Many people think that capitalism and imperialism are the same thing, or at the very least that
they're very closely connected.
In fact, they're contradictory and opposed systems of economic and political organization.
Because of this confusion, many people blame capitalism and the world trading system for
bad things that have happened in the past or in the present - the exploitation of poor
people, mass famines. and like - when in fact it's imperialism and empire that should get
the blame.
So what are these two different systems?
Capitalism is a system of the free exchange of goods and services between individuals
on a voluntary basis under the rule of law and in a system of private property rights.
In other words, it is a system of voluntary exchange in which all parties to the exchange
are better off.
Now imperialism, by contrast, is a system of relations based upon power.
Essentially, it's a system in which certain groups of privileged people in one part of
the world are able to extract unearned income from people in other parts of the world through
the use of exploitative power relations, usually with the help of local collaborators.
The key to this is the use of political power, ultimately military power, to establish economic
relations which are involuntary and exploitative.
Empires have existed throughout the whole of human history.
In fact, there are so many examples of empires that it's hard to know where to start.
So, for example, in the early 17th century the Dutch Republic created the Dutch East
India Company.
This was a way in which privileged merchants in the province of Holland in particular were
able to gain monopoly rights to trade with the people of what is now Indonesia and were
able to use that and the military power of the Dutch Republic to establish exploitative
and politically domineering relations over the populations of that part of the world.
Later on the English got in on the act and created their own East India Company, which
for over 150 years ruthlessly exploited many of the people of the Indian subcontinent,
most notably in Bengal, but elsewhere as well.
Once again you had a politically privileged group of people backed by the military power
of the state establishing trade relations with people in another part of the world that
were not voluntary and which were highly exploitative.
More recently, in the Caribbean, the United Fruit Company, backed by the U.S. federal
government, was able to establish similarly exploitative relations with people in parts
of Central America, such as Honduras and Guatemala.
The important thing to realize is that while these were profit-making enterprises, they
were not true commercial capitalist businesses in the real sense of the term.
The profits that they gained were due not to free competition or voluntary cooperation
with willing buyers and sellers but the use of political power.
Had we had a true capitalist system operating here, we would've had lots of free trade between
the people in the other parts of the world, not only with people from the U.S. or the
UK, but also other people from other parts of the world.
And there would have been a much more voluntary and mutually beneficial relationship.
The results of imperialism are generally not very good.
Not only does it lead to political corruption and the exploitation of any poor people, but
it often has quite catastrophic results, such as the enormous famines which occurred in
the late Victorian period in many parts of the world.
in the 1890s in particular, most notably in India but also elsewhere, which are often
blamed on capitalism, which in fact were clearly the result of the policies of the British
Empire and other colonial powers at that time.
So the thing to take away is this: imperialism is not and never has been the highest stage
of capitalism.
For one thing, empires have existed long before capitalism came into existence.
Capitalism and imperialism are not complementary but contradictory and hostile systems of political,
economic, and social organization.
Where one of them flourishes, the other has to decline.