Hilferding defined finance capital as “banking capital turned into industrial capital”. Lenin found this definition somewhat incomplete, and he mainly drew attention to the monopolies and their formation:

This definition is incomplete insofar as it is silent on one extremely important fact — on the increase of concentration of production and of capital to such an extent that concentration is leading, and has led, to monopoly. But throughout the whole of his work, and particularly in the two chapters preceding the one from which this definition is taken, Hilferding stresses the part played by capitalist monopolies. The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry — such is the history of the rise of finance capital and such is the content of that concept.[1]

One of the most striking characteristics of capitalism, as it was proceeding towards the imperialist stage, was the concentration of industrial capital in bigger companies with a high speed. Similarly, banking capital was also being concentrated in a small number of large-scale financial institutions. Thus, banks became huge monopolies controlling an important part of a certain country’s or many countries’ raw material sources and productive forces besides the money-capital of other capitalists and small businessmen. In this process, banking capital and industrial capital fused into a growing unity. Banks turned into international associations governing finance capital. As a principal characteristic of imperialist stage of capitalism, monopolies gained a decisive importance.

As Marx pointed out a long time ago, quantitative concentration of monopolies in industrial and banking sectors caused a qualitative transformation and gave birth to a new combination of capital, i.e. finance capital. In mercantilist and free competitive periods of capitalism, revealing itself as commercial and industrial capital respectively, capital created monopolist finance capital as a consequence of competition. It is competition that creates monopolies. But existence of monopolies in no way eliminates competition. So, it is not right to deal scholastically with monopolies and competition as if they exclude each other. Within the dialectics of capitalist development, monopoly and competition form a unity in which these two contradict each other but also exist together. Competition creates monopoly; but the effort of overcoming competition through monopolization does not eliminate it. On the contrary, this carries it to a higher level, so to say, creates competition among monopolies.

If we think it through for a moment, the final point that kind of movement tends to reach in its own dialectics would be a situation of an “absolute monopoly” that excludes competition. But this means a negation of relations of capitalist production based on private property. As a matter of fact, Marxist analysis of imperialist epoch indicates this course the highest stage of capitalism heads to. Centralization and concentration of capital, that is, the quantitative development of monopolization, increasingly enforces a qualitative transformation. Capitalist production process, originally organized on the basis of private property of capitalists on the means of production, turned into a process that is organized on a world scale by huge international capital groups as a result of the growth and monopolization of joint stock companies. The dimensions of monopolization and growth of socialization of production become enormous as the epoch of imperialism proceeds, which means that capitalism rapidly moves towards a point where it negates its very essence. Undoubtedly, this Marxist analysis points to the main tendency of monopolist development of capitalism, its course and the need of replacing it with communism. But capitalism will not leave its place to communism by a natural evolution. For this qualitative transformation to take place, world capitalist system must be overthrown by proletarian revolutions.

Monopolist progress of capitalism at the same time causes organization of production to acquire a global character that cannot be confined to national borders any more. Lenin makes this point: “Imperialism is the highest stage in the development of capitalism, reached only in the twentieth century. Capitalism now finds the old nation states, without whose formation it could not have overthrown feudalism, are too cramped for it.”[2]

But we must emphasize one important point here. It was Marx himself who pointed out that capitalist mode of production has the inner characteristic of uneven and combined development; that concentration and centralization of capital in certain hands indispensably leads to monopolization; that this course of capitalism can in no way reconcile with narrow borders of nation-state form; that capitalism would find various ways out unless it is not overthrown. But is not that imperialism?

For us, of course it is. Nevertheless, according to the Stalinist school of falsification which reduces Marx’s profound analyses on capitalist mode of production to a “theory of the period of free competition capitalism” with a sleight of hand, Marx knew nothing about this course of capitalism! It was Lenin who analyzed these facts, discovered the law of uneven and combined development, and consequently established the theory of imperialism! These hollow assertions of Stalinism clouded the facts muddling the consciousness of so many people for many years in the name of a so-called Marxism. But Lenin, who took it as a virtue to try to be a good disciple of Marx, wrote in his book Imperialism:

Half a century ago, when Marx was writing Capital, free competition appeared to the overwhelming majority of economists to be a "natural law". Official science tried, by a conspiracy of silence, to kill the works of Marx, who by a theoretical and historical analysis of capitalism had proved that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly. Today, monopoly has become a fact. Economists are writing mountains of books in which they describe the diverse manifestations of monopoly, and continue to declare in chorus that "Marxism is refuted". But facts are stubborn things, as the English proverb says, and they have to be reckoned with, whether we like it or not.[3]

The concept of world economy occupies a very important place in all analyses of the founders of Marxism, starting from the early but basic works like the German Ideology or the Communist Manifesto. World economy increasingly reveals itself in the imperialist stage of capitalism. Therefore, it has been a necessity to conceive all of the elements of capitalist mode of production (forces of production, relations of production, division of labour, production and division of surplus value, markets, formation of prices) not on a national scale anymore, but on an international scale. All of the concepts such as globalization, which is quite popular nowadays, indeed describe the latest phase of capitalism that has been reached in 20th century and we still live in, that is to say, the age of finance capital rule, which we simply call imperialism.

For instance, monopolistic mergers that appear as an inevitable outcome of sharpening of competition at an increasingly higher level by the monopolist drive cannot only occur within national borders. International formation of capital is a very contradictory process pregnant with various crises. On the one hand capital cannot completely avoid the need to lean on a nation state because of both historical roots of its formation and its search for a safe shelter. But on the other hand, existence of capital groups from different countries which undertake huge investments in company is a concrete fact. Besides, it is a necessity for capital groups which face trouble during periods of big crises to seek for some more powerful “foreign” partners, vindicating the principle that capital has no fatherland. Monopoly capitalism means monopolist marriages. And in these kinds of marriages, the important matter is not the nationality of the “bride” or “groom”, but rather economic interests.

Let us assume that a more powerful American monopoly merges with a relatively weakened English monopoly in the energy sector. Even if there is an inequality in this marriage, they undersign the birth of a multi-national monopoly at a higher level. The fact that every capital group resting on a nation state in regard to their origin calls its nation state for help when they get into trouble is just a revelation of the contradictory character of capitalism in its imperialist stage. Both mergers and fights! Both the need for shelter under nation states’ wings, and mergers disregarding nationality with the efforts of overcoming restricted borders of the nation state! So, in spite of the tendency of capital to integrate, there is no abstract international capital free of national divides, flying over the clouds as if completely broken off from the states in the world. But in a contradictory process as we pointed out and as a result of multidimensional economic relations, powerful finance capital groups gain more of an international character than standing on a single nation-state.