IV. Industrial Crises Due to Anticipation of War.

Submitted by GrouchoMarxist on May 13, 2012

The necessity for preparing, long beforehand, formidable quantities of war material and accumulations of stores of every description, brings about in all industries shocks and crises from which every one, and especially the working man, suffers to a terrible extent. This fact was to be observed quite recently in the United States.

Every one, no doubt, remembers the industrial crisis that devastated the United States some three or four years ago. In a measure, it is not over yet. Well, the origin of this crisis — whatever may have been said about it by “scientific” economists, who know the writings of their predecessors, but ignore real life — the true origin of this crisis lay in the excessive production of the chief industries of the States, carried on during several years in anticipation of a great European war and of a war between Japan and the United States. Those who spread the idea of these wars knew well the effect that the expectation of such conflicts would exercise in stimulating certain American industries. In fact, for two or three years a feverish energy reigned in extracting all sorts of metals and coal, and in the manufacture of railway plant and preserved articles of food, as well as all materials for clothing.

The extraction of iron ore and the manufacture of steel in the United States reached quite unexpected proportions during these years. Steel is the principal article of consumption in modern warfare, and the United States manufactured it in a fantastical way, as well as those metals, such as nickel and manganese, which are required in the manufacture of various kinds of steel used for war materials. At the same time, the big American concerns vied with one another as to who would speculate the most in gun-metal, copper, lead, and nickel.

The same thing happened with supplies of corn, preserved meat, fish, and vegetables. Cottons, cloth, and leather followed closely. And as each great industry gives rise to a number of smaller ones around it, the fever of a production far in excess of the demand spread more and more. Money-lenders, or rather credit-lenders, who supplied the manufacturers with capital, profited of course by this fever, even more so that the captains of industry.

Then, at a blow, production suddenly stopped, without it being possible to ascribe the fact to any one of the causes to which preceding crises had been attributed. The truth is, that from the day when the great European financial houses were sure that Japan, ruined by the war in Manchuria, would not dare to attack the United States, and that no European nation felt itself sufficiently sure of victory to draw the sword, European capitalists refused to give credit either to those American bankers who kept up over-production, or to the Japanese “Nationalists.”

The threat of an imminent war ceased. Steel factories, copper mines, blast furnaces, dockyards, tanneries, all suddenly slowed down their operations, their orders, their purchases.

It was worse than a crisis, it was a disaster. Millions of workers of both sexes were thrown on the street and left in the most abject misery. Great and small factories closed down. The contagion spread as during an epidemic, sowing terror around.

Who will ever tell of the sufferings of millions of men, women, and children, of broken lives during the crisis, while immense fortunes were being made in anticipation of mangled flesh and the piles of human corpses about to be heaped up in the great battles!

This is war; this is how the State enriches the rich, keeps the poor in misery, and year by year reduces them more and more to subjection.

Now, a crisis resulting from the same causes as the one in the United States will in all likelihood be produced in Europe, and especially in England.

Towards the middle of the year 1911 the world was astonished at the sudden and quite unforeseen increase in English exports. Nothing of consequence in the world of economics led us to expect it. No reason for it has been given, precisely because the only possible explanation is that the orders cam from the Continent in anticipation of a war between England and Germany. As we know, this war failed to break out in July, 1911; but if it had broken out, France, Russia, Austria, and Italy would have been compelled to participate in it. It is evident that great financiers, who supply speculators in metal, provisions, cloth, leather, etc., with their credit, had been warned of the threatening turn relations were taking between the two sea Powers. They knew that both Governments were pressing forward their preparations for war, so they hastened to give their orders, which increased English exports in 1911 beyond measure.[3]

To the same cause is also due the recent extraordinary rise in prices of all provisions without exception, at a time when neither the yield of last year's harvest nor the accumulation of all kinds of goods in warehouses justified the rise. The fact is also that the rise did not affect provisions only; all goods were influenced by it. Orders continued to pour in when no reason whatever, save the anticipation of war, could be brought forward for this excessive demand.

And now it would be sufficient that the great Colonial speculators of England and Germany agree about their share in the partition of Eastern Africa, and to act in concert as regards “the spheres of influence” in Asia and in Africa — that is to say, come to terms over the next conquests — for a sudden stoppage of industry to take place in Europe similar to the crisis from which the United States have suffered recently.

In truth, this reduction began to be felt already at the beginning of 1912. That is why the Coal Companies and the Cotton Lords of England proved so uncompromising towards their workpeople and drove them to a strike. They foresaw a reduction of orders when they had already too great a stock of goods and too much coal piled up around their mines.

When we closely analyze the facts arising from the activity of modern States, we understand to what extent the whole life of our civilised societies depends, not on the facts of economic developments in nations, but on the manner in which various groups of monopolists and privileged men, more or less favoured by the State, react on these facts.

Thus it is evident that the entry into the arena of economics of such a powerful producer in modern Germany, with her schools, her technical education spread broadcast among her people, her youthful high spirits, and her capacity for organisation, of necessity changed the relations between nations. A readjustment of forces was unavoidable. But, owing to the specific organisation of modern States, the adjustment of economic forces is impeded by another factor of political origin: the privileges and the monopolies constituted and upheld by the State.

In reality, modern States are specially constituted in order to establish privileges in favour of the rich, at the expense of the poor. The great financial houses of each nation always lay down the law in all political matters of importance. “What will Baron Rothschild say to it?” “What attitude will the syndicate of great bankers in Paris, Vienna, and London take?” Such questions have become the dominant element in political affairs and in the relations between nations. It is the approval or disapproval of financiers that makes and unmakes Ministries everywhere in Europe. True, that in England there is also the approval of the State Church and of the brewers to be faced; but the Church and the brewers are always in agreement with the great financiers, who take care never to interfere with their partisans' income. After all, as a Minister is but a man who holds fast to his office, to his power, and to the possibilities of enrichment which his post offers to him and to his supporters, it necessarily follows that the question of international relations is nowadays finally reduced to knowing whether the favoured monopolists of a particular State will take such or such an attitude towards the favourites of the same calibre in another State.

Thus, the state of economical forces brought into action is determined by the technical development of diverse nations at a certain time in their history; but the use that will be made of these forces depends entirely on the degree of servitude towards their Government to which populations have allowed themselves to be reduced. The economical forces which could produce harmony and well-being, and give a fresh impulse to libertarian civilisation if they had free play in society, — these forces, being directed by the State, that is to say, by an organisation specially developed to enrich the rich and to absorb all modern progress in order to benefit privileged classes — these same forces become an instrument of oppression, of monopolists, and endless wars. They accelerate the enrichment of the favoured, and they augment the misery and the enthralment of the poor.

This is why those economists who continue to consider economic forces alone, without analysing the limits within which their action is circumscribed nowadays — without taking into account the ideology of the State, or the forces that each State necessarily places at the service of the rich, in order to favour their enrichment at the expense of the poor — this is why such economists remain completely outside the realities of the economic and social world.