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Engels discerns the approach of capitalism's historic crisis
According to a certain school of academic Marxologists, councilists and anarchists, marxist theory entered a period of sterility after Marx's death in 1883. The social democratic parties and the Second International, in this view, were actually dominated by "Engelsism", an attempt by Marx's second fiddle and his camp-followers to turn Marx's method of investigation into a semi-mechanical system which falsely equates radical social criticism with the approach of the natural sciences. "Engelsism" is also attacked for being a regression to quasi-mystical Hegelian dogmas, particularly in its efforts to elaborate a "dialectics of nature". In this view, what is natural is not social, and what is social is not natural. If the dialectic exists, it can only be applied to the social sphere.
This break in continuity between Marx and Engels - which in its extreme form dismisses almost the whole of the Second International as a vehicle for integrating the proletarian movement into the needs of capital - is frequently used to reject any idea of continuity in the political history of the working class. From Marx, whose work few of our anti-Engelsists repudiate (indeed they frequently become experts on the minutiae of the value/price transformation problem or other partial aspects of Marx's critique of political economy), we are encouraged to leap over Engels, Kautsky, Lenin, and the Second and Third Internationals; and although parts of the communist left may, despite being the scions of this dubious parenthood, be grudgingly acknowledged to have hit upon a few insights, the real continuity of Marx's theory passes from Marx to....the scattering of brilliant individuals who have really understood him in the last few decades - none other, in fact, than the proponents of the "anti-Engelsist" thesis.
We can't respond to this whole ideology here. Like all myths, it is based on a certain element of truth which is then distorted and exaggerated beyond measure. During the period of the Second International, a period when the workers' movement was establishing itself as an organised force within capitalist society, there was a real tendency to schematise marxism and to turn it into a form of determinism, just as there was a real pressure on the workers' movement from the weight of reformist ideas; and even the best marxists, including Engels himself, were not immune from this. But even if Engels did make some important errors during this period, to flatly dismiss Engels' work in the years after Marx's death as a negation and a perversion of Marx's real thought is an absurdity given the extremely close cooperation between the two men from the beginning to the end of their relationship. It was Engels who took on the immense task of editing and publishing Marx's Capital and it is ironic that so many of those who try to drive a wedge between Marx and Engels are perfectly happy to quote the Marx of volumes two and three of Capital, despite the fact that they only appeared in public via the allegedly uncomprehending mind of Engels.
One of the principal exponents of this "anti-Engelsist" line of thought is the Aufheben group in the UK, whose series "Decadence: Theory of decline or the decline of theory" has been taken by some to have driven the last nail into the coffin of the notion of capitalist decadence, given the number of times the series is cited by those who are hostile to this notion. In their view, the decadence of capitalism is essentially an invention of the Second International: "The theory of capitalist decadence first comes to prominence in the Second International. The Erfurt Programme supported by Engels established the theory of the decline and breakdown of capitalism as central to the party's programme." And they cite the following passages:
"Private property in the means of production has changed... From a motive power of progress it has become a cause of social degradation and bankruptcy. Its downfall is certain. The only question to be answered is: shall the system of private ownership in the means of production be allowed to pull society with itself down into the abyss; or shall society shake off that burden and then, free and strong, resume the path of progress which the evolutionary path prescribes to it? [p. 87] The productive forces that have been generated in capitalist society have become irreconcilable with the very system of property on which it is built. The endeavour to uphold this system of property renders impossible all further social development, condemns society to stagnation and decay. [p. 88] The capitalist social system has run its course; its dissolution is now only a question of time. Irresistible economic forces lead with the certainty of doom to the shipwreck of capitalist production. The erection of a new social order for the existing one is no longer something merely desirable; it has become something inevitable. [p. 117] As things stand today capitalist civilisation cannot continue; we must either move forward into socialism or fall back into barbarism".
In the summary that begins the next article in the series (Aufheben n° 3), the argument that the concept of decadence was rooted in "Second International Marxism" is even more explicit:
"In Part I we looked at how this idea of the decline or decadence of capitalism has its roots in Second International Marxism and was maintained by the two claimants to the mantle of true continuers of the 'classical Marxist tradition' - Trotskyist Leninism and Left or Council communism".
Although the quotes Aufheben describes as being from the Erfurt Programme appear to come from Kautsky's comments on the programme (The Class Struggle, 1892) rather than the document itself, the preamble to the actual programme certainly contains a reference to the notion of capitalist decline and indeed asserts that this period has already opened up: "The gulf between the propertied and the propertyless is further widened by crises that are grounded in the nature of the capitalist mode of production, crises that are becoming more extensive and more devastating, that elevate this general uncertainty into the normal state of society and furnish proof that the powers of productivity have grown beyond society's control, that the private ownership of the means of production has become incompatible with their appropriate application and full development". As a matter of fact, however, despite Aufheben's view that the Erfurt programme is so dependent on the theory of decadence, a cursory reading of the programme gives the impression that there is hardly any connection at all between the overall diagnosis cited above and the demands put forward in the programme, which are all essentially a series of minimum demands to be fought for inside capitalist society; and even Engels' many detailed points of criticism of these demands makes almost no reference to the historical context in which these demands are being raised.
That said, it is certainly true that in the work of Engels and other marxists in the last part of the 19th century we find increasing references to the notion of capitalism entering upon a crisis of old age, a period of decline.
But while for Aufheben this was a departure from Marx - who, they maintain merely maintained that capitalism was a "transitory" system and did not put forward any idea of an objective process of decline or breakdown as a foundation for the revolutionary struggle against the system - we have tried to show in previous articles in this series that the conception of capitalist decadence (as of the decadence of previous class societies) was entirely in line with Marx's own thinking.
Again, it's certainly the case that Marx's writings on political economy were produced during the period when capitalism was still in its triumphant ascendancy. Its periodic crises were crises of youth which served to impel the imperious march of this dynamic mode of production across the surface of the globe. But Marx had also been able to see these convulsions as harbingers of the system's eventual demise, and had already begun to see signs of capital completing its historic mission by opening up the more remote areas of the planet, while in "old Europe", in the wake of the events of the Paris Commune, he affirmed that the phase of heroic national wars had come to an end.
Furthermore, during the period after Marx's death, the approaching signs of a crisis of historical proportions, and not just a repetition of the old cyclical crises, were becoming increasingly clear.
Thus, for example, Engels pondered the significance of the apparent end of the "ten year cycle" of crises and the onset of what he termed a chronic depression affecting the original capitalist nation, Great Britain. And while new powerful capitalist nations were thrusting their way onto the world market, above all Germany and the USA, Engels saw that this would inevitably result in a much more profound crisis of overproduction:
"America will smash up England's industrial monopoly - whatever there is left of it - but America cannot herself succeed to that monopoly. And unless one country has the monopoly of the markets of the world, at least in the decisive branches of trade, the conditions - relatively favourable - which existed here in England from 1848 to 1870 cannot anywhere be reproduced, and even in America the condition of the working class must gradually sink lower and lower. For if there are three countries (say England, America and Germany) competing on comparatively equal terms for the possession of the Weltmarkt, there is no chance but chronic overproduction, one of the three being capable of supplying the whole quantity required".
Simultaneously, Engels saw capitalism's tendency to engineer its own ruin in the accelerating conquest of the non-capitalist hinterland that surrounded the capitalist metropoles:
"For it is one of the necessary corollaries of grande industrie that it destroys its own home market by the very process by which it creates it. It creates it by destroying the basis of the domestic industry of the peasantry. But without domestic industry the peasantry cannot live. They are ruined as peasants; their purchasing power is reduced to a minimum; and until they, as proletarians, have settled down into new conditions of existence, they will furnish a very poor market for the newly-arisen factories.
"Capitalist production being a transitory economical phase, is full of internal contradictions which develop and become evident in proportion as it develops. This tendency to destroy its own market at the same time it creates it, is one of them. Another one is the insoluble situation to which it leads, and which is developed sooner in a country without a foreign market, like Russia, than in countries which are more or less capable of competing on the open world market. This situation without an apparent issue finds its issue, for the latter countries, in commercial revulsions, in the forcible opening of new markets. But even then the cul-de-sac stares one in the face. Look at England. The last new market which could bring on a temporary revival of prosperity by its being thrown open to English commerce is China. Therefore English capital insists upon constructing Chinese railways. But Chinese railways mean the destruction of the whole basis of Chinese small agriculture and domestic industry, and as there will not even be the counterpoise of a Chinese grande industrie, hundreds of millions of people will be placed in the impossibility of living. The consequence will be a wholesale emigration such as the world has not yet seen, a flooding of America, Asia and Europe by the hated Chinaman, a competition for work with the American, Australian and European workman on the basis of the Chinese standard of life, the lowest of all--and if the system of production has not been changed in Europe before that time, it will have to be changed then.
"Capitalistic production works its own ruin, and you may be sure it will do so in Russia too...."
The growth of militarism and imperialism, aimed above all at completing the conquest of the non-capitalist areas of the planet, also enabled him to see with remarkable lucidity the danger of these developments rebounding back to the centre of the system - to Europe, threatening to engulf civilisation in barbarism while at the same time accelerating the maturation of the revolution.
"No war is any longer possible for Prussia-Germany except a world war and a world war indeed of an extent and violence hitherto undreamt-of. Eight to ten millions of soldiers will massacre one another and in doing so devour the whole of Europe until they have stripped it barer than any storm of locusts has ever done. The devastation of the Thirty Years War compressed into three or four years, and spread over the whole Continent: famine, pestilence, general descent into barbarism, both of the armies and the mass of the people; hopeless confusion of our artificial system of trade, industry and credit, ending in general bankruptcy, collapse of the old states and their traditional elite wisdom to such an extent that crowns will roll by dozens on the pavement and there will be nobody to pick them up; absolute impossibility of foreseeing how it will all end and who will come out of the struggle as victor; only one result is absolutely certain: general exhaustion and the establishment of the conditions for the final victory of the working class".
As it happens, however, Engels did not see such a war as inevitably bringing forth socialism: he had a well-founded fear that the general exhaustion would affect the proletariat as well and render it incapable of accomplishing its revolution (hence, we could add, a certain attraction for somewhat utopian schemes that might delay or put off the onset of war, such as the replacement of standing armies with a popular militia). However, Engels had grounds to hope that the revolution would break out prior to a pan-European war. A letter to Bebel (24-26 October, 1891) encapsulates this "optimistic" view:
"...According to the reports, you said that I had prophesied the collapse of bourgeois society in 1898. There is a slight error there somewhere. All I said was that we might possibly come to power by 1898. If this does not happen, the old bourgeois society might still vegetate on for a while, so long as a shove from outside does not bring the whole ramshackle old building crashing down. A rotten old casing like this can survive its inner essential death for a few decades, if the atmosphere is undisturbed"
In this passage you have both the illusions of the movement of the time and its underlying theoretical strength. The steady gains of the social democratic party, above all on the electoral front and in Germany, gave rise to exaggerated hopes that there could be a kind of inexorable progress towards the revolution (and even the revolution itself could be seen in semi-parliamentary terms, despite oft-repeated warnings against the parliamentary cretinism that was a central aspect of the rapidly burgeoning ideology of reformism). At the same time, the consequences of the failure of the proletariat to take power are laid out clearly: capitalism surviving for several decades as a "rotten old casing" - although Engels, like most revolutionaries of his day, would probably not have thought that it could survive its crisis of decline for a century or more. But the theoretical underpinning for anticipating such a state of affairs is clearly laid out in this passage.
Luxemburg leads the battle against revisionism
And yet, precisely because the great imperialist expansion of the last decades of the 19th century made it possible for capitalism to experience dramatic rates of growth, this phase is remembered above all as one of unprecedented prosperity and progress, of steadily improving living standards for the working class, thanks not only to the favourable objective conditions but also to the growing influence of the workers' movement organised in trade unions and social democratic parties. This was especially the case in Germany, and it was here that the workers' movement was faced with a major challenge: the rise of revisionism.
Spearheaded by the writings of Eduard Bernstein at the end of the 1890s, the revisionists argued that social democracy should recognise that the evolution of capitalism had invalidated some fundamental elements in Marx's analysis - above all the prediction of ever-growing crises and consequent impoverishment of the proletariat. Capitalism had shown that by using the mechanism of credit and organising in huge trusts and cartels it could overcome its tendency towards anarchy and crisis and, under the impulsion of a well-organised workers' movement, could make growing concessions to the working class. The "ultimate" goal of revolution enshrined in the programme of the social democratic party had therefore become redundant; and the party should acknowledge itself for what it really was: a "democratic-socialist party of reform", advancing gradually and peacefully towards a transformation of capitalism into socialism.
A number of figures on the left wing of the social democracy responded to these arguments. In Russia Lenin polemicised against the Economists who wanted to reduce the workers' movement to the fight for "bread and butter" issues; in Holland Gorter and Pannekoek led the polemic against the mounting influence of reformism in the trade union and parliamentary arenas. In the USA Louis Boudin wrote an important book, The Theoretical System of Karl Marx (1907), in answer to the revisionist arguments - we shall return to this later on. But it was above all Rosa Luxemburg in Germany who is associated with the struggle against revisionism, at the core of which was the reaffirmation of the marxist notion of the decline and catastrophic collapse of capitalism.
Reading Luxemburg's polemic with Bernstein, Social Reform or Revolution (1900), it is striking how much the arguments that the latter put forward have been repeated over and over again, almost every time that capitalism gave the appearance - however superficial - of overcoming its crises.
"According to Bernstein, a general decline of capitalism seems to be increasingly improbable because, on the one hand, capitalism shows a greater capacity of adaptation, and, on the other hand, capitalist production becomes more and more varied.
"The capacity of capitalism to adapt itself, says Bernstein, is manifested first in the disappearance of general crises, resulting from the development of the credit system, employers' organisations, wider means of communication and informational services. It shows itself secondly, in the tenacity of the middle classes, which hails from the growing differentiation of the branches of production and the elevation of vast layers of the proletariat to the level of the middle class. It is furthermore proved, argues Bernstein, by the amelioration of the economic and political situation of the proletariat as a result of its trade union activity."
How often have we been told, not only by the official ideologists of the bourgeoisie, but also by those who claim to have a far more radical ideology in their pockets, that crises are a thing of the past because capitalism today is organised on a national or even international scale, because it can have infinite recourse to credit and other financial manipulations; how many times have we been told that the working class has ceased to be a revolutionary force because it is no longer facing the absolute misery described in Engels' book about the conditions of the working class in Manchester in 1844, or because it is becoming more and more indistinguishable from the middle classes? Certainly these were the grand sociological refrains of the 1950s and 60s, given a radical gloss by the likes of Marcuse and Castoridadis; and they were dragged out of the cupboard again in the 1990s after the collapse of the eastern bloc and with the credit-fuelled boom that has only recently been exposed as a hollow sham.
Against these arguments, Luxemburg insisted that far from overcoming crises, the "organisation" of capital through cartels and credit was a response to the contradictions of the system and tended to raise these contradictions to a higher and more devastating level.
Credit was seen by Luxemburg essentially as a means for facilitating the extension of the market while concentrating capital in fewer and fewer hands. At this point in history, this was certainly the case - there was a real possibility for capitalism to expand outwards and credit greatly accelerated this expansion. But at the same time Luxemburg was able to grasp the destructive side of credit as this expansion of the market was also the premise for future conflict with the mass of productive forces set in motion:
"We see that credit, instead of being an instrument for the suppression or the attenuation of crises, is on the contrary a particularly mighty instrument for the formation of crises. It cannot be anything else. Credit eliminates the remaining rigidity of capitalist relationships. It introduces everywhere the greatest elasticity possible. It renders all capitalist forces extensible, relative and mutually sensitive to the highest degree. Doing this, it facilitates and aggravates crises, which are nothing more or less than the periodic collisions of the contradictory forces of capitalist economy."
Credit was not yet what it has largely become today - not so much a means of accelerating the expansion of a real market, but an artificial market in itself, upon which capitalism has become increasingly dependent. But its function as a medicine that aggravates the disease has thereby become even more evident in this epoch, and above all since the outbreak of the so-called "credit crunch" of 2008.
By the same token, the tendency of capitalism and the capitalists to organise themselves on a national and even international scale was seen by Luxemburg not as a solution to the antagonisms of the system but as a potent force for raising them onto a higher and more destructive level:
"capitalist combinations aggravate the contradiction existing between the international character of capitalist world economy and the national character of the State - insofar as they are always accompanied by a general tariff war, which sharpens the differences among the capitalist States. We must add to this the decidedly revolutionary influence exercised by cartels on the concentration of production, technical progress, etc.
"In other words, when evaluated from the angle of their final effect on capitalist economy, cartels and trusts fail as ‘means of adaptation'. They fail to attenuate the contradictions of capitalism. On the contrary, they appear to be an instrument of greater anarchy. They encourage the further development of the internal contradictions of capitalism. They accelerate the coming of a general decline of capitalism".
These predictions - above all as the organisation of capital passed from the stage of cartels to the national "state capitalist trusts" which confronted each other for control of the world market in 1914 - were to be profoundly vindicated by the entire history of the 20th century.
Luxemburg also responded to Bernstein's arguments that the proletariat did not need to make a revolution because it was enjoying growing living standards as a result of its effective organisation in trade unions and through the activities of its representatives in parliament. She warned that trade union activity had inherent limitations, describing it as a "labour of Sisyphus", necessary, but constantly frustrated in its efforts to increase the worker's share in the products of his labour because of the inevitable increase in the rate of exploitation brought about by the development of productivity. Later developments in capitalism would expose even more thoroughly the historical limits of trade unionism, but even while activity in the trade unions (as well as the parallel fields of action in parliament and cooperatives) still retained a validity for the working class, the revisionists were already falsifying reality by arguing that such activities could secure for the working class a constant and indefinite improvement in its living conditions.
And while Bernstein saw a tendency towards the attenuation of class relations through the proliferation of small-scale enterprises and thus the growth of the middle class, Luxemburg affirmed the existence of the tendency that was certainly to become predominant in the century that followed: the evolution of capitalism towards increasingly gigantic forms of concentration and centralisation, both at the level of the "private" enterprise and the state and imperialist alliance. Others on the revolutionary left, such as Boudin, responded to the claim that the proletariat itself was becoming middle class by arguing that many of the "white collar" and technical strata which were supposedly swallowing up the working class were in reality themselves a product of the process of proletarianisation - again, a tendency that has become increasingly marked in the last few decades. Boudin's words from 1907 thus have a very modern ring to them, as do the specious arguments they are directed against:
"A very great proportion of what is termed new middle class, and appears as such in the income statistics, is really a part of the regular proletariat, and the new middle class, whatever it may be, is a good deal smaller than might be supposed from the tables of incomes. This confusion is due, on the one hand, to the old and firmly-rooted prejudice, according to which Marx is supposed to ascribe value creating properties only to manual labour, and on the other to the severance of the function of superintendence from the possession of property - effected by the corporations as noted before. Owing to these circumstances large sections of the proletariat are counted as belonging to the middle class, that is, the lower strata of the capitalist class. This is the case with almost all those numerous and growing occupations in which the remuneration is termed ‘salary' instead of ‘wages'. All these salaried persons, no matter what their salaries may be, who make up perhaps the bulk, and certainly a great portion, of the ‘new' middle class, are in reality just as much a part of the proletariat as the merest day-labourer."
Heading towards the debacle of bourgeois civilisation
Today's open economic crisis is taking place in a very advanced stage of capitalism's decay. Luxemburg was responding to Bernstein in a period which she characterised, again with remarkable lucidity, as being not yet that of the period of decline, but as one in which the approach of this period was becoming increasingly evident. This passage occurs in Luxemburg's response to Bernstein's empirical (and empiricist) question: why have we not seen any expressions of the old decennial cycle since the early 1870s? Luxemburg's answer is to insist that this cycle was in fact the product of a youthful phase of capitalism; the world market was at that point in a "transitional period" between its period of maximum growth and the onset of an epoch of decline:
"The world market is still developing. Germany and Austria only entered the phase of actual large industrial production in the 1870s; Russia only in the 1880s; France is still in large part in the stage of smallscale production; the Balkan states, for the most part, have still not stripped themselves of the chains of a natural economy; and only in the 1880s did America, Australia and Africa enter into a large and regular exchange of goods with Europe. Thus, on the one hand, we now have behind us the sudden and large opening up of new areas of the capitalist economy, as occurred periodically until the 1870s; and we have behind us, so to speak, previous youthful crises which followed these periodic developments. On the other hand, we still have not progressed to that degree of development and exhaustion of the world market which would produce the fatal, periodic collision of the forces of production with the limits of the market, which is the actual capitalist crisis of old age. We are in a phase in which the crises are no longer the accompaniment of the growth of capitalism, and not yet that of its decline."
Interestingly, however, in the second edition of the pamphlet, published in 1908, Luxemburg omitted this passage and an ensuing paragraph and mentioned the crisis of 1907-8, centred precisely in the most powerful industrial nations: evidently, for Luxemburg, the "transitional period" was already drawing to a close.
Furthermore, she also hints that the previous expectation of the new period being opened by a "great commercial crisis" might prove to have been mistaken - already in Social Reform or Revolution she points to the growth of militarism, a development that was to preoccupy her more and more. It is surely the possibility that the opening of the new period might be marked by war rather than open economic crisis that lies behind the following observation:
"Socialist theory up to now declared that the point of departure for a transformation to socialism would be a general and catastrophic crisis. We must distinguish in this outlook two things: the fundamental idea and its exterior form.
"The fundamental idea consists of the affirmation that capitalism, as a result of its own inner contradictions, moves toward a point when it will be unbalanced, when it will simply become impossible. There were good reasons for conceiving that juncture in the form of a catastrophic general commercial crisis. But that is of secondary importance when the fundamental idea is considered".
But whatever form the dawning of the "crisis of senility" might take, Luxemburg insisted that without this vision of the catastrophic downfall of capitalism, socialism becomes a mere utopia:
"According to scientific socialism, the historic necessity of the socialist revolution manifests itself above all in the growing anarchy of capitalism, which drives the system into an impasse. But if one admits with Bernstein that capitalist development does not move in the direction of its own ruin, then socialism ceases to be objectively necessary...
"Revisionist theory thus places itself in a dilemma. Either the socialist transformation is, as was admitted up to now, the consequence of the internal contradictions of capitalism, and with the growth of capitalism will develop its inner contradictions, resulting inevitably, at some point, in its collapse, (in that case the ‘means of adaptation' are ineffective and the theory of collapse is correct); or the ‘means of adaptation' will really stop the collapse of the capitalist system and thereby enable capitalism to maintain itself by suppressing its own contradictions. In that case socialism ceases to be an historic necessity. It then becomes anything you want to call it, but it is no longer the result of the material development of society.
"The dilemma leads to another. Either revisionism is correct in its position on the course of capitalist development, and therefore the socialist transformation of society is only a utopia, or socialism is not a utopia, and the theory of ‘means of adaptation' is false. There is the question in a nutshell".
In this passage Luxemburg draws out with stark clarity the intimate relationship between the revisionist outlook and the rejection of Marx's theory of capitalism's decline - and conversely, the necessity for such a theory as the foundation-stone of a coherent conception of revolution.
In the next article in this series we will look at how Luxemburg and others sought to locate the origins of the approaching crisis in the underlying process of capitalist accumulation.
Gerrard, Winter 2009.
. See for example the article "1895-1905: parliamentary illusions hide the perspective of revolution" (International Review n°88), the concluding chapter of our book Communism is not a nice idea but a material necessity.
. Aufheben n°s 2 and 3: https://libcom.org/aufheben
. Aufheben n° 2.
. Engels to Florence Kelley Wischnewetzky. February 3 1886.
. Letter to Nikolai Danielson, Sept 22 1892.
. 15 December 1887, Marx and Engels Collected Works Vol. 26, p451.
. Luxemburg, Social Reform or Revolution, Chapter 1, "The opportunist method".
. Ibid. Chapter 2, "The adaptation of capitalism".
. The Theoretical System of Karl Marx, 1907, p 207.
. Luxemburg, Social Reform or Revolution, Chapter two.
. Ibid, Chapter 1.