MIA > Archive > Fraina/Corey Archive > Decline of Am. Cap.
CAPITALISM develops the forces of production more than the forces of consumption. This is a condition of the accumulation of capital. Consumption grows only if an increasing output of capital goods, the means of converting profits into capital, creates consumer purchasing power which is spent on consumption goods (and services). If it becomes unprofitable to produce capital goods, and their output falls, production and consumption must fall simultaneously. For the capitalist system is based on the making of profits and their conversion into capital, and this creates an irreconcilable antagonism between production and consumption.
One result of the antagonism is cyclical crisis and breakdown. Although the production of capital goods creates purchasing power, the lag of wages behind profits eventually engenders a deficiency in consumption, which becomes acute when markets are saturated by the mounting output of newly producing capital goods. The consumption goods industries, overequipped and overproducing, lessen their demands for capital goods. The output of capital goods falls, and the crisis moves on to depression. Production revives if and when there is a renewed demand for capital goods; and if the demand is an increasing one, revival moves on to recovery and prosperity.
Another result of the antagonism between production and consumption is that the productive forces are never fully utilized. This amounts to a restriction of production and consumption. The restriction was relative to the epoch of the upswing of capitalism. Both production and consumption scored an absolute increase, although the increase was always below the possibilities of industry; and while the workers’ consumption rose (in spite of periods when it was stationary or decreased) it fell relatively to the share of the propertied classes. In the epoch of decline, however, the tendency toward the restriction of production and consumption becomes absolute. Capitalist prosperity depends upon an increasing output and absorption of capital goods. With the older industries mechanized, no new industries developing, and the industrialization of new regions declining – with measurable exhaustion of the long-time factors of economic expansion and their increasing demand for capital goods there is no chance of an upsurge in the production of capital goods and, consequently, of an upsurge in prosperity. For capitalist industry fully to utilize its productive forces would require a great increase in mass consumption by absorbing the unemployed, shortening hours, and raising wages; but this would seriously reduce profits and threaten profit itself. Under these conditions, capitalist industry tends toward an absolute restricttion of production and consumption.
The average yearly rate of growth of production has been slowing down for many years. It is the inevitable expression of growth itself. Nevertheless the slowing down of the rate of growth is eventually ruinous economically, as it tends to approximate to zero and expansion is a necessity of capitalist production. Expansion must primarily, however, take the form of an increasing output of capital goods, which produce more profits and embody the capitalist claims to wealth and income. If expansion is primarily in consumption goods the rate of profit must fall disastrously. The capitalists restrict production. Restriction, if it becomes general, means not only a rate of growth approximating zero but an absolute decrease in production, with the rate of profit eventually tending to fall disastrously. These developments and contradictions create a permanent crisis. It is the decline of capitalism.
Decline is not collapse. The decline of capitalism does not mean that the economic order is unable to function, but that it must function on a lower level. It does not mean an inability to restore production and prosperity, but an inability to restore them on any considerable scale. While the decline may be interrupted, the downward movement will persist. Capitalist decline involves, primarily, an increase in class-economic, social, and international disturbances, a tendency toward stagnation simultaneously with the aggravation of instability, a reaction against progress in all its forms.
The capitalist class strives to throw the burdens of decline upon the workers (and farmers and professionals). It slashes their wages, throws millions out of work, and limits their consumption. In particular, unemployment becomes greater and increasingly permanent, a development inherent in the dynamics of capitalist production. In the epoch of the upswing of capitalism unemployment, other than seasonal and cyclical, was essentially technological – the result of displacement of labor by more efficient machinery. Displaced workers were eventually absorbed because of the upward movement of production (the tendency was, however, for unemployment to increase). In the epoch of the decline of capitalism unemployment is essentially economic workers are still displaced by improved technological efficiency, but they are no longer re-absorbed because of the downward movement of production; and this becomes the main cause of unemployment. Increasing technological efficiency is no longer accompanied by increasing expansion of industry. Unemployment becomes disemployment. A growing mass of unemployable workers, whom the profit economy condemns to a living death, is characteristic of the decline of capitalism.
Last updated on 29.9.2007