Lenin's Political Economy of Information in Monopoly Capitalism

In chapter 2 of Imperialism, the Highest Stage of Capitalism (1916), Lenin offers an account of the role the transition of the banking sector plays in his stadial theory of the development of monopoly capitalism from its origins in the older capitalism with free enterprise. In the older capitalism, banks function as intermediaries between savers and entrepreneurs. In the new capitalism a few very large, concentrated banks displace entrepreneurs by controlling whole industries.

My interest in Lenin’s argument is in his diagnosis of the banks’ new comparative advantage at this point (a late stage of capitalism) which is in the manipulation of information. Today I am going to set aside questions about how Lenin’s analysis helps us think about imperialism and political theory as well as to what degree Lenin’s analysis of the evolution toward monopoly can survive scrutiny.

I will quote a passage that introduces the theme I am interested in. At this point in Lenin’s argument, Lenin is more interested in showing the concentration of capital in a few hands.

These simple figures show perhaps better than lengthy disquisitions how the concentration of capital and the growth of bank turnover are radically changing the significance of the banks. Scattered capitalists are transformed into a single collective capitalist. When carrying the current accounts of a few capitalists, a bank, as it were, transacts a purely technical and exclusively auxiliary operation. When, however, this operation grows to enormous dimensions we find that a handful of monopolists subordinate to their will all the operations, both commercial and industrial, of the whole of capitalist society; for they are enabled by means of their banking connections, their current accounts and other financial operations—first, to ascertain exactly the financial position of the various capitalists, then to control them, to influence them by restricting or enlarging, facilitating or hindering credits, and finally to entirely determine their fate, determine their income, deprive them of capital, or permit them to increase their capital rapidly and to enormous dimensions, etc. [Emphasis in Lenin]

It’s crucial to Lenin’s argument that banks have a knowledge advantage over their clients. And this knowledge advantage is part of the leverage they gain over individual firms (which have a tendency to form cartels that the banks will control) and, thereby, whole industries. As Lenin puts it, “to obtain fuller and more detailed information about the economic position of its client, the result is that the industrial capitalist becomes more completely dependent on the bank.”

This control is reinforced by banks’ control of (shareholder) positions in firms as well as appointments to boards of directors. Lenin’s argument is all about showing how cartelized industries facilitates the control of a tightly knit group of bankers’ over these industries and thereby “accelerate the process of concentration of capital and the formation of monopolies in all capitalist countries, notwithstanding all the differences in their banking laws.”

The significance of this concentration and cartelization is that the market loses its epistemic function to the banks. This is symbolized by the reduction of the significance of the stock exchange. Lenin quotes Jacob Riesser approvingly, “the Stock Exchange is steadily losing the feature which is absolutely essential for national economy as a whole and for the circulation of securities in particular—that of being not only a most exact measuring-rod, but also an almost automatic regulator of the economic movements which converge on it.” On this view, which Lenin adopts, the few great banks have internalized the measuring-rod and the regulator of economic movements.

This is diagnosed in two functions ascribed to banks: first, within the great centralized banks there is a division of epistemic labor among distinct specialists in different industries and in relations with different kind of political units. And this also encourages a revolving door between regulators, civil servants, and politicians with banks. Lenin quotes Otto Jeidels approvingly as follows:

There can be no doubt that the growth in the dimensions and diversity of the big banks’ operations is accompanied by an increase in the division of labour among their directors with the object (and result) of, so to speak, lifting them somewhat out of pure banking and making them better experts, better judges of the general problems of industry and the special problems of each branch of industry, thus making them more capable of acting within the respective bank’s industrial sphere of influence. This system is supplemented by the banks’ endeavours to elect to their Supervisory Boards men who are experts in industrial affairs, such as industrialists, former officials, especially those formerly in the railway service or in mining.

But this distinct managerial expertise [the nod to James Burnham is deliberate] is only one feature of Lenin’s diagnosis of the comparative advantage of banks.

The second feature is that banks also have an expertise in what we may call data management through bureaucratic processes. Lenin quotes Schulze-Gaevernitz on this point:

Thirty years ago, businessmen, freely competing against one another, performed nine-tenths of the work connected with their business other than manual labour. At the present time, nine-tenths of this ‘brain work’ is performed by officials. Banking is in the forefront of this evolution.* [emphasis in original]

So, within the evolution of capitalism toward a system of monopoly, it’s not just that the entrepreneur organizing manual labor has been displaced by the large corporation controlling bureaucratic processes organizing usable knowledge, but among the large corporations, banks have led the way in this capacity.

Since concentrated financial capital becomes the pre-eminent form of capital for Lenin under imperialism, and this is a system of global domination, then on his view the capacity to shape and control information is one of the central tools of economic and political control in the modern world. Perhaps this is familiar to serious students of Lenin, but I had not realized it before.

That’s all I wanted to digress on today.

But it’s worth noting that Lenin’s sources that I have quoted are all first-rate treatments of German banking of the day. In the material I have drawn on Lenin cites Otto Jeidels’ dissertation, which was written with Max Sering and Gustav Schmoller, Jacob Riesser (see here), and Gerhart von Schulze-Gaevernitz whose Die deutsche Kreditbank seems to have appeared just before Lenin went to print. While the impact of Hobson’s treatment of imperialism on Lenin is acknowledged and unmistakable, Lenin inscribes Hobson’s argument not just into his own branch of Marxism but also in a much more detailed understanding of the inner workings of finance.

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*The 1934 translation has ‘officials’ which corresponds to the German ‘beamte,’ which I assume is in Schulze-Gaevernitz’s original.