New Directions in Marxism: An Interview With Matthijs Krul

by C. Derick Varn on April 3, 2013

Matthijs Krul is a Ph.D. student in Economic History at Brunel University and maintains the blog Notes and Commentaries. C. Derick Varn blogs at The (Dis)Loyal Opposition to Modernity.

C.Derick Varn: Do you think value theory is an area of Marxism that is particularly under-explored in relationship to class relations? I am thinking of the development of the so-called “Third World” and how understanding “abstract value” can lead one to make predictions about geo-political relationships in the global South?

Matthijs Krul: Value theory is of course not under-explored in Marxism as a whole. Since the 1980s or so there has been a great revival in Marxist economic theory, especially in exploring the nature and implications of Marx’s value theory. But in relation to class, other than purely in the abstract, is another issue. One important problem with much analysis of class in the modern world is that it is taken for granted, as if class relations are the starting point of the analysis, rather than a subject of analysis themselves from the point of view of Marxist economic theory. There is much ado about the precariat, changes from industrial to service work, and things of that kind, but there is not much interest in the history of the development of classes in the 20th century as tests of Marxist economic theory in themselves, least of all value theory. Here is where so-called Third Worldism comes into its own. In the work of e.g. Emmanuel and Amin, but more so in the work of people like Zak Cope, we find a systematic attempt to understand global economic relations as class relations as well as understanding these class relations as being the working out, in concrete empirical history, of more general and abstract Marxist economic theory. In most radical analysis you have either the former — as in William I. Robinson’s theory of the transnational capitalist class — or the latter, as in for example the debates about the bourgeois revolution or the nature of the USSR. But rarely do you have both.

I am not sure I would speak here of predictions, however — it’s more a matter of explanatory value. Keep in mind economic theory is always more general than the reality analyzed, and so we’re dealing with different levels of empirical application. It’s not pure, abstract modeling as in neoclassical economics, but I would not dare say I can predict how the global class struggle will develop. I think there is an ongoing struggle between the divergent tendencies identified by the ‘Third Worldist’ labor aristocracy thesis on the one hand, and convergent tendencies resulting from shifts in global production and the decline of the Western social-democratic consensus on the other hand. Value theory is an indispensable tool to understanding both of these. Without it we’re stuck either in chauvinist assumptions about the significance of white workers, or in purely distributional arguments for global equality of the kind common in Green and ‘alternate globalization’ movements. But value theory is not much more capable of prediction than any other economic theory.

C.D.V.: Are you familiar with Andrew Kliman’s explanation of the current crisis? If you are, what are the implications for the Global South?

M.K.:  Yes, I have followed Kliman’s work quite closely. I gave a very favorable review of his defense of the so-called temporal single-system interpretation (TSSI) in refuting the inconsistency attributed to Marx’s theory of value, and I have been very intrigued by the way in which he consistently opposes ‘fixing’ Marx by applying amalgams of Keynesian and other theories to his work, like is fashionable today. His emphasis on the importance of temporality in making sense of capitalism as a dynamic system, and thereby of value theory itself, is really valuable I think.

For our purposes, I think the most important work is his book The Failure of Capitalist Production. As I understand him, his argument is essentially that neoliberalism has not seen a decrease in workers’ total compensation in favor of corporate profits, as is often alleged (although it has flatlined), and that financialization is not the result of a ballooning profitability. On the contrary, he sees the capitalist system as suffering a secular decline in the rate of profit since the early 1970s, and financialization, speculation and debt, as well as the austerity drives we see today, are attempts at overcoming that inherent barrier to the accumulation of capital. But such methods cannot succeed, because contrary to the ‘left’ Keynesian interpretations, Marx’s value theory indicates that the only way out of a capitalist crisis is by restoring the rate of profit, i.e. by destroying large amounts of (fictitious) value, not, as is done by all Western governments today, by means of bailouts and liquidity drives. Those only kick the can down the road, and make the problem for capitalism worse in the long run, by piling up more debt, generating more unproductive speculation, and thereby pushing the rate of profit down further.

One major consequence of Kliman’s consistent application of Marxist economics is the emphasis on opposing purely distributional responses — all these Marxo-Keynesian attempts to ‘stimulate’ by redistributing wealth, or restoring the welfare state, or calling for nationalizations and public investment works. Instead, as Kliman shows, the contradiction of capital means you have to choose between one of two evils: either ameliorate the crisis now by emergency measures of that kind, and suffer a worse one soon, or ride out the storm, with all the attendant unemployment, immiseration, and unfreedom we have seen in the Great Depression and the Victorian age. Neither option is desirable: that’s exactly why capitalism itself is the problem, and must be overthrown.

In terms of the Global South, this does have some implications. Kliman’s work on the origins of the crisis is statistically limited to the US, although very likely to apply (mutatis mutandis) to the West generally. Worldwide, we have seen a decline in capitalist growth systematically since the 1970s, even despite the new capitalist drives in China, Brazil, and so forth. The poor conditions for investment in the West have driven shifts in production to the Global South, but the longer run effect of this will simply be to equalize this already low rate of profit, and eventually to drive it down even further. This is the inherent tendency of capitalism to do through its expansion of capital and technology, and a ‘Luxemburgian’ solution in the Global South cannot be sustained.

This means, to my mind, that the longer run trend is quite possibly more one of convergence than of divergence. Firstly because the capitalist class is more and more losing their incentive for maintaining the social-democratic ‘historical agreement’ with the labor aristocracy in the West, and is thereby actively destroying the legacy of social-democracy and its basis in sharing the loot of unequal exchange. Secondly because the operation of a global law of value, with a longer run global decline in the rate of profit, will generate similar crisis phenomena in the Global South as it has in the Global North, and in that sense, in a very slow but real way the dissimilarities in social position between the Southern working class and the Northern are being overcome. Keep in mind that for the first time in world history, the majority of the global population is now actually urban workers. If we actively oppose the easy, nostalgic social-democratic and Keynesian answers in the West, and focus on attacking capitalist relations of production themselves and not just questions of the 99% and so forth, we may actually have a better basis for internationalism between the North and South in the long run than it seems at first sight. But that social-democratic nostalgia, whether in its left or its ‘social fascist’ form, is of course popular with Western workers in the shorter run. Kliman gives us powerful economic materials for opposing it, even if that’s not his political intent.

C.D.V.: What do you think is the theoretical error that leads to romanticizing Social Democracy?

M.K.:  This is a very big question. If we take social democracy broadly, the idea of the egalitarian, redistributionist state bureaucracy as guarantor of ‘development’, you could say this is the key question to understanding the politics of the 20th century.

I’ll try to be as brief as possible in answering it, and I certainly don’t think I’ve figured this all out yet. But I think there are basically three elements: the first is that there has been throughout the twentieth century a combined pressure (in the historical materialist, causal sense) of the need to develop the productive forces everywhere, a need stated for different reasons by all parties from the left wing to the right wing, and on the other hand the need to complete bourgeois revolution in the Marxist sense, often over and against not just the conservatism of the actual bourgeoisies as a class, but also against Arno Mayer’s “persistence of the old regime.” These pressures have everywhere combined — in national liberation movements, this has taken the form of the rebellion of ‘the people’ of a particular nation or place against their colonial overlords, presented as their own ancien régime. In the Communism of 1917 onwards, it has taken the form of the need to develop the productive forces to achieve the level of productivity and abundance that would allow the switch to socialist production relations — a switch we know has never happened, although one can see the Cultural Revolution in China as an attempt to do so. Within liberalism, not least in mainstream economics, the whole framework of internationalism has been one of ‘development’ and the promotion of a certain kind of liberal egalitarianism for the purposes of combating Communism and political resistance to capitalist relations. A good example of this is The Stages of Economic Growth by Rostow. So the first major force I would identify is this general developmentalism, one that has taken over Marxism as much as it did all the other ideologies. Again, this points to an underlying strong economic causal force operating in and through all this, which I suspect we can identify simply as capitalism’s historical expansion reaching its fulfilment. Marx and Engels certainly thought that capitalism and its bourgeois revolutions had reached their ‘consummation’, to borrow Neil Davidson’s term, by the 1870s or so. But I suspect that they were wrong, and that the 20th century has been the process of this consummation. This also explains its extraordinary violence, which goes entirely contrary to the expectations of the 19th century ‘men of progress’. Social-democracy then appears as the most peaceful and egalitarian-democratic version of this ideal of development, especially for those scared off by the experience of the USSR and so on. But it is profoundly ahistorical to reason in this way: as Claude Bitot has said, in certain ways, Communism has only just begun.

The second force, relating to this, has been the misunderstanding of Marxism as promoting working class rule. It certainly does and should do so in the sense of the rule of the working class in and through the state as a means of simply exercising the physical and political, if you will logistical, power to uproot capitalist relations. That does not happen spontaneously, whatever our anarchist comrades may want. But the ultimate purpose of this can only be the abolition of class society, which is a historical transformation constituting not just a sharp break with capitalism, but with the last 4000 or 5000 years of most parts of the world. It is however very easy, because of capitalism’s own reinforcement of its structures as ‘natural’ (which Marx took so much pains to expose), to end up despite all efforts to take them as such and to promote the working class as an end in itself. This critique of the dominant forms of Marxism in the 20th century is nothing new, of course — many have made it, from Postone to the ‘libertarian communists’. There is a very intriguing, although I think historically exaggerated, essay on this by Gáspár Miklós Tamás called “Telling the Truth About Class”, in which he contrasts the Marxist socialism of overcoming class society tout court with what he calls Rousseauan socialism, which is concerned with egalitarianism, the rule of the people, and the Enlightenment abolition of all artificial restrictions and inequalities imposed by class society without overcoming the social relations that generate them. This creates a kind of ‘compensatory’ socialism: one that is concerned with redistribution, leveling, the evening out of unfair distinctions, and so forth, but not really interested in class society as a historical construct and the role of production in it. I have written about this before: one of the greatest strategic dangers facing Marxist politics today is being led into wanting to simply redistribute and compensate for the effects of capitalism, rather than doing away with capitalism.

The third factor is the most immediate one – people remember the ‘welfare state’ situation of the 1950s-1970s, and especially among the left of the various social-democratic parties there is a lot of nostalgia for that period. It’s an attempt to deny the direction that things are going, and especially for unions it’s pretty hard to face the degree to which their position has been radically undermined, so it becomes tempting to propose this kind of Scandinavian programme as the ideal. It’s a sympathetic idea from a certain egalitarianism, but it has no theoretical basis and is essentially pure demagogy hitched to the wagon of the various Labo(u)r parties.

C.D.V.: Do you think the continued failure of Social Democracy to lunch a counter to neo-liberalism may help break left-liberals out of the malaise here?

M.K.:  Well, I think it may. Not so much in the ideological sphere — it tends for now to translate more into attempts at refounding the ‘real’ social-democracy, the creation of various left populist initiatives, and a more general sense of outrage that does not much translate into any concrete political direction. But the decline of social-democracy also means, and is caused by, a decline in the position of the West in terms of its economic hegemony and the living standards of much of the population, and it is that that definitely should clarify things politically in the medium term. A more interesting question in this context is what has been called “the strange non-death of neoliberalism”, i.e., why it persists even through this crisis and does not lose its legitimacy for the ruling classes (and even much of the Western population generally). If the left-liberals want to understand things better, they should ask themselves why this is beyond mere talk of conspiracies of finance or bad faith arguments in the style of Krugman about ‘dogmatism’ and so on. This would also force them to seriously engage with economic theory as it is conceived of by the orthodoxy today, and that intellectual struggle is one that cannot but radicalize people.

C.D.V.: Now, to shift the focus for a moment, do you think this contradiction also plays a role in environmental problems for the “Third World”?

M.K.: That is a good question, and one that perhaps needs more studying (at least by me). There is certainly a problem with a certain tendency in Green politics, mainly as a phenomenon in the First World, that basically decides that after most people here have gotten cars and fridges and plane tickets, it would be unsustainable for anyone else to have them. Rightly, a lot of opposition to Green initiatives in the Third World comes from this sense of it being just another one of the myriad ways in which, to use Ha-Joon Chang’s felicitous phrase, the West has “kicked away the ladder”. On the other hand, the global shift in production has also seen much of the most polluting industry move to Asia and Latin America in particular, and people there are acutely aware of the impact of this. The Green movement has been successful insofar as it has shown that the developmentalist paradigm of the 20th century has itself, in a way Marx would have recognized, conjured up global forces it cannot control. These impact the Third World more than they impact us, in all likelihood, at least if we accept the scientific predictions on this point. Yet at the same time, the same causes of developmentalism, the motives to ‘develop the productive forces’, have not gone away. So a lot of the struggles not just between the position of the relatively super-consuming First World and the poor Third World revolve around this, but much struggle within countries like Ecuador, Bolivia, India and China are also about how to reconcile this productivism or developmentalism with the increasing sense of negative feedback loops in our control over natural forces.

One common left response to this here has been to endorse particular aspects of Green politics — in particular an emphasis on population reduction, on reducing consumption, and on ideas of equilibrium. Originally I was almost Deep Green in my views, and my romantic sympathies still are there. But politically I have become more and more skeptical of this. Some feminist critiques of developmentalist Marxism, like those of the Bielefeld School, have also made some substantive criticisms of the developmentalist ideas about technology and progress, but fall back into a kind of ‘naturalization of the natural’; something that inevitably leads to primitivism and/or conservatism.

It’s worth pointing out that all these ideas were originally part of the intellectual repertoire of Malthusianism, a profoundly anti-socialist thought that Marx and Engels rightly despised. It may well be so that capitalism’s ultimate demise will be caused by an ecological catastrophe, which would be very unfortunate. But it can’t be a question of these dichotomies between Western consumption and Third World lack, or Western ‘recognition’ of nature and Third World obstinacy (or the reverse), or any of these things. We need to develop ideas of Marxism that contain the fundamental critique of technology and production under capitalism that is its greatest strength, but also contain political ways of making that work against the divergence between First and Third World on this front. The science is real enough, but Malthusianism need not be the answer. Green thoughts are just as much part of the class struggle, both globally and within countries, as any other philosophy. Moving forward from developmentalism without falling into primitivism — that will be a challenge, and one I don’t yet have an answer to.

C.D.V.: Why do you think that primitivism has been so much more a temptation in the developed world?

M.K.: I’m not entirely sure if that is true. It has certainly been theorized most in the developed world, but there are also figures like Vandana Shiva, and a lot of groups in India, Latin America and elsewhere resist developmentalist impositions in language which is (partially) about maintaining their organic, traditional relations and so forth. Of course, it’s a sliding scale — primitivism proper is a very extreme position only held by the likes of Zerzan, whereas various forms of romantic conservatism or reaction are much more common. I do think that in the Third World there is at the same time necessarily an enormous awareness of the debilitating effects of poverty and lack of ‘development’, since this is an everyday experience there in a way it’s not here. That makes it much harder to be full of middle class urban anxieties of the Green variety and/or of the romantic kind (ones which, as mentioned, I instinctively share). But there’s also a lot of awareness of how development itself has led to new forms of exploitation and alienation, and has often destroyed old relations without providing any new social bonds that can sustain social life – a familiar topic for much postcolonial literature, for one.

This is sometimes quite literally true, when the very effects of developmentalism can lead to severe socio-economic dislocations, inducing famine and disease and actually reducing life expectancy. The plague of HIV in southern Africa, for one, is an example of this. So I think that this contradiction, the impossibility of both romantic reaction as well as a pure productivism, shows itself ad oculos in much of the Global South in a way it does not in our part of the world. But our own struggles over the needs of highly urban, high-consuming populations versus the desire to maintain some degree of ecodiversity and of open space, for example, are milder versions of the same conflict.

C.D.V.: What do you make of the recent Time magazine article about the return to Marx?

M.K.: A surprisingly intellectual article for something as generally braindead as Time magazine, that’s for sure. These ‘the return of Marx’ things are very common — The Economist publishes one every few years, I think. Most of the time they don’t amount to anything as they’ll just be some concession to vapid chatter about ‘inequality’ and how Marx was wrong about everything substantial but ‘has a lot to say about how capitalism works’. This Time article is more intriguing because it actually cited Marxist (or Marxisant) thinkers at length, e.g. Richard Wolff and Jacques Rancière. Still, for most of the liberal and social-democratic media, Marxism just appears as their bad conscience. You get people like Lord Desai or the Dalai Lama calling themselves Marxists. I don’t make too much of that. Generally my attitude towards any of the mainstream political chatter (whether theory or middlebrow TV ‘debates’), just like with the mainstream popular economics, is one of unrelenting hostility and separation.

C.D.V.: What do you make of Richard Wolff’s particular economic proposals?

M.K.: I am not hugely familiar with Wolff’s work, other than the book he and Stephen Resnick wrote on class in the USSR, which is an odd melange of empirical economics and poststructuralist thought. My impression from what I have seen on him is that his interpretations of the crisis and the development of the profit rate are not as compelling as Kliman’s; it strikes me his viewpoint is more akin to most Marxist economic articles, in that they hew close to underconsumptionism. The strength of Kliman’s view over those like this is precisely that Kliman’s view sees the crisis as a failure of capitalism itself. He does not imply, like most left theorists still do (from Krugman to Wolff), that if only the ruling class had more sense and made the right distributive decisions, there need not be a crisis impact at all.

Crisis in ancient Greek means something like ‘decision’ or the power to make decisions; I think we need to go back to that not just political, but also theoretical rejection of capitalism. There is certainly room for reforms and transitional demands as a matter of politics, but there is no economic way to make capitalism work for the majority. On the other hand though, Wolff also often remarks that opposing austerity and ‘policy mistakes’ is not enough, but we need to confront the system that generates them. So I probably just don’t know his work well enough. Given he seems to be successful at the moment as one of the popularizers of Marxist economics through blogs and podcasts (a great development in my view!), I should look into it more.

C.D.V.: Anything you’d like to say in closing?

M.K.: Well, I hope the interview will stimulate some useful discussion. I’m definitely open to input from people on many of these issues. I think in terms of theory there’s much potential still for Marxist research — new consensuses are developing that are much more promising than the old, and the end of the Cold War mentalities and the rediscovery of Marxist economic theory give a wide room for further debates and ideas. I don’t think ‘late capitalism’ is more than rhetoric, capitalism will take another century or so to collapse. But it is a great time to be a Marxist, and a great time for a unified social science.

{ 38 comments… read them below or add one }

Pham Binh April 3, 2013 at 2:24 pm

“Marx’s value theory indicates that the only way out of a capitalist crisis is by restoring the rate of profit, i.e. by destroying large amounts of (fictitious) value, not, as is done by all Western governments today, by means of bailouts and liquidity drives. Those only kick the can down the road, and make the problem for capitalism worse in the long run, by piling up more debt, generating more unproductive speculation, and thereby pushing the rate of profit down further.”

The rate of profit can also be restored by increasing the rate and intensity of exploitation at the point of production. The above statement seems to exclude this possibility and paints a picture of capitalism’s prospects that is one-sidedly and overly bleak.

“Worldwide, we have seen a decline in capitalist growth systematically since the 1970s, even despite the new capitalist drives in China, Brazil, and so forth. The poor conditions for investment in the West have driven shifts in production to the Global South, but the longer run effect of this will simply be to equalize this already low rate of profit, and eventually to drive it down even further.”

The first sentence is a contradiction. Capitalism is in decline, except where it is growing spectacularly.

I’m not sure what to make of the second sentence. Since when does the neoliberal West have poor conditions for investment? Conditions are better than ever as far as I can tell — few regulations, lots of bailouts, tax loopholes, zero government oversight. The “longer run” process is a decades, maybe even centuries-long process. It would be interesting to compare the rate of profit in China shortly after Deng Xiaoping took over to today to see if this prediction contains any truth.

All of this reminds me of the debate over the state of capitalism we had in the thread of my book review.


C. Derick Varn April 3, 2013 at 6:03 pm

“It would be interesting to compare the rate of profit in China shortly after Deng Xiaoping took over to today to see if this prediction contains any truth.”

You actually need to look at the industrialization that happened at the end of the cultural revolution too for to get really good data. But that would be helpful, I asked Kliman if he thought that was meaningful when he was in South Korea and I met him, and he said he didn’t know if he could trust the Chinese books.

“The rate of profit can also be restored by increasing the rate and intensity of exploitation at the point of production. The above statement seems to exclude this possibility and paints a picture of capitalism’s prospects that is one-sidedly and overly bleak.”

I think that is still a pretty bleak picture. But I think it also leaves out monopoly capital and rent-seeking–that is “intellectual property” (which I have heard Kliman say in interviews he doesn’t see as meeting Marx’s definition of “commodity”) and various forms of rent-seeking even in the financial sector.

I also think there is an upper-limit to labor exploitation and we’re reaching it, but if that is the only way to restore profitability to the classical commodity form, then Keynesianism would still lead to a decline in profitability. But I agree with you, that this would be an incomplete view.


Pham Binh April 3, 2013 at 7:32 pm

Instead of China, use S. Korea from, say, 1960 until present. No commie book-cooking there.


C. Derick Varn April 3, 2013 at 8:06 pm

I would use South Korea, Singapore, and Taiwan. South Korea’s growth curve is very interesting, but since it joined the OECD, it does have a bunch of “capitalist book-cooking” going on (they use some really “inventive” tricks to keep the unemployment rate down… such as familial job sharing and whatnot).


dave brown April 6, 2013 at 4:54 am

Increasing the rate of exploitation is built into Marx theory of TRPF. The point is that capitalists cannot increase the rate fast enough to overcome the rise in organic composition.
This is a ‘bleak picture’ if you see only the increase of exploitation and destruction of value as negative rather than something to be negated.


rationalrevolution April 3, 2013 at 4:10 pm

I agree with Pham Binh’s points. I think is disingenuous to say that the rate of profit is declining in capitalist economies. I think the real point is that capitalists are maintaining profits by increasingly undermining markets in order to extract rents.

As capital ownership has been consolidated, capital owners have gained increased control over markets, both through their ownership of capital and via their influence over governments (which is a product of their ownership of capital).

So, the reality is that rent seeking has increased, thus sustaining profits.

I think the most important prediction of Marxism is the consolidation of capital ownership over time. This has irrefutably been proved out and we can plainly discuss the implications of this fact.


C. Derick Varn April 3, 2013 at 6:16 pm

” I think the real point is that capitalists are maintaining profits by increasingly undermining markets in order to extract rents.”

I agree with that, but I would say that if that is the case, we’re aren’t exactly dealing with commodity capitalism in the same way we were. The centralization of capital would be taking on forms that are more reliant on monopoly control and the state. From the state-point of a theory of liberal praxis after the early revolutions, this would be highly regressed.


C. Derick Varn April 3, 2013 at 6:22 pm

Although the only way these rent-seeking and monopoly capital tactics could actually be profitable is that if commodity production was largely happening in other places on the globe. While there is still a lot of production in both the US and in lot of the BRICS countries, it does seem to the moving more and more to places like China and South East Asia and dependent on resource extraction from Africa and Latin America. So some a lot of what Mattijis Krul is talking about still applies even then. That said, as things shift in the US economy, and labor becomes inelastic and easier to exploit, we are seeing a highly mechanized version of that production coming back.

I agree with you thought that this would be impossible without the centralization of power in (hopefully late) capitalism.


rationalrevolution April 4, 2013 at 8:23 am

My contention is that capitalism can persist forever, even in a closed system. The definition of “crisis” is somewhat nebulous. Crisis for whom? My view is that due to concentration of capital ownership, the capitalist class will both shrink as a percentage of the population, and gain increasing power via concentrated capital ownership.

Ownership of capital is the most important thing. Via capital ownership capitalists can control markets and governments, thus always maintaining favorable conditions for themselves and always maintaining profits, which is exactly what we see going on in the world today.

Profits are, after all, a measure of market inefficiency. It is the objective of capitalists to undermine market efficiency in order to maintain profits, and their ability to undermine market efficiency is a function of capital ownership consolidation.

This is the criticism of the neo-liberal welfare-state, because the neo-liberal welfare-state has done nothing to prevent capital ownership consolidation, and thus, the neo-liberal welfare-state has allowed capitalists, over the past 50 years, to continue consolidating power and undermining markets. The welfare-state reforms merely facilitated further capital ownership concentration by decoupling capital ownership from compensation, thereby allowing a non-capital owning middle-class to exist, but all the while actual capitalists were becoming more powerful behind the scenes.

The problem with the neo-liberal welfare-state is that it doesn’t address the issue of capital ownership or distribution, it allows capital distribution to continue to consolidate, which ultimately is the source of the problem. One way or another, capital has to be owned by everyone, it can’t be concentrated in the hands of a few.


Matthijs Krul April 4, 2013 at 1:43 pm

This is nonsense. The consolidation of capital ownership over time could very well be described by a simple neoclassical economies of scale model; one does not need Marxism for that. Marx himself considered his most important theoretical development the two-fold character of labor corresponding to the two-fold character of the commodity, i.e., his theory of exploitation and surplus value.


Jurriaan Bendien April 3, 2013 at 5:13 pm

The reason why leftists know so little about capitalism is because they don’t do any real research into it. There is just a great rush to skim off and plagiarize the latest insights from anybody regarded as advanced or prominent in the field, and rehash that into a publication, without really thinking things through to the end, on the basis of real mastery of the evidence.


Arthur April 3, 2013 at 11:31 pm



rationalrevolution April 4, 2013 at 7:58 am
Matthijs Krul April 3, 2013 at 7:40 pm

It is emphatically not the case that the rate of profit has been very high in the West in recent terms. On the contrary – where else does the crisis come from? Why else is there an almost unprecedented piling up of liquidity that despite its complement in the form of hundreds of billions in bailouts and special money printing measures is not being invested anywhere? It is not being invested because it cannot be invested. There simply is no potential to do so currently. Only the destruction of value entailed by a crisis can restore this potential, which is precisely the ‘function’ of crisis in the capitalist system. It is certainly true that conditions are very good for the capitalist class in terms of their political power, but that is not the same thing.


C. Derick Varn April 3, 2013 at 8:04 pm

The rates of profit in the case of the overall society, and the profits of individuals in those society seem in conflict here. I think maybe conflation of those two things is making this harder to talk about.


Arthur April 3, 2013 at 11:40 pm

Agreed. Only the near zero rate funds from central banks enable keeping up the appearance of profitability with essentially fictitious profits while the unresolved imbalances deepen.

Exaggeration to say “it is not being invested because it cannot be invested”. There is still investment but in directions that only intensify and prolong the imbalances and so will intensity the destruction of value that will be required in a crisis to get back to “real” profitability.

eg Tail end of mining boom continues in Australia with “investments” in mines and related infrastructre that can only come onstream a few years down the track together with mases of other new mining output that will glut the market.

BTW this example highlights importance of sectoral imbalances. Crises don’t just destroy value. They restore necessary proportions between sectors or “departments” of production.


Trevor Konsko April 3, 2013 at 7:52 pm

Pham & Rationalrevolution: Read Kliman (Reclaiming Marx’s Capital and Failure of Capitalist Production) before commenting on what “makes sense” to you. And read this:

Kliman shows, exhaustively, that the rate of profit (not GDP/cap, not current cost, but _historical cost_ measure of the rate of profit) fell since at least 1970 and has not recovered since, in secular terms. The countervailing tendencies (including speculative financialization) have not proven sufficient to offset this trend. The only way to restore the rate of profit is through mass capital devaluation/destruction, as is necessary in the accumulation cycle. He notes, rightly, that this is a politically disastrous reality of capitalism for the ruling class and has necessitated state intervention as a response to (not a precaution against) the concrete forms of crisis that result from a historically low rate of profit.

I wonder if Kliman has read Cope and what he thinks about A) the empirical rigor of Cope’s analysis and B) the political conclusions that draw from the (eroding) labor aristocracy and the falling rate of profit as two trends seemingly coming to a head


Pham Binh April 3, 2013 at 8:13 pm

I don’t need to read Kliman before questioning what Krul said in this interview. That’s a pretty weak response to the issues I raised.


Trevor Konsko April 3, 2013 at 8:30 pm

I’m trying to save you the embarassment of looking like an idiot who writes things like this:

“I’m not sure what to make of the second sentence. Since when does the neoliberal West have poor conditions for investment? Conditions are better than ever as far as I can tell — few regulations, lots of bailouts, tax loopholes, zero government oversight. The “longer run” process is a decades, maybe even centuries-long process. It would be interesting to compare the rate of profit in China shortly after Deng Xiaoping took over to today to see if this prediction contains any truth.”

trying to comment on matters that you clearly haven’t read anything about, let alone the sources (Kliman) that Krul specifically mentions.


Pham Binh April 3, 2013 at 8:56 pm

If you had a grasp of any of the issues, you’d be able to enlighten me on them instead of just repeating yourself and throwing angry words around.


Arthur April 3, 2013 at 11:46 pm

What harm would it do to study material opposing your current belief that capitalism is as profitable as ever and that austerity results from some optional “offensive” against workers rather than actual severe economic problems? Complaints that you obviously have not done so are not just “angry words”.


Pham Binh April 4, 2013 at 3:06 am

No harm at all.

That wasn’t his complaint.


C. Derick Varn April 4, 2013 at 12:10 am

Let’s back track again: What if Kliman is right about commodities (and having looked through Kliman’s book and verified, it looks like he is for the US in the 1970s and 1980s. Kliman doesn’t claim all economies work that way, although he doesn’t address that in that particular book. I asked him these questions personally a few months ago). I think that profitability in terms of individuals and profitability per unit are actually quite different and the reasons for that is rent-seeking and over-exploitation.


Brian S. April 4, 2013 at 7:16 pm

The discussion above seems predicated on the assumption that we have a coherent and consensual Marxist theory of the rate of profit and crisis. But we don’t. As the Roberts paper makes clear, there isn’t even agreement on the methodological issues involved in calculating the rate of profit – much less what it actually is. I wouldn’t accept any claims about the latter until I had seen the details of the methodology used to determine it.
And beyond that there are a lot of basic issues about the connection between the rate of profit and the performance of the capitalist economy that seem to me pretty obscure: is this a structural or a behavioural factor (ie is it about something like the availabilty of resources for accumulation or the proportional distribution of demand between departments or the motivation of capitalist investment decisions?); is crisis driven by the movement of the rate of profit (ie falling or rising) or by its absolute level? Whichever of these it is, why? If the latter what is a crisis-inducing level of profit (why for example, taking the Roberts data, does a 20% (but falling) rate of profit in the UK economy correspond to a deep recession , while a similar profile (and somewhat lower rate) in the period 1986-92 correspond with quite strong growth?


Trevor Konsko April 4, 2013 at 8:19 pm

There really isn’t much room for debate though, despite Roberts being charitable to the opposition. Kliman makes it very clear that the historical cost rate of profit is the most consistent with Marx’s conception of rate of profit and is the most consistent with the actual analysis done by corporations of their performance. That’s because the historical cost measure looks at the prices capitalists actually paid at the beginning of an accumulation cycle, and not what a capitalist would have paid had he bought those assets today (as is done in the opposing current cost analysis, also known as physicalism).

The long-run rate of profit is not, he argues, an immediate cause of crises but a proximate one. Crises can be caused by so-called “exogenous” factors (terrorist attacks, political changes, environmental catastrophe, etc.) or endogenous factors but it is the rate of profit that both allows for crises to occur and determines their severity. Despite a historically low rate of profit, it is possible for there to be headline growth but that growth will be limited and ultimately corrected until the underlying capital value is destroyed through crisis. Crises are never permanent but they are necessary for the restoration of profit levels.

I wrote a review of one of his academic articles that lays the foundation of the concepts he outlines in more detail in his book. The review is here:


Arthur April 5, 2013 at 5:16 am

While I agree with Kliman on rejecting both under-consumptionism and neo-ricardianism, ignoring capital gains to measure “profits” is just silly and discovering a reduction in profit rates by simply ignoring inflation simply highlights the level of silliness that can result.

BTW Marx repeatedly emphasized the importance of “moral depreciation” which directly opposes the TSSI stuff.


Brian S. April 5, 2013 at 12:00 pm

Kliman appears to engage with “moral depreciation” but I’m not sure how it affects his analysis (only seen the preview so far). I also not that unlike most previous analysts of the RoP he includes both non-financial and financial corporations: again not sure either of the rationale or the implications, but it does mean that its difficult to compare his work with other studies.


Trevor Konsko April 5, 2013 at 3:01 pm

You all are talking about this stuff like you’ve read it. You need to slow down, take some time and actually *read* what people are posting and referencing before going off on some ridiculous commentary about this or that aspect of Kliman’s analysis that you haven’t even read. You’re trying to make one measure of the rate of profit do more than it is able to do. We were talking about historical rates of profit, but different measures are used to answer different questions (as Marx did as well). Here is a draft paper from Kliman in which he goes into more detail about the methodology he uses:

Pay particular attention to part 2(c) and part 9 which covers the issue of moral depreciation. Because of the way the statistics are gathered, we are never going to get a “true” representation of net surplus value but nevertheless a very close proxy for it.


Arthur April 5, 2013 at 7:13 pm

Trevor, I agree that Kliman should be studied and responded to properly and have added that paper to my collection for future study.

Meanwhile, I have now read part IIC and quickly skimmed part IX.

Part IIC acknowledges that the sort of “profit” measures used in the paper by Robert Michaels don’t actually mean much (but claims one can talk about any measure one likes),

Part XI accurately quotes Marx emphasizing the importance of moral depreciation in the same way that the BEA does but then blithely goes on to draw the exact opposite conclusions from Marx by excluding moral depreciation instead of including it as Marx did! This can only reflect a basic misconception about value that precludes any understanding of technical change and the closely related long run tendency of the rate of profit to fall.

(BTW the latter is implicitly accepted in Solow’s neo-classical growth model though they don’t like to draw attention to it.)


Arthur April 5, 2013 at 7:44 pm

PS I’ve also read your review of Kliman. The only account of Marx’s theory of the relation between falling profit rates and crisis that I can recommend is:

I believe you would find it very intersting (and so should Andrew Kliman).


C Derick Varn April 6, 2013 at 11:22 am

That is helpful. Thanks

Brian S. April 6, 2013 at 10:42 am

Well, I’ve been reading (and thinking) about everything posted above so far and most of the links, and several other papers that I have at hand although I haven’t felt ready to invest in Kliman just yet (but have looked at the Amazon preview which covers a lot of his data and conclusions). Its just that I haven’t been persuaded by the logic. Thanks for the link to the Kliman paper: I’ll take a look and come back if this thread is still alive.


Pham Binh April 4, 2013 at 10:58 am

The PDF you provided does not grapple with the issues I raised. The “historically low rate of profit” you refer to is only historically low if you compare it to the 1963 peak as listed on p. 4. Compare it to the 1975 figure and it looks high.


PatrickSMcNally April 3, 2013 at 7:54 pm

There seems to be a tendency to blur the differences between aggregate profit, rate of profit, and overproduction. A decline in the rate of profit should really be measured in relation to individual goods. As less labor goes into making the same kind of item such as had been required a century ago, the profit off of the production of each such item declines. That need not mean a fall in aggregate profit. If production rises steeply enough, there may be a large increase in aggregate profit which occurs alongside the decline in the rate of profit on individual goods.

Still, overproduction and a decline in the rate of profit together do pose a challenge to the legitimacy of capitalism. All of the classical arguments as to why capitalism is a superior economic system have been based on the claim that capitalism is best able to increase production and thereby outperform every other economic system. When overproduction strikes together with a decline in the rate of profit this does not automatically undercut the aggregate profit. What it does do is it starts to force capitalist enterprises into directions which do not involve increasing production as a way of maintaining profits. That contradicts the most legitimizing argument in support of capitalist economy.

I agree that we should probably not expect any revolution to occur for a few decades at least. The US population has experienced many relative comforts in the last 6 decades. Even when many workers clearly have much to complain about one can easily run across the attitude of “Aren’t we lucky that we don’t live in Mexico?” Things like this are often invoked as an argument by many people, not just a few straight white male labor aristocrats. To be fair, there is some truth to the argument. Many Mexicans really do have more crappy conditions than what a majority of USAians get. Although living conditions have grown more unstable in the last 4 decades, they still have not fallen through the floor.

But that doesn’t mean that socialists should be waiting for some more optimal time of the future before presenting a message. The reason why I was willing to drag myself to the polls and write in Jerry White & Phyllis Scherrer last November was because I mostly approved of the message which they had spent time carrying around to people. For a potential Left to ever emerge, it is necessary that socialists should actively seek to present their message to workers without having any illusions that a mass of workers are suddenly going to jump on board tomorrow. If a socialist party resolves to wait until the workers are ready to revolt before it goes out there to show its wares, then that will be too late.


negative potential April 4, 2013 at 4:57 am

Richard Seymour, being insightful as usual:

“In the ‘fundamentalist’ version of this theory, the successive stages of capitalist development show a marked tendency to ‘sharpen’ crisis tendencies; the ‘resolution’ of each crisis, unless it involves a truly cataclysmic destruction of capital, merely stores up more pathologies. At last, the concept of ‘crisis’ is stretched so that it comes to cover a certain stage of capitalist development. The whole system, since a certain threshold, has been in a permanent state of crisis.

“Such an approach occludes what is truly relevatory in Marx’s account of crisis, which is that permanent crisis tendencies are part of the system’s health and its dynamism. Of course there will be symptoms of ongoing crisis while the system is booming! Of course it will be rotting away in parts even while it is engorged, hypertrophic, in others! Subsuming long periods of reproduction and growth into the concept of crisis erases its specificity. Linked to this approach, sometimes, is an economistic reflex according to which the resulting class struggles erupt first on the terrain of industry, the direct capital-labour relation, which then results in a straightforward feedback from an economic crisis into a generalised political crisis of the system. The result of such an approach is that, when a real crisis does occur, far from preparing one adequately to act on it, it produces an apocalyptic complacency”


Matthijs Krul April 4, 2013 at 1:40 pm

Yeah, I agree with comrade Seymour on that.


Ross Wolfe April 4, 2013 at 10:48 pm

Seymour’s observation about the kind of “apocalyptic complacency” that is bred by repetitive, cyclical crises is fairly accurate, I’d say. Another way of putting it would be “the normalization of catastrophe.”


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