FASCISM AND SOCIAL REVOLUTION

CHAPTER II

THE END OF STABILISATION

THE technical and economic situation described in the previous chapter finds its social and political expression in the storms of the present epoch, in the world war, in the revolutionary struggles, in the world economic crisis, in the advance to renewed world war and in Fascism.

The objective conditions for the social revolution were ripe already from the beginning of the period of imperialism, and more particularly since the opening of the general crisis of capitalism in Œ 1914.

But the living human factor was not yet ready. The minds of men were still dominated by the conceptions of the past epoch. The bursting of the contradictions in the world war and after broke on the majority of men like a natural catastrophe. The first aim was widely proclaimed on all sides to resume the broken thread of pre-war continuity.

The proletariat in the leading capitalist countries, although advancing to social revolution, was not yet strong enough, not conscious enough, not organized enough, to overthrow the rule of the capitalist class. The revolts of the proletariat after the war, although drawing close to success and profoundly transforming the political situation, were finally defeated in all countries outside Russia.

The capitalist class, having overcome the immediate menace to its rule, set itself the aim to restore the shaken mechanism of capitalist production and exchange, to return to "pre-war,, or "normalcy."

The proletariat, following the leadership of Social Democracy, after the defeat of the revolution, sought to win improved conditions within the capitalist restoration.

On this basis was built up the capitalist restoration or temporary "stabilisation" of 1923-9. The illusory character of this basis, which sought to resurrect the vanished conditions of the old pre- war capitalism, was not at first realised by any save the Marxists.

THE LAST ATTEMPT TO RESTORE PRE-WAR CAPITALISM 47

Only when a new cycle of capitalism on this basis had resulted with extreme speed in a more intense crisis than ever before, shattering one by one all the pillars of "stabilisation," did the recognition begin to become universal on all sides that the old conditions were passed beyond resurrection, and that fundamental issues of social, economic and political Organisation would have to be faced.

From this point stabilisation ends, and a transformation begins to develop in the whole of capitalist policy and in the consciousness of the proletariat. Social Democracy, which had shared in the boom of capitalist restoration, goes through a series of inner crises, and weakens before Communism. Fascism which had previously developed only in an experimental stage in a secondary capitalist Œ country, now comes to the front as a world factor, dominating directly a major capitalist country, as well as in greater or less degree a whole series of other countries, and revealing itself as the most typical expression of modern capitalist policy.

1. The Last Attempt to Restore Pre-war Capitalism.

The basis of the attempted capitalist restoration after the war was the defeat of the proletarian revolution outside Russia.

To this objective the principal concentration of world capitalist policy was directed in the period immediately after the war. This primary preoccupation was true, not only of the governments of Central Europe, where the revolution came closest to victory, but above all of the governments which held the world leadership of capitalism, of Britain, France and the United States. Thus Hoover declared in 192 1

The whole of American policies during the liquidation of the Armistice was to contribute everything it could to prevent Europe from going Bolshevik or being overrun by their armies.

(Hoover, letter to 0. Garrison Villard, 1921, reprinted in the New York Nation, December 28, 1932.)

In the same way, for Britain, Sir William Goode, British Director of Relief in Central Europe, wrote on "European Reconstruction" in 1925, quoting from his official report in

1920:

Food was practically the only basis on which the Governments of the hastily created States could be maintained in power. . . . Half

48 FASCISM AND SOCIAL REVOLUTION

of Europe had hovered on the brink of Bolshevism. If it had not been for the 1'37 million in relief credits granted to Central and Eastern Europe between 1919 and 1921, it would have been imposisible to provide food and coal and the sea and land transport for them. Without food and coal and transport, Austria and probably several other countries would have gone the way of Russia. . . . Two and a half years after the Armistice the back of Bolshevism in Central Europe had been broken, largely by relief credits. . . . The expenditure of L137 million was probably one of the best international investments from a financial and political point of view ever recorded in history.

(Sir William Goode, Times, October 14, 192 5.) Œ Subsequently, the Dawes Plan, Locarno and the flow of American credits and loans to Europe carried forward the same process of capitalist restoration at a higher stage.

What was the basis of the defeat of the proletarian revolution and the rebuilding of capitalism in the years immediately following the war? Fascism at this time did not exist as a factor save in Italy. The main weapons of capitalism were threefold.

The first was direct civil war and counter-revolution-the wars of intervention against Russia, the White Terror in Finland, Hungary, Poland, etc., the military aid to Poland in 1920, the permission of the counter-revolutionary military organisations, officers' corps, Orgesch, etc., in Germany (which helped to build up the basis of the subsequent Fascism in Germany), and the like. This was of decisive importance at the immediate critical points of struggle, but it could not provide the main basis, as it had no mass support and could only build on the narrow ranks of the ex-officers and direct reactionary classes; the failure of the Kapp Putsch demonstrated this weakness. It was only later that Fascism was to find the way towards a temporary solution of the problem of the combination of counter-revolution with winning a wide measure of mass support.

The second weapon was Social Democracy and the granting of temporary concessions to the workers. Social Democracy because of its mass basis, was the main weapon of capitalism in the years immediately after the war for the rebuilding of capitalism. The advance of the workers to the struggle for power, the immediate onrush of which after the war was too powerful to be successfully defeated in direct battle, was circumvented by a strategical ruse-the placing of Social

THE LAST ATTEMPT TO RESTORE PRE-WAR CAPITALISM 49

Democratic governments, presidents and ministers in office, thus appearing to surrender to the workers the seats of power, while the realities of power remained with capitalism. Only in this way, by the alliance with Social Democracy, by hiding capitalism under a Social Democratic front, was the capitalist state saved after the war. Social Democracy united with capitalism to defeat the workers' revolution. A great show of concessions to the workers was made; promises were lavishly broadcast; Socialisation Commissions, Nationalisation Commissions, Sankey Commissions were set up; wages were increased and hours shortened.*

Subsequently, as soon as the power of capitalism was thus successfully re-established, a reverse action took place. The concessions were withdrawn; inflation wiped them out in the Œ European countries; the capitalist offensive drove back the workers even below pre-war levels; the Social Democrats, while still occasionally used as governments, were increasingly relegated to the role of "opposition." At the same time, the consequent growth of disillusionment of the workers with the whole process and with Social Democracy led to the necessity of capitalism discovering a further basis of power, and the development of Fascism as the parallel instrument of capitalism alongside Social Democracy. But this development only took place on a wider scale as the stabilisation began to break down in the world economic crisis.

The third weapon of capitalism in the re-establishment of its power and of its economic system was the drawing on the colossal reserves of the still unshaken centre of world capitalism -American capitalism. American loans and credits poured into Europe to bolster up and rebuild the shaken fabric of European capitalism. On this basis the restoration of the gold

*The character of this period was revealingly described, with reference to the

Sankey Coal Commission, by Evan Williams, President of the Mining Association, in his evidence before the Mining Court of Inquiry in 1924:

"It was an atmosphere charged with the emotions of the time in which the Commission sat. There were fears throughout the whole country as to what might happen, and it was felt that the miners' position ought to be met in order to maintain peace. That was the atmosphere of the Commission. The atmos- phere was an unreal one altogether, and conclusions were arrived at without any real foundation. Two of my colleagues, mineowners and myself," went on Mr. Williams, with 9. smile, "actually signed a report which recommended a reduc- tion in the hours of work in mines." (Daily Herald report, April 26, 1924.) The "smile" is the comment of capitalism on its own ruse, after the ruse has succeeded.

50 FASCISM AND SOCIAL REVOLUTION

standard took place. The triumph of stabilisation was celebrated by the bankers of the world. It was obvious that this basis was a false one, and would involve a boomerang outcome, as was predicted at the time by Marxists.*

On this basis was built the restoration of capitalism after the war, and subsequent upward movement and boom of 192 7-9. Œ It is evident to all to-day that this basis of stabilisation was a hollow and rotten one.

In the first place, the direct counter-revolutionary fighting Organisation was still built on the narrow circle of privileged strata and their immediate range of influence, and bad no wider mass basis. The masses were still only reached by Social Democracy or Communism.

Second, the weapon of Social Democracy was more and more blunted by each successive use. Widespread disillusionment grew with the failure of Social Democracy, not only to lead any fight for socialism, but even to fight to maintain existing conditions or defend the daily interests of the workers. The more and more desperate use of ever extending disciplinary and coercive measures by the Social Democratic leadership to maintain their power could not check this growing discontent. In the European countries as a whole during this period the vote of Social Democracy declined, and that of Communism increased.

Third, the American Colossus, on whose support and subsidies the restoration of capitalism was built up, was a colossus with feet of clay. As rapid as was its expansion and apparent prosperity and power in the war and post-war period, no less rapid was the bursting of the contradictions of its capitalist structure into a more gigantic economic crisis than any previously experienced in any country of capitalism. But just as American capitalism had provided the economic base for the

* See, for example, the Labour Monthly for February 1925, on "The Restoration of Europe," and for March 1025, on "The Gold Standard," where it was predicted that, as soon as the flow of new loans and credits should begin to dry up, and be exceeded by the necessary return movement of interest and amortisation, requiring an enormous expansion of European exports in the overcrowded world market, this would necessarily precipitate a new crisis, leading to the shattering of the gold standard. To-day this analysis, made in 1925, and fully realised six years later, provides an instructive comparison of the effectiveness of the Marxist line in contrast to the complacent contemporary statements during that period of all the leaders and professorial experts of capitalism on the success of stabilisation and of the return to the gold standard.

THE LAST ATTEMPT TO RESTORE PRE-WAR CAPITALISM 51

rebuilding of capitalism throughout the world, so the American crash brought with it the crash of the whole structure of stabilisation throughout the world.

Fourth, the very success for the moment of stabilisation of rationalisation, of the enormous expansion of the productive structure, brought with it the intensification of all the problems and conflicts of capitalism, and only resulted in the more rapid and complete shipwreck. The gigantic productive mechanism required a no less gigantic expansion of the market; unless it could maintain its mass output at full working, its very much heavier maintenance costs made it actually less economical than more primitive technical forms.

The presuppositions of the attempted restoration and stabilisation of capitalism after the war had been the return to the conditions of pre- war capitalism (which had in reality already been undergoing far- reaching modifications and transformations already before the war), to the free market regulation of supply and demand, to the automatic gold standard, etc. But in fact monopoly capitalism had already before the war transformed these conditions of classic capitalism beyond recognition, and led to the growing disequilibrium which found expression in the war. After the war, monopoly capitalism was enormously further developed, not only in the scale of the trusts and in the concentration of the financial oligarchies, but in the ever closer unification of the financial oligarchies and the State machine, in the growing State economic intervention and control, in the utilisation of direct political means for economic ends (reparations, debts, loan policies, colonial policies), and the rising network of tariffs, subsidies, quotas, licenses, and all forms of restrictions to maintain the closed monopolist areas. The whole resulting structure was top- heavy. The crash was inevitable. Capitalism under these conditions was more and more revealing itself, no longer as a "working system," but as a clogging fetter on production and exchange, with vast concentrations of conflicting and irresponsible power at strategic points, which could rock the whole system.

When the crash came with the world economic crisis, the conditions of monopoly capitalism still further prevented the "normal" working out of the crisis, and intensified and prolonged the crisis. The great capitalist monopolies were able to maintain relatively high profits in the midst of the depression,

52 FASCISM AND SOCIAL REVOLUTION Œ by artificial measures of restriction, by maintaining monopoly prices above the general price-level, and by passing on the burden of the depression to the working masses, to the petitbourgeoisie and to the colonial peoples. The prices of cartellised goods in Germany in the beginning of 1933 had only fallen 2 0 per cent. below the level of the first half of 19 2 9, whereas the price of non- cartellised goods had fallen 55 per cent. (League of Nations World Production and Prices, p. 109). The prices of manufactured goods in the imperialist countries were maintained above the pre- war level, at the same time as the prices of the raw-material products of the colonial peoples were depressed to an average of half the pre-war level. But this meant to intensify the contradictions at the root of the crisis. In this way the workings of monopoly capitalism hindered the "normal" solution of the crisis after the methods of "healthy" capitalism.

Thus it became more and more evident, both from the circumstances leading to the crisis, and from the further development of the crisis, that the "restoration of capitalism" of the pre-war type was no longer possible; that its breakdown was not due to any particular, isolated, accidental causes (reparations, debts, gold supply and distribution, etc., as was at first suggested), but was inherent in the whole nature of the attempt in relation to modern conditions of production and economic Organisation; and that in fact, as began to become increasingly recognised in informed capitalist quarters, the whole attempt at "restoration" during the nineteen-twenties had been in reality a chase after an illusion.

As the recognition of this begins to spread within the capitalist world, the conscious direction of capitalist policy begins to change more and more openly-the decisive point of change from the old to the new may be marked in 1933 with the advent of Roosevelt in the United States, with the advent of Hitler in Germany, and with the breakdown of the World Economic Conference-and moves to new types of policy in accordance with the changed conditions, and to corresponding new types of economic and political Organisation.

2. The Collapse of the Illusions of the Stabilisation Period.

The short-lived "stabilisation" and upward movement of capitalism in the nineteen-twenties gave rise to a host of myths

COLLAPSE OF THE ILLUSIONS 53

and illusions as to the possibilities of permanent capitalist Œ prosperity, of a new era of harmonious capitalist advance, of "organised capitalism," of "super-capitalism," of improving standards for all without the need of class struggle or revolution.

These illusions were important at the time as the means by which capitalism sought to maintain its hold on the masses and to counter the issue of the social revolution, which concretely confronted the world since 1917.

The collapse of these illusions with the world economic crisis was of decisive importance in the development of capitalist ideology to Fascism.

The main forms taken by these illusions were twofold, both closely connected.

The first was the myth of American Capitalism as a new type of capitalism, which had overcome the contradictions and crises of the old capitalism, which had "ironed out the trade cycle," and found the key to permanent prosperity and the abolition of poverty through continuously rising standards of the workers alongside continuously rising profits. American Capitalism was held out as the triumphant refutation of Communism. "Ford versus Marx" was the common popularisation of this theme.

The second, closely connected with the first, was the conception of "Organised Capitalism" as the new type of capitalism developing throughout the world, and building up under capitalist leadership a rational productive world order, which would eliminate the evils, poverty and discords of the old nineteenth- century capitalism and replace them by unparallelled universal prosperity. This conception found its final expression in "Ultra- Imperialism," or the conception that capitalist development was working towards a unified world capitalist order, eliminating war and the divisions of imperialism under the beneficent and pacific control of international finance.

There is no doubt that these illusions were to some extent shared by a portion of the leaders of capitalism during this period, who were dazzled by the apparent rapid recovery from the war and the unparallelled advance in production, trade and profits, and looked forward to a period of ever-growing prosperity. Thus President Hoover declared on July 2 7, 192 8: "The outlook of the world to-day is for the greatest era of commercial expansion in history." And again, on August II,

54 FASCISM AND SOCIAL REVOLUTION Œ 1928, in a speech accepting the Republican renomination for President:

Unemployment in the sense of distress is widely disappearing. We in America to-day are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us. We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years, and we shall soon with the help of God be within sight of the day when poverty will be banished from this nation.

(New York Nation, June 15, 1932.)

Similarly Keynes in 1925, addressing the Liberal Summer School under the title, "Am I a Liberal?" distinguished three periods of economic development: the first, of scarcity, up to the fifteenth or sixteenth centuries; the second of abundance, represented by the nineteenth century; and the third, of it stabilisation," now opening:

But we are now entering on a third era, which Professor Commons calls the period of stabilisation, and truly characterises as "the actual alternative to Marx's Communis(Keynes Am I a Liberal? 1925, reprinted in Essays in Persuasion, 1931.)

The principal channel of these illusions throughout Western Europe and America was Social Democracy. Through Social Democracy these illusions were transmitted to the masses. The "American Model" and "Ford versus Marx" became the battle-cry of Social Democracy and the Second International in the fight against Communism. Government-paid missions of abour leaders were sent from Britain, Germany and other countries to the United States to bring back the new gospel from the Holy Land of Capitalism. It is unnecessary now to repeat (although it would be profitable for those who come newly to these questions to study this record of capitalist and social democratic illusion and ignorance on the basic questions of our epoch) the more fantastic utterances of all the principal Labour Party, trade union and social democratic leaders and theorists on the American Miracle and the triumph of capitalism over Marxism.*

* Reference may be made to the present writer's Socialism and the Living Wage, published in 1927, for a collection of some of the typical British Labour expressions - Labour Party, trade union and Independent Labour Party-in adoration of the American Mammon, Fordism, the New Capitalist Era, Rationalisation, etc. It may be noted that Labour Press reviews of this book, which in 1927 exposed the clay feet and impending crash of the American Colossus, rejected its reasoning on the grounds that it was based on the "obsolete" theories of Marxism, which only had reference to nineteenth-century capitalism and were refuted by modern capitalism, as demonstrated in America. Œ

COLLAPSE OF THE ILLUSIONS 55

What is important is that capitalism in this period, through Social Democracy, was able to build up a powerful propaganda in the working class of expectation of a new capitalist era, of rising prosperity, of the unshakable strength of capitalism, and of the refutation of revolutionary Marxism. The entire machine of reformist socialism, in control of the working class organisations, spread this propaganda.

Thus Snowden on behalf of the Labour Party declared:

He did not agree with the statement of some of their socialist friends that the capitalist system was obviously breaking down. He believed that we were to-day in a position very much like the industrial revolution that took place about 120 years ago. Then the steam age was ushered in.

Now we are entering in, I believe, the new age of electricity and an age of chemistry. Wide-awake capitalists are seeing this, and they are taking steps to appropriate for private profit and private ownership the exploitation of these great forces. If they succeed in doing that, then the capitalist system will be given a new and long and more powerful lease of life.

(Snowden, Daily Herald report, April 17, 1926.) Citrine, on behalf of the Trades Union Congress, defending the policy of "Mondism" or alliance with capitalism, explained that the policy of co-operation with the employers

aims at using the organised powers of the workers to promote effective co-operation in developing more effective less wasteful methods of production, eliminating unnecessary friction and unavoidable conflict in order to increase the wealth produced and provide a steady rising standard of social life and continuously improving conditions of employment for the workers.

(Citrine, in the Labour Magazine, October 1927.) In this way the expectation of "a new and long and more powerful lease of life" of capitalism, and of "a steady rising standard of social life and continuously improving conditions of employment for the workers" within capitalism was preached by Social Democracy.

Similarly the theorist of German trade unionism, Tarnov, wrote that Marxism was now refuted by modern capitalism:

We must distinguish two epochs in the development of capitalism; Œ

56 FASCISM AND SOCIAL REVOLUTION

the epoch of British capitalism, which was limited in its possibilities of expansion, and the epoch of American capitalism, which on the basis of the latest technical advances can unendingly expand and develop.

For the first epoch, Marx and Lassalle were typical. They maintained that wages are determined by certain economic laws, that they depend on the cost of labour-power, etc. For the second epoch, Ford is typical. He proved that capitalism can prosper, while the worker need not at the same time remain poor.

Along the same lines another leading theorist of German trade unionism, Naphthali, wrote:

Cyclical development, under which there was a regular succession of prosperity and crisis, of which Marx and Engels wrote, applies to the period of early capitalism.

A younger theorist of the Labour Party wrote in a book appearing as late as 193 1:

There are grounds for thinking that the situation is changing for the good. The wave of world revolution, on which the advance of Communism is depending, has subsided. Capitalism has been suc- cessful up to a point in stabilising itself-though at the price of admitting into its structure socialist elements which will ultimately supersede it. . . . There is a good deal in the classic Communist pic- ture of a world in the grip of ineluctable conflict that is out of date. (A. L. Rowse, Politics and the Younger Generation, 1931, P. 294.)

This writer argued further that the most modern capitalist monopolies were showing an enlightened and benevolent tendency of scientific world Organisation which held out the prospect of an ultimate "synthesis of common aims" with socialism. Unfortunately for the writer, he chose as his example of this progressive tendency of modern monopolist capitalism and potential ally with socialism- Kreuger.

It is noteworthy that one of the greatest and most progressive of modern finance corporations, the Swedish Kreuger and Toll Co., in a brilliant review of world conditions comes to conclusions not dissimilar. (A quotation from their report follows):

When a great capitalist concern speaks in these terms, one seems to Œ see a glimpse of the future in which the existing conflict between socialism and it is resolved in a synthesis of common aims.

(Ibid., pp. 46-7.)

The Preface of this book was dated 29 July, 1931. The collapse

AFTER TM COLLAPSE

and exposure of Kreuger and his swindles took place within eight months. This writer for the "younger generation" was belated in his repetition of social democratic propaganda of a preceding period, which had already reached its climax and completed its main currency in 19 2 7-9.

What was the effect of this dominant line of propaganda and policy of Social Democracy during the short-lived boom period of post-war capitalism?

First, it completely concealed the real character of post-war capitalism, the real issues of the period, and the real struggle confronting them, for the working class. Thus the workers were left confused and unprepared for the gigantic issues which faced them, and which the crisis laid bare.

Second, the subsequent collapse of all these theories and of the entire line of leadership with the advent of the world economic crisis produced a tremendous disillusionment throughout the petit- bourgeoisie and the working class who had followed the promises of Social Democracy. All the hopes which had been built up collapsed.

Thus the path was laid open for the advance of Fascism in the petit-bourgeoisie and in certain strata of the working class.

3. After the Collapse.

At first the full extent of the collapse involved in the world economic crisis was not understood by the leaders of capitalism. It was attempted at first to regard the crash of the autumn of 1929 as a crisis of speculation on the American Stock Exchange, unrelated to the general economic situation.

On 29 October, 1929, President Hoover affirmed that "the fundamental business of the country is on a sound and prosperous basis," The Assistant Secretary of Commerce, Dr. Klein, explained that "a decline in security prices does not greatly affect the buying power of the community . . . the industrial and Œ commercial structure of the nation is sound." On November 24 Dr. Klein stated that American business was

"healthy and vigorous and promises to be more so." On December 3 Hoover announced: "We have re-established confidence. . . . A very large degree of unemployment which would otherwise have occurred has been prevented." On January 1, 1930, the Secretary of the Treasury, Mellon, prophesied: "I have every confidence that there will be a revival

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of activity in the spring." On January 10 Dr. Klein prophesied: "I believe that the turn will come about March or April." On March 8 Hoover prophesied that the crisis would be over in sixty days. On May 19, the Secretary of State, Lamont, prophesied that "normal conditions should be restored in two or three months." On May 1, 193o, Hoover announced: "We have now passed the worst."

And so on, continuously, right into 1932. A similar list could be compiled for the Labour Government and National Government in Britain.

As late as 1930 appeared the well-known report of the Hoover Committee on "Recent Economic Changes," still celebrating the American Miracle and the "economic balance" achieved and concluding: "Our situation is fortunate, our momentum is remarkable." And indeed had not all the professors proved that the "prosperity" must be permanent? Thus Professor Carver, of Harvard, answering the question "How long will this diffusion of prosperity last?" replied:

There is absolutely no reason why the widely diffused prosperity which we are now witnessing should not permanently increase.

(Professor N. Carver, This Economic World, 1928, P. 396.)

Similarly another of the professors of economics had declared:

There is no fundamental defect in the organisation of the industrial system which would prevent business enterprises being operated constantly at a profit. Under the present industrial system, it is not only desirable to have, and to maintain constantly, profits, industrial progress and prosperity, but it is possible to attain this goal.

(Professor A. B. Adams, Progress, Profits and Prosperity, 19 2 7

Very different was the tone of President Hoover's next Research Committee into Modem Trends, which reported in the end of 1932, Œ and found that:

In the best years millions of families are limited to meagre living. Unless there is a speeding up of social inventions or a slowing down of mechanical invention, grave mal-adjustments are certain.

The American standard of living for the near future must decline because of lower wages caused by unemployment.

As the deeper and more lasting character of the crisis began to be recognised, the attempt began to be made to seek for some specific major cause, such as reparations and debts, the gold supply, tariffs, etc. These questions came to the front, as

AFTER THE COLLAPSE 59

the intensity of the crisis began to centre in Europe in 1931, with the Austrian bank crash and the inability of German debts payments. In the summer of 1931 the Hoover Moratorium postponed all reparations and debt payments for one year. This did not prevent the collapse of the pound sterling in the autumn. In the summer of the following year the Lausanne settlement ended reparations.

With the collapse of the Dawes and Young Plans, and with the collapse of the gold standard in Britain and other countries, the two main pillars of the stabilisation period bad fallen.

But the ending of reparations and debts payments did not mitigate the crisis. On the contrary, it grew more intense in 1932, thus demonstrating that there were deeper factors at work. A panic tone now began to pervade capitalist expression in 1932. Already by the end of 1931 the economist, Sir George Paish, bad prophesied that "nothing can prevent a complete breakdown within the next two months" (Manchester Guardian, December 10, 1931). In May 1932, the Conservative politician, L. S. Amery, prophesied: "We are likely to have a complete collapse in Europe within the next few months" (Times, May 28, 1932). In the same month Lloyd George declared at Llandudno: "Without some action international trade would collapse, and there would be famine in the midst of plenty. Russia with vast resources and a population schooled to hardship, might escape; but Europe was on the way to perish" (Manchester Guardian Weekly, May 27, 1932). In October 1932, the Governor of the Bank of England, Montagu Norman, made his famous declaration that "the difficulties are so vast, the forces are so unlimited, precedents are so lacking, that I approach the whole subject in ignorance and in humility. It is too great for me. . . . I will admit that for the moment the way, to me, is not clear" (Times, October 21, 1932). And his possibly apocryphal alleged Œ declaration to the Governor of the Bank of France was widely reported in the Press to have prophesied collapse of the capitalist system within twelve months.

The expectations of the bourgeoisie, in their moment of panic, of a sudden automatic collapse of capitalism were no more correctly founded than their previous expectations of a rapid automatic recovery. However unlimited the destruction that capitalism in decay and in crisis can cause, its final collapse can only take place through the action of the proletariat in

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overthrowing it. But in these expressions of the bourgeoisie we can see the ideological reflection of the end of stabilisation, and the preparation of the ground for the transition to the desperate measures of Fascism.

The subsequent upward movement of 1933 and 1934, although limited, revived new hopes of "recovery." But in fact the deeper changes and problems only became more sharply laid bare by the peculiar character of this limited upward movement. The crisis had passed from the lowest point of 1932 to the phase of depression which should normally mark the transition to a new cycle and advance to a new boom. In fact, however, the development of this upward movement on the basis of the general crisis of capitalism enormously complicated the process and produced a situation without parallel in the old "normal" capitalism. The limited upward movement of production, and more rapid upward movement of profits, still left a heavy proportion of the means of production unused, still left mass unemployment in 0 the leading countries, and was not accompanied by any corresponding upward movement of world trade; the dislocation of international trade, currency and credit relations continued in even intensified forms, with increasing State regulatory measures, discriminations and trade war; the economy of each imperialist Power was transformed more and more towards a type of war basis. In this situation the "limits of recovery" became widely recognised also by the leaders and spokesmen of the bourgeoisie; all the contradictions of capitalism, both within each country and internationally, were laid bare as sharpened and not diminished in the new stage, which began to reveal itself more and more, not as the herald of the transition to economic recovery, but as the herald of the transition to new tension and war.

Already in the third and fourth years of the crisis, that is, as it had approached its lowest point, and as all the attempted remedies and hopes of recovery had proved deceptive, attention had begun Œ to be increasingly concerned on the deeper issues of the whole advance of technique and its obvious outstripping of the existing forms of social Organisation. The expression "technological unemployment" had found increasing currency during this period as a seemingly scientific explanation which could be used to account for everything without raising the

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sharp problem of property relations. Typical of this period was the short-lived episode of "technocracy," which was boomed throughout the world capitalist Press during the last quarter of 1932 and the beginning of 1933. The advocates of "technocracy" (whose leaders were in reality former camp-followers of the labour movement and had drawn such inspiration as they had from incompletely digested crumbs from the table of Marxism) brought a wealth of evidence to show the advance of productive power and its conflict with existing social forms. But they drew therefrom the incorrect conclusion that the problem is consequently a technical problem, to be solved under the expert guidance of technicians through new utopian forms of commodity valuation (a la Proudhon) within existing property society. Thus, while their evidence of the conflict of the advance of technique with existing society was based on familiar and in the main indisputable facts, they remained economically and politically at sea. They failed to understand that the social Organisation of technique is incompatible with the capitalist class monopoly in the means of production, and that consequently the basic problem of the present period is not a technical problem, but a political problem-the breaking of the capitalist class monopoly by the power of the working class

The minds and thoughts of the leaders of capitalism, as the development of the crisis was making increasingly clear the basic contradictions confronting them and the basic conflict between the advance of technique and the maintenance of classsociety, were moving in a different direction. They were drawing with increasing clearness and consciousness the necessary conclusions for the maintenance of class-society and the restriction of the advance of technique. The old conceptions of the "restoration" of capitalism of the pre-war pattern, of "international capitalism," of all the traditional theories of the older schools of capitalist economists, who wrung their hands at the new developments, were becoming more and more clearly and consciously abandoned. In their place came to the front the conceptions of so-called "national planning," of the closed monopolist area, of state economic control, of the restriction of production, of the building of rigidly controlled, confined, static class-societies with suppression of the class Œ struggle, and of war as an inevitable near necessity.