Crisis of Marxism

The debate over the economic dilemmas of Marxism came to the forefront after several articles by Conrad Schmidt in 1897 and Eduard Bernstein in 1898 were published in German Social-Democrat's journals. They questioned the validity of some Marxist tenets, pointed out the possible erroneous nature of materialism, and proposed to revise Marxism,[12] eventually asserting that many of Karl Marx’s economic anticipations were not borne out by the expectations presented in Capital and elsewhere.[13]

Bernstein and other Marxist revisionists addressed a number of issues that focused on the deficiencies of Marx’s economic predictions. One of the first issues addressed was the Marxian prediction that industrial capitalism would lead to concentration and centralization. But Bernstein pointed out that ownership of businesses had become more diffuse, instead of being concentrated in few hands.[14]

In his attempt to prove that industrial concentration was not increasing, Bernstein wrote:

…it is a well-established fact that in a whole series of branches of industry small and medium-sized undertakings appear quite capable of existing beside the large industries.[15]

Bernstein also attempted to demonstrate empirically that huge firms were not as profitable as small-scale ones, arguing that all sizes of companies could survive well together.[16] Bernstein challenged orthodox Marxist theories that capitalism was doomed to fail, noting that capitalism was increasingly overcoming a number of its frailties “such as unemployment, overproduction, and the inequitable distribution of wealth.”[17] Moreover, Bernstein claimed that the apparent stabilization of capitalism was not temporary but a permanent feature.[18]

Bernstein contended that the income of the proletariat was rising,[19] which directly contradicted Marx's conjecture that workers would become poorer due to capitalism's insoluble contradictions, oppression of workers and oppressed class mold, and profit-based structure.[20] Due to his empirical approach, Bernstein took the position that economic prosperity under capitalism was causing a reduction in class conflict as well as increasing the differentiation of the working class.[21] Bernstein predicted that class antagonism would eventually diminish in a capitalist society whereas socialism would evolve peacefully under parliamentary and reformist responses.[22]

One of the first serious detractors of Bernstein's reformist and optimistic stance towards capitalism was Alexander Parvus a Marxist theoretician. Parvus contended that Bernstein was attempting to “overthrow socialism.[23] In one of his 1898 essays, Parvus critically examined the significance of Bernstein's revisionism, writing:

What would be the point of striving to achieve political power if it only led to a ‘colossal defeat’? What would be the point of opposing capitalism if we could not manage without it? Instead we would have to encourage capitalist development, since, if it is not interrupted by general trade crises, it must eventually lead to the prosperity of all![24]

There were a number of other economic dilemmas facing orthodox Marxism in the late 1890s. David Ramsey Steele, a former member of the Socialist Party of Great Britain, summed up many of the most serious conditions behind the crises that plagued Marxism, stating:

The workers were becoming richer, the working class was fragmented into sections with different interests, technological advance was accelerating rather than meeting a roadblock, the 'rate of profit' was not falling, the number of wealthy investors ('magnates of capital') was not falling but increasing, industrial concentration was not increasing, and in all countries the workers were putting their country above their class.[25]

In his 1899 Precondition of Socialism, Bernstein treated the theoretical parts of Marxist doctrine as “not scientific but doctrinaire,” therefore rejecting the fundamental principle of scientific socialism.[26] Instead, Bernstein evoked Kantian liberal ideals that promoted ethical and moral arguments in favor of socialism.[27] As Bernstein highlighted under the concept of ethical socialism, “no action on the part of the masses”, could have a “lasting effect without a moral impetus.”[28] He also proposed the abandonment of the Hegel-derived dialectic and revolution itself, ushered in the first “post-Marxism” era.[29]

According to Henry Tudor and J.M. Tudor, Bernstein's rationale to reform Marxism was to secure “the rights of individuals and promoting their material wellbeing without undermining their independence.”[30] He believed that the predominant problem of socialism was to “prevent the sheer size of the modern state from submerging the individual and nullifying democratic control.”[31]

The crisis of Marxism encompassed the “Breakdown Controversy” which was an argument among Karl Kautsky, orthodox Marxists, Bernstein and his revisionists over the predicted breakdown of capitalism due to its internal contradictions. Orthodox Marxists held the opinion that capitalism's collapse was imminent, which would result in a revolutionary conjuncture.[32] Opposed to revolutionary tactics, Bernstein argued that revolution was only justified if capitalism falls of its own accord. But if capitalism fails to self-destruct under the crisis of capital, as predicted by Marx, Bernstein and Marxist reformers believed that a transition to socialism could be accomplished through the existing political structure.[33] To the consternation of orthodox Marxists, the contradiction of capitalism did not result in the worsening of economic conditions, pitting socialist theory against empirical data. In this debate, Kautsky, considered the pope of socialism, maintained that the Marxist revolution did not demand the economic breakdown of capitalism. In contrast, Bernstein conceived evolutionary socialism as an approach to Marxism that saw the pathway to socialism as reformist and evolutionary, minus the chaos and violence of revolution.[34]

The consequences that followed the crisis of Marxism led to the birth of revisionist Marxism, which subsequently resulted in the emergence of the Social Democracy movement,[35] considered a turning point when Bernstein challenged the central precepts of socialist revolution.[36]

The final political schism over Marxist revisionism ruptured after the violent 1917 Russian Revolution, where the social democratic parties discarded militant revolutionary in support of parliamentary reformation, while still declaring their dedication to socialization.[37] Social democracy advocated an evolutionary transformation of the private-based economy to socialism via established political processes under social reform of capitalism.[38]

In retaliation, Joseph Stalin unleashed a series of attacks against Marxist reformers and Social Democrats, declaring in 1924 that "Social democracy is objectively the moderate wing of fascism.... These organisations are not antipodes, they are twins.”[39] In later years, Stalin, Grigory Zinoviev and the Communist International (Comintern) applied the term “social fascists” to the various independent Social Democratic parties, especially in Germany.[40]

Ever since the 1890s, numerous periods were under a continuing crisis of Marxist theory, including the early 1930s where German Marxist theoretician Karl Korsch warned that “Marxism today is in the midst of an historical and theoretical crisis. It is not simply a crisis within the ‘Marxist movement’, but a crisis of ‘Marxism itself.’”[41]

Others have argued that Marxism has been in a continuous state of crisis throughout the 20th Century. After the dissolution of the Soviet Union in 1991, a general Marxist crisis emerged that some claim was due to the rejection of Marxism by “millions of workers as an obstacle rather than a help to their struggles.”[42]