p The generally faster and stable growth of the socialist economy is of crucial significance for the prospects and eventual outcome of the competition and contest between the two social systems, because that is what gradually tilts the material balance between the opposed world forces against imperialism. There is, of course, no doubt about the need to compare the concrete economic parameters of capitalism and socialism, but a comparison of the resources of each of the two systems and of their weak spots, and also—and most importantly—the tendencies in their development is much more relevant. In our revolutionary epoch, the world tends to change at a dizzy rate, and it is not so much the material and financial mass, as social development capable of transferring this mass in political space that has the crucial influence on the balance of forces. When measuring the economic or military potential of each group of countries, one cannot be sure that within an interval of time some of its components will not turn out to be neutral or even incorporated in the other camp.

p The historical contest between the two world systems tends to run increasingly over economic and social terrain, which is why there must be a full set of indicators including those of volume and rate of growth in production and qualitative parameters like scientific and technical progress, economic efficiency and intensification, labour productivity and product quality, and also the quality of life, social services, and spiritual and personal factors.

p Since modern state-monopoly capitalism continues to be capitalism today (as was the case in the past), the weakest spots in its economy stem above all from the gravest exacerbation of the traditional contradictions of that mode of production (operating, it is true, on a broader basis), such as the haphazard market mechanism and the anarchy of production which persist despite the spread of state-monopoly forms of economic management, and also the reproduction, sectoral and other disproportions which are amplified by its cyclical economic development.

p The chronic unemployment, the underloading of fixed capital, and the general waste of producer resources—all inherent in the general crisis of capitalism—have reached such gigantic proportions that they bear no comparison to anything in the past. During the cyclical crises of 1974-1975 and 1980-1982, between 25 and 33 per cent of the production capacities were idle as compared with 8 per cent in 1966, a degree of underuse of fixed capital (even reckoning with the need to have reserve capacities in the economy) unknown in the United States for over 40 years. Capitalism, as never before in the past, "is like the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells".  [38•1 

p The conflict between the productive forces and the relations of production under capitalism is now the supreme expression—as it has been in the past—of the radical class antagonism of the capitalist system between social production and capitalist appropriation of the results of labour socialised to an unprecedented extent. That is still the conflict "whence arise all the contradictions in which our present-day society moves”,  [39•1  for it "contains the germ of the whole of the social antagonisms of today",  [39•2  both within the capitalist countries and in their relations with each other.

p With the emergence of the socialist system the historical contest between socialism and imperialism naturally became the main antagonism of the epoch, pervading every facet and sphere of social life on the globe, while the basic economic and political contradiction of capitalism became less of a totality, although, operating as it does in the capitalist zone, it fully retains its fundamental significance in the hierarchy of contradictions inherent in capitalism as a social formation. It remains the primary basis of the antagonism between labour and capital, of the proletariat’s class struggle and of the working people’s anti-monopoly actions. The inevitable collapse of capitalism is rooted in the deepening of this antagonism and in its ultimate resolution the revolutionary way.

p In the epoch of the general crisis of capitalism, new forms in which this antagonism moves and is manifested have been added to the old ones, such as the contradiction between the drive for boundless expansion of production and the limited purchasing power of the masses, the contradiction between the anarchy of social production as a whole and the high level of organisation and balanced development within individual enterprises and corporations. These new forms include the contradiction between the fantastic potentialities opened up by the STR and the obstacles erected by capitalism to their use for the benefit of the society as a whole, and the contradiction between social production and state- monopoly regulation. There is not only a growth of the contradiction between labour and capital, but also a deepening of the antagonism between the interests of the overwhelming majority of the nation and the financial oligarchy.

p The weakest spots in the capitalist economy today stem from the sharpening of the traditional contradictions and the evolution of a wide range of new negative processes. What are these?

p There is, first of all, the lacing into a single ganglion of many acutely critical cyclical, structural, conjunctural, chronic, internal and international situations on a scale unprecedented in the history of the capitalist society. During the cyclical crisis of the mid-1970s, and then the crisis of the early 1980s, the general overproduction of goods and overaccumulation of capital was first closely alloyed with various types of structural crisis, such as the fuel, energy and raw materials crises, originating from the relative underproduction 40 of oil and other energy resources, and some raw materials; the food and the ecological crises in the broad sense of the word; the sectoral crises of overproduction in ferrous metallurgy, mining, ship- building, automobile and textile industries, lasting for years and, in some cases, for decades; and the crisis in circulation: the credit, monetary, and financial crisis, the crisis of foreign trade and payments balances, and of world economic relations as a whole. All of these have gone hand in hand with conflict situations within the system of interstate relations, and with acute social and political crises in the capitalist countries.

p The whole reproduction mechanism was deeply upset by this unusual mix of crises of the most diverse origin, character and calibre, which threw into such bold relief the economic, social and political upheavals of the 1970s and the subsequent years against the background of the earlier ones.

p Moreover, inflation ceased to be episodic and mainly national, and became a protracted and chronic ailment of world capitalism. Inflation curves became unprecedentedly steep and, what is even more important, inflation became a concomitant of capitalist economic development in wartime and in peacetime, in time of boom, of recession and even of bust. Inflation has been woven into the steady growth of unemployment involving millions upon millions of working people. It erodes the partial handouts which the capitalists are forced to make to the working people, causes sharp increases in the cost of Hying, slowdowns and even declines in real wages and salaries, and in the real incomes of the other strata of the population, especially those with fixed earnings. During the 1974-1975 crisis, real wages dropped only in the United States and Britain, but during the 1980-1982 crisis, they declined in most capitalist countries.

p Since the mid-1970s, the ruling class switched to a counterattack, to a policy of social revanche, using the economic upheavals and the state of the labour market which is unfavourable for the working class, and seeking to more than compensate for the concessions it had been forced to make earlier, in the course of its social manoeuvring. The working people have been robbed of a sizeable part of their social gains, and some elements of their living standards are down to those of many years ago. Unemployment is at a postwar high: the STR under capitalism makes millions of people, including young and educated people, redundant. The level of real wages has been declining, the conditions for the extension of social aid have been worsening, the working people’s gains in public health, education and other fields are being gradually whittled away. The right-wing conservative forces, which have taken power in the United States and some of the other major capitalist countries, are attacking the working people, harassing the trade unions, and using ever tougher totalitarian methods to run the society, not even hesitating to use political blackmail, repression, terrorism and punitive operations.

p Capitalism is now in the toils of a most acute bout of its general crisis. The factors whose favourable combination gave a temporary 41 impetus to the expansion of the productive forces, among them the restructuring of the capitalist economy, were largely worked out by the 1970s. Tremendous difficulties in the resource supply of the reproduction were caused by the exacerbation of global energy, raw material and ecological problems, made economic growth much more costly and required a fresh restructuring of the economy that was much less lucrative and more capital- intensive, while the structural shifts in the economy linked to the new stage of the STR on the basis of high technology and a switch to resources-saving and highly intensive type of reproduction still lay ahead. The economic efficiency of scientific and technical progress along the lines which had by then taken shape began to decline. The factors of cyclical renewal of fixed capital became less potent. The external economic stimulator of production was seen to misfire again and again: the rate of growth in the quantum of international capitalist trade was nearly halved as compared with the earlier period. The grave upheavals in material production and other sectors of the economy are accompanied by the disruption of finances and the monetary and credit systems of the capitalist countries.

p There are more and more weak spots in the capitalist economy because of the vast waste of the society’s resources by the war machine. Militarism has waxed on the arms race and has shot through the whole of life in the capitalist society in its efforts to take over all the political instruments of power. Naturally, it has a strong effect on the economy. Whatever the advocates of the MIC may say, militarism ultimately sucks the nations dry and ruins the peoples labouring under the burden of taxes and growing cost of living, although it does enrich some groups of the monopoly bourgeoisie. A sizable part of the social wealth is being destroyed through the channels of militarism. Pushing mankind to the brink of catastrophe, militarism has substantially contained the growth of production over a long period, has weakened the base of expanded reproduction, and has diverted vast labour, material and financial resources from productive use. The war machine has devoured more and more fruits of scientific and technical thought and has absurdly wasted not only the present but also the future potential of the human society. Analysts at the Institute of the United States and Canada of the USSR Academy of Sciences have estimated that the losses inflicted on the US economy by militarisation in terms of final-product underproduction over a period of thirty-three years (1946-1979) came to a total of $3.4-5.3 trillion (in 1972 prices), which is equivalent to 2.4-3.7 times the US gross national product in 1979. Researchers at the Institute of World Economics and International Relations of the USSR Academy of Sciences have estimated that if the proposals contained in Mikhail Gorbachev’s statement of January 15, 1986, were to be realised, the United States could save by the year 2000 roughly $1 trillion, and Western Europe—almost $300 billion.

p The worth of the ultra-optimistic claims about the existence of some kind of “neo-capitalism”, allegedly capable of balanced and 42 crisis-free development, is now clear even to bourgeois economists. The financial director of a TNG has admitted that "we have lost our way".  [42•1  One West German journal says that the world capitalist economy "is entering the final quarter of the twentieth century with a profusion of problems, uncertainties and causes of confusion and pessimism as faced seldom before in history. The unbroken optimism about continual growth until recently has given way to all-pervading resignation and skepticism.”  [42•2  Alvin Toffler has described the capitalist economy as careening on the brink of disaster, as the "eco-spasm or spasmodic economy".  [42•3 

p Under these circumstances, bourgeois economists have been forced to rehash their economic growth doctrine from fast to slow rates, on the pretext of the need for a radical renewal of the economic and ecological system of the modern world. A new paradigm has already been adopted by many experts, suggesting the " feasibility of sustained growth" at "reasonable rates".  [42•4  Such ideas have been repeatedly aired by the political leaders of the capitalist world, in particular at meetings of the Big Seven.

p There is a ceaseless but on the whole futile search in the capitalist countries for ways of overcoming the deep crisis of the entire system of state-monopoly regulation of the economy and its radical restructuring. Such regulation may have yielded an effect during the upward phase of the cycle in the 1960s, but it has proved to be altogether unworkable in the period of economic development which has followed. That is quite natural. The coincidence of inflation and mass unemployment, of cyclical and structural crises has created in the economy of world capitalism not only an unusual but also an unusually complicated situation, which makes the arising problems intractable and the state-monopoly regulation of the economy and the social relations much less effective. Indeed, it is impossible simultaneously to conduct a policy of anti-cyclical stimulation of production growth in order to combat the crises, the stagnation and the unemployment, while pursuing a deflationary policy of brakes on economic development in order to contain or damp down inflation as far as possible.

p Under the general crisis of capitalism, the capitalist state has limited scope for economic and social manoeuvring. The crisis processes which have multiplied in the highly developed state-monopoly economy of the postwar period have highlighted the low effectiveness and contradictory nature of state intervention in the capitalist countries’ economic life. They have exposed the inadequacy of the mechanism of state regulation to the problems which arose in the fundamentally new situation of the 1970s and the subsequent period, when the conditions of reproduction became more complicated and on the whole substantially worse, the problem of 43 marketing was aggravated, and cyclical economic crises became deeper and more protracted.

p The new situation has thrown a harsh light on the impotence of state-monopoly capitalism—despite the fact that it has developed into a major economic and political force—in tackling the all- encompassing problems of harmonising and ensuring the proportional development of capitalist production and overcoming its uneven and cyclical character. The state is incapable of coping with the capitalist market element or causing the “transformation” of capitalism as advocated by bourgeois economists. "No ‘modifications’ and manoeuvres by modern capitalism have rendered invalid or can render invalid the laws of its development, or can overcome the acute antagonism between labour and capital, between the monopolies and society, or can bring the historically doomed capitalist system out of its all-permeating crisis," says the new edition of the CPSU Programme. "The dialectics of development are such that the very same means which capitalism puts to use with the aim of strengthening its positions inevitably lead to an aggravation of all its deep-seated contradictions.”  [43•1 

p The crisis of the world capitalist economy has been superimposed on the contradictions within the national economies, and its mounting difficulties are also a clear manifestation of the incapacity of the existing system of state-monopoly capitalism to adapt to the new situation in the world. The foundations of the old structure of the international capitalist division of labour have been undermined, and the crisis processes have been spreading throughout the whole system of capitalism’s world economic and interstate relations. The quantum of international capitalist trade shrank for three years running during the world economic crisis at the beginning of the present decade, and this led to sharper competitive in-fighting for marketing outlets, and to a growth of dumping and protectionist trends in old and new forms.

p The crisis pervading the world capitalist economy has been largely sharpened by the fact that it is being eroded and considerably disrupted—much more so than ever before—by two types of contradictions: first, those within the system of the imperialist states, and second, those between imperialism and the national liberation movement, in other words, between the two main zones of the capitalist system, the developed and the less developed.

p The web of new colonialist relations of dependence, subjugation and exploitation, by means of which imperialism fetters the countries that have won their national sovereignty, keeps being broken through in many places. Once an object of imperialist policy, the less developed countries have become an independent and ever mightier factor of international relations, and their positions and influence in the world capitalist economy have been growing. The aggressive policy of domination and diktat conducted by the neocolonialists, primarily of the US stock, cuts across the objective interests even of the erstwhile colonies and semi-colonies where the capitalist system has been established.

p The dialectics of the world social process lie in the fact that the politically independent development of the states of Asia, Africa and Latin America does not strengthen, but markedly weakens imperialism, stripped of its colonial hinterland and reserve, and with it the whole of world capitalism, so producing more and more weak spots in it and deepening the general crisis of that economic and social system.

p It is ever more obvious that imperialism is unable to deal with the socio-economic and political consequences of decolonisation and an unprecedented scale of the STR. The capitalist system has entered upon a period of deep destabilisation, although it still has considerable reserves at its disposal. Its ruling forces have been trying ever harder to use military means to keep the system going. But in the nuclear age that is a recipe for universal disaster, instead of victory. As this truth is gradually driven home, it could have a great influence on every aspect of capitalism’s economic, social and spiritual development—provided the comprehension does not come too late.

p Comprehension of the peculiarities and prospects of capitalist development is an essential prerequisite for conducting the foreignpolicy course and international strategy of the Communist Party of the Soviet Union and the Soviet state. Capitalism is the society with which we have to coexist in the nuclear age, to seek ways of cooperation and mutual understanding, and to carry on a historical contest for mankind’s social future in peace. It is also a society whose experience in economic activity and development of productive forces needs to be viewed in objective and well-considered critical terms.

p The documents of the 27th Congress of the CPSU contain an in-depth scientific and innovative analysis of the capitalist society, of the main lines and peculiarities of world development, and of the dialectical unity and struggle of the two opposite social systems: capitalism and socialism. The theoretical and political conclusions and ideas formulated by the Congress have stimulated social scientists to further fruitful and creative efforts in studying the tendencies and contradictions of the modern world.

p Loyalty to the Marxist-Leninist doctrine consists in its creative development in the light of the available experience. Inertness’and stagnation of thinking are simply intolerable. Mikhail Gorbachev says: "The concrete economic and political situation we are in, and the particular period of the historical process that Soviet society and the whole world are going through, require that the Party and its every member display their creativity, their capacity for innovation and ability to transcend the limits of accustomed but already outdated notions.”  [44•1 

The task set by the Congress of taking a fresh look at some of the theoretical notions and concepts and of summing up the phenomena and processes developing in the modern world can be fulfilled only through a bold and creative approach to the new realities.