The neo-Ricardian professor of economics

Now let’s introduce into the discussion a radical professor of economics of the neo-Ricardian—or “physicalist,” as Kliman calls them—school. Our “physicalist” says to our young socialist, you know I am very much in favor of socialism just like you are. But is your socialist organization still teaching you the labor theory of value? Don’t they know that Marx’s—and Ricardo’s—theory of labor value has long since been refuted by us radical economists. We have shown that the rate of profit in terms of labor is not the same as it is in terms of money.

These results have been mathematically proven beyond all doubt. The rate of profit is not determined by the surplus value divided by the total value of capital times the turnover period of variable capital, as Marx believed, but by the real wage plus the physical conditions of production. Therefore, profits are really measured in terms of the physical product that is produced by capitalist industry.

You will understand this, our neo-Ricardian professor of economics explains to our young socialist, when you master mathematics rather than waste your time with an introduction to Marxist economics class taught by well-meaning but ignorant socialist organizers. Math, our young socialist answers, why I hate math and anyway I am far too busy organizing!

Next month, how should we measure the rate of profit?

_______

1 Historically, there was one other school of crisis theory, the school that claims that crises are brought on by disproportionate production. At present, the disproportionality theory of crises appears to have little support.

2 Kliman is a follower of the American Marxist Raya Dunayevskaya (1910-1987). Dunayevskaya was born in the Ukraine of Jewish parents and was brought to the United States by her parents as a young girl in 1920. During her teenage years, she became an enthusiastic supporter of the Russian Revolution, the Third International and the American Communist Party. In 1928, however, she broke with the leadership of the Comintern and the U.S. Communist Party and became one the first Americans to take up the cause of Leon Trotsky.

A Trotskyist during the 1930s, Dunayevskaya broke with Trotsky in 1939 over his support of the Soviet Union in the Soviet-Finnish winter war of 1939-40. She supported a breakaway group from the Trotskyist movement that refused to support the Soviet Union in any way whatsoever. The majority of these breakaway “Trotskyists”—Trotsky himself disowned them—claimed that the Soviet Union represented a new kind of class society unforeseen in Marxist theory, which they dubbed “bureaucratic collectivism.” However, Dunayevskaya, working with the far better-known West Indian Marxist CLR James, developed a theory that the Soviet Union represented “state capitalism.”

Dunayevskaya argued that since the Soviet state was engaged in competition with other capitals on the world market, it represented a single capital that brutally exploited the Soviet workers. Therefore, she reasoned, though there was little private ownership, the Soviet economy was fully subject to the operations of the law of value, and the Soviet economy was a capitalist economy in the full sense of the word.

But because the Soviet state owned most of the means of production, Dunayevskaya called the Soviet economy “state capitalism” to distinguish it from traditional capitalism where private ownership of the means of production predominates. Dunayevskaya believed that the Soviet economy was simply the most extreme example of a general evolution of capitalism from private capitalism to “state capitalism.”

Dunayevskaya, along with CLR James, briefly rejoined the main wing of the U.S. Trotskyist movement—the one that had been supported, though not without some friction, by Trotsky himself—but then split with it a second time forming their own group. Shortly thereafter, James and Dunayevskaya split and Dunayevskaya formed what she called the Marxist-Humanist current. She became increasingly critical of not only Trotsky but Lenin as well, coming to reject Lenin’s idea of a vanguard party of the working class that leads the working class to power.

Over the years, Dunayevskaya wrote many articles on politics, philosophy, problems of women’s liberation and economics including on crisis theory. Dunayevskaya like the far better-known Grossman strongly defended the view that crises stem from the tendency of the rate of profit to fall due to the rising organic composition of capital. Kliman’s views, though similar to Grossman’s, draw their immediate inspiration from Dunayevskaya, not Grossman.

3 Reagan, a professional movie actor with a political bent was himself a strong supporter of FDR’s New Deal and his Democratic Party. However, during the witch hunt in the late 1940s, Reagan “named names” in order to save his acting career. Having thus burned his bridges with the “progressive wing” of U.S. politics, Reagan then quickly evolved to the right and became a supporter of the extreme right wing of American capitalist politics. Reagan, who had been a strong “liberal” in the American sense of the world, ended up an extreme “neo-liberal,” or in American parlance an extreme conservative.

4 The WPA—short for Work Projects Administration—was a New Deal program that hired the unemployed directly and put them to work on many useful public works projects, many of them still in use today.

5 In its December 2011 issue, Monthly Review published an article by Richard Preet, professor of geography at Clark University, Worcester, Massachusetts, along these lines. “Resolving finance capitalism’s dilemmas,” Preet concludes, “would require state redirection of income distribution, investment, and economic development.”

While Preet calls this a “stronger version of democratic socialism,” he means a stronger form of New Deal or Popular Front-type reformism designed to break the power of finance capital over the U.S. and world capitalist economy and not a socialist revolution in the traditional Marxist sense of the world.

The now very small U.S. Communist Party is also strongly committed to achieving a new New Deal through electing as many Democrats as possible, which is seen as a step towards a gradual democratic evolution toward socialism in the U.S. The party has long since repudiated the idea of leading a Russian-type revolution in the United States.

The U.S. Communist Party shares Professor Preet’s view that finance capital lost power under Roosevelt but regained power under Reagan and used its regained power to ditch Keynesian-type economics in favor of the neo-liberal policies that led to the recent crisis.

6 By long-term crisis of capitalism, I mean that long-term period of reduced growth that began in the 1970s and not short-term periods of absolutely falling production and employment such as occurred in 2007-09 that represent short-term cyclical crises or “recessions” in the industrial cycle. Still, even Kliman makes some distinction between the “Great Recession” proper and what he calls the “failure” of capitalist production that began in the 1970s.

7 These are the kind of people for whom the expression a little knowledge is a dangerous thing was invented.

‘The Failure of Capitalist Production’ by Andrew Kliman — Part 2