III. The United States, Japan, Colonial Countries and Soviet Russia

14. The development of the United States during the war proceeded in an opposite direction, in a certain sense, to that of Europe. The part played by the United States in the war was chiefly that of a salesman. The destructive consequences of the war had no direct effect upon that country, and the damage caused to its transport, agriculture, etc., was only of an indirect nature and of a far smaller degree than that caused to England, not to speak of either France or Germany. At the same time, the United States, taking full advantage of the fact that European competition had either been removed entirely or had become extremely weak, succeeded in raising some of its most important industries (such as petroleum production, ship-building, automobile and coal industry) to such a height as it had never anticipated. today most of the countries of Europe are dependent on America not only for their petroleum and corn, but also for their coal.

While America’s export prior to the war consisted chiefly of agricultural products and raw materials (making up more than two-thirds of the entire export), her main export at the present time is made up of manufactured articles (60 per cent. of her entire export). Having been in debt prior to the war, the United States is now the world’s creditor, concentrating within its coffers about one-half of the world’s gold reserve and continually augmenting its treasury. The dominating part played by the pound sterling in the world’s financial market has now been taken over by the American dollar.

15. This extraordinary expansion of American industry was caused by the special combination of circumstances, namely, the withdrawal of European competition and, above all, the demands of the European war market. But American capitalism today has also lost its balance. Devastated Europe as a competitor of America is not in a position to regain its pre-war role on the world market. And the American market can only preserve an insignificant part of its former position with Europe as a customer. At the same time, America today is producing goods for export purposes to a much greater extent than prior to the war. The over-expansion of American industry, during the war, cannot find any outlet owing to the scarcity of world markets. As a consequence, many industries have become part time, or seasonal, affording employment to the workers only part of the year. The crisis in the United States resulting from the decline of Europe signifies the beginning of a profound and lasting economic disorganization. This is the result of the fundamental disturbance of the world-wide subdivision of Labour.

16. Japan also took advantage of the war in order to extend its influence on the world market. Her development has been of a much more limited scope than that of the United States and some branches of Japanese industry have acquired the character of what might be termed “hothouse” production. Her productive forces were sufficiently strong to enable her to take hold of the market while there were no competitors. But they are utterly insufficient to retain that market in a competitive struggle with the more powerful capitalist countries. Hence the acute crisis which had its starting point particularly in Japan.

17. The Trans-Atlantic countries and the colonies (such as South America, Canada, Australia, China, Egypt and others), which used to export raw materials, in their turn took advantage of the rupture in international relations for the development of their home-industries. But the world crisis has now involved these countries as well, and their internal industrial development is going to be checked, thereby serving as an additional cause for the trade handicap of England and of the whole of Europe.

18. Thus, there is no ground whatsoever to speak of regarding any restoration of lasting balance today, either in the sphere of production, commerce or credit with reference to Europe or even with reference to the world as a whole. The economic decline of Europe is still going on, and the decay of the foundation of European industry will manifest itself in the near future.

The world market is in a state of disorganisation. Europe wants American products, for which, however, it can give nothing in return. While the body of Europe is suffering from anaemia, that of America is affected with plethora. The gold standard has been destroyed, and the world market has been deprived of its general exchange medium.

The only way by which the restoration of the gold standard in Europe could be achieved would be by getting the export to exceed the import. But this is just what devastated Europe is not in a condition to do. America, on the other hand, is trying to check the influx of European goods by raising her tariff.

Thus, Europe has become a bedlam. England has introduced prohibitive customs duties. The export as well as the entire economic life of Germany is at the mercy of the Parisian speculators. The former Austria-Hungary is now broken up into a number of provinces divided by custom borders. The net in which the Versailles Treaty has entangled the world is becoming more and more tightened.

19. The reappearance of Russia on the world market is not going to produce any appreciable changes in it. Russia’s means of production have always been completely dependent upon the industrial conditions of the rest of the world, and this dependence particularly with regard to the allied countries became intensified during the war, when her home industry was almost completely mobilised for war purposes. But the blockade cut off these vital connections between Russia and the other countries. There could be no question of setting up any new branches of industry which were needed to prevent the general decay caused by the wear and tear of machinery and equipment in a country completely exhausted during three years of incessant civil war. In addition to this, hundreds and thousands of our best proletarian elements, comprising a great number of skilled workers, had to be recruited for the Red Army. Under these conditions, surrounded by the iron ring of the blockade, carrying on incessant wars and suffering from the heritage of an industrial collapse, no other could have maintained the economic life of the country and create such conditions as would permit of its centralized administration. There is no denying, however, that the struggle against world imperialism was carried on at the price of the progressive diminution of the productive resources of industry in various branches. Now, since the blockade has relaxed, and the relations between town and country are becoming more regular, the Soviet power has, in a centralized manner, been enabled for the first time gradually and steadily to direct the country upon the road to economic prosperity.