Preface to the Chinese edition. Paul Cockshott, Allin Cottrell October 2015 Introduction This book was written during the late 1980s as a response to the crisis that social- ism was going through in Europe and the USSR. The postwar European consensus had been that the best economic model was the mixed economy, that is to say one containing both a private sector and a large state sector. Prior to the ’80s it was taken to be simple common sense that large sections of the economy such as housing, transport, energy, communications and steel should be run entirely or in large part by the state. Debate had been restricted to whether the state sector should be extended to other industries like cars, ships and aircraft. At the same time private firms, including foreign private firms, were encouraged to develop in areas that the state was not yet interested in. At a macro level, the state took on the responsibility of ensuring full employment, reducing income differentials and managing the balance of external trade. This model of a large state sector playing a leading role, particularly in in- vestment, along with a substantial private sector, was of course what China was starting to move to in the 1980s. For some 30 years after the Second World War, this model had been highly successful, giving Europe the longest period of rapid economic growth that it has ever seen. But by the ’70s the internal contradictions of this model were beginning to be apparent. A long period of growth and full employment encouraged the for- mation of strong trades unions. With labour in short supply, strikes became more effective, and wages rose relative to private profits as a share of national income. Thirty years of rapid capital investment also raised the capital to labour ratio, so these diminished profits were spread over a larger capital sum. In consequence, in all the main European economies the rate of profit, in real terms, fell. 1