[Marxism] Financial crisis not related to overaccumulation

Louis Proyect lnp3 at panix.com
Mon Dec 8 12:46:12 MST 2008

(Interesting piece by Spiked online's token Marxist)

Living Marxism
James Hartfield December 2008

One of the stranger sights in today’s banking crisis is the sudden 
popularity of Karl Marx. The Manifesto is flying off the shelves, and 
business execs are boning up on Marx’s crisis theory in much the same 
way that they used to lap up Sun Tzu’s Art of War, or parrot Heraclitus’ 
saying that there is nothing permanent but change.

Today’s economic dislocation, though, does not correspond to the crisis 
of overaccumulation that Marx explained in the third volume of his book 
Capital. Marx’s analytical reconstruction of capitalism was made at a 
time of great forward momentum in industrialization, made under the 
discipline of what he called the ‘capitalist mode of accumulation’.

Abbreviating his argument, we could say that Marx anticipates that as 
capital accumulates, non-productive investment in ‘dead labour’ 
(technology, raw materials, plant and so on) tends to crowd out 
investment in ‘living labour’. But ‘living labour’ is the only source of 
new value. When capitalists replace workers by machines they kill the 
goose that lays the golden egg. The consequence is a crisis of 
overaccumulation as the investment in capital leads to falling profit 
rates, which in turn results in a contraction of investment, and then a 
recession and the destruction of capital.

Capital, Volume III was of interest to me and my comrades in Britain in 
the 1980s, since we (rightly, I think) saw the economic crisis that had 
begun in the 1970s as a crisis arising out of overaccumulation, along 
the lines that Marx had set out. All around us, capitalism was clearly 
in crisis. But Marx’s explanation was such a threatening proposition 
that all intellectual work was dedicated to showing that on the 
contrary, capitalism was the only viable way of organizing production. 
Nowadays there is more of a tendency to exaggerate the crisis 
tendencies, and the collapse of capitalism is announced on a regular 
basis since the 1988 recession, or the 1998 difficulties in East Asia 
and Russia, the dot.com collapse in 2001, and so on.

People forget, though, that it was quite exceptional back in the 1970s 
and 1980s even for those who called themselves Marxists to insist on the 
rightness of Marx’s theory of overaccumulation. In fact, the ‘Marxists’ 
for the most part used up a lot of time trying to show that Marx was 
wrong about overaccumulation, or even that he never said (or meant) what 
he wrote in the third volume of Capital.


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