Book exposes falling rate of profit while protests threaten economic-political system
This month marks the fourth anniversary of the start of an economic crisis that almost brought down the world financial system, and with that, the whole capitalist system. People in the U.S. and most other countries are still suffering in the aftermath. In spite of, or because of, this hardship, new challenges to capitalism have broken out around the world in the form of mass protests and revolts.
What can we understand about the current state of the economy? Can that knowledge help those who are challenging the system?
In the U.S., although the crisis-triggered recession ended two and a half years ago, it was not followed by the usual upsurge in economic activity. On the contrary, sluggish economic growth has now become “the new normal.” As a result, millions of Americans are unemployed—including young people, who, even if they enter the job market with a college degree, have difficulty finding a job. From the beginning of 2007 through the third quarter of 2011, employment among all people over 25 years of age (which includes retirees) fell from about 65 to 61 percent; for people from 20 to 24 years old, it fell from about 69 percent to 60 percent, a much steeper drop (figures from the U.S. Bureau of Labor Statistics). Nor do middle-aged people have much chance of re-employment once they are laid off.
Overseas, the governments of Greece other euro zone countries still totter on the brink of collapse, and not only in countries with the weakest economies. Even those governments without massive debt problems lack the revenue to operate because without economic growth, there is insufficient tax revenue to sustain social services, education, etc. Austerity is not simply a right-wing political choice or a solution imposed by heartless lending institutions.
Today’s headlines decry the lack of recovery in the rate of growth or any prospect for so-called full recovery (the old normal) any time soon. The facts being reported echo those presented in the new book, The Failure of Capitalist Production: Underlying Causes of the Great Recession by Andrew Kliman. In the book, Kliman demonstrates empirically the strict relation between a persistent fall in the rate of profit (return on investment) over the last 50 years, and low rates of investment (the basis for growth). The relation may seem intuitively obvious—you can’t invest what you don’t have––yet it is disputed by many so-called Marxist economists, whose views are dissected in the new book.
The explanation that a persistently low rate of profit underlies the crisis and current state of the economy is also contrary to the popular notion that the problems are primarily due to powerful, greedy people who unfairly skew the distribution of supposedly plentiful income. This idea fails to take account of the fact that “greedy capitalists” are only what Karl Marx characterized as “personifications” of capital’s drive to expand and to increase its rate of profit, not individuals exercising their own free choices. The distinction is like that between the characters in a play and the actors playing the roles. Capitalists are real people, but if they don’t play their roles in the interests of the system, they are simply swept away by others who do. As long as the fault is placed on individuals, then it appears as if the problem were political rather than systemic, and can be solved by different power-relations among people in order to “manage” capitalism better.
Thus, both those economists who are invested in this system, and the populism coming from people who denounce Wall Street’s “greed,” try to explain the continuing recession-type conditions without facing the fundamental fact that this system is incapable of functioning for the benefit of most people. They fail to reach Kliman’s revolutionary conclusion that the facts and figures point to a need for an entirely new, human-based economic system to replace capitalism altogether.
Protests Erupt Around the World
Yet even as some left activists and theorists mislead and misdirect discontent by focusing on the distribution of income rather than on the inherent drive that impels the system to act in its own interests, the whole world seems to be challenging existing economic, political, and social relations. Millions of people are demanding better explanations and more radical solutions than merely tinkering with what exists.
In just the past few months, protests and revolts have multiplied. Their targets include economic hardship, political corruption and repression, racism and sexism. It is impossible to say how many of these protests and revolts were triggered by continuing hardship following the economic crisis, but there is no doubt that many are challenging the worldwide economic system.
We’ve seen increasingly large demonstrations in Egypt, where the ongoing “second Egyptian revolution” (the first one felled Mubarak’s government in February—see various WSS articles) has brought continuous protests in Tahrir Square since November. These protests seek not only to oust the military rule that replaced the dictatorship, but also to create jobs and establish human rights. The most amazing protest took place December 20, when tens of thousands of women demonstrated against the military’s use of force to suppress discontent, including its physical attacks on women demonstrators. Images of military men beating and dragging a woman whom they stripped, exposing her underwear, set off a rallying cry that is continuing at daily “blue bra girl” demonstrations.
Also this month, the largest protest demonstration in many years took place in Russia on Dec. 10: see the story by Alexsandr Buzgalin below. Then an even larger one took place on Dec. 24, on the twentieth anniversary of the fall of the U.S.S.R. and its so-called Communism. Tens of thousands marched in Moscow and other cities around the country. The protests began over fraud-tainted parliamentary elections held Dec. 4, but the participants loudly demanded the end of the Putin government altogether, even as Putin plans to extend his 12-year-long iron rule in an upcoming presidential election. The protests forced the regime to release Aleksei Navalny, a popular anti-government blogger, and Putin’s re-election is no longer certain.
This year, grass-roots protests have erupted throughout China over pollution, corruption, and government appropriation of land and resources. In December, the villagers of Wukan in southern Guangdong province chased out its officials and held the police at bay for more than a week. They were protesting the death of activist Xue Jinbo while he was in custody for his role in earlier demonstrations against the local officials’ seizure of farmers’ land for profitable development. The villagers’ takeover and blockade of the town won some preliminary concessions to their demands for the release of other jailed protesters and return of their land.
Mass struggles against austerity measures in Europe continue daily, as the working class fights capital’s drive for concessions. Demonstrations in Syria and other countries in the Middle East and North Africa continue, against tremendous odds and with many thousands having been killed this year. It seems that the “Arab spring” uprisings have inspired people everywhere. The Russian protesters call their demonstrations “Russian winter.”
MHI challenges the left to aid these movements in the realm of theory, and to prepare to aid American workers who join the battle here. We think it can do this by understanding the facts and figures about capitalism today, exposing the inadequacy of and harm done by popular falsehoods and intonations to “just do it,” and working on theoretical preparation for a post-capitalist organization of society.
Occupy Wall Street: The Problem is not Unfair Distribution of Income
Here in the U.S., the Occupy Wall Street phenomenon has spread like wildfire since it began in New York City in September, although its demonstrations are much too small to put a serious dent in the status quo. Most notably, some Occupies on the West Coast have made links with workers’ struggles and not only staged protests and provided strike support, but have closed down entire ports in one-day strikes. This gives us hope for a workers’ movement to develop as well.
We are happy to see protests against a major characteristic of our society–– injustice, but we are concerned that the means and ends of the Occupies, at least in New York, seem to range from beating drums and blocking traffic to attempting through direct democracy to build a new society in the interstices of the old one (“we are living our demands”). The dominant theoretical basis appears to be a presupposition that the problems of this society can be solved by changing the political process so as to enable the “99 percent” to make the decisions.
In addition to the obvious problem that the “99 percent” don’t agree on what should be done or how to do it, this view relies on a political solution which ignores the economic realities of the need to produce food, clothing, etc. for everyone in the world. The prevalent view in Occupies is that poverty conditions arise from unfair distribution of wealth, but as Marx showed, distribution follows from the mode of production, not vice versa. Redistribution of income, even were it possible to accomplish without bringing capitalist production to a standstill, would not result in plenty for everyone—there is simply not enough wealth for all the necessary stuff. Nor does the redistributionist view address how to uproot the exploitation that is inherent in capitalist production. In fact, exploitation is the source of inequality and misery, not the result.
We will not go into the details and ramifications of misleading theories right here. Marxist-Humanists have written and spoken about these matters extensively on this site and elsewhere. The point here is to urge people to see for themselves that The Failure of Capitalist Production unmasks the capitalist system as having proved itself incapable of bringing a decent standard of living to the world’s population. If this is the case, it gives the lie to popular left and liberal ideas that capitalism can be successfully and sustainably reformed by new regulations or new people in power, or that it can be replaced simply by everyone deciding to live as if it did not dominate our lives.
If we fail to expose the falsity of the idea that society’s problems can be solved by redistributing the alleged “plenty,” we are not helping the Occupies or other movements to grow, but on the contrary, we are contributing to their failure and demise. If we participate in them while voicing an understanding of the implications of the low rate of profit—low investment, slow growth, no way for capitalism to produce the “plenty” needed––then we are changing the terms of the discussion and opening up the prospect of movements for real change.
MHI focuses on the hard theoretical task of working out what has to be changed in order to actually uproot capitalism. We deny it can be substantially reformed through political decisions to change its practices, that it can halt the exploitation which lies at its heart and reorganize itself around goodwill toward people. Capitalism actually has nothing to do with people other than to use them as the source of value-expanding labor-power. We beg those who want to change “the system” to understand how the system operates, and to help work out the theoretical ground for building another system that is human-centered.
We are encouraged that when we brought Kliman’s book to Occupy Wall Street, some people thanked us, adding that OWS needs more information on Marxism and on the economic scene. For the first time in a long time at a protest, we talked with a number of students who are taking Marx courses and organizing Marx study groups. Perhaps the economic crisis and continuing recession-like conditions will have an upside: a renewal of interest in Marxism here, as there has been in many other countries. We hope that The Failure of Capitalist Production will initiate new discussions everywhere. That could be a step toward the Left preparing to make an actual contribution to the revolutionary process.