Has Capitalism entered its Decadence since 1914?

Index of Graphs: Chapter III. The national question before and after 1914

Graph 3.1: Distribution of the Manufactured Production in the World (1750 – 1913)
Source: Les mondes insurgés, Altermanuel d’histoire contemporaine, Ed. Vuibert, p13. The data come from: Paul Bairoch, ‘International industrialization levels from 1750 to 1980’, published in The Journal of European Economic History, n°11, 2, 1982.
Graph 3.2: Level of Industrialization per Inhabitant (1750 – 1995); UK 1900 = 100
Source: Bairoch, P., 1997, Victoires et déboires. Ed. Folio, Volume III, p.860.
Graph 3.3: The catching-up of the Asian giants: China, India, Indonesia (1820 – 2015)
Source: Milanovic, B., 2020, Le capitalisme sans rival. La Découverte, p.260.
[GDP per inhabitant of China and India as percentage of Britain’s; GDP per inhabitant of Indonesia as percentage of Netherlands’; from the Industrial Revolution until our days. Sources: calculated from the Maddison Project (2018); GDP per inhabitant expressed at purchasing power parity, 2011.]
Graph 3.4: USA and China – Relative Part of the Global GDP per country (1950 – 2015)
Source: Milanovic, B., 2020, Op. Cit. p.27.
Graph 3.5: Vietnam – Growth of the GDP (1986 – 2018)
Source: J.R. Chaponnière & M. Lautier, 2019, L’Asie du Sud-Est, Bréal, p.170.
Graph 3.6: Vietnam – GDP per inhabitant (1820 – 2016)
Source: Maddison Project Database (2018)
Graph 3.7: China – GDP per inhabitant (1820 – 2016)
Source: Maddison Project Database (2018)
Graph 3.8: Laos – GDP per Inhabitant (1950 – 2016)
Source: Maddison Project Database (2018)
Graph 3.9: GDP per inhabitant of three East European countries (1946 – 2016)
Source: Maddison Project Database (2018)
Graph 3.10: Growth of the GDP per Inhabitant of China, Vietnam and the USA (1990 – 2016)
Source: Milanovic, B., Op. Cit, p. 119.
[Growth rates of the GDP per inhabitant in China, Vietnam and the USA from 1990 to 2016. The growth rates are calculated in real terms, based on the US-Dollar in 2011, at purchasing power parity. Source: World Bank, World Development Indicators, version 2017.]

8 thoughts on “Has Capitalism entered its Decadence since 1914?”

  1. Link commented on Topic: Has Capitalism entered its Decadence since 1914?
    November 6, 2020:

    I would like to start of by absolutely agreeing with CM’s presentation of empirical facts about the developments during the past century. The ICC in particular has had major problems recognising what has been actually happening in the world economy because it is stuck in Luxemburg’s theories about accumulation being dependant on non-capitalist markets.

    I however disagree with the interpretation that leads to a rejection of the idea of decadence and indeed the suggestion that the ICC presents falsehoods.

    Luxemburg, Lenin, Bukharin and others are I think to be applauded for their efforts at the start of the 20th century to understand how capitalism was changing at that time. With hindsight we can say they all got some things right and some things wrong. With regard to the Luxemburgism taken up by groups in the 30s and later by the ICC, it seems to me that it is possible to say that her ideas made a certain sense and were justifiable in the context of world developments up to say the 1960s. It seems to me that it is only since then during an extended period of reaction and of continued growth of the capitalist economy and world population that her thesis about non-capitalist markets really needs to be seriously questioned and for my part definitively abandoned.

    CM takes this criticism of the ICC to an extreme however in rejecting the concepts of decadence/obsolescence (I become less concerned about the label to be used, the point is that a significant change in capitalism development took place).

    The ICC’s unwillingness to reject Luxemburgism leads it into many problems because certainly in the early days and to some extent today explains decadence as an economic crisis, as permanent crisis, market saturation and a product of the lack of pre cap markets and these explanation do not hold up any longer. Some of the assessments it makes on workers struggle, political activity and economic development are as a consequence faulty and open to serious questioning. Now I do agree that there are issues that the ICC has got wrong

    However, just because luxemburgism is wrong does not mean we should reject an understand of imperialism and the completion of a world market and the changes in capitalism. Nor should we reject Marx’s view of historical materialism which identifies for all exploiting societies a period of ascendancy and a subsequent period where the relations of production become a fetter on the forces of production. I cannot agree therefore that to recognise the continued growth of capitalism in decadence should lead to seeing dangerous political aberrations in rejecting reformism, national question, its interpretation of historical materialism and so forth.

    My explanation for this viewpoint is thats I think it has been clear for sometime that the onset of decadence/obsolescence should not be seen as the onset of an economic crisis. It is not determined by the amount of non-capitalist markets available nor is it a product of a certain rate of profit and nor a certain amount of overproduction. Decadence/obsolescence is a political and social even a historical development that is not in itself an economic crises but it creates an environment where the contradictions within capitalism are sharper and more prone to generate crises.

    In fact Grossman’s following explanation of capital expansion (from Chap 2 The Law of Capitalist Breakdown seems a far more insightful view of how capitalism has grown within decadence, and it rejects Luxemburgism and provides an explanation of why capitalism can continue to grow even within decadence.

    “Despite the fall in the rate of profit, accumulation proceeds at an accelerated tempo because the scope of accumulation expands not in proportion to the level of profitability, but in proportion to the weight of the already accumulated capital: ‘beyond certain limits a large capital with a small rate of profit accumulates faster than a small capital with a large rate of profit’ (Marx Capital Vol 3)”

    After all the basis of capitalism and what differentiates it from previous societies is precisely the ongoing accumulation of constant capital. We can never expect it not to continue to grow outside of overt crises. Decadence can only represent a fetter on the growth of productive forces not their decline.

  2. The author of this (and other) works in progress, has set himself the task to confront the positions of the ICC with reality. In doing so, he is contributing to a necessary revision of the heroic effort of the ICC to synthesize the historical contributions of the Italian, German-Dutch, and other Communist Lefts. I can only confirm the urgent need for this work.

    Unfortunately, he does so in partly self-chosen isolation from other comrades and from the work of analyzing present reality, taking a position, and contributing to the actual class struggle, even with the present limited possibilities. He has defended this double isolation with reference to Lenin that withdrew from the life of his party to write Materialism and Empiriocriticism; an exceptionally bad example, and in no way justifying C.Mcl.’s retreat, that has reached now about five years. Unfortunately, the dangers of this isolation from class struggle are starting to become evident when his latest publications ignore the specter of generalizing inter-imperialist wars that are haunting the proletariat, from the Middle East to Indochina, and from the Caucasus to Libya.

    When the Communist International, following the efforts of mainly Lenin and Luxemburg to understand the causes of World Ware One, declared “The contradictions of the capitalist world system which were hidden deep within it have burst forth with tremendous force in a single huge explosion – the great imperialist world war” (Manifesto of the CI), this was understood by many in a mechanistic way as the end of the capitalist mode of production, because capitalism would not be able to restore itself. Indeed the national capitals that had suffered most from the war – Germany, Hungary, Italy, and Russia – completely collapsed, and so did their state power, followed by revolts and revolutions by the workers and bigger parts of a hungry and war-tired population. In Germany, this led the KAPD to theorize a ‘death crisis capitalism’ on the basis of Luxemburg’s theory of extra-capitalist markets. This theory found some evidence in the disastrous situation of the German economy but was contradicted by the post-war boom of the capitals that had won the war. In his American exile, Paul Mattick in full Depression elaborated a theory based on the tendential fall of the profit rate. Both theories could argue more or less correct that World War was the consequence of certain economic contradictions of capitalism.

    [It is an incontestable merit to have shown] that both the theory of Luxemburg and that of Mattick/Grossman were one-factor explanations when Marx in each of his analyses of several recessions underlined another factor as the main cause and that all factors are related to each other (La crise qui vient [pdf document available]). Linked to this C.Mcl. showed the reality of productive orders of capitalism as determining the continued survival of capitalism. However, in his aim to refute the ICC-version of the theory of decadence of capitalism, he had to follow its long-term view point of ‘before’ and ‘after 1914’. In doing so, the question of war, which is essential to the several theories of decadence, seems to have been lost.

    First, let’s have a look at the theory of decadence as the ICC sees it. Is it true that capitalism, like all productive orders historical modes of production before it, develops according to a curve with rise, summit, and downfall? As far as I know, Marx and Engels never said anything like that. What they did say was that communism contrary to productive relations in the past will have no exploitation and repression and that the proletariat as an exploited class will have no economic power to base its political struggle, as the bourgeoisie could do. Therefore in his First draft of Civil War in France, Marx underlines that the Commune – this finally discovered form of proletarian dictatorship – is only a form in which the liberation of labor will take place by the implementation of a proletarian economy. This is of course totally unacceptable for the ‘Leninists/Trotskyists’ in the ICC, and these kicked out, for they would have to accuse Marx of Stalinism.

    When capitalism is not overcome by the proletarian revolution, it will continue, finding new ways (‘productive orders’ in the words of C.Mcl.) and by a re-division of the world between imperialist powers (inter-imperialist wars) and the following redistribution of surplus-value extorted form the proletariat. Therefore it is important to analyze economic and demographic figures not as before and after 1914, but as well according to the ‘the real development’ of capital and labor: crisis, war, reconstruction, crisis. Finally, for any analysis that can explain for each generation of proletarians in each region of the world what they are living and what are the class forces of their situation, more details are needed than an overview of 250 years of world industrial capitalism or that of GB/UK. Latter can be symptomatic for the developments on the Continent, or even North-America. In this respect a good job has been done. But the world proletariat understood as the enormous masses that have lost their means of subsistence without all finding work in capitalism, from Iraq to Chile and from Pennsylvania to South Africa, cannot be satisfied with an analysis that centers around the old industrial centers of world capitalism. And neither the unemployed coal miners and steelworkers in the USA will be satisfied with the statement that there has been no net loss of jobs by the transfer of their industries to Asia.

    F.C. 13-11-2020

  3. In terms of CM’s piece, ive reread some and it appears i may well have misunderstood the first part of the intro and  i can now see in the section on Brake on the Productive Forces that there is agreement with the idea of periods of ascendancy and decline in capitalism.  Im afraid i got that wrong but i still cannot find anywhere that actually agrees that 1914 was a turning point and that capitalism is in decadence now.  In fact items 2 – 6 of the introduction are full of criticisms of the ICCs positions about the political consequences of decadence eg reformism, leftism, national question, national development, identity politics, workers councils.

    If i am misunderstanding this, please let me know, but my interpretation of the text is that it must be saying capitalism is still in its ascendant period?

    I would also like to question the statistics on the rate of exploitation during the 20th Century. These statistics are just based on the UK and are therefore not representative of the world economy as a whole against which the UK has declined significantly. Whilst I can see that rate of exploitation would vary on against factors eg stagnation of the 30s and the increased wage levels and population levels will both tend to reduce the rate of exploitation as is shown in the chart, I am wary about the overall idea that it has reduced over the 20th Century. Do these figures represent the weakness of the UK relative to others ie lack of investment? The undoubted advances in technology over the century would seem to complement the increased figures for increased GDP and increased population that are mentioned elsewhere but I would have thought exploitation would overall increase therefore just as the rate of profit falls because C generally increases at a faster rate than V. Anyway is there a clarification for these figures please?

    I cant comment to much on FC’s contribution as there has clearly been an ongoing discussion that i dont know about but i think its wrong to discard the view of a period of decline for capitalism based on purely economic issues.

    As I’m inclined to think that the term decadence has come from Luxemburg’s analysis that economic decay must happen after its ascendant period has come to an end, I am now more inclined to use the term obsolescence but i do not treat this is as overly important. I keep using both terms. 

    I would argue along with most that imperialism and the 1914 war marked the turning point for capitalism.  It marked the end of the ascendant period and the onset of decadence/obsolescence.  My view is that none of the economic theories of capitalist crisis can be used to explain this change, they just dont make sense as an explanation of this change in period. 

    I think that the changes in that period are political and social and this is why so many agree on 1914 as the change in period because of the onset of imperialism, the completion of the world market and the military confrontations this creates, the emergence of state capitalism to take control of national economies and international relations and i would agree with those including Luxemburg who saw this as a period of wars and revolutions – although clearly that has not worked out as permanent world wars or permanent revolutions. It has also been a period of increased exploitation of the working class. These are signs of capitalism’s decline, ie of the social relations being a fetter on the productive forces!  The issue is what could have been done with the productive forces if we didn’t have capitalism not of permanent crisis or stagnation or saturated markets or even low rate of profit (as capital seems to adapt by increasing in size)

    I believe that it is luxemburg’s theory of accumulation, and the early ICC positions on this topic, that got us all believing incorrectly that decadence meant economic stagnation and decline.

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