Posts Tagged ‘Keynesian economics’

Clever Monkey versus the Accelerationists (2)

May 9, 2013 2 comments


Part Two: (Nick) Land, Capital and Labor (Theory)

Clever Monkey’s argument against the accelerationists seems to rest on a precise formulaic incantation repeated over and over: the only accelerationism possible is Nick Land’s accelerationism. Thus accelerationism itself is merely a virulent subform of neoliberalist ideology that advocates commodification of all human relations. Which is to say all talk of accelerationism must lead us to embrace anarcho-capitalism, the Thought of Murray Rothbard, and the good folks at the Mises Institute.

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Guglielmo Carchedi’s bad advice for activists

December 16, 2012 Leave a comment


Keynesian economic policies don’t work, but fighting for these policies will?

Guglielmo Carchedi’s essay on the so-called Marxist multiplier has me bugging. He is handing out bad advice to activists in the social movements and telling them this bad advice is based on Marx’s labor theory of value. The bad advice can be summed up concisely: Keynesian policies do not work and cannot work, but the fight for these policies (as opposed to neoliberal policies) can help end capitalism:

From the Marxist perspective, the struggle for the improvement of labour’s lot and the sedimentation and accumulation of labour’s antagonistic consciousness and power through this struggle should be two sides of the same coin. This is their real importance. They cannot end the slump but they can surely improve labour’s conditions and, given the proper perspective, foster the end of capitalism.

Frankly, Carchedi’s advice is the Marxist academy’s equivalent of medical malpractice. (For the record, Michael Robert’s has his own take on the discussion raised by Carchedi’s essay.)

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Cat Brain at Work: How Chris Harman explains the “Marxist theory of stagnation”

April 6, 2012 Leave a comment

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. I am now reading the late Chris Harman’s “The rate of profit and the world today”, written in 2007, just prior to the big crash. This is part two of my examination.


Before we go any further, let me reiterate one thing: In Marx’s theory, the law of the falling rate of profit is not expressed in “stagnation of economic growth” directly or indirectly. The so-called “stagnation thesis” appears no where in the body of Karl Marx’s works on the capitalist mode of production spanning more than 40 years. Nor does it appear in any of Frederick Engels works on the same subject spanning nearly fifty-five years. It is not even an indirect result of the laws of motion of the capitalist mode of production. Moreover, in addition to the idea of “stagnation“, no Marxist can point to a single reference in the collective body of work by these two writers — together amounting to a century of research and publication — where either the terms “financialization” or “globalization” appear.

So, why the fuck are Marxist academics trying to explain these nonexistent phenomena? I think the answer to that question is simple: they are trying to explain stagnation, financialization and globalization because they can’t explain this:

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Chasing Unicorns: Chris Harman and the “Marxist theory of stagnation”

April 4, 2012 2 comments

"Friesian Unicorn" by Katrina Lasky

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. I am now reading the late Chris Harman’s “The rate of profit and the world today”, written in 2007, just prior to the big crash.


Harman appears to be one of a group of the influential Marxist thinkers in the last quarter of the 20th Century, and especially the period leading to this crisis, who helped refocus Marxist academic attention to Marx’s rate of profit theory. In this paper, to some extent an outline of his book, published in 2009, on the same topic in the middle of the crash, Harman presents the result of his research on the rate of profit and offers some ideas to explain his findings.

In Harman’s view Marx’s argument that the rate of profit falls over the life of capitalism has far reaching implications because it argues capitalist crises result, not from some sort of failure in the mode of production, but from its successes:

The very success of capitalism at accumulating leads to problems for further accumulation. Crisis is the inevitable outcome, as capitalists in key sections of the economy no longer have a rate of profit sufficient to cover their investments. And the greater the scale of past accumulation, the deeper the crises will be.

For some reason Harman does not follow up on this very interesting argument — if in fact capitalism’s crises are not a sign of failure but a sign of success, this indicates capitalist crises themselves should not be the focus of attention when studying the mode of production.

Crises are no more than a interval during which the mode of production resolves the contradictions produced by its previous successes. As such, these crises cannot be the reason why Marx labeled the mode of production a relative, historically limited, form of development. While the recurrent crises of increasing scale demand our attention because they momentarily bring economic activity to a near standstill these crises in no way are the source of processes leading Marx to his conclusion regarding the fate of the mode of production.

The conclusion resulting from this realization are pretty staggering: for all of its social consequences, the depression of 2001 is not the harbinger of the demise of capitalism, but an interval during which the mode of production prepares for its further expansion. This may explain why Marxists, when looking at the recurrent explosions of capitalism, see no reason why they cannot continue indefinitely.

They are looking at the wrong thing.

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Marxist Academic Error 101: “A term is undefined and has no properties”

March 29, 2012 1 comment

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. This is the final part of my critique of Andrew Kliman’s “Neoliberalism, Financialization, and the Underlying Crisis of Capitalist Production” (PDF).


As can be seen in the chart above, most bourgeois economists look at fascist state economic data and conclude we are experiencing nothing like the sort of economic event that occurred in the Great Depression. The Great Depression was just that — a depression — while what we are experiencing is perhaps a more severe than normal recession generated in the aftermath of a financial crisis. For the bourgeois economist this description of the situation may or may not be entirely satisfactory.

For anyone attempting to understand the fascist state economic data using Marx’s theory of the capitalist mode of production it is less than worthless — it can turn Marx’s theory into a useless glob of shit that describes nothing — least of all what is occurring within the capitalist mode of production.

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Dumenil, Levy and FDR’s Fascist Revolution

March 17, 2012 Leave a comment

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. This is the final part of my critique of “The Crisis of Neoliberalism” (PDF) by Gerard Dumenil and Dominique Levy,  first published in 2009. I am using the 2011 version of the book.

Since I am getting bored with Dumenil and Levy, this will be the last post on them.

I tried to show in my last post (Speculation, Greed and Chart Porn for Fun and Profit) even based on their own data Dumenil and Levy can’t explain how the 1930s is similar to today’s crisis. They argue the Great Depression, like the present one, resulted from causes other than a fall in the rate of profit. But, the chart they offer clearly shows a pronounced fall in the rate of profit even exceeding that leading into the depression of the 1890s.

The data is not mine — it is theirs. And it shows the profit rate, as they calculate it, fell from about 15-20 percent to about 2 percent. The fall in the profit rate to 2 percent is more severe even than the fall to 9 percent that occurred in the 1890s depression. Further, if you look at the data series back to 1870 there is a clear down slope both in terms of highs and lows in the profit rate. A series high is established in 1880 and the series low is established in 1933. Fluctuations in the rate of profit are a succession of lower highs and lower lows between 1880 and 1933. Any day trader would argue the series up to 1933 shows a clear downward trend in the profit rate.

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Speculation, Greed and Chart Porn for Fun and Profit

March 16, 2012 1 comment

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. In this current post I will be spending some time critiquing “The Crisis of Neoliberalism” by Gerard Dumenil and Dominique Levy, first published, it appears, in 2009. I am using the 2011 version of the book. This is part two of my critique.

Dumenil and Levy open Part VIII of their book, “The Crisis of Neoliberalism” (PDF) by asserting a striking similarity between the Great Depression and the present crisis:

If there is a precedent to the contemporary crisis, it is, unquestionably, the Great Depression.

The core proposition of the book is that an historical pattern is being played out in this crisis similar to that experienced in the period beginning with the Great Depression and ending with World War II. Moreover, the writers go on to argue this pattern is part of an even larger historical pattern beginning more or less with the depression of the 1890s and ending with the emergence of neoliberalism by the end of the 1970s. The larger pattern is the emergence of a financial hegemony which dominates society until its twin social determinants — the owners of capital and their management team — bring themselves to ruin in an orgy of speculation and greed. At the end of this outbreak of license, the state is forced to step in, regulate the financial oligarchy, repair the inequalities generated by the excessive greed, and assume management of the macro-economy.

I will show in this post how Dumenil and Levy are offering an argument that is not only significantly at odds with Marx’s labor theory of value, and a mere rehash of the sort of pop culture economics you might find on CNN, FOX News and MSNBC, but also, how even by their own standards, their argument is questionable and at odds with their own data.

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At best it sometimes rhymes: Dumenil’s and Levy’s “The Crisis of Neoliberalism”

March 14, 2012 2 comments

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. In this current post I will be spending some time critiquing “The Crisis of Neoliberalism” by Gerard Dumenil and Dominique Levy, first published, it appears, in 2009. I am using the 2011 version of the book. This is part one of my critique.

“Everything that needs to be said has already been said. But since no one was listening, everything must be said again.”

André Gide

In part one of their book, “The Crisis of Neoliberalism”, Dumenil and Levy argue neoliberalism is a new phase in the evolution of capitalism. So what is a phase of capitalism? I am not altogether clear on this, but, apparently, neoliberalism is the third such phase of capitalism in the 20th Century. These three “social orders” “jointly constitute modern capitalism, that is, capitalism since the turn of the twentieth century.”

Each phase is dated by a major crisis.

The authors tell us dating the emergence of the neoliberal social order is all very very complex:

Neoliberalism is a multifaceted phenomenon, the outcome of a whole set of converging historical determinants, and it is difficult to precisely determine its beginnings. Actually, the earliest expressions of the new trends were evident from the end of World War II when the basic features of the postwar society and economy were defined. Various developments surrounding the crisis of the dollar in the early 1970s, such as the floatation of exchange rates, or the policies enacted during the dictatorships in Latin America in the 1970s, can be considered early manifestations. Simplifying to some extent, one can contend, however, that neoliberalism was first established in the United States and the United Kingdom at the end of the 1970s, a crisis decade, a few years later in continental Europe, and then around the globe. The year 1979, when the Federal Reserve decided to raise interest rates to any level allegedly required to curb inflation, is emblematic of the entrance into the new period.

Okay so the dating thing may be a little shaky, so let’s switch back to the definition thingy:

…the overall dynamics of capitalism under neoliberalism, both nationally and internationally, were determined by new class objectives that worked to the benefit of the highest income brackets, capitalist owners, and the upper fractions of management. The greater concentration of income in favor of a privileged minority was a crucial achievement of the new social order. Income statement data make this apparent. In this respect, a social order is also a power configuration, and implicit in this latter notion is “class” power. National accounting frameworks add to this observation that a large and increasing fraction of U.S. capital income comes from outside of the United States. Not only class relations are involved, but also imperial hierarchies, a permanent feature of capitalism.

Yes, that’s it, “new class objectives”. Mo’ money for the rich and well-to-do was “a crucial achievement of the new social order.” And, we can prove this with our chart porn — the rich got richer! This just goes to demonstrate neoliberalism is also a “power configuration“. (Yes, that sounds all dialectical and shit.) And, implicit in this “power configuration” is “Class power.” And, don’t ya’ know, more and more of this increased income comes from outside the United States. So not only is “class power” involved here, “but also imperial hierarchies, a permanent feature of capitalism.”

Okay, so sometime between the end of World War II and Reagan’s elections we experienced the birth of a new social order” which was a power configuration involving class power and imperial hierarchies, producing “mo’ money, mo’ money, mo’ money” for rich folks. In addition to the above well stated thesis we must add the US was running everything not flying a red flag — then the Soviet Bloc died. So, somehow, the upshot of all this is the dollar is the world reserve currency. Thus globalization was imposed throughout the world at the cost of severe crises using economic violence, corruption, subversion and war.

Well, I don’t know about you folks but I am pretty much all learned up after reading this.

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Theories of the Current Crisis: David Harvey and the Left’s search for a new master

March 4, 2012 1 comment

I have been reading David Harvey’s “Organizing for the Anti-Capitalist Transition” (2010). Harvey’s theory of the current crisis differs somewhat from the other Marxists I have been following. I actually rather enjoyed reading Harvey because he is simple to read without being simplistic like Wolff’s and Resnick’s piece. Harvey gave this originally as a talk to the World Social Forum in 2010,

Harvey opens his talk by stating boldly:

The historical geography of capitalist development is at a key inflexion point in which the geographical configurations of power are rapidly shifting at the very moment when the temporal dynamic is facing very serious constraints.  Three percent compound growth (generally considered the minimum satisfactory growth rate for a healthy capitalist economy) is becoming less and less feasible to sustain without resort to all manner of fictions (such as those that have characterized asset markets and financial affairs over the last two decades). There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy.

I liked his argument here, but, I think, he could have clarified things by explaining what he meant by “three percent compound growth…” Growth is one of those terms from bourgeois economics that has been adopted into the lexicon of Marxism as a category without critical examination. When Harvey then proposes that “compound growth” must sooner or later give way to “zero growth”, he unwittingly injures his own argument.

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Theories of the Current Crisis: John O’Connor, Neoliberalism and the Long Painful Death of the Nation State

February 25, 2012 1 comment

The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over.

Frederick Engels, Socialism: Utopian and Scientific

I am now reading John O’Connor’s “Marxism and the Three Movements of Neoliberalism” (PDF)

O’Connor proposes what he calls a “Marxian conceptual and empirical framework for understanding the disparate research on neoliberalism”. As with Saad-Filho’s work, John O’Connor’s is deeply flawed and is not in any fashion based on Marx’s theory of the Capitalist mode of production. Rather than an exercise in historical materialist analysis, O’Connor serves up a rehash of progressive nostalgia for a mythical pre-1970s Keynesian social compact, combined with a laundry list of ideological and policy crimes by the Neoliberal world order. We end with no more understanding of this thing, Neoliberalism, within the context of history, than we did at the beginning. O’Connor fails the essential test of the historical materialist critique of the capitalist mode of production.

If Neoliberalism is simply an ideological, policy, or governance construct, why is this construct the necessary form of ideology, policy and governance at this stage of development of the mode of production?

Fascism and the Myth of Keynesian Social Accommodation

For some strange reason, O’Connor arbitrarily begins his narrative in 1950 — completely bypassing a decade of depression ending in world war . He wants us to ignore this catastrophe and the war of redivision of the planet that ended in the destruction of much of Europe and Japan — 80 million dead and the productive capacity of Europe and Japan laying in ruins. He also wants us to ignore the rise of the fascist state and the debasement of currency that made that war possible. This allows him to portray the period roughly from 1950 to 1974 as a “Golden Age of Capitalism” following Glyn and Hosbawm.

Completely ignoring the fact that Europe and Japan lay in ruins at the end of the war — and, therefore, that any measure of post-war expansion begins from a base determined by this previous horrific loss of productive capacity — O’Connor tells us the “post-war economic boom was exceptional in capitalist history for its explosive growth, high profits, technological innovation, and reliance on government policy.” This last thing “reliance on government policy” is the kicker, because O’Connor is now going to use it as a crutch to get him to 1974. The “Golden Age” was made possible by two things: class accommodation at home and state involvement in the accumulation process. We don’t get any critical look at this so-called class accommodation nor state involvement in the accumulation process. In fact, both are filler material, placed there solely to let O’Connor to segue into the “crisis” of 1974-82. With this filler material O’Connor can stuff in the typical myth-story about a “Golden Age”” which he finds already present in our national political discourse.

Gone is the Great Depression, the debasement of the currency and the rise of the fascist state, the catastrophic wars of the 30s and 40s, US aggression in Korea, and a series of other police actions and coups, the red scare, the arms race, the Suez incident, Vietnam and the horrors of the United States’ Southeast Asian murderous rampage. What was blood red in reality, becomes a hazy faint shade of pink in O’Connor’s make-believe world of “I Love Lucy”. At some point, someone is going to have to call Marxists out on their patriarchal, racist, elitist, Anglocentric, rewrite of history. Frankly, the shit is just fucking unnerving — there was no “Golden Age” of capitalism! For John O’Connor, Saad-Filho, Richard Wolff and the rest of the Marxist Academy to continue referring to this myth is just bizarre!

The period under question begins not in 1950, but in 1929 with the collapse of capitalism world-wide, from which capitalism never recovered. Rather, all industrial states stepped in as the national capitalist and immediately imposed a continuous wage reduction regime across the board on their respective working classes in a ruthless act of class warfare. Then each fascist state turned on its neighbors and slaughtered everyone they could get their hands on in an orgy of bloodletting. It wasn’t enough to kill them — NO! — they then leveled their cities, destroyed their  factories and productive capacity, and stole their resources to starve them out.

You want to see the “Golden Age” of Keyesianism — just look at World War II. Thanks to Lord Keynes the United States was able to devote 40% of its GDP to slaughter and pillage, and still have “economic growth”. In the United States alone 1500 factories were built from scratch to murder strangers — not feed them and ourselves. Sixteen million men were withdrawn from all productive labor and sent to murder, fully outfitted and fed by American industry — the same American industry which, just months earlier, could neither hire nor feed them — that’s your fucking Keynesian “Golden Age”, bitches.

The insult to the 100 million dead in two global wars of redivision cannot be worst than out of the mouth of a Marxist who states, as John O’Connor does, “the USA and Britain took steps to ensure that a stable liberal world order was recreated”.

The Second Great Depression

Having used this “Golden Age” of capitalism as a crutch to get him to 1974, O’Connor misses the beginning of the crisis in the 1960s. Had he done the least bit of analysis on the period 1929 to 1950 he might have noticed a little event called debasement of the currency. With this debasement, and the devaluation of wages by 70% that accompanied it, American capitalism went through an expansion phase. That expansion was not just fueled by the devaluation of wages, but also the war expenditures of World War II and the absorption of a hefty section of post-war Europe and Japan into the newly emerging fascist American Empire. This expansion phase comes to a head not in 1974, but in the mid-sixties with the collapse of the London gold pool in 1968 (pdf) , which facilitated manipulation of gold bullion price and allowed the US to share in the extraction of surplus value wrung from the European and Japan working classes — the so-called “exorbitant privilege”, a term coined by the French. (Of course, since Marxists are MARXist in name only, they have ignored the implications of the French critique.)

The crisis begins in the mid-sixties with a run on US gold reserves, and culminates in the collapse of Bretton Woods, and the end of dollar convertibility for settling international obligations. But this is just its superficial expression — what really happened is that the new productive capacity of Europe and Japan came online. For a period this overaccumulation was disguised by the murderous war on Vietnam and the swelling of American domestic spending to stem protests. But all of this comes to a head with the opening moments of the Second Great Depression of the 20th Century — the Great Stagflation. This depression triggers the collapse of Bretton Woods and the end of dollar convertibility by the Nixon administration. And it occurs not in 1974 but years earlier, although the actual expression of this crisis in unemployment is itself triggered by the massive inflation that occurs as Washington tries desperately to spend its way out of the contraction. Those of a certain age will remember Nixon declaring fatuously, “I am now a Keynesian in economics”.

The attempt to slow the contraction by a massive expansion of government spending ultimately fails and the Federal Reserve has to choke off credit in the midst of a depression to slow the inflation of prices. Nixon is gone, Gerald Ford is running around handing out “Whip Inflation Now” (WIN) buttons, and the Fed is trying to douse inflation with unemployment. None of this has any effect on the depression, however, which continues unabated for the next five or six years  — in other words Keynesian economic policy is overcome by the growing productive capacity of society and the dissolution of nation-state economic management begins.

Only at this point do we finally reach O’Connor’s dating of the initial emergence of what eventually becomes neoliberalism — the crisis has, by this time, gone on for nearly a decade.

Neoliberalism and the Demise of the Nation State

The easiest way to understand neoliberalism is to understand exactly what the fascist state accomplished that can now only be accomplished by its demise. The success of the fascist states rested on what O’Connor terms a “distinct structural, institutional, and class foundation.”

This state led monopoly capitalism, as described by Fine and Harris (1979), was marked by the socialization of economic activity, in which the state took an active role in the accumulation process. Economic socialization helped offset the unproductive costs of accumulation and the reproduction of the labor force (Gough and Eisenschitz 1996). Through a wide variety of non-market mechanisms, the state balanced the social nature of production with the private appropriation of capital.

Okay, I admit I haven’t a clue what this means — so I am going to parse it.

“State led monopoly capitalism” appears to be some sort of a distinction from the state-as-capitalist — a concept that is apparently alien to Marxists. What role does the state play in this “state led monopoly capitalism” – clearly it is not the capitalist, so is it leading the capitalists? So how is it leading them? And to where? Well, it appears to be leading them toward some “socialization of economic activity” — which is clearly not socialism, but “socialization”. Which is to say, the capitalist accumulation process, having grown beyond the control of various forms of private management, must at some point fall under the direct management of the state. How does this work? Well, the state takes “an active role in the accumulation process”.

Okay, now I am stumped. What exactly is “an active role in the accumulation process”?

O’Connor tells us that it “helped offset the unproductive costs of accumulation and the reproduction of the labor force”. So what are these unproductive costs of accumulation and the reproduction of the labor force? Clearly by “the reproduction of the labor force” O’Connor can only mean wages and (perhaps) a meager provision of public education and a national health system. Can the state add to wages, educate, or cure illness? Not likely, since it is a bloated parasite on society, it can’t even put a chicken in a single pot. Since the state creates nothing, and produces nothing, it can only “offset … the reproduction of the labor force” by driving wages down. Perhaps I got this wrong; perhaps the state can magically whip up a subsidy for wages by creating food, clothing, and shelter out of nothing. I am not as educated as fucking Marxists Academics, but it seems to me all O’Connor is suggesting is that the state devalues labor power!

Of course, I could be wrong. Maybe Obama is feeding the working class from that victory garden over at the White House.

And what are the “unproductive costs of accumulation”? How does the fascist state “offset” these costs pray tell me? Frankly, I have never heard of the term “unproductive costs of accumulation” before I read this paper — the term appears nowhere in Marx. Nowhere in three fucking volumes of Capital does Marx ever mention an animal going by the name of “unproductive costs of accumulation”. Even if we assume the state plays some role in offsetting these mysterious costs, there are only two classes for the distribution of the social product of labor: workers and capitalists. If the state is “offsetting the unproductive costs of accumulation” for the capitalists, it has to be taking it from the working class.

So when I parse O’Connor’s argument, “Economic socialization helped offset the unproductive costs of accumulation and the reproduction of the labor force”, I only get two things out of it: “devaluation of the wages of the working class” and “more devaluation of the wages of the working class”. Since I am not a Marxist, you probably can understand why I come to that ‘absurd’ conclusion. If I were a Marxist, I could invent another phantom source of value for the state to redistribute as wages and profits.

Once we get past the silliness about the Keynesian “Golden Age” of capitalism, it is clear neoliberalism is not in the least a switch from social accommodation between capital and wage labor to coercive competition as O”Connor argues, but simply an intensification of systematic impoverishment of wage labor, for which Keynesian state policy was, by the 1960s and 1970s, insufficient to realize. This does not in the least require any modification of Marx’s labor theory of value, nor any special explanations. It simply requires us to grasp national capitals behave just like privately owned capitals, but with grim consequences for both national sovereignty and national fiscal/monetary policy. Which means these national capitals, although for a time appearing quite permanent features of economic analysis, were always transitory and subject to the very same laws as determine the capitalist mode of production generally: equalization of the rate of profit, concentration and centralization of capital, overaccumulation, falling rate and mass of profit, a growing superfluity of capital, a growing mass of workers who fill the ranks of the industrial reserve, etc.

What is distinct about these national capitals, however, is the constitution of purely national political class struggles. The political contest between any class of wage laborers and their national capital is fought out within the context of a nation-state form that is rapidly approaching extinction. Already countries very close to the core of Europe have been stripped of their national sovereignty, not to mention peripheral nations. And the more these nations lose their sovereignty, the more indifferent they become to both their domestic working class and domestic capitalist class.