Section two. Perspectives. Capitalism at the end of its historical cycle - Claude Bitot

First published in 1995 in France: Section One, “The Historical Balance Sheet” includes chapters on: communist movements throughout history; Marx and Engels and communism; “Real” vs. “Formal” domination of capital and the importance of this distinction for understanding the failure of the old workers movements (capitalism was not “obsolete” prior to 1945). Section Two, “Perspectives”, contains an extensive discussion of: the economic roots of capitalism’s current crisis (the “final stage of its cycle”); the communist revolution; and socialism.

II

Perspectives

“As Communists we are all dead men on leave.” Eugen Leviné, Spartacist combatant shot in May 1919.

Capitalism at the End of Its Historical Cycle

General Theory: From Capitalism to Socialism

Marx succinctly described this passage from capitalism to socialism in Chapter 32 of Capital, Volume I: “Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” All the basic elements of the process that leads from capitalism to socialism are identified in this text: the obsolete character of capitalism, growing misery, proletariat, class struggle, and revolution.

For Marx, a precondition for the supersession of capitalism is a historical stage of development in which its system becomes economically impossible, and ultimately “breaks down”. But this does not mean that it is going to disappear on its own and thus make way for socialism. In order to facilitate such a step human intervention is necessary. Marxism never said that it is the economy that makes history instead of men, it merely emphasized that men make history within particular economic conditions. For Marxism, when “the knell of capitalist private property” sounds, these men who make history are the proletarians, not because they are gods, or an elect and providential class (a position often imputed to Marx), but because they constitute the class that, suffering acutely from the “misery, oppression, slavery, degradation [and] exploitation” engendered by capitalism during a stage of its development when its contradictions can no longer be contained within certain limits, is driven to take action against capitalism. Marx called this action of the proletariat the class struggle. The latter does not require as a precondition any more or less revolutionary ideal; it spontaneously arises from the soil of bourgeois society. At first it is a simple resistance struggle against capital, and later, from the moment when capitalism experiences serious contradictions, it becomes openly revolutionary: as the living conditions of the proletariat deteriorate, it is clear that its demands for improvements can only be satisfied by directly confronting the existing social and political order. This radical solution for misery is rejected by all the bourgeois and petit bourgeois philanthropists, humanists, Christians and even certain utopian socialist idealists: “they see in poverty nothing but poverty, without seeing in it the revolutionary, subversive side, which will overthrow the old society.”1 For them the proletariat only exists as an unhappy and passive class that must be succored, or enlightened by their “illumination” so they can be capable of taking action. All of which is vain and ridiculous. It is true that “it is an inevitable phenomenon inherent to the course of development that individuals who have hitherto belonged to the ruling class have been attracted to join the proletariat in its struggle and to supply it with elements of theoretical instruction. This is what we have already explained in the Communist Manifesto,” Marx and Engels acknowledged;2 it would nonetheless be false to conclude, they added, “that the workers are too uneducated to free themselves and that they must be freed first from above, or in other words, by big and little bourgeois philanthropists”. In fact, when they proclaim later in the same text that their motto is “The emancipation of the working class must be the work of the working class itself,” this means that this class will itself become conscious of the necessity for radical change. How? Such revolutionary consciousness will not fall from the sky, it will be the product of a historical situation: the imperious necessity of finding a way out of the final crisis of capitalism is what will lead it to think in this manner. From that point, it will be obliged at the same time to pose the problem of replacing capitalism with something else. In this respect as well, it would be wrong to imagine that to solve this problem the working class must be impregnated with a revolutionary ideology called “socialism”, previously theorized and duly passed on by a few especially inspired prophets. It is true that socialism has up until now appeared historically in this guise, bathed in a mystical and idealist light, after having been understood quite differently: The working class has “no ideals to realize, but to set free the elements of the new society with which old collapsing bourgeois society itself is pregnant.”3 Socialism is effectively already contained within capitalist production itself: by concentrating and socializing production (transforming it into an activity dependent on large quantities of labor power that acts collectively and no longer individually), it makes social appropriation possible. It is this possibility that the workers must discover in their everyday lived reality. From what is set forth above it is to be concluded that the process that leads from capitalism to socialism has the character of historical necessity. The class struggle, revolutionary consciousness and the revolution all depend on objective conditions. They must be joined together in order to become fully operative and lead a historical process. These conditions constitute an economic and social determinism that compels the proletariat to act in a socialist sense and become conscious of the necessity of socialism: “The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.”4

This determinism—or materialism—of Marx has often been challenged and labeled as “fatalism”. It was thus questioned by the revisionist Bernstein, who transformed socialism into a “moral aspiration”; by the irrationalist Sorel, who viewed socialism as no more than a “mobilizing myth”; by the “orthodox” Kautsky and his disciple Lenin (What Is To Be Done?) for whom the class struggle did not lead to socialism, because socialism was a “pure science” (economic, philosophical and social) elaborated by radical intellectuals whose mission was to imbue the proletariat with this science and thereby allow the class struggle to rise above the simple “trade unionist” level; by the left socialist Rosa Luxemburg and Stalin’s opponent, Trotsky, one of whom observed the bankruptcy of the workers movement in 1914 when it fell into the abyss of the war, while the other saw the degeneration of the Third International in Stalinism and the rise of fascism, and both of whom proclaimed the alternative of “socialism or barbarism”, thus depriving socialism of its necessary quality so as to transform it into no more than a “choice” on the part of humanity. This kind of indeterminism has its roots in the immaturity of the existing conditions or was the fruit of the setbacks suffered by the class struggle: since history did not give rise to socialism, Marx was revised by introducing into his historical materialism certain voluntaristic notions of the “spiritual” or “moral” type, which, disconnected from their material foundations, can only have an idealist content; in the end, socialism became the outcome of man’s “free” will. Later, with the real domination of capital giving the impression that we are dealing with a capitalism that will be indestructible forever, that is perfectly regulated, that integrates the proletarians and empties the class struggle of any revolutionary content, this kind of indeterminism was reinforced: under these conditions, socialism could only survive as a “desire” or as a “hope”, or in other words, a pious supplication! It is said that the objective conditions for socialism are “necessary, but not sufficient”. This theory could make sense insofar as the abbreviation of capitalism’s historical career was thought to be possible: since the objective conditions were only partially established, it was hoped that this gap could be filled with the subjective preparation of the proletariat (the socialist education of the masses, propaganda, etc.). As we saw above, all of this failed. Such a theory has therefore lost all validity. It remains to be seen where capitalism is presently situated, objectively speaking: is it in the process of reaching a stage of development that could end up by creating the necessary and sufficient conditions for the emergence of a will to carry out a victorious socialist revolution? This question must be answered first so we can then address perspectives for the supersession of capitalism.

The Capitalist Economy Digs Its Own Grave

For the ruling ideology the collapse of “communism” in the East proved that capitalism is economically insurmountable. From now on, everything will be reduced to knowing which “model” of capitalism would be preferable. For some, it will be that of an “ultra-liberalism”, which they consider as the most effective kind for engendering growth; for others, it will be that of a “moderate liberalism”, the only kind capable of promoting a fairer distribution of the benefits of growth. This vision of an eternal capitalism is an aspect of a metaphysics of history characteristic of bourgeois economists. For Marx, while it is true that the capitalist mode of production is a necessary phase of historical development, it does not therefore cease to be a transitory phase of that same development. This can be observed in several different manifestations.

Thus, in Chapter 32 of Volume I of Capital, Marx describes what he called “the historical tendency of capitalist accumulation” in the following manner. At first there is small-scale production, that of independent producers who produce for their own subsistence, whether peasants or craftsmen. Marx points out that such an economic regime implies “the parceling of the soil”, “the scattering of the other means of production”, and therefore excludes “concentration ... [and] cooperation” as well as the “division of labour within each separate process of production, the control over, and the productive application of the forces of Nature by society, and the free development of the social productive powers”. This stage corresponds to “a society, moving within narrow and more or less primitive bounds. To perpetuate it would be, as Pecqueur rightly says, ‘to decree universal mediocrity’”. This is why, as “painful” and as “disruptive” as it was, the expropriation of all these small independent producers became necessary. From that moment on, property based on personal labor was replaced by capitalist property based for its part on the exploitation of the labor of others, on wage labor. In this stage we have numerous capitalists who employ cooperative labor in their workshops, involving common rather than individual labor, as was previously the case. In other words, a progressive socialization of labor was underway. But the evolutionary process did not stop there. Since the capitalist economic regime was now based on “the action of the immanent laws of capitalistic production itself, by the centralization of capital....”, a new expropriation took place: that “of the large number of small-scale capitalists”. Consequently, capitalism has an innate tendency to negate itself, since the owners of capital are subject to an increasing rate of expropriation, and property is thereby concentrated in a few hands, those of a few magnates, bankers and other monopolists; this indicates that the historic tendency is towards the expropriation of all the private possessors of the means of production, and is itself a “first negation” of private property, as Marx says, while socialism, in turn, is nothing but the result of this process.

Another phenomenon is equally notable. Capitalism’s economic career is not a smooth one, but is prone to interruptions. It is accompanied by periodic crises whose utterly novel characteristic is overproduction, and no longer the underproduction that afflicted previous modes of production. These crises exist because production grows faster than the capacities of the market to absorb it. In other words, these crises reveal the growing contradiction between the productive forces and the capitalist relations of production: the latter constitute an obstacle to economic development itself. From this moment on, in order to be capable of overcoming its crisis, capitalism is obliged to destroy masses of unsellable commodities, limit production capacity by scrapping factories, and laying off workers who are condemned to unemployment. Only with the aid of this “purge” can capitalism reestablish equilibrium and regain its forward momentum. How long can this tumultuous cycle, composed of expansion, contraction, depression and economic recovery, be repeated? Marx, in a very illuminating passage in the Grundrisse, responds as follows: “Capitalist contradictions will provoke explosions, catastrophes and crises in the course of which temporary layoffs and the destruction of a large number of capitals will lead capitalism by means of violence to a level from which it can resume its course (…). However, these regularly renewed catastrophes are repeated on an ever-expanding scale and ultimately end up provoking its violent overthrow”; “The real barrier of capitalist production is capital itself. It is that capital and its self-expansion appear as the starting and the closing point, the motive and the purpose of production.”5 Production of the capitalist type does not have consumption as its essential goal, or the production of use values, as capitalism’s champions try so hard to make us believe, but rather above all the search for profit, that is, of money increased by surplus value, which is composed of unpaid labor.6 This process of capital valorization is simultaneously its process of devalorization: the more strenuously capital seeks to obtain profits, the lower its average rate of profit. This rate is the relation between invested capital (composed of the capital Marx calls “variable”, that is, the wages paid to the workers in exchange for their labor power, and “constant” capital, that is, raw materials, plant and machinery necessary for production) and the surplus value that results from the exploitation of the workers’ labor power. But because competition obliges capitalist firms to modernize, or in other words to resort to ever more machinery to lower their costs of production and maintain their competitiveness on the market, this process leads to a constantly increasing “organic composition of capital” (c + v): constant capital (c) increases at the same time that variable capital (v) undergoes a relative reduction, which results in a fall of the rate of profit and therefore diminishing the profitability of capital. Of course, this fall can be counteracted by various procedures (increasing the rate of exploitation of the working class on the basis of a greater intensity of labor—the famous time studies—buying cheaper raw materials, operating machines around the clock) that have the effect of partially restoring the rate of profit. But the struggle for market share and increasingly more vicious competition compel firms to modernize even more, that is, to introduce new machinery with even better results, which has the effect of introducing a new devalorization of capital. The nature of this process leads capitalism once more towards its doom, since it enters into a contradiction that is increasingly insoluble for it: to valorize itself it needs living labor (wage labor) which is simultaneously being gradually excluded and replaced by dead labor (machinery and plant), which precipitates its devalorization (because the machines are incapable of generating surplus value) and, therefore, it approaches that much closer to its ultimate fate.

The growing concentration of capitalist property, the increasingly catastrophic crises of the bourgeois economy, and the increasing devalorization of capital—these are the various phenomena that can be observed and that justify the saying that capitalism is economically digging its own grave. It could of course be objected that there are counter-tendencies that disturb this economic determinism. We have already referred to the partial restoration of the rate of profit. One can also cite the efforts of governments to avoid more severe crises of overproduction by State intervention and the development of artificial consumption (the so-called “consumer society”). Likewise, in order to avoid a degree of structural unemployment that would threaten to become overwhelming with increasing mechanization, since industrial development is the primary foundation of capitalist wealth and expansion, there is a tendency to multiply parasitic jobs (especially in the State sector) which are not only unproductive (not directly generative of surplus value) but useless for the purposes of the circulation and realization of surplus value. But these counter-tendencies, which cannot be ignored, and which distance capitalism somewhat from its pure model, also have their limits. They can to some extent alter the laws that rule the capitalist mode of production, but they cannot abolish them; they can delay for a while the final collapse of the system, but it is not in their power to prevent it; they can temporarily allow capitalism to adapt, but they are incapable of radically modifying it, as its objective contradictions will still exist and only end up more powerful; in short, capitalism is not an economic system programmed to exist for eternity and the end of its historical cycle will necessarily arrive. Having recalled these theoretical data, we must still identify this terminal stage of capitalism. As we have seen, many Marxists have come to grief with regard to this issue. In response to the prophets of the death crisis, capitalism exhibited possibilities of development that allowed it to survive. It is therefore incumbent upon us, in so far as it lies within our power, to avoid falling prey to this same error.

This being said, in the present situation, after almost twenty years (following the “glorious thirty years” of 1945-1975), capitalism is submerged in a permanent economic quagmire that has found expression in a feeble rate of growth and increasing unemployment. Is this just a slowdown, a prelude to a new growth spurt, or is it the first sign of the final crisis of the system? And, to begin with, how can the current economic situation be explained?

The Failure of Keynesianism

As we have already pointed out, production of the capitalist type has as its goal not human needs, but profit, that is, the money that, having been invested in production, emerges from production augmented by a surplus value. An operation of this kind is possible thanks to, on the one hand, the exploitation of the working class that allows the capitalists to appropriate at no cost a part of the labor of the working class and, on the other hand, the fact that the commodities that contain this unpaid labor of the workers are sold on the market, which then allows the profit to be realized in the form of money. A question arises, however: who buys the commodities offered for sale on the market? The workers? Of course, but they buy only within the limitations of their wages, that is, of the value of their labor power. Which means that the market is essentially backed up by the capitalists themselves. How is this possible? The capitalists buy for their personal needs a certain number of consumer goods with the income formed by the profits they obtained from the exploitation of their workers. If, however, they were to spend all their profits in this manner—assuming this were to be possible—there would be no extended reproduction of capital: once spent, the money would not accumulate but would return to its initial value. In order for capital accumulation to take place, it is necessary for part of the profits to be productively reinvested, that is, in the form of new means of production. Every capitalist will therefore be led to extend the scope of his activities and, spurred on by competition, becomes the buyer of new machines or plant. As a result capitalist production is principally driven by the sector of production goods.

From this it follows that this sector has a tendency, in tune with the accumulation of capital, to hypertrophy in relation with the sector of consumer goods which is in turn limited to only the luxury needs of the capitalists and the subsistence wages of the workers. The crises of overproduction that periodically strike capitalism due to the anarchy of the market primarily affect the means of production. These crises, because of the enormous productive powers involved, tend to become increasingly severe. Thus, the crisis of 1929 would be massive and would confirm this prediction made by Marx: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.”7

It was precisely by developing the consuming powers of the masses that the capitalist system was able to overcome its catastrophic crisis of 1929. It was also able at the same time to re-launch the sector of production goods, as the increase in the supply of consumer goods led to new orders for machinery and buildings. Keynesianism was behind this innovation. State intervention would stimulate, with the help of a budget deficit and the increase in taxes on corporate profits, “general demand” by means of a policy of “job creation” and the expansion of the masses’ capacity for consumption (unemployment insurance, higher wages, etc.). However, in order not to depress profits too much, these measures would be contingent upon an increase in the share of profits coming from increases in productivity; in other words, the share of profits deducted would be compensated for by a higher degree of exploitation of the working class, whose output must constantly grow: beginning in the 1930s, Taylorism, “labor fragmented to the maximum”, and assembly lines would be the rule.

After 1945, this new mode of capital accumulation spread like wildfire, and the results are well-known: vigorous expansion along with attenuated cyclic crises, while the consumption of the masses reached a scale never before seen and unemployment was reabsorbed with almost full employment.

This “economic miracle” would last for thirty years, until 1974-1975, when a generalized and serious crisis affected all the advanced capitalist economies for the first time since 1945. Production fell 14.4% in the United States, 19.8% in Japan, 11.8% in West Germany, 10.1% in Great Britain, 13.6% in France, and 15.5% in Italy; the number of unemployed meanwhile rose by 17 million in the O.E.C.D. countries. After this crisis, although nothing catastrophic had taken place, the major economies became bogged down in the morass, and unemployment continued to increase: according to a 1993 report, it affected 35 million people in the O.E.C.D. countries, to which must be added the 13 million “disguised” jobless persons (short-term subcontractors and temporary employees) and “discouraged” workers who have given up looking for employment (who are not counted in official unemployment statistics).

The tendency has therefore remained unchanged. Policies that once constituted a springboard for capitalist expansion, the Keynesian recipes for mass consumption, full employment and State intervention, have finally turned against capitalism.

The Keynesian model was only viable for capitalism as long as the profits derived from increased productivity compensated for the wage increases that were earmarked for expanding mass consumption. After the mid-60s there was a noticeable decrease in profits generated by productivity gains. The reason for this was the condition of near-full employment that led to a relation of forces that was relatively favorable for the workers. The latter took advantage of this situation not only by the exercise of relentless pressure for higher wages, whose most spectacular consequence was the general strike of May-June 1968 in France, but also, having been subjected to the Taylorist organization of labor and its hellish speed-ups, by strikes that tied up strategic bottlenecks in the production process, or by absenteeism. Wage and resistance struggles caused the partial breakdown of capitalist rationality, which eventually led to lower profits.8

Another factor linked to the Keynesian model that has a negative impact on profits: the rise of compulsory deductions by the State, some of which accrue from corporate and estate taxes.9 Mass consumption implies a whole array of collective facilities (urban infrastructures, roads, etc.) that the State is responsible for and finances by means of taxes, thereby affecting the profits of private enterprises. These growing costs weigh heavily upon capital accumulation. Finally, the increase in unproductive labor, evident in highly advanced capitalism, plays no small part in this erosion of profits. By unproductive labor we mean labor that does not generate profits but is necessary for the circulation of capital (management, sales, advertising, banking, insurance) as well as for the stability and smooth operation of bourgeois society (police, army, schools, justice system, etc.), this latter sector’s jobs generally being staffed by State officials. These are unavoidable accessory expenses that limit the valorization of capital. In this way, the profits that, for example, can be extracted by marketing companies actually come from the surplus value produced by the industrial working class, part of which is transferred for the financing of sales, advertising, etc. The employees who work in these businesses are subject to a particular kind of wage labor. It does not produce surplus value, but helps to realize surplus value through the sale of commodities. These wage laborers are therefore paid the value of their labor power, but since the source of this payment is industrial profit, from which a portion is transferred to commercial capital, this necessarily has a negative impact on the general rate of profit. To this must be added the numerous officials10 who take their turn sucking up a significant share of the profits. Furthermore, in industrial enterprises, there has been an expansion of the professional staff (foremen, administrative personnel, various kinds of managers) and of the number of efficiency technicians charged with the task of preventing any decline in productivity. All the people who fill these positions, even if they do not create surplus value, try to get the workers to produce more. As Pierre Souyri notes, however, “the growing cost of their maintenance has always been a heavy burden. This can only continue if the growth of the labor costs of all the categories of the enterprise, at the scale of global society, which do not produce surplus value, can be compensated for by an even more rapid growth of the productivity of labor. In any event, however, the proliferation of the unproductive layers, which is the social expression of the swelling of the accessory expenses of the extraction and realization of surplus value, tends to depress the rate of profit”.11

All of these factors we just summarized, by building up and affecting the rate of profit to various degrees, led the latter to decline in a characteristic manner during the early 1970s.12 The “oil embargo” of late 1973, which led to a fourfold rise in the price of oil, only added to this decline.

Businesses, seeing their profitability especially affected, cut back on their operations. Instead of investing, they were content to liquidate their holdings and, consequently, proceeded to lay off large numbers of workers. This is the generalized crisis. It is a crisis of the profitability of capital and not of overproduction, properly speaking, even if it assumed the latter form. Instead of the deflation that occurs with the collapse of commodity prices and wages (the typical phenomenon associated with crises of overproduction), it is inflation that is precipitated, as businesses try to compensate for the fall of the rate of profit by raising prices.

The fact that the crisis of 1974-1975 was overcome with the help of the good old Keynesian recipe of the budget deficit, does not refute the following claim: the Keynesian model showed that it has its limits by leading to a characteristic depression of the profitability of capital. In the end, it, too, is put into question. “Today’s profits will make investments and jobs for many tomorrows.” This slogan of the era demonstrates well what will henceforth be the greatest preoccupation of capitalism. If its nightmare during the 1930s was overproduction, as of the 1970s what matters above all is the restoration of the rate of profit, and in this respect Keynes has not been much help. Hence the return to neoliberal and monetarist theories, the exaltation of free trade, the deification of the market, and the hatred fostered for the “nanny-State”; this new orientation was thought to be capable of imparting a renewed dynamic to capitalism.

The Aggravating Effect of the “New Technologies”

One of capitalism’s characteristics is that of revolutionizing the means of production in successive waves. The “information revolution” that took place during the mid-1970s has its place amidst the series of shocks that capitalism has witnessed from the age of the steam engine to that of electronics. The latter, with its diverse applications in industry (machinery with numerical controls, computer-aided design, robots, flexible factory floor plans) has continued to have economic consequences. Driven by competition, capitalist businesses have modernized their productive apparatus, allowing them to reduce their costs of production by increasing the productivity of labor while simultaneously reducing the amount of labor employed in any particular process. Because the new technologies require fewer personnel, these businesses became more competitive, seizing market share. Following this pattern, spectacular restructuring operations have taken place in the steel, metallurgy and automotive sectors, accompanied by larger and larger reductions in the work force.

As a result of this development, commentary began to assume a more optimistic tone. There was talk of an emerging “new society”. In fact, these technological innovations that were presented as a great “transformation” had the principal effect of exacerbating the fall of capital’s rate of profit: by replacing living labor, the only creator of surplus value, with the most highly-perfected machines, capital’s profitability could only decline yet further. It is true that the decline in profitability is partially counteracted thanks to the stagnation of real wages. The labor power ejected from production by the new machines, as well as that which was rendered superfluous in the crisis of 1974-1975, far from having been reabsorbed, allowed for the formation of an important reserve army, capable of weighing down on wages and doing away with the absenteeism and numerous strikes that characterized the preceding period. And in fact, after 1975, the strike movements would melt away like snow under the sun. A model social peace was established. Fear of losing their jobs paralyzed the workers, who no longer made any claims except to increase their productivity, in order not to form part of the “excluded”. There was a corresponding massive expansion of the temporary and part-time workforce, or precarious workers: employment agencies recruiting labor power for specific tasks or companies hiring workers on a contract basis, who were forced to accept the lowest-paid jobs and then subject to being fired at a moment’s notice at the whim of management or due to the company’s bloated inventory. But this was far from the end of the question. If this new social arrangement that is currently being established has the effect of tying the workers more securely to capital, to its demands for profit and competitiveness, it cannot compensate for the race to modernization that, in turn, endlessly raises the technical and organic composition of capital and therefore diminishes its profitability. In a word, the reduction of its rate of profit has not really been stopped. And capital, instead of investing in production, prefers to seek refuge in speculation and artificial inflation of the value of its assets, subject to the risk of provoking financial crashes like that of October 1987. In these conditions, a real economic revival is not possible. Growth rates, despite a few good stretches, have remained weak. Whereas annual growth rates prior to 1975 averaged 5% to 6%, after 1975 they hardly rose above 1% or 2%. What can this anemic capitalism say in its defense, after having done nothing for twenty years but institutionalize and continuously aggravate unemployment, which affects at least 50 million people in the O.E.C.D. countries?

The End of a Historical Cycle

A new trend became apparent in 1975: the absolute diminution of the working class (that is, of the primary creator of surplus value, as the tertiary sector is composed largely of unproductive workers), for the most part in the more advanced capitalist countries. In France, the working class (including construction and public works), which had grown from 7 million in 1959 to 8 million in 1974, i.e., an increase of approximately 13%, fell to 6.5 million in 1985, a 19% decline in eleven years.13 The objection will be made, that if the number of workers in the skilled trades has fallen, the number of engineers, technicians and other new professional categories has increased because the new technologies require a more specialized personnel. While it is true that this highly skilled labor power (which also produces surplus value) assumed greater importance, its growth did not compensate for the loss of traditional working class jobs. Technical personnel, who numbered 650,000 in 1982, totaled only 720,000 in 1990. The number of foremen, 550,000, remained steady. The number of high-level technical personnel (engineers, etc.) did increase from 900,000 to 1.3 million, but soon thereafter also felt the impact of unemployment (in July 1992 there were 162,000 unemployed in this category) while the A.N.P.E. registered a 40% increase in unemployment among young college graduates. This absolute decline in the number of productive workers also affected Great Britain and Italy, where job losses followed a similar pattern, and in Germany, despite the fact that due to that country’s dominant position in world trade, this decline was less apparent although, there as well, the same tendency soon made itself felt: in the automotive sector, for example, where between 100,000 and 200,000 out of 780,000 jobs were lost during the next five years.14 In the United States, the manufacturing sector shed almost 3 million jobs between 1979 and 1992.

This was yet another unprecedented phenomenon, because up until this point, in order for capital to expand, even if it was a feeble sort of expansion, it needed to constantly increase the mass of labor power at its disposal, so that its corresponding investment in constant capital could be set in motion. As Marx wrote: “Accumulation of capital is therefore multiplication of the proletariat.”15 And this was true despite the fact that, as capital accumulated, its organic composition reflected a more rapid growth of constant capital than variable capital, because the latter, although relatively diminished, underwent absolute growth. Now, however, this is no longer the case. Growth no longer creates jobs; it destroys more than it newly creates. Even in the opinion of the “experts”, in order to reverse such a trend and to facilitate even the partial re-absorption of structural unemployment, a growth rate of 5% is needed, which is now unthinkable.

“The economists don’t have a clue.... In any case, there is no unified, general and universally accepted theory in the scientific community that explains massive and long-term unemployment.”16 In fact, what the bourgeois economists do not want to see is the no-man’s land that capitalism is now entering. Capitalism, after all, means exploitation of living labor; only the latter can make a certain sum invested in production emerge, once a sale is effected, as a larger sum than the original investment; from all the money that is accumulated in ever larger amounts, it is not the portion thereof spent on clever marketing, speculation or machinery, but that invested in productive human activity, that is solely capable of producing more value than its maintenance requires. “Hence it follows that in the labour process the means of production transfer their value to the product only in so far as they lose their exchange-value along with their use-value.... It is thus strikingly clear that means of production never transfer more value to the product than they themselves lose during the labour process by the destruction of their own use-value.”17 As a result, it takes all the confusion that the bourgeois economists can muster, who set profit to the account of constant, or dead, capital (or else, occasionally, the sale of the products) rather than to that of variable, or living, capital, to fail to see that from now on the capitalist mode of production is crippled: its growing inability to extract surplus value from living labor and thus to obtain profit, with constant capital completely dominating variable capital. It is indisputably true that the law of capitalism is to produce wealth with ever less expenditure of human labor power, although it still posits this living labor power as the source and the measure of capital’s value. Hence the growing contradiction: capital depends upon living labor and at the same time gradually eliminates it and replaces it with machinery. The source of capital accumulation is thus condemned to constant diminution, as its rate of profit is condemned to decline. It cannot resolve this contradiction. If it introduces generalized automation, it purely and simply eliminates itself as capital. But since it is simultaneously impelled by its own logic of development to go in this direction, the contradiction can only be exacerbated as it approaches this limiting point.

Today, with the latest technological revolution, the exacerbation of this contradiction is becoming ever more spectacular in view of the development of massive and permanent unemployment. The “new technologies” and the “industrial transformations” proudly presented by the capitalist system’s proponents as overwhelming proof of its vitality are in reality its tomb; they signify, in conformity with the Marxist analysis, that the productive forces cannot be contained for much longer within the framework of capitalist production relations. In short, what is commonly called “the crisis” is nothing but the conclusion of the historical cycle of capitalism. This end of capitalism’s cycle is also manifested in the unprecedented expansion of the tertiary sector, which now employs a majority of the active population.18 It constitutes a largely unproductive sector, that is, it does not for the most part create surplus value (this does not apply, however, to the transport and communications sectors, which are classified as service industries, but which actually participate in production). In other words, by creating wage labor for the production of surplus value for valorization purposes, capital has ended up causing the majority of individual wage workers to live on this surplus value (instead of on their unproductive labor), which is in total contradiction with its initial objective and is the hallmark of its irreversible decline as a mode of production. This decline is all the more accentuated now that, as it is incapable of providing jobs, even in the tertiary sector that has long constituted the safety valve that limited unemployment, this system is reduced to proposing “small-scale work projects”, “local jobs”, and other “time-wasting schemes” that only serve to dissimulate the real scale of unemployment.

The objection could be made that this end of capitalism’s cycle may apply to the highly advanced countries, but what about the rest of the world? Do other possibilities of development exist in other places that would allow capitalism to experience a second childhood?

The Failure of State Capitalism in the East

Alongside the capitalism of the West, there was another capitalism in the East, christened as “socialist”, whose clearly manifested ambition since the early 1930s was to equal, and then to overtake, its western counterpart. In competition with the West, it attempted to supplant the latter thanks to its State controlled and planned economy. This State capitalism presented itself as a more effective and more rational solution for the future that would utterly defeat the old liberal, private enterprise capitalism. The late 1980s witnessed its downfall. How did it come to such an end?

This system had entered into crisis in 1956. Kruschevism, which succeeded pure, hard-core Stalinism, responded to this crisis in its own way by attempting to introduce reforms. Effective when it was a matter of fostering an industrial buildup, or undertaking primitive accumulation on a grand scale—proceeding rapidly according to a despotically imposed plan—Stalinist State capitalism began to show its inflexibility from the moment when its previous goal was realized: what Russian capitalism needed then was free enterprise, competition and the market. Its leaders were more or less aware of this. It was in this sense that professor Lieberman’s reforms were proposed during the early 1960s, which advocated enterprise autonomy. During the same period, another economist, Abel Aganbegyan, called attention to the overdevelopment of the production goods sector compared to the consumer goods sector, which had been sacrificed to heavy industry; this imbalance was a factor in the slowing of the tempo of the annual growth rates which, from 11.3% in the years 1951-1955, declined to 5.7% in the years 1961-1965. For such reforms to operate effectively, however, State capitalism would have to be dismantled on a grand scale. After 1956, the government was content to phase out the use of terror to ensure labor’s submission to capital, of which Stalinism had made abundant use during its heroic era (1930-1950) for the purpose of rapid industrialization. But by putting an end to the most brutal forms of coercion (which also affected the leadership) without a radical transformation towards a new mode of management, it ran the risk of being revealed to be a remedy that was worse than the illness it was intended to cure: once the terror ended, would one not be justified to fear a relaxation of discipline and labor output? That desertion, waste and a vast system of corruption would reign, now that the Stalinist axe was no longer suspended over everyone’s heads? The semblance of change was limited to a more flexible State capitalism. The reforms of 1965 conceded a certain degree of autonomy to enterprises. Part of the profits they made would be retained by the enterprises for their own financing, and another part would be distributed in the form of bonuses and social benefits to the employees, so that they would have an interest in increasing profits. Priority was given to heavy industry, although an effort was made to increase the production of consumer goods.19 The large blind spot was agriculture, whose share of investment capital rose to 20% in 1968, only to fall again to 5% later. For other sectors State control was still maintained, as well as planning, even if the latter was really only planning for the next year.

If State capitalism was slightly reformed, it was never really questioned. The State bourgeoisie benefited from it and the workers also began to discover its advantages: it assured them job security, it allowed them some scope for resistance to exploitation by means of absenteeism or the restriction of output, not to mention its provision of housing, transportation and health care, which were almost free.

In short, the entire world settled into this State capitalism “which was taken for granted”. If, however, it was still capable of impressing people with its power of military dissuasion—“soviet hegemony”, at which westerners sagaciously pointed their finger—was it economically stable? The real crisis broke out during the early 1980s. The decline of growth rates, which approached zero, testified to this. Labor productivity was very low. “It took eleven or twelve years to build a factory that would take one and a half or two years to construct anywhere else in the world.”20 This was not how Russian, so-called “socialist”, capitalism “would catch up to and overtake” the West. Its backwardness with respect to the latter could only become more pronounced and, finally, we must draw up a balance sheet of the collapse of the entire system.

It was in this context that the Russian leaders arrived at the idea of “perestroika”. This was a comprehensive challenge to State capitalism, involving its reconversion, carried out more or less rapidly, into a western style “market economy”. In other words, those who were responsible for the system acknowledged that it had failed and that it had to be liquidated. The profitability of capital had ended up in free fall. This is why one of the first reforms was designed to create a significant reserve army of the unemployed (16 million workers) in order to encourage the workers to “get to work”, with the fear of losing their job acting as a prod. This is what a reformer like N. Chmeliov said, without beating around the bush: “The risk of losing one’s job (. . .) is excellent medicine against laziness, drunkenness and irresponsibility.”21 We shall leave him and his insights, in the purest bourgeois and capitalist style, regarding the Russian workers who are nothing but a bunch of drunks if they are not mercilessly exploited, but it is a fact that the latter have ended up, to a greater or lesser degree, accommodating themselves to a post-Stalinist State capitalism that pays them low wages, but for which they do not work very hard.

Regarding such a fiasco, what can be said, from a Marxist perspective, is that this system, which was not socialist but was also not capitalist in the classic sense of the term, was dragged down by the disadvantage of being deprived of the free market, competition between enterprises and the free initiative of private enterprise; hamstrung by a system of bureaucratic planning and a State that wielded the pretense of omnipotence (even though, in fact, its vigilance was relaxed: corruption and waste testify to this), Russian capitalism could not flourish, because it could not fully develop its relations of production (law of value, market, money); in fact, this State capitalism, far from being a higher form of capitalism, as some theorized (who saw it as the most developed stage of capitalism, or as a system called “State bureaucratic” that was transcending capitalism, without, however, becoming socialist), was only a lower, more vulgar form of capitalism; it was only logical that it should soon display its limitations.

It remains to be seen if Russia’s adherence to liberalism (presented as a Panacea) can deliver the goods and if a significant degree of capitalist development can thus take place in the East.

For the time being, what the introduction of liberalism has brought is above all an accentuated social and economic depression. Production in the former USSR has fallen more than 30% in three years; although the official unemployment figures are still low, misery has spread with the increase in the number of homeless persons (up to 200,000 in Moscow, and some 7,000,000 in European Russia). In the former satellites of the old “Soviet Union”, only “the Baltic States, Poland and the two States formed from the former Czechoslovakia have managed to limit the damage”, but everywhere else there was “negative growth”. “In all these countries the real income of families has declined (…). The most worrying phenomenon is the rise of unemployment: 8% of the active population in the former Czechoslovakia and Hungary, 12% in Poland and Bulgaria, 20% in Romania.”22

Thus, by way of a “painful transition”, as the western pundits say, what we are witnessing is above all economic and social regression on a vast scale. The old State capitalism has not really been replaced but, utterly thrown into disarray by “reforms”, is suffocating under a mountain of debris. “The market economy” that was so widely praised as a miraculous remedy has no real existence: for a market economy to exist, it would be necessary to renovate the productive apparatus of the economies of the East, which is too antiquated to be competitive on the world market; but the highly advanced capitalist countries are not interested in “helping” them to modernize; thus, aid to the East is given drop by drop and no massive aid on the scale of the “Marshall Plan” is seriously being considered. The extension of the European “Community” towards the East is nothing but a pious wish.... The westward wave of emigrants from the East, most of whom are heading for Germany, is testimony of this: the countries of the East are becoming Third World countries. Their only asset is cheap labor power that could induce some western investors to move their production facilities and thereby create several focal points of development. For everyone else, everything tends to point towards a transition to a mafia-ridden, inefficient “economy of poverty”, in other words, to a lower form of capitalism; in short, capitalism in this part of Europe will most likely be uncompetitive and there are reasons to think that this is how it will end its career.

Capitalism in the Rest of the World

If we now take a look at what is referred to as the “Third World”, one notes that the situation is not much brighter. Unequal development in relation to the western countries is flagrant. While the value of exports of manufactured products from the O.E.C.D. countries amounted in 1985 to 949 billion dollars, those of the Third World did not exceed 157 billion dollars.23 The foreign debt of the Third World countries rose to 911 billion dollars (385 billion dollars for Latin America and the Caribbean alone). We see some of these regions collapsing at an accelerated rate; such as sub-Saharan Africa, where there is zero economic growth while population growth, itself a product of underdevelopment, exceeds all bounds.

In fact, taking into account the fact that they are encumbered with a heavy structural deficit, the countries of the Third World have been the first victims of the market, now completely globalized and without any restraints: increasingly incapable of developing domestically-focused economies, they have been forced to “adjust” to this borderless market that benefits the strong rather than the weak, and which allows the highly developed capitalist countries to invade the markets of the Third World with their commodities, where free competition is totally in their favor, except in a few domains (the textile industry, for example). Within the framework of this market, the gap between the advanced capitalist countries and the backward countries can only get wider. The consequence for the latter is the ruin of millions of small producers caused by the competition from the world market, who will then migrate to the gigantic slum neighborhoods composed of the masses of subproletarians and the excluded (who represent between 30% and 50% of the potential working population) in the grips of starvation who can only survive by resort to extreme measures. In a word, “sweet business”—the market—never ceases to wreak havoc and to create victims; in accordance with its logic, capitalism concentrates wealth at one pole and condemns the rest of the world, that is, most of the planet, to underdevelopment and misery, as is made evident in our end-of-the-century “triumphant” capitalism.

The fact that millions of these excluded persons from the Third World come knocking at the doors of the developed countries is therefore not at all unexpected and is the proof of capitalism’s inability to really develop most of the world. Unable to undertake such a project of expansion, it is reduced to distributing a little charity, in its own interest, of course, so that the imbalance between the rich and the poor countries will not become socially explosive. So now and then emergency food aid is distributed. Immigration also constitutes part of its “nobility of soul”. This immigration, however, encounters limits in the extent to which it runs the risk of creating too much friction because of the unemployment that now plagues the developed countries. This implies that the capitalism of the wealthy countries must try to control the flow of migrants, since it is evidently unable to accept the world’s “tired, cold and hungry masses” ... or to allow itself to be “invaded” without resistance by millions of needy people, in spite of the idealistic defenders of the right of asylum who, standing on the petit bourgeois terrain of angelic humanism, make an abstraction of the existing economic system and are incapable of seeing that the only solution is the suppression of capitalism, beginning with those countries where it is most highly developed.

Some exceptions may be adduced in opposition to the claim that capitalism is in decline; in particular, the impetuous development of capital in Southeast Asia: not only that of the famous “four dragons” (South Korea, Hong Kong, Singapore and Taiwan) but also that of China in its “five special economic zones” (open to foreign capital) where, it would seem, “market socialism” is being experienced.... Not to overlook Malaysia, Indonesia, the Philippines, Thailand, and even Vietnam, which has also joined the dance. In the meanwhile, the facts speak for themselves: factories are sprouting up like mushrooms: in China, in 1992, production increased 20%; “in Thailand, the annual growth rate between 1987 and 1990 averaged 11% (the highest in the world) and in 1991, 8% (France: 1.2%)”.24

This could provide some comfort to those who have begun to lose confidence in capitalism.... Isn’t capitalism, in these “Asian Newly Industrialized Countries”, regaining its sanctity? Even better, are those countries not witnessing a rebirth that proves that capitalism, far from having reached the final stage of its cycle, is preparing to inaugurate the beginning of a new cycle, at the other end of the world?

This economic take-off can be largely accounted for by the advantageous rates of profit that this region offers to foreign capital, which have proven so advantageous that some western businesses have even transferred their operations overseas. The reason for this profitability is not hard to find: wages are much lower than those paid in the West, and if China is seeing a particularly strong trend towards higher wages this is because they are still much lower than those paid in Hong Kong (where they are between five and seven times higher), which in turn are one-fourth those paid to western workers doing the same jobs.... This having been said, it must be emphasized that this capitalism that has developed in one part of southeast Asia is essentially limited to the production of clothing and consumer electronics (except in South Korea and, to a lesser degree, Singapore), that is, in sectors in which the organic composition of capital is still low due to the importance of the living capital that is still necessary for these kinds of production.

The real value of the capitalist splendor of these countries must therefore be subject to scrutiny. Their industrialization is quite relative. “Everywhere, except in Singapore, the population is still mostly rural and industrial jobs represent 10% of the active labor force in the best cases."
25 As for China, apart from its privileged zones, it cannot escape the Third World-ization of its economy: it could have 140 million unemployed, of whom 35 million reside in the cities. In short, it would be illusory to believe that capitalism is making a new leap forward in this region of the world. It is merely that, in the grips of a trend towards its devalorization, it is seeking new horizons which, in some sectors of production, may prove fruitful; this is what is now taking place in Southeast Asia, but tomorrow this zone of prosperity could very well disappear as quickly as it had arisen, to the benefit of another zone that proves to be more profitable, as capital is constantly uprooting itself from some sectors in its ever more frantic quest for profits.

Towards Generalized Social Regression

This general overview indicates that capitalism is essentially concentrated around three major poles (North America, Western Europe, and Japan, with an accessory role for part of Southeast Asia), as no other zone of the world is in any condition to take over and inaugurate a new cycle for capital. It all boils down to knowing what will result from the end of the cycle of capital in its major centers.

The further pursuit of modernization, which has characterized capital until now, is now becoming less and less a solution for it. These policies have led to a significant reduction of the working class, that is, the most important fraction of those who work for wages who create surplus value. But capital cannot rid itself of the entire class, which would mean suicide for it (as well as for the bourgeoisie, whose class interests are linked to the preservation of capitalism). In order to preserve production based on exchange value and the law of value as far as possible (fictitious capital will not last much longer and will collapse in a gigantic financial crash), it is not a question of eliminating the working class, but on the contrary it is vital to more thoroughly subject the working class to this law. In other words, by virtue of its own law of the preservation of capital it does not seek generalized automation but a redoubled exploitation of the working class and of workers in general; putting an end to the profit sharing of productivity gains that had allowed wages to rise (Fordism), threatening the social “conquests”, attacking the living conditions of the bulk of the workers (including those who do not produce surplus value)—there are no other ways to raise the rate of profit and to revalorize capital.

In fact, this is what has begun to happen. Social Programs, Exit Here!26 Little by little, capital proclaims its new dispensation. “The Safety Net” has fallen under increasing suspicion, with its bottomless financial pit, the payments to the unemployed are subjected to doubt with the “fake unemployed” who seemingly take advantage of this deal, the pension system must be restructured, while the more affluent are advised to join private pension schemes.

But all of this is insignificant compared to what is to come in the way of social regression. Until now, after the state of stagnation that set in after 1975, with the exception of the layer of the excluded who have been sacrificed to modernization (the “new poor”), the workers in the advanced countries have not for the most part experienced runaway pauperization, although they are more and more worried about their future. The “entitlements won” over the years, although threatened, have not been universally put to the test. Real wages, although stagnating, have not significantly declined, on average. In the public sector, millions of workers still have their guaranteed employment, with secure retirement funds. In short, the majority of wage workers continue to constitute, by virtue of their standard of living, a vast middle layer.

But this is precisely what must change, and first of all wage costs must be economized due to the problems of profit and competition that plague business. To reach this goal, it is not only necessary to reduce the wages of the productive workers, but also those of the unproductive workers, whose accessory expenses are too taxing on the profits of capital. The public sector must also be restructured: it must, wherever this is possible, be privatized; elsewhere, some of its services must be transformed into business enterprises subject to competition, in order to reduce the wage burden.

There are various ways to achieve this kind of wage policy. There is the system whereby the S.M.I.C. (which is subject to less and less regulatory oversight) engages young people under contract to work for private business, along with the gift to private business on the part of the State of lowering the entrepreneurs’ costs for a certain period of time, which permits them, once this period has elapsed, to fire everyone and to take on new young contract workers on the same terms. There is “the sharing-out of work”: instead of firing workers, firms impose wage reductions, that is, they pay their workers a total wage bill that is the same as if there had been mass layoffs. There is the blackmail of relocations: by threatening to move operations elsewhere, where labor is cheaper, businesses intimidate workers to accept reduced wages. There is the gradual dismantling of the “Welfare State”, even in wealthy Germany: “In order to assure the future of Germany’s competitiveness, the government is proposing a long list of measures that affect public finance, labor, social spending and education. Their overall purpose is to shrink the Welfare State by lowering mandatory deductions to their pre-unification level, 45.8% of the national wealth as opposed to the current 50.5%, by the end of the decade. Mr. Rexrodt (Economic Minister) has furthermore indicated that he foresees that a reduction of the buying power of the wage workers will be necessary for several years.” (Le Monde, September 4, 1993). The current level of unemployment forces the wage workers to accept the ever more draconian conditions imposed by capital on the purchase of their labor power. The creation of vast Free Trade Zones, within which there is “free circulation of capital, commodities and men”, is also an excellent means for capital to bring about a leveling of wages from below: this allows commodities and labor power to be subjected to direct competition across frontiers to facilitate the quest for the lowest cost. As a bourgeois commentator says: “It is paradoxical to hear a call to help Social Europe, as if the goal were to unify wage levels from above in order to protect the better paid wage workers from the competition of the less developed zones!”27 The Maastricht Accords fully participated in this logic of social regression. They led to the constitution of a supranational institution with full powers, economic, monetary, and financial, that will decide major policies, budgetary as well as fiscal and social. In fact, this monetary and economic Union is intended to reduce to nothing the various national “Welfare States” that have until now enjoyed a certain margin for maneuver, especially in the social domain. From this point on, we will have a “very advanced liberalism”; there will be one bank (the European Central Bank) which, bypassing the national States, will be responsible for making all major decisions; in other words, it is capital itself that, without intermediaries, will issue its directives, decide what is good for it, and the only criteria considered in the deliberations of this power center will be its demands for profitability and competitiveness—to sum it up, the ideal of power to capitalism! It is in this “European edifice” that the efforts of an increasingly transnational capitalism are manifested and one of its crucial goals is the liquidation of the social reformism that has handicapped it.

Briefly, what is inscribed in the logic of the final stage of capital’s cycle is the return of the immense majority of the workers, whether productive (producers of surplus value) or unproductive (those who realize surplus value), to a situation of poverty, reduced to a subsistence wage, where all guarantees and all security have been abolished, as had been foreseen by the Marxist analysis: “It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse.”28 This catastrophic tendency, so often challenged (and which, in fact, appears to be questionable at first glance, at least in the highly developed capitalist countries) is the dominant trend that is irresistibly unfolding. To put it another way, capitalism in the last stage of its cycle leads not only to massive unemployment, but also to the absolute pauperization of the workers, which will become evident from the moment when they see their standard of living collapse and their “conquests” melt away like snow under the summer sun. Then the clock will strike twelve midnight. The events themselves will prove that the “consumer society”, “capitalism with a human face” and other vain reformist fetishes were nothing but a parenthesis in capital’s career, the latter having transformed these notions, in its last stage of development, into faded myths.

Towards an Increasingly Serious Crisis of Overproduction

Will capitalism nonetheless manage to dodge the bullet? Let us keep in mind that its mode of accumulation was based on “Fordism” (a policy that supported high wages that would foster mass consumption, which was made possible by rising labor productivity, and therefore a compensatory production of surplus value), which had allowed it after 1929 and especially after 1945 to successfully expand and avoid a severe crisis of overproduction such as had taken place in 1929. Now that capital, under the constraints of profitability, has increasingly subjected the wage labor force to impoverishment, and thus has undermined this Fordist mass consumption, it is not hard to see the consequences: there is nothing else that lies in store for it than a return to the old problem of overproduction, which was thought to have been settled after 1945; in other words, it will find itself between Scylla and Charybdis: the volcano of production vs. the swamp of the market; a contradiction that Engels described as follows more than a century ago: “The enormous expansive force of large-scale industry, compared to which that of gases is mere child’s play, now appears to us as a need for qualitative and quantitative expansion that laughs at all counteracting pressure. Such counteracting pressure is formed by consumption, by sales, by markets for the products of large-scale industry. But the capacity of the market to expand, both extensively and intensively, is primarily governed by quite different laws that operate far less energetically. The expansion of the market cannot keep pace with the expansion of production. The collision becomes inevitable, and since it can yield no solution so long as it does burst the capitalist mode of production itself, it becomes periodic.”29 The last recession (which began in 1991 in the United States and then spread to Europe and Japan) heralds the return of the classic crisis of overproduction (the tendency towards deflation is evidence of this) that Engels describes. It followed hard on the heels of a drop in consumption (due to massive and long-lasting unemployment, as well as the tendency for wages to fall) and the saturation of markets throughout the world (solvent markets were diminished by the exhaustion of credit: all countries, including their governments as well as their businesses and individuals, were deep in debt—hence the high interest rates—and were consequently forced to restrict their purchases). After 1975, the growth rate of the capitalist economy is only slightly positive, interrupted by crises that only lead to “mild economic recoveries”, which are soon defunct. In addition to the reduction in the rate of profit, this tendency reflects an increasingly more serious restriction of the market which can only lead to violent crises of overproduction: “The trend towards wage reductions, coupled with a deflationary spiral, and the return of the old protectionist reactions: the fatal process of 1929 is not so far away.”30 We must, however, point out that this time there will be no “New Deal”, now that capitalism as an economic system has proceeded too far in its development to survive one more such depression. However long it takes to confirm this catastrophic development, capitalism has certainly entered the final stage of its historical cycle. Utopia? The utopians are not those who foresee capitalism’s collapse, but those who believe that it will last forever.