Where mercantilism/colonialism makes profits from trade on the basis of unequal exchange, industrial capitalism/imperialism makes profits on the basis of production, and extraction of relative surplus value. Consequently, its motivation for international expansion is not at all simply the ability to sell overproduced commodities. Its motivation is to access additional supplies of exploitable labour, as one means of delaying the point at which capital is overproduced relative to the social working-day. But, as Lenin and Marx point out, what this also allows is a greater degree of social division of labour, now on an international scale, with ranges of use values from some economies then being exchanged for other use values from other economies. Globalisation is the obvious result of this process.
However, the export of productive-capital to access new exploitable reserves of labour is not the only consideration. The fact that such labour exists does not mean it can be immediately and profitably exploited. Marx's analysis of the opening up of new lands, in relation to his explanation of rent, is significant here. More naturally fertile land, contrary to Ricardo, is not necessarily cultivated first, because it may be remote from markets, or else requires large expenditures of capital before it can be used. It may require drainage and irrigation, as well as the production of infrastructure in the shape of roads, storage facilities and so on. Trade, and so markets, always develops most rapidly between geographically close economies. Its this which acts as the economic basis for the development of the capitalist nation state, as the capital operating within its borders requires a level playing field, a common language, laws, currency and customs – (See blogs on Marxism, Zionism and the National Question.
It is also why, in the era of imperialism, and the dominance of industrial capitalism, capital exports are concentrated between such neighbours, and provide the basis for the development of the multinational state, as capital bursts through the fetters imposed on it by the borders of the nation state. Its why the US had to go through the Civil War, so that it was not just a federation of separate states, but a federal state in which the power was centralised, and the states subordinated to that power. Its why, in Europe, first France under Napoleon, and then Germany under the Kaiser and then Hitler, attempt to form a single European state, which ultimately, but inevitably arises out of a peaceful agreement, in the form of the EU, as European capital needs to compete with the US, and now with China, and other large multinational economic blocs around the globe.
Consequently, the export of capital, for the purpose of exploiting labour, requires not only the existence of such labour, but it being adequately educated and trained. It requires a minimum level of infrastructure development, so that raw materials can be delivered, and finished products sent out to ports and markets etc. Moreover, contrary to the theories of neoclassical economists, who see factors of production that are interchangeable, with the demand for each being determined by its price, capital exported to economies with plentiful supplies of cheap labour does not substitute labour for capital. Large scale capital exported to such economies continues to utilise large amounts of fixed capital, and its attraction to the supplies of cheap labour is precisely that the labour required is then almost exclusively unskilled, machine-minding labour.
As Geoffrey Kay points out, therefore, the neoclassical economists were confounded when they saw that this industrial development rather than seeing a large increase in demand for this cheap labour, instead results, at least initially, in a sharp rise in unemployment. The reason is that, to the extent that this large scale industrial capital replaces existing small scale domestic producers, it throws more of the latter out of employment than it takes up, precisely because of the more efficient more productive nature of this large-scale capitalist production.
This is all the more pronounced when capital then also enters agricultural production. Peasant farming, and particularly subsistence farming is extremely inefficient and destructive. Its inefficient nature means that it is extensive rather than intensive, requiring more land for any given amount of output. High rents discourage farmers from farming more land, but, without capital to farm more intensively, they are forced to over cultivate, and, therefore, deplete the soil. When peasant farmers must produce commodities/cash crops to obtain money to pay rents and taxes, the less efficient of them are led to overwork their land even more. The development of industrial capitalism, in the towns, with its increased dominance of markets for manufactured goods, and its demands for raw materials and food exacerbates that further.
As Marx says, this means that the demands of industrial capital on the old forms of agriculture become too great, and only then as the pre-capitalist agriculture has denuded the land does capital itself begin to invade agriculture, bringing to bear the full benefits of its science and technology. When large-scale capital invades agriculture, in developing economies, therefore, its more efficient, intensive nature not only means that it requires relatively less land, but much less agricultural labour. This was also what happened as capital invaded agriculture in Russia.
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