Capitalism is in its deepest crisis in its history. It is an economic, social and political crisis, which is now expressing itself in political turmoil and growing class struggle across the globe. While the ruling class attempts to bury Marxism, it has in fact never been so relevant as it is today. In this updated article, Alan Woods explains the essence of Marxism and its role today.
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In 1992 Francis Fukuyama published a book entitled The End of History and the Last Man, which became an instant best-seller. In it he loudly proclaimed the demise of socialism, communism and Marxism and the definitive triumph of market economics and bourgeois democracy. The fall of the Soviet Union meant that henceforth only one system was possible: the capitalist market economy, and in that sense, history had ended.
This idea seemed to be confirmed by the apparent success of the market economy, marked by successive years of soaring profits and virtually uninterrupted economic growth. Politicians, central bankers and Wall Street managers were convinced that they had finally tamed the cyclical nature of capitalist development. Everything was for the best in the best of all capitalist worlds.
But history is not so easily disposed of. Since then the wheel of history has turned 180 degrees. Only sixteen years after the appearance of Fukuyama’s book the crisis of 2008 brought the entire edifice of global capitalism to the point of collapse, plunging the world into the deepest crisis since the 1930s. And it is still struggling to extricate itself from the abyss.
Every one of the confident predictions of Fukuyama has been falsified by events. Before the collapse of 2008 the bourgeois economists boasted that there would be no more boom and slump, that the cycle had been abolished. They had worked out a wonderful new theory called the “efficient market hypothesis”, according to which, left to itself, the market would solve everything.
Actually, there is nothing new about this idea. It is merely a repetition of the old idea contained in Say’s Law, that in a market economy supply and demand will balance each other, thus rendering impossible a crisis of overproduction. Marx demolished that nonsense over a century ago. To the assertion that “sooner or later” market forces will sort everything out, John Maynard Keynes issued the celebrated reply, “In the long run we’re all dead.”
Today not one stone upon another remains of the old illusions. The bourgeoisie and its strategists are in a state of the deepest depression. In the 1930s, Trotsky said that the bourgeoisie was “tobogganing to disaster with its eyes closed.” These words are precisely applicable to the present situation. They could have been written yesterday.
It is becoming increasingly clear that capitalism has exhausted its progressive potential. Instead of developing industry, science and technology, it is steadily undermining them. Nobody any more believes the constant assurances that we are on the verge of an economic recovery. The productive forces stagnate or decline, factories are closed as if they were matchboxes, and millions are thrown out of work.
All these are symptoms that show that the development of the productive forces on a world scale has gone beyond the narrow limits of private property and the nation state. That is the most fundamental reason for the present crisis, which has exposed the bankruptcy of capitalism in the most literal sense of the word.
Everywhere the symptoms of crisis are manifesting themselves, economically, socially and politically. The huge Chinese economy, which played an important role in boosting world trade and economic growth, is slowing sharply, while Japan is stagnant. The so-called emerging economies are all in crisis to one extent or another. The USA is passing through a social and political crisis that has no precedent in modern times.
On the other side of the Atlantic European capitalism is in a critical state. The plight of Greece provides graphic confirmation of the diseased state of European capitalism. But Portugal and Spain are not much better. And France and Italy are not far behind them. Following its decision to withdraw from the EU, Britain, which used to be seen as one of the most stable countries in Europe has entered a downward spiral of economic crisis, a falling pound and chronic political instability.
The bourgeois economists and politicians, and, above all, all the reformists, are desperately seeking signs of revival to get out of this crisis. They look to the recovery of the business cycle as salvation. The leaders of the working class, the trade union leaders and the Social Democratic leaders believe that this crisis is something temporary. They imagine it can be solved by making some adjustments to the existing system, that all that is needed is more control and regulation, and that we can return to the previous conditions.
But this crisis is not a normal crisis, it is not temporary. It marks a fundamental turning point in the process, the point at which capitalism has reached a historical dead end. The best that can be expected is a weak recovery, accompanied by high unemployment and a long period of austerity, cuts and falling living standards.
The crisis of bourgeois ideology
Marxism is in the first place a philosophy and a world outlook. In the philosophical writings of Marx and Engels we do not find a closed philosophical system, but a series of brilliant insights and pointers, which, if they were developed, would provide a valuable addition to the methodological armoury of science.
Nowhere is the crisis of bourgeois ideology clearer than in the realm of philosophy. In its early stages, when the bourgeoisie stood for progress, it was capable of producing great thinkers: Hobbes and Locke, Kant and Hegel. But in the epoch of its senile decay, the bourgeoisie is incapable of producing great ideas. In fact, it is not capable of producing any new ideas at all.
Since the modern bourgeoisie is incapable of bold generalisations, it denies the very concept of ideology. That is why the post-modernists talk of the “end of ideology”. They deny the concept of progress simply because under capitalism no further progress is possible. Engels once wrote: “Philosophy and the study of the actual world have the same relation to one another as onanism and sexual love.” Modern bourgeois philosophy prefers the former to the latter. In its obsession to combat Marxism, it has dragged philosophy back to the worst period of its old, outworn and sterile past.
Dialectical materialism is a dynamic view of understanding the workings of nature, society and thought. Far from being an outmoded idea of the 19th century, it is a strikingly modern view of nature and society. Dialectics does away with the fixed, rigid, lifeless way of looking at things that was characteristic of the old mechanical school of classical physics. It shows that under certain circumstances things can turn into their opposite.
The dialectical notion that gradual accumulation of small changes can at a critical point become transformed into a gigantic leap received a striking confirmation in modern chaos theory and its derivatives. Chaos theory put an end to the kind of narrow mechanical reductive determinism that dominated science for over a hundred years. Already in the 19th century Marxist dialectics was an anticipation of what chaos theory now expresses mathematically: the inter-relatedness of things, the organic nature of relations between different entities and processes.
The study of phase transitions constitutes one of the most important areas of contemporary physics. There are an infinite number of examples of the same phenomenon. The transformation of quantity into quality is a universal law. In his book Ubiquity the North American scientist Mark Buchanan shows this in phenomena as diverse as heart attacks, avalanches, forest fires, the rise and fall of animal populations, stock exchange crises, wars, and even changes in fashion and schools of art. Even more astonishing, these events can be expressed as a mathematical formula known as a power law.
These remarkable discoveries were anticipated long ago by Marx and Engels, who put the dialectical philosophy of Hegel on a rational (that is, materialist) basis. In his Logic (1813) Hegel wrote: “It has become a common jest in history to let great effects arise from small causes.” This was long before the “butterfly effect” was ever heard of. Like volcano eruptions and earthquakes, revolutions are the result of a slow accumulation of contradictions over a long period. The process eventually reaches a critical point at which a sudden leap occurs.
Every social system believes that it represents the only possible form of existence for human beings, that its institutions, its religion, its morality are the last word that can be spoken. That is what the cannibals, the Egyptian priests, Marie Antoinette and Tsar Nicolas all fervently believed. And that is what Francis Fukuyama wished to demonstrate when he assured us, without the slightest basis, that the so-called system of “free enterprise” is the only possible system—just when it is beginning to sink.
Just as Charles Darwin explains that species are not immutable, and that they possess a past, a present and a future, changing and evolving, so Marx and Engels explain that a given social system is not something eternally fixed. The analogy between society and nature is, of course, only approximate. But even the most superficial examination of history shows that the gradualist interpretation is baseless. Society, like nature, knows long periods of slow and gradual change, but also here the line is interrupted by explosive developments - wars and revolutions, in which the process of change is enormously accelerated. In fact, it is these events that act as the main motor force of historical development.
The root cause of revolutionary changes is the fact that a particular socio-economic system has reached its limits and is unable to develop the productive forces as before. Marxism analyses the hidden mainsprings that lie behind the development of human society from the earliest tribal societies up to the modern day. The materialist conception of history enables us to understand history, not as a series of unconnected and unforeseen incidents, but rather as part of a clearly understood and interrelated process. It is a series of actions and reactions which cover politics, economics and the whole spectrum of social development.
The relationship between all these phenomena is a complex dialectical relationship. Very often attempts are made to discredit Marxism by resorting to a caricature of its method of historical analysis. The usual distortion is that Marx and Engels “reduced everything to economics.” This patent absurdity was answered many times by Marx and Engels, as in the following extract to Engels’ letter to Bloch:
“According to the materialist conception of history, the ultimate determining element in history is the production and reproduction of life. More than this neither Marx nor myself have asserted. Hence, if somebody twists this into saying that the economic element is the only determining one, he transforms that proposition into a meaningless, abstract and senseless phrase.”
The Communist Manifesto
The most modern book that one can read today is the Communist Manifesto, written in 1848. True, this or that detail would have to be changed, but in all the fundamentals, the ideas of the Communist Manifesto are as relevant and true today as when they were first written. By contrast, the immense majority of the books written one and a half centuries ago are today merely of historical interest. What is truly amazing is just how little of what the Manifesto says needs to be changed over a century and a half after it was published. By contrast, our modern “experts” would be ashamed to read today what they wrote only yesterday.
What is most striking about the Manifesto is the way in which it anticipates the most fundamental phenomena which occupy our attention on a world scale at the present time. Let us consider one example. At the time when Marx and Engels were writing, the world of the big multinational companies was still the music of a very distant future. Despite this, they explained how “free enterprise” and competition would inevitably lead to the concentration of capital and the monopolisation of the productive forces.
It is frankly comical to read the statements made by the defenders of the “market” concerning Marx’s alleged mistake on this question, when in reality it was precisely one of his most brilliant and accurate predictions. Today it is an absolutely indisputable fact that the process of concentration of capital foreseen by Marx has occurred, is occurring, and indeed has reached unprecedented levels in the course of the last few decades.
For decades the bourgeois sociologists attempted to disprove these assertions and “prove” that society was becoming more equal and that, consequently, the class struggle was as antiquated as the handloom and the wooden plough. The working class had disappeared, they said, and we were all middle class. As for the concentration of capital, the future was with small businesses, and “small is beautiful”.
How ironic these claims sound today! The entire world economy is now dominated by no more than 200 giant companies, the great majority of which are based in the USA. The process of monopolisation has reached unprecedented proportions. The world’s biggest corporations have wealth that far exceeds that of many nation states – a striking illustration of the growing power of big business. A study by the anti-poverty charity Global Justice Now found that the number of businesses in the top 100 economic entities jumped to 69 in 2015 from 63 in the previous year.
Just 147 corporations which form a “super entity” have control of 40% of the world’s wealth. These mega-corporations are the real rulers of the global economy. The 10 biggest corporations – including Walmart, Apple and Shell – make more money than most countries in the world combined. The value of the top 10 corporations was $285tn (£215tn), which is greater than the $280tn worth of the bottom 180 countries, including Ireland, Indonesia, Israel, Colombia, Greece, South Africa, Iraq and Vietnam.
Lenin pointed out that in the imperialist (monopoly-capitalist) stage of development, economic power is concentrated in the hands of the big banks. That analysis is completely confirmed by the present situation. The world economy is dominated by finance capital. The Swiss Federal Institute (SFI) in Zurich released a study entitled “The Network of Global Corporate Control” that proves a small consortium of corporations – mainly banks – runs the world.
The most powerful banks include:
• Barclays • Goldman Sachs • JPMorgan Chase & Co • Vanguard Group • UBS • Deutsche Bank • Bank of New York Mellon Corp • Morgan Stanley • Bank of America Corp • Société Générale
The speculative activities of these powerful financial institutions, which are closely connected by a complex web of investment schemes, derivatives and the like, was the catalyst for global financial collapse. James Glattfelder, complex systems theorist at the SFI, explains: “In effect, less than one per cent of the companies were able to control 40 per cent of the entire network.”
The concentration of capital is accompanied by a constant increase in inequality. In all countries the share of profits in the national income is at a record high level, while the share of wages is at a record low. Global inequality is growing, with half the world’s wealth now in the hands of just 1% of the population.
Like a band of voracious cannibals, these gigantic companies are continually devouring each other in mergers and take-overs, where billions of dollars are squandered in a frantic attempt to increase the size and profitability of the big monopolies. This feverish activity does not signify a real development of the productive forces, but the opposite. This corporate cannibalism is inevitably followed by asset-stripping, factory closures and sackings – that is, by the wholesale and wanton destruction of means of production and the sacrifice of thousands of jobs on the altar of Profit.
While preaching the need for austerity, the bankers and capitalists are continuously enriching themselves, extracting record amounts of surplus value from the working class. In the USA the workers are producing on average a third more than ten years ago, yet real wages stagnate or fall in real terms. Profits have been booming and the wealthy are becoming ever wealthier at the expense of the working class.
Let us take another, even more striking example: globalisation. The crushing domination of the world market is the most important manifestation of our epoch, and this is supposed to be a recent discovery. In fact, globalisation was predicted and explained by Marx and Engels over 150 years ago. In the Preamble to this remarkable document we read the following:
“The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.”
Today this analysis has been brilliantly confirmed. The crushing domination of the world market is one of the most decisive features of the present epoch. Yet when the Manifesto was written, there was practically no empirical data to support such a hypothesis. The only really developed capitalist economy was England. The infant industries of France and Germany (the latter did not even exist as a united entity) still sheltered behind high tariff walls - a fact which is conveniently forgotten today, as Western governments and economists deliver stern lectures to the rest of the world on the need to open up their economies.
So-called globalization is an expression of the inevitable tendency of capitalism to go beyond the narrow limits of the national market and develop and intensify an international division of labour. This opens up a dazzling perspective of future prosperity and co-operation between al the peoples of the world. But under capitalism, this marvellous potential for human development is forced into the straitjacket of production for profit. Far from enhancing the prospects for economic and social advancement, it becomes a finished recipe for the plunder of the entire planet in the interests of giant corporations. Far from lessening the contradictions and reducing the risk of wars and conflicts, it has intensified them, causing one war after another.
On a world scale the results of globalised “market economics” are horrifying. In 2000 the richest 200 people had as much wealth as the 2 billion poorest. According to the figures of the UN, 1.2 billion people are living on less than two dollars a day. Of these, eight million men, women and children die every year because they do not have enough money to survive. Everybody agrees that the murder of six million people in the Nazi Holocaust was a terrible crime against humanity, but here we have a silent Holocaust that kills eight million innocent people every year and nobody has anything to say on the subject.
Alongside the most appalling misery and human suffering there is an orgy of obscene money-making and ostentatious wealth. According to the Bloomberg Billionaires Index the wealthiest 30 people in the world control a staggering portion of the world economy: $1.23 trillion. That is more than the annual GDP of Spain, Mexico, or Turkey.
Eighteen from this group are from the USA. The world’s eight richest billionaires control the same wealth between them as the poorest half of the globe’s population, the most striking symptom of an ever-increasing and dangerous concentration of wealth. The charity Oxfam, which published the figures, said it was “beyond grotesque” that a handful of rich men headed by the Microsoft founder Bill Gates are worth $426bn (£350bn), equivalent to the wealth of the 3.6 billion poorest people in the world, 50% of the world population..
Apart from Gates, Amancio Ortega, the founder of the Spanish fashion chain Zara, and Warren Buffet, the big-time investor and chief executive of Berkshire Hathaway make up the group.
Others on the list are Carlos Slim Helú, the Mexican telecoms tycoon and owner of conglomerate Grupo Carso; Jeff Bezos: the founder of Amazon; Mark Zuckerberg: the founder of Facebook; Larry Ellison, chief executive of US tech firm Oracle; and Michael Bloomberg, a former mayor of New York and founder and owner of the Bloomberg news and financial information service.
For a rational plan of production
The need to harmonise the vast resources of our planet through a rational plan of production has become an absolute necessity. The capitalist system is an anarchic system, based on greed and the constant search for new ways of exploiting and raping the planet in order to increase the wealth and power of a few. The big corporations have shown a reckless disregard for the environment. In their frantic search for profit they have destroyed the rain forests, poisoned the seas, exterminated species of plants and animals and contaminated the air we breathe, the water we drink and the food we eat. The continuation of the capitalist system constitutes a deadly threat to the planet we live in and the very future existence of the human race.
Objectively speaking, all the conditions exist for solving every one of the problems that face us. The human race holds in its hands all the necessary technological and scientific means for eradicating poverty, disease, unemployment, hunger, homelessness and all the other evils that cause endless misery, wars and conflict. If this is not done, it is not because it cannot be done, but because we have run up against the limitations of an economic system based purely on profit.
The needs of humanity do not enter into the serious calculations of the bankers and capitalists who rule the planet. This is the central question, the answer to which will determine the future of the human race. The charity Oxfam calls for a new economic model to reverse the inexorable trend towards inequality. But what is needed is not tinkering with the system but its complete overthrow.
It was the historic task of the bourgeoisie to sweep away all the barriers that prevented the development of the productive forces under feudalism: the local taxes, currencies and tariff barriers, the endless tolls that hindered the free development of trade, the parochial narrowness and the idiocy of rural life. The great conquest of the bourgeoisie was the establishment of the national market and, on that basis, the nation state in the modern sense of the word.
But the development of the productive forces under capitalism has long ago transcended the narrow limits of the national market, which now has become transformed into a barrier to economic development, just as the old local particularisms of feudalism were in the past. The advent of globalization is merely an expression of the fact that the nation state has outlived its usefulness and become an obstacle in the path of human progress.
The two main barriers to the development of humankind are: on the one hand, private ownership of the means of production and on the other hand, that obsolete remnant of barbarism, the nation state. It is the historic task of the proletariat to tear down these barriers to the progress of civilization. Private ownership will be replaced by a democratic plan of production. And the nation state will be consigned to a lumber-room in the museum of historical antiquities.
The socialist revolution will sweep aside all national barriers and free the vast potential for the development of the productive forces by creating a World Socialist Federation that will pool the limitless resources of our planet in a planned and harmonious manner to satisfy the needs of all humanity, not the greed of a few super-rich parasites.
Historical materialism teaches us that conditions determine consciousness. Idealists have always presented consciousness as the motor force of all human progress. But even the most superficial study of history shows that human consciousness always tends to lag behind events. Far from being revolutionary, it is innately and profoundly conservative.
Most people do not like the idea of change and still less of a violent upheaval that transforms existing conditions. They tend to cling to the familiar ideas, the well-known institutions, the traditional morality, religion and values of the existing social order. But dialectically, things change into their opposite. Sooner or later, consciousness will be brought into line with reality in an explosive manner. That is precisely what a revolution is.
Marxism explains that in the final analysis, the key to all social development is the development of the productive forces. As long as society is going forward, that is to say, as long as it is capable of developing industry, agriculture, science and technology, it is seen to be viable by the great majority of people. Under such conditions, men and women do not generally question the existing society, its morality and laws. On the contrary, they are seen as something natural and inevitable: as natural and inevitable as the rising and setting of the sun.
Great events are necessary to permit the masses to throw off the heavy burden of tradition, habit and routine and to embrace new ideas. Such is the position taken by the materialist conception of history, which was brilliantly expressed by Karl Marx in the celebrated phrase “social being determines consciousness.” It takes great events to expose the unsoundness of the old order and convince the masses of the need for its complete overthrow. This process is not automatic and takes time.
In the past period it appeared that the class struggle in Europe was a thing of the past. But now all the accumulated contradictions are coming to the surface, preparing the way for an explosion of the class struggle everywhere. Everywhere, including in the United States, stormy events are being prepared. Sharp and sudden changes are implicit in the situation.
When Marx and Engels wrote the Manifesto, they were two young men, 29 and 27 years old respectively. They were writing in a period of black reaction. The working class was apparently immobile. The Manifesto itself was written in Brussels, where its authors had been forced to flee as political refugees. And yet at the very moment when the Communist Manifesto first saw the light of day in February 1848, revolution had already erupted onto the streets of Paris, and over the following months had spread like wildfire through virtually the whole of Europe.
We are entering into a most convulsive period which will last for some years, similar to the period in Spain from 1930 to 1937. There will be defeats and setbacks, but under these conditions the masses will learn very fast. Of course, we must not exaggerate: we are still in the early beginnings of a process of radicalisation. But it is very clear here that we are witnessing the beginning of a change of consciousness of the masses. A growing number of people are questioning capitalism. They are open to the ideas of Marxism in a way that was not the case before. In the coming period ideas that were confined to small groups of revolutionaries will be eagerly followed by millions.
We can therefore answer Mr. Fukuyama as follows: history has not ended. In fact, it has hardly begun. When future generations look back at our present “civilisation”, they will have approximately the same attitude that we adopt towards cannibalism. The prior condition for attaining a higher level of human development is the ending of capitalist anarchy and the establishment of a rational and democratic plan of production in which men and women can take their lives and destinies into their own hands.
“This is an impossible Utopia!” we will be told by self-styled “realists”. But what is utterly unrealistic is to imagine that the problems facing humanity can be solved on the basis of the present system that has brought the world to its present sorry state. To say that humanity is incapable of finding a better alternative to the laws of the jungle is a monstrous libel on the human race.
By harnessing the colossal potential of science and technology, freeing them from the abominable shackles of private ownership and the nation state, it will be possible to solve all the problems that oppress our world and threaten it with destruction. Real human history will only commence when men and women have put an end to capitalist slavery and taken the first steps towards the realm of freedom.