But it was the Soviet Union that collapsed, not capitalism.  Was there perhaps a fundamental error in Marxism?

Abstract

Marxism is faced with dual challenges: the Collapse of the USSR and the relative stability of US capitalism and its decade-long expansion in the 1990s.  Taken together have they rendered Marxism irrelevant?  The answer must be  sought through an understanding of the concept of “ one world economy”  Today’s world has two different economic systems that dynamically interact to both the betterment and detriment of each other.  Capitalist cries while still existing have been lessened by markets opened in socialist states.  Trade with socialist states   like China have become a major source of global capitalist stability.  At the same time, capitalism’s instability and pressure negatively impacted planned economies contributing to their collapse. 

Both the seeming stability of capitalism and  instability of  socialism can be understood within the framework of the Marxist worldview. 

“Communism is dead”, capitalists proclaimed when the Soviet Union collapsed along with the socialist countries in Eastern Europe.  With the collapse, unprecedented economic stability in the US, the citadel of global capitalism, has challenged Marxist’s claims about capitalism’s built-in economic problems.  Much of the world came to believe that Marxism was no longer a useful tool for analyzing the world.  But this isn’t the first time Marxism has been declared dead, and as time has moved on, we have been able to say, “Not so fast”. 

After the first International, a federation of socialist-oriented worker organizations founded by Marx and Engels, was disbanded in 1876, the capitalists   of course declared that ‘’ Marxism is finished, socialism is dead!” The same declaration followed the collapse of the Second International, an organization of Marxist-led European Trade unions, labor parties and socialist organizations, as World War I  broke out, and again after the dissolution of the Third International, the international organization for Communists and Workers Parties, in World war II.  Each time, though, Marxism re-emerged sharpened by defeat. 

But the latest challenge to Marxism is moiré comprehensive than in the past.  After all it was the soviet union that collapsed not the Marxism.  Additionally, the relative stability of US capitalism poses almost as great a challenge for Marxists as the collapse of the USSR. 

However, the question must be posed: is capitalism really stable? Marx identified capitalism’s main problem as the contradiction between the growth of the forces of production and the too-narrow ways capitalism operates.  A prime example of this is the fact that while productivity in the last two decades in the US has grown, real wages for working people have fallen making their ability to purchase the goods they produce more difficult.  This endangers economic growth as businesses don’t sell  as many products and have to find ways to cut expenses, such as letting workers go or finding even more efficient ways of making products.  This kind of contradiction, Marx predicted, would drive capitalism into increasingly severe crises as productivity advanced, ultimately leaving humanity no path out but that of socialism. 

And history has borne this out.  By the late 19^th and early 20^th centuries, capitalism’s crises were even worse than in earlier decades, forcing the capitalists to make harsher attacks on workers and oppressed peoples.  These crises climaxed with World War I, the worst war humanity had ever experienced – a war that suddenly opened the door for the Russian Revolution.  Marxist theory and guidance had been validated.

The Soviet Union’s collapse and US capitalism’s recent stability have challenged Marxist claims about capitalism’s built-in economic problems.  1904 – 1914: GDP was in decline 35 per cent of the time 1929 – 1939: GDP was in decline 40 per cent of the time. 1949 - 1974 : GDP was in decline 20 per cent of the time. 1982 – 2004  : GDP was in decline 12 per cent of the time.

             In the 1920s and 1930s with the Great Depression, capitalism’s problems seemed even worse.  Again, the capitalists went after unions and working people.  Again global war followed.  In 1931, Japan engaged  in an extraordinarily brutal war in China, Korea and elsewhere.  World war II came next – opening the path to revolutions and overturns of capitalist rule in china, parts of Vietnam, Korea and Eastern Europe.  Once again, Marxism had been validated. 

            But after World War II, the imperialist countries entered an extended period of relative stability – not the capitalist world as a whole, but the imperialist countries, above all the US.  In the 25 years after 1949, for example,  US gross domestic product was in decline only 26.51 per cent of the time, and the declines were milder than in the first half of the century.  By contrast, in the 10 years before World War I, US GDP was in decline almost 35 per cent of the time.  In the 10 years before World War II, US GDP was in crisis 40 per cent of the time.  

The 22 years since 1982 have been the most stable in the   entire history of the US.  Although the period has been one of the most difficult for workers since the 1930s, the GDP has been in decline only 12 per cent of the time.  The two downturns since 1982 have been milder than in prior decades.  And the period included the longest uninterrupted expansion in US history, 1991-2001. 

Does this relative  stability suggest there is perhaps a fundamental error in Marx and Engel’s theoretical  work, or in the conclusions Lenin derived from them?  Did capitalism somehow learn to at least regulate, if not to overcome its contradictions?  Are objective conditions in the world not ripe for socialism?  In light of recent developments, those are valid questions. 

To answer these questions, let’s look at what Marxists have to say.  Marxism is the scientific and activist philosophy of the working  class.  It is essential not just to understand  this ever-changing world but also to guide workers and their parties in the transition from the ancient system to the new. 

Marx and Engels identified the   working class specifically, rather than the oppressed in general, as the key historical player in the transition from capitalism to socialism.  This role of workers is based  in the way capitalism is organized.  Above all, capitalism’s main characteristic is the theft of value and wealth created by workers in the process of making goods and services owned legally by their employers. 

But capitalism isn’t just local or even national.  In modern times, this relationship between capitalists and workers is international.  So the working class is also international in character, as are both the   capitalist class and class struggle.   Marxists understood this point almost 160 years ago, when they first announced the main slogan of Communists today: Workers of the World, Unite!

The world economy is the starting point of our analysis, rather than the USSR, the US or any national economy in isolation.  After its revolution, the Soviet Union remained part of a single world economy, despite some incorrect efforts at economic self-sufficiency.  And of course, the US is part and parcel of a single world economy, despite some of its continuing efforts at isolation.  We can’t understand any part of the world system without first applying Marxist analysis to the whole thing and examining its parts within that context. 

“One world economy” means that economic developments-which are also political – in one part of the world always positively or negatively affect the rest of the world.  No corner remains isolated.

            The world economy is extra ordinarily  unequal and uneven.  In addition, since 1917 and to this day, it has consisted of two social systems – one, the product of socialist revolution, which includes today China, Vietnam, Laos, Northern Korea and Cuba – and the other, the capitalist system.

            Different laws regulate the two systems. In States created by socialist revolutions, the law of planning is the primary regulator, even when the economy continues to incorporate market mechanisms and commodity production.  That is why the Soviet or Chinese economies were distinctly non-cyclical  after their revolutions.

            By contrast, it is the laws of commodity production and exchange, independently of the wishes of the capitalist class that regulates capitalist economies.  Boom-bust cycles are unavoidable as imbalances accumulate in capitalist economies.  Thus, the US has suffered over 30 cycles in 200 years.  As stated earlier, the longest expansion without a downturn was barely 10 years long, while the USSR went over 70 years without a business cycle.

Is Marxism is wrong? Marxism predicts that as the tools and machinery used to make products develop and as the way goods are made changes, capitalism will become more prone to crisis. Capitalism is based on the theft of value created by workers  Capital is global; so is production, the working class and class struggle.  Global capitalism means that problems in one part of the world necessarily affect all others.

              The two systems interact and clash within the arena of a single world economy.  Capitalist cries have necessarily stressed the political economies created by socialist revolutions.  In the early 1970s, for example, Poland took considerable loans from capitalist banks to develop its steel production; it assumed it could repay the loans by selling the steel to the West.  But when the new steel capacity came on line, the West was drowning in “overproduction” of steel, and no sales were to be had.  The result was profoundly destabilizing not only for the Polish, but for the Soviet and all the East European states.  Similarly, the immense fluctuations in capitalist market prices for Oil  and gas in 1980s played havoc on Soviet economic planning, which had erroneously counted on steady revenues from energy sales.

               On the other hand, the non-cyclical economies created by socialist revolutions have brought some stability to the world economy as a whole.  It is widely admitted even in capitalist economic journals, for example, that China’s rapid growth, and its large and fast-growing purchases from South-Korea, Malaysia and other capitalist Asian states, that have been the primary factor in those states’ rebound from the severe crisis of 1997-98.  Morgan Stanley’s chief international economist, David Roach has said that if it was not for China’s growth – and specifically its purchases from capitalist countries “there would be world chaos”.  The only genuine stability in the global economy since 1945 has come from the economies created by socialist revolutions.

            A secondary factor enters into the relative stability of Germany, Japan, Britain, and above all the USA.  World capitalism is a stratified system, dominated and plundered by the imperialist economies; the great majority of capitalist countries, and of the worldwide population still living under capitalist rule, are at the bottom.

            Wall street has been at the top of this capitalist pyramid since World War I, and above all since World War II.  It has used its position, and developments in technology, transport and communications, not to improve the standard of living worldwide, but to facilitate plundering weaker capitalists and states – including the states created by socialist revolutions – while pushing off capitalism’s unavoidable contradictions on them.  The mechanisms involved are varied and complex, but they include debt, unequal exchange (where stronger capitalists sell the commodities they monopolize above their value, while buying commodities, from weaker producers below their value), “trade” treaties, market access or denial, intellectual property, speculation, war and outright plunder.

            Another stabilizing factor is that the productivity of labour in capitalist countries worldwide has been rising around one per cent per year in recent decades.  But income per person fell nearly one percent per year in most of the capitalist world (144 countries) between 1973 and 1995, according to calculations by the capitalist economic historian, Angus Maddison!  Living standards under capitalism are falling despite, increase in productivity.  In the US, income per person has claimed gain since 1973, but the gains went to business elements; workers real hourly wages fell and living standards and the security of life are declining. 

            These elements taken as a whole indicate why with respect to their critique of capitalism, Marx and Lenin were right on target. 

            The capitalist class does not control the economy.  If it did, there would be no economic cycles, which damage profits.  What the capitalists have some control over is who suffers in a crisis above all, they move to weaken and cheapen labour, directing their fire above all at workers’ organizations, ranging from unions and Communist Parties to the states created by socialist revolutions.  And they also move to plunder weaker capitalists.

            But what then accounts for the collapse of socialism? Once again the answer must be seen in terms of capitalism’s crisis and its larger effects.  Capitalism’s   contradictions measurably deepen in the 1970s and 1980s.  This posed ever-growing challenges for the Soviet Union and its allies – economically, militarily, politically, culturally, ideologically.  These multiple challenges periodically coalesce into something like a hurricane or tsunami sweeping over the region.  The world labour movements failures to apply Marxism – in accessing reality and in practice, on questions of organization, economy, and struggle – meant that the world working class was not prepared and not mobilized for the hurricane emerging from capitalism in deepening crisis.  The Soviet Union collapsed, as did its European neighbours,  including Poland, the DGR, Czechoslavakia, Hungary, Romania, Alabania and Yugoslavia. 

            Cuba was also hit by that same hurricane, or its ferocious after winds.  But it did not collapse, although it was damaged and is not out of danger. Cuba’s survival tells us that the Soviet Union’s collapse was not inevitable.  It tells us that the collapse was above all the result of problems with the foundations, governance and economy of the USSR, problems that did not permit it to overcome and emerge victorious from another of capitalism’s crises.

Capitalism’s continuing Crisis While productivity has grown recently, real wages for working people   have fallen making their ability to purchase the goods they make more difficult.  The ripple effect is that workers are laid off, their benefits are cut and the crisis worsens.  Living standards under capitalism are falling because of increases in productivity.  Powerful countries use imperialism to push their problems off onto weaker countries and have profited from open markets in formerly socialist countries, crating temporary stability.  While socialist China has helped prevent global economic crisis through the strength of its planned economy, problems persist.   This makes Marxism still relevant as it describes a process by which we can escape the devastating cycles of capitalism……a global transition to socialism.

             Capitalism’s problems continue to deepen. All of the 10 worst capitalist economic crises since the Great Depression have occurred since the Soviet collapse, including those that hit Mexico in 1994, Thailand, Indonesia, southern Korea and other states in 1997, Brazil and the Russian Federation in 1998, Argentina and Turkey in the past two years, and so on.

            The current period resembles that which preceded World War I and II.  Some 50 wars and major armed conflicts plague the world today; even in the US, hunger and homelessness stalk the masses.  In Boston, cradle of the American revolution, hospital admissions of infants for malnutrition – malnutrition – have tripled since 1999!

            With the guidance of Marxist theory and the corresponding organization of the workers and their allies, what can emerge is liberation such as brought on by 1917 and by 1949.  The goal is a world without borders, with genuine economic, social and    political equity in peace and prosperity.  And Marx and Engels original conclusion remains valid: Workers of the World Unite!