First published: May 1993
The consideration of inter-imperialist competition is frequently not integrated into the body of Marxist economic analysis, which is too often seen as relating to the study of the workplace or to national capitalism, with inter-imperialist competition running ‘parallel’ to this. This is radically wrong.
The starting point of Marx’s analysis is the development of ‘capital in general’ or ‘the capital of the whole society’ . This is sometimes taken to be the capital in a nation state, but this is wrong.  Capitalism is an international system in which the world economy is dominant. The decline in the rate of profit throughout the 1960s and 1970s, from which capital has still not recovered and which is the driving force of the present crisis, was an international decline working itself out in all countries.
But capital as it actually exists is not ‘capital in general’. As Marx put it: ‘In their actual movement capitals confront each other in certain concrete forms’.  Capital exists as different firms, and different nations with different companies and trusts, in competition with each other. It exists, as Marx put it, as ‘many capitals’. Competition between these capitals is the ‘essential locomotive force of the bourgeois economy’.  Competition is the mechanism by which the fundamental laws of the capitalist economy work themselves out.
There is a clear relation between the development of capital in general and the decline in the rate of profit. A decline in the rate of profit leads to stagnation in the entire capitalist economy: ‘The rate of profit, is the spur to capitalist production… a fall in this rate… appears as a threat to the entire capitalist production process; it promotes overproduction, speculation and crises, and leads to the existence of excess capital alongside a surplus population (unemployment).’ 
The reason is simple: ‘It is the rate of profit that is the driving force of capitalist production, and nothing is produced at a profit.’  Therefore: ‘Production comes to a standstill not at the point where needs are satisfied, but rather where the production and realisation of profit impose this.’  Stagnation and unemployment in the capitalist economy since 1973–75, the recession currently gripping the world economy, and the even greater depression of the 1930s, are products of a decline in the rate of profit.
A crucial effect of this decline however, is to dramatically intensify inter-imperialist competition. Confronted with a decline in the rate of profit, the bourgeoisie as a whole can only overcome it by attacking the working class – or, a marginal case today, through gaining profit from a pre-capitalist system of production. But this is not the only way out for an individual capitalist. An individual capitalist can increase their rate of profit by competing with, or attacking, another capitalist. Indeed attacks on other capitalists can be a way to avoid the necessity of so severely attacking their own workers. This is the mechanism used by the most powerful imperialist powers to maintain reformist control over their working class – they attack other capitals in order to limit the necessity to so severely attack their own working class and thereby destabilise their internal political situation.
As Marx put it: ‘which section (of capital) is particularly to be affected by this idling (of production) is decided in the course of the competitive struggle. As long as everything goes well, competition acts… as a practical freemasonry of the capitalist class, so that they all share in the common body.. but as soon as it is no longer a question of division of profit, but rather of loss, each seeks as far as he can to restrict his own share of the loss and pass it on to someone else.
‘For the class as a whole, the loss is unavoidable. But how much each individual member has to bear, the extent to which he has to participate in it, now becomes a question of strength and cunning, and competition now becomes a struggle of enemy brothers. The opposition between the interest of each individual capitalist and that of the capitalist class as a whole now comes into its own, in the same way as competition was previously the instrument through which the identity of the capitalists’ interests was asserted…
‘Loss is by no means uniformly distributed amongst all the particular individual capitalists… the distribution being decided instead by a competitive struggle in which the loss is decided very unevenly and in very different forms according to the particular advantages of positions that have already been won… one capital lies idle, another is destroyed, a third experiences only a relative loss or simply a temporary devaluation, and so on.’ 
Thus, during the period of prosperity of the 1950s and 1960s it was relatively easy for capital to ameliorate the effects of inter-capitalist and inter-imperialist competition – the relations between the imperialist powers were relatively harmonious. With the decline in the rate of profit in the 1970s, much sharper inter-imperialist conflicts began to appear.
It appears to the capitalists that it is competition which is producing a decline in the rate of profit. But in fact it is a decline in the rate of profit which is producing the increased competition: ‘the fall in the profit rate… necessarily gives rise to a competitive struggle. Compensation for the fall in the profit rate by an increase in the mass of profit is possible only for total social capital and for the big capitalists who are already established… it is the fall in the profit rate that provokes the competitive struggle between capitals, and not the reverse.’ 
Falling profit rates also lead to increasing trends to monopoly – one example being the wave of takeovers and mergers of the last decade – and simultaneously to speculation and fraud: ‘As the profit rate falls… concentration grows at the same time, since beyond certain limits a large capital with a lower rate of growth accumulates more quickly than a small capital with a higher growth rate… The mass of small fragmented capitals are thereby forced onto adventurous paths: speculation, credit swindles, share swindles, crises’.  Decline of the profit rate therefore gave rise to the ‘casino economy’ of the late ‘80s – but it is the decline in the profit rate, the economic crisis, that produces the ‘casino economy’, not the speculation that gives rise to the crisis.
Alongside swindles and fraud, however, a decline in the profit rate also gives rise to revolutionary breakthroughs in technology to attempt to increase profit – the rapid development of new technology alongside City frauds of the late ‘80s is quite typical: ‘If the rate of profit falls, on the one hand we see exertions by capital, in that the individual capitalist drives down the individual value of his own particular commodities below their average social value, by using better methods, etc, and thus makes a surplus profit at the given price; on the other hand we have swindling and general promotion of swindling, through desperate attempts in the way of new methods of production, new capital investment and new adventures, to secure some kind of extra profit, which will be independent of the general average and superior to it’.  That the ‘casino economy’ and the computer revolution developed side by side was a logical product of the capitalist crisis.
The crisis itself, however, is neither illogical nor irrational. It is the only means capitalism possesses, as it lacks central planning, for overcoming crisis and relaunching a capitalist upswing. As Marx noted: ‘Stagnation in production makes part of the working class idle and hence places the employed workers in conditions where they have to accept a fall in wages… The fall in prices and the competitive struggle, on the other hand, impel each capitalist to reduce the individual value of his total product below its general value by employing new means of machinery, new and improved methods of labour and new forms of combination. That is, they impel him to raise the productivity of a given quantity of labour… and… to dismiss workers… The stagnation in production that has intervened prepares the ground for a later expansion of production – within capitalist limits.’ 
This process, including the competitive struggle, works itself through not just in attacks on workers within individual countries but in tremendous conflicts between the imperialist states – as they attempt to determine, through competition, which will experience the situation whereby, in Marx’s words, ‘one capital lies idle, another is destroyed, a third experiences only a relative loss’.
The relative stagnation in production is therefore accompanied by not only sharp attacks on the working class but by increased conflicts between the imperialists. As Trotsky put it: ‘Capitalism produces… equilibrium, disrupts it, restores it anew in order to disrupt it anew, concurrently extending the limits of its domination. In the economic sphere these constant disruptions and restorations of the equilibrium assumes the form of strikes, lockouts, revolutionary struggle. In the sphere of inter–state relations the disruption of equilibrium means war or – in a weaker form – tariff war, economic war, or blockade.’ 
The economic conflicts between the imperialist states are given particular weight because these powers attempt to use political means to maintain their control over sections of the world economy. Previously this has taken the form of wars, the creation of empires etc. But it can equally take the form of competitive devaluations, military threats etc.
The most extreme expression of inter-imperialist competition is, of course, war. Thus Trotsky noted during the 1930s that the international weight and empires of the old European states, Britain and France, was totally out of line with their real weight in the world economy compared to the rising power of the United States. He prophetically noted: ‘The United States is heading inevitably towards an imperialist explosion such as the world has never seen… A new partition of the world is on the order of the day’. 
This ‘new partition of the world’, as well as attacks on national working classes was the preparation for a new upswing. As Trotsky had noted earlier, in the 1920s: ‘If we grant – and let us grant it for the moment – that the working class fails to rise in revolutionary struggle, but allows the bourgeoisie the opportunity to rule the world’s destiny for a long number of years, say two or three decades, then assuredly some sort of equilibrium will be established. Europe will be thrown into reverse gear. Millions of European workers will die from unemployment and malnutrition… Afterwards, after a new world division of labour is thus established in agony for 15 or 20 or 25 years, a new epoch of capitalist upswing might perhaps ensue.’ 
This was not ‘catastrophism’ but literally what happened. Tens of millions of European, and Asian, workers and peasants died amid fascism and world war. The consequence was that a ‘new (capitalist) world division of labour’, under the leadership of the United States, was established in 1945. At the cost of 100 million dead in the World Wars the centre of world capitalism passed from Europe to the United States. But in the 1980s that ‘new division of labour’ was itself undermined by the decline of the United States, the rapid economic growth of Japan and the NICs, and from 1989 in particular the rising political and economic weight of Germany. Hence a new wave of inter-imperialist competition is breaking out.
Imperialism must again create a ‘new international division of labour’ – one that corresponds to the real, economic weights of the different imperialist powers. Just what that division of labour will be will be decided not by any pre-arranged plan but by a real competitive struggle between the imperialists – in which those who will lose will fight by all political means to hold onto what they have possessed in the past, and the rising capitalist powers will have no option but to assault their old dominant rivals.
 Marx, Grundrisse p346
 This is, for example, the typical mistake made by David Yaffe
 Marx, Capital Vol 3 p 117
 Grundrisse p440
 Capital Vol 3 p350
 Capital Vol 3 p368
 Capital Vol 3 p367
 Capital Vol 3 p362
 Capital Vol 3 p365
 Capital Vol 3 p359
 Capital Vol 3 p367
 Capital Vol 3 p364
 Trotsky, ‘Report on the World Economic Crisis and the New Tasks of the Communist International’
 Trotsky, ‘A fresh lesson on the character of the coming war’
 Trotsky, ‘Report on the World Economic Crisis and the New Tasks of the Communist International’