Crises and cycles in the economy of dying capitalism, part 2

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The article that follows is the second part of a study published in the review Bilan in 1934. In the first part, published in the previous issue of the International Review (see Crises and cycles in the economy of dying capitalism, part 1), Mitchell returned to the foundations of the marxist analysis of profit and accumulation, in continuity with the analyses of Marx and Rosa Luxemburg. In this second part, he deals with “the analysis of the general crisis of decadent imperialism”, and explains with remarkable clarity the expressions of this general crisis of capitalism’s decadence. In its day, this study made it possible to lay the theoretical foundations for understanding the inevitable tendency to generalised war engendered by the historical crisis of capitalism; it is not merely of historical interest today. On the contrary, it is of burning immediacy in laying down the theoretical framework which allow us to understand the expressions of the economic crisis today.


In the first part of this study we saw that the period from 1852 to 1873 was marked by a considerable development of "freely competing" capitalism (a competition mitigated nonetheless by a protectionism designed to defend growing industries). During this same historical phase, the various national bourgeoisies completed their economic and political domination on the ruins of the remnants of feudalism, breaking down all the barriers to the capitalist forces of production: in Russia, through the abolition of serfdom; in the USA through the Civil War which swept away the anachronistic system of slavery; through the creation of Italy and the foundation of German unity. The Treaty of Frankfurt closed the cycle of the great national wars which gave birth to the modern capitalist state.

The organic process in the capitalist epoch

By 1873, capitalism's rapid development had already integrated into its market the adjacent extra-capitalist domain. Europe had become a vast market economy (except for a few backward East European nations), dominated by capitalist production. The North American continent was dominated by an already highly developed Anglo-Saxon economy.

At the same time, the process of capitalist accumulation, temporarily interrupted by cyclical crises but taking off again with renewed vigour after each economic purge, led to an irresistible centralisation of the means of production, accelerated by the tendency towards the falling rate of profit and by bitter competition. There was a spread of enormous enterprises of high organic composition, encouraged by the development of joint stock companies replacing the individual capitalists, who were unable by themselves to satisfy the extensive demands of the productive process. The industrialists became mere agents subordinated to the company board.

But another process was also under way: following the crisis of 1873, the formation of monopolies grew in importance. This was a means both of countering the fall in the rate of profit, so that it remained within limits compatible with capitalist production, and of preventing an anarchic and "disastrous" competition. Their first expression was the cartels, followed by a more concentrated form, the syndicates. Finally there appeared the trusts and konzerns, which either concentrated similar industries horizontally, or grouped different branches of industry together vertically.

With the influx of a considerable mass of available savings, produced by intense accumulation, human capital gained a preponderant influence. The system of "cascading" shareholdings grafted onto the monopolistic organism, gave it the key to the control of fundamental production. Industrial, commercial, and banking capital gradually lost their autonomous position in the economic mechanism, and the greater part of the surplus-value produced was drained towards a higher, synthetic capitalist form, which disposed of it according to its own interests: finance capital. In short, the latter is the hypertrophied product of capitalist accumulation and its contradictory expressions. This definition obviously has nothing in common with the one which presents finance capital as an expression of the will of a few individuals moved by "speculative fever" to oppress and despoil the other capitalist formations and to oppose their "free" development. Such a conception, attractive to petty-bourgeois social-democratic and neo-marxist currents wallowing in the swamp of "anti-hypercapitalism", expresses an ignorance of the laws of capitalist development and turns its back on marxism while strengthening the ideological domination of the bourgeoisie.

Far from eliminating competition, the process of organic centralisation amplifies it in other forms, and in doing so it expresses nothing other than the deepening of the fundamental contradiction of capitalism. The competition between individual capitalists across the whole breadth of the capitalist market (domestic and international), contemporaneous with "progressive" capitalism, is replaced by a vast international competition between more highly evolved organisms: the monopolies, masters of the national market and of basic production. This period corresponds to a productive capacity which far outstrips the limits of the national market and to a geographical extension of the latter through the colonial conquests at the beginning of the imperialist epoch. The highest form of capitalist competition finds expression in inter-imperialist wars, and appears once every territory in the world has been shared out among the imperialist powers. Under the aegis of finance capital, there appeared a process of transformation of national formations - the product of historic upheavals whose development contributed to a crystallisation of the world-wide division of labour - into complete economic entities. "The monopolies" said Rosa Luxemburg, "aggravate the contradiction between the international nature of the world capitalist economy and the national nature of the capitalist state".

The development of economic nationalism is both intensive and extensive.

The cornerstone of intensive development is protectionism, geared to ensuring not "emerging industries", but the monopoly on the domestic market. This opens up two possibilities: at home, the realisation of a super-profit and abroad, prices fixed below the value of the product, competition by dumping.

The "extensive" development, determined by capital's constant need to expand in search of zones for the realisation and capitalisation of surplus-value, is oriented towards the conquest of pre-capitalist and colonial territories.

We have shown that a continual extension of the market, in order to escape the permanent threat of overproduction of commodities as expressed in cyclical crises, is a fundamental necessity for the capitalist mode of production. This is manifested on the one hand by an organic evolution leading to the monopoly, to finance capital and economic nationalism, and on the other to a historic evolution leading to imperialism. To define imperialism as "a product of finance capital", as Bukharin does, is to establish an incorrect connection and above all is to lose sight of the common origin of these two aspects of the capitalist process: the production of surplus value.

Colonial wars in the first phase of capitalism

The cycle of national wars is essentially characterised by struggles between nations in the process of formation, building their social and political structure in accordance with the demands of capitalist production. Colonial wars, by contrast, oppose fully developed capitalist nations, already bursting out of their own narrow framework, and non-evolved countries with natural or backward economies.

The regions for conquest are of two kinds:

  1. colonies for the expansion of population, which serve essentially as spheres of capital investment, and so become in some sense an extension of the metropolitan economy, undergoing a similar capitalist evolution, and even competing with the metropolis, at least in certain branches of industry. Such is the case in the British Dominions, whose capitalist structure is complete;
  2. colonies for exploitation, densely populated, where capitalism has essentially two objectives: to realise its surplus value, and to appropriate cheap raw materials, allowing it to hold back the growth of constant capital invested in production, and to improve the ratio of the mass of surplus value to total capital. As far as the realisation of commodities is concerned, the process is as we have already described: capitalism forces the peasants and small producers of the domestic economy to produce, not for their own direct needs, but for the market, where capitalist products of mass consumption are exchanged for agricultural produce. The farmers of the colonies are integrated into the market economy under the pressure of commercial capital and debt, stimulating the large-scale cultivation of raw materials for export: cotton, rice, rubber, etc. Colonial loans represent an advance on purchasing power made by finance capital, and are used either to equip the network for the circulation of commodities - construction of ports and railways which improve the transport of raw materials - or for strategic works to consolidate imperialist rule. Moreover, finance capital takes care that these funds cannot be used as an instrument for the emancipation of the colonies, and that the productive forces are only developed and industrialised in as much as they do not threaten the metropolitan industries, for example by orienting their activity towards the preliminary refinement of raw materials thanks to the exploitation of indigenous labour power at virtually no cost.

Not only that, but the peasants, crushed under the weight of their own debts and the taxes raised to pay off government loans, are forced to sell their produce below its value, or even below its cost of production.

A third type of colonisation consists in the acquisition of "zones of influence" through the reduction of backward states to vassal status, through loans and inward investment. The intense flow of capital exports, linked to the extension of monopolistic protectionism, encouraged an expansion of capitalist production, at least to Central and Eastern Europe, to America, and even to Asia where Japan became an imperialist power.

On the other hand, the unequal development of capitalism was prolonged into the process of colonial expansion. On the eve of the cycle of colonial wars, the oldest capitalist nations already possessed a solid imperial basis: Britain and France, the two great powers of the day, had already shared out the "best" lands of America, Africa, and Asia. This encouraged their further extension to the detriment of their younger competitors, Germany and Japan. The latter were forced to be content with some meagre remnants in Africa and Asia; by contrast, they developed the metropolis much faster than the older nations. As an industrial power, Germany was soon to dominate the European continent in the face of British imperialism, and to pose the problem of world hegemony, whose solution was sought through the first imperialist war.

While economic contrasts and economic antagonisms sharpened during the cycle of colonial wars, the resulting class conflicts could still be "resolved" peacefully by the bourgeoisie in the most advanced countries. The colonial banditry of the latter accumulated reserves of surplus value which it used abundantly to corrupt the privileged layers of the working classi. The last two decades of the 19th century were accompanied by the triumph of opportunism and reformism within international social-democracy, monstrous parasitic growths feeding off the colonial peoples.

But extensive colonialism is limited in its development, and capitalism, the insatiable conqueror, quickly exhausted the available extra-capitalist outlets. Inter-imperialist competition, deprived of any natural outlet, took the direction of imperialist war.

"Those who are engaged today in armed conflict" said Rosa Luxemburg, "are not the capitalist countries on the one hand, and on the other the countries of natural economy, but states which are pushed into conflict precisely by their identical high level of capitalist development".

Cycles of imperialist wars and revolution in the general crisis of capitalism

Whereas the ancient natural communities survived for thousands of years, and ancient and feudal societies occupied a long historical period, "modern capitalist production, on the contrary", said Engels, "which is barely 300 years old, and whose domination dates from no earlier than the establishment of large-scale industry - in other words 100 years - has, in this short lapse of time achieved disparities of distribution (concentration of capital among a few owners on the one hand, a concentration of propertyless masses in the cities on the other) which will inevitably lead it to its downfall".

Because of the intensity reached by the contradictions in its mode of production, capitalist society can no longer continue its historic mission: the continuous and progressive development of the productive forces and of the productivity of human labour. The revolt of the forces of production against private appropriation goes from being sporadic to become permanent. Capitalism enters into its general crisis of decomposition, and history records its death spasms in lines of blood.

Let us summarise the main characteristics of this general crisis: general and permanent industrial overproduction; chronic unemployment weighing on the production of non-viable capital; permanent unemployment of considerable masses of labour power seriously aggravating class antagonisms; a chronic agricultural overproduction, which adds a general crisis to the industrial crisis, and which we will analyse later; a considerable slowdown in the process of capitalist accumulation as a result of the shrinking field for the exploitation of labour power (organic composition), and the continued decline in the rate of profit which Marx foresaw when he said that "as soon as the formation of capital falls into the hands of a few large capitalists, for whom the mass of profit can compensate for its rate, then production will lose all vitalising stimulus and will fall into slumber. The rate of profit is the motive form of capitalist production. Without profit, no production". Finally, the necessity for finance capital to seek a super-profit, not from the production of surplus value, but by despoiling both the consumers (by raising commodity prices above their value), and the small producers (by appropriating a part of a part of their labour). Super-profit thus represents an indirect tax raised on the circulation of commodities. Capitalism tends to become parasitic in the absolute sense of the term.

During the two decades that preceded the World War, these agents of general crisis were already developing and acting to a certain extent, even though the conjuncture was still in a rising curve, expressing capitalism's "swan-song" as we might say. By 1912 it had reached its zenith, and the capitalist world was flooded with commodities; the crisis broke out in the USA in 1913 and began to spread to Europe. The spark in Sarajevo caused it to explode into a world war, where the stakes were a redivision of the colonies. The slaughter which followed formed an enormous outlet for capitalist production, opening up a "magnificent" perspective.

Heavy industry produced the means of destruction instead of production. Consumer industry worked flat out, not to satisfy the needs of human beings but to hasten their destruction. On the one hand, the war carried out the "salutary" operation of restoring hypertrophied capital-values to health by destroying them without any concern for their replacement. On the other hand it also encouraged the realisation of commodities well above their value through a formidable rise in prices under the regime of price controls. The mass of super-profit which capitalism drew from thus despoiling the consumers largely compensated for the reduction in the mass of surplus value, which was the result of the decline in opportunities for the exploitation of labour power, due to its mobilisation at the front.

Above all, war destroys enormous amounts of labour which in peace, excluded from the productive process, formed a growing threat to bourgeois dominationii. It has been estimated that the destruction of real value represented a third of the world's wealth accumulated by the labour of generations of workers and peasants. From the standpoint of world capitalist interests, this social disaster takes on the air of the healthy balance-sheet of a limited company dealing in financial shareholdings, and whose profit and loss account, swollen with profit, hides the ruin of innumerable small companies and the poverty of the workers. For although the destruction is of cataclysmic proportions, its cost is not born by capitalism. During the conflict, all power converges on the capitalist state under the imperious necessity of establishing a war economy. The state becomes the great and insatiable consumer which creates its purchasing power through monstrous loans that drain all the nation's savings. This is all done under the auspices of finance capital, which of course is paid for its help. The state pays with bonds which mortgage the future revenue of the proletariat and small peasants. Marx's words of 75 years ago are fully validated: "The only part of the national wealth which really enters the collective possession of modern peoples is their national debt".

The war of course accelerates the exacerbation of social antagonisms. The last period of the massacre opens with the thunderclap of October 1917. The weakest sector of world capitalism imploded. Revolutionary convulsions shook Eastern and Central Europe. Bourgeois power trembled. The conflict had to be brought to an end. In Russia the proletariat, guided by a party tempered by fifteen years of workers' s struggles and ideological work, was able to overpower a still weak bourgeoisie and establish its dictatorship. But in the central countries, where capitalism was still solidly rooted, the bourgeoisie, although it wavered before the impetuosity of the revolutionary tide, nonetheless was able - with the support of a still powerful social-democracy and thanks to the immaturity of the communist parties - to direct the proletariat away from its specific goals. Capitalism's task was made easier by its ability, after the armistice, to prolong its wartime "prosperity" in a period of economic growth justified by the need to adapt military production to renewing the productive apparatus and restoring peacetime production in order to meet the huge need for basic necessities which emerged after the war. The recovery reintegrated into production almost all the demobilised workers, and economic concessions - while they did not affect profits (since the rise in wages was far from matching the devaluation of paper currency) - allowed the bourgeoisie to create the illusion within the working class that it could improve its lot within the framework of the capitalist regime, and so to crush the revolutionary vanguard by isolating it from the class.

Disturbances in the monetary system aggravated the disorder that the war had caused in the hierarchy of value and in the trade networks, so that economic growth (at least in Europe) took the direction of speculative activity and an increase in fictitious value, rather than of a new cyclical phase. This quickly reached its high point, since although the volume produced by the seriously reduced capacity of the productive forces remained well below the pre-war level, it nonetheless soon exceeded the low purchasing power of the masses. Whence the crisis of 1920, which as the 3rd Congress of the Communist International put it, appeared as "the reaction of poverty against the efforts to produce, trade, and live in a similar style to that of the preceding capitalist period", ie the fictitious prosperity of the war and the immediate post-war period.

Although this was not the case in Europe, in the US the crisis appeared as the conclusion of an industrial cycle. The war had allowed the US economy to break the grip of the economic depression of 1913, and offered immense possibilities of accumulation by eliminating its European competitors and opening up an almost inexhaustible military market. The USA became Europe's main supplier of raw materials, industrial and agricultural products. Based on a colossal productive capacity, a powerfully industrialised agriculture, enormous capital resources, and its position as the world's creditor, the US became the economic centre of world capitalism, thus shifting the axis of imperialist contradictions. The old Anglo-German rivalry, which had been the motive force of World War I, was replaced by an antagonism between Britain and Americaiii. With the end of the war, the US was confronted by the profound contrast between a hypertrophied productive apparatus and a considerably contracted market. The contradiction broke out in the crisis of April 1920, and it was the turn of the young American imperialism to plunge into the general decomposition of its economy.

In imperialism's decadent phase, there is only one way out for capitalism's contrasts: war. Humanity can only escape such an outcome through the proletarian revolution. But in the advanced Western countries, the October revolution proved unable to bring the proletariat's consciousness to fruition. The revolution was unable to guide the productive forces towards socialism, which alone could overcome capitalism's contradictions; thus, once the last revolutionary energies had burnt themselves out in the defeat of the German proletariat in 1923, the bourgeoisie was able to restore its system to a relative stability. Although this strengthened its domination, it nonetheless pushed it down a path leading to a new and still more terrible general conflagration.

Meanwhile, a new period of economic recovery began, which had all the appearances of a prosperity analogous to a cycle of ascendant capitalism, at least as far as one essential aspect was concerned: the development of production. But we have seen that previously, growth corresponded to an extension of capitalist markets through the annexation of new pre-capitalist regions, whereas the expansion of 1924-29 took place within the general crisis of capitalism and could not draw on such resources. On the contrary, we saw an aggravation of the general crisis under the influence of certain factors which will examine rapidly here:

  1. The capitalist market was deprived of the vast outlet which had been formed by imperial Russia, an importer of industrial products and capital, and an exporter of raw materials and agricultural products, sold cheap thanks to a ferocious exploitation of the peasantry; moreover, this last great pre-capitalist area, with its immense resources and a vast reservoir of manpower, was plunged into terrible social convulsions which made it impossible for capitalism to invest there "safely".
  2. The breakdown of the world economic mechanism eliminated gold as a universal currency and general equivalent for commodities; the absence of any common measure and the co-existence of monetary systems based either on gold or on a fixed exchange rate or non-convertibility, created such a difference in prices that the notion of value became vague, international trade became completely disjointed, and its disorder was aggravated by the increasingly frequent resort to dumping.
  3. The general and chronic crisis in agriculture in the agrarian countries, and in the agricultural sector of the industrial countries (it was to reach its full extent during the world economic crisis). The pre-war development of agricultural production under the impetus of agricultural industrialisation and capitalisation in large areas of the USA, Canada, and Australia, was extended to the most backward regions of Central Europe and South America, whose essentially agrarian economies lost their semi-autonomous nature, to become totally dependent on the world market.

Moreover the industrial countries, which would normally be importers of agricultural produce, adopted policies of economic nationalism, and tried to make up for their own agricultural deficiencies by an extension of the land under cultivation for cereals, and through an increase in yields behind the shelter of customs barriers and subsidies. This practice extended also to countries with an industrialised agriculture (USA, Canada, Argentina). Under monopolistic pressure, the result was a regime of unreal farm prices, which rose to the level of the highest cost of production, and which weighed heavily on the purchasing power of the masses (this was true above all for wheat, an article of mass consumption).

For capitalism, the fact that the peasant economies had been completely integrated into the market meant that national markets could no longer be extended and so reached the point of absolute saturation. Although he still appeared to be an independent producer, the peasant was incorporated into the capitalist sphere of production in the same way as a wage-earner: just as the latter is despoiled of his surplus labour by being forced to sell his labour power, so the peasant is unable to appropriate the extra labour contained in his products because he is forced to sell them to capital below their value.

The national market thus provides a striking expression of deepening capitalist contradictions: on the one hand, the relative, then absolute, decline in the proletariat's share of total product, and the spread of permanent unemployment and the industrial reserve army, reduced the market for agricultural products. The resulting decline in the purchasing power of the small peasants reduced the market for capitalist products. The continuing fall in the general purchasing power of the working and peasant masses thus came into more and more violent opposition with an increasingly abundant agricultural production, especially of products for mass consumption.

The existence of an endemic agricultural overproduction (clearly demonstrated by the figures for world wheat stocks, which tripled between 1926 and 1933), reinforces the elements of decomposition acting within the general crisis of capitalism. This is because agricultural overproduction is different from capitalist overproduction properly so-called, in that it cannot be counter-acted (other than by the "providential" action of natural causes), given the specific nature of agricultural production, which is still insufficiently centralised and capitalised, and occupies millions of families.

Having determined the conditions which strictly delimit the evolution of inter-imperialist contradictions, it is easy enough to discern the real nature of the "surprising" prosperity of the period of capitalism's "stabilisation". The considerable development of productive forces and production, the volume of world trade and the international movement of capital, which are the essential traits of the ascending phase of 1924-28, are explained by the necessity to erase the traces of war, to rebuild prior productive capacity so that it could be used for its fundamental objective: the completion of the economic and political structure of imperialist states, ensuring their competitiveness and the construction of economies adapted for war. It is now obvious that all the very uneven fluctuations of that economic conjuncture, although moving in a rising curve, did no more than reflect the changes in the imperialist balance of forces fixed by the Versailles Treaty's new division of the world.

The flourishing of technology and productive capacity took on gigantic proportions, especially in Germany. After the inflationary storm of 1922-23, the investment of British, French, and above all American capital was such that much of it could find no domestic field for action, and was re-exported through the banks, in particular towards the USSR to finance the Five Year Plan.

During this process of expanding productive forces, the law of the falling rate of profit acted all the more violently. Organic composition rose still more rapidly than the development of the productive apparatus, and this was true above all in the fundamental sectors. The result was a change within constant capital: the fixed part (machinery) increased powerfully relative to the circulating part (raw materials and consumables), to become a rigid element that weighed on production costs to the extent that the volume of production faltered and fixed capital represented the counter-part to borrowed capital. The most powerful companies thus became more sensitive to the slightest economic downturn. In 1929, in a USA at the height of economic prosperity, the maximum output of steel only used 85% of productive capacity; in 1933, the rate of use of productive capacity had fallen to 15%. In 1932, the value of the production of the means of production in the great industrial countries was not even equivalent to the normal wear-and-tear on fixed capital.

Such facts only express another contradictory aspect of imperialism's degenerating phase: the maintenance of a partially unused productive apparatus as an essential military potential.

In the meantime, to reduce production costs finance capital had recourse to the methods with which we are already familiar: reduction in the price of raw materials to reduce the value of the circulating part of constant capital; fixing sale prices above their value to obtain a super-profit; the reduction of variable capital, either by the direct or indirect reduction of wages, or by an intensification of labour equivalent to prolonging the working day and achieved by the rationalisation and organisation of factory production-lines. We can understand why these last methods have been most rigorously applied in the most technically developed countries - the USA and Germany - which are disadvantaged in periods of economic downturn, relative to less developed countries where production costs are much more sensitive to a fall in wages. However, rationalisation comes up against human limitations. Moreover, the fall in wages only allows an increase in the mass of surplus-value, as long as there is no decline in the number of workers employed. Consequently, the solution to the fundamental problem - how to preserve both the value and the profitability of invested capital by producing and realising the maximum surplus-value and super-profit (the parasitic extension of the former) - has to take other directions. In order to keep non-viable capitals alive and ensure them a profit, they must be fed with "fresh" money, which finance capital of course refuses to fund from its own reserves. It therefore draws either on the savings put at its disposal through the state, or on the purchasing power of consumers. Hence the development of monopolies, of state shareholding in mixed companies, the creation of costly "public utilities", loans, subsidies to unprofitable companies or state guarantees for their revenue. Hence also the control of budgets, the "democratisation" of taxation by extending the tax base, fiscal advantages for capital in order to re-animate the "living forces" of the nation, the reduction in "unprofitable" social costs, the conversion of unearned income, etc.

However, even this cannot suffice. The mass of surplus value produced remains inadequate; the field of production remains too narrow and must be extended. While war is the great outlet for capitalist production, in "peacetime" it is militarism (ie all the activities involved in the preparation for war) that realises the surplus value of the fundamental areas of production controlled by finance capital. The latter determines militarism's capacity for absorption by confiscating a part of the purchasing power of the working and peasant masses and transferring it through taxation to the state, which is the customer for the means of destruction and strategic public works. Capitalism's contradictions obviously cannot be resolved by the respite thus gained. As Marx already foresaw, "the contradiction between the general social power finally constituted by capital and the power of each capitalist to dispose of the social conditions of capitalist production develops more and more". All the internal antagonisms of the bourgeoisie must then be taken in hand by its apparatus of domination, the capitalist state, which is called upon to safeguard the whole bourgeois class’ fundamental interests from the danger threatening it, and to complete the fusion - already carried out in part by finance capital – of the particular interests of the various capitalist formations. The less surplus value there is to share out, the sharper the internal conflicts and the more vital this concentration. The Italian bourgeoisie was the first to resort to fascism, because its fragile economic structure threatened to break up under the pressure, not only of the crisis of 1921, but also of the shock of violent social contrasts.

Germany, a power without any colonies and with a weak imperialist foundation, was forced in the fourth year of the world economic crisis to concentrate all the resources of its economy within a totalitarian state, breaking the only force which could have opposed a capitalist dictatorship with its own: the proletariat. Moreover, the process of transforming the economic apparatus into an instrument of war was furthest advanced in Germany. By contrast, the most important imperialist groupings, such as France and Britain, still possessed considerable reserves of surplus value, and so have still not entered determinedly on the road towards state centralisation.

We have just seen that the expansion of the period 1924-28 was a function of the restoration and structural reinforcement of each of the imperialist powers, with a number of secondary states that have entered the former’s orbits according to their own interests and inclinations. But precisely because this expansion includes two contradictory - though closely linked - movements, one towards the expansion of production and the circulation of commodities, the other towards a splintering of the world market into independent economies, its saturation point could not be long delayed.

The world crisis, which the dreamers of economic liberalism wanted to see as a cyclical crisis which could be resolved thanks to the effects of “spontaneous” factors, and which capitalism could therefore escape from by applying some labour plan of the De Man variety, opens the period of inter-imperialist struggles, first economic and political, then violent and bloody once the crisis has exhausted all of capitalism's peaceful possibilities.

We cannot analyse here the process of this unprecedented economic collapse. During the crisis, all capitalism's attempts, which we have already described, to find a way out of its contradictions are used tenfold and with the energy of desperation: extension of monopolies from the home market to the colonies and attempts to form homogeneous empires protected behind a single tariff barrier (Ottawa); the dictatorship of finance capital and the strengthening of its parasitic activity; the retreat of international monopolies, forced to give way before the rise of nationalism (Kreuger crash); the exacerbation of antagonisms through tariff wars, to which are joined struggles over currencies involving the gold stocks of the central banks; in trade, the substitution of compensatory clearing offices, or even of barter, for the regulatory function of gold as a general equivalent for commodities; the annulment of irrecoverable “reparations”, and the repudiation of American debts by the “victorious” states, the suspension of the financial service of private loans and debts in the “vanquished” states, leading to the collapse of international credit and of capitalism's “moral” values.

If we consider the determining factors of capitalism's general crisis, we can understand why the world crisis cannot be absorbed by the “natural” action of capitalism's economic laws, and why on the contrary these laws have been emptied out by the combined power of finance capital and the capitalist state, which have compressed all manifestations of particular capitalist interests. We should consider from this viewpoint the multitude of “experiments” and attempts at correcting the situation, the “recoveries” that have appeared during the crisis. Their action is exercised, not at the international level as part of an improvement in the world conjuncture, but at the national level of the imperialist economies, and in forms adapted to the particularities of their structures. We cannot analyse here certain expressions such as deflation, inflation, or currency devaluation. Their interest is anyway secondary, because they are contingent and ephemeral. All these experiments in artificial reanimation of an economy in decomposition nonetheless produce common fruits. Those which propose, demagogically, to fight unemployment and increase the purchasing power of the masses, lead to the same result: not to the fall in unemployment which is vaunted in the official statistics, but to a sharing out of the available work among a greater number of workers, which can only cause a degradation of their living conditions.

The increase in production by basic industry (and not by consumer industry), which can be observed within each imperialism, is nourished solely by the policy of (strategic) public works and by militarism, whose significance we understand very well.

Wherever it turns, however it tries to escape the grip of the crisis, capitalism is pushed irresistibly towards its destiny of war. Where and how the war will break out is impossible to determine today. What it is important to say and to state clearly, is that it will explode over the division of Asia and that it will be world wide.

All the imperialisms are heading towards war, whether they are dressed in democratic suits or fascist uniforms; and the proletariat cannot let itself be drawn in to any abstract discrimination between “democracy” and fascism, which can only divert it from the daily struggle against its own bourgeoisie. To make its tasks and its tactics dependent on the illusory perspective of an economic recovery, or on the pseudo-existence of capitalist forces opposed to war, would lead the proletariat straight into war, or deprive it of any possibility of finding the road towards revolution.


i We reject this wrong notion of “privileged strata of the working class”, better known through the concept of the “workers’ aristocracy”, developed in particular by Lenin (though he took the idea from Engels) and defended to this day by the Bordigist groups. We have developed our position on this question in the article “Workers’ aristocracy: a sociological theory to divide the working class” (International Review no.25, 2nd quarter 1981).

ii While there is no doubt that “war destroys enormous amounts of labour”, in other words that it leads to the slaughter of vast numbers of proletarians, this sentence might lead to the conclusion that war is a solution that the bourgeoisie adopts to confront the proletarian danger, and idea we do not share. In the Italian Left, this non-marxist idea that in fact war is a “civil war of the bourgeoisie against the proletariat” was defended above all by Vercesi.

iii This assertion, soon to be disproved by events, was based on a political position which considered that the main commercial rivals would inevitably be the major opponents on the imperialist front. This position had already been defended in a debate which had taken place within the Communist International; it was Trotsky who, rightly, opposed it on the grounds that military antagonisms do not necessarily mirror economic rivalries.



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