I’m writing series of posts examining the question – what is left of Marxism, as a way to understand the world, and as a way to change it, once it is accepted that capitalism is not going to be overthrown by a working class revolution. Last time I talked about class. This post is about crisis. As before, the shorter JQ is “there are lots of valuable insights, but there’s a high risk of political paralysis.”
One of the most powerful feature of Marxian analysis is the idea that crisis is a normal part of capitalism rather than an aberration resulting from exogenous shocks. Marx asserts that crises arise from inherent contradictions in the system and proposes a dialectical account by which the resolution of one crisis produces the contradictions that set the scene for the next. That seems to me to remain valuable
On the other hand, the central point of Marx’s theory of crisis was the claim that crises would grow steadily more intense, driven by the declining rate of profit, until they brought about the revolutionary overthrow of the system. Hence, despite the short-term suffering they caused, crises were to be welcomed as steps on the path to the inevitable downfall of the system.
Once the link between crisis and revolution is abandoned, it is necessary to reconsider the whole analysis of crises. Without the declining rate of profit and the inevitable progress towards revolution, it is obvious that different crises have had different effects on class relations.
Some, such as the Great Depression, weakened the position of the dominant class, giving rise to the New Deal in the US and social democratic reforms in other developed countries
Other crises, such as that the 1970s have strengthened the dominant class. The failure of Keynesian stabilization policy paved the way for the resurgence of market liberalism, the set of ideas I discussed in Zombie Economics, most of which is online here.
The Global Financial Crisis, which initially seemed (to me at any rate) likely to bring an end to the dominance of the financial elite, has so far reinforced it, though it will be quite a while before the final whistle blows.
Standard Marxist analyses don’t deal with this very well, in my view. The tendency is always to present the response to each crisis in terms of increasing exploitation, and of papering over the cracks in a system that is doomed to inevitable failure. After three hundred years of such crises (if you start with the South Sea Bubble), it’s necessary to work on the hypothesis that crises are inherent features of the capitalist system.
The problems with the standard Marxist approach were evident in the response of the German Social Democrats to the Great Depression, which we discussed in the seminar on Sheri Berman’s book The Primacy of Politics The orthodox Marxist response, exemplified by the leading Social Democrat theorist Hilferding was that within the system, there was no alternative to ‘sound finance’. The revisionist Swedish Social Democrats weren’t so constrained and produced a response that was social democratic in the modern sense of the term.
Closely related is the question of what, if anything, can and should be done to stabilise the capitalist economy. The orthodox Marxist answer, it seems to me, is the same as that of classical economics, namely “Nothing”. By contrast, I read the historical evidence as showing that the system can and should be stabilised to a significant extent, as was done during the postwar decades, using Keynesian macroeconomic policies and tight regulation of the financial system. Obviously, those policies broke down in the late 1960s and early 1970s. On the other hand, the limited resort to Keynesian methods in 2008 and 2009 did prevent complete collapse of the system.
As I argued in Zombie Economics, the most promising route forward is to redevelop Keynesian economics in a way that overcomes these failings. That’s not a strategy with a guarantee of success, but it seems more hopeful than any alternative, and certainly better than standing by and restating the obvious fact that crises are part of the system.