Socialist Party of Great Britain - Capitalism In Crisis - The Anarchy of Capitalist Production.

The Anarchy of Capitalist Production.

Marx’s study of capitalist production and exchange for profit led him to understand that the anarchy of the market; its contradictions and conflicts, lead to periodic crisis with all the social problems market failure entails for the working class; unemployment, loss of homes, social problems like crime, drug abuse and poverty.

The abolition of capitalism and the establishment of Socialism by the working class was Marx’s considered conclusion of the failure of capitalism to meet the needs of all society. He wrote CAPITAL to show why there can never be harmony between the capitalists and workers and why periodically capital accumulation leads to destructive consequences like economic crises rather than the smooth equilibrium hoped for by the economists. He said that capitalism develops in cycles. Capitalism periodically moves through crisis, depression, revival, boom and then crisis again.

Crises”, Marx said, “are never more than momentary, violent solutions for the existing contradictions, violent eruptions that re-establish the disturbed balance for the time being” (CAPITAL VOLUME III, Development of the Laws Internal Contradictions Ch. 15 page 357).

Academic economists, like Evan Davies, do not like economic crises and depressions because it goes against the deeply held but flawed belief that the market is harmonious and self-adjusting. They use the anaemic word “recession” rather than “depression” to give the false impression that capitalism will never return to the 1930’s unemployment which so disfigured a generation of workers.

In the DICTIONARY OF ECONOMICS (Pelican 2004), of which Davis was a co-author, it is stated that a depression has not occurred since the 1930’s while a “recession” is merely two successive declines in gross domestic product. Here political propaganda masquerades as economics.

Yet at the end of September 2008, after the collapse of Lehman Brothers, the nationalisation in the US of AIG by a Republican administration and the problems of HBOS in Britain the word “depression” had taken over the headlines as we were told by media pundits that a return to the 1930’s was on the cards. A poll of workers in the US believed a depression was immanent. The world economy is entering a major downturn in the biggest financial crisis since the 1930s, said the International Monetary Fund (IMF) (CNN 8th 10 2008).

How many were economists who lost their jobs we were not told? As the old joke goes: when your neighbour loses his job, it is called an economic slowdown, when you lose your job, it is a recession, but when an economist or a banker loses his job, it becomes a depression.

When capitalism goes wrong it is not long before Marx appears in the media like Banquo’s ghost. Under the heading “Crisis and Capitalism” (September 17 2008) the TIMES newspaper approvingly quotes Marx:

Capital is money, capital is commodities. By virtue of it being value, it has acquired the occult ability to add value to itself. It brings forth living offspring or, at least, lays golden eggs

Although the TIMES does not give a source for the quotation it came from CAPITAL VOLUME 1; chapter 4 “The General Formula for Capital” page 255 Penguin Edition.

The quotation actually relates to the circulation process of money capital being invested to create more money capital (M-C-M) where an original investment of money brings forth additional money as if by magic. As used by the TIMES editorial the quotation is taken out of context and has no bearing on the “credit crunch”. Marx dealt with credit in the third volume of Capital and his only aim in the first volume was to give a critical account of capitalist production. Clearly the TIMES leader writer had looked for a juicy quote from Marx to make his editorial look good but had no clue to what Marx was writing about. So much for a college degree from a top university.

In fact, the goose that lays the golden egg to which Marx is referring in the above quotation is the working class who produce more social wealth in a working week than they receive in wages and salaries. The golden egg they lay for the capitalist class is surplus value Marx’s explanation for the appearance of money breeding money.

However, it is an indication of the panic engendered by the economic crisis within the ruling class that sees Marx, The Depression, and Capitalism used together in the same TIMES newspaper editorial.

THE DAILY MAIL was also anxious about the political consequences of the Crisis. They had a middle page spread written by Richard Branson entitled “In Defence of Capitalism” (DAILY MAIL 26th September 2008) in which Branson tried to give a defence of a system he clearly did not understand but only got rich from. A few days later in the paper the food critic and film director Michael Winner said that he had absolute faith in capitalism. It is doubtful if his faith will remain when his broker tells him his financial portfolio is now worthless. Faith cannot buy food at smart restaurants particularly when many are now shutting down. Many of the smart restaurants visited by Michael Winner around the City are no longer there. During the last depression many a trendy restaurant went back to being a sandwich bar or charity shop.

The crisis, for Marx, was the decisive feature of the trade cycle because it is a connecting point with the main contradictions of capitalism; the primary contradiction being the restraint imposed by production for profit on the free development of the forces of production.

The productive forces –science, techniques of production, means of production and social labour- are restrained in that they are not being utilised to their full capacities which would require new social relations; ones associated with Socialism. Not hampered by the wages system and commodity production for profit Socialism would allow the forces of production to be developed to meet the social needs of society.

Marx did not offer an apology for capitalism but rather offered a scientific explanation for its conflicts and contradictions. The periodic rise in what he called “the industrial reserve army” of the unemployed, for example, was one of the defining features of an “economic depression” and a consequence of crisis and the problems associated with capital accumulation.

Social labour is part of the forces of production. An economic crisis renders part of this social labour periodically inactive and in large numbers. Failure to introduce or utilise available productive forces is an example of what Marx called “fettering” demonstrable with the occurrence of either persistent employment over trade cycles or intensively during an economic depression. The affect of a depression for the working class is one of hardship and uncertainty.

In the economic textbooks on the so-called business cycle little is said of the consequence for workers who cannot be profitably employed; marriages break-up, there is illness and mental depression, houses are repossessed; there is hardship, there is the ignominy of the unemployment office and the job centre. High periods of unemployment are associated with social alienation; crime, violence and drug and alcohol abuse.

Economic crises have a human cost to the working class. Unemployment often leads to desperation, misery, and loss of self esteem. An unemployed banker recently said that unemployment was similar to bereavement. J. A. Schumpeter, the Austrian Economist, callously called economic crises “creative destruction” (CAPITALISM, SOCIALISM AND DEMOCRACY, 1942, pp.82-85).. There is little creativity in the destruction of people’s lives.

In CAPITAL VOLUME III, Marx stated that crises are “always only momentary and violent solutions of existing contradictions” (CAPITAL VOLUME III, Ch. XV, p. 249) and determine its development. A crisis serves the purpose of periodically reigning in the forces of production through the temporary establishment of unemployment and idle machinery, the destruction or stock-piling of commodities and the imposition of limits on production in accordance with its narrow foundation of commodity production and exchange for profit.

Economic crisis do not eliminate the contradiction between the social character of production and the private-capitalist nature of its appropriation. In WAGES, PRICE AND PROFIT, Marx was to write:”…capitalist production moves through periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis and stagnation” (SWI, p. 440). Crises will continue to occur in capitalism along with all the attendant social problems of unemployment, discomfort and unpredictability while the profit system remains in existence.

Marx often refers to the term “contradiction”. Contradiction, in the Marxian sense, is not used in the same way as formal logic or everyday speech which assumes a fixed time, for example it cannot be simultaneously raining or not raining. Capitalism, as Marx states right at the beginning of CAPITAL, is in “motion”.

It is in the movement of capital accumulation that Marx uses the word “contradiction” emphasizing the web of social conflicts that it entailed. Marx, for example, identified a contradiction in the commodity between its use value, which relates to specific goods and needs, and its exchange value. This basic contradiction is carried through the system of capital accumulation with devastating social consequences.

During the recent crisis the media attributed to Marx the phrase “Capitalism will collapse under the weight of its own contradictions”. He never said it. Marx did not hold to a collapse theory of capitalism. There are those on the capitalist Left who are obsessed with what they believe is a law of the falling rate of profit. They mistakenly believe this is the ultimate cause of crisis and will eventually lead to capitalist breakdown. They are hopelessly naïve First; Marx saw the falling rate of profit as a tendency and offered a number of counter examples. Second, only the conscious and political action of a working class socialist majority could replace the profit system with production for use. Marx was to add in THEORIES OF SURPLUS VALUE that “there are no permanent crises” (VOLUME II, PART II, p. 269).

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Object and Declaration of Principles


The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.