An industrial crisis is a noted phenomenon of modern civilization. Time and time again, every civilized country is hit by a profound disturbance in its industrial, financial, and commercial life, and as a rule the setback occurs at a time when the majority of people, even those directly engaged in business, believe that all is well and there is no threatening danger. Then suddenly, in the midst of bustling activity, with contractors working at full capacity, manufacturing plants loaded with orders, mines and railroads paying handsome dividends and somewhat higher wages than usual, a change for the worse sets in. The commodity price level hitherto high now declines abruptly. The business world is gripped with fear and distrust. 2There is a race for opportunities to gain possession of liquid capital through the sale of securities, goods, or through bank loans, all of which contribute to a general crisis throughout the nation or, as it now appears, throughout several nations, without anybody knowing definitely how and why it all happened.

If it were at all possible to determine the cause of such repeated financial and industrial disturbances, people would be forced to take precautions and take steps to lessen the damage done when the inevitable happens.

At various times earthquakes, droughts, floods, cyclones, insects, 3and epidemics have all caused serious disturbances in the business world. Several such disorders have had more than local and immediate effect. As science has progressed and knowledge has become more universal we have succeeded in counteracting some of these evils and preventing some of the damages which might otherwise be the result of these spasmodic acts of nature. However, no one believes that we will ever be able to eliminate the dangers, or that future generations will ever succeed in having the weather at their command, even though it has actually been proved that drought can be treated effectively by using explosives in the upper regions.

Many a business crisis of the middle ages can be directly attributed to drought and floods as certainly as similar phenomena have a depressing effect on business in China, India, Russia and even now to 4some extent in the United States. It is a recognized fact however that such calamities could be counteracted by transferring the surplus from one district or country to another. In earlier days it was customary to accumulate a surplus in years of prosperity, to be distributed in times of distress. It is more than likely that in our quest for progress and development we have entirely forgotten the importance of saving for a rainy day or perhaps, we are pushing developments in the wrong direction.

At least it is a fact, that previous to the establishment of the capitalistic system of production, under which commodities are produced for speculative purposes by means of "free" wage-earning workers, never before did a business crisis occur as a consequence of overproduction of commodities necessary for the salvation of the population.

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Of course, periods of distress in earlier days were felt first and foremost by the poor, exactly as is the case now. During the times of ancient civilizations based on the exploitation of slaves, and also during the period of feudalism for that matter, the contrast between the luxury of the rich and the misery of the poor was even more appaling than it is today during periods of depression; but modern crisis differ distinctly in the which they always occur and cause the most suffering among the poor at a time when there is a surplus of the things they need, the themselves produced.

As long as the worker, farmer or mechanic, produces only what he and 6his family consumes or sells in the local market for immediate consumption; as long as he is the owner of his tools, farm and raw material, and sells his own products directly, he has some degree of control over his own destiny. But technical developments have forced him into a position of wage earner, together with fellow wage earners that produce at the command of an employer who in turn floods the market with the products. When this system became universal, two opposing factions of the wealth-producing machinery of the nation were created. The workers labored no longer as individuals; they worked in cooperation and accelerated specialization placed the individual as a smaller and smaller part of the force called labor which produces goods not 7for individual consumption, but for purposes and uses foreign to the very producers. Under this system the actual producers have no control over either the tools or the raw materials, no claim to ownership of the products, and no voice in the matter of distribution. They are wage earners, nothing else; working for a salary which is regulated on the basis of an average standard of living maintained by the groups to which they belong, and which is but a fraction of the value of their own production.

Individual ownership of the products has been abolished for the benefit of the capitalist or the employer who is in charge of the distribution. The worker's contribution to human welfare in 8general is that of producing goods. The employers, as an individual, considers the goods his property to be used or to be disposed of at his will, which means that the products are not going to be used or disposed of unless he can realize a profit. This, in its essence, is the fundamental difference between the individual owner, who is producer and distributor in one, and the individual controller of the specialized mass production.

Orthodox economists, even some of those who pretend to be socialists, overlook the difference between individual and collective production, the latter being subject to capitalistic control. Many insist that there is, in fact, no difference between the worker and the 9capitalist, which theory contradicts the philosophy of their great teacher, Adam Smith, who discovered that employers were constantly active to prevent a rise in wages.

However, it is this essential difference in methods of production that cause the industrial, commercial, and financial disturbances so frequent in modern civilization.

Instead of acknowledging this cause, economists come forth with the most absurd explanations each time the nation is hit by a crisis of which overproductions, glutted markets, unemployment, and destitution are familiar aspects.

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For instance, we have often been told that a crisis comes as a result of overpopulation. Many economists are of that opinion, despite repeated proof to the effect that the ratio between the increase of productive capacity and the increase of population is steadily widening, and is now more distinctly in favor of the former than ever. The fact that the United States was not and could not have been overpopulated prior to the crisis in 1856 and again in 1872, and yet had hundreds of thousands unemployed and perhaps millions working part time during these periods, should be sufficient to prove the fallacy of that theory.

Others hold that overproduction is the real cause of a crisis.

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That philosophy is without foundation in so far as there are thousands of people ready to absorb the supposed surplus the moment their labor is accepted in exchange.

Then we have the monetary quacks who attribute all economic disturbances to either a scarcity or an abundance of money in circulation, notwithstanding the fact that crises, identical in aspects and effects, have occured during periods of both.

We have economic experts who seek a solution by explaining that a crisis is a consequence of crop failures. Furthermore, if crop failures are said to be caused by sunspots, economic evils would 12supposedly be derived more or less directly from solar phenomenon. Unfortunately, a bumper harvest preceded one of the worst crises of this century, thereby questioning the accuracy of the theory of sunspots having any more to do with it than the spots on a leopard.

Except for that of the school of thought represented by Karl Marx, the best explanation of the causes of economic crises ever presented, is a simple analysis of the preceding symptoms, such as wild speculation, a race to establish new business enterprises, the gullibility with which the public invest money in dubious undertakings, a get-rich-quick-and-easy fever, a rising price level, increased luxury, increasing demand for manual labor, and higher wages, etc. These all are symptoms of an impending crisis, 13but instead of being the actual causes they should be regarded as consequences of maneuvers taking place behind the scene.

Returning to our point of view as expressed previously, on the basis of historical facts we are able to prove the origin of the difference between collective production for individual seizure, and the method of limited individual production prevailing throughout the Middle Ages.

As a consequence of the change in method, technical improvements and scientific developments turned out to be of benefit only to the capitalist and employer who surged ahead, ridding himself of all restrictions, opening and controlling new markets for his products. On account of the rapid technical developments, which began at the close 14of the nineteenth century and resulted in a universal system of mass production, the monopoly held by the capitalists threatened the welfare of society more and more.

The differences between capital and labor broadened in scope at an accelerated speed. Of course, every manufacturer is eager to make hay while the sun shines. When the market is good he keeps his factory operating at capacity. He either employs more workers, or lets his regular staff work overtime so that they can earn more and keep up with rising prices. Employer as well as employee commit the same blunder by thinking only of personal profit. That is part and parcel of free competition. Every employer is not only 15forced to preserve his establishment, but to improve and expand it. There are good and bad employers, but they all have to follow the trend in developments or they will lose their standing.

The recent organization of trusts and rings, of course, has had some stabilizing effect on the system of production, but at the same time it has increased the disproportion between production and distribution by removing the worker still farther from ownership of his own products. An industry may organize as a ring and thereby double its production and profit, but it does not double the workers' wages. In other words, increased productive capacity and accelerated speed of production is not counterbalanced by a corresponding increase 16in purchasing power; again we have the crisis, which often lasts for years, with prices declining, bankruptcies, glutted markets, unemployment, etc.

What happened is simply that the capitalists proved themselves unable to guide a nation's productive forces. Their system of production and method of distribution were off balance.

While we have pointed out the causes of an industrial crisis, at the same time, we have offered a remedy for this evil.

Involuntarily, society has begun to take advantage of this remedy.