Economic crisis: a product of capitalism
This motion was passed unanimously at the recent CPGB-ML party congress
This congress recognises that the economic and financial crisis gripping the world is a classic crisis of overproduction of the kind that Marxism demonstrates is bound to affect the capitalist world periodically because of the contradiction inherent in capitalism between private ownership of the means of production, on the one hand, and the social nature of production on the other. The private owners of the means of production (ie, ‘capital’) deploy them only for the purpose of accumulating private wealth, while the social producers – the working class – are squeezed as much as possible in order to maximise the capitalists’ profits.
However, congress further recognises that, since it is overwhelmingly the working-class masses who constitute, either directly, or indirectly through government purchases on their behalf of services such as health care and education, the market for the products of the capitalist economy, their squeezed powers of consumption cannot keep pace with the permanent need of capital to expand its production (the unquenchable thirst for expansion being forced on capitalists by the phenomenon of the tendency of the rate of profit to fall, which the capitalists strive to neutralise by expansion). Hence the recurring crises of “overproduction”.
Congress affirms that it is not that more is being produced than people need – it is that more is being produced than people can afford to buy. The least competitive capitalists are wiped out, along with all their workers, who are thrown out of employment by the thousand, and then cause a general lowering of wages because there is an oversupply of workers in relation to the supply of jobs available. This in turn undermines the general market for the products of capitalism still further, and so on in a vicious downward spiral.
This congress notes that crises of overproduction appear as financial crises because the bankruptcies caused by producers being unable to sell their commodities in the quantities they had been banking on leaves these producers unable to pay their debts – most businesses being dependent on bank loans in normal times to ensure that their businesses run smoothly. To avert the economic chaos that would arise from bank failure, national governments step in to save their banks by pumping huge sums of taxpayer money into them. This, however, means that governments are forced to borrow more, pay more interest and, generally, pay increased rates of interest too as they become more of a credit risk.
Congress further notes that these huge borrowing costs have to be paid by taxpayers, which puts still more pressure on their purchasing power – aggravating the crisis rather than curing it. Therefore, in order to reduce borrowing costs, governments reduce their spending – ie, they introduce ‘austerity’ – with thousands of government employees being added as a result to the mounting numbers of unemployed, and a further twist being added to the downward spiral of the crisis. Precisely because it is no solution, even the Financial Times condemns austerity as counterproductive, leading to reduced GDP and therefore to a reduced income with which to pay all the problematic debts.
This congress recognises that the crisis of capitalism will within capitalism be resolved – and then only temporarily – when enough capital (machinery, unsaleable goods etc) has been destroyed to ensure that there is room for whatever is left to expand as it needs to. Since capitalism evolved into imperialism, which has divided the whole world into spheres of influence under the control of one or other imperialist power, economic crises have driven the various imperialist powers to world war (ie, the first and second world wars) as each of them sought to resolve its crisis at the expense of the others. These wars take place over and above the incessant wars conducted in every corner of the earth by the various imperialist powers, either directly or through local proxies, to maintain oppressed nations in subjection to the imperialist diktat.
This congress therefore affirms that the recurring crises of capitalism and its ever more destructive, inhuman and brutal wars, demonstrate that this last exploitative economic system has now by far outlived its usefulness and urgently needs to be discarded. The ruling bourgeoisies who benefit from this moribund system, and who fight tooth and nail to preserve it, stopping not even at world war, must be overthrown and the proletariat must establish socialism in order to put itself in a position to implement real solutions to the economic problems of the world.
This congress resolves that the party shall continue to do its best to spread an understanding of these economic facts throughout the working-class movement in order to help dispel the illusions in the viability of the capitalist system that have been engendered by social democracy.