2. The Adaptation of Capital¶
Core Argument¶
The chapter mounts a systematic demolition of Eduard Bernstein’s revisionist thesis that capitalism is undergoing a process of ‘adaptation’ which will attenuate or eliminate its periodic crises. Bernstein identifies three key mechanisms of this supposed adaptation: the credit system, perfected means of communication, and capitalist combines (cartels and trusts). The author argues that far from suppressing capitalism’s internal contradictions, each of these instruments aggravates them to the highest degree.
Credit, the chapter contends, is not a means of crisis-suppression but a particularly mighty instrument for crisis-formation. It extends production disproportionately beyond market limits while simultaneously paralysing exchange at the first sign of trouble. Credit transforms all exchange into an extremely complex and artificial mechanism resting on a minimum of metallic money, easily disarranged at the slightest occasion. It aggravates the antagonism between production and appropriation by separating production from ownership, transforming capital into ‘social’ capital while reducing profit to a mere title of ownership. The revolutionary character of credit has long been recognised, the author notes, citing Marx’s characterisation of Isaac Pereira as “half prophet, half rogue.”
Employers’ organisations fare no better under scrutiny. Cartels cannot become the dominant form of production because their purpose is to increase profit in one branch at the expense of another—a tendency that suppresses itself when generalised. Within their practical limits, cartels produce the opposite of industrial anarchy’s suppression: they sell abroad cheaper than at home, sharpening international competition, as demonstrated by the world sugar industry. Cartels are fundamentally identical to crises in method—both keep accumulated capital partially idle. When the world market reaches its limit, this remedy transforms into a malady, and regulating organisations burst like soap bubbles.
The chapter then addresses the empirical objection that no major crisis occurred between 1873 and 1900. It points to the crises of 1900 and 1907-1908 as factual refutations of Bernstein’s theory, noting that the 1907-1908 crisis was most violent precisely in those countries with the greatest development of the supposed ‘means of adaptation.’ The ten-year cycle, the author insists, was never a natural law but a contingent historical pattern tied to the rapid extension of capitalist domains through railway construction, gold discoveries, and new markets.
On the question of middle-size enterprises, the chapter argues that Bernstein misunderstands the dialectical character of their development. Small capitalists serve as pioneers of technical change, initiating new methods in established branches and creating new branches not yet exploited by big capital. Their history proceeds not rectilinearly toward disappearance but through constant contradiction: periodic mowing down followed by rapid regrowth, only to be mowed down again. The descending tendency must win in the end, but its victory shows itself not in absolute numerical decline but in the progressive increase of the minimum capital necessary for production and the progressively shorter duration of small capitalists’ stay in new industries.