The Economic Boom and the International Labor Movement

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Throughout Europe the labor movement is showing signs of a new period of revolutionary development. Though it cannot definitely be stated whether or not we are approaching the decisive conflict, there can be not doubt that the revolutionary curve is steadily going upward.

Capitalism in Europe passed its most critical period in the year immediately following the war. The acme of the revolutionary struggle in Italy (September 1920) was reached at a time when Germany, Great Britain and France had already overcome the serious stages of the political crisis. What took place in Germany in March last was but the belated echo of a revolutionary epoch passed by, and not the prelude to new one. Having strengthened its first positions, Capitalism and its various governments adopted offensive measures in the beginning of 1920, thus forcing the labor movement into the defensive. The Communist Parties became convinced that they were but a small minority, and they appear at times as if isolated from the majority of the working class. This state of affairs resulted in what commonly called “ the crisis” in the Third International. At present, however, – as has been maintained before – a change for the better is taking place. The revolutionary attack of Labor is developing; the perspectives of the struggle are widening.

The cause for this change are various and complicated. The basis for it, however, is to be found in the sharp ups and downs of world economics in which is reflected capitalist development during the post-war period.

The period most fraught with danger for the European bourgeoisie was that of demobilization, when the disillusioned soldiers returned and had to be fitted into the process of production. The first few months after the conclusion of the war created great difficulties which furthered revolutionary development. But the ruling classes regained their courage and inaugurated both a financial and political policy of considerable magnitude, intended to overcome the demobilization crisis. The defence budgets of the various states retained the magnitude of war budgets. Many enterprises were kept going by artificial means. Many orders were effected merely with the view of preventing unemployment. Flats were rented for prices hardly sufficient to cover the outlays for repairs. Various governments included in their budgets subsidies with which the prices of imported meat and grain were held at a certain level. In other words: the state’s indebtedness was increased, the currency inflated, the very basis of economy undermined – all for politicals ends: to prolong the deceptive war time boom in trade and industry. These measures provided the captains of industry with the possibility of perfecting the technical apparatus of their main enterprises and of adapting them to the purposes of peace industry.

But the artificial boom found its limits very quickly in the general impoverishment Industries producing necessities of life, were confronted with an extraordinarily limited market, which created the first wall of. overproduction and retarded the further development of the large industries. The crisis assumed a tremendous extent and tremendous forms. Incepted in the United States in Spring 1919, the crisis crossed the ocean, reached Europe in the middle of 1920 and thoroughly enveloped it by May 1921.

Thus we see that when the open post-war trade and industrial crisis commenced to develop (after one year of artificial boom) the first attacks of Labor against bourgeois society were nearing their end. The bourgeois warded off these attacks. Partly by means of persuasion and compromise, partly by employing force. That first proletarian onslaught was rather chaotic, devoid of any definite political aims and ideas, without a well defined plan, without leadership. Its development and its outcome proved to Labor that a change of its position within bourgeois society is rather more difficult to achieve than it appeared to be during the first months of the post-war protests. Labor’s uniformity in its chaotic state of revolutionary sentiment disappeared rather quickly. Internal differences were beginning to make themselves felt. The more active section of Labor, the parts least bound up with earlier traditions, united in the Communist Parties, being through experience convinced of the necessity for clearly perceiving one’s aims and also for organizational centralization. The more conservative and less class-conscious elements declined, for the time being, to consider revolutionary aims and methods. The labor bureaucracy promptly utilized that state of affairs and regained its lost positions.

The trade and industrial crisis in Spring and Summer 1920 broke out, as mentioned before, at a time when both political and psychological reaction had gained a foothold among the workers. The crisis has undoubtedly increased the discontent of large sections of Labor, it has even at some places resulted in stormy manifestations of that discontent. But after the defeat in 1919 and the internal differences resulting from that defeat, the economic crisis in itself was no longer able to give the movement the necessary unity and make of it a decisive revolutionary onslaught.

From this we see that the crisis does not influence the labor movement in as regular a manner as it appears to some people. The political effects of a crisis (not its depth only, but its tendency as well) are determined by the entire political situation and the events preceding and accompanying the crisis, and above all by the previous successes and failures of Labor itself. In some cases a crisis can be instrumental in rousing the revolutionary activity of the workers, in others it is apt to deaden the militant spirits of the proletariat and, if it lasts very long and demands too many sacrifices of Labor, to weaken not only the offensive energies of the workers, but the defensive as well, and that in an extraordinary degree.

Now, if this line of thought be following and completed, the following opinion can be arrived at:

If the economic crisis with its widespread unemployment and general insecurity had set in immediately after the war, the revolutionary crisis within bourgeois society would have assumed a decidedly more powerful and fundamental character. In order to prevent this, the bourgeois governments endeavored, by means of an artificial boom, to weaken the revolutionary crisis. That means that the inevitable has been postponed for a year and a half at the expense of the still further destruction of both the financial and economic apparatus of capitalism. Though the crisis gained thus in depth and intensity, it did not coincide with the stormy wave caused by demobilization, but with a time of defeat, of a settling of accounts, when in one camp the masses had to start anew at the very beginning, and in the other were disappointed – all of which was the cause of many splits. The revolutionary energies of Labor were directed inward and found expression in the formation of Communist parties which have become powerful factors in Germany and France. Capitalism, which in 1921 artificially prolonged the unreal boom, exploited, once the immediate danger was avoided, the resulting crisis in order to deprive Labor of its gains (the 8-hour day, increases in wages) which in self-defense it had granted during the preceding period. Labor, though it defended its positions, had to yield in the end. The ideas of conquest of power, of the Soviet system, of a Socialist revolution, naturally receded at a time when Labor was compelled to fight against a reduction of wages, and not always successfully at that.

In countries where the economic crisis did not assume the forms of overproduction and widespread unemployment, but another, even more serious form, that of selling out the assets of the country and lowering the standard of living of the workers (as for instance in Germany), the energy of Labor expended in increasing wages (while the buying power of the currency was steadily decreasing) can be likened to a man chasing his own shadow. The German capitalists, together with their brothers in other countries, went over to the offensive. The workers retreated in disorder.

In a situation such as that, the March occurrences took place in Germany. The explanation of those events is that the young Communist Party, alarmed at the apparent retreat of the labor movement, made a desperate attempt at utilizing the action of a group of militant proletarians to “electrify” Labor, and, if possible, to develop the action into a decisive battle.

The Third Congress of the Communist International met with the impressions of the March action still fresh in the minds of the delegates. After careful examination the Congress realized the danger resulting from a clash between the “Offensive Theory” and that of revolutionary “electrification” and those deeper processes going on within Labor in connection with both the economic and political changes.

If in 1918–19 there had been in Germany as strong a Communist Party as in March 1921, it is very possible that the proletariat would have already been victorious in January or March 1919. But a Party such as that did not exist – and the proletariat suffered defeat. Out of the experience gained in that defeat there grew the Communist Party. If in 1921 it had acted as a Communist Party would have been obliged to act in 1919, it would have perished. That was stated by the last Congress.

The discussions on the “Offensive Theory” are closely connected with the problem of how to appraise the economic boom and its development. The spokesmen of that theory developed the following theorem:

The whole world is dominated by a crisis – the crisis of the decay of bourgeois society – which is bound to grow in intensity and thus revolutionize the workers. Hence a Communist Party has no reason to look backwards upon its reserves; its task is to attack capitalist society. Under the pressure of the economic decay the proletariat must sooner or later fulfill that task.

That point of view could not maintain itself in so unimpaired a form till the time of the Congress. Its crudest points were eliminated by the Commission on the Economic Situation. The mere thought that the crisis could be succeeded by a relative economic boom, seemed to the conscious and half-conscious followers of the “Offensive Theory” as something akin to – Centrism. Regarding the opinion that a revival of trade and industry would not only not act as a brake upon the revolution, but could on the contrary imbue it with fresh power – that point of view was held to be purely Menshevik. The badly employed radicalism of the “Left” found an innocent reflection in a resolution adopted by the last convention of the German Party which levelled a personal attack against me. This in spite of the fact that I had been merely repeating the opinion held by the Executive of our Party. I can console myself for that petty revenge of the “Left” since the lessons of the Third Congress have gone home everywhere and most of all in the German Party.

II.

Clear signs of a change in the economic situation are noticeable everywhere. Platitudes about the present crisis being the crisis of decay and the basis of a pre-revolutionary epoch, which can only end with a victory of the proletariat, are not likely to replace a concrete analysis of the economic development and all tactical conclusions resulting therefrom. The world crisis really and truly came to a standstill in May last. The branches of industry manufacturing necessities of life first of all showed signs of a boom. Then came large industry. At present there are undeniable facts which can be proved by figures.

Does that mean the decay of industry has been brought to a stop? That the balance has been regained? That the revolutionary epoch has come to an end? Not at all! The industrial boom simply means that the decay of the capitalist system and the development of the revolutionary movement are merely somewhat more complicated than they appear to some people who always like to simplify matters.

The trend of economic development is characterized by two curves:

One – the basic one – determinates the general growth of the forces of production, buying and selling, import and export, banking operations, etc., etc. The general direction of this curve throughout the entire period of capitalist development is upward. It expresses the fact that under Capitalism the forces of production and the general wealth of society have increased. But this basic curve does not rise steadily. There have been decades when it remained stationary, and others when it soared upward only in order to remain at the same level for a long time. In other words: in the history of Capitalism there have been epochs when the forces of production developed rapidly, and others when they grew very slowly. Thus tor instance, considering the curve of Great Britain’s export trade, we can see that from the beginning of the 18th century till the middle of the next it developed very slowly indeed. After that time, however, it grew very quickly within two decades (1851–73). In the following epoch (1873–1894) it remained nearly stationary, only in order to go steadily upward again until the outbreak of the war.

If we were to draw this curve, its unequal course upward would be a schematic representation of the development of Capitalism or of one of its parts.

We know, however, that capitalist development moves within the industrial limits given by a few successive phases of the economic boom: boom, standstill, crisis, standstill of the crisis, improvement, boom, standstill, and so on. History teaches us that the period of this cycle is eight or ten years. If we were to put this cycle on paper, we should have a basic curve representing the general direction of capitalist development, and its periodical ups and down, which are as inherent in Capitalism as the beat of the heart in a living animal.

A crisis is succeeded by a boom which is again followed by a crisis. Generally speaking, of course, the curve of capitalism has gone upward during the last few centuries. Hence it follows that the total of development exceeded the total of the crises. The curve has, however, a different aspect in the various epochs. There have been periods of standstill. The oscillations continued. But as the capitalist development was generally slowly upward, it follows that the crises have about balanced the booms. The oscillations continued even through epochs when the forces of production grew very quickly. It is not to be doubted, however, that in every boom industry has gone forward to an extent than could not altogether be destroyed by the succeeding crisis. The ups and downs of capitalist economy can be likened to the vibrations of a chord, if one thinks of the lines of economic development as tightly stretched, which is not the case, however, for they are complicated and bent.

These inner workings of capitalist development, this continuous alternation of booms and crises prove that to think of the present crisis as continuing and intensifying until it is ended by the dictatorship of the proletariat, no matter if that dictatorship will set in within one, two or even three years, is wrong, unscientific and one-sided. Oscillations – we said both in the report and in the resolution of the Third Congress – were and are accompanying capitalist development in its youth, maturity and decay, just as the heart beat is always present in a human being, even in a state of agony. No matter what the general conditions, no matter how far economic decay has progressed, a crisis does away with overproduction and the forces of production, it regulates supply and demand and thus tends to enliven industry.

The tempo, the extent, the firmness and the duration of the revival depend upon the conditions characterizing the vitality of capitalism.

It can now be declared definitely (it was already stated at the Third Congress) that as soon as the crisis has broken through the first wall, the tremendous increase in prices, the industrial revival will within the limits given by the present system be confronted with other obstacles – the destruction of the economic balance between America and Europe, the impoverishment of Central and Eastern Europe, the lasting and thorough ruin of the financial apparatus. The next industrial boom, no matter how great, will not be able to put industry on its pre-war level; it is even possible that this boom once the first obstacles are overcome will come to grief in an economic blind alley?

Nevertheless, a boom remains a boom; it means an increase in the demand of goods and consequently an increase in production, the reduction of unemployment, an increase in prices and a consequent possibility of increasing wages. Under these given historic conditions a boom will not weaken Labor but strengthen it. That follows from past events. In all countries the labor movement reached its highest point after the war. At this point Labor, as we have seen, was more or less defeated and compelled to retreat, which resulted in many splits occurring within it. Though a lasting crisis would under conditions such as these increase the bitterness of the workers (especially the unemployed and part-time workers) it would at the same time seriously weaken the activity of Labor which is bound up with the knowledge that without it the wheels of production would not revolve. Lasting unemployment after a period of revolutionary political attacks and defeats, is under no circumstances favorable for the Communist Parties. On the contrary! The longer a crisis lasts the more conducive it is both for anarchist and reformist tendencies. This fact finds expression in the splitting away of the syndicalist groups from the Third International, in Amsterdam joining hands with the 2½ International, in a temporary consolidation of the Serrati group, in the splitting off of the Levi group, etc. An industrial revival is apt to strengthen Labor’s self-reliance, weakened by many defeats and dissolutions within its ranks; it is furthermore apt to weld the workers in mill and mine together and strengthen their attempts at united action.

We are already noticing the first signs of this process, Labor, beginning to feel solid ground under its feet, strives for unity; it feels that splits are obstacles on the way to action. The Workers endeavor not only to present a united front to the capitalists attempting to take advantage of the crisis conditions, they even prepare for a counter-attack and rely in this on the conditions created by the boom. The crisis represented for Labor a period of disappointments, bitterness and partly despair at its own weakness. The boom will give these feelings occasion to vent themselves in action. This is said in the resolution of the Third Congress:

“If the development should slow down, and if the present crisis is, in some countries succeeded by a period of boom, this would not mean the ushering in of the ‘organic’ epoch. Oscillations are inevitable as long as Capitalism continues to exist; they will be with it in its time of agony just as they accompanied it during its youth and maturity.

“If in the course of this crisis the proletariat is overrun by Capitalism, it will surely assume the offensive once a period of boom has set in. An economic attack such as that which must be carried out under the slogan of revenge for the deceptions of the war period and for all humiliations suffered during the crisis, would thus show just as much tendency to become a civil war as the present defensive ...”

III.

The capitalist press shed tears of joy over the economic improvement and the possibility of a new epoch of capitalist stability. There is a little cause for that joy as for the supplementing fears of the “Left”, who held the opinion that the Revolution would be the outcome of an uninterrupted series of ever-intensifying crisis. Politically speaking, it would in practice be only favorable for us, if the next trade and industrial boom means increased riches for the big capitalists. The tendencies for unity within Labor are but an expression of the increased determination for action. If Labor, in the name of the struggle against the bourgeoisie, demands today that the Communists join hands with the Independents and the Social Democrats, it will in the course of development quickly convince itself that only the Communist Parties are able to lead the revolutionary struggle. The first wave of the attack will engulf all workers’ organizations and compel them to unite. Both the Social Democrats and the Independents will meet with the same fate; one after the other they will be drowned in the revolutionary tide.

Does this mean, contrary to the opinion of the adherents of the “Offensive Theory”, that not a crisis but the industrial revival will lead to the victory of the proletariat? Such a categorical statement has no foundation, we have shown that the connection between a boom and the character of the class struggle is not mechanical, but complicated and dialectic. In order to understand the tasks of the immediate future, it is sufficient to know that we are better prepared for a boom period than we were for the crisis. There exist strong Communist Parties in the more important countries on the Continent. These parties are undoubtedly presented by the boom with the opportunity of both an economic and a political offensive.

It would be useless to try and guess today how far this offensive can go. It has only commenced, or rather, the very first signs of it have put in their appearance. Some dialectic theoreticians will maintain that if the next industrial revival does not immediately help us to attain victory, a new period of industrial stability will probably set in which will be another step on the road toward the re-establishment of capitalist equilibrium. Does that not involve the danger of a fresh epoch of capitalist reconstruction? To this we can reply as follows: If the Communist Parties would not continue to grow and if the proletariat would not gain more and more experience and join with the bourgeoisie in always more serious and bitter battles, if it would not endeavor to assume the offensive on the first occasion presenting itself – if all this would not be the case, capitalist development would, assisted by the manoeuvres of the bourgeois governments, surely attain its goal. Whole countries would then once more be forced back into a state of economic barbarism; millions would perish through hunger and despair, and upon their bones would be built some new equilibrium of the capitalist world. A perspective such as that is a mere abstraction, however. Many obstacles lie on that road: chaos in the world’s market, collapse of currency, militarism, dangers of wars, insecurity of even the immediate future. The elementary forces of capitalism groping for a way out of these entanglements affect Labor and spur it to attack. Development of the labor movement goes on even if Labor be compelled to retreat. Because even defeats provide experience and strengthen its party. Labor moves on. The working class itself is its most important moving factor, the incarnation of its future.

It is true that the movement is impeded by the oscillations of Capitalism, which in a period immediately following a war assume abrupt forms. But no matter in what stage of development the union of objective and subjective conditions will take place – resulting in Revolution – we are satisfied with the knowledge that the tempo of the development depends to great extent upon us, our parties, and our tactics. It is of utmost importance to gain a comprehensive view of the new economic boom which will, perhaps, prove to be a fresh stage in the consolidation of our ranks for a victorious attack. A clear and profound knowledge of the prevailing situation means for a revolutionary party a shortening of the long road of suffering, an approach toward its aim.