The imperialists' crisis of capital accumulation will soon enter its third decade. Like the preceding period of capitalist expansion, it has stretched across several business cycles of recession and upturn. Its consequences have been and continue to be far reaching:

1. Intensified interimperialist competition
The downward pressure on profit rates intensified price competition among capitalists, including on an international level. This broke down the de facto industrial monopoly held by the U.S. capitalists coming out of World War II.

When the U.S. rulers entered the war they were producing about one-third of the world's manufactures; they emerged less than four years later with that figure having leapt to one-half. That edge in their share of the world market encouraged U.S. capitalists to defer major costly postwar investment in modernization of plant and equipment in industries such as steel and auto. It enabled them to maintain price levels on the world market well above actual production costs, collecting monopoly rents in the form of superprofits.

By the end of the 1960s, however, the monopoly position of the U.S. capitalists had been challenged in one industry after another: steel, auto, farm equipment, electronics, aerospace, computer-related technology, garment, and textile. Initially the U.S. rulers faced increasing competition in the world market primarily from their Japanese, West German, and other imperialist allies. By the 1970s price competition was even growing with industrial capitalists in a handful of semicolonial countries such as South Korea, Hong Kong, Singapore, and Taiwan. Competition for markets in cereal grains and other farm commodities has come not only from imperialist rivals, but also - as a result of the "green revolution" and a reorientation of agriculture toward the world market - from capitalists in some semicolonial countries. Stiffer competition has forced U.S. and other capitalists to bring prices down on both manufactured and agricultural commodities, reinforcing the squeeze on profit rates.

Marx's observation that "it is the fall in the profit rate that provokes the competitive struggle between capitals, not the reverse" has been confirmed once again by the events of the past twenty-five years.(1)

2. Overproduction and excess capacity
This interimperialist competition is sharpening in a world capitalist market plagued by overproduction of commodities and excess industrial capacity....

The capitalists continue to have too much industrial capacity. They are plagued by overproduction of commodities: that is, by more output than they can sell at a high enough profit to justify expanding their productive plant and equipment. The employers have made working people pay the price through mounting work reorganization, speedup, plant shutdowns, and layoffs as they drive along the only road open to them: increasing absolute surplus value (lengthening the workday) and relative surplus value (intensifying labor through speedup and adding so-called labor-saving machinery) as much as the relationship of class forces will permit....

As Marx observed about the history of capitalism: "Since capital's purpose is not the satisfaction of needs but the production of profit... there must be a constant tension between the restricted dimensions of consumption on the capitalist basis, and production that is constantly striving to overcome these immanent barriers. Moreover, capital consists of commodities, and hence overproduction of capital involves overproduction of commodities....

"It is not that too many means of subsistence are produced in relation to the existing population. On the contrary. Too little is produced to satisfy the mass of the population in an adequate and humane way. Nor are too many means of production produced to employ the potential working population. On the contrary.... Periodically, however, too much is produced in the way of means of labour and means of subsistence, too much to function as means for exploiting the workers at a given rate of profit."(2)

3. Declining capital investment in capacity-increasing plant and equipment

Over the past decade there has been a sharp decline in the rate of new investment by U.S. capitalists in capacity- increasing plant and equipment. Factory closings and layoffs have registered the competitive pressures on the rulers to shed less-productive capacity. Large amounts of value have been destroyed in the process. But stagnating profits continue to make it less worthwhile for the capitalists to invest in building new factories and purchasing major new industrial technologies that would expand productive capacity. There has been no extensive preparation by finance capital to draw new labor power in substantial amounts into expanded and modernized sectors of industrial production....

Instead of expanding productive capacity, manufacturing investment during the post-1982 upturn in the business cycle has focused on upgrading and retooling a part of existing plants and equipment.(3) This investment in "labor-saving" technology has resulted, as intended, in brutally labor- intensifying reorganization of work, from meatpacking to paper production. This speedup takes a devastating toll on health and safety, means longer hours for workers who remain on the job, and leads to permanent layoffs for many other workers....

The most important revelation from the October 1987 crash was not what was happening on the world's stock and bond markets, but the destabilizing worldwide impact of what was not happening in the expansion of capital investment in capacity-increasing industrial plant and equipment.

4. Speculative binge and debt explosion
The post-1982 recovery has been fueled by an enormous expansion of fictitious capital. The owners of U.S. corporations have been issuing "junk" bonds to finance an orgy of mergers and takeovers and sinking their capital in a burgeoning variety of paper securities....

Each additional six months that a downturn in the capitalist business cycle is pushed off by these means will be paid for by an even more wrenching shakeout when the next recession hits. Moreover, at this late stage in the capitalists' falling average rate and stagnating mass of profit, any partial crisis - a recession, another Wall Street crash, major crop failures, Third World debt disaster, or bank failure - could initiate a chain of events that would wipe out today's mountain of paper values overnight, bringing a collapse of the markets to buy and sell them. No degree of lowered interest rates by the U.S. Federal Reserve Board or flood of dollars from the Treasury could stem such a plunge. No matter how easy the money comes, capitalists will only put it to use if it can be converted into capital and invested at a sufficient profit....

5. U.S. bank and business failures
Another consequence of the U.S. capitalists' declining profit rate has been registered in the greatest wave of bank and business failures since the Great Depression of the 1930s....

The so-called government bailouts of failing banks and savings and loans institutions are not aimed at protecting the small checking or savings accounts of working people and small business owners. Nor are they intended to prevent foreclosure on the land, buildings, livestock, and equipment of exploited farmers in debt to these loan sharks. The aim is to bail out the wealthy shareholders and bondholders who stand to lose billions of dollars of money capital when these financial institutions collapse....

6. Devastation of semicolonial countries
The toilers of the oppressed countries of Africa, Asia, the Pacific, and the Americas have been dealt the heaviest blows by the sharpening of the imperialists' accumulation crisis over the past decade. These countries, which have inherited economies distorted by centuries of colonial and semicolonial domination, are being devastated by an accelerating transfer of values produced there into the hands of the imperialist ruling classes.

Marx pointed out that interest-bearing capital is always "the mother of every insane form." Thus "debts, for example, can appear as commodities in the mind of the banker."(4)

So it has been with the imperialists' debt offensive against the Third World. Lacking sufficiently profitable ways to invest money capital in expansion of industrial capacity, the capitalist rulers from New York to Tokyo and from London to Sydney have foisted gigantic loans onto governments and groups of capitalists in the semicolonial countries. To the imperialist bankers, these mounting debts appear on the balance sheet as massive assets - a "right" to suck in billions of dollars in interest payments each year from the wealth produced by the labor of workers, peasants, and artisans across the world.

These debts, which take the form of pieces of paper, are actually the registration of a social relationship of forces between the exploiting families of finance capital and their states, and the capitalists and governments of the oppressed countries. The compounding interest quickly outstrips the principal, and the whirlpool of indebtedness drains ever more wealth produced by the toilers in the semicolonial countries. As the interest due mounts, the imperialists bring their enormous power to bear on governments in the semicolonial countries, pressing them to squeeze out funds for payments by imposing more and more severe austerity measures on the workers and peasants: currency devaluations, abolition of price subsidies on food and other necessities, wage cuts, longer hours, speedup, and sharp cutbacks in spending for health, education, and housing....

7. Farm crisis in imperialist countries
A front-page New York Times article in May 1988 made the grotesque claim that "the world's farmers produce vastly more food and other goods than the world can use." In a world where some 10 million people face starvation, hundreds of millions suffer from malnutrition, and hundreds of millions more are ill-housed and ill-clothed, nothing could be farther from the truth. But neither could anything underline so pointedly the consequences both for farmers and all humanity of the intensifying price competition among the capitalists of the major imperialist powers in processing, packaging, transporting, and marketing agricultural commodities....

Working farmers have already been hit by depression conditions. The annual income of more and more of them has been driven below a living wage. Growing numbers have been forced to look for a factory job or other full-time employment to support themselves and their families. And hundreds of thousands have been driven off the land altogether....

Capitalist domination of the distribution and sale of agricultural products turns natural disasters such as a drought into social catastrophes that ruin many exploited farmers and raise food prices for working people. Meanwhile, enormous profits are reaped by the handful of capitalists who own the giant food processing and marketing monopolies and speculate on the commodities futures markets.

The huge government agricultural subsidies and farm-debt bailouts that have received so much publicity in recent years are designed to profit the wealthy owners of the food monopolies, of bonds and bank stocks, and of the biggest capitalist farms....

Both workers and working farmers in the economically advanced capitalist countries are victims of the intensifying interimperialist competition for profits on processed agricultural products. The proceeds from mounting food prices are pocketed overwhelmingly by the capitalists who own the processing, packaging, transport, and marketing monopolies. The rise in the cost of food, which does virtually nothing to raise the income of exploited farmers, is the most regressive tax possible on working people both in urban and rural areas, and both in the United States and worldwide.

In Japan, for example, the capitalist government's restrictions on agricultural imports raise the shelf price of rice, wheat, and beef to between three and six times the world average. The bosses and labor bureaucracy try to convince workers that working farmers are to blame for these high food costs, and in this way hope to weaken workers' understanding of the need for an alliance with exploited farmers.

In Western Europe government price supports now account for nearly 50 percent of annual farm income. As in the United States, these enormous government subsidies benefit finance capital and a handful of capitalist farmers, while the exploited majority find it ever more difficult to make a living on the land. Three-quarters of the farming population in both Europe and Japan have to depend on outside income to make a living.

In most imperialist countries, government agricultural programs also drive farmers to take land out of production, at a time when hundreds of millions of people around the world are desperately in need of food....

8. Declining real wages and accelerating speedup
To counter the deceleration of capital accumulation, the rulers in the United States and other imperialist countries have sought to boost profit rates by increasing their exploitation of the working class. The value of labor power has been driven down in the United States for the first time since the Great Depression of the 1930s. Speedup has squeezed more profits from working people at the cost of health and safety conditions on the job and in society as a whole. The workweek in manufacturing has reached its highest level since World War II....

9. Rising unemployment and growing relative surplus population
The capitalists' falling average rate of profit results not only in "surplus" plant, "surplus" food, and other "surplus" capital and commodities, but also in what Marx described as a "relative surplus population." The layoffs of wageworkers and dispossession of agricultural producers proceed at an accelerating pace and outstrip capitalism's capacity to absorb this surplus labor power into new employment. The expanding reserve army of the unemployed becomes a source of pressure used by the capitalists to intensify the labor and hold down the wages of employed workers, and to increase competition among all workers.

"The over-work of the employed part of the working class swells the ranks of its reserve," Marx explained, "while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital. The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and vice versa, becomes a means of enriching the individual capitalists."(5)...

The coming world depression
The capitalists' falling average rate and stagnating mass of profits have undermined the equilibrium of world capitalism. The October 1987 crash on the world's stock markets signaled the consequences: no longer can the exploiters be confident that a major bankruptcy, loan default, crop failure, bank collapse, deflationary slump, stock market dive, or other partial crisis will be buffered and absorbed by the strength of production, investment, and trade in the broader capitalist economy. Today, at this advanced point in the stagnation of capital accumulation, any of these partial crises has the growing potential to spiral out of control and trigger a worldwide depression and a generalized social crisis.

1. Capital, vol. 3, p. 365. For how these trends have played out since 1988, see the article, "Imperialism's March toward Fascism and War."

2. Capital, vol. 3, pp. 365-67.
3. Spending in 1993 on what the U.S. Commerce Department itself defines as "expansion"-new factories and buildings that require more workers-ran at little more than half the pace as that during periods of capitalist expansion in the 1960s. Once outlays on cost-cutting computer and information processing equipment are subtracted from equipment expenditures (for the period from the March 1991 upturn in the U.S. capitalist business cycle through June 1994), then investment for that period in new, capacity-expanding equipment actually declined 5 percent and spending on the construction or expansion of factory buildings declined more than 25 percent.

4. Capital, vol. 3, p. 596.
5. Capital, vol. 1, p. 789.  
 
 
Front page (for this issue) | Home | Text-version home