AWL conferences

Debating the second round of the French Presidential election

Submitted by Matthew on 13 December, 2017 - 12:07

At the 2017 AWL conference there was a debate on two opposing resolutions on the second round of the 2017 French Presidential elections.

We present the speeches made in the debate by Martin Thomas and Daniel Randall. Both resolutions can be found here

Against passivity and indifference, for active politics

By Martin Thomas

We have three points of agreement in this debate.

First, that, unlike in the majority of bourgeois run-offs, there was a real difference in France on 7 May.

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Our duties in the Corbyn surge

Submitted by Matthew on 6 December, 2017 - 1:05 Author: Simon Nelson

Opening the AWL’s annual conference on 25-26 November, and moving the document “Nine years on: the new left, neoliberalism, and the new right”, Martin Thomas outlined the situation the political left finds itself in: “The global credit crash of 2008 and the ensuing travails have produced delayed political effects. A shift to more right-wing, nationalist, and ’identity’ politics may move neoliberalism sharply to the right, or even explode it from within. The economic turmoil has also produced new life on the left, as yet on a low wattage.”

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Why we should oppose British exit from the EU

Submitted by AWL on 7 October, 2014 - 6:07

“...The slogan of the United States of Europe will in all cases retain a colossal meaning as the political formula of the struggle of the European proletariat for power. In this program is expressed the fact that the national state has outlived itself — as a framework for the development of the productive forces, as a basis for the class struggle, and thereby also as a state form of proletarian dictatorship.”

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Prospects and the “decisive element”

Submitted by AWL on 30 September, 2014 - 6:12

On average workers' real wages fell 8.2% between 2008 and 2013. The median (middling) worker lost £2000 a year. But for many workers it has been much worse.

For the 18-25 age range, the average drop was 14%; for 25- 29, it was 12%. Public sector wages have fallen by 15%.

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The world of neo-liberalism

Submitted by Matthew on 2 October, 2013 - 12:36

A background document for the 2013 annual conference of the Alliance for Workers’ Liberty (26-27 October), by Paul Hampton and Martin Thomas.

See below for a critical comment from Barry Finger

1. The AWL has pioneered a distinctive assessment of the development of global capitalism over recent decades, which underpins our orientation, concrete slogans and differences with much of the left.


Submitted by AWL on Wed, 01/01/2014 - 23:15

By Barry Finger

Martin and Paul have presented an analytically rich background document on “The World of Neo-Liberalism.” I am in fundamental agreement with the politics of the argument. But where the argument fails me is in this. In its emphasis on the novelty and specificity of the current crisis, Martin and Paul dismiss any attempt to place this crisis in a larger historical context as futile. They are at pains to dismiss the tendency for the rate of profit to fall, which marks them in agreement with the preponderant opinion of academic Marxists, but at odds with business economists such as those from Deloitte, who, as I have previously argued in Solidarity, have clearly demonstrated in their "Shift Index" that the rate of profit (in the US) has fallen since the mid 1960s. These conclusions have been discussed in such ruling class sanctuaries as the Harvard Business Review and Forbes. This divergence – this inversion -- itself should be a cause for note, if not concern.

And of course, Martin and Paul argue consistently. Once the tendency for the rate of profit to fall is found wanting, there is no other general dynamic of capital accumulation through which the current crisis can be contextualized. “Underconsumptionism” is a dead end. It argues, at least in its Marxist forms, that accumulation requires additional sources of demand outside the framework of the capitalistically generated market place. Rosa Luxemburg, for instance, famously argued that capitalism needed a third (external) market of consumers who are not producers of value to offset values for which there are no (internal) consumers. And “disproportionality”, rarely today cited as an alternative, is so general – so all applicable -- as to be functionally meaningless.

Yet the underconsumptionist argument had one great merit. It situated imperialism at the very center of capitalist accumulation. Militarism, war and colonialism were seen as essential to keeping national capitalist economies afloat in part by providing a state generated third market for armaments but, more vitally, by defending and expanding captive markets at the expense of global competitors.

The problem with Martin and Paul’s analysis, I fear, is that it fails to identify any alternative explanation that links the politics of imperialism with the economics of accumulation. It suggests, instead (am I misreading this?), an imperialism that is a contest of force, in part, between established and rising capitalist powers. It is true that they talk about the “imperialism of free trade” and “global production chains.” But if what is meant by these are the amounts extracted directly through profit and interest repatriation form oversees investment, such numbers are relatively paltry. American corporate profits extracted from the rest of the world (and that prominently includes the other advanced capitalist economies) amounted to $430 billion in 2012, less than a third of the profit total ostensibly generated domestically. The proposed defense budget in the same year, prior to the sequester, was $671 billion. If we presume that this is required to police the “imperialism of free trade”, it is hardly a cost-effective tradeoff.

But perhaps Martin and Paul mean that the US, as the imperial hegemon, bears the burden of policing the global south for the benefit of the developed economies as a whole. In which case, the extraction of profits and interest flowing from south to north should be the crucial determinant and relevant comparison. Very well. But where has the case been made that most of the profits and interest redistributed among the advanced economies originate in the South rather than within the developed nations themselves? In fact, that proposition, should it be asserted, could probably not be sustained.

Why even dignify the essential economic relationship of the advanced to the developing capitalist economies with the grandiloquent term of imperialism, if the direct extraction of value is so apparently marginal, even dispensable, to the well being of the capitalist metropolises?

More important, what is there to capitalism that requires imperialism? I can’t really find an answer to this in Martin and Paul’s piece. Underconsumptionism is not a problem even worth raising; profitability is not a problem worth considering. What unanswered need is addressed by imperialism?

Before that can be answered, we need to take a step back. Martin and Paul concede that capitalism did suffer from a crisis of profitability prior to the current neo-liberal phase that originated in the 1980s. But they, assert, the subsequent opening of the former Stalinist economies to capitalism and the offshoring and outsourcing of production combined with the massive growth of the third world proletariat turned that crisis around, arresting and reversing the fall in the rate of profit that climaxed – according to them – in the crises of the 1970s.

Again, if not by the massive infusion of profits from Eastern Europe and the third world, then how? Perhaps (in part) by suppressing the wage demands of the western working classes threatened by third world competition, thereby massively jacking up the metropolitan rate of exploitation? And then (also in part) by unequal exchange based on global wage disparities that allow the capitalist Triad to diminish the costs of imported inputs and thereby increase the spread between cost and revenue.

Martin and Paul do not discuss the latter proposition. And while neither do they expressly discuss wage suppression, such a conclusion might not be too far a leap, nevertheless. But had they made they made either of these propositions explicit it would bring the argument full circle. It reintroduces the question of functionality. Imperialism serves primarily as a bulwark against the resurgence of a falling rate of profit. It restores that tendency to the center of our consideration compelling us to ask what forces within capitalism arise to periodically fend off the very dynamic that Martin and Paul deny the existence of.


Even so, has imperialism reversed, or even eliminated, the falling rate of profit as a factor in the current crisis? I would argue – no.

There is, I believe, a prior inherent shortcoming on how we conceptualize the rate of profit, once the stripped down framework of Capital is extended to encompass movements in a modern – corporate dominated -- capitalist economy over time. Marx’s purpose was not to demonstrate that there is a tendency for the rate of profit to decline. This proposition was accepted by all classical economists. Even Keynes argued that there was a long term tendency for the “marginal efficiency of investment” to diminish. What Marx attempted to demonstrate was how this tendency is rooted in the process of commodity production itself -- in the very warp and woof of capitalism, a demonstration that bedeviled classical economists.

But Marxists have tried to shoehorn our arguments, both pro and con, about the consistency and empirical relevancy of this proposition and within the all too restrictive framework of Marx’s discussion. Corporations do not measure their rate of profit against capital invested in structures and equipment. They own a spectrum of assets that generate income streams, among which are not only tangible means of production, but also a variety of financial assets such as consumer and corporate loans, CDs, treasury bills and so on. All these pool together to comprise corporate profits. In practice it is very difficult on a macro level to map the stream of income associated with each individual class of assets. It is therefore difficult to isolate that stream solely associated with productive investment from all the other sources of income, such that asset A is associated with income stream a, B with b, etc. Of course, for individual corporations who need to periodically rebalance their assets this knowledge is crucial to maintain profitability. But the point is this. Corporate profitability measures the sum of all these income streams with respect to the entirety of its assets, including cash on hand, which, in the absence of deflation, yields no appreciable return.

And that is precisely what most Marxists have failed to do. Much of the literature is focused on taking the sum of corporate income streams and comparing its growth against the increase in tangible assets. This invariably invites a degree of randomness. It neglects the fact that consumer loans, and installment credit, imposed on workers constitutes a second stream of exploitation that takes place outside the production process. The extraction of interest on consumer debt converts paid labor time into unpaid labor time. It is a reversion to a form of absolute surplus value extraction. Similarly, state taxation of wages (net of the flowback as extra-market wage supplements) to pay banks also constitutes a reduction in paid labor. To the extent that capital holds public bonds and securitized debt, it retains for itself a supplementary source of surplus-value that it counts as income. And it is the rise of this secondary source of surplus value that gives heft and sweep to the so-called financialization of capitalism. It means that capitalism is increasingly focused on bypassing production as a means of supplementing surplus value.

The increasing emphasis on detour, at the expense of productive investment, suggests how deep the crisis of manufacturing profitability had been. Yet the financial sphere, by multiplying claims on surplus value, without expanding the productive base, pumps up one avenue of surplus value while suppressing what might otherwise be translated into an increase in relative surplus value. And in either case it, and like all other means, for the extraction of surplus value faces natural and cultural limits.

So if, on the other hand, we were to more accurately measure the movement of income streams with the totality of assets that are associated with such streams, we would generate an entirely different picture of how the rate of profit moves over time. This I have tried to do by plotting corporate profits before taxes against corporate assets valued at historical cost for the nonfinancial sector of the American economy. This yields the following result.

This pattern seems to be compatible with Henryk Grossmann’s formulation of a secular decline in profitability expressed through cyclical movements in asset (capital) accumulation and destruction. And it is a remarkably tight fit over a protracted period of time, roughly the entire post-war epoch.

What it does not do is verify Marx’s argument per se. And in this Martin and Paul are dead right. It certainly may not be the case that the fall in the rate of profit during any of these cycles – or for the period as a whole -- can be explained solely by the rise in the organic composition of capital invested in the sphere of commodity production in relation to the stream of surplus-value extracted exclusively through production.

But why is that essential? To prove our “orthodox” Marxist bona fides?

Capitalism is not simply a mode of production, but a mode of social reproduction. It develops primarily by expelling labor from the process of production, while multiplying the claims on surplus value through the accumulation of capital – not just means of production, but commercial capital, banking capital, speculative capital. It is this contradictory tension that it is at pains to suppress. The system holds together as long as it can expand the mass of profits. When the countervailing forces of imperialism -- of wage suppression and unequal exchange -- of innovation and rationalization of the production process no longer suffice to that end, crises are needed as a last resort to restart the clock by eliminating excess claims on surplus-value.

If we are going to understand neo-liberalism, why not start here?

Submitted by PaulHampton on Sun, 05/01/2014 - 20:49

In reply to by AWL

Hi Barry,

Thanks for the comments. The document was meant as a very compressed broad-brush summing up of the assessment we’ve made of the current period, i.e. slightly longer term and therefore much less on the recent specific crisis.

I’m not convinced by the TRPF as an explanation for this crisis. At least some data shows the rate of profit rising in the years immediately prior to this crisis. That’s not to say longer term trends are irrelevant – and indeed I think a stronger case might be made for the crisis in the 1970s. There may be something to it in some national contexts e.g. the US, although I’m not sure this can be generalised for the world economy as a whole.

I’ve read two other pieces recently, which make an argument in favour of the TRPF:

Deepankar Basu and Panayiotis Manolakos, Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007, Review of Radical Political Economics March 2013 45: 76-95.

They found weak evidence of a long-run downward trend in the general profit rate for the US economy for the period 1948-2007, though are cautious beyond that.

Michael Roberts, From global slump to long depression, International Socialism 140, October 2013

I know Michael and I read his blog regularly. There’s no doubting his knowledge of political economy nor the impressive empirical detail he brings to bear. However it is striking that his figure 12, estimating a world rate of profit, is far less connected to the recent crisis than the early 1970s data.

His discussion of debt and finance - i.e. the more proximate causes of the current crisis - is also interesting. I’m not sure how this exactly connects up with the earlier discussion of the TRPF – it reads more like a bolt-together than a fully worked through explanation.

That sums up the problem for me. There may be a long run TRPF, but exactly how it feeds through to crises (and states’ responses to crises) is not at all resolved.


Submitted by Barry Finger on Mon, 06/01/2014 - 15:25

Hi Paul

I appreciate the issues you raise. But there is no necessary contradiction between the studies you cite and my conclusions. My point is that such studies – not to mention the overwhelming bulk of Marxist economic analyses – do not build on the framework of Capital. Instead they mirror it. That is, Marxists continue to adopt the formulation for the rate of profit Marx used in his studies. But Marx was seeking to devise a formulation adequate to a specific task, namely to demonstrate why commodity production itself gives rise to a fall in the rate of profit. And that formulation is adequate for that purpose and that alone. By “proving” this tendency in this way, Marx believed himself to have stripped the analysis to its bare essentials, thereby eliminating any extraneous considerations that might otherwise have obscured his argument.

Our task, in contrast, is not to provide a “proof” for the necessity of a proposition – the tendency for the rate of profit to fall -- widely accepted by classical economists. We need to have a measurement of the rate of profit that is relevant to how corporate capitalism, and not just corporate capitalism for that matter, gauges its performance.

The point is that we, and by that I mean the studies you cite and myself, are measuring two different things. The question is, which one actually reveals something essential about the empirical world of capitalism, and which one fails to extricate itself from a concept inappropriate and inadequate to the wider subject?

I’m not interested in analyzing the world to verify Marx’s propositions. Suffice it to say, if one accepts the axioms upon which the proof rests, the conclusion follows. Relax, or qualify the axioms, and the law becomes a tendency. Revoke the axioms and the law falls apart. How much more ink needs to be spilled on the issue of Marx’s proof?

Where you and I may differ, is that I believe Marx’s proof is adequate but only adequate for his purpose. It’s larger importance is as a suggestive framework for examining empirical movements, all the more so in a post-industrial capitalism where employment in commodity production and value creation is relatively shrinking; where, in other words, fewer and fewer dollars of investment ever come into direct contact with productive labor. [In the larger world of global capitalism, this is certainly less true. But I’ll return to this.]

Those who employ Marx’s measurement of the rate of profit (surplus value compared to the money invested in structures, machinery, inventories, etc) are looking to the world to exonerate Capital or perhaps to jettison it. I look rather to a rate of profit that examines movements in the rate of return on assets, which is a far broader and, as I will argue, more appropriate base against which profits – from all sources -- are compared.

So let’s look at some facts. Every department store, every car manufacturer, every housebuilder, every hospital and every veterinarian in the US offers consumer credit. Unlike transactions among businesses that involve credit, the interest earned from workers are earned outside the sphere of production. Such interest payments convert paid labor to unpaid labor, but do not redistribute values previously extracted in production. This interest is an additional stream of profits. So when the Marxists you cite look at business income, they of course lump this in with profits realized in commodity production. This procedure raises the rate of profit, oblivious to the fact that such profits are not earned in production. Moreover, each time credit is extended, capitalists create an asset for themselves that is expected to provide a steady stream of interest. These assets can be securitized, bundled and sold in the market place. What are these assets, but so many claims on surplus value? They are therefore capital and must be treated as such. Should workers default on their debts, the money lent is lost and investments are destroyed. How should capital register these gains or losses? Against the capital invested in machines and brick and mortar? Or against the asset base it created to extract this unpaid labor in the first place?

We can do the same with a whole variety of financial instruments. That is why I believe my approach is superior to other approaches. Financial capitalism is distinctive precisely because it is the form that post-industrial capitalism assumes to supplement profitability when the extraction of surplus value through production is deficient.

But now let’s take another look at the world prior to neo-liberalism. This was a world in which we both concur that the fall in the rate of profit has been empirically established. But it is also a world in which wages, including that of production workers, grew in tandem with productivity and inequality began to flatten out. It was the so-called golden age of capitalism for workers in the advanced economies.

What does it mean that wages grew with productivity? Remember, mainstream concepts of productivity use a measure of value-added that is significantly different from what Marxists may mean by that. Their concept of value added (GDP) includes preexisting values transferred in the process of production, including amortization on constant capital and the wages of nonproductive workers engaged in commerce and finance. Our concept of value added embraces only variable capital (the wage bill of productive workers) and surplus value extracted through commodity production.

If we were to call the mainstream concept of value added, the gross product and the Marxist concept -- the net product (as distinct from NNP which includes nonproductive wages), it would be obvious that in post-industrial capitalism gross production and therefore gross productivity grows faster that net productivity. If real wages were to rise in proportion to net productivity, there the rate of exploitation would have remained unchanged; if they lagged behind, the rate of exploitation would have risen.

But they rose in proportion to gross productivity and therefore the rate of exploitation fell.

This appeared to capital as a profit squeeze. And it triggered a myriad of responses. The first was massive inflation. Inflation was a desperate attempt to break the connection between real wages and productivity. Then there was a turn towards austerity, to claw back taxes on capital from the state and to create a lax labor market that could put downward pressure on wages.

And finally (and this is requires a completely separate treatment), there is globalization, which is based on wage arbitrage and the unequal exchange that arises from it. This unequal exchange drains values from third world economies and redistributes them northward, while placing additional downward pressures on first world wages. This is what I think gets to the heart of the imperialism of free trade and the massive relocation of the heart of commodity production to the global south. It has resulted in an enormous transformation of the world economy and delivered equally enormous dividends to first world capitalists. It explains in no small part why capitalism in the advanced nations can still reap massive profits without massive investments.

And yet, this too has been of limited success.

What capitalism has yet to do is to purge itself of the excess of capital needed to arrest the decline in profitability.

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