In addition to its ordinary working mechanism named industrial cycles, capitalist economy is also characterised by non-cyclical, more prolonged upward and downward fluctuations that involve far more complex factors. This type of fluctuations is nothing more than a combination of different economic and political events capitalism has been through. Such periods of capitalist development, each having its distinctive characteristics, still contain industrial cycles that consist of boom and crisis phases. Therefore, the existence of such long-term fluctuations does not invalidate the Marxist analysis of industrial cycles.

Industrial cycles do not always follow the same course. When we examine problematic and relatively stagnant sections of the curve of capitalist development, we can see that crisis phases of the industrial cycles have gradually become more prolonged and profound, whereas the boom phases have acquired a more volatile and shallow character. In periods of vigorous upswings, however, economic oscillations take place the other way round. But all these outcomes can be nothing else than an expression of the concrete reality. For, long-term fluctuations are irregular in length and non-cyclical in character. We are not able to precisely anticipate the outcomes produced by multifaceted variables of the actual life on the basis of their interaction. As pointed out by Engels in his introduction to Class Struggles in France, “A clear overall view of the economic history of a given period can never be obtained contemporaneously, but only subsequently, after the material has been collected and sifted.”[1]

Although economic factors have an important influence on the workings of capitalist organism, the course of history is determined by the mutual interrelationships between various factors and, above all, by the class war between the proletariat and the bourgeoisie. The kind of approach that reduces history to economy is alien to Marxism’s materialistic conception of history which by no means overlooks the influence of subjective factors on the general course of events. Productive forces are decisive in the final analysis. However, economic basis is continuously influenced by super-structural factors such as class struggle, wars, ideology, and politics. On the whole, the course of events proceeds on the basis of the dialectical relationship between these two levels. Therefore, while analysing the long-term curve of capitalist development, we must take into consideration not only economic factors, but also the course of the class struggle, conflicts of interest between different capitalist powers and outcomes of hot wars.

When we speak of upswings and downswings in the curve of capitalist development, we actually refer to concrete periods distinguished from one another in the history of capitalism. Indeed, it is possible to identify specific periods, each of which is created by a particular set of economic and political factors that operate on the basis of a dialectical interrelation. Various Marxist authors dealing with this subject pointed to specific periods in the history of capitalism such as 1848-79; 1880-93; 1894-1914; 1915-39; 1940-74 and the following period. However, when we examine such periods, it would be seen that what distinguishes one period from another is not spontaneous upswings and downswings in the economy, but a combination of economic factors and political developments. For instance, the period of recession and the Great Depression in the 1920s and ’30s were accompanied by the rise of fascism, concentration camps and the disaster of the Second World War. During this period, the bourgeoisie sought to remove the barriers blocking its path through an unprecedented policy of aggression. In the meantime, proletarian struggle was paralysed due to the ominous role played by Stalinism and social democracy, paving the way for the bourgeoisie. In the end, it was the combination of all these factors that gave shape to that period.

When we examine the long period of economic boom experienced by the developed capitalist countries following the Second World War, it would be seen that this period witnessed the implementation of employment-incentive policies such as Keynesianism. Public expenditure that grew throughout the period posed no problem since it was counterbalanced by real growths in capital. The reconstruction activities in the aftermath of the war led to a huge mobilisation in the US, Europe and Japan, producing higher rates of profit, promoting industrial investments and enabling these countries to achieve satisfactory growth rates of national output. Moreover, these conditions provided an enormous impetus to global trade.

However, we must highlight the fact that these developments were shaped not only by economic factors, but also by non-economic factors such as global political landscape and balance of powers. Let us remind ourselves that in the face of the revolutionary upsurges in European countries and the threat posed by the presence of the Soviet Union, the Western bourgeoisie came to the conclusion that making concessions to the working class would be more sensible for its interests. Likewise, in order to fortify the capitalist system in the face of revolutionary developments and against the Soviet Union, the US funnelled large amounts of loans and aids into the reconstruction of the capitalist Europe following the war. Thus, on the one hand global trade expanded enormously within a short span of time, while on the other hand the labour movement in developed capitalist countries was brought under control through reform policies, just as previously seen in the period of 1894-1914. It was on the basis of all these developments that the path was cleared for a long-term capitalist upswing.

As an example from the recent past, one can recall the 1968 revolutionary wave across the world. This revolutionary upsurge in class struggle coincided with the peak of the economic boom that followed the Second World War. And in accordance with the laws of dialectics, this peak also marked the beginning of a downward phase. This point brings to mind the explanation offered by Trotsky who pointed out that replacements of booms by crises or of collapses by recoveries pave the way for significant social disturbances. And again, the fact that the period following the revolutionary upsurge of 1968 did not witness successful proletarian revolutions cannot be explained by referring to mere economic factors. While examining such crucial turning points, it is essential to consider the factors that erect barriers in the path of world revolution, the lack of leadership suffered by the proletariat and the tragedies bearing the stamp of Stalinism.

It is an obvious fact that the upswing enjoyed by the capitalist system under the leadership of the USA following the Second World War gave way to a slowdown in 1970s. As a result of this, the dollar, which had functioned as the international reserve currency since the Bretton Woods Agreement of 1944, lost its stability. Furthermore, the antagonisms between the USA and the European countries began to escalate, with Europe embarking on a project to create its own currency system. Bretton Woods system collapsed in 1971, depriving the dollar of its role as the international reserve currency without replacing it with another currency. This, in fact, was a reflection of the fact that capitalism was entering a turbulent period. Yet, the bourgeoisie managed to postpone the crisis to subsequent decades before it reached a point where it could shake the system, largely due to the opportunities provided by the weakness of workers’ movement. But in the final analysis, there are limits to gaining extra time and opportunities. Keynesian policies or high levels of public expenditure cannot postpone crises forever.

Imposing measures to protract the economic upswing and increasing the amount of money in circulation and indebtedness with the aid of inflationary policies, capitalist governments can only produce an artificial and bloated economic recovery. As a result of escalating speculative activities in capital markets, an inflation of fictitious capital becomes visible, even though industrial output suffers a relative decline. This inflated bubble is doomed to burst sooner or later, with a crush like thunder. Serving to promote economic recovery for a period of time, loans become an increasingly serious problem for both debtors and creditors, as they rise to enormous amounts with the accumulation of interests. In order for the capitalist economy to regain a relative equilibrium, the long-overdue crisis must materialise along with its consequences.

Hence, the 1980s marked the beginning of a new period, with the bourgeoisie preparing for the consequences of the crisis. New economic conditions dictated changes in economic policies. Thus, Keynesian policies, which had long accompanied the capitalist upswing following the Second World War, became discredited until they would be needed again. State capitalist policies, characterised by a high level of public spending, were blamed for creating crises. Financial policies that were considered to be at variance with the necessities of the new period were done away with. All these changes were accompanied by the rise of neo-liberalism which advocated the withdrawal of the capitalist state from state economic enterprises and public services such as education, health care and communication, along with the privatization of all these enterprises and services, allowing the free winds of market to regulate the economy. Theorised by economists like Friedman and epitomised by Reaganism and Thatcherism, neo-liberalism became the dominant trend of the new period. Such a change amounted to a long-term reactionary surge that was encouraged by the bad condition of the labour movement and that aimed at making it worse.

This trend did not operate only in developed capitalist countries, but found echo in other capitalist countries including Turkey as in the case of Özalism and IMF recipes. And a so-called restructuring process began to unfold everywhere. For, it was impossible to raise the rate of profit without increasing the rate of exploitation and imposing severe social benefit cuts and “bitter pills”. It should not be forgotten that, in Turkey, a blood-soaked military dictatorship accompanied this process, during which the economic and the political spheres were reorganised in accordance with the needs of capital. Since then, the world has been witnessing the implementation of austerity policies aimed at cutting public spending and social benefits along with an offensive against social conquests of the working class. In addition to this, the collapse of the Soviet Union and other totalitarian-bureaucratic dictatorships in the last part of the 20th century was seized upon by the bourgeoisie to slander socialism, Marxism and the revolutionary struggle of the working class.