First Published: In Struggle! No. 238, February 17, 1981
Transcription, Editing and Markup: Malcolm and Paul Saba
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The inter-war period was a time of general and widespread crisis. In gestation in the twenties, the crisis came full bloom in the thirties, It was an economic, financial and monetary crisis, of course, but it was also a crisis affecting the whole superstruiture of society, It was a crisis for bourgeois democracy. Hitler and fascism,, don’t forget, were allowed to build up strength under bourgeois democracy. It was a crisis for the State, for classical bourgeois liberal ideas and, after 1929, for reformist social democracy. And finally, (although we could of course list many other crises too) it was a crisis for communism and the communist movement, which swang back and forth between left and right. The political “turns” were more a consequence of uncertainty about which way to go than they were responses to changes in the concrete situation.
Why did all this happen? How can we make sense out of such a complex pattern of events? Can we be satisfied with simply repeating that it was all just the continuation of the rivalries that had led to the First World War? Or that it was the communists who were responsible for the turn events were to take? If we content ourselves with that as an explanation we will hardly be able to comprehend why the constantly predicted collapse of capitalism, viewed as particularly imminent because capitalism had reached its final “highest stage” of monopoly capitalism, failed to materialize. And that question, we would surely all agree, is still today a very fresh, contemporary and relevant one.
We will try to answer all these questions with a clear awareness of the limits of our present state of knowledge. We will try to locate the key link (and will not try to figure out all the other factors)which can provide us with a guide to analysing more specific events during this period. By doing things this way we will not be able to get into, for the moment, the whole question of the activities of communists in this period. Some people see these actions as highly controversial, others as a taboo subject not to be touched with a ten-foot pole. It all depends on how you look at things.
Let’s get right down to what is fundamental to explaining the crisis period. Here is our hypothesis. In the inter-war period, it became obvious that the way in which capitalism was organized no longer corresponded to what was needed for it to develop. That hypothesis, intentionally formulated in a general way, comprises two more specific points that we will elaborate upon later. First, the relations of production in the imperialist countries were inadequate if capitalism were to continue to develop. Second, the international order as it was arranged at the time was equally at odds with continued development.
The inter-war period thus turned out to be a period of transition culminating with the establishment of the welfare state and a new world order in 1945. The latter was based on a liberalization of trade and the creation of various international institutions like the World Bank. IMF, GATT etc. Some interesting comparisons can be made, although one must not go overboard, between the crisis in the inter-war period and the present-day crisis. Today’s crisis is occasioning widespread questioning in all social classes too. The way forward is far from clear. Should the welfare state be dismantled? Is there a need for a new economic world order?
First, let’s clarify a few things about relations of production. Most simply put, relations of production means the social relationships that tie people to one another in specific ways within the context of the social production of the necessaries of life. Those relationships are conditioned most fundamentally by the place each group of people occupies in relation to the means of production.
Political economy usually deals only with “pure types” of relations of production. The purpose of this is to illustrate the essential features common to all the different particular relations which may exist, the characteristic features. It would be wrong to deduce from this that relations of production are somehow cast in concrete and that everywhere, in all times and places, they remain. the same. It would be wrong to deduce this even when we are talking about the same type of relations, capitalist relations for example. Relations of production are constantly undergoing modification, although their basic characteristics remain unchanged. Those modifications are what define the particular character of a specific, concrete society and the particular form that the struggle between classes takes within it at any given moment.
With this in mind, what can we say about the twenties? On the one hand, the socialization of production had increased considerably since the 19th century. This was true within each production unit; hence, the assembly line made workers more specialized and interdepended. It was also true on the level of the overall economy; the various productive units were more interdependent than before; Indeed, it was beginning to be true on a world level; hence, the rapid rise of multinational corporations before the Depression.
On the other hand, the relation of production were still more or less the same in form as they had been in the early days of free enterprise competitive capitalism. The capitalist owner of the means of production was still the absolute master in the realm of both production and distribution (exchange). There were virtually no restrictions imposed on his property rights, his rights as an owner to do as he saw fit with his property and its products. This lack of restrictions was very understandable some fifty years earlier. At that time, it corresponded to the wide dispersion of private property into many small economic units. But by the 1920s, things were different. The fact that economic decisions continued to be made individually by a smaller number of much more powerful capitalists in a purely private way was to have much more serious consequences. The 1929 Depression was proof of that.
The 1929 Depression was to lay this contradiction bare for all to see so brutally that all countries quickly adopted policies of a similar sort, all hinging on the direct intervention of the State in the economy. This was something very new. Up to then, the State had been content to play the role of policeman.
The State was to aid in the restructuring or entire sectors of the economy and in the concentration of enterprises into larger units. It was to intervene directly by placing private concerns under public ownership (nationalizations). It was to undertake large-scale public works such as the Tennessee Valley Authority Project in the United States. The State was to lay down guidelines, establish regulatory bodies and set rules and regulations for economic activity. Japan got involved in economic planning. New felds for the accumulation of capital were opened up, most notably farm credit and the centralized investment of small private savings by large financial institutions. In many countries, the State took responsibility for the debt in the agricultural sector. The principle of public social assistance was broadly accepted, as with the New Deal in the U.S. This meant a more collective acceptance of responsibility for dealing with poverty at least with respect to wage-earners.
There was thus a common trend that overrode any and all national particularities: centralization, concentration, integraiton, increased social control over private activity, co-ordination etc. All of this was to be given theoretical expression in the thirties by the famous economist, John Maynard Keynes, the “Karl Marx” of the bourgeoisie.
It is easy enough to see what effects this had on the relations of production. The individual capitalist found hi absolute right of ownership squelched. From now on, he would have to accomodate and adapt himself repeatedly to new restrictions on his freedom of action which were aimed at upholding the interests of the capitalist class as a whole. The farmer who had been independent up to then, in control of what he would produce and where and when he would sell it, was to have the State interfere in these matters. The government would pay him to reduce the size or his crop and would ensure its sale on the market. But the farmer would also become indebted to and thereby fall into the clutches of the banks and the monopolies. Thus the peasant had a new relationship to his means of production and to the rest of the society.
Those are but two examples, enough to illustrate our hypothesis. We will have to research things much more deeply if we want to understand all of the changes which took place in the relations between social classes in this period and the ensuing pattern of struggle between those classes. This is a job that remains to be done.
As we have seen, the capitalists in all the different countries adopted similar policies. But this should not lead us to ignore the important differences which existed among them as to what attitude to take towards the working class. The fascist countries tended towards corporatism and sought to crush the workers’ movement. The other imperialist countries more commonly moved in the direction of tripartism and the integration of the working class as social partners with the bourgeoisie. Hence, in Great Britain, the Labour Party led in the formation of a National Union government in 1931. The U.S. New Deal included a broader recognition of union rights. The Matignon accords in France in 1936 between the employers, the State and a reunified union movement is another example. All of these facts indicate that the bourgeoisie could no longer rule without taking considerable account of the working class.
The crisis, as we stated above, was equally much the result of a second factor: the international order was no longer in conformity with the needs of the imperialist system. The type of order that had been built up little by little in the period of competitive capitalism failed completely in the crisis period of the twenties.
Great Britain, facing an economic crisis from the twenties on, lost its world hegemony. But no other country was to move in and take its place until 1945. The end of British hegemony also meant the end of a certain way of organizing the international financial market which had been founded on the supremacy of the London Stock Exchange and the British pound sterling.
Simmering beneath the surface in the area of international trade was another major problem. The world market was divided up into distinct colonial empires. Each empire had its own protected market which was difficult for third parties, like the United States, to penetrate. Colonies, which had been positive factors in the expansion and growth of the world market and of imperialism, were bit by bit becoming a brake on its development. In 1848, Karl Marx spoke about the world market as if it was an already established fact, a process which had been completed. A better way of looking at it is to see the evolution of the world market as a progressive, very long-term yet irresistible creation of capitalism on a world scale. It was less possible than ever for any country, even the Soviet Union, to escape this reality over a prolonged period. It was less and less possible to put up with a less advanced technology, a lower rate of productivity etc. It is not just a coincidence that people in the U.S.S.R. were to talk about “catching up with the advanced capitalist countries”. Nor did this idea fall from the sky in China, where they are pursuing precisely the same goal today.
With the onset of the Depression, however the world market was to disintegrate to quite a serious degree. Every country launched a protectionist campaign. Economic nationalism won out everywhere. There was no more international order to speak of that held together. A 1933 London conference which tried to plan the reorganization of the international system was a complete flop. Rivalries pitting one imperialist country against another were far and away the sharpest contradiction, sharper even than that between the capitalist countries and the Soviet Union.
Those countries that controlled colonial empires fell back onto them and obtained short-term benefits from them. But this palliative was by no means strong enough medicine to stop the systematic decline in international trade. Great Britain, for example, was unable to meet all its needs even though it had access to a vast empire. It too had to turn to the world market. The situation of other countries without any appreciable empire was still more dramatic.
The setback in the trend to world economic integration did, of course, allow a number of the more backward countries to begin industrializing a bit more. Despite that, the decline in the extension of the world market remained absolutely at odds with the continued development of the productive forces. It came as no surprise that in 1944, before the war had even ended, the imperialist countries showed their order of priorities when they established, at Bretton Woods, the basis for a new economic order based on the supremacy of the U.S. dollar. In the ensuing years a whole series of international bodies were to grow up to serve imperialism that were more in tune with the degree of integration that had been attained in the embryonic world economy.
That, summarily, is the hypothesis we are starting with. It allows us to give an initial answer to the question we have posed. Why did revolutionary conditions fail to appear in the imperialist countries in the inter-war years despite the Great Depression? Because the capitalist relations of production were able to adapt sufficiently, i.e. they were sufficiently socialized to correspond more to the relatively more socialized productive forces. Such an explanation of the facts obviously does not jibe very well with those theories which view capitalism as always tottering on the brink of complete collapse. It appears however that in the period we are talking about capitalism had the means at its disposal to move away from that brink. It is worth raising the question as to whether the communists of that period took this situation sufficiently into account in evolving their strategy and tactics.
The October revolution had the task of using the State power in the hands of the working class in such a way as to CREATE the necessary conditions for socialism. From 1917 on, the European social democrats and the Menshevik opposition within Russia believed that the whole effort was doomed. Either the revolution would be destroyed or it would degenerate under the weight of the historical conditions within which it had been undertaken. The challenge before the Bolsheviks was thus to determine just how much it was possible to do to overcome the limits of the objective conditions through political action that transformed the subjective conditions. Many current criticisms about this period in Russia focus on saying that there was not enough of this kind of action. More political action would have been required to revolutionize the relations of production, etc.
What lessons can be drawn from the experience of the Soviet Union with regard to this basic issue? The first conclusion is that, with the New Economic Policy (NEP) in force, working class control of State power did not have all the miraculous virtues, that we often associate with it. A society which needs to industrialize must obey objective laws which seem to be the same everywhere (the accumulation of capital based on the appropriation of a surplus from the agricultural sector, etc.). If the working class is in power, it can use its knowledge of these laws to modify the form of social transformation and its rhythm, but it cannot do away with them. Holding political power does not give you the power to create the relations of production that you want just because you want them.
The Soviet Union’s experience in the thirties demonstrates the same thing except in the opposite way. The thirties saw a very GREAT FLIGHT FORWARD in the Soviet Union in the transformation of the relations of production. What happened? The U.S.S.R., by political decision, created a system of planning and collectivization and hence a very socialized form of relations of production. Economic planning was far more than some simple technical gimmick to increase production. It meant a radical upheaval in the relations of production that had existed up to then. All the prerogatives attached to the ownership of private property were taken away from the individual owners and transferred to various political and planning organisms. Formally at least, it was the whole of the working class which was in power that thereby took control of production.
The abrupt imposition of this highly centralized structure of economic leadership and co-ordination entered into violent contradiction with the decentralized and only slightly integrated character of the economy. Take, for example, Soviet agriculture, which was divided up into small units and isolated from the other economic sectors. The same situation prevailed with light industry, which was spread out haphazardly, a bit here and a bit there, etc. This is hardly an economy which has matured, where the kinks have been worked out or where high levels of socialization of production and interdependence have been attained. All of that takes a lot of time to develop. It is inseparably tied in with the growth of the productive forces. When those productive forces have not been developed yet, when you have a whole series of economic units side by side which are by and large independent of one another, the type of ties that usually develop are market-type relations, the relations of buyer and seller in the marketplace. Thus it is quite understandable that market relations, which had been suppressed by political decision during the period of war communism and civil war, had to be reintroduced after the war in the form of the NEP.
What happens if relations of production which are “too advanced” are imposed on this sort of economic structure? You get what they got in the U.S.S.R.: a significant burgeoning of the sort of bureaucratic apparatus which is necessary to give centralized leadership to the economy insofar as this apparatus has to make up for the feebleness of real economic ties and thereby has to carry out an enormous number of tasks. The direct producer, the worker, scarcely has a role to play in all this. He is not the maker of this vast upheaval but its product: the number of proletarians, mostly originating from the countryside, tripled in the Soviet Union in a very short period. Inversely, a stratum of bureaucrats was to take on virtually all the prerogatives ordinarily attached to legal private ownership of the means of production. The apparatus thus constituted something that begins to look an awful lot like a bourgeoisie.
Thus, the Soviet Union in the thirties was marked by hastily sped-up socialization of the relations of production which were then grafted onto an economic and social reality which did not yet demand them. Are there the seeds here of an explanation of the great purges and trials in the second half of the thirties which saw a large number of Party, State, economic and army leaders fall victim?
The experience of the Soviet Union also leads us to the conclusion that the world context has considerable impact on an isolated country. An isolated country does not have an unlimited margin of manoeuvre. As a matter of fact, many of the moves made by the Soviet Union to deal with the imperialist system share a disturbing resemblance with the measures implemented by the fascist countries which were also obliged to push ahead their development at maximum speed. The driving force in the case of the fascist countries was the need to carve out a better place for themselves in the imperialist system. Thus, the fascists used economic planning (Japan), State control over the unions, a Labour Code, a single-party system, the fusion of the Party and the State – in short, they employed a series of measures which centralized control over the productive forces, including workers.
Thus we should stop thinking that the seizure of power by the working class will insulate a given country right away from all the constraints that are imposed on countries where the working class is not in power. Indeed, it is naive to believe that the State, Party and so on can remain for a long time the incarnation of our idea of the socialism. Sooner or later, this whole super-structure will itself be affected by the economic base. Of course, the superstructure will have helped to transform that economic base but othat transformation will be taking place within precise limits. In short, experience shows us that bureaucratization is not simply the result of a lack of political firmness or vigilance. It is the result of a lack of integration of the economy, which is something you cannot just decree.
If this is true, then we must take care not to make a fetish out of the Soviet experience, for the simple reason that those who presided over the development of the Soviet Union were themselves a product of the social and economic conditions within which they were acting. Furthermore, we must avoid the error of taking each concrete particularity of the Soviet superstructure of that period – the specific way in which the Party, the State etc. were organized – and transforming it into some kind of universal “principle” of Marxism-Leninism.