Understanding the Crisis and Putting the System on Trial (Part 1)

Earlier in the year a number of articles in Socialist Voice sought to explain the struc
tural causes of the present economic crisis and to identify some of the dominant characteristics of the monopoly capitalist system of production as it is today.[1]

These articles bring to the fore the 
contradictions within the system that creates economic crisis and also some of
the features that create mass human misery. They seek to explain crisis as
 rooted in the internal process of capital accumulation and reproduction and not 
in the superficial establishment explanations of human failings. Crises are 
not caused by greed, though that is rampant.

Crises are not 
caused by timid regulators or corrupt politicians, though they are many. Crises are not caused by too much state expenditure: crises are constant and
 recurring features of capitalism, arising from the internal working of the economic system at both the productive and the fictitious level. The articles by NC 
show crisis within capitalism as rooted in the declining rate of profit resulting from the competitive need of businesses to 
invest more and more in technology in order to produce faster and more
 cheaply than their rivals.

This, however, has the adverse effect of reducing the amount of labour involved in the process, which ultimately is the source 
of profit, consequently leading to a tendency in the rate of profit to decline, 
resulting in turn in periods of stagnation, overproduction, layoffs, and 
crisis, in order for the process to begin again.


Crises, therefore, are cyclical and recur. This is evidenced in many works, 
including Andrew Kliman's book The Failure of Capitalist Production , which NC 
reviews. But it can also be seen generally in the declining growth in GDP, the constant level of mass unemployment, and declining interest rates (for if interest rates were higher than the rate of profit in production, why would anyone with capital invest in production?). Kliman identifies as 
one of the reasons for the severity of the present crisis the fact that over recent decades the state and other institutions have actively interfered to stave off crisis.

These actions, commonly known as
 neoliberalism, have included a massive reduction in tax on  profits, which,
 while not increasing the rate of profit, has in fact increased the private accu
mulation of capital through increased after-tax profits. This avoidance of
 massive crisis prevented the necessary destruction of capital and assets 
that would be required to re-start the growth process. That is
 why the crisis today, which has been building over recent decades, is so severe.


In my article, I tried to identify the contemporary features of the system, which I do not believe NC denies: financialisation, intense monopolisa
tion, internationalized production, increased proletarianisation, increased unemployment and pauperisation,
 increased indebtedness and speculative bubbles—and to describe how they 
have contributed to the depth of the crisis today, making it distinct from previous ones and preventing growth arising from so-called traditional systemic responses, such as increased exploitation of labour.

Though these 
earlier articles seemed to oppose each other—indeed one was explicit in suggesting that they couldn't be reconciled—there is a crisis 
theory within the Communist movement internationally that does seem to 
explain crisis in a way that recognizes cyclical crisis occurring from the shift 
in capital investment away from labour and into machinery, resulting in a
 general decline in the rate of profit, and the increased contradictions of the
 strongest tendencies within monopoly capitalism
—monopolisation and con
centration of wealth—leaving the system in a continuous state of crisis 
but not always a downturn: a general crisis of capitalism.


The General Crisis of Capitalism

The theory of the general crisis of capitalism developed both Marx's and Lenin's analysis of the contradictions 
and tendencies within the system. It did not replace their earlier findings, nor did it seek to suggest that cyclical crisis and recoveries would not occur
 and recur.  In fact, it was explicit in saying that this did not mean that capitalism was on the brink of collapse.

The characterization of the general crisis of capitalism given in the documents of CPSU [Communist Party of the Soviet Union] congresses and the theoretical documents of the world Communist
movement is by no means irrevocably bound to a particular "set" of symptoms. 
It is a flexible description reflecting the contradictory, multifaceted, and
changing quality of the collapse of the capitalist system...the development of
the general crisis is not linear, nor can it
be said to intensify steadily from year to year. It is an uneven, extremely complex
process, and, as Lenin predicted, it passes through "prolonged and arduous
stages"...

In addition to long-term tendencies toward the intensification of the internal contradictions of capitalism, the general crisis of capitalism includes short-term processes—for example, rapid inflation, severe balance of payments problems in various countries, or sociopolitical
outbursts...as long as capitalism is not
brought down by a socialist revolution, it will adapt to changing conditions. the
specific characteristics of modern capitalism can, to a considerable extent, be explained by the fact that it has adapted to the new world situation. However, adaptation to new circumstances does not mean the stabilization of capitalism as a system... M. S. Dragilev, The Great Soviet Encyclopedia (3rd edition, 1970).


The theory of the general   crisis of capitalism was suggesting, correctly, that the tendencies identified by Marx and Lenin had developed. Monopolisa
tion was far greater. Finance capital played a more significant and destabilising role. National economies were more integrated, meaning that crisis spread more quickly. Capitalism reacted to each crisis by 
shifting more investment to technology so as to increase exploitation; further
 concentrations of production occurred through mergers, seeking profit-
creating opportunities where previous avenues were shut off; and this all 
required a more complete understanding of systemic crisis.


Formulated during the 1920s, the concept of the general crisis of capital
ism was adopted by the  Sixth Congress of the Communist International in 1929,
 which stated:

 ... experience throughout the post-war historical period has 
shown that the stabilization achieved by the repression
of the working class and the systematic depression of its standard of living can 
be only a partial, transient and decaying stabilisation ... The spasmodic and
 feverish development of technique [technology], bordering in some countries on 
a new technical revolution, the accelerated process of concentration and cen
tralisation of capital, the formation of
 giant trusts and of "national" and "inter- national" monopolies, the merging of trusts with the state power and the growth of world capitalist 
economy cannot, however, eliminate the general
 crisis of the capitalist system...

This very technical progress and rationalization of industry, the reverse side of which is the closing down and 
liquidation of numerous enterprises, the
 restriction of production, and the ruthless and destructive exploitation of
 labour power, leads to chronic unemployment on a scale never before experi
enced. The absolute deterioration of the
 conditions of the working class becomes a fact even in certain highly developed 
capitalist countries. The growing compe
tition between imperialist countries, the constant menace of war and the growing
 intensity of class conflicts prepare the ground for a new and higher stage of
 development of the general crisis of capi
talism and of the world proletarian revolution...


The revolutionary crisis is inexorably maturing in the very centres of
 imperialism; the capitalist offensive against the working class, the attack 
upon the workers' standard of living,
 upon their organisations and their political rights, with the growth of 
white [ counterrevolutionary] terror, rouses increasing resistance on
 the part of the broad masses of the proletariat and intensifies the class struggle
 between the working class and trustified capital...


The bourgeoisie resorts either to the method of fascism or to the method of
 coalition with social  democracy according
 to the changes in the political situation;
 while  social democracy itself often plays a fascist role in periods when the
 situation is critical for capitalism.— Programme of the Communist Inter
national, 1929.
_____

October 20, 2012

This is Part One of a three-part article. The remaining parts will be published in November and December in the Socialist Voice.

[1] See in the Socialist Voice, <<www.communistpartyofireland.ie/sv/index.html>>,
“The Failure of Capitalist Production, a Review” by NC, January 2012;
“Opinion: Understanding the Crisis” by NL, April 2012;
“Opinion: The Failure of Capitalist Production” by NL, May 2012; and
“Explaining the Crisis: A Response” by NC, June 2012.

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