The Economic Crisis: A Marxian Interpretation

Abstract

Like most capitalist crises, today's challenges economists, journalists, and politicians to explain and to overcome it. The post-1930s struggles between neoclassical and Keynesian economics are rejoined. We show that both proved inadequate to preventing crises and served rather to enable and justify (as “solutions” for crises) what were merely oscillations between two forms of capitalism differentiated according to greater or lesser state economic interventions. Our Marxian economic analysis here proceeds differently. We demonstrate how concrete aspects of U.S. economic history (especially real wage, productivity, and personal indebtedness trends) culminated in this deep and enduring crisis. We offer both a class-based critique of and an alternative to neoclassical and Keynesian analyses, including an alternative solution to capitalist crises.

Keywords:

• Capitalist Crisis
• Exploitation
• Keynesian Economics
• Neoclassical Economics
• Marxian Economics

Notes

¹Perhaps Joseph Stiglitz is the most important and best-known macroeconomist arguing that unfettered markets yield cyclical crises. The animal spirits argument first appeared in Keynes (1964, 161); it refers to how the expected yield of business investment in relation to its cost is “determined by the uncontrollable and disobedient psychology of the business world” (317). Everything and anything shapes “business psychology,” hence the central causal role of “animal spirits” in governing capitalist investment behavior and why it fluctuates. This kind of argument is nicely summarized and extended to today's economic world in Akerlof and Shiller (2009).

²To avoid ambiguity about what we mean by “connect,” we do not aim to reduce capitalist crises to an underlying class cause. We reject essentialist explanation of all kinds, Marxian or non-Marxian. Rather, we wish to add class as one of many contributing and interacting causes of economic crisis; in this we are mindful of the exclusion of class from most other analyses of the crisis.

³These are average annual growth rates calculated from the data described in the note on sources. The growth of real wages and productivity is calculated from 1890 to 1978.

⁴The term “intangible asset” is taken from Teece, Pisano, and Shuen (1997, 521). The authors present a view of the importance of corporate management—in our Marxian terms, a subsumed class of corporate managers—in shaping (overdetermining) the present and future profitability (surplus value) of enterprises.

⁵In Marxian terms, U.S. industrial enterprises (in steel, autos, rubber products, and electronics) were losing superprofits to foreign competitors. This reduced available supplies of surpluses to capitalists in these industries while surplus demands rose.

⁶It is worth quoting in some detail the findings for the changing U.S. income distribution from 1917 to 2007: “The overall pattern of the top decile share over the century is U-shaped. The share of the top decile is around 45 percent from the mid-1920s to 1940. It declines substantially to just above 32.5 percent in four years during World War II and stays fairly stable around 33 percent until the 1970s … After decades of stability in the post-war period, the top decile share has increased dramatically over the last twenty-five years and has now regained its pre-war level. Indeed, the top decile in 2007 is equal to 49.7 percent, a level higher than any other year since 1917 and even surpasses 1928, the peak of the stock market bubble in the ‘roaring’ twenties” (Saez 2009, 2). Income is measured as the sum of all market incomes, including realized capital gains and gross of income taxes. “Top decile” refers to families with an income of more than $109,600.

⁷That is, in Marxian terms, not only to arrest the drain of surpluses to foreign competitors but also to go on the offensive and gain superprofits from them.

⁸Still another and different step might involve surplus producers—wherever located—put into the position of first appropriators and distributors of surpluses wherever produced. In other words, instead of surplus production and appropriation occurring in one space—the individual enterprise—they may occur in different spaces. In more centralized arrangements, surplus labor appropriation could be aggregated across various or all surplus-producing units. In the latter arrangements, the collectivity of workers who produce the surpluses would be the first appropriators and distributors of surpluses aggregated across these operating units. We have worked out the social conditions for these various form of appropriation and distribution in our Class Theory and History (Resnick and Wolff 2002, 16–20).