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Crisis of
Capitalism has by now become a disgustingly well worn cliche. Ever since
Karl Marx popularized the phrase in the middle of the last century,
Capitalism has in fact outlived many crises and emerged out of each one
stronger than before. So much so that many capitalists, not only in the
West, but also in my country, India, do sincerely believe that it is
Socialism that is now in crisis and that Socialism will not outlive
the present crisis. I shall certainly say a word also about the crisis in
Socialism, but let me first seek to present my imperfect understanding of
both the perennial and the current crisis in Capitalism, mainly in order
that I may benefit from your comments.
Capitalism has, as a system, an inherent perennial crisis built into it. It
has certainly faced a number of other crises as it has developed through
successive stages and came to the final stage of imperialism, which has
masked it for the past 200 years or more. Within that final stage of
imperialism, it entered a new stage with the end of the Second World War in
the second half of this century; whether or not it has now emerged from yet
another crisis within neo-colonialist imperialism i.e., the crisis of the
Seventies, we should examine in this lecture.
The rate of inflation cuts into the real earnings of the worker, despite all
trade union activity and Government populism. The Capitalist system cannot
survive unless it makes each laborer produce the surplus value necessary not
only for capital investment but also for a high rate of profit on huge
investments. There is no way for Capitalism to get out of this perennial
crisis situation. It dooms the system itself in the long run; but so long as
there is no viable alternative, the system will perpetuate itself by all
sorts of means.
But Marx or Engels should not be misunderstood as having taught that
under-consumption by the power sectors of society explains the perennial
Capitalist crisis. That crisis has to do very specifically with the
capitalist mode of production, and not just with the existence of the poor
which has been here also in pre-capitalist societies1.
Marx’s argument is that surplus value is the source of profit for the
Capitalist. Increased wages reduces surplus value. So if the Capitalist in
order to increase the purchasing power of the worker, so as to sell all he
produces, raises his wages, would be actually cutting into his own profit
margin. This is the contradiction.
The state can often intervene as a consumer to increase the level of demand;
but that does not resolve the contradiction that to raise wages is to reduce
profit – of course assuring that other things remain constant.
The first historical crisis of Capitalism-- the rise of the socialist
state
It is interesting to observe how the Capitalist system develops a high
degree of robustness by facing and overcoming crises. The way it has faced
and outlived two major historical crises reveals its temporary inner
strength as well as its ultimate weakness.
The first major crises in history that the Capitalist system had to face was
the appearance in history of a concrete viable alternative-- the emergence
of Russia as a Socialist power controlled not by the owners of private
property but by the working class. Of course it was not an advanced
Capitalist country like Britain or Germany that first became socialist. This
shows that there is no strictly pre-determined sequence by which Capitalist
societies become socialist. But the presence of Russia as a socialist power,
precisely at the time when the Capitalist Nations of the West were in the
throes of the First World War, soon to emerge
Victorious-------------------------------
The Perennial Crisis of Capitalism
According to Karl Marx, the system of market economy Capitalism, or to use
the more glorified terms, that of free enterprise and private ownership of
the means of production adumbrates within itself an inherent contradiction
which belongs to its very nature.
Marx has clearly shown, at least in a theoretical frame, how the capitalist
producer’s primary aim is to keep the wages of the worker to the minimum
possible, and to maximize his profit by simultaneously increasing the
efficiency of the forces of production (say machinery, technology etc.) and
keeping the wage level as low as possible. This means that the Capitalist
system encourages unemployment in order that the labor market can be kept
competitive so that the laborer is always under pressure to sell his labor
to the producer for les than its worth. This seems fairly obvious. Marx also
argued that by keeping the laborers’ wages low, the producer is reducing the
purchasing capacity of the worker and thereby harming his own market. This
later argument has been weakened by two developments-- the growth of trade
unions and their partial success in fighting for higher wages, and the
pressure under which the state which largely serves the interest of the
Capitalist is forced by the exigencies of the “democratic system” to stand
for a more egalitarian society. Despite much -----------------------
The reconstruction of the Capitalist countries, however, was assisted in the
three decades after the First World war by the possibility of
----------------and more systematically exploiting the colonies and by the
transfer, through taxation through business and trade, and also by other
Colonialist methods of an enormous amount of wealth from Asia, Africa and
Latin America into the industrial heartland of North-western Europe and
North America.
The presence of the “red feril” acted as a “moral” justification for all
sorts of openly imperialist loot and plunder, and as Stalin observed,
Capitalism survived by an intensification of its imperialistic activities. A
trade structure was built up which would drain the periphery of its raw
materials and cheap labour and at the same time use the periphery as an
expanding market for the centre’s products.
Reference
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Weeks, J.
(1977). The Sphere of Production and the analysis of Crisis in
Capitalism. Science and Society Vol XLI No. 3, pp 281….
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Marx, K.
Capital. Vol II, pp 414-415
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Engel. F. (1962)
anit-----------London, 1962, pp 393-3
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