Capitalist Crisis, Causes and Consequences – A brief overview.

Today there is no denying the obvious reality of economic crisis. The tendency towards worsening social conditions for the vast majority of the population is universal. Extreme examples such as Greece (at the time of writing) show the future of every State whose capitalist foundations can only provoke the spiral of class antagonism.

Why this crisis has come about is a main focus of this brief introductory article, necessarily broad and relatively simple despite the complexities of the subject, aspiring to put aside non-essentials in order to contribute as a theoretical weapon to catalysing and accelerating the revolutionary awareness of those elements of the working class who seek a solution to an intensifying crisis devastating so many lives. The temptation to extensively quote ‘’old masters’’ like Marx and Engels is resisted but anyone who reads this and is compelled to verify its essential main proposal, that capitalism has inevitably entered an insoluble crisis and the only way out is its revolutionary overthrow will find ample material at the website of the INTERNATIONALIST COMMUNIST TENDENCY (

Amongst the various revolutionary organisations the explanation for the capitalist crisis generally centres on two main issues, the tendency for profit rates to decline and the difficulty in finding markets for the enormous productive capacity capitalism generates.

Generally speaking the earlier works of Marx and Engels tend to emphasise the role of overproduction, glutted markets, and the restricted consumption of the impoverished working class. Every few years the capitalists found themselves unable to sell their goods at prices compatible with further expansion and they had to be dumped cheap or left to rot, companies went under, unemployment rose and wages dropped, eventually resulting in the emergence of ever larger companies who took over the productive capacity and markets of the multiple failed operations and pushed the capitalist system worldwide. Essentially the restriction of overproduction (or under consumption for it is not that capitalism produces more than is required, but it produces more than workers can afford) is the result of the essential feature of capitalist production; the exploitation of workers who create profit solely because of the disparity between their input and their reward in wages which allows them to purchase goods (i.e. the labour of workers). The difference between the two, the labour contributed and the labour consumed by the working class, is the SURPLUS VALUE which is the ‘dirty’ secret of capitalist profiteering.

It is precisely the attempt by the capitalists to maximise surplus value (i.e. unpaid labour, exploitation, profit) which leads them down a path of technical innovation to conquer and expand markets, as well as an incessant drive to lower labour costs, including wages. The result is that ever more quantities of raw materials, machinery, plant (what we call constant capital) have to be purchased and processed yet none of this generates profit which is only created by exploiting living labour, surplus value. The outcome is a pressure for profit rates on investment to decline, and this can manifest itself in various ways, actual decline of profit rates, closure and unemployment, abandoning non-profitable areas of production and stoking of the antagonism between capital and labour as profits and wages are diametrically opposed.

Thus, for those, like ourselves, who emphasise the determining role of the tendential decline in profit rates in bringing on an escalating crisis, overproduction is its outward appearance and visible expression, as well as many other indicators of social malaise. We are all too familiar with, longer hours for some, unemployment for others, growth of poverty and concentration of wealth, rising levels of State debt as it tries to mitigate the ills generated by the capitalist process to no avail.

The above brief outlines are merely touching the surface but the essential message is that the crisis is the inevitable result of the capitalist process and defies all attempts to resolve it without abandoning the capitalist economic framework which generates it. Every palliative, every recovery from the historical sequence of lesser crisis, each growing in magnitude, only serves to create the stage for the next at a higher level, until the crisis which we have before us.

State intervention of every kind, including full State ownership of the means of production (as occurred in the so–called socialist countries where workers remained exploited and surplus value was managed by the State bureaucracy) cannot resolve the problem which persists as long as capitalism does, the problem of extorting the necessary levels of surplus value to continue capitalist expansion. Surplus value may be shifted from one sector to another in an attempt to keep flagging enterprises afloat, but this is only spreading the burden, postponing the collapse of one area at the expense of weakening the whole.

Today the crisis has used up all the means available to hide its devastating effects from the general population. The accumulation of massive State debt, the flight of capital from non-profitable production to all manner of speculative schemes, removal of all obstacles to capital flows, globalisation, mass unemployment, economic dislocation in specific areas, all this has now become a universal crisis where none of the capitalist players can claim to be outside of its grip. And the entire working class is under attack as capitalists resort to cuts on a massive scale in a futile attempt to restore flagging profit rates. The future will only bring worse as long as capitalism is allowed to exist.

Thus it is now possible to speak of an insoluble crisis. This may be a departure from the past study of the capitalist process, but not in the sense that previous capitalist crisis could not have been terminal for the system. Despite bourgeois attempts to rubbish the entire concept, 1917 which saw the beginnings of a world revolution, and was only ever conceived as such by its Bolshevik authors who knew that the necessary outcome of a revolution isolated within the relatively backward confines of ex-Tsarist Russia could only degenerate, posed a very real danger to the entire capitalist edifice everywhere.

However today the outlook for capitalism is far graver than even in the dark days of trench warfare, attrition and mass slaughter for a few metres lost and gained. The current crisis, and here we refer to the crisis opening with the end of the post war boom, approximately the end of the sixties, despite all twists and turns which only postponed the day of blatant and open crisis we now face, is the longest in the history of capitalism. Lenin may have said that there is no economic crisis out of which capitalism cannot eventually extricate itself, but that was at a time when the possible reset mechanism of world war, the only known means to massively and simultaneously devalue a sufficient mass of capital (destruction) was still a definite viable strategy, at least for the victorious side. Now the possibility of successfully conducting a global imperialist war in the sense of coming out of the other side with conditions which will allow a capitalist recovery is extremely unlikely, but such a possibility cannot be discounted in its entirety.

Perhaps it is possible that the horror of imperialist war will allow capitalism a further lease of life but if WW3 is the alternative, then it hardly detracts from the argument of terminal crisis. And just in case anyone seriously prefers to throw the dice of generalised imperialist war, let us not forget that the overwhelming majority scientific opinion is that global warming will unleash forces which will make civilisation impossible if we continue down the path of expanding emissions, a path capitalism cannot avoid. However, for the sake of accuracy let us say that capitalism crisis does offer an alternative; World War or World Revolution. Certainly, although capitalism can only produce various shades of hell, a successful socialist outcome is not totally assured.

This is the perspective that the working class needs to embrace; capitalism can only produce ever worsening conditions for its working class host. That is the essential consequence of the capitalist crisis today, itself the ultimate incarnation of a series of crisis which forced capitalism to destroy all previous economic forms and took the economic struggle to the nightmarish levels of World Wars as States attempted to secure materials, labour and markets for their capitalist backers. If we assume that WW3 would be too devastating to allow for a resumption of capitalist accumulation, capitalism now has nowhere to go other than the limited solution of localised warfare and pauperising and intensifying the exploitation of the working class, thus further undermining its possible markets and stoking the class struggle to a fever pitch. Again discounting another post –war rebirth, (and who seriously wants to prove that point?), this is the final crisis and capitalism has no hope. But humanity does.

The days of reform and the economic struggle for better conditions under capitalism are over as a means for the working class to improve its general condition and inexorably, only one path worth pursuing is left for the working class, the struggle for socialism. Not a socialism which is only a capitalism in disguise, another casualty of the crisis, but a real classless society. Nothing else is possible unless one wants to risk some reversion to the stone age under conditions of nuclear winter.

So let us consider another aspect of the capitalist crisis which does not emphasise the primacy of tendential or actual declining profit rates or the ever mounting difficulty of selling the product of productive forces that expand ‘like gas’. Let us emphasise the class struggle. In the final analysis, this is the determining factor which decides capitalism’s fate. Whether or not capitalism will succeed in dragging us through a long period of mounting social barbarism in a futile attempt to overcome its innate contradictions which produce incremental crisis, environmental devastation, wars, ultimately generalised imperialist war, entirely depends on the capacity of the working class to understand the real nature of the capitalist process sufficiently to put an end to the class antagonism which is capitalism’s essential feature.

Marx wrote that the capitalist crisis is the growing incompatibility of the productive forces – prime amongst which is the working class – and the capitalist relations of production. The working class is the productive force constantly at odds with the capitalist profit drive, a drive which now threatens its very survival. The entire trajectory of capitalism is determined by the capacity of the working class to resist capitalist exploitation, and now, to comprehend its real conditions and overthrow capitalism. The capitalist process sets in motion its own gravedigger, a class constantly forced to defend itself through unified struggle from the insatiable profit drive which allows continued expansion without which capitalist enterprise dies.

Today the extent of the crisis means that the working class cannot use the methods which allowed it to subsist under capitalism. Nor can it cling on to a vision of socialism which simply transfers productive forces from private to State ownership but leaves it powerless and exploited as capitalist expansion is pursued via nationalised or ‘’public’’ property. Public sector and private sector workers face the same capitalist crisis. Methods and ideologies which have allowed two World Wars, staggering levels of human suffering and the threat of the ultimate barbarity of another World War are useless.

The understanding that capitalism is caught up in an inexorable, progressively intensifying crisis necessitates revolutionary consciousness.

Gone are the days of sectional improvements, winning pay rises, reforms etc as a viable strategy for the working class. Time will only allow one direction for the working class under capitalism – worse.

It is absolutely imperative that workers reject the appeals from capitalist lackeys of all stripe for ‘’temporary’’ belt tightening to allow economic ‘’recovery’’. It is an illusion.

The working class has to break with capitalism in all its guises, free market, state, mixed, and equip itself with the understanding that the crisis can only worsen its situation and fight with its eyes open under revolutionary banners.

The COMMUNIST WORKERS ORGANISATION, British affiliate of the INTERNATIONALIST COMMUNIST TENDENCY offers the viable alternative to the obsolete struggle under those political and economic organs, parties and unions peddling the impossible illusion of a better capitalism.


Friday, October 26, 2012


It may be a brief overview but it's beautifully done and clearly stated. "The working class has to break with capitalism in all its guises...and fight with it's eyes open under revolutionary banners." Yes, this is so right and so true! But will we; can we; isn't it somehow too late? Everythin seems so awful just now, and so hopeless. It's hard not to be pissed off and depressed.

This article gives a clear analysis of why capitalism has gone wrong and is wrong, producing 'various shades of hell'. On a crest of enthusiasm for the concept that the only worthwhile struggle is the struggle for socialism, we can be swept along 'under the revolutionary banners'. O.K. However, it is not much good trying to punch a cloud, even when amidst fog. It would, I suppose, be useful to spell out exactly what workers should do, as ICT sees it, in clear practical terms. OK, ICT has been doing that anyway for years ? ICT has been arguing against the activities of the unions, so does that only leave the possibilities of seeking out or forming scattered groups of like-minded comrades, in the absence of an ICT-type party ? And/or trying to persuade workers to leave a union ? Really ? Would to do so lead towards socialism, or to somewhere else?

I think timescales involved are such that there is hope for a positive outcome to this situation, that although we can recognise the currently low level of proletarian response this is not necessarily a permanent fixture and that it is entirely logical and rational and to be expected that the working class will not simply mutely accept the decimation of its conditions and allow itself to be marched off to wars and ultimately imperialist war on a global scale.

In reality the revolutionaries of today do not have the power to seriously influence the outcome, but neither is that a necessarily permanent fixture.

I think that the real solution lies in an escalating wave of class struggle which will not begin on any fine pure revolutionary footing, which may well be initially contained within Trade Union barriers but given the correct general conditions will breach those defense mechanisms and then we the revolutionaries will have some fertile soil in which to sow our ideas.

Meanwhile we continue to identify openings and establish lines of communication as we can, not that there is a totally pre-conceived plan that we can follow to the letter.

Of course we see the expansion of the currently meagre forces of revolutionary Marxism as a priority, and to a great extent the solution lies in the minds of those individuals who are starting to question the validity of going along with the capitalist status quo and its pseudo-solutions which we see as a futile waste of time.

Thank you stevein 7 for the warm and comradely post above.