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p The most crucial yet difficult task in state-monopoly control has been to overcome the cyclical nature of capitalist development and to ensure that capitalist production maintains a stable rate of economic growth in peacetime. Capitalism had never before set itself this objective nor, indeed, was it able to do so. As has been shown, this objective only became feasible as the productive forces developed and in the circumstances produced by the general crisis of capitalism and the advances of socialism in competition with and struggle against capitalism.

p One must first establish whether it is possible under commodity production based on capitalist private property to reach a degree of economic control where economic progress could become even and stable and entail full employment and full capacity operation of the production facilities. The very facts of post-war activity provide an answer to this question: no capitalist country has attained anything approaching this level of stability.

p The first post-war cyclical crisis of overproduction occurred in the U.S.A. between 1948 and 1949. The recession began in October 1948 and continued for ten months, during which time the monthly production index dropped by 10 per cent, and the annual index (1949 over 1948) dipped by 5.4 per cent. The subsequent period of revival sparked off by the Korean war was comparatively short-lived, being halted in mid-1953 by a fresh crisis in production which, in duration and scope, was similar to that of 1948-49. The next and worst post-war crisis to hit the U.S.A. came in 1957-58. From the autumn of 1957 to the summer of 1958, the industrial index fell by 14 per cent, and the 1958 annual index was 7 per cent lower than the year before. Within two 92 years, in January 1960, the U.S.A. was beset by another protracted recession lasting over a year and cutting industrial production by 7 per cent. The expansion that commenced in the second quarter of 1961 continued uninterrupted until 1967 at a relatively high (about 7 per cent) average annual rate of industrial growth. In 1967, however, the situation took a sharp turn for the worse: despite the stimulating effect of the war in Vietnam, production laboured under a recession for six months and for the year as a whole it remained at the previous year’s level. Another economic crisis, accompanied by a prolonged decline in production, broke out in the U.S.A. in 1970-71.

p The C.P.S.U. Central Committee’s Report to the 24th Congress, given by L. I. Brezhnev, said: “Even the most developed capitalist states are not free from grave economic upheavals. The U.S.A., for instance, has been floundering in one of its economic crises for almost two years now. The last few years have also been marked by a grave crisis in the capitalist monetary and financial system. The simultaneous growth of inflation and unemployment has become a permanent feature. There are now almost eight million unemployed in the developed capitalist countries.”

p Economic activity developed differently in Western Europe and Japan. As the U.S.A. was suffering its initial postwar crisis, post-war rehabilitation was still in full swing in Western Europe and Japan. Later on, however, first in 1951-52 and then in 1957-58, a number of West-European countries suffered either a slump in production or a sharp cutback in rate of overall growth. The upward phase of the cycle that followed the 1958 world crisis occurred variously in the capitalist economies. Britain had long periods when her economy was virtually marking time (1960-62, 1964-65 and 1967); West Germany showed steady growth, but her growth rate sharply dipped in 1962 and 1965-66, and in 1967 she was beset by an economic crisis; the French economy stagnated for some two years in 1964-65; in Italy, between November 1963 and May 1965, industrial stagnation set in, followed by a slump and then more industrial stagnation. Although Japan enjoyed the highest industrial growth rate in the capitalist world—between 1956 and 1965, some 15 per cent a year—stagnation or crisis recessions did occur for several months in 1958, 1961 and 1964-65.

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p These facts are convincing evidence that at its present, third stage of general crisis, capitalism has not managed to attain stability or steady growth; the dynamics of its economic growth are subject to powerful devastating fluctuations, which since the war have had a new feature: on the one hand, they have become more frequent and on the other, they are not as regular or periodic as they used to be; they are much shallower and are not as long. By contrast, U.S. industrial production in the 1920-21 crisis plummeted by 23 per cent, and in the 1929-33 crisis by as much as 46.2 per cent. During the latter, British industrial production fell by some 15 per cent, German over 40 per cent and French 30 per cent. The contraction lasted from 18 to 30 months, and production took another 12 to 18 months to regain its former level. During the previous crises in the imperialist era production recessions had never been so deep and protracted as the 1929-33 crash, yet they were 2 or 3 times deeper and longer than recent post-war recessions and stagnation.  [93•1 

p To evaluate correctly the significance of such radical changes in the dynamics of capitalist reproduction, one must recall the essential causes of its cyclic nature. There is a basic contradiction within capitalism between the social nature of production and the private nature of appropriation. This leads, among other things, to anarchy of production, a contradiction between the production and the consumption potential of a society founded on exploitation. These contradictions are constantly at work under capitalism. Why, then, does commodity overproduction occur periodically rather than constantly?

p The answer lies in the part played by fixed capital as an instrument of exploitation under advanced capitalism. It is the accumulation of capital, and renewal and expansion of the implements of labour, that are most directly affected by the principal contradiction of capitalism. Hopes of greater profit through expansion of enterprises (particularly with the latest inventions and technologies) amid a situation of production anarchy produce a fever, an agiotage, inflation 94 of credit, a scramble in which each capitalist individually and all capitalists together endeavour to put the maximum of resources into the business. Such a concentration, emanating from the very essence of capitalism, eventually leads first to latent, then to blatant overproduction, which means a crisis. Cutbacks in production, bankruptcy and liquidation, price drops and rising unemployment are all factors that follow from overproduction; they are also the means for resolving the contradictions that had accumulated in the earlier phases. Or, as Marx put it, they are the starting point for new capital investment, a booster for the revival and consequent upsurge in production.

p Crises became periodical in the 19th century. Marx wrote: “As the heavenly bodies, once thrown into a certain definite motion, always repeat this, so is it with social production as soon as it is once thrown into this movement of alternate expansion and contraction. Effects, in their turn, become causes, and the varying accidents of the whole process, which always reproduces its own conditions, take on the form of periodicity."  [94•1  The duration of the cycles (the intervals between crises) depended mainly on the period of renewal of fixed capital. Marx explained: “Up to now, this was normally a cycle of ten or eleven years, but there is no reason why we should take this to be a constant figure. On the contrary, the laws of capitalism we have set out suggest that this is a variable figure, and that it is bound to diminish little by little."  [94•2 

p Marx’s forecast was borne out. Between 1825 and 1857, the length of the cycle was exactly 11 years, in the following 43 years up to the end of the century it was 8.5 years, and in the first 30 years of the present century it was 7 years.

p In the years since the end of the Second World War—a period of the scientific and technological revolution—the period of renewal and replacement of labour implements has been considerably shortened. The rapidly increasing flow of new discoveries and inventions is speeding up the obsolescence of old equipment and altering the ratio of investment in hardware and investment in industrial buildings in favour 95 of the former.  [95•1  These changes are being accompanied by a reduction in the time taken to get new facilities running and by greater effectiveness of capital investment and return on capital.

p The factors listed above in themselves help to intensify overproduction and reduce the intervals between crises. It would be quite wrong, however, to see the present situation and prospects for reproduction as being similar to the old direct dependence between the periods of mass renewal of equipment and the periodic nature of crises. Some countertendencies have also arisen as a number of factors operating in a reverse direction and closely linked with the already mentioned changes in the productive forces, with the development of state-monopoly regulation of the economy, and with the change in the relationship of class forces within the imperialist world. Their effect on the reproduction cycle largely consists of the following.

p The scientific and technological revolution has been causing basic and protracted structural changes, including the formation or great expansion of several new branches of production, such as petrochemistry, electronics and plastics. These processes have been spurred on by the disintegration of the colonial system, and intensified specialisation and cooperation of production on a domestic and international scale. Structural shifts in the economy have occurred simultaneously with changes in the centralisation of production and capital and improvements in monopoly organisation. Alongside the increased size and importance of the biggest monopoly companies in the economy, their dependence on foreign credit has weakened, the system of inter- and intrafirm planning has greatly improved, and they now have more sophisticated methods of estimating current and future demand, of maintaining prices, profits, dividends and investment at a given level, irrespective of market trends.

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p The increased rate oi depreciation and shorter life of hardware is now counteracted by the fact that the renewal of fixed capital takes place at different times and is no longer concentrated within short periods.

p State-monopoly regulation tends to work even more strongly in the same direction. In spite of their increase in absolute size and importance, no private monopolies can meet modern requirements in promoting science and experimental technology, in education and social insurance, construction of a modern infrastructure, and in stability and mobility of credit resources. The data on the distribution of the social product show a tendency for the state to intervene increasingly in the distribution of the national income, which in itself, and particularly in conjunction with administrative means of influencing the economy, brings a certain stability to the economic outlook. The state now has enough means to maintain its economic activity even when the general economic outlook takes a turn for the worse, thereby preventing things from getting worse.

p It is especially worth noting the part played by statemonopoly capitalism today in inter-state economic relations. The effect of an economic crisis in one country on other countries is not now so great as it once used to be. This is largely due to the formation over many years (since the 1929-33 crisis) of systems of many-sided state control in foreign trade, in the import and export of capital and in monetary relations. This helps to desynchronise the crises in various countries and so to damp down the lluctuations in economic outlook.

p All the same, despite the substantial and beneficial modifications, capitalism has not been able to overcome the cyclical nature of reproduction. Crises or sharp cyclical fluctuations in the process of reproduction remain. Lenin once wrote that monopolies brought about the planning, while the capitalist magnates calculated in advance the volume of production on a national and even on an international scale systematically regulating it.  [96•1  Since this was written the instruments and means with which the monopolies have been able to bring about some planning to production, have greatly improved. But with all the latest improved means at their 97 disposal, they cannot overcome the chaos and anarchy of capitalist production or the lluctuations in market conditions, and make reproduction throughout the economy balanced, stable and optimal. This can be clearly seen in the persistent crises and cyclical lluctuations in production and in many other phenomena, most importantly in the growth of prices and inflation.

Price rises and the increasing cost of living are a characteristic feature of the imperialist era. One of the aims in discontinuing the free convertibility of banknotes was to increase government control of money in circulation, thereby halting the growth of prices and stabilising them. But capitalism has failed to achieve this, and post-war experience is particularly indicative of this. It would seem that prices should fall or at least keep constant with the growth in production spurred on by technical progress and accompanied by cuts in per-unit labour costs. In fact, the opposite has occurred. Taking 1959 as a base of 100, 1969 prices look like this:

Table 20 Wholesale and Consumer Goods Prices in Some Capitalist Countries (1959 = 100) Wholesale (aggregate index) Consumer goods (aggregate index) US. A. . 112.7 120. 0 Britain ..... .... 122.5 141.3 West Germany ......... 105.2 129.0 France . ... 127.9 138.2 Italy 121 9 143.8 Japan 110.7 167.6 Sources: U.N. Monthly Bulletin of Statistics, July 1970, pp. 110-58, 176-80; U.N. Statistical Yearbook, 1968, pp. 535-39, 54240.

The specific reasons for price rises vary from country to country: they often have a predominantly inflationary character, i.e., they are associated with large-scale government military spending, an overburdened budget, and the issue of paper money over and above the requirements of 98 circulation (Britain and France); sometimes they are caused by market conditions, and sometimes the various causes are intertwined. But, whatever the actual circumstances, price rises everywhere demonstrate that the bourgeois state cannot fully contain the spontaneous forces of the capitalist market. Since the drive for maximum profit remains the principal incentive to capitalist production, the intrinsic contradiction between the social character of production and private appropriation causes appreciable shifts in market conditions, price rises and inflationary tendencies—even with a high degree of state-monopoly control.