Capitalism is anti-imperialist.

Capitalism and international trade are often linked with imperialism, which refers to an ideology, and the associated policies, of a government expanding its power through military force and economic activity. It is not hard to see why some make this connection—throughout history, governments have used military force to expand markets and secure control over inputs such as natural resources. But does this mean that imperialism is inherent to capitalism and trade?

Marx (1867) believed that capitalism would expand across borders to capture natural resources and exploit cheap labor. “A new and international division of labour, a division suited to the chief centres of modern industry springs up” he argued “and converts one part of the globe into a chiefly agricultural field of production, for supplying the other part which remains a chiefly industrial field” (p. 493). Hobson (1902) also made a similar connection arguing that capital owners who could not find suitable investment opportunities domestically, due to over-saving and under-consumption, would seek opportunities abroad through imperialism. Imperialism, he argued “is the endeavor of the great controllers of industry to broaden the channel for the flow of their surplus wealth by seeking foreign markets and foreign investments to take off the goods and capital they cannot sell or use at home” (91).

Hobson was a key influence on Lenin (1917) who argued that the “monopoly stage of capitalism” was driven by concentration in production and finance and expansion abroad to secure inputs for production and new markets. Similar themes are echoed by Luxemburg (1951) and Frank (1967) with the latter concluding that “External monopoly has always resulted in the expropriation and its appropriation by another part of the world capitalist system” and that “Imperialism, therefore, is more or less synonymous with capitalism” (p. 7).

An alternative view is that capitalism and imperialism are fundamentally at odds. Capitalism is grounded in the idea of private property rights and voluntary exchange. Imperialism, in contrast, is a system of social relations grounded in the political power of the state and its military apparatus. Of course, the two can be, and have been historically, entangled, but that does not have to be the case. That is, there is nothing endogenous to capitalism that requires imperialism. Throughout history states have used their political power to engage in conquest and expand both their own power and that of those with close political ties. The root cause of the benefits generated from these relationships, however, are not the result of capitalism, properly understood, but because of the political privileges created by the state.

Some of the aforementioned thinkers on imperialism recognized this very point, although not always the full implications. For instance, Hobson noted that the “economic root of Imperialism is the desire of strong organized industrial and financial interests to secure and develop at the public expense and by the public force private markets for their surplus goods and their surplus capital. War, militarism, and a ‘spirited foreign policy’ are the necessary means to this end” (p. 113).

Other writers highlighted the centrality of political privilege to imperialism. Writing about the British Empire and her colonies, Adam Smith (1776b) wrote, “To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers” (p. 613). In his study of imperialism, Schumpeter (1951) noted that liberal capitalism is anti-imperialistic such that “we cannot readily derive from it such imperialistic tendencies as actually exist, but must evidently see them only as alien elements, carried into the world of capitalism from the outside, supported by 18 non-capitalistic factors in modern life” (p. 96). From the perspective of these writers, it is the political power associated with the state that is the driver of imperialism.

The issue, then, is whether, and how, political capitalism can be constrained or altogether removed. This is an ongoing intellectual project grounded in issues of constitutional political economy and comparative institutional analysis to study the nuances of political capitalism and possible ameliorating mechanisms (Holcombe 2018, Munger 2019, Coyne and Hall 2019a, Coyne 2022). But the key point is that imperialism is not inherent in capitalism. Historically, imperial empires existed before the rise of capitalism indicating that the state, and not capitalism, is the root cause of imperialism. Moreover, voluntary, positive-sum trade has existed both within and across borders absent state imperialism indicating that trade does not necessitate military imperialism.