Like the majority of Marxists internationally you say there was a change in economics in the mid-1970s. Before, we had a very long period of development of capitalism worldwide, not only in the advanced countries but also the beginning of national liberation movements. But after the mid-1970s a new cycle of capitalism began. The world upswing was finished and the problems of oil began. But we as Marxists have had experience of a crisis of capitalism and crisis of revolutionary processes very near together. There was a crisis, and after, an upsurge of the revolutionary movement but not the definite crisis of capitalism or worldwide revolution. For example, in the period between the First and Second World Wars the contradiction and crisis became very deep and had only two solutions: war or revolution, or after a war, revolution. We see today two tiers in worldwide capitalism. What characteristic today is different to the crisis before the Second World War, the changes to regulation of crises and why did we have deep clashes between the imperialist forces in the Second World War? For example, you say that US imperialist forces are so strong militarily that other countries do not try to defeat it. But also Hitler was clear that the US could not be beaten but he tried to think about a European war.
This is a very big subject so we can only give the main points but it is a key question for understanding the past but also the current situation. Firstly, the period following the Second World War was different to that following the First World War, as you pointed out. The period from 1918 to 1938 was, in general, a period of economic stagnation punctuated by the most serious economic crash in the history of capitalism (1929-33). Unemployment rose to 25% of the labour force in the US and a fall of 50% in the national income of the strongest power on the planet. It was a period of revolution and counter-revolution which culminated in the Second World War. The period that followed the Second World War was similar in one sense: out of the Second World War came a revolutionary wave, starting in Italy in 1943-44 with the overthrow of Mussolini. There were revolutionary events in France where the French working class in Paris defeated the forces of the Nazis, when de Gaulle was 50 miles from Paris, and there was the opportunity for another Paris Commune. But the Communist Party stepped in and stopped it. In Britain, there was the election of a majority Labour government for the first time in history. In Italy, the period of the popular front. All of that reflected a revolutionary wave, which was similar in many respects to the post-1918 situation.
Trotsky was right in his predictions of revolution following the war. But he could not foresee that Stalinism and social democracy would save capitalism with a series of popular front governments in France and Italy, the crushing of the revolution in Greece, the Labour government in Britain which carried through a quarter of a revolution, nationalising basic infrastructures. They saved capitalism. In a way, it was a counter-revolution in a democratic form, not by the mailed fist of dictatorship. Having saved capitalism, together with new economic factors, it laid the basis for one of the greatest upswings in the history of capitalism from 1950-74/75.
The main causes of that were the enormous destruction from the war including the proletariat, its labour power, in a sense the liquidation of ‘variable’ capital, as well as the destruction of ‘constant’ capital, together with new techniques in electronics, plastics. This all came together in a spiral effect, which led to the upswing of world capitalism, The Revolutionary Communist Party (RCP) in Britain was probably the first to recognise that, whereas the Fourth International’s leadership had the perspective of an immediate crisis. The Revolutionary Communist Party said that was not going to happen because the political preconditions had been created for this economic upswing. But even the RCP did not expect that the boom would go on for so long and have such a big effect.
This boom, a structural upswing of capitalism, because that is what it was, increased living standards significantly. There was not just the growth of industry in general but also a growth of the working class and growing real living standards. Even some of the crumbs off the rich table of Europe, Japan and America went to the neo-colonial world. An analysis of what happened then is very important for understanding the current situation. The idea then developed, and it still holds sway, that this was the ‘norm‘, the future for capitalism. There is today a harkening back to this ‘golden era’ and the hope that it could return. But this was an exceptional period in the history of capitalism. The periods prior to the First World War, of ‘liberalism’, and now this era of neo-liberalism, are the ‘norm’, The 1950-75 period was exceptional. A period stretching over 25 years is a long time in a man or woman’s life, but it is a moment or half a minute in the life of a society, or in the life of a class.
But 1974/75 represented the high-water mark in the development of capitalism. We have to remember that since 1974/75, we have had a number of crises. The 1974/75 crisis was overcome, in a way a bit like what China is doing at the moment, by recycling petrodollars back to the US, as the oil revenue of the Gulf states was reinvested in the US, Europe, etc. What do you do, keep dollars in the bank? It was recycled back; enormous credit was pumped into the world capitalist system. So the system went on.
In 1987, there was another crisis, with the biggest collapse of the stock market since 1929. Some of our comrades then, such as the late Ted Grant, said that this was going to be another 1929. We disagreed. The reason for this was that, through the boom of 1950-75 and after, capitalism had built up a layer of reserves, of liquidity. Japanese and German capitalism, in particular, stepped in. They delayed the crisis until 1990, when there was a serious recession from 1990-92.
The 1990s
Then we witnessed the collapse of the Soviet Union, which dovetailed with an economic upswing in the 1990s, although this upswing, and the whole period from 1974 to today, does not have the same character as the growth in production of 1950-74/75. Present growth rates are, in general, half of what they were in that period. Productivity rates, despite the claims of US bourgeois economists, are less. We have given all the figures in our publications. The living standards of the proletariat, its relative share, have fallen back. This resulted from the collapse of the Soviet Union and the consequent move to the right of the trade union leaders, as well as the social democratic and Communist Party leaders. The working class was politically and, to some extent, in the trade union field thrown back. A brutal policy of neo-liberalism was carried through right up to the present period. This has altered the share going to the working classes, decreasing dramatically in some countries like Germany and the US, and is a world trend. It is true that the real living standards of a minority of the working class have gone up. But in America, for instance, median average earnings, of what they would call the ‘middle class’ – in reality, the upper layers of the working class – have stagnated or stood still throughout the whole of the 1990s. So this ‘boom’ or growth is a lopsided one. It is not the structural upswing that we saw from 1950 to 1975. And it is preparing the basis now, we believe, for a serious crisis, the timing of which, however, is very difficult to predict.
So our answer is that we have not had a 1929 crash for a combination of reasons. One factor in sustaining capitalism today is the collapse of the former Soviet Union and Eastern Europe and the growth of capitalism in China. According to The Economist, the world labour force is estimated to have doubled with the entry of China and Eastern Europe onto the world market and now stands between two and three billion. Therefore the opportunities for increased exploitation, what Marx called the expansion of the variable capital, labour power, have also increased. Cheap credit has been available, which has been assisted by the fact that, through the exploitation of the Chinese working class, in particular, inflation has been kept down. Cheap goods have flooded the markets of Western Europe, the US, Japan and the neo-colonial world. This has helped to hold down inflation. That, in turn, has had an effect on the rate of interest which has greatly depressed the inflationary tendencies which were a feature of capitalism in the 1970s.
All of these factors have had an effect. But, in a way, the most crucial point at the present time is the existence of a Faustian pact between emerging Chinese capitalism and US imperialism. The crux of the world economy today rests on an investment boom in China – mostly of foreign capital – and of a consumer boom in the US. Chinese capitalism has now built up a huge surplus. First of all, the balance af payments deficit in the US could be anything up to $725bn this year – as much as 7% of the gross domestic product (GDP). China has a trade surplus with the USA of $201bn. It has accumulated $1,000bn – one trillion dollars – of reserves, in paper dollars, for the goods that it has exported to the US. This build-up of dollar assets is used to plug the deficit of US imperialism. The problem is, how far does the gap expand before there is a ‘bust’? From 7% to 8% to 9% to 10% before the holders of US dollars, not just China but South Korea and Asian capitalism as a whole, especially with the beginning of the decline of the dollar, say that is enough? This cheap credit has coalesced with a housing boom, which has allowed US house owners to take out loans; the whole mighty edifice of society has become indebted. The world economy is resting on ‘chickens’ legs’, the US housing boom and the growing Chinese reserves.
It is only a matter of time before the dollar begins to decline. If you are holding huge reserves of dollars, what do you do? It is not rational to hold on to a currency when it looks as though it will decline. You begin to sell dollars, to exchange them for the euro, for instance. Once you start to buy euros, as South Korea did recently, the value of the euro goes up, the price of European exports goes up, which means that Europe’s economic prospects would be profoundly affected. America, Europe and Japan would be seriously affected by this. The capitalists are on a merry-go-round. The Chinese dare not pull the plug on the dollar because that would immediately plunge the US and Europe into crisis. On the other hand, if they don’t maintain the growth rate that they have in China now, they have a revolution. That’s the dilemma. It is a most explosive situation that exists for world capitalism.
Growth rates this year, the real growth rates, are going ahead much more than even the capitalist experts expected. But often a flame flares up brightest just before it dies out. All the ingredients of a collapse are there but when it will happen, who knows? In the Financial Times recently there was a report of the collapse of a hedge fund valued at $6bn! And this evokes a shrug of their shoulders. The threat of a new Long Term Capital Management collapse, as in 1998, is not going to happen, they say. But then they make the point later on in the article that if four or five of these huge hedge funds go at once – bang!
But for the fact that in 1998 the New York wing of the US Federal Reserve stepped in and bailed out Long Term Capital Management, there would have been a financial crisis that would have had world repercussions, and may have led to a serious recession. You would not need a slump of the magnitude of 1929 to produce political convulsions like that today. Such is the development of the world productive forces a drop of a few percentage points in world output would have a colossal effect. In 1974-75, overall world GDP fell compared to the previous year (it almost halved) but there was still a small growth of 1.4%. However, industrial production fell by 1.6%. The Economist now suggests that world growth of less than 2% means an economic recession because this is the minimum growth required to prevent an increase in unemployment. In 1974, the small drop in industrial output, on top of the accumulated factors from the previous era had powerful world repercussions. It led to the revolutions in Spain, Portugal and Greece, and to the upheavals in France and Britain, which were a reflection, ultimately, of these economic processes. So the world economy, world capitalism, and perspectives for world capitalism, are a crucial question.
Nuclear threat
The second point raised is why have we not had clashes between the big imperialist forces as we had in the first half of the 20th century? One reason is the overwhelming dominance of American imperialism, militarily. The other factor is the world relationship of class forces and the pressure of the working class against war and for peace, which has been manifested in the huge anti-war demonstrations. This is a very important factor in checking the capitalists. The third factor, and as important, is of course that war between powerful states would not be on the lines of the Second World War because of the existence of nuclear weapons.
You could theoretically have a situation, and we even raised it in relation to Lebanon, if Israel was being defeated, or if there was an invasion of Iran and imperialist forces were being beaten, that sections of the American military and the Israeli ruling class may consider the use of tactical nuclear weapons. But the use of those weapons would provoke unprecedented mass opposition, even revolution. The revulsion today worldwide against what is happening in Iraq would be dwarfed if one power used tactical nuclear weapons in a conflict. It could lead to revolutionary convulsions, provoked by the prospect that the whole world was disintegrating because of the lunatics who are in power.
On the other hand, a nuclear Armageddon could not be ruled out theoretically if, for instance, a dictator took over in the US, smashed the unions, smashed democratic rights and so on. Faced with a military dictatorship like itself elsewhere which threatened it, theoretically you could not rule out that a US dictator might attempt a pre-emptive strike to destroy that regime. This is not a realistic perspective for the US or elsewhere in the foreseeable future. It would be absolutely mad for even the capitalists to go down this road. It is no accident that military experts dubbed the nuclear understanding between Stalinism and US imperialism ‘MAD’ – ‘Mutual Assured Destruction’. Capitalism does not go to war for the sake of it but to pee. markets, to increase its income and so on. In destroying the working class, which is what would happen in a nuclear war, it would destroy the ‘goose that lays the golden egg’, the source of its profits and, thereby, its power. So we do not think that a general world war of a major inter-imperialist character is possible. Small wars or the kind of conflicts that we have seen in the 1990s involving American imperialism pitted against a national resistance movement; these are possible. A conflict over Taiwan between the US and China, and drawing in Japan, that is also a possibility. But it would stop short of the use of nuclear weapons. Regional wars, using conventional weapons, are also possible as the Israel-Lebanon conflict shows. A similar clash could develop between India and Pakistan.
But another, in a sense more important, ‘war’ could take place in the modern era, a trade war. This is really the modern form of war, because the lead up to an actual war, an armed conflict, is invariably preceded by an economic clash between the different powers. That was the reason for the First World War. It was the reason for the Second World War, as well. German capitalism was hemmed in and was seeking markets, colonies and so on in Eastern Europe at the expense of British imperialism.
The effects of the economic crisis on workers
There are two schools of thought we have to discuss in relation to the crisis of capitalism. On the one side, some people say the crisis begins, unemployment rises and there is a worsening of the situation. That is one thing. The second school said: No problem, now there is a crisis, but in two months we think there will be a recovery of the European economy, so also in Italy. The working class was silent in the period of crisis, because they did not want to lose work. They were afraid to struggle during the crisis. When it looks like the capitalists have expanded the economy, the first struggle begins. But in Italy in 1969 there was a huge wave of class struggle in the period of the boom economy, when the working class said: Alright you have huge profits, you propose to me to buy a car in the advertisements, but have no money, give me more money. And the process of class struggle began. Of course, in Italy there were many questions that opened up along the road after a long hot autumn at the end of the 1970s. But the process started in the period of boom. There is a period of the development of capitalism, of production, and the class struggle rises.
Put forward crudely – economic crisis equals passivity, boom equals radicalisation or vice versa – it is a one-sided way to approach the issue. It depends on what has gone before: what was, what is, and what will become. Let us take the two examples that Trotsky gives, of the 1905-07 revolution, where there was a revolutionary wave in the first Russian Revolution. The defeat of the revolution then coincided with the downturn in the economy and a worsening of living standards. This did not radicalise the proletariat but disheartened them even more. In the crisis of 1929-33, because the US working class was not prepared, it was stunned. There were no strong trade unions, they were not organised in the new big industries, only a small minority was organised. There were no mass socialist or communist parties. It took four years, and only when the economy began to develop from 1933-36, for three million workers to pour into the trade unions and create new huge, potentially radical and even revolutionary, unions. The possibility of a mass labour party based on the trade unions was posed in America. John L Lewis, the mineworkers’ leader, was on the point of launching the idea of a labour party in the late 1930s. These are two examples. It all depends on what has gone before and what will develop.
Take this boom, for instance. Normally in a boom, which is to some extent what we have had in the 1990s, the working class manages to increase its living standards – pushing up wages and achieving shorter working hours. When there is an upswing, in general, the unions should be strengthened, Yet this boom has resulted in a weakening of the working class because of the trade union leaders. The workers’ organisations act as a huge brake. We could give many examples of this in Britain as you could for Italy.
It is necessary here to make a general point. In the next period, if a 1929-type collapse takes place, it is possible that the working class could be stunned. This is because neo-liberalism has weakened the trade union movement and lowered consciousness. A 1929 situation, on the industrial front, could further weaken the working class. If you have 600 workers in a workplace and it goes down to 300, the workers who are left would say, I have to keep my head down here. They may conclude that it is not the time to fight. If there is then an increase in the workforce in a small boom then, possibly, they would feel stronger and be prepared to fight in that situation.
However, while on the industrial front the working class was stunned in the US between 1929 and 1933, politically it was a different matter. A layer of politically advanced workers began to draw anti-capitalist, socialist and revolutionary conclusions and some moved towards the Communist Party. The capitalist system was shown to be bankrupt. Se to some extent we have to differentiate between the industrial and political responses of the proletariat in a given situation. There will be occasions when a worker will say, I cannot fight industrially, am too weak, but I can do something politically, can move in a political direction, I can make a difference in this field. A 1929-type situation is not the best for us in this period, after what has gone before.
If there is a small drop in production in the next period, which undermines the confidence of the bourgeoisie, that would have a radicalising effect without disheartening the working class. Also it would raise political questions about the viability of the system. However, we cannot determine the character of the economic cycle in advance. We have to analyse each situation as it develops. There is no cookbook, no recipe which can determine a priori exactly how the economic period opening up will be. Perspectives are a rough guide. It is an approximation of the situation, it is not a blueprint, as to the precise economic and political processes that will unfold.
No ‘final crisis’
You say that the prediction of Trotsky before the Second World War was right.
In one sense, yes.
Yet, in the Transitional Programme he wrote that the productive forces cannot develop any more and that capitalism has no solution. After that you say his prediction was right because you had a revolutionary period in Europe. But his prediction was broader. He was also sure that Stalinism would fall during the Second World War. He was sure that there would be a rising of the working class during or just after the Second World War. The working class would arrive at a revolutionary level, so destroying and defeating Stalinism. Because of their level of consciousness, Russian workers defeated the Mensheviks and the Social Revolutionaries.
But the Bolshevik party had led a revolution before, in 1905, and were much stronger in their roots than any other revolutionary force was in Europe or internationally in 1943-47. They were much stronger and they did not have the added impediment of the Stalinists.
The general prediction of Trotsky was that there were some weaknesses; we can say that capitalism destroyed much of the productive forces. During the Second World War you have not only the destruction of the productive forces, you have inventions, development of the chemical industry, plastics. There was the first nuclear bomb.
It always happens that there are new inventions developed in war. They are a by-product of military conflict.
Today, if you only look at the GDP worldwide you have a development under capitalism…
In the period 1950-75, four times the rate of development of any other time in history.
… But if you look worldwide, you have stagnation, the artificial development of the United States and a rapid development of China, India, etc., can we then continue to speak of the productive forces stagnating as discussed by the Marxists?
Marxism is the science of perspectives but all perspectives are conditional including those dealing with the development of the economy. I will make a general point here. Engels said in the introduction to the Class Struggles in France, it is never possible to have a complete view of what is happening in capitalism at each stage, a completely accurate view, especially in a crisis. Only afterwards when the statistics are compiled is it possible to have a complete picture. That is true today even with computers, the latest analyses of the stock exchanges and with all the means of gathering information, because capitalism is still a blind system. It is the blind development of the productive forces behind the backs of society. It is an unplanned system and despite all the attempts of the capitalists to plan it falls down because of private ownership and the nation state, with the individual and national interests of each capitalist taking priority.
The second point is that it would be wrong to use a statement of Trotsky or Lenin in one historical context and say that is the ultimate truth. Let me give an example. Trotsky said in the Transitional Programme, within ten years not one stone upon another of the old internationals will be left and the Fourth International will be the biggest force on the planet. Some Trotskyists then claimed, ten years later: “It is now 1947, next year we will be the biggest force on the planet.” It was using the letter of Trotsky against the spirit, method of analysis and approach.
Trotsky also wrote that capitalism was stagnating. But if you took capitalism from 1918-38, net production grew. But when we are talking about the productive forces we are also talking about the proletariat as well. This is the most important productive force, and the inability of capitalism to absorb the working class is a symptom of endemic crisis. Apart from 1918-29 in the US, the inter-war period was characterised by short booms and drawn-out crises, which characterised the whole period. From 1918 some countries were in a much better position than others and the world economy was less dominant than it is today. But even then, Trotsky objected when Zinoviev said in 1924 that we were entering the ‘final crisis of capitalism’. There is no such thing as a ‘final crisis’. Capitalism will always find a way out on the bones of the proletariat, by the destruction of the productive forces. 1929-33 saw the destruction of the productive forces, of constant capital and variable capital, and the inter-war period saw a holding back of technology.
You talked about the use of technology after 1945 but do not forget that, while there was a substantial development of technology before the Second World War, it could not be utilised fully because of the crisis. Twenty to 30 years ago British capitalism had two thirds of the research and development of the whole of Europe. But it could not fully use its ingenuity and technological edge in its domestic market, which was too small. Its invention could only be properly utilised by bigger powers. To return to Trotsky. He said unless the proletariat takes power then, through the destruction of the workers’ organisations and drastically reduced living standards or through war, capitalism will find a new equilibrium. There is no ‘final crisis of capitalism’ unless the working class takes power. It will only be resolved by the conscious action of the proletariat to change society. Then, of course, there will be opportunities to develop technology fully.
Trotsky was right in his prediction of a post-war revolutionary wave. What you said about the Soviet Union is true: he expected Stalinism to collapse. But he later made a correction in his unfinished biography Stalin. He wrote that capitalism worldwide was in such a parlous state that there was an international tendency towards collectivisation and therefore it was even possible that the Russian Stalinist regime could go on longer. He was correct in anticipating the revolutionary wave. What he could not estimate – and nobody could have done this before the war – was the ability of social democracy and Stalinism together to successfully betray this revolutionary wave. The two powers which emerged from the Second World War strengthened were the US on the one side and Russian Stalinism on the other. The latter extended its power to Eastern Europe and rapidly rebuilt the Soviet Union. That could not have been anticipated. The destruction of the war laid the basis, together with the political factors, for the economic recovery. Without the political factors, Europe would have remained broken-backed after 1945.
So radicalised was Europe by the devastating effects of the war that the German social democracy’s slogan of 1948 was for a ‘socialist united states of Europe’! Italy was convulsed in that whole period, France too. The stability came really after 1950, and came very slowly. So the political preconditions for this framework of capitalist growth were absolutely essential.
In Trotsky’s writings are some of the keys to understanding the world today. But to use a key successfully, you have to know how to put it in the lock and how to turn it. They are not a philosopher’s stone. By merely repeating the words of Trotsky in a much more complicated world situation we will not advance one iota. That is, unfortunately, what some of the “Trotskyists’ have done. They have repeated the phrases of Trotsky on a whole number of issues without understanding the context, and without understanding the historical background and the changes that have taken place today.
Trotsky posed a whole number of questions, such a s the idea of a black republic in South Africa and a separate state in the South of the US for blacks. But events worked out differently. On the Jewish question, look at Trotsky’s position and the way events actually developed. One has to have an ability to analyse new phenomena by trying to utilise and understand the method of Trotsky but not just by repeating by rote the phraseology of Trotsky.
The environment and China
I asked a question about the new approach, the question of the productive forces, because the Marxist movement says there are developments in the level of productive forces and socialism is possible. So we have two questions: worldwide, the productive forces are so big that you could have socialism tomorrow, I think you agree.
Yes, because we can abolish scarcity.
There are the possibilities for planning the economy…
For the first time in history, want, privation, poverty and unemployment could disappear, in one generation.
This is the first question. The second question is the kind of development of the productive forces under capitalism. One simple example. It is impossible, unlike Italy where every two people has a car, use a car, that the Chinese and Indian people could have the same. It is not just an economic question, there is oil …
It is environmental as well.
All the things bought in Western countries, the poor people cannot buy. It is not only economic but environmental. Did Trotsky ever speak about the question of the environment? Is there a new relationship in the development of the productive forces and the world, or not?
This is a very important issue and is crucial, especially for the new generation and for the whole of humankind. But it is not true that Marx, Engels Lenin and Trotsky never spoke about the environment, they did. In the third volume of Capital, Make makes the point: “From the standpoint of a higher economic form of society private ownership of the globe by single individuals will appear quite as absurd as private ownership of one man by another. Even a whole society, a nation, or even all simultaneously existing societies taken together, are not owners of the globe. They ate only its possessors … they must hand it down to succeeding generations in an improved condition.” We must pass the world on to the next generation in a better state than we found it. Trotsky spoke in a similar vein in works like Radio, Science and Technique. The Bolsheviks were very interested in the harmonisation between the productive forces and the environment.
We face an unprecedented situation today. The kind of development of the productive forces under capitalism in an unplanned way, even if you do not have a new economic crisis, means that the majority of humankind will have to challenge this system on the question of the environment alone in order to prevent an unstoppable decline. The leading Chinese environmentalist, semi-officially supported by the government, has said that for China to reach the living standards of the US will need the resources of four worlds! Do we conclude from this that the Chinese people will never reach the living standards of the American people today and that they are condemned forever to backwardness? I think it would be wrong to say this. We can have sustainable growth and we can avoid the crimes that have been committed against the environment by capitalism and Stalinism.
Let us just take the question of China and India or the neo-colonial world as a whole. Under capitalism, industry equals high living standards and wealth while agriculture, in general, equals cultural backwardness and poverty. In order to overcome that problem on the basis of capitalism, the backward, economically underdeveloped countries have to try and imitate the advanced industrial countries in every respect by developing their own steel, car and all the other modern industries. There is a huge duplication accompanied by massive urbanisation. For the first time in history, just over 50% of the world’s population live in urban areas.
This itself will create massive urban conurbations of 20, 30, 40 millions, in the future. To avoid this nightmare poses the need for democratic planning. It raises the necessity for a new world division of labour.
Under a world socialist plan, for instance, agriculture would not equal backwardness, and industry would not automatically equal higher living standards. The surplus that would be generated by industry and by agriculture to a degree would be developed through a world plan. On this basis it would be possible to harmonise the resources of the world between industry and the agricultural areas to the mutual benefit of the peoples of the world. It is not for us to work it out in detail how the working class and the poor will do this when they take power. The Stalinists attempted in a bureaucratic fashion to organise a division of labour in Eastern Europe. They had grain countries like Romania and those like Bulgaria for fruit. Others concentrated on different branches of production. But it was done in a bureaucratic fashion and the agricultural areas remained the most backward. Their wealth was sucked out for the benefit of the bureaucracy in the industrialised urban areas.
We are opposed to nuclear power, nuclear fission, but the possibility of clean energy and the resources to be put into that have been outlined in a pamphlet produced by one of our comrades. [Planning Green Growth, by Pete Dickenson.] This poses the need for socialist planning of industry, society and the environment, which goes into some of these issues. The environment is absolutely crucial. It is not just an abstract question. Our comrades in places like Pakistan, Nigeria, Sri Lanka, in Malaysia, which I visited, have to fight environmental battles in their societies to a much greater extent than existed in the past. When I was in Malaysia in 2005, there was one Chinese village I was taken to by the Socialist Party of Malaysia (PSM), which is not affiliated to the CWI but with whom we have friendly relations. There was a rubber factory poisoning the people in the village and, as a result of a mass campaign, they got the rubber factory removed. So the environment is both a general and also a concrete question.
I would add that Marx in the first volume of Capital, in the chapter on the working day, also provides a number of examples of the adulteration of food like bread – which is even the case today– and of the effect of capitalism on the environment. It is not true, as some of the environmentalists like to say, that Marx was only interested in a one-sided way in the development of the productive forces and the economic aspect. He was concerned about the alienation, which is a major problem today, the adulteration of food, the question of the environment, the need for each generation to leave the world in a better state for the next generation.
The falling rate of profit
What do you think of Marx’s theory of the falling rate of profit? Marx wrote about it as a tendency and also about a counter-tendency.
We think that Marx was correct about the tendency of the rate of profit to decline. Historically, there has been a colossal growth of constant capital, dead labour if you like, to use Marx’s terminology, compared to living labour, variable capital. Consequently, capital, said Marx, has a tendency to become less and less ‘organic’, with a tendency to create relatively smaller and smaller annual increments. However, the capitalists express that as the technical growth of capitalism but dead labour predominates over living labour. It is generally accepted even by pre-Marxist economists as an empirical fact that, as capitalism grew, the rate of profit declined. Marx described it as a ‘tendency’ and analysed this wonderfully in detail in part three of the third volume of Capital.
What immediately concerns the capitalists is not the tendency of the rate of profit to decline or even the rate of profit. It is the amount of profit which they can accumulate. The ‘counteracting causes’ are things like the depression of wages below their value, which is what we have seen to some extent in the 1990s with neo-liberal measures. Profits for the capitalists are at an unprecedented level, the highest they have been for 70 years in the case of the US. But it is also a general phenomenon throughout the advanced industrial countries. There are a number of other counteracting factors which can have an effect but again, to use Marx’s terminology, there are certain ‘impassable limits’ beyond which the capitalists cannot go.
There is empirical evidence to show that Marx was right but this process is revealed over time and sometimes over long historical periods. We do not talk here necessarily of two, three or five years. It is a long-term trend. But periods can be reached where there is a sudden collapse in profits. In Britain, for instance, in one year of the 1970s, there was an absolute drop in the mass of profits. There is a constant battle between the classes to garner the surplus created by the working class, thereby controlling art, science, culture and therefore the state. When the amount of profit drops absolutely, even the capitalists stop investing. Why should they invest £2 million when they only get £1,975,000 back? When they refuse to invest, then there can then be a crisis. This results in a ‘jamming’ of the system leading to the crisis itself. Unlike some people who claim to be Marxists and who dispute this aspect of Marxism, we do not. We think the tendency of the rate of profit to decline is correct theoretically and it can be verified empirically, especially today.
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