[Marxism] Fwd: Transformation and realisation – no problem | Michael Roberts Blog

Louis Proyect lnp3 at panix.com
Wed Nov 16 05:32:22 MST 2016

In my view, ‘too much surplus’, ‘disproportion’, ‘overproduction’ or 
‘underconsumption’ are not Marx’s theory of crises.  But more important, 
they are very weak alternatives to Marx’s law of profitability as an 
explanation.  They are weak theoretically and even worse, empirically 
unverifiable.  What are we measuring when we look at 
‘disproportionality’ or ‘underconsumption’?  Does consumption fall 
before a slump?  No, the evidence is clearly to the contrary, unlike 
profits and investment.  Will disproportionate investment growth 
compared to consumption lead to overproduction and periodic crises? 
Well no, as Andrew Kliman has shown for the US in his book, The failure 
of capitalist production, chapter 8.  Historically, business investment 
always grows faster than workers’ consumption – that is the result of 
capitalist accumulation.  But this does not create a chronic slump or 
permanent stagnation because investment creates its own demand 
(capitalist demand).  Indeed, investment drives the productivity of 
labour and thus drives economic growth.  The problem is when investment 
collapses, not when it grows ‘too fast’.

Everybody in Marxist economic circles seems to agree that the crises of 
the 1970s and early 1980s were the result of falling profitability 
rather than overproduction or underconsumption.  But you see, the 
argument now goes, each crisis can have a different cause because 
capitalism metamorphoses into new forms or structures (neoliberalism or 
financialisation) that change the causal contradictions.  So we are now 
being told that, because profitability rose after 2001 up to the Great 
Recession, Marx’s law does not apply and we need to consider that the GR 
was the result of either financial instability, excessive credit, rising 
inequality and falling wage share, or weak demand and secular stagnation.


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