From Fourth International, Vol.14 No.6, November-December 1953, pp.122-127.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
From his fundamental social and economic studies Marx drew the conclusion that all human relations are rooted in the material conditions of life, or more specifically, in the prevailing mode of production and distribution of each historical stage of development. This is the basis for the existence of social classes and it gives rise to class antagonism and conflicts as well as to consciousness of class position.
“It is not the consciousness of men that determines their existence, but on the contrary, their social existence determines their consciousness.”
Economic conditions are not the sole determining factor. They form the basis for the political and legal superstructure with its philosophical, cultural and religious attributes. But between all of these there is reciprocal interaction with a fundamental economic necessity which in the final analysis always asserts itself.
Since the beginning of civilization human society has developed on the basis of dominance of class contradictions and class struggles. Whenever new productive forces were attained the mode of production was altered and social relations changed correspondingly. New classes appeared in place of the old; and the social contradictions and conflicts became the motive power of all historical development.
This, holds true for each historical stage, to which capitalism forms no exception. On the contrary, capitalism has intensified these contradictions and enlarged the scale of conflict.
From these contradictions, constantly transformed from one series of connections into another, Marx formulated the objective laws of development of the capitalist system. And he found that the very forces which operate to yield an equilibrium of its elements generate counter-forces which disrupt that equilibrium. These contradictions and their reciprocal interactions, expressed in violent conflicts, crises, and wars, account for the instability of the system. Historically, its character is transitory. The ever-expanding productive forces and their ceaseless revolutionization of capitalist society prepares the way for new and higher social forms.
While material conditions of life have thus made necessary a certain order of things during the historical stage of capitalism!, they make equally necessary another order into which these must inevitably pass over at the next historical stage.
This we accept as our fundamental concept. It enables us to understand the variations and changes of social relations at each successive stage of development. It enables us also to understand the corresponding changes in the reactions, the moods, and the consciousness of the working class. And the application of this concept provides the key to a correct appraisal of the future course of development.
The analysis made by Marx of the objective laws of motion of capitalist society is most fully confirmed by the evolution of its American sector – its most highly developed expression. The history of the United States is the history of capitalism in its most modern and its most advanced form.
Since its birth the United States has been built on a capitalist foundation from its economic substructure to its philosophical and religious summits. American history reveals an abundance of bold ventures, great spurts, and revolutionary leaps. Its oustanding phenomenon is the remarkably compressed character, and unexampled speed and tempo, of social development. Within this framework American capitalism displayed its special traits of audacity, aggressive enterprise and ruthless pursuance of its struggle for class supremacy.
As is well known, the secret of its success lies primarily in the unique position enjoyed by American capitalism, during the earlier and greater part of its development. It had possibilities aplenty for sustained expansion on a virgin continent rich in natural resources. This provided -the essential prerequisites for technological advance. Rapidly growing labor productivity created abundant surplus values to furnish the life blood of an ever greater accumulation of capital, all of which existed alongside of an organically expanding internal market. As it unfolded, this process was interrupted periodically by crises and panics, yet in its dialectic interactions it became a self-sustaining process.
The United States became the land of plenty and of opportunity. Its ever-mounting wealth enabled American capitalism to give greater concessions expressed in a relatively higher standard of living for the population and greater degree of formal democracy than was the case with capitalism elsewhere.
These unique possibilities available to American capitalism set its definite seal upon the corresponding social developments. While the working class movement often challenged the capitalist drive toward complete class domination, its own evolution during this early state followed an irregular pattern. Robust and militant, from its inception, it forged ahead in turbulently explosive struggles, especially during each boom period, to retreat and almost disappear for a time. But it rose again to make further gains. Bold venture and revolutionary leaps became a distinguishing characteristic also of the early American labor movement, reaching its highest point during the upheavals of the eighties of the past century.
The equilibrium of class relations suffered rude shocks, sometimes merely causing a shift of fighting advantage between the opposing forces, at other times, however, having a sufficiently shattering effect to necessitate its reconstitution on a new plane.
Such a reconstitution took place after the explosive period of the eighties. A relative stability of class relations ensued, but it was attained primarily by narrowing the scope and influence of the unions to the skilled sector at the cost of keeping the great mass of the labor population unorganized and helpless. Finally the unions were in actuality divorced from mass production industry. And as American capitalism, still enjoying the fruits of its unique possibilities, advanced toward its most healthy prime in the boom period of the twenties, the labor movement retreated and lost ground.
With the great depression the unique position which American capitalism had enjoyed came to an end. The long-term factors of organic expansion of its internal market had been exhausted. But exhausted also were its historically progressive qualities. The great depression marked the end of one era and the beginning of a new.
Since the crash of 1929 the social and economic structure of the United States has been subjected to a transformation which is qualitative in its content. Correspondingly, certain important functions of the political superstructure have been altered. As a consequence, social and class relations exist now on a foundation which is also qualitatively different. A new molecular process was set into motion; and the mutual interaction of these basic changes will influence decisively the course of future development.
Several features of this transformation stand out in bold relief and warrant careful examination. Let us consider first among these what an inventory of national wealth reveals.
1. A study of income and wealth published by the National Bureau of Economic Research presents illuminating facts and figures. Estimates of this study are carried through from the year 1896 to 1948. But their real significance lies in the sharp contrast revealed by the two periods, before the depression and after. The figures given in constant dollars based on 1929 prices read as follows:
From 1896 to 1929, both inclusive, national wealth rose from $164 billion to $426.3 billion with a fairly regular upward curve of an increasing ratio, and amounting to an average annual rate of growth of about 3 percent. From 1929 to 1948, however, the figures present an entirely different picture. The rate of growth of national wealth now becomes highly irregular. Starting from a total of $426.3 billion in 1929 the increase over these years is very slight, the actual total of 1948 is only $461.8, of an average annual gain of less than one-half percent (to be exact, 0.45 percent).
Projections made of the above mentioned study by the US News and World Report, carried through 1951, reveal the fact that while we have a plethora of automobiles, radios, televisions and innumerable gadgets, the total value of home buildings, measured in constant dollars on a per capita basis, is today 13 percent below that of 1929. These projections summarize as follows:
“Even now, big as the US wealth has become, the country is still a little below 1929 in real wealth, population growth considered.”
The basic trend revealed by these estimates is clear and beyond dispute. It does not conceal the fact that the American bourgeoisie has become fabulously enriched by vast profits made in peace-time as well as in war-time. But the twofold effect of ravages of depression, and a vast scale of arms output in the place of production of use values, during this latter period, created a different reality for the American people. Relatively the country as a whole is now poorer than it was in 1929. In terms of population growth this relationship becomes absolute.
What does this basic trend portray if not a system in decline? The powerful internal dynamic once generated by American capitalism, out of its past unique position, to be sure, and not out of any inherent quality, this internal dynamic is now being rapidly dissipated. American capitalism now squanders, recklessly, the wealth accumulated by past generations. This is the surest indication that it has in actuality entered the state of decline of its world system as a whole.
2. A second feature of the transformation carries implications of more immediate and more basic concern. The great depression revealed the fact that American capitalist economy had lost its capacity to operate as a self-sustaining process. In place of an ever-growing market, keeping abreast of the expanding productive forces, a yawning disproportion appeared. The whole process had been thrown into reverse; it could no longer proceed unaided and on its own momentum. Artificial stimulants had to be injected to keep the economy, a going concern.
At first these stimulants took the form of simple “pump-priming” through public works expenditures as an effort to close the gap between production and consumption. But the efforts of the first phase quickly proved insufficient. They were superseded by war and armaments expenditures together with foreign economic and military grants.
Thus, while in 1929 expenditures for the armed forces amounted to less than one percent of the gross national product, in 1944 at the height of World War II expenditures, these were not less than 45 percent. Today the arms program accounts for 20 to 25 percent of the gross national product.
War and armaments production became, and has since remained, a sector of decisive importance to the whole economy. It was decisive not only in the sense of its central imperialist aim to which all other economic efforts had to be subordinated. It was, and remains, decisive also in the sense of maintaining a balance in a precarious economic equilibrium loaded with explosive elements of crisis.
While the armaments program represents a terrific burden of overhead expense on the nation as a whole, its real paradox lies in the fact that the economy under capitalist relations of production could not be sustained without it. This has already become a demonstrated fact, it is the fact of a qualitative change. The truth is that this economy is no longer expanding organically in the sense of either rapidly enlarging old industries or creating new ones. Those of the latter category which have appeared during the period under consideration, such as radio and television, do not absorb a sufficient part of the immense productive capacity to provide a serious impulsion to the economy. Hence only arms production remains to provide an artificial stimulant. In the absence of an organically growing market these components of the economic structure lay the basis for more devastating crises to come. Thus all the factors which in the past stimulated and strengthened the prodigious growth of the American economy are either disappearing or turning into their opposite.
3. Alongside these changes in the economic foundation and closely integrated with them should be noted the vastly enlarged scale of function of the political superstructure. The paralyzing effect of the great depression made necessary a much more direct state intervention in all aspects of social and economic life. Beginning with the New Deal, this intervention continued through the Fair Deal and it will, all appearances to the contrary notwithstanding, become more complete under Eisenhower.
Greater and more direct intervention in social and economic relations is an outgrowth of, and at the same time a particularly distinguishing characteristic of, the capitalist world system in its stage of decline. Its appearance in the United States serves to underline the fact that basic elements of decline have also reached these shores.
Increasing anarchy of production in general, pushed to its extreme by the greater concentration of monopoly capital, generates ever more malignant elements of economic crisis. Complexities of international relations, expressed in wars and revolutions, and reflected as well in the astronomic costs of the war program, tend to invest every manifestation of economic crisis with a distinct social and political character. They tend to become manifestations of crisis of the bourgeois regime. The combination of these factors has necessitated constantly more direct state intervention in an attempt to preserve the social stability of the regime.
World War II, the Korean War, and the continued war program has brought this intervention to its highest form of development in the United States. The government became the centrally directing force in all social and economic activity. Major risks of capital investments in the war program were assumed by the government with guaranteed lucrative profit returns for the big monopoly concerns. The government took charge of labor relations and set patterns of wages and working conditions. Through heavy taxation, the government controls an increasingly large share of the national income. This constitutes its operating capital – social capital – which is used primarily to promote imperialist aggression in an effort to keep the economy on an even keel and safeguard capitalist profits.
On the whole, the powers of the political state are strengthened immeasurably; its preponderance, however, renders the political state so much more vulnerable to the tremors and eruptions of social and economic relations with which it is now so thoroughly integrated. The impact on the future political life of the nation will tend in this sphere also to bring forth new and higher forms of development.
4. Yet the most important aspect of the transformation of the American social structure since the depression is the change that has taken place in the relationship of class forces. While .the outward stability of its social fabric still remains, this relationship now rests on an entirely new foundation. The working class has emerged as a distinct social force foreshadowing today its ‘great potentialities of tomorrow.
From the lowest depth of its long period of ebb-tide the labor movement advanced in one mighty leap. A volcanic eruption climaxed the long accumulated pressures of capitalist exploitation which were intensified by the mass unemployment and destitution of the depression days. From virtual atomization the working class went ahead and built the most powerful union movement in the world. In the process of growth, quantity changed to quality. Union consciousness, cohesion and militancy replaced the diffusion, inertia and backwardness of the past.
The hitherto prevailing equilibrium of class forces was shattered and it could be restored only on an entirely new basis: on the basis of recognition of this new power. For the American social structure this change of relationship more than any other development signifies the end of an era and the beginning of a new.
Outwardly this new equilibrium still remains relatively stable. The apposite and antagonistic class forces have maintained a certain balance of power. How was this manifested in actual life? In the first place, the war and the arms economy provided a guaranteed market, relatively free of competition, for the products of capital investments. But it permitted also a vast expansion and a greater utilization of the available productive forces which in turn permitted a more complete realization of surplus value. On the whole this made possible the continuation of a measure of concessions to labor. Through full employment, including overtime, and by means of winning several wage rounds, the working class standard of living maintained a rising trend. Out of these concessions the so-called Welfare State gradually evolved.
Conservative tendencies within the working class grew and became more pronounced as a result of these conditions. And the labor bureaucracy, supported tacitly by the rank and file union members, drew closer to the government, seeking its protection against the power of monopoly capitalism. In effect this new relationship took on the form of a political coalition, not formally recognized of course, but existing in fact. The government needed the collaboration of the labor’ leaders to assure the indispensable prerequisite of mass acquiescence in its war program; the latter wanted to miaintain the benefits of the “Welfare State.” This was the essence of the political coalition which served as an essential prop for the relative, social stability that prevailed through the New Deal and the Fair Deal period.
Working class acquiescense in the imperialist war program became an established fact, not to be disturbed seriously even by the unpopularity of the Korean War. Now the Korean war has come to an end. This, of course does not signify a change of the fundamental course of American imperialist policy. Its essence remains global war of undisguised counter-revolution; war for the survival of the .capitalist system ...
But the war plans elaborated by the Washington strategists are now badly disorganized; their time-table is upset. Defeat in Korea underlines the power and sweep of the colonial revolution. Increased working class resistance to Washington policies in the European metropolitan centers unfolds alongside the mounting difficulties, insecurity and crisis of their bourgeois regimes. The overall effects cause hesitation and muffled resistance also by the latter and introduce paralysis into the NATO structure. Not because these bourgeois regimes, like, for example, that of the British Tories, are less imperialistic or less counter-revolutionary than their more powerful Washington allies. No, the real reason is the impact of more clearly defined and sharpened class relations on Tory home grounds. Stronger than the pressure from Washington is the more immediate and direct threat to Tory class rule coming from the growing consciousness and political advance of the British working class which, moreover, is displaying its hatred of imperialist war. Tory hesitation and resistance reflect their awareness of that danger.
This is paralleled by significant changes in the Soviet Union since the death of Stalin; and the totality of these developments has introduced further modifications in the world relation of class forces which compel a considerably slower tempo of the imperialist war drive. In turn these modifications, together with the change of tempo, tend to aggravate the contradictions of the American social and economic structure. The artificial stimulants which had Operated to yield an equilibrium of its elements generated counterforces which threaten to disrupt that equilibrium. Out of their mutual interaction elements of crisis once again become predominant.
A twofold dilemma confronts the American bourgeoisie. In the field of foreign policy the relationship of class forces, on a world scale, is evolving more distinctly to the disadvantage of its projected counter-revolutionary strategy. Internal policy faces the beginning of economic decline which is fraught with serious consequences for the stability of the social structure. Dynamic forces have been set into motion in both fields which easily pass beyond the control of policy makers at imperialist headquarters. Both pose problems of social crisis.
At the imperialist home base the program of arms production did not mitigate, let alone remove, a single one of the basic causes out of which crises arise. Not only did these persist, but they have grown more malignant. This can be illustrated quite simply.
Commodities produced in a normal peace-time economy for the most part return to further sustain that economy. By and large they return either in the form of capital goods employed as means of production, in the form of raw materials of production, or in the form of means of consumption to sustain the labor force. In this manner they serve to build up and strengthen the economy and increase national wealth. The output of war material, on the other hand, is in its entirety unproductively consumed. Arms production on the present scale, therefore, constitutes a terrific drain on the economy and on all the resources of the nation. The debt load, both government and private, has reached astronomical proportions; credit inflation extends its disintegrating influence into every pore of the economy; heavy taxation cuts deeply into the lowest income brackets. And yet, a serious reduction of arms expenditures would spell disaster to the economy.
But the program of arms production promotes also the exact opposite tendency. Military needs, stimulated by the ravenous appetite for imperialist conquest, demand an accelerated and unrestrained expansion of productive capacity which quickly surpasses the absorbing ability of the market. Precisely this is now the case. Elements of a crisis of overproduction appear alongside of, and in spite of, the leverage of vast arms expenditures. It is clear now that the war and the armaments economy tends to push all the contradictions of the capitalist mode of production to the extreme. Tendencies toward crisis, merely held at bay by the injection of artificial stimulants of arms expenditures, are now due to erupt. Their explosive fury tends to become greater because of the consequent unrestrained expansion of the material forces of production.
The basic transformation of the economic structure now reveals its real nature: economic decline amidst an enormous armaments production. Indeed, this poses more sharply the terrible alternatives: depression or war. Any other course is definitely excluded. And implicit in both alternatives is the social and political crisis of American capitalism. Its decadence is approaching a deadly climax.
Once again the Marxist analysis of crisis arising inevitably out of the many-sided contradictions between the productive forces and the productive relations of capitalism finds its verification in the actual march of events. But these relations of production, as Marx made equally clear, are capable of final explanation only in terms of the social relation of classes and the position they occupy in the process of production. Iri other words, all these developments can be interpreted only in the sense of their dynamic interplay with existing class relations, or they cannot be interpreted at all. The reaction to these developments by the contending class forces therefore becomes the decisive question. What the power-drunk bourgeoisie intends to do is already clearly indicated. Its course of action is determined by its economic and political needs as a class owning and controlling the means of production.
Economic decline imposes serious restrictions on the full and complete realization of surplus value. While the magnitude of the latter must inevitably diminish, the magnitude of arms expenditure remains, and it will eventually increase. Yet these terrific “overhead costs” of Wall Street’s program of world domination can come from one source, and one only: national income.
Concerned first and foremost with profits and its accumulation of capital, the bourgeoisie, therefore, plans to effect a drastic redistribution of national income. It will not tolerate concessions to labor that approach anywhere near the previous scale. It needs an ever greater part of the purchasing power of the workers to finance the tremendous costs of armaments production. At the same time the bourgeoisie is less and less disposed to tolerate a social relationship in which the labor movement holds a certain balance of power. And in order to strengthen its own class position it is equally determined to change this relationship. Nothing less will satisfy the American bourgeoisie as a minimum prerequisite in preparation for the next stage of aggressive moves in its predatory war plans. As these unfold, the titanic immensity of the contemplated desperate venture would cut the working class standard of living to the very bone and tax the manpower requirements to the point of virtual slave labor.
From these general considerations a two-pronged attack on labor unfolds. Instead of the measure of concessions previously granted, the chiefs of big business and finance are now determined to reduce the workers share of the national income, while they themselves plunder the nation’s resources. Austerity will replace prosperity.
But this part of the program cannot be carried out successfully unless it is combined with measures to curtail the power of the trade union movement in order to assure complete command for the capitalist monopoly concerns. The witchhunt, attempts at thought control together with repressive and union-busting legislation is being fitted into the whole pattern of attack. Step by step these measures can be expected to unfold alongside of the production decline and the consequently more abundant supply of labor power. Flank attacks at the initial stage developing to a full-scale offensive for which all of the essential groundwork has been laid down carefully and consciously: this is the real significance of Eisenhower’s Millionaire Cabinet.
The political coalition between the government and the trade union bureaucracy has been brought to an end. It was terminated, not on the initiative of the labor leaders, but by the very same chiefs of big business and finance who have taken charge of the execution of the anti-labor program. Now the political coalition has been replaced by open, unabashed and completely unchallenged control of the government by monopoly capitalism. Its first objective is to carry the anti-labor program through to the end. Indeed, state intervention in social and economic relations will become more complete under the Eisenhower regime.
Even in this most highly developed capitalist nation, no clearer proof has ever been provided of the real role and function of the political state as an instrument of class rule. It was to be expected, of course, that this should become more pronounced as fissures of decline and decay begin to crack the capitalist foundation. Increasing state intervention in social and class relations arises on the whole, out of the reactionary necessity to prevent the disintegration of the old order, to hold the working class at bay, and to preserve the bourgeois relations of production. State intervention can therefore occur only on behalf of the interests of capitalism, whose class rule it symbolizes and translates into action.
But the relationship of class forces is not at all as favorable to the bourgeoisie as may appear on the surface. By virtue of its economic and social weight the working class is in possession of a far greater power than that of its adversary. It is now a class socially transformed to the highest level of union consciousness and organization. And the trend toward economic crisis together with the two-pronged attack on labor will tend to alter correspondingly the further course of the class struggle.
1. Actually this article was reprinted in the next issue with a short concluding section (18 paragraphs).
Last updated: 8.6.2005