For me, the best book of the year is Classical Political Economics and Modern Capitalism by Greek Marxist economists, Lefteris Tsoulfidis and Persefoni Tsaliki. And it is a book that I have not yet reviewed on my blog. The reason why is that it’s so good that I am doing a longer and comprehensive view for the journal Marx 21 to be published next spring. There will be some criticisms but for Marxist economics it is essential reading.
Suffice it to say now, the title tells the reader that the authors cover all aspects of Marxist economic theory as applied to modern capitalism in a succinct, rigorous manner. In so doing, the authors refute neoclassical and Keynesian theories as better explanations of capitalism; and above all, they offer empirical evidence to support Marx’s key laws of motion of capitalism: the law of value and the law of profitability. Both theory and evidence are offered to explain and justify Marx’s theory crises under capitalism. The book is expensive, so it should really be seen as a textbook for economics students seeking an account of Marxian economics. But each chapter can be purchased or read separately. And it delivers well, better even than Anwar Shaikh’s monumental Capitalism (in 2016).
In contrast, American Marxist economist Richard Wolff has aimed at activists and not academics by publishing two short books designed to explain the ideas of Marxism and socialism in a straightforward way: Understanding Marxism and Understanding Socialism. The books are powerful propaganda weapons for socialism, but they do suffer, yet again, from an incorrect explanation of crises under capitalism. Wolff adopts the classic underconsumption argument that capitalists pay “insufficient wages to enable workers to purchase growing capitalist output”. Regular readers of this blog will know that I consider this theory of capitalist crises as wrong. Marx rejected it; it does not stand up theoretically as part of Marx’s law of value or profitability; and empirical evidence is against it.
Among other Marxist economics books in 2019 is the The Oxford Handbook of Karl Marx, edited by Matt Vidal, Tomas Rotta, Tony Smith and Paul Prew. This brings together a series of chapters by prominent Marxist scholars covering all aspects Marxist theory, from historical materialism, dialectics, political economy, social reproduction and post-capitalist models. https://thenextrecession.wordpress.com/2019/08/06/the-handbook-of-karl-marx-profitability-crises-and-financialisation/
I was particularly interested in the chapter on Reproduction and Crisis in Capitalist Economies by Deepankar Basu, from the University of Massachusetts, Amhurst. Basu denies that there is a “Marxist theory of crisis’ and seeks to produce one that amalgamates the law of tendency of the rate of profit to fall, with profit squeeze theory from Okishio and straightforward underconsumption theory. In my view, this does not work. Indeed, I conclude that “all the Marxist authors discussing crises under capitalism in the Handbook are determined to trash Marx’s law of profitability as an explanation, in favour of others or deny that there is any general theory of crises at all.”
One chapter in the handbook deals with the commodification of knowledge and information. In this chapter, the authors argue that knowledge is ‘immaterial labour’ and ‘knowledge commodities’ are increasingly replacing material commodities in modern capitalism. Disputing the authors’ analysis, I would argue that knowledge is material (if intangible) and if knowledge commodities are produced under conditions of capitalist production ie using mental labour and selling the idea, the formula, the program, the music etc on the market, then value can be created by mental labour. Value then comes from exploitation of productive labour, as per Marx’s law of value. The value of ‘knowledge commoditites’ does not tend to zero. So there is no need to invoke the concept of rent extraction to explain the profits of pharma companies or Google. The so-called ‘renterisation’ of modern capitalist economies that is now so popular as a modification or a supplanting of Marx’s law of value is not supported by knowledge commodity production.
Another important book in Marxist economic analysis was The Economics of Military Spending: A Marxist perspective by Adem Yavuz Elveren. In analysing the economic role of military expenditure (milex) in modern capitalism, Elveren combines theoretical analysis with detailed econometric investigations for 30 countries over last 60 years. That’s the right way to do political economy or Marxist social science. If the reader wants to gain knowledge of all the theories of milex and crises without verbiage and confusion, he or she can do no better than read Elveren.
Elveren’s empirical work appears to back up the Marxist view of the role of military spending in a capitalist economy. It can act to lower the rate of profit on capital and thus on economic growth as it did in the neo-liberal period, when investment and economic growth slowed. But it can also help bolster the rate of profit through state’s redistribution of value from labour to capital, when labour is forced to pay more in taxation, or the state borrows more, in order to boost investment and production in the military sector.
Another book from a Marxist perspective looks at the modern changes in the composition and activity of the global labour force. Jorg Nowak, a fellow at the University of Nottingham, looks at Mass Strikes and Social Movements in Brazil and India:: popular mobilisation in the Long Depression. Nowak argues that in the 21st century and in this current long depression in the major economies, industrial action is no longer led by organised labour ie trade unions, and now takes the form of wider ‘mass strikes’ that involve unorganised workers and wider social forces in the community. This popular mobilisation is closer to Rosa Luxemburg’s concept of mass strikes than the conventional ’eurocentric’ formation of trade unions. Nowak develops the argument that the intensity of class conflict between labour and capital varies with stages in the economic cycle of capitalist economic upswings and downswings. He cites various authors who seek to show that when capitalism is in a general upswing in growth, investment and employment, class conflict as expressed in the number of strikes rises, particularly near the peak of the upswing.
There were a number of heterodox economics, not strictly Marxist in my view, published this year. The most popular and widely praised was Stolen – how to save the world from financialisation, by Grace Blakeley, the young British socialist economist and Labour activist. Blakely poses that “all our wealth has been stolen by big finance and in doing so big finance has brought our economy to its knees”. So we must save ourselves from big finance. That is the shorthand message of a new book. The concept of financialisation dominates her view of capitalism, not exploitation of labour.
Stolen aims to offer a radical analysis of the crises and contradictions of modern capitalism and policies that could end ‘financialisation’ and give control by the many over their economic futures. Accepting this model implies that finance capital is the enemy and not capitalism as a whole, ie excluding the productive (value-creating) sectors. Moreover, the narrative that the productive sectors of the capitalist economy have turned into rentiers or bankers is just not borne out by the facts. And because the analysis is faulty, her policies for reform are also inadequate.
Another heterodox book is by John Weeks, who used to write solid Marxist analyses of capitalism back in the 1980s. In his new book, The Debt Delusion: Living Within Our Means and Other Fallacies. Weeks aims at demolishing economic arguments for the necessity of austerity. But he adopts the Keynesian view that the cause of crises under capitalism is the “lack of effective demand”. Weeks says the lack of effective demand can be overcome or avoided by government spending and that is why capitalism worked so well back in the 1960s. If we just drop austerity policies and go back to Keynesian-style government ‘demand management’, all will be well. Marxist theory and the history of modern capitalist crises beg to differ.
The desire to put Keynes in same box as Marx is repeated by James Crotty with his new book entitled Keynes Against Capitalism: His Economic Case for Social Liberalism, in which he claims that, far from being a conservative, Keynes was in fact a socialist, if not a revolutionary one like Marx. “Keynes did not set out to save capitalism from itself as many think, but instead reckoned it needed to be replaced by a liberal form of socialism.” This thesis does not hold water in my opinion. There is plenty of evidence in Keynes’ writings that he really stood for ‘managed capitalism’, and not socialism by any reasonable definition.
Then there are the more mainstream but radical analyses of capitalism. World renowned expert on global inequality, Branco Milanovic in his new book, Capitalism Alone, starts from the premise that capitalism is now a global system with its tentacles into every corner of the world driving out any other modes of production like slavery or feudalism or Asian despotism to the tiniest of margins. But also capitalism is not just only mode of production left, it is the only future for humanity. Milanovic poses just two models for the future: ‘liberal capitalism’ of the West which creaks under the strains of inequality and capitalist excess; and ‘political capitalism’, as exemplified by China, which many claim is more efficient, but which is autocratic and corrupt and vulnerable to social unrest.
In my view, Milanovic’s dichotomy between ‘liberal democracy’ and ‘political capitalism’ is false. And it arises because, of course, Milanovic starts with his premise (unproven) that an alternative mode of production and social system, namely socialism, is ruled out forever. Indeed, Milanovic’s policies to reduce the inequality of wealth and income in capitalist economies and/or allow people to leave their countries of poverty for a better world seem to be just as (if not more) ‘utopian’ a future under capitalism than the ‘socialist utopia’ he rules out.
Then there is the new book by the radical superstar of mainstream economics, Thomas Piketty: Capital and Ideology. This is a follow up to his mega Capital in the 21st Century from 2014. The new book is even larger: some 1200pp. Whereas the first book provided theory and evidence on rising inequality, this book seeks to explain why this was allowed to happen in the second half of the 20th century. Piketty says that he does not want what most people consider ‘socialism’, but he wants to “overcome capitalism.” Far from abolishing property or capital, he wants to spread its rewards to the bottom half of the population, who even in rich countries have never owned much. To do that, he says, we must return to the social-democratic principles that were so successful in the 1960s.
Certainly, the evidence of growing inequality of both wealth and incomes in all the major economies is overwhelming and in a new book, The Triumph of Injustice: how the rich dodge taxes and how to make them pay , inequality experts, Gabriel Zucman and Emmanuel Saez provide us with yet more updated data. It’s a searing indictment of American tax system, which, far from reducing the rising inequality of income and wealth in the US, actually drives it higher. Like Piketty, their policy solution is a wealth tax on property and financial assets. They do not propose more radical policies to take over the banks and large companies, stop the payment of grotesque salaries and bonuses to top executives and end the risk-taking scams that have brought economies to their knees. For them, the replacement of the capitalist mode of production is not necessary, only a redistribution of the wealth and income already accrued by capital. Abolish the billionaires by taxation, not by expropriation.
Redistribution of incomes and wealth by government taxation and regulation is the main policy proposal of radical mainstream – the alternative to the Marxist proposal of the replacement of the capitalist mode of production. It is the theme also adopted by Joseph Stiglitz, a Nobel (Riksbank) prize winner in economics and former chief economist at the World Bank, as well as an adviser to the leftist Labour leadership in the UK. He stands to the left in the spectrum of mainstream economics. His new book called People, Power, and Profits: Progressive Capitalism for an Age of Discontent, in which he proclaims that “We can save our broken economic system from itself.” It is not capitalism that is the problem but vested interests, especially among monopolists and bankers. The answer is to return to the days of managed capitalism that Stiglitz believes existed in the golden age of the 1950s and 1960s. Here he echoes the views of Weeks, Piketty, Milanovic and Crotty above.
To get back to this “progressive capitalism”, Stiglitz proposes regulation, breaking up the ‘monopolies’, progressive taxation, ending corruption and enforcing the rule of law in trade. But what on earth would make the top 1% and the very rich owners of capital agree to reduce their gains in order to get a more equal and successful economy? And how would regulation and more equality deal with the impending disaster that is global warming as capitalism accumulates rapaciously without any regard for the planet’s resources and viability? Programmes of redistribution do little for this. And if an economy is made more equal, would it stop future slumps under capitalism or future Great Recessions? More equal economies in the past did not avoid these slumps.
Readers would be better advised to understand the nature of modern capitalism by carefully digesting the best Marxist analyses that combine theory with empirical evidence. One such work is a new revised version of Invisible Leviathan, a book by Professor Murray Smith of Brock University, Ontario, Canada. The book sets out to explain why Marx’s law of value lurks invisibly behind the movement of markets in modern capitalism and yet ultimately explains the disruptive and regular recurrence of crises in production and investment that so damage the livelihoods (and lives) of the many globally. This book is a profound defence (both theoretically and empirically) of Marx’s law of value and its corollary, Marx’s law of the tendency of the rate of profit to fall.
As Smith concludes: “The essential programmatic conclusion emerging from Marx’s analysis is that capitalism is constitutionally incapable of a ‘progressive’, ‘crisis-free’ evolution that would render the socialist project ‘unnecessary’, and furthermore, that a socialist transformation cannot be brought about through a process of gradual, incremental reform. Capitalism must be destroyed root and branch before there can be any hope of social reconstruction on fundamentally different foundations – and such a reconstruction is vitally necessary to ensuring further human progress.”