Heterodox economics: where are you?

I thought this diagram from the Louis-Auguste Blanqui Facebook site was a pretty good description of the various strands of economic thought on crisis theory.  Marx is put bottom left and I would put myself there too.

Crisis theory

It is an interesting course that this American anti-capitalist group is doing:  http://crisistheory4anticaps.wordpress.com/

45 thoughts on “Heterodox economics: where are you?

  1. An amusing diagram, but of course reality is more complicated than that.

    Firstly, there may be a difference between cyclical crises & longer cycles/waves, or even breakdown crises.

    Secondly, that although crises of overproduction can happen because of the over-issue of credit money, behind this can be a problem with the underlying rate of profit due to an increase in the value composition of capital.

  2. P.s. I don’t mean that question to sound flippant or rhetorical, I’m sincerely curious, as I’ve never read Luxemburg, and I’m just now finishing up Vol III of Capital.

  3. Yes, IMO Rosa is in fact dead wrong in her main thrust, and way off in her historical analysis on primitive accumulation and the role of finance capital (for example her remarks on the building of the Suez canal, and mis-classifying the fellahin as peasants. That BTW is not a whole other subject, as I think we can show the links between the two, but it’s best left for a different discussion).

    I think of Rosa of the first of the “disproportion” theorists, and I think disproportion arguments always come down to arguments about consumption. A really great treatment of disproportion, so great I endorse it despite my disagreements is Pavel Maksakovsky’s The Capitalist Cycle. Really worth reading and rereading.

    Anyway in the spirit of the topic:

  4. Why is underconsumption in contradiction within Marx’s theory of crises (at least that’s the impression I get reading this blog and comments). Marx made it clear in Capital Vol II, that consumption is necessary for the realization of surplus value, to keep the production cycle going. If capital cannot be realized, it makes sense that crises could follow…?

    1. CB, under-consumption isn’t in contradiction with the crisis theory, but the theory shows it’s a natural consequence of the crisis, not a cause of it. Over-production (a glut) of capital is the reason why too many goods are produced for the market to absorb at appropriate prices. The reflected opposite of over-production is under-consumption. The surface of capitalist society is a great big silver screen reflecting these inverted (and distorted) images generated by an invisible, underlying reality.
      Too much capital drives down the rate of profit, which is what this blog is all about. Under-consumption is a symptom that doesn’t drive anything.

  5. Well, the “left Keynesians” are often confused with (or even claim to be) Marxists, and some have shifted from one position to the other (cf. Joan Robinson). Henryk Grossman is one interesting border case. The thing the two positions share is the assertion that various disproportions/inequalities (between Dept 1 and Dept 2, or in the distribution of revenues between capital and labor) arise from something endogenous to capitalism’s structure, not to some exogenous factor.

    But the basic distinction that Choppa makes above is the right one. By definition, Keynesians understand crises as caused by effective demand; for Marxists, this failure of demand exists but is a consequences of crises is production (with profitability being the classical kernel).

    By the way: I’m the maker of the chart. I certainly didn’t mean it to explain everything; it is a schematic overview for a short course, with actual details (of underconsumption/disproportion, profit squeeze, overaccumulation, etc) being dealt with in detail each week.

  6. If underconsumption by the working class were the problem, capitalism would never get started, as the original relation is that a portion of the labor is unpaid for; so that the product appears and accrues as surplus or “free” value to the capitalists.

    Consumption is derivative of the reproduction of capital. Marx expresses this in a number of ways throughout the Grundrisse and the Economic Manuscripts 1857-1864, but one of the most succinct ways Marx puts it is– the market for the commodity is the commodity.

  7. Patnaik makes a very good critique of viewing capitalism as an isolated system in his The Value of Money (2009). To borrow his arguments; capitalism need not realize its entire surplus value in every period through sales to the precapitalist sector. Indeed, he goes on to say, the role of precapitalist markets does not even have to be quantitatively significant. Capitalism can run just fine for long periods, using the precapitalist markets to turn itself around whenever it is on a downward movement.

    In the preface Patnaik says that this role of the precapitalist sector is to provide “on tap” markets, which can instill among the capitalists sufficient confidence to undertake investment, thus thwarting downturns. I’m distilling a whole book here, so if the arguments come across as simplistic it is through no fault of Mr. Patnaik, I assure you.

    Anyhow these “reserve markets” are on par with the reserve army of labor, because capitalist goods can always displace local production (very true in Eastern Europe, for example, and probably even more true in Africa and elsewhere), causing deindustrialization and unemployment. This creates a great pauperized mass in the precapitalist economy, which constitues for the capitalist sector a second, and distantly located reserve army. This army is the one which ensures that the money wage rate of workers in the midst of it changes only slowly through time (wages are supposed to be “sticky”). These workers are price-takers – or, more accurately, their ex-ante wage claims are compressible precisely because they are located in the midst of vast labor reserves. Since the products they produce enter into the wage and raw material bills of the capitalist sector at the core, they play the role of “shock absorbers” of the capitalist system (Patnaik, 2009).

    Well I could go through the whole book, but I’m too lazy. My point was that Rosa wasn’t completely “wrong” (whatever that means) and that the classification above is a bit too simplistic, which was already noticed by some other commentators.

    1. Can you give examples where……in the midst of a downturn in the advanced capitalist centers “tapping into” these “reserve markets” has righted the ship, so to speak, and created a recovery?

      Just on the most superficial level we can look at Japan’s “tapping” deeper into the “emerging markets” of Thailand, China, etc etc. after the Plaza Accords without that reversing the long deflation in Japan.

      And the tapping into Eastern Europe and the fSU occurs in the midst of the capitalist expansion 1994-2000 and then again PRIOR to the downturn of 2008, so where’s the evidence for

      “Capitalism can run just fine for long periods, using the precapitalist markets to turn itself around whenever it is on a downward movement.

      In the preface Patnaik says that this role of the precapitalist sector is to provide “on tap” markets, which can instill among the capitalists sufficient confidence to undertake investment, thus thwarting downturns.”???

      1. Well it’s a strictly theoretical book, so it doesn’t deal with empirics, but you could say that Patnaik noticed and incorporated imperialist relations and relations between different modes of production into his analysis of capitalism (which he starts, appropriately, with the value of money). Because the purity of analysis that one can do by focusing on one mode of production alone, while indeed helpful, can be enriched if we look at the interrelationships between different modes. Now the fact that different modes co-exist and that the capitalistic one is dominant, is hardly a stylized fact that anybody would argue. So this is what Patnaik then made explicit. But unlike Rosa Luxemburg, it is his contention that the pre-capitalist sector is needed for the realization of the whole surplus. The pre-capitalist sector, mainly located also outside of the so called center, provides a vital check to capitalism in form of abundant and cheap labor (thus keeping wages from spiraling out of control) and as it can be industrialized or de-industrialized at will, it represents a handy product market. For the latter, Patnaik posits that these markets could be helpful in making sure that capitalism survives the downturn. Because lets be honest, while crises are vital to capitalism, every system that hopes to exist longer than through just one period, needs to make sure that the oscilations are contained (and say what you will, capitalism has done a beautiful job in this department). In other words, he does not view capitalism as internally viable in the long run, he says it needs exogenous stimuli. And as capitalism has never existed without imperialism, this is something that Patnaik takes explicitly into account and asks himself. Now he could be wrong or right, but its hard to argue with the fact that capitalism has never existed as an isolated system. Of course if Mr. Patnaik is right, then capitalism will be having more and more problems as its reach grows the encompas the whole world.
        However, by having banana republics, that you can exploit at will, could work for a long time. He doesn’t talk about this too explicitly, but 3rd world countries are a great place to throw bombs at as well. And then you can rebuild them as well. So their taps are more than just markets, if you will (jingoism always helps, and it needs to manifest somewhere geographically). If anybody here reads Adam Curtis and his blog, you can find a nice description of a similar scenarion in his stories about Kabul. The US built the country in the 60’s and 70’s, then it also bombed the country, only to rebuild the same things all over again (a hoover-like dam, for example). Of course the BBC and the western media (as did the soldiers) hailed how they are bringing progress to Afghanistan. Yup, just like they did 50 years ago.

        But anyway, the book is theoretical, so there aren’t a lot of examples. It’s a great book if you want a differen perspective on monetarism, walras, Keynes, Kalecki and Marx. His monetary divide in economics goes along the lines of Ricardo-Walras vs. Marx-Kalecki-Keynes. Granted this is bound to irk some of the readers of this blog (putting Keynes, the patrician, together with Marx), but his argumentation (which I cannot even hope to distill in a condensed form, sorry) is sound. He calls the first tradition monetarist and the second propertyist. In the second it is not supply and demand which determine the value of money.

      2. Sorry, made a couple of mistakes.

        So while Rosa believed that surplus under capitalism needs to be realized outside of capitalism, Patnaik merely states that some of it has to be realized outside of the capitalist mode. While pre-capitalist markets might actually be relatively unimportant quantitatively, they are very important qualitatively.

  8. (Apologies for the length, but I just had to bring the word hammer down)

    That is a good diagrammatic depiction of the common confusion and *reduction* to the concept of capitalist *production* – including “as a whole”, including the circuit of its determinate form as money capital – of what is a different theoretical object: the concept of capitalist accumulation. Simply because Marx invokes the word “accumulation” in his analysis of capitalist production as a whole, means neither 1) that production as a whole, and accumulation, are identical concepts, nor 2) that they are mutually exclusive concepts. They are obviously related, but different, concepts. The general abstract relation is:

    (capitalist) production -> accumulation -> (historical) mode of production

    Anyone familiar with the dialectical-critical method will understand that the partial determination of related but different concepts is unavoidable in the course of the complete determination of the object under examination. A good example is the concept of money, the partial determination as the general equivalent or determinate form of *value in general*, which must occur even before the approach to the question of capital (Part I, Vol I Capital), and which thereafter is readdressed in further partial determinations throughout all three volumes, until we arrive at capital itself in its commodity form, as money capital, while also halting at the threshold of *fictitious* capital (Part 5, Vol III).

    Topics such as 1) relative scarcity of natural resources, whose value form in capitalism is rent or rent equivalent surplus profits; 2) non-productive consumption, an inherently non-capitalist process *in itself*, as the consumption of commodities as use values occurs outside the valorization process – especially the consumption by wage labor that reproduces its labor power (this area poorly theorized by actually existing historical Marxism), and finally 3) the class struggle, ALL properly belong to the concept of accumulation. They are not “outside”, but INSIDE the accumulation process. They are outside the process of production as a whole as conditions that can be safely abstracted from for the purposes of that analysis; they are constituent determinants (and determinates) of the concept of capitalist accumulation.

    The movement from accumulation to the historical concept of the mode production requires casting of the complete concept of accumulation onto the world stage divided by nations and states, hence foreign trade and the “world market”: Uneven and Combined Development, a multiplicity of accumulations of differing tempo.

    No revision of the results of any part of Marx’s concept of capitalist production as a whole is required in the move to accumulation. When we include these areas within the concept of accumulation, we’ll find, for one example, that disproprotionalities are inevitable under capitalism, and constitute an aggravating real factor in accumulation crises, in addition to the fundamental one of the TRPF that emerges directly from production. A Marxist attempt to theorize these out of the picture is passing strange. Say’s Law deja vu all over again?

    Isn’t it strange that Marx’s first partial reference to accumulation in Vol I Chapter 25 is not only titled “The *General* Law of Capitalist Accumulation”, but which general determinate form is identified with a growing “relative mass of the industrial reserve army [that] increases therefore with the potential energy of wealth [i.e. as self-expanding capital]”, this then declared to be “the absolute general law of capitalist accumulation”!!! (Capital I 1967 pg 644, original italics indicating Marx’s emphasis not reproduced here). Of course this is the result of the rise of OCC, fall in the ROP, etc. – concepts Marx hasn’t even presented yet. But isn’t this mass “outside” of capital? Indeed, how can any social phenomenon be more “outside” capitalism than this relative surplus population? Yet Marx identifies this “outside” with the *absolute form of the concept of accumulation*, as the point of departure for its further analysis! Marx is pointing the reader further on down the road.

    BTW, isn’t it precisely this chapter that comes in for the greatest abuse, even ridicule, from Marx’s latter day bourgeois critics? Shouldn’t we be defending (and advancing!) *this* Marx as well?

    An BTW, isn’t the above diametrically opposed to the ideas of a certain character who normally appears in the lowest circle of Marx’s inferno, and who also appears (correctly) in the lower right leaf? I mean of course Thomas Malthus.

    So all the leaves of the above decision tree that result from the “No” side, labeled “natural resource scarcity (relative!)”, “under- (why not ‘over’) consumption”, and “profits (why not ‘wage’, you know, living on credit cards, payday loans and all that) squeeze”, should be switched under the left-most decision box so as to render the statement contained – “so you are saying the limit to accumulation is internal to the structure of accumulation itself” – something more than a tautology.

    Rosa Luxemburg certainly came up with the wrong solution to the question of accumulation in its relation to production by positing an “necessary outside” of a pre- or non-capitalist sphere. To that extent Luxemburg remained within the same conflation of production as a whole with accumulation. But Luxemburg asked the right question. And I don’t think she disputed the TRPF.

  9. If we look at the relative resilience of post-restoration Russia, of India and of China to the present great crisis of capitalism, we can see that in their different ways they are all benefiting from an Outside. Rosa was on to something, even if she cut too many corners in drawing her conclusions.
    The outside they are benefiting from is poor non-proletarian masses being thrown into large-scale industrialized extraction of surplus labour. In India, the classical case, it is the massive proletarianization of the poor peasantry. In China, which I don’t consider capitalist despite the bureaucracy’s obscene use of capitalist techniques, it’s the massive quasi-proletarianization of the poor rural workers as they are forced off the land and into the cities and industrial zones, and in Russia it’s the reproletarianization of what under conditions of Primitive Socialist Accumulation (Preobrazhensky’s and the Left Opposition’s term) were associated workers who owned and who belonged by right within the means of production. All these countries have strong nationally conscious and protectionist regimes and states.
    This means the creation of hundreds of millions of new well-springs of surplus labour/value.
    The great political battle involves these countries trying to prevent the value pump of the equalized general rate of profit from sucking all this new surplus labour/value out of them and over into established high-tech capital branches and countries.
    So, perhaps the errors of a great revolutionary like Rosa will prove to be more fertile and stimulating for developing a shall we say Bolshevik Marxist answer to why capitalism is able to keep on surviving than any number of orthodox academic Marxists who find it hard to digest what Marx has to say about an epoch of transition to socialism, who seem to be stuck in a rut with Lenin’s Imperialism and 1917, and who never seem to have heard of Preobrazhensky or taken to heart Trotsky’s analysis of the astonishing power of the new mode of production (primitive as it was and merely “protosocialist” as I like to call it) in the Soviet Union as presented in The Revolution Betrayed.
    Too bad Marx never wrote those books on the State, the World Market and Trade, because they would probably have made an abstract globalizing perspective in serious revolutionary Marxism a non-starter.
    Rosa next for me, to check this notion out.
    “Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle. The proletariat of each country must, of course, first of all settle matters with its own bourgeoisie.”

    1. It also means tremendous new sources of overproduction, of depressing the rate of profit. China is hardly benefiting from the “astonishing power of the new mode of production.” It is benefiting from Deng’s 4 reforms announced in 1979-1980, a direct result of the CCP decision to go forward with the cheap labor strategy. The real astonishing power can be summed up as $1 trilllion in FDI in China, turning the Guangdong into the world’s largest maquiladora. Whether or not China is already capitalist or just on the way there at a speed equal to its “rate of growth” is pretty much immaterial to the working class of China, to the hundred(s?) million or so not employed, displaced,without legal status and……to the limits to that growth– the limits being an agricultural sector of persistent low productivity, entrapping almost half the population in a rural economy that cannot be rationalized without displacing hundreds of million and thus throwing the entire country into upheaval.

      Preobrazhensky to the contrary notwithstanding, there is no such thing as “primitive socialist accumulation.” The Bolsheviks were not engaged in primitive socialist accumulation. The notion that there can be primitive socialist accumulation based on declining labor productivity, which is what must occur absent an international revolution that links the advanced countries to the less advanced; and on driving consumption levels below the requirements of the laborers, urban and rural, which again is exactly what happens, and happened, in isolation from that link, is a recipe for disaster, again what has happened due to the isolation from that link.

      But that’s just one man’s opinion

    2. PS: In regard to this: “why capitalism is able to keep on surviving”– Rosa doesn’t provide the answer. The answer quite clearly is the success the bourgeoisie have enjoyed since 1919, knocking the snot, more or less, out of the working class in the advanced and less advanced countries, sending an easy hundred million or so off to die in various wars, conflicts, famines, plagues; incinerating masses of accumulated capital and living labor, making workers pay-up whether through the offices of an Allende setting the stage for Pinochet by restraining the cordones in Chile; or the second time as tragic farce, third time as bloodbath of Juan and Isabel Peron; or the two James– Callaghan and Carter–pre-paving the road for Thatcher/Reagan etc etc. ad nauseum

      1. S.Artesian says: “China isn’t benefiting from ‘the astonishing power of the new mode of production'” but from Deng’s 4 reforms. Oh brave new reforms that have such wealth in them!!! No other country has had the cunning to try such reforms! Cheap labour strategy! Wow… the answer to all under-developed ills. Forget Trotsky on why the Soviet Union wiped the floor with the rest of the world in terms of economic development in the 30s IN SPITE OF EVERYTHING. If only Stalin had been as cunning as Deng…
        Anyhow I didn’t say that Rosa provides the answer to why capitalism survives. I think that there are three mainly economic reasons:
        1) Destruction of capital in war and other drastic devaluation (generally acknowledged among Marxists);
        2) The coexistence alongside the Law of Value of the Law of Primitive Socialist Accumulation in post-capitalist proto-socialist states like the ex-USSR and its bloc, and continuing with China today (not generally acknowledged, but spelt out by Preobrazhensky and Trotsky in The New Economics and The Revolution Betrayed), which provides a stability and predictability lacking in capitalism; and
        3) The existence of still vast (though shrinking) pools of untapped labour power in the poor subsistence farmers of the world, which has enabled an ongoing proletarianization (also falsely and misleadingly known as “urbanization” from its surface symptom) and appropriation of unpaid surplus labour as profit. I mentioned this in my earlier comment above as being particularly striking in India (within the capitalist mode of production), Russia (and the ex-Soviet bloc) (counter-revolutionary social transition between modes of production – proto-socialist to restored capitalist), and China (use of capitalist techniques to leverage the Law of Value within the still prevailing Law of Primitive Socialist Accumulation). This needs to be seen and brought into our theory especially in relation to the issue of the character of imperialist hegemony in the world economy, ie how unshakable is US hegemony and how stable or unstable is the present division of economic power in the world.

        Summarizing all these under one head we can say that the bourgeoisie has been able to “knock the snot out of the working class” since 1919 because the working class hasn’t been able to organize and mobilize socialist revolution in its own interests, despite expropriating the bourgeoisie in almost half the world and flinging out colonialist oppressors or introducing huge New Deal Welfare State concessions in the rest. If we see that the leadership of the working class during all this upheaval has been in the hands of Social Democracy, bourgeois nationalism, and Stalinism/Maoism, all of them counter-revolutionary forces, and if we realize that it is precisely the preventing by these leaderships of the full political and economic rise to power of a democratically organized working class that has allowed capitalism to survive (even if not exactly to flourish 😉 ), then we are compelled to agree with Trotsky’s formulation in the very first sentence of the Transitional Programme of 1938 (“The Death Agony of Capital and the Tasks of the Fourth International”): “The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat.”

        If we are scientific revolutionary Marxists, as Marx was, then our theory has to be both true/valid and serve the end of resolving this historical leadership crisis.

      2. Uhh…yeah other countries have tried it, and guess what– it works just as well for them. Let’s try– uhh Vietnam, for one, Thailand for another, Indonesia, Malaysia, hmmh…..Taiwan, back in the day before it became one of the major investors in the Guangdong……..

        Hey……how about Brazil? Wait you’re going to tell me about the massive hidden poverty in Brazil? The dispossessed? The overproduction. Please do.

        And what a boon this has been to China.. well just ask the IMF, the Chicago Boys, and the Wall Street Journal. Why the benefits of primitive socialist accumulation are positively indistinguishable from the benefits of capitalism.

        Oh yeah China’s “primitive socialist accumulation” is just the ticket. It sure revolutionized agriculture; sure it did.

        And sure Stalin sure cleaned up in the 30s– with “growth.” Do us a favor… please. Labor productivity declined. Agricultural productivity declined. Consumption decline. That sure is some primitive socialist accumulation you got going on there.

        Stability and predictability? Really? You call the fSU in the 20s and 30s “stable” and “predictable”? Come on, are you making this up or has someone written it down for you?

        What’s next? You’re going to tell me how the big S Soviets “removed” the fSU from the “world markets” in the 1930s? Ignoring those little things like the imports of machinery and tractors? Or that other little thing that started in the 1930s and the fSU certainly participated in……..World War 2?

        I’ll stop here before this turns into a sectarian slap-fest and I make some sort of nasty remark how Trotskyists wish they had a Soviet Union of their own so they could practice primitive socialist accumulation– gulags and all. I wouldn’t want to do that.

        Envy, not critique, is what we get

      3. What an eruption of bilious ignorance!
        S.Artesian, addressing some figment of his limited but fevered imagination, writes: “What’s next? You’re going to tell me how the big S Soviets “removed” the fSU from the “world markets” in the 1930s? Ignoring those little things like the imports of machinery and tractors? Or that other little thing that started in the 1930s and the fSU certainly participated in……..World War 2?”. Showing that he has no idea of what Preobrazhensky was talking about when he wrote of Primitive Socialist Accumulation in The New Economics, which was all about world markets and managing machinery and tractors given the contradictory and simultaneous pressures from the operations of the Law of Value and PSA in the USSR. And no idea of what Trotsky was doing and writing during the 1930s, particularly (with regard to this discussion) in The Revolution Betrayed, but as regards war and the Stalinist Soviet Union damn near all of his political and literary work.
        Funny how the Marxist veneer peels off the chipboard when the dialectical realities of an epoch of transition to socialism have to be denied and the revolutionary political forces of the working class facing up to them (led by Trotskyism) have to be sprayed with shit. For this kind of perspective imperialism rules, always has ruled and always will rule. It only sees surface politics and superficial social-economic-historical development. Labels fighting labels. History as a Wall Street ticker-tape parade. That’s not what Marx or Lenin or Trotsky were working for or writing about.

      4. Of course Choppa, you fail to deal with any of the concrete issues raised. Your fidelity to the religion of “primitive socialist accumulation” makes you ignore the reality that made up the “stability” “predictability” “growth” of the fSU– which was indeed primitive accumulation with productivity measures showing pretty much general declines in industry and agriculture, and declines in caloric intake per capita.

        The growth in the fSU during the five year plans was based on huge applications of labor power.

        Now what’s supposed to be “socialist” in “primitive socialist accumulation”? It’s supposed to be the enhanced productivity of labor. There is a very simply measure, rule of thumb, we can use as a proxy for the overall social productivity of labor and that proxy is the percentage of the population tied to the agricultural economy.

        At it’s “peak,” at it’s most developed, the fSU required, or kept, about 30% of its population tied to the agricultural production; a measure of social productivity far below that of the US, the UK, Germany, France etc etc etc.

        What Preobrazhensky was talking about in The New Economics and in his misnamed “primitive socialist accumulation” was the the various manifestations of the relations/conflicts between city and countryside, and the impacts of that conflict during conditions of interaction with the world markets. Important issue to examine. Unfortunately, Preobrazhensky’s “way out” of the impasse was no way out at all– a “light” expropriation of the peasantry, a benign “unequal” exchange, a “gradual” dispossession supporting the transfer of “wealth” from the agricultural to the industrial. Without an adequate level of productivity in agriculture, which peasant agriculture could not provide, the cost of “gradual” expropriation which outweigh the benefits. Without a level of industrial productivity, there would be simply nothing to exchange for the agricultural product.

        Leaves you with two options: 1) international revolution or 2) forced labor with massive declines in consumption, brutal expropriation of rural producers, and opposition to revolutionary struggle internationally that might disrupt your control of the state apparatus necessary to enforce this program of primitive accumulation.

        You talk about the so-called “benefit” that the “new mode of production” has provided first the fSU and now China– attributing all sorts of wonderful things to it; but first, if the fSU and China represent a “new mode of production” we should see a new organization of labor, a new social organization of labor that enhances productivity beyond that established by the old mode of production, which is capitalism. Now it’s not enough to say, “oh the enhanced productivity exists if you compare China’s labor productivity to that of… say China in the early 20th century; India in the 20th century.” It has to exist, if it’s a new mode of production, in absolute terms, when compared to the the productivity of labor (and the productivity of agriculture) in the advanced capitalist areas.

        No such improved productivity exists in those terms. Steel production in China accounts for more than half the global output, with a capacity even greater than that. But the productivity of China’s steel industry? Maybe 1/4 of the productivity of the industry in South Korea or Japan.

        And in agriculture? Please. Not even close.

        China has benefited from $1 trillion in FDI– FDI which was specifically welcomed into the country with various restrictions and regulations waived.

        It’s growth was keyed on exports; “snap and pack” assembly, textiles, clothing. And the earnings from those exports? Last time I checked (which was around 2008), about 80% went to the FD Investors.

        China’s so-called “move up the value-chain” has not been quite as dramatic as many claim.

        What the fSU accomplished was accomplished more or less through adaptations of the militarization of labor. That’s not a new mode of production; that’s not enhancing the productivity of labor, or the use of that labor.

        What China has accomplished is a result of FDI. That’s not a new mode of production either.

        Simply, there is no such thing as a “primitive socialist accumulation.” As the five year plans demonstrated, you can get two out of the three, but the two yet preclude the “socialist.”

        PS: I’ve read everything Trotsky wrote during the 1930s– I mean everything that was available in English when I was a big reader of Trotsky some 35 or so years ago– that includes The Revolution Betrayed. I just think he was wrong in his analysis of the results of the revolution and the nature of its betrayal.

      5. S.Artesian is a bit less incoherent now. Good. He (presumably a he) writes: “if the fSU and China represent a “new mode of production” we should see a new organization of labor, a new social organization of labor that enhances productivity beyond that established by the old mode of production, which is capitalism. […] It has to exist, if it’s a new mode of production, in absolute terms, when compared to the the productivity of labor (and the productivity of agriculture) in the advanced capitalist areas.”
        And here’s the rub, the point where he fails completely to grasp the contradictions in a period of transition like ours (let’s say from 1900 to date and continuing).
        What Preobrazhensky discovered was that “enhanced productivity beyond that established by the old mode of production” is NOT necessary for a new mode of production to get its foot in the door and establish itself. This was corroborated by events up to 1936 when Trotsky wrote The Revolution Betrayed, and when he made his points about the advantages enjoyed by the new system over capitalist economies. Greater absolute productivity wasn’t one of them.
        One of the most important points made by Preo/Trotsky is that the system in the USSR was in fact “Primitive” and not Standard Socialist Accumulation.
        SSA assumes (as S.A unthinkingly does in the present case) a level of economic development equal to or higher than in ‘advanced capital areas’. PSA doesn’t have this advantage and starts from way below advanced capitalist levels. Which makes it a terribly arduous process even in the best of conditions (a healthy democratic workers’ state) demanding deliberate siphoning off of surplus labour-time (quasi-value) from the countryside and low-tech production to the modern industrial sectors of the economy.
        The miracle, if you like, is that it worked at all and held its own. Even more so after the failure of “socialism at a snail’s pace” and forced industrialization and collectivization which were carried out in a way that destroyed all the conscious political advantages of a healthy workers’ state in regard to this kind of economic development.
        Not only that but it survived, held its own and expanded explosively after world war 2.
        The spread of post-capitalist proto-socialist economies to Eastern Europe and China showed very clearly to those capable of grasping it that capitalism had no historical viability in it (otherwise it would have wiped the floor with these rivals, given their political inadequacy). It also showed just how incredibly inefficient capitalist anarchy and exclusion are compared to even the most minimal general social organization and and inclusiveness (in relation to the means of production). (Comparing China to India, or Cuba to Honduras or Guatemala, say, rather than to the US or New Zealand.)
        The social counter-revolution in the USSR has further shown us that you can’t just dismantle a new mode of production by decree (as the “China is capitalist” line would have us believe, the decree in this case being Deng’s reforms). Not only does it demand a social cataclysm and human devastation on a huge scale, but it just doesn’t work. After a decade of Yeltsin’s mafia plunder and destruction, the Putin regime adapted the centralized national elements of the Soviet economy to the new really existing capitalism and ended up with a perfect example of state capitalism. East Germany is still languishing because there is no regime capable of taking what remains of it to state capitalism, and imperialism can’t handle it, except to destroy as much of it as it can.
        In the same way as the proto-capitalist economies of the Italian city-states coexisted with and competed with the feudal economies of medieval Europe in an earlier period of transition from one mode of production to another, we are witnessing today the coexistence and competition of two modes pf production, one organized by the Law of Value and the other by the process of Primitive Socialist Accumulation (NB once again “primitive”!)
        The economic key to why politically counter-revolutionary entities like the Stalinist USSR or Mao/Dung China function as proto-socialist states probably lies in two things. One is the organizing power of the socially collective productive forces, which we don’t understand at all well, but which Marx could see at work already within capitalism in the 1860s. And the other, which we should be able to handle better, especially in the framework of Mike’s blog here, is in the qualitatively different character of the surplus generated by the labour-power in such an economy. The surplus in capitalism constitutes surplus value, realized on the surface in the form of profit *and compelled to reach a certain hefty percentage of the capital employed*. The surplus in proto-socialism takes the form of surplus labour, not generalized profit across all spheres of production, and is not constrained to attain any given level at all as long as it actually is a surplus. It is not distributed blindly according to the proportion of capital owned, but flows into the economy at the point of production and is distributed by social measures such as taxation. What this means is that proto-socialist economies are viable at far lower levels of “profitability” than capitalist ones are. It also means that in such economies when they are run by counter-revolutionary exploiters (generally speaking that is, not capitalist exploiters, but brutally direct exploiters like slave-owners or feudal lords) like Mao/Dung bureaucracy, there is a great pool of surplus that can be disguised as profit even if it really isn’t, and there is also scope for actual profit in capitalist enclaves.
        I mean, why should the economic structure of an emerging, non-optimal, politically repulsive (anti-proletarian), workers’ state be straightforward in any sense, or lack contradictions? Our task isn’t to sweep away contradictions and settle for known categories like capitalism or imperialism, or unknown but hypothetical categories like “real” (more-advanced-than-capitalism) socialism, but to grasp reality in its contradictions and see why things are so damn confusing.
        The Soviet Union was different. Trotsky managed to grasp that reality along with Preobrazhensky in the twenties, and explain it to us in The Revolution Betrayed in the thirties. (And because it emerged from the Soviet Union, today’s Russia is still different, despite being obviously capitalist. It’s what you get when you try and stuff a growing child back in its mother’s womb after a number of years, so to speak.)
        China is different. We haven’t got Trotsky or any Chinese revolutionary of his stature to tell us why, so we’ve got to make our own best shot at it.
        The shot I’m making here at least grasps a number of relevant contradictions and at least relates developments in China to the history of the epoch of crises, wars, revolutions and transition to socialism that Lenin and the Bolsheviks were grappling with.
        It’s big picture stuff, and painted with broad and even crude strokes, but it opens up political and economic perspectives rather than locking them down in technicalities (FDI!) or institutions (IMF, Wall St!!).

      6. I may be more coherent, but Choppa most certainly is not. He praises the “astonishing power” of a “new mode of production” but when confronted with the specific declines in labor productivity, and the lack of the signatures that a “new mode of production” displays, he then says– …well what Preobrazhensky perceived was that enhanced productivity beyond that of an already existing mode of production “was not necessary for the “new mode” to establish itself.

        That’s, to be blunt, bunk. First off, that’s not what Preobrazhensky “perceived” in the New Economics. What he perceived were the fundamental questions of development, and relations between city and countryside that had confronted capitalism historically (and defined its limitations in Russ) which were “bequeathed” to the Soviet Union– and what steps were required in the attempt to sequester the agricultural sector from the world market, making the state the sole “broker” for production, theoretically then, allowing the state to appropriate the surplus and direct it toward industrialization.

        These are questions of development. To be issues of a “new mode of production” there would have to be the mechanism whereby in the resolution of this question, in the “mode” of the so-called “new mode of production,” the emancipation of labor replaces accumulation of “capital” or “state property” as the fundamental task. In truth, the proletariat has NO mode of production unique to itself. It cannot, no more than it can have a proletarian art, a proletarian culture, a proletarian science. In all cases, and in particular in the case of the so-called economy, “socialist accumulation” means the mechanism by which the proletariat abolishes itself as the proletariat.

        Now people can babble on about dialectical this and dialectical that when seeking to justify, or rationalize what occurred when, but if somebody is going to have the temerity to utter the word “dialectical” like it were “abbracadabra” and presto-changeo so he or shecan express his or her “astonishment” at the “power of the new mode of production”– then it’s imperative that we point out what Marx’s use of the term, situating the dialectic in the conflict between the labor process and the valuation project, realyl is and really requires. It requires just that “overcoming” and NOT reproduction, mirrored, analogous, mimicked, slavish, and/or inferior to the “old mode of production.”

        There are certainly tasks, but the tasks are the emancipation of labor, and to that task all issues of accumulation must be subordinated. That’s what makes socialism a “new mode of production.” The subordination of accumulation to conscious social need enhances and is enhanced by the emancipatory power of labor.

        Comrade Choppa can talk about contradiction this and contradiction that, and proletarian here and proletarian there, and use “dialectical” in every sentence. Doesn’t change anything. Concretely he has nothing to say about the necessary connection between the emancipation and the productivity of labor. Hence we get twisting and turning and breathless astonishment at nothing other than the power of forced labor, that old mode of production all dressed up in pseudo-Marxist rags.

      7. S.A writes: “In all cases, and in particular in the case of the so-called economy, “socialist accumulation” means the mechanism by which the proletariat abolishes itself as the proletariat.”
        Overnight? In all countries at once? With no vestiges of the old capitalist mode of accumulation interfering? Nothing happening under the skin of capitalism as Marx wrote when he spoke of capitalism abolishing itself within the framework of capitalism? Nothing happening at any time during “socialist accumulation” that goes against the movement towards socialism or the emancipation of labour? No historical contradictions? Or economic contradictions? Or even class contradictions? Today revolution, tonight the bourgeoisie withers away and dies, and tomorrow we the ex-proletariat emancipate ourselves?
        Utopian, anarchistic dreaming. Proudhon would be proud.
        And I love the way you slip the “so-called economy” into the discussion. As opposed to the real one?

      8. No, “not overnight,” but yes, from the beginning.

        As usual however, you want to transform a concrete point, about how the productivity of labor is essential to emancipation of labor, into some sort of abstract ideal, so you can feel comfortable accommodating the absence of both in your rendering of the history of the fSU, so we get “primitive socialist accumulation” which occurs somehow without transmitting the differentials of the world markets directly into the body of the economy; we get an “astonishing power” of the “new mode of production” which is the current case is nothing other than the ability of the “new mode of production” to sell wage-labor to the old mode of production. .

        Your “argument” that the new “proto socialist” “mode of production” need NOT achieve a greater productivity than that existing in capitalism, that it need not be concerned with surplus, with emancipating labor by reducing the time necessary for the satisfaction of basic needs, is priceless– truly priceless, as in fact it is precisely the lack of productivity that drives the “proto-socialist” “new mode of accumulation” to increase the absolute surplus labor time, to hold consumption down, to mimic capitalism, and to…..collapse.

      9. While SA keeps his Tibetan prayer wheels whirling I’ll content myself with noting that “proto-socialist” is NOT the same as socialist, and proto can be understood as “first stirrings of” or “primitive”. No one would dream of confusing “primitive communism” with communism as such.
        The historical problem this encapsules, which so evidently escapes SA entirely, is not so much the collapse of the proto-socialist economy in the USSR but a) why a system as useless as SA (and the IMF and all the rest of them) so passionately trumpets it to be took so goddam long to collapse and was able to rip half the world out of the embrace of imperialism before it did so, and b) what part the conscious political regime played in this collapse relative to the part played by the economic preconditions for it.

      10. Well, I’m quite content to let the discussion rest with Choppa’s reference to prayer wheels. It says a lot about someone who deploys the term “dialectic” like a talisman, an excuse for not engaging with the material nature of the production of the talisman itself; use “dialectical” like a magical incantation to ward off the evil spirits who don’t quite buy into the “astonishing power” of some “new mode of production.

        But before we do……..don’t touch that dial. Let’s sum up:

        1. Preobrazhensky in his New Economics does not claim what Choppa says he claims.
        2. “Primitive socialist accumulation” does not resolve the conflict between city and countryside in Russia; indeed that conflict cannot be resolved within Russia, but as the conflict is a product of international relations between labor and capital, “primitive socialist accumulation” makes the state the broker, and the repository of that conflict.
        3. “Primitive proto-socialist accumulation” is naught but an iteration of the failure of primitive socialist accumulation, a failure based on its national boundaries and not per se the “quality” of the “proletarian leadership.” On the contrary, the theory of PSA (not to be confused with prostate-specific antigen) or PPSA or PPPSA is itself determined, and reproduces, the rolling back of the proletarian revolution on an international level
        4. It’s just great to award credit and fame to the “astonishing power” of a “new mode of production” in “ripping half the world from imperialism,” but then we have to assign responsibility for the “other half”– the maintenance of capitalism as the DOMINANT world system not to the mistakes, perfidy, brutality of some misguided leadership but to the same “astonishing power” of the “new mode of production.” It makes no sense to at one and the same time attribute such power against imperialism to our New Model Production while at the same time claiming the NMP was itself powerless to prevent, defeat, replace, overthrow the administrators of the NMP who set the “astonishing power” AGAINST the very class on which the NMP is supposed to be based. This “reconciliation” of irreconcilables is Choppa’s idea of “dialectic”– see opening paragraph.
        5. Continuing with the linkage of “credit and responsibility” we have to acknowledge the failure of the NMP, astonishing power and all, to transform itself, or create the conditions where it can be transformed into anything but the OLD mode of production. Now the reason for that must be material, must be in the organization of labor of the so-called NMP. It must be in the inability of the NMP to advance the productivity of labor, and the emancipation of labor. It must reside in the fact that the NMP functions as an analog to the old mode of production– different origin, same function.
        6. If the above is correct, and I’d welcome any material critique that can establish that the NMP is indeed a NMP with new class relations, then we are compelled more or less to acknowledge that the “astonishing power” of the “NMP” is only its ability to command, compel, expropriate, SELL and ultimately destroy, labor organized as wage-labor.
        7. The issue isn’t if the “emancipation of labor can be achieved all at once.” The issue is that for the emancipation of labor to be achieved ever, the mechanisms of “development” cannot be isolated from the critical, determining element of that development which the rule of the class itself through the organizations of its own making.

  10. Hi Michael, in terms of the current capitalist crisis it’s never commented upon what impact if any the war in Iraq and Afghanistan has had on economies in the USA and the UK. To what degree has this war contributed to the crisis in capitalism, not least of which is the huge amounts of public money used to fight the war. Has the war impacted in other ways e.g. the price of oil

    1. These wars have been a cost to capitalism, and of course to the incomes and jobs of Americans and Brits (apart from those working in unproductive arms and support industries). And above all, the appalling loss of life, limb and livelihood for Iraqis and Afghans. The strategists of imperialism were and are divided over whether the invasion of Iraq and Afghanistan was the best policy to ‘remake’ the Middle East and keep oil and regimes in the hands of the West or no. But the cost for imperialism has been less in money and more in loss of support from people.

      1. I think he wars have served their purpose. I can’t agree that the issues were “keeping oil” or “regimes in the hands of the West. IMO, the wars were about overproduction of oil, and decline in the rate of profit, and the need to drive Iraq’s production off the market, destabilize the Mideast, and drive the price of oil higher to offset its generally lower rate of profit.

        And when the price of oil tanks again, as it will– or should– get ready for another one.

  11. I have one more question. You said Marx’s theory of crisis is not under consumptionist and arises from production. But I’m reading vol III now and just read:
    The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses…

    1. “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses…”

      It’s probably the key quote used by Sweezy et al to lay claim to a Marxist theory of underconsumption. Michael Bleaney’s book Underconsumption Theories (don’t think it’s online) covers it and points out that it’s one statement in the midst of a discussion on credit and that Sweezy himself accepts it’s a parenthetical remark.

      Bleaney concludes that Marx was not an underconsumptionist.

  12. Marx certainly said that. And he leaves it there without elaborating any further, whereas throughout his economic manuscripts he takes the “underconsumptionists” to task time and time again.

    wish I had a neat explanation for it; wish I could explain what I think Marx meant without putting my words in Marx’s mouth, but that’s what I’d wind up doing.

    even wish I could blame somebody else for putting that sentence in there– like Heinrich et al get to blame Engels. That’s the ticket…will blame Engels.

  13. So let me get this straight – and don’t take this as rhetorical, it’s an earnest question from someone wrestling with Vol III – In the overwhelming majority of Marx’s economic writing, he says crises arise from production. And he even utilizes this view to show how underconsumption is wrong, but then out of the blue there exists one underconsumptionist paragraph – which otherwise does not fit into the rest of the Marxian picture?

    Maybe Marx just forgot to take the paragraph out before he died?

    Marx seems to have spent years working out a theory of crises, it seems nearly impossible he’d be aloof enough to hold two contradictory views on this issue.

    1. To hold two contradictory views on an issue is sometimes called dialectics 🙂 And Marx was a dialectical materialist.

      Maybe the words “ultimate” reason and “real” crises are a clue on how to resolve the contradiction? A falling rate of profit is not an immediate problem or “crisis” for the working class, only for the capitalists. It is the poverty and unemployment that is the consequence of the falling rate of profit that is the real problem that will make the workers fight.

    2. @CB: Rosdolsky in The Making of Capital is very good on the limits of capitalist production and consumption, commenting on the Grundrisse. Note that the poverty and restricted consumption of the masses is the “ultimate” reason for all real crises, ie in the final analysis, which indicates a general historical level is involved in the idea, in this case related to the inherent limitations of the capitalist mode of production as a wealth-producing system and its impending (but not inevitable, as capitalism can destroy itself and take us all with it if we don’t put it out of its misery and bring in socialism first).
      In Capital 3 in the chapters on the formation and equalization of the average rate of profit Marx is focusing on the aggregate production and aggregate consumption of aggregate social labour and aggregate capital – his reasoning on supply and demand takes the whole of commodity production and the whole of commodity consumption to show that what balances out supply and demand is the correct proportional distribution of the whole of society’s labour to satisfy the whole of its economic needs, ie production of the aggregate commodity mass such that it corresponds to aggregate paying demand and can sell at its value. That is, when supply and demand balance, the price is centred on the socially necessary labour input.
      The link between the permanent poverty of the working class necessitated under capitalism and the real crisis of capitalism is that the system accumulates too much capital to maintain a sufficiently high rate of profit. The commodity contains use-value ie has to meet a real consumption need if its exchange value is to be realized, but paying consumption needs are limited by available cash, and the working class has available cash (equal to the variable capital) equal only to its most basic social requirements – food, shelter and breeding. Squirm as it might, and waste as much as it might on useless and destructive consumption, capitalism can’t escape this dilemma.
      Capitalism in its full (highest, ultimate) development (with an equalized average rate of profit and full development of the credit system) has created a single massive wealth-producing system where all production is fundamentally united and collective – Marx says the capitalists are basically all share-holders in the one gigantic joint-stock company, each taking their share of the total loot (surplus value, unpaid labour) according to the quantity of shares they own, ie the amount of capital they own. The German is very graphic – Gesamtarbeiter (total or aggregate worker), Gesamtkapital (total or aggregate capital), Gesamtproduktion, Gesamtprofit, Gesamtmehrwert (total or aggregate surplus value) etc.
      So in the operations of the economy below the scale of totality, underconsumption isn’t an issue – production (as Marx puts it) presupposes an appropriate level of labour input to meet the level of demand/consumption expected by experience. As soon as crises begin to reach a dangerous level of totality, however, things become unpredictable and very unstable. From being a symptom of system dysfunction, underconsumption (inappropriate and massively inadequate consumption) can become a cause of catastrophic collapse. But by the time this happens the political consciousness of the classes warring over the social distribution of wealth will have kicked in spurred on by the measures taken by the bourgeois state to resolve the crisis to the benefit of its own class.
      The bigger the crisis, the more Political the Economy becomes, so to say. And since imperialism is the epoch of capitalism in permanent and massive crisis, we’re pretty much watching this happen right now, and have been since 1900.

    3. Here’s a direct quote from Capital 3, chapter 15, section 1 where Marx explains in his own words the difference between absolute under-consumption and under-consumption in capitalist society, and the part this under-consumption plays in restricting accumulation and economic and social development:
      “And the capitalist process of production consists essentially of the production of surplus-value, represented in the surplus-product or that aliquot portion of the produced commodities materialising unpaid labour. It must never be forgotten that the production of this surplus-value — and the reconversion of a portion of it into capital, or the accumulation, forms an integrate part of this production of surplus-value — is the immediate purpose and compelling motive of capitalist production. It will never do, therefore, to represent capitalist production as something which it is not, namely as production whose immediate purpose is enjoyment or the manufacture of the means of enjoyment for the capitalist. This would be overlooking its specific character, which is revealed in all its inner essence.

      The creation of this surplus-value makes up the direct process of production, which, as we have said, has no other limits but those mentioned above. As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest.”

      So exploiting labour is one thing, while realizing the surplus labour thus extracted is quite another. And here the issue of the “consumer power of society” comes in, not in general or absolute terms but in the specific, limited historical sense of “consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits”, that is to say, solvent consumer power in capitalist society. Marx emphasizes “the narrow basis on which the conditions of consumption rest” under capitalism. In this sense under-consumption is indeed a reason for crises in accumulation, but this in no way implies that “stimulating consumption” within capitalist society under capitalist conditions as argued by Keynesians or Harvey, say, provides a solution to the crisis. The only way of resolving the consumption dilemma would be to get rid of the “antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum”. And this would require the abolition of capitalist relations of production, which impose the antagonistic conditions of distribution, ie it would require the abolition of capitalism and its replacement by socialism.
      So in the sense that realizing surplus value depends on the consumer power of society, a failure in realization ie a crisis can be caused by a failure in this consumer power.
      But this failure within capitalism is due to the character of the capitalist mode of production itself whose “immediate purpose and compelling motive” is the production of surplus-value, ie profit. That is, the failure of capitalism expresses itself in symptoms including under-consumption. Symptoms aren’t the cause of the disease, just indications that it is there.

      1. I wouldn’t consider myself an underconsumptionist, but I was wondering about this thought experiment. Let us say that the whole world has been brought under one enormous welfare state, and that all capitals are subject to taxation by this one authority. Geographical arbitrage is no longer a possibility. The welfare state engages in an aggressive campaign of progressive personal income taxation and encouragement of wage increases for workers. This redistributes wealth to the working class from the capitalist class. The working class then invests the amount they receive above the cost of their personal consumption into mutual funds, contributing to a massive collective capitalist. We then have capitalism but based on a great class compromise. Surplus value is still being produced and made available through the credit system for the expansion of capitalism.

        I am supposing that EVEN IN THIS CASE “underconsumption” would pose a problem, because there would emerge amongst the working class a contradiction between their interest as consumers of use-values (C-M-C) and their interest as part of the collective capitalist (M-C-M) similar to the contradiction that Marx identifies for bourgeois consumption in Capital Vol. I Ch. 24 Section 3. Capital would keep expanding and outstripping consumption, and consumption could only match it through the use of borrowing against the future, which would incite financial crises. All this still ignoring the effects of the OCC and the crisis tendencies it would manifest with their attendant social chaos.

        My question is, would this situation differ fundamentally from the “contradiction” under socialism between the use of the social surplus for consumption and its use for economic expansion? If there were a single socialist world state there would be no inherent necessity to expand (As there is under capitalism) so I am supposing that the answer is yes?

        If we step back from this extremely high level of abstraction and consider the case of a multi-state world system, the possibility of geographical arbitrage would render the “World Welfare Capitalism” unstable, but it would also introduce the possibility that the law of value could be imposed on socialist states by means of inter-state competition.

    1. Because what Marx said or didn’t say does not determine the validity or lack of validity of any particular explanation simply because Marx said or did not say it..

      The issue is capitalism, the processes of accumulation and reproduction of capital, and in regard to those processes, consumption is derivative, determined; not a causal.

  14. CB, I believe it can be under-consumption, but it gets initiated in a crisis. And just makes things worse. E.g a rise in unemployment…a fall in wages…and then underconsumption.
    It started with the unemployment.
    Also it is wise to concider not all production is for consumption,
    Imagine a iron mine selling iron to a pickax firm that sells pickaxes to the miners. With that we have economic growth and then…workers and capitalist buy stuff with their wages and profits

    (so everyone can continue living their pointless mining lives)

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