ICC internal debate: The causes of the post-war economic boom

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Lazarus
ICC internal debate: The causes of the post-war economic boom
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The discussion that follows was prompted by the article: ICC internal debate: The causes of the post-war economic boom. The discussion was initiated by Lazarus.
Below is the discussion so far. Feel free to add your own comments!

Lazarus
This may be messy...    I

This may be messy...

 

 I think we can all see that workers are too poor to buy what they want and that overproduction does not mean too much is produced that people don't want.

There is a case re the environment and resource use that there are objective limits on some kinds of production.

However, what we are really looking at is a limit, a fetter, caused by the capitalist mode of production.

 

I think it is valid to say that the raisond'être of capitalism is pursuit of profit and that all else is a consequence of that primary objective.

 

The pursuit of profit gives rise to the effects of competitfion, innovations, class struggle.  

These effects all tend to lower the rate of profit on capital in general.

It is not an actual decline in profit rate that is the root o the malady, but a tendential decline, which even if resisted  leads to the inevitable crash.

 

Alf
Overproduction

No disagreement with what you wrote. But Marx also identifies the problem of realisation, of overproduction, as a fetter on the development of capital, leading towards collapse. The two contradictions  work together: capitalists try to compensate for the tendency for the rate of profit to fall by extending the market and so increasing the mass of profit. But then they come up against the limits to this extension. For me, Marx's work does not provide definitive and final answers to these questions, even if he of course indicates the questions to be resolved and the method for approaching them 

Demogorgon
The problem I have with this

The problem I have with this is that I don't understand how you can separate the one from the other. Surely overproduction can also be explained as a consequence of the fall in the rate of profit?

What constitutes the limit to the extension of the market? And how does extending the market (assuming other factors remain constant) increase the mass of profit?

Alf
Agree overproduction can also

Agree overproduction can also be a  consequence of the falling rate of profit. The question is whether (leaving aside the question of 'disproportionality', which can also lead to overproduction, but is not a fundamental cause) the contradictions leading to the crisis of overproduction can entirely be reduced to the falling rate of profit, or whether there is an inherent limit to the extension of the market within the capitalist social relation. Extending the market, which is one of the factors that counter-act the falling rate of profit, but not the only one, allows you to obtain a greater mass of profit by selling a greater mass of commodities, even if the profit on each individual commodity is smaller, given the rising organic composition of capital. 

jk1921
Isn't the falling rate of

Isn't the falling rate of profit caused by the tendency of competition to lead to technological change which raise the organic composition of captial? But isn't profit determined by "prices" rather than "values," which means some industries or firms will have a profit rate much higher than average, while others' wil be lower? (i.e the so-called "transformation problem").

I think we need to be careful about what we mean when we use terms like "crash" and "collapse." They are highly controversial and can be easily misunderstood.

Demogorgon
If overproduction is "a

If overproduction is "a consequence of the falling rate of profit" then you already have "an inherent limit to the extension of the market within the capitalist social relation". Naturally, this limit has a certain elasticity.

"Extending the market, which is one of the factors that counter-act the falling rate of profit, but not the only one, allows you to obtain a greater mass of profit by selling a greater mass of commodities, even if the profit on each individual commodity is smaller, given the rising organic composition of capital."

If the greater mass of commodities is produced with the same amount of labour, how can the the mass of profit be enlarged?

Demogorgon
On the transformation

On the transformation problem, I'd rather try and understand the basics of the rate of profit argument and counter-argument before moving onto the more advanced topics!

Alf
mass and rate of profit

 

The term ‘mass of profit’ can be confusing: unless I am mistaken, Marx sometimes seems to use it as an equivalent for the mass of surplus value extracted in the production process. But as Marx points out in a  passage which is crucial for understanding the relationship between the tendential fall in the rate of profit and the crisis of overproduction, “as soon as all the surplus-labour it was possible to squeeze has been embodied in commodities, surplus value has been produced. But this production of surplus value completes but the first act of the capitalist process of production”. The second act is the necessity to sell the stuff....and since the consuming power of the masses is not absolute, but based on “antagonistic conditions of distribution”, ie the wage labour relation, “the market must, therefore, be continually extended”. (Vol 3, chapter XV, section 1,‘Internal contradictions of the law’ ie of the falling rate of profit. Moscow edition, p 243-245).  

 

In chapter XIII, ‘The law as such’, Marx clearly presents the mass of profit as the mass of ‘realised’ surplus value. The cheapening of commodities makes it possible to increase the mass of profit even though the rate of profit is falling: “The law that a fall in the rate of profit due to the development of productiveness is accompanied by an increase in the mass of profit, also expresses itself in the fact that a fall in the price of commodities produced by a capital is accompanied by a relative increase of the masses of profit contained in them and realised by their sale” (p 225-226 of the Moscow edition).

 

Does this make any sense? 

jk1921
So, the cheapening of

So, the cheapening of commodities can in some ways compensate for the declining rate of profit by allowing more commodities to be realized, albeit at a lower overall profit rate, i.e sell cheaper, but sell more?

Demogorgon
It makes sense, although it

It makes sense, although it doesn't answer my question. What I mean is that the mass of profit can only really be expanded by increasing the exploitation of labour power i.e. more workers must be employed, existing ones work more hours, the proportion of necessary as opposed to surplus labour must be reduced, or any combination of the above.

The point is that if capital attempted to enlarge the mass of profit by simply "extending the market", it would be doomed to fail. Such enlargement in fact occurs due to accumulation (or, more properly, it is accumulation), which also has the happy side-effect of increasing the market.

This goes part of the way to answering the other question I posed earlier - "What constitutes the limit to the extension of the market?". The limit is accumulation itself in all its destabilising contradictions.

Demogorgon
"So, the cheapening of

"So, the cheapening of commodities can in some ways compensate for the declining rate of profit by allowing more commodities to be realized, albeit at a lower overall profit rate, i.e sell cheaper, but sell more?"

I can't see how this can work for the reasons I outline above. Nonetheless, increasing productivity reduces the amount of necessary labour required by the worker and thus increase the amount of surplus value flowing to the capitalist (without actually affecting the worker's material standard of living incidentally).

But, in Marx's words: "Inasmuch as the development of the productive forces reduces the paid portion of employed labour, it raises the surplus-value, because it raises its rate; but inasmuch as it reduces the total mass of labour employed by a given capital, it reduces the factor of the number by which the rate of surplus-value is multiplied to obtain its mass. Two labourers, each working 12 hours daily, cannot produce the same mass of surplus-value as 24 who work only 2 hours, even if they could live on air and hence did not have to work for themselves at all. In this respect, then, the compensation of the reduced number of labourers by intensifying the degree of exploitation has certain insurmountable limits. It may, for this reason, well check the fall in the rate of profit, but cannot prevent it altogether."

jk1921
I agree with Demo in that

I agree with Demo in that these mechanisms do not obviate the contradictions of capitalist accumulation, but perhaps they can ease them temporarily? I think what Alf refers to is that by cheapening commodities, capital can temproarily overcome the overproduction problem by selling more, albeit at a lower rate of profit. In other words, measures that overcome one contradiction, worsen another. In this case, it is a problem in the sphere of circulation that is addressed in the sphere of production in a way that ultimately worsens the problems in the sphere of production in time. The problem is thus shifted from one sphere to another.

There is a lot of economic theory coming out that suggests that this how captialism survives, by shifting its problems from one sphere to another in a series of "shifts." These shifts do not prevent crises; they merely move them from one place to another--but the act of overcoming them produces a temporal gap that breathes some life back into the system for a period of time. If I understood it correctly (that's a big if), this is the gist of David Harvey's latest book on the "Enigma of Captial."

Lazarus
Whilst there may be some

Whilst there may be some evidence to produce a graph on profit rates in certain countries that reflect reality, I don't think we can do so for capital as a whole.

With trillions tied to 'criminal' activity like the drug trade, I think we can only pursue theoretical models.

The class struggle going in favour of capital means proletarian conditions are attacked and investment in productive sectors yields a better % rate of profit, but markets are supressed due to limited purchasing power, more capital is syphoned into the speculative sphere which bubbles and bursts.

 

The working class itself is forced to defend itself and the  'tendential' decline in profit rates, if succesfully resisted translates into restriction of markets and social upheaval.

 

The point being these are consequences of the causation which is the TENDENTIAL decline in profit rates. 

 

So I am defending a monocausal explanation of capitalist crisis .

 

However I think it could also be expressed as the growinc contradiction between the means of production (proletaiat included) and capitalist  relations of production, though I am thinking about that.

 

 

ernie
A possible way of developing the discussion.

First I need to make an apology to comrades, the following post is rather long but I have not been able to participate until now. I have tried to limit the post but brevity is not one of my strong points.

This is a very positive discussion on the question of the causes of the crisis, which has drawn out several important questions; Is the fall in rate of profit the causes of overproduction or is it the limit of the market? What is meant by the extension of the market? How does the extension of the market impact on the rate of profit? How do we understand Marx's concept of the mass of profit and its importance in relation to the crisis of overproduction? The question of the inter-relationship between the constant process of the development of the means of production under the pressure of competition, the fall in prices and the rate of profit. The way that the contradictions of capitalism flow and move through the relations of production, and what is the relationship of this dynamic to the cause and development of the crisis?

For those reading this thread who do not know about the internal debate in the ICC on the post-war boom it could appear to be a rather abstract discussion where everyone appears to agree and disagree at the same time, where we use terms like the extension/expansion of the market but appear to understand them differently. I think that if we are going to continue the positive dynamic of this thread we need to be clearer about what the differences are; otherwise we will continue to hedge around the central question with only “those in the know” really understanding what is being discussed.

The differences can be clearly seen in relation to the question of the expansion of the market. For the ICC the causes is the absolute necessity for capitalism to sell that part of Surplus Value earmarked for expanding the means of production and buying more labour power to be sold to social systems or individuals outside of the capitalist means of production. This is based on Rosa Luxemburg's critique of Marx's analysis of the process of accumulation: I presume this is what comrade Alf is referring to when he says “For me, Marx's work does not provide definitive and final answers to these questions, even if he of course indicates the questions to be resolved and the method for approaching them”. Where as for other comrades in the discussion Marx's analysis of accumulation is coherent and his analysis of the tendential rate of profit flows from this understanding. I am sure they will correct me if I am wrong.

I agree that the rate of profit is a  central factor and believe that Marx's critique of the capitalist mode of production in Capital and his other economic writing are coherent and that Luxemburg's critique, whilst being very important, is incorrect.

In relation to the Falling rate of profit and the extension of the market. In Kapital Marx's lays out 6 counter-tendencies to the falling rate of profit: 1, More intense exploitation of labour,  2 reduction in wages below their value, 3 cheapening of the elements of constant capital, 4 the relative surplus population, 5 Foreign trade, 6 the increase in share capital. The role of foreign trade is not simply for the realization of products to increase the mass of profit, as comrade Alf says, but the means for purchasing cheaper means of production and subsistence thus increasing the rate of profit, selling of good above their value, the higher rate of surplus value in the colonies which had to be include in the equalization of the general rate of profit, these aspects also had the effect of stimulating the overproduction in the advanced country. This is a rather more complex picture than the idea of foreign trade being about the need to sell commodities.

On a more general point, the use of the term overproduction needs clarification. Capitalism cannot function without overproduction. If accumulation is to take place there has to be the necessary means of production and labour available for purchase, thus capitalism by necessity has to be permanently overproducing. So the question has to be overproduction in relation to what? The answer as comrades Lazarus, Demo and ? JR1921 say has to be within the process of accumulation itself. In ascendency the areas of expansion we vast but the crises were still periodic. Did capitalism run out of markets to expand into every ten years or were the crises despite the vast areas? It is the inability of Luxemburg or the ICC position to explain this and the unfolding of the cycles of capitalism that have always concerned me, and made me question our analysis.

Marx illustrates the dialectical role of foreign trade very clearly in kapital when he illustrates how hundreds of factories were built in the North of England in the 1840s based on the illusion that China would be opened up and exploited, but this did not happen there was a crisis closing many of them but once the crisis was over they were sold at knocked down prices and served as the basis of a new round of accumulation. Thus the process of accumulation was expanded despite the mass of commodities not even being sold!

Comrade Alf says that the expansion of the market allows the realization of surplus value. This is true, but that is still only part of the process of accumulation. You have to be able to invest the surplus value in increased production, but you will only do that if the rate of profit is high enough. There is no guarantee that by the time that commodities have been produced and sold that the general rate of profit will have dropped due to better means of production, cheaper machinery etc thus meaning that although the Surplus value has been realized it cannot be feed back into the process of accumulation.

This underlines the general point made by JK1921 about the way the contradictions of the system flow through the complex network of the capitalist relations and can only really be understand in that way.

The flowing nature of these contradictions makes me hesitate about nailing my coloures to the Falling rate of profit mast.

JK1921 also makes a very interesting point about the impact of international competition, technical development etc on the price of commodities. This is something Marx wanted to develop on but was unable to. For an interesting theoretical effort to do this comrades can read Robert Brenner's The Economics of Global Turbulence the impact of the constant process of the emergence of more developed means of productions on international competition, prices and the rate of profit are shown to be integral to the 40 year persistence of the crisis. Brenner is a leftist but the analysis he makes is illuminating to the whole question of the post war period.

Lazarus
TENDENTIAL - not same as actual.

Perhaps this is a superfluous comment but the theory of a TENDENCY for profit rates to decline is what I argue is the cause of crisis.  This is not the same as actual decline in profit rates.

Eg 

''The flowing nature of these contradictions makes me hesitate about nailing my coloures to the Falling rate of profit mast.''

The progressive lack of extra-capitalist markets and cheap labour /resources contributes to intense competition,war, concentration of capital, decimation of working class conditions which long term produce the inevitable social explosion which communists need to influence.

 

 

 

 

Demogorgon
Lazarus, I think you need to

Lazarus, I think you need to explain further your distinction between "tendency" and "actual". As far as I understand it, the tendency towards a falling rate of profit is permanent in capitalism, but is only actualised when the counter-tendencies weaken.

On another note, even when the falling rate of profit is actualised, crisis does not necessarily appear immediately; for example, Grossman's critique of Bauer's schemas showed that the ROP is only part of the question and that the crisis appears as a result of a collapse in the mass of profit.

I agree that the ROP is probably the most important mechanic at work in the accumulation cycle but there are also subsidiary cycles in capitalism that, although arguably deriving from the ROP, also influence its course and can retard or exacerbate the rhythym of the accumulation process.

Lazarus
I think the tendential

I think the tendential decline is not permanent or linear as imperialist expansion and world wars served to temporarily reverse it.  

As regards crisis not appearing immediately, well, surely ROP has to fall to the point that the capitalists get nothing out of the process and worse, cannot fund further expansion.    

Crisis does not end capitalism unless it refers to the proletariat taking history into its hands.  Doubtless the objective conditions provided by capitalism have a great influence on this possibility.

 

 

Demogorgon
"I think the tendential

"I think the tendential decline is not permanent or linear as imperialist expansion and world wars served to temporarily reverse it. As regards crisis not appearing immediately, well, surely ROP has to fall to the point that the capitalists get nothing out of the process and worse, cannot fund further expansion."

Okay, I think we're actually saying the same thing here, more or less.

"Crisis does not end capitalism unless it refers to the proletariat taking history into its hands. Doubtless the objective conditions provided by capitalism have a great influence on this possibility."

I think this is a tricky question. In 2008, there was a real danger that capitalism would "collapse" i.e. the freeze in the credit system causing the whole financial apparatus to seize up and not function. Clearly this couldn't be a permanent condition - some form of economic activity would have to resume in order for people to feed themselves - but it would have been a hammer blow for the system with only open state despotism (i.e. martial law) being able to contain the social unrest.

Because there is also a historic element to growth in the organic composition of capital, it stands to reason that crises should become more and more violent - surely confirmed by events in the last 4 years. Assuming that they manage to get out of this crisis (either via partial efforts similar to the ones since the end of the 60s, or some kind of genuine recovery brought about by a massive destruction of capital) what will the next crisis look like ?!

But, following the FROP thesis, the only way out for a capitalism in the current crisis is a massive devaluation - it seems obvious we haven't so far seen anything like the destruction of capital needed, which would basically be all the hyper-indebted states writing off their loans. Could the system survive such an eventuality or would the resulting storms shake the system apart at its seams? I have my doubts. Needless to say, outside of a genuine proletarian response, the resulting lurch into barbarism would border on cataclysmic regardless of what we called what's left of the system.

jk1921
I like the questions Demo

I like the questions Demo raises in his last post. What does it mean for capitalism to "collapse"? What do Marxists mean when we talk about "barbarism"? Is this some kind of mode of production or is it a rhetorical device used to describe a form of chaotic crisis prone capitalism that results from decomposition due to the social stalemate?

Was it the financial system that almost collapsed in 2008 or capitalism itself? How would capitalism continue to function with a moribund financial system?

What are the perspectives for the future? Are they limited to communist revolution or barbarism? What does barbarism mean exactly? The eventual destruction of humanity? Is this another communist rhetorical device? Are there other ways of conceiving of the future of captialism in the abscence of a proletarian revolution? A new form of agressive state capitalism like fascism or Stalinism? The emergence of some hybrid form of capitalism and other methods of labour exploitation? Aren't we already seeing this to some extent--the re-emergence of old forms of labour exploitation like slavery, debt peonage, other forms of bonded and forced labour etc. along with the development of something some call the "pobretariat"?

What about the future of the so called "liberal democratic state"? The ICC has always argued that fascism, etc. is not an option in the advanced countries due to the need to fool and indoctrinate the working class with democratic illusions. Is this still the case? What about more subtle forms of totalitarianism? What about the idea bandied about in some quarters of an "inverted totalitarianism" where the corporations dominate the state? Isn't this what we have already to some extent? What is the meaning of this for state captialism, etc.? Maybe we are living in barbarism already, but don't quite recognize it as such?

 

baboon
A lot of questions from jk

A lot of questions from jk that I don't have the answers to... but a couple of elements.

I don't think that there's any "royal road" that's mapped out here and we could not only waste time searching for too many detailed answers but also miss what's happening in front of our eyes. I use the example of jk's "subtle totalitarianism". I think that we've already got it in the major democracies in the form of state capitalism. We've had it for some time and it's always open to development, particularly as it enables, more or less, the bourgeoisie to continue to shore up its system in the light of pressing contingencies. i don't think that there's any point in questioning the value of "democracy" to the bourgeoisie. At the same time, in Britain today, the Tory coalition is the front for a 5-year plan being implemented by the state. We know what happens to them. In Britain and the US, the banking system is virtually nationalised.

What will barbarism look like? Look at the poorest parts of the capitalist world and there it is. It doesn't leave much to the imagination.

I think that it's clear now that in summer 2008, the whole economic system came very close to collapse: cheques not honoured, ATM's empty, pensions, wages, social security not paid, etc. It seems that we were very close to disaster - a disaster that wouldn't have been at all favourable to the working class. At the highest levels the bourgeoisie moved very quickly to avoid such a disaster but it doens't mean that the threat of collapse has gone away. It seems that last September/October the danger again became acute necessitating the US, as lender of last resort, to flood the system - particularly Europe - with dollars.

 

 

 

 

 

 

 

 

jk1921
Good Point

baboon wrote:

A lot of questions from jk that I don't have the answers to... but a couple of elements.

I don't think that there's any "royal road" that's mapped out here and we could not only waste time searching for too many detailed answers but also miss what's happening in front of our eyes. I use the example of jk's "subtle totalitarianism". I think that we've already got it in the major democracies in the form of state capitalism. We've had it for some time and it's always open to development, particularly as it enables, more or less, the bourgeoisie to continue to shore up its system in the light of pressing contingencies. i don't think that there's any point in questioning the value of "democracy" to the bourgeoisie. At the same time, in Britain today, the Tory coalition is the front for a 5-year plan being implemented by the state. We know what happens to them. In Britain and the US, the banking system is virtually nationalised.

What will barbarism look like? Look at the poorest parts of the capitalist world and there it is. It doesn't leave much to the imagination.

I think that it's clear now that in summer 2008, the whole economic system came very close to collapse: cheques not honoured, ATM's empty, pensions, wages, social security not paid, etc. It seems that we were very close to disaster - a disaster that wouldn't have been at all favourable to the working class. At the highest levels the bourgeoisie moved very quickly to avoid such a disaster but it doens't mean that the threat of collapse has gone away. It seems that last September/October the danger again became acute necessitating the US, as lender of last resort, to flood the system - particularly Europe - with dollars.

 

I agree with Baboon about the "subtle totalitarianism." There isn't much controversial there, I think. His description about what almost happened in 2008, reminds me of what happened in Russia after the revolution--the so-called period of "War Communism," where economic activity was carried out largely through barter. And yet captialism survived this period in Russia, resusitated briefly under the NEP and then full-blown Stalinism. Time and again it seems the bourgeoisie is able to pull off a state captialist intervention that keeps the system going even at higher levels of volatility and increased vulnerability to crisis. It is tempting I think to look for some kind of dramatic event that brings capitalism to its knees and proves once and for all to the working class that this system has to go, but I I am not sure it will ever play out this way. Perhaps, we are stuck in a kind of "eternal return," and it is up to the working class to put this cycle to an end? By this, I don't mean that there isn't a direction to the captialist crisis, but I am not sure we ever reach "the end." Kind of, sort of like a Black Hole? 

 

jk1921
To follow up: Wasn't this

To follow up: Wasn't this Marx's point about the TRPF--it is a factor that dogs captialism, but the effort to overcome it is in part responsible for the system's development? Captialism may be haunted by this TRPF--tendential or actual--but it generally finds a way to overcome it--temporally or spatially--in such a way that the profit rate never quite reaches zero. There is a cyclical quality to it.

In fact, IIRC, hasn't the ICC argued that preceidly because of this, the TRPF cannot explain the transition to decadence? It is hard to identify a qualitative change in the nature of the system resulting from the TRPF, as it is with the saturation of the world market and the permanent crisis of overproduction.

Demogorgon
Distilled Confusion

I doubt any of the below will provide many answers and will probably raise more questions. Please consider them the distilled confusion of an ICC militant who's been grappling with these questions lately. (For clarity, both concerning this and earlier posts, I'm one of the minority comrades in the organisation who does not defend Rosa Luxemburg's economic theory - I'm more in Grossman's camp.)

I think part of the problem with this discussion is that revolutionaries in the past have been far too quick to proclaim the crisis of the day as "The Big One" that will end it all. Each time they've been proven wrong - after all, the system is still here. (And, at the level of theory, there's no doubt that this poses more difficulties to some theoretical explanations of crisis than others.)

Nonetheless, as I mentioned above, there is a historic element to the factors behind the crisis-cycle. Indeed, one might argue (e.g. Paul Mattick) that capitalism has been locked in a kind of permanent crisis since the Great Depression. After all, at no point since then has capitalism been able to return to its "normal" state of functioning and throw off the crutches of the state. State capitalism is a fundamental contradiction for capitalism in many respects.

Total monopoly or total state capitalism is a contradiction in terms. As Marx points out in Grundrisse "Since value forms the foundation of capital, and since it therefore necessarily exists only through exchange for counter-value, it thus necessarily repels itself from itself. A universal capital, one without alien capitals confronting it, with which it exchanges—and from the present standpoint, nothing confronts it but wage labourers or itself—is therefore a non-thing. The reciprocal repulsion between capitals is already contained in capital as realized exchange value." While such a conception is useful to illustrate certain mechanics of the capitalist system, it can never exist in reality - at least not while remaining capitalism. There is thus a historic limit on how far state capitalism can develop before it calls the entire system into question.

This is partly the reason why the most extreme form of state capitalism (Stalinism) only came about under very specific historic conditions and even there never took on a complete form (there was "organised competition" for example between the various arms companies in the Soviet Union like Sukhov and Mikoyan Gurevich, etc. It also goes without saying that state capitalist nation states also competed against others.

The classic bourgeoisie (i.e. the business class) in the mixed economies also instinctively recognise the essential contradiction in state capitalism - this is why there is such general hostility to the state in such circles and their ideological representatives. There is a perpetual tension between these strata and the tendency towards the state absorbing more and more economic activity. The precise balance between these two tendencies may wax and wane, but the essential contradiction can never be overcome.

Despite this recognition, modern capitalism cannot survive without the state and the recent crisis has shown this more starkly than ever. Capitalism today is thus caught in a contradiction it can't escape and this more than anything shows its historical obsolescence. Its own economic mechanisms push it towards the formation of a truly global capitalism i.e. the one thing it cannot actually become.

This historic element means that there cannot be a simple repetition of the crisis cycle throughout time until the proletariat wakes up and makes a revolution. At the risk of repeating an earlier post, each accumulation cycle poses a more and more profound barrier for it to cross. Even if, at the abstract level of the economic mechanism, a powerful enough crisis can create the conditions for renewed accumulation, this doesn't happen in the vacuum of an equation but in a real society with all the devastating consequences this implies.

Whether this results in an economic armageddon (which, even if capitalism survives it will have to face again on an even bigger scale), a full blown war (as seemed likely between the 50s and 90s), or the slow but accelerating disintegration of society (as seen from the 90s till now) is largely a moot point: capitalism has no real future to offer us.

jk1921
Hmm, I think it is the use of

Hmm, I think it is the use of phrases like "economic armageddon" that increasingly bother me. What does that mean? I don't think these are moot questions either. I think, as Marxists, we need to start to move beyond these abstract rhetorical devices and think more concretely about what we are saying.

I don't know if something like an economic armageddon will ever hapen, where one day capitalism stops being capitalism due to its own contradictions. What might be more convincing is that capitalism hits up against its, what some have called, "second contradiction," i.e. the inability of the planet to sustain this type of destructive activity indefinetly-although that theory might have certain neo-Malthusian implications.

But Demo's post raises other interesting questions. What does it mean to say "healthy captialism"? Wasn't the captialist system always prone to crises, wars, social conflagarations? There has been some literature coming out over the last decade or so arguing that the idea that there was some pure free-market period of laissez-faire capitalism is a pure myth. Captialism has always relied on the state, it has always been state captialism to some extent or another. This is more obvious is some places and some times, but captialism could never have come into existence as a full fledged system without heavy state intervention to produce the conditions for a supposedly free market to exist: the so called primitive accumulation, colonialism, the slave trade, systems of laws that enshrine the right of contract, etc,. In fact, there is still considerible debate in historical sociology about the precise nature and role of the absolutist state in the early modern period: was it a vehicle for capitalist development, etc. 

But as Demo has said, Marxists have been predicting the final crisis of captialism for a long time and yet it never comes. We have a lot of work to do if we want to convince people this time is different.

On the question of "barbarism": Do barbarians realize they are barbarians? I just have a hard time seeing how these abstractions get us very far. "Barbarism," "armageddon", etc. all seem to have certain eschatological and apocalyptic implications about them. How about "permanent high unemployment, low wage, crisis prone, capitialism with the re-emergence of other forms of direct labour exploitation" to describe the likely future trajectory of captialist society?

Fred
Jk asks: "What does it mean

Jk asks: "What does it mean to say "healthy captialism"? Wasn't the captialist system always prone to crises, wars, social conflagarations? "

Yes it was, even in its ascendant period when it might have been regarded as being "healthy" even if it was only the health of a growing tumor, which was successfully hiding it's malignancy. Now the malignancy is there for all to see, and more people do seem to be looking. Capitalism is actively decomposing. It's in what jk references as: " what some have called, "second contradiction," i.e. the inability of the planet to sustain this type of destructive activity indefinetly...". In other words it has become a menace not just to humanity but to the environment itself.

As to Barbarians - weren't the original barbarians goodies? So: " How about "permanent high unemployment, low wage, crisis prone, capitialism with the re-emergence of other forms of direct labour exploitation" to describe the likely future trajectory of captialist society?" That's good, and sounds a fair description of something like the state we're in already in eg. China, and which is shortly to be appearing in a neighbourhood near everyone else if it hasn't got going there already. So the choice now becomes: "Communism or Total Life-long- Wage- Enslavement- Poverty- and- Misery." Can we all adjust to that? I trust not. To do so would be truly to glorify decomposition, and tantamount to suicide. I am being serious. The system has nothing left to even pretend to offer us. And there is something a little different about this current crisis isnt tbere; even the bourgeoisie show signs of understanding this don't they? I was thinking of Hollande's election win, and the leftist circus in Greece. Is the bourgeoisie now not a little scared of what it has to do ie. Make the working class massively pay with massive austerity! Or is this a mere upping of their machiavellianism? What can they pull out of the hat this time!

Demogorgon
There are lots and lots of

There are lots and lots of questions being raised here, so I'm going (to try at least!) to concentrate on the phrase "economic armageddon" that I used and which troubles JK. Hopefully this post will clarify what I meant (and I will admit there was a certain rhetorical flourish to the phrase).

From my theoretical perspective, to put things simply, the current crisis is the expression of a gigantic over-accumulation of capital. Profitability is no longer sufficient to properly valorise the enormous of amount of physical (embodied in massive production centres across the planet) and fictitious (the even more gigantic accumulation of financial instruments) capital that has been built up.

Historically, such situations ended in the appearance of depression which annihilated the fictitious capital and devalued plant, labour and material allowing a reorganisation of the remaining capitalisms on a profitable basis. The 1930s marked a change in this pattern (which was already partially prefigured by the Long Depression at the end of the previous century) where in spite of the worst crisis capitalism had ever known, there was no spontaneous return to "normal" accumulation. From that point onwards, capitalism has responded to crisis with an ever-growing state intervention in the economy (today, after decades of so-called privatisation the state in the "free-market" US contributes about 35% of GDP, other countries are even higher). Every attempt to abandon the state crutch (e.g. the US in 1937, Chile in the 70s, etc.) resulted in the return of depression and was quickly abandoned.

The omnipresent addiction to permanent state support has kept economic activity going but has not - and cannot - revitalise the profits mechanism itself. In the mixed economy, using subsidies, pump-priming and the rest to support the economy it only does this by leeching surplus value from elsewhere in the economy, guaranteeing profit on the basis of a return on its ever growing debts (e.g. Treasury Bills, etc.)

The only real way for capitalism to revitalise itself is on the basis of either crisis itself, or another mechanism that simulates the effect of a crisis. In the ICC, we've talked for a long time about "phasing in the crisis" and this is basically what's been attempted since the 80s with all the assaults on working conditions regardless of the official status of recession or growth, even if the phases of the former have accelerated the process at specific times.

None of this has been enough as the steady accumulation of fictitious capital, speculation, state debt, etc. has shown and now we have reached a historic juncture in what's going to happen. What capital needs to achieve - at minimum - is a massive write-off of all the unsustainable state debts accumulated over the past 50 years. The events of 2008 (which nearly caused the total cessation of US and possibly even global activity as the credit system seized up) would look like a minor tremor in comparison to the cataclysmic earthquake such a "credit event" would unleash.

Am I exaggerating? I don't think so. We only have to look at the apoplexy that the threat of a Greek default (a pitiful minnow on the economic stage) has had on the world bourgeoisie. After 4 years of turmoil, Greece has been allowed to carry out a small orderly default but worse is yet to come and everyone knows it. There is, of course, all the talk about Spain, Portugal and Italy also being potential dangers. But no-one talks about Japan, one of the most indebted states in human history, where the long-term course is far less sustainable than Greek debt ever was.

It is the Japanese (and US, UK, etc. etc.) mountain, obscured for the moment by the Greek molehill that is the ultimate threat to the system. Even to stabilise this unsustainable course requires a massive retrenchment in state capitalist mechanisms ... and yet this cannot be achieved without unleashing the very depression those mechanisms have been employed to prevent.

Such a crisis would mean a reconfiguring of the global economic and political landscapes as profound and traumatic as World War II - and would most likely be accompanied by an explosion of wars as each nation state tries to avoid paying its own share of the crisis. And we mustn't forget that even the 20 years of crisis war and post-war crisis from 1929 - 1949 did not result in a traditional recovery (although, in my opinion, it certainly contributed) but a state-initiated and state-supported one.

I think it is conceivable that the contradictions in capitalism have reached such extremes that no crisis is powerful enough to restore a truly spontaeneous accumulation cycle - or that such a crisis would have the unfortunate side-effect of disrupting the economic foundation of society so profoundly that it could lead to the collapse of the society on which it rests (with or without world revolution).

It's also conceivable that capitalism might survive such a cataclysm, but it would be a profoundly changed world from the relatively comfortable one we know today. And, ironically, a renewal in capital accumulation would catapult what's left of society into direct conflict with the basic physical restrictions on growth that we're already seeing prefigured in today's world (climate change, resource constraint, etc.).

JK's formulation "permanent high unemployment, low wage, crisis prone, capitialism with the re-emergence of other forms of direct labour exploitation" actually describes the current situation, the one which we're stuck with assuming the bourgeoisie can somehow continue on the course they've traversed for the past few decades, not the situation that is more likely: the attempt to phase in truly dramatic assaults in living standards (no doubt accompanied by global convulsions beyond what seen so far) or, even worse, a chaotic "unleashing" of the crisis mechanism with consequences I think we're ill-equipped to imagine.

jk1921
Thanks Demo, your post raises

Thanks Demo, your post raises many interesting questions. To be clear, when I said I was "bothered" by phrases like "economic armagedeon," I didn't mean I didn't think the scenario you describe is not possible, only that we need to be more precise in characterizing this future world we envision.

I think they key is in your final paragraph-where you say that a far worse future than the one I describe is more likely. I think this may be the point of debate, what is more likely as opposed to what is possible. Like I said previously however, I don't think this is a moot point. We all agree capitalism has outlived its usefulness to humanity and is ripe to be relaced, but figuring out where the system is most likely to go seems important in that it could circumscribe the possibility for a communist way out of this morass of decomposing captialism.

One question: how are you using the concept of a "mixed economy" exactly? Are you refering here to Western style state captialism? Is this particular form of state capitalism just about surface appearences or is there somthing fundamental to the system's dynamics about the fact that it is "mixed"--your post seems to lead to believe you think the latter?

Demogorgon
"Thanks Demo, your post

"Thanks Demo, your post raises many interesting questions. To be clear, when I said I was "bothered" by phrases like "economic armagedeon," I didn't mean I didn't think the scenario you describe is not possible, only that we need to be more precise in characterizing this future world we envision."

I think this is a fair enough point but, of course, part of the problem is that we can't predict exactly how the crisis will evolve. We can certainly point to potentialities but exactly if, when and how these potentialities are actualised is another matter. All we can say with certainty is that a lot of shit is coming our way. Nonetheless, a correct understanding of the crisis can allow us to assess what capitalism has to do in order to survive (or attempt survival) and thus go on to assess its long-term historical trajectory.

Understanding crisis is only part of the picture, of course, because the crisis both determines and is determined by the course of the class struggle, imperialism, etc.

"I think they key is in your final paragraph-where you say that a far worse future than the one I describe is more likely. I think this may be the point of debate, what is more likely as opposed to what is possible."

Perhaps you could outline what you think is most likely and why?

"One question: how are you using the concept of a "mixed economy" exactly? Are you refering here to Western style state captialism"

That's what I had in mind when I wrote it, certainly.

"Is this particular form of state capitalism just about surface appearences or is there somthing fundamental to the system's dynamics about the fact that it is "mixed"--your post seems to lead to believe you think the latter?"

I suppose what I was referring to was the contradictions inherent in the state's action to revitalise the private economy through Keynesian methods because the more it attempts to do so, the more it tends to destroy it. Naturally, where the state directly exploits workers itself (for example, in the nationalised industries) it acts as capital but there, too, it confronts exactly the same problems as private capital and doesn't represent any overcoming of those problems. A nationalised capital would also suffer from a low profit rate, for example.

As you can no doubt tell, I'm trying to clarify some of these points in my own mind, so if this all seems confused that's because it probably is!

baboon
banking collapse

With reference to my speculation above that the banking system almost collapsed last Sept/Oct., and the rumours that Europe was flooded with dollars in order to sustain it - in today's Guardian "Nenoit Coeure, executive director of the ECB, said: 'In the autumn of 2011 the conditions were very dangerous... European banks were facing severe difficulties to fund themselves, to access finance, and we were very close to having a collapse in the banking system of the euro area, which would have also led to a collapse of the economy.'"

It shows that at the highest levels the bourgeoisie plays its cards very close to its chest.