THE
GENESIS OF CAPITALIST DECADENCE
The real domination of
capital, technology-driven mass production, became prevalent only in the 20th
century (and continues its development to this day). But the transition towards
it accelerated, especially in the second half of the 19th century.
In the industrializing world, the proportion of the labor force employed in
agriculture dropped from 3/4 in 1850 to 1/3 in 1900. By 1870, the most
developed countries suffered overcapacity (even though many sectors were still
not mechanized and most industrial workers were still craftsmen working in
small shops). Crisis and years of deflation followed. In
The crisis of the 1870’s also ended free trade. The
scale-enhancement of production and the decreasing cost of transportation had
greatly reduced the natural protection local markets enjoyed before. The
temptation to blame foreign imports for market saturation was irresistible.
Walls of tariffs were erected, behind which, as Engels
put it, a war for industrial supremacy was being prepared. Some of the
protectionist measures were clearly counter-productive; with various tariff
wars the capitalist class shot itself in the foot. Others however, enabled
countries such as
There were several
more crisis moments before the turn of the century but the early part of the
20th century saw a real ‘sturm und drang’
period in which real domination rapidly spread, aided by a series of
technological breakthroughs (the combustion engine, chemistry, electricity
etc). Every period of fast technological change is characterized by
accelerating productivity (and thus increasing material wealth) and huge
surplus-profits for the strongest, most innovating capitals, because new
cost-saving technology creates new competitive advantages and the rapid pace in
which new products are introduced constantly creates temporary opportunities
for monopoly-profits. But then as now, these characteristics were hiding the
exacerbation of the underlying basic contradictions. The boom was further
stimulated by the intensification of exploitation made possible by the new
industrial methods (Taylorism was introduced in 1895
and quickly spread). But meanwhile, an important escape-valve was in the
process of being closed. Despite protectionism, the development of scale and
productivity had greatly stimulated international trade. In 1913, foreign trade
per capita was more than 25 times greater than in 1800. At the eve of world war I, the world economy was more integrated than it
ever was or would be again until the aftermath of world war II. As a result,
since the end of the 19th century, competition established for the
first time uniform prices for most commodities traded on the world market.
Before that point, the market values of most commodities were determined by
local conditions of production only. A low organic composition of capital
yielded a high rate of profit and an even higher one for developed capitals
exporting more cheaply made commodities which could be sold above their value,
at the local market value. No wonder that their export rose much faster than
their production. But they had to absorb the costs of transportation and
tariffs. Such obstacles did not hamper financial capital, so its export was
even more profitable and grew even faster, mobilizing productive forces abroad
and fostering horizontal development. But after competition enforced uniform
world market prices and thus established international values, the market value
for an increasing number of commodities was no longer determined by local
conditions but by (average) international conditions. That means that those
capitals which produced these commodities cheaper (under their international
value) still obtained a surplus-profit but those who produced them with more
backward, labor-intensive methods (above their international value) lost part
of their surplus-value to their competitors. As we explained elsewhere, because
of the tendential equalisation
of the rate of profit within nations, this loss was shared by their entire
economy. As a result, the lower organic composition of capital of the less
developed country, instead of yielding a higher than average
rate of profit, yielded a lower one, the more that market values were
determined by international trade. This sharply reduced the incentive for
developed capital to invest in the industrialization of others and thus also
reduced the tendency for capitalism to develop horizontally.
The first part of the
20th century was also a period of tremendous acceleration of the
concentration of capital. Uncounted small companies went bankrupt, were taken
over or merged. It was the time of birth of the giant companies (Ford, General
Motors, General Electric, BASF, Siemens, Daimler-Benz etc) which still dominate today. Up to that
point, the domestic market sufficed for most capitals. but
now industrial forces outgrew them. Despite the increase in international
trade, overcapacity was building and the rate of profit fell. To defend the
most developed industries, cartels were formed and other measures were taken to
restrict production and to prevent prices from falling. But inevitably
capitalism was moving towards the point at which the shortage of productive
demand and the fall of the rate of profit would compel it to massive devalorization. Before that point was reached however, war
intervened.
The moment at which
the progress of real domination fundamentally changed the conditions of accumulation
for global capital is hard to pinpoint. But it is certain that such a change
took place, whichever term is used to describe it, that massive devalorization
became an intrinsic part of the accumulation process, that therefore the
continuation of capitalism imposed on society increasingly brutal violence and
self-destruction and thus placed before the working class the need to fight,
not to improve its conditions of exploitation within capitalism, but to
overthrow it. That’s why we consider 1914 as the starting date of capitalist decadence. In the remaining part of the
century, war would make more casualties than in the entire preceding human
history. It is true that amidst this endemic destruction, capitalism continued
to develop and to grow, that real domination continued to deepen and spread,
and that the resulting technification continued to
stimulate productivity and thus also the quantity and quality of use-values,
even for the working class. Those who think that the conditions for revolution
require the irreversible stagnation of capitalism and abject poverty for the
vast majority of the working class will wait forever. They have not understood
that an irreversibly stagnating capitalism is an oxymoron, that crisis and
productivity growth do not exclude each other, that capital seeks higher
productivity to fight its crisis, yet worsens it this way, that the struggle of
the working class is not one of variable capital reacting only against its own
demobilization but of the part of humanity which, because of its place in the
production process, is most capable both of recognizing the mortal danger that
capitalism represents for humanity and of eliminating it.
The onset of decadence cannot be explained as inevitably
imposed at that point in time by the objective state of the economy. The case
can be made that, if the capitalist class would have recognized the
counter-productive effect of its protectionist policies and would have
retracted them, the capitalist system would have entered its phase of massive
destruction considerably later. And if the capitalist class would not have
clung to the gold standard or to balanced-budget dogma, if it would have
embraced Keynesianism much earlier and used the
monetary and fiscal levers that were potentially there, then for much longer
still .…. But as the saying goes, with ‘ifs’ you can put
Sander