Lenin's view proved to be correct and still explains why Nepal, a small country with the weakest link in the world capitalism today is likely to usher in a new era under the leadership of the working-class ideology of Marxism-Leninism.(The communist party there will have to maintain a rock-like unity to strengthen the subjective factor to face the challenge of counter-revolution in Nepal) However, Lenin following the vision of Marx-Engels shared their view about the 'ripeness of capitalism' and in an article, ‘Imperialism and the Split in Socialism’ written in October 1916 (published in December). Lenin further described three characteristics of imperialism. ‘Imperialism is a specific historical stage of capitalism. Its specific character is threefold: imperialism is monopoly capitalism; parasitic, or decaying capitalism; moribund capitalism.’ This perception is still prevalent among majority of Marxists world over that capitalism has reached a 'ripe' or 'ageing' stage and has become a 'decadent' social system. For example, John Smith after his brilliant analysis of imperialism in the Twenty-first Century falls back on the same old perception of ‘epoch of decay’ :

The rise of capitalism depended on the most barbaric forms of ‘primitive accumulation,’ such as the transportation of millions of African slaves, colonial plunder, and opium trafficking. When capitalism reached its adult stage and took full control over the production process, competition flourished and the inner laws of capital became expressed most fully. Finally, in its epoch of decay, capitalism increasingly relies on forms other than free competition—monopoly, vastly increased state intervention in all aspects of economic life, “accumulation by dispossession,” imperialism—for its survival, but at the cost of distorting the operation of its laws and erecting new barriers to the expansion of the productive forces.

--Abstract from his  book Imperialism in the Twenty-First Century, published in the Monthly Review dated January 2015.

       Here a question becomes pertinent : has capitalism really lost now all potential of unleashing productive forces? Has it really entered into a decadent phase?

         The communist parties during Lenin's own time were having a vision that with the October Revolution a new era of rise of socialism and fall of capitalism had begun on earth. They were witnessing the rise of various liberation movements in different parts of the world. They continued to uphold this view even after the death of Lenin and expressed it collectively. The 1957 and 1960 conferences of the Communist Parties, endorsing the shift in the world balance of forces in favour of socialism, went beyond to formulate that socialism was becoming the decisive factor in shaping world developments. The statement of the 1960 conference issued by 81 participating Communist Parties stated: 'It is the principal characteristic of our time that the world socialist system is becoming the decisive factor in the development of society.' It goes on to say: 'The world capitalist system is going through an intense process of disintegration and decay.' And, 'capitalism impedes more and more the use of the achievements of modern science and technology in the interests of social progress.' And that, 'the time is not far off when socialism's share of world production will be greater than that of capitalism'; 'Capitalism will be defeated in the decisive sphere of human endeavour, the sphere of material production.' The statement continued: 'A new stage has begun in the development of the general crisis of capitalism,' and talked of 'the growing instability of the entire world economic system of capitalism'. Based on such assessments the statement concluded that 'today the restoration of capitalism has been made impossible not only in the Soviet Union, but in the other socialist countries as well.'

        However, the post-war world situation during that period was creating over-enthusiasm in the consciousness of Marxists who were unaware that the world capitalism had not entered the phase of its decay and downfall at that point of human history, it was busy to enter into a new phase of further development. They were ignoring the new initiative taken by the world capitalism to enter into a new phase leaving behind the stage of 'imperialism'. They were unaware perhaps what had already happened at 'Bretton Woods Conference' held from July 1 to 22, 1944.        

           The Bretton Woods Conference, formally known as the 'United Nations Monetary and Financial Conference', was the gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II. Agreements were signed that, after legislative ratification by member governments, two new institutions be established, i.e. the International Bank for Reconstruction and Development (IBRD, it became a part of the World Bank group) and the International Monetary Fund (IMF). Then a new forum, the World Trade Organisation was also created to regulate world trade under the new stage of world capitalism. This led to what was called the Bretton Woods system for international commercial and financial relations. Thus imperialism paved the way for the hegemony of 'international finance capital' over the productive forces of the whole world. The understanding of Lenin presuming 'imperialism' as the 'highest' stage of capitalism proved to be as erroneous as Marx's view of 'fall of capitalism' in the Western developed capitalist countries and the understanding of the majority of the communist parties of the world who expressed the similar view at the 1957 and 1960 international conferences.

         The erroneous view was first critically examined by some communist parties after going deep into the shocking event of the collapse of the Soviet Union and other east European socialist systems without any resistance or blood-shed. The Communist Party of India (Marxist) at its May 1990 Central Committee meeting self-critically reviewed the basis of such an assessment. It had concluded that this assessment was a gross under-estimation of the potential of the world capitalism, both of its capacity to further develop productive forces as well as its capacity to adapt to changed circumstances. Then, it adopted a Resolution ON CERTAIN IDEOLOGICAL ISSUES at the 14th Congress of the CPI(M), Madras, (January 3-9, 1992) and reiterated its critique in detail. Without mincing words, the CPI(M) stated in its document : 'Self-critically, it must be noted that the CPI(M), as a contingent of the world communist movement, was influenced by this incorrect understanding.'

       While realising correctly 'the potential of the world capitalism, both of its capacity to further develop productive forces as well as its capacity to adapt to changed circumstances' Marxists still retain in mind the image of old form of world capitalism and in their writings they still talk of 'imperialism' as if they were ignorant of the new stage of world capitalism, the stage of 'international finance capitalism'. They forget that most of the colonies on the globe got liberated themselves from the direct rule of the erstwhile imperialist forces and have different forms of political systems with their own sovereignty. The CPI(M) correctly underlined in its updated Party Programme (October 20-23, 2000) the role of 'international finance capital' but failed to classify it as a higher stage of 'imperialism'. It uses the contradictory classifications as 'sovereignty of nations' and 'imperialist order' in the same para. The document ignores the historical fact that 'sovereignty of nations' became possible after the negation of 'imperialist order' and ‘post-colonial global order’. The para 2.6 of the updated Party Programme  states :

The concentration and internationalisation of finance capital has reached unprecedented heights in the current phase of capitalism. Globally mobile finance capital is assaulting the sovereignty of nations, seeking unimpeded access to their economies in pursuit of super profits. The imperialist order in the service of this speculative finance capital breaks down all barriers for its free flow and imposes the terms favourable to such capital in every part of the globe. The International Monetary Fund, the World Bank and the World Trade Organisation are the instruments to perpetuate this unjust post-colonial global order.

 But after stating this fact it falls back on the same old erroneous understanding when it states : 'The new hegemony of speculative finance capital results in sluggish growth in the advanced capitalist countries.' The document negates the earlier understanding of the potential of world capitalism to unleash the productive forces and treat this feature of 'sluggish growth' in some countries as if it were a negative one, a sign of 'decay'. The 'advanced capitalist countries' are no more in the 'imperialist' phase, they no more need 'fast growth' as 'developing' countries do; they have already amassed the surplus value created by the labour of all peoples of the world, and now that mass of capital has taken a new shape of 'international finance capital'. The globalisation of the new phase of world capitalism has paved the way for 'the new hegemony', a 'New World Order' with new economic policies governed by the international finance capital, the higher stage of imperialism.

From these figures we at once see standing out in sharp relief four of the richest capitalist countries, each of which holds securities to amounts ranging approximately from 100,000 to 150,000 million francs. Of these four countries, two, Britain and France, are the oldest capitalist countries, and, as we shall see, possess the most colonies; the other two, the United States and Germany, are capitalist countries leading in the rapidity of development and the degree of extension of capitalist monopolies in industry. Together, these four countries own 479,000 million francs, that is, nearly 80 per cent of the world’s finance capital. In one way or another, nearly the whole of the rest of the world is more or less the debtor to and tributary of these international banker countries, these four “pillars” of world finance capital.

    It is particularly important to examine the part which the export of capital plays in creating the international network of dependence on and connections of finance capital.

Lenin had foreseen the future evolution of imperialism into international finance capital. In the Introduction to the Bukharin’s book, Imperialism and the World Economy, he had written what seems to be the statement about our own times :

The typical ruler of the world became finance capital, a power that is peculiarly mobile and flexible, peculiarly intertwined at home and internationally, peculiarly devoid of individuality and divorced from the immediate processes of production, peculiarly easy to concentrate, a power that has already made peculiarly large strides on the road of concentration, so that literally several hundred billionaires and millionaires hold in their hands the fate of the whole world.

The world situation, of course, has changed since Lenin's time, no developed country possesses colonies now, and individual countries directly may or may not export finance capital to the less developed ones. They have created a new mechanism at Bretton Woods. Now that mechanism itself has become a power, a monster that has 'new hegemony'. This new form of 'international finance capitalism' does not own any individual territory, it owns the whole globe except some tiny regions such as Cuba, East Timor, North Korea, Liechtenstein, Monaco, Taiwan, and Vatican City. Unlike imperialism, this monster does not possess any army or physical defence machinery to defend its existence and its hegemony. All the countries from United States, China to Vietnam and Nepal (excluding a few) are under heavy debt and, therefore, pose no threat to it as if they had no antagonistic contradictions with this new phase of capitalism as was the case during imperialist phase of world capitalism when there were various forms of contradictions including those within imperialist countries that led to two world wars. This does not mean that all earlier forms of capitalism including imperialism have evapourated into thin air. World capitalism retains all old forms of capital accumulation -- primitive, mercantile, industrial, imperialist forms and even old institutions of primitive, slavery and feudal stages of human history that strengthen the classical ideology of inequality and exploitation of humans by humans. So the various forms of contradictions too exist, but they do not take a sharp antagonistic form to shake the foundations of 'international finance capitalism', the new stage of world capitalism at this point of time. Why is it so? The answer needs a deep and serious research by social scientists who are committed to the vision of human world without exploitation, hunger, poverty and wars and those who are committed to the scientific ideology of Marxism-Leninism.

            I am not capable enough to see deep into the causes of the complex social developments. I may just conjecture and put forth my views. Marxists including most of the communist parties of the world everywhere point out in their documents that ‘capitalism is in crisis.’ For example, the communist party of USA in its updated 'Program'(2019) writes :

All of humanity is faced with multiple, interlocking crises–in the economy, in our shared environment, in extreme weather disasters, in the growing danger of pandemics. These crises expose the rampant income inequality, the disparate impacts of these crises on those facing exploitation and oppression, and, in the U.S. especially, the inhumane lack of health care for all.

     These are crises of capitalism, an inhumane, exploitative, oppressive economic system of greed. In the present we struggle to improve the lives of workers and poor people, in our country and around the globe. Ultimately, to solve the challenges facing humanity, we need to replace capitalism with socialism, a system of cooperation, democracy, and equality

Sometimes they go to exaggerate so much that they compare the crisis with the Great Depression of the 'thirties of 20th century. The Communist Party of India(Marxist) at its Kozhikode Congress (April, 2012) adopted a Resolution on some Ideological Issues. The opening para itself states :

The current global crisis of capitalism, more intense in many of its manifestations than the great depression of the 1930s, has once again resoundingly demonstrated capitalism’s inherent oppressive and exploitative character. This crisis is imposing greater miseries on the vast majority of the world’s population. This crisis is also increasingly demonstrating that imperialism, notwithstanding all ideological efforts to obfuscate its existence and role, is leading global capitalism in this offensive against humanity. Thus, imperialism’s quest for global hegemony is the fountainhead that continues to deny humanity its complete emancipation, liberation and progress

At every Party Congress the CPI(M) reiterates that ‘capitalism is in crisis’, for example, the Political Resolution adopted at the 22nd Party Congress(April, 2018) slightly modifies the exaggerated stand taken at its previous Party Congress, but it also opens with the same statement of harping on 'capitalist crisis' :

Though there are forecasts of a modest global economic recovery, the systemic crisis of global capitalism that manifested itself in the financial meltdown in 2008 continues...This continued economic crisis of global capitalism has resulted in further widening the economic inequalities both globally and in individual countries.

Communist Party of Great Britain too holds an outdated view about capitalism in its own country. Its Programme too harps on 'crises' in capitalism :

As we know from our current experience in Britain and the world, capitalism cannot solve crises, despite the fact that it commands the productive forces to do so.

    The profit motive on which capitalism is based ensures that crises are endemic in this parasitic system. Far from solving crises, accumulation, speculation and greed ensure that the merry-go-round of temporary stability is quickly followed by recession.

Whatever is said by the various communist parties in the world may be a fact, but this does not explain why the general crisis in world capitalism does not result in the fast growth of the communist movements and their membership. On the contrary all communist parties show a decline in the membership. The Japanese Communist Party has truthfully acknowledged that more recently membership numbers have declined, with membership number around 300,000 in 2017, and 270,000 in 2020. This is the bitter truth about the non-ruling communist parties of the world. Even the communist party of Russia that once led the heroic October revolution in 1917 is unable to grow. Its membership too is on the decline.

            The fact of the matter is that at this stage, world capitalism still has the potential to develop productive forces and it still has vast areas on the globe to utilise that potential. There will occur phases of crises, but it still has the means to overcome it. That is what we see with our own eyes. Marx and Engels themselves were aware of these eventual crises within capitalist system. They also knew how capitalism could overcome crisis every time. In the Communist Manifesto they wrote :

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones...The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

This correct visionary understanding about world capitalism propounded by Marx-Engels is often forgotten while analysing the nature of reality of the contemporary world. The bourgeoisie is still 'revolutionising the instruments of production', with a faster pace than ever in the past. Every day new inventions and gadgets with new 'generation' of technology become available and launched in the world market. The 'new world order' under the hegemony of international finance capital is heading to develop a high level of 'artificial intelligence' and 'robotic' machines to replace the age-old proletarian work-force that has been the foundation of world communist movement. This new phase of future development may affect the revolutionary spirit of the traditional proletariat, this metamorphosis is already occurring in the countries under the hegemony of the international finance capital. The signs of change are now visible in the dwindling number of workers under organised trade unions. Why is this new development taking place in the whole world? If organised working people lose their strength, this will impact the overall strength of their political vanguard, that is, their communist party.

       While the objective conditions are not favourable for the growth of communist parties in the new era of international finance capitalism, the subjective factors are also causing stagnation in the communist movement. One grievous mistake committed by communist parties (except in China and Vietnam) is about their image of being anti-technological development. For example, they opposed automation, introduction of computers, nuclear energy and a lot of such steps that created a negative image in the minds of general public. Communist parties attracted common masses only when people saw the stagnation in the feudal, or capitalist societies because, then only communists stood for ‘unleashing the productive forces’ and for development. Once that image got damaged as happened in the former USSR and stagnation became visible, the Parties were alienated from people and the lead was taken by international finance capital that took into its fold the indigenous capitalists becoming engine of further development. This phenomenon, perhaps, explains why the right-wing politics and even neo-Fascists win elections in a large number of countries while the Leftwing political forces are defeated.

         The Communist Party of China and later on the Vietnamese understood that finance capital can be utilised for unleashing productive forces in their countries too. By utilising the new resource of the finance capital, China achieved the highest growth rate and Vietnam is now picking up. They saved their image of being the vanguard of social development and thus retained their hold on the political economy of their countries. They do not stand alienated from the people.   

            The world capitalism at its highest stage as ‘international finance capital’ has fully established its hegemony over the whole globe (only a few exceptions including Cuba and North Korea and some smaller nations are not members of the World Bank or IMF). All the member countries borrow the finance capital and therefore are under debt and strengthen the power of all the wings of international finance capital that is working as the development engine for the globalised world and pushing all nations to create surplus value for it. The following data can explain how the new phase of world capitalism as International finance capital has become the real ruling new class over the whole globe and why all forms of governments in various countries have to follow the dictates of this new ruling class, although it has no geographical territory or any army or weapons as earlier ruling classes had had to rule, yet it is the most powerful ruling class of the 21^st century.

External Debt Position of all Countries in the World

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(Source : website : https://tradingeconomics.com/country-list/external-debt

This is the objective reality of our 21^st century world and by recognising this new feature the communists in the global village can evolve their new strategy and new tactic. The communist parties in the capitalist countries frighten people by their slogan of replacing capitalism by ‘socialism’ as mentioned in the Program (2019) of the communist party of United States : ‘Ultimately, to solve the challenges facing humanity, we need to replace capitalism with socialism, a system of cooperation, democracy, and equality.’ The communist Parties in other capitalist countries also raise the same hollow slogan without realising that they frighten a vast majority of people at this stage of social development when people still love to possess private property. They thus further alienate themselves from the vast majority of people. The Chinese leadership took the wise decision to assure the people that China may be ready to enter the phase of ‘socialism’ in 2049 after developing the productive forces to such an extent that the higher stage can be reached :

In the second stage from 2035 to the middle of the 21st century, we will, building on having basically achieved modernisation, work hard for a further 15 years and develop China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful.

(Xi Jinping’s Speech Delivered at the 19th National Congress of the Communist Party of China. October 18, 2017. Section IV)