II. Characteristics of the Period of Decline

The period since the end of the war and especially during the last three years was characterised above all by the confusion of economic conditions, through the absence of uniform course of business in the whole capitalistic world, through the existence of tendencies and counter-tendencies that crossed each others’ paths in the world’s business. For this very reason it is exceedingly difficult to extricate the chief characteristics of this period from this confusion. In an earlier work of mine I made an attempt to summarise the principal characteristics of the period of decline as follows:—

“(1) The geographical extension of the capitalistic method of production becomes narrower: besides the capitalistic countries there exist and continue to increase in numbers countries in which the workers are already establishing their dictatorship.

“(2) Within the various capitalistic countries there is a tendency toward the return to forms of production in existence in pre-capitalistic times.

“(3) The international division of work is restricted, trade with foreign countries decreases: world commerce, which was previously grouped uniformly about the highly industrial centre in western Europe, loses its balance and is dissolved into parts that are built economically upon entirely diverging bases.

“(4) Gold exchange, previously uniform and differing only as to the size of the various monetary units, is supplanted by uncertain, wavering paper exchanges: a tendency is discernible in the direction of reverting to trade in kind.

“(5) The accumulation of capital gives place to progressive impoverishment-disaccumulation.

“(6) Production decreases.

“(7) The credit system collapses.

“(8) The standard of living of the proletariat declines: either as a result of the fact that wages do not keep pace with the rising cost of living or as a result of tremendous unemployment.

“(9) Among the various strata of the possessing classes there is an ever-sharpening conflict for the distribution of the decreasing social production of values. Politically this shows itself by the constant change of governments, the collapse and new formation of parties, the absence of a uniform government party in the parliaments, etc.

“(10) Ideologically the faith in the eternal and unshakable character of the capitalistic order of society begins to wane: the ruling class is compelled to arm itself for the protection of its dominion. “This condition of capitalism, which has been incompletely and hastily characterised in the above, may be called the declining stage of capitalism or the period of continuous crises.”

Not two years have passed since the above lines were written and although they are still true in the main, yet the importance of several of the ten points has been greatly reduced, e.g., the tendency toward a reversal to economic forms of pre-capitalistic times (Point 2). Whether the accumulation gave place to decumulation throughout the whole of capitalistic business, I set down as doubtful even then. In the light of the boom in the United States which has taken place since then, this sentence can be set down as incorrect. This does not mean, however, that it is to be regarded as incorrect for the European countries that were hit hardest by the crisis.

On the other hand, several very important characteristics of the present period of world economics are missing in the above.

i. The lack of uniformity in the development of booms as a sure sign for the absence of a uniform capitalistic form of production.

ii. The agrarian crisis, interwoven with the general phase of crises and extending over the whole world.

iii. The social crisis in Europe and in the leading industrial countries of Europe as a result of a decline in the division of world economic labour.

iv. The tendency on the part of European imperialistic countries, instead of extending their markets, to hinder production on the part of a competitor and to turn capitalistic development backward.

The result of the entire three years’ development seems to us to be the following:—

THE ACUTE SOCIAL CRISIS of capitalism, the instinctive, unorganised rebellion of the working class against capitalistic society, seems on the whole to have been overcome. On the other hand, the “normal” conflict of capitalistic society seem to have been made very much more acute by fargoing concentration and centralisation on the one hand, and by the birth of revolutionary, communistic mass parties on the other.

THE ECONOMIC CRISIS of capitalism has become less but is not yet overcome. Production has scarcely reached pre-war levels; Europe’s production has diminished, that of capitalistic countries outside of Europe increased! Owing to successful offensive of capital against the proletariat, owing to the expropriation of the middle class through inflation, and owing to the progressive impoverishment of the farmers as a result of the low prices of agricultural products compared with industrial goods (“shears”), the distribution of income has been shifted in favour of capital. In this manner capitalistic accumulation was made possible, in many cases at the same time that industry as a whole declined. Corresponding to the antagonistic character of capitalist society, the tendencies that are favourable toward overcoming the crisis have the imminent faculty of changing over into the very opposite; through the reduction of income the buying power of the classes affected is in a like manner reduced, which fact becomes a source of new wars.

The CRISIS OF ECONOMIC POLICY continues unabated. None of the great economic problems—Reparations question, international debts, relation of the capitalistic states toward Russia, protective tariffs versus free trade, inflation or return to a gold basis—could be solved during the last three years. Economic chaos continues unchanged.

“We shall justly be reproached with the charge that our presentation of the situation is unclear. But we must repeat that the lack of clearness, the existence of contradictory tendencies is a characteristic of the present period. As far, however, as the prospects for a revolution are concerned, we should like to say the following, anticipating the results of our later observations:—

“The present position of capitalism, although the general feeling of rebellion on the part of the proletariat, observable immediately after the end of the war, no longer exists, is one of giving ,good prospects for a successful revolution in Europe. Whether this possibility becomes a reality, depends upon the attitude of the proletariat and of its revolutionary advance-guard, the Communist Party. There is no such thing as an economic situation which ensures a victory of the proletariat without long continued, enduring fights calling for numerous sacrifices. And there is no such thing as a situation that offers no way out for the bourgeoisie.

“We now come to the question of the revolutionary crisis as the basis of our revolutionary action. In this connection we must, however, mention two wide-spread errors. The bourgeois economists on their part represent this crisis simply—to use their elegant English expression—as ‘unrest.’ On the other hand, revolutionaries sometimes attempt to prove that there is absolutely no way out of the crisis.

“That is an error. There are no absolutely hopeless situations. The bourgeoisie acts like an impudent robber who has lost his head. It commits one folly after another, increases the difficulties of the situation thereby, and hastens its own destruction. All this is true, but one cannot ‘prove’ that there is no possibility for the bourgeoisie to put to sleep any minority of the exploited with the aid of some small concession, and to suppress the movement or the uprising of any small section of the oppressed and exploited. The attempt to ‘prove’ the ‘absolute hopelessness’ from the start is futile and is fencing with words. A real ‘proof’ for this or similar questions can only be brought by experience. The bourgeois order is now passing through an exceedingly revolutionary crisis throughout the whole world. We must now ‘prove’ by actual practices of the revolutionary parties that they are sufficiently class conscious, and that they possess an intimate enough hold upon the masses and sufficient determination and wisdom, to utilise this crisis for the successful, the triumphant revolution.

“To prepare this ‘proof’ we have chiefly gathered here at the Congress of the Communist International.”

The above was said by Lenin in 1920, at a time when the wave of revolution seemed still to be on the upward trend; when the great masses of the workers were on their way to joining the Communist Party; when the “notorious” Twenty-one Points were worked out in order to protect the Communist International from a flood of opportunistic elements; when the Red Army was in the midst of a triumphant march upon Warsaw.

But if it is true that there are no situations from which there is no way out for the bourgeoisie, it is also true that there are no situations in which the revolutionary proletariat cannot wage successful fights. The honest, earnest struggle of the proletariat for the improvement of its conditions within the capitalist system is a factor of prime importance for hindering the successful averting of the crisis. If it is possible for the Communist Party, as the leader in the fight of the whole proletariat, to lead into the fight also the masses of peasants who are exploited by the big landowners and the bourgeoisie, the struggle can lead to victory, even if the “normal” capitalistic system were apparently to be re-established.