Many people believe capitalism and imperialism are the same thing or at least closely related. Professor
Stephen Davies explains that this is not the case. While capitalism is based on voluntary exchange that
benefits all parties involved, imperialism is based on exploitation and the exercise of political power,
generally backed by a military force.
We can see that capitalism and imperialism differ by looking at the history of empire in the world and
examining trade patterns. Empires have existed for the whole of human history, long before the development of
capitalism. Imperialism has led to the impoverishment of people and bears the blame for terrible famines,
especially during the Victorian period in India. Under capitalism, we would expect to see global free trade
between many countries, not just from world powers to less-developed countries, but also between less-developed
countries. This does not happen under imperialism.
While capitalism and imperialism have been closely linked in the minds of many, the truth is that the two
systems are at odds with one another. Where one system flourishes, the other cannot. Many negative things, such
as political corruption, the exploitation of the poor, and mass famines, have been blamed on capitalism, but
that blame is misplaced. Real capitalism should work to improve circumstances for the poor by voluntary
exchange, but imperialism hurts the poor by political or military domination that enables countries or
government-backed businesses to profit at others’ expense.