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Arne Swabeck

A World in Crisis

(Winter 1958)

From International Socialist Review, Vol.19 No.1, Winter 1958, pp.18-22.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Do events inside the two centers of world power have any connection with each other? A Marxist considers the forces that make today’s headlines

THE RECENT shake-ups in the Kremlin hierarchy have again called attention to the crisis haunting this bureaucratic regime. Its first sharp manifestations, sufficiently clear for all to observe, began with the upheavals in Eastern Europe which culminated in the Hungarian revolution. The ill-fated Anglo-French-Israeli invasion of the Suez Canal pointed up, no less bluntly, the growing crisis in the capitalist imperialist world.

What happened at the Suez Canal and in Hungary were different manifestations of a turbulent epoch. Today upheavals and military interventions may appear in one part of the globe, tomorrow in another: but whatever their form, they are all part of the complex pattern of a world in change. Since the early part of this century, the social stability of the past has turned into its opposite. Crises, wars and revolutions have set into motion an interacting process of profoundly deep-going consequences for all future history.

Clearly indicated is a major alteration in the whole course of human history. It marks the beginning of a transition from one historical stage to another. The long-established order of social relations is in dissolution and new social relations are in the process of formation. New economic forms of society, represented by the Soviet orbit, have arisen alongside of the old forms of the capitalist world. Opposite forces, and opposite tendencies, constantly interpenetrate in the complex world fabric today. The progressive and the revolutionary exist alongside of the reactionary and retrogressive. Both the advancing and the retarding, while opposites, remain internally related as two aspects of one historical process.

It is not at all strange that social relations in the Soviet Union develop through crises and conflicts. Considering the immensity of the transformation from its backward heritage to the present advance, a smooth and easy course was not to be expected. The task confronting the Soviet republic was nothing less than the creation of entirely new economic forms. Here is how Lenin put it:

“The difference between socialist revolution and bourgeois revolution lies precisely in the fact that the latter finds ready forms of capitalist relationships; while the Soviet power – the proletarian power – does not inherit such ready-made relationships ... The organization of accounting, of the control of large enterprises, the transformation of the whole of the state economic mechanism into a single huge machine, into an economic organism that will work in such a way as to enable hundreds of millions of people to be guided by a single plan – such was the enormous organizational problem that rested on our shoulders.” (Selected Works in Two Volumes, Moscow 1950, Vol.II, Part 1, p.240.)

But the rise of the Stalinist bureaucracy, superimposed upon and distorting the foundation laid down by the Bolshevik revolution, has introduced additional crises and conflicts that are constantly increasing in scope and in intensity. Crises are thus running parallel in both dominant world sectors. But these crises are different in nature for the simple reason that they arise out of different social systems. Each social system develops in opposite direction and each is subject to different social laws. The basic distinction between them derives from the diametrically opposite relations of production or – what is but a legal expression for the same thing – the property relations: the capitalist property forms and the socialist type of property forms. These are the relations that determine the place in history of any society as they determine, indeed, its growth and development.

How Crises Differ

The crisis in the Soviet Union unfolds alongside of the unprecedented expansion of its productive forces. The greater the expansion the more glaringly the gaping disproportions in the social and economic structure stand out. Fundamentally the Soviet crisis is a reflection of the monstrous social inequalities, the great disparity between the low living standard of the masses of the people – who have suffered the most brutal repression under Stalin’s long-standing police regime – and the privileges and powers usurped by the ruling bureaucratic caste. It is the very success of Soviet industrialization that points up most acutely the anachronism of bureaucratic mismanagement and waste of capital resources, both physical and human, while the workers are deprived of any creative initiative, any democratic rights and any sense of ownership or control of the nationalized means of production. As an inevitable consequence, the dynamism of the rapidly advancing industrialization, made possible by the nationalized property relations, comes into ever sharper conflict with the restrictions imposed by the totalitarian superstructure. The promotion and protection of the privileges of bureaucratic rule collide with the needs and the interests of the Soviet masses. Essentially the crisis in the Soviet Union is a crisis of the regime.

The extension of Soviet economic forms to Eastern Europe also extended the bureaucratic powers and privileges and with them the crisis. Upon these countries totalitarian regimes were imposed. Looting and pillaging by the Kremlin bureaucracy became a corollary to strangulation of their national independence. The people there suffer the double oppression of native satraps ruling under a foreign bureaucracy. Their discontent with these conditions and their resistance to the oppressive rule, as we have witnessed, reached the stage of open rebellion from Eastern Germany, through Poland to the Hungarian revolution.

The crisis of capitalism grows out of an entirely different economic foundation and it will therefore have different social consequences. Concretely it is an expression of decline and decay of the system. Capitalist decay derives from the fact that world productive forces have long outgrown private property relations and the artificial barriers set up by national boundaries.

Prior to World War I the constant extension of the world market, the tapping of new resources and the creation of new fields of capital investment for exploitation of cheap labor in colonial spheres, acted as a self-sustaining process for expanded reproduction. This assured a certain social and political stability in a constantly rising curve of economic developments. To be sure it was interrupted by recurring cyclical crises, but the curve maintained its upward course nevertheless. This stability has turned into its opposite in a shrinking world market. Instead of stimulating an upward curve, this market now imposes restrictions’ on the productive forces.

Capitalist world equilibrium has been completely upset by the abolition of capitalist rule in one-third of the globe; that is, by the extension of Soviet economic forms into China and into Eastern Europe; and by the colonial revolution. The rich resources, the abundant market and the labor forces of this one-third have been withdrawn from the orbit of capitalist exploitation. It is true that the United States has expanded. Not only has the economic and political center of gravity definitely shifted to the United States, but all of the West European countries, together with Japan, are now dependent on American capitalism for economic, financial and military hand-outs. The disintegration of the former colonial empires acts to reinforce this dependence. However, the rise of the United States to world preponderance amid the eclipse of the old colonial powers only serves to emphasize the decay of the system as a whole in which American imperialism has gained far less than world capitalism has lost.

Struggle of World Systems

On the world arena capitalism must now meet the competition of the rival social order. This applies above all to the United States. It faces that competition especially in regard to the needs and demands of the countries rising from colonial status. To these countries the gigantic leap recorded by the Soviet Union from a backward to a modern industrial power represents an attractive goal.

While the new Soviet economic forms and the old capitalist forms are mutually antagonistic, their relationship is simultaneously dialectically interconnected. The decline and decay of the old and the rise of the new interpenetrate. Mutually their development reacts upon one another and tends to amplify their divergences. Any weakening or setback of one side is translated into reinforcement of the other. Similarly the internal relations of both tend to reflect the interactions between them. The shattering of the world capitalist equilibrium made a breach in the imperialist encirclement of the Soviet Union. In turn, this removed one of the obstacles to the struggle there against the bureaucratic regime. On the other hand, the blow thus suffered by the capitalist world created new strains in the imperialist coalition. In a declining capitalist world, national economies, especially of the lesser powers, face increasing difficulties followed by mounting social and political tensions. And in the next stage, this will again be reflected in sharpened class struggles.

Conflicts between the two world systems arise throughout the planet. They show up in the relations of the contending forces to the underdeveloped countries and, above all in their relations to the continued ferment in the colonial world. The struggle between the outlived capitalist order and the nascent world socialist order is the dominant feature of the world today.

Economic, political and military developments are interlaced everywhere in this struggle; to these can be added developments in the arts and sciences. In their interconnections they all react upon one another. The radio voice of “Sputnik” circling the globe as a demonstration of the giant strides made in Soviet science, engineering and technique, echoed in Wall Street and Washington in the form of tumbling stock prices and demands for greater, and speedier military preparations. Competing arms shipments to the Middle East from the United States and from the Soviet bloc intensify the struggle for political influence in that area while simultaneously adding to the Arab revolutionary mass ferment. Divided rule of nations like Germany, Korea and Indo-China arose out of the conflict between the two world systems, and acts as a source of constantly greater friction. Jim Crow violence in the United States no less than Kremlin suppression of upheavals in the buffer countries reverberates throughout the world. Yet, in all of these developments, there is a reciprocal interaction with a fundamental economic necessity which in the last analysis asserts itself. And the manifest superiority of the Soviet economic forms are viewed with increasing apprehension by all the chancelleries of the West.

End of Capitalist Boom

However, while the Soviet economy proceeds on its upward curve, the course of capitalist economy, as we have pointed out, is in decline. The crisis in the Soviet Union is a crisis of the regime. The crisis in the capitalist world is a crisis of the whole system.

In view of the present capitalist prosperity the above statement may seem one-sided and arbitrary. But this is not the case. True, the United States has experienced an industrial boom and expansion of its productive forces since the beginning of World War II. In recent years the boom has extended to Western Europe and Japan. But the truth is that the boom is stained by the blood of untold victims of war and marred by the ghastly destruction of World War II and the Korean conflict. While the boom does include actual capitalist expansion, such as arises out of regeneration of normal civilian demands and the need to restore war-devastated areas, together with the industrialization of the Deep South – essentially the boom has been artificially stimulated by war and armaments production for the militarization of the United States and its allies. It has left unsolved the central imperialist problem of finding new avenues in a constricted world market for export of capital, manufactured goods and agricultural surpluses. Only the vast government expenditures for armaments have so far postponed the inevitable economic crisis. However, the vast expenditures, deficit financing and expansion of the credit structure show up in a boom corroded by universal inflation.

This boom does not differ in nature from any previous capitalist booms. The artificial stimulant of armaments spending promotes greater speculative capital investments in industrial plants, increasing productivity and production to a point where the stimulant becomes less and less effective. Facilities for producing goods are outrunning the market. Output lags as capacity grows. There is ample evidence that the boom has attained its peak and is leveling off for the decline to set in.

According to reports by the Conference on Economic Progress, the rate of growth of the American economy has declined for the last three years. From an average of 4½% during 1947-53, the rate of growth has dropped to 2½% for 1954-55, and to 2% for 1956. Other recent figures show that it has now reached the vanishing point. Thus all the conditions for the cycle terminating in depression were prepared in the course of the boom. The conclusion is inescapable: the present economic prosperity is relative, transitory and conditional, whereas the decline and decay, operating as an organic part of the capitalist system, is absolute. It is a process that cannot be reversed.

Capitalist decline and decay, like its rise and growth, is subject to the law of uneven development. From its manifestation throughout history by the disproportions emerging from different rates of economic development, this unevenness now shows up in a more drastic form. This is demonstrated most clearly in the interrelations between the United States and Europe.

Not only is the overwhelming economic, political and military preponderance of the North American colossus an established fact, but its rise to this dominant position has occurred at the expense of the European capitalist structure. The older imperialist powers have lost their major colonial possessions. Their overseas investments, formerly a source of substantial national income, have been drastically reduced; and East-West trade has suffered a severe shrinkage. Remaining European colonial possessions are in a state of national revolutionary ferment extending even into Africa. Moreover, the dollar gap between what European nations spend and what they receive is still closed only by means of US aid, the continuation of which now faces ever greater difficulties.

The survival of capitalism in Western Europe, during the revolutionary upsurge following World War II, was made possible by the treacherous leadership and policies of Stalinism and Social Democracy. The fate of Europe was in their hands. In Britain, France and Italy the Stalinists and Social Democrats shared the allegiance of the majority of the population. Instead of leading this majority toward the establishment of a Socialist Europe, they took office in their own respective bourgeois state structures. Thus the Stalinists and Social Democrats disoriented the workers, kept them subject to the European bourgeoisie and imposed upon their struggle for socialism a serious defeat. The mass organizations of the workers were not broken; they were immobilized. A class stalemate resulted.

Taking advantage of the social peace thus enforced, American capitalism deployed its economic, financial and military strength to stabilize Europe. US resources proved sufficient for reconstruction and economic revival; above all else, they were sufficient to prop up the shaky bourgeois social order. But the boom experienced by Western Europe since 1950 has not lessened the dependence of its capitalist regimes politically and economically upon the United States. They remain under the challenge of the socialist-minded proletariat at home. And the dialectics of this inter-relationship reduces them to distinctly subordinate positions in the imperialist alliances. They must remain content with the constantly diminishing share in world economy that is allotted to them by American imperialism.

The most unkind cut occurred last year. While the Anglo-French imperialists were still reeling under the blow of Egypt’s nationalization of the Suez Canal and the disastrous collapse of their ill-fated invasion, American imperialism rushed in to fill the power vacuum, at a minimum cost and for maximum profits. Through the Eisenhower Doctrine, Washington proclaimed its suzerainty over the oil-rich Middle Eastern estates before the Anglo-French claimants were legally dispossessed.

Without attempting here to examine the complexities of the Middle Eastern crisis, a few outstanding points should be noted. At present this strategically important area focuses most sharply the competition and conflict between the two world systems. Washington policy makers aimed above all at protecting and expanding the lucrative American monopolist oil properties; but they aimed no less at counteracting the much feared “Communist infiltration.”

Their aims were greatly facilitated by the Kremlin preoccupation with its own internal crisis, chiefly its military intervention in the Hungarian revolution. This the Washington policy makers used to full advantage. But American imperialism is unable to substitute new forms of domination for the colonialism, avowed or covert, against which the masses are up in arms.

Like their predecessors, the American imperialists can find support only among the feudal rulers, the sheiks, the landlords and the militarists. Winning their support is a Pyrrhic victory indeed. After all, the situation in the Middle East is but one field in the crises, wars and revolutions affecting the world. Even the almighty dollar cannot assure social stability. So far the power and sweep of the colonial revolution has had greater impact on the Arab world than all the imperialist machinations combined. In the end, it will also prove stronger than the Eisenhower Doctrine.

Struggle of Social Forces

For British and French imperialism there can be but little hope of recovery from the blows struck by the colonial revolution and the disaster at the Suez Canal. Neither the dollar injections, nor the postwar economic upturn have altered their fundamental instability. In each country the economy operates under severe strains, threatened by the twin scourges of runaway inflation and unemployment. Both are glaring examples of the paradoxical fact that while the American economy has so far been sustained at boom levels only through colossal government arms expenditures, the economies of the West European capitalist powers can no longer carry the heavy outlays demanded by imperialist armaments. As a result the NATO setup remains in permanent crisis.

Britain is more dependent on the world market than ever before, and yet its share of world exports of manufactured products has fallen for five successive years. Economically, politically and militarily British capitalism is in deep crisis. Its desperate position drives it with increasing compulsion toward a showdown with the working class. For the Tories, however, this will likely prove an unequal struggle. They confront a highly organized and powerful working class, “the first-born sons of modern industry.” The proverb that events cast their shadows before would seem to apply to the present flight of capital out of Britain, not so much – according to London financial sources – in fear of devaluation of the pound, as in fear of a Labor government coming back into power.

The effect of this trend upon the Labor party leaders, who are still deeply immersed in Fabian conservatism, is visible in a negative way. Not a little afraid of the prospect of taking office they are much more concerned about mitigating capitalism’s crisis. During the Suez adventure they expressed their abhorrence of industrial struggle to back political demands. They have likewise resisted taking political advantage of major industrial conflicts. Now they are all but abandoning nationalization of industry as an issue in the struggle to return to office. The policy declaration adopted at the recent Labor party conference, with the support of Bevan, pays this tribute to capitalism: “Large firms as a whole are serving the nation well.” So instead of nationalization, the policy declaration advocates that a Labor government should purchase shares of industrial concerns on the stock market.

It is not at all unlikely that Britain’s crisis will lead to replacement of the Tories by a Labor government before long. Could a Labor government at this political juncture continue where the Attlee government left off a decade ago? Could it continue the piddling process of nationalizing one or another ailing industry including the purchase of industrial shares? This is hardly conceivable. Moreover, the choice would not be up to the labor leaders alone. They would face the relentless combined pressure of economic crisis and working-class demands. Of necessity a Labor government would have to take steps in the direction of comprehensive nationalization of industry and steps toward planned production. The crisis of British capitalism is fast approaching a point where such steps become imperative. For neither the needs of the people, nor the needs of a stable economy can find a solution within the capitalist relations of production. And for the British working class, it can truly be said that it is on the way to measuring up to the present situation.

To be sure, this implies replacement also of the present Labor party leadership. The working class, increasingly conscious of its strength, will hardly hesitate to do this. As Trotsky observed along ago: “It will take much less time to transform the Labor party into a revolutionary party than was required for its creation.”

In fact recent developments in Britain show revolutionary cadres beginning to work out Marxist program and policies, and extending their influence.

Developments of a similar nature in capitalist continental Europe, even though it is equally torn by crisis, may seem destined to appear at a later stage. In France, particularly, the treacherous opportunist course pursued by Stalinist and Social Democratic leaders alike, has constantly increased the danger of working-class political demoralization. (Without support in parliament from the Stalinist leaders for a year and a half, the Mollet “socialist” government could not have directed the “dirty war” in Algeria.) Yet advances made by the British workers cannot fail to have great impact across the Channel. These would tend to overshadow the feeble imperialist scheme of a common European market, and give new impetus to the idea of a Socialist United States of Europe. Even for the Soviet workers, or to be more exact, precisely for the Soviet workers, struggling against the Kremlin’s bureaucratic rule, the significance would not be lost.

Fear of these perspectives shows up in the chancelleries and stock exchanges of Western Europe like the chart of a rising fever. Fear of the rapidly growing Soviet power follows a parallel course and the European capitalists cling all the more desperately to Wall Street.

But this dependence is not a one-way street. The greater foreign dependence becomes, the greater the dependence of the USA on the world capitalist structure: for investment of surplus capital, for exports and imports and for essential and strategic raw materials, not to mention political and military alliances.

During past decades the uneven development of capitalism favored the advance of the United States. Enormous resources, tapped from a virgin continent, enabled the most rapid expansion within a stable capitalist world and its constantly widening market. Today the dialectics of world relations is turning this into its opposite. American imperialism is now faced with the expansion of its productive forces in a disintegrating capitalist world and in a constricted market. Simultaneously, as the condition of its own existence, it must assume the task, practically single-handed, of defending the decaying system as a whole against further revolutionary advances. Hence, the keystone of US foreign policy is to “organize the world” under its hegemony, to reconquer the lost one-third of the globe. Constant preparation for war flows implicitly and explicitly from this policy.

But the benefits the United States derives from its dominant position are temporary and tend to become transformed into liabilities. The greater its dominance the more do the contradictions and threatening upheavals in other countries become incorporated in the foundations of American imperialism.

“... it is precisely the international strength of the United States,” said Trotsky, “and her irresistible expansion arising from it, that compels her to include the powder magazines of the whole world into the foundations of her structure, i.e., all the antagonisms between the East and the West, the class struggle in Old Europe, the uprisings of the colonial masses, and all wars and revolutions.” (The Third International After Lenin, p.8.)

At home the present social equilibrium owes its existence primarily to the prolonged artificial boom. More than anything else, the boom enabled American capitalism to grant sufficient concessions to keep the workers subordinated to the reactionary but powerful trade-union bureaucracy. Today this bureaucracy sits astride 17 million workers and keeps the class as a whole harnessed to the capitalists politically. But this internal equilibrium is neither stable nor lasting. With the boom tapering off, the dominant monopolies are less willing to grant concessions to labor. Once they find it necessary to attack living and working standards, advance preparations for which are now in the making, the class struggle will again break into the open. And, judging by past performances, the American workers will not shy away from drastic action.

The American working class closed the lag in its trade-union consciousness in a single leap to the most highly advanced industrial unionism under the CIO in the thirties. Politically it still lags far behind the needs of the socialist transformation of society as the only real solution to the capitalist crisis. This lag in political consciousness and the gap between its class power and its class needs prepare the conditions for another forward leap in the political field. And this, we can be sure, will take much less time than was required for the rise in trade-union consciousness. Once the American workers attain political independence as a class, acting through their own political party, a new historical stage will begin in the United States.

The Socialist Solution

The logic of world relations points inexorably everywhere to socialist reorganization of society. It arises as an imperative necessity out of the crisis of both dominant world sectors – the Soviet Union as well as the capitalist world. True, the solution to these crises will be decided by the struggle of living social forces, both on the national and the world arena. And here the power of the mighty phalanxes of the American and Soviet workers will be decisive.

For the capitalist world it is a question of the socialist transformation of society as a whole. For the Soviet world, genuine progress to socialism is possible only through a political revolution. Socialism and bureaucracy are incompatible. Democracy and freedom are essential ingredients for its social as well as its economic development. Socialism can become a reality in the Soviet territories only by the complete elimination of the bureaucratic regime and the restoration of Soviet democracy.

The road to the socialist solution is clearly indicated by history. It was followed through to a victory over capitalism in Russia in 1917, and was again indicated in last year’s events in Hungary. “The most indubitable feature of a revolution,” said Trotsky, “is the direct interference of the masses in historic events.” And so the masses did interfere in Russia through the creation of their own mass organs – the Soviets, or workers councils. Arising directly out of the workshops when the mass movement entered the openly revolutionary stage, these councils became the pivot around which the toilers united in their struggle for the socialist transformation.

Workers councils reappeared in the Hungarian revolution; this time, however, they arose as working-class instruments of the political revolution to overthrow the Stalinist bureaucratic regime. There the course of the coming political revolution in the USSR was clearly indicated, for in Hungary the workers councils appeared as an affirmation of working-class determination to maintain and develop the socialist forms of property relations. Moreover, their existence was a demonstration in life of workers democracy.

The workers councils proceeded to reorganize the management of industry and to draw up plans for production and for economic advance in the interests of the toilers. These included a rational wage system, investments and utilization of capital to promote a harmonious development of the productive forces. Under the impulsion of the mass movement the trade unions functioned in behalf of the workers. Revolutionary committees removed worthless bureaucrats from state institutions, even from high ministerial posts and took over their duties. Throughout the country was heard the battle cry for democracy – workers democracy – for the right to strike and for socialist equality, for genuinely free elections with the right of participation by all parties standing on the basis of nationalized property.

In this manner the Hungarian workers demonstrated the meaning of the political revolution; their actions foreshadowed events to come in the USSR. As in Hungary so in the Soviet Union, the realization is mounting that an overgrown bureaucracy, jealous of its powers and privileges, has become the greatest obstacle to socialist development. Instances have been reported already of workers striking against the bureaucratic arbitrariness and misrule. Rapidly moving events have resurrected questions, forgotten since Lenin’s time, concerning the meaning of social control of production and of social relations in a workers state. Demands for workers control of the factories have penetrated the USSR from Poland and Yugoslavia, where some limited forms of control are exercised by workers councils.

A whole historical period is coming to a close and a new one is beginning. A new stage in the Russian revolution was inaugurated by the denunciation of the Stalin cult and the promise to return to Leninism. It is a part of a new historical process set into motion by the terribly pressing need to change the political superstructure to correspond to the transformed economic foundation. This process is not likely to proceed in a straightforward line to its inevitable conclusion, but rather in spurts and spasms. It might include, as has already been the case, both reforms from above and revolutionary actions from below. But the forces for change that have already been unleashed make it increasingly difficult to turn back.

Demands for democracy, for greater freedom and for legal reforms indicate the tremendous ferment especially in intellectual and student circles. Socialist aspirations of the working class are rising. Originally the power of the bureaucracy was rooted in the weakness of the working class. That has now changed. The bureaucracy is obliged to reckon with the growing strength and consciousness of the working class. We can rest assured also that the Soviet workers, as in Hungary, will take into their own strong hands the torch lit by the intellectuals and students.

On this broad arena of masses in motion, workers councils can be reconstituted in the Soviet Union. They can become the testing ground of political programs and leadership. Out of the struggle of political tendencies a revolutionary party can be forged – the party that is the indispensable weapon for the success of the political revolution in the Soviet Union as well as for the socialist revolution in the capitalist world.

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