CHAPTER XVIII.
Crisis and Competition.

1.—Causes and Effects of the Crises.

The crisis arises because no standard exists whereby the real demand for a commodity may at any time be measured and ascertained. There is no power in bourgeois society that is enabled to regulate the entire production. In the first place, the consumers of a commodity are scattered over a wide area, and the purchasing ability of the consumers, who determine the consumption, is influenced by a number of causes that no individual producer is able to control. Moreover, every individual producer must compete with a number of other producers whose productive abilities are unknown to him. Each one seeks to defeat his competitors by every means at his command: by a reduction in prices, by advertising, by giving credit for prolonged periods, by sending out drummers, and even by cunningly and insidiously disparaging the products of his competitors, the latter means being especially frequently resorted to during critical times. The entire realm of production accordingly depends upon the subjective discretion of the individual. Every manufacturer must dispose of a certain quantity of goods in order to subsist. But he seeks to sell a far larger quantity, for this increased sale determines not only his larger income, but also the probability of his triumphing over his competitors. For a while sales are insured, they even increase; this leads to more extensive enterprises and to increased production. But good times and favorable conditions tempt not only one but all manufacturers to multiply their efforts. Production by far exceeds the demand. Suddenly it becomes manifest that the market is over-stocked with goods. The sales slacken, the prices fall, production is limited. To limit production in any branch means to decrease the number of workers employed in this branch, and a reduction in wages, whereby the workers in turn are compelled to limit their consumption. The inevitable result is, that production and consumption in other branches slacken likewise. Small dealers of all kinds, shopkeepers, bakers, butchers, etc. whose chief customers are workingmen fail to dispose of their goods and also suffer want.

The effects of such a crisis may be seen from the statistics of the unemployed that were compiled by the trade-unions of Berlin at the close of January, 1902. In Berlin and suburban towns there where over 70,000 persons who were entirely unemployed, and over 60,000 who were partly unemployed. On February 13, 1909, the trade-unions of Berlin took another census of the unemployed and found that there were 106,722 unemployed persons (92,655 men and 14,067 women).[204] In England there were 750,000 unemployed persons during September 1908. These figures represent workingmen and women who were willing and eager to work but unable to find work. The deplorable social conditions of these human beings may be easily imagined!

Since one industry furnishes the raw material to another and one depends upon the other, the ills that befall one must affect the others. The circle of those affected widens. Many obligations that had been entered upon in the hope of prolonged favorable conditions cannot be met, and heighten the crisis that grows worse from month to month. A heap of accumulated goods, tools and machines becomes almost worthless. The goods are frequently sold underprice and this often leads to the ruin of the owners of such goods as well as to the ruin of dozens of others who in turn are compelled to sell their goods underprice also. But even during the crisis the methods of production are constantly improved in order to meet the increased competition, and this means again forms a cause for new crises. After a crisis has lasted for years and over-production has gradually been removed by selling the products underprice, by limiting production and by the ruin of smaller manufacturers, society slowly begins to recuperate. The demand increases again, and promptly the production increases also, slowly and carefully at first, but more rapidly with the prolonged duration of favorable conditions. People seek to reimburse themselves for what they have lost and seek to secure their portions before a new crisis sets in. But as all manufacturers are guided by the same impulse, as they all seek to improve the means of production in order to excel the others, a new catastrophe is ushered in more rapidly and with still more disastrous results. Countless lives rise and fall like bubbles, and this constant reciprocal action causes the awful conditions that we experience during every crisis. The crises become more frequent as production and competition increase, not only among individuals, but among entire nations. The small battle for customers, and the great battle for markets becomes increasingly severe and is bound to end with enormous losses. Meanwhile goods and supplies are stored away in masses, but countless human beings who wish to consume but are unable to buy, suffer hunger and privation.

The years 1901 and 1907–08 have proven the correctness of this representation. After years of business depression, during which capitalistic development nevertheless continued to progress uninterruptedly, the upward course set in, stimulated to no slight extent by the changes and new equipments that the army and navy required. During this period a tremendous number of new industrial enterprises sprang up, and a great many others were increased and expanded to attain the development made possible by their technical means and to heighten their productivity. But in the same way the number of enterprises increased that were transferred from the hands of individual capitalists to capitalistic associations (stock companies), a transformation that is always accompanied by an enlargement of the manufactory. Many thousands of millions of marks represent the newly formed stock companies. Moreover, the capitalists of all countries seek to form national and international agreements. Trusts spring up like mushrooms from the ground. These endeavour to determine the prices and to regulate production on the basis of exact statistical research to avoid over-production and reduction in prices. Entire branches of industry have been monopolized in this way to the advantage of the manufacturers and to the disadvantage of the workers and the consumers. Many believed that thereby capital had obtained the means that would enable it to dominate the market in all directions. But appearances are deceiving. The laws of capitalistic production prove stronger than the most cunning representatives of the system, who believed to have regulated it. The crisis came, nevertheless, and it was seen again that the wisest calculation proved faulty and that bourgeois society cannot escape its fate.

But capitalism continues in the same manner since it cannot change its substance. By the way in which it is bound to act, it upsets all laws of bourgeois economics. Unrestricted competition—the alpha and omega of bourgeois society—is supposed to place those most capable at the helm of all enterprises. But experience shows that as a rule it places those at the helm who are most shrewd and cunning and least troubled by a conscience. Moreover, stock companies set aside all individuality. The trust goes further still. Here not only does the individual manufacturer cease to be an independent person, the stock company too becomes a mere link in a chain that is controlled by a board of capitalists whose main purpose is to plunder the public. A hand full of monopolists become the masters of society; these dictate the prices to be paid by the consumers for commodities, and to the workers their wages and standard of living.

This development shows how superfluous private enterprise has become, and that production conducted on a national and international scale is the goal toward which society is bent. The only difference will ultimately be that organized production and distribution will benefit the entire community instead of benefiting the capitalistic class only, as is the case to-day.

The economic revolution above described, which is rapidly driving bourgeois society to the heights of its development, is constantly intensified by new, important events. While Europe is being more threatened each year, both in its foreign and domestic markets, by the rapidly growing North American competition, new enemies are arising in the far East who make the economic conditions of the entire world still more critical.

Competition drives the capitalist around the globe, as the Communist Manifesto expresses it. He is constantly seeking new markets, that is, countries and nations where he can dispose of his goods and create new demands. One side of this endeavour may be seen from the fact that since a few decades the various states are eagerly engaged in colonization. Germany was foremost among these and succeeded in taking possession of large tracts of land, but these possessions are chiefly occupied by people of a very primitive degree of civilization who have no demand worth speaking of for European products. The other side of this endeavour is directed toward carrying capitalistic civilization to nations who have already attained a higher degree of civilization, but who until recently were rigorously opposed to modern development. Such are the East Indians, the Japanese, and especially the Chinese. These are nations that comprise more than one third of the entire population of the earth. When once given an impetus they are well able—as the Japanese have already demonstrated during the war with Russia—to develop the capitalistic method of production quite independently, and to do so, moreover, under conditions that will be accompanied by disastrous results to the more advanced nations. The ability and skill of these nations is well known, but it is equally well known that their wants are few—due to a great extent to the warm climate—and that, when compelled to do so, they rapidly adapt themselves to changed conditions. Here the old world, including the United States, is being confronted by a new competitor who will demonstrate to the whole world that the capitalistic system is untenable. In the meanwhile, the competing nations, especially the United States, England and Germany, seek to outdo one another, and all means are resorted to in order to obtain the largest possible share in the control of the world’s market. This leads to international politics, to interference in all international events of importance, and in order to interfere successfully, the navies especially are developed and increased as never before, whereby the danger of great political catastrophes is heightened anew. Thus the political realm grows with the realm of economic competition. The contradictions grow on an international scale, and in all countries that have undergone a capitalistic development they bring forth similar phenomena and similar struggles. Not only the method of production but also the manner of distribution is responsible for these unbearable conditions.