Understanding the nature of the contradictions and crises of capitalism is central to the question of building a socialist alternative, writes John Clarke

Efforts to pretend that the global pandemic is over are coming up against the stubborn and deadly reality of its continuing spread. The Russian invasion of Ukraine, with its backdrop of global rivalry, points to the prospect of further and even bloodier conflicts. The escalating climate crisis brings an entirely unique element of disruptive destruction into play. The present ‘supply shocks’ that have triggered a global cost of living crisis would seem to be a sign of things to come. There are very good grounds for concluding that the capitalist system has entered a period of multi-layered crisis.

In such conditions, the question of how fundamental the elements of capitalist crisis are becomes a central one. As always, there are no lack of proposals to alleviate the worst impacts of the situation. The global exploiters who gather at Davos every year have become quite expert at peddling the mythical concept of a sustainable and socially just form of capitalism. The liberal media enthusiastically advances notions of a responsible and caring brand of the present economic system. For those on the left who accept the need for a socialist alternative to capitalism, however, the question of the nature and depth of crises within the system takes on particular significance.

There has been a longstanding debate on the left over how fundamental the contradictions and limitations within capitalism are. On the one side, the view has been advanced that this system creates levels of economic crisis and social explosions that pose revolutionary solutions. One the other, it has been held that capitalism can be managed better and significantly stabilised, so that a more incremental approach to socialist transformation will be possible.

In 1900, Rosa Luxemburg took up the debate against an emerging reformist trend within German social democracy. She wrote her work ‘Reform or Revolution’ in response to the ideas put forward by the spokesperson of this trend, Eduard Bernstein. In the opening paragraphs, Luxemburg immediately links Bernstein’s ideas to his conviction that crises within capitalism were diminishing and controllable. She notes that,

“According to Bernstein, a general decline of capitalism seems to be increasingly improbable because, on the one hand, capitalism shows a greater capacity of adaptation, and, on the other hand, capitalist production becomes more and more varied.”

Bernstein also argued that, as capitalism was learning to achieve greater levels of stability, the working class was also improving its economic and political situation by way of trade union activity. Thus, notions of breakdown and revolutionary upsurge would have to give way to a gradualist and parliamentary political project that would win a majority over to socialism on the basis of “pure reason,” as Luxemburg puts it.

Crisis theory

A lot of water has flowed under the bridge since Luxemburg challenged the emerging reformist notions advanced by Bernstein. However, the disagreement over crisis theory remains as clear cut and significant as ever. In the book he wrote to mark the 200th anniversary of the birth of Friedrich Engels, Michael Roberts takes issue with those on the left who reject the law of the tendency of the rate of profit to fall. He contends that “It is ironic that Marx’s most important law in political economy has been neglected, ignored or dismissed…by the bulk of Marxist economists.”

The rejection of this key manifestation of the limited ability of a profit-driven system to develop the productive capacities of human society, is correctly identified by Roberts as a dividing line for those who accept the revolutionary implications of Marxist theory.

It becomes clear that theories of crisis are a major impediment to gradualist notions of socialist transformation. This is strikingly apparent in the case of the Meidner Plan, developed in the Sweden of the 1970s as “..one of the most ambitious democratic socialist policy proposals ever seriously considered in a developed economy.” The backdrop to the plan was an unprecedented level or class compromise that existed in that country, even by the standards set by the prevailing conditions of an international post-war boom.

Social democracy and trade union officialdom had brokered an understanding with the capitalist class that was quite remarkable. In return for relatively high wages, state policies were put in place that favoured the most profitable business operations and allowed weaker competitors to go to the wall. Strengthened systems of social provision ensured that workers who were displaced in the process would be significantly supported, as they transitioned to jobs with companies that were successful under the terms of this deal.

Rudolf Meidner and co-thinker Gösta Rehn, came to see that the flaw in the social compromise was an intensifying concentration of wealth in the hands of the most powerful capitalist families. Their plan was to literally buy out the capitalist class. They wanted to have the state power embark on a gradual compulsory purchase of the biggest companies, with the boards of these institutions incrementally replaced with worker representatives. It was an elaborate and detailed plan that the capitalists predictably worked to prevent. There were other reasons why its implementation stalled but one of the key ones was that the boom conditions out of which it emerged were coming to an end.

Meidner and his co-thinkers were certainly going further than most social democratic leaders would ever want to consider but this was not to be any seizing of the means of production. It would be a state-sponsored elbowing aside of the capitalist class, carried out over decades, in which they would be gradually shut out of their own boardrooms. To say the least, there is great room to doubt that the capitalists would submit to such treatment but there is also another striking element to this. The plan was developed in the context of a highly regulated class compromise that rested on a buoyant economy and robust profits. There was no place for major economic crisis in the undertaking and very little role for class struggle.

Gradualism

In the context of the present period, gradualist strategies for transforming capitalism and its state institutions rest on the same need for stability but in a situation, of course, that is deeply unstable. Far from being able to disregard the contradictions of the capitalist system and the disturbances these generate, there is a greatly increased need to understand them and to develop strategies and approaches that are based on this understanding.

In 1929, Henryk Grossman, trying to deepen Marxist crisis theory after decades of relative neglect, wrote The Law of Accumulation and Breakdown of the Capitalist System. He explored the contradictions and limitations of capitalism and considered ‘the historically ephemeral character of the bourgeois mode of production.’ In the first chapter, he included a quote from Karl Kautsky that lays bare the underlying assumptions of reformism with remarkable clarity. As Kautsky puts it,

“The prospects for socialism depend not on the possibility or necessity of a coming collapse or decline of capitalism but on the hopes we must have that the proletariat attains sufficient strength, that the productive forces grow sufficiently to provide abundant means for the welfare of the masses … finally, that the necessary economic knowledge and consciousness develop in the working class to ensure a fruitful application of these productive forces by the class – these are the preconditions of socialist production.”

The notion of a stable, even prosperous capitalism that produces, not revolutionary crises, but the basis for a well-ordered and incremental social transformation, has always been at odds with reality. In the present context, it is a deeply incorrect view that must be overcome. The greatest contradiction that capitalism creates is a working class whose needs can’t be met under this system and that is driven to challenge and overthrow it. An appreciation of the crisis-ridden nature of capitalism is the basis for any realistic project of socialist transformation.