In accordance with the dialectics of the process of development, the periods of economic stability feed the self-confidence of capitalists and their ideologists on the one hand, while at the same time they serve as fermentation processes of the problems which would produce the disappointment of the forthcoming period. A concrete example can be given from the present crisis. During the boom period which preceded the last great economic crisis, bourgeois economists constantly proclaimed that capitalism entered a new epoch which would witness an uninterrupted growth. Two aspects of this period of ideological propaganda, which marked 1990s in particular, were especially highlighted, which made it different from previous ones. The first aspect was the collapse of the Soviet Union and other similar regimes. Bourgeois ideologists used this event as a means of brainwashing the masses about the supremacy and immortality of the capitalist system. The second one was the claim that, thanks to the technological inventions, capitalism created its own mechanisms to bring its crises under control. Owing to the spread of inventions such as internet, computer and cell phones, economic growth continued from the beginning of 90s, particularly in the U.S.A. This was presented as an indication that the claims regarding capitalism’s relative stagnation since 70s proved false. This was followed by the claim that the nature of capitalist cycles was changed thanks to the new technological revolution. The Marxist analysis, which explains that capitalist booms are inevitably followed by crises, was denounced as outmoded. Supposedly, thanks to the application of the new technology, it would be quite possible to determine the demand in the market with great accuracy, to manage stocks, and thus to avoid the tendency of overproduction! Other elements contributing to this bourgeois propaganda were the massive expansion of the world trade in this period and the accelerating integration of developing countries into capitalist system, both of which were summed up in one word: globalisation. It was alleged that capitalism, on its way to become precisely a world system, would create a magic change that would put an end to all contradictions inherited from the past. Globalisation propaganda, tailored to the capitalist interests, provided grounds for the misperception that revolutionary leaps in technology would strengthen capitalism, providing it with a magic potion. Despite all deepening historical contradictions and obsoleteness of the present economic system, worship of capitalism was reawakened, among the youth in particular, by the illusion that technology was able to solve all these contradictions. Yet, technology on its own cannot determine the course of humanity. The ruling forces that control the technology and exploit it according to their interests are decisive. Under capitalism, technological advances have been, and can be, nothing else than the means of increasing the productivity of the working class, and thus minimizing the necessary labour time for production in order to maximize the surplus value, and consequently, the profit. Besides, as seen throughout the history of capitalism, even when new technologies bring huge amounts of profits at first, rates of profit would inevitably decline due to spread of technological revolution. Thus, the same conditions, which were once acting as a catalyst for the capitalist upswing, would now swing in the opposite direction and lead to a decline. Moreover, in the final analysis, the potential benefit which capitalism can obtain from technological innovations is relative in the course of history, no matter how striking new techniques might look. The history of capitalism has seen periods of big advances when successive technological inventions were put into practice and brought about new, vibrant, and abundant markets. With the industrial revolution of 18th Century, use of simple single-engine machines was replaced by more complicated ones composed of several of them. This enabled the rise from manufacture to industrial production of fixed capital. In short, what makes a huge leap forward possible for capitalism is not just some technological innovations. In fact, it is, as seen in the case of industrial revolution, an age of historical innovations that bring about a revolution in the organisation of production. It was alleged that new technologies of 1990s would start a similar period of leap forward. But in the end, this allegation turned out to be no more than an empty propaganda of the bourgeoisie. The periods of great advances which capitalism enjoyed in its early stages came thanks to a combination of factors: successive leaps forward experienced in various industries, spread of these advances to virgin areas of the world and creation of new markets on a large scale. Likewise, the technological revolutions of this period were capable of increasing the surplus value production substantially thanks to new labour-saving techniques which replaced old labour-intensive technologies. However, capitalism has long left behind its youth, during which it had such potential prospects. Today, even in case that new technical inventions take place and further reduce the necessary labour time for the production of goods, a fast and widespread implementation of these is incompatible with the essence of the capitalist mode of production. No matter how attractive the technical inventions of the so-called new technological revolution may appear, capitalists are not concerned with this technical miracle side of the story. What they rather take into consideration is whether these inventions bring along new, highly profitable and widespread markets or not. And yet, for capitalists, the contradictions of capitalist system are as inescapable as natural laws. This system is bound to proceed on the basis of the contradiction between the limited purchasing power of the broad masses and the insatiable desire of capitalists to make profits and profit-driven investments. Despite all technological innovations, with many capitalists acting in the same direction with the same positive expectations, it is inevitable after a certain amount of time that profitability decreases, market becomes flooded with new products, and thus a crisis of overproduction occurs. Moreover, potential market opportunities created by new technology are, in fact, restricted by enormous inequalities within the world capitalist system. It is for this reason that the new technology has abundantly exposed the inner laws of capitalism, triggering a very serious crisis of overproduction in a relatively short span of time. Under profit-driven capitalist order, new technologies become a source of new problems, whereas they could have an enormous significance in the sense of fulfilling the needs of human society. However, capitalism cannot continue without revolutionising its technical base on a constant basis. Mechanisation becomes mandatory for capitalists as they seek to increase productivity in order to reduce production costs. From a mere technical point of view, although it does not have absolute limits, this progress has a character which gradually becomes irreconcilable with the nature of the capitalist mode of production in the long run. Growing mechanisation of the production process means reduction of living labour against dead labour. Although this amounts to a progress in terms of the advance of the productive forces, in capitalist mechanism, it reduces profit rates by increasing the organic composition of capital. Moreover, the possibility of reducing the working hours to minimal levels by means of new technical inventions contradicts the essential feature of the process of surplus value production. Firstly, machines cannot produce surplus value, so that a form of capitalism in which workers are replaced by robots is unimaginable. Secondly, although it seems possible to increase surplus value production despite reduction in working hours, this has historical limitations. Since the purchasing power of the working class cannot be increased in proportion with the decrease in working hours, now the realisation of surplus value will become a problem on a much larger scale. Expansive valuation of capital depends not only on its ability to exploit larger amounts of living labour, but also on its ability to turn the surplus value which is appropriated in the production process into profit. This is precisely the reason why the advance of productive forces becomes more and more incompatible with the essence of the capitalist mode of production. Today’s technological innovations have some potential for reviving the economy to some extent. However, there is a too senile capitalism on the stage of history, which has already entered the way which will lead it to much bigger obstacles and deeper crises. For instance, the advances made in 1990s in the field of information technology could not find a wide application area across the world simultaneously. Moreover, these innovations even failed to provide the ground for a general, long-term, consistent boom in the US economy, which enjoyed a brief recovery thanks to them. In fact, the economic boom seen in the last period has developed in such a way as to follow a very unstable path and acquire an inflated character thanks to stock market intrigues and credit mechanism. All these realities have been reflected in concrete changes along with economic growth achieved on the basis of new technologies of 90s. For instance, in all capitalist countries, including the USA, the working class was made to work for longer hours, whereas shorter working hours were possible thanks to the innovations in the field of information technology. There was a massive attack carried out against the general level of wages and the vested rights of the working class, while the purchasing power of broad masses was reduced. The economic advance in the new fields of production turned into an overproduction crisis in a short span of time, since it failed to play a locomotive role for the other fields of economy and find sufficient markets across the world. The incapacity of the existing markets in terms of absorbing and spreading the new technologies reflected itself through a slowdown in growth of productivity despite the technical innovations. Thus, while on the one hand millions of people were suffering from hunger and thirst, large stocks of unsold variations or scraps were growing out of the products of the new technology on the other. Unfolding as a systemic crisis and spreading across capitalist countries on the eve of the 21st century and in the first decade of the new millennium, the economic crisis also manifested itself through sharp declines in world trade. With the market opportunities shrinking, the exacerbated competition between imperialist powers forces them to act primarily in a self-protective manner. This is also the reason for protectionist measures being on the rise again, although they are at variance with a globalised capitalism. But we must underline that these are temporary developments. The interests of capitalists require an immediate way out of the stagnation of world trade. The primary goal of each imperialist power is not isolation, but on the contrary, a buoyant world trade and the largest possible slice of it. Competition which makes its way in a relatively steady and modest way in periods of capitalist rise takes on a different character as circumstances change. As in all previous periods of crisis that shook capitalism, at present the ever growing tension between imperialist powers is bringing forward new alignments and confrontations. This is reflected most strikingly in the growing conflicts between the USA and the EU. Thus, what marks the beginning of the 21st century is not a relative stability, but rather an utter instability in all areas. The balances peculiar to the boom period of capitalism in the wake of the Second World War, is now turned upside down as capitalist system has entered a chaotic period characterised by rocking crises, big upheavals.

As is known, capitalism is based on generalised commodity production. The fundamental feature of capitalist mode of production lies in the fact that the outcome of the production process is not only the value but also the surplus value. Nevertheless, for a well-functioning economy, producing more surplus value is not enough. It must be realised in the market as well. In this way, the capitalist class is able to use a significant part of the realised profit for new investments. Thus, the capitalist production process is materialised as an expanded reproduction process, which is a totality formed by the sphere of production and distribution. But this totality is a contradictory one since there is a lack of harmony between the two spheres, which manifests itself, for instance, in the discrepancies between production and consumption and also between the time of selling and payment. In order to maintain the expanded reproduction process, capitalists have to increase the social productivity of labour. However, this movement is interrupted by stagnations or discrepancies in capital accumulation. Since capitalism has a tendency to increase production regardless of potential stagnations, this leads to emergence of spasms in the capital accumulation process when problems arise in increasing profitability and realisation of profits. It is precisely this character of the process which plays a central role in causing cyclical crises of overproduction in capitalism. For this reason, there is no separate theory of crisis in the writings of Marx apart from the analysis of capital accumulation process. Because the basic laws of motion of capitalist system are nothing else than the laws of capital accumulation. The source of capitalist crises is the conflict between the capital’s constant desire for expansion and the obstacles created by the workings of capitalism itself. The real barrier of capitalist production is capital itself. One must therefore not consider economic development an uninterrupted and a linear process. When we examine a process in motion, we discover that different factors create an upward trend at the beginning and raise it up to a peak point. But after this peak point, the same factors begin to turn into their exact opposites and causes of sharp slumps and collapses. In the workings of capitalist economy, every rise is followed by a fall and this phenomenon is one of the laws of motion of the system. Therefore, leaving some financial crises arising from accidental causes aside, the cyclical economic crises discussed here are not accidental events. There is no way for ruling capitalist forces to escape from this kind of crises of the system. When we examine the history of capitalist system, we discover that it moves along on the basis of successive industrial cycles. These cycles are, above all, driven by periodic reinvestment of fixed capital. Industrial cycles include, as in the breathing process, phases of expansion and shrinkage, in other words, stages of boom and crisis. Marx explains that each cycle goes through successive phases, namely, recession, recovery (medium activity), acceleration (upswing, boom) and depression (crisis, collapse). [1] Crisis is the most important phase of the industrial cycle, enabling one to distinguish the successive cycles. But it would be a serious mistake to regard these periodic fluctuations in capitalist economy as equivalent cycles in terms of their duration and impact. Cycles vary not only by the economic magnitude of the collapses and rises they involve, but also by their durations. For instance, while they were suggested to recur approximately every 10 years in Marx’s time, they took place over shorter time periods in subsequent decades. Marx refers to industrial cycles in his analysis regarding the whole turnover of the invested capital. He explains that the capital-value invested has to pass through a cycle duration of which, for instance, is determined by the life of fixed capital, that is, its reproduction or turnover time.[2] When circulating capital, that is, the sum of variable capital used in wage payments and certain parts of constant capital such as raw materials and intermediate materials, enters the production process it transfers its value into the product. On the other hand, fixed capital, the part of constant capital which serves in the form of buildings, machinery and equipment, continues to function in subsequent production processes as only part of its value, i.e., its depreciated and depleted part, is transferred to the product. Since the durability of each component of fixed capital is different, Marx assumed that fixed capital outlives its term, in approximately, say, 10 years, until it loses its capacity to yield product and value and has to be renewed. But, he added that it is impossible to offer exact figures since there are too many variables involved. For instance, while technical innovations enable more durable products, at the same time, they necessitate replacement of the same products long before they outlive their usefulness, that is, they lead to moral depreciation. The transition of capitalist economy from recession to recovery requires adoption of new techniques of production which would enable a more efficient use of labour power –i.e. extracting more surplus value. In its endless pursuit of more profit, capital starts to flow towards the investment areas where profitability is higher and new techniques are implemented to increase labour productivity. Those capitalists who rely on the strength of their capital or who do not hesitate to take risks can make above-average profits during the initial periods of economic recovery. As they increase their labour productivity and reduce the costs of production by adopting a new production technique, they can sell their products for higher prices based on their old values, before the other capitalists make a move. And so, they can make excessive profits. But these excessive profits are, in fact, taken away from the share of other capitalists. With the adoption of new techniques becoming widespread, products would be sold at their new values based on their new and lower costs. As a result, those who made excessive profits at the beginning would come down to the average. During periods of recovery, demand generally increases while stocks of unsold goods piled up in the previous period start to melt away. The idle capacity of the previous period of depression is reactivated, as some of the closed factories reopen and investments soar. A downward trend in unemployment goes along with a general upward trend in wages. Consumption, prices and average rate of profit are on the rise. There is sufficient amount of currency in circulation, returning quite smoothly and regularly, posing no problem for industrial capitalists. Therefore, during such periods, credits are provided on the most favourable and flexible terms. Loan volume grows while market expands and stock markets flourish. Likewise, no problem arises with the interest rates during boom periods, since there is no serious stagnation in the credit system or speculative heat in the economy. Interest rates remain at low enough levels to encourage investments, though higher than the levels of recession periods.  All these signs of economic recovery stimulate optimism in the market intensely. Investments expand at a great pace owing to the rise in profitability. Unemployment declines further as prices continue to rise and the loan volume grows even more rapidly. As long as things go well, these factors, operating in mutual interaction, enable the economy to remain on an upward trend. Thus, economic recovery climbs up towards the peak, gradually turning into boom. Boom is a period when the economy displays signs of overheating with rising interest rates and with credit bubble inflated by new investors rushing into markets. A tendency towards overproduction becomes evident as a result of the gradually growing capital flow into various sectors in anticipation of high profits. At the end, the rate of profit starts to decline and a new crisis brews. In addition to brewing cyclic crises, boom process also bears witness to a growing tendency towards speculation. Since the aim of capitalist competition is to obtain more profit. What satisfies capitalists is not manufacturing more products in the field of industry and gaining fame, but obtaining more profit. In this respect Marx points out that in modern capitalism, even a seemingly industrial competition is, in the final analysis, a commercial one. As he explains, in the economic lives of modern nations, there are even some phases when everyone is carried away by the madness of obtaining profit without producing. Yet, there is no magic formula to increase the total amount of profit without producing. Therefore, such seizures of madness based on speculation are nothing but a competition for a bigger slice from the total surplus value already created in the production process. A careful examination of the process would reveal that the economy is overheated as a result of the tendency towards more investment, higher capacity utilisation and more production, which were all encouraged during the whole course of boom process. Therefore, certain signs of disease in the economy are already evident. But it is impossible to say that these signs become prominent and have broad repercussions in the minds of capitalists immediately and consistently. Capitalist economy, when taken as a whole, is like an extremely complicated organism which makes an easy diagnosis of diseases impossible. Capitalist accumulation process is doomed to break in many points. Once the economy staggers, all the factors involved increasingly affect each other in a negative way, leading to a collapse of the economy. These breaking points of the expanded reproduction process are the moments which mark the slide of economy from boom into collapse. So, the peak of every boom, in other words, the phase during which capitalists believe that business flourishes, is, in fact, the phase but one before a new collapse. But although a new crisis brews in the last phases of the boom, pay-backs continue regularly for some time, owing to the optimism fuelled by the excessive buoyancy and various kinds of bond games. In this way, on the surface the image of a very profitable business continues its existence for a while. “Business is always thoroughly sound and the campaign in full swing, until suddenly the debacle takes place.” writes Marx.[3] Therefore, every collapse seems to happen too sudden, shocking the bourgeois economists in general and those who trail behind them. Capitalist system is characterised by combined and uneven development on every level, not only with regard to countries, but also with regard to different industries in a national economy. According to this law, while on the one hand the pace and extent of the economic crisis vary between countries and industries, at the same time the crisis causes a combined effect on all levels. On the basis of this complicated operation the two basic classes of capital cannot respond simultaneously in terms of boosting or curtailing investments. Marx divided all capital into two major classes: “Class I, producing means of production, and Class II, producing articles of individual consumption.”[4] This division within capital, which some authors call first and second department, is important in the sense that it exposes the anarchic nature of capitalism. Although planning is carried out to some extent on the level of big business or cartels, the capitalist economy as a whole can only proceed with imbalances and disproportions. The length of time for the production of the means of production does not match that of consumption articles. The former requires larger-scale capital investments as well as longer production times compared with the latter. For instance, even when the unsold stocks begin to pile up in the textile sector, the companies manufacturing textile machines are still busy fulfilling the orders they have been given in the previous period when the economy was still in upswing. Therefore, the production is not reduced simultaneously in the two departments. This factor is of crucial importance since it intensifies the effects of crises and delays the recovery. During crisis periods, the economy experiences sudden declines in profit rates, which is accompanied by shrinking investments and piling up of unsold stocks. Then follow mass sackings, decrease in demand and shrinkage in circulation. Prices and wages also decline as the number of workers employed falls and the volume of commercial transactions shrink. The market, already unable to absorb the overproduction, shrinks even further. Loan repayment becomes impossible. During depression, the market seethes with commodities which cannot be converted into money despite falling prices. Marx points out that if there is a disturbance in the expansion or even in the normal flow of the reproduction process, credit becomes scarce and it becomes difficult to obtain commodities on credit. For this reason, one of the fundamental features of the depression phase of the cycle is insistence for cash payment and scrutiny of credit sales. With credit scarcity, the demand for the currency in circulation grows, mirrored in a further rise of interest rates. In such periods, the demand for money originates from the need to pay, rather than to purchase. New loans are sought not for new transactions but to conclude the old ones.  Crisis causes a wave of bankruptcies. Factories which cannot keep up with changing conditions shut down. A substantial part of machinery and fixed capital ceases to be a part of production process and falls into ruin. As a result of a general crisis of confidence surrounding the market, stocks and bonds lose value. The impact of depression would vary among different sections of capital, being determined by the competition. During the periods when things are going well, competition enables a climate of brotherhood among capitalist class by equating the profit rates. But, with crisis, it becomes a life-and-death struggle. As Marx puts it, “as soon as it no longer is a question of sharing profits, but of sharing losses, everyone tries to reduce his own share to a minimum and to shove it off upon another.” Consequently, the competition would turn into a war between brothers. Only survivors can be those major corporations that manage to maintain the production thanks to their mighty financial structures and keep the increase in their total mass of profits despite falling rates of profit. During the period of depression, capital becomes more centralised and restructures itself. Since capital gains increasingly decline, some capitals would either be liquidated or depreciate and be bought off cheaply by monopolies. With the realization of the results of the crisis, the total social capital depreciates, stock market hits the bottom, interest rates drop, and pessimism dominates the market. Thus begins a period of recession which is not easy to leave behind for an economy that hit the bottom in the crisis. During recession, despite the persistent low level of interest rates, there is a great reluctance to make new investments, since the effects of the crisis are still felt, stocks are mounted, and fear of bankruptcy is still palpable. Depending on the magnitude of the unfolding crisis of overproduction and the extent of its spread on a world scale, the recession may last a relatively short span of time, and undergo a painless transition to recovery, or it may follow an opposite path as seen in the Great Depression of 1929 as well as the present crisis. The economic crisis opens up new room for growth for capitalists, saving them from problems caused by overproduction and excess capacity. As the crisis eliminates less competitive capitals, those remaining become able to share the total surplus value at a higher rate of profit. And the rate of exploitation also rises if the working class cannot prevent wage reductions. If all these factors work in combination in such a way as to put an end to recession, the capitalist economy enters into a recovery phase. Having hit its peak during the period of crisis, unemployment begins to decline. And prices rise as a result of growing demand. Signs of recovery create an optimistic mood, triggering the desire to generate more profit. Thus, the capitalist economy moves forward towards a new boom period. But, inevitably, another crisis of overproduction breaks out in the end. Therefore, the history of capitalist development is also the history of depressions, which become gradually more and more severe. In Marx’s words: “Capitalist production seeks continually to overcome these immanent barriers, but overcomes them only by means which again place these barriers in its way and on a more formidable scale.”[5] Cyclical crises of capitalism are both the inescapable disease of the system and its remedy which enables further operation despite all contradictions and disproportions. The depression serves for nothing else than to forcibly unite the phases of production process that had become independent from one another. Proceeding through and on the basis of crises, this system has, in fact, an unsteady character like a jigsaw puzzle, despite all the economic growth achieved. Marx and Engels strikingly pointed out this reality in the Communist Manifesto many decades ago. There, the question as to how the bourgeoisie overcomes the crises is answered as follows: “On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”[6]

In an effort to escape the fact that economic crises are inherent in capitalism, bourgeois economics has long claimed that crises are completely accidental, resulting from factors such as fluctuations in wages and prices. Yet, such fluctuations are not the cause but the result of the boom-crisis cycle as both wages and prices are generally dependent on the course of economic development. Capitalism contains within itself the possibility of crisis, which manifests itself in the form of overproduction. It is not some incidental factors that play the decisive role in turning possibility into reality, but some fundamental laws inherent in capitalism. The law of the tendency of the rate of profit to fall occupies a central position with respect to the outbreak of capitalist crises. Marx points out that this tendency “is the most important law of modern political economy, and the most essential one for comprehending the most complex relationships. It is the most important law from the historical viewpoint.”[7] In the course of capital accumulation, the tendency of the rate of profit to fall exacerbates competition between capitalists, and thus ferments crises. Marx was not the first to point out the fall of the profit rate. Classical economists such as A. Smith and D. Ricardo had already dealt with this subject, yet they had failed to offer a correct explanation. The basic mistake of these classical economists was their inclination to regard the fall as a result of a decline in labour productivity. Marx, on the contrary, discovered that the profit rate showed a tendency to fall because of increasing labour productivity. In fact, the key factors that determine the profit rate were the fluctuations in the rate of surplus value, the fluctuations in the organic composition of capital, and the fluctuations in the turnover rate of capital. Marx criticized Ricardo for regarding the profit rate as a linear function of wage fluctuations. Contrary to Ricardo’s analysis, profit rate can rise while real wages are also rising and it can fall while the latter is falling. Marx pointed out Ricardo’s false assumption that the rate of profit and the rate of surplus value were identical. Yet, the rate of surplus value is the ratio between the two parts of the working day, that is, between the surplus labour, spent for the capitalist, and the necessary labour, spent for the worker himself. The rate of profit, on the other hand, is the proportion of the surplus value extracted from workers to total capital. Therefore, even when the rate of surplus remains constant or rises, with increasing labour productivity as a result of mechanisation, total capital grows, and consequently, the rate of profit falls. “The rate of profit thus falls, not because labour becomes less productive, but because it becomes more productive. Not because the worker is less exploited, but because he is more exploited...”[8] So, the mechanism, which expands the mass of surplus by increasing the labour productivity, is also the reason behind the tendential fall in the rate of profit. Because, even when the mass of surplus expands, its proportion to the total capital, which increases to a greater extent, would produce a smaller rate of profit.[9] The surplus value, the source of capitalist profit, can be increased in two ways. The first way is to extend the working day, i.e. working hours. This is called absolute increase. The second way, called relative increase, involves reducing the necessary labour time in which the worker produces a value equivalent to his wage, while the length of the working day remains unchanged. But let us note that under capitalist mode of production, there are inherent limits to increasing labour productivity due to the nature of the system. Because, although it may seem appealing to reduce the necessary labour time through growing mechanisation, the raison d'être of capitalist system is nothing but the exploitation of living labour. Hence, a level of mechanisation which would almost remove the need for living labour, that is to say robotization, is totally at variance with the fundamental character of capitalism. Therefore, contrary to expectations, the capitalist system does not shorten working hours, and it implements new methods which enable increases in relative surplus value within the limits allowed by the logic of the system. Capitalist development improves labour productivity through growing mechanisation. Thus, it enables the utilization of an ever-growing constant capital (means of production, raw material, auxiliary materials and instruments of labour) by the same amount of living labour within the same amount of time. As a consequence, the costs of constant capital increase while the ratio of constant capital to variable capital (allocated to labour power) also increases. The increase in this ratio, which demonstrates the organic composition of capital, is one of the laws of capitalism as capitalist mode of production creates a continuous rise in the organic composition of capital. But, the decrease of the variable capital should be seen, not as an absolute decline, but as a relative one. In fact, the absolute mass of exploited labour set in motion by social capital, and consequently the absolute mass of surplus labour, may grow; the capitals controlled by individual capitalists may appropriate a growing mass of surplus labour. The workings of capitalism is summarized by Marx as follows: “The number of labourers employed by capital, hence the absolute mass of the labour set in motion by it, and therefore the absolute mass of surplus-labour absorbed by it, the mass of the surplus-value produced by it, and therefore the absolute mass of the profit produced by it, can, consequently, increase, and increase progressively, in spite of the progressive drop in the rate of profit. And this not only can be so. Aside from temporary fluctuations it must be so, on the basis of capitalist production.”[10] This means that, in spite of the growing mass of profit, the value of constant capital will increase, due to the capitalist law of operation, more rapidly in proportion to the part of capital invested in living labour, and thus the rate of profit will show a tendency to fall. The decline in the rate of profit is a bad sign for capital since this rate indicates the level at which the capital can revaluate itself. Capital accumulation is stimulated not by the rate of surplus value, but by the ratio of surplus value to total capital outlay, that is, by the rate of profit and the total amount of profit. The rate of profit is the driving force of capitalist production. Commodities are produced as long as they create profits for capitalists. New production methods, no matter how productive, cannot be put into practice by any capitalist voluntarily if they reduce profitability. Improvements in productivity arouse the capitalist’s interest not because they reduce the necessary labour time for the production of a commodity, but because they increase his profit. Capitalists base their calculations not on abstract formulations, but on concrete figures they obtain such as the rate of profit and the mass of profit. Therefore, new production methods can attract a great number of capitalists only when they reduce the prices of capital factors and increase profitability. It is an obvious fact that the growing incompatibility between the productive development of society and the existing relations of production manifests itself through sharp contradictions, depressions and spasms. Apart from temporary recoveries owing to the destruction of some parts of capital due to cyclical crises, the rate of profit continues to show a downward tendency, exposing the limitations of the capitalist mode of production. The meaning of the destruction of capital through crises is explained by Marx as follows: “The violent destruction of capital as the condition for its self­preservation, and not because of external circumstances, is the most striking form in which it is advised to be gone and to give room to a higher state of social production.”[11] It is clear that the advance in the productive forces made by capital along its historical development becomes self-destructive after a certain point, rather than improving the process of appreciation for capital. Thus, the further advance of the productive forces becomes a fetter for capital, just as the yoke of capital becoming a fetter on further development of productive forces of labour. The law of the tendency of the rate of profit to fall is a complex subject which should not be vulgarised by oversimplification. Therefore, to avoid distortion, let us underline that what is referred to by this law here is not an absolute and a linear fall in the rate of profit. The fall explained by this law expresses only a historical tendency. Since in the actual workings of capitalism, counter effects check the fall in the absolute sense of the word. Therefore, this law operates only as a tendency. And its effects become apparent only under certain circumstances and in the long term. Marx gives the following factors that counteract the fall in the rate of profit: (1) more intense exploitation of labour; (2) reduction of wages below the value of labour power; (3) cheapening of the elements of constant capital and a flow of capital into countries where the average organic composition of capital is lower than in certain industrial sectors of the industrialized capitalist countries; (4) relative overpopulation; (5) foreign trade; (6) the increase of share capital. Let us note that these factors do not invalidate the law but lessen its effects and give it a peculiar character. Marx stresses that the conflict between counter-acting factors involved in capital accumulation process is exposed during depressions. Average rate of profit fluctuates upward and downward during the boom and crisis stages of industrial cycles. In the long run, however, the counter-acting factors become less influential, leaving capitalism confronted with a serious threat of recession as seen in 1929. The fall in the rate of profit intensifies competition not only on a national scale but also internationally. It paves the way for strong monopolies to come to the forefront in the world arena, for international mergers and thus, for the centralisation of capital. With such an intensification of capitalist development, an expanding world trade and growing capital exports, it becomes unavoidable to use ever-increasing amounts of credit. The acceleration of the internationalisation process of capitalism on this basis plays a positive role in terms of surpassing the nation-state barrier that stands in the way of capital accumulation process. But on the other hand, as another consequence of the same development, capitalist depressions increasingly unfold as global depressions compared to previous periods.

With the development and spread of the banking system, the work of allocating capital, which had previously been managed by private money lenders and individual capitalists, was taken over by banks that grew on substantial scales. Thus, banking system and credit mechanism became the strongest lever to push the capitalist production beyond its limits. With the utmost intensification and centralisation of capital in the age of imperialism, massive growth of banks and the domination of finance capital, the credit system gained central importance in the workings of capitalism. The need for loans grew incredibly as a result of the fact that capitalist production and trade made colossal progress not only within national borders but also on an international level. Credit occupies a very significant role in the history of the development of capitalism. Marx points out that competition and the credit system, the two most powerful levers of centralisation, develop in line with the development of capitalist production and accumulation. Having furtively crept in as the humble assistant of accumulation in early stages, the credit system, with its invisible strings, now increasingly channels the sources of money, spread around the society in large or small amounts, into the hands of individual or associated capitalists. But, says Marx, “it soon becomes a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralisation of capitals.”[7] The imperialist stage of capitalism lays bare that the credit system is used in attempts to overcome the inevitable barriers that confront the capitalist market due to the conflict between overproduction and the limited purchasing power of the masses. But, credit has by no means eliminated the source of capitalist crises. On the contrary, the attempts to postpone or alleviate crises by such means have prepared the grounds for greater ones. Credit system enables larger investments which increase the organic composition of capital, and consequently, reduce the rate of profit. Marx points out that as the capitalists are compelled to utilize enormous means of production on larger scales and to set in motion all the mainsprings of credit to this end, there occurs an increase in industrial quakes. Since the expansion of markets falls behind the enormous growth in production. At this point it becomes necessary to avoid some misunderstandings. Market question does not, as once falsely alleged by Narodniks, arise from the shrinkage of market as a result of capitalist development. As pointed out by Lenin during his struggle against such misconceptions of Narodniks, capitalist development, in fact, expands the market. But, this expansion always lags behind the colossal growth of the productive forces. As production piles up along with capitalist development, there occurs an ever-growing need for larger markets. Hence, each depression leads the capitalist system to incorporate new markets which remains uncaptured or partially exploited. And therefore, as the capitalist system matures, relieving potentials become scarce. In the words of Marx, “the world market becomes more and more contracted, fewer and fewer markets remain available for exploitation”.[8] Precisely because of this conflict, depressions become more frequent and severe. In the end, the maturation of the world capitalist system is accompanied by imperialist wars that are provoked by imperialist powers for the purpose of creating new markets and re-dividing the existing ones. Credit system serves as a catalyst in the capitalist reproduction process. Therefore, it aggravates the problem of overproduction and speculation. Marx explains that the credit system accelerates the material development of productive forces and creation of the world market. It is the very historical task of the capitalist mode of production to bring its material foundations to such a level of development. But at the same time, the credit mechanism accelerates the capitalist depressions and creates the elements of dissolution of the old mode of production. Hence, as if denying itself in one sense, it prepares the ground for the transition to a new mode of production. Marx explains the two characteristics immanent in the credit system in his following words: “The two characteristics immanent in the credit system are, on the one hand, to develop the incentive of capitalist production, enrichment through exploitation of the labour force of others, to the purest and most colossal forms of gambling and swindling, and to reduce more and more the number of the few who exploit the social wealth; on the other hand, to constitute the form of transition to a new form of production.”[9] Credit system stimulates production by resolving the funding problem of capitalists who desire to make investments in various industries. Besides, it also stimulates consumption of broad masses by spreading buying on credit. Hence, it appears to be providing a remedy for depressions of capitalism, whereas, in fact, it exacerbates them. Whether in the form of investment credit or consumer credit, in reality, there is no way of keeping the credit taps turned on indefinitely. In order that banks and credit institutions maintain the credit system, the amounts of credit they lend must be repaid with interest. As repayment problems pile up, credit expansion would cease and credit taps would be tightened. In a system where the sustainability of the reproduction process is based on credit, it is inevitable that a depression emerges with suddenly tightening credit taps. This is precisely the reason why the capitalist crisis seems at first to be a cash and credit depression, although, in fact, it builds up in the form of overproduction. Resulting from the falling rate of profit and rising interest rates, the accelerating speculation in stock markets attracts significant amounts of money-capital in such periods. In reality, however, the “excess profit” in stock markets is of speculative character, not stemming from an expansion of the production process. And, it suddenly collapses as the depression breaks out in the stock markets. With depression, the credit system suffers an enormous collapse: “The chain of payment obligations due at specific dates is broken in a hundred places. The confusion is augmented by the attendant collapse of the credit system, which develops simultaneously with capital, and leads to violent and acute crises, to sudden and forcible depreciations, to the actual stagnation and disruption of the process of reproduction, and thus to a real falling off in reproduction.”[10] Serving as a lever for pushing the capitalist production process beyond the obstacle of private property and national boundaries, the credit system accelerates the expansion of capitalism on a world scale on the one hand, and provides the basis on which crises that break out in different countries grow in a much more deeper way into a global crisis on the other. Once depression breaks out, “it then becomes evident that all these nations have simultaneously over-exported (thus over-produced) and over-imported (thus over-traded), that prices were inflated in all of them, and credit stretched too far. And the same break-down takes place in all of them.”[11] It is common knowledge that the United States has been the driving force of the long-term economic growth in the aftermath of the Second World War. In the United States, where one-fifth of total world output is supplied, the credit mechanism is the main factor that keeps the market buoyant despite ebbs and flows of industrial cycles. For this reason, the US economy has occupied the first place in terms of the amount of consumer and corporation loans. The reality behind the boom in 1990s and its unexpectedly protracted character was also the credit mechanism. These years saw a gigantic rise in consumer credits in almost all capitalist countries. Thus, the spending capacity of the working class and toiling masses, who in fact had very limited purchasing power, has been inflated through credit mechanism. During this “consumption frenzy” created by the capitalist system, broad masses kept the capitalist economy buoyant for a long time, ignoring the fact that the credits were to be repaid with interest. But, just as it is impossible to escape natural laws through daydreaming, it is also impossible to avoid the disastrous results of inner laws of capitalism. In the face of inevitable obstacles resulting from these laws, the economic growth cannot be sustained forever by means of credit pumping. The recession in the markets can be postponed by increasing government expenditures and inflating credits, but this works only up to a point. In fact, the problems, which seem to be postponed for a period, constitute a hazard that poses threats to the global banking system in the form of bankruptcies in sequence and collapse. With loans not repaid reaching enormous amounts, things change into their opposite. As new credits cease to be available on the one hand, the sums of debts, grown like a snowball with accumulated interests, draw broad masses into destruction. This results in sudden and large scale shrinkages in demand. What becomes apparent in such a situation is an uncontrollable tendency towards depression, which deepens more and more with interactive effects among aforementioned factors becoming ever-more adverse. Indeed, “the disaster”, from which Japan has been suffering since a long time, has finally reared its head in the United States. And together with its tremors, this driving force of the global economy has now drifted the entire capitalist system into a turbulent period.

Chapter II

Crisis: A Natural Outcome of the Capitalist Mode of Production

Aside from the reality of periodic crises that break out on the basis of industrial cycles, the changes in the pace of capitalist development over long periods have continuously preoccupied Marxists as well. There have been many debates concerning the fluctuations in the curve of capitalist development that have been identified to occur over the course of decades. In these debates there have been certain conceptions developed in an effort to deepen the understanding of the workings of capitalism, without drifting away from basic tenets of Marxism. But there have also been other interpretations that are at variance with foundations of Marxism, leading to various misconceptions. The analysis of “long waves” that will be discussed below belongs to the latter category. Let us underline an important point to prevent any misunderstanding regarding the target of criticism. To be able to comprehend concrete fluctuations in the curve of capitalist development, it is of importance to analyse long periods with different characteristics. There is nothing to criticise about it. What deserves criticism, however, is the type of “long waves” theory which, in effect, is used in place of periodic long cycles, as seen in the case of Kondratiev.[1] Marx remarks that the industrial cycle is of such a nature that the same circuit must periodically reproduce itself, once the first impulse has been given. Engels attached an important footnote to Marx’s remark, saying that following the crisis of 1867, the former ten-year cycles seemed to be have given way to a more chronic and drawn-out form that found its expression in the alternation between a relatively short and weak improvement in trade and a relatively long and indecisive depression. The conclusion to be drawn from this remark was not a new sort of analysis of crises or business cycles. Indeed, Engels continues: “But perhaps it is only a matter of a prolongation of the duration of the cycle.” And further: “In the early years of world commerce, 1845-47, it can be shown that these cycles lasted about five years; from 1847 to 1867 the cycle is clearly ten years; is it possible that we are now in the preparatory stage of a new world crash of unparalleled vehemence?”[2] Engels goes on to answer this question by pointing out that there were many signs indicating this way. With this, he wishes to explain that crises were showing a tendency to become more severe, as previously pointed out by Marx. Engels was right. As the capitalist mode of production proceeded in the effort to surpass the barriers of private property and national boundaries that stand in its way, this historic tendency manifested itself more and more dramatically. Engels’s remark on the dramatic changes in the aftermath of the 1867 crisis was to draw Parvus’s attention several years later. Parvus, quoting the term “sturm und drang” from Marx, pointed out that there could be longer “storm and stress” periods in the workings of capitalist economy in addition to the usual industrial cycles. In the aftermath of the First World War, long waves became a subject of debate in the Soviet Union. Among the issues dealt with during the Third World Congress of the Comintern, held in 1921, was the world economic crisis. Examining the question of capitalist development in his report, Trotsky explained that the curve of economic development is a composite of two movements: “a primary movement which expresses the general upward rise of capitalism, and a secondary movement which consists of the constant periodic oscillations corresponding to the various industrial cycles.”[3] Trotsky further explained that the cyclical fluctuations blend with the primary movement of the capitalist curve of development and consequently, in periods of rapid capitalist development, crises have a brief and superficial character, whereas the booms are long-lasting and far-reaching. In periods of capitalist decline, however, the crises have a prolonged character while the booms are fleeting, superficial and speculative. The point remarked by Parvus was clearly used as a point of departure by Trotsky in his report, who wrote: “In citing Engels it is very dangerous to overlook these basic facts. For it was precisely after 1850, when Marx and Engels made their observations, that there set in not a normal or regular situation, but an era of capitalist Sturm und Drang (storm and stress) for which the soil had been cleared by the Revolution of 1848. ... At issue here is not whether an improvement in the conjuncture is possible, but whether the fluctuations of the conjuncture are proceeding along an ascending or descending curve. This is the most important aspect of the whole question.”[4] He explained, “The acquisition by capitalism of new countries and continents, the discovery of new natural resources, and, in the wake of these, such major facts of ‘superstructural’ order as wars and revolutions, determine the character and the replacement of ascending, stagnating, or declining epochs of capitalist development.”[5] However, Kondratiev drifted away from this conception following the Third Congress of Comintern. Based on statistics and mathematical models, he endeavoured to prove the existence of long term periodic cycles in addition to the ordinary boom-collapse cycles, which made him known as the founder of the “long waves” theory. In his view, in addition to the “small cycles” spanning periods of 10 years, there were also “big cycles” lasting around 50 years, divided into two nearly equal halves - a downswing and an upswing. This was an erroneous conception, which was therefore to receive Trotsky’s criticism for being an erroneous generalisation based on a formal analogy: “It is already possible to refute in advance Professor Kondratiev's attempt to invest epochs labeled by him as major cycles with the same ‘rigidly lawful rhythm’ that is observable in minor cycles.”[6] Under the influence of Trotsky’s critical remarks on the long cycles, Kondratiev replaced the term with long waves from 1926 onwards. But, Trotsky’s criticism was not confined to the term at stake, but basically directed towards the content of the analysis. What he principally emphasised was that sudden turning points of long-term motion, unlike the industrial cycles, could not be explained by the internal laws of the economy, and that unlike the industrial cycles, a kind of long waves theory based on the rhythm of renewal of fixed capital was incorrect. Although Kondratiev abandoned the term he had initially used, he preserved his manner of approach to the question. He continued criticising the Marxist explanation of long-term motion of the capitalist economy. Marxist analysis had already laid bare the fact that the curve of capitalist development takes shape under the influence of irregular and non-economic factors such as wars, revolutions, technical innovations, and the integration of newcomer countries into the world market. In Kondratiev’s view, however, such factors were not the causes but the results. For instance, the integration of newcomer countries into the system did not cause a long-term upswing; but, on the contrary, new areas were absorbed as a consequence of an upward trend caused by the economic operation of the system. There is nothing wrong with distinguishing the periods of economic operation according to their peculiar characteristics. However, Kondratiev, and also others who adopted his “long waves” theory, neglected the role played by political factors in determining the long-term ebbs and flows of capitalism. They attributed a one-sided and an undue importance to economic factors. For instance, Kondratiev built his “long waves” theory by on the basis of the relationship he established between the renewal of the fixed capital and the investment fund. Yet, the phenomena that cause long-term trends in the operation of the capitalist economy are charactarised by irregularity. Therefore, this kind of ebbs and flows cannot be explained by theories such as “long-term industrial cycles”. It is obvious that the need to renew and increase the fixed capital requires massive investments. As point of departure Kondratiev takes the assumption that it would take a long time to accumulate enough funds to accomplish such renewal and increase. In his view, the expansion of the funds of capital goods was not a continuous and a regular process. Rather, it was taking place in the form of cyclical upsurges that find their expressions in the long periods of economic activities. For this reason, major inventions had to wait for a period of time, long enough to ensure the accumulation of such capital, say 20 years, before being put into practice on a vast scale. According to this explanation, there exist long cycles that operate on a regular basis, stimulated by the realisation of large-scale investments. The period in which the production of capital goods is on the rise coincides with the upward stage of the cycle. In an effort to theorise the emergence of technological inventions, Kondratiev argued that they generally occur during periods of economic downturn. Yet, as can be easily reckoned, new inventions can emerge at any time, even though they do not find immediate widespread use. Moreover, the renewal of fixed capital is not distributed equally and simultaneously among countries and industries. In short, in spite of all its scientific-looking mathematical appeal, Kondratiev’s theory is far from demonstrating the existence of a law inherent in capitalist economy that operates on the basis of “long cycles”. It would be erroneous to regard the halts in the economic growth as a result of inadequate capital accumulation and, thus, of inadequate investment funds. In fact, as pointed out by Marx, economic stagnations arise from overaccumulation of capital, not from capital shortage. Undoubtedly, overaccumulation does not signify an absolute reality, but a relative one. It implies capital that remains idle due to inability to obtain the expected rate of profit. Marx points to superabundance of the mass of capital that is impeded in its reproduction process during crisis periods when everyone has products to sell but cannot sell them, and when the credit is extremely scarce. Thus, a crisis emerges, leading to factory shutdowns, to piling up of raw materials, and to the glutting of the market with unsold commodities. Marx therefore highlights that it would be erroneus to blame the scarcity of productive capital for depression, adding that it is precisely at such times that there is a superabundance of productive capital. “Huge quantities of commodity-capital, but unsaleable. Huge quantities of fixed capital, but largely idle due to stagnant reproduction.”[7] The question of overproduction, the main signifier of capitalist crises, also signifies overproduction of capital. In order to resolve the crisis, to enter a period of recovery and to leave behind the recession created by overproduction, the capitalist economy is bound to sacrifice some of the capital, leaving it depreciated and discarded. Likewise, introduction of new techniques, which paves the way for recovery through increasing the productivity, entails the moral depreciation of some part of fixed capital before it is physically exhausted. Hence, the source of the problem is not the shortage of capital accumulation, but rather the stagnations in the revaluation process of capital, arising out of the unplanned character of the capitalist economy. Investors, at first, swarm into profitable areas. But profitability tends to decline over time, aggravating the problem of realisation of the surplus value. All these form the basis whereupon industrial cycle plunges into a crisis. It is also on the basis of these laws of operation that capitalism proceeds over the long run. As remarked by Marx, the curve of capitalist development is fluctuated by tendencies such as the fall of the rate of profit. When the operation of the economy is taken as a whole, it would be seen that each one of the factors examined by Marx, including periodic reinvestment of fixed capital, the question of overproduction, inadequate consumption, the tendential fall of the profit rate, interacts with one another on the basis of a dialectical relationship. Therefore, it has nothing to do with the Marxist attitude to break the integrity of the reality and overemphasise one of the elements, ending up forming schools such as “underconsumptionists” or “falling profit rate-ists” and, at the end, reducing the theoretical struggle to inter-school economic debates, as seen in the cases of some so-called Marxist writers. Though inspired by this or that interpretation of Marx, the mentality of researchers like Kondratiev bears a strong stamp of bourgeois economists, marked by the desire to compete with them. In fact, the phenomenon of capitalist crisis had already been adequately explained by Marx. The “contributions” that Kondratiev and his likes desired to make, in the final analysis, do not bring further clarity to, but rather blur the subject. Besides, “long waves” type of analysis is characterised by an obsession with hammering away at the ebbs and flows of economy, far from attaching any importance to class struggle, the only way to overthrow the capitalist system. This style, in the final analysis, belongs to the economists. Indeed, it is precisely for this reason that theories of this kind find acceptance among bourgeois economists, being rehashed time and again. To sum up, there is no basis for claiming that capitalist economy proceeds on the basis of cyclical long waves spanning, say, 30 or 50 years by establishing resemblance with the Marxist analyses of industrial cycles. There is no such inherent law of motion in capitalist system, which can be called “long cycles”, where long periods of upswing and downswing alternate with each other on a regular basis. “Long wave” theory is alien to Marxism as it rules out non-economic factors that are directly involved in the shaping of history and denotes that the course of history is driven by an almost predetermined economic fate. In an effort to establish a mechanistic link between the course of economic fluctuations and the ebb and flow of class struggle, Kondratiev also maintained that wars and revolutions occur during the upward phase of his “long waves”. But social life, contrary to what Kondratiev and his likes try to deduce, has no regular pattern of rhythm or mathematical accuracy. Trotsky underlines the necessity to combat the mechanistic conception of capitalist decline. The transition from an epoch to another leads to intense frictions in the relations between classes and states. “If periodic replacements of ‘normal’ booms by ‘normal’ crises find their reflection in all spheres of social life,” says Trotsky, “then a transition from an entire boom epoch to one of decline, or vice versa, engenders the greatest historical disturbances; and it is not hard to show that in many cases revolutions and wars straddle the borderline between two different epochs of economic development, i.e. , the junction of two different segments of the capitalist curve.”[8] The history of capitalism is replete with different types of examples, illustrating the complicated relationship between economic crises and revolutionary situations. Different parts of the world experienced many different revolutionary upsurges during periods of both economic recovery and recession. In some cases where the counter-revolution was successful the capitalist system secured a long period of relief, but, it would be extremely erroneous to attribute this situation to spontaneous fluctuations of the economy. In fact, what all these examples demonstrate is the vital importance of the subjective factor for the victory of the revolution, rather than the role of economic crisis or recovery. In relation to the debates on “long waves”, another episode may also be worth recalling. Ernest Mandel, who was a prominent figure in the Trotskyist movement, put forward some theses on long waves that aroused interest among academic milieu. Though he did not explicitly ignore Trotsky’s criticism of Kondratiev’s “long cycles”, he was influenced by the latter’s theories. Due to the critiques he recieved regarding this subject, he felt it necessary to repeat time and again that the long periods of capitalist development are not automaticaly determined by economic factors and that one cannot ignore the influence of superstructural factors. In his explanation regarding the working mechanism of “long waves”, Mandel argues: “A general transformation of productive technology also generates a significant rise in the organic composition of capital and, depending on concrete conditions, this will lead sooner or later to a fall in the average rate of profit.” The reality revealed here, as may be remembered, corresponds to the law of operation of the capitalist industrial cycles. However, as can be seen in the subsequent lines, Mandel devotes much of his effort to prove the existence of a law that operates on a regular basis and regulates the long-term motion of capitalist economy: “The decline of the average rate of profit in turn becomes the greatest impediment to the next technological revolution. The increasing difficulties of valorization in the second phase of the introduction of any new basic technology lead to growing under-investment and increasing creation of idle capital. Only if a combination of specific conditions generates a sudden rise in the average rate of profit will this idle capital, which has slowly gathered over several decades, be drawn on a massive scale into the new spheres of production capable of developing the new basic technology.”[9] As is evident from this analysis and others alike, Mandel strives to attribute the long-term fluctuations of capitalism to ebbs and flows in the average rate of profit. Trotksy, on the other hand, clearly criticises the attempts at explaining the curve of capitalist development with mere economic factors. Thus, what Mandel’s “long waves” analysis reflects is an effort to find a middle way. According to Mandel, the transition from an expantionist long wave to a stagnating long wave is inevitable due to the tendential fall of the profit rate, which amounts to the idea that there is nothing wrong at this point with explaining the events with economic factors. “It is inevitable that a new long wave of stagnating trend must succeed a long wave of expansionist trend, unless, of course, one is ready to assume that capital has somehow discovered the trick of eliminating for a quarter of a century (if not for longer) the tendency of the average rate of profit to decline.”[10] But, the same does not apply to the transition from a stagnatory long wave to an expansionist long wave, Mandel argues, as such a transformation cannot be explained merely by an automatic motion of economic factors. He adds that non-economic factors, the course of the class struggle and the setbacks suffered by the working class play a role here. Mandel’s “long waves” theory surely shows differences of emphasis from Kondratiev’s and Schumpeter’s analyses, with the former attaching primary importance to price movements, while the latter bases his analysis solely on technological inventions. At any rate, Mandel brings to the forefront the changes in the rate of profit in an effort to remain loyal to Marx’s analyses. But in the last instance, he fails to prevent his analyses from being infected by the influence of economists such as Kondratiev, Schumpeter and so on. Therefore, his writings regarding the subject contain many generalisations, in which various views, each with a determining role, are put together in an eclectic way. On the one hand, he criticises Kondratiev, quoting Trotsky at length. But on the other hand, he attempts at attributing long-term fluctuations of capitalism to a law that almost amounts to “long cycles”. In addition to the renewal of fixed capital on the basis of industrial cycles, Mandel argues, there is a fundamental form of renewal based on technological change that occurs in long historical periods. In his view, this type of renewal corresponds to “technological revolution” and forms the objective basis of long waves. He divides the curve of capitalist development, stretching from the late 18th century to 1960s, into 4 long periods, each corresponding to a distinctive form of technology: The industrial revolution with handicraft-operated (and handicraft-made) machines driven by the steam engine; the first technological revolution with machinist-operated (and industrially produced) machines driven by steam engines; the second technological revolution with assembly line combined machines operated by semiskilled machine operators and driven by electric engines; the third technological revolution and electronics, which made non-stop production machines part of semiautomatic systems. There is no need to further examine the “long waves” theory advocated by Mandel and his co-thinkers. It is clear that the analyses within the scope of this theory contain many misconceptions along with certain truths. But beyond this, the crux of the problem, in our view, lies in the way such questions are dealt with. Undoubtedly, it is a necessity to examine long-term fluctuations in the curve of capitalist development. However, an approach focused merely on displaying one’s knowledge on economy cannot be satisfactory at all. The method employed, the way the theses are substantiated, and whether a clear Marxist stance along with avoidance of eclecticism is adopted are of utmost importance. And above all else, one must subordinate theoretical struggle to the requirements entailed by the duty of organising the working class in a revolutionary way, without giving the slightest credence to academic Marxism, which is incapable of breaking away from bourgeois ideology.

In addition to its ordinary working mechanism named industrial cycles, capitalist economy is also characterised by non-cyclical, more prolonged upward and downward fluctuations that involve far more complex factors. This type of fluctuations is nothing more than a combination of different economic and political events capitalism has been through. Such periods of capitalist development, each having its distinctive characteristics, still contain industrial cycles that consist of boom and crisis phases. Therefore, the existence of such long-term fluctuations does not invalidate the Marxist analysis of industrial cycles. Industrial cycles do not always follow the same course. When we examine problematic and relatively stagnant sections of the curve of capitalist development, we can see that crisis phases of the industrial cycles have gradually become more prolonged and profound, whereas the boom phases have acquired a more volatile and shallow character. In periods of vigorous upswings, however, economic oscillations take place the other way round. But all these outcomes can be nothing else than an expression of the concrete reality. For, long-term fluctuations are irregular in length and non-cyclical in character. We are not able to precisely anticipate the outcomes produced by multifaceted variables of the actual life on the basis of their interaction. As pointed out by Engels in his introduction to Class Struggles in France, “A clear overall view of the economic history of a given period can never be obtained contemporaneously, but only subsequently, after the material has been collected and sifted.”[1] Although economic factors have an important influence on the workings of capitalist organism, the course of history is determined by the mutual interrelationships between various factors and, above all, by the class war between the proletariat and the bourgeoisie. The kind of approach that reduces history to economy is alien to Marxism’s materialistic conception of history which by no means overlooks the influence of subjective factors on the general course of events. Productive forces are decisive in the final analysis. However, economic basis is continuously influenced by super-structural factors such as class struggle, wars, ideology, and politics. On the whole, the course of events proceeds on the basis of the dialectical relationship between these two levels. Therefore, while analysing the long-term curve of capitalist development, we must take into consideration not only economic factors, but also the course of the class struggle, conflicts of interest between different capitalist powers and outcomes of hot wars. When we speak of upswings and downswings in the curve of capitalist development, we actually refer to concrete periods distinguished from one another in the history of capitalism. Indeed, it is possible to identify specific periods, each of which is created by a particular set of economic and political factors that operate on the basis of a dialectical interrelation. Various Marxist authors dealing with this subject pointed to specific periods in the history of capitalism such as 1848-79; 1880-93; 1894-1914; 1915-39; 1940-74 and the following period. However, when we examine such periods, it would be seen that what distinguishes one period from another is not spontaneous upswings and downswings in the economy, but a combination of economic factors and political developments. For instance, the period of recession and the Great Depression in the 1920s and ’30s were accompanied by the rise of fascism, concentration camps and the disaster of the Second World War. During this period, the bourgeoisie sought to remove the barriers blocking its path through an unprecedented policy of aggression. In the meantime, proletarian struggle was paralysed due to the ominous role played by Stalinism and social democracy, paving the way for the bourgeoisie. In the end, it was the combination of all these factors that gave shape to that period. When we examine the long period of economic boom experienced by the developed capitalist countries following the Second World War, it would be seen that this period witnessed the implementation of employment-incentive policies such as Keynesianism. Public expenditure that grew throughout the period posed no problem since it was counterbalanced by real growths in capital. The reconstruction activities in the aftermath of the war led to a huge mobilisation in the US, Europe and Japan, producing higher rates of profit, promoting industrial investments and enabling these countries to achieve satisfactory growth rates of national output. Moreover, these conditions provided an enormous impetus to global trade. However, we must highlight the fact that these developments were shaped not only by economic factors, but also by non-economic factors such as global political landscape and balance of powers. Let us remind ourselves that in the face of the revolutionary upsurges in European countries and the threat posed by the presence of the Soviet Union, the Western bourgeoisie came to the conclusion that making concessions to the working class would be more sensible for its interests. Likewise, in order to fortify the capitalist system in the face of revolutionary developments and against the Soviet Union, the US funnelled large amounts of loans and aids into the reconstruction of the capitalist Europe following the war. Thus, on the one hand global trade expanded enormously within a short span of time, while on the other hand the labour movement in developed capitalist countries was brought under control through reform policies, just as previously seen in the period of 1894-1914. It was on the basis of all these developments that the path was cleared for a long-term capitalist upswing. As an example from the recent past, one can recall the 1968 revolutionary wave across the world. This revolutionary upsurge in class struggle coincided with the peak of the economic boom that followed the Second World War. And in accordance with the laws of dialectics, this peak also marked the beginning of a downward phase. This point brings to mind the explanation offered by Trotsky who pointed out that replacements of booms by crises or of collapses by recoveries pave the way for significant social disturbances. And again, the fact that the period following the revolutionary upsurge of 1968 did not witness successful proletarian revolutions cannot be explained by referring to mere economic factors. While examining such crucial turning points, it is essential to consider the factors that erect barriers in the path of world revolution, the lack of leadership suffered by the proletariat and the tragedies bearing the stamp of Stalinism. It is an obvious fact that the upswing enjoyed by the capitalist system under the leadership of the USA following the Second World War gave way to a slowdown in 1970s. As a result of this, the dollar, which had functioned as the international reserve currency since the Bretton Woods Agreement of 1944, lost its stability. Furthermore, the antagonisms between the USA and the European countries began to escalate, with Europe embarking on a project to create its own currency system. Bretton Woods system collapsed in 1971, depriving the dollar of its role as the international reserve currency without replacing it with another currency. This, in fact, was a reflection of the fact that capitalism was entering a turbulent period. Yet, the bourgeoisie managed to postpone the crisis to subsequent decades before it reached a point where it could shake the system, largely due to the opportunities provided by the weakness of workers’ movement. But in the final analysis, there are limits to gaining extra time and opportunities. Keynesian policies or high levels of public expenditure cannot postpone crises forever. Imposing measures to protract the economic upswing and increasing the amount of money in circulation and indebtedness with the aid of inflationary policies, capitalist governments can only produce an artificial and bloated economic recovery. As a result of escalating speculative activities in capital markets, an inflation of fictitious capital becomes visible, even though industrial output suffers a relative decline. This inflated bubble is doomed to burst sooner or later, with a crush like thunder. Serving to promote economic recovery for a period of time, loans become an increasingly serious problem for both debtors and creditors, as they rise to enormous amounts with the accumulation of interests. In order for the capitalist economy to regain a relative equilibrium, the long-overdue crisis must materialise along with its consequences. Hence, the 1980s marked the beginning of a new period, with the bourgeoisie preparing for the consequences of the crisis. New economic conditions dictated changes in economic policies. Thus, Keynesian policies, which had long accompanied the capitalist upswing following the Second World War, became discredited until they would be needed again. State capitalist policies, characterised by a high level of public spending, were blamed for creating crises. Financial policies that were considered to be at variance with the necessities of the new period were done away with. All these changes were accompanied by the rise of neo-liberalism which advocated the withdrawal of the capitalist state from state economic enterprises and public services such as education, health care and communication, along with the privatization of all these enterprises and services, allowing the free winds of market to regulate the economy. Theorised by economists like Friedman and epitomised by Reaganism and Thatcherism, neo-liberalism became the dominant trend of the new period. Such a change amounted to a long-term reactionary surge that was encouraged by the bad condition of the labour movement and that aimed at making it worse. This trend did not operate only in developed capitalist countries, but found echo in other capitalist countries including Turkey as in the case of Özalism and IMF recipes. And a so-called restructuring process began to unfold everywhere. For, it was impossible to raise the rate of profit without increasing the rate of exploitation and imposing severe social benefit cuts and “bitter pills”. It should not be forgotten that, in Turkey, a blood-soaked military dictatorship accompanied this process, during which the economic and the political spheres were reorganised in accordance with the needs of capital. Since then, the world has been witnessing the implementation of austerity policies aimed at cutting public spending and social benefits along with an offensive against social conquests of the working class. In addition to this, the collapse of the Soviet Union and other totalitarian-bureaucratic dictatorships in the last part of the 20th century was seized upon by the bourgeoisie to slander socialism, Marxism and the revolutionary struggle of the working class.

Under conditions of confusion and demoralisation created by the collapse of the Soviet Union, workers’ movement suffered a major setback in terms of the level of class consciousness and organisation. This allowed the world bourgeoisie, which was on the verge of a crisis, to breathe a deep sigh of relief. The capitalist class seized the historic opportunity with both hands, stepping up its neoliberal economic policies that had already been in progress. This represented an all-out attack against the gains made by the working class and plundering of social funds. It was owing to this all-out attack that capitalism secured a temporary recovery throughout 1990s. However, this recovery was not to last long. Long-postponed economic crisis finally broke out, when spasms devastated capitalist countries one after another. Yet again, under conditions where the workers’ movement is in bad shape, the world bourgeoisie have felt itself less strained in living their crisis to the full. However, as subsequent developments showed soon afterwards, events unfolded far differently than the capitalist class had expected. Under conditions of a deepening economic crisis, events such as the revolutionary situations unfolding in Latin American countries foreshadow major changes. As has happened multiple times in the history of capitalism, a sudden change from upswing to downswing ended the old equilibrium. The world has now entered a new period, characterised by tumultuous social upheavals that have begun to manifest themselves in many ways and will continue to do so. Such periods lead to the emergence of new pursuits and polarisations within the ranks of both the workers’ movement and the bourgeoisie. Indeed, today the workers’ movement worldwide has begun to show signs of a new upsurge, while the class-collaborationist, reformist, pro-establishment forces in various workers’ organisations do their utmost to keep the movement on its old line. Likewise on the top, there is an infighting taking place among capitalist forces. This infighting finds its most concrete expression in the conflict that is taking place in top echelons of the USA, the hegemonic power of the capitalist system, and also between the USA and the EU, over whether to expand the imperialist war or to restore old policies. Likewise, there are opposing voices coming from major international institutions of the capitalist system such as the IMF and the World Bank. On the one side stand those ideologists and economists who insist on implementation of the IMF recipes that further deepened the crises in Turkey, Latin America and elsewhere. On the other side are those who express their concern over a potential outpouring of mass discontent on the part of workers and toilers at large. Concerned over such a prospect, the latter group makes recommendations that evoke a return to Keynesian policies. Long spasmodic periods of capitalist system generally coincide with explosive developments, mounting rivalry between hegemonic powers over new markets and spheres of influence, and wars. This should not be taken to mean, however, that it is the wars that lie behind the tumultuous interruptions in the development of productive forces during such periods of the history of capitalism. On the contrary, both imperialist wars of re-division resulted from the fact that the two barriers of the capitalist system, private property and national borders, have obstructed further development of productive forces in Europe. The tumultuous periods accompanying major crises of capitalism find their expression in the policies introduced by each ruling power or fundamental class in response to the crisis. Neither any hegemonic power of the system nor any other imperialist power fighting for hegemony has ever hesitated to resort to war to seize and create new markets in the face of a crisis. However, by the very logic of such major conflicts, there is no way for countries to leave the crisis behind all together and simultaneously. This was indeed the case with the First World War, where the clash between imperialist powers of Europe paved the way for the rise of US imperialism. Europe, on the other hand, was plunged into an even deeper crisis and destruction. Caused by the outburst of accumulated contradictions of the capitalist system, the Second World War likewise ravaged Europe, claiming as many as 55 million lives and destroying productive forces on a colossal scale. However, as a factor that precisely exposes the true face of the capitalist system, war does not only mean destruction from the capitalist viewpoint, but it also produces an investment opportunity, where war-torn areas undergo a feverish reconstruction under the hegemony of the victorious imperialist power. From the capitalist viewpoint, qualitative differences between commodities have no importance. In terms of capitalist “moral”, any means or anything that serves to expand the production of surplus value and to realise the profit is considered permissible. Especially in times of stagnation, capitalist state and arms monopolies give priority to the production of “guns, rather than butter”, as long as it helps pump fresh life into economy. Growing arms production and rising militarism play an enormous role in capital accumulation and world trade. Expanding output of each military-industrial complex finds its expression in growing consumption of arms, spreading military exercises, surging military expenditures by the capitalist states, escalating warmongering activities in spheres of influence for the sake of boosting arms trade, and, finally, in the actual firing of weapons in the regions where tensions have been intentionally exacerbated. Massive arms monopolies are formed not only on a national basis, but also in the form of multinational monopolies. Intermingled on a global scale, capital derives huge profits from armament and wars. However, let us not forget that capitalist unity, by its very nature, is a unity in competition and that tendency of capital towards integration represents no decline in armament or wars at all. As Lenin put it, “To think that the fact of capital in the individual states combining and interlinking on an international scale must of necessity produce an economic trend towards disarmament means, in effect, allowing well-meaning philistine expectations of an easing of class contradictions take the place of the actual intensification of those contradictions.”[*] Imperialist wars cause slaughter of millions and destruction of productive forces. For capitalist economy, however, they play a refreshing role, opening up new, profitable markets. In addition to that, major crises of capitalism and imperialist wars are the main factors that trigger revolutionary situations on a world scale. In sum, we cannot make definite predictions on the concrete developments of the upcoming period. However, one thing is certain: the course of capitalism and the resultant outcome will depend on the response of the world working class.

Capitalist economy inherently contains seeds of crisis. However, it would be utterly erroneous to argue that crises will spontaneously lead capitalism to its destruction. Unless it is overthrown through a revolution of the working class, it can continue to exist, going through new periods of booms and crises. Some assert that the ongoing crisis will mark the end of capitalism. This idea was also put forward during previous crises. While it seems very difficult for capitalism to overcome the deep crisis it is currently engulfed in, and moreover that capitalism becomes weaker with time in terms of overcoming its crises, it would be erroneous to link the collapse of capitalism with the prophecy of a final crisis. An example of this misconception was also seen in the Comintern debates of the early 1920s, where some participants argued that capitalism would collapse as a result of the accumulation of its internal contradictions that originate merely from its economic workings. As pointed out by Lenin and Trotsky, there is no such thing as a final crisis that will lead capitalism to a spontaneous collapse. Unless overthrown through the revolutionary struggle of the working class, the ruling class would find a way to survive their system at the expense of causing most destructive disasters for human societies. It is obvious that, with the beginning of the age of imperialism capitalist mode of production became a world system in the real sense of the word, which also meant it has now entered an epoch of decay compared to its earlier periods of great leap forward. This fact was also stressed by Lenin. However, to conceive this historical contrast between the two epochs should not be taken as something absolute and stretched out beyond what it really means. For instance, “decaying capitalism” and “moribund capitalism”, expressions used by Lenin to characterise the age of imperialism, should not be taken to mean that capitalism is sliding into a spontaneous collapse since it became unable to develop productive forces further. Rather, they underline the fact that the internal contradictions of capitalism have become overripe and begun to decay, with the exploitation of the world at the hands of monopolies acquiring a parasitic and decaying character. As is the case with Britain, where capitalism first developed and grew old, financial oligarchy lives increasingly on “clipping coupons”, and this tendency manifests itself through devastating stagnations, wars and resultant destruction of productive forces. Lenin criticised those who interpreted these basic characteristics of the age of imperialism as a cessation of economic growth. “It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. ... On the whole, capitalism is growing far more rapidly than before...”[1] Likewise, during the Comintern debates of the early 1920s, which revolved around “the epoch of collapse of capitalism”, Trotsky pointed out that the term “collapse” should not be misunderstood, emphasising that if the balance of power and political conditions shifted in favour of capitalism despite the Russian Revolution, capitalism would be able to enter a phase of upswing and develop productive forces. In comparison with preceding modes of production, capitalism has a much more dynamic character. However, development capacity of the capitalist mode of production can be evaluated not only in comparison with the past, but also, and more importantly, in comparison with the future. The point to be emphasized here is that the contradiction under capitalism between the social character of productive forces and the private character of appropriation has long reached a level of maturity. The current level of development of productive forces necessitates overcoming two main obstacles, namely, the private ownership of the means of production and the nation-state, and thus, building socialism. That the capitalist system continues to exist despite all these impediments means that social production is conducted in a very contradictory and inefficient way when compared to the alternative offered by socialism, posing the threat of destruction to environment and humanity. The term “decaying capitalism” is, in fact, the expression of this reality. One can also interpret this reality as a historical crisis of the capitalist system. This interpretation explains that the Great October Revolution opened up the epoch of transition from capitalism to socialism, as Lenin once pointed out, and that the capitalist system has historically outlived its time. But it is never right to attach any different significance to this fact and conceive it as a permanent crisis as suggested by the Stalinist conception, or as that this time capitalism is in a final crisis where there is no way out. As Marx remarked, permanent crises do not exist. The assertion that the victory of the Russian Revolution commenced the period of a general crisis of capitalism in the sense of a permanent crisis, is a product of the Stalinist distortion of Lenin’s views on the imperialist age, and it is totally erroneous. The Stalinist stereotype of general crisis stands in sharp contrast to what happened since the Second World War. It is clearly evident that, by liquidating the October Revolution, Stalinism provided the capitalist system with a great sigh of relief, and that the capitalist system did not collapse as a result of its economic crises, and that the bureaucratic dictatorships, which talked of a general crisis of capitalism for decades, vanished. In fact the real situation of the capitalist system is related to its historical evolution. What history has taught us about the past modes of production is that, along with periods of upswing, there are also periods of downswing wherein they become unable to further develop productive forces. Capitalist mode of production is not immune from this law of history. The historical mission of the capitalist mode of production is unconstrained development in geometrical progression of the productivity of human labour. But as surfaced during recurring and ever-deepening crises, it betrays this mission as it prevents the development of the productivity. In Marx’s words, it thus demonstrates again that it is becoming senile and that it is more and more outlived.[2] Capitalism will not collapse spontaneously as a result of its internal contradictions. However, as the capitalist mode of production develops and spreads across the world, growing mature and even becoming senile, the levers allowing it to overcome crises gradually erode, losing their functions. Having fulfilled its historic mission of developing productive forces over a whole historical period, capitalism has long exhausted its developing potential, which was by no means absolute or infinite. As it suffers severe spasms due to over-production crises that gradually become more profound, the capitalist mode of production is at variance with the current level of the productive forces. Today, socialism represents the most burning necessity for humanity, for it is the only way to meet the needs of society in an egalitarian, just, balanced way that is compatible with both the human nature and the environment. In today’s world, on the one hand we have destruction, hunger and mass unemployment imposed by the irrational reality of capitalism, and on the other hand stands the prospect of a classless society that will satisfy both the needs and the souls of its members. This is precisely the reality that we experience today, a reality that we try to express through a concise aphorism: either socialism or extermination! Socialism is by no means a utopia today. Rather, it is an actual alternative that can easily be put into practice through the struggle of millions of workers and toilers across the world.

The relationship between the economic crises of capitalism and the struggle of the working class should not be interpreted in a mechanical manner. Rather, it must be analysed on the basis of the dialectical relationship between various objective and subjective factors that determine the actual course of events. Economic crisis does not automatically lead to an upsurge of the revolutionary struggle of the working class. The mutual interaction between economy and politics has a much more complex nature. The way workers respond to crisis is determined by various factors such as the political and organisational level of the workers’ movement, its general mood, its determination to combat, or exhaustion. Under unfavourable circumstances, the working class may suffer setbacks in the face of economic crisis, allowing bourgeoisie to heave a sigh of relief. This was, for instance, the reason attributed by Trotsky to the relative stability secured by imperialism following the First World War: “... the initial and basic cause –the so-called ‘stabilization’– lies in the contradiction between the general disorganisation of the economic and social position of capitalist Europe and the colonial East on the one hand, and the weakness, unpreparedness, irresolution of the communist parties and the vicious errors of their leadership on the other.”[1] In contrast, more favourable conditions, where the working class is self-confident under proper leadership, can have an impact on economy, making economic crisis even more arduous for the bourgeoisie. There are indeed many cases, where the working class refused to bear the burden of the crisis, and even heightened the struggle for better living and working conditions, making the bourgeois order face mounting problems. In such cases, a capitalist economy that suffers under crisis may fall behind in the competition and lose ground in the markets it once dominated. The successful blows dealt to the capitalist system by the working class deprive the bourgeoisie of escape routes out of crisis, whereas failed attempts enable it to find a way out. This has been proved in many historical cases. To exemplify, we may recall the Popular Front experiments in Spain and France that promoted class-conciliation and avoided confronting capitalism head-on. Likewise, one may remember the class-collaborationist line followed in Turkey in the pre-1980 era. A closer look at such cases reveals that the working class was plunged into despair as a result of the disastrous policies pursued by so-called revolutionary organisations. Thus, the bourgeoisie had a free hand to solve its economic problems through oppressive regimes such as fascism. Again, when we examine historical cases, we can see that economic crises may trigger revolution, while they are also able to drag the working class movement into a general standstill or even setback. For instance, in 1851, when the economic boom in Europe was at its peak, Marx and Engels remarked that the revolutionary wave of 1848 had ebbed. Drawing his conclusion on the basis of the relationship between revolution and crisis, Engels said that while the crisis of 1847 was the mother of revolution, the boom of 1849-51 was the mother of triumphant counter-revolution. This was, however, not a general rule, but a product of the conditions at that particular period. Indeed, the same emphasis can be seen in Trotsky’s writings on the matter who says that it would be very one-sided and utterly false to argue that a crisis invariably engenders revolutionary action while a boom, on the contrary, pacifies the working class. As he underlines, the revolution of 1848 was not born out of the crisis mechanically. Rather, the crisis provided the last impetus for the explosion of contradictions. A further example can be drawn from the period leading up to the Russian revolution. The defeat of the 1905 revolution gave way to a period of reaction during which many revolutionary Marxists thought that an economic recovery would pave the way for the resurgence of the revolutionary workers’ movement in Russia. And that was precisely what happened. The economic improvement throughout 1910-12 was accompanied by an upsurge of the workers’ movement that had been demoralized and devitalized as a result of the defeat. Re-awakening to the key role it plays as a class in the capitalist production process, the proletariat got up off its knees. With its morale boosted by gains in economic struggle, it went on the offensive in the political arena. In short, the relative prosperity enjoyed by capitalism for a period did not restrain the militant workers’ movement, but rather set the stage for a revolutionary upsurge. Drawing a conclusion from such experiences, Trotsky says that an improvement in economic conjuncture and a relative rise in living standards can have a propitious effect upon the revolution, rather than a harmful one. In his view, the focal point in the debates on this kind of subjects is to grasp the true character of the long-term development curve, rather than confining oneself to the observation of mere conjunctural changes. For instance, as regards the 1848 period, the crisis was shallow and transient, while the conjuncture of recovery and upswing was rather strong. Consequently, revolutionary wave subsided. But as for the periods of deep economic crisis such as the Great Depression or the present one, the improvements in economy are weak and temporary in character. Therefore, leaving aside the other factors that influence the process, it can be said that such changes are rather limited in terms of the adverse effect they exert on the revolutionary wave. As historical examples demonstrate, concrete reality has diverse and complex aspects. Keeping this crucial point in mind, one can still claim that economic crises, where workers and toilers slide ever deeper into poverty, are of vital importance to the revolutionary forces of the working class. For, under conditions favourable enough for an upsurge of the working-class movement, crisis can serve to draw the mass of the working class into a widespread economic struggle that acquires an increasingly militant character. No wonder Lenin attached particular importance to the periods where poverty and economic struggle among the proletariat intensified. When he observed an increase in the activity of the working class in terms of economic struggle, he brought this to the party’s attention. He pointed out that all upsurges of the revolutionary movement began on the basis of mass economic movements. In February 1907, he set the following task before the fifth congress of the RSDLP: “The greatest possible number of Party members must be concentrated on economic agitation among the masses.”[2] How can anyone deny that major economic crises remove the veneer that leads the masses to delusions over capitalist system? Such periods are extremely important historical episodes as demonstrated today by the revolutionary situations that emerge one after another in Latin America. Leading to a general change in mood among the toiling masses, crises have a revitalising effect even on revolutionary leaders. Let us remind Marx and Engels’s approach to crisis. Towards the end of 1856, when they were expecting a new revolutionary upheaval, Marx wrote to Engels, “Although I am in serious financial difficulties myself I have not felt so happy since 1849 as I do today in face of this eruption.” And Engels replied, “The bourgeois mud of the past few years had stuck to me to a certain extent after all, but now it will be washed off and I shall feel a new man. The crisis will do my health as much good as a seaside holiday, I can feel that already.”[3] All these remarks are perfectly true. What is equally true, however, is that even the most seemingly spontaneous upsurges and declines in mass movement are strictly linked to the subjective factors of the revolution. The reality is that when the level of its revolutionary consciousness and organisation is low, the working class cannot give a revolutionary response even to the most severe crisis. Rather, it is more likely to regress altogether out of fear of losing jobs, future anxiety and deep concerns. As seen in the case of Turkey, recent economic crises, which came after long years of reaction where workers’ movement received heavy blows, did not engender a revolutionary situation. On the contrary, the threat of job loss was hanging like a sword of Damocles even over the most basic economic struggle. In order to improve the general mood of the working class and raise the level of militancy under such circumstances, it is of utmost importance to achieve certain gains, albeit modest ones, in the field of economic struggle. A closer look at this matter confronts one with problems in the trade union movement. The union bureaucracy is playing a treacherous role, while workers lack necessary consciousness and organisation even in the sense of economic struggle. These are bitter realities of today’s Turkey. In short, it is impossible to arrive at any correct conclusion regarding the relationship between economic situation and the revolutionary struggle by ruling out the subjective factor, relying merely on economic analyses. It is not the economic crisis that will seal the fate of the class struggle, but rather the factors such as the general political conditions in the world and the state of world workers’ movement. Marxism categorically rejects the idea that subjective factors of the revolution have no influence on its objective conditions. It is quite possible for a revolutionary situation, which resulted from a profound economic crisis, to languish in a short span of time under conditions where the working class is not adequately organised to overthrow the capitalist system. In such a case, the bourgeoisie would seize the opportunity and step up the exploitation of the working class, thus securing another period of economic recovery.

The main distinguishing feature between reformist and revolutionary tendencies in the workers’ movement lies in the question of whether or not there is will, tenacity and preparedness to heighten the organised class struggle against the bourgeoisie. The idea that capitalist crisis will somehow be followed by a new period of economic recovery, where measures to improve workers’ rights will be back on the agenda, is an utterly pacifist, conciliationist and reformist notion. Such an approach would have a paralysing effect when it prevails in the workers’ movement, playing into the hands of the bourgeoisie under circumstances where capitalism flounders in a profound crisis. Today, as in the past, reformist strands in the workers’ movement provide an important aid to the bourgeoisie in its effort to alleviate the class struggle. So long as workers’ struggle is kept within the boundaries of the established order through the dominance of reformism, the bourgeoisie would secure extra time and a certain margin for manoeuvre. Yet, it is possible to heighten the level of militancy under conditions of both crisis and economic upswing, when a revolutionary tendency gains ground in the workers’ movement. In the aftermath of the First World War, many reformists including Hilferding were overestimating the capacity of capitalism to stabilize, asserting that the system would automatically restore itself on a new basis. Yet, capitalism does not operate on the basis of a law of natural equilibrium that ultimately prevails. Often interrupted by crises, upheavals, wars and upsurges in class struggle, the working of the system has a contradictory and irregular character. As Trotsky remarked in his criticism of Hilferding and those holding similar views, faith in automatic evolution is the most important and the most characteristic trait of opportunism. If the working class fails to heighten the revolutionary struggle, allowing the bourgeoisie the opportunity to rule the world’s destiny for a long number of years, then assuredly some sort of new equilibrium would be established. After a considerable period of economic recession, a new world division of labour is established in agony, a new epoch of capitalist upswing might perhaps ensue. But Trotsky justifiably points out that reformist conception signifies a very dangerous tendency. This political tendency approaches all the questions on the basis of the presumption that the proletariat has already ceased or will cease to struggle. Taking into account the simultaneous operation of various factors, one can easily realise how misleading it is to assume that capitalist economy would automatically re-establish equilibrium after each crisis. For, the mechanisms which are necessary to revitalise the workings of capitalism function also as the factors that potentially exacerbate the class struggle. A new period of recovery, for instance, means new investments and measures to increase profitability. As a result, capitalists devote their efforts to increasing labour productivity. In order to ramp up production, which had reached rock-bottom during the periods of crisis and recession, measures are introduced such as de facto extension of the working day or increasing the pressure on workers to work more productive within the same working day. These new conditions intensify exploitation of the working class. They also represent an offensive against workers’ rights that surely has the potential to trigger a working class revolt. Without suppressing a possible workers’ revolt and a serious wave of strikes, it is impossible for the bourgeoisie to stabilize the economy in the way prescribed on paper by bourgeois economists. Thus, inevitably, life takes us beyond the universe of abstract economic analysis, towards the concreteness of reality, that is, the fields of politics and class struggle. Under capitalism, economic development has never been, and never will be, a process that is automatically shaped by numbers and statistics. It is in no way reconcilable with revolutionary Marxism to adopt a pacifist attitude that overlooks the role of class struggle as if the eventual outcome is a foregone conclusion produced by mere economic conditions. The task ahead of the revolutionary vanguard forces of the proletariat is to identify the characteristics of the ongoing period and to put into practice the tactics necessitated by concrete conditions. As with any kind of battle, there is no other way to know in advance the final outcome in class struggle than to fight tooth and nail to the very end. Take, for instance, the fervent and protracted kind of militant strikes that break out under conditions of economic crisis. Is it possible to anticipate what kind of developments they will lead to? Or suppose that capitalist economy enters a new phase of recovery. Would it be correct to say that it will automatically trigger an upsurge (or a decline) in militant working class struggle?

When we examine the necessary conditions for a successful proletarian revolution as a whole, we must speak of three principal premises. The first one is related to the general conditions of production across the world. Productive forces must reach a certain level of development that would allow socialism to replace capitalism. Secondly, a class that possesses both the intention and capability to carry out such historical transformation must come into existence. That is to say, the position occupied by the working class in the economy must allow it to launch such a radical change. And thirdly, the working class must be prepared to carry out the revolution. While the first two conditions involve the objective basis for the overthrow of capitalism and the building of socialism, the last one corresponds to the subjective factor of the revolution. In order not to drift towards voluntarism or spontaneity on the question of revolution, one must properly grasp the objective and subjective factors of proletarian revolution. The fact that the world as a whole has become ready for socialism, in other words, that the objective conditions are ripe for socialism, should not be taken to mean that proletarian revolution can be accomplished at any given time. This point was highlighted by Trotsky, who said that the revolutionary character of our epoch would not allow for the realisation of the revolution, that is, the seizure of power at any moment. As he put it, the revolutionary character of the epoch “consists in profound and sharp fluctuations and abrupt and frequent transitions from an immediately revolutionary situation; in other words, such as enables the communist party to strive for power, to a victory of the Fascist or semi-Fascist counter-revolution…”[1] Indeed, the revolution does not come up as a result of voluntary decisions of individuals. First and foremost, the objective conditions of revolution must be ripe. Therefore, one should not confuse the objective conditions enabling the socialist transformation of society with the objective conditions of the proletarian revolution. The objective condition of the revolution, that is, the revolutionary situation, cannot be a product of the will of individuals or organisations, and in the last instance, it is linked to crises into which capitalism plunges. Lenin classifies the symptoms of a revolutionary situation into three general categories: “(1) when it is impossible for the ruling classes to maintain their rule without any change; when there is a crisis, in one form or another, among the «upper classes», a crisis in the policy of the ruling class, leading to a fissure through which the discontent and indignation of the oppressed classes burst forth. For a revolution to take place, it is usually insufficient for «the lower classes not to want» to live in the old way; it is also necessary that «the upper classes should be unable» to live in the old way; (2) when the suffering and want of the oppressed classes have grown more acute than usual; (3) when, as a consequence of the above causes, there is a considerable increase in the activity of the masses, who uncomplainingly allow themselves to be robbed in «peace time», but, in turbulent times, are drawn both by all the circumstances of the crisis and by the «upper classes» themselves into independent historical action.”[2] Lenin calls these conditions “objective changes” and the totality of them a “revolutionary situation”. He emphasizes that without these objective changes, which are independent of the will, not only individual groups and parties but even individual classes are unable to carry out a revolution. However, even the rise of a revolutionary situation does not guarantee that a revolution will take place. Indeed, although such situations existed in Russia prior to the revolution of 1905, none of them ended in revolution. For, a revolution can only take place when a subjective change is present alongside above-mentioned objective changes. The working class must be able to take revolutionary mass actions strong enough to overthrow the government, which would never, not even in a period of crisis, fall spontaneously. In short, in order for a revolutionary situation to turn into a revolution that will overthrow the old government, the subjective factor must be ripe enough. In other words, there must be a correct leadership and the working class must have a sufficient level of political consciousness and organisation. In the absence of a revolutionary situation, even the strongest organisation is not able to introduce the revolution solely on the basis of its own revolutionary activity. On the other hand, however, it should not be overlooked that, in the age of imperialism, capitalism frequently creates ferment that leads to revolutionary situations. And it is precisely for this reason that the subjective factor has become decisive historically. Therefore, the historical crisis of mankind can be reduced to the crisis of revolutionary leadership. As Trotsky pointed out, under today’s circumstances, the opportunist mindset that overlooks the role of the party and the revolutionary leadership poses a serious danger. He lays a strong emphasis on the fact that the key to the whole historical process has passed into the hands of the subjective factor, that is, the party. Opportunism, on the other hand, always tends to underestimate the role of the subjective factor, that is, the importance of the party and of revolutionary leadership. Hence, “Such an attitude, which is false in general, operates with positively fatal effect in the imperialist epoch.”[3] For the forces preparing to take up the vanguard role in the revolutionary struggle of the proletariat, an accurate analysis of concrete situation bears utmost importance since the tactics will be determined accordingly. For instance, in the event of a revolutionary situation, it is extremely vital to determine and implement the tactics that will help spread the idea of overthrowing capitalism within the mass struggle and propel the struggle towards revolution. When the struggle reaches such a level of maturity that brings up the question of seizing the power as an urgent task, that is to say, in the stage of immediate revolution, it becomes essential to bring forward the tactics of insurrection in a courageous and wise way and make necessary preparations accordingly. But, to avoid misunderstanding, we must highlight that there is no rigid wall between a revolutionary situation and a revolution. Therefore, one must avoid scholastic ways of reasoning while examining the relationship between these two different levels of maturity in terms of the development of revolutionary struggle. In a revolutionary situation, the task of the vanguard forces of the working class is to make the utmost progress possible in preparation for the revolution, without wasting time in vain discussions such as “is it a revolutionary situation or a revolution?” It must be kept in mind that, in the absence of the necessary leadership, a revolutionary situation can easily recede, just as it can be propelled towards a successful revolution with the efforts of the revolutionary vanguard. Hence, in such critical situations, this is the basic reality that defines the focal point.

Without grasping the meaning and significance of the objective and subjective conditions of the revolution, together with their dialectical interaction, it is impossible to develop a revolutionary strategy that will lead the working class to victory. The distortions that have emerged, and will continue to emerge, from this question can be lumped into two opposite categories. On one end lies the one dimensional interpretation of the objective condition of revolution, and hence an overestimation of the capacity of the working class for a spontaneous revolt. On the other end stand attaching extravagant importance to subjective factor alone and glorifying voluntarism. As a matter of fact, an appropriate concept of revolutionary leadership capable of leading the proletariat to victory has to base itself on a proper understanding of the dialectical relationship between these two fundamental factors. Considered carefully, one can easily realize that the political currents that are unable to grasp this dialectical relationship, both left-wing and right-wing variants, end up in the same place: revolutionary verbalism. Let us put aside those who openly advocate reformism. There are political circles that do not reject the revolutionary solution nominally, but avoid carrying on organising work among the working class, which is necessary to put that solution into practice. They generally tend to glorify each spontaneous upsurge of the working class. In order to mask their lack of a revolutionary understanding and resoluteness in terms of organisation, they use a revolutionary verbiage, going so far as to worship spontaneity. Likewise, there are also groups that have neither the capacity to grasp the objective conditions of class struggle, nor the patience to conduct a systematic activity among the working class. In order to disguise their shortcomings, they resort to a revolutionary rhetoric, based on a one-sided exaggeration of voluntarism. Yet, as demonstrated by the Bolshevik line of the working class movement, created under Lenin’s leadership, a proper revolutionary preparation has never been, nor ever will be conducted on the basis of revolutionary verbalism and pompous phrases. It calls for resoluteness, systematic activity and patience to achieve the revolutionary organisation of the proletariat. True Bolsheviks are those who show revolutionary tenacity in undertaking arduous tasks, which would seem extremely tiresome to verbalists. Lenin criticised German “Lefts” for their infantile disorder, who maintained that the revolutionaries must not work in reactionary trade unions. He pointed out that, despite all adversities awaiting them, true revolutionaries must find ways to wage struggle in trade unions in order to serve the task of organising the working class. He said: “We must be able to stand up to all this, agree to make any sacrifice, and even—if need be—to resort to various stratagems, artifices and illegal methods, to evasions and subterfuges, as long as we get into the trade unions, remain in them, and carry on communist work within them at all costs.”[*] Aside from reactionary trade unions, the trade unions are, in general, much more limited and conciliatory in many respects compared to the revolutionary political organisation of the working class. Indeed, Lenin listed these points while underlining the importance of working in trade unions and remarked on the fact that proletariat could not develop anywhere in the world without reciprocal action between the trade unions and the party of the working class. As a revolutionary leader, Lenin was imbued with a clear understanding of how to put into practice the Marxist principle which emphasizes that the emancipation of the working class must be the work of the working class itself. When the vanguard revolutionary forces overlook trade unions and refrain from working in the existing mass organisations of the class in the name of a so-called sharper revolutionism, this will produce only one outcome: handing the mass of the class to reactionary, unreliable, conciliatory union bureaucrats. That the revolutionary verbalism has reached the level of irresponsibility is by no means compatible with the colossal tasks that will face us in the upcoming period. Having been able to make certain concessions to the working class throughout the long period of upswing following the Second World War, capitalism is now suffering from a profound crisis that is characterised by austerity measures, cuts in social benefits and attacks on the vested rights of workers. In advanced capitalist countries, the ground upon which reformism has flourished for a long time is now sliding away. This phenomenon finds its expression in the consciousness of the working class and reflects itself through the relative upsurge in the mass movements across the world. However, it would be naive to hope that the change in the objective conditions would easily lead to a change in subjective conditions in the short term. Everywhere, but particularly in the advanced capitalist countries, reformist and class-conciliatory notions have sunk so deep into the working-class organisations that they fall far short of the tasks that lie ahead. Although this creates a mood of discontent among the vanguard sections of the working class, an unorganised discontent can by no means change everything at one stroke. It is possible to launch an organisational revival through a leap forward by the advanced sections of the class. But even the success of such an attempt will depend on organised cadres with revolutionary merits, who will wage a determined and planful struggle to this end. Only on the basis of such an organised mobilisation can a sound upsurge in the workers’ movement be achieved. Otherwise, mass movements, which can occasionally make leaps forward out of motives such as anti-war sentiments, would inevitably subside with the same ease. Taking into account these solid realities, we must state that the world workers’ movement is faced with a real parting of ways. It is apparent that the working class cannot make any advance with conciliatory, reformist and supine leaderships and mentalities that took root in mass organisations in the previous period. As Marx pointed out, the task of the proletariat is not only to resist capitalism but also to overthrow it. Escalating in almost every country, the ongoing capitalist economic offensive is threatening the working class in general. It is clearly apparent that all these developments will exacerbate the class struggle. Developing countries, where economic crises affect politics in a more immediate and profound way as compared to developed capitalist countries, have already witnessed unrests that provide a foretaste of future developments. The recent revolutionary crises in Latin America clearly reveal, on the one hand, that a victorious revolution cannot be achieved spontaneously. And on the other hand, they dramatically lay bare the fact that revolution is not something to play with. In an exacerbated class conflict, the power struggle between the bourgeoisie and the proletariat cannot proceed in the same way for a long time. This fact has been proven time and again throughout history. The class that fails to win this battle is doomed to be defeated in the end. Economic crisis and massive unemployment are plunging the poor masses into the abyss of misery, making conditions ripe for a revolt. On the basis of a correct leadership and organisation, such conditions can set the stage for a revolutionary seizure of power. However, it is also plain that the same conditions can pave the way for capitalist reaction and rise of fascism if the working class lacks sufficient level of organisation and guidance. Today, world capitalist system is going through a profound crisis. The imperialist aggression, displayed by the USA, the hegemonic power of the system, explains the current state of affairs clearly, rendering it unnecessary to cite statistics. In developed capitalist countries, political scandals unfolding one after another and the brewing political crisis indicate that these countries are no longer able to avoid political tensions created by the deterioration of economic conditions. Grounding on the conditions of the previous period, generalisations to the effect that Europe will not experience political reaction again do not correspond with today’s realities. As it becomes less and less possible to deceive masses with certain concessions and honeyed words, the capitalist system would find ways to introduce political forms that would suppress and crush mass movements. The reactionary offensive of the bourgeoisie does not necessarily have to unfold as a replica of an historical case such as the rise of Nazism in Germany. Yet, one point is clear: the more its impasse intensifies, the more ferocious capitalism will become, showing no hesitation in introducing any kind of reactionary political measure. As expressed by the concrete situation of the USA, the hegemonic power of the system, capitalism has now left behind its best years which covered a long period. However, we should never overlook the fact that capitalism will not collapse spontaneously no matter how severe crises become. Never before has the destiny of humanity been so bound up with the revolutionary struggle of the working class. Let us not forget Marx’s famous 11th thesis on Feuerbach: “The philosophers have only interpreted the world, in various ways; the point, however, is to change it.” This must be our focal point today. The workers’ organisations that are totally adapted to the conditions of the previous period and unable to adjust themselves to new conditions will be confronted with serious crises under conditions of political turmoil. During such a process, only political structures that can offer revolutionary guidance to workers’ movement will be those who are equipped with Marxist understanding and Bolshevik style of organisation in the struggle against capitalism. We will be confronted with important developments in the period ahead, during which the necessity and gravity of mounting the struggle worldwide on the basis of proletarian internationalism will become a burning issue. As seen in previous periods of turmoil, only those organisations that possess the necessary capacity and preparation can adjust themselves to such dramatic changes and come forward to fulfil the tasks necessitated by the internationalist revolutionary struggle of the working class. And another lesson that was taught by the Great October Revolution and that should never be forgotten is that the proletarian internationalism cannot be reduced to an abstract wish. Without striving to heighten the struggle on a Bolshevik basis upon the concrete soil where one lives and thus giving these true ideas flesh and blood, the international struggle of the working class cannot be strengthened. Internationalist communist tendency has never become a power centre in a spontaneous fashion merely because it has based itself upon correct ideas. It is the task of communist vanguards to foster these correct ideas within the working-class movement and to turn them into an organised centre of attraction. While fulfilling this task under Lenin’s guidance, the Bolsheviks, at the same time, waged a relentless struggle against those tendencies that worshipped spontaneous upsurges in workers’ movement and those that adopted revolutionary voluntarism disconnected from workers’ movement. Despite the decades that have passed since then, the task set before today’s revolutionary generations is more or less the same. Today, the only way to strengthen the proletarian internationalist struggle within the working class is to take up the banner of struggle that was held aloft by the Bolsheviks when they spearheaded the October Revolution. 2 November 2003