The logic of state-directed monopoly capitalism led to a form of imperialism Lenin had referred to in 1916-the seizure of "highly industrialised regions" .51 Beyond a certain point such expansion led to inevitable clashes with other great powers which feared threats to their own empires and spheres of influence. As they reacted by building up their own armed forces, the German and Japanese regimes in turn had to direct even more of the economy towards arms-and to reach out to grab new territory-in order to "defend" the lands they had already grabbed. This provided their capitalists with new sources of surplus value to counter any downward pressure on profit rates. But at the same time it increased the hostility of the existing empires-leading to the need for a greater arms potential and further military adventures. The breaking points were the German seizure of western Poland and the Japanese onslaught on Pearl Harbor.52
Just as deepening slump in each major capitalist country had fed into the slumps developing elsewhere, so now did the path out of the slump through military state capitalism.
British and American imperialism could only defend their own positions in the world after the fall of France in 1 940 and Pearl Harbor in 1941 by moving on from the half baked statedirected capitalism of the mid- 1 930s to fully militarised economies of their own. The British state took charge of all major economic decisions, directing which industries should get raw materials and rationing food and consumer goods, with the civilian economy reduced to a mere adjunct of the centrally organised war economy. The US government "not only controlled the armaments sector of the economy, which represented about half the total production of goods. The state decided what consumer goods should be produced and what consumer goods should not be produced". 53 It spent huge sums building armaments factories which it handed over to private corporations to run. Government capital expenditure in 1941 was 50 percent higher than the country's entire manufacturing investment in
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Capitalism in the 20th Century