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The Second World War and the Second Stage of the General Crisis of Capitalism

Lenin foresaw that the first world war would be followed by other wars, called forth by imperialist contradictions. “Everyone can see", he said, after the end of the 1914-18 war, “that another war of the same kind is inevitable if the imperialists and the bourgeoisie remain in power." (Lenin, “Speech at Celebration Meeting of the Moscow Soviet in Honour of the Anniversary of the Third International", Works, Russian edition, vol. xxx, p. 398.)

The distribution of spheres of influence among the imperialist countries which resulted from the first world war proved still less lasting than that which had prevailed before the war. The role of Britain and France in world industrial production markedly declined, and their positions in the world capitalist market deteriorated. The American monopolies, which greatly enriched themselves during the war, expanded their production capacity and advanced to first place in the capitalist world in respect of export of capital. Germany, after suffering defeat in the first world war, rapidly restored its heavy industry with the help of American and also British loans, and began to demand a re-division of spheres of influence. Japan took the road of aggression against China. Italy began a struggle to seize a number of colonial possessions belonging to other Powers. Thus, the operation during the first world war of the law of uneven development of capitalist countries led to another sharp break-up of the equilibrium within the world system of capitalism. The formation in the capitalist world of two hostile camps led to the second world war.

The second world war, which was prepared by the forces of international imperialist reaction, was begun by the bloc of fascist States—Germany, Japan and Italy. In the period preceding the war the ruling circles of the U.S.A., Britain and France tried to turn the aggression of German fascism and Japanese imperialism against the Soviet Union, conniving in every possible way at the actions of the aggressors and giving them the utmost encouragement to start a war. However, German imperialism began the war first against France, Britain and the U.S.A., and only later attacked the Soviet Union. The second world war was a war of conquest and plunder on the part of Germany and its allies in robbery, fascist Italy and militarist Japan. It was a just war of liberation on the part of the Soviet Union and the other peoples who were subjected to the fascist onslaught.

In the scale of military operations, the numbers of the armed forces involved and the amount of armaments employed, the size of the human sacrifices and the volume of destruction of material wealth, the second world war far outstripped the first. Many countries of Europe and Asia suffered gigantic human losses and unprecedented material damage.

The direct war expenditure of the States taking part in the war came to about a thousand milliard dollars, which does not include losses from destruction caused by military operations, The economy and culture of many peoples of Europe and Asia suffered tremendous damage from the robber rule of the German-fascist and Japanese occupying forces.

The war brought about a further development of State-monopoly capitalism. A whole series of measures connected with the war which were taken by the bourgeois States, were directed to ensuring maximum profits to the magnates of finance capital. These purposes were served by such measures as giving to the biggest monopolies war contracts worth milliards on extraordinarily advantageous terms; handing over State enterprises to the monopolies at trivial prices; distribution of raw material and labour—power in short supply in the interests of the leading companies; compulsory closing-down of hundreds and thousands of small and medium enterprises or their subjection to a few arms-industry firms.

The war expenditure of the belligerent capitalist Powers was met by means of taxation, loans and the issuing of paper money. In 1943-4, in the principal capitalist countries (U.S.A., Britain, Germany) taxes absorbed about 35 per cent of the national income. Inflation brought about a tremendous price-rise. The lengthening of the working day, the militarisation of labour, the increase in the burden of taxation and of the high cost of living, the fall in the level of consumption-all this meant a still greater intensification of the exploitation of the working class and the bulk of the peasantry.

The monopolies amassed fabulous profits during the war. The profits of the American monopolies grew from 3.3 milliard dollars in 1938 to 17 milliard in 1941, 20.9 milliard in 1942, 24’6 milliard in 1943 and 23.3 milliard in 1944. The monopolies of Britain and France and of fascist Germany, Italy and Japan also made huge profits during the war.

During the war and after the war the economic and political tyranny of the monopolies and the weight of their yoke in the capitalist countries increased still more. A particular expansion took place in the scale of operations of the American monopolies such as United States Steel, the Dupont chemical concern, the General Motors and Chrysler automobile firms, General Electric and others. The General Motors concern, for example, now owns 102 factories in the U.S.A. and 33 in 20 other countries; about half a million workers are employed in these enterprises.

Each of the two capitalist coalitions which grappled with each other during the first period of the war hoped to smash the other and both German and American imperialism strove to achieve world domination. It was thus that they sought their way out of the general crisis. At the same time, both of the capitalist groupings reckoned on the Soviet Union perishing or being substantially weakened in the course of the war, and also on strangling the working-class movement in the metropolitan countries and the national liberation movement in the colonies.

Thanks to the heroic struggle waged by the Soviet people and the economic and military might of the U.S.S.R., and thanks to the upsurge of the anti-imperialist national liberation movement in Europe and Asia, these calculations of the imperialists were frustrated. The second world war ended in the complete rout of the fascist States by the armed forces of the anti-Hitler coalition. The decisive part in this rout was played by the Soviet Union, which saved from the fascist enslavers the civilisation, freedom, independence and very existence of the peoples of Europe, Contrary to the calculations of the imperialists, who had expected it to be destroyed or weakened, the Soviet State emerged from the war stronger than before and with enhanced international prestige. The great Patriotic War of the Soviet Union showed the strength and might of the first socialist Power in the world and the enormous advantage of socialist society and the socialist form of State. The rout of the fascist aggressors unloosed the forces of the national-liberation movement in Europe and Asia.

The law of social development in the present epoch, discovered by Lenin, by virtue of which the revolutionary supersession of the capitalist system of economy by the socialist takes place through a gradual falling away of country after count. from the world system of capitalism, was fully confirmed.

Contrary to the imperialists’ calculations that the revolutionary movement would be weakened and routed, the war led to more countries leaving the capitalist system. The peoples of a number of countries of Central and South-eastern Europe—Poland, Czechoslovakia, Yugoslavia, Rumania, Hungary, Bulgaria, Albania—threw off the yoke of the reactionary regimes which oppressed them and took power into their own hands. People’s democratic republics carried out fundamental social and economic changes and took the road of building the foundations of socialism. The formation of the German Democratic Republic constituted a grave setback to world imperialism and a noteworthy success for the camp of peace and democracy; it is a stronghold of the democratic forces of the German people in their struggle to form a united, democratic and peace-loving Germany.

Contrary to the imperialists’ calculations of a further enslavement of the peoples of the colonies and dependent countries, a mighty upsurge of the national liberation struggle took place in these countries. Very great historic changes occurred in Asia, where live more than half of the population of the entire world. The first place among those changes belongs to the victory of the great Chinese people, headed by the Chinese Communist Party, over the combined forces of imperialism and the internal feudal reaction. The people’s revolution in China put an end to the rule of the feudal exploiters and foreign imperialists in the largest semi-colonial country in the world, liberating from the power of imperialism a people numbering six hundred millions. The formation of the Chinese People’s Republic was the most powerful blow to the entire system of imperialism since the great October Socialist Revolution in Russia and the victory of the Soviet Union in the second world war. People’s republics arose in Korea and Vietnam.

All this led to a further substantial change in the relation of forces between socialism and capitalism in favour of socialism and to the disadvantage of capitalism. As a result of the falling away from capitalism of a number of countries of Europe and Asia, more than a third of mankind have already been freed from the capitalist yoke.

The period of the second world war witnessed, especially after the breakaway of the people’s democratic countries, both in Europe and in Asia, from the capitalist system, the development of the second stage of the general crisis of capitalism, which is marked by the further deepening and sharpening of this crisis.
The Formation of Two Camps in the International Arena and 
the Break-up of the Single World Market

A very important result of the second world war was the formation of the world camp of socialism and democracy, uniting the countries of Europe and Asia which have left the capitalist system, and headed by the Soviet Union and the Chinese People’s Republic. Hundreds of millions of working people in the capitalist world and all progressive forces in the world of today sympathise with the ideas of peace, democracy and socialism. The camp of socialism and democracy is confronted by the camp of capitalism, headed by the U.S.A

The second world war and the formation of two camps in the international arena has had as its most important economic consequence the break-up of the single, all-embracing world market.

“The economic consequence of the existence of two opposite camps was that the single, all-embracing world market disintegrated, so that now we have two parallel world markets, also confronting one another." (Stalin, Economic Problems of Socialism in the U.S.S.R., F.L.P.H. Edition, 1952, p. 35.)

This has caused a further aggravation of the general crisis of capitalism. In the post-war period, the countries of the socialist camp have dosed their ranks economically and arranged for close collaboration and mutual aid among themselves. Economic collaboration between the countries of the socialist camp is based upon a sincere desire to help one another and bring about a common economic advance. The principal capitalist countries—the U.S.A., Britain and France—have tried to subject the Soviet Union, China and the European countries of people’s democracy to an economic blockade, expecting to be able to stifle them. But by doing this they have contributed, contrary to their intention, to forming and consolidating anew, parallel world market. Thanks to the crisis-free of the economies of the countries of the socialist camp, the new world market does not experience any difficulty in finding outlets for its goods: its capacity grows continually.

As a result of the falling-away of a number of countries in Europe and Asia from the system of imperialism, the sphere in which the forces of the principal capitalist countries (the U.S.A., Britain, France) have access to world resources is considerably reduced. This affects the United States with particular sharpness, as the productive capacity of American industry grew considerably during the war.

The narrowing of the sphere of access by the forces of the principal capitalist countries to world resources has brought about an intensification of the conflict between the countries which make up the imperialist camp, for outlets for their goods, for sources of raw material and for spheres of capital investment. The imperialists, and in the first place those of the U.S.A., are trying to overcome the difficulties arising from their loss of huge markets, through intensified expansion at the expense of their competitors, acts of aggression, arms drives and militarisation of the economy. But all these measures lead to a still greater aggravation of the contradictions of capitalism.

The two camps—the socialist one and the capitalist one—embody two lines of economic development. One line is a line of rapid development of the productive forces, continuous advance of peaceful economic activity and steady increase in the well-being of the working masses of the Soviet Union and the People’s Democracies. The other line is the line of capitalist economy, holding back the development of the productive forces, a line of militarising the economy and reducing the standard of living of the working people, in conditions of the continually deepening general crisis of the world capitalist system.

The two camps—socialist and capitalist—embody two opposite trends in international politics. The aggressive circles of the U.S.A. and other imperialist States are following the road of preparing another war and intensifying reaction in the internal life of their own countries. The socialist camp is conducting a struggle against the threat of new wars and imperialist expansion, for the development of economic and cultural collaboration among the peoples, to strengthen peace and democracy.
The Crisis of the Colonial System of Imperialism Becomes More Acute

The second stage of the general crisis of capitalism is marked by a notable sharpening of the crisis of the colonial system. The attempts made by the imperialist Powers to pile on to the backs of the peoples of the dependent countries the burden resulting from the war and its aftermath have led to a considerable lowering of the standard of living of the working populations of the colonial world. The American monopolies are penetrating and striking root in the colonies and spheres of influence of the Western European countries, under the guise of “aid" to underdeveloped countries, which leads to still greater plundering of the enslaved peoples and to aggravation of the contradictions between the imperialist Powers. Meanwhile the development of industry in a number of colonial and semi-colonial countries, brought about by the war, has resulted in a growth of the proletariat, which is more and more actively opposing imperialism. As a result of all this the contradictions between the colonies and the metropolitan countries have become more and more acute, and the struggle of the peoples of the colonial world for national liberation has become more intense. The rout of the armed forces of German and Japanese imperialism created new and favourable circumstances for the success of this struggle. As a result of the second world war and the new upsurge of the national liberation struggle, in the colonial and dependent countries there has taken place, in fact, a breakdown of the colonial system of imperialism.

The breakdown of the colonial system of imperialism is signalised first and foremost by the breaching of the imperialist front in a number of colonial and semi-colonial countries which have detached themselves from the world system of imperialism and established the system of people’s democracy.

As mentioned already, the world front of imperialism has been breached in China and also in Korea and Vietnam. The great victory of the people’s revolution in China has had an enormous influence on the whole colonial rear of imperialism. From an object of imperialist exploitation and of rivalry between groups of capitalist powers China has been transformed into an independent great Power, possessed of complete national sovereignty and conducting an independent policy in the international arena. The Chinese People’s Republic, linked by close ties of friendship and co-operation to the Soviet Union and all the other countries of the socialist camp, functions a powerful factor for peace and democracy in the Far East an throughout the world.

The break-up of the colonial system of imperialism is further characterised by the fact that the peoples of a number of other colonial and dependent countries have won liberation from the colonial regime and taken the road of independent, sovereign development. Under the pressure of the national liberation movement in India, a country with a population exceeding 440 millions, British imperialism was obliged to withdraw its colonial administrative machine from that country. India was divided into two dominions—India and Pakistan. India became an independent republic, carrying on an independent policy in the international arena. Freed from colonial oppression, the Indian people are fighting to consolidate their independence, industrialise their country and introduce agrarian’ reforms. Besides India, Indonesia, Burma and Ceylon have also got rid of the colonial regime. The imperialist Powers, Britain and the U.S.A. first and foremost, are making all possible efforts to retain and extend their economic positions in these countries and deprive them of independence. This policy, however, is encountering a growing resistance on the part of the peoples of the countries concerned, who are fighting resolutely for their independence.

The sharpening of the crisis of the colonial system of imperialism is characterised by an upsurge of the national liberation movement of the oppressed peoples, which has taken on fresh distinctive features. In a number of colonial countries the leading role of the proletariat and the Communist Parties has grown and become stronger, which is an important condition for the success of the struggle of the enslaved peoples directed towards the expulsion of the imperialists and the introduction of democratic changes. Under the leadership of the working class a united national democratic front is being created and the alliance of the working class with the peasantry in the anti-imperialist and anti-feudal struggle is growing stronger. In certain enslaved countries the development of the national liberation movement has led to a prolonged armed struggle of the masses against the colonialists (Malaya, the Philippines). The peoples of Africa (Madagascar, Gold Coast, Kenya, Union of South Africa), more ground down than any by imperialist oppression, have joined the national liberation struggle. Resistance to the imperialists is growing in the Middle East (Persia, Egypt) and in North Africa (Algeria, Tunisia, Morocco). In Latin America the struggle against economic overlordship and political oppression by the finance oligarchy of the United States is growing more intense.

The reactionary attempts of the imperialists, headed by the imperialist circles of the U.S.A., to frustrate the national and social rebirth of the peoples of Asia on anti-imperialist and anti-feudal foundations is inescapably suffering defeat. The failure of American armed intervention in Korea, the collapse of the plans of French and American imperialism in Indochina have vividly demonstrated that the days have passed, never to return, when the imperialists could impose their will by force of arms on the peoples of Asia and put down any endeavour on their part to win freedom and independence.

The break-up of the colonial system of imperialism which has begun is leading to a situation in which the sphere of colonial exploitation is becoming narrower and narrower. This inevitably intensifies the economic and political difficulties of the capitalist countries and shakes the foundations of the imperialist system as a whole.
The Intensification of the Unevenness of Development of Capitalism. 
The Expansion of American Imperialism

The second world war, which was born of the uneven development of the capitalist countries itself led to a further accentuation of this unevenness. Three imperialist Powers—Germany, Japan and Italy—were defeated in the field. France suffered severe damage and Britain was very seriously weakened. At the same time, the U.S. monopolies, profiting by the war, strengthened their economic and political position in the capitalist world.

In the period between 1929 and 1939, American industry, which possessed considerable reserves of productive capacity, essentially marked time. Enterprises worked a great deal below capacity owing to the narrowness of markets. During the second world war the territory of the U.S.A. was not affected by military operations, and its economy suffered no military damage. At the same time the market for the American monopolies enormously expanded. The war brought with it a gigantic demand for arms and war materials. Also, the American monopolies were able to seize the former markets of the West European countries and their overseas colonies and spheres of influence. In these circumstances the monopolies of the U.S.A. could rapidly expand the volume of production and carry through on a considerable scale a renewal of the productive apparatus of industry.

American industrial production in 1943 was 2.2 times the level of 1939. In the principal capitalist countries of Western Europe, however, which had suffered severely in the war, industrial production was considerably reduced by the end of the war. As a result, the relative weight of the U.S.A. in the to amount of industrial production of countries of the capitalist camp grew from 41 per cent in 1937 to 56.4 per cent in 1948.

Monopoly circles in the U.S.A., having proclaimed a programme of establishing world domination, undertook extensive economic and political expansion into the capitalist countries and colonies. Taking advantage of the weakening of their competitors, the American monopolies, in their hunt for maximum profits, seized in the first years after the war an important share of the capitalist world market. They resorted on a large scale to State-monopoly forms of the export of capital in order to enslave other countries.

The calculations of the American finance oligarchy about establishing domination of the capitalist world market were, however, not fulfilled. The capitalist countries of Western Europe found themselves at the end of the war having to face great losses. The war had taken heavy toll of the economy of the principal countries of Western Europe, on whose territory military operations had taken place (Germany, France, Italy), or whose territory had been subjected to attacks from the air (Britain). After the end of the war the bourgeoisie of these countries restored the productive apparatus of industry and to a considerable extent renewed it at the expense of intensified exploitation of the working people and lowering of their standard of living.

Owing to the narrowness of the internal market these countries began to make their way again into their foreign markets, which during the war years had been seized by the American monopolies. Soon after the war the United States came into collision in the capitalist world market with increasing competition on the part of the West-European countries, and in the first place of Britain. The fight for markets became still sharper when, five or six years after the end of the war, the monopolies of Western Germany and Japan joined in this fight.

The expansion of American imperialism showed itself first in the guise of “aid for the post-war restoration of Europe". The “Marshall Plan" which operated in 1948-52 had for its aim to make the West-European countries dependent on the American monopolies, draw them into the orbit of aggressive American policy and force the pace of the militarisation of their economies. The “Marshall Plan" paved the way for the North Atlantic Pact—the aggressive alliance formed in 1949 by American imperialism (with the active support of the ruling circles of Britain) for the purpose of establishing its domination over the world. When the period of the Marshall Plan’s operation came to an end it was succeeded by a programme alleged to be for “ensuring mutual security", under which American aid is given only for arms drives, only for preparations for another war. By the terms of this programme, American imperialism finally threw off the mask of “restorer" of the economies of the capitalist countries.

During the war American exports were growing markedly at the expense of those of the European countries and especially those of Britain, which fell sharply. In 1945 the share of the U.S.A.’s exports in the total export of the capitalist countries amounted to 40.1 per cent as against 12.6 per cent in 1937, while that of Britain’s exports fell from 9’9 per cent in 1937 to 7.4 per cent in 1945. After the war, however, as a result of the more acute struggle on the world market and the growth of the exports of the European countries, the share of the U.S.A. in the exports of the capitalist countries declined, amounting in 1954 to 19.5 per cent, while Britain’s exports in the same year were 10.1 per cent of the total.

The American monopolies are trying by all possible means to push up their exports of goods to the other countries of the capitalist camp, employing to this end both the enslaving terms of the loans which they make to these countries and also barefaced dumping. At the same time the U.S.A. fences off its home market in every possible way from the import of foreign goods, imposing exceptionally high customs duties on these goods. This one-sided nature of American external trade has brought about a chronic dollar gap in other countries, i.e., a shortage of dollars with which to pay for goods imported from the United States.

The economic expansion of the monopolies of the United States leads to the breaking of historically formed, multilateral economic ties between various countries. American imperialism deprives Western Europe of the possibility of obtaining food-stuffs and raw materials from the countries of Eastern Europe, which could supply these goods in exchange for West European industrial products. One of the factors in the aggravation of difficulties of capitalist economy, since the war, is the circumstance that the imperialists have themselves cut off their access to the world market of the democratic camp, having reduced to almost nothing their trade with the Soviet Union, the Chinese People’s Republic and the European People’s Democracies.

In the years since the second world war (1946-54) exports from the U.S.A. have amounted, on the average, to 13.5 milliards a year, while U.S. imports have been only 8.2 milliards; the U.S.A. imported 1.3 milliard dollars’ worth of goods a year from the countries of Western Europe, on the average, but exported about 4 milliards worth to these countries. Over the eight years the gap between the U.S.A.’s exports to the countries of Western Europe and its imports from these countries amounted to 21.6 milliard dollars.

The exchange of goods between the U.S.A. and those countries which now form the democratic camp was in 1951 only one-tenth of what it had been in 1937; Britain’s trade with them was down to one-sixth, and France’s to less than a quarter.

The expansion of the American monopolies deals a painful blow at the interests of the other capitalist countries. The American monopolies, under the pretext of “aid" and through advancing credits to these countries, are striking root in their economies and conquering important positions in the colonies of the West European Powers. Britain and France, for which cheap raw materials and guaranteed markets are of first-class importance, cannot put up indefinitely with the situation which has been created. The conquered countries —Western Germany, Japan, Italy—which are under the yoke of American finance capital, also cannot remain satisfied with their lot.

After the second world war the unevenness of development within the contracted camp of imperialism became still more marked, and this inevitably led to a further growth of contradictions among the capitalist countries. The most important of these are the contradictions between the U.S.A. and Great Britain. These contradictions show themselves in the open struggle being waged between the American and British monopolies for markets for their goods, especially in the countries making up the British Empire-Australia, Canada, India, etc. — and for spheres of influence generally—in Western Europe, in the Near and Far East, in Latin America.

The aggressive blocs of imperialist States, scraped together by the United States and directed against the countries of the Socialist camp, cannot eliminate the antagonisms and conflicts between the partners in these blocs, which have as their foundation the struggle to obtain high, monopoly profits in conditions in which the territory under the sway of capital has contracted. Thus, Lenin’s proposition that the operation of the law of the uneven development of the capitalist countries in the epoch of imperialism is fraught with conflicts and armed clashes between these countries remains valid in the present period.

The aggressive ruling circles of the imperialist Powers, and of the U.S.A. above all, began immediately after the close of the second world war to carry out a policy of preparing for a third. Hirelings of the monopolies try to mislead the peoples by asserting that the inevitability of war is due to the existence in the world today of two opposed systems—capitalism and socialism. The facts of history refute this fabrication. The first world war was caused by the sharpening of imperialist contradictions in a world in which the capitalist system still held undivided sway. The second world war began as a war between two coalitions of capitalist countries. In the period since the second world war the countries of the socialist camp are firmly arid consistently upholding the cause of preserving. and strengthening peace between the peoples, taking as their starting-point that the capitalist and socialist systems are perfectly able to co-exist in peace, emulating each other economically. The policy of the Soviet Union and the People’s Democracies, which is directed towards the development of peaceful co-operation between States regardless of their social structure, enjoys the support of the working masses and the sympathy of champions of peace throughout the world.

The peace movement unites hundreds of millions of people in all countries, including many millions in the capitalist countries. People belonging to a variety of social groups and holding different political and religious views have come together on the common ground of the defence of peace and of the security of the peoples. The plans for another world war which aggressive imperialist circles are maturing will be doomed to frustration if the peoples take the cause of peace into their hands and defend it to the end. “The democratic forces of the world are now strong enough to prevent war, if only they will act in unity and make impotent the capitalist war profiteers and would-be world conquerors." (William Z. Foster, Outline Political History of the Americas, 1953, p. 590.),
The Militarisation of the Economy of the Capitalist Countries. 
Changes in the Capitalist Cycle

In conditions of the break-up of the single world market and contraction of the sphere of exploitation of the world’s resources by the chief capitalist countries, the dominant monopolies are resorting more and more to militarisation of the economy as a means of bringing about a growth of production and securing very high profits. In the State Budgets the relative share taken by expenditure arising directly or indirectly from the arms of drive is continually rising. The increase in the State Budgets, absorbing an ever larger slice of the national income, is accompanied by an increase in the gap between receipts and expenditure, a growth in the public debt, and the clogging of the channels of monetary circulation with paper money, the purchasing power of which is falling. Militarisation of the economy inevitably leads to still greater sharpening of the insoluble contradictions of capitalist economy.

According to official, certainly underestimated figures, the profits of the American monopolies grew from 3.3 milliard dollars in 1938 to 34.8 milliard dollars in 1954, i.e., they were multiplied by ten. During the nine years immediately following the war, the profits of American monopolies amounted to 304 milliard dollars. In Britain the profits of joint-stock companies amounted in 1953 to £3,500,000,000, as against £1,000,000,000 in 1938.

In the post-war years (1946-54) the total war expenditure of the U.S.A., including expenditure on arming the States-members of the North Atlantic alliance (N.A.T.O.) and on producing atomic bombs, exceeded 258 milliard dollars. Direct military expenditure in the U.S.A. during the last three years (1952-4) came to 47 milliard dollars per year, or over two-thirds of the entire Budget, as compared with 953 million dollars, or 12 per cent of the entire Budget, in the three years before the second world war. In Britain military expenditure has grown correspondingly, from £173 million to £1,429 million, and from T8per cent to one-third of the total Budget. In France, war expenditure has during the last three years amounted on the average to a third of the total Budget.

The purchasing power of the U.S. dollar was in 1954 only 34.6 per cent of what it had been in 1939, that of the British pound sterling was 31.2 per cent, that of the French franc 2.8 per cent and that of the Italian lira 1.8 per cent.

The militarisation of the economy of the capitalist countries furnishes one of the most vivid demonstrations of the increasing parasitism and decay of capitalism.

Even at the time of the first world war, Lenin, noting the rapid economic development of the U.S.A., stressed that, “for this very reason, the parasitic features of modern American capitalism have stood out with particular prominence." (Lenin, “Imperialism", Selected Works, 1950 edition, vol. I, Pt. 2, p. 565.) In the period since the second world war, these parasitic features of American capitalism have intensified still further. This is especially graphically shown in the growth of the State’s unproductive expenditure, caused by the arms drive and the all-round militarisation of the national economy.

The parasitism and decay of capitalism does not mean in the least that technical progress ceases and complete stagnation of technique sets in. The characteristic tendency of monopoly to technical stagnation operates alongside an opposite tendency, for technique to advance under the influence of competition and the hunt for high monopoly profits. The arms drive brings about an advance of technique in the branches concerned with armaments production and the sections of heavy industry connected therewith. As a result technique does not stand still in the capitalist countries but goes forward. But the decay of capitalism shows itself in the fact that technical progress takes place extremely unevenly and lags considerably behind the vast possibilities opened up by the present level of development of science and technique.

The economic essence of militarisation of the economy consists in the fact that, first, an ever-greater share of the finished products and raw materials is absorbed by unproductive consumption connected with war preparations or locked up in the form of huge strategic stocks; second, the expansion of war production is carried out at the cost of a further lowering of workers’ wages, ruin of the peasantry, increase in the tax burden and plundering of the peoples of the colonial and dependent countries. All this substantially reduces the purchasing power of the population, cuts down the demand for the products of industry and agriculture, and leads to a sharp contraction in civilian production. Thus, the militarisation of the economy of the capitalist countries, aggravating the disproportion between the production potentialities and the reduced effective demand of the population, leads inevitably to the growth of the pre-requisites of a crisis of overproduction.

In connection with the aggravation of the general crisis of the world capitalist system, further changes take place in the capitalist cycle. These changes ensue from the break-up of the uniform world market and the intensification of the uneven development of the capitalist countries. They are connected with the inevitable consequences of the second world war and the militarisation of the economy. War-inflation factors, i.e., the militarisation of the economy and the inflation which accompanies it, temporarily hold back the outbreak of crisis but cannot eliminate, or restrict the operation of the general laws of capitalist reproduction which make crises unavoidable.

Since the U.S.A. on the one hand, and the main West European countries on the other, came out of the war having suffered quite different economic effects from it, the course of the capitalist cycle could not be the same through the capitalist world. After the second world war ended, the volume industrial production in the U.S.A., which had been inflated by war demand, fell sharply, so that in 1946 it was 29 per cent less than in 1943. Later, in 1948-9, an economic crisis occurred. It is significant that, on the eve of the crisis, in 1948, American industry had not yet attained the highest peak of production during the war period, the level of 1943. The crisis of 1948-9 affected to some extent also a number of countries of Western Europe. From October 1948 to October 1949 the volume of American industrial production fell by 10 per cent. Industrial production in the U.S.A. in 1949 amounted to only 35 per cent of what it had been at the highest point in 1943 (engineering only 50 per cent). This shrinking of production was accompanied by crisis phenomena in the fields of commodity circulation, credit and foreign trade. These include piling up of vast stocks of unrealisable commodities the decline in commercial transactions, a sharp falling-off railway freights, some stock exchange failures, a fall in the value of shares amounting to milliards of dollars, an increase in the number of bankruptcies, and a reduction in the volume of America’s exports..

The war inflicted considerable damage upon the economies of the principal capitalist countries of Western Europe and the restoration of this damage held back for a definite period the growth of the prerequisites for an overproduction crisis, so that the post-war years saw an increase in industrial production in these countries. The crisis of 1948-9 in the U.S.A. did not lead to a. general falling-off of production in Western Europe and, consequently, did not develop into a world economic crisis.

The rapid increase of war expenditure in the United States and other capitalist countries, especially after the outbreak of the war in Korea in 1950, served as a temporary stimulus to the expansion of production, and first and foremost to the production of armaments and other war material. However, the one-sided character of this recovery made it unstable and short-lived. A fresh falling-off of production, signifying a crisis, began as early as the middle of 1953. Within less than a year—from August 1953 to April 1954—the volume of industrial production in the U.S.A. declined by 10 per cent. The shrinkage of production led to the doubling of the number of completely unemployed, to a wave of bankruptcies and the swallowing up. of many smaller firms by the big monopolies. Between April and November 1954 industrial production remained at the same level, and only in November 1954 did it begin slowly to mount.

Thus, the course of reproduction in the second stage of the general crisis of capitalism is marked by sharply-increasing unevenness of development as between different countries, which brings special instability to the entire economic system of capitalism. The prerequisites for a world economic crisis continue to accumulate in all the capitalist countries.
Intensified Impoverishment of the Working Class in the Capitalist Countries

The aggravation of the general crisis of capitalism which took place after the second world war led to a further impoverishment of the proletariat. Seeking maximum profits, the monopolies are increasing the exploitation of the working people. Monopoly capital is transferring on to the backs of the working people the ruinous consequences of the war and of militarisation of the economy.

The monopolies supported, by the reactionary trade union leaders seek to lower the workers’ real wages through “freezing" nominal wages, i.e., preventing them from rising in conditions in which inflation prevails and the burden of taxation is growing. Inflation produces an increase in the cost of living and a rapid rise in the prices of consumer goods, a widening of the gap between nominal and real wages. External expansion and the militarisation of the economy of the capitalist countries take place at the price of a burden of taxation which weighs upon the working people. One of the factors in the reduction of the standard of living of the working class is the rapid rise in rents. The decline in real wages leads to a worsening of the nutrition of the working population.

The position of the working intelligentsia in the capitalist countries is deteriorating; unemployment is increasing amongst them, and their incomes are falling as a result of the rise in the cost of living, the growth of taxation, and inflation.

Real wages in the U.S.A. and Britain and especially in France and Italy have markedly declined as compared with pre-war. Thus, for example, in France the purchasing power of the average hourly wages was in 1955 about half what it had been before the war.

Along with the sharp fall in the purchasing power of money the cost of living grew considerably in the capitalist countries in relation to the pre-war figures. In 1954 in the U.S.A. it was 2.9 times pre-war, in France more than 30 times and in Italy more than 60 times.

In 1952, in spite of the increase in war production, there were reckoned to be in the U.S.A. not less than 3 million wholly unemployed and 10 million partly, and in Western Germany nearly 3 million wholly and partly unemployed. Italy had more than 2 million wholly unemployed and an even larger number partly unemployed. In Japan there were about 10 million wholly and partly unemployed. In the U.S.A. at the beginning of 1954 the number of wholly unemployed reached 3.7 millions, and that of partly unemployed 13.4 millions.

In the U,S.A. direct taxes in the 1953-4 budget year were nearly twelve times as great as in the 1937-8 budget year, even if the fall in the purchasing power of money be taken into account. In the Western European countries, where, too, the tax-burden was very heavy even before the war, taxes likewise grew in this period; in Britain they were doubled, in France multiplied by 2.5 and in Italy one and a half times. At the beginning of 1955 the rent paid by a U.S. worker’s family was more than double what it had been in 1939.

According to figures issued by the Bureau of the Census, in 1949 in the U.S.A. 72.2 per cent of all American families had incomes below the extremely meagre official subsistence minimum; 34.3 per cent had incomes which were less than half of this minimum, 18.5 per cent less than a quarter, and 9.4 per cent less than an eighth.

The worsening of the material situation of wide sections of the population of the capitalist countries leads to a growth of unrest and discontent among the masses, who react more and more actively against the oppression of monopoly capital. This is expressed in an upsurge of the strike movement in the capitalist countries, in a strengthening of the progressive trade unions which are united in the World Federation of Trade Unions set up in 1945, in the growth of the Communist Parties and extension of their mass influence, in the strengthening of the political activity of the working class. The Communist Parties and progressive trade unions, firmly rebuffing the splitting activity of the right-wing Socialists and reactionary trade union leaders, are educating the working class in the spirit of proletarian solidarity, in the spirit of struggle for liberation from imperialist oppression.
Intensified Oppression by the Monopolies in the Agriculture
of the Capitalist Countries, and Impoverishment of the Peasantry

The aggravation of the general crisis of capitalism after the second world war is marked by enhanced domination by the monopolies and finance-capital in agriculture, the growth of differentiation among the peasantry and of impoverishment of the bulk of them.

Finance capital takes possession of agriculture ever more widely and deeply. The mortgage banks, which advance credit on the security of land, become the de facto owners of the holdings of the ruined peasantry, together with their implements and other chattels. The short-time credit banks and insurance companies entangle the peasants in a net of indebtedness.

The monopolies make money for themselves out of the products of agriculture at every stage of their passage from the producer to the consumer. By fixing low prices for the produce which they buy from the small peasants and screwing up retail prices to a high level, the monopolies appropriate a substantial part of the peasants’ incomes. Huge profits are received at the expense of the bulk of the peasants by the monopolies engaged in the processing of agricultural produce (in the flour-milling, meat, tinned food and sugar industries). The measures taken by the State-tax policy, wholesale buying operations and other forms of so-called “aid" to agriculture—result in ever greater enrichment of the monopolies and impoverishment of the bulk of the peasantry. The exploitation of the peasants by the monopolies is combined with very numerous survivals of the serf-owning type of exploitation and above all with share-cropping, under which the tenant is obliged to hand over to the landowner a considerable share of his crop as rent for land and implements.

In the U.S.A, the proportion of the total land occupied by large and very large farms, over 500 acres in extent (which amounted in 1950 to less than 6 per cent of all the farms), grew from 44.9 per cent in 1940 to 53.5 per cent in 1950, while the share occupied by latifundia with an extent greater than 1,000 acres grew from 34.3 per cent to 42.6 per cent. According to the data of the 1950 census, 44 per cent of all the farms (in value of marketable produce accounting for less than 1,200 dollars each) produced less than 5 per cent, of all the marketable produce, i.e., they were primitive, poorly-productive, subsistence farms, while 103,000 large farms (25,000 dollars’ worth, or more, of marketable produce each), which made up only 2 per cent of the total, contributed 26 per cent of the marketable produce of U.S. agriculture. In France in 1950 small farms, twenty-five acres or less in extent, which made up 56.7 per cent of all the farms, comprised only 16.1 per cent of all the agricultural land, while large farms, numbering 4.4 per cent of the total, made up 29.9 per cent of it. In Western Germany small farms with an area not exceeding 12.5 acres, which in 1949 made up 55.8 per cent of all the farms, had only 11 per cent of all the land, while 0.7 per cent of the large farms accounted for 27.7 per cent of it. In Italy there are 2.5 million landless peasants and 1.7 million who have little land. During the decade 1940 to 1950 over 700,000 farm households were ruined.

The total amount of ground-rent in the U.S.A. grew from 760 million dollars in 1937 to 2.1 milliard dollars in 1952. In Italy a few hundred landlords drew every year 450 milliard lire in ground-rent, whereas the wages of 2.5 million agricultural labourers amounted only to 250 milliard lire. The total indebtedness of American farmers to the banks and other credit institutions more than doubled in 1946-54, reaching the figure of 18 milliard dollars by January 1, 1955. The property tax on the farm population was in 1953 2.3 times as high as in 1942.

Since the second world war the increase in the impoverishment of the working class and the peasantry in the capitalist countries and the vast expenditures which these countries are making on armaments have brought about a decline in effective demand and in the market for agricultural produce. In connection with this, stocks and “surpluses" of agricultural goods for which no outlet can be found are increasing in the capitalist countries, cultivated areas are shrinking, the earnings of the bulk of the peasantry from the sale of their produce are sharply declining, a mass-scale ruination of petty producers is taking place, and a vast quantity of foodstuffs is being destroyed—at the same time as the consumption of foodstuffs by the working masses is falling and they are actually going without essential food. All this is preparing the way for the onset of a fresh agrarian crisis.

Transient stocks of wheat in the U.S.A. in 1954 were 2.4 times the highest level of stocks during the crisis of 1929-33 and were more than 7 times as great as the average annual stocks of 1946-8. In order to keep prices of foodstuffs at their inflated level, State agencies in the U.S.A. buy up huge quantities of gram, cotton, potatoes and livestock products and systematically destroy part of these stocks.

In 1954 the net income of U.S.A. farmers was 4.6 milliard dollars, or 36 per cent less than their average annual income in 1946-8.

* *

The further aggravation of the general crisis of capitalism since the second world war is marked by a sharpening of the antagonisms of capitalist society. The contradiction between society’s productive forces and the capitalist relations of production, which has reached its farthest limits, shows graphically that history has doomed the bourgeois system, which has outlived itself.

The second stage of the general crisis of capitalism has brought with it an aggravation of the crisis of bourgeois democracy. The anti-popular and anti-national character of bourgeois rule is showing itself with increasing frankness. The reactionary circles of the bourgeoisie are seeking their way out from the general crisis of capitalism by the path of war and the fascisation of political life.

The masses of the people in the capitalist countries, marching under the banner of proletarian internationalism, are seeking their way out of the situation through active and resolute struggle against the entire system of imperialist slavery and for national and social liberation.

“Proletarian, socialist internationalism is the basis of the solidarity of the working people and of co-operation between the peoples in the cause of defending their independence from the attempts made upon it by imperialism, in the defence of peace. It teaches the workers to unite their forces in every country in order to fight against the rule of capital, to bring about a transition to socialist economy. It teaches the working class and the peoples to develop mutual of links of international solidarity, in order the better to carry forward the fight for peace, to isolate and render harmless those who are fomenting another war." (P. Togliatti, “The Unity of Working Class and the Tasks of the Communist and Work Parties", For a Lasting Peace, for People’s Democracy, December 2, 1949.)

After the first world war Russia broke away from the capitalist system; after the second world war a whole series of countries in Europe and Asia broke away; and a third world war, should the imperialists manage to start one, would inevitably result in the downfall of the entire world capitalist system. In such a war the imperialist aggressors would not only clash with the invincible might of the States of the socialist camp. They would find themselves confronted with an explosion of all the sharpest contradictions inherent in present-day capitalism—between labour and capital, between the imperialist Powers, between the metropolitan countries and the colonies.

The progressive, democratic forces of the peoples, headed by the working class and its vanguard, the Communist Parties, are uniting in active opposition to imperialist reaction, the fascist danger and the plans for fresh wars. The peace-loving policy of the Soviet Union, the Chinese People’s Republic and the other countries of the socialist camp, directed towards the easing of international tension, has led to the ending of the war in Korea, the restoration of peace in Indochina and the conclusion of the State treaty with Austria. At the Geneva meeting of the heads of government of the four Powers —the Soviet Union, the U.S.A., Britain and France—held in June 1955, definite successes were achieved in the direction of improving the international situation and establishing co-operation between States with different economic and social systems. The camp of peace, democracy and socialism, headed by the Soviet Union and the Chinese People’s Republic, unites the 900 million inhabitants of the countries which have broken away from the capitalist system. This camp constitutes a powerful force which exercises a decisive influence on the entire course of current history.

(1) In the period of the second world war, especially after the falling away from the capitalist system of the People’s Democracies of Europe and Asia, the general crisis of capitalism developed to its second stage. As a result of the formation of two opposing camps in the international arena, a split took place in the single, all-embracing world market and two parallel markets were formed: the market of the countries of the socialist camp and the market of the countries of the capitalist camp. The sphere of access by the forces of the chief capitalist countries—U.S.A., Britain, France—to the world’s resources was notably reduced.

(2) One of the principal results of the second world war has been the sharp aggravation of the crisis of the colonial system of imperialism. An upsurge of the national liberation struggle in the colonial and dependent countries has led to the beginning of the break-up of the colonial system, to the breaking away of China and a number of other countries from the world system of imperialism.

(3) The further intensification of the unevenness of the development of the capitalist countries inevitably produces an aggravation of. the internal contradictions in the camp of imperialism. The militarisation of the economy

(1) causes the gap to widen between the production potentialities of industry in the capitalist countries and the possibilities for disposing of their goods, and by so doing prepares the way for the onset of a fresh economic crisis.

(4) The second stage of the general crisis of capitalism is marked by a further deterioration in the material position of the broad masses of the working people. This is expressed in the decline in the real wages of the working class, the increase in the permanent army of unemployed, the extensive introduction of sweating systems, inflation and rise in the cost of living, increase in the burden of taxation, the worsening of the position of the bulk of the peasantry in the capitalist countries and intensified exploitation of the colonies. The strengthening of the camp of peace, democracy and socialism, the weakening of the imperialist camp of reaction and war, the upsurge in the struggle of the working class, the peasantry and the colonial peoples for freedom testify that the present epoch is the historic epoch of the downfall of capitalism, of the victory of communism.


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