A (usually court-ordered) forced restructuring of a debt load which involves the reduction of the amount owed, in order to allow the debtor to at least be in the position to continue to pay back part of the debt. This happens most often in bankruptcy proceedings. The term arises from the fact that lenders view such reductions in the debts owed them as something that is being “crammed down” their throats!
Under present U.S. law (as of November 2009) if a person files for “Chapter 13 bankruptcy” (a court-supervised, multi-year plan designed to provide at least partial payment of debts to the creditors), the judge can reduce the amount owed on credit cards, auto loans, student loans and even mortgages on second homes, but not on mortgages on an individual’s principal residence. At present there are once again proposals to change the law in order to allow cramdowns on these sorts of mortgages as well, as part of the desperate effort to resolve the financial crisis in the U.S. which first broke out in the sub-prime mortgage sphere in 2008. At present, banks are often rapidly forcing foreclosures, and then the sale of the house to someone else (even at a much lower price), in order to quickly recover as much of the bad loan as they can. If this change is made it might make it somewhat more difficult for the banks to do this, because a judge might cut the mortgage amount owed and allow the person in bankrupcy proceedings to keep their home (thus preventing the bank from selling it again).
CRASH OF 1929
The major stock market crash and financial crisis that broke out in the United States in the fall of 1929 and is generally viewed as the beginning of the Great Depression of the 1930s.
Most bourgeois economists view this Crash and overall financial crisis, along with the inept handling of it by the Hoover Administration and the Federal Reserve, as the main causes of the Great Depression, which then spread through the entire world capitalist economy. This theory, however, is mostly nonsense. A recession was already developing in the U.S. economy by the spring of 1929, and it was the fundamental workings of the real capitalist economy that led to overproduction of capital, the massive debt bubble, the initial recession, the wild financial speculation, then the Crash, and finally the Depression. While it is true that financial crises such as the Crash of 1929 virtually always play a prominent role in capitalist economic crises, they are by no means the fundamental cause of them. Still, it is also true that a more rational response from the government (for example, via what is now called Keynesian deficit financing) might have somewhat mitigated or even postponed the Depression, at least for a while. But the bourgeoisie was trapped by its own ideology that proclaimed the capitalist system as self-regulating, and therefore was unable to respond with even limited effectiveness.
CRATYLUS OF ATHENS (5th century BCE)
Ancient Greek idealist philosopher who was a disciple of Heraclitus and an influence on Plato. He was a Sophist, who arrived at his extreme relativist views on the basis of Heraclitus’s dialectics. This appears to have led to a misconception of Heraclitus’s actual philosophy by Plato and Aristotle and by many others for centuries following them.
The religious doctrine that matter, energy, life, animal species, human beings, and the world in general, were created by God out of nothing. Among fundamentalist Christians this is assumed to have occurred as is described in the first book of the Bible, Genesis, and took a total of six days. (Why the supposedly omnipotent God couldn’t get it all done in just six seconds, and why the job was so difficult even for God that “He” had to rest on the seventh day, has so far not been explained....)
Of course this entire creationist doctrine is totally unscientific nonsense.
See also: SCOPES “MONKEY” TRIAL
“In my own professional work I have touched on a variety of different fields. I’ve
done my work in mathematical linguistics, for example, without any professional credentials in
mathematics; in this subject I am completely self-taught, and not very well taught. But I’ve often
been invited by universities to speak on mathematical linguistics at mathematics seminars and
colloquia. No one has ever asked me whether I have the appropriate credentials to speak on these
subjects; the mathematicians couldn’t care less. What they want to know is what I have to say. No
one has ever objected to my right to speak, asking whether I have a doctor’s degree in mathematics,
or whether I have taken advanced courses in the subject. That would never have entered their minds.
They want to know whether I am right or wrong, whether the subject is interesting or not, whether
better approaches are possible—the discussion dealt with the subject, not with my right to discuss
“But on the other hand, in discussion or debate concerning social issues or American foreign policy, Vietnam or the Middle East, for example, the issue is constantly raised, often with considerable venom. I’ve repeatedly been challenged on the grounds of credentials, or asked, what special training do you have that entitles you to speak of these matters. The assumption is that people like me, who are outsiders from a professional standpoint, are not entitled to speak on such things.
“Compare mathematics and the political sciences—it’s quite striking. In mathematics, in physics, people are concerned with what you say, not with your certification. But in order to speak about social reality, you must have the proper credentials, particularly if you depart from the accepted framework of thinking. Generally speaking, it seems fair to say that the richer the intellectual substance of a field, the less there is a concern for credentials, and the greater is concern for content.” —Noam Chomsky, Language and Responsibility (1979), pp. 6-7.
[It seems to me that the more fundamental difference between these two cases is not the differing level of intellectual substance (though that is often true as well), but rather the absolute necessity for the bourgeois ruling class to suppress any social ideas which go against their class interests in an “unacceptable way” or which even threaten their continued rule. This requires a system that, in one way or another, regulates who is even allowed to speak out about society, at least to a mass audience. —S.H.]
CREDIT (Acknowledgement of Efforts or Contributions)
“There is no end to the good a person can do if he or she doesn’t care who gets the credit.” —Wise old adage.
The benefit granted someone by allowing them to buy goods or services without immediate payment, but requiring payment at some usually definite time in the future. Credit is essential to the functioning of capitalism for a variety of reasons; most fundamentally because the workers who produce all the goods to be sold are not themselves paid enough to buy them all back! Thus, if they are to buy the “excess goods” at all, they must be extended credit to do so. Of course, the repetition of this extention of credit, over and over again, creates a CREDIT BUBBLE (see below).
See also: CREDIT SYSTEM, LEVERAGE, DELEVERAGING
The expanding amount of credit outstanding, as those who will never be able to pay back all that they owe are granted more and more credit. Those borrowing money, or buying things on credit, always imagine that they will someday be able to pay it back. And those lending the money would not do so unless they expected to be paid eventually. But in a capitalist economy this is inherently impossible because of the extraction of surplus value from the workers, or—in other words—from the fact that the value of their wages is necessarily less than the value of the commodities they produce. But because things are going well for a certain period, the lenders and borrowers always jump to the conclusion that the good times will continue for ever. This is, alas, an illusion. All credit bubbles eventually burst, and this forms the heart (though not necessarily the initial phase) of a major financial crisis of the sort the world entered in 2008.
Cards, generally made of plastic, which allow consumers to receive short-term loans to make purchases. Although these loans are usually interest free if they are paid off in the first month, many credit card holders are unable to pay off the entire amount immediately and therefore end up paying what are in effect usurious interest rates to the credit card company. The credit card company also charges businesses which accept their credit cards a percentage fee. This forces businesses to raise their prices to cover these fees, but they are willing to do this to attract more customers to their shops. Moreover, those using credit cards tend to spend more, even if they really cannot afford to do so. Many workers and other low-income consumers end up getting very deeply into debt because of these factors.
“One section of the book discusses how credit cards are used to
‘phish’ [deceive and ripoff] the unsuspecting. Why do shops accept cards when it is so
costly? One study found that credit-card firms charge convenience shops fees that
amount to over twice their profits. But cards also trick people into spending more
than they really want to. Richard Feinberg of Purdue University demonstrated this in
a psychology experiment. After putting MasterCard symbols nearby, subjects said that
they would pay significantly more for a basket of goods than the control group—in
some cases 200% more. You, the consumer, may think that credit cards make life more
convenient. In fact they ‘phish’ you on a daily basis.”
—“The Econonomics of Deception: You Have Been Warned”, the Economist, Sept. 19, 2015, p. 82. This is a book review of: George Akerlof and Robert Shiller, Phishing for Phools: The Economics of Manipulation and Deception (2015).
“The average annual percentage rate, or APR, on a credit card is 16.97 percent, nearly the highest in two decades and up from 13.53 percent in 2015. Lenders are tacking on an average margin of 11.72 percentage points to the rates banks themselves pay, the highest on record.” —Wall Street Journal report, summarized in The Week magazine, Oct. 25, 2019, p. 36.
CREDIT CARD RECEIVABLES [Capitalist Finance]
The ownership right to receive the payments on outstanding credit card debt. While the credit card company itself makes the loan to the customer when he or she uses the credit card, that credit card company may sometimes turn around and sell the right to receive payment on that debt to a third party. They are especially apt to do this if too many of their customers are getting behind in their payments, and the risk of never being paid is increasing. The credit card company will of course have to sell this right to receive payment at a discount, and the company purchasing these “receivables” is gambling that it will be able to collect enough of this outstanding debt to be able to make a profit on the deal.
CREDIT DEFAULT SWAP (CDS)
[Capitalist finance:] An insurance contract that supposedly protects the holder against corporate defaults by paying him or her the face value of a loan, bond or security if the corporation issuing it fails to do so when it comes due. Buying a CDS therefore supposedly removes the risk from buying very speculative bonds and various kinds of otherwise extremely risky derivatives. However, the risk is really only removed if the insurance company issuing the CDS can itself be relied on. The 2008 failure of AIG (the American International Group), which was then the world’s largest insurance company and which had issued hundreds of billions of dollars of CDS contracts, shows that this assumption by financial speculators was not at all correct. Credit Default Swaps can themselves be traded and thus form yet another arena for speculation. Even the original purchaser of the CDS does not need to itself have issued the loan that is covered by it. Thus it is possible in this way (as well as other ways) for speculators to gamble on (and make money from) the defaults by other companies!
By the end of 2007, just as the speculative bubble began to burst, more than $62 trillion in CDS’s had been issued, almost all of it in the previous 7 years. This shows the truly absurd level of speculative gambling in modern capitalism!
CREDIT RATING AGENCIES
Since capitalist companies and corporations cannot be trusted—even by other corporations—to be honest about their financial status, capitalism requires the existence of credit rating agencies to inform outsiders about just how great a risk it is to loan money to them. This is in the form of public credit ratings for the securities (e.g. bonds) that they issue, from say a top rating of AAA+ to a bottom rating of CCC-. (The precise rating system used varies from one agency to another.) However, under the current system in the U.S., it is most often the corporations being rated who pay the rating agencies! Thus there is an incentive for these agencies to give companies a higher rating than they should, and to be tardy in lowering their ratings when adverse developments occur. This partly explains how risky sub-prime mortgages which were chopped up and repackaged as Collateralized Debt Obligations managed to receive top-of-the-line AAA credit ratings! This foolishness even suckered in some of the financial corporations who issued these phony CDOs in the first place, and led to huge losses for investors and banks in the financial crisis that began in 2008.
There are also credit rating agencies that assign a rating to individual people, for the protection of the capitalist corporations who issue them loans. Of course in this case the agencies are by no means biased in favor of those they rate, and often make errors which unjustly lower the credit rating of ordinary people.
“Of the 150 rating enterprises around the world, three dominate. Moody’s and Standard and Poor’s—the two industry giants—have an 80 percent market share. The US Justice Department refers quaintly to them as a ‘partner monopoly.’ Fitch has between 10 and 15 percent, and all the others share what remains. This industry structure generates massive profits and profit rates at the top. Moody’s, for example, generated 2006 revenues of $2 billion, from which it derived a pre-tax income of $1.1 billion (a better than 50 percent profit rate.) No wonder that Moody’s top shareholder (a 19 percent stake) is Warren Buffett. That wizard was wise enough to buy Moody’s but not the securities that Moody’s rated.” —Richard D. Wolff, Capitalism Hits the Fan (2010), pp. 111-112.
[Intro material to be added...]
“The credit system itself [arose] out of the difficulty of employing capital ‘productively’, i.e., ‘profitably’. The English, for example, are forced to lend their capital to other countries in order to create a market for their commodities. Over-production, the credit system, etc., are means by which capitalist production seeks to break through its own barriers and to produce over and above its own limits.” —Marx, TSV, 3:122.
A specialized type of bank operated as a cooperative and owned by its members. Credit unions only accept deposits from, and only make loans to, their own members. They are often set up by labor unions, professional organizations, and the like.
Crime is the violation of a law. And what are laws? They are the rules established by a state (government) controlled by some specific ruling class primarily for the benefit of that one social class. Thus, if the capitalists who own an automobile factory or giant agribusiness corporation steal half or more of the wealth produced by “their” workers (via the extraction of surplus value in the production process), amounting to millions or even billions of dollars every year, that is not of course a crime in capitalist society. But if a poor, starving unemployed worker steals a loaf of bread, that is a very serious crime and a worrisome break down in law and order.
The revolutionary proletariat views the worst real crimes in society as those forms of exploitation (theft), oppression, mass killings (mostly through endless imperialist wars), and so forth, which are technically not crimes in bourgeois society at all (since there are no laws against them). It is also true, however, that the bulk of the great many smaller crimes (according to the legal code itself), such as robberies and burglaries, though mostly committed by “lumpen” elements among the masses, are also directed primarily at workers and others among the masses. The ruling class is mostly concerned about such “petty crimes” only because they are also the occasional victims themselves.
“Mark the part of your city where crime flourishes. Now look at the map of your city. You have marked the areas where there are slums, poor schools, high unemployment, widespread poverty; where sickness and mental illness are common, housing is decrepit and nearly every site is ugly—and you have marked the areas where crime flourishes.... Poverty, illness, injustice, idleness, ignorance, human misery, and crime go together. That is the truth. We have known it all along. We cultivate crime, breed it, nourish it. Little wonder we have so much. What is to be said of the character of people who, having the power to end all this, permit it to continue?” —Ramsey Clark, Attorney General in the Lyndon Johnson Administration, quoted in Andrew Karmen, “Poverty, Crime, and Criminal Justice,” in Wm. Heffernan & John Kleinig, eds., From Social Justice to Criminal Justice: Poverty and the Administration of of Criminal Law (2000), p. 28.
One who commits a crime (see above). Basically criminals are those who the ruling class says are criminals because they act in a way the rulers prohibit, and especially if they appropriate even the smallest part of some rich man’s property.
“Criminal: Someone who steals or cheats on too small a scale to
afford the legal or political protection needed to avoid prosecution. It is a matter of
scale and the degree to which one is a political insider. St. Augustine wrote in The
City of God of what a pirate said when captured by Alexander the Great: ‘Because I
do it with a little ship only, I am called a thief; you, doing it with a great navy, are
called an emperor.’
“Regarding political and legal theft, the greatest seizures are from the public domain by insider dealing, as capsulized in a 17th-century folk rhyme:
‘The law locks up the man or woman
Who steals the goose from off the common,
But leaves the greater villain loose
Who steals the common from the goose.’”
—Michael Hudson, J is for Junk Economics (2017), p. 66. [Hudson’s comments are humorous and sardonic, but not being a Marxist he fails to see that by far the biggest problem here is not that the rich and powerful can escape the laws, but rather that the laws themselves are written by their politicians in such a way that they directly benefit the capitalists as a class while victimizing the working class and masses. —Ed.]
“The question of which behaviors are identified as criminal is a highly social one—Prime Ministers who lead their countries into illegal wars, or bankers who speculate recklessly with other people’s money, tend not to fall under such definitions.” —Hilary & Steven Rose, Genes, Cells and Brains (2014), p. 268.
CRISES — ECONOMIC
An economic crisis is a serious interruption in the operation of the economy in a society. Before the capitalist era, the most common causes of such crises were general crop failures, wars and plagues (though after the “Black Death” in Europe there was a modest economic boom, since fewer people now owned the same amount of material wealth).
Besides these traditional sorts of economic crises, new types have appeared in the capitalist era. Marx notes that the sudden interruption of trade channels caused an economic crisis in England after the war of 1815. [See: Marx, TSV, 3:122] And in our own era it now appears that global warming and other devastation caused by the capitalist disregard for the environment may well result in a major long-term economic crisis (in addition to a general health and well-being crisis) during the 21st century.
But in capitalist society by far the most important and powerful type of economic crisis is usually the overproduction crisis, which can exist only under capitalism. This means overproduction by the capitalists of commodities relative to the actual market demand (and not in relation to what people actually need and want). There are mechanisms (such as the credit system and Keynesian deficit financing) which allow the capitalists to keep expanding production (beyond what the market would otherwise be) for a long while. In the process they hugely expand the amount of capital itself beyond what could otherwise be supported. This creates a tremendous economic house of cards which must periodically come tumbling down. (The “house of cards” metaphor seemed doubly appropriate in the 2007-2009 crisis which became the Great Recession, since the collapse of the housing bubble was the fuse that ignited it!)
See also: CRISIS THEORIES, ECONOMIC CRISES—Simultaneous Multiple Crises, POLYCRISIS
CRISES — FINANCIAL
See: FINANCIAL CRISES
CRISES — and MONOPOLY
See: MONOPOLY—AND CRISES
CRISES — OVERPRODUCTION
See: OVERPRODUCTION CRISES
CRISIS OF 1873
A significant financial crisis, one of the most serious of the 19th century, that marked the beginning of a prolonged period of economic weakness lasting about two decades.
CRISIS OF AUTHORITY IN THE CAPITALIST SYSTEM
“That aspect of the modern crisis which is bemoaned as a ‘wave of materialism’ is related to what is called the ‘crisis of authority’. If the ruling class has lost its consensus, i.e. is no longer ‘leading’ but only ‘dominant’, exercising coercive force alone, this means precisely that the great masses have become detached from their traditional ideologies, and no longer believe what they used to believe previously, etc. The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.” —Antonio Gramsci, 1930, in Selections from the Prison Notebooks, ed. by Quintin Hoare, (NY: International, 1971), pp. 275-6.
CRISIS THEORIES (For Capitalist Economic Crises)
There are a large number of different theories attempting to explain why economic crises periodically develop in capitalist society. Most bourgeois economists, when pressed to explain such social disasters, try to say that the causes are all “exogenous” (external) to the workings of capitalism itself. Usually they claim that financial panics, recessions, depressions, etc., are instead entirely due to the foolish errors and missteps on the part of the government authorities. In some cases, though, they’ve come up with rather bizarre theories, such as William Stanley Jevons blaiming sunspot cycles! It seems quite fair to say that bourgeois economists, and bourgeois economics as a whole, have no good explanation whatsoever for the existence and continual development of capitalist economic crises, as important as those crises certainly are!
However, economists in the Marxist tradition have many different theories, and/or sub-theories, to explain this phenomenon of recurring economic crises under capitalism. Virtually all Marxists, from Marx on, say that these crises are inherent to capitalism, and will continue to occur as long as the capitalist mode of production continues to exist. Marx gave the name Overproduction Crises to them, and quite obviously, overproduction is definitely a central aspect to them. However, the various theories that have been created and defended are focused on what the basic cause of these crises is, which could conceivably be something else entirely. Here we list the three three main categories of Marxist theories of capitalist economic crises. For further discussion of each, go to the specific entries:
I. The Overproduction Theory itself, as it is usually called, is the most central and important crisis theory. In brief outline, it basically argues that since the capitalists pay their workers for only a fraction of what they produce, the workers can therefore only buy back a fraction. Since the surplus value (the value produced by the workers that the capitalists don’t pay them for) is enormous and continually accumulating, it is up to the capitalists themselves to buy all the remaining commodities produced. But even after spending great amounts on their own luxurious lifestyles, there is still a mountain of loot left. For a long while they use that loot mostly to build more factories, but that just makes the underlying problem worse. Even more goods are produced for which there is no true market. So they grant credit to the workers and other consumers for a long while, in order to artifically expand the market; and similarly the capitalists have their government go into ever greater debt to buy the excess production (often in preparation for capitalist wars). And, really, it is only this continual expansion of credit and debt that allows a capitalist economy to keep functioning at all. But finally the debt bubble collapses in a financial crisis and there follows a recession or even a depression, characterized by a true mass of commodities which cannot be sold even while people are in great need of them; and also, the much greater problem for the capitalists is exposed, the vast array of idle factories representing the overproduction of productive capital itself.
However, some superficial and naïve versions of this overproduction theory, such as that of Rodbertus, focus only on the overproduction of final consumer commodities as compared to the limited market demand for them, and ignore the massive overproduction of productive capital itself and the necessary endless expansion of debt. Those writers who favor a different theory of capitalist economic crises prefer to call this the “underconsumption” theory, rather than the overproduction theory, as a means of emphasizing the erroneous idea of a few, like Rodbertus, who thought that these crises could then be prevented by simply raising workers’ wages somewhat. However, this criticism of the overproduction/“underconsumption” theory is setting up a straw man and is essentially dishonest. Virtually all modern proponents of the overproduction theory of crises totally reject such naïve versions of it as that of Rodbertus!
Marx’s own overproduction theory focuses on the overproduction of productive capital itself, and is for that reason often referred to as overaccumulation, although Marx himself generally just used the term ‘overproduction’, since productive capital, like final consumer goods, is also created via the production of commodities under capitalism.
II. The Anarchy of Production Theory. The basic idea here is that capitalist production is not done according to an overall plan for what society needs, and therefore too much of some things and too little of other things get produced. While that is certainly true, capitalism does not care about what people really need; only about producing commodities that can be sold. And in terms of the effective demand for goods, capitalist corporations generally seem reasonably efficient in switching production to meet any shifts in that demand. (In fact, the U.S. capitalists frequently bragged about this ability as compared with the sluggishness in the U.S.S.R. in its state-captialist era.) The proponents of this crisis theory, however, say that the market itself tends to lead to disproportionalities that result in crises. Mostly, it seems to us, that they have not proven their point. And the most important disproportions that do in fact arise—such as the continual construction of unnecessary new factories (given actual demand without excessive credit expansion)—can be better explained by the overproduction theory (see above).
It is of course true that there can still be disruptions in production which throw the economy seriously out of whack for a while, such as major crop failures, earthquakes, hurricanes and other severe weather, wars, or pandemics like Covid-19 which led to sudden major but temporary shifts in market demand for many commodities, and therefore all kinds of “supply chain” problems. However, it should be noted that these sorts of major truly exogenous problems can lead to problems under every mode of production, including even socialism and communism. Most of those who nevertheless still favor the theory that capitalist economic crises are basically due to its unplanned nature, or to the independent production of commodities by “many capitals”, prefer to speak in terms of disproportionalities rather than anarchic production. But it is not clear that merely changing the terminology makes this theory any more plausible.
It should also be noted that this anarchy-of-production-theory of capitalist economic crises has itself historically had some very negative consequences. For example, it has reinforced the tendency for people to misunderstand socialism as simply the nationalization of industry. And in addition it was very puzzling to many upholders of this crisis theory to see the Soviet Union in its final state-capitalist decades fall into ever deeper economic crisis even though it was the least anarchic, and most organized and monopolized economy on earth!
III. The Falling Rate of Profit Theory. It has long been supposed, even in classical bourgeois economics such as by Adam Smith, David Ricardo, and many others, that there is a long-term overall tendency in capitalism for the average profit rate to fall. (Real profit rates are difficult to ascertain, especially for periods with poor statistical records.) However, the empirical evidence we have from that period of classical bourgeois economy does suggest that this may have been true back then, for reasons which might remain not fully explained, even by Marx. However, for long periods since the beginning of the capitalist-imperialist era, this is certainly no longer true. See: Falling Rate of Profit Theory—Empirical Investigations This strongly suggests that falling profit rates—when they do occur—may be more the result of other negative factors, than they are the supposed primary driving causal factor leading to crises.
Of course profit rates generally fall during a serious economic crisis! But that is no more the explanation for the cause of the crisis than laying sick in bed is the cause of your getting the flu. Moreover, even during the course of a really prolonged overproduction crisis, such as the current one which actually began around 1973 and a half-century later is still continuing to develop and worsen, there may well be numerous sub-periods when average profit rates rise as well as other sub-periods when they decline.
There are various quite different reasons why the capitalists may pull back on new investment and thus weaken or further weaken the economy, and not just because of falling profit rates. How about the fact that their existing factories might already produce all they can sell, for example, whether their current profit rates are high or not! (The overproduction explanation.) At the very most, the falling rate of profit theory is only an adjunct or secondary component of a full and complete explanation for overproduction crises.
Yes, Marx also believed (at least in his earlier decades) that there was a long-term tendency for the rate of profit to fall. And in the mid-1860s he also believed and wrote drafts about his theory at that time that this was a deeper cause of overproduction crises. But after about 1965 he stopped writing anything at all about this particular crisis theory—even though it was obviously in need of a lot more work. And since he didn’t die for another couple decades (in 1883), it seems quite plausible to think that he gave up on this theory completely. (For a thorough discussion of this matter, see Michael Heinrich, “Capital after MEGA: Discontinuities, Interruptions, and New Beginnings”, online at: https://www.bannedthought.net/MLM-Theory/PoliticalEconomyOfCapitalism/Crises/CapitalAfterMEGA-Discontinuities-Heinrich-2016-OCR.pdf
Engels incorporated those passages from the mid-1860s about the falling rate of profit theory into Volume 3 of Capital which he edited, but it should not be assumed from this fact that by the end of his life Marx himself would have done so.
All three of these main crisis theories are derived from the writings of Marx himself, including directly from the various drafts of his great but unfinished work Capital. Moreover, it is quite clear that all three theories have at least some relevance and partial validity to them in that each may at least contribute to the overall explanation for capitalist economic crises and how they develop. For example, the falling rate of profit is not the first or most basic cause of overproduction crises, and simple overproduction is the basic cause (since as both Marx and Engels put it in different places, the expansion of the capitalist market is unable to keep up with the expansion of production). Nevertheless, that falling rate of profit which then develops early in the crisis, and because of it, will certainly compound the situation, and for one thing, make capitalist companies even more reluctant to start investing again in new factories, thus at least helping to prolong the crisis. Similarly, even if the anarchy of “many capitals” is not actually the cause of overproduction crises, it will certainly contribute to the problem as the crisis develops. For example, each corporation will try to keep as many of its own factories operating, and try to force the other companies to permanently close down their plants. Since the de facto destruction of excess productive capital is the only real way to resolve the crisis, the individual interests, reserves and reluctance of each competing company will tend to strongly slow down the resolution process and extend the crisis. (These are just two of many examples of how these other subsidiary crisis theories also enter the overall picture.)
Nevertheless, it is incorrect to try to say that all three of these crisis theories are equally correct, or equally important, or somehow equally “the basic cause” of overproduction crises, as some Marxist or pseudo-Marxist writers have tried to claim. In reality the overproduction of commodities, including most especially the overproduction of productive capital itself, is the basic and primary cause of these crises—which is why they are indeed appropriately called overproduction crises. But in the further development of these crises there are in fact elements of capitalist anarchy and disproportions, and also falling rates of profits, which then compound, amplify, and extend the overall crises. This, in part, and along with the necessity of getting into the financial aspects of crises, are what makes fully understanding overproduction crises a somewhat challenging task. —S.H. [March 31, 2023]
See also: ECONOMIC CRISES, FINANCIAL CRISES
The name given by adherents of the “Frankfurt School” to their idealist and revisionist reinterpretation of Marxism.
See also sub-topics below.
“Criticism is something we can avoid easily by saying nothing, doing nothing, and being nothing.” —Aphorism sometimes falsely attributed to Aristotle. It is actually a variation on the statement “There is only one way to avoid criticism: do nothing, say nothing and be nothing,” by Elbert Hubbard, an American religious anarchist writer, in his Little Journeys to the Homes of American Statesmen (1898), p. 370.
CRITICISM AND SELF-CRITICISM
Political criticism of oneself or of one’s comrades and others for the purpose of improving the effectiveness of the revolutionary work of individuals, groups, parties and the revolutionary movement as a whole. Making regular and appropriate use of criticism and self-criticism within our ranks is a fundamental characteristic of any genuine Marxist-Leninist-Maoist organization or party, and is essential to our development and success.
Criticism involves pointing out shortcomings of individuals which are interfering with their political efforts. This includes the deficient character of the relationships which individuals may have with the masses, their manner of interacting with comrades or the masses, or any other aspect of their activity (or lack of it) which is deemed harmful to the political work. Criticism also involves pointing out aspects of the general or collective work of the group which is holding things back. This can extend at times even into criticism of part of the political line which the group is putting forward to the masses, or how that is being done.
See also the sub-topics below, and the essay “How Critical Should Revolutionaries Be of Each Other?” (2004), by Scott Harrison, at: https://www.massline.org/Politics/ScottH/HowCritical.htm and: CONFABULATION, CONFESSIONS—False or Insincere, INNER-PARTY STRUGGLE, SELF-CRITICISM
“We have the Marxist-Leninist weapon of criticism and self-criticism. We can get rid of a bad style and keep the good.” —Mao, “Report to the Second Plenary Session of the Seventh Central Committee of the Communist Party of China” (March 5, 1949), SW 4:174.
“I wondered also at the new level of tolerance and understanding
attained by the whole group [attending a Communist Party conference in rural China in
1948] through the method of self-and-mutual criticism. The method, I began to realize,
was something that had to be learned. It did not flow naturally out of the extremely
individualistic, face-conscious culture in which the majority of the team members had
“To practice self-and-mutual criticism well one had to cultivate objectivity in several ways. First, one had to be willing to be objective about oneself. One had to be willing to seek out that kernel of truth in any criticism regardless of the manner in which it was presented. Second, one had to be objective about others; one had to evaluate others from a principled point of view with the object of helping them to overcome their faults and work more effectively. One had to raise others up, not knock them down. In practice these two considerations meant that one had to pay great attention to one’s own motives and methods when criticizing others, while disregarding in the main the motives and methods used by others towards oneself.
“Above and beyond this, one had to cultivate the courage to voice sincerely-held opinions regardless of the views held by others, while at the same time showing a willingness to listen to others and to change one’s own opinion when honestly convinced of error. To bow with wind, to go along with the crowd was an irresponsible attitude that could never lead to anything but trouble for oneself, for the revolutionary movement, and for China. The reverse of this, to be arrogant and unbending was just as bad.” —William Hinton, Fanshen: A Documentary of Revolution in a Chinese Village (1966), p. 395.
CRITICISM — And Democracy
“Criticism and self-criticism is a kind of method. It is a method of resolving contradictions among the people and it is the only method. There is no other. But if we do not have a full democratic life and do not truly implement democratic centralism, then this method of criticism and self-criticism cannot be applied.” —Mao, “Talk at an Enlarged Central Work Conference”, Jan. 30, 1962, in Stuart Schram, ed., Chairman Mao Talks to the People: Talks and Letters: 1956-1971 (1974), p. 163.
CRITICISM — By the Masses
“It seems that some of our comrades still do not understand the
democratic centralism which Marx and Lenin talked of. Some of these comrades are already
veteran revolutionaries, with a ‘three-eight
style’ or some other style—anyway they have been Party members for several decades,
yet they still do not understand this question. They are afraid of the masses, afraid
of the masses talking about them, afraid of the masses criticizing them. What sense does
it make for Marxist-Leninists to be afraid of the masses? When they have made mistakes
they don’t talk about them. The more frightened they are, the more haunted they become.
I think one should not be afraid. What is there to be afraid of? Our attitude is to
hold fast to the truth and be ready at any time to correct our mistakes. The question
of right or wrong, correct or incorrect in our work has to do with the contradictions
among the people. To resolve contradictions among the people we can’t use curses or
fists, still less guns or knives. We can only use the method of discussion, reasoning,
criticism and self-criticism. In short, we can only use democratic methods, the method
of letting the masses speak out.
“Both inside and outside the Party there must be a full democratic life, which means conscientiously putting democratic centralism into effect. We must consciously bring questions out into the open, and let the masses speak out. Even at the risk of being cursed we should still let them speak out. The result of their curses at the worst will be that we are thrown out and cannot go on doing this kind of work—demoted or transferred. What is so impossible about that? Why should a person only go up and never go down? Why should one only work in one place and never be transferred to another?” —Mao, “Talk at an Enlarged Central Work Conference”, Jan. 30, 1962, in Stuart Schram, ed., Chairman Mao Talks to the People: Talks and Letters: 1956-1971 (1974), p. 160-1.
CRITICISM — Of Others, and the Development of One’s Own Views
In my opinion the best way to think about some topic, and to develop one’s own views on it, is to start by looking at and thinking about the views of others. This examination should be done with an open mind, but also with a critical eye. Very often here the most important advances in one’s own understanding come from developing some very strong criticisms of the other person’s views!
I sometimes think that I might not have anything in the way of a considered opinion on any significant topic at all if it were not for my inclination to do things in this “contentious” way. (I don’t think I’m smart enough to come up with a lot of well-thought-out ideas entirely on my own. And I’m not sure anybody else is either! Most wisdom has social origins.)
My views, and I hope the views of most other people too, have been created and changed over time in light of the views of others and often in reaction to their views. In a way this is sort of like creating a personal dialog with other people. Of course we all especially seek out the views of those we have already come to respect, but some of the most important advances in our own thinking may still actually come in reaction against opinions which we find ourselves forced to strongly criticize. —S.H.
“I do not think one should separate criticism of other views from the development of one’s own.” —Maurice Cornforth, Marxism and the Linguistic Philosophy (1967), Foreword to the Second Edition, p. 9.
CRITICISM — In Socialist Society
“Thoroughgoing materialists are fearless; we hope that all our fellow fighters will courageously shoulder their responsibilities and overcome all difficulties, fearing no setbacks or gibes, nor hesitating to criticize us Communists and give us their suggestions. ‘He who is not afraid of death by a thousand cuts dares to unhorse the emperor’—this is the indomitable spirit needed in our struggle to build socialism and communism.” —Mao, “Speech at the Chinese Communist Party’s National Conference on Propaganda Work” (March 12, 1957); Quotations from Chairman Mao Tse-tung, 1st ed. (1966), pp. 258-259.
“If we have shortcomings, we are not afraid to have them pointed out and criticized, because we serve the people. Anyone, no matter who, may point out our shortcomings. If he is right, we will correct them. If what he proposes will benefit the people, we will act upon it.” —Mao, “Serve the People” (Sept. 8, 1944), SW 3:227.
CRITICISM — Sharp
“Criticism should be sharp. I don’t find the criticism made by some comrades at this conference very sharp; they seem to be afraid of offending others. If you are not sharp enough, if the sting doesn’t reach home, the person criticized will not feel any pain and take any heed.... Fear of offending others is only fear of losing votes and of an uneasy relationship at work. Will I lose my rice-bowl if you don’t vote for me? Nothing of the kind. Actually, if you speak your mind and lay the issues on the table sharply, you’ll find it easier to get along with others. Don’t draw in your horns. Why does an ox have two horns? They are for fighting, for self-defense and attack. I often ask comrades if they have ‘horns’ on their heads. Comrades, touch and feel if you have any. I can see some comrades have horns, some have horns but not very sharp ones, and others have no horns at all. In my opinion, it is better to have them, for that goes well with Marxism. One of the tenets of Marxism is criticism and self-criticism.” —Mao, “Speeches at the National Conference of the Communist Party of China: Concluding Speech” (March 31, 1955), SW 5:170-1.
“[I]n opposing subjectivism, sectarianism and stereotyped Party writing we must have in mind two purposes: first, ‘learn from past mistakes to avoid future ones’, and second, ‘cure the sickness to save the patient’. The mistakes of the past must be exposed without sparing anyone’s sensibilities; it is necessary to analyze and criticize what was bad in the past with a scientific attitude so that work in the future will be done more carefully and done better. This is what is meant by ‘learn from past mistakes to avoid future ones’. But our aim in exposing errors and criticizing shortcomings, like that of a doctor curing a sickness, is solely to save the patient and not to doctor him to death. A person with appendicitis is saved when the surgeon removes his appendix. So long as a person who has made mistakes does not hide his sickness for fear of treatment or persist in his mistakes until he is beyond cure, so long as he honestly and sincerely wishes to be cured and to mend his ways, we should welcome him and cure his sickness so that he can become a good comrade. We can never succeed if we just let ourselves go, and lash out at him. In treating an ideological or a political malady, one must never be rough and rash but must adopt the approach of ‘curing the sickness to save the patient’, which is the only correct and effective method.” —Mao, “Rectify the Party’s Style of Work” (Feb. 1, 1942), SW 3:50.
CRITICISM — Timeliness Of
“Whenever a problem crops up, tackle it right away; don’t let problems pile up and then try to settle them all at one go. Make criticism in good time; don’t get into the habit of criticizing only after the event.” —Mao, “On the Co-operative Transformation of Agriculture" (July 31, 1955), SW 5:200-201. [Slightly different translation in Quotations From Chairman Mao Tse-tung, 1st ed. (1966), p. 266.]
CRITICISM — Within the Party
See: INNER-PARTY STRUGGLE
CRITIQUE OF THE GOTHA PROGRAMME [By Marx]
A very important work criticizing the Gotha Programme, a draft of which had been prepared for a conference of the united German Social Democratic Party to be held in the city of Gotha in 1875.
This work by Marx is available in many editions, including MECW 24:75-99, and also online at several places, including: http://www.marxists.org/archive/marx/works/1875/gotha/index.htm
“Marx’s Critique of the Gotha Programme deals with fundamental
questions of the theory and programme of the working class party. It consists of a series
of comments on points contained in the draft programme prepared for a unity conference
of the German working class movement held at Gotha in 1875. Marx’s comments were
suppressed by the opportunist leadership of the German Social Democratic Party, and were
subsequently published by Engels in 1891, against the wishes of the leadership.
“The intention of the draft programme—the ‘Gotha Programme’—was to provide a platform behind which the whole German working class movement could unite. But for the sake of ‘unity’ it made a number of concessions on points of principle to the followers of the splinter group led by Ferdinand Lassalle.
“What are the principal points clarified in Marx’s critique?
“1. He shows that the capitalist mode of production has created the material conditions for advancing to socialism, and deals with the way in which the social product will be distributed in socialist society. Socialism is only the first phase of communism, and is guided by the principle, ‘From each according to his ability, to each according to his labor.’ It will lead to full communist society, the principle of which is, ‘From each according to his ability, to each according to his need.’
“2. He attacks the reformist slogan of ‘a fair distribution of the products of labor,’ and exposes the theoretical confusion behind this slogan. For the distribution of the products of labor, must always be a consequence of the mode of production. He likewise attacks the reformist slogan of ‘state aid under democratic control,’ and shows that the aim of the working class must be ‘to revolutionize the present conditions of production.’
“3. He attacks the conception that, relatively to the working class, all other classes are only one reactionary mass. It is necessary to examine concretely the actual position of each class at each stage of history, and not lump them all together as ‘reactionary.’ Thus the workers may fight together with sections of the capitalists against feudal survivals, together with the lower middle class for certain democratic demands, and so on.
“4. He affirms the international character of the working class struggle in opposition to the narrowly national aims of the Gotha Programme.
“5. He refutes the conception of an ‘iron law of wages,’ according to which the worker’s real wages can never be raised above a minimum subsistance level.
“6. He attacks the reformist slogan of a ‘free state,’ and shows that ‘between capitalist and communist society lies the period of the revolutionary transformation of the one into the other. There corresponds to this also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat.’”
—Maurice Cornforth, Readers’ Guide to the Marxist Classics (London: 1952), pp. 9-10.
CRITIQUE OF POLITICAL ECONOMY [By Marx]
[Intro to be added.]
“[In a] passage from Marx’s Preface to the Critique of Political
Economy ... Marx said [as summarized here by Cornforth]:
“1. In social production men enter into definite relations of production, which arise independent of their will. The sum total of these constitutes the economic structure of society.
“2. This economic structure is the real basis on which arises a legal and political superstructure, and to which correspond definite forms of social consciousness.
“3. Therefore the mode of production in material life determines the social, political and intellectual life process in general. It is not the consciousness of men that determines their being but, on the contrary, their social being determines their consciousness.
“4. At a certain stage of their development, the forces of production in society come into conflict with the existing relations of production. From forms of development of the forces of production these relations turn into their fetters.
“5. Then follows an epoch of social revolution. The economic foundation is changed, and with it the whole superstructure is more or less rapidly transformed.
“6. In considering such transformations we must distinguish between the material transformation of the economic conditions of production, and the legal, political and ideological forms in which men become conscious of the conflict and fight it out.
“7. No social order ever disappears until all the productive forces for which there is room in it have been developed; and new and higher relations of production never appear until the material conditions of their existence have matured within the old society.”
—Maurice Cornforth, Readers’ Guide to the Marxist Classics (London: 1952), p. 23.
CROCE, Benedetto [Pronounced: CROW-chay] (1866-1952)
Italian bourgeois philosopher of the neo-Hegelian school, historian, critic and politician. He developed his own metaphysical system along the lines of Hegel, but without the dialectical sophistication. His philosophy is that of absolute idealism. He also devoted much attention to aesthetics and art criticism, and had a strong influence on bourgeois aesthetics theory. He viewed art as an “intuitive cognition of the singular” as contrasted with logical reasoning as a rational process of “knowing the general”. In an idealist way he denied the physical reality of the work of art. (Cf. AESTHETIC OBJECT. ) In ethics he tried to obscure the social roots and class nature of morality.
Politically Croce was a prominent liberal bourgeois ideologist, and member of the Italian government before Mussolini’s rise to power and after his fall. He was a determined opponent of Marxism and revolution as well as of Mussolini and Fascism. He wrote a short book, Historical Materialism and the Economics of Karl Marx (1914) which is focused mostly against popularizers of Marx such as Antonio Labriola.
A number term in India and other south Asian countries which means 10 million. One crore equals 100 lakhs. Thus to say that the government spent $60 crores in an particular anti-revolutionary military campaign means that it spent $600 million.
CROSS-BORDER E-COMMERCE (CBEC)
The purchase of goods on the Internet where the seller is in one country and the buyer is in a different country. Of course all Internet marketers want to promote this, but presently there are often obstacles including tariffs, trade barriers (restrictions and inspection delays) and outright prohibitions on sales of some goods from the originating country, in some cases.
One company that is especially promoting CBEC from the U.S. to other countries is the world leader in E-commerce, Amazon. But China, as a nation, is even more determined to promote this sort of cross-border commerce. In May 2020 it increased the number of “pilot zones” (cities and districts) allowed to engage in direct foreign sales via the Internet to 105, throughout China.
Of course, the international shipping capacity and speed must be quite good for this sort of commerce. China on its end already has very good shipping systems and is rapidly improving their abilities. However, the U.S. has been trying to block this expansion of Chinese CBEC into America by 1) Intensifying tariffs, trade regulations and inspections; 2) Demanding that China not use the U.S. Postal Service for deliveries in America; and 3) Actually weakening or even eventually totally eliminating the USPS! Of course many of these things would seriously harm internal E-commerce in the U.S. too, so there is great U.S. corporate opposition to some of these policies and plans.
Central Reserve Police Force. This is one of many government paramilitary forces seeking to destroy Naxalites (Maoist revolutionaries) in India.
A digital form of “money” (or, more accurately, something pretending to be money) which is based on complex computer coding and widely distributed bookkeeping of its ownership (via “blockchains”) which keeps individuals from easily producing endlessly more of it. Bitcoin is the best known example, but there are now at least hundreds of others.
Money was originally some rare special commodity itself, such as gold or silver, which served as a relative measure for the value of other commodities, as a means of exchange, and as a store of value. When powerful governments were established, the possibility of establishing fiat money arose, that is, printed paper which only has value because the government says it does (and because people are willing to believe the government and use that currency because the government doesn’t excessively inflate prices of real commodities by printing too much of the fiat currency). But governments cannot be trusted not to do this, especially in times of economic or social crisis. For this and other reasons, skilled computer programmers, originally of an anarchist inclination, have recently created many forms of cryptocurrency independently of governments, in hopes that these will replace government-issued fiat money.
However, cryptocurrencies are also fiat money! That is, they only have value because people believe they have value. A single bitcoin, for example, has no inherent value in the way that an ounce of gold does. Some cryptocurrencies, such as bitcoin, allow for the gradual expansion of the number of coins (for a limited period) through what is referred to as “mining” (i.e., by using computers to solve difficult mathematical calculations and thus be rewarded with newly issued bitcoins). Others have a permanently fixed number of digital “coins”. And all these cryptocurrencies can be bought or sold for money issued by governments. Their price varies constantly, commonly with huge swings up and down.
In reality, it is usually extremely difficult or even outright impossible to use any “cryptocurrency” as actual money to buy real commodities (such as food, clothing, or to pay your rent), and few people even try to do so. Those who buy these cryptocurrencies are doing so only because they think their price will go up, and they will be able to sell them at a higher price later on. In other words, the current cryptocurrency boom is actually an old-style Ponzi Game, in which the gamblers hope to cheat each other, or else are ignorant of the whole situation. This can only end with most people involved losing most or all of their real money they “invested”. [Apr. 20, 2022]
See also: PRICE OF A THING WHICH HAS NO VALUE
“Twenty percent of American adults—36 percent among millennials—own cryptocurrency, according to a recent Morning Consult survey.” —“Crypto is Here to Stay”, Sunday Business Page, New York Times, March 20, 2022.
CRYPTOCURRENCY — Collapse Of
Just months after the above entry on cryptocurrency was added, a major collapse in this Ponzi-like boom occurred in late 2022, with the “value” [i.e., current market price] of cryptocurrency investments crashing by about 75%, from about $3 trillion to around $800 billion. (That remainder may well also disappear in the not-too-distant future.) In response to this collapse many victims have been calling for government regulation of the “crypto industry”. This is foolishness of course. It is like calling for govenment regulation of fraud and confidence games! [Jan. 4, 2023]
“Following a series of bankruptcies of crypto companies, and following the total
collapse of some stablecoins, and following the general collapse of crypto prices, and following
revelations of all kinds of imaginable and previously unimaginable shenanigans, scams, and frauds in
the entire crypto and DeFi space, the US banking regulators today issued a warning to banks about the
crypto and DeFi space, amid fears of contagion to the banking sector.”
—Wolf Richter, “Fed, FDIC, & OCC Warn Banks about Contagion from Cryptos, with Laundry List of Sordid Stuff Inherent in the Crypto Scene”, on WolfStreet.com, Jan. 3, 2023.
“This is another example of the regulators closing the barn door after the proverbial
horses have bolted. Yet so many people, including numerous commenters on this [WolfStreet.com] site,
still have faith in the regulatory process.
“Go look at the history of regulation. This is how it always works. A mania or bubble followed by widespread fraud that is supposedly ‘shocking’ to the politicians and public. This is followed by regulatory ‘reform’ to ‘prevent’ the crisis or fiasco that just happened.
“No amount of regulation can prevent manias or regulate moral hazard. It’s not possible to fix stupid either. In the case of crypto, the stupid is believing that nothing is something. It’s also stupid to pretend that nothing (crypto) is something and then regulate it, yet this is virtually guaranteed to happen.
“There is no need to pass some statute or write endless pages of regulations for anything that is fraud or theft. That’s already covered by English Common Law, the foundation of the US legal system.”
—Agustus Frost, posting on the WolfStreet.com blog, Jan. 4, 2023.
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