The Catastrophic Failure of the Theory of “Catastrophism” (Part 1)

 

Note of the Editorial Board: This chapter contains figures which can only be viewed in the pdf version (download here).

 

Introduction

 

 

 

Since the days of the revisionist theoretician Eduard Bernstein more than 100 years ago, debates about the so-called theory of capitalist breakdown have taken place inside the Marxist movement. Broadly speaking, this debate basically deals with the question if the inner laws of capitalism are steering it towards crisis and, ultimately, towards breakdown or if it could exist for very long or even indefinitely.

 

The former opinion is held by those who consider themselves as orthodox Marxists and the later by the open or hidden supporters of revisionism (which includes also many pseudo-Marxists). Related with this issue has been the question of political strategy: should the workers movement orient towards the revolutionary overthrow of the capitalist system, which is the orthodox Marxist position, or towards reforming it?

 

The Revolutionary Communist International Tendency (RCIT) adheres to the theoretical school of orthodox Marxism which defends the theory of capitalist breakdown. This school is associated, first and foremost, with the names Vladimir Ilyich Lenin and Leon Trotsky, but includes also Rosa Luxemburg and other, less known, theoreticians like Henryk Grossmann, Fritz Sternberg, Paul Mattick and Eugen Varga, to name a few. [1] Albeit important differences exist in between these theoreticians, they all defended the tendency of capitalism to breakdown and opposed the revisionist school.

 

It would go beyond the scope of this essay to discuss these differences in detail or even to present a comprehensive overview of this century-long debate. We rather intend, in this pamphlet, to present a summary of our understanding of the Marxist theory of capitalist breakdown and to compare it critically with the conception of the Argentinean Partido Obrero (PO, Workers Party) which is the dominant component of the international alliance called Coordinating Committee for the Refoundation of the Fourth International (CRFI). These forces are important currents among those who claim adherence to Trotskyism. [2]

 

As we will demonstrate below, the comrades of PO/CRFI uphold an extraordinary one-sided, undialectical interpretation of the Marxist theory of capitalist breakdown. (The comrades prefer the term “catastrophism” for their theory.) This is not a purely theoretical question but has important consequences for their understanding of the world situation and hence for the strategic perspectives and programmatic answers. This pamphlet should help to understand the methodological failures of the theory of “catastrophism” and outline an orthodox Marxist conception which, in our opinion, serves as a basis for a revolutionary perspective in the present historic period.

 

 

 

A Note on the PO’s Term “Catatrophism

 

 

 

Before dealing with the arguments in substance we can not ignore an issue which seems to be of purely terminological character but which however is highly symbolic. It is somehow strange that the PO comrades positively use the term “catatrophism” for their theoretical conception of the decline of capitalism. Despite the fact that the PO dedicated special articles about the historical origin of term “catatrophism”, they seem to be completely unaware of the fact that the very term “catatrophism” has not been invented nor taken up by the Marxists but rather by the revisionist opponents of the Marxist theory of capitalist breakdown! [3] Instead they are musing in their articles about the origin of this term by the biologists Charles Robert Darwin and Thomas Henry Huxley!

 

It was Eduard Bernstein, a German social democrat theoretician and the “father” of revisionism, who used this term in his letter to congress of the German social democratic party in October 1898 and continued to use it in his famous book “Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemokratie” in the following year. [4] There he wrote: “The adherents of this theory of a catastrophe base it especially on the conclusions of the Communist Manifesto. This is a mistake in every respect.[5]

 

The orthodox Marxists themselves, like Rosa Luxemburg and Karl Kautsky (at that time) as well as, later, Lenin and Trotsky did not use the term “theory of a catastrophe” or even “catatrophism”. Personally, I am not aware of a single quote where they would have used this phrase (neither in German nor in English language). They rather always spoke about the theory of the “breakdown” respectively of the “collapse” of capitalism.

 

Surely, this would be no big issue if it would be only a terminological question. But, in fact, it is symbolic that the PO uses the prerogative term “catatrophism”, which has been invented by the revisionists in order to ridicule orthodox Marxism, as a positive category for their own theory. Worse, the PO, lacking a clear and explicit programmatic method to differentiate itself from other “Trotskyist” organizations, puts their idiosyncratic theory of “catastrophism” in the center of their political profile. Jorge Altamira, PO’s historic leader, emphasized once more in a speech at a recently hold conference, that his organization and the whole CRFI distinguishes itself from others as a declaredly catastrophistic current”. [6]

 

And, unconsciously, they are right to do because the PO’s interpretation is indeed a unique, we shall better say idiosyncratic, caricature of the original Marxist theory of capitalist breakdown which not many dare to raise.

 

However, in order to demonstrate the validity of our criticism, let us first positively summarize what the Marxist classics said about the theory of capitalist breakdown.

 

 

 

What did the Marxist Classics Say? A Brief Overview

 

 

 

While various so-called Marxists deny that there exists something like a theory of capitalist breakdown, the evidence from the side of the Marxist classic is pretty obvious. Let us present a few quotes to prove our case.

 

The most famous passage of Marx on capitalism’s destiny can be found in the chapter 24 of Volume I of Capital.

 

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, organised 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. Thus integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated. The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property. This is the first negation of individual private property, as founded on the labour of the proprietor. But capitalist production begets, with the inexorability of a law of Nature, its own negation. It is the negation of negation. This does not re-establish private property for the producer, but gives him individual property based on the acquisitions of the capitalist era: i.e., on co-operation and the possession in common of the land and of the means of production.” [7]

 

Marx already formulated a similar thought in the Grundrisse - his groundwork for Capital:

 

Since this decline of profit is synonymous with a decline in the ratio of immediate labour to the amount of objectified labour which it reproduces and posits anew, capital will try everything to make up for the smallness of the proportion of living labour to the size of capital in general, and hence for the smallness of the proportion which surplus value, if expressed as profit, bears to the preposited capital. It will seek to do so by reducing the allotment made to necessary labour and by still more expanding the quantity of surplus labour with regard to the whole labour employed. Hence the highest development of productive power together with the greatest expansion of existing wealth will coincide with depreciation of capital, degradation of the labourer, and a most straightened exhaustion of his vital powers. These contradictions lead to explosions, cataclysms, crises, in which by momentaneous suspension of labour and annihilation of a great portion of capital the latter is violently reduced to the point where it can go on fully employing its productive powers without committing suicide. Yet, these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow.” [8]

 

We therefore fully agree with the assessment of Roman Rosdolsky – an Ukrainian Trotskyist and an excellent Marx connoisseur – when he concluded in his study on the genesis of Capital:

 

The assertion that Marx did not propose a 'breakdown theory' is primarily attributable to the revisionist interpretation of Marx before and after the First World War. Rosa Luxemburg and Henryk Grossmann both rendered inestimable theoretical services by insisting, as against the revisionists, on the breakdown theory.[9]

 

Later Marx’s approach was fully supported and refined by Lenin and Trotsky. Writing a balance sheet of the discussion between the Marxists and the revisionists, Lenin confirmed in 1908 Marx’s theory of breakdown.

 

„Passing to political economy, it must be noted first of all that in this sphere the “amendments” of the revisionists were much more comprehensive and circumstantial; attempts were made to influence the public by “new data on economic development”. (...) It was said that the “theory of collapse” to which capitalism is heading was unsound, owing to the tendency of class antagonisms to become milder and less acute. (...) The position of revisionism was even worse as regards the theory of crises and the theory of collapse. Only for a very short time could people, and then only the most short-sighted, think of refashioning the foundations of Marx’s theory under the influence of a few years of industrial boom and prosperity. (...) That capitalism is heading for a break-down – in the sense both of individual political and economic crises and of the complete collapse of the entire capitalist system has been made particularly clear, and on a particularly large scale, precisely by the new giant trusts. The recent financial crisis in America and the appalling increase of unemployment all over Europe, to say nothing of the impending industrial crisis to which many symptoms are pointing— all this has resulted in the recent “theories” of the revisionists having been forgotten by everybody, including, apparently, many of the revisionists themselves. But the lessons which this instability of the intellectuals had given the working class must not be forgotten. [10]

 

Later Leon Trotsky confirmed repeatedly the Marxist theory of breakdown in his writings. Leaving aside the famous passage from the Transitional Program in 1938, he emphasized this thought in various writings. [11] In his theses “War and the Fourth International” (1934) he stated:

 

The catastrophic commercial, industrial, agrarian and financial crisis, the break in international economic ties, the decline of the productive forces of humanity, the unbearable sharpening of class and international contradictions mark the twilight of capitalism and fully confirm the Leninist characterization of our epoch as one of wars and revolutions.” [12]

 

In another essay, which appeared in 1939 as a preface to Otto Rühle’s “Living Thoughts of Karl Marx”, Trotsky wrote:

 

Marx began with a criticism of that political economy, exposed its errors, as well as the contradictions of capitalism itself, and demonstrated the inevitability of its collapse. [13]

 

The minds and hearts of middle class intellectuals and trade-union bureaucrats were almost completely enthralled by the achievements of capitalism between the time of Marx's death and the outbreak of the World War. The idea of gradual progress ("evolution") seemed to have been made secure for all time, while the idea of revolution was regarded as a mere relic of barbarism. Marx's prognosis about the mounting concentration of capital, about the aggravation of class contradictions, about the deepening of crises, and about the catastrophic collapse of capitalism was not amended by partly correcting it and making it more precise, but was countered with the qualitatively contrary prognosis about the more balanced distribution of the national income, about the softening of class contradictions and about the gradual reformation of capitalist society. (...) The life of monopolistic capitalism in our time is a chain of crises. Each crisis is a catastrophe. The need of salvation from these partial catastrophes by means of tariff walls, inflation, increase of government spending and debts lays the ground for additional, deeper and more widespread crises. The struggle for markets, for raw material, for colonies makes military catastrophes unavoidable. All in all, they prepare revolutionary catastrophes. Truly, it is not easy to agree with Sombart that aging capitalism becomes increasingly "calm, sedate and reasonable." It would be more apt to say that it is losing its last vestiges of reason. In any event, there is no doubt that the "theory of collapse" has triumphed over the theory of peaceful development. [14]

 

We could give many more quotes but for reasons of space we leave it at that. However, we are convinced that these quotes are sufficiently clear to show the reader that the theory of capitalist breakdown has always been an indispensable component of Marxism’s theoretical arsenal.

 

 

 

Empirical Evidence for the Long-Term Decline of Capitalism

 

 

 

One of the fundamental causes behind the decay of the productive forces in capitalism is the law of the tendency of the rate of profit to fall. As Marx elaborated in Capital Vol. III, this means that, in the long run, the share of surplus value becomes smaller relative to all of the capital invested in production (in machinery, raw materials, etc., as well as wages paid to workers). Therefore, the surplus value which can potentially be used for the reproduction of capital on an extended level becomes less and less. This inevitably leads to disruptions and crises and a historic tendency of decline as it becomes less and less profitable for the capitalists to invest in the expansion of production. While numerous left-reformists and centrists (e.g., the CWI), openly or hidden, ignore this law, Marx emphasized:

 

This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never before been grasped and, even less, consciously articulated.“ [15]

 

While bourgeois statistics make it not easy to dissect the development of the capitalist value production, accumulation and rate of profit, there are various indications which verify the Marxist thesis of capitalism’s decay.

 

In Figure 1, 2 and 3 we can trace the long-term fall of the profit rate. Naturally, over-accumulation of capital and the tendency of the rate of profit to fall is not a linear process, but its tempo and dynamics are influenced by various counter-veiling tendencies – most importantly by the relation of forces between the classes, i.e., the political class struggle. [16] However, while such factors can for some time slow down or temporarily halt the fall of the rate of profit (as happened in the 1990s, for example, as a result of the coalescing neoliberal offensive, advance of imperialist globalization, and the collapse of the Stalinist workers’ states), they cannot stop – or even reverse – the decline for in the long run.

 

 

 

Figure 1. World Rate of Profit and Average Rate in Core and Peripheral Countries (1869-2010) [17]

 

 

 

 

 

Figure 2. World Rate of Profit (G20 Countries), 1950-2011 -Simple Mean, in % [18]

 

 

 

 

 

Figure 3. The US Rate of Profit (Excluding ‘Fictitious Profits’), 1949-2012, in % [19]

 

 

 

 

 

 

 

The tendency of the rate of profit to fall led in turn to a decline of the rate of capital accumulation, i.e., the expanded reproduction of capital, as well as of output. In Table 1 we see the decelerating dynamic of the growth of the global Gross Domestic Product from an annual average of +3,8% in the 1970s to +3,2% (1980s), +2,8% (1990s), +2,6% (2000s) to +2.4% (2011-2013). The numbers in Table 2, which we take from another UN study, are slightly different but demonstrate exactly the same declining dynamic.

 

 

 

Table 1. Average Annual Growth Rate of the World Gross Domestic Product, 1971–2013 (in % p.a.) [20]

 

 

 

1971–1980           +3.8%

 

19811990           +3.2%

 

1991–2000           +2.8%

 

2001–2010           +2.6%

 

2011–2013           +2.4%

 

 

 

Table 2: The development of global Gross Domestic Product, 1960–2010 (in absolute numbers as well as average annual growth) [21]

Global GDP                                        Average annual                                                  Average annual

 

in absolute numbers                          growth rate (5 years)                                        growth rate (10 years)

 

 

 

1960: 7279                                          

 

1965: 9420                                                           1960–1965: +5.88%

 

1970: 12153                                                         1965–1970: +5.80%                                           1960–1970: +5.84%

 

1975: 14598                                                         1970–1975: +4.02%

 

1980: 17652                                                         1975–1980: +4.18%                                           1970–1980: +4.09%

 

1985: 20275                                                         1980–1985: +2.97%

 

1990: 24284                                                         1985–1990: +3.95%                                           1980–1990: +3.46%

 

1995: 27247                                                         1990–1995: +2.44%

 

2000: 32213                                                         1995–2000: +3.64%                                           1990–2000: +3.04%

 

2005: 36926                                                         2000–2005: +2.93%

 

2010: 41365                                                         2005–2010: +2.40%                                           2005–2010: +2.66%

 

 

 

Legend: GDP figures are in billions of constant 2000 US dollars. The growth figures are the respective averages of the five ten years cycle (our calculations).

 

 

 

The tendency of capitalist decline becomes even more pronounced if we examine the dynamic of capital accumulation in the imperialist metropolises during the same period (see Table 3). While the growth rate of capital accumulation in the US, Japan und EU-15 was between 5% and 15% in the 1960s, it declined to between 2% and 5% in the subsequent decades. In the first decade of the new millennium, there was outright stagnation or even decline (with a growth rate of between -0.4% and -1.9%).

 

 

 

Table 3. Growth Rate of Gross Fixed Capital Formation in USA, Japan and EU-15, 1961–2010 (in % p.a.) [22]

 

 

 

                                USA                       Japan                    EU-15

 

1961–1970           +4.7%                    +15.7%                  +6.0%

 

1971–1980           +3.3%                    +3.5%                    +1.9%

 

1981–1990           +3.5%                    +5.7%                    +2.8%

 

1991–2000           +5.4%                    -0.6%                     +1.8%

 

2001–2010           -0.4%                     -1.9%                     +0.4%

 

 

 

We leave it with reproducing these few statistics which confirm the historic decline of capitalism and move forward in discussing the Marxist theory of breakdown and its relevance to understand the historic period in which we are living.

 



[1] We refer to the English-language translation in those cases where such exist according to our current knowledge: Henryk Grossman: Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen Systems (Zugleich eine Krisentheorie), Verlag von C. L. Hirschfeld, Leipzig 1929 (in English: Law of the Accumulation and Breakdown, http://www.marxists.org/archive/grossman/1929/breakdown/index.htm); Henryk Grossman: Eine neue Theorie über Imperialismus und die soziale Revolution (1928), in: Aufsätze zur Krisentheorie, Verlag Neue Kritik, Frankfurt a. M. 1971; Fritz Sternberg: Der Imperialismus (1926), Verlag Neue Kritik, Frankfurt a. M.1971; Eugen Varga: Die Niedergangsperiode des Kapitalismus, Verlag der Kommunistischen Internationale, Hamburg 1922; Eugen Varga: Aufstieg oder Niedergang des Kapitalismus, Verlag Carl Hoym, Hamburg 1924 (in English: The Decline of Capitalism, London 1924, https://www.marxists.org/archive/varga/1924/x01/x01.htm); Eugen Varga: Die Krise des Kapitalismus und ihre politischen Folgen, Europäische Verlagsanstalt, Frankfurt a. M.1971; Paul Mattick: The Permanent Crisis - Henryk Grossman’s Interpretation of Marx’s Theory Of Capitalist Accumulation (1934), https://www.marxists.org/archive/mattick-paul/1934/permanent-crisis.htm; Paul Mattick: Zur Marxschen Akkumulations- und Zusammenbruchstheorie (1934), https://www.marxists.org/deutsch/archiv/mattick/1934/theorie.htm; Paul Mattick: Marx und Keynes. Die Grenzen des „gemischten“ Wirtschaftssystems, Europäische Verlagsanstalt, Frankfurt a. M. 1971 (in English: Paul Mattick: Marx and Keynes. The Limits of the Mixed Economy, 1969, https://www.marxists.org/archive/mattick-paul/1969/marx-keynes/index.htm); Paul Mattick: Kritik der Neomarxisten und andere Aufsätze, Fischer Taschenbuch Verlag, Frankfurt a. M. 1974.

[2] Concerning the theory of catastrophism, we have taken into account the following articles of PO for this essay:

Pablo Rieznik: Sobre el origen del "catastrofismo", 29 de enero de 2015, Prensa Obrera #1348, http://www.prensaobrera.com/prensaObrera/1348/cultura/sobre-el-origen-del-catastrofismo; Pablo Heller: PTS: anticatastrofismo y política democratizante, 15 de septiembre de 2016, Prensa Obrera #1428, http://www.prensaobrera.com/prensaObrera/1428/internacionales/las-conclusiones-politicas-de-la-conferencia-internacional-del-pts; Daniel Gaido: Los orígenes históricos del término "catastrofismo", 15 de enero de 2015, Prensa Obrera #1347, http://www.prensaobrera.com/prensaObrera/1347/sociedad/los-origenes-historicos-del-termino-catastrofismo; Pablo Heller: La izquierda frente a la crisis mundial, En Defensa del Marxismo #49, http://www.prensaobrera.com/publicaciones/verNotaRevistaTeorica/49/la-izquierda-frente-a-la-crisis-mundial;

We have also taken into account several documents of the Partido de los Trabajadores Socialistas (PTS) and its international current, the Trotskyist Fraction - Fourth International. The PTS collaborates with PO in the framework of the electoral Alliance FIT and is, at the same time, a major rival of PO. The PTS has published a number of polemics against PO on the issue of “catastrophism”. See e.g. Guillermo Iturbide: El derrumbe del capitalismo y la estrategia marxista. Una polémica con el Partido Obrero alrededor del “catastrofismo” desde la Internacional Comunista de los orígenes, Ediciones IPS-CEIP, Jueves 16 de febrero de 2017, https://www.laizquierdadiario.com/El-derrumbe-del-capitalismo-y-la-estrategia-marxista; Claudia Cinatti: On Internationalism: A Response to the Partido Obrero, January 02, 2017, http://www.leftvoice.org/On-Internationalism-A-Response-to-the-Partido-Obrero. See also Mercadante Esteban, Noda Martín: Gradualismo y catastrofismo”, Revista Lucha de Clases Nro 8, junio 2008; Claudio Katz: Los efectos del dogmatismo, Revista Espacio Crítico No 8. Enero – Julio de 2008.

[3] Daniel Gaido: Los orígenes históricos del término "catastrofismo"; Pablo Rieznik: Sobre el origen del "catastrofismo"

[4] Eduard Bernstein: Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemokratie (1899), Dietz Verlag, Berlin 1991, online: https://www.marxists.org/deutsch/referenz/bernstein/1899/voraus/index.html; in English: Eduard Bernstein: Evolutionary Socialism: A Criticism And Affirmation, B. W. Huebsch, New York 1909, online: https://www.marxists.org/reference/archive/bernstein/works/1899/evsoc/index.htm

[5] In German language on p. 8; In English language on p. x (see sources in the previous footnote).

[6] Jorge Altamira: “Reconstruir la IV Internacional con una lucha política franca”. Extractos de la intervención en el acto internacionalista, 12 de abril de 2018, Prensa Obrera #1497, http://www.prensaobrera.com/prensaObrera/1497/internacionales/reconstruir-la-iv-internacional-con-una-lucha-politica-franca

[7] Karl Marx: Capital. A Critique of Political Economy, Volume I, in: MECW Vol. 35, pp. 750-751. For reasons unknown to me, the English translation of Capital has given the chapters different number than the German-language original. Hence chapter 24 in the German-language original version of Capital is chapter XXXII in the English-language translation. As I have pointed out elsewhere this is neither the only nor the worst example of problems in the English translations of the works of Marx, Engels and Lenin.

[8] Karl Marx: Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy, 1857-58), MECW 29, p. 134

[9] Roman Rosdolsky: The Making of Marx's ‘Capital’, Pluto Press, London 1977, p. 382

[10] V. I. Lenin: Marxism and Revisionism (1908), in: LCW 15, pp. 35-36

[11] Leon Trotsky stated in the Transitional Program: “All talk to the effect that historical conditions have not yet “ripened” for socialism is the product of ignorance or conscious deception. The objective prerequisites for the proletarian revolution have not only “ripened”; they have begun to get somewhat rotten. Without a socialist revolution, in the next historical period at that, a catastrophe threatens the whole culture of mankind. The turn is now to the proletariat, i.e., chiefly to its revolutionary vanguard. The historical crisis of mankind is reduced to the crisis of the revolutionary leadership.” (Leon Trotsky: The Death Agony of Capitalism and the Tasks of the Fourth International: The Mobilization of the Masses around Transitional Demands to Prepare the Conquest of Power (The Transitional Program); in: Documents of the Fourth International. The Formative Years (1933-40), New York 1973, p. 181, https://www.marxists.org/archive/trotsky/1938/tp/index.htm)

[12] Leon Trotsky: War and the Fourth International (1934); in: Trotsky Writings 1933-34, p. 299, https://www.marxists.org/archive/trotsky/1934/06/warfi.htm

[14] ibid

[15] Karl Marx: Grundrisse der Kritik der politischen Ökonomie; in: MECW Vol. 29, p. 133

[16] See on this e.g., Richard Brenner, Michael Pröbsting, Keith Spencer: The Credit Crunch - A Marxist Analysis, London 2008

[17] Esteban Ezequiel Maito: The historical transience of capital The downward trend in the rate of profit since XIX century, 2014, p. 13

[19] The figure is from Peter Jones who elaborated a highly interesting method to better calculate the rate of profit. See Peter Jones: The Falling Rate of Profit Explains Falling US Growth, Paper for the 12th Australian Society of Heterodox Economists Conference, November 2013; see also Peter Jones: Depreciation, Devaluation and the Rate of Profit, Australian National University. (The figure above is reproduced from: Michael Roberts: Investment, profit and growth (2017), https://thenextrecession.wordpress.com/2017/06/13/investment-profit-and-growth/.

[20] FAO: Global Trends in GDP and Agriculture Value Added (1970-2013), May 2015, http://www.fao.org/economic/ess/ess-economic/gdpagriculture/en/

[21] Deepak Nayyar: The South in the World Economy: Past, Present and Future, UNDP Human Development Report Office, Occasional Paper 2013/01, p. 6

[22] European Commission: Statistical Annex of European Economy, Autumn 2015, p. 49