“Sanctions” used by U.S. imperialism against governments it seeks to overthrow, and part of its policy of enforcing and extending its world domination, are acts of economic warfare. The demonstrations in Cuba that erupted on July 11 against the Cuban government around the slogan “Patria Y Vida” (1) — country and life — illustrate this fact.
Background to the counterrevolutionary demonstrations
Since 1960, Cuba has been blockaded by the United States. According to Wikipedia, in April 1960, Deputy Assistant Secretary of State for Inter-American Affairs Lester D. Mallory wrote to his superior Roy Rubottom that the “only foreseeable means of alienating internal support is through disenchantment and disaffection based on economic dissatisfaction and hardship.” The aim would be to deny “money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.” This not only describes perfectly the policy adopted by the Eisenhower administration in 1960 but also Biden’s policy toward Cuba today.
Until the end of the 1980s, Cuba’s membership in the socialist bloc led by the USSR greatly mitigated the effects of the economic blockade. However, the counter-revolution that matured under Mikhail Gorbachev in the USSR not only destroyed the USSR as a socialist federation of Soviet Socialist Republics, it also destroyed what had been the socialist economy under construction as well. The wave of counterrevolution unleashed by Gorbachev’s policies engulfed all of Eastern Europe as well as the USSR. This capitalist counterrevolution had dire effects on the struggle of the working class, the peasantry, and oppressed people not only in the former socialist bloc but throughout the world.
The Soviet Union had been more than simply another trading partner for Cuba. The relationship between Cuba, the Soviet Union, the German Democratic Republic, and the other socialist countries in Eastern Europe contained elements of the planned international socialist economy of the future. All this had been lost by the time Mikhail Gorbachev “resigned” as president of the Soviet Union in December 1991.
The second blockade
The effect on socialist Cuba was disastrous. It was as though a whole new blockade had been imposed. Cuba was now facing a double blockade. The Cuban government called it “The Special Period in Time of Peace,” or Special Period for short. In 1994, a serious anti-government demonstration erupted in Cuba.
Fortunately, Fidel Castro was still alive and well at the time. Instead of using brute force to halt the demonstration, which would have created martyrs for the counterrevolution, Fidel reasoned with the disaffected people and mobilized the working class and the revolutionary people of Cuba against the counterrevolution. Many people who were not die-hard counterrevolutionaries — which do exist in Cuba, of course — but were simply caught up in the frustrations caused by the devastating shortages the people of Cuba faced during the Special Period were shamed. The counterrevolution collapsed before it could get started.
This doesn’t mean that absolutely no force was used in 1994 or again today. The Cuban security forces exist for a reason. In the 19th century, long before the Cuban Revolution, Frederick Engels explained to the “libertarian socialists” of that time that the working class needs the state, not for freedom but to keep down the bourgeoisie and its counterrevolutionary allies.
Only when the restoration of capitalism becomes an economic impossibility, which can be achieved only on a world scale, will the bourgeoisie die at its economic roots. When we reach this stage of development, there will be no further need for the security forces. Then all restrictions on freedom will be lifted, and the state will wither away. (2) These happy circumstances were still far from the case in Cuba when the Soviet Union and the socialist camp existed and were a thousand times further away during the “special period” that followed the overthrow of the socialist camp. The same thing is, unfortunately, true today.
Double blockade becomes a triple blockade
After the rise of Hugo Chavez and his Bolivian Revolution to power in oil-rich Venezuela, Cuba was able to develop close economic and political relations with that country, though Venezuela was still capitalist. The relationship with Venezuela in no way could replace Cuba’s relations with the Soviet Union and the socialist camp. However, Cuba’s relations with Venezuela and increasingly China, Iran, Vietnam, the Democratic People’s Republic of Korea, and now capitalist Russia did greatly ease the effect of the “double blockade,” and Cuba was able to begin attracting foreign capital necessary for economic growth in the absence of the socialist camp.
In the case of Venezuela, Cuba was able to exchange doctors, which brought health care for the first time for many poor Venezuelans, for Venezuelan oil. The U.S.-supported coup government that briefly took power in 2002 in Venezuela immediately cut off the flow of oil to Cuba. It took many months with considerable international help to get the oil flowing to Cuba again and fortunately this was accomplished.
For many years after Hugo Chavez came to power, the U.S. government, even after the U.S.-backed 2002 coup failed, assumed that the Bolivian government in Venezuela would sooner or later be replaced by another right-wing government that would end the mutually beneficial exchange of Cuban doctors and medicine for Venezuelan oil. Towards the end of the Obama administration, the U.S. government finally began to lose patience and extended the blockade to Venezuela.
During the Trump years, the blockade against both Cuba and Venezuela was steadily tightened. In addition, Trump organized another coup in Venezuela and recognized the right-wing Venezuelan U.S. puppet Juan Guaidó as the Venezuelan “president”. It would be as though the Russian government recognized Donald Trump as still being the legitimate president of the U.S. After all, Trump claims that the U.S. election results were fake and that he was reelected by a “landslide”. Joseph Biden has continued Trump’s policy regarding Venezuela where he still recognizes Guaidó as “president” while he further extends the blockade against Cuba, despite his campaign promise to ease it.
COVID-19 makes it a quadruple blockade
In recent years, Cuba has developed tourism and turned to foreign capital to develop its hotel industry. In the absence of the socialist camp, however much foreign socialists might wish otherwise, Cuba cannot develop its economy without private foreign capital. When the socialist camp did exist, Cuba had no desire to attract foreign capital. Cubans remembered the days when wealthy American tourists were entertained in luxury in Havana and enjoyed access to Cuba’s beautiful tropical beaches while most Cubans lived in misery. But after the Russian and Eastern European counterrevolutions, tourism once again became a necessary source of the dollars Cuba needs to purchase vital inputs such as foodstuffs, fuel, raw materials and parts necessary for its industry and agriculture.
Then, starting in 2020, COVID-19 all but shut down the tourist industry in Cuba as well as the rest of the world. Cuba now faces a quadruple blockade. The worst days of the Special Period returned. In addition, Fidel Castro as well as many of his comrades had since died, while Raul Castro, now 90 years old has retired as president and first secretary of the Central Committee of the Communist Party of Cuba. A new generation of leaders is now in charge under President and Communist Party First Secretary Miguel Diez-Canal. Imperialism and its Cuban counterrevolutionary allies are wasting no time putting the new leadership to the test.
Why the Patria y Vida demonstrations have been harmful to the people of Cuba and the people of the entire world
The Cuban government has done much for the peoples of the world in the form of providing doctors and medicines to countries all over the world. In the years when the Soviet Union existed, Cuba gave not only political support like it always has but troops as well to help the peoples of Africa who were fighting against U.S. imperialism and its partner apartheid South Africa. (3) These facts have forced even extremely reactionary governments to vote against the U.S. blockade in the UN General Assembly. In the most recent vote, only apartheid Israel voted with the U.S. against the resolution to condemn the U.S. blockade of Cuba.
But aren’t the economic problems in Cuba at least partially the result of economic mistakes and bureaucracy? Some on the left such as Socialist Alternative claim that the Cuban government’s policy of encouraging a small-scale but growing sector of private enterprise as well as for-profit cooperatives and encouraging the import of foreign capital means that the Cuban people have legitimate grievances that were expressed by the Patria y Vida demonstrations. Dollar stores that sell commodities for U.S. dollars — but not Cuban pesos — are for obvious reasons highly unpopular and were favorite targets of the demonstrators and rioters.
People in Cuba indeed have legitimate grievances, and that is of course a vast understatement. I know how mad I was when I lost power for about 36 hours last summer when a rare cluster of summer thunderstorms moved through my area. But things are far worse in Cuba when it comes to power outages, not to speak of shortages of basic items and medicines (though paying for these medicines is another matter), which are hard to imagine in an imperialist country like the United States that exploits the entire world.
For example, though Cuba has developed one COVID vaccine that has been authorized and a second one that is expected to be authorized soon, an amazing feat for a blockaded underdeveloped country, vaccinations have lagged because Cuba lacks syringes, which it has had great difficulty obtaining on the world market due to its lack of dollars and restrictions on the ability to spend the few dollars it has.
Well, perhaps some on the left might ask, why can’t Cuba produce syringes? Isn’t that a sign of bureaucracy and mismanagement in the Cuban economy? However, to manufacture syringes you need parts and raw materials. Again, the shortage of dollars and the blockade stands in the way. Naturally, the Patria y Vida movement has complained about the lack of vaccines and blamed not the blockade but the Cuban government.
If we examine the nature of reactionary mass movements that occurred in the 20th century, of which European fascism is the most notorious, they have one thing in common. They all used real grievances of masses of people, including workers who for whatever reasons lacked class consciousness, and directed them not against the class enemy — the capitalist class — but the workers’ movement as well as such purely imaginary enemies as “international Jewry” in the case of the German Nazis.
It would be wrong to think that all the supporters of fascist movements including the German Nazis were psychopaths — though they certainly existed in both the ranks and the leadership of the National Socialist German Workers Party. However, the vast majority of Germans who supported the “National Socialist” movement and voted for its candidates had no idea what the ultimate consequences of its victory would be. If they had, “National Socialism” would have had very little support and would never have come to power.
What the leaders of all reactionary mass movements have in common is that they direct the anger of politically backward people away from their real enemies and toward the organized workers’ movement. This is true whether the workers’ movement is in opposition — as was the case in Germany — or in power — the case in Cuba.
During the July 11 Patria y Vida demonstrations, there were no criticisms of the U.S. government and the blockade at all. Indeed, some demonstrators carried U.S. flags. What the leaders of Patria y Vida were saying to their followers was that if we throw out the Communist Party and set up a government to the liking of the U.S., Cuba will be flooded with consumer goods. We will then be able to have “the good life” in our beautiful tropical country.
True, the victory of the Patria y Vida movement will not turn Cuba into Nazi Germany. Nazi Germany was built on top of a powerful industrial monopoly capitalist economy. But the Patria y Vida movement if it is victorious will transform Cuba into a second “pseudo-Republic” where the impoverished many will once again look on impotently as wealthy North Americans once again fill the hotels and casinos and enjoy the beautiful tropical beaches of Cuba that will no longer belong to the Cuban people, just like in the days of old.
No doubt if the worst happens many of today’s supporters and sympathizers of Patria y Vida will complain that the movement and its “good intentions” were “betrayed” by its leadership. Not a few of today’s Patria y Vida supporters will regret their actions and look back with nostalgia to the days of the revolution.. But then it will be too late. This is not mere speculation or just a theory. Today after Gorbachev and Yeltsin, you only have to look at eastern Germany, Eastern Europe, and the countries of the former Soviet Union where such people are legion.
Fortunately, the new Cuban leadership is following the example of Fidel Castro in 1994. They are confronting the Patria y Vida demonstrations politically in the battle of ideas and mobilizing the revolutionary people of Cuba, especially the working class, to politically defeat Patria y Vida. As long as the Cuban Communist Party remains united and firm against the counterrevolutionaries, and maintains the confidence of the overwhelming majority of the working class, the counterrevolution will not be able to win without a full-scale U.S. military invasion. Even with such an invasion, the counterrevolution will be defeated in the long run.
However, if the Cuban Communist Party splits, or if it loses the support of the majority of the working class, the counterrevolution will be victorious, not forever but for a whole historical period. That is the lesson of the events of 30 and more years ago in the Soviet Union and Eastern Europe.
What will happen if the Cuban counterrevolution wins?
Already the Patria y Vida demonstrations have encouraged Biden to continue with and indeed further intensify the economic war not only against Cuba but against Venezuela, Iran, Nicaragua, and other countries in the imperialist cross-hairs. Let’s look at the situation from Biden’s point of view.
Biden is the political representative of the ultra-rich U.S. imperialist capitalist class and its world empire. His job, which he takes seriously, is to extend the power of his class in general and U.S. imperialism in particular. From Biden’s perspective, the Patria y Vida demonstrations indicated that Trump’s intensified blockade measures against Cuba are working as intended. Why abandon them now? And if they are working against Cuba, Biden thinks, they will work all the more against Venezuela, Nicaragua, Iran, and so on. So the message of Patria y Vida is not only that the blockades and sanctions should continue against all these countries, they should be further tightened.
Before the Patria y Vida demonstrations of July 11, Biden was considering a return to Obama’s policies of easing the blockade with the view of encouraging the growth of the private sector with all its capitalist tendencies in Cuba. Obama and his advisers hoped such policies would encourage illusions among Cubans, especially members of the younger generation who have no memory of the “pseudo-republic,” that U.S. imperialism is a benign force. In this way, Cuba will be softened up over time, at the end of which conditions will ripen for a full-scale counterrevolution along the lines of what happened in the Soviet Union and Eastern Europe 30 years ago.
The easing of, or better yet the end of, the blockade would however buy time for the Cuban Revolution. It would increase the chances of attracting foreign capital that under present conditions offer the only hope of any economic growth. The Cuban Communist Party would have time to wage what Fidel Castro called a battle of ideas against the capitalism that the Cuban revolutionaries lack the economic strength to eliminate under present conditions. And conditions will change radically as soon as a new socialist revolution like the October Revolution of 1917 in Russia occurs in a large nation somewhere in the world. Of course, nobody knows when this will happen. Can the Cuban people and their leadership hold out that long? Only the struggle of living forces can answer that question.
Now thanks to the Patria y Vida demonstrations of July 11 only if U.S. imperialism becomes thoroughly convinced that the reactionary movement has been thoroughly defeated in Cuba will there be any chance that the Biden administration will consider lifting or at least relaxing the blockade.
If Patria y Vida succeeds in organizing new demonstrations, or worse encouraging desperate Cuban workers to strike against state enterprises raising economic demands that cannot possibly be met in the face of the blockade, Biden may be encouraged to consider outright U.S. military intervention. The U.S. has not dared invade Cuba up to now only because it fears that an invasion would bog it down in a quagmire of guerrilla warfare that would cost the lives of many U.S. soldiers leading to massive demonstrations and mobilizations around the world, not least in the U.S. itself. But if Biden and his advisers conclude that the Cuban people are now worn down and demoralized and the Cuban Communist Party is losing support among the Cuban working class and people, Biden may decide that perhaps the U.S. could get away with an invasion with minimal resistance from the people of Cuba and the peoples of the world.
Much of this analysis also applies to Nicaragua, Venezuela, Iran and many other countries even if unlike Cuba they don’t have socialist governments. The Patria y Vida demonstrations of July 11 have increased the danger of not only a full-scale U.S. invasion of Cuba but of a whole series of U.S. wars that could develop into a world war.
And finally, the fall of Cuba would unleash a new edition of the “failure of communism” propaganda drive orchestrated by the capitalists that swept the globe 30 years ago. In that earlier drive, not only “communism” but “socialism” including social insurance (for example, medical care as a human right and not a commodity) and even trade unions were declared failures by the capitalists.
Already we are seeing in the global capitalist media a new wave of demonization of Cuba’s revolutionary leaders, including both its current leaders and its historic leader Fidel Castro such as has not occurred since the 1960s. Virtually every imperialist organ is full of articles on what a failure the Cuban revolution, communism, and socialism have been.
This is yet another reason why we should wish the best of luck to our comrades in Cuba in their struggle to defeat the Patria y Vida movement and all it stands for. But we must also do our part! We must build the broadest united front demanding that Biden accede to the demands of the peoples of the entire world as shown by the vote in the UN General Assembly and lift the blockade now! Let Cuba Live!
Finally, many progressives who support the demand that the blockade be lifted now blame the Cuban-American community and its right-wing counterrevolutionary leadership for policies of the U.S. against Cuba. Indeed, the Democratic Party likes to hide behind the Cuban-American community to justify its counterrevolutionary policies toward the Cuban revolution — which in practice does not differ from the policies of the Republicans. Making excuses for Biden, “progressive” Democrats “explain” that Biden must appear “tough” against the “Cuban Communist regime” if he and the Democrats are to have any chance of winning the votes of Cuban-Americans, which they must win if they are to have any chance of prevailing in Florida elections.
If only we can overcome the power of the “Cuban lobby,” these progressives believe, can Biden be convinced to follow a humane policy toward Cuba and lift the blockade. It would indeed be sectarian idiocy to refuse to work with such people in demonstrations and other actions aimed at ending the blockade of Cuba.
But don’t be fooled! The Democrats like to justify their reactionary policies on Cuba by hiding behind the Cuban-American community just as they like to hide behind the Jewish-American community and the “Israel lobby” to justify their equally reactionary policies toward Palestine and the Middle Eastern countries in general. The Democrats raise their “need” to win over Cuban-Americans by showing how tough they are on the “Cuban Communist dictatorship.” This is even though Biden defeated Donald Trump handily in the last presidential elections, though he did indeed lose Florida’s electoral votes in part due to right-wing Cuban voters who — or their parents or grandparents — left Cuba after the revolution in the hope of growing rich in the land of the dollar bill.
But why does U.S. foreign policy, if it is not controlled by the Cuban and Israeli lobbies remain so completely reactionary under both the Democrats and the Republicans? To understand this, we have to understand the economic laws that govern capitalism. We, therefore, return to our examination and critique of Anwar Shaikh’s “Capitalism”.
Anwar Shaikh’s ‘Capitalism’
Anwar Shaikh’s 2016 work “Capitalism” is without doubt one of the most significant books — perhaps the most significant work — on political economy published so far in the current century. In “Capitalism,” Shaikh defends the basic economic themes he has been defending since the late 1970s. Shaikh has strongly defended the law of labor value against attacks based on the “transformation problem”, as well as the law of the tendency of the rate of profit to fall. Just as importantly, Shaikh strongly rejects the claim of the economists that under the capitalist mode of production the law of comparative advantage, as opposed to the law of absolute advantage, prevails on the world market. It should be no secret that the present author has been strongly influenced by Shaikh on these crucial questions.
Though Shaikh is often accused by his critics of being a “fundamentalist” Marxist, this does not mean that Shaikh is an orthodox “Marxist-Leninist” economist. Shaikh rejects the whole concept of monopoly capitalism as the final stage of capitalism. This includes not only the Baran-Sweezy concept of monopoly capital as put forward in “Monopoly Capital” (first published in 1966) but also the Hilferding-Lenin concept of monopoly capital that formed the foundation of the economics of the Communist International.
This doesn’t mean that Shaikh denies the existence of imperialism. Far from it. Shaikh, who was born in British India in what was to become Pakistan, certainly believes that present-day capitalism – and indeed capitalism throughout its history – is thoroughly imperialist. But Shaikh does not believe in a monopoly stage of capitalism. Instead, he develops the concept of what he calls “real capitalist competition” as opposed to the perfect competition of the neoclassical school. He claims that all versions of the monopoly capitalism theory, whether Baran-Sweezy or Hilferding-Lenin, are built on top of the theory of “perfect competition” as put forward by neoclassical economists and sees present-day monopoly capitalism as modifying the economic laws that prevailed when perfect competition ruled capitalism before the late 19th century.
Shaikh believes that what he considers the four great classical economists – Adam Smith, David Ricardo, Karl Marx, and John Maynard Keynes – assumed “real competition,” which according to Shaikh has ruled capitalism throughout its history. It could even be said that Shaikh’s “Capitalism” could be titled “Anti-Monopoly Capital” in the sense of Baran and Sweezy’s “Monopoly Capital.”
Despite his strong rejections of the economic theory Paul Sweezy put forward in “Monopoly Capital” and many other articles and essays over the years, the biographies of Shaikh and Sweezy show striking similarities. Shaikh was born to a relatively well-to-do family in what was British India in 1945. Shaikh’s father was an Indian Muslim who became a Pakistani diplomat, so the young Shaikh was well traveled. Shortly after Shaikh’s birth in 1945, Britain, bankrupted by World War II, was forced to leave India. However, before they left the British encouraged an Islamic separatist movement that split the predominately Muslim part of India, which became Pakistan, away from the predominately Hindu part. Pakistan later split again into what today is Pakistan and Bangladesh.
Millions of people died in the resulting conflict and many other millions were forced to relocate. Shaikh’s mother was a Roman Catholic, and the young Shaikh went to a Catholic school. With this experience, it is no wonder that Shaikh became a strong opponent of religion whether organized or not. (4) Sweezy’s father, Everett, though he was wealthy and a vice president of the First National Bank of New York – a powerful Wall Street corporate bank – was radical in one way. Everett was an opponent of religion.
The parallels between Shaikh and Sweezy continue. The young Paul had planned to be a journalist. But the Depression turned his interest toward economics. Shaikh had originally planned to be an aeronautical engineer, but the wretched conditions under which the people of Pakistan – and India – and the people of the rest of what we now call the Global South, where the great majority of humankind lives, turned his attention toward “developmental economics.”
Both the young Sweezy and the young Shaikh were exposed to neoclassical economics. In Shaikh’s case, when he studied economics at Columbia University, his leading professor was Gary Becker (1930-2014), considered one of the leading neoclassical economists of his generation. Becker was a protégé of Milton Friedman. Friedman hailed Becker as the leading social scientist of his time.
The young Sweezy in search of the origins and causes of the Great Depression found that his teachers had no idea of what was causing the Depression – indeed their theories precluded the very possibility that the economic and social disaster unfolding beyond the boundaries of Harvard Yard could occur. Sweezy turned away from the neoclassical school in search of the causes of the Depression. Shaikh also found no explanation for the poverty and disasters that the population of the Global South is subjected to even in “normal times” in Becker’s lectures. Both of the young economists turned to the left and Marx, though in the end Shaikh came to very different conclusions than Sweezy and his Monthly Review school on how capitalism operates in the real world.
Shaikh considers himself working in what he calls the “classical” tradition – as opposed to the “neo-classical” tradition that has dominated and continues to dominate university economics departments since the end of the 19th century. According to Shaikh, the classical tradition he associates with is dominated by Adam Smith, David Ricardo, Karl Marx, and John Maynard Keynes. This is a somewhat curious list. It was Marx who first used the term “classical economists.” But Marx unlike Shaikh did not consider himself to be a classical economist. Instead, Marx distinguished between the classical bourgeois economists, who penetrated beneath the surface of the emerging capitalist economy, and those he called vulgar bourgeois economists, who limited themselves to analyzing the surface phenomena of capitalism.
According to Marx, classical bourgeois political economy begins with the Englishman William Petty (1623-1687), continues with the French economist Pierre le Pesant de Boisguilbert (1646-1714), and ends with the English economist David Ricardo (1772-1823) and Swiss economist Jean Charles Léonard de Sismondi (1773-1842). According to Marx, classical political economy could exist only under specific social and historical conditions, namely a still immature capitalism where the contradictions between the proletariat and the capitalist class were still underdeveloped.
At this early stage of capitalist development – between the later half of the 17th century and the first half of the 19th century – the rising capitalist class needed a scientific understanding of how the capitalist economy operated in its battle with the semi-feudal landowners and other pre-capitalist economic formations and their political representatives. But by the mid-19th century, the class antagonisms between the proletariat and the capitalist class had reached such a degree of development that only vulgar bourgeois political economy was possible.
Marx did not consider himself a classical economist – or primarily an economist at all – but rather a proletarian revolutionary who was critical of all schools of political economy including the classical school. Marx did not so much negate classical economy as transcend it. He aimed to keep all that was scientific in classical political economy and develop it to its logical conclusions in order to create a powerful analytical tool in the hands of the proletariat. This revolutionary approach to bourgeois political economy, so characteristic of Marx, is absent in Shaikh’s concept of the classical tradition in political economy.
Shaikh, however much he is influenced by Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and many lesser economists (some Marxists, some not), is particularly influenced by a fifth economist, the Marxist Henryk Grossman (1881-1950). Grossman was of Polish-Jewish heritage but died a citizen of the German Democratic Republic (East Germany). As we will see, if Shaikh has an immediate predecessor it is Henryk Grossman.
Marxism before Grossman
I have dealt with Grossman before in this blog. But here I will do so again to prepare the way for my critical examination of Shaikh’s “Capitalism.”
There was a general belief in the early German Social Democracy that the world market was headed for exhaustion. It was not only a matter of cyclical crises. Indeed, during the period that began with the crash of 1873 and continued to 1896, the periods of falling prices accompanied by “dull business” and high unemployment were longer and deeper than the periods of rising prices and “good business”. It was assumed by the early Social Democrats that what we now call the “Long Depression” (5) showed that the world market was approaching exhaustion and this heralded the approach of the “social revolution.”
To prolong the existence of capitalism, most early German Social Democrats believed, the major capitalist powers were being forced to colonize the agricultural countries of what we now call the Global South. Sooner or later, markets provided by the newly colonized countries would also be exhausted. When this happened, the 19th-century Social Democrats believed, the social revolution would begin.
In Russia during the late 19th century, the revolutionary movement was dominated not by working-class Social Democrats, as was the case in Germany, but by populists – later the Social Revolutionary Party – who looked to the peasantry as the force destined to bring socialism to Russia. According to the Russian populists, workers and peasants had an equal interest in socialism.
By the late 19th century, no one could claim that capitalism could not develop in Germany – it was already dominated by capitalism – but Russia remained largely pre-capitalist. The Russian populists claimed that capitalism could not develop in Russia because the existing capitalist nations were already fully monopolizing the markets of the world. There simply wasn’t room on the world market for any more capitalist nations. (6)
Therefore, the populists argued, Russia had no choice but to bypass capitalism on its road to socialism. The populists believed that the Russian Mir – the peasant commune – provided a cell that – once a peasant-based revolution swept away the landowners, the monarchy, and the bureaucracy – would provide the basis for the development of a modern socialist society.
Russian Marxism and Volume II of ‘Capital’
At the end of the 19th century, a group of Russian populists led by Georgi Plekhanov (1856-1918) broke from populism and embraced Marxism, becoming in some ways more Marxist than Marx. Plekhanov became the founder of what was to become the Russian Social Democratic Labor Party. The RSDLP later split into the Mensheviks (Social Democrats in the post-Russian Revolution sense of the term) and Bolsheviks (who formed the core of the future ruling Soviet Communist Party).
The pioneer Russian Marxists led by Plekhanov insisted not only that capitalism could develop in Russia but inevitably would. Therefore, it was crucial to build a party based on the working class in Russia as well as Western Europe. The coming Russian revolution would, the Russian Marxists (including the young Lenin) emphasized, would be a bourgeois revolution that would, as Lenin later put it, enable Russian capitalism to develop in American fashion.
In 1885, Frederick Engels had published Volume II of “Capital” based on notes left by Marx. It deals with the circulation of capital as opposed to the production of capital – including surplus value – that was the main subject of Volume I. Today, Volume II of “Capital” is perhaps the least read of the three volumes. But it was to have a huge effect on the development of Russian Marxism and Marxism in general during the 20th century. It is in Volume II that Marx deals with the subject of capitalist reproduction. Marx was the only writer on economics who dealt with economic reproduction since the French Physiocrats of the late 18th century. (7)
Marx divides the entire capitalist economy into Department I, which produces the means of production, and Department II, which produces the means of personal consumption. The most important equation in Marx’s analysis of simple reproduction is C2 = V1 + S1. The right side of the equation represents the means of production that Department I exchanges for means of consumption produced by Department II for both the capitalists and workers of Department I. The left side of the equation represents the means of personal consumption that Department II exchanges for means of production produced by Department I, replacing the means of production that have been used by Department II.
To maintain simple reproduction, Department I must produce means of production that exactly replace the means of production used up in the process of production. Marx assumes that all commodities exchange at their values – sell at their direct price. There is no need to bother with prices of production at this stage of the analysis. The equation C2 = V1 + S1, therefore, represents an equilibrium that must be maintained if simple reproduction is to proceed smoothly without crises in terms of value and as well in physical terms.
If the means of production produced by Department I and exchanged for means of consumption produced in Department II represents less value than the means of production used up in the production of the items of personal consumption – which occurs in a full-scale war economy – C2 will shrink in value as well as be progressively destroyed in physical terms.
As machines are used up in production, they first lose part of their value through depreciation without at first losing their use value. But at some point, the machines will physically break down. So it is possible that production in Department II might be maintained in physical terms for awhile though reproduction in Department II is negative in value terms.
But eventually, the machines will start breaking down and become “non-machines,” at which point the production of the items of personal consumption will break down in physical terms. This phenomenon is important when analyzing a war economy. The basic requirement of expanded reproduction is for V1 + S1 to increase faster than C2 is being consumed – both in value and physical terms. Only then does the possibility of expanded reproduction arise.
What about the reproduction and production of money capital? Many vulgarizers of Marx’s theory of reproduction ignore the question of the reproduction of money capital but not Marx. Particularly today, when it is widely if wrongly believed that today’s money is non-commodity money and the creation of money is seen to lie entirely outside the sphere of (re)production, it is easy to ignore the problem of the simple (and expanded) reproduction of money capital.
Marx assumes that the currency consists entirely of full-weight gold coins. This seems an odd assumption even in the mid-19th century when gold coins were still widely employed in retail trade. However, the assumption that the currency exists entirely in the form of gold coins is a necessary assumption for Marx’s analysis of simple reproduction.
The reason is that Marx was interested not only in the reproduction both simple and expanded of real capital but also money capital. Therefore, simple reproduction must not only leave the total quantity of real capital unchanged, it must leave the quantity of money capital unchanged as well.
If the quantity of money capital is allowed to increase while the quantity of real capital remains unchanged, we would not have simple reproduction but rather the expanded reproduction of money capital. That will not do for Marx. To Marx, simple reproduction of capital meant the simple reproduction of both real capital and money capital.
To illustrate the simple reproduction of money capital, Marx assumed that the wear and tear of gold coins in circulation lead to a loss of weight of the gold coins. (8) The gold used up in circulation must be exactly replaced both in value and use value terms by newly produced gold used for monetary purposes. Only by assuming the new gold produced by the gold mining and refining industry used for monetary purposes exactly equals the gold used up in the wear and tear of gold coins in circulation does the quantity of money capital remains unchanged. Marx placed the production of gold bullion in Department I, though gold in its role as money material is, strictly speaking, neither a means of consumption or a means of production.
Expanded reproduction of real and money capital
Marx emphasized that capitalism can only exist as expanded reproduction – is only possible as long as expanded capitalist reproduction is possible. However, the analysis of simple reproduction remains crucial because expanded reproduction always contains within it simple reproduction. If you don’t understand simple reproduction, you cannot possibly understand expanded reproduction.
To make expanded reproduction of real capital possible, V1 + S1 must be greater than C1. As with simple reproduction, it is assumed that the workers consume their entire wage earnings on the means of personal consumption required to reproduce their labor power. The capitalists, however, now use some of their profit income to purchase means of production beyond those necessary to merely replace those used up in production as well as purchasing additional labor power. Therefore, not only must new gold be produced to replace the gold lost through wear and tear on gold coins in circulation, additional gold must now be produced to circulate an increasing quantity of commodities being exchanged.
If an insufficient amount of gold is produced to support expanded reproduction, a portion of the value of commodities will not be realized in money form causing a crisis in reproduction. The expanded reproduction of real capital, therefore, requires an expanded reproduction of money capital. If more than the needed additional gold is produced to circulate additional commodities, the quantity of money capital will expand faster than the number of commodities in circulation causing the money market to relax and interest rates to fall.
Marx assumes throughout his analysis of both simple and expanded reproduction that the organic composition of capital and the rate of surplus value (which he assumes is 100%) remains unchanged. Since there is no change in labor productivity, (9) the value of commodities and their prices expressed in terms of the use value of money material (the value of which also remains constant) also remain unchanged. Since there is no change in the rate of surplus value or the organic composition of capital, the rate of profit remains unchanged. The only things that are allowed to change are the quantity of capital both constant and variable, the quantity of surplus value, and the quantity of money capital, all of which are constantly rising without crises.
Based on these assumptions and the correct proportions between Departments I and II – both in value and use value terms – and within these Departments as well and the needed quantity of additional gold bullion needed to make possible the creation of additional means of circulation possible (a lot of ifs), expanded capitalist reproduction like an infinite loop continues forever.
According to the Volume II formulas, not only is the physical possibility of producing an ever-greater quantity of commodities provided for but the additional markets for these commodities are provided for as well. The market is never exhausted but expands with production thanks to the proportionate increase of the production of money material that is a necessary and integral part of Marx’s model.
These conclusions were music to the ears of Georgi Plekhanov and his Russian Marxists in their struggle with the Russian populists. Marx’s formulas of expanded capitalist reproduction were deployed by the followers of Plekhanov – which included the young Lenin – against the Russian populists, who claimed there was no room on the world market for a capitalist Russia. On the contrary, the Russian Marxists claimed, Russian capitalism had a bright future. True, once Russian capitalism was fully developed and a powerful Russian proletariat was created, the transition to socialism would be put on the agenda. But until that point was reached, any talk of socialism in Russia was a utopia.
The genesis of the breakdown controversy
But weren’t the Russian Marxists proving too much? Why would socialism in Russia – or anywhere else – ever be necessary if expanded capitalist reproduction could proceed forever. Hadn’t Marx himself explained in his famous introduction to his “Contribution To A Critique of Political Economy,” first published in 1859, that no economic system is superseded until it has fully developed the productive forces it is capable of developing. If capitalism could develop the productive forces forever – and this is exactly what Marx’s formulas for expanded reproduction seemed to show – capitalism would never need to be replaced but would last forever.
However, after Volume II of Capital came Volume III based on Marx’s notebooks, published by Frederick Engels in 1894. In his reproduction schemes, Marx had held the ratio of constant capital (which does not produce surplus value) to variable (which alone produces surplus value) constant. In Volume II of “Capital,” there is no rising organic composition of capital or falling tendency of the rate of profit. However, Volume III assumes a rising organic composition of capital and the famous tendency of the rate of profit to fall because of the rising organic composition of capital.
The rising organic composition of capital also has implications for expanded capitalist reproduction beyond its effects on the rate of profit. Expanded reproduction requires the capitalists to transform a portion of their profit income into additional capital. The portion transformed into new capital is itself divided between the portions transformed into new constant capital and new variable capital. In Marx’s reproduction formulas that he introduced in Volume II before he dealt with the effects of a rising ratio of constant capital to variable capital, the portion of surplus value that is transformed into new constant capital as opposed to new variable capital remains constant.
However, once we assume that constant capital is rising faster than variable capital, we must assume that the capitalists will increase the portion of the surplus value they convert into constant capital as opposed to variable capital. This means that the rate of growth of Department I (which produces the means of production – constant capital) must grow faster than Department II (which produces the means of personal consumption) if the necessaryr equilibrium between the two departments is to be maintained.
Before – when the organic composition of capital was held constant – all that was necessary for the capitalists in the two departments of production to maintain the existing ratio between Departments I and II was to maintain their existing rate of growth. But with a rising organic composition of capital, some of the surplus value produced in Department II has to be shifted to Department I when it is re-converted into new capital because the market for the means of production will be growing faster than the market for the commodities that constitute the means of personal consumption.
While some Marxists saw this as a source of crises – for example, Paul Sweezy in his “Theory of Capitalist Development,” published in 1942 – other Marxists and bourgeois semi-Marxists, most famously the Ukrainian economist Mikhail Tugan-Baranovsky (1865-1919), did not. Capital is, after all, constantly flowing from less profitable to more profitable branches of industry.
Tugan-Baranovsky, who began as a Marxist and then became a “legal Marxist,” used Marxism to prove that the semi-feudal structure of the Czarist Russian Empire was bound to give way to a far more progressive system of capitalist rule that would carry that development of the productive forces to undreamed of levels. Socialism was thereby reduced by Tugan-Baranovsky to a “moral idea” not a historical necessity. Tugan-Baranovsky is part of a broader tendency that might be called “bourgeois Marxism.”
Bourgeois Marxism arises in capitalistically underdeveloped countries when the leaders of the emerging bourgeoisie engaged in a progressive fight against both imperialism and pre-capitalist economic formations use the part of Marxism that teaches that capitalism is a progressive system – as opposed to pre-capitalist formations and foreign imperialism that seeks to hold back that capitalism because it does not want competition from new capitalist countries.
At the same time, bourgeois Marxism explains to the leaders and ideologues of the rising capitalist class that by fighting for capitalism today, they are really fighting for socialism, but only in a distant future. Didn’t Marx prove, the bourgeois Marxists claim, that capitalism since it greatly raises the productivity of human labor above anything that existed before is the necessary pre-condition for socialism? The bourgeois Marxists, however, lose their enthusiasm for Marx when the workers, “prematurely” from the viewpoint of the bourgeois Marxists, start asserting their independence and launch their own struggle for socialism.
The pre-Russian Revolution Social Democrats, inclined toward opportunism, also liked the interpretation of Marx’s reproduction formulas that apparently showed that capitalist expanded reproduction could continue forever. To the opportunist Social Democrats, socialism, much like it was to the bourgeois Marxists, was an ethical ideal and not a material necessity.
For the Social Democratic opportunists, the real struggle was to improve the position of the working class, especially its unionized, better-paid strata located in the imperialist countries. The opportunists counted on the alleged ability of capitalism to expand forever to reduce socialism to only an ethical ideal talked about at May Day rallies and similar occasions, much like certain Christian preachers talk about the second coming of Christ. This is an event that is always approaching but never arrives. (10)
After 1896, the period of falling prices and long-lingering depressions following recessions was replaced by a new era of rising prices fueled by powerful economic booms. During the “long depression,” when the German Social Democracy was first developing, it was easy to believe that capitalism was approaching its end owing to increasingly saturated markets. But now in the early years of the new 20th century, it appeared that capitalist prosperity would go on forever, just as it does in Marx’s formulas of expanded reproduction. And this was exactly what the opportunist wing of the Social Democracy was counting on.
Some Marxists insisted that capitalism would eventually break down due to the falling rate of profit. Eventually, the argument went, the rate of profit would fall so low that the very incentive to produce surplus value would dry up and capitalism would break down. Then there would be no alternative to revolution.
However, the Social Democratic supporters of the possibility of endless capitalist growth countered that the fall in the rate of profit would be rendered harmless to capital because it would be compensated for by a rise in the mass of profit. Therefore, the opportunists proclaimed, even with a falling rate of profit capitalism could go on forever. To them, socialism was an ethical ideal and not a historical necessity.
The most revolutionary of the major Social Democratic leaders outside the Russian Empire in the years before World War I was Rosa Luxemburg (1871-1919). Luxemburg didn’t like the idea that capitalism could go on forever. She was convinced that there must be some flaw in Marx’s expanded reproduction formulas. In her book “The Accumulation of Capital,” first published in 1913, Luxemburg attempted to prove that in a purely capitalist economy there would be no way to realize the surplus value in the form of profit that the capitalists need to carry out expanded capitalist reproduction. Luxemburg tried to show that to realize surplus value the capitalists need to find additional markets among non-capitalist simple commodity producers. This, Luxemburg explained, is why in the early 20th century the rival imperialist powers were struggling with each other over control of pre-capitalist countries – what we now call the Global South. This was the basis of Luxemburg’s theory of imperialism, which stands in contrast to Lenin’s definition of imperialism of the monopoly stage of capitalism..
Luxemburg believed that with the further development of capitalism it would only be a matter of time before the then pre-capitalist countries would be fully drawn into capitalist production. As this point approached, capitalism would face economic breakdown and there would simply be no alternative to socialist revolution. This as we saw above is exactly what the early German Social Democracy believed before the publication of Volume II of “Capital” and even later until the end of the “long depression” in 1896. Luxemburg believed she had now proven scientifically that this old but increasingly rejected view of the early Social Democracy had been correct after all.
Today, left-wing followers of Keynes and especially Kalecki sometimes claim Luxemburg as a predecessor. For them, as the market provided by the pre-capitalist simple commodity producers shrinks the state increasingly emerges as the “replacement market” that keeps capitalism alive. However, the difference between Luxemburg and the followers of Keynes and Kalecki is that Luxemburg rejected the idea that the problem of unrealizable surplus value (which she believed inevitably arose in a closed capitalist system) could be solved through the consumption of “third persons” who ultimately live off surplus value appropriated by the capitalists from the workers. Luxemburg would have agreed with a supporter of Ricardo who wrote back in his time that no merchant would willingly pay anybody to buy their unsold commodities.
However, no Social Democrat – and after 1917 no major Communist – knowledgeable in Marxist economic theory supported Luxemburg’s view that the surplus value needed to carry out expanded reproduction could not be realized in a pure capitalist system without simple commodity production. The most famous Marxist of that time, Lenin, considered Luxemburg’s theory that independent commodity producers were necessary to realize surplus value false since this argument had already been disproven in the controversies with the Russian populists that had marked Lenin’s apprenticeship in Marxism. This did not prevent Lenin from considering Luxemburg a revolutionary and a great Marxist despite what he viewed as her error on the question of the accumulation of capital.
Otto Bauer ‘deepens’ Marx
During the disputes over reproduction and the “breakdown theory,” the Austrian Marxist Otto Bauer (1881-1938) in 1913 brought out his reproduction formulas, which improved on those Marx presented in Volume II of “Capital”. He presented a series of formulas on expanded reproduction that assumed a rising organic composition of capital and a falling rate of profit. Bauer’s formulas like Marx’s assumed a rate of surplus value of 100% and held the rate of surplus value constant at 100%. Bauer also assumed the full employment of the working class combined with the assumption that the working-class population grew at 5% a year. To maintain full employment at a constant rate of surplus value, the surplus value that capitalists have to transform into new variable capital must grow at a rate of 5%. (11) However, in contrast to Marx’s formulas, the percentage of the total surplus value re-transformed into capital as opposed to personal consumption is permitted to increase.
Bauer carried out his calculation through four years. Over these four years, the rate of profit falls and the capitalists are obliged to spend an increasing percentage of their surplus value – profits – on accumulation as opposed to personal consumption. In addition, the percentage of the surplus value transformed into new constant capital increases faster than the percentage of capital transformed into new variable capital. Therefore, Department I grows faster than Department II. However, variable capital must still increase at a 5% annual rate to match the 5% annual rate of growth of the working-class population.
In this way, Bauer presented an improved version of Marx’s formulas for expanded reproduction. Bauer’s model incorporated the findings of Marx presented in Volume III, where Marx deals with the rising organic composition of capital and the tendency of the rate of profit to fall.
In Bauer’s model during the four years that he extends his model, everything proceeds smoothly without crisis. Bauer’s model does require the capitalists to increase the percentage of the surplus value they (re)-transform into capital and reduce the percentage of the surplus value that they spend on personal consumption. His capitalists are required to do this because they must keep the rate of growth of variable capital at 5% to maintain full employment without increasing the rate of surplus value in the face of a falling rate of profit. However, their personal consumption measured in terms of value – hours of abstract human labor – grows in absolute terms. Bauer thought that he had proven that expanded capitalist reproduction with a rising organic composition and a fixed rate of surplus value can proceed forever without crises. But had he?
Henryk Grossman was born into a Polish Jewish family. In his youth, he was active in the Polish-Jewish workers’ movement. After the Russian Revolution, he joined the Polish Communist Party. In 1925, he left Poland due to the increasingly repressive political atmosphere, dropped out of the Communist Party, and settled in Germany.
Grossman became active in the Institute for Social Research associated with Goethe University in Frankfurt, Germany. The Frankfurt Institute originally consisted of a group of non-party Marxist intellectuals who had like Grossman dropped out of active politics. The Frankfurt Institute was more radical in its early years – before 1930 – than it was later when it turned away from its early interest in economics and politics towards its later interest in psychology and culture, for which it is remembered today. It was while he was associated with the Frankfurt Institute that Grossman published his most influential work “The Law of Accumulation and Breakdown of the Capitalist System” in 1929.
Grossman, like all other members of the Frankfurt School, was forced to leave Germany in 1933 as a result of the rise to power of Adolf Hitler. Grossman emigrated first to Britain but then settled in the United States. He left the U.S. in 1949 due to the increasingly repressive political climate associated with the Cold War and found refuge in the German Democratic Republic (East Germany). In 1949, he became a professor of political economy at the University of Leipzig and joined the Socialist Unity Party – a merger of the Communist Party of Germany and the Social Democratic Party – the ruling party of the German Democratic Republic. He died the following year.
Unlike many of his admirers, Grossman was a supporter of the Soviet Union from the Russian Revolution until his death, realizing that the overthrow of the Soviet Union would throw the world working class back many decades. Grossman’s view has unfortunately been fully confirmed over the last 30 years.
In “The Law of Accumulation and Breakdown of the Capitalist System,” Grossman took Bauer’s calculation in which the Austrian Social Democrat believed he had proven that capitalist expanded reproduction could proceed smoothly without crisis indefinitely from four to 36 years. Nobody has ever found a flaw in Grossman’s math. It is solid. What does Grossman’s calculation reveal?
For 21 years, as the rate of profit falls the capitalists have to re-transform a growing percentage of the surplus value they appropriate into new capital as opposed to using it for necessary and luxury items of personal consumption. They have to do this because not only is the rate of profit falling but an ever-greater portion of the surplus value that is re-transformed into capital goes into constant capital as opposed to variable capital. And, to be true to Bauer’s model of full employment with a constant rate of surplus value, the formulas have to maintain the 5% annual rate of growth of variable capital.
But by the 36th year, the mass of surplus value available for capitalist consumption measured in terms of value has dropped to zero. Despite the growth in labor productivity, a “mass” of consumer commodities representing zero hours of labor represents zero use values! The system has broken down. Not exactly what Otto Bauer thought he had proven. And this is based on Bauer’s – not Grossman’s – figures.
It is therefore a shortage of surplus value – not any problems in the realization of surplus value in money form like is the case with Rosa Luxemburg – that brings about the breakdown of the Bauer-Grossman model, though Grossman did not deny that realization problems exist. This did not prevent many of Grossman’s followers to ignore the problems of realization or denying them altogether since capitalism breaks down without them.
Grossman’s book soon came under attack. Grossman was ridiculed for predicting that capitalism would collapse because of massive starvation among the capitalist class. The annual rate of growth in the organic composition was in the model altogether unrealistic – though the figures came from Bauer, not Grossman. You can if you wish plug more realistic figures into the model, but as long as you allow the organic composition of capital to rise, with the rate of surplus value unchanged, the system will “break down” and only the number of years – or periods – will vary.
However, the breakdown crisis that Grossman extracted from Bauer’s numbers is not “final”. If we raise the rate of surplus value from the 100% assumed by Bauer, the system will “reset” and continue until the next inevitable breakdown crisis. It should also be remembered that though the wages of the working class remained unchanged in terms of value in the Bauer-Grossman model, they are presumably rising in real terms because of the rising productivity of labor. After all, the rising organic composition of capital is exactly how the rising productivity of labor expresses itself under the capitalist mode of production.
If capitalism “resets” after the breakdown crisis in the 36th year and the capitalists lower wages permanently in value terms, this won’t prevent the system resuming growth until the next inevitable breakdown crisis. Eventually, Grossman was convinced that the rising organic composition combined with the need for a rising rate of surplus value necessary to get out of each successive breakdown crisis would cause the capitalist system to break down for good. That’s because the necessary value – the value of labor power – though it can be devalued as the productivity of labor rises, cannot be driven all the way down to zero. This meant, according to Grossman, that the class antagonisms between the capitalists and working class would grow through successive breakdown crises until the class struggle led to the establishment of the dictatorship of the proletariat and the expropriation of the capitalist class.
Grossman believed that classical Social Democracy – by this I mean the parties of the Second International before August 4, 1914, lacked a breakdown theory. He believed the Communist International also lacked such a theory. The only serious attempt after the time of Marx and Engels to develop a breakdown theory before his own had been that of Rosa Luxemburg in her “Accumulation of Capital” and her “anti-Critique.” However, Grossman believed just like most other Marxists both before and since that Luxemburg’s breakdown theory was a failure. Grossman was scathingly critical of what he viewed as the failure of N.I. Bukharin – then widely viewed as the leading theoretician of the Communist International – in his 1924 “Imperialism and the Accumulation of Capital,” written against Luxemburg’s breakdown theory, to provide an alternative breakdown theory.
Next month, I will examine Anwar Shaikh’s 1978 article “An Introduction to the History of Crisis Theories,” which continues the Grossman tradition and has many of the ideas that will appear with some important modifications in his 2016 “Capitalism.”
1 The slogan Patria Y Vida is revealing. Fidel Castro and other Cuban revolutionary leaders have put forward the slogan Country or Death. The idea here is that patriotic Cubans will make any sacrifice necessary to safeguard the basic independence of the Cuban nation. However, in addition to a “party of resistance” in Cuba, there is also a “party of capitulation” – called the annexationists by the Cuban revolutionaries because the logic of their position leads them to hope that one day the U.S. will annex Cuba and perhaps even make it a U.S. state. The “party of capitulation” believes that Cuba’s defiance of the U.S. world empire is pointless. If Cuba would stop resisting U.S. imperialism, the annexationists believe, the blockade will be lifted and “normal” trade with Cuba will resume. Then the bourgeois and upper-middle-class Cubans will have access to all the consumer goods the world capitalist market has to offer and will enjoy the “good life” just like they did in the good old days before the revolution. This is what the Patria Y Vida slogan and movement are all about. (back)
2 For example, there will be no need for laws to limit the number of people that a private business owner can hire to work for wages. Nobody will have any need to work for another person so there will be no one willing to work for another person in exchange for wages. (back)
3 It has been reported that the Soviet leadership under Leonid Brezhnev opposed Cuba’s decision to send troops to Africa. Cuban troops played a crucial role in defeating apartheid South Africa’s military campaigns against its neighbors. However, whatever the position of Brezhnev and the Soviet leadership was regarding this decision, it was the existence of the USSR and the socialist camp that made Cuba’s military intervention possible. (back)
4 Shaikh sees clear parallels between neoclassical economics and religion. (back)
5 The period of generally falling prices between 1873 and 1896 was originally
called the “Great Depression” but has been replaced by the term “Long Depression” so has not to confuse it with the Depression of the 1930s. (back)
6 Marx was highly sympathetic to the Russian populist movement. He did not rule out the possibility that if socialism was victorious in Western Europe before capitalism was firmly established in Russia, the Russian Mir could provide a basis for a transition to socialism in Russia that would bypass capitalism. (back)
7 The French physiocrat economist François Quesnay (1694-1774) published his Tableau économique (Economic Table) in 1758. This was the only attempt to deal with the subject of reproduction of the economy before Marx’s Volume II of “Capital”.
Post-classical bourgeois political economists – in Marx’s sense of the term – contributed nothing to the study of economic reproduction. As a result, modern bourgeois economists, to the extent they deal with reproduction, have to borrow from Marx. Marx’s reproduction formulas are therefore precursors of today’s input-output tables – partially also inspired by Soviet economic planning – that mathematically model the reproduction of the economy as a whole. (back)
8 To the extent that gold coins are replaced in circulation by tokens that represent gold in circulation – with a growing quantity of gold backing an expanding quantity of tokens as capitalist expanded reproduction proceeds – money capital unlike real capital is not reproduced but is simply accumulated. (back)
9 Under capitalism, the rise in the productivity of labor is expressed through a rise in the organic composition of capital. (back)
10 In the earliest preserved writings of Christianity such as the letters attributed to St. Paul, or the Book of Revelation, the last book of the Christian Bible, the second coming of Christ is proclaimed immanent and was eagerly awaited. However, once the church obtained a vital stake in the existing society the prospect of “the end of the world” – the second coming of Christ – was looked open by the leaders of the church as something to be dreaded and postponed as long as possible – hopefully forever.
The evolution of the attitude toward the approaching “social revolution” by the Social Democracy shows a similar evolution. When Social Democracy was revolutionary, the social revolution was eagerly awaited, but once Social Democracy and the “labor aristocracy” it based itself on acquired a stake in the existing capitalist society, social revolution became something to first postpone and then avoid at virtually all costs. (back)
11 This implies a considerable rise in real wages since as the organic composition of capital rises the productivity of labor rises. Therefore, a given quantity of value measured in terms of labor measured by some unit of time will represent, as labor productivity rises, a rising quantity of use values. (back)