Source: “Is Capitalism Collapsing?”, The Call, 13 November 1920, p.2, (1,722 words)
Transcription: Ted Crawford
HTML Markup: Chris Clayton
Copyleft: John MacLean Internet Archive (www.marx.org) 2007. Permission is granted to copy and/or distribute this document under the terms of the GNU Free Documentation License
Unfortunately, comrade Marcy does not live in Britain. If she did she would more readily appreciate the situation here. At the beginning of the year Kahn’s “Collapse of Capitalism” had great vogue at Economic Classes, and greatly influenced class leaders and teachers. At the time I said Kahn’s book was bad economics and bad Marxism. If capitalism is going to collapse from purely financial causes then there is no need of effort, no need for prosecuting the class war. This corrupting influence, some of us in Britain calculated, was being used in the American Socialist Party to dam back action. The split in the corrupt A.S.P. has justified our suspicions, and it is no surprise that the great class war in America is now just beginning to assume revolutionary dimensions after the break away of the Party’s left wing to form the Communist Party.
At Easter time the British press raised the alarm about financial collapse, to justify the withholding of supplies of credit to France, because France was making extravagant demands at the Peace Conference. In other words, Britain used this collapse bleat to justify a financial blockade of France. France yielded all right. However, certain of the best Marxists in the South Wales coalfields were deceived by the press stunt, all the more readily as they had been swept away by Kahn’s book that supplemented their contention that the gradually increasing pressure on the profits of the capitalists would in the end reduce these to the vanishing point with the inevitable collapse of the present system. When I showed the leading articles dealing with France’s obstinacy our comrades at once realised the game.
The British governing class are very apprehensive of America’s menace to Britain’s grip on the world markets, and are following the tactics of America. Trustification is proceeding so rapidly here that very soon we will have virtually One Big British Capitalist Trust, whilst the Government is camouflaging the situation by committees on Trusts and Bank Amalgamations, The impulse towards trustification is admitted by “The Economist” (1-11-19), which, commenting on the fusion of two first-class insurance companies, says, “The test which most concerns this country is whether the fusion of great financial institutions, of which insurance offices are one example, enables them to compete with greater effect in the markets of the world. From that point of view we do not think it can be denied that amalgamation has been beneficial.”
American machinery and scientific methods of speeding-up are universally being adopted to increase output to the American level. The miners and other workers have been denounced for “ca’ing-canny” or “soldiering” and told that, if production is not increased, Britain will lose markets to America, and will in the usual way be ruined. To prevent bankruptcy production must be increased. I assure my audiences that, if British capitalism is going to collapse through restricted production, they ought to “ca’-canny” in real earnest. If comrade Marcy could realise the flood of leaflets, pamphlets, papers, and speeches that urge increased production to save capitalism, then she would clearly comprehend how skilfully our enemy are using the war debt to frighten the workers into policy of reducing the time of producing commodities.
The American Government has left Britain to take the responsibility of crushing Russia, and is delaying the signing of the Peace Treaty, obviously to keep Britain in hot water, because the British Navy won the fight at the Paris Peace Conference.
It seems to me that in August, Austin Chamberlain and Lloyd George again raised the financial alarm in the Commons, to try and persuade America to hurry on her signature to the Peace Treaty and to take over some of Britain’s bad debts amongst the Allies, as well as to prevent British workers demanding more money, and to prepare them for a future break in wages.
The N.U.R. strike success, the continued triumph of the Bolsheviks, the failure of America to sign the Peace Treaty, the knock-out of Woodrow Wilson and his British Capitalist League of Thieves, the futility of the British-inspired International Labour joke at Washington, through the outburst of the Class War in the United States, and the rapidly growing solidarity of Labour here likely to be hastened by the events in America, must have jointly inspired Chamberlain and Lloyd George to go to the other extreme that next year is going to see the roseate dawn of a newly-born capitalism. It may amaze comrade Marcy when I assure her that I am using those very speeches last week to show that Britain is in a tighter corner than I had expected her likely to get into at this juncture, not in the financial sense alone, but in the whole political sense as well.
“The Statist” (1-11-4, commenting on Chamberlain’s speech in the Commons, on Monday, October 27th, says: “It is not easy for the most optimistic of us to see the silver lining in our financial cloud.” “The Economist” (1-/1-’19) also says:— “As a political manoeuvre the speech may have been a great success, but these are not the times for adroit manoeuvres. Not only is our economic recovery at stake, but the very existence of our present economic order, based on private property and individual freedom. If our rulers want to wreck this order they are working very cleverly to that end.” Lord Milner recently expressed the situation more clearly in the Lords, when he said that prices could not be reduced drastically as wages would have to he brought down as well, and that would involve a revolution.
That is it, precisely. Do what our enemy may we are watching and using every circumstance to get our class into line for the last fight. Not financial collapse, but the attempts to escape from a financially tight corner, must involve working-class resistance, leading right on to the revolution.
To come now to the economics. From 1890 onward, the world supply of gold increased from £30,000,000 to nearly £100,000,000, with the result that prices rose everywhere. There was a plethora of gold when war broke forth. That gold exists yet and is being added to. Certainly, the output of gold in South Africa fell during the last two years particularly; partly because of shortage of labour, and partly because an ounce of pure gold was estimated at about 84s. in paper money, whereas it should have been higher, but for the restrictions of the British Government. Still the output is about £35,000,000 this year as compared with £38,000,000 in 1914, not a large fall in the circumstances. Since the embargo on the export of gold was removed In June, certainly gold moved to America; in fact, had to go there to pay part of the excess of imports to Britain from America. Quite a common phenomenon. America, therefore, had more gold than ever before, and is still adding to it from South Africa. If the safety of capitalism depends on the supply of gold, American capitalists, I fancy, can freely.
The Bank of England’s supply of gold has remained fairly steady since June round about £86,000,000, whilst Government has spent £340,000,000 Treasury notes doing the circulation of commodities as well as gold could do it. A game is on, however, as we learn that the gold movements to and from the Bank of England arc no longer announced. However, “The Statist” tells us that for the week ending October £22nd, the gold imports amounted to 6,794,745, whereas the exports were re-turned at .£133,254. In any case, whether Britain is piling up gold at home or not, her empire is on the point of increasing the gold supplies.
Gold bullion now goes at 99s. an ounce, instead of 84s. This means larger profits in mining. “The Share Market Review” (25-10-’19) reports an interview — given by the “Agence Economique et Financiers” (edited by Mr. Yves-Guyot) to Sir Lionel Phillips, one of the South African gold top-notchers. He contends that the increased profits (anticipated by the recent gamble in Kaffirs) will lead to the working, of low-grade ones. He thinks the premium on gold will last ten years, and therefore a gold production will last that time. As extremely rich ones are now being found in the Far East Rand, as comrade Andrews, of Johannesburg assured us in 1918, a vast extension of South Africa’s gold industry may be anticipated.
Even already we find the beginnings of capital increase in gold production. The press of Saturday, October 25th, reports an extraordinary general meeting of the Hampton Properties (Ltd.), when it was agreed to extend its capital to £500,000 by the creation of 100,000 new shares of £1 each to develop its gold production in the famous Kalgoorlie Gold Field, owing to the discovery of new deposits.
If the world requires more gold still, the “price of gold” against paper currency will rise and further stimulation will be given to gold production.
Let us assume that no more gold is available, that all paper currency is abolished, and that, therefore, exchange of goods must take place solely through the use of gold coinage fixed in quantity. What would happen? Exactly what happened after 1877 when Germany, France and other countries became gold countries and reduced silver virtually to token money. The excessive demand for gold increased its value and so reduced prices. A fall in prices would necessitate less gold for circulation. Less gold being necessary, capitalism would not collapse through lack of gold.
With the trustification of bank and insurance companies, and their closer and closer grip over the British Cabinet we may depend on it that expedient will be resorted to to prevent financial collapse as at the beginning of the war. Paper notes will continue in vogue, and the exchange of goods in the world will become more and more barter as before the war, with the need for sending only small quantities of gold hither and thither, View it as I may cannot see the possibility of a financial collapse automatically arising out of the contradictions of the capitalist process of production. The great contradiction is the opposition of classes leading to the collapse of the system through the mighty resounding blows of world-united Labour. On with the Class War.