Lenin on Keynes
This excerpt has been taken from Lenin’s report to the The Second Congress of the Communist International, highlights his thinking on world debt and his thoughts on Keynes.
The piece is still relevant amidst the backdrop of the economic crisis and the subsequent debt crisis that started in 2008 shows no signs of abetting. Globally the disenchantment with capitalism is growing, so is the yearning of the masses to sweep away old political and economic landmarks. World over we are seeing capitalism’s frantic effort to reinvigorate itself and the imperialist powers attempt to scuttle voice of dissent with increasing military ferocity. The Arab dream has turned into a nightmare thanks to the capitulationist position taken by the so-called ‘revolutionary’ leaders and the US imperialist’s new game to subjugate and divide the world. Yet on the other hand we are also witnessing a change where US no longer occupies the same unchallenged hegemony it held at the end of the Cold War. NATO is no longer a cohesive alliance, and the divisions in the Western imperialists are growing more and more to get the share of pie. The temporary successes of the counter-revolution in parts of Africa and Asia are a harsh reminder that imperialism still has been able to maintain its stranglehold in large part of the world and still we are living in the era of imperialism—the highest stage of capitalism.
Lenin highlights that
This fact shows that the “mechanism” of the world capitalist economy is falling apart. The trade relations on which the acquisition of raw materials and the sale of commodities hinge under capitalism cannot go on.
A significant secion of bourgeoisie economist and planners are harping on going back to Keynesianism. But the Keynesian programmes being propagated or implemented to end the crisis, even if they succeed in stabilising capitalism to some extent, would surely over time initiate its own demise and then go back to laissez-faire capitalism. For those who still clinch their hope on Keynes and his ideas need to read what Lenin said: …the example of Keynes shows that in Europe and America tens and hundreds of thousands of petty-bourgeois, intellectuals, and simply more or less literate and educated people, have had to follow the road taken by Keynes, who resigned and threw in the face of the government a book exposing it. Keynes has shown what is taking place and will take place in the minds of thousands and hundreds of thousands of people when they realise that all the speeches about a “war for liberty”, etc., were sheer deception
Not only have the colonial and the defeated countries been reduced to a state of dependence; within each victor state the contradictions have grown more acute; all the capitalist contradictions have become aggravated. I shall illustrate this briefly with a few examples.
Let us take the national debts. We know that the debts of the principal European states increased no less than sevenfold in the period between 1914 and 1920. I shall quote another economic source, one of particular significance—Keynes, the British diplomat and author of The Economic Consequenices [sic] of the Peace, who, on instructions from his government, took part in the Versailles peace negotiations, observed them on the spot from thc [sic.] purely bourgeois point of view, studied the subject in detail, step by step, and took part in the conferences as an economist. He has arrived at conclusions which are more weighty, more striking and more instructive than any a Communist revolutionary could draw, because they are the conclusions of a well-known bourgeois and implacable enemy of Bolshevism, which he, like the British philistine he is, imagines as something monstrous, ferocious, and bestial. Keynes has reached the conclusion that after the Peace of Versailles, Europe and the whole world are heading for bankruptcy. He has resigned, and thrown his book in the government’s face with the words: “What you are doing is madness”. I shall quote his figures, which can be summed up as follows.
What are the debtor-creditor relations that have developed between the principal powers? I shall convert pounds sterling into gold rubles, at a rate of ten gold rubles to one pound. Here is what we get: the United States has assets amounting to 19,000 million, its liabilities are nil. Before the war it was in Britain’s debt. In his report on April 14, 1920, to the last congress of the Communist Party of Germany, Comrade Levi very correctly pointed out that there are now only two powers in the world that can act independently, viz., Britain and America. America alone is absolutely independent financially. Before the war she was a debtor; she is now a creditor only. All the other powers in the world are debtors. Britain has been reduced to a position in which her assets total 17,000 million, and her liabilities 8,000 million. She is already half-way to becoming a debtor nation. Moreover, her assets include about 6,000 million owed to her by Russia. Included in the debt are military supplies received by Russia during the war. When Krasin, as representative of the Russian Soviet Government, recently had occasion to discuss with Lloyd George the subject of debt agreements, he made it plain to the scientists and politicians, to the British Government’s leaders, that they were labouring under a strange delusion if they were counting on getting these debts repaid. The British diplomat Keynes has already laid this delusion bare.
Of course, it is not only or even not at all a question of the Russian revolutionary government having no wish to pay the debts. No government would pay, because these debts are usurious interest on a sum that has been paid twenty times over, and the selfsame bourgeois Keynes, who does not in the least sympathise with the Russian revolutionary movement, says: “It is clear that these debts cannot be taken into account.”
In regard to France, Keynes quotes the following figures: her assets amount to 3,500 million, and her liabilities to 10,500 million! And this is a country which the French themselves called the world’s money-lender, because her “savings” were enormous; the proceeds of colonial and financial pillage—a gigantic capital—enabled her to grant thousands upon thousands of millions in loans, particularly to Russia. These loans brought in an enormous revenue. Notwithstanding this and notwithstanding victory, France has been reduced to debtor status.
A bourgeois American source, quoted by Comrade Braun, a Communist, in his book Who Must Pay the War Debts? (Leipzig, 1920), estimates the ratio of debts to national wealth as follows: in the victor countries, Britain and France, the ratio of debts to aggregate national wealth is over 50 per cent; in Italy the percentage is between 60 and 70, and in Russia 90. As you know, however, these debts do not disturb us, because we followed Keynes’s excellent advice just a little before his book appeared—we annulled all our debts. (Stormy applause.)
In this, however, Keynes reveals the usual crankiness of the philistine: while advising that all debts should be annulled, he goes on to say that, of course, France only stands to gain by it, that, of course, Britain will not lose very much, as nothing can be got out of Russia in any case; America will lose a fair amount, but Keynes counts on American “generosity”! On this point our views differ from those of Keynes and other petty-bourgeois pacifists. We think that to get the debts annulled they will have to wait for something else to happen, and will have to try working in a direction other than counting on the “generosity” of the capitalists.
These few figures go to show that the imperialist war has created an impossible situation for the victor powers as well. This is further shown by the enormous disparity between wages and price rises. On March 8 of this year, the Supreme Economic Council, an institution charged with protecting the bourgeois system throughout the world from the mounting revolution, adopted a resolution which ended with an appeal for order, industry and thrift, provided, of course, the workers remain the slaves of capital. This Supreme Economic Council, organ of the Entente and of the capitalists of the whole world, presented the following summary.
In the United States of America food prices have risen, on the average, by 120 per cent, whereas wages have increased only by 100 per cent. In Britain, food prices have gone up by 170 per cent, and wages 130 per cent; in France, food prices—300 per cent,. and wages 200 per cent; in Japan—food prices 130 per cent, and wages 60 per cent (I have analysed Comrade Braun’s figures in his pamphlet and those of the Supreme Economic Council as published in The Times of March 10, 1920).
In such circumstances, the workers’ mounting resentment, the growth of a revolutionary temper and ideas, and the increase in spontaneous mass strikes are obviously inevitable, since the position of the workers is becoming intolerable. The workers’ own experience is convincing them that the capitalists have become prodigiously enriched by the war and are placing the burden of war costs and debts upon the workers’ shoulders. We recently learnt by cable that America wants to deport another 500 Communists to Russia so as to get rid of “dangerous agitators”.
Even if America deports to our country, not 500 but 500,000 Russian, American, Japanese and French “agitators” that will make no difference, because there will still be the disparity between prices and wages, which they can do nothing about. The reason why they can do nothing about it is because private property is most strictly safeguarded, is “sacred” there. That should not be forgotten, because it is only in Russia that the exploiters’ private property has been abolished. The capitalists can do nothing about the gap between prices and wages, and the workers cannot live on their previous wages. The old methods are useless against this calamity. Nothing can be achieved by isolated strikes, the parliamentary struggle, or the vote, because “private property is sacred”, and the capitalists have accumulated such debts that the whole world is in bondage to a handful of men. Meanwhile the workers’ living conditions are becoming more and more unbearable. There is no other way out but to abolish the exploiters’ “private property”.
In his pamphlet Britain and the World Revolution, valuable extracts from which were published by our Bulletin of the People’s Commissariat of Foreign Affairs of February 1920, Comrade Lapinsky points out that in Britain coal export prices have doubled as against those anticipated by official industrial circles.
In Lancashire things have gone so far that shares are at a premium of 400 per cent. Bank profits are at least 40-50 per cent. It should, moreover, be noted that, in determining bank profits, all bank officials are able to conceal the lion’s share of profits by calling them, not profits but bonuses, commissions, etc. So here, too, indisputable economic facts prove that the wealth of a tiny handful of people has grown prodigiously and that their luxury beggars description, while the poverty of the working class is steadily growing. We must particularly note the further circumstance brought out very clearly by Comrade Levi in the report I have just referred to, namely, the change in the value of money. Money has everywhere depreciated as a result of the debts, the issue of paper currency, etc. The same bourgeois source I have already mentioned, namely, the statement of the Supreme Economic Council of March 8, 1920, has calculated that in Britain the depreciation in the value of currency as against the dollar is approximately one-third, in France and Italy two-thirds, and in Germany as much as 96 per cent.
This fact shows that the “mechanism” of the world capitalist economy is falling apart. The trade relations on which the acquisition of raw materials and the sale of commodities hinge under capitalism cannot go on; they cannot continue to be based on the subordination of a number of countries to a single country—the reason being the change in the value of money. No wealthy country can exist or trade unless it sells its goods and obtains raw materials.
Thus we have a situation in which America, a wealthy country that all countries are subordinate to, cannot buy or sell. And the selfsame Keynes who went through the entire gamut of the Versailles negotiations has been compelled to acknowledge this impossibility despite his unyielding determination to defend capitalism, and all his hatred of Bolshevism. Incidentally, I do not think any communist manifesto, or one that is revolutionary in general, could compare in forcefulness with those pages in Keynes’s book which depict Wilson and “Wilsonism” in action. Wilson was the idol of philistines and pacifists like Keynes and a number of heroes of the Second International (and even of the “Two-and-a-Half” International), who exalted the “Fourteen Points” and even wrote “learned” books about the “roots “ of Wilson ’s policy; they hoped that Wilson would save “social peace”, reconcile exploiters and exploited, and bring about social reforms. Keynes showed vividly how Wilson was made a fool of, and all these illusions were shattered at the first impact with the practical, mercantile and huckster policy of capital as personified by Clemenceau and Lloyd George. The masses of the workers now see more clearly than ever, from their own experience—and the learned pedants could see it just by reading Keynes’s book—that the “roots” of Wilson’s policy lay in sanctimonious piffle, petty-bourgeois phrase-mongering, and an utter inability to understand the class struggle.
In consequence of all this, two conditions, two fundamental situations, have inevitably and naturally emerged. On the one hand, the impoverishment of the masses has grown incredibly, primarily among 1,250 million people, i.e., 70 per cent of the world’s population. These are the colonial and dependent countries whose inhabitants possess no legal rights, countries “mandated” to the brigands of finance. Besides, the enslavement of the defeated countries has been sanctioned by the Treaty of Versailles and by existing secret treaties regarding Russia, whose validity, it is true, is sometimes about as real as that of the scraps of paper stating that we owe so many thousands of millions. For the first time in world history, we see robbery, slavery, dependence, poverty and starvation imposed upon 1,250 million people by a legal act.
On the other hand, the workers in each of the creditor countries have found themselves in conditions that are intolerable. The war has led to an unprecedented aggravation of all capitalist contradictions, this being the origin of the intense revolutionary ferment that is ever growing. During the war people were put under military discipline, hurled into the ranks of death, or threatened with immediate wartime punishment. Because of the war conditions people could not see the economic realities. Writers, poets, the clergy, the whole press were engaged in nothing but glorifying the war. Now that the war has ended, the exposures have begun: German imperialism with its Peace of Brest-Litovsk has been laid bare; the Treaty of Versailles, which was to have been a victory for imperialism but proved its defeat, has been exposed. Incidentally, the example of Keynes shows that in Europe and America tens and hundreds of thousands of petty-bourgeois, intellectuals, and simply more or less literate and educated people, have had to follow the road taken by Keynes, who resigned and threw in the face of the government a book exposing it. Keynes has shown what is taking place and will take place in the minds of thousands and hundreds of thousands of people when they realise that all the speeches about a “war for liberty”, etc., were sheer deception, and that as a result only a handful of people were enriched, while the others were ruined and reduced to slavery. Is it not a fact that the bourgeois Keynes declares that, to survive and save the British economy, the British must secure the resumption of free commercial intercourse between Germany and Russia? How can this be achieved? By cancelling all debts, as Keynes proposes. This is an idea that has been arrived at not only by Keynes, the learned economist; millions of people are or will be getting the same idea. And millions of people hear bourgeois economists declare that there is no way out except annulling the debts; therefore “damn the Bolsheviks” (who have annulled the debts), and let us appeal to America’s “generosity”! I think that, on behalf of the Congress of the Communist International, we should send a message of thanks to these economists, who have been agitating for Bolshevism.
If, on the one hand, the economic position of the masses has become intolerable, and, on the other hand, the disintegration described by Keynes has set in and is growing among the negligible minority of all-powerful victor countries, then we are in the presence of the maturing of the two conditions for the world revolution
Source: The Second Congress Of The Communist International, July 19-August 7, 1920
Lenin Collected Works, Vol. 31 at https://www.marxists.org/archive/lenin/works/1920/jul/x03.htm