For a student of Marxist political
economy, one of the last year’s highlights was the seven-part discussion of the
global economic crisis, its causes, and consequences which was featured in Socialist Voice, the excellent monthly
publication of the Communist Party of Ireland. Beginning in January with the
review of a book on the crisis, two interlocutors—identified as NC and NL--
surveyed the landscape of radical and Marxist explanations of economic crises
and their meaning for the working class movement.
Several features of the discussion were
remarkable.
First, the discussion was conducted in
a comradely and respectful manner. Much of the academic “Marxist” dialogue is
about scoring points and splitting hairs. The SV exchange, on the other hand, sought to construct and unify.
Second, the articles were free of
jargon and pretension. Too often self-styled Marxist economists feel compelled
to package their views in fashionable or “sophisticated” language to create an
aura of profundity.
Third, the dialogue owes little to
bourgeois economics. Outside of a few distinguished Marxists like Maurice Dobb,
Ronald Meek, and Victor Perlo, in the English-speaking world, training in
mainstream bourgeois economics has been more of a hindrance than a help in
grasping and advancing Marxism. Likewise, formalism—the fetish of mathematical
and logical constructs-- has elevated issues like the so-called transformation
problem or the “Okishio Theorem” to center stage at the expense of pursuing and
elaborating the insights of Marx, Engels, and their successors. In most cases,
the formalists and academicians would be well advised to return to a study of
the opening chapters of Capital, an
exercise that would render much of their exercises pettifoggery.
The Socialist Voice contributions cover briefly, but clearly and
seriously, the theories of crisis ranging from the
tendency-of-the-falling-rate-of-profit through underconsumptionism, stagnation,
long cycles, and the general crisis of capitalism. They draw on a diverse group
of theorists from Andrew Kliman and the Monthly
Review adherents through Nikolai Kondratiev and Hans Heinz Holz.
The articles are to be found in the
January, April, May, June, October, November, and December issues of Socialist Voice or online at: http://www.communistpartyofireland.ie/sv/index.html.
I urge everyone interested in Marxist
political economy to read them. Hopefully, this discussion will generate
further research and debate over the many issues addressed. Developing a clear
and full Marxist account of the current crisis is a work in progress. My own
thoughts, offered in the same comradely spirit, are below:
SYSTEMIC CRISIS
1. Capitalist economic crises are of two
types: cyclical and systemic. In the course of capitalist economic activity,
imbalances occur between various departments of production, between suppliers
and producers, between production and consumption, etc. These imbalances result
in slumps or slowdowns in productive activity. Bourgeois economists refer to
these as “business cycle” events, meaning that they are cyclical or
self-correcting; recovery is on the horizon, perhaps the distant horizon, but
on the horizon. Generally, bourgeois politicians apply conventional
nostrums—interest rate adjustments, state spending, incentives or
inducements—to adjust these cycles to their political ends. Even though these
are episodic events, the ensuing damage generally falls on the backs of working
people.
2. Systemic crises, on the other hand,
are reflective of deep contradictions inherent in the capitalist system. As
such, they are not subject to either patience or the usual menu of remedies.
Capitalism, like a perpetual motion machine, violates the laws of nature. A
system cannot continue forever that depends upon increasing complex social
interactions while awarding the riches produced by those interactions to a few
who are dissociated from the same social processes. In the long run, the
accumulation of private, concentrated wealth tends to choke off the further
accumulation of that wealth.
3. Systemic crises do not pass, but are
temporarily suppressed or resolved through transformative change. That is,
policy makers may blunt or postpone the harshest consequences of systemic
crises, but eventually systemic changes are necessitated to exit the crisis.
For example, despite New Deal boasts about resolving the Great Depression in
the US, the Depression’s demise only came with the vast systemic changes that
accompanied a world war— socialist-like economic planning, organization,
investment, and production in war supplies and the massive destruction of
material assets. In our time, the full impact of the 2001 technology crisis was
suppressed only to exacerbate the 2008 crisis. The underlying dynamics of
capitalist crisis remained, and still remain.
4. Systemic crises are, in the final
analysis, crises of accumulation. What cripples the mechanism of capitalism
most decisively is the inability to generate sufficient profit. Conversely,
those factors which restrain the growth of accumulation-- retard the rate of
profit-- largely account for systemic crises. Thus, broadly speaking, crises
are caused by a tendency within the system for the rate of profit to fall.
5. Basing systemic crisis on failing
accumulation and not imbalances or unrealized consumption has the following
political consequence: it cannot be overcome with liberal or social democratic
panaceas. Wealth redistribution, public sector jobs programs, social insurance
etc. will not directly restore profitability unless these programs are actually
subterfuges for surplus transfer. Only the restoration of profit growth will
stabilize the economy. We saw this in the US after mid-2009 when profits
rebounded sharply (generated by intensified exploitation!). But even then
earnings began to recede again by mid-2012. Thus, for the working class, the
choice is really only between helping the capitalists restore profit or working
to eliminate the capitalist system!
6. Paradoxically, the crisis exists
because the accumulation process is overwhelmed by the huge pool of surplus in
the hands of the few, the owners of the means of production, distribution,
service, and finance. Just as before the Great Depression, investment opportunities
in productive activities are outstripped by the sheer weight of accumulated
surplus. The rate, as well as the expected rate, of profit sinks against the
aggregate capital held by corporations, banks, and the rich. They turn to speculation in scarce resources,
property and financial schemes, the ever-active “hunt for yield.” And they take
on debt which amplifies the folly of this ceaseless search for a return on
available capital.
7. The systemic crisis should not be
understood as foretelling an ultimate breakdown of the system. Henryk
Grossmann’s pioneering work on Marx’s tendency of the falling rate of
profit—because of its strict logical exposition—mistakenly led some to believe
that capitalism would implode by its own logic. Similarly, academic Marxists
divorced from the working class movement lean heavily on projected stagnation
to force the departure of capitalism from the world stage. But capitalism
always has extreme measures to fall back on for its self-preservation: a
re-shuffling of the cards through war, forced-march capitalism through fascism,
and many forms of direct and indirect enslavement. The only escape from
capitalism is through the efforts of the most advanced, organized elements of
the working class armed with an understanding of capitalism.
MONOPOLY AND STATE-MONOPOLY-CAPITALISM
1. The theorists at Monthly Review are correct to
persistently point to the never-ending concentration of capital into fewer and
fewer hands as evidence for the rise of monopoly capital. Mergers and acquisitions,
bankruptcies, and integration ensure that leading corporations grow stronger
and fewer. At the same time, they understate the resiliency of capitalism to
create and re-create new arenas of competition. Frederick Engels stated it well
in the very first Marxist tract on political economy (Outlines of a Critique of Political Economy): “Competition is based on
self-interest, and self-interest in turn breeds monopoly. In short, competition
passes over into monopoly. On the other hand, monopoly cannot stem the tide of
competition—indeed, it itself breeds competition…” It is this seemingly small
point that eludes the “Monopoly Capital” (MC) school associated with Monthly Review.
2. Even in a hugely capital-intensive
industry and a paragon of monopoly like automobile production, competition
persists with new producers entering the industry through new technologies
(e.g., electric cars) or national initiatives (Japan, Korea, and today China
and India). While price competition persists (contrary to the MC school),
competition is also expressed through technological features, fuel consumption,
performance, warranty protection, and a host of other differences. Moreover,
these differences are based in the techniques of production and costs of
production and not merely sloughed away as “the sales effort” as Sweezy and
Baran do in Monopoly Capital. They
equally sidestep the competition between old and new, mainstream and alternate
industries.
3. Despite the
persistent concentration of capital, competition among capitalists and the thirst
for a return on capital stocks will always steer the system towards systemic
crisis.
4.
Of greater use to the working class movement is the theory of
state-monopoly-capitalism. While monopolization may bend, but not break the
logic of capitalism, enormous monopoly corporations have succeeded in merging
their interests with the functions of the state. The enormous power and reach
of monopoly enterprises have commandeered all organs of the state and harnessed
the state’s actions to the promoting of capital accumulation. While the theory
of state-monopoly-capitalism has been dismissed in left circles since the
demise of European socialism, the priority by the state given to the
US/European bank bailouts surely underscores its validity and makes the critics
pause to reconsider. The theory is an essential tool for understanding the
behavior of EU and US policy-makers through the course of the crisis.
“FINANCIALIZATION” AND DEBT
1. “Financialization” is an unfortunate
term—fashionable, but adding little light to our understanding. The growing
role of finance has been noted since before the time of Lenin. The process
culminated in finance accounting for over 40% of corporate profits in the US by
the early twenty-first century—in part by its increasing absorption of
stampeding surplus and in part by the decline and departure of manufacturing
that formerly accounted for a far greater share of US profits.
2. Unquestionably finance took on a
leading role in the US, the UK, and a few other advanced capitalist countries
with the creation of a vast new pool of low-wage workers available to
manufacturing after the destruction of Eastern European socialism, its
socialist-oriented allies and the PRC’s opening to global markets. This
reflected the new national division of labor in the global economy—
manufacturing and export in the East and South and finance, management, and
services in the West and North.
3. As the leading financial center, the
US became the Mecca for those with pockets overflowing with cash and fewer investment
opportunities in an era of low interest rates and cheap money.
4. Unlike in the world of commodity
production where value is produced in real time, finance offers opportunities
to appropriate future value through contractual instruments like mortgages,
bonds, futures, and, in our era, even more exotic creations. These instruments
trade in future value, hence
challenging capitalism to find even more marginal investment opportunities to absorb surplus and potential surplus.
5. Debt—the offspring of easy credit
and low interest rates—serves as an amplifier of financial investment, the
critical bridge to ever-more reckless speculation. Thus, finance served up its
many “innovations” designed to absorb the ocean of surplus accumulated over
decades and in search of another round of accumulation in an environment of
diminishing returns. In this manner, the tendency for accumulation to retard
its own re-production found its expression in the financial crisis that broke
out in the US in 2007-2008.
OTHER CRISIS THEORIES
1. Wave theory-- the notion that
economic activity exhibits a wave-like trajectory from boom to bust and back to
boom again—enjoys an almost mystical, spiritual attraction for many. Associated
with the views of Nikolai Kondratiev in Marxist circles, the theory of a
regular, periodic wave—long or short—is flawed for two distinct, but fatal
reasons.
2. From an empirical perspective, it is
impossible to settle on those features of economic history that are decisive in
expressing the upturns and downturns of regular
cycles. That is to say, the dependent variables are illusive and hazy.
Moreover, when they are clearly stipulated—GDP, labor productivity, profits,
etc—no incontrovertible pattern is revealed. Instead, only intuitive patterns
are seen by those already disposed to see them.
3. From a theoretical point of view,
there is no candidate for an independent variable that demonstrates a
consistent and regular wave-like behavior throughout economic history (or the
history of capitalism). Neither technological innovation, cultural or
demographic change, nor any other candidate for the cause of cycles exhibits
the kind of wave-like nature that would account for regular, periodic waves in
the historic record. And where we find wave-like motion in nature (eg. Lunar
cycles), there is no obvious causal connection with economic life.
4. In short, long cycles are impossible
to discern without appealing to Rorschach-like impressionism and impossible to
explain without assuming what it sets out to illustrate. When you want to see a
face on the moon, you’ll see one.
5. We owe a great debt to Hans Heinz
Holz, the late German Marxist philosopher, who brought new life to the
long-standing Communist concept of the General Crisis of Capitalism (GCC). As
Holz points out, Soviet social science mechanically and empirically attached
the GCC to the historical stages ushered in by the Bolshevik revolution and the
Second World War. This was a misleading interpretation dissolved by the
setbacks to socialism.
6. Holz is correct in rehabilitating
the GCC as a truly general crisis generated by capitalism’s internal mechanisms
independently of important, but external events. He is correct to conceive of
the GCC as a total crisis, not limited to the economic sphere but including
social life, culture, ideology, and all other human relations.
7. Thus the GCC is not a theory of
economic crisis. Instead, the systemic crisis of capitalism is one element—one
causal element-- in the General Crisis of Capitalism.
8. Much more work needs to be done in
developing a full theory of the GCC with its consequences in every aspect of
everyday life.
Zoltan
Zigedy
zoltanzigedy@gmail.com