Economic Expansion


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Expansion, Economic

 

the broadening of the spheres of economic influence of private capitalist firms, monopoly associations and groups, and capitalist states.

Economic expansion is a characteristic capitalist technique for extracting a greater amount of surplus value. Because of the advantages of large-scale specialized production, commodities produced by capitalist enterprises have captured the market in the economically backward countries. The intensification of economic expansion under imperialism is a natural consequence of the concentration of production and capital, the growing internal contradictions of the capitalist economic system, and the law of uneven economic and political development of capitalism. Economic expansion is achieved by means of the struggle for the most profitable spheres of capital investment, for sources of raw materials, and for markets.

One form of economic expansion is the export of capital. The neocolonialist expansion of monopolies and imperialist states in the developing countries intensifies the disproportionality in these countries’ economic and social development and increases their technical and technological dependence on their former parent states and other developed capitalist countries. Both the developing countries and the developed capitalist countries that have a strong production and scientific-technological base and a skilled work force at their disposal are the object of economic expansion. Such expansion takes the form of interpenetration of the capital of imperialist states.

Multinational corporations play an important part in economic expansion on the foreign market for commodities and capital. Multinational corporations make skillful use of their superior technology, organization of labor and production and their colossal material and financial resources to adapt to the modern competitive struggle, to establish networks of affiliates in other countries, and to reap fabulous profits.

With the development of state-monopoly capitalism, the bourgeois state plays an increasingly active part in the realization and stimulation of economic expansion; it accomplishes this end by means of such instruments as the investment of state capital abroad, “aid” to the developing countries, insurance on the export of private capital against commercial and political risk, export credits, export premiums, dumping of commodities and currencies, and alteration of currency parities. Economic expansion is frequently associated with the military and political expansion of capitalist states in the less developed countries by such means as diplomatic pressure and military intervention.

In the economic literature, the term “economic expansion” is also applied to bourgeois state measures aiming to increase business activity and to find a way out of economic crises (for example, deficit financing, the granting of low-interest credits, reduced discount rates, lower tax rates, and policies of accelerated amortization and financial benefits). Inflation and the rising cost of living are the inevitable consequence of such policies.

A. A. KHANDRUEV

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