One of the key elements in holding up consumer spending – and therefore sales and profits – in the USA has been growing house prices. The growing nominal value of housing has led to a widespread phenomenon of remortgaging, i.e. borrowing more to keep up annual family incomes. This cannot continue for much longer. The signs are already there that we are close to the limit.

Capitalism in the advanced capitalist countries is becoming ever more based on finances and services. The idea is that the actual production of real goods can be done in less developed countries where labour costs are much cheaper. For this to work, the consumer boom in the West must be maintained permanently, otherwise who will buy the goods? Can this be maintained in the long run?

After Hurricanes Katrina and Rita have ravaged the US coast of the Gulf of Mexico, does the fast-rising oil price presage a worldwide economic recession? The track record of oil shocks is indeed close to perfect. In the case of the US, each of the previous three oil shocks was followed by recession.

Official figures reveal that US corporate profits as share of GDP have moved up from lows in 2001 to reach near record levels in 2005. But if you look over the much longer term, US profits are still below the levels achieved in the 'golden years' of capitalism back in the 1960s. The steady decline of the ability of capitalists to extract profits from their workforces is revealed even more clearly when we look at the profit figures before tax.

Marxist economics answers the question ‘how did the many start poor?’ with an analysis of primitive accumulation, the historical process of the dispossession of the toilers from the means of production and creation of a propertyless working class. We then go on to explain capitalist production as the production not just of commodities, but also of rich and poor. Reproduction is the reproduction not just of factories and offices, but of the capitalists who own them and the workers who labour in them.

The socialist calculation debate is usually regarded as beginning in 1920 with a challenge to the socialists thrown down by the right wing Austrian economist von Mises. He opined that rational economic calculation would be impossible in a socialist commonwealth. Unfortunately, the socialists who took up this challenge did not, with the sole exception of Maurice Dobb of the British Communist Party, regard themselves as Marxists.

When Meghnad Desai comes to discuss this aspect of Marx’s work, this is the area where his ‘equilibrium’ interpretation of Marx’s economics leads him most seriously astray. He seems to imply that Marx can be used to defend the idea of the long-term survival of capitalism, which is something alien to Marx. It is also an oversimplification of what Marx said.

Economists, with outstanding exceptions such as Marx, have usually set out to glorify capitalism. They tend to conclude that it will automatically produce full employment and increasing prosperity – so long as nobody messes about with its workings. That is the outlook of monetarism. But Marxists believe that Keynesianism doesn’t work either. It doesn’t work because capitalism can’t be made to work. The problem of capitalism in crisis is not just a matter of inadequate demand - of markets - it’s a problem of profitable markets.

Meghnad Desai has published a book, Marx’s Revenge in which he poses a fundamental question for Marxists – could capitalism go on for ever? The short answer to this is that capitalism will last until such time as it is overthrown through socialist revolution, conscious action by millions of people. So the question needs to be reformulated: is socialism on the agenda? If capitalism is a flawed system, as we argue, then it will offer endless opportunities for its overthrow. Desai, on the other hand, seems to argue that a crisis-free future is possible for capitalism. Talk of socialism is therefore premature. Mick Brooks argues the case for socialism in the twenty-first century.

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