Chapter 1: Capitalism

Our dally lives are completely dominated by two distinct but closely related forces that control all aspects of our society. They are capitalism and the State. Here we are going to deal with capitalism. The State will be covered in Chapter Two.

Submitted by libcom on April 19, 2006

"The great only appear great because we are on our knees. Let us rise."
James Connolly - Edinburgh born Irish socialist

Our dally lives are completely dominated by two distinct but closely related forces that control all aspects of our society. They are capitalism and the State. Here we are going to deal with capitalism. The State will be covered in Chapter Two.


This is the name given to the way the economic or productive forces of society are organised at the moment. As it's name implies the main activity involved is the creation and accumulation of capital - represented by money and property. It is this activity that determines the way our present society works and is at the foundation of our present way of life.

Capitalism did not appear overnight. Before it there was another sort of society called feudalism where the economic organisation was on a different footing. There the ruling class simply took what they wanted by force, in the form of tributes of produce and crops etc. from the peasants and tithes to the church. This whole society was justified and supported by the church who in return got their 10%. This sort of economy was based on the ownership of land and represented a preindustrial method of production.

From this older form of society grew modern capitalism through a mixed process of economic changes and reforms. In Britain where capitalism started first, this has been a lengthy process. In other countries capitalism has been installed in a far shorter time-span. Nevertheless, wherever you live in the world you live in a capitalist society: - the USA, UK, USSR, Cuba, S.Africa, India etc. are all capitalist economies. The actual practice varies from place to place but the essentials of capitalist society are now universal in this world. The State now fills many of the functions (e.g. welfare) that the church played under feudalism - more on this in Chapter Two. It is time we described the bare essentials of capitalism.

How Capitalism Works

To exist capitalism has to have society organised in a certain way, often called the social relations of capitalism. Here we list them;

  • Everything, and we mean everything, must have a price to enable it to be sold for money.
  • To get hold of the things needed for life - food, housing, clothes, entertainment etc. money is needed. For most people the only way to get money is by selling their labour in return for a wage. These people are generally called the working class. They have little or no productive property i.e. property that is employed in creating profit. Interest on savings or a rise in the value of your house are not profit. Interest is the rent you are paid by the capitalist for the use of your money. House price increases and decreases are a side effect on the economy of the activities of the capitalists and represent the periodic re-valuing of resources by the capitalists.
  • The goods and services that people produce by their labours (mental and physical) are sold by their employers for a profit. This profit comes from two causes:
  • Labour; the labour used in making the product.
  • The market; being able to sell the product for a price that will ensure a profit.
  • This profit is stored as capital in the form of money and property.
  • As the. things that are produced are sold for a profit it follows that the wage earners only receive a part of the value or wealth that their labour produces. The people who take the profit are the capitalists. This is the trick! The capital in capitalism comes from the labour of the working class. Someone explained this well at the start of this century and called it "The Great Money Trick", (See below for an explanation).
  • Not content with exploiting us at work the capitalists take a second hit at us by selling us back the product of our labours. As consumers we have to pay directly or indirectly for everything we need to live.
  • In capitalism there are many divisions fostered in the workforce to keep wages down and the working class divided. Racism and sexism are the most profitable divisions from the capitalist's point of view (more on this later).
  • Capitalists compete with each other to make profit.
  • The working classes have to compete against each other to survive in the market for labour. This has the effect of tending to put us in a defensive position.
  • The prime, and most fundamental, reasons for the existence of capitalism and the capitalist are;
  • To continue making a profit in order to accumulate more capital.
  • To increase the amount and rate of profit if at all possible.
  • War is good for capitalism because lots of products and services are destroyed and have to be replaced over and over again, meaning lots of profit at every stage of the produce and consume cycle.

These are the driving forces behind capitalism and its only explanation. This is the grim reality of capitalism as a way of organising society. The satisfaction of human needs and desires are not important, except in the interests of profit and stability.

The Great Money Trick!

"How is it that the benefits of civilisation are not produced for the benefit of all? How is it that the majority of the people always have to go without most of the refinements, comforts, and pleasures of life, and very often without even the bare necessaries of existence? Plenty of materials, plenty of labour, plenty of machinery - and nearly everybody going short of nearly everything!

The present money system prevents us from doing the necessary work, and consequently causes the majority of the population to go short of the things that can be made by work. They suffer want in the means of producing abundance. They remain idle because they are bound and fettered with a chain of gold."

From "The Ragged Trousered Philanthropists" by Robert Tressel

See the Appendix for his full explanation of "The Great Money Trick" where he describes how wage-labour is at the heart of capitalism. He briefly mentions how capitalism is always getting into trouble and introduces the idea of the problem of over production in capitalism, which we pick up on at the end of this chapter.


As human beings we all have certain needs and desires that have to be satisfied if we are to continue living and enjoy life; good housing, food and drink, healthcare, education, leisure facilities and so on.

In a capitalist society only some of these needs and desires are fulfilled and then only for profit and stability. But because we are told that capitalism is 'natural', inevitable and has no alternative, we look to it to provide us with what we need, and most of us are doomed to disappointment. Ideas like; "a fair days work for a fair days pay", "value for money", "fair competition", "buy British", "keep foreigners out" "respect for the law", are accepted by many people and are used to justify our present situation, when of course they do not exist for the capitalist!

The vast majority of people in the UK and the rest of the world do not have enough of even the basics to lead a happy life; decent housing, good food, leisure, worth while work etc.

What we do have lots of are boredom, frustration, unemployment, poverty, poor housing, poor food or none at all, poor health, severe social divisions along the lines of race, sex, age, sexuality (meaning whether you prefer the opposite sex or not), a popular culture that is imposed from above, whether it is respect for the rich and love of Royalty as in the UK. Or belief in the Party in the so-called communist countries or fear of a religious or military dictator. This is the reality of capitalism for most people.

To stabilise such a miserable society we are encouraged to believe that we are responsible as individuals for our own position in society or that our position is a result of divine forces.

In the Beginning - (a mini history of capitalism)

The start of the economic end of feudalism was matched by the emergence of the Protestant religion to replace the Roman Catholic one. This new religion was much more suited to the earthly interests of the merchants and craftmasters who were the forerunners of the capitalists. They also required an economy where everything could be exchanged for money. The growing need for gold and silver to act as currency was what drove the Spanish and others to the Americas and was one of the earliest examples of capitalist imperialism, much more was to follow.

At first this capitalist class just did what they did previously on a larger scale. But they had political ambitions to have a different society with different values so they got rid of the weak feudal kings and aristocracy, as in the French revolution, or came to terms with them and incorporated them into a new ruling class as in Britain. Here the aristocracy remained in control of the civil service and influenced the development of the British State machine and ruling class right up to the present;

"It is as well to recall the continuing enormous power of the landed aristocracy (however much their wealth comes now from other sources). No cabinet between 1830 and 1900 had less than 41 % of an aristocratic element."
"The Great Arch" - by Corrigan and Sayer

This ability to integrate new cliques into the ruling class is one of the strengths of the British ruling class. The 'link' that cements the old and new rulers is the possession of profitable property. This new ruling class came to be called the "bourgeoisie". Having obtained political power through control of the State (more later) they then started a thorough re-organisation of society in line with their own interests and values. See the appendix on The History of Capitalism for a fuller history.

Capitalism and the World (the International division of labour)


This, as we pointed out above, has been central to capitalism right from the start and has accounted for its expansion. By this we mean the theft of resources and labour from people in other parts of the world by force.

Some classic examples:

  • Slavery - the kidnapping of Africans, and others, for use as slaves in the Caribbean and American cotton and sugar plantations.
  • The stealing of tea, coffee, cocoa, gold, rubber, wood, food, cotton, minerals etc. from the people forced into the British, French, German, Dutch, Spanish, and Belgian Empires - to mention but a few.
  • It is also the forcing of other people to be a market for your products and so making them dependant on your economy, like cotton clothes to India and Opium to China.

This is what made Britain 'Great'. This imperialism has left a deep scar on our class in the form of the racism that justifies its outrages. In countries like Britain, France, the USA and Germany it still cripples our unity.

Writing of the Black slave rebellions in the French colony of Haiti in the late 18th century C.L.R. James notes how imperialism and its cruelties are a constant feature of the history of capitalism:

"The French burned alive, hanged, drowned, tortured, and started again their old habit of burying blacks up to their neck near nests of insects. It was not only hatred and fear but policy.... It was the policy of the Tories that the British followed in Ireland in 1921 [and today] regardless of the complaints of the Guardian newspaper or the pacifists. So it is, so it has always been."
From "The Black Jacobins" - by C.L.R. James.


This is a development of imperialism. Having taken a land and its people into servitude, the imperial power often sent settlers to it to form a local ruling class and recruit a group of native supporters. These native supporters often carry on the work of the settlers after the colonial power has withdrawn e.g. the Lebanon, India and South Africa. Armed force, religion and cultural manipulation in the form of denial of language and identity are typical of this process. Once in place colonialism is a more efficient way of running a colony than sheer force. Examples include: Hong Kong, Northern Ireland, North America under the British, Lebanon under the French, and the Philippines under the USA.

The Sexual and Racial Division of Labour

Capitalism does not just create an international division of labour as in imperialism and colonialism but an internal social division of labour. We are referring here to the sexual and racial divisions of labour. We have to be clear in our minds that racism and sexism occur not just because people are bigots; they are a direct result of capitalism's need to divide up the workforce on a permanent basis. The racial and sexual division of labour fragments sections of the workforce from each other and justify the super-exploitation of workers in weaker economic positions like women, ethnic and immigrant workers.

The Sexual Division of Labour

Even though the discrimination against women predates capitalism (and was largely created by religion), the economic exploitation of women has become an integral part of our economic system. Here we look at the difference between women's work and men's work. Although many women in the UK are employed, it is nearly always in low paid and part-time jobs. But even more far reaching than this is the huge amount of work that women do which is unpaid, such as housework, cooking, child care etc. This unpaid work services the domestic needs of the existing generation of workers (men and women) for free, and rears the next generation of workers for the capitalist entirely free of charge. You do not have to be a genius to see why this is a good deal for the capitalist class. This situation is the economic foundation of discrimination against women called sexism, which as a class we must overcome to move forwards. Please refer to Chapter Three for further discussion of sexism.

Needless to say the capitalist will never pay more than a pittance for this work. The idea of "wages for housework" is an illusion. We believe the only real solution to low pay and no pay for women is the removal of capitalism.

With women's work tending to be less permanent and low paid their position in the economy is similar to the unemployed. Together they form a section of the workforce which has a below average status in the job-market and are a source of cheap labour. Bosses can use and discard them at will when they are no longer required. This part of the workforce were called "The Reserve Army of Labour" by Marx for fairly obvious reasons. The existence and use of this reserve army by the capitalists has the general effect of reducing the wages of the entire working class and sapping our militancy and unity. Workers from this reserve can be brought in to replace others who have been sacked. For those of us living in this sub-section of the workforce it can mean a life of permanent poverty with little hope of getting out of that situation. On the area of women's work and unemployment the unions have done little or no organising in the past, and show little or no enthusiasm for doing any in the future.

The Racial Division of Labour

Ethnic groups (whether immigrant or permanently resident) that are different from the majority in the UK are another sub-section of the workforce and are often a part of the reserve army of labour mentioned above.

The racial division of labour came into full effect after World War Two, with the increase of immigration from Commonwealth countries to fill the shortage of labour in the UK economy during the boom years. Despite fighting on the same side in the war and having skills, they were shunted off into low paid, semi-skilled or unskilled work, and poor housing. They were destined to become a separate part of the working class. This was the economic basis of racism. The traditional racism of the British ruling class justified this treatment of these people to the rest of the white working class. See Chapter Three for more on racism.

Asian workers were mostly concentrated in the textile industries and foundries. The Afro-Caribbeans were mostly concentrated in the low paid service sector jobs like cleaning, building, buses and nursing - where white immigrant groups like the Irish were also concentrated. In the workplace ethnic groups were concentrated in particular sectors of production (usually the lowest paid, menial, unsocial hours, dirty and dangerous work). It was not unusual for there to be 'ethnic shifts' in factories which isolated black workers even more from white workers (please note that when we say 'black' we mean all non white people).

The response of the trade unions to this situation has been, as with women and the unemployed, another chapter of shame. The official union bureaucracy has sabotaged and ignored militant actions taken by black workers to improve their work conditions or pay and to stop discrimination. Black workers have had to rely on their own communities and their own working class organisations for help. The black experience at work, as well as that of women, fits in with the general working class's experience of the unions leadership: sabotaging anything that rocks the boat and threatens real radical changes. This behaviour we call "collaboration with the enemy" and intend to treat it accordingly. The racial division of labour and the racism that justifies it, is crucial to capitalist economic domination. It presents another barrier to a united working class, as does sexism, and if we wish to achieve anything we have to attack and destroy both.


Towards the end of the 19th century, ownership of enterprises started to move away from individuals to that of groups of shareholders. Here the role of "management" became more important, although many also were large shareholders. This process intensified as companies grew larger as they gobbled each other up to form monopolies that dominated the market for certain products in certain areas of the world. At this stage capitalists were tied closely to the interests of their own nation-states e.g. oil, coal, shipping, manufacturing, railways, banks etc. In most cases the two coincided. Where they did not, there was usually a civil war to enable the dominant group of capitalists to take over. The American civil war is a good example of this. It was a war between two groups of capitalists and not about slavery as the recent rewriting of history would have us believe. Competition between capitalists was, and is, fierce for markets and resources. This was often resolved by the means of war between different nation-states representing different capitalists.

The First World War was the culmination of this competition among the international capitalists. After the war capitalism continued to expand all over the world through imperialism and the pickings were rich. Britain had just about all of the Middle East, most of the Far East and Africa. This period saw the emergence of companies that had operations all around the world.

The trend to shareholder owned capitalism continued with an increase in the numbers of the very rich as shareholders, and the growing trend for companies and financial institutions to hold shares in other companies. The great international economic crisis of the 1920's and 30's marked a turning point in capitalist economics. Up till then there had been a succession of re-workings of Adam Smiths' (the capitalist economist) ideas, mostly all concerned to balance freedom for the capitalist with social stability. At the time of the great depression in the USA, the work of the economist Dr. Simon N. Patten held sway in government circles. He argued for the minimum of government intervention rather like the present fashion in the USA and the UK. Thus the response of the government was to step aside in the belief that the economy would sort itself out. This experiment in business self-management proved disastrous. It resulted in the restriction of production, the squeezing out of small businesses and the tendency to trample down everyone in the pursuit of profit - so deepening the effect of the depression.

A new group of economists, of whom John Maynard Keynes is the best known, learnt their lesson from the great depression and realised that capitalism could not be left to its own devices. They started to take a long term view of things and increased the trend towards bureaucracy, with the role of management growing further and the increasing participation of State bodies in large scale economic management and planning. They saw the State as having the function of an economic regulator. The logical progression was to world-wide bodies to regulate capitalism, hence the development of the World Bank and the International Monetary Fund (IMF) who are so powerful today.

Trade Unions

By the beginning of the 20th century capitalism had drastically changed from the beginning of the 19th century. Large industrial centres such as those in Northern Ireland, the West of Scotland and South Wales were employing huge numbers of workers in coal, iron and steel, engineering, and textiles etc. Advances in production led to the removal of many skilled workers from industry, the workforce came to be made up of large numbers of labourers, machine minders and semi-skilled workers. Capitalism was entering the era of mass production and a crisis of its own making, that of producing more than it could sell on the existing market. This a recurring crisis in capitalism.

These huge numbers of working class people all living in great cities working close to each other, sharing similar conditions and experiences at work and at home, not surprisingly started to share common problems and hopes. The workplace became the centre of renewed attempts to improve the conditions of life by demands for higher wages and shorter hours. Faced with a decline in profits and an increasingly militant workforce the capitalists became very vulnerable to attack at the workplace. Just before the First World War there were many large and bitter strikes in Britain. Many believed we were on the brink of revolution, as this report on the period from "Merseyside Anarchist" very graphically shows;

"The years before World War One saw an explosion of class warfare in Britain not seen since the Chartist movement of the early 19th century. Known as the "Labour Unrest" or "Syndicalist Revolt", this period saw the rapid escalation of strike action - insurgent in character, largely unofficial, and often violent. Trade union membership doubled from around 2,500,000 in 1909, to over 4,000,000 by 1914 - while days lost due to industrial action rose from around 2,500,000 a year in 1909 to nearly 41, 000, 000 a year in 1912.

The first major unrest centred on the South Wales coalfields. In the Cambrian Combine strike of September 1910 to August 1911, striking miners formed mass pickets, intercepted trains, and attacked scabs, working pits, and managers' houses. At Tonypandy one striker was killed by the police. In 1911 the strike wave spread to the transport industry. Between June and August 1911 strikes took place in all the major ports - starting with seaman and soon extending to dockers and other groups of workers in factories and processing plants. In August an unofficial walkout by railwaymen on Merseyside escalated into the first national railway strike and a General Transport Strike on Merseyside. On Merseyside two strikers were shot dead by troops during street fighting - as crowds attacked prison vans taking prisoners to Walton jail. In Llanelly (S. Wales) two workers were also shot dead, and crowds bayonet charged - strikers in turn tore up rail tracks, damaged signal boxes and telegraph systems, and set fire to trucks. In 1912 another transport strike broke out in London, and the miners came out again - this time nationally.

1913 saw the strike wave spreading to many groups of workers previously unaffected - semi-skilled and unskilled engineering workers in the West Midlands "Black Country Strike", the Leeds Corporation Strike etc. the Dublin Lockout of August 1913 to January 1914, against the Irish Transport Workers Union, led to five deaths, and over 650 jailed, and the formation of the Irish Citizens Army as a workers defence force. Back in Britain, rising unoffical strikes in the building industry in 1913 came to a head with a bitter five month lockout in 1914. Many smaller strikes also took place during this period. Meanwhile, the formation of the National Transport Workers Federation in 1910, the National Union of Railwaymen in 1912 and the Triple Alliance - a solidarity pact between miners, transport workers and railwaymen - in 1914, seemed to lay the groundwork for more effective solidarity between unions.

Increasingly, as conflict continued and attitudes hardened with the onset of a new economic downturn, Britain seemed to be rushing headlong towards mass industrial revolt, if not an insurgent General Strike. As the atmosphere of crisis intensified, it took the outbreak of war in August 1914 to bring the movement to a halt."
"The Syndicalist Revolt" - taken from "Merseyside Anarchist".

The war was one part of the solution for the capitalists to this problem, it used up a lot of capital (and people), diverted working class anger into patriotism, destroyed competing capitalists in Germany and opened up new markets abroad. The second part of the solution was the legalising of trade unions to represent the working class. With, of course, the moderate and reformist leaders within the unions being encouraged by the capitalists, and the revolutionary workers being penalised.

Just after the First World War capitalism was again in trouble internationally and in Britain, there was massive social and industrial unrest. The divided and reformist trade unions just held the line for capitalism, despite the heroic efforts of many workers and activists. By the time of the General Strike in 1926, the absorption of the unions within the capitalist machine was complete, the leadership had sold out.

As a member of the ruling class put it looking back at this period:

"Trade union organisation was the only thing between us and anarchy'.
Lord Balfour

The reformist and paternal trade unions in the workplace were paralleled by the formation of the Labour Party in the community. The ruling class had very clear ideas on the benefits of this. Lloyd George and Stanley Baldwin made it clear that they wanted the Labour Party incorporated within the State machine of parliamentary politics. Their view was that this would add to the stability of the State by bringing in the moderate elements and leave the radicals on the 'outside'. In this way trade unions and the Labour Party became essential for the smooth running of capitalism from 1920 until 1975, a role which they happily played.

But later the situation changed completely and from 1975 onwards the unions and the Labour Party came under increasing attack in Britain.

In the 1980's the powers of the unions were severely limited as capitalism moved into a new phase, where the co-operation of the labour movement was no longer required. Now in the new conditions of capitalism, and its present economic crisis, the ruling class have gone back to their 19th century methods where negotiation and co-operation have no place in their plans. They are in such trouble that they know they are going to have to impose new conditions on the working class both at work and in the community.

This need of the ruling class has found its political expression in a philosophy called "The New Right" in the USA and the UK. In essence, this return to the ideas of the 19th century with the emphasis being on the survival of the fittest, and enterprise. When the British ex-Prime Minister, Margaret Thatcher, said she did not believe in 'society', she meant this; that society was going to be transformed into a battle for survival bringing a new age of barbarism.

The response of the trade unions and labour movement to this attack has been to collapse and take up the new rights' ideas, calling this 'the new realism'. This collapse by the leadership of the labour movement has happened despite the bitter struggles of workers at the shop floor level. Not surprisingly we do not look to the unions to deliver a better way of life for our class. Capitalism must, and will be fought in the workplace (at the point of production as it's sometimes called), but the unions will not be the tool.

After World War Two

The Second World War was again a competition between capitalists; the fascist 'Axis' and the 'Allies'. For both it was also a solution to the economic crisis of the depression guaranteeing a high return of profit. The English socialist William Morris made the perceptive observation that:

"War is the natural and healthy state of capitalism. Both war between individuals and war between countries,"

For the USA, World War Two saved the day. In 1940 before they entered the war, military spending stood at 3.2% of the Gross National Product (GNP), note that the GNP is simply the value of everything including services produced by a country. In 1943 it stood at 40% of the GNP, with profits reaching unprecedented heights. Military production still dominates the USA economy because of the 'Cold War' with the Soviet Union. In 1988 the Pentagon awarded $142 billion in defence contracts. This economy is based on war, as we pointed out earlier, war is good for capitalism as it consumes lots of money (capital) and returns high profit. This is one of the reasons that the Gulf War, and before it, Vietnam started.

After World War Two the world was carved up again between the victors. Fascism and capitalism are two sides of the same coin. There were many people who felt that it was a fight against fascism and fought with great courage and sacrifice, which should not be sneered at by us. Many of our families still bear the scars. However the war was a conflict between capitalists and not a war to end capitalism itself.

The spread of international capitalism leapt forward again with the aid of imperialism - that of the USA and USSR particularly. The 1950's and 60's saw the expansion of ever larger firms around the world like Exxon, BP, ITT, Glaxo, Ford, Proctor and Gamble etc. These large international companies came to be called multi-national on account of the fact that they operated across different countries on a global scale. They came to have their own economic and political ambitions and were able to exert enormous pressure on individual countries. The emerging independence movements in Asia and Africa had to come to terms with these multinationals who controlled the markets for their domestic produce and resources.

Although these multinationals have their own ambitions, they do identify with certain nation-states to benefit from the political and military support they can give. Still, the idea of a patriotic capitalist is a joke. During the Falklands/Malvinas war Lloyds Bank, which had a large interest in Argentina, traded there as normal. During the First World War the khaki dye for British Army uniforms was bought from Germany and during the bitter Iran/Iraq war in the 1980's both sides continued dealing and swopping oil credits on the international market.

Consumerism and Imperialism - After World War Two

After World War Two the capitalist victors on the allied side faced a set of problems; What were they to do with the huge amount of capital accumulated from the profits of five years of a world-wide war? And how were they going to manage the enormous productive capabilities and technology that they now owned?

Their solution was dictated by the capitalist principles of self preservation and increased profit. In practice this resulted in consumerism in the industrialised world and imperialism in the Third World. This, together with the application of Keynes's economics, bought more time for capitalism - about another twenty-five years until the end of the 1960's.


This was the method they found to use the means of production and technology that they controlled. Essentially it was the production of more of everything, and more and more exotic and luxury products. Where no market existed for goods they were created through the increasingly powerful and sophisticated media industry of TV, radio and newspapers. We became the market for this consumerism, and in turn the workforce to produce the products, which sums up nicely the essential cycle of capitalism. The work of economist Thornstein Veblen concentrated on this. He saw consumerism as a way of creating an endless system of social ranking and snobbery which reflected the ruling class's obsession with social standing and privilege. Veblen saw this as an effective way of tying the workforce to the economic system, where everything we own represents our standing in society and the pressure is constantly on us to buy new objects to 'move up'.

A classic example of this process was the massive growth in car ownership that continues to this day. This was pushed very strongly by the interested parties; car producers, steel firms, engineering firms, civil engineers, roadhauliers etc. A perfectly good national rail system was destroyed by government decree to force us onto the roads. All that remained was to market the ideas to us, and if you find this hard to grasp just look how much time and money is spent selling cars to us today. This is a classic example of the illusion of the idea of "the Free Market". There is of course no free market, nor will there ever be. What the phrase means is that they are free to exploit us.

Now we are at the advanced stage of consumerism and can look back over forty-five years of what amounts to chaos in human terms. We have traffic jams over one hundred miles long on the motorways, and many of us can walk to work faster than we could drive there! We have thousands of products that we are 'free' to choose from, provided we have the money to pay for them. Meanwhile our basic human needs of good housing, healthcare, food, education, leisure and worthwhile work have not been met.

In the early 1970's some French writers expressed the situation as follows,

"Wage labour itself has been an absurdity for several decades. It forces one part of the workers to engage in exhausting factory work; another part which is very numerous in countries like the USA and the UK, work in the unproductive sector i.e. insurance, banking, advertising, sales etc. The function of this sector is to make sales easier, and to absorb workers rejected by mechanisation and automation, thus providing a mass of consumers, and being another aspect of crisis management. Capital takes possession of all the sciences and technologies: in the productive field, it orients research towards study of what will bring a maximum profit; in the unproductive field, it develops management and marketing"

From "The Eclipse and Re-emergence of the Communist Movement" - by Barrot and Martin

Post War Imperialism

The massive post war economic boom that was built on consumerism in the industrial world of the USA, Japan, Europe etc., was also founded on the continuing direct and brutal exploitation of people and resources in the Third World. Their labour and land is used to produce cheap raw materials for the industrial countries; coffee, tea, cocoa, bauxite, copper, iron, uranium, rice, rubber, wood, cotton and so on. The prices of these raw materials have remained stagnant or dropped in the last ten or twenty years, like tin in the Far East and cocoa in Africa. These areas are also a target for fairly useless exports from the First World; hi-tech armaments, nuclear power, consumer goods e.g. coca-cola and cigarettes.

While people in the First World suffer boredom, depression, unemployment, poor housing and inadequate health care the people of the Third World have all that plus famine and war.

The Present (1960-1990)

At present capitalism has achieved a truly global economy dominated by multinationals and some strong nation-states. All these are controlled by a mixture of rich individuals, financial institutions - and a very highly placed powerful managerial class that governs the large corporations and international co-ordinators of capitalism like the World Bank, IMF and some lesser known groups (Tri-Lateral Commission etc.)

There are factions in this class, who often clash with each other with dire results for our class around the world. (E.g. Saddam Hussein and the Kuwaiti ruling class). But remember, they are united when it comes to doing business and attacking us.


So what conclusions can we come to about capitalism?

  • It is an economic system run purely for profit and in the interests of a small class, the capitalists, and at the expense of the largest class, the working class. The whole of present society is dominated by the needs of capitalism.
  • Our human needs cannot be met by capitalism.
  • Relationships between people are dominated by the ideas and values behind capitalism.
  • Capitalism is not a machine governed by natural laws as Marx tended to suggest. It is a simple economic system run by a group of people who compete fiercely with each other, learn from their mistakes (sometimes) and try to plan ahead. The people who we call capitalists are only partly in control of the worldwide capitalist economy. The rest of the time it follows its own cycle of produce, consume, profit, invest, - produce, consume, profit, invest etc. Capitalism is part machine, part wild beast with the ruling class sometimes controlling it. It is chaos.
  • It is not inevitable that capitalism will die of its own accord. Therefore it should be destroyed and replaced by a way of life that takes as its first principle:

    "From each according to their ability and to each according to their need"
    From "The Communist Manifesto" - Karl Marx

    So that what is produced is not determined by the values of profit and greed, as at the moment. Between these two opposing views of how the productive forces of society should be organised there can be no peace. It is war. For us the prize is a world that will be fit for us and our children to live in, where the abilities, needs and desires of people are fully realised. This way of life has been called anarchism, communism and socialism; the crucial thing is to end capitalism and the social relations that go with it that make our lives miserable.

  • Capitalism is not based on taking account of human needs or the limits of the natural world. It runs according to its own set of simple rules. At times it enters severe crisis of its own making, such as the crisis of over-production, fall of profit, surplus of capital, failure of natural resources and, of course, resistance from us. Capitalism is a young' economic system compared to what went before. Karl Marx tried to show that it was fundamentally unstable according to its own rules, and was substantially correct. Various Left parties have predicted that this or that crisis is the final crisis and have been left with egg on their faces. Capital's managers, the ruling class, try to avoid crisis and try to plan ahead with varying degrees of success. Either way we do not intend to wait around for capitalism to self-destruct. (See Appendix on Karl Marx).
  • Capitalism has no hard and fast creed, dogma, or hereditary leadership. Unlike peculiar religious customs, it can adapt. In essence it reduces all individuals to financial relations with each other. That is to say whether you believe in Christ or Allah, support the Royal Family or Nelson Mandela, the bottom line is; it's how much money you've got in your pocket that allows you to live by buying the next meal, a place to live, or latest consumer goods etc. Everything; sex, rebellion, health, freedom, leisure, all are given price tags. Everything is bought and sold.

So there you have it. Capitalism, it is a system that has done nothing, and continues to do nothing for us except to create the right conditions and instruments to bring about a social revolution. So what are we waiting for?


As we pointed out earlier capitalism is not a stable economic system and regularly suffers crises, which we, the working class, have to invariably pay for in one form or another. Below we briefly describe the problems that capitalism has created for itself, and end by describing how and why, as an economic system it is regularly going to enter crisis of its own creation. We conclude that it is not inevitable that it will die of its own accord and that we must destroy it.

The Problems Facing Capitalism

Profit; in the late 20th century we are faced with a group of very large international companies competing for limited markets. This raises the problem of profitability. The mad thing about capital is that it is totally useless unless it is used or re-employed in making more profit that becomes more capital. But the more capital that is generated, the more the capitalist must try to re-employ it and so on. Eventually the capitalist starts to run out of things to make a profit from and then enters into a crisis, called the 'crisis of over production' by Marx. This is one of the fundamental problems within capitalism and is what makes it so unstable. A fuller description of this is given at the end of this chapter.

Enviroment; a truly world economy that has caused environmental destruction on such a global scale that the managers of capitalism are having to work it into their plans for the future (would you believe that this includes working out the replacement value of the Amazonian rainforest! Its true, the IMF and World Bank have done so).

Restructuring; since the late 1960's capitalism has been undergoing a big re-organisation of its international structure, hence the name. This has many caused problems. Here is a brief description of re-structuring and its main effect. The continuing transfer of basic manufacturing industry from the First World to so-called Second World countries occurs because the drastically lower wages there mean more profit. Some examples include; shoe manufacture to Brazil and Egypt, steel products to China, shipbuilding to Korea, textiles to Singapore and chemicals to India (remember Bhopal?). Coping with the resulting unemployment in the First World is a problem.

The emergence of certain areas in the world, where the control and management of capital on an international scale are becoming one of the central economic activities of the countries concerned. Examples include; the Hitachi corporation in Japan which is an international company in its own right, producing electronic consumer goods and heavy engineering plant, yet makes more profit out of its investment activities than its manufacturing. The same is true of the BMW company of Germany.

This trend is accompanied by a growing computer and information industry that is needed to service the finance sector. A booming service sector also goes with this growth of the wealthy, and not so wealthy, finance workers from yuppies to bank clerks. These countries are becoming effectively the 'management centres' of global capitalism. Their societies are grossly distorted as a result of the enormous growth in this sector and the transfer of manufacturing industry to the Second and Third World. As a result countries like the UK are now very dependant on international finance. The dramatic decline of service industry employment in the South East of England during the recession of the early 1990's is an example of this dependence. Meanwhile the Third World suffers as a result of the resources diverted away from it.

Our French friends have described this growth of "capital management" and its effects;

"The problems caused by buying and selling, by the realisation of the value of the product on the market, create a complex mechanism, including credit, banking, insurance and advertising. Capital becomes a sort of parasite absorbing a huge and growing part of society's total resources in the costs of the 'management' of value. Bookeeping, which is a necessary function in any developed social organisation, has now become a ruinous and bureaucratic machine overwhelming society and real needs instead of helping to fulfil them"

From "The Eclipse and Re-emergence of the Communist Movement." - Barrot and Martin

This, together with severe unemployment due to removal of manufacturing industry is creating a severely divided society compared to the 1945-1970 period in the UK. The prospect of intense, internal unrest is a very real, and for our bosses a very worrying possibility.

In the UK while 'money management' has boomed, the rate of profit returned from manufacturing and industry has steadily declined (profit equals the return on capital invested). Investment in new buildings, manufacturing plant, training and research has tailed off and the British capitalists have survived by drastically cutting the workforce in the last twenty years. Now in 1992 the output of British manufacturing industry is below what it was in 1979. But because of the huge cuts in labour employed the bosses have managed to protect their profit, while their share of the market has declined greatly.

The outlook for British manufacturing industry is not good. Takeovers and asset stripping (selling off resources to raise cash) are helping to put off the day of reckoning. Eventually they are going to have to inflict further cuts on our standard of living through wage cuts (also called inflation) and cuts in State services. At the end of the day it is quite simple. When there is not enough in the pot to go around, the ruling class take what they want and leave us the scraps.

The capitalists also face a constant problem, coping with opposition from the working class and the peasants.

These then are the problems the international capitalist class face, their solution might include war, wage cuts, famine, green fascism and things which we cannot (or would not like to) foresee. But their solution will be dictated by their needs not ours.

The Continuing Crisis of Capitalism - Revolution as the only Solution

To survive, and continue to generate a profit, business is compelled to continually expand, to produce more and more goods. This is due to the fierce and deadly competition created by the capitalist market place. However at no time can the capitalist consider the limits of the market. The idea is to increase their share of it and preferably take it over completely.

Therefore it is inevitable that there will be more of a particular product produced than can be sold at a profit on the market. But no business, industry or national economy exists in isolation, they are linked through the world market. In the past capitalists were able to avoid over-production by expanding beyond national boundaries into new markets i.e. those parts of the world that had pre-capitalist economies. This was achieved through colonialism, whereby the newly developed capitalist States literally seized political power by force from the native populations.

Despite attempts to head off the impending crisis, such as currency devaluations and increasing or decreasing State expenditure, a world recession did arrive in the early 1970's. Industrial production fell by 10% between 1974/75, international trade slumped and millions of workers lost their jobs. In fact since the late 1960's the world capitalist economy has been in a state of permanent crisis. The ruling class will claim, yes, there were recessions in 1974 and 1981 and 1991, but the periods in between have been periods of growth.

Yet if you look at it on a world scale the picture is quite different. All that happened was that the ruling class of the major capitalist countries found ways of hiding the recession. They've made others pay for the crisis; the lowest paid workers in their own countries and the destitute people in countries on the edge of capitalism, the so-called Third World. This they have achieved through the massive use of credit. In order to dispose of their goods the major industrialised countries have lent money on a huge scale.

To keep the illusion of economic prosperity, the major industrialised countries have given credit to less developed countries, so that they'll buy the goods from the West to keep the Western economies afloat. The debts are so large that they can never be paid off, giving the Western lending countries even more control over the Third World economies.

On the domestic front in countries like the UK, the late 1980's economic growth has been brought about by a consumer boom generated by easy access to credit; loans, charge cards, overdraughts etc.

At the same time the USA, in particular, has tried to hold back the recession by embarking on a massive programme of arms production, financed by going into equally massive debt. The USA is the most indebted country in the world, with a domestic debt of $10 trillion and a foreign debt of $700 billion. If you add up the Third World's debts and that of the USA, it is easy to see that there isn't enough real money to repay them, or even pay off the interest on them.

All is not well in the international capitalist economy; maybe this system is really on its last legs. But you can bet that before the ruling class's time is up, they'll bleed us dry. The prospect of wage cuts, inflation, unemployment etc. all mean a massive deterioration in our living standards. A complete collapse of production, where output comes to a halt, is always on the cards, but is by no means inevitable. Unlike certain Lefties we do not believe in the 'natural' collapse of capitalism leading to a new classless society.

Capitalism will continue AS LONG AS WE LET !T! If we are to prevent a massive deterioration in our quality of life, we have only one option; to wage the class war, destroy capitalism once and for all and build a new world, a world of stability, freedom and prosperity for all.

For the working classes of the world the choice is simple. Revolution or barbarism. We choose revolution.