§ 16 The anarchy of production; competition; crises

The miseries of the working class continually increase concomitantly with the progress of manufacturing technique. Under capitalism this progress, instead of bringing advantages to all, brings increased profit to capital, but unemployment and ruin to many workers. There are, however, additional causes for the increasing misery.

We have already learned that capitalist society is very badly constructed. Private ownership holds sway, and there is no definite plan whatever. Every factory owner conducts his business independently of the others. He struggles with his rivals for buyers, competes' with them.

The question now arises whether this struggle becomes enfeebled or intensified as capitalism develops.

At first sight it might seem that the struggle is enfeebled. In actual fact, the number of capitalists grows continually smaller; the great fish eat up the small fry. Whereas in earlier days ten thousand entrepreneurs were fighting one with another and competition was embittered, since now there are fewer competitors it might be imagined that the rivalry would be less acute. But this is not so in reality. The very opposite is the case. It is true that there are fewer competitors. But each one of these has become enormously stronger than were the rivals of an earlier stage. The struggle between them is greater, not less; more violent, not more gentle. If in the whole world there should rule only a few capitalists, then these capitalist governments would fight with one another. This is what it has come to at long last. At the present time the struggle goes on between immense combinations of capitalists, between their respective States. Moreover, they fight with one another, not solely by means of competitive prices, but also by means of armed force. Thus it is only in respect of the number of competitors that competition can be said to diminish as capitalism develops; in other respects it grows continually fiercer and more destructive.

One more phenomenon must now be considered, the occurrence of what are termed crises. What are these crises? What is their real nature? The matter may be stated as follows. One fine day it appears that various commodities have been produced in excessive quantities. Prices fall, but the stock of goods cannot be cleared. The warehouses are filled with all kinds of products, for which there is no sale; buyers are lacking. Needless to say, there are plenty of hungry workers, but they receive no more than a pittance, and cannot buy anything in excess of their usual purchases. Then calamity ensues. In some particular branch of industry the small and middle-sized undertakings collapse first, and are closed down; next comes the failure of the larger enterprises. But the branch of production thus affected bought commodities from another branch of production this latter bought from a third. For instance, tailors buy cloth from the cloth makers; these buy wool from the yarn spinners; and so on. The tailors come to grief, and in consequence there are no customers for the cloth makers. Now the cloth makers fail, and their failure reacts upon the firms that supply them with woollen yarn. Factories and workshops everywhere close their doors, tens of thousands of workers are thrown on the streets, unemployment grows to unprecedented proportions, the workers' life becomes even worse. Yet there are plenty of commodities. The warehouses are bursting with them. This was continually happening before the war. Industry flourishes; the manufacturers' businesses work at high pressure. Suddenly there is a crash, followed by misery and unemployment, and business is at a standstill. After a time, recovery sets in; there comes a renewed period of excessive activity, to be followed in turn by a new collapse. The cycle is repeated over and over again.

How can we explain this absurd state of affairs, wherein people become paupers in the midst of wealth?

The question is not easy to answer. But we must answer it.

We have already learned that in capitalist society there prevails a disorder, or so to say an anarchy, of production. Every factory owner, every entrepreneur, produces for himself, on his own responsibility, and at his own risk. The natural result in these circumstances is that sooner or later too many commodities are produced - there is overproduction. When there was production of goods but not of commodities, when, that is to say, production was not effected for the market, then there was no danger of overproduction. It is quite otherwise in the case of commodity production. Every manufacturer, in order that he may buy what he requires for further production, must first of all sell his own products. If in any particular place there is a stoppage of machinery on account of the anarchy of production, the trouble quickly spreads from one branch of production to another, so that a universal crisis ensues.

These crises have a devastating influence. Large quantities of goods perish. The remnants of small-scale production are swept away as if by an iron broom. Even the big firms often fail.

Most of the burden of these crises is of course borne by the working class.

Some factories close down altogether; others reduce production, working only half-time; others are temporarily closed. The number of unemployed increases. The industrial reserve army grows larger. Simultaneously there is an increase in the poverty and oppression of the working class. During these crises, the condition of the working class, bad at the best of times, grows even worse.

Let us consider, for example, the data of the crisis of 1907-10, affecting both Europe and America, in fact the whole capitalist world. In the United States, the number of unemployed trade unionists increased as follows: June, 1907, 8.1 per cent; October, 18.5 per cent; November, 22 per cent; December, 32.7 per cent (in the building trades, 42 per cent; in the dressmaking trade, 43.6 per cent; among tobacco workers, 55 per cent). It goes without saying that the total number of unemployed, taking into account the unorganized workers as well, was still larger. In England, the percentage of unemployed in the summer of 1907 was 3.4 to 4 per cent; in November, it rose to 5 per cent; in December, to 6.1 per cent; in June,1908, it reached 8.2 per cent. In Germany, during January, 1908, the percentage of unemployed was twice as great as during the same month of the previous year. Like conditions were observable in other countries.

As regards the falling-off in production, it may be mentioned that in the United States the production of cast-iron, which had been 26,000,000 tons in 1907, was only 16,000,000 tons in 1908.

In times of crisis, the price of commodities falls. The capitalist magnates, eager to continue profit making, do not hesitate to impair the quality of production. The coffee-growers of Brazil dumped innumerable sacks of coffee into the sea in order to keep up prices. At the present time the whole world is suffering from hunger and from the nonproduction of goods, the result of the capitalist war. For these things are the offspring of capitalism, which decreed the disastrous war. In times of peace, capitalism was overwhelmed by a glut of products, which, however, did not advantage the workers. Their pockets were empty. The glut brought nothing to the workers except unemployment, with all its attendant evils.