E. Germain

From the ABC to Current Reading:
Boom, Revival or Crisis?

(November 1947)

From Internal Bulletin, Revolutionary Communist Party (BSFI), November 1947.
Translated by Condos, W. Redver.
Transcribed by Mike Pearn.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The document The Real Situation in Great Britain – An Answer to the IS, has been the subject of many controversies. We want, therefore, to limit ourselves to one aspect of the questions raised, in order to allow our comrades following the discussion really to educate themselves through the curtain of fractional smoke that has been lowered over the debate.

To sincerely add that in our opinion it is necessary once and for all that the comrades of the RCP Majority should drop this deplorable attitude of wanting to teach “the ABC” to everyone at every opportunity. It is all very well to know the ABC, and we must rejoice that there are no more illiterates in the RCP, it seems. But woe to you, comrades, if you stop your efforts at this rather primitive stage of knowledge! Armed with the ABC alone, you must stumble fatally as soon as you undertake to decipher phrases as complicated as those in which the stages of the cycle of industrial production under capitalism are contained. It is time, high time, to pass from the ABC to current reading.

How the Document Defines “Boom”

The document of the majority comrades defines a “boom” in the following way:

“We understand by “boom”, a period when the market is capable of absorbing the goods produced, and during which period production expands. (In comparison with which level? the crisis level!) It means that growing numbers of workers are employed on producing commodities, that the unemployed army declines, and that capital is ploughed back into industry and there is an expansion of trade. The measure of the “boom” is its productive output in comparison with the past, etc., (which past? the previous crisis?)”

Here we are with our ABC pat – but unable to spell anything! If the comrades of the RCP Majority were to take their own definition seriously, they should logically conclude that we are confronting a “boom” in all capitalist Europe, because in all these countries production is “expanding” (in relation to 1944 or 1945), capital is being “ploughed back” into industry (after having left it at an unknown point previously), the market is capable of “absorbing” all the products that are sent to it (there is still everywhere terrible underproduction in all sectors of the Continent, etc. And if one wanted to push this to its logical conclusion, one could say that always, in all countries and under any condition, the “boom” starts as soon as a crisis has passed its lowest point, because slowly, one after the other, the characteristics cited in the document of the RCP Majority are realised. Such a reasoning would lead to this schematism: reduce the whole cycle of capitalist production to two stages: the crisis and the boom. Such vulgarisations even do an injustice to the ABC, comrades of the RCP Majority; they must deal a severe blow to Marxist political economy.

How Marx Defined the Cycles of Capitalist Production

The theory of the cyclical movement of capitalist production, in constant correlation with the theory of crisis, is treated by Marx only fleetingly, in a great number of passages in his works on political economy. The term “boom” does not appear anywhere, but although we lack a systematic exposition of these questions in his works, there are a great many passages which can help us better understand the meaning of the terms which constitute the core of the discussion.

This is how Marx defined for instance the stages along which the cycle of capitalist production runs:

“The enormous power, inherent in the factory system, of expanding by jumps, and the dependence of that system on the markets of the world, necessarily beget feverish production, followed by over-filling of the markets, whereupon contraction of the markets brigs on crippling of production. THE LIFE OF MODERN INDUSTRY BECOMES A SERIES OF PERIODS OF MODERATE ACTIVITY, PROSPERITY, UPSWING (‘ESSOR’), OVER-PRODUCTION, CRISIS AND STAGNATION”. [1]

Another definition, interesting because it specifies the idea that Marx formed on the stage which we today call “boom”, is contained in the following extract;

“... cycle, interrupted by smaller oscillations, of periods of average activity, production at high pressure, crisis and stagnation ...” [2]

We see here that Marx does not distinguish two, but six stages of the economic cycle, by which one could even add a seventh, by distinguishing in the period that Marx calls “moderate activity” the stage of industrial resumption, and that of revival proper. These stages are actually called resumption, revival, boom, prosperity, over-production, crisis and stagnation.

We have already seen too terms by which Marx characterises the period that we call “boom”: the term “upswing” (essor) and the term “production at high pressure”. We find in his works, however, fuller characterisations of what he designates in this way:

“The mass of social wealth, overflowing with the advance of accumulation, and transformable into additional capital, thrusts itself frantically into old branches of production, whose market suddenly expands, or opens up new branches, such as railways, the need for which grows out of the development of the old ones.” [3]

The comrades of the RCP Majority must answer this question frankly: do we actually see such a “feverish”, “frantic”, “high-pressured” movement in British industry? Is there a situation that corresponds to the general definition of “boom” in Marx?

But Marx, while not giving a general analysis of the characteristics of such stages anywhere, has all the same touched upon these specific characteristics in many of his writings. We can specifically distinguish the following characteristics which, according to him, distinguish this period of “upswing (essor) that we today call “boom”,:

  1. On the basis of the devaluation of constant capital throughout the period of stagnation preceding the revival, this capital is renewed during the period of revival, the boom appears as the period during which industry works at a capacity and a production of work greater than that of the “prosperity” preceding the last crisis. It is precisely for this reason – each boom constituting an expansion of production in relation to the preceding boom – that according to Marx the cyclical movement has been a motive force of development of the productive forces. [4]
  2. Throughout the period of stagnation and resumption, sufficient stocks of raw materials have been built up to create abundance in this field. The price of the raw materials – the principal constituent of the total price of production of a capitalist commodity – stand at a level relatively lower than the price of finished commodities, allowing in this way a very accentuated rise in the average rate of profit, which constitutes the basis of this extraordinary impetus received by industry during the period of boom. [5]
  3. Sufficient reserves of man power must be present in order to allow a serious expansion of industry. According to Marx, the essential basis of the boom is a proletarian overpopulation. [6]
  4. Sufficient reserves of unproductive money capital must be accumulated during the previous stages, so that suddenly a mass of this capital can be put into industry. It is this mass which allows, from the point of view of value, the expansion of industry, as the present mass of modernised machinery allows it, from the point of view of use value. [7]

We have limited ourselves to these four points, but it is obvious that the boom has still other characteristics that one only needs to take the trouble to look up in the works of Marx. Let us not this essential point: It is the movement of the average rate off profit – which does not coincide mechanically with that of the market – which determines the [word obscured] of the cycle of capitalist production. The passage from stagnation to resumption for instance, is made, in general, without extension of the market, but simply on the basis of the fact that the real price of labour and of raw materials, have fallen below those of finished products in the sphere of means of consumption, where, after a certain relative destruction of stocks, the production can slowly be resumed, on the basis of buying power which is not greater than that existing at the moment of the crisis... Let us not exist, but state that we are very far from the schemata of the document of the RCP Majority, but ... we are with Marx!

The Economic Situation of Great Britain in the Light of this Definition

Can we say that the four characteristics are actually present in the situation of British economy? It is enough to read the document of the RCP Majority itself attentively to see that this is not the case. Of those four factors of the boom the fourth alone is present. In reality, on the British capital market there is a plethora of capital and a sharp decrease in the average rate of interest and discount. But we can make two remarks on this subject.

  1. The average rate of profit is kept to such a level and the new investments bring such little hope of immediate and abundant profit that an enormous mass of capital refuses to converge towards industry – exactly the opposite phenomenon to that which is produced during a period of boom. We would wish to point out, on this subject, running the risk of offending our comrades of the RCP Majority, that the only real boom that Great Britain has known is the farcical boom which absorbs £500,000,000 per year, more than the whole of British agriculture and equal to half the total industrial, agricultural, etc., annual investments for the whole country!
  2. This plethora of capital on the British market, is in reality, a phenomenon of inflation of pound sterling, clearly expressed by its inconvertibility into dollars on the world market. Great Britain’s chronic shortage of hard currency on the world market is as much the expression of a lack of gold-capital (a phenomenon opposed to that of a boom) as of an adverse balance of trade. As for the question of industrial machinery, there is no serious progress in the modernisation of the basic industries. The question of man power and of raw materials is dealt with below.

It clearly follows that the situation of British economy is not that of a boom, if one wishes to give this term the significance that Marxists have always given to it. There exists in Great Britain at the moment a situation of general revival, with at most a boom in some isolated industries which do not determine the general aspect of the economy. The Economist regularly speaks of the boom in shipbuilding. There is nothing which resembles the “feverish push of production in all the branches of industry” of which Marx speaks, and we shall see later why there cannot be such a phenomenon in the Great Britain of today. This confusion between revival and boom that the comrades of the RCP Majority make is fatal not only from the point of view of economic analysis, but also, and mainly, because it disarms them in face f a phenomenon such as the crisis of last winter, which is inexplicable in the framework of a boom. Of course there is no crisis of overproduction in Great Britain. If the comrades of the Minority have foreseen this, they have made a great mistake, and this is their business. But never, and nowhere, has the IS spoken of a crisis of overproduction. Here the authors of the document have made a real amalgam in constantly mixing their polemic against their own minority with their polemic against the IS, and thus trying to smuggle into our movement their vulgarisation of the cycle of production without differentiation between the two periods of the crisis.

The Cycle of Production in the Conditions of Decadent Capitalism

All the above reasoning, however, is fundamentally perverted. It applies categories emerging from an analysis of the cycle of production under conditions of ascendant capitalism to a situation of capitalist decadence. The question now is to determine in what measure an application of the theory of the cycles is possible in the present era.

The answer that the document offers to this question is astonishingly simple:

“Since the advent of imperialism and finance capital and the turn of the 20th century, world economy has been dominated in general by the fact that the productive apparatus has expanded more rapidly than the world market.”

This is the whole definition of the period of “general and absolute decline” that the authors of the document offer us. By what is this “general and absolute decline” manifested in the course of the cycle of production, comrades of the majority of the RCP? Only by what you have written on page 17 of your document? If there is not any specific effect on each of the stages of the cycle?

Unfortunately Trotsky, with regard to decadent capitalism, no more than Marx with regard to ascendant capitalism, has left no systematic treatise of the cycles. Moreover, supplementary difficulties appear in this field, due to the lack of the synchronism of those political and economic phenomenon. However, on the basis of the programmatic writings of our movement, we can, without mistake, cite at least the following characteristics of the cycle of production under capitalist decadence:

  1. The crises last longer, are more violent, and carry a much longer stagnation than the period of revival and prosperity. “Ascendant capitalism appears as a long prosperity interrupted by brief interludes of crisis. Decedent capitalism appears as a long crisis interrupted by revivals which are more and more unstable and brief.”
  2. The world market ceases to expand globally. There is no more boom on a world scale. The splitting up of the world market or the violent destruction of a competitor alone allows for the development of feverish booms in certain capitalist countries.
  3. There is no more all-round development of productive forces on a national scale. Even during the period of “prosperity” certain branches develop only at the expense of other branches. Advances in technology are no longer or are only very partially incorporated in production.
  4. There is no more all-round amelioration of the standard of living of the industrial workers from one revival to another. This naturally does not exclude either a relative “amelioration” between the crisis and revival, or a relative amelioration of the position of the unemployed or peasants, etc.!, transformed during the “revival” into industrial workers.

One can say, more specifically about the “old” capitalist countries of the European Continent and Great Britain, that the market is limited more and more not only by the growing contradiction between the capacity of production and the capacity of consumption, but also by the fact that the overproduction of certain sectors is emphasised by the chronic underproduction of other sectors.

Some Examples From Great Britain of Today

A few concrete examples will show the exactness of our statement that in the period of capitalist decadence British industry can no longer overgrow the stage of revival and attain one of real boom:

  1. In the sphere of the market: all the so-called “expansion” of Great Britain’s foreign trade has been realised only in a unilateral way, Great Britain (as well as Belgium, etc.) has taken advantage of the disappearance of German competition on the world market. But if one wants to add up the volume of the foreign trade of all the countries with which Great Britain is supposed to have “expanded” her commercial relations, one would see that this volume is still far below the volume of 1938, which itself was a year of crisis. Yet, already at the present stage, and even before world commerce has reached the volume of 1938 – we repeat once more: the volume of the previous crisis! – the absence of the German market, weighs ever more heavily on the development of British trade. And American competition is already appearing ... [8]
  2. In the sphere of the development of industry: the British capitalists are not in the least capable of an all-round development of all sectors of their industry. On the contrary, they are forced to concentrate their efforts on a few sectors- as the 1947 Conference document of the PB of the RCP correctly indicates – such as automobiles, machines, locomotives, shipbuilding, etc. The conditions of the textile, coal and even steel industries are such that capital refuses to flow into them, and the state will be forced to make the taxpayer pay for production in these sectors which no longer yield the average rate of profit which alone can make the profitability of the other industries possible.
  3. In the sphere of raw materials: towards the end of a boom period there is always a shortage of raw materials because production expands less rapidly into this sector than into others during the stage of “feverish development”. [9] Such a shortage is the direct product of the boom itself. Can one say that the present shortage of coal in Great Britain , for instance, is a shortage of this nature? Obviously not. In fact, the present shortage is based on a chronic underproduction in this sector, on the fact that for many decades the productive capacity of the British coal industry has with smaller oscillations been on the decline. Far from being the result of the boom, the coal shortage is a factor limiting the revival and making its development towards a boom impossible.
  4. In the sphere of labour power: it is here that the authors of the RCP Majority document allow themselves the most astonishing acrobatics. According to them the best proof of the boom is the fact that the number of unemployed, which is still 400,000, is the lowest that has been known in peacetime. At this note, France, where there are no unemployed at all anymore, would be experiencing an absolutely feverish boom, whereas in reality, its industries have been paralysed for the last eight months below the crisis levels of 1938. The comrades of the RCP Majority seem never to have heard talk of the tendency of depopulation which characterises all the old decadent capitalist countries, and which represents the dialectical ”turn” of the law of relative overpopulation in capitalist decadence. The active population of these countries has a tendency to stabilise of decline slowly, independently of the stage of the cycle which the country is under-going. The fact that the number of unemployed is today lower does not mean at all that there is a serious increase in the working population. Quite the contrary. British statistics are very defective on this subject, because they do not separate workers and industrial employees (one knows that the tendency towards bureaucratisation of the big industries is particularly strong in Great Britain). In spite of this lack of precision, the figures are very eloquent. [10]

The total number of workers and employees, men and women working in public services, goes from: 16,500,000 in the middle of 1939 (a year of stagnation) to 16,612,000 in the middle of 1946, and 17,605,000 March 1947.

Yet even this increase of scarcely one million (6 per cent) is fictitious, as the sector “basic industries”, the most bureaucratised, by itself has absorbed a million extra hands!

And the picture becomes even clearer when one adds that the number of active men has declined from 211,000 in relation to 1939. Really this is a funny kind of boom in man power ...

Of course, in a boom a shortage of man power appears very often towards the end when the expansion of the industry has been more rapid than the building up of new reservoirs of man power. But far from being the result of a boom the present crisis of British manpower (as the equivalent crisis in France, Belgium, etc.) is the expression of the irredeemable capitalist decadence of these countries which limits the revival and renders its transformation into a boom impossible.

It is not by chance that American capitalism which is still capable of broadening its basis, on the background of the impoverishment or destruction of its competitors, has been able to find, at the beginning of its present boom, a reserve of man power of 15 million hands, whereas all the previous course of decadence in the “old” capitalist countries, had destroyed all important reservoirs of man power.


The sores of the actual revival in Great Britain, as we have tried to demonstrate, are not the effect of chance. They are actually the immediate result in the cycle of production of this “absolute and general decline” that the comrades of the RCP Majority cite as frequently, in the abstract, without trying to draw the conclusions for everyday economy. They provoke crises within revivals, which are not crises of overproduction, but specific crises of the decadent economy occupied with the restoration of past destruction. These sores are inherent in the British capitalist economy, and it will not be possible to eliminate them definitely otherwise than on the basis of world socialist planning. To demonstrate this practically, to denounce the false character of “Labour planning”, which, historically, consists solely of an attempt to replaster condemned capitalism on he backs of the working class, ‒ this is what should constitute one of the axes of the British Trotskyist propaganda. But, in order to undertake this correctly, it is necessary to abandon right now any juggling with a boom that has not existed and that British capitalism will never experience again.


1. Karl Marx: Das Kapital, p. 396, in the Volksausgabe of Karl Kautsky, Dietz, Stuttgart 1919. Translated and underlined by us.

2. Id., p. 570. Translated and underlined by us.

3. Id., p. 570. Translated and underlined by us.

4. For example; Karl Marx, Theorien über den Mehrwert, III, Second Part, p. 304 and ff., in the edition of Karl Kautsky, Zweite Auflage, Dietz, Stuttgart 1910.

5. Karl Marx: Das Kapital, III, First Part, p. 101 and ff., in Engels’s edition, 5e Auflage, Meissner, Hamburg 1921.

6. Karl Marx: Das Kapital, I, p. 570 and ff.

7. Karl Marx: Das Kapital, III, Chapter 25, passim. This plethora of capitals provokes a sharp decrease in the average rate of discount and interest.

8. Here we leave out of consideration the possible question of new American credits to Europe, the result of the Marshall Plan, etc.

9. Karl Marx: Das Kapital, III.

10. The Economist, Record and Statistics, 24.5.1947.

Last updated on 14.5.2011