Page - 104 - in Otto Bauer (1881–1938) - Thinker and Politician

104 chapter 3 factors:thecontradictionbetweenthestrongproductiveforcesoftheeconomy andthelowpurchasingpowerofthepopulation;theanarchyofcapitalisteco- nomy; and the falling rate of profit. The falling rate of profit in particular is, according to Bauer, fundamental, as it is an objective law of capitalist eco- nomyand therefore causes crisis as an inevitable phasewithin the business cycle.54Hence, Bauer treated the crisis of 1929 as a normal andunavoidable occurrence.Hewasconvincedthatthiseconomicmeltdown, liketheprevious one, representedaself-regulatoryelementanddrivingmechanismofcapital- ism.Analysingthecausesofthecrisis,hearrivedatthefollowingconclusions: WorldWar i compromised theglobal economicbalance. Following that, new globaldivisionsgaveriseto,ontheonehand,closedeconomicsectors,and,on theother, intensifiedcompetitionbetween the imperialist countries formar- kets and spheresof influenceabroad. InBauer’s eyes, the crisis of 1929wasa crisisofoverproduction,andthecausesofsucheconomicdisturbances–Marx wasequallyconvincedofthis–arethefallingrateofprofitandasimultaneous rise of surplus value. That is, a situation inwhich consumption cannot keep upwith the surplusofproductioncapital. Thus,Bauer rejecteda theorypop- ularisedby theworksof J.S.Mill and Jean-Baptiste Say,which remainedalive inbourgeois economicsuntil thedaysof JohnMaynardKeynes:namely that, inthelongterm,it is impossibletoglutthecapitalistmarket,asthereisnodis- turbance in thec–m–ccirculationof commodities.All income fromthe sale a number of real causes of crisis in different volumes of Capital, including the con- tradiction between levels of production and consumption, disparities in the develop- ment of different branches and sections of production, and the falling rate of profit. SeeMarx 1972, pp. 414–15; compareMarx 1959, pp. 483–4. This triggered awave of cri- ticismamong thinkers inside andoutside the socialist camp.Among the first to attack Marx’s crisis theorywere – according toKluza-Wołosiewicz 196, p. 172 –Bernstein and Mikhail Tugan-Baranovsky. See Bernstein 1899, pp. 66–82, compare Tugan-Baranovsky 1923,p. 197. 54 AfterWorldWar i, Social Democrats pointed to the falling rate of profit as a cause for the breakout of crisis. Bauer was therefore not alone in claiming this. I shall use the opportunitytomaketwocorrections.Firstly,manyeconomists incorrectlythinkofBauer astheauthoroftheclaimthatcrisisdoesnotconstituteaninevitablephaseofthebusiness cyclebecauseperiodsofboomanddepressionarecrucialforthecycle.Theyalsowrongly accuse Bauer of providingwith this thesis –which, nota bene, he never put forward – abasis forHilferding’s theory of crisis-free cycles. SeeMendelson 1959, p. 96. Compare Sweezy 1964, pp. 447–8. Secondly, Hilferding’s theory of ‘organised capitalism’ did not exclude thepossibility of crisis in the first phase, i.e. before a central cartel that totally controls all production is established.Hilferding himself haddoubts that such a cartel wouldbecreated.