p Over the past decades, the world capitalist system and its economic foundation have undergone deep change. End-of-century capitalism is a far cry from early-century and even mid-20th century capitalism, an incontrovertible fact that has been written into the policy-making documents of the CPSU and the fraternal parties, and of the world communist movement.

p State-monopoly capitalism is, of course, still exploitiye and inhuman—because all the main means of production remain in capitalist ownership, wage-labour is still exploited, the monopolies wield all the power, capital keeps appropriating the surplus-value and driving for maximum profits, and the monopoly bourgeoisie exercises totalitarian political power.

p So, even in the epoch of its general crisis, capitalism retains its basic features, as they were described by Marx, Engels and Lenin. The accumulation of wealth at the one pole, and the growth of mass poverty and deprivation at the other, continue on an unprecedented scale; the social-class polarisation of the capitalist society is being exacerbated; imperialist capitalism is still marked by political reaction, mounting violence, and external expansion and aggression. Capitalism’s development in the course of this century has fully borne out Lenin’s analysis of its final stage.

p Since 1917, capitalism has ceased to be a closed system, and has developed under the influence not only of its internal uniformities— the objective requirements of the productive forces and the antagonisms sharpened by the far-advanced processes of monopolisation and the state-monopoly degeneration of its whole structure, determining in the first turn the aggravation of its general crisis— but also of the external factor. The society ruled by the financial oligarchy is under strong and ever growing pressure coming from the consolidation of world socialism, the deepening of the basic contradiction of our epoch (that between socialism and imperialism), the onset of the international working-class movement and the national liberation revolutions, and the effects of the winding up of the colonial empires. The global contest between the two social systems, their coexistence and competition, and the resultant feed-forward and feed-back ties leave a heavy imprint on the state and development of the capitalist society and on the new 31 phenomena and the deep-lying processes that are characteristic of world capitalism today.

p In other words, capitalism was simply unable to ignore—- politically, economically or socially—the revolution in Russia, which blew up the capitalist order and built a system for the working people.

p The final outcome of the contest between the two systems is a historically foregone conclusion: the general crisis of capitalism is the collapse of the capitalist mode of production and its revolutionary replacement by socialism. Nevertheless, back in 1916, Lenin warned that "it is undialectical, unscientific and theoretically wrong to regard the course of world history as smooth and always in a forward direction, without occasional gigantic leaps back".  [31•1 

p The general crisis of the world capitalist system has a long record which shows that the antagonisms of the bourgeois society are sharpened in contradictory and often latent forms, inevitably leading to its collapse and revolutionary transition to a higher type of social system. The crisis tends to run in a zigzag and erratic course, in leaps and bounds, in fits and starts, through "prolonged and arduous" upheavals,  [31•2  with alternations of revolutionary ebbs and flows, temporary reverses and retreats, and the defeat of some revolutions.  [31•3  That is quite natural because the uneven development of capitalism tends to sharpen the contradictions in the various countries and groups of countries of the non-socialist world in different periods of time to a very different degree.

p It is a caricature of Marxism and Lenin’s theory of socialist revolution to assume that it can be carried out by the proletariat overnight, in one fell swoop on the bastions of capitalism. Indeed, hardly anyone was more emphatic than Lenin in stressing that the development of monopoly and then of state-monopoly capitalism is itself a negation of capitalism as a social system. But he also drove home the point more vigorously than anyone else that the overthrow of capitalism on a world scale and the development and establishment of the communist formation would take an entire historical epoch, since it was an exceptionally complicated, multifaceted and drawn-out process the deadlines for whose completion could not be predicted with any degree of accuracy.

p The social revolution, he said, was bound to assume the form of an epoch, linking up the proletarian revolutions in the advanced countries and a "whole series of democratic and revolutionary movements, including the national liberation movement, in the undeveloped, backward and oppressed nations".  [31•4  Marxism-Leninism eschews both the idea of some “automatic” collapse of capitalism, and the notion that the general crisis of capitalism tends to develop 32 into a steady, year-on-year weakening of the capitalist system. An international conference on the 50th anniversary of the publication of Lenin’s Imperialism, the Highest Stage of Capitalism, had good grounds to assert that any mechanical and thoughtless reiteration of the idea about a steady deepening of contradictions sounds like an incantation, carries less and less conviction and may often produce a sense of dissatisfaction.

p It is wrong to regard the capitalist society, even in the epoch of its decline, as a system exhibiting a stagnation of the productive forces, locked rigid, with its economic potentialities and internal sources of economic development depleted. Considering the greatest revolutionary crisis which the capitalist system faced throughout the world, Lenin warned that "there is no such thing as an absolutely hopeless situation... To try to ‘prove’ in advance that there is ‘absolutely’ no way out of the situation would be sheer pedantry, or playing with concepts and catchwords".  [32•1  It is not a clotting but a growth of the productive forces—the most fluid, revolutionary and definitive element of the mode of production—that compounds the conflict which is crucial for the fortunes of capitalism: the conflict between the productive forces and the integument which puts a bind on their development, namely, the capitalist relations of production. This conflict tends to sharpen under the impact and against the background of the STR.

p Why is it that of all the capitalist societies it is the US capitalist society and its economy and social structure that have been hit hardest by the general crisis of capitalism? It is above all because the US society has developed the productive forces to the highest level in the capitalist world: the chief centre of imperialism has attained the maximum of what capitalism has been able to attain in this field, and it is precisely because the productive forces have developed most powerfully in the United States that its economic and political contradictions, social contrasts and the property and other inequality of the classes and social strata are most glaring. Noting the rapid economic development of the United States at the beginning of the century, Lenin stressed that "for this very reason, the parasitic features of modern American capitalism have stood out with particular prominence".  [32•2 

p Lenin’s proposition on the two tendencies in the development of capitalist production in the epoch of imperialism—growth and decay—remain fully valid in our day as well. These tendencies keep alternating at the various stages of the historical way, but the former on the whole tends to prevail. Monopoly under capitalism generates a tendency towards stagnation, but under the pressure of competition the imperialist monopolies often generate scientific and technical progress. At its highest stage capitalism keeps growing very much faster than ever before, while its decay does not rule out periods of accelerated development in individual industries 33 or countries, and the more marked the economic growth, the deeper and sharper the contradictions.

p The documents of the 27th Congress of the CPSU contain a dialectical analysis of the contradictions in the advancing world development and of the new forms in which these contradictions move. They are not only a verdict on the old world and everything that impedes advance, but are also the motive force of social progress proceeding in an atmosphere of struggle that is inevitable so long as exploitation and exploiter classes exist. These contradictions pave the way for the replacement of capitalism by socialism, while simultaneously operating as a source of the self-movement of the capitalist formation and its partial transformation through the development of the productive forces and some adjustment of the mechanism of production relations as a whole. Consequently, the capitalist society, which is on its way out of history, a society without a future, is still fairly strong.

p The main reserve of imperialism is that, although it has lost its erstwhile economic and political hegemony on the globe, it continues to dominate in a sizable group of developed countries turning out about half of the world’s industrial product, and above all in the Big Seven (United States, Japan, FRG, France, Britain, Italy and Canada), which account for almost 43 per cent of the world’s industrial product.

p While capitalism has passed its peak and is on the down-grade, it remains a strong and dangerous adversary of socialism. Imperialism seeks to learn the lessons of its defeats and to adapt to the fundamentally new historical situation in which the two systems are in confrontation and locked in worldwide class struggle, and to the demands of the STR, which is having an ever deeper impact on world social processes.

p The stocks of accumulated material wealth, the powerful industrial, scientific and technical potentials, the well-geared and wellorganised production machine and high-skilled manpower constitute a major resource of present-day capitalism. With it at their disposal, the monopolies continue to be capable of mobilising material, manpower and financial reserves, even if not as vigorously as they did in the early postwar decades. Maximising surplus-value is an incentive for boosting production, which is still there to tantalise them, .and that is why they still have force and momentum. These may not be as strong as they were twenty or thirty years ago, but they are still sufficient to keep them going for some time at a fairly fast pace.

p Since the Second World War, the capitalist economy has evolved through three markedly different periods: rehabilitation—roughly until the mid-1950s; relative stability—until the 1970s, and a sharp slowdown in economic growth.

p Over the first two periods, the capitalist economy acquired some new features which largely changed its face as compared with prewar capitalism, to say nothing of the earlier stages of imperialist development. It remained unstable, uneven and cyclical, but for nearly three decades after the end of the war the upward phases of 34 the capitalist cycle were, as a rule, longer and more intensive, while the crises of general overproduction were not as deep or as long. Nor should one forget that in that period there was not a single truly deep and devastating W9rld economic crisis, although the cyclical fluctuations of production continued both in the individual countries, and in the world capitalist economy as a whole.

p There was a marked change in the structure of the economy and in the national-economic, reproductive and sectoral proportions. New industries and sub-industries were set up and developed faster than others in the sphere of material production, marking its transition to a higher technical level: radioelectronics and microelectronics, missiles and aerospace, lasers, nuclear energy, new lines in chemistry, biotechnology and genetic engineering, modern transit, composite materials, communications and computers. Fundamentally new products and sources of energy appeared on the scene and an industrial raw-material base took shape. The development of capitalist production could rely on relatively cheap energy resources and raw materials. The share of agriculture in the GNP shrank (in the United States, for instance, the share of its net product in the total volume of material output dropped from 10.5 per cent in 1960 to 7.7 per cent in 1970 and to 5.8 per cent in 1985), while there was a noticeable increase in the absolute indicators of its growth, industrialisation and switch to machine systems. Many developed countries which had once imported food began to export it. The non-production sphere, on which material production became substantially more dependent, acquired great significance.

p There was a marked change in the principles and techniques of capitalist economic management at every level, with the free-play market regulators of reproduction increasingly being complemented, and in some cases directly replaced, by centralised regulators, and with growing state-monopoly centralisation of the management of production as the overall trend making headway despite the frequent zigzags of government economic policy. Competition continues to be the main mechanism spontaneously regulating the proportions of social reproduction in accordance with the law of value, but capitalist incomplete balanced development and the regulation, programming or indicative planning, realising it, have also become part and parcel of economic management under highly developed state-monopoly capitalism. This was naturally manifested both in an expansion of the economic function of the capitalist state and in important shifts in the organisational structure of private corporations, notably the TNCs.

p The roots of these changes lie in the evolution of capitalist property, which has become much more concentrated. Capitalist socialisation of production has reached an even higher degree. Despite the growth of small and medium enterprise, the concentration, centralisation and monopolisation of production and capital are a process that continues in full spate, sweeping across state borders, acquiring international features and leading to the formation of transnational capital with dominant positions in the capitalist world economy. TNCs are subjecting and monopolising entire industries 35 and sectors in the individual countries and on an international scale.

p A much greater role in the development of the capitalist economy than before now belongs to the international division of labour and the world economic ties based on it: economic, scientific and technical; foreign trade, producer, patent and licence, export and import of capital, engineering, consultant and high-tech services. The imperialist states were most forcibly impelled to seek additional sources for economic growth beyond their national borders by the growing antagonisms of the reproduction process and their inability to ensure an expansion of the domestic market adequate to the modern productive forces. Foreign trade in the capitalist countries kept growing twice as fast as their production, and the share of exports in the gross national product rose to an unusually high level. An average of one-third of the capitalist countries’ aggregate material product is now being realised on the world market as compared with 17.5 per cent in 1950.

p All these fairly important changes led to a leap in the development of capitalism’s productive forces, and this, for its part, generated another tide of vindication of the capitalist system by its bour;eois and reformist advocates. From the late 1950s and the mid960s, there was a spate of diverse and incompatible theories concerning some “transformation” and “rejuvenation” of capitalism, a “super-industrial” and a “post-industrial” society, all spreading the illusion that the capitalist society had entered an era of crisisfree development, "general affluence" and "class peace", which allegedly made it capable of ensuring the harmonious growth of production with full employment of the population and resources. All these theories were designed to suggest that capitalism had almost ceased to be capitalism.

p That was a period of euphoria, as even the bourgeois ideologists have admitted. At the time, one US economist wrote: "The growth experience of the third quarter of the twentieth century revealed that a market economy enriched by government planning and macroeconomic control could perform favourably in comparison to past epochs of both capitalist and communist development."  [35•1  Another US economist, Michael Harrington, conceded that capitalism "has shpwn remarkable resiliency" and predicted that it would "spend and plan its way out of the present situation".  [35•2 

p But a serious analysis of the new features of the economy of imperialism which it displayed at the end of the 1960s showed that it neither was fundamentally transformed nor ceased to be exploitive, but that the capitalist society was being further restructured in depth along state-monopoly lines against the background of the STR.

p In effect, all the economic and political factors underlying the increased volume of capitalist output in the early postwar decades boiled down to a further development of state-monopoly capitalism 36 and to scientific and technical progress. It would be wrong, in principle, to assume that these were short-term factors and that they have not become intrinsic to present-day capitalism. On the contrary, the wide use of these instruments constitutes the basis of imperialism’s economic strategy of adaptation to the new historical situation in the world, a strategy of self-preservation and survival. They will continue to exert a most important effect on the course and character of capitalist reproduction in the future as well.

p Another substantial reserve of capitalism is the possibility of relying on state-monopoly regulation in its various forms to derive benefit from scientific and technical achievements so as to go on developing the productive forces, despite the deepening economic, social and political contradictions. One conclusion of the 27th Party Congress is that "the present stage of the general crisis does not lead to any absolute stagnation of capitalism and does not rule out the possibilities for economic growth, and the mastering of new scientific and technical fields. This stage ’allows for’ sustaining concrete economic, military, political and other positions, and in some areas even the possibility for social revenge, for regaining what had been lost before.”  [36•1 

p Militarism largely channels technical progress into the arms race. The MIC’s efforts tend to convert the most advanced scientific and technical thought into weapons of mass destruction, so posing a mortal threat to mankind. The STR, on which mankind’s progress directly depends and which has a great influence on all the contradictions and processes under way in the world, cannot, of course, abolish the laws of social development. It was emphasised at the Congress that man’s social and spiritual liberation alone make him truly free.

p The best proof that capitalism is on the downgrade is its limited capacity to apply STR achievements for constructive purposes, but although the relations of production are much too narrow for the current STR, and especially for its new stage, although technical progress keeps running up against the capitalist constraints to consumption by the bulk of the population, one cannot but see that the possibilities of increasing the scale and pace of expanded social reproduction tend objectively to increase. The idea is that over the remaining part of the 20th century the economy of the leading capitalist countries could be provided with a totally new material and technological basis as the latest STR achievements are applied, production is intensified and radically restructured, and wide use is made of modern forms of international division of labour.

p The STR has now become the main sphere of the peaceful competition between the two systems, a specific form of class struggle in the international arena today. Indeed, imperialism hopes to survive by putting its stake on the STR.

p It is now regarding the STR as a means for patching up the capitalist system and possibly for helping it to win in the 37 competition with socialism. But these hopes are illusory, to say the least. However, once again there can be nothing automatic about it: Marxists have always asserted that the struggle against the historically obsolete system calls for fresh efforts at every stage of history and in every period of time.

p Another factor used by capitalism in the historical competition between the two systems is that it still has a preponderance over socialism in the total output of goods and services, and also in some concrete spheres and fields of economic life. In the most developed countries, it still has some advantages stemming from the higher level of social labour productivity. The CPSU Programme formulates the vital task of attaining the world’s highest level of social labour productivity and efficiency of production, so depriving capitalism of this advantage.

p Up to now it is material and technical resources and factors that have been mainly considered. In the service of private capitalist or state-monopoly interests these are an instrument of capitalist exploitation and continue to be a real reserve of capitalism. But in practice, capitalism also has other, what could be called non- material reserves, including the following.

p First, because of its developed economy and the continuing neocolonial exploitation of the Third World countries, capital has been able—without any special losses for itself—to meet some of the prime wants of the working class and to ensure a relatively high subsistence minimum for the bulk of it, while permanently keeping a large part of the population in the developed capitalist countries in a state of poverty, and millions upon millions on the fringes of the capitalist world suffering from unemployment, hunger, disease and a high death rate.

p Second, capitalism is dominant in a group of countries with longstanding “democratic” traditions, which boil down to parliamentary political demagogy that serves to cover up the total power of the monopolies and the military, economic and political elite. Capitalism has been fairly successful in conducting a policy of splitting and corrupting the working-class and democratic movements.

p Third, through the mass media monopoly capital is still able to manipulate public opinion and influence the minds of men.

p Fourth, capitalism is making ever more frequent use of less blatant, more sophisticated and refined forms of exploitation both of its “own” working class and of the peoples of former colonies and semi-colonies.

All these reserves can temporarily—and at a high price for mankind—put off the inexorable outcome in this or that sector of the capitalist world, distort the social process in this or that capitalist country, and, twist the way of its development in terms of the historical perspective. But it cannot make the old world less historically doomed.