Imperialism, the Highest Stage of Capitalism: An Expansion

Marx’s method, historical materialism, provides a predictive framework for understanding not just how profit arises, but how capitalism develops, faces crises, and reorganizes itself through global violence and imperial expansion. As capitalism matures, the internal contradictions identified by Marx—particularly the falling rate of profit—begin to assert themselves more profoundly. Once industrial capitalism begins to encounter the limits of domestic accumulation, it turns outward.

This occurs when constant capital—investments in machinery and infrastructure—begins to eclipse variable capital, or labour power. Because only labour creates new value, the reduction in variable capital means fresh surplus value diminishes even as output increases. Technological progress intensifies exploitation: more output is produced per unit of labour, and relative surplus value increases. However, the capacity of the working population to consume lags behind the productive potential of capital. This underconsumption crisis compels the search for new markets.

Thus, the imperative becomes global: to find spaces where surplus capital can be invested and commodities sold. Here, Lenin’s analysis in Imperialism, the Highest Stage of Capitalism becomes indispensable. As monopoly capital forms, finance and industrial capital merge, creating financial oligarchy. Investment, not just commodity trade, becomes the new frontier. To secure these investments, and to ensure debt repayment and market access, imperialism becomes a necessity. Export of capital replaces export of goods.

This logic explains the sudden acceleration of imperial conquest in the late 19th century. In 1876, only 10% of Africa was under European control; by 1900, that figure had exceeded 90%. This was not a civilizing mission, but a territorial expression of capitalism’s need to valorise surplus capital. From the Congo Free State to the Suez Canal, colonialism was not about spreading Western values, but about securing higher rates of profit, cheaper raw materials, and the geopolitical routes necessary to safeguard imperial networks.

The British, French, Belgian, and German bourgeoisies expanded not because of national glory, but because they were driven by profit imperatives. British investment abroad rose from £95 million in 1883 to nearly £400 million by 1889, often tied to infrastructure—railways, ports, and canals—that locked colonies into an imperial economic structure. Where borrowers defaulted or resistance emerged, military force ensured returns. Egypt in 1882 and South Africa in 1899 are paradigmatic: financial crises triggered imperial control.

Meanwhile, the mythologies of empire—crafted in the literature of Kipling and the missionary tales of Livingstone—masked the brutal reality. Colonial conquest was bloody and often resisted, as in the Sudan, Ethiopia, or Nigeria. The myth of primitive, passive peoples legitimized extermination and terror. In Sudan, 10,000 were killed at Omdurman for a British loss of 48. The Congo was a site of mass mutilation and enslavement in the service of rubber profits. These were not anomalies, but the standard operating procedures of imperial capital.

This global expansion also served a domestic political function. The pressure valve of empire allowed European states to stave off internal crises. Cecil Rhodes was explicit: without the spoils of empire, civil war at home would be inevitable. Imperialism offered the surpluses necessary for welfare spending and political concessions, deferring the class contradictions that threatened bourgeois hegemony.

However, the growth of competing empires brought these powers into conflict. Germany, rising as an industrial powerhouse, found itself excluded from the earlier carve-up. Its capitalists, organised in cartels and trusts, turned to the state to break into Africa, the Middle East, and East Asia—challenging British and French dominance. The Berlin–Baghdad railway, the annexation of Tanganyika and Southwest Africa, and the naval arms race with Britain all pointed to the growing inter-imperial tensions.

Thus, imperialism—far from being a policy choice—was the necessary expression of capitalism in its monopoly phase. And like all contradictions in capitalist society, the imperial fix was temporary. The scramble for markets led inexorably to inter-imperial rivalry, culminating in the First World War—a war not for freedom, but for redivision.

Marxist theory, particularly historical materialism, explains not just the economic origins of profit but the geopolitical logic of empire. Imperialism is not an aberration, nor is it simply racism or nationalism—it is the externalisation of capital’s inner contradictions. As such, Marx’s insights remain crucial not only for understanding the past, but for analysing the present crises of imperialism, finance, and militarism.