Volumes have been written about the crisis of 1886–1887, a crisis which, to use the words of the Parliamentary Commission, lasted since 1875, with but “a short period of prosperity enjoyed by certain branches of trade in the years 1880 to 1883,” and a crisis, I shall add, which extended over all the chief manufacturing countries of the world. All possible causes of the crisis have been examined; but, whatever the cacophony of conclusions arrived at, all unanimously agreed upon one, namely, that of the Parliamentary Commission, which could be summed up as follows: “The manufacturing countries do not find such customers as would enable them to realise high profits.” Profits being the basis of capitalist industry, low profits explain all ulterior consequences.
Low profits induce the employers to reduce the wages, or the number of workers, or the number of days of employment during the week, or eventually compel them to resort to the manufacture of lower kinds of goods, which, as a rule, are paid worse than the higher sorts. As Adam Smith said, low profits ultimately mean a reduction of wages, and low wages mean a reduced consumption by the worker. Low profits mean also a somewhat reduced consumption by the employer;