Fighting global capitalism

Forging global solidarity

Published on: Fri, 30/05/2014 - 13:42

LabourStart’s “Global Solidarity Conference” in Berlin on 23-25 May 2014 was its fourth major gathering and, with more than 300 participants, its biggest.

The conference was hosted by the German trade union ver.di, and comprised nearly three days of plenaries and workshops covered a range of themes.

A substantial chunk of the conference examined “Digital communications” — how unions can use electronic media to build themselves and their campaigns: LabourStart’s raison d’être!

In an introductory session, Derek Blackadder, who works for the Canadian Union of Public Employees, described the work

Revolutionary politics, imperialism, and anti-racism: a further reply in the "Marxism and religion" controversy

Published on: Thu, 23/01/2014 - 16:40

Marcus Halaby’s polemic against Workers’ Liberty’s politics on religion, Islamism, and anti-imperialism (“The AWL’s anti-anti-imperialist Islamophobia”) is worth reading because it illustrates some differences between the political method of Workers Power and ourselves in Workers’ Liberty.

Click here for the debate of which this is part, which started with a Facebook outcry in 2013 against the introduction to Workers' Liberty 3/1 of January 2006

Marcus expends more than 3,000 words before he reaches what he calls “the crux of the matter”: our disagreement on imperialism. We’ll start with it.


Callinicos and the SWP: wrong on imperialism

Published on: Sun, 29/12/2013 - 11:57

At the Second Congress of the Communist International, in the debate on the national and colonial question, just after his book Imperialism had been translated into German and French, Lenin warned delegates they should “establish concrete facts and to proceed from concrete realities, not abstract postulates”.

Alex Callinicos’ book, Imperialism and Global Political Economy (Polity 2009) is a deeply flawed book. It does not proceed from material realities of the modern world, but rather from texts written a century ago. For Callinicos, the most important thing is to demonstrate how his current politics achieve continuity with his pastiche of the classical Marxist tradition. Hence the old analysis must still be true, even when the evidence is against it, so that the SWP can claim the mantel of orthodoxy.

Callinicos is well aware of the central limitations of earlier analyses of imperialism, even at the time. He states (2009: 10): “The classical Marxist theory of imperialism sometimes conflated the historically specific with the universal: thus the theory of finance capital that Lenin took over from Rudolf Hilferding extrapolated far too much from characteristics that were distinctive particularly to late nineteenth century Germany. Furthermore, the treatment of economic crises by the theorists of imperialism was generally problematic. And, quite simply, they were overtaken by how capitalism changed in the course of the twentieth century.” Callinicos (2009: 49) also rightly rejects the principal political conclusion Lenin drew from his analysis of imperialism, arguing that “the theory of the labour aristocracy is untenable on both theoretical and empirical grounds”.

Callinicos’ defence of the classical theories is bizarre in places. He is formally correct (2009: 44) to argue that “Lenin did not claim that imperialism was the final stage of capitalism; the original title of his pamphlet, Imperialism, the Latest Stage of Capitalism, was changed only after his death”. However Lenin used the “highest stage” designation in his wartime writings, as well as in the Comintern. At the Second Congress he stated that “the economic relations of imperialism form the basis of the international situation as it now presents itself”, adding that “in the course of the twentieth century a new, highest and final stage of capitalism has taken shape”. Similarly, the idea that capitalism had reached its highest or final stage was a commonplace in pre-war Marxist writings on imperialism as demonstrated in Day and Guido’s collection, Discovering Imperialism (2012).

So what remains of “classical Marxist theory of imperialism”? For Callinicos (2009: 51, 66) first, “inter-imperialist wars of the kind that erupted in August 1914 are thus a necessary consequence of a world economy dominated by competing capitals”. Second, “uneven development was for Lenin the economic basis of military rivalry”. This minimal justification allows Callinicos to argue that the same “project” applies to the modern world.

However Callinicos is aware that the world economy is in many respects very different from the one analysed by the classical Marxists. He argues (2009: 176, 179) that “the growing tendency of industrial firms to fund their investments from retained profits, thereby loosening the relationship between banking a productive capital that Hilferding had posited”. He is also correct to point out that “the picture that Lenin had pained of an imperialist system based on the export of capital to the colonies – even in his time… only a partial truth – was completely at odds with the economic patterns that developed after 1945”.

Callinicos (2009: 214-17) eliminates almost all the candidates challenging US primacy. Although the EU boasts a larger GDP than the US, “there are structural reasons for doubting that the EU is likely in the short term to develop into a major ‘peer competitor’ of the US”. Such a change would “depend on the EU developing military capabilities to match its economic power”. He adds that “it seems even less probable that Japan will break loose from the American hegemony any time soon”. Russia, “with a shrinking population and share of global GDP, and deprived of economically and strategically crucial regions such as Ukraine and Azerbaijan, is in no position to mount a global challenge to the US”.

Even his treatment of China’s rivalry with the US is half-hearted. Callinicos (2009: 210-11, 219) states that “economically the two states are interdependent… the arrangement is a mutually beneficial and hence stable one”. He indicates some elements likely to exacerbate tensions, such as China’s economic expansion, Taiwan and its efforts to ‘soft balance’ the US. However he accepts that “none of this means that the Chinese leadership is set on a path of challenging US hegemony”. He falls back on a veiled warning that “quite independently of the intentions of China’s state managers, the revival of Chinese economic and military power threatens to destabilise US hegemony”. The separation between agency and structure is stark.

Callinicos therefore manufactures a series of elisions to cover his approach. He cannot claim that great power rivalry today is leading to another world war, so instead he formulates a separate “logic” of geopolitical competition, which he then links to any tensions, disagreement between the US and other powers, to indicate potential rivalry. He believes (2009: 136) that throughout modern history, a “symbiotic relationship” emerged “between state-building and geopolitical expansion on the one hand, and capitalist economic development on the other”. Such vague abstractions provide no orientation for over two hundred years of capitalist development, never mind a guide to action.

Callinicos’ weasel words are best summed up by his invention: “the partial dissociation of economic and geopolitical competition”. Thus in 1914, the economic competition of the previous period of uneven capitalist development led to war. But after that, the cold war meant these drives dissociated. And a century on, economic globalisation and heightened competition still does not lead the big powers to war – though the possibility remains. The point is not that great power rivalry is obsolete, which Callinicos ascribes to others such as Hardt and Negri, and Panitch and Gindin, amalgamated with Kautsky and Norman Angell. Such a conclusion, ruling out the prospects of war indefinitely – would be absurd. It is not a position defended by anyone. The point is the current and immediate likelihood of war and how that shapes working class politics.

The disconnection is evident in the political conclusions Callinicos draws from this analysis. Hamas and Hezbollah are spoken of in awe, while the best anti-imperialists appear to have been the Islamist “resistance” in Iraq. There is no sign of the independent working class movement in this scenario, since the SWP’s “anti-imperialism” embraces any force as long as it is anti-American. Callinicos cannot find a rational basis for his argument that the “classical” view still applies. Rather he takes refuge in texts in order to avoid drawing conclusions from current realities. For all his erudition, it is a miserable effort and a regression from the classics.

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Lenin’s laboratory: A review of Day and Gaido, Discovering Imperialism

Published on: Sun, 29/12/2013 - 11:53

“It is the same with the policy of Social Democracy as with any other: if you do not move forwards, you go backwards. Whoever closes his eyes out of a (not necessarily conscious) fear of the consequences of stating what is, has not only failed to fulfil his Social-Democratic duty to say what is but will also be forced to say what in reality does not exist, to spread illusions. Any misunderstanding of reality leads to confusion.”
Karl Radek, Ways and Means in the Struggle against Imperialism (14 September 1912). D&G 2012: 615


Lenin’s book Imperialism: The Highest Stage of Capitalism, written at the height of the First World War almost a century ago, remains enormously influential on the left internationally. Lenin intended his book to be a popular outline, fit to pass the Russian censor. It was primarily an attempt to explain from processes in the real world why the mighty international socialist movement had split, with the vast majority of organisations, from leaders to the rank and file, had supported their own governments in the mutual slaughter.

Lenin’s book was published in Russian, initially in a mangled edition because Menshevik publishers removed some of his acerbic comments about his former mentor and Marxist-in-chief Karl Kautsky, who had rationalised the vote by German SPD leaders for war credits in 1914. The book only fully saw the light of day in 1917, with French and German editions translated for the Second Congress of the Communist International in July 1920. English translations appeared in the late 1920s.

Lenin’s version of imperialism was by no means universally accepted across the Marxist left – even among the Bolshevik party at the time. Bukharin developed a distinctive variant of his own, while the debates at the Second and Fourth Congresses of the Comintern showed a mixture of opinion, including sympathy with Rosa Luxemburg’s conception of imperialism, which Lenin opposed.

Lenin’s book only became gospel on the left after Stalin and the Russian bureaucracy turned it into a rigid, one-sided dogma, which predicted only inter-imperialist war between the big powers (together with war on the USSR) and frozen relations between these powers and the colonies, which were bound to stagnate.

Uncovering the origins of Lenin’s view on imperialism, at least in English, has taken many decades and is still not resolved. The publication of Lenin’s Collected Works in the 1960s meant it was possible to read the wider range of articles he wrote at the same time. Volume 39, which consists of his notebooks on imperialism shows the wider sources Lenin drew on. The translation of Kautsky’s Socialism and Colonial Policy (1975) and in particular Rudolf Hilferding’s Finance Capital (1981) showed where many key ideas on monopoly, finance capital, the export of capital, cartels and trusts and territorial division were first systematised, before popularisation in Lenin’s book.

However the publication of Richard Day and Daniel Gaido’s (henceforth D&G) selection, Discovering Imperialism (2012) gives the English-language reader access for the first time to many of key articles on which Lenin’s Imperialism rested.

Lenin’s imperialism

Lenin’s book sought to provide an explanation for the two central events of his time: the causes of the First World War and the collapse of the socialist parties into chauvinistic support for their own governments in the war. He did so within a single, coherent explanation of imperialism, which extrapolated from Marxist political economy some central tendencies, which converged to produce military conflict between the big powers.

He gave a definition of imperialism that included five basic features:
(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital”, of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.
Lenin, [January-June 1916] Imperialism, the Highest Stage of Capitalism, LCW 22: 266-67
As such he defined imperialism (LCW 22: 238-39) as “that highest stage of capitalism in which this separation reaches vast proportions”.

Imperialism was primarily about the conflictual relations between the great power empires that had led to war; relations between these powers and the rest of the world were a subordinate element of inter-imperialist rivalry. If we distinguish the associations between the big powers as horizontal relations; and relations between these powers individually and collectively and the rest of the world as vertical relations, it is clear that in classical Marxism horizontal relations predominate, while in later theories (such as dependency and post-colonial theories), it is vertical relations that are foreground. In Lenin, there is an important sense of fluidity between individual states, their neighbours, rivals, partners and associates. This fluidity is missing in many subsequent accounts.

Working class opportunism

The main focus of Lenin’s study is not especially the characterisation of the world war as imperialist: that was self-evident from the previous Marxist analysis to which he simply provided a popular synthesis. Lenin’s more distinctive contribution, though one shared with other Bolsheviks such as Zinoviev and Bukharin, was his explanation of causes of social-chauvinism within the working class movement that had led leaders and party members to renege on promises of international solidarity and support their own governments in the imperialist slaughter.

Lenin’s position is succinctly stated in book Imperialism, the Highest Stage of Capitalism (LCW 22: 280-81): “The receipt of high monopoly profits by the capitalists in one of the numerous branches of industry, in one of the numerous countries, etc, makes it economically possible for them to bribe certain sections of the workers, and for a time a fairly considerable minority of them, and win them to the side of the bourgeoisie of a given industry or given nation against all the others.”

Lenin based his case on references made by Marx and Engels to England’s nineteenth century global hegemony, which had led to the alleged embourgeoisment of the English working class, in the form of a labour aristocracy and a labour bureaucracy of full-time party functionaries, trade union officials and parliamentary representatives. Lenin had first used this argument in September 1907 (and generalised it), after attending the International Socialist Congress in Stuttgart, where right-wing participants argued for a “socialist colonial policy”, while the left rejected such notions.

Lenin wrote (LCW 13: 76-77) that the debate “revealed a negative feature in the European labour movement, one that can do no little harm to the proletarian cause, and for that reason should receive serious attention. Marx frequently quoted a very significant saying of Sismondi. The proletarians of the ancient world, this saying runs, lived at the expense of society; modern society lives at the expense of the proletarians”. Lenin reiterated that “the non-propertied, but non-working, class is incapable of overthrowing the exploiters”. Only the proletarian class, he said, can bring about the social revolution. However as a result of the extensive colonial policy, “the European proletarian partly finds himself in the position when it is not his labour but the labour of the practically enslaved natives of the colonies that maintains the whole of society. In certain countries this provides the material economic basis for infecting the proletariat with colonial chauvinism”.

But Lenin’s analysis was not especially original. Much of it was a paraphrase from comments in Marx and Engels’ correspondence with their contemporaries, which was published for the first time at the turn of the century. In The War in South Africa (November 1899), Kautsky quoted Engels’ argument that “during the period of England’s industrial monopoly the English working-class have, to a certain extent, shared in the benefits of the monopoly”. Kautsky added (D&G 2012: 157, 160): “The workers of England feel united with their capitalists as a privileged class vis-à-vis the population of the conquered territory”. Similarly, Julian Marchlewski (D&G 2012: 311) argued in 1904 that “an incidental feature of the trust-system is that it begins a stratum of workers who, through the quality of their work and the level of their wages, rise above the mass of the workers and, as a consequence, come into a certain contradiction with their own work”.

There are a number of serious flaws with this explanation of working class opportunism. Its proponents did not demonstrate that the origin of most profits in the advanced states derived from colonial exploitation. In fact, Marx’s theory suggests the bulk of surplus was generated from the exploitation of waged labour by capital, i.e. was produced mainly “at home” because of mechanisation, technology, the reorganisation of the labour process etc. This also explains the higher wages granted to industrial workers, off the back of their own exploitation and the class struggle derived from it. Second, even where vast tribute was extracted from the colonies, the mechanisms through which this was transmitted to bribe layers of workers, rather than confined to capitalists, are not specified. Third, the analysis was stretched, applying to societies before the monopoly “stage” had been reached and to states that did not have colonies or were necessarily imperialist in the modern sense. Finally, even if the hypothesis could be proven, it is then difficult to see how such a grip could be broken, thereby writing off the working class as the key progressive social force. If the working class was bound to capital in this way, there would be little prospect of a working class revolution.

These contradictions were exposed in reality even at the time Lenin stated the thesis. The better-off “aristocratic” layers of the working class had been involved in the pre-war industrial unrest and they were central to the stewards committees, factory councils and in some places, workers’ councils that emerged in wartime and in the revolutionary upsurge afterwards. Of course the opportunist leaders of socialists and trade unions kept their peace with their own ruling classes. But the broader layers of workers proved to be precisely the social force Marxists had long believed would fight for socialism.

Lenin of course did not abandon the centrality of the working class. In fact in his writings at the time, he clearly articulated working class anti-imperialism. In The Discussion on Self-Determination Summed Up (July 1916, LCW 22: 357), Lenin wrote that “The dialectics of history are such that small nations powerless as an independent factor in the struggle against imperialism, play a part as one of the ferments, one of the bacilli, which help the real anti-imperialist force, the socialist proletariat, to make its appearance on the scene”. And in A Caricature of Marxism and Imperialist Economism (August-October 1916), he wrote (LCW 23: 63) that “it is not every struggle against imperialism that we should support. We will not support a struggle of the reactionary classes against imperialism; we will not support an uprising of the reactionary classes against imperialism and capitalism”. Lenin’s epigones may have forgotten these strictures, but then this reflects a wider failure to put his analysis of imperialism in context.

Imperialism as the highest stage of capitalism

With the material now available, it is necessary to underline Lenin’s lack of originality: he did not innovate any of the central arguments about imperialism. Perhaps this is most starkly obvious in the description of imperialism as the latest and highest stage of capitalism. As early as the SPD’s Mainz Congress in 1900, during the debates over a resolution on world policy, Anton Friedrich described imperialism as “perhaps the last stage of development of capitalism” (D&G 2012: 19 N.61). Imperialism was referred to repeatedly in subsequent years, to the extent that it was the conventional wisdom among Marxists. Probably the starkest expression was given by Hilferding in Finance Capital (1910):
Finance capital, in its maturity, is the highest stage of the concentration of economic and political power in the hands of the capitalist oligarchy. It is the climax of the dictatorship of the magnates of capital. At the same time it makes the dictatorship of the capitalist lords of one country increasingly incompatible with the capitalist interests of other countries, and the internal domination of capital increasingly irreconcilable with the interests of the mass of the people, exploited by finance capital but also summoned into battle against it. In the violent clash of these hostile interests the dictatorship of the magnates of capital will finally be transformed into the dictatorship of the proletariat. (1981: 370)

In 1911, Luxemburg (D&G 2012: 470) referred to modern imperialism as “the final period of capitalist development”, while in 1912, Marchlewski wrote (D&G 2012: 521) that “capitalist development has reached its highest degree of maturity”. Paul Lensch wrote (D&G 2012: 571-2) that “imperialism has always been described as the last and highest stage of capitalist society… We thus see that imperialism actually means the era of revolution, that it is the last word of capitalism”. Karl Radek (D&G 2012: 613) saw in imperialism “the last phase of dying capitalism”.

Such was the ubiquity of the idea that even the heavily bureaucratised SPD, at its party congress at Chemnitz, (15-21 September 1912), supported it. The lead speaker Hugo Haase said (D&G 2012: 644, 673) that “imperialism drives the capitalist system to its highest stage”, while the resolution stated: “It is therefore the task of the proletariat to transform capitalism, now brought to its highest stage, into socialist society, thus securing lasting peace, independence, and freedom for the peoples”.


The same is true of the five features Lenin highlighted. The importance of monopolies, cartels and trusts can be found in the writings of Marx and Engels. They were popularised by Kautsky in his commentary on the Erfurt Programme, known as the Class Struggle (1892). Kautsky wrote: “During the last twenty years the number of trusts, through which the price and production of certain wares is ‘regulated’, has increased greatly, especially in ‘protected’ countries, such as the United States, France and Germany. The trust, once formed, the several concerns that have combined constitute virtually only one concern, under the guidance of a single head.”

More significantly, these tendencies had been the subject of the revisionist controversy instigated by Eduard Bernstein in 1896-98. Bernstein argued in a series called “the problems of socialism” that the formation of cartels and the use of credit had averted the crisis tendencies of capitalism. Bernstein’s articles were robustly challenged by Parvus, who asserted that the tendencies towards the concentration of capital were still evident, and by Luxemburg, who argued that cartels simply transferred the crisis tendencies previous seen at home onto the world market (Tudor and Tudor, Marxism and Social Democracy, 1988). Similarly Kautsky criticised the revisionist treatment of cartels and trusts in his Bernstein and the Social Democratic Programme: an Anti-Critique (1899), a book favourably reviewed by Lenin at the time, including the specific section on cartels and monopoly.

Finance capital

Lenin made the concept of finance capital central to his account of imperialism, relying on Hilferding for inspiration. Hilferding (1981: 301) said finance capital “signifies the unification of capital”. He wrote: “The previously separate spheres of industrial, commercial and bank capital are now brought under the common direction of high finance, in which the masters of industry and of the banks are united in a close personal association”. The basis of this association was “the elimination of free competition among individual capitalists by the large monopolistic combines. This naturally involves at the same time a change in the relation of the capitalist class to state power”. He explained the connection with imperialism thus:
Finance capital puts control over social production increasingly into the hands of a small number of large capitalist associations, separates the management of production from ownership, and socializes production to the extent that this is possible under capitalism. The limits of capitalist socialization are constituted, in the first place, by the division of the world market into national economic territories of individual states, a division which can only be overcome partially and with great difficulty through international cartelization, and which also prolongs the duration of the competitive struggle which the cartels and trusts wage against one another with the aid of state power… Even today, taking possession of six large Berlin banks would mean taking possession of the most important spheres of large-scale industry, and would greatly facilitate the initial phases of socialist policy during the transition period, when capitalist accounting might still prove useful. (1981: 367-8)

Day and Gaido (2012: 17) state that Heinrich Cunow pioneered the use of the concept of finance capital. In Trade-Agreements and Imperialist Expansion Policy (May 1900), Cunow wrote (D&G 2012: 186, 190) that “even if industrial interests are not totally unconcerned, they play a completely subordinate role. The driving force of contemporary world and expansionist policy is the need for activity and profit on the part of money-capital”. He said that domestic industry had very little interest in the acquisition of colonies. However “the situation was different in the case of money-capital seeking profitable investments, which is actually the real driving force behind imperialist expansion efforts”. For capital seeking higher profits in foreign undertakings than in domestic ones, “it is by no means immaterial to whom this or that territory belongs, because political rule is of decisive significance for the feasibility and security of investments”.

Day and Gaido also credit Parvus with the development of this version of finance capital. In his pamphlet Colonies and Capitalism in the Twentieth Century (June 1907), Parvus wrote:
The concentration of money-capital in the banks led to the concentration of banks. Industrial concentration grew out of technical development and capitalist competition, but it was significantly encouraged by the concentration of money-capital – in the banks as well as in individual hands. In the cartels and syndicates, we see a concentration of industrial capital that partly goes beyond the technical concentration of enterprises and partly presupposes it. On the other hand, the barriers between purely monetary capital and industrial capital have fallen down: the banks own shares and financial obligations of industrial enterprises, which in turn, own shares of the banks and have members on their supervisory boards. The whole system is ruled by industrial cartels and banking syndicates. The capitalist state appears as a third partner whose budget represents the greatest concentration of industrial as well as monetary capital. Through the technical transformations of the modern military and the public debt, the state is intimately bound up with private capital. (D&G 2012: 345)

These contributions were undoubtedly important, though they book somewhat plays down the contribution of Kautsky to the concept of finance capital. Day and Gaido include an earlier article by Kautsky, which stated (D&G 2012: 159) that “high finance, which has the greatest interest in imperialist policy, is also stronger”. The collection also contains Kautsky’s Germany, England and World Policy (8 and 10 May 1900), in which he wrote (D&G 2012: 172, 175): “Finance capital, much more than industry, finds satisfaction in acquiring colonies” and that “the only beneficiary from the founding of colonies, from the modern expansion policy, is finance capital, which draws further advantages from the failings of colonial governments and the consequent expenditures and loans for colonial purposes.”

However Kautsky had begun to synthesise what became the dominant theory of imperialism linked to finance capital and the export of capital even earlier. In Past and Recent Colonial Policy (1898), he wrote (2013: 78, 81, 83) that “finance capital pushes for the acquisition of colonies, where it can take care of its business, unregulated yet protected by the state… High finance drove France to Tunis, Tonkin and Madagascar, to the cheers of the army and the navy… For almost all colonising nations in Europe, Africa has become a point of weakness, not strength. In African colonial policy, high finance feathers its own nest”.

Colonial policy

In A History of Marxian Economics, Howard and King (1989: 92-3) argued that Kautsky's writings contain the germ of every significant view expressed by Marxist theorists before 1914. In an article Tongking (1884), Kautsky argued that colonies were a prerequisite for capitalist expansion, and that Germany’s lack of them was one of the main reasons why it had failed to industrialise at the same time as Britain. Colonial possessions had been essential for the primitive accumulation of capital and as a source of markets. Workers received in wages less than the value of their product and capitalist consumption was insufficient to fill the gap. Hence capitalists must find “a market outside the sphere of their own production”, which could offer the prospect of continuous growth. Accordingly, “as a sales market the colonies have become a condition of existence for capitalism”. For Lenin in Imperialism, the Highest Stage of Capitalism (LCW 22: 241-2), colonisation and the need to export capital arose from the fact that “in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the poverty of the masses) capital cannot find a field for ‘profitable’ investment”.

Limits of Day and Gaido’s selection

Day and Gaido’s selection contains many gems previously inaccessible to all but the most linguistically proficient. The articles by Max Beer and Paul Louis, the early analyses of Hilferding and Bauer, along with the later contributions of Lensch, Radek and Anton Pannekoek all had merit and deserve to be acknowledged.

It is a pity Day and Gaido only translated parts of Parvus’ pamphlet on colonial policy, given its apparent importance, preceding almost all the later protagonists. The biggest hiatus however is Kautsky’s work. Even if we discount his 1880s essays as restricted to colonialism rather than turn of the century inter-imperialist rivalry, it is disappointing that Kautsky’s Past and Recent Colonial Policy (1898) was not included (it has since been translated by the Weekly Worker). Similarly, according to Howard and King (1989: 94), Kautsky’s pamphlet Handelspolitik and Sozialdemokratie (Commercial Policy and Social Democracy) first published in 1901 and reissued ten years later “anticipated Hilferding and Lenin by pointing to the connection between the formation of cartels, industrial capitalists' demands for protection, and the growth of militarism which threatened to spark off a world war”. Rectifying such gaps would contribute further to our understanding of the roots of Marxist theories of imperialism.

Kautsky’s role underplayed, despite ample evidence in the book and in other articles of his leading role. In his review of Hilferding’s Finance Capital (June 1910), Otto Bauer stated (D&G 2012: 422) that the instigators were Kautsky, Parvus, Cunow, Hilferding and himself. Similarly Radek stated in 1912 (D&G 2012: 544) that “the common foundations of the whole imperialism policy of capitalism became clear to the party, and even five years ago its main features were properly recognised by Kautsky and Parvus” and were then “deepened by Hilferding and Otto Bauer”. In his book Socialism and Colonial Policy (1907), Kautsky listed some of the articles he had written on colonial policy in the 1880s, as well as a range of pieces around the turn of the century. Actually Lenin uses Hobson’s work as a mask for the earlier Kautsky, in order to castigate the “renegade” who rationalised the capitulation of the SPD leaders in the face of war.

A further weakness in downplaying Kautsky’s role is to homogenise what was a heterogeneous, contradictory and shifting sense of imperialism even among the Marxist writers before the First World War. A range of authors offered shifting explanations of the economic drives. Some argued that the lack of consumption demand in the advanced states drove firms there to sell or invest overseas. Others believed that foreign trade and investment arrested, at least temporarily, the tendency for the rate of profit to fall. Some emphasised the industrial forces driving colonisation in pursuit of raw materials and markets, while others foreground investment by factions of financial capital, who required stable states to guarantee their contracts. Finally, some Marxists believed colonies were essential to western capitalism and without them, the system would eventually collapse, while others argued that imperialism and colonisation were the product of reactionary classes and not necessary for capitalism at all.

The book has an implicit, teleological thread running through it, which assumes Lenin’s perspective was right and unproblematic at the time (and perhaps since). That is most evident in the (related) discussion of the United States of Europe slogan and Kautsky’s account of ultra-imperialism. Day and Gaido make too much of Luxemburg’s opposition to the demand for a United States of Europe. Their selection (D&G 2012: 108, 442, 453, 884) shows it was widely accepted before the conflict broke out, including by Lenin. Max Beer advocated it in Modern English Imperialism (November 1897), as did Parvus in Colonial Policy and the Collapse (1907), as the book states, along with Kautsky (1911) and Trotsky during the war. Otto Bauer had also advocated the slogan in The Question of Nationalities and Social Democracy (1907).

But again, Kautsky was probably the pioneer. As early as 1892 in The Class Struggle, he wrote: “There are but two ways out of this intolerable state of things: either a gigantic war that shall destroy some of the existing European states, or a union of them all in a federation.” This was not particularly challenged at the time or prior to the war, other than be Luxemburg, and then on similar grounds to her erroneous rejection of the right of nations to self-determination. This is another unfortunate case of reading back later disagreements into earlier periods.

It makes even less sense today. Speculation about a United States of Europe or an ultra-imperialist alliance of the most powerful states may well have been wishful thinking during the First World War. But in light of the subsequent century and the actual developments, when both of this demands have in fact (albeit partially, with contradictions and in the absence of socialism) been progressed to a significant degree by the bourgeoisie, it seems somewhat perverse to mechanically maintain hostility to accomplished facts.

Similarly, there are a number of loose-ends, by-ways and under explored insights in Lenin’s book that are barely visible from the selection in the book but have a greater bearing on subsequent developments. Lenin argued (LCW 22: 300, 274, 259) that “it would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism”. On the whole, he believed capitalism was “growing far more rapidly than before; but this growth is not only becoming more and more uneven in general”. It was also “growing with the greatest rapidity in the colonies and in overseas countries. Among the latter, new imperialist powers are emerging (e.g., Japan)”. Alongside the unevenness, Lenin also referred to combined development, what he called the “process of levelling the world”.

An even more fertile insight is Lenin’s reference (LCW 22: 263) to “transitional forms of state dependence”, outside of the binary division between the two main groups of countries, those owning colonies, and the colonies themselves. Such states were politically formally independent, but were nevertheless “enmeshed in the net of financial and diplomatic dependence”. The three forms mentioned were semi-colonies (like China), another type was provided by Argentina, and still another by Portugal. Such arrangements were far more characteristic of specifically capitalist forms of imperialism and with those utilised by the USA as it became the dominant hegemonic state, particularly after World War Two.

Critique of Lenin

Day and Gaido’s book, together with other writings of Kautsky, Hilferding, Bauer and others, shows definitively that Lenin’s account of imperialism was neither original nor innovative. However it had many virtues, summing up the combined wisdom Marxists had accumulated at the time. It was a coherently argued synthesis of significant trends in the world economy, which went a long way to explaining the drives that led the major powers into imperialist war. It identified how the enemy (capital and its states) had behaved and would behave in the near future. It explained how self-defeating the war would be for the ruling class and for those in the labour movement that backed them.

It charted a course for the labour movement, to renew the ties of international solidarity and to organise itself afresh in a new international organisation built on sturdier principles than the Second International. In particular it highlighted the type of internationalism required of labour movements in advanced capitalist states. In particular they would have to champion the rights of colonial peoples and other nations to self-determination, both as a means of weakening the ruling class of the West but also liberating powerful social forces across the globe.

Lenin’s original analysis of imperialism, which synthesised the best of Second International geopolitics, was a more-or-less adequate assessment of the First World War conjuncture. However in many respects it was flawed even for its time: its conflation of finance capital with the merger of bank and industrial capital, or as purely speculative or rentier; the derivation of the drive of capital to export abroad from a supposed ‘glut’ or absence of investment opportunities in the home country; its artificial dichotomy of earlier free-trade, competitive capitalism from the later imperialist, monopoly capitalism; the elevation of the conjuncture becoming the last stage of capitalism; the instrumental treatment of the state as simply a reflex of particular, financial interests; the premise of the working class immiseration as an explanation for imperialism; and the conception of a labour aristocracy to explain the collapse of socialist parties into chauvinism. Carried over mechanically to the present, these conceptions are no guide to working class action.

And the commonly accepted version of Lenin has much worse problems than his original analysis. Since Lenin's 1916 pamphlet contains essentially no discussion of the economic effects of imperialism in subordinate countries (because that was not Lenin's focus in that particular text), scattered phrases and offhand polemical swipes from Lenin have been reconstructed to theorise imperialism as a simple process of plunder rather than a species of capitalist development. The end result is to conflate “imperialism” with whatever advanced capitalist states do internationally. There is of course no lack of real evidence that simple plunder is part of the routine international activity of advanced capitalist states: the question is whether that is all there is to it, and whether plunder is a feature uniquely of advanced capitalist states rather than of all capitalist states. In the cod-Leninist discourse, “imperialism” (meaning advanced capitalism) is opposed not so much because it is capitalist as because it is advanced.

Lenin cannibalised

Lenin’s Imperialism, the Highest Stage of Capitalism is still regarded by many on the Marxist left as a sacrosanct text. It became so only as a tool fashioned by the Stalinists to justify the twists and turns in their foreign and domestic policy. Thus the notion that capitalist development is simply hindered or (in the language of the time) “retarded” in the colonial and semi-colonial countries was laid down at the Sixth Comintern Congress in 1928, as part of a political answer to the defeat suffered in China at the hands of Stalinists (and justly criticised by Trotsky).

Lenin’s book, and in particular the notion wrenched from it of “uneven development” was used to justify Stalin’s theory of socialism in one country. In his terrible Short Course textbook (1938), Stalin laid down that “the victory of Socialism was possible first in several countries or even in one country, taken singly, that the simultaneous victory of Socialism in all countries was impossible owing to the unevenness of development of capitalism…”. Stalin wrote:
This theory fundamentally differed from the view current among the Marxists in the period of pre-imperialist capitalism, when they held that the victory of Socialism in one separate country was impossible, and that it would take place simultaneously in all the civilized countries. On the basis of the facts concerning imperialist capitalism set forth in his remarkable book, Imperialism, the Highest Stage of Capitalism, Lenin displaced this view as obsolete and set forth a new theory, from which it follows that the simultaneous victory of Socialism in all countries is impossible, while the victory of Socialism in one capitalist country, taken singly, is possible.

Such cannibalisation of Lenin was carried to particularly farcical lengths in a volume of the book edited by Varga and Mendelsohn, which adduced the “Lenin-Stalin” theory of imperialism by piling up more recent empirical data to “prove” Lenin had foreseen accurately the two decades after he wrote the book.


Imperialism is, in essence, a strategy available to states to resolve crises and obstacles to the circuit of capital. It is not a stage of capitalism, nor a necessary policy for all states at all times. Rather it’s specifically capitalist form consists of the imposition of the “dull compulsion of capitalist economic relations” through the actions of capitals and bourgeois states (representing capital-in-general), including through military force, international agreements, financial investment, loans or debt, all with particular institutional forms. It is not reducible to territorial invasion or colonial aggrandisement, though it does rely on the intervention of bourgeois states.

Modern capitalist imperialism, under the superintendence of the US and with its own geometry of capital flows, financial and inter-state relations, is very different from the world of 1914. Marxists today can learn from the method of our predecessors, while taking a critical approach to their texts, which were inevitably bound by their spatial-temporary context. We need to understand imperialism today in order for the working class to oppose it independently on its own terms. What is required is an unflinching realism, not self-deception. Classic texts – however insightful – cannot substitute for a rounded assessment of today’s conditions.

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The Making of Global Capitalism by Leo Panitch and Sam Gindin

Published on: Sun, 29/12/2013 - 11:49

The Making of Global Capitalism: The Political Economy of American Empire by Leo Panitch and Sam Gindin is one of the best Marxist analyses of the modern epoch published in a long time. The book (Panitch and Gindin 2012: vii) is devoted to understanding “how it came to be that the American state developed the interest and capacity to superintend the making of global capitalism”. It deserves to be widely read and discussed on the international left both for the coherence of its arguments and because it challenges a series of shibboleths – particularly on imperialism – that have hampered the left for decades.

Panitch and Sam Gindin’s central claim is that since the Second World War, the US state has acted as the essential defender of the particular interests of US capital capital-in-general, but also for the general interests of global capital-in-general. They argue (2012: 195): “The ambitious project for the making of global capitalism, imbricated in the American empire and first articulated during World War II, was realised in the last two decades of the twentieth century.” In short, the US state established effectively an informal American empire, where its hegemony is accomplished primarily through economic mechanisms (including through the World Bank, IMF, WTO), while backed by the irreplaceable role of the state, military forces and political coercion (through the G20, the UN, NATO and of course its own armed forces, the CIA and local collaborators).

Panitch and Gindin divide post-war history distinctively: the launch of the project after 1945 until the late 1960s, focused on the revival of Western Europe and Japan; the period of crisis from 1968 until 1982; thereafter the turn known as neoliberalism when growth and profits revived until the 2007 crisis; and the period since the current crisis began. The authors argue that over the course of a half-century, the project for a new type of empire was “largely realised” and by the beginning of the twenty-first century fully capitalist social relations had spread over the entire surface of the globe.

The projection of the US state as the global enforcer was articulated by politicians during the Second World War and propagated in wider circles. Thus in May 1942, Fortune, Time, and Life magazines jointly published a statement entitled “An American Proposal”, which called for “a new American ‘imperialism’”. Panitch and Gindin (2012: 73-4) describe the post-war settlement as grafting “the philosophy, substance and form of the New Deal regulatory state onto the world”. The historic significance of the Bretton Woods agreement was that it “institutionalised the American state’s predominant role in international monetary management as part and parcel of the general acceptance of the US dollar as the foundation currency of the international economy”.

The new relations were most pronounced with Europe. The Marshall plan signalled the US state’s commitment to underwriting the European states as capitalist states. They argue (2012: 112-114) that the US state positively supported the Common Market, which “was not intended to be, and it did not become, the basis for a new inter-imperialist rivalry based on a European super-state”. Rather than trying to limit the penetration of US capital, European governments competed for American investment, offering special treatment for foreign capital. They argue that the stage was set for “the implantation of American capital as a class force inside European social formations”.

The process was not without serious contradictions. The first was “the growing trade competition from Europe and the growth of US private investment in Europe combined to produce severe pressure on the dollar”. A second emerged as US financial capital increasingly strained against the limits of the New Deal framework at home, and also “found new outlets through the overseas expansion of multinational companies (MNCs) and the opportunities this gave to internationalise US banking”. The vast cross border flows of private capital this involved “were bound eventually to undermine the Bretton Woods system of fixed exchange rates”.

Integration of the rest of the world into the US informal empire took a qualitatively different form from Western Europe, not only in Japan but also in the oil-producing states of the Middle East, as well as elsewhere in the ‘Third World’. Although Japan’s integration would become the model for Taiwan and South Korea, no other part of the Third World would be so successfully integrated in this fashion into the American empire. Although Japan was the successfully assimilated, this was also not without contradictions, not least the economic competition of Japanese capital with US capital that emerged in the 1960s.

The initial “golden age” saw the reconstruction of Western capitalism. International trade during the 1960s grew 40% faster than GDP, but this was outstripped by foreign direct investment (FDI), which increased twice as fast as GDP. Panitch and Gindin (2012: 112) point to “a shift over the second half of the twentieth century in capitalism’s international fulcrum from trade linkages across national spaces of accumulation to the development of transnational productive spaces”.

Panitch and Gindin (2012: 164) argue that the way the crisis of the 1970s was resolved “was decisive for realising the project for a global capitalism under leadership in the final two decades of the twentieth century”. They explain four specific transformations. The first was the relationship between industry and finance. “A much larger share of total corporate profits now went to the financial sector. However “it is a mistake to see the dominance of finance in terms of speculation displacing productive activity”. Second, old labour-intensive sectors like shoes, textiles, food and beverage didn’t just ‘decline’ in the US. By the end of the century, a major restructuring had occurred within these industries – in particular their spatial relocation. Third, the shift to high-tech manufacturing production – a new, largely American-led industrial revolution – soon spread globally and encompassed computer and telecommunications equipment, pharmaceuticals, aerospace, and scientific instruments. Fourth, structural transformation involved the growth of a diverse range of “professional and business services” that ranged across consulting, law, accounting, market research, engineering, computer software and systems analysis.

These transformations – the new age of finance, the restructuring of manufacturing, the explosion of high-tech, the ubiquity of business services, as well as the profound weakening of working class organisation and labour identity – reconstituted the material base of the American empire. The global division of labour before the Second World War was rigid: manufacturing was largely concentrated in the former imperial countries and resource extraction in their dependencies. This pattern did not change all that much until the 1980s, when the political conditions were established – in the North as well as increasingly in the South – that laid the grounds for a truly global capitalism.

Panitch and Gindin (2012: 211-12) argue that some states were able to break out of capitalist underdevelopment. The major shift across so many developing counties to export-led manufacturing production “meant that their place in global capitalism was no longer that of mere suppliers of raw materials to the advanced capitalist states”. In fact this transformation in the international division of labour involved “a reconfiguration of social relations in one country after another, yielding not only new capitalist classes which became ever more linked to international capital accumulation, but also a massive expansion of the global proletariat”.

By the new millennium there was clearly a very remarkable, if still highly uneven, process of capitalist development taking place in the global South. But Panitch and Gindin (2012: 211-212, 275) do not exaggerate the extent of the transformation. The integration of these regions of the world into global capitalism has been extremely uneven. At the end of the twentieth century the advanced capitalist countries accounted for 90% of all financial assets, 65% of world GDP and almost 70% of global exports of manufactured goods. Not only did 85% of global FDI emanate from these countries, they were also the recipients of over two-thirds of it. Despite the enormous volume of manufacturing production taking place in developing countries by the first decade of the twenty-first century, the advanced capitalist countries still accounted for over 70% of world manufacturing production by value, and over 60% of the value of manufactured exports. Most MNC production and sales still took place in the developed world, which in 2007 was still the recipient of 70% of FDI. Nor did the increase in global production taking place in the Third World lead to anything near a corresponding convergence in income relative to the advanced capitalist countries, as evidenced not only by conditions in the factories but especially in the slums of most Third World cities.

Much of this analysis is simply reading off the real trends and tendencies in global political economy without flinching or self-deception. One virtue of the book is that it is empirically grounded – starting from reality as it is – and seeking to explain how the current balance of forces emerged. This is neither fatalistic nor pessimistic. Panitch and Gindin constantly emphasise the contested nature of the global order and in particular the efforts of labour movements to come to grips with it. Thus they see that within the drive towards globalised capitalist production increased the power of capital but also the social weight of the working class. The apparent triumph of the American empire only reinforces the global terrain of working class politics and the importance of international working class struggle.

One of the chief contributions made by Panitch and Gindin, not only in this book but in a range of articles they have produced over the last decade in the Socialist Register and New Left Review, is to challenge the “orthodox” left version of imperialism. This view – expressed by the SWP and most of the left in Britain – mechanically transposes Lenin’s view of inter-imperialist rivalry leading to the First World War onto today’s very different conditions. Behind arguments about Israel-Palestine, Syria, Iraq, Iran and a host of other debates lurks an interpretation of imperialism largely inherited from Stalinism. Clearing away the debris is vital to understand the dynamics of current politics.

Panitch and Gindin (2012: 5) applaud the classical Marxist analysis of the international dimension of capitalism. They regard the insight that the export of capital was transforming the role of the state in both capital-exporting and importing countries as “the most important contribution of theorists of imperialism writing at the beginning of the twentieth century”. However “the link these theorists made between the export of capital and the inter-imperialist rivalry of those years was problematic, and would become even more so over the years from 1945 onwards”. The problem was “not only that classical theories of imperialism saw states as merely acting at the behest of their respective capitalist classes, and thus did not give sufficient weight to the role of pre-capitalist ruling classes in the inter-imperialist rivalry of their own time”. It was also that “they treated the export of capital itself as imperialist, and thus the theories did not really register the differentiation between the economic and political spheres in capitalism, or the significance of informal empire in this respect”.

Panitch and Gindin (2012: 6) do not dismiss the value of these theories at the particular conjuncture of the First World War. However “their tendency to directly associate the new export of capital with the old history of imperialism (as the extension of rule through armed conquest of territories), led them to mistakenly conclude that this fusion defined the historical terminus of a mature capitalism”. Whatever one believes about imperialism, the form it took in 1914 cannot in retrospect be described as the final or highest stage of capitalism. Further, “the notion of finance capital (extrapolated far too generally from the monopoly trusts between industrial and financial firms at the turn of the century in Germany) was a hindrance to understanding the much looser relationship between production and finance that increasingly became the norm, along American lines, through the course of the century”.

But most problematic of all was “the attempt to explain the export of capital in terms of the saturation of domestic markets in the major capitalist countries”. This failed to recognise the long-run implications of the growth of working class organisations for the dynamics of capitalism. In the ‘golden age’ after 1945, “domestic markets were anything but saturated; profits were realised through expanding working class consumption, yet capital exports continued, driven by quite different factors, as the export of capital itself was transformed over the twentieth century in the context of the international integration of production through multinational corporations and the extensive development of international financial markets”.

In short, Marxists cannot understand capitalist development after the Second World War by mechanically extrapolating the tendencies that characterised the period of the First World War. For Panitch and Gindin (2012: 7-8), the most important novelty of the relationship between capitalism and imperialism set in train after 1945 was that “the densest imperial networks and institutional linkages, which had earlier run North-South between imperial states and their formal and informal colonies, now ran between the US and the other capitalist states”. The creation of stable conditions for globalised capital accumulation was accomplished by the American informal empire, which succeeded in integrating all the other capitalist powers into an effective system of coordination under its aegis.

Panitch and Gindin (2012: 11) argue that the interpenetration of capitals “did largely efface the interest and capacity of each ‘national bourgeoisie’ to act as the kind of coherent force that might have supported challenges to the informal American empire”. The new relationship between capitalism and empire established at this time “should not be understood in terms of the old ‘territorial logic of power’ long associated with imperial rule merely becoming fused with the ‘capitalist logic of power’ associated with ‘capital accumulation in space and time’. The US informal empire constituted a distinctly new form of political rule”.

They build on the insight of Marxists such as Ellen Meiksins Wood, about how the separation of the economic and the political that characterises capitalism. This plays out globally as well as within particular states. The prototype for this kind of imperial hegemon was of course Britain, which emerged as the first global capitalist power. Before the late eighteenth century, all empires had combined economic control with military and political control. It was left to Britain, “where the differentiation between economy and state was most advanced, to develop a conception of empire based as much on economic expansion and influence - the ‘imperialism of free trade’ – as on the military and political control of overseas territories”. Of course the Britain empire mixed the old territorial conquest (such as in India) with the more informal methods (such as in Latin America). Panitch and Gindin puncture the conventional notion that free trade and imperialism did not mix, a misconception carried into the twentieth century by Marxists such as Kautsky and Lenin. The British experience and latterly the role of the US decisively refute this juxtaposition.

Panitch and Gindin (2012: 218, 330) extend this analysis of “the imperialism of free trade” to understand the hegemony the US state has exercised globally since 1945. They also make some wider insights that are valuable. First, those observers who have sought since the 1970s to predict “a recrudescence of inter-imperial rivalry”, in the form of US conflict with either Europe, or Japan, (or latterly with China) have been wrong. The continuing centrality of the American state in the global economy has been reinforced in the current crisis unfolded, “with virtually no trace of such inter-imperial conflict that a century earlier had given rise to world war”. The conflicts that have emerged today in the wake of the greatest capitalist crisis since the 1930s are taking shape, not only in Europe but much more generally, “less as conflicts between capitalist states and their ruling classes than as conflicts within capitalist states”.

There are also implications of their analysis for our understanding of the Cold War and its place in the last half-century of history. Panitch and Gindin (2012: 12), rightly in my view, did not regard USSR as a capitalist state, but rather as a different form of exploiting class society. The USSR was imperialist in the classic, general historical sense i.e. a territorial imperialist, both internally in dominating other people, such as in the Ukraine, and externally in its post-war control over Eastern Europe. The Cold War was undoubtedly a conflict between imperialist blocks, and between different modes of production. There is no doubt about the real threat of global war that it entailed, or its terrible impact on labour movements.

However many on the left made the US-USSR rivalry simply a species of the inter-imperial rivalry thesis, and thus the main dynamic in international relations between 1945 and 1991. If I read Panitch and Gindin right, they regard the Cold War as a secondary phenomenon, subordinate to the global capitalist project of the US state. I think they are right about this. The USSR was never able to mount a systemic challenge to capitalism and Stalinism never caught up with the productivity of capitalism. Stalinism was a blind alley – and for the working class movement a terribly destructive diversion – within an epoch in which capitalism was the dominant mode. The collapse of Stalinism and the endurance of capitalism underline the analytical priority. This is not to render the Cold War irrelevant, but rather to understand it as a sub-plot within a much wider global political economy that emerged after 1945.

Two other insights also make sense. Panitch and Gindin argue that to characterise the US economy a century ago (never mind today) as ‘monopoly’ capitalism is a mistake. In 1900, US firms’ relationship with the financial sector was fundamentally different from that of European companies with centralised banking systems that initially funded and then came to control industrial firms. Similarly, while there is no doubt deeper interpenetration of financial and productive capital in the modern world, to amalgamate it as “monopoly capital” adds little and confuses much.

Finally, Panitch and Gindin not only debunk important presuppositions about relations between the big powers, they also challenge the way “North-South” relations have been framed. They are critical of the way “imperialism” became ever more loosely associated with core-periphery relations, dependency and unequal exchange, with little focus on what distinguished the US from other empires. The world systems, dependency and other third worldist nationalist theories that dominated left thinking, particularly in the 1960s and 1970s, have been crucially undermined by developments over the last generation. Capitalist development has been and will always be highly uneven, but there has been significant combined development, particularly the creation of new centres of accumulation with sub-imperialist states, and crucially the growth of the industrial working class, which has renewed and expanded the objective basis for international socialism. It is on these tendencies that a revived labour movement can arise.

Since the 1970s, much of the international left has claimed that the US is in decline and thus the cannibalised “Leninist” position of inter-imperial rivalry leading to war became operative again. Yet even a superficial familiarity with the real relation of forces challenges this thesis – the US retains absolute superiority in military, economic, technological and cultural matters. For example, the US state had around 400 military bases in the 1960s, while today it has over 700. The US also outspends all its possible rivals put together, never mind its allies, alliances, nuclear and cyber capability, and other advantages. The Making of Global Capitalism (2012: 135, 289-91) shows very clearly that apocalyptic interpretations of US decline are misplaced, the evidence for it scanty and the political conclusions drawn from it hugely problematic. Panitch and Gindin weigh up key decline arguments: growth, technology, trade and rivals, finding them unsatisfactory at present.

The first argument concerning world production shares is simplistic. The US share of global GDP did shrink from 35% in 1950 to 27% in 1970 and has reduced since then to around 20%. However the US state’s project for a global capitalism was always predicated on reviving the other capitalist economies and their capitalist classes. The period since the 1970s has seen the further integration of European, Japanese and American capital, as well as intensive cooperation between the European and Japanese states and the American state. The US economy has not stagnated compared with other advanced states. The average annual real rate of growth of the American economy in the quarter-century after the resolution of the crisis of the 1970s (from 1983 to 2007) was 3.5%. This was higher than in any similar period from 1830 to 1950, and only marginally less than during the post-war ‘golden age’. US GDP growth in the quarter-century after 1983 surpassed that of all other advanced capitalist countries.

The second argument concerns the growth of the US trade deficit, which some observers claim threatens the dollar and ultimately US hegemony. Panitch and Gindin (2012: 291) argue that “the US trade deficit was not an adequate measure of the overall productive power of American capital; rather, it indicated its place in global capitalism”. The growth in the volume of US exports in the two decades up to 2007 – even as the trade deficit accumulated – averaged a very robust 6.6%, leaving it only marginally behind Germany and China, the world’s largest exporters. It was “the relative expansion of US imports that was the source of the growing deficit. The deficit in other words, primarily came from increased US consumption”. A more rounded picture is gleaned from looking at overall flows. Total US trade (exports plus imports) equalled 30% of GDP in 2007, whereas it had still been under 10% four decades earlier. But “perhaps the best measure of the intertwining of US and global capital was foreign capital’s increased presence inside the US”. Foreign direct investment into the US, which was still under 5% of US non-residential investment until the mid-1980s, exploded in the following two decades; by 2007 FDI to the US was running at 20% of US non-residential investment.

The third argument concerns technological leadership, which US capital continues to dominate. Panitch and Gindin (2012: 190-1, 202) point out that in the 1970s, US expenditure on research and development was about four times that of the countries of Western Europe combined. By the 1990s American IT corporations such as Apple, Hewlett-Packard, IBM and Microsoft were supplying over 80% of Europe’s software and computer market. By the end of the century, of the top dozen global firms by sector, the US accounted for 77% of the world’s aerospace sales, 75% of all sales of computers and office equipment, 91% of computer software sales, and 62% of pharmaceuticals. The US share of global high-tech sectors (aerospace, pharmaceuticals, computers and office machinery, communications equipment, and scientific – medical, precision, and optical - instruments) remained relatively steady at 32% between 1980 and 2001, whereas that of Germany was halved (to 5%) and that of Japan fell by a third (to 13%), and China’s and South Korea’s shares were still only 9% and 7% respectively.

Panitch and Gindin (2012: 289, 291) argue that the ‘commanding heights’ of global accumulation has shifted to these high-tech sectors, and to a range of business services. As of 2007, the top three or four firms in such diverse sectors as technological hardware and equipment, software and computers, aerospace/military, and oil equipment and services were American, as were fourteen of the sixteen top global firms in healthcare equipment and services. Nine of the top ten corporations in global financial services were American – a dominance that went beyond that in any other sector. By 2007, five US investment banks accounted for 35% of world revenue generated by underwriting bond issues, organising IPOs, equity trading, syndicated loans, and over-the-counter derivatives. More than half the world’s pension, insurance, and mutual funds were under the management of US financial firms, as were two-thirds of hedge funds and private equity funds. Yet the US was still producing more manufactured goods and receiving more foreign investment in 2007 than all the BRICS (Brazil, Russia, India and China) combined.

The final argument, which has probably the most substance, concerns the rise of China. The size of Chinese economy is expected to surpass the US economy in the next decade, although in per capita terms it remains far behind. However by 2050 (if not before) China may become the centre of gravity of global capital accumulation, and by that stage the Chinese armed forces may present a more serious rival to the US. China is already an imperialist power, in the traditional sense of territorial suzerainty over oppressed peoples and in the modern capitalist sense involving the export of capital, the role of financial capital and in the relationship between the Chinese state and particular states.

Panitch and Gindin (2012: 297-8, 336) do not discount the long term possibility of rivalry, but are sanguine about the exaggerated claims of China’s growing economic dominance, given that Chinese capital is still catching up technologically to Korea and Taiwan, let alone the US. They point to Chinese-US interdependence, with China reliant on the US as an export market and as the holder of huge dollar reserves, while US capital is now producing much more in China itself. They believe that since China’s admission to the WTO in 2001, it has been integrated into global capitalism. However the crucial question about rivalry concerns whether the Chinese state has the capacity to take on extensive responsibilities for managing global capitalism. Their view is that China is “manifestly still a very long way from being able to do so”. There are international institutional ties, from the UN to the G20, which at present bond the Chinese state to the current global order.

The situation of Chinese workers is perhaps the biggest factor in shaping the type of state China becomes in the coming decades. The number of manufacturing workers in China alone is now double the ten leading developed countries combined and its total labour force is larger than that of the US, Europe, Japan and all Latin America combined. Panitch and Gindin (2012: 337) say “it cannot be known in advance whether working class struggles in China will lead to the emulation of the West’s individualised consumerism, or whether they lead to the new collectivist claims”. What is known, based on the bitter experience of the last two decades, is that there will be more class struggle in China and there are opportunities for workers to organise as they did spectacularly in 1989. The role of international working class solidarity, in which Marxists can play an irreplaceable role, will also be vital for the emergence of an independent Chinese workers’ movement.

Panitch and Gindin (2012: 15, 97) provide an interesting account of the most recent phase of capitalism since 1982, although they are not keen on the term “neoliberalism”. First, they believe (rightly) that capitalist states remain central to the reproduction of capitalist social relations of production and have not been displaced by market mechanisms. Second, they argue that to demarcate the period since 1982 as neoliberalism “misses the continuities between their prescriptions for free markets and the long term goals already articulated by the American state at the time of the relaunching of global capitalism into the post-war era”. They quote Per Jacobson, who ran the Bank of International Settlements (and later the IMF) reassuring American policymakers in 1948 that something he called “neo-Liberalism… has begun to gain ground” in Europe. Third, they believe that neoliberalism was essentially “a political response to the democratic gains that had been previous achieved by working classes”.

These are valid insights, but their description does in fact (and for good reasons) feed the idea of that the past three decades have been significantly different from what went on for a generation before. Panitch and Gindin (2012: 150, 159, 172) state that the derivatives revolution was “crucial to the stabilisation of currency markets in the wake of the end of fixed exchange rates, and was also intimately linked to the internationalisation of the US bond market”. The significance of the triumph of monetarism in Britain in the late 1970s was “the class alignment that went with it”. In accepting the need to give priority to fighting inflation, “industrial capital accepted that a finance-led accumulation strategy was in its interests too”. The way in which this was achieved – high interest rates, a deep recession, and the liberalisation of markets – also laid the basis not only for the new age of finance, but also for the restructuring of US industry.

Between 1980 and 2007, global GDP doubled, trade grew twice as fast as GDP, and FDI grew twice as fast as trade. Panitch and Gindin (2012: 284, 286) believe that this “accelerated capitalist globalisation” entailed major changes everywhere. This could been seen in three interrelated areas: a) the massive expansion of finance in global accumulation; b) the impact of networks of integrated production on the global division of labour; and c) the novel aspects of US economic centrality in global capitalism. The scale of global financialisation “was especially stunning”. While in the years 1990-2007 world trade grew at an impressive annual rate of 8.7%, cross border financial flows grew at 14.4%, exploding over those years from $1.1 trillion to over $11 trillion. Financialisation in the global South also “facilitated the outward flow of capital from developing countries”. Capital flows between the developing countries increased significantly, and this came “not only from the foreign banks operating there, but also from local capitalists who were expanding their horizons beyond their home base”.

The new division of labour corresponded to something equally crucial to a globalised capitalism: the development of new networks of integrated production. The result was a more interdependent global capitalism that required more than ever the consolidation of ‘free trade’ to facilitate borderless production. Again, the process has not been without contradictions. No less than seventy-two financial crises broke out in the 1990s. The crisis that began in 2007 also indicates the state of the global power relations, including the neoliberal continuities with the previous period.

The current crisis is a crucial test for theories of imperialism and capitalist development. Panitch and Gindin (2012: 300, 311) argue that the first global crisis of the twenty-first century “would not be caused by the build-up of external imbalances, such as the US trade deficit and indebtedness to China, triggering collapse of the dollar”. On the contrary, “it was caused by the build-up of domestic contradictions in US society’s own envelopment in the volatility of finance. It was a crisis made in America”. The American crisis that started in 2007 “was not caused either by domestic industrial ‘overaccumulation’ or international trade and capital imbalances, but rather by the volatility of capitalist finance”. It was because “US finance had become so integral to the functioning of twenty-first century global capitalism that the ultimate impact of this crisis throughout the international economy was so profound”.

Panitch and Gindin (2012: 20, 329) oppose efforts to subsume the explanation for all crises to one universal, such as the tendency of the rate of profit to fall. They oppose attempts to go back to the theories of imperialism a century earlier, which suggested that “overaccumulation is the source of all capitalist crises”. There are fundamental differences between the 1970s crisis and the present one: for example “it was only after the financial meltdown in 2007-08 that profits and investment declined”. The stagnant growth and employment since are not due to falling profits – corporate profits quickly recovered after the 2009 downturn, and by mid-2011 were not only 23% above the mid-2007 level but even 16% above their record peak in mid-2006.

For Panitch and Gindin (2012: 313, 318, 326) the US Federal Reserve “has acted as the world central bank during the crisis, trying to ensure thereby that interbank rates would decrease and normal mechanisms for access to dollar funding would be restored”. Although many commentators predicted widespread “delinking” from the US-centred global order, remarkably “the crisis actually had the effect of strengthening the global role of the dollar”. Quantitative easing essentially involved “an audacious printing of US dollars”, and thus relied on “the willingness of foreign investors and central banks to continue to hold dollars; it served as the strongest reminder to date of the special ongoing attractiveness of the dollar”.

Of course the process has not been without contradictions. The confrontations between the Treasury and Congress starkly revealed the tensions the American state experienced between “the governance of its own social formation and its imperial responsibilities for the reproduction of global capitalism” (2012: 330). But thus far the US economy has survived the impact of the crisis and the US state remains central to the existing global political economy.

Panitch and Gindin’s account of the current era of capitalist development, superintended by the US state and sucking almost all social formations into the vortex of capitalist social relations of production, is essentially sound. At one point (2012: 115) they describe the way national bourgeoisies forged ties with American capitalists and were integrated into American imperial hegemony as “Canadianised”. This is an apt description and no accident. The authors have observed the pattern of US-Canadian relations first-hand during their lives, and those relations have served as a model for the global order.

Panitch and Gindin (2012: 338, 340) make some pertinent points for the future, which should be assimilated by sober Marxist analysis. First, the belief that there is a way back to a supposed post-war “real economy” from finance-led capitalism is “illusionary”. Second, “there is no real possibility of going back to the largely mythical ‘mixed economy’ the New Deal and Keynesian welfare state are imagined to have represented”. Third, “a revival of progressive economic nationalism in most developing states today is ruled out by the absence of anything like a national bourgeoisie for popular classes to ally with”. Instead they look to the organised labour movement for the social agency capable and willing to take on the forces of capital.

It would be churlish as some reviewers have done to emphasis the gaps and limitations of the picture. Methodologically, Panitch and Gindin chose to examine the construction of global capitalism through the analysis of a single state, which inevitably means some global relations are not discussed fully. Of course further analysis is needed of global flows of surplus value, anomalies such as many regimes in the Middle East and Africa, and no doubt other problems. But these can be reconstructed on the firm foundations established by the book. This is an immense contribution to understanding the nature of contemporary capitalism, which socialists should study in order to rearm the labour movement.

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Submitted by AWL on Thu, 02/01/2014 - 14:24

By Martin Thomas

The main theses of Panitch's and Gindin's book, restatements of what they have argued in many articles, are, I think, plain fact and important fact.

The forty-odd years of turbulence since the end in the early 1970s of the 1950s-60s "golden age" of West European, Japanese, and American capitalism have not brought a relative decline of the USA and a rise of inter-imperialist rivalries.

They have brought the extension of global capitalist markets and global capitalist interpenetration.

That has not been a process of the pushing-aside or marginalising of states by markets, but of new active roles, and in many cases new capacities for capitalist states.

US hegemony has been a lynchpin. It not disappeared or declined, but remains strong.

The forty years have not been a time of permanent crisis or permanent depression, leavened only by "speculative" or "artificial" booms. They have included long periods of profit-rate recovery and capitalist expansion, as shaky and contradiction-ridden as capitalist expansions always are, but also as real as capitalist expansions often are.

In 2002 I wrote (Workers' Liberty 2/3): "The unremarked surprise of the 13 years since 1989 is that the web of international regulatory institutions built up on the US side of the Cold War, and mostly lynchpinned by the USA - IMF, WTO, G7, World Bank, NATO, European Union - has proved strong and flexible enough to integrate vast new territories", despite follies, pauperisations, and shocks.

Even more surprising now. The EU has by some measures been through its worse and most discreditable period ever. Despite that, Latvia has just joined the euro, Lithuania wants to do so soon, Croatia has joined the EU, Serbia is a hopeful candidate, and Turkey's EU membership application talks restarted in November 2013. In Ukraine there have been mass demonstrations in favour of Ukraine moving towards the EU.

As Panitch and Gindin rightly explain, EU development is not the development of an alternative pole to the USA, but the development, encouraged from the start by the USA, of an integrating mechanism within a US-hegemonised world order.

All that is true.

I worry, however, that in working their researches up into a book Panitch and Gindin tend too much to "rationalise", to read back events as having turned out as they did because previously-established capacities and qualities of the US state ensured that they had to happen that way.

They are careful at points to stress contradictions, fumblings, and cross-currents in the progress of US power. Yet they sum up the process in these words: "The ambitious project for the making of global capitalism, imbricated in the American empire and first articulated during World War II, was realised in the last two decades of the twentieth century".

What does "imbricated" mean here? Dictionaries define "imbricate" as to overlap, especially in the manner of roof-tiles, or to place so as to overlap. The word comes from the Latin imbrex, meaning a convex roof-tile. Maybe the word was nudged into Panitch's and Gindin's minds by memories or half-memories of E P Thompson's use of it in The Poverty of Theory: "law... was imbricated within the mode of production and productive relations themselves". In any case, the nudge for the reader is towards thinking that the project was built into what their chapter one calls "the DNA of American capitalism" and developed in a way analogous to that in which a person's DNA shapes their growing-up (which is, of course, not unilaterally or totally).

It is with Panitch and Gindin a bit as Feuerbach said it was with Hegel: "The form of both conception and method is that of exclusive time alone, not that of tolerant space; his system knows only subordination and succession".

Their text hesitates to endorse Toni Negri's and Michael Hardt's claim that "Empire" is driven by the unique "network power" that the US constitution gives to the US state as a manager of global capitalism. But in a footnote Panitch and Gindin give a modified version of that claim: "the remarkable informal imperial 'carrying power' of the American constitution".

It is true that Karl Marx could, in the US Civil War, find reason to write of the USA as "the very spot where... the idea of one great democratic republic had first sprung up, whence the first declaration of the Rights of Man was issued", and even to declare that "the working men of Europe felt instinctively that the star-spangled banner carried the destiny of their class".

The quality of the USA as the world's longest-lasting and most stable bourgeois democracy, free from feudal encumbrances, and with multicultural tendencies from early on, cannot be gainsaid.

But I worry here about the danger of falling victim to the always-tempting illusion of success, that it comes from the successful entity always having the DNA of success within it.

In the heyday of the British Empire, its rulers, when they wished, as they often did, to distance themselves from crude racism, would explain the empire in terms of Britain having a special facility at "good government".

Studying parliamentary inquiries into Britain's trade, Karl Marx found the banker William Newmarch (Thomas Tooke's collaborator on Tooke's great history of prices) explaining that "the British import 'good government' into India for these £3,700,000" [tribute extracted by Britain from India].

Marx commented with a snort: "Wood [the questioner], as a former Minister for India, knows full well the kind of 'good government' which the British import to India" (Capital vol.3 p.583).

Yet over half a century later the then Tory leader Arthur Balfour used the same idea of a British facility for "good government" to justify Britain's rule in Egypt.

Edward Said makes Balfour's speech, from 1910, the keynote text for his whole book, Orientalism. In fact the quotation shows Balfour languidly sidestepping claims that British culture was superior to Egyptian. "The civilisation of Egypt... goes far beyond the petty span of the history of our race".

The British just happened to have a facility for government. "A true Eastern sage would say that the working government which we have taken upon ourselves in Egypt and elsewhere... is the dirty work, the inferior work, of carrying on the necessary labour".

Self-interestedly, the British ruling class really did think, and convinced some others, that it had a special capacity for governing. Its methods of indirect rule in the colonies did work more smoothly than the cruder methods of France or the Netherlands or other powers.

In reality, the British ruling class appeared to have that capacity for governing, and developed nuanced methods and flexibility and an eye to the long term, because it had great power. The capacity arose with and from the success. What also arose, in large part, from the success, was the greater stability and security of the British state, which also enhanced its capacity.

None of that saved the British ruling class from carrying through debacles like the partition of India or its ignominious collapse in Palestine, or atrocities like its campaign against the "Mau Mau" in Kenya.

Is there not the same with the US state? That it seems to have special capacities because it has such power and stability? Rather than the power and stability being essentially a "realisation" of some given-in-advance capacities?

In The Civil War in France Karl Marx wrote that "the multiplicity of interpretations to which the Commune has been subjected, and the multiplicity of interests which construed it in their favour, show that it was a thoroughly expansive political form".

Has the US state the same quality of being the "thoroughly expansive political form" in a different register? Or was Engels right when in his introduction to an 1891 edition of The Civil War, he singled out the US state as the very model of the state machine becoming the victim of cliques - "two great gangs of political speculators, who alternately take possession of the state power and exploit it by the most corrupt means and for the most corrupt ends"?

The US has one of the most complicated tax codes in the world. Panitch and Gindin note that almost all the top international law firms are American. That fact also reflects the enormous drain on productive effort in the USA from its army of lawyers and its much higher rate of jailing people than other countries'. Legal liability costs for businesses in the USA are the highest in the world, and over two-and-a-half times higher than in Europe. The US has a quarter of all the world's prisoners, and jails people at a higher rate than any other country, almost ten times the rate of the Netherlands or Germany, for example.

Because the US has a sort of gang system for politics rather than proper political parties, US legislation is specially susceptible to pork-barrelling by special interests. The American Society of Civil Engineers compiles a "report card" each year on the country's physical infrastructure. "Since 1998, the grades have been near failing, averaging only Ds ['poor', on an A-to-F scale], due to delayed maintenance and underinvestment across most categories".

Although the USA has most of the world's richest universities, the average performance of its education system, so far as figures allow us to tell, is clearly below the OECD (34 richer countries) average. Although it has the world's most skilled medical centres, on average its enormous level of health spending produces, so a January 2013 report found, a poor outcome: "a large and widening 'mortality gap' among adults over 50 compared with other high-income nations". Exceptionally great inequality like the USA's, as Richard Wilkinson and Kate Pickett have shown, has regressive effects even within the ambits of capitalist development.

Not in Engels's day, but today, the USA also sees much of its surplus product sucked away in military spending.

Large, hugely-resourced, constantly reinvigorated by waves of immigration, geographically gifted with a large default sphere of influence, enjoying feedback advantages of centrality in a global economy where those advantages are important (as Saskia Sassen demonstrated in The Global City), the US has prevailed. We should not read back from that fact the conclusion that it prevails as a "realisation" of its "DNA".

Connected is the fact the Cold War scarcely figures in Panitch's and Gindin's narrative.

They draw a pretty straight line from the more confident, expansive, liberal-internationalist variants of US ruling-class thinking in the 1940s to the feathered-out global capitalism of today, with little attention to the other variants of the 1940s (which included schemes to chop up Germany into half-a-dozen states, all forcibly deindustrialised) and the way US policy was determined over much of the interim by Cold War imperatives.

We now know that Stalinism would suffer internal collapse in the late 1980s. Stalinism now looks like a sideshow. No-one knew that for sure in advance. At times like those after the USSR launched its Sputnik satellite in 1957, things looked very different to everyone, including the US ruling class.

Even if the US's rulers had been able to foresee that Stalinism would suffer internal collapse after a due span of decades - and they could not have done that in abstraction from the actual and unpredictable struggles which brought down Stalinism - they lived in the meantime. They planned for periods in which Stalinism was dynamic.

Panitch and Gindin say that the US defeat in Vietnam was not followed by a "domino effect". The effect was not as large as the most anxious US strategists, or those most concerned to colour things so as to sustain support for the infamous US war in Vietnam, said. But there was a domino effect.

By about 1969 it was clear that the US would win no clear victory in Vietnam, and in 1973 the US withdrew, leaving it only a matter of time until the Stalinists took South Vietnam in 1975.

Portugal's former colonies in Africa, winning independence in 1974-5, swung into the orbit of the USSR until around 1990. From 1974 to 1991 Ethiopia had a Stalinist regime allied to the USSR. So, between 1970 and 1990, had South Yemen.

In Portugal itself, military officers allied with the CP dominated a provisional government in 1975, before a counter-coup ousted them. US support for Turkey's military coup in 1978 will have been conditioned by fears of where the political ferment in Turkey in the late 1970s, with the Turkish Communist Party influential, might lead.

Peru had a USSR-allied and self-describedly "socialistic" military regime between 1968 and 1975. For the US ruling class, the Popular Unity government in Chile, from 1970 to 1973, was also part of the domino effect.

The US lost influence in the Middle East, other than with Israel, after the 1967 war, and Egypt, Syria, and Iraq were all closely aligned with the USSR, with heavily-statised economies. Things in Egypt shifted in favour of the USA with Sadat's infitah policy after 1975, but the USA still depended on the Shah's Iran as its main ally in the region - and then lost it in 1979. The USSR was the first state to recognise Khomeiny as ruler of Iran. Links were broken when the USSR backed a safer ally, Iraq, in the 1980-8 Iran-Iraq war, but mended a little after that.

As late as April 1978, when the Stalinists (embedded in the country's officer corps) took power in Afghanistan, or December 1979, when the USSR invaded to take over control from the Stalinists unable to quell popular revolt, Stalinism seemed to be, on the whole, advancing.

We now know that the revolt of the peoples of Afghanistan would so shake the USSR as eventually to bring down the whole Stalinist structure. We now know that the revolt of the people of Poland in 1980-1 could only be partially quelled by the military coup of 1981, and that the internal rotting of East Europe's governments had gone far.

None of that was obvious in advance. None of it was even fixedly true in advance, in abstraction from the struggles in Afghanistan and Poland and elsewhere that made it true.

Fading the Cold War out of the story fades out a number of things. It fades out the expedient-to-block-Stalinism character of such things as the Marshall Plan. It fades out the reasons why the US sponsored the most drastic land reforms in history in Japan, South Korea, and Taiwan, reforms which played a part in those countries' subsequent industrial rise. It fades out a large dimension of why so many governments turned to seek deals with the USA after the collapse of Stalinism. It fades out a large dimension of why so many governments and politicians came to think that an arrangement with the USA was now the only game in town, and why the USA became more willing and even keen to "let go" previous Cold War allies like Marcos in the Philippines (1986), Suharto in Indonesia (1998), the military in Chile (1990), or Stroessner in Paraguay (1989).

All these things then tend to be read as just consequences of the capacities of the US state, or of the progressive working-out of the "project" which was "imbricated" in it from way back.

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An Introduction to the Three Volumes of Karl Marx’s Capital

Published on: Mon, 11/03/2013 - 21:08

Michael Heinrich’s book, An Introduction to the Three Volumes of Karl Marx’s Capital, (Monthly Review Press 2012) is a lucid and refreshing theoretical interpretation of Marxist political economy.

Apparently, it has gone through nine editions in Germany and is used widely in German universities. Heinrich takes inspiration from the “neue Marx Lektüre” (new Marx reading) of Capital. The result is one of best introductions to Capital for the new reader, but also many sophisticated clarifications for those who who’ve already read some Marx.

The book has many virtues, both in terms of clarifying Marx’s meaning and rebutting Marx’s critics. One advantage of Heinrich’s approach is his emphasis on the tentative, unfinished nature of Marx’s grand project. He argues that Marx was undertaking a scientific revolution - not just writing a critique of classical political economy but establishing a new field of science. Marx opened up and entered this new field but was not at every step completely free from the old ideas and concepts. In Capital there is sometimes a mixture, which leads to what Heinrich calls “ambivalences”—notions and arguments that are oscillating between old and new concepts.

Heinrich distinguishes between two different projects in Marx. Originally, he had the six-book plan with the Grundrisse as first draft and the manuscript of 1861–63 as the second draft. However he then developed a new project: the four-book plan of Capital. This had the manuscript of 1863–65 as the first draft of the first three books (the fourth book never was written). A second draft is constituted by the first edition of volume I of Capital (1867), by manuscript 2 of volume II which was written by Marx in 1868–69 and some small manuscripts regarding the beginning of volume III. A third draft is constituted by the “Reworking manuscript” in French (1871/72), the second edition of volume I, the mathematical manuscript on profit-rate and rate of surplus value, and the manuscript for volume II, which were written in the 1870s. These are two distinguishable projects: the first project with two drafts and the second project with three drafts (partly published), but without a final design.

These matters have really only come to light in recent decades with the publication of the MEGA, a gargantuan plan for 120 volumes (only half so far published), which started in 1975. Heinrich puts a strong emphasis on the philological aspects of Marx in order to draw out what Marx actually meant, something obscured both by earlier interpretations (particularly Engels’ rendering of Capital Volume III) as well as some translations into English. However Heinrich avoids treating Marx as a quarry from which to extract quotations, or passing off certain texts as “the” position of Marx. The results are a theoretical intervention that brings to light new interpretations and solutions to previous shibboleths, including the transformation problem, crisis theory and imperialism.

Heinrich (2012: 9) argues that under no circumstances should anyone be satisfied with reading only the first volume of Capital, because what someone “believes to be understood after reading only the first volume is not only incomplete, but in fact distorted”. For example he denies that Marx begins with capital in general or advances “from the abstract to the concrete”, as he suggested in the Grundrisse. The object of the Capital is the capitalist mode of production, not particular capitalist social formations (such as nineteenth century England), or worse, a notional pre-capitalist “simple commodity production”. However Heinrich (2012: 13) warns that “one should not succumb to the illusion that with an analysis of the fundamentals of the capitalist mode of production that everything decisive has already been said about capitalist societies”.

Heinrich (2012: 44-45) argue that for many Marxists and most of Marx’s critics, the core of Marx’s value theory consists of the following ideas: “the commodity is use value and value, value is the objectification of human labour, the magnitude of value depends on the ‘socially necessary labour time’ required for the production of a commodity (the last point is frequently referred to as the ‘law of value’).” But the central value-theoretical insights of Marx are not limited to these simple propositions.

In chapter three, Heinrich reconstructs the panorama of value theory found throughout the three volumes of Capital. With value theory, Marx seeks to uncover a specific social structure that individuals must conform to, regardless of what they think. So value theory doesn’t “prove” that an individual act of exchange is determined by the productively necessary quantity of labour. Rather it should explain the specific social character of commodity-producing labour. Value is not at all a property that an individual thing possesses in and of itself. The substance of value is not inherent to individual commodities, but is bestowed mutually in the act of exchange. Only with the act of exchange does value obtain an objective value form, thus the importance of the “value form analysis” for Marx’s theory of value. Value is “something purely social; it expresses the equal social validity of two completely different acts of labour, and it is therefore a specific social relationship”.

One theoretical insight concerns the role of money in this reconstruction. Money is in no way merely a helpful means of simplifying exchange on the practical level and an appendage of value theory on the theoretical level. Heinrich (2012: 63-4) argues that “Marx’s value theory is rather a monetary theory of value: without the value form, commodities cannot be related to one another as values, and only with the money form does an adequate form of value exist”. Both the labour theory of value of classical political economy and the theory of marginal utility of neoclassical economics are pre-monetary theories of value. The usual “substantialist Marxist” value theory that alleges that value is already completely determined by “socially necessary labour time” is also a pre-monetary value theory. The magnitude of value of a commodity is expressed in its price – and this is the only possibility for the magnitude of value to be expressed.

Heinrich 92012: 69-70) deals with one obvious objection to Marx’s value theory, namely his assumption in Capital that money always has to be linked to a particular commodity. During Marx’s time, gold played the role of this “money commodity”. However at the beginning of the 1970s, the gold standard was formally abolished, as were fixed currency exchange rates. Since then, there is no longer any commodity that functions as a national and international level of a money commodity. Although “Marx could not image a capitalist money system existing without a money commodity”, Heinrich argues that “the existence of such a commodity is in no way a necessary consequence of his analysis of the commodity and money”.

Heinrich argues that for Marx, value is means of understanding fetishised social relations, not price theory. In the Communist Manifesto, Marx and Engels still held that with the establishment of capitalism, social relations would become increasingly transparent: domination and exploitation are no longer mystified or disguised, but openly visible. The notion that the exploitation of the working class in capitalism was readily transparent and that only the manipulation of the rulers disguised it – with the help of the press, church, schools, etc. The critique of ideology was understood as an act of exposure: one merely had to uncover the “real interests” behind a notion.

In Capital, Marx did not use the term “commodity fetish” to describe how people in capitalism place undue importance upon the consumption of commodities, or that they make a fetish out of particular commodities that serve as status symbols. In contrast to the idea that social relations in capitalism are regarded as transparent, central passages of the work deal with the “mystification” of these social relations. What Marx describes in Capital as fetishism and mystification are “inversions that do not arise from the manipulation of the ruling class, but rather from the structure of bourgeois society and the activity that constantly reproduces this structure”. Marx therefore speaks of the “reification of the relations of production” (Capital 3: 969).

Heinrich (2012: 184-5) argues convincingly that people in bourgeois society therefore live in an “enchanted world”, in which a “personification of things” occurs: the subjects of the social process are not people, but commodity, money and capital. This is not merely a case of “false consciousness”. It is the social practice of capitalist society that constantly enacts a process whereby the “factors of production” take on a life of their own and social cohesion is constituted as an objective necessity that individuals can only escape on pain of ruin. All members of bourgeois society are subordinate to “the fetishism of social relations”. Neither capitalists nor workers have a privileged position that allows them to evade this fetishism. However, this fetishism is “not a completely closed universal context of deception from which there is no escape. Rather, it constitutes a structural background that is always present”.

One audacious digression in the book is the discussion of anti-Semitism as “the personalisation of fetishistic relations”. Heinrich (2012: 189) argues that anti-Semitism in bourgeois society is fundamentally distinct from all other forms of discrimination, prejudice and attribution: “Only in modern anti-Semitism are central constitutive principles of society projected ‘outward’ onto a ‘foreign’ group.” He argues that many anti-Semitic tropes and stereotypes, such as the all-powerfulness of Jews, their rootlessness and the “global Jewish conspiracy” are in fact perverse projections of elements of bourgeois society concentrated on (and scapegoating) Jewish people with it. Heinrich is seeking to understand how particularly forms of racist oppression are rooted in capitalist political economy. I don’t think this captures entirely the nature of modern anti-Semitism. However he deserves credit for the insight.

The book contains a fairly orthodox exposition on the nature of exploitation. Capital reveals how exploitation takes place under capitalism, under the veneer of apparent equality. Heinrich (2012: 96-7, 120) argues that the term exploitation is “not meant to allude to especially low wages or especially bad working conditions”. Exploitation refers “solely and exclusively” to the fact that the producer only receives a portion of the newly produced value that he or she creates – regardless of whether wages are high or low or working conditions good or bad. As an effect of the increase in productivity, a rise in the standard of living of the working class has accompanied an increase of the surplus value appropriated by the capitalists. Increased exploitation (meaning that a greater portion of the workday consists of surplus labour) and an increased standard of living for the working class are therefore not mutually exclusive. “Exploitation” and the existence of “unpaid labour” are not the result of an infringement of the laws of commodity exchange, but are rather in compliance with them. If one wishes to abolish exploitation, then this cannot be accomplished through a reform of the relations of exchange within capitalism, but only through the abolition of capitalism.

Armed with this interpretation of Marx’s value theory, Heinrich seeks to clarify important debates within the history of Marxism. The first theoretical gain is the way in which he dissolves the knotty “transformation problem”. In the third volume of Capital, Marx sketched out a simple quantitative method of calculation to arrive from a system of value to a system of production process. This method of calculation, however, has proven to be wrong. The fact that it contains an error was also noted by Marx (Capital 3: 265) but he underestimated the effects of this error. Heinrich (2012: 148) argues that within the framework of the monetary theory of value, there can be no point to any sort of procedure for calculating production prices from values. Rather, the “transformation of values into prices of production” represents a conceptual advancement of the form determination of the commodity. He argues that “the transition from value and surplus value to production price and average profit is not an historical or even a temporal sequence, but rather a transition between different levels of description”.

An even more substantial clarification concerns theories of crisis. The possibility of interruption and therefore crisis as Marx explained in Capital volume 1 is inherent to the mediation of the social circulation of matter through money. But for the mere possibility of crisis to become an actual crisis, a series of further circumstances must come into play. Heinrich (2012: 171) rightly argues that Marx attempted to prove that crises results from the capitalist mode of production itself and that a crisis-free capitalism is impossible. And he is right that “one cannot find a comprehensive theory of crisis in Marxist work, but rather scattered, more-or-less elaborated observations that have been worked up by Marxists into quite distinct theories of crisis”.

Heinrich (2012: 150-3) takes particularly delight in pulling to pieces what is sometimes called the fundamentalist Marxist theory of crisis (held for example by the SWP), that crises result from the law of the tendency for the rate of profit to fall. For Marx, the tendency for the rate of profit to fall and capitalist development of the forces of production are two sides of the same coin. If Marx had been able to conclusively prove the connection, then he would have shown that a falling rate of profit belongs to the “essence” of capitalism.

However here lies the fundamental difficulty for every proof of the “law of the tendency of the rate of profit to fall”: a general statement about the degree of increase for the organic composition of capital (c/v) is not possible. In one case, a specific increase in productivity can be achieved through a small quantity of additional constant capital; c/v thus increases only a little bit, which can lead to the rate of profit rising, not falling, as a result of the increasing rate of surplus value. In another case, the same proportional increase in productivity may require a large amount of additional constant capital; c/v thus increases strongly, and the rate of profit eventually declines. He also states that if the number of employees declines beyond a certain critical mass, then at some point the amount of surplus value produced also declines, regardless of how strong the rate of surplus value increases.

In Heinrich’s (2012: 153) view, Marx thought he had sufficiently proven the law of the tendency of the rate of profit to fall using this consideration. But that was not the case. A declining mass of surplus value only indicates a fall in the rate of profit with certainty when the total capital c + v required for the production of this surplus value has not also fallen, but has at least remained constant. And Marx implicitly assumes this precondition in his example. But this assumption is not unproblematic. For the total capital to remain the same it is not sufficient for the constant capital c to increase, rather it must increase by a certain amount; namely it must increase by the same amount that the variable capital has been reduced. Whether or not this is the profit fall cannot be answered at such a general level: we don’t know whether the productivity increase has been implemented with a lot or a little additional constant capital.

He concludes: “In contrast to Marx, we cannot assume a “law of the tendency of the rate of profit to fall”. This doesn’t mean that the rate of profit can’t fall, which may very well be the case. However, the rate of profit can also rise. A long-lasting tendency for the rate of profit to fall cannot be substantiated at the general level of argumentation by Marx in Capital.” It cannot therefore serve as the basis for explanations of all crises.

Heinrich (2012: 140, 172, 177) also gives short shrift to other Marxian theories of crisis, including those based on a disproportion between different departments in the reproduction schemes, underconsumption theories focused on the lack of consumption demand, and with theories that purport to show the collapse of capitalism. In the history of Marxist debates, the reproduction schemes were “burdened” with too much explanatory power. Though they offer a broad overview of capitalist production and circulation, “they are a long way from being an exact depiction of capitalist reproduction as it exists in empirical reality”. Similarly, “underconsumption” theories of crisis are based upon this constricted power of consumption of the working class. As an explanation for the existence of crises, “the argument of excessively low wages and the resulting “demand gap” is insufficient”. And theories of collapse are “confronted with the fundamental problem that they claim an inevitable developmental tendency that capitalism is so unable to deal with that its further existence necessarily becomes impossible – regardless of whatever happens in the actual course of history”.

Heinrich does not set out a comprehensive alternative explanation for crises; in fact he goes some way to denying this is even possible. He describes (2012: 173-4) “a tendency toward the overproduction of commodities” (overproduction relative to buying power) and the over-accumulation of capital (accumulated capital that either cannot be valorised at all, or only very poorly), which ultimately leads to crisis: “reproduction stagnates, invested capital is devalued or even completely wiped out, the lest profitable production facilities are closed down, the least profitable capitals go bankrupt, workers are laid off and wages decline with the rise in unemployment. Crises are also enormous processes of destruction: social wealth is annihilated”. But crises are not just destructive. Rather, in crises the unity between spheres (such as production and consumption) that belong together but become independent of one another is “violently restored”. New branches emerge, old ones disappear or lose their importance, machines and raw materials that were previously important are no longer so, old enterprises are devalued, new ones emerge without certainty as to whether they will yield profits at the expected level. The only thing certain in this economic turmoil is uncertainty.

However Heinrich (2012: 174-5) concludes that “at the general level of depiction intended by Marx in Capital, nothing further can be said concerning the concrete development of specific crises”. The progression of specific crises is dependent upon the respective concrete circumstances, such as “technical and operational developments, the structure of the credit system, the position of a country on the world market (a priority for capital particularly in times of crisis), the organisation of the working class and its struggles, and the manner of state intervention in the business cycle”.

If Marx’s value theory is a monetary theory of value, then the commodity and value cannot exist and also cannot be conceptualised without reference to money. The same can be said concerning the relationship between capital and credit. Heinrich (2012: 165) argues that within traditional Marxism, a non-monetary theory of value was dominant, as was a conception of credit that reduced it to a mere appendage that was unnecessary for the existence of capital, and unnecessary for the understanding of capital. Therefore one advantage of Heinrich’s approach is that it can be brought to bear more readily on the current crisis, where the financial aspects have been to the fore.

In chapter 11, Heinrich (2012: 200-3) provides important clarity on the relationships between the state and capital. Marx emphasises that “the state and law cannot be grasped by themselves, but must always be examined against the background of economic relations”. However his criticises a trend within some Marxist thinking, which defines the state primarily an instrument in the hands of the ruling class. Heinrich accepts as “indisputable” that particular fractions of capital attempt to use the state as an instrument, and sometimes succeed in doing so. But in political practice “the instrumentalist conception of the state usually leads to the demand for alternative use of the state”, which effectively a reformist perspective.

Heinrich (2012: 203-5) says that a fundamental problem with the “instrumentalist” conception of the state is that it “obscures the qualitative differences between pre-bourgeois and bourgeois social relations and only emphasises the division of social into social classes”. In capitalist society, economic exploitation and political rule diverge. He states that the state “does in fact conduct itself as a neutral instance with regard to its citizens; this neutrality is in no way merely an illusion. Rather it is precisely by means of this neutrality that the state secures the foundations of capitalist relations of domination and exploitation”. The formulation is somewhat misleading. He is not seeking to allow reformism back in, but rather to stress that the appearance of the state as an arbiter “above” classes is real.

The state has to continuously and directly intervene to encourage and enable capitalist production. The state, following Engels in Anti-Dühring (MECW 25: 266) thus acts as an “ideal personification of the total national capital” This general interest is not always identical with the particular interests of individual fractions of capital. The essential pre-condition of capitalist accumulation is the existence of waged-labourers, yet there is “a tendency towards the destruction of labour-power is thus intrinsic to capitalism”. The state does not only prevent the destruction of labour-power; in the form of the welfare state, it also guarantees its reproduction insofar as that is not possible solely as a result of the wage compensation negotiated between workers and capitalists.

Heinrich (2012: 207-8) argues that state social welfare measures “originate in the capital accumulation process, regardless of whether these measures are financed by social insurance contributions or taxes”. A portion of total social capital is used, so that the mass of surplus value is reduced. It is frequently the case that state social welfare measures come about as a result of struggles by the labour movement. The welfare state is therefore frequently understood as an “achievement” of the labour movement, a concession to the working class (in order to pacify it). However for Heinrich, “it is not the case that such measures are one-sided benefits for the forces of labour that – as is occasionally asserted – already constitute the first step in transcending capitalism. Rather, they safeguard the existence of workers in a manner consistent with capitalism, namely as wage-labourers”.

The interests that determine the state’s activity are not just sitting around waiting to be implemented, as is assumed by the instrumentalist conception. Rather these interests must first be constituted. Alternative strategies are possible, so that state policies cannot be reduced to the simple implementation of necessities of the capitalist economy. The reference to the economic purpose behind a state measure, popular in Marxist circles, is insufficient as an explanation. In the bourgeois public sphere, a political system counts as democratic when it offers the effective possibility for voting out a government.

Another significant virtue of the book is to highlight the disconnection between Marx’s political economy and later theories of imperialism. Heinrich (2012: 213) argues that in attempting to achieve the highest possible level of valorisation, “capital has a tendency to transcend national borders, both in the purchasing of elements of constant capital (most notably raw materials) as well as in the sale of its finished products”. Marx thus wrote (Capital 3: 205) of the world market that it is “the basis and living atmosphere of the capitalist mode of production”.

Heinrich (2012: 215-16) argues that in Lenin’s theory of imperialism, there are a number of extremely problematic points. First of all, the alleged transition from competitive to monopoly capitalism led Lenin to conclude a change in the capitalist mode of socialisation: it was no longer value, but rather the will of the monopolists that was supposedly dominating the economy the state is reduced to a mere instrument of these monopolists. Finally, the characterisation of imperialism as “parasitic” is problematic. Overall, “what Lenin intended as a continuation of Marx’s analysis ultimately has almost nothing to do with Marx’s critique of political economy”.

Not only theoretically, but also empirically, Lenin’s theory of imperialism stands on shaky ground: “the export of capital supposedly necessitated by imperialist policies did in fact occur, but the greater portion of this capital export went not to colonies and dependent territories but to other developed capitalist countries that also pursued imperialist policies”. That means that the cause of capital export could not solely lie in the absence of profitability in the capitalist centres, since that would mean there couldn’t have been any capital exported to other centres. Further, for the United States – regarded as the most important imperialist power – the import of capital, rather than the export of capital, is the decisive factor.

Heinrich (2012: 216) identifies the slippage between the early uses of imperialism and its subsequent application after Lenin’s time. He states: “If one describes the state assertion of the capitalist general interest at an international level by means of economic, political, or military pressure against other countries as imperialism, then imperialism is no longer a particular stage in the development of capitalism; rather every bourgeois state is imperialist within the limits of possibility, but then the term ‘imperialism’ really doesn’t say very much. At the international level, “a multiplicity of states of widely varying economic, political and military strength and with completely different interests face one another. Between them, there exist disparate constellations of dependence and alliance, as well as antagonisms”. An independent terrain of conflicts for power and influence between states is constituted. Upon this terrain, “the primary concern is the organisation of an international ‘order’ in the trade, currency, legal and military-political sectors”.

Heinrich (2012: 217-18) rightly says that the relations between states are not static; “they exist against a background of a developing capitalism that constantly restructures the technical conditions of the production process, the organisation of enterprises, and the international linkages between them”. The world market is not just a precondition, but the constantly re-created result of the capitalist mode of production. Periodisation like ‘imperialism’ thus applies to a more concrete analysis than Marx’s Capital. However such a periodisation should not be mistaken (as with some Marxist readings) for an inevitable development toward a final end – whether a “highest” stage of capitalism or even a “necessary” transition to socialism or communism.

Heinrich’s book is well worth reading. Alongside Ben Fine and Alfredo Saad-Filho’s Marx’s Capital (2003), which also covers the three volumes, it is the best introduction to Marxist political economy. It is comparable to Duncan Foley’s Understanding Capital (1986), such is the clear exposition of basic concepts. However there are at least three concerns which deserve to be aired: with Heinrich’s theoretical stance, his view of method and most importantly, his conception of class.

Heinrich (2012: 26) appears sympathetic to the leftist, Western Marxist stance pioneered by Korsch, Lukacs, Pannekoek and the Frankfurt school. This covers a wide range of thinkers, who veered from ultra-leftism (putschism, theory of the offensive, rejection of transitional demands, united fronts and the workers’ government slogan) to political passivity. Worse, he creates a pastiche of ‘traditional Marxism’ or ‘worldview Marxism’ as a straw opponent within Marxist history. This is an amalgam of Second International social democratic Marxism, Stalinism, and post-Trotsky Trotskyism.

Whilst there certainly are elements of crude economism and historical determinism within these strands, lumping them together actually narrows the importance of debate and disagreement at every stage of Marxist history. Thus on theories of crisis, on the state and on imperialism there are wide differences between the likes of Kautsky, Luxemburg, Lenin and Trotsky – and differences within their own works. Just as Heinrich finds a mixture of pre-scientific and revolutionary conceptions in Marx, we should apply the same standard to later Marxist debates, including contemporary discussions.

A second concern is with his treatment of dialectics. Heinrich (2012: 36-7) states that “more often than not, the grandiose rhetoric about dialectics is reducible to the simple fact that everything is dependent on everything else and is in a state of interaction and that’s all rather complicated – which is true in most cases, but doesn’t really say anything”. ‘Dialectics’ understood as the general science of development, was often viewed as a sort of Rosetta Stone with which everything could be explained. Instead he argues that dialectics is between understood as a “form of depiction in the critique of political economy”. The structure of the depiction is therefore “not a didactic question for Marx, but has a decisive substantive meaning”.

Heinrich concedes that the precondition of a dialectical portrayal is not the application of a method (a widespread conception in worldview Marxism) but rather the categorical critique. But that means dialectics is not simply a matter of presentation. Categories such as form, essence, necessity and ontology of structured intransitive (as in critical realism) are important philosophical assumptions that underlabour Marxism. The cod-dialectics of Stalinism should rightly be junked; but methodological kernel of Marxist dialectics still have enormous value.

The most substantial criticism of Heinrich’s approach concerns his treatment of classes. Some matters are probably presentational, but others suggest a failure to think through the critique of political economy into the realm of social theory. In a striking metaphor, Heinrich (2012: 185-6) argues that “capitalism turns out to be an anonymous machine, without any foreman who steers the machine or can be made responsible for the destruction wrought by the machine”. If one wishes to put an end to such destruction, it is not sufficient to criticise capitalists. Rather, capitalist structures in their entirety must be abolished. The political conclusion is right. However the idea of a driverless machine takes away a certain edge of naming the enemy – identifying actual capitalists and their backers has the actual agency to be overcome.

Heinrich (2012: 192) is right that in Capital, Marx writes repeatedly of classes, but there is no attempt at a systematic treatment or even a definition. Only at the end of the third volume does Marx begin a discussion on classes, and it is precisely here that the manuscript breaks off after a few sentences. From this arrangement, he says that “a systematic treatment of classes is not the precondition of Marx’s depiction, but rather should come at the end as its result”. One can speak of social classes in two distinct senses. In a “structural sense”, classes are determined by their position in the social process of production. To that extent, someone can belong to a particular social class without necessarily being aware of it. Distinct from this are classes in a “historical sense”. These are social groups that in a particular historical situation understand themselves to be classes as distinct from other classes; the members of the class distinguish themselves by means of a common “class consciousness”. In Capital, Marx uses the concept of class predominantly in the structural sense.

Heinrich (2012: 194) is keen to point out that “class conflict is not the only important social cleavage in capitalist society”. Conflicts concerning gender roles, racial oppression, and the handling of immigration are also of considerable importance for social development. However he states that “traditional Marxism often considered class conflicts to be the only truly important social struggles”. Here Heinrich goes from the self-evidently true proposition that struggles around sex, race and sexuality are not reducible to class, to an assertion about Marxist history that does not hold. Only if one ignores Engels and Bebel on women, Marx on the US civil war, or Lenin on nationalism, or countless other subtle analyses of the relations between different forms of exploitation and oppression, would such a caveat apply.

Heinrich (2012: 196-8) argues that in the history of Marxism, two false conclusions were often made concerning class and class struggle. First, “it was inferred that class consciousness arises sooner or later as a direct result of the situation of the working class”. Second, “it was assumed that this class consciousness must have a more or less ‘revolutionary’ content”. He accepts that “the proletariat experiences a numerical increase as a result of the imposition of the capitalist mode of production and in a certain sense is “unified” and “schooled” by large industry (to the extent that the proletariat has to organise politically and in trade unions to continue to exist as a proletariat)”.

However, “the idea that this inevitably leads to the constitution of a revolutionary class is in no way a consequence of Marx’s analysis”. A revolutionary development can arise; “it is not impossible, but it is anything but inevitable”. Thus “it is anything but certain that a common class position necessarily generates a common consciousness and practice... it can happen, but then again it might not”. Again the problem is that a valuable insight is jumbled with a straw argument that few Marxists today would have any truck with. The caricature does not raise the level of argument around the difficulties for workers developing class consciousness – the earlier discussion of political economy and of ideology (especially fetishism) is a much more useful insight.

The problem with Heinrich’s approach is perhaps most clearly drawn out in his treatment of workers and the labour movement. He states (2012: 78-9) the popular argument of worldview Marxism: “namely that there exists a social subject (the working class), which, on the basis of its particular position in bourgeois society, possesses a special ability to see through social relationships. Many representatives of traditional Marxism expressed the need to “take the standpoint of the working class” in order to understand capitalism. But in doing so, they overlooked the fact that workers (just like capitalists) in their spontaneous consciousness are also subject to the delusions of the commodity fetish. “One cannot therefore speak of a privileged position of perception occupied by the working class – but one also cannot make the claim that fetishism is in principle impenetrable.”

The caricature is a long way from Marxist thinking. The argument about the privileged position of the working class does not primarily relate to the matter of special perception, although in order to break through the mask of fetishism, shared experience of collective struggle is necessary. However the argument relates the material interests of workers, arising from exploitation, that provide good reasons to engage in class struggle; and secondly the power of the working class conferred by its strategic position in the social relations of production, so brilliantly depicted by Marx in Capital and his other works. This is an argument about how the social structure, far from being simply oppressive, also enables workers to break their chains and struggle as strategic agents for their own emancipation.

These criticisms should not detract from the importance of this book. Heinrich (2012: 223-24) argues that there are still many valid reasons to fight for socialism: the social devastation wrought by global capitalism while their exists at the same time a historically unprecedented level of material wealth; the destruction of the natural foundations of life caused by capitalist production, no longer occurring locally but affecting the planet as a whole (clearly visible in climate change); and constant wars that also emanate from or are promoted by “democratic” bourgeois states.

This is real value of Marx’s Capital. It is a foundation stone for the critique of the entire social science of bourgeois society, but it is also the basis for working class self-liberation as a viable and increasingly necessary alternative to the world as it is.

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Submitted by Barry Finger on Wed, 13/03/2013 - 02:25

Heinrich proceeds at length to deny the validity of the falling rate of profit as the specific underlying premise of Marx’s crisis theory, going so far to deny that Marx actually had an internally consistent crisis theory. Heinrich’s counterarguments, themselves tired old chestnuts, are curiously incompatible with that conclusion. What occurs during a crisis according to Heinrich (and anyone else who has given the matter an iota of consideration)? “( C )apital is devalued or even completely wiped out…workers are laid off and wages decline with the rise of unemployment” until the unity between spheres is “violently restored.” Now, one might ask, if a declining rate of profit is not the underlying cause of crises, why then should crises be overcome and accumulation restored by eliminating excess claims on surplus value and forcibly redistributing the division of the working day towards capital? That is, why should raising the rate of profit be the specifically appropriate cure for the crisis if the falling rate of profit was not its underlying cause?

What exactly is the meaning of the “over-accumulation of capital” that Heinrich blithely trots out as a description of the crisis precipitant? Over-accumulation of capital relative to what, if not profits? And what are we to make of the “over-production of commodities” “relative to buying power”? Commodities are the form that capital takes in the process of circulation; “buying power” is the rate of capital formation out of surplus-value. Buying power (the market) expands to the extent that capitalists add to their stock of means of production (constant capital) and hire additional workers (variable capital). So when Marx speaks of the over-accumulation of commodities relative to purchasing power, he simply means that the motivation to accumulate has dissipated owing to dismal profit expectations. Ordinarily, the crisis tendencies of the falling rate of profit can remain latent insofar as capital compensates for a fall in the rate of profit by increasing the mass of profits. When this is no longer seen as feasible because the expected rate of return is too feeble, capital fails to expand purchasing power (accumulate) sufficiently to clear the markets. Inventories build up. The relative “overproduction of commodities” becomes an absolute over production; the relative overproduction of capital becomes an absolute over production. Surplus value cannot be realized and the circuits of capital cannot be completed.

The problem with Heinrich is that he cannot convince himself that the argument for a falling rate of profit is internally consistent and logically compelling. At the same time he does not or cannot situate a framework for crises that can be constructed in any other context.

Submitted by Barry Finger on Thu, 14/03/2013 - 23:23

Paul, this is not a question of “orthodoxy” and my misgivings with Heinrich’s take on crisis theory are a matter of logic and method, not religion. I think Heinrich makes many valuable ad worthwhile contributions and your review did the book real justice. For what it’s worth, I think his monetary theory of value is spot on. (I published a piece on the transformation problem in Critique three years ago, with a similar theme and can send a reprint to any interested reader. Unfortunately the URL is hidden under a paywall.)

Moreover, I realize that AWL’s understanding of the relationship between values and prices, and profit rates are derived from the physical structure of production. This originates in the work of Geoff Hodgson, who was an early associate of one of AWL’s predecessor organizations. But Hodgson and Martin built their critical departures on the work of Pierro Sraffa, a school that, fairly or not, has been characterized as neo-Ricardian. The Heinrich critique does not critically engage with the neo-Ricardian influenced marxists, and circumvents (or transcends, if one is to be generous) the entire controversy that this entails. The fact that AWLers reach similar conclusions based on different premises and assumptions does not validate Heinrich’s treatment or the conclusions he draws from it. That has to stand on its own merits. And that's the problem

And it’s on this basis that I question him. I find his dismissal of the falling rate of profit all the more curious since it actually is little different from that which can be found in the decades old writings of Paul Sweezy or Joan Robinson and which in either case was hardly novel when Natalie Moszkowska questioned the theory back in 1929. But that type of criticism (i.e, that there is no reason that the rise in the value composition of capital should exceed that of the increase in the rate of exploitation) along with the specific and entirely different criticism associated with neo-Ricardinanism--the Okishio theorem (that any economically feasible innovation that raises the organic composition of capital, also, of necessity raises the general rate of profit provided the real wage is held constant)—were both subject to some very sharp rebuttals.

Some of those rebuttals, not so coincidentally, appeared in PROKLA, the magazine that Heinrich edits. Georg Stamatis, most notably, summarized his work “Die ‘spezifisch kapitalistischen’ Produktionsmethoden und der tendenzielle Fall der allgemeine Profitrate bei Karl Marx”in PROKLA 25 (available on line). Moreover the entire Sweezy /Robinson approach was dismantled, in my opinion, by Shane Mage, whose PHD thesis – The “Law of the Falling Tendency of the rate of Profit”: It’s Place in the Marxian Theoretical System and Relevance to the US Economy—is also downloadable from an open source site.

I hope I’m reading Paul wrongly, but it seems that his eagerness to see the falling rate of profit “demolished” rests on the fact that he holds David Yaffe and Chris Harmon’s politics, and their claims to “orthodoxy”, in disdain. I do too. But isn’t that besides the point?

Again, the problem with Heinrich, as I tried to point out is that he formulates a framework for understanding crises which is most compatible with the very theory he distances himself from. It is also a framework that is incompatible with any other approach, considering the only approaches he is specific about are "underconsumptionism" or "disproportionality". Doesn’t that require some elaboration?

Submitted by PaulHampton on Fri, 15/03/2013 - 19:04

In reply to by Barry Finger

Hi Barry,

I think there probably is a bit of talking past – but also perhaps some differences of assessment too.

1) I think we agree the Monthly Review approach pioneered by Paul Sweezy is not adequate on crises, because of its underconsumptionism, view on transition from feudalism to capitalism, later material on potential surplus, stagnation and dependency theory etc. I think Heinrich’s approach is a long way from Sweezy or the current Monthly Review approach.

2) Your Critique article makes some very good points against the neo-Ricardian approach. I don’t personally agree with that approach and in his book, Heinrich does criticise Ricardo’s (non-monetary) theory of value. Martin can say whether he is a neo-Ricardian or not, but I haven’t heard him advocate that approach either.

3) I think my opposition to the fundamentalist reading on the TRPF is more than just political disagreement with Yaffe and Harman. I’m not convinced they explained the post-war boom, the 1970s slump, the neoliberal period of growth or the current crisis using the theory. I’m not persuaded by other attempts such as Andrew Kliman or Michael Roberts either, though I thought
McNally’s book was a step forward.

4) I don’t think TRPF, underconsumptionism or disproportionality exhaust the possible Marxist explanations of crisis. All these theories have their flaws – I think Clarke’s book shows that very clearly. The possibility of crisis is implicit in the circuit of capital, so capitalism will always be crisis-prone. But perhaps a general theory of capitalist crises i.e. one that explains every concrete instance, is just not possible.

I think that is what Heinrich is getting at. Perhaps he’s right. If so, the job of Marxists is to understand the causes and forms of particular crises – especially the current one. Clearing the ground of obstacles to doing that seems like a worthwhile endeavour, which is why I’ve welcomed Heinrich’s intervention.

So is elaboration required? Yes, it is. And that’s an ambitious task to set ourselves.


Submitted by Bruce on Mon, 18/03/2013 - 00:27

Hi Barry,

I think you are labouring under a misapprehension here. I don't know where you got the idea that Martin Thomas has ever had a neo-Ricardian position, still less one inherited from Geoff Hodgson, who, as far as I know, never pronounced on questions of economics while he was a member of our tendency (leaving before, at the time of, or shortly after we were expelled from IS in 1971). I fortuitously found today while tidying my study (a Herculean task!) a copy of a document entitled 'Notes on Value and Crisis' written by Martin in around 1980 commenting on the positions taken by supporters and critics of the neo-Ricardians in the controversies following the publication of Ian Steedman's 'Marx after Sraffa' in 1977.

In the introduction Martin writes: “Many Marxists have dissented [from the Sraffian view] and argued *(I think correctly)* that the Sraffian revision of Marxist theory is invalid and would blot out crucial aspects of that theory.” I haven't reread the document closely but cannot find anything to suggest that “the relationship between values and prices, and profit rates are derived from the physical structure of production.” Here are a few rather different quotes:

“The value is expressed through the commodity being priced. It is not necessarily priced *accurately*. Exchange cannot be completely independent of production but it has a relative independence...”

“Prices vary from values and yet are the only socially recognised expressions of values. This does not mean that value is a theoretical fiction. Crisis proves otherwise...”

“It is possible (but practically difficult) to estimate values in terms of socially necessary labour time... In that sense value is determined prior to exchange, although it is not socially recognised...”

Now my question to you and other advocates of a “monetary theory of value” (and it is a genuine question from ignorance as I haven't read Heinrich or your article) is which of these statements, if any, would you disagree with? How does value act as the regulator of the capitalist system if there can be no measure other than price?


PS: I don't know if Martin still agrees with his 1980 position. Hopefully we'll hear from him.

Submitted by Barry Finger on Mon, 18/03/2013 - 18:58

Hi Bruce,

Let me sidestep your invitation to answer specific statements of Martin's, with some generalizations which, I think, offer a suggestive framework of why what you call the "monetary theory of value" is crucial. I hope you don't take this as an evasion. I offer this approach because Martin's points as they are listed are decontextualized. I can't tell whether I agree with them or not, devoid of the broader arguments they were meant to uphold.

I would suggest that neo-Ricardianism is an approach that examines critical issues of political economy from conclusions that are thought to be derived from the physical structure of capitalist production. Most neo-Ricardian Marxists do not believe that their approach is in contrast to Marx’s for one simple reason. And that is that they believe that a formal proof, if you will, of the labor theory of value can be established – and only established – by the examination of a predetermined set of material conditions of production and real wages. From these it can be mathematically demonstrated that the rate of profit is positive if and only if the rate of exploitation is positive.

But this formal proof of the validity of the labor theory of value, a proof incidentally that Marx – in a familiar letter to Kugelmann – persuasively argued is unnecessary, comes at a theoretical cost. Money in this neo-Ricardian theoretical system is simply a means of exchange normalization: of transforming trading ratios into absolute magnitudes. Money in this system is a numeraire, but it is not a measure of abstract labor.

Let me give you an example from the first prominent neo-Ricardian, Borkiewicz. Transformed “exchange ratios” are normalized by his method in terms of the labor time units “embodied” in the gold producing sector (department III), whose value/price ratio is set by assumption to 1. Under these circumstances the output prices of department I and II are normalized in terms of the average concrete labor time embodied in the physical units of gold against which the products of the other departments are exchanged. For very good reasons, Marx held that the value/price ratio of any commodity could only equal 1 if its organic composition of capital is equal to the social composition of capital. If Bortkiewicz had fashioned the gold sector in his illustration along this basis, then the most important of Marx’s consistency identities (total values = total prices, total profits = total surplus value) would have held. But there is no theoretical reason for gold production to conform to this and therefore Bortkiewicz was well within reason not to do so.

So what we are left with is a monetary unit in the neo-Ricardian system that standardizes price, but which, in the general case, cannot perform the function of measuring value. What is critical, at least for what you – Bruce – I think are asking of me, is this. In the neo-Ricardian system, price cannot be established as value in the form of money, because money is no longer a measure of abstract labor time. It is only a measure of the average labor time concretized in a particular use-value against which all other commodities are exchanged. (As are all such efforts, even those efforts, such as Alfredo Medio’s which affects similar changes within a stylized Sraffan framework.) Marx, on the other hand, sees any particular commodity as a given sum of values – and therefore of capital in the form of money – in any state of its continuous metamorphoses through the various phases of production, exchange and realization.

How so? An hour of simple, average labor – labor of average skill and intensity -- is the basic unit of measure of abstract labor in the Marxian system. Marx captures this relationship by equating the sum total of annual productive labor time expended to the yearly value product expressed in money in which that labor is “embodied”. He therefore establishes an implicit link between the monetary unit and its labor-time content. It is the capitalistically generated exchange process that necessarily forges this link. Through this identity any economic activity evaluated in price terms is theoretically convertible into labor-time units. It is the comparability of this simple, average – undifferentiated – labor in terms of the price form of value that permits qualitatively different use-values to be marketed in set proportions at any moment within an ever changing production-structure.

Of course, Bruce, you are right to insist that price is a regulator of economic activity. But price in its neo-Ricardian form, disembodied from any connection to social labor (and therefore to value), plays no such parametric function. Or to put it specifically, neo Ricardians see a static economic structure and ask how trading ratios and profits would fluctuate in response to changes in distributional norms. Money, remember, plays no role other than the normalization of exchange ratios and this entire exercise so-conceived can be affected without the slightest reference to it.

One of the principle consequences of this is that the general rate of profit is determinable within the neo-Ricardian framework without any reference to labor time, value or price. (I believe that this method cannot determine a general rate of profit and that the entire method is riddled with internal contradictions in logic, but that discussion is far beyond what I can develop here.)

Marx, I think, correctly approached this from a more acute perspective, asking how the system of allocated labor is regulated under capitalism by means of prices; or alternatively, how the division of labor among the various spheres of production is assigned, disturbed and reshaped in response to changes in technique/productivity, investment and inter and intra class distributions of output through changes in the pricing structure. Exchange value is intimately connected to how the totality of social labor is addressed. It is the incessant adjustment of the social division of labor in response to demand, and therefore profitability, that both modifies prices and redistributes surplus-values. Value in the Marxian system first exists in monetary form as exchange value. What Marx did was to demystify that form by establishing the relationship between the labor process which is the bedrock of any given society, with the exchange process typical of capitalism, wherein the accumulation of capital is the means for the appropriation of surplus labor. It is the monetary unit that crystallizes value, profit and capital as socially derived expressions of homogeneous quantities of abstract labor time.

Submitted by PaulHampton on Tue, 09/04/2013 - 07:31

In reply to by Barry Finger

Michael Heinrich’s article on Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s is now available on the Monthly Review website. Worth reading for his account of the evolution of Marx's political economy project, the texts and on the critique of crisis theory.

Submitted by Barry Finger on Mon, 15/04/2013 - 15:22

Does Heinrich’s article clarify anything? Let’s look at this old chestnut that Heinrich chews over. (A form of this also appears in Clarke’s article.)

Take his formulation:

p = s/ (c+v) ; which he rewrites as

p = s/v /
(c/v)+ 1

where p stands for the rate of profit, s for surplus value, c represents constant capital and v is variable capital. (In the Clarke formulation, c is the value of the fixed and circulating capital expended in production, v is the annual wage bill and s the total annual surplus value.) But in Heinrich’s formulation, which is the more general one, c is the stock of constant capital invested in the production process. But what then is v ? Heinrich unreflectively believes that v is simply variable capital, so that s/v stands for the rate of exploitation and c/v stands for the value composition of capital (or, perhaps in his formulation, the organic composition of capital). From this the argument is made that there is no reason for s/v to grow less rapidly than c/v. Therefore there is no basis to deduce a tendency for a falling rate of profit. This does not rule out the possibility of a falling rate of profit, but – per Heinrich – this is an empirical issue, not theoretically developed tendency.

What he misses is this. The v in the numerator (s/v) cannot stand for the same thing as the v in the denominator (c/v). The v in s/v is the annual wage bill. But the annual wage bill is a flow concept, whereas the v in c/v is, for lack of a better expression, a stock variable. It is the amount of wages capitalists must have on hand at any given time to meet their obligations. The stock of variable capital is related to the annual wage bill by the number of turnovers that take place during a year. For instance if a sector of production takes one month to produce and sell its output, the capitalist only needs 1/12 of the annual wage bill on hand as a stock of variable capital. The rest is repeatedly returned as sales are realized. Any additional tie up capital would be unnecessary.

Except for the case in which there is one annual turnover, Heinrich’s math is as pointless as the conclusions that he derives from it. If on the other hand c/v is to represent the division of the capital into that invested in machinery, plant, buildings, raw materials etc compared to that invested in wages no conclusions can be drawn from this exercise, without introducing one more variable, turnover time. But turnover time varies over the course of a business cycle, decreasing when sales are brisk and lengthening when sales are sluggish and inventories begin to build up.

The main thrust of Marx’s argument is that the process of productivity enhancement (extracting relative surplus value) is tied to the process of capital accumulation. If that is the case, a far better means of expressing this relationship can be derived. It would compare the growth of surplus value extracted per worker (assuming the working year to be fixed) to the amount of constant capital that has to be invested per worker to realize that result. This can be represented by:

P = s/(v + s) /
C/(v+ s) + V/( v+ s)

Here (v + s) is the annual value product per worker, C is the stock of constant capital invested in the production process and V is the stock of variable capital invested in the production process. s/ (v+ s) is the amount of surplus value extracted per worker; C/(v+s) is the stock of constant capital invested per worker (the organic compostion of capital) and V/(v +s) is the stock of variable capital invested per worker.

Now s/ (v + s) reaches a maximum of 1 as the rate of exploitation increases to the point that v, the wage bill, approaches zero. Conversely, V/(v+s) approaches 0. (Remember V x n turnovers = v ((the stock of variable capital x the annual amount of turnovers equals the wage bill)), so as v approaches 0, so too does V.)

The upshot is this. As long as C/(v+s) increases, there must eventually come a point in which the rate of profit falls, despite any temporarily offsetting increases in the rate of exploitation. It is for that reason that Marx, in my opinion, properly considers this law a tendency.

Is this enough of an insight for a full blown theory of crises? Clearly not. And Marx’s notes on this subject indicates that he believed additional and successive approximations to the empirical reality of crises needed to be studied.

To bring together how this law operates in reality involves, in my opinion, a more robust understanding of the concept of a profit rate, as a rate in which mobilized capital expands. The problem with leaving the theory where Marx left it is that it omits the entire banking and financial (and other nonproductive) sectors of the economy. How, for instance, is the rate of profit on banking or insurance to be measured? Against the stock of capital invested in brick and mortar and computers or against the stock of fictitious capital (securities, debt instruments, derivatives, etc) that comprise additional claims on surplus value?

If we, in fact, include these forms of capital into the denominator of the rate of profit, a clear tendency for the rate of profit to fall can be seen. I tried to do this in Solidarity and in the current issue of Critique by using the so-called Shift Index. This index derived by business for business demonstrates that the rate of return on balance sheets across the American economy has been in persistent decline since the 1960s. See also Alan Freeman’s essay, The Profit Rate in the Presence of Financial Markets, that reveals similar results for the economies of the US and UK:

I think these are the directions that we need to go if we are to develop the tendency of the falling rate of profit into more complete theory of accumulation and breakdown.

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Horsemeat smoke screen

Published on: Tue, 19/02/2013 - 13:11

The claim and counter claim as to who is to blame for the “horse meat scandal” is a smokescreen. The big retailers, the multi-nationals, the international agri-businesses all know they are to blame! They are trying desperately to focus attention on “not so bad” horse meat “incidents” because to divert away from the real issues.

The real problem is unregulated (or at least badly and mis-regulated) food additives and processing — things which are only needed because of an ever-increasing complex market place, one which is geared to the companies' need for short term profit.

We don’t need to “buy

Assessing the global slump

Published on: Mon, 30/04/2012 - 19:36

There is no definitive Marxist assessment of the current economic crisis or of the period leading up to it, but there is a vibrant debate among Marxists trying to grapple with the underlying causes of the world we’re in. David McNally’s book “Global Slump” provides one of the most panoramic and provocative accounts with many insights. He argues that the crisis of 2008 represents the terminus of a quarter-century wave of economic growth – neoliberal expansion – and the transition to a protracted period of slump (2011 p.2). He defends three broad arguments:

1) From 1982 an era of severe capitalist restructuring took place in which capital, by attacking working class living standards, reorganising production and spatially reconfiguring global production chains, succeeded in raising the rate of exploitation and increasing profitability.
2) The upward trend in profit-rates from the early 1980s sustained a wave of capitalist expansion that began to falter in 1997, with the crisis in East Asia.
3) A wholesale reorganisation of capitalist finance occurred, stimulated by a metamorphosis in forms of world-money (2011 p.40-41).

It is the first thesis, with its characterisation of the past twenty-five years that I think is most significant. The argument can be subdivided into three substantial claims:
1) A sustained government and employer offensive against workers, unions and the social wage beginning in the late 1970s reduced working class shares of national income and real wages, leading to a significant increase in the rate of exploitation of labour.
2) Substantial processes of industrial restructuring took place, with massive downsizing, mothballing of old plants and equipment, introduction of new technologies, speed-up, and the development of systems of lean production that raised the productivity of labour. Robotics, computerisation and the widespread application of new production methods are evidence of decisive processes of technical change that boosted labour productivity, increased relative surplus value, and contributed to rising profitability.
3) A dramatic spatial-geographic reorganisation of capital has seen the creation of a new centre of capital accumulation in East Asia, with the tripling in the size of the waged labour force in China as its economy emerges as a crucial workshop of the world.

The virtue of McNally’s approach is to examine the world economy as a totality, rather than as simply the sum of national economies. In doing so, he avoids the subjective trap that generalises trends in the US and major Western economies to the world economy as a whole. As such he provides a richer account of both the unevenness of the world economy and also those combined processes that have shaped the past quarter century.

The book emphasises the tremendous growth in the international working class, which appears to have at least doubled in size across the neoliberal era, with something like half of it living in East and South Asia. The last two and half decades have witnessed one of the great migrations in world history. For the first time ever, a majority of humankind will live in cities and towns. We have probably passed the tipping point, whereby the majority of the world’s direct producers do waged work rather than peasant agriculture. Far from the disappearance of the working class, globally we are living through a time when its social weight has never been greater.

McNally uses official figures to argue that the quarter-century 1980-2005 saw “a quadrupling of the world’s so-called ‘export-weighted’ global labour force, an estimate of working class size based on exports to world markets”. Most of this growth “occurred after 1990 and about half of it took place in East Asia, where the working class increased nine-fold – from about 100 million to 900 million workers. South Asia, too, saw significant growth in both industry and the number of industrial workers. In fact, of a global labour force of roughly three billion people, more than half today live in East and south Asia combined” (2011 p.51).

In China, the most gigantic process of ‘primitive accumulation’ in world history took place in the twenty-five years after 1978. China’s employed working class tripled, growing from 120 million to 350 million (2011 p.134). By 2002 China “had more than twice the number of manufacturing workers than the world’s largest industrial nations, the G7 combined”, with 109m compared to 53m. These workers are not only producing low-cost manufacturing, such as footwear, clothing, sporting goods and toys. They are also producing electronics and information-technology hardware (2011 p. 55-56). McNally is not exaggerating the emergence of China and other centres of capital accumulation, but rather seeking to grasp what is novel in the situation, and where the new forces of hope will lie in the coming period.

McNally dissents from the views of many on the revolutionary left, ranging from the SWP in Britain to Robert Brenner, Andrew Kliman and Monthly Review in the US, who see the last forty years as one of uninterrupted crisis, or a ‘long downturn’. Such assessments “either ignore or thoroughly downplay the dramatic social, technical and spatial restructuring of capitalist production that occurred across the neoliberal period, all of which significantly raised profitability, and led to a volatile but nonetheless real process of sustained capitalist expansion, centred on East Asia”. McNally is right that grasping some of the central features of that process is essential to understanding the current crisis (2011 p.9, p.36).

McNally argues that the current crisis is fundamentally the result of over-accumulation and generalised problems of profitability. When the first signs of a new phase of over-accumulation set in, with the Asian Crisis of 1997, gargantuan credit expansion, increasingly fuelled by record-low interest-rates and the extraordinary build-up of fictitious capital (stocks, bills and other paper claims to wealth), postponed the day of reckoning, while greatly ‘financialising’ relations between capital and labour. When financial markets started to seize up in the summer of 2007, underlying problems of overaccumulation and declining profitability meant that financial meltdown would trigger global slump. It is therefore not simply a financial crisis, though it does have some unique financial and monetary features. Financialisation is not about the rise to prominence of a stratum of financiers or rentiers, who have twisted capitalism to narrowly financial ends, nor is it simply about neoliberal policies of financial deregulation (2011 p.87-91).

Ultimately the book argues that the world economy has entered a protracted slump involving “a whole period of interconnected crises — the bursting of a real estate bubble; a wave of bank collapses; a series of sovereign debt crises; relapses into recession — that goes on for years without a sustained economic recovery” (2011 p.8-9). He believes that the slump drives capital to destroy value in order to restore the conditions for its own reproduction. The crisis will induce measures such as an enormous centralisation and further spatial re-organisation of capital, upset the balance of global economic power and probably witness more draconian restrictions on the movement of migrant-labour. He also argues that despite the hardship and suffering, there will be opportunities for socialists to offer our own coherent answers and to mobilise workers to resist the onslaught.

What are the political implications of this assessment? First and foremost it means paying attention to the development of working class politics in Asia, particularly China, and doing everything possible to promote solidarity and the development of independent labour movements across the globe. The assessment requires a rethinking of much left orthodoxy on imperialism and globalisation and in particular the recognition of the emergence of new imperialist and sub-imperialist powers. Knee-jerk, one-eyed, purely anti-Western “anti-imperialism” is no use in this global configuration. The prolonged slump also requires the existing labour movement in countries like Britain to get off its knees and fight – and struggle for far-reaching structural changes, not just defensive retreats. Socialists have to rebuild and create the “organised infrastructures of dissent” if we are to successfully carve out the future we announce.

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