At first it delayed the outbreak of the crisis. The Bolshevik economist Preobrazhensky, attempting to analyse the crisis in 1 93 1 , argued that there had been a big change since Marx's time. Then recessions had led to the elimination of inefficient firms and allowed the rest to enter into new rounds of accumulation. But now the system was dominated by big near-monopolies which were able to prevent the liquidation of their inefficient plants. They would do their utmost to keep their operations intact, even if it meant their plants operating at only a fraction of their usual capacity and cutting investment to the minimum. This produces a "thrombosis in the transition from crisis to recession" and prevents-or at least delays-the restructuring necessary for an emergence from the crisis: "Monopoly emerges as a factor of decay in the entire economy. Its effects delay the transition to expanded reproduction" .46
Once the crisis erupted, the sheer size of individual industrial or financial capitals was such that the collapse of any one of them threatened to drag others down with it. The banks would lose the money they had lent it, and so cut off credit to other firms. Its suppliers would be driven out of business and so damage other firms dependent on them. And the end to its spending on investment and wage bills would reduce demand in the economy as a whole. The delayed crisis was now a much magnified one, which could not automatically resolve itself. The response of the big capitals was to turn to the state for "bail-outs" to keep the system going.
The turn to state capitalism
At first governments continued to place their hopes in the untrammelled operation of the market mechanism, with only limited actions to protect some banks. But the crisis continued to get worse, particularly in the US and Germany. Enormous damage was being done to capital itself as it tried to operate with little more than half its previous production levels. At the same time desperation was leading the mass of people to look to remedies that might turn the whole of society over. Major sections of capital began to look for an approach that might solve their problems, however much it broke with old ideological shibboleths. By the summer of 1932 the head of General Electric in the US was campaigning for state intervention. The shift which eventually took place was from forms of monopoly capitalism in which the state kept in the background, providing services to big capital but keeping away from attempting to direct it, to forms in which it attempted to ensure the international competitiveness of nationally based capital. That came to involve consciously restructuring industry by shifting surplus value from one section of the economy to another.
The Great Slump
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