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       5 Speculation: a US Hypothesis

      Pre-industrial modes of production were coherent. They functioned as stable systems over very long periods of time without generating problems. The crises which disturbed them from some normal level of activity can be ascribed, in the main, to external influences over which there was no control. Hunter-gatherers may have gone hungry at times because the herds failed to return to the traditional grazing grounds. In agrarian systems, famines occurred because of inclement weather. This is not to deny that problems did not originate from within the system. Over-zealous hunting can deplete the available stock of animals in a tribe’s territory; over-intensive cultivation can turn soil into a dust bowl. But these were aberrations, cases of unwise, irregular, self-destructive, management of affairs by individuals, and were not entailed by the mode of production itself.

      Because these systems were stable, over very long periods of time, scholars classified them as ‘stagnant’ societies. But the peoples themselves were content. They were culturally equipped to deal with deviant cases within their ranks, and they developed elaborate rituals to explain, if not to control, the ‘acts of god’.

      Industrial society, by contrast, has in its short life been riddled with regular economic crises which appear to be caused directly by malfunctioning elements of the system itself. If the record is to be believed, capitalism suffers from internal contradictions which preclude stable production of goods and services over a long period of time.

The view that the industrial mode of production based on the private ownership of capital was inherently defective was promoted at a very early stage by left-wing critics. One was Robert Owen, who attributed unemployment to ‘under-consumption’. His solution was to create small, self- contained communities. Members would share a communal ethic and earn their living by agriculture and industry in which machinery would be carefully controlled. Owen’s scheme was promoted in the House of Commons during the first major industrial recession, in the late 1810s. It was advocated in 1817 by De Crespigny, who placed great store by the claim that people were rendered unemployed by the advance of technology.¹ The theoretical critique from the left was advanced by Frederick Engels in The Condition of the Working Class, who argued that capitalism operated through cyclical fluctuations and that therefore the system had to create and maintain a permanent reserve of workers. Karl Marx elaborated on the inevitability of these characteristics. Anarchy reigned because of the multiplicity of individual decisions: entrepreneurs could not have perfect knowledge of the state of the developed market. Furthermore, the maldistribution of income as a result of private ownership of capital meant that labour could not buy back all that it produced. From this, it followed that at certain times there would be ‘over-production’. The excess of goods in relation to demand would set in motion a recession, because entrepreneurs were forced to cut back on output and new investment. Only planning from the centre — where the decision-makers had an overview of the total system—would eliminate the risk of wrong decisions. This would create a rational programme of economic activity. Only social ownership of the means of production would ensure that the rate of consumption was tailored to output. In a word — socialism.²

The over-production thesis did not mean that recessions were always caused by the inability of labour to buy up the goods which it produced. Marx said that rising wages also caused crises, for among capitalists ‘the stimulus of gain is blunted’.³ Attempts to make up for a decline in the rate of profit, by increasing aggregate profit, merely reinforces the over-production of commodities on sale in the market. Marxists, therefore, have got it both ways. Either

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