From Internal Bulletin, Revolutionary Communist Party (BSFI), November 1947.
Translated by Condos, W. Redver.
Transcribed by Mike Pearn.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
The document The Real Situation in Great Britain – An Answer to the IS, has been the subject of many controversies. We want, therefore, to limit ourselves to one aspect of the questions raised, in order to allow our comrades following the discussion really to educate themselves through the curtain of fractional smoke that has been lowered over the debate.
To sincerely add that in our opinion it is necessary once and for all that the comrades of the RCP Majority should drop this deplorable attitude of wanting to teach “the ABC” to everyone at every opportunity. It is all very well to know the ABC, and we must rejoice that there are no more illiterates in the RCP, it seems. But woe to you, comrades, if you stop your efforts at this rather primitive stage of knowledge! Armed with the ABC alone, you must stumble fatally as soon as you undertake to decipher phrases as complicated as those in which the stages of the cycle of industrial production under capitalism are contained. It is time, high time, to pass from the ABC to current reading.
The document of the majority comrades defines a “boom” in the following way:
“We understand by “boom”, a period when the market is capable of absorbing the goods produced, and during which period production expands. (In comparison with which level? the crisis level!) It means that growing numbers of workers are employed on producing commodities, that the unemployed army declines, and that capital is ploughed back into industry and there is an expansion of trade. The measure of the “boom” is its productive output in comparison with the past, etc., (which past? the previous crisis?)”
Here we are with our ABC pat – but unable to spell anything! If the comrades of the RCP Majority were to take their own definition seriously, they should logically conclude that we are confronting a “boom” in all capitalist Europe, because in all these countries production is “expanding” (in relation to 1944 or 1945), capital is being “ploughed back” into industry (after having left it at an unknown point previously), the market is capable of “absorbing” all the products that are sent to it (there is still everywhere terrible underproduction in all sectors of the Continent, etc. And if one wanted to push this to its logical conclusion, one could say that always, in all countries and under any condition, the “boom” starts as soon as a crisis has passed its lowest point, because slowly, one after the other, the characteristics cited in the document of the RCP Majority are realised. Such a reasoning would lead to this schematism: reduce the whole cycle of capitalist production to two stages: the crisis and the boom. Such vulgarisations even do an injustice to the ABC, comrades of the RCP Majority; they must deal a severe blow to Marxist political economy.
The theory of the cyclical movement of capitalist production, in constant correlation with the theory of crisis, is treated by Marx only fleetingly, in a great number of passages in his works on political economy. The term “boom” does not appear anywhere, but although we lack a systematic exposition of these questions in his works, there are a great many passages which can help us better understand the meaning of the terms which constitute the core of the discussion.
This is how Marx defined for instance the stages along which the cycle of capitalist production runs:
“The enormous power, inherent in the factory system, of expanding by jumps, and the dependence of that system on the markets of the world, necessarily beget feverish production, followed by over-filling of the markets, whereupon contraction of the markets brigs on crippling of production. THE LIFE OF MODERN INDUSTRY BECOMES A SERIES OF PERIODS OF MODERATE ACTIVITY, PROSPERITY, UPSWING (‘ESSOR’), OVER-PRODUCTION, CRISIS AND STAGNATION”. 
Another definition, interesting because it specifies the idea that Marx formed on the stage which we today call “boom”, is contained in the following extract;
“... cycle, interrupted by smaller oscillations, of periods of average activity, production at high pressure, crisis and stagnation ...” 
We see here that Marx does not distinguish two, but six stages of the economic cycle, by which one could even add a seventh, by distinguishing in the period that Marx calls “moderate activity” the stage of industrial resumption, and that of revival proper. These stages are actually called resumption, revival, boom, prosperity, over-production, crisis and stagnation.
We have already seen too terms by which Marx characterises the period that we call “boom”: the term “upswing” (essor) and the term “production at high pressure”. We find in his works, however, fuller characterisations of what he designates in this way:
“The mass of social wealth, overflowing with the advance of accumulation, and transformable into additional capital, thrusts itself frantically into old branches of production, whose market suddenly expands, or opens up new branches, such as railways, the need for which grows out of the development of the old ones.” 
The comrades of the RCP Majority must answer this question frankly: do we actually see such a “feverish”, “frantic”, “high-pressured” movement in British industry? Is there a situation that corresponds to the general definition of “boom” in Marx?
But Marx, while not giving a general analysis of the characteristics of such stages anywhere, has all the same touched upon these specific characteristics in many of his writings. We can specifically distinguish the following characteristics which, according to him, distinguish this period of “upswing (essor) that we today call “boom”,:
We have limited ourselves to these four points, but it is obvious that the boom has still other characteristics that one only needs to take the trouble to look up in the works of Marx. Let us not this essential point: It is the movement of the average rate off profit – which does not coincide mechanically with that of the market – which determines the [word obscured] of the cycle of capitalist production. The passage from stagnation to resumption for instance, is made, in general, without extension of the market, but simply on the basis of the fact that the real price of labour and of raw materials, have fallen below those of finished products in the sphere of means of consumption, where, after a certain relative destruction of stocks, the production can slowly be resumed, on the basis of buying power which is not greater than that existing at the moment of the crisis... Let us not exist, but state that we are very far from the schemata of the document of the RCP Majority, but ... we are with Marx!
Can we say that the four characteristics are actually present in the situation of British economy? It is enough to read the document of the RCP Majority itself attentively to see that this is not the case. Of those four factors of the boom the fourth alone is present. In reality, on the British capital market there is a plethora of capital and a sharp decrease in the average rate of interest and discount. But we can make two remarks on this subject.
It clearly follows that the situation of British economy is not that of a boom, if one wishes to give this term the significance that Marxists have always given to it. There exists in Great Britain at the moment a situation of general revival, with at most a boom in some isolated industries which do not determine the general aspect of the economy. The Economist regularly speaks of the boom in shipbuilding. There is nothing which resembles the “feverish push of production in all the branches of industry” of which Marx speaks, and we shall see later why there cannot be such a phenomenon in the Great Britain of today. This confusion between revival and boom that the comrades of the RCP Majority make is fatal not only from the point of view of economic analysis, but also, and mainly, because it disarms them in face f a phenomenon such as the crisis of last winter, which is inexplicable in the framework of a boom. Of course there is no crisis of overproduction in Great Britain. If the comrades of the Minority have foreseen this, they have made a great mistake, and this is their business. But never, and nowhere, has the IS spoken of a crisis of overproduction. Here the authors of the document have made a real amalgam in constantly mixing their polemic against their own minority with their polemic against the IS, and thus trying to smuggle into our movement their vulgarisation of the cycle of production without differentiation between the two periods of the crisis.
All the above reasoning, however, is fundamentally perverted. It applies categories emerging from an analysis of the cycle of production under conditions of ascendant capitalism to a situation of capitalist decadence. The question now is to determine in what measure an application of the theory of the cycles is possible in the present era.
The answer that the document offers to this question is astonishingly simple:
“Since the advent of imperialism and finance capital and the turn of the 20th century, world economy has been dominated in general by the fact that the productive apparatus has expanded more rapidly than the world market.”
This is the whole definition of the period of “general and absolute decline” that the authors of the document offer us. By what is this “general and absolute decline” manifested in the course of the cycle of production, comrades of the majority of the RCP? Only by what you have written on page 17 of your document? If there is not any specific effect on each of the stages of the cycle?
Unfortunately Trotsky, with regard to decadent capitalism, no more than Marx with regard to ascendant capitalism, has left no systematic treatise of the cycles. Moreover, supplementary difficulties appear in this field, due to the lack of the synchronism of those political and economic phenomenon. However, on the basis of the programmatic writings of our movement, we can, without mistake, cite at least the following characteristics of the cycle of production under capitalist decadence:
One can say, more specifically about the “old” capitalist countries of the European Continent and Great Britain, that the market is limited more and more not only by the growing contradiction between the capacity of production and the capacity of consumption, but also by the fact that the overproduction of certain sectors is emphasised by the chronic underproduction of other sectors.
A few concrete examples will show the exactness of our statement that in the period of capitalist decadence British industry can no longer overgrow the stage of revival and attain one of real boom:
The total number of workers and employees, men and women working in public services, goes from: 16,500,000 in the middle of 1939 (a year of stagnation) to 16,612,000 in the middle of 1946, and 17,605,000 March 1947.
Yet even this increase of scarcely one million (6 per cent) is fictitious, as the sector “basic industries”, the most bureaucratised, by itself has absorbed a million extra hands!
And the picture becomes even clearer when one adds that the number of active men has declined from 211,000 in relation to 1939. Really this is a funny kind of boom in man power ...
Of course, in a boom a shortage of man power appears very often towards the end when the expansion of the industry has been more rapid than the building up of new reservoirs of man power. But far from being the result of a boom the present crisis of British manpower (as the equivalent crisis in France, Belgium, etc.) is the expression of the irredeemable capitalist decadence of these countries which limits the revival and renders its transformation into a boom impossible.
It is not by chance that American capitalism which is still capable of broadening its basis, on the background of the impoverishment or destruction of its competitors, has been able to find, at the beginning of its present boom, a reserve of man power of 15 million hands, whereas all the previous course of decadence in the “old” capitalist countries, had destroyed all important reservoirs of man power.
The sores of the actual revival in Great Britain, as we have tried to demonstrate, are not the effect of chance. They are actually the immediate result in the cycle of production of this “absolute and general decline” that the comrades of the RCP Majority cite as frequently, in the abstract, without trying to draw the conclusions for everyday economy. They provoke crises within revivals, which are not crises of overproduction, but specific crises of the decadent economy occupied with the restoration of past destruction. These sores are inherent in the British capitalist economy, and it will not be possible to eliminate them definitely otherwise than on the basis of world socialist planning. To demonstrate this practically, to denounce the false character of “Labour planning”, which, historically, consists solely of an attempt to replaster condemned capitalism on he backs of the working class, ‒ this is what should constitute one of the axes of the British Trotskyist propaganda. But, in order to undertake this correctly, it is necessary to abandon right now any juggling with a boom that has not existed and that British capitalism will never experience again.
1. Karl Marx: Das Kapital, p. 396, in the Volksausgabe of Karl Kautsky, Dietz, Stuttgart 1919. Translated and underlined by us.
2. Id., p. 570. Translated and underlined by us.
3. Id., p. 570. Translated and underlined by us.
4. For example; Karl Marx, Theorien über den Mehrwert, III, Second Part, p. 304 and ff., in the edition of Karl Kautsky, Zweite Auflage, Dietz, Stuttgart 1910.
5. Karl Marx: Das Kapital, III, First Part, p. 101 and ff., in Engels’s edition, 5e Auflage, Meissner, Hamburg 1921.
6. Karl Marx: Das Kapital, I, p. 570 and ff.
7. Karl Marx: Das Kapital, III, Chapter 25, passim. This plethora of capitals provokes a sharp decrease in the average rate of discount and interest.
8. Here we leave out of consideration the possible question of new American credits to Europe, the result of the Marshall Plan, etc.
9. Karl Marx: Das Kapital, III.
10. The Economist, Record and Statistics, 24.5.1947.
Last updated on 14.5.2011