Is the “World in Crisis” terminal?  

Khartoum 19 December 2018

In a new book “World in Crisis”, the main contributors Guglielmo Carchedi and Michael Roberts argue for the classic Marxist account of the crisis of the capitalist global economy against its “neo-Marxist, Keynesian, Post-Keynesian and Modern Money Theory rivals”. It is a useful book that doesn’t merely assert Marxism’s debunking of its rivals but uses real world data to scientifically demonstrate Marxism’s superiority.

First, Marx has a theory of ‘crisis’ i.e. breakdown in capitalist production, explained by the Law of the Tendency of the Rate of Profit to Fall (LTRPF) and not by some combination of ‘underconsumption’, ‘overproduction’, ‘financialization’, excessive debt or inequality of income. Second, this can be put to the test of empirical evidence despite the limits of bourgeois statistics. Third, the extent of crises is international and not merely the sum of its national parts. Chapters 1&2 cover this well.

The other contributors’ work based on national and international data (Japan, UK, Greece, Brazil and China) confirms it is the LTFPF that is the explanation of the long-term decline in profits over the 20th century and the stagnation in the world economy that began with the “Great Recession” of 2008. For those in doubt, both Roberts and Carchedi are prolific writers and you can check out their body of work on their websites or blogs.

However, it’s one thing to validate Marx’s  theory of crisis; it’s another to predict whether or not Capitalism’s crisis today is ‘terminal’ i.e. whether or not the counter-tendencies to LTRPF are so exhausted that capitalism cannot be ‘saved’ by any means including the favoured candidates, the role of China in the world economy, the current fashion of Modern Monetary Theory, and/or  ‘economic planning’. 

Roberts has stated that he doesn’t think the current crisis is terminal, but Carchedi in Chapter 2 poses the question: “Capitalism will not self-destruct” but “The old is dying…what will the new be?” He does not go on to say capitalism is dying because it has exhausted nature. We argue that capitalism has exhausted its historical mission and that the destruction of nature and threat of human extinction means that capitalism is doomed unless we overthrow it and create a new global socialist society in harmony with nature.  

On the question of China

We have written about how China restored capitalism in the 1990s, and from the early 2000’s emerged as a new imperialist power. Roberts thinks that China is a ‘weird’ hybrid state because  the Law of Value operates in the private sector but is in ‘contradiction’ with state control of the economy.

Mylene Gaulard’s chapter in World in Crisis, “The Chinese Economic Crisis: A Marxist Approach clearly sees the LTRPF as causing China’s crisis which suggests that the LOV dominates despite state attempts to manage it. Nor can the rising mass of profit offset the falling rate of profit without overproduction and negative consequences for production.

We agree. Moreover, the crisis results from China’s exceptional capitalist growth and global expansion as it attempts to use the counter-tendencies to the LTRPF to restore falling profits – exporting capital to invest in cheap labour and raw materials. Therefore, while China’s road to imperialism is atypical, its capitalist laws of motion are not. Having rescued the global economy in the Long Recession, it cannot even rescue itself from terminal crisis.

On the question of Modern Monetary Theory

MMT is a trendy return to a watered-down Keynes with a few other bits to appeal to bankrupt liberal-left politics. It’s not modern then. Roberts says its origins are in Chartalism. The king guarantees the money supply just at the modern state would. MMT proposes to let governments print money and spend it without worrying about deficits and debt so long as the economy is growing faster than the money supply.

MMT is hardly a theory either because the problem it seeks to solve, lack of growth, cannot be solved by money Keynes discovered. State financed jobs and wages to stimulate demand won’t make the capitalists invest in production unless they can make a profit.  Otherwise the result is inflation as more money chases fewer goods like that which brought the end of the post-war boom and stagnation of profits ever since.

MMT theory lacks a Marxist understanding that capitalists won’t invest unless they can make a profit by extracting surplus value from their workers. MMT is similar to the failed ‘Keynesian multiplier’ (of profits), compared with what really causes profits to grow, the exploitation of labour value, that Carchedi calls the ‘Marxian Multiplier’.

The state can print money, but unless money is exchanged for commodities at their value to realise profits, the capitalist system grinds to a halt and money loses value. ‘Financialization” i.e. speculation in existing values does not create profits. Which is why so-called ‘financialization’ is no escape route out of terminal crisis.

This brings as to state planning

Since state planning in capitalist China cannot keep capitalism alive, and new fads like MMT that rely on the state to print money cannot magically recover profitability, can nationalizing or socializing capitalism without overthrowing the capitalist state resolve the terminal crisis or capitalism? We seem to have exhausted the options.

Terminal crisis means that capitalism has reached the point where the basic contradiction between its society and nature will destroy its own existence and with it, humanity. Fortunately, the proletariat (all producers of value) as part or nature can rise up and overthrow the capitalist exploiters and their state and create a workers’ state to expropriate private property and restore society to nature.

Marx understood that capitalism had the embryo of socialism within in the form of socialised production. Capital had created a collective labourer by coordinating all branches of production which was a pre-condition for actual socialism.

That is why Lenin insisted that Russia had to adopt the most advanced techniques of the Western powers to fully extend capitalist socialisation of labour as a platform to make the transition to socialism. This ‘catchup’ meant harnessing private capitalist production but under the control of the workers’ state to ensure no restoration of bourgeois rule.

The planned economy worked in Russia until it was deliberately destroyed by Western intervention, and then by the Stalinist cult of the bureaucracy which kowtowed to the peasantry to “get rich” by smashing workers’ democracy. Technically planning was always superior to the market in matching production to need.

But for that to work, workers had to be in control of the plan, voted on and corrected by workers democracy. Therefore, no planned economy can work without a workers’ state based on democratic workers councils replacing the decaying capitalist economy and state and restoring the unity of society with nature.