BOOK REVIEW: Marxism without Marx: Recent Interpretations of the Economic Crisis

Paul Mattick, Business As Usual: The Economic Crisis and the Failure of Capitalism. London: Reaktion Books, 2011.

David McNally, Global Slump: The Economics and Politics of Crisis and Resistance. Oakland: PM Press, 2011.

Not long after Karl Marx completed the first volume of Capital, he boasted to his friend, Louis Kugelmann: “even if there were no chapter on ‘value’ in my book, the analysis of the real relationships which I give would contain the proof and demonstration of the real value relation.”[1] Marx did not carry through on this suggestion, never completing the work that centered on the concept of value (the unfinished volumes 2 and 3), let alone attempting something more ambitious still. But he seemed to suggest that it was fully possible to comprehend societal reality in all its essential complexity without resort to the simplifying conventions of theory. His intriguing remarks thus serve as a vantage point from which to judge recent marxian interpretations of the economic crisis, especially ones that aim at a popular audience for whom a background in theory—marxian, economic, or otherwise—is not necessary.

Paul Mattick’s, Business As Usual, and David McNally’s, Global Slump, follow through to varying degrees on Marx’s suggestion. Each author focuses on a single, primary aspect of Marx’s theory as a means to explain the current crisis. For Mattick, the point of entry into the economy is money; for McNally, it is competition. This propels them in very different directions, largely a function of how close to Marx they remain. Mattick’s book takes the form of an extended essay that warrants close reading. McNally’s lengthier treatment is both breezier and polemical.

If Mattick only occasionally describes ideas and events by means of marxian value theory, he nonetheless takes full advantage of the ability to think abstractly about the economy. This is implicit in his use of money as a jumping off point. Money is the most mystifying, if not outrightly befogging, arena of all. Money is where the intertwining of economic categories and economic reality is so extreme that few commentators avoid slipping repeatedly from one conceptual domain to the other without a real awareness of the transgressions they have committed. In Mattick’s hands, money becomes an easily-understood substitute for what Marx, at various moments, labeled “value” or “labor-time,” albeit at an even greater level of abstraction.

Mattick is particularly interested in economists who, like Marx, form a minority current within the wider profession of economic analysis because they focus on economic crises rather than economic prosperity, attribute crises to the peculiar mode of functioning unique to capitalism alone, and who single out profit as the sine qua non of business operations. He calls our attention to economists such as Wesley Claire Mitchell and Hyman Minsky who used profits (or the lack thereof) as a means to explain the Great Depression of the 1930s and the cyclical nature of capitalist enterprising. Prior to Marx, it was J.C.L. de Sismondi, writing in the early 1800s, who identified the destabilization of the economy in the inability of the working population to consume all that was produced. Marx might not have agreed with Sismondi’s explanation (without a gap between production and consumption, profits would not be possible), but he appreciated the attempt to explain crises by looking internally at how capitalism operated as an economic system.

Mattick mentions that there have been other voices along these lines. Nonetheless, he highlights Marx, who more than anyone else focused attention on the relationship between crises and profit. The economics profession has tended towards an unending, and ultimately unsatisfying, search for factors exogenous to the industrial system to explain what goes wrong. If at one point natural disasters and agricultural productivity were resorted to as explanations for the periodic downturns and stagnation that have plagued the world’s economy, it has been the emotional habits of investors, consumers, and financiers alike that has focused economists’ attention ever since. In modern-day economics, as Mattick aptly points out, profit simply becomes one income stream among others, leading to a profound inability to see capitalism for what it is—a profit-making system that creates its own difficulties.

If Mattick leads readers to reconceptualize their understanding of economic reality, McNally approaches matters quite concretely with easily understood descriptions of the competitive process. He has us assume, as is the custom within the field of microeconomics, that the actions of a single competitive firm are indicative of business behavior everywhere. “Overaccumulation,” he tells us, “emerges at a point where, relative to demand backed by money, there are simply too many factories and too much equipment producing the same good.” Unable to sell all that has been produced and unable to cover expenses, “this is the point at which overaccumulated capital finds itself in a crisis situation” (Global Slump, p. 77). McNally echoes Sismondi, except that insufficient consumption is now generalized throughout the economy rather than attributed to the underconsumption of a particular class. For McNally, even businesses are consumers.

But where Mattick uses abstract thinking (theory) to selectively explain pertinent aspects of economic reality, McNally has no such luxury. By beginning in the concrete, he quickly becomes mired in it. McNally’s treatment of competition—the centerpiece of his analysis—is far from adequate. For one, much has been written by marxists (from Hilferding to Sweezy) and mainstream economists alike during the last century on the effects of monopolies and oligopolistic competition on price-setting, output restrictions, the predatory nature of advertising, and the manipulation of effective demand. Not competition, but the progressive disappearance of competition over time, has animated discussion. Yet, McNally’s descriptions of the overproduction of commodities fail to mention this trend.

Secondly, competition for Marx takes place on multiple levels—within specific spheres of business (of the sort described by McNally), but also between and among the different spheres of production. Each firm, no matter how monopolistic in its own arena, must still seek ways to secure a portion of the total profits that are generated in the economy at large. There need not be direct competition between producers for them to nonetheless experience the competitive effects of capitalism’s internal mechanisms. Steel makers, oil companies, and home healthcare providers all compete against one another even though none of this takes place directly. Monopolistic prices in one area of the economy, say oil production, mean that there is less left over society-wide for everyone else.

Insofar as McNally embraces what is specific to Marx (the theory of the falling rate of profit), he does so as part of a two-track explanation: “whenever both of these trends—over-accumulation and declining profitability are at work—capitalism is heading for a crisis” (Global Slump, p. 79). This is an odd way to pose the matter. For Marx, the two trends posited by McNally were actually one, since declining profitability manifests itself in overaccumulation. But the reverse is not true. Overaccumulation can be accompanied by either a falling or a rising rate of profit (and often varies, depending on the particular phase of the crisis). For Marx, it isn’t the rate of profit per se that provokes a crisis, but the insufficiency of profit, of which the rate of profit is—in theoretical terms—a shorthand means of explaining this phenomena.

Mattick, in Business As Usual, keeps these various relationships clear: the lack of profits vis-à-vis the profit needs of existing capital stands behind capitalism’s tendency towards crises. Mattick has largely accomplished what Marx indicated could be done, avoiding the terminological use of the marxian value theory without abandoning the accompanying discursive explanations.

McNally, on the other hand, doesn’t succeed because of gaps in his presentation regarding the competitive process and also in his comprehension of the marxian theorem. Theory is collapsed into reality as if they are the same entity. In McNally’s understanding, competition functions in this dual capacity, but so does the empirical rate of profit (as experienced by businesses) which is treated as if identical to the theoretical rate of profit (as posited by Marx).

Sometimes McNally gets downright psychological. The crisis cycle, he claims at one point, results from a repetition compulsion by the 1 percenters: “just as denial is unhealthy for individuals, so it is for groups and societies. To deny or repress a traumatic experience means, as Freud taught us, to invariably repeat it. And this is what global elites are in the process of doing” (Global Slump, p. 16).

For the most part, though, politics for Mattick as for McNally flows naturally from the starting points of their respective analyses. For McNally, this means the elimination of crises by restricting and counteracting the negative effects of the competitive process and the market economy. In Global Slump, McNally endorses a wide range of social movements, including regime change in Ireland, one-day demonstration strikes in France, broad-based electoral movements in Bolivia, and the formation of small trotskyist parties. In other publications, McNally offers additional recommendations—corporate bailouts, conversion programs, and even Keynesian-like stimulus packages (albeit with qualifications).[2]

Mattick puts such solutions into question. When both inflationary and deflationary policies threaten to deepen the crisis, as evidenced in the fierce disagreements among the world’s bourgeoisie over which policies to follow, governmental action of any sort—interventionist or isolationist, expansive or repressive, stimulus-oriented or deficit-reducing, or entirely inactive—becomes a hindrance to the expansion of the for-profit market economy. What’s the point, then, of intermediary measures if the world’s economy, and its attendant social systems, is already stuck in a dead-end?

It is worth reading Mattick’s account of the previous 60 years in some detail because of how he reconstructs this ongoing dilemma. The post-WWII boom, unprecedented in terms of the prosperity it brought forth, nonetheless required massive amounts of government-managed deficit spending. During the 1970s, however, government debt itself became one of the obstacles to a further expansion of the world’s economy. A never-ending process, of lurching from one economic crisis to another, came to characterize the modern era.

Piece by piece, society has been transformed—without much of any overall coordination—in order to help counteract the failing economy. Because of his focus on the reshaping of the global system currently under way, Mattick is able to inter-relate a huge number of seemingly disparate phenomena and trends. These include the quest for low-wage labor, the privatization of publically-owned assets, erratic investment behavior, and the torturous discussions everywhere as to whether it is best to enlarge or shrink government, with economists often saying the opposite of what they had said just months before.

Neither Mattick nor McNally refer to Marx’s theory of exploitation, by which employers extract a surplus over and above what is needed to recreate the material and human resources to continue the production process. That such a discussion is missing from McNally’s account is understandable since it is commodities, and not the employed, that are the focus of his economic analysis. Given the general lack of rigor in his argumentation, it’s probably unfair to even point out all that is absent in his interpretations.

Mattick, however, is more rigorous in his investigation, and it’s precisely because he raises expectations by explaining reasons, and not just effects, that one can ask more from him. For Mattick, the system has failed, and can’t be fixed, which explains why the world must change. Exploitation, though, is not among the desiderata.

Might we then conclude that the disappearance of any discussion of exploitation is one of the costs of following Marx’s suggestion of a value-free value theory? Perhaps it’s no accident that Marx never followed up on his own suggestion. If this is the case, we owe it to Mattick for showing us all that can be done in such terms.

  1. [1] Karl Marx to Louis Kugelmann, July 11, 1868.
  2. [2] See the interview with McNally, “The Global Economic Meltdown” in Sasha Lilley, Capital and Its Discontents: Conversations with Radical Thinkers in a Time of Tumult. Oakland: PM Press, 2011, pp. 102–03. Lilley seems not to notice that McNally embraces some of the very solutions she criticizes.

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