A System of Contradictions and Crises

The whole history and experience of capitalism demonstrates that it is a system of crises and contradictions.  The most fundamental, insoluble contradiction of capitalism is that between the social character of production – how society’s goods and services are produced and distributed in a vast network across society – and the private character of its ownership and control.

The economy’s productive forces are organised together in a complex, inter-dependent system on which society as a whole is based.  Yet under capitalism, these forces are mostly owned or controlled by a small minority of the population – the main capitalist shareholders – who direct them to serve their own narrow individual and class interests, rather than the needs of society as a whole.

In their drive to maximise market share and profit, capitalist employers fight to raise productivity and hold down wages.  The same drive also takes place in the public sector in order to minimise taxation of private sector profits and wages.

Here is the primary economic basis for the class struggle: between the monopoly capitalists and their state striving to maximise profit on the one side, and the whole working class striving to maximise wages and improve living standards on the other.

Yet working class purchasing power needs to be maintained if capitalism’s commodities are all to be sold at a profit.  This becomes increasingly difficult when economic growth turns into boom, as capitalists fight to expand sales, production and profits.

Increasing wages might ease the situation, but this eats into profits and only spurs the capitalists to boost production still further.  An expansion of private credit or public expenditure might maintain demand in the economy for a limited time, but it has to be paid for as production continues to grow.

So the point is reached where the working class cannot afford to buy all of capitalism’s commodities at prices which sustain profitability.  Capitalist growth invariably ends in a crisis of ‘over-production’.  Commodities can no longer be sold at a profit and companies begin to cut back on production and investment, causing a slowdown or recession.  Workers are laid off, further depressing demand in the economy.  Production actually falls – sometimes in a sudden crash – and stagnates in depression.

Society’s productive forces are destroyed as premises are closed, plant and machinery scrapped and large numbers of workers are forced into unemployment.

In the wake of such crises, the trend to monopoly is reinforced as stronger companies take over weaker ones and increase their own market share.  This lays the basis for the cycle to begin again.  It does so on the basis of another contradiction intrinsic to capitalism, between the drive for technological advance and the source of capitalist profit.

As companies innovate and mechanise to compete more effectively against each other, so the source of fresh surplus value in the economy as a whole – living labour power – occupies a smaller share of the production process.  This depresses the general rate of profit.  In order to counteract this tendency, capitalism searches perpetually for cheaper labour and materials, higher levels of productivity, new profit-making activities and fresh markets for its products.

This reinforces the tendency of the most ruthless big capitalists to subject oppressed sections of society – women, black workers and immigrant labour – to super-exploitation at work, using them to undermine workers’ terms, conditions and trade union strength.

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