Andrew Kliman’s The Failure of Capitalist Production: Underlying Causes of the Great Recession continues to pick up praise, this time from Gabriele Piazza in the latest edition of International Socialism. Piazza praises Kliman’s informed critique of the conventional Keynesian and ‘underconsumptionist’ explanations for the economic crisis:
Kliman argues that the underconsumptionist theory cannot explain the crisis. According to underconsumptionist writers like Foster, Magdoff and Wolff, the build-up of debt was rooted in the falling pay for workers and/or a fall in their share of income, which would have led to a fall in consumption, if consumption had not been propped up by debt. This has become a common view on the left and the fall in wages is normally linked to the assault on trade unions in Britain and the US.
This would be accurate if one only looked at wages and salaries. But working people also receive social benefits; and if these are included in the calculation, as Harman and Anwar Shaikh1 have argued elsewhere, workers’ share of national income in the last decades did not decline but actually rose. This does not mean that working people are living well—moreover, many mechanisms in the last decades have depoliticised the process of social provision. But the evidence shows that the crisis was not caused by a collapse of consumer demand and increasing inequality.
Underconsumptionists and left Keynesians argue that slumps can be avoided by increasing the workers’ share of wealth, implying that what is good for working people is good for capitalists. However, in this case, socialism would not be necessary, at least for economic reasons. Kliman argues that his analysis does not imply that working people should not struggle for redistribution and reforms. But these will not deliver a stable and flourishing future. The interests of the capitalist are always in conflict with those of working people. Higher pay for workers or higher corporate taxation eat profits, the raison d’être of the system. Only a sufficient destruction of capital can restore profits and stabilise the system, but policymakers have shown their reluctance to it.
Piazza concludes that the book is a ‘must read’:
This book is a major contribution to the debate on the recent economic crisis. It exposes the flaws of some of the most popular arguments on the left and reinstates the centrality of Marx’s law of profitability in explaining the crisis. This is done using plentiful empirical evidence and through a series of logical steps. Everyone who is interested in understanding the roots of the crisis must read it.
Visit International Socialism to read the article in full.
Underlying Causes of the Great Recession
Distinctive and detailed account of the current economic crisis, identifying it as a crisis of capitalism caused by long-term falling profit rates
“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