Capitalism's General Crisis

(January 2006)

This article is based largely on the original published in 1992. Although some editing and corrections in content have been made, we have not updated changes occurring during the sixth period of the general crisis (1987-present). Work on the topic is ongoing, some of which is reflected in more recent articles. Results of updated analyses will be published periodically.

The major purpose of this article was to defend the thesis that world capitalism remained in a state of general crisis. One idea disseminated by some modern Marxist-Leninists in the early 90s was that the "fall of communism" in the USSR and Eastern Europe and the destruction of Socialism in Albania eliminated both the Socialist camp and market and along with them the crucial contradictions that caused the general crisis; therefore, it no longer made sense to speak of a general crisis.

There is no doubt that Socialist revolutions and the existence of the Socialist Camp aggravate and deepen the general crisis because such developments sharply encroach upon imperialism's global political influence and further restrict the world capitalist market. However, the social-fascist Soviet bloc was already fully integrated into the imperialist camp and capitalist market, so the main contradictions that were affected were those of an inter-imperialist nature. The destruction of the dictatorship of the proletariat in Albania was pertinent as it was the only Socialist country, stood politically independent of the imperialist camp, and resisted the enslaving economic policies of international finance capital. Albania for a time also enjoyed strong support from the International Marxist-Leninist Movement, which it had resolutely worked to inspire and build. All of these factors could be interpreted as criteria for a Socialist Camp, whose absence do seriously impact on the world situation. But capitalism's general crisis remains, and nothing can end it except the world proletarian revolution that will overthrow the global capitalist system. The MML's idea is neither scientific nor honest; it is just another apology for capitalism, implying that with several victories over Socialism, it has resolved all of its class contradictions.

Without negating the significance of the contradiction between the imperialist and Socialist camps, there are others, inter alia that must be considered to fully understand the nature and development of the general crisis. We have already characterized world capitalism as being in a stage of chaotic decay with its relations of production decomposing - two of the most startling effects of the general crisis. While we have yet to objectively show the connections between these phenomena, the analysis below provides the groundwork for future work on this question.     


Stalin defined the general crisis as:

An all-round crisis of the world capitalist system, embracing both economic and political spheres (1).

The general crisis emerges with the continual intensification of social contradictions during the transformation of industrial capitalism into monopoly capitalism - imperialism. With the rise of imperialism, contradictions become exacerbated to the point of creating an entirely new epoch of world wars and revolutions. All of the major events of the 20th century, such as World Wars I and II, the Socialist Revolutions in Russia and other countries, the so-called "Cold War," and the "collapse of communism," as well as the national liberations struggles, can only be properly understood within the context of the general crisis. Moreover these political phenomena have had a definite economic basis. For example, turbulent economic dislocations preceded both world wars and the subsequent proletarian revolutions. In addition, severely disabled capitalist economies and a sharply restricted world capitalist market preceded the "Cold War."

            After World War II great emphasis was placed on the disintegration of a single capitalist market as a cause of the general crisis. As Stalin pointed out that:

. . . at the bottom of it (the general crisis - ed.) lies the ever increasing decay of the world capitalist economic system on the one hand, and the growing economic might of the countries that have fallen away from capitalism - the USSR, China and the other people's democracies - on the other (2).

However, the general crisis began even before the existence of a Socialist market, for Communist International analyzed:

The imperialist struggle among the largest capitalist States for the redistribution of the globe led to the first imperialist world war (1914-1918). This war shook the whole system of world capitalism and marked the beginning of the epoch of general crisis(3).

What is indisputable is that the general crisis is a complex of interconnections between the economic, social, and political spheres and can only be understood within the historic context. Furthermore, this historic context must not only include what has transpired since the emergence of the general crisis but significant developments that occurred before, that is by taking into account the development of capitalism from its industrial to imperialist stage.

I. Causes of the General Crisis

            The phenomenon of a new, qualitatively different kind of capitalist crisis was already detected by Engels in the 1880s. Observing the unusually long depression that set in after the crash of 1873, he noted ". . . the situation has essentially changed from what it was formerly"(4). for:

The decennial cycle of stagnation, prosperity, over-production and crisis, ever recurrent from 1825 to 1867, seems indeed to have run its course; but only to land us in the slough of despond of a permanent and chronic depression. The sighed-for period of prosperity will not come; as often as we seem to perceive its heralding symptoms, so often do they again vanish into air(5).

Engels cited the problems of overproduction, the glut of commodities on the world market, and the end of free trade in considering that a period of   "chronic crisis" had begun. He died, however, before circumstances would allow him to thoroughly study the question.

            It was Lenin who, by assimilating the Marxist theory of political economy and applying it to new conditions, analyzed the changes that capitalism was undergoing at the turn of the century. From his work he concluded that these changes signified a transition from the epoch of industrial capitalism to a new stage - imperialism. Imperialism, or monopoly capitalism, is the highest and last stage of capitalism when the:

intensification of contradictions constitutes the most powerful driving force of the transitional period of history(6).

At this stage, capitalism, "dying but not dead,"(7). becomes immersed in the general crisis.

            But why, more precisely, did the general crisis emerge and develop? To answer this, we must examine what the significant contradictions of capitalism are and how they become intensified in the conditions of its monopoly stage. Especially germane to solving these problems is an analysis of capitalism's fundamental contradiction.

            Marxist political economy identifies the fundamental contradiction of capitalism to be that between the socialized means of production and private appropriation, between the growth of the production forces and the property relations. This fundamental contradiction expresses itself both in the antagonism between the organization of production in the individual factory and the anarchy of production in society as a whole and the antagonism between the proletariat and the bourgeoisie. As Engels points out:

The capitalistic mode of production moves in these two forms of the antagonism immanent to it from its very origin (8).

Capitalists organize the production within their factories to increase profits, i.e., to accumulate surplus value through exploiting wage labor. The surplus value accumulated is then reinvested to build larger and additional factories, i.e., to expand the productive forces and reproduce on a wider scale. But this extended reproduction cannot develop smoothly. Actually anarchy in production prevails. Thus Lenin explained:

Capital organizes and regulates the labor within the factory for the further oppression of the worker, in order to increase its own profit. But in social production as a whole, chaos grows greater, bringing on crises when accumulated wealth finds no purchasers and millions of workers perish or go hungry, not finding work(9).

In their race for profits, the capitalists demand more and more to be produced. However, the increased number of commodities that are put on the market find a decreasing number of buyers because the growing exploitation of the workers results in a reduction of their wages and hence restricts their purchasing power.

That is why Marx analyzed:

The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit(10).

So it is precisely because of the two antagonisms: the contradiction between the capitalists and the proletariat grounded in the fundamental contradiction - the growth of the productive forces and private appropriation - that class conflict and crises ensue.

When the fundamental contradiction is exacerbated in the conditions of industrial capitalism, it primarily expresses itself in the economic sphere as a periodic crisis of overproduction: more goods are produced than the market can absorb. These crises of overproduction are inevitable and act as a necessary resolution of the contradiction which permits capitalism to continue reproduction. Marx explained:

From time to time the conflict of antagonistic agencies finds vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium(11).

Despite the crises' mitigating effects to temporarily ease the conflict between these antagonistic agencies, viz., between the proletariat and the bourgeoisie and the organization of production and the anarchy of production, the fundamental contradiction remains. Even though a certain equilibrium is restored, the capitalist relations of production cannot be brought into correspondence to the state of the productive forces. The recurring exacerbation of this contradiction leads to aggravating class antagonisms between capital and labor and to sharper political struggle. Consequently, it engenders and develops the subjective forces necessary for the overthrow of the bourgeoisie and for the revolutionary collapse of capitalism. This revolutionary collapse is grounded in a sociopolitical context that goes beyond the cyclical crises: in the imperialist stage of capitalist development it presumes the general crisis.

            Here we see the necessity of drawing a distinction between the cyclical crises and the general crisis. Whereas the former are "but momentary," the latter is "chronic," i.e., permanent. The periodic crises of overproduction appear soon after capitalism is born, take on crucial significance in its development during the industrial epoch only to have their effectiveness to "restore the disturbed equilibrium" undermined by the subsequent general crisis at the imperialist stage. Now, as one Soviet political economist said, "the former cyclical development of industry is shattered" (12). While the periodic crises continue, they do so in abnormal, convoluted forms which scarcely resemble the ones that occurred during the industrial epoch. No more are there four fairly predictable phases of the cycle which Marx described as crisis, depression, recovery, and boom. Since the "roaring 20s," a number of recoveries have been anemic and no real "boom" phases of the business cycle, typical during the industrial stage of capitalism, have occurred. This is evident by the fact that even during what bourgeois economists now call the "peak" or highest phase of the cycle, millions of workers remain jobless. This is a condition associated with the chronically unemployed sector of labor that came into existence as a corollary of the general crisis and is one of its key features. Besides the phases breaking down, the timing of the cycles becomes inconsistent. In the US for instance, intervals between cycles decreased from an average of 11 years between 1865 and 1918 to an average of 4 years after the general crisis set it. Other examples of abnormality include the crises of underproduction in Europe after the world wars and in the former Soviet Union during the 80s. These were brought on, in part, by extreme militarization of the economy - another important feature of capitalism's general crisis. Also significant is that the cycles taking place during the general crisis, unlike those of industrial capitalism, have been unable to resolve the fundamental contradiction even temporarily, thus intensifying this contradiction as the general crisis unfolds and consequently deepening all crises.

            A classic example of the convoluted nature of a post-general crisis economic cycle is what took place during the 30s. In assessing the "unprecedented protracted character" of the Great Depression, the Communist Party of the Soviet Union detailed a number of reasons to explain this phenomena. Among them was:

. . . the most important thing - . . . the fact that the industrial crisis broke out in the conditions of the general crisis of capitalism , when capitalism no longer has, nor can have, either in the major countries or in the colonial and dependent countries, the strength it had before the war and the October Revolution(13).

Here it is apparent that the periodic crises at this stage cannot be viewed as things-in-themselves, independent of the more profound socioeconomic conditions. On the contrary, they are to be understood chiefly within the context of the general crisis of capitalism.

            This dialectical and closely intertwined relationship between the periodic and general forms of crisis is not easily analyzed precisely because both forms stem from the same fundamental contradiction. However, the Comintern clarified that:

. . . the development of capitalism, and particularly the imperialist epoch of its development, reproduces the fundamental contradictions on an increasingly magnified scale (Emphasis added)(14).

The general crisis is not simply the result of the fundamental contradiction. The fundamental contradiction existed in the epoch of industrial capitalism, long before the appearance of the general crisis. At this stage its exacerbation mainly gave way to the temporary, periodic crises in the economic sphere. The general crisis emerges later, as a result of the intensifying of the fundamental contradiction on an increasingly magnified scale. It is from this historical- materialist perspective, i.e., from the standpoint of viewing the general crisis as an unfolding process, that its full significance can be apprehended. For the intensification of the fundamental contradiction at the imperialist stage drives all the contradictions of world capitalism to the extreme, whereby crisis becomes permanent and spreads to the social and political spheres as well. In this sense, capitalism enters a moribund state.

           How does this degeneration happen?

           It happens in accordance with the laws of capitalism.

          The point was made earlier that inherent in capitalist production is the tendency to grow at an ever greater and more rapid rate. Capitalisms are compelled to use part of their profits to expand existing enterprises and build new ones in a predatory struggle for survival in their respective regions of the capitalist jungle. The addition of this surplus value to the original capital is called capitalist accumulation. It is of the utmost importance to take into account the law of accumulation and its consequent, the law of the concentration and centralization in understanding the rise of imperialism and how this stage begets the general crisis.

            In his classic Imperialism, Lenin bases his analysis on the economic theory of Marx, paying particular attention to the law of concentration to explain the development from industrial to monopoly capitalism. At the very beginning of his work he makes clear that it was:

Marx, who by a theoretical and historical analysis of capitalism proved that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly(15).

Throughout the book, Lenin examines the birth, growth, and major features of capitalism at this "certain stage." Using the most recent and authoritative bourgeois sources and statistics, he substantially validates what Marx had anticipated years before, viz., the inevitable rise of monopoly, which now had "become a fact." Even more importantly, Lenin concluded that the rise of monopolies "is a general and fundamental law of the present stage of development of capitalism" (16).(Emphasis added)

            Here Lenin uncovered the decisive role played by the creation of monopolies and monopolization in the economic development of capitalism as it entered the 20th century. But when monopoly is spoken of here, it must be understood in the Leninist sense, which means dominance of a few big companies in a particular branch of industry or finance and the establishment of various forms of combinations whereby price-fixing, interest rates, production quotas, etc., are agreed upon and exercised. It does not mean "sole-seller," a definition concocted by bourgeois economists to distort the whole question of the relationship between monopoly and competition, feebly attempting to discredit the scientific conception of this phenomenon. For example, if one defines monopoly as "sole seller" or supplier then it is easy to rule it out as an abstraction that rarely exists in the "real economy." What supposedly exists, according to the bourgeois economists, is "oligopoly," or a "few sellers" that carry out "imperfect competition" among themselves rather than monopoly which eliminates competition.

            These arbitrary definitions and fallacious arguments are intended to obscure the law of monopolization articulated by Lenin, who emphasized that monopoly is the opposite of competition and represents a tendency alongside of competition to gain sole control of the market. By concentrating production and capital, the capitalist enterprises strengthen their capacity to produce at an ever growing rate. Yet, the capitalists tending toward monopolists face more and more difficulty locating adequate markets to realize the value of the additional commodities produced. For the concentration of production and capital can only come about from a massive accumulation of surplus value extracted from the working class, driving it to a worse state of impoverishment and under-consumption. The capitalists extract ever more surplus value from the working class in a number of ways, including wage reduction and rationalization (the incorporation of new, more efficient machinery and technologies in the production process, requiring fewer and fewer workers). These measures have the critical impact on the economy of decreasing the purchasing power of Labor that leads to its underconsumption and thereby an increasing glut of commodities on the market. To overcome the subsequent glut on the home market, the monopolists seek to export their unsold goods, but with the capitalist system spreading from country to country, the foreign market also contracts. Lenin cites England as a classic example:

England became a capitalist country before any other, and by the middle of the nineteenth century, having adopted free trade, claimed to be the "workshop of the world," the purveyor of manufactured goods to all countries, which in exchange were to keep her supplied with raw materials. But in the last quarter of the nineteenth century this monopoly was already undermined: for other countries, sheltering themselves by "protective" tariffs, developed into independent capitalist states(17).

            It now becomes clear that the stage of industrial capitalism - capitalism where "free competition" and "free trade" allowed for its unimpeded expansion - has come to an end. A fierce struggle for markets and spheres of influence begins to take shape between the major capitalist states. The Anglo-Boer War and the Spanish-American War are two examples of how this struggle assumed the form of violent conflicts to "solve" the problem of markets at the turn of the century. The capitalists and their political representatives of that time were more inclined to be candid about these matters. As the chief functionary of the US Department of Foreign Commerce commented a few years after US intervention in Cuba:

The Spanish-American War was but an incident of a general movement of expansion which had its roots in the changed environment of an industrial capacity far beyond our domestic powers of consumption. It was seen to be necessary for us not only to find foreign purchasers for our goods, but to provide the means of making access to foreign markets easy, economical and safe(18).

Lenin, in an earlier study, The Collapse of the Second International , had already discovered the significance of this new "policy" of imperialism toward solving the problem of markets:

Free trade and peaceful competition were possible and necessary as long as capital was in a position to enlarge its colonies without hindrance, and seize unoccupied land in Africa, etc., and as long as the concentration of capital was still weak and no monopolist concerns existed, i.e., concerns of magnitude permitting domination in an entire branch of industry. The appearance and growth of such monopolist concerns . . .have rendered the free competition of former times impossible; they have cut the ground from under its feet, while the partition of the world compels the capitalist to go over from peaceful expansion to an armed struggle for the repartitioning of colonies and spheres of influence(19).

            Such conflicts between the big capitalist powers assume a greater scope as imperialism replaces industrial capitalism on a world scale. The law of uneven development, which operated mainly through the anarchic and spasmodic growth of individual enterprises and branches during the industrial epoch, now expresses itself in the spasmodic development of entire countries. Once economically less significant countries begin to outpace the previously dominant ones. There is a constant striving to crowd each other out on the world market, and this fierce competition eventually includes the use of force. The rivalry that built up between England and Germany and escalated into World War I illustrates how the law of uneven development operates in causing and aggravating world-wide armed conflict.

            The striving of the powerful imperialist states to constantly expand their spheres of influence for markets, raw materials, etc. by waging war against each other illustrates how the productive forces capitalism unleashes have outgrown the restricted boundaries placed on them on the national scale and now demand the organization of economy on a world scale. This is how imperialism tries to eliminate the fundamental contradiction between the growth of the productive forces and the exploitative property relations. Its goal, through all manner and means, including force, is to create a single world state-capitalist trust, through which it hopes to organize the entire world economy. US imperialism set up the World Bank and the International Monetary Fund after the Second World War for precisely the purpose of bringing the entire world capitalist economy under its aegis.

            There was and is, however, no possibility for such a dream to materialize. The law of uneven development prohibits any long-lasting agreements and collusion between the big imperialist powers. The present day rifts that have opened up and are now widening between Anglo-American, German, Japanese, and French imperialism prove this point. Rivalry between them is intensifying over the most lucrative spheres of influence(20). Behind the smokescreen of fascist demagogy, inter-imperialist conflict is breaking out in the Middle East and Eastern Europe and a new round of repartition is beginning. As has been true since the rise of imperialism, wars of the most wanton and catastrophic kind are inevitable.

            But the intensified uneven development under imperialism not only brings forth wars; it also brings forth revolutions.

. . . imperialist wars, which are developing into world wars, and by which the law of centralization of capitalism strives to reach its world limit - a single world trust - are accompanied by so much destruction and place such burdens upon the shoulders of the working class and of the millions of colonial proletarians and peasants, that capitalism must inevitably perish beneath the blows of the proletarian revolution long before this goal is reached(21).

The October Revolution in 1917 where the Russian proletariat overthrew the bourgeoisie and seized state power blazed the path of proletarian revolution in the imperialist countries. And the national revolutions led by the proletariat throughout the Russian empire heralded the beginning of the colonial revolutions in the oppressed countries. Thus, the laws of accumulation, concentration and centralization of capital, monopolization, and uneven development inexorably led to the epoch of imperialism, wars and revolutions.

            From the scientific socialist standpoint, the conditions of imperialism do not arise accidentally, but by the necessity of these laws. And imperialism, i.e., moribund, dying capitalism cannot escape or negate these laws and the resulting contradictions; on the contrary, it:

carries the contradictions of capitalism to their last bounds, to the extreme limit, beyond which revolution begins(22).

Of these sociopolitical contradictions, the most important are (1) the contradiction between labor and capital; (2) the contradiction between the imperialist and Socialist camp; (3) the contradiction between the various financial groups and imperialist powers, and (4) the contradiction between the handful of ruling "civilized" nations and the colonial and dependent peoples. To gain an objective analysis of world events and developments, one must proceed from these contradictions which are fundamental to Marxist political economy, a science that provides the keys to understanding all sociopolitical phenomena and problems, including the one at hand - the emergence and growth of the general crisis.

            Laws are another essential component of Marxist political economy. Several that were discovered and articulated by Marx, Engels, and Lenin have been outlined above in their connection between capitalism and the general crisis. But there is more to say about laws in this connection.

           After World War II, Soviet and other Marxist economists carried out an intense debate over the state of post-war capitalism. Part of this debate was focused on identifying capitalism's basic economic law. J.V. Stalin, in response to this discussion, advanced an analysis in Economic Problems of Socialism in the USSR . First of all, he defined the criteria for such a law:

The basic economic law of capitalism is such a law as determines not some particular aspect or particular process of the development of capitalist production, but all the principal processes of its development - one, consequently, which determines the essence of capitalist production, its essential nature(23).

He then explained that certain laws, such as the law of value, the law of uneven development, and the law of the average rate of profit cannot meet the criteria of the basic law. For, whereas the first cannot be considered since it existed in commodity production even before the birth of capitalism, the latter two are unsatisfactory because they do not determine the essence of capitalist production and the principles of capitalist profit at the monopoly stage.

            Of particular importance is Stalin's argument that it is untenable to hold the law of the average rate of profit as the basic law because:

Modern capitalism, monopoly capitalism, cannot content itself with the average profit, which moreover has a tendency to decline, in view of the increasing organic composition of capital(24).

His claim is that extended reproduction of modern monopoly capitalism demands maximum profits. The drive for monopoly, the concentration and centralization of capital and production requires that profits are maximized. Furthermore, profits must be maximized in the attempt to counteract the law of the tendency of the rate of profit to fall.

            What is this law?

            The source of profits is the surplus value created by labor power of the working class, viz., the surplus or unpaid labor appropriated by the capitalists. The part of capital used for the purchase of this labor power, the payment of wages to the workers, is called variable capital as distinguished from constant capital spent on the means of production, viz., machinery, tools, raw materials, etc. Because profit is determined by variable capital, it is directly gauged by the ratio between variable capital and total capital. A high organic capital , viz., a preponderance of constant capital over variable capital, is inevitably brought about by the development of technique in production and an ever greater expenditure on machinery and materials. Such increasing organic composition of capital causes the average rate of profit to fall, but this is not to be misinterpreted as the actual mass of profit which does not generally fall but, on the contrary, tends to rise. Nevertheless, capitalism strives to counteract the tendency toward a lower rate of profit by taking certain measures, including intensifying the exploitation of labor, cutting wages below value and exporting capital. These and other counter-measures give rise to a new process of economic development essential for capitalist production under imperialism that Stalin identifies as the basic economic law. This law is predicated upon the law of surplus value, "made more concrete and developed further in adaptation to the conditions of monopoly capitalism" (25).

            Stalin presents what he characterizes as a "rough formulation" of the law as follows:

. . . the securing of the maximum capitalist profit through the exploitation, ruin and impoverishment of the majority of the population of the given country, through the enslavement and systematic robbery of the peoples of other countries, and lastly, through wars and militarization of the national economy, which are utilized for obtaining the highest profits(26).

Securing the maximum profit, according to Stalin, means securing a profit above both the average rate of profit and super-profit; the latter being, as a rule, only a slight addition to the average profit. This attempt to gain the highest profit is what "drives monopoly capitalism to such risky undertakings, such as wars of colonial plunder, inter-imperialist wars and attempts to win world supremacy" (27).This explains the significance of this law for understanding capitalism's general crisis and the epoch of imperialism. It is the law of maximum profit that intensifies the contradictions between the working class and the capitalists, between the oppressed nations and the imperialist powers, and between the imperialists themselves. The intensification of such class and social contradictions brings everything to a head in the general crisis.

            Materialists understand that the international situation is constantly changing, and we must take a holistic view towards the general crisis, taking into account all relevant contradictions and laws. The fact is, monopoly capitalism can never escape its contradictions and the consequences of the laws that govern it. It is especially incapable of escaping the ills brought on by the law of maximization of profits, the major ones of which are integrally connected to the general crisis.

II. The Development and Stages of Capitalism's General Crisis

            The general crisis emerged, as was noted earlier, with the rise of imperialism, and more precisely, with the start of the First World War (28). Shortly after capitalism fell into the general crisis, Marxist-Leninist theoreticians attempted to analyze its history and to identify periods or stages through which it had progressed. This is consistent with the dialectical-materialist perspective that sociopolitical phenomena must be examined within definite historical periods in order to understand their change and development. The periods of the general crisis are seen as unfolding within the larger epoch of imperialism; these smaller units are distinguished from each other by a set of key economic and political features which operate for a time before being supplanted by a new set. There have been several accounts of these periods presented in the International Communist Movement over the years. But judging from the major documents of the Comintern and the CPSU(B), there appears to be overall agreement that by the late 1930s, the general crisis had passed through two definite periods and had entered a third. These were:

* First Period 1914-1921

Characterized by the first imperialist war and socialist and national revolutions.

The uneven development of the capitalist countries and the constant drive of the monopolists to maximize profits inevitably lead to a violent re-division of the world (World War I 1914-1918) to force a new configuration of relationships among the major imperialist states in accordance with their respective strengths.   The growing predominance of the monopolies, of finance capital, over the life of the capitalist states, results in the transformation of the bourgeois capitalist state (bourgeois democracy) into state monopoly capitalism, whereby its major compartments are subjugated to the monopolies through a vast bureaucratic and military apparatus facilitating the centralization of political power and the militarization of the economies of the major industrialized countries. Post-war economic collapse ensues in most of the belligerent countries 1918-1921. At the same time, the war exacerbates the contradictions both between the proletariat and the bourgeoisie and the oppressed and oppressor countries, giving rise to proletarian revolutions in several countries and in Russia to the establishment of the dictatorship of the proletariat. Both the Socialist revolution and the national struggles are victorious in Russia, leading to the   establishment of the USSR, which embarks on the Socialist road apart from the world capitalist system.


* Second Period 1922-1928

Characterized by a temporary and partial stability of world imperialism achieved through a reactionary offensive, increased capitalist exploitation, and a retreat and ebb of the proletarian and national struggles outside the USSR.

After the war, capitalism attempts to "reconstruct" the economic and political spheres in accordance with the newly repartitioned world. An economic "recovery" or "boom" is effected in a number of major capitalist countries by "rationalization," whereby new, more brutal methods of exploiting the working class are introduced. Extraordinary reactionary measures are taken in a number of capitalist countries to put down and suppress the revolutionary proletarian movement, including the launching of fascism in Italy. On the other hand, rapid socialist construction moves forward in the USSR.


* Third Period 1929-1939

Characterized by an unprecedented deepening of all the fundamental contradictions of capitalism which bring about severe economic and political dislocations in the capitalist world and the threat of new imperialist wars.

World capitalism experiences its most protracted economic crisis, seriously affecting production, trade, credit, and money circulation. All this results from the attempt to continue to expand the productive forces to maximize profits while the world market sharply contracts. The crisis, which at base is one of over-production, is devastating and shatters the stabilization capitalism had gained in the previous period. This causes and aggravates tensions in the relations between the capitalist countries, bringing about the collapse of the post-war order. It also aggravates the class contradictions between the working class and bourgeoisie within the capitalist countries brought about, in part, by massive unemployment on top of chronic mass unemployment and sending huge numbers of laboring masses into pauperization and ruin. Hence growing antagonisms between the proletariat and capitalists effect the growth of revolutionary movements throughout the world. Finance capital responds by unleashing fascism on a wider scale and increasing militarization of the economy and society in preparation for war, especially on the part of those imperialist powers that are dissatisfied with the established spheres of influence and that plan to use military force to re-divide the world in their favor. At the same time, the ongoing success of Socialist construction in the USSR intensifies the contradictions and struggle between the capitalist and Socialist system.

Briefly, this is how the analysis stood just prior to World War II. But what has transpired since then? How is this analysis to be updated so that Marxists can come to terms with the present world situation?

            To deal with these questions, attention must be paid to relevant post-war documents and writings from the CPSU and the Cominform up to 1953, the work of the Party of Labor of Albania up to 1986, and to other reliable Marxist-Leninist analyses. There are, however, no materials from the past that can shed light directly on the post-World War II development of the general crisis and its current state(29). Scientific research and analysis need to be carried out by Marxist theorists today. This work will facilitate an advance of revolutionary theory that enables the working class to better understand capitalism and ways to struggle against it. As a contribution to this field of inquiry, we submit the following tentative overview:


* Third Period 1929-1945

Characterized by fascism and war unleashed by the imperialist camp to resolve the fundamental contradictions of capitalism only to be met and defeated by the tremendous struggle of the working class and democratic forces led by the Soviet Union and Communist Vanguards world-wide .

This period actually ends with the conclusion of World War II, so that the above description must be revised to include the following:  

Imperialism attempts to solve its endemic economic and political problems caused by exacerbated class contradictions by launching monstrous oppression (fascism) against the revolutionary working class movement internationally, providing the "quiet rear" and all-round militarization to unleash unbridled aggression (war) to re-divide the world and to destroy Socialism in the USSR. The total defeat of the belligerent fascist powers at the hands of the anti-fascist front led by the Soviet Union and the Communist Vanguards undermines the economic and political stability of the entire imperialist world and significantly deepens the general crisis, marking a transition to a new, more complex period.


* Fourth Period 1945-1953

Characterized by a substantial advance of Socialism and revolutionary struggles on a world scale answered by international reaction with a vicious fascist counter-offensive, resulting in a fierce clash between the Socialist camp and the imperialist camp.

Reconstruction of devastating war damage in the Soviet Union in fact advances Socialist construction; and New Democracies born in Eastern Europe and Asia lead to the expansion of the Socialist camp and the establishment of a large Socialist market independent of the capitalist market.   The proletariat and people's   struggle for democracy and liberation manifests itself powerfully in all corners of the globe. All these developments in turn deepen and aggravate the economic and political crises of world capitalism, which has been considerably weakened by the war. In these dire conditions for reaction, the US is compelled to lead a fascist counter-offensive to defend the decrepit imperialist camp at the same time serving its own interests by attempting to create a single world state capitalist trust of global domination through (1) subordinating the defeated and weakened imperialist rivals to Washington's dictate as well as bringing their colonies under its new neo-colonial order and (2) smashing the Communist Vanguards, the independent working class and liberation movements globally; and (3) organizing world imperialism and its social-fascist fifth column to wage overt and internal aggression against the Soviet Union and the Socialist camp in order to liquidate the proletarian dictatorships, destroy Socialism, and restore capitalism in those countries.


* Fifth Period 1953-1986

Characterized by the intensified struggle between Socialism and imperialism on the world scale resulting in victory of the neo-social-fascist counter-revolution and defeat for the Socialist camp and the working class and people's struggles, thus driving the world proletarian revolutionary movement into retreat and from an offensive to a defensive position. The restoration of capitalism in all but one of the Socialist countries that had formed the Socialist camp essentially results in a return to a single world capitalist market and the emergence of a new configuration of countries in the imperialist camp.

  Neo-social-fascist forces overthrow Socialism in the USSR and the proletarian dictatorships in the New Democracies (except for Albania) and restore capitalism in these countries behind the signboard of "Communism" and "Socialism." The Socialist market is liquidated and a single world market under the auspices of capitalism is re-established. The majority of the Communist parties are transformed into counter-revolutionary, reformist mechanisms of the capitalist states and the International Communist Movement is liquidated and substituted with an international apparatus of social-fascist state agents together with their tools acting in concert to assist imperialism in its continuous effort to sabotage and suppress the working class and people's movements throughout the world. Simultaneously, the Soviet-led imperialist bloc emerges in rivalry with the US led bloc for world hegemony. This super-power world order achieves an "equilibrium" whereby the monopolists (1) use all forms of struggle against each other short of open inter-imperialist war to settle spheres of influence and (2) agree to a "peaceful co-existence" in which they cooperate to coordinate attacks against the Marxist-Leninist, working class, and liberation movements. On the other hand, the Party of Labor of Albania along with other revolutionary Marxist-Leninist parties step up to defend Marxism-Leninism against the neo-social-fascist offensive and the two super-powers to build new proletarian vanguard organization in the working class, including the effort to build a new International Marxist-Leninist Movement against the machinations of the bogus International Communist Movement. The working class and peoples continue and intensify their battles in various parts of the world to free themselves from imperialist neo-colonial bondage and manipulation.


* Sixth Period 1987-Present

Characterized by intensified contradictions among the imperialists expressed in a new round of conflicts connected to yet another forceful re-division of the world brought on by uneven development and shrinking markets in the deepening global economic crisis. Another ferocious neo-social-fascist assault to crush Marxism-Leninism, Socialism and the revolution.

An all-out economic and political offensive by and the wrangling between the members of Western imperialism is effected by their efforts to depose of the rival monopolist ruling cliques in the Soviet Union and its Eastern European vassal states. To this end, they launch internal aggression to install more pro-Western, openly anti-Communist regimes in these countries. The standing of the US (along with its UK adjunct) and the Russian "federation" drops relative to other major imperialist powers due to the exhaustion and disintegration of the super-power world order and the increasing economic and political influence of the German, Japanese, and French imperialists. Uneven development, the breakup of the old super-power world order, and the shrinking "global marketplace" result in new conflicts among the imperialists in another scramble to re-divide the world due to the striving of the Anglo-American bloc to persist in asserting its "leadership" in a "new world order" to exercise its hegemony over dependent states and "valued" neo-colonies contrary to the interests of the other major imperialist states and groups. All this results in a growing number of reactionary local wars, military aggression, and other adventures in contested regions. At the same time there is a gravitation toward more open and extreme forms of fascism to provide imperialism a "secure rear" and military preparedness in its drive to re-divide the world in this predatory conflict. On another front, world imperialism unleashes neo-social-fascism to eliminate the Marxist-Leninist line of the Party of Labor of Albania and launch internal aggression to overthrow the proletarian dictatorship in Albania, thus eliminating the last Socialist country, while simultaneously launching social fascism to spread ideological confusion and political intrigue internationally to liquidate Marxist-Leninist parties and groups and suppress and manipulate revolutionary and liberation struggles.  





(1) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 586.

(2) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 586.

(3)Communist International. "Program 6th Congress." Handbook of Marxism. New York: International Publishers, 1935. 974.

(4)Engels, F. "Letter to Bebel," January 20, 1886. Marx Engels: Selected Correspondence. Moscow: Progress Publishers, 1955. 370.

(5)Engels, F. "Preface to the English Edition" of Capital Volume I. Capital, Volume I, Karl Marx. New York: International Publishers, 1975. 6.

(6)Lenin, V.I. Imperialism, the Highest Stage of Capitalism. Beijing: Foreign Language Press, 1973. 150.

(7)Lenin, V.I. Materials Relating to the Revision of the Party Program. Collected Works, Volume 24. Moscow: Progress Publishers, 1964. 464.

(8) Engels, F. Socialism: Utopian and Scientific . New York: International Publishers, 1972. 61.

(9)Lenin, V.I. "The Taylor System - Enslavement of Man by Machinery." Collected Works Volume XVII, qtd. in A. Leontiev. Political Economy. New York: International Publishers, undated, ca 1935. 53.

(10)Marx, K. Capital, Volume III. New York: International Publishers, 1975. 484.

(11) Marx, K. Capital, Volume III. New York: International Publishers, 1975. 249.

(12)Leontiev, A. Political Economy. New York: International Publishers, undated - ca 1935. 186.

(13)CPSU. "Report to the 17th Party Congress." Reprinted in J. Stalin. Problems of Leninism. Moscow: Foreign Languages Publishing House, 1947. 456.

(14)Communist International. "Program of 6th Congress." Handbook of Marxism. New York: International Publishers, 1935. 970.

(15) Lenin, V.I. Imperialism, the Highest Stage of Capitalism. Beijing: Foreign Language Press, 1973. 17-18.

(16) Lenin, V.I. Imperialism, the Highest Stage of Capitalism. Beijing: Foreign Language Press, 1973. 18.

(17) Lenin, V.I. Imperialism, the Highest Stage of Capitalism. Beijing: Foreign Language Press, 1973. 72.

(18) Qtd. in Howard Zinn, A People's History of the United States. New York: Harper & Row, 1980. 299.

(19) Lenin, V.I. The Collapse of the Second International. Tirana: The "8 Nentori" Publishing House, 1980. 35-36.

(20) For more details on these rifts, see New and Recent Articles folder, especially the article entitled "The Truth Behind the 'War on Terrorism': An Inter-Imperialist War."

(21) Communist International. "Program of 6th Congress." Handbook of Marxism. New York: International Publishers, 1935. 972.

(22) Stalin, J.V. Foundations of Leninism. Reprinted in Problems of Leninism. Moscow: Foreign Languages Publishing House, 1947. 15.

(23) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 570-571.

(24) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 571.

(25) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 571.

(26) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 572.

(27) Stalin, J.V. Economic Problems in the USSR. Selected Works. Tirana: The "8 Nentori" Publishing House. 572.

(28) Communist International. "Program 6th Congress." Handbook of Marxism. New York: International Publishers, 1935. 974.

(29) Political Economy - "A Textbook issued by the Economic Institute of the Academy of Sciences of the USSR" published in 1957 includes several chapters on the general crisis that may be useful, pending the outcome of our evaluation of its science and probity.