The Economic Foundations of Capitalism’s Rise and Decline. Communist Workers Organisation. 2026.
‘For global capitalism the devastation of world-wide imperialist war is the solution to its ineluctable profitability crisis’. This — that a third world war is needed for capitalism to continue — is the position that this 100-page book seeks to defend.
The argument starts from the view that under capitalism there is a tendency for the rate of profit to fall as capital accumulation proceeds, due to an increasing proportion of capital being invested in plant, machinery and materials rather than in employing workers (whose labour is the only source of profits). This was something noted by Marx but he also noted other tendencies, arising too from capital accumulation but conversely tending to raise the rate of profit, such as plant, machinery and materials becoming cheaper and increasing surplus value per worker. So, what happens over any given period — which tendencies prevail and so whether the rate of profit does actually fall — is unpredictable. There are also other factors that reduce profitability, such as overproduction in an important industry having a knock-on effect on the rest of the economy resulting in a general slump in production.
The book hopelessly mixes up all the various tendencies, elevating a theoretical slow long-term tendency for the rate of profit to fall into ‘the drive towards the collapse of the capitalist system’. The authors also see this as, in the shorter term, the cause of slumps but to do that there would have to have been a fantastically rapid increase in mechanisation and productivity. They are correct, though, that an important way out of a slump is the restoration of the rate of profit due to devaluation of the capital invested in the plant and machinery.
According to the CWO, a new factor entered into the equation at the beginning of the 20th century: capitalism, after coming to dominate the whole world and creating the basis for a world socialist society, passed its peak and entered into a period of decline which they call ‘decadence’. In this period, the boom/slump cycle continues but:
‘Capitalist competition is no longer a purely economic battle between firms but imperialist rivalry between “great powers”; where, in short, the massive devaluation of capital required to assuage the crisis of low profitability and achieve a new round of accumulation is obtained by the destruction of capital values via war’.
‘The history of capitalism since the start of the twentieth century’ we are told, ‘has been this cycle of crisis-war-reconstruction’. That the First World War was caused by imperialist states being driven to war as the only way out of a fall in the rate of profit doesn’t hold. Conflict between the ‘great powers’ over sources of raw materials, markets and investment outlets makes more sense. Replacing the destruction caused during the Second World War will have been one explanation for the resumption of capital accumulation in the postwar period but by no means the only one and would have been completed within a decade or so. Another, more significant factor will have been the expansion of the world market as more and more parts of the world were industrialised.
Whether or not the rate of profit has fallen since the 1970s is a moot point since it is not easy to calculate. On some assumptions it has; on others it hasn’t. In any event, a hard-to-calculate and unknown average rate of profit will not have been a factor influencing decisions to invest by those in charge of capitalist enterprises; shorter-term and particular sectoral considerations will have been the deciding factors.
The question also arises as to why the long gap between the end of reconstruction and the outbreak of the Third World War. The authors provide an economic history of the period since the 1970s but don’t answer this question. They describe well enough the extent of the non-productive, financial sector that has grown on the basis of the real, productive sector of the capitalist world economy, but can’t explain away the real capital accumulation that has taken place.
When they write that, if socialism is not established, ‘capitalism could continue on its demented course for centuries’, it is not clear what they mean. Is it that capitalism could continue after a nuclear world war or that capitalism might not lead to one for centuries?
In short, the CWO have not proved their claim that present-day capitalism must, for capital accumulation to continue, lead to a Third World War (they are suggesting it’s going to be between China and the US). As long as capitalism continues, there will be wars but there is no compelling reason why there should be another world war, this time between states armed with nuclear weapons. It is not entirely impossible of course, but it wouldn’t be to restore the rate of profit.
Adam Buick
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