A Marxist Guide to Capitalist Crises
“A Marxist Guide to Capitalist Crises,” an eBook created from the key posts on the Critique of Crisis Theory blog, is currently in production. We’ll be sharing the completed chapters between our regular postings.
Section 4: World Trade and Crisis Theory
In the last few chapters, we examined an ideal capitalist industrial cycle. To simplify, we assumed the capitalist world was a single country with a gold-bullion-standard currency system. Based on these assumptions, we saw that once capitalism developed to the point where it acquired the ability to carry out sudden expansions of industrial production, an industrial cycle with all its phases of crisis, depression-stagnation, average prosperity, and boom emerged.
Therefore, even if global capitalists could achieve a single unified state with a gold bullion currency in the future, they would not be able to avoid industrial cycles crowned by crises of overproduction.
The capitalist world has always been divided into multiple countries using different currencies. In addition to the gold bullion standard we have been assuming, there have been gold coin (and sometimes silver coin) standards, mainly used before World War I, gold bullion standards, and paper money standards, where paper currencies are declared legal tender for all debts, public and private. The latter systems — sometimes called fiat currency — have been used since the end of the Bretton Woods System in the early 1970s up to the time of this writing.
Therefore, we need to understand international trade to complete our theory of the industrial cycle and its crises. Such a theory must explain global prices, trade, currency exchange rates, and gold flows as they operate under different currency systems.
More than crisis theory
A correct understanding of international trade involves much more than crisis theory, as important as this is. It also involves the relationship between capitalistically developed countries and capitalistically underdeveloped countries. Do these countries have a common interest in “free trade” as is proclaimed by the so-called “Washington Consensus” and most professional economists?
Can one capitalist country exploit another if free trade prevails? Understanding international trade is also crucial to understanding the underlying causes of wars among capitalist countries.
In the following chapter, I will maintain the assumption that the entire world is capitalist and that all the countries engaged in international trade are capitalist. The question of trade between capitalist and pre-capitalist countries raises many questions of its own. So, of course, does the question of trade between capitalist countries and countries that are building socialism.
However, here I will deal only with trade among capitalist countries. In any case, we have to understand this before we can deal with the trade between capitalist and pre-capitalist countries or between capitalist countries and countries engaged in socialist construction.
As is the case with all questions involving economic theory, we must be on guard against allowing the often false and apologetic ideas of the professional bourgeois economists to creep into our analysis. An example of this is the widespread tendency of modern Marxists to describe crises as being something other than crises of the general overproduction of commodities. This is even though Marx and Engels themselves repeatedly — and not just in a few places — described capitalist crises as crises of overproduction from the 1840s to the end of their lives. We can also mention the tendency of modern Marxists to describe current paper currency as non-commodity money.
This does not mean we should reject a theory simply because it enjoys widespread support among bourgeois economists. On the contrary, Marx was the greatest student of bourgeois political economy who ever lived and drew most of his economic ideas from them. However, he did so critically accepting what was correct in bourgeois political economy while rejecting what was false or simply apologetic.
A Critique of Crisis Theory 