In Chapter I we pointed to the erroneous character of the theory that links the problem of a foreign market for capitalism with that of the realisation of the product (pp. 64-65 and foll.). Capitalism’s need of a foreign market is by no means to be explained by the impossibility of realising the product on the home market, but by the circumstance that capitalism is in no position to go on repeating the same processes of production on the former scale, under unchanging conditions (as was the case under pre-capitalist regimes), and that it inevitably leads to an unlimited growth of production which overflows the old, narrow limits of earlier economic units. With the unevenness of development inherent in capitalism, one branch of production outstrips the others and strives to transcend the bounds of the old field of economic relations. Let us take, for example, the textile industry at the beginning of the post-Reform period. Being fairly well developed capitalistically (manufacture beginning to pass into factory industry), it had gained complete command of the market of Central Russia. But the big factories, growing so rapidly, could no longer be satisfied with the former dimensions of the market; they began to seek a market further afield, among the new population colonising Novorossia, the south-east Transvolga region, North Caucasus, then Siberia, etc. The efforts of the big factories to reach out beyond the old markets are undoubted. Does it mean that the areas which served as these old markets could not, in general, consume a larger quantity of the products of the textile industry? Does it mean, for example, that the industrial and central agricultural gubernias cannot, in general, absorb a larger quantity of wares? No, it does not. We know that the differentiation of the peasantry, the growth of commercial agriculture and the increase in the industrial population have also expanded, and continue to expand, the home market of this old area. But this expansion of the home market is retarded by many factors (chief among them the retention of obsolete institutions which hinder the development of agricultural capitalism); and the factory owners will not, of course, wait until the capitalist development of other branches of the national economy catches up with that of the textile industry. The mill owners need a market at once, and if the backwardness of other branches of the national economy restricts the market in the old area, they will seek for a market in another area, or in other countries, or in the colonies of the old country.
What is a colony in the politico-economic sense? It was stated above that, according to Marx, the main features of this concept are the following: 1) the existence of unoccupied, free lands, easily accessible to settlers; 2) the existence of an established world division of labour, of a world market, thanks to which the colonies can specialise in the mass production of agricultural produce, receiving in exchange finished industrial goods “which they would have to produce themselves under other circumstances” (see above, p. 258, footnote, Chapter IV, § II). Reference has been made elsewhere to the fact that the southern and the eastern border regions of European Russia, which have been settled in the post-Reform period, bear the distinctive features mentioned and constitute, in the economic sense, colonies of Central European Russia. The term colony is still more applicable to the other outer regions, for example, the Caucasus. Its economic “conquest” by Russia took place much later than the political conquest; and to this day this economic conquest has not been completed to the full. In the post-Reform period there has been, on the one hand, an intensive colonisation of the Caucasus, an extensive ploughing up of the land (particularly in the North Caucasus) by colonists producing wheat, tobacco, etc., for sale, and attracting masses of rural wage-workers from Russia. On the other hand, native age-old “handicraft” industries, which are declining due to the competition of wares from Moscow, are being eliminated. There has been a decline in the ancient gunsmith’s craft due to the competition of imported Tula and Belgian wares, a decline in handicraft iron-work due to the competition of the imported Russian products, as well as in the handicraft processing of copper, gold and silver, clay, fats and soda, leather, etc. These products are turned out more cheaply in Russian factories, which supply the Caucasus with their wares. There has been a decline in the making of drinking-horns because of the decay of the feudal system in Georgia and of the steady disappearance of her memorable feasts; there has been a decline in the headgear industry due to the replacement of Asiatic dress by European; there has been a decline in the production of wine-skins and pitchers for local wine, which for the first time is now being sold (giving rise to the barrel-making trade) and has in turn captured the Russian market. Russian capitalism has thus been drawing the Caucasus into the sphere of world commodity circulation, obliterating its local peculiarities— the remnants of ancient patriarchal isolation—and providing itself with a market for its factories. A country thinly populated at the beginning of the post-Reform period, or populated by mountaineers living outside world economy and even outside history, has been turning into a land of oil industrialists, wine merchants, big wheat and tobacco growers, and Mr. Coupon has been ruthlessly divesting the proud mountaineer of his picturesque national costume and dressing him in the livery of a European flunkey (Gleb Uspensky). The process of rapid colonisation in the Caucasus and of the rapid growth of its agricultural population has been accompanied by a process (obscured by this growth) of the diversion of the population from agriculture to industry. The urban population of the Caucasus increased from 350,000 in 1863 to about 900,000 in 1897 (the total population increased between 1851 and 1897 by 95%). There is no need to add that the same thing has taken place and continues in both Central Asia and Siberia, etc.
Thus, the question naturally arises, where is the border line between the home and the foreign market? To take the political boundaries of the state would be too mechanical a solution—and would it be a solution? If Central Asia is the home market and Persia the foreign market, to which category do Khiva and Bokhara belong? If Siberia is the home market and China the foreign market, to which category does Manchuria belong? Such questions are not of great importance. What is important is that capitalism cannot exist and develop without constantly expanding the sphere of its domination, without colonising new countries and drawing old non-capitalist countries into the whirlpool of world economy. And this feature of capitalism has been and continues to be manifested with tremendous force in post-Reform Russia.
Hence, the process of the formation of a market for capitalism has two aspects, namely, the development of capitalism in depth, i.e., the further growth of capitalist agriculture and industry in the given, definite and enclosed territory—and the development of capitalism in breadth, i.e., the extension of the sphere of the capitalist domination to new territory. In accordance with the plan of the present work, we have confined ourselves almost exclusively to the first aspect of the process, and for this reason we consider it particular]y necessary to stress the point here that its other aspect is of exceptionally great importance. Anything like a complete study of the process of colonisation of the border regions and of the expansion of Russian territory, from the point of view of capitalist development, would require a special work. Suffice it to mention here that Russia is in a particularly favoured position as compared with other capitalist countries, due to the abundance of free land accessible for colonisation in her border regions. To say nothing of Asiatic Russia we have also in European Russia border regions which, because of their exceeding remoteness and bad means of communication, are still very poorly connected economically with central Russia. Let us take, for instance, the “Far North” —Archangel Gubernia; the boundless stretches of territory and their natural resources are still exploited very slightly. One of the principal local products, timber, was until recently exported mainly to England. In this respect, therefore, that part of European Russia was a foreign market for Britain without being a home market for Russia. The Russian entrepreneurs naturally envied the British, and now, with the extension of the railway line to Archangel, they are jubilant at the prospect of “elevated moods and business activity in various branches of industry in the region.”
 “. . . It was thanks exclusively to them, thanks to these forms of people’s production, and on the basis of them that the whole of South Russia was colonised and settled.” (Mr. N.–on, Sketches, 284). How wonderfully broad and comprehensive is the term: “forms of people’s production”! It covers whatever you like: patriarchal peasant farming, labour-service, primitive handicrafts, small commodity-production, and those typically capitalist relations within the peasant community that we saw above in the data on the Taurida and Samara gubernias (Chapter II, etc., etc.—Lenin
 Cf. articles by Mr. P. Semyonov in Vestnik Finansov, 1897, No. 21, and by V. Mikhailovsky in Novoye Slovo, June 1897.—Lenin
 See article by K. Khatisov in Vol. II of Reports and Investigations of Handicraft Industry, and by P. Ostryakov in Vol. V. of Transactions of the Handicraft Commission.—Lenin
 The circumstance indicated in the text has another aspect. The development of capitalism in depth in the old, long-inhabited territories is retarded because of the colonisation of the outer regions. The solution of the contradictions inherent in, and produced by, capitalism is temporarily postponed because of the fact that capitalism can easily develop in breadth. Thus, the simultaneous existence of the most advanced forms of industry and of semi-medieval forms of agriculture is undoubtedly a contradiction. If Russian capitalism had possessed no range for expansion beyond the bounds of the territory already occupied at the beginning of the post-Reform period, this contradiction between capitalist large-scale industry and the archaic institutions in rural life (the tying of the peasants to the land, etc.) would have had to lead quickly to the complete abolition of these institutions, to the complete clearing of the path for agricultural capitalism in Russia. But the possibility (for the mill owner) of seeking and finding a market in the outer regions in process of colonisation and the possibility (for the peasant) of moving to new territory, mitigates the acuteness of this contradiction and delays its solution. It goes without saying that such a deceleration of the growth of capitalism is equivalent to preparing its even greater extension in the near future.—Lenin
 Productive Forces, XX, 12.—Lenin
 Mr. Coupon—a term adopted in the 1880s and 1890s to indicate capital and capitalists. The expression “Mr. Coupon” was put in circulation by the writer Gleb Uspensky in his articles “Grave Sins.” [p. 594]
 See Gleb Uspensky’s article “In the Caucasus.” Works, Vol. II, 1918. [p. 594]