Encyclopedia of Anti-Revisionism On-Line

October League (M-L(

Which Way Out of the Crisis?

First Published: The Call, Vol. 3, No. 3, December 1974.
Transcription, Editing and Markup: Paul Saba
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Gerald Ford, faced with evidence which would make a blind man see, has finally admitted that the U.S. economy is “moving into a recession.”

There are only two solutions to the “recession” and the capitalist economic, crisis: the imperialists’ way out – which is starvation and war – or the way of the working class – which is a revolutionary fight-back against every attack.

What are the causes of the current crisis? What will it lead to? These questions are asked by millions of people today.

As the chieftains of the capitalist system try to maneuver their way back to the profits of the days when the economy was “healthier,” they know only the ruthless tools of provoking imperialist war, and using fascism against the people of their own country in order to force the working class to absorb the impact of the crisis. As the crisis sharpens the contradictions in society, the brutal thinking of the imperialists sees only two choices: killing the workers slowly by starvation, or killing them quickly,on the battlefield in wars fought (or new markets and, spheres of influence.

The “current” economic crisis is actually a deepening of crisis conditions which have existed since U.S. imperialism suffered its first major defeat in the Korean War of 1951-3. Since that time, the recessions of 1957, 1963, the tight money crisis of the late sixties, and the devaluation of the dollar in 1971 have taken such a toll on the economic system that “recovery” from each has taken on a new meaning – just keeping capitalism above water. For example, in 1967, Lyndon Johnson, then U.S. president, said that the economy would be “safe” as long as unemployment didn’t go over 4 per cent. Today, government economic experts talk as if 5 percent unemployment is a healthy level, and the current 6 per cent really won’t mean much until it hits 7 per cent. But unemployment is only one symptom of the economic crisis. Behind unemployment lies recession (stagnation of the economy), inflation (rising prices), monetary and trade crisis, and stock market collapse.

The reality of the current crisis can best be seen in the terms used by the capitalists themselves to measure their own economic stability. The Gross National Product (GNP) which measures the total value of all goods and services produced, has declined, in real terms, by about 2 per cent over the last six months. Since capitalism is a system based on the continued expansion of its productive forces in order to takeout more profits and drive competition out of business, any sign of a shrinking GNP is a sign of weakness to the capitalists.

Inflation, which is represented by the rise in prices, has hit proportions unknown in the U.S. since the 1920s. Wholesale prices in the U.S. last year rose 44 per cent, while retail prices to the average consumer are rising more than a full per cent a month.

Production in the key industries such as auto has stagnated so completely that the Chrysler Corporation closed down all its factories but one for the month of December, while GM and Ford laid off over 50,000 workers indefinitely. Altogether, the Big Three automakers’ cutbacks and plant closings have meant loss of jobs to over 185,000 auto workers. In the field of construction, only half as many homes are under construction as last year at this time. This has meant a loss of half a million jobs, and large cutbacks in steel, plaster and other construction material production. It is estimated that between auto, steel and construction – three industries currently in sharpest decline-nearly one out of every five jobs in the U.S. is affected!

For the U.S. imperialists the crisis cannot be confined at home! The dollar has virtually collapsed on the international market, buckling under the weight of unfavorable trade balance, and lack of gold reserves. Four years ago, gold, the standard on which the whole world capitalist system is based, sold for $35 an ounce. Today, it is fast approaching the $200 mark, having risen $30 in the last two months alone. The change in the price of gold has sent an earthquake tremor through the capitalist system. The U.S. is having a hard time selling its goods on the world market because of their high price. Meanwhile, U.S. interests have been forced to pay much more for imports, especially to the Arab oil producers, and other raw material exporters around the Third World. All of this has resulted in what is known as a “balance of payments deficit,” meaning that the U.S. is spending far more for imports then it is receiving from exports. Prices on the stock market are always much higher than the actual value of the stocks, but in times of economic crisis, when the confidence of investors in their own system is very low, exaggerated prices are forced back down to their real value and below. This has resulted in the spectacular downturn of the Dow-Jones industrial averages from 1000 to 600 in the space of a year. So far, neither Ford, nor any leaders of other capitalist class, has been able to solve the problems of inflation, unemployment, industrial stagnation-all the result of basic contradictions of capitalism. Not a single program formulated by their economic advisers has worked; no single significant aspect of the world economy has gone without a downturn over the last year. One capitalist country is unable to shift the crisis on to the next, as they have done historically because all face the same crisis conditions. This is heightening the possibility for renewed world war, especially in Europe where the U.S. and the USSR are vying for domination of the West European countries.

Despite the various terms economists call it, the current crisis is objectively a “crisis of overproduction.” When Marxist-Leninists use this term to characterize the crisis in capitalism they mean that the capitalists have expanded their production with no regard as to who will buy all these goods at the prices they are charging. When the goods don’t sell, they are forced to cut production, close the factories, and lay-off the workers, often destroying the goods themselves rather, than sell them at lower prices. We have already evidenced this with the dumping of 300,000 gallons of milk in Los Angeles, the shooting of cattle in the Midwest and other graphic examples. Leontiev, a Soviet political economist writing at the time of the Great Depression, illustrated the crisis of overproduction with the following example: A miner’s son asks his mother, “Why don’t you light the fire, it’s so cold?” The mother responds, “We have no coal. Your father is out of work, and we can’t afford coal.” The son demands, “Why is he out of work?” And the mother replies, “Because there’s too much coal.”

This bitter story shows the meaning of capitalist “over-production.” The reason new cars are not selling is not that no one needs them, but rather, no one can afford them. In their greed and haste to make profits, the Big Three auto makers sped up production lines to record levels earlier this year, working thousands of workers 10 and 12 hours a day. They also raised their prices more than 10 per cent. Suddenly, they had 100,000 cars piled up in show rooms, and no one could afford to buy them. Revealing the utterly unplanned and chaotic nature of the capitalist system, they turned around and laid-off a large percentage of the workers, in order to slow down production. But in fact, all this does is throw more workers out of work and keep even larger numbers of people from buying cars.

It is this cycle which, in the past has thrown world capitalism in to the depths of starvation-torn depressions. In this country, it is of course the minorities that are the hardest hit. Unemployment among non-whites is more than double that of the white workers. In some Black communities, unemployment is up over 40 per cent.

Like the auto industry, the recession in. housing construction is not due to “too much” good housing. In fact, the government itself has recently released surveys showing that in communities like Harlem and Newark, over 66 percent of the housing is “below standard.“

In the midst of the obvious deterioration of living standards, and the sharpening of all of capitalism’s contradictions, the government has consistently tried to convince people that “there is no crisis,” and that everything will be alright “soon.” The best testament to this was Ford’s refusal to admit even the existence of a recession prior to mid-November. Meanwhile Ford’s top economic adviser, Alan Greenspan, has announced that “The U.S. economy is already well on its way to recovery, and the worst of inflation is over.”

Stressing the controls on the economy that have come about since the 30s, government experts assert that bank insurance, stock market regulations, unemployment compensation and social security will prevent anyone from going hungry no matter how bad things get. Many of these “controls” however were won only through militant mass struggles in the earlier part of this century and will undoubtedly require a new wave of working class struggle merely to keep them, let alone expand such things as social security or unemployment payments to keep pace with inflation. Other “controls” such as Federal insurance to bank, have already shown themselves to be inadequate, with the recent closing of New York’s Franklin Bank. Banking officials admit that there are 180 other banks in serious financial trouble.

All the features of the Great Depression are present in today’s economy: record-high interest rates, personal debt on a par with personal income, rapid recession in the production of many items, inflationary prices, and mushrooming unemployment. The solution to that crisis, for the imperialists, was the Second World War, which stimulated receding production with the vast demand for weapons and equipment, and crushed working class struggle under the banner, “everything for the war effort.” As a result of the war, the U.S. captured tremendous new markets and .sources of cheap labor all over the world, replacing the decaying empires of Germany, France, Britain, and Japan, thus becoming the chief imperialist superpower.

Today, the possibility of another world war is very great, as the capitalists desperately try to untangle themselves from the web of crisis, and as the Soviet Union expands its imperialist empire into areas formerly controlled by the U.S. The propaganda for such a war is already being dished out by the leading figures in U.S. political life such as Kissinger, Simon and Ford. Kissinger, in a speech in late October, observed that “The developed countries of the Western world cannot allow the Arab countries to wreck in a few short years an economic system which took centuries to construct.”


In the period of the first imperialist war, World War I, V.I. Lenin, the leader of the Russian revolution, observed that imperialism was capitalism’s most developed stage and that it was creating its own gravediggers. He called imperialism the “eve of socialist revolution,” because as it brought with it the inevitable brutality of economic crisis and war, it also turned the masses of workers and peasants around the world into anti-imperialist fighters.

By plundering the peoples of the oppressed nations while at the same time, exploiting its own working class, the system of imperialism lays the foundations for a united effort by the peoples of the whole world in revolutionary struggle against all oppression.

Today, in the face of sharpening economic crisis, the working class is rapidly concentrating its experiences in class struggle, and fighting back with new militancy against every capitalist attack. The miner’s strike in the coal fields of Appalachia is one such example. In the midst of the workers movement, for the first time in twenty years, communists are present, lending militancy to the movement, and at the same time pointing out its final aims: The overthrow of imperialism and the establishment of a socialist system run by the working people themselves, free from economic crisis because it is free from the contradiction of soaking profit out of workers’ labor; and free from war, because it has no business plundering the resources of another country or fighting for the “right” to dominate a foreign land.