Theories of imperialism

Accumulation Theory

This theory, conceived largely by Hobson and later Lenin, centers on the accumulation of surplus capital during the Second Industrial Revolution.

J.A. Hobson and later Lenin linked the problem of shrinking continental markets driving European capital overseas to an inequitable distribution of wealth in industrial Europe. Lenin and that bourgeois economist to his liking contended that the wages of workers did not represent enough purchasing power to absorb the vast amount of capital accumulated during the Second Industrial Revolution. This charge was not baseless, and some have argued that its logic is even evident in the causes of the interwar Great Depression beginning in the US, which had garnered the coveted center of the world’s capitalist economy following the Great War, not just the Long Depression of 1873-96. For instance, a fundamental misdistribution of purchasing power during the great industrial expansion of the post-World War I era might have been the Second Great Depression’s main contributing factor.

J.A. Hobson, a British liberal writing at the time of the fierce debate on imperialism during the Boer War, observed the spectacle of the ‘Scramble for Africa’ and emphasized changes in European social structures and attitudes as well as capital flow, though his emphasis on the latter seems to have been the most influential and provocative. His so-called accumulation theory suggested that that capitalism suffered from under-consumption due the rise of monopoly capitalism and the resultant concentration of wealth in fewer hands, which apparently gave rise to a misdistribution of purchasing power. Logically, this argument is sound, given the huge impoverished industrial working class then often far too poor to consume the goods produced by an industrialized economy. His analysis of capital flight and the rise of mammoth cartels later influenced Lenin in his Imperialism: The Highest Stage of Capitalism, which has become a basis for the modern neo-Marxist analysis of imperialism. Thus some have argued that the New Imperialism was caused essentially a flight of foreign capital.

New Imperialism was one way of capturing new overseas markets. By the eve of World War I, Europe, for instance, represented the largest share (27 percent) of the global ‘zones of investment’, followed by North America (24 percent), Latin America (19 percent), Asia (16 percent), Africa (9 percent), and Oceania (5 percent) for all industrial powers. Britain, the forerunner of Europe’s capitalist powers, however, was clearly the chief world investor, though the direction of its investments underwent a striking change, becoming oriented less toward Europe, the United States, and India, and more toward the rest of the Commonwealth and Latin America.

During the post 1870 period the amount of foreign trade increased. For western European nations in 1840, 7.7 million pounds of its export and 9.2 million pounds of its import trade was done outside Europe; in 1880 the figures were 38.4 million and 73 million. Europe’s economic contacts with the wider world were multiplying, much as Britain’s had been doing for years. In these non-industrial regions (such as the Russian and Ottoman empires), which were the principal sources of surplus French capital, and other overseas territories that lacked both the knowledge and the power to direct the capital flow, served to colonize rather than develop them, destroying native industries and creating dangerous political and economic pressures which would, in time, produce the so-called ‘north/south divide’. The contemporary Dependency Theory[?], devised largely by Latin American academics, draws on this inference.

Some have criticized J.A. Hobson’s analysis of over-accumulation and under-consumption, arguing it does not explain why less developed nations with little surplus capital, such as Italy, participated in colonial expansion. Nor does it fully explain the expansionism of the great powers of the next century—the United States and Russia, which were in fact, net borrowers of foreign capital. Opponents of his accumulation theory also point to many instances in which foreign rulers needed and requested Western capital, such as the hapless modernizer Khedive Ismail Pasha[?].

World Systems Theory

Contemporary World-Systems theorist Immanuel Wallerstein[?] addresses these counterarguments without degrading Hobson’s underlying inferences.

Hobson’s theory is thus useful in explaining the role of over-accumulation in overseas economic and colonial expansionism while Wallerstein perhaps better explains the dynamic of inter-capitalist geopolitical competition.

Wallerstein’s conception of imperialism as a part of a general, gradual extension of capital investment from the “center” of the industrial countries to an overseas “periphery” thus coincides with Hobson’s. According to Wallerstein, “Mercantilism… became the major tool of (newly industrializing, increasingly competitive) semi-peripheral countries (i.e, Germany, France, Italy, Belgium, etc) seeking to become core countries. Wallerstein hence perceives formal empire as performing a function “analogous to that of the mercantilist drives of the late seventeenth and eighteenth centuries in England and France.” The expansion of the Industrial Revolution hence contributed to the emergence of an era of aggressive national rivalry, leading to the late nineteenth century ‘scramble for Africa’ and formal empire. Hobson’s theory is thus useful in explaining the role of over-accumulation in overseas economic and colonial expansionism while Wallerstein perhaps better explains the dynamic of inter-capitalist geopolitical competition.

Since the “Scramble for Africa’ was the predominate feature of New Imperialism and formal empire, opponents of Hobson’s accumulation theory often point to frequent cases when military and bureaucratic costs of occupation exceeded financial returns. In Africa (exclusive of South Africa) the amount of capital investment by Europeans was relatively small before and after the 1885 Congress of Berlin, and the companies involved in tropical African commerce were small and politically insignificant, exerting only a tiny influence on domestic politics.

First, this observation might detract from the pro-imperialist arguments of King Leopold II of Belgium, Francesco Crispi[?], and Jules Ferry, but Hobson argued against imperialism from a slightly different standpoint. He concluded that finance was manipulating events to its own profit, but often against broader national interests.

Second, any such statistics only obscure the fact that African formal control of tropical Africa had strategic implications in an era of feasible inter-capitalist competition, particularly for Britain, which was under intense economic and thus political pressure to secure lucrative markets such as India, China, and Latin America. In Britain’s case this process of capitalist diffusion had in many regions led it to acquire colonies in the interests of commercial security; France and Germany would later follow suit. For example, although the then inconspicuously moribund Czarist Empire proved to be little treat to Great Britain following its stunning defeat in the 1905 Russo-Japanese War, British Conservatives in particular feared that Russia would continue to usurp Ottoman territory and acquire a port on the Mediterranean or even Constantinople—a long touted goal of Orthodoxy[?].

These fears became especially pronounced following the 1869 completion of the near-by Suez Canal, prompting the official rationale behind Benjamin Disraeli’s purchase of the waterway. The close proximity of the Czar’s (territorially) expanding empire in Central Asia to India also terrified Lord Curzon, thus triggering the Afghan Wars. Rhodes[?] and Milner also advocated the prospect of a “Cape to Cairo” empire, which would link by rail the extrinsically important canal to the intrinsically mineral and diamond rich South, from a strategic standpoint. Though hampered by German conquest of Tanganyika until the end of World War I, Cecil Rhodes successfully lobbied on behalf of such a sprawling East African empire.

Interpretations of Bernard Porter, P.J Cain, and A.J. Hopkins

In this sense, contemporary imperial historian Bernard Porter[?] argues that formal imperialism for Britain was a symptom and an effect of its relative decline in the world, and not of strength. Symbolic overtures, in fact, such as Queen Victoria’s grandiose title of “Empress of India”, celebrated during Disraeli’s second premiership in the 1870s, helped to obscure this fact. Joseph Chamberlain thus argued that formal imperialism was necessary for Britain because of the relative decline of the British share of the world’s export trade and the rise of German, American, and French economic competition.

Porter, however, notes that Britain, “Struck with outmoded physical plants and outmoded forms of business organization… now felt the less favorable effects of being the first to modernize.” He contends that “a kind of vicious circle had been set up, with domestic industry lagging because capital was going elsewhere because industry was lagging.” Unlike J.A. Hobson, however, who links under-consumption to a misdistribution of purchasing power, Porter argues that “the best thing that Britain could have done to correct [its balance of payments] would have been to make her export industry more competitive—improve her methods of manufacturing and marketing in order to sell more abroad.”

As mentioned, contemporary historians, such as Bernard Porter, P.J. Cain, A.G Hopkins do not downplay the influence of ‘the City’s’ financial interests either, but contest Hobson’s conspiratorial overtones and ‘reductionisms’. Nevertheless, they often acted as repositories of the surplus capital accumulated by a monopolistic system and they were therefore the prime movers in the drive for imperial expansion, their problem being to find fields for the investment of capital.