In Imperialism and World Economy (1915), Nikolai Bukharin, one of Vladimir Lenin's closest collaborators, observed that the “internationalization of economic life” (today referred to as “globalization”), which derives from the search for cheaper raw materials, cheaper labor, larger markets and more profitable investment opportunities abroad, generates two contradictory tendencies. The first, the “internationalization of capitalist interests,” arises from a global division of labor and produces growing interdependence of capitalist enterprises across national frontiers. The second, counterposed tendency, the “nationalization of capitalist interests,” is based on the fact that every entrepreneur depends on their own national state apparatus to guarantee conditions for profit-making at home and abroad.
In Lenin's important work, Imperialism, the Highest Stage of Capitalism, he observed: “If it were necessary to give the briefest definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism.” The “monopoly stage” of capitalism developed in a few of the more economically advanced countries where a handful of big firms, after gradually eliminating their competitors, merged with banking interests to create giant trusts. After dominating their national markets, they began to look for new markets abroad. They had the resources and connections to get preferential access to government contracts at home as well as for the construction of roads, ports, railroads and military installations required to open up investment opportunities in colonial holdings.
The tendency for accumulations of capital to become progressively larger continues to this day, as bigger fish swallow smaller ones through mergers and acquisitions both at home and abroad. The concentration of wealth and economic clout in a few powerful nations that characterized imperialism at its birth is even more pronounced today. A recent United Nations study of the world's 100 largest transnational corporations found that:
“By origin, 85 of the companies had their headquarters in the Triad (the EU, Japan and the United States), the United States dominating the list with 21 entries. Of the top 100 firms, 72 came from five countries: the United States, France, Germany, the United Kingdom and Japan, in that order.”
—UNCTAD, World Investment Report 2008
Lenin noted that inter-imperialist competition for resources, markets and territory shaped global politics:
“The epoch of the latest stage of capitalism shows us that certain relations between capitalist associations grow up, based on the economic division of the world; while parallel to and in connection with it, certain relations grow up between political alliances, between states, on the basis of the territorial division of the world, of the struggle for colonies, of the ‘struggle for spheres of influence’.”
Competition for control of “spheres of influence” between monopolists of different nations has a tendency to spill over into open military conflict. Both world wars of the 20th Century originated in such rivalries. Even during periods of relative peace, the threat of force exerts considerable influence on the operation of the “invisible hand” of the market, as Bukharin observed:
“Capital export unusually sharpens the relations between the great powers. Already the struggle for opportunities to invest capital, i.e., the struggle for concessions, etc., is always reinforced by military pressure. A government or a ‘country’ subjected to the manipulations of the financiers of the great powers ordinarily yields to that party which appears to be the strongest militarily.”
In the aftermath of World War II, the undisputed economic and military hegemony of the U.S., as well as shared antipathy for the degenerated Soviet workers' state, muted antagonisms between the major capitalist powers. The triumph of counterrevolution in the Soviet bloc, and the narrowing of the gap between the American hegemon and its competitors, has set the stage for a return to the sorts of great power rivalries that preceded the outbreak of wars in both 1914 and 1939.
The mechanisms employed today by “advanced capitalist” countries to exploit more economically backward ones are less transparent than they were in the colonial era. In Lenin's day many of what are now euphemistically referred to as “developing countries” were outright colonies of various European powers, the U.S. or Japan. The dissolution of the old colonial empires after World War II created a host of neo-colonies—nominally independent countries in which the indigenous rulers served essentially as agents, rather than rivals, of the big interests of the “developed” world. In recent years, corporations from “advanced” countries have been directly “outsourcing” production facilities and services to low-wage and “free trade” zones in neo-colonies. There are a wide variety of ways that wealth is pumped out of neo-colonies: profits from investments, sale of commodities, licensing agreements, transfer pricing, interest payments on public and private debt and even land rent.
In the 1970s, major commercial banks in the West provided low-interest hard currency loans to many neo-colonial regimes, ostensibly to help accelerate economic development. Much of this money was appropriated by corrupt officials (sometimes with the connivance of imperialist bankers). Some was spent on projects that benefited imperialist corporations with connections to the banks making the loans. In many cases payments were maintained by “rolling over” the debts (i.e., paying off old loans with new, and often larger, ones). Eventually, rising interest rates in the 1980s produced a “debt crisis” as many “Third World” countries, their economies contracting and their currencies depreciating, reached a point where they could no longer continue to make their payments.
The International Monetary Fund (IMF) responded with “rescue packages” requiring the adoption of “Structural Adjustment Programs” to lower tariffs, privatize state enterprises (particularly utilities), slash subsidies for domestic manufacturers and farmers and deregulate business. Advertised as a means for poor countries to achieve rapid growth and economic modernization, the net effect of this prescription (which came to be known as the “Washington Consensus”) was to accelerate the flow of wealth to rich countries from “developing” ones, while also locking their economies ever more tightly into a subordinate position within the global capitalist division of labor.
The elimination of tariffs opened up new markets for foreign conglomerates, whose cheap goods bankrupted many local producers. Domestic food production shrank as land was bought up by foreign agricultural corporations and wealthy local elites in order to establish large-scale farms oriented to production of crops for export. The “globalization” of agricultural production that has taken place over the past several decades has transformed millions of displaced small farmers into urban slum dwellers and made many of the world's poorest countries dependent on imperialist agribusiness for much of their food.
Haiti provides an example of the impact of “market liberalization” and “free trade” on impoverished neo-colonies. In 1995, in order to qualify for an IMF loan, the Haitian government agreed to cut the tariff on imported rice from 35 to 3 percent. This produced a flood of rice imports from the U.S., which undersold local growers and forced thousands of them out of business. Bourgeois ideologues like to trumpet the “efficiencies” that can be achieved by “leveling the playing field” and freeing the operation of the market from tariffs and other forms of state intervention. But the only reason American rice producers could undersell Haiti's farmers was that they received an enormous government subsidy:
“…in 2003 the US government ploughed $1.3 bn into rice sector subsidies, supporting farmers to produce a crop that cost them $1.8 bn to grow—effectively footing the bill for 72 per cent of the cost of production.”
—“Kicking down the door,” Oxfam Briefing Paper, April 2005
Decades of imperialist “development” have stunted and deformed the economies of the neo-colonies. Over a third of the world's population, 2.5 billion people, eke out an existence on less than two dollars a day. Almost a billion are chronically undernourished, and an estimated 1.3 billion people have no access to safe drinking water. While publicists for the World Bank and the IMF talk about development and modernization, global capitalism, which originated in blood-soaked colonial conquest, has always operated as a mechanism for funneling wealth from poor countries to rich ones:
“World inequalities have been rising steadily for nearly two centuries. An analysis of long-term trends in world income distribution (between countries) shows that the distance between the richest and poorest country was about 3 to 1 in 1820, 11 to 1 in 1913, 35 to 1 in 1950, 44 to 1 in 1973 and 72 to 1 in 1992.”
—UNDP, Human Development Report 1999
Inequalities in the distribution of personal income are even more extreme:
“The world's richest 500 individuals have a combined income greater than that of the poorest 416 million. Beyond these extremes, the 2.5 billion people living on less than $2 a day—40% of the world's population—account for 5% of global income. The richest 10%, almost all of whom live in high-income countries, account for 54%.”
—UNDP, Human Development Report 2005
The growing disparity between rich and poor internationally is paralleled by increasing social polarization within the imperialist centers themselves. In the U.S., as real wages stagnated between 1981 and 2005, “the real income of taxpayers at the 99.9th percentile nearly tripled, and the real income of taxpayers at the 99.99th percentile—a hyper-rich stratum comprising about 13,000 taxpayers—increased fivefold” (Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded Age, 2008). This underlines the essential identity of interest between working people in both “developed” and “undeveloped” countries. Only a globally-planned socialist economy, organized as a democracy of producers and governed by the principle of production for human need rather than private profit, can eliminate the threat of poverty, hunger, racism and war once and for all.