IN THE AFTERMATH OF THE COLD WAR, some saw the world heading toward a “clash of civilizations” between established Western powers and the rising economic and demographic powers in the Sino and Muslim worlds.1 Samuel P. Huntington, “The Clash of Civilizations?” Foreign Affairs 72, no. 3 (1993): 22–49. Some saw the world moving toward great universal peace, unified under liberal democracy and the free market.2 Francis Fukuyama, The End of History and The Last Man (New York: Free Press, 2006). Others saw the rise of a universal global empire of capitalism in which major capitalist powers united to dominate and carve up the world, fomenting harmony between major powers.3 Michael Hardt and Antonio Negri, Empire, (Cambridge: Harvard University Press, 2001).
This contemporary debate about the prospect of war and peace is not unprecedented. The history of capitalism has been full of wars and conflicts. Since the inception of capitalist modernity, there has been debate about whether this modernity ultimately leads us to perpetual peace or great wars among major capitalist powers. We see the same debate at the turn of the twentieth century when the world saw an established capitalist power (the UK) facing the intensifying challenges from rising latecomer powers (Germany and Japan).
To Karl Kautsky, the end of Pax Britannica and the rise of new capitalist powers toward the end of the nineteenth century did not necessarily lead to conflict.4 Karl Kautsky, “Ultra-Imperialism,” Die Neue Zeit, September 2014. Kautsky put forward a theory of “ultra-imperialism,” arguing that the great capitalist powers could well establish a joint cartel to divide and dominate the world together. The Scramble for Africa in the Berlin Congress in 1878 and the joint imperialist invasion of China among great powers in 1900 can be seen as such ultra-imperialism in action. Under this ultra-imperialist formation, great powers can be at peace with one another for a long time.
In disagreement with this position, Lenin built on the analysis of British economist J.A. Hobson and argued in Imperialism: The Highest Stage of Capitalism that great powers, when seeking to dominate the world through imperialist expansion, were destined to clash with one another. Any synergy among the great powers could be at most a temporary truce in between conflicts. Given the uneven pace of capitalist development among great powers, the division of the world based on the balance of power among those powers at one given point would certainly become outdated when the balance changed. This changing balance of power inevitably pushed some powers to seek a redistribution of the divisions, leading to conflicts. In the end, the two world wars vindicated Lenin’s theory about the inevitability of great power conflict over Kautsky’s theory of ultra-imperialist peace.
Lenin’s Imperialism is a long-misunderstood work. For decades, many have used it to critique the “(neo)imperialist” relation between developed and developing countries. But the book’s insight is much greater. Lenin looks at how inequality, lack of purchasing power of the working class, and overproduction urged advanced capitalist economies to export capital to underdeveloped regions of the world with a higher rate of return. Capital exporting powers needed to carve out their empires or spheres of influence to protect their investments. Such acts fomented rivalry among capitalist powers, precipitating world war.
Lenin paid particular attention to the urging of Germany, as a late imperialist power, to finance railroad construction projects in Latin America, Central-Eastern Europe, and the Middle East on the condition that the projects procured German equipment, train cars, and other materials. This put German banks, German industrialists, and German diplomatic-military apparatus into direct competition with established capitalist powers, above all Britain and France.
As I argue elsewhere,5 Ho-fung Hung, “The US–China Rivalry Is About Capitalist Competition,” Jacobin, July 11, 2020. the intensifying US–China rivalry today is not driven by the ideological difference between the two countries, but by the increasing competition between Chinese capital and US capital worldwide after China started to aggressively export its overaccumulated capital to the rest of the world in the wake of the global financial crisis of 2008. This intensifying US–China rivalry resembles the long UK–Germany conflict from the turn of the twentieth century to the second world war.
In recent years, nonMarxist political economists, including a banker,6 Michael Knox, “How the Sino–US Trade War is Driving the Global Bond Bubble” Financial Review, September 30, 2019. a Wall Street Journal columnist,7 Walter Russell Mead, “Imperialism Will Be Dangerous for China,” The Wall Street Journal, September 17, 2018. and a US Treasury economist,8 Kenneth Austin, “Communist China’s Capitalism: The Highest Stage of Capitalist Imperialism,” World Economics Journal, March 2011. have noticed imperialism’s relevance to the understanding of contemporary US–China relations. The political economy behind the antagonism between the UK and Germany in the early twentieth century resembles the dynamics underlying the tension between the US and China today in many ways. Rereading Lenin might offer us insights into whether and how to prevent an unavoidable inter-capitalist competition from escalating into inter-imperial war.
Since the late nineteenth century, Germany had become a major capitalist power searching for overseas markets and outlets for its capital export. Without many formal colonies, German capital export was led not by foreign direct investment, but by loans of German banks that supported infrastructure projects, predominantly railroad construction, in Central and Southern Europe and Latin America, among other places. Borrowers of German loans were obliged to procure German products for their projects. German bankers competed with British and French banks in lending to Central Europe and Latin America. Paragraphs in Lenin’s work discussing this process could be read as referring to China’s Belt and Road initiative today. For example:
The capital-exporting countries are nearly always able to obtain certain “advantages,” the character of which throws light on the peculiarity of the epoch of finance capital and monopoly … Finance capital has created the epoch of monopolies, and monopolies introduce everywhere monopolist principles: the utilization of “connections” for profitable transactions takes the place of competition on the open market. The most usual thing is to stipulate that part of the loan granted shall be spent on purchases in the creditor country, particularly on orders for war materials, or for ships, etc.9 Vladimir Ilyich Lenin, Imperialism: The Highest Stage of Capitalism, in Lenin’s Selected Works, vol. 1 (Moscow: Progress Publishers, 1963), 240–45.
One such Germany-supported infrastructure project serving German business interests and German geopolitical ambition was the Berlin–Baghdad railroad proposed by Wilhelm II. The project connected Germany, the Austro–Hungarian Empire, and the Ottoman Empire, and it cut into the British and Russian spheres of influence in the Near East, which became an increasingly important energy source when the world was transforming from coal to oil power. The railroad also put Serbia at the epicenter of the inter-imperial rivalry, contributing significantly to the outbreak of World War II.
After the first world war, Germany tried to internationalize the Reichsmark, its currency, in Central and Southern Europe. The increased use of Reichsmarks sought to facilitate the export of German capital, and to create a Reichsmark bloc10 Alan S. Milward, “The Reichsmark Bloc and the International Economy,” in Aspects of the Third Reich, H.W. Koch, ed., (London: Palgrave, 1985), 331–59. among those countries at the expense of the British pound sterling. This intensified UK and German competitions, first in the financial-monetary sphere and then in the political and military spheres, over Central and Eastern Europe. This policy resembles Beijing’s attempt to internationalize the Chinese currency, the RMB, and to create an RMB economic bloc at the expense of the US dollar.
The precedents of inter-capitalist competition turning into an inter-imperial rivalry between the UK and Germany suggest that rivalry between the US and China is more likely to escalate than not, maybe even leading to wars. Many observers11 Denny Roy, “Assertive China: Irredentism or Expansionism?” Survival 61, no 1 (2019): 51–74. already compare China’s sovereignty claim over areas controlled by US allies (Senkaku/Diaoyu Islands, South China Sea, Taiwan, for example) to Germany’s irredentism in the early twentieth century. It is noteworthy that many influential official scholars in China have openly compared China’s “great revival” foreign policy agenda to Germany’s policies a century earlier. Works of German statist thinkers, such as that of Nazi jurist Carl Schmitt, became a sensation among prominent scholar-officials in Beijing, who have the ears of the party-state leaders. The clash between China, as a rising empire, and the US, as an established one, looks increasingly like the Germany–UK conflict in the early twentieth century.
The parallel between the US–China rivalry and the one between the UK and Germany a century earlier does not stop at the political economies behind the rivalries. The public discourses on the rivalries in the two eras are strikingly similar too. In mid-1914, a British economist spoke with great conviction that economic reciprocity and integration between the British and German Empires determined that the two countries would not be likely to go into conflict:
So far as the existing economic relations of the two Empires with each other are concerned we may look to the immediate future with confidence. At the present time it may be affirmed that their true economic interests are reciprocal rather than antagonistic.”12 dgar Crammond, “The Economic Relations of the British and German Empires,” Journal of the Royal Statistical Society 77, no. 8 (1914): 777–824.
It is ironic that the Great War broke out less than half a year later. This statement disturbingly resembles today’s judgment that the economic integration between the US and China would eventually avoid conflict between the two.
In the early twentieth century, an apologist for German foreign policy pointed to the unjust international system and the tyranny of established powers to justify German aggressiveness as a merely rightful act to claim its rightful place in the world. For example, in 1933, Richard von Kühlmann, a former German Minister of Foreign Affairs during the first world war and defender of the Hitler’s foreign policy on the eve of World War II, defended the increasing aggressiveness of Germany, Italy, and Japan as “three latecomers in the world” responding to their unfair treatment by the UK and US as established powers.13 Richard von Kühlmann, “Three Late-Comers in the World,” The North American Review 235, no. 5 (1933): 388–94. He pointed out that “much of the unrest abroad in the world is traced to the reluctance of old-established nations to share good things with newcomers.”
In 1934, Kühlmann wrote an article in Foreign Affairs blaming France’s intransigence and injustice for the growing German–French territorial dispute over the Saar:
Chancellor Hitler, passionately adhering to his program of promoting peace (which has found strong expression in the German–Polish declaration of January 26, 1934) has attempted in his conversations with the French Ambassador, M. François-Ponçet, to open a direct Franco–German discussion on the Saar question. But Paris opinion, almost morbidly distrustful, has not been favorable to such a course.14 Richard von Kühlmann, “The Future of the Saar,” Foreign Affairs, April 1934.
Kühlmann even blamed the “the intellectual (to a great extent Jewish) German émigrés” in Paris for encouraging France’s antagonism toward Germany.
This rhetoric resembles the view of Beijing’s apologists today that the Chinese regime is peace-loving. Any of its assertiveness over territorial disputes with its Asian neighbors (in the South China Sea, for example) stemmed from the unjust intransigence of the US and its allies and that the Chinese, Uyghurs, and Tibetan dissidents in exile were fanning antagonism against China and damaging US–China relation.
The comparability between the conflict between the US and China today and the one between the UK and Germany a century earlier does not mean that war is inevitable. What is different in the twenty-first century is that now there are various global governing institutions over which the US, China, and their allies could struggle for influence, allowing them to resolve their conflicts rather than settling scores through war. Such struggles have already started. US–China competition over influences in the UN, the WTO, and the WHO, for example, has been growing over the last decade.
Moreover, as Hobson points out, capitalist powers need to export capital to seek overseas profits because they failed in securing higher income and hence purchasing power of the working class at home to absorb the excess productive capacity in domestic economies. If domestic redistribution advances, the capitalist powers would be under less pressure to export capital, creating a smaller incentive to carve out their sphere of influence and collide with other powers. In China’s context, if Beijing’s attempt to rebalance the economy by boosting household income and household consumption succeeds, the Chinese political economy’s profitability crisis would be alleviated. Chinese enterprises would hence be less prone to overseas investment. The same applies to the possibility of redistributive reform rather than continued capital export and neoliberal globalization in the US. To be sure, such a rebalancing act is easier said than done.
Based on an analysis of China’s capitalist development and US political economy, combined with a comparison with historical precedent, it is certain that the US–China rivalry would only intensify in the years to come.15 Ho-fung Hung, “Repressing Labor, Empowering China,” Phenomenal World, July 2, 2021. The mediation by legitimate global governing institutions and the rebalancing of China’s and the US’s economies are two approaches that could help alleviate the conflicts. Only time will tell whether such approaches would succeed and whether they could successfully avert more deadly conflict.
- Samuel P. Huntington, “The Clash of Civilizations?” Foreign Affairs 72, no. 3 (1993): 22–49.
- Francis Fukuyama, The End of History and The Last Man (New York: Free Press, 2006).
- Michael Hardt and Antonio Negri, Empire, (Cambridge: Harvard University Press, 2001).
- Karl Kautsky, “Ultra-Imperialism,” Die Neue Zeit, September 2014.
- Ho-fung Hung, “The US–China Rivalry Is About Capitalist Competition,” Jacobin, July 11, 2020.
- Michael Knox, “How the Sino–US Trade War is Driving the Global Bond Bubble” Financial Review, September 30, 2019.
- Walter Russell Mead, “Imperialism Will Be Dangerous for China,” The Wall Street Journal, September 17, 2018.
- Kenneth Austin, “Communist China’s Capitalism: The Highest Stage of Capitalist Imperialism,” World Economics Journal, March 2011.
- Vladimir Ilyich Lenin, Imperialism: The Highest Stage of Capitalism, in Lenin’s Selected Works, vol. 1 (Moscow: Progress Publishers, 1963), 240–45.
- Alan S. Milward, “The Reichsmark Bloc and the International Economy,” in Aspects of the Third Reich, H.W. Koch, ed., (London: Palgrave, 1985), 331–59.
- Denny Roy, “Assertive China: Irredentism or Expansionism?” Survival 61, no 1 (2019): 51–74.
- Edgar Crammond, “The Economic Relations of the British and German Empires,” Journal of the Royal Statistical Society 77, no. 8 (1914): 777–824.
- Richard von Kühlmann, “Three Late-Comers in the World,” The North American Review 235, 5 (1933): 388–94.
- Richard von Kühlmann, “The Future of the Saar,” Foreign Affairs, April 1934.
- Ho-fung Hung, “Repressing Labor, Empowering China,” Phenomenal World, July 2, 2021.