The confusion about the term ‘imperialism’ can be resolved upon recognising that the term was originally popularised to explain warfare, but not national exploitation, whereas the subsequent evolution of the term sought to explain national exploitation, but not warfare. Therefore, the term ‘imperialism’ must provide an answer to the question, how do relations of national exploitation create the long-term conditions for warfare?
My PhD thesis, Imperialism: How Declining Currency Hegemony Leads to War, argues that the Indian Political Economy (PE) tradition provides useful insights to answer this question, beginning with its foundational claim, which is that from 1757 to 1947, India was drained gigantic sums of wealth by Britain. Dadabhai Naoroji, the founder of the Indian PE tradition claimed that nearly one-third of all tax-revenues raised by Britain from the Indian population was used to purchase goods from India, which were then sold on London’s financial markets in Pounds Sterling.
This drain has been estimated at $65 trillion US Dollars in today’s terms by Utsa and Prabhat Patnaik, two of India’s leading Marxist theorists. However, this drain was explicitly denied by John Hobson, the theorist who coined the term ‘imperialism’ in 1902. It may surprise readers that for Hobson, the definition of British ‘imperialism’ did not include the draining of wealth from any of its colonies, rather Hobson alleged that ‘imperialism’ drained Britain through the outflow of capital, which benefited only the financial capitalists at the expense of the British working class and nation in general.
This general idea was integrated into Marxist discourse by Vladimir Lenin in his 1917 Imperialism pamphlet, which argued that as capitalist states develop, industries form monopolies, which are then further subordinated to banks, resulting in financial oligarchies commanding large sums of capital. Such monopolies seek to export overseas to access cheaper sources of labour and raw materials, thereby compelling states to violently acquire overseas territories as outlets for capital until, eventually, they clash with each other, such as in the culmination of WW1.
Lenin wrote his pamphlet because he was trying to mobilise the working classes of Europe against the first world war that they were being conscripted in to fighting, with the argument that they should use the opportunity to carry out socialist revolutions against their respective capitalist ruling classes. That outcome would not only end the war, but also end the underlying cause of war, namely capitalist class rule.
I argue that the definition of ‘imperialism’ advanced by Lenin in his 1917 pamphlet did not contain the actual means by which nations exploited other nations throughout history. However, in 1920, Lenin explicitly defined ‘imperialism’ as national exploitation, referring to the division of the world “into a large number of oppressed nations and an insignificant number of oppressor nations”. Lenin also said that “70% of the world’s population, belong to the oppressed nations”, which refers to those nations across Asia, Africa, and Latin America that were colonised for the purposes of extracting their wealth.
The export of capital emphasised by Hobson and Lenin as defining ‘imperialism’ was never a mechanism of national exploitation, and never the means by which Britain exploited the nations it had subjugated, rather it was primarily the means by which Britain stimulated the industrial development of states originally founded as British settler-colonies like Australia, the United States, New Zealand, and Canada.
I argue that in Marxist political economy, national exploitation cannot be reduced to class exploitation. This is because with class exploitation the underlying assumption is that both capitalists and workers are paid in the same currency, whereas with national exploitation, the currency of the exploiting nation is backed by wealth extracted from the colonised nations under its control.
From this distinction, the following cyclical law can be observed throughout history. The currency hegemon is the state that extracts the largest quantity of wealth from those nations that it violently subjugates, which allows it to issue the currency that becomes the global measure of value. This hegemon creates its own gravediggers in the form of the mercantile rivals, which are those states that develop their productive forces by producing in exchange for the hegemonic currency. This creates the conditions for hegemon-rival warfare.
The contradiction is that the currency hegemon must keep its markets open to incentivise countries to hold its currency. However, this leads to its own deindustrialisation, which gradually disincentivises states from holding its currency. Meanwhile, the nations subjugated by the hegemon and the rivals are prevented from developing, or become ‘underdeveloped’, and thus tend towards the production of periphery commodities like food and raw materials.
From 1870 onwards, Britain’s mercantile rivals like the US, Germany, France, Italy, and Japan industrialised by producing in exchange for Pounds Sterling, which in turn was backed by the draining of Britain’s extractive colonies like India. Eventually, Britain found it difficult to meet its gold liabilities as those rivals began buying gold to establish gold standard currencies of their own.
Through the lens of my thesis, one major reason why the Soviet Union faced hostility was because it championed the ‘right of nations to self-determination’ as its foreign policy. This angered states like Britain, France, Holland, and Belgium that feared that the colonised nations under their control could liberate themselves with Soviet help. This policy also worried those states, like Germany, Italy, and Japan, that lacked the colonies needed to feed their industrial ambitions.
These would-be Axis states had industrialised from 1870 onwards by producing in exchange for Pounds Sterling, but in 1931 Britain ended the convertibility of its currency to gold. The ensuing depression compelled the Axis states to establish their own relations of national exploitation, that is, to acquire what they lacked through military conquest, thereby initiating WW2. However, these attempts failed primarily because the USSR and China resisted.
My thesis argues that inter-imperialism ended after WW2 as a consequence of the former empires, including the Axis powers, ceasing hostility with each other, and huddling under the leadership of the United States, leaving only a single imperialist alliance, led by the US, also known as ‘the West’.
Does imperialism persist in the absence of formal empire after WW2? Yes, because the West inherits an interest in keeping its former colonies poor in order to suppress inflationary pressures on the US Dollar. Therefore, imperialism must also include in its definition all attempts to maintain the trade relations historically established through violent conquest.
After the US ended the convertibility of the Dollar to gold in 1971, new pillars were needed to support its currency. To that end, OPEC agreed to price its oil in Dollars in 1975, and the post-Soviet space was bled by capital fleeing to Western banks after 1991. Meanwhile, China produced large quantities of goods in exchange for Dollars, thereby rapidly industrialising in the process to become the leading mercantile power of the current cycle.
The industrial productivity that propelled the US Dollar to its hegemonic status in the first place has been eroded by decades of deindustrialisation as shown by trade deficits since 1977. After WW2 the US was the largest absolute net-exporter of capital, then it became a net-importer of capital from 1989 onwards, and today the US is the largest absolute net-importer of capital by way of its enormous net-external debt. As the technological gap between East and West closes, demand for US Dollars will decline.
The hegemony of the US Dollar embodies all economic advantages won by the West at the expense of the rest, but those advantages are unravelling. Upon recognising that the global tensions being witnessed today have their parallels in past lifecycles of currency hegemony, the question arises, can the same fate be avoided?
TeaTay | Dec 29 2222
There is much here to discuss, especially this point:
“The industrial productivity that propelled the US Dollar to its hegemonic status in the first place has been eroded by decades of deindustrialisation as shown by trade deficits since 1977. After WW2 the US was the largest absolute net-exporter of capital, then it became a net-importer of capital from 1989 onwards, and … ”
The succession of rise and decline in great powers needs further study, and the points raised here are very good. One of the disconcerting things about the current situation, is that history shows that a currency/imperial structure situation can change very fast. It is like a wave crashing.
Jay Tharappel | Dec 29 2222
Indeed. In my thesis I write about how currency hegemony under a gold standard had a definite end point, which is when the hegemon can no longer meet its gold liabilities which is what happened to Britain. However, in the case of US fiat currency hegemony, there is no end point, only the worsening inflation, and the threat of countries like China rapidly selling off their US Dollars in exchange for money metals like gold or silver.
Eve | Jan 9 2323
A very insightful and interesting topic, especially in light of the current largely economic-based Ukraine and Russian war, which has accelerated with the Western sanctions on Russia over Ukraine. Can you please shed some light on this topic in terms of the current climate?
Jay Tharappel | Jan 9 2323
Sure. Part of the US strategy for maintaining the hegemony of its currency is destabilising the rest of the world. To that end, the US interfered in Ukraine’s internal affairs by supporting the Dec 2013 coup against President Victor Yanukovych. The new regime began stating its desire to join NATO, which from a Russian perspective is almost a declaration of war because the entire founding purpose of NATO was to weaken and contain Russia.
The NATO leadership is unlikely to support Ukraine joining unless it can firstly neutralise or disempower its pro-Russia population. To that end, the new regime in Kiev began banning pro-Russia political parties, shutting down pro-Russia media, and cracking down on the Russian language. This prompted the mainly Russian Donbas to attempt secession for 8 years until the Russian govt invaded in Feb 2022 to help enforce their secession.
I believe the US wants to weaken both Russia and the EU, see for example the obvious US sabotage of the Nordstream pipeline last year, which prevents Europe from resuming energy imports from Russia. While Russia’s invasion was tactically offensive, I believe it was strategically defensive. I pray this war ends soon.
Daniel K | Jan 15 2323
I’m unsure whether the same fate can be avoided because of the arrogance of the American ruling class, but if it were to happen, it would require anti-finance socialist revolutions in the US most importantly. Most Americans do not benefit from currency hegemony because it renders them superfluous to the economy. This shows that we’ve reached a stage where maybe imperialism no longer benefits the majority whereas at some point in history it certainly did.
Jay Tharappel | Jan 15 2323
You’re right, imperialism no longer benefits the American majority. It used to before the US began losing all its industry, but that outcome is a by-product of currency hegemony. Here’s an idea, multilateral debt forgiveness. The US forgives third world debt and scales down its military footprint in Eurasia in exchange for the mercantile rivals like China, Japan, the EU, and South Korea forgiving US debt. It can work, but it needs “anti-finance” revolutions in the US most importantly as you say.
Kyle | Jan 18 2323
Very impressive work.
What do you make of the current US attempts at reindustrializing (e.g. “friendshoring”, Inflation Reduction Act, new TSMC plants in Arizona, &c.) — will they prolong US hegemony?
Since you write that the USSR did not exploit a periphery in its development, doesn’t that represent a novel phenomenon—i.e. a hegemon-rival cycle in which the rival wasn’t also an empire? Since the USSR was also unique in not being “capitalist”, surely this implies that class and national exploitation, even if distinct phenomena, are connected?
Given that your reconceptualized theory of imperialism is cyclical, do you see the cycle broken by the remedies you suggest (e.g. debt forgiveness in exchange for military de-escalation) or by revolutions in postcolonial countries? Or will this lead to a new iteration, in which the US (or another) is the rival and China is the currency hegemon?
Jay Tharappel | Jan 23 2323
If the US can maintain its leading position in semi-conductor technology, then yes, that will prop up demand for the US Dollar, but China is catching up, they’re currently only one generation behind in terms of technology. Problem for the US is that they lack the ability to discipline their capitalists the way China does.
To quote a Yahoo headline “Chip makers are refusing to build new semiconductor plants in the U.S. unless Congress unlocks $52 billion in funding” lol. Can you imagine what would happen to Chinese executives who “refused” to follow orders from the CPC? They would simply be removed and replaced, if not investigated for corruption, and if found guilty, jailed, and possibly executed. So if the US wants to maintain its lead, its gonna have to print a lot more money to bribe these US tech companies to invest more.
Not only are these companies like “pandas that won’t screw to save its species” to quote Fight Club, but paying less in dividends because they’re investing more in fixed capital will cause a downturn in share prices, which will also undermine faith in the US Dollar. Ironically, the best way to maintain US Dollar hegemony is through extreme disciplining of capital, but that requires a revolution in the balance of class forces, i.e., socialism.
As for the USSR, the answer is yes, and yes. I do think there is a connection and it goes like this:
In the Russian empire, the conquering Russian nation did not engage in national exploitation to anywhere near the same scale as the British in India. The Russians did not *depend* on surpluses extracted from its conquered Asian lands because they had plenty of their own resources. They insisted on Russification, and they sent Russians to live in conquered lands, but they also sought to assimilate the conquered into the Russian nation economically, thereby evening out national differences.
Russians had less to lose when it came to the anti-colonial content of socialism whereas Britain had a lot more to lose, which possibly explains why the British working class were/are so revolutionarily impotent. For the Russians, the idea of spreading their ENORMOUS wealth among all subjugated nations was not giving up as much as they’d gain from working together through combined development, hence the USSR.
Do I see the cycle broken by the remedies I suggest? The future is unwritten, I just know that I would prefer remedies than the continuation of WW3 which in my view started in Syria. Think about it, every major power (except Japan but with the addition of Saudi Arabia, Israel, and Iran) that fought in WW1 and 2 is somehow involved in Syria, but they’re not fighting directly. What we see now are world wars that take the form of civil wars within postcolonial nations. Nuclear powers prefer this over direct confrontation because it avoids MAD.
The West poking nuclear powers is worrying though.
TeaTay | Feb 8 2323
Jay wrote: “I just know that I would prefer remedies than the continuation of WW3 which in my view started in Syria. Think about it, every major power (except Japan but with the addition of Saudi Arabia, Israel, and Iran) that fought in WW1 and 2 is somehow involved in Syria …”
Very true, and I note the key role of China. The US’s willingness to play at destabalizing China through encouraging militancy in the Uighar population fed into the Syrian war, where Chinese fighters were imported to North Syria. But the Chinese made them pay for that, by giving support to the Taliban – it is often forgotten that China has a border with Afghanistan – and thus forcing the US to finally realise that their “never quite successful” war in Afghanistan was an abject failure.
Han Asra | Jan 25 2323
The fact Lenin later revised his definition of Imperialism from class exploitation to national exploitation truly cements it to me that the great dividing line between “Western Marxism” aka Social Democracy and Marxism-Leninism is related to the question of the oppressed nation. Even today Western Marxist (which mostly hesitate to call themselves ‘Leninist’) harbors the same chauvinist attitude towards Eastern Marxist including those who hailed from the former Soviet Union.
With that being said, your work is seminal and I wish for it to get published in book form. The central point you made in your thesis is so important not just in recognizing what imperialism actually is and how it could actually function to describe a historical phenomena, but also to explains how the world commerce works through the lens of historical materialism. Lots of unoriginal, and frankly speaking revisionist Western Marxists work that solely focused on exploitation of production (not even forces of production) somehow tends to forget that money in Marx times was an actual, physical commodities that is gold bullion (at least backed by it). This completely change the material dynamics of geopolitical strategy of the imperialist state because it is clear why they have the tendency towards warfare and conquest of weaker-but-resource-rich nations. As someone from a (still) colonialized country, this helped understand our own history.
Another important point you made is the concept of American Tianxia, especially the _voluntary_ subjugation of the individual against their own nation collective interest. This explains the inner working of US cultural and financial hegemonism on micro level that ultimately had an effect macro scale from elites corruption to comprador urban liberals who hold “progressive’ views that usually against the conservative majority norm of their home society. But on this point in regards to most recent development, the accelerated social decay and degeneracy in which the Democrat-led US government hastily embrace ‘Wokism’ has apparently to my observation weaken the American Tianxia. So I guess that even if the US ever to reindustrialize somehow, they still need to fix their messy society to an orderly manner.
Jay Tharappel | Jan 25 2323
Han, thank you for your comment. Looks like you’ve taken the time to read my PhD! Wonderful!
To be honest, I do not think Lenin *consciously* revised the definition in the sense of explicitly stating that he was going to start using the term differently, but I agree with the general ‘world feeling’ of the rest of your first paragraph. I am merely recognising that there is a contradiction between “imperialism as national exploitation” (Lenin, 1920) and the contents of Lenin’s 1917 imperialism pamphlet.
The 1920 definition is the one delivered to very large delegations from the Global South, which is why it has a prominent place in ML, Maoist, and postcolonial Marxist parties, whereas in the Global North, the 1917 definition is more prominent because the target audience was the Global North in the context of WW1. So you can say that the Global North/West has a very different historic memory of Lenin as compared to the Global South/East.
I do not claim that one definition is superior, rather I demonstrate that both definitions are observing the same structure from different perspectives, leading me to (what I believe is) an original definition of imperialism (at least in English language Marxist discourse), which is that the term ‘imperialism’ must theorise how a) relations of national exploitation b) create the conditions for warfare.
The post-WW1 1920 Global South/East definition focussed on a) for obvious reasons, while the 1917 definition that was being disseminated as early as 1914 (according to Indian Marxist M.N. Roy) was written during WW1 and focussed on b) because it sought to stop Global North/West countries from killing the shit out of each other.
And yes, money is central. Marxists must realise that Marx’s work was unfinished. The first part of the Capital series roughly corresponded to a closed model of the world (no nations just classes), and the second part, which he did not live to finish, roughly corresponds to an opened model of the world that introduces nations. Also, while Marx assumes in Capital Vol. 1 that gold is money, although of course he did acknowledge in Vol. 3 the mountains of paper debts/assets or “fictitious capital” built like a ‘house of cards’ on top of that gold.
What Marx did not theorise (as far as I know) is how paper money that claims to be backed by gold as in the case of the Pound Sterling was actually backed by surpluses forcefully extracted from subjugated nations. You say your country is still colonised, where are you from if you don’t mind me asking?
I’m glad you liked the part about the “American Tianxia”, a concept I borrowed from my extremely helpful supervisor Salvatore Babones. I even argue that because the US financial system depends on people in the developing world putting their individual interests ahead of their collective/national interests that policies of national seclusion (i.e., North Korea) can be effective strategies for development!
Thank you for the great comment!
Han Asra | Jan 25 2323
I’m from Indonesia, which I think mentioned directly by Marx as “East Indies” that plundered by the European to fund their industrialization. tbh there should be more analysis and historical investigation on how our wealth plundered and how it contributes to the wealth of European but sadly unlike the Indians who have IPE, we don’t have any of that so we need to start from scratch.
American Tianxia is an important refutation against people who like to deny any American influence whatsoever on a smaller nation (Their elites to be exact) behind the argument of agency. What is the use of agency if their elites voluntarily doing things that’s against the collective interest of their own nation and pursuing individual interest to get closer to the hegemon?
Jay Tharappel | Jan 25 2323
Good question. Being aware of the problem is a good start
Navid | Feb 4 2323
Great piece. Do you know what time range Dadabhai Naoroji’s estimate covers? Only post 1850’s or before that too?
Jay Tharappel | Feb 4 2323
Dadabhai Naoroji mostly covered the Home Charges for his time, concluding that Britain stole a quarter to one third of India’s tax revenues, which amounted to around £20 million per year. Utsa and Prabhat Patnaik in their latest book ‘Capital and Imperialism’ (2021) have produced aggregate estimate for 1765 to 1938 based on other sources.
Download that book at look at these pages:
1. 1765 to 1836: £270 million (p. 137)
2. 1837 to 1901: £597 million (p. 144)
3. 1871 to 1901: £428 million (p. 142)
4. 1900 to 1921: £479 million (p. 166)
5. 1922 to 1938: £827 million (p. 168)
Albina | Mar 2 2323
Thanks for your work.
I would like to express my more than a year of observation of today’s split among the left in Russia. There is a tough, irreconcilable war between them.
I think that the split comes precisely because of the definition of imperialism.
All 100% of the Left Russians agree that now is imperialism, and about 50% of them consider Russia an empire, that Russia is waging an imperialist war and Russia is fascist.
Others believe that Russia is an empire, but a weak one.
Looking at their battles, I believe that the definition of the current stage of capitalism as imperialism is absolutely not correct.
The time since 1917 of the revolution and the emergence of a socialist state in the world, and eventually the socialist camp, – this time (epoch) cannot be valued by imperialism.
Because simultaneously with the socialist state, fascism, and fascist states appear. A fierce confrontation between the 2 systems begins with socialism and fascism.
This period of time marked itself with numerous bloody wars, the overthrow of pro-communist regimes and replacement of them with fascist ones, dozens of coups, and color revolutions, destabilizing entire continents.
It is also the emergence of a massive anti-communist movement consisting of numerous intelligence agencies, organizations, political parties, special scientific research, etc. Thousands and thousands of anti-communist criminal operations were committed by the Intelligence Services.
And as a result, the world became global and it controlled by the global elite.
That is, now it is not imperialism, but globalism. Fascism is a tool of the globalists.
This is my point of view, which I got from watching the enmity among the Russian left.
Do you think that Globalism is a completely possible stage of capitalism?
And how would you define the 100-year stage of the struggle between fascism and communism?
This stage cannot be called imperialism.