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| Proletarian issue 27 (December 2008) |
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| Economic crisis: no escape under capitalism |
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| “Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsaleable, hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence because they have produced too much of the means of subsistence, bankruptcy follows upon bankruptcy, execution upon execution.” (F Engels, Socialism: Utopian and Scientific, 1876) |
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How are we to explain this crisis? What is the way out of this crisis? Only Marxian analysis, contained in succinct form in the above-quoted words of Engels, offers the key to an understanding of this crisis, as well as the way out of it.
Bourgeois economic science offers little in this regard, not because bourgeois economists are unintelligent, but because their outlook is hemmed in by their belief in the immortality of the capitalist system of production – they have sold themselves body and soul to the service of this parasitic, decadent and moribund system, namely, imperialism.
Thus, even when they come pretty close to understanding the underlying cause of the crisis, they shy away from it, ending very often by confusing symptoms with their causes, and appearance with reality. One has to indulge in excavations, as it were, to dig and drag the truth out into the light of day.
The words of Engels quoted above were written about England in 1876, but they apply equally to the shambles affecting the capitalist world today.
And then as now they contain the key to understanding the whole crisis: “the workers are in want of the means of subsistence because they have produced too much of the means of subsistence”, ie, these devastating economic crises are caused by overproduction.
As Engels explained: “The enormous expansive force of modern industry appears to us now as a necessity for expansion, both qualitative and quantitative, that laughs at all resistance. Such resistance is offered by consumption, by sales, by the markets for modern industry. But the capacity for extension, extensive and intensive, of markets, is primarily governed by quite different laws that work much less energetically. The extension of the markets cannot keep pace with the extension of production. The collision becomes inevitable ...
“In these crises, the contradiction between socialised production and capitalist appropriation ends in a violent explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation are turned upside down ... the mode of production is in rebellion against the mode of exchange.” (Ibid)
Nothing happens in a capitalist economy unless some capitalist thinks he can make a profit. This involves generating sufficient sales to enable the capitalist to recoup and expand his capital so as to recommence the production process.
But sales sooner or later slump. On the one hand, if profits are high, more and more capitalists join the same bandwagon, causing production to soar. On the other hand, the potential consumers are being relatively impoverished – through the unemployment and low wages that the capitalists impose in order to cut their costs of production and remain ‘competitive’.
Then the “whole mechanism of the capitalist mode of production breaks down under the pressure of the productive forces, its own creation. It is no longer able to turn this mass of means of production into capital ... Means of production, means of subsistence, available labourers, all the elements of production and general wealth, are present in abundance. But ‘abundance becomes the source of distress and want’ (Fourier), because it is the very thing that prevents the transformation of the means of production and subsistence into capital.” (Ibid)
Sooner or later, the economy will recover, but not before causing more physical damage and emotional heartache than the most fearful of natural disasters.
Within capitalism, all attempts to cure the crisis only serve to accelerate it, or shift the worst of the damage onto somebody else. Cutting production involves throwing workers on the scrap heap, thus further reducing effective demand in the economy. In the end, this ‘cure’ further exacerbates the crisis.
In the UK, and some other imperialist countries, the government proposes to ‘spend’ its way out of crisis – the classic Keynesian formula (a policy which is not, however, open to those who apply to the IMF for relief: they are required to slash public spending – at the expense of the wellbeing of the people of the countries in question).
Experience has shown, however, that under the conditions of capitalism, when either governments or corporations borrow in order to spend, this generally leads to inflation that in turn wipes out the value of profits as well as wages, again leaving the capitalists in difficulties in keeping production going, as the value of their capital keeps shrinking every time it assumes its money form.
And if capitalists cannot keep production going, then unemployment grows, tax revenues fall further, the government has still less to spend and has to borrow still more, until they day arrives, as it did for Iceland only recently, when it no longer has even the money to service its debts – the arrival of sovereign defaults.
Already, with merely the threat of increased borrowing for public spending by the government, the pound sterling has suffered a battering on currency exchanges because investors are selling pounds as they beat a hasty retreat from the UK. As against the US dollar, the pound has lost a quarter of its value in less than six months, and is expected to sink still further. It has not far to go before it falls below the value of the euro.
Under capitalism, crisis can only come to an end (and that only temporarily) when, through destruction of productive capacity and of excess stocks, availability of commodities sinks well below what even the impoverished masses are able to buy:
“The stagnation lasts for years, both productive forces and products are squandered and destroyed on a large scale, until the accumulated masses of commodities are at last disposed of at a more or less considerable depreciation, until production and exchange gradually begin to move again. By degrees the pace quickens; it becomes a trot; the industrial trot passes into a gallop and the gallop in turn passes into the mad onrush of a complete industrial, commercial, credit and speculative steeplechase, only to land again in the end, after the most breakneck jumps – in the ditch of a crash. And so on again and again.” (F Engels, Anti-Dühring, 1877)
As the world plunges at breakneck speed into the depths of what is likely to be a prolonged crisis, the absurdity of the capitalist system becomes increasingly obvious even to the most untutored. The question, however, is what to do – what to do now – to save humanity from the miseries of a severe economic collapse.
The fact is, however, that the present crisis is a capitalist crisis of overproduction. It cannot be cured within the capitalist system but can only be endured until such time as destruction of means of production and of accumulated commodities has brought the level of supply below the level of even the much diminished demand.
The job of communists is to persuade the exploited and oppressed masses of the world to ‘think outside the box’ – the capitalist box, that is – and bring them to understand both that capitalism has to go, and that it is they who have to overthrow it.
This thinking has both an economic and a political aspect.
(a) The economic aspect
As Engels points out, the “solution [to the constant recurrence of economic crises] can only consist in the practical recognition of the social nature of the modern forces of production, and therefore in the harmonising of the modes of production, appropriation, and exchange with the socialised character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces which have outgrown all control except that of society as a whole. The social character of the means of production and of the products today reacts against the producers, periodically disrupts all production and exchange, acts only like a law of Nature working blindly, forcibly, destructively. But with the taking over by society of the productive forces, the social character of the means of production and of the products will be utilised by the producers with a perfect understanding of its nature, and instead of being a source of disturbance and periodical collapse, will become the most powerful lever of production itself.” (Ibid)
This theoretical exposition of the question translates itself into the practical step of organising economic planning – a planning which can only be effective under socialism, because socialism brings all the important means of production into single ownership (that of “society as a whole”, ie, the state).
There cannot be effective planning over assets that belong to others. The regulator of production will cease to be the market – the market and the striving for profit on that market only being necessary where producers of commodities are many and varied, as the only effective means of exchanging them with each other. With the state as the only major producer, the role of the market is, step by step, diminished until commodity production disappears altogether.
Under socialism, the proletariat organised as the ruling class will organise production to satisfy the constantly increasing material and cultural requirements of the population.
In a socialist society, there is obviously no place for unemployment. When new and more productive machinery is introduced, this does not put workers on the scrap heap but frees them up either to produce other items needed by the population, or alternatively allows a reduction of everybody’s working time without any loss of pay.
This is particularly important for a society that is working towards the achievement of the higher stage of communism, which will, among other things, be characterised by the elimination of distinctions between mental and physical labour. By freeing the workers from the drudgery of long hours of work, it will provide them with an opportunity to raise their educational and cultural level and participate in the running of the affairs of society.
Workers who are, by reason of age or infirmity, not as fast as others, are no longer unemployable: since nobody is trying to extract profit from them, any contribution that they can make at their own pace to the wellbeing of society is precious and appreciated.
Since profit is not a consideration, far more attention can be paid to health and safety at work, and to measures to avoid pollution.
(b) The political aspect
The bourgeois state, and all the bourgeois political parties (or armies, in the case where bourgeois democracy has ceased to be effective in maintaining bourgeois order) that supply the personnel to manage that state are committed to defending the property rights of the capitalist class – the bourgeoisie.
It follows that one cannot look to this state, or to its political parties, or to its armed forces, to “openly and directly take possession of the productive forces in the name of society”, since to do so would be to deny them the right to use what they regard as their own sacred property for what they regard as the fulfilment of the most basic human craving, namely, profiteering.
This is why it is only the working class that is capable of taking society forward. The working class has no property rights to protect. The rational deployment of the means of production to satisfy their needs, in addition to improving the lives of the working people, relieving them of the curse of poverty, also wipes out the shame of their lives, ie, of having no value and no raison d’être unless they are exploited by others.
Marxism has proved itself in practice
In the crisis that began in 1929 and lasted until 1954 (a period which included an orgy of destruction of productive capacity and of excess stocks in the second world war), production capacity in the capitalist world fell precipitously, and it took another 25 years for the stock markets to return to pre-crisis levels.
During that self-same period, from 1929-1954, the Soviet economy was advancing by leaps and bounds. It was able to do so because it was not a capitalist economy but a socialist one: not anarchic but planned; not producing for profit but to meet the needs of the Soviet population.
With its planned economy, notwithstanding the fact that most of agricultural production was the commodity production of collective farms rather than the fully socialist production of state farms, the USSR was able to advance its economy exponentially throughout the period.
Let us take some statistics that are readily available to us. [footnote] In the table below, we can see the figures for the industrial production of leading industrial countries between 1929-1933 and compare them to those for the Soviet Union during the same period.
VOLUME OF INDUSTRIAL PRODUCTION
(Percentage of 1929)
USSR USA UK Germany France
1929 100 100 100 100 100
1930 129.7 80.7 92.4 88.3 100.7
1931 161.9 68.1 83.8 71.7 89.2
1932 184.7 53.8 83.8 59.8 69.1
1933 201.6 64.9 86.1 66.8 77.4
1934 283.3 66.4 98.8 79.8 71.0
1935 293.4 75.6 105.8 94.0 67.4
1936 382.3 88.1 115.9 106.3 79.3
1937 424.0 92.2 123.7 117.2 82.8
1938 477.0 72.0 112.0 125.0 112.0
These figures are supported by the common knowledge we have that in the years between 1928 and 1941 the USSR’s economy developed at an unprecedented rate such that it enabled the USSR to catch up industrially with Germany to a sufficient extent to enable it to deal the latter’s Nazi aggressors a mortal blow in the second world war – to the astonishment of world imperialism, which had expected the USSR to be defeated in six weeks at most.
What stands in the way of socialism and economic planning
(a) The main obstacle is obviously the capitalist class, which is able to enrich itself so hugely by expropriating the surplus product of the mass of labourers. This class controls the state machinery in all capitalist countries, including Britain, the state being the instrument whereby one class keeps in their place another class or classes that have interests conflicting with those of the ruling class.
However ‘democratic’ a bourgeois state may appear to be, any attempt on the part of those who are ruled to challenge the interests of the rulers, the billionaire bourgeoisie, will be met with attempts to stamp out by force what cannot be diverted by deceit.
(b) In its struggle for power, to establish socialism, and to organise socialist production, the proletariat faces not only the bourgeoisie but also the opportunists in the working-class movement, who are “alien to the proletariat as a class, who are the servants, the agents of the bourgeoisie, and the vehicles of its influence” and “unless the labour movement rids itself of them it will remain a bourgeois labour movement”. (Lenin, Imperialism and the Split in the Socialist Movement, October 1916)
These opportunists have been allowed to run riot in the working-class movement in Britain. Almost all trade unions, for instance, are completely in thrall to the Labour party – just another imperialist party, which in government can clearly and obviously be seen to be the loyal servant of the bourgeoisie, prepared to commit any crime if it serves its masters’ interests – the most heinous current examples being the illegal invasions and occupations of Iraq and Afghanistan.
The communist movement, which should be providing leadership to the working class to enable the latter to overthrow capitalism and form its own state to impose its own class interests on its former exploiters, has been splintered by opportunism and at present is not fit for purpose.
Our party is promoting a correct proletarian line in defence of proletarian interests but is for the moment too small to mobilise the working class as a whole. Other parties who claim to be communists are splitting the movement by insisting on trailing in the wake of the Labour party, trying to save it by hiding its imperialist nature and essence from the working class, trying to preserve illusions that something can be achieved for the benefit of the working class by so-called left-wing MPs presenting early day motions in parliament, undermining the will of the working class to establish its own class rule by maligning socialist countries and socialist achievements, etc, etc.
At the present time, it has to be admitted that this pernicious opportunist ideology is all-pervasive in the working-class movement, as a result of which the working class remains tame and unresponsive despite mounting unemployment, daylight robbery of its pension schemes, spreading homelessness, deteriorating schools and health service and aggressive, and predatory wars being conducted in our name and at our expense.
The present economic crisis is showing signs of developing to be even worse than the economic crisis of 1929. If it is, then it is very probable that Britain will be wiped out as an imperialist power and the British working class will suffer a severe decline in its standard of living.
It is also most probable that the crisis will ignite contradictions among the competing capitalist and imperialist powers that will lead to more wars, in which case it would not at all be beyond the bounds of possibility that Britain could find itself being bombed by foreign powers in the way that Britain has been bombing others almost continuously since the end of the second world war.
Such conditions force the working class to revolution as its only salvation. In the meantime, we must get ready for the day when the working class has finally had enough and rises up with the aim of booting capitalism, and indeed all exploitation of man by man, into the dustbin of history.
At this moment we are very, very far from ready. Therefore, to guarantee the working class success in this historic task, and thereafter in the task of building socialism, it is essential to undertake the task of destroying the influence of opportunism in the working-class movement. It is essential also to succeed in this task to a considerable degree.
If it is going to succeed at the appropriate time in fighting for the interests of the working class, the following basic understanding must be made to permeate the working-class movement:
1. that capitalism is a transitional stage in the long march of humanity from primitive communism to the higher stage of socialism – communism;
2. that capitalism long ago became a historically outmoded system, owing to the conflict between the productive forces, which are social, and the relations of production (private appropriation), and that this basic conflict lies at the heart of recurrent crises of overproduction and the resultant misery of the working class;
3. that, under monopoly conditions, capitalism has grown into a monstrous system of domination and exploitation by a handful of monopolist concerns within each of the imperialist countries and on a world scale by a tiny group of imperialist countries, which exploit, dominate and oppress the overwhelming majority of humanity inhabiting the vast continents of Asia, Africa and Latin America;
4. that, for reasons of the conditions peculiar to this stage of capitalism, imperialism cannot but result in incessant warfare waged by imperialist countries against the oppressed peoples (for instance, the current predatory war of Anglo-American imperialism against the people of Iraq) and inter-imperialist wars, which claimed the lives of 100 million people during the 20th century;
5. that socialism alone offers the way out of the contradictions of capitalism; it alone is able to offer humanity a world without the crises of overproduction, without unemployment, poverty and wars; socialism alone is able to provide the conditions for a limitless increase in production, unending prosperity, fraternal cooperation and peace among peoples and nations;
6. that capitalism itself creates the power, namely, the proletariat, which alone is capable of putting an end to the anarchy of production and all other horrors of the capitalist system of production, for “of all classes that stand face to face with the bourgeoisie today, the proletariat alone is a really revolutionary class. The other classes decay and finally disappear in the face of modern industry, the proletariat is its special and essential product” (Marx and Engels, The Communist Manifesto);
7. that the struggle of the proletariat for the overthrow of capitalism must be led by a vanguard revolutionary party of the proletariat;
8. that the state is nothing but an instrument in the hands of one class for the suppression of another class; that the proletariat too needs a state of its own; that the struggle of the proletariat for socialism must lead to the establishment of the dictatorship of the proletariat, which lasts for a whole historical period, and is the instrument of the proletariat for suppressing any attempts of the bourgeoisie at the restoration of capitalism, on the one hand, and for creating the material and social conditions for the transition to the next, the higher, stage of communism, in which the state withers away and society is able to move from the formula “From each according to his ability, to each according to his work” to “From each according to his ability, to each according to his needs”. (K Marx and F Engels, Manifesto of the Communist Party, 1848)
In the words of Lenin, “If we translate the Latin, scientific historical-philosophical term ‘dictatorship of the proletariat’ into more simple language, it means the following: only a definite class, namely that of the urban workers and industrial workers in general, is able to lead the whole mass of the toilers and exploited in the struggle for the overthrow, in the struggle to maintain and consolidate the victory, in the work of creating the new socialist system, in the whole struggle for the complete abolition of classes” (Lenin, ‘A Great Beginning’, June 1919);
9. that after the overthrow of the bourgeoisie and the establishment of socialism, the class struggle, far from subsiding, actually intensifies. In the words of Lenin: “In the transition, the class struggle grows more intense. The transition from capitalism to communism represents an entire historical epoch. Until this epoch is terminated, the exploiters will inevitably cherish the hope of restoration, and this hope will be converted into attempts at restoration. And after their first serious defeat, the overthrown exploiters ... will throw themselves with tenfold energy, with furious passion and hatred grown a hundred fold, into the battle for the recovery of their ‘lost’ paradise” (Lenin, The Proletarian Revolution and the renegade Kautsky, November 1918);
10. that commodity production and socialism are incompatible and it is the function of socialism to eliminate commodity production and the market and make way for planned production, which instead of being regulated by profit is guided by the principle of the maximum satisfaction of the constantly rising material and spiritual needs of the people;
11. that all bourgeois prejudices against the Soviet Union of the period of J V Stalin’s leadership must be dropped. During that period, the Soviet Union made earthshaking achievements in every field – from socialist construction, through collectivisation, to victory in the anti-fascist war – of which the proletarians and oppressed peoples of the world have every right and duty to be proud. Negating that important period in the history of the international working-class movement has only served to negate the most glorious achievements of the working class to date, to defame the dictatorship of the proletariat and the international communist movement and to sully the banner of Marxism Leninism. Our movement must understand that anti-Stalinism always was, and is now, a cover for attacking Marxism Leninism, in particular the dictatorship of the proletariat and the planned economy, the purpose being “to kill in the working class the faith in its own strength, faith in the possibility and inevitability of its victory, and thus to perpetuate capitalist slavery” (‘Report to the 18th Congress of the Communist Party of the Soviet Union’ by J V Stalin, 1938);
12. that the guard and fight against all forms of opportunism – social-democracy, Trotskyism and revisionism – must never lessen, for “the fight against imperialism is a sham and humbug unless it is inseparably bound up with the fight against opportunism”. (Lenin, Imperialism, the Highest Stage of Capitalism)
Conclusion
As can be seen, there is so much to do – yet for the moment those who can be mobilised to do the necessary work are far too few. However, others before us have succeeded and we are confident that in this country, too, it is possible to succeed.
The more people who are prepared to join us to do their bit, the surer that success will be. We would urge all those who are inactive in the working-class movement at the present time – perhaps out of dismay at the disarray in which that movement finds itself at present – to make contact with us with a view to helping in the awesome tasks that confront us.
For the fight against capitalism to succeed, our party needs you, and you need our party!
Footnote
From A Leontiev, Political Economy – a beginner’s course, Lawrence & Wishart, London c1939 (first published in English by the Co-operative Publishing Society of Foreign Workers in the USSR) and ‘Report to the 18th Congress of the CPSU(B)’ by J Stalin, Problems of Leninism, Foreign Languages Publishing House, Moscow, 1953. |
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