More on Imperialism More on Imperialism

by Harpal Brar

It is just over four years since I published my book

Imperialism – Decadent, Parasitic, Moribund Capitalism.

In that book I proved, by reference to irrefutable statistics from impeccable bourgeois sources, the correctness of V I Lenin’s theory on imperialism and its continuing validity in our own time.

Lenin repeatedly emphasised that “

the deepest economic foundation of imperialism is monopoly;”

that the “

transformation of competition into monopoly is one of the most important – if not the most important – phenomena of modern capitalist economy

“. That “

the rise of monopolies; as a result of the concentration of production, is a general and fundamental law of the present


stage of development of capitalism”

and that “

Monopoly! This is the last word in the ‘latest phase of capitalist development’

” (Lenin,

Imperialism, the Highest State of Capitalism,

Progress Publishers, Moscow, 1978, pages 93, 20 and 29 respectively).

During the short period since I completed my book, the monopolisation of the world economy has proceeded at an unprecedented speed. The value of global mergers and acquisitions totalled $1,618 billion in 1997 and $2,432 billion (£1,448 billion) in 1998 (see

Financial Times

29 December 1998, whose figures are based on Securities Data). Large though these sums are, they are dwarfed by those of the two years that followed. The frenzy of activity in the field of mergers and acquisitions (M&A) turned 1999 into a landmark year, with the total value of deals reaching the hitherto unthinkable sum of $3,435 billion (

Financial Times,

28 January 2000). In the United States alone, M&A volume in 1999 reached $1,730 billion – up from $1,630 billion in 1998. In the year 2000, the M&A volume in the US was higher still at $1,833 billion.

In the first six months of 1999 TMTs (technology, media and telecommunications companies) did 2,900 deals worth $445 billion, as against $488 billion for all of 1998.

In the US, through a round of breakneck consolidation in the telecommunications industry, four groups have emerged as the clear winners, namely, AT&T (which itself bought TCI and Media One), world Com, SBC (which, through its purchase of Ameritech and Pacific Telesis, brought back under one roof three of the original seven Baby Bells, thus reducing the latter to four), and Bell Atlantic (which merged with GTE), now called Verizon, Between them these four companies had, until a few months ago, a combined market capitalisation in excess of $400 billion, and vast resources at their disposal for international predatory operations. Having eliminated the enemy (rivals, if you like) at home, these national powerhouses had set the stage for a frenzied round of consolidation in Europe and elsewhere over the next few years. Most European companies

“would not be survivors”

, declared Bernie Ebbers, the chief executive of WorldCom, to the horror of the Europeans. Europe for its part is fighting back. Vodafone’s acquisition of AirTouch is but one example of this fightback.

If 1999 was the landmark year, the value of mergers and acquisitions went higher still in 2000, which saw the biggest mergers and takeovers in corporate history.

Vodafone AirTouch completed its $203 billion takeover of Mannesmann, and AOL that of Time Warner for $182 billion.

Overall, more than $3,495 billion worth of deals were announced worldwide in 2000 – a record volume according to Thomson Financial. Of this colossal sum, a mere 17 top M&A deals in 2000 accounted for a huge total of $775.6 billion, representing 22.19% of the total. This figure alone is further confirmation of the gigantic growth of monopoly.

Both in 1998 and 1999, M&A activity made up 9% of global market capitalisation.

With each passing year the value of the deals is getting bigger. Here are just a few examples, chosen at random, of the mergers effected in the last three years. [see Table 1]

Table 1



$203 billion


Time Warner

$182 billion



$115 billion



$ 85 billion



$ 77 billion



$ 94 billion

Glaxo Wellcome

SmithKline Beecham

$ 78 billion


Telecom Italia

$ 66 billion



$ 40 billion

Not without reason did Mr Irwin Stelzer, writing in the

Sunday Times

of 22 August 1999, say that

“There was a time when a billion-dollar deal was news, real news, generating feature stories and hours of television punditry. This is no longer so – and with reason”.

The truth is that mergers of $50 billion or more seem two a penny. In an aside on the competition and regulatory authorities, supposedly the guardians of free competition, Mr Seltzer adds:

For one thing, mergers in the billion-dollar class are now so common as to be almost not newsworthy. For another, any competition threat can easily be ameliorated by tinkering around the edges of a deal to please the competition authorities. When John D Rockefeller put together Standard Oil, muck-raking journalists were in full cry, and the trustbusters finally broke it up; when Exxon stitched its two largest components back together by buying Mobil, nobody paid much attention”

(‘Irresistible forces sweep world into merger mania’).

In its

World Investment Report 2000

(WIR), published on 4 October 2000, the United Nations Conference of Trade and Development (UNCTAD) stated that global flows of foreign direct investment (FDI) were set to exceed $1,000 billion in 2000 – up from $865 billion in 1999, with international mergers and acquisitions still the driving force. The WIR emphasises the emergence of a

“global market for firms”

, which are increasingly being bought and sold across national frontiers on a scale hitherto unknown.

Mergers and acquisitions, says the WIR, including deals within national borders, have soared at an annual rate of 42% over the past two decades to reach a completed value in 1999 of $2,300 billion, equivalent to 8% of the global GDP. Of the 24,000 deals, a quarter were cross-border, valued at $720 billion.

Just 109 megadeals (more than $1 billion a time) accounted for 60% of the total, most of them involving the world’s hundred largest multinationals, which control $2,000 billion of foreign assets and employ 6 million people in their foreign affiliates.

Global sales of the world’s 63,000 multinationals reached $14 trillion in 1999 – almost double the volume of global exports. This underlines the importance of export of capital (as opposed to the export of commodities) so characteristic of imperialism.

Presently, M&A activity dominates FDI flows into the industrialised (imperialist) countries. From $481 billion in 1998 it rose to $636 billion in 1999.

The WIR 2000 also reveals the interesting fact that while the UK was the world’s largest ‘overseas investor’ (i.e., exporter of capital), with outflows of $199 billion (23% of the total), the US, on the other hand, was the biggest recipient, with inflows of $276 billion (representing 30% of total global inflows). The figure concerning the export of capital by British imperialism cannot but have a startling effect on the Troto-revisionist fraternity in Britain who hardly regard Britain as an imperialist country.

Although M&A are playing an increasing role in the flow of FDI to ‘developing countries’ (i.e., oppressed nations), ‘greenfield’ investments, that is, the installations of new productive capacity, remain the norm. FDI flows to ‘developing countries’, of which more later, increased from $178 billion in 1998 to $208 billion in 1999.

Globalisation –

old-fashioned imperialism with a new label

Globalisation (the bourgeois professorial term for the scientifically precise term imperialism) is only a further manifestation of the over-accumulation of capital in the centres of imperialism, insufficient opportunities for its profitable investment and thus inadequate profits for financing a growing state sector as well as a fast-expanding non-productive private-service sector. The chief features of this globalisation are:

(a) extreme monopolisation of the economy through mergers, acquisitions and privatisation of the formerly state-owned enterprises;

(b) further consolidation in banking and the further dominance of finance capital, as we shall shortly see;

(c) ever-increased export of capital;

(d) formation at an unprecedented pace of international monopolist combines and a furious struggle for re-division of the world;

(e) reduction in social wage through cuts in welfare expenditure;

(f) increased exploitation of labour power through de-regulation of every kind, especially of the labour market; and lastly

(g) increased inequality between countries and within countries.

Wherever you are, in whichever direction you look, whether you are at work or at home, whether you are awake or asleep, you cannot get rid of monopoly. The top 5 companies typically account for 35-70% of total sales across a range of products, such is the concentration of production and centralisation of capital. And with each passing day, the monopolisation of the world economy is proceeding at a furious speed in one sector after another. From banking and insurance to defence and aviation; from oil, chemicals and the motor industry to mining, pharmaceuticals and utilities; from retail (supermarkets), food and tobacco to tourism, hotels and brewing; from engineering to TMTs (tele-communications, media and technology companies) and manufacturers of domestic appliances; from entertainment to professional firms of accountants, lawyers and consultants – all are being swallowed up in the whirlpool of consolidation, through mergers, takeovers and acquisitions, with the aim of acquiring a global reach and beating rivals in the cut-throat competition for markets, raw materials, cheap labour and avenues for investment.

Global reach is increasingly a condition of success. “

You have to be in the three main markets of America, Europe and south-east Asia now if you are to have the scale to allow investment in a technological change process that is more rapid than it ever was”,

so said Mr Nick Scheele, chairman of Ford Europe (see John Lloyd, ‘Cultivating the world’,

Financial Times,

20 September 2000). In the same article, the

Financial Times

also reports Sir (now Lord) John Browne of British Petroleum, which not so long ago took over Amoco and Arco – two big American oil companies – as saying: “

When I started in BP there was an international department. That’s inconceivable now. The whole thing is international.”

In a

“constant process of aggrandisement,”

to use Mr Lloyd’s rather apt expression, the

“global companies”,

as he prefers to call the giant monopolist enterprises, from being huge are “

striving to become more huge”

. The above observations of the most authoritative representatives of monopoly capitalism and their ideologues merely serve to furnish a most wonderful confirmation of the following words of V I Lenin, written 81 years ago almost to the day:

Private property based on the labour of the small proprietor, free competition, democracy, all the catchwords with which capitalists and their press deceive the workers and peasants – are things of the distant past. Capitalism has grown into a world system of colonial oppression and of financial strangulation of the overwhelming majority of the world by a handful of ‘advanced’ countries. And this ‘booty’ is shared between two or three powerful world plunderers armed to the teeth…”

(Preface to the French and German edition of

Imperialism the Highest Stage of Capitalism


Here are a few examples of current M&A volumes, and the consequent growing consolidation on a world scale. These examples are confined to the short, but representative, period between 1 January and 19 June 2000. For obvious, but unavoidable, reasons, there is bound to be repetition and duplication, as some of the deals appear under more than one heading, for example, under global as well as European, etc. Be that as it may, here are these examples [see tables 2,3,4,5]

Table 2

: Global M&A top ten deals (Jan 1 to Jun 19 2000



Value of deal ($m)

Time Warner (US)

American Online (US)


SmithKline Beecham (UK)

Glaxo Wellcome (UK)


Nortel Networks (Canada)

Shareholders (Canada)


Orange (Mannesmann) (UK)

France Telecom (France)


Seagram (Canada)

Vivendi (France)


Cable & Wireless HKT (Hong Kong)

Pacific Century Cyberworks (Hong Kong)


Bestfoods (US)

Unilever (UK)


Network Solutions (US)

VeriSign (US)


Allied Zurich (UK)

Zurich Allied (Switzerland)


Seat Pagine Gialle (Italy) (Italy)


Source: Thomson Financial Securities Data (reproduced in the Financial Times of 30 June 2000)

Table 3

: M&A top ten acquisitions of US companies (Jan 1 to Jun 19 2000)



Value of deal ($m)

Time Warner

America Online (US)



Unilever (UK)


Network Solutions

VeriSign (US)


Seagate Technology

Veritas Software (US)


Coastal Corp

El Paso Energy (US)


E-Tek Dynamics

JDS Uniphase (US)


Times Mirror

Tribune (US)



Terra Networks (Telefonica) (Spain)


Champion International

International Paper (US)


Nabisco Group Holdings

Carl Icahn


Source: Thomson Financial Securities Data (ibid).

Table 4

: M&A top ten acquisitions of European companies (Jan 1 to Jun 19 2000)



Value of deal ($m)

SmithKline Beecham (UK)

Glaxo Wellcome (UK)


Orange (Mannesmann) (UK)

France Telecom (France)


Allied Zurich (UK)

Zurich Allied (Switzerland)


Seat Pagine Gialle (Italy) (Italy)


Norwich Union (UK)



Credit Commercial de France (France)

HSBC Holdings (UK)


Mannesmann Atecs (Germany)

Investor Group (Germany)


Telia AB (Sweden)

Investors (Unknown)


AOL Europe, AOL Australia (Germany)

America Online (US)


Dordtsche Petroleum (Netherlands)

Investor group (Netherlands)


Source: Thomson Financial Securities Data (ibid.)

Table 5

: M&A top ten acquisitions of UK companies (Jan 1 to Jun 19 2000)



Value of deal ($m)

SmithKline Beecham (UK)

Glaxo Wellcome (UK)


Orange (Mannesmann) (UK)

France Telecom (France)


Allied Zurich (UK)

Zurich Allied (Switzerland)


Norwich Union (UK)



Compass Group

Granada Group (UK)


Robert Fleming Holdings

Chase Manhattan Corp. NY (US)



Leconport Estates (Multi-national)


Burmah Castrol

BP Amoco (UK)


Pearson Television

CLT-UFA (Cie Luxembourgeoise) (Lux)



Telewest Communications (UK)


Source: Thomson Financial Securities Data (ibid.)

Consolidation in Europe

Acquisitions have become common in France, Germany, Italy and other Continental nations that once scorned ‘Anglo-Saxon’ corporate finance. European mergers and acquisitions have reached more than $280bn in value already this year (including proposed deals), compared with $253bn last year and $148bn at the previous peak in the 1980s, according to Acquisitions Monthly, a specialist magazine. Just under half have been cross-border deals”

. Thus wrote the

Financial Times

on 14 October 1997. Staggering though the above valuations appeared then, they look rather puny as compared with the figures for 1999 and 2000. If European M&A as announced for 1999 amounted to $1,218 billion, in the year 2000, these totalled $1,478.5 billion. M&A activity is Europe is driven by the re-structuring under way in telecommunications, media and technology and in pharmaceuticals and chemicals. Prominent deals included the $78 billion merger of Glaxo Wellcome and Smith-Kline Beecham.

The UK economy is one of the most highly concentrated in the world. The only sectors in the UK left for further consolidation are media and telecoms, chemicals, oils, leisure and financial services. Among smaller sectors, for example food producers, consolidation is pretty well complete. Precisely for this reason the bigger companies are looking abroad for mega deals. In 1999 the UK was “

… the world’s most acquisitive country for cross-border business, fuelled by deals such as Zeneca’s merger with Astra, the Swedish Pharmaceutical Company”


Financial Times,

30 June 2000)


The introduction of the euro in January 1999 has created a pan-European market and, notwithstanding the fact that Britain is not a member of the single currency, “

corporate financiers increasingly regard pan-European consolidation as the biggest source of business”.

Economics & politics of monopoly capital

Writing in the

Financial Times

of 22 December 1998, Peter Martin, although in disagreement with it, is nevertheless obliged to report the following ‘conventional wisdom’:

The conventional wisdom is that today’s giant mergers reflect the irresistible force of globalisation. Just as the turn of the last century saw the creation of dominant enterprises on a


scale, so today’s mergers are giving birth to the companies that will achieve


domination… The most ambitious big company bosses are seizing the opportunity to become still bigger, in order to obtain the scale that will forever set them apart from lesser rivals. Merge now, or be consigned to ultimate oblivion”

(‘Gorging on mergers’).

This is how most bourgeois commentators perceive the frenzied monopolisation of the global economy – in terms of

global domination

. And yet, being the respectable bourgeois that they are, they are sure to declare Marxism-Leninism to be dead and buried. But how is the above perception, this “

conventional wisdom

” of the world of finance capital, any different from the perception expressed in the following words of V I Lenin:

Monopolist capitalist associations…”

, said Lenin,

“first divided the home market among themselves and obtained more or less complete possession of the industry of their own country. But under capitalism the home market is inevitably bound up with the foreign market. As the export of capital increased, and as the foreign and colonial connections and ‘spheres of influence’ of the big monopolist associations expanded in all ways, things ‘naturally’ gravitated towards an international agreement among these associations, and towards the formation of international cartels.

This is a new stage of world concentration of capital and production, incomparably higher than the preceding stages”


Imperialism, the highest stage of capitalism,


The creation of these international supermonopolies, which was already a fact in Lenin’s day, has proceeded relentlessly since then, as is only too evident from the figures cited above concerning M&A, and the resultant monopolisation and concentration of all sectors of the economy on a world scale.

The capitalists from the principal imperialist countries are frenetically busy dividing the world. And they are doing so “…

not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to obtain profits. And they divide it ‘in proportion to capital’, ‘in proportion to strength’, because there cannot be any other methods of division under commodity production and capitalism”




p. 71


Whatever the


, the


, the


, of the economic struggle between international monopolies is the division of the world. And as this division is based on the relative strength of the parties, in proportion to capital, it is but natural that changes in the strength, ever recurring, consequent upon the degree of economic and political development, should call forth a redivision and attempts, by means peaceful or otherwise, at such a redivision.

The entire epoch of monopoly capitalism/imperialism bears eloquent testimony to the fact that “

parallel to and in connection with”

certain relations which have grown up between capitalist monopolies, “

based on the economic division of the world”

there come to grow up certain relations “…

between political alliances, between states, on the basis of the territorial division of the world, of the struggle for colonies, of the ‘struggle for spheres of influence'”




Precisely for this reason the foreign policy of finance capital cannot but be a struggle of the principal imperialist powers for the economic and political division of the world, which no amount of sentimental, deceptive and downright fraudulent phrases, designed to hoodwink the gullible, about ‘humanitarianism’ can hide. Hilferding was a hundred times right when he said: “

Finance capital does not want liberty, it wants domination”

. And this, for the simple reason that under the conditions of private property, monopolies in the economy are incompatible with “

non-monopolist, non-violent, non-annexationist methods in politics”.

To think otherwise would amount to an attempt at the detachment of “

the politics of imperialism from its economics”

; it would be tantamount to “

…a slurring over and a blunting of the most profound contradictions of the latest stage of capitalism, instead of an exposure of their depth”;

the result would be the substitution of “

bourgeois reformism”

for Marxism-Leninism. (The words appearing in quotation marks are from Lenin’s

Imperialism, the highest stage of capitalism,

pp. 87-88).

The dominance of finance capital, far from diminishing, actually increases “

the differences in the rate of growth of the various parts of the world economy. Once the relation of forces is changed, what other solution of the contradictions can be found

under capitalism

than that of



” (



One must never forget even for a single moment the significance of what has just been said, if one wants to make any sense not only of the two world wars in the last century, which slaughtered 100 million human beings and destroyed property worth hundreds of billions of dollars, just to decide which coalition of slave-owning imperialist bandits was to have what share of the booty, but also the imperialist wars of aggression against North Korea (in which 4 million Koreans perished and suffered colossal devastation) and Vietnam (which also killed 4 million Vietnamese and caused equal material destruction), the US-imperialist-inspired Suharto coup in Indonesia with its one million victims, the Gulf War, the conflict in Palestine, the daily bombardment of Iraq, US aggression against Colombia, British imperialist attempts at recolonisation of Sierra Leone, the NATO war of aggression against tiny Yugoslavia, the continuing expansion of NATO, the expansion of the European Union and the latter’s attempt to create a European army as well as to expand the EU so as to enrol into it former socialist countries from eastern Europe as well as from the erstwhile USSR, not to speak of the frenzied development and production by the leading imperialist countries of the latest killing machines that technology can provide.

Consolidation, both with-in and across national boundaries, is proceeding at an ever-increasing tempo – with the number of major players in each sector of the economy shrinking. Each wave of mergers and acquisitions merely sparks off a new one, which in turn becomes a prelude to yet further consolidation. According to the WIR 1998, the total number of major global car makers is set to decline from the present 15 to between 5 and 10 by 2010. In many other industries this has already happened or is on the verge of doing so. For instance, in the pharmaceutical industry, which has still some distance to travel along the road of consolidation, many markets are now controlled by a small number of firms, with seven corporations having sales of over $10 billion each, accounting for a quarter of the $300 billion pharmaceutical market (WIR1998).

One may gauge the scale of cross-border M&A activity from the fact that in just the first seven months of 1999, foreigners spent a huge $242 billion on taking over US companies. This figure represented a quarter of the total for the seven months under consideration. BP Amoco’s purchase of Arco and Vodafone’s acquisition of AirTouch between them cost over $100 billion. It is not just the American companies being taken over. Foreign purchasers accounted for over 40% of the M&A deals in Britain. Even Germany, not so long ago considered closed “

has seen its top companies acquiring and being acquired as they enter world markets in a big way, and insular Spain saw its oil giant, Repsol, leap into the international game when it spent $13 billion on Argentina’s YPF”

(Irwin Stelzer,

Sunday Times,

22 August 1999).

Germany and the ferocious battle for

European capitalism

Behind the wave of consolidation – of mergers, acquisitions, re-structurings, divestments and alliances – sweeping across Europe, lies the accelerating industrial transformation of Europe’s biggest economy, that of Germany. This transformation is both driven by, and in turn drives, global competition, deregulation, pressure on management for ‘shareholder value’ (i.e., maximisation of profit), opportunities for cost-cutting made possible through size, the need to get bigger as a defence against predators, and against declining prices through competition, the introduction of the euro and the creation of a pan-European market. Heads of German businesses, such as Ron Sommer of Deutsche Telekom and Ulrich Hartmann of the giant utility Veba, representing a generation of ruthless managers who are in the ascendance, have embarked upon a drive against their European and American rivals through a mixture of consolidation at home and acquisitions abroad.

This year alone,”

wrote the

Sunday Times

of 28 August 1999, “

the giants of German business have announced seven mergers and acquisitions. The Germans are latecomers to globalisation but they are showing all the zeal of coverts to the faith”

(Michael Wood, ‘Germany on the march’)

Deutsche Telekom’s acquisition of the British One2One, Deutsche Bank’s capture of Bankers Trust of America to create one of the half-dozen biggest banks in the world, the merger of Daimler and America’s Chrysler (in fact a takeover of the latter by the former), the news of which stunned the business world in the summer of 1998 when the planned merger was announced, to create the world’s third biggest car manufacturer, and the successful campaign by Hoechst to persuade Rhône-Poulenc of France “

to become part of a German-dominated life-sciences giant with the globally friendly name of Aventis”



), all these deals point to the success of German monopoly capital in the field of international M&A activity. At home, Veba has merged with the Bavarian-based Viab to create Europe’s third biggest utilities conglomerate with a market capitalisation of £30 billion.

With disarming candour, and in terms almost Leninist, Dieter Zetsche, Daimler-Chrysler’s finance director, stated: “

there are now no new markets left to discover in the industry. We are fighting each other to win. This is what makes it so enjoyable”

(reported in the

Sunday Times,

29 August 1999).

The ground for this frenzied consolidation at home and abroad was prepared by German monopoly capital’s assault on the workplace aimed at breaking down what the bourgeoisie and its hod-carriers, namely, its intellectual representatives, call “

old-style, inflexible working practices”,

with a view to cost cutting and boosting the productivity of labour (increasing the extraction of surplus value). Let the

Financial Times

of 21 November 1998 speak of this transformation:

By embarking on such a transformation, corporate Germany has jolted the country’s traditional cosy relationship between labour and capital; And it is doing much to throw off the image of a conservative nation more concerned with retaining the comfortable vestiges of its post-war social-market economy than with modernising to compete in a global economy.

To grasp the scale of transformation, it is necessary to understand what lies behind it. Perhaps the biggest revolution has taken place within Germany’s factories, where companies have introduced an array of flexible working practices that would have been unthinkable a decade ago. Workers, especially in the engineering and car industries, have accepted longer working hours and more varied shift patterns. Several companies now use ‘credit time accounts’ that allow managers to increase working hours during periods of strong demand, in return for time off later in the year. ‘Six years ago, the Japanese auto industry was the benchmark, then it was the US auto sector that restructured, and now today we are on top,’ says the chief economist of one German car group”

(Graham Bowley, ‘Germany’s new shop window’).

With the disappearance of the USSR and the east European socialist countries, and the consequent increasing intensification of inter-imperialist contradictions, German monopoly capital has definitely decided to banish the pursuit of social stability. From now on the maximisation of profit and assuring a prominent place at the top table in the imperialist banqueting hall is going to be its priority. In a joint study with Sheffield University, Reinhardt Schmidt, professor of economics at Halle University near Leipzig, says that “…

the men who sit on German boards

[only German boards?]

all fear that if they do not make it into the top five global companies in their market they will not be competitive in the future”

(reported in the

Sunday Times,

29 August 1999).

Writing in connection with the hostile bids by Olivetti for Telecom Italia, Banque Nationale de Paris for Société Générale and Paribas (thus rudely interrupting the consummation of the latter two’s own friendly merger), the battle royal between Bernard Arnault and François Penault, two French tycoons, for the control of Gucci (the Italian fashion house listed in Amsterdam), and the two unsolicited bids by the two Italian banks (Unito Credito and San Paolo) for two other Italian banks (Banca Commerciale Italiana and Banca di Roma), all of which bids came within the first 100 days of the launch of the euro on 1 January 1999, the

Financial Times


The battle for European capitalism has begun in earnest. In the three months since the single currency was launched, the sleepy world of continental European corporate finance has burst into frenetic activity. The speed with which companies have adopted previously foreign techniques, notably the hostile takeover, has been astonishing. So has the ferocity of the resulting action.”

(Hugo Dixon, ‘Europe’s new frontier’,

Financial Times,

16 April 1999).

And yet, the bids witnessed during those first 100 days pale into insignificance in comparison with what has happened since and what is likely to be the case in the not-too-distant future. According to the

Financial Times

of 9 May 2000, European companies were the most active in M&A, investing nearly $500 billion in foreign enterprises and selling about $350 billion in equity to foreign investors. Of this, M&A purchases by UK companies, amounting to $210 billion, accounted for 40% of the EU total, “

pushing the US out of the top slot to make the UK the world’s single largest overseas M&A investor”

in 1999. But the US companies were the favourite targets, with $233 billion in M&A sales in 1999.

From now on, what the Japanese call

tekitai teki baishu

(bid by the enemy) is going to be the norm, rather than the exception, for European monopoly capital too. This was clearly signalled by Vodafone’s conquest of Mannesmann.


Asia too has not escaped the wave of consolidation sweeping across the world. Japan, where M&A activity was relatively underdeveloped in the past, is showing all the signs of catching up. From $17.5 billion in 1998, the total value of deals rose to $150 billion in 1999. And this trend is expected to continue and reshape Japan’s corporate face, for Japan has some way to go as the deals represent only 6% of market capitalisation as against 13% in the US and 18% in Europe. The year 2000 witnessed the opening of the floodgates of mergers and acquisitions in Asia, with the volume of deals doubling that of 1999. While the deals announced during 2000 hit a record $187 billion, those closed reached $144 billion (see the

Financial Times

of 30 June 2000 and 30 January 2001).

That Japan, where mergers and acquisitions are still considered in some circles as a shameful betrayal of the employees by the management, should be in the grip of consolidation, says something about the strength of the economic compulsion driving the M&A activity worldwide. Even hostile bids by foreigners, as shown by the controversial takeover by Cable & Wireless of the UK of IDC, the long-distance telephone operator, are no longer taboo.

Table 6

: Asian M&As – top five Asian M&A deals, 2000





Value of deal ($bn)


Dai-ichi Kangyo Bank


Fuji Bank



Cable & Wireless HKT


Pacific Century Cyberworks



Beijing Mobile


China Mobile (Hong Kong)



Industrial Bank of Japan


Fuji Bank







Banking capital

The concentration of production; the monopoly arising therefrom; the merging or coalescence of banking with industry – this is the history of the rise of finance-capital and what gives the term ‘finance-capital’ its content”


Imperialism – the Highest Stage of Capitalism).

“As banking develops and becomes concentrated in a small number of establishments”, says Lenin,

“the banks grow from modest middlemen into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries. THIS TRANSFORMATION OF NUMEROUS MODEST MIDDLEMEN INTO A HANDFUL OF MONOPOLISTS IS ONE OF THE FUNDAMENTAL PROCESSES IN THE GROWTH OF CAPITALISM INTO CAPITALIST IMPERIALISM” (

Lenin, p.30 – emphasis added).

The concentration of banking, even in Lenin’s day, compelled banking specialists, who regarded economic questions “

from a standpoint which does not in the least exceed the bounds of the most moderate and cautious bourgeois reformism,”

(p.35) to conclude that Germany was governed (in 1914) by 300 financial magnates, and that this number was forever declining.

The concentration of banking capital has accelerated at breakneck speed. If in 1997 31 banks had combined assets of 10.4 trillion, today the top 10 banks in the world have combined assets of more than $7.5 trillion.

As in industry, so in banking, the epoch of imperialism is characterised by growing concentration and centralisation. With each passing decade, with the growth in this centralisation of money capital, the number of banks has dwindled at an increasingly fast tempo. In the three decades from 1890 to 1920, the number of banks in Britain declined by four-fifths from 104 to 20. What is more, control of the total deposit and current accounts passed into fewer hands. Whereas in 1900 twenty-four banks accounted for 68% of all the joint-stock deposits, in 1920, five banks accounted for 86% of all such deposits.

In 1997, the banking scene in Britain was dominated by what even the bourgeois economists call ‘the gang of four’, that is to say, Barclays, NatWest, the Midland and Lloyds. If in 1953, the then big five between them made profits of almost


10 million, by 1997 each of the big five (five because since shedding its mutual status the Abbey National in effect became the fifth largest bank and others, such as the Halifax soon followed suit) were forecast by the

Independent on Sunday

to make a pre-tax profit well in excess of

£1 billion (‘Banks to

report £10 billion record profits’).

Note that since 1997 NatWest has been taken over by the Royal Bank of Scotland and Midland by HSBC and profits today are £10 billion.

Consolidation of banking in the US

At 10 a.m. on Monday 12 October 1998 in the Hilton banquet hall of New York’s Waldorf-Astoria Hotel it was announced that the Bank of America had merged with NationsBank to become one of the US’s largest banks. Having been told this, the Wall Street analysts were marched across the corridor to the equally dazzling Empire banquet room to learn that Bank One and First Chicago had merged to become the fifth largest bank in the US. These deals were worth $60 billion and $30 billion respectively.

The above two announcements, within two hours in the same hotel, emphasised

“the almost manic pace of consolidation of America’s fragmented banking industry. Only a week earlier, the biggest banking deal of all had been announced, between Travelers and Citicorp”



18 April 1998).

March of the banking behemoths

These deals are merely the latest in a trend which has been gathering pace for the past 20 years. If in 1987 there were 13,723 commercial banks in the US, by the end of 1997 there were just 9,143.

The most common complaint from customers in the US is that they can’t keep track of their bank’s name, such is the speed of consolidation.

Most analysts reckon that when the dust settles in 10 years or so, there will be a handful of nationwide banks and a few thousand small ones”




If the consolidation in the US was to reach the same proportions of concentration as in the UK or Canada, which is by no means impossible, there might be left no more than 500 banks in all in he US, with half a dozen truly national giants with a huge national and international financial clout.

The above deals represent an attempt to create truly national coast-to-coast banking giants, operating from all areas, providing unprecedented services, and having an unprecedented reach. The merged BankAmerica and NationsBank have 8% of all bank accounts in the country, with 29 million clients spread across 22 states, while BankOne and First Chicago will account for 4% of bank deposits and operate in 14 states.

Just in case someone gets it into their heads that the economies of scale resulting from mergers are routinely passed on to the customers, a terrible disappointment awaits any such person. For on average the US big banks charge between 16-20% more than small ones. American bank customers are liable to a range of fees that, in the words of one financial journalist, “

make British banks seem almost charitable”

– and this is saying something. As the banks grow bigger, they gain in the confidence that they can get away with whatever charges they fancy levying on their customers. Besides, small businesses suffer owing to the disinclination of big banks to advance loans to them.

Table 7

: 12 largest US bank deals from Dec 1995 to the beginning of June 1999



Deal value($bn)

Date announced

First Union

CoreStates Financial


Nov 97


Barnett Banks


Aug 97

Wells Fargo

First Interstate


Jan 96


Mercantile Bancorp


Apr 99


Boatmen’s Bancshares


Aug 96

Sun Trust Banks

Crestar Financial


Jul 98

Deutsche Bank

Bankers Trust


Nov 98

First Bank System US



Mar 97

National City

First of America


Dec 97


First America


Jun 99

Bank of America*



Apr 98

Bank One*

First Chicago*


Apr 98




Apr 98

*These mergers were mergers of equals

Source: Financial Times, 8 June 1999

Consolidation of Banking in Japan

August 1999

Fuji Bank, Industrial Bank of Japan and Dai-Ichi Kangyo announced their merger, with assets totalling $1,480.5 billion – the world’s largest financial group, the world’s first trillion dollar bank.

[see endnote 1]

7 October 1999

Asahi Bank and Tokai Bank, creating Japan’s third largest banking group, with $549 billion of assets.

14 March 2000

The group merged with Sanwa, creating the world’s second trillion-dollar bank, with assets of $1,055 billion.

March 2000

Sumitomo and Sakura merged to form a bank with assets of $960 billion, leaving the poor bank of Tokyo – Mitsubishi – in the fourth position with assets of $691 billion.

Consequent upon this dramatic consolidation in Japanese banking, the number of banking groups has fallen to 8 from 21 three years ago.

As a matter of fact, this furious consolidation in the Japanese banking sector means that there are really only four giant banks in this sector, namely:

IBJ-Fuji-DKB (now known as Mizuho);

Asahi-Tokai-Sanwa group;

Sumitomo-Sakura group;

Bank of Tokyo-Mitsubishi.

In the wake of the announcement by Sumitomo and Sakura (in October 1999) that they were preparing to integrate their operations, through a merger in 2002, to create the world’s second largest bank in terms of assets, Gillian Tet and Naoko Nakamae made this penetrating and colourful observation in the

Financial Times

of 15 October 1999:

This autumn, the mood in Japan’s banking has seemed as edgy as the closing minutes of a teenage disco.

“While many banking players have been cuddling up, the rest have been eyeing each other anxiously. For none of the unattached want to look unattractive when the music stops – let alone lose their favourite partner to a rival. ‘The pressure is rising’, quipped one Japanese banker recently.” (‘Preparing for the last tango in Tokyo’).

The authors added that with the announcement of the above merger “

…the pressure on loners edged even higher.”

Consolidation in Europe

Banco Central Hispanoamericano acquired Banco Santander for $11.6 billion.

Banque Nationale de Paris acquired Paribas for $13 billion.

Swiss Bank Corporation and Union Bank of Switzerland merged in a deal worth £35 billion ($59 billion).

At the end of 1997, Merita, Finland’s largest bank, announced a £6.5 billion merger with Sweden’s Nordbanken, to create the largest financial services group in the Nordic region, and Nordea of Sweden acquired Norway’s Christiana Bank. And Den Danske Bank bought RealDenmark.

In February 2001 two Swedish banks, SEB and FS-Banken announced a $15.9 billion merger in order to provide them with a strong platform for European expansion. The new bank will be called SEB Swedbank.

A month later, in March, Allianz successfully bid for Dresdner. Here are a few details of this important deal.

At the end of March this year, Allianz, the Munich insurer, made a successful £15 billion (€24 billion) bid for Dresdner, Germany’s third largest bank. At a stroke this deal took a step in the direction of simplifying the intricate web of cross-shareholdings that has shaped German business and created two giant bancassurance groups in Europe’s largest market – “

an intimidating prospect for other financial services groups in Europe”


Financial Times,

30 March 2001).

Presently the Munich insurance (Allianz) group owns 21.4% of Dresdner, 17.4% of Hypovereinsbank, the country’s second largest, and 5.6% of Deutsche Bank, Germany’s largest. All three of them in turn have stakes in Allianz.

Munich Re, the world’s biggest insurer, owns 5.9% of Dresdner, 5% of Hypovereinsbank and a smaller percentage of Deutsche Bank – all three of them in turn have stakes in Munich Re.

A four-way swap of the cross-shareholdings between Allianz, Munich Re, Dresdener and Hypovereinsbank would enable Allianz to purchase the remaining shares in Dresdner that it does not own and allow Munich Re to inrease its holdings in Hypovereinsbank. The latter, which merged last year with Bank Austria to create Europe’s third largest group by assets and twelfth by market capitalisation, is possessed of the biggest banking network in Central Europe, straddling across Germany, Austria, Poland, Hungary, the Czech Republic, Slovakia and Croatia. The creation of these two powerful bancassurance groups, along with Deutsche Bank, which has already become an international bank with a strong investment arm, places German finance capital in an exceptionally strong position to challenge its imperialist rivals and forcing the latter to reconsider their strategies,

Investment banks

It goes without saying that with all this frantic activity in the field of M&A, the investment banks, parasites par excellence, and rentiers of rentiers, had a bonanza, as each deal bring huge fees for them. This exclusive club of a mere dozen, mainly Wall Street, sharks is dominated by just three, each of whom advised in 1999 on deals with a combined value of more than $1 trillion:

A by-product of the frenzy of activity, valued at $3,435bn by Thomson Financial Securities Data in 1999, was the creation of the Trillionaires’ Club. Three investment banks – Goldman Sachs, Morgan Stanley Dean Witter, and Merrill Lynch – each advised on deals in 1999 with a cumulative value of more than $1trillion ($1,000bn)

” (

Financial Times,

28 January 2000).

One of these three parasites was involved in 88% of all mergers and takeovers in 1999 worth more than $10 billion. And it is set to continue this way as the deals of today are not merely large but also increasingly sophisticated, requiring expertise which only the top few investment banks possess:


It will continue to be an oligopoly as the biggest companies in the world, which are the clients that the three of us want to have, demand a commitment of resource and talent that is very difficult for smaller firms to mount; says Jack Levy, global head of M&A at Merrill Lynch”




Precisely for this reason, if no other, the investment banks themselves are not immune from the process of consolidation. The smaller ones must merge, grow bigger and acquire a global reach or perish, for the chief beneficiaries of global M&A activity, equity underwriting and bond issuance (in 2000, bond issuance hit the all-time high of $1,430 billion), will doubtless be the investment banks possessing a global reach. Hardly a surprise, then, that Deutsche Bank took over Bankers Trust, which owned second-tier investment bank and that the three Lazard houses merged to become one global operation; that Citicorp acquired Schroders’ investment banking arm for $1.35 billion; that UBS reached across the Atlantic to buy, in July 2000, PaineWebber, with Credit Suisse following suit in August with the acquisition of Donaldson, Lufkin and Jenrette; that, in the year’s biggest banking deal, Chase Manhattan bought JP Morgan for a whacking $32 billion in September.

Table 8

: Top 10 world banks (by total assets), September 2000



Assets ($bn)










Bank of Tokyo-Mitsubishi









Bank of America



Deutsche Bank






HSBC Holdings



(Source: Reuters Securities 3000, reproduced in the Financial Times of 28 September 2000)

Export of capital

We must now deal with the question of export of capital.

Typical of the old capitalism, when free competition held undivided sway, was the export of GOODS. Typical of the latest stage of capitalism, when the monopolies rule, is the export of CAPITAL

” (Lenin,

Imperialism, the Highest Stage of Capitalism,


The separation of the ownership of capital from the application of capital to production, of money capital from industrial capital (and consequently of the rentier from the entrepreneur), which is characteristic of capitalism, reaches unprecedented proportions in the era of imperialism – the era of the dominance of finance capital, with its predominance of the rentier and of the financial oligarchy.

The latest stage of capitalism is characterised not only by the emergence of monopolistic associations of capitalists in all the advanced capitalist countries, but also by the emergence of the “

monopolist position of a few very rich countries, in which the accumulation of capital has reached gigantic proportions


giving rise to “

an enormous ‘surplus of capital’

” (Lenin,


p. 60).

And this “…

small number of financially ‘powerful’ states stand out among all the rest … In one way or another, nearly the whole of the rest of the world is more or less the debtor to and tributary of these international banker countries, these … pillars of world finance capital”


Imperialism, the Highest Stage of Capitalism,

pp. 57-59)”.

The necessity for exporting capital arises because in a small number of countries “

capitalism has become ‘overripe’ and capital cannot find a field for ‘profitable’ investment”



p.60). Hence the need to export this “

surplus of capital


Of course, there would be no question of surplus of capital if capitalism could raise the living standards of the masses – an argument all too frequently resorted to by the petty-bourgeois critics of capitalism. But capitalism would not be capitalism if it did such things. Capitalism is in the business of making a profit. It therefore exports ‘surplus capital’ to places where an opportunity for making such a profit presents itself.

The export of capital has accelerated enormously since Lenin’s day, especially since the end of the Second World War. In the 13 years between 1983 and 1995, according to

The Economist

of 24 June 1995, Foreign Direct Investment (FDI) grew five times faster than trade, and ten times faster than world output.

Although benignly called

Transnational Corporations as Engines of Growth,

the UN’s World Investment Report (WIR) of 1992 supplies us with an abundance of statistics which enable us to discern the furious attempts being made by the imperialist powers to redivide the world through the means of FDI by MNCs based in a handful of imperialist countries.

UK was the world’s biggest overseas investor in 1999, with outflows of $199 billion, and the US was the biggest recipient with inflows of $276 billion. Most of these outflows between imperialist countries, accounted for as they are by M&A activity, do not go towards creating new productive facility. Far from creating any new employment opportunities, they only make for intensified rationalisation, cost cutting and mass redundancies.

In a furious bid to counter falling profits in the imperialist countries, the MNCs from the main imperialist countries are investing heavily in the developing countries ($208 billion in 1999 – up from $178 billion in 1998). Of the $1,000 billion FDI in 2000, approximately one quarter went to the developing countries. The importance of the developing countries as an avenue for imperialist export of capital, and thus for enhancing the latter’s profitability, may be judged from the fact that, whereas during the second half of the 1980s net private capital flows into the developing world were running at an annual average rate of $15 billion, by 1996 they had risen to a peak level of $241 billion. Under the impact of the turmoil in Asia, which gripped the tiger economies, and from which they still have not fully recovered, FDI flows to the developing countries fell sharply to about $150 billion in 1997, but have recovered somewhat since then (see the

Financial Times

of 15 August 1998). Approximately one third of the entire FDI global stock is accounted for by the developing countries; and between a quarter and a third of all FDI flows found their way into the developing countries over the past many years. While the share of trade in the global GDP has remained broadly constant since 1980, that of FDI flows has risen nearly two and a half times. According to the

Financial Times

of 4 September 1998, global FDI stock rose from 10% to 21% of global GDP between 1980 and 1996, thus demonstrating that global integration “

is being accelerated more through investment

[i.e., through export of capital]

than trade

[i.e., export of commodities].” This is perfectly true and a confirmation of Lenin’s proposition that increased export of capital (as opposed to commodities) is one of the chief characteristics of imperialism. The 60,000 MNCs produce a quarter of world output. Their foreign affiliates notched up sales of $11 trillion in 1998 and $14 trillion in 1999, compared with world exports of about $7 trillion – once again emphasising the importance of production (and therefore of export of capital) rather than trade in reaching foreign markets.

It is estimated that the accumulated stock of FDI in 1997, and belonging to MNCs and their foreign affiliates, amounted to $3,500 billion (more than twice the sum of $1.7 trillion it was in 1990) – 90% of it accounted for by the MNCs from the rich imperialist countries, of which 69% from just 5 imperialist countries, namely, the US, UK, Germany, Japan and France. This handful of 5 usurer countries has dominated the field for several decades, although their relative positions have been subject to change. Concentration goes even further. Just 25 companies from each of the imperialist countries account for over half of their respective countries’ FDI stock. And 40% of world trade is accounted for by a mere 350 monopoly corporations.

As far as the FDI to developing countries is concerned, most of it (two-thirds) goes to just a handful of countries – China, Singapore, Malaysia, Thailand, India, Mexico, Brazil, Argentina, Egypt, Hong Kong and Taiwan (the last two ought to be considered as part of China). China alone has attracted $45 billion in 1998 and $35 billion in 1999 by way of FDI inflows.

If the ability to attract international capital flows were a beauty contest, Asia would be awarded the title of Miss World every year,

so observed Mr Anthony Rowley in

The Banker.

The rates of return on FDI of the imperialist countries in third-world countries were estimated in the mid-1990s at 17% – twice the rate of return in the imperialist countries. As a result, there has been a marked acceleration in the movement of manufacturing and service industries out of the countries with higher labour costs to third-world countries with low wage costs. Not surprisingly, the


of 2 November 1996, using the figures concerning wage rates in different countries produced by Morgan Stanley, the American investment bank, asks: “

Whom would you rather employ: one German worker, two Americans, five Taiwanese or 128 Chinamen?

All this is producing misery for millions upon millions of workers in the imperialist and the oppressed countries alike, for all the benefits of technology and the colossal gains in productivity of labour to the geniuses of financial manipulation. In the words of Marx, this “

Accumulation of wealth at one pole”,

only on an incomparably larger scale than in Marx’s day, is “

… at the same time accumulation of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital

” (


Vol I).

Unless and until the proletariat and the oppressed people overthrow imperialism, this will be their lot.

Dominance of finance capital and corruption

The influence, the power, the dominance of gigantic monopolies frightens even some bourgeois intellectuals, who are otherwise committed body and soul to defend capitalism. One such person is a certain Michael Pinto-Duschinsky. Writing in

The Times

of 12 May 1999, this is what he has to say on the sinister influence of mega-monopolies:

…I have, recently, come to realise an uncomfortable truth: it is not necessary to be paranoid or Marxist to be deeply suspicious of big banks and industrial behemoths. In fact, it is the urgent duty of democrats to recognise that monopolists and multinationals are now a


threat to our freedom …”

Forgetting, or being ignorant of the fact that “

free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly”



p.20), being oblivious of the fact that free market competition capitalism long ago gave way to its opposite, monopoly, Mr Pinto-Duschinsky complains that these “

…leviathans do not work by the rules of the free-market. They are imperial. And they are almost beyond democratic control … voters remain in the dark about the challenges they pose.”

He makes his points by reference to Germany, to Deutsche Bank in particular. In this he is motivated by some considerations which are not relevant to our argument. That, however, in no way detracts from the validity of his general argument.

Such giants

[Deutsche Bank and similar monopolies]”, he says, “

…prevail upon any government by simply threatening to move their investments and their factories to other countries. Such a threat was sufficient to ensure the ousting of Oskar Lafontaine as Germany’s Finance Minister. Institutions such as Deutsche have further sources of subtler influence. Their salaries and directorships are a magnet for former politicians and civil servants. A hint to a minister or mandarin about possible future employment can do wonders in securing co-operation”

(‘Giants that make nations tremble’).

And yet, according to this gentry, Marxism-Leninism is dead! But facts are stubborn things. And the fact is that a “

monopoly, once it is formed and controls thousands of millions, inevitably penetrates every sphere of public life, regardless of the form of government and all other ‘details'”




The fact is that “

Monopoly hews a path for itself everywhere without scruple as to the means”

. The fact is that

“Imperialism is the epoch of finance capital and of monopolies which introduce everywhere the striving for domination, not for freedom. Whatever the political system the result of these tendencies is everywhere reaction and an extreme intensification of antagonisms in this field”.

The fact is that “

Finance capital does not want liberty, it wants domination”,

and that “

Dominance, and violence that is associated with it, such are the relationships that are typical of the latest phase of capitalist development”



pp. 28, 80, 113-114 respectively).

There is no going back to the old free competition capitalism, after which the petty-bourgeois critics of imperialism are forever hankering in the most reactionary manner. Humanity can only go forward, through proletarian revolution and the overthrow of imperialism, on the basis of the technical achievements and the concentration and socialisation of production achieved in the era of imperialism.

Third world debt

It would be worth our while in this context to say a few words about the third world debt. From being $70 billion in 1971, the third-world debt has grown to the gargantuan sum of $2.3 trillion. The third world pays $233 billion a year to service this debt, while receiving $55 billion a year in development aid.

Some of the poorest countries in the world have literally to take food out of the mouths of their children and let them starve to death in order to be able to service this debt. Typical of these countries is Uganda, which in 1995 spent only $2.60 per person on health but $30 per person on debt service. 13 million children in the developing countries die each year of preventable and malnutrition-related diseases, which is the equivalent of 2½ times the notorious Nazi holocaust.

All this, however, does not prevent the hired servants of the bourgeoisie from claiming that “…

a dynamic market economy … is the only possible basis for human advance

” (Martin Wolf,

Financial Times,

15 September 1999).

Poverty and riches

The monopoly stage of capitalism brings on the scene a handful of usurer countries, which export capital to, and exploit, the whole of the rest of the world. This process, while accelerating the development of capitalism in the countries to which capital is exported, and thus “

expanding and deepening the further development of capitalism throughout the world”



, p.62), is nonetheless accompanied by increasing inequality between the imperialist and the oppressed countries, on the one hand, and between the rich and the poor in both the imperialist and the oppressed countries on the other hand.

The ratio in living standards between the very richest and poorest countries, reported in

Human Development Report,

Summer 1999:

There are scores of countries with a GDP of a mere $300 a year per capita, and a tiny group of imperialist countries with $25,000!

Although global GDP, having increased ninefold during the last 50 years, today stands at $30,000 billion, the GDP of the Group of Seven countries, with a population of only 685 million, adds up to $20 trillion. In other words, a mere 12% of the world’s population, living in the richest seven imperialist countries, consumes two-thirds of global income, whereas 181 countries, with a combined population of over 5 billion, have a combined income of just $10 trillion.

If the richest 20% of the world’s population living in the richest countries accounts for 86% of global income, the poorest 20%, living in the poorest and oppressed nations, account for an insignificant 1.3%; 1.3 billion people, inhabitants almost entirely of poor countries, live in absolute poverty on less than $1 a day, whereas 3 billion people live on less than $2 a day. Of the 4.4 billion people living in the so-called Third World (i.e., former colonies and oppressed nations), three-quarters (3.3 billion) don’t have their basic needs satisfied; a quarter (1.1 billion) have no access to safe drinking water; a quarter have inadequate housing; nearly a fifth (900 million) go hungry; nearly a fifth are illiterate; and just under half (2 billion) are without electricity.

During her visit to the Zimbabwean capital, Harare, in the summer of 1999, Liz Mason, the head of the regional secretariat of the World Health Organisation (WHO), said that 12 million children die in developing countries every year before they reach the age of five. She told the Zimbabwe News Agency that seven out of ten such deaths were caused by respiratory infections, diarrhoea, measles, malaria and malnutrition. Most of these children, she added, died during their first year of life.

Of the 33 million AIDS sufferers in the world, 95% live in the poor countries, Africa alone accounting for 23 million (70%) of those who are HIV positive.

And the solutions?

These are the ‘solutions’ put forward by the best brains among bourgeois journalism, at the height of imperialism’s decadence:

1. a United Nations foreign legion

2. improved governance, with donors paying for, and recruiting, judges, officials, soldiers, police, medical personnel and teachers – “

such operations could be mounted under UN auspices, in some kind of protectorate”

(M Wolf,

Financial Times,

14 July 1999)

3. More liberal trade, openness to FDI and more privatisations

4. This means some sacrifice of independence – so be it.

In other words, back to colonialism.

In 1997, the wealth of the world’s 358 billionaires exceeds the combined annual incomes of countries which are home to nearly half the world’s people. These 358 held between them $760 billion, a sum equal to the wealth of 2.5 billion of the world’s poorest people, representing 45% of the global population.

Now the world’s top 200 billionaires have $1.135 trillion, having more than doubled from $440 billion in 1994. The assets of the three top billionaires were more than the GDP of all the least developed countries.

In 1990-1993 average incomes fell by a fifth or more in 21 countries, mostly in eastern Europe and the CIS.

In 70 countries average incomes are less than they were in 1980, and in 43 less than in 1970.

In Africa, Aids has cut life expectancy from 62 years to 47.

Per capita water supply in developing countries has dropped by two-thirds since 1970.

World military spending is $778 billion.

Poverty in rich countries

Sections of the population in the rich countries are not immune either from the ravages of the ‘normal’ working of capitalism. Here are a few facts.

Over 100 million people in OECD countries live below the poverty line. Over 40 million of these are unemployed.

The annual expenditure on narcotics alone exceeds the combined GDP of 80 developing countries.

40 million US citizens have no health insurance and one adult out of five is functionally illiterate.

According to a US agricultural department study released in October 1999, 9.7% of US households were “

food insecure”

(in plain language – suffered from hunger) during the 3-year period between 1996 and 1998 – this at a time of the greatest post-Second World War boom in the US, the richest and the most powerful imperialist country and self-appointed leader of the ‘free’ world.

In Britain, another powerful and rich imperialist country, 12 million people, out of a population of 56 million, live in “

relative poverty”

, i.e., on incomes of less than half the average household income. Of these 12 million, 4 million are children.

Capitalist restoration in the eastern bloc

It had been the constant refrain of the bourgeoisie that socialism in the former USSR and other east European countries had deprived the peoples of these countries of their freedom and shackled their economic development. And, therefore, only a return to (bourgeois) democracy and the ‘free market’ could guarantee them unprecedented prosperity. And the results of this restoration? Take the former USSR: production, as well as per capita income, has more than halved; there has been a precipitous fall in living standards; male life expectancy fell by a spectacular 6 years (from 64 to 58) between 1990 and 1994; a free health service, the education system, with its proliferation of creches, kindergartens and holiday camps, which were a source of legitimate pride to the Soviet people, have all but disappeared. From being the second largest, the Russian eocnomy has been reduced to the size of the economy of the tiny Netherlands; unemployment, which had not been seen in the USSR since 1932, is rampant, with an estimated 40 million unemployed in the territory of the former USSR. The wealth produced by the honest toil of the Soviet working class has been stolen by a handful of kleptocrats and mafiosi, while the mass of people are reduced to penury; fraternal harmony and friendship have given way to fratricidal warfare; prostitution, alcoholism, drug abuse and drug traffiicking, organised and violent street crime, homelessness, and such other concomitants of the ‘free market’ have assumed epidemic proportions. In summary, a once great and mighty socialist USSR has been reduced to a third-rate capitalist country, burdened with a foreign debt to the tune of nearly $200 billion, on the one hand, and bleeding white through capital flight of approximately $300 billion over the last 10 years, on the other hand.

According to data released in the autumn of 1999, of the 146 million Russians today, 51.7 million, constituting 35.3% of the population, live below the official subsistence minimum and its population continues to decline at an alarming rate of approximately a million a year through a mixture of declining birth and increasing death rates.

And Russia’s experience since the restoration of capitalism is repeated in all the countries of eastern Europe, with women and children being the worst sufferers. According to a UNICEF report, released in November 1999, about 20% of the 150 million children from east Europe and the former USSR have become homeless. And, according to the 1999 HDR, sexual slavery has returned to these countries with a vengeance. Says the Report: “

An estimated 500,000 women are trafficked each year from Eastern Europe and the CIS (former republics of the Soviet Union) to Western Europe. An estimated 15,000 Russians and East Europeans work in Germany’s red light districts. In the Netherlands 57% of the trafficked women are under 21″.

So much, then, for the wonderful freedom and prosperity which were supposed to have been delivered by the restoration of capitalism Today the peoples of these countries, in particular those of the former USSR, who have witnessed, taken part in, and benefited from, the glorious achievements of socialism, are justly seething with anger. It is only a question of time before they overthrow the rule of their kleptocracies, which lack all legitimacy, and wipe off the shame of capitalist restoration and misery from the face of their societies. Thus the contradiction between the thieving fraternity who rule these countries and the masses of people is becoming more acute by the day.

Division of the world among imperialist countries

It is beyond doubt

“, said Lenin, “

that capitalism’s transition to the stage of monopoly capitalism, to finance capital,

is connected

with the intensification of the struggle for partitioning the world

” (

Imperialism, the highest stage of capitalism


It is undoubtedly the case that the end of the 19


and the beginning of the 20


century (precisely the period which marked the transition of pre-monopoly capitalism to the monopoly stage of its development) saw tremendous intensification of the struggle among the imperialist power for the conquest of those parts of the globe which had not yet been occupied by these powers. Once this partition of the globe was complete, there could only be re-division and re-partition, as a result of the change in the relative strength of the imperialist countries due to their uneven development. This alone explains both the first and the second world war.

Following the Second World War, for reasons which need not been gone into here, most of the colonies managed to gain


independence, yet imperialism was nevertheless able to devise mechanisms whereby these formally independent countries have been fully enmeshed in the net of financial, diplomatic and military dependence on imperialism. In other words, colonialism has made way for neo-colonialism. In fact, there is now, since the collapse of the Soviet Union, a movement back from political independence to semi-colonial status – South Korea, Saudi Arabia, the Gulf States, many African and Latin American countries and, last though not least, the Balkans.

Through a system of alliances, a network of military bases, the establishment of a string of client puppet regimes, and through its economic power, finance capital is able to enmesh almost the whole world in a net of dependence. In fact, one may say that there is barely an inch of the earth’s surface where it does not lay its heavy boot.

Thus, although there are not many formal colonies in existence, and although most countries are endowed with the accoutrements of political independence, all the same the characteristic feature of the present-world is in


the same as at the beginning of the 20


century, namely, its partition into spheres of influence among the various contending imperialist powers. In fact, a frenzied struggle is already under way for the re-division of the world between the three imperialist blocs centred around the US, the European Union and Japan. The war in Yugoslavia, the occupation of the Gulf, the daily bombing of Iraq by the Anglo-American imperialist forces, the war provocations on the Korean peninsula, the extension of the warmongering NATO alliance to the borders of Russia, the American bombing of the Chinese embassy during the Yugoslav War, the recent American spy-plane incident off the Chinese coast, the sale of sophisticated weaponry to the renegade province of Taiwan, the European attempts to build a European army, and the American decision to go ahead with Nuclear Missile Defence Programme in violation of the 1972 ABM Treaty, the proxy wars in Africa, the attempts at building three economic blocs (in the Americas, Europe and Asia Pacific) – all these can only be explained in the context of a complicated but furious struggle going on right before our eyes for the re-partitioning of the world. Sooner or later, unless prevented by proletarian revolutions, these imperialist blocs, or a combination of some of these, must come to blows against each other.

Monstrous growth of militarism

It is precisely in the furtherance of the struggle for the partitioning of the world that the imperialist powers, notably the United States, have armed themselves to the teeth. US imperialism alone spends close to $300 billion a year on military expenditure, which accounts for more than a third of the military expenditure of the world as a whole.

Thomas Friedman, reactionary journalist, spoke with rare candour in the

New York Times

of 28 March 1999 when he wrote thus:

For globalisation to work, America can’t be afraid to act like the almighty superpower that it is. The hidden hand of the market will never work without a hidden fist. McDonald’s cannot flourish without McDonnell-Douglas, the designer of F-15, and the hidden fist that keeps the world safe for silicon valley’s technology is called the United States Army, Air Force, Navy and Marine Corps.

Parasitism and growth of opportunism

Following Lenin, we must devote special attention to “

yet another aspect of imperialism to which most of the discussions on the subject usually attach insufficient importance,”

namely, to parasitism, which is one of the characteristic features of imperialism. Since imperialism is an enormous accumulation of money capital in a few countries, it gives rise to an enormous growth “

of a class, or rather, of a stratum of rentiers, i.e., people who live by ‘clipping coupons’, who take no part in any enterprise whatever, whose profession is idleness. The export of capital, one of the most essential economic bases of imperialism, still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries …

” (Lenin,

Imperialism, the highest stage of capitalism


From the above Lenin concludes that opportunism in the working class of the imperialist countries was not an accidental phenomenon; that, on the contrary, it had deep economic roots, namely, in the superprofits received by the bourgeoisie of the imperialist countries from the plunder of the whole world, a part of which plunder could be, and is, used to bribe the upper stratum of the workers – the labour aristocracy – and thus engender a split in the working class; that this stratum of “

bourgeoisified workers

“, thoroughly petty-bourgeois in their style of life, the size of their earnings and their world outlook, serve as the “



… support of the bourgeoisie … the real

agents of the bourgeoisie in the labour movement

, the labour lieutenants of the capitalist class, the real carriers of reformism and social chauvinism. In the civil war between the proletariat and the bourgeoisie they inevitably, and in no small numbers, stand on the side of the bourgeoisie, on the side of ‘Versaillese’ against the ‘Communards’

” (



Lenin adds: “

Unless the economic roots of this phenomenon are understood and its political and social significance is appreciated, not a step can be taken toward the solution of the practical problems of the communist movement and the impending social revolution.

The Gulf and the Balkan wars, and the attitude of the opportunists, from trade-union leaders to leaders of social democracy, constitute an eloquent proof of the correctness of the above observation of Lenin’s. In our own country, in Britain, with the sole and honourable exception of Arthur Scargill and one or two of his comrades, not a single trade unionist of any note condemned the imperialist war against Yugoslavia or the daily bombing of Iraq.


In the light of the foregoing, it is clear that capitalism in its imperialist stage is rotten to the core – it is decadent, parasitic and moribund capitalism, which has nothing to offer to four-fifths of humanity; it is a system under which speculative operations, amounting to $3 trillion a day, are devastating the lives of billions of people and shattering the economies of scores of countries around the world. Such an architecture is beyond repair; it needs to be demolished and replaced by a system which gives primacy to production for the satisfaction of human need.

To a tiny minority of the world’s population it offers riches and comfort, but it rewards the vast majority with unemployment, deprivation, agony of toil, slavery, ignorance, brutality, mental degradation and war.

Thus it can be seen that imperialism faces humanity with the choice: either revolution or war and barbarism. It is our bounden duty to spread among the proletariat “…

the grim and inexorable truth that it is impossible to escape imperialist war, and the imperialist world which inevitably engenders imperialist war, it is impossible to escape that inferno

except by a Bolshevik struggle and a Bolshevik revolution

” (Lenin, 14 October 1921).

The Leninist theory of revolution and Leninist tactics and methods of organisation offer the only road to salvation open to the proletariat faced with the stark choice: “

Either place yourself at the mercy of capital, eke out a wretched existence and sink lower and lower, or adopt a new weapon – this is the alternative imperialism puts before the vast masses of the proletariat. Imperialism brings the working class to revolution

” (Stalin, CW6, pp. 74-75).

In its bid to maintain its profits, imperialism is confronting humanity with the dilemma: “

either sacrifice all culture or throw off the yoke of capitalism by revolutionary means, eliminate the domination of the bourgeoisie and win a socialist society and lasting peace

” (Lenin,

For Bread and Peace

, December 1917). At the same time imperialism sharpens all the contradictions to their extreme – those between labour and capital, between imperialism and the oppressed nations, between the various imperialist countries, and the contradiction between imperialist and socialist countries. By riding roughshod it is surely spurring the working class and the oppressed people to effect its revolutionary overthrow.

Notwithstanding the colossal reverses suffered by socialism during the past decade, notwithstanding all the zigzags of the struggle and the tortuous course of events, nothing on earth can stop the victory of proletarian revolution on a world scale.

Imperialism is the eve of the social revolution of the proletariat

” (Lenin, Preface to the French and German editions of

Imperialism, the highest stage of capitalism


12 August 2001




Financial analysts agree that this deal, which brought together under one roof these three banks, promises to deliver something that Japan has lacked thus far – a diversified financial group with the potential to benefit from the efficiencies of scale and market dominance. Apart from being the world’s largest bank by assets, it will be the principal lender to 30 % of corporate Japan and account for approximately 15% of the Japanese retail marekt – a position which could provide it not only with sufficient financial muscle to challenge the giant international banks now emerging consequent upon recent mergers in the US and Europe, but also to thwart further encroachment by foreign banks and other financial institutions. Clearly, Japanese finance capital is determined to be the front runner in the international banking sector, through acquisition of banks overseas if need be. In order to achieve this aim, it is busy getting rid of the ‘culture of consensus’ and the ‘rigid’ labour laws, which make redundancies prohibitively expensive. It is also beginning to plug the information technology gap between it and its European and US rivals who are far ahead of Japan in this regard. Nothing will be allowed to stand in the way of the maximisation of profits of finance capital. The banks have plans to get rid of 17% of their 36,000 staff and put into effect a steep rise in expenditure on information technology. The sheer size and the shock of this deal are providing the Japanese kings of finance with both a pretext, and an opportunity, to implement the changes necessary to enable Japanese finance capital to compete against its US and European imperialist rivals on a global scale.


[In the coming issues I shall be dealing with Consolidation in some of the important industries]

Comments are closed, but trackbacks and pingbacks are open.