Creative Destruction

March 31, 2006

The final stage of capitalism?

Filed under: Economics,History — Adam Gurri @ 6:02 pm

My research paper has me looking into Lenin's ol' article, Imperialism, the Highest Stage of Capitalism, as well as that old book by the Scottish "capitalist" himself, and a fair amount of the history of the British Empire.

I have to say, I'm stumped. I can't see the connection between Imperialism and free market economics in the slightest–in fact, even a brief glance at the history of European empire demonstrates the opposite of the commonly supposed notion.

When people talk about British Imperialism, they aren't referring to the American colonies. They mean Cecil Rhodes, The East India Company, and so on. And what could be more capitalist than these examples, right? I mean, the British didn't even send in an army to invade anywhere half the time–they gave guys like Rhodes a charter for what amounted to a private company dedicated to grabbing land to turn a profit.

But this is exactly the kind of thing that Adam Smith argued against in his day. In the very first book of the Wealth of Nations, Smith makes reference to the "despotism" of the East Indies.

In fact, the kind of imperialism that occurred in Africa and in the Near and Far East is much closer to the merchantilism of American colonization. The word itself was coined as part of a criticism of the system made by Adam Smith, who argued that spending money to hold on to the colonies was wasteful, and it would be far more beneficial for everyone if they simply traded with an Independent America.

America wasn't conquered by British troops either, you will recall–it was taken by chartered companies as well.

Between the time of American independence, and the period that has come to be known as the Scramble for Africa, a lot happened in Great Britain. The industrial revolution increasingly gathered momentum. The so-called Laissez-Faire politicians–the liberal reformers like Gladstone–came to power. Under their direction, the British Empire was greatly restructed, and many colonies were phased out of direct English control and given their own representative bodies under a principle of Responsible Government. This was in keeping with economic policy as Smith and others had recommended it; it made no sense to try and grab massive amounts of land because maintenance would empoverish rather than enrich the empire. So Gladstone's government gave a large degree of self-governance to the British colonies, the only real tie to the center being an agreement of free and open trade that was to the benefit of all parties involved.

Also, during this time, the East India Company's monopoly was made illegal, first in its business dealings in India, and then, later, with its standing in China.

National leaders are fickle when it comes to convictions, however, and many lusted for empire. One of the most influential figures of this batch was Benjamin Disraeli, leader of the conservative party and longtime rival of Gladstone.

Under Disraeli and his party, the British Empire turned backwards. It indulged in the Scramble, among other things. It brought back the chartered companies and, though it never outright banned its colonies from trade with other countries as they had with the Navigation Acts two hundred years prior, they did establish a number of tariffs aimed at discouraging anything but trade internal to the empire.

Small-minded fools like Hobson, the British economist who inspired Lenin's famous essay, tied this new imperialism to capitalism because of the prevalence of industrial technology in the military and because of the use of resources in the colonies in British factories.

But the exact same system was being used at the time of the American colonies. It was expected that Americans would produce, and the mother country would refine and consume. The only difference is that the industrial revolution had had more time, and had grown exponentially faster under laissez-faire policies, by the time Disraeli and his peers turned to reactionary policies of expansion. So the technology of weaponry gave them an unopposable advantage in places such as Africa, and under notions of wealth that had been debunked a century earlier, they proceeded to set up shop and leech off of the most expansive and costly empire in their history, and perhaps in the history of any modern European nation.

It should be noted that throughout most of the 19th century, the British were at the top of the food chain, but by the end, others were muscling their way in. I believe there is a connection.

Otto von Bismarck, though certainly no dove, frequently made the case that his only goal was the unification of Germany, and he very much opposed foreign empire. It is no coincidence, in my mind, that it was during his time that Germany became the world's leading and fastest growing industrial power. Nor do I think it is a coincidence that his successor, Wilhelm II, was unable to outmuscle France in World War I. After Bismarck, the Germans had embarked on a quest for empire, spreading themselves thin and falling victim to the meaningless desire for the status brought on by having the most area of your nation's color on the world map. Had they stayed out of it, and focused on a free trade policy, I won't say that they definately would have won, but they certainly would have stood a better chance.

Marxism is a very narrow doctrine. Just as many schools of theology interpret their faith in such a narrow manner that they cannot see a place for Darwin's findings within it, so were Marxists left without the analytical tools to grasp what was happening in Africa and elsewhere. Marx had given them a naively simplistic progression which follows very specific stages. Merchantilism, which had already occured by the time of his writing, was left completely out of the picture entirely. So when it reemerged at the end of the 19th century and went on well into the 20th, Lenin could do nothing but be perplexed by it and declare it just another element in the next to last stage of Marx's progression, which he had put under the blanket term "capitalism".

Stalin was similarly perplexed by the rise of fascism, and decided that it, too, was just another form of capitalism.

It's time for us all to grow up. Calling Imperialism an extension of free market economics is like calling quantum physics just another stage of newtonian physics. It makes no sense. The Wealth of Nations is ripe with blatant criticism of everything that its brand of economics is often blamed for creating. So please, please, please, try to take the time to learn something about economics before making irrelevant accusations about it. Or at the very least, learn something about its history.

Cross Posted at: Sophistpundit 

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4 Comments »

  1. Ummm, Adam? You know you got featured on the Carnival of the Vanities over at This Blog Is Full Of Crap thanks to this one, right?

    Not quite an Instapundit feature, but damn close, dude. Cheers unto thee.

    Comment by offcolfax — April 7, 2006 @ 3:00 am | Reply

  2. Sweet! Whoring myself out for CD traffic! 😀

    Comment by Adam Gurri — April 7, 2006 @ 5:07 pm | Reply

  3. Ee letter chadvadam valla caalam yokka direction ee srustilo anuvu anuvupy choope effect chaalaa perfectgaa telusukogalaru, Ee vishayam meeku entavaraku telavaalo antaa caalam chetulo undi. Prati jeevilo halothane calgajechedi caalame. telusukolekapote your bad luck

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    Sir,

    Kind attn: Mr. Sandy Grello

    Sub: Universe perfect secrets

    I (T.N. Vijay Kumar) want to bring some universe facts (or secrets) to your notice, which I have got experienced through my practical life.
    I’ve been working in a private organization “as a facilitator” located in Hyderabad, Andhra Pradesh , India. Being a facilitator, I will be getting many things from outside of the company and I will travel in a bus frequently.

    In the year 2000, I proposed a lady conductor but she refused to love me. I gave a letter containing something related to “KALAGNANAM” (future according to time) to her. There are about 120 movie names and many names on advertisement boards appeared in city which are here in my letter. There is a movie released exactly reflecting the situation. In my love and its name is “Mounamelanoyee..! (A Silent Love Story) in Telugu language.

    What is the need for ‘TIME’ to do such thing (love) in my life? The ‘TIME’ has to be known that:
    The movie occurred because its there in my life? or its there in my life because the movie will be released in future.
    There are 2 universal facts that they doesn’t have beginning and end:
    1) The size of the Universe
    2) TIME
    of the both ‘TIME’ is most important and also constant.
    In the constant and long span of time, the universe will be created and destroyed several trillions of times. The span between the creation and destroyment of universe is again crores of millions of years. This is almost infinite time, let this time span will be one “YUGAM”. The communication between one yugam and another is “TIME”.

    In each yugam, every creature is created and run by time only. Yes, nothing will come from outside the universe, but there is lot of ‘matter’ coming on to earth to survive creaturtes. Throughout all planets or galaxy, the human being was and will be intelligent but even by him/her its not invented. Its very very difficult to think, then what about “CREATION..?”

    Any how, from yugam to yugam how the creation of universe is happening is still confusing the people, its again an unsolvable puzzle. It’ll be known only to time. Time means: past tense, present tense and future tense. Every ‘matter’ created in universe will be destroyed as time prolong so its having its own starting point and ending point nothing is constant. But only constant thing is time. Hence we can say that time is great than anything.

    The total universe is just like a movie in theatre. For this movie the direction-cum-producer are ‘TIME’ (is exactly equivalent to {GOD}). For the general movie, which we usually enjoy, the producer and directors are usually doesn’t play any role. GOD is also play exactly same role. (Ex: Life of a being depends on every part of the body but not on a single part. The GOD is also same as LIFE. As life spread over the body, the GOD spreads throughout universe) Everything is predefined. Whatever is the defined, that’ll occur with respect to time. As we don’t know the story of movie, we will go to theatre and watches the things. Exactly we are here to see the things happening in universe and life. Even in a movie our guessing in next scene will fail sometimes, that’s the greatness of ‘direction’, which is exactly applicable for LIFE.
    Hence TIME is divided as follows:

     Kindly see the drawing.

    If we take any yugam; it’ll create uncertainty that it’ll be having starting and ending points. But it (yugam) does not have any such ends, it’s a chain reaction.

    As we are mapping movie with life, one single director can create so many movies, the TIME is also so. I’ve experience the effect of TIME on LIFE in so many situations.

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    Universe

    This universe is not temporary. Think for a while that this is Yugam from the beginning there are trillion years. There are Big Bang happened countless. Not even once effected blasts. In this Big Bang it procures required things. Time knows in which Big Bang we are existing time will moves till we knows. There are mars in the Universe which creates future. Time is the reason for what happens from beginning to last. Everything like cinema which we see everything will store. What to be happened in future. Everything will happen definitely. We cannot change anything. In this Universe all different Big Bangs are 0.999…% only.

    Comment by T.N. Vijay Kumar — March 1, 2007 @ 7:45 am | Reply

  4. Uh, Adam…you missed something. It’s called Neo-Imperialism. Critics of free trade aren’t so much worried about the traditional Imperialism of the nation state. You DO know the history impressively well, bravo, but OOOPS! things have indeed changed. The personal connection with nation state fizzled out at the end of WWII and what everyone is so up in arms about is corporate imperialism. When free trade allows a major corporation to headquarter itself all snuggled up in the U-S of A with most of it’s major operations either directly, or sub-contracted in other cheap labor countries, ha, that’s imperialism buddy. When the IMF, World Bank, and WTO decide that they are going to write off tens of billions of dollars in debt to third world countries in exchange for opening up their national economies to international, predatory privitization – that’s fucking imperialism. And by the way you totally missed Hobson’s point you small minded fool. When public taxes are dumped into expanding foreign markets yet only 1/5 of all empolyment has anything to do with production for export while Britain was basically surviving off debt interest tribute from abroad…free trade has nailed its mark. Furthermore, Hobson’s thesis was NOT that mercantilism was new or that it was the main motivation for imperialism, but speculative and capital INVESTMENT were the big boys of colonial imperialism.

    Comment by Ryan — June 30, 2007 @ 12:53 am | Reply


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