Communist Party of Great Britain
Published: October 1946
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The main economic features of Capitalism were summarised in Part I of this Course, “The Aims of the Communist Party” (pp. 14-15). It is a class society, based on the exploitation of the great majority of the people, the working class, by the small minority, the capitalist class. Because production is carried on for profit and not to meet the needs of the people, capitalism leads to unemployment, crises and war. These four Lessons will consider these questions in greater detail; they will be dealing, that is to say, with the political economy of capitalism.
It has already been said that capitalism arose out of an earlier form of society, feudalism, and is itself creating the material conditions for a higher form, socialism. To understand it we must therefore study it in its development, as is done in Lesson 4. But at the same time, since the main features of capitalism, referred to above, are common to all stages of its development and give it its special character, it is these which we shall first consider.
1. The Meaning of Exploitation
A society based on exploitation is one in which one class, through its ownership of the means of production, is able to live as a parasite class, not producing, but living on the labour of—that is, exploiting—the other class, or classes, who are obliged to do all the real productive work on which the life of the society as a whole depends. But though all class societies are based on exploitation, the form of the exploitation, and therefore the character of the classes and of the societies themselves, differ.
In slave society the slave, being the property of the slave owner, can be bought and sold like a horse or a cow. In order that he may carry on production, the owner must first feed, clothe and house him. But he must also supply him with the raw materials and the tools. Since all the means of production, including the slave himself, belong to the slave owner, it follows that the goods produced by the slave are also the property of the slave owner. Here the exploitation is obvious, and admitted by every civilised person.
In feudal society, which succeeded slavery, the form of exploitation is different: it is midway between slavery and wage labour, the form that exploitation takes in capitalist society. In its typical form, the actual producer, the serf, is tied to the land; he cannot change his master. But he has a small plot of land which he works for himself, although he is also obliged to work his lord’s land so many days in the year, and give other service to his lord. What he produces on his own land, or on the “common lands,” is his own: what he produces on the lord’s land belongs to the lord. Here again, both the fact and the nature of exploitation are clear to everyone. (We speak of slavery and feudalism as the main forms of society in certain periods; but of course there were also some free producers—peasants and independent craftsmen, etc.—in both periods.)
In capitalist society, too, the fact of exploitation is clearly understood, at least by every worker. He knows that while he and his fellow-workers do all the work, it is the small class of capitalists who enjoy the lion’s share of all that he produces. The nature of the exploitation, that is to say how he is exploited, is not however so obvious, because, unlike the slave or the serf, the wage worker is not legally forced to work for his master. Yet in fact, like the serf, he works part of the time for himself and part for his employer. Like the slave, what he produces is not his but his employer’s, who owns the means of production. Why this is so is explained in what follows.
2. Production for Profit
In order that production may be carried on in capitalist society it is necessary that there should be, on the one hand, capitalists who have at their disposal sufficient resources to buy or rent factories, to purchase raw materials and to pay wages; and, on the other, workers who will be prepared to work for wages because they have no other means of livelihood (see Lesson 4). The capitalists then set the workers to work on their raw materials, in their factories; and therefore the goods which the workers produce also belong to the capitalists to dispose of as they wish. Since the goods produced are neither for the personal use of the capitalists to whom they belong, nor of the workers who make them, the capitalists must be able to find someone who will buy them, i.e., find a market for them. Such goods, that is to say goods produced for sale on the market, are known as commodities. Now though a commodity must be wanted by someone (must have use-value) or else nobody would buy it, the decision of the capitalist to produce a given commodity is not determined by the needs of the people, but by the expectation that he will find someone able to pay for it. If more profit can be made from selling television sets to the rich than by selling tables to the workers, more television sets than tables will be produced, however great the shortage of tables. In other words, the motive of capitalist production, the reason why capitalists decide to produce what they do, is not the needs of the people: but the search for profits. In Lesson 2 we shall consider some of the results of this, but first of all it is necessary to examine this question of profit in greater detail, because in doing so the nature of capitalist exploitation becomes clear.
3. Profit and Wages
Profit is the difference between the cost of production of a commodity and the price for which it sells on the market. It is sometimes argued, therefore, that it is the result of cheating, of selling commodities above their value. But, if this were so, the profit made by one capitalist would simply cancel out the loss made by another. We must therefore be able to explain profit on the assumption that commodities are bought and sold (are exchanged through the medium of money) at their value.
If commodities exchange at their value, there must be some property common to them all by which their values can be compared. It is not their “use value,” referred to above, or otherwise the necessities of life as would sell (that is exchange for) more than the luxuries. But there is another factor, and only one other, that is common to all commodities; and that is that they are produced by human labour. Thus the exchange value (or simply “the value”) of a commodity is determined by the amount of labour (i.e., the labour-time) that goes into its production. More accurately, it is determined by the “average socially necessary labour-time,” since the amount of labour-time required at any particular time for producing commodities of that sort will depend on the technical methods available at that time.
But since commodities exchange at their value, how does this explain profit? We can only answer this if we can find a commodity which actually creates value in the course of being used. This Marx was the first to do by discovering the difference between labour and labour-power.
When a capitalist employs a worker, he is not buying his labour. He could only buy that in the form of the finished article after the worker has made it. What he does buy is the worker’s ability to work, his labour power; and the value of this is determined like that of any other commodity, by the amount of average labour-time necessary to produce it. This means, in the case of labour-power, the time required to produce the food, clothes and other necessities that are needed, in a given country, at a given time, to keep the worker and his family alive and able to work. (The more skilled a worker is the more training he will require, and therefore the greater the value of his labour-power.) And it is this value which determines the general level of wages paid to the worker by the capitalist.
But, with the technical methods available in modern society, it only takes the worker part of the working day to create, and embody in what he is producing, the equivalent of his keep (his wages). In four hours, say, he creates sufficient value to pay his wages. But since what he has sold to the capitalist is his labour-power, “his ability to work” for, say, eight hours, the surplus value he creates in this further four hours also belongs to the capitalist, though the capitalist pays nothing for it. It is out of this surplus value that the capitalist makes his profit; and, since it has not been paid for, it is clear that the capitalist is therefore exploiting the worker.
So far we have been considering how value is determined—the value of labour-power or of any other community. It must, however, be borne in mind that the actual price of commodities may in practice, and usually does, vary from the value at any time as a result of competition between the capitalists or of the working of supply and demand—the fact, that is to say, that there is sometimes an excess, sometimes a scarcity, of a given commodity on the market. In the same way, the price of labour-power (i.e., wages) will vary from its value as a result of trade union action.
4. The Class Struggle
From what has been said, it follows that the economic interests of the capitalists and those of the workers are diametrically opposed: for the more the capitalist can exploit the worker the greater will be his profit.
This he can do in two ways. He can lengthen the working day, which means that, since the amount of labour-time necessary to create the value of the worker’s wages remains the same, the additional hours are devoted to creating more surplus value. This is called increasing absolute surplus value. Or, on the other hand, he can increase the relative surplus value, which is achieved in the following way: As improvements in technique increase the productivity of labour, less labour is required to produce the means of subsistence of the worker. As a result of this a smaller part of the working day is devoted to producing the value of the workers’ subsistence (of his wages, that is to say), and a larger part is available for creating surplus value. In both cases the exploitation of the worker is therefore increased.
Inevitably the workers resist these attempts of the capitalists by fighting for higher wages and shorter hours; and, since they soon discover that their individual efforts are ineffective, they organise themselves in trade unions for the purpose. This is the first form that the class struggle takes. But trade union action alone can only modify the exploitation of the workers, can only effect reforms within the capitalist system. Once, however, the workers begin to understand the real nature of capitalist exploitation—the fact that the capitalists are appropriating for themselves the unpaid labour of the workers—they see the necessity for political action; that is to say, for putting an end to the capitalist system and building Socialism in its place. (See Part 4.)
1. The Development of Capitalist Production
We have seen that the purpose of capitalist production is to create profit, and that this can only be done by employing workers to create surplus value. Not all the surplus value that is created, however, goes to the employers of labour. Part of it is taken as interest by the bankers and financiers who invest their money in production; while another part is appropriated by the owners of land in the form of rent. Though neither the banker nor the landlord plays a direct part in capitalist production, they are nevertheless both sections of the capitalist class, for since their incomes are derived solely from surplus value, they are equally interested in the exploitation of the workers.
Moreover, the whole of the profit that goes to the industrial capitalist is not, and could not be, used by him to satisfy his own personal needs and whims. The greater, and much the more important, part of it is continually being transformed into new capital, that is to say is being used to increase the scale of production, to employ more workers, and so to create more surplus value. (Capital, be it noted, is not any form of private property. Neither the land belonging to a small farmer, nor even the yacht belonging to a capitalist, is capital; but only property which is used for the purposes noted above.)
This accumulation of capital, as Marx called it, though it increases the wealth and power of the capitalist class, is nevertheless, especially in the early stages of capitalism, also of value to society as a whole. Capitalism, in so far as it increases the material means of production available to society (and thus makes it possible to achieve the abundance, which, as we have seen in Part I, is one of the pre-requisites for Socialism), is to that extent progressive. But, as we shall see in the next section, this progressive feature is increasingly off-set by others.
2. Capitalist Competition
Since the motive of capitalist production is to make profit, and since the market for what is produced is limited, there is inevitably competition between individual capitalists. Each individual capitalist strives to make more surplus value than the others; and as we saw in Lesson 1, he can only do this in one of two ways.
To the first, the increase of absolute surplus value, there is a limit (quite apart from any successful action the trade unions may take to shorten the hours of work), since to lengthen the working day beyond a certain point inevitably reduces the worker’s physical capacity to produce. The second, increasing the relative surplus value, has a twofold effect. On the one hand, since it involves the improvement of technique, it increases the productivity of the worker, and thus man’s control over the forces of nature. But on the other, because every technical improvement means that several workers are displaced by a single machine, it inevitably leads to unemployment. If this happens when production as a whole is expanding, some of the workers may be re-absorbed in another industry; but since the same tendency is at work here also, the overall result of the improvement of technique in capitalist society is to create what Marx called a “reserve army of unemployed.”
The effect of this is twofold. In the first place, it reduces the bargaining power of the working class as a whole by increasing the number of workers who are looking for jobs; because, as everybody knows, unless the unemployed are very effectively organised, they may be induced to work for lower wages than those who are already employed. In the second place, because it reduces the purchasing power of the workers, who, taken as a whole, constitute the principal market for all consumption goods, it introduces one of the factors making for crisis (see § 3 below).
There is a further aspect of competition that must be considered. Acting through the law of supply and demand on the market, it does, within certain limits, serve to regulate the production of goods. If so many of a particular kind of commodity are produced that there is no longer an effective demand for them (which means, it should be noted, not that people do not need them, but that they cannot pay for them), the producers of that commodity will be obliged to compete with one another in order to dispose of them. This means that they will be obliged to reduce the price; and, in so doing, to cut down the profit on that particular line of production. The result of this will be that capital will be withdrawn from the production of this commodity and invested in other branches of industry, where the rate of profit is higher. This may mean that some capitalists are saved from making a loss, but it may also mean, and indeed usually does, that the production of precisely those things which the people most need, e.g., houses, is cut down, while the production of luxuries for the rich is increased.
Competition, therefore, cannot produce a planned economy. Though the rough and ready working of the law of supply and demand enables the capitalist system to overcome some of its defects, it does not remove the causes leading to those inevitable and repeated breakdowns in the system that we know as crises.
3. Capitalist Crises
We have seen that the “normal” process of capitalist production is that the capitalist employs workers who, in addition to the value of their keep, which is paid to them in the form of wages, also create surplus value, which goes to the capitalist. The latter then uses, part of this surplus value as new capital, with which he puts more workers to work, who create more surplus value, which in turn means more capital. But though this process has, in the last 150 years, led to a tremendous increase in the total wealth of mankind, it has also been continually interrupted by ever more serious economic crises.
The effects of crises we are all familiar with: more goods produced than the people can buy; therefore the closing-down of factories and unemployment; unemployment in turn still further reducing the purchasing power of the working class; so leading to a further curtailment of production, the destruction of goods and even of factories. But we must also consider their causes.
We have already glanced at one of the principal factors. We have seen how each capitalist, in the struggle with his competitors to make more profit, is continually introducing new technical methods. But the introduction of more machinery and greater technical efficiency, though it increases the volume of production and therefore the total amount of capital, at the same time reduces the relative number of workers employed; and, as a result, the total amount of wages they have to spend on the greater volume of goods produced.
This, then, is a fundamental contradiction at the heart of the capitalist system: the fact that the expansion of capitalist production can only take place side by side with a relative decrease in the demand, i.e., the purchasing power, of the workers. Only under Socialism can this contradiction be finally removed, for only when all the means of production are owned by the people can the State, representing the people, so plan production that every increase in production is accompanied by a corresponding increase in the purchasing power and social services available to the people.
It is with a similar aim in view that the Labour Party in its electoral programme put forward measures for the partial control of industry; and they may, if they are effectively enforced, modify crises, even though they cannot of themselves abolish their causes. But they can only have this effect on condition that they do in fact lead to a real increase in wages at the expense of a real reduction of profits; and this can only be achieved by effectively weakening the power of the capitalist class as a whole and strengthening that of the working class.
1. The Development of Capitalist Monopoly
In Lesson 2 we have seen how competition leads to a continual development of technique and to a continual, though interrupted, expansion of capital. There is a further effect, however, which we now have to examine.
Most technical improvements involve a further division of labour (that is to say, the breaking down of a single productive process into a number of less skilled ones) and an increase in the size of the unit of production. Instead of a number of small enterprises, employing small numbers of workers on comparatively rudimentary machines, industry becomes more and more concentrated in giant enterprises, employing increasing numbers of workers on ever more complex machines. Since these larger firms can be run more efficiently and economically, they can also produce goods more cheaply than the smaller firms. If the latter are to compete, they must be able to organise their enterprises on the same scale. But this means that they must have at their disposal ever-greater resources of capital. The concentration of production therefore leads to the concentration of capital.
This process of concentration is going on continuously throughout the development of capitalism. In the 19th century it had already led from the individual capitalist producer to the business partnership; and so to the limited liability company, in which, in return for the promise of dividends or interest, thousands of people unconnected with the industry are invited to contribute capital in order to make large-scale industry possible. Gradually, however, as the scale of concentration increased, many of the smaller enterprises could no longer compete, and were either put out of business or absorbed by the giant firms. This replacement of a number of small competing firms by one, or a few, giant firms controlling the whole of a particular industry, which had become characteristic of capitalism by the beginning of the 20th century, is called monopoly capitalism.
It is because monopoly capitalism makes possible the mass-production of goods and creates the conditions for still further technical developments, that Lenin called it the “highest stage” of capitalism. But, as he also pointed out, it is at the same time the stage of “dying” capitalism, because it is precisely in this period that all the defects of the capitalist system reveal themselves in their sharpest form.
For one thing, monopoly capitalism accentuates the conditions making for crisis that have been described above. Though monopoly tends to prevent competition within a single industry or group of industries, the rivalry between the various monopoly groups is intensified, thus leading to ever more rapid “nationalisation”—that is to say, developments of technique which increase capitalist profit, while leaving the workers’ share in the increased output the same or even less. And this, coupled with the huge overall accumulation of capital, leads to the general crisis of capitalism; the conditions we are all familiar with between the wars, when even in times of “boom” a large part of the productive forces are kept idle and even destroyed, while millions of workers are thrown into chronic unemployment.
Again, with the growth of industry and of limited liability companies, the bankers begin to take shares in the industrial companies and the wealthy industrialists to take shares in the banks. Since this is done also, particularly in Britain, by the big landowners, the power of the capitalist class tends to become unified in a single group of monopolists or finance-capitalists; the finance oligarchy, as it is called. Gradually this small group of multi-millionaires begins to control wider and wider sections of the economic life of the country, and this growth of economic power inevitably gives them increasing political power. More and more the State is used to carry out policies favourable to the monopolists, until, under fascism, the State becomes the direct instrument of monopoly capitalism and is used to smash all the democratic forces; especially the organised working class, which hinder the further development of monopoly.
There are a number of other important effects of monopoly capitalism. But since capitalism only becomes monopoly capitalism at a stage when it has extended its influence throughout the world—has become a world system—in order to understand these effects we must now consider them in relation to other countries.
2. Monopoly Capitalism and Imperialism
In the earlier, competitive stages of capitalism, capitalists export their manufactured goods to other countries, and with the proceeds buy the food or raw materials that are required to keep the home industry going. If the other country is technically more backward, that is to say if it employs more workers and less machinery, such trade is profitable, because it amounts in fact to exchanging less labour for more labour. But it does not necessarily lead to the political subjugation of the backward people.
With the development of monopoly capitalism, however, there is a tendency for the export of manufactured goods to give way to the export of capital. One of the reasons for this is that, partly because the comparative poverty of the workers restricts the expansion of the home market and partly because their more organised bargaining power enables them to demand higher wages, it becomes less and less profitable to invest the continually accumulating capital in the home industries. By exporting capital, however, that is to say by lending money to foreign States or companies, or by financing such things as railways and harbour works in undeveloped countries, they are able not only to maintain but also to increase their profits.
This comes about in two ways. In the first place, the country lending the money can make it a condition of the loan that all, or a proportion of it, shall be spent on goods which it itself produces. Since the same group of capitalists—the finance oligarchy—both make the loan and manufacture the goods on which it has to be spent, both the interest on the loan and the profit on the manufactured goods thus accrue to the same people. Secondly, when the capital that is exported is used to “develop” a backward and primitive country, where the use of machinery is very restricted and labour is cheap because the workers are not yet organised in trade unions, it will yield a higher rate of profit than at home. For, as we saw in Lesson 1, profit is part of surplus value, and this can only be produced by the exploitation of the workers.
It will be seen, therefore, that with the growing tendency to export capital instead of goods the political control of the country to which the capital is exported becomes of increasing importance. For only when such control exists can the country which is making the loan dictate the conditions of the loan. Moreover, in the case of capital being exported to a backward country, political control alone can make sure that it will be used for such things as railways and harbours (which make easier and more profitable the exploitation of the country), and not to finance large-scale manufacturing enterprises, which could compete with the home industry.
Thus this necessity for political control leads inevitably to the world being divided up between the capitalist powers. There are two ways in which this can be done: either directly, by open conquest and annexation, which reduces the conquered countries to the status of colonies, as for example was the case with Africa between 1875-1900; or indirectly, by using diplomatic pressure, backed by force, to set up puppet rulers who can be relied on to further the interests of the big capitalist power. Examples of this form of “semi-colonisation” were Britain’s relations with the countries of Eastern Europe in the past, or with Greece at the present time; and those of the U.S.A. with the countries of South America.
It is because the development of monopoly capitalism leads inevitably to this struggle for colonies or dependent countries that Lenin, who was the first to analyse fully its economic and political characteristics, described it alternatively as the epoch of monopoly capitalism or of imperialism.
3. Capitalism and War
War is not peculiar to capitalist society. There have been wars throughout the history of class society, but their character has not always been the same. In the stage of competitive capitalism they were in the main conducted by the advanced capitalist countries, especially Great Britain, for the purpose of annexing the undeveloped countries; so that, though they involved untold suffering for the peoples of these countries, they were to a large extent localised. World war, such as we have experienced twice during the present century, is a special characteristic of imperialism.
We have seen how the development of monopoly capitalism led to the dividing up of the world between the advanced capitalist countries. This division, completed by the beginning of the 20th century, clearly corresponded to the relative political and economic strength of the capitalist powers. But just as, within a single capitalist country, competition leads to an uneven rate of development as between one enterprise and another and as between different industries, so for the same reason the different countries themselves develop unevenly.
For example, already by the middle of the 19th century, Britain was a highly developed industrial country, while German economy was still based largely on agriculture and petty manufacture. In Germany, however, precisely because large-scale industrial development began much later, it was able to start at the higher technical level already reached by the most advanced concerns in Britain, without going through all the earlier stages. It was therefore able to expand more rapidly than British industry, which was held back increasingly by the large amounts of accumulated capital invested in less technically efficient industries. Thus the re-division of the world, in order to give German capitalism access to wider markets and sources of raw material, became a necessity for the German capitalists; and eventually led to the imperialist war of 1914-18.
The war, however, could not solve the problem, for the uneven development of the capitalist countries continued; but now under different conditions. In the first place, the victory of Socialism in the U.S.S.R. had weakened the world system of imperialism by withdrawing one-sixth of the world from its difficulties and contradictions. In the second, in order to prevent the development of Socialism, the monopoly capitalists in the defeated countries had introduced fascism. The aim of the fascist powers, however, was not simply once again to secure a redivision of the world as in 1914-18. They sought also to destroy the one socialist country and at the same time to reduce the other capitalist countries to the status of colonies or semi-colonies. There thus arose an alliance between the peoples of the non-fascist countries and the Soviet Union, which led to the military defeat of fascism in the great war of liberation.
But though the military defeat of fascism has led to the strengthening of the Soviet Union and a great advance towards Socialism in other countries, monopoly capitalism is still tremendously powerful. And as long as this is the case it is clear that the fundamental cause of imperialist war will still remain.
1. Capitalism as a Progressive Social System
We have already spoken of the material conditions that are necessary in order that capitalist production may be carried on (Lesson 1, § 2). But these conditions could not appear suddenly out of thin air; they developed gradually within feudal society. The typical feudal form of production was production for local consumption; that is to say, consumption by the small, isolated feudal communities. To supply the needs of the community it was necessary for the great majority of the people, the serfs, to work on the land; but side by side with this typical form of production there was always a limited amount of individual production, that is to say of goods being produced by specialist craftsmen.
Gradually, however, as the technique of feudal and individual production improved, a growing surplus was produced, which the feudal lord was able to sell in exchange for goods from other parts of the country as well as from foreign countries. Later this led to the development of a new class of people, merchants, whose special function was to organise this buying and selling. In other words, within the system of feudal production, another form of production—production for the market, or commodity production—began to play an increasing part.
But for this new form of production to develop into capitalism, two things were necessary: (a) a class of people with enough resources to buy the means of production—the looms, and spinning-machines, etc.—that were required; and (b) a class of workers who, unlike the serfs, neither possessed any means of production themselves nor were legally forced to work for a feudal lord.
The first of these conditions came about in several ways—accumulation by merchants of profits from trade; accumulation, by the richer craftsmen in the towns, of profits from the surplus labour of in increasing number of hired workers; plunder from the newly discovered countries; the seizure and sale of Church lands in England, etc. But this new “capital” could function only if the second condition—the creation of a class of wage-labourers—was also present. This second condition was realised in a variety of ways. In some cases the serfs simply ran away from their feudal lords to work in the towns. In other cases, owing to the gradual breakdown of the feudal form of production, it began to pay the feudal lords to sell the serfs their freedom and to allow them to work as peasants on their own land. Then, at a later stage, when sheep-farming became more profitable than small-scale peasant farming, thousands of these peasant families were brutally driven off their land, and eventually drifted into the towns to swell the growing class of “free” workers (proletarians as they were called, to distinguish them from the workers in feudal society) searching for employment.
Without attempting to describe this process in detail, however, enough has been said to show that the conditions for the development of the new, capitalist mode of production arose out of the conditions of feudal production; and that the driving force in its development was the slow improvement of technique, the growing power of society to control the force of nature. But in order that capitalism might be free to develop to the full its potentialities for increasing the wealth of mankind, it was also necessary that the legal restrictions and prohibitions, as well as many of the religious prejudices, that were an essential part of the feudal political and intellectual system, should be swept away. This was accomplished by the great Bourgeois Revolutions of the 17th and 18th centuries, in which the new capitalist (or bourgeois) class succeeded in breaking the power of the old feudal ruling class and creating new forms of State power, thus making possible the transformation of Western Europe from feudalism to capitalism. (These will be considered in Part III of this Course.)
It was these changes in production, and the political changes to which they gave rise, that made possible the series of great technical inventions in the 18th and 19th centuries known as the “industrial revolution.” Thus, it was because of the undreamed-of abundance that it could create that capitalism was, in its early stages and by contrast with feudalism, a progressive system of society.
2. Capitalism in Decay
But although capitalism was progressive, it nevertheless always contains within itself its own internal conflicts or contradictions, as they are called. One of these, the contradiction due to the opposed interests of the capitalists and the workers, the class struggle, we have already considered. But underlying this there is a fundamental economic contradiction. We have seen how competition brings about technical development, but we must also consider the results of this development. On the one hand, the unit of production, the factory, becomes larger and larger, so that a growing number of workers are associated in production; while, on the other, production itself is continually being broken down into a larger number of separate processes, thus involving a greater variety of workers in the production of any single article. Thus inevitably—that is to say, as a result of the working of the laws of capitalism itself—production is becoming an increasingly social act, is becoming more socialised. But while production itself is becoming increasingly socialised, and thus laying the necessary basis for Socialism, the goods that are produced are privately appropriated by the capitalist class, because it is they who own the means of producing them.
With the development of monopoly capitalism this contradiction becomes ever sharper and more obvious. In the first place, because, while the socialisation of production proceeds ever more rapidly, the size of the exploiting class, the monopoly capitalists in whose interests production is carried on, is continually decreasing. And in the second place, because, while the finance capitalists who own the means of production are only interested in the profits of ownership and leave the direction of production, of which they themselves are ignorant, to paid managers, at the same time the workers, whose knowledge of technique and the problems of industry is continually growing, become more and more capable of organising production themselves. (And, indeed, in critical situations such as war, are deliberately called upon to do so.)
Moreover, because monopoly capitalism is also imperialism, it leads not only to the conquest of colonial countries, but also to the increasing impoverishment and exploitation of the colonial peoples. As we have seen, too, it is imperialism that leads to war, as well as to the intensification of economic crises and chronic unemployment. Thus, in this stage, capitalism, though it has created the possibility of almost limitless abundance, is in fact the cause of growing poverty, suffering and violence.
3. From Capitalism to Socialism
In order that mankind may advance to the next stage of social development, Socialism, it is therefore necessary that the means of production should cease to be privately owned and should become the property of society as a whole. Only in this way is it possible for the socialised mode of production which has grown up within capitalism to be fully extended and developed, and so to lay the material basis for Communism.
This step, the Socialist Revolution, was first achieved in 1917 by the Russian workers and peasants, under the leadership of the Communist Party; and already within a generation they have been able as a result to transform a backward agricultural country into one of the three greatest industrial countries in the world, in which unemployment and crises have for the first time been abolished and a continually rising standard of living, for everyone has been assured. In contrast to this, it was precisely during these years that Britain and the other capitalist countries experienced the most serious crisis in their history, and that the scourge of mass unemployment became chronic.
Today, however, with the defeat of the most reactionary monopoly capitalist countries in the war of liberation, the world is entering a new stage of development. Imperialism has ceased to be a worldwide system, since capitalism and Socialism now exist side by side. Moreover, today, it is the capitalist countries which are threatened by a renewal of crisis, whereas the U.S.S.R. and those countries which are most rapidly developing towards Socialism are able to plan for a continual increase in production, accompanied by a steadily rising standard of living.
In Britain, where by electing a Labour Government the majority of the people have shown that they are determined to achieve Socialism, the first steps are being taken to replace the monopoly capitalists’ control of industry by State control. This is not Socialism, nor necessarily a step towards Socialism. If, however, it is accompanied by practical steps to liberate the colonial peoples and as a result to raise their standard of living, and if at the same time the Government develops trade with the stable economies of the Soviet Union and the new democratic countries, instead of allowing Britain to become economically dependent upon the “free enterprise” of American monopoly capitalism, the danger of crisis can be delayed and perhaps avoided.
But all these measures will only prove to be a real advance towards Socialism to the extent that they do in fact weaken the political, as well as the economic, power of the monopoly capitalists, and strengthen that of the working class. In other words the struggle for Socialism cannot be won without at the same time carrying through the struggle for democracy; and it is therefore to this question that Part 3 of this Course will be devoted.