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«How capitalism survives»: Michael Roberts

How Capitalism Survives small

Last weekend, I attended this year’s London version of the Historical Materialism conference (, which for those who don’t know is an annual gathering of mainly Marxist academics, students and activists organised by the Historical Materialism journal. A host of papers and book launch presentations are made, often bringing out new ideas in the analysis of capitalism.

This year’s main theme was How Capitalism Survives and was apparently attended by over 750 scholars, academics and activists. It’s not possible to attend all sessions, of course, so my review concentrates on the economics papers and even there is sometimes based on reading the papers presented rather than on actually attending the session (so be forewarned!).

How does capitalism survive? Well, according to John Weeks, emeritus professor at SOAS, it’s because the capitalist mode of production has had very few of what could be called proper crises (2014 Weeks_Crisis_Izmir). Weeks reckons that only the Great Depression of the 1930s and the recent Great Recession could be considered generalised crises (“episodes of severe contraction”) that affected the world capitalist economy for any length of time or to any depth. Other so-called crises were merely mild recessions or financial crashes that were short and limited to the national economy concerned.

As for the causes, Weeks argues that it was the breakdown in the circuit of capital and the realisation of money that was the problem and had nothing to do with the accumulation of value in the production process, as advocated by the ‘falling rate of profit’ theorists. As he puts it: “The typical “falling rate of profit” mechanism fails to get out of the starting gate as a candidate for generating cross-country crises, much less global ones.” This is because Marx’s law of a rising organic composition of capital would only generate a gradual fall in profitability and there is no mechanism that decides “a critical value” of profit that could provoke a sudden collapse in production or investment or its simultaneous spread globally.

Well, I beg to differ. Starting with Henryk Grossman ( and continuing with the work of many scholars very recently, such as Tapia Granados (, including my own work and that of G Carchedi (The long roots of the present crisis), we find that there is a causal connection between the movement of profitability, profits and slumps in investment and GDP (and see my paper, The nature of current long depression).

It’s true that many financial crises are not accompanied by a slump or economic recession, as in the stock market crash of 1987, cited by Weeks as an example. But in that case, profitability in the major economies including the US was on the rise. So the crash was short-lived and quickly reversed. But that was not the case in 1974-5, the first worldwide simultaneous slump, triggered by the oil price jump, but after a decade or more of a profitability slide; or in 1980-2, again triggered by energy prices, but again after another decline in profitability. Anyway, I could go on, but I refer you to my paper here (Presentation to the Third seminar of the FI on the economic crisis).

In the same session as Weeks, young economist Juan Pablo Mateo Tome from Kingston University presented a paper on Spain that showed the causal role that falling profitability in the productive sectors of the Spanish economy played in the Great Recession and the subsequent weak recovery (JPMT_Crisis Spain_HM_2014). Similarly, in another session paper, Aberlardo Marina Flores and Sergio Camara Izquierdo, analyse the development of the Mexican economy in the post-war period and find that Mexico’s immediate high post-war profitability deteriorated (The structural causes of the severity of the crisis in Mexico_AMFySCI_GEConLA). The neo-liberal period was designed to counteract that fall through the opening-up the economy to US investment, weakening the labour movement and expanding control of the surplus to the financial sector. The recessions in the US had a deep impact on Mexico as a result, contrary to Weeks’ view above, while ‘financialisation’ weakened the productive sectors.

Financialisation was a theme of another session where Tony Norfield presented his incisive analysis of the dominance of US and UK finance capital in the hierarchy of imperialism ((Norfield-Tony-Finance_the_Rate_of_Profit_and_-Imperialism). The apparently huge profits of the late 1990s and early 2000s were really appropriations from the productive sectors of the major economies and were largely fictitious. Francois Chesnais, the French Marxist economist ( and still going strong at 82 years, argued that finance capital cannot be separated from capital in general, as ‘financialisation’ theorists suggest. Contemporary finance capital is a combination of productive capital lodged in transnational corporations, money capital centralised in very large financial conglomerates (financial capital) and merchant and commercial firms. This facilitates the distribution of surplus value generated by productive capital on a global scale. Both Norfield and Chesnais emphasised the parasitical nature of finance capital in modern capitalism. It helps capitalism survive but at great cost to profitability and investment in productive sectors.

Finance capital at the centre of imperialism was a theme of other papers that looked at hitherto unpublished (in English at any rate) manuscripts and notebooks by Marx on his developing ideas on imperialism and finance capital. Lucia Pradella launched her new book on Globalisation and the Critique of Political Economy: New Insights from Marx’s Writings (, in which she argued that, as imperialism and finance capital became an increasing feature of modern capitalism (with its productive potential becoming exhausted in the mature capitalist economies), Marx still preserved the continuity of his key categories in the capitalist mode of production. Imperialism and globalisation were counteracting factors to the deterioration of profitability and the extraction of more surplus value in the mature capitalist economies.

This seemed to me to be an important answer to the question of how capitalism survives: through a global search for more labour to exploit and through the centralisation and concentration of capital in finance. Both developments have a finite end, however, while causing increasing recurrent crises of production.

The attempt to claim that Marx did change his theory of crisis in later years as capitalism matured and finance capital grew in dominance has been a familiar theme in recent years, based on the scholarship of those Marx’s manuscripts and notebooks in the MEGA project. It is claimed that Engels’ editing of Marx’s Capital was a distortion and, in particular, Marx’s law of the tendency of the rate of profit to fall had been dropped by him in later works, but Engels reinstated it in his editing. See Michael Heinrich’s work ( and the reply to (and debate with) Heinrich by Carchedi and me (

Well, Fred Moseley introduced a new translation into English of Marx’s four drafts for Volume 3 of Capital by Regina Roth, where Marx’s law of profitability is developed and showing how Engels edited those drafts for Capital (Moseley intro on Marx’s writings). Contrary to the view of Heinrich and others, Moseley shows that much maligned Engels did a solid job of interpreting Marx’s drafts and there was no real distortion. “One can, therefore, surmise that Engels’ interventions were made on the basis that he wished to make Marx’s statements appear sharper and thus more useful for contemporary political and societal debate, for instance, in the third chapter, on the tendency of the rate of profit to fall.”

Talking of scholarship on Capital, after the end of the HM conference, I spoke as part of a panel that included Chris Arthur, the renowned Marxist philosopher, at the launch of Alex Callinicos’ new book, Deciphering Capital.  I reviewed Callinicos’ book in a recent post ( At the launch, I concentrated on Callinicos’ account of Marx’s theory of crisis and how that could be ‘deciphered’ pretty clearly in Capital (my speech is here, Callinicos speech).  And


Every year, at the HM conference, the Isaac and Tamara Deutscher memorial prize for the best Marxist book of the year is awarded ( And the author of last year’s winner delivers a lecture. Last year’s winner was The making of global capitalism: the political economy of the American Empire by Leo Panitch and Sam Gindin ( Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications.

I missed their speech but from the book I can glean their main arguments. Panitch and Gindin challenge the widespread notion that globalisation has led to the retreat of the state. The argument that states still have a role in directing global capitalism is obviously right. America is still the leading imperialist power and leads the other imperialist powers in an ‘informal empire’. But in addition, Panitch and Gindin maintain that workers are generally weaker now and the American state has greatly strengthened since the post-1973-83 crisis.

I disagree. Is American imperialism is actually stronger now than 50 years ago? Contrary to Panitch and Gindin’s view, the neoliberal period was not a Golden Age like the post-war period, if we mean by that fast growth in GDP, high profitability and productive investment. Sure, growth in the 1980s and 1990s was faster than in the crisis period of the late 1960s and 1970s, but it was still slower than in the first Golden Age and investment was way less productive. Just because in the neoliberal period the finance sector had a bonanza and thus so did American imperialism does not mean it was a golden age.

Another area where I have a strong disagreement is with Panitch and Gindin’s explanation of capitalist crisis as expounded in their book. They argue that the crisis that erupted in 2007 was not caused by a profit squeeze or collapse in investment due to overaccumulation. Instead, the authors prefer to explain the Great Recession as a result of stagnating wages, rising mortgage debt and then collapsing housing prices, causing “a dramatic fall in consumer spending”. In my view, as I have expounded in several posts (, this common and dominant view (in the mainstream and post-Keynesian economic circles) about the Great Recession being caused by rising inequality and debt does not bear up to the facts.

That this view has become mainstream is confirmed by the news that Thomas Piketty has won the FT best business book of the year for his monumental Capital in the 21st century, a title pinched from Marx but actually not a critique of capital or the capitalist mode of production at all, but an analysis of the recent rising inequality of wealth in modern capitalist economies (see my post, Inequality, not crises, is the buzz word about capitalism.

This year’s Deutscher prize winner was entirely different. It went to Roland Boer for his book, In the Vale of Tears, ( the concluding volume of a five volume series, The criticism of heaven and earth, a critical commentary on the interactions between Marxism and theology in the work of the major figures of Western Marxism. Boer is from Australia, now a professor at Renmin University Beijing, and considers himself a Christian Communist. His speech next year should be interesting.

By the way, Piketty gets £30,000 for his prize, Boer £500.

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