198

p The idea that the course of world capitalism’s cyclic development reflects some mechanical aggregate of the movements of national cycles is as illegitimate as the proposition that the cyclic growth of capitalist product ion within the separate, nationally isolated economies is based on their internal factors of development. The national economies of individual countries are constitutionally linked into a single economic organism by the system of international division of labour on the world capitalist market.

p Karl Marx repeatedly stressed that the world capitalist economy’s cyclic movement found its general expression in regularly recurring crisis fluctuations of the world market. 199 The latter, being the final result of the interlocked cyclic development of the national economies, embrace the most important aspects of the reproduction process of the separate countries.

The world trade crises (he wrote in Vol. 4 of Capital) must bo regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy. The individual factors, which are condensed in these crises, must therefore emerge and must bo described in each sphere of the bourgeois economy and the further we advance in our examination of the latter, the more aspects of this conflict must be traced on the one hand, and on the other hand it must be shown that its more abstract forms arc recurring and are contained in the more concrete forms.  [199•1 

This conclusion is logically linked with other very important tenets of Marxist-Leninist political economy that bring out the patterns of the functioning of the capitalist mode of production as a world system all parts of which are united into a single whole through the international division of labour.

p Already in the middle of the nineteenth century Marx had noted that large-scale industry was closely dependent on the world market and the international division of labour.  [199•2  Developing that idea ho subsequently showed that the world market at onco is the precondition and the result of capitalist production.  [199•3 

p Since these theoretical points were formulated, the internationalising of social production by capital has led to an immense strengthening of international business connections on the world market. In spite of repeated crises, international trade rose by a factor of five in the second half of the nineteenth century. From 1900 to 1938 it doubled again. After World War II it grew particularly rapidly. The physical volume of foreign trade within the bounds of postwar world capitalism, much reduced by socialism, had increased more than sevenfold on the whole by 1978 compared with 200 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1982/WCE326/20070620/299.tx" 1938, and trade in industrial items more than tenfold.  [200•1 

p New trends in economic relations connected with the rapid development of the international exchange of scientific and technical knowledge and know-how, new forms of capital export, the unprecedented growth of international specialisation and co-operation of production, the advent of new means of transport and further development of transport systems, etc., have notably expanded in the capitalist market in recent decades and acquired a considerable scale. All that
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Fig. 13 Dynamics of international trade on the world capitalist market * (in percentages of the preceding year) 13- 12- 11- 10- \ 7- 6- 5. 4- 3- 2- 1- 0. -2- -3- -4- -5- "6"i 1950 51 52 53 64 55 56 57 53 S3 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 »8 I98t * Index of physical volume of exports Sources: UN Statistical Yearbook and Monthly Bulletin of Statistics for the relevant years.
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has undoubtedly complicated final analysis of the processes taking place on the capitalist world market,  [200•2  but a guiding thread in this analysis continued to be the dynamics of international trade, which reflects the cyclic course of development of capitalist production. The most generalised indicators in this regard are the annual changes in the aggregate rates 201 of growth (or recession) of the physical volume of world capitalist exports, which in essence characterise the real scale and long-term trends in changes in the volume of trade on the world market (see Fig. 13).

p The graph indicates that a definite cyclic trend of development of a long-term character made itself felt, as before, in the postwar period, through countless fluctuations of the elements of the world market. After each upswing of the growth rates of trade, there was invariably a recession, followed by a new upswing fraught with another recession, and so on. In the period under review several such cycles can be traced in trade as well as in industry.

p Thus, the very substantial fall in the growth of world trade in the early 50s, which led to an absolute reduction in its volume in 1952, was later succeeded by an upswing that reached a peak in 1955. The next cycle began with an even more marked slump in 1957-58. Later the outlines of this type of cycle were not so marked, especially in its lower phases, but in those years, too, there were several cycles. Their troughs occurred in 1961, 1967, 1971, and 1975. In other words, for all the differences, the length of each of them averaged four to six years and was noticeably shorter than the periodicity of the market’s cyclic fluctuations in preceding stages of its evolution.

p The following features in the analysis of the dynamics of the growth rates of international trade since the war catch one’s attention. Whereas the trough phases in the 50s were marked by an absolute fall in the physical volume of trade, such was not the case in the 60s. The trough was relatively shallower and did not sink below 4.2 per cent in relation to the preceding year.

p Hence the question naturally arises whether this feature of the market, characteristic of the 60s and early 70s, was a quite new phenomenon, i.e. whether two qualitatively distinct stages must be distinguished when analysing its growth in the first postwar decades. For in the 50s the crisis phases of the world cycle ended in an absolute reduction in the scale of international trade, while in the 60s up to the mid-70s they were expressed in a relative fall in its growth rates. Only in 1975, for the first time since 1958, was there a marked contraction of the world capitalist market.

p Here the approach to evaluating the ratio of the indicators that characterise the boom and crisis phases during 202 the modern capitalist economy’scydicdevelopment inevitably conies to the fore. The point is the following: is it legitimate to include years in the crisis phase when there is a substantial slowing of the growth rates of the productive forces, while such very important indicators as the volume of world production and international trade do not fall below the level of the preceding years of cyclic upswing? Another posing of the problem also follows from that: is there a sharp dividing line between the cyclic dynamics of the evolution of world capitalist economy in the past and in the postwar decades we are considering? The approach to clarification of this point is linked, of course, with the need to consider the corresponding facts of the previous history of capitalism’s cyclic development.

p The view that there is an inherent crisis phase in which there is necessarily a deep, protracted fall of industrial production and international trade used to be quite commonly held in the Soviet literature. The world crisis of 1929-33, in the course of which the physical volume of international trade fell by almost two-thirds and world industrial production by around a fifth, had considerable influence on the forming of this point of view. But, as the experience of the development of world capitalist economy has shown, that crisis was unique. The slumps of even the ‘classical’ world cycles of the turn of the century, for which there are summary statistics, were by no means always, marked by an absolute reduction of the indicators of the system’s international business activity.

p Thus, in the 1882 crisis, world trade grew by around 4.5 per cent, but compared with the preceding boom period, this was a fall of 50 per cent (growth was 9.3 per cent in 1880). The next year, with a certain absolute fall in the volume of industrial production, the growth rates of trade fell significantly, though remaining above the 1882 level in physical volume. The cyclic crisis of the early 1890s was not accompanied with an absolute fall of world trade. In 1890 its growth was around 3 per cent against 7 per cent in the preceding year.

p In spite of the subsequent decline in the .scale of world trade, its lowest absolute level in the 1890s cycle was above the corresponding high of the preceding cycle. In the 1900 crisis world industrial production increased on the whole by more than 5 per cent and. the commerce of the principal 203 trading countries by (i per cent.  [203•1  According to the UN statistics, the next year the index of the physical volume of international trade remained at the 1900 level, while the index of world production of manufactures even rose somewhat.  [203•2 

Estimates based on the statistical’ publications of the League of Nations, provide evidence of the dynamics of manufactnring industry during the successive world economic crises of the turn of the century (see Table 20). For all the conditional character of the summary indices presented, they make il possible for al! that to make certain generalisations of a comparative character.

Table 20 Growth Rates of Manufacturing During World Cyclic Overproduction Crises (in percentages of the preceding year) Including Years Whole world USA Great Britain Germany France Russia Sweden Belgium Italy 1889 8.6 7.1 7.2 8.2 2.5 18 .2 -1.4 6. 7 0 1800 4.8 8.4 -1.4 4.5 9.6 0 .4 25.2 -3. 0 4.7 1891 1.5 2.5 0.2 2.4 0 7 .7 2 7 -3. 1 -5.5 1892 1.2 8.6 -5.0 -3.7 -0.2 7 .6 9.3 2. 1 4.8 1899 4.7 10.0 3.6 4.2 9.5 11 .0 0 -3. 7 20.0 1900 0.1 2.0 -1.0 1.3 -0.5 8 .6 5.6 0 -15.2 1901 3.6 12.8 -1.3 1.3 -0.9 0 .3 1.1 -12. 7 10.7 1902 7.9 12.2 1.2 7.0 6.8 2 .2 3.9 27. 3 6.5 1906 4.7 7.4 3.1 5.8 7.7 7 .8 8.3 ’ 7. 0 15.1 1907 3.1 1.4 0.8 -0.5 7.3 4 ,5 3.2 2. 1 10.7 1908 -8.2 -17.5 -6.3 -3.6 -1.0 2 .0 1.2 -5. 5 1.1 1909 9.7 18.8 1.9 5.6 7.5 2 .1 -4.8 11. 3 3.2 Note: the years in italics belong;, by Varna’s classification, to the Initial period of the onset of world industrial crises. (See E. S. Varga (Ed.) Op. cit., p.4) fource: League of Nations Induttriuliziition and Foreign Trade (Geneva, 1945), pp. 132-135.

p (1) They allow us to conclude that the course of the world market’s cyclic development, when the annual indices of the physical volume of international trade did not fall in absoule terms in the lowest phases of several postwar cycles, or 204 fell very temporarily, is not a phenomenon that emerged then. Such cases have heen repeatedly met in the history of capitalism.

p The same can be said of the spasmodic character of the dynamics of industrial growth on the scale of capitalist economy as a whole. During its long evolution there also used to he world cycles that were characterised hy substantial, but only relative, declines in the growth rates of world trade and industrial production compared with the preceding upturns.

p For the period surveyed in Table 20, which covers three world business cycles, only in 1908 was there a fall in world production (of 8.2 per cent) in the main cycle-forming branch of the capitalist economy, namely, manufacturing industry. But within each crisis phase of the cycle the main countries invariably experienced absolute or sharp relative declines in the growth of production. These, however, did not always coincide within one and the same calendar crisis year.

p (2) It would hardly be justified, in that connection, to consider that the decisive criterion of the onset of a world crisis was also, in the earlier stages of capitalism, an absolute and prolonged decline in the main annual indicators compared with the level already reached in preceding years. The periodicity of the cyclic fluctuations, and the scale, depth, and length of world economic crises, are determined by the main patterns of this mode of production in its most general form. In real life, the concrete course of each of them depends on the interaction of a host of historical ‘accidents’ and the current situation in the development of the economies of the separate countries within the system of the international capitalist division of labour.

p As E. S. Varga justifiably remarked, each world cycle and crisis takes on a specific character determined by a host of very different factors of both an economic and an extraeconomic order. Moreover,

p not only does each world crisis have its own special, typical features but development also proceeds unevenly in the separate countries; and within them the separate industries develop extremely unevenly, there being fast growing ‘new’ industries and alongside them ‘old’ ones displaying a tendency to decline irrespective of the cyclic curve of reproduction.  [204•1 

205

p The correctness of these statements is confirmed by the whole experience of the cyclic development of the world capitalist economy, but that experience does not provide the necessary grounds for recognising as legitimate in all respects the view expressed by Varga in the mid-30s that

with the development of capitalism crises cannot be smoothed out but must become more and more universal, deeper, and more and more frequent.  [205•1 

In any case, the summary statistical indices of the rates of postwar development cited above clearly indicate that.

p The frequency of world recessions of business activity has increased, but not one of them has yet been as deep or on the scale of the 1929-33 crisis. Furthermore, these crises have been characterised in the main, on the background of the certain acceleration of the growth of the productive forces in most capitalist and developing countries in the 50s and 60s, by a relative decline in the growth of international trade and production, when comparatively deeper crises alternated with shallower ones.

p Study of the specific character of each of the postwar world cycles undoubtedly requires us to allow for such concrete historical factors as the various forms of manifestation of the scientific and technical revolution in one industry or another, the steady growth of economic competition between the two opposing social systems, the extension of state-monopoly control in the leading capitalist countries and on a world scale, the socio-economic consequences of the break-up of the colonial system, the intensification of the class struggle in the developed capitalist countries for their workers’ vital rights, and so on.

p (3) Even the deep cyclic crises of the world capitalist economy accompanied with a drop in the volume of world industrial production and international trade in fact have a temporary character, as they used to, since they are compared only with the preceding boom phase. At the same time the low of each new crisis is higher, as a rule, in absolute terms, than the corresponding level not only of the previous crises but also of the cyclic upswings before it.  [205•2 

206

p This is one of the most essential patterns of the growth of the world capitalist economy. Crises periodically hold hack its development and at the same lime create the objective conditions for the next upturn. The capitalist economy experienced four world economic crises, for instance, between 1880 and 1913; international trade increased over, the same period by approximately 170 per cent, it- annual growth rate being around 3 per cent. The volume of world industrial production increased correspondingly by a factor of four, with an annual growth rate of more than 4 per cent. In the next 35 years (1913 to 1948), which covered two world wars and the most acute cyclic crisis (1929-33) in the history of capitalism, the annual rates of economic growth fell steeply. In the sphere of international trade they were only 0.6 per cent, and in industrial production 2.4 per cent. In the 50s through the 70s the corresponding annual indicators within the contemporary world capitalist economy were approximately 6.8 and 5.0 per cent.  [206•1 

p Thus, over a long period of ca_; italism’s development, an absolute fall in the generalised indicator of the volume of trade and industrial production was by no means always a longterm orientor for evaluating the crisis phase of its world cycle. A relative, but more or less protracted, deep fall in the aggregate growth rates of international trade and industrial production can also serve as an indicator of this. In the same way the transition from the crisis phase to the boom within one world cycle may be determined by the development of a tendency toward a considerable acceleration of economic growth relative to the low point touched in the cycle just completed, rather than by a surpassing in absolute terms of the maximum level of development of the preceding cycle.

p To characterise several successive world cycles, we have to establish a system of indicators that would ’et us compare 207 the scale of the fluctuations of the extreme phases of cycles. For that the annual growth rates over a certain period of time are above all of special value, since they make it possible to trace the long-term trends of cyclic movement on a broader scale than quarterly or monthly data.

p At various stages these tendencies, of course, acquire very substantial differences. Each of them, normally covering several consecutive cycles, reflects on a longer plane the unevenness and instability of the world capitalist economy in certain conditions of its historical development.

p As we have already remarked, the annual growth rates of international trade in the decades before World War I substantially exceeded the corresponding indicators of the interwar period but were much below those of recent decades. Therefore the growth rates of the physical volume of trade at the turn of the century, which were 4 or 5 per cent per annum, could have been evidence of a cyclic boom, while now the same growth may serve as the indicator of the next cyclic downturn. Thus the negative trend manifested in international trade in the mid-60s led to an approximately 50 per cent fall in its physical volume, from 10 per cent in 1964 to around 5 per cent in 1967. A considerable fall occurred in the course of the world cycle of the late 60s and early 70s, when the growth rates of international trade fell by almost half in 1971 compared with 1968 (see Fig. 13).

p But perhaps the substantial changes that have occurred in recent decades in the world market have led to its cyclic fluctuations no longer adequately reflecting the cyclic character of the world capitalist economy as a whole, above all of its industrial basis, as happened in Marx’s day? To clarify this point let us compare them with the indicators of the postwar development of industrial production and gross product on a world scale (see Fig. 14).

p The long-term trends brought out in the graph very obviously indicate the maintenance of a synchronous movement of these indicators, which in their aggregate reflect the regular periodicity of the main phases of the modern world capitalist cycle. Instability, a spasmodic character, and cyclicity are, as before, integral features of world capitalist business, however specific the postwar conditions of development of its productive power.

p It is becoming typical of the postwar capitalist economy as a whole, consequently, for there to be a quickening of its
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208 Fig. 14 Dynamics of industrial production, international trade, and GDP of the world capitalist economy (in percentages of the preceding year) o- 1950 51 —i——1——1——1— 52 53 54 55  i—-1—-1—-1—-1—-r  56 57 58 59 60 61 -1—-1——1—-T- 63 64 65 66 —1— 67 68 69 70 71 72 —I— 73 74 75 76 77  T———1———1———1 78 79 SO 1981’ * Estimated Sources: UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics, and OECD Main Economic Indicators for the releTant years. 209
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cyclic fluctuations and a marked modification of the phases of the world cycle compared with its previous stages of development.  [209•1 

The figures adduced indicate also that there has been a certain shortening of the time scale through a contraction of all the phases, especially of the periods of depression and revival. After each phase in the crisis, a quite rapid but unsustained quickening of the development of the productive forces set in, which was later invariably followed by a crisis decline in growth rates passing once more into a comparatively short-term boom phase, and so on. This periodicity is very distinctly traceable when we analyse the dynamics of the basic industries.