Reply to Giussani

Last April, G Carchedi and I published a paper in the World Review of Political Economy called The long roots of the present crisis.  We presented this paper in November at the Historical Materialism Conference (see my post, https://thenextrecession.wordpress.com/2013/11/12/the-informal-empire-finance-and-the-mono-cause-of-the-anglo-saxons/).  The gist of our paper was that the ultimate cause of crises in capitalism is the lack of profitability. The Keynesian and Austerians (the supporters of “austerity” measures) deny this. So their solutions to crises do not work. Keynesian state-induced stimulus programs (redistributive, monetary, and fiscal) cannot overcome the underlying tendency for profitability to fall. The same holds for the policies of austerity, which are designed to reduce debt. These conclusions are particularly relevant for the weaker Eurozone economies in the midst of the euro crisis. In a case study of Argentina in the paper, we argued that it was not Keynesian-style competitive devaluation that restored growth after the 2001 crisis, but the default on state debt and the ‘creative’ destruction of productive capital.

Following the HM conference, Paolo Giussani, an Italian Marxist economist, wrote a paper criticising our account of the post-war period in the US and elsewhere and in particular, arguing that, as the US rate of profit rose from the early 1980s and also from 2002, the conclusion that a falling rate of profit was the cause of the Great Recession in 2008-9 is faulty.  Giussani suggested that we failed to take into account the empirical evidence because we are blinded a ‘mono-causal’ theory of crises, based on Marx’s law of profitability.  Instead, each crisis has its own characteristics and causes,.  You can read Giussani’s critique at the Italian Marxist blogsite, http://www.countdowninfo.net/ and the paper (in Italian) is here, la_great_recession_e_il_saggio_del_profitto_verfin.  Carchedi and I decided to reply to Giussani’s points.  Our reply is also on the countdown website and can be found here (reply_to_giussani_10-1).

In our reply, we argue that the 2002-2006 rise in profitability before the recession of 2007-9, far from proving Marx’s law wrong, actually substantiates it.  Crises emerge within the context of a downward profitability cycle, but only when the new value generated and total profits have a negative rate of growth i.e. they contract. Just as recoveries require not only rising profitability but also an expansion of new value, so crises arise not only when profitability falls but also when, within a downward profitability cycle, there is a contraction in absolute new value.  The 2002-2006 recovery period in profitability was part of a whole downward cycle (in my view, starting in 1997) and the 2007-2009 crisis emerges within this downward cycle. Falling profitability sets the stage for the crisis, which is preceded (and indicated) by a fall in new value and total profits.  In the 2006-2010 downward profitability cycle, new value and total profits fell 26.7% and 63.7% respectively, by far the deepest of all the post-WWII crises.  So the 2007-2009 Great Recession does fall into line with Marx’s theory of crisis.

Looking at the period that concerned Giussani, since the early 1980s, in the case of the US economy, the rate of profit fell 24% from 1963 to a trough in 1982, while the organic composition of capital rose 16% and the rate of surplus value fell 16%.  Then the rate of profit rose 15% to a peak in 1997, while the organic composition of capital rose 9% but was outstripped by the rise in the rate of surplus value of 22%.  From 1997 to 2008, the rate of profit fell 12% while the organic composition of capital rose 22%, outstripping the rate of surplus value, up only 2%.  All three phases fit Marx’s law: when the organic composition of capital rose faster than the rate of surplus value, the rate of profit fell.  Over the 45 years to 2008, the US rate of profit fell secularly by 21% because the organic composition of capital rose 51% while the rate of surplus value rose just 5%.

There were five recessions or slumps after 1963: 1974-5, 1980-2, 1990-2, 2001 and 2008-9.  In each case, the rate of profit peaked at least one year before, but on most occasions up to three years before. And on each occasion (with the exception of the very mild 2001 recession), a fall in the mass of profit led or coincided with a slump.  This is shown clearly for the Great Recession. And these conclusions are confirmed by other authors.

We think that Giussani misunderstands us.  We were not arguing that each crisis of capitalism does not have its own characteristics.  The trigger in 2008 was the huge expansion of fictitious capital that eventually collapsed when real value expansion could no longer sustain it, as the ratio of house prices to household income reached extremes.  We do not say that such triggers are not ‘causes’, but argue that behind them is a general cause of crisis: the law of the tendency of the rate of profit to fall.

‘Mono-causal’ should not be interpreted as if there were no other causes.  There are many causes (actually, there is the tendency and the several counter-tendencies). With this in mind, perhaps we should not have used this term.  But we used it against those who deny the basic role of Marx’s law and who argue that each crisis has its own independent causes.  The debate continues – see my recent post, https://thenextrecession.wordpress.com/2013/12/19/the-us-rate-of-profit-extending-the-debate/.


28 Responses to “Reply to Giussani”

  1. Choppa Morph Says:

    Clear and cogent. Good stuff.
    Seems like there is a general horror of the big picture in all these discussions. Short-sightedness trying to drag the perspective back to a flea’s-eye-view.
    So I would dearly love to see a bolder commitment to Marx’s grand historical perspective of the destiny of modes of production in a class (ie repressive, non-cooperative) society. Namely, that when a mode of production no longer serves to develop the forces of production in human society in general (ie worldwide, regardless of the boundaries of states or economic treaties) it falls apart and is replaced by a more viable one. The healthier part of humanity – the oppressed productive classes – takes over the political running of society and creates more adequate social relations within which the forces of production can develop more freely.
    Of course this process, as we have seen in the transitions from slavery to feudalism, takes a very long time, and is far from linear or pure. It is almost like an historical tendency – of the rate of profit to fall, for instance😉 – or a natural process like the tide coming in. The various incidents and individual processes appear to happen piecemeal and by chance, some waves break farther up the beach than others, some rates of profit are obstinately outside the linear projection, but the mass outcome of the processes as a whole, regardless of more or less powerful counteracting forces, is that the rate of profit falls, and the tide rolls in. And as we have seen, slavery is superseded, and feudalism in its turn yields to capitalism.
    Well, right now we’re in the middle of just such an historical transition – this time from the capitalist mode of production to socialism, the mode of production of the freely associated labour of all humanity. And the processes are occurring piecemeal and by chance, to all appearances. Only it’s not arbitrary at all, the general tendency is very clear for those of us able to see it – capitalism has got less of a chance of historical survival than Canute had of turning the tide. (Of course, human history being the explosive and blood-dripping and catastrophic creature it is, capitalism may well take humanity down with it as it goes – socialism or barbarism.)
    This more general perspective on human society and history is sorely lacking in all economic discussion – including, needlessly, contributions like Mike’s. It’s the perspective that provides the whole drive of Lenin’s work “Imperialism – the ultimate stage of capitalism”, and it also powers Trotsky’s work from “Results and Prospects” to the Transitional Programme. And the reason of course is that it is the great insight at the heart of Marx’s work, both theoretical and practical.
    So, please. A flea’s-eye-view is for fleas – we’rrre not fleas.

  2. vallebaeza Says:

    Reblogueó esto en Econo Marx 21.

  3. billjefferies Says:

    So when profit rates are rising it vindicates your theory that profit rates are falling. Nice.

  4. sartesian Says:

    There also was a recession in the US from 4Q 1969 t0 3Q 1970.

  5. Charles A. Says:

    “Over the 45 years to 2008 [that is, from 1963], the US rate of profit fell secularly by 21% because the organic composition of capital rose 51% while the rate of surplus value rose just 5%. There were five recessions or slumps after 1963: 1974-5, 1980-2, 1990-2, 2001 and 2008-9.”

    Why is 1963 your baseline? After all, real median earnings of U.S. workers peaked in 1973 and have slid down ever since.

  6. Boffy Says:

    “Namely, that when a mode of production no longer serves to develop the forces of production in human society in general (ie worldwide, regardless of the boundaries of states or economic treaties) it falls apart and is replaced by a more viable one. The healthier part of humanity – the oppressed productive classes – takes over the political running of society and creates more adequate social relations within which the forces of production can develop more freely.”

    Except that is not how such transformations take place, and nor does Marx say they do. Feudal society did not emerge from slave society. It arose out of the “destruction of the contending classes” consequent upon the inability of the slave class to constitute itself as a new ruling class.

    Capitalism did not arise on the back of a collapse of Feudalism, but grew out of it, as a more developed mode of production. In fact, at the time that Capitalism becomes dominant, Feudalism far from collapsing is at its most effective and prosperous; it has vast empires spread across the globe, it has huge commercial and financial empires and interests via its symbiotic relation with the merchant and money capitalists, guild production is at its most advanced stage etc.

    Progressive social revolutions do not arise on the back of a collapse of the existing productive relations – the collapse of the USSR is another indication of that. They arise because the new productive relations demonstrate themselves as being superior to what went before.

  7. Boffy Says:

    There is not even a suggestion in Marx and Engels’ explication of the theory, nor in their analysis of actual crises, that the cause is a long run tendency for the rate of profit to fall. Quite the opposite.

    The theoretical description of a crisis of overproduction given is one in which a boom leads to over accumulation of capital, input prices of constant and variable capital are pushed up (as described in Capital III, Chapter 6). That is not the same as a long run falling rate of profit due to a rising technical composition of capital causing a higher organic composition. A point made clear in the explication of the theory. As described in Ch. 6 the higher prices of materials caused by this expansion of production, and there sharply rising demand, cannot be passed on to final product prices, because beyond a certain point they meet consumer resistance, i.e. elasticity of demand. Because, Marx says capitalist production is based upon mass production, which in turn requires the maintenance of certain technical co-efficients, it is not possible to reduce supply in response to this lower level of demand, because to do so is either not technically possible, or else would mean scale efficiencies are lost.

    In order to maintain production at efficient levels, capital, therefore, absorbs some of the increased material costs out of produced surplus value, so as to keep market prices at a level that maintains demand at necessary levels. Rises in wages due to such a boom simply squeeze produced surplus value directly. The crisis erupts when the market prices for this massively increased volume of use values thrown on to the market fall below the cost of production, a situation which can in fact be exacerbated by the fact that higher wages for workers means that the demand for a range of commodities is sated, so that demand elasticity causes market prices to fall sharply. That is Marx’s point in TOSV that there is no reason to buy 6 knives simply because they can be had now for the same price as previously would be paid for 1.

    In the description of the theory, it is the crisis of overproduction which then causes a sharp drop in the rate of profit, not vice versa.

    In the analysis of the crisis of 1847 Engels describes the situation as one of considerable boom and rising rates and volumes of profit. It is precisely these high rates of profit that lead to high levels of increased investment, and in turn lead to a a large rise in output. The surplus value produced is so great that even after this expansion, large amounts of money-capital are left over, pushing down interest rates and encouraging speculation. A similar background led up to the financial crisis of 2008.

    Once the financial crisis of 1847 was resolved by the suspension of the Banks Act, the economic effects were quickly reversed, and the boom continued.

    In the analysis of the 1857 crisis, it is again a period of boom and high profits that leads to over-accumulation and over-production. The main difference here is that credit is used to sustain levels of demand, so that the underlying overproduction is disguised for longer. I suspect that is the kind of crisis we will see in relation to China, and the underlying symptoms of it can be seen in the current situation facing many emerging economies.

    If low profits have any relevance it is in relation to periods of stagnation, or low growth, not to crises of overproduction. But, as Marx points out in relation to the industrial cycle, even that may not be the whole story. He points out in discussing the interest rate that it can be low after a crisis, even though the rate of profit is high, and the reason is that after a crisis there is a sense of “paralysis” on the part of entrepreneurs who fear the return of the crisis, and therefore hold back on the use of their profits, which accumulate as money hoards forcing the interest rate down.

    Clearly Keynes was not the only one who recognised the role of “animal spirits” in determining the actions of human beings whether they are capitalists, workers or consumers. But, then Marx’s theory is not one based on a crude mechanism that reduces people to mere automatons.

  8. duvinrouge Says:

    A falling rate of profit behind the current crisis that dates all the way back to the 1960’s is a plausible explanation.
    Interpreting Marx’s falling rate of profit theory as the explanation for periodic crises is much more debatable.
    Even if Marx himself say it as operating on both a periodic & long term basis, he may have been wrong about the former.
    I think it’s important to understand overproduction theory & how it is based upon excessive credit/debt (leverage). That pervious periodic crises may not of had any falling rate of profit due to an increase in the organic composition of capital, & can be explained simply by overproduction.
    All in all though I do agree that the current crisis is most likely based upon a falling rate of profit hidden by excessive money creation.

  9. GrahamB Says:

    “In the 2006-2010 downward profitability cycle, new value and total profits fell 26.7% and 63.7% respectively, by far the deepest of all the post-WWII crises.”

    Well, any data will look pretty disastrous if you include the months of very deep recession. And you don’t disagree that the rate of profit rose in the preceding period: 2002-2006.

  10. Boffy Says:

    “I think it’s important to understand overproduction theory & how it is based upon excessive credit/debt (leverage).”

    In Theories of Surplus Value, where Marx analyses the causes of overproduction crises he goes out of his way in several places to argue AGAINST the idea that overproduction is caused by credit let alone excessive credit. In his analysis of the 1857 crisis, in Capital III, he makes that point again pointing out that whilst credit can make a crisis of overproduction worse, because it extends the period of overproduction, he again goes out of his way to point out that it is not the extension of credit that causes the overproduction and over trading.

    He criticises those of the Monetary School who argued such a position. The Austrians basically took the element of the role of credit in extending the overproduction period described by Marx, and made it into the cause of the crisis itself.

  11. sartesian Says:

    Throughout the Grundrisse, Vol 3, and yes, even in parts 2 and 3 of Theories of Surplus Value, Marx certainly writes as if the LTFROP represents, in a single expression, the conflict between means and relations of production that he considers to be the motor of social revolution, and also, the terrifying moment of self-realization for the capitalists, when they confront the historical specificity and limits to their mode of production. .

    Regarding overproduction, which is the thread that links “crisis”– which is always a short term and cyclical movement– with structural decline– that is to say, long term declines in rates of growth, Marx says at one point in Vol 3 that overproduction does not cause the rate of profit to decline, but the decline in the rate of profit precipitates overproduction, and at another point in the same volume, that overproduction does cause the rate of profit to decline.

    There’s a bit of ambiguity in Marx’s formulations, and it happens to be a productive ambiguity, in that it requires one to make an examination of the concrete circumstances of a particular “rotation” or movement of capital, and not simply categorize that movement based on formula.

    That being said, overproduction is most definitely not based on credit/debt/leverage. Marx makes the point that overproduction is inherent in capitalist production; it is necessary for capitalist production; that it is at the very origin of capitalist production. Credit can and does make a crisis of overproduction more acute, more extensive, deeper etc.etc. but it does not cause overproduction.

  12. Choppa Morph Says:

    When we’re talking about overproduction we should never forget that the big thing is not the overproduction of commodities, important as this is for the glutting of markets, the collapse of chains of credit etc, but the overproduction of capital. Too much capital means the sum total of capital against which the rate of profit is measured is high, making the rate lower.
    This is why war is such a necessary component in capitalist recovery – it is the most efficient way of destroying surplus capital and thus raising the rate of profit.
    Commodity production moves in waves, sometimes choppy, sometimes huge Pacific swells – but capital production moves like the tide.

    (Just a slip-of-the-keyboard correction re Sartesian’s comment – the motor of social revolution is the conflict between *forces* (not “means”) of production and relations of production.)

    • Boffy Says:

      “This is why war is such a necessary component in capitalist recovery – it is the most efficient way of destroying surplus capital and thus raising the rate of profit.”

      Marx says the opposite. When he speaks of the destruction of Capital in Theories of Surplus Value he makes clear that he is NOT speaking of the physical destruction of capital, but the destruction only of Capital Value. The continued existence of the devalued physical capital is precisely one of the means by which it raises the rate of profit!

      “When speaking of the destruction of capital through crises, one must distinguish between two factors.” (TOSV2 p 495)

      One is the form of physical destruction described above, but it is the second form that is beneficial for capital.

      “A large part of the nominal capital of the society, i.e., of the exchange-value of the existing capital, is once for all destroyed, although this very destruction, since it does not affect the use-value, may very much expedite the new reproduction. ” (TOSV2 p 496)

      It is beneficial because it does not affect the use-value of that capital Marx emphasises, i.e. it is not physically destroyed.

    • Boffy Says:

      “Too much capital means the sum total of capital against which the rate of profit is measured is high, making the rate lower.”

      But, in all the instances of crises of overproduction described by Marx it is in the context of economic booms when the rate and volume of profit is high! It is that, which causes the prices of constant and variable capital to rise, which squeezes produced surplus value. As Marx points out, crises of overproduction are usually preceded by periods where wages are high, precisely for that reason.

      This squeeze on profits due to high prices of inputs is not at all the same as a tendency for the rate of profit to fall due to a rising organic composition of capital, which would imply that less labour-power is being employed relatively, and that, therefore, rather than rising wages would be under pressure.

    • Boffy Says:

      In the actual description of crises that Marx undertakes, for example, of 1857, the overproduction of capital manifests itself as an overproduction of commodities. It is the fact that demand for British commodities in the US declines and that Indian markets are glutted that causes market prices there to fall below market value, and even cost of production that demonstrates that capital has been over produced, i.e. that too many commodities have been produced for the capacity of the market to absorb at current prices.

      In fact, as Marx says,

      “The excess of commodities is always relative; in other words it is an excess at particular prices. The prices at which the commodities are then absorbed are ruinous for the producer or merchant.” (TOSV2 p 505)

      In other words, this is an overproduction of capital not because the produced surplus value has declined, or declined relative to the advanced capital, but because it cannot be realised at current market prices.

  13. sartesian Says:

    Think you’re making a distinction between capital and “commodities” which is, as Marx demonstrated, unwarranted.

    Capital is produced as commodities, is embodied, in its movement, in exchange, in commodities. You cannot have capitalist commodity production and separate the production of capital, or more exactly the reproduction of capital, from the expanded production of commodities. That is the nature of value production, of production for the accumulation of value.

    We can never lose sight of the fact that capital, the capitalist means, I mean, forces of production are themselves produced as commodities and the way the capitalism accumulates value is by transforming an increased accumulated dead labor (forces of production) into an expanding universe of commodities.

    Capitalism rarely achieves any equilibrium; it is a condition of dynamic disequilibrium where “balance” between supply and demand at any particular moment is a chance occurrence, just like the correlation of price and value of any particular commodity in the market is a chance occurrence.

    Overproduction is inherent, endemic, and cyclical; and I don’t think it represents the “end” or the “terminal condition” of capital. Nor do I think the tendency of the rate of profit to decline is the “ultimate crisis” of capital. While there is no decline in the rate of profit that the bourgeoisie can afford to ignore, there is no decline in the rate of profit that in and of itself represents a barrier which capital cannot overcome. It just means liquidating a whole lot of people to do it, something the bourgeoisie are always willing to do.

    Actually I don’t think anything represents the end or “terminal condition” of capital, which is why it has to be overthrown.

    Destruction of the forces of production in war is indeed destruction of capital; of commodity capital; of value.

    Correction appreciated. Thanks.

  14. Choppa Morph Says:

    Depends what you mean by “terminal condition”, doesn’t it? You could compare overproduction to obesity/diabetes and falling profits to a wasting disease. So you’ve got diabetic with TB. Probably die of heart or kidney failure – the social-political regulators of the body.
    As for the distinction between commodities and capital, you’re not taking it seriously enough in the epoch of finance capital. Haven’t got my books here right now, but I’m pretty sure Marx makes the point about overproduction of capital being the real problem rather than market-glutting overproduction of goods. They are obviously inseparable but equally obviously distinct.
    In individual crises it’s possible to nitpick about too many cars being produced or too few tellies being consumed, but when the capital markets are glutted and no investment is being made it’s a general phenomenon, and attempts to resolve it (cure the disease) by artificially inflating the supply of or demand for individual commodities (types of commodity) such as computers etc won’t work. They only lead to bubbles or bubbly inflation.
    No, it takes the wiping out of capital value on a national and international scale to reset the score across the board and restore a “healthy” rate of profit.
    The reason this is worth emphasizing is that failing to distinguish between commodities and capital in general in this sense bogs the whole debate down in the tired old oppositions of supply vs demand, production vs consumption.

  15. sartesian Says:

    I generally avoid analogies to medical conditions when it comes to capitalism, although I make an exception for dementia.

    In volume 3 Marx makes the point that “the overproduction of capital” is nothing other than overproduction of the means of production AS capital– capable of exploiting labor at a sufficient level of intensity.

    And I’m not trying to be snide when I direct you to the opening paragraphs of volume 1– that the wealth of these capitalist societies appears as a great mass of commodities. That, the commodity, the capitalist production of commodities is the fundamental organizing principle– the “stem cell” if you like medical analogies of capitalism, and the forces of production are but an iteration of the stem cell.

    Look at your example of war as “destruction of capital.” Do you think this is somehow distinct, separate from, or simply something other than the destruction of commodities? Side A bombs Side B’s oil fields. What’s being destroyed or “devalued”– capital? commodities? Exactly how does the machinery used to extract oil qualify as capital, but the commodity to which that machinery transfers its value, not qualify as capital but only as a “commodity.”

    Side B bombs Side A’s rail network, destroying locomotives, freight cars, rail, signal systems. What’s being destroyed? Capital? Forces of production? Commodities? All of the above? That’s my answer, because all of the above exist only in the organization of each other. They all represent different aspects, facets, moments if you like, of value.

    I agree I’m not taking it seriously enough in the epoch of finance capital……because I don’t think the “epoch of finance capital” changes a thing about the conditions of accumulation and production of value. I don’t take the “epoch of finance capital” seriously.

  16. Charles A. Says:

    Sartesian: “Actually I don’t think anything represents the end or “terminal condition” of capital, which is why it has to be overthrown.”

    Productive powers emerge that are incompatible with capitalist accumulation, which becomes a fetter (no quote, only a single allusive word needed on this forum) in an era of revolution. Terminal condition + overthrow.

  17. sartesian Says:

    Well, yeah. But so far………..we’ve had a terminal condition and not much of an overthrow, right? Capitalism has reconstituted itself, and penetrated even “intermediate formations” brought about by revolution. So fetters there may be, but fetters are not necessarily terminal conditions + overthrow

  18. Choppa Morph Says:

    You could argue the same about feudal rulers aping slave-owning regimes (Charlemagne’s Holy Roman Empire), and bourgeois rulers aping feudal regimes – umpteen examples here but the sickening English example of the Glorious Revolution takes the biscuit, I suppose.
    If you only see things from within a bourgeois-capitalist historical perspective, from within the social framework of the capitalist mode of production, then of course you will see capitalism reconstituting itself as long as it or some remnant of it survives. This is what all the state capitalist people did after capital was expropriated in Russia and the workers’ state was founded. You only see where you’re coming from, not where you’re heading.
    Dialectically speaking you assume your current situation is universal, and fail to see it has a limit, so you’re not even aware that there is a beyond to it. In this sense, Marx saw the modes of production arising in class societies as finite, with an historical limit that would be transcended with the fall of the ruling class and the rise of a new one. The amazing thing he then did was to see the mode of production arising in a classless society – socialism – as infinite (in the sense developed in Hegel’s Science of Logic I), without a limit external to it to be transcended and a new beyond to move to. All further development of humanity’s forces of production and relations of production would take place within this ultimate (“highest”) mode of production, not externally to it in a new mode of production.
    The perspective I’ve just sketched is of course nowhere to be seen in the debate because it is implicit in Marx and only rarely mentioned by say Lenin or Trotsky. But it pervades the whole of their historical and economic thinking. It’s also an example of the power of Hegel’s thought in Marx and the Bolsheviks that needs to be studied and brought out a lot more explicitly.
    Anyhow, more to the point than going on about the survival of capitalism – “look, it’s still wheezing! its heart is still beating!” would be pinpointing and emphasizing the development of the forces of production behind the back of the capitalists (and the rest of us, as it seems) beyond the capitalist framework. This would throw into relief the historically hopeless task of the bourgeoisie in holding back the tide of socialism and prolonging the life of capitalism. It would show what superhuman effort has to be expended in this task, and what little good it does. It’s a desperate holding operation at best. At incalculable cost to humanity. Millions of lives destroyed (by war, disease, poverty, brutal exploitation, etc) for the sake of a repugnant and empty lifestyle. Undreamt of wealth and cultural riches blocked for the same reason.
    A bit like what happened at the end of previous modes of production, come to think of it.
    Put another way, the big thing about our epoch isn’t the survival of capitalism, but the emergence of socialism, and the sooner we see this ourselves and make it explicit in our discussions and political writing and other activities, the better. Our audience is working productive humanity, which is interested in the coming of socialism. Not the unproductive bourgeoisie and its hangers-on, which is only interested in itself and the survival of its economic system. If we only talk about what interests the class enemy, we can swathe ourselves in red as much as we like but we won’t be helping humanity very much to develop its historical and economic potential.

  19. Boffy Says:

    “Anyhow, more to the point than going on about the survival of capitalism – “look, it’s still wheezing! its heart is still beating!” would be pinpointing and emphasizing the development of the forces of production behind the back of the capitalists (and the rest of us, as it seems) beyond the capitalist framework. ”

    Given that of all the goods and services produced in the whole of Man’s entire existence on the planet, 25% were produced just in the first 10 years of this century; given the fact that the global working class increased in size by 30% in the same period; given that global GDP and global fixed capital formation doubled during that period; given that we have more patents for new inventions being registered by a large margin than at any time during Capitalism’s existence and that innovation is still continuing apace in a wider range of activities than ever, I’d say Capitalism was doing far more than just wheezing and surviving!!!

  20. Boffy Says:

    “Put another way, the big thing about our epoch isn’t the survival of capitalism, but the emergence of socialism, and the sooner we see this ourselves and make it explicit in our discussions and political writing and other activities, the better.”

    I agree. The number of workers globally employed in Co-operatives continues to grow apace. More are now employed in Co-operatives than by multinational corporations. Worker owned businesses continue to outperform capitalist businesses both in profitability and in survivability.

    We should emphasise those successes of workers in constructing the new mode of production. If Capitalism collapses before this new mode of production is constructed as a superior form the consequence is likely to be barbarism as happened when slave society collapsed. We should welcome the continued growth of Capitalism as Marx did, because as with the continued development of Feudalism, it is the basis upon which the development of the productive powers required by the new society is built.

  21. sartesian Says:

    Would be interested in some hard data regarding this notion of “an invading socialist society”– i.e. what number of workers are employed in “co-operatives” not to mention how “cooperative” they really are; what % of global GDP originates in these cooperatives; what the measures of profitability are.

    If we should “welcome the continuous growth of capitalism” then exactly in this welcome wagon is the necessity for its overthrow?

  22. Choppa Morph Says:

    1. Marx didn’t welcome the continued growth of capitalism. When the early Marx celebrated the conquests of capitalism it was in the context of the advance this marked over the modes of production of slave-ownership and feudalism as wholes. He was later (after the 1850s) very explicit about how capitalism as a whole had attained the furthest conceptual (in the Hegelian sense) development it was capable of and that any further development of the forces of production of humanity could only come in opposition to capitalism. If development took place while the bourgeoisie continued its political rule in the form of capitalist relations of production, it would be “invisibly” behind the backs of the social actors, adding to the antagonistic contradictions present within human society.
    As a concrete example of his views on this we can take his opinion that the rural masses living in the traditional communal Russian village, the mir, would not benefit in the least from their village structures being destroyed by capitalist development, and would rather lend themselves to development under socialist relations of production.
    2. It is meaningless to oppose cooperatives under capitalism to multi-nationals under capitalism. They are not examples of a new mode of production taking over. They are always in every way subordinated to capitalist control and bourgeois social relations. The forces of production transforming the economy from within are more infrastructural and apparently abstract, such as extreme socialization and collectivization of the processes of production and circulation, extreme planning on a worldwide scale, extreme general introduction of scientific method and techniques on a scale dwarfing even the biggest multinationals etc. Planning and collectivization are seen *within* the big companies, and only political and military pressure prevent them being applied on an economy-wide scale. Even the multinationals themselves try to transcend their own limits illegally! by processes such as cartelization and trust formation (as Lenin describes in “Imperialism”). All the farcical attempts to smooth the process of capitalist accumulation internationally (free trade agreements, political-economic abortions like the EU, monetary wishing wells like Bretton Woods etc, international branch organizations), ideologized as “globalization”, are expressions of both this huge pressure for efficient and fair cooperative association on the scale of human society as a whole and of the complete inability and incompetence of the bourgeoisie as a ruling class to do anything sensible about it and at the same time as it retains its political and social power and needs the violently repressive force of the imperialist bourgeois state to defend this power.
    The explicit and undeniable emergence of the socialist mode of production on the world stage (as opposed to implicit and limited and distorted expressions of it, such as I’ve listed and such as workers states like the USSR and China) will come when a number of the biggest imperialist states go socialist via revolutions and are able to impose (urge) their system on other nations and draw them voluntarily into it because they control the world economy.
    This is different from the transformation from feudalism to capitalism, where many small bourgeois states (the Italian municipal states, Holland etc) were able to exist autonomously alongside the big world-controlling feudal states, and bourgeois forms of statehood developed in lots of different ways piecemeal over hundreds of years. In fact it is miraculous that any workers’ states have been able to exist for any length of time in opposition to world imperialism, and just another indication that the time for this transition to socialism is long overdue and practically forcing itself on recalcitrant bone-headed actually existing human societies.

  23. Choppa Morph Says:

    Boffy writes:
    ” “This is why war is such a necessary component in capitalist recovery – it is the most efficient way of destroying surplus capital and thus raising the rate of profit.”

    Marx says the opposite. When he speaks of the destruction of Capital in Theories of Surplus Value he makes clear that he is NOT speaking of the physical destruction of capital, but the destruction only of Capital Value. The continued existence of the devalued physical capital is precisely one of the means by which it raises the rate of profit!

    “When speaking of the destruction of capital through crises, one must distinguish between two factors.” (TOSV2 p 495)

    One is the form of physical destruction described above, but it is the second form that is beneficial for capital.

    “A large part of the nominal capital of the society, i.e., of the exchange-value of the existing capital, is once for all destroyed, although this very destruction, since it does not affect the use-value, may very much expedite the new reproduction. ” (TOSV2 p 496)

    It is beneficial because it does not affect the use-value of that capital Marx emphasises, i.e. it is not physically destroyed. ”

    This is true, of course, since it is the destruction of value that allows the bar to be reset. However, the second world war demonstrated very clearly on an international scale that the use-values that weren’t destroyed were localized unequally. Physical destruction was colossal in Europe, especially Germany and Britain – there weren’t many use-values left. Whereas in countries like the US and Sweden (a neutral economic parasite during the war) no physical destruction occurred and the use-values of a highly developed imperialism were intact.

    The crises Marx is writing about here are the normal cyclical crises. In these too enormous amounts of physical capital are effectively destroyed (surplus commodities dumped, surplus production facilities bought up for nothing or decommissioned). On a world scale however, bankruptcy (the soft option for “adjusting” debts etc) isn’t enough. Nor is the unproductive siphoning off of capital into the luxury sector (armaments and military spending). Capitalism is a limited piddling mode of production (impressive as it might be compared to slave-owning or feudalism) and to function smoothly it needs a world on an appropriately limited and piddling scale. The colossal development of the forces of production generates a world on a titanic and unlimited scale that has to be torn back down to suit the crippled stunted nature of bourgeois society and capitalist relations of production.

    The inability of the bourgeoisie to see any of this, and to accept the consequences of its rule as unacceptable to humanity as a whole (eg the consequences of a tendentially falling rate of profit) and adjust its economic and social behaviour accordingly, is the fundamental reason for the catastrophic socio-economic condition of the world today, and the total lack of any hope for the future in the current ideology and culture of the dying bourgeoisie. It’s also of course the fundamental reason why the logically consistent revolutionary working-class policies of Marx and Engels and the Bolsheviks under Lenin and Trotsky and those of us who continue their work today offer the only way out for the exploited and repressed working class and poor rural masses of humanity.

  24. sartesian Says:

    I agree. We do not “welcome” the growth of capitalism. In fact, we are about opposing the growth of capitalism. This isn’t 1642, or 1789, or even 1861.

    This is the post Reconstruction, post Commune, post 2 capitalist World Wars, and post the centuries of destruction capitalism has inflicted in its accumulation of value.

    Capital does not exist as an “expansionary mode of growing the means of production” outside its social relations, which relations are more or less barbaric depending where in the order of those relations you are situated.

    When Brazil builds a dam to provide electrification to large agri-businesses dispossessing small farmers and indigenous people, we do not “welcome” that growth of capitalism. We oppose it, not because in the future, small subsistence or “subsistence plus” production is a goal, but because the overthrow of such a system of dispossession is the only method of achieving the emancipation of social labor.

    We don’t “welcome” NAFTA, the EU, or FDI in Vietnam.

    Overthrow of capitalism by itself is not sufficient, but it is certainly necessary.

    No thank yous, no welcomes, and no pleases.

    Don’t agree with several other of Choppa’s formulations, particularly about ex-imperialist nations “imposing (urging)” their socialism on other countries. Doesn’t work that way. Uneven and combined development, a global configuration, means the revolution is international, takes place globally against the localities of capital, or it simply isn’t a revolution.

  25. Tony Says:

    It’s a mistake to think about the transition to capitalism in the same form as that from capitalism to socialism.
    The new revolutionary class grows up in feudalism as it does in capitalism, but the bourgeoisie also grows its mode of production in the seams of feudalism, whereas the working class cannot do the same within capitalism.
    There is an immense difference in the transition from feudalism to capitalism and that from capitalism to socialism.
    Socialism as a mode of production can only grow AFTER the proletariat takes power, not within capitalism.
    The transition from feudalism did not everywhere require a self-conscious revolution by the bourgeoisie, but workers power simply cannot come about in any other way – not via cooperatives, not by benevolent dictators, not by guerrilla armies.
    In the same way socialism cannot come about after a capitalist collapse into barbarism – the social prerequisites will no longer exist.

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