This post is the second part of a biweekly series posting chapters of Frank Cunningham’s Understanding Marxism: A Canadian Introduction (Toronto: Progress Books, 1981). Through these excerpts, readers will come to understand the basics of Marxist theory through a Canadian lens in a digestible, accessible, and easy-to-understand way. As 2021 marks 100 years of the communist movement in Canada, and as more young workers and students become interested in Marxism, we hope that this educational series will benefit our readers.
The following chapter (Ch. 3 of Understanding Marxism) explains how value and profit is derived from labour. It further explores why the basic functions and contradictions present within capitalism will inevitably cause its demise.
The original text is available to borrow through Archive.org. It has been amended minimally to include links to relevant texts, to update vital information, and to remove notes relevant only to the physical book.
Frank Cunningham, 1981
Chapter Three: The Fall of Capitalism
In a capitalist system the factories, mines and other major means of production are privately owned by people who employ others to do the actual work of producing “commodities” — products made not to be used by the producer but just to be sold. It was not Marx who discovered that the interests of workers and the interests of capitalists are opposed to one another in this system. Long before Marx was born, working people knew that their bosses would pay as little as possible in wages and squeeze as much work as they could out of their employees.
What Marx did was to study capitalism in its historical and social contexts to discover its strengths and its weaknesses. By this study he was able to show that capitalism was not accidental, but arose quite naturally in history; and he showed that it cannot survive. Thus Marx corrected a common error in thinking among many anti-capitalists of his time who believed that capitalism is like the devil — an unnatural moral deviation, which working people had the bad luck of suffering from. At the same time Marx listed the internal contradictions in capitalism that will lead to its downfall, in contrast to pro-capitalists who say that capitalism will last forever. In this chapter I will summarize the Marxist theory that explains why capitalism cannot survive.
The main internal contradiction of capitalism is that work is highly social or collectivized, while ownership is private. Under capitalism most people do not work alone or in small groups to produce things for private use or to trade for things made by others. People work in groups of hundreds or thousands, using sophisticated technology to mass produce commodities. This is a very powerful economic force. How production is organized has long range effects on the whole of a society. To be effectively and beneficially used, modern “socialized” labour needs long-range, coordinated planning. But under capitalism the people who decide what and how much to produce, where to sell, how many to hire and fire, and so on, have very short-range interests — maintaining their private profits. The result is that the mighty force of modern industry is often used against the interests of the majority of people in the form of inflation, unemployment, overproduction, underproduction, useless and faulty goods, and so on. When economic crises occur, some of the smaller capitalists themselves are driven out of business.
To understand this contradiction better it is necessary to introduce some concepts of Marxist economic theory. There are many good summaries of Marxist economics, some of which are listed at the end of this chapter. Here I will summarize only two points in order to explain why capitalism must fall.
The Labour Theory of Value
Since ancient times economic theorists have been puzzled by the question of why things can be exchanged for one another, or for particular amounts of money. Why is it that you can buy a pair of shoelaces, for instance, for approximately the same amount of money that you can buy a package of chewing gum, but not for anywhere near the amount of money you would need for a car? What determines the “exchange value” of commodities?
In the Middle Ages there was a theory of the “just price”. Everything had a price set by God. By the eighteenth century, when the science of economics was first developed, this theory was generally rejected. It did not explain how the Deity decided what the just price of everything was. Also economists of that period felt that the medieval church, which was itself a major economic power, used the theory in a less than disinterested way when it interpreted “just prices”.
Another theory was that commodities were exchanged according to the amount of gold they could be traded for. This didn’t explain how gold received its value or why some things were exchanged for more gold than others. A more recent theory suggested that things become more valuable or less valuable according to how badly people want them and how easy they are to get. If people want something because they badly need it and it is in short supply, they will be prepared to pay more for it and its value will rise. If people don’t want something or if it is easy to obtain, then they will pay less, and its value will fall.
Marxists hold that this theory, called the theory of “supply and demand” helps explain the exact price something sells for in a particular time and place, but it still does not explain why things have the exchange values they do. Shoelaces always sell for less than cars, no matter how badly people want either and no matter what their supply. The theory also puts the cart before the horse, since one of the factors that affects how much people want things is how valuable those things are.
The theory of value Marx and Engels adopted was developed in the eighteenth century by the Scottish economic theorist, Adam Smith. It is called the “labour theory of value”. According to this theory the exchange value of commodities is determined by the amount of labour, measured in working hours, necessary to make them (given current levels of technology). Shoelaces sell for less than cars, because it takes fewer people working fewer hours to make a pair of shoelaces than it does to make a car. Or, to put it another way, in the same period of time a person can make many more shoelaces than the same person could make cars. Adam Smith and other economists tested this theory by comparing prices of commodities with the necessary labour time involved in producing them. They found that while it does now explain the exact price of things, it does explain why they exchange for their approximate prices.
This theory takes the mystery out of the concept of value by relating exchange value to human labour. The value of a commodity is not some mysterious quality, but a characteristic it has in virtue of its relation to the work process that gives rise to it. Most of the early advocates of the labour theory of value were pro-capitalists, who were mainly concerned with using the theory to aid the fight against restrictions on trade and manufacture. Marx wished to deepen the theory to make it useful in working-class struggle.
The Theory of Surplus Value
The economic system of capitalism is organized around the capitalist drive for private profit. Once it was understood that the value of a commodity came from the amount of labour in it, Marx asked the question: where does profit come from? A capitalist can start with some raw materials, machines and employees, then manufacture commodities and sell them. And after paying wages and costs of materials and machines, he ends up with more money than he started with. How can this be? Various attempts by pro-capitalists to answer this question have failed. The popular view that profit comes from buying cheap and selling dear does not explain where capitalist profits come from. On the buying cheap and selling dear view, the one who gains through buying cheap does to because someone else loses either through selling cheap or buying dear. If a whole economy is taken into account, losses would, therefore, cancel out gains. The theory does not explain how capitalists acquire the money necessary to invest in production in the first place or how their profits continue to grow.
Marx’s answer was that profit is possible because the capitalist pays less for the labour power of the workers he hires than they produce in commodity value. A worker sells his “labour power” — his ability to work measured in time — to a capitalist for wages. But the wages received for a certain number of hours of work represent a quantity of exchange value considerably less than the exchange value of the commodities produced during those same hours. For example, an auto-worker may receive 40 dollars for eight-hours labour, but he may have produced engine parts totalling 90 dollars in value during the same period of time.
A worker’s labour power is itself a commodity, which he/they/she sells to a capitalist in exchange for wages. The cost of this commodity is approximately what it costs to “reproduce” the worker’s labour power itself. It is the cost of what is necessary to keep the worker alive, working and able to raise children who will be the next generation of workers. This cost is lower than the market cost of what is produced by that worker. (In North America today, Marxist economics estimate that the value of commodities produced is well over twice the value expressed by wages received for producing them.) (RY-JM note: this text was published in 1981 — today, prices of goods have increased approximately 2.65x that of 1981, and $1 in 2021 is worth only about 38% of $1 in 1981.)
Marxists call the difference between these two amounts “surplus value”. It is simply taken by the capitalist and used for things like paying rent or interest, investing in his own or other enterprises, and for his own survival and entertainment. The process of taking surplus value is called capitalist “exploitation”. This process is at the heart of the capitalist economic system. Pro-capitalist economists from Marx’s time to the present have expended tremendous energy trying to discredit this theory. Most of their arguments attempt to show that capitalists themselves create their profits.
Some people say that capitalists contribute to production by doing the “brain work” of management. One problem with this is that capitalists do not have to do any work (by brain or hand) if they don’t want to, since they can hire people to do it. Moreover, the “brain work” that capitalists or their highly paid managers do most often does not contribute to the actual creation of commodities, but involves scheming ways to market goods, squeeze labour, or out-manoeuvre competition. Even if a capitalist did perform some useful function in production, his contribution to the finished product would be just that of one person among hundreds or thousands, whose combined and coordinate labours are all necessary.
Some say that capitalists derive their profits from the risks they have to take. This often-repeated claim has never had any weight. The mere fact of risk-taking does not create any exchange value, which is the same whether risks are taken or not. Usually, those who talk about the risks capitalists are supposed to take mean not that the risk creates value, but that because of taking risks, the capitalists deserve profits. In the first place, the Marxist theory of exploitation, as we shall see, is not a moral theory about who deserves what. But even if it were, why should risk-taking make one deserve profits? If the same goods could be produced more efficiently in a planned, socialist economy, without risking someone’s individual investment, then the fact that capitalists defend a system where somebody has to take these supposed risks shows that they are either selfish or stupid, not that they deserve profits. Finally, what the capitalist presumably risks is his original investment in a means of production. But this investment itself had to come from some place. It usually represents the profits gained by somebody, and therefore has its source in the surplus value created by labour.
Capitalist Production
Of course there is much more to Marxist economic theory, but this summary of capitalist exploitation will serve to show how Marx analyzed the unsolvable problem capitalism faces. A common misinterpretation of Marx’s analysis is that he thought capitalism would fall because it is not fair or just. Now while Marx’s discovery of the source of profit does explain the truth behind a long-standing socialist view that “capitalism is theft”, Marx did not hold that capitalism would fall because it is unfair. It will fall because the capitalist system itself creates problems it cannot solve.
The production of commodities for profit is possible only when labour is collectivized. That is, it requires that a great number of people do specialized jobs using advanced machinery so as to produce the most goods in the least time. The constant pressure of competition ensures that capitalists cannot lag behind in the production of commodities. It also ensures that they must strike to keep wages down as far as possible. They lay workers off whenever keeping them on cuts into profits. (This is doubly advantageous to them, since having unemployed workers around is a threat to other workers and helps to keep wage demands down.) They also keep prices up as high as they can get away with, even above their exchange value if possible. These things are obviously not in the interests of working people.
There are other problems. Working people are the ones who produce commodities, but they are also the main consumers. However, since working people are not paid enough to purchase all they produce (and capitalists cannot consume what is left without cutting into profits), there are regular crises of “overproduction”, where there are too many goods on the market compared to people’s ability to pay for them. In extreme cases these crises become depressions. In less extreme cases they are now called “recessions”, such as the protracted one we have been experiencing in Canada. An important discovery of Marx was that these crises are not accidents or the result of bad management, but are a natural outcome of the capitalist system.
Crises are marked by a general dropping off of production, with resulting layoffs and the bankruptcy of smaller capitalist firms. In the early stages of capitalism these crises often led to a drop in prices, though this did not help working people, since they also led to higher unemployment and lower wages. More recently, capitalists have learned to dampen some of the effects of crises through things like unemployment insurance. But in another way crises today are more severe than earlier ones, since they are marked by both growing unemployment and rising prices. This is due primarily to the fact that giant monopolies today are in a better position to price fix than before. Marx predicted that these crises would occur at about ten-year intervals and that the intervals would grow shorter as capitalism nears its end. His predictions are proving correct.
Many other problems are created by the capitalist economy, and the ones I have mentioned have many more facets. Those who wish to pursue these topics might want to read one of the several Marxist texts on the subject or read Marx’s famous Capital, where the mechanics of the capitalist economic system are discussed in detail.
Marx described capitalist production as “anarchy”. This does not mean that individual capitalists are crazy or irrational, but that the entire system, motivated as it is by competition for private profit, creates more problems than it can solve. In talking about the anarchy of capitalist production, Marx was contrasting it to what he saw would be possible in a socialist, planned economy where collectivized mass-production is organized so as to serve the best long-range interests of the working people themselves. In socialist economies there are no economic crises, and needless to say there are no policies to create unemployment or keep wages down. Under a system of private ownership, this sort of planning has no place.
The Working Class
The working class is made up of those people who do not own any means of production but sell their ability to work to those who do. The most important conclusion Marx drew from his analysis of capitalism is that it is the working class that can and will lead successful socialist revolutions. In this view, Marxists differ from those who see socialist revolutions led by a few individuals, or as a rising of all groups in society against capitalism without any group playing a leading role, or as the result of capitalists themselves becoming “enlightened” and handing over power. The contradiction between collectivized labour and private ownership is expressed as the contradiction between capitalists and the working class.
The system of capitalist commodity production brings the working class into existence. But in doing so, capitalism also creates a force that eventually destroys the capitalist system itself. As Marx and Engels put it, capitalism creates its own “grave diggers”. The Marxist basis for this view is that because of its mode of work, the working class is provided with both the ability to lead a successful revolution and also the incentive to want one.
Workers have the incentive to change the social and economic system of capitalism for several reasons. Even working people with relatively high wages cannot afford the luxuries taken for granted by capitalists and their overpaid managers. In a system geared to private profit, life for most working people is hard. Apart from monotonous, tiring, and unrewarding work, workers face the constant pressure of job insecurity. One’s old age is not adequately provided for. A working person has practically no say in the safety of his or her work conditions, much less in how work is organized or what is produced.
Through work, working-class people also acquire the ability to change this oppressive system. Industrialization forced people off farms and out of small shops and into cities and large factories. Industrialized work creates the habits and skills of collectivity and discipline. Knowing how to work consistently in a coordinated way does not come automatically to people. Depending on their class background and type of job, some never learn these things. Large-scale industries and offices train workers in these skills. These are potentially revolutionary abilities. The main force standing in the way of socialism is the capitalist class, which is small in number but controls weighty instruments of power, such as the army and the police. To compensate for this advantage, the rest of society must be able to move in a collective, united, and disciplined way.
Through its regular work, there is another advantage gained by the working class. At least in its industrial sector, the class has its hands on the actual means of production. It has the ability to stop the wheels of production and also to turn them on again. Not only do workers have some direct power over the capitalists, but they learn that they can challenge capitalists and make gains in their own interests. This is important, because capitalists try to make working people feel powerless and unsure of themselves.
Early in its history the working class learned that it has these abilities and strengthened them through the formation of unions. The value of working-class unity and collectivity makes itself felt when workers cooperate in strikes, refuse to cross picket lines, or support other issues. These skills are crucial to winning a revolution and building a socialist society. And the working class learns them in a kind of on-the-job training program unwittingly provided under capitalism.
The Marxist view about the central revolutionary role of the working class has come under fire from several directions. One criticism is that the peasantry is the key revolutionary class. Another is that the working class has “sold out”. We will look at these criticisms in turn.
Peasants and industrial workers. Russia and China had large peasant populations, that is, poor farmers whose families used almost all they produced. More recently peasants and landless farmworkers have been active in third-world liberation struggles. These facts have led some to conclude that Marx and Engels were wrong to see industrial workers as the key to revolutionary change. They claim instead that peasants play the crucial role of leading the fight for socialism.
I suppose the effect of accepting this view in Canada would be that we must watch peasants liberate other parts of the world, since there is no peasant class to speak of in Canada. However, even in parts of the world where there are sizeable numbers of peasants, the theory is flawed. This is not to say that there is no grain of truth in it. Marxists have taken a closer look at the important role of the peasantry since Marx’s time. But the view that the working class has ceased to play a leading revolutionary role in certain parts of the world is wrong.
Jack Woddis, a Communist exile from South Africa, has written an excellent book, New Theories of Revolution, in which he criticizes advocates of this view, such as Frantz Fanon and Régis Debray. Woddis examines most of South America and Africa and shows how militant working-class activity has often been instrumental in initiating struggles for national liberation. In his study of African struggles from the late 1940s to the present, he concludes:
“In country after country the workers acted as pace makers of the national liberation struggle. They staged major confrontations with imperialism, organized strike struggles, most of which were fought with great tenacity and courage, sacrificed in prison and in front of the bullets of the imperialist troops, and helped to awaken the entire nation. General strikes became manifestations of national struggle and stirred millions into an awareness of the total system of colonial oppression and discrimination, of the necessity to fight against it, and of the possibility of defeating it.”
Another problem with the concept of peasant leadership is that it overlooks some very important additions to the theory of Marxism since it was first advanced over a century ago. The most important of these concerns imperialism. In the late nineteenth century and throughout the twentieth century, industrialized capitalist countries such as England, the United States, France, Japan, and others began wholesale capitalist expansion into other parts of the world. Either by direct military invasion or by installing puppet governments, they forced large parts of the world to provide cheap labour and raw materials for them and to serve as a captive market for manufactured goods at inflated prices.
Africa, Asia, South and Central America, Russia and Eastern Europe were quite consciously divided up by the big industrial powers. The economic gains were great and in some cases almost certainly staved off revolutions at home by bailing out the home economy and stemming discontent. (Canada has found itself in the unique position of being both subject to imperialism, first by England and now by the U.S., and at the same time acting as an imperialist country itself.)
The effect of imperialism on non-industrialized parts of the world was to create revolutionary potential there. In some places imperialism introduced a measure of heavy industry, which created the beginnings of a militant industrial working class. But even in those countries where little industry was developed the nature of farm work itself began to change as peasants were forced to become farmworkers on large plantations owned by other people, usually European colonial settlers. This created another economic shift as small-scale, variety crop production gave way to large-scale single commodity production (of such products as coffee, tobacco, or sugar).
Earlier I suggested that incentive and the ability to change the system were qualities of the industrial working class that make it the key force in revolutionary change. Where peasant forces have been instrumental in revolutionary movements it is because imperialism has forged similar qualities in them. The peasantry does the work; someone else makes the profit. Agricultural and plantation work in imperialized countries is highly collectivized and disciplined. The point is that where peasant forces play a revolutionary role this is not because Marx and Engels were wrong about the revolutionary nature of the working class, but because imperialism has created some important working-class qualities in the peasantry.
Has the working class “sold out”? The North American media have created the image of the industrial worker as a bloated and complacent person who has a stake in maintaining the present social system. This image has prompted some to suggest that while the working class may have had revolutionary potential in the 1930s, it has now been “bought off” and has chosen instead to support capitalism. There are two questions here: Is the working class bloated? And has it sold out?
If someone measures a person’s well-being against a standard of complete poverty — starvation, rags for clothing, no roof over one’s head — then I suppose that most North American industrial workers are well off. But this is not a realistic standard. Well-being should be measured against what is possible. In a land rich in natural resources and industrial potential, it is not necessary for working people to have to pay from 25 per cent to 50 per cent of their income on housing. Inflation should not make each year’s paycheck worth less than before. Even with a high-paying job, how well off is someone if that job could be taken away at any time? In fact only some working people have high-paying jobs. According to government statistics, around 25 per cent of Canadian families live below the poverty line ($8000 per year) (RY-JM note: Nation-wide, this is now about 1 in 7 people, or 4.9 million people. Precarious employment has increased by nearly 50% over the past 20 years, and the poverty line for individuals is now around $26,000 per year — for families of four in urban centres, you must make over $60,000 a year to escape poverty).
The view that the working class has sold out is heard more in North America than in other parts of the world. In Europe working people in countries like France and Italy swell the ranks of revolutionary parties that may be on the eve of transforming those countries to socialism. What is the difference between the working classes of those countries and of Canada or the U.S.? On the “sell-out” theory the difference must be that the North American worker is too cowardly or too stupid or too immoral to risk leading society in revolutionary change.
Marxists maintain that this theory rests on a wrong view about how people come to have the attitudes they do. It supposes that at some point members of the North American working class came to the realization that socialism is an alternative and revolution requires working-class leadership, but then they deliberately chose to turn their backs on socialism.
Revolutionary consciousness and determination do not come and go in such a haphazard fashion. It is not a matter of an effort of will. To think that having or abandoning revolutionary consciousness is a matter of individual choice is to view things in a narrowly moralistic way. Sometimes I suspect that people who hold the sell-out theory confuse worker militancy in strikes with revolutionary militancy: since North American workers are quite militant trade unionists, it is assumed that they must also be revolutionaries. Then when they don’t organize in large numbers for revolution, the conclusion is drawn that they have sold out.
There are definite conditions that lead to revolutionary consciousness. These include economic conditions, the effectiveness of anti-revolutionary propaganda, the nature and extent of working-class political organizations, the success of divide-and-conquer tactics, and so on. Largely because of the success of imperialism, important sectors of the North American working class were spared the worst economic pressures, and this meant that they did not look for solutions to their problems outside of the capitalist system. This has, indeed, been one of the many bad effects of imperialism. The task of the scientific socialist, however, is not to berate working people for not being revolutionary, but to discover just what conditions lead to revolution and what conditions hold it back.
Can capitalism be saved?
To summarize, the Marxist claim is that capitalism has created economic forces it cannot control, much less direct for the benefit of everybody in society. At the same time, capitalism has brought into existence the modern working class, which can control and direct those forces. But it can only do so by a socialist transformation of society, which ends the system of capitalist exploitation altogether. Thus capitalism digs its own grave.
Some people maintain that while this may have been true of the “classic” capitalism Marx was writing about, capitalism has now changed in ways to make it stronger, and capitalists have taken measures to avoid socialist revolution. Thus, they say that capitalism can be saved. Marxists do not deny that capitalism has changed and that capitalists use their considerable power to fight socialism. However, the internal problems of capitalism cannot be overcome in the long run, and measures taken to avoid socialism can only set it back temporarily. I will conclude this chapter by looking at five things that are often said to be able to save capitalism.
Imperialism. We have already noted that advanced capitalism turns into its imperialist phase. By forcing people in other parts of the world to work at starvation wages, capitalists increased profits and were able to yield to some of the workers’ demands in their home country for higher wages. By creating captive markets in other countries, capitalists had places to sell goods at inflated prices and to dump goods when there were crises of overproduction at home.
Does imperialism, then, save capitalism? Some have maintained that it does. They note that Marx and Engels predicted a probable socialist revolution in England or Germany in the last century. But due to imperialist ventures, these revolutions did not take place, and hence, it is argued, Marx’s whole theory is shown to be false. The failure of this prediction has shown that there were inadequacies in the theory, but it did not show that the theory is wrong. Lenin wrote an important book on this subject called Imperialism, The Highest Stage of Capitalism in which he shows how imperialism is a natural outgrowth of capitalism — one that does temporarily solve some problems, but that can only postpone revolutions in the major capitalist countries, not prevent them.
The difficulty imperialism created was to move the problems of capitalism into new territory. In fact it moves it to territory less advantageous to the capitalists. By super-exploiting workers in countries subject to imperialist rule, it creates even greater incentive for revolution. Imperialism also sparks nationalistic sentiments. At home imperialists can flag wave and urge their own working class to go along with them for the sake of their common country (a cynical ploy, since capitalists don’t care about the real needs of their countries). In the nations they subject to imperialist plunder, capitalists are correctly regarded as foreign invaders who have no business there at all. Imperialism has made it relatively easy for forces of national liberation and revolution, such as the NLF in Vietnam, to rally large segments of the population to the anti-imperialist struggle.
Taking imperialism into account, Lenin predicted that capitalism, regarded on a worldwide scale, would snap first at its “weakest link”, which he considered his own native Russia. The Russia of that time was both an imperialist power, caught up in a costly and destructive war between imperialist rivals for markets (World War I), and at the same time it was subject to the imperialist domination by stronger capitalist countries. Taking these factors into account, it should not be surprising that the first socialist revolution was in Russia and the other nations that make up the USSR. Similarly, China, Cuba, North Korea, and, for the most part, the countries of Eastern Europe, all of which are now socialist, were subject to the most devastating imperialist rule (RY-JM note: Of these countries in 2021, those of Eastern Europe are no longer socialist or under a communist-led government). It is because of imperialism also that national-liberation struggles in Africa, Latin America and Asia often move quickly in a socialist direction.
Monopolization. Competition is a major source of capitalist economic problems. Why cannot capitalists eliminate competition through creating monopolies? Monopolization has indeed helped many capitalists. Groups of capitalist concerns form monopolies (or, what comes to the same thing, “cartels” or “conglomerates”) that fix prices and remove some of the pressure of competition. Every time there is an economic crisis, smaller capitalist enterprises go under, leaving larger and larger ones to corner the market even further.
Still, monopolization will not save capitalism. In the first place, like imperialism, it creates special problems of its own for the capitalist system. Capitalist ownership of the means of production cannot become concentrated in fewer hands without more and more smaller capitalists going out of business. This has the effect of forcing more discontented people into the working class, and it makes it harder to maintain the myth that anybody with enough intelligence and drive can be a capitalist.
Theoretically, I suppose one could imagine a single world monopoly which would afford to pay higher wages and improve working conditions, because it had no fear of competitors who by keeping wages down would be able to produce competitive products for less. But think of how unlikely such a development really is. It would not be enough for some capitalists to gain a monopoly in just one industry. They would have to monopolize all industries. If someone monopolized the entire auto industry and then stopped making improvements in auto-manufacturing machines, what is to prevent an enterprising manufacturer in some other industry from using his profits to invest in new and better auto-making machines, thus becoming a competitor of the auto monopoly? This sort of industry jumping is not at all unusual in capitalism.
Not only would capitalists have to monopolize all industries; they would have to monopolize the whole world. Capitalists do not care about state boundaries. They are prepared to make profits wherever they can manufacture goods the cheapest and sell them at the highest prices. But even if this imaginary world monopoly could have been created, it is now too late, because capitalists have to contend with competition from the socialist countries, which do not have economic crises and are becoming more and more economically powerful each year.
In the U.S., where monopolization has developed quite far, there is still vicious rivalry among different groups of large capitalists, who still have all the characteristics that mark the anarchy of capitalist production. Monopolization is only beneficial to some capitalists in the short run. And it does not change the fact that modern production has outgrown a private-profit economy. The dream (or nightmare) of a single world monopoly is so far from reality that it is hardly worth considering.
State involvement. In the early days of capitalism, most pro-capitalists argued that the government ought to play a very small role in the economy. At that time they wanted to break the government-church-feudal network which had attempted to constrain manufacture and trade. Now, even if they pay lip service to this philosophy, the largest capitalists all promote active government involvement in the economy. This is because they see that governments can help them to weather crises and make profits. In some capitalist countries the government plays a larger role than in others, but in all capitalist countries, government involvement in the economy is on the increase.
Pro-capitalist governments help ease crises by making loans and tax gifts to businesses and by controlling wages. They purchase expensive goods, such as military equipment, from corporations at inflated prices. They help corporations to market their goods. For instance, the Canadian government helps Canadian-based war-goods producers to market their wares through the Canadian Commercial Corporation (a Crown corporation formerly called “War Supplies Limited”).
Pro-capitalist governments finance the research for new technology, which is then used by capitalists in production. Sometimes governments run some industries for the capitalists. Occasionally people talk of countries like England as if they were socialist because the government owns and runs some major industries (such as the English coal industry). In fact, some essential industries are no longer profitable, so the government manages these industries for the capitalists.
Useful as state regulation of portions of the economy can be for capitalists, it cannot save the system of capitalism. The main problem is that the government has to find the money to do all these things somewhere. If government projects were financed by the capitalists, their profits would fall, which is just what government involvement in the economy is supposed to prevent. Therefore all capitalist governments leave giant loopholes in their corporation tax structures, and the state gets its money from working people. But higher taxes just create more discontent and further lower people’s ability to purchase goods.
State regulation of the economy in the interests of capitalists has a two-edged effect on people’s attitudes toward government. On the one hand, by trading on the capitalist-inspired myth that any government regulation is a form of socialism, it confuses people about what socialism is and makes them cynical. If this is socialism, who needs it? On the other hand, it opens the door to some economic reforms that people can force the government to make. For instance, working people can force the government to enact legislation setting minimum wages or regulating working conditions, which they could not do if the government played no role in economic matters at all. Even if these reforms are minor, relative to people’s needs, they help them to learn what could be done, if there was a workers’ government that ran the entire economy in their own interests.
Threats of violence. A time-honoured method of oppressive regimes is to try keeping people down by threatening them with job loss, prison, or even death if they try anything revolutionary. Capitalism is no exception. During the 1919 Winnipeg General Strike, which was put down with horses, clubs, and guns, workers learned that capitalists are prepared to use police against the people. The lesson has been repeated many times in Canadian working-class history. How far can the threat of jail or harassment go in preventing people from challenging the capitalist system?
Obviously threats have some effect. Any sane person thinks twice before taking risks. But I do not think that threats of violence can save capitalism any more than they have saved any of the oppressive systems that preceded it. If history has taught us nothing else, it has taught us that there are limits to how far people can be bullied. Look at situations where the threats and actual use of violence have been extreme.
Portuguese people lived under the systematic terror of fascism for 48 years. Now we learn that the Communist Party there was actively organizing underground the whole time at tremendous risk and had a membership of around 30,000 just before the 1974 anti-fascist coup.
I heard a priest from the U.S. who had been locked up in the prisons of Vietnam tell of Vietnamese women who were brought out every morning and told that if they didn’t salute the U.S. flag and the flag of its puppet government, they would be beaten and put into the infamous “tiger cages” (rooms of about four feet square, some of which were made in Canada). He reported of women who refused to salute those symbols of imperialism. There is a point where human dignity rebels at the brutality of intimidation.
Mind control. Through the school system and the pro-capitalist news and entertainment media, working people are subjected to a daily barrage of propaganda designed to convince them that capitalism is good, that socialism is evil, that you can’t change things, and that the real source of your problems is the working people of another race or nationality or sex, or that you, yourself, are to blame for your problems. There are any number of other ideas designed to confuse working people about what is wrong and how to change things. Of course, many people in educational and cultural institutions are themselves honestly confused about the source of their problems and pass on the theories they have learned. Nevertheless, such propaganda dampens revolutionary class consciousness and hence helps to perpetuate capitalism.
Effective as capitalist mind-control techniques are, there are limits to how long they can save capitalism. People who have already participated in socialist revolutions were all subjected to pro-capitalist propaganda, as were the working people and their allies all over the capitalist world who are now engaged in anti-capitalist struggles. Why cannot others overcome the effects of this propaganda too? It is typical of the elitist thinking of the bourgeoisie to regard working people as fools and sheep who can be convinced of anything. In fact, life itself has a way of revealing truths and exposing lies.
Readings for Chapter Three
K. Marx, Capital. This major work is available in different editions, both paperback and hardback. Volume One contains the main outline of Marx’s theory.
K. Marx, “Value, Price and Profit”; “Wage Labour and Capital.” Two short articles on some aspects of Marx’s economic views written for workers’ education.
F. Engels, Anti-Dühring. Chapter II, sections v-ix. These sections of Engels’ criticism of a contemporary anti-Marxist socialist (Dühring) contain a good summary of Marxist economic theory.
V.I. Lenin, Imperialism, the Highest Stage of Capitalism (in Volume 22 of the Collected Works). Lenin’s application and development of Marxism to account for imperialism.
There are many Marxist economists who have written books explaining and defending Marxist theories. My favourite author is Maurice Dobb. He has written one summary of Marxist economics on an introductory level, Marx As An Economist (London, Lawrence & Wishart, 1943, reprinted 1975) and several more advanced ones, including Political Economy and Capitalism (London, Routledge & Kegan Paul, 1940) which defends Marxism against modern bourgeois critics.
The Jack Woddis book referred to earlier is New Theories of Revolution (New York, New World Paperbacks, 1972, reprinted 1974).
Chapter Four (Historical Materialism) will be posted on Monday, May 31st.