In January and February 1932 the Institute of Economics of the Leningrad branch of the Communist Academy held meetings on the Trotskyist Theory on Imperialism (already translated and published in RD in April 2016) and the Universal Crisis of Capitalism. Here we publish the contribution of L. Kasharsky in this conference in which the author evaluated the recently published book by E.A. Preobrazhensky ‘The Decline of Capitalism’ which had been published in Moscow in 1931. (An English translation of this book was published in 1985: E.A. Preobrazhensky, ‘The Decline of Capitalism’, translated and edited with an introduction by Richard B. Day, M. E. Sharpe, Inc. Armonk, New York). Kasharsky argues that Preobrazhensky breaks with Marx and Lenin on a range of issues of political economy, on the crisis of capitalism, on the theory of reproduction of Marx, a rejection of Lenin’s theory of imperialism, particularly of the theory of uneven development under imperialism and is heavily influenced by the theories of Karl Kautsky, Hilferding, Trotsky and Luxemburg. This paper, as that of V. Serebryakov published earlier in this journal, shows the valuable literature on political economy which was occluded after the 20th Congress of the CPSU.
Comrade Stalin’s letter to the editorial board of “Proletarian Revolution” revealed, on the basis of historical component of the theoretical principles, that a counter-revolutionary Trotskyism, its counter-revolutionary nature demolished and unmasked, is powerless, in conditions of the worldwide historical victories of our country and the party in building socialism, when it speaks openly against the Leninist party, the Leninist Central Committee, and all the more persistently resorts, as a method of struggle, to a theoretical contraband, trying to mount an attack from the rear on the history of the party, on the theoretical principles of the party, trying to subject the axioms of Bolshevism to revision.
It goes without saying that the smuggling of counter-revolutionary Trotskyism is not limited to the historical front alone. In particular, on the economic front, recently, the former henchman of Trotskyism and Pope Trotsky’s Cardinal for Economic Affairs – E. Preobrazhensky – has been made the peddler of Trotskyist contraband. At the end of 1931, he published the book “The Decline of Capitalism” that is heavily soaked with Trotskyist ideology.
E. Preobrazhensky’s book is devoted to the theoretical coverage of the basic problems of modern capitalism in the phase of the general crisis of the capitalist system. In the preface E. Preobrazhensky pointed out that this book is only a part of a larger study on the issues of modern monopoly capitalism and its demise. “A characteristic feature – writes E. Preobrazhensky at the beginning of the first chapter – of the post-war economy is the huge size of the unused fixed capital and the monstrous absolute dimensions of unemployment” (page 5). These features of post-war capitalism, says Preobrazhensky, unwittingly posit before everyone the fundamental questions: why does it happen, what causes this phenomenon in capitalism? Getting to resolve these issues, Preobrazhensky says:
“Based on the theory of reproduction of Marx and Lenin S theory of imperialism, as well as on an analysis of the conditions of expanded reproduction under monopolistic capitalism, I try to give an answer to the above questions, as well as to give a theoretical analysis of the causes of the current global financial crisis” (p. 5, my italics, LK; later italics, belonging to the author, are not specified).
Let us first of all see, on whom does E. Preobrazhensky rest his analysis of the conditions of expanded reproduction under monopolistic capitalism and also his analysis of the causes of the current global crisis, so as to then proceed to a characterization of Preobrazhensky’s findings on the truly fundamental questions of modern capitalism and contemporary global crisis.
1. The Theory of Reproduction of Marx and E. Preobrazhensky’s Trotskyist Theory of Reproduction
In his book, E. Preobrazhensky repeatedly characterizes the inheritance of Marx’s theory of reproduction of social capital and crises (pp. 54, 61, 82 etc). E. Preobrazhensky does not think much of this legacy. He persistently and in various ways develops and emphasizes the idea that Marx did not leave behind a complete theory of reproduction and crises and that, while specifying a method to understand these problems, Marx confined himself mainly to the most abstract statements and a number of individual observations, highly valuable and brilliant, but which still are of a fragmentary and partial nature. “Marx’s theory of crises, – says Preobrazhensky, – due to the incompleteness of his work, as well as Marx’s theory of reproduction need be developed and framed in the sense of approximation of the analysis to the real conditions of capitalism (p. 61). As we shall see below, E Preobrazhensky wants the development and the formulation of the theory of reproduction not only in terms of approximation to the real conditions of capitalism, and “development” in all its essential relations.” This is not the place to defend Marx against Preobrazhensky. But here, at the outset it should be emphasized that before us is the old tried and tested method of revisionists – to justify their anti-Marxist constructions they usually declare one or the other side of Marx’s theory “undeveloped” and “incomplete” and thus get an opportunity to pass on their own constructions as “development” and “formulation” of the ideas of the teacher.
What is the essence of Preobrazhensky’s theory of reproduction and the theory of crises?
1. First of all, it should be noted that Preobrazhensky approaches the problem of reproduction and crises in a mechanical way. Preobrazhensky in his book, as in his previous works, understands Marx’s theory of reproduction as a theory, constructed on the principle of equilibrium1. Marx’s schema of reproduction, according to Preobrazhensky are only “laws of proportionality” (p. 82), that just fix the process of distribution of capital in the process of reproduction2, and so on. Of course, along with this Preobrazhensky also speaks of “persistent imbalances” but the decisive and determining factor in all his arguments is the fact that Marx’s theory of reproduction Preobrazhensky interprets as a theory, resting on the postulate of equilibrium. Thus Preobrazhensky turns the whole Marxist methodology on its head. If for Marx “a balance is itself an accident owing to the spontaneous nature of this [capitalist] production ” (Capital, vol. II, English edition, Progress Publishers, p. 499), if the balance appears only as a special case of the movement of social capital, if the movement is primary and balance and “proportionality” constitute only a moment of the latter, then for Preobrazhensky the movement itself becomes only one moment in maintenance of the balance, movement is subject to the balance, the balance has primacy over the imbalances.
For Marx, capitalist reproduction, even with ideal proportionality includes capitalist contradictions; therefore it involves movement – self-movement – of capitalist contradictions. The motion of contradictions constantly creates imbalances in the capitalist economy: the proportionality and disparities are inseparable from the contradictions of the capitalist system, from the motion of the latter. In this movement, “proportionality” and “equilibrium” occur as an accident, as one moment. Here, Preobrazhensky firmly holds on to his old mechanistic positions.
2. Treating the process of social reproduction of capitalism as a dynamic equilibrium of the capitalist system, not realizing that the process of reproduction of social capital is a self-movement of the basic capitalist contradictions, by taking in this regard a vulgar mechanistic position, Preobrazhensky naturally comes to consider the capitalist crisis as a temporary disorder of equilibrium of the capitalist system, the emergence of the capitalist system from this equilibrium as deviations from a major proportion. He writes: “The crisis breaks out, which means a transition from a specific temporary equilibrium ... to a smoother process ...” (p. 27), to new proportions. Elsewhere it is stated: “In order to show how the general crises are possible under capitalism, it is necessary from the schema revealing overall proportionality, to continue to study further and to proceed, firstly, from the fact that the fixed assets are not amortized over a period of one year, and secondly, from unevenness of recovery and of increasing unevenness in time” (p. 82).
Thus according to Preobrazehnsky it appears that capitalism is peacefully marching on according to the schema of expanded reproduction, and only the uneven reproduction of fixed capital pushes the system out of balance.
For anyone who is in the least even broadly familiar with Marx’s theory of crises, it is clear that such representation has nothing in common with Marxism. According to Marx, as we know, crises are just a “real connection and forced evening of all the contradictions of the bourgeois economy.” (Theory, Vol. II, Part 2, pp. 177-178.)
3. Preobrazhensky exhibits monstrous theoretical carelessness on the question of the causes of capitalist crises. Periodic crises are known to represent the explosion of all the contradictions of capitalist society. It is also clear that the causes of these crises cannot be understood, if one ignores the movement of the main contradictions of capitalist society – the contradiction between the social character of production and the private character of appropriation. What is characteristic of Preobrazhensky in this regard is his manner of viewing capitalist crisis without, and separated from, the movement of the most basic, the most profound contradictions of capitalism. On the basic contradictions of capitalism, the real cause of the crises, the author does not say anything.
In one place he most clearly demonstrates the extent to which he is indifferent to the internal causes of capitalist crises: “It is sufficient to have one deep economic crisis, whatever its reason, for subsequent crises to recur periodically.”
4. In order to uncouple the capitalist cycle and crises from the movement of the internal contradictions of capitalism, not understanding the contradictions of the process of reproduction of social capital, Preobrazhensky naturally is forced to seek other reasons for pushing the system out of balance, i.e. into a crisis. Such a reason, to some extent a reason for the external shock, he sees in the refurbishment and the creation of fixed capital.
There would be no harm if Preobrazhensky took into account the reproduction and an increase in fixed capital as one of the moments that make up the capitalist cycle. But a mechanical Preobrazhensky, by separating the crisis of the motion of capitalist contradictions is forced to raise an increase in the reproduction of fixed capital to the rank of the general and the main cause of the crisis. The cyclic form of motion of capitalism, according to the latest discovery of Preobrazhensky, is “first of all connected with the uneven over time reproduction of fixed capital’ (p. 42). This uneven reproduction of fixed capital the author believes is the main immediate cause of the crisis: “The uneven recovery, and especially the increase of the capital in bourgeois society is the main, immediate and proximate cause of the general economic crisis.”
After this discovery Preobrazhensky thinks of course it is superfluous to refer to the real causes of the crisis, pointed out by Marx, Engels and Lenin. On these real, deeper causes the author is stubbornly silent. The slightest attempt by a mechanical Preobrazhensky to approach the nature of the real causes of the capitalist crises shows his complete inability to understand them. An isolated attempt by Preobrazhensky to break through in explaining the crises on the basis of a specific moment (of reproduction of capital) to the most common, deep, inclusive cause of the crisis – the main capitalist contradiction (between the social character of production and the private character of appropriation) ends in a miserable fiasco. Preobrazhensky wrote: “All of the above is not to mean that crises or the state of crisis of the capitalist system have only the cause pointed out by us. The anarchy of production under private management of firms (obviously anarchy is possible with the public management of the company? LK), but the social character of production in its entirety and complexity of relationships of proportionality inevitably creates conditions not only for the above, but also for other causes of crises” (p. 84).
If anything that can be deduced from this awkward quote, then there are only two things. Firstly, Preobrazhensky agrees to allow, along with the reproduction of the fixed capital, also “other causes of crises.” Secondly, as Preobrazhensky touches upon as one of the “other reasons”, the basic capitalist contradictions, he takes the last in a narrow and one-sided manner, imitating Hilferding. We would be looking in vain for (as the causes of the crisis) Preobrazhensky’s other aspects of the mentioned main capitalist contradictions – for example, the contradiction between production and consumption, the contradictions between the bourgeoisie and the proletariat, the contradiction expressed in the fall of the rate of profit, etc. The class characteristic of capitalist contradictions leading to a crisis is obscured, smeared, and it loses its defining importance.
At the same time, further, having allowed himself the above empty run-around about these “other reasons” Preobrazhensky here tends to annul them. “However, – he writes – these other imbalances usually exert their effects in the framework of the existing cyclicity of the entire process and either increases or decreases the process of expansion or contraction of production.”
Thus the real causes of the crises are, at best, of secondary importance, including the already established cyclic movement subordinated to the main, immediate causes of the crisis – the uneven reproduction of fixed capital.
How disdainfully Preobrazhensky treats these “other causes” of the crisis is clear from what follows. He says, “To this is added the influence of environmental conditions on the reproductive process” (page 84.). Thus, the impact of “other” (in addition to the reproduction of capital) causes of crises is reduced to the influence of natural conditions.
5. According to Preobrazhensky reproduction of fixed capital is not only the main, a direct and immediate cause of crises, not only explains the necessity of crises, not only determines the structure of the capitalist cycle, but also explains the frequency of crises. Moreover, Preobrazhensky attributes his own discoveries to Marx. “He is (Marx, LK) credited with formulating the position that the periodicity of the capitalist crisis is due to the uneven distribution over time of reproduction of fixed capital” (p. 25).
Earlier we saw how Preobrazhensky supplemented Marx in those parts of the theory of crises, which, according to Preobrazhensky remained undeveloped in Marx. Now we are witnessing how our author attributes to Marx a position that Marx not only could not share, but against which he directly spoke with certainty. Marx points out conditions that make it necessary for the crisis to occur, and which determine the frequency of crises. The reproduction of fixed capital plays an important role but is not the main, not the basic, not the crucial factor, as it appears to Preobrazhensky. Below I will focus more on how Marx treats the problem of fixed capital in the cycle.
6. After all that has been mentioned it is clear that in his conception of a crisis, Preobrazhensky completely misses the point of how the transitory nature of the capitalist mode of production is established. Each cyclical crisis shaking the capitalist system, reminds us of the historical limitations of its existence and at the same time sharpens all capitalist tendencies and contradictions which bring capitalism to ruin. Preobrazhensky, at least for crises in premonopoly capitalism, stresses and gives prominence to the other side of crises, the ease with which they are overcome and their temporary nature, their narrow economic importance and, moreover, views them not so much negatively as positively. In other words, Preobrazhensky’s assessment of the significance of the crisis for capitalism is essentially apologetic.
“For capitalism, once it already exists, it is not this alternation of highs and lows that is dangerous, what is dangerous is a standstill in the transition from a crisis to recovery, to depression, because a decline of production in itself is the greatest factor in long-term market contraction, if the system does not have sufficient incentives to break out of depression”... But –Preobrazhensky says soothingly – such a stimulus exists.
“Lower prices and fast technical progress, mercilessly strangling all backward enterprises, is the mechanism that facilitates the preparation for a new upsurge on the basis of orders for new fixed capital” (p. 42).
7. It follows from the above that in Preobrazhensky’s formulation, which can be described as an underestimation of the revolutionizing significance of each crisis, the significance of the crisis lies in changing the interclass relations, especially relations between the proletariat and the bourgeoisie, the significance of the crisis as a factor in the revolutionary upheavals of capitalist society. For Preobrazhensky crisis, at least in the environment of free competition, passes with barely perceptible consequences for the capitalist society. According to Preobrazhensky in a crisis the “real loss is ... reduced to ruination of some reserves of the means of production (e.g., spontaneous combustion of coal, etc...) and to insufficient employment of the potential labour force in the next cycle in the branches manufacturing means of production!” (p. 22).
Elsewhere Preobrazhensky stresses that the negative impact of the crises on the working class is short-lived and gets over quickly – an assertion amazing for its frank apologetic conclusion. But Preobrazhensky makes and must make this conclusion, as he occupies a mechanistic and anti-Marxist position on the theory of reproduction and crises. Logic requires it. If the crisis is not due to the totality of capitalist contradictions – if it is not seen as something imposing its stamp on all aspects of capitalist reality, but is due to the conditions of reproduction of fixed capital, taken in isolation from the inherent capitalist antagonisms – then the revolutionary significance of the crisis is inevitably misunderstood and blurred.
Having developed his “the schema of economic cycle under free competition” (Ch. VI) and having proceeded to the presentation of the “economic cycle schema under monopoly conditions” (Ch. VII), our author in advance attacks the inevitable criticism that can be levelled against its theoretical constructs in the following angry tirade:
“In our economic literature, instead of laying bare the process of how a typical economic crisis under capitalism inherently follows from the general structure of capitalism, many often get off with a mere repetition of the general Marxist thesis that capitalist crises are explained by the contradiction between the social character of production and the private character of appropriation. Meanwhile, the whole problem is precisely to uncover the specific economic content of this formulation, and analyse it in relation to the cycle under classical capitalism, and in the period of imperialism ... In this paper, I give my version of the construction of this theme. I would consider it worthy of serious attention only to such criticism, which could counterpoise this construction by some other” (pp. 80-81).
Is it possible to counter Preobrazhensky’s constructions of the cycles in the epoch of free competition and in the era of imperialism? Is Marxist- Leninist economic thought so poor, that it can do nothing to oppose the impotent Trotskyist schema used by Preobrazhensky? Certainly it can. And it is no different against a boastful Trotskyism and it can and should be exposed by a genuine Marxist-Leninist understanding of the nature of the cycles and of crises in the different stages of development of capitalism.
Of course, if we restrict ourselves to multiple repetitions of the thesis of Marx–Engels–Lenin about the contradictions between the social character of production and the private form of appropriation for the understanding of the crises, then it gives us very little. It is just Preobrazhensky who in his book demonstrates that he is unable to concretize the initial argument. It is Preobrazhensky who fails to understand all the wealth, all the content and comprehensive strength of the Marxist- Leninist position and fails to discover its “specific economic content.” That is why Preobrazhensky believes that Marx did not complete both his theory of reproduction and the theory of crisis and that Marx left behind, on the question of crises, just some general methodological positions and isolated views, some fragmentary notes.
Not having the possibility to reproduce here the Marxist-Leninist theory of cycles and of crises in all their brilliant versatility, I will confine myself to a brief depiction of the substance of this theory of crises and the revolutionary character of this theory; even a short reproduction of the Marxist-Leninist theory of crises will make it possible to see clearly that Preobrazhensky does not understand Marx and Lenin and that he is actually revising them and creating his own theory of cycles and crises – a caricature of Marxism.
From the standpoint of Marx, Engels and Lenin the common cause of crises – the contradiction between the social character of production and the private form of appropriation – is the really basic, immanent contradiction of capitalism, that includes all concrete contradictions of capitalism. This basic contradiction gets concretized in multiple individual contradictions of capitalism: between anarchy of the social and the despotism of the industrial division of labour; between the growth of productive forces, resulting in an increase of the organic composition of capital and a consequent lowering of the rate of profit; between the need for a limitless expansion of production and the limited size of available capital; between increasing production and increasing, at the other pole, of the working class poverty, in other words, between production and mass consumption; between the need for proportionality in the process of reproduction and the inevitable imbalances in conditions of the capitalist anarchy of production and so on.
All these contradictions are expressions, concrete moments of the main, the most profound, decisive contradiction – between the social character of production and the private form of appropriation.
And precisely because it is the basic contradiction contained in all the concrete contradictions, it involves these specific conflicts, which is why it– and it alone – can act as causes of the crisis.
The movement, the self-movement of this fundamental contradiction leads inevitably to that, that at a certain stage capitalist production reaches its limit, the point where contradictions are exacerbated to an extreme degree. And then the crisis breaks out, which represents a real connection and forceful equalization of all the contradictions of bourgeois economy. “For capitalism there must be a crisis so as to create a constantly disturbed proportion.” (Lenin. Collected Works, Vol. III, English edition, p. 618.)
The crisis temporarily removes this limit and by providing existing capital “delays the lowering of the rate of profit and accelerates the accumulation of capital value by the formation of new capital”. But by forcibly equalizing the contradictions, the crisis at the same time makes it the only way in which the conditions for a new crisis are created.
Thus, the movement of the main capitalist contradiction between the social character of production and the private character of appropriation, not only reveals the deepest cause of the crisis, but also determines the periodicity of capitalist crises. The frequency of crises is created by the self-movement of the main contradictions of the capitalist mode of production. In the necessity of crises is given the necessity of their periodicity. The theory of crises of Marx, Engels, Lenin certainly is in irreconcilable conflict with all sorts of theories that try to explain the nature of the crises by any one feature of capitalism, whether under-consumption, reproduction of fixed capital or anything else ...
The theory of Marx-Engels-Lenin explains the capitalist crises by self-movement of this most general capitalist contradiction, and reveals at the same time the possibility of crises and their necessity under capitalism.
The same theory gives an exhaustive answer to the question about the actual role of the reproduction of fixed capital in the capitalist cycle and in the capitalist crisis. This theory does not underestimate the role of fixed capital in the capitalist cycle; it only fixes its proper place and importance in the overall effect of other conditions and factors. Let me remind you here of the two instances from two letters of Marx and Engels, where the former specifically examines the role of fixed capital in the capitalist cycle. In a letter dated 2 / III 1858 Marx asks Engels about the average duration in which the equipment is upgraded, and writes that this fact “is one important factor in explaining the multi-year cycle which has been a feature of industrial development ever since the consolidation of big industry.”. (Marx and Engels. Collected Works, English edition, Vol. 40, p. 277.)
In a letter dated 5 / III 1858, having received from Engels calculations made on the subject, Marx wrote: “The figure of 13 years corresponds closely enough to the theory, since it establishes a unit for one epoch of industrial reproduction which plus ou moins [more or less] coincides with the period in which major crises recur; needless to say their course is also determined by factors of a quite different kind, depending on their period of reproduction. For me the important thing is to discover, in the immediate material postulates of big industry, one factor that determines cycles.” (Marx’s italics, ibid, pp. 325.)
Marx does not underestimate the role of fixed capital in the cycle. He emphasizes the increase in the share of production of fixed capital in the total production. He notes that the industries producing the elements of fixed capital played a leading role in the cycle. He shows that in this connection, the duration of the cycle more or less coincides with the average period of functioning of the fixed capital. But this does not mean that cyclical nature is due to the dynamics of fixed capital as Preobrazhensky tries to show. Upgradation of fixed capital is a consequence of the crisis. The movement of fixed capital reflected the general laws of the cycle and is composed of the totality of capitalist contradictions. The frequency of crises cannot be explained exclusively from the conditions of reproduction of fixed capital. It follows from the general causes of the crisis, and that is ultimately from the contradiction between the social character of production and the private form of appropriation, no, specific reason periodicity than the causes of the crisis does not exist.
The main features of the Marxist-Leninist explanation of crises consists in the fact that it:
1. Takes as a basis, the fact that the causes of the crisis are not an arbitrarily chosen single or a series of separate contradictions of capitalism, but the totality of capitalist contradictions, takes not the external reasons for the crisis, but reveals the inner, deepest reasons and takes into account not what is derivative and secondary, but what is basic and important.
2. Consistently gives the class relations of productive relations of capitalism, emphasizes the class nature of the capitalist contradictions and thus expresses the laws of the dynamics of capitalism and crises in the language of the class struggle. Suffice it to recall Engels: “The contradiction between social production and capitalist appropriation became manifest as the antagonism between proletariat and bourgeoisie.” (Engels. Anti-Dühring, English edition, FLP Peking, 1976, p. 349.)
3. The theory of cycles and crises of Marx, Engels, Lenin is a revolutionary critique of capitalism, for it reveals the limitations of the capitalist mode of production, the movement and the growth of its contradictions, preparing the downfall of capitalism, for it sees every crisis, as Marx aptly puts it, to be a reminder to the bourgeoisie of the relativity and temporality of its domination.
4. This theory is strongly opposed to any attempt to treat the cycles and crises of capitalism as a monotonous repetition of the constant, always equal to themselves phenomena. Exposing the deepest foundations of the crises, reducing them to the movement of the internal contradictions of capitalism, this theory emphasizes in a crisis, firstly, that every crisis reveals the relativity and the historically limited nature of the capitalist mode of production; secondly the fact that crises are becoming more frequent; and thirdly the fact that each new capitalist crisis is a new step toward the collapse of capitalism, since it develops and sharpens all of the internal contradictions of capitalism.
5. This theory, while giving an explanation of capitalist cycles and crises, not only fully reveals their economic nature and the laws of motion, it always pays close attention to the aggravation of class antagonisms through crises, to processes escalating the crisis in the revolutionary upheavals, and so on. It is worth quoting here the most striking places from fundamental works of the founders.
“Finally, as the capitalists are compelled, by the movement described above, to exploit the already existing gigantic means of production on a larger scale and to set in motion all the mainsprings of credit to this end, there is a corresponding increase in industrial earthquakes, in which the trading world can only maintain itself by sacrificing a part of wealth, of products and even of productive forces to the gods of the nether world -- in a word, crises increase.” (Marx, Wage Labour and Capital, English edition, FLP Peking, 1978, p. 50.)
“But capital does not live only on labour. A lord, at once aristocratic and barbarous, it drags with it into the grave the corpses of its slaves, whole hecatombs of workers who perish in the crises.”(Ibid., p. 50.)
“If capital remains stationary, industry will not merely remain stationary but will decline, and in this case the worker will be the first victim. He goes to the wall before the capitalist.” (Marx, On Free Trade. Collected Works, 6, p. 450.)
If it is impossible to argue for the inevitable co-occurence of a capitalist crisis with a revolution, if I cannot talk about the inevitability of the transformation of an economic crisis into a revolution, then one can and should consider crises, shaking the entire capitalist system, as periods when the preconditions for revolutionary upheavals are created.
“Ever since the beginning of this (19th) century, the condition of industry has constantly fluctuated between periods of prosperity and periods of crisis; nearly every five to seven years, a fresh crisis has intervened, always with the greatest hardship for workers, and always accompanied by general revolutionary stirrings and the direct peril to the whole existing order of things.“ (Engels, The Principles of Communism. Collected Works, Vol. 6, p. 341.)
Elsewhere Engels wrote:
“Such a revolution (a real revolution. L. K) is possible only in such periods when both these factors, ie. the modern productive forces and the bourgeois forms of production, come into conflict with each other... A new revolution is only possible after a new crisis. But its advance is as inevitable, as the last attack.” (Vol. VIII, p. 239)
Marx and Engels specifically linked the Revolution of 1848 to the general crisis in England.
“The second great economic event that hastened the outbreak of the revolution (the revolution of 1848, LK)was a general commercial and industrial crisis in England.” (Marx, The Class Struggles in France. Collected Works, English edition, Vol. 10, p. 48)
“Anyway there is no doubt that the commercial crisis facilitated the revolution in 1848 far more, than the other way round, the revolution – trade crisis.” (Vol. VIII, p. 226)
Marx and Engels associated the future revolution with crises.
“The virtual repeal of the act of 1847 will force the manufacturers into such a rush at overtrading that revulsions upon revulsions will follow, so that very soon all the expedients and resources of the present system will be exhausted, and a revolution made inevitable, which, uprooting society far deeper than 1793 and 1848 ever did, will speedily lead to the political and social ascendancy of the proletarians.” (Engels, The Ten Hour’s Question, Collected Works, English edition, Vol. 10, p. 271-276.)
In the observations of international situation in 1850, Marx and Engels, asserting an impending crisis, again connected the crisis with large scale conflict on the continent, with the “revolution on the continent.” (Collected Works, Vol. VIII). One of the reviews by Marx and Engels is concluded with the following summary:
“Political developments in the continent insistently need to be addressed with every passing day, and the coincidence of a commercial crisis and the revolution, which has repeatedly been asserted in this review becomes ever more inevitable.” (Collected Works, Vol. VII, p. 218)
Lenin also always stressed the importance of crisis for the revolutionary struggle.
“Without a common ground of an agrarian crisis in the country and the depression in industry, there is no possibility of a deep political crisis. “ (Collected Works, Vol. III, p. 93)
“Capitalism successfully takes care that crises occur frequently, a situation which this army will make use of (the army of the proletariat, LK) for the destruction of capitalism.”
After all of the above it s not difficult to give a general characterization of Preobrazhensky’s theory of crises. Moreover, Preobrazhensky himself makes this task easier. Preobrazhensky twice (note on page 37-38 and page 55) indicates the true source of his revisionist inspiration. “I consider it my duty to mention a very important service rendered by comrade Spectator in that he is among the few economists who stress the critical role of the main process of reproduction of fixed capital both for theory of reproduction and the theory of crises” (note on p. 38). Meanwhile, we all know that in the theory of crises Spectator slips into the positions of social-fascist Hilferding, who considers Marx’s theory of reproduction to be a theory of proportionality and crises as a violation of that proportionality.
In addition to these basics, the roots of which go back to Hilferding, Preobrazhensky’s theory of reproduction includes Luxemburgian motives. I shall mention only the most important. Contrary to the Marxist-Leninist method that correctly distinguishes the problem of reproduction and the problem of the significance of external markets for capitalist development, Preobrazhensky, following in the footsteps of Rosa Luxemburg, straight away sets the first – reproduction – in direct connection with the second: “So, if the opening of various new territories for development of capitalism played a role in the issue of realisation, it is not the absolute value of these areas in capitalist trade, but because ultimately the expansion of markets in the colonies allowed a far greater amount of expansion of market for capitalism within capitalism itself” (p. 15). External market, Preobrazhensky writes in another place, plays the same supporting role for capitalism which a small projection between the steps of a staircase plays, that raises a man with a load; the ledge helps a man to rise up and stand on the next step; foreign markets help to raise the productive forces of capitalism onto following stage of expanded reproduction. It is easy to see, that the difference between Rosa Luxemburg and Preobrazhensky is a difference of just one of magnitude, but in principle, both recognise the thesis of impossibility of reproduction and realisation within the capitalist circle, devoid of “projections”.
Substituting Marx’s theory of crises with an eclectic stew of Hilferding and Rosa Luxemburg, Preobrazhensky entirely follows his teacher Trotsky. In the report of comrade Serebryakov it has been shown that it is from Hilferding and Rosa Luxemburg that Trotsky draws his wisdom in explaining crises. When Preobrazhensky explains the crisis of reproduction of fixed capital, he again copies Trotsky. He echoes Trotsky and his arguments that Marx left no complete theory of crises, but only scattered hints. And even in the praise lavished on Spectator, Preobrazhensky follows Trotsky. Preobrazhensky’s whole theory of crises – from a methodological starting point – “equilibrium theory” to its last findings – is Trotskyist theory of crises.
II. Lenin’s Theory of Imperialism and Preobrazhensky’s Trotskyite Theory of Imperialism
In his theory of imperialism, while verbally recognizing the Leninist theory of imperialism, Preobrazhensky in fact breaks with Leninism and opposes it.
1. Lenin, in his theory of imperialism, gives a detailed description of all the contradictions of monopoly capitalism, because the great variety of internal contradictions, their exceptional sharpness and strength make up one of the most characteristic features of imperialism. Among these contradictions that Lenin with extreme urgency emphasizes and promotes as the most profound and fundamental is the contradiction between monopolies and the competition coexisting along with them. Lenin while fighting against opportunism, reveals the “the very profound and fundamental contradictions of imperialism: the contradictions between monopoly and free competition which exists side by side with it, between the gigantic ‘operations’ (and gigantic profits) of finance capital and ‘honest’ trade in the free market, the contradiction between cartels and trusts, on the one hand and non-cartelized industry, on the other, etc.”. (Imperialism, The Highest Stage of Capitalism, English edition, FLP Peking, 1970, pp. 141-142.)
The obligation to recognize this contradiction, as a characteristic feature of imperialism, in Lenin follows from his theory of capitalist monopolies – the essence of imperialism. According to Lenin, monopoly cannot completely oust competition and must exist above it and alongside it, because “it is a capitalist monopoly, i.e. it has grown out of capitalism and exists in the general environment of capitalism, commodity production and competition, in permanent and hopeless conflict with the overall situation.” (Collected Works, Vol. XII, p. 314) Underlining this, Lenin mocked all sorts of schema (whether the schema of ultra renegade Kautsky or schema of “state capitalist trusts” of Bukharin) that originate from the possibility of destroying competition among monopolies, from the conception of a pure monopoly, a pure imperialism.
Preobrazhensky on this issue holds a different opinion. However, in his book, Preobrazhensky talks about many modes in imperialism, mentions that “the monopoly can never completely destroy free competition” (p. 32). But all such reservations and declarations by Preobrazhensky are irrelevant. They only cover up his anti-Leninist construction. In fact, when it comes to the theoretical analysis of certain aspects of imperialism, Preobrazhensky almost completely discards the contradiction between monopoly and competition. Thus, for example, posing for himself the question, “how can there be any industrial expansion under monopolism”, Preobrazhensky accompanies it with the following methodological remark: “We will try to analyse this issue, first on the basis of the prerequisites of pure capitalism at the stage of monopolism.” And not to leave any doubt about the fact that the theoretical analysis of Preobrazhensky comes from the schema of pure imperialism, in another part of his book he states bluntly: “The question now is what elements of industrial expansion may exist in the era of monopoly? We will talk about pure monopoly”(p. 43). Below Iwill show that Preobrazhensky’s conclusions regarding the sharp drop in the pace of development under imperialism, the resolution of cyclical form of movement of imperialism, the termination of economic development and so on are closely linked with the methodological approach of Preobrazhensky to imperialism as a pure monopoly.
This approach can also be seen in the revisionist teachings of Preobrazhensky on the operation of the law of value under monopoly capitalism. Following his early tradition, Preobrazhensky in his latest book examines the law of value only as a regulator of the capitalist economy, i.e. examines it in a one-sided, mechanistic manner, rather than treat it as a law of contradictory motion of capitalism. With respect to the operation of the law of value in conditions of imperialism Preobrazhensky rests (p. 35) essentially on his old position, the essence of which boils down to the thesis that monopolies limit the effect of the law of value. Recall his argument of the “New Economy”:
“Restrictions on freedom of competition also lead to limiting the operation of the law of value, to the fact that on a number of occasions it encounters obstacles to its manifestation and partially takes on only that form of production and distribution, which is possible under capitalism” (p. 182).
Limitation of the law of value, i.e. the spontaneous law of motion of capitalism, means that spontaneity gives way to a monopolistic organization, that the movement of capitalism in its monopoly stage is not complicated by growing internal contradictions, and gradually becomes to from them. But these assertions represent pure revision of Leninism. Such an interpretation is at the same time deeply akin to the theory of “organized capitalism” and the conception of the automatic collapse of capitalism, which, as is known, are preached by Trotskyists.
It goes without saying that the Marxist-Leninist understanding of the law of motion of capitalism in its monopoly stage has nothing to do with the theory of limitation of the law of value. Everyone knows how vigorously he emphasized the idea that the movement of monopoly capitalism becomes ever more anarchic, conflictual, impetuous and catastrophic.
It is a hopeless enterprise to try to reconcile this statement of Lenin’s theory of movement of imperialism with the theory of limitation of operation of the law of value in the epoch of imperialism. Between Lenin and Preobrazhensky there are no points of contact. The idea that each new stage of commodity-capitalist economy develops, complicates and distorts the operation of the law of value, rather than eliminate it, is brilliantly expressed by Engels, when he wrote in Anti-Dühring (p. 351). “With the emergence of the capitalist mode of production, the previously dormant laws of commodity production began to operate more openly and more potently. ... The anarchy of social production became obvious and was carried to further and further extremes. But the chief means by which the capitalist mode of production accentuated this anarchy in social production was the exact opposite of anarchy -- the increasing organization of production as social production in each individual productive establishment.”
Monopoly capitalism propelled forward the “strengthening of the social organization of production,” but, in spite of Preobrazhensky, it does not lead to restriction of the law of value, but to a deepening, expansion and increasing complexity of the law and of the contradictions contained in it.
2. Preobrazhensky breaks with Leninism also in his interpretation of the law of uneven development under imperialism. The law of uneven development occupies a prominent place in the Leninist theory of imperialism. As is well known, Lenin links with this law tension generated by all the contradictions of imperialism, the spontaneity, conflict and crisis in the movement of monopoly capitalism; he associated with it the trend towards stagnation under imperialism; on this basis he built his brilliant theory of the victory of socialism in several or even in one single country. Lenin’s understanding of the law of uneven development of imperialism almost allowed the Leninist Party to achieve great successes in building socialism in the USSR and in the advancement of the world socialist revolution. On the other hand – anti-Leninist understanding of the law of uneven development was, along with everything else, based on theoretical and practical bankruptcy of the Trotskyist opposition.
What does Preobrazhensky contribute to the understanding of the law of uneven development under imperialism? Nothing, absolutely nothing, except for those trinkets and trifles that appear under the label “law of uneven development”.
Indeed. Preobrazhensky mentions law of uneven development in a number of places (p. 134, 55-56, 60, 81, 82, 83, 84, 86, 95, 102 etc.). For the most part, however, the law is only mentioned by him, or he only declares the need to consider the impact of this law on the process of capitalist reproduction. Preobrazhensky makes just one or two attempts to speak on the substance of the law. But the facts that he provides here is a very weak shadow of the real law of uneven development under imperialism – this “decisive force” of monopoly capitalism.
Basically Preobrazhensky just reduces the law of uneven development, to the unevenness of the reproduction of fixed capital (p. 82, 83, etc.).
In his theoretical analysis of imperialism Preobrazhensky takes into account the law of unevenness and does so mostly and only in the sense of uneven reproduction and an increase of fixed capital. Meanwhile, there is no doubt that if it is impossible to confine the all-pervading3 law of uneven development of capitalism (the uneven development of enterprises, industries, countries, uneven development, not only economic but also political, and so on) to the particular facts of uneven reproduction of capital, then, on the other hand, it is completely wrong to see only unevenness in the reproduction of the fixed capital. The unevenness of capitalist development is only one side, is one of the definitions of the capitalist relations of production, seen in movement. And in the reproduction of fixed capital, along with the unevenness there is uniformity in the same way as for example, the law of value also includes the denial of the organization of capitalism and a particular kind of its spontaneous organization.
Preobrazhensky’s understanding of the law of unevenness has nothing in common with Lenin’s understanding of the law, as it can be seen from the opposite effects, which stem from the law of unevenness in Lenin and Preobrazhensky. The law of unevenness for Lenin causes spasmodic gain, crises and catastrophic development. For Preobrazhensky the consequence of the strengthening of the law of unevenness in the era of imperialism (the uneven reproduction of capital) is the attenuation of the capitalist curve, reducing the cyclic waves, breakdown of the cyclical form of movement and a return to the schema of simple reproduction. What is this, if not decisive negation of the significance of the law of unevenness in the era of imperialism?
New evidence of Preobrazhensky’s misunderstanding the law of unevenness is his “objection” against the theory of ultra-imperialism (p. 34). It is known that the battering ram of the law of uneven development of Lenin completely defeated the Social-fascist theory of ultra-imperialism. It is clear that along with this argument against the mentioned theory, all other arguments appear as partial and less significant. Preobrazhensky held a different opinion. In the critique of ultra-imperialism he makes no mention of the law of unevenness at all. Preobrazhensky thinks it is sufficient to overturn the theory of ultra-capitalism merely by a reference to an assertion of “the impossibility of complete elimination of competition” (p. 34).
Thus, if we ignore some of Preobrazhensky’s purely verbal, purely formal assertions on the recognition of uneven development under imperialism, and take the essence of Preobrazhensky’s interpretation of the law of uneven development, one necessarily comes to the conclusion: Preobrazhensky does not understand the law of unevenness, and not only did he underestimate its operation (and strengthening) in the era of imperialism, but ultimately ignores the very law of unevenness for monopoly capitalism.
Thus, Preobrazhensky again finds himself in the company of Trotskyites and supporters of social-fascist theory of organized capitalism, who, as we know, deny the strengthening of the law of uneven development under imperialism.
3. In his book, Preobrazhensky demonstrated a lack of understanding of the Leninist doctrine of the decay of imperialism. Lenin considered parasitism and decay of the latter as one of the essential aspects of imperialism.
Under imperialism the seal of parasitism is put on whole sections of the bourgeoisie, and even on whole countries i.e. the imprint of a complete separation of capital-property from its direct operation, imprint of coupon slicers. Appropriation of surplus value and its consumption – these are the characteristics of these layers and rentier countries. The decay of monopoly capitalism Lenin saw in the fact that the form of “private economic and private property relations” no longer corresponds to the content of “socialization of production,” and therefore it decays. This decay occurs across the whole of private property relations. In particular, this decay is expressed in the tendency to stagnation in the development of the productive forces in individual enterprises, sectors, individual countries; more than that, “for certain periods of time, it [this trend, LK] gains the upper hand. ” (Imperialism,…, p. 119)
It should be emphasized that Lenin never equated decay and complete stagnation, the decay and full suspension of growth of the productive forces. Based on the fact that monopoly can never eliminate competition, based on the fact that the increase in profits through technical improvements cannot but act in the direction of change, based finally on the fact that an enormous intensification of the contradictions characteristic of imperialism, are “the most powerful driving force of the transitional period of history.” Ibid. p. 150), Lenin comes to the following conclusion:
“It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before, but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (England) ” (Ibid, p. 150-151.)
Preobrazhensky, in contrast to Lenin, equates the rot and stoppage (“throttling”) of development of the productive forces in the imperialist epoch.
“Monopolistic form of organization of production stifles development of the productive forces of society” (p 144) says Preobrazhensky. And it is not an accidental slip of the pen, an unsuccessfully formulated phrase – such flowers decorate the whole of Preobrazhensky’s book4. ‘But to treat the capitalist monopolies, which, as we know, are neither absolute nor solid, as a form that excludes any progress, any movement, equal to stifling of the productive forces, means to break also from evidence given in this respect by experience and at the same time, from the contribution of Lenin on this point. The capitalist monopolies, creating a tendency to decay, to a partial and temporary delay of the productive forces are still just a specific form of motion, rather than simple stagnation, of capitalism, unevenness, conflict, spontaneity, abruptness, but still a movement. E. Preobrazhensky holds a different opinion. Trotskyist wisdom: if there is a monopoly, then what follows is full suspension of movement, absolute stagnation, a complete stifling of development of productive forces –this is completely reproduced by him.
The thesis equating the decay with the suspension of development of the productive forces in the epoch of imperialism, of course consistently follows from Preobrazhenky’s representation of imperialism as a pure monopoly, of his representation of the limitation of operation of the law of value, of his ideas about the monopoly form, as the form excluding any movement of the productive forces, and so on. This thesis of course coincides with the statements of Trotsky, but this thesis has nothing to do with the actual tendencies of imperialism and serves as a theoretical basis for anti-communist practices.
4. Revisionists must admit to the views of Preobrazhensky, developed by him on the conditions of the working class. Preobrazhensky manages simultaneously to “revise” Marxism-Leninism on this issue both in terms of capitalism under free competition, and in relation to the era of monopoly capitalism. According to the theory of Marx and Lenin, in the course of capitalist development, accompanied by the displacement of humans by machines, the growth of division of labour, the growing use of female and child labour, decreasing qualification of the workers, increasing army of the unemployed, etc., pay cuts and lowering of the living standards of the working class occurs necessarily. This involves both relative and absolute impoverishment. For Marxist-Leninists, Marx’s law is still considered axiomatic. Preobrazhensky – and we know he is not alone – holds a different opinion.
He bluntly rejects Marx’s law of the deteriorating conditions of the working class, developed by Marx as a general tendency for capitalism as a whole, i.e. for capitalism in all its phases. Preobrazhensky wrote (for the era of imperialism): “As a result, wage rise even of the top and the best paid workers in the advanced capitalist countries is suspended, replaced by a tendency to fall systematically” (page 146). Already from this thesis it can be concluded that Preobrazhensky considers an increase in the level of wages and the improvement of the working class to be characteristic features for pre-monopoly capitalism. But in another place he openly expresses it himself:
“In the era of free competition ..., due to the rapid deployment of industry, big demand for labour was relatively higher than in the era of monopoly, and wages, albeit slowly, increased in the developed capitalist countries also for this reason. This is not a conjunctural fact from concrete history of capitalism, irrelevant for theoretical analysis, but a very important fact of a fundamental nature, because a more rapid increase in production and a rapid retraction of the labour force in the production and growth of not only the number of workers and the total salary fund, but also of wages of separate workers – all are elements of a single whole, elements and characteristics of the entire system of capitalism in the era of free competition ... The growing number of workers and average wage growth in the advanced capitalist countries is an inseparable part of the peculiar and historically unique moment, that expanded reproduction was in the era of free competition.” (pp. 41-42)
Our “theoretician”, as we see, follows the apologetic bourgeois statistics, and can see only the dynamics of the wages of the top layer of the workers of individual advanced capitalist countries, and swims against the current, against the “conjectural” tendencies of capitalism under free competition, the tendency toward decreasing wages and deterioration of the position of the working class. Thus, in respect of pre-monopoly capitalism, Preobrazhensky frankly revises one of the central points of the Marxist-Leninist theory. He “courageously” joins in this regard the company of a number of top-notch revisionists and opportunists – Bernstein, Kautsky and all modern social-fascists.
But Preobrazhensky also tries to distort the question of trends in wages (and the position of the working class) in the epoch of imperialism, although, as we have seen here, he talks about suspension of raise in wages, and even the tendency to systematic reduction. The fact is that whenever Preobrazhensky begins to explain the reasons for this feature of downward trend in wages in the period of imperialism, he slips into the position of the social theory of distribution that is now so fashionable among the social-fascists. Preobrazhensky wrote: “In monopoly capitalism, the main change here is that the balance of forces between the capitalist class and the proletariat has changed to the disadvantage of the latter” (p. 46), because at the same time that workers oppose capitalists with the old trade unions (weakened by the betrayal of the union officials), the capitalists oppose the workers using the increasing power of capital organised in trusts.
All of this, to say the least, is very ambiguously and suspiciously formulated. Wages depend on the balance of force? Good. Well, is the law of value of labour power valid or not valid in the epoch of imperialism? Preobrazhensky is silent, although he will have to speak out here, because we already know that he in all his works he holds the view of limitation of the law of value in the era of imperialism. Wages are determined by balance of forces? Good. Well, is labour power a commodity? Preobrazhensky is silent, although he should be saying something, for as slipping into the theory of “organized capitalism”, he must by elementary logic arrive at the theory of constraints to transformation of labour power into a commodity. Underlining the dependence of wages on the balance of “force” while concealing fundamental problems of wages (the law of value of labour power, problems of exploitation, of capital accumulation, etc.) brings Preobrazhensky to the social theory of wages of Social Fascists: The fact that in this case the Social Fascists speak about the tendency of wages to increase, and Preobrazhensky – of a downward trend, is not critical: with the wrong approach to the problem contradictory findings often and quickly pass one into the other.
Certainly monopoly associations are an important factor in the deviations of wages below the cost of labour power, of course, and a number of other factors act in the same direction, but this is on the basis of the immanent laws of capitalism and all this is closely connected with the law of the value of labour power.
5. The centre of gravity of the Preobrazhensky’s book lies undoubtedly in the analysis of natural cycles and crises of monopoly capitalism. In this area, the Preobrazhensky does not make mistakes “unexpectedly”, but consciously puts forward a new theory of the development of imperialism, as he puts it (p. 43). “from the view of the general theory of capitalist reproduction by Marx applied to the era of imperialism”.
The starting point here is Preobrazhensky’s thesis of the accumulation of excess stock of fixed capital.
“It is precisely due to the existence of monopoly and competition next to each other that I explain partly such a rapid accumulation of excess fixed capital under imperialism – a fact having so much importance in the process of deformation of the cycle under imperialism, and in changing the nature of capitalist crises.” (p. 35)
But how and why under imperialism does an excess of fixed capital accumulate? Monopoly, says Preobrazhensky, is characterised by the desire to meet the demand of cyclic expansions of existing enterprises by increased production and the desire to prevent the emergence of new enterprises during the upswings. Therefore, monopolies should always have maximum reserves of fixed capital. “The huge increase in reserves of fixed capital... inherently derives from the very structure of monopoly capitalism” (p. 36) and “is of paramount importance for the understanding of the whole system of reproduction under imperialism” (p. 54).
Due to this excess of fixed capital economic recovery is very rickety and “rarely able to grow automatically into an economic upswing” (p. 63). Only in some countries it may happen that the recovery will develop into an upswing.
But such an upswing will turn out to be very sluggish. If in the era of free competition, new construction began in period of early recovery (as determined by the free competition regime and the insignificant reserves of fixed capital), now upgradation and increase of fixed capital occurs – if it’s going happen at all – at the time of the upswing itself, mainly in its second phase, just before another crisis. This postponement of reproduction of capital weakens the robustness of the upswing and along with it delays the “crisis”.
The depressive phase of the cycle under monopoly conditions significantly changes its character. If the depression phase under free competition era of capitalism was characterized by the fact that within it the critical contraction of production mostly ended and that restarted the movement in an ascending trajectory, in the monopoly era, when there is no demand for fixed capital, depression functions to eliminate only that part of the excess in the production sphere, which was created by the crisis.
Changing the conditions of reproduction of fixed capital under imperialism leads to a change in the nature of the crisis. Since monopoly capitalism “enters into a crisis after the increase of capital’ (p. 95), the presence of an excess of fixed capital “now weighs down on it and makes it difficult to move forward” (p. 95), i.e. makes it difficult to exit from the crisis. “The crisis has to eliminate the swelling of the productive apparatus, which happened during the upswing.” But it’s just hard to do so, since monopoly capitalism “loses a very important incentive in terms of potency and time to end the crisis” (p. 64). If in the pre-monopoly period re-equipment has always acted as an important natural impulse for the weakening of the crisis, then now, since the increase in demand for fixed capital does not come in times of crisis, but earlier, this incentive disappears – hence the tendency to a prolongation of the crisis and in fact to its transformation into a permanent crisis.
If Preobrazhensky had thought his “concept” through to the end, he would have inevitably come to the conclusion about the impossibility of direct recovery and cyclical movements in general. He does not want, however, to openly declare so soon this explicitly anti-Marxist thesis. He tries to find the possibility of recovery under imperialism. But here he is helpless to do so with the help of his theory.
“The question is (how can a long recovery turn into an upswing, LK?) of exceptional difficulty, and I must frankly confess to the reader that I have not understood it completely” (page 51-52).
However, without explaining the question, Preobrazhensky tries to offer the readers options for its solutions. There are two options. Either an upswing on the basis of orders for new equipment: “In this case, increasing reserves of fixed capital are deployed before the crisis. It is this process of increasing stock of fixed capital can either turn the economic recovery into an economic expansion or throttle and temporarily postpone the looming crisis” (p. 53), or an upswing through expansion of the foreign market: “With just such a non-uniformity in the distribution of the rate of movement, separate parts of the world can experience the state of a long recovery, translating into an upswing, despite the countering factor in the form of accumulation of huge reserves of fixed capital” (p. 56).
But all this does not help Preobrazhensky. The first option comes into irreconcilable contradiction with his main thesis that it is the accumulation of fixed capital reserves, specifically the shifting demand for fixed capital at the end of the upswing, makes the next upswing impossible. The second option does not answer the question: how is a general upswing possible under imperialism? As a result, for Preobrazhensky, the upswing under monopoly capitalism must be impossible. Along with this crisis and cyclicity in general becomes impossible.
At the root of all relevant constructs of Preobrazhensky is the bourgeois and social-fascist idea about the disappearance of cyclical form of movement under capitalism at the highest stage of its development, an idea, the strongest preacher of which has consistently been Trotsky. Preobrazhensky directly formulates this idea.
Under conditions of monopoly, “the capitalist system will tend to incline more and more to the conditions of simple reproduction” (p. 95). “The whole capitalist system ... must enter conditions when gradually the cyclical form of movement itself is absorbed (if capitalism survives until then), when the gradual economic development is suspended, and the trend to simple reproduction come to prevail more and more ...” (page 96–97).
The whole theory of Preobrazhensky, which is really the theory of Trotsky and social-fascists, is in complete contradiction with the teachings of Marx and Lenin. Com. Serebryakov in his report has revealed the apologetic and defeatist essence of the theory of non-cyclical development. This theory is strongly at odds with the real dynamics of capitalism. It confuses the proletariat. It imposes the conclusion that if the cycle is still there, then all is well with capitalism and the proletarian revolution is premature.
Thus the cycle of distortions in the conditions of monopoly capitalism acquires a totally perverted character with Preobrazhensky. Deformation of the cycle undoubtedly occurs in the era of monopoly, but it happens differently than it is presented by Preobrazhensky.
The development of the basic contradictions of capitalism in the epoch of imperialism lies in a dramatic, immeasurably more acute than ever before, contradiction that finds its expression in the exacerbation of the specific contradictions of monopoly capitalism, representing, as stated above, the form of expression of the basic contradiction. In view of all these changes, there is nothing surprising in the fact that monopolistic cycle and monopoly crises acquire a number of specific features; here it is possible to note the weakening intensity, universality and durability of upswings; acceleration and deepening of the crisis; deepening and protraction of depression. But there is nothing like a resolution or an ending of cycles and expanded reproduction. That is because there would be no cessation of expanded reproduction of capitalist contradictions.
6. In close connection with Preobrazhensky’s teaching of cessation of the cyclical form of movement under monopoly capitalism are his views on the general trajectory of development of monopoly capitalism and about the pace of this development. Preobrazhensky in numerous places (pp. 11, 13, 16, 44, 45, 57, 58, 59, 85, 95 and 96, and so on) dwells on how monopoly structure of capitalism obstructs the development of the productive forces. We can and must say that monopoly capitalism creates new barriers to the development of the social productive forces. But one cannot view these obstacles as absolute, it is impossible to come to a conclusion regarding stagnation (cessation) or the absolute inability of imperialism to move the latter forward. Meanwhile Preobrazhensky directly develops the Trotskyist theory of stagnation.
“Monopoly ... means a slower pace of economic development in general” (p. 44).
“Economic development of capitalist society is slowed down, the lifting curve of the upswing turns more and more to a straight line of simple reproduction” (pp. 85-86); “The gradual economic development is suspended” (p. 96).
“Monopoly, with the existence of categories of profit as a direct stimulus to production, is a constant source of blockage in the development of the productive forces of society, and here the desire for profits increasingly becomes a stimulus not for the development of production, but for a reduction.” (p. 134).
This “philosophy” of the productive forces in the era of imperialism has nothing to do with Leninism. Lenin all the time emphasizes that with the increasing tendency to decay, to parasitism, imperialism also drives forward the productive forces, although this development is uneven, intermittent, irregular, that decay, which is expressed in the suspension of the development of the productive forces in some sectors in some countries, in some periods of time, does not preclude an overall growth. This development of productive forces in the process of contradictions rising to the extreme, in the exacerbated antagonism (class and imperialist), in the general “horror without end” is what makes imperialism the eve of the proletarian revolution.
But if Preobrazhensky’s statements regarding the general line of development of the productive forces of imperialism are contrary to reality and the views of Leninism, then these statements are identical with Trotsky’s conception. I will not give quotes, because they are contained in Com. Serebryakov report. Let me just note that Preobrazhensky is in solidarity with the Trotskyist theory of stagnation of the productive forces in contemporary capitalism, that he boldly raises the Trotskyist position to the rank of general laws of monopoly capitalism, applies them not only to the post-war imperialism, but also to the entire pre-war imperialism. Here Preobrazhensky attempts to become more Catholic than even the Pope himself.
So, there is not a grain of Leninism in the conclusions arrived at by Preobrazhensky of the laws of motion of imperialism. Preobrazhensky here reveals the ideological connection, first, with the bourgeois theory of non-cyclical development of late capitalism (Sombart); secondly, the social-fascist theory of “organized capitalism”; thirdly, the general concept of counter revolutionary Trotskyism of the absolute cessation of all development of the productive forces under imperialism; fourth, with anti-Leninist, anti-revolutionary, Luxemburg’s theory of automatic economic collapse of capitalism.
III. Timid Allusion to a Global Crisis and the Bold Denial of Universal Crisis in E. Preobrazhensky
Throughout the work of Preobrazhensky the most characteristic feature of the post-war imperialism is absent – namely that it has entered the phase of the general crisis of the capitalist system. What Preobrazhensky provides in the short chapter XIII, which is titled the “general crisis of capitalism,” does not in the remotest degree resemble the interpretation of the general crisis, given in the works of com. Stalin, in the Comintern’s programme and a number of other documents, the correct interpretation of which is confirmed on a daily basis by the revolutionary practice of the world proletariat.
What does Preobrazhensky here speaks of? He talks about the failure of the mechanism in capitalism to emerge from a crisis, of the complete suspension of the development of productive forces, the intensification, due to this, of capitalist contradictions, the systematic increase in excess of the working population, a growing unproductive consumption while reducing the base of the exploited workers, the growing mountain of income titles while reducing the mass of surplus value and so on. It is easy to notice that in all these arguments Preobrazhensky remains within the framework of the anti-revolutionary theory of automatic economic collapse of capitalism, the theory which is known to be one element in the eclectic ideology of counter-revolutionary Trotskyism. On the general crisis of capitalism in its Leninist understanding Preobrazhensky says nothing.
What is this, a random forgetfulness? Of course not. Not only in this book, but in all his prominent works on the post-war capitalism, the prospects of which he gives in the preface, Preobrazhensky does not say a word about the general crisis of capitalism.
Misunderstanding of, or rather the denial of, the universal crisis of capitalism by Preobrazhensky is already apparent from his very approach to the problems of modern capitalism. Whatever the issue, whether it is the problem of reproduction, crisis, working class, unemployment and so on, Preobrazhensky takes up for examination, he considers these always in terms of monopoly, as a whole, i.e. it being the same both for the pre-war imperialism and for the post-war one. This methodology is precisely what exposes Preobrazhensky. It just shows that Preobrazhensky does not understand or deliberately denies the general crisis of capitalism, as a specific phase of imperialism, of the era of proletarian revolutions.
Incidentally this manner to treat specific problems of contemporary capitalism from the standpoint of imperialism as a whole constantly misleads Preobrazhensky in his conclusions (if he did not even want to be misled), forcing him to carry the characteristics of imperialism in the epoch of the general crisis over to the pre-war imperialism, and vice versa. But this is a different thing!
Misunderstanding and the denial of universal crisis of capitalism by Preobrazhensky is also reflected in the fact that Preobrazhensky views the crisis of 1929- 1932 as the first classic crisis of monopoly capitalism.
Of course fundamentally wrong is the attempt to consider the crisis of 1929-1932 only as monopoly crisis: it is a monopolistic crisis, but it is also something more. The crisis of 1929-1932 is also a crisis that unfolded on the basis and in an atmosphere of a general crisis of the capitalist system.
Since Preobrazhensky declares the crisis of 1929-1932 as “the first typical economic crisis of imperialism”, he thus casts aside all the specificity of the crisis and, consequently, all the specificity of capitalism in an era of a general crisis, i.e. denies the existence of this universal crisis.
But if by equating capitalism of the era of universal crisis with the prewar monopoly capitalism Preobrazhensky denies global crisis, then at the same time by additional arguments he stresses and also develops a counter-revolutionary theory of automatic economic collapse of capitalism. Unable to understand the real forces that are now undermining capitalism, equating the elements of post-war capitalism with the corruption of the mechanism of capitalist reproduction, with an “increase in the force of friction” of the capitalist economic machine, Preobrazhensky on the one hand smudges the specific features of capitalism in the epoch of its collapse, and on the other hand, extends the features of the latter for the entire period of imperialism as a whole.
With what ease Preobrazhensky carves up a stubborn reality for the sake of his schemata can be illustrated by the following examples.
In Preobrazhensky’s theoretical schema it must follow that in the epoch of imperialism, “the capitalist system is forced into the next phase, one of slower pace of development” (p. 60), into a cessation of cyclicity and general upswings, into an end to the movement of the productive forces. In fact, however, the pre-war imperialism knew upswings, on the whole far more rapid ones than in classical capitalism, the productive forces developed and found the sharpest breaks in the cycle. This glaring contradiction between reality and his schemes Preobrazhensky overcomes by stating that pre-war imperialism was transitional, not typical, not classical.
According to Preobrazhensky’s theoretical schemata it must follow that in the era of imperialism the crises are protracted, and the exit from these is difficult and that “the global economic crisis is a disaster for the whole imperialist system” (p. 98). In fact monopoly capitalism was shaken by more frequent crises (1902, 1907, 1914, 1921) and deeper ones, although they do not automatically lead to the downfall of the capitalist system. It is a contradiction of his theoretical schemata with reality that Preobrazhensky destroys by simple way of denial of reality: he argues that monopoly capitalism essentially has not yet experienced monopolistic cycles and crises of monopoly. The crises in 1902 and 1907 were still one of “transition” from capitalism of free competition to monopolies, the crisis of1914 turned into a war crisis and one in 1921 was a crisis of deflation. After this simple operation Preobrazhensky reveals even a more striking fact:
“Remarkably interesting fact! Imperialism as the latest stage of capitalism has been in existence for more than 30 years. Meanwhile, during this time there was no deep economic crisis, which would allow to distinguish its most characteristic features” (p. 98).
Really remarkable discovery: there is monopoly capitalism without monopolistic cycles, which are known to occasionally lead to the explosion and resolution of all the contradictions of the system, there is monopoly without monopoly, by the grace of Preobrazhensky’s theoretical fantasy. I will here “rehabilitate” the crises of the era of imperialism from the accusations that they were not deep crises: the available statistical material5 is not in Preobrazhensky’s favour, but in favour of Engels and Lenin, who strongly emphasized the inevitability of escalation of the crisis in the imperialist epoch.
Denial by E. Preobrazhensky of the general crisis of capitalism clearly emerges from his conception of fascism. Fascism “as a terrorist dictatorship of big capital”, as a “method of suppressing the revolutionary movement”, as “civil war against the workers” is a product and at the same time a sign of the general crisis of capitalism. Of the two methods of bourgeois rule (“violence” and “liberalism”) in the era of monopoly capitalism “ the first acquired precedence: political reaction corresponds to the dominance of monopolies in the economy, but only under specific historical conditions, this bourgeois-imperialist reaction takes the form of fascism. These are special conditions – the conditions of the general crisis of capitalism, with its characteristic features – the struggle between the two systems, a tense struggle of the working class against the capitalists, etc. Preobrazhensky does not agree with... such an interpretation of the nature of fascism. For him fascism is a – “form of bourgeois state in the period of monopoly capitalism, the last stage of the existence of capitalism” (p. 141), which replaced the” bourgeois-democratic state, definitively established in the XIX century”, in the period of pre-monopoly capitalism. In other words, in interpreting fascism E. Preobrazhensky again takes up the Trotskyite position and considers the era of universal crisis of capitalism and the pre-war imperialism as a single whole, conflates the first with the second, and as it were denied the unique nature of general crisis of capitalism. At the same time, fascism too, according to Preobrazhensky, ceases to be a specific product of the era of the general crisis of the capitalist system and one of the most characteristic features of the latter. This is one aspect of the matter. On the other hand, Preobrazhensky strongly emphasizes the idea that fascism as a new form of the bourgeois state in its very foundation has “a narrow base of social production” (p. 145), the inability to “use all the means of production and all the labour power of society” (p .145), due to the structure of monopoly capitalism, and so takes up the task to compensate the bourgeoisie for “weakening of the economic power” by doubling of its political forces, providing means “to increase the rate of exploitation of the proletariat and to lower its standard of life ... that it has reached, by destroying all its strength as an organized resistance” (p. 143).
It is easy to see that all these considerations are sequentially arranged in a particular row and with Preobrazhensky it appears that the fundamental question of modern capitalism (the general crisis of capitalism) in the relationship between the bourgeoisie and the proletariat is the increase in the rate of exploitation, the desire to bring the standard of living below the one existing, i.e. the struggle between the proletariat and the bourgeoisie over economic issues and, moreover, in such a form that the bourgeoisie is on the offensive, and the proletariat is on the defensive. This is certainly not true. It is clear that in the era of the general crisis there is, between the working class and the bourgeoisie, a struggle not only on economic issues, but above all on the question of whether or not capitalism should exist at all. It is clear that in the era of the general crisis of capitalism, the proletariat not only leads the economic struggle, even if a defensive one but one that increasingly sharpens economic conflicts so that they become political battles and conducts offensive operations against the bourgeoisie on an unprecedented scale. There is no need to prove that the characterization of the labour movement of the era of economic crisis, both in terms of its content and as defensive tactics is anti-Leninist, and a Trotskyist one.
As a last in order, but perhaps first in importance of the common arguments in support of the assertion that Preobrazhensky denies general crisis of capitalism, it is necessary to point out Preobrazhensky’s interpretation of the struggle between the two systems, of the defining moment of general crisis of capitalism. Preobrazhensky’s interpretation of the problems of struggle between the two systems is wrong. nonpartisan and obviously obscures the greatest impact of the rising system of socialism on the dying capitalist system, inevitably leads to smudging the line between pre-war and post-war imperialism, of imperialism in the epoch of general crisis, leading to a denial of the general crisis of capitalism. More of it, I show below
We have indicated above some general moments, that provide irrefutable evidence that Preobrazhensky denies the general crisis of capitalism. Along with this, we find in Preobrazhensky’s book also his direct remarks to that effect. He writes:
“The general economic crisis under monopolism, if it does not lead to a world war or is not interrupted by technological revolution inevitably develops into a general, not only economic, but also a social crisis of the entire historical system of capitalism” (p. 97).
Preobrazhensky considers as the first typical crisis under monopolism, as we have seen, the crisis of 1929-1932. However, he argues that such a crisis inevitably develops into a general crisis of the capitalist system (and that too only in the absence of a war and technological revolution). Consequently, until now there was no general crisis. Is this not a denial of the general crisis of capitalism, the crisis, which began with the War of 1914-1918!
Elsewhere Preobrazhensky predicts like a professional scientist: “Universal economic crisis threatens to turn into a (general) crisis of the capitalist system.”
According to Preobrazhensky in 1931, the global crisis threatens even more to turn into a global crisis of capitalism. Social Fascists, these rabid apologists of capitalism, its doctors and rescuers are known to have denied and continue to deny that capitalism has entered from 1914 – 1915 into a period of general crisis. A counter-revolutionary Trotskyism as a matter of fact does not recognize the existence of the general crisis of capitalism. Is it difficult to understand whose ideas are now being peddled by Preobrazhensky when he denies the existence of the universal crisis of capitalism?
So Preobrazhensky denies the universal crisis of capitalism. Those of his arguments, where he asserts the hopelessness of modern capitalism, the absence of a mechanism to exit the crisis, fading economic development of society, and so on., has nothing in common with the theory of general crisis of capitalism. Here the theorist of the “decline of capitalism” (which is the sunset rather than the collapse, not the revolutionary overthrow) simply reproduces the theory of automatic, purely economic collapse of capitalism, a theory on the basis of which half hearted Mensheviks and Luxemburgism and counter-revolutionary Trotskyism and skittish right opportunism and adventurist left opportunism converge.
Preobrazhensky does not recognize the general crisis of capitalism. But this makes it hopeless to attempt to understand the basic questions of modern capitalism that is in its stage of death. In particular, it deprives him of the possibility of anything like a satisfactory understanding of today’s global crisis.
IV. Modern World Crisis in Preobrazhensky’s Assessment
What serious repercussions the ignoring of the presence of the general crisis of capitalism has, is easy to show by the example of Preobrazhensky’s analysis of the nature, causes and prospects of the current world crisis. The theoretical study of the problems of the modern world crisis – the crisis is highly peculiar – clearly falls short of “practice.” Marxist literature on the universal crisis, created over the past two years, often gives a comprehensive answer to one or the other question, thrown up by the course of the crisis. But what is now presented by Preobrazhensky is striking even in comparison with the poor state of our literature about the global crisis.
Analysis of the contemporary global crisis by Preobrazhensky and its content is nothing less than a biased forcing of reality into a contrived schema of cycles in the era of monopoly capitalism. We know this schema: the overall rise is excluded; the strength of a partial upswing determines the volume of reserves of fixed capital; an end to production of these reserves signifies a crisis, the mechanism of exit from which (if there is no war or technological revolution) is non-existent. In this schema Preobrazhensky tries to fit in all the development of the world capitalist economy since 1923.
The matter is presented in the following form. The war years of 1914-1918 for the USA were years of enormous growth in exports. This was a “spike”, leaning on which the USA then increased the capacity of its internal market. Because of this the crisis in 1921 was quickly eliminated. In fact, the expansion of the domestic market has played a crucial role in the expansion of the industrial demand for new fixed capital6. On the basis of this expansion of fixed capital in the production sphere in the USA economic expansion lasted until the summer of 1927. By this time it had exhausted itself. There has been a crisis, but it ended with depression, for the monopoly system of the USA at that time moved to the rapid accumulation of reserves of fixed capital, which has overcome depression and prolonged the upswing in the USA for two more years.
In other words, the latest upswing in the USA, according to Preobrazhensky’s assurances developed in full accordance with his schema. But not only the upswing, says Preobrazhensky, is a confirmation of his schema, the crisis itself of 1929 -1932 also confirms the correctness of (Preobrazhensky’s) constructs: the crisis began suddenly, dramatically, with heavy industry, and was very deep and long. As in the phase of upswing so in the phase of the crisis the strongest country of monopoly capitalism – the USA was in the lead. The prospects for the crisis, as far as they can be judged at all, according to Preobrazhensky, are in full accordance with his schema:
“Capitalism in the United States cannot count on a way out of the crisis from this end (with upgradation and an increase of fixed capital, that got over in 1929, L. K). On the other hand, neither had any revolution in technology occurred that could have led to existing capital becoming technologically obsolete and hence to placing of large orders for new fixed capital. Even in expansion of foreign markets in new territories there is no hope. Thus it is expected that capitalism in the United States will have to pass through an extremely difficult and a long course of compression of the productive apparatus till it reaches the limits mentioned above. Branches of Department II must shrink enough to be able to adapt to new proportions of consumption so that existing reserves are depleted. The branches producing fixed assets may shrink to the level of depreciation of fixed capital’.
“The question arises – says Preobrazhensky, – how much physical compression of products is necessary for the economy of the United States so that the limit of critical reduction of the production apparatus is reached and inventories from the period of the upswing are used up” (page 134).
On this issue Preobrazhensky gives the answer: “The volume of production in the United States must shrink at the very least to the level that preceded the onset of recovery, i.e., up to about the level of1922-23. Then, even the additional compression of a conjunctural character must get over, compression, whose task is to re-absorb the excessive inventory” (p. 134 -135).
“This is a natural limit to the contraction of production, and hence the limit after which a recovery can begin, if the system is not eliminated, or in that part where it is not eliminated by a proletarian revolution” (p. 134).
Comparing further data on commodities in the USA over the past decade with the monthly data of 1931, Preobrazhensky comes to the conclusion that “this basic compression of production has almost gotten over by the end of the second half of 1930 (my italics, LK), since December provides production levels below that for all of the last nine years” (p. 135). Moreover, Preobrazhensky believes that at the end of 1930 the additional compression, which was needed to eliminate the trade surplus in the USA also comes to an end. From this follows the general conclusion: “so the level of production in the United States is unlikely to have significantly dropped in comparison with the current level” (page 135).
In Preobrazhensky’s interpretation of the causes of the current world crisis what strikes us most is the narrow, purely economic approach to the problem. In words Preobrazhensky recognizes the inadequacy of this method: “As it is impossible to examine the current economic crisis only as a purely economic process – it is just as impossible to give a purely economic outlook” (p. 133). In practice he limits himself to this (and only this). If in his projections Preobrazhensky tries to take into account the impact of these non-economic factors, then in explaining the causes of the global crisis, he remains stuck in the positions of pure war economy; moreover, he is interpreting it incorrectly. The role of the foreign market at the beginning of recovery, the significance of the domestic market later and then an increase in the reserves of the fixed capital at the end of recovery – that’s the whole cocktail, of the biggest, distinctive global crisis according to Preobrazhensky.
Accounting for at least such a decisive fact that the economic development of the USA after the war is to some extent a function of the political, social, economic disturbances that characterized the post-war development of the capitalist countries of Europe and the colonial and semi-colonial countries of Asia, America and Africa we have certainly not seen in Preobrazhensky’s works. Problems of higher mathematics Preobrazhensky tries to solve the by primitive methods of multiplication tables.
It was noted above that essentially Preobrazhensky denies the general crisis of capitalism. Preobrazhensky’s analysis of the current world crisis has convinced us of that again. We know that the current global crisis unfolds in the new specific conditions, without which it is impossible to completely understand its nature. We know further that most of these features are reduced to the fact that, firstly, the current crisis hit the main capitalist countries the hardest, that secondly, industrial crisis got interwoven with the agrarian crisis, that, thirdly, the current crisis unfolds in conditions of monopoly capitalism, and that, fourthly, the current crisis unfolds on the basis of the general crisis of capitalism.
Of all these conditions Preobrazhensky takes into account only the third, and then, as we have seen, in the form of “pure monopoly”. With regard to the crucial features of the current crisis, as a crisis on the basis of the general crisis of capitalism Preobrazhensky pays no attention. Such important aspects of general crisis of capitalism, as the existence of the Soviet Union, a chain of proletarian revolutions in European countries, colonial revolutions, general social and political instability created by the war, a chronic agrarian crisis, a unique price dynamic, structural unemployment, and so on., should also be considered in order to explain the present global crisis. To equate the current global crisis to the general basis of capitalist crises, even though monopolistic, means bypassing by its most important features.
Further. When taking into account these features of the general background in which the current global crisis has occurred, all those “limits” to the crisis in the USA which Preobrazhensky outlines in the form of “basic” (pre-level, prior to the present recovery) and “incremental” compression (to the extent necessary for the resolution of trade surpluses) must seem frivolous.
As always, practice is the best criterion of judging a theory. Preobrazhensky says that the level of production in the USA is unlikely to fall significantly in comparison with the level at the end of 1930. What are the facts? They speak against Preobrazhensky. It is sufficient to compare the data for December 1930 and December 1931 on key indicators of production in the USA, to see that the Preobrazhensky “limits” have been surpassed by far by the actual movement of the American crisis.
| Manufacturing products | Steel | Automobiles | Electricity | |
| December 1930 | 76.1 | 1971 thous. Tons | 161 thous. | 1979 mil. Kv |
| December 1931 | 65.5 | 1320 thous. Tons | 120 thous. | 1670 mill Kv |
In between the scissors of production level in USA in the late 1930 which (level) for Preobrazhensky is the lowest in the present crisis, and the level for December 1931 it is easy to discern a complete average crisis. Meanwhile, there is no reason to believe that the level of December 1931 is the lowest level. The fall still continues.
Preobrazhensky’s “forecast” proves that his theory of monopoly cycle and the crisis, with all his “revolutionary” talk (there is no exit from the crisis, capitalism is powerless to develop the productive forces and so on and on) in its very core is an opportunistic theory – it smudges the most acute contradictions of capitalism, blurs the scope of the explosion of these contradictions, leading to thoroughly wrong findings undermining the degree of the decline of capitalism, and predictions. In Preobrazhensky the crisis in the USA should have long come to an end. In fact, it now has not yet reached the bottom.
V. The Fight between Two Systems in Preobrazhensky’s Assessment
With the victory of the October proletarian: the revolution in the USSR, the world economy has split into two antagonistic systems: socialist and capitalist. “Capitalism is no longer the sole and all-embracing system of world economy” (Stalin). Alongside of capitalism and in irreconcilable struggle with it there is developing and strengthening the system of socialism, the USSR is growing – the citadel of world revolution. But the totally opposite, antagonistic systems of a growing socialism and a dying capitalism are not indifferent to each other. They are connected by a single process of the revolutionary transformation of world capitalism into a socialist world. They are related by a relentless struggle between them. The tremendous aggravation of the basic contradiction inherent to capitalism between the social character of production and the private capitalist form of appropriation has led to a splitting of the world economy and has found its highest expression in the contradiction between the socialist and capitalist systems, in the struggle between these two systems. The struggle between the two systems is the defining moment of the entire modern history.
It is impossible to understand anything correctly either about the capitalism of the era of general crisis, nor about the expansion of the world socialist revolution without a proper accounting for the actual significance for both aspects of the first country of victorious socialism – the USSR. “By its very existence it is revolutionizing the whole world” (Stalin), shakes the very foundations of capitalism, aggravates all its contradictions, narrows the limits of exploitation, “it poses a threat to imperialism through the socialist industrialization of the USSR” (resolution of the XI Plenum of the ECCI), by the rapid pace of socialist economic growth practically realises the slogan of catching up and overtaking the advanced capitalist countries technically and economically in the shortest historical period.
By destroying the system of imperialism, shaking its foundations, aggravating its contradictions, the Soviet Union thus at the same time serves as a base for further development of the world revolution. “The international significance of the October Revolution is not only that it is a great beginning of one country as the first centre of socialism in the ocean of imperialist countries and of destruction of the system of imperialism, but also in the fact that it is the first stage of the world revolution and a mighty base for its further development”(Stalin).
The struggle between the two systems – socialism and capitalism – is the main contradiction of contemporary history, the basic core of contemporary international relations. Now, in a new phase of the general crisis of capitalism, and in the period of the greatest global crisis of 1929-1932, the period of the huge success of building socialism – this contradiction is revealed with unprecedented sharpness, the struggle between the two systems as a defining moment has increased enormously. The enlarged Plenum of the ECCI (February 1930), noting the huge success of construction in the USSR, pointed out: “There can be no doubt that all this change in the balance of power between the two world economic systems in favour of international socialism makes the USSR, now more than ever, a powerful factor in the deepening crisis of capitalism, and in a revolutionary upsurge of the proletariat and the exploited masses all around the world.”
How does Preobrazhensky evaluate and take into account in his analysis the struggle between the two systems, this decisive factor in the totality of relationships and of the whole development of modern capitalism?
First of all, a reader is astonished by the extreme brevity of Preobrazhensky’s analysis of the matter. Winding and unrestrained in discussions on all sorts of subtleties of his arbitrary theorizing, Preobrazhensky is incredibly silent as soon as he comes to the most essential, the most crucial issue of our time.
Suffice it to say that in his book, to the question of struggle between the two systems Preobrazhensky devotes nearly four pages in Chapter XIV and several cursory and fragmentary observations in two or three other places.
Preobrazhensky’s brevity is not accidental in this important matter. And what he says on this subject, clearly shows that he did not understand the significance of the problem. As a proof of this last thesis I will cite a few examples.
First example. When Preobrazhensky tries to take into account “the fact of the existence of the USSR” for the further development of capitalism and the development of the world socialist revolution, for him the Soviet Union merely acts as a symbol of the fact that “the crust of the capitalist system is already broken in the USSR”, or the fact that the proletariat of Russia “already is organized in a state.” In 1931, in the decisive year of the first five-year period, at the threshold of the second five-year plan, to characterize the USSR’s importance in the revolutionary transformation of the world only by such features as a “breaking of the capitalist system’s crust,” as “the organization of the working class in form of a state,” means falling behind by 14 years.
We have entered the period of socialism, and completed the construction of the foundation of the socialist economy. As a result of the victories of world-historical significance we have secured the victory of socialism in our country, and solved the problem of “who destroys whom” in the Soviet Union once and for all in favour of socialism. We stand today at the threshold of the second five-year plan, which will ensure the elimination of the capitalist elements and classes in the USSR. The majestic outline of this five-year plan is hanging like a terrible nightmare over the perishing capitalist world. In these circumstances, to limit oneself, in the interpretation of the issue of the Soviet Union, to just an indicating the fact of breaking the crust of capitalist society and the organization of the proletariat into a state (because it was already in 1917) is to ignore the huge successes of socialism in the USSR and it means underestimating the importance of the Soviet Union as a powerful factor of universal crisis of the capitalist system, shaking and destroying capitalism.
Second example. In the aforementioned Chapter XIV Preobrazhensky emphasizes mainly the “propaganda value of our economic success” (p. 164). He is very reserved in assessing the direct impact of the economy of the Soviet Union on the capitalist world.
“In our press a lot is said about the whole absurdity of the accusations that we can overthrow capitalism by offering cheap prices through the mechanism of three percent participation in the higher world trade” (p. 161).
Rejecting the bourgeois’ press defamation of Soviet dumping, one should not at the same time underestimate the economic impact of the USSR on capitalist countries. Thanks to the heroic growth rates of socialist production, and rapidly changing share of the USSR in world production, the share of the USSR in world production (in percent) constituted respectively for cast iron: 1928 – 1.7 and 1929 – 4.1, 6.2 in 1930, and in 1931 – 9.0, for steel respectively: 2.1; 3.9; 5.9; 7.5; oil, respectively: 6,4; 6.6; 9.5; 11.5.
Already at this stage, and even more with the next steps we can talk about increasing economic pressure of the Soviet Union on the decaying capitalist economy. The threat of Soviet Socialist industrialization for imperialism, about which XI Plenum of the ECCI talks, is not only a matter of propaganda, but a real, direct offensive of socialism against capitalism. Preobrazhensky blurs this aspect of the matter, and obscures and hides it.
A third example. The last page of his book, Preobrazhensky completes with this sentence:
“Let the other countries announce a blockade of the new socialist country: now it will not disappear because of this, now she has a powerful ally and a socialist rear of the East” (meaning the USSR, L.K.).
This thesis of the USSR as the rear of the next proletarian revolutions of course has nothing to do with party’s assessment of the role and responsibilities of the USSR in the world socialist revolution. It is known that Lenin pointed out the active role and leadership of the victorious proletariat of one country in the spread of the international revolution. It is known that Stalin forcefully emphasized the importance of the Soviet Union as a basis for further development of the world revolution, as a lever to the further disintegration of imperialism.
The Soviet Union as a “socialist rear” of the “new socialist countries” is a kind of echo of the old Trotskyist conception that preaches the impossibility of the victory of socialism in one country, smudging of the international significance of our revolution, denies the role of the USSR as the bulwark and the most important factor in the global victory of socialism.
Preobrazhensky’s distortion and underestimation outlined above of the role of the struggle between two systems, again, are not of chance. This underestimation stems from Preobrazhensky’s poorly concealed doubts about the authenticity of the socialist nature of the Soviet economy. In most of Preobrazhenky’s wording to that effect, we come across purely ambiguous characteristics such as “our economy”, “our economic system shows example of what socialist organisation of Labour can provide” (page 139. “The law of value ceases (!) to operate in our economy” and so on.
<> In the present-day discourse on the nature of the Soviet economy and the struggle between the two systems the load of ideas, perceptions, attitudes, which is developed by Preobrazhensky in the “New Economy” (1926) continues to be felt. The then conclusions about the pressure of the world economy (p. 37) on the economy of the USSR, the old idea of our economy being a commodity-socialist one, the old doctrine of the two regulators (p. 42), the old ideas about the development of our economy like a parallelogram of forces between socialism and capitalism, the old formulations on the restoration of pre-war contradictions between agriculture and industry, all of this and are now part of the silence about the huge success of socialist construction in the USSR, a pure and deliberate usage of a vague language in characterizing the socialist nature of the Soviet economy, in disregard of the new stage of our development, in denying the active destructive impact of the Soviet Union on the capitalist system, in belittling the role of the USSR as a base for further development of the world revolution.In this underestimation of the socialist nature of the Soviet economy, tremendous achievements in socialist construction, the smudging of the world-historical significance of the fact of the USSR entering the stage of socialism, this blurring of the success of the world proletarian revolution – don’t we feel that there is a motive of the same conception, which social- fascists and counter-revolutionary Trotskyites openly assert in the form of a direct maligning of the successful construction of socialism in the USSR?
Let us summarize the results of Preobrazhensky’s new book. It contains:
Open Trotskyite revision of the Marxist-Leninist theory of reproduction and the theory of crisis.
Support for R. Luxemburg’s revisionist theory of realization.
Open revision of Lenin’s theory of imperialism.
Echoes of social-fascist theory of “pure” imperialism.
Trotskyite negation of Lenin’s theory of uneven development.
Social-fascist, Trotskyite theory of automatic collapse of capitalism.
Trotskyite theory of stagnation of productive forces in contemporary capitalism.
Bourgeois and social-fascist theory of non-cyclic development of contemporary capitalism
Social-fascist and Trotskyite negation of the general crisis of capitalism.
Mechanistic explanation of the contemporary global crisis as the latest stage in the general crisis of capitalism.
An almost complete ignoring of the struggle between the two systems as the main trajectory of development of contemporary society and as the decisive moment in the general crisis of capitalism
It is not difficult to note that the latest book by Preobrazhensky is an eclectic work. Separate parts of his theory Preobrazhensky has collected from from a wide variety of (bourgeois, social-fascist, Trotskyite and Menshevik) theoretical junkyards. But in all his eclecticism the Trotskyite “motive” is most prominent and constitutes the main stream. The Trotskyite formulations of this book must be ruthlessly exposed and defeated.
***
Source: Serebryakov. V, Kasharsky. L, Against the Trotskyite Conception of Imperialism, Party Publication, Moscow-Leningrad, 1932, p.43-78.
Translated from the Russian by Tahir Asghar.
Endnotes:
1. As it is known that his whole article “Economic Equilibrium in Concrete Capitalism and in the System of the USSR” is based on the postulate of equilibrium (Vestnik Komakademii, bks 17,18. “The New Economy” and “Economic Crisis under NEP” are also based on this idea.
2. “Our example illustrates equilibrium in expanded reproduction” p. 20.
3. Evenness, harmony and proportionality never existed anywhere in the capitalist world nor could have ever existed. (Lenin. Collected Works, vol. XVI, p. 183)
4. See following instances: “The capacity of the capitalist system in relation to the productive forces is so small ... that this situation leads, in the entire world economy, to a systematically increasing, organic, immobilisation of an ever increasing part of the capital and labour power” (p. 144).
“.... The suspension of development of the productive forces of bourgeois society” and several other instances.
5. It is sufficient to compare the fall (in percent) in 6 main countries: cast iron 1873 / 74 – 8%; 1907 / 08 – 23%; 1920 / 21 – 42 %; Foreign trade turnover: 1873 / 74 – 5%; 1883 / 84 – 4%; 1907 / 08 – 7%;. Price of Shares 1873 / 74 – 30%; 1833 / 34 – 29%; 1907 / 08 – 37%; 1921 / 22 – 41% and so on?
6. Other factors here were: increase in exports of commodities and export of capital from the USA.
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