# The Theoretical System of Karl Marx/Chapter 10

We are now at the central point of Revisionism, the point from which everything else in the theories of the Revisionists radiates and to which everything in their arguments gravitates. The casus belli which moves all their hosts—the Social Revolution. The red flag of the social revolution is the red cloth the sight of which none of them can bear. Whatever their disagreements, and they are not few, they are all agreed that the social revolution wouldn't, shouldn't and couldn't come. Struve proves it philosophically, Tugan-Baranowsky proves it economico-mathematically, Oppenheimer proves it sociologically. Bernstein proves it by a composite method which cannot easily be classified, and the rest of them in any old way.
What is this social revolution which has thus aroused them? It is not, of course, the fact of the change from the capitalist to the socialist order. They all, or almost all, believe in that, in some form or other. It is the particular form or manner in which it is to come about, according to the Marxian teaching, to which they object. It is the implication of the suddenness of the change, and the violent manner in which it will be brought about as the culmination of a struggle, that arouses their opposition. The change could, should and would come in all imaginable ways, but none of them will be sudden or violent. For they are all violently opposed to violence. And not only physical violence, but any kind of violence or disturbance. Therefore, socialism will come, according to their notion, as a gradual enlargement or a gradual diminution of capi​talism, but never as an overthrow, more or less sudden, more or less violent, physical, social or economic, as Marx imagined it.
Marx says that the centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist shell. This shell is burst asunder. The knell of capitalist private property sounds. "The expropriators are expropriated." This, says Struve, is too sudden, and is philosophically quite impossible. There is no philosophic way in which the sudden transformation of one social order into another could be explained, no logical method by which it could be reasoned out. Hence it could not take place. "The continuity of every change, even the most radical, is a necessary cognito-theoretic and psychological postulate of its comprehension. The evolutionary principle takes a position analogous to the law of causation: it is a universally valid form in which we must picture to ourselves the radical changes of things in order to comprehend them. Of the content and the causality of the change the evolutionary principle tells us nothing: it only gives us its form; and this form is—continuity. The old maxim: natura non facit saltus should, accordingly, be changed into: intellectus non potitur saltus." All of which may or may not be true. We are not sufficiently conecfned in the subject to undertake to decide that question here. For ourselves we hope it is not true, but if it be true, let the theories of cognition and psychology look out for themselves. The maxim: natura non facit saltus, in so far as it is still part of our scientific apparatus, simply means that nothing happens without any cause, but when there is sufficient cause therefor nature does leap. As a matter of fact sudden leaps are almost as frequent in nature as are slow changes, and the figure used by Marx, that of a bursting shell, may be considered its most common and most perfect example. Fur​thermore, it does not in any way interfere with the evolutionary principle, to which Struve does, in our opinion, great injustice by reducing it in reality to mere slowness, for such violent leaps as the bursting of shells do not by any means interfere with the continuity of the process, as Struve seems to think. On the contrary these violent leaps are part of the evolutionary process and constitute its culminating point, as well as the starting point for a renewal of this process, in all higher forms of life. The natural sequence of events being such, a theory of cognition must be able to explain it to our comprehension, and to say that some theory which styles itself a theory of cognition cannot do that is simply another way of saying that it is not a theory of cognition.
Another "philosophical" objection which Struve advances is supposed to be based on the Materialistic Conception of History, which he feels himself called upon to protect against Marx. According to the Materialistic Conception of History, says Struve, it is impossible that the legal forms which make up the social system should become so entirely incompatible or antagonistic to the forms of production as to cause a breaking up of the whole system. For, that theory, properly understood, requires that the legal forms should continually adjust themselves to the material conditions, as they change, and it would be an infringement on the power of the economic forces to suppose that they should not change the legal forms as they go along. We shall not enter here into a long discussion to prove that Struve has not "properly understood" the Materialistic Conception of History. We will simply say that if Struve has understood it properly then the Materialistic Conception of History is sadly in the wrong. For the fact, of which there is abundant historical proof, is, that legal forms become quite antagonistic and absolutely incompatible with economic conditions and that very serious and violent disturbances result therefrom. No amount of reverence for the "economic factor" can blind us to the ​sad truth, that that much-abused worthy is not quite as all-powerful as some of his would-be admirers would have us believe, or, at any rate, that his influence is not quite as direct, and therefore does not work quite as smoothly, as they imagine. Besides, in his touching care for the Materialistic Conception of History, Struve has entirely forgotten the fact that, according to Marx, the economic conditions of the capitalist system are themselves a mass of contradictions, and could not therefore result in a smoothly working legal or political system.
It was evidently with the intention of eliminating some of the absurdities which the purely philosophic opponents of the Social Revolution had to resort to in their argument, that Rudolph Goldscheid constructed his theory of the so-called "Sociological Wave." This theory is quite cleverly constructed, and is evidently designed to present an argument against the possibility of the social revolution, without the use of some of the grosser errors of his predecessors. This theory recognizes most of the Marxian premises, and therefore sounds plausible. It consists in this:
The tendency of the accumulation of capital is, as Marx says, towards increasing the misery of the working-class. At the same time this accumulation has also the tendency to organize the working-class, as Marx has also clearly stated. This results in a struggle between organized labor and the capitalists, the class struggle on which Marx lays so much stress. In this struggle, the fortunes of war alternate, giving victory now to the one side and now to the other. When the tendency of capitalistic accumulation has gone very far in reducing the condition of the working-class, this engenders the revolutionary feeling of the proletariat, who put up a strenuous fight until they gain a victory substantially bettering their condition, usually putting them on a higher plane than they ever were before. This better condition lasts for some time until the capitalists, driven to it by the lash of competition, turn on the screws and attempt to enforce the tendency of capitalistic accumula​tion and reduce the condition of the workingmen to their former level. In this they succeed only partly, for when the workingmen have reached a higher level of well-being they utilize it to strengthen their organization, obtain more knowledge and intelligence, and the spirit of revolt is aroused in them long before the former low level of their estate is reached. Their resistance is intensified, and the fight on their part does not slacken until they reach not only the high level which they formerly occupied but until they make new conquests, placing themselves on heights never yet before reached. This they are enabled to do because the spirit of revolt which is aroused in them by the pressure of economic tendencies succeeds in constantly limiting and checking the economic process and diverting it from its natural course. So that "the social evolution moves in a wave-like course, which has this peculiarity: No matter what relation the hill and dale may have to each other, the crest of each succeeding wave reaches, as a rule, a higher level than any preceding one." The waves will finally run so high that their crests will reach into socialism: the prospect of a social revolution is successfully banished.
The whole thing sounds so plausible, the argument so much Marxian, and the picture of the rising waves is so beautiful, that one is almost tempted to overlook the fact that there is absolutely no warrant in the whole argument for the assumption so unceremoniously made that the spirit of revolt engendered in the working class by the hardships and misery of capitalistic accumulation succeeds in constantly limiting and checking the economic process while the capitalist system lasts. And yet it is on this assumption that the whole thing rests! With this assumption out, the whole argument against the social revolution as Marx conceived it, with bursting of shell and all, falls to the ground. We are not disposed to quarrel with the author of the "sociological wave" in so far as the same does not put forward any higher pretensions than to give us a descrip​tion of the bettering of the condition of the working-class under capitalism in so far as the same is possible under the laws governing capitalist production and accumulation. That is to say in so far as it affects the question of the impoverishment of the working-class. And in so far it does not in any way contradict the Marxian theory. It is quite different, however, when it comes to the abolition or limiting of the economic laws by "psychological tendencies" in the peaceful movement of the "sociological wave." Before we can accept his statements we must carefully examine into the question whether the tendencies of modern development do or do not limit the laws of capitalist production and accumulation, and if they do whether such limitations can abolish the whole capitalist system by degrees and transform it into a socialist system without the bursting of any shells. This brings us back to the purely economic question of the possibilities of capitalistic development, and the theories of the "expansion," "adaptation" and "adjustment" of capitalism brought forward by the Revisionists.
In an earlier chapter of this work we discussed at length the economic contradictions of the capitalist system. We concluded our examination with the statement that the great problem of capitalist economics is the disposition of the surplus-product created continually under that system. It is the inability to dispose of that product that is the chief cause of the temporary disturbances within its bowels, and which will lead to its final breakdown and replacement by the socialist mode of production and distribution.
The Revisionists with Bernstein at their head question the correctness of these conclusions, both as regards the crises within the capitalist system as well as with regard to its ultimate breakdown. Bernstein has nothing definite to say as to the cause of economic crises in the capitalist system, except to inform us that much could be said and has been said on either side, and that people who are interested in analogies might find very interesting analogies ​between the theories on this subject and some other interesting subject. As to the Marxian theory of crises Bernstein has again nothing more definite or instructive to say except that Marx, as usual, contradicts himself in the most flagrant manner, and that the explanation of this contradiction is to be found, again as usual, in the fact that, as is very usual, and, indeed, unavoidable, some time has elapsed between the writing of the contradictory passages. The only unusual thing about this very enlightening information is the correct statement that the passage contained in the earlier volumes was written much later than that contained in the third volume; a statement which must confound his friends who have been writing very learned disquisitions on the development of the Marxian theory, based on the contradictions between the earlier and later volumes of Capital, which were to be explained by the fact that the third volume was the fruit of Marx's later and riper judgment. As to the subject-matter itself the reader is left absolutely in the dark as to what either the Marxian or the Bernsteinian theory of crises (if there be such) may be. It is very evident, however, from what he does say that he is himself very much in the dark on the subject. This does not prevent him, however, any more than a similar groping in the dark prevents his friends, from giving instruction on the subject, and from revising a theory which he does not understand.
The sum and substance of the argument against the Marxian conception of the tendencies of capitalist economic development put forward by Revisionism, amounts to this: The contradictions observed by Marx are not inherent in capitalism, as Marx supposed, but are merely connected with, and are the result of, a certain form of capitalism, to wit: capitalism in its early stages, when private enterprise with its resultant anarchy of production were predominant. As soon, however, as the anarchy will be eliminated from capitalistic production, and that anarchy will be eliminated by the organization and systematization of pro​duction through the modern trusts and other industrial combinations, crises will be abolished, particularly in view of the apparently boundless possibilities of the expansion of capitalist markets by the aid of modern imperialism. And as the final breakdown of capitalism, or social revolution, is nothing more than a big crisis, the possible danger of a revolution is averted the moment the cause of crises is removed. The basis of fact for this argument is furnished by the circumstance that the law of the periodical recurrence of economic crises insisted on by Marx was apparently broken through by the modern trusts with the aid of Imperialism, and the crisis which was due at about the beginning of this Century was successfully kept out by them.
Before proceeding any further we shall have to examine the Marxian theory of crises, and the connection in which crises within the capitalist system stand to the ultimate breakdown of the system as a whole, and then examine the facts of the latest developments of capitalism as to their bearings on each.
According to Marx there are two distinct causes of crises: One is the separation of the act of exchange of commodities into two separate acts, the exchange of commodity A for money and then the exchange of that money for commodity B, by the introduction of money as the universal commodity and general repository of exchange-value. By dividing the act of exchange into two separate and independent acts, disconnected in point of time, the possibility of crises is given. For, should the interval between the two acts be too long the wheels of production will stop, the market will become overloaded with goods, and a crisis will result. This possibility turns into a probability because of the peculiar character of money as the universal commodity and special repository of exchange-value which makes it a very much coveted good, as it is only in that form that value is realized and remains real. Of course, capital is anxious to fulfil its function, the cre​ation of surplus-value, and in its anxiety to create surplus-value it takes the risk of having the value crystallized in itself transformed into such form where the value realized in it may again be called into question and be partly lost. But with all that capital is essentially cowardly, and the least disturbance frightens it and makes it withdraw into its shell. And a disturbance arises each time there is a disproportion of production, which is a common occurrence under our system of private production and competition. This probability, again, is intensified by our credit system, which on the one hand makes capital extremely sensitive to disturbances and increases its natural cowardice, and on the other opens up great vistas of gain by speculation and jobbery through panics and crises.
Such crises, that is crises chargeable to the circulation process of commodities, are of course due to the "anarchy of production," and will disappear with the disappearance of that anarchy, assuming that the latter may disappear while the capitalist system lasts. Assuming therefore that the trusts and industrial combinations can abolish this anarchy and regulate production, the Revisionists are quite right in asserting that no commercial crisis will occur again on that account. Their mistake lies in assuming that the "anarchy of production" is, according to Marx, the only cause of commercial crises. As a matter of fact the cause mentioned by us above is not only not the only, but not even the chief cause of crises according to Marx. This could be determined as a mere matter of logic, that method of determining economic and sociological questions which is so dear to the heart of some Revisionists. For, the "anarchy of production," in its very nature and essence an irregular factor, could not possibly be the cause of regularly recurring crises. But Marx does not leave any room for doubt to what is, in his opinion, the chief cause of crises under capitalism.
This cause is the inherent contradiction of that system which we have already pointed out before, the dual posi​tion of the laborer as a seller of his labor-power and a purchaser of the products of his labor-power, and the creation of a surplus-product flowing therefrom which must result in an over-production of commodities quite apart from the "anarchy of production." It is to this constant factor, the constantly accumulating surplus-product, that the constancy with which crises recur is due. It is to this that the industrial cycle, the periodical recurrence of prosperity and stagnation, is due. And this recurrence of prosperity and stagnation, that is to say, the inability to continually carry on production on that plane which the productive forces of society permit and require, is the foundation of the Marxian theory of crises. The fact, therefore, pointed to by Revisionists, that, as Tugan-Baranowsky has shown in his History of Commercial Crises in England, the cycle has now assumed another form, that instead of feverish activity preparing the way for a sudden crash there is now a gradual tide and ebb of prosperity and stagnation, is not a refutation of Marx but a confirmation of the correctness of his analysis of capitalistic production. This fact, which is ascribed to the regulative influence of the modern trusts and combinations, proves conclusively that neither trusts and combinations nor any other regulative influence can abolish crises, because it cannot abolish the chief cause of crises—overproduction, which does not depend on the lack of regulation of production but is inherent in the capitalistic mode of production. Trusts and combinations, if they can do anything at all, can only affect the form which the crises may assume, whether they should be short and acute as formerly or mild and long-drawn-out as now, but no more. This is acknowledged even by Tugan-Baranowsky himself.
Some Marx-critics seem to derive some comfort from the fact that, owing to the regulative influence of modern industrial combinations, crises have ceased to be as acute as formerly. We fail to see wherein a long period of stagnation is any better than an acute crisis. That is, ​from the workingman's point of view. As Tugan-Baranowsky himself points out, the change in the character of the industrial cycle has benefited only the capitalist class, and the position of the working class has become much worse for it.
Of course the chief reason for their exultation over this change, or at least that of some of them, is their belief that the doing away with the acuteness of crises does away with the possibility of the occurrence of the great and final crisis, the social revolution, which they cannot imagine otherwise than as a sudden crash. But this cataclysmic conception of the breakdown of capitalism is not part of the Marxian theory, and has, at any rate, nothing to do with his theory of crises. The disappearance of the acuteness of commercial crises does not in any way affect their revolutionary influence, if their influence be necessary for the coming of the social revolution. For the remedy is worse than the disease as far as its influence on the condition of the working class is concerned, except, of course, to the minds of those who imagine the great revolution as the work of a hungry and desperate mob driven to distraction and destruction by the immediate lack of work, food and shelter. The mildness of the change from one phase of the industrial cycle to the other does not lessen the mass of misery produced by it, nor does it indicate any lessening of the contradictions of the capitalist system of production; it does not therefore affect the probabilities of a social revolution, except if we imagine it as a sudden cessation of all economic activity. The real question therefore is, not whether crises have become less acute in form but whether the economic contradictions which produce them have lost any of their acuteness. This brings us to the question of the adaptability and expansiveness of the capitalist system of production.
That capitalism has obtained a new lease of life by embarking on the sea of Imperialism is assured by the Revisionists, although none of them ever attempted to care​fully examine into the question in order to ascertain whether there was any basis of fact for such assumption, and if the assumption was correct how long such new lease would last. Bernstein declines at the decisive moment to commit himself. True to his nihilistic-opportunistic instinct he leaves the question an open one, which does not, however, prevent him and his friends from holding language as if they had squarely met the issue and settled it.
A careful examination of the question will show, however, that, both as a matter of abstract reasoning and as a matter of concrete fact, Imperialism cannot save the capitalist system, although it undoubtedly may prolong its existence. If the Marxian analysis of the capitalist system of production is correct, and that system does suffer with the inherent malady of ever increasing overproduction because of the ever increasing diminution of the share of the workingman in the product of his labor, then it follows as a logical conclusion that the mere extension of that system to new fields cannot save it, for the system would then carry with it its fatal malady to these new fields. And it is to a mere extension of the capitalist system that Imperialism reduces itself in the last analysis. For it must be remembered that capitalism cannot open a new market for its products without making the new territory part of its own system of production. It is the curse of capitalism that by the very processes with which it creates its new customers for its goods it makes of them competitors in the business of producing these goods. Therein lies the difference between the old and the new forms of colonization. That is why colonial dependencies, colonial empires in the old sense of the word, are no longer possible, except as a temporary and passing stage. Of course while this stage lasts it is of some relief to the mother country suffering from being heavy with surplus-product. But the infant colonies grow very rapidly, and with the ripening age of capitalism the offspring develop marvelous pre​cociousness, and soon serve only to "extend" the seriousness of the situation.
The facts verify this reasoning. But before examining the facts we must again pay our respects to that bright light of anti-Marxian economic literature whom we have already had occasion to mention before—Prof. Tugan-Baranowsky. With that insight of the true scholar which so favorably distinguishes him from the rest of the Revisionist host he saw that the Marxian theory cannot be overthrown by such indefinite and meaningless talk as that of "adaption," "extension," or "expansion." That the Marxian theoretical edifice is too solidly built and is too finished a structure to be vulnerable to such mode of attack. That it can be successfully attacked, if at all, only at its foundation and only by using the methods employed in its construction. He therefore attempts to show by an analysis of capitalistic production that the Marxian conclusion of a necessary over-production does not follow. The result of his efforts is a theory of "distribution" of production, according to which if production is "regulated" in such a way as to always produce a certain, ever increasing, share of the total yearly product in the form of "means of production," then no over-production will ever occur. I have somewhere else shown that this theory is an utter absurdity. But nevertheless it cannot be denied that this theory is the only scholarly attempt on the part of any Revisionist to disprove the Marxian theory of crises and over-production. That Tugan-Baranowsky failed in his attempt was not his fault, but his fate. And the fact that the theory so laboriously construed by him is sheer nonsense makes his fate the more tragical. For Tugan-Baranowsky is not only an acute theoretician but also a keen observer of the facts of life. But, as I have stated somewhere else, he suffers with the malady of his age: a sickly yearning for the "ethical," and a hysterical hunt for the "practical." The yearning for the "ethical" drove him away from the "unethical" Marxian system, ​and, left to drift without the sure guidance of an all embracing theory, he clings to the isolated facts of existence which obtrude themselves upon his keen vision.
The facts upon which Tugan-Baranowsky constructs his theory are the same facts to which we alluded above as confirming our theory. They are: that the area of capitalism expands, and that production, in so far as the goods produced are concerned, has so changed that the principal goods produced now by the leading capitalist countries are machinery and other "means of production," instead of consumable goods as was formerly the case. From these two facts Tugan-Baranowsky concludes that it is a law of capitalistic development that the quota of consumable goods in the yearly product of society should constantly grow smaller and the quota of "means of production" as constantly increase; and that if the proper proportion is always observed no over-production can ever occur.
Is this conclusion correct? Most emphatically, no! Tugan-Baranowsky sees the immense masses of "means of production" produced annually by the leading capitalist countries, and he stands in awe of this great fact. A little less respect for "fact" and a little more respect for theory would have made him ask for the why and the wherefore. It would also have made him look for the connection between this fact and other facts. And first of all he would have taken notice of what was being done with these "means of production." Had he done so he would have observed that these immense masses of "means of production," with some exceptions which will be noted later, are not used in the capitalistic countries in which they are produced. They are produced in the capitalistic countries and exported into countries which are only in the process of capitalization, so to speak. He would then have understood that the surplus-product in capitalistic countries has so far not clogged the wheels of production permanently, not because of the clever distribution of production into the different spheres, not because of the change from the pro​duction of consumable goods to the production of "means of production," but because the capitalistic countries have so far, owing to the fact that some have developed capitalistically earlier than others, and there still remain capitalistically undeveloped countries, had an outside world into which they could dump the products which they could not themselves absorb, whether those products be cotton or iron goods. This does not, by any means, mean that the change from cotton to iron goods, as the leading product of the foremost capitalistic countries, is of no significance. On the contrary, it is of the greatest importance. But its significance is entirely different from that ascribed to it by Tugan-Baranowsky. It shows the beginning of the end of capitalism. As long as the capitalist countries exported goods for consumption there was hope for capitalism, within those countries. There was no telling, then, how great the capacity of the non-capitalistic outside world for the consumption of capitalistically produced goods would be, nor how long it would last. The growth of machinery in the export from the foremost capitalistic countries at the expense of consumption-goods shows that spheres which were formerly outside of capitalism, and therefore served as a dumping-ground for its surplus-product, are drawn into the world of capitalism. That as their own capitalism develops they produce their own consumption-goods. Now that they are in the initial stages of their capitalistic development, they need the capitalistically produced machinery. But soon they will not need this either. They will produce their own iron-goods just as they now produce their own cotton or other consumption-goods. Then they will not only cease to be a receptacle for the surplus-product of the now only capitalistic countries, but they will produce a surplus product of their own which they will find it hard to dispose of.
There are other things which Tugan-Baranowsky might have observed had his vision not been obstructed by the details of capitalistic practice. Things, the observation of ​which would have given him a glimpse of the "true inwardness" of the latest phase of capitalistic development. He would have noticed, for instance, that a tremendous amount of the "means of production" which are produced in capitalistic countries and are not directly exported, is used within those countries in such a manner, that is, in effect, equal to export. Such are the building of transcontinental railroads, interoceanic canals, and steamship lines designed to serve as an incident to the export of products from capitalism into the non-capitalistic or half-capitalistic world. Furthermore, in so far even as such "public improvements" are used wholly within the limits of capitalism (and a tremendous amount of the "means of production" is used for such purposes), they have the peculiar effect of removing large quantities of surplus-product from the market, at least temporarily. It is the peculiar nature of such means of production that their usefulness or uselessness can not be definitely ascertained until fully completed and operated for some time. The result is that immense masses of such "means of production" are constantly produced without any actual necessity therefor, and often for purely speculative purposes. While these "means of production" are being produced, and it takes years to complete them, the wheels of capitalistic production revolve merrily, without hitch or stop, notwithstanding the fact that the work may be absolutely useless in whole or in part, and that the value supposed to be created in their production, or at least a large part thereof, will never be realized. The wiseacres of capitalism, like Tugan-Baranowsky, listen to the siren-song of these merrily revolving wheels, and draw in their imagination alluring pictures of the endlessness of capitalism wound around an endless chain of "means of production." Of course, there is bound to come a rude awakening. The production of these particular "means of production" turns out to be the merest waste. But that is another story ..........
In order to appreciate the importance of this point (and ​this point applies equally to "means of production" of this nature, whether used within the limits of capitalism, or exported for use outside of it), we need only refer to Tugan-Baranowsky's own "History of Crises in England." The facts brought together in that book, in so far as they relate to the latest phase of capitalism, that now under consideration, teach a remarkable lesson. This lesson can not be missed by one who contemplates the whole picture there represented, but could not be learned by Tugan-Baranowsky, who saw only the details of the process by him described. His theory of the "distribution of production" is the result of his having missed the great lesson which that book teaches, and that is, that the capitalist system lives and thrives by waste.
In speaking of the first "modern" crisis, that of 1857, Tugan-Baranowsky says in his History of Crises:—"The peculiarities of the crisis of 1857 find their explanation in the world-character of that crisis .......... The characteristic difference between the crisis of 1857 and those of 1825 and 1836 consisted also in the fact that this crisis fell most heavily not on the cotton industry as the former ones but on the iron industry. In this the new feature of the capitalistic mode of production found its expression,—the increased importance of the part played by means of production on the world-market as well as in economic life generally. The stagnation of trade usually moves the industrialists to look for new markets for the disposition of their goods. In this respect the crisis of 1857 had a very strong effect. The exports from England to the United States fell from nineteen million pounds sterling (1857) to fourteen millions (1858); the exports from England to the East Indies, on the other hand, rose from 11.7 millions pounds (1857) to 16.8 millions pounds (1858). In order to recuperate from the blows which it received on the European and American markets English capital migrated to Asia. In the East Indies began an epoch of railroad building, and of the improvement of inland ways of ​communication, which had the effect of increasing there the demand for English goods."
We can not repeat here the detailed statement of the crises that followed that of 1857 until the present day, but a careful examination of this very interesting part of Tugan-Baranowsky's book will prove very instructive. Briefly stated, all these crises were brought about by over-production of "means of production," particularly of the most lasting and staple means of production, those which it takes longest to produce, means of communication and public improvements. The typical crisis occurs in about the following manner:
The starting-point is the preceding crisis. As Tugan-Baranowsky says in the passage just quoted: "The stagnation of trade usually moves the industrialists to look for new markets for the disposition of their goods." And as he has also observed, these goods consist mostly of means of production. In other words: after a crisis there is a superabundance of capital which is seeking employment. As the ordinary fields of occupation, particularly at home, are well filled, the capitalists look for some new fields wherein their capital could be profitably employed. Knowing that it would be useless to manufacture some new consumption-goods, or some machine for the purpose of manufacturing such goods, for the reason that the capacity of our society for consumption is limited, they start out to create new demands by creating new civilization. Civilization has proved a good customer, and capitalists turn to it instinctively whenever hard pressed. So the iron threads of civilization begin spinning at home and abroad, but mostly abroad, the missionary spirit of capitalism being well known. This creates a demand for vast amounts of capital and labor. Things begin to hum,—the prospects are bright. The markets are relieved of the surplus-product which clogged the wheels of production, and trade has revived. An era of prosperity has set in. The more crazy the "civilizing" undertaking, particularly the longer it takes to finish it, ​and obtain results, the greater the prosperity and the longer it lasts. But the undertaking has to be finished some day, and the harvest must at last be gathered in. Then it is discovered that the undertaking was a failure. The railroads, it turns out, were not necessary where they were built, for they have nothing to carry when they are ready for business. The undertaking goes into liquidation. The vast amounts of capital, the glorious piles or stretches of means of production, now represent so much waste, for capital which does not pay dividends is not capital according to capitalistic laws. Then the crisis is on—things go to smash all around. The crisis is not limited to those interested in the particular undertaking. First, because the ramifications of modern capitalistic undertakings are so extensive and complicated, particularly by reason of our credit system, that no serious break can occur anywhere but that the whole system will crumble to its foundations. Secondly, because the large number of men employed in producing the defunct "means of production" are now thrown out of employment, thereby weighing heavily on the labor-market and demanding charity from their masters. And thirdly, because the apparent prosperity incident to the continued production of the large "means of production," has caused a general rush of production to an unwarranted extent, even in spheres which are not in any way directly connected with the particular undertaking which brought about the prosperity .......... and the crisis.
The deductions which Tugan-Baranowsky himself makes from these facts are very curious and furnish a good object lesson in the mental pathology of our age. We can not, however, pursue this branch of the discussion here any further. We hope to resume this very interesting discussion some other time. For the present we will try to make some deductions on our own account, as far as they may be pertinent to our subject proper. The first irrefutable deduction which presents itself to our mind, not only from ​the facts adduced by Tugan-Baranowsky, but also from his own statements, is that his theory, the perpetuation of capitalism by means of the proper "distribution" of production, is the veriest rot. Prior to 1857 a change occurred in the "distribution" of the production of the chief seat of capitalism in those days, England. The production of cotton goods (consumption goods), was relegated to the background, and the front rank was assigned to iron-goods, (means' of production). In other words, Tugan-Baranowsky's advice of how to prevent a crisis because of over-production was followed. But the crisis of 1857 did come, notwithstanding the use of his patent remedy. The faith of the capitalists in his remedy was evidently shaken a bit. For, as he has told us, the capitalists, instead of continuing the production of their means of production for the same market, which, according to Tugan-Baranowsky's theory, can never be over-stocked with means of production, set about looking for new markets. The only thing in which they followed him still was the "distribution" of production; they still produced means of production by preference. But the crises still continued to set in regularly, driving the poor capitalists to distraction in their vain hunt for new markets. In other words, the new markets were also soon over-stocked with means of production. And very naturally so: for means of production (and this includes means of communication), are nothing more than means to the production of consumable goods. Where, therefore, there is no demand for the consumable goods ultimately to be produced by their means, their production is over-production, and is so found to be when the ultimate test is applied. The capitalists discovered this much sooner than did Tugan-Baranowsky, owing to their healthy wolf-instinct of capitalism, which can not be fed on fairy-tales, but requires good dividends to appease its hunger. Seeing that they are at the end of their tether, that the reserve of markets is giving out, while those under exploitation are geting hopelessly over-stocked, they set about fighting each ​other like wild cats in a scramble to get, each for himself, as much as possible of what is left. Capitalism reversed its time-honored policy of free-trade, and the era of wild imperialism in which we live has set in.
Modern crises and modern imperialism are very instructive studies. As Marx said, crises are mere symptoms of the contradictions working within the bowels of capitalism, and a means of relieving the diseased condition when it becomes acute. They are not the malady itself, they merely show the presence of the malady. So does imperialism. As a matter of fact, modern crises and modern imperialism are manifestations of the same condition, and are merely two phases of the same process. Among other things, they show how the capitalist system is kept alive by waste.
The waste of the capitalist system is of two kinds, ordinary and extraordinary. The ordinary waste is the most important, because the more extensive; it is, however, the extraordinary waste that permits us to get a glimpse into the vital forces of capitalism, and is, therefore, of greatest interest to us here. It is this extraordinary waste that manifests itself in crises and in imperialism. We have already stated how imperialism has been heralded as the saviour of capitalism from crises and ultimate destruction by providing new markets for its surplus-product. It was pointed to that the great crisis which was scheduled for the beginning of this century did not come in, and this is claimed to be due to the opening up of new markets by the imperialistic policy of the modern capitalistic nations. In a way, this is true; the effect of a crisis being the destruction of the surplus-product which can not be absorbed by the social organism, and the permission of the resumption of normal production by removing the surplus-product from the market, anything that will serve the same purpose may, for the time being, take the place of a crisis. A great war, for instance, may have the same effect. It has usually been assumed that wars bring about crises. While it is true ​that under peculiar circumstances, particularly because of credit relations, the declaration of a war may hasten on an impending crisis, or even bring a financial one about, the usual and general effect of a war is just the reverse. A great war usually keeps a crisis out, for the reason that, economically it has the same effect as a crisis and can take its place. After a great war an era of prosperity usually sets in, for the same reason that great prosperity usually follows a great crisis. The longer the war, the greater the destruction of property, both actual and potential, the greater the prosperity that will follow it.
A policy of imperialism, aside from the actual wars which it may lead to, has in itself the same effects, and that is why it is beneficial to capitalism. Among the economic causes of the great popularity of imperialism must not only be counted the desire for new markets and their actual attainment, but the economic causes of the policy of hunting for new markets itself. We will illustrate this by an example. During the last presidential campaign in the United States the anti-imperialists made very much of certain statistics compiled by the late Edward Atkinson, showing that the expense to the United States in keeping and governing the Philippines was greater than what the whole trade of the United States with those islands amounted to. The anti-imperialists argued that it was the height of folly to pay more than a dollar for the opportunity of selling a dollar's worth of goods. From their own shop-keeper's point of view that is undoubtedly true. Not so from the standpoint of the modern, means-of-production-producing capitalism. There arise times when goods must be gotten rid of at any expense. As these goods consist of means of production they can not be given in charity to the workingmen, nor destroyed bodily the way the western and southern farmers and planters destroy part of their crops, when they are too plentiful, in order to keep up the prices. These goods being capital, can only be gotten rid of by being sold or "invested." Hence this apparent craze for ​new markets. But this is not all. As far as the safety of the capitalistic system is concerned, in so far as it affects the "general prosperity of the country," as it is euphoniously styled, the millions expended in the effort to sell goods to the Philippines are not waste but gain. These millions represent so many millions worth of goods sold by the capitalists of the United States for unproductive consumption by military and civil employes and officials, a very effective though not always profitable way of disposing of a surplus-product which threatens to clog the wheels of business. It is true that this is sheer waste. But it is on waste that the capitalist system now depends for the continuance of its existence.
In this connection it must be added that it is not only the moneys so expended directly that are wasted in that manner and for that purpose, or at least with that effect. To the direct expenses of colonies must be added the general military and naval establishments of modern nations, which are necessitated by this imperialistic policy. Every dollar expended in the military and naval "needs" of a country are the purest waste, but it is at the same time absolutely necessary for the preservation of the capitalistic system. Furthermore, it is not only the money expended on these "needs," and included in the official budgets, that must be taken into consideration. The big military and naval establishments require men, besides money. These men are taken away from ordinary production where they would compete with other men in the labor-market, and where the products by them produced would swell the masses of surplus-product to be disposed of in far-away lands. The taking away of a man for military or naval purposes (including administrative duties of all sorts), relieves the labor-market by one man, and at the same time creates a demand for the goods to be consumed by him which are to be produced by those remaining at work at some useful occupation. Hence our continued prosperity. Waste is the safety-valve of capitalism.
​How long will this last? Evidently not forever. If the surplus-product can only be gotten rid of by waste, and by the kind of waste described above, and if the surplus-product which must be disposed of by such waste is always increasing, we will evidently reach a stage when it will be physically impossible to dispose of it. In saying "physically" we take, of course, into consideration human nature, which is part of the "physics" of our social system. There is, however, no warrant for assuming that according to Marx capitalism would have to go on until such a "physical" catastrophe should occur. This theory of a final catastrophe which has been much exploited by Marx-critics is the result of their woeful ignorance of the Marxian philosophy and the connection it has with his economics. Even Tugan-Baranowsky says that in order that the transformation from capitalism to socialism should follow as an economic necessity, according to the Marxian philosophy, the impossibility of the continuance of production under capitalism indefinitely must be proven. That is why he exerts himself so much to prove that an absolute impossibility does not follow from an analysis of capitalistic production. But this assumption is entirely wrong. The Marxian philosophy does not require the arrival at an economic impossibility. This is a figment of the imagination of those who understand under the Materialistic Conception of History a Mechanical Conception of History.
Such is not the Marxian philosophy. It will be remembered that in describing the causes for social revolution generally, in outlining his philosophy of history, he says that a revolution occurs whenever the superstructure of laws, etc., turns from a means of helping production into fetters of production. He does not say that production under the old system must become impossible before a revolution sets in, but it is according to his theory sufficient that it becomes "fettered." And in speaking of the particular revolution now under discussion, that from capitalism to socialism, he says that the "knell of capitalist pri​vate property sounds" when "the monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with it, and under it." When "centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument." According to the Marxian philosophy a system of production can only last as long as it helps, or at least does not hinder, the unfolding and full exploitation of the productive forces of society, and must give way to another system when it becomes a hindrance, a fetter, to production. That a system has become a hindrance, and a fetter to production when it has reached the point when it can only exist by preventing production, and by wasting what it has already produced, goes without saying. Such system cannot therefore last very long, quite irrespective of the purely mechanical possibility or impossibility of its continuance. Such a system has become historically impossible, even though mechanically it may still be possible. As we have seen, the capitalist system has reached that point: The capitalist system must go.