Global Capitalism in Crisis
Karl Marx & The Decay of the Profit System
We may be in the middle of the “worst economic crisis since the 1930s” and, as Smith claims, the global capitalist order “may also be on the verge of its deepest political and ideological crisis ever” (3). Given the state of the Canadian left today, many may welcome this book as a timely intervention in debates around Marxist theory and political practice. The weaknesses inherent to both neo-liberal and reform-liberal accounts of the causes of the recent global economic crisis have left many people thirsting for a deeper, more critical analysis of the real economic processes underlying it. Smith offers up an alternative analysis that is based on a particular kind of orthodox interpretation of Marx’s “scientific analysis of capitalism,” one that sees the current crisis as both the result of “conjunctural” causes as well as a component of the “systemic” crisis of the global capitalist system. He presents a defence of Marx’s “value-form analysis” both on the grounds of theoretical consistency and empirical corroboration, and attempts to extend this analysis to explaining the “long downturn” of the global capitalist economy in the post-1970s. Thus, financialization and the current “great depression” are situated within this long downturn and examined in light of the same underlying economic mechanisms. Smith presents a case for why the “falling rate of profit” theory of crisis is best suited to explaining the current conjunctural and systemic crisis of capitalism and why capitalism must be superseded by “a rationally planned, collectivized global economy under the democratic administration of those who labour” (3).
Much of the content of the book has been, as Smith acknowledges, published elsewhere–both appendices and chapter 3 were based on previously published articles and some parts of other chapters draw on his previously published book Invisible Leviathan (University of Toronto Press, 1994). Yet there are good reasons to collect these arguments together for presentation in a single book. Numerous publications have appeared in recent years asserting the value of Marx in helping us understand both the contemporary crisis of capitalism and imagining an alternative future. Smith offers a particular position on both fronts: he defends the necessity of building a general theory and combines this with an appeal to the radical left to develop vanguardist political parties. While his assessment of the current political conjuncture from the perspective of its revolutionary possibilities is written primarily for a Canadian audience (and from a Trotskyist perspective), his account of Marx’s value theory may have a distinct and wider appeal to both those with a basic understanding of the concepts and theories presented in Marx’s Capital as well as those with a deeper interest in the intricacies of the debates on these.
The book can be divided into three major interwoven themes. An overwhelming portion of the book–the first two chapters and key parts of the others, as well as both appendices–is devoted to a particular theoretical elaboration and defence of Marx’s value theory and crisis theory, covering a wide range of topics such as: the value-form of the commodity, labour power and exploitation; concrete vs. abstract labour and the labour theory of value; the law of value, the law of average profit, and the “transformation problem;” and finally, the “law of the tendency of the rate of profit to fall,” which bears repeated discussion throughout the text given its centrality to Smith’s overall argument. An equally important, though analytically distinguishable, strain of his argument is directed towards providing empirical evidence in support of several (six, to be exact) of Marx’s “predictions,” the one most central to the book being that there exists a “long-term tendency for the rate of profit to fall as a result of a rise in the organic composition of capital” (61-68). Finally, Smith claims that there are certain “programmatic” implications of value theory for revolutionary socialist political strategy, in Canada and elsewhere, though here he moves beyond Marx’s “scientific analysis of capitalism” and draws generously on the history and practice of Trotskyite bolshevism (chapters 4 and 5).
Readers who have taken their first stab at reading Marx’s mature works on political economy can benefit from the introduction Smith provides to some of the debates and controversies surrounding value theory and crisis theory, and may be interested in the effort he directs at showing how abstract theory can inform one (but not necessarily only) kind of revolutionary political practice. More sophisticated readers will appreciate some of the finer points of Smith’s engagement with Marxist economic theory, controversial as they might be. The key to understanding his falling rate of profit view of crisis lies in his conceptualization of “socially necessary unproductive labour” (SNUL). SNUL refers to the labour of those whose work may be “necessary” to the functioning of capitalist accumulation in some sense, but which is not directly involved in the production of commodities, hence, of value (or surplus value). This, in itself, is uncontroversial. However, following the position developed by Shane Mage, Smith advocates treating the wages and salaries paid to “socially necessary unproductive labourers” as constant capital, as opposed to variable capital or deductions from social surplus value. Smith uses this distinction between productive and unproductive labour to “re-operationalize” value categories. On this conceptual basis, Smith (in an earlier work co-authored with K. W. Taylor) reconstructs Marxian value-ratios for Canada from 1947-1991 which purportedly show “a secular increase in the organic composition of capital and a rising ratio of unproductive to productive labour in the wage-earning workforce” (86; see chapter 3 and Appendix 2 for extended discussions).
It seems that the wider and ultimate aim of Smith’s argument is political, addressing himself to the reformist and gradualist political strategy “championed by many social-justice activists, independent socialists and Marxist intellectuals” (126-7) in Canada and elsewhere. While eschewing both moralistic and so-called “distributionist” critiques of capitalism that “blame the working class for the crisis” (of the wage-push/profit-squeeze variety, for example), Smith should be commended for advancing a defence of the need for “general theory.” However, a general theory of this type isn’t easily translated into an “inclusive” (which Smith, dismissively, can only see as leading to reformist) socialist politics. Smith’s critical analysis of Marx’s political economy finds its political expression in a call for a return to revolutionary vanguardism: a plea to the radical socialist left in Canada to build a programmatically based vanguard organization that embraces Trotskyist “rules.” However, Smith’s call for “imagining” another October Revolution threatens to alienate those not baptized in the history of revolutionary movements. Whatever you might think of the political positions developed by Smith, an argument can be advanced that the connection between the effort to develop a “scientific” interpretation of Marx’s political economy and Smith’s advocacy of revolutionary Trotskyism can be suspended long enough to appreciate his contributions to his theoretical work on Marxist value and crisis theory.
–Reviewed by John Simoulidis
Socialist Studies 6(2) Fall 2010