CLASSICAL
LIBERALISM, IMPERIALISM, AND THEORY
The
intellectual history of theories of imperialism is an
odd one. Early liberals like Thomas Paine, Richard Cobden,
and John Bright understood imperialism as a projection
of state power, paid for by the citizenry, for the economic
benefit of particular interest groups. They did not
see overseas plundering operations as an "inherent"
part of a market economy resting on private property.
By the late 19th-century, liberals began forgetting
these insights.
LIBERAL
THEORY RUNS OFF THE RAILS
The
English liberal John A. Hobson wrote in 1902: "The
economic taproot of Imperialism is the desire of strong
organized industrial and financial interests to secure
and develop at the public expense and by the public
force private markets for their surplus goods and their
surplus capital. War, militarism, and a 'spirited
foreign policy' are the necessary means to this
end." Unfortunately, Hobson muddied the waters
by attributing this "surplus" to general "overproduction"
and "underconsumption." Surpluses in specific
markets and shrinking investment opportunity at home
cannot be blamed on reified aggregate concepts, but
must – to the extent they exist – be traced to specific
political facts at home. Hobson himself later discussed
tariffs, patents, franchises, licenses, railroad subsidies,
etc., as prime examples of institutional blockage, but
failed to stay on this track.
THE
MARXISTS ASSUME THE BURDEN
Hobson's
best known work, Imperialism
(1902) set the Marxists rolling. In Imperialism
– The Highest Stage of Capitalism (1916),
Lenin took up Hobson's argument, characteristically
adding that "capitalism" must cause
overproduction and underconsumption and that, pending
the arrival of communist heaven, such problems would
make "capitalist states" fight imperialist
wars in a vain attempt at solving them. Other Marxists
– Rudolf Hilferding, Rosa Luxemburg, and Nikolai
Bukharin – joined in, although Hilferding thought
that the wily capitalists might answer Rodney King's
question – "Can't we all just get along?"
– with an International Super-Cartel, thus avoiding
endless war. In time, the impression got abroad that
only Marxists cared about imperialism or, alternatively,
only their impressive theoretical toolkit could handle
it adequately. Oddly enough, Marx himself liked
Western imperialism, which – tearing backward peoples
out of Asiatic despotism – had set them on the
path to capitalism and, therefore, to socialism. (All
in all, one can easily imagine Marx cheering NATO as
the vanguard of social democracy.)
PROGRESSIVES
– IMPERIALIST AND ANTI-IMPERIALIST
In
the 1890s, export-hungry American businesses raised
the cry of "over-production" to justify an
aggressive foreign policy. But the over-productionist
thesis was: 1) a rationalization of entrepreneurial
error, 2) an ad hoc argument for grants of privilege,
or 3) a mistaken explanation of real trends in particular
markets (not "general overproduction"), trends
often rooted in state interventions: protectionism,
subsidies, and regulatory "reforms," which
actually promoted cartels. That the handful of anti-imperialist
Progressives like Charles A. Beard accepted the Hobsonian/proto-Keynesian
theory of what caused imperialism, meant they shared
the export-mavens' economic premises. This made
extra work for them, dreaming up domestic reforms to
deal with alleged overproduction/underconsumption. With
the best of intentions they unfortunately sidetracked
the analysis of imperialism. For most Progressives,
however, empire wasn't an issue, provided it was
humane, benevolent, and overseen by them.
A
BETTER LINE OF ATTACK: SCHUMPETER, E.M. WINSLOW, AND
OTHERS
Hobson
correctly understood imperialism as a predatory alliance
of state and businesses. Joseph Schumpeter saw "export
monopolism" as the mainspring. Behind tariff walls,
prices rose at home and cartelization got under way.
Artificial gluts came about, since the full amounts
produced would not sell at the protected prices. Yet
these amounts had to be produced to realize lower unit
costs. (As Andrew Carnegie put it, "The condition
of cheap manufacture is running full.") Resulting
"surpluses" were dealt with by "dumping"
the excess abroad "at a lower price, sometimes...
below cost.")
Since
"cartels successfully impede the founding of new
enterprises," Schumpeter adds, foreign investment
outlets were also sought. When export-hungry monopolists
from different states crave the same markets, "the
idea of military force suggests itself" both "to
break down foreign customs barriers" and to "secure
control over markets…" Empire, formal or informal,
is the outcome. If a firm could not survive without
politically won markets, it was, for Schumpeter, "expanded
beyond economically justifiable limits" and ought
to close shop. There was nothing inevitable here: "trusts
and cartels ... can never be explained by the automatism
of the competitive system" – they arise from
state policy.
In
Europe, "export monopolism" and imperialism
were pre-capitalist phenomena connected with feudalism,
mercantilism, and royalist bureaucracy. But the US experience
shows that wherever there stands a state apparatus strong
enough to meddle with market outcomes, special interests
will ask it to meddle for them. Historian Murray Greene
observes, "American capitalism, which developed
unimpeded by monarchical power, and German capitalism,
where the monarchical element was a factor, were both
characterized by strong tendencies toward protectionism
and monopolism." Both nations had "enjoyed"
high tariff protection – the US from 1862, Germany
from 1879.
'MONOPOLY,'
CARTELS, AND CORPORATISM
This
brings us to monopoly. Much of the literature on the
subject – Liberal and Marxist – rests on the
groundless assumption that there is in market economies
an inherent monopolistic trend. But Schumpeter wrote
that "with few exceptions large-scale production
does not lead to… one or only a few firms in each
industry." Cartels were "quite different from
the trend to large-scale production with which [they
are] often confused." Ludwig von Mises remarked
that "the important place that cartels occupy in
our time is an outcome of the interventionist policies
adopted by the governments of all countries." Murray
Rothbard, too, argued powerfully that monopoly cannot
arise on the free market. Real monopoly hinges on grants
by the state – direct or indirect – to particular
firms, reserving the production of a certain good; these
include, in Rothbard's analysis, tariffs, quotas,
licenses, patents, eminent domain, franchises, and other
regulations.
Cumulative legislation produced, in time, an American
corporatist system – albeit a more "pluralistic"
one than the Euro-Japanese model. Corporatism –
modern mercantilism "with a human face" –
calls for close cooperation of state, business, and
labor unions to "stabilize" economic life.
The practice is restriction of entry into markets, higher
prices, and protection of established companies. Polish
economist Oskar Lange – no friend of the market
economy – comments: "[I]n present capitalism…
interventionism and restrictionism are the dominant
economic policies." And F.A. Hayek notes that "[m]ore
than by anything else the market order has been distorted
by efforts to protect groups from a decline from their
former position...."
INNER
'CONTRADICTIONS' OF CORPORATISM
Here
we catch sight of the inner "contradictions"
of mercantilism/corporatism. The "unintended consequences"
of economic intervention drive its beneficiaries to
seek further support from the state, including –
sometimes – help breaking into foreign markets.
E.M. Winslow, a non-Marxist student of imperialism,
wrote that business and labor seek monopolistic privileges
partly to protect themselves against the hazards of
trade cycles. Grasping the connection between depressions
and credit expansion, Winslow called for "social
control of the monetary aspects of the economic process."
(Oddly enough, a sound laissez faire banking
system would provide the "social control.")
Certainly, the 1929 depression accounts for part of
the drive to corporatism. Even here, the state must
answer, since its own credit expansion is at the heart
of the business cycle.
Anti-depression
"remedies" only added to an existing tendency.
In 1943, Robert A. Brady wrote that, beginning with
the Bismarck tariff of 1879, neo-mercantilism had been
the main drift in the industrialized nations. In each
country, trade associations and pressure groups had
produced "a generalized system of state aid"
with 1) protection against foreign competition, 2) protection
against domestic competition, and 3) protection against
becoming extra-marginal (with public funds to bail out
failed firms and finance public works and armaments).
At the end of this road was corporatism, already arrived
at, in the fascist form, in Italy, Germany, and Japan.
The United States was well down the same road. (John
T. Flynn said much the same thing in As
We Go Marching [1944].) It means something that
in 1937 – after years of futile depression "cures"
– the New Dealers came back to seeing export markets
as the key to recovery.
IMPERIALISM – THE HIGHEST STAGE OF STATISM
Lange
observes that under "interventionism and restrictionism,
the best businessman is he who best knows how to influence
in his interest the decisions of the organs of the state....
What formerly was regarded as a special trait of the
munitions industry becomes in interventionist capitalism
the general rule." But restrictionist measures
generate problems in specific markets.
At
times, the side-effects of state monopolistic grants
to favored clients do call forth a search for foreign
markets. There is no universal law here. A state too
weak to expand could not resort to empire to offset
the outcome of misconceived economic measures at home.
There, the state and allied businesses would have to
fiddle with further domestic interventions. On the other
hand, a corporation need not be groaning under side-effects
of corporatism to want state help overseas. It might
just be exploiting a favorable relationship to the state
without regard to its domestic position.
Imperialism
is power-political (as Hilferding himself admitted in
1941). It is the outcome of an alliance between the
permanent state apparatus – with its territorial
monopoly of legitimized violence – and business
interests bent on looting society. As Thomas Paine put
it, "[w]hen the robber becomes the legislator,
he feels himself secure." The goals involved may
be "economic," but also include power for
its own sake, prestige, adventure, and ideology. Empire
widens the sphere of "the political means"
to wealth (state) at the expense of "the economic
means" (market) – to use Franz Oppenheimer's
terms.
Imperialists
often have economic motives, but empire is not
"economically determined" in the Marxist sense.
Empire enlarges the area controlled by a state, which
arguably has too much power already, or it wouldn't
be able to take up overseas intervention and endless
war. From an ordinary citizen's standpoint, empire
heaps new burdens – conscription, higher taxation,
and detailed state surveillance of everything –
on a society already struggling under the state's domestic
brainstorms. Overseas, the empire creates a "double
layer" of exploitation, superimposing its rule
over that of local elites. At times, it undertakes near-genocidal
counterinsurgency warfare, "pacification,"
and terror bombing to keep the locals in line. ("Sam's
Better World-Burghers: Over 4 Zillion Bombed"!)
There
are those who make a buck on empire. Commonsense reasoning
applies to them ("follow the money"). This
just shows that so-called "vulgar Marxism,"
which takes narrow "pocket book" interests
seriously, works better than Scholastic Marxism, reflecting
the former's deeper roots in early liberal analysis
of politics-as-plunder. Everything in Marxism that works
comes from early laissez-faire liberalism –
as Leonard Liggio and Ralph Raico have been saying for
years. The liberal approach to imperialism is not the
least of these useful ideas.
For
some interested parties empire represents an attempt
to resolve the "contradictions" of state monopoly
capitalism. But empire also draws life from such "irrational"
phenomena as will-to-power, militarism, bureaucracy,
and Jingoism. For society, the state-corporate alliance
is rather parasitic. And yes, Virginia, there are
"bourgeois" who don't give a monkey's
for free markets. Paine wrote that "[m]onarchy…
is the master fraud which shelters all others. By admitting
a participation in the spoil, it makes itself friends...."
Substitute "neo-mercantilist state" for "monarchy,"
and you know most of what you need to know.
The
state, by gathering the political means to wealth (the
"means of predation," to lift a phrase from
Ernest Gellner), "constitutes" – in Murray
Rothbard's words – "and is the source of,
the 'ruling class'..., and is in permanent opposition
to genuinely private capital." Empire, then, is
the state writ large. Sundry motives drive the process.
In the US case, the engrossing of overseas markets has
been the abiding goal of empire-builders since 1898.
Widespread support for Open Door empire has rested on
a desire to remedy perceived economic dilemmas.
Wealth
and power, as Republican theory tells us, are powerful
motives. Detailed reconstruction of specific actions
of political and economic figures will take us further
than big, furry generalizations about the "inherent
dynamics of late capitalism" or "postcolonial
deconstruction" of the racist white folks. In all
this, theory plays an important, if subordinate, role.
The legitimate descent is Cobden-Schumpeter-Mises-Rothbard,
not the "deviationist" line of Cobden-Hobson-Beard
or, worse, Cobden-Hobson-Lenin-Lin Piao.
IS
HEGEMONY CRICKET?
At
the beginning of this terrible century, Marxist writers
noted the growing prominence of bankers in the "power
elite" of capitalist societies. One need not be
a Marxist to second the motion. Central bankers became
key players from 1913. In World War II US leaders concluded,
on Keynesian grounds, that the US economy needed to
expand as a system unified and managed by the
state. US control of the world monetary system, after
1945, has been a key lever or "command post"
of US hegemony, worth as much in its way as all those
bombers. Future reconstruction of the classical liberal
theory of empire will have a lot to say about banking.1
Meanwhile, the US leadership seem hell-bent on fulfilling
Hilferding's prophecy of One Big International
Cartel presided over by – themselves.
What's
in for the rest of us? War, war, war – with all
the usual costs in lost blood, treasure, freedom, and
other values. Not very "economical" – is it?
[1] For a good beginning, see Hans-Hermann Hoppe, "Banking,
Nation States and International Politics," The
Review of Austrian Economics,
4 (1990), 55-87.
Major
Sources: Richard J. Barnet, Roots
of War (1972); Robert A. Brady, Business
as a System of Power (1943); John A. Hobson,
Imperialism:
A Study (1965[1902]), The Evolution
of Modern Capitalism (1926); R. E. Roberts,
ed., Selected Writings of Thomas Paine (1945);
Murray N. Rothbard, America's
Great Depression (1972) (for a refutation of
overproduction/underconsumption analysis, see pp. 55-58);
Joseph A. Schumpeter, Imperialism, Social Classes:
Two Essays (1955[1919]); E.M. Winslow, The
Pattern of Imperialism (1948).
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