Marx developed an idea about how capitalist economics worked and carried this idea to its logical conclusion, which for Marx was a generalized overproduction vis-a-vis the ability of the society to consume. An important corollary to this idea was that machines would come to replace a greater and greater percentage of human labor in the production process. Carried to its logical conclusion, this idea suggests that machines could ultimately replace almost all human labor. For Marx, this presented both a theoretical as well as a practical problem.

The practical problem was that sooner or later, the system was bound to overload its carrying capacity in terms of production and a crisis was bound to result. Put simply, capitalist society had the capacity to produce far more than it had capacity to consume. Carried to its logical conclusion, capitalism would ultimately displace so much human labor, that it would impossible for consumption to continue, at least private consumption of mass market items. With consumption slowed or strangled, production would soon have to stop as well. Profitability of the system would drop rapidly, furthering the crisis. Into this gap, Marx believed that the displaced working class would step in, establish a new system of government and humanity could live from the machine-based production indefinitely.

Much of the way that Marx described capitalist production rings true. As the tremendous productive capacity of the world capitalist system severely strained the very weak consumptive capacity of the modern world during the late 1920s, the world fell into a depression, the Great Depression. This depression did not abate until government led us out by going to war. In the absence of World War ll, it is difficult to see how the world capitalist system would have revived.

Where Marxist theory breaks down is in terms of predicting how the two general classes would react and how the politics would work. In fact, during the 1930s, the capitalist class around the world made deals with anti-communists, from the Fascists of Italy and later in Spain to the Nazi Party in Germany. Both America as well as Great Britain had fascist parties. Our own Charles 'Lucky Lindy' Lindberg was an ardent admirer of the German Luftwaffe. The royal family of Britain played footsy with local fascists, as well as with their German associates across the Channel. And the working class rallied around its own representatives, usually labor union- based political groupings.

Again, how this would have finished playing out in America and Britain without the intervention of World War ll, is so much speculation. I have seen no realistic economic analysis which indicates a way out of the depression, apart from what actually occurred. True, some monetarists continue to claim that only a bad monetary policy by the Federal Reserve caused the market crash of 1929 to deteriorate into the Great Depression. Still, I have not seen an analysis of how the Federal Reserve might have righted the economy, once the damage had been done, say by 1931. (1)

The war did occur and the capitalist system returned to vibrant levels of production with the war and once war ceased, the world economy coughed for a couple of years, but production soon returned to pre-depression levels of growth and stayed that high for almost two decades, more than sufficient time for conservative economists and political conservatives to distort the actual history of the 1920s and 1930s. Still, distortions or not, these conservatives could not refute the labor theory of value and as production escalated beyond all purchasing power of the working and middle classes during the early 1980s, America went on a debt boom. The extra production was consumed during the 1980s, but at an unprecedented level of debt. (2)

Another market crash occurred in October 1987, but this time the Federal Reserve flooded the banking system with cash, preventing another Great Depression, more accurately putting off another Great Depression for a while. Despite furious efforts by the Republican-dominated Federal Reserve for almost two and one-half years, the American economy stayed dormant.(3) From 1989 until the end of 1992, the Federal Reserve lowered interest rates and tried to pump up the money supply in order to permit George Bush to run in 1992 with a growing economy. To no avail. Bush had to run in 1992 with almost no wind in the economy and he went down, thanks partially to the third party efforts of H. Ross Perot. Bill Clinton inherited all these Federal Reserve efforts and had a better economy for almost 18 months, until the Federal Reserve began tightening the interest rates and the money supply.

But the large issue may be getting distorted in this text. The capitalist system is in the beginnings of the world wide crisis which Marx predicted over one hundred years ago. And after almost seventy years of incompetence and worse under the socialist banner, the fallen Soviet Union is an example to modern people world wide of what not to do and how not to run an economy. Still, with capitalism slowly but steadily squeezing the human labor from the production process, and with production itself slowly expanding, a crisis is in the making. And with most Marxist ideas thoroughly discredited in most peoples' eyes, it is difficult to see how anything that Marx wrote being put into political effect today.

If anything, conservative thinking has triumphed, with even the weak government efforts remaining from the New Deal being destroyed in the present Congress. And still, if Marx' ideas on how capitalism works were and remain accurate, then there is no conservative way out of the crisis. And worse yet, there may not be another World War to absorb the tremendous levels of overproduction flooding all over the world today.

1 see Charles Kindleberger and Peter Temin especially. Back
2 see R.L. Norman's 1992 and 1993 unpublished manuscripts on the Gross National Debt. Back
3 see again R. L. Norman unpublished manuscripts of 1992 and 1993. Back

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