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James Heartfield looks at some of the renewed interest in Marxism and asks whether it is all good news

Marx and the Marxologists

  • Specters of Marx: The State of the Debt, the Work of Mourning and the New International, Jacques Derrida, Routledge, £35 hbk, £11.99 pbk
  • The Falling Rate of Profit: Recasting the Marxian Debate, Stephen Cullenberg, Pluto Press, £35hbk, £10.95pbk
  • Marx's Theory of Crisis, Simon Clarke, St Martin's Press, £14.99 pbk
One of the peculiarities of the present is that just when Marx's critique of capitalism should be most pertinent, its name is mud. Associated with the brutality and waste of the Stalinist regimes, Marxism's critical power has for some time been obscured. On the other hand, the capitalist triumphalism at the collapse of the old Soviet bloc has been punctured by economic slump - creating new openings for Marxist criticism.

The French philosopher Jacques Derrida, until now known for his deconstruction of rationalism, weighs in to the debate about the market system with an aggressive polemic against the capitalist triumphalism of Francis Fukuyama. It was Fukuyama, a paid ideologue of the American Rand corporation, who trumpeted the fall of communism as 'The end of history', meaning the final victory of capitalism. To Derrida, Fukuyama's 'good news' about the end of history has rather too religious a ring to it.

Pointing to trade wars between the major economic blocs, 'pauperisation', 'the ferocity of the "foreign debt"' and the 'epidemic of overproduction', Derrida suggests that 'in order to analyse these wars and the logic of these antagonisms, a problematics coming from the Marxian tradition will be indispensable for a long time yet' (Specters of Marx, pp63-64). Derrida's Specters of Marx, along with Simon Clarke's Marx's Theory of Crisis and Stephen Cullenberg's The Falling Rate of Profit, is indicative of a renewed interest in Marxism provoked by the persistence of market failure in spite of the West's victory in the Cold War.

Gratifying as this renewed interest in Marxism might seem, each of the works reviewed here shows in its own way an unwillingness to draw Marx's conclusion about the failure of capitalism: that capitalism is a historically limited mode of production which must be overturned if mankind is to prosper. The tentativeness with which each of these authors approach Marx's analyses of the historical limits of capitalist accumulation shows that they approve of the way that Marxism qualifies the case for capitalism, without embracing his project of social revolution. This is a version of Marx which, at its worst, reduces him from an optimistic propagandist for social change to a cynical Jeremiah revelling in the failures of present-day society.

Indicative of the half-hearted return to Marx is the unwillingness of these authors to embrace Marx's characterisation of the limitations of the capitalist accumulation process, and in particular the theory of the tendency of the rate of profit to fall.

It was in the latter half of the last century that Karl Marx elaborated a critique of capitalist society that has stood as a guide for revolutionaries ever since. The beauty of Marx's critique of capitalism was that it showed how the dynamic character of capitalist society was intrinsically linked to its limitations.

From the most advanced social theorists that preceded him, the political economists Adam Smith and David Ricardo, Marx took and reworked the idea that the value of commodities was an expression of the labour expended - at the normal level of productivity - in their production. To the political economists equal exchange on the market looked very fair, but their theory could not explain the source of profits. Profit, as Marx explained had its origin in exploitation. The surplus value that accrued to the capitalists was the difference between the money laid out in wages, what Marx called variable capital, and the value created by the workers employed.

Exploitation, the difference between the paid and unpaid labour of the working class has often been understood simply in moral terms, as though it was a question of workers being tricked by cunning employers. Marx showed that exploitation was not the exception, but the norm, the real basis of the profit system. For Marx, exploitation was the key to the dynamic character of the capitalist system. The surplus value created through exploitation was the basis of accumulation, the perennial reinvestment of profits back into the production process.

Capitalist dynamism, however, also implies limitations, as the tendency towards ever greater productivity overshoots the narrow basis of production for profit. Marx explained how economic crisis arose out of the process of capitalist production itself, not on the market. Marx points out that the accumulation process tends to undermine the capitalist rate of profit. The reason for that is that not all capital invested creates surplus value. Apart from the variable capital laid out in wages, the capitalists also invest in machinery, plant and raw material which, while they are necessary for production, do not create new value. Marx called this portion of the capitalists' investment constant capital. Furthermore, he pointed out, the historical trend in the development of industry is towards a greater investment in machinery relative to the investment in men.

The displacement of variable capital by constant capital implicit in the development of the production process would reduce the portion of capital that produced new surplus value. Of course the mass of surplus value has to rise - if it did not then accumulation could not take place at all. But the ratio of surplus value to the total capital invested, the rate of profit, falls as a greater amount of capital is exploiting relatively fewer workers. The falling rate of profit acts as a barrier to investment, eventually leading to economic crisis. The rising mass of profits is not sufficient to finance a new round of investment. What this means is that the tendency towards crisis is inherent to capitalism.

Stephen Cullenberg is one of the editors of the American journal Rethinking Marxism, as well as the organiser of the colloquium at which Jacques Derrida gave the speech that was the basis of his Specters of Marx. Cullenberg's book, The Falling Rate of Profit, looks back over the debate among Marxists at the onset of recession in the seventies about the tendency towards crisis.

As a reprise of the debate Cullenberg's book is very good. He shows that the two contrasting standpoints - that there is an inherent tendency to a falling rate of profit or that there is not - rest on different understandings of society. First he shows that the adherents of the falling rate of profit envisaged society as dynamic and therefore subject to transformation: 'If a falling rate of profit, and hence crises, are not perm- anent, built-in features of capitalism's laws of motion, then there is no objective necessity for the transition to socialism.' (p11)

Second, and this is his own contribution to the debate, Cullenberg shows that the different sides of the argument reflect different views about the way that capitalist society is interrelated. He describes how the underlying assumption of the adherents of the falling rate of profit is that capitalist enterprises are jointly engaged in the exploitation of labour. As Cullenberg puts it, the whole takes priority over each of its parts. This is an important element in the Marxist analysis of exploitation, removing the theory from the narrow relationship of a particular employer to his employees and seeing it instead as a relation between wage labour and capital as a whole.

By contrast, says Cullenberg, the competing view of the rate of profit starts with the opposite assumption: that the whole of capitalist society is nothing more than the sum of its parts, the individual enterprises. Seen in terms of individual companies, the source of profits in the exploitation of labour disappears.

Cullenberg looks at the best known radical alternative to Marx's theory of the rate of profit, the Okishio theorem, first argued in Nobuo Okishio's article 'Technical change and the rate of profit' published in the Kobe University Economic Review in 1961. Cullenberg gives a version of the formula by which prices of production are estimated in the Okishio theorem which reads: p = (1+r)(pA + pbL). Without going into the definition of all the terms, the one term that needs to be defined is 'r' which equals 'the general rate of profit'.(p54)

For some reason Cullenberg thinks that the suspect part of the theorem is the assumption of 'a single, uniform, economy-wide rate of profit'. In fact the problem is that there is an assumption of a given rate of a profit at all. Where does it come from? Why is it the magnitude it is? The Okishio theorem can explain neither of these things because it is only a theoretical representation of the way that any individual capitalist works out his prices. After adding up his costs he adds his profit margin. He's not concerned where it comes from, only that he gets it. The remarkable part of this story is that anyone ever thought that the Okishio theorem was an alternative to Marx's society-wide theory of the rate of profit.

At this point Cullenberg ought to have consigned Okishio to the accountants and endorsed Marx's theory of the rate of profit. Instead he reacts against the revolutionary implications of Marx's theory, which he calls 'a reductionist approach to social theory and causality'. In particular Cullenberg accuses the Marxists and the capitalists of sharing the same assumptions about how capitalism works:

'despite the tremendous differences in approach between the "capitalist qua accumulator" of the traditional models of the tendency of the rate of profit to fall and...the "capitalist qua profit maximiser" of the Okishio models they share a fundamental similarity. They both reduce the capitalist to a homogenous conceptual category which acts out its given role.' (p56)

Yes indeed. Both the capitalists and the Marxists assume that capital has to make a profit. Cullenberg thinks that assumption unjustified, to which one could only answer that he would make a very poor capitalist. Behind this weird point is Cullenberg's desire to visit a plague on both the Marxists' and the capitalists' houses.

Cullenberg's ham-fisted attempts to qualify Marx's theory of the falling rate of profit are an extreme version of the vulgarisation of Marxism, but even the best of these authors is reluctant to wholly endorse the argument. In Marx's Theory of Crisis, Simon Clarke, for many years a leading figure in the Conference of Socialist Economists, gives an excellent and exhaustive account of the development of Marx's theory. However, when it comes to placing the role of the falling rate of profit in the theory, Clarke is painfully tentative.

One of the more useful aspects of Clarke's book is that it shows how in their earlier works Marx and Engels described economic crises in more or less conventional ways. They believed crisis was due to overproduction of commodities, or the disproportionality of different branches of production. However, with the development of the theory, Marx began to show how these particular forms of crisis were just expressions of the underlying limitations imposed by the profit system. The importance of this approach was that it showed how crises were endemic to capitalist accumulation, rather than being merely conjunctural disturbances at the level of the market.

Clarke cites one passage from Marx that has been used to argue that his theory of crisis was based on the overproduction of commodities. There Marx talks about 'necessary labour as the limit on the exchange value of living labour capacity or on the wages of the industrial population'. Many commentators have assumed this means that the low amount paid out in wages sets a limit on how many goods can be sold. However, Clarke explains that Marx is 'not referring to the limited consumption power of the mass of the population', but to the fact that the workers will only be employed if their wages are low enough to facilitate exploitation (p147). The key to the crisis tendency is always the ability or inability of the capitalists to exploit living labour.

In a similar fashion, Clarke shows how Marx dealt with the theory that crises were a consequence of disproportionality between different branches of production: 'he reformulates the problem of proportionality...in terms of the proportionality between necessary and surplus labour' which is to say the rate of exploitation. Clarke adds that 'Marx defines this as the specifically capitalist form of disproportionality, which underlies the pre- disposition to crisis in the capitalist mode of production.' (p151)

But good as Clarke's reading of Marx is, he is reluctant to place the theory of the falling rate of profit at centre stage. Having shown that the crises of disproportionality and overproduction are just particular forms of the underlying limits of the accumulation process, Clarke fails to show how these forms are linked to that process. So he writes:

'Although all three aspects of disproportionality, underconsumptionist and the tendency of the rate of profit to fall play a role in determining the vulnerability of capitalism to crisis, the underlying cause of all crises remains the fundamental contradiction on which the capitalist mode of production is based, the contradiction between the production of things and the production of value, and the subordination of the former to the latter.' (p285)

This sounds very profound, but in fact it is just too general to be of much use. Demoting the tendency of the rate of profit to fall to just one of many conjunctural crises that may occur in capitalist production misses the point. The tendency of the rate of profit to fall is not a superficial characteristic of capitalism, like unsold goods or uneven development, but a fundamental law. Clarke himself quotes Marx as saying that it is 'in every respect the most important law of modern political economy, and the most essential one for comprehending the most complex relationships'. In fact the tendential fall in the rate of profit is just the same law as the law of capitalist accumulation, only seen from the other side, looking at its limitations instead of its dynamism. More superficial expressions of crisis can only be understood by relating them to this inner dynamic.

For that reason no actual crisis has ever broken out under the immediate spur of a fall in the profit rate, but the susceptibility of capitalism to crisis is conditioned by its relatively narrowing basis of profit. Even the contradiction that Clarke makes central, that between 'the production of things and the production of value', reaches its clearest expression in the falling rate of profit. In recent times the conflict between making useful things and making profits has been pushed to new heights by the difficulties of profitable investment. Consequently investors prefer to make money by speculating on the stock exchange, trading on shares and other assets, leading to an ever greater divergence between the productive economy and the fictitious paper economy of the City of London.

Clarke's reworking of Marx's theory of crisis undermines the programmatic conclusion of the investigation of capitalism's inherent limits. Rightly arguing that there can be no single catastrophic crisis that will bring the capitalist era to a close, Clarke wrongly draws the conclusion that Marxism is just a theory of 'the permanent instability of social existence under capitalism', adding that 'from this perspective Marx is the first and most radical theorist of the "postmodern" condition' (p280).

The weakness of both Clarke and Cullenberg's investigations of the theory of the limits of capitalist accumulation is that they divorce the theory from the understanding that capitalism is historically limited. Clarke's point above would be correct if he were only arguing that the objective limitations of capitalism were not enough to make a revolution without the intervention of the working class. But assuming a condition of permanent instability assumes the permanence of capitalism.

Cullenberg's mistake is yet more grievous: looking at Marxism only as an interesting theory not as a means to transform society. As he writes of the competing theories of crisis, 'each theory literally constructs its own truth, and criteria for the validity of that truth' (p13). At which point theories become works of art where one can just as easily imagine that capitalists do not have to make a profit as imagine that Emma does not marry Rochester in the end.

The attraction of the idea of Marxism to modern radicals is best illustrated by Derrida's belated endorsement of Marx. Derrida fans will know that for some time the controversial philosopher has been avoiding saying anything about Marx, while promising to do so at a later date. Derrida jokes: 'Already I hear people saying: "you picked a good time to salute Marx!" Or else: "Its about time! Why so late?"' (p88)

Reading Derrida's extended and laconic essay, it is not hard to work out why he has endorsed Marx just when he is out of fashion. The attraction of Marx for Derrida is not the case for overthrowing capitalism, but the case merely for calling it into question. All through the seventies and eighties postmodernists inspired by Derrida were attacking Marxism precisely for its claim to represent the interests of humanity as a whole. That offended their preference for a plurality of different viewpoints. When capitalism seemed to triumph in the wake of the Cold War, however, it was the capitalist triumphalists who stood - or pretended to stand - for a common humanity. Consequently, Derrida has turned his deconstructive ire on capitalism, and used Marx to do it.

Derrida relates his own theory of deconstruction to Marxism: 'Deconstruction has never had any sense or interest in my view at least, except as a radicalisation, which is to say also in the tradition of a certain Marxism, in a certain spirit of Marxism.' (p92) But the radicalism that Derrida reads into Marxism is precisely its ability to undermine the claims of capitalism to be the best possible society. The minute that the Marxists claim to have an answer to the problems of how to organise society, deconstruction takes its leave from Marxism, or as Derrida puts it 'radicalises' Marxism.

Throughout the long Cold War the radical intelligentsia flirted with Marxism. The counterweight of the Stalinist countries and the left was a useful weapon in its own academic criticisms of society. These academics rarely endorsed any real social change, but always enjoyed the fact that the outlook of the establishment was open to a challenge, leaving some room for their own criticisms. Today the persisting failure of capitalism makes the project of transforming society all the more pressing. But if Marxism is to play a role in that project it will have to be a different Marxism than the rejuvenated complaints of the radical intelligentsia. As Marx said, the philosophers have only interpreted the world in various ways: the point is to change it.
  • Turning Japanese? Britain with a Permanent Party of Government, Helen Margetts and Gareth Smyth (eds), Lawrence & Wishart, £14.99 pbk
Written by journalists, academics and Labour politicians, Turning Japanese reflects the fear that Britain under the Conservatives is becoming a one-party state. It looks at Japan - where 38 years of one-party rule ended last year - as a model of how change could come to Britain.

There are some striking similarities between the two countries. Both the Conservative and Liberal Democratic Party governments have been tainted by corruption scandals - though the editors assert that while bribes and pay-offs to MPs are a feature of Japanese politics 'we have not seen this in Britain' (pix). Even if they did go to print before the cash-for-questions scandal, this assessment borders on national naivety - as if British members of parliament were more honourable than the Japanese.

But entertaining as these various comparisons are - especially Patrick Dunleavy's reflections on the end of political debate - the similarities between Britain and Japan end when you look at the relative strengths of the two economies. After all one-party rule in Japan brought prosperity and an increased role in the world.

Tessa Mayes
  • Cyberia: Life in the Trenches of Cyberspace, Douglas Rushkoff, Flamingo, £6.99 pbk
For once the blurb on the back of the book is justified. Douglas Rushkoff is to nineties cyberculture what Tom Wolfe was to sixties pop culture: the chronicler of a generation, celebrating its aspirations and - between the lines - describing its limitations, often self-imposed.

It's all here: surfing the information superhighway (something like a hi-tech rerun of Jack Kerouac's On The Road - it's not the places/information that matter, but the speed with which you pass them by); the New Edge convergence between mysticism and the veneration of technology; drug-taking as a chemical safety-blanket (the warm feeling of the E community); and the idea that going with the flow is as subversive as anyone can be.

Rushkoff profiles all the recognised makers and shakers in West Coast cyberculture: Mondo 2000 editor RU Sirius, Dr Timothy Leary (from LSD to virtual reality as 'electronic LSD'), and ex-pat Brits such as Mark Heley, Fraser Clark and Terence McKenna. He also introduces a bevvy of up and comers - the face of 1996 is probably in there somewhere.

The world inhabited by the cyberculturists is narrow and blinkered. But the idea of cyberculture appeals to a broad range of mainly young people. Rushkoff succeeds in showing its appeal: solipsism is made to appear more attractive than ever before.

Like Wolfe 30 years ago, Rushkoff arrived on the scene as an investigative journalist, underwent something of a conversion, and left almost a missionary. The tenets of cyberculture are fantasy. But they are fantasies which are true to our times, and Rushkoff encapsulates them better than most. Read this book.

Andrew Calcutt
Reproduced from Living Marxism issue 75, January 1995

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