Imperial Capitalism: The Hobson-Lenin Thesis

John Atkinson Hobson and Vladimir Lenin both claimed that the West live by a system of Capitalist Imperialism, a system that fosters powerful monopolies over free trade and inevitably leads to war.  Both Hobson and Lenin claimed that as monopolies in both the industrial and the financial sectors of society formed in the second half of the nineteenth century, imperialistic policies were needed to protect their financial interests and Western governments were more than willing to do this, as their economies depended on these monopolies.  As many industrialists and financiers stand to make considerable gains from war, Hobson and Lenin argued that they actively encourage conflicts such as World War One. 

Vladimir Lenin.  Image source

In his essay, Imperialism, the Highest Stage of Capitalism, first published in 1916, Vladimir Lenin claimed that the most important aspect of the Capitalist economy from c1870 was the transformation from an environment of competition to a situation where monopolies had formed.  Often, cartels and trusts controlled seven or eight tenths of all the output of a given industry and as these cartels merged or had understandings and agreements with each other on issues such as product prices.  Free trade was lost and a small number of capitalists gained large amounts of power and took control of key aspects of society such as skilled labour and transport.

John Atkinson Hobson, a widely popular English economist and Imperial critic, wrote in his work, Imperialism, A Study, first published in 1902, “of a small minority of white men, officials, traders, and industrial organisers, exercising political and economic sway over great hoards of population regarded as inferior and as incapable of exercising any considerable rights of self government, in politics or industry”.

One of the most important features of the transformation of Capitalism into Imperialist Capitalism was the changing role of the banks, which went from being what Lenin called  “small, numerous modest intermediaries” into powerful monopolies controlling vast amounts of capital.  For example by 1909, eighty three per cent of total German bank capital was controlled by the nine big Berlin banks (along with smaller affiliated banks that these banks had shares or holdings in).  As the banks gained more power, industry became more dependent on them and banks, industry and commercial enterprises became more tied to one another.