Global Capitalism in Crisis by Murray E. G. Smith

Review of Smith, M. E. G. (2010) Global Capitalism in Crisis: Karl Marx and the Decay of the Profit System, Halifax and Winnipeg: Fernwood Publishing, pp. 179.

PDF Versions: Review by Esteban Castro, Review by Thom Workman, Review by Josh Dumont, Review by Jan Otto Andersson, Author’s Reply by Murray E. G. Smith.

Review by Jose Esteban Castro[1]

In Chapter 5 of Global Capitalism in Crisis, Smith provides an overview of the conditions that help to explain the emergence of what he variously calls an “amorphous”, “gradualist” or “non-vanguardist” anti-capitalist left in the aftermath of the collapse of the former Soviet Union in the late 1980s. He also presents a deeply critical assessment of the positions adopted by these groups in relation to the feasibility of a socialist revolution, and puts forward some potential explanations for what he calls the “political irresponsibility of the radical left” in the face of the current global crisis of capitalism that erupted in 2008. Finally, Smith vigorously invites the reader to engage in an in-depth revision of the postulates of revolutionary Marxism, specifically as developed by Lenin and more particularly Trotsky, as the only way forward to develop a political programme and strategy to revive revolutionary socialism.

Smith’s diagnosis is clear and stems from his main argument in the book: the current global crisis of capitalism is terminal. He argues that the crisis, from a Marxist perspective, should be understood as being both conjunctural and systemic, “as an extreme conjunctural expression of the decay of the profit system” (p. x). He dedicates the first four chapters of the book to elucidate this argument, which he does convincingly in many respects while also providing empirical evidence that leaves no doubt about the enduring explanatory value of Marx’s analysis of capitalism.

The fifth chapter builds on this diagnosis and reviews some of the main trends characterizing global politics since the demise of the former Soviet Union, particularly: the “disastrous restoration of capitalism” in the territories of the former Soviet bloc, the worldwide expansion of a “virulent neoliberalism”, the strengthening of and clashes between different forms of fundamentalism, and the development of “adventurist and bellicose” neocolonial initiatives. More importantly, Smith highlights the emergence of a “militant anti-corporate-globalization movement”, an “amorphous global social-justice movement” concerned with issues of ecological sustainability, fair trade, global poverty, racism, gender inequality, economic democracy, and other issues. He dedicates much of this chapter to criticize this multifarious “movement”, and particularly those sectors within it that identify themselves as Marxists or socialists of some description.

The author argues that despite long-standing attempts to discredit Marxism as a body of theory and knowledge, the developments in recent decades and most notably the ongoing global crisis have given Marxists an opportunity to show “profound intellectual and moral responsibility” and stand up in defense of certain “truths”: the historically specific character of capitalism, the fact that since the early twentieth century capitalism would have lost its capacity “to promote continued human progress” for all, and that the only systematic attempt to develop an alternative to capitalism, the experience of the former Soviet Union, ended up in complete failure as a result of been taken over by the Stalinist project, which was “hostile to the Marxist principle of the democratic self-emancipation of the working class”.

From this point onwards the author attempts to define clear lines of demarcation between a broadly defined “left” and what he calls towards the end of the chapter “a genuine socialist project”, that is, revolutionary socialism:

1)      Smith correctly points out that many left wing intellectuals have come to accept arguments previously defended by right wing and liberal actors who dismiss the value of Marx’s work as a predictive theory. He claims that Marx’s critics, including many coming from the Marxist left, have ignored the accuracy of his analysis of the long-term dynamics of capitalism governed by the law of the tendency of the profit rate to fall, which offers a powerful explanatory framework for the understanding of the current global crisis. Rather, they have mainly concentrated on criticizing Marx’s “failed” prediction that the end of capitalism would be brought about by the organized working class.

2)      On the latter point, Smith rightly emphasizes that in fact the revolutionary potential of the working class has been recurrently enacted since Marx’s time. The fact that working class revolutions have not delivered the predicted demise of capitalism should remind us that Marx himself had warned that the revolutionary transcendence of capitalism by socialism was not merely dependent on the revolutionary potential of the working class but more importantly on the level of development achieved by the forces of production. The author also emphasizes that the achievement of a full transcendence of capitalism by socialism must be, as Marx warned, of a worldwide scale. Socialism cannot be achieved at the level of individual countries or regions, as history has now demonstrated with the demise of the Stalinist project, but must be truly global in scope and reach, which in turn validates Trotsky’s positions on this matter.

3)      The relevance of the current global crisis, Smith argues, would be that “the objective, historical conditions for a socialist transformation are not only ripe; they have become altogether rotten” (p. 134). Here he develops what I think is the hardest line of his argument in this chapter and probably also the weakest. Summing up his argument, Smith suggests that the main reason why a revolutionary socialist transition does not seem likely despite the fact that the historical conditions are now ripe, even rotten, would be the “political irresponsibility” of the radical left (p. 131). By this, he in fact means that the radical left would have abandoned its revolutionary vocation, leaving the working class without a vanguard to lead the revolution.

It is not difficult to agree with many of the factors that Smith marshals to back up his attack on the “gradualist”, “reformist”, “non-vanguardist” socialism that has emerged in the aftermath of the collapse of the former Soviet Union, which would be the main culprit for the lost opportunity to take advantage right now of the historical conditions to carry out the revolution. In particular, I cannot disagree with his argument that “the collapse of Stalinism and the sharp rightward turn of social democracy” have generated the conditions for the rise and consolidation of a highly heterogeneous “left”, which includes many Marxist intellectuals that now embrace liberal reformist initiatives and see socialism as very distant goal that presupposes a very long march through ever evolving capitalist landscapes for the foreseeable future.

Although there is considerable merit in these arguments, Smith has entered here a much muddier terrain. Firstly, his analysis here leaves little room for distinction between widely different processes and actors, which have been cramped together as the “adversary” for the sake of the argument. Although this certainly makes the task of identifying who is responsible for the slow pace or even regression of the socialist revolutionary project somewhat simpler, it does so at the expense of a huge loss in the discriminatory power of his analytical tools and arguments. For instance, by mechanically labeling some policy instruments and initiatives like alternative budgets, taxes on financial flows, or bank nationalization as “liberal reformist” (p. 126), to give just an example, rather than examining, the actual processes and historical conditions in which these instruments are deployed or the interlinkages between those responsible for such policies and wider constellations of social actors at different scales, Smith is in fact forgetting if not abandoning altogether the Marxist approach that he has so vehemently defended in much of the book. Even in the context of a single country like Brazil, there is a need to make a fine discrimination in the analysis of the design and implementation of a policy instrument like participatory budgeting, as it has been carried out by widely ranging political actors, with different political objectives, in highly diverse socio-geographical and political settings, and with different results, including unplanned and uncontrollable political developments. I would not disagree with Smith if he were to argue that despite all that complexity the end result of these policies (for instance in Brazil) has been no more than a reformist, gradualist process that in a broad perspective consolidates a regime based on capitalist exploitation and subordination of the working class. However, the analysis of the intricacies of this process (or any other of the processes under discussion) as it happens in the field would allow Smith to get a very different picture and probably to review some of his presuppositions and perhaps also his conclusions.

In this connection, it may be reasonable and fair to say that Smith’s argument in Chapter 5 is largely exaggerating both the terminal state of the capitalist system and the capacity that a vanguardist left could eventually have in the present circumstances in conducting the dethroning of the system at world scale and its replacement by a socialist order. There is no question of the desirability and necessity of replacing a criminal system like capitalism if we are to preserve our planet, its biosphere, and our species within it, but I am not convinced that Smith’s analysis is helping us here to chart the field correctly. I already pointed out above the low discriminatory power of Smith’s analysis of what he calls “liberal reformist” policy instruments, as presented in Chapter 5 of his book. I also think that his argument would benefit from a more discriminating examination of the “global crisis” itself, which is the central topic of his book. He tends to blur in his account the fact that the crisis has helped to drive substantive changes in the capitalist world system, notoriously in relation to the emergence of new capitalist actors that seriously challenge the status quo at the inter-capitalist level, to the point that the traditional capitalist core finds difficult for the first time to transfer the cost of the crisis to the now highly dynamic and increasingly assertive former peripheries. Most of or all these emerging capitalist powers and the nation states to which they are primarily attached (i.e. Brazil, China, India, and a few others), have escaped the worst impacts of the financial crisis and are experiencing a process of rapid capitalist development, for sure with little serious opposition from their national working classes and much less from their left-wing national intelligentsias.

Smith may be right in concluding that despite the rapid capitalist development taking place in these areas of the world, “stagnation and austerity have remained pervasive on a global scale”. However, the fact that billions of humans are being incorporated into the dynamics of these emerging capitalist markets, and the systemic consequences these processes already have and will continue to have in the coming years are not minor developments and cannot be left out of the analysis if a proper understanding of the process is to be achieved. For a large part of these billions of humans currently being thrown into the world of capitalist markets and consumption the idea that capitalism has long lost his capacity to deliver improvements in living conditions would seem far-fetched, and in fact for a large part of these masses capitalism seems to be delivering significant improvements which find expression in longer life expectancy, access to education, and even some forms of sumptuary consumption. These may be short lived gains, the prelude of Apocalypse, as it has been many times before. But my point here is that from a sociological perspective the attempt to understand WHY if the transcendence of capitalism by socialism “cannot be delayed for long without putting at risk the very survival of the human species” (p. 127) we do not seem to be any nearer of reaching that goal, requires refocusing our theoretical lens to capture a rapidly changing and multi-textured socio-political scene.

It certainly merits a more in depth analysis that goes beyond blaming the “amorphous left”, the “preeminence of academics in the radical left”, or the “political irresponsibility of the radical left” for this state of affairs. The capacity of the capitalist system not just to survive economic-financial crises but more importantly to reproduce and reinvent itself in different dimensions, notably the political and cultural dimensions, cannot be left out of consideration. More importantly perhaps, the capacity of the capitalist system to annihilate the development of systemic alternatives, as it has happened so often since Marx’s times, for instance through genocidal dictatorships in the Global South that swiped a whole generation of radical thinkers and activists in the late twentieth century leaving an enduring mark in the way in which whole countries experience the “political”, must be part of the explanation that helps to understand the weakness or even absence of a political leadership with revolutionary vocation. Finally, Smith remains focused on the “working class”, presumably understood in classical terms, and uses a somewhat dismissive language when referring to “grassroots movements” and other expressions of the amorphous anti-capitalist movements that he discusses in Chapter 5. However, in parts of the world that are currently undergoing significant experiences in the search to develop systemic anti-capitalist alternatives, like several countries of Latin America (i.e. Bolivia, Ecuador, but certainly also Argentina, Peru, Mexico and Venezuela, at different scales and in different ways), the traditional working class is part of a wider spectrum of social forces that includes notably the emergence as political actors of long-forgotten but often sizeable and increasingly active indigenous communities with capacity for transnational organization, which in some cases have been able to deliver significant blows to the system. Smith remains oddly silent about these and similar processes.

I think that the final pages of Chapter 5 are an excellent contribution to this debate. Smith poses a number of critical questions that provide a precise guidance to answer “what is to be done” today, which I strongly encourage readers to engage with. Many of these questions are already pointing in the direction of some of the criticisms I have made in the previous paragraphs. I believe that Smith has put the finger in the wound and his book deserves careful reading, which I also wish will be widespread.


[1] Professor of Sociology, Newcastle University. Review completed while working as visiting scholar at the Federal University of Minas Gerais, Belo Horizonte, Brazil, December 2010

Review by Thom Workman[1]

Murray E. G. Smith’s Global Capitalism in Crisis is a timely scholarly achievement that establishes a de facto measure of the plethora of assessments on the global economic crisis.  At a time when much factual commentary rhapsodically marks the elements of the crisis without sufficient regard for relative importance, especially failing to distinguish cause from effect, Smith has cogently identified the central and peripheral elements of the socio-economic decline.  In an era when far too much analysis eclectically borrows from a breathtaking array of intellectual traditions, usually without much regard for analytical inconsistencies, Smith has outlined an account of the crisis that is theoretically coherent, self-conscious and unambiguous.   And at a moment when most recent commentary seems overwhelmed by the welter of political responses, utterly unable to respond with either consistent policies or a coherent vision that takes us beyond salutary gestures and tiresome shibboleths, Smith has outlined a lucid short-term and long-term programmatic political strategy which cannot to be dismissed casually.

This is a study of the highest scholarly calibre.  Global Capitalism in Crisis derives much of its strength from the fact that it sins against the smothering epistemic virtues of our age in two telling ways.  It is informed neither by the liberal orthodoxy that dominates the academy, nor does it conform to the prevailing notion of a proper scientific accounting in contemporary sociological commentary.  We are well served by both transgressions.  And both breaches of the prevailing intellectual idioms of our times are related to the fact that Smith’s work builds upon the Marxist tradition of critical political economy.  Since labels like Marxism and ideas like scientific socialism are subject to ideological opprobrium in the academy and beyond, and since such perennial hostility has contributed to a misunderstanding of Marx’s legacy as a scholarly critic of political economy, an elaboration Smith’s transgressions will provide insight into the scholarly and political merits of his study.

The first epistemic sin centres around the liberal orthodoxy of the intellectual world.  Smith links political and institutional developments, especially the range of neoliberal policies that have rendered the crisis more acute for so many people around the world, to underlying forces of the global capitalist formation.  This analytical sensibility runs headlong into the prevailing liberal predilections of the social sciences, predilections informed by the supposition that public policy somehow swings free from the exigencies generated by capitalist production, and predilections which, in their turn, permit academics to charge scholarly malefactors with the crime of “economism” or “reductionism” in a strikingly self-satisfied manner.  Smith shares with radical political economists the assessment that the problems of today are rooted in the profitability crisis that had set in by the early 1970s.  Capital responded to this crisis by restructuring production and by embracing neoliberal accumulation strategies at the level of public policy.  Underlying economic forces rendered the drift towards crisis inevitable and the hegemonic neoliberal practices of recent decades could not prevent it, although they have often exacerbated the sheer quantity of human misery and suffering.  Global Capitalism in Crisis is undergirded by the assumption that a proper account of the crisis must extend far beyond liberal sensibilities typically content to blame the downturn on such things as inadequate market regulation or an overreaching working class.  Indeed, Smith is inclined to regard such unsuspecting attitudes about capitalism’s causal potential as being directly related to obfuscation rooted in the prevailing social relations of power.  The “ideological guardians of the status quo,” he baldly observes at one point, “are putting forward various accounts that absolve the capitalist system itself of responsibility.”   The pleasures of liberal orthodoxy are an Eleusinian mystery to enough of us, and so it is with some satisfaction that we have encountered a book stressing that a full explanation must make an rigorous connection between “the Great Recession” and the underlying dynamics of capitalist production.

Yet Global Capitalism in Crisis commits a much deeper epistemic sin.  Were Smith’s study merely to offer a counter to liberal analyses of the crisis it would be on par with other marginal traditions of the academy including Social Structure of Accumulation (SSA) theory or Regulation theory.  But it goes much further than this.  It holds that the immanent tendencies within the global capitalist formation ineluctably spawn crisis after crisis.  “The crisis of global capitalism referred to in the title,” Smith summarizes in his preface, “should be understood in two distinct senses: as a conjunctural crisis of overproduction, credit and finance, and as a deep-seated systemic crisis.  The current crisis should be viewed against the backdrop of a historical-structural crisis of capitalism—as an extreme conjunctural expression of the decay of the profit system.”  The crisis is a crisis of capitalism qua capitalism.  Other more critical traditions may be inclined to overcome the liberal bias of the academy and connect the world of public policy to the world of productive life, but the question of how to conceive of the economic sphere might still lead analysts to suppose that the connection between capitalism and crisis is merely contingent as opposed to being inscribed into the very inner-workings of capitalist social formations.  The deliberate titular banality of Smith’s book is informed by the profound analytical conviction that the relationship between capitalism and crisis is one of necessity.

And therein lies the rub that sets the work apart even from most critical commentary.  It is not merely the economy in some vague and indeterminate manner that shapes public policy and impels us towards crisis, but rather the fact that “capitalism is dominated by historically specific laws — the law of value and the law of the tendency of the rate of profit to fall — that involve a deepening structural contradiction between the development of the productive forces and the reproduction of capitalist social relations.”  Immediate causes of the crisis abound and everyone has endured the “relentless chatter” about hedge funds, Ponzi schemes and credit default swaps.  But the real cause of the current malaise is the press of capitalism’s tendencies that encouraged inter alia the historic growth of finance capital and the “persistently lacklustre” performance of productive capital.

The second transgression is now in full relief. His account of the crisis distinguishes between essential social relations within capitalist social formations on the one side and phenomenal social relations on the other side.  In keeping with his immersion in the Marxist tradition the essential sphere of social relations is highlighted by the labour theory of value and necessarily declining rates of profitability.  And it is this sphere of productive life and exchange which frames socio-political struggles.  To use Leibniz’s classic distinction, in Smith’s accounting of the crisis rests on a conception of  society as a “dynamic singularity” with an essence and a governing logos.  Smith’s work thus rejects the notion that society should be conceptualized as an “aggregate” comprised of many related parts, like a teapot (Wittgenstein’s oft-cited example) with lids, spouts and handles all serving some recognizable function or purpose.  Smith’s work implicitly criticizes those rarer writings that overcome the liberal biases of the academy, like SSA theory, but then fail to regard the global capitalist social formation in terms of its inner dynamics and necessary trajectories.

Conceiving of society in terms of an essence and a dynamic logos is bound to feel unfamiliar to we late moderns. It is precisely this kind of thinking that has been repudiated in the post-metaphysical, anti-essentialist or anti-totalizing writings dominated by the philosophical likes of Rorty, Derrida, Foucault and Lyotard and so many others.  It is the unfortunate fact that the intellectual paradigm that structures the kind of Marxist analysis of the contemporary crisis offered by Smith has been repudiated at this most basic socio-philosophical level.  Marx distinguished between essential and phenomenal social relations, and he believed that he had placed an analytical finger on the driving forces of capitalist society.  Writers like Smith follow this path, and much of Global Capitalism in Crisis is devoted to an exploration of key theoretical notions (chapters 2, 3 along with Appendix 1).  The scientific attitude informing such analyses is both richly theoretical and thoroughly empirical.  Beginning with Marx we have seen this notion of science oscillate between contemplation and empirical observation, carefully comparing competing accounts of the world, synthesizing, testing, measuring and mulling all for the sake of theoretically fixing the essence of capitalist society in a manner that accounts for its phenomenal forms.  Marx had recognized that capitalism was prone to certain tendencies, like discharging its workers from the factories, long before he had developed his full accounting of these tendencies in the pages of capital.  Smith’s work is a splendid example of this scientifically critical tradition. But this version of a proper scientific accounting has lost much credibility.  The hegemonic intellectual climate of our age, a climate marked by the post-Nietzschean “linguistic turn” in philosophy and emphatically endorsed by the American philosopher Richard Rorty, will not be receptive to Smith’s manner of analysis just as it has discredited Marx’s mature critique as outlined in Capital.  The ideological forms that encourage a rejection of Marxist criticism by encouraging a rejection of its most basic philosophical assumptions are ubiquitous.  From this perspective Marxist analysis has been attacked “through the floor,” and a detailed and refined study like Global Capitalsim in Crisis sadly reminds us of the extent of our loss.

In the end this genuinely critical work boldly reiterates that capitalism in an untenable form of life.  Smith declares unequivocally that capitalism and sustained human misery necessarily go together.  For some of us it is a sobering reminder of the power of ideological obfuscation to dwell on the fact that capitalism is not usually suspected to be at the root of our global suffering.  Most academics, many activists and typically all politicians are reluctant to draw such connections, despite the mounting ecological toll, depraved Euro-American military aggression and rising wretchedness.  Global Capitalism in Crisis concludes with an impassioned argument for a programmatic and strategic socialist politics informed by the scientific appreciation of the “historical limits of capitalist production.”   Politics matters — particularly a politics that is programmatic and strategically guided by insights of scientific socialism: “Capitalism may be digging its own grave,” Smith colourfully writes along the way, “but it will never carry out its own execution.”


[1] Professor of Political Science, University of New Brunswick.

Review by Josh Dumont

The publication of Murray E.G. Smith’s Global Capitalism in Crisis: Karl Marx and the Decay of the Profit System is a welcome occasion. Although the reader will find some sections challenging (particularly those technical materials that appear as appendices), this timely and important book is, on the whole, quite accessible to the non-specialist. Chapter Two provides a highly useful and succinct overview of Marx’s basic understanding of the capitalist mode of production. Chapters One and Three put forward a compelling case for a “Marxist fundamentalist” value-theoretical account of the present economic crisis and its ultimate roots in a secular decline in the profit rate in the post-WWII era. Chapters Four and Five draw out some of the implications of this analysis for making sense of, and participating in, the political left and labor movement.

Marx’s scientific socialist project is based on the proposition, as Smith formulates it, that “the working class not only has an abstract historical interest in abolishing capitalism but is also strategically positioned to end the rule of capital and undertake the socialist/communist reorganization of society” (p. 93). The need to transcend the “bourgeois horizon” is, for Smith, premised on the fact that the capitalist law of value has long since exhausted its historically progressive role. Humanity has for over a century confronted the stark choice famously outlined by Rosa Luxemburg: socialism or barbarism? The current economic crisis poses this question rather sharply for the hundreds of millions of working people who are being forced to bear the brunt of government and business “recovery” efforts.

Of the many qualities that commend Smith’s book, one of the most important is its bold yet sophisticated reassertion of the necessity of a class-struggle perspective both to understand and to change the world. There are two broad dimensions of class struggle that Smith addresses from the standpoint of Marx’s value theory: the “objective” factors shaping the composition and consciousness of the contemporary working class and “subjective” matters associated with socialist consciousness, organization and strategy. Smith’s dialectical materialist social ontology understands the interconnectedness of these dimensions. For analytical purposes, however, it is helpful to examine them separately.

Smith discusses one of the central objective forces assisting the class struggle for socialism when he interrogates Marx’s proleterianization thesis. Marx posited that capitalist development would tend to polarize society into two broad classes defined by their relationship to the means of production: the bourgeoisie (capitalists) and the proletariat (workers), a class that would eventually constitute the mass of the population. Smith’s own version of Marx’s value theory lends itself to a broad conception of the proletariat and an affirmation that this “universal class” has, as Marx predicted, increased in absolute and relative size. The author sees the growth of the proletariat into its current form partly as the historical product of “the operations of the capitalist law of value, in particular the effects of the law of the falling tendency of the rate of profit” (p. 94). The fact that a large, and likely expanding, majority of the population in advanced capitalist countries now belongs to the working class (or to a “contradictory class location” between the bourgeoisie and the proletariat) is a highly significant factor with the potential to propel the class struggle for socialism forward in the 21st century.

There are, however, objective forces that have mitigated the effects of proletarianization. The expansion of the working class under the conditions of a long, protracted decline of capitalism has led to a more complex, internally differentiated and, indeed, divided proletariat. In this connection, Smith discusses Marx’s ambiguity on the valuation of labor power: the reproduction costs of this peculiar commodity are shaped in part by the bare minimum requirements of physical existence and in part by historical class struggle, which helps set the “normal” standard of living for working-class people in definite social settings. The inclusion of this “moral” or “historical” component alongside the “physical” component is not so much a matter of tergiversation on the part of Marx, as it is a reflection of the fact that the value categories must accommodate the ways in which social structures are internally shaped by real class struggle and attendant phenomena: “the value of labour power is determined to a considerable extent by prevailing social norms, lifestyle expectations, racial, ethnic and gender inequalities, and other strictly non-economic considerations” (p. 102). Smith points to the possibility that labor-market segmentation and working-class fragmentation along gender or racial lines may in fact reflect and reinforce a redistribution of value within the working class concordant with non-class cleavages, thus undermining unity and pro-socialist consciousness by supporting sexist and racist attitudes. Similarly, the tendency toward the formation of a truly global economy and the equalization of profit rates internationally – a tendency thwarted to varying degrees by counter-tendencies rooted in the system of distinct national states – “allows for the possibility of significant transfers of surplus value across national lines” (p. 104). This aspect of global capitalism could provide a material basis for the transmission of xenophobic and nationalist sentiments into the working class in the imperialist countries. It may also contribute to an account of the development of labor bureaucracies under capitalism.

Smith is, however, not a fatalist, and his value-theoretical approach – far from restricting itself to the operation of “objective” laws – is sensitive to the central role of the “subjective” side of things. Indeed, social reality does not simply develop on the basis of objective forces; such forces are themselves shaped by the inherent antagonism between the bourgeoisie and the proletariat and by the outcome of the real-life struggles between these two social classes. In this regard, Smith places great emphasis on the key political conclusion that should be drawn from Marx’s labor theory of value and critique of capitalism:

The programmatic upshot of Marx’s analysis of capitalism is that the latter is not at all susceptible to socialist transformation through a process of gradual, incremental reform and that neither is it capable of a progressive crisis-free evolution that would render the socialist project, in some sense, dispensable. Capitalism must be destroyed root and branch before there can be any hope of social reconstruction on fundamentally different foundations, and such a radical reconstruction is vitally necessary to ensuring further human progress. (p. 106)

This anti-gradualist, anti-reformist political perspective is integral to a distinctly Marxist understanding of the class struggle. Such a revolutionary solution must, according to Smith, come to be embraced by the working class as the only viable way to rid the world of capitalist crisis once and for all. Thus the “vital task today is to bring human consciousness and activity – the ‘subjective factor’ – into correspondence with the urgent need to confront and transform” the objective situation capitalism has created in the course of its development (p. 134).

Objective deterrents to the growth of revolutionary socialist consciousness are powerful elements of the answer to Smith’s question of why “the working class has so far failed to carry through its anti-capitalist struggle to the end” (p. 106). Yet Smith’s class-struggle stance invites us to examine the real history of (potentially open-ended) conflicts and the impact of the subjective factor: “in part […] strategic or even tactical errors on the part of revolutionary workers movements (for instance, Germany 1919-24) and in part […] the outright betrayal of revolutions by the ostensible leaders of the working class (for example, Spain 1936-37)” (p. 106). In Smith’s view, a “transitional program” linking the present needs of workers to the necessity of transcending private property in the means of production must be actively and skillfully introduced into the struggles of the labor movement by class-conscious militants:

The transitional program and the strategic orientation it embodies for mobilizing the working class against capital is consistent with Marx’s critique of capitalism in the sense that it challenges the social logic of value relations…. [There is a] need for those who have achieved a revolutionary socialist consciousness to wage a determined fight to preserve and disseminate the programmatic legacy of Marxism, both through propaganda and cadre development and through exemplary forms of trade union activity and other mass work based on a transitional program. Only by waging such a fight (and not just on their own national terrains but on an international scale) can socialists prepare the way for linking the program of Marxist socialism to the mass anti-capitalist struggles that are likely to emerge and multiply as the crisis of capitalism deepens. (p. 109)

Whatever one might think of Smith’s resolutely anti-capitalist perspective, his analysis deserves close attention from critically-minded scholars and labor activists. If the origins of the global economic crisis are indeed to be found in the “decay of the profit system,” as Smith persuasively argues, then this book cannot be dismissed or ignored by serious people.

Review by Jan Otto Andersson[1]

The book contains two quite different themes. The first is an effort to reformulate Marx’s theory of crisis concentrating on the tendency of the rate of profit to fall. The other is an exhortation to join the imminent class struggle for a global socialist revolution. While the first theme tries to be as close to Marx as the author possibly can, the second repeats Trotsky’s old battles against social democratic reformism and Stalinist deformations of the socialist project.

Although Smith takes his departure in the ongoing economic crisis he does not try to analyse it in any detail: for Smith, it stems directly from the tendency of the rate of profit to fall. However, the same tendency has been visible for at least the last century, so the decay of the profit system has plagued world capitalism since the days of Lenin, if not earlier. Smith does not bother to make any distinction between different types of capitalism or different types of crisis. Capitalism has been decaying for a very long time, and today’s crisis is just another manifestation of this “Marxist truth”.

Smith does not bother to answer the many critiques that even renowned Marxists have levelled against an excessively straightforward use of Marx’s “law of the falling rate of profit”. Instead he reformulates the concept of the organic composition of capital by including “unproductive but socially necessary work” in constant capital. Through this astonishingly unmarxian reformulation he is able to show empirically that the law has been operating in North America for a long time. I find this “solution” unconvincing.

I also find difficulty in the author’s view of Marx’s theory of value in general. Capitalism is not a system characterized by “the social practice of measuring (valuing) wealth in terms of labour time”. Even less is it an “imperative of the capitalist mode of production” to measure wealth in this way. If neoclassical economics is seen as the self-reflection of mature capitalism, the opposite seems to be true.

The political part of the book is even more disappointing. It lacks any effort to analyse the contemporary international political situation, but contains a stream of critiques of different radical struggles that do not aim for a direct transition to global socialism. Mikhail Gorbachev, Michael Moore, Naomi Klein, Susan George, Robert Brenner, Eric Olin Wright, as well as many Marxists and Trotskyites, get their due share of Smith’s self-assured disapproval. The reader gets the feeling that only Smith – based on Marx and Trotsky – knows the truth.

To complete this sour review it feels appropriate to cite a few quotations. To me, they exemplify the difficulties in using general abstract theories in order to understand concrete historical events and struggles. According to Smith:

Socialists have a responsibility to say what is: the crisis unfolding before our eyes confirms (yet again) that capitalism has reached its “historical limits”. (p. 3)

The expansion of a socially necessary yet unproductive workforce may be seen, after all, as a by-product of a rather long and drawn-out historical-structural crisis of the capitalist mode of production. Even so, the proliferation of such labour can only be properly understood in light of the operations of the capitalist law of value, in particular the effects of the law of the falling tendency of the rate of profit. (p. 94)

the problems of value production and realization call forth an ever-more elaborate technical and social division of labour – that is, an increasingly differentiated occupational structure that tends to obscure the real contours of the class structure. (p. 97)

Are there reasonable grounds for claiming that the twentieth century witnessed several opportunities for working-class revolutions, opportunities thwarted by the weakness, ineptitude or betrayal of working-class leadership? (pp. 131-2)

As a conclusion we are also told:

The objective, historical conditions for socialist transformation are not only ripe; they have become altogether rotten. (p. 134)

This is not a book about global capitalism, not about the contemporary crisis, not even about the only alternative to “human annihilation”: “a planned, collectivized world economy under the democratic control of a world socialist government.”


[1] Åbo Akademi University, Finland.

Author’s Reply by Murray E. G. Smith[1]

Many thanks to the editors of Global Discourse for organizing this symposium and to J.E. Castro, Josh Dumont and Thom Workman for the serious efforts they have made to summarize and evaluate my arguments in Global Capitalism in Crisis (GCIC), while exploring the theoretical, political and methodological implications of my analysis of “the decay of the profit system.” Dumont and Workman in particular offer particularly appreciative commentaries that deepen and develop my ideas in a number of fruitful ways, while also (alas!) presenting me with few opportunities for disagreement. Fortunately, through his more critical engagement with my book, Castro has created a welcome opening for me to clarify several points and to elaborate on some of the more strictly political arguments in my book, a task that I will undertake toward the end of this contribution.

It is disappointing that the fourth review, by J. O. Andersson, fails to rise to the same high standard of intellectual honesty and fair-minded engagement as the other reviews. The sole redeeming feature of the Andersson piece is that its misrepresentations, errors and ideological prejudices draw attention to several central concerns of GCIC that are mentioned only in passing by the other contributors. These concerns include: Marx’s law of the falling tendency of the rate of profit; the problem of unproductive labour in contemporary capitalism; the relationship between the financial crisis of 2007-09 and what I refer to as the “historical-structural crisis” of world capitalism; and some of the intellectual and political pathologies afflicting the contemporary reformist left. It is to these issues that I will devote most of my attention in what follows.

As I made clear in the book’s preface, my purpose in bringing together both new and previously published material in GCIC was not to provide a detailed description or analysis of the events that shaped and triggered the financial crisis of 2007-09. Rather, my aim was to disclose the “essential relations” (to use a phrase favoured by Thom Workman, following Marx) that are the backdrop to a decades-old malaise of the world capitalist economy and to the associated “financialization” process whose phenomenal forms and results have been the almost exclusive concern of mainstream commentators and many leftist intellectuals. These essential relations are precisely the relations of capitalist production/reproduction and the growing contradiction between these social relations and the increasingly sophisticated forces of production that mark contemporary capitalism. In this connection, my goal was to show that Marx’s account of the fundamental contradictions and “laws of motion” of the capitalist mode of production is indispensable to an adequate analysis not only of the Great Recession, understood as a conjunctural crisis of global capitalism, but also to an understanding of the historical impasse that humankind now confronts and has confronted (albeit in different ways) for over a century. Politically, this theoretical undertaking points to the necessity of responding to the manifest decay of the capitalist profit system with a bold reassertion of the fundamental programmatic tenets of Marxist socialism. Accordingly, what the current global slump demands by way of a truly progressive response is not a reformist attempt to attenuate the contradictions of capitalism or to rehabilitate the idea of “capitalism with a human face,” but a revolutionary-transformative perspective of replacing the capitalist profit system with a collectivized and democratically administered global socialist economy geared to the satisfaction of human needs.

The greater part of GCIC constitutes an elaboration of a series of arguments broached in its first chapter and summed up in the following ten theses[2]:

  1. The global slump that began in 2008 as well as the crisis of global capitalism referred to in the title of the book should be understood in two distinct senses: as a conjunctural crisis of overproduction, credit and finance, and as a deep-seated systemic crisis. In other words, the current crisis should be viewed against the backdrop of a historical-structural crisis of capitalism – as an extreme conjunctural expression of the decay of the profit system. (p. x)
  2. Capitalism is dominated by historically specific laws – the law of value and the law of the tendency of the rate of profit to fall – that involve a deepening structural contradiction between the development of the productive forces and the reproduction of capitalist social relations. These laws inform and give expression to a growing incompatibility between the ‘technical-natural’ and ‘social’ dimensions of capitalism. (p. 6)
  3. The financial and debt crisis that erupted in 2007-08 is the outcome of a decades-long effort on the part of the capitalist class, in the U.S. and elsewhere, to arrest and reverse the long-term decline in the average rate of profit that occurred between the 1950s and the 1970s. It is the cumulative and complex result of a series of responses by the capitalist class to an economic malaise that can be traced to the persistent profitability problems of productive capital. (p. 8)
  4. Rigorous empirical studies by the Marxist economist Anwar Shaikh have established that the fall in the average rate of profit in the U.S. economy was significantly correlated with an increase in what Marx called the ‘organic composition of capital’ – the ratio of ‘dead labour’ (above all, accumulated fixed capital) to living labour in production. The profitability crisis of the 1970s in the U.S. and Canada resulted from the displacement of living labour from production and its replacement by labour-saving technologies, a process encouraged by both competitive cost-cutting and capital-labour antagonism. Marx’s law of the tendency of the rate of profit to fall holds up remarkably well in light of the empirically verifiable performances of the U.S. and Canadian economies over the course of the second half of the twentieth century. Hence, an adequate scientific analysis of the recent trajectory of the world capitalist economy must take into account the phenomenon of a high organic composition of capital in the advanced capitalist countries as a persistent obstacle to global profitability. (pp. 12, 14-15)
  5. The response of the social capital to the profitability crisis of the 1970s involved a three-fold strategy with regard to investment: to restrain new capital formation in industries deemed to be ‘overcapitalized’ and burdened by a high-wage labour force; to concentrate investment in technological innovation (such as information technology) in the financial sector; and to direct an increasing share of productive-capital investment to ‘newly industrializing’ regions….This new investment strategy can be viewed as a determined effort by the dominant fractions of the social capital to mobilize what Marx called the ‘counteracting tendencies’ to the falling rate of profit. One important consequence was the redirection of a great deal of surplus value into the circuit of capitalist revenue (that is, into the bloated executive pay and bonuses that made possible ever more obscene levels of luxury consumption by the capitalist class) and away from accumulation (that is, new capital formation). But the other major consequence was financialization – significantly increased investment in financial activity, the appearance of new financial instruments like derivatives and hedge funds, frenzied speculation surrounding a growing volume of fictitious capital, a massive overloading of the credit system and a generalized ‘irrational exuberance’. (p. 15)
  6. The contribution of the People’s Republic of China to the stabilization of global capitalism during the heyday of financialization deserves special attention…. With its opening to the world market, the Chinese Stalinist bureaucracy has sought to use its monopoly of political power and the surviving elements of ‘socialist planning’ to harness market forces and capitalist enterprise to the essentially nationalist project of modernizing China and transforming it into a ‘great power’…. In counterpoint to the notion that capitalism ‘rescued’ China from economic stagnation, China’s transitional economy is playing a helpful, even crucial, role in rescuing Western capitalism from its worst profitability crisis since the 1930s. (pp. 16, 18)
  7. The future of China’s deformed workers’ state and ‘socialist market economy’ remains very much in doubt and with it China’s continuing ability to contribute to the stabilization of world capitalism. But one thing is certain: either the Chinese working class will settle accounts with the Stalinist oligarchy and usher in a revolutionary workers’ state committed to socialist democracy and working-class internationalism, or the oligarchy will continue to prepare the ground for a full-scale capitalist counter-revolution. (pp.19-20)
  8. Between 1991 and 2007 the U.S. profit rate wasn’t restored to the average levels that prevailed between 1950 and 1968, but it did show some promise of overcoming the malaise of the late 1960s to the early 1990s. Much of this apparent improvement is attributable to the above average returns of the financial sector in the late 1990s and after the 2001 recession. But following that recession, U.S. manufacturing continued its decline while the role of the housing bubble in fuelling growth became crucial. The result was not only a huge expansion of credit market debt but also overproduction in the housing sector – a glut of overvalued homes for which there turned out to be insufficient effective demand. The ensuing wave of mortgage foreclosures precipitated a sharp decline in housing prices, igniting the financial crisis and setting the stage for a severe economic downturn with dire implications for the economy-wide rate of profit. (p. 20)
  9. Thirty years of neoliberalism, corporate globalization and financial chicanery did not succeed in completely reversing the profitability crisis that has long plagued the core of the capitalist world economy – a crisis deeply rooted in capital’s persistently high organic composition. These class strategies could only postpone the day of reckoning for capital – which is now looking less like a rationally calculating vampire lurking within the sphere of production and much more like a rampaging zombie gorging itself at a casino crime scene. (p. 22)
  10. The time has come for a revival of Marx’s scientific socialism. The time has come for a class-struggle, socialist program that appeals boldly to working people’s own most fundamental interests. Furthermore, the time has come for a socialist message that declares loudly and clearly that our species can no longer afford an economic system based on class exploitation – a system whose social relations imperiously necessitate the outmoded measurement of wealth in terms of ‘abstract social labour’ and that must, as a consequence, deny humanity the full benefits of scientific rationality while plunging us recurrently into economic depression and war. (pp. 25-26)

In elaborating the above arguments, I explore three issues pertaining to the “deepening structural contradiction between the development of the productive forces and the reproduction of capitalist social relations.” The first is the negative impact on profitability of a rising or persistently high organic composition of capital (OCC) in the capitalist core – the issue highlighted by Marx in his “law of the tendency of the rate of profit to fall” (LTRPF). According to Marx’s theory of labour-value, living labour is the sole source of the “new value” that finds expression in capitalist profits and in the wages of productive workers. Accordingly, its displacement from production through labour-saving technological innovation tends to depress the average rate of profit.

The second issue is the negative impact of the growing specific weight of unproductive capital and of “socially necessary unproductive labour” in the advanced capitalist economies — an issue that not only enormously complicates any empirical evaluation of the LTRPF, but also points to a certain corruption or adulteration of Marx’s law. This adulteration has become rather pronounced since World War II and calls for a new way of conceptualizing the declining dynamism of the capitalist mode of production:

If Marx argued that the rate of profit would fall …due to progressive increases in the technical and organic compositions of capital, profitability now seems to be subject to a downward pressure stemming from technical changes enforced by capitalist competition and from the circumstance that a diminishing percentage of the working class is involved in surplus-value production, as distinct from realization. If capitalism’s tendency to promote the “objective socialization” of labour and of production once reflected its historically progressive role in developing the forces of production, it now also reflects a hypertrophy of the capitalist state and the sphere of circulation – a hypertrophy which impedes the advance of the productive forces by diverting enormous economic resources away from production. (Smith 1994: 180-81; cited in GCIC, p. 90)

The third issue is that the systemic costs associated with the expansion of unproductive capital relative to productive capital, and involving significant growth in the wage-bill of socially (“systemically”) necessary unproductive labour (SNUL), should be regarded as elements of the constant capital flow: “[If] the growth of constant capital in relation to newly created value once signified a growth in the productivity of labour, it now also signifies a relative diminution of productive labour in relation to socially-necessary unproductive labour” (ibid.). As a manifestation of the historical-structural crisis of capitalism, this phenomenon points to the fact that a growing share of economic resources is being used to sustain and perpetuate the distinctive institutional and class-antagonistic structures of capitalism. It signifies, in other words, that the social relations of capitalist production and reproduction are more and more an obstacle to the progressive development of the productive forces (understood, above all, as productive capacities to meet human needs and promote social progress).

Originally proposed by Mage (1963), the value-theoretical specification of the unproductive “overhead” costs of the capitalist system as elements of constant capital is controversial and stands against a well-entrenched convention among Marxist political economists to treat such costs (that is, tax revenues and the wages of unproductive workers in general) as non-profit elements of social surplus-value and/or as part of variable capital. In a series of publications (Smith 1993, 1994, 1994-95, 1996, 1999, 2010), I have documented the uncertain status of these costs in Marx’s own writings while defending a constant-capital specification of SNUL and most tax revenues.

The treatment of SNUL wages and tax revenues as elements of constant capital permits me to agree with the critics of the productive-unproductive distinction that these costs are indeed systemically necessary from the point of view of the social capital while also agreeing with my fellow defenders of the productive-unproductive distinction (Moseley 1991; Shaikh and Tonak 1994; Mohun 1996) that it is incorrect to treat the labour (and wages) of workers employed in finance, trade and many service industries as part of variable capital (that is, as directly productive of surplus value). The constant-capital specification of these systemic overhead costs compels us to recognize that unproductive capital and SNUL are at once necessary to over-all capitalist profitability and hazardous to it. But to theoretically justify this specification we are obliged to conceptualize the category of constant capital (which Marx calls “previously existing value”) as the value expression not only of physical means of production (its operational definition at the level of abstraction of the first volume of Capital) but of all the expenses and investments implicated in the total process of capitalist production and reproduction apart from living, productive labour. Again, for Marx, it is only the latter that creates the new value that enters into profit-of-enterprise, interest and rent (the principal components of surplus value) as well as the wages of productive workers themselves.

Such a conceptualization of constant capital has important implications for the calculation of Marx’s fundamental ratios (the rate of surplus value, the rate of profit and the OCC) and for empirical Marxist analysis in general. For it suggests that the flow of constant capital (as distinct from it stock expression) represents a much larger share of the total value of gross output than is usually thought – and this is especially true for the most developed capitalist economies with expansive state, commercial, service and financial sectors. Other things being equal, real growth in the SNUL wage-bill and tax revenues must produce an increase in what I call the “value composition of output” – the ratio of the annual flow of constant capital to the total value of gross product – and “this is likely to be associated with a declining average rate of profit” (GCIC, p. 89).

Marx’s hypothesis of a rising OCC leading to a falling rate of profit (ROP) finds support in my own empirical study of the Canadian economy from 1947 to 1991 (Smith and Taylor 1996). This study (reported in GCIC) produced what might be considered an “ultra-Marxist” set of conclusions regarding the long-term dynamics of capitalist development between 1947 and 1975: a falling ROP, a gradually increasing rate of surplus-value and an impetuously rising OCC. In the ensuing 1976-91 period of capitalist “restructuring” in response to the profitability crisis, the trend lines for the ROP and the OCC stabilize and the rate of surplus value rises sharply.

In his contribution to this symposium, Andersson implies that there is some sleight-of-hand or trickery involved in the way that I measure the rate of profit and the OCC in relation to constant capital. He suggests, erroneously, that I can only derive a falling rate of profit and a rising OCC for the 1947-75 period by including taxes and unproductive wages as elements of constant capital in these ratios. But the constant capital measure that is relevant to calculating the ROP and the OCC in my analysis is the constant capital stock, not the constant capital flow. My constant capital stock (the denominator of the ROP and the numerator of the OCC) is in fact the standard one employed by most other Marxists, including Moseley (1991), Shaikh and Tonak (1994) and Brenner (1998): namely, the current-cost value of the fixed capital stock. My calculations differ significantly from those of Shaikh-Tonak and Moseley, however, in what I define as surplus value in the numerator of the ROP and the denominator of the OCC. By counting only after-tax profits as surplus value (and refusing the notion of a “gross” or a “maximum” rate of profit that would include SNUL wages), I argue that the rate of profit that actually drives the investment decisions of the capitalist class can be more accurately established.

Curiously, Andersson fails to elaborate on his bald assertion that my “reformulation” of taxes and unproductive wages as elements of the constant capital flow is “astonishingly unmarxian.”  Instead of engaging with my extensive argumentation on this issue, which is most fully developed in the second appendix of GCIC, he is content to make dismissive statements and to egregiously misrepresent my analytical procedure by implying that I lump together fixed capital, SNUL wages and tax revenues in an expanded measure of the constant capital stock. To repeat, that is not my procedure. Indeed, I would consider such a procedure no less problematic than the conventional Marxian approach of lumping together profit-of-enterprise, ground rent and interest with tax revenues and SNUL wages into an expanded measure of “gross surplus value.”

My analysis and empirical findings are in many respects unique compared to those of other participants in recent Marxist debates concerning the link between trends in profitability and the Great Recession. In addition to rejecting a measure of “gross surplus value” that includes tax revenues and/or SNUL wages, I have sought to defend the idea that the LTRPF expresses itself in “adulterated” form in what I consider to be an epoch of capitalist decline. Accordingly, while there are clear affinities between my analysis and theoretical position and those of other proponents of the LTRPF, it seems fair to say that I am more explicitly concerned than many of these theorists with articulating the particular features of the current crisis with the dynamics of capital’s longer-term “historical-structural crisis.” At the same time, my empirical findings for the post-World War II trends in the key Marxian ratios are remarkably consistent with Marx’s theoretical expectations concerning the LTRPF and its counteracting tendencies.

How then does this analysis assist us in understanding the process of financialization and the proximate causes of the financial crisis of 2007-09? In brief, the profitability crisis of the 1970s, particularly as it afflicted productive capital in the core capitalist countries, was never fully resolved due to the determination of capital and capitalist states to a) avoid the kind of deep global depression that would involve widespread bankruptcies and a significant devalorization of capital stocks, and b) restore profitability through a gradual erosion of working-class living standards and a steady increase in the rate of exploitation, but in ways that would not provoke a major politico-ideological crisis for world capitalism in the era of the Cold War. Furthermore, to sustain effective demand and to mitigate crises of overproduction, the credit system was overhauled and extended in ways that allowed for the accumulation of dramatically larger volumes of debt across the world economy. Along with the globalization of capitalist production and the creation of significant new sites of surplus value production in Asia and Latin America, the expansion of the debt bubble helped restore profitability and conferred upon financial capital a much enhanced role in maintaining the conditions of capital accumulation and economic growth, even as the rate of new capital formation and the growth rate of global GDP slowed in the 1980s and 1990s. Under these circumstances, the phenomenon of fictitious capital (and fictitious profits) became a much more prominent feature of global capital markets.

Fictitious capital is capital seeking to enlarge itself through speculative claims on future income. It signifies an attempt on the part of a fraction of the social capital, centered in the financial sector but involving other sectors as well, to liberate itself from the malaise of the “productive economy” and thereby from the constraints of the law of value. The proliferation of fictitious capital and the build-up of ever-greater debt between 2001 and 2007 stimulated an anomalously high rate of profit in the U.S. and robust global economic growth. But the escalating financial panic of 2007-08 signaled a growing recognition that the rising value of an array of dubious financial assets (collateral debt obligations and other derivatives) was wildly out of line with the “economic fundamentals” (the precarious realities of the sub-prime mortgage market, the profitability problems of productive capital, the stagnancy of real wage growth, etc.). In the end, the capitalist law of value asserted itself as a kind of gravitational force, pulling down the financial house of cards and precipitating the worst global recession since the 1930s.

This analysis suggests that the Great Recession is not a typical periodic crisis of capitalism (that is, a “normal” phase of the business cycle), but rather an extreme manifestation of a longer-term crisis of capitalist profitability rooted in a persistently high organic composition of capital in the “advanced” core of the world economy. Short of a complete collapse of the latter into deep depression, the immediate prospect is for a major escalation of the offensive by capital against labour on a world scale. The gradual erosion of working-class living standards that marked the neoliberal era (1980 to 2008) is being succeeded by a major restructuring of class relations, involving truly draconian attacks on real wages, pensions and social programs. In this context, no serious constituency exists within ruling class circles for a revival of Keynesian palliatives and nostrums. The role of liberal Keynesians like Michael Moore, Paul Krugman and Robert Reich is to sustain the illusion that a kinder and more “progressive” capitalism remains possible in the twenty-first century, and that a decisive break from the U.S. Democratic Party and the European parties of “the Left” is unwise and unnecessary. Not surprisingly, these stalwart defenders of a “humane capitalism” are finding many willing allies among “left” social democrats, trade union bureaucrats and even radical leftists who profess to be Marxist socialists. It is on behalf of this new “popular front” that Andersson seems to be speaking.

Before expanding on the political implications of the above analysis and engaging with Castro’s review of my book, I should make two final comments on the Andersson piece. Against my “view of Marx’s theory of value in general,” Andersson writes that capitalism “is not a system characterized by ‘the social practice of measuring (valuing) wealth in terms of labour time’” and that “even less is it an ‘imperative of the capitalist mode of production’ to measure wealth in this way.” Typically, Andersson provides no further elaboration, except to say that such notions are alien to neoclassical economics! I have no idea how Andersson understands Marx’s theory of value, but it is surely uncontroversial to attribute to Marx the position that the measurement of wealth in terms of labour time is an inherently unconscious process under capitalism, and one that is necessarily mediated by the money commodity whose social substance is precisely “abstract labour.” I provide several passages from Marx to support this “view” of his value theory, and I devote Appendix One to a more detailed elaboration of my own take on the finer points of value theory. Evidently, Andersson failed to read any of this with even a modicum of care. Nor apparently has he read the famous passage from the Grundrisse where Marx contrasts the “real wealth” of the future communist society to the alienated wealth of capitalism, suggesting that, under communism, the “measure of wealth is then not any longer, in any way, labour time, but rather disposable time” and that “labour time as the measure of value posits wealth itself as founded on poverty” (Marx 1973: 708).

Andersson also takes me to task for my “stream of critiques” against those who “do not aim for a direct transition to global socialism,” citing my “disapproval” of such diverse figures as Mikhail Gorbachev, Michael Moore and Naomi Klein, among others. This part of Andersson’s polemic borders on the absurd. Is he suggesting that Gorbachev, Moore and Klein are in some way aiming for an “indirect” transition to socialism? Is this what Andersson himself is hoping for? What on earth could this possibly mean? At bottom, of course, Andersson is simply reacting against my “self-assured” arguments on behalf of the revolutionary socialist perspective and in favour of a “direct attack” on capitalism in general (as opposed to a particular “type” of capitalism such as neoliberalism). Once again, instead of engaging with the substance of my arguments, he resorts to ad hominem ridicule, apparently in the belief that an entire political tradition can be dismissed with the sarcastic statement that “only Smith – based on Marx and Trotsky – knows the truth”!

In the end, Andersson’s efforts to discredit my work succeed only in exposing some of the baser prejudices and pathologies of the contemporary reformist left. At the same time, the very poverty of his polemic reveals just how defenseless this left has become in the face of a “self-assured” revolutionary Marxist critique. In Chapter 5, I point out that a “neo-reformist perspective” has long been “championed by many social-justice activists, independent socialists and Marxist intellectuals without any attempt to link it to a theoretical analysis of contemporary capitalism that clearly supports it” (p.127).  The accuracy of that judgment, I believe, has only become more apparent with the very weak political response of the liberal and radical left to the Great Recession. I make no apologies for taking a clear stand in favour of revolutionary Marxism at a time when so many ostensible Marxists are signing programmatic statements of Keynesian inspiration directed to the U.S. Congress, writing books and articles that call for the nationalization of the banks by a “democratized” capitalist state, and campaigning for “unity” around a program for reforming rather than abolishing the capitalist profit system.[3]

This brings me, finally, to a consideration of Castro’s thoughtful and appreciative but also somewhat confused critique of my book. Castro asserts that my “main argument” is that “the current global crisis of capitalism is terminal.” While I appreciate his assessment that my argument is made “convincingly in many respects,” I am nevertheless obliged to correct him on this score. The current crisis, which I characterize as both conjunctural and systemic, was never described by me as terminal. Such a diagnosis would imply a “breakdown” or “final collapse” theory of the end of capitalism, one to which I have never subscribed. Like Lenin, I believe that no periodic crisis of the capitalist system can be seen as irresolvable barring the revolutionary transformation of society by the working class. The current slump is now slowly being surmounted through a successful offensive by capital against labour on a global scale, largely as I anticipated. But this offensive is also planting the seeds of new forms of systemic crisis, both economic and political. What’s more, these new crises will continue to reflect, in ever-changing ways, the more general historical-structural crisis of capitalism that I have defined in GCIC in terms of the growing incompatibility between the forces and relations of production of global capitalism (see my discussion on pp. 57-59).

Castro’s misreading of my argument in this regard is significant inasmuch as he asserts that the fifth chapter of GCIC, to which he devotes most of his attention, “builds on this diagnosis.” Indeed, he goes on to write that “Smith’s argument in Chapter 5 is largely exaggerating both the terminal state of the capitalist system and the capacity that a vanguardist left could eventually have in the present circumstances.” The implication of much of the argument that follows is that the “vanguardist” strategy and revolutionary-socialist programmatic perspective that I advocate could only make sense if global capitalism were indeed facing a “terminal crisis” that was in some sense independent of human volition – a “structural breakdown” of the system that would preclude, anywhere and everywhere, any kind of successful struggle for progressive reforms within capitalism. The problem with Castro’s argument is two-fold: first, it underestimates the extent to which my Leninist-Trotskyist strategic and programmatic conceptions are predicated on a solid appreciation of the resilience of the capitalist system, the uneven geographical expressions of its historical-structural crisis and its capacity to survive even the most severe of conjunctural crises, barring the intervention of a class-conscious working class with adequate revolutionary leadership; and second, it seems to overestimate the degree to which contemporary capitalism is actually capable of accommodating significant structural reforms that might somehow prepare the working masses for socialist transformation in a later “stage” of struggle.

Castro is clearly a sincere and committed socialist with an appetite to challenge capitalism “directly.” But like many militants active on the left, he appears to entertain strategic conceptions that owe much to the gradualist reformism of the social-democratic and Stalinist traditions. I suspect that his enthusiasm for recent developments in Latin America – the popular struggles and left-reformist political experiments in countries like Bolivia, Ecuador and Venezuela in particular – has also led him to imagine that there are “progressive possibilities” that remain open in our era short of a working-class-led socialist revolution. While I share Castro’s interest in the Latin American ferment, I do not agree that genuinely “anti-capitalist systemic alternatives” have made much headway as yet, and I continue to believe that a sine qua non for real anti-capitalist breakthroughs remains the construction of revolutionary workers’ parties (with bases of support in non-proletarian strata as well) committed to the fight for a transitional socialist program.

I could continue at length on these important political themes, but it is time to conclude. For further discussion, the reader is referred to Chapters 4 and 5 of GCIC as well as to the excellent summary provided by Josh Dumont in his contribution to this symposium.

References

Brenner, Robert. 1998. “Uneven Development and the Long Downturn: The

Advanced Capitalist Economies from Boom to Stagnation, 1950-1998.” New

Left Review 229.

Mage, Shane. 1963. The “Law of the Falling Tendency of the Rate of Profit”: Its

Place in the Marxian Theoretical System and Relevance to the U.S. Economy.

Ph.D. Dissertation, Columbia University.

Marx, Karl. 1973. Grundrisse. Harmondsworth, Middlesex: Penguin Books.

Mohun, Simon. 1996. “Productive and Unproductive Labor in the Labor Theory of

Value.” Review of Radical Political Economics. 28, 4.

Moseley, Fred. 1991. The Falling Rate of Profit in the Postwar United States

Economy. New York: St. Martin’s Press.

Shaikh, Anwar and Ahmet E. Tonak. 1994. Measuring the Wealth of Nations: The

Political Economy of National Accounts. Cambridge: Cambridge University

Press.

Smith, Murray E.G. 1993. “Productivity, Valorization and Crisis: Socially Necessary

Unproductive Labor in Contemporary Capitalism.” Science & Society 57, 3.

Smith, Murray E.G. 1994. Invisible Leviathan: The Marxist Critique of Market

Despotism beyond Postmodernism. Toronto: University of Toronto Press.

Smith, Murray E.G. 1994-95. “Unproductive Labor and Profit Rate Trends: A

Rejoinder.” Science & Society, 58, 4.

Smith, Murray E.G. 1999. “The Necessity of Value Theory: Brenner’s Analysis of the

‘Long Downturn’ and Marx’s Theory of Crisis.” Historical Materialism 4.

Smith, Murray E.G. 2010. Global Capitalism in Crisis: Karl Marx and the Decay of

the Profit System. Halifax and Winnipeg: Fernwood Publishing.

Smith, Murray E.G. and K.W. Taylor. 1996. “Profitability Crisis and the Erosion of

Popular Prosperity: The Canadian Economy, 1947-1991.” Studies in Political

Economy 49.

 


[1] Professor of Sociology at Brock University.

[2] The opening arguments of my book are reproduced here in the form of ten theses with some minor changes to the cited text from GCIC.

[3] See, for example: “A Progressive Program for Economic Recovery & Financial Reconstruction” issued by Political Economy Research Institute/Schwartz Center for Economic Policy Analysis and signed by such prominent Marxist economists as David Kotz and Fred Moseley; and the many left-reformist proposals offered up by Greg Albo, Sam Gindin and Leo Panitch in their In and Out of Crisis (PM Press, 2010) and by contributors to the 2011 Socialist Register: The Crisis This Time, edited by Panitch, Albo and Chibber (Merlin, Monthly Review and Fernwood, 2010).