Non-Marxist Theories of Imperialism


"Empire-building is done not by 'nations' but by men. The problem before us is to discover the men, the active, interested minorities in each nation, who are directly interested in imperialism, and then to analyze the reasons why the majorities pay the expenses and fight the wars necessitated by imperialist expansion."
—Parker T. Moon,
Imperialism and World Politics, 1926

"…we must name the system that creates and sustains the war in Vietnam—name it, describe it, analyze it, understand it and change it."
—Carl Oglesby, "Trapped in a System", speech delivered at the October 1965 antiwar march on Washington

One of the most encouraging aspects of the emergence of the libertarian movement during the late 1960's and early 1970's has been the growing receptivity within that movement toward revisionist historical scholarshipboth within the areas of domestic political history and foreign diplomatic history. Not only are such revisionist classics as Harry Elmer Barnes' Perpetual War for Perpetual Peace (Caldwell, Idaho: Caxton, 1953; Westport, Connecticut: Greenwood, reprint of 1953 ed.) receiving wider attention, but increased interest has also been focused on the works of such "New Left" revisionist historians as Gabriel Kolko, William Appleman Williams, and Lloyd C. Gardner on the origins of the cold war. (Perhaps the most comprehensive bibliography of the works available on World Wars I and II revisionism is Harry Elmer Barnes' pamphlet "Select Bibliography of Revisionist Books Dealing with the Two World Wars and Their Aftermath," available in Barnes (ed.), The Rightwing Tradition in America [New York: Arno, 1972].)

As a consequence of their exposure to revisionist works, libertarians have acquired a more sophisticated awareness of the historical continuity underlying America's expansionist foreign policy and of the economic factors that have been important in shaping it. In particular, historical revisionism has played a vital role in penetrating the veil of anticommunist ideology which has served to justify America's interventionist role in world affairs during the post-1945 period.

Unfortunately, however, the response thus far to the work of revisionist historians has largely been restricted to passive acceptance or, in some cases, active cheering. Very few have undertaken the more difficult task of elaborating a theoretical framework capable of "explaining" the nature and evolution of U.S. foreign policy in terms of a solid free market analysis. Historical revisionism and Austrian economics have been largely compartmentalized areas of scholarship and little effort has been made to systematically integrate these two disciplines. A few, such as Murray Rothbard, Leonard Liggio, and Walter Grinder, are important exceptions to this generalization and some of their work will be discussed later.

A major reason for this failure has been the lingering taint attached to theories of imperialism by those who continue to view them as necessarily the product of a (fundamentally flawed) Marxist economic analysis. Such an attitude, however, overlooks non-Marxist theories of imperialism. The latter group encompasses economic analyses which are highly uneven in quality, but nevertheless contain useful insights for the elaboration of an authentically libertarian theory of imperialism.


Ever since the emergence of systematic laissez-faire economic analysis in England in the late 18th and early 19th centuries, advocates of laissez-faire economic doctrines have served in the forefront of anti-imperialist movements. While early critiques of England's colonial foreign policy had focused primarily on political and moral objections, Adam Smith's Wealth of Nations presented the first comprehensive economic refutation of the mercantilist doctrines which had been used to justify the acquisition of colonies. Upholding the virtues of division of labor, economic specialization, and freedom of trade, Smith persuasively argued that protectionism and regulation of commerce would hamper, rather than promote, economic growth and welfare.

The insights of Adam Smith were later amplified by the two leading representatives of the Manchester School, Richard Cobden and John Bright, who vigorously campaigned on behalf of a strict noninterventionist foreign policy for England. While most people are probably aware that Cobden and Bright led the struggle to repeal the Corn Lawsas oppressive interference with free traderelatively few are aware of their extensive involvement in the peace movement in England or, in particular, their outspoken opposition to England's involvement in the Crimean War. This had been an extremely popular war in England and both Cobden and Bright suffered widespread vilification as "peace at any price" men. Their active role as critics of England's foreign policy is discussed in Donald Read's Cobden and Bright (London: Edward Arnold, 1967), William Dawson's Richard Cobden and Foreign Policy (London: George Allen and Unwin, 1926) and J.A. Hobson's Richard Cobden: The International Man (London: Ernest Benn, 1919, 1968).

Neither man was a pacifist but both were acutely aware of the necessary connection between laissez-faire economic policies and noninterventionism abroad. The first pamphlets written by Cobden, "England, Ireland and America" and "Russia," advanced a theme which he and Bright reiterated often in later years: war and intervention abroad are parasitic and destructive activities which sap the strength of the domestic economy and ruin trade. Such a foreign policy is necessarily accompanied by heavy national debt and oppressive taxation, which handicap industry, trade, and agriculture. Furthermore, the political consequences would inevitably be a strong executive government progressively restricting the role of Parliament, using the pretext of the need for secrecy in diplomatic activity. The extent of Cobden's opposition to England's interventionist foreign policy is indicated by the following:

I am opposed to any armed intervention in the affairs of other countries. I am against any interference by the Government of one country in the affairs of another nation, even if it be confined to moral suasion. Nay, I go further, and disapprove of the formation of a society or organization of any kind in England for the purpose of interfering in the internal affairs of other countries. (Quoted in Dawson, p. 108)

Cobden had perceived that England's aristocratic class was the major antagonist of free trade and, similarly, that the landed aristocracy was the strongest supporter of an interventionist foreign policy: "Wars have ever been but another aristocratic mode of plundering and oppressing commerce" (Quoted in Dawson, p. 122). Cobden's unrelenting hostility to the foreign policy of Lord Palmerston is best summarized in the following excerpt from one of his letters:

[W]e shall do no good until we can bring home to the conviction and consciences of men the fact that, as in the slave-trade we had surpassed in guilt the whole world, so in foreign wars we have been the most aggressive, quarrelsome, warlike and bloody nation under the sun. (Quoted in Dawson, p. 122)


Across the Atlantic, America's first tentative efforts to annex overseas territories at the end of the 19th century prompted the emergence of a broad anti-imperialist movement. The Anti-Imperialist League founded in 1898 served as the leading organizational embodiment of the movement and, with few exceptions, the organizers of the League were firm adherents of laissez-faire economic doctrines. Like the Manchester School of Cobden and Bright (which strongly influenced the anti-imperialist movement in the United States), these individuals perceived that free trade and anti-imperialism are inextricably bound together. Historical accounts of the movement at the turn of the century are available in E. Berkeley Tompkins, Anti-Imperialism in the United States: The Great Debate, 1890-1920 (Philadelphia: University of Pennsylvania Press, 1970) and Robert L. Beisner, Twelve Against Empire: The Anti-Imperialists, 1898-1900 (New York: McGraw-Hill, 1968). Harold Francis Williamson, in Edward Atkinson: The Biography of an American Liberal, 1827-1905 (Boston: Old Corner Book Store, 1934, New York: Arno, 1972), provides an interesting biography of one of the leaders of the Anti-Imperialist League. Atkinson had been active in the abolitionist movement, raising funds to supply John Brown's guerrillas in Kansas with weapons and ammunition, and had campaigned vigorously for an end to tariffs and government-backed banking and currency. (The biography discusses Atkinson's great respect for the economic analysis of Frederic Bastiat.)

William Graham Sumner's essay "The Conquest of the United States by Spain" (Chicago: Gateway/Regnery) provides an excellent introduction to the main elements of the anti-imperialist critique of American foreign policy. Sumner explained the title of the essay in the following manner: "We have beaten Spain in a military conflict, but we are submitting to be conquered by her on the field of ideas and policies. Expansionism and imperialism are nothing but the old philosophies of national prosperity which brought Spain to where she now is." (p. 139)

Sumner went on to develop the theme that republic and empire are antithetical concepts and that interventionism abroad would require the abandonment of America's traditional isolationist policies as well as her anticolonial heritage. Moreover, he argued, annexing overseas territories is morally wrong, violating such fundamental principles as liberty, democracy, equality, and self-government. Sumner stressed that the values of militarism and "industrialism" are inherently antagonistic, and that imperialism would result in the triumph of militarism. On a purely practical level, he challenged the assumption that the United States could effectively administer a far-flung colonial empire embracing people of different backgrounds and cultures, and charged that the colonies would become a serious drain on American economic resources.

The isolationist movement prior to World War II provides another example of an anti-interventionist movement which mobilized the support of a large number of adherents of classical liberalism (although the movement as a whole encompassed a broad spectrum of political views). A detailed bibliography covering this field is available in Justus Doenecke's "The Literature of Isolationism: A Guide to Non-Interventionist Scholarship, 1930-1972" (Colorado Springs: Ralph Myles, 1972). In addition, a penetrating analysis of the origins and development of the isolationist movement is provided in Leonard Liggio's essays in Left and Right ("Why the Futile Crusade?" Spring 1965, pp. 4-22, "Isolationism: Old and New," Winter 1966, pp. 19-35; "Early Anti-Imperialism," Spring 1966, pp. 39-57; "Palefaces or Redskins: A Profile of Americans," Autumn 1966, pp. 48-60; "Jonas on Isolationism in America," Spring-Summer 1967, pp. 55-61).

Liggio's model of "Paleface"–"Redskin" tensions within American society (Autumn 1966) offers an original and valuable framework for analysis of the isolationist movement. The Redskin category encompasses the mass of American people who fled statist oppression in Old World feudal systems and who instinctively recognize that their real enemy is their own government rather than the "official" enemies abroad used to divert attention from domestic problems. The "Palefaces," on the other hand, are those who seek to implant the feudal structures of the Old World in American society, transforming the contractual relationships of a market economic system into the static status relationships of feudalism. Liggio argued that the isolationist movement is a manifestation of the underlying hostility between the Redskin and Paleface in American society.

More recently Ronald Radosh has written a major new study Prophets on the Right: Profiles of Conservative Critics of American Globalism (New York: Simon and Schuster, 1975) which analyzes in detail five of the leading Old Right isolationists. This book is particularly significant because it was written by a prominent "New Left" revisionist historian and offers a highly favorable evaluation of the isolationist heritage.


John T. Flynn's As We Go Marching (Garden City, New York: Doubleday, Doran, 1944; New York: Free Life, 1973) remains one of the most brilliant analyses of the New Deal to have emerged from that period. Flynn—leader of the militant New York chapter of the America First Committee—traced the emergence of fascist economic systems in Germany and Italy and then noted their close similarities to the economic policies adopted by the United States during the New Deal. He defined "fascism" as:

a system of social organization in which the political state is a dictatorship supported by a political elite and in which the economic society is an autarchial capitalism, enclosed and planned, in which the government assumes responsibility for creating adequate purchasing power through the instrumentality of national debt and in which militarism is adopted as a great economic project for creating work as well as a great romantic project in the service of the imperialist state, (p. 161, 2nd ed.)

Flynn's analysis stressed the inevitable autarchic dimension of Keynesian demand-management policies. He argued persuasively that imperialism and militarism constitute essential elements of fascist economic systems since they provide the only channels for massive government expenditures that will command the enthusiastic support of conservative economic interests. Thus, while the primary focus of the book is the domestic economic policies of the New Deal, he set out to demonstrate that such domestic policies have clear implications for foreign policy. He arrived at the important theoretical insight that domestic and foreign policies in a "state capitalist" system are inextricably linked, so that neither can be fully understood in isolation.

The work of Lawrence Dennis provides a useful complement to Flynn's study. Like Flynn, Dennis anticipated the emergence in the United States of a regimented corporate state which would attempt to plan consumption patterns, maintain expenditures to keep full employment, and protect the economy through high tariffs. Dennis was far from an advocate of laissez-faire economic policies, however. He was an adherent of Frederick Jackson Turner's frontier thesis, believing that America's expanding frontier had provided a necessary outlet for the domestic economy and that the end of the continental frontier confronted American policymakers with a choice between fascism and communism.

Unlike Flynn, Dennis appeared to believe that a strong authoritarian executive state might be able to implement an isolationist foreign policy. While his analysis is marred by the assumption that capitalist systems are inherently vulnerable to crises of overproduction, Dennis provided an illuminating study of the emergence of fascist economic institutions, a study which continues to have considerable relevance for contemporary social analysis. His three most important works are: Is Capitalism Doomed? (New York: Harper, 1932), The Coming American Fascism (New York: Harper, 1936) and The Dynamics of War and Revolution (New York: Weekly Foreign Letter, 1940). Justus Doenecke has traced the evolution of Dennis' thought in "Lawrence Dennis: The Continuity of Isolationism" (Libertarian Analysis, Winter 1970, pp. 36-63).

Garet Garrett is another prominent representative of the isolationist movement who recognized the important links between domestic economic policies of the New Deal and interventionist foreign policies adopted during World War II and the postwar period. In a series of three essays published in 1953 as The People's Pottage (Boston: Western Islands, 1965), Garrett traced the "revolution within the form" that occurred during the New Deal period and resulted in a concentration of power within the executive branch of government, the adoption of systematic deficit financing, and dramatically increased governmental control of the allocation of investment through such agencies as the Reconstruction Finance Corporation. Arguing that war had become an instrument of domestic policy designed to prolong an inflationary "boom" period, Garrett concluded that "we have crossed the boundary that lies between Republic and Empire" (p. 93).

Among the fundamental characteristics of Empire Garrett listed: a strong executive power, subordination of domestic to foreign policy, ascendancy of the military over the civilian mind, a dominant psychological sense of constant fear, and a "vast system of entanglement" which would automatically involve the United States in any conflict that erupted in any part of the world. Garrett's essay on the "Rise of Empire" vigorously attacked U.S. involvement in Korea, characterizing that country as an example of the "satellite nations" which had become increasingly dependent on U.S. military and economic aid and which were "scattered all over the body of the sick world like festers" (p. 120). (A complementary work by Garrett is The American Story [Chicago: Henry Regnery, 1955].)


Harry Elmer Barnes is well known for his important contributions to revisionist scholarship on both World War I and World War II. Among his most prominent works are The Genesis of World War (New York: Knopf, 1929), In Quest of Truth and Justice (Chicago: National Historical Society, 1928; Colorado Springs: Ralph Myles, 1972), and an edited volume, Perpetual War for Perpetual Peace (Caldwell, Idaho: Caxton, 1953; Westport, Connecticut: Greenwood, reprint of 1953 ed.). In addition, Barnes wrote an important series of pamphlets which were privately printed and therefore are not readily accessible: "Shall the United States Become the New Byzantine Empire?" (1947), "The Struggle against the Historical Blackout" (1947, 1952), "The Court Historians versus Revisionism" (1952), "The Chickens of the Interventionist Liberals Have Come Home to Roost" (1954), "Blasting the Historical Blackout" (1962), and "Revisionism and Brainwashing: A Survey of the War-Guilt Question in Germany after Two World Wars" (1962).

Barnes' theoretical contributions to an understanding of postwar foreign policy are comparatively less well known than his earlier work. Murray Rothbard, in "Harry Elmer Barnes as Revisionist of the Cold War" (in Arthur A. Goddard (ed.), Harry Elmer Barnes, Learned Crusader [Colorado Springs: Ralph Myles, 1968]), focused on Barnes' use of George Orwell's 1984 as a model for understanding the emergence of "military state capitalism" in the United States. While this theme was raised in Barnes' Perpetual War for Perpetual Peace, it was most extensively developed by him in an unpublished manuscript, "How'Nineteen Eighty-Four' Trends Threaten Peace, Freedom and Prosperity."

Barnes believed that U.S. postwar economic prosperity could be largely attributed to military expenditures and a permanent war economy. Perpetual war against an ever-changing external enemy served to justify massive military expenditures which increasingly politicized the domestic economy and stifled dissent. Barnes particularly criticized the increasing invasion of civil liberties and the cooptation of "court" intellectuals within the educational system who became skilled in Orwellian semantics and doublethink. As in Orwell's 1984, war had indeed become an economic and political necessity.

Another early critic of the permanent war economy was Arthur A. Ekirch in The Decline of American Liberalism (New York: Longmans, Green, 1955) and The Civilians and the Military (New York: Oxford University Press, 1956). In these books Ekirch traced the decline of classical liberalism and of the antimilitarist spirit in the United States, culminating in an unprecedented peacetime militarization of both government and economy. Considerably ahead of the New Left critics of the 1960's, Ekirch pinpointed the emergence and consolidation of a vast military-industrial complex which required a progressive abandonment of laissez-faire economic policies.

Perceiving the permanent war economy as a system designed to maintain economic prosperity and to avoid another depression, Ekirch analyzed the postwar foreign aid program as a system of subsidies to expand American export markets. Like Barnes, Ekirch stressed the close connection between the garrison state and the police state, and criticized the intimate ties evolving between the state and the educational system. As an adherent of classical liberalism, Ekirch understood better than most the profound antagonism between a free market economy and the military state capitalism that is required to maintain an interventionist foreign policy.

It should be noted that the five critics of America's interventionist foreign policies discussed above were consistent in their criticism of both U.S. involvement in World War II and foreign policy in the cold war. They were unanimous in denouncing the vast system of "entangling alliances" which U.S. policymakers had constructed in the postwar period and, in particular, they vigorously criticized the U.S. role in the Korean War. In contrast, many other isolationists abandoned their earlier position in favor of active support for U.S. cold war foreign policies. This shift has been analyzed by Murray Rothbard in "The Transformation of the American Right" (Continuum, Vol. II, 1964, pp. 220-231) and "Confessions of a Right Wing Liberal" (Ramparts, June 15, 1968, pp. 47-52). Leonard Liggio has also stressed the key role that the domestic China Lobby played in stifling the development of isolationist opposition to U.S. interventionist policies in Asia during the early years of the cold war ("Isolationism: Old and New").


Isolationist critics of U.S. foreign policy have generally demonstrated a more perceptive understanding of the dynamics of imperialism than many earlier critics. For the most part the Manchester School led by Cobden and Bright in England and the anti-imperialists in the United States at the end of the last century focused their critique of imperialism on the pernicious consequences which they argued necessarily result from interventionist policies abroad. Using the doctrines of free trade, these critics persuasively demonstrated that the anticipated economic benefits of imperialism are illusory and that, in fact, imperialism would result in the increasing debilitation of economic activity. They also stressed the undesirable political consequences, and eloquently stated the moral objections to the statist oppression, both foreign and domestic, which imperialism entails.

Nevertheless, very few of these early critics sought to explore in any systematic fashion the causal factors underlying imperialism. Cobden's insight that the aristocratic class constituted the supporting bulwark of England's interventionist foreign policies was extremely important, but he never articulated a systematic analysis of the tensions between England's feudal class structure and expanding market system. Such an analysis would be particularly essential for a proper understanding of the incomplete capitalist revolution in England and the eventual collaboration which developed between England's emergent bourgeoisie and the remnants of its feudal aristocratic class.

U.S. isolationists of the Old Right, while adopting many of the themes raised by earlier critics of imperialism, displayed a more sustained concern with identifying the roots of the expansionist urge in American foreign policy. Perhaps their most important contribution was the recognition, at least on an implicit level, that American domestic and foreign policies are related and that one cannot understand interventionism abroad without reference to the domestic economy. In particular, these critics perceived that the Keynesian economic policies adopted in an effort to promote recovery from the Depression were an important factor in the subsequent growth and consolidation of a vast military-industrial complex, as well as in the systematic intervention abroad which characterized U.S. foreign policy in the cold war period. Unswayed by the rhetoric of anticommunist ideology, they pointed out that military and foreign aid expenditures constitute a significant form of state intervention in the market process which benefits and protects well-defined economic interests.

While the Marxist-Leninist theory of imperialism is undoubtedly the best known, there are a number of non-Marxist theories which should receive attention from those interested in achieving a theoretical understanding of foreign expansionism. Most of these were developed either during, or in response to, the sudden burst of colonial annexations by European governments in the 40 years preceding World War I. As a result, the theories are generally not addressed to the more indirect forms of political and economic control which evolved at a later date.


The earliest attempt to develop a systematic theory was J.A. Hobson's Imperialism (Ann Arbor: University of Michigan Press, 1972, orig. publ. 1902). This work proved extremely influential in subsequent efforts in the field. In particular, Hobson's analysis had a major impact on European Marxists who had begun to formulate their own theories of imperialism from within the Marxist tradition. And Lenin, in Imperialism: The Highest Stage of Capitalism, explicitly acknowledged the influence of Hobson.

Hobson, who considered himself a true heir to Richard Cobden's critique of British foreign policy, wrote Imperialism in the aftermath of his disillusionment with British involvement in the Boer War. The book offers a detailed presentation of his view that capitalist economic systems are characterized by inherent expansionist tendencies resulting from a "mal-distribution of consuming power" which encourages "excess saving." Excess saving culminates in reckless overproduction, forcing prices down and precipitating economic collapse.

Hobson believed that this instability within the capitalist system explained the widespread emergence of trusts which sought to achieve price stability via regulation of output. While successful in this aim, the formation of trusts merely raises the problem of excess saving to a higher level, since regulation of output severely restricts domestic outlets for the excess savings (which are already increased by monopoly profits). Thus, according to Hobson's theory, the real impetus underlying imperialist expansion was not the search for overseas markets, although this may have played an important role in the early stages. Rather, the most important fact was an intensified search for investment outlets.

Hobson stressed that imperialism could not be justified at the aggregate economic level:

It has indeed been proved that recent annexations of tropical countries, procured at great expense, have furnished poor and precarious markets, that our aggregate trade with our colonial possessions is virtually stationary, and that our most profitable and progressive trade is with rival industrial nations, whose territories we have no desire to annex, whose markets we cannot force, and whose active antagonism we are provoking by our expansive policy, (p. 71)

He pointed out, however, that "although the new Imperialism has been bad business for the nation, it has been good business for certain classes and certain trades within the nation" (p. 46). He singled out manufacturers in export-oriented industries, shipbuilders, and armaments manufacturers as prominent beneficiaries of imperialist policies. Describing these special interests as "economic parasites of imperialism," Hobson provided a detailed and illuminating analysis of the various devices, particularly in the area of fiscal policy, designed to socialize the costs associated with overseas business activities.

Hobson's focus on the crucial role of overseas investment outlets naturally brought him to emphasize the strategic position of international bankers ("the central ganglion of international capitalism") in formulating imperialist policies:

…it is true that the motor-power of Imperialism is not chiefly financial: finance is rather the governor of the imperial engine, directing the energy and determining its work: it does not constitute the fuel of the engine, nor does it directly generate the power. Finance manipulates the patriotic forces which politicians, soldiers, philanthropists, and traders generate; the enthusiasm for expansion which issues from these sources, though strong and genuine, is irregular and blind; the financial interest has those qualities of concentration and clear-sighted calculation which are needed to set Imperialism to work. (p. 59)

Hobson did not consider himself a socialist, but he argued forcefully that the survival of capitalism would require social reform to alter the distribution of income and terminate the "excess saving" at the root of imperialist expansion. He believed that the maldistribution of income which he observed in capitalist systems was the consequence of imperfect equality in bargaining power among participants in the market economy. It is unclear whether Hobson regarded such inequality as endemic to a market economy or as a consequence of various forms of government privilege. In either case, a more equitable distribution of income would raise the level of domestic consumption and thereby provide an adequate outlet for domestic production without precipitating either cartelization of industry or foreign expansion.

Hobson's theory of imperialism is thus essentially dependent on the familiar "overproduction/underconsumption" thesis which pervades both the orthodox Keynesian and Marxist critiques of laissez-faire economic systems. Because of Hobson's considerable influence on later writers in this field, the vulnerability of capitalism to overproduction emerges as a recurring theme in many non-Marxist theories of imperialism.


For example, Parker T. Moon, in Imperialism and World Politics (New York: Macmillan, 1926), placed great emphasis on "the economic pressure which imperialism seeks to relieve—the pressure of surplus goods and surplus capital on a temporarily saturated market" (p. 519). Although his study included a detailed descriptive account of the surge in colonial annexations during the last decades of the 19th century, it also provided an extremely valuable elaboration of Hobson's insight that imperialism must be analyzed at the level of individual economic interests rather than at the level of the economy as a whole, since some interests profit more from state-subsidized overseas expansion.

Moon's analysis focused on the powerful, well-organized, and active business interests which shaped the nation's foreign policy and profited from the annexation of overseas territories. Government and military officials were seen as the "allies" of these interests rather than the primary impetus behind imperialist expansion. Like Hobson, Moon attributed particular importance to the role of bankers: "The most influential of all business groups, the bankers, may be said not only to have a direct interest in imperialism, through colonial investments, but to represent indirectly all the above-mentioned interests, for banks have financial fingers in every industrial pie" (p. 61).

Recognizing that these business interests constitute a distinct minority within any country and that the overwhelming majority of the people have no direct interest in imperialist expansion, Moon then analyzed the ideas that are influential in activating the majority to actively support the imperialist minority. "It requires ideas, attuned to instinctive emotions, to make modern nations fight" (p. 67). While business interests take the initiative in promoting overseas expansion, the necessary support for this activity is achieved through the manipulation of ideas. This line of analysis led Moon to the conclusion that "imperialism, nay, all history, is made by the dynamic alliance of interests and ideas" (p. 74).

Hobson's notion that overproduction in the domestic economy constitutes the source of the expansionist urge abroad received strong reinforcement within American historical scholarship from Frederick Jackson Turner's widely known "frontier" thesis, which held that America's westward expansion had provided a valuable outlet for a growing domestic economy. Once this expansion had reached its continental limits, however, many concluded that economic prosperity could only be maintained through overseas expansion. For an analysis of Turner's importance see William Appleman Williams, "The Frontier Thesis and American Foreign Policy" in History as a Way of Learning (New York: New Viewpoints, 1973).

Charles A. Beard was another leading American historian who adopted a variant of the overproduction thesis. In two books, The Idea of National Interest (New York: Macmillan, 1934) and The Open Door at Home (New York: Macmillan, 1935), Beard developed his view that two parallel conceptions of the national interest, both assuming that outward expansion and exports are necessary conditions of domestic prosperity, had guided the formation of American foreign policy since independence. Beard argued that the economic collapse of 1929 challenged the assumptions underlying both conceptions and, in terms very reminiscent of Hobson's proposals for a redistribution of income, he proposed an "open door at home" policy as a solution to the crisis of capitalism. Such a policy would be based on the central idea that "by domestic planning and control the American economic machine may be kept running at a high tempo supplying the intranational market, without relying primarily upon foreign outlets for 'surpluses' of goods and capital" (The Idea of National Interest, p. 552). Beard's analysis has had considerable influence on that of William Appleman Williams and other "New Left" revisionist historians during the past several decades.

From these brief examples, it is clear that the overproduction thesis elaborated by Hobson has been a common element in many attempts to explain American continental and overseas expansion. In fact, the overproduction/underconsumption critique pervades an astonishing variety of theoretical analyses of contemporary capitalism, ranging from the orthodox Keynesian models to the Paul Baran/Paul Sweezy studies within the Marxist tradition. As one author surveying theories of imperialism has noted:

The idea of surpluses seeking outlets—indeed, the whole problem of effective demand, of which such ideas are the center—seems to arise spontaneously in the minds of a great many students of economics seeking the reasons for capitalism's failure to maintain an equilibrium between production and consumption. (Earle M. Winslow, The Pattern of Imperialism [New York: Columbia University Press, 1948], p. 104)

Moreover, considerable historical evidence indicates that U.S. policymakers have been guided by a fundamental consensus, often explicitly acknowledged, concerning expansion of America's export markets as a necessary condition of preserving domestic prosperity. Franklin D. Roosevelt said in 1935 that "foreign markets must be regained if America's producers are to rebuild a full and enduring domestic prosperity for our people. There is no other way if we would avoid painful economic dislocations, social readjustments, and unemployment." This view was also reflected in Dean Acheson's conclusion, expressed in November 1944, that "we cannot have full employment and prosperity in the United States without the foreign markets." (Roosevelt and Acheson are quoted in William Appleman Williams, The Tragedy of American Diplomacy [New York: Dell, 1959, pp. 202-203 and p. 162, respectively.)


Those with a background in Austrian economics should be well acquainted with the classic statement of Say's Law of Markets and the logic behind the contention that a situation of absolute or general overproduction (or underconsumption) cannot emerge in the free market. The economist Benjamin M. Anderson offers the following concise summary of Say's Law:

Supply and demand in the aggregate are…not merely equal, but they are identical, since every commodity may be looked upon either as supply of its own kind or as demand for other things. (Economics and the Public Welfare [New York: Van Nostrand, 1949])

Since supply and demand are ultimately identical, general overproduction becomes a logical impossibility. These observations are based on the implicit, but highly important, assumption that an unhampered market system exists, permitting relative price levels to adjust to the proportions which reflect the structure of market demand. (For an analysis of Say's Law and a critique of the concept of overproduction see: Ludwig von Mises, "Lord Keynes and Say's Law," Planning for Freedom [South Holland, Illinois: Libertarian Press, 1963]; Frederic Bastiat, Economic Sophisms [Princeton: Van Nostrand, 1964]; Henry Hazlitt, The Failure of the New Economics [Princeton: Van Nostrand, 1959, 1960; New Rochelle: Arlington House, 1974]; Phillips, McManus, and Nelson, "Overproduction, Underconsumption and Maldistribution of Income as Cyclical Forces" in Banking and Business Cycles [New York: Macmillan, 1937], pp. 53-57; and Joseph Schumpeter, History of Economic Analysis [New York: Oxford University Press, 1954], pp. 538-39, 621-25, 740-43.)

The widespread popularity of some variant of the overproduction thesis should not be dismissed merely as an example of popular error on a massive scale. The fact that otherwise perceptive social analysts from fundamentally different theoretical perspectives agree on the importance of the overproduction thesis and, more importantly, that this agreement is shared by prominent and politically active members of American society, suggests the possibility that this thesis is not entirely mistaken. It may represent an attempt, however imperfect, to describe certain "real world" phenomena which are the product of state intervention in the market process. The analyst untrained in Austrian business cycle theory might interpret the resulting distortions in the market process as a natural consequence of the market.

In view of this possibility, it might be desirable for those with a firm grasp of Austrian economic theory (and particularly business cycle theory) to critically evaluate the overproduction thesis. Such an analysis should be an essential element in any effort to formulate a systematic libertarian theory of imperialism. Joseph Stromberg, in "The Political Economy of Liberal Corporatism" (Individualist, May 1972, pp. 2-11) and in a subsequent paper, "American Monopoly Statism and the Rise of Empire" (delivered to the first Libertarian Scholars Conference, New York, October 1972), has made an important initial effort in this direction. While his economic analysis may be challenged, Stromberg's work remains essential reading for those interested in this field, since it is a sophisticated attempt to trace the relationship between domestic economic intervention and military intervention abroad.


Stromberg's analysis is strongly influenced by Joseph Schumpeter, who sought to formulate a non-Marxist theory of imperialism in his essay "Imperialism" (New York: Meridian, 1955, orig. publ. 1919). Schumpeter's model of "export dependent monopoly capitalism" included a variant of the overproduction thesis. It was a distinct advance on Hobson's earlier model, however, since it explicitly and forcefully contended that neither cartelization nor overproduction are natural attributes of the market process: "export monopolism does not grow from the inherent laws of capitalist development" (p. 88, emphasis in original). Rather, they are the consequence of intervention in the market. "[I]t is a basic fallacy to describe imperialism as a necessary phase of capitalism, or even to speak of the development of capitalism into imperialism" (p. 89).

Schumpeter focused especially on the role of protectionism in facilitating the formation of cartels and trusts in the domestic economy and on the resulting distortions. His analysis stressed the intimate ties between bankers and the cartel organizers and noted that the two may often be identical. These state-fostered monopolies maximize their profits by restricting output on the domestic market and resort to "dumping" in foreign markets as a means of exploiting economies of scale. Protectionism and "dumping" intensify the conflict of interest among nations, and precipitate a process of forcible expansion abroad.

Schumpeter repeatedly stressed the "atavistic" nature of imperialism, and argued that a capitalist system is inherently anti-imperialist: "We must expect that anti-imperialist tendencies will show themselves wherever capitalism penetrates the economy and, through the economy, the mind of modern nations" (pp. 69-70). Schumpeter perceptively recognized, however, that the capitalist transformation of society had nowhere been permitted to achieve its completion; instead, social formations from the feudal period persisted and, as a consequence, imperialist attitudes were "suppressed" rather than eliminated, leaving open the possibility of a subsequent alliance of feudal interests with other economic interests. "The social pyramid of the present age has been formed, not by the substance and laws of capitalism alone, but by two different substances, and by the laws of two different epochs" (p. 92).


For those interested in the theoretical literature on imperialism, Earle M. Winslow's The Pattern of Imperialism (New York: Columbia University Press, 1948) provides an extremely valuable survey of the field. He traced the intellectual history of imperialism from the early blasts at mercantilism by Adam Smith and concluded with an attempt to formulate a new critique of imperialism, focusing on its essential nature as a "political phenomenon." Winslow categorized earlier theories under two broad headings: those which consider imperialism a necessary outgrowth of capitalist economies (the "stage" doctrines) and those which consider it a phenomenon neither restricted to capitalist economies or necessarily an outgrowth of such economies (the "policy" doctrines).

His analysis of the evolution of Marxist theories of imperialism—from the sketchy and ambivalent formulations in Marx's own writings to Lenin's and Luxemburg's theories—is especially valuable. In view of Winslow's praise of Rudolf Hilferding's classic work Das Finanzkapital, the fact that this seminal work has remained untranslated for more than 50 years proves particularly frustrating. Hilferding challenged the assumption that imperialism is a necessary stage in the development of capitalist economies and, instead, focused on the strategic role of the bankers who control the monetary and banking structures. He contended that the policies adopted in this sector introduce major distortions in the price mechanism, thereby disrupting its equilibrating function and consolidating the domination of the "production process" by the "circulation process." These developments, in Hilferding's analysis, are the key to a full understanding of the transition from laissez-faire and free trade to the imperialist outlook characteristic of finance capital. While Hilferding was hardly an adherent of laissez-faire economics, the compatibility between certain elements of his theory and aspects of the Austrian theory of the business cycle remain striking.

Winslow's own analysis of imperialism is valuable for its persistent focus on the possibility that expansionist tendencies in capitalist societies might have some relationship to the business cycle and that this possibility requires a detailed analysis of the role of banking institutions and credit creation in generating economic instability. Unfortunately Winslow's analysis is marred by his argument that the credit creation underlying the business cycle is the outcome of unrestrained competition among banks rather than state-enforced cartelization of the banking sector.

Winslow's book is also useful for its chapter on "Imperialism and War as Political Phenomena," in which he sought to develop the distinction between "economic" and "non-economic" competition (or "economic power" and "naked power"). While this is an essential distinction for any theoretical analysis of imperialism, Winslow was not fully successful in elaborating its implications. A much more fruitful and systematic analysis is Franz Oppenheimer's discussion of "political means" and "economic means" in The State (New York: Free Life Editions, 1975, orig. publ. 1914). Another illuminating analysis is offered by Albert Jay Nock in his comparison of "social power" and "State power" in Our Enemy, the State (New York: Free Life Editions, 1973).

In more recent years, a number of brilliant insights into certain dimensions of imperialism have been presented in articles by Murray Rothbard and Leonard Liggio in Left and Right. The seminal article, "Left and Right: The Prospects for Liberty" (Spring 1965) by Murray Rothbard focused on the revolutionary implications of the capitalist transformation of society in Europe and England but at the same time suggested that this transformation was not complete; feudal social structures were not entirely uprooted. Liggio proceeded in his Left and Right article, "Why the Futile Crusade?", to develop the implications of such an analysis for an understanding of contemporary imperialism in the Third World:

Instead of the radical reorientation of society implicit in capitalism, the application of capitalism was circumscribed within a narrow range by the pre-capitalist institutional instruments of exploitation which continued in force. Thus, not only was the capitalist revolution thwarted in Western Europe and America, but their ruling classes were able to exploit the feudal conditions existing in Europe, Asia, Africa and Latin America through the system of imperialism. The imperialist power of the Western countries prevented the overthrow of feudalism by capitalist revolutions in Eastern Europe, Asia, Africa and Latin America and imposed on the world's peoples a double or reinforced system of exploitative imperialism—by which the power of the Western governments maintains the local ruling class in exchange for the opportunity to superimpose Western exploitation upon existing exploitation by the local ruling states. Imperialism or double exploitation has caused the twentieth century struggle against feudalism and for progress to take a form different from the earlier Western European struggle against feudalism. (p. 24)

This analysis of the impact of imperialism could be usefully supplemented by Stanislav Andreski's discussion of domestic class structures in Latin America in Parasitism and Subversion (New York: Pantheon, 1966). Andreski's work was greatly influenced by the class analysis of the French laissez-faire theorist, Charles Comte, and his concept of "parasitism" bears a close resemblance to Oppenheimer's concept of "political means." Andreski analyzed in detail the various institutional forms of parasitism endemic to the semi-feudal societies of Latin America, and focused on the characteristic "parasitic involution" of capitalism. While he tended to dismiss the role of external intervention in reinforcing such parasitic structures, his work nevertheless complements Liggio's focus on imperialism as the imposition of a double layer of exploitation.

Studies are now needed which will systematically analyze, from an explicitly libertarian perspective, the more sophisticated and subtle political means that have tended to replace colonial annexation at the international level, particularly focusing on the impact of such intergovernmental institutions as the International Monetary Fund and the International Bank for Reconstruction and Development. Hopefully, this brief and highly selective survey of some non-Marxist theoretical approaches to imperialism will serve to stimulate greater interest in this field.

Alan Fairgate is currently pursuing a combined business and law program at a leading eastern university. His article "The RFC Rides Again" (co-authored with Walter Grinder) appeared in REASON's July 1975 issue.