The rise of German capitalism and the European crisis The concentration, so far, on the position of Germany should not be taken to mean that Germany was any more responsible for the war than the other great powers, and therefore should be rightfully saddled with “war guilt” as prescribed by the Treaty of Versailles. Rather, the emphasis on Germany flows from the political economy of international relations at the turn of the century. Above all, it was the dynamic development of German capitalism, following the formation of the Empire in 1871, which upset the balance of power in Europe. Germany set out to change the status quo in line with the rise of its industry and to advance its economic and geopolitical interests. But in doing so it came into conflict with the other great powers who were satisfied with the status quo, from which they derived great benefit, and who were no less determined to retain it. Germany’s decision to seize upon the events in Sarajevo in June 1914 in order to bolster its position in southeastern Europe and force a showdown with Russia, Russia’s ally France, and even with Britain if that proved necessary, was motivated by concerns that it was necessary to act in the face of a worsening international and domestic situation. So far as France was concerned, the eruption of an all-European war was the only road by which she could restore her position on the European continent. French domination in the nineteenth century had depended on the disunity of the German states. But the Franco-Prussian war and the unification of Germany meant that France depended on alliances with other powers against her more powerful rival. With the German annexation of Alsace-Lorraine following the Franco-Prussian war of 1870-71, Marx had pointed to the inevitable alignment of France with Russia, considered unthinkable at the time because of the vast difference in the political systems of the two countries. “He who is not deafened by the momentary clamour,” he wrote, “and is not interested in deafening the German people, must see that the war of 1870 carried with it, of necessity, a war between Germany and Russia, just as the war of 1866 bore the war of 1870. I say of necessity, unless the unlikely should happen, unless a revolution breaks out in Russia before that time. If this does not occur, a war between Germany and Russia may even now be regarded as un fait accompli. It depends entirely upon the attitude of the German victor to determine whether this war has been useful or dangerous. If they take Alsace-Lorraine, then France with Russia will arm against Germany. It is superfluous to point out the disastrous consequences.” [25] Not that France was driven into war with Germany simply out of a desire for revenge. In the four decades that had passed since the annexation, other factors had come into play. The struggle with Germany had gone beyond the confines of Europe as both powers sought colonies and spheres of influence across the globe. Looking back on the July crisis, the French president, Poincaré, made clear the strategic issues which were bound up with the decision to back Russia and refuse the German demand that France stay neutral. “On us rested two duties, difficult to reconcile but equally sacred: to do our utmost to prevent a conflict, to do our utmost in order that, should it burst forth in spite of us, we should be prepared. But there were still two other duties, which also at times ran the risk of being mutually contradictory: not to break up an alliance on which French policy had been based for a quarter of a century and the break-up of which could leave us in isolation and at the mercy of our rivals; and nevertheless to do what lay in our power to induce our ally to exercise moderation in matters in which we were much less directly involved than herself.” [26] London’s decision to enter the war on the side of France and Russia against Germany was likewise motivated by long-term strategic considerations, above all the belief that at some point Britain would have to take a stand against Germany and that the longer the confrontation was delayed the worse Britain’s position would be. Why could not a modus vivendi have been struck between Britain and Germany? History and reason seemed to point in that direction. After all, the two nations had never gone to war in the past, shared many common interests and had developed closer economic relations—they were major markets for each other’s products. Yet the rise of Germany increasingly threatened the global position of Britain. Almost 20 years before the July crisis, Foreign Secretary Edward Grey had summarised his views on the rise of Germany as follows: “The fact is that the success of the British race has upset the tempers of the rest of the world and now that they have ceased quarrelling about the provinces in Europe and have turned their eyes to distant places, they find us in the way everywhere. Hence a general tendency to vote us a nuisance and combine against us. I am afraid we shall have to fight sooner or later, unless some European apple of discord falls amongst the Continental Powers...” [27] British political leaders could recognise Germany’s need for global expansion, at least in the abstract. However, in the words of a memorandum prepared on January 1, 1907 by Eyre Crowe, the chief clerk at the Foreign Office, they would maintain “the most unbending determination to uphold British rights and interests in every part of the globe.” [28] This memorandum was a detailed discussion of the strategic issues which should guide British foreign policy in relation to Germany and its rising claim to world power status. According to Crowe, either Germany was aiming for general political and maritime ascendancy, or she had no such clear-cut ambition but was merely aiming to use her legitimate position to promote her foreign commerce, spread the benefits of German culture and create fresh German interests all over the world, wherever and whenever a peaceful opportunity presented itself. How would one be able to tell the difference? There was, in fact, no necessity to undertake such a determination, Crowe explained, because the consequences to Britain would be the same. The second scheme “may at any stage merge into the first, or conscious, design scheme,” and “if ever the evolution scheme should come to be realized, the position accruing to Germany would obviously constitute as formidable a menace to the rest of the world as would be presented by any deliberate conquest of a similar position by ‘malice aforethought.’” The significance of the Crowe Memorandum is that it points to the objective processes and tendencies at work in the Anglo-German relationship. Whatever the policies pursued by its political elite and whatever its intentions, Crowe maintained that the very economic advance of Germany and the consequent spread of its interests on a global scale represented a danger to the British Empire which had to be countered. While not denying Germany’s legitimate expansion, he concluded, care had to be taken to “make clear that this benevolent attitude will give way to determined opposition at the first sign of British or allied interests being adversely affected.” One course which had to be abandoned, if the past were to be any guide, was “the road paved with graceful British concessions—concessions made without any conviction either of their justice or of their being set off by equivalent counter-services. The vain hopes that in this manner Germany can be ‘conciliated’ and made more friendly must be definitely given up.” On the continent of Europe, Britain demanded the maintenance of the “balance of power.” But that “balance” was being disrupted by the spread of capitalist development itself. Germany was seeking to expand its interests, as was Russia, which had experienced rapid growth in the latter years of the nineteenth century and the first decade of the twentieth. Italy was a new force on the Continent, while the old empires of Turkey and Austria-Hungary were in an advanced state of decay. Irrespective of the policies of the various governments, the old European balance of power was being broken up. At the same time, German expansion in whatever part of the globe it took place inevitably came into conflict with the British Empire. The logic of a policy which sought to maintain the old balance of power coupled with “unbending determination” to uphold British interests in every part of the globe was military conflict. Indeed, as Churchill admitted in a moment of candour during the 1913-14 debate over naval estimates: “We have got all we want in territory, and our claim to be left in unmolested enjoyment of vast and splendid possessions, mainly acquired by violence, largely maintained by force, often seems less reasonable to others than to us.” [29] Britain had already intervened on the side of France in the first Moroccan crisis in 1905. With the eruption of the second crisis in 1911, the issues became even more clearly defined. In the Foreign Office, Crowe defined the issue in terms of the balance of power within Europe. “Germany,” he noted in a Foreign Office minute, “is playing for the highest stakes. If her demands are acceded to either in the Congo or in Morocco, or—what she will, I believe, try for—in both regions, it will mean definitely the subjection of France. The conditions demanded are not such as a country having an independent foreign policy can possibly accept. The details of the terms are not so very important now. It is a trial of strength, if anything. Concession means not loss of interest or loss of prestige. It means defeat with all its inevitable consequences.” [30] These views of the Moroccan crisis were widely shared. According to Sir Arthur Nicholson, the permanent undersecretary of state in the Foreign Office, if Germany had her way, then “our policy since 1904 of preserving the equilibrium and consequently the peace in Europe” would collapse. Britain’s support for France was motivated by the fear that if the Entente collapsed, France might move to an accommodation with Germany, opening the possibility that Britain would be isolated. For Britain, the eruption of the July crisis was the culmination of a conflict which had been developing over the preceding decade and a half. Unless Germany gave up its demands for an alteration of the European and international order, or Britain accepted great changes in that order, conflict was inevitable. But neither side could shift from its position because what was at stake were not the designs, prestige or policies of politicians, but fundamental economic interests of the states whose interests they represented. A recent book surveying the decisions which led the great powers to enter the war concludes that in Britain the interests of the capitalist class had no bearing whatsoever. British industrialists had very little influence on the policy-making elite, and the great financiers of the City of London were terrified of war, believing it would bring economic ruin. “Whatever triggered the British declaration of war in 1914, it was not the wishes of the nation’s ‘finance capitalists.’” [31] Be that as it may, the decision to go to war was undertaken in defence of the position of the British Empire, which, in turn, was the foundation for the dominant position of British finance capital. A decade before the outbreak of war, the Tory politician Joseph Chamberlain had explained to the City’s bankers, in no uncertain terms, the significance of the Empire for their activities. “You are the clearing-house of the world,” he told them. “Why? Why is banking prosperous among you? Why is a bill of exchange on London the standard currency of all commercial transactions? Is it not because of the productive energy and capacity which is behind it? Is it not because we have hitherto, at any rate, been constantly creating new wealth? Is it not because of the multiplicity, the variety, and the extent of our transactions? If any one of these things suffers even a check, do you suppose that you will not feel it? Do you imagine that you can in that case sustain the position of which you are justly proud? Suppose—if such a supposition is permissible—you no longer had the relations which you have at present with our great Colonies and dependencies, with India, with the neutral countries of the world, would you then be its clearing-house? No, gentlemen. At least we can recognize this—that the prosperity of London is intimately connected with the prosperity and greatness of the Empire of which it is the centre.” [32] And the pivot upon which the Empire turned was India. The British attachment to India was not based on some ill-defined search for power for its own sake. Nor was it grounded on psychological factors. India played a central and increasingly important role in providing the underpinning for both British economic and military power. As the viceroy to India Lord Curzon explained in 1901: “As long as we rule India we are the greatest power in the world. If we lose it we shall drop straight away to a third-rate power.” [33] From the very beginning of colonisation, India had played a crucial role in the provision of finances for British capitalism. In the latter decades of the nineteenth century, with the rise of rival industrial powers (Germany and the United States) and the increased competition for markets, this role became even more important. Britain had for a long time run a deficit on the visible balance of trade—the excess of imports over exports. But this had been more than compensated for by the surplus on so-called invisibles—items such as freight and insurance. However, towards the end of the nineteenth century, even this income was becoming insufficient and the stability of British finance came to depend increasingly on investment income and the revenue from the so-called Home Charges levied on India. The Indian market absorbed a large portion of British exports, while at the same time India generated a trade surplus with the rest of the world—it increased from £4 million to £50 million in the course of the latter half of the nineteenth century—which was then drained off via the charges paid to Britain. In the words of one study, before World War I “the key to Britain’s whole payments pattern lay in India, financing as she did more than two fifths of Britain’s total deficits.” [34] But even as Britain became more dependent on India, the threats to her domination of the colony and to the stability of the Empire more generally were growing. The Boer War (1899-1902) proved to be a shock to the British establishment. What was expected to be a short conflict—it will be over by Christmas—dragged on for more than two years, and at great cost in terms of both men killed and finances. It exposed the weakened military position of Britain, which could certainly be capitalised on by her rivals on the European continent. Definite political conclusions were drawn. No longer could British foreign policy be guided by the preservation of the “splendid isolation” which had characterised it in the nineteenth century. Within five years of the Boer War a series of arrangements had been entered into for the purpose of strengthening Britain’s control of Empire. First came the alliance with Japan in 1902, and then the settling of differences with France over colonial issues via the entente of 1904, a process which was repeated with the entente with Russia in 1907. In the case of entente with France, British control over Egypt, the key to control over the Middle East and the route to India, was recognised, and with Russia, there was an explicit recognition of British predominance in Afghanistan and an end to the Russian threat to India from the north. These measures were undertaken to strengthen Britain’s grip on the Empire. But they had the effect of pulling Britain into the conflicts on the European continent. The war and the Russian Revolution In his analysis of the war, James Joll, noting the statements of the Second International that wars are inherent in the nature of capitalism and will cease only when the capitalist economy is replaced, acknowledged that, if true, this doctrine “would provide the most comprehensive explanation of the outbreak of the First World War, though it would still leave open the question of why this particular war started at that particular moment in the mounting crisis of capitalism.” [35] The Marxist analysis of the war, however, does not seek to establish exactly why the war broke out at the particular time it did, as if the contradictions of the capitalist system operated with a kind of iron determinism which excluded chance and accident. On the contrary, Marxism insists that the laws of capitalism exert their sway not directly, but rather through the accidental and contingent. In the case of World War I, it is clear that but for the accidental assassination of the Austrian Archduke, the crisis would not have developed as it did. Even after the assassination, it was by no means predetermined that war would result. But there is no doubt that even if war had been averted, the growing tensions, arising from long-term historical processes ever more evident from the beginning of the century, would have led to the eruption of another crisis sooner rather than later. While the Marxist analysis does not claim that the outbreak of war in August 1914 was predetermined, it does maintain that deep-going shifts in the world economy invested political crises and international conflicts—for which there was ample combustible material—with an enormous tension. The year 1913 forms a turning point in the long-term curve of capitalist development. The preceding 15 years had seen the most sustained economic growth in the history of capitalism to that point. There were crises and recessions, but they were short-lived and gave way to even faster growth once they had passed. But in 1913 there were clear signs of a major downturn in the international economy. The significance of a downturn in the global economy can be seen from an examination of trade statistics. If the year 1913 is taken as the base, with an index of 100, world trade in the years 1876-1880 was just 31.6, growing to 55.6 in the years 1896-1900. This means that in the next 13 years it almost doubled. All the major capitalist powers were becoming increasingly dependent on and sensitive to movements on the world market, under conditions where the competitive struggle among them was becoming more intense. As Trotsky was to point out, the economic downturn of 1913 had a significant impact on the political relations between the major powers because it was not just a recurring market fluctuation, but signified a change in the economic situation of Europe. “The further development of the productive forces at approximately the rate observed in Europe for almost all of the previous two decades was extremely difficult. The growth of militarism occurred not only because militarism and war create a market, but also because militarism is an historical instrument of the bourgeoisie in its struggle for independence, for its supremacy, and so on. It is not accidental that the war started in the second year of the crisis, revealing the great difficulties of the market. The bourgeoisie felt the crisis through the agent of commerce, through the economic agent and the diplomatic agent.... This created class tension, made worse by politics, and this led to the war in August 1914.” [36] It was not that the war put a stop to the growth of the productive forces. Rather, beginning in 1913, the growth of the productive forces ran up against the barriers imposed by the capitalist economy. This meant that the market was split up, competition was “brought to its intensest pitch and henceforward capitalist countries could seek to eliminate each other from the market only by mechanical means.” [37] The downturn in 1913 was not simply a market fluctuation—a recession taking place amidst a generally upward movement in the long-term curve of capitalist development. It was a turning point in the curve itself. Even if there had been no war in 1914, economic stagnation would have set in, increasing the tensions between the major capitalist powers and making the outbreak of war more likely in the immediate future. That the downturn in 1913 represented no ordinary recession is indicated by the fact that after the war was over the European economy never returned to the conditions of the decade prior to the war. Indeed, in the general economic stagnation of the 1920s (production in many areas only returned to 1913 levels by 1926-27) the period prior to the war came to be looked on as a belle époque, which could never return. In order to bring out some of the fundamental issues of perspective at the heart of the controversies surrounding World War I, I should like to review a work by the British academic Neil Harding. In his book Leninism, Harding finds that Lenin’s theories were not the result of a politics of backwardness produced by Russian conditions—as is so often asserted with regard to What is to be Done?, for example—but were “authentic Marxism” and had indeed revitalised Marxism as a theory of revolution. It is precisely because Leninism constitutes genuine Marxism that, in Harding’s view, it needs to be refuted. Harding maintains that the eruption of the war and the betrayal of the leaders of the Second International convinced Lenin that “he had a unique responsibility to restate the Marxist imperative for revolution on a global scale, and to reformulate it in the economic and political conditions of the modern world.” [38] Contrary to all those who try to portray Lenin as some kind of opportunist who engaged in a grab for power in the chaos produced by the war, basing himself on the popular demands of bread, peace and land, Harding writes that Lenin’s response to the war was to construct a “Marxist account of the nature of modern capitalism and how it had necessarily produced militarism and war.” This account, which is embodied in the book Imperialism, the Highest Stage of Capitalism, “defined the global characteristics of what was held to be an entirely new epoch in human history—the epoch of the final collapse of capitalism and the advent of socialism” and provided the theoretical foundation of the Bolshevik-led revolution of October 1917. [39] Harding correctly draws out that in the period prior to the war the various schools of revisionism had argued that revolution was both an implausible and unnecessary strategy and that, at least in their hands, “as a theory and practice of revolutionary transformation, Marxism was virtually dead by 1914.” He writes: “It was Lenin who, almost single-handedly, revived it, both as a revolutionary theory and as a revolutionary practice; the theory of imperialism was the very keystone of his whole enterprise.” [40] He makes the important point that, so far as the events of the Russian Revolution are concerned, Lenin’s perspective was rejected at the outset. When Lenin advanced the perspective of socialist revolution and the conquest of political power by the working class, it was opposed not only by the leaders of all the other political tendencies, but by his closest associates in his own party. Pravda insisted that the April Theses were Lenin’s personal view, which was unacceptable because it proceeded “from the assumption that the bourgeois democratic revolution is finished and counts on the immediate conversion of that revolution into the socialist revolution.” Yet from a minority of one in April 1917, Lenin became the leader of the first workers’ state in November. For Harding, the fatal flaw in Lenin’s perspective lies in the fact that capitalism continued to survive, despite the claims advanced in Imperialism. It proved to be neither the highest nor the final stage of capitalist development. “The very persistence, adaptability and continued vitality of capitalism could not be explained by the logic of Leninism. The one feature of its system of thought that made the whole intelligible was ... the contention that by 1914 capitalism was moribund: it could no longer reproduce itself; its epoch was over. It was entirely evident that the longer capitalism survived this prognosis, the more empirical evidence undermined the Leninist metaphysic of history.” [41] Lenin certainly characterised imperialism as the “highest stage of capitalism” and the “eve” of the socialist transformation, and he certainly did not envisage that capitalism would survive into the twenty-first century. So was the perspective which guided the revolution wrong? No small amount of confusion has been created on this question, both by those who claim to uphold Lenin’s perspective and those who denounce it. For example, when we explained that globalisation represented a further, qualitative development of the socialization of production, we were assailed by the Spartacists and other assorted radicals who denounced us for rejecting Lenin. If imperialism was the “highest stage” of capitalist development, then how could we speak about globalisation as being a qualitative development in the socialization of production? Then there are those who maintain that Lenin’s analysis is refuted by the fact that capitalism has undergone vast changes since the writing of Imperialism and that there has been a significant development of the productive forces. How then is it possible to speak of imperialism as the highest stage of capitalism? And does this not mean that the Russian Revolution itself was a premature attempt to overthrow the capitalist order and begin the socialist transformation? That is, it was doomed to failure from the very beginning because capitalism had not exhausted its progressive potential. In the first place, Lenin did not have the mechanical view which is so often ascribed to him. Initially, he spoke of imperialism as the “latest phase” of capitalist development. He certainly characterised it as “decaying” and “moribund” capitalism. But he pointed out that it would be “wrong to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (Britain).” [42] Lenin characterised the activities of British capital in living off its earnings from capital exports—the process of “clipping coupons”—as an expression of parasitism and decay in the country richest in capital. One wonders what he might have had to say about the activities of firms such as Enron and WorldCom and the looting associated with the share market and dot bubble.
Posted on: Mon, 04 Aug 2014 11:36:29 +0000
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