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Theories of New Imperialism

 This article is part of the
New Imperialism series.
 Rise of the New Imperialism
The breakdown of Pax Britannica
  • Britain and the New Imperialism
  • France and the New Imperialism
  • The New Imperialism in newly-industrialisng countries
  • Social implications of the New Imperialism
  •  Imperialism in Asia 
     Scramble for Africa
     Imperial rivalry
     Theories of New Imperialism
    Accumulation theory
  • World Systems theory
  • The interpretations of recent scholarship
  • Table of contents
    1 The accumulation theory
    2 World Systems theory
    3 The interpretations of recent scholarship

    The accumulation theory

    The accumulation theory, conceived largely by J.A. Hobson and later Lenin, centres on the accumulation of surplus capital during the Second Industrial Revolution.

    Both theorists linked the problem of shrinking continental markets driving European capital overseas to an inequitable distribution of wealth in industrial Europe. They contended that the wages of workers did not represent enough purchasing power to absorb the vast amount of capital accumulated during the Second Industrial Revolution.

    Hobson, a British liberal writing at the time of the fierce debate on imperialism during the Boer War, observed the spectacle of what is popularly known as the "Scramble for Africa", and emphasized changes in European social structures and attitudes as well as capital flow (though his emphasis on the latter seems to have been the most influential and provocative). His so-called accumulation theory suggested that capitalism suffered from under-consumption due to the rise of monopoly capitalism and the resultant concentration of wealth in fewer hands, which apparently gave rise to a misdistribution of purchasing power. Logically, this argument is sound, given the huge impoverished industrial working class - then often far too poor to consume the goods produced by an industrialised economy. His analysis of capital flight and the rise of mammoth cartels later influenced Lenin in his Imperialism: The Highest Stage of Capitalism, which has become a basis for the modern neo-Marxist analysis of imperialism. Thus some have argued that the New Imperialism was caused essentially by a flight of foreign capital.

    New Imperialism was one way of capturing new overseas markets. By the eve of World War I, Europe, for instance, represented the largest share (27 percent) of the global zones of investment, followed by North America (24 percent), Latin America (19 percent), Asia (16 percent), Africa (9 percent), and Oceania (5 percent) for all industrial powers. Britain, the forerunner of Europe's capitalist powers, however, was clearly the chief world investor, though the direction of its investments underwent a striking change, becoming oriented less toward Europe, the United States, and India, and more toward the rest of the Commonwealth and Latin America. In non-industrial regions that lacked both the knowledge and the power to direct the capital flow, this investment served to colonize rather than to develop them, destroying native industries and creating dangerous political and economic pressures which would, in time, produce the so-called "north/south divide". Modern Dependency Theory, devised largely by Latin American academics, draws on this inference.

    Some have criticised J.A. Hobson's analysis of over-accumulation and under-consumption, arguing it does not explain why less developed nations with little surplus capital, such as Italy, participated in colonial expansion. Nor does it fully explain the expansionism of the great powers of the next century — the United States and Russia, which were in fact, net borrowers of foreign capital. Opponents of his accumulation theory also point to many instances in which foreign rulers needed and requested Western capital, such as the hapless moderniser Khedive Ismail Pasha.

    Since the "Scramble for Africa" was the predominant feature of New Imperialism and formal empire, opponents of Hobson's accumulation theory often point to frequent cases when military and bureaucratic costs of occupation exceeded financial returns. In Africa (exclusive of South Africa) the amount of capital investment by Europeans was relatively small before and after the 1880s, and the companies involved in tropical African commerce exerted limited political influence. First, this observation might detract from the pro-imperialist arguments of Leopold II, Francesco Crispi, and Jules Ferry, but Hobson argued against imperialism from a slightly different standpoint. He concluded that finance was manipulating events to its own profit, but often against broader national interests. Second, any such statistics only obscure the fact that African formal control of tropical Africa had strategic implications in an era of feasible inter-capitalist competition, particularly for Britain, which was under intense economic and thus political pressure to secure lucrative markets such as India, China, and Latin America.

    World Systems theory

    Contemporary World-Systems theorist Immanuel Wallerstein addresses these counterarguments without degrading Hobson's underlying inferences.

    Hobson's theory is thus useful in explaining the role of over-accumulation in overseas economic and colonial expansionism while Wallerstein perhaps better explains the dynamic of inter-capitalist geopolitical competition.

    Wallerstein's conception of imperialism as a part of a general, gradual extension of capital investment from the "centre" of the industrial countries to an overseas "periphery" coincides with Hobson's. According to Wallerstein, "Mercantilism became the major tool of (newly industrialising, increasingly competitive) semi-peripheral countries (i.e, Germany, France, Italy, Belgium, etc.) seeking to become core countries. Wallerstein hence perceives formal empire as performing a function "analogous to that of the mercantilist drives of the late seventeenth and eighteenth centuries in England and France." Protectionism and formal empire were characteristics of this era of neo-mercantilism, the major tools of "semi-peripheral", newly industrialized states, such as Germany, seeking to usurp Britain's position at the "core" of the global capitalist system.

    The expansion of the Industrial Revolution thus contributed to the emergence of an era of aggressive national rivalry, leading to the late nineteenth century scramble for Africa and formal empire. Hobson's theory is thus useful in explaining the role of over-accumulation in overseas economic and colonial expansionism while Wallerstein perhaps better explains the dynamic of inter-capitalist geopolitical competition.

    The interpretations of recent scholarship

    Benjamin Disraeli and Queen Victoria

    In this sense, contemporary imperial historian Bernard Porter argues that formal imperialism for Britain was a symptom and an effect of its relative decline in the world, and not of strength. Symbolic overtures, in fact, such as Queen Victoria's grandiose title "Empress of India", celebrated during the second premiership of Benjamin Disraeli in the 1870s, helped to obscure this fact. Joseph Chamberlain thus argued that formal imperialism was necessary for Britain because of the relative decline of the British share of the world's export trade and the rise of German, American, and French economic competition.

    Porter, however, notes that Britain, "Struck with outmoded physical plants and outmoded forms of business organization... now felt the less favorable effects of being the first to modernize." He contends that "a kind of vicious circle had been set up, with domestic industry lagging because capital was going elsewhere because industry was lagging." Unlike J.A. Hobson, however, who links under-consumption to a misdistribution of purchasing power, Porter argues that "the best thing that Britain could have done to correct [its balance of payments] would have been to make her export industry more competitive —improve her methods of manufacturing and marketing in order to sell more abroad."

    As mentioned, contemporary historians, such as Bernard Porter, P.J. Cain, and A.G. Hopkins, do not downplay the influence of financial interests of "the city" either, but contest Hobson's conspiratorial overtones and "reductionisms". Nevertheless, they often acted as repositories of the surplus capital accumulated by a monopolistic system and they were therefore the prime movers in the drive for imperial expansion, their problem being to find fields for the investment of capital.