BOOK V: FASCISM
I. FOUNDATIONS OF FASCISM
XXIV. CHRONIC CRISIS
FASCISM is an outstanding political demonstration that the capitalist world is no longer strong and healthy. Although capitalism grew with vigor and promise during the nineteenth century, it has already reached its age of decrepitude. In economics capitalism stifles the forces of production. In social life it reduces the standards of the people to an unbelievably low level. In theory it flies to mysticism and necromantic table-rappings of all sorts. Instead of the old basic capitalist rhythms and patterns prevailing in the pre-war period, the framework clatters convulsively, torn by disintegrating tremors.
Prior to the present, all the contradictions which have ripened since into such monstrous proportions were already paining the social consciousness, although the healthy forces of growth were able to conceal the disease while indeed nourishing it. In the nineteenth century, capitalism went through its cycles of prosperity, boom, panic, depression, revival and prosperity, etc., in which prosperity and boom were the relatively long periods, panic and depression the shorter ones. However, as capitalism advanced, the crises, intensified, affected more countries, the intervals between crises shortened, the effects grew more severe. Gradually prosperity and boom were becoming overshadowed by panic and depression.
The United States furnishes a good example of this development. According to a carefully worked-out chart of the Cleveland Trust Company, starting with the panic of 1837, it was found that, generally speaking, and leaving aside the special causes such as existed in the economic readjustment immediately after the Civil War, panics lasted only a short time, a year or two, and, in the main, did not reduce the business activity below 10 per cent of normal. The crises were separated by intervals of fifteen years which became shortened, by the latter part of the century, to intervals of approximately ten years. Only in the panic of 1893, for the first time, did production fall off 20 per cent from normal, and the depression extend for several years (three to five years). This was the greatest damage suffered during the nineteenth century. In the twentieth century, however, even before the war, the United States witnessed three periods when industry fell from 10 per cent to 15 per cent. The country was again on the verge of a great depression when the European War broke out.
Following the World War came the crisis of 1920-21, which plunged the country into the deepest depression of its history. Production fell off at times 25 per cent, and millions of workers were thrown on the street. That the United States was able to recover relatively quickly was due to the weakened conditions of capitalist Europe and its great demand upon the United States for economic support in its rehabilitation and reorganization. That is to say, the crisis of 1920-21 in the United States was liquidated by the famine, poverty, and breakdown of Europe. No such causes for recovery exist in the present crisis.
The crisis extant today has embraced the whole capitalist world in its throes and is shaking the entire system to its foundations. Already it has gone through several stages. The first was purely economic, from 1929 to 1932. In the second, economics became concentrated into politics. As economic measures used to stave off bankruptcy failed, political expedients were tried. The third phase has witnessed the impossibility of liquidating the crisis within any country by the utilization of internal forces alone. The critical events now becoming universal must inevitably culminate in world war and revolutionary convulsions.
The present crisis is quite distinct from all the others that have preceded it in the sense that it is due to a mutually interacting combination of two distinct sets of forces. On the one hand, it has its roots in the chronic basic crisis in which imperialism was placed ever since the World War; on the other hand, it is the result of the very efforts which allowed capitalism to survive and to stabilize itself after the war. This partial stabilization regenerated all the forces that had existed before the war, but on a higher plane. Had capitalism perished under the advance of the first proletarian revolutionary wave, the present crisis would have been impossible. The forces that defeated the proletarian revolution and that revived capitalist contradictions re-created the cyclical features of the present crisis.
Even from the standpoint of the cyclical aspects only, the present crisis is unprecedented, both in weight and fury. At the same time, the capitalist world has been unable. as previously, to absorb the shock of these cyclical depressions. The blows are harder, and the body has become weaker.
In the discussion of Socialism we have already taken up the economic contradictions and general social antagonisms which, operating even in "good times," lead in turn to "bad times." Now, as in similar periods in the past, the output per worker has increased more rapidly than the total disposable production, thus leading to the discharge of workers even when production is increasing. This increased output per worker is due especially to increased productivity, that is, to the introduction and wide-spread application of the improvements of machinery, etc. The worker, with the same amount of labor power expended, now turns out increasingly large quantities of commodities.
If the accumulation of capital leading to relative overproduction is the- basic cause of any particular cyclical crisis, this overproduction is still further stimulated by the crisis itself. In order to prevent shut-downs, each manufacturer tries to lower the cost of production, that is, still further to rationalize production and to depress the wages of the laborers. It is precisely in the period of crises that new machinery, sweatshops, and over-work become general, and the output per laborer enormously increased. Thus, to the evils of over-work and over-strain is added the misery of an uncertainty of labor.
Ample evidence is available in official reports of the great increase of productivity per man occurring exactly in periods of crisis. The United States Department of Labor reports, for example, regarding the coal mines: "A further significant fact shown in these statistics is that the year-to-year increase in output per man per day has been more rapid in years of depression, i.e., 1930 and 1931, than in the year of more active coal demand, 1929." (*1) The same was stated in regard to the auto-tire industry for 1930-1931: "...especially during the last 2 years, there has been an increase in man-hour productivity, much larger than during any preceding year in the history of tire making." (*2) In fact, the rate of increase in 1931 was nine times that of 1929. The same tendency has existed in all industries.
The crisis itself is brought about by the law of accumulation of capital leading to the contradiction between the increased productivity of the worker and the slower increase of markets, or even decrease of markets. The ingenuity of man is unlimited. His ability to increase his output has steadily progressed. On the other hand, the world is finite. It has a limited number of people and a restricted area. The number of people who can purchase goods so as to yield a profit does not increase with the rate of growth of production or of productivity. Not only does the rate of consumption decrease relative to the rate of production, but now consumption tends, even in absolute figures, not to increase at all, to remain stagnant, and even to decrease. The growing impoverishment of the masses often renders large markets nugatory. This has been especially true since the World War.
The very tendencies engendering crises are accentuated in turn by the crisis itself. The rate of growth of productivity in periods of prosperity has been ascertained to be 4 per cent per year; in periods of depression it has become 7 per cent per year. Precisely at the moment when falling markets create unemployment, workers are thrown out of work all the more rapidly because of the introduction of new machinery. (*3) Periods of crisis are generally periods of complete renovation of machinery and the introduction of even more efficient systems of rationalization than prevailed before. At the same time, the market collapses farther because of unemployment.
In the present crisis, all the harsh contradictory features of the old cyclical crisis have been reproduced on a much higher plane. In 1920-1921, in the United States, during the crisis, production fell off at times to 25 per cent; in the crisis commencing 1929, production at one time went down to 50 per cent, and although by 1936 it has mounted again to almost the same levels as before, in many instances, the number of unemployed in the United States has remained as large as in the deepest period of the crisis, 1932.
The unprecedented violence of the present crisis could be seen from the start, when the cycle was launched with a terrific stock market crash in New York City. In a very short time, industry and trade had fallen to record lows all over the world. The industrial crisis led to a financial crisis, aggravated by the insecure financial positions of the various European governments. Not only large banks began to go bankrupt, but also the governments themselves controlling these banks, especially in those countries which had been defeated in the War. The victorious Versailles powers, enemies of these governments, had to rush in to save them with loans and credits of all sorts in order to bolster up the entire capitalist world. It was too late, however, for Versailles to repair what it had previously impaired. Practically the whole world was forced off the gold standard and a world-wide moratorium for debts declared. This in turn only brought about a further stagnation of business, leading to a political crisis in 1932-1933.
Confining ourselves to the cyclical features of the present crisis, the following new factors can be noted: (1) The crisis has affected the whole world simultaneously, no matter to what degree the various countries may have differed preceding the turn. The crisis has put a definite end to the particular violent vacillations marking the economy of each country, and, with few exceptions, has crashed down upon the production of all of them. This situation is quite different from that before the War, when the cycles, though embracing the whole world, operated in a serial manner affecting one country after the other, rather than all at once. (2) The crisis is of far longer duration, so much so as to become a chronic one. (3) The "hard times" are far more intense and severe in their effects than those heretofore.
In the late nineteenth century, Friedrich Engels had analyzed the changes occurring in the cyclical crises of capitalism, where depressions were tending to merge one into the other. At that time he wrote: "The acute form of the periodical process, with its former decennial cycle, seems to have given way to a more chronic, long drawn, alternation between a relatively short and slight business improvement and a relatively long, undecided depression, both of them differently distributed over the various industrial countries.... is it possible, that we are now in the preparatory stage of a new world crash of unparalleled vehemence?" (*4)
The question that Engels posed then can be answered today. The postwar period of imperialism has amply demonstrated that today the period of prosperity is the brief and ephemeral one. We are now in a period of perpetual panic.
Should the law of accumulation of capital fail to operate as hitherto, the world would be placed in an extreme predicament, for, far from ameliorating the contradictions, this failure would remove the last progressive feature from capitalism. It is an ominous fact that this very tendency is coming to the fore during the present depression. As we have seen, the past crises had at least this justification --- they swept out the old technique and backward economy in favor of better methods. Society progressed through the ruin of the bankrupt.
But what will happen when there is no backward business man to bankrupt, when, as, for example, in the aluminum industry in the United States, there exists a complete monopoly? In this case, when markets are bad, all that the trust does is to close down one of its branches or subsidiary factories. There is here no substitution of a better technique or improvement in quality, but simply a curtailment of the quantity of production. When "good times" return the old plant may be reopened. Here, then, is an extremely sinister symptom of capitalism that tends to become more universal, especially when, with the ever increasing rise in the organic composition of capital, marked by the preponderance of fixed and constant capital over labor (variable capital), it becomes steadily more difficult to throw away the old and introduce the new in monopolist industries. Under such circumstances, technique tends to sink into a Pontine Marsh.
The present crisis has given birth to another unique circumstance of the greatest danger. Up to now, the expropriated petty owner could find a place in the ranks of the active working class. This was apparently a step downward for him, but, in reality, it attached him to a new class imbued with optimism and vigor, a class which could refresh him. Now, however, the ranks of the proletariat are closed to him by the enormous standing army of unemployed. Thus, the doors have been locked before and behind and he is left literally to rot. This decaying mass of humanity, isolated from the active classes, can descend only to the degeneracy of the d’eclass’e, receptive to any adventure that promises to raise him from his desperate plight. He becomes excellent fodder for the fascists, forming the most important bulk of their forces. (*5)
One final phenomenon should be emphasized, namely, the formation of a class of permanently disemployed workers. Some of these disemployed may join with the rotting petty bourgeoisie to enter the ranks of fascism. In the United States, this element will be mostly the native American, skilled worker and employee type unable to adjust itself. To them will be joined the lumpen proletariat and diseased criminal elements. The menacing character of this development is especially marked where these disemployed are formed along race lines. (*6) Under such conditions, the stage is set for the most savage and violent civil wars, civil wars which are capable of assuming, in the United States, truly cyclonic proportions.
The new features of the cyclical crisis that have been enumerated above can be traced to the changed productive relations that have developed in the era of imperialism. In the first place, we have the process of capitalistic rationalization which, with its scientific and systematic attempts to increase the mass and rate of surplus value, has also scientifically and systematically sharpened the economic and social contradictions of the present order. The nineteenth century was a stranger to rationalization. This factor brought the clash more clearly to a head, and all the faster increased production at a geometric ratio, while, even in the best of times, consumption increased but arithmetically. Sooner or later there would have to come a time when so great would become the productivity of society that one country could produce enough for all, and, in one year, sufficient for ten years' use. This time has now come.
The United States alone can produce enough to satisfy Europe's present demand. There is no longer any need for German or English production. Further, its factories are so productive that no longer can three years of depression consume the surplus of seven years' hard work. Now one or two years of capacity production supplies goods it takes eight years to consume. Here is the reason for the chronic character of the depression today.
The new features of the cyclical crisis are also due to the fact that radical structural changes have taken place in world economy, including such matters as the shift of the economic center of gravity from Europe to the United States, the breaking down of Europe, the rise of Soviet economy, the development of Asia, etc. These shifts have permanently disturbed the former balances and equilibriums.
We must emphasize again that the very causes of the crisis are accentuated by the effects. During the depression, rationalization is intensified, the market is still further diminished, the law of uneven development, leading to radical structural changes and shifts, is still further sharpened. Economics becomes transformed into politics which in turn reacts upon economics mutually anastomosing to plunge the world into still greater political convulsions.
The cyclical crisis has been the gravest in history, and, at the same time, never was the world in a weaker condition. These two circumstances have operated mutually to strengthen each other and to drive the crisis into an international affair of unsolvable proportions.
The World War and its aftermath greatly weakened capitalism's power to withstand the blows of the present crisis, shocks which only the more violently arose. Between 1918 and 1929, England, France, Germany, the large as well as the small countries, careened madly from one side to another, from prosperity to crisis, from reaction to revolution. Periods of prosperity or crisis in England no longer corresponded with similar periods in Germany, or those in Germany with events in France, or general conditions in Europe, with those of Asia or of the United States. Each country seemed to function as an independent fragment, dizzily spinning on its own axis towards its inevitable doom. This has been the basic pattern since the World War, while entirely new economic and political equilibria have governed America, Europe, the Soviet Union, and Asia.
Comparative statistics well illustrate the above conclusions. Conditions in the iron and steel industry are good indices of general business conditions. (*7) In 1920, for example, while the United States was falling off in iron and steel production from about thirty-seven million tons to seventeen million, the United Kingdom was falling from nine to four million, Germany was rising from six to almost nine million, and France was advancing as well. In 1923, on the other hand, when the United States had recovered to forty million tons, Germany had fallen to five million, France was still going up, and England had recovered to about seven million. In 1926, the United States remained at forty million, France had gone to ten million, England had dropped to four million, and Germany had risen to eleven million. In 1929, the figures for the United States were 42.6 million tons of iron and steel; Germany, 15.5 million; France, 10.4 million; the United Kingdom, 7.6 million.
In the financial sphere, as a result of the re-division of Europe by the Versailles Treaty and the chaos caused by war and revolution, one country after the other experienced drastic currency crises culminating in Germany in 1923 and in France and Italy in 1925, etc- In 1926 wholesale prices stood as follows (counting 1913-14 as 100): Germany 134.4; Belgium 744; France 718; Italy 603; Poland 105; United Kingdom 148.1; Japan 178.9, etc. Thus in the same year the widest differences were to be noticed in countries in close juxtaposition to each other. By 1929, while prices rose 15 per cent in Belgium, they fell 13 per cent in France, 27 per cent in Italy, 7.2 per cent in the United Kingdom. (*8)
Considering the fluctuations from the aspect of their effects upon the income of the people, we note that in 1924 the number of bankruptcies in the United States was the lowest of the nine years that followed; in Great Britain, on the other hand, it was the highest, while Germany experienced the most violent fluctuations, ranging from a monthly average of 516 bankruptcies in 1924 to 1,003 in 1926, falling to 475 in 1927, and rising to 821 in 1929; in France the figures showed opposite fluctuations or 659 in 1925, 122 in 1926 and 689 in 1927.
In France, despite temporary suspensions at various levels, the cost of living, having leaped up during 1925, mounted steadily from 1927 to 1930; in Italy, it took a drastic drop from 1925; in Great Britain, it showed a steady decline; in Germany, it maintained itself at the same level. In France, wages rose above the slowly dropping cost of living; in Great Britain, they had been below the cost of living. In both Germany and Italy also the cost of living dropped gradually; after 1930 wages dropped at terrific speed. (*9)
Thus, we can safely declare that, as a result of the World War and the revolutions continually shaking the capitalist structure, capitalist world economy was nowhere able to return to the relatively stable equalibria and smooth functionings that had existed prior to 1914. It was as though someone had taken a mighty hammer and smashed the social framework of Europe into fragments.
The crisis has not affected all countries equally. It has fallen upon the backward agrarian countries, such as Spain and the European States in Eastern Europe, even more severely than upon the major industrial countries of Europe. This is even more true of the non-European agrarian countries, colonial and semi-colonial, such as Cuba, Central and South America, India and China, etc., (*10) In every possible way, the industrial country has tried to shift the burden upon the weaker agrarian one. The oppressive political regimes and the general bankruptcy existing in these backward countries have fructified economic difficulties into political explosions.
Thus, to sum up the whole situation, we may declare that, upon the shoulders of this new economic and political situation existent from 1918 onward, the present crisis enters the scene. Superimposed upon the chronic breakdown of world order there now arise the heavy contradictions stemming from the temporary stabilization of capitalism with the arresting of the proletarian revolution. We have, then, a double or combined crisis: first, the general critical situation in which capitalism has been placed since the War, and, also, the unprecedented regular cyclical crisis superimposed upon it. This combination concentrates the economic crisis and transforms it into a political one.
In its desperate attempt to extricate itself from the crisis, the capitalist world has been forced to turn to fascism and rampant adventurism of the most violent character, as illustrated by the recent actions of Germany, Italy, and Japan, fraught with the greatest menace of world war. Although there has been a temporary upturn since 1933, it has become clear that through peaceful methods alone there can be no way out for capitalism. The war danger has become enormously heightened; capitalism stands before a worldwide political crisis of the greatest magnitude, involving the decisive question: To be or not to be.
Loaded upon the natural weakness of world imperialism have been the great structural changes in world economy that have permanently upset the old equilibria, marked by a shift of the economic center of gravity to the United States, by the breaking up of the British Empire, by the dissolution of the natural cohesiveness of Europe and its breakdown, by the rise of Soviet economy and the markets of Asia. These structural movements have been sharply exacerbated by the present crisis which in turn has greatly intensified the uneven development of capitalism.
The United States is now almost equal to all of capitalist Europe and comprises 40 per cent of the capitalist world economy. Besides its own production, American manufacturers directly control production in many countries, and, through agreements and cartels, dominate many industries which they do not control directly. In its evolution, the United States already has reached the stage where, in its exports of commodities, two-thirds are finished and semi-finished, while the imports are moving more and more to raw materials. This is just the opposite to the situation that existed in the nineteenth century. In wealth and income, Europe has slipped behind America, both relatively and absolutely.
The basis for the hegemony of the United States in world affairs rests upon its enormous natural and power resources, its great food supply, the ample raw materials at hand, the exceptional equipment and rationalized technique, the huge home market, the lack of any decisive feudal relationships, the non-exhaustion through war, and finally, the tremendous reservoir of capital in its possession.
As a result of the shifting of the economic center of gravity to the United States, a most severe struggle has taken place between Europe and America generally, and between Great Britain and the United States especially. The European capitalists feel heavily the tremendous impact of the United States. War debts payable to the United States amount to over twelve billion dollars; private loans abroad payable to American capitalists amount to over fifteen and one-half billion more. (*11)
Increasingly has the United States become a dominant part of world capitalism. Up to the twentieth century, America had served as the instrument for the rejuvenation of Europe, as an enormous outlet for Europe's surplus capital and relative surplus population. Had it not been for the Open Door of America, class conflicts in Europe would have matured far earlier and would have led to decisive solutions before this time. Thus, America's growth postponed the ultimate day of reckoning for Europe.
In this respect the United States and Russia have functioned as two powerful reservoirs of reaction, each in its own way. Russian Czarism and the huge Russian army stood ready at the beck and call of the financiers of Europe to crush every democratic and socialist movement in the West. Thus, the breakdown of the Russian system became the goal of every democratic movement. On the other hand, the United States, in depriving Europe of its militant characters, in permitting the masses of Europe to believe that salvation was attainable in the "promised land," offered an outlet for the pent-up streams generated by European contradictions and thus prevented eruption. Under the Russian system, socialism was crushed; under the American system it was dissolved into Liberalism. Both co-operated to save Europe from a workers' rule.
Today, however, America's doors are shut. The tide of immigrants has turned the other way indeed. There is no longer any escape either for Europe or for America. America affects Europe today, not as a liberator, releasing her productive forces and taking away the revolutionists, but as a huge competitor smashing Europe to pieces.
After the World War, the United States again was called upon to save Europe. This time America was forced into an entirely different technique. It had to throw into the fray the whole might of its reserves to save Europe from the proletarian revolution, to send its army against the Soviets, to liquidate many of its war debts. It made fresh loans to the capitalists. It practically gave away war supplies and material then in Europe. It brought into Germany alone four billion dollars for the rehabilitation of Europe, for stamping out revolution. These favors, however, were not granted without political payment. The ruling class of the United States used its favorable position and power to make Europe entirely subservient to its ends, to break up all alliances against it. From now on, each country would have to come to America humbly to beg for funds or for support for its continued existence.
In self-defense, European capitalists struggled to resist the impact of American capitalism. Under French and English leadership, an attempt was made to organize a debtors bloc against "Uncle Shylock." The reactionary French plan of a "United States of Europe" was another such attempt to consolidate the continent. Similarly, many international cartels were formed to meet the growing competition from across the Atlantic; high tariffs were erected to resist American invasion.
That this resistance of reconstructed Europe was successful to some extent is evidenced by the fact that imports from the United States into various European countries fell steadily. (*12) In spite of this, Europe continues to lag far below its former pre-War strength, both relatively and absolutely.
Today the resistance of Europe has taken still more drastic trends. Practically none of the European countries is liquidating its debts to the United States. In consequence of the increased competition, the ratio of the United States to the rest of the world in the production of certain key commodities, such as iron, steel, coal, etc., has steadily fallen, as it has in the total of the world's foreign trade.
However, it must be noted here that the comparative loss in position is not due so much to the fact that other countries have seized the markets belonging to the United States as to the fact that the markets no longer exist and that each country is curtailing imports, pulling in its belt, in its extreme efforts to obtain self-sufficiency and to avoid complete bankruptcy. Resistance to America has been carried out only at the ruinous cost of the lowering of all the levels of living within the nations of Europe.
The fact of the matter is, Europe cannot pull itself together to give battle to the United States. Torn between the United States on the one hand and the Soviet Union on the other, Europe is self-divided, cannot unite itself, must be driven down farther and farther as the tool of this or that historical force. The sole way out for these peoples is through a united states of Europe, precisely what European capitalism congenitally is unable to attain.
As the United States becomes definitely an indissoluble part of world capitalism, world markets and world division of labor, every major disturbance in the Western hemisphere at once rapidly affects the rest of the world, and vice versa. The United States is not a self-contained system. Over thirty articles absolutely necessary in time of war, over one hundred products regularly purchased, are not produced within the United States, but must be imported. Again, of the total wealth of the country, approximately 7 per cent is invested abroad. At the same time, today many countries are practically dependent on the economy of the United States for their very existence, such as Bolivia supplying tin, Peru copper, Brazil coffee, Chile nitrates, Malay Peninsula rubber and tin, Cuba sugar, Japan silk, etc. All these facts show how closely the United States is linked up with the rest of the world. A revolutionary crisis in Europe must rapidly and violently draw in the United States as well.
The structural changes that have occurred in world economy during and since the War have resulted in the growing disintegration of the British Empire. This is partly due also to the terrific pressure that the United States is bringing to bear against Great Britain for world supremacy. It is a struggle for all parts of the world in every conceivable sphere of activity. There can be but one result: In this struggle, the British Empire must continue to give ground and, as it loses its position of world supremacy, it also must begin to disintegrate within. (*13)
Emerging from the World War with a tremendous material loss, both in goods and in men, with an antiquated industrial technique, and with increased competition, Great Britain, heavily in debt, has been unable to regain her former position. Revolts of the colonies (India, China), the industrialization of other countries, the technological shift to means of production which Great Britain proper does not own (e.g., the shift from coal to oil), coupled with the breakdown of Europe after the War and the increased tariff rates all around, all these events further combined to
reduce the power of Great Britain. Added to this was the resistance labor offered to any drastic decrease in its income, and the costly struggles which followed the attempt to lower wages. The British General Strike in 1926 alone cost Britain nearly a billion dollars, though it lasted but nine days.
In the foreign field, Germany, with the aid of the United States, has rebuilt its economic machine to the extent that it is now superior to what it was before the War. Also, the gigantic competition of the United States is driving Great Britain before it, especially in South America and in the Dominions, notably Canada. On the other side, the victory of the workers of the Soviet Union has considerably weakened the position of British capitalism. Finally, in Asia there is above all the increased competition of the rising Japanese imperialism, particularly in textiles.
On top of all this has come the present world crisis which has profoundly affected and weakened the British capitalist system, although the drop in production in foreign trade has not been so great nor so prolonged in Britain as in the United States, and the number of unemployed has not grown so large. Nevertheless, Great Britain is in a far worse position to bear the strain and has not functioned at full capacity at any time since the war. In the best of times there were about three million out of work; this figure has risen lately to six million. (*14) The British public debt is eleven times what it was before the war, and is the highest per capita of any country in the world. At the same time, the government budget has shown a huge internal deficit. Even during prosperity (1924-1929), exports paid for only 69 per cent of its imports; the balance was raised from invisible imports, especially interest from capital invested abroad, which equaled close to a billion dollars a year. However, during the crisis this income, coupled to the moritoria on debts that have to be effected in Australia, South America, etc., has been cut down by half. All of these forces jointly have compelled the government of Britain to take drastic steps for its preservation.
The Bank of England has been forced off the gold standard, thereby making it profitable for other countries to buy from but not to sell to England. A sharper policy of forcing exports has been entered into, leading to dumping. At the same time, debts to the United States have been factually canceled. A bitter trade war has been started between the United Kingdom and Japan. Finally, in self-preservation, Great Britain has been forced to encircle her Empire with a tariff of 10 per cent on non-Empire wheat and meat; this is but one of the methods utilized in an attempt to hold the British Empire together.
Nevertheless, none of these measures can be more than temporary stop-gaps. In innumerable ways the superior industrializations of the United States can undermine and penetrate the Empire tariff. The pressure on the British Empire gradually increases. But British capitalism is not able to deter its rate of disintegration. While it is true that in the British Dominions, Great Britain has been able to retrieve some of the ground lost to the United States after the war, this has been done at great cost and has been more than compensated by the steady loss of ground to the United States and Asia, while in South America the fight rages fiercer than ever; Great Britain attempts to consolidate itself in Argentina, the United States in Brazil.
Political battles occur coinciding with the growth of economic competition. Faced with the loss of Germany and Japan, and with the present formal hostility of the United States and the Soviet Union, (*15) the League of Nations, dominated by Great Britain, has completely broken down as a world instrument of control, and the inevitable military and naval race has begun.
To counter the growth of American influence in Asia, Great Britain has tolerated the partition of China and the hacking away of Manchuria. In reply to the recognition of Russia by the United States, Great Britain has allowed France to bring the Soviets into the League of Nations. As Great Britain loses control over Italy, she finds herself in an increasingly isolated position regarding Europe. The perspective for the British Empire can be only one of further disintegration, adventure, and acute growth of the class struggles. An excellent illustration of the disintegration is the break with Ireland which is steadily assuming major proportions. Another illustration is the abdication of Edward VIII.
The tottering international position of Great Britain has to be accompanied by drastic changes within the country. Taxes on low incomes are increased; the pay of workers and government officials is cut down; social insurance is reduced; heavy consumption taxes are placed on articles needed by the masses, etc. The government itself must move steadily to the Right. Both the national government from above and the Mosley black- shirts from below show definite fascist symptoms in turn, mute evidences of the growing disintegration of the British Empire.
All of these changes bring, at every turn, their own contradictions, such as rioting in Belfast, Glasgow, and London, mutiny in the navy, drifting of labor organizations to the Left, the split with Ireland, adoption of the Statute of Westminster, recognizing the constitutional independence and equality of the Dominions with Great Britain. (*16)
The World War left Europe exhausted, divided between victorious and conquering powers, bound in the straight-jacket of the Versailles Treaty, torn with internal dissensions and civil war, unable to regain its world position relative to Soviet Russia and the United States. For Europe, the world economic crisis has rapidly become transformed into a gigantic political one. The fascization of Mittel Europa, the breakdown of stability, the feverish preparations for war undertaken by desperate sections of the bourgeoisie, and finally, the reopening of all the old sores of the last war and the transformation of the new countries created by the Versailles Treaty into veritable explosion points, indicate that the sole way out for Europe is either violent social readjustment or collapse. A false readjustment has already been started brutally by Germany; the collapse will come later. The victory of fascism has broken down the last semblance of order and stability in Europe.
Most extreme is the Austrian situation. Constantly on the verge of bankruptcy, torn between the ambitions of German and Italian fascism, and the pawn of world diplomatic intrigue, Austria has become a vortex of the capitalist whirlpool in Europe. The victory of Austrian fascism and the destruction of socialism and proletarian organizations have moved the bourgeoisie of Austria step by step farther to the Right. Tied very closely to the economy of Germany without which it cannot live, Austria nevertheless is divorced artificially from that system by the victorious powers. Within Austria the position of the ruling clique has become increasingly embarrassed. Social explosions have followed one upon the other, and nothing but perpetual turmoil and strife can be anticipated until the problem is definitely solved. The capitalist solution lies in the restoration of the old Austro-Hungarian Empire or annexation to Germany, in either case no permanent solution.
In any event, the old Versailles system is no more. The Austrian situation has revealed the antipathetic interests between France and some countries of the Little Entente, and between each of these and Italy. The old Little Entente combination has been factually broken up, and even the Franco-Polish Alliance is threatened with a new counter-alliance between Germany and Poland. All is now chaos and confusion. The new alliances are no longer on the basis of order, but on the order of war. A host of potential explosion points exist in Europe, each one ready to blow up the entire social system.
In the Far East, too, the strain of events has reached the breaking point, as demonstrated by the Japanese adventures in Manchuria and Mongolia. Although seemingly the first to emerge from the crisis and now actually experiencing a great boom, Japan has been wasting her strength through an economy based on inflation and war. Her present prosperity hides the real reduction of national wealth and its loss in unproductive processes. The great increase of exports on an inflationary basis has simply meant that goods have been sold abroad below their real value and at the expense of the masses.
Of all the great powers, Japan least of all has been able to withstand the shock of the world crisis. Her economy was extremely unbalanced and relied mainly upon the export of silk, the production of which occupied 20 per cent of the country's factory operatives and made up about 40 per cent of its exports, a commodity especially hit by the crisis. At the same time, Japan suffered from a great under-production of the means of production. As both exports and imports dropped drastically, especially silk exports to the United States, it became imperative for Japan to end its reliance upon the United States, to find new markets, to develop other commodities, to become self-sufficient in basic materials, in respect to iron and steel and to food. This need was aggravated by the heavy import surplus, the rise in the national debt, and the increased expenses of government. These were some of the reasons compelling Japan to act in China.
There were other reasons, too. Economic pressure had become aggravated by the political situation, both international and national. On the foreign front, Japan had received many defeats. Its alliance with Great Britain had been broken. Its attempts to raise its naval strength above 60 per cent of that of the United States had been frustrated. In China, a huge boycott had been launched against it. In Manchuria, the war lords were marching closer to Nanking. Russia and the United States were winning the markets, and Chinese railways were paralleling the Japanese. Internally, Japanese capitalism was ridden by a Militarist camarilla with a form of government as outmoded as that of Czarism. In the saddle was an extremely reactionary element supporting the chauvinistic regime of the Mikado. This unbridled military chauvinism could only welcome war.
Just as Japanese economy was unhealthy, so was the relationship of class forces inimical to the capitalists. Two big concerns, literally twelve men, controlled practically everything economic in Japan, e.g., 38 per cent of the commercial bank deposits, 73 per cent of the trust properties, etc. On the other hand, the average income per capita was on the level of the poorest countries in Europe.
By 1931, Japan, immediately upon abandoning the gold standard, was able by ruthlessly driving down the masses to make large advances in winning markets. It greatly extended the rationalization of its industry in textiles, for example, by reducing the number of workers running the same machinery by 43 per cent, speeding up all machines, paying wages one-seventh of those of Great Britain, and cutting wages 52 per cent, while stepping up the cost of living 10 per cent. Japan was able to reach first place in cotton textiles, surpassing even Great Britain, and rapidly dominating Asia, increasing its share in India and even in South America. By such aggressive measures, Japan shoved up its proportion of world exports by over 25 per cent.
At the same time and for similar reasons, Japan was forced into its Manchurian adventure from which there was no retreat and no outlet save war. The invasion of Manchuria by imperialist Japan marked a critical moment in imperialist post-war history. It proved again that, under the pressure of the crisis, weaker countries become still weaker and further penetrated by leading powers; debtor countries become further indebted, colonies and semi-colonies still more enslaved, the warfare among the leading powers more intense. The greatly increased political instability is a close indication of how transient and ephemeral the much vaunted "stabilization" of capitalism actually is.
The new aggressive acts by Japan have not been due to a sudden change of policy. On the contrary, they have been but the culmination of carefully laid imperialist plans that date from the Russo-Japanese War. The seizure of Sakhaline, Korea, of various Chinese concessions, of Kiao-chow and the Manchurian Southern Railroad, the all-rounded economic penetration of Manchuria, and the support formerly given the Manchurian militarists, all show that Japan has been but waiting for the proper correlation of forces in order to seize Manchuria outright, as one of her possessions, as she had Korea.
The present crisis has presented an extremely ripe opportunity for action to Japanese militarists, owing to the extreme chaos to which China had been reduced by famine, floods, and constant civil war among the military generals, which desolated the countryside and shattered any centralized unified power. Within the Nanking Government goes on a most corrupt and unprincipled intriguing for power by the various factions, egged on by the great imperialist powers of the world. The struggles of these militarists, both within and against the Nanking Government, have been only the forerunners of open attempts of the main imperialist powers physically to dismember and partition China. Such a partition conceivably would allocate the North of China to Japan, the coast and central parts to Great Britain, and sections of the south to France. Preventing these attempts at dismemberment have been the divisions among the imperialists, especially the opposition of the United States, which, having entered China late, having seized no large territory, yet having a great economic superiority, and burdened with democratic, non-imperialist pretensions, has supported the Nanking regime and temporarily fights for the "open door" policy. The second great force preventing the partition of China has been the revolutionary movement still stirring within.
The failure of the Chinese military leaders to resist Japan by means of war has hastened the dismemberment of China. Already Yunan has been seized by the French, Szechwan by the English Tibetans, and a bid made for Chinese Turkestan. However, the temporary victory of Japan has greatly increased all capitalist rivalries; at the same time, it has intensified the internal crisis in China and the revolutionary movement there. Finally, the temporary victory of Japan has sharpened the antagonisms between that country and the Soviet Union. The seizure of Manchuria and Inner Mongolia now offers imperialism a consolidated basis of attack. It is a thrust to split Siberia, a menace to Outer Mongolia under Soviets, a move against Turkestan, and a threat of outflanking the communist forces within China. Victory by Japan imperils the entire life of the Soviet Union.
Within Japan, the tremendous pressure of the world crisis, the Manchurian war and invasion have greatly heightened all social struggles. The Manchurian war alone has taken up the whole national income of the Japanese government. With 32 per cent of the peasant's income going to the State in taxes, loaded as he is, with a debt of six billion yen and an interest rate rarely below 10 per cent, and chained in a semi-feudal condition, with the workers regimented in barracks and increasingly exploited, with the students unable freely to express their thoughts, Japanese society seethes on all sides with discontent and revolution. On the one hand, fascism is growing rapidly. On the other hand, two thousand strikes in 1935, and thirty thousand political arrests within the past five years attest to the revolutionary vitality of the masses.
These structural changes and shifts in economic and political power are remaking the world, overthrowing the old balances, and creating world wide disturbances. It is these changes that help to aggravate the permanent and chronic character of the present crisis.
Post-war imperialism has thus become an era of permanent crisis, economic and political. As such, it has become an age of violence and an era terminating all social reform. The Marxian theories of polar antagonisms, leading to the breaking down of the system on the top and the impelling of the masses to end the social order from below, seem to be verified completely.
1. Monthly Labor Review, Vol. 36, No. 3, p. 511. (March, 1933.)
2. United States Bureau of Labor Statistics: Bulletin No. 585, p. 24. (July, 1933.)
3. Compare here, too, the general trend described by A. F. Burns (Production Trends in the United States Since 1870, p. 173): ". . . there are substantial grounds for believing that the life histories of industries are becoming shorter."
4. K. Marx: Capitol, III, footnote, pp. 574-575.
5. "A census made in 1934 of heads of families on urban relief shows that about one-third of all were members of the middle class, including skilled workers as middle class." (S. Chase: Government in Business, p. 47.)
6. In America, for example, the overwhelming mass of Negroes are gradually being placed in this category of permanent disemployed. The destiny of the Negro, however, is to turn not toward Fascism but toward Communism.
7. See, National Industrial Conference Board: Chart No. 239, "Road Maps of Industry," Series October, 1930.
8. See, National Industrial Conference Board: Major Forces in World Business Depression.
9. See, for example, League of Nations: World Production and Prices, Appendix III, Table 2 (1933 Series II A, No. 12.)
10. For the terrible effects of imperialism even in normal times see the statement on the depopulation of French Equatorial Africa in S. H. Roberts: History of French Colonial Policy, 1870-1925, I, 365.
11. Spread approximately as follows: Nearly 5 billion dollars to Europe, of which about 4 billion is in Germany; 4 billion to Canada; 5 1/2 billion to Latin America; over 1.2 billion to the Far Fast. Of these investments approximately two-thirds are in government loans and one- third in loans to individual corporations, railroads and public utilities.
12. The share of imports from the U. S. into the United Kingdom fell from 18.6% in values in 1925, to 14.7% in 1930, and to about 11% in 1933. Germany in 1923 imported 19.1% of her total imports from the United States. In 1927 this had fallen to 14.7% and in 1933 to 9%.
13. See, L. Denny: America Conquers Britain.
14. We double the amount totaled by the government as "registered."
15. Although the Soviet Union has now joined the League of Nations, the Russians have never retracted their opinion of the League as a gang of robbers. However, the hostility between the two is being steadily reduced to a mere formality.
16. For the present Constitution of the British Empire see, H. J. Schlosberg: The King's Republics (1929).