On August 8, former U.S. President Donald Trump announced that the FBI was searching his luxurious palace-like mansion in Mar-a-Lago in Palm Beach, Florida. Trump wasn’t in Mar-a-Lago. He was in his Trump Tower residence high above Manhattan in New York City, another one of his many residences. Trump claimed he observed the FBI search live on close circuit TV. (1) The FBI raid was ordered by U.S. Attorney-General Merrick Garland. President Joseph Biden claimed he didn’t know about the raid in advance.
The search warrant, soon made public with redactions, is a legal document U.S. police agencies — in this case, the FBI — need for a legal search without the approval of the person who is being searched. According to U.S. law, to obtain a search warrant, the police agency conducting the search must convince a judge — in this case, a federal judge — that there is probable cause of a crime. The alleged crimes being investigated center on Trump’s possession of secret documents with various degrees of classification. Documents with high degrees of classification are documents whose contents are hidden from the American people and everybody else, except for certain high-ranking government officials, for “national security” reasons.
The classified documents allegedly stored at Mar-a-Lago without authorization might include military secrets (including those of nuclear weapons), as well as information, if made public, embarrassing to powerful people. They are supposed to be stored in highly secure government buildings — it’s a crime to hold them in a private residence or other unsecured location. Only Trump and a handful of government officials know what’s in them.
The search warrant indicates Trump is under investigation for possible violations of sections of the World War I era Espionage Act, obstruction of justice, and violations of the Presidential Records Act. In theory, if convicted of crimes under the Espionage Act, Trump could go to prison for decades, and considering his age, this would be a life sentence. Nobody expects things to come to this. However, some of the laws for which he is under investigation carry a provision that a person found in violation is ineligible to ever again hold a federal office, including that of the president.
Trump could, for example, be charged with violating a section of the Espionage Act carrying a ten-year prison sentence but then be offered a plea deal in which he would plead guilty to violating a section of the Presidential Records Act for which he would receive no prison time. But he would be ineligible to hold the position of president again — he’d be out of the picture for the 2024 election. As things stand now, Trump is eligible for one more four-year term.
Before any legal ban could go into effect, if recommended by the attorney general, Trump would have to be indicted by a grand jury. (2) As of this writing, Trump has not been charged with any crime. So he’d either have to be convicted by a regular jury or plead guilty to a crime rendering him ineligible for office. The laws rendering a person ineligible for federal office are of dubious constitutionality and could be challenged in court and ultimately be decided by the U.S. Supreme Court. Three members of the current Supreme Court were nominated by Trump when he was president.
The U.S. president does have the power to declassify documents. Trump now claims he declassified the documents before he left office. However, even the president of the United States has to go through a definite process before documents are declassified. Did he go through these procedures? His critics say he did not. Leaving aside the legal technicalities, the unprecedented FBI search of a former president’s residence raises a slew of questions. Why did Trump take top secret documents with him in the first place? What possible use would classified information about nuclear weapons, for example, be for him? Why would he give his enemies within the ruling class the chance to go after him by keeping such material on his property? Did he plan to use the documents to blackmail his opponents?
Trump was in negotiations for months with the government and agreed to return some documents. But he apparently was determined to hold others which the government only recovered by force on August 8. Reportedly the FBI has a spy within Trump’s inner circle keeping the cops informed about where he was hiding the documents. Did the government recover all they were looking for? Or are there more at another location? Does he have any copies?
While the answers to these questions are anything but clear at this time, one thing is. Trump does not play by the rules, written or unwritten, that other modern presidents — even Richard Nixon — have played by for decades. As a result, the Party of Order is determined he be barred, one way or another, from returning to the White House on January 20, 2025. Or, as Richard Cheney, a senior member of the Republican wing of the Party of Order, and George W. Bush’s war-mongering vice president, said, referring to his daughter’s, Congresswoman Liz Cheney, (3) role in Congressional hearings into the January 6 events, put it, “There is nothing more important she (Liz Cheney -SW) will ever do than lead the effort to make sure Donald Trump is never again near the Oval Office.” (4) As a result of the support Trump still has among part of the population, the Party of Order is forced to take extraordinary measures. This is true due to the current economic and political circumstances that appear to favor Trump winning a new term in November 2024.
Since 2021, the U.S. and world capitalist economy have been going through what I call the COVID aftermath boom. The last cyclical generalized overproduction crisis was in 2007-09. In its wake, both industrial and commercial capitalists were cautious in building inventories because they had been burned when market demand suddenly collapsed in the second half of 2008. As a result, the multiplier and accelerator effects transforming an initial upturn in the industrial cycle, fueled by the capitalists’ need to rebuild depleted inventories, worked more sluggishly than normally. The sluggish upturn combined with the long-term decline of U.S. capitalism created the conditions making the election of a racist political adventurer like Donald Trump (presenting himself as an outsider who’d drain the Washington swamp) possible.
The sluggish upturn combined with a rise in global gold production as a result of the 2007-08 crisis had the benefit of postponing a new generalized cyclical crisis. Tension in the credit markets indicating the approach of a cyclical recession finally appeared in September 2019. But the U.S. dollar held its own against gold — due to the rise in gold production since 2008 — and this combined with a low dollar price inflation rate reflecting the upturn’s weakness — gave the Fed leeway to allow falling interest rates after September 2019 with the hope of limiting a new cyclical recession. The industrial cycle appeared under control, much as it was during “the great moderation” of 1983-2007. (5)
Then came the COVID shutdowns. The March-April 2020 recession sent unemployment soaring into double digits, followed by depressed production. A cyclical overproduction crisis didn’t cause it. This resulted from government-ordered shutdowns of global industry, representing an attempt to stamp out the deadly pandemic within a few weeks. It is important to distinguish a normal recession, that is, a cyclical overproduction crisis, from government-enforced shutdowns. This period of underproduction depleted inventories. The resulting shortages have been dubbed the supply chain crisis.
The supply chain crisis forced businesses to throw caution to the winds when it came to managing inventories. Previously the capitalists followed a “just-in-time” inventory management policy to maximize capital turnover rate by preventing stagnation either in the form of idle stocks of parts and raw material or unsold commodities collecting dust in warehouses.
But as the shutdowns eased, industrialists scrambled for inputs, and commercial enterprises scrambled for commodity capital under the pain of losing customers to competitors. One consequence of real capitalist competition is that if a buyer cannot find a commodity from their regular supplier, they search for alternative sources. As a result, many businesses began hoarding supplies before prices rose even more, creating the appearance of severe commodity shortages relative to demand. This resulted in a rise in prices that spread to supermarkets and gasoline stations.
Capitalists were flooded by a wave of orders as their customers rebuilt their inventories. Production recovered from the COVID shutdowns, and businesses began to scramble for workers for the first time in decades. Workers were reluctant to return to work for fear of contracting COVID. This created a favorable situation for the sellers of labor power compared to the buyers. The capitalist media complained of the “great resignation” as workers quit low-paid and, with the continuing pandemic, dangerous jobs for better-paid, safer jobs.
This led to a new wave of labor organizing and strikes, especially in warehouse and service businesses. Though wages in terms of dollars have risen, real wages have declined in purchasing power as wages lag behind rising prices. The COVID aftermath boom has seen one of the most significant falls in real wages on record. This fall in real wages under boom conditions results from a weakened and shackled labor union movement which has allowed the right to strike to be whittled away. (6) Inflation associated with the COVID aftermath boom shows the importance of a sliding scale of wages, popularly known as cost-of-living adjustments, to protect workers’ standard of living as well as the right to withhold the only commodity we have to sell, our labor power.
It is not only hourly real wages that have been falling. The popularity of the “pro-labor” Democratic President Biden has fallen in tandem with the fall in wages. As a result, some polls show Trump beating Biden in the popular vote while others show it as neck and neck. We have to keep in mind, however, that the president is chosen by the electoral college and not the popular vote. This allows a candidate to assume office even when they lose the popular vote — as happened in the 2016 election as well as in 2000 when Democrat Al Gore won the popular vote, but Republican George W. Bush was sworn in as president on January 20, 2001. If Trump is allowed to win the Republican nomination in 2024, the Democratic candidate will have to win the popular vote by a considerable margin to keep Trump out of the White House come January 2025.
The history of capitalism reveals that when normal capitalist reproduction is disrupted by extra-economic causes unusual scrambles for inventories both in the sense of commodity capital and circulating constant capital, as well as labor power follows. Whether caused by the aftermath of a world war, or a global pandemic, it leads to an overproduction crisis. I have described recessions that followed the non-cyclical aftermath booms of 1918-20, after World War I, and 1946-48, after World War II, as “reset” recessions because they reset the industrial cycle interrupted by a world war. There seems to be no reason why the current aftermath boom won’t end in a similar reset recession, though its severity and duration remain to be seen.
Signs of overproduction abound
Reporter Dani Romero writes, “There could be relief ahead as retailers look to move bloated inventories, according to a new note by Bank of America (BofA). ‘At one extreme, general merchandise stores are overstocked,’ the analysts wrote, ‘but the good news is that excess inventories could put downward pressure on inflation as big box retailers mark down their prices to entice consumers.’”
Reuters’ Lisa Baertlein reports, “America’s largest warehouse market is full as major U.S. retailers warn of slowing sales of the clothing, electronics, furniture and other goods that have packed the distribution centers east of Los Angeles. … Suppliers — ranging from barbecue grill maker Weber Inc to Helen of Troy Ltd, a consumer brands conglomerate that includes OXO kitchen tools — also have warned of slowing demand and an urgent need to clear inventories. While the U.S. economy was downshifting, goods kept pouring in at near-record levels.”
This is a classic description of capitalist over-trading fueling capitalist overproduction.
A sector of the economy doing particularly well is the demand for warehouse space because it’s getting scarce. Baertlein reports, “Demand for space in the Inland Empire is so intense that when 100,000 to 200,000 square feet of space frees up, it ‘gets gobbled up in a second,’” according to Scott Weiss, vice president of the Performance Team an enterprise that has 22 warehouses in greater Los Angeles.
Conflicting economic data from the U.S. government
On July 27, the U.S. government reported that the Gross Domestic Product declined at an annual rate of 0.9% after falling at an annual rate of 1.6% the previous quarter. According to Associated Press writer Paul Wiseman, on July 27 “the GDP report for last quarter pointed to weakness across the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories tumbled as businesses slowed their restocking of shelves, shaving two percentage points from GDP.” The standard definition of a recession is a fall in the GDP for two consecutive quarters. By this measure, the U.S. economy is in a recession and has been in one for some time.
However, government data on employment-unemployment contradicts the picture of an economy in recession. One figure widely publicized by the media was the U.S. Labor Department estimate based on a survey of business establishments that 528,000 jobs were created in July in the non-farm economy. The media reported as fact that 528,000 jobs were created in July. But this is only a preliminary estimate and will likely be revised. The government also reported that according to a different method of estimating employment growth, the household survey, 179,000 jobs were created in July. Well, which is it? Was it 528,000 jobs in July, which as the bosses report? Or was it 179,000 as households, meaning workers, report?
Eventually, the government will know how many people were working legally in July in the non-farm economy — as opposed to working off the books — because the bosses are required to report to the government the number of people they employ to determine Social Security and unemployment insurance withholding of the workers’ wages. It will take time before the real numbers are available.
Using the household data, few, if any, jobs were created during the last four months. This is consistent with the economy being in a mild recession. The hundreds of thousands of new jobs created monthly that the establishment survey reports are hard to reconcile with an economy already in a recession. This does not mean a recession is not approaching, as shown by indicators such as the inverted yield curve. The yield curve — the relative levels of yields on long-term versus short-term debt — often becomes “inverted” just before a recession.
The only thing we can say about the government data at this point is that it’s more contradictory than usual, though contradictory data isn’t unusual during the transition period between a dying boom and a developing recession.
Keeping the employment data is perspective
But let’s go with the establishment survey’s claims that the economy has created hundreds of thousands of jobs a month, including the 528,000 new jobs in July. This many new jobs in such a short time is impressive by capitalist standards. But this only brings total employment up to the level that prevailed on the eve of the COVID shutdown in February 2020. This means that the economy failed to create new jobs for more than two years on a net basis. What happened was that employment collapsed due to the COVID shutdowns and then rebounded, leaving total employment at about where it was two years ago. But though there have been no new net jobs created, the population grew, and now, more jobs are needed.
What the Federal Reserve System has been trying to do
The Federal Reserve raised interest rates — or rather, allowed them to rise — to bring the inflation rate down to its target level of 2% per year from the current level of about 8.5%, according to official government statistics. (7) According to the economic theories of John Maynard Keynes — upheld by Federal Reserve economists — the general price level is determined by money wages. Inflation develops whenever money wages rise faster than labor productivity. Once inflation develops, the only way to slow it down is to reduce the number of new jobs. When this happens, competition among the sellers of labor power — workers — increases, while competition among the buyers of labor power — the bosses — falls. The Fed claims that a fall in the demand for labor (power) causes money wages to stop increasing and even fall. In this way, the Fed claims, a higher level of unemployment will slow the rate of general inflation from the current level of around 8.5% back down to 2%.
Workers are asked to bear the burden of fighting inflation by accepting fewer jobs and more unemployment. Supposedly, when inflation fades, real wages will rise as labor productivity rises, therefore a reduction in the number of jobs created is in the interests of bosses and workers alike. The argument that rises in money wages drive inflation was refuted more than 200 years ago by David Ricardo. His arguments were further developed in Marx’s pamphlet “Value, Price and Profit.” Capitalists don’t want unemployment to drop “too low” because when it does, the position of the sellers of labor power improves. Rising wages do not mean higher inflation, but as Ricardo and Marx explained, it does mean lower profits.
The aftermath booms of 1919-20 after World War I and 1946-48 after World War II saw an upturn in union organizing and strikes as workers took advantage of the extraordinary demand for labor power created by the aftermath booms. We see the same phenomenon with the current boom following the COVID shutdowns. Real wages, calculated on an hourly real basis, have fallen, but the situation would have been worse without the increased labor organizing and strikes. Experience shows that periods of inflation are not favorable for real wages.
The Federal Reserve is aiming for a so-called soft landing, where unemployment increases just enough to slow down the increase in wages. It wants to keep the post-COVID aftermath boom reset recession mild enough so capitalist statisticians can claim there was no actual recession, only a slowdown. The Fed admits it might not succeed in this. It says a major recession with mass unemployment is a better outcome than continuing wage increases and rising inflation. Progressives, on the contrary, argue continuing inflation is better than a recession with renewed mass unemployment.
The absolute overproduction of capital versus the relative overproduction of commodities
Capitalists need a certain level of unemployment to maintain an increase in the rate of surplus value necessary to check the long-term tendency of the profit rate to fall. If genuine full employment developed — as defined by the job seekers, not the capitalist economists — the rate of surplus value would collapse, and profits would disappear as capitalists competed for our labor power. As a result, the investment of additional capital would fail to increase surplus value. Marx called such a situation the “absolute overproduction of capital.”
A relative overproduction of commodities can cause profits to collapse even if the rate of surplus value remains high. While the Fed will never admit this — and may even be unaware of it — when a relative overproduction of commodities develops, to preserve profits, the central bank has to slow down trade and production. The reason is that profit is the form of surplus value measured in terms of the use value of the money commodity. No profit can be made if surplus value is not produced. An absolute overproduction of capital by making the continued production of surplus value impossible would wipe out profits. However, even if conditions remain favorable for the continued production of surplus value profits are not assured. Surplus value contained in commodities doesn’t become profit until the commodities are sold at profitable prices. If commodities cannot be sold at profitable prices because too many commodities have been produced relative to market demand we don’t have an absolute overproduction of capital but rather a relative overproduction of commodities.
Profits that are the money form of surplus value must be calculated in terms of the use value of the money commodity, not simply in terms of arbitrary fiat monetary units like U.S. dollars or British pounds. They must be calculated in terms of the use value of the money commodity — quantities of gold bullion measured in some unit of weight. A crisis of overproduction occurs when the central bank cannot stimulate demand any further without causing an increase in the demand for gold bullion to reach such levels that profits in terms of gold bullion are wiped out, as happened in the 1970s.
When overproduction reaches the point that hoarding gold becomes more profitable — though gold yields by definition a zero rate of profit in terms of gold bullion (8) — then conducting a business enterprise, no matter how high profits are in terms of the depreciating currency, a crisis cannot be postponed. As the 1970s showed, the demand for gold reaches fantastic levels, and inflation increases at a faster rate as the currency loses value against gold. The only way to escape this situation without a hyperinflationary collapse is to allow interest rates to explode upward, bringing on a deep recession with mass unemployment. This is what happened during the Volcker shock of 1979-82.
Recessions temporarily reduce the dollar (or other currency) profit rate but also preserve — or in the 1970s, restore — a positive rate of profit in terms of the use value of the money commodity allowing the economy to recover. From the capitalist viewpoint, recessions also have the “happy effect” of increasing competition among the workers for jobs while reducing the capitalist competition for workers. The rate of surplus value is thus increased while absolute capital overproduction never develops. Recessions safeguard profits in the long run at the price of a temporary reduction of profit.
This outcome is only possible when an overproduction period is compensated by an underproduction period — recession/depression. During depressed economic activity and high unemployment, the overproduced commodities are sold off at prices below their value — or prices of production. If the central bank eases before the overproduced commodities are liquidated, the crisis breaks out anew, and the economy returns to recession. The art of central banking is to determine when it is safe to ease up.
What does this have to do with the August 8 FBI search of Trump’s Mar-a-Lago mansion? From the point of view of keeping Trump out of the White House it seems sensible for the Federal Reserve System to ease its campaign to tighten credit since a deep recession and its aftermath of mass unemployment would make it harder for a Party of Order Republican to defeat Trump in the Republican primaries or for a Party of Order Democrat to defeat him in the general election. For example, a 2023 recession with mass unemployment lingering through 2024 would make it difficult for any Democrat to defeat Trump in the 2024 election.
If the Fed eases up now, it would avoid a return to mass unemployment in 2023, but it would likely face runaway inflation in 2023, followed by a deeper recession and higher unemployment in 2024. Nothing would be better for Donald Trump’s campaign to return to the White House. The Party of Order policymakers running the Federal Reserve System and the government can’t theoretically explain the problems they are facing the way I do here. For that, they need the tools provided by Marxism, and that is our advantage over them. (9) But leaders of the Party of Order sense the difficulties they are in, and that is why they’re forced to turn to the Department of Justice and the FBI to block Trump. The Party of Order, unable to fight Trump’s Bonapartism by normal political means, is forced to fight it by Bonapartist methods.
Now let’s return to Anwar Shaikh.
Shaikh, Real Competition and Money
In “Capitalism,” Shaikh writes, “Capital is a particular social form of wealth driven by the profit motive. … Each individual capital operates under this imperative, colliding with others trying to do the same, sometimes succeeding, sometimes just surviving, and sometimes failing altogether. This is real competition (emphasis Shaikh’s), antagonistic by nature and turbulent in operation.” Shaikh then adds, “It is as different from so-called perfect competition as war is from ballet.” [p. 258, “Capitalism”]
Ricardo and his neoclassical successors assume that capital is always fully utilized. This means that any increase in effective monetary demand affects nominal prices and incomes but not production, employment, or real incomes, defined as the purchasing power of profits and wages. However, this is not what happened following the discovery of gold in California in 1848 and Australia in 1851 which led to an increase in effective monetary demand worldwide. Shaikh writes, “In the earlier time of commodity-based money, the flood of new gold flowing out of California mines in the 1840s enhanced global purchasing power and raised global output as it spread from the New World to the Old.” [p. 625, Capitalism]
While prices rose after 1848, the rise in prices was dwarfed by the rise in industrial production, employment, world trade, wages, and profits that occurred after 1848. This period of accelerated capitalist growth was called the mid-Victorian boom. If the quantity theory of money was correct, prices should have risen more than they did, while the rate of increase in production and real incomes should have been unchanged. This would have been in full accord with the quantity theory of money and the neutrality of money that holds that changes in money quantity affect only nominal prices, wages, and profits, not the production of real wealth. But history disproved the theory.
Shaikh, along with Marx and the Keynes of “General Theory,” rejects the quantity theory of money and the neutrality of money. He believes changes in the quantity of money like that caused by the discovery of gold in California and Australia had great effects on the real economy, not just on nominal prices, wages, and profits. But this raises another question. Does an increase in the quantity of paper money, not backed by an increase in the quantity of gold, have the same stimulating effects on production and real incomes as an increase in the quantity of gold? Shaikh believes that answer is yes. Shaikh writes that the “striking feature of a modern credit system based on fiat money is that it can drive virtually unlimited growth in aggregate demand. … The issue then becomes one of the limits to the growth of supply.” [p. 693, “Capitalism”]
If Shaikh is correct, modern non-commodity money should banish general crises of overproduction.
This view is at odds with Shaikh’s belief that there are no stages in capitalist development. As we have seen, Shaikh rejects the theory — supported by Hilferding, Lenin, and in their own way, the “Monthly Review School” — that around the turn of the 20th century, the age of competitive industrial capitalism gave way to monopoly capitalism. Lenin defined imperialism as the monopoly stage of capitalism, and the view became the foundation of the Third International. If Shaikh is right that the “modern credit system based on fiat money … can drive virtually unlimited growth in aggregate demand,” capitalism underwent a drastic mutation around the year 1940 when non-commodity fiat money replaced commodity-based money as the “medium of price.”
If Shaikh is consistent, he’d have to say that before 1940, capitalist production was limited, as Marx and Engels emphasized throughout the decades of their revolutionary activity, by the size of the market. As Marx and Engels explained, the medieval guild system limited feudal craft production under capitalism; the market’s ability to absorb commodities at profitable prices limits capitalism. That Marx and Engels were right is illustrated by the accelerated growth of capitalist production that followed the 1848 and 1851 gold discoveries. By expanding the market, gold discoveries eased but did not eliminate the restriction on the ability of the market to absorb commodities at profitable prices that were imposed on capitalist production. By 1873, the depletion of California gold mines, combined with the vast increase in the physical ability of the industrial capitalists to produce, again tightened restrictions the market imposed on capitalist production. The result: the 1873-96 “long depression” Shaikh writes about.
The easing that the 1848 and 1851 gold discoveries had on market restrictions imposed on capitalist production was temporary because, after the discoveries, there was nothing comparable until the gold discovery in the Yukon in the mid-1890s. (10) The Yukon discovery was followed by an expansion of capitalist production, employment, and world trade, lasting until the eve of World War I. By that time, the Yukon mines were depleted. After World War I, the effects that market limits imposed on capitalist production growth reasserted themselves as the Great Depression of 1929-40.
If Shaikh is right, before 1940, the periodic accelerated expansion in market demand fueled by gold discoveries was always temporary because it was only a matter of time before the new gold mines were exhausted. Things changed when commodity money was replaced by pure-fiat non-commodity money after 1940. After 1940, the growth of the market is no longer limited by the market’s ability to grow but only by the ability of the capitalists to increase supply. If true, this represents no small change in the nature of capitalism and capitalist competition.
If he were consistent, Shaikh would claim at least two stages of capitalism. The first stage was before 1940 when capitalist production was limited by the market’s ability to grow, which was less than the capitalists’ ability to increase production. The second stage is after 1940; thanks to modern pure fiat money, the capitalists’ ability to increase supply becomes the limiting factor on production. (11)
Such a mutation of capitalism would change the nature of the competition between individual capitalists, as well as the nature of the competition between capitalists as buyers and workers as sellers of labor power and the competition between the workers themselves as sellers of labor power. This change would not be temporary, as was the case following major gold discoveries, but permanent.
Marx’s description of real competition
Marx intended to write a book on the world market, competition and crises. This book was never written. Shaikh’s “Capitalism” attempts to fill the gap. Marx dealt with competition in his early, pre-1857 works. He would doubtless have integrated his earlier insights into his post-1857 economic discoveries, and there is no reason to believe he would have discarded his earlier work on competition.
Marx includes a vivid description of “real competition” in “Wage Labor and Capital.” The text is based on a series of lectures before the German Workingmen’s Club of Brussels in 1847. They were reprinted in the Neue Rheinsiche Zeitung in 1849. In 1891, they were published as a pamphlet in revised form, and the term labor was replaced with the term labor power by Frederick Engels as the name of the commodity the workers sell to the industrial capitalists. This was in accord with Marx’s post-1857 distinction between labor and labor power. The change in terminology is vital to understanding the nature of surplus value production and doesn’t affect Marx’s description of real competition.
Marx wrote, “The competition by which the price of a commodity is determined is threefold.
The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply is sure to drive the other sellers from the field and secure the greatest market for themselves. The sellers, therefore, fight among themselves for the sales, for the market. Each of them wishes to sell and to sell as much as possible, and if possible, to sell alone, to the exclusion of all other sellers. Each one sells cheaper than the other. Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.”
Marx explains, “But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.”
“Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors, i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.”
But what determines the intensity of the competition? In “Capitalism,” Shaikh treats real competition as an unchanging battle to the death. But Marx explains the intensity of competition depends on the prevailing relationship between supply and demand at any given time.
Marx gives an example where the demand for a commodity at the prevailing price is greater than the supply.
Marx wrote: “Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales. This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world. In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton. The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another’s hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.”
According to this description of real competition, the relationship between the sellers can be peaceful as long as demand is greater than supply. To the extent demand exceeds the supply of a given commodity at existing prices, competition between the sellers fades away while competition between the buyers becomes strong.
Marx wrote: “If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all (my emphasis -SW) among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.”
But what about when supply exceeds demand at current prices?
Marx wrote: “It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.”
Notice Marx considered the situation where supply exceeds demand at the current price to be more typical than the opposite situation.
Marx wrote: “The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law. The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident — as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations — it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.”
Here Marx describes the operations of what Shaikh calls real competition as opposed to the neoclassicals’ fantasy of general equilibrium, which Shaikh rejects.. If Marx had rewritten this passage late in his life, he would have substituted the term “cost” of production with “price” of production. The price of production is what society pays for a commodity, while the capitalist pays the cost price, which is the cost of the commodity to the industrial capitalists. The difference between the price of production — what the final consumer pays — and the cost price is the profit pocketed by the capitalists. Otherwise, this passage is in accord with Marx’s mature analysis.
Marx, writing in 1847, believed that the situation where the supply of commodities exceeds demand is more common than where demand exceeds supply. This expresses not only the “young” Marx of the 1840s but of Marx for the rest of his life and Engels until he died in 1895. But Shaikh believes the views of Marx and Engels have been out of date since 1940. While before then, periods of rising prices are regularly offset by periods of declining prices, after 1940, prices only rise. Before then, periods of demand exceeding supply were offset by periods of supply exceeding demand. After 1940, Shaikh believes demand always exceeds supply. The very nature of real competition is transformed.
Under the pre-1940 commodity-based monetary system, demand grew more slowly than supply. Periodic production reductions were necessary to keep supply in line with demand. Effective demand grows faster than supply in the post-1940 non-commodity monetary system, breeding constant inflation. Demand has to be restrained to keep it in line with supply growth. Supply is limited by the physical limits of production. It is no accident that the term overproduction is absent from the thousand pages of “Capitalism” except where it appears within quotations from Marx. Following Shaikh’s logic, the position of the commodity sellers as opposed to the commodity buyers — workers are sellers of the labor power commodity — has been permanently strengthened thanks to the introduction of non-commodity money relative to the position of the labor power buyers — the capitalist class.
Or does it? Last month we saw that Shaikh examined the history of British wholesale prices between 1790 and 1940 in terms of ounces of gold. The concrete history of golden prices shows no fundamental change in the direction of prices after 1940. If there is any change, it’s that between 1790 and 1940, prices change so little over the long term. However, after 1940, golden prices continue to fluctuate, and they now show a long-term downward tendency.
Last month I promised to take another look at Shaikh’s criticisms of the Okishio Theorem in light of Shaikh’s confused, contradictory theory of money and his acceptance of the claim that modern money is non-commodity money.
Okishio Theorem and competition
In dealing with what is called “the choice of technique,” Shaikh writes, “If competition is taken as equivalent to perfect competition, then the conventional (Okishio) selection criterion is the highest profit rate, and this implies that average profit rate falls, only at sufficiently high wage shares.” [p. 261, “Capitalism”]
Or in Marxist terms, the rate of profit falls only if the rate of surplus value falls. Some months ago, I examined a pair of tables that appears on page 263 of “Capitalism.” The tables give examples where if a commodity sells at the price of 100, it is indeed more profitable to use capital-saving methods of production. The reason this is true is that though the cost price is higher, the rate of profit will also be higher because the higher-cost method economizes more on capital compared to the lower-cost method.
The lower-cost method always yields a higher profit rate if it’s calculated on capital used up during a particular production cycle; the profit rate is calculated on the total capital advanced. With a given profit, everything remaining equal, the profit rate is lower the greater the capital advanced. The Okishio Theorem is based on this.
Here I use an example I constructed based on the same tables appearing on page 263 in “Capitalism.” Table 7.2 has an error: Column 3 contains the profit made per unit sold. The numbers were incorrectly rounded up, throwing off the calculation. I corrected the error to keep the numbers consistent. The table includes four methods of production: A B C D. To simplify, I assume only two production methods, method A and method D. Based on numbers provided in table 7.1, I assume that 100,000 coats of a certain type and quality are produced by each industrial capitalist per year using A. I also assume that 130,000 coats per year are being produced by each capitalist using D. The cost price is $82 for A and $76 for D.
All the capitalists using A produce and sell 100,000 coats per year for $100 each. Those using D are selling 130,000 coats per year at $100 each. The “law of one price” forces all the capitalists to sell coats of the same type and quality in the same market to charge $100 per coat despite different cost prices. The numbers imply that capitalists using A are producing about 43% of the total output — we’re doing some rounding here — and the capitalists using D are producing 57% of the total.
Which group of capitalists will make the higher rate of profit? At first glance, we’d think it would be those using D because they’re producing most cheaply. Their cost price of $76 per coat is lower than those using A at $82 per coat. However, it turns out that those using A are making a higher rate of profit on their total advanced capital.
The D capitalists use $21,000,000 of capital to produce the 130,000 coats we assume they sell annually, while the A capitalists need only $12,000,000 to produce 100,000 coats. Though the A capitalists have a higher cost price, they make up for it by saving capital.
Though the tables on page 263 do not distinguish between constant and variable capital, we assume all have to pay the same wage. So the D capitalists use more constant capital than those using A. The D capitalists make a higher profit of $3,600,000 per year because they have a lower cost price and they produce and sell more coats, while the A capitalists make only $1,880,000 per year. It’s a different story if we calculate the profit rate on the total capital advanced. The A capitalists make a profit rate of 15% on the total capital they advance, while the D capitalists make a profit rate of 14.86% on their total advanced capital.
Using the lower organic composition method A is more profitable than the higher organic composition method D, as A saves so much (constant) capital and thus has a higher profit rate. In the real world, D wouldn’t be used as it “wastes” so much constant capital that it ends up with a lower profit rate than A.
Let’s assume capitalists producing 57% of the total per year stick with lower cost D despite its lower profit rate, while those producing 43% follow Okishio’s advice and use A despite its higher cost as it economizes on capital and yields a higher profit rate. We’ll treat the entire capital invested as a single social capital, so the profit rate will be about 14.92%, reflecting a combination of methods A and D.
Now let’s assume many years pass and our capitalists have doubled production, but nothing else has changed. The A capitalists now produce 200,000 coats annually, and the B capitalists now produce 260,000. The only thing that changes is the annual profit for the A capitalists rises from $1,800,000 to $3,600,000, while the profits of the D capitalists rise from $3,120,000 to $6,240,000. The yield on the total capital remains at 14.92%. (12)
We can also assume that 14.92% represents the profit rate for the industry as a whole. If the profit rate were higher in the other branches of industry, some of the invested coat industry capital would move into different branches, raising the profit rate for the coat industry. Conversely, if the profit rate in industry as a whole is lower than 14.92%, capital moves into the coat industry, lowering its profit rate.
As explained before, assuming money is a commodity, general relative commodity overproduction crises are inevitable. When total production is lower, all coat capitalists sell all their coats for $100. They share out the market for this coat type and quality among themselves. But as production expands, the market also expands, but not as fast as production.
An overproduction crisis now breaks out. The market can no longer absorb all the coats being produced at $100 each. So the coats start piling up in warehouses. To liquidate the overproduction, capitalists are forced to hold a sale. Coats are marked down to $76 per coat.
A portion of the capitalists go out of business; they are fighting for their business lives. In this battle for survival, the D capitalists have an advantage over the As. They can cut the selling price to $76 and still break even. The A capitalists can only reduce their price to $82 before they start losing money. As the sale continues, the 43% A capitalists are bleeding money and forced out of business, leaving only the D capitalists.
The crisis passes, and the sale ends. But the new sale price is no longer $100, but only $89.50. For simplicity, we assume that whatever commodity serves as money remains unchanged in social value. Once the crisis has passed, coats cannot be sold for more than $89.50. By the low point of the crisis, coat production has fallen 43% because all the A capitalists have gone out of business. This clears the market, and the sale ends. The new coat price is $89.50. At this price, the crisis-shrunken market can absorb all that the A capitalists produce, but no more.
The years go by, and both the production and the monetary effective coat demand fully recover and reach new highs. Eventually, 1,040,000 coats per year are produced and sold at $89.50 each. Our industrial capitalists earns a profit of $14,040,000, a new record. The D capitalists however earn a profit rate on the total advanced capital of only 8.36% compared to the 14.86% they earned before the crisis. But what of the formerly more profitable A capitalists? They are out of business completely now, making no profits at all.
In the above example, based on Shaikh’s two tables, we see several laws of capitalist development and competition illustrated. Let’s examine them. In the beginning, we had X industrial capitalists producing coats of a particular type and quality, selling them at a price of $100 per unit. The .57X industrial capitalists using the cheaper but less profitable method D were not able to produce enough coats to satisfy market demand for $100 a coat. Since demand exceeds supply, this enabled additional capitalists to enter the coat manufacturing business using method A.
The capitalists using the lower cost per unit but more capital expensive method D cannot produce enough coats to prevent the market price from rising above $100, so the capitalist using method A could enter the market and realize a slight super-profit of 15% compared to an average profit of 14.92%. The extra production hitting the market prevents the price from rising above $100 and exceeding the average profit rate of 14.92%.
But then, an overproduction crisis temporarily shrinks the market. The shrinkage drives high-cost A capitalists out of business. The crisis then bottoms out, leaving only the lower-cost D capitalists still standing. This is the centralization of capital. Fewer independent capitalists make our coats. At the bottom of the crisis, the surviving capitalists make a smaller total profit than before the crisis hit. Once the crisis is over, these capitalists realize a profit rate of 8.36%, the new profit rate of profit throughout industry compared to the 14.86% they were making before the crisis.
After contracting temporarily, the coat market resumes long-term growth. After some time, the growing mass of profit reflecting the rising number of coats produced and sold at $89.50 per coat makes up for the fall in the profit rate on total capital advanced. The surviving capitalists, now all using method A, make more profit than ever, though the rate of profit has fallen from 14.86% to 8.36%. Because the profit rate has fallen, more capital is needed than before the crisis to conduct business since D capitalists need more capital than those using method A.
The deeper level of value hides behind the market price and production prices. So we can assume the D capitalists will make coats with a lower individual value than the A capitalists. But the crisis drives out the capitalists using the (constant) capital-saving method A. This leaves unchanged the individual value of coats produced by method D, but drives down the social value of all coats of that given type and quality to the individual value of D.
But suppose the government using “pure fiat money” keeps demand rising, so an overproduction crisis never arrives. Then not only will the capitalists using Method A remain in business, but it will also be profitable for the D capitalists to shift to method A. Since a shift from method A to D reduces production causing prices to rise above $100, perhaps a few extra capitalists will be needed to prevent the selling price from rising above $100. The number of capitalists will increase, and the general profit rate throughout the industry will rise slightly above the previously prevailing rate of 14.92% as the average organic composition of industry declines slightly. In Marx’s language, capital will become more decentralized, as neoclassical economists assume. But pure fiat or non-commodity money is an illusion: money must remain a commodity. This means government attempts to expand demand to keep up with production will eventually fail. Capitalists following Okishio’s advice to make a higher profit rate are rewarded with bankruptcy.
The disappearance of overproduction crises means a rise in the value of wages and a fall in the rate of surplus value because the demand for the commodity labor power outruns its supply. Eventually, the profit rate falls as the value of wages rise. A fall in the profit rate caused by rising real wages is allowed for by Okishio. If the profit rate falls enough, this causes a crisis but not one of relative commodity overproduction. Instead, we have what Marx called a crisis of the absolute overproduction of capital because once all potential workers are fully employed, any further investment of capital fails to produce additional surplus value.
The quantity of surplus value falls in absolute terms because the competition for jobs dries up while competition for labor power among the capitalists is whipped into a fury. This is the basic law of competition as described in Marx’s early work “Wage Labor and Capital.” When he deals with the tendency of the profit rate to fall, Shaikh, like Marx, assumes the profit rate falls independently of a fall in the surplus value rate due to the rising organic composition of capital. This is what happens in the Bauer-Grossman model of breakdown crises that assumes the surplus value rate remains unchanged and the profit rate falls due only to a rise in the organic composition of capital.
The Bauer-Grossman model of breakdown crises relies on a rising organic composition of capital, while the Okishio Theorem denies this will happen because no capitalist adopts a production method that will lower the profit rate. If we combine Marx’s description of real competition found in his early work — “Wage Labor and Capital” — with his mature work — Volume III of “Capital” — we get a picture of the laws of motion of capital unfolding independently of the will of the individual capitalists, the capitalist class as a whole, the capitalist state and its central bank. These laws of motion, including the tendency of the profit rate to fall due to the rising organic composition of capital, are enforced against the will of the capitalists both individually and collectively through their mutual competition.
One of the consequences of Marx’s economic law is that money must be a commodity. Any attempt to establish non-commodity money fails as long as capitalist production continues. A consequence of this law dictating that money must be a commodity is that in conditions of advanced capitalist production, periodic crises of relative general commodity overproduction are inevitable at periodic intervals. It’s during these overproduction crises that capitalists — seeking to cheat the laws of motion discovered by Marx by using high-cost but (constant) capital-saving production methods — are eliminated.
It seems Shaikh either has to give up his defense of Marx’s laws of motion through real competition in “Capitalism,” or he has to give up pure fiat, non-commodity money. In one long volume, Shaikh has actually written two books without being aware of it. One defends the laws of motion of capitalism discovered by Marx based on the earlier work of classical bourgeois political economy. The other assumes non-commodity money that, if correct, overthrows Marx’s laws of motion. Shaikh’s two-books-in-one stand in contradiction with one another.
(1) Not everyone whose residence is raided by the FBI’s political police gets such polite treatment. On July 29, shortly before the FBI raid on Trump’s Florida compound, the FBI raided the offices of the African Peoples Socialist Party/UHURU. At a press conference in Brooklyn, N.Y., called in defense and solidarity, December 12th Movement spokesperson Roger Wareham said, “On July 29, the FBI broke into the St. Louis home of African People’s Socialist Party Chairman Omali Yeshitela and his wife, Ona Zene Yeshitela, dragged them into the street and forced them to sit for hours on the curb in handcuffs. They employed similar tactics at the St. Petersburg, Florida, and the St. Louis offices of the UHURU Movement. These illegal and fascistic attacks are not just an assault on the African People’s Socialist Party/UHURU Movement (APSP) but the entire Black Liberation Movement.” The federal political cops charged Russian citizen Aleksandr Ionov under the Foreign Agent Registration Act with working with the African Peoples Socialist Party/UHURU in support of their opposition to U.S. policy in the Donbass-Ukraine. Like many Africans, the pan-Africanist African People’s Socialist Party/UHURU sympathizes with Russia in the Russian-Ukrainian war.
Colin Pariot of the National Lawyers Guild explained at the press conference: “The FBI has claimed that these raids were intended to root out foreign influence in U.S. policy. Specifically attacking community activists who dare to express solidarity with people oppressed by the U.S. and its allies across the globe. This is not the first time that the FBI has used these same kinds of charges under the Foreign Agent Registration Act to criminalize international solidarity. But you do not have to be a foreign agent to recognize the role of U.S. imperialism to understand the material interests of communities here in the U.S. are directly tied to those of people living under the boot of imperialism around the world.”
Ionov, who is in Russia, is charged with violating the Foreign Agent Registration Act. He is head of the Anti-Globalization Movement of Russia. The U.S. media claims Ionov is a member of a Russian foreign intelligence organization. Even if true, Ionov is not charged with engaging in espionage — what U.S. state secrets would the anti-imperialist African Peoples Socialist Party/UHURU have access to? And Ionov is not being accused of terrorism or anything life-threatening. No, Ionov is charged with engaging in lawful political activity. The only reason the FBI can raid the African Peoples Socialist Party is that Ionov, who the African Peoples Socialist Party was allegedly working with, is a foreigner. The Foreign Agent Registration Act is an attempt to legally ban political activities of non-U.S. citizens and thus get around the First Amendment to the Constitution within the United States if the foreigner opposes the policies of the U.S. government.
As for leaders of the African Socialist Peoples Party/UHURU, since they are U.S. citizens engaged in constitutionally protected political activity, they are not being legally charged with anything. However, this didn’t prevent the federal political police from handcuffing the elderly African Socialist Peoples Party leader Omali Yeshitela and his wife Ona Zené Yeshitela and forcing them into the street for hours while the political police searched the headquarters of the African Socialist Peoples Party supposedly looking for evidence against Mr. Ionov. [Amsterdam News, “FBI raid on African Peoples’ Socialist Party denounced,” by Amadi Ajamu.] (back)
(2) Under U.S. federal law, nobody can stand trial for a crime unless a grand jury indicts them. This is a special jury that charges but does not convict people of a specific crime if it finds probable cause that they committed a crime. The person indicted by a grand jury then stands trial and is considered innocent under the law until a regular jury convicts them. Grand juries originally arose to prevent people from being charged with crimes for trivial reasons. Today, grand juries are considered by civil libertarians to be an obsolete institution and a threat to civil liberties because persons being investigated for possible crimes have no right to confront their accusers. The saying goes that a grand jury would “indict a ham sandwich if that’s what you wanted.” (back)
(3) Liz Cheney is a Republican Congresswoman from Wyoming who has been investigating Trump’s role in the January 6 attack on the U.S. Capitol. The difficulties the Party of Order is running into in its attempt to keep Trump out of the White House were illustrated when Representative Cheney was defeated in the August 17 Republican primary by a pro-Trump opponent. (back)
(4) This makes clear the real aim of the January 6 hearings is not to reveal the truth about January 6 but to keep Trump out of the White House. (back)
(5) The “Great Moderation” was undermined by the exhaustion of the South African gold mines that led to the first sustained decline, 2001-08, in gold production since the 1970s. The depletion of the mines meant that it took more hours of abstract human labor to produce a given weight of gold bullion than before. The result was that in the years preceding the 2008 banking panic, market prices measured in gold terms were above production prices measured in gold terms.
Because of the resulting high demand for gold, the Fed had to protect the value of the U.S. dollar by refraining from the expansion of the quantity of U.S. dollars, even as recession clouds gathered until full-scale financial panic broke out in September 2008. The result was a severe crisis, the 2007-09 recession. The crisis did lower the golden prices of commodities relative to their golden prices of production. At these lower golden prices, the market commodity prices were again in line with underlying production prices. The result was a new rise in gold production as it became profitable to exploit poorer mines.
Today a sharp new crisis threatens, thanks to the COVID aftermath boom, as market prices rose relative to their underlying production prices. While in the years leading up to the Great Recession, the fall of the prices of production below the market prices of commodities led to the unusually severe recession, this time, the problem is a rise in market prices above the prices of production.
The longer this inflation continues, the more market prices will rise above their prices of production. To prevent this situation from leading to a new run into gold against the U.S. dollar, the Federal Reserve System has been forced to let interest rates rise to defend the U.S. dollar. The Fed’s task is made more difficult by the decision of the Biden administration to freeze the reserves of the Bank of Russia in dollars and euros, which is encouraging central banks of countries that are in potential conflict with U.S. imperialism to rely more on gold as opposed to U.S. dollars or euros for their reserves. The rising interest rates combined with the panicky inventory build-up leading to rampant speculation and high corporate debts are now driving the U.S. economy toward a recession that could be extremely severe, very long, or both. (back)
(6) Unions should be able to strike when the demand and supply of labor power create the most favorable market situation for the workers, such as the present. However, labor contracts often make it impossible for workers to take advantage of these all-to-rare favorable market conditions. Such favorable conditions for workers are not very common and generally don’t last very long because they represent periods of overproduction. Therefore by the time labor contracts do expire and strikes are “legal,” the odds are that favorable labor market conditions will have swung once again in favor of the bosses.
The capitalists have the right to reduce or shut down production whenever market conditions dictate that such actions are needed to safeguard their profitability. Likewise, workers should have the same right to withhold their labor power whenever market conditions make such action advisable to defend their standard of living. (back)
(7) The U.S. government reported that its index consumer prices increased by “only” 8.5% in July compared to 9.1% in June. Most of the decline in inflation was the result of the sales of oil reserves by the U.S. government and its satellites, which has caused the price of gasoline to fall. The price of oil dropped from over $120.00 a barrel in June to around $90 at the time of this writing in August 2022. However, the great quantity of overproduced commodities that have been built up by businesses during the COVID aftermath boom will, at some point, depress the rate of inflation and could even lead to deflation — lower prices.
However, if the Federal Reserve System stops the rise in interest rates too soon — before the overproduction created by the COVID aftermath boom has been sufficiently liquidated — confidence in the U.S. dollar could collapse. This would be signaled by a sharp rise in the dollar price of gold which would quickly spread to other commodities. Inflation would then sharply accelerate, which would finally force the Fed to allow interest rates to rise even more until the overproduction is finally liquidated. BLS Consumer Price Index July 2022 PDF (back)
(8) Actually less than zero when storage costs are taken into account. (back)
(9) I say potential advantage because to realize the advantages that Marxism gives us over the ruling class and its economists and policymakers, we have to use the tools Marxism gives us. (back)
(10) In June 2022, the government of Uganda announced that satellite and air observations indicate that Uganda has potentially recoverable gold ores that could more than double the current world gold supply. However, this has not been confirmed by drilling into the deposits to determine how much gold they actually contain. The Uganda government has good reasons to encourage gold mining companies from the West and China to invest in Uganda to develop its mineral resources, including whatever amount of gold it has. Therefore the claims of the Uganda government should be met with extreme skepticism, as well as any other claims of major gold finds anywhere else in the world. The gold industry has a long and sordid history. Inflated and outright fraudulent claims of finding huge deposits of gold can be traced far back into the pre-capitalist past.
However, if these claims were to pan out, it would lead in time to the accelerated growth of the world market and, therefore, capitalist economic growth, which would lead to a rise in the demand for labor power not only in Africa but throughout the world, though unevenly, until the new mines are exhausted. This would create many opportunities to rebuild the now greatly weakened workers’ movement across the globe. This would, however, not necessarily be good news for the people of Uganda, considering the disastrous consequences for Native peoples that have followed every significant gold discovery in the past, nor would it be good news for those who want to keep the rise of carbon dioxide in earth’s atmosphere in check. (back)
(11) The degrowth school of ecological socialists, now strongly supported by Monthly Review magazine (see the special summer issue of Monthly Review Magazine 2022, which is devoted to the theme), holds that capitalism has a virtually unlimited ability to develop the forces of production. However, the degrowth ecosocialists claim that the productive forces have developed so far that they must now be reduced if the earth is to avoid an ecological catastrophe that will destroy modern society, if not all life on earth.
As I’ve said before, those supporting what is called degrowth turn Marx on his head. Marx believed capitalism would not be capable of developing productive forces sufficiently to achieve a society of abundance for all. The traditional Marxist view sees the main contradiction of modern society as the conflict between productive forces and capitalist property relations. But degrowthers see the conflict between productive forces and nature as the central contradiction. (back)
(12) These assumptions are highly simplistic. In the real world, competing capitalists would be working not only with different methods of production but with capitals of different sizes. But for purposes of simplification, I abstract from these factors because they do not affect the basic argument. (back)
A Critique of Crisis Theory 