Samezō Kuruma; 1929

An Introduction to the Study of Crisis

Japanese title: “Kyōkō kenkū joron”;
First published: Sep. 1929 issue of Journal of the Ohara Institute for Social Research, (vol. VI, no. 1);
Source: Chapter 1 of Kyōkō kenkū (Investigation of Crisis), Tokyo: Otsuki Shoten, 1965;
Translated: for by Michael Schauerte;
CopyLeft: Creative Commons (Attribute & ShareAlike) 2006.

The problem of crisis is gaining the attention of people worldwide. This is because crises of unprecedented scale, and unparalleled seriousness and tenacity, have struck throughout the world. Representatives of the two main classes in society are seriously engaged in the study of this problem with a rare level of seriousness; economists for the sake of somehow forging a path to stable capitalist production, and Marxists to provide a scientific basis for their tactics in this momentous period.

Cover of an issue of the Journal of the Ohara Institute for Social Research

As long as political economy retains its bourgeois perspective, however, it will be incapable of moving forward to thoroughly understand the problem of crisis. We can in fact see that the outbreak of crisis, in the proper sense of the term, was a turning point in terms of political economy ceasing to exist as a science. Crisis, in its particular sense, is the collective explosion of all of the contradictions of capitalist production, and as such the outbreak of crisis, from two directions, necessarily brought bourgeois political economy as a science to an end. First, by actually thrusting upon political economy a new problem that was unanswerable from the bourgeois perspective–i.e. a problem that could only be answered by elucidating the contradictions of capitalist production–crisis exposed in the clearest manner possible the fundamental defect of bourgeois political economy: the class-based limitations of its cognition. Second, the appearance of crisis threw out on the streets immense numbers of wageworkers, who had been gathered from every direction during the preceding period of prosperity, thereby revealing the anti-social figure of capitalist production in the most vivid manner and stimulating the class consciousness of the proletariat, so that the elucidation of the internal connections of capitalist production, which had been a weapon in the hands of the bourgeoisie, became a weapon to be wielded by the proletariat.

Here I would like to spend some time considering this history.

The first major crisis to strike capitalist production occurred in 1815. With the approaching downfall of Napoleon, capitalists in England, seeing that the continental market, which had long suffered from a shortage of goods due to the blockade, would once again be opened, prepared a massive quantity of goods for export. The Battle of Waterloo was fought in July 1815, followed by several months of robust trading and optimistic speculation. Before the end of the year, however, it became clear that expectations were entirely fictitious. One reason was that the blockade, by preventing the import of English goods, had stimulated the development of industry in continental countries to an unexpected degree. On top of this, the purchasing power of people on the continent had deteriorated as a result of war. There is no question that these people perceived a lack of goods, and the products that could relieve this scarcity were piled up in warehouses, but this collision between demand without purchasing power and a mountain of unsold goods ultimately resulted only in unmet needs and numerous bankrupt capitalists. This was the situation up to the spring of 1817. One bankruptcy followed another, and the ranks of the unemployed overflowed in the industrial cities, with riots breaking out in many places. The suspension of the Habeas Corpus Act in 1817 reflects the seriousness of the social unrest at the time. In spring of that year, signs of recovery did finally appear, but in 1819 business slumped again, leading to a rise in social unrest and ultimately the horrible Peterloo Massacre. The economic depression and social unrest continued into the following year, and only in 1821 did the road to recover finally come into view. The business climate gradually improved, and production developed unprecedented strength. But this in turn eventually culminated in another crisis, on an enormous scale, which broke out at the end of 1825.

Needless to say, the upheavals that greeted capitalist production in its youthful period, like a violent storm, also influenced the realm of political economy. One economist who experienced his first doubts regarding existing doctrine upon seeing the harsh convulsion of wealth, and the shocking social misery that accompanied it, was Simonde de Sismondi, who like Rosseau hailed from Geneva. At a young age, Sismondi read The Wealth of Nations and became strongly attached to Smith's theories. He apparently wrote his book De la richesse commerciale ou principes de l'economie politique appliqué à la legislation du commerce (1803) to explain and popularize Smith's doctrine, but following this Sismondi spent a considerable amount of time dedicated to historical research. He again turned his attention to political economy around 1818 when he was commissioned to write an entry on "political economy" for the Edinburgh Encyclopedia.

This was just following a serious economic downturn after the outbreak of the first major crisis in 1815. The crisis, as noted earlier, was one outcome of the Napoleonic Wars, arising from what could be called outside factors, so it cannot necessarily be considered a crisis in the proper sense of the term. But for Sismondi, the scale and breadth of the crisis, and the seriousness of its impact, were already sufficient to generate grave doubts regarding the capitalist mode of production. It was clear to him that regardless of the factors that generated it, the crisis itself and its dreadful results could not have arisen apart from the capitalist mode of production. His doubts were already growing when he was writing his encyclopedia entry, but he later said that considering the aim of the submission he did not use the opportunity to develop his new ideas. It was in his book Nouveaux principes d'dconomie politique, published in 1819, that Sismondi would begin developing his new doctrine. In the foreword to that book, he writes:

I was deeply moved by the business crisis Europe had experienced in the last few years; the cruel suffering of the factory workers I witnessed in Italy, Switzerland, and France, and which all public accounts showed to be equally severe in England, Germany, and Belgium. I became convinced that governments and nations were on the wrong track, that they aggravated the distress they were seeking so much to remedy. I had noted with equal sadness the combined efforts of landowners, legislators, and writers, to change cultivation systems which spread so much happiness in the countryside, and to destroy the comfort of the peasants in the hope of increasing the net product. The politicians as well as the writers seemed to me to stray in their quest, sometimes for what could most increase wealth, sometimes for what could most increase population; whereas one or the other, considered by themselves, are only abstractions, and the real problem for statesmen is to find that combination and proportion of population and wealth that would safeguard the greatest happiness to humanity in a given space[1].

Here we can already clearly sense the motivation for the turning point in Sismondi's thought, as well as the direction of his transformed thought that was thus determined. But if we look at the foreword to the second edition, published in 1817, his views are presented in an even more acute form:

Seven years have passed [since the first edition], and it seems to me that the facts have victoriously fought on my side. They have proven, much better than I could have ever done, that the wise men with whom I parted ways have pursued a false prosperity; their theories, where they were put into operation, could well increase material wealth, but they diminished the sum of enjoyments destined for each individual; if these theories tended to make the rich even richer, they also made the poor poorer, more dependent and deprived. Entirely unforeseen crises have followed each other in the business world; industrial progress and opulence have not saved those producers who created this wealth from unheard-of suffering. The facts have neither conformed to common expectations, not to the predictions of the pundits, and despite the implicit trust the disciples of political economy have in the teachings of their masters, they are now forced to seek elsewhere new explanations for events which diverge so much from laws they have believed settled.

Among these explanations, those which I had given in advance have totally agreed with the events. Perhaps one should ascribe to such coincidence the quick sale of my book, and the demand which has brought me to prepare a new edition. I have done so in England, England has brought forth the most celebrated economists; their science is practiced there even today with redoubled ardor. Government ministers, already well versed in the doctrines of public welfare, have been seen to pursue studies with one of the most qualified professors of political economy; they have been heard to invoke his reasonings in Parliament. Universal competition, or the effort to always produce more, and always at a lower price, has been for a long time the English system, a system I have attacked as dangerous. That system has enabled English industry to make giant strides, but it also has, twice, thrown producers into frightful distress. It is in the face of such economic upheavals that I have seen it as my duty to review my arguments and compare them with the facts.

The study I have made of England has proven to me the validity of my New Principles. I have seen in that amazing country, which seems to go through a great trial for the instruction of the rest of the world, production increased while happiness decreased. The greater part of the nation, as well as the philosophers, seems to forget that increased wealth is not the goal of political economy, but the means it has to procure happiness for everyone. I have looked for such happiness among all classes, and I do not know where to find it. The upper English aristocracy has actually achieved a measure of wealth and luxury which surpasses everything one could see in all other nations. Nevertheless, it does not at all enjoy the opulence which it seems to have acquired at the expense of other classes; it lacks security, and in every family privation is felt more keenly than abundance. When I visit houses whose splendor is altogether regal, I hear their owners assert that if the corn monopoly they practice against their fellow citizens is abolished, their fortunes will be destroyed, because their estates, which extend over whole provinces, will not pay anymore the cost of production. Around these men I see numerous children, unequaled in any other aristocratic class; often one counts ten, twelve, sometimes more, but all the younger sons, and the daughters, are sacrificed to the glory of the eldest son; their share of the inheritance is not even equal to a year's income their brother receives. They must grow old as bachelors, and their dependence, at the end of their lives, is the high price they must pay for the luxury of their early years.

Below this titled and untitled aristocracy I see business occupy a distinguished position; its enterprises embrace the whole world, its agents brave the icy regions of the poles, and the heat of the equator, whilst everyone of its leaders, meeting at the Exchange, can dispose of millions. At the same time, in all the streets of London and of other large English cities, the shops display goods sufficient for the consumption of the entire universe. But has this wealth secured to the English merchant that kind of happiness one would expect? Not at all–in no other country are bankruptcies as frequent. Nowhere are such colossal fortunes, sufficient in themselves to finance a public loan, to support an empire or a republic, destroyed more quickly. Everyone complains that business is scarce, difficult, hardly profitable. Within a span of a few years two terrible crises have ruined part of the bankers and spread desolation among all English manufacturers; at the same time another crisis has ruined the farmers, and its repercussions have been felt in the retail trade. On the other hand, business, despite its immense extent, has ceased to call for the young men who seek a career; all positions are taken, and in the upper, as well as the lower ranks of society most offer their labor in vain, without being able to obtain remuneration.

Finally, has this national opulence, whose material progress strikes every eye, benefited the poor? Not at all! The working classes in England are without comfort now, and without security for the future. There are no more freeholders on the land; they had to yield to day laborers; there are hardly any craftsmen left in the villages, or independent owners of small businesses, but only manufacturers. The factory hand, to use a word the system itself has coined, does not know what it is to have a station in life; he only gains wages, and since these wages cannot suffice equally for all seasons, he is almost every year reduced to ask alms from the poorhouse.

This opulent nation has found it more economical to sell all the gold and silver she possesses, to give up good coinage, and to accomplish its circulation with paper. She has thus voluntarily deprived herself of the most valuable of all the advantages of specie, price stability. The holders of provincial bank notes risk ruin every day from frequent, sometimes epidemic bank failures, and the entire state is exposed to a convulsion in all fortunes if an invasion, or revolution, should shake the credit of the national bank. The English nation has found it more economical to give up crops which demand much manual labor, and she has discharged half the cultivators who lived on the land; she has found it more economical to replace workers with steam engines, and she has dismissed, then rehired, then dismissed again, the workers in the villages; weavers have yielded to power looms, and now succumb to famine; she has found it more economical to reduce all workers to the lowest possible wages on which they can still subsist, and the workers, being no more than proletarians, have no fear of plunging themselves into even greater misery by raising ever larger families. She has found it more economical to feed the Irish with nothing but potatoes, and clothe them in rags, and now every packet boat brings legions of Irish who, working for less than the English, drive them from all employments. What are then the fruits of the immense accumulation of wealth? Has it had any other effect than to make all classes share sorrow, privation, and the specter of total ruin? Has England, by forgetting men over things, sacrificed the end for the means?[2]

Here we get a vivid picture of how the reality of capitalist production in England, the rapidly-developing motherland of capitalism, made a deep impression on a humanitarian liberal such as Sismondi, who was raised in the feudalistic atmosphere of Switzerland, and how this changed the direction of his thought. He saw that the accumulation of capitalist wealth is at the same time an accumulation of poverty. He saw that farmers and craftsmen were ruined, becoming property-less wageworkers. He saw that the use of machinery caused unemployment for workers. He saw that frequent crises disturbed the entire range of production, bringing unease, ruin, and famine to members of every class. He also discovered that all of these evils were precisely the outcome of a social system based upon universal competition. Adam Smith's lovely dream, which saw laissez-faire and the divine nature of the capitalist method of production as a panacea for every social ill, was completely shattered. Sismondi was saddened that this mistaken doctrine of political economy had led various people and governments into a labyrinth. Moreover, he was saddened not only for the working class, but for the aristocrats and capitalists as well. Thus, Sismondi offered his "new principles of political economy" in place of the principles of political economy existing at the time, and called for controls to be placed on universal competition.

From the above, we can get an idea of the fundamental stance of Sismondi toward the various problems of capitalist production. There seems little need here to explain in detail that this stance–so well-intentioned and humanistic, but at the same time petty-bourgeois, conservative, querulous, and completely ineffective historically speaking–seems pitiful when contrasted with the materialist conception of history later developed by Marx. Nor do we need to discuss how Marx's ideas represent a profound development of those of Sismondi. Here it seems sufficient to merely point out that one characteristic of the materialist conception of history is that instead of merely complaining about the problems of the day, it instead uncovers within these problems the elements for the development toward a new era.

I also think that there is no particular need here to take a detailed look at Sismondi's analysis of the causes of crisis or the countermeasures he proposes. Regarding these points it seems sufficient to merely note the following. According to Sismondi's doctrine, a system of production based upon competition necessarily brings forth crises in two senses. First, this is because the correspondence, or lack of correspondence, between supply and demand can only be known after the fact, via price increases or decreases, and not only is a correspondence between the two necessarily premised on constant disequilibrium, but the reestablishment of equilibrium between industrial sectors prompted by these fluctuating prices, is seriously obstructed by the difficulty of the transfer of capital and labor, so that this transfer cannot occur without actually bringing about the ruin of capitalists and misery to workers. Sismondi goes on to say, secondly, that in addition to the inevitability of such partial crises, under a system of competition the reduction of prices is the only competitive weapon among capitalists, and therefore the unavoidable condition for survival. He writes: "the attention of the manufacturer is therefore endlessly directed to the discovery of some savings of labor, in the use of materials, that will enable him to sell at a lower price than his competitors. As the materials in their turn, are the product of previous labor, his savings come down at all times, in the last analysis, to the use of less labor for the same product."[3] [In other words] "Through improvements from the production method, one part of the workers employed will become a surplus and become unemployed. At the same time, one part of the income of society will have to be reduced. And this lost social revenue will not be compensated for by the slight decease in the price of the newly produced commodities or the gains of the capitalist."[4] Thus, according to Sismondi, in general there inevitably arises an inconsistency between the income of society that determines demand (and therefore consumption) and production. That is, a general crisis is also not merely possible but inevitable under unlimited free competition. So what does he propose as a measure to counter these types of crises? Here Sismondi's stance is quite insufficient and indecisive. He basically believes in the need for some sort of intervention on the part of the state in order to place controls upon unrestricted competition.

In a short article such as this one, not intended to present the various doctrines regarding crisis, there does not seem to be a need to explore Sismondi's theory of crisis in greater detail. And there will be an appropriate moment shortly to deal with the defects in his analysis of the cause of crisis. What is essential to the aim of this article, rather, is to clarify how Sismondi, despite his powerless stance and incomplete analysis, had great significance for the history of political economy – and for the self-awareness of the capitalist class.

Sismondi was himself a political economist. And despite his "new principles," he still remained within the framework of a bourgeois perspective. However, even while remaining within this framework, he already perceives the fundamental contradiction in the capitalist mode of production that had revealed itself, and he posits this as one important problem. The perspective that he adopts does not permit him to pose the problem in a correct form, and therefore he is unable to solve this problem. But we can still recognize the groundbreaking significance that Sismondi's manner of posing of the problem had for the development of political economy. The fundamental characteristic of classical political economy was that even while adopting a bourgeois perspective it advanced the elucidation of the internal connections of capitalist production. What made this scientific attitude of the pioneers of political economy possible was their unshakable belief in the capitalist mode of production. One example was their conviction that the capitalist mode of production was ideal for the development of productive power. The views of Adam Smith, needles to say, are strikingly optimistic, but even in the case of Ricardo, who was considered to be pessimistic by economic historians, we can see that this conviction underlies all of his arguments. Marx, for his part, said of Ricardo:

Ricardo, rightly for his time, regards the capitalist mode of production as the most advantageous for production in general, as the most advantageous for the creation of wealth. He wants production for the sake of production and this with good reason. To assert, as sentimental opponents of Ricardo's did, that production as such is not the object, is to forget that production for its own sake means nothing but the development of human productive forces, in other words the development of the richness of human nature as an end in itself. To oppose the welfare of the individual to this end, as Sismondi does, is to assert that the development of the species must he arrested in order to safeguard the welfare of the individual. Sismondi is only right as against the economists who conceal or deny this contradiction.) Apart from the barrenness of such edifying reflections, they reveal a failure to understand the fact that, although at first the development of the capacities of the human species takes place at the cost of the majority of human individuals and even classes, in the end it breaks through this contradiction and coincides with the development of the individual; the higher development of individuality is thus only achieved by a historical process during which individuals are sacrificed for the interests of the species in the human kingdom. Thus Ricardo's ruthlessness was not only scientifically honest but also a scientific necessity from his point of view. But because of this it is also quite immaterial to him whether the advance of the productive forces slays landed property or workers. If this progress devalues the capital of the industrial bourgeoisie it is equally welcome to him. If the development of the productive power of labor halves the value of the existing fixed capital, what does it matter, says Ricardo. The productivity of human labor has doubled, Thus here is scientific honesty. Ricardo's conception is, on the whole, in the interests of the industrial bourgeoisie, only because, and in so far as their interests coincide with that of production or the productive development of human labor. Where the bourgeoisie comes into conflict with this, he is just as ruthless towards it as he is at other times towards the proletariat and the aristocracy.[5]

Here Marx strongly emphasizes one characteristic of Ricardo: his scientific standpoint. Overall, however, Ricardo's standpoint is also that of the capitalist class. He was able to balance these two standpoints because the actual development of capitalist production at the time still coincided with the development of productive power. As long as this basis still existed, Sismondi's sentimental attack, as Marx noted, clearly could only be powerless. But we should remember, as Marx also correctly points out, that this criticism was only powerless as long as the social basis was in place that allowed orthodox political economy to preserve its original scientific standpoint. Once this had deteriorated, not only could the scientific standpoint no longer be maintained, but at the same time resistance to Sismondi – and his stance of launching such a sentimental attack – completely vanished. And we can see that this basis was fundamentally overturned with the outbreak of crisis, because crisis is the explosion of the contradiction between the capitalist relations of production and the development of productive power. In other words, crisis is general overproduction, and general overproduction is first and foremost nothing more than the manifestation of the products of capitalist production as a whole reaching the point where they are no longer capable of being completely consumed within the capitalist relations of production under which they are produced. A crisis is thus clear proof that capitalist relations of production are not the ideal form for the development of productive power, but rather a fetter on its development. Ricardo himself, who died in 1823, was fortunate to not have witnessed a crisis in this sense. The first edition of his Principles of Political Economy was published in 1817, the second edition in 1819, and the third – and final edition prior to his death – was published in 1821. The crisis that he saw in 1815, as noted already, was one outcome of the culmination of the Napoleonic Wars, arising from what could be called external factors, and it was also not yet a general crisis in terms of its scale – as far as the regions and industries affected. Moreover, the crisis of 1819 could be seen as a reverberation of the crisis four years earlier, and its scale was even narrower than the 1815 crisis. This is why Ricardo rejected the possibility of general overproduction in Principles of Political Economy, merely discussing "sudden changes in the channels of trade" – and this is also why he could do so without betraying his scientific conscience. But the possibility of adopting such a stance was forever swept away with the outbreak of crisis in 1825. Only a dogmatist could deny that this was clearly a case of general overproduction, arising naturally from capitalist production. Political economists were thus left with only two paths. If they chose to preserve their scientific integrity, the only path open to them would be to clearly face their own self-doubts – and their doubts regarding the relations of capitalist production and the principles of political economy. Moreover, if they did not abandon their bourgeois perspective there would be no way for them to move beyond these doubts. This was the path that Sismondi already took in 1819, and he was proud of his foresight, saying: "seven years have passed, and it seems that the facts have victoriously fought on my side." And in this sense we can say along with Marx that, "whereas Ricardo's political economy ruthlessly draws its final conclusion and therewith ends, Sismondi supplements this ending by expressing doubt in political economy itself."[6] The path of self-doubt was thus the only path open to classical political economy after the outbreak of crisis.

This path of self-doubt, traveled by Sismondi alone, may have been the only path left to classical political economy, but this was not the orthodox path for bourgeois political economists. The path of the orthodoxy was rather to employ sophistry to deny the existence of general overproduction, which had appeared in reality, while at the same time, with ill intent, deceiving people about the fundamental relations of capitalist production, which could no longer be confidently elucidated and defended. We can see this within the shift to a theory of the impossibility of general overproduction and the process of the complete vulgarization of the system of political economy.

The basic tenet of the orthodoxy to demonstrate the impossibility of general overproduction is generally referred to as the "théorie des débouches" [or "Say's Law"]. This theory was first advocated using this particular term[7] in the first edition of Jean Baptiste Say's Traite d' économie politique published in 1803. For the second edition and subsequent editions Say made some revisions but this did not alter his main point, which, when applied to the matter at hand, comes down to the following argument. A product is ultimately exchanged for another product. Money is merely the mediator of exchange. Thus, the purchasing power vis-a-vis one product is created by the production of another product, and conversely the production of a product creates the purchasing power vis-a-vis another product. Therefore, the overproduction or lack of a sales channel for one product can only signify underproduction of another product, so that an excess of production common to every product is, by its very nature, impossible.

This argument of Say was later adopted by Ricardo, who in Principles of Political Economy writes:

M. Say has, however, most satisfactorily shown, that there is no amount of capital which may not be employed in a country, because demand is only limited by production. Productions are always bought by productions, or by services; money is only the medium by which the exchange is effected. Too much of a particular commodity may be produced, of which there may be such a glut in the market, as not to repay the capital expended on it; but this cannot be the case with respect to all commodities[8].

This explanation, which Ricardo adopted in the manner above, later became a long-standing tenet of orthodox political economy. While at first glance it may seem a plausible explanation, it is in fact a heap of errors. And at the core of it is a complete misunderstanding of the essence of money, itself based on the bourgeois delusion of grasping capitalist production as the absolute, natural and supra-historical form of production. According to Say and Ricardo, a product is exchanged for a product. However, a product is merely a thing that is produced and nothing more than a use-value. Thus, the concept of "product" itself completely obscures the historical-social relations under which it is produced – and therefore obscures the specific determination of the product that reflects these relations. Starting from such a supra-historical concept, they sought to reject the possibility of a general crisis. But if we consider the nature of the phenomenon a general crisis, it is of course a specific historical phenomenon that first occurs once capitalist production has reached a certain level. Its basis clearly must therefore be found not within the general nature of production but rather within the capitalistic character of production; not within the character of the product as product, but within the product's character as a capitalistic product. Capitalist production is first and foremost commodity production, and capitalistic products are above all commodities. This means that Say and Ricardo not only ignore the capitalistic character of production but even overlook its character as commodity production. They treat the commodity – a unity of the mutually contradictory value and use-value – as a mere "product" (use-value). The inevitable outcome of failing to understand the dual character of the commodity is that the essence of money and the significance of commodity circulation are also necessarily rendered unclear. Say and Ricardo go further than merely understanding the circulation of commodities as an exchange of products, grasping money as a mere mediator of commodity exchange. If there are no commodities, no inevitability of money, and no commodity circulation, not to mention no capitalist production, there would be no way for a general crisis to occur. From their standpoint, the denial of the possibility of general crisis is indeed the natural conclusion. But the naturalness of the conclusion they reached does not mean it has objective validity. This only means that in a case where the fundamental conditions of a general crisis are not recognized, a person will also naturally not recognize the possibility – not to mention necessity – of a general crisis. This precisely demonstrates the defect in their understanding of the basic relations of capitalist production.

The arguments of Say and Ricardo, in denying a general crisis, demonstrate the fundamental defect in their understanding of these basic relations of capitalist production, but during the period when a general crisis had yet to become a reality, this defect was not yet demonstrated by reality. As long as this was the case, they could at least manage to present their arguments without betraying their scientific conscience. This situation changed completely in 1825, when a general crisis appeared as an actual fact. How did this change in the situation alter the theory of crisis held by orthodox political economy? Ricardo, as mentioned earlier, had already died in 1823, so there is nothing we can say regarding him. But we can take a look at Jean-Baptiste Say, the father of the théorie des débouches.

To counter an attack from Sismondi, who indicated the actuality of crisis in England, Say wrote:

Mr. Sismondi says that there is the occurrence of overproduction in England. Does he truly, however, have an adequately clear concept of what we mean by "production"? His view might be correct were this a case of more hats being made than the number of people. But we mustn't forget that those who are discussing political economy know of no production other than production that repays expenditures. A factory that expends 25 francs to create 20 francs in value is not something that produces but rather annihilates itself. Correct production creates value. A thing only has value when a consumer demands it. Further, a consumer will not give anything for a thing he does not wish to consume. Correct production is thus accompanied by consumption[9].

The entire secret of Say's argument, which seeks to defend the validity of the théorie des débouches in the face of actual overproduction, clearly lies in the arbitrary determination posited within his concept of production. He says that no production exists "other than production that repays expenditures." Thus, according to Say, production wherein overproduction occurs, prices drop, and therefore the expenditure of capital cannot be recouped, cannot be considered production. Only production where there is no overproduction can be considered production. In a similar vein he says that, "correct production creates value" and that, "a thing only has value when a consumer demands it." This view, therefore, argues that a product which does not find a consumer is a product without value, and that the production of a valueless product is not "correct" production, so that the production of a valueless product that is unable to find a consumer cannot be called "correct" production. In other words, only the production of products that are able to find consumers is "correct" production. Granted, if only the production of products that find consumers merits the name "correct" production, over-production could not occur, and "correct" production would be always be "accompanied by consumption." However, this new determination for the concept of production, while rescuing his argument formally, at the same time completely eliminates the concept's original meaning. Ultimately, Say's view amounts to nothing more than a tautology, where production that is not in excess cannot be over-production, and the production of products that find consumers always find consumers. This suggests nothing at all about the laws of capitalist production, and signifies nothing more than a papering over of the actual contradictions. We can see that the outbreak of a real crisis not only demonstrated in actuality the errors of orthodox political economy, but at the same time turned errors that had once been made innocently into apologetic arguments made in bad conscience.

The negative relation between bourgeois political economy and crisis is not limited to that mentioned above. Periodic crises unceremoniously threw large numbers of wageworkers, who had been gathered from various directions during the preceding period of prosperity, into the ranks of the unemployed, and by instilling in them a keen awareness of their own suffering and the contradictions of capitalist production this effectively stimulated their rebellious feelings and class consciousness. The clearest demonstration of this is that with every crisis there were countless riots and one socialistic doctrine after another arose. The early socialistic doctrines – "Ricardian socialism" – inherited Ricardo's theory of value and sought to use it as a weapon to attack capitalist production. According to Ricardo, the source of value is labor, while profit and rent are merely one part of this labor. Thus, profit and rent are stolen from labor, meaning that the current organization of society is an organization of theft. The Ricardian socialists argued that such an unmoral organization of society should be swept aside and replaced by a correct one where distribution is carried out according to each person's labor. There is no real need here to explain how utterly powerless this moralistic and utopian standpoint was. Nevertheless, this attack was at least a menace to the capitalist class at the time. And the attack made an appeal to the proletarian class. The capitalist class was unable to come up with an effective rebuttal to this attack. The outbreak of crises had already robbed economists of their only basis to counter this criticism – namely the belief that capitalist production is the ideal form for the development of productive power. The elucidation of the internal connections of capitalist production, which had once been a weapon in the hands of the capitalist class, turned into a weapon to be used against them. This situation ultimately determined the transformation of bourgeois political economy from its classical system into a vulgar one. The labor theory of value was discarded, and in its place the "trinity formula" – according to which rent arises from land, profit (and interest even more so) from capital, and wages from labor – became ascendant.

Still, the sophistry used to reject the possibility of a general crisis and the dogma to conceal the class nature of capitalist production were incapable of preventing the gradually awakening of the working class that occurred along with the periodic outbreak of crisis. A crisis is an example of a stubborn fact that cannot be denied through mere sophistry. The need to whitewash the internal relations of capitalist production grew with the passage of time, while at the same time there was an increasingly acute awareness of the need for policies to prevent, or at least alleviate, a crisis. This change in the situation led to a change in the attitude toward crisis within the capitalist camp. It was no longer possible to deny the possibility of crisis. Moreover, spurred by the new necessity, bourgeois scholars even engaged in an active study of the process that generates crisis. It was never possible, however, for them to investigate the necessity of crisis as the developmental outcome of the fundamental contradictions of capitalist production. To do so would have meant ultimately arriving at a rejection of capitalist production itself. Thus, instead of raising the question of the ultimate cause of crisis (as in the debate between Sismondi and Say), or its internal process of development (as in the later system of Marx), a new tendency arose of setting the goal of searching out the superficial relations between phenomena within the process of the business cycle, which is one aspect of crisis. This is the shift from a "metaphysical=deductive" theory of crisis to a "scientific=inductive" theory of crisis. But this was in fact rooted in the same socio-historical necessity as that of the historicist tendency within political economy in general (which was also the tendency for social policy). That is to say, in both cases, it was not possible to conceal the reality of the contradictions of capitalist production – and in the case of the former in particular this was the most acutely contradictory phenomenon of crisis – and at the same time this developed to the point where a hands-off approach was no longer possible. Meanwhile, in order reject the exposure of the internal significance of these contradictory phenomena, while on the other hand pursuing the self-contradictory goal of preserving capitalist production itself while averting its undesirable outcomes, they denied comprehensive=theoretical research itself, while at the same time attaching the word "scientific method" to describe their pursuit of historical facts and examination of the superficial relations between these facts (without touching on the fundamental relations of capitalist production).

The above, of course, is merely a blanket evaluation of the totality of the new stance taken by bourgeois political economy toward crisis. When observed more closely, this tendency certainly does not have a single, uniform appearance. It passed through various developmental stages, and actually split into several branches. Here it is not possible to provide a detailed description of this, but in very general terms it could be said that this tendency was manifested in three developmental stages – and that the final two stages form the two main currents today. The first, or pioneering stage, is represented by the achievements of Clement Juglar. He was the pioneer of the new tendency in terms of shifting the object of study from "crisis" to the entire process of the "business cycle," which encompasses one aspect of crisis, and replacing the "abstract-deductive" method of investigation with a "demonstrative-inductive" method based on historical materials. But Juglar's field of vision was primarily limited to the area of finance and did not encompass the entirety of the national economy. The second stage is represented by continental scholars, first and foremost Arthur Spiethoff, who drew ideas from the work of the Russian "revisionist" Marxist Tugan-Baranovsky that appeared at the end of the nineteenth century, and they were also driven by the crisis that broke out in the beginning of the twentieth century and developed ideas based on new materials such as the surveys carried out by Vereins fur Socialpolitik. The intention of these scholars was to move from the historical study of the process of changes in the business cycle, to elucidate the relation of cause-and-effect of the wave-like movement of the economy, and this led to various "discoveries." But even the "discoveries" of some value had already been clarified earlier by Marx. The only difference is that unlike Marx, who had grasped the various moments within the total process of capitalist production, in terms of their particular relation to the totality, on the basis of a complete understanding of the internal relations of capitalist society, these scholars severed the moments from this relation, emphasizing them in an isolated, abstract, and therefore one-dimensional manner. Later I will have the opportunity to touch further on this point. Finally, in the third stage, which developed with particular rapidity after the Second World War, instead of seeking the cause of fluctuations in the business cycle in the meager and imprecise materials, the most urgent matter at hand was considered to be the gathering of large amounts of materials to clarify the process of change in the cycle itself, and efforts were made to quantitatively express this process using, above all, complex mathematical methods, and by evaluating the order of the succession of various indicators appearing within the process they tried to utilize the knowledge gained to devise policies related to the business cycle. This approach, by its nature, could not rely on the achievements of individual scholars, and had to be carried out as a joint effort involving significant cost and large numbers of personnel. The various business-cycle research centers, which first appeared in the United States and then spread to other countries, were created to carry this out. Some representative institutions in the United States are the Harvard University Committee of Economic Research established in 1917, and the National Bureau of Economic Research and the Washington D.C. based Institute of Economics, both founded in 1920. Learning from this, similar research centers were founded elsewhere, such as the centers in Stockholm (1922), London (1923), Paris (1925), and Rome (1926)[10]. No definite statement can be made about the research results of these institutions, considering how recently they have been established, but one thing has at least been clear from the outset: there is no way to correctly investigate the business cycle without a correct theory of political economy. This is because it is only in accordance with an established theoretical basis that one is able to decide which facts are to be observed, in what manner, and from which direction, from out of the infinite number of economic facts with an infinite range of meanings that exist within an infinite number of relations.[11] If this theoretical basis is not established, or is mistaken, most investigations, no matter how accurate or large in scale, will end up being a waste of energy. Granted, some results of value will be arbitrarily generated – just as a dog that walks around, as the [Japanese] saying goes, will eventually come across a bone – or it is more accurate to say that such results will be endowed with real value by being reorganized in line with a correct theory. For this reason, we do not hold out many expectations for the findings of these capitalist research centers, but at the same time, instead of rejecting their work out of hand, we should pay attention to what can be utilized from their research.

Thus far I have looked at the development of crisis theory within the capitalist camp and the historical significance of this development. Now I would like to address the question of the developmental process of the theory of crisis within the camp of Marxism and the current state of this theory.

The great interest that Marx and Engels had in crisis is clear from the Communist Manifesto and Capital alone, as has been pointed out by many commentators. Still, if we read the direct accounts of their lives, and trace all of the connections within their systematic critique of political economy, we can no doubt renew our sense of wonder on this point. From their writings we get a keen sense of how excited they were by any indication of a crisis and the degree of their practical interest in crisis. The extent of this theoretical interest is evident from the fact that their entire criticism of political economy, ultimately, can be viewed as a study of the developmental process of crisis. (This is a point I will address in subsequent chapters.)

Around the end of the 1870s, however, for specific reasons (which must be elucidated in the main theory of crisis), a remarkable change took place in the situation of the world market, and therefore in the aspects of the progression of capitalist production. In line with this change, a shift occurred in the immediate aim of the proletarian movement, and the original spirit of Marxism was neglected following the death of Marx. The issue of crisis as a catastrophe of capitalist production was, at least for the moment, no longer the focus of either practical or theoretical attention. It was Bernstein's efforts to "revise" Marxism that hardened this tendency, turning what had been passive neglect into active rejection.[12] But Bernstein's proposals, unexpectedly, ended up providing a great stimulus to the Marxist camp, with many opposing his "revisionism." And the necessities of the debate itself provided an opportunity to restore the revolutionary theory of Marx centered on the problem of crisis. This situation was strengthened by the presentation of the work of the "revisionist Marxist" Tugan-Baranowsky [13] in Russia, and by the outbreak of crisis at the beginning of the new century. The problem of crisis frequently came to the forefront. Two or three meaningful proposals were made[14], but ultimately they were limited by the proposal of Bernstein that called them forth. There were not adequate opportunities for the new development of a Marxist theory of crisis.

These opportunities ripened along with the ripening of a new stage of capitalist production. This new stage is what Lenin referred to as the "stage of imperialism."

This stage is characterized by capitalist production undergoing a fundamental formal metamorphosis during its process of development, which is the transformation from its "liberal" to its "monopoly" form. However, just as this transformation does not signify the abolishment of capitalist production itself, it also does not signify the superceding of the contradictions of capitalist production. Rather, this provided a developmental transformation of the form of these contradictions. And this developmental transformation necessarily brought about a developmental transformation of the form of crisis, which is both the explosion and self-dissolution of the contradictions. This was a transformation from purely economic crises to the occurrence of world wars. In other words, within the new form the contradictions of capitalist production, in their cyclical accumulation, necessarily exploded not merely as an economic crisis but as a world war. This took on the quality where the contradictions could only be dissolved through the explosion of a world war. There thus arose the necessity not only of an economic crisis, but the occurrence of world war as the developed form of such a crisis.

This shift to the new situation – the arrival of inevitable world war – could naturally be keenly felt even before it was theoretically elucidated. And the awareness of this steadily ripening situation gradually awakened great attention from every direction, including of course Marxists. This can be seen from the fact that at the congresses of the International heated debates arose over the policy to be taken toward war. In these debates, we can see three different tendencies among the opinions expressed on war. One was a clear jingoistic tendency, the second was a utopian pacifist tendency, while the third recognized the inevitability of war as the explosion of the contradictions of capitalist production and at the same time saw within such war the final catastrophe of capitalist production. Needless to say, it was this third tendency that took the most active interest in this problem. This was represented by those who had experienced the 1905 revolution in Russia that broke out in part because of the Russo-Japanese War, starting first and foremost with Lenin, and represented by Rosa Luxemburg. It is no accident that they were the two who carried out the most innovative work for developing a scientific analysis of imperialism.

The work by Luxemburg I am referring to is of course her famous book The Accumulation of Capital: A Contribution to an Explanation of Imperialism (1913). In it, she begins by critically examining Marx's schema for the process of the expanded reproduction of the total social capital, attempting to demonstrate that in a society where capitalist production is universally dominant and monopolistic, it is quite impossible for capital to be accumulated. An indispensable condition for the accumulation of capital, she asserts, is the existence of non-capitalist societies or social layers. This means that the necessity of capital accumulation at the same time necessitates the forced advance of capitalist societies into the non-capitalist areas and the competition among groups of capitalists (states) to make such advances – in a word it necessitates imperialism. Subsequently, these non-capitalist areas themselves become capitalistic, so that the non-capitalist areas disappear, thereby robbing the areas themselves of their own possibility to advance further. There must be some ultimate limit to this historical process of capital accumulation, and therefore a limit to the fate of capitalism itself. This is the gist of what Luxemburg sought to demonstrate in The Accumulation of Capital.

Opinions are divided over whether Luxemburg's attempt was on target in terms of grasping the problem and the process of inference she employed. I have a number of doubts myself, and will probably have an appropriate time to discuss each one subsequently. Still, no one can ignore the historical significance of Part One of The Accumulation of Capital. With an increasingly keen awareness of the approaching crisis of world war, which accompanied the gradual unfolding of the contradictions particular to the imperialist stage of capitalism, the decision by the Social-Democratic Party regarding the policy to adopt toward war became increasingly crucial. Luxemburg made the first theoretical achievement intended to sweep aside the petty-bourgeois attitude of the "central faction" of the party and put in place a truly proletarian stance as its foundation. The historical significance of The Accumulation of Capital is demonstrated by the incredibly controversy it generated within the Social-Democratic Party. As Luxemburg writes:

Habent sua fata libelli – books have their fates. When I wrote my Accumulation a thought depressed me from time to time: all followers of Marxist doctrine would declare that the things I was trying to show and carefully substantiate were self-evident. Nobody would voice a different opinion; my solution of the problem would be the only possible one imaginable. It turned out very differently: a number of critics in the Social democratic press declared that the book was totally misguided to start with and that such a problem calling for solution did not exist at all. I had become the pitiful victim of pure misunderstanding. There were events connected with the publication of my book which must be called rather unusual. The "review" of the Accumulation which appeared in Vorwarts of 16 February 1913 was striking in tone and content even to the less involved reader; and all the more astonishing since the criticized book is purely theoretical and strictly objective, and directed against no living Marxist. Not enough. Against those who had published a positive review of the book a high-handed action was taken by the central organ. A quite unique and somehow funny event – a purely theoretical study of an abstract scientific problem was censured by the entire staff of a political daily paper. Such a fate has happened to no other party publication as far as I know and over the decades Social Democratic publishers have certainly not produced all gold and pearls. All these events clearly indicate that there have been other passions touched on, one way or another, than "pure science." But to judge that properly one has first to know at least the main points of the material in question.[15]

Luxemburg, who in this manner once again developed her views on capital accumulation and the necessity of imperialism in the form of a counter-attack on the criticism aimed at her, located the real reason for the leadership's vehement attack on her view within their own practical interests. She explains this at the end of her work in the following way:

According to official "expert" Marxism, the rules are quite different [i.e. the tactical rules regarding action to be taken against imperialism]. The belief in the possibility of accumulation in an "isolated capitalist society," the belief that capitalism is conceivable even without expansion, is the theoretical formula of a quite distinct tactical tendency. The logical conclusion of this idea is to look on the phase of imperialism not as a historical necessity, as the decisive conflict for socialism, but as the wicked invention of a small group of people who profit from it. This leads to convincing the bourgeoisie that, even from the point of view of their capitalist interest, imperialism and militarism are harmful, thus isolating the alleged small group of beneficiaries of this imperialism and forming a bloc of the proletariat with broad sections of the bourgeoisie in order to "moderate" imperialism, starve it out by "partial disarmament" and "draw its claws"! Just as liberalism in the period of its decline appeals for a well-informed as against an ill-informed monarchy, the "Marxist center" appeals for the bourgeoisie it will educate as against the ill-advised one, for international disarmament treaties as against the disaster course of imperialism, for the peaceful federation of democratic nation states as against the struggle of the great powers for armed world domination. The final confrontation between proletariat and capital to settle their world-historical contradiction is converted into the utopia of a historical compromise between proletariat and bourgeoisie to "moderate" the imperialist contradiction between capitalist states[16].

This is not a distorted or emotional cursing of the critiques of her book, but rather the expression of a clear truth that was confirmed in the actual stance toward imperialism of those (in the Marxist "central" faction) who attacked The Accumulation of Capital. The attitude of the central leadership toward imperialism reminds us again of our consideration of the attitude of Sismondi toward crisis. Sismondi's fundamental error concerning the contradictions of capitalism in the form of "universal competition" was repeated a century later by "Marxists" in their attitude toward the contradictions of capitalism in the form of imperialism. We can apply what was said a moment ago regarding Sismondi directly to their attitude as well. And Luxemburg's criticism of them, just cited, likewise applies directly to the case of Sismondi. The difference is that whereas Sismondi was naive and humanistic to the core, these other gentlemen strangely claim to be "expert Marxists." Sismondi's error can be understood from the historical circumstances in which the development of capitalism, and therefore the development of the proletariat as its opposite, had yet to adequately develop, so that the particular method of thought, and socio-political power, of the proletariat as a revolutionary class was still developing. Today, however, with Marx having already long ago established the dialectical-materialist conception of history, and the power of the proletarian class even overwhelmingly reflected in the parliaments of advanced nations, it is hard to accept self-described followers of Marx, and representatives of the power of the proletarian class, who repeat the same errors that were overcome a century earlier. This can certainly not be considered a well-intentioned, naive error. Rather, this must signify a conscious turning away from Marxism, a conscious betrayal of the class interests of the proletariat. In this sense, it is the same as the opportunistic view of imperialism held by the right wing. This apostasy and betrayal can no longer be explained by a lack of capitalist development. The basis for this must instead be sought in the modern relations of capitalist production. And this represents an important issue. In his preface to the French and German editions of Imperialism, Lenin draws attention to this problem in particular, writing:

[The "economic basis" of imperialism] is precisely the parasitism and decay of capitalism, characteristic of its highest historical stage of development, i.e., imperialism. As this pamphlet shows, capitalism has now singled out a handful of exceptionally rich and powerful states which plunder the whole world simply by "clipping coupons". Capital exports yield an income of eight to ten thousand million francs per annum, at pre-war prices and according to pre-war bourgeois statistics. Now, of course, they yield much more.

Obviously, out of such enormous superprofits (since they are obtained over and above the profits which capitalists squeeze out of the workers of their "own" country) it is possible to bribe the labor leaders and the upper stratum of the labor aristocracy. And that is just what the capitalists of the "advanced" countries are doing: they are bribing them in a thousand different ways, direct and indirect, overt and covert.

This stratum of workers-turned-bourgeois, or the labor aristocracy, who are quite philistine in their mode of life, in the size of their earnings and in their entire outlook, is the principal prop of the Second International, and in our days, the principal social (not military) prop of the bourgeoisie. For they are the real agents of the bourgeoisie in the working-class movement, the labor lieutenants of the capitalist class, real vehicles of reformism and chauvinism. In the civil war between the proletariat and the bourgeoisie they inevitably, and in no small numbers. take the side of the bourgeoisie, the "Versaillese" against the "Communards".

Unless the economic roots of this phenomenon are understood and its political and social significance is appreciated, not a step can be taken toward the solution of the practical problem of the communist movement and of the impending social revolution[17].

This problem is dealt with in further detail in Lenin's book. But to elaborate on this point would be to depart too far from the aim of this article. Returning to the main point, we need to consider the ground-breaking significance of Lenin's Imperialism within the history of the development of the theory of crisis[18].

We have clarified the significance of Luxemburg's The Accumulation of Capital for the developmental history of this theory. So now we need to consider how Lenin's Imperialism represents a step forward compared to Luxemburg's work.

This development can be seen, essentially, in how Lenin grasped the problem. And the locus of this development in grasping the problem can already be seen externally from the titles each author gave to their books. Luxemburg chose the title, The Accumulation of Capital: A Contribution to an Explanation of Imperialism, whereas Lenin clearly entitled his work Imperialism: The Highest Stage of Capitalism. I think that both titles, in a sense, clarify that imperialism is the product of the modern development of capitalism. Imperialism as the outcome of the modern development – or the modern aspect of imperialism – is the historical reality that underlies the emergence of both works. Each book has particular historical significance in terms of adopting a truly proletarian stance toward this new situation. But Rosa Luxemburg does not seem to have an adequate awareness of her corresponding historical mission. Indeed, according to the passage from An Anti-Critique quoted above, the particular historical significance of The Accumulation of Capital only first reached her consciousness through the "unexpected" shock its publication had within the Social-Democratic Party; unless she was using this expression as a rhetorical expression within the debate. This is not the extent of the problem, however. If we look at the structure of her book, as already noted, its fundamental part is composed of a general analysis of the reproduction process of social capital. She concludes that expanded reproduction (capital accumulation) is absolutely impossible in a purely capitalist society. From this impossibility, she demonstrates that non-capitalist environments are indispensable to capital accumulation in general. And it is here that she seeks to locate the economic basis of imperialism. It may be possible, through such a general basis – as the general characteristic of capitalism – to explain imperialism, but this will be quite unable to explain the imperialism that characterizes capitalism's modern stage – or the particular modern aspect of imperialism. What actually motivated Luxemburg, spurring her to write The Accumulation of Capital in 1913 on the eve of a world war, clearly must have been the latter, yet what she explained was the former. Herein lies a defect in her work. And it is the existence of this defect that highlights the ground-breaking significance of Imperialism. In Lenin's book, the object of study is clearly defined from the outset in terms of "imperialism as the highest stage of capitalism." From this, he is clearly aware that unless "the fundamental economic question, that of the economic essence of imperialism" is studied, "it will be impossible to understand and appraise modern war and modern politics." Lenin, thus, does not pose the question in terms of the general process of capital accumulation, but instead considers the "concentration of production and monopolies," "banks and their new role," and "finance capital and the financial oligarchy," which were ground-breaking developments at the end of the nineteenth century and early twentieth century. Unlike Rosa Luxemburg, he does not raise the problem of the general relation between capitalist societies and non-capitalist societies. Instead, he considers the "export of capital," "division of the world among capitalist associations," and the "division of the world among the great powers," which characterize the modern stage of this relation. The consideration of these problems by Lenin provides an essential grasp of imperialist war in its most modern form – i.e. not war in general or a general view of capitalist aggression, as explained by Luxemburg, but rather as a world war among great powers to divide up the world, which is the explosion that occurred in 1914 and will continue to occur as long as capitalism still exists – and he also reveals the basis of the tendency of "social patriotism" that appeared along with the necessity of war. Moreover, unlike Luxemburg, from the outset Lenin considers where the most dangerous enemies are, pointing out that "special attention has been devoted in this pamphlet to a criticism of Kautskyism, the international ideological trend represented in all countries of the world by the most 'prominent theoreticians,' the leaders of the Second International cand a multitude of socialists, reformists, pacifists, bourgeois democrats and parsons." [19] Finally, unlike Luxemburg, who abstractly speaks of the general self-contradictions of capitalism, and explains the ultimate deadlock of capitalism from these self-contradictions, Lenin locates within imperialism, as the modern form of capitalism, a clear sign of the decline of capitalism and a clear transitional aspect leading toward socialism.

Lenin's theory of imperialism, then, is a study of the historical characteristics of the particular aspect of the current stage of capitalism, or what could be called the current stage of capitalism manifested in its imperialistic characteristics. The essence of this historical character, he says, lies in the contradictions of capitalist production, as the outcome of the self-development of these contradictions, which brings about a formal transformation. By elucidating the contradictions of capitalist production within these new forms, Lenin was able to clarify the inevitability of world war as the explosion of these contradictions, and the decisive significance such war must have for the fate of capitalism, while clearly discerning the boundaries of the enemy camp in the struggle against imperialist war. His work thus establishes general standards for the struggle of the proletarian class against modern capitalism centered on imperialist war, thus giving this book great practical significance. As is well known, this was useful as a guiding principle in the Russian Revolution, and subsequently as a guiding principle for the Third International, and it continues to be useful today.

We therefore need to clarify the value of Lenin's work, while at the same time not overlooking its inherent limitations. This is a work that was originally written in order to elucidate certain phenomena, so we should not expect it to resolve matters that it did not originally set out to address.

As noted already, it is a study of the nature of the current stage of capitalism, and does not go beyond this study of its nature as a stage. But if the current stage of capitalism is to be observed further, it is clear that it does not have a uniform appearance. That is to say, within it are encompassed various developmental aspects. In other words, the contradictions of capitalist production within the imperialist stage are also themselves developed through a wave-like process. From the outset, Lenin's Imperialism does not set out to elucidate this process of development. And this is natural. Lenin's work was written in the midst of a world war, as an urgent response to this situation. The development of contradictions had already passed a certain point. The contradictions – regardless of the nature of their process of development – were exploding in reality. At issue was the task of revealing the essence of the crisis that had actually arrived, as a crisis of capitalism in general which had to be realized as such. Clearly, the question of the twists and turns leading up to the arrival of the crisis was a secondary issue at the time. But today the situation has changed. For the moment, the page of the Great War has been turned, with the direct outcome being that the wave of the worldwide revolutionary movement has receded. The task today is to prepare for the new crisis that will soon arrive. This new period of crisis will probably once again take the form of a world war. But even prior to this, it will likely assume the form of an economic crisis. In either case, however, the greatest task in the current period is to prepare for the upcoming major crisis. How can we accomplish this task in the most efficient and effective manner? First of all, we must confirm the necessity underlying the arrival of the new crisis, and also recognize the current position as one step in the journey leading toward this. It is only possible to attain the theoretical basis for this recognition by grasping all the contradictions of capitalism in their mutual organic relation, i.e. as moments in the dialectical development of capitalist production, and to thereby elucidate the process of the inevitable development up to the point where these contradictions explode. It is precisely the elucidation of this theoretical basis – as will be explained in more detail subsequently – that is the task of a truly Marxian theory of crisis. And this is precisely what Marx set out to achieve throughout his entire systematic critique of political economy. In this sense, the entire system of his critique (within which Capital is the most fundamental part) at the same time is a system of a theory of crisis–or a system that is concentrated within the "theory of crisis" as the most comprehensive, conclusive parts of the totality. Yet, these relations do not seem to have been adequately understood by many Marxist researchers. In fact, the problem of crisis has mainly been considered from a narrow and one-dimensional perspective. Crisis and the problems related to it have not been elucidated, and at times have been distorted. The various causes of crisis – its intrinsic, ultimate causes, and its real forms, conditions, etc. – in most cases have been severed from their original relations to be grasped abstractly in isolation, and therefore as mutually unrelated (or only superficially united), or even as mutually unrelated. In such a situation, every debate ends up being waged for the sake of debate alone, and naturally do not generate results that take us a step forward. This, I think, is one reason why the system for a theory of crisis not only remains incomplete but there is no indication of any constructive progress of any sort. Of course, the completion of a theory of crisis is certainly no easy task. In all likelihood it could not be achieved by a lone individual and would instead require the cooperation of many people. However, in order for the cooperation of many to be effective there must be a common basis or uniform standpoint. And we can only look to Marx to provide this. This is the reason why I have taken a look back on Marx in this article which I have entitled "An Introduction to the Study of Crisis."


1. Sismondi, New Principles of Political Economy (London: Transaction Publishers, 1991). 2.

2. Ibid., 7-10.

3. Ibid., 263.

4. [This was translated from the Japanese after being unable to find the passage in the English translation of Sismondi.]

5. Theories of Surplus Value, in Marx Engels Collected Works vol. 31, 347-8.

6. Marx, A Contribution to the Critique of Political Economy, in Marx Engels Collected Works vol. 29, 301.

7. Here I make a point of saying "using this particular term" because in earlier works the same idea can be found. For example, according to the research of Bergmann (Geschichte der Nationalokonomischen Krisen-theorien), this was already clarified by Sir Dudley North in Discourses upon Trade (London 1691), by Josiah Tucker in Reflections on the Expediency of a Law for the Naturalization of Foreign Protestants (1751-2) and by the Physiocrats. Say's achievement (?) was merely to attach the name "théorie des débouches" to this idea and fashion it into a textbook dogma.

8. Ricardo, Principles of Political Economy and Taxation (Amherst: Prometheus Books, 1996) 201-2.

9.[Kuruma did not cite the source of page number so I have had to translate this from the Japanese.]

10. In opposition to these capitalist business-cycle research centers, a special research cycle on the business cycle was established in Russia in 1920 in order to contribute to the financial and economic policies of the Soviet government. I have a great interest and expectations in this organization but unfortunately do not possess the materials needed to comment in detail on this.

11. This fact is even recognized by the researchers themselves. A recent book by Wesley C. Mitchell, a prominent scholar at the National Bureau or Economics in the United States, which is one of the world's foremost business-cycle research centers, provides us with a clear glimpse of how perplexed researchers are by the contradiction between their lack of theoretical confidence and the need for theory as the premise of their investigations. In his introduction to this book, entitled Business Cycles: the Problem and its Setting (1928), Mitchell writes: "It is not advisable to attack the statistical data until we have made this survey of theories. For while the statistics will come to seem scanty as our demands develop, they are sufficiently abundant and diverse, susceptible of enough transformations and combinations, to make hopeless a purely empirical investigation. At every turn, we shall need working hypotheses to guide our selection of data, and to suggest ways of analyzing and combining them. Our survey of theories will provide us with the most promising hypotheses which have been invented. Not until we are thus equipped can be begin constructive work upon the problems of business cycles, confident that we are not overlooking the elements already proved to be important." – In other words, the author, lacking theoretical confidence regarding the processes of capitalistic production, wanders around like a hungry dog in search of anything to fill this gap. Thus, the bulk of the first chapter is taken up with a "general survey" of existing doctrines. But this sort of makeshift compilation has no chance of success. He even fails to understand the doctrines of the other people (see for instance his description of Marx's theory of crisis). Moreover, needless to say, he also fails to achieve a comprehensive synthesis of the results. (See the second chapter on economic organization and the business cycle where he treats a variety of elements from various scholars regarding the important relations of the business cycle without any regard for their internal relations.)

12. Bernstein first publicly presented his motion for a "revision" in a series of articles that appeared from 1896 to 1897 in the SDP journal Die Neue Zeit, entitled "Problems of Socialism." His famous book, Evolutionary Socialism, published in 1899, was a more systematic presentation of his views in response to the incredible controversy that his articles had sparked within the party.

13. Tugan-Baranowsky's Studien zur Theorie und Geschichte der Handelskrisen in England. The original Russian edition was published in 1894, but it was first introduced in Europe through the German edition published in 1901. In one aspect, the book displays the same revisionist tendency as Bernstein, and must be seen as a product of the global situation at the end of the 19th century, but at the same time it has the characteristic of being a product of the particular social conditions in Russia at the time. (For more on this, see "Third Round" in part two of Luxemburg's The Accumulation of Capital.) Having said this, however, his work at least provided an opportunity for stimulation and discussion within the Marxist camp by considering the previous crises in England in terms of a process of their occurrence and providing important suggestions for the later development of the theory of crisis, while at the same time discussing the problem of the reproduction of the total social capital in relation to the problem of crisis (particularly the relation of the schema in part two of volume two of Capital to this). For example, the Theory of Crisis [title translated from Japanese] by Kautsky mentioned in the following footnote as well as Boudin's article "Mathematical Formulas in Marx's Writing" [title translated from Japanese] " published in Die Neue Zeit from 1906 to 1907, etc., were written to criticize Tugan-Baranowsky's book. We can also imagine that Luxemburg's The Accumulation of Capital gained many hints from his book in terms of seeking to evolve the problem of crisis into a problem of the reproduction of the total social capital, and her discussion was developed based on a criticism of Tugan-Baranowsky's book.

14. For example, Luxemburg's Reform or Revolution (1898), Parvus' Commercial Crises and Labor Unions [title translated from Japanese] and Kautsky's Theory of Crisis. Of these works Luxemburg's work is particularly important in terms of showing a dialectical grasp of the problem. The latter two works recognize within the process of the development of capitalist production in the 19th century a cycle of crisis that is more comprehensive than the slight cycle recognized previously to be encompassed, and Kautsky in particular provided suggestions of some significance by attempting to elucidate the significance of the more comprehensive cycles in terms of the stage of the historical development of capitalist production. However, this attempt did not bear final fruit at the time, nor was it every achieved by Kautsky.

15.Luxemburg, The Accumulation of Capital–An Anti-Critique New York: Monthly Review, 1972; 47-8.

16. Ibid., 148

17. Lenin, Imperialism: The Highest Stage of Capitalism (Peking: Foreign Languages Press, 1970) 9-20.

18. It should already be clear from my discussion up to now that my use of the term "theory of crisis" is not limited to the theory of economic crisis. This term naturally also encompasses the study of the necessity of imperialist world war as the explosion of the contradictions peculiar to modern capitalism. Imperialist world war itself is precisely crisis in its highest form. Thus, the theory of imperialism must be an extension of the theory of crisis.

19. Ibid., 7.