Imperialism and World Economy
Chapter 13: War and Economic Evolution
1. CHANGE IN THE ECONOMIC RELATIONS AMONG STATE CAPITALIST TRUSTS INCREASED IMPORTANCE OF AMERICA; ELIMINATION OF SMALL STATES). 2. WORLD ECONOMY AND ECONOMIC AUTARCHY. 3. CHANGE IN THE INNER STRUCTURE OF STATE CAPITALIST TRUSTS DISAPPEARANCE OF INTERMEDIARY GROUPS, GROWTH OF POWER OF FINANCE CAPITAL, GROWTH OF STATE INTERFERENCE, STATE MONOPOLIES, ETC.). 4. STATE CAPITALISM AND SHARPENING OF STRUGGLE BETWEEN STATE CAPITALIST TRUSTS. 5. STATE CAPITALISM AND THE CLASSES.
The war, which was bound to break out because it had been prepared by the entire course of events, could not fail to exercise a colossal influence on world economic life. It has caused a complete change in every country and in the relations between countries, in the "national economies" and in world economy. Together with a truly barbarous squandering of production forces, with the destruction of the material means of production and of the living labour power, together with the devitalisation of economy through monstrous socially harmful expenditures, the war, like a gigantic crisis, has intensified the fundamental tendencies of capitalist development; it has hastened to an extraordinary degree the growth of finance capitalist relations and the centralisation of capital on a world scale. The centralising character of the present war (imperialist centralisation) is beyond doubt. First of all, there is a collapse of independent small states whether of high industrial development (horizontal concentration and centralisation) or of an agrarian type (vertical centralisation); the latter have also absorbed some of the weaker (and similarly backward) formations-which, however, is comparatively unimportant. The independent existence of Belgium, a highly developed country with a colonial policy of its own, is becoming doubtful; the process of a centralising redivision of territory in the Balkans is perfectly obvious; it is to be expected that the tangle of colonial possessions in Africa will be straightened out. On the other hand, we witness a very strong rapprochement (in the form of a lasting agreement between syndicates) of Germany and Austria-Hungary. Whatever the actual outcome of the war, it is already clear (and could have been assumed a priori ) that the political map will be changed in the direction of greater state homogeneity-this being exactly the way in which the imperialistic "nationality states" ( Nationalitätenstaaten ) grow.
If the general tendency of development, only intensified by the war, consists in a further process of centralisation, the war has also considerably accelerated the appearance on the world arena of one of the largest state capitalist trusts, possessed of an unusually strong internal organisation. We mean the United States of America.
The war has placed the United States in an unprecedented, exclusive position. With the cessation of the Russian grain export, etc., to Europe, the demand for American agrarian products has increased; on the other hand, there is a stupendous demand for the products of the war industry of the United States on the part of the belligerent countries." 1) To the United States is also directed the quest for credit capital (foreign loans, etc.). Only recently America was a debtor to Europe; in consequence of the war the situation changes rapidly: America's debts are being repaid, and in the field of current accounts and short term credits America is becoming the creditor of Europe. This growing financial importance of the United States has another no less significant side to it. The secondary American states used to import capital from Europe, mainly from England and France, while the import of capital from the United States, itself an importer of European capital, was of little importance. During the war, however, Canada, Argentina, Panama, Bolivia, and Costa Rica have placed their loans not in Europe but in the United States. "The American countries have received small sums, but what is characteristic in this transaction is the fact that the enumerated countries had usually been clients of the London market. Thus New York has replaced London for the time of the war and has, as it were, given impetus to the realisation of the financial section of a Pan-American programme. 2) The continuation of the war, the payments for war orders and loans, later the immense demand for capital in the post-war period (when the reconstruction of fixed capital will have to be undertaken, etc.) will increase the financial importance of the United States still more. It will hasten the accumulation of American capital; it will widen its sphere of influence in the rest of America, and will rapidly make the United States a prime factor in the world struggle for markets. 3)
The example of the United States of America shows how a large state capitalist trust grows and becomes consolidated, how it absorbs countries and territories formerly dependent upon Europe. Simultaneously with the extension of America's world connections, we witness a highly intensive progress of "national consolidation." Stronger still are the "nationalising" tendencies inside of the belligerent groups: international commodity exchange has been disrupted, the movement of capital and labour power from one belligerent country to the other has ceased, nearly all relations have been severed. Within the boundaries of "national" economy (of which the best example is Germany, for Germany is cut off from the rest of the world most completely) there goes on a hasty redistribution of productive forces. This relates not only to the war industry (it is a well known fact ,that even piano factories in Germany have been adapted to new tasks, namely, they manufacture shells), but also to foodstuffs and agriculture in general. Thus the war has unusually intensified the tendency towards economic autarchy, towards transforming the "national" economy into a self-sufficient whole, more or less isolated from world connections. Does it follow, however, that this tendency will continually prevail, that world economy will be split up into a number of independent parts entirely isolated from each other? So, or almost so, does Utopian imperialism think. The ideologists of imperialism strive towards a state of affairs where a country produces everything "by itself," where it "does not depend upon foreigners," etc. Let the country acquire the necessary "economic supplements," let it secure for itself the sources of raw material, and the task, they say, is achieved. Such arguments, however, will not stand the light of criticism. The imperialist gentlemen completely forget that the annexationist activities they pursue imply the growth of economic world connections, the expansion of capital and commodity export, the increase of raw materials' import, and so forth. Thus, from a certain point of view, the policy of imperialism contains a contradiction: the imperialist bourgeoisie must, on the one hand, develop world relations to a maximum (remember the dumping policy of the cartels), on the other hand, it erects a tariff wall between itself and the world; on the one hand it exports capital, on the other it cries over foreign supremacy; in a word, on the one hand it internationalises economic life, on the other hand it strives with all its might to bottle it up within "national boundaries." Still, notwithstanding all obstacles, the basis of international connections keeps on growing, hence Felix Pinner is perfectly right when he says:
Remembering that the unusual expansion of foreign trade took place in the period of the most decisive nationalist economic policy, we must assume that the war, and the political sentiments of the great powers called forth by the war, will destroy international relations as little as this was hitherto done by the seclusion tendency [ Absperrungstendenzen ]. 4)
While the war is going on, the disappearance or the weakening of economic connections in one place is accompanied by their growth in another. The dominant rôle played by the Germans in Russia has been discontinued, only to give place to the dominant rôle of the Entente powers. Nor is this all. We must remember that the regulative principle of capitalist activity is the accumulation of profits. War is one of the "business operations" of the modern bourgeois; once it is over, he is as eager as of yore to establish old connections (not to speak of contraband operations during the war itself). Capitalist interest imperatively dictates these steps. The international division of labour, the difference in natural and social conditions, are an economic prius which cannot be destroyed, even by the World War. This being so, there exist definite value relations and, as their consequence, conditions for the realisation of a maximum of profit in international transactions. Not economic self-sufficiency, but an intensification of international relations, accompanied by a simultaneous "national" consolidation and ripening of new conflicts on the basis of world competition-such is the road of future evolution.
Thus if the war cannot halt the general development of world capital, if, on the contrary, it expresses the greatest expansion of the centralisation process, the war also influences the structure of individual "national" economies in such a way as to intensify centralisation within the limits of every "national" body and, while wasting productive forces on a colossal scale, it organises "national economy" in that it places it more and more under the combined rule of finance capital and the state.
In its influence on economic life, the war in many respects recalls to mind industrial crises, differing from the latter only by a greater intensity of social convulsions and devastations. Those devastations express themselves economically, first of all, in the dying out of the middle strata of the bourgeoisie--a process that goes on also during industrial crises. When markets are lost, entire branches of production perish; due to the absence of a solvent demand, connections hitherto firmly rooted are disrupted, the entire credit system is shaken, etc. Outside of the workers, however, the most afflicted elements are the middle strata of the bourgeoisie: they go bankrupt first of all. Large-scale cartel industry, on the contrary, does not feel unhappy at all. It is easy to gather abundant statistical material to illustrate the rise in the profits of a whole series of the largest enterprises, particularly such enterprises as are close to army deliveries, i.e., in the first place enterprises in the sphere of heavy industries (so-called "military profits"). In spite of the fact that the sum total of surplus value produced does not grow (on the contrary, it is diminishing, due to the fact that a vast number of hands are diverted to the army), the profits of the large-scale bourgeois groups keep on growing. This goes on to a large extent at the expense of the profits of other, small and uncartelised, groups of the bourgeoisie. (This increase in profits is, on the other hand, explained by the rise in the value of paper securities as a draft on the future.) Where there is a colossal expenditure of productive forces, where the fixed capital of society is being "consumed," 5) there is evident a shifting of groups and a relative growth of the large-scale bourgeois categories. This tendency will not be ended with the war. If the large-scale bourgeoisie defends and fortifies its position during the war, the post-war gigantic demands for capital will facilitate the rapid growth of large-scale banks, and consequently the rapid growth of centralisation and concentration of capital. A feverish process of healing the wounds inflicted by the war will ensue: reconstruction of destroyed or wornout railways, shops and factory plants, machines and apparatus, rolling stock in the field of transportation, etc.; not the least among these activities will be the mending and extending of the military state apparatus. This will increase the demand for capital to a very high degree, and will strengthen the position of banking trusts. 6)
While the finance capitalist groups are becoming stronger, there has increased tremendously the interference of the state in economic life. 7)
Under this head comes the formation of state (production and trade) monopolies; the organisation of so-called "mixed enterprises" ( gemischte Betriebe ) where the state or the municipalities are partners to the enterprise, hand in hand with private syndicates and trusts; state control over the production process of private enterprises (obligatory production, regulation of production methods, etc.): regulation of distribution (compulsory deliveries and acceptance of goods; organisation of state "central distribution offices;" state warehouses for raw materials, fuel, foodstuffs; fixing of prices; bread cards, meat cards, etc.; prohibition of import and export of goods, etc.); organisation of state credit; lastly, state organisation of consumption (communal kitchens). 8)
England has established, besides, state insurance of ocean cargoes, state guarantee of merchants' promissory notes, state payments of sums belonging to English merchants abroad, when they cannot be obtained at the moment, etc. Similar measures have been introduced to a greater or lesser degree by all the belligerent states.
The "mobilisation of industry," i.e., its militarisation, was achieved with least difficulty where the entrepreneurs' organisations, cartels, syndicates, and trusts were the strongest. Those employers' organisations, in whose interests the war is here undertaken, have placed all their regulating apparatus at the service of the imperialist state, to whom they are closely related. They have thus secured the technical-economic possibility of militarising the economic life, beginning with the direct process of production and up to the subtleties of credit circulation. Where industry was organised into cartels, its "mobilisation" assumed grandiose proportions.
"Large sections of economic life ( des Erwerbslebens )," says Mr. Pinner about Germany, "have for decades been very closely united, the character of their activities being almost collective; they have absorbed a large part of the national production and have placed it under single management: these are the cartels and trusts." 9) The aims of industrial mobilisation as well as its significance have been stressed by the English minister, Mr. Lloyd George, when he said on June 3, in Manchester, that the law relative to the defence of the realm gave the government full power over all the factories; that this law made it possible for the government to give precedence to work most urgent; that it gave the government a right to dispose of every factory, every machine, and that were a difficulty to be encountered, the ministry was well supplied with arms to make its orders effective. 10) Similar measures have been adopted also in France 11) and Russia. Aside from direct control of state power over the production of private enterprises, the war has established a number of state monopolies. In England the railways have become state property; Germany has introduced bread, potato, nitrate monopolies, etc., and has a number of others in prospect (this we shall treat later); even the coal industry is turning into a "mixed cartel" where a syndicate co-operates with the government. 12) In all these cases the government directly intervenes in the sphere of production; there is, however, another and very effective governmental intervention through credit relations. Typical for the latter is the "financial mobilisation" and related operations in Germany. Even at the beginning of the war the Reichsbank operated through a series of other large banks; later its activities in this respect were greatly augmented. The so-called "loan banks" ( Darlehenskassen ),as state institutions dependent upon the Reichsbank, soon became a very important factor in the realm of credit. 13) A tremendous importance is attached to internal military loans that are being placed among the public directly by the Reichsbank. Thus the latter, an institution endowed with exceptional importance in the economic life of Germany even before the war, has grown tremendously in importance, becoming as it did a strong centre for the attraction of available portions of capital. On the other hand, it grows also as an institution that finances the ever increasing state enterprises and other state economic organisations. The central banking institute of the government thus becomes the "golden head" of the entire state capitalist trust.
One must not think that this evolution is confined to Germany alone. Mutatis mutandis the same process is taking place in all the belligerent countries (also in the non-belligerent ones, but to a lesser degree). We must dwell here on one question that seems to us of unusual importance, namely, on the question of state monopolies and their future.
War Loans of Six Belligerent Countries
Great Britain (in thousands of pounds sterling)* France (in thousands of francs) Russia (in thousands of rubles) Italy (in thousands of lira) Germany (in millions of marks) Austria-Hungary (in millions of crowns)
3.5% loan, Nov., 1914 350,000 Bank of France loans 7,000,000 5% loan, with obligatory discount at State Bank 2,650,000 4.5% loan, Dec., 1914 1,000,000 5% loan, Sept., 1914 3,492 5.5% loan, Nov., 1914 2,300
3% bonds, Mar., 1915 33,600 Loans of France's Allies, discounted by treasury 530,000 5% loan, Oct., 1914 500,000 5% loan, July, 1915 1,000,000 5% obligation, Sept., 1914 1,000 6% loan, Nov., 1914 1,170
4,5% loan, July, 1915 585,000 3.5% loan, July, 1914 500,000 5% loan, Feb., 1915 500,000 Loans from Banca d'Italia 1,216,350 5% loan, Feb., 1915 9,103 5.5% loan, May, 1911 2,780
5% American loan, Oct., 1915 50,000 Bonds 7,871,000 5,5% loan, May, 1915 1,000,000
5% loan, Sept., 1915 12,101 6% loan, June, 1915 1,124
Treasury Notes 214,000 Obligations 2,241,000 4% series, Aug., 1914 300,000
Treasury Notes 4,304 6% loan in Germany (Gross), Nov., 1914 248
English loans 1,250,000 4% series, Mar., 1915 300,000
Same, July, 1915 253
U.S.A. loans 1,250,000 Treasury notes discounted in England 1,248,324
Current debts 5,112
Same in France 234,750
Currency loan, April, 1915 200,000
5.5% loan, Nov., 1915 * 1,000,000
Total 1,232,600 Total 20,642,000 Total 7,933,074 Total 3,216,350 Total 30,000 Total 12,987
* The figures quoted in the table are considerably below the actual ones.
"According to calculations," said Dr. Helfferich in the Reichstag in August of this year, "the general cost of this world war for all its participants must be estimated as equal to some 300 million marks a day, i.e. , to something like 100 billion marks" (Hear, Hear!). "This is such a gigantic destruction and shifting of values as world history has never known." 14) It is needless to say that the figures quoted by the "Marshal of Finance," Dr. Helfferich, give no idea as to the real "general cost of the war," for they speak only of the immediate war expenditures made by the states. However, in this connection we are interested in these particular expenditures, and it will not be out of place to quote a few more detailed figures concerning military loans. The states are also spending part of their ordinary income on the war, still the following figures may give some idea as to the size of the military expenditures. 15) We use the computations quoted in No. 44., Vestnik Finansov for 1915. We must emphasise, however, that the figures here quoted tell us only about the war loans of the six largest states, whereas the number of states involved in the war is twelve. Where such unprecedented expenditures are made, and for no other purpose but for the further destruction of values, the state debt must grow enormously and the financial organisation of the state is entirely deranged. The equilibrium is so seriously impaired that additional sources to replenish the treasury must be looked for, if the colossal expenditures which will remain even after the war (payment of interest on state loans, aid for the families of invalids, etc.) are to be covered. In Germany, to take only one country, the income of the state will have to be increased more than twice. 16) It appears impossible to cover the expenses out of the usual sources of state income (state owned enterprises, direct and indirect taxation), and the states will be compelled to extend their monopolies. The leading circles of the bourgeoisie become more and more reconciled to this idea, for in the final analysis the strength of the state is their own strength. This is what the "scientific" organ of the German banks has to say through the mouth of Dr. Felix Pinner:
The basic differences of opinion which express themselves sharply as to monopolies in general, and one or the other monopoly in particular, have disappeared over night [ über Nacht verschwunden ], and almost everybody agrees that such proposed monopolies as monopolies on alcohol, kerosene, electricity [more precisely: electric current-N.B.], matches, perhaps even coal, salt, potassium, tobacco, and insurance, are near realisation. 17)
Under such conditions the further expansion of monopoly tendencies is very probable. Gas production, as we know, is competing with the production of electric power, consequently a gas monopoly is also probable. More probable still is the expansion of state power over enterprises contiguous upon monopolies. When the coal industry is monopolised by the state, the production of pig iron is affected. Such examples could be quoted in large numbers. The question then arises as to whether all such proposals would not remain on paper, whether they would not encounter the resistance of the bourgeoisie.
We have just indicated the change of tone in relation to state monopolies. Of course, even now there are sub-classes of the bourgeoisie, whose interests are clashing in one or the other respect. It is a fact, however, that economic evolution, fortified at this point by the war, must and does lead to a situation where the bourgeoisie as a whole is more tolerant regarding monopolistic interference of the state power. The basic reason for this change is the ever growing closeness between state power and the leading spheres of finance capital. State and private monopoly enterprises merge into one entity within the framework of the state capitalist trust. The interests of the state and the interests of finance capital coincide more and more. On the other hand, a maximum of centralisation and a maximum of state power are required by the fierce competitive struggle on the world market. The latter two causes on the one hand, and fiscal consideration on the other, form the main factors making for state organisation of production within capitalist society.
The bourgeoisie loses nothing from shifting production from one of its hands into another, since present-day state power is nothing but an entrepreneurs' company of tremendous power, headed even by the same persons that occupy the leading positions in the banking and syndicate offices. The difference is that, under such conditions, the bourgeoisie receives its income, not from the office of a syndicate, but from the office of state banks. On the other hand, the bourgeoisie is gaining from such a shift, since only when production is centralised and militarised, i.e. , organised by the state, can the bourgeoisie hope to emerge victorious out of the bloody combat. Present-day war needs more than mere financial "funding." A successful war requires that factories and plants, mines and agriculture, banks and stock exchanges-everything should "work" for the war. "Everything for the war," is the slogan of the bourgeoisie. The exigencies of the war, and of imperialist preparations for war, force the bourgeoisie to adopt a new form of capitalism, to place production and distribution under state power, to destroy completely old bourgeois individualism.
Of course, not all war time measures will remain after the war. Such measures as bread and meat rations, the ban on the production of a number of commodities, the ban on exports, etc., will disappear with the conclusion of peace. There is no doubt, however, that the tendency of the state to take hold of production will keep on increasing. Co-operation between the state and private capitalist monopolies after the type of "mixed enterprises" will probably be introduced in a number of industries; in military industries, the purely state type of production will probably remain. Cunow very correctly defines the future of the national economies as "domination of banking financiers, growth of international concentration, increase of state control and state enterprises." 18)
The processes of industrial organisation and of the increase in the economic activities of the state raises the general question as to the social meaning of this-to use Professor Jaffé's expression-change in the very principle of the economic structure. So-called State Socialists, whose adherents are recruited mainly from the councils of the German university professors, were the first to feel a rise of spirits. Karl Ballod in full earnestness speaks of the rebirth of Utopia, assuming as he does that state monopolies, etc., by themselves introduce a new structure of production. 19) Jaffé says that the militarisation of economic life differs from Socialism mainly in that the term "Socialism" is connected with the "eudemonistic trend of thought," whereas in war the individual is entirely given to the service of the "whole." 20) In the writings of Professor Krahmann we find a very curious argumentation. The future of the mining industry is thus visualised by the professor:
The present powerful effect of all the measures in support of the state and in defence of the country, introduced by the state power because of military considerations, brings us, in the sphere of mining as well as elsewhere, considerably nearer to State Socialism. The road, however, is not that which, prior to the war, was feared by some, expected by others. This is not internationally diluted but nationally consolidated Socialism. Such a Socialism we now approach. This is not democratic Communism, less so aristocratic class domination, but it is a nationalism that reconciles the classes. Since August 1, 1914, we have been approaching it with gigantic strides, such as would have been formerly considered entirely impossible. 21)
What is that picture of present-day "State Socialism" which appears to be a "change in principle"? From the foregoing analysis the answer seems to follow with irresistible logic: We have here the process of accelerated centralisation within the framework of a state capitalist trust, which has developed to the highest form, not of State Socialism, but of State Capitalism. By no means do we see here a new structure of production, i.e., a change in the interrelation of classes; on the contrary, we have here an increase in the potency of the power of a class that owns the means of production in quantities hitherto unheard of. To apply to such a state of affairs a terminology fit for post-capitalist relations, is not only very risky, but also highly absurd. "War Socialism" and "State Socialism" are purposely being circulated with the direct intention of misleading the people and of covering up by a "good" word a very ungainly content. The capitalist mode of production is based on a monopoly of the means of production in the hands of the class of capitalists within the general framework of commodity exchange. There is no difference in principle whatsoever whether the state power is a direct expression of this monopoly or whether the monopoly is "privately" organised. In either case there remains commodity economy (in the first place the world market) and, what is more important, the class relations between the proletariat and the bourgeoisie. 22)
It follows from the above that (as far as capitalism will retain its foothold) the future belongs to economic forms that are close to state capitalism. This further evolution of the state capitalist trusts, highly accelerated by the war, is reflected, in its turn, in the worldwide struggle among state capitalist trusts. We have seen above how the tendency to turn capitalist states into state capitalist trusts found its reflection in the mutual relations of the states. Monopoly tendencies within the "national" body have called forth tendencies to monopolise territories outside the home state by means of annexations; this has sharpened competition and its forms terrifically. With the further progress of internal centralisation, this acute situation will become more acute by leaps and bounds. Added to this is the rapid narrowing of the free field for capital activities. There is, therefore, not the slightest doubt that the near future will be fraught with the most cruel conflicts, and that the social atmosphere will not cease being saturated with war electricity. One of the outward expressions of this circumstance is the extraordinary growth of militarism and of imperialist sentiment. England, the land of "freedom" and "individualism," has already established a tariff and is organising a standing army; its state budget is being militarised. America is preparing war activities on a truly grandiose scale. The same thing is going on in Germany, in France, in Japan, and everywhere. The period of an idyllic "peaceful" existence has sunk into Lethe; capitalist society is whirling in the mad hurricane of world wars.
It remains for us to say a few words about the future of class relations, since it is perfectly clear a priori that the new forms of capitalist relations cannot fail to be reflected in the situation of the various social groupings. The fundamental economic question is, What will be the fate of the various parts of the "national" income? In other words, the question consists in how the "national" product will be distributed among the various social classes, in the first place how the "share" of the working class will fare. We presume that the process is going on more or less alike in all the foremost countries, and that what is true for "national" economies is true for world economy.
A deep-going tendency towards decreasing real wages must be noted first of all. High prices resulting from the disparity of capitalist production not only will not become lower but, on the contrary, they will keep on rising (we have in mind prices that are distinct from specific "war time" dearth). The disparity between world industry and world agriculture will grow more and more, for we have entered an era of an accelerated industrialisation of agrarian countries. Growing militarisation and wars will immensely tighten the tax press, straining it to the utmost; "everything taxable will be taxed; everything taxed will bear the greatest possible tax burden" says a Russian trade paper. 23) And this is not an empty phrase. Where non-productive expenditures are colossal and the state budget is being reconstructed, increased direct and indirect taxation is inevitable. The mounting cost of living results also from other causes: first, prices are increased due to the increased tariff rates; second, there are monopoly prices in trustified industries; state monopolies in their turn will raise prices for fiscal reasons. The result will be that an ever greater part of the national product will be retained by the bourgeoisie and its state.
The opposite tendency, springing from the working class, will, on the other hand, be confronted with a growing resistance on the part of the consolidated and organised bourgeoisie that has grown to be one with the state. Workers' gains that were a usual phenomenon in the former epoch, become almost impossible. There takes place, not a relative, but also an absolute worsening of the situation of the working class. Class antagonisms become inevitably sharpened. This will take place also for another reason. State capitalist structure of society, besides worsening the economic conditions of the working class, makes the workers formally bonded to the imperialist state. In point of fact, employees of state enterprises even before the war were deprived of a number of most elementary rights, like the right to organise, to strike, etc. A railway or postoffice strike was considered almost an act of treason. The war has placed those categories of the proletariat under a still more oppressive bondage. With state capitalism making nearly every line of production important for the state, with nearly all branches of production directly serving the interests of war, prohibitive legislation is extended to the entire field of economic activities. The workers are deprived of the freedom to move, the right to strike, the right to belong to the so-called "subversive" parties, the right to choose an enterprise, etc. They are transformed into bondsmen attached, not to the land, but to the plant. They become white slaves of the predatory imperialist state, which has absorbed into its body all productive life.
Thus the principles of class antagonisms reach a height that could not have been attained hitherto. Relations between classes become most clear, most lucid; the mythical conception of a "state elevated above classes" disappears from the peoples' consciousness, once the state becomes a direct entrepreneur and an organiser of production. Property relations, obscured by a number of intermediary links, now appear in their pristine nakedness. This being the situation of the working class in the intervals between wall, it will undoubtedly be still worse in war time The Economist , the organ of the English financiers, was perfectly right when it wrote at the very beginning of the war that the world was entering an era of the most strenuous social conflicts.
1) The growth of American export for the first four months of 1915 compared with the first four months of 1914, may be seen from the following figures (in millions of dollars): January, 1914, 204.2; January, 1015, 267.9; February, 173.9 and 299.8 respectively; March, 187.5 and 296.5 respectively; April, 162.5 and 294.5 ( Vestnik Finansov , No. 16). Mr. Pratt, the head of the Bureau of Foreign and Domestic Commerce, characteristically remarked that the country faced a new period wherein the expression "domestic market" would seem archaic compared with the slogan of a world market ( Vestnik Finansov , No, 16).
2) M. Bogolepov: "American Capital Market," in Vestnik Finansov , 1915, No. 39, p. 501. Cf. his articles on the same subject in Vestnik Finansov , Nos. 37 and 38.
3) At the very beginning of the war, Kautsky, in the Neue Zeit , called attention to the growing importance of America.
4) Felix Pinner: "Die Konjunktur des wirtschaftlichen Sozialismus," in Die Bank , April, 1915.
5) War loans signify nothing but a consuming of the parts of capital that are being worn out; those parts are replaced by paper; the real values in their material form are wasted in a non-productive way by being fired into the air.
6) Cf. Cunow: "Vom Wirtschaftsleben," in Neue Zeit , 33,2, No. 22 ("Der Bank- and Geldmarkt im ersten Kriegsjahr"). Also Dr. Weber: "Krieg and Banken," in Volkswirtschaftliche Zeitfragen ( Krieg and Volkswirtschaft ), Heft 7, 1915, P. 27.
7) In relation to Germany, see Johann Miller: "Nationalökonomische Gesetzgebung. Die durch den Krieg hervorgerufenen Gesetze, Verordnungen, Bekanntmachungen, u.s.w.," in Jahrbücher für Nationalökonomie and Statistik for 1915.
8) Cf. Edgar Jaffé: " Die 'Militarisierung' unseres Wirtschaftslebens," in Archiv für Sozialwissenschaft and Sozialpolitik , 1915, Bd. 40 B, Heft 3.
9) Pinner: "Organisierte Arbeit," in Handels-Zeitung des Berliner Tageblatts , Aug. 23, 1915.
10) We quote from the Vestnik Finansov , 1915, No. 24, p. 518.
11) Cf. Yves Guyot: "Les Problèmes économiques après la guerre," in Journal des économistes , Aug. 15, 1915.
12) Cf. E. Meyer: "Die Drohung mit dem Zwangssyndikat," in Neue Zeit , 33,2, No. 18; also "Die Bergwerksdebatte im Reichstag," in Handels-Zeitung des Berliner Tageblatts , No. 435, Aug. 26.
13) Dr. Weber: Krieg and Banken , p 14.
14) We quote from the Vorwärts of Aug. 21, 1915.
15) Those figures are insufficient also in another respect: the states resort to the printing press, i.e. , they issue paper money in increasing quantities, which is also an internal loan, but without interest. Thetable indicates that up to August, 1915, Austria-Hungary obtained some 13 billion crowns (and since the figures relating to Germany are brought up to, and include, September, 1915, one may assume that the figures concerning Austria-Hungary extend up to October), whereas the military expenditures of the Austro-Hungarian government amounted up to the end of August to nearly 18 billion crowns, and up to the end of September to more than 19 billion crowns. Obviously, there must have been some sources to cover the expenses! There is no doubt, therefore, that the figures quoted in the table are considerably below the actual ones.
16) Cf. Adolf Braun in Neue Zeit , 33, 1, p. 584.
17) Felix Pinner: "Die Konjunktur des wissenschaftlichen Sozialismus," in Die Bank , April, pp. 326-327. On separate monopolies in Germany, see Adolf Braun: "Elektrizitätsmonopol," in Neue Zeit , 1915, Nos. 19 and 20; also Edmund Fischer: "Das Werden des Elektrizitätsmonopols," in Sozialistische Monatshefte , p. 443 ff .; partly Kautsky: "Zur Frage der Steuern and Monopole," Neue Zeit , 1914-15, 1, p. 682 ff .
18) H. Cunow: "Die Weltwirtschaftgestaltung nach dem Kriege," in Correspondenzblatt der Generalkommission der Gewerkschaften Deutschlands , Sept. 11, 1915, No. 37. Cunow arrives at a wholely incorrect liberal conclusion in this article.
19) Karl Ballod: "Einiges aus der Utopienliteratur der letzten Jahre," in Archiv für die Geschichte des Sozialismus und der Arbeiterbewegung , herausgegeben von Grünberg, 6. Jg. Heft I, pp. 117-118.
20) Jaffé, l.c. , p. 523.
21) Max Krahman: Krieg and Montanindustrie , pp. 22-23. The opposite view is maintained by Liefmann (see his Stehen wir dem Sozialismus näher? ). His book is generally directed against illusions; this he does not wish to conceal.
22) Were the commodity character of production to disappear (for instance, through the organisation of all world economy as one gigantic state trust, the impossibility of which we tried to prove in our chapter on ultra-imperialism) we would have an entirely new economic form. This would be capitalism no more, for the production of commodities would have disappeared; still less would it be socialism , for the power of one class over the other would have remained (and even grown stronger). Such an economic structure would, most of all, resemble a slaveowning economy where the slave market is absent.
23) Torgovo Promyshlennaya Gazeta , 1915, No. 217.
Contents | Chapter 12 | Chapter 14
Bukharin Archive
World Economy and Proletarian Socialism
N.I. Bukharin: Imperialism and World Economy
Chapter 14: World Economy and Proletarian Socialism
1. THE CAPITALIST AND THE WORKER AS OPPOSITE POLES OF SOCIAL RELATIONS. 2. CLASS ANTAGONISM OF INTERESTS, AND THEIR RELATIVE SOLIDARITY. 3. LASTING INTERESTS AND INTERESTS OF THE MOMENT. 4. THE SO-CALLED PATRIARCHAL RELATIONS BETWEEN LABOUR AND CAPITAL. 5. THE WORKING CLASS AND THE BOURGEOIS STATE. 6. THE WORKING CLASS AND THE IMPERIALIST POLITICS OF THE BOURGEOIS STATE (RELATIVE FORM OF "SOLIDARITY"). 7. THE WORKING CLASS AND THE WAR. 8. COLLAPSE OF "COLLABORATION" WITH THE BOURGEOIS STATE, AND REGENERATION OF REVOLUTIONARY SOCIALISM.
The first period of the war has brought about, not a crisis of capitalism (the germs of which were visible only to the most penetrating minds of both the bourgeois and proletarian camps), but a collapse of the "Socialist" International. This phenomenon, which many have attempted to explain by proceeding solely from the analysis of the internal relations in every country, cannot be more or less satisfactorily explained from this angle. For the collapse of the proletarian movement is a result of the unequal situation of the "state capitalist trusts" within the boundaries of world economy. Just as it is impossible to understand modern capitalism and its imperialist policy without analysing the tendencies of world capitalism, so the basic tendencies in the proletarian movement cannot be understood without analysing world capitalism.
Capital implies the existence of labour. Labour implies the existence of capital. The capitalist mode of production is a certain relation between people, between social classes, each of which implies the existence of the other. Viewed from this angle, both capitalists and workers are members, component parts, poles of the same capitalist society. In so far as capitalist society exists, there exists also an interdependence of these opposing classes, a mutual dependence, expressing itself in a relative solidarity of interests that are opposed in substance. This "solidarity" of interests is the solidarity of a moment, it is not that lasting solidarity which welds together the members of the same class. Bourgeois political economy, and together with it its "Socialist" followers, present that which is passing, momentary, accidental for the class struggle on a social scale as essential; they do not see the trees for the forest, and they inevitably sink to the rôle of simple satellites of finance capital.
Here is an example. Everybody knows that at the beginning of the capitalist era, when the working class had just begun to emerge and to separate itself from the small entrepreneurs, when so-called patriarchal relations prevailed between master and worker, the latter to a considerable degree identified his interests with the interests of his exploiter.
This identification of interests that are in substance totally opposed to one another, was, to be sure, not suspended in the air. It had a very real basis. "The better the business of our shop, the better for me," the worker of that time used to reason. This reasoning was based on the possibility of raising wages with the increase of the sum total of values realised by a given enterprise.
We find the same psychology in other variations. What, in fact, is, let us say, the so-called "craft ideology" of the English trade unionists? We find here substantially the same idea: our production, they say, our sphere of production, which embraces both workers and industrialists, must prosper before anything else. No interference of outside elements must be tolerated.
In recent times we find an analogy to this purely local patriotism in enterprises with highly skilled labour. Such enterprises, for instance, are the plants of the well-known American pacifist (and, incidentally, war contractor) Ford. The workers are carefully selected for the plant. They receive higher wages, they are granted various premiums and profit sharing under the condition that they be bound to the plant. As a result, the bamboozled workers are "devoted" to their masters.
On a larger scale the same phenomenon may be observed in the so-called working class protectionism with its policy of safeguarding "national industry," "national labour," etc. This ideology permeates a considerable part of the Australian and American workers: "We" ( i.e. , both capitalists and workers), they say, are equally interested in our national industry, for, the higher the profits of our employers, the higher will our wages rise.
In the process of competitive struggle between the various enterprises, their situation is not everywhere the same. Enterprises with highly skilled labour always occupy the first ranks, always enjoy exceptional privileges. Their share in the surplus value that is being produced in society as a whole is disproportionately large, for they receive differential profits on the one hand, cartel rents (as far as we deal with modern times) on the other. Thus a basis is created for a momentary interlinking of the interests of capital and labour in a given production branch, a circumstance which expresses itself in the workers giving capital, not the labour of duty, but the labour of love.
It is perfectly obvious that such a "solidarity of interests" between the capitalist and the worker is of a temporary character, and (from the point of view of what "ought to be") it cannot determine the conduct of the proletariat. Were the workers eternally to hang on to the coat tails of their masters, they would never be able to conduct a single strike, and the employers, bribing them individually, would be able individually to defeat them.
However, because the proletariat has not learned yet to distinguish local and temporary interests from general and lasting ones, it is permeated with such a narrow conception. The latter is overcome only when the class struggle achieves great scope, destroying local bigotry, welding the workers together, and throwing them into sharp opposition as a class to the class of the capitalists. In this way the psychology of the patriarchal period was overcome when the bond of unity between the workers and the master of an individual enterprise was severed. In this way the "craft ideology" of the unions organising skilled workers was overcome.
However, the end of the nineteenth century, which to a large degree destroyed the bond of unity between capitalists and workers, which placed against each other those classes and their organisations as classes and organisations hostile to each other in principle, has not yet destroyed the bond of unity between the working class and the greatest organisation of the bourgeoisie, the capitalist state.
The working class connection with this organisation was expressed in the ideology of workers' patriotism ("social-patriotism"), in the idea of a "fatherland," which the working class is supposed to serve.
After what has been presented above, the material basis of this phenomenon will become clear if we turn our attention to the whole sphere of world economy.
We have seen that the competitive struggle was, by the end of the nineteenth and the beginning of the twentieth century, to a large extent transferred to the foreign markets, i.e. , it became a competition in the world market. Thus the state organisation of capital, the "fatherland," having turned into a state capitalist trust, took the place of the individual enterprise and appeared on the world arena with all its heavy and ponderous apparatus.
From this angle we must first of all view the colonial policy of the imperialist states.
There is an opinion current among many moderate internationalists to the effect that the colonial policy brings nothing but harm to the working class and that therefore it must be rejected. Hence the natural desire to prove that colonies yield no profit at all, that they represent a liability even from the point of view of the bourgeoisie, etc. Such a point of view is being propounded, for instance, by Kautsky.
The theory unfortunately suffers from one shortcoming, namely, it is out and out incorrect. The colonial policy yields a colossal income to the great powers, i.e. , to their ruling classes, to the "state capitalist trust." This is why the bourgeoisie pursues a colonial policy. This being the case, there is a possibility for raising the workers' wages at the expense of the exploited colonial savages and conquered peoples.
Such are exactly the results of the great powers' colonial policy. The bill for this policy is paid, not by the continental workers, and not by the workers of England, but by the little peoples of the colonies. It is in the colonies that all the blood and the filth, all the horror and the shame of capitalism, all the cynicism, greed and bestiality of modern democracy are concentrated. The European workers, considered from the point of view of the moment, are the winners, because they receive increments to their wages due to "industrial prosperity."
All the relative "prosperity" of the European-American industry was conditioned by nothing but the fact that a safety valve was opened in the form of colonial policy. In this way the exploitation of "third persons" (pre-capitalist producers) and colonial labour led to a rise in the wages of the European and American workers.
One highly important circumstance must here be noted: in their struggle for colonies, for sales markets, and markets for raw materials, for capital investment spheres, for cheap labour, not all the "state capitalist trusts" achieve an equal success. While England, Germany and the United States of America forged ahead in their triumphal march over the world market, Russia and Italy, all the strenuous efforts of the imperialists notwithstanding, proved too weak. It was in this way that a few great imperialist powers came to the forefront as pretenders to world monopoly. They have proved, as far as the others are concerned, "above competition."
Economically the situation is this. World surplus value is being divided in the struggle for the world market. As is the case within the framework of "national economy," so also within the boundaries of world economy, the stronger competitor (whose strength is increased by multifarious factors, like the structure of production, the strength of the state militarist apparatus, convenient location due to the presence of "natural monopolies," etc.) receives super-profits, a kind of differential profit (due to the superior structure of production) and a kind of cartel rent (due to the pressure of the militarist apparatus that fortifies monopolies).
Super-profits obtained by the imperialist state are accompanied by a rise in the wages of the respective strata of the working class, primarily the skilled workers.
Such a phenomenon could also be observed in olden times. It was pointed out by Friedrich Engels who referred to the monopoly situation of England in the world market and to the conservatism of the English proletariat that resulted therefrom.
It was on the basis of this relative interest of the proletariat in colonial plunders that its connection with the masters' organisation of the bourgeois imperialist state grew and became strong. In Socialist literature this psychology found expression in the "national" point of view of the Social-Democratic opportunists. This "national wisdom," emphasised on every occasion, signified a complete abandonment of the point of view of revolutionary Marxism.
Marx and Engels viewed the state as an organisation of the ruling class that crushes the oppressed class with blood and iron. They assumed that future society would have no state at all, for the simple reason that there would be no classes. It is true that, for the transition period of proletarian dictatorship, when the proletariat is the temporary ruling class, they most correctly demanded a strong apparatus of working class state power to keep the overthrown classes in leash. Still, their attitude towards the oppressing state apparatus of the bourgeoisie was that of furious hatred, and from this point of view they mercilessly criticised the Lassalleans and other "statesmen." And a connection undoubtedly exists between this revolutionary point of view and the well-known thesis of the Communist Manifesto that the workers have no fatherland.
The Socialist epigones of Marxism have relegated this revolutionary opposition of Marx and Engels to the archives. In its place there emerge the theories of " true patriotism" and " true statesmanship," which, however, are in no way distinguishable from the most ordinary patriotism and the most ordinary statesmanship of the ruling bourgeoisie. Such an ideology was an organic outgrowth of the proletariat's partaking in the "great-nation policy" of the state capitalist trusts.
No wonder if after the outbreak of the great war, the working class of the foremost capitalist countries, chained to the chariot of the bourgeois state power, came to the aid of the latter. The proletariat was prepared for this by the whole preceding development; it was brought to this by its connection with the state organisation of finance capital.
However, the war itself, which could be waged only because the proletariat gave its tacit consent or showed insufficient indignation, has proven to it that its share in the imperialist policy is nothing compared with the wounds inflicted by the war.
It is in this way that there comes the crisis of imperialism and the rebirth of proletarian Socialism. Imperialism has turned its true face to the working class of Europe. Hitherto its barbarous, destructive, wasteful activities were almost entirely confined to the savages; now it thrusts itself upon the toilers of Europe with all the horrifying impact of a bloodthirsty elemental power let loose. The additional pennies received by the European workers from the colonial policy of imperialism-what do they count compared to millions of butchered workers, to billions devoured by the war, to the monstrous pressure of brazen militarism, to the vandalism of plundered productive forces, to high cost of living and starvation!
The war severs the last chain that binds the workers to the masters, their slavish submission to the imperialist state. The last limitation of the proletariat's philosophy is being overcome: its clinging to the narrowness of the national state, its patriotism. The interests of the moment, the temporary advantage accruing to it from the imperialist robberies and from its connections with the imperialist state, become of secondary importance compared with the lasting and general interests of the class as a whole, with the idea of a social revolution of the international proletariat which overthrows the dictatorship of finance capital with an armed hand, destroys its state apparatus and builds up a new power, a power of the workers against the bourgeoisie. In place of the idea of defending or extending the boundaries of the bourgeois state that bind the productive forces of world economy hand and foot, this power advances the slogan of abolishing state boundaries and merging all the peoples into one Socialist family. In this way the proletariat, after painful searching, succeeds in grasping its true interests that lead it through revolution to Socialism.
Contents | Chapter 13 | Chapter 15
Bukharin Archive
Conclusion
N.I. Bukharin: Imperialism and World Economy
Chapter 15: Conclusion
History moves in contradictions. The skeleton of historic existence, the economic structure of society, also develops in contradictions. Forms eternally follow forms. Everything has only a passing being. The dynamic force of life creates the new over and over again-such is the law inherent in reality. Hegel's dialectics, which Marx placed on its feet, is valuable for this very reason that it grasps the dialectics of life, that it fearlessly analyses the present without being disturbed by the fact that every existence hides within itself the germ of its own destruction.
In its mystified form, dialectic became the fashion in Germany because it seemed to transfigure and to glorify the existing state of things. In its rational form it is a scandal and abomination to bourgeoisdom and its doctrinaire professors, because it includes in its comprehension an affirmative recognition of the existing state of things, at the same time also, the recognition of the negation of that state, of its inevitable breaking up; because it regards every historically developed social form as in fluid movement, and therefore takes into account its transient nature not less than its momentary existence; because it lets nothing impose upon it, and is in its essence critical and revolutionary in spirit.
Thus Marx in his foreword to the first volume of Capital . Many years have passed since; we already hear a new future knocking at history's door. Present-day society, which developing productive forces to a gigantic degree, while powerfully conquering ever new realms, while subjugating nature to man's domination on an unprecedented scale, begins to choke in the capitalist grip. Contradictions inherent in the very essence of capitalism, and appearing in an embryonic state at the beginning of its development, have grown, have widened their scope with every stage of capitalism; in the period of imperialism they have reached proportions that cry to heaven. Productive forces in their present volume insistently demand new production relations. The capitalist shell must inevitably burst.
The epoch of finance capital has made all the elements of maladjustment of the capitalist organisation stand out in the boldest possible relief. In former times, when capitalism, as well as its class sponsor, the bourgeoisie, appeared as a progressive force, it was in a position partly to conceal its inner defects by comparing itself with the backwardness and maladaptation of pre-capitalist relations. Large-scale production, equipped with gigantic machines, ruthlessly crushed the handicrafts with their poor technique. This painful process was nothing but the collapse of precapitalist production forms. On the other hand, the very existence of those forms, of those various "third persons" in the capitalist production process, allowed capitalism to extend its power "peacefully," without exposing the limits put to economic evolution by its capitalist shell. This is why the general features of the contradictions inherent in capitalism as such, and forming its " law ," appeared in the sharpest possible form only at a stage of economic development when capitalism had outgrown its swaddling clothes, when it had not only become the prevailing form of the socioeconomic life, but had even become the general form of economic relations, in other words, when it had appeared as world capitalism. It is only now that the inner contradictoriness of capitalism is expressed with dramatic force. The convulsions of the present-day capitalist world that is drenched in blood and is agonised in mortal pain, are the expression of those contradictions in the capitalist system, which in the long run will cause it to explode.
Capitalism has attempted to overcome its own anarchy by pressing it into the iron ring of state organisation. But having eliminated competition within the state, it let loose all the devils of a world scuffle.
Capitalism has attempted to tame the working class and to subdue social contradictions by decreasing the steam pressure through the aid of a colonial valve. But having accomplished this task for a moment, it thus prepared the explosion of the whole capitalist boiler.
Capitalism has attempted to adapt the development of productive forces to state limits of exploitation by resorting to imperialist conquests. But it proved unable to solve the problem even through its own methods.
Capitalism has increased the power of militarism enormously. It has brought to the historic arena millions of armed men. The arms, however, begin to turn against capitalism itself. The masses of the people, aroused to political life and originally tame and docile, raise their voices eves higher. Steeled in battles forced upon them from above, accustomed to look into the face of death every minute, they begin to break the front of the imperialist war with the same fearlessness by turning it into civil war against the bourgeoisie Thus capitalism, driving the concentration of production to extraordinary heights, and having created a centralised production apparatus, has therewith prepared the immense rank: of its own grave-diggers. In the great clash of classes, the dictatorship of finance capital is being replaced by the dictatorship of the revolutionary proletariat. "The hour of capitalist property has struck. The expropriators are being expropriated."
THE END
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