Posts Tagged ‘tony cliff’

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Tony Cliff and capitalist crisis

January 5, 2014

A bit more on this. Tony Cliff, in chapter seven of his classic State Capitalism in Russia, offers a brief, analytical description of capitalist crisis, based on Marx, that differs (I think) fairly substantially from what has become the orthodoxy. Cliff describes the central contradiction owners of capital face between the need to both generate profits, via the creation of surplus value, and the need to realise those profits in monetary form, by selling the output produced. It is this contradiction that drives the whole process of the business cycle, but, critically, Cliff does not here attempt to make the claim (central to Chris Harman’s version of the theory) that the falling rate of profit ultimately determines the entire system:

Unlike all pre-capitalist forms of production, capitalism is forced to accumulate more and more capital. But this process is hampered by two complementary, and yet contradictory, factors, both arising out of the system itself. One is the decline in the rate of profit, which means the shrinking of the sources of further accumulation. The other is the increase in production beyond the absorptive capacity of the market. If it were not for the first contradiction, the “underconsumptionist” solution of the crisis – to raise the wages of the workers – would be a simple and excellent answer. If it were not for the second contradiction, fascism could, by continuously cutting wages, have staves off the crisis for a long period at least…

…the rate of profit determines the rate of accumulation, the rate of accumulation determines the extent of employment, the extent of employment determines the level of wages, the level of wages determines the rate of profit, and so on in a vicious circle. A high rate of profit means a quick accumulation, hence an increase in employment and a rise in wages. This process continues to a point where the rise in wage rates so adversely affects the rate of profit that accumulation either declines catastrophically or ceases altogether…

This theory explains why, in spite of the antagonistic mode of distribution and the tendency of the rate of profit to decline, there is not a permanent crisis of overproduction, but a cyclical movement of the economy.

This is, to my mind, a much more satisfactory description of the actual history of capitalist development than the prediction of ever-worsening crises over time, ameliorated only by “countervailing factors”.

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