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You are here: The Platypus Affiliated Society/Radical interpretations of the present crisis

Radical interpretations of the present crisis

Loren Goldner, David Harvey, Andrew Kliman, and Paul Mattick

Platypus Review 56 | May 2013

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Last autumn, chapters of the Platypus Affiliated Society in New York, London, and Chicago hosted similar events on the theme of “Radical Interpretations of the Present Crisis.” The speakers participating in New York included Loren Goldner, David Harvey, Andrew Kliman, and Paul Mattick. The transcript of the event in London appeared in Platypus Review 55 (April 2013). What follows is an edited transcript of the conversation that PAS-NYC hosted on November 14, 2012 at the New School. A full recording of each of the events held in this series can be found on the media section of this website and a recording of the event can be found by clicking the above links.


Loren Goldner: The title of my talk tonight is “Fictitious Capital and Contracted Social Reproduction.” It is important to note that as we convene tonight, there are general strikes across the southern flank of Europe, the miners’ strikes in South Africa, and at least 50 strikes a day in China. While we convene to talk about the crisis, there are people in motion trying to do something about it.

Marx writes in his Grundrisse, “Capital itself is the moving contradiction, [in] that it presses to reduce labor time to a minimum, while it posits labor time, on the other side, as sole measure and source of wealth.”[1] Unpacking that one sentence can get us very far in understanding the crisis and the history of at least the last hundred years.

Capital can be broken down into Marx’s categories: surplus value (s), variable capital (v), and constant capital (c). Within constant capital there is a breakdown into (i) fixed capital, which refers generally to machinery and tools, and (ii) circulating capital, which refers to things such as raw materials.

With these categories I would like to address the question of fictitious capital, which I define as claims on the social wealth and social surplus that correspond to no existing social surplus. The origins of fictitious capital are the advancing productivity of labor in capitalism, which is an anarchic system, one that is constantly devaluing the constant capital invested by the capitalist class. Capital volumes 1 and 2 describe a pure capitalist system, in which there are only two social classes: the wage-labor proletariat and the capitalist class or the bourgeoisie. Other classes enter the picture, for instance peasants, in the long historical chapter on accumulation. But Marx is trying to set up a pure model and then move on to the more everyday appearances of the system.

Value is defined in Marx as the socially necessary labor time of reproduction; I want to emphasize the “re-” in reproduction. For, in the opening chapter of Capital, Marx talks a lot about the value of a commodity as the socially necessary labor time embodied in it, but later moves to social reproduction. There he is talking about an expanding system in which the early definitions are superseded.

Capitalists themselves tend to have only a vague idea of use-value. As they are running a society into the ground, say in the contemporary debates on infrastructure, capitalists come to a recognition that use-value plays some kind of a role. But, by and large, individual capitalists are interested in profit of which use-value is a mere by-product. One aspect of recent capitalist history that is important to emphasize is that the tremendous incomes that a part of the capitalist class gets from the sale and rental of buildings of all kinds has long superseded the total amount of profit directly derived from industry. This is important to understand for the contemporary situation.

There is another category that doesn’t attract the attention that it should: what I call “capitalist consumption.” Capitalist consumption does not refer to the consumption of the capitalists themselves, not the yachts in the Hamptons and the Malibu lifestyle, but the consumption of all the hangers-on of the capitalist class. Marx has a colorful formulation, in which he refers to king, minister, professor, and whore, as different embodiments of the hangers-on. But I would expand this category quite a bit to include state bureaucrats—let’s not forget that 35–40% of U.S. GDP goes to state expenditure at the local, state, and federal level. In 1950 there were ten workers for every manager; today there are three. The military police, prison system, and the biggest single group the so-called FIRE (Finance-Insurance-Real Estate) sector, which represent the interest and ground siphon of surplus value, all of these elements enforce capitalist social relations. We also have the total wage bill, which is comprised of more than the pay packets or checks, but also everything that goes into education and training. The military has increasingly assumed this role over the last thirty to forty years in the U.S. with the collapse of a lot of vocational schools.

Though an incomplete picture, all the above points to different ways in which capital in crisis transfers variable and constant capital to a surplus, as a way of saving itself. In the United States and most countries in crisis over the last 40 years, we see the non-reproduction of labor power—just think of the fact that almost 40% of all high school students in NYC don’t ever finish high school.

Also important, perhaps more important, is primitive accumulation. This Marx defines as the separation of petty producers from the means of production. There is a lot of debate about whether Marx simply meant the expropriation of the English peasantry in the late-17th early 18th century. But I think primitive accumulation is a permanent feature of the capitalist system. In this respect, I follow aspects of Rosa Luxemburg’s The Accumulation of Capital, which included chapters with examples of this process from the nineteenth century. I don’t think one has to go along with all of Luxemburg’s reasoning to recognize the mobilization by modern capital of labor power outside of the subsectors of the world economy, more specifically the peasantry of India, China, Latin America, and Africa. All kinds of people who are not wage workers are recruited to the wage labor system, after another subsector has paid their reproduction costs.

In short, what keeps this proliferation of fictitious capital afloat in all the forms that I have just described, is a general process of non-reproduction: both of labor power and of aspects of constant capital, such as infrastructure—concerning which, for instance, the American Society of Civil Engineers estimates that it would cost 2.3 trillion dollars just to bring things to a standard level.

David Harvey: I had an interesting experience in May when I was in Istanbul, where I was giving lectures and hanging out with social movement people. Istanbul is a boomtown and it is quite incredible what is going on there. Turkey is growing around 7% a year. There is talk of a new bridge across the Bosporus, and the population of Istanbul will grow from 18 million to 40 million in 10-15 years. Meanwhile, Athens, two hours away by flight, is a catastrophe. Argentina was a disaster in 2001–03, but by 2004 it had reneged on its debt and has been booming ever since. China in early 2009 had lost close to 30 million jobs due to cuts to export industries. Yet by the end of the year it recorded a net loss of 3 million jobs, which means that they created 27 million jobs in nine months, through expansive urbanization—basically, a huge infrastructure project. The bankers in China obeyed the orders of the Central Committee to lend. The huge labor absorption in China stands in contrast to the 7 million net jobs lost in the same year in this country. Why? For one thing, you have this stupid form of austerity here, whereas, in effect, there was a Keynesian expansion program in China. Argentina did very well, too, because it started selling all its agricultural commodities to China. It is now one big soy plantation for the China trade. How are we to create a theoretical apparatus that can encompass these incredible differences, as well as the dynamics that created them?

I tried to do a little of that in the Enigma of Capital, analyzing the ways capital flows. As Marx puts it, every limit and barrier has to be overcome. But as you surpass one crisis, it just manifests somewhere else. It has moved from the U.S. and the property markets, impacting consumers in China, and then spun over to the financial sector, creating sovereign debt problems, as in Spain. It is in Iceland, then Dubai, and then Greece. If you don’t have a theoretical framework that can understand the rapidity of these moves then you cannot really encompass what is going on. The crisis tendencies of capitalism are never resolved, but simply moved around from one space to another and from one sector to another.

That the crisis moves around like this poses great difficulty for organizing. The huge anti-capitalist movement in Argentina in 2003, with its assemblies, strikes, and factory takeovers, resembled a revolutionary movement. But five years on, everything is back to normal. One political disaster follows after another. Something that looks like a revolutionary movement can suddenly rescind itself. The result is that the class struggle is very volatile right now. If we were in Bolivia in 2003–05, we would be looking at El Alto, which was in revolutionary mode, but now that Eva Morales is in power you have a mix of indigenous thinking and neoliberal compromises.

I take seriously Marx’s argument that crises express the internal contradictions of capital. However, here can be a tendency, when we come across something we don’t fully understand, it is tempting to chalk it up to the “internal contradictions of capital.” What do we really know about the structure of internal contradictions within the capitalist mode of production? When does a contradiction become an absolute contradiction and generate a crisis?

I went back to Capital, and there are 17 internal contradictions specified therein. To give you one example: The basic contradiction is between use-value and exchange-value. One place to look at this is housing, which has a use-value. But many people who dwell in houses don’t rent, but become incorporated into home ownership—and this use-value is sold as a commodity. This became very popular toward the end of the 19th century, when it was seen as a way of stabilizing society. Home dwellers eventually became homeowners who would use their house as a form of saving. This became critically important in the Great Depression, when all of the financial reform was about encouraging home ownership amongst the working classes. It was once famously said that the savings and loans societies and building societies across Great Britain were the best defenses against Bolshevism. Or to put it the other way around: debt encumbered homeowners don’t go on strike.The incorporation of the U.S. working class as homeowners in suburban locations turned them into very conservative people. They became the defenders of property rights and defenders of capitalism rather than its essential enemies. Prior to this unlike they had been part of a conscious political project during, say, the 1930s.

Around 1980, housing became something else, not simply a form of saving, but a form of speculation. Homeowners became much more concerned with improving the exchange-value of their house. You would stretch a bit to buy a house for $200,000 , improve it, and sell it for $300,000 in a couple of years. The Savings and Loan Crisis of the late-1980s and the housing crash of 2008 led to foreclosures and a crisis of exchange-value, which in turn led to some people being denied the use-value of their house. This conflict between exchange and use-value has evolved historically and has culminated in the current crisis.

This can help tell us what an anti-capitalist politics should be about: namely, that we do not want housing that is vulnerable to the exchange-value calculus. We want housing to be secured as use-values that everyone can access. The same is true of education, healthcare, and water supply. In other words, what you do is say that the contradiction led us into this crisis, but we have a particular political stance now which would roll back neoliberalism’s drive to privatize all those things, gearing them toward exchange-value accumulation.

Andrew Kliman: “Do different interpretations of the crisis really recommend different political strategies?” That this question has to be asked is a sign of the irrationalism and elitism in which much of the left is mired. If you think the masses need you to lead them step by step to a more advanced consciousness, like pieces on a game board, how they understand the crisis is unimportant. But how this vanguard understands the crisis is not important either until you have the allegiance of people, so gaining that allegiance becomes the all-important task—appealing to them where they are now, providing sound bytes about Wall Street, neoliberalism, and the one percent. Similarly, if you think that people can change society by spontaneous activity alone, or by a spontaneously arrived at consensus, understanding how capitalism functions becomes unimportant. Activity becomes all-important, the possibility of unintended consequences is dismissed, and rational argument is seen to lead only to disagreement and disunity.

I begin from a different starting point. Many lack information and access to ideas, but they want a real solution to the ongoing economic malaise. They are not going to rise up unthinkingly without first knowing what they are trying to accomplish and what actions can reasonably accomplish it. Finally, actions have unintended consequences, as the many failed revolutions and failed utopian experiments attest. The road to the present morass was paved with good intentions. This suggests the need for severely rationalist politics. We have to be oppressively aware that some supposed solutions to our economic problems seem good on the surface, but won’t work, or will only worsen the crisis.

When I set out to write The Failure of Capitalist Production, I found some things about the present day crisis that counter the traditional account on the Left about the causes of the recession. First, the turning point of recent U.S. economic history was not the rise of neoliberalism, but what transpired in the 1970s, with the slowdown in economic growth, the relative increase in borrowing, global financial instability, decline in the growth of U.S. public infrastructure development, and so forth. This alone casts doubt on the political determinism of the conventional left view that the reversal of neoliberalism is the key to solving our economic problems.

Contrary to what the conventional left account suggests, I also found that the rate of return on investments, the rate of profit, of U.S. corporations did not rebound under neoliberalism. It fell from the mid-1950s through the early 1980s and never recovered in a sustained way. National corporations'  foreign investment also trended downward. This has to do with the long-term slowdown in the growth of productive investment or what is called the rate of capital accumulation. The conventional left account claims that slowdown was caused by financialization: Corporations diverted profits from production to financial uses. But I found that there was no such diversion. Almost all of the fall in the rate of accumulation had taken place by 2001. Between 1981, when Regan took office, and 2001, the period of neoliberalism, U.S. corporations invested a bigger share of their profits in production than they did between 1947–1980. Productive investment absorbed a bigger share of their surplus than it had before. So the slowdown in growth of productive investment is real; however, it was not caused by the difficulties in absorbing the surplus, but by the relative lack of surplus or profit in the first place.

For U.S. corporations, the entire fall in the rate of accumulation or productive investment between 1948–2007 is attributable to the fall in their after tax rate of profit. I have found that even though there has been a rise in income inequality in this country, which is real, profits did not increase at the expense of wages and benefits. The share of corporate output that employees receive did not change, nor did the share of the net national product that the working class was able to buy. Workers’ income enabled them to buy the same share they were able to buy before, without going deeper into debt. Redistribution from wages and benefits to profit didn’t occur, and thus was not the cause of the debt build-up. There was a build up, but for other reasons.

The underlying causes of the Great Recession, at least in the U.S., are the long-term fall in the rate of profit. This is what led to a long-term slowdown in productive investment, which in turn led to a slower growth of output and income. The slowdown in income growth led to ever rising debt burdens, as did government policies that repeatedly kicked the can down the road by throwing even more debt at the problem and encouraging private borrowers to do the same. This led to a series of burst bubbles and debt crises, culminating in the Great Recession. The recession was triggered by a financial crisis. There is no denying that. But if the financial issue was the only aspect of the problem, the economy should have rebounded smartly long ago, since the financial crisis in the U.S. had been quelled by the end of 2008. But there has been no such rebound anywhere in the world and that is mainly due to the profitability and debt problems that remain unresolved and to the political consequences of those debt problems, especially for the future of the Eurozone.

What are the political implications of this analysis? First, neoliberalism did not cause the changed trends in the economy. Financialization didn’t cause profits to be diverted from production. So people who want a broad multi-class alliance against neoliberalism, replacing the bad capitalists with the good capitalists, who want investment in production and for jobs to be created—this isn’t going to solve the problem. Productive investment is not going to rebound until profitability problems, debt problems, and the associated lack of confidence remain unresolved.

Debt forgiveness can help people in debt and in debtor countries but it is not going to solve the economic malaise. To reverse the malaise, the debt problem has to be solved in a way that boosts lenders’ confidence that they are going to be repaid, not the opposite. If lenders are forced to forgive some of the debts, they are going to learn the lesson that they should not lend, or that they should lend at much higher rates, and we would have no solution to the crisis. There has not been redistribution in the United States of wages and benefits for profits, so while reduced inequality is certainly going to help those at the bottom, it is not going to solve the economic crisis. Profit is the fuel on which capitalism runs. The problem that capitalism is facing is that it has been low on fuel for quite some time and any redistributionist measures that siphon off even more fuel are not going to help to stabilize capitalism, but will do the opposite.

I do not think that there is any progressive or leftist solution within the confines of capitalism. Within the system the problems are going to be solved—if they are solved—by addressing the profitability and debt problems. So I would like to suggest that we stop thinking about solving the crisis and instead assist peoples’ ongoing struggles to protect their incomes, jobs, and homes. Concessions were won during the Great Depression, they can be won again, even though they will not solve capitalism’s problems and, in fact, might even make them worse. Concessions are nevertheless worth fighting for and supporting. We need to offer the prospect of a socialist way out of the crisis. It is a real historical possibility. Struggles have been accelerating throughout the world and the problem has been the Left’s response—or lack of response. In the fall of 2008, the notion that capitalism had failed was common in the mainstream media, but it went nowhere because almost all of the Left moved in the opposite direction. The Left tried to downplay the severity of the crisis. It didn’t so much as echo the conclusion that capitalism has failed. That was an enormous lost opportunity and explains a lot of what this panel is meant to address.

Paul Mattick: “What does it mean to interpret the world without being able to change it?” This is not particularly mysterious. Changing the world requires the collective action of very large numbers of people. This does not mean, as the guiding questions for this panel suggested, that capitalism is a system devoid of human agency. Human agency keeps capitalism going, as people go to work, go to school, buy and sell goods. The process of social reproduction is carried out by active, conscious individuals. The existence at various times of social movements against that reproduction attests to other directions for that human agency. The misery the social reproduction process generates explains those movements and with them the various efforts to understand the system that constitute the history of socialist thought. As Marx observed long ago, it is social being that, practically speaking, determines the consciousness, not the other way around.

The most profound understandings of capitalism will lack any practical importance unless what used to be called the broad masses of the people are engaged in social transformation in ways that lead them to find those understandings useful. Marx’s own thought provides an excellent example. His brilliant analysis of capitalism was for the most part not even read, much less understood or acted on, in the heyday of Marxist movements. It was, after all, of little relevance to the social democratic projects of the regulation of the market system in Western Europe and the construction of state capitalism in Russia.

Today, with the disappearance of the historical left, Marxian ideas have become largely an academic specialty. On the other hand, what seems an increasing interest in those ideas, inside and outside the academy, attests to a growing discomfort with the existing social system, especially since the start of the current depression in 2007. It is not impossible that some of those presently engaged in interpreting the world may some day get a chance to participate in changing it. It may be hard on a thinker to discover how little brilliant interpretation shapes history, but there is a positive side to this situation. If the proletarian revolution required a firm grasp of Marx’s Capital with, for example, a correct understanding of value-price transformation by the aforesaid broad masses, it is hard to imagine how that revolution could ever get going. Luckily this is not how social movements happen. They happen when large numbers of people find the existing state of affairs unbearable to such a degree that they are willing to risk the comforts of ordinary life, not to mention life itself, to try something new. Then they look around for ideas that might help them understand what is happening to them and what they can do about it. Social theory can help explain how such situations may come about, but it cannot be expected to produce them.

Crisis is a term used very loosely. I like to remember its original meaning: a turning point. A crisis coming after a period of prosperity initiates a period of depression, thus it corresponds to what on the other end is called a recovery. In this sense the crisis of 2007–08 is over, but the depression lingers on despite all the official talk of recovery. Of course the downturn, like all developments in capitalism’s history, is uneven in its effects. The weakest are hit hardest. Small businesses are crushed in Greece while Germany is still doing fairly well. As Detroit is depopulated, housing prices rise in Brooklyn and Paris. For this reason, the social effects are likewise uneven, although this also reflects the strengths and weaknesses of local traditions. Quebec students defeated an effort to increase university tuition while American students have been unable to prevent similar developments. Such movements, like the mass demonstrations in Lisbon and Spain that have so far held back somewhat the assault on the Iberian working class, have so far remained sporadic, localized, and limited in their challenge to the capitalist economic order. For this reason, we cannot really speak of social or political crisis at the present time.

This economic crisis and the downturn that led into it are like earlier episodes of the same type in the history of capitalism since the early 19th century. But like each of those predecessors they have novel features. Crises manifest deep-rooted problems in profitability in the capitalist economy, which discourage investment and create unemployment and market gluts. They are overcome as the depression acts to shift capital values and labor costs downward. The devaluation of capital makes possible higher profit rates and so a revival of economic affairs. The last major downturn of this type, which began in the 1930s and led into World War II, was so destructive in its effects on capital values as to make possible the 20 years of prosperity known to economists as the golden age. But even this prosperous period required constant infusions of government spending to maintain low levels of unemployment. When the golden age came to an end in the mid-1970s government borrowing and spending was further increased. More and more government policies also facilitated the expansion into the 21st century of the credit necessary for the debt-based version of prosperity that lasted despite continuous debt cresses, stock market crashes, currency exchange crises and decades of depression in Japan. The failure of all this to restore the profitability of capital can be seen in the flow of money from capital investment to speculation, which offers high short-term profits, at least for the well-placed or lucky. As capital flowed into speculation instead of productive investment, producing the effect of temporary prosperity by means of a series of bubbles, working class living standards were maintained by the massive growth of consumer debt, culminating in workers’ participation in the mortgage bubble in the early 21st century. Like the growth of state debt and the welfare state, the difficulty we see today in doing away with them registers the decline of the private enterprise economy.

Despite its dynamism and the gigantic increase in the productivity of human labor that it has achieved since the early 19th century, and despite the disappearance of political and social barriers to its spread in the course of the 20th, capitalism has not been able to generate the quantity of profit production needed to incorporate much of the world’s population into its modern industrial form. The failure of the non-financial parts of the economy to expand sufficiently showed itself in 2008 in the near collapse of the whole Rube Goldberg device of cantilevered finance. For the same reason the massive increase in government spending that avoided a return to depression conditions after the mid 1960s led not to a steady flow of profits from the now primed pump, but to today’s increasingly problematic state deficit.

From the viewpoint of the Marxist theory of capital accumulation, it is precisely the avoidance of depression conditions that have prevented a new transition to prosperity since the end of the post-war golden age. The desire to avoid a full-blown depression, still, as of late-2012, prevails among the global ruing class. Although smaller scale businesses have been pushed into bankruptcy, the European Central Bank along with the International Monetary Fund and Federal Reserve Bank of the U.S. are printing money to keep afloat the banks and hedge funds, whose investments powered the recent expansion of the euro and dollar zones. At the same time, one sees in full force the will to extract as much as possible from the world working class by cutting wages, including socially administered segments of the wage such as pensions and health insurance, along with the elimination and privatization of government services with attendant cuts in public employment. This is held somewhat in check by mass expressions of anger; austerity has not progressed as rapidly, for example, in Spain or Italy as it has in smaller and weaker economies, like Ireland or Greece. Is this to say that the current crisis cycle has moved capitalism to the point of breakdown, in the sense of self-destruction? No. Because today, as in all earlier moments, capitalism’s fate hangs on the willingness of human beings to engage in the difficult struggles needed to overthrow existing relations of social power and create new forms of production and consumption.

In its current condition, capitalism promises economic difficulty for decades to come. Waves of bankruptcies and business consolidations for capitalist firms and increasingly serious conflicts among economic entities and even nations all center around who is going to pay for the system’s survival. The mass unemployment and material deprivation that Marx predicted as the long-term outcome of capitalist development have become features of the world economy. That is not permanent, but it will be with us for an extended time, together with the havoc promised by the ongoing ecological catastrophe. It is not inconceivable that this could lead to social and political convulsions that would deserve the name of crisis.



LG: David, I would eventually like to hear about the 16 or so contradictions that we didn’t address yet. But first, regarding the housing bubble that began in the 1980s right up to 2007–08, it seems to me this was a response to a deeper crisis of profitability in the system as a whole. It was part of a wider attempt to solve the crisis by putting consumption power in the hands of people with supposedly appreciating assets, i.e., their homes. Andrew, I agree about dating the crisis to the 1970s. You mentioned that there has been no fall in real wages for American workers. I don’t want to argue much over statistics, but the disappearance since the 1960s of the one-paycheck family means that, with these same levels of income, the possibility of one paycheck reproducing a family of four has become nearly impossible. Marx mentions in Capital, and this is often neglected, that the wage of a worker is not just to reproduce the worker but also to produce the next generation of workers. The rise of the 2- and 3-paycheck family is a sure sign of a contraction of social reproduction. Paul, I would like you to elaborate more on the devaluation represented by the crisis of 1929–45, or 1914–1945. At those times a phase of destruction did lay the foundation for the post-war boom, so why do you think that is not what is going to happen now? What we have seen the 1970s is a kind of substitute World War III, in that there has been tremendous destruction on a world scale. Do you think that social revolution is a possible outcome of the crisis?

DH: I was a little confused by your understanding of fictitious capital, Loren. I understand it as the capitalization of any income stream, which can then be brought to the market and sold in stocks and shares. What’s striking about Marx’s analysis is that this is where he comes back to the question of fetishism. Why it is it that the fetishistic character of the credit system can produce circulation of fictitious capital? That leads into an interesting question as to why capital actually tolerates the insanity of the credit system, which is a Pandora’s box out of which all kinds of nasty things jump, including the speculative waves that we have been experiencing.

Andrew, I too date the origins of neoliberalism to the late 1960s and early 1970s, particularly the market crash of 1973, which was followed then by what I saw as the major dual experiment in neoliberal politics: One was in Chile, of course, in 1975, and also of course in the New York fiscal crisis. The notion of structural adjustment that would later become a shibboleth within the IMF after 1992 was first experimented with in 1975. The origin of neoliberalism was not technical. It was a class project. To those who argue that neoliberalism is over, I say the class project is going very well, in fact the upper classes have benefited from this last crisis. In many ways they have consolidated even more wealth and power.

AK: When I say that the real wages and benefits of American workers have increased in place and their share of income hasn’t fallen, I am talking about the real wages per hour, and this is not because per family they are working more hours. What Paul has said, about the empirical basis of the claim that there has been a diversion from production to finance, the evidence actually points to the opposite.

My other comment though is that the actual contradiction, as Marx argues, is between use value and value, not use-value and exchange-value. The two factors of the commodity are use-value and value. Exchange value is just a form of appearance. It seems like a kind of abstruse theoretical point, but I think it goes deep into the question of what we need to do, which is to get rid of the law of value, the economic laws that compel producers to produce at low cost because time spent producing stuff that you don’t need above the social average does not count.

PM: We don’t see the kind of massive devaluation of capital that took place during the Great Depression and the Second World War because the nature of the capitalist economy relentlessly pushes people in that direction anyway. Hence every government’s move in the direction of austerity, cheered on by capitalist pundits, who at the same time are reluctant to destroy the debt-based structure supporting the fictitious capital that had sustained the appearance of prosperity over the last 30 years. Capital has become much more centralized and concentrated in the last 50 years and much more globalized. The only hope for capitalism, you could say, for capitalism would be massive devaluation, even though they don’t want to do that, hence the endless pussyfooting around austerity and bits of stimulus.


Q & A

Do you think that U.S. hegemony is at an end, and if so, what is to come? Is neoliberalism at an end? What will replace it?

DH: As far as military power is concerned, the U.S. is hegemonic, absolutely! But is it financially and productively hegemonic? In many ways it seems more decentered. We are getting regional hegemons like China in the Far East, Brazil in Latin America, and so on. In some parts of the world neoliberalism never really got started. Latin America has been anti-neoliberal for some time now, adopting (broadly speaking) a more Keynesian approach. Neoliberalism was a political project, which had diverse structures deeply embedded in some parts of the world and not in others. The reaction against it is also uneven. Is this the end of capitalism? Certainly not. But the interesting question is what kind of capitalism will follow—a plutocracy, or something rather different? 

AK: While certainly the U.S. has military might that is unrivaled, there is an argument, which I think should be taken seriously, that in the financial sphere and the economic sphere, the U.S. was never hegemonic. Regarding neoliberalism, I don’t accept that the economic direction is determined by politics and ideology. I think it is rather the reverse. Consider that Henry Paulson, the neoliberal Treasury Secretary, pushed for a massive bailout. Those in power will do what is pragmatic, muddling through to keep the system afloat, whatever their ideological inclinations, if they think that is what it takes to save capitalism. 

PM: Neoliberalism never really existed as much more than an ideology. The greatest prophet of neoliberalism in American history, Ronald Regan, also was the greatest Keynesian. The move toward austerity does not significantly decrease state involvement in economic activity. We don’t know what the outcome of any period of social and economic crisis would be. The historical record is that so far only small minorities of people have tried to overthrow the existing system of social relations. It's possible that in the future much larger numbers of people might be moved in a similar direction and they might be large enough to succeed in doing it.


How is listening to a panel like this, with four white males telling us things we already largely know, helpful to us in overcoming the crisis? Why was nothing mentioned about rights, gender, or the family? Why were these treated as side issues?

One implication of the crisis of neoliberalism is that there is no alternative and that this absence of alternatives has to do with the collapse of the centrally planned economies. Would socialism entail the creation of a democratic, globally planned economy?

LG: I am really sorry that I was born a white male and spent 40 years studying capitalist crisis. I think the question of the disappearance of the one-paycheck family—though I am no fan of the bourgeois nuclear family—is one key aspect of the contraction of social reproduction. This can lead to a fruitful discussion of some gender issues.

If one looks over a 200-year period—from the very labor-intensive capitalism that existed in the early 19th century to today—there is no question that there has been a long-term trend towards the rise of constant capital and the diminution of variable capital, albeit with a lot of fluctuations along the way. The credit system was necessary to uphold the value of different claims to wealth well past the time they otherwise would have collapsed due to lack of profit. The goal of socialism is, as Andrew said, the abolition of value, the destruction of the regulation of social production by socially necessary labor time.

PM: Participating on a panel like this is not a radical activity. It does not change the world. It does not undermine anything. As a group we are interested in the subject, but I see no reason to describe that as a radical or revolutionary activity. I generally refuse to be on a discussion that does not include at least one female. This time I would have refused, but, the truth is, I deal with a lot of the crisis literature, but I don’t know any women who are writing about the subject. I would say that issues of race and gender, while of importance or interest politically, are quite irrelevant to the question of the nature of the world economic downturn. They have no bearing on it. This is an extremely, highly abstract feature of capitalism. If you had total gender equality and total racial equality in every nation in the world, you would still have economic depressions. If we would begin to talk about political responses to the existing economic situation, then we would have to start talking about gender, race, nationality, and many other social categories. I think it has to be faced, as a sociological fact, that Marxist theory is a male business, like ham radio operators or tropical fish keeping. It’s a hobby for white males. There is a history behind that sociological fact.

AK: I would also have liked a more representative panel. But, on the question of planning: If you are going to overcome the law of value, you have to have planning and at some level it will have to be centralized, for practical reasons. To have a world economy, it has to be coordinated. It doesn’t have to be coordinated by bureaucracy in an oppressive manner. Michael Albert and Robin Hahnel have done really good work about how you can have, in a sense, central planning, without anybody being controlled. 

If it is difficult to conceive of the end of capitalism, this probably is an indication that there is not currently a force capable of challenging it. If that is the case, what is the interpretation of capitalism for? Do you think that, in the early 20th century, when there was a burst of revolutions, that the issue of anti-capitalism was clearer?

PM: We have now had 300 years of capitalism. It seems like it has always been there and always will be there. The problem is still the same and the solution is still the same. Unless people figure it out, they will suffer wretchedly. Since people are not completely nuts, it’s possible they will be pushed to the point that they say, “We have to do something about this.” If they want to, they certainly can.

LG: Forty years ago, the most advanced notion of revolution on the radical left was the idea of seizing the factories and establishing worker’s councils. But looking more deeply into Marx, one of the things that always struck me was that as capitalism evolves, it illuminates things in Marx that people didn’t notice before. Let’s take the unpublished sixth chapter of volume one of Capital. It has this very powerful description of the transition to an embodied technology that self-expresses a social relationship of capital. Most early 20th century Marxists did not even know this chapter, but the evolution of capital now makes it stand out. As for the early 20th century, I think it is very important to understand that the overwhelming majority of Marxists and revolutionaries at that time were statists of one kind or another. There was a belief that if it wasn’t a question of seizing the existing state, it was a question of setting up another state that would essentially continue capital in a different form, as in the Soviet Union.

DH: Value is a social relation. As such, it is immaterial and objective, as Marx makes very clear. It therefore needs material representation, money, which depends on exchange-value. But the representation of value, the money form, does not truly represent it. Value is socially necessary labor time on a world scale. The problem is that its representation is such that private persons can appropriate its sociality. As a result, this social power can be accumulated by an individual and a class. This representation of value in the money form is a perversion of what value is really about, and this is a contradiction. If you want to abolish classes and the individual appropriation of social value, then you have to come up with a money form that is anti-accumulation. This is a very interesting idea. Marx says that the money commodities are gold and silver for the very simple reason that they do not oxidize. They do not rot or disintegrate, but retains its character. Therefore, you can accumulate and save value. If you had a form of money that dissolved, you would end up with a very different kind of society, because money would aid circulation but would not facilitate accumulation. Perhaps we should start inventing new forms of money that oxidize!

What we have to do is stop the accumulation of wealth and power in private hands. One of the ways to do that is to revolutionize the money form. I know someone is going to say, “Marx objected to Proudhon’s attempts to do this,” but Marx is sometimes unfair to Proudhon. Some of the stuff about alternative currencies, which the Marxist left usually renounces as anarchist, is actually worth considering.


What are the political implications at stake in the contradiction between use-value and exchange-value?

AK: This is not the essential contradiction of capital but a form of its appearance. The internal contradiction of capital is between use-value and value. It is not just a question of Marx being fair or unfair to Proudhon; there is a question of whether or not you can fundamentally alter the nature of the system by regulating markets or messing with money. Marx puts forward a very detailed argument—in section three, chapter one of Capital, volume one—about why attempting to change the system by abolishing money, while keeping commodities and commodity production intact, is like getting rid of the pope while keeping Catholicism otherwise in place.

The Left set about downplaying the crisis of 2008. Howard Zinn remarked in The Nation, “It is sad to see both major political parties agree to spend 700 billion dollars of tax-payer money to bail-out huge financial institutions."[2] Populists like Zinn were focused on, “Why are we enriching the bankers?” while failing to see that the system was hanging in a balance. The financial system could have collapsed in September-October of 2008. But the Left didn’t want to say that it wanted that to occur. Yet it hated to admit that keeping capitalism afloat required the implementation of something like TARP. The Left was thus unable to put forward a reasonable response in light of the widespread opinion that capitalism had failed.

LG: What does the non-reproduction of the working-class mean and what is the role of the revolutionary left? I think we saw a very good example of this in the most radical days of Occupy, which took place on the West coast, where you might say a “precariat” or a large pool of casual workers began to form an alliance with more traditional, older organized workers, the West Coast Longshoreman Union. This culminated with the attack on the Longshoreman in the fall of 2011 and carried over into the spring of 2012. I do not advocate the formation of a vanguard party. Someday, a political party will emerge, but in the meantime what is possible and necessary is a network of people, like those in Occupy, that are spreading an analysis of the fundamental crisis of the system, putting forward the claim that there is no exit short of a socialist-communist alternative to the capitalist mode of production. As Marx says in the Communist Manifesto, the involvement in this or that struggle is not the question of victory or defeat, but of building the unity of the working class. I think that’s what briefly emerged, in Seattle, Portland, and San Francisco, at the time of the Longshoreman struggle.

PM: The non-reproduction of the working class is a misnomer. What one should say is that the value of labor power is declining or being pushed down. A smaller percentage of the world’s population is becoming necessary for the working class. You can send half the people in the United States to college but you only need to employ eighty percent of them. The others will become part of the “precariat” and go on to work as baristas or scrabble for some other kind of wage-labor, or go to Vermont and to make goat cheese. In Greece now, there are no jobs for people, but globally the working class is reproduced. As Marx expected, the reserve army of labor increases over time. China is an interesting example where, in the last 10 years, there has not been one new job in manufacturing, according to ILO (International Labor Organization) statistics, partly because the southern edge of China, where foreign manufacturing and assembly platforms are constructed, is using the latest technology with extremely high productivity.


Historically, socialists have proposed answers even beyond capitalism, pointing to the reappropriation of technology. What happened to that socialist imagination?

LG:  Technology as such is not capital. Capital is a social relationship and in the case of, say, the port of Rotterdam, where some infinitely small number of longshoreman are unloading ships in the biggest port in Europe, this shows how capital has marginalized much of the working class through technological innovation even as it depends upon the value of the reproduction of labor power as its standard for exchange. It is only a socialist-communist society that can strip away that value form and use technology for its unrealized use-value.

PM: I feel I have to defend the honor of the socialist past. The idea of the abolition of labor and the abolition of the working class was the prime idea of much of the socialist movement of the 19th century and it was particularly dear to the heart of Marx, who looked to a communist society in which people would do as little work as possible through the egalitarian use of technology in order to maximize free time. This was the Marxian utopia: The freeing of time for everybody by abolishing the class of workers. Through the generalization of labor, the hours of labor would be shortened and everybody would do as little work as possible. This is a very old idea that Marx’s son-in-law Paul Lafargue celebrated, and it is one that all socialists should follow. |P

Transcribed by Daniel Jacobs and Konstantin Kaminskiy

[1]. Karl Marx, Grundrisse: Foundations of the Critique of Political Economy, trans. Martin Nicolaus (New York: Penguin Books, 1973), 706.

[2]. Howard Zinn, “Spend the Bailout Money on the Middle Class,” The Nation, October 27, 2008,  available online at <>.[