Not explaining the crisis

David Osler reviews Chris Harman's 'Zombie capitalism: global crisis and the relevance of Marx', Bookmarks, 2009, pp401, £16.99

Ever even heard of the Okishio theorem? Understand the maths behind it? Could you outline the temporal single system interpretation to a workmate after a couple of bevvies? If not, don’t beat yourself up about it.

Marxist economics is increasingly becoming a specialised terrain, with perhaps only a handful of academics truly on top of recondite developments in the field. Even for those with some undergraduate-level training in mainstream economics, it can be hard work to keep up. That must be counted an ironic fate for an analysis intended by its founder to become the common-sense explanation of capitalism for hundreds of millions of working class people.

To the best of my knowledge, there is no one, single, up-to-date volume that convincingly puts across this set of ideas in a manner accessible to the average activist. Chris Harman - who died only last month in Cairo, aged 66 - presumably intended what will be his last ever book to fill this very real gap.

To some extent Zombie capitalism pulls off what it was designed to do. But that has to be said with a couple of major qualifications. For a start, the work is 100% grounded within the so-called ‘IS tradition’ of the British Socialist Workers Party and its predecessor, the International Socialists.

Sure, all revolutionary socialists defend their ideas against allcomers. But, in so doing, Harman builds on an intellectual framework that no other current on the international revolutionary left will find satisfactory. What is being offered is not a broad introduction to Marxist economics, but a quite specific introduction to one possible take on Marxist economists.

Secondly, and more importantly, the central argument of the book - that capitalism has been stagnant in recent decades, thanks to a long-term trend for the rate of profit to fall - is at best too simplistic, and may even be just plain wrong.

Let us quickly look at some of the other literature. There is much by Marx himself, and every socialist should make an effort to read it. His pamphlets Wage labour and capital and Wages, price and profit should be comprehensible to most educated people. Capital is a three-volume masterpiece, but is not exactly an airport novel in terms of readability.

However, capitalism has changed hugely since 1883, and prevalent economic theory has moved with it. There are entirely new questions Marxists must answer. It says much that the text still touted as the standard way in to more contemporary issues is Paul Sweezy’s The theory of capitalist development: principles of Marxian political economy, first published in 1942. Manifold theoretical flaws notwithstanding, it does cover many of the key debates up until that point, and in a well-written manner. But 1942 was an awfully long time ago.

Ernest Mandel’s 1962 effort, Marxist economic theory - a strong influence on me when I first became involved with the far left - scores over Sweezy in terms of depth. But it too can represent heavy going, and again, it is obviously outdated.

What is needed now is a new version of John Harrison’s Marxist economics for socialists, which is comparatively recent - if that can be said of a book penned in 1978 - and aimed squarely at beginners. It is pretty basic and thankfully slim, but in this instance, more is less. Somebody should reprint it.

This brings me to the output of Harman, who until his passing stood all but alone as an Anglophone populariser of Marxist economics. His last substantial venture in this respect was Explaining the crisis: a Marxist reappraisal (1984). Indeed, it is probably fair to describe Zombie capitalism as an updated and expanded version of that earlier book. There is considerable overlap in terms of content, so I will skip the critique here.

If you do buy Harman’s latest effort, what do you get for your money? (Oh, and on the subject of money, it is over £4 cheaper on Amazon than it is in the Bookmarks shop.) Well, almost two-thirds of what you are shelling out for is a crash course in Marxist economics, as understood by the IS tradition. You may, or may not, have heard it all before.

We kick off with a rapid-fire run-through on the nature of commodities, use-value and exchange-value, the labour theory of value, exploitation, surplus value, accumulation and competition, and the rate of profit. While this material will not challenge anybody with a pre-existing understanding of Marxism, I suspect that the pace of the exposition alone would make it quite hard for someone coming across these concepts for the first time.

After that, there comes a summary of the mainstream objections to these concepts, which are swiftly rejected, followed by explanation of capitalism’s crisis-prone character. This, for Harman, is based on the tendency of the rate of profit to fall; everything after this point is by way of a series of footnotes.

Such a position has clear advantages if you are trying to come up with a line for an outfit like the SWP. It is a one-size-fits-all stance that can rapidly be picked up by the averagely bright middle cadre, and relentlessly hammered home at every opportunity.

Marx, of course, did postulate what has become known in the jargon as the TRPF. But a tendency is only a tendency; Marx himself listed numerous countervailing tendencies, which can and often do completely counteract any fall in profitability. These include increasing working time, cutting wages and productivity gains in the consumer goods sector.

What Harman has to show is that TRPF analyses can validly be erected as a monocausal reason for the gyrations of capitalism since Marx’s death. He may just about be able get away with it, but only because Marx nowhere lays out his own developed theory of capitalist crisis.

As many other writers have pointed out, Marx points to numerous other considerations. One alternative argument within Marxism is known as ‘underconsumptionism’, which is the claim that crisis can be driven by a shortage of effective demand on the part of the working class. Other writers have looked to the lack of balance between production and demand in the output of consumer goods and the output of capital goods, a stance dubbed ‘disproportionality’.

The common mistake of proponents of all three positions is that they arbitrarily separate factors that are organically linked in capitalist production itself. As Marx himself explicitly stated, an explanation of capitalist crisis must take into account both problems resulting from the TRPF and those of the realisation of surplus value.

To understand what is going on in capitalism at any one time, you need to know a heck of a lot more than what is happening to the rate of profit. As Mandel puts it, “The capitalist mode of production is both generalised commodity production and production for profit by firms operating independently of one another. It cannot be the one without the other.

“It is both a system oriented towards the production of a growing mass of surplus value (of surplus labour) and a system in which the real appropriation of this surplus value is dependent on the possibility of actually selling commodities, which contain this surplus value, at their production prices (returning the average rate of profit) or at prices permitting the realisation of super-profits. Any other interpretation of the capitalist mode of production dispels one of the intrinsic structural characteristics without which it would no longer be capitalist” (E Mandel The second slump: a Marxist analysis of recession in the 70s London 1978, p166).

TRPF can also be challenged empirically. Inconveniently for us, economic statistics are not collected by Marxist categories. It is by no means clear that the rate of profit has consistently fallen in the long term. There are plenty of calculations available, from far-left sources and investment banks alike, that in the 2000s the rate of profit was moving upwards. Such a critique is particularly associated with Permanent Revolution, the British-based orthodox Trotskyist group, and I tend to sympathise with it. But the debate is beyond verification unless the two sides can agree a methodology.

Now back to the rest of the book. The opening decades of the last century, of course, saw the replacement of the free-market capitalism of Marx’s day by the new phase of imperialism, as theorised by a number of leading Marxists of the time. That much is uncontroversial on the far left.

But chapter four presents the SWP’s idiosyncratic line on this debate, based on an over-literal reading of Hilferding and Bukharin, from which much else about its politics flows. Insistence that the state and capital have - at least in all major countries on the world stage - fused into single ‘state capitalist trusts’ is essential to the bulk of SWP theory, not least Cliff’s arguments about state capitalism and Kidron’s notion of the permanent arms economy. This is another case of conflating an undoubted tendency with concrete reality.

Multinational capital can and does have relationships with many states. Harman seemingly wants to pretend that globalisation did not happen, because it does not fit his predetermined framework. The wilder claims that we now live in a borderless world for capital, so fashionable only a decade ago, clearly were exaggerated. But the last period undeniably did open major new possibilities for capital on a global scale.

For the IS tradition, economic change in the former Stalinist states was a straightforward shift from one form of capitalism to another. But the rest of the Marxist left looks at the same picture and sees a massive ingress of cut-price labour-power - and vast quantities of accumulated dead labour - now available for capitalist exploitation for the first time, with all that implies for the organic composition of capital.

Part two of Zombie capitalism gives us a potted history of the major economic trends of the mid-20th century, including the great depression, the long boom and the return to instability from the early 1970s. Again, these chapters will be useful for some, but those who have heard the arguments before might as well skim-read these pages. So far, so Explaining the crisis.

The real meat of Zombie capitalism comes in part three, which examines the current capitalist downturn. Harman traces the rise of finance as “privatised Keynesianism” - the felicitous phrase was coined by Riccardo Bellofiore - and its role as the driver behind the debt bubble in the lead-up to the events of the last two years. In SWP terms, the permanent arms economy was supplemented by a temporary debt economy.

Harman hedges his bets on the immediate outlook, in one paragraph reminding readers darkly that “the system was only able to recover from the crisis of the inter-war years after a massive destruction of value through the worst slump capitalism has ever known followed by the worst war”.

In the next, he leaves himself some wriggle room, insisting that he is not predicting endless slump. Future bubbles and periods of rapid growth are described as likely, if only as a prelude to further crises. “And the consequences will not only be economic,” he contends in the final sentence of the book’s key chapter. Meaning what, exactly?

Chapter 12 comprises a bolted-on nod to environmental concerns, perhaps reflecting the SWP’s only recently discarded obsession with ‘the movements’. They are presented as a new set of limits to capital, and some of the points raised are moderately interesting. But chapters 13 and 14 are there to rally the troops. The working class can put a stop to capitalism, we are reassured. But most of us knew that anyway.

What to make of the work as a whole? Zombie capitalism is an honest attempt to argue an internally coherent set of ideas, and nobody is complaining about that. It is as good as any roughly equivalent title, better than some and as close to well written as the subject matter allows.

The practical conclusions - whatever the basis on which they are reached - are ones that any socialist would be able to support, if at a high level of generality; yes, we do need a better system to replace capitalism. But we did not need to read a 350-page book to tell us that. In short, the book is disappointing, rather than actually bad. The space is still there for some author to do a better job.