Türkiye Komünist Partisi – Marksist Leninist (TKP-ML)

March 2024

The structural crisis of the imperialist-capitalist system, which started with the Mortgage Crisis in 2008, one of the biggest crises in the history of the capitalist system, rapidly spread to all countries of the world and seriously shook the system. The current deep effects of this crisis continue to exist today.

Although the history of capitalism is a “history of crises”, there are three major crises in terms of their impact, depth, severity and consequences. 1) the crisis of 1873, also called the “Long Depression” or the Panic of 1873, 2) the crisis of 1929, called the “Great Depression”, and 3) the “Global Crisis”, which is still ongoing today despite various measures. As a matter of fact, the congestion created by this crisis in the bosom of the worldwide system has not been eliminated until today and has reached a chronic dimension.

When we talk today about the chronicity and persistence of capitalism’s crises, we must say that this is a manifestation of capitalism’s own development, that is, of its contradictions.

Stalin explains the root cause of the crisis of capitalism as follows: “The basis of the crisis lies in the contradiction between the social character of production and the capitalist form of appropriation of the results of production. An expression of this basic contradiction of capitalism is the contradiction between the colossal growth of capitalism’s potentialities of production, calculated to yield the maximum of capitalist profit, and the relative reduction of the effective demand of the vast masses of the working people whose standard of living the capitalist always try to keep at the minimum level” (Works, Volume 12)

Overproduction and Crisis

The existing capitalist system is a system with its own contradictions, and the basis of these contradictions is the opposition and struggle between the bourgeoisie and the working class.

In other words, the capitalist system is based on the exploitation of surplus-value that it usurps from the working class. The bourgeoisie in power has been able to make capital accumulation possible through the continuous exploitation of surplus-value. The history of capitalism, marked by class struggle and the exploitation of surplus-value, is also the history of the crises that constitute our subject. These crises or depressions, which are the inevitable consequences of the exploitation of capitalism, are not detached from the system. They have their roots in the leaven of capitalism and are the result of the inner workings of the system.

As a result of this current structure of the system, the working classes, which are becoming poorer and poorer, cannot consume the products they produce at the same rate. Increasing exploitation gradually reduces the share of the working classes in production. As a result of the decrease in their share of production, there is an overabundance in production. What creates this overabundance is the intensification of the exploitation of surplus-value. As the exploitation of labor increases, the share of the owner of labor in the living value of the commodity produced decreases. Therefore, the consumption of the commodity produced is limited.

“The capital already invested is then, indeed, idle in large quantities because the reproduction process is stagnant. Factories are closed, raw materials accumulate, finished products flood the market as commodities. Nothing is more erroneous, therefore, than to blame a scarcity of productive capital for such a condition. It is precisely at such times that there is a superabundance of productive capital, partly in relation to the normal, but temporarily reduced scale of reproduction, and partly in relation to the paralyzed consumption.”(Marx, Capital, Volume 3)

As Marx pointed out, the commodity produced by labor-power is the result of the blockage of the reproduction process. This is the crisis that corresponds to overproduction. The exploitation of the masses, especially the laborers involved in capitalist production, intensifies. The exploitation of surplus-labor, which creates surplus-value, increases due to the nature of the system. Therefore, the weakening of the purchasing capacity of laborers weakens the consumption of the product they produce. The quantities of commodities produced in excess of the purchasing power of workers cannot be consumed in markets where they cannot find a place. Factories run by monopolies that can no longer produce are closed. The remaining commodities are sent to rot in warehouses because they cannot be consumed. Gradually, unemployment increases rapidly. They are laid off in masses. The inability to consume the commodities produced in the markets also shakes the commercial bourgeoisie. The blockage of trade prevents the commodities produced from being transported to the market and consumed. In addition, capitalists are unable to repay the loans they have taken

from banks to use in production. The non-payment and maturing of loans granted by banks also adversely affects the financial market. Having received their share of the profits during the stable period, banks now receive their “share” of the crisis. The exchange rates of the stocks, bonds, etc. that they put on the financial markets, and the stock exchanges on which they are listed, also plummet.

The crisis reflects on the system’s production structure, the commercial sphere and the financial markets as a whole. Existing factories, commercial firms and banks, as institutions of the existing order, are affected by the crisis as a whole. The crisis corresponding to the system disintegrates the economic and financial markets of the ruling classes. A significant part of them go bankrupt. With the cessation of production, production equipment in idle factories is destroyed. A significant part of the banks and factories affected by the crisis are destroyed.

The working masses involved in capitalist production become poorer and poorer. As a result of the functioning of the capitalist system in whose production they take part, exploitation tends to increase. Because as the productive forces develop, the surplus-labor process of the more productive workers grows. In Marx’s analysis, “the creation of surplus-value by surplus-labor” increases the rate of exploitation of workers. With the developing productive forces, workers become more productive and produce more commodities. Commodity production, which increases with each expanded reproduction, also increases the exploitation of surplus-value. The growth of surplus-value makes the laborer in production poorer, while the surplus-value he creates is appropriated by the capitalist. This is how capitalism works… But the mode of production of capitalism brings with it its own inherent contradiction. While surplus-value tends to grow within changing capital, the rate of profit, which is the reflection of the organic composition of changing capital and unchanging capital, tends to fall. The contradiction of growing surplus-value and shrinking rate of profit also constitutes the objective law of capitalism. As a result of this functioning of capitalism, the rate of profit, which tends to fall, is tried to be increased through the exploitation of absolute surplus-value and relative surplus-value. Especially in times of crisis, the entire bill is passed on to the working class through the confiscation of the rights obtained by the working class, the reduction of wages and layoffs.

Under conditions of the development of the productive forces, the contradiction between the social character of production and capitalist appropriation grows. This fundamental contradiction of capitalism brings with it the crisis that corresponds to overproduction within the system itself. Thus, as the means of production develop, labor-power becomes more productive in production on the one hand; on the other hand, it forms masses that are excluded from production and deprived of the means of subsistence… If the growth of the means of production and the greater productivity of labor-power is the result of the functioning of capitalism, the gradual movement of a certain part of labor-power out of production is also the result of its functioning. Capitalist production becomes more socialized and the duration of surplus labor grows larger, but at the same rate the duration of necessary labor shrinks. Herein lies the contradiction. It is the functioning of capitalist production that

the surplus-labor which constitutes surplus-value grows and the necessary labor shrinks. As a result of this functioning, in proportion as the production capacity of the commodity increases, consumption tends to fall. As the production capacity develops, the working class produces more commodities, but its consumption is limited. As the contrast between the production and consumption of the commodity develops with each reproduction, the contradiction becomes sharper and sharper. And this contradiction makes the conditions for crisis more ripe.

Production and consumption, which are intertwined in the process of reproduction entered into with the crisis, decouple. Since the commodities produced do not enter circulation at the same rate as they are produced, the commodity capital invested in production does not turn into money capital. The process of reproduction narrows and factories close down. In the crisis phases of freely competitive capitalism, the payments made by industrialists, merchants and banks to each other are not in money, but in nominal payments with reduced discounts. Payments to workers are sometimes minimized and sometimes frozen. The bourgeois state, too, passes laws attributing the consequences of the crisis to the working class. The bourgeoisie of free competition prepares for a new period of prosperity with new laws in their favor.

The Orientation of Capital during Prosperity and Depression

In terms of its orientation, capitalism is characterized by contrasting periods. These periods are characterized by periods of stability or crisis. Marx evaluated these processes and contradictions of capitalism through his analysis. He also analyzed the different markets to which capital is directed in different processes of the system. Under different conditions of crisis and stability, capital was directed to different areas and concentrated in different markets. The economic-policy implemented in conditions of stable capitalist production had different dimensions than the period of crisis.

Marx considers the stable period of capitalism as the period of prosperity. The characteristic feature of this period, in which the production process and the circulation process are intertwined in the process of expanded reproduction, is that capital is more involved in the production process. In the period of prosperity, capital is more productive. As a result, capital is more concentrated in the production process in which it directly takes part. Therefore, since the loan received from the bank takes place in the productive process during periods of prosperity, the conditions for its repayment are more favorable. The stable process of the period of prosperity brought along the attraction of bank credit to the production process of capitalism. Because the capital that comes in return for interest is in high demand as it can easily take part in production under the current conditions of the period.

The period of depression, which refers to the crisis, is a period in which, as is well known, production comes to a standstill. This process, caused by overproduction, is a period in which reproduction shrinks and capital loses its productive quality. Therefore, it is not easy to meet capital under these conditions. Naturally, the volume of credit involved in production also

shrinks under depression conditions. As a result, the concentration of capital in this period is in the speculative markets, in contrast to the boom period. Marx describes the differentiation in the volume of capital during periods of prosperity and depression as follows.

“But the contrast drawn by Fullarton is not correct. It is by no means the strong demand for loans, as he says, which distinguishes the period of depression from that of prosperity, but the ease with which this demand is satisfied in periods of prosperity, and the difficulties which it meets after a depression has become a fact. It is precisely the enormous development of the credit system during a period of prosperity, hence also the enormous development of the demand for loan capital and the readiness with which the supply meets it in such periods, which brings about a shortage of credit during the period of depression. It is not, therefore, the difference in the size in the demand for loans which characterises both periods.

As we have remarked previously, both periods are primarily distinguished by the fact that in periods of prosperity the demand for currency between consumers and dealers pre- dominates, and in periods of depression that for currency among capitalists. In a period of depression the former decreases, the latter increases.” (Marx, Capital, Volume 3)

As can be seen, the “demand for the means of circulation between consumers and merchants” in periods of prosperity refers to the processes of production and circulation, while the “demand for the means of circulation between capitalists” in periods of depression refers to usurious markets. These processes, of course, have different dimensions.

But this difference is a difference within the system itself. And this difference is the inevitable reflection of the class contradiction between the bourgeoisie and the proletariat.

As a result, each period contains within itself the conditions of the opposite period. A period of prosperity also contains within itself a period of depression. The period of stability (prosperity) after each crisis (depression) turns into its opposite with the processes it re- enters. Thus, the system continues to exist on this basis with new cyclical periods. However, we must underline that with each period of depression, the contradictions corresponding to the system deepen. Therefore, the deepening contradictions of the system escalate the dimensions of class contradictions to more extreme levels.

The development of the contradictions of capitalism involves a change in the internal structure of the bourgeoisie. The industrial bourgeoisie of the period of free competition gradually developed a usurious bourgeoisie. As capital accumulation becomes more concentrated and centralized, it moves out of the production process and develops the speculative character of the bourgeoisie.

Changes related to crisis in the post-Marx period

While the above-mentioned causes of crises, which are a structural part of the capitalist system, remain the same, their forms and appearances, as well as their cycles, have changed in the post-Marx period. Engels emphasized these changes in his writings. For example, in his English Preface to Volume 1 of Capital, he pointed out that although the productive forces were growing at a geometric rate, markets were growing at an arithmetic rate, and wrote: “The decennial cycle of stagnation, prosperity, over-production and crisis, ever recurrent from 1825 to 1867, seems indeed to have run its course; but only to land us in the slough of despond of a permanent and chronic depression.”

In a footnote to Volume 3 of Capital, Engels wrote: ““Since the last general crisis of 1867 many profound changes have taken place. The colossal expansion of the means of transportation and communication – ocean liners, railways, electrical telegraphy, the Suez Canal – has made a real world-market a fact. The former monopoly of England in industry has been challenged by a number of competing industrial countries; infinitely greater and varied fields have been opened in all parts of the world for the investment of surplus European capital, so that it is far more widely distributed and local over-speculation may be more easily overcome. By means of all this, most of the old breeding-grounds of crises and opportunities for their development have been eliminated or strongly reduced. At the same time, competition in the domestic market recedes before the cartels and trusts, while in the foreign market it is restricted by protective tariffs, with which all major industrial countries, England excepted, surround themselves. But these protective tariffs are nothing but preparations for the ultimate general industrial war, which shall decide who has supremacy on the world-market. Thus every factor, which works against a repetition of the old crises, carries within itself the germ of a far more powerful future crisis.”

In short, Engels stated that after the great crisis of 1867, the form, sequence and appearance of crises had changed due to the profound changes taking place in the world. In other words, for capital, we have entered a period in which periods of prosperity are short and periods of depression are longer and more chronic.

With the exception of the thirty years of the “golden years” after the Second Imperialist War, the general trend is in line with the words of Engels and Lenin. More chronic and prolonged depressions, alternating between a relatively short and mild recovery and then a long and unstable depression, are typical of this period.

The stage of imperialism and crisis

So far we have dealt with the problem of the crisis within the free competitive process. The basis of the crisis is the same within the imperialist-capitalist system. But the contradictions of the process have escalated to higher dimensions than the contradictions of the age Marx analyzed. Therefore, in today’s conditions, where the contradictions have become sharper, the

limits and volume of the crisis on the agenda have become much wider. In the age of imperialism, the crisis in the bosom of the system, which enters the remotest market of the world, spreads to other developed countries and backward countries. In other words, the historical conditions we are in have made the crisis a more international problem.

The new cyclical processes entered after each crisis consisted of the stages of depression, stagnation, revival and development. But the cyclical period following the 1973 Oil Crisis was one in which capital rapidly broke away from the process of expanded reproduction, and periods of revival and development did not occur at all. The period from then until today has been one in which capital has been increasingly involved in rentier markets and has lost its productive qualities to a significant extent. In fact, the fact that large and small monetary crises, which have occurred more than 120 times in a row from that period to the present day, have occurred within this period is the result of the situation in which the current system finds itself.

It is necessary to look for this current situation in the bosom of capitalism, as Marx and Lenin did. In Marx’s analysis, with the development of centralization and socialization, and in Lenin’s, with the development of rentier capital, this is the dimension that capital has reached today… Therefore, the escalation of the contradictions of the current capitalism compared to the past has made it more and more difficult to overcome the existing problems within the limits of order.

This process will eventually take the turn that Marx analyzed below, when “those who dispossess are dispossessed”. Indeed, the bells of moribund capitalism have begun to ring…

“Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” (Marx, Capital, Volume 1)