David North
The Heritage We Defend

Marxism and the “Breakdown” Theory

Following the 1963 Reunification Congress, the far-ranging implications of the conflict between the International Committee and the United Secretariat were clarified by the rapid development of the class struggle on a world scale. The entry of the Ceylonese Pabloites into the bourgeois government of Mme. Bandaranaike was only the most extreme expression of the role played by Pabloite opportunism throughout the world. The organizations associated with Mandel’s United Secretariat functioned more and more openly as auxiliary agencies of imperialism, consciously rejecting the independent revolutionary mobilization of the proletariat, and, instead, insisting upon its subordination to social democracy, Stalinism and bourgeois nationalism.

In the massive social crises which erupted in the imperialist centers in the mid-1960s, shaking the very foundation of capitalist rule, the Pabloites were to play a crucial role in the defense of the European and American bourgeoisie. As the social democratic and Stalinist bureaucracies were shaken by the powerful upsurge of working class militancy, combined with an unprecedented movement of millions of student youth, the Pabloites sought to deflect these mass struggles away from revolutionary socialist goals.

Banda does not trace the political evolution of the United Secretariat after 1963–64. All his attention is directed to denouncing and slandering the International Committee. His aim, as always, is to deny the objective role of the International Committee, of Trotskyism, as the revolutionary vanguard of the working class. But in attacking the ICFI, Banda succeeds only in exposing the finality of his break with all the theoretical foundations of Marxism.

He makes the following assessment of the perspectives of the International Committee:

Stemming from a totally false analysis of the post-war boom which came dangerously close to the “break-down” theory of early German social-democracy, Healy and the IC saw national and world developments as an apocalyptic and Messianic process. The entire orientation of the 1960s and 1970s was dominated by this bizarre anti-Marxist thesis succinctly summed up in a “Newsletter” headline of 1968: “Crisis, Panic, Crash” (or as the Germans said: “Krisen, Kriegen, Katastrophen”).

Not deduction but reduction of every trend to a simple common denominator of the apocalypse. Hence every Labour government was seen as the last government of its kind, every monetary crisis as the final crisis and every bank failure as the threshold to Armageddon. We used to laugh at Behan’s lobotomised economics and his theory of the “catastrophic crash” in the early 1960s but Healy’s fantasies showed how little the IC had travelled since then.

As is generally the case with Banda’s bombastic declamations, we encounter here once again the familiar combination of ignorance and deceit. His gross caricature of the ICFI’s perspective precludes any detailed analysis of the actual content and development of its line. He simply declares that the ICFI analysis was “totally false” but does not suggest, let alone elaborate, what a correct line would have been. In fact, what Banda is rejecting is not an incorrect analysis, but rather a Marxist approach to the crisis of capitalism. Behind his attack on the perspective developed by the International Committee during the 1960s is an outlook which is essentially that of a petty-bourgeois reformist.

The economic perspective upon which Banda now heaps ridicule was developed by the International Committee in struggle against the efforts of Mandel to construct an economic justification for the Pabloites’ explicit rejection of the decisive revolutionary role of the proletariat in Western Europe and the United States. Prior to reunification, the Pabloites had announced that the work of their International would be concentrated, for the indefinite future, upon the backward countries, which they proclaimed the “epicenter” of world revolution.

Mandel attempted to bolster this perspective by arguing that there existed no material possibility for the development in the advanced capitalist countries of an economic crisis of such magnitude that would drive the proletariat into revolutionary struggle. The central tenet of his theory of “neo-capitalism” was that the imperialists would never again permit another catastrophic crisis such as that which had occurred in the 1930s. Mandel wrote in 1964, “ ‘the necessity of avoiding at all costs a repetition of the 1929 type depression has become a life and death question for capitalism under the conditions of the Cold War and the rise of the anti-capitalist forces on a world scale.’ ”[1]

The supposed capacity of the capitalists to regulate the economy in such a way as to avoid catastrophic crises indefinitely was defined by Mandel as the central feature of his neo-capitalism. Well into the 1970s he wrote, “ ‘As far as an economic crisis or catastrophe is concerned, … it has been emphasised and re-emphasised that there are strong reasons why this can be avoided by neo-capitalism for a considerable period.’ ”[2]

He insisted that the “ ‘initial hypothesis’ ” for Marxists must be “ ‘that we cannot expect any catastrophic economic crisis comparable with 1929–32. …’ ”[3]

Mandel’s conclusions were based on unscientific (i.e., non-Marxist) generalizations from the surface appearance of the movement of capitalism during the postwar boom. His belief in the viability of a managed capitalism amounted to a vote of confidence in the Keynesian mechanisms of controlled inflation that had been erected by US imperialism in the aftermath of World War II. Mandel’s outlook was essentially the same as that of the old revisionists at the turn of the century who saw in the use of credit a means through which capitalism could avoid devastating crises. This reformist outlook is now shared by Banda and is the basis of his theoretically-ignorant attack on the perspective of the ICFI.

When Banda claims that the ICFI’s analysis of the economic crisis “came dangerously close to the ‘break-down’ theory of early German social-democracy,” he is arguing from the standpoint of the revisionist Bernstein. Whether he knows it or not, the author of the “breakdown” theory was none other than Karl Marx. It is an axiom of Marxist political economy that the movement of the inner contradictions of the capitalist mode of production leads inexorably to its collapse. If that is denied, then there no longer exists any objective necessity for socialism. In her brilliant polemic against Bernstein, Reform or Revolution, Rosa Luxemburg was emphatic on the inevitability of an economic collapse of the capitalist system:

Socialist theory up to now declared that the point of departure for a transformation to socialism would be a general and catastrophic crisis. We must distinguish in this outlook two things: the fundamental idea and its exterior form.

The fundamental idea consists of the affirmation that capitalism, as a result of its own inner contradictions, moves toward a point when it will be unbalanced, when it will simply become impossible. There were good reasons for conceiving that juncture in the form of a catastrophic general commercial crisis. But that is of secondary importance when the fundamental idea is considered.[4]

The political significance of attempts by revisionism to deny the possibility of collapse was clearly explained by Luxemburg:

Revisionist theory thus places itself in a dilemma. Either the socialist transformation is, as was admitted up to now, the consequence of the internal contradictions of capitalism, and with the growth of capitalism will develop its inner contradictions, resulting inevitably, at some point, in its collapse, (in that case the “means of adaptation” are ineffective and the theory of collapse is correct); or the “means of adaptation” will really stop the collapse of the capitalist system and thereby enable capitalism to maintain itself by suppressing its own contradictions. In that case socialism ceases to be a historic necessity. It then becomes anything you want to call it, but is no longer the result of the material development of society.

The dilemma leads to another. Either revisionism is correct in its position on the course of capitalist development, and therefore the socialist transformation of society is only a utopia, or socialism is not a utopia, and the theory of “means of adaptation” is false. There is the question in a nutshell.[5]

Therefore, Banda’s attempt to indict the International Committee for subscribing to a “breakdown” theory merely leads to his own conviction as a reformist ignoramus. In upholding the “breakdown” theory, in opposition to Mandel’s “discovery” of a new type of capitalism (“neo-capitalism”) capable of suppressing indefinitely its own contradictions, the ICFI concretely investigated the internal connection between the “adaptive” mechanisms employed by the American bourgeoisie at the end of the war and the essential movement of the basic contradictions of the capitalist mode of production. In other words, the ICFI analyzed the framework of Bretton Woods as a contradictory expression of the insoluble crisis of world capitalism. It demonstrated that the complex system of monetary arrangements, credit mechanisms and trade agreements, centered on dollar-gold convertibility, set up in order to counteract the law of value and the tendency of the rate of profit to decline, was inevitably subordinated to that law and tendency and became over time the medium for their explosive manifestation.

The great contribution made by the ICFI—and for this the main credit must go to the British Trotskyists—was that they pierced the contradictory appearance of the postwar boom and insisted that a massive economic crisis, fraught with revolutionary implications for the working class, was rapidly maturing. In a series of statements issued between 1964 and 1968, the Socialist Labour League correctly argued that in the very basis of capitalist restabilization in the immediate postwar period, the domination of the world economy by the United States symbolized by the role of the dollar as the international reserve currency, lay the source of gigantic contradictions and inevitable upheavals.

From the standpoint of Marxism, the significance of these analyses consisted first of all in their examination of the material basis, in the crisis of the capitalist mode of production, for the development of the international class struggle and, second, in the elaboration, on this scientific foundation, of a correct revolutionary strategy. Under conditions of American imperialism’s genocidal war against Vietnam, this enabled the ICFI to establish the objective unity between the Vietnamese masses and the working class in the advanced capitalist countries, especially the United States.

From this analysis flowed political perspectives diametrically opposed to that of the Pabloites, whose protest politics were based on the denial of the material basis for revolutionary struggle by the working class. The ICFI insisted that the same economic crisis which lay behind the imperialist war against Vietnam was driving the working class into revolutionary struggles against the imperialists. The turn to the proletariat and the struggle to build the revolutionary party had to be based on this perspective.

The perspective of the ICFI might deserve the term “apocalyptic” only if, by making a caricature of the “breakdown” theory, it had claimed that a cataclysmic economic crisis would lead inevitably, independently of the actions of the revolutionary party, to the conquest of power by the working class. But no honest reading of the statements of the International Committee would sustain such an allegation. There was not a trace of fatalism in the analyses of the ICFI. It never claimed that any economic crisis, by itself, would be the last crisis of the capitalist system. Rather, the International Committee approached the crisis from the standpoint of the political tasks which it posed to the Trotskyist movement.

The relationship between the ICFI analysis of the economic crisis and its political perspective is exemplified in a statement entitled “US imperialism faces its most serious crisis,” dated January 1, 1968. We will quote only a few of its most important passages:

1. For the past half century and more capitalism has been a system in permanent crisis. During this century it has plunged the working class into two world wars and experienced a 20-year period of stagnation and massive unemployment between the wars in which in Germany, Italy and Spain it has had to resort to fascism to smash the working-class movement. At the same time, stagnation and famine condemn millions, indeed the greater part of the world population, to starvation, malnutrition and disease.

The capitalist system, should it survive, holds out before mankind only one prospect: that of a relapse back into barbarism. Imperialism cannot develop the forces of production because the ownership of the means of production rests in private hands, with the world economy divided into a series of antagonistic nation states.

These basic, inescapable contradictions were ever present throughout the relative boom which capitalism experienced after the end of the last war, despite the fact that these contradictions did not reveal themselves openly “on the surface.”

2. Our perspective in economics must start, therefore, from the nature of the present epoch as one characterized by a social system, capitalism, in crisis, in which the crisis of leadership in the class is the main question. Capitalism has survived in this century, not through any inherent strength, but only because the working class has been unable to solve this crisis of leadership and take advantage of the series of economic and political crises which have shaken the capitalist system during the course of this century. The period since 1945 has been no exception to this characterization.

Capitalism in Western Europe survived the war and its aftermath principally because of the collaborationist policies of the Kremlin bureaucracy. Europe and Germany were divided, with the Communist Parties of France and Italy carrying out the logic of the Kremlin’s policies of “peaceful co-existence” heading off the struggles of the working class for power in both these countries. …

4. The resultant expansion of world trade and production—the boom—was financed largely through means of the dollar which has now displaced sterling as the main international currency. The position of the dollar was an expression of the relative strength of US capitalism and its dominance over the weaker capitalist powers. The Americans were able to maintain the pre-war agreement which guaranteed the dollar against a fixed price of gold. The American gold holdings accumulated before and during the war expressed its development at the expense of European and Japanese capitalism.

5. The very consequences of the boom have now made the dollar the centre of the world currency crisis. This crisis in the world monetary system was not a crisis “in itself.” It was, and is, the expression of a deeper and more fundamental crisis, which ultimately stems from the contradictions between the development of the productive forces and the private ownership of the means of production. …

9. … The Russian Revolution, followed by the Chinese Revolution and the loss of control by the capitalists in large areas of Eastern Europe, were enormous body blows against the capitalist system. Not only were these areas of the world lost as markets, but they no longer provided fields for the profitable export of capital or the extraction of raw materials.

These losses, the result of successful struggles by the international working class, are now a major factor accentuating the crisis faced by the capitalist system involving a renewed attempt by the capitalists of Western Europe and North America to regain these lost areas through military conquests.

10. Thus the present stage of the crisis cannot be reduced merely to “economic” factors. The offensive of the working class throughout Europe and North America is now the decisive factor standing in the way of the capitalist class as it attempts to find some temporary way out of its world crisis.

The capitalist system is incapable of rational planning and control. Only a drive to step up the exploitation of the working class of the world offers any temporary “solution” for capitalism. This must involve as a central aim, the drive through the state to break up the organization and resistance of the working class. Hence the concerted attempts in all countries, Britain, France, the United States and West Germany to integrate the unions into the state and to control wages through the capitalist state machine. … Hence the political radicalization of the European and American working class resulting from this state intervention. …

11. … The present economic crisis, therefore, resolves itself into a struggle by the capitalists to retain power and a fight by the working class to destroy that power. Only through the building of the Fourth International and its parties can the economic crisis be solved in the interests of the working class.[6]

This statement—only one of many that appeared in the press of the International Committee—was not simply a description of what was taking place. In contrast to the sterile objectivist commentaries of the Pabloites, the ICFI’s analysis grasped as a dynamic and interconnected whole the relation between the “logical” development of the capitalist crisis, the historical unfolding of the class struggle, and the subjective intervention of the revolutionary party. The basic tendencies in the crisis were correctly assessed. As events were to prove, the ICFI demonstrated tremendous political foresight in grasping the implications of the economic situation for the development of the international class struggle.

This statement appeared on the eve of the most explosive developments in the class struggle since the end of World War II. Within three weeks of this statement’s publication, US imperialism was staggered by a devastating military and political setback in Vietnam, the Tet Offensive. On March 31, 1968, Lyndon Johnson announced that he would not seek reelection to the presidency. In April, following the assassination of Dr. Martin Luther King, virtually every major American city was engulfed by ghetto uprisings unprecedented in their violence and fury. And in May, the most massive general strike in the history of Europe erupted in France, shattering almost overnight the stability of the capitalist state and placing the seizure of power by the working class on the agenda. The survival of French, and, therefore European, capitalism depended upon the treachery of the French Communist Party.

In attacking the analyses of the ICFI, Banda is counting on the collective political amnesia of his readers. If the actual course of development between 1968 and 1975 is kept in mind, then the headline which Banda cites as proof of the ICFI’s “bizarre” disorientation, “Crisis, Panic, Crash,” does not appear at all ridiculous. As a matter of fact, the article, written by Healy, was published in the March 19,1968 issue of Newsletter, in the midst of the Paris gold crisis which destabilized the international currency and which directly preceded the May-June explosion of student-worker struggles. Healy’s claim that the economic crisis placed the question of power before the working class was to be confirmed in France within just eight weeks.

The events of 1968 opened up a period of unprecedented crisis for world imperialism. The interaction of economic contradictions and working class struggles produced, in country after country, tremendous political upheavals. That these upheavals did not result in the overthrow of world capitalism is due, above all, to the treachery of Stalinism, social democracy and their Pabloite accomplices.

The breakdown of the Bretton Woods system on August 15, 1971 did lead, as the ICFI had anticipated, to an enormous development of the international class struggle. Imperialism was besieged as never before. The eruption of levels of inflation without precedent in the postwar period was followed by the most severe world recession (1973–75) since the 1930s. The end of dollar-gold convertibility—the linchpin of the postwar expansion of world trade and monetary stability—had devastating political consequences: the 1973 Arab-Israeli war and the oil boycott; the British coal miners’ strike and the fall of the Tory government; the fall of the Portuguese fascist dictatorship in April 1974; the fall of the Greek junta in July 1974; the resignation of Nixon in August 1974; and the defeat of US imperialism in Vietnam in April-May 1975.

A concrete study of the political upheavals of 1973–75 would show that the survival of capitalism depended, no less than in 1918–1919, on the treachery of the old organizations of the working class. The smallness of the revolutionary forces of the Fourth International was itself a consequence of the political betrayals of Pabloite revisionism, which had done so much to disorient and disperse the cadre of the Trotskyist movement. Nowhere was the criminal role of Pabloism exposed so starkly as it was in Latin America. Its glorification of Castro and the creation of a cult of Guevara led to the abandonment of the struggle to construct revolutionary leadership in the working class and the physical destruction of countless cadre. The Pabloites themselves would later describe their policies in Latin America as a disaster, but not before their actions had played a major role in preparing the defeat of the working class in Chile and Argentina.

The International Committee emphasized the revolutionary implications of the economic crisis. That this crisis did not result in the overthrow of capitalism in any country does not invalidate the analyses of the International Committee. Rather, Marxists are obliged to make a concrete study of the experiences in Greece, Portugal, Spain (after Franco’s death), etc., to show more precisely the role of Stalinism and social democracy in defending the capitalist state against the movement of the working class. Furthermore, in studying the class struggle in the backward countries, it would be necessary to thoroughly expose the political bankruptcy of Maoism, whose petty-bourgeois line produced bloody defeats and catastrophes.

In Britain, the fact that the Labour government of Wilson-Callaghan (1974–79) was not the last social-democratic regime is not altogether unconnected with the opportunist line pursued by the WRP itself, which rejected the time-honored tactics developed by the Trotskyist movement to expose the reformist agents of imperialism.

Seeking to cover up the crimes of Stalinism and social democracy, as well as to conceal the real content of the WRP’s degeneration, Banda offers no concrete analysis. Instead, he prefers to ridicule the very notion that capitalism faces a breakdown and remains to this day in a crisis of historically-unprecedented dimension whose survival is more dependent than ever upon the reactionary labor bureaucracies and their centrist accomplices. Banda seems not to have noticed that during the past decade alone, after the catastrophic recession of 1973–75, capitalism has undergone two additional slumps: that of 1979–80 and 1982–83. The base level of unemployment in the United States and Western Europe has more than doubled during the past fifteen years.

In the United States, none of these slumps has been followed by “recoveries” which restored the previous levels of industrial production. The analysis made by the ICFI in the mid-1960s of the crisis of US capitalism has been confirmed by the historic decay of the position of American industry in the world market. Since 1971, the value of the dollar in relation to the German mark and Japanese yen has fallen by more than one-half. In 1985, the United States became a debtor nation for the first time since 1917, burdened with trade deficits that now exceed one hundred billion dollars a year. In the space of just five years, from 1981 to 1986, the national debt has doubled.

At the present time, world imperialism stands once again on the brink of massive revolutionary upheavals sparked by the worsening economic crisis. The more the industrial foundation of American capitalism deteriorates, the more ruthless becomes its drive to recover lost markets by prosecuting trade warfare. This process must intensify the class struggle in every imperialist country, as the struggle for markets compels the bourgeoisie to intensify the exploitation of “its” working class.

In a parallel process, the hopeless bankruptcy of the indebted backward countries, under constant pressure to meet the terms of the imperialist bankers as a condition for further credit, produces social conditions that lead inevitably to revolutionary confrontations between the national bourgeoisie and the workers and oppressed peasantry. Within the Soviet Union, Eastern Europe and China, the impact of the capitalist crisis on the degenerated and deformed workers’ states must sharpen the conflict between the working class and parasitic bureaucracy.

Behind Banda’s attempt to ridicule the economic perspective of the ICFI and his mocking dismissal of the “breakdown” theory is his loss of confidence in the working class and corresponding conviction that capitalism is impregnable. Thus, he dismisses the revolutionary perspective with contempt. It is well known inside the Workers Revolutionary Party that in the last days before his flight to Sri Lanka, in the fall of 1985, Banda was proclaiming to all and sundry that it was impossible to even conceive of a revolutionary situation in Britain for several decades to come. He hit upon the following aphorism: “In America, the principal historical factor is space; in Britain, it is time.” Intoxicated by the brilliance of this remark, Banda, shaking his index finger wildly, repeated it several times a day.

Banda would have us believe that he and a few other lonely intellectuals in the WRP waged a grim and hopeless struggle against “Healy’s fantasies.” He tells us, “Every serious attempt to analyse world economy was frowned upon and the intellectuals were forced to toe the Healyite line: apocalypse now! Cde. Kemp, for one, was virtually driven out of leadership and almost out of the party for dissenting from this viewpoint.”

A grave accusation, but one which is untrue. Let us consider the case of one such “frowned-upon” intellectual: Professor Geoffrey Pilling, Senior Lecturer in Economics at Middlesex Polytechnic. In 1980, during one of his long and frequent unauthorized absences from party work, he produced a book entitled Marx’s “Capital”: Philosophy and Political Economy, published by Routledge and Kegan Paul. His departure from active party work was not aimed at escaping from the anti-intellectual tyranny of “lobotomized economics.” Pilling’s book unequivocally defended the general perspective of the ICFI and its underlying methodology, though Pilling made no explicit reference to his own political affiliations. Instead of acknowledging his intellectual debt to the collective work of the International Committee, he expressed his personal gratitude for “the pleasure and benefit of joint theoretical and political work with Cliff Slaughter, Tom Kemp and Cyril Smith.”

This leads us, of course, to the long-suffering Tom Kemp, whom Banda informs us was the lone dissenter, “virtually driven out of leadership and almost out of the party.” The record tells a different story. In 1982, Kemp wrote a book, Karl Marx’s “Capital” Today, published by New Park. If he dissented from the economic perspectives of the ICFI, there is no trace of that in this book.

A large portion of this work was devoted to refuting Mandel’s claim that there can be no repetition of the type of catastrophic economic crisis that occurred during the Great Depression. In a characteristic passage, Kemp wrote:

In fact capitalism is in a deep historic crisis which is endemic and insoluble. Attempts to deal with it by capitalist governments in resorting once again to inflationary policies have only made it worse by aggravating the contradictions. The crisis manifests itself within each capitalist country, though in different ways, and in relations between them—trade war, monetary chaos, the free fall of the dollar, the balance of payments deficits of some and the huge surplus of others. These problems have defied all efforts by governments, bankers and industrialists to resolve them. Every summit meeting ends in stalemate leaving the situation worse by further undermining confidence in the system and in its prospects for recovery, to speak about an “upturn” in these circumstances, or to interpret the crisis through the arbitrary patterns of a Kondratiev is to lose all touch with the method of Marxism whatever formal use is made of its categories and its language. The mark of Mandel’s revisionism is that he can make no analysis of the overriding crisis and can only repeat parrot-fashion that there will never be a repetition of 1929–1932. …

Like earlier revisionists before him, Mandel sees no tendencies dominant in the capitalist mode of production towards its breakdown and collapse.[7]

Kemp concluded his book with the following passage: “While Mandel and his colleagues, the bourgeois and Stalinist economists, study the capitalist mode of production as a going concern, its actual contradictions, laid bare by Marx, are driving it towards slump, war and the socialist revolution.”[8]

If this was “dissent” from the perspectives of the International Committee, it was a strange one indeed. In fact, Professor Kemp dissented from Healy only on such issues as the length of his summer vacations in the south of France (Kemp generally insisted on a three-month leave) and the number of hours he was required to devote to party activities.

In order to legitimize his blanket condemnation of the entire history of the International Committee, Banda makes no distinction between the theoretical work that was carried out by the SLL-WRP in the 1960s and early 1970s with what was produced by the British section from the mid-1970s on. Nor does he distinguish between the work (or, more correctly, the non-work) of the WRP in the final stages of its political degeneration and the on-going struggle to analyze the economic crisis within the sections of the International Committee.

A comparison of the perspectives documents written by the Workers League between 1975 and 1985 with those of the WRP would reveal an enormous difference in the caliber of theoretical work. By the 1980s, the WRP had largely abandoned any systematic work on the world capitalist crisis. The Workers League, on the other hand, consistently studied and explained the significance of the deepening crisis of American capitalism and its political reflection in the policies of the Reagan administration. The attention given by the Workers League since 1979 to the international debt crisis and its impact on the US banking system (Penn Square, Seattle First National, Continental Illinois), the trade and budget deficit, and the growth of financial parasitism and the underlying decay of the productive capacities of American capitalism, was central to the party’s unrelenting struggle to mobilize the American working class on the basis of a revolutionary program.

When Banda denounces the economic perspectives of the ICFI, his target is not the hollow and bombastic formulas which were utilized by the WRP during the period of its death agony. Rather, it is precisely what was correct in the perspective originally developed by the ICFI as a product of the struggle against revisionism: the insoluble character of the world capitalist crisis leading to economic catastrophes and the inevitability of revolutionary struggles by the proletariat in the centers of world imperialism.


Tom Kemp, Karl Marx’s “Capital” Today (London: New Park Publications, 1982), p. 129.


Ibid., p. 130.


Ibid., p. 130.


Rosa Luxemburg, Reform or Revolution (New York: Pathfinder Press, 1970), p. 11.


Ibid., p. 13.


Newsletter, 6 January 1968.


Kemp, pp. 136–138.


Ibid., p. 195.