A Textbook issued by the Economics Institute of the Academy of Sciences of the U.S.S.R




The Basis of Capitalist Crises of Overproduction

Starting from the beginning of the nineteenth century, from the time when large-scale machine industry first arose, the course of capitalist extended reproduction has been periodically interrupted by economic crises.

Capitalist crises are crises of overproduction. A crisis shows itself first of all in the’ fact that commodities cannot be sold, since they have been produced in quantities greater than can be bought by the main consumers—the mass of the people—whose purchasing power is confined under capitalist relations of production within extremely narrow limits. “Surplus" goods encumber the warehouses. The capitalists curtail production and dismiss workers. Hundreds and thousands of enterprises are closed down. Unemployment increases sharply. A great number of petty producers are ruined, in both town and country. The lack of outlet for the goods produced leads to disorganisation of trade. Credit connections are broken. The capitalists experience an acute shortage of money for payments. The exchanges crash-the prices of shares, bonds and other securities fall headlong. A wave of bankruptcies of industrial, commercial and banking concerns sweeps forward.

Overproduction of commodities during crises is not absolute but relative. This means that an excess of commodities exists only in relation to demand effective in terms of money, but not at all in relation to the actual requirements of society. During crises the working masses suffer extreme want in respect of elementary necessities, their requirements are satisfied worse than at any other time. Millions of people starve because “too much" grain has been produced, people suffer from cold because “too much" coal has been produced. The working people are deprived of means of livelihood just because they have produced these means in too great a quantity. Such is the crying contradiction of the capitalist mode of production, under which, in the words of the French Utopian Socialist Fourier, “plenty becomes the source of poverty and want".

Upheavals in economic life often occurred under pre-capitalist modes ofproduction, too. But they were called forth some extraordinary elemental or social calamity: flood, drought, wars or epidemics sometimes laid waste entire countries, dooming population to famine and extinction. The radical difference, however, between these economic upheavals and capitalist crises is that the hunger and want caused by these upheavals were an outcome of the low level of development of production, the extreme shortage of products; whereas under capitalism crises are engendered by the growth of production alongside the wretched standard of living of the masses, by a relative “excess" of commodities produced.

As has been shown above (in Chapter IV), the possibility of crises is inherent even in simple commodity production and circulation. Only under capitalism, however, do crises become inevitable, for then production assumes a social character but the product of the socialised labour of many thousands and millions of workers passes into private appropriation by the capitalists. The contradiction between the social character of production and the private, capitalist form of appropriation of the results of production, which is the fundamental contradiction of capitalism, furnishes the basis for economic crises of overproduction. Thus the inevitability of crises is rooted in the system of capitalist economy itself.

The basic contradiction of capitalism shows itself as an antithesis between the organisation of production in the individual enterprises and the anarchy of production in society as a whole. In each separate factory the workers’ labour is organised and subordinated to the single will of the employer. But in society as a whole, owing to the supremacy of the private ownership of the means of production, anarchy of production reigns and excludes planned development of the economy. Therefore the complex conditions which are necessary for the realisation of the social product under capitalist extended reproduction are inevitably broken up. These violations gradually accumulate until the onset of a crisis, when the process of realisation falls into complete disorder.

In their hunt for the highest possible profits the capitalists expand production; improve technique, introduce new machinery and throw vast masses of commodities on to the market. Acting in the same direction is the constant tendency of the rate of profit to fall, which arises from the growth in the organic composition of capital. The employers endeavour to make up for the fall in the rate of profit by increasing the amount of profit, through expansion of the scale of production and the quantity of commodities produced. Thus capitalism has an inherent tendency to expand production, a tendency towards a huge growth in production potentialities. But as a result of the impoverishment of the working class and of the peasantry, the effective demand of the working people is relatively reduced. In consequence of this the expansion of capitalist production inevitably encounters the narrow limits of consumption by the bulk of the population. It ensues from the basic economic law of capitalism that the aim of capitalist production—the extraction of profit on an ever-increasing scale—inevitably comes into contradiction with the means for attaining this aim—the extension of production. Crisis is that moment in the course of capitalist extended reproduction when this contradiction appears in the acute form of overproduction of commodities, for which no outlet can be found.

“The basis of the crisis lies in the contradiction between the social character of production and the capitalist form of appropriation of the results of production. An expression of this basic contradiction of capitalism is the contradiction between the colossal growth of capitalism’s potentialities of production, calculated to yield the maximum of capitalist profit, and the relative reduction of the effective demand of the vast masses of the working people whose standard of living the capitalist always try to keep at the minimum level" (Stalin, “Political Report of the Central Committee to the XVIth Congress of the CPSU(B)", Works, vol. XII, pp. 250-1.)

The basic contradiction of capitalism comes to light in the class antagonism between proletariat and bourgeoisie. Characteristic of capitalism is the split between the two most important conditions of production: between the means of production, concentrated in the hands of the capitalists, and the direct producers, who are deprived of everything except their labour-power. This split is vividly revealed in the crises of over-production, when a vicious circle is formed: on the one hand a surplus of means of production and products, and on the other a surplus of labour-power, masses of unemployed who are without the means of existence.,

Crises are the inescapable companions of the capitalist mode of production. To abolish crises one must abolish capitalism.

Cyclic Character of Capitalist Reproduction

Capitalist crises of overproduction recur at definite intervals of time, every eight to twelve years. The inevitability of crises is determined by the general economic laws of the capitalist mode of production, which operate in all counties taking the capitalist path of development. At the same time the course of each crisis, the form in which it appears and its special features, depend also on the concrete conditions of development of the particular country concerned. Partial crises of over-production, affecting particular branches of industry, occurred in Britain as far back as the end of the eighteenth century and the beginning of the nineteenth. The first industrial crisis which embraced a country’s economy as a whole broke out in Britain in 1825. In 1836 a crisis began in Britain and then spread to the. U.S.A. as well. The crisis of 1847-8, which embraced Great Britain, a number of countries of the European continent and the U.S.A., was, in essence, a world crisis. The crisis of 1857 affected the principal countries of Europe and America. It was followed by the crises of 1866, 1873, 1882 and 1890. The most serious was that of 1873, which marked the beginning of the transition from pre-monopoly capitalism to monopoly capitalism. In the twentieth century crises occurred in 1900-3 (this crisis began in Russia, where it was felt much more strongly than in any other country), in 1907, 1920-1, 1929-33, 1937-8 and 19489 (in the U.S.A).

The period from the beginning of one crisis to the beginning of another crisis is called a cycle. A cycle is made up of four phases: crisis, depression, recovery and boom. The fundamental phase of a cycle is the crisis, which provides the starting point for a new cycle.

The crisis is that phase of a cycle in which the contradiction between the growth of the productive potentialities and the relative reduction of effective demand breaks out in an acute and, destructive form. This phase of a cycle is characterised by overproduction of commodities which cannot find outlets, by a sharp fall in prices, by an acute shortage of means of payment and by stock exchange crashes which bring in their train mass bankruptcy, a sharp curtailment of production, a growth in unemployment, and a fall in wages. The fall in the prices of commodities, unemployment, direct destruction of machinery, equipment and entire works—all this means a tremendous destruction of society’s productive forces. Through the ruin and collapse of a large number of concerns and the destruction of part of the productive forces the crisis forcibly adapts, and that within a very short time, the magnitude of production to the magnitude of effective demand. “The crises are always but momentary and forcible solutions of the existing contradictions, violent eruptions, which restore the disturbed equilibrium for a while." (Marx, Capital, Kerr edition, vol. III, p. 292.)

The depression is the phase of the cycle which comes immediately after the crisis. This phase of the cycle is characterised by the fact that industrial production stagnates, prices of commodities are low, trade proceeds sluggishly, and there is an abundance of spare money capital. In the depression period the prerequisites are created for the ensuing recovery and boom. The accumulated stocks of commodities are partly destroyed and partly sold off at reduced prices. The capitalists endeavour to find a way out from the stagnant condition of production by reducing the costs of production. They seek this objective, first, by intensifying in every way the exploitation of the workers, further reducing wages and heightening the intensity of labour; second, by re-equipping their works, renewing their fixed capital, introducing technical improvements, all with the aim of making production profitable at the low prices which prevail owing to the crisis. The renewal of fixed capital gives a fillip to the growth of production in a number of branches. Enterprises which manufacture equipment receive orders and in their turn create a demand for all kinds of raw material and other materials. Thus there opens a way out of the crisis and depression and for transition to recovery.

Recovery is that phase of the cycle during which enterprises revive from their disturbed condition and proceed to an extension of production. Gradually the level of production attains Its former height, prices rise, profits grow. Recovery passes into boom.

The boom is that phase of the cycle in which production rises above the highest point attained in the previous cycle, before the crisis. During a boom new industrial enterprises, railways, etc., are built. Prices rise; merchants try to buy as many commodities as possible in the expectation of a further rise in prices, and by so doing stimulate manufacturers to expand production still further. The banks readily grant advances to manufacturers and traders. All this makes it possible to extend’ the" scale of production and trade far beyond the limits of effective demand. In this way the conditions for the next crisis of overproduction are created.

Before the onset of a crisis production attains its highest level, but selling possibilities seem to be even greater. Over-production already exists, but in a hidden form. Speculation pushes up prices and inflates the demand for commodities to an excessive degree. Goods surpluses pile up. Credit still further conceals the fact of overproduction: the banks go on financing industry and trade, artificially sustaining the expansion of production. When overproduction attains its highest point, the crisis breaks out. Then the whole cycle is repeated.

Each crisis gives a stimulus to mass renewal of fixed capital. Endeavouring to restore the profitability of their enterprises by means of a sharp reduction of prices, the capitalists, besides intensifying the exploitation of the workers, are obliged to introduce new machinery and machine-tools, new methods of production. At the expense of intensified exploitation of the working class, ruin of the small producers, absorption of many enterprises by their competitors, the large capitalists bring about new investments of capital. Thus, the way out of the crisis is effected by the internal forces of the capitalist mode production. But with the transition to recovery and boom, violations of the conditions of reproduction, disproportions, contradictions between the growth of production and the narrow limits of effective demand, inevitably begin to pile up once more. In consequence, a new crisis of overproduction inevitably breaks out within a more or less definite space of time. “It is true that the periods in which capital is invested are different in time and place. But a crisis is always the starting-point of a large amount of new investment. Therefore it also constitutes, from the point of view of society, more or less of a new material basis for the next cycle of turnover." (K. Marx, Capital, Kerr edition, vol. II, p. 211.) In the decisive branches of large-scale industry the longevity of the basic means of production, taking into account not only physical but also moral depreciation, amounts on the average to about ten years. The inevitability of periodical mass renewal of fixed capital serves as the material basis for the periodicity of crises, which recur regularly throughout the history of capitalism.

Every crisis prepares the ground for fresh and still deeper crises, so that as capitalism develops their destructive force and acuteness becomes greater and greater.

Agrarian Crises

Capitalist crises of overproduction, which bring in their train unemployment, a fall in wages, and reduction in the effective demand for agricultural produce, inevitably give rise to partial or general, overproduction in the sphere of agriculture. Crises of overproduction in agriculture are called agrarian crises.

Behind the inevitability of agrarian crises is the same fundamental contradiction Of capitalism which constitutes the basis of industrial crises. At the same time, agrarian crises have certain special features: they are usually more prolonged than industrial crises.

The agrarian crisis of the last quarter of the nineteenth century, which involved the West-European countries, Russia and eventually also the U$A., began in the first half of the 1870’S and continued in one form or another down to the middle of the 1890’s. It arose because the development of maritime transport and the extension of the network of railways began to bring to the markets of Europe large quantities of cheaper grain from America, Russia and India. The production of grain was less costly in America owing to the opening-up of new and fertile lands there and the availability of free land which bore no charge of absolute rent. Russia and India could export grain to Western Europe at low prices because the Russian and Indian peasants, crushed by unbearable taxes, were obliged to sell their grain very cheaply. The European capitalist tenant-farmers and peasants could not stand up to this competition, owing to the high rents exacted from them by the landlords. After the first world war, in the spring of 1920, owing to the great reduction in the effective demand of the population, an acute agrarian crisis broke out; it affected the non-European countries (U.S.A., Canada, Argentina, Australia) with particular violence. Agriculture had not yet recovered from this crisis when, at the end of 1928, clear signs of a new one made their appearance in Canada, U.S.A., Brazil and Australia. This crisis embraced the principal countries of the capitalist world exporting raw materials and foodstuffs. The crisis involved all branches of agriculture; it became interwoven with the industrial crisis of 1929-33 and continued down to the beginning of the second world war. After the second world war an agrarian crisis again broke out in the largest countries exporting agricultural produce—the U.S.A., Canada, Argentina-and in a number branches of agriculture in the Western European Countries.

The protracted nature of agrarian crises is due to the following main causes.

First, the landlords by virtue of the monopoly of private property in land compel the tenants to go on paying during agrarian crises the same ground-rent which they agreed to in their tenancy agreement. When the prices of agriculture commodities fall, the ground-rent is paid at the cost of a further reduction of the wages of agricultural workers, and also at cost of the profits of the tenants, sometimes even by drawing the capital advanced by them. Consequently it becomes extremely hard for them to emerge from the crisis by introducing technical improvements and reductions in the costs of production.

Secondly, agriculture under capitalism is a backward branch of the economy compared with industry. Private ownership of land, survivals of feudal relations, the necessity of paying absolute and differential rent to the landlords—all these so many obstacles in the way of a free influx of capital into agriculture, and hindrances to the development of the productive forces. The organic composition of capital is lower agriculture than in industry; fixed capital, the mass-scale renewal of which is the material basis, of the periodicity industrial crises, plays a very much smaller role in agriculture than in industry.

Thirdly, the petty producers (the peasants) strive during crises to keep up their former level of production, so as at costs to hang on to their bit of land, whether it be their own property or leased; this they do at the price of exhausting labour, underfeeding and destructive use of the soil and cattle. This still further increases the overproduction of agricultural produce.

Thus the common basis for the protracted character of agrarian crises is the monopoly of private property in land, the, feudal survivals connected with this and the extreme backwardness of agriculture in capitalist countries. The main burden of agrarian crises falls on the bulk of the peasantry. An agrarian crisis ruins a mass of petty common producers; breaking up established property relations, it hastens the differentiation of the peasantry and the development of capitalist relations in agriculture. At the same time agrarian crises have a devastating effect on agriculture in the capitalist countries, causing a diminution in the sown area, a fall in the level agricultural technique, and a lowering of agricultural crops and of the productivity of stockbreeding.

Crises and the Sharpening of the Contradictions of Capitalism

Economic crises in which all the contradictions of the capitalist mode of production violently explode, inevitably lead to a further deepening and sharpening of these contradictions.

As a rule, capitalist crises of overproduction are universal in character. Beginning in a particular branch of production, they rapidly embrace the entire national economy. Arising first in one country or a few countries, they spread over the whole capitalist world.

Every crisis leads to a sharp decline in production, a fall in the wholesale prices of commodities and in the price of shares on the exchanges a decline in the volume of both domestic and external trade. The scale of production falls to a level which prevailed a number of years previously. In the nineteenth century the level of the economic life of capitalist countries was thrown back during crises by three to five years, in the twentieth century by decades.

The output of coal in the U.S.A. fell during the crisis of 1873 by 9.1 per cent, during that of 1882 by 7.5 per cent, during that of 1893 by 6.4 per cent, during that of 1907 by 13.4 per cent, during that of 1920-1 by 27.5 per cent and during that of 1929­33 by 40.9 per cent. The production of pig-iron in the U.S.A. fell by the following amounts during the crises indicated: 1873—27 per cent, 1882—12.5 per cent, 1893— 27.3 per cent, 1907—38.2 per cent, 1920-1—54.8 per cent, 1929-33—79.4 per cent.

In Germany the total volume of industrial production fell during the crisis of 1873 by 6.1 per cent, 1890—3.4 per cent, 1907—6.5 per cent, and 1929-33—40.1 per cent.

In Russia during the crisis of 1900-03 the smelting of iron declined by 17 per cent the output of oil by 10 per cent, the rolling of rails by 30 per cent, and the production of sugar by 19 per cent.

The crisis of 1857 threw the U.S.A. back two years in output of coal, four years in production of pig-iron, two years in exports and three years in imports. The crisis of 1929 threw the U.S.A, back 28 years in output of coal, 36 years in output of pig-iron, 31 years in outputs of steel, 35 years in exports and 31 years in imports. Britain was thrown back by the 1929 crisis 35 years in coal output, 76 years in pig-iron output, 23 years in steel output and 36 years in external trade.

Economic crises vividly reveal the predatory character of capitalism. During every crisis, while millions of people are in extreme want, doomed to poverty and hunger, vast quantities of commodities are destroyed because they cannot find a market—wheat, potatoes, milk, cattle, cotton. Whole factories, shipyards, blast-furnaces are closed down or sold for scrap, grain crops and technical crops are destroyed and plantations of fruit trees are cut down.

During three years of the 1929-33 crisis 92 blast-furnaces were pulled down in the U.S.A., 72 in Britain, 28 in Germany and 10 in France. The tonnage of sea-going vessels destroyed in those years amounted to more than 6V2 million registered tons.

The destructive effect of agrarian crises is clear from the following figures. In the U.S.A. between 1926 and 1937 more than two million farms were compulsorily sold for debt. The revenue from agriculture shrank from 6.8 milliard dollars in 1929 to 2.4 milliard dollars in 1932. During the same period sales of agricultural machinery and equipment were reduced from 458 million dollars a year to 65 million (one-seventh), and the demand for artificial fertilisers fell by nearly a half The U.S. Government took all kinds of steps to reduce agricultural production. In 1933 10.4 million acres of cotton crop were destroyed by ploughing over, 6.4 million pigs were bought and destroyed by the State, and wheat was burned in the fire-boxes of locomotives. In Brazil about 22 million sacks of coffee were destroyed, and in Denmark 117 thousand head of cattle.

Crises cause incalculable sufferings to the working class, the bulk of the peasantry and the working people as a whole. They bring about mass unemployment, which condemns hundreds of thousands and millions of people to enforced idleness, poverty and hunger. The capitalists make use of unemployment to intensify in every way the exploitation of the working class, and sharply to reduce the standard of living of all the working people.

The number of workers employed in manufacturing industry in the U.S.A. fell by 11.8 per cent at the time of the 1907 crisis. During the 1929-33 crisis the number of workers in America’s manufacturing industry decreased by 38.8 per cent, and the total wages bill fell by 57.7 per cent. According to American statisticians, 43 million man-years were lost between 1929 and 1938 as a result of unemployment.

Crises enormously increase the insecurity of the working people’s lives, their fear of the morrow. Through spending years out of work, workers lose their skill, and after the crisis has ended many of them cannot return to industry any more. The housing conditions of the working people are greatly worsened; the number of homeless people wandering about the country in search of work increases. During crises the number of suicides caused by desperation rises markedly, and destitution and crime increase.

Crises lead to a sharpening of class contradictions between the proletariat and the bourgeoisie, between the bulk of the peasantry and the landlords, usurers and kulaks who exploit them. During a crisis the working class is deprived of many of the achievements which it has won through long and hard struggle against the exploiters and the bourgeois State. This shows the workers that the only way to salvation from want and hunger lies through abolishing capitalist wage slavery. The broadest masses of the proletariat, doomed by crises to tremendous privations, acquire class consciousness and revolutionary determination. The inability of the bourgeoisie to control the productive forces of society undermines the faith of the petty-bourgeois strata of the population in the enduring nature of the capitalist order. All this leads to a sharpening of the class struggle in capitalist society.

The bourgeois State renders aid to the capitalists during crises in the form of subsidies, the cost of which is paid in the long run by the working masses. Using its apparatus of coercion and compulsion, the State helps the capitalists to wage an offensive against the standard of living of the working class and the peasantry. All this intensifies the impoverishment of the working masses. At the same time, crises reveal the complete incapacity of the bourgeois State to curb to any degree the elemental laws of capitalism. In capitalist countries it is not the State that controls the economy but, on the contrary, the State itself is in the power of capitalist economy, in subjection to big capital.

Crises are the clearest indication that the productive forces brought into being by capitalism have outgrown the framework of bourgeois production relations, so that the latter have become a brake on the further growth of the productive forces.

“The crisis shows that present-day society could produce an incomparably greater quantity of products, which could go to improve the lives of all the working people, if only the land, the factories, the machines, etc., were not in the grip of a handful of private owners who draw millions from die poverty of the people." (Lenin, “Lessons of the Crisis", Works, Russian edition, vol. v, p. 76.).

Every crisis brings nearer the downfall of the capitalist mode of production.

Inasmuch as crises exhibit with particular clarity and sharpness the insoluble contradictions of capitalism, testifying to the inevitability of its doom, bourgeois economists try in every way possible to conceal the true nature and causes of crises. Endeavouring to gloss over the inevitability of crises under capitalism, they usually explain crises as resulting from accidental causes which they claim could be eliminated while maintaining the capitalist system of economy intact.

With this purpose, the economists of the bourgeoisie proclaim the ultimate, cause of crises to be either a violation in the proportionality between branches of production or the lagging of consumption behind production, and they propose as a means of curing capitalism of crises that such types of “consumption" be guaranteed as armaments drives and wars. In fact, neither disproportionality of production nor the contradiction between production and consumption are accidental defects of the capitalist mode of production, but inevitable ways in which the basic contradiction of capitalism manifests itself, the contradiction which cannot be eliminated while capitalism exists. Certain bourgeois economists have gone so far as to declare that crises are caused by sun­spots, on the grounds that these exert an influence on the harvest and so on the whole of economic life.

In the intervals between crises the defenders of the bourgeoisie usually come out with sweeping statements to the effect that crises are no more and capitalism has taken the road of crisis-free development; the very next crisis shows up the mistakenness of such statements. Life invariably reveals the complete bankruptcy of such prescriptions for curing capitalism of crises.

The Historical Tendency of Capitalist Development.
The Proletariat as the Grave-digger of Capitalism

After capitalism had become the dominant system, the concentration of property in a few hands advanced with giant strides. The development of capitalism leads to the run of the petty producers, who fall into the ranks of the army of wage-workers. Along with this, the competitive struggle among the capitalists becomes acute, as a result of which one capitalist lays low many others. The concentration of capital means concentration of enormous wealth in the hands of an ever narrower circle of persons.

In developing large-scale production, capitalism gives birth to its own grave-digger in the person of the working class, which comes forward to assume the role of guide and leader of all the working and exploited masses. The development of industry is accompanied by the growth of the proletariat, in numbers, solidarity, consciousness and degree of organisation. The proletariat advances ever more resolutely in struggle against capital. The development of capitalist society, which is accompanied by a sharpening of the. antagonistic contradictions inherent within it and by an intensification of class struggle, prepares the conditions necessary for the victory of the proletariat over the bourgeoisie.

The theoretical expression of the fundamental interests of the working class is Marxism—scientific socialism—which is an integral, harmonious outlook on the world. Scientific socialism teaches the proletariat to unite for class struggle against the bourgeoisie. The class interests of the proletariat coincide with the interests of the progressive development of human society, they merge with the interests of the overwhelming majority of society, for the revolution of the proletariat means the abolition not of this or that form of exploitation but of all exploitation in general.

While at the dawn of capitalism a few usurpers in the shape of the capitalists and landlords expropriated the masses of the people, the development of capitalism leads inevitably to the expropriation of the usurpers by the masses of the people. This task is carried out by the socialist revolution, which socialises the means of production and sweeps away capitalism along with its crises, unemployment and poverty of the masses.

“The monopoly of capital becomes a fetter upon the mode of production which has sprung up and flourished along with and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist property sounds. The expropriators are expropriated." (Marx, Capital, Kerr edition, vol. I, p. 837.)

Such is the historical tendency of development of the capitalist mode of production.


(1) Economic crises are crises of overproduction. Underlying crises is the contradiction between the social character of production and the private capitalist form of appropriation of the products of labour. The forms in which this contradiction is expressed are, first, the antithesis between the organisation of production within the individual capitalist enterprises and the anarchy of production in society as a whole, and, second, the contradiction between the huge growth in the productive potentialities of capitalism and the relative reduction in the purchasing capacity of the working masses. The basic contradiction of capitalism shows itself in the class antagonism between the proletariat and the bourgeoisie.,

(2) The period from the beginning of one crisis to the beginning of another is called a cycle. A cycle consists of the following phases: crises, depression, recovery, boom. The material foundation of the periodicity of capitalist crises is the necessity for periodical renewal of fixed capital. Interwoven with industrial crises are agrarian crises, which are distinguished by their protracted character owing to the monopoly of private property in land, the existence of feudal survivals and the backwardness of agriculture under capitalism.

(3) Capitalist crises mean destruction of the productive forces on a gigantic scale. They bring with them incalculable sufferings for the working masses. It is in crises that there is most clearly revealed the historically-limited character of the bourgeois system, the inability of capitalism to control any further the productive forces which have matured within its womb. In order to abolish crises it is necessary abolish capitalism.

(4) The historical tendency of capitalist development is, on the one hand, that it develops the productive forces and socialises production, thus creating the material prerequisites for Socialism, and, on the other hand, that i gives birth to its own grave-digger in the person of the proletariat, which organises and heads the revolutionary struggle of all the working people for liberation from the yoke of capital.