Lenin argued that “the most deep-rooted economic foundation of imperialism is monopoly” and that imperialism could be briefly defined as “the monopoly stage of capitalism” (Imperialism, 1916). Under capitalism, cyclical economic crises, combined with the advantages of scale held by large companies over small- and medium-sized businesses, lead inevitably to the annexation of smaller companies by larger enterprises.
This process led to the concentration of production and capital in fewer and fewer hands, causing monopolies to develop within specific sectors of the economy, first within one country (and its colonies, semi-colonies and neo-colonies), then across the world market. At the same time, finance capital was created by the merger of bank capital with industrial capital, creating a financial oligarchy which derived profit primarily from the export of capital from the developed capitalist world to the Third World to invest in cheaper labour and raw materials.
Much of this monopolisation occurred during the second half of the 19th century. In 1917, Lenin referred to the example of the oil industry which operated as a monopoly on a world scale. Two or three companies controlled production and distribution of most of the world’s oil and each was closely linked to national banking operations. The largest was Rockefeller’s Standard Oil, linked to the Chase Manhattan Bank (now Exxon-Mobil and JP Morgan Chase), followed by Royal Dutch Shell and Anglo-Persian Oil, both linked to the City of London (now Shell and BP-Amoco). These three firms still dominate oil production and are all in the top ten of the world’s largest Trans-national Corporations (TNCs).
As monopolies developed within and between the advanced capitalist countries, the race to secure control over economic ‘spheres of influence’ began. By the early 20th century, the world had been entirely divided up into colonies or other spheres of influence and each imperialist power could only expand at the expense of another. Due to the uneven economic development caused by the capitalist system, no stable re-division of the worlds resources and markets was possible, leading to constant conflict or inter-imperialist rivalry. It was this situation which led to the First World War as the faster-growing industrial power of Germany came to challenge the economic domination of Britain.
In the countries where they operate, TNCs need to protect their investments through political or military control. Key to this is the state apparatus of the TNCs’ ‘home’ countries, ensuring that Transnational Corporations, whilst international in their operations, remain based firmly in one specific advanced capitalist country. As the struggle between rival imperialisms intensified, the monopolies began to fuse their economic power with the political power they exercised through the state to form state monopoly capitalism – characterised by the state being “progressively subordinated to the interests of one section of the capitalist class – monopoly-based finance capital – while the system’s growing contradictions led to increasing state intervention.” (Britain’s Road to Socialism p6).
Today TNCs based in the leading imperialist countries account for one-third of the world’s production, two-thirds of world trade and three-quarters of international investment. This economic power is backed up by the political and military power of the advanced capitalist nations, which is used to ensure access to raw materials and markets across the world. It is this which has caused the wars and conflicts we have experienced throughout the 20th century and the first part of the 21st century.