“But perhaps it is only a matter of a prolongation of the duration of the cycle. In the early years of world commerce, 1845-47, it can be shown that these cycles lasted about five years; from 1847 to 1867 the cycle is clearly ten years; is it possible that we are now in the preparatory stage of a new world crash of unparalleled vehemence? Many things seem to point in this direction. Since the last general crisis of 1867 many profound changes have taken place. The colossal expansion of the means of transportation and communication — ocean liners, railways, electrical telegraphy, the Suez Canal — has made a real world-market a fact. The former monopoly of England in industry has been challenged by a number of competing industrial countries; infinitely greater and varied fields have been opened in all parts of the world for the investment of surplus European capital, so that it is far more widely distributed and local over-speculation may be more easily overcome. By means of all this, most of the old breeding-grounds of crises and opportunities for their development have been eliminated or strongly reduced. At the same time, competition in the domestic market recedes before the cartels and trusts, while in the foreign market it is restricted by protective tariffs, with which all major industrial countries, England excepted, surround themselves. But these protective tariffs are nothing but preparations for the ultimate general industrial war, which shall decide who has supremacy on the world-market. Thus every factor, which works against a repetition of the old crises, carries within itself the germ of a far more powerful future crisis.” (Note 8, p 489)
Written in 1894, twenty years ahead of WWI, Engels words about the coming industrial war are powerfully prophetic, as are his comments about the even more powerful crisis to come as a result of the heightening of the contradictions, which itself arises from the very changes he describes. Important in understanding the Marxist theory of crisis, however, is what Engels states about the more wide distribution of capital making local over speculation more easily dealt with, and the way the breeding grounds for crises had been eliminated or reduced. This is only possible if you accept the idea that such crises of overproduction are the result of production being expanded beyond the capacity of the market. If crises were the result of some long run tendency for the rate of profit to fall, then its clear that no such elimination or reduction of the basis of crises could occur for the reasons Engels describes.
In fact, though, Engels was wrong about those changes being the cause of the long period of stagnation that we now call the First Great Depression, that ran from around 1865 to 1890. That was just one period of long wave downturn. Engels did not live to see the global capitalist boom that ran for a similarly long period, from around 1890 to 1914-20, and which itself was just one such upswing in the history of capitalism, a cycle we still see today, as since WWII, we have had a boom run from 1949 to 1974, a downturn from 1974 to 1999, and we have been in a new period of boom since 1999.
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