ICC internal debate on economics (Part 4): The causes of the post-1945 economic boom

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For the fourth time since we began to publish elements of our internal debate in the International Review n°133 , we reproduce below a text on the explanation of the period of prosperity that followed World War II.[1]

The article below defends the thesis of "Keynesian-Fordist state capitalism", which considers that the prosperity of the 1950-60s was based on the bourgeoisie's development of various Keynesian measures. It replies to two articles published in International Review n°136 which defended respectively, the idea that this prosperity was fundamentally the result of the exploitation of the last, but extensive, extra-capitalist markets and of the beginning of a rising level of debt (the "Extra-capitalist markets and debt" thesis),[2] and the idea that it was made possible by the weight of the war economy and state capitalism within society. [3]

In the introduction to these two previous articles, we gave an overview of the evolution of the discussions in the organisation, noting that the "Keynesian-Fordist state capitalism" thesis "now clearly calls into question some of the ICC's positions". The comrades responsible for the article below disagree with this evaluation, and explain why.[4]


In defence of the "Keynesian-Fordist state capitalism" thesis  (reply to Silvio and Jens)


We are continuing here the debate begun in the International Review n°133 on the explanation of the period of prosperity during the 1950-60s, which was an exception in capitalism's history since World War I. We intend to reply both to the arguments put forward by comrades Silvio and Jens in International Review n°136 , and to the presentation of these two articles which seems to us to contain several misunderstandings.

The disagreements currently under discussion in our organisation are all set within the framework of the positions defended by revolutionaries in the Second and Third Internationals and within the communist lefts, notably in the contributions of Luxemburg, Bukharin, Trotsky, Pannekoek, Bilan, Mattick and others. We are aware that these contributions cannot simply be combined since they contradict each other on a number of points. But none of them by themselves explain the development of the post-war Reconstruction, for the simple reason that their authors did not live through this period (with the exception of Paul Mattick). We think nonetheless that all of them have something to contribute to the discussion that concerns us today. Revolutionaries today have the responsibility to continue the discussion opened in the revolutionary movement the better to understand the mechanisms that encourage or hold back capitalism's development, especially during its period of decadence.

The authors of the present article defend the thesis known as "Keynesian-Fordist state capitalism". This thesis has already been presented in more detail by C.Mcl, in International Review n°135. The latter has decided to abandon the debate and has broken off relations with us. As a result, we do not know if the position that we defend is absolutely identical to his.

What facts are we concerned with?

To continue the debate, we want first of all to point out certain historical facts on which up to now there has been no disagreement among the three different positions:

1)       Between 1945 and 1975, at least within the sphere of the industrialised countries belonging to the bloc dominated by the USA, not only did GDP per inhabitant grow as never before in the history of capitalism,[5] but there was also an increase in the real wages of the working class.[6]

2)       During the same period and in the same sphere, there was also a constant increase in labour productivity, "Gains in productivity never seen in the whole history of capitalism, gains which were founded on the generalisation and maintenance of assembly line production (Fordism)".[7]

3)       The rate of profit (ie the profit realised relative to the total invested capital) was very high throughout this period, but once again tended to fall from 1969 onwards. All the comrades involved in the debate refer to the same statistics in this respect.[8]

4)       At least up until 1971, there was a hitherto unheard of degree of co-ordination between all the states of the US bloc (bloc discipline, Bretton Woods system).

As far as the first three aspects are concerned, one's arguments must be consistent. If we all agree on these facts, then we cannot take a step backwards to insist that: "(...) the real prosperity of the 1950-60s was not all that the bourgeoisie made it out to be, when they proudly display the GDP of the main industrialised countries during this period".[9] The bourgeoisie may very well distort the reality of the period, but we cannot solve the problem simply by saying that it does not exist, because this growth did not exist in reality. Our aim in continuing this debate should be to clarify for ourselves, and for the other workers who have no interest in hiding from reality, what were the mechanisms which made it possible to maintain simultaneously:

  • an accumulation without major interruptions (independent of the normal cyclical crises),
  • a high rate of profit,
  • a growth in real wages.

If we exaggerate this or that aspect, or if we underestimate certain difficulties, then these are only relative arguments (more or less quantity), whereas what concerns us is a qualitative argument: how was it possible for decadent capitalism to undergo a twenty-year phase of prosperity during which wages rose and profits were high?

This is the question we must answer.

How far is the "Keynesian-Fordist state capitalism" thesis compatible with the ideas of Rosa Luxemburg?

The "Keynesian-Fordist state capitalism" thesis is criticised above all because it rejects a part of Rosa Luxemburg's argumentation (see the article that presents this thesis in International Review n°135 ). There seems to be some confusion as to how far we agree with Luxemburg. Thus comrade Jens, in his article in International Review n°136 , thinks that C.Mcl has changed opinion since his article in International Review n°127 . This article explained (for the ICC, in a polemic with the CWO) that the reduction of the solvent market compared with the needs of capital "is obviously not the only factor analysed by Marx in the appearance of (...) crises", and pointed out that it is also necessary to take account of the law of the tendency of the rate of profit to fall, and the disequilibrium in the rhythm of accumulation of the major sectors of production.

For us, the realisation of surplus value is indeed a fundamental problem for capitalism. It offers not only an explanation of the capitalist crisis, but also of two of its essential causes (we will leave aside for the moment the problem of proportionality). Not only is there the problem of the tendency for the rate of profit to fall, as a result of the increase in capital's organic composition, there is also (after the act of production and appropriation of surplus value) the problem of selling the product and so realising the surplus value. It is one of Luxemburg's merits that she localised the difficulty of realising the product in the inadequacy of solvent markets.

Capitalism is a system that is forced to develop. Accumulation is based not on simple but on expanded reproduction. In each cycle, capital must expand its foundation, in other words constant and variable capital. Capitalism developed in a feudal environment, in an extra-capitalist milieu with which it established relations in the first place to obtain the material means of its accumulation: raw materials, labour power, etc.

Another of Luxemburg's merits was to analyse the relations between the capitalist sphere and the extra-capitalist milieu. We do not agree with all the economic arguments of the this analysis (as we will explain later), but we share its central ideas: capitalism continually destroys the other modes of production in its environment, the internal contradiction seeking a solution in the extension of its external domain, there is a qualitative change in the development of capitalism once the latter has conquered the whole planet, in other words once capitalism has created the world market. At this point capitalism has fulfilled its progressive function and enters into its decadent phase. As C.Mcl points out in International Review n°127, "as well as analysing the inseparable historic link between capitalist relations of production and imperialism, showing that the system could not live without expanding, without being imperialist in essence, Rosa Luxemburg also demonstrated at what moment and in what manner the capitalist system entered its phase of decadence (...) The system's entry into decadence was thus characterised not by the disappearance of the extra-capitalist markets (Marx's 'demand exterior to the labourer') but by their insufficiency with regard to the needs for enlarged accumulation".[10]

Does each cycle of capitalist accumulation need extra-capitalist markets?

During capitalism's ascendant phase, it is true that the markets situated outside the capitalist sphere provided the latter with an outlet for the sale of its commodities in a time of overproduction. Capitalism was able temporarily to overcome its internal crises on the one hand through periodic crises and on the other through the sale of products that could not be sold in the purely capitalist sphere, on the extra-capitalist market. In the cyclical crises provoked by the fall in the rate of profit, some capitals are devalued, thus making it possible to re-establish an organic composition sufficiently low for a new cycle of accumulation to begin. Moreover, during the ascendant phase the extra-capitalist market provides capitalism with "an outlet for the sale of commodities suffering from overproduction",[11] thus attenuating the problem of the lack of solvent markets.

Luxemburg's mistake is that she makes these extra-capitalist markets and the surplus value realised there, a vital element in capital's enlarged reproduction. The capitalist produces to sell and not just to produce. Commodities must find buyers. And every capitalist is above all a seller: he only buys in order to invest again, after selling his product at a profit. In short, capital must pass through a money phase, and commodities must be converted into money in order to be realised, but neither in their totality, nor at a given moment, nor annually as Luxemburg imagines: one part may remain in its material form, while another may evolve through multiple commercial transactions during which the same quantity of money serves several times to convert commodities into money, and money into commodities.

If there were no credit, and if it were necessary to realise the whole of each year's production in money form then yes, an outside purchaser would be necessary for capitalist production.

But this is not the case. It is obvious that barriers may appear in the way of this cycle (purchase ® production/extraction of surplus value ® sale ® new purchase). There are several difficulties. But the sale to an extra-capitalist buyer is not a condition sine qua non of accumulation in "normal" conditions. This is only one possible way out if there is overproduction or a disproportion between the production of means of production and the production of means of consumption, and such problems do not appear all the time.

This weak point in Luxemburg's argument has also been criticised by "Luxemburgists" like Fritz Sternberg, who refers to "fundamental errors which it is hard to understand".[12] If these errors of Rosa Luxemburg are "hard to understand" for the partisans of "pure Luxemburgism", this is precisely because they do not take account of Sternberg's critique. Since the beginning of the debates in the ICC on the question of decadence, in the 1970s, Sternberg has been considered a highly important reference precisely because he is also considered to be a Luxemburgist.

Comrade Jens disagrees with the idea put forward, according to him, by the "Keynesian-Fordist state capitalism" thesis, that "the extra-capitalist market is nothing but a sort of overflow pipe for the capitalist market when it gets too full".[13] To avoid any misunderstandings, we think that it is precisely on this point that Sternberg's Luxemburgism differs from the "pure Luxemburgism" of Jens (and Silvio). On this point, we are in agreement with Sternberg.

For us, the mystery of the Reconstruction boom cannot be explained by the remaining extra-capitalist markets, since these have been insufficient for the requirements of expanded capital accumulation ever since World War I.

How does accumulation function during a strong increase in productivity?

For the "Keynesian-Fordist state capitalism" thesis, the prosperity following World War II results from the combination of three essential factors:

  • important increases in productivity over a period of two decades;
  • a major increase in real wages during the same period;
  • the existence of a developed state capitalism (co-ordinated on a supranational level), which adopted Keynesian policies on other levels also (not just that of wages).

In International Review n°136 , comrade Silvio finds himself in some perplexity: "What does it mean to increase the production of profit? It means producing commodities and selling them, but to satisfy what demand? That of the workers?".

We would like to answer the comrade's concerns: if labour productivity rises throughout industry, then the workers' means of consumption are reduced. The capitalist pays his workers less money for the same labour time. The worker's unpaid labour time increases, in other words the surplus value increases. In other words, the rate of surplus value (which is nothing other than the rate of exploitation) rises. Marx called this process the production of relative surplus value. If other factors remain the same (or if constant capital itself falls), an increase in surplus value also means an increase in the rate of profit. If this profit is high enough, then the capitalists can increase wages without losing all the increase in extracted surplus value.

The second question is that of the market. If the workers' wages rise, then they can consume more. As Marx pointed out, labour power must be reproduced. This is the reproduction of variable capital (v), which is just as necessary as the reproduction of constant capital (c). Consequently, variable capital is part of the capitalist market. A general rise in wages also means an increase in the size of the market.

One might reply that such an increase in the size of the market is not enough to realise the whole of the surplus value necessary for accumulation. This is true in general and in the long term. Those of us who defend the "Keynesian-Fordist" thesis do not think that we have discovered a solution to capitalism's inherent contradictions, which could be endlessly repeated. Our analysis is not a new theory, but a prolongation of the critique of the capitalist economy begun by Marx, and continued by those other revolutionaries that we have cited.

But it cannot be denied that such an increase in the size of the market reduces the problem of inadequate demand, in the conditions created after World War II. Perhaps comrade Silvio is still wondering where the demand might come from? Demand in capitalism presupposes two factors: a need (the desire to consume), and solvency (possession of money). The first factor is almost never a problem; there is always a lack of means of consumption. The second factor is on the contrary a permanent problem for capitalism - a problem which it managed to attenuate precisely thanks to the growth in wages during the Reconstruction boom.

But the expansion of the market formed by wage labourers is not the only factor that attenuated the scarcity of markets during this period: we also need to take account of the increase in the costs of the Keynesian state (for example, investment in infrastructure projects, armaments, and so forth). In fact there is a threefold division of the increase in profit: distribution of increased profits thanks to rising productivity among the capitalists (profit), the workers (wages) and the state (taxes). Comrade Silvio seems to agree with this idea when he says: "It is true that workers' consumption and state spending make it possible to sell the product of an increase in production"  However, he sees another problem here: "but as we have seen this results in a sterilisation of the wealth produced since it is unable to be usefully employed to valorise capital" He refers here to the idea that  "increasing wages beyond what is necessary for the reproduction of labour power is - from the capitalist standpoint - nothing other than a pure waste of surplus value which cannot become a part of the accumulation process".

The comrade is confusing here two spheres, which need to be distinguished before we analyse the general dynamic that brings them together:

One problem (in the sphere of circulation, the market) is the realisation of the product. On this level Silvio seems to agree with us if he means that the workers' consumption (like state spending) makes it possible to provide an outlet to increasing production.

Another problem (in the sphere of production) is the valorisation of capital such that accumulation is possible not only with profit, but with an increasing profit.

Obviously, the comrade's objection about the "waste of surplus value" concerns the second level, that of production. Let us then follow him to the factory (after remarking that he agrees with us at least in part at the level of the markets), where the worker is exploited for an increasing wage. What happens if the surplus value increases thanks to a major increase in labour productivity (leaving aside the threefold division of profits, in other words taxes, which are transformed into state spending. The twofold share-out between worker and capitalist is enough to explain the basic mechanism)? The total product of a capitalist entity (be it a company, a country, or the entire capitalist sphere) over a certain period of time, for example one year, can be divided into three parts: constant capital c, variable capital v, and surplus value sv. In the process of accumulation, the capitalist does not consume the whole surplus value, since a part of it must be invested in expanded production. The surplus value is therefore divided into the part consumed by the capitalist (the interest on his investment: I), and the part destined for accumulation (a) so that sv = i + a. We can in turn divide a into the part invested in constant capital (ac) and that which goes to increase variable capital (av) in the next production cycle, so that a = ac + av. The total product of this capitalist entity can therefore be expressed as:

c + v + sv, or:

c + v + (i + a), or:

c + v + (i + ac + av).

If, thanks to a major increase in productivity, the capitalist obtains a sufficiently large surplus value, then the part represented by ac can continue to grow, even if the av grows "beyond what is necessary". If for example, the costs of the means of consumption fall by 50% while unpaid labour time increases from 3 to 5 hours of an 8-hour day, thanks to the effect of the production of relative surplus value, then the rate of surplus value increases from 3/8 to 5/8, for example from $375 to $625, even though the worker has had a 20% increase in his real wages (his wage which originally represented 5 hours labour, but with a doubling of productivity it represents the product of 3 hours instead of 6 hours as previously). The same thing happens if the capitalist increases his consumption (because the cost of his products of consumption also decrease by 50%): the share of surplus value devoted to accumulation can nonetheless grow. And the amount ac can also grow year on year even if av grows "beyond what is necessary", as long as labour productivity continues to increase at the same rhythm. The only "damaging" effect of this "waste of surplus value" is that the increase in capital's organic composition is less frenetic than it would otherwise have been. The growth in organic composition implies that ac grows faster than av: if av grows "beyond what is necessary" then this tendency may be suppressed or even inverted), but we cannot assert that this "waste of surplus value" plays no part in the process of accumulation. On the contrary this distribution of profit obtained through the increase in productivity plays a complete part in accumulation. Not only that, it attenuates the problem identified by Luxemburg in Chapter 25 of The accumulation of capital, where she insists that with a tendency towards an ever-increasing organic composition of capital, the exchange between the two main sectors of capitalist production (production of the means of production on the one hand, and of the means of consumption on the other) becomes impossible in the long term.[14] After only a few cycles, an unsaleable remainder is already left in the second sector of the capitalist economy, that of the production of the means of consumption. The combination of Fordism (increasing productivity) and Keynesianism (increasing wages and state spending) helps to hold back this tendency, attenuating the problem of overproduction in Sector II and that of the disproportion between the two main branches of production. The leaders of the Western economy could not prevent the return of the crisis at the end of the 1960s, but they could delay it.

Before leaving this subject, we have to say that Silvio leaves us perplexed. He seems to have understood at the theoretical level what we have just explained, that is to say the mechanism of the production of relative surplus value as an ideal basis for an accumulation which is as internal as possible, and as little dependent on external factors as possible, when he says that "as long as there are gains in productivity sufficient for consumption to increase at the same rhythm as labour productivity, the problem of overproduction can be resolved without preventing accumulation since profits, which are also increasing, are enough to ensure accumulation".[15] We presume that Silvio knows what he is saying, or at least that he understands what he is saying, since these are his own words which conclude a quotation from Marx's Theories of Surplus Value (a quotation which of course proves nothing in itself). But Silvio fails to answer at this theoretical level, or at least fails to follow the logic of the argument, preferring to change the subject and to object: "During his lifetime, Marx never witnessed an increase in wages at the same rhythm as the productivity of labour, and moreover thought that this was impossible. Nonetheless, this has happened at certain moments in the life of capitalism; however this fact in no way allows us to deduce that it could resolve, even temporarily, the fundamental problem of overproduction that Marx highlighted". What a reply! We are about to come to a conclusion on the basis of a line of reasoning - but instead of verifying or contradicting the conclusion on the basis of a series of facts, we continue to speak of its empirical probability or improbability. As if he feels that this is inadequate, the comrade counters in advance that "Marxism does not reduce this contradiction of overproduction simply to the proportion between increasing wages and increasing productivity". Since the authority of Marx is not enough, we need that of "marxism". An appeal to orthodoxy! But which one?

Let us have more coherent reasoning, more open and daring conclusions!

The value of the schemas of capitalist accumulation

In the second volume of Capital, Marx presents the problem of expanded reproduction (ie accumulation) by using schemas, for example:

Sector I: 4000c + 1000v + 1000sv = 6000

Sector II: 1500c + 750v + 750sv = 3000

We ask the reader's indulgence and patience if reading and understanding these schemas is heavy going. But we don't think that there is any reason to be afraid of them.

Sector I is the branch of the economy that produces the means of production, Sector II the branch that produces the means of consumption. 4000c is the quantity of value produced in Sector I one for the reproduction of constant capital c; 1000v is the sum of wages paid in Sector I; 1000sv is the surplus value extracted from the workers in Sector I - and the same reasoning is true for Sector II. For expanded reproduction to take place, it is essential to respect the proportions between the different parts of the two sectors. The workers of Sector I produce, for example, machines, but for their own reproduction need means of consumption produced in the other branch. Exchange takes place between the two sectors according to certain rules. If for example, half the surplus value of Sector I is used to expand production while the organic composition of capital remains the same, then of the 500sv reinvested, 400 are devoted to the increase of constant capital and only 100 to the increase of total wages in this Sector. Marx thus gave the following example of the second cycle:

Sector I: 4400c + 1100v + 1100sv = 6600

Sector II: 1600c + 800v + 800sv = 3200

He continued with possible schemas for various cycles of accumulation. These schemas have since been enlarged, criticised, and refined by Luxemburg, Bauer, Bukharin, Sternberg, Grossmann and others. From all this we can draw a certain law which can be summarised as follows:

If we have

Sector I with c1 + v1 + i1 + ac1 + av1

Sector II with c2 + v2 + i2 + ac2 + av2

then expanded reproduction demands that:

c2 + av2 = v1 + i1 + av1. [16]

In other words, the value of constant capital in Sector II (c2) plus the share of surplus value in the same sector devoted to the increase of constant capital (ac2)[17] must be exchanged with the value of the variable capital of Sector I (total wages, v1) plus the consumption of the capitalists of the same Sector (i1) plus the share of surplus value of this sector devoted to the employment of new workers (v1).[18]

These schemas do not take account of certain factors, for example:

1)       The fact that the economy needs certain conditions for its "permanent" expansion; it demands ever more workers and raw materials.

2)       The fact that there is no direct exchange between the entities, but an exchange of transactions by the intermediary of money, the universal commodity. For example, the products materialised in the value ac1 must be exchanged within the sector: these are means of production necessary in the same sector, they must be sold and then bought if before they can be used.

At the same time, these schemas have some relatively awkward consequences, for example the fact that Sector II has no autonomy relative to Sector I. The rhythm of growth of the sector of the production of the means of consumption, as well as its organic composition, depend entirely on the proportions in the accumulation of Sector I.[19]

We cannot force the partisans of the necessity of capitalist markets to see a certain problem, in other words what Marx was looking for in his schemas of capitalist accumulation. Instead of looking at the different problems and placing each one in its context, they prefer to mix up the different contradictions by constantly insisting on one aspect of the problem: who in the final analysis buys the commodities necessary for the extension of production? This fixation blinds them. But if we follow the logic of the schemas presented by Marx, then we cannot avoid the following conclusion: if the conditions are such as those assumed in the schemas, and if we accept the consequences (conditions and consequences which can be analysed separately), then a government which controls the entire economy can theoretically organise it in such a way that accumulation functions according to the schema: c2 + av2 = v1 + i1 + av1. At this level there is no need for extra-capitalist markets. If we accept this conclusion then we can analyse separately (ie differentiate) the other problems, for example:

1)       How can an economy grow permanently in a necessarily limited world?

2)       What are the conditions for the use of money? How can money work effectively in the different acts of transformation of one element of global capital into another?

3)       What are the effects of a growing organic composition (when constant capital grows more quickly than variable capital)?

4)       What are the effects of increases in wages "beyond what is necessary"?

Clearly, as Luxemburg said, mathematical schemas prove nothing in themselves, neither the possibility nor the impossibility of accumulation. But if we know precisely what they say (and of what they are an abstraction) then we can distinguish between the different problems. Luxemburg also studied the first three of the problems enumerated here. She contributed above all to analysing questions (1) and (3). But as far as problem (2) is concerned, she mixed up certain contradictions and reduced them to a single difficulty, that of realising the share of surplus value devoted to expanded reproduction: the transformation into money is a problem not only for this part of the global product (ac1, av1, ac2, av2) but for all the elements of production (c1, v1, c2, v2) and even of the product itself: the owner of a chocolate factory cannot live on chocolate. The transformation of product into money and then into new material elements of production can fail. Every seller must find a buyer, every sale is a challenge - this is a distinct problem which can be separated theoretically from problem (1): the necessary growth of the sphere of capitalist production, which contains within it the necessity of the growth of the market. Such a growth must necessarily take place at the expense of the extra-capitalist sphere.[20] This growth presupposes only that capitalism has available all the material elements necessary for expanded reproduction (labour power, raw materials, etc.); this problem has nothing to do with the sale of a part of capitalist production to the producers of non-capitalist commodities. As we have said already: the sale to extra-capitalist markets may ease problems of overproduction, but is not necessary for accumulation.

What is our attitude to the ICC's Platform?

The editorial commission's presentation to the discussion on International Review n°136 tried to demonstrate an opposition between certain positions of the "Keynesian-Fordist state capitalism" thesis and the positions of the ICC, and notably with our Platform. This was motivated by certain notes included by C.Mcl in the complete version of his article published in International Review n°135 (only available on our French web site ; see notes 16, 22, 39, 41). C.Mcl has criticised certain formulations of the Platform's Point 3, but from a theoretical point of view without proposing any alternatives. We do not know C.Mcl's present attitude to the Platform since he has abandoned the discussion. We are not able to speak in his place. But we ourselves are in agreement with our Platform which was conceived from the outset to integrate all those who agree with the analysis that capitalism entered into its decadent phase with World War I. The Platform's Point 3 was in no way intended to exclude those who explain decadence by the tendency of the rate of profit to fall, although the formulation of this Point has a certain "Luxemburgist" tonality. If we consider the Platform's Point 3 as a common denominator between revolutionary marxists who explain decadence by the inadequacy of extra-capitalist markets, and those who explain it by the falling rate of profit, then we see no reason to quit this framework since we defend not just one but both of these ideas. In this sense, we have no reason in excluding one or other of the explanations for capitalism's decadence  from our Platform. The present formulation is preferable, although with the advance in the discussion on the Reconstruction boom one might be able to find a different formulation that more consciously reflects the different analyses of capitalism's decadence.

We thus want to clarify our position with regard to the presentation in International Review n°136 on the "calling into question of some of the ICC's positions" by the "Keynesian-Fordist state capitalism" thesis. We want to clarify three supposed contradictions between the Platform and the "Keynesian-Fordist state capitalism" thesis presented under the heading "The evolution of the positions in the debate".

1)       "[According to the 'Keynesian-Fordist state capitalism' thesis], Capitalism 'generates a growing social demand through the employment of new workers and reinvestment in extra means of production and consumption' whereas for the ICC 'Contrary to what the idolaters of capital claim, capitalist production does not create automatically and at will the markets necessary for its growth' (ICC Platform)". Although the idea that "Capitalism generates a growing social demand through the employment of new workers and reinvestment in extra means of production and consumption" is indeed to be found in International Review n°135, we cannot isolate it from its context. As we have seen in the previous part of the present text, capitalism (for us, but also for those who explain decadence solely through the tendency of the rate of profit to fall) has a built-in dynamic of extension of its market. But none of the defenders of the "Keynesian-Fordist state capitalism" thesis has claimed that these markets are sufficient. They may offer a temporary way out, but there is no escape from the elementary contradiction that the market grows more slowly than production.

2)       "Capitalism's apogee corresponds to 'a certain stage [of] the extension of wage labour and its domination through the formation of the world market', whereas for the ICC on the contrary its apogee corresponds to the world's division between the major powers and the fact that 'capitalism reached a point where the outlets which allowed it to grow so powerfully in the nineteenth century became saturated' (ICC Platform)". This second point of our supposed disagreement with the ICC's positions concerns capitalism's entry into its decadent phase. The "Keynesian-Fordist state capitalism" thesis is totally in agreement that capitalism's apogee is reached when the major imperialist powers have shared out the world between them. The only difference between the "Luxemburgism" of the Platform and ourselves lies in the role of the extra-capitalist market. However this difference is much less than that with the defenders of the falling rate of profit as the sole factor in capital's entry into decadence (Grossmann, Mattick).

3)       "The evolution of the rate of profit and the size of the market are completely independent, whereas for the ICC 'the growing difficulty encountered by capital in finding a market for the realisation of surplus value accentuates the fall in the rate of profit, which results from the constant widening of the ratio between the value of the means of production and the value of the labour power which sets them in motion' (ICC Platform)". With regard to this last point, we can say that overall we agree with the presentation, although we did not speak of a "total" but only a "theoretical" independence. We have always said that the rate of profit influences the market and vice versa, but are "not linked theoretically".

What are the consequences of these disagreements?

At first sight, it must be said, none.

We obviously have a different interpretation of certain dynamics of the capitalist economy. These can also lead to disagreement on other issues, for example the analysis of the present crisis and capitalism's perspectives in the short term. The evaluation of the role played by credit in the present crisis, the explanation of inflation and the role of the class struggle appear to us to be subjects that may be analysed differently depending on the various positions in the debate on the Reconstruction boom.

Despite the disagreements put forward in this debate, during both the 17th and the 18th Congresses, we discuss the present economic crisis together, and have voted together for the same resolutions on the International Situation. Even if different analyses on the fundamental mechanisms of the capitalist economy coexist in the organisation, we can still reach very similar conclusions as to our immediate perspectives and the tasks of revolutionaries. This does not mean that debate is not necessary, but on the contrary that it demands patience and the ability to listen to each other with an open mind.


Salome and Ferdinand (4 June 2009)

[1]. We invite our readers who want to follow the whole debate to consult the articles published in International Review n°133, 135, and 136.

[2]. See "The bases of capitalist accumulation".

[3]. See "War economy and state capitalism".

[4]. In the article that follows ("Reply to Silvio and Jens", co-signed by Salome and Ferdinand), the authors point out that some of the notes in C.Mcl's article "The origins, dynamics, and limits of Keynesian-Fordist state capitalism" are missing from the Spanish and English versions. We will correct this on our web site in order to make the terms of the debate as clear as possible, in particular since, as Salome and Ferdinand point out, C.Mcl "criticises certain formulations in Point 3 of the Platform", "from a theoretical point of view, but without proposing any alternatives".

[5]. See note 2 in the introduction to the debate in International Review n°133.

[6]. See Silvio's article in International Review n°136, citing Mattick.

[7]. International Review n°133, introductory article, in the section on "Keynesian-Fordist state capitalism".

[8]. See International Review n°121, "Economic crisis: the descent into the abyss".

[9]. Silvio in International Review n°136.

[10]. International Review n°127, "War in the decadent phase of capitalism".

[11]. International Review n° 135, "The origins, dynamics, and limits of Keynesian-Fordist state capitalism".

[12]. Fritz Sternberg, El imperialismo, ed. Siglo XXI, p75.

[13]. International Review n°136.

[14]. Sternberg considers that this point made by Luxemburg is the most important "of all those that have been carefully avoided by those who criticise Luxemburg" (see El imperialismo, p70).

[15]. See International Review n°136.

[16]. See for example Nicholas Bukharin, Imperialism and the accumulation of capital, his reply to Rosa Luxemburg, Chapter III.

[17]. These two elements were produced in Sector II, in other words appear in the form of means of  consumption.

[18]. These three elements appear in the form of means of production, and must be bought in one way or another by the capitalists of Sector II ("transformed" into c2 + ac2).

[19]. In our view this is the economic reason for the suffering of the workers exploited under Stalinism (or Maoism): a rigid state capitalism forced a maximum of industrialisation by giving the priority to Sector I, which reduced the Sector of the production of the means of consumption to a minimum.

[20]. A sphere is not necessarily a market: washing laundry at home is an activity outside the capitalist sphere. This sphere can be conquered by capitalism if wages are high enough for the worker to take his dirty clothes to the laundry. But there is no extra-capitalist market in this example.


General and theoretical questions: