POLITICAL ECONOMY - THE GENERAL CRISIS OF CAPITALISM
Part II : CAPITALIST MODE OF PRODUCTION
B. MONOPOLY CAPITALISM-IMPERIALISM
CHAPTER XXI : THE GENERAL CRISIS OF CAPITALISM
Nature of the General Crisis of Capitalism
As the contradictions of imperialism grew, so the preconditions for the general crisis of capitalism accumulated. The foundations of the theory of the general crisis of capitalism were worked out by V. I. Lenin.
The general crisis of capitalism is the all-round crisis of the world capitalist system as a whole, characterised by wars and revolutions, by a struggle between moribund capitalism and growing socialism. The general crisis of capitalism involves all sides of capitalism, both economic and political. Underlying it are, on the one hand, the ever more intense disintegration of the world capitalist system, from which more and more countries are falling away, and, on the other hand, the growing economic might of the countries which have already fallen; away from capitalism.
The fundamental features of the general crisis of capitalism are: the splitting of the world into two systems, the capitalist and the socialist, the crisis of the colonial system of imperialism, the sharpening of the problem of markets and, in connection with this, the increase of chronic under-capacity working of enterprises and chronic mass unemployment in the capitalist countries.
The uneven development of the capitalist countries in the epoch of imperialism gives rise in course of time to a lack of correspondence between the existing division of markets, spheres of influence and colonies and the changed relation of forces among the principal capitalist States. On this basis there arises a sharp break in the equilibrium within the world system of capitalism, leading to the formation of hostile groupings of capitalist States and to war between these groupings. World wars sap the strength of imperialism and facilitate the breaching of the imperialist front and the falling away of one country after another from the capitalist system.
The general crisis of capitalism covers an entire period of history, forming part of the epoch of imperialism. As already mentioned, the law of uneven economic and political development of the capitalist countries in the imperialist epoch predetermines a variation in the time when socialist revolution becomes ripe in different countries. Lenin pointed out that the general crisis of capitalism is not an event which takes place in a single moment of time but a long period of stormy economic and political upheavals and sharp class struggle, a period of “the collapse of capitalism on its full scale, and the birth of a socialist society". (Lenin, “Report on the Revision of the Programme and Change of the Name of the Party, at the VIIth Congress of the R.C.P.(B)", Selected Works, 12-vol. edition, vol. VIII, p. 315.) This determines the historical inevitability of a prolonged co-existence of the two systems—socialist and capitalist.
The general crisis of capitalism began in the period of the first world war and developed especially as a result of the falling away of the Soviet Union from the capitalist system. This was the first stage of the general crisis of capitalism. In the period of the second world war the second stage of the general crisis of capitalism developed, especially after the falling away from the capitalist system of the People’s Democracies in Europe and Asia.
The First World War and the Beginning of the General Crisis of Capitalism
The first world war was the result of the sharpening of contradictions between the imperialist Powers arising out of the struggle to re-divide the world and spheres of influence. Alongside the old imperialist Powers new ones had grown up which had been too late for the partition of the world. German imperialism appeared on the scene. Germany had taken the path of capitalist development later than a number of other countries and arrived to join in the share-out of markets and spheres of influence when the world was already divided up among the old imperialist Powers. As early as the beginning of the twentieth century, however, Germany, having outstripped Britain as regards the level of industrial development, took second place in the world and the first in Europe. Germany began to squeeze Britain and France out of the world markets. The change in the relation of forces, economic and military, between the principal capitalist States brought to the front the question of re-dividing the world. In the struggle for the re-division of the world, Germany, taking her stand in alliance with Austria-Hungary, clashed with Britain, France and Tsarist Russia, which was dependent on them.
Germany strove to take away part of the British and French colonies, to oust Britain from the Near East and to put an end to her maritime supremacy, to take from Russia the Ukraine Poland and the Baltic regions, and to bring under subjection the whole of Central and South-eastern Europe. In its turn, Britain strove to put an end to German competition on the world market and to establish firmly its dominion over the Near East and the continent of Africa. France set out to recover Alsace and Lorraine, annexed by Germany in 1871, and to grab the Saar basin from Germany. Predatory aims were also pursued by Tsarist Russia and other bourgeois States which took part in the war.
The struggle between the two blocs of imperialists, the Anglo-French and the German, for the re-division of the world affected the interests of all the imperialist countries and so led to a world war in which Japan, the U.S.A. and a number of other countries took part. The first world war was imperialistic on both sides.
The war shook the capitalist world to its very foundations. In the scale on which it was fought it threw into the shade all previous wars in the history of mankind.
The war provided the monopolies with a source of enormous enrichment. The capitalists of the U.S.A. did especially well out of it. The profits of the American monopolies as a whole in 1917 were three or four times what they had been in 1914. In the five years of the war (1914 to 1918) the American monopolies received more than 35 milliard dollars profit (before deduction of tax). The biggest monopolies increased their profits tenfold.
The population of the countries which actively participated in the war amounted in all to about 800 million. About 70 million men served in the armies. The war swallowed up as many human lives as had perished in all wars in Europe during the previous thousand years. The number of killed was 10 million, the number of wounded and maimed exceeded 20 million. Millions of people died from famine and epidemics. The war brought colossal damage to the economies of the fighting countries. The direct war expenses of the combatant Powers amounted for the whole period of the war (1914-18) to 208 milliard dollars (in the prices of those years).
During the war the role played by the monopolies grew ever greater and the subjection of the State machine to them was increased. The State machine was utilised by the biggest monopolies for the purpose of securing maximum profits. Wartime “regulation" of the economy was carried out so as to enrich the biggest monopolies. To this end the working day was lengthened in a number of countries, strikes were forbidden, barrack discipline and forced labour were introduced in the enterprises. The main source of the unprecedented growth of profits was furnished by State war contracts paid for out of the Budget. War expenses absorbed a huge share of the national income during the war, and were covered first and foremost by increases in taxes on the working people. The bulk of the war appropriations went to the monopolists in the form of payment for war contracts, grants and subsidies. The prices paid under war contracts ensured enormous profits for the monopolies. Lenin called war contracts legalised treasury-looting. The monopolies gained through the lowering of the real wages of the workers by means of inflation, and also through direct plundering of occupied territories. During the war the rationing system of distributing products was introduced in the European countries, and this restricted consumption by the working people to a bare minimum.
The war carried the poverty and misery of the masses to extreme limits, sharpened class contradictions, and brought about an upsurge of the revolutionary struggle of the working class and the working peasantry in the capitalist countries. Moreover, the war, which from European became worldwide, dragged into its orbit the rear of imperialism as well-the colonies and dependent countries-which facilitated the joining together of the revolutionary movement in Europe with the national liberation movement of the peoples of the East.
The war weakened world capitalism.
“The European war", wrote Lenin in those days, “means the greatest crisis in history, the beginning of a new epoch. Like every crisis, the war has made deeply-hidden contradictions more acute and brought them to the surface." (Lenin, “Dead Chauvinism and Living Socialism", Works, Russian edition, vol. XXI, p. 81.)
It called forth a mighty upsurge of the anti-imperialist revolutionary movement.
The Victory of the Great October Socialist Revolution.
and the Splitting of the World into Two Systems: Capitalist and Socialist
The proletarian revolution breached the front of imperialism first of all in Russia, which turned out to be the weakest link in the imperialist chain. Russia was a focal point of all the contradictions of imperialism. In Russia the tyranny of capital was interwoven with Tsarist despotism, with survivals of serfdom and with colonial oppression in relation to the non-Russian peoples. Lenin called Tsardom “military-feudal imperialism".
Tsarist Russia was a reserve of western imperialism as a sphere of investment of foreign capital, which controlled. the decisive branches of industry (fuel and metallurgy), and as a support for western imperialism in the East. The interests of Tsardom and of western imperialism were merged in a single tie-up.
The high degree of concentration of Russia’s industry and the existence of such a revolutionary party as the Communist Party had transformed the working class of Russia into the greatest political force in the country. The Russian proletariat possessed a valuable ally in the peasant poor, which made up the great majority of the peasant population. Under these conditions it was inevitable that the bourgeois-democratic revolution in Russia should inevitably grow over into the socialist revolution, assume an international character and shake the very foundations of world imperialism.
The international significance of the great October Revolution consists in the facts that, first, it breached the front of imperialism, overthrew the imperialist bourgeoisie in one of the largest capitalist countries and for the first time in history placed the proletariat in power; secondly, it not only shook imperialism in the metropolitan countries but also struck a blow at imperialism’s rear, undermining its domination in the colonies and dependent countries; thirdly, by weakening the power of imperialism in the metropolitan countries and shaking its domination in the colonies, it thereby brought into question the very existence of world imperialism as a whole.
The great October Socialist Revolution meant a radical turn in the world history of mankind; it opened a new epoch-the epoch of proletarian revolutions in the countries of imperialism and national liberation movements in the colonies. The October Revolution wrested from the rule of capital the working people of one-sixth of the earth and brought about the splitting of the world into two systems, capitalist and socialist, which is the most vivid expression of the general crisis of capitalism. As a result of the splitting of the world into two systems a contradiction arose which was new in principle and was of world historical importance-the contradiction between dying capitalism and growing socialism. The struggle between the two systems, capitalism and socialism, became of decisive importance if) the present epoch.
Describing the general crisis of capitalism, J. V. Stalin said:
“It means, first of all, that the imperialist war and its aftermath intensified the decay of capitalism and upset its equilibrium, that we are now living in an epoch of wars and revolutions, that capitalism has already ceased to be the sole and all-embracing system of world economy, that side by side with the capitalist system of economy there is the socialist system, which is growing, thriving, which stands opposed to the capitalist system and by its very existence demonstrates the decaying state of capitalism and shakes its foundations." (Stalin, “Political report of the Central Committee to the XVI Congress of the C.P.S.U.(B)", Works, vol. XII, p. 253.)
The first years after the war of 1914-18 were a period of terrible collapse in the economy of most of the capitalist countries that took part in the war, a period of bitter conflict between the proletariat and the bourgeoisie. As a result of the upheaval suffered by world capitalism and under the direct influence of the great October Socialist Revolution, a number of revolutions and revolutionary outbreaks occurred both on the continent of Europe and in the colonial and semi-colonial countries. This powerful revolutionary movement, and the sympathy and support shown to Soviet Russia by the working masses of the whole world, doomed to failure all the attempts of world imperialism to smother the first socialist republic in the world. In 1920-1 a deep-going economic crisis broke out in the U.S.A. and a number of other capitalist countries.
Having emerged from the post-war economic chaos, the capitalist world entered in 1924 upon a period of relative stabilisation. The revolutionary upsurge gave way to a temporary ebb of the revolution in a number of European countries. There was a temporary, partial stabilisation of capitalism achieved by redoubled exploitation of the working people. Under the flag of capitalist “rationalisation" a ruthless intensification of labour was introduced. Capitalist stabilisation inevitably led to a sharpening of the contradictions between the workers and the capitalists, between imperialism and the colonial peoples, between the imperialists of different countries. Beginning in 1929, a world economic crisis brought capitalist stabilisation to an end.
Meanwhile, the national economy of the U.S.S.R. was developing steadily on an upward trend, without crises or catastrophes. The Soviet Union was in those days the only, country which did not know crises and other contradictions of capitalism. The industry of the Soviet Union went forward continually, at rates never seen before in history. In 1938 the U.S.S.R.’s industrial production was 908.8 per cent of the 1913 figure, whereas industrial production in the U.S.A. was only 120 per cent, Britain’s was 113.3 per cent and France’s 93.2 per cent. The contrast of, the economic development of the U.S.S.R. with that of the capitalist countries revealed graphically the decisive advantages of the socialist system of economy over the capitalist system.
The rise of the first Socialist State in the world had a very great influence on the development of the revolutionary struggle of the working people.
The experience of the U.S.S.R. has shown that the worker can successfully govern a country and build up and manage its economy without the bourgeoisie. Every year of peaceful emulation between socialism and capitalism undermines and weakens capitalism and strengthens socialism.
The example of the working people of the Soviet Union and of the other countries which have overthrown the capitalist yoke rouses the oppressed peoples to fight for their freedom against imperialism. International imperialism strives to smother or, at least, to weaken the Socialist State. The camp. of imperialism tries to settle its own internal difficulties and contradictions through kindling war against the U.S.S.R. and the countries of People’s Democracy. In the struggle against imperialist intrigues the Soviet Union relies upon its economic and military might and on the support of the international proletariat and the working people of the whole world.
The experience of history shows that, in the struggle between the two systems, the socialist system of economy is assured of victory over capitalism on a basis of peaceful emulation. The Soviet State proceeds in its foreign policy from the possibility of peaceful co-existence of the two systems, capitalism and socialism, and resolutely follows a policy of peace between the peoples.
Crisis of the Colonial System of Imperialism
Among the most important features of the general crisis of capitalism is the crisis of the colonial system of imperialism. This crisis, which arose in the period of the first world war, is becoming wider and deeper. The crisis of the colonial system of imperialism means an acute sharpening of the contradiction between the imperialist Powers, on the one hand, and the colonies and dependent countries, on the other, and the development of the struggle of the oppressed peoples of these countries for national liberation and the liberation of a number of colonies from imperialist enslavement.
The great October Socialist Revolution has played a very great role in the rise of the national liberation movement in the colonies and dependent countries. It unleashed a number of mighty national liberation movements in the countries of the colonial East. The victory of the October Socialist Revolution in Russia contributed greatly to the rise of the national liberation struggle of the great Chinese people. Powerful movements for national liberation also .arose in India, Indonesia and other countries. The great October Socialist Revolution opened an epoch of colonial revolutions bringing to the peoples of the colonies liberation from the imperialist yoke.
In the period of the general crisis of capitalism, the role played by the colonies as sources of maximum profits for the monopolies becomes greater. The sharpened struggle between the imperialists for markets and spheres of influence, and the more acute difficulties and contradictions in the capitalist countries, lead to intensified pressure being put on the colonies by the imperialists, to increased exploitation of the peoples of the colonial and dependent countries. This brings about an intensification of the anti-imperialist struggle for national liberation.
Another factor in the crisis of the colonial system is the development of industry and native capitalism in the colonies, which renders more acute the problem of the world capitalist market and leads to the growth of an industrial proletariat in the colonies.
The first world war, during which the export of manufactured goods from the metropolitan countries sharply declined, gave a notable fillip to the industrial development of the colonies. In the inter-war period, as a result of the increased export of capital to the backward countries, capitalism continued develop in the colonies. In connection with this the proletariat grew in numbers in these countries.
The total number of industrial enterprises in India increased from 2,874 in 1914 to 10,466 in 1939, and connected with this was an increase in the number of factory workers. The number of workers in Indian manufacturing industry, which amounted to 951,000 in 1914, was 1,751,000 in 1939. The total number of workers in India, including miners, railway and water transport workers and also plantation workers, amounted in 1939 to about 5 million persons. In China (less Manchuria) the number of industrial enterprises (employing not less than thirty workers), grew from 200 in 1910 to 2,500 in 1937, and the number of workers employed in them from 150,000 in 1910 to 2,750,000 in 1937. Taking into consideration that Manchuria was more highly developed industrially, the number of workers in industry and transport (not including small-scale enterprises) amounted in China on the eve of the second world war to about 4 million. The numbers of the industrial proletariat grew considerably in Indonesia, Malaya and in the African and other colonies.
The exploitation of the working class in the colonies becomes more intense in the period of the general crisis of capitalism. A commission which investigated the conditions of the Indian workers in 1929-31 established the fact that the family of an ordinary worker had to live on wages which worked out per head at only about half what it cost to keep a prisoner in the prisons of Bombay. The bulk the workers in the colonies fall into debt-bondage to the moneylenders. Forced labour is widespread in the colonies, especially in mining and agriculture (on the plantations).
The working class of the colonies is an active and most consistent fighter against imperialism, able to rally the vast masses of the peasantry around itself and lead the revolution to its conclusion. The alliance of the working class with the peasantry under the leadership of the working class is a decisive condition for the success of the national liberation struggle of the oppressed peoples of the colonial countries. Throughout the entire course of economic and political development, the working class of the colonies comes forward more and more as the leading force in the national liberation movement.
As has been shown, although a certain amount of industrial development takes place, imperialism hinders the economic development of the colonies. Though a certain degree of development of native industry takes place in the colonial countries, heavy industry still does not develop and they remain agrarian raw-material appendages of the metropolitan countries. Imperialism preserves the survivals of feudal relations which exist in the colonies, using them to help it intensify the exploitation of the oppressed peoples. The development of capitalist relations which takes place in the countryside, breaking up the natural forms of economy, only intensifies the exploitation and pauperisation of the peasantry. The colonial revolution is a junction of two streams of the revolutionary movement-the movement against feudal survivals and the movement against imperialism. It is not possible to abolish feudal survivals in the colonies without a revolutionary overthrow of imperialist oppression. The biggest force in colonial revolutions consists of the peasantry, which makes up the bulk of the population in the colonies.
The national bourgeoisie in the colonies, whose interests are encroached upon by foreign capital, at a certain stage of the revolution takes part in the struggle against imperialism. Given correct proletarian leadership of the movement, the inconsistency and wavering of the national bourgeoisie in the struggle against imperialism and feudal survivals can be overcome, and the national bourgeoisie is capable of playing a progressive role in certain periods of the revolution. At the same time, as the national liberation struggle of the colonial peoples develops, the activity of the reactionary forces of the feudal landlords and compradore bourgeoisie is intensified.
The growth of the working class in the colonial countries and the intensification of the national liberation struggle of the peoples of these countries in the period of the general crisis of capitalism signify a new stage in the development of the national liberation movement. Where formerly the national liberation struggle led only to the consolidation of the power of the bourgeoisie, in the period of the general crisis of capitalism it becomes possible for the working class to win the hegemony and secure the development of the given country along the road to socialism, by-passing the capitalist stage.
In the period of the general crisis of capitalism the national liberation movement in the colonies links itself ever more closely with the revolutionary struggle of the working class in the metropolitan countries. The colonies and dependent countries are transformed to an ever greater extent from reserves of imperialism into reserves of the socialist revolution.
Aggravation of the Problem of Markets;
Chronic Under-capacity Working of Enterprises and Chronic Mass Unemployment
An integral feature of the general crisis of capitalism is the progressive sharpening which the problem of markets under-goes, and the chronic under-capacity working of enterprises and chronic mass unemployment which result from this.
The sharpening of the problem of markets in the period of the general crisis of capitalism is caused first and foremost by the falling-away of a number of countries from the world system of imperialism. The departure from the capitalist system of Russia, with its huge markets and sources of raw material, could not but have an effect on the economic situation of the capitalist world. In the period of the general crisis of capitalism the impoverishment of the working people, whose standard of living the capitalists try to restrict to the absolute minimum, inevitably gets worse, and as a result the effective demand of the masses declines. The development of native capitalism in the colonies and dependent countries renders the problem of markets more acute, for this native capitalism begins to compete on the markets with the old capitalist countries. The development of the national-liberation struggle of the peoples of the colonial countries also complicates the position of the imperialist States in overseas markets.
Consequently, characteristic of the inter-war period was a relative stability of markets, while the production potentialities of capitalism grew. This could not but sharpen to the utmost all the contradictions of capitalism.
“This contradiction between the growth of the production potentialities and the relative stability of markets lies at the root of the fact that the problem of markets is today the fundamental problem of capitalism. An aggravation of the problem of markets in general, and especially an aggravation of the problem of foreign markets, and an aggravation of the problem of markets for capital exports in particular— such is the present state of capitalism. This, indeed, explains why it is becoming a common thing for mills and factories to work below capacity." (Stalin, “Political Report of the Central Committee to the XV Congress of the C.P.S.U.(B), Works, English edition, vol. x, pp. 281-2.)
In previous years mass under-capacity working of factories was a feature only of economic crises. Characteristic of the period of the general crisis of capitalism is chronic under-capacity working of enterprises.
Thus, in the boom period of 1925-9 the productive capacity of manufacturing industry in the U.S.A. was utilised only to the extent of 80 per cent. In 1930-4 the utilisation of the productive capacity of manufacturing industry Jell to 60 per cent. Moreover, it must be taken into account that U.S. bourgeois statistics, in calculating the productive capacity of manufacturing industry, did not include in its reckoning enterprises which were inactive for a long period and took as normal enterprises where only one shift was worked.
Closely connected with the, chronic under-capacity working, of enterprises is chronic mass unemployment.Down to the first world war the reserve army of labour grew during years of crisis but in boom periods shrank to comparatively small dimensions. In the period of the general crisis of capitalism unemployment attains huge dimensions and remains at a high level also in the years of recovery and boom. The reserve army of labour is transformed into a standing army of unemployed numbering many millions.
At the peak of the industrial boom between the two world wars, in 1928, the number of wholly unemployed in the U.S.A. amounted to about two millions, but in the following years, right down to the second world war the number never fell below eight millions. In Britain the number of insured workers wholly, unemployed never fell, in the period 1922-38, below 1,200,000 persons annually. Millions of workers subsisted on casual work and were victims of partial unemployment.
Chronic mass unemployment markedly worsens the position of the working class. It enables the capitalists to intensify labour in factories to an enormous extent, to dismiss workers already exhausted by excessive labour and to engage in their place fresh, stronger and healthier workers. In this connection the “working life" of the working people is reduced, and also the length of their employment. The working people become more and more uncertain what the morrow will bring. The capitalists make use of chronic mass unemployment to effect a sharp reduction in the wages of the employed workers. The incomes of working-class families are reduced also as a result of the reduction in the number of the members of the family at work.
In the U.S.A., according to bourgeois statistical data, the growth of unemployment from 1920 to 1933 was accompanied by a fall in average annual wages of the workers employed in industry, building and railway transport from 1,483 dollars in 1920 to 915 dollars in 1933, i.e., by 38 per cent. The unemployed members of the family had to be supported out of the meagre wages of the working members. If the total wage fund is related not merely to the employed workers but to the workers as a whole, both employed and unemployed, it is seen that the wages per worker (including the unemployed) fell in connection with the growth of unemployment from 1,332 dollars in 1920 to 497 dollars in 1933, i.e., by 62.7 per cent.
Chronic mass unemployment has a grave effect also on the position of the peasantry. In the first place, it contracts the internal market and reduces the urban population’s demand for agricultural produce. This leads to agrarian crises becoming more serious. Secondly, it worsens the situation on the labour market and renders it difficult for peasants who have been ruined, and are seeking work in the towns, to find a place in industry. Consequently, agrarian surplus-population and the pauperisation of the peasantry increase. Chronic mass unemployment, like chronic under-capacity working of enterprises, is a proof of the decay of capitalism, its inability to make use of the productive forces of society.
The intensified exploitation of the working class and the reduction in its standard of living in the period of the general crisis of capitalism leads to a further sharpening of the contradictions between labour and capital.
Deepening of Crises of Overproduction and Changes in the Capitalist Cycle
The lagging of markets behind growth of production potentialities in the capitalist world, the existence of chronic under-capacity working of enterprises and chronic mass unemployment leads to crises of overproduction becoming deeper and to essential changes taking place in the capitalist cycle.
These changes can be summed up as follows: the length of the cycle is shortened, so that crises become more frequent; the devastating effects of crises grow greater; it is harder to find a way out of the crisis, so that the length of the crisis phase of the cycle becomes greater, as also that of the depression phase, while booms become less stable and less prolonged.
Before the first world war economic crises usually occurred every 10-12 years, and only occasionally within 8 years of each other. In the period between the two world wars, from 1920 to 1938, i.e., in 18 years, there were three economic crises: in 1920-1, in 1929-33 and in 1937-8.
The depth of the fall in production in the period of the general crisis of capitalism taken as a whole increases. The output of manufacturing industry in the. U.S.A. fell during the crisis of 1920-1 (i.e., from the peak point before the crisis to the lowest point reached during the crisis) by 23. per cent, during the 1929-33 crisis by 47.1 per cent, and during that of 1937-8 by 22.9 per cent.
The economic crisis of 1929-33 was the deepest and most acute crisis in the history of capitalism. In this the impact of the general crisis of capitalism was felt with great force.
“The present crisis", said E. Thalmann, describing the crisis of 1929-33, “is of the nature of a cyclical crisis within the setting of the general crisis of the capitalist system in the epoch of monopoly capitalism. In this matter we must grasp the dialectical interaction between the general crisis and a periodical crisis. On the one hand, the periodical crisis assumes unprecedentedly acute forms, because it unfolds against the background of the general crisis of capitalism and is determined by the conditions of monopoly capitalism. On the other hand, the damage caused by the periodical crisis in its turn deepens and accelerates the general crisis off the capitalist system." (Thalmann, Tasks of the People’s Revolution in Germany, Report to the Plenum of the C.C. of the Communist Party of Germany, January 15, 1931, pp. 27, 28.)
The economic crisis of 1929-33 involved all the countries of the capitalist world without exception. Consequently it proved impossible for some countries to manoeuvre for their own advantage at the expense of others. The crisis struck with its maximum force at the strongest country of modern capitalism, the U.S.A. The industrial crisis in the principal capitalist countries was interwoven with an agricultural crisis in the agrarian countries, which resulted in aggravation of the economic crisis as a whole. Industrial production in the capitalist world as a whole fell by 36 per cent, and in certain countries fell still more. The turnover of world trade fell by two-thirds. The finances of the capitalist countries fell into complete confusion.
In the period of the general crisis of capitalism economic crises lead to an enormous increase in the numbers of persons unemployed.
The percentage of wholly unemployed at the time when production was at its lowest amounted, according to official figures for 1932, to 32 per cent in the U.S.A. and 22 per cent in Britain. In Germany the percentage of trade union members wholly unemployed amounted in 1932 to 43.8 per cent, while 22.6 per cent were partly unemployed. In absolute figures the number of wholly unemployed amounted in 1932: in the U.S.A. (according to official data) to 13.2 millions, in Germany to 5.5 millions, in Britain to 2.8 millions. In the capitalist world as a whole there were in 1933 40 million persons wholly unemployed. The number of semi-unemployed attained tremendous dimensions. Thus, in the U.S.A. the number of semi-unemployed amounted in February 1932 to 11 million.
Chronic under-capacity working of factories and extreme impoverishment of the masses make it hard to emerge from the crisis. Chronic under-capacity working of enterprises restricts the field for renewal and expansion of fixed capital and hinders the transition from depression to recovery and boom. Chronic mass unemployment and the policy of high monopoly prices work in the same way, restricting the expansion of the market for consumer goods. This means a lengthening of the crisis phase. Whereas previously crises worked themselves out in a year or two, the crisis of 1929-33 lasted over four years.
The recovery and boom which succeeded the crisis of 1920-1 took place quite unevenly and were more than once interrupted by partial crises. In the U.S.A. partial crises of overproduction occurred in 1924 and 1927. In Britain and Germany a considerable fall in production took place in 1926. The crisis of 1929-33 was succeeded not by an ordinary depression but by a depression of a special type, which did not lead to a new boom and industrial prosperity, though it did not return to the point of maximum decline. The depression of a special type was followed by a certain recovery which, however, did not lead to prosperity on a new, higher basis.
The industrial production of the capitalist world in 1937 exceeded the level of 1929 only by 3.5 per cent, and in many capitalist countries (U.S.A., France, Italy, etc.) did not even attain the 1929 level. In the middle of 1937 a fresh economic crisis began in the capitalist world, starting in the U.S.A. and later spreading to Britain, France and a number of other countries.
The total volume of industrial production in the capitalist world in 1938 was 10.3 per cent lower than in 1937; in the U.S.A. it was 21.8 per cent lower, in Britain 12 per cent, in France 9 per cent. Compared with 1929 the total volume of industrial production in 1938 reached in the U.S.A. the level of 72.3 per cent, in Britain 98.7 per cent, in France 66 per cent and in Italy 98.5 per cent.
The crisis of 1937-8 differed from that of 1929-33 first and foremost in that it arose, not after a phase of industrial prosperity as had happened in 1929, but after a depression of a special type and a certain recovery. Furthermore, this crisis began in the period when Japan had started war in China, when Germany and Italy had switched their economies on to a war basis, and when all the remaining capitalist countries had begun to put themselves on a war footing. This meant that capitalism had very much less resources for a normal emergence from this crisis than it had during the crisis of 1929-33.
In the conditions of the general crisis of capitalism agrarian crises become more frequent and more profound. On the heels of the agrarian crisis of the first half of the 1920’s there began in 1928 a fresh, deep-going agrarian crisis, which lasted right down to the second world war. Relative overproduction of agricultural produce led to a marked fall in prices, worsened the position of the peasantry.
In the U .S,A. in 1921 the index of prices paid to farmers fell to 58.5 per cent of the level of 1920, and in 1932 to 43.6 per cent of the level of 1928. The output of arable farming in the U.S.A. fell in 1934 to 67.9 per cent of the 1928 level and 70.6 per cent of the 1920 level. Farmers’ incomes fell.
The ruin and pauperisation of the bulk of the peasantry; brings about a growth in revolutionary sentiments among them and pushes them along the road of struggle against capitalism under the leadership of the working class.
Arms drives and world wars, which are used by the monopolies to secure maximum profits, have a big effect on the course of capitalist reproduction and the capitalist cycle, in the conditions of the general crisis of capitalism. The factors of war inflation may lead to a temporary recovery of economic activity and hold back the development of a crisis which has begun, or slow down the advance of a fresh economic crisis. But wars and the militarisation of the economy cannot save capitalist economy from crises. Indeed, they facilitate the further deepening and sharpening of economic crises. World wars lead to destruction of productive forces and social wealth on a huge scale: factories, stocks of material wealth, human lives. Wars, by giving a one-sided direction to the development of the national economy, intensify the unevenness and disproportional character of capitalist economy. Militarisation of the economy means an expansion of the production of armaments and supplies for the armed forces at the price of a contraction of production of consumer goods, and an excessive increase in taxation and rise in the cost of living, which inevitably lead to a reduction in consumption by the population and a sharpening of the contradiction between production and consumption, and prepare the onset of another, still deeper economic crisis.
The intensification of the decay of capitalism in the period of its general crisis is shown in an all-round lowering in the rate of production. Average annual rates of growth of industrial production in the capitalist world were: in the period 1890-1913—3.7 per cent; and in 1913-53—2.5 per cent. Along with this the unevenness of the development of capitalist production sharply intensified.
During the general crisis of capitalism the monopolist bourgeoisie, striving to fend off the collapse of the capitalist system and to retain its domination, conducts an onslaught on the standard of living and democratic rights of the working people and resorts to police methods of rule. In all the principal capitalist countries the development of State-monopoly capitalism is intensified.
Being no longer able to rule by the old methods of parliamentarian and bourgeois democracy, in a number of countries—Italy, Germany, Japan and others—the bourgeoisie set up fascist regimes. Fascism is the open, terrorist dictatorship of the most reactionary and aggressive elements of finance capital. Fascism sets itself the aims, internally, of smashing the organisations of the working class and crushing all progressive forces, and, externally, of preparing and launching a war of conquest for domination of the world. Fascism seeks to realise these aims by methods of terror and social demagogy.
Thus the world economic crisis of 1929-33 and the crisis of 1937-8 led to a marked sharpening of the contradictions both within the capitalist countries and between them. The imperialist States sought a way out of these contradictions along the road of preparation for a war for a new re-division of the world.
BRIEF CONCLUSIONS
(1) The general crisis of capitalism is an all-round crisis of the world capitalist system as a whole. It embraces both economics and politics. Underlying it is the continually increasing disintegration of the world system of capitalism, from which country after country is falling away on the one hand and on the other, the growing economic might of the countries which have broken away from capitalism.
(2) The general crisis of capitalism embraces an entire period of history, in the course of which take place the breakdown of capitalism and victory of socialism on a world scale. The general crisis of capitalism began during the first world war, and especially as a result of the falling away of the Soviet Union from the capitalist system.
(3) The great October Socialist Revolution meant a radical turn in the world history of mankind, from the old, capitalist world to the new, socialist world. The splitting of the world into two systems—the system of capitalism and the system of socialism—and the struggle between these is the fundamental symptom of the general crisis of capitalism. With the splitting of the world into two systems two lines of economic development made their appearance. While the capitalist system becomes more and more entangled in insoluble contradictions, the socialist system develops on a steadily upward-moving line, without crises and catastrophes.
4) The crisis of the colonial system of imperialism is one of the most important features of the’ general crisis of capitalism. This crisis consists of the development of the national liberation struggle, which shakes the foundations of imperialism in the colonies. The working class takes the lead of the struggle of the oppressed peoples for national liberation. The great October Socialist Revolution unleashed the revolutionary activity of the oppressed peoples and opened the epoch of colonial revolutions headed by the proletariat.
(5) In the conditions of the general crisis of capitalism, as a result of the falling-away of a number of countries from the system of imperialism, of the increased impoverishment of the working people and also of the development of capitalism in the colonies, the problem of markets becomes more acute. A characteristic feature of the general crisis of capitalism is chronic undercapacity working of enterprises and chronic mass unemployment. Under the impact of the sharpening of the’ market problem, of the chronic under-capacity working of enterprises and of chronic mass unemployment there occur an aggravation of economic crises and essential changes in the capitalist cycle.
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