WESTRALIAN WORKER, 5 May 1933, pages 1 & 4.
GREAT SOCIALIST FORESEES COLLAPSE OF CAPITALISM
EACH CRISIS BREAKS UP THE SYSTEM
(By J. Curtin)
Many years ago now, in collaboration with Belfort Bax, the more famous William Morris wrote a remarkable book on “Socialism.” An extract appears opposite to the present situation: - “ A necessary accompaniment of the capitalist system, with its competition among the proletariat, is the floating mass of workmen rejected for the time being by the labor market. This mass of unemployed has a continuous tendency to increase as machinery and the organisation of the factory grow toward perfection; the complement to this phenomenon being the cycles of inflation and depression, which are also a necessary consequence of the machine industry, and the world market which it feeds.
“At every fresh depression this matter of the unemployed becomes more pressing and harder to be dealt with. The periods of depression grow to be more frequent and of longer duration. As a consequence, the lack of employment over large sections of the population is becoming chronic.”
What Karl Marx Said For some years, years of colonisation and the advent of new markets in the then undeveloped industrial countries, it was the practice of many alleged economists to scoff at the conclusions set out in the writings of Karl Marx, the founder of modern Socialism. Let me cite an example of his thought as it concerns what the world calls a commercial crisis.
Having described how affairs are thrown out of joint, Marx proceeds: “Commerce is at a standstill, the markets are glutted, products accumulate as multitudinous as they are unsaleable, hard cash disappears credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence because they have produced too much of the means of subsistence; bankruptcy follows upon bankruptcy. Productive forces and products are wasted and destroyed until the accumulated mass of commodities finally filter off more or less depreciated in value, until production and exchange gradually begin to move again.
“Little by little the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit and speculation which finally, after breakneck leaps, ends where it began – in the ditch of a crisis.” It was this graphic description of the capitalist cycle which led commentators to discover the “vicious circle.”
As H.G. Wells would say, having dealt with the “how” of the matter, let us now cite Marx on the “why” of it:- “In these crises the contradiction between socialised production and capitalist appropriation ends in explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation of commodities are turned upside down. The economic collision has reached its apogee. The mode of production is in rebellion against the mode of exchange.”
Time the Vindicator William Morris and Karl Marx never sat at a conference of Premiers. But the facts are in accord with their so-called theories. The growth of unemployment in recent years has become chronic, the present method of mass production has become incompatible with the means for its exchange. The wages paid to those engaged in production do not allow, of an equivalent in purchasing power for the same goods when there is added to the price the pyramided costs which the capitalist system adds thereto.
The recent studies of Major Douglas shed a vast illumination on that reality. Douglas buttresses in the realm of distribution the surplus value exploitation law which Marx diagnosed in the realm of production. Post-war monetary policy has accentuated its consequences. By doubling the real burden of indebtedness of the nations it has widened the gulf between money, the means of exchange, and the production of the world of which it is the exchange medium.
Marx and the Capitalists
Frederick Engels, drawing on the writings of his fellow countryman, makes the position clear. He observes that the truth of Marx’s contention of the basic causes of the crisis is brought home to the capitalists by the violent concentration of capital that occurs during crises through the ruin of many large and a still greater number of small capitalists. The whole mechanism of the capitalist structure breaks down under the pressure of the very forces it generates. It is no longer able to turn all the mass of surplus production into capital. The means of production lie fallow, and for that very reason the industrial reserve army must also lie fallow. Means of production, means of subsistence, all the elements of production and of general wealth are present in abundance, but “abundance becomes the source of distress and want.”
The Law of Profit
And here the Marxian conception of surplus value becomes demonstrably correct. Marx points out that in our present society means of production have to undergo a preliminary transformation into capital, into a means for the exploitation of human labour power, otherwise into a profit-earning investment, before they can function. The necessity for this, therefore stands between the workers and employment like a veritable ghost. It frightens the capitalists into panic, and it frightens the workers into an acceptance of the absolute helplessness of the position. It is in these eras that reaction becomes politically supreme; and when policies of regression become the enforceable instruments of governments.
The Load on the Camel’s Back
It is undoubted that the war speeded up the development of the industrial system. It furnished at a stroke the greatest market for goods the world had known. In every land, production was accelerated. Vast national credits were unloosed; goods poured out in enormous volume; the capacity for production, immediate and potential was almost marvellously quickened.
The exchange of this mass of commodities was only made possible by a great increase in the volume of money. It furnished, where required, capital for industry, and also the means whereby governments paid for the services either of soldiers or contractors. The fact that the gold standard was suspended to enable this to be done does not alter the fact that it was done – it only explains how it was done! Then came the peace and the post-war settlements; the reparations; the inter-Allied debt arrangements; and the enormous liabilities on governments for interest payments. These burdens, in the main, became levies on the production of the world. They became an added, if not a new, element in industrial costs, necessarily accounted in prices, but unequated by a corresponding distribution of purchasing power among the masses, who are the final market for the consumption of production. And this inherent economic contradiction inevitably produced on a wider plane, and in a more acute form, those characteristics of crisis which Morris, Bax, Engels, Marx, and the Socialist economists generally had declared as constitution the regular routine of the capitalist cycles.
Piling on the Last Straw
I need not take space here to discuss the finance practices of the war period. Suffice it to say that they were operated on a non-gold basis. In 1925 the Cunliffe Commission of Bankers advised the restoration of the gold standard. Mr Ernest Petter declares that the commission “followed a traditional and conventional policy in the interests of the moneyed classes.” Describing the effect of the return to gold, he says: - “It has been to increase, in fact it is not too much to say to double, the burden of the war debt upon the country, and at the same time to impair greatly the ability of industry to provide the interest and sinking fund necessary, and to support a great and increasing army of workless condemned to unemployment by reason of the policy followed.“
From that date the problems of the capitalist structure have been intensified. The return to gold was the work of bankers; they deal in money, the medium of exchange, as a market gardener deals in vegetables; they seek the appreciation in value of the commodity in which they trade. Therefore, they forced up the value of money; they forced down the value of goods; they widened the gap between the means of exchange and the goods the medium exists to exchange.
In his “Modern Democracies,” so eminent a jurist as Lord Bryce has said: “Democracy has no more insistent or insidious foe than the money power, to which it may say, as Dante said when he reached in his journey through hell the dwelling of the god of riches, ‘Here we found wealth, the great enemy.’ That enemy is more formidable because he works secretly, by persuasion or deceit rather than by force, and so takes men unawares. He is a danger to good government everywhere.”
The capitalist system, at best, was difficult to adjust because of its nature; but the financial interests have made it intolerable, not only to workers, but to civilisation.