they're very closely connected. In fact, they're contradictory and opposed systems of economic

and political organization. Because of this confusion, many people blame capitalism and

the world trading system for bad things that have happened in the past or in the present

- the exploitation of poor people, mass famines. and like - when in fact it's imperialism and

empire that should get the blame. So what are these two different systems?

Capitalism is a system of the free exchange of goods and services between individuals

on a voluntary basis under the rule of law and in a system of private property rights.

In other words, it is a system of voluntary exchange in which all parties to the exchange

are better off. Now imperialism, by contrast, is a system of relations based upon power.

Essentially, it's a system in which certain groups of privileged people in one part of

the world are able to extract unearned income from people in other parts of the world through

the use of exploitative power relations, usually with the help of local collaborators.

The key to this is the use of political power, ultimately military power, to establish economic

relations which are involuntary and exploitative. Empires have existed throughout the whole

of human history. In fact, there are so many examples of empires that it's hard to know

where to start. So, for example, in the early 17th century the Dutch Republic created the

Dutch East India Company. This was a way in which privileged merchants in the province

of Holland in particular were able to gain monopoly rights to trade with the people of

what is now Indonesia and were able to use that and the military power of the Dutch Republic

to establish exploitative and politically domineering relations over the populations

of that part of the world.

Later on the English got in on the act and created their own East India Company, which

for over 150 years ruthlessly exploited many of the people of the Indian subcontinent,

most notably in Bengal, but elsewhere as well. Once again you had a politically privileged

group of people backed by the military power of the state establishing trade relations

with people in another part of the world that were not voluntary and which were highly exploitative.

More recently, in the Caribbean, the United Fruit Company, backed by the U.S. federal

government, was able to establish similarly exploitative relations with people in parts

of Central America, such as Honduras and Guatemala.

The important thing to realize is that while these were profit-making enterprises, they

were not true commercial capitalist businesses in the real sense of the term. The profits

that they gained were due not to free competition or voluntary cooperation with willing buyers

and sellers but the use of political power. Had we had a true capitalist system operating

here, we would've had lots of free trade between the people in the other parts of the world,

not only with people from the U.S. or the UK, but also other people from other parts

of the world. And there would have been a much more voluntary and mutually beneficial

relationship.

The results of imperialism are generally not very good. Not only does it lead to political

corruption and the exploitation of any poor people, but it often has quite catastrophic

results, such as the enormous famines which occurred in the late Victorian period in many

parts of the world. in the 1890s in particular, most notably in India but also elsewhere,

which are often blamed on capitalism, which in fact were clearly the result of the policies

of the British Empire and other colonial powers at that time. So the thing to take away is

this: imperialism is not and never has been the highest stage of capitalism. For one thing,

empires have existed long before capitalism came into existence. Capitalism and imperialism

are not complementary but contradictory and hostile systems of political, economic, and

social organization. Where one of them flourishes, the other has to decline.