The Capitalist Class. By Karl Kautsky (continued)

[Continued from the March issue]

Specially translated for the Socialist Party of Great Britain and approved by the Author.

8.—THE ECONOMIC CRISIS (continued)

We have explained at the beginning of this chapter that under the domination of large industry, industrial capital comes always to the fore and increasingly dominates capitalist production. Within capitalist industry itself, however, special branches of industry become the leading ones, particularly the textile and iron industries. If one of them receives a special impetus, as for instance by the opening up of a new extensive market, like China, or by the sudden taking in hand of the, construction of a large railway line, for example in America, that particular branch of industry does not only expand, but it communicates the impetus thus received immediately to the entire economic structure of society. The capitalists extend their concerns, establish new ones, and thus increase the use of raw material and accessories ; new workers are engaged, while at the same time ground-rent, profits and wages rise. The demand for various commodities increases, while different industries begin to participate in the economic improvement, which ultimately becomes a general one. Then every undertaking seems bound to succeed, confidence is blindly bestowed and unlimited credit given ; anybody possessed of money endeavours to invest it profitably, and everyone participating in interest and profit, which are rapidly rising, seeks to transform some of it into capital. At such periods a general state of elation prevails.

In the meantime production has grown enormously, and the increased demand of the market has been satisfied; yet production continues. One capitalist knows nothing of the other, and even if the one or the other of them in sober moments has misgivings, these are stifled by the necessity of utilising the fluctuations of the market and of keeping pace with competition. The hindmost ia severely bitten. To dispose of the additionally produced commodities becomes an increasingly difficult and slower process ; the stock-rooms of the warehouses become full, but the ecstacy caused by the spell of prosperity continues. Then comes the time that one of the commercial houses is to pay for the goods which it had purchased months before from the manufacturer on credit. The goods are still unsold; it possesses the goods but not the money; it cannot fulfil its obligations; it goes bankrupt. But the manufacturer, too, has to discharge his financial responsibilities: as his debtors cannot pay, he too must fail. One bankruptcy succeeds another. A general panic ensues ; the previous blind confidence is superseded by distrust quite as blind ; the panic spreads in all directions, causing financial ruin everywhere.

The entire economic foundation of society is profoundly shaken. Every undertaking which is not firmly established collapses. Not only the’fraudulent undertakings are ruined, but also all those which at ordinary times have just managed to keep above water ; during periods of crisis the expropriation of peasants, handicraftsmen and small capitalists proceeds at a more rapid rate than at other times. But also many a large capitalist fails and no one is certain oi escaping ruin in the general collapse. And those among the large capitalists who happen to survive, participate liberally in the spoil; during periods of crisis net only the expropriation of ” small men,” but also the concentration of concerns into fewer hands and the extension of large fortunes proceeds more easily than at other times.

But no one knows whether he will survive the crisis; and while it lasts, and until such time as commerce has again to some extent assumed its ordinary aspect, all the terrors of the present method of production are prevailing to an extreme degree ; insecurity, want, prostitution and crime increase. Thousands starve or freeze to death, because they have produced too much food, clothing and shelter. Then it is demonstrated most vividly that the present productive forces are becoming less and less compatible with commodity production, and that the private ownership of the means of production becomes an ever greater curse, above all for the propertyless, but ultimately also for many of the propertied class.

Some economists expect that Combines will bring about the abolition of crises. Nothing is more erronous than such a view.

The regulation of production by the Combines presupposes, above all, that they embrace all the important branches of production and are built up op an international basis, t’hat is to say, that they extend over all the countries where the capitalist mode of production prevails. Until now there does not exist a single completely international Combine in any branch of industry, which could be taken as a criterion of the entire economic structure of society. International Combines are most difficult to establish and as difficult to maintain. Marx already remarked some fifty years ago, that not only, competition created monopoly, but monopoly created competition. The larger the profit derived by a number of firms from a Combine, the greater the danger of a powerful outside capitalist endeavouring to deprive them of these profits by establishing a competitive concern.

The Combines and. Trusts themselves become the object and cause of commercial speculations. They constitute the highest form of Joint Stock proprietorship, and .admittedly make it possible to carry swindling to its very extreme. While the era of swindling from 1871 to 1873 was an era of Joint Stock Companies, the latest era of swindling, viz., from 1899 to 1900, was an era of establishing Combines and Trusts, particularly in the tlnited States. Combines as a rule fail in preventing over-production. Their main object with regard to over-production does not consist of preventing it, but, of transferring its consequence from the capitalists to the workers and consumers. They exist for the purpose of assisting the large capitalists in living through crises by restricting production at certain times and discharging workmen, etc., without, however, interfering with profits. But let us suppose the improbable happens, namely, that within a certain period it would be possible to organise the large world-industries in Combines internationally and rigidly disciplined. What would be the consequence? Competition among the capitaliats in the same branch of industry would thereby, even in the most favourable case, be abolished only in one direction. It would here lead us too far to enquire into the consequences which must arise from the remaining sides of competition. But one point may here be considered, namely, the more the competition among the different owners of concerns in the same branch of industry disappears, the greater becomes the contest between them and the owners of concerns in those other branches of industry dependent upon their goods. While the struggle between the individual producers in the same industry ceases, the struggle between producers—the latter word taken in its widest sense—becomes more acute. In this sense each producer is consumer ; the cotton-spinner, for instance, apart from his personal consumption, is consumer of cotton, coals, machines, oil, etc. The whole capitalist class would then no longer be divided into single individuals, bnt into sections fighting one another most bitterly.

To-day each capitalist endeavours to produce as much as possible and to put on the market as many commodities as possible ; because the more commodities there are the more profit, under otherwise equal conditions. His production is limited only by the calculation of the possible absorption by the market, and, of course, by the extent of his capital. But in.the event of Combines becoming general we should not get regulated production and thereby a cessation of crises, as some illusionists tell us, but we might find that it would be the aim of each Combine to produce as little as possible, for the smaller the amount of-commodities the higher the prices. The old practice of merchants at periods of a glut in the market, of destroying a portion of the existing commodities, in order to obtain a profitable price for the remainder, would then become the general practice. It is clear that under such conditions society cannot exist. While each Combine aims at underproduction, it has on the other hand to force the other Combines, whose commodities it requires, into over-production. There are many ways of effecting that. The simplest one is to restrict its consumption more than,. the other Combine is restricting its own. Another way is to call science into play in order to create substitutes for the commodities w.hose production has been restricted. A third way is for the consumers concerned themselves to produce what they require.

Let us suppose that the copper mines form a Combine, restrict the production of copper, and force up its price—what would be the conse-,, quence ? Of the industrial capitalists in whose concerns copper is used in production, some would close their factories until more prosperous times, a few would, endeavour to use other metals in place of copper, while others again would themselves acquire or start copper mines, in order to become independent of the copper ring. In the end the Combine would burst—go bankrupt, that is to say there would be a crisis. Should that not be the case, the under production of the Combine would call forth an artificial restriction of production— that is to say, also a crisis—in those branches of industry which consume the products of the Combine as raw material or as tools, etc.

The Combines, therefore, do not get rid of crises. If they were to, succeed in that respect it could only be that the crises would assume a different form—but not a better one. Bankruptcies would not cease, the only difference being that they would become more extensive and not merely affect single capitalists, but entire sections of them. Combines cannot abolish crises, but are able to produce some of a far more disastrous character than anything we have hitherto witnessed.

Only when all Combines would be merged into one so all-embracing that the entire means of production of all the capitalist nations were contained therein, that is to say, only when private property in the means of production had been practically abolished would it be possible to do away with crises by means of Combines. On the other hand crises are inevitable from a certain point of economic development so long as private property in the means of production prevails. It is, therefore, not possible to proceed one-sidedly and to do away with only the harmful effects of private property while permitting the private property itself to continue.

[To be continued]

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