Louis Proyect: The Unrepentant Marxist

January 16, 2013

Is Growth Over?

Filed under: economics,financial crisis — louisproyect @ 2:59 pm

(I was invited to write a short article for an Indian journal that will be translated into Hindi on the question of “Crisis of Capitalism and Challenges of Marxism”. This is what I wrote.)

The question of capitalist crisis is being posed in a manner for the core industrial nations in a way that has not been seen since the 1930s. While few would doubt the severity of the recession at its height, there has been a tendency to see capitalism as now being in the recovery phase of the business cycle. For example, the unemployment rate in the U.S. is now at 7.7 percent, the lowest in 4 years. Despite this uptick, most of Europe remains mired in Eurozone depths.

One of the key questions facing the left is the long-term viability of the capitalist system. If you base yourself on the theory that the system is governed by cycles of boom and bust, the logical conclusion one might draw is that our chances for an all-out confrontation disappeared with the easing of the unemployment picture. This coupled with the decline of the Occupy movement can give one the impression that the system has stabilized itself for the time being.

From within the capitalist ideology camp, there has been a distaff note of some significance. Nobel Prize winning economist Paul Krugman, who is as committed to “globalization” as his fellow N.Y. Times op-ed columnist Thomas Friedman, asked the $64,000 question recently: does technological advance lead to the creation of new jobs? This is the base assumption of Schumpeter’s “creative destruction”, a theory that can be described as a vulgarization of the capital accumulation cycle described in Volume Two of Marx’s Capital.

On December 9th 2012, Krugman directed his attention to the replacement of living labor by machinery in a column that he described as “an old-fashioned, almost Marxist sort of discussion”:

In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.

Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries.

Krugman posed an even deeper challenge to capitalist orthodoxy on the 27th of December in a column titled “Is Growth Over”. It referred to the research of an economist named Robert Gordon:

Recently, Robert Gordon of Northwestern University created a stir by arguing that economic growth is likely to slow sharply — indeed, that the age of growth that began in the 18th century may well be drawing to an end.

Mr. Gordon points out that long-term economic growth hasn’t been a steady process; it has been driven by several discrete “industrial revolutions,” each based on a particular set of technologies. The first industrial revolution, based largely on the steam engine, drove growth in the late-18th and early-19th centuries. The second, made possible, in large part, by the application of science to technologies such as electrification, internal combustion and chemical engineering, began circa 1870 and drove growth into the 1960s. The third, centered around information technology, defines our current era.

If this is true, then Marxism is presented by a set of circumstances that have never been seen before. When the Communist Manifesto was written, capitalism was revolutionizing the means of production everywhere.

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.

But what if the “heavy artillery” has turned into a peashooter? What are the political consequences for a social system that cannot continue to expand the needs of a growing population, especially in the developing countries? Left Keynesian economist Joan Robinson once wrote, “…the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” If working people cannot expect to be a wage slave, then what other options do they have except to confront the social system that they have made a compact with for centuries? For all of the tendencies to look at the Arab Spring as a movement against despotic regimes (and rightly so), the underlying failure of the capitalist system to provide the basic necessities of life was what fueled the revolt. When a street peddler set fire to himself in Tunisia, it was his way of saying that the system was not working for him. When a Greek pensioner took his life in front of the parliament building last year, he was making a similar statement.

With class lines being drawn more sharply than at any time since the 1930s, the Marxist left must rise to the occasion. Keeping in mind that the Latin American left led by Hugo Chavez has called for a 21st Century Socialism, we must consider what this means for revolutionaries in countries like the U.S., Germany, Britain or France. While the working class remains relatively quiescent in such countries (largely a function of the deindustrialization Krugman is concerned about), there is little doubt that struggles will continue even if they do not assume the same character they did in the 1930s. The Occupy movement was the first sign of that and we should be alert to future manifestations. The ruling class is prepared for us and we should be equally prepared for the monumental battles to come.



  1. Ok one might argue that the national unemployment rate is lower or has stabilized, but growth has been painfully slow since 2008 and I don’t see how we are not in a period of a prolonged recession. I recall hearing some pundit sometime ago say that this is the new norm. I agree with that conclusion because the problem isn’t economically per se, but with the capitalist system itself.

    Comment by Deborah Jeffries — January 16, 2013 @ 6:28 pm

  2. You ever notice that in the worst of economic times, the bourgeois continue to live the good life? That explains why the ruling class thinks the capitalist system is the best in the world as they tee off on the golf course and many other Americans have lost their jobs, become homeless and use food banks and soup kitchens to survive. What a great system, NOT!

    Comment by Deborah Jeffries — January 16, 2013 @ 7:16 pm

  3. I’ve posted a response to this article here: http://trotskyschildren.blogspot.com/2013/01/proyect-on-economy.html

    Comment by Dan King — January 16, 2013 @ 8:21 pm

  4. Revolutions are not born out of politics, but rather out of the frustration with the system. I don’t believe there will ever be a revolution or call for a system change because their are working class people who are under the misguided notion that capitalism benefits their demographic. If they took a closer look at the system, they would see that they are metamorphically slaves to their bourgeois masters.

    Comment by Deborah Jeffries — January 16, 2013 @ 10:20 pm

  5. That “heavy artillery” line is the most peculiar line in leftist literature. http://krebscycle.tumblr.com/post/11354994574/marx-opium-zetas

    Comment by rootless (@root_e) — January 17, 2013 @ 1:54 pm

  6. per IMF, 2011 growth was 1.3 % in the aging imperial powers, and 5.3 % everywhere else.

    As David Harvey says, for much of the world it is : “what crisis ?”

    Comment by purple — January 18, 2013 @ 4:55 am

  7. “technological unemployment”


    Comment by manuelgarciajr — January 18, 2013 @ 5:45 am

  8. When capitalism was young and dynamic each down turn in the business cyle led to a huge leap forward during the next upturn. Now that it is monopolised, slerotic and bankrupt each `upturn’ is but a blip in its inevitable descent into barbarism. Growth on the basis of production for profit has reached its apogee. Yes the profits of the monopolies are massive but with out a rate that equals growth then captialism becomes a zero-sum game. Every dollar in the pockets of the monopolists is taken directly out of the pockets of the workers. In any case even in the past each upturn required a sweeping away of the old political economic arrangements that had become a fetter and in the age of imperialism to clear out the old requires at the very least global inter-imperialist war. There is no new pretender waiting in the wings however.

    Comment by Rudi — January 18, 2013 @ 10:47 am

  9. “Yes the profits of the monopolies are massive but with out a rate that equals growth then captialism becomes a zero-sum game. Every dollar in the pockets of the monopolists is taken directly out of the pockets of the workers.”

    If the labour theory of value and the identity between profit and surplus value is correct then surely it was always a zero-sum game?

    Comment by Harsanyi_Janos — January 19, 2013 @ 1:02 am

  10. No Janos. If profit and surplus value were identical they wouldn’t have different names. As long as there is growth it is not exactly a zero sum game though the benefits of a growing capitalism to the working class are dubious to say the least. Massive profits may compensate the monopolies for a declining rate of profit but it doesn’t compensate capitalism as a whole which cannot survive without growth.

    Comment by Colin Broach — January 19, 2013 @ 2:30 pm

  11. Capitalism is the utopian paradise for the ruling class, as the less fortunate live in its ruins.

    Comment by Deborah Jeffries — January 19, 2013 @ 11:48 pm

  12. Really Colin: “Considered with respect to its material, profit is absolutely nothing but surplus value itself. Considered with respect to its absolute magnitude, it therefore does not differ from the surplus value produced by capital over a particular turnover time. It is surplus value itself, but calculated differently. ”


    Comment by Harsanyi_Janos — January 20, 2013 @ 12:41 am

  13. That’s a quote from old Marx himself, by the way, Colin.

    Comment by Harsanyi_Janos — January 20, 2013 @ 12:42 am

  14. […] A few months ago I wrote an article on the economic crisis for the February issue of Samayantar, a monthly Hindi journal published from Delhi that is described by its editor Pankaj Bisht as independent and left leaning. Samay means time, and antar means difference. The original article in English titled “Is Growth Over” appears here: https://louisproyect.wordpress.com/2013/01/16/is-growth-over/ […]

    Pingback by For my Hindi-reading comrades | Louis Proyect: The Unrepentant Marxist — March 21, 2013 @ 3:32 pm

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