“The law of breakdown is the fundamental law that governs and supports the entire structure of Marx’s thought” — Henryk Grossman, The Law of Accumulation and Breakdown of the Capitalist System, 1929

Humanity stands at a crossroads: either progression via a socialist transition towards communism, unleashing the full potential of automation, science and human creativity, or regression into a new dark age — and probable extinction — via fascism, world war and environmental annihilation.

After the global financial crash in 2007–08, bourgeois economists and politicians insisted that ‘no one saw it coming’ and were at a loss as to why. They could not offer an explanation beyond blaming greedy bankers and reckless speculation.

But these factors were just the manifestations of a deeper malaise. Marxists had been predicting the crash for years. Fidel Castro, the late, great president of socialist Cuba, saw it coming very clearly in a speech on 24 August 1998 — nearly 10 years earlier. “Nothing has been invented nor can anything be invented which can avoid it,” he said, describing capitalism as a “savage, chaotic and uncontrollable beast”.

Capitalist/bourgeois economists did not see the crash coming because they do not understand their own system. Their various analyses of crises can be summed up as:

on the neoliberal, conservative and fascist right, ‘overspending’ (on wages, public services, welfare etc)

and on the social democratic or ‘democratic socialist’ left, the opposite, ie ‘underfunding’ (underconsumption due to low wages, underfunding of public services which undermines productivity, lack of investment etc)

These theories are wrong because they analyse appearance instead of essence. For the latter we have to look at the capitalist mode of production and its inherent contradictions.

What is not in dispute is that capitalism must keep growing in perpetuity: like a shark which would die if it stopped swimming, capital must accumulate indefinitely. What is disputed is whether it can accumulate indefinitely, ie ‘harmoniously’, disrupted only by ‘economic mismanagement’ or lack of regulation or redistribution, or whether the system’s intrinsic mechanisms make crises, ie recessions etc, inevitable. Marx showed it is the latter theory that is correct.

Capital accumulation is capital expansion. But capital cannot expand if its value is not firstly reproduced. The indefinite reproduction and expansion of total capital cannot happen unless a sufficient magnitude of surplus value (profit) — worth over and above the value of total capital — is generated by commodity-producing human workers. If the surplus value generated is insufficient then it only reproduces the part of capital that it is equal in value to — the rest becomes surplus, or overaccumulated capital. (Surplus value arises from the fact that capitalists only ‘pay’ commodity-producing workers for part of the value they create, ie for their necessary labour time, the time in which they produce enough value to reproduce themselves and their families/dependents.)

And this is what happens. Because investment in machinery (machines, computing, robotics etc) tends to rise relative to investment in human workers (the sole producers of new value), total capital investment tends to grow faster than total surplus value, resulting periodically in a falling rate of profit and a lack of surplus value relative to total capital — an underproduction of surplus value and an overaccumulation of capital.

“There’s more here than we could spend in 10 life-times”

Restoring the accumulation process necessitates:

(1) increasing the production of surplus value by raising the rate of exploitation by (a) increasing the production of absolute surplus value, ie increasing the length of the working day and intensification of work (limited by the number of hours in the day, the physical health and ability of workers); (b) raising the production of relative surplus value (which does not suffer from the same limits and is therefore the main way of increasing surplus value), ie reducing the value of labour power by cheapening production through innovation; (c) driving the cost of labour below its value through wage cuts (relative and absolute), redundancies, attacks on welfare and workers’ rights etc. (All of these can be limited by the effectiveness of workers’ resistance.)

(2) making more surplus value available for the expansion of total capital by cutting state expenditure (making austerity and corporate tax reductions an economic necessity, not, as democratic socialists claim, a ‘political choice’);

(3) the sufficient devaluation, centralisation and concentration of capital.

But the cycle repeats itself: the capital investment needed to raise productivity tends to grow faster than the growth of surplus value (because the latter’s source, commodity-producing humans, shrinks relative to machinery, automation etc, which cannot sell labour power and therefore cannot be exploited); capital overaccumulates, the profit rate falls, investors pull out of unprofitable companies and the economy goes into recession and crisis.

The rate of investment in technology in the US has slowed since 2000 because returns are increasingly low. (Source: Elsby, The Decline of US Labor Share, p30)

And because the overall mass of capital is now even greater than before, overaccumulation is greater, and an even greater magnitude of surplus value is required alongside an even greater devaluation of capital and labour power in order to restore the accumulation process.

The severity of each recession therefore tends to be greater than the one that preceeded it.

Eventually, overaccumulation becomes so insurmountable that the only thing that can sufficiently devalue capital and labour power is global conflagration.

The depth of the current economic crisis suggests the accumulation process is again approaching this limit. The debt-fuelled economic recovery since 2008 has been the weakest since World War 2. We are already in the middle of a long depression, like the one that preceded World War 1. Now, the threat of a devastating global conflict are ever-present and growing. The US has already started an intensifying trade war with Europe and China, whose competition with each other for Iran’s resources increasingly looks like becoming the spark that ignites a world war.

The decaying nature of capitalism meant the periods of Keynesian social democracy (1945–1973) and neoliberal globalisation (1974–2016) were always unsustainable; the failure to achieve global socialist revolution during the capitalist crisis of the 20th century inevitably paving the way for history to be repeated with today’s austerity and a rising protectionist right-wing nationalism. The wars being imposed on much of the world by the imperialist powers, led by the US and Britain — and the resulting migration crisis — pay testimony to capitalism’s tendency towards breakdown.

As with previous modes of production, ie slavery and feudalism, the contradictions between the productive forces (the means of production) and the productive relations (the ownership of production) are being driven into irreconcilable conflict by sheer historical force — the former has outgrown the latter but is also being held back by it. While this contradiction has always been expressed under capitalism by the private appropriation of the products of collective, socialised labour, it is now increasingly expressed by automated labour and a diminishing source of profit, tending ever-closer towards the self-abolition of the law of exchange value. Ultimately — for all the principles of the communist tradition — it is this historical force that will assure the victory of socialism.

Capitalism faces its greatest ever crisis and is almost certainly approaching terminal decline:

Public and private debt — rising to make up for insufficient surplus value — are both at unprecedented levels, expressing the fact that overaccumulation is at an all-time high . Global debt rose to a record $237 trillion in the fourth quarter of 2017, more than $70 trillion higher than a decade earlier. In June 2018 the International Monetary Fund said that global debt had hit a new high of 225% of GDP, exceeding the previous record of 213% in 2009. Overaccumulation has therefore grown in relative as well as absolute terms.

. Global debt rose to a record $237 trillion in the fourth quarter of 2017, more than $70 trillion higher than a decade earlier. In June 2018 the International Monetary Fund said that global debt had hit a new high of 225% of GDP, exceeding the previous record of 213% in 2009. Overaccumulation has therefore grown in relative as well as absolute terms. Overaccumulated capital is an ever-growing fetter on investment and productivity growth. Because this surplus capital cannot be reinvested profitably, fixed capital (machines, factories) is increasingly under-utilised and money capital is increasingly hoarded in tax havens and channelled into speculative ventures (such as subprime mortgages and cryptocurrencies) that only serve to centralise capital and do not create new value. In 2008, the 963 non-financial companies in the S&P Global 1200 index sat on cash piles totalling $1.95 trillion. By 2012, total reserves had grown by 62% to $3.16 trillion. Overaccumulation is underinvestment. Profits and overall net investment in the US tracked each other closely until the late 1980s, with both about 9% of GDP. But after 2009, while pre-tax profits hit absolute record highs, at more than 12% of GDP, net investment in 2012 was barely 4% of output. To stimulate the lending of idle capital, interest rates have had to be set at record lows. In August 2016, credit ratings agency Fitch calculated that the sovereign debt carrying negative interest rates in the global market stood at a remarkable $11.7 trillion. (Overaccumulation is also what necessitated so-called ‘deindustrialisation’, the decimation of manufacturing employment, not of industrialisation itself, in the US and Britain — surplus capital could not be reinvested profitably ‘at home’ so it had to be exported in order to exploit cheaper labour, land and machinery for higher rates of return.)

The almost complete ‘globalisation’ of capitalist imperialism (monopoly capitalism, ie multi- and transnational corporations based mostly in the imperialist nations of the US, Britain, France, Germany, Japan and China) — a decaying and parasitic system that requires continual expansion — means it has all but run out of territory to penetrate. This is partly why ‘globalisation’ is in retreat and protectionist nationalism is rising, as the ability to grow export markets is increasingly exhausted.

Inequality is at an all-time high, the inevitable expression of the necessary and ever-intensifying concentration and centralisation of capital. In the US, for example, according to the Federal Reserve, the richest 1% owned a record-high 38.6% of the country’s wealth in 2016, nearly twice as much as the bottom 90%. Between 1980 and 2015, the global economy grew by 380%, yet the number of people living in poverty on less than $5 (£3.20) a day increased by more than 1.1 billion.

The US dollar is becoming too weak to act as the global currency anchor, with no alternative strong enough to replace it. This is unprecedented — in the 20th century the waning sterling was replaced by the ascendent US dollar as the world’s dominant currency.

General rates of profit — the average rates of return on investment—are at all time lows in the major imperialist nations. Because it is the oldest capitalist country, Britain has the highest overaccumulation and the lowest rate of profit: while it was around 24% in the 1880s, it has gradually fallen to below 10% today. The world rate of profit is estimated to have gradually fallen in a secular trend from around 43% in the 1870s to 17% in the 2000s. This confirms Karl Marx’s analysis that the general rate of profit tends to fall, not just in cycles of years or decades, but historically towards (a permanent) zero. Capitalism’s end is therefore a scientific and economic certainty, making its replacement by socialism and then communism historically necessary.

Marx’s analysis is again reflected in average GDP growth rates, which have fallen for 50 years in what the World Bank defines as ‘high-income countries’: from 5.59% in the 1960s, to 4.15% in the 1970s, to 2.93% in the 1980s, 2.35% in the 1990s, and 1.78% in the 2000s. The figure rose slightly to 1.97% in 2010–2017, but with a major crash surely looming. There is an inexorable secular trend towards zero growth within approximately two or three decades. Given that record overaccumulation will continue to rise, this approaching flatline will manifest as capitalism’s greatest ever economic crisis — and in all likelihood, given the rate of profit’s historic fall towards zero, a historic limit to accumulation, meaning an absolute, insurmountable, final collapse of the capitalist system. Because the GDP growth of the ‘high income’, ie imperialist, nations depends largely on extracting value created in the ‘developing’ or ‘low-income’ neocolonies, the figures can be taken as representative of the global economy as a whole.

The ever-steepening progress of World GDP is approaching a verticle trajectory, which would surely represent an historical maximum to capital accumulation. The abberational dip around 2008–09 is likely to be repeated, only more severely, with the next global crash.

Only the Marxist labour theory of value can explain the profit rate’s historical fall towards zero. The closer the productive forces get to becoming fully automated, the the lower the historic rate of profit. Machinery, unlike human workers, cannot produce surplus value because it cannot sell its labour power (the commodified ability to work) — it cannot be exploited. And yet, the deeper the capitalist crisis becomes, the more capitalists need to replace human workers with automation in order to raise productivity and cheapen labour costs, only to sharpen the sharpest of sharpening contradictions. Innovation is also required to stay ahead of or keep up with competitors. In the past this has been achieved through wage cuts and redundancies, with innovation allowing for less workers to produce more commodities in less time. But technology is already so advanced and the demands of capital so high that this is now increasingly achieved by replacing most or even all workers. As a result, factories which have been built since 2012, around the world, employ very few people. Automation is also contributing to the retreat of ‘globalisation’, as the higher costs of its introduction overseas eat into the rates of return which the imperialist nations extract from poor and ‘developing’ neocolonies, encouraging the ‘return’ of factories ‘home’ —automated factories that employ few people. (Furthermore, the development of autonomous weapons poses a potentially existential threat to humanity.)

In 2015–16, the G20 economies introduced a record number of trade-restrictive measures. Clearly, ‘globalisation’, ie imperialism and deregulated trade, was in retreat before Brexit and Trump — because the ability to expand export markets is increasingly exhausted. The rise of protectionism and economic nationalism were inevitable.

The demands of capital accumulation—perpetual economic, productive and therefore material growth—can only accelerate the climate, pollution, plastic and environmental crises. The labour intensity involved with turning naure into commodities necessitates the plunder of the environment, and at an ever greater rate. This is why the growth in global carbon emissions has accelerated from 1% a year in the 1990s to 3% a year in the 2010s. Every year, we are consuming natural resources at a faster rate than nature can replenish them. Sustaining the accumulation of capital requires an ever-greater magnitude of surplus value and therefore an ever-greater production of commodities; and since commodities are made from natural resources, the destruction of the environment rises in line with the accumulation of capital. Capitalism is making the world increasingly uninhabitable. Socialism must replace our labour-intensive carbon-based economy with a hemp-based fully automated system of production. Hemp can be turned into almost anything, including clean biofuel, batteries and superconductors that outperform lithium and graphene, and, because its production is not labour intensive—it is grown rather than extracted — at 1,000th of the cost. Hemp grows rapidly in a wide-range of temperatures, heals the soil thanks of its deep, aerating root system, and extracts carbon out of the atmosphere at a particularly high rate — something that hemp-based buildings continue to do while they are petrifying. Rebuilding civilisation out of hemp is not some idealist fantasy but an absolute necessity if we are to have any chance of stabilising the climate and saving the habitability of Earth.

The overall rate of profit falls historically towards a permanent zero. But in his 1929 book The Law of Accumulation and the Breakdown of Capitalism, Henryk Grossman’s vital clarification of Marx’s Capital showed that the absolute limit to accumulation will strike “much earlier than a zero rate of profit”. While the likes of Karl Kautsky — who after rejecting breakdown theory decided that accumulation proceeded harmoniously — claimed capitalist breakdown would be brought about by world war, caused only by uncivilised ruling classes, Grossman was at pains to show that this was a subjective analysis and that the opposite was true: that overaccumulation caused breakdown and world war followed necessarily in order to sufficiently devalue capital, to “ward off imminent collapse” and “create a breathing space” for accumulation to restart.

In the 20th century, capitalism self-destructed necessarily in order to self-renew. The First World War destroyed 35% of the world’s wealth and yet it wasn’t enough; the 1929 Wall Street crash followed and an even more destructive world war was required before economic equilibrium was restored. With entire countries to rebuild, Keynesian social democracy became necessary because capital could not afford the upfront costs. Capitalism’s greatest ever productivity boom followed, but this could only be sustained during an early stage of accumulation — by 1973 a new overaccumulation had built up in the imperialist nations and ‘neoliberal globalisation’ became necessary to overcome the new crisis. State regulation was loosened, trade and production expanded and labour protections were weakend, all serving to sufficiently devalue capital and labour power.

The crisis of accumulation intensifies the rivalries between imperialist and capitalist powers, intensifying competition and thereforce forcing them into confrontation over profit, trade and assets; protectionism therefore becomes an inevitable defensive reflex in order to insulate assets from rivals , only to deepen the overall economic crisis by making trade increasingly expensive and pushing up the costs of production. But it also plays a decisive role in the devaluation process. In the Grundrisse, Marx wrote that “although the curbs on competition appear to complete the mastery of capital, they are at the same time, by curbing free competition, the heralds of its dissolution, and of the dissolution of the mode of production based on it”.

Conflict between the US and the German-led EU, the two greatest imperialist rivals, is as likely at some point as ‘western’ confrontation with Russia and China.

It does not take any kind of expert to realise that a world war in this day and age, with the destructiveness and lethality of modern weaponry, would almost certainly end in a nuclear holocaust that would kill billions of people and destroy what is left of the environment. Even a so-called ‘limited’ nuclear attack would assure this outcome. Since every major capitalist breakdown has ended in total war (the US Civil War is another, if usually forgotten, example), it should be expected that any world war would have to be settled by a nuclear attack. The massive devaluation of capital required arguably implies that only nuclear conflagration could deliver sufficient destruction. Only global socialism can end this threat for good and guaratee humanity’s survival.

Despite the bleakness and enormity of the approaching situation, there is reason to be optimistic, for there surely could be no more paralysing scenario for the ruling classes — even for the savage brutes that they are, they know a world war in this day and age can have no winners. If the masses organise armed with a Marxist consciousness, the ruling classes could therefore well be forced to abdicate.

It is, ultimately — for all the progressive principles of the communist tradition — sheer historical force that will assure the victory of socialism. Just as the cause to abolish slavery in the US Civil War succeeded because it was the only way to save the Union; just as the Bolshevik Revolution succeeded because it was the only way to pull Russia out of the First World War; and just as the implementation of socialism after the Cuban Revolution succeeded because it was the only way to expel US colonialism; the coming revolutions will succeed because world socialism will be the only way to stop ecocide and World War Three.

Even if capitalism somehow survived one or more global conflicts it would be destroyed by the end of the century by its destruction of the environment. Furthermore, as explained above, automation, which would develop even faster through an arms race necessitated by war, and faster still by a post-war productivity boom, is hastening the rate of profit’s historical fall towards zero.

Capitalism is doomed. It is clear that the Canutes who make the irrational choice not to fight for socialism will only be aiding and prolonging barbarism while delaying communism’s historical inevitability, and at the risk of annihilating the human race.

Just as the capitalist mode of production is the dictatorship of capital, the socialist mode of production is the dictatorship of the proletariat. Socialism is a higher stage of production because it progressively removes the fetters that impede investment and productivity under crisis-ridden capitalism — surplus capital, the profit motive, unemployment and competition-strangling monopolies.

In historical terms the productive forces are crying out for socialist central planning: firstly, capital’s necessary tendency towards monopoly demands a final merger into a publically owned monopoly of the productive forces (for capitalism cannot exist without competition); secondly, the increasingly necessary long-term central planning that already takes place within capitalist corporations shows that there is a historical tendency towards central planning of the economy as a whole; this is reinforced, thirdly, by the private sector’s ever-rising dependence on state subsidies. Anarchist theory is therefore proven to be categorically incorrect.

The problems that faced the Russian and Chinese revolutions, which inherited primitive peasant economies, hardly exist: most of the world is already industrialised to some significant degree (and so the eurocentric Stalin-Trotsky dichotomy is redundant).

In every respect, capitalism has laid and is laying the foundations for socialism and communism: the proletarianisation of the masses, to be accelerated by the breakdown, on the way to a classless society; the ever-greater monopolies ripe for their final merger and transformation into social enterprises; the immense development of the productive forces and computing power that will make central planning eminently superior to anarchic capitalist production; the devaluation of capital and labour power on the way to the historically necessary abolition of the law of value and the wages system. Even globalisation, multiculturalism and examples of free movement, as in the EU, provide a taste of the borderless, raceless and secular future world to come.

The capitalist state must be dismantled and replaced by a socialist state (in order to prevent counter-revolution while reorganising society). After this stage has been achieved, sustained mass action co-ordinated by state and soviet/communal power (councils of workers and soldiers) must set about building socialism in order to solve the economic crisis. This requires:

the state ownership of the means of production, starting with the nationalisation of private banks into one central bank. A digital credit system will replace fiat currencies, which are about to collapse anyway. Socialism will also nationalise the land, the value of which, at some point, is also going to collapse anyway. To weaken support for counter-revolution, communist parties should vow to cancel all outstanding mortgages and personal debt, and entitle households to remain in the property in which they presently live, leased from the state at very low rates of ground rent. As the process of building socialism progresses, those who are required to leave their homes, due to the need to revive the environment etc, will be compensated with the new high quality public housing, in a location as close as possible, that the state will embark upon building for everyone. A move towards a communalsystem of living, which will achieve huge efficiency gains, will be incentivised. Empty properties will be given to the homeless and those living in inadequate accomodation, while mansions etc will be transformed into care homes and mental health retreats, run by patient-led councils.

central planning, ie the production and allocation of resources according to human need, rather than for private profit. This will depend on a high level of consultation and co-operation between central, regional and local authorities, organisations and communities.

the state monopolisation of foreign trade.

the phased decommodification of labour power, ie the abolition of the wage system. As explained perhaps most clearly by Che Guevara, in practice this means transitioning towards work becoming a collective social duty in a system where, instead of commodities being traded between producer and consumer, products are exchanged between social enterprises. This means making the whole of society work like ‘one big factory’ — in each country, and then the world over. Exploitation ends under socialism because surplus value is reinvested in society as a whole via state spending instead of going into the pockets of individual capitalists.

A new Communist International will oversee the construction of a Single Automated Society, whereby nation-states will effectively merge into a one-state world, the final stage before communism.

Socialism is the transitional phase between capitalism and communism. While socialism in one country is possible, as proven to this day even by a country as small as Cuba, communism isn’t. Communism will be the culmination of world socialism, the realisation of the abolition of the law of value, exchange-value and commodification. As the productive forces become increasingly efficient, central oversight will become increasingly obsolete and the state will wither away. By this time working hours would have fallen dramatically and wealth will be measured in free time.

The shallowness of bourgeois democracy must be replaced by real democracy, ie a participatory workers’ democracy. Each new socialist country will agree upon a new constitution via a mass democratic process. Proletarian dictatorship merely means having an all-socialist state, just as the dictatorship of capital introduced all-capitalist states.

Under socialism, communist parties should campaign for equal rights to be granted to all, regardless of race, ethnicity, nationality, gender, sexuality or ability. Access to quality social housing will be made a human right. Access to free, quality and universal healthcare will be made a human right. Access to free and universal education through to university will be made a human right. Public services will be made accessible to all, so that society no longer disables the physically and mentally impaired.

Once global revolution has been achieved and counter-revolution defeated, the nation-state will wither away, abolishing the economic imperatives that necessitate militarism and war.

To save humanity from the crises of pollution, global warming and ecological destruction, a speedy transition must be made that replaces fossil fuels with renewable energy and privately-owned transport with highly-accessible public transport. This will become viable because the removal of the fetter of the profit motive will unleash the true potential of science and technology, while the cheapness of renewable production will enable us to keep the rest of the oil, coal and majority of metals in the ground. All this must be done as much as possible via recycling so that we can stop mining the earth, and by switching to predominantly hemp-based production.

These conclusions have been reached not through wishful thinking or fetishism, or even by ideology, but by applying the scientific theories of Marx to contemporary economic and political evidence and analysing capitalism as a world system in totality. The international revolutionary communist vanguard party, combined with soviet power, remains the ultimate vehicle for liberation from war, inequality, discrimination and poverty, and must be urgently rebuilt.