V. I.

Lenin

Thecommercial and industrial crisis has already dragged on for almost two
years. Apparently it is still growing, spreading to new branches of
industry and to new districts, and is becoming more acute as a result of
the failure of more banks. Every issue of our newspaper since last
December has in one form or another shown the development of the crisis
and its disastrous effects. The time has come to raise the general
question of the causes and the significance of this phenomenon. For
Russia, it is a comparatively new phenomenon, as new as Russian
capitalism. In the old capitalist countries—i.e., in the countries
where the greatest part of the goods is produced for sale, and where the
majority of the workers own neither land nor tools, but sell their
labour-power to employers, to the owners of property, to those to whom the
land, the factories, the machinery, etc., belong—in the capitalist
countries, crises are an old phenomenon, recurring from time to time, like
attacks of a chronic disease. Hence, crises may be predicted, and when
capitalism began to develop with particular rapidity in Russia, the
present crisis was predicted in Social-Democratic literature. The pamphlet
The Tasks of the Russian Social-Democrats , written at the end of
1897, stated: “We are apparently now passing through the period in
the capitalist cycle [a rotation, in which the same events repeat
themselves like summer and winter] when industry is ’prospering’, when
business is brisk, when the factories are working at full capacity, and
when countless new factories, new enterprises, joint-stock companies,
railway enterprises, etc., etc., are springing up like mushrooms. One need
not be a prophet to foretell the inevitable and fairly sharp crash that is bound to succeed this period of industrial ’prosperity’. This
crash will ruin masses of small owners, will throw masses of workers into
the ranks of the unemployed...." [1]

And the crash came with a severity unparalleled in Russia. What is the
cause of this horrible, chronic disease of capitalist society, which
recurs so regularly that its coming can be forecast?

Capitalistproduction cannot develop otherwise than by leaps and
bounds—two steps forward and one step (and sometimes two) back. As
we have said, capitalist production is production for sale, the production
of commodities for the market. Production is conducted by individual
capitalists, each producing on his own and none of them able to say
exactly what kind and what amount of commodities will be required on the
market. Production is carried on haphazardly; each producer is concerned
only in excelling the others. Quite naturally, therefore, the quantity of
commodities produced may not correspond to the market demand. This
probability becomes particularly great when the enormous market is
suddenly extended to new huge, unexplored territories. This was precisely
the situation at the beginning of the industrial “boom” we
experienced not so long ago. The capitalists of all Europe stretched out
their paws towards that part of the globe inhabited by hundreds of
millions of people, towards Asia, of which until recently only India and a
small section of the coastal regions had been closely connected with the
world market. The Transcaspian Railway began to “open up”
Central Asia for the capitalists; the “Great Siberian Railway”
(great, not only because of its length, but because of the unrestricted
plunder of the Treasury by the contractors and the unrestricted
exploitation of the workers who built it) opened up Siberia. Japan began
to develop into an industrial nation and strove to make a breach in the
Chinese Wall, opening the way to a choice morsel into which the
capitalists of England, Germany, France, Russia, and even Italy
immediately plunged their teeth. The construction of gigantic railways,
the expansion of the world market, and the growth of commerce, all
stimulated an unexpected revival of industry, an increase of new enterprises, a wild hunt for commodity markets, a hunt for profits, the
floating of new companies, and the attraction to industry of masses of
fresh capital, which consisted partly of the small savings of small
capitalists. It is not surprising that this wild world-hunt for new and
unknown markets led to a terrific crash.

Toobtain a clear idea of the nature of this hunt for markets and profits,
we must remember what giants took part in it. When we speak of
“separate enterprises” and “individual capitalists”, we sometimes forget that, strictly speaking, these
terms are inexact. In reality, only the appropriation of profit has
remained individual but production itself has become social. Gigantic
crashes have become possible and inevitable, only because powerful
social productive forces have become subordinated to a gang of
rich men, whose only concern is to make profits. We shall illustrate this
by an example from Russian industry. Recently the crisis has spread to the
oil industry, in which such enterprises as the Nobel Brothers Oil Company
are engaged. In 1899 the company sold 163,000,000 poods of oil products to
the value of 53,500,000 rubles, while in 1900 it sold 192,000,000 poods to
the value of 72,000,000 rubles. In one year, a single enterprise increased
the value of its output by 18,500,000 rubles! This “single
enterprise” is maintained by the combined labour of tens and
hundreds of thousands of workers engaged in extracting oil and refining
it; in delivering it by pipeline, railways, seas, and rivers; and in
making the necessary machinery, warehouses, materials, lighters, steamers,
etc. These tens of thousands of workers work for the whole of society, but
their labour is controlled by a handful of millionaires, who appropriate
the entire· profit earned by the organised labour of this mass of
workers. (In 1899 the Nobel Company made a net profit of 4,000,000 rubles,
and in 1900 the figure was 6,000,000 rubles, of which the shareholders
received 1,300 rubles per 5,000-ruble-share, with five members of the
board of directors receiving bonuses to the amount of 528,000
rubles!) When several such enterprises fling themselves into the wild
chase for a place in an unknown market, is it surprising that a crisis
sets in?

Furthermore,for an enterprise to make profit, its goods must be sold,
purchasers must be found. The purchasers of these goods must comprise the entire population, because these colossal
enterprises produce whole mountains of goods. But nine-tenths of the
population of all capitalist countries are poor; they are workers who
receive extremely miserable wages and peasants who, in the main, live even
worse than the workers. Now, when, in the period of a boom, the large
industrial enterprises set out to produce as vast a quantity of goods as
possible, they flood the market with such a huge quantity of goods that
the majority of the population, being poor, cannot pay for them. The
number of machines, tools, warehouses, railroads, etc., continues to
grow. From time to time, however, this process of growth is interrupted be
cause the masses of the people for whom, in the last analysis, these
improved instruments of production are intended, remain in a state of
poverty that verges on beggary. The crisis shows that modern society could
produce immeasurably more goods for the improvement of the living
conditions of the entire working people, if the land, factories,
machines, etc., had not been seized by a handful of private owners, who
extract millions of profits out of the poverty of the people. The crisis
shows that the workers should not confine themselves to the struggle for
individual concessions from the capitalists. While industry is in upswing,
such concessions may be won (the Russian workers on more than one occasion
between 1894 and 1898 won concessions by energetic struggle); but when the
crash comes, the capitalists not only withdraw the concessions they made,
but take advantage of the helpless position of the workers to force wages
down still lower. And so things will inevitably continue until the army of
the socialist proletariat over-throws the domination of capital and
private property. The crisis shows how near-sighted were those socialists
(who call themselves “Critics”, probably because they borrow
uncritically the doctrines of the bourgeois economists) who two years ago
loudly proclaimed that crashes were becoming less and less probable.

Thelessons of the crisis, which has exposed the absurdity of subordinating
social production to private, property, are so instructive that even the
bourgeois press is now demanding stricter supervision—e.g., over the
banks. But no supervision will prevent the capitalists from setting up enterprises in times of boom which must inevitably become bankrupt later
on. Alchevsky, the founder of a land and a commercial bank in Kharkov,
both now bankrupt, acquired millions of rubles by fair means or foul for
the purpose of establishing and maintaining mining and metallurgical
enterprises that promised wealth beyond the dreams of avarice. A hitch in
industry wrecked these banks and mining and metallurgical enterprises (the
Donets-Yuryev Company). But what does the “crash” of enterprises mean in capitalist society? It means that the smaller
capitalists, capitalists of the “second magnitude”, are
eliminated by the big millionaires. The place of Alchevsky, the Kharkov
millionaire, is taken by the Moscow millionaire, Ryabushinsky, who, being
a richer capitalist, will bring greater pressure to bear on the
workers. The supplanting of smaller capitalists by big capitalists, the
increased power of capital, ruination of masses of small property-owners
(e.g., small investors, who lose all their property in a bank crash), the
frightful impoverishment of the workers—all this is brought about by
the crisis. We recall also cases described in Iskra of capitalists lengthening the working day and discharging class-conscious
workers in an effort to replace them by more submissive people from the
villages.

Theeffect of the crisis in Russia is, in general, ever so much greater
than in any other country. Stagnation in industry is accompanied by famine
among the peasantry. Unemployed workers are being sent out of the towns to
the villages, but where can the unemployed peasants be sent? By sending
the workers to the villages, the authorities desire to clear the cities of
the discontented people; but perhaps those sent out will be able to rouse
at least part of the peasantry from its age-long submission and induce it,
not only to request, but to demand . The workers and peasants are
being drawn closer to each other, not only by unemployment and hunger, but
also by police tyranny, which deprives the workers of the possibility of
uniting to defend their own interests and prevents even the aid of
well-disposed people from reaching the peasantry. The heavy paw of the
police is becoming a hundred times heavier for the millions of people who
have lost all means of livelihood. The gendarmes and the police in the
towns, the rural superintendents and the village policemen in the rural districts, see clearly that hatred
against them is growing, and they are beginning to fear, not only the
food-kitchens, set up in the villages, but even advertisements in the
newspapers appealing for funds. Afraid of voluntary contributions! In
truth, the thief fears his own shadow. When the thief sees a passer by
offering alms to the man he has robbed, he begins to think that the two
are shaking hands in a pledge to settle accounts with him.

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Notes:
[1]
See present edition, Vol. 2, p. 346.— Ed .