European intellectuals have contributed to formal theories of imperialism. In Imperialism, the Highest Stage of Capitalism. Lenin said capitalism necessarily induced monopoly capitalism as imperialism to find new business and resources, representing the last and highest stage of capitalism. The necessary expansion of capitalism beyond the boundaries of nation states a foundation of Leninism was shared by Rosa Luxemburg and liberal philosopher Hannah Arendt. Since then, Marxist scholars extended Lenin's theory to be synonymous with capitalist international trade and banking.
Marxist imperialism theory, and the related dependency theory, emphasize the economic relationships among countries, rather than formal political and military relationships. Thus, imperialism is not necessarily direct formal control of one country by another, but the economic exploitation of one by another. This Marxism contrasts with the popular conception of imperialism, as directly controlled colonial and neocolonialism empires.
Per Lenin, Imperialism is Capitalism, with five simultaneous features:
Concentration of production and capital led to the creation of national and multinational monopolies not as in liberal economics, but as power over their markets while "free competition" remains the domain of local and niche markets:
Free competition is the basic feature of capitalism, and of commodity production generally; monopoly is the exact opposite of free competition, but we have seen the latter being transformed into monopoly before our eyes, creating large-scale industry and forcing out small industry, replacing large-scale by still larger-scale industry, and carrying concentration of production and capital to the point where out of it has grown and is growing monopoly: cartels, syndicates and trusts, and merging with them, the capital of a dozen or so banks, which manipulate thousands of millions. At the same time the monopolies, which have grown out of free competition, do not eliminate the latter, but exist above it and alongside it, and thereby give rise to a number of very acute, intense antagonisms, frictions and conflicts. Monopoly is the transition from capitalism to a higher system
Lenin saw a lot of potential in Capitalism:
1.Lenin saw monopoly capitalism limited by the law of falling profit, as the ratio of constant capital to variable capital increased. Per Marx, only living labour creates profit in the form of surplus-value. As the ratio of surplus value to the sum of constant and variable capital falls, so does the rate of profit on invested capital.
2. Finance capital replaces industrial capital, as industrial capitalists rely more upon bank generated finance capital.
3. Finance capital exportation replaces the exportation of goods.
4. The economic division of the world, by multi-national enterprises via international cartel
5. The political division of the world by the great powers, wherein exporting finance capital to their colonies allows their exploitation for resources and continued investment. This super exploitation of poor countries allows the capitalist industrial nations to keep some of their own workers content with slightly higher living standards. (cf. labor aristocracy; globalization)
Claiming to be Leninist, the U.S.S.R. proclaimed itself foremost enemy of imperialism, supporting armed, national independence or communist movements in the Third World, while simultaneously dominating Eastern Europe and Central Asia. Marxists and Maoists to the left of Trotsky, such as Tony Cliff, claim the Soviet Union was imperialist. Maoists claim it occurred after Khrushchev's ascension in 1956; Cliff says it occurred under Stalin in the 1940s. Harry Magdoff's Age of Imperialism (1954) discusses Marxism and imperialism.
Lenin's theory of imperialism has been critiqued by many scholars. One problem with Lenin's theory concerns the measured volumes of trade and capital flow among European capitalist societies and between European capitalist societies and poor Third World societies. European capitalist systems since the nineteenth century have always done the vast bulk of their trading among themselves, with a relative sliver of trade and capital flow going out to non-developed societies in comparison with trade and capital flow within the great European systems.
Lenin's theory also contradicts Marx's doctrine of the reserve army of the unemployed, which holds that capitalism, for systemic reasons, cannot generate enough capital to employ all those who want to work. Lenin failed to see the contradiction, between the claim that capitalism builds up so much capital that it must send the excess overseas to "exploit" less developed societies, and the claim that capitalism cannot generate enough capital to sustain full employment.
The aforementioned contradiction can be seen as a distortion of Marxist-Leninist Theory. It is true that Marx uncovered systematic failures inherent to capitalism such as the inability of capitalism to provide work for all people. For instance, many modern Nations have an unemployment rate significantly greater than zero. However, Marx attributed such a failure to the dynamics of capitalist production. Capitalists, in general, own the means of production and make profit. What is important here is how the profit is re-invested into the capitalist system. Rather than pay their workers higher wages or hire a larger work force, capitalists spend a significant portion of their profits on technological development. For example, the modern assembly line relies heavily on machinery. These machines take away the jobs of human workers. At the same time, capitalists are able to churn out more products using such machinery. Capital, then, can be increased. In terms of imperialism, Lenin's theory does not contradict Marx's analysis of capitalism. Both men believed in and witnessed the formation of monopolies. Both men also stressed the insatiable appetite of capitalism to search for new markets that can increase profit. Since the bottom line for monopolies is to increase profit, Lenin was right insofar as imperialism is caused by the search for new markets.