Don Hallas

The Permanent Crisis

(June 1952)

From Socialist Review, Vol.2 No.2, June-July 1952.
Transcribed by Mike Pearn.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Everybody knows about the crisis. For years now e have heard politicians and radio commentators, business-men and archbishops, professors and union leaders, all plugging the same old themes: “Work or Want,” “Productivity Pays,” and all the rest of it. The strange thing is, though, that none of these learned gentlemen who so kindly explain about the balance of payments, the dollar deficit, why too much money chases too few goods, why you can’t – or shouldn’t! – reduce profits, and many other things besides, ever tells us the real cause of all the trouble. It isn’t because the cause is difficult either to find or explain. Quite the contrary. It’s because once the real cause is understood it’s easy to see the solution and – this is the point! – the solution involves a radical re-organisation of society, which would, among other things, remove these kind gentlemen and the class they represent from their present privileged positions. It would make them “Work or Want” – and, naturally enough, they don’t much care for the idea!

Why the Crisis?

The crisis is not due to the last war – that merely speeded up the process – nor is it basically die either to Mr Molotov’s “No,” to the workers not working hard enough, or to alleged “socialist mismanagement” whilst labour was in power. No; the real cause lies elsewhere.

Great Britain, the first country to develop as a modern industrial society, was the first to go in for exporting industrial products on a large scale. Because there was a clear field the rulers of Britain did very well out of this business and accumulated great wealth. They built more and more factories, employed more and more workers, and opened up new markets all the time. After a while they started exporting capital as well as commodities; that is to say, they constructed railways, ports, factories and mines in various parts of the world, especially in their Empire. The profits from these enterprises flowed into Britain and still further enriched the British capitalists.

But there was a fly in the ointment! What the British could do, others could do also – and not only could do, but did do. France, Belgium, Italy, Japan, Russia and, above all, Germany and the USA, developed modern industries of their own, and the market for British goods was narrowed down. Not only did these countries attempt to supply their own needs and rid themselves of dependence upon Britain but they also competed with Britain in the rest of the world. But why, it may be asked, shouldn’t there be room for all the industrial countries? After all, there was – and is – no lack of people who need the products of industry. A very large part of the world’s population lives in wretched poverty and even in the wealthiest countries the conditions of the mass of people is nothing to boast about. Why shouldn’t the markets for products go on expanding indefinitely? This is, of course, the guinea question.

Under the present social system – capitalism – the workers (and producers generally) receive in wages and salaries only part of the value of the goods they produce. The rest goes to a relatively small group of people, capitalists, land-owners and others, in the form of profit, rent and interest. If this small group spent all its income the market for commodities would never fall short of supply. But they cannot and do not spend more than a tiny fraction of what they receive. The remainder is re-invested in industry and commerce; that is, it goes to make more factories, etc., and t modernize existing ones. It is obvious therefore that a time must come when there are more goods for sale than customers with the necessary cash. When this happens we have a slump like that of 1929, with unemployment, low wages and general misery.

The slump, unlike the poor, is not always with us. The period from 1945 to 1949 was one of booming industrial production and high profits. The destruction of immense quantities of goods and of the factories and machinery which produce them, and other effects of the war, had created a tremendous demand for commodities of all kinds. Even today, despite growing unemployment and the slump in textiles and furniture, there is still a semi-boom. This is due to the production on a considerable and rapidly growing scale of a very peculiar type of commodity; very peculiar in the sense that, in general, it is purchased only by governments; namely armaments.

Squaring the Circle

But before going on to consider the economics of rearmament, it is essential to understand that the root cause of all economic difficulties in capitalist society is the problem of what the economists call £effective demand”; in other words, how to sell the people more goods than they have money to buy, and to do this at a profit to boot! It is only necessary t state the problem in this way for it to be seen that it’s like squaring the circle – it just can’t be done! But that doesn’t mean to say that a given concern or a given country can’t do it. Even tho’, on a world scale, there may be too many goods chasing too little money, one firm or even all the firms in one country, may get rid of all the goods they have for sale. They may do so at the expense of their competitors. But in order to do this they must produce more cheaply than their competitors.

There then is the idea behind all the pleas for more production. For, in modern industry, the more items produced the lower the cost per item. Although it will cost more, for example, to produce ten thousand bicycles than to produce one thousand. The cost per bicycle will be less; hence, if necessary, the selling price can be reduced. Anyone can see that this ‘solution’ cannot succeed indefinitely. Sooner or later the competitors will do the same thing, and unless the world market expands at the same rate as production – which is impossible, as we have seen – a slump is bound to come in time. The official answer to these economic difficulties – produce more and produce more cheaply – works for a time, but in the end it actually aggravates matters. The real solution is social ownership of the means of production, for in this way the cause of ‘under consumption’ is abolished.

Ultimately, of course, this must be done on an international scale. A socialist economy in one country, say Britain, would be compelled to act as a single “firm” competing on the world market with others, and, to that extent would be subject to the laws of capitalist economics. That is why ‘national socialism’ or ‘socialism in one country’ are contradictions in terms: they are economic impossibilities. A genuine workers’ government in any country must have as its first aim the development of the international working-class movement to the point where it becomes possible to supersede capitalism over a wider area, and, ultimately, everywhere. Internationalism, is not something sentimental, as our Fabians imagine; it is an indispensable part of the struggle for socialism.

To solve the problem fundamentally then means, as we started out saying, the total transformation of society, and therefore the irrevocable political defeat of all those who have a vested interest in the present set-up. But since these are the people, by and large, who control the present governments of the various countries, they are naturally very concerned o try to find some other way out of the difficulty – and, t their relief, such a way out presents itself.

Rearmament and the Crisis

Rearmament is not the cause of the crisis, in a sense it is a solution. By 1949 the post-war boom was coming to an end. If the rearmament programme – not just the British one, but that of all the Powers – had not got underway we would now be facing a large scale slump. The great thing about armaments from the capitalist point of view is that the only limit to their sale is the willingness of governments to buy them – and during an arms race the sky’s the limit! On the other hand, large-scale production of armaments creates problems of its own. In the first place whilst it creates boom or semi-boom conditions, rearmament doesn’t permit of the production of the mass of consumer commodities that would normally be produced during a boom: in fact it may very considerably reduce the amounts available. Hence the situation of greatly increased total production meaning less, not more, for the workers. This naturally gives rise to discontent and demands for more – one of these dreadful pressures” we hear so much about! In the second place, rearmament does not mean that normal economic activity stops. Exports and imports must continue and the goods must be produced to do this. From an economic point of view – not to mention any other – arms production is pure waste. The remainder of the labour and capital in the country have to produce as much as was previously produced by the whole economy. Rearmament is like a snowball; once an arms race has begun, governments can never have enough. And as everyone knows, there has never been an arms race yet that didn’t end in war. Thus we get the fantastic state of affairs where more and more production leads, in the end, to a shortage of commodities which – we are told – necessitates more and more production, which will lead to an even greater shortage, which will necessitate more and more production, and so on, ad infinitum – or rather, until the temptation to use the armaments becomes irresistible.

Where Do We Go From Here?

The capitalists, bankers, generals, diplomats and so on, as well as the politicians and economists who serve their interests can’t really change from the policies they have pursued in the past, and are still pursuing today, for these policies are designed to keep their power and privileges intact. That isn’t to say, of curse, that they are all conscious hypocrites; but the way things look depends upon where one is sitting – and they are sitting pretty!

It’s obvious therefore, that there is no way out for us as long as they are in control of society. Most workers already know this. And so, in spite of the fact that the ruling class control the Press, the BBC, the cinemas and so on – the “head fixing” industries, in short – most workers support their trade-union and labour organisations. And in this they area absolutely correct, for the only possible alternative to the old gang is the organised Labour movement. But, unfortunately, this isn’t enough. If it were we wouldn’t have the crisis, for after all we had a Labour Government from 1945 to 1951. And it was this very Labour Government that first put the “more and more production” solution to our present problems. Why did this happen? Because the Labour leaders had been bribed by the capitalists? No – it’s not as simple as that.

The British Labour movement was built at a time when the British capitalists were the richest and most powerful in the world. The people who led it were practical men. Their problem was, how to improve the lot of their followers? There were two ways of doing this. One was to organise the workers to take power and expropriate the capitalists, lock, stock and barrel, and was obviously both difficult and – dangerous. The other way was to organise the workers to bring pressure to bear upon the ruling class, pressure for various reforms on the political front, pressure for better working conditions and higher wages on the industrial front. This was obviously both easier and – for the Labour leaders – safer than the other. In words the first method was adopted – the Labour Party adopted the socialist programme – but in practical politics the second way – pressure for concessions within the existing capitalist society – became the real method of the Labour movement or, at any rate of its leaders. Now whilst refors can be obtained as a by-product, so to speak, of the struggle for socialism, the opposite is not the case. Socialism can’t be obtained as a by-product of the struggle for reforms. This is the crux of the matter. The leaders of the British labour movement started out with the idea that they would fight for more and more reforms and thus step by step get nearer and nearer to socialism. Gradually the capitalists would grow weaker, gradually the workers would grow stronger, until finally, as the song has it, “England is risen! – and the day is here!” Alas! It just didn’t happen – and the reason is obvious. Concessions can be obtained from the capitalists only if they are in a position to give them, in other words, if capitalism is in working order. So, hey presto! And the main business of the labour leaders becomes making capitalism tick! Starting out with the absolutely correct ideas that capitalism can’t be made to work in the interests of the people and that socialim is the only real way forward, they finished up as powerful supporters of the very capitalism they set out to abolish. The “inevitability of gradualism” meant in practice, the inevitability of giving up the fight for socialism. That’s why we are in the mess we are in today.

No More Horse-Dealing!

The only way out of that mess is to win the Labour movement for a fighting socialist policy: to stop supporting capitalism and compromising with the capitalists both in Britain and overseas. In the long run, the only policy that will benefit the workers is the expropriation of the capitalist class, workers’ control over the economy, abolition of all class privileges, and a foreign policy based on support for the struggles of the workers all over the world against their own ruling classes, as against horse-deals between imperialist powers. Now anyone with half an eye can see that such a policy cannot possibly be carried out by the Right Honourable (!) Leaders of Her Majesty’s Opposition as at present constituted. Therefore, the first stage in any real struggle for socialism is a struggle inside the Labour movement for a change of leaders and policy. That struggle is getting under way. The split in the Parliamentary Labour Party on the rearmament issue is only the beginning of what will be a touh and lengthy fight. On the outcome of that struggle depends the whole future of the British people. That is the literal truth. In all essentials the policy of Atlee is identical with that of Churchill, and that policy can only bring misery and war. To break the hold of the present leadership on our movement; that is the essential first step towards solving the crisis.

Of course, the leaders of the ‘Bevanite’ opposition are themselves very far from being consistent socialists. But that isn’t the point. Inevitably in the course of the struggle their rank-and-file supporters will develop clearer ideas.

Often there doesn’t seem much that the individual can do in the face of economic crisis and the drift to war, but in fact everything depends upon the individual. History is the result of the actions of millions of individuals. The only way to solve the crisis, the only way, is to fight on all fronts, political, industrial, cultural against both the Tory defenders of capitalism and their allies inside the Labour movement.


Last updated on 13.8.2007