Monopoly capitalism and imperialism.

During the 19th century, periodic crises speeded up the process - through bankruptcy and merger - of reducing a large number of small firms to a small number of large ones. In each sector of industry and commerce in the main imperialist countries, no more than ten or 12 large companies came to monopolise the market, often forming cartels to restrict competition. Where they could, these capitalist monopolies restricted output relative to capacity in order to obtain monopoly prices and profits.

This compelled them to find greater investment outlets abroad for their growing capital, aiming to repeat on a world scale the monopoly control they had established at home. In particular, they sought to monopolise sources of raw materials and cheap labour, thereby pre-empting imperialist rivals. More and more of these companies thereby established themselves as transnational corporations (TNCs or 'multinationals'), locating at least some of their production operations abroad.

The monopolies also sought to protect their foreign investments through political and often military control of the countries in which they operated, using this to maintain privileged markets for their own manufactures. Hundreds of millions of people - the majority of the world's population - were drawn as workers and through trade, usury and taxation into the sphere of imperialist exploitation, and into the political and cultural oppression that sustained it.

In the early 20th century, once the world was completely divided up into colonies and other spheres of influence, the expansion of any one imperialism could only be achieved at the expense of another. No stable redivision or carve-up was possible, because capitalist countries develop unevenly. The faster-growing industrial power of Germany came to challenge the status quo dominated by the older, less dynamic power of Britain.

A struggle between imperialisms became inevitable. To prepare their economies for war, and to condition or bludgeon their peoples into accepting it, the monopolists began to fuse their economic and political power into a unity: state monopoly capitalism. This is characterised by the closest collaboration and joint involvement of the capitalist monopolies and the state apparatus in economic, political and military affairs.

The conflict between imperialisms culminated in the bloodbath of the 1914-18 First World War. But as they saw through the nationalistic and bellicose slogans of their own ruling class, working people everywhere began to struggle against war and the system which had caused it.

In the Russian empire - itself a target for imperialist investment - the corruption and military incompetence of a landlord police-state helped forge an alliance between the peasants' struggle against landlordism and the workers' struggle against capitalism. Out of this came the October Revolution of 1917, when Lenin, the Bolsheviks and their allies seized political power.

From then on, imperialism was faced for the first time in its history with a system which was ending exploitation. The Union of Soviet Socialist Republics (USSR) became a new and special focus for capitalist hatred.

Within the imperialist system all the old contradictions continued to develop. The First World War had stimulated important shifts in the productive forces and production relations. Methods of mass production raised the productivity of labour very sharply, while the war economy had accelerated the growth of monopoly. As capitalism was re-stabilised in the mid-1920s, partly by the the increased intervention of the monopoly capitalist state to defeat trade union militancy and attempts at revolution, workers' consuming power grew more slowly than productive capacity. This contradiction laid the basis for capitalism's most profound periodic economic crisis, the Great Depression of the 1930s.

This crisis was uneven between imperialist countries, being deepest where the cushion of super-exploited colonies did not exist on a significant scale, but where the productive forces had grown most rapidly. In Germany, such deep crisis coincided with an organisationally strong but politically divided working class. The German ruling class turned to fascism to destroy the Communist and working class movement, in part as preparation for a new imperialist war to redivide the world in its favour.

Initially, Nazi Germany was able to use the anti-Sovietism of powerful sections of the ruling classes of other imperialist countries to strengthen its own economic and military position. The working class, on the other hand, led the struggle to build a popular front against fascism, the principal force for war. In the struggle against fascist aggression, the Soviet state and the international Communist and working class movement were able to use the divisions within imperialism - between bourgeois democracy and fascism - to prevent a united front of imperialism against the USSR. Thus the basis was created for the defeat of fascism in the Second World War. That war also marked the emergence of the United States as the world's leading imperialist power, having already established its own colonies and semi-colonies in Central and South America.

Since then, capitalism's productive forces have grown at an unprecedented rate, largely due to the scientific and technological revolution. Widely based, this has been epitomised by the computer and micro-electronics revolution, through which complex mental processes could for the first time be carried out by machines.

But for the fruits of scientific advance to be realised, an ever more complex division and unity of labour was required, with huge resources devoted to research and development. In some sectors (eg. aircraft, informatics, chemicals and robotics), giant enterprises constituted the minimum scale of operation required to achieve this, but even they needed to collaborate with other giants. The research and education needed to underpin the scientific and technological revolution could only be organised and financed through massive state involvement, and in spheres such as nuclear fusion only through collaboration between states. Few countries were large enough to sustain the scientific and technological revolution in every sector. A new division of labour between countries - with a new geographical distribution of productive forces - was necessary.

This process has been led by the transnational corporations. Their policies are tempered only by state pressure and popular struggle. The transnationals are now the decisive monopolies of imperialism, exporting capital from the home country where their headquarters and most of their biggest shareholders are based. They organise their activities between different countries in order to maximise their global profits. Their decisions - which sectors to expand, which to contract, which type of productive forces to develop, which to make redundant - determine the fate of whole regions, nations and groups of workers. Today, transnational corporations based in the USA, Japan, Britain and the other leading imperialist states account for one-third of the world's production, two-thirds of world trade and three-quarters of international investment.