THE MOST striking and significant political and social fact in the world today is the glaring contrast between the industrial, political and social conditions prevailing in the capitalist countries and those obtaining in the Soviet Union. Throughout the capitalist world, without exception, the picture is one of increasing chaos and crisis. The capitalist industrial system is paralysed as never before. Tremendous masses of workers are thrown into unemployment and destitution. The standards of living of the producing masses have declined catastrophically, mass starvation existing in every capitalist country, including the United States. War is already here in Manchuria and preparations go ahead upon an unprecedented scale for future wars against the Soviet Union and among the capitalist powers themselves. To enforce their regime of hunger and intensified exploitation, the capitalists everywhere are increasingly developing their dictatorship from its masked form of bourgeois democracy into open systems of Fascist terrorism. And against all this the revolutionary upsurge of the workers and poor farmers becomes worldwide; revolutionary struggle growing acute in many countries. Capitalism is manifestly in serious crisis.
On the other hand, the Soviet Union, born in the midst of the capitalist world slaughter of 1914-18, presents a picture of growth and general social advance. The Russian industries and agriculture are expanding at an unheard-of rate, the Soviet Union being the only country in the world not prostrated by the economic crisis. The masses of producers of factory and farm are all employed; their standards of living and culture are rapidly rising. They are building a new and free proletarian democracy. In short, as capitalism goes deeper and deeper into crisis, the Soviet Union forges ahead faster and faster upon every front.
The meaning of all this, as will be developed in the course of this book, is that the capitalist system is in decline and is historically being replaced by a new social order, Socialism. Capitalism, based upon the private ownership of industry and land and the exploitation of the toiling masses, has exhausted its social role; the revolutionary forces, under the leadership of the Communist International, are gathering to sweep it away and to build in its place a social system based upon the common ownership of the means of production and the carrying on of production for social use. Out of the welter of crisis and mass misery and war, a new social system is born. We are living in the historical period of the revolutionary transition from capitalism to Socialism.
LIKE a tornado the present economic crisis struck the capitalist world. It is a crisis of over-production. The first signs of this threatening over-production manifested themselves in Germany and central Europe generally in the latter part of 1928. The industrial decline began in the U.S. towards the middle of 1929, followed by the great October Wall Street crash, after which every capitalist country was swiftly drawn into the vortex. The inevitable result is the worst economic crisis, by far, in the whole history of capitalism. It is the deepest, the most far-reaching and the longest. Every branch of industry, every capitalist country is affected. Only the Soviet Union is immune. And as Stalin says, “The crisis has struck deepest of all at the principal country of capitalism, its citadel, the U.S.A.” The crisis is setting in motion forces that threaten the very existence of the capitalist system.
Statistics constantly pile up to indicate the entirely unparalleled severity of the economic crisis. In industry the drop in production has been catastrophic and, after 30 months of crisis, it still declines. Production in the basic industries has fallen more than 50% below 1929 levels and more than 30% below 1930. Steel has dipped to 20% of capacity and “even order inquiries for tacks are seized hopefully.” Building is off about 70% since 1928, notwithstanding “emergency” building programs, etc. In 1931 American exports declined about one-third, or $1,418,000,000. The total national income fell from 89.5 billions in 1929 to 52.4 billions in 1931, or 41%. The drop in wholesale prices, 24% between 1929 and 1931, is wholly unprecedented, the previous record being 7% in the crisis of 1873-75. New financing decreased from 6½ billions in 1929 to 2½ billions in 1931. The general business index, at this writing registering 60, a drop from 113 in Aug., 1929, is the lowest in American economic history, the nearest low to this being 72 in 1894.
Internationally there is a similar picture, world production levels at this time being about those of 1913. According to League of Nations’ figures, world trade has fallen off 40% from the Spring of 1929 until the end of 1931, a decline entirely without precedent.1 In England production is at 65, or far below pre-war levels. In Germany, says the German Institute for Business Research, “Industrial production is about as large as it was in the years 1900-03.” Production in France has dropped 20% since the middle of 1930. Poland and Austria have declined 28% and 31% respecitively since 1929. The Balkans are deep in crisis, Japan’s industries have been similarly paralysed.
Unemployment has developed internationally upon an unheard-of scale. In Great Britain there are 3,000,000 unemployed, in Germany 6,500,000, in France unemployment registers an all-time record, and in the United States over 12,000,000 are unemployed. There are almost as many more part-time workers. Throughout the capitalist countries there are not less than 40,000,000 unemployed and the number constantly increases.
In agriculture the crisis is no less ravaging and general. According to the Department of Agriculture bulletin of Dec. 16, 1931, the value of farm products declined from $8,765,820,000 in 1929 (which was already about 50% below 1919) to $4,122,850,000 in 1931, as against a decline of only 10% in prices of commodities that farmers must buy. The terrific fall in the prices of agricultural products is graphically illustrated by the fact that on Oct. 4, 1931 wheat reached 441/2 cents a bushel on the market, the lowest point since the Civil War, with farmers getting as low as 25 cents. And world agriculture in the capitalist countries is in a similar crisis, prices received by the peasants having fallen from 40% to 70% for the great staples, wheat, cotton, rice, rubber, silk, coffee, etc.
In finance the world economic crisis also manifests itself with devastating effects. Whichever way one looks there is a spreading ruin and wreckage. The whole financial system of capitalism is tottering. Internationally, there is a great wave of bankruptcy, many of Europe’s oldest and greatest banks and industrial concerns collapsing. Great Britain, Japan and various other countries have been driven off the gold standard. Stock exchange prices in many countries have dropped 50% to 75%, the general average in France declining from 437 in 1930 to 230 at the end of 1931. Huge deficits exist in all the national government budgets. Repudiation of international debts is the order of the day, with the United States standing to lose, counting war debts and other loans now in default, from 10 to 15 billion dollars.
The United States, home of the world’s strongest capitalism, presents a similar picture of financial crisis. During 1931, 2,290 banks with deposits of $1,759,000,000 closed their doors, and 17,000 retail stores failed. In 1931, bank deposits declined by seven billion dollars. From the middle of 1929 to the end of March, 1932, the average prices of 30 leading industrial stocks on the New York Stock Exchange dropped from $381.17 to $61.98.2 The total loss in security “values,” according to B.C. Forbes, was 75 billions. New York, Chicago, Philadelphia, Detroit and hundreds of smaller cities are bankrupt. The Federal government faces a deficit of about two and one-half billion dollars. And, most significant of all, the Federal Reserve Bank system, a financial fortress of supposed Gibraltar strength, has manifestly proved unable to stand the strain, the Hoover two billion dollar Reconstruction Finance Corporation being an attempt to buttress up the reserve bank system by a further concentration of the State power behind the great bankers and by a policy of inflation. Mazur says: “1931 has witnessed a substantial debacle of both the orthodox currency basis and the established banking system of the world.”3 And the end is not yet, with the crisis deepening internationally.
“We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”—President Hoover, Aug. 11, 1928.
THROUGHOUT capitalism the policy of the ruling class is to try to find a way out of the crisis by throwing its burden upon the shoulders of the working class, the poor farmers and the lower sections of the city petty bourgeoisie. This is being done by a vast system of starving the unemployed, wage-cuts, speed-up, inflation schemes, taxes directed against the masses, etc. In consequence, with the development of the crisis, there has been an enormous increase in the impoverishment of the toiling masses.
Wholesale starvation, spreading like a plague, is the order of the day in all capitalist countries. The bourgeoisie, intent only upon its own pleasures, cynically shrugs its shoulders at the whole terrible misery, when it does not hypocritically direct the masses towards religion for consolation. Nor are there “scientists” lacking to justify this mass starvation. Thus Prof. E. G. Conklin of Princeton University says: “Some of the weaker, according to the law of nature, will naturally die under the stress of the times. Others will not propagate their kind. The strong and hardy will survive and reproduce, and thus the human race will be strengthened.”4
Since the onset of the present economic crisis American workers and poor farmers, through unemployment, part-time work, wage-cuts, reduced prices for agricultural products, tax increases, etc., have suffered a general decline in their living standards of at least 50%. Prof. Leiserson estimates that the total income of industrial and office workers was about 22 billion dollars less in 1931 than in 1929, and this is supported by the figures of Business Week (Feb. 10). This is by no means offset by the decline in living costs which, according to the U.S. Dept. of Labor, amounted to 11.7% from June, 1929, until June, 1931. On the farms, the Alexander Hamilton Institute says, the average income per household has dropped from $887 in 1929 (already a crisis year in agriculture) to but $367 in 1931.
By these gigantic reductions in their real income masses of toilers of field and factory have been forced down to actual starvation conditions. Even before the crisis the working masses stood at the very threshold of destitution. The average wage of industrial workers during the height of “prosperity” did not exceed $23.00 per week. Consequently, the vast body of American toilers existed from hand to mouth. They had very little reserves. Paul Nystrom says that 9,000,000 people in the United States lived below the subsistence level.5 Then came the economic hurricane.
The result is real destitution, verging into actual starvation, on a broad scale in the United States, “Only in countries like India and China are there today larger numbers of workers suffering from mass unemployment, hunger, semi-starvation, disease and other manifold evils of wholesale poverty than in the United States—the richest country in the world,” says the Statement of the National Hunger Marchers to Congress, Dec. 7, 1931. “One-third to one-half of our population is at various stages ranging from hunger to the pressing danger of losing homes and farms,” says Governor LaFollette. The New York American, (Feb. 21, 1932), says: “Food is lacking in 81 per cent of the New York City homes that have been stricken by unemployment, the Emergency Unemployment Relief Committee reported last night.” William Hodson, executive director of the Welfare Council of New York City, informs us: “Relief in New York City is now on what might be called a disaster basis . . . the spectre of starvation faces millions who never were out of work before.” The Baltimore Post, (Mar. 11, 1932), declares; “40,000 face starvation in Baltimore.” An Associated Press dispatch of Mar. 23, 1932, from Tulsa, Okla., says: “Ten thousand persons have been living here since Nov. 1 on a charity ration costing six cents a day per person.”
So it is all over the country. The cities are full of “Hoovervilles” and breadlines, where tens of thousands of homeless, hungry workers are compelled to exist in tin can shacks and to stand for hours to get a miserable bowl of soup. Workers fall famished in the streets in front of stores and warehouses that are crammed with the necessaries of life. Daily we read in the capitalist press of families actually starving to death. No longer is it “news” for a confused and desperate unemployed worker to blow out his brains or to do away with his family.
The workers are losing wholesale the houses, radios, furniture, etc., that they so laboriously got together during the upward swing of American capitalism; thousands of farmers are losing their farms to the usurers. The Nation, (Mar. 23, 1932), says that in Detroit alone 50,000 workers lost their life savings in the collapsed banks, and similar huge losses have been suffered all over the country. In 1931, according to the New York Journal, (Jan. 28), 198,738 workers’ families were evicted from their homes in New York City for non-payment of rent. The worker’s life has become an endless round of worry and misery. The jails are filled to overflowing, thousands preferring prison rigors to life under the Hoover regime of “rugged individualism.” Prostitution spreads like a poison weed in every American city. Tuberculosis runs riot among the half-starved masses, and the hospitals are packed with sufferers of diseases bred of under-nourishment, etc., etc. To such a debacle has come the Hooverian pre-election promises of the “abolition of poverty,” “a chicken in every pot” and “an automobile in every garage” for the workers. And daily the whole maze of poverty, starvation, misery and death gets worse.
Manifestly, a fundamentally necessary measure against actual starvation among the workers is the establishment of a system of federal unemployment insurance, financed by the government and the employers. This must be of a permanent character, because what we have to deal with is not a temporary condition of unemployment, but a huge mass unemployment on a permanent basis. This, however, has not been done. The capitalists and their government have forced the workers into wholesale starvation which is now infesting the country like a plague.
The entire question of unemployment relief has been reduced to a charity basis. Although the worker has spent his life producing the wealth of the country, now when the capitalist system has broken down he is treated as a mendicant and a criminal. He is thrown a beggarly handout like a starving dog. Mr. Gifford, head of Hoover’s Emergency Employment Committee, boasted that in the 1931 Fall relief drive about $150,000,000 had been raised in the various localities. So far as the Federal government is concerned, this money (what the workers get of it after the grafters are through) has to last the unemployed for the whole year. Thus it figures out at about $1.00 per month for each of the 12,000,000 unemployed. In New York, richest city in the world, after a disgusting campaign of begging, $18,000,000 of Gifford’s fund was raised. This would give about $1.50 per month to each of New York’s 1,000,000 unemployed.
The unemployed relief program of the Hoover Government is a real hunger plan. It is the policy of the capitalist class and it has the support of both big parties and the A. F. of L. That the Progressives also agree fundamentally with it is shown by the new unemployment insurance law in Wisconsin. This law adds insult to injury. According to its beggarly provisions unemployed workers can receive only a maximum of $100 yearly. And this applies only to those now employed, for whom insurance funds will be gradually built up. As for the masses of those totally unemployed now and part-time workers, they are left out of consideration altogether.
If the capitalists have callously forced the toiling masses into starvation conditions they have, however, very carefully looked after their own interests. “During the first nine months of 1930, our national industrial and business system was able to and did pay $432,000,000 more in dividends and $191,000,000 more in interest than it did in 1929; in the first nine months of 1931, the second year of the depression, it paid $347,000,000 more in dividends and $338,000,000 more in interest than it did in the first nine months of 1929.”6 The Publishers Financial Bureau, (New York American, Mar. 19, 1932), states that the industrial dividends paid in 1931 are “the largest for any year previous to 1929.” Anna Rochester says: “In September, 1931, the New York Times reported that of 5,000 companies, 50% had continued dividend payments without reduction; 20% were paying smaller dividends; and only 30% had omitted payments entirely. . . . For October, 1931, the total dividends plus bond interest by a large group of corporations were only 4% below the high record of October, 1930.”7 Besides, every appeal of the bankers and other capitalists to the government for assistance has met with immediate response. The two billion dollar Reconstruction Finance Corporation has been organized and the Glass-Steagall inflation bill is being prepared to absorb the worthless paper of the banks and to underwrite the dividends of industrial corporations. And in the new Federal taxes the capitalists are further shielded from the economic effects of their own bankruptcy.
In the other capitalist countries starvation conditions also grip the masses. In Germany, with wages down 30% since the hunger period of 1929 and millions getting no unemployment benefits, actual famine exists in many cities. The great masses in England are almost as badly-off. In Poland miners got 69 cents a day and have recently had another wage-cut. And the offensive to cut wages and reduce unemployment benefits and social insurance in general goes on ever faster throughout Europe. In the colonial and semicolonial countries crisis conditions also prevail. Famine stalks in China and India. In Brazil, says E. Penno, Brazilian Public Health Director, “30,000,000 people are slowly dying of starvation, malaria and syphilis.” The world over, the bankrupt capitalist system is physically destroying the producing masses. The general crisis bids fair to outdo in numbers of human victims even the murderous World War itself.
All this is a picture of a society in decay. Great mills and factories standing idle and warehouses piled full of goods, while millions of toilers starve and lack the necessities of life—that is plain bankruptcy. Never until capitalism appeared upon the world scene was such an anomoly possible—starvation in the midst of plenty. The present great crisis is not only a glaring exhibition of the decline of capitalism, it is a crime against the human race.
THE WORLD economic crisis has dealt a shattering blow to capitalist complacency. Greatly alarmed, the capitalists dimly perceive its seriousness, without understanding its causes. Chadbourne, the sugar expert says: “Those who speak about these world depressions coming in cycles and this being one of these cycles are talking sheer nonsense. This is a depression for which there is no precedent.”8 Judge Brandeis says: “The people of the United States are now confronted with an emergency more serious than war.” Pope Pius XI declares: “The international crisis is too general to have been the work of men. It is evident that the hand of God is being felt.”
Over the world system of capitalism there grows a brooding fear of revolution. The capitalists cannot cure their deepening crisis and have been unable to check its progress. The old tricks and slogans for making capitalism “go” are no longer potent. Pessimism and confusion begin to appear in the ranks of the bourgeoisie. They start to see, not prosperity, but the revolution, “just around the corner.” Spengler asserts: “It is no mere crisis, but the beginning of a catastrophe.”9 The chief economist of the Stock Exchange, Dr. Irving Fisher of Yale, in a speech cited by the United Press on Jan. 3, of this year, issued “a warning to capitalism ‘to clean the dirt of depression’ from its foundation or be devoured by some form of Socialism.” In the recent debates in the House on the sales tax Rep. Rainey declared that the American people “are right up against Communism.” Mr. Raymond Fosdick, (New York Times, Dec. 27, 1931), shrinks at the prospect of a revolution, stating that: “Western civilization (read capitalism, WZF) has begun to look furtively around, listening behind it for the silent tread of some dread specter of destruction.” W. F. Simms, Scripps- Howard Foreign Editor, in a dispatch of Oct. 5, 1931, says:
“The object of these epochal comings and goings (the various international conferences), it is admitted behind the scenes, is nothing more or less than to prevent, not merely the collapse of this or that particular country, but of the white man’s universe as a whole. For recent events have driven Washington, London, Paris, Berlin and Rome to the startling realization that only some sane accord on international finances, economics and armaments and that promptly can prevent a general smash.”
Such elements among the bourgeoisie become especially lugubrious when they think of the Soviet Union. They begin to sense Communism as a higher and inevitable order of society. They more and more realize, as their own society goes deeper into crisis, that the U.S.S.R., forging ahead, is having a profoundly revolutionary effect upon the masses of starving workers and poor peasants still under capitalism. Prof. Pollock, a bourgeois scientist, at the 1931 World Congress for Social Planning, said:
“The Soviet Union has filled millions of workers and peasants with hope and belief in a better future and of the possibility of further progress. With us, on the contrary, things get worse every year. If capitalism is not capable of arousing equal enthusiasm and readiness for sacrifice in the masses, then there can be no doubt that they will finally choose the path of the Soviets.” It is well known, of course, that the European bourgeoisie, animated by such fears, are taking many precautions for their personal safety. But it is “news” that American capitalists feel the need for similar measures. In Liberty, Jan. 2, 1932, Cornelius Vanderbilt, Jr., says, speaking of the ultra-rich: “They see the possibility of long vistas of hungry faces in breadlines again this winter, and they fear the red specter of revolution. . . It is interesting to note that since the beginning of the depression the yachts of society millionaires (in New York Harbor) have invariably been anchored in places where their owners could board them on short notice.”
These dark forebodings are true expressions of the fear eating at the consciousness of the capitalist class. They serve to stimulate the offensive against the workers. But, of course, the general policy of the capitalists does not limit itself to spreading such pessimism. On the contrary, especially in the United States, they systematically cultivate optimism. As the capitalists intensify their drive against the workers’ standards of living, they at the same time increase their propaganda about the impending return of prosperity. The burden of their song is that this is “just another crisis,” that the crises of the past have been overcome and have been followed by “prosperity,” and that the same thing must happen again. The cultivation of such prosperity illusions is one of the principal methods of the capitalists to break the resistance of the workers against wage-cuts, starvation, relief systems, etc.
This pollyanna propaganda is best illustrated in the policy of the federal government. President Hoover started out, at the time of the Wall Street crash) by assuring everyone that this was only a financial bubble, that the great “prosperity” was safe. Then, when the industrial crisis was upon us on all sides, he assured us, March 8, 1930, that “the depression will be over in 60 days.” And from that time on every department in the government has harped upon a similar string. Undoubtedly, the effect of sowing such illusions has been to facilitate the wholesale cutting down of the workers’ living standards that has taken place. The theory that the crisis will cure itself and that all will be well again, is further classically illustrated by Prof. Taussig, who advises us: “Don’t spend too much; don’t hoard; don’t worry; just live normally and everything will right itself in due time as it has always done.”10
The capitalist optimists are wrong; the fears of the pessimists are justified. What we have to deal with is not “just another crisis,” which will soon liquidate itself and be followed by a higher and worldwide wave of “prosperity.” It is a profound economic crisis developing on the basis of a rapidly deepening general crisis of capitalism. Arising out of fundamental weaknesses of the present social system, it is setting on foot forces that are drastically undermining the very economic, political and social foundations of capitalism, and hastening that system ever faster towards the proletarian revolution.
IN ORDER to understand what is the matter with the capitalist system, why it is torn with economic crises, war and revolution and why it is sentenced to death as a social order, it is necessary to take at least a brief glance at the basic processes of capitalism. If this is done it is readily seen that the capitalist system is a shaky house built upon sand. It is full of incurable internal contradictions which cause its conflicts and crises, which deepen with the development of capitalism, which produce its decline and decay, and which must culminate in its revolutionary overthrow. Over 80 years ago Marx pointed out these innate weaknesses of capitalism.
The basic contradiction of capitalism, the source of all its weakness and of its final dissolution, is found in the fact that this system does not carry on production for the benefit of society as a whole but for the profit of a relatively small owning class. The great industries by which society must live are owned by private individuals who ruthlessly exploit the masses who work in these industries. Under capitalism production is regulated not by the needs of the masses but by whether or not the capitalist class can make a profit by such production; commodities are not produced primarily for use, but for profit.
The system of private ownership and production for profit generates the whole series of contradictions and conflicts—economic, political and social—which torment present day society, causing disruption in the economic life and violent struggles between individual capitalists, between social classes and between capitalist States. This maze of conflict turns around the two major contradictions into which the basic contradiction of capitalism resolves itself. The first of these is economic, the tendency of capitalist production to exceed the buying capacity of the masses and thus to cause crises of over-production. The second contradiction is social in character, the division of capitalist society into classes of exploiters and producers, with resultant class struggle between them. The first contradiction, making for the disruption of capitalist economy and the impoverishment of the masses, provides the objective conditions for eventual revolution; the second, organizing the political struggle of the toiling masses, prepares the subjective factor, the revolutionary working class.
Now let us examine briefly the first of these major contradictions, the tendency of capitalist production to outstrip the markets, to cause over-production. Over-production is inherent in the capitalist system because the toiling masses, robbed in the industries by the employers, are paid back in the shape of wages only a fraction of the value they create. The wage of the worker remains essentially at the subsistence level, regardless of his productive capacity.
This exploitation results in a piling up of commodities in the hands of the capitalists, for naturally a worker getting a wage of three to five dollars a day cannot buy back the ten to twenty or more dollars’ worth of commodities he has produced. This gap between his producing and buying powers widens by the constant increase in the workers’ productive capacity through machinery and the speed-up and also by the lowering of their standards of living. The gigantic booty in the possession of the capitalists is further increased by their wholesale robbery of the poor farmers by paying them low prices for their products, charging them monopoly prices for the commodities they must buy, loading them down with exorbitant taxes, usurious loans, etc.
The capitalists waste huge masses of these stolen commodities through luxurious living, by the creation of hordes of parasitic occupations, by immense military establishments and wars. They seek to dispose of them by export trade. But the surpluses are not exhausted by these means. There is an inevitable tendency to glut the market with unsaleable commodities. Even though, as now, the millions of producers, who make up the bulk of the population, may actually starve and die for want of the barest necessities of life, the market suffers from over-production.
This basic tendency of capitalism to over-production (while the masses starve) results in actual economic crisis because of the competitive character of the capitalist system. Under capitalism there is and can be no general plan of production to fit social needs. Capitalist production is anarchic. The innumerable individual capitalists and companies, ruthlessly exploiting the toiling masses, produce whatever they think they can sell by dint of sharp competition with each other. The results are, the impoverished masses not being able to buy back what they have produced, over-expansion of the industries, a general flooding of the markets and a hastening of the capitalist crisis of over-production.
But the basic tendency of capitalism towards over-production does not result in immediate and chronic industrial stagnation, because it is partially offset by a counter tendency towards the expansion of the capitalist market. Among the principal factors historically in this market expansion have been the extension of capitalism upon a world scale, with a consequent wide development of transportation and communication industries, the gradual conquest of the peasant and handicraft occupations and their re-organization upon a capitalist basis, the large increase in population in all countries, the building of elementary public services such as water and lighting plants in many countries, the huge growth of munitions making and the military establishment, etc.
These developments of the capitalist market have provided outlets for the investment of the capital robbed from the workers in the shape of surplus value. But the tendency for the market to expand has always lagged behind the tendency to clog the market with over-production. In consequence there is periodic need for the readjustment of these mutually antagonistic tendencies. These readjustments are the cyclical crises of capitalism.
Marx made the first analysis of the causes and consequences of these crises. Cyclical crises are common to all capitalists countries, including the United States, which has experienced 15 of such major economic disturbances since 1814. In the various countries the cycles have averaged from seven to nine years. The development of the capitalist system has not been even and steady, but by a series of jerks. The zigzag graph made by the cyclical crises is the normal graph of capitalist growth the world over.
The general course of the capitalist cycle is quite familiar. First, the upward trend, a period of industrial expansion, with rising prices and wages, an era of good employment, “prosperity” and optimism, gradually developing into a boom, with its characteristic orgies of feverish production, stock speculation, etc.; secondly, the downward trend, with the gradual surfeit of the market from excess production, slowing down of industry, wage-cuts, fall of prices, mass unemployment, financial “panics” and general economic crisis; and thirdly, the trough of the crisis, in which the productive forces are diminished and the choking surplus of commodities, in the low state of production, are consumed or wasted in various ways and the markets thus cleared for a fresh race between the swiftly expanding productive forces and the more slowly developing capitalist market.
But the cyclical crisis is more than an economic disturbance. It also greatly sharpens the major social contradiction of capitalism, the ever-active antagonism between the working class and the capitalist class. In economic crises the capitalists always seek to shift the economic burden onto the workers through wage-cuts, etc., and this still further stokes the class struggle. Hence, the capitalist cyclical crises have been especially periods of great strikes fiercely fought, growing class consciousness of the workers, etc.
The present economic crisis bears this cyclical character, but it develops under the special conditions of the deepening general crisis of capitalism, which profoundly change its character and deepen its effects in every direction.
THE TREND of capitalist development is not, however, a simple repetition of cycles, with capitalism necessarily having a broadened base and stronger sinews after each cyclical crisis. It is a bourgeois fallacy that production and exchange, in the long run, automatically balance each other under capitalism, that the capitalist market mechanically expands to accommodate the increased production. On the contrary, as we have seen, the capitalist system, in its very essence, leads to over-production. This tendency to over-production is vastly strengthened as capitalism develops. The productive powers of the workers more and more outrun their consumptive capacity. Thus the major economic contradiction of capitalism, that between production and exchange, becomes ever deeper and more devastating, and with it, like its shadow, grows an intensification of the revolutionary class struggle.
Capitalism can live only by a rapid extension of its market, so that the ever-increasing masses of surplus value robbed from the workers may be disposed of through new capital investment. Therefore, the widening of the gap between the productive forces and the consuming power of the impoverished masses progressively brings the whole capitalist system into broader and deeper crises, into sharper class struggle, and eventually into decay and decline. Karl Marx clearly foresaw the development of this general crisis of capitalism when, speaking of the manner of liquidating the cyclical crises, he said it was “paving the way for more extensive and more destructive crises and diminishing the means whereby crises are prevented.” As Varga says: “Each cycle is at the same time a step in the history of capitalism, bringing it nearer to its termination.”11 So far, in fact, has this general trend gone that the world capitalist system can be said definitely to have entered its period of decay. That is, capitalism no longer has to deal simply with cyclical crises, each of which left it upon a higher plane, but a growing general crisis, political as well as economic, which marks its decline as a world system.
The history of capitalist development may be divided into two general eras, industrial capitalism and imperialism. The former was the period of “healthy” capitalism, of its rapid rise and extension; the latter is the period of its decay and decline. As Lenin says, “Imperialism is the final stage of capitalism.” Regarding the early phase of capitalism, the Program of the Communist International states:
“The period of industrial capitalism was, in the main, a period of ‘free competition,’ a period of a steady development and expansion of capitalism throughout the entire world, when the as yet unoccupied colonies were being divided up and conquered by armed force; a period of continued growth of the inherent contradictions of capitalism, the burden of which fell mainly upon the systematically plundered, crushed and oppressed colonial periphery.”
Imperialism is the era of monopolistic capitalism. It has been analysed by Lenin in his Imperialism, which may be summarized as follows: (a), the concentration of industry and the development of trusts and other monopoly forms; (b), the concentration of banking capital and its amalgamation with industrial capital under the hegemony of finance capital; (c), the export of capital from the imperialist countries; (d), the division of the world among monopolistic unions of capitalists, cartels, syndicates and trusts; (e), the territorial division of the world among the great imperial powers.
The correctness of this elementary analysis is clear. It would serve no purpose to summon statistics to show the gigantic growth of trusts and powerful banks in all capitalist countries, and the supremacy of finance capital. The significance of the export of capital is that when it takes place it means that the faster developing productive forces have quite outrun the slower developing home market in the given country and that it becomes necessary to find foreign markets for the excess of capital and other commodities. All the great capitalist countries have reached this stage, England being the earliest and most classical example. The growth of the international trusts and cartels and “spheres of influence” are a matter of common knowledge. And as for Lenin’s final proposition, the division of the world among the capitalist powers with the growth of imperialism, he says: “In 1876 three powers had no colonies; and a third one, France, had hardly any. In 1914 those four powers had acquired a colonial empire of 14,100,000 square kilometers, or approximately one and a half times greater than the area of Europe, with a population of some 100,000,000 souls . . . the division of the world was ‘completed’ by the dawn of the 20th century.”12
The United States began clearly to show its imperialistic character about 1900. This was evidenced by the intensification of the growth of trusts, the rapid rise to dominance of the great banking interests, and by the beginnings of a system of colonies through the seizure of the Philippines, Cuba, Porto Rico, etc., and the development of “spheres of influence” in China, Latin America, etc. All these tendencies increased with the passage of the years, but it was only after the World War that American imperialism came to maturity. Fattening upon the slain of that great slaughter, with the other imperialist countries paralysed by the murderous struggle, American imperialism was able to export capital (including the war loans) to the gigantic amount of 27 billion dollars. It has widely penetrated into a score of Latin American countries, reducing them to semi-colonies. Its influence in Canada is tremendous. It tries, with its Young Plan and other financial schemes of enslavement, to reduce Europe to its control. It has a hand in every imperialistic robbery in China and Africa. With its great navy and potentially tremendous military establishment, it has become the most powerful and ruthless of imperialist powers, aiming at hegemony over the world.
The development of world imperialism enormously sharpened all the contradictions of capitalism. The major economic contradiction between the producing and consuming powers of the masses was vastly deepened. The productive powers were increased, the exploitation of the workers in the industrial countries and the colonial masses was intensified. The class struggle became more acute, the war danger more menacing. The great powers began to fight more relentlessly to conquer the lagging world markets to dispose of their choking surpluses of commodities, to win new sources of supplies of raw materials for their industries and to re-divide the world to their respective advantage. Capitalism began definitely to show signs of the developing general crisis.
The World War was a great clash of the sharpening imperialist antagonisms, an acute expression of the growing general crisis of the capitalist economy. It was an attempt of the various powers to solve their deepening problems by eliminating each other as competitors in the world market and by redividing the colonial world. The capitalist nations, developing with uneven tempo, could not tolerate the pre-existing division of markets and colonies. The great capitalist crisis which was the World War naturally caused a tremendous intensification of the class struggle. Revolutionary upheavals took place in many countries. The outstanding result was the loss to capitalism of one-sixth of the globe, Russia, and what prevented its losing Germany, Italy and several other countries were the counter-revolutionary activities of the Socialist parties against the revolutionary workers, which defeated the revolution in these countries.
After the great war and these revolutionary upheavals, which nearly killed it, capitalism got a brief breathing spell. By 1924 it had achieved what the Communist International called a “partial and temporary stabilization,” both economically, and politically. Economically this was based upon the replacement of the material destruction wrought by the war, catching up with the warcaused building shortage, and by investment of capital necessary to rationalize antiquated industries in various countries; and politically it was based on the defeat of the revolutionary attempts of the proletariat.
But this breathing spell for capitalism did not last long. The tendency for capitalist production to outrun the markets soon manifested itself stronger than ever. In a number of capitalist countries there has been an intense rationalization of industry. Thus in the United States, which is the extreme illustration, from 1923 to 1928 there was a total of 200,000 less workers required to produce 42% more in the industries.13 On the railroads a given quantity of freight is transported now by 33% fewer workers than 20 years ago.14 Tugwell shows increases in efficiency in the various industries, 1914 to 1925, of from 10% (meat packing) to 210% (automobiles).15 And in agriculture, 14% less farm workers produced 20% more crops in 1925 than in 1910.16 Besides, in the colonial and semi-colonial countries, such as India, China, Africa, Australia, etc., there has been considerable industrialization in spite of the determined efforts of the imperialist countries to prevent it and to retain these countries simply as markets for their manufactured articles and as sources of raw materials.
The purchasing power of the masses has in no sense kept pace with this increased producing capacity. On the contrary, there has been a vast crippling of the capitalist market through wholesale reductions in the real wages of workers and the incomes of farmers the world over; that is, by the widespread impoverishment and decline in the living standards of the masses. The result is a great clogging of the world markets and the present unprecedented economic crisis.
IN RECENT years, especially since the beginning of the present economic crisis, the process of the concentration of capital has been greatly speeded in all sections of capitalist economy and in all capitalist countries. In the United States this has been marked by the wholesale wiping out of small business, the mergers of banks, the liquidation of stock-holdings of the petty bourgeoisie, the confiscation of great areas of farm land by foreclosure, etc. This rapid concentration of capital intensifies all the contradictions of capitalism.
It has produced, together with the unparalleled depth and breadth of the economic crisis and mass starvation, previously discussed, many other manifestations which, in sum, constitute the general crisis and decay of capitalism in this, its final stage of monopoly and imperialism. Most of these decay factors were already in evidence, but the present economic crisis is greatly emphasizing and developing them. They sharpen the capitalist contradictions in every direction. They intensify the contradiction between the capitalist methods of production and exchange; they broaden and deepen the struggles between workers and capitalists, between the various capitalist countries, between the imperialist countries and the colonies, and between the two world systems represented by capitalism as a whole and the U.S.S.R. They are undermining the foundations and breaking down the very fiber of capitalism. They make more and more for industrial paralysis, mass starvation, war, revolution.
Some of the more outstanding of these manifestations of the growing general crisis are, without analyzing in detail the specific gravity of each:
(a) Over-expansion of Industry: In view of the limited capacities of the capitalist markets, there is a large over-expansion of the industrial plant in all the leading capitalist countries. This constantly grows more pronounced. The United States is a striking example of this condition. It is typically illustrated by the automobile industry with a capacity estimated at 10,000,000 cars yearly and a record output of but 4,500,000; the bituminous coal mines with a capacity of 750,000,000 tons yearly and an output (1929) of 535,000,000; the steel industry with a capacity of 65,000,000 tons and a maximum output (1929) of 56,000,000; textiles with 50% excess plant capacity, etc. Even in the greatest boom periods these capacities cannot be fully utilized. Such conditions, common to the most highly industrialized countries of capitalism, are not only basic causes of the economic crisis but also prolific breeders of the ultra-reactionary practices of the destruction of commodities and such dismantling of industry as the present proposal to tear out 100,000 British looms and 10,000,000 spindles.
(b) Chronic Industrial Stagnation: In the growing general crisis of capitalism there is an intensification of the whole phenomenon of the economic crisis. As Varga says: “Crises now follow more speedily upon one another, attain a greater depth, and shake bourgeois rule more violently than before.” Besides this, whole sections of the capitalist economy, even before the present crisis, had fallen into a state of more or less chronic depression. Thus England and Germany, the one with its foreign trade ruined and the other hamstrung by its imperialist rivals, had been in practically permanent crisis since the end of the war. Besides, the older industries (coal, textiles, shipbuilding, etc.) had suffered a similar stagnation in all industrial countries including the United States; only the newer industries (automobiles, chemicals, electrical, etc.) experiencing substantial growth and expansion. As for agriculture, it had been in a prolonged world-wide crisis of unprecedented dimensions, due primarily to a vast over-production of wheat, cotton, rubber, coffee, sugar, etc., caused by the lowered buying power of the world’s toilers, improved methods of production, increased acreage, etc.
The present economic crisis, despite eventual recovery here and there, will unquestionably intensify and spread this condition of chronic industrial stagnation. At the same time that the purchasing capacity of the producing masses drops, the rationalization of industry is proceeding apace, at least on the stronger sectors of capitalism. A. T. Sloan says, for example: “As a result of the readjustment and refinement that is going on, our industrial machine is more efficient, more effective from every standpoint than ever before in its history.”17 That is it exactly; more able than ever to flood the sickly market with a fresh mass of unsaleable commodities. We can be sure that the present economic crisis will involve the older industries and weaker sections of capitalist economy into still deeper and more permanent stagnation.
(c) Permanent Mass Unemployment: Throughout the leading capitalist countries, as one of the most basic features of the growing crisis of capitalism, is an ever-increasing army of unemployed. Capitalism, unable to provide work for the workers, faces permanent mass unemployment on a gigantic scale. This tendency was typically illustrated by the large army of jobless in England ever since the end of the World War, and by the fact that in the United States, even during the boom period of 1929, there were at least 3,000,000 unemployed. In Germany and England it has reached the point where many youths graduate from school and reach manhood without ever having had a job, and with little prospect of getting one. In the present economic crisis this permanently jobless mass of workers, full of fatal portent to capitalism, is being added to by many millions.18
(d) The Choking of International Trade: One of the sure signs of the decline of capitalism is the systematic strangling of international trade that is now taking place. This is being done principally by high tariffs and under slogans of “economic nationalism” and “autarchy.” In their bitter fight for markets, the capitalist countries generally have adopted the double-phased policy of high tariffs and dumping. Tariffs everywhere are at unprecedented heights and constantly going higher. “Free trade” England has now become a leader in this reactionary movement. The general result is to greatly intensify the industrial paralysis and trade stagnation. The tendency is for each capitalist country to wall itself off from the commerce of the others. Mussolini says: “This blockading of the free flow of trade has caught hold of the world and the grip is placed like that of a powerful wrestler on his adversary. It cannot move its component parts and though it writhes and rebels it is helpless.”19 Then, to show what a constructive program Fascism has, he jacks up the Italian tariff a few notches and launches a “Buy Italian” campaign to match the “Buy British,” “Buy French,” etc. movements. This “economic nationalism” cannot lessen, but must intensify the general crisis of capitalism.
(e) The Breakdown of the Medium of Exchange: An important sign of the general weakening of capitalism is the breakdown of the medium of exchange in the individual countries and internationally. More than half of the capitalist world is now off the gold standard, and the percentage constantly grows; in every capitalist country, including the United States (Finance Reconstruction Corporation, etc. ) , various systems of inflating the currency are in effect. Not only are the individual capitalist countries of themselves unable to maintain a stable currency, but, in their brutal struggles with each other, they are breaking down the capitalist exchange medium generally. They fight to bankrupt each other. The raid on the mark early in 1931 smashed the German and Austrian financial system, compelled the United States to grant the moratorium, forced Germany and Austria to their knees before French imperialism and almost provoked a gigantic economic collapse in Central Europe. The raid on the pound following soon after drove Great Britain off the gold standard, wrecked the Labor government and deposed London as the world’s money center. Then came the raid on the dollar, which cost the United States the loss of $500,000,000 in 20 days and which menaces the gold standard in this country. All this was tied up with the internecine struggle over the question of the international war debts and reparations.
(f) The Development of Fascism: Another of the pronounced symptoms of the decline of capitalism is the growth of Fascism in various forms in all capitalist countries. The capitalists, faced with the task of drastically slashing the living standards of the workers and poor peasants and, where the political crisis is acute, the job of trying to save the capitalist system itself, no longer find adequate their bourgeois “democracy,” of which the Social Democracy is a part, to hold the rebellious masses in check. Consequently, with the aid of the Social Democrats, or Social Fascists,20 they are transforming the masked “democratic” capitalist dictatorship into open Fascist dictatorship, with its extreme demagogy and use of violence against the workers and poor peasants. Mussolini is not the symbol of a new era of capitalist development, but the sign of a decadent system of society vainly trying to hold back the clock of social progress.
(g) The Birth of a New World Social System: The most significant of all signs of the decline of capitalism is the rise of the Union of Socialist Soviet Republics. Capitalism no longer stands dominant in the world with its only rival the declining remnants of feudalism. Today it faces a new and deadly rival, the forerunner of the new world social order. The rise of the Soviet Union enormously weakens the world capitalist system. Capitalism has thereby lost territorially one-sixth of the globe, and it is rapidly losing more to the Chinese Soviets; it has lost control of the great markets and raw materials of what was old Russia; it suffers enormously in loss of prestige in the comparison of its industrial crisis and generally decadent conditions with the great advance of the U.S.S.R.; it confronts the deadly menace of its workers inspired and organized by this great example of the success of Socialism. And all these losses and dangers for capitalism in the rise of the U.S.S.R. will increase as time goes on.
To the foregoing signs of the growing capitalist crisis and decline many more could be added, including the increase of the socially parasitic classes of mere bond clippers, the growth of artificial stimulants for the market such as instalment buying, the reversion to pre-capitalist forms of production and barter, the smothering of inventions and improved methods of production, etc. But most significant are the menacing danger of war and the world-wide revolutionary upsurge of the toiling masses.
WAR is inevitable under the capitalist system. Imperialism is the era of great world wars. The capitalist imperialists consciously use war as a weapon for furthering their interests just as they do tariffs and dumping. They cold-bloodedly send millions to slaughter in order to eliminate their imperialist competitors and to reduce whole populations to their programs of exploitation. The general crisis of capitalism, with its vastly sharpening antagonisms, is fast driving capitalism to a new world war; in fact, war is already here, in Manchuria and China proper. Only 14 years after the great “war to end all war” we stand on the brink of a still more frightful shambles.
How deliberately capitalists consider war as a necessary part of their business was shown by the New York correspondent of the London Daily Telegraph who, on Dec. 23, 1916, wrote: “The rumors of peace which were current during the last week caused alarm on the New York Exchange and a sharp drop in the value of bonds. The price of wheat dropped heavily. Everybody is talking about the disasters which will occur upon the conclusion of peace.” Now the capitalists of the world are just as cynically looking to war as the broad way out of the present crisis. They see in mass murder on the battlefields the way to make business good with bonanza profits for themselves. They are circulating propaganda among the unemployed workers that war is the only way to restart the crippled industries, to do away with unemployment. They prepare war to beat back the advancing world revolution, to overthrow the Soviet Union. The cynical militarist, General William Mitchell, says: “Many nations think that at this time a foreign war would do them a great deal more good than domestic insurrection and revolution.”21
But capitalism, characteristically, hides its war plans behind a mask of pacifism. This is to throw dust in the eyes of the masses who would rebel against a frank statement of imperialist war aims. As the war nears the capitalists multiply their camouflage peace conferences, disarmament meets, etc., behind which the preparations for war proceed ever faster. For modern warfare pacifism is just as necessary as airplanes. It is characteristic of capitalist pacifist hypocrisy that the principal architect of the militaristic French imperialism, Briand, is hailed as the great apostle of international peace.
The League of Nations is not a peace-striving institution, as the capitalists and their Social Fascist flunkeys would have us believe; it is a grouping of imperialist bandits intent only upon their own schemes of mass exploitation and war making. The Kellogg Pact, instead of being, as Nicholas M. Butler says, “the supreme act of the age in which we live,” is a monstrous lure to blind the masses to the slaughter that is being prepared. In Manchuria, Japan, a member of the League and a signer of the Pact, wiped its feet on this “scrap of paper” and exposed the League of Nations’ imperialist character. And what could be more bankrupt than the present “disarmament” conference of the League now being held in Geneva.
The Social Fascists and bourgeois pacifists who support the various “peace” plans of the capitalist governments (while at the same time they vote the war budgets) are only catspaws; they play the game of imperialism by creating illusions among the masses that the warlike capitalist governments actually want peace. Only by the mass resistance of the workers can the war plans of the capitalists be delayed; only when the toiling masses have defeated the world bourgeoisie can war be abolished altogether.
Behind the smoke-screen of pacifism war armaments pile up. Now they are greater than ever before in “peace” times. Over 10,000,000 men are now under arms and 35,000,000 are in reserve. The total world military expenditures are now 5 billion dollars yearly, against 2½ billion in 1913, with the United States expending far more for its armed forces than any other nation.22 If the price index is taken as a basis it is found that since 1928 military expenditures of the principal powers have increased as follows: United States 48%, Japan 40%, France 43%, Italy 25%. The following figures show the large increases in the direct military outlay of the five great powers, the United States, Great Britain, France, Japan and Italy:
| 1914 | $1,182,000,000 |
| 1923 | $1,828,000,000 |
| 1928 | $2,167,000,000 |
| 1930 | $2,324,000,000 |
These huge expenditures are being accompanied by an unheard-of militarization and mobilization of the masses and the whole industrial system for war. New and hideous weapons are constantly being devised for mass murder; frightful poison gases and germ bombs; airplanes, tanks, submarines, etc., a hundred times more efficient at wholesale killing of human beings than during the World War. The decadent capitalist system, fighting to prolong its anti-social existence, menaces the very life of the peoples with its program of mass slaughter.
What these murderous war preparations mean is indicated by the jingo General Mitchell, who is trying to stir up a war against Japan. He says: “These (Japanese) towns, built largely of wood and paper, form the greatest aerial targets the world has ever seen. . . Incendiary projectiles would burn the cities to the ground in short order. An attack by gas, surging down through the valleys, would completely blot their population out.”23 And even as I write these lines, Japanese planes are bombarding and burning Shanghai, slaughtering thousands of non-combatants. Stuart Chase, under the heading, “The Two-Hour War,” gives a vivid picture of the new capitalist war-makers in action:
“War is declared. Nay, war is only threatened—for he who speaks first, speaks last. In Bremen, or Calais, a thousand men climb into the cockpits of a thousand aircraft, and under each is slung a bomb which the pressure of finger may release. A starting signal, an hour or two of flight—one muffled roar after another as the bombs are dropped per schedule—and so, the civilization which gave Bacon, Newton, and Watt to the world, comes, in something like half an hour, to a close. Finished and done. London, Liverpool, Manchester, Lancashire, Bristol, Birmingham, Leeds. Not even a rat, not even an ant, not even a roach, can survive the entire and thorough lack of habitability.24
The world stands in the most imminent danger of such a horrible blood bath. The whole capitalist system is a maze of acute war antagonisms, bred of and stoked by the increasing general capitalist crisis. The deeper the crisis, the more acute the war danger. Growing Fascism, with its intense nationalism, renders the danger all the sharper. The war antagonisms flare up between the various capitalist powers, between the imperialist countries and the colonial and semi-colonial countries, and especially between world imperialism and the Soviet Union. In order to preserve their system of exploitation the capitalists are proceeding direct to a slaughter, beside which that of 1914-18 will seem pale, and which may well result in the destruction of the capitalist system. But, of this, more anon.
Among the great capitalist powers there exist many antagonisms, any of which may produce a devastating war, and these antagonisms constantly become more acute under the pressure of the deepening crisis of capitalism. Of them the more important are: the struggle between the United States and Great Britain for world imperialist hegemony;25 the conflict between the United States and the rising system of French imperialism; the four-cornered fight between the United States, Japan, Great Britain and France for domination of the Far East; the struggle between Great Britain and France for financial supremacy and general leadership in Europe; the struggle of France and her vassal States (Poland, Rumania, Czecho-Slovakia, etc.) to choke Germany into submission and to hang on to their Versailles Treaty blood booty; the sharp antagonisms between France and Italy over control of the Mediterranean area; the tangle of potential war conflicts in the Balkans; and, of present special acuteness, the struggle between the United States and Japan for imperialist control in the Far East. In short, world capitalism presents the picture of a medley of hostile imperialist groupings preparing inevitably to cut each other’s throats, and if they have not already done so it has been chiefly from fear of revolutionary upheavals of the workers. The antagonisms between the imperialist countries and the colonial and semi-colonial countries likewise grow constantly more sharp. Stalin says: “The European bourgeoisie is in a state of war with ‘its’ colonies in India, Indo-China, Indonesia and Northern Africa.”26 One of the basic indications of the growing decline of world capitalism is the weakening of the hegemony of the imperialist powers over the colonial countries, the necessity of the imperialists to use more and more armed force against the colonies. These growing conflicts are caused primarily by the attempts of the imperialist countries to shift the burden of the crisis onto the colonial countries by means of intensified exploitation of the peasants and workers, tariffs, high taxes, the crippling of local industry, etc., all backed by imperialist troops, and by the rebellion of the colonial masses against this impoverishment. Great Britain, in increasing collision with its dominions, Canada, South Africa, Australia and Ireland, over the tariff and other questions, proceeds with armed force, under the leadership of the “Socialist” MacDonald, to crush rebellious India. France maintains its grip perilously upon Indo-China by “fiercest terror, mass shootings, the annihilation of whole villages by French occupational troops.” Japan carries out its colonial policy by the armed conquest of Manchuria. And American imperialism, to hang onto its great Latin-American hinterland, finds necessary an ever-greater terrorism by its puppet governments in Cuba, Nicaragua, Chile, Salvador, the Philippines, etc. In all these situations lurks the danger of sudden and far-reaching war.
But the greatest and most imminent of war dangers is that between world imperialism and the Soviet Union. This antagonism is the most fundamental of all economic, political and social conflicts. The major political objective of world capitalism is to overthrow the Soviet government. The capitalists’ central world strategy is to bridge over their own contradictions sufficiently to enable them to make a united front in war against the first Workers’ Republic. Ingrained in the very fibre of world imperialism is the slogan, “Death to the Soviet Union.” This is the struggle between two antagonistic world systems, capitalism and Socialism. It grows ever sharper with the deepening of the general capitalist crisis. Upon this central contradiction capitalism will eventually break its worthless neck.
In 1918-20, at the very birth of the Soviet government, France, Great Britain, United States, Germany, Japan, Czecho-Slovakia, Poland, etc., sent their armies against the revolutionary Russians. But these armed assaults were defeated by the Soviet forces. The imperialist powers, faced by dauntless revolutionary soldiers, fearing revolution at home and learning to their dismay that their armies of workers and peasants often mutinied rather than fight against the Russians (this being the case also with the 310th United States Infantry at Archangel), had to abandon for the time being their program of violent overthrow of the Soviets.
But the capitalist powers did not give up their counter-revolutionary determination. With French and American gold they built a steel row of armed Fascist States along the Russian border; they established an economic, financial and political boycott against the Soviets; they sabotaged the Russian industries from within; they worked ceaselessly with their Social Fascist tools to discredit the Soviet Union among the workers of the world, as a preparation for a new armed attack. With the manifest success of the Soviet regime, especially the great victories of the Five- Year Plan, the capitalists have redoubled the attacks against the Soviet government. They have flooded the world with anti-Russian propaganda—charges of red imperialism, dumping, forced labor, red plots, religious persecution, etc. France has been the most militant in all this. Hardly less active also is the United States, with its policy of non-recognition, trade restriction, financial blockade, Fish committee propaganda, etc.; this country, the world center of capitalism, has always viewed with undisguised hatred the world center of Communism, the U.S.S.R.
In 1929 the imperialists made an effort to provoke an anti-Soviet war by the seizure of the Chinese Eastern Railroad through subsidized Chinese generals. But this was defeated by the prompt and victorious action of the Red Army. And the exposures made in the famous trials of the Industrial Party and the Mensheviks broke up the plans for an armed intervention against the U.S.S.R., scheduled to take place in the Spring of 1931 under the leadership of the French General Staff. Doubtless, the great stores of wheat assembled at that time by the Federal Farm Board were to have been used to provision this war.
Now, in the Manchurian invasion by Japan, world imperialism is developing a new and still more dangerous attack against the Soviet Union. In its present imperialist war against the Chinese, Japan has clearly in mind the following objectives: (1), the dismemberment of China and the capture of its markets; (2), the crushing of the rapidly spreading Chinese Soviets; (3), the establishment of a strong base in Manchuria from which to launch an early attack upon the Soviet Union. The deliberation with which Japan is developing this strategy against the U.S.S.R. is indicated by the following quotation from a memorandum presented on July 25, 1927, by the then-Premier, Tanaka, to the Mikado:
“The Chinese Eastern Railway will become ours just as the South Manchurian Railway became ours, and we shall seize Kirin as we seized Dairen. It seems that the inevitability of crossing swords with Russia on the fields of Mongolia in order to gain possession of the wealth of North Manchuria is part of our program of national development.”
While the general strategy of world imperialism is to develop the attack against the Soviet Union, this does not go forward on the basis of a solid bloc or united front of all its leaders with Japan, spearhead of imperialism, in China. This is because the violent antagonisms between the imperialist powers prevent such a firm unity. France, which actively prepares the offensive against the U.S.S.R. through Poland, etc., is solidly united with Japan and supports it. But England maneuvers against France and Japan and has its eye on its Chinese interests, especially in the Shanghai district. As for the United States, it views with alarm the strengthening of its traditional enemy in the Pacific, Japan.
But all these powers are violent enemies of the Soviet Union, and their mutual antagonisms do not prevent the development of the imperialist attack generally against the U.S.S.R. In the International Press Correspondence, Mar. 10, 1932, a writer puts the situation thus:
“The sharpness of the imperialist antagonisms renders difficult the formation of new groupings of power. But—as the Japanese campaign in Manchuria and in the Yangtse valley shows—it not only does not form an insurmountable obstacle to the immediate war preparations but is also no obstacle preventing the world from creeping into the world war, into military intervention against the Soviet Union. As experience shows, these groupings are formed at the outbreak and partly even in the course of war, in the carrying out of military operations.”
The danger of imperialist war against the U.S.S.R. is now most acute. The imperialist bandits are trying to force the Soviet Union into the Manchurian war. That is the purpose of Japan’s studied insolence and provocation, its massing of troops on the Soviet border, its organization of the counter-revolutionary White Russians. And the significance of the attempted assassination of the Japanese ambassador in Moscow by Vanek, a Czecho-Slovakian diplomat, was that France tried to organize another Sarajevo. Only the steadfast peace policy of the Soviet Union has prevented its being enmeshed in war. But there is a limit to such provocation. As Molotov says: “We do not need an inch of any other country’s land; but neither will we give up an inch of ours.”
The capitalists clearly intend to thrust war upon the Soviet Union. Their offensive may easily come during 1932. The deepening general crisis of their own system and the growing successes of the U.S.S.R. inevitably drive them on to this war. It is a situation that should arouse every worker to fight against the robber war on China, and to rally in defense of the Soviet Union. When the capitalists, to save their bankrupt system, launch their armed attack upon the U.S.S.R. to destroy its new Socialism, they must be taught a revolutionary lesson from which their system of robbery and misery will never recover.
THE MOST basic indication of the growing general crisis of capitalism and its decline as the social order is the increasing revolutionary upsurge throughout the world. The toiling millions, finding it impossible to live in the starvation conditions everywhere developing, are gradually getting ready to wipe out capitalism and to establish Socialism. In his profound analysis of capitalist society, Marx says:
“Along with the constantly diminishing number of the magnates of capital . . . grows the mass of misery, oppression, slavery, degradation, exploitation, but with this grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of capitalist production itself.”27
Reformist Socialists have always violently attacked this conception of growing working class pauperization and revolt. They have put in its stead their own theory of the gradual rise in the standards of the workers and their progressive acceptance of capitalist evolution as the way to Socialism. For a period, during the rise of imperialism in the leading industrial countries, bringing about improved conditions for the labor aristocracy, largely at the expense of the exploited colonial masses, the workings of Marx’s principle were somewhat obscured. The opportunist Socialists were able to lend an air of plausibility to their bourgeois theories about the advancing standards of the working class under capitalism.
But now, with the development of the general crisis of capitalism, the truth of Marx’s formulation stands out with crystal clearness. Truly, as the Communist Manifesto says, “pauperism develops more rapidly than population and wealth,” and “it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society . . . because it is incompetent to assure an existence to its slave in his slavery, because it cannot help letting him sink into such a state that it has to feed him, instead of being fed by him.” That is, on the one hand, as we have already seen, there is mass impoverishment developing upon the most gigantic scale, and on the other, as we shall now indicate, there is the growing revolt of the workers, so clearly foreseen by Marx.
The revolutionary upsurge of the workers and peasants is worldwide. It varies in intensity, corresponding to the uneven development of capitalism in the several countries, from intensified strike movements to actual struggles for power. Its tempo is greatly increased by the deepening of the capitalist crisis. Hoover had a smell of its significance when, in his message to Congress on Dec. 8, 1931, he informs us that: “Within two years there have been revolutions or acute social disorders in 19 countries, embracing more than half the population of the world.” The resolution of the XI Plenum of the Executive Committee of the Communist International, (April, 1931), thus analyses the situation:
“There has been a further increase in the revolutionary upsurge bound up with the sharp reduction in the standard of living of the working class, the monstrous development of unemployment, the ruination of the office workers and urban petty bourgeoisie, the mass robbery of the peasantry, the extreme impoverishment of the colonies and the growing revolutionizing role of the U.S.S.R.
“The growing revolutionary upsurge found expression in: (a) the further intensification of the strike struggle and the unemployment movement, (b), the development and strengthening of Soviets and of the Red Army over a considerable area in China, (c), the growth of the revolutionary movement in the colonies, (d), the development of the revolutionary peasant movement, (e), the growth of the political and organizational influence of a number of important Communist Parties (Germany, China, Czecho-Slovakia, Poland), (f), the sharp intensification of oppositional ferments within the Social Democracy, (g), the growth of an opposition among the petty bourgeois masses of the towns, office employees and civil servants.”
In the months since the foregoing was written the revolutionary upsurge has been accelerated on every front. In the industrial countries of Europe the strike movement has been greatly broadened and intensified, in spite of the efforts of the powerfully intrenched Socialists to stifle all struggle. The strikes are more numerous, they include more workers and they are more militantly carried on. During this period one of the most striking events was the mutiny of the British Navy sailors against a wage-cut. This affair sent a shiver along the spine of the world bourgeoisie.
The United States is not exempt from the developing world-wide movement of struggle. American workers, faced by intolerable conditions, are also exhibiting the characteristic signs of radicalization. During 1931 the number of strikers doubled over the previous year. A series of important strikes have been carried on (coal miners in Western Pennsylvania, Ohio, West Virginia, Kentucky and the anthracite districts, textile workers in Lawrence, Allentown, Paterson, etc.) in spite of the rankest betrayal by the A. F. of L. leadership, all these strikes being very militant in character. The unemployed are also showing increased radicalization, indicated by such important movements as the National Hunger March, the Ford Hunger March, the big demonstrations in Chicago, Cleveland, etc.; notwithstanding the extreme brutality of the police, nine workers having been killed in the three latter movements. The Negro workers, in strikes and unemployment movements, have been distinguished for their militancy, the Camp Hill and Scottsboro outrages being attempts of local authorities to terrify them. Among the skilled workers a striking demonstration of the radicalization taking place is the rank and file referendum of unemployment insurance in the A. F. of L., a movement involving hundreds of thousands of workers and going directly contrary to the policy of the reactionary leadership. These are only a few indications of the deep-going radicalization now taking place among the American working class. But, of this subject, more will be said in Chapter IV.
In Germany events are moving towards a revolutionary political crisis. The masses of workers, in spite of Socialist treachery and Fascist repression, are preparing to free themselves from the tyranny of the Versailles Treaty and its Young Plan, and with it, from the capitalist system itself. The Communist party, rapidly growing, now counts almost five million votes. The proletarian revolution advances irresistibly in Germany. It is in the vain hope of defeating it that the employers are building up Fascism through the Social Fascists, the Bruening government and the Hitler movement.
Poland is another country where the revolution begins to menace capitalism. The industrial and agrarian crises are acute. More than half the workers are either wholly or partly unemployed. One wave of wage-cuts follows another. The peasants are expropriated in masses for non-payment of rent. The country is burdened with militarism. The various national minorities are ruthlessly repressed. The country is stagnant from the loss of its former Russian markets. In this situation the Communist party, in spite of the ferocious terror of Pilsudski and Social Fascist treachery, steadily gains ground. The workers and peasants are becoming rapidly revolutionized. Great strikes, unemployment demonstrations and anti-tax and rent movements in the villages develop in rapid succession. There is a revolutionary storm brewing.
Spain is also a country where capitalism faces a developing revolutionary crisis. The producing masses suffer intolerable exploitation and misery from capitalist and semi-feudal conditions. The first phase of their revolt swept away the monarchy; now it turns sharply against capitalism itself. Social Fascist, Anarchist and Syndicalist illusions still act as a brake on the movement, but the revolutionary Communist party constantly becomes stronger. The recent seizure of many towns and villages and the hoisting of the red flag are forerunners of the revolutionary struggle that is on its way.
Throughout the whole Asian colonial and semicolonial world the revolutionary upsurge manifests itself upon a gigantic scale. The basic trend of the hundreds of millions of toilers in these countries is towards Socialism, not capitalism. The efforts of the national bourgeoisie, led by the Gandhis, Chang Kai Sheks, etc., to build up a powerful capitalism shatter themselves upon the rocks of the world industrial and agrarian crisis, the determination of the imperialists (to whom the native bourgeoisie always surrenders) to prevent the industrialization of the colonies, and the revolutionary struggles of the vast masses of incredibly exploited and impoverished workers and peasants. Under the increasing leadership of the Communist International, these revolutionary national struggles develop more and more, not only into fights again American, British, Japanese, French and Dutch imperialist domination, but against the whole capitalist system. Asia is now undergoing profound revolutionary developments.
In China, 70,000,000 people are already living under the Provisional Chinese Soviet government, organized Nov. 7, 1931. The Chinese Red Army controls one-sixth of China and is constantly spreading its influence. It is now hammering at the gates of Hankow. Strikes and peasant movements develop in many other parts of China. The prestige of the Kuomintang diminishes; that of the Communist party rises. “Everywhere a decided swing to the left is evident” said a New York Times Chinese correspondent on Jan. 20, 1931. And 11 days later another said in the same paper: “Again the Communists are making rapid progress in organizing town and country Soviets as rapidly as they overrun new territory . . . the peasants and common people are giving a hearty welcome to the returning Communists. They say that after comparing their status under previous Communist rule with the bad government and confiscatory taxation enforced upon them after the arrival of the Nanking troops last Summer, they enjoyed greater liberty and a greater degree of prosperity under the Reds than under Nanking.” It was largely the fear of the growing Chinese revolution, its tremendous effect upon the vast millions of Asia, the danger of a great Russian-Chinese Soviet Union, that determined the imperialists upon their present war to partition China and to lay the basis for an attack upon the Soviet Union.
In India the revolutionary struggle, while not so advanced as in China, rapidly gains momentum. The masses of peasants and workers are beginning to break with the counter-revolutionary non-resistance policies of Gandhi, which paralyze their struggle and enable a handful of British troops to rule the country. The failure of the London Round Table Conference is being followed by a great intensification of revolutionary activity in India. Over 50,000 “politicals” are in jail. The newly-organized Communist party consolidates itself and strengthens its position. Great strikes, militant peasant movements, etc., which sharpen to the point of armed clashes with the government, are the order of the day in India. And the revolutionary blaze will spread, despite the announced policy of the “Socialist” Ramsay MacDonald’s government to “make a desert out of India.” British imperialism and Indian capitalism have nothing to offer the Indian workers and peasants but starvation; and the inevitable reply of the latter will be revolution.
In Indo-China, controlled by French imperialism, a similar revolutionary foment exists. Despite terrific repression by French troops, there is a growing wave of strikes, mutinies, seizures of food supplies and local governments, leading to armed conflicts and guerilla warfare. In the North, where the influence of the Chinese revolution is strong, there has been the formation of local Soviets. This deepening revolutionary movement is mainly under the leadership of the Communist party.
In Latin America there is also to be seen the growing revolutionary foment common to all colonial and semi-colonial countries, although not yet in such acute form as in Asia. The conditions of the workers and peasants, in the deep industrial and agrarian crises, go from bad to worse. A growth of revolutionary spirit is everywhere evident. During the past three years many governments in South America have been overthrown by coups d’etat. While these “palace revolutions” were largely engineered by American and British imperialism in their struggles against each other, they nevertheless had as a background the discontent of the masses. This discontent, by undermining the strength and prestige of the existing governments, made it easy for rival imperialist agents to overthrow them. In recent months, however, the struggles in Latin America assume a more revolutionary character. The working class and radicalized peasantry are developing real mass movements. The Communist parties are becoming more and more the leaders. This development of revolutionary struggle in Latin America is exemplified, among other events, by the Chilean Navy mutiny and general strike, the Peruvian general strikes and armed struggles, the big Cuban strikes and the revolutionary struggles in Salvador. In the latter upheaval, for the first time in the Western Hemisphere, local Soviets were established. We may expect further and still more important revolutionary developments in Latin America in the near future.
THE GENERAL capitalist crisis heads inevitably, but not at the same speed in all countries, towards the revolutionary overthrow of the world capitalist system. To the American with a bourgeois outlook, such a perspective will seem remote indeed. The American capitalism that he comes in contact with appears strong and no revolutionary danger seems to loom from the toiling masses. But the perspective of revolution in general and in the United States in particular cannot be determined simply upon the basis of the present situation in this country. American capitalism is part of the world capitalist system, subject to its general laws and bound up with its fate. This is the first point to be borne in mind.
The second is Lenin’s theory of the “weakest link.” The world capitalist system, as Marx has taught us, is not of uniform strength in all its parts. Hence, because of its uneven development in point of time, extent, etc., in the several countries, it is like a chain of stronger and weaker links. The revolution advances, not by breaking the chain simultaneously everywhere, but by beginning the break at the weakest links. Old Russia was such a weak link and the Russian revolution was such a break.
The capitalist chain, with the progress of the general capitalist crisis, is becoming full of weak links. The entire chain is weakening. As we have seen, among the especially weak links are Germany, Spain, Poland, China, India, etc. So far has the capitalist crisis developed in these countries that the toiling masses may make a revolutionary break through at any time, with disastrous results upon the whole chain. Such revolutionary breaks may come either as an accompaniment of imperialist war, or by the maturing gradually of the inner contradictions of capitalism in a given country, culminating in a struggle for power by the workers and toiling masses. And world capitalism is faced with imminent danger from both these directions, which are, of course, intimately related to each other.
The revolutionary danger to the capitalist system from the developing war situation is acute and menacing. If and when the imperialist powers launch a great war among themselves we may be sure that in many countries the workers and peasants, following the famous strategy of Lenin and under the leadership of the Communist International, will transform the imperialist war into a civil war against the capitalist system. The World War of 1914-18 resulted in the formation of the first Soviet Republic; another great war can well produce a Soviet Europe.
Capitalism will run no less a danger for its existence when it launches its eventual attack upon the Soviet Union. The Japanese were astounded at the brave resistance put up by the half-armed Chinese soldiers in Shanghai, fighting to defend their country from imperialist invasion. And the capitalist powers that attack the Soviet Union will be doubly and fatally surprised when they go against the Red Army. They will learn that their drafted masses of workers and peasants will have no taste to fight their Russian brothers; they will find out also that revolutionary soldiers fighting for Socialism are worth many times their number of toiler soldiers pressed into the service of capitalism. The capitalists will learn, finally, that they will have to face their aroused workers at home, for the defense of the Soviet Union will be carried out not only by the Red Army but by the militant working class all over the world. And the way this job will be done will bode ill for capitalism.
But the development of the revolution does not depend upon the initiation of imperialist war. As we have remarked, it also grows out of the sharpening of the economic and eventually political crisis within the given countries. This revolutionary process now goes ahead on a world scale with the deepening of the general crisis of capitalism. We have seen how rapidly the revolution approaches in this way in Germany and other countries.
The proletarian revolution in Germany would be a deadly blow to the whole capitalist system throughout the world. Such a revolution would in all probability draw with it Poland and other countries on the Russian border. Thus, with the U.S.S.R., there would be created a gigantic Soviet bloc. This great Soviet Union, supported by the growing revolutionary movement in the remaining capitalist countries, would be well able to defend itself from the inevitable military attacks of the capitalist imperialists. More than that, it would certainly be in a dominant world position as against the decadent capitalist system. The center of gravity in the world relation of class forces would be shifted definitely on the side of the revolution. These far-reaching possibilities are now, with the sharpening of the crisis in Germany, already within the scope of practical political perspectives.
When the situation is thus looked at from the Marxist-Leninist conception of capitalism as a world economy, when it is realized that the capitalist system is like a chain of stronger and weaker links, and when it is seen how imminent a revolutionary break becomes in some of these links, and how disastrous to world capitalism such a break would be, then the perspective for the American revolution looms up in a quite different manner than though we kept our eyes fastened solely upon the immediate situation in this country. American capitalism, like capitalism in other countries, is travelling the same road to revolution. The chronological order of the United States’ entry into the developing revolution is, as yet, a matter of speculation; but it would be sheer assumption to conclude that because this is the strongest capitalist country, it will be the last to go into revolution. One day, despite the disbelief of the capitalists and of their still more cynical Social Fascist lackeys, the American workers will demonstrate that they, like the Russians, have the intelligence, courage and organization to carry through the revolution. The American capitalist class, like that of other countries, is living on the brink of a volcano which, sooner than it dreams, is going to explode. George Bernard Shaw is right: the time will surely come when the victorious toilers will build a monument to Lenin in New York.
It is upon the background of this growing general crisis of capitalism that the present economic crisis develops. That is why it is of such unprecedented scope, depth and duration. Those who compare the prevailing crisis with the cyclical crises of the pre-war period are deluding themselves, living in a realm of false hopes. The pre-war economic crises developed during the period of the upward trend of capitalism; the present one, although retaining the cyclical character, occurs during the decline of capitalism. The former liquidated themselves into wider circles of capitalist growth; the latter leads to deepening crisis and decay.
In view of all this, the questions arise: can the capitalists secure even a temporary respite from the onward march of the revolution by a revival of industry? Is the present one the last crisis of capitalism? In answering these questions there must be borne in mind the considerations that, first, the present economic crisis is of a cyclical character, and, second, the question of the relation of forces between the working class and the capitalist class, with the possibility of breaks at weak links in the capitalist chain where the working class takes the revolutionary path. Where there is no strong revolutionary movement the capitalists will find a way out at the expense of the toiling masses; that is, the economic crisis, following the laws of cyclical crises, will eventually wear itself out by reducing production, slashing prices and wages and drastically reducing the living standards of the masses.
But that such a turn will come soon or extend far is doubtful. Already, as we have seen, in the deepening general capitalist crisis, whole sections of the capitalist economy have fallen into more or less chronic paralysis, and the tendency is for this paralysis to spread. The economic crises become more frequent, more widespread and more lasting. Varga points out, in illustrating the severity of the present crisis, that contrary to all previous experience: “so far there has been in general no diminution of visible (world) stocks; nay, some commodities even having increased in this respect.”28 Any recovery, therefore, that may be registered from the present economic crisis can, at most, be only very partial and temporary in character. It must soon be followed by another crash still more far-reaching and devastating to the capitalist system.
Capitalism is doomed. The capitalist system of private ownership of industry and land, production for profit, and exploitation of the workers is reaching the end of its course. It has outlived its historic mission. In its earlier stages capitalism was a progressive system; it constituted an advance over feudalism, which preceded it. Under capitalism there has been built an industrial system, at least in the imperialist countries; industrial technique has been developed; the proletariat has been created and disciplined. But even the limited progress that capitalism has accomplished for humanity has been achieved at the cost of incredible misery, poverty, ignorance and slaughter of the working class.
Capitalism has created the objective conditions for Socialism. But it can go no further. It cannot carry society to higher stages of development, to Socialism and Communism; it has become an obstacle in the upward path of humanity, a means of condemning hundreds of millions of people to mass starvation and death. History will soon sweep aside this obsolete system. Capitalism has provided its own executioners and grave diggers, the proletariat. The workers and peasants of the world are getting ready for their great social task of abolishing capitalism and establishing Socialism. They are freeing themselves from the illusion that capitalism provides the way to prosperity; they are gradually breaking the leadership of the MacDonalds, Gandhis, and other similar misleaders; under the banner of the Communist International they are securing revolutionary organization and program. In due season they will break through the Social Fascist and Fascist trickery and violence with which decadent capitalism sustains itself. World capitalist society is heading irresistibly towards the proletarian revolution.
1. The Phases and Course of the World Depression.
2. New York American, April 12, 1932.
3. Current History, November, 1931.
4. New York Times, Jan. 28, 1932.
5. Economic Principles of Consumption.
6. America Faces the Future, p. 370.
7. Profits and Wages, p. 8.
8. Speech in Brussels, May 9, 1931.
9. The American Mercury, January, 1932.
10. Radio Broadcast, Jan. 23, 1932.
11. International Press Correspondence, No. 27, 1931.
12. Imperialism, p. 66.
13. A. F. of L., Business Survey, November, 1931.
14. Labor Fact Book, p. 107.
15. Industry’s Coming of Age, p. 3.
16. Harvey Baum, p. 73.
17. New York Times, Jan. 7, 1932.
18. Marx (Capital, Vol. I, p. 308) indicated the revolutionary significance of the rapidly growing army of unemployed when he said: “A development of the productive forces which would diminish the actual number of laborers . . . would cause a revolution, because it would put the majority of the population on the shelf.”
19. New York American, Dec. 27, 1931.
20. Communists use the terms “Social Democrat,” “Social Fascist” and “Social Reformist” practically interchangeably; why, we shall see in Chapter IV.
21. Liberty, Jan. 30, 1932.
22. “War and its by-products (pensions, etc.) cost the United States government $2,201,390,992 during the fiscal year that ended last June.”—United Press dispatch, Feb. 3, 1932.
23. Liberty, Jan. 30, 1932.
24. Men and Machines, p. 310.
25. For the vast ramifications of this great struggle see Ludwell Denny’s America Conquers Britain.
26. Speech at the XVI Congress of the Communist Party of the Soviet Union.
27. Capital, Vol. I, p. 836.
28. International Press Correspondence, Mar. 10, 1932.
Next: 2. The Rise of Socialism