The logic of Marx still wins the battle

The Stubborn Spectre Still Haunts: Marx's Logic Won't Go Away

[My warmest thanks to Ed George for his translation to English of my 
original essay, which had been written during February, 2003.  

Ed's work did not consist of an easy version of the original in 
Spanish (but is a good translation ever easy?).  

With my full agreement, Ed also enhanced some paragraphs, supressed 
superfluous material, suggested versions for a good title in English 
(out of which I concocted the Frankestein which heads these lines), 
and even provided accurate footnote quotes for some statements!  

I can't but feel that this essay, in the English version, has been 
the product of collaborative work between Ed and myself. 

Of course, I am still the only one to blame for any mistakes or 
shortcomings.

N. G., April 16, 2003.]

I

It is now nearly 130 years since Karl Marx argued that the creation 
of a growing mass of population unable to guarantee its means of life 
was the natural law of population of the capitalist mode of 
production. [1] Alongside this affirmation he put forward its 
corollary: that the capitalist mode of production would generate the 
conditions of its own suffocation by bringing about a fall, over the 
long term, of the rate of profit. [2]

Both laws arose, in his analysis, from the irresolvable contradiction 
between the rates of increase of the capacity to produce and of the 
capacity to consume, in turn the expression of the _fundamental and 
inexorable_ contradiction between the increasing socialisation of 
_productive activity_ and the growing private appropriation of the 
means of production (and, as a consequence, of the _product_ of 
social activity as a whole by the owners of the means of production).

For decades, capitalism's defenders would point to the statistics and 
revel in the failure of these predictions to be fulfilled. 
Triumphant, they concluded that if the tendencies predicted by Marx 
could not be observed in the 'more mature' capitalist countries, what 
Marx had put forward was in its entirety without foundation. But in 
fact they forgot that in limiting their observations to these 
countries alone they were committing an unforgivable and foolish 
scientific error. The capitalist system must be considered on a world 
scale; and, if it is, and we see what has really taken place, it l
ooks as if Marx (as we shall see below) had more right on his side 
than all of his would-be gravediggers put together.


II

We could summarise the twentieth century as that period of human 
history in which the bourgeoisie, struggling against the first 
attempt at a socialist reorganisation of human affairs, strove 
desperately against the realisation of these two predictions of Marx. 
And they appeared to have been successful, at least in the core 
countries, with the application of Keynesian economic measures up to 
the mid point of the 1970s.

But at that point, the automation and digitalisation of the 
industrial process - what we could call the 'electronic revolution' - 
brought about a monumental rise in the productivity of labour which, 
in only a few years, undermined the foundations of this 'pax 
keynesiana'. The powers that be found themselves faced with a choice 
between a war to the finish, or their own demise. Either they 
reorganised the planet anew according to the changing needs of 
capital, or they would find themselves overcome by means of one of 
the varies means of asphyxiation gathering on the horizon (the 
'petrodollar crisis' or 'stagflation' were but two harbingers of what 
was going to come). As could be expected, they opted for the former 
option. 

In the Third World horrendous coups d'état - like those of Pinochet 
or Videla - were fomented, or, more commonly, no less horrendous 
regimes, such as those of Suharto or Mobutu, were consolidated. In 
general, and especially in sub-Saharan and western Africa, an 
intensified drive towards recolonialisation (with, this time, the 
spoils to be fundamentally shared out between Europe and the US) was 
reinstigated, combined with a struggle, of varying success, to 
destroy the diverse nationalist or socialising regimes that had been 
springing up, exceptionally in Ethiopia, or, more generally, as a con
sequence of the overthrow of the Portuguese Salazar-Caetano regime 
and its Empire.

In the metropolis, a process of progressive cuts in the social 
benefits which had been built up with the agreement of the working 
class - within the context of competition with the Soviet Union - was 
finally set in train. In the boardrooms the great business 
strategists openly declared that countries like the United States 
suffered from a 'surfeit of democracy'. Although the first victims of 
this new wave of reaction were the British workers, over the long 
term those who most suffered in this new change of course were the 
workers in the hegemonic power itself, the United States. [3]

Finally, the Reagan presidency in the US and the Thatcher government 
in Britain found themselves acting hand in hand with a profoundly 
reactionary leap backwards in the mainstream sphere of ideology: the 
varying rubrics of 'postmodernism', 'neoliberalism', and 
'globalisation' reflected the consciousness of an imperialist regime 
faced with the necessity of unleashing a struggle for its very 
survival.

It was the moment to put the final squeeze on the Cold War, and 
finish off the Soviet giant once and for all. And thus it happened: 
the first act was the trap of Afghanistan, where the Stalinist 
bureaucracy bogged itself down up to the point at which, after 15 
years, the bitter dénouement of the drama begun with the death of 
Lenin was played out. In the Soviet Union, whatever remained of 
socialism had never recovered since suffering its first organised 
assault at the hands of the imperialist west (headed up by Hitler's 
Germany); now, after decades of bureaucratic degradation, it found 
itself grievously injured, disorientated and numbed. As the Red Army 
sank without trace in the depths of the Hindu Kush what was left of 
Soviet society went down with it.

The end of the story we already know well: at the end of the 1980s 
and beginning of the 90s the last ghostly remains of the only state 
of working-class origin that had ever existed on the surface of the 
planet finally fell. And, although it fell because of its many 
mistakes, it had already been pushed to the brink by virtue of its 
scant, if fundamental, successes.

Buoyed up by its victory (definitive beyond expectations), the 
imperialist bourgeoisie was able to whip up a spree of celebrations 
in praise of the ultimate triumph of the West in the Cold War against 
the Soviet Union. Now indeed, as the mainstream mass media would put 
it, a new period of peace and prosperity throughout the world could 
be opened up. For a whole generation, 'the fall of the Berlin Wall' 
was transformed into the triumph of freedom and democracy. The rock 
band Pink Floyd saw how their anthem _The Wall_ (in fact an 
indictment of authoritarianism in education along the lines of the 
already classic film _If..._) converted into a symbol of the fall of 
socialism. Combining market sensibility and reaction, the music 
industry sold the song in the same way as the strictures of George 
Orwell had been sold 50 years before. The received wisdom was that 
with the fall of the Wall the institutions of democracy would now be 
able to rule without fear, and the free play of market supply and 
demand would carry us all off to the realm of plenty. With the end of 
the Cold War, a time of peace without limits could begin.

But in reality the most totalitarian period in human history was 
being opened up, in which we were launched into a downward spiral of 
violence the depths of which we are still unable to comprehend: for 
the first time, each inhabitant of the planet has been obliged to 
live within the confines set by a single _Weltangschauung_, a state 
of affairs which cannot be enforced other than through the use of 
force. As Thatcher had said: 'There is no alternative.'

After eighty years of warfare, be it open or concealed, against the 
October regime, the dominant forces of the capitalist mode of 
production had finished with a political threat which was able to 
unmask the true nature of the dominant classes. Now indeed they could 
display themselves in all their magnificence and with all the true 
force of their power.


III

Throughout the twentieth century, whose central features we have just 
outlined, one of the favourite weapons of the bourgeoisie was the 
idea with which we opened this short essay: that the predictions made 
by Marx had not been fulfilled. There are many counter arguments that 
we could be put forward here, each of them equally worthy. But at 
first sight this line of argument does look incontestable, in 
particular with regard to the metropolitan world and, in part, with 
regard to the most privileged parts of the semicolonial one.

Here there had been no brake on the growth of the productive forces, 
as had been put forward by Leon Trotsky in the 1930s; the misery of 
the masses had not augmented (either in absolute or relative terms); 
neither had there been a restraint on the accumulation of capital. 
The tendency of the rate of profit to fall had not been demonstrated 
as correct.

Of course, in the background of all this stood the growing 
militarisation of international relations, the spiralling external 
debt of the countries of the third world and the proliferation of 
regimes of '_democracia podrida_', or 'rotten democracy' (as defined 
by José Vicente Rangel, current Vicepresident of Venezuela, a country 
which, from 1958 found itself faced with the dubious privilege of 
being maybe the first country to enjoy the experience of this 
particular political miscegeny). More subtly, the existential 
emptiness and meaninglessness of everyday life could not escape the 
attention of philosophers and critical theorists. But it seemed as if 
nothing of this had any relation with Marx's prognoses.

All this was to last around ten or fifteen years. Throughout the 
period opened up in 1989 the imperialist bourgeoisie, and in 
particular its North American sector, had its hands free to make and 
unmake the world to its taste. We are now in a position to draw up an 
outline balance-sheet of the new world order that we now face as a 
consequence.

Let us examine, then, for once and for all, old Marx's predictions.


IV

Let us begin with the fall of the rate of profit. Until now, the 
bourgeois economists have put it to the Marxists that in the complex 
construction of tendencies and countertendencies with which Marx had 
tried to deal with this matter there was nothing which could allow 
his suggestion of an inexorable fall to be seriously sustained. 
Carried away by his 'irrational' and 'unscientific' socialist faith, 
the great economist of socialism had abandoned his scientific rigour 
and had dared to assume as certain something which had yet to be 
demonstrated, and which, strictly speaking, could indeed neve
r in fact be demonstrated at all.

Over decades, the most carefully thought-through and complex 
arguments put forward by the defenders of Marx's thesis would run 
into this - empiricist, but apparently irrefutable - argument. There 
was not a single investigation which, dealing with a whole historical 
period, demonstrated the _empirical_ validity of this _theoretical_ 
proposition.

In a sense, this was like the 'ether wind' in Newtonian physics: 
without its discovery, without demonstrating that light could be 
measured as travelling at different velocities, the whole theoretical 
edifice faced collapse.

Until in 1999, when two French economists, Gérard Duménil & Dominique 
Lévy, analysed in detail the rate of profit by sector and branch of 
economic activity in the United States for the period opened up by 
the end of the Second World war - in economic terms fixed at 1948. 
[4]

Their empirical study led to a number of conclusions, the most 
important of which they summarised like this: 'In the early 1980s, 
the profit rate had declined to about half of its average value over 
the decade 1956-1965. Since the mid-1980s, about half of the decline 
has been recovered.' [5]

In a graph, the authors show how between 1948 and 1997 the rate of 
profit fell from an initial peak to a low point in 1956, rose again 
until 1965, although without reaching its 1948 level, and then began 
a prolonged fall to the lowest point in 1982. From this point we see 
a slow recovery.


V

The results of the study in themselves are more than eloquent. But we 
can also look at them in a different way: during the second half of 
the twentieth century, we can discern two distinct periods with 
regard to the rate of profit in the core of the North American 
economy (in turn, the heart of the world imperialist system). After a 
long and practically continuous descent, over the last two decades 
the system returned to see a rise - if a ponderous rise - in the rate 
of profit. But even so, the rise hardly came close to the values 
prevailing at the point in which the crisis began to sharpen,
 in the first half of the 1970s. It did not reach the spectacular 
values of the immediate post-War period; it did not even approach 
those of Lyndon Johnson's 'Great Society', the moment of maximum 
Keynesian redistribution associated with the period of economic Cold-
War competition known as 'peaceful coexistence'.

If we think in the cost in human lives of this recovery, we have to 
take account, as a minimum, of the effects of the 
institutionalisation of a real colonial tribute in the form of the 
excessive growth of the international foreign debt, the growing 
instability of working conditions in the very heart of the economic 
system, and, as we shall see below, the unstoppable tendency towards 
exclusion from the workplace. 

At the same time, this expansion coincided with the general 
militarisation of international relations and the existence of a 
state of permanent war, conditions which find in the current foreign 
(and domestic) politics of the United States government a fitting 
complement to the wave of xenophobia which has of late been building 
up among the peoples of Europe. To this last phenomenon has to be 
added the laboured constitution of a European military nucleus 
autonomous to that of the United States, and the frictions between 
both blocs over the mechanisms to control the strategic natural 
resources located outside of their frontiers (the case of Iraq the 
most recent - though hardly unique - expression of these 
developments).
 
Finally, in an bitter act of symmetry, now that the Berlin Wall has 
fallen, on triumphant imperialism's Mediterranean front in the Middle 
East a new Wall - much more impressive, and infinitely more complex, 
deadly and sophisticated - has been raised between the Israeli super-
ghetto and the Palestinians.  Its immediate precedent: the Wall 
separating Mexico and the United States, which began to take shape... 
around 1975!  The brave new world was "global" indeed.
 
Even this contrast alone would seem to demonstrate that Marx's 
prediction was not false. We could even demonstrate this through a 
_reductio ad absurdum_. Suppose that even by means of the measures we 
have already seen deployed over the last quarter of a century the 
imperialist world system manages, over the course of the next 50 or 
60 years, to recuperate, if not exceed, the rate of profit of the mid 
1960s. Marx's prediction was made within the scientific assumption of 
_ceteris paribus_ (all else being equal). But a rise of the profit 
rate realised by extra-economic means precisely does not 
amount to a situation of ceteris paribus. If these extra-economic 
means include the indiscriminate looting of peoples and resources on 
a planetary scale, and are confronted in turn both by a growing 
resistence on the part of those populations under attack and by a 
simple exhaustion of resources, it would seem indisputable that the 
economic system, on its own account, through its own automatic 
operation, cannot sustain the rate of profit at a reasonable level.

And _this_ is exactly what Marx had put forward: the simple 
functioning of the capitalist economy, left to its own devices (and 
this is of course the basic proposition of political economy) would 
not be able to maintain the rate of profit at a level sufficient to 
allow new investment. In this respect Keynes was right in his 
diagnosis; although now we can see that at a global level the 
solutions he put forward have turned out to be inadequate.


VI

On top of all this, the other of Marx's predictions - that of the 
'natural law of population' - is also revealed as true.

To summarise this in two lines (and suffer the consequent risk of 
being excessively schematic), the central idea is this: the 
precondition for the profitability of a mature capitalist economy is 
a constant increase in the productivity of human labour. But this 
increase in productivity must run into the problem of insufficient 
demand, since at the same time that the total physical mass produced 
increases, the quantity of human beings (again, _ceteris paribus_) 
that participate in the process of production of this mass falls. 
What results is an excess of population without which capitalism can
not function, and which, aside from short term ups and downs, grows 
unstoppably. [6]

We currently dispose of a welter of statistics from the United 
Nations which demonstrate the validity of this proposition. To the 
overwhelming mass of recent figures on the growth of misery on a 
planetary scale we can add others on the incapacity of the system to 
absorb workers or its inability to absorb them at previously reached 
levels of income (as evidenced, for example, by the economic 
supplement of _Clarín_ of today, 1 February 2004).

Here, first of all, we find Paul Samuelson painting a sorry picture 
of the standard of life of the workers of the United States. [7] 
Here, he says, there are going to be salaries at the same level as 
those of those countries to which production is currently being 
outsourced. He admits publicly (something unheard of 30 or 40 years 
ago) that 'left to its own devices, any pure market system will 
generate a considerable inequality of wealth, income and 
opportunities.' But, as luckily we find ourselves in he throes of an 
election campaign, this Democrat economist seems to be saying, he can 
recommend as a solution an intelligent and compassionate vote: 'Where 
democratic voters harbour or adopt a level of altruism, society can 
avail itself of certain useful measures to generalise, along with 
more welfare, the freedom from poverty.' But he cannot give us a 
rational economic explanation for this, for 'the outlook of business 
government in modern times is the pursuit of greater profitability at 
all costs'. How can these 'business governors' not be interested in a 
reasonable level of social cohesion? Is their behaviour, perhaps, the 
result of a malevolent virus that only afflicts the richest members 
of the North American business elite? Has Samuelson, faced with 
incontrovertible evidence that Marx's predictions have ended up being 
confirmed even in the United States, exhausted his theoretical 
armoury?

But then we turn to Paul Krugman, a soldier from the same battle and 
a combatant in the same Democrat army, who relieves public spending 
from blame: 'Even conservatives are beginning to admit that George 
Bush is not being serious when he says he is busying himself with an 
explosive budget deficit.' [8]. But Krugman, who according to what 
some say was a Marxist once (and maybe for this reason has a broader 
than average view of the behaviour of the North American 
bourgeoisie), again wriggles out of the killer question, which is 
this: if this approach is wrong, and if even conservatives admit it, 
why does Bush so stubbornly pursue it? For Krugman, not only is a 
radically distinct policy possible, it would be enough only to vote 
Democrat to get there.

To get to the heart of the matter we now turn away from the North 
American system - in which a privileged fraction of the richest 
country on earth chooses between two candidates of the ruling class 
to serve as Hegemonic Monarch of the Planet - to the Chilean Juan 
Somavía, Director General of the International Labour Organisation 
(ILO). In the same _Clarín_ supplement, Somavía, who has quite the 
look of the social democrat about him, also believes that there is a 
political way out. Hence: 'Unemployment is a Political Problem', as 
Pablo Maas's interview with him is titled. [9]

Somavía points out that, unlike in the past, economic growth is not 
bringing about a growth in employment. In fact, the growth seen 
during 2003 was accompanied by an increase in the rate of 
unemployment, which now stands, according to figures of the ILO, at 
record levels, affecting around 6,2% of the world's workforce.

Once again, the economists of the bourgeois and imperialist world 
(nobody could call the ILO, organised precisely as a kind of 'Society 
of Nations' so scorned by Yrigoyen [10] in order to oppose the Red 
International of Labour Unions in the 1920s, a workers' and peasants' 
organisation) paint a discouraging picture. The operation of the 
economy is generating an international plague of unemployment, but, 
according to the _Clarín_ article, Somavía believes that the question 
is now no longer a question 'of economic policy, but of simple 
politics.' In other words: there is nothing more for it than to say 
that the world economy, left on its own, simply cannot absorb the 
growing human mass (in excess of 500 million people) being 
incorporated into the world's labour markets for the first time. 

In a communiqué released on 22 January, 2004 the ILO is apocalyptic: 
'No country can sustain growing unemployment rates in the long run, 
because diminishing demand will at some point limit economic growth.' 
The rise in the youth unemployment rate will end up creating 'a huge 
cadre of frustrated, uneducated or unemployable young people that 
could have a devastating impact on long-term development prospects.' 
[11]

In the _Clarín_ interview, when asked 'Who is responsible for the 
rise in unemployment?', Somavía completely loses the plot. He speaks 
of 'a political problem', and 'a great agreement between the great 
developed nations and the developing nations, international 
organisations and the world of Davos, where we are speaking.' He 
declines to name names. But that is his job, to weep silent tears 
while proposing 'dialogue' as a solution.

The problem, of course, is that the necessities of the accumulation 
of capital cannot permit dialogue. They lead, instead, to a 
sharpening of competition, which in turn leads to automation, thus to 
unemployment, and, finally, to disaster. The only realistic solution 
to the problem of unemployment would be to cut the working week to, 
say, 10 or 15 hours. More workers would be able to exercise their 
skills, and everyone would have more free time. A simultaneous 
increase in incomes would generate greater demand, and everything 
would be solved.

But ...

But against this idyllic proposal stands the spectre of the decline 
of the rate of profit. The capitalists fight to raise it. They 
compete amongst themselves to supply the market. The great monopolies 
expand and deepen. The direct application of scientific methods to 
production, the incorporation of formal logic to mechanical bodies in 
the form of robots; each and every innovation prompted by the 
inexorable rhythm of productive activity drives the productivity of 
the workers dramatically upwards and demands increasingly higher 
investments of fixed capital. 

Marx, in the end, was right: there is no way out, under capitalism. 
This is why Somavía is not able to name those responsible: because, 
despite everything that was said in 1990, it is the international 
capitalist system that is really responsible; a capitalist system 
whose terminal stage is today's globalising regime, in which, as long 
as it survives, it can, like Poe's M. Valdemar, do no more than 
repeat the words 'I am dead.'

 


NOTES

[1] See _Capital_ volume 1 (Harmondsworth and London, 1976), chapter 
25 ('The General Law of Capitalist Accumulation'), passim, especially 
section 3 ('The Progressive Production of a Relative Surplus 
Population or Industrial Reserve Army').

[2] As set out in part 3 of _Capital_ volume 3 (Harmondsworth and 
London, 1981), especially chapter 13 ('The Law Itself').

[3] Of the many reasons for this phenomenon the fundamental one was 
that Europe and Japan were too close to what was still, despite its 
deformations, the heart of an attempt at the socialist reconstruction 
of human life, and it proved impossible to make excessive inroads 
into the standard of life of a working class which, on top of all 
this, in the European case had a much more solid tradition of 
struggle than that of north America or Japan.
 
[4] Gérard Duménil and Dominique Lévy, 'Profit Rates: Gravitation and 
Trends', Paris, 1999 (available at: 
<pythie.cepremap.ens.fr/levy/indexus.htm> (frames) or 
<www.cepremap.ens.fr/~levy/> (no frames).)

[5] Ibid., 1.

[6] 'The working population [...] produces both the accumulation of 
capital and the means by which it itself is made relatively 
superfluous; and it does this to an extent which is always 
increasing. This is a law of population peculiar to the capitalist 
mode of production [...]' _Capital_ volume 1, 784, and chapter 25, 
section 3, passim.

[7] 'EE.UU.: recuperación sin empleo' ['US: A Jobless Recovery'], 
_Clarín Económico_, 1/2/2003, p. 24, available online at: 
<http://old.clarin.com/suplementos/economico/2004/02/01/n-02401.htm>.

[8] 'El gasto público no tiene la culpa' ['Public Spending Is Not To 
Blame'], _Clarín Económico_, 1/2/2003, p. 10 
<http://old.clarin.com/suplementos/economico/2004/02/01/n-
01003.htm>).

[9] 'La desocupación ya es un problema político', _Clarín Económico_, 
<http://old.clarin.com/suplementos/economico/2004/02/01/n-00501.htm>.

[10] [A reference to the Argentine President, Hipólito Yrigoyen, who 
withdrew the Argentinean delegation from the Assembly of the League 
of nations on the grounds that the League, rather than being a League 
of all nations ('Una Liga de Las Naciones'), was, in reality, only a 
League of some nations ('Una Liga de Naciones'). Tr.]

[11] 'Global Unemployment Remains at Record Levels in 2003 but Annual 
ILO Jobs Report Sees Signs of Recovery', <http://www-ilo-
mirror.cornell.edu/public/english/bureau/inf/pr/2004/1.htm>.

Néstor Miguel Gorojovsky
nestorgoro@xxxxxxxxxxxxxxx

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 
"Sí, una sola debe ser la patria de los sudamericanos".
Simón Bolívar al gobierno secesionista y disgregador de 
Buenos Aires, 1822
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 



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