In ‘Clarifying the Crisis,’ published earlier this year in Jacobin magazine, the Canadian political economist Sam Gindin reasserted his view that the global economic crisis that erupted in 2008 ‘needs to be understood primarily as a financial crisis.’ To be sure, the U.S. financial crisis was the event that triggered the Great Recession, and Gindin is certainly correct that the recession ‘turned into such a generalized and profound economic catastrophe’ largely because of the size of the financial sector, global financial integration, and the securitization of mortgage loans. Yet has one really ‘clarified the crisis’ by saying only this and then quickly moving on, as he does?
In the U.S., the TARP bailout, ‘stress tests’ of financial institutions, and other actions succeeded in quelling the financial crisis by mid-2009 at latest. Yet it is now five years later, and the U.S. economy remains mired in a state of near-stagnation with no clear end in sight. Austerity policies are certainly not the culprit; U.S. fiscal and monetary policies have been wildly expansionary. The public debt has risen by 88% since the start of 2008; the extra $8.1 trillion of borrowing, which has been used for increased government spending and lower taxes, amounts to about $4400 per person per year for six straight years. The Federal Reserve has kept the federal funds rate (i.e. the overnight interbank interest rate) near zero for five full years and has bought $3.6 trillion worth of securities since Lehman Brothers collapsed in order to lower long-term rates. Nonetheless, near-stagnation persists–long after the financial crisis ended.
“La crisis global y el capital ficticio”: Consuelo Silva Flores y Claudio Lara Cortés. [Coordinadores]
Rosa María Marques. Paulo Nakatani. Reinaldo Carcanholo. Mauricio de Souza Sabadini. Claudio Lara Cortés. [Autores de Capítulo]
Colección Grupos de Trabajo.
Santiago de Chile.
Diciembre de 2013
A la memoria de
colega, amigo y compañero de ruta.
“Marxist crisis theory to 1932 and to the present: reflections on Henryk Grossman’s ‘Fifty years of struggle over Marxism” Rick Kuhn
Henryk Grossman’s article and pamphlet ‘Fifty years of struggle over Marxism, 1883‐1932‘ provided a survey of Marxism and particularly Marxist crisis theory since Marx’s death. He identified both innovations in and major departures from Marx’s own approach amongst those who called themselves Marxists. The processes of innovation and departure have both continued over the period since. This paper explores Grossman’s assessments of Marxist crisis theories up to 1932, subsequent theoretical developments and grounds these in an account of the material circumstances of their production.
This paper critically evaluates the “new solution” to the transformation as presented by Foley and Duménil and others, from the perspective of the author’s “macro-monetary” interpretation of Marx’s theory. The main issue emphasized is the method of determination of the inputs of constant capital and variable capital in Marx’s theory–whether these inputs are taken as given as quantities of money capital or derived from given quantities of physical goods.
JEL classification: E11; D46
Keywords: Marx, Sraffa, Transformation Problem
Este trabajo evalúa críticamente la “nueva solución” a la transformación tal como fue presentada por Foley y Duménil y otros, desde la perspectiva de la interpretación “macro-monetaria” que tiene el autor de la teoría de Marx. El cuestionamiento principal que se enfatiza es el método de determinación de los insumos de capital constante y capital variable en la teoría de Marx–si esos insumos se toman como cantidades de capital dinero dadas o se derivan de las cantidad de bienes físicos.
Clasificación JEL: E11; D46
Palabras clave: Marx, Sraffa, Transformation Problem
Heinrich’s article is mainly about the falling rate of profit and crisis theory, but another important point has to do with Marx’s logical method in Capital, and in particular with the levels of abstraction of capital in general and competition. Heinrich argues that Marx encountered difficulties in the Manuscript of 1861-63 concerning this logical structure, and as a result of these difficulties, Marx abandoned this logical structure in the final versions of Capital.
I argued in a 1995 paper that Heinrich is wrong about Marx abandoning the logical structure of capital in general and competition after 1863 (Moseley 1995). Capital in general and competition refer to the two main levels of abstraction in Marx’s theory – the production of surplus-value and the distribution of surplus-value. The key point of this logical structure is that the production of surplus-value is theorized prior to the distribution of surplus-value; i.e. the total amount of surplus-value is determined (by the total surplus labor) prior to its division into individual parts (first the equalization of the profit rate across industries and then the further division of the total surplus-value into commercial profit, interest, and rent). The pre-determined total surplus-value is taken as given, as pre-determined (as a “limit”; see below), in the subsequent theory of the distribution of surplus-value; i.e. in the division of this pre-determined total surplus-value into individual parts.
“La Determinación de la “Expresión Monetaria del Tiempo de Trabajo” (“MELT”) en el caso del Dinero no mercancía”: Fred Moseley
This paper suggests a way to determine the “monetary expression of labor” (the “MELT”) in today’s regime of inconvertible credit money, a way that is consistent with Marx’s general theory of money and is quantitatively the same as Marx’s determination of the MELT in the case of the inconvertible fiat money of his time. In order to explain this method of determination of the MELT in the case of modern inconvertible credit money, the paper first reviews Marx’s determination of the MELT in the case of commodity money and in the case of the inconvertible fiat money of his time. The final section of the paper discusses the similarities and the differences between my interpretation and Saros’s (2007) interpretation of the MELT in the case of inconvertible fiat money.
JEL classification: B51, E11
Keywords: commodity money, fiat money, credit money, monetary expression of labor time
Este trabajo sugiera una manera para determinar la “expresión monetaria del tiempo de trabajo” (el “MELT” por sus siglas en inglés, monetary expression of labor time) en el régimen actual de dinero crédito inconvertible, una manera que es consistente con la teoría general del dinero de Marx y que es cuantitativamente igual a la determinación de Marx del MELT para el caso de dinero fiduciario inconvertible de su tiempo. Para explicar este método de determinación del MELT en el caso de dinero crédito inconvertible moderno el trabajo primero revisa la determinación del MELT que hace Marx en el caso del dinero mercancía y en el caso del dinero fiduciario inconvertible de su tiempo. La sección final del trabajo discute las similitudes y diferencias entre mi interpretación y la interpretación de Saros (2007) del MELT en el caso de dinero fiduciario inconvertible
Clasificación JEL: B51, E11
This site contains the full scanned text of Ricardo, Marx, Sraffa: the Langston Memorial Volume, edited by Ernest Mandel and Alan Freeman and published by Verso books in 1984 (distributed in the USA in 1985 by Schocken Books). The texts were scanned by Mike Welte, to whom we are very grateful. The text has been optically recognised and is searchable for the most part.
The book is out of print and Alan Freeman has been granted permission by the copyright owners to re-publish it here. You may download and freely distribute it but you may not use it for commercial gain or restrict its public availability. The original page numbering has been retained. Please cite it as follows:
“The Unmaking of Marx’s Capital. Heinrich’s Attempt to Eliminate Marx’s Crisis Theory”: Andrew Kliman, Alan Freeman , Nick Potts, Alexey Gusev and Brendan Cooney
Michael Heinrich’s recent Monthly Review article claims that the law of the tendential fall in the rate of profit (LTFRP) was not proved by Marx and cannot be proved. Heinrich also argues that Marx had doubts about the law and that, for this and other other reasons, his theory of capitalist economic crisis was only provisional and more or less in continual flux.
This response shows that Heinrich’s elementary misunderstanding of the law––his belief that it is
meant to predict what must inevitably happen rather than to explain what does happen––is the
source of his charge that it is unproved. It then shows that a simple misreading of Marx’s text
lies at the basis of Heinrich’s claim that the simplest version of the LTFRP, “the law as such,” is
a failure. Marx’s argument that increases in the rate of surplus-value cannot “cancel” the fall in
the rate of profit is then defended against Heinrich’s attempt to refute it. Finally, the paper
presents evidence that Marx was indeed convinced that the LTFRP is correct and that he
regarded the crisis theory of volume 3 of Capital as finished in a theoretical sense.
This paper is about the history of crisis theories. Broadly speaking, the term “crisis” as used here refers to a generalized set of failures in the economic and political relations of capitalist reproduction. In particular, the crises we seek to examine are those towards which the system is internally driven, by its own principles of operation. As we shall see, it is in the nature of capitalist production to be constantly exposed to a variety of internally and externally generated disturbances and dislocations. But only at certain times do these “shocks” set off general crises. When the system is healthy, it rapidly revives from all sorts of setbacks; when it is unhealthy, practically anything can trigger its collapse. What we seek to examine is different explanations of how and whyy the system periodically becomes unhealthy.
I Reproduction and Crisis
Consider how peculiar capitalist society is. It is a complex, interdependent social network, whose reproduction requires a precise pattern of complementarity among differen productive activities: and yet these activities are undertaken by hundreds of thousands of individual capitalists who are only concerned with their private greed for profit. Is is a class structure, in which the continued existence of the capitalist class requires the continued existence of the working class: and yet no blood lines, no tradition, no religious principle announces who is to rule and who is to be ruled. Is is a cooperative human comunity, and yet it ceaselessly pits each against the other: capitalist against worker, but also capitalist against capitalist and worker against worker.
In the past two decades the number, variety, and monetary value of marketable financial instruments, particularly securitized instruments, has grown by orders of magnitude. This is the most significant development in what many writers, for the most part Marxist, term ‘financialisation’1. It brings to light, however, an anomaly in the way they calculate the profit rate. This calculation takes no account of the capital tied up in these instruments.
This article shows that when this omission is corrected, there is a consistent long-run fall in the UK and US rate of profit which, contrary to the figures widely used by Marxists, have both fallen almost monotonically since 1968.
Why does this matter? First, the profit rate figures prominently in Marx’s own theory, as is clear from his published works. It is the explicit subject of the first 15 chapters of Capital Volume III (Marx, 1981: 117-378) and dominates the remaining analysis. Second, the results shed light on current debates about the cause of the present extended crisis. A significant group of writers (see Choonara, 2011) argue that this is recent in origin, unconnected with the serious difficulties that beset Western economies in the 1970s, and follows a recovery from that crisis, brought about by neoliberalism, in the 1980s. Thus Husson:
“After the generalized recessions of 1974-5 and 1980-82, a new phase opened in the functioning of capitalism, one which one could for convenience call neo-liberal. The beginning of the 1980s was a real turning point. A fundamental tendency towards increasing the rate of exploitation was unleashed, and that has led to a continuous rise in the rate of profit” (2008).
Michael Heinrich is an exponent of what is known as the ‘New German Reading of Marx’, which interprets the theory of value that Marx presents in Capital as a socially specific theory of ‘impersonal social domination’. He is a collaborator on the MEGA edition of Marx and Engel’s complete works and has published several philological studies of Capital. He has also authored a work on Marx’s theory of value, The Science of Value, which is forthcoming in the Historical Materialism book series. And recently he has published An Introduction to all Three Volumes of Capital as his first full-length work to appear in English.
I am not going to do a critique of Heinrich’s views on the theory of value, as this has been done by Guglielmo Carchedi in his book, Behind the Crisis (see chapter 2). But I am moved to respond to a recent article of Heinrich’s in the American Monthly Review, entitled Crisis theory, the law of the tendency of the rate of profit to fall and Marx’s studies in the 1870s (monthlyreview.org).
In this article, Heinrich makes the following points: 1) Marx’s law is inconsistent because its categories are indeterminate; 2) it is empirically unproven and even unjustifiable on any measure of verification; 3) Engels badly edited Marx’s works to distort his view on the law in Capital Vol 3; 4) Marx himself in his later works of the 1870s began to have doubts about the law as the cause of crises and started to abandon it in favour of some theory that took into account credit, interest rates and the problem of realisation (similar to Keynesian theory); 5) Marx died before he could present these revisions of his crisis theory, so there is no coherent Marxist theory of crisis.
“From the Oil Crisis to the Great Recession: Five crises of the world economy”: J. A. Tapia Granados
ABSTRACT — This article makes the case that the global economy has gone through five crises since the 1970s to the present. This implies not only that the world economy is a real entity, but also that the usual view that poses national economies as units of economic analysis is an approach with major limitations. The paper discusses the concept of “economic crisis” and provides data indicating that the world economy, not national economies, is the major unit to be analysed when trying to understand the economic reality of our time, and particularly the reality of crises. These crises are discrete, countable phenomena, distinctive states of an entity that can be properly called world economy, or world capitalism. Data on capital formation, on growth of the world output, of monetary aggregates, of unemployment rates and on industrial activity indicate five major “dips” of the global economy, i.e., world recessions, in (i) the mid 1970s, (ii) the early 1980s, (iii) the early 1990s, (iv) the early 2000s, and (v) the Great Recession that provisionally can be dated 2007-2009. To a large extent business cycle chronologies of national economies such as those produced by the NBER, the OECD, or other institutions are largely consistent with these five crises of the world economy which, obviously, had different manifestations in different nations and economic regions.