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ABC of Marxism
The capitalist system like every material entity undergoes constant and rapid change owing to the inherent laws of its development. In their competition for profit the capitalists are forced to seek cheaper and better ways to produce commodities for exchange on the market. The continuous transformation and revolutionizing of the methods and instruments of production makes a perpetual disturbance of social conditions, an everlasting instability affecting relations of production as between boss and worker and in society in general.
“The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production and with them the whole relations of society. Conservation of the old modes of production in unaltered form was, on the contrary, the first condition of existence for the earlier industrial classes. Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.” (Communist Manifesto)
Capitalists compete with each other for control of the market. Similarly workers content against one another for the sale of their commodity, labor power. Engels says:
“Competition is the most complete expression of this war of all against all which dominates modern bourgeois society. This war, a war of life and death, for existence, for everything, is waged not only between the various classes of society but also between the individual members of these classes. Everyone is in everyone else’s way; and consequently everyone tries to thrust aside and take the place of those in his way.”
No business can stand still and hope to survive in modern society. To compete successfully the boss is forced to expand his scale of operations, to increase production, and to take the market away from his competitors. To do this he seeks continually to lower the price of production, the value of his commodity. For this purpose he introduces newer, more productive machinery. Such machinery is more expensive and can only bring profits thru mass production. Now the factory building and machinery are not consumed directly in production. Hence they are called fixed or constant capital. Capital used to pay wages is directly consumed in the process of production. This is called variable capital. The boss may lower the value of his commodity by:
And as capitalism develops “labor saving” machinery the composition of capital changes – the percentage of constant capital increases while variable decreases. This change in the composition of capital produces a fall in the rate of profit, because while profit is derived from surplus values realized by the employment of variable capital, the rate of profit is calculated on the total capital (both types) invested. Constant capital cannot create new values; it can only pass on to the commodities produced its own value as it is consumed in the production process. As the proportion of constant to variable capital increases, therefore, the rate of profit falls. This iron law of capitalist production drives the ruling class to attempt to overcome this falling rate of profit by increasing the mass of profit through the employment more productive (labor-saving) machinery and large scale production.
Under capitalism production is not planned according to the needs of society. On the contrary each capitalist produces blindly for the world market, hoping to make a profit. He is not aware in advance how many other capitalists are producing the same commodities, nor how much each is throwing on the market. Thus, although he carefully plans production inside his factory, in society as a whole, complete anarchy reigns. When profits are high in any field capital rushes in, overproduces and brings down the profit and stifles production.
Capitalism is the only system in history in which periodically – once a decade, now much oftener – a colossal volume of commodities are thrown on the market and cannot be sold. This is an overproduction for the market. The result is a capitalist crisis. Industry and commerce come to a standstill, factories close, workers are thrown out of work to starve in the midst of “too much”. In other words the forces of production have broken through the capitalist property relations which fetter them.
“We have seen that the ever-increasing perfectibility of modern machinery is, by the anarchy of social production, turned into compulsory law that forces individual industrial capitalists always to improve this machinery, always to increase its productive force. The bare possibility of extending the field of production is transformed for him into a similar compulsory law… The extension of the markets cannot keep pace with the extension of production. The collision becomes inevitable, and as this cannot produce any real solution, the collision becomes periodic as long as it does not break the capitalist mode of production into pieces. Capitalist production has begotten another vicious circle.” (Socialism, Utopian and Scientific – Engels)
“Things cannot be otherwise in a mode of production where the worker exists to promote the expansion of existing values, as contrasted with a mode of production where wealth exists to promote the developmental needs of the worker. Just as, in the sphere of religion man is dominated by the creature of his own brian, so in the sphere of capitalist production, he is dominated by the creature of his own hand.” (Capital, Vol. 1, p. 685)
Marx shows the effects of crisis on money and commodity prices:
“A crisis occurs whenever the returns of those merchants who sell at long range, or whose supplies have accumulated also on the home market, become so slow and meagre that the bank press for payment, or the notes on the purchased commodities become due before they have been resold. It is then that forced sales take place, sales made in order to meet payments. And then we have the crash, which brings the deceptive prosperity to a speedy end.” (Vol. III, p. 359)
The crisis is invariably international in character:
“And once the crisis has broken our say in England, it compresses the succession of these terms of payment into a very short period. It then becomes evident that all these nations have simultaneously overexported (and overproduced) and overimported (over traded); that prices were inflated in all of them, and credit overdrawn. And the same collapse follows in all of them.” (Vol. III, p. 578)
The crisis is a violent attempt to readjust the equilibrium of the capitalist mode of production, just as fever in case of human infection is an attempt on the part of the organism to readjust physiological equilibrium. Economic cycles and crisis must be analysed in terms of the stage of development or decay of capitalism under consideration. In the present epoch of capitalist decline, contracted, spasmodic periods of revival or prosperity are invariable followed by violent periods of depression and crisis.
“In crisis the contradiction between socialized production and capitalist appropriation ends in violent explosions.” (S – U & S – Engels)
Underconsumption is a natural result of exploitive society, but it is not the cause of crisis.
“The underconsumption of the masses is a necessary condition of all forms of society in which robbers and robbed exist, and therefore of the capitalist system. But it is the capitalist system which first brings about the economic crisis.” (Anti-Dühring – Engels, p. 236)
“It is not a fact that too many necessities of life are produced in proportion to the existing population. The reverse is true. Not enough is produced to satisfy the wants of the great mass decently and humanely. It is not a fact that too many means of production are produced to employ the able bodied portion of the population. The reverse is the case… On the other hand there is periodically a production of too many means of production and necessities of life to permit of their serving as means of exploitation of the labourers at a certain rate of profit. Too many commodities are produced to permit a realization of the value and surplus value contained in them under the conditions of distribution and consumption peculiar to capitalist production, that is, too many to permit continuation of the process without ever-recurring explosions.” (Vol. III, p. 303)
“Overproduction of capital is accompanied by a more or less considerable relative overpopulation.” (Same)
To overcome the declining rate of profit, the capitalist are compelled to introduce large scale industry. The home market cannot absorb the enormous mass of commodities produced by large scale industry. In the early period of capitalist development, crisis were overcome by colonial conquests; by wholesale destruction of excess commodities and capital; and by more thorough exploitation of the old markets. But in the modern world, all markets belong to one or another imperialist country. No part of the earth remains unclaimed. Capitalism can no longer expand its world markets on a world scale. On the contrary, markets are progressively restricting, strangling the economic life of society as a whole. The capitalist system, therefore, is said to have reached its stage of decline.
“While the productive forces increase in geometric, the extension of markets proceed at best in an arithmetic ratio.” (I – p. 365)
In the competitive world the capitalists find it to their advantage to combine forces to make the most profit out of a given market. Trusts and monopolies come into being, controlled and manipulated by bankers and financiers through the credit system. Far from eliminating competition, monopoly creates a deadlier competition on a higher plane: between vast international monopolies. These tremendous concentrations of capital reach out and seize hold of the backward countries and make them colonies or semi-colonies for the purpose of exploitation. The national rivalries for control of these markets lead inevitably to war. The imperialist powers are today marching rapidly toward such a war.
Monopoly capitalism and large scale production tends to drive the small manufacturer, farmer or banker out of business. He is powerless to compete with such overwhelming forces. Many of them exist by working for larger capitalists. They are mortgaged to the hilt and at the mercy of the banks. The falling rate of profit hits hardest the individual with small capital. Large sections of the middle class are being driven into the proletariat.
Large scale production has another important effect – the development of a reserve army of workers who are superfluous to industry. The continual introduction of new machinery to reduce costs means unemployment for more workers. Under capitalism unemployment must always exist. A vast army of permanently unemployed now exists which the capitalists use as a club over the employed worker to extract more surplus value. The problem of the employed and unemployed is closely bound up.
There comes into existence a completely ruined and demoralized “class” which has lost all power to resist the bourgeoisie. It is devitalized. It produces tramps, thieves, drunkards, prostitutes. This “class” has forgotten how to work. It is the slum proletariat.
Up to the beginning of the 20th century the conditions of the working class was gradually improving at the expense of the colonial peoples. Much of the labor movement of the pre-war period was permeated with the idea that by reform and the ballot-box the worker could improve his lot and bring about more and more socialism. This idea dominated the Social Democratic parties of the Second International. It has now conquered the Third. It governs much of the labor movement today. It is based on the illusion that the capitalist class controls its own destiny, that it can continue to improve social conditions. Following the world war, capitalism had entered the stage of decay. In order to keep profits up the capitalist class must force down wages. Wage-rates as a whole are failing. This leads to an intensification of the class struggle which undermines the basis for reformism in society.
The capitalist exists only at the expense of the working class. The latter can gain better conditions only be irreconcilable militant struggle. The worker can gain complete freedom from exploitation only by overthrowing the capitalist class and taking over the means of production. The struggle between the worker and capitalist is incessant. On the economic plane it takes the form of strikes for wages and conditions. On the highest plane, when the worker becomes conscious of his position in society, it takes the form of building the revolutionary party aimed at the overthrow of capitalism.
Competition, inherent in the very nature of capitalism, tends to develop its opposite – concentration and centralization of the productive forces. Production is socialized. Yet the relations between men in the productive process remain anarchistic. Continuous warfare rages amongst the classes in society. The dialectics of capitalist development are now clear. Capitalism bears within itself the seeds of its own destruction.
The Gotha Program – Marx
The Eighteenth Brumaire of Louis Bonaparte – Marx
The Decline of Capitalism – E. Varga
Capital – Marx; Vol. III, Chapter on Crises
History of Great American Fortunes – G. Myers [Vol. I & Vol. II]
The Decline of American Capitalism – L. Corey
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Last updated: 7 August 2019