Can Marxism explain the crisis? – Bill Dunn in Socialist Review

In an article for November’s Socialist Review Bill Dunn considers the relevance of Marxist economics in getting to grips with the twists and turns of the current crisis of capitalism:

Capitalism’s recurrent crises are not aberrations. Financial deregulation and shifts of income between and within countries were achieved by powerful capitalist interests responding to the crisis of the 1970s, which Keynesian-inspired state regulation failed to prevent. To understand the real problems we need to go beyond the criticism of neoclassical economists or Keynesians. We need to examine the dark underworld of exploitation within capitalist production.

He provides a useful summary of a key Marxist explanation for why capitalism goes into repeated crisis – the tendency for the rate of profit to fall:

Competing firms invest in new technologies and new equipment – what Marx calls “constant capital”. The innovators steal a march on their competitors and capture a greater share of profits. As others follow, the new techniques become generalised and the leaders’ advantages are lost. Moreover, capitalists overall are now investing more in constant capital than in labour, or “variable capital”. While they must continue to pay the machine-making capitalists for the full value of the capital they purchase from them, it is only the workers they can exploit.

So, Marx argued, even as the total surplus being extracted from labour increases, this can fall relative to the overall amount being spent on constant and variable capital. There is a tendency for the rate of profit to fall.

The simplest way to restore profits is to cut wages, either directly or through cuts in welfare. The attack was particularly savage in the US. People were also forced to work longer and harder. Millions were forced into second jobs and, of course, into debt. Across the rich countries the wages share of national income, if not absolute wages, fell substantially, on average from about 75 percent to 66 percent between 1975 and 2006. Meanwhile restored profits and higher salaries for the rich increased the financial supply. They had more money to lend in financial markets.

Dunn concludes by looking to potential anti-capitalist forces of resistance:

Against this, there have already been some magnificent fights. The wave of general strikes in Greece is the proudest example. Many of those fighting rightly insist there are better ways to recover government deficits – taxing the rich for example. They point out that there are more important priorities than tackling government deficits and repaying the bankers.

Financial speculation can and should be restrained. Whether in the US or China, increasing wages and reorienting the economies to productive investments would be a better way of addressing the imbalances. Yet these reforms seem unpalatable to the ruling class.

Ultimately, the fight against austerity quickly forces us to face the need for a systemic transformation – the overthrow of capitalism.

Visit Socialist Review to read the article in full.

Global Political Economy

A Marxist Critique

Bill Dunn

A masterly explanation of events and upheavals in the world economy over the last 100 years.

“A clear and comprehensive account of global capitalism today. An indispensable antidote to conventional textbooks, this book will be valued by students and activists alike.” – Hugo Radice, Senior Lecturer in International Political Economy, University of Leeds

“This timely and accessible book presents us with an historically embedded account of what the new global political economy has wrought.” – Christopher May, Professor of Political Economy, Lancaster University

£21.99 only £19.50 on the Pluto site

The Failure of Capitalist Production

Underlying Causes of the Great Recession

Andrew Kliman

“One of the very best of the rapidly growing series of works seeking to explain our economic crisis. … The scholarship is exemplary and the writing is crystal clear. Highly recommended! “ – Professor Bertell Ollman, New York University, author of Dance of the Dialectic

“Clear, rigorous and combative. Kliman demonstrates that the current economic crisis is a consequence of the fundamental dynamic of capitalism, unlike the vast bulk of superficial contemporary commentary that passes for economic analysis.” – Rick Kuhn, Deutscher Prize winner, Reader in Politics at the Australian National University

£17.99 only £16.00 on the Pluto site

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