Author Archives: 4harrisons

Review: Capitalizing on Crisis

This is a technically complex work of sociology unpicking and analysing trends in US society, economy, and politics over the course of forty years from the 1960s to the 2000s.

Krippner’s basic thesis is that successive policy decisions over the course of this period, each in response to immediate challenges, have ‘financialised’ the US economy. In other words, have shifted the focus of profit making from investment in productive activity to the ownership and exchange of financial instruments. Even major industrial companies come to make significant portions of their profit from activity in the financial market. This shift has significant implications for how the economy is managed, and the location of future crises.

Krippner demonstrates this through a detailed analysis of economic data and a systematic review of policy shifts during this period. Although this is somewhat dry in places the case is convincing. She defines three separate phases. First the deregulation of the domestic financial market as an attempt to get to grips with the social crisis of the 1960s and 1970s, offering policymakers a ‘reprieve from difficult political choices’. Second the response to the fiscal crisis of the late 1970s and 1980s with growing government deficits which altered the relationship between the domestic and global markets driving a ‘dramatic expansion of credit in the US economy’. Finally on the realisation relying on market mechanisms offered in fact very little restraint on consumers, corporations, or governments how approaches to monetary policy developed incrementally in the period up to 2001 to control the demand for credit through interest rates (as opposed to regulation of the supply).

Although the book was first published in 2011, Krippner stops short of the 2007-9 financial crisis, indicating in the introduction that she considers this to represent a separate stage of development that requires a separated analysis. That said it is clear that the ‘depoliticisation’ of economic decision making that Krippner outlines is a significant factor underpinning the later crisis. As Krippner explains, in making this change the expectation had been that the market would impose a discipline on economic behaviour that political actors were unwilling to do. In fact this has turned out not to be the case at all. The market has promoted and validated a lack of restraint particularly in relation to credit which has left us more exposed than ever to the risk of financial crisis.

Although this is not Krippner’s intention, her analysis is a neat fit for the Marxist view of the long term tendency of the rate of profit to decline (see writers such as Robert Brenner and Michael Roberts). The declining profit possible in productive industry leads to speculation in what Marx called ‘fictitious capital’. This growing financialisation becoming increasing unstable and leading inexorably to crisis. The picture here is one that provides a deep-seated explanation for the financial crisis of 2007-9.

So this is a fascinating book with many implications for further analysis. If a touch dry in places, it is detailed, well researched, and a thought provoking discussion of what underpins the modern economy.

Krippner, Greta Capitalizing on Crisis (Harvard University Press, Cambridge Massachusetts, 2012)

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Review: How Will Capitalism End?

Wolfgang Streeck may not in fact answer the question that he poses in the title of this book, but it is still a superb read.

How Will Capitalism End” consists of a set of essays and speeches from the German sociologist published previously in New Left Review (and elsewhere) and organised around the theme of the challenges to capitalism. Each is a thoughtful and valuable contribution to the analysis of modern capitalist, it’s impact on society, politics, and environment, and what our options for the future might be.

The opening essay sets the tone. It poses the suggestion that capitalism has so successfully eliminated all opposition to it’s conquest of politics and society that it’s destructive nature now has free rein without constraint from organised labour or political control. The end result will be the long slow death of capitalism’s ability to deliver for the majority of its inhabitants, without the prospect of its replacement by a different system which can pick up the baton as Marx originally envisaged.

The remaining essays work around similar themes. The emphasis is on the impact of the neoliberal project to disconnect the management of the economy from political and social control. This can be seen in Streeck’s characterisation of the changing nature of the state leading towards the current “consolidation” state where having passed successively through private debt then public debt stages now exists to ensure that we reliably meet our obligations to asset holders.

Another theme of Streeck is the divide between social rights and free markets. Where the democratic state prioritises providing public services for its citizens identified through elections. By contrast the “consolidation” state prioritises the contractual claims of creditors and the servicing of debt. The tension between these two has been a major driver for social and political change since the second world war.

This is a thought provoking and very readable set of essays which should be of interest to anyone who doesn’t accept the orthodox economist world view.

Streeck, Wolfgang How Will Capitalism End? (Verso, London, 2016)

Rosa Luxemburg and the Communist Manifesto

After reading Rosa Luxemburg’s “The Accumulation of Capital”, included in Verso’s second volume of her complete works I wrote a post covering her analysis that accumulation could only proceed on the basis of there being sufficient space outside the global capitalist system for it to expand into.

I recently re-read Marx’s and Engels’ Communist Manifesto (thanks to my wife, who gave me the best possible Christmas present for a radical). This was written in 1848, that is before Marx began his economic work. It is interesting therefore that Marx and Engels also point out in the Manifesto the importance of the non-capitalist economies to the growth of capitalism itself.

For example this comment on the importance of the discovery of America on the initially explosive growth of capitalism:

“Modern industry has established the world market, for which the discovery of America paved the way. This market has given an immense development to commerce… This development has, in its turn, reacted back on the extension of industry.”

(Marx and Engels 2010, p. 22)

Marx and Engels seem to have a similar mindset to Luxemburg in her analysis that capitalism needs to grow into the space outside itself in order to expand.

“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe.”

(Marx and Engels 2010, p. 25)

Along with the points Luxemburg makes about capitalism drawing even those parts of the globe that are not part of the capitalist world into its orbit.

“The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country.”

(Marx and Engels 2010, p. 25)

“The bourgeoisie… draws all, even the most barbarian, nations into civilisation… It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst… it creates a world after its own image.”

(Marx and Engels 2010, p. 26)

As I wrote in my earlier post I don’t think that this is the end of the story, that their are other important factors both supporting and driving the expansion of capital. But it is interesting to see support for Luxemburg’s analysis in this earlier work of Marx and Engels.

Luxemburg, Rosa The Complete Works of Rosa Luxemburg Volume II (Verso, London, 2016)

Marx, Karl and Engels, Friedrich The Communist Manifesto (Vintage, London, 2010)

Review: The Meaning of Marxism

This is not a terrible book. But it is a limited one. As a basic introduction to a lot of the basic concepts in Marxism it has some merit. D’Amato sweeps across the range of Marxism from the economy to exploitation to the state to the revolutionary party, covering each at a basic introductory level. What then is the problem?

Partly it is that D’Amato’s treatment is quite dogmatic. He discusses Marxism as a fairly monolithic source of truth without acknowledging debate or variation other than to condemn Stalin and Mao as dictatorial and not true Marxists. But Marxism is not a monolithic entity, certainly not anymore. It’s use in the modern world must surely be as an analytical toolkit to prompt debate and the exploration of alternatives to the neoliberal capitalism. This requires the sort of argument that doesn’t form any part of this book. On top of this, D’Amato’s own (undeclared) viewpoint is sectarian Trotskyist, a fairly specific clique within modern socialism.

It doesn’t feel like D’Amato engages with modern uses of Marx’s analysis at all. He doesn’t mention such thinkers as David Harvey or Wolfgang Streeck, both of whom make intelligent use of Marxist thinking to break down modern society and economy. Jodi Dean is mentioned only to attack her as not adhering to the true nature of socialism. Yet these writers (and I’m sure others that D’Amato doesn’t mention) are all critically engaged with Marx and Marxist thought.

In fact this book feels like a simple restatement of a revealed truth. D’Amato quotes Marx and Trotsky extensively, and often follows this up with an assertion that whatever point is being made remains relevant to the modern world, without attempting to actually apply the analysis to the changed world. And it is important to remember that the capitalist world has changed since Marx was alive and we cannot simply treat his work as truth. It is telling that D’Amato quotes the Communist Manifesto extensively, written before Marx began his economic work and while it has value doesn’t reflect the depth of his later work.

It does not feel like D’Amato is trying to reconstruct a modern left progressive movement that can take on the world of capitalism. He is simply reasserting the world view of Trotsky in the 1930’s and D’Amato’s belief that it remains relevant to today.

Finally the bibliography is limited and strongly slanted towards Trotsky and with very few recommendations of modern writers. While it does reference Capital, it doesn’t really provide a guide to getting further into Marx’s analysis (for example D’Amato doesn’t reference key works by Harvey, Michael Heinrich, or Ben Fine that can help ease the difficulty of getting to grips with Marx’s economics).

In short this is a limited book. It does have value, it is written in clear language and covers a wide range of subjects. It is by no means a definitive introduction to the basics of Marxism.

D’Amato, Paul The Meaning of Marxism (Haymarket, Chicago, 2014).

Beauty and the Beast

Over Christmas this year I watched the Disney live action version of “Beauty and the Beast” with my family. I was fascinated by two specific parts of the film which are revealing about US politics and Disney’s place as a prop for the status quo. It’s easy to believe that Disney promotes a reactionary view of society through its depiction of women, gender, and the family. In Beauty and the Beast we are presented with a right wing view of political economy as well.

At the beginning of the film we are presented with an aristocrat whose lifestyle brings down on him the curse of the Enchantress which turns him into the beast. His most important crime is given as impoverishing the villagers by imposing too much tax.

This is the world view of Trump and his tax cutting bill. The prince stands in place of the state and the film gives us the morality of the Tea Party, where the state is considered too intrusive and all tax is bad. Nothing else is said about where the prince’s wealth might have come from or how it will be sustained once it is no longer derived from ‘taxes’.

At the end of the film the prince is released from the curse. His position in society, and therefore presumably also his ability to extract surplus value from the villagers is reinstated. The film ends with a party where the villagers celebrate the return of the prince and his engagement to Belle. Having realised the folly of his earlier life, the prince is now keen to include the villagers. In their turn they no longer present themselves a supplicants or workers but as well dressed and middle class, they fit seamlessly into the etiquette of the castle in both dress and behaviour.

In other words it is not the prince that has changed, but the villagers who no longer seek to challenge the prince’s behaviour but rather accept it and seek to fit in. This is a standard charge by the status quo against those who seek progressive change, the attempt to change the prince was simple the “politics of envy“. The villagers ought to accept that the prince’s lifestyle is one they should aspire to achieve themselves (presumably in competition with each other).

This film then brings a very specific world view to its depiction of the life of the prince and the village. In some ways this is similar to Downton Abbey in its embodiment of conservative values.

I didn’t watch the film closely, but these two fragments stood out to me. Perhaps it is not surprising that a major film studio should reflect the current status quo, and Disney is well known for conservative “family values”. But I must confess that I was surprised to see the political economy of the neoliberal right as well.

Rosa Luxemburg and Marx’s Reproduction Schema

One of Rosa Luxemburg‘s most important works is The Accumulation of Capital, written in 1913 and included in translation in the second volume of her complete works published by Verso.

Here Luxemburg unpicks in detail the reproduction schemas described by Marx in Volume 2 of Capital. Marx defines two different basic formulae. Under simple reproduction, the economy remains the same size from year to year, with just sufficient productive activity taking place to replace what is consumed. Of course this exists only in theory. Capitalism is driven by the need to continuously expand, so simple reproduction serves only to demonstrate the basic approach to the problem.

This method abstracts the economy into two basic sections. One part which produces just means of production, commodities supporting the production process. A second part which produces means of consumption, commodities which will be consumed by society. The two sections clearly need to work in close lock step. Sufficient means of production must be created to support continuing production. Sufficient means of consumption must be produced to support the population. Marx goes into mathematical detail (which I won’t duplicate here) to demonstrate how this interaction must work for the economy to function.

In reality though, capitalism is driven by expanded reproduction, or ‘accumulation’. Here a portion of surplus value is used to increase the output of the economy year on year. Marx again shows how this might work mathematically, but somehow it is never quite convincing.

This brings us to the key criticism made by Luxemburg. For the economy to expand in this way then there must be demand for the increased output of both means of production and consumption goods. Marx’s expanded reproduction schema shows production increasing. But where does the increased demand come from? An economy operating at a particular capacity simply ought not to generate the demand (backed by the ability to pay) over and above that needed for simple reproduction. Marx demonstrates mathematically how the growth of an economy should progress, but not the process by which this expansion can actually happen.

What is more the expanded reproduction schema ignores the tension between the drive to produce more and more surplus value (and therefore commodities to be consumed for their value to be realised by the individual capitalist) and capitalism’s need to curtail the capacity for consumption of the majority of the population. The schema as described by Marx implies that accumulation can continue smoothly and indefinitely in mathematical progression. This does not match the lived experience of capitalism with it’s booms and busts. The absence of a smooth growth trajectory is a fundamental part of the system. In other words there must be a flaw in Marx’s analysis.

Marx assumes throughout that the economy in question is a fully self contained capitalist one with only two classes – capitalists and workers – and this is where Luxemburg identifies the critical point. Capital has since the beginning existed in a world which includes significant elements operating in non-capitalist ways, whether it is left over peasants and handicraft workers in the same country or colonies and developing countries overseas. Throughout it’s history capitalism has not been the closed system that Marx assumes in the reproduction schema.

Luxemburg gives two reasons why this is important. First the existence of a market outside capitalism itself creates the safety valve that is missing in the schema. This is where the demand comes from that allows the system to move beyond simple reproduction, allowing surplus value to be turned into capital and reinvested in expanding production.

“the surplus value that is to be capitalized and the corresponding part of the capitalist mass of products cannot possibly be realized within the capitalist sphere, and must therefore at all costs find purchasers outside this sphere, in social strata and formations not engaged in capitalist production.”

(Luxemburg 2016 p. 259)

The progressive growth in production also implies a growth in the workforce and allowing the world outside capitalism to be included in the theory makes clear where these additional workers come from – that is the ranks of peasants and others who are progressively brought into the world of waged work.

“It must be able to draw on other social reservoirs of labor-power not previously under the command of capital, which are added to the wage proletariat as required.”

(Luxemburg 2016 p. 260)

This is an aggressive and destructive process. Marx discusses “primitive accumulation” as something that kick starts the beginning of capitalism. Luxemburg asserts that in fact this continues all around us. In her time it was the growth of colonies and imperialism. In ours we might see it in the extension of commodity exchange to areas of life not previously touched by capitalism such as childcare.

“the accumulation of capital as a historical process, in all its relations, is contingent upon noncapitalist social strata and forms.”

(Luxemburg 2016 p. 263)

Luxemburg explicitly states then that when capital is no longer able to expand outwards into the non-capitalist world, when the whole globe is fully incorporated into capitalism, that the system will no longer be tenable and must collapse.

“Yet the more violently, forcefully, and thoroughly imperialism brings about the decline of noncapitalist civilisations, the more rapidly in removes the very basis for hte accumulation of capital. As much as imperialism is a historical method to prolong the existence of capital, objectively it is at the same time the surest way to bring this existence to the swiftest conclusion.”

(Luxemburg 2016, p.325)

Although there is much that is valuable in Luxemburg’s thinking, I think there are two basic problems.

First that the century of capitalism since Luxemburg wrote this has shown it’s ability to find new spaces for exploitation. To the extent that her analysis is correct, it does not imply the approach of the ultimate crisis of capitalism that she is seeking to demonstrate. It simply confirms the system’s dynamic nature, its ability to find new outlets and opportunities for primitive accumulation. Nothing from the last hundred years suggests there is any inherent limit to this.

Second and more significantly I think that Luxemburg misses Marx’s point. David Harvey points out that the expanded reproduction schema is constructed in such precise terms that it is hard to believe that Marx is not trying to point out that securing such a smooth path to accumulation is highly unlikely. Marx’s schema demonstrates the expanded reproduction is mathematically possible. But think about all the different processes that have to align in order for this to work: wages we must be suppressed to maintain profits, but sufficient to support realisation; the relation between producing means of production and means of consumption which must be just right to avoid overproduction as a result of disproportionality.

Obviously the schemas are totally unrealistic, and Marx has cooked the figures to fit his case. But are the schemas so unrealistic as to reveal nothing about the nature of the stresses, strains and contradictions, as well as the dynamic capacities, of a capitalist mode of production? If not, what are the schemas intended for?

(Harvey 2013, p. 368)

In other words the schema is an analytical tool rather than a statement of categorical truth. Something which allows us to examine what mechanisms the system must possess for it to function, how they must mesh together, and more importantly where they might jar and clash. Luxemburg is therefore undoubtedly right to point out how difficult it is for expanding capital to realise itself in the market, and no doubt aggressively exploiting the remaining non-capitalist segments is part of how capitalism solves this. But so is debt, speculation, and the loss of value or destruction of individual capitals which guessed the market wrong. The system is fundamentally not stable. Marx’s toolbox can help us to understand where and how that instability appears and its impact.

Luxemburg, Rosa The Complete Works of Rosa Luxemburg Volume II: Economic Writings 2 (Verso, London, 2016)

Marx, Karl Capital A Critique of Political Economy Volume 2 (Penguin, London, 1992)

Harvey, David A Companion to Marx’s Capital Volume 2 (Verso, London, 2013)

Review: The Shock of the Anthropocene

A polemic on climate change and the impact of humanity on the earth. Very wide ranging in its scope running through the history of those who have challenged the climatic impact of industrialisation from before the industrial revolution, as well as the basic science behind the description of a new geological era where humanity dominates the globe – the “anthropocene”.

The very sweep and scope of this book means that the treatment of is sometimes quite brief. It would benefit for example from a more comprehensive engagement with Marx bearing in mind the importance of capitalism as a system, which Bonneuil and Fressoz do acknowledge, for the impact of industry on the climate.

Bonneuil and Fressoz do succeed in at least one of his stated goals – echoing EP Thompson – to rescue earlier challenges to the impact of human activity on the climate from the “enormous condecension of history”. The call to action is also clear. Humanity is now in a position where it controls the future of the planet. Perhaps the most challenging part of the book is where Bonneuil and Fressoz argue that humans have not suddenly become aware of the climate crisis, and that therefore we cannot look to a newly engaged science to simply reverse the situation. More fundamental change is needed, starting with an acknowledgement of the new situation. Bonneuil and Fressoz makes the case, but more work is needed to develop a programme for future action.

An important book then. Not the last word on the subject, but rather perhaps the beginning of something that needs to become much more mainstream and influence all our thinking in the future.

Bonneuil C., and Fressoz J-B The Shock of the Anthropocene (Verso, London, 2017)