Correspondence. (1922)

Letter to the Editors from the November 1922 issue of the Socialist Standard

Dear Editor,—

I read with great interest your article entitled “The Collapse of Capitalism.”

There seems a great difference between "Capitalism in Collapse” and “Capitalism in imminent Collapse.” As the Communist Party of Russia has pointed out—the collapse may be extended over a period of years; Lenin says ten years.

The final stage of collapse will not be caused by production of commodities ceasing, but by the lack of world markets. In fact, production will be on such a large scale internationally that the distribution of the products will cease owing to the small incomes and unemployment of the wage slaves, and lack of markets. The collapse of Capitalism in Europe would bring down Capitalism in the West owing to the internationalism of our modern economic and political systems. Former great wars, such as the Napoleonic wars, form a very bad analogy, as in that war the instruments of production were not nearly so great as to-day, and there were new and coming markets, and less countries so productive as to-day.

Again, your question of Russia seems remarkable, coming from the “S. S.” Russia is relying on Capitalism to a certain extent, because, as the “S. S.” has often pointed out, Russia before the Revolution was not a developed Capitalist Empire. Its wage slaves were not “educated” to mind machines and produce wealth, as the wage slaves of U.S.A., Germany and England. From 1914-1920, wars crushed Russia. There is no need for me to repeat the terrible story to the readers of the "S. S.” Then came the drought. Yes, Comrades, Capitalism is in collapse, but like a candle which is near burning itself out; it flickers and flickers for a very long time, every moment it is expected to “go out,” and yet lingers on. But a time comes when it does die. How like Capitalism it is in collapse—it may last even for ten years, but what is ten years in the history of the world?

Of course, Socialists cannot afford to wait for the system to collapse! As we look at the struggle between Capitalism and International Socialism, we become keener on convincing the worker of the need for the common ownership and control of the instruments of production and the need to organise politically by the vote to take power, and industrially to take economic control. Nor can we afford to remain outside the struggle like the S.P.G.B., merely content to write fine articles.

Every struggle of the workers must be ours, and we must stand by them, even in the smallest of battles.

Yours faithfully;

" S. Warr.”

OUR REPLY.

First our correspondent points to the difference between “collapse” and “imminent collapse.” There is a difference, but it is one of date only, and not, as he suggests, one of form. A process of disintegration spread over a period of years cannot, in my opinion, accurately be described as a collapse. In any event, Palme Dutt did not appear to mean this process, and it would, seem, therefore, that Mr. Warr does not hold his view.

Palme Dutt’s view is, I think, very well expressed by the following extract from Herman Cahn’s “Collapse of Capitalism” : “A new force has grown up which no longer leaves the downfall of capitalism to the vague future, or its earlier ending to the spread of a high intelligence among the real proletariat, but makes the coming of that great event a matter of figures, and entirely independent of even the collective will of men. The war has enormously hastened the development of this force, and the catastrophe is imminent.” (Page 8.)

In writing “the final stage of collapse will not be caused by production of commodities ceasing, but by the lack of world markets,” I gather that Mr. Warr intends to rule out the possibility of a physical collapse, but he does not show how the lack of markets is going to do what he assumes it will.

The restriction of markets is one of the series of difficulties which have arisen out of the contradictions of the system. The endeavour on the part of the capitalists to reconcile these contradictions has always been in evidence in some degree since the rise of capitalist society.

Mr. Warr, however, does not consider that there is an analogy between the present depression and that following the Napoleonic wars, because “the instruments of production were not nearly so great as to-day." He overlooks the important point that the only useful comparison is between the powers of production then and the effective demand then. Relative to this country’s powers of production, there was an acute shrinkage of markets. In the February issue was an extract from the writings of Robert Owen, which dealt with this crisis. He wrote for instance:—“this very superabundance of wealth was the sole cause of existing distress.”

It is true the problems which arise become more numerous, and difficult to meet, and are for the capitalists insoluble: but it must be remembered that they are under no obligation to solve them. 

The suffering falls on the workers, and while the workers are content to leave the ruling class in control, the suffering will remain. Only such minor adaptations are required and will be forthcoming as will allay any acute working class unrest. So long as the workers accept doles there is no unemployment problem which the capitalists are called upon to solve.

Even if the position gets much worse the choice before the workers is still the same; either to accept their condition, or rejecting it, to endeavour to remove the cause by overthrowing the system. To be effective they must, as Mr. Warr says, organise to “take power,”, but I fail to see that he has shown either that the problem is different from what it was 10 or 20 years ago, or that there is any method other than that advocated by the Socialist Party.

If Mr. Warr really believed that the “lack of world markets” would bring Socialism, he would not trouble about “convincing the workers.”

The Bolsheviks are depending on Capitalist enterprise because collapse or no collapse, there is no prospect of revolution in Western Europe. There will be no revolution because there are too few revolutionaries.

If by “struggle” Mr. Warr means strikes, etc.; it is news to me that emancipation would be hastened by our telling the workers that all would be well if only they refuse to work overtime, or insist on their right to wear a union badge in the employer’s factory. I am not aware that membership of this party makes a worker fight any the less vigorously in the day-to-day struggle, and finally as Socialist knowledge is necessary for emancipation, I have yet to be convinced that there is anything the Socialist Party can engage in more useful than propagating Socialism.

Edgar Hardcastle

Is there a crash coming? (1988)

From the September 1988 issue of the Socialist Standard

Capitalism is an inherently unstable system of society. Changes are continuously taking place, most of them unforeseen by workers and capitalists alike. Workers suddenly find that their supposedly safe jobs have disappeared; capitalists' markets and profits fade out. Something like 100,000 British companies have been wound up in the past ten years.

Every day something goes wrong for some group or other, and out of this uncertainty many observers over the past 200 years have concluded that capitalism will, or may, fall into chaos from which it cannot recover. Some have been capitalist spokesmen who feared what was apparently taking place. In 1829 William Huskisson, former President of the Board of Trade, wrote: "I consider the country to be in a most unsatisfactory state, that some great convulsion must soon take place". In 1884 Lord Randolph Churchill, describing the difficulties in which most industries found themselves because of the current depression, said: "Turn your eyes where you will, survey any branch of British industry you like, you will find signs of mortal disease". And in 1876 a Board of Trade official, Sidney Bourne, issued a warning about the dire consequences that would follow if the nation failed to tackle a problem that all the economists and politicians were talking about in June of this year — the adverse balance of trade, the excess of imports over exports.

While those people feared the "great convulsion", there were other observers who welcomed the possibility of a "collapse of capitalism" because they supposed that it would force the workers to introduce socialism. So in every depression there were forecasts of that kind. Typical of them is the statement by H.M. Hyndman of the Social Democratic Federation in 1884: "It is quite possible that during this very crisis ... an attempt will be made to substitute collective for capitalist control". In 1919 Herman Cahn published his The Collapse of Capitalism in which he said that it could not be postponed any longer and was "imminent". In 1922 W. Paul, a prominent member of the Communist Party, wrote: "There is the greatest possibility that the social revolution may take place in the immediate future:, and in 1931 James Maxton of the Independent Labour Party said that it was only a matter of months: "collapse is sure and certain".

There have been several different theories about the way the supposed collapse would be brought about. Herman Cahn's bogey was the 1914-1918 wartime inflation and consequent depreciation of the currencies of many countries in terms of gold. It was no more difficult to restore stable currencies after that war than it had been after the Napoleonic Wars and the American Civil War. Lots of banks did go broke and depositors and shareholders lost money, but "bad debts" are a normal feature of capitalism. In recent years some prophets of collapse have concentrated on the huge debts owed to American and European banks by Mexico, Argentina, Brazil and other borrowers who now want to default on repayment. It has all happened before, repeatedly in the nineteenth century and between the wars. A century ago, when British capitalists were the big world lenders, a large proportion of loans were never repaid.

Then there is the "adverse balance of trade". It is possible for a country to have its imports and exports tidily balanced, but actually there are always some countries with an adverse balance, that is, imports greater than exports and other countries with exports greater than imports. (For the world as a whole, of course, total imports and exports are identical, one country's exports being another country's imports.) The country with a favourable balance is one whose products are cheapest and which therefore predominate in world markets. For some time it has been Japan; earlier it had been Britain (in the nineteenth century), Germany and America. In due course it will be some other country or countries underselling Japan. It is a situation which largely repeats itself. If Japanese exporters capture markets the importers have to pay in Japanese yen, which they acquire by selling their pounds, dollars and so forth. This has the effect of putting up the exchange rate of the yen and depressing the exchange rates of pounds and dollars . . . which in turn takes away the relative cheapness of Japanese goods and makes the American or British goods more competitive. Fifty years ago Professor Edwin Cannan, when asked what governments should do about the "problem", told them to stop publishing import/export figures and just forget all about it.

Like Herman Cahn, many later politicians and economists have seen in inflation the great threat to the continuance of capitalism, Mrs Thatcher among them. She says that inflation causes unemployment and trade depressions, and has proposed to end it and get a stable price level. The Tory Election Programme 1987 had this:

Our success in the battle against inflation has been the key to Britain's economic revival. We will not be content until we have stable prices, with inflation eradicated altogether.

The Labour Party, on the other hand, has always been favourably disposed to inflation. The 1974-79 Labour government more than doubled the cost of living in five years, and during the depression between the wars their leading economist, Pethick Lawrence proclaimed the very opposite of the Thatcher theory. He wrote: "I regard it as indisputable that unemployment, as it has existed in the world in recent years, is due to falling prices". The Labour Party's remedy at that time was to get prices up again.

If the Tories and the Labour Party looked at the history of capitalism they would find that unemployment and depression exist whether prices are falling, rising or stationary.

Probably the most widely accepted "collapse" theory centres around the belief that unemployment is bound to get larger and larger. Karl Marx's colleague Frederick Engels put it forward in 1886, three years after Marx's death. He wrote:

Meanwhile, each succeeding winter brings up afresh the great question "what to do with the unemployed"; but while the numbers of unemployed keep swelling from year to year, there is nobody to answer that question; and we can almost calculate the moment when the unemployed, losing patience, will take their own fate into their own hands.

The same theory was advanced again in the depression which began in 1979 and it has met the same fate. Within a short time Engels saw unemployment falling and he abandoned the theory. And unemployment in the 1930s, which reached 23 per cent in Britain and 25 per cent in the United States was nearly double the unemployment rates'of recent years. British unemployment is now slowly falling again; and American unemployment is at an all-time low.

When Engels put forward the theory he recognised that it was not a view held by Marx. It was Marx who put the whole question in perspective, showing that it is a continuous cycle, the recovery from the depression being as inevitable as the depression itself:

Capitalist production. . . moves through certain periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis and stagnation.

Britain is now in the phase of "growing animation" with production, real wages, profits and employment all rising in the past few years.

Events since Marx wrote have fully confirmed the accuracy of his description, and all of the attempts by governments to promote permanent boom and full employment have failed. But we have something further to say about it. It needs more than capitalism's crises to produce socialism. It needs a predominantly socialist working class. As it was phrased in our pamphlet Why capitalism will not collapse, published in 1932:

So long as the workers are prepared to resign themselves to the evils of capitalism, and so long as they are prepared to place in control of Parliament parties that will use their power for the purpose of maintaining capitalism, there is no escape from the effects of capitalism.

Edgar Hardcastle