The development of Imperialism cannot be isolated from the general dynamics and tendencies of the capitalist economy. Imperialist-capitalism, therefore, is not identical to pre-capitalist forms of imperialism, although there can, of course, be similarities. As such, it must be viewed as an advanced stage of capitalism and not as some kind of deviation of it. This kind of imperialism was attained by some nations, mostly Western European, in the late 19th and early 20th-century. Since then it has changed and developed as economic and political developments occurred, but it is based on the same basic principles.

However, it is useful to describe the history of capitalism in order to fully understand the place imperialism holds within it, how it has changed and what functions it provides.

Imperialism has important economic advantages for those who run the economy. As the needs of the business class change, the forms taken by imperialism also change. We can identify three main phases: classic imperialism (i.e. conquest), indirect (economic) imperialism, and globalisation. We will consider the first two in this section and globalisation in section D.5.3. However, for all the talk of globalisation in recent years, it is important to remember that capitalism has always been an international system, that the changing forms of imperialism reflect this international nature and that the changes within imperialism are in response to developments within capitalism itself.

Capitalism has always been expensive. As we noted in the last section, this is unsurprising as it is based on "compete or die," which becomes "grow or die." Under mercantilism, for example, the "free" market was nationalised within the nation state while state aid was used to skew international trade on behalf of the home elite and favour the development of capitalist industry. This meant using the centralised state (and its armed might) to break down "internal" barriers and customs which hindered the free flow of goods, capital and, ultimately, labour. We should stress this as the state has always played a key role in the development and protection of capitalism. The use of the state to, firstly, protect infant capitalist manufacturing and, secondly, to create a "free" market (i.e. free from the customs and interference of society) should not be forgotten, particularly as this second ("internal") role is repeated "externally" through imperialism. Needless to say, this process of "internal" imperialism within the country by the ruling class by means of the state was accompanied by extensive violence against the working class (also see section F.8).

So, state intervention was used to create and ensure its dominant position at home by protecting it against foreign competition and the recently dispossessed working class. This transition from feudal to capitalist economy enjoyed the active promotion of the state authorities, whose increasing centralisation ran parallel with the growing strength and size of merchant capital. It also needed a powerful state to protect its international trade, to conquer colonies and to fight for control over the world market. The absolutist state was used to actively implant, help and develop capitalist trade and industry.

The first industrial nation was Britain. After building up its industrial base under mercantilism and crushing its rivals in various wars, it was in an ideal position to dominate the international market. It embraced free trade as its unique place as the only capitalist/industrialised nation in the world market meant that it did not have to worry about competition from other nations. Any free exchange between unequal traders will benefit the stronger party. Thus Britain, could achieve domination in the world market by means of free trade. This meant that goods were exported rather than capital.

Faced with the influx of cheap, mass produced goods, existing industry in Europe and the Americas faced ruin. As economist Nicholas Kaldor notes, "the arrival of cheap factory-made English goods did cause a loss of employment and output of small-scale industry (the artisanate) both in European countries (where it was later offset by large-scale industrialisation brought about by protection) and even more in India and China, where it was no so offset." [Further Essays on Applied Economics, p. 238] The existing industrial base was crushed, industrialisation was aborted and unemployment rose. These countries faced two possibilities: turn themselves into providers of raw materials for Britain or violate the principles of the market and industrialise by protectionism.

In many nations of Western Europe (soon to be followed by the USA and Japan), the decision was simple. Faced with this competition, these countries utilised the means by which Britain had industrialised — state protection. Tariff barriers were raised, state aid was provided and industry revived sufficiently to turn these nations into successful competitors of Britain. This process was termed by Kropotkin as "the consecutive development of nations" (although he underestimated the importance of state aid in this process). [Fields, Factories and Workshops, p. 49] No nation, he argued, would let itself become specialised as the provider of raw materials or the manufacturer of a few commodities but would diversify into many different lines of production. Obviously no national ruling class would want to see itself be dependent on another and so industrial development was essential (regardless of the wishes of the general population). Thus a nation in such a situation "tries to emancipate herself from her dependency . . . and rapidly begins to manufacture all those goods she used to import." [Op. Cit., p. 32]

Protectionism may have violated the laws of neo-classical economics, but it proved essential for industrialisation. While, as Kropotkin argued, protectionism ensured "the high profits of those manufacturers who do not improve their factories and chiefly reply upon cheap labour and long hours," it also meant that these profits would be used to finance industry and develop an industrial base. [Op. Cit., p. 41] Without this state aid, it is doubtful that these countries would have industrialised (as Kaldor notes, "all the present 'developed' or 'industrialised' countries established their industries through 'import substitution' by means of protective tariffs and/or differential subsidies." [Op. Cit., p. 127]).

Within the industrialising country, the usual process of competition driving out competitors continued. More and more markets became dominated by big business (although, as Kropotkin stressed, without totally eliminating smaller workshops within an industry and even creating more around them). Oligopoly marked the national economies of the most advanced capitalist nations as a means of creating "an amalgamation of capitalists for the purpose of dominating the market, not for cheapening the technical process." [Kropotkin, Op. Cit., p. 354] Indeed, as Maximoff stressed, the "specific character of Imperialism is . . . the concentration and centralisation of capital in syndicates, trusts and cartels, which . . . have a decisive voice, not only in the economic and political life of their countries, but also in the life of the nations of the worlds a whole." [Program of Anarcho-Syndicalism, p. 10] The modern multi-national and transnational corporations are the latest expression of this process. Simply put, the size of big business was such that it had to expand internationally as their original national markets were not sufficient and to gain further advantages over their competitors.

Faced with high tariff barriers and rising international competition, industry responded in two ways: export of capital and increased concentration of capital.

The latter was essential to gain an advantage against foreign competitors and dominate the international market as they had dominated the national one. So the imperialist form of capitalism sees the rise of big business and big finance.

In addition to the export of finished goods, capital (investment, venture, and finance capital) is also exported. This export of capital was an essential way of beating protectionism (and even reap benefits from it) and gain a foothold in foreign markets ("protective duties have no doubt contributed . . . towards attracting German and English manufacturers to Poland and Russia" [Kropotkin, Op. Cit., p. 41]). In addition, it allowed access to cheap labour and raw materials by placing capital in foreign lands As part of this process colonies were seized to increase the size of "friendly" markets and, of course, allow the easy export of capital into areas with cheap labour and raw materials. These two processes are both driven by the needs of capital to accumulate.

This form of imperialism, which arose in the late nineteenth century, was based on the creation of larger and larger businesses and the creation of colonies across the globe by the industrialised nations. Direct conquest had the advantage of opening up more of the planet for the capitalist market, thus leading to more trade and exploitation of raw materials and labour (and often slavery as well). This gave a massive boost to both the state and the industries of the invading country in terms of new profits, so allowing an increase in the number of capitalists and other social parasites that could exist in the developed nation. As Kropotkin noted at the time, "British, French, Belgian and other capitalists, by means of the ease with which they exploit countries which themselves have no developed industry, today control the labour of hundreds of millions of those people in Eastern Europe, Asia, and Africa. The result is that the number of those people in the leading industrialised countries of Europe who live off the work of others doesn't gradually decrease at all. Far from it." ["Anarchism and Syndicalism", in Black Flag no. 210, p. 26]

As well as gaining access to raw materials, imperialism allows the dominating nation to gain access to markets for its goods. By having an empire, products produced at home can be easily dumped into foreign markets with less developed industry, undercutting locally produced goods and consequently destroying the local economy (and so potential competitors) along with the society and culture based on it. Empire building is a good way of creating privileged markets for one's goods. By eliminating foreign competition, the imperialist nation's capitalists can charge monopoly prices in the dominated country, so ensuring high profit margins for capitalist business. This adds with the problems associated with the over-production of goods:

"The workman being unable to purchase with their wages the riches they are producing, industry must search for new markets elsewhere, amidst the middle classes of other nations. It must find markets, in the East, in Africa, anywhere; it must increase, by trade, the number of its serfs in Egypt, in India, on the Congo. But everywhere it finds competitors in other nations which rapidly enter into the same line of industrial development. And wars, continuous wars, must be fought for the supremacy in the world-market — wars for the possession of the East, wars for getting possession of the seas, wars for the right of imposing heavy duties on foreign merchandise." [Kropotkin, Kropotkin's Revolutionary Pamphlets, pp. 55-6]

This process of expansion into non-capitalist areas also helps Capital to weather both the subjective and objective economic pressures upon it which cause the business cycle (see section C.7 — "What causes the capitalist business cycle?" for more on these). As wealth looted from less industrially developed countries is exported back to the home country, profit levels can be protected both from working-class demands and from any relative decline in surplus-value production caused by increased capital investment (see section C.2 for more on surplus value). In fact, imperialism often allowed the working class of the invading country to receive improved wages and living conditions as the looted wealth was imported into the country and workers could fight for, and win, improvements that otherwise would have provoked intense class conflict. And as the sons and daughters of the poor emigrated to the colonies to make a living for themselves on stolen land, the wealth extracted from those colonies helped to overcome the reduction in the supply of labour at home which would increase its market price. This loot also helps reduce competitive pressures on the nation's economy. Of course, these advantages of conquest cannot totally stop the business cycle nor eliminate competition, as the imperialistic nations soon discovered.

Therefore, the "classic" form of imperialism based on direct conquest and the creation of colonies had numerous advantages for the imperialist nations and the big business which their states represented.

These dominated nations were, in the main, pre-capitalist societies. The domination of imperialist powers meant the importation of capitalist social relationships and institutions into them, so provoking extensive cultural and physical resistance to these attempts of foreign capitalists to promote the growth of the free market. However, peasants', artisans' and tribal people's desires to be "left alone" was never respected, and "civilisation" was forced upon them "for their own good." As Kropotkin realised, "force is necessary to continually bring new 'uncivilised nations' under the same conditions [of wage labour]." [Anarchism and Anarchist Communism, p. 53] Anarchist George Bradford also stresses this, arguing that we "should remember that, historically, colonialism, bringing with it an emerging capitalist economy and wage system, destroyed the tradition economies in most countries. By substituting cash crops and monoculture for forms of sustainable agriculture, it destroyed the basic land skills of the people whom it reduced to plantation workers." [How Deep is Deep Ecology, p. 40] Indeed, this process was in many ways similar to the development of capitalism in the "developed" nations, with the creation of a class of landless workers who forms the nucleus of the first generation of people given up to the mercy of the manufacturers (see section F.8.3 for details).

However, this process had objective limitations. Firstly, the expansion of empires had the limitation that there were only so many potential colonies out there. This meant that conflicts over markets and colonies was inevitable (as the states involved knew, and so they embarked on a policy of building larger and larger armed forces). As Kropotkin argued before the First World War, the real cause of war at the time was "the competition for markets and the right to exploit nations backward in industry." [quoted by Martin Miller, Kropotkin, p. 225]

Secondly, the creation of trusts, the export of goods and the import of cheap raw materials cannot stop the business cycle nor "buy-off" the working class indefinitely (i.e. the excess profits of imperialism will never be enough to grant more and more reforms and improvements to the working class in the industrialised world). Thus the need to overcome economic slumps propelled business to find new ways of dominating the market, up to and including the use of war to grab new markets and destroy rivals. Moreover, war was a good way of side tracking class conflict at home — which, let us not forget, had been reaching increasingly larger, more militant and more radical levels in all the imperialist nations (see John Zerzan's "Origins and Meaning of WWI" in his Elements of Refusal).

Thus this first phase of imperialism began as the growing capitalist economy started to reach the boundaries of the nationalised market created by the state within its own borders. Imperialism was then used to expand the area that could be colonised by the capital associated with a given nation-state. This stage ended, however, once the dominant powers had carved up the planet into different spheres of influence and there was nowhere new left to expand. In the competition to increase sales and access to cheap raw materials and foreign markets, nation-states came into conflict with each other. As it was obvious that a conflict was brewing, the major European countries tried to organise a "balance of power." This meant that armies were built and navies created to frighten other countries and so deter war. Unfortunately, these measures were not enough to countermand the economic and power processes at play. War did break out, a war over empires and influence, a war, it was claimed, that would end all wars. As we now know, of course, it did not because it did not fight the root cause of modern wars, capitalism.

After the First World War, the identification of nation-state with national capital became even more obvious, and can be seen in the rise of extensive state intervention to keep capitalism going — for example, the rise of Fascism in Italy and Germany and the efforts of "national" governments in Britain and the USA to "solve" the economic crisis of the Great Depression. However, these attempts to solve the problems of capital did not work. The economic imperatives at work before the first world war had not gone away. Big business still needed markets and raw materials and the statification of industry under fascism only aided to the problems associated with imperialism. Another war was only a matter of time and when it came most anarchists, as they had during the first world war, opposed both sides and called for revolution:

"the present struggle is one between rival Imperialisms and for the protection of vested interests. The workers in every country, belonging to the oppressed class, have nothing in common with these interests and the political aspirations of the ruling class. Their immediate struggle is their emancipation. Their front line is the workshop and factory, not the Maginot Line where they will just rot and die, whilst their masters at home pile up their ill-gotten gains." ["War Commentary", quoted Mark Shipway, Anti-Parliamentary Communism, p. 170]

After the Second World War, the European countries yielded to pressure from the USA and national liberation movements and grated many former countries "independence" (often after intense conflict). As Kropotkin predicted, such social movements were to be expected for with the growth of capitalism "the number of people with an interest in the capitulation of the capitalist state system also increases." [Peter Kropotkin, "Anarchism and Syndicalism", in Black Flag no. 210, p. 26] Unfortunately these "liberation" movements transformed mass struggle from a potential struggle against capitalism into movements aiming for independent capitalist nation states.

Not, we must stress, that the USA was being altruistic in its actions, independence for colonies weakened its rivals as well as allowing US capital access to those markets.

This process was accompanied by capital expanding even more beyond the nation-state into multinational corporations. The nature of imperialism and imperialistic wars has changed accordingly. In addition, the various successful struggles for National Liberation ensured that imperialism had to change itself in face of popular resistance. These two factors ensured that the old form of imperialism was replaced by a new system of "neo-colonialism" in which newly "independent" colonies are forced, via political and economic pressure, to open their borders to foreign capital. If a state takes up a position which the imperial powers consider "bad for business," action will be taken, from sanctions to outright invasion. Keeping the world open and "free" for capitalist exploitation has been America's general policy since 1945. It springs directly from the expansion requirements of private capital and so cannot be fundamentally changed. However, it was also influenced by the shifting needs resulting from the new political and economic order and the rivalries existing between imperialist nations (particularly those of the Cold War). As such, which method of intervention and the shift from direct colonialism to neo-colonialism (and any "anomalies") can be explained by these conflicts.

Within this basic framework of indirect imperialism, many "developing" nations did manage to start the process of industrialising. Partly in response to the Great Depression, some former colonies started to apply the policies used so successfully by imperialist nations like Germany and America in the previous century. They followed a policy of "import substitution" which meant that they tried to manufacture goods like, for instance, cars that they had previously imported. Without suggesting this sort of policy offered a positive alternative (it was, after all, just local capitalism) it did have one big disadvantage for the imperialist powers, it tended to deny them both markets and cheap raw materials (the current turn towards globalisation was used to break these policies). As such, whether a nation pursued such policies was dependent on the costs involved to the imperialist power involved.

So instead of direct rule over less developed nations (which generally proved to be too costly, both economically and politically), indirect forms of domination were now preferred, with force resorted to only if "business interests" are threatened. Examples of new-style imperialistic wars include Vietnam, the US support for the Contras in Nicaragua and the Gulf War. Political and economic power (e.g. the threat of capital flight or sanctions) is used to keep markets open for corporations based in the advanced nations, with military intervention being used only when required (although the threat of it is always there). Moreover, the competition between the USA and the USSR also had an impact. On the one hand, acts of imperial power could be justified in fighting "Communism" (for the USA) or "US imperialism" (for the USSR). On the other, fear of provoking a war or driving developing nations into the hands of the other side allowed more leeway for developing nations to pursue policies like import substitution. However, force always was the ultimate solution for imperialism, just as it had been previously.

Least it be considered that we are being excessive in our analysis, let us not forget that the US "has intervened well over a hundred times in the internal affairs of other nations since 1945. The rhetoric has been that we have done so largely to preserve or restore freedom and democracy, or on behalf of human rights. The reality has been that [they] . . . have been consistently designed and implemented to further the interests of US (now largely transnational) corporations, and the elites both at home and abroad who profit from their depredations." [Henry Rosemont, Jr., "U.S. Foreign Policy: the Execution of Human Rights", pp. 13-25, Social Anarchism, no. 29 p. 13] This has involved the overthrow of democratically elected governments (such as in Iran, 1953; Guatemala, 1954; Chile, 1973) and their replacement by reactionary right-wing dictatorships (usually involving the military). As George Bradford argues, "[i]n light of [the economic] looting [by corporations under imperialism], it should become clearer . . . why nationalist regimes that cease to serve as simple conduits for massive U.S. corporate exploitation come under such powerful attack — Guatemala in 1954, Chile in 1973 . . . Nicaragua [in the 1980s] . . . [U.S.] State Department philosophy since the 1950s has been to rely on various police states and to hold back 'nationalistic regimes' that might be more responsive to 'increasing popular demand for immediate improvements in the low living standards of the masses,' in order to 'protect our resources' — in their countries!" [How Deep is Deep Ecology?, p. 62]

Capital investments in developing nations have increased steadily over the years, with profits from the exploitation of cheap labour flowing back into the pockets of the corporate elite in the imperialist nation, not to its citizens as a whole (though there are sometimes temporary benefits to other classes, as discussed below). In addition, other countries are "encouraged" to buy imperialist countries' goods (often in exchange for "aid", typically military "aid") and open their markets to the dominant power's companies and their products. Imperialism is the only means of defending the foreign investments of a nation's capitalist class, and by allowing the extraction of profits and the creation of markets, it also safeguards the future of private capital.

So, imperialism remained intact, as Western (mostly U.S. and its junior partner, the U.K.) governments continue to provide lavish funds to petty right-wing despots under the pseudonym, "foreign aid". The express purpose of this foreign aid, noble-sounding rhetoric about freedom and democracy aside, is to ensure that the existing world order remains intact. "Stability" has become the watchword of modern imperialists, who see any indigenous popular movements as a threat to the existing world order.

Foreign aid channelled public funds to the ruling classes in Third World countries via home based transnational companies. The U.S. and other Western powers provide much-needed war material and training for the military of these governments, so that they may continue to keep the business climate friendly to foreign investors (that means tacitly and overtly supporting fascism around the globe). "Foreign aid", basically, is when the poor people of rich countries give their money to the rich people of poor countries to ensure that the investments of the rich people of rich countries is safe from the poor people of poor countries!

(Needless to say, the owners of the companies providing this "aid" also do very well out of it.)

Thus, the Third World sags beneath the weight of well-funded oppression, while its countries are sucked dry of their native wealth, in the name of "development" and in the spirit of "democracy and freedom". The United States leads the West in its global responsibility (another favourite buzzword) to ensure that this peculiar kind of "freedom" remains unchallenged by any indigenous movements. Thus, the fascist regimes remain compliant and obedient to the West, capitalism thrives unchallenged, and the plight of people everywhere simply worsens. And if a regime becomes too "independent", military force always remains an option (as can be seen from the 1990 Gulf War).

Thus, imperialism changes as capitalism changes. The history of capitalism generally begins with mercantilism, the state aided destruction of petit-bourgeois commodity production (artisans, guilds and peasants) by capitalist manufacturing. Once capitalist industry has found its feet, free competition ("free trade") is embraced, which naturally progresses to a concentration of production (the rise of big business), which continually strive towards monopolies — although it rarely reaches that stage (oligopolistic competition reigns). Major economic decisions are made by a few heads of major companies and corporations. Big business, while appearing to be contrary to the foundations of capitalism, is, in fact, its most developed form — with the world turned more and more into one big factory, under one management hierarchy. Free association is replaced by top-down orders and industrial development is distorted by the need to maintain and extend corporate power and profits.

With the increasing globalisation of big business and markets, capitalism (and so imperialism) is on the threshold of a new transformation. Just as direct imperialism transformed into in-direct imperialism, so in-direct imperialism is transforming into a global system of government which aims to codify the domination of corporations over governments. This process is often called "globalisation" and we discuss it in section D.5.3. First, however, we need to discuss non-private capitalist forms of imperialism associated with the Stalinist regimes and we do that in the next section.