William K. Tabb
In the writings of Karl Marx we find the most penetrating theoretical construction of the basic laws of motion of capitalism, and also acute observation of the significant events of his time and their larger meaning. Distinguishing his different levels of analysis can be obscured by the employment of the same words in different usages. For example, as Marx moves between the usages of the term “class” applied at the level of the mode of production to “class” as class fractions relevant to a specific social formation in his contemporary conjuncture, the term takes on different meanings (Oilman, 1978; Tabb, 2009). So too his writing explaining the causes of economic crisis range from disequilibrium in reproduction schemas and the core contradictions of social relations under capitalism, to contingent events of timely importance which attribute causal significance to such things as the discovery of natural resources or the bankruptcy of a particular enterprise. Just as our use of “class” depends on subject of our inquiry, so “crisis” is employed to consider different ranges of explanation.
Marx was quite expansive in discussion of crisis but, as Schumpeter writes (1951, 49), he “had no simple theory of business cycles. And none can be made to follow from his ‘laws’ of the capitalist process.” But this is to ignore his dialectical method. It is true that nowhere does Marx present a single crisis theory. He offers different explanations in different contexts. This should not be surprising, for Marx’s science is not a deterministic one but a dialectical approach with strong stress on historical specificity. For us his work raises the question in what ways our understanding of Marxian crisis theory helps explain the conjunctural crisis of the early 21st century and suggests appropriate political responses. In attempting to discuss these crucial questions in the limited space available I will paint a broad canvas highlighting diverse elements to connect discourses which frequently stand in isolation from or conflict with each other. Such scope reminds us of the breadth of Marx’s writing; the different levels of analysis, periodisation, and abstractions he pursued.
Marx on Crisis
Most frequently Marx and Marxists consider crisis at the level of an abstract model of capitalism in which the discussion is of the relative merits of underconsumptionism versus falling rate of profit, of overaccumulation, disproportional growth among departments, and profit squeeze foci, all at the level of the economic system as an entity. There are severe difficulties in carrying out empirical investigations: counteracting tendencies, measurement issues, the transition from an international economy to a globalized one (and the difficulties of measuring profit at the level of the world system), the importance of differential rates for different sectors, issues of redistribution in the sphere of production and along the commodity webs controlled by transnational oligopolies. A focus on the present conjuncture in economic history raises other framings stressing the role of finance, which is privileged in Marx’s own analysis of specific crises.
Marx follows a method of historical-logical development through the three volumes of Capital. Volume I offers an abstract model of production and then expanded reproduction. In Volume II circulation is presented, and in Volume III the two are brought together in terms of the totality of capital in general as the unity of production and exchange. Because Marx’s writings involve such a large over- arching vision there are five important problems for those who would want to develop a Marxist theory of crisis. First, as noted above, is that he does not develop such a unitary theory. Second, he treats crisis at different levels of abstraction. Third, there are alternative readings possible for just about everything Marx writes because of the extremely elastic multifaceted constructs he routinely deploys (Oilman, 2003). Fourth, Marx only completed a small part of his ambitious project and so in many places he offers partial analyses which do not get completed in his lifetime. Fifth, when looking at historically specific crises (and not crises at the level of capitalism’s historical-logical development) it is the particularities of a conjuncture that are dominant and Marx cannot be expected to have answers ready made for our stage of capitalist development and conjunctural specifics, even as his method gives us guidance. Let us look at each of these.
At the level of capitalism as a mode of production emphasis is given to the law of the tendency for the profit rate to fall, which Marx himself believed was “in every respect the
most important law of modern political economy” (Marx, 1973, 748). This law, he believed, “has never before been grasped, and even less, consciously articulated.” Indeed, it is not an easy “law” (read: tendency) to grasp in any concrete time and place, given powerful countertendencies: increases in the intensity of exploitation, producing more relative surplus value through speedup and such; or increases in absolute surplus value through a lengthening of the working day, which seems to have been happening in recent decades in the United States. Other counter-tendencies are not easy to measure: working off the clock at places like Wal-Mart and for white collar and professional workers thanks to the Internet, email and Blackberries; the cheapening of the elements of constant capital; wages forced below their value; relative overpopulation of the reserve army which globalization has surely promoted; as well as changes in the cost of raw materials, expansion into new markets, and so on. Measurement of the profit rate on a global scale is no easy task and accounting for offsetting tendencies which have interrupted the falling rate of profit over the century and a half since Marx presented this idea is hardly a straightforward project as a guide to explaining crises. If crisis is generated when the ratio of capital to the laboring population has grown so that neither absolute nor relative labor time can be expanded further, “there would be absolute over-production of capital” producing a “steep and sudden fall in the general profit rate.” This could be caused by a rise in the money value of variable capital (an increase in wages) or a change in the composition of capital (Marx, 1908, 251-2). Contemporary work by Marxist scholars focuses on both.
This article was originally published in Science & Society, Vol. 74, No. 3, July 2010, 305-323