In response to the overproduction of capital, and subsequent profits squeeze, and crisis, capital seeks to introduce labour-saving technologies, and to thereby create a relative surplus population, which causes wages to fall, and profits to rise. So, here, capital accumulation, as intensive accumulation does not lead to higher wages, but the opposite. This is is also why the bourgeois doctrine that it is higher productivity which leads to higher wages is totally false. Higher productivity, causes the demand for labour-power to fall, and so brings about a fall in wages. The demand for labour-power falls, relatively, wages fall, employment becomes more precarious; workers' confidence falls; competition between workers rises; workers organisations go into decline; conservative, individualist, sectionalist and nationalist ideas become more influential. Trotsky describes these movements in The Curve of Capitalist Development and Flood Tide.
“Oscillations of the economic conjuncture (boom-depression-crisis) already signify in and of themselves periodic impulses that give rise now to quantitative, now to qualitative changes, and to new formations in the field of politics. The revenues of possessing classes, the state budget, wages, unemployment, proportions of foreign trade, etc., are intimately bound up with the economic conjuncture, and in their turn exert the most direct influence on politics. This alone is enough to make one understand how important and fruitful it is to follow step by step the history of political parties, state institutions, etc., in relation to the cycles of capitalist development.”
(Trotsky - The Curve of Capitalist Development)
Again arguing against the ultra-lefts, who believed that the crisis was an indication of the final decay of capitalism, and the basis for working-class resistance, Trotsky notes the crude, mechanical nature of such an approach.
“The commercial-industrial crisis of 1920 broke out in the spring and summer, as has been said, at a time when the foregoing political and psychological reaction had already set in inside the working class. The crisis unquestionably increased the dissatisfaction among considerable working-class groups, provoking here and there stormy manifestations of dissatisfaction. But after the failure of the 1919 offensive, and with the resulting differentiation that took place, the economic crisis could not by itself any longer restore the necessary unity to the movement, nor cause it to assume the character of a new and more resolute revolutionary assault. This circumstance reinforces our conviction that the effects of a crisis upon the course of the labour movement are not all so unilateral in character as some simplifiers imagine. The political effects of a crisis (not only the extent of its influence but also its direction) are determined by the entire existing political situation and by those events which precede and accompany the crisis, especially the battles, successes or failures of the working class itself prior to the crisis. Under one set of conditions the crisis may give a mighty impulse to the revolutionary activity of the working masses; under a different set of circumstances it may completely paralyse the offensive of the proletariat and, should the crisis endure too long and the workers suffer too many losses, it might weaken extremely not only the offensive but also the defensive potential of the working class.”
(Trotsky – Flood Tide)
Trotsky then sets out how, as the crisis phase of the long wave cycle that began in 1914, results, during the 1920's, in workers resistance becoming ever more difficult. The 1926 General Strike, was one example.
“With the passing of the immediate danger, capitalism, having artificially created a speculative boom in the course of 1919, took advantage of the incipient crisis in order to dislodge the workers from those positions (the 8-hour day, wage increases) which the capitalists had previously surrendered to them as measures of self-preservation. Fighting rearguard battles, the workers retreated. The ideas of conquering power, of establishing soviet republics, of carrying through the socialist revolution, naturally grew dim in their minds at a time when they found themselves compelled to fight, not always successfully, to keep down the rate at which their wages were being slashed.”
(ibid)
And, likewise, Trotsky then describes how an ending of a period of stagnation, and its replacement by a boom, creates the conditions for workers confidence to grow, for wages to rise, and for their organisations to be rebuilt.
“It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production...
Prolonged unemployment following an epoch of revolutionary political assaults and retreats does not at all work in favour of the Communist Party... In contrast, the industrial revival is bound, first of all, to raise the self-confidence of the working class, undermined by failures and by the disunity in its own ranks; it is bound to fuse the working class together in the factories and plants and heighten the desire for unanimity in militant actions...
We are already observing the beginnings of this process. The working masses feel firmer ground under their feet. They are seeking to fuse their ranks. They keenly sense the split to be an obstacle to action. They are striving not only toward a more unanimous resistance to the offensive of capital resulting from the crisis but also toward preparing a counter-offensive, based on the conditions of industrial revival. The crisis was a period of frustrated hopes and of embitterment, not infrequently impotent embitterment. The boom as it unfolds will provide an outlet in action for these feelings.”
(ibid)
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