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Notes on the Theory of Imperialism

In terms of the total system, these [the dominant classes in the most advanced capitalist countries] are the classes which have the power of initiative: they are, so to speak, the independent variables.  The behavior of other classes — including the subordinate classes in the dominant countries as well as both the dominant and the subordinate classes in the subordinate countries — is primarily reactive.  One of the most important tasks of a theory of imperialism is therefore to analyze the composition and interests of the dominant classes in the dominant countries.

. . .

One can no longer today speak of either industrialists or bankers as the leading echelon of the dominant capitalist classes.  The big monopolistic corporations, which were formed and in their early years controlled by bankers, proved to be enormously profitable and in due course, through paying off their debts and plowing back their earnings, achieved financial independence and indeed in many cases acquired substantial control over banks and other financial institutions.  These giant corporations are the basic units of monopoly capitalism in its present stage; their (big) owners and functionaries constitute the leading echelon of the ruling class.  It is through analyzing these corporate giants and their interests that we can best comprehend the functioning of imperialism today.

In size, complexity of structure, and multiplicity of interests the corporate giant of today differs markedly from the industrialist or the banker of an earlier period. . . .  It would obviously be wrong to expect a corporation like this to behave like a British cotton mill owner interested in getting his raw cotton from abroad at the lowest possible price and in exporting his products to a duty-free India, or like a Rothschild or a Morgan disposing over great amounts of liquid capital and interested in investing it abroad at the highest attainable rate of profit.

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One cannot say of the giant multinational company of today that it is primarily interested, like the industrialist of the 19th century, in the export of commodities; or, like the banker of the early 20th century, in the export of capital. . . .  What all this means is that one must beware of easy generalizations about the specifically economic interests of the leading actors on the imperialist stage.  Their interests are in fact variegated and complex, often contradictory rather than complementary.  Subsidiaries of a United States company in two foreign countries may both be in a good position to export to a third country.  If one gets the business, the interests of the other will be damaged.  Which should be favored?  Or a certain company produces raw materials through a subsidiary in one country, processes the materials through another subsidiary in a second country, and sells the finished product through yet another subsidiary in the United States.  Intercorporate prices can be so fixed as to allocate revenues and profits in any number of ways among the subsidiaries and countries.  Which set of prices should actually be selected?  These examples illustrate the kind of problem which the top managements of the multinational corporations have to solve every day; and about the only valid generalization one can make is that in every case they will seek a solution which maximizes the (long-run) profits of the enterprise as a whole.  And this of course means that whenever necessary to the furtherance of this goal, the interests of particular subsidiaries and countries will be ruthlessly sacrificed.

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. . . [I]t does not follow [from how the underdeveloped countries are treated by the multinational companies] that these giant enterprises are any more concerned to promote the national interests of the advanced countries, including even the one in which their headquarters are situated.  Quite apart from particular actions . . . a plausible argument could be made that in the last fifteen years United States corporations have developed their foreign operations at the expense of, and often in direct competition with, their domestic operations, and that these policies have constituted one of the causes of the lagging growth rate of the United States economy and hence of the rising trend of unemployment which is now perhaps the nation’s number one domestic problem.  Whether or not this is really the case — and it would probably be impossible to prove either that it is or isn’t — it remains true that the decisions and actions of the multinational companies are taken solely with a view to promoting the interests of the companies themselves and that whatever effects, beneficial or injurious, they may have on the various countries in which they operate are strictly incidental.

Does this mean that the giant multinational companies have no interests in common on which they can unite?  Are there no general policies which they expect their governments — and the governments of the dominant imperialist states are indeed theirs — to follow?  The answer is that there are common interests and desired general policies, but that for the most part they are not narrowly economic in nature.  The multinational companies often have conflicting interests when it comes to tariffs, export subsidies, foreign investment, etc.  But they are absolutely united on two things: First, they want the world of nations in which they can operate to be as large as possible.  And second, they want its laws and institutions to be favorable to the unfettered development of private capitalist enterprise.  Or to put the point in another way, their ideal would be a world of nations in every one of which they could operate uninhibited by local obstacles to their making and freely disposing of maximum attainable profits.  This means not only that they are opposed to revolutions which threaten to exclude them altogether from certain areas — as, for example, the Cuban Revolution excluded all United States corporations from Cuba — but also that they are adamantly opposed to all forms of state capitalism (using the term in its broadest sense) which might tend to hamper their own operations or to reserve potentially profitable areas of economic activity for the nationals of the countries in question.*  Their attitude is well expressed in the 1962 Annual Report of Standard Oil on which we have already drawn for illustrative material: “Both at home and abroad, a greater awareness is needed of the importance of private investment to economic progress.  Some countries have shown a trend toward state enterprise both through government participation in new commercial ventures and through nationalization of established private businesses.  The interest of these nations will best be served, however, by fostering societies that are based on those principles of free enterprise which have produced the outstanding economic development of many other nations.  It is reassuring to see steps taken — such as the Hickenlooper Amendment to the Foreign Assistance Act of 1961 — to ensure that economic assistance funds from the United States encourage a climate of progress by emphasizing the importance and protection of private investment in nations receiving aid from the United States.”  It would be wrong to think that the management of Standard Oil opposes government enterprise in the subordinate countries because of a naive belief that state action is identical with socialism.  The explanation is much more rational: government enterprise and state action in these countries generally represent attempts on the part of the native bourgeoisies to appropriate for themselves a larger share of locally produced surplus at the expense of the multinational companies.  It is only natural that such attempts should be resolutely opposed by the multinational companies.

The general policy which the multinational companies require of their government can thus be summed up in a simple formula: to make a world safe for Standard Oil.  In more ideological terms, this means to protect the “free world” and to extend its boundaries wherever and whenever possible, which of course has been the proclaimed aim of United States policy ever since the promulgation of the “Truman Doctrine” in 1947.  The negative side of the coin is anti-communism.  The necessary complement is the building up and maintenance of a tremendous global military machine.

All the major struggles going on in the world today can be traced to this hunger of the multinational corporations for maximum Lebensraum.


*  This does not mean, of course, that they oppose foreign governments’ undertaking public works — roads, harbors, public health and education programs, etc., etc. — of a kind that will benefit their own operations.  For such beneficent activities they even favor generous “foreign aid” from their own government.

Paul Baran (1910-1964) was the author of The Political Economy of Growth (1957) and co-author with Paul Sweezy of Monopoly Capital (1966).  Paul M. Sweezy (1910-2004) was a Marxist economist and founding editor of Monthly Review.  The text above is a collection of excerpts from the paper contributed by the authors to a volume celebrating the 65th anniversary of the birth of Michal Kalecki, Problems of Economic Dynamics and Planning: Essays in Honour of Michal Kalecki (Warsaw: PWN [Polish Scientific Publishers], 1964) and reprinted in the March 1966 issue of Monthly Review (17.10).

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