N. Bukharin

New Forms of the World Crisis

Source: The Labour Monthly, September 1928, pp. 533-543 (3,954 words)
Transcribed: Ted Crawford
HTML Markup: Brian Reid
Public Domain: Marxists Internet Archive (2009). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.

(Report on behalf of the Executive Committee to the Sixth World Congress of the Communist International, made on the 18th and 19th of July, 1928. The Report covers the four years that have elapsed since the Fifth World Congress. The LABOUR MONTHLY will publish, this month and next, all the general sections analysing the changes in Modern Capitalism.)

COMRADES! Much has happened since the last Congress of the Comintern. In order that we may be able better to understand the events that have taken place during this period, and to get them in the right perspective, we must consider the stage of development through which we have just passed not as something separate and isolated, but in conjunction with the preceding stages. A general consideration of the whole post-war development shows us that this development is obviously divided into three periods.

The first period was the period of acute revolutionary crisis, particularly in the European countries. It was the period in which revolutionary development reached its highest stage, and an enormous revolutionary wave swept over the whole of Europe. The culminating point of this period was reached in the years 1920-21.

This first period includes the February and October revolutions in Russia; the workers’ revolution in Finland in March, 1918; the rice riots in Japan in August, 1918 (called forth by the rise in the price of rice); the revolutions in Austria and Germany in November, 1918; the proletarian revolution in Hungary; the rebellion in Korea in March, 1919; the setting up of the Soviet Government in Bavaria in April, 1919; the bourgeois national revolution in Turkey in January, 1920; the seizure of the factories by the workers in Italy in September, 1920. This period must also include the Red Army’s march on Warsaw, and finally we have the so-called March action in Germany in 1921 . . . .

We see, therefore, that this first period was crammed with revolutionary events of great magnitude and of great historical significance. These events brought out with tremendous clarity the process of decay within the capitalist system and above all within European capitalism. The first period must be regarded as having ended with the year 1923; in September, 1923, the rebellion in Bulgaria ended in severe defeat, and in the autumn of 1923 the German proletariat suffered a fresh defeat.

The defeat of the proletariat in Western Europe served as the political starting point for further development on the part of the bourgeoisie. These defeats, and particularly the defeat of the German proletariat, marked the beginning of the second period of development in Central Europe and in Europe as a whole. This was the period of the capitalist offensive, the period of defensive proletarian struggles generally, and defensive strikes in particular. It was the period of the partial stabilisation of capitalism. Several of the defensive battles of the proletariat, it must be added, assumed colossal dimensions. Among these were the general strike and the miners’ strike in Great Britain. The second period brought greater “peace and order” to European capitalism and to world capitalism. Events of a directly revolutionary character passed from the continent of Europe to the colonial and semi-colonial countries. In 1925 we had the rebellion in Morocco; in August, 1925, we had the rebellion in Syria, and in the same year the great struggle in China assumed a more acute form. While in the first period the directly revolutionary situation was of a sharply defined European character, in the second period the directly revolutionary situation became the characteristic feature in the colonial periphery of world imperialism.

From the economic standpoint, from the standpoint of the analysis of capitalist economy, the second period may be described as the period of the restoration of the productive forces of capitalism. In this period, supported by its political victories and its relative political stabilisation, capitalism strove to achieve, and ultimately did achieve, a certain economic stabilisation.

The second period passed away to give place to the third period, the period of capitalist reconstruction in which the pre-war standard was exceeded both qualitatively and quantitatively. The growth of the productive forces of capitalism is linked up on the one hand with fairly great technical advances and on the other with a reorganisation affecting the economic relationships within each industry. Technical reconstruction, economic reorganisation and the rapid growth of capitalist trustification are, however, accompanied by a growth of the forces hostile to capitalism and by an extremely rapid development of its inherent contradictions.

Among these must be included first of all the growth of the U.S.S.R. The period of the reconstruction of capitalism “coincides” with the period of reconstruction in the U.S.S.R.; the period in which a new technical basis for production is created, and, corresponding with it, a certain economic reorganisation both in the social-economic sense of this word (the growth of the socialised section of our economy) and in relation to the increasing consolidation of our apparatus of production. The economic and political growth of the U.S.S.R., the development of the Chinese revolution, the ferment in such a country as India, and finally the rapid growth of the inherent contradictions in the capitalist section of our present world economy, and bound up with all of these, the ever increasing danger of war—these represent the “reverse” side of world development.

It is necessary to analyse carefully the new world situation that has arisen in the third period. Unless we appreciate all the fundamental world economic and political changes that have taken place, we shall be unable to lay down the right political line and to deal properly with the tactical problems of the moment.

From the very outset it must be stated with the utmost clearness that the thesis of the stabilisation of capitalism now bears a character somewhat different from that of a year ago, and this alteration in the manner of presenting the question must be taken in consideration in analysing the international situation. I come now to the analysis itself.

First of all I will deal with the technique of the present day capitalist world. We must concede that a considerable growth has taken place in the electrification of production in capitalist countries. Important inventions have been brought out in the sphere of applied chemistry. The new methods of synthetic production of fuels and raw materials, the Bergius method of producing benzine, the production of artificial silk, &c.: all these are characteristic features of present day capitalist production. At the same time we must take note of the growing utilisation of light metals, particularly of aluminium, the wider application of new machinery and apparatus in agriculture as well as in industry: for example, the development in the United States; the use of very complicated combined agricultural machines, of automobile transport; the extensive application of the endless conveyor system and the new methods of organising labour in the factories; standardisation, mass production, &c. All these are the most characteristic features of present day capitalist technique.

I will quote a few figures in relation to the production of electrical power in the United States.

Production in Million Kilowatt Hours:
1912 1922 1926 1927
17,572 47,569 73,791 79,724

One can produce a quite enormous amount of material showing convincingly that the curve of development of capitalist economy, both from the qualitative and quantitative point of view, marks definite progress.

A few figures to characterise the dynamics of the growth and the redistribution of the parts played by various metals in world industry. If we take the total production of 1913 at 100, the figures of production of various metals in 1926 will be as follows:

Steel 122
Copper 150
Lead 107
Aluminium 310

Aluminium is successfully competing with other metals in the electrical industry, in railway construction, and in the construction of street cars in the United States and in Germany.

of artificial silk. The world production of artificial silk is shown Still more interesting are the figures illustrating the production in the following figures (in thousands of kilogrammes):

Pre-war production 11,000
1921 30,000
1925 84,000
1927 125,000

Taking the pre-war figure at 100, the index numbers for the subsequent years will be as follows:

1921 173
1925 668
1927 1,030

With regard to the latest inventions and their influence on production, we will take as an example the Bergius method. In Germany, synthetic benzine produced by this method already represents 12 per cent. of the total amount of benzine utilised in the country.

At the present time extensive plans for the introduction of new technical processes are being made in many countries, for example in Germany and in England, which will have very important economic consequences. These are the schemes to supply gas over long distances in Germany, electrification in Great Britain, &c. It is easy to understand that these technical successes, even if we put the word successes in inverted commas, will inevitably lead to an increase in the productivity of social labour. Gunter Stein, in the Berliner Tageblatt, writes, for example, that in the United. States the gross output of the manufacturing industries during 1923-24 increased by 4.5 per cent. compared with the normal, whereas in the same period the number of workers employed diminished by over 5 per cent. This means that the productivity of the worker has increased approximately by 30 to 40 per cent.

The development of the chemical industry is important not only from the general industrial point of view, but also from two others: (1) from the point of view of war preparations; for the chemical industry is a first-class war industry; and (2) from the point of view of the possibility it holds out of introducing very important changes in the methods of agricultural production. The world output of chemical products in pre-war times amounted to 10 billion German reichsmarks; in 1923-24 it amounted to 18 billions. Taking the previous figure at 100, the index number of the second figure will be 140. You will observe that the production of chemical products has greatly increased. The utilisation of nitrate products in the important capitalist countries has increased as follows:

(In thousands of tons of pure nitrates.)
Pre-war 1926
Germany 260 430
Great Britain 54 61
France 79 152
Italy 22 54
United States 167 341

I do not think these figures require any comment, they speak for themselves. The changes in technique which in some countries, primarily in the United States, are assuming the character of a technical revolution, are quite definitely linked up with the trustification of national economy, with the establishment of gigantic banking consortiums, and already in the post-war period with the growth of state capitalist tendencies in multifarious forms. I will mention a few examples. Everyone knows, for example, of the existence of gigantic trusts like the German Dye Trust, &c. Everyone must know what a powerful trust has grown up in the English chemical industry (the so-called Mond Trust, from which originates the notorious “Mondism”). All the comrades are aware of the existence of Standard Oil in the United States. We are now passing through a period not only of the birth and rapid development of colossal capitalist organisations within each capitalist country, but we are also passing through a period of the establishment of giant international trusts. I have before me a whole list of such trusts, which it would be rather boring to read out here.

A short time ago, at the Congress of our Party, I advanced the thesis that we are now observing a certain growth in State capitalist tendencies—not in the pre-war form of “war capitalism” (the social deceivers of all breeds had the impudence to describe this war capitalism, resembling a form of penal servitude, as “war socialism”), with the card system of rationing and the specific features connected with war. In a new form, or rather in new forms, the process is developing, in which trusts, cartels and banking consortiums are becoming more linked up with and grafted on to the State machinery of the imperialist bourgeoisie. It is not so very important in what exact sort of “shell” this process develops—whether in the form of the State ownership of industrial enterprises and increased State interference in economic life, or in the form of the so-called capitalist economic organisations “capturing the State from below” as the Liberals express it. Of course, we must categorically reject this latter expression: there is no need to capture the State if the State apparatus is already in the hands of the imperialist bourgeoisie. What we have in mind is the organisational forms in which the economic organisation of the imperialist bourgeoisie become grafted on to organs of the bourgeois State. Thus, the form this process assumes is of secondary importance. All that I wish to assert and stress here is that this process is definitely taking place. We observe it taking place in Italy, in Japan, in the United States and in Germany in the greatest variety of forms. There is not the slightest doubt that the process is taking place. Certain comrades formerly expressed doubt concerning this matter. But since then the works of the comrades who have specially investigated it have been published; I have in mind particularly the works of Comrades Wurm and Lapinsky, who have investigated this subject from the point of view of the development of State and municipal industry and from the point of view of the mutual relations between the private capitalist and State organisations of the imperialist bourgeoisie. All the evidence in this field reveals a State-capitalistic tendency in the present development of imperialist economy.

What are the political results of this process? This we can see from the following example. In America a certain Theodore Knappen, in an article in the Magazine of Wall Street for March 19, 1928, entitled, “Business Qualifications of the Leading Presidential. Candidates,” wrote as follows:—

It is not an exaggeration to say that he [Hoover] has considered himself and has actually been the director-general of American business. Never before, here or anywhere else, has a governmental department been so completely fused with business. . . . He respects big business and admires big business men, he considers that there is more good in one man who does well a big job than a dozen learned dreamers talking about what they have never attempted and will never accomplish. . . . . There can be no doubt that Hoover as President would be without precedent. He would be a dynamic business President even as Coolidge has been a static business President. He would be the first business as distinguished from political President the country has had.

The fact that Hoover is described as Director-General of Trusts is in itself a striking political expression of the process of grafting that is taking place between the capitalist trust organisations and the capitalist political State organisations.

The following questions arise, assuming all these facts are correct, what becomes of our analysis of the so-called stabilisation of capital? What becomes of our thesis concerning the partial, temporary, &c., stabilisation—stabilisation with all its definitions and qualifications? What becomes of the question of the general crisis of the world capitalist system when we ourselves admit technical achievements, the growth of trusts and other capitalist organisations, and when in this sense we admit that capitalism has undergone considerable consolidation? What becomes of our special and specific characterisation of stabilisation? I think that these questions must be clearly presented and clearly replied to. Otherwise we stand the risk of dropping into ideological confusion.

First of all I want to quote a few literary and political references to this question. How did we, a few years ago, picture to ourselves the process of the further development, or the further collapse, of the capitalist system? First of all I will deal with the period when we drew up the first draft of our programme. We then formulated the thesis on the condition of capitalism in this way: the capitalist system is undergoing a process of decay—a process of decay without qualification. The fate of capitalism as it presented itself to us at that time may be described in the form of a steadily drooping curve.

When we took up the discussion of the draft a second time, we came to the conclusion that some changes ought to be made in the definitions. At the Fifth Congress our thesis on the state and ultimate fate of capitalist economy was already formulated somewhat differently. Then the word “stabilisation” came into use with various qualifications such as “partial,” “temporary,” &c.

Now, I submit the following question: what meaning have these definitions and qualifications at the present time? Have they any meaning at all? If they have any meaning, is it the same meaning that we attached to them before, or is it some other? In my opinion the meaning of these definitions now differ, somewhat from the meaning we formerly attached to them.

I think that, taken as a whole, we may, in a semi-literary style, define our previous position on this question in the following manner.

It was assumed that some increase in production was observed in only one or two countries, and that only to a certain degree as an exception. This increase did not appear to be particularly characteristic, and was regarded merely as an auxiliary “conditional” circumstance. To-morrow or the day after another process would set in. If on a certain day we observed in a certain country a growth of technique or of productive forces, or a favourable economic situation, we said that this was only a sort of economic nine days’ wonder, which could not be taken seriously.

It can, and it should be said that at that time there were definite grounds for appraising the situation in this way, but the definition of stabilisation as relative stabilisation, in many respects, no longer corresponds to the present situation.

Take each country in turn. The United States is marching ahead. Let us assume that predictions concerning a relative crisis in America are true. This possibility is by no means excluded; in fact it is very probable. But the general course of development shows a growth of industry, a growth of production. For the first time in world history and in the history of the Labour Movement—to speak in the words of Marx—“V” (variable capital—the value of labour power) in the United States is diminishing not only relatively to “C” (constant capital—the value of means of production), but also absolutely. The number of workers employed in industry is diminishing. This is the first time in world history and in the history of the Labour Movement that this has occurred on so large a scale.

Some comrades may say that this is a pessimistic view. This is not true. We must draw a distinction between optimism and stupidity. These are two different things. If we do not wish to be stupid, we must take the facts as they are. This is the first obligatory pre-requisite for all but stupid tactics.

Take another country, Germany. Some time ago, when I wrote about the growth of technique and of the forces of production in Germany, the “Ultra-Left,” anti-Communist Maslov roundly abused me. Now one must be blind not to see that German capitalism is developing rather rapidly, and the talk one hears now about imperialism, the dreaming about “mandates” and the longing for colonies, the building of battleships, &c., are by no means accidental.

Take France. It must be clear to everyone that a tremendous difference exists between pre-war France and post-war France; everyone must see that old usurer France is acquiring new qualities and is now becoming transformed into a substantial industrial country.

Take Great Britain. On the whole Great Britain is passing through a period of decline; her strength is undermined, the might of her Empire is waning. But, all the same, even Britain is now straining to exert her powers. On certain sectors the British bourgeoisie is succeeding in increasing the forces of production; for example, in the so-called new industries.

But even if these facts are true, does it mean that we have to confess that the crisis of capitalism has been liquidated? Or does it mean something else? I would like to put this same question in a more sharply political form: Does this analysis coincide with the analysis made by the Social Democrats?

I think it is quite easy to understand the real state of affairs. The correct reply to this question should be: The general crisis of capitalism continues, more than that, it is developing, although the forms of the crisis are now different. Formerly, we examined the most important symptoms of the crisis in the following manner: we took each in turn and said, In this country capitalism is undergoing a process of decline, in that country and in another the same process is observed, in a fourth perhaps the process is not so rapid, but it is nevertheless there. Like everything else in the world, our appreciation of the crisis of that time had its roots in the economic conditions then prevailing. Germany had reached the lowest ebb of economic collapse. In a number of other countries, particularly in Central Europe, the situation was similar. Thus, our former definitions were based on a somewhat exaggerated estimation of certain real facts. Now the earlier forms of the crisis have given way to new forms. That is the whole point.

We must not picture the crisis of capitalism and of the capitalist system as a steady decline in almost all capitalist countries or even in a majority of countries. The situation is not quite that. The crisis of capitalism lies in that as a result of the preceding war and post-war phases a fundamental structural change has taken place in the whole world economy, a change which inevitably intensifies the contradictions of the capitalist system a thousandfold, and will finally lead to its doom.

Take for example such a fact as the existence of the U.S.S.R. What does it imply? First and foremost the existence of the U.S.S.R. is the result of the post-war crisis of capitalism; secondly, it, implies that the crisis is continuing; for we have here an alien, hostile, essentially antagonistic body developing within the economic system of world capitalism. An alien body! Is this not a fundamental change in the structure of world economy?

I have already noted the fact that the direct revolutionary situation has passed to the Orient and to the colonial periphery generally. This, too, is a result of the post-war crisis. But are not these mighty revolutionary developments in the periphery of capitalism an expression of its profound crisis?

Further, what does the so-called disproportion between the United States and Europe, which is striving to liberate itself from the hegemony of America, imply? It, too, implies a structural change in the system of world economy. Finally, the contraction of the home markets in capitalist countries and the impoverishment and pauperisation of the colonies raise the question of the relations between production and consumption in an entirely different manner from that in which it presented itself under the “normal” conditions of capitalism. A situation is developing in which the whole future development of the capitalist system can proceed only in the forms created by the previous critical periods of capitalism. Capitalism cannot proceed as if the U.S.S.R. did not exist. It cannot proceed as if the Chinese Revolution, the disproportion between the United States and Europe, the contraction of the markets, &c., &c., did not exist.

(To be continued)



Note by transcriber—There is no other article by Bukharin in Labour Monthly from now on.