Workers Vanguard No. 26 (3 August 1973)
Healy/Wohlforth and “The Crisis”
The socialist movement repeatedly throughout its history has had to struggle against the abandonment of Marxist principles by tendencies and individual leaders who were adapting to pressure from the bourgeoisie. Thus although the Communist Manifesto unambiguously declares that "the workers have no country," the reformist Social Democrats voted for national defense of their respective bourgeoisies in World War I. Without a determined struggle against this betrayal the workers movement could not go forward.
The abandonment of proletarian politics is usually accompanied by a "theoretical" justification, in the form of a new "discovery" which "corrects" or "brings up-to-date" central propositions of Marxism. This is what is meant by revisionism – an attempt to attack the substance of Marxism-Leninism without openly coming into conflict with its great authority. Therefore revisionism often takes the form of maintaining lip-service to traditional Marxist terminology but redefining (usually broadening) certain key concepts to insinuate a different political line. For example, the Socialist Workers Party has transformed Lenin's concept of "self determination" for oppressed nations into the thoroughly utopian-reformist concept of freedom from all forms of oppression through real or illusory separatism.
A central facet of the revisionism of Gerry Healy's "International Committee" and his U.S. satellite, Tim Wohlforth's Workers League, has been the redefinition of the term "crisis." The Marxist use of this term is fairly conventional -- meaning an abrupt change in a situation or a sharp transitional period. However, Marx, Lenin and Trotsky were always careful to distinguish different types of crises. There are for instance the epochal crisis of the capitalist order since World War I, a parliamentary crisis (e.g., Watergate), a crisis of class rule (e.g., Chile) or a revolutionary crisis (Russia in October 1917). For a Marxist, an economic crisis has a precise and limited meaning. It is that phase in the business cycle between the boom and the bust, between expanding and declining production, and is accompanied by mass layoffs, widespread bankruptcies and the contraction of money and credit
Contrary to the fantasies of the proponents of Kondratieff long waves (Mandel) or a post-war boom which according to different versions lasted from 15 to 27 years (Healy), the phases of the business cycle are limited in duration. This is doubly true of the transitional, crisis phase. In the entire four volumes of Capital, Marx never mentions a crisis involving more than two years. Of course, depressed conditions can last many years. However, in contrast to the IC, Marx clearly distinguishes a "crisis" from "stagnation." ("In the period of stagnation following a crisis, circulation is smallest...." Capital, Vol. III, Ch. 33). The concept of a fifteen-year-old never-ending economic crisis is a fundamental revision of Marxism
Where Marxists are careful to distinguish the different types of crises, the IC amalgamates everything into one omnipresent super-crisis. The Watergate scandal, resurgent Peronism in Argentina, the rising price of gold, Heath's economic policies in Britain, are all an expression of The Crisis. Moreover, this cataclysmic event is also The Worst Crisis Ever:
Healy/Wohlforth and “The Crisis”
The socialist movement repeatedly throughout its history has had to struggle against the abandonment of Marxist principles by tendencies and individual leaders who were adapting to pressure from the bourgeoisie. Thus although the Communist Manifesto unambiguously declares that "the workers have no country," the reformist Social Democrats voted for national defense of their respective bourgeoisies in World War I. Without a determined struggle against this betrayal the workers movement could not go forward.
The abandonment of proletarian politics is usually accompanied by a "theoretical" justification, in the form of a new "discovery" which "corrects" or "brings up-to-date" central propositions of Marxism. This is what is meant by revisionism – an attempt to attack the substance of Marxism-Leninism without openly coming into conflict with its great authority. Therefore revisionism often takes the form of maintaining lip-service to traditional Marxist terminology but redefining (usually broadening) certain key concepts to insinuate a different political line. For example, the Socialist Workers Party has transformed Lenin's concept of "self determination" for oppressed nations into the thoroughly utopian-reformist concept of freedom from all forms of oppression through real or illusory separatism.
A central facet of the revisionism of Gerry Healy's "International Committee" and his U.S. satellite, Tim Wohlforth's Workers League, has been the redefinition of the term "crisis." The Marxist use of this term is fairly conventional -- meaning an abrupt change in a situation or a sharp transitional period. However, Marx, Lenin and Trotsky were always careful to distinguish different types of crises. There are for instance the epochal crisis of the capitalist order since World War I, a parliamentary crisis (e.g., Watergate), a crisis of class rule (e.g., Chile) or a revolutionary crisis (Russia in October 1917). For a Marxist, an economic crisis has a precise and limited meaning. It is that phase in the business cycle between the boom and the bust, between expanding and declining production, and is accompanied by mass layoffs, widespread bankruptcies and the contraction of money and credit
Contrary to the fantasies of the proponents of Kondratieff long waves (Mandel) or a post-war boom which according to different versions lasted from 15 to 27 years (Healy), the phases of the business cycle are limited in duration. This is doubly true of the transitional, crisis phase. In the entire four volumes of Capital, Marx never mentions a crisis involving more than two years. Of course, depressed conditions can last many years. However, in contrast to the IC, Marx clearly distinguishes a "crisis" from "stagnation." ("In the period of stagnation following a crisis, circulation is smallest...." Capital, Vol. III, Ch. 33). The concept of a fifteen-year-old never-ending economic crisis is a fundamental revision of Marxism
Where Marxists are careful to distinguish the different types of crises, the IC amalgamates everything into one omnipresent super-crisis. The Watergate scandal, resurgent Peronism in Argentina, the rising price of gold, Heath's economic policies in Britain, are all an expression of The Crisis. Moreover, this cataclysmic event is also The Worst Crisis Ever:
"The latest moves by the Nixon administration in devaluing the dollar mark a rapid acceleration of the capitalist system towards a breakdown and crisis deeper than at any time in its history..."In no way could the implications of the crisis after August 1971 be likened to those of 1931. Despite the depth of the earlier crisis, it was one in which the world's major trading currency, sterling was replaced by another currency, the dollar. The blunt fact today is that nothing can replace the dollar." [emphasis in original]
-- "Development of the Post-War Economic Crisis - Draft Resolution of the Socialist Labour League,"
– Workers Press, 24 February 1973
In fact, The Crisis is the Healyite term for the Pabloist conception of a "New World Reality," in which the question of proletarian leadership is no longer the key issue facing the workers movement, due to the changed objective conditions. The purpose of this terminological revisionism is to justify a revision of the Trotskyist program, particularly the methods of constructing a proletarian vanguard party. According to Pablo in 1951 the "New World Reality" would force erstwhile reformists to take revolutionary measures, thereby justifying liquidation of the Trotskyist parties into the local Stalinist, social-democratic or even petty-bourgeois nationalist parties. Today Healy/Wohlforth assert that traditional trade-union economic demands are now objectively revolutionary and that there are new shortcuts to creating a mass revolutionary party.
Crisis Magic: Trade-Union Reformism Becomes Revolutionary
The consequences of the IC's crisis-mongering are starkly revealed in a recent polemic by the Workers League against the Spartacist League on the question of whether ;wage demands by themselves are revolutionary. According to the WL:
Crisis Magic: Trade-Union Reformism Becomes Revolutionary
The consequences of the IC's crisis-mongering are starkly revealed in a recent polemic by the Workers League against the Spartacist League on the question of whether ;wage demands by themselves are revolutionary. According to the WL:
"But the fact is that the fundamental contradiction within capitalism, suppressed for an entire historical period through wild inflation, is radically transforming the relations between classes....-- Bulletin, 16 April 1973
"This is why simple trade union demands are so profoundly revolutionary today."
This is reformist hogwash. An economic downturn does of course weaken the power of the trade unions and make wage increases more difficult to win. Moreover, in the epoch of imperialism, the decaying stage of capitalism, there is no possibility of substantial and lasting reforms in the conditions of the workers. But the impossibility of successful reformism on a systematic scale does not at all imply the impossibility of reformist misleaders taking the working class down to defeat.
Moreover, since the capitalists do not confront the working class in a unified way, they can always temporarily improve the conditions of certain groups of workers at the expense of others and then try to reverse the process. For example,- even during the Great Depression those workers who remained employed and were relatively insulated from the market (e.g., government employees) had their real wages rise, as prices fell faster than their money wages. Communists must fight against reformist illusions in the workers movement under all political and economic conditions. In a period of actual economic crisis in the Marxist sense, to limit the struggle to reform demands, thereby failing to raise the consciousness of the masses to the understanding of the need to fight the entire capitalist system, means preparing even worse defeats.
The most important way in which capitalists play off different sections of the working class is along national lines. In recent years this was manifested in the systematic effort by bourgeois politicians and the labor bureaucracy to build support for the Vietnam war. With the end of the U.S.' post-World War II imperialist hegemony, codified in Nixon's August 1971 wage freeze/devaluation measures, the heightened inter-imperialist rivalry has led to a wave of social-chauvinist economic protectionism in the labor movement. During this period, the Spartacist League has been unique on the American left in consistently raisng the need for a class opposition to the Vietnam war and economic protectionism in its trade union work. In marked contrast, the Workers League, precisely by asserting the objective impossibility of reformism, has adapted to the social-patriotic union bureaucracy. In 1968 the WL set up Trade Unionists for a Labor Party whose program did not even mention the Vietnam war; in 1972 these pseudo-Trotskyists hailed Buy-American, No-Strike I.W. Abel's right-wing opposition to McGovern as a step toward a labor party.
The Jeremiah Theory of the Proletarian Vanguard
It seems that Healy/Wohlforth (together with Lyn Marcus) believe that the essential qualification for proletarian leadership is the same as that for an astrologer or religious mystic - the ability to miraculously foretell the future. And like successful astrologers, Healy/Wohlforth/Marcus are careful to couch their prophesies in obscure formulations which allow them to claim vindication no matter what happens. This fortune-teller blueprint for building a communist vanguard consists of: (1) asserting that the final crisis will appear imminently; (2) redefining the term "crisis" to render it meaningless; (3) then proclaiming at what appears to be an auspicious moment that the crisis is now occurring; and finally (4) asserting the right to lead the working class on the basis of credentials as a successful crystal-ball gazer.
These intreped "revolutionary" prognosticators will doubtless reply that their wisdom is based on Marxist science (or in the case of Marcus, on superhuman powers of "creative mentation"). But what kind of Marxism is it that announces week-in and week-out for the last twelve years that The Crisis is imminent or already here; that talks of a period of boom (during which the law of value was denied) lasting either until 1961, 1968 or, in the most recent version, until 1971; and that consistently refuses to print any concrete economic statistics of the real evolution of production to back up their ravings? There is only one way a communist organization can genuinely prepare for a revolutionary crisis, regardless of the factors which precipitate it. This is by establishing its cadre as recognized leaders in the labor movement and mass organizations of the oppressed on the basis of a revolutionary program. But this is precisely what the IC and Labor Committee do not do. According to their method one does not need a party whose cadre have won authority in the labor movement. All one needs is a genius-leader and effective publicity gimmicks.
A hallmark of Pabloism is the view that the changed objective conditions (The Crisis) will solve the tasks of the proletarian vanguard. Thus the perspectives document of the European majority of the so-called "United Secretariat" comments that recent changes in economic conditions place revolution on the order of the day (as opposed to earlier, when, presumably, it was not).
Economic Analysis as Subjective Idealism
In the article "Myth of Neo-Capitalism" (RCY Newsletter, No. 10, January-February 1972) we wrote:
Common to all these final-crisis enthusiasts is the desire to give a pseudo-Marxist explanation to their impressionistically-derived organizational ambitions. Thus in the articles "Myth of Neo-Capitalism" and "Boom Heads Toward Bust" (Workers Vanguard No. 25, 20 July 1973) we scientifically demonstrated that the 1950's was definitely not a period of exceptional capitalist prosperity. For the U.S., 1953-61 was the second worst economic period in this century, with three recessions, a per capita growth rate of only one percent a year and an average unemployment rate of over five percent. In addition to the U.S., France and Japan had distinctly higher growth rates in the 1960's than in the 1950's, while Britain stagnated at the same rate in both decades. The IC theorists have never produced a single statistic to demonstrate that the 1950's was a boom period because it simply was not.
Instead, Wohlforth counters our concrete refutation of their thesis with the following incredibly un-Marxist argument: "To deny the boom of the 1950's is simply a way to assert that today is the same as the 1950's, that ft requires no more of the revolutionary than was possible to do in the 1950's" (Bulletin, 9 July 1973). The state of production is here deduced from a subjective evaluation of organizational prospects: We think we can do much better now than in the 1950's, says Wohlforth. Therefore, there must have been a boom in the 1950's and a great crisis now. Marxists have a term for this method of reasoning. It is called subjective idealism. If Wohlforth thinks he can fly now but could not in the 1950's, do we then conclude that he was a human then and a pigeon now?
Behind Wohlforth's impressionistic idealism there is an element of truth. The organizational perspectives for Trotskyists are more favorable now than in the 1950's. The reason, however, is not the end of the mythical boom. Rather the relative quiescence of the workers movement in the major advanced countries in the 1950's was the result of demoralization produced by recent defeats engineered by the solidly entrenched Stalinist bureaucracies and conditioned by the direct military might of U.S. imperialism. Now a new generation is coming to the fore, uncowed by past defeats, but also unaware of the crucial lessons of the past betrayals. A crucial task of the Trotskyist vanguard is to bring to the new generation of militants the knowledge of these lessons. It will not accomplish this by constantly screaming "Crisis:" but rather through struggling for the program of permanent revolution which represents the distillation of this past history.
Marxism vs. Monetarism
As a supposedly definitive statement, the WL pamphlet "The Dollar Crisis" is most peculiar. Supposedly analyzing the "post-war economic crisis," it contains virtually no statistics on production, labor input, wages or profits. Despite Peter Jeffries' two theoretical appendices, the central document is journalistic and makes no attempt to present the analysis within the Marxist theoretical framework or even terminology. Particularly peculiar in a supposedly Marxist work, there is no treatment of the changing conditions for the buying and selling of labor power (the labor market) -- the point of intersection between the organized working class and capitalism as a system of production. Thus while the Profumo scandal is mentioned, the absolutely strategic importance of cheap foreign labor for the West European economy is not!
However, the strangest fact of all is that there is no detailed, theoretical analysis of the pamphlet's central theme – how the expansion of money and credit could stimulate a prolonged period of expanded production. The term "Bretton Woods agreement" is used like abracadabra as if it were obvious that the gold-convertability of the dollar could generate an international economic boom. A brief, clear explanation of the IC analysis appears to the following: There exists a fixed relation between the supply of money and total circulation and, therefore, production. By setting up a dollar-backed reserve currency system in 1944, the world bourgeoisie temporarily created a kind of pseudo-money. The expansion of dollar capital caused an economic boom which lasted until the late 1950's in some IC versions, and until 1971 in others. In any case, with the dollar devaluation in 1971, world production must contract to the point where it can be circulated by gold alone. This contraction creates the conditions for immediate proletarian revolution or the universal victory of fascism.
There is an important bourgeois economic school which, like the IC, regards the stock of money as the active, causal element in determining the general level of production. Running from J.B. Say and the British Currency School in the nineteenth century to Milton Friedman today, it is called the quantity theory of money. This theory holds that there is a fixed relationship between the stock of primary money (gold) and the flow of money expenditures. Until Lyn Marcus and Peter Jeffries, all erstwhile Marxists regarded the quantity theory of money as one of the most reactionary-utopian schools of bourgeois. economics, since it asserts that the bourgeois state can control the level of economic activity through its traditional control over bank reserves, or that total production is limited by the physical supply of gold, a kind of bullionist Malthusianism.
Jeffries is no doubt aware of Marx's attitude toward the quantity theory of money so he doesn't explicitly identify it as the basis of the IC analysis. However, the assertion of a fixed relation between the stock of monetary gold and production is the basis of the IC analysis.
A good deal of Marx's writings on money, particularly in Volume III of Capital, is a direct attack on the quantity theory of money. Marx asserted that the money supply adjusted to the demands of industrial and commercial capital through changes in the amount of credit and the velocity, of circulation. In the following passage Marx explicitly attacks the notion that the stock of monetary gold or level of bank reserves can determine production. We could cite fifty similar passages.
The Role of Credit
Moreover, since the capitalists do not confront the working class in a unified way, they can always temporarily improve the conditions of certain groups of workers at the expense of others and then try to reverse the process. For example,- even during the Great Depression those workers who remained employed and were relatively insulated from the market (e.g., government employees) had their real wages rise, as prices fell faster than their money wages. Communists must fight against reformist illusions in the workers movement under all political and economic conditions. In a period of actual economic crisis in the Marxist sense, to limit the struggle to reform demands, thereby failing to raise the consciousness of the masses to the understanding of the need to fight the entire capitalist system, means preparing even worse defeats.
The most important way in which capitalists play off different sections of the working class is along national lines. In recent years this was manifested in the systematic effort by bourgeois politicians and the labor bureaucracy to build support for the Vietnam war. With the end of the U.S.' post-World War II imperialist hegemony, codified in Nixon's August 1971 wage freeze/devaluation measures, the heightened inter-imperialist rivalry has led to a wave of social-chauvinist economic protectionism in the labor movement. During this period, the Spartacist League has been unique on the American left in consistently raisng the need for a class opposition to the Vietnam war and economic protectionism in its trade union work. In marked contrast, the Workers League, precisely by asserting the objective impossibility of reformism, has adapted to the social-patriotic union bureaucracy. In 1968 the WL set up Trade Unionists for a Labor Party whose program did not even mention the Vietnam war; in 1972 these pseudo-Trotskyists hailed Buy-American, No-Strike I.W. Abel's right-wing opposition to McGovern as a step toward a labor party.
The Jeremiah Theory of the Proletarian Vanguard
It seems that Healy/Wohlforth (together with Lyn Marcus) believe that the essential qualification for proletarian leadership is the same as that for an astrologer or religious mystic - the ability to miraculously foretell the future. And like successful astrologers, Healy/Wohlforth/Marcus are careful to couch their prophesies in obscure formulations which allow them to claim vindication no matter what happens. This fortune-teller blueprint for building a communist vanguard consists of: (1) asserting that the final crisis will appear imminently; (2) redefining the term "crisis" to render it meaningless; (3) then proclaiming at what appears to be an auspicious moment that the crisis is now occurring; and finally (4) asserting the right to lead the working class on the basis of credentials as a successful crystal-ball gazer.
These intreped "revolutionary" prognosticators will doubtless reply that their wisdom is based on Marxist science (or in the case of Marcus, on superhuman powers of "creative mentation"). But what kind of Marxism is it that announces week-in and week-out for the last twelve years that The Crisis is imminent or already here; that talks of a period of boom (during which the law of value was denied) lasting either until 1961, 1968 or, in the most recent version, until 1971; and that consistently refuses to print any concrete economic statistics of the real evolution of production to back up their ravings? There is only one way a communist organization can genuinely prepare for a revolutionary crisis, regardless of the factors which precipitate it. This is by establishing its cadre as recognized leaders in the labor movement and mass organizations of the oppressed on the basis of a revolutionary program. But this is precisely what the IC and Labor Committee do not do. According to their method one does not need a party whose cadre have won authority in the labor movement. All one needs is a genius-leader and effective publicity gimmicks.
A hallmark of Pabloism is the view that the changed objective conditions (The Crisis) will solve the tasks of the proletarian vanguard. Thus the perspectives document of the European majority of the so-called "United Secretariat" comments that recent changes in economic conditions place revolution on the order of the day (as opposed to earlier, when, presumably, it was not).
"The socialist revolution is once again on the agenda in Europe, not just in a broad historical perspective (in this sense, it has been on the agenda since 1914), but even from a conjunctural point of view."Similarly, in the recent statement of Healy's Socialist Labour League on The Crisis reprinted in the WL pamphlet, "The Dollar Crisis" (1973) we read:
- "The Building of Revolutionary Parties in Capitalist Europe," 1972
"The building of a mass revolutionary party i.e. no longer a propaganda demand, as it has always been for the revisionists. It is the urgent burning question of the hour."The building of a revolutionary party is never a demand, propagandistic or otherwise. Who is it to be demanded of -the bourgeoisie, the labor bureaucracy, the entire working class? The creation of a mass revolutionary party is the result of the lengthy struggle to root an organized communist cadre in the workers movement. If a revolutionary situation occurs when the communist vanguard does not yet have significant authority in the proletariat, that revolution will fail and no amount of wishful thinking, hysterical posturing or gimmicks can change that. The Healyites believe in every kind of crisis except the decisive one -- the crisis of proletarian leadership.
Economic Analysis as Subjective Idealism
In the article "Myth of Neo-Capitalism" (RCY Newsletter, No. 10, January-February 1972) we wrote:
"All theories of fundamental post-war capitalist change assume that postwar capitalism has performed extraordinarily well. This exceptional performance can only be explained if major structural reforms have taken place. Bourgeois and revisionist theorists then search for the structural changes behind this otherwise inexplicable boom – Keynesian-type stabilization policy, capitalist planning, increased government expenditure, the permanent arms economy, etc. The first, and in some ways most important, myth of neo-capitalism is the post-war boom.The IC accepts the essential theoretical premise of neo-capitalism. This is that after World War II, the advanced capitalist countries enjoyed a lengthy, extraordinary economic boom as a result of some form of state activity.
"The fact that after the Bretton Woods 1944 conference it [the ruling class] was forced to establish a series of agencies through which the economy was artificially stimulated by means of inflation was its recognition that the working class was too strong to be dealt with at that stage."This credit-inflation boom is nothing other than a monetarist variant of the theory of neo-capitalism. This is now clearly demonstrated by the fact that just when the Healyites declare the boom has generated the definitive crisis, the Mandelites have also declared the end of neo-capitalist expansion; ("For the first time since the Second World War, attempts to reduce these crises of over-production through stepped-up inflation ran into obstacles...." ["The Building of Revolutionary Parties in Capitalist Europe"]). Healy and Mandel have reinvented the famous Bukharin-Stalin "period" analysis - the "Second Period" of absolute capitalist stabilization is followed by the "Third Period" of terminal economic collapse and immediate revolutionary situations everywhere.
-- "The Dollar Crisis"
Common to all these final-crisis enthusiasts is the desire to give a pseudo-Marxist explanation to their impressionistically-derived organizational ambitions. Thus in the articles "Myth of Neo-Capitalism" and "Boom Heads Toward Bust" (Workers Vanguard No. 25, 20 July 1973) we scientifically demonstrated that the 1950's was definitely not a period of exceptional capitalist prosperity. For the U.S., 1953-61 was the second worst economic period in this century, with three recessions, a per capita growth rate of only one percent a year and an average unemployment rate of over five percent. In addition to the U.S., France and Japan had distinctly higher growth rates in the 1960's than in the 1950's, while Britain stagnated at the same rate in both decades. The IC theorists have never produced a single statistic to demonstrate that the 1950's was a boom period because it simply was not.
Instead, Wohlforth counters our concrete refutation of their thesis with the following incredibly un-Marxist argument: "To deny the boom of the 1950's is simply a way to assert that today is the same as the 1950's, that ft requires no more of the revolutionary than was possible to do in the 1950's" (Bulletin, 9 July 1973). The state of production is here deduced from a subjective evaluation of organizational prospects: We think we can do much better now than in the 1950's, says Wohlforth. Therefore, there must have been a boom in the 1950's and a great crisis now. Marxists have a term for this method of reasoning. It is called subjective idealism. If Wohlforth thinks he can fly now but could not in the 1950's, do we then conclude that he was a human then and a pigeon now?
Behind Wohlforth's impressionistic idealism there is an element of truth. The organizational perspectives for Trotskyists are more favorable now than in the 1950's. The reason, however, is not the end of the mythical boom. Rather the relative quiescence of the workers movement in the major advanced countries in the 1950's was the result of demoralization produced by recent defeats engineered by the solidly entrenched Stalinist bureaucracies and conditioned by the direct military might of U.S. imperialism. Now a new generation is coming to the fore, uncowed by past defeats, but also unaware of the crucial lessons of the past betrayals. A crucial task of the Trotskyist vanguard is to bring to the new generation of militants the knowledge of these lessons. It will not accomplish this by constantly screaming "Crisis:" but rather through struggling for the program of permanent revolution which represents the distillation of this past history.
Marxism vs. Monetarism
As a supposedly definitive statement, the WL pamphlet "The Dollar Crisis" is most peculiar. Supposedly analyzing the "post-war economic crisis," it contains virtually no statistics on production, labor input, wages or profits. Despite Peter Jeffries' two theoretical appendices, the central document is journalistic and makes no attempt to present the analysis within the Marxist theoretical framework or even terminology. Particularly peculiar in a supposedly Marxist work, there is no treatment of the changing conditions for the buying and selling of labor power (the labor market) -- the point of intersection between the organized working class and capitalism as a system of production. Thus while the Profumo scandal is mentioned, the absolutely strategic importance of cheap foreign labor for the West European economy is not!
However, the strangest fact of all is that there is no detailed, theoretical analysis of the pamphlet's central theme – how the expansion of money and credit could stimulate a prolonged period of expanded production. The term "Bretton Woods agreement" is used like abracadabra as if it were obvious that the gold-convertability of the dollar could generate an international economic boom. A brief, clear explanation of the IC analysis appears to the following: There exists a fixed relation between the supply of money and total circulation and, therefore, production. By setting up a dollar-backed reserve currency system in 1944, the world bourgeoisie temporarily created a kind of pseudo-money. The expansion of dollar capital caused an economic boom which lasted until the late 1950's in some IC versions, and until 1971 in others. In any case, with the dollar devaluation in 1971, world production must contract to the point where it can be circulated by gold alone. This contraction creates the conditions for immediate proletarian revolution or the universal victory of fascism.
There is an important bourgeois economic school which, like the IC, regards the stock of money as the active, causal element in determining the general level of production. Running from J.B. Say and the British Currency School in the nineteenth century to Milton Friedman today, it is called the quantity theory of money. This theory holds that there is a fixed relationship between the stock of primary money (gold) and the flow of money expenditures. Until Lyn Marcus and Peter Jeffries, all erstwhile Marxists regarded the quantity theory of money as one of the most reactionary-utopian schools of bourgeois. economics, since it asserts that the bourgeois state can control the level of economic activity through its traditional control over bank reserves, or that total production is limited by the physical supply of gold, a kind of bullionist Malthusianism.
Jeffries is no doubt aware of Marx's attitude toward the quantity theory of money so he doesn't explicitly identify it as the basis of the IC analysis. However, the assertion of a fixed relation between the stock of monetary gold and production is the basis of the IC analysis.
"With gold now supporting perhaps only 10 per cent of the value of world trade, the implications of the crisis must be a collapse of much of the other 90 per cent.... Here again, however, the limits to the expansion of credit (which the revisionists such as Mandel saw as the means of indefinite capitalist expansion) are strictly limited by the available money supply."
– "The Dollar Crisis"
A good deal of Marx's writings on money, particularly in Volume III of Capital, is a direct attack on the quantity theory of money. Marx asserted that the money supply adjusted to the demands of industrial and commercial capital through changes in the amount of credit and the velocity, of circulation. In the following passage Marx explicitly attacks the notion that the stock of monetary gold or level of bank reserves can determine production. We could cite fifty similar passages.
"So long as the condition of business is such, that the returns on the loans given come in regularly and credit remains unshaken, the expansion and contraction of the currency depends simply on the requirements of the industrialists and merchants. Since gold does not enter into consideration in the wholesale trade, at least in England, and the circulation of gold aside from the fluctuations with the seasons, may be regarded as a rather constant magnitude for a long time, the circulation of the notes of the Bank of England forms a sufficiently accurate measure of these changes. In a period of stagnation following a crisis circulation is smallest, with the recovery of demand comes also a greater demand for currency, which increases with the rising prosperity; the quantity of currency reaches its culminating point in the period of overtension and overspeculation...." [our emphasis]The availability of loanable money capital cannot stimulate production if expanded output is considered insufficiently profitable. As Marx observed:
– Capital, Vol. III, Ch. 33
"Not every augmentation of loanable capital indicates a real accumulation of capital or expansion of re-production. This becomes most evident in the phase of the industrial cycle following immediately after a crisis, when loanable capital lies idle in great masses.”The highest level of excess bank reserves (an index of the difference between actual bank loans and legally authorized lending capacity) in U.S. history occurred in the late 1930's, when interest rates were also abnormally low: if what is needed to bring the economy out of stagnation is simply an infusion of more money, a la Keynes and Healy, why was this available money not used to immediately end the depression instead of letting it drag on until World War II? Precisely because it is the rate of profit and not the supply of money which is the immediate determinant of the level of production. The credit expansion of the New Deal policies was a total failure. Conversely, the "shortage” of money and credit during a crisis is not because the stock of gold is too small in relation to total circulation. It is because financiers are hoarding money since they do not think loans can be repaid under conditions of rapidly contracting production and falling commodity prices.
– Capital, Vol. III, Ch. 30
The Role of Credit
One of the most characteristic features of petty-bourgeois socialism has been to emphasize the supposedly key role of "unproductive" financial capital and credit, rather than the productive system which Marx emphasized was the key to capitalism. From Proudhon to Lyn Marcus their battle-cry has been, "Tax the Banks!" To complement this reformist program, they produce a theoretical analysis emphasizing "fictitious" capital. Thus Marcus writes:
Not the Credit System, But the National State
Although the IC keeps insisting that the present crisis is insoluble, if their analysis was correct there could ba an easy solution. If world trade must collapse because the value of monetary gold is too small to circulate it, all that is necessary is to raise the price of gold. And this is precisely what is now happening. Within a year, most governments will probably be buying and selling gold on the open market. When this happens, the IC will have to come up with another explanation for the final crisis.
In general, the Dollar Crisis raises an obvious question which it does not answer. Why didn't the ruling class restore the pre-1914 gold standard after World War I, or World War II, or why don't they do so now? Under the pre-1914 gold standard the only way a national bourgeoisie could improve its international competitiveness was by lowering th edomestic price level. This, in turn, could only be brought about through unemployment, cutting money wages and temporarily sacrificing profits. Under nineteenth century comditions of generally expanding world production and a weak labor movement, the advanced capitalist countries were prepared to play by the gold-standard rules of the game. But backward capitalist countries (e.g., Argentina) did not adhere to the gold standard even in the nineteenth century.
After World War I the qualitatively greater instability in the world economy, the strengthening of the labor movement and development of powerful revolutionary proletarian tendencies made domestic deflation to correct a balance of payments too politically dangerous. Significantly, the only contemporary bourgeois political tendency which even contemplated a return to the pre-1914 gold standard was semi-bonapartist French Gaullism in the early 1960s'. After World War I, the conflicts between the national bourgeoisies produced international financial anarchy because this condition enabled a national bourgeoieise to mantain or incras its share of world trade and capital at the expense of other nations through permanent borrowing, competitive devaluation and direct control over foreign exchange transactions. That this did not occur after World War II was the result of the absolute economic and political hegemony of the U.S. in the capitalist world, a condition which lasted until the late 1960's. Even today the U.S. produces roughly 45 percent of total goods and services of capitalist countries, and its still considerable power has enabled it to force upward valuations of its major competitors' currencies (Japan, Germany). The endless crises of international finance are arenas of struggle between the imperialist powers over markets and spheres of exploitation. The decisive arena is war.
Despite its lip service to Lenin's "Imperialism," the SLL negates the Leninist-Trotskyist view of contemporary capitalism. Written during World War I, "Imperialism" has two major themes. The first is that a decaying world economy intensifies inter-imperialist conflicts leading to a war over the division of world markets and spheres of exploitation. The second is that labor reformism necessarily leads to social-patriotic support for one's own imperialist bourgeoisie. In contrast to Lenin, the IC ignores the question of imperialist war and denies the possibility of labor reformism, even in its virulent social-chauvinist form. Instead what is projected is a uniform world economic collapse whose result could be the international victory of fascism:
Healyism and Pabloism Drift Together
For the past several years we have called attention to the rightward degeneration of international Healyism, and its increasing adoption of Pabloist methodology. The parallelism of the IC and USec Majority's present economic analysis and particularly the organizational perspectives they draw from it further strengthens this view. It is now clear that Mandel's neo-capitalism and the Healyites' credit-inflation boom were objectivist explanations for the organizational stagnation of the erstwhile Trotskyist movement in the 1950’s-early 1960's. Likewise, their present catastrophic economic analysis is an objectivist projection of their get-rich-quick organizational ambitions. These ambitions are simultaneously associated with both sectarian posturing and adventurism and with opportunist tailism. On the one hand, we have the Healyites boy-scout-type hikes against unemployment and ever more-frequent press or the USec's experimentation with guerilla terrorism in Latin America and confrontation with the police in France. On the other hand we have the WL's campaign to pressure the Meanyite union bureaucracy into building a reformist labor party and the Ligue Communiste's and the WL's support to the French popular front, the Union of the Left. What sectarian posturing, adventurism and tailism have in common is that they are apparent short cuts to building a mass party
The Spartacist League does not pretend to be able to foretell the pattern of future economic cycles and their precise effect on the international class struggle. On the value of such predictions, we can do no better than to quote comrade Lenin
"Under capitalism, however, expanded production tends increasingly to obstruct itself and to turn into stagnation, increasing misery and decay....Its cause lies in the contradiction between expanded social production and the largely fictitious values associated with individual property-titles in the means of production and other income-producing property forms."Wohlforth is not so blatant in his revisions of Marx as is the guru of the NCLC. So in his current series on "What is Spartacist Today?" he spends part four in attacking the SL for allegedly ignoring the question of circulation, listing several quotes from Marx which point out how th ecrisis o f overproduction is expressed in the process of circulation. But Wohlforth is saddled with an insurmaountable difficulty: namely that the IC monetary crisis theory is rooted in circulation, not production, and is precisely the kind of monetarist theory Marx polemicized against in Vol. III, Part 5 of Capital. So in the next installment we discover that crises in Marx's time were, it is true, production crises but now things are different:
-- "Economism or Socialism, Part II," The Campaigner, October 1970
"Marx wrote of [capitalism] under conditions in which it was still capable of expansion of the productive forces of mankind. Crises in his period were more limited in impact and largely of a commodity or commercial nature. Today the overall expansion of capital with its corresponding change in the organic composition of capital producing a falling rate of profit means that capitalism has reached its general historical limit...Thus, you see, today the crisis takes place in circulation, today it is possible to solve the economic crises of overproduction by artificially creating credit! Keynesianism works according to Wohlforth, although only "momentarily." On the other hand, according to the 28 May Bulletin, Wohlforth's Hegelian "moment" when the law of value was "denied" lasted for "27 years"! Even more explicitly, the "Dollar Crisis" pamphlet exclaims: "The capitalist system, in any case is not fundamentally a crisis of commodity over-production, but one involving the over-production of capital." Wohlforth just can't keep that Marcus ghost hidden in the closet! As if in anticipation, Marx entitled one of the sections of chapter 17 of the Theories of Surplus Value "Absurd Denial of the Overproduction of Commodities, Accompanied by a Recognition of the Over-Abundance of Capital." But then, of course, that was in his day. As far as the substance of the matter is concerned, commodities are capital and capital in turn takes the form of commodities and even money at different points in the process of circulation. And the triumph of finance capital over manufacturing spoken of by Lenin was achieved by the absorption of the latter by the former. The opposition of financieal and manufacturing capital is a myth of Stalinism conconcted to justify the theory of a people's front with the "progressive" capitalists against the reactionary, unproductive sector, variously known as the Robber Barons, the 200 Families or Wall Street.
"This is also why questions of the monetary system and credit become so vital as well. As Lenin explained, the epoch of imperialism is a period in which finance capital triumphs over manufacturing capital...
"If forms of credit, of extended credit, are entered into this process both through bank loans and through the production of paper currency quite out of proportion to the money (gold) backing of the currency, then we can immediately see how the problem of overproduction can be momentarily overcome and along with the problems related to the falling rate of profit..."
-- Bulletin, 23 July 1973
Not the Credit System, But the National State
Although the IC keeps insisting that the present crisis is insoluble, if their analysis was correct there could ba an easy solution. If world trade must collapse because the value of monetary gold is too small to circulate it, all that is necessary is to raise the price of gold. And this is precisely what is now happening. Within a year, most governments will probably be buying and selling gold on the open market. When this happens, the IC will have to come up with another explanation for the final crisis.
In general, the Dollar Crisis raises an obvious question which it does not answer. Why didn't the ruling class restore the pre-1914 gold standard after World War I, or World War II, or why don't they do so now? Under the pre-1914 gold standard the only way a national bourgeoisie could improve its international competitiveness was by lowering th edomestic price level. This, in turn, could only be brought about through unemployment, cutting money wages and temporarily sacrificing profits. Under nineteenth century comditions of generally expanding world production and a weak labor movement, the advanced capitalist countries were prepared to play by the gold-standard rules of the game. But backward capitalist countries (e.g., Argentina) did not adhere to the gold standard even in the nineteenth century.
After World War I the qualitatively greater instability in the world economy, the strengthening of the labor movement and development of powerful revolutionary proletarian tendencies made domestic deflation to correct a balance of payments too politically dangerous. Significantly, the only contemporary bourgeois political tendency which even contemplated a return to the pre-1914 gold standard was semi-bonapartist French Gaullism in the early 1960s'. After World War I, the conflicts between the national bourgeoisies produced international financial anarchy because this condition enabled a national bourgeoieise to mantain or incras its share of world trade and capital at the expense of other nations through permanent borrowing, competitive devaluation and direct control over foreign exchange transactions. That this did not occur after World War II was the result of the absolute economic and political hegemony of the U.S. in the capitalist world, a condition which lasted until the late 1960's. Even today the U.S. produces roughly 45 percent of total goods and services of capitalist countries, and its still considerable power has enabled it to force upward valuations of its major competitors' currencies (Japan, Germany). The endless crises of international finance are arenas of struggle between the imperialist powers over markets and spheres of exploitation. The decisive arena is war.
Despite its lip service to Lenin's "Imperialism," the SLL negates the Leninist-Trotskyist view of contemporary capitalism. Written during World War I, "Imperialism" has two major themes. The first is that a decaying world economy intensifies inter-imperialist conflicts leading to a war over the division of world markets and spheres of exploitation. The second is that labor reformism necessarily leads to social-patriotic support for one's own imperialist bourgeoisie. In contrast to Lenin, the IC ignores the question of imperialist war and denies the possibility of labor reformism, even in its virulent social-chauvinist form. Instead what is projected is a uniform world economic collapse whose result could be the international victory of fascism:
"Either the working class, under the leadership of the revolutionary party, takes the power and puts an end to capitalist anarchy, or the ruling class will be forced to impose brutal dictatorship on the European, Japanese and American working class."Such a view dangerously miscomprehends the nature of fascism. A fascist bourgeoisie is not content merely to intensify the exploitation of its own working class. Fascism is, above all, the mobilization of the masses for imperialist war. Fascists come to power by proclaiming that the "people" need a "strong leadership" to defend them against their national enemies. It is precisely by social chauvinist demagogy that fascism attains its mass base and disorients and splits the workers movement. After Hitler came to power, the German Social Democrats announced their support for Nazi foreign policy. Labor reformism prepares the way for fascism through its social chauvinist policies. Because the IC rejects the centrality of the struggle against social-chauvinism and labor reformism in this epoch, the politics of international Healyism are essentially economist – which because they fail to go beyond the limits of capitalism ultimately lead to outright support for the bourgeoisie. Healy/Wohlforth have not yet had their 4 August 1914 (the day the German Social Democrats voted for war credits), but they have one in their future. It is only a question of time.
– "The Dollar Crisis"
Healyism and Pabloism Drift Together
For the past several years we have called attention to the rightward degeneration of international Healyism, and its increasing adoption of Pabloist methodology. The parallelism of the IC and USec Majority's present economic analysis and particularly the organizational perspectives they draw from it further strengthens this view. It is now clear that Mandel's neo-capitalism and the Healyites' credit-inflation boom were objectivist explanations for the organizational stagnation of the erstwhile Trotskyist movement in the 1950’s-early 1960's. Likewise, their present catastrophic economic analysis is an objectivist projection of their get-rich-quick organizational ambitions. These ambitions are simultaneously associated with both sectarian posturing and adventurism and with opportunist tailism. On the one hand, we have the Healyites boy-scout-type hikes against unemployment and ever more-frequent press or the USec's experimentation with guerilla terrorism in Latin America and confrontation with the police in France. On the other hand we have the WL's campaign to pressure the Meanyite union bureaucracy into building a reformist labor party and the Ligue Communiste's and the WL's support to the French popular front, the Union of the Left. What sectarian posturing, adventurism and tailism have in common is that they are apparent short cuts to building a mass party
The Spartacist League does not pretend to be able to foretell the pattern of future economic cycles and their precise effect on the international class struggle. On the value of such predictions, we can do no better than to quote comrade Lenin
"We cannot tell-no one can tell in advance how soon a real proletarian revolution will flare up there, and what immediate cause will most serve to rouse, kindle and impel into struggle the very wide masses, who are still dormant.” [emphasis-in original]We assert that in this epoch of the death agony of capitalism many revolutionary situations will occur. They can only be resolved in favor of socialism if led by a revolutionary proletarian party. And the only way to successfully prepare for a revolutionary situation is a constant struggle to establish a cadre as recognized leaders in the labor movement and mass organizations of the oppressed on the basis of the Transitional Program.
– "Left Wing Communism, An Infantile Disorder," 1920
