The Crisis of Neoliberalism. This is a work of empirical economics, in which Dumenil and Levy adduce a wide range of evidence to argue that capitalism has entered a phase characterized by rapid technological change, increasing returns to capital, and financial instability. While the authors focus on the interpretation of contemporary capitalism, they also integrate an historical perspective, showing that in the immediate post-World-War II era from till , now considered a golden age of capitalism in which economic growth was high, inflation low, and income inequality decreasing, returns to capital decreased. In the s this trend reversed, and real interest rates started rising, returns to capital increased, and income inequality widened.
|Published (Last):||17 May 2006|
|PDF File Size:||13.48 Mb|
|ePub File Size:||8.93 Mb|
|Price:||Free* [*Free Regsitration Required]|
Gerard Dumenil and Dominique Levy have made important contributions to the understanding of Marxist economics over the years. Gerard Dumenil was in London this week to give a presentation on the main ideas in their book. Neoliberalism is the latest. It is a new form of capitalism. One of its features is that it is very violent. For Dumenil, capitalist crises can be caused by a variety of reasons. The four crises were the decade of s; the s Great Depression; the s crisis; and now the neoliberal crisis of the early 21 st century.
The s crisis was caused by a lack of profitability; but the s depression was a financial crisis as profitability had been rising up to The s crisis was one of profitability again; but the crisis of neoliberalism was one of a collapse of financial hegemony again profitability had been rising up to Those who argue that falling profitability is the cause of capitalist crises forget that Marx did not raise this cause in the Communist Manifesto, but on the contrary referred to the cause of crisis in the credit system.
The social order changes when the managerial class sides with one or other of the other two. Thus in the s and in the post war period, the managerial class sided with the popular class against the capitalist class and we had the welfare state etc.
In the neoliberal era, the managerial class sided with the capitalist financial class and the popular class was on the back foot. Neoliberalism started in the US because US capitalism was uniquely placed to expand financial hegemony and could rely on globalisation for growth. This made the US economy imbalanced with a growing trade deficit and relying on capital inflows from the rest of the world.
This generated excessive consumption and inadequate investment. And debt took over from saving. That meant slow accumulation of capital in productive sectors and the need for more financialisation to raise profits. It was this imbalance of financialisation and globalisation that caused the structural crisis of It was not falling profitability.
Dumenil produced a graphic showing that the rate of profit for the US non-financial corporate sector peaked in , fell back to , then rose to , fell again to and then rose again to peak in For Dumenil, the crisis of could not be caused by falling profitability because it rose from to This was especially the case if you looked at after-tax profitability and not overall profitability.
The trigger, but not the cause, of the crisis was the residential subprime loans market and the securitisation of those loans around the world. Dumenil did not think this would work in solving the crisis of neoliberalism and so capitalism would have a new crisis some time.
The first was that it showed irrefutably that profitability was not the cause of Great Recession. Anyway, the idea that the tendency of the rate of profit to fall is the cause of capitalist crises is really a fairly new idea, one that has arisen only post-war and mainly comes from Anglo-Saxon sources, says Lapavitsas.
Sure, it might have fitted the facts in the s, but not after. Luxemburg said it was underconsumption and others said it was disproportionality. Lapavitsas reckons the causes of capitalist crisis is complex not monocausal. Financialisation was a product of new order of neoliberalism.
That is why neoliberalism is an epochal change. We need to return to Hilferding and Lenin to understand financialisation.
The circulation of capital is now key to understanding the structural crisis of capitalism not profitability. Where do you start with all this?
As those of you who have read my posts regularly would not be surprised to guess, I could not disagree more with so many of the propositions presented by Dumenil and Lapavitsas. They seem to me to be the weakest arguments, not the strongest. It seems that, for Dumenil, every crisis is different. In , it was the Wall St stock market crash that set off the Great Depression.
But these proximate causes do not reveal the underlying or ultimate cause of capitalist crisis. What about Henryk Grossman or Paul Mattick? If they are recurrent, they must have a common cause that manifests itself recurrently as different causes of different crises.
For Marx, there are only two classes defined by their relation to the means of production: one that owns the means of production and appropriates the surplus value created; and one that lives only by selling its labour power. People may think they are not members of either class but from the point of view of Marxist economic theory, they are defined by these economic categories.
President Obama could lead such an alliance in a similar way. The trouble is that the managerial class is an illusion and there is nothing to ally with!
Can we really identify the major cause of a capitalist crisis by whether the economy collapses profitability or explodes financial?
Namely, the US rate of profit peaked in , then fell back to a low in , then in the era of so-called neoliberalism, it rose to peak in That peak, according to Dumenil and my own data see graph was not surpassed in at the peak of the credit boom. And the peak was also higher than the peak. Indeed, based on that view, in early , I predicted the Great Recession would take place in Dumenil made no such forecast as far as I am aware.
Profitability will soon resume its downward path after its current recovery from the recession low of , according to my interpretation of the data. It will reach a new low with a new recession in four to five years time. This entry was posted on March 3, at pm and is filed under capitalism , economics , marxism , Profitability.
You can follow any responses to this entry through the RSS 2. You can leave a response , or trackback from your own site. Nice critique. This is a much worse recession for workers. Yet profit rates fell the same. Seems like more is going on. My own work own on found evidence of a profit rates lower than a decade earlier b a decline in triggering the first fall in October and then further declines no doubt hastened by the financial falls in My reading of Dumenil and some of his supporters found him too-easily accepting the sort of facts that come out of national stats bureau, even then they are not quite clearcut.
Plus as you say there are plenty of marxists who would disagree. My own simple attempts a few years back found some upswing in s but still not at the peak of the mids. I posted a paper that I presented to the Association of Heterodox Economists in summer It provides charts and data on the rate of profit. Relation between theory and politics. You correctly point out the political implications of their theory. Those who ignore theory are condemned to reconstruct it.
Is this an argument against a race or a theory? On another note, I would like to inquire about your opnion regarding the mechanism used to prop up the economies. Removal of the this life support is unthinkable for the ruling class in the US. In the depth of the financial collapse all capitalist goverments resorted to government support to the failing banks.
But once that had been done, proper Keynesian policies of easy money and state spending were adopted with varying degrees of enthusiasm.
Bailing out the banks was more important. At the other end of the argument on capitalist economic policy are the tea party Republicans who find any role for the state except to lock people up or to wage war as anathema. They want government spending decimated. As you say, neither policy would restore capitalist health unless it revives profitability in the productive sectors of accumulation. I am not sure what this buys us. The idea is that somehow if we change our language then people will be more receptive to our ideas.
Assuming that the most fundamental definition of Marxism is that it is a movement which allies itself with the social interests of the working class and seeks to aid the working class in an historical process which results in the working class becoming the ruling class thereby abolishing class differentiated society, at what point is this form of analysis useful.
What is its application to the class struggle or the construction of socialism.? To speak of a managerial class is to depart from Marx and to enter the realm of Bernstein. My suspicion, admittedly made without adequate analysis is that it could be easily broken up into the more specific categories of a the bourgeiosie, owners of social capital who have managerial positions but are major shareholders or bondholders and thus are entitled to a portion of the fruits of surplus value.
I would suspect that true managerial professionals who do not fit in to any of these above categories and whom are nonetheless explicit agents of the bourgeiosie would represent a very small statisitcal component of society, are not a class per se and will remain in their great majority loyal to their masters irrespective of either the rate of profit or the condition of the credit markets.
The analysis described above seems like a self aggrandizing petit-bourgeois fantasy in which college professors imagine themselves and their cohort to to play a pivotal historical role.
Both the Manifesto and Capital refer to the unquenchable thirst for growth of the capitalist system. The present epoch is salient in the aspect that the extension of commodity production is now virtually complete on a world scale.
To some extent it is already being truncated by the operation of post revolutionary state regimes which in some limited aspects superceed the law of value such as in the case of Cuba, Vietnam and China.
Resolution of both limitations on the expansion of the rate of profit and most certainly limitations on the operation of credit markets depend upon opportunity for systemic growth which is no longer avaliable to the capitalist system without a prior massive destriction of existing fixed capital war , the creation of direct access to a new market by the reimplimentation of colonial relations or some presently unforseeable major advance in the productivity of labor—such as occured in the s with the development of the internet wireless technology and personal computer.
Further advances in information technology have not produced the same level of productivity increases as did their introduction and have if anything intensified the downward pressure on the rate of profit as the application of these technologies has become generalized and markets for these devices saturated except for the replaceement of one device with another that is only marginally improved over its predecessor.
Lacking the social power to alter these balance of forces, including the massive expansion of democratic power now resting in the hands of the worlds working people, capitalism has turned to cannibalism which is sometimes euphemistically called neoliberalism. The solution to this problem is a social movement to overthrow the power of capital rather than the employ of ever more intricate and sophisticated marxian analysis of capital.
Marxists who posses talent as economists ought to turn their attention toward the world that we must now begin to create rather than to dissect the world that we must leave behind.
In fact, Dumenil and Levy argued that financialization was a response to rate of profit shrinkage. How then it is possible to say that present crisis has nothing to do with the rate of profit? Or, if both matter, how they correlate? I read this essay with great interest.
The Crisis of Neoliberalism
Gerard Dumenil and Dominique Levy have made important contributions to the understanding of Marxist economics over the years. Gerard Dumenil was in London this week to give a presentation on the main ideas in their book. Neoliberalism is the latest. It is a new form of capitalism. One of its features is that it is very violent. For Dumenil, capitalist crises can be caused by a variety of reasons.