chapotraphouse

The main reason imperialist exploitation becomes less profitable over time is pretty analogous to why domestic exploitation becomes less profitable over time. We call it the tendency for the rate of profit to fall.

Profit always comes from the exploitation of labor and natural resources. Over a given cycle of production, a capitalist exchanges money for capital and labor, then sells resulting commodities for a profit that stems from the difference in what they paid for the labor and natural resources and the value added to the commodities over that cycle of production, i.e. profit. In a domestic scenario, each time a cycle of production happens, the capitalist will earn some profit that they will invest in more advanced means of production for the next cycle of production, cutting down the necessary labor to produce whatever commodities it is they are producing. At first, this gives them an advantage over other capitalists, but soon other capitalists will invest to adopt the same techniques, and what we call the socially necessary labor to produce this commodity will be reduced in accordance to the amount of capital invested. However, as I said earlier, profits always come from exploitation of labor and natural resources; if capitalists reduce the amount of labor that goes into each commodity they will be conducting less exploitation and the rate of profit is reduced.

Lenin described how that process took place in Europe in the turn of the 20th century, the formation of various capitalist cartels stabilized the situation a little bit as capitalists realized that as they competed with one another they were cannibalizing themselves, so they decided to divide up their countries between various cartels which could hold prices artificially high and not suffer as much from the falling rate of profit. However, this only lasted so long, and eventually capital needed to open new frontiers to begin new cycles of production, and facilitated by the advance of finance capital the advanced capitalist countries of Europe began dividing the world between themselves. But over the time same process took place, immense amounts of capital have been invested in imperialist projects which has also led to a falling rate of profit. Capital needs to renew itself continually by finding new ways to increase exploitation. Nowadays that usually means war and financial services (i.e. the type of imperialism Lenin described).

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