AMERICAN REVIEW OF P OLITICAL ECONOMY

Modern Capitalism and Modern Marxism

Bruce E. Parry [email protected]

Melvin Rothenberg University of Chicago [email protected] ago.edu

Abstract

In this essay, we offer our views on some of the fundamental issues involved in creating a revolutionary Marxist position, which we feel must be involved in any adequate systematic analysis of the current development of capitalism and distinguish it from a Keynesian analysis whose inevitable politics are at best Social Democratic. We are not interested in boilerplate Marxism but rather in a sharp and clear analysis of the present day conjuncture as viewed through a historical materiali st lens

JEL : Keywords: Revolutionary Marxism, capitalism, technological innovation,

Th e international economic crises that began in Brancko Milanovic 17 have effectively raised the 2007 has led to a rather massive negative shift in the issue of global economic inequality, challenging the prognosis for the future of co ntemporary capitalism mythology of a value - free market. Even more on the p art of many prominent political economists. significantly, a grouping of what might be termed Larry Summers, chief economic advisor to Marxist/Keynes ian economists have risen to Presidents, talks about long term stagnation. 14 positions of theoretical and political influence in Robert Gordon, one to previously laud U.S Europe and U.S. Examples include Costas economic dynamism and productivity, now declares Lapavitsas and Yanis Varoufakis, both major the end of productivity growth. 15 Nobel laureates intellectual forces in the founding of the Greek Paul Krugman and Joe Stiglitz have sharpened the ruling party, Syriza, John McDonnell, the Shadow criticism of market fundamentalism and have Chancellor of the Exchequer in British Labour Party explicitly adopted a kind of left Keynesianism that led by Jeremy Corbyn, and Jack Rasmus in the U.S., was at most implicit in their earlier writings. 16 a writer dealing with global economy, a broadcaster and an economic advisor to America’ s Green Heterodox and left wing economists such as D ean Party. 18 Baker and Jamie Galbraith have published op - ed pieces in the major media. This opens up space for 17 Thomas Picketty, Capital in the 21st Century and our ideas, although neoclassic economics — the Brancko Milanovic, Global Inequality . academic, ideological wing of capitalist ideology — 18 See in particular Costas Lapavitsas’ Profiting Without maintains its hold over almost all major university Prod ucing . This work is a valuable, informative and dep artments. Scholars such as Thomas Picketty and thorough treatment of the subject of global finance from a Marxist/Keynesian perspective by an economist and 14 14 See Summers, Foreign Affairs. former elected representative in Greece of the Syriza 15 Robert J. Gordon, The Rise a nd Fall of American party. Lapavitsas has a detailed and profound grasp, in Growth . his words, of “ the ascendancy of finance and the 16 see various Krugman articles in the New York Times , concomitant financialization of capitalism”. Lapavitsas and Stiglitz, The Euro… is perhaps the strongest and most intellectually 188 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY foundations clear to arrive at an adequate strategic These thinkers carry significant theoretic al and perspective. Such a perspective is crucial in getting political weight within the Left. They may even our politics right. In conclusion, we offer some shift discussion and analysis in a Marxist direction. broad strategic project ions about the main However, it must also be recognized that their contradiction of contemporary capitalism, and, hegemony may water down the basic insights and flowing from it, about the appropriate response of contribution of Marxism. In fact, the evidence so far revolutionary Marxists in reviving an international is that they fail to treat certain basic foundational workers movement. questions. This is a problem with much of current left analysis, which weakens the analysis as a guide We begin by laying out our basic thesis: that to political action and program. Specifically, they electronic technolo gy is transforming and fail to link their economics and program adequ ately destabilizing capitalism. It is creating poverty and to material production, the source of profits and permanent unemployment. We consider the value. Costas Lapavitsas, 19 for example, more revolution in technology over the last half - century forthright then many, has stated that he is a Marxist and the impact this has had on capitalist relations of in theory, but a Keynesian in policy. This is production. We then turn to the basic sources of ultimately an incoherent position, which can fatally profit under capitalism. There is just one source of we aken the chances of a revived working class profit: surplus value produced in the production movement for Socialism. process. 20 Surplus value may be augmented by two methods, which Marx identified as the creation of In this essay, we offer our views on some of the relative surplus value and absolute sur plus value. 21 fundamental issues involved; views which put forth For any given worker, the creation of absolute a revolutionary Marxist position, which we feel surplus value is the lengthening of the workday. The must be involved in any adequate syste matic increase in relative surplus value is accomplished by analysis of the current development of capitalism changing the proportion of necessary to surplus and distinguish it from a Keynesian analysis whose labor time. Each will be examined in deta il. inevitable politics are at best Social Democratic. We are not interested in boilerplate Marxism but rather We then look at what we consider a fundamental in a sharp and clear analysis of the prese nt day gap in Keynesian analysis. We look at imperialism conjuncture as viewed through a historical and its effect on financial profit from different materialist lens. Some of what we say may seem aspects. We look at the oppression of the neo - obvious and elementary to those in the Marxist colonies themselves and super - exploitation. We tradition but we believe these points must be then examin e the creation and decimation of the reiterated and clarified in reasserting Marxism. middle class. We refer, with Engels and Lenin, to Other points will be controversial to many the bourgeoisification of the working class and the traditional Marxists. It seems to us that they must be process, currently under way, of removing the taken into account in analyzing the current situation. privileges bourgeoisification implies. That situation is materially different from the world many of us grew up in. While our argument is We then examine the process of overproduction of primarily theoretical and logical, our concerns are capital and how that leads to two phenomena. One mainly political. We believe one must get the is the increased flow of capital into the arena of circulation, where surplus value is realized as profit. formidable advocate of what we are criticizing, and The second is the massive increase in debt, which therefore details and positions taken from his work serves to promote the circulatio n of this surfeit of represent the most challenging examples, and are most capital. Debt is a very important aspect of frequently cited in this essay. financialization; the massive creation of debt is also 19 Lapavitsas does not agree; see Lapavitsas, Profiting Without Producing , p. 168) for an example where “ profit 20 Ibid . [may be] generated out of the processes of c irculation.” 21 Marx, Capital , Vol. I, Parts III & IV . 189 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY a source of economic crisis, including the Great and intellectual life process in general. It is Recession beginning in 2007. not the consciousness of men that determines their being, but, on the contrary, The growing environmental crises and the their social being that determines their degradation of t he quality of our basic necessities consciousness. At a certain stage of their are argued to be a central factor in the need for development, the material productiv e forces social change to ensure human survival. This is of society come into conflict with the followed by a short section on the strategic existing relations of production, or – what is implications of these developments and appropriate but a legal expression of the same thing – responses for revolutionar y Marxists. We conclude with the property relations within which by summing up our analysis and asking some they have been at work hitherto. From forms salient questions that point the way for future of development of the productive forces research and exposition. these relations turn into their fetters. Then begins an epoch of social revolution. With In critiquing the concept of financialization, it is the change of the economic foundation the important to note both what has been said and what entire immense superstructure is more or has not bee n said. Lapavitsas spends time less rapidly transformed. 23 discussing the flow of capital and workers into the financial sector, but fails to note that this may be the All technological advance causes shifts and chang es result of effects in the industrial sector, rather than in the mode of production. Many of these are small just a feature of the financial sector alone. 22 In fact, or incremental changes. At times, the advances in exam ination of the industrial sector shows that technology are fundamental. Harvey has referred to technological change is inducing the changes that these types of technological advance as “ generic lead to the effects he notes. This is not the result of technologies.” 24 They apply to many or all fields of financialization, but is a feature of the technological production and distribution and can cause and electronic revolution occurring throughout quantitative shifts in the mode of production. The soc iety. We now examine this in detail. most profound can lead to qualitative change.

In the Preface to a Contribution to the Critique of The most obvious of these was the steam engine Political Economy , Marx laid out the profound that is widely regarded as the fundamental cause of consequences of the inexorable march of the industrial re volution that launched modern technological progress for the mode of production: capitalism. Its effect was profound. It created markets for iron and steel to produce the engines In the social production of their life, men and for wood and coal to provide them with energy. enter into definite relations that are It was the invention that allowed power to be indispensable and independent of their will, divorced from waterpower and an imal energy for relations of production which correspond to the production of goods. It allowed the development a definite stage in the development of their of factories. It was the technology adopted to material productive forces. The sum total of develop transportation through the railroads. The these relations of pro duction constitutes the demand for all the inputs to production created economic structure of society, the real entire new industries, including the oil in dustry. foundation, on which rises a legal and Ultimately, it led to the development of electricity political superstructure and to which and the communications revolution created by the correspond definite forms of social telegraph. consciousness. The mode of production of material life conditions the social, p olitical 23 Marx, Preface, A Contribution to the Critique of Political Economy. 22 Costas Lapavitsas, op. cit. 24 Harvey, Seventeen Contradictions … , pp. 94 - 5. 190 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY Electricity was also a generic technology that led is solely or mainly due to jobs shifting to low - wage from the industrial phase of capitalism to areas such as Mexico, China, Vietnam, etc. In fact, imperialism, creating a new source of us able many of the jobs have both shifted and been energy, military and transportation advances, and computerized out of existence. Some recent the possibility of the centralization and research claims that 88 percent of the job loss in the concentration of capital. Again, the communications United States is due to technology; the reminder i s revolution electricity ushered in, coupled with the due to offshoring. 27 Others have claimed the share provision of power to the local consumer of off - shoring is greater. 28 There is no doubt that profoundly alt ered the economic landscape. technological developments have played a major role in manufacturing job loss. One of the The current technological revolution is based in the important, but little publicized facts about development of electronics, in particular the storing offshoring is that production, for example in China and transmission of vast amounts data electronically or at the maquiladoras in Mexico, is done with the through computers: information technology. most modern technology, so that the number of Electronics is a gener ic technology that is workers is minimized. influencing every aspect of economic relations in production and distribution on a global scale. It has The effect is also sharpened by workers pouring in led to the current stage of development of from the countryside. In China, but also in other capitalism, the exact nature of which is still being n eocolonies, the electronic revolution, along with debated. Of course, the most basic relation of attendant advances in agricultural technology which production — private property — has remained make possible more cash crops using less labor, is unchanged. The question that confronts us is how tractoring the peasantry off the land and forcing this technology is affecting the mode of production. them into the cities. On the one hand, this developme nt of industrial agriculture is an One of the most basic aspects of this electronics expression of exactly what is referred to here: the revolution is that it appears to be a labor - r eplacing technological revolution that is sweeping all aspects technology. 25 Numerous articles have been written of all economies. On the other hand, these workers showing that the effects of computer technology — are being made available for exploitation by capital unlike its historical antecedents — are actually in the citi es and in the industrial sector. causing a reduction in the overall employment in manufacturing. 26 The idea is that robotic The overthrow of the socialism in the former Soviet substitut ion for manufacturing labor is actually Union and other Eastern European countries also replacing more workers than the increase resulting led to large numbers of workers moving from state from the production of robots. This effect is owned enterprises (SOEs) to private firms, ubiquitous. Replacement of manufacturing labor in increasing the number of manu facturing workers the advanced industrial economies is a well - being exploit ed by capital. Given the relative low established, long - term tr end. level of technological development of the SOEs, retooling these industries might ultimately lead to a This effect has been partially hidden by the effect of reduction in industrial employment. offshoring, or moving production to the lowest wage countries as described elsewhere in this paper. Further, the analysis of the effect of This leaves the impression that the reduction in jobs computeri zation on employment in industry has focused on manufacturing. Industrial employment 25 Peery, Entering an Epoch of Social Revolutio n. also includes transportation (particularly 26 Parry & Brody, “The Decline of the Proletariat…;” international transportation of goods), construction Carson, U.S. Weekly Economic Update , October 10, 2003 and October 24, 2003; Carl Frey and Michael 27 Hicks and Devaraj, T he Myth and Reality of Osbourne, “ The Future of Employment;” and Rodrik , Manufacturing in America. Premature Deindustrialization. 28 Autor, Dorn, and Hansen, “ The China Syndrome.” 191 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY and other industries that are not directly concerned capital, the extent and energy of its growth, and, with manufacturing, su ch as software development. therefore, also the absolute mass of the proletariat many kinds of services today are also surplus value and the productiveness of its labour, the greater is producing. These include private health care, the industrial reserve army. … This is the absolute private education and other arenas where services ge neral law of capitalist accumulation. ” 31 are privatized. All of these industries have also been deeply affected by the el ectronic and scientific The current situation is more dire than he analyzed. revolution, but the overall employment effect has The worldwide effect of capitalist not been determined. underemployment is that over a 3.1 billion people lived on less than $2.50 a day in 2014. That is about Nevertheless, indications are that the direction of 44 percent of the world population. 32 It used to be technological development in both the neocolonies that layoffs were temporary, either for retooling or and imperialist countries is toward labor during downturns in the economy or for demand for replacement by t echnology. For example, China is the product. The expectation, of both capital and the the world’s largest market for industrial automation workers, was that the workers would be recalled. If and robots. Foxconn — famous as producers of the one factory closed or downsized, that labor force iPhone for Apple — plans to have robots replace 30 would be reabsorbed by other factories. Hence, the percent of its labor force doing the most tedious excess labor was, in that regard, a reserve army, work. 29 ready to be thrown into production when capital had a need for more workers: either when demand It is clear that jobs in the United States and other picked up or when the econom y recovered. imperialist countries have been computerized out of existence. The factories of the past, employing tens But the idea that capitalism will ever hire the most of thousands of workers, are gone. The trend today destitute of those in poverty today or that they is to smaller, highly computerized factories, constitute a “ reserve army’ is dated. While sections employing hun dreds, not thousands of workers. will be drawn into production, the vast majority has While they are not common yet, workerless plants been thrown out of the formal econ omic system and also exist. Many do not run without workers all the is forced to survive by any means possible. In case time, but on holidays and over weekends or between one thinks that this is restricted to Africa, Asia and shifts. Thus, the move to fully computerized Latin America, see the book, $2,00 a Day: Living factories is an economic d irection of on Almost Nothing in America about poverty in the computerization for the future. U.S. 33

One indicator of this is that in the imperialist Obviously, everyone has to get enough money to countries, the Labor Force Participation Rate continue to survive. Thus, we see the growth of (LFPR) and the Employment - Population Ratios are employment in the informal economy, i.e., the petty falling. 30 retail sector and in marginal consulting and entrepreneurship schemes. The latter two basically If this analysis is correct, it means that capitalist mean hustling for oneself in the absence of secure ind ustry will require neither increasing numbers of employment in the corporate sector and include industrial proletarians nor a reserve army. Marx illegal economic activities. explicitly pointed to the growth of the absolute mass of industrial proletarians and their immiseration as the fundamental law of capitalist accumulation. “ Th e greater the social wealth, the functioning 31 Marx, Capital , Vol. I, p 644, italics in the original. 32 Ja son Hickel, “Exposing the great ‘poverty reduction’ 29 The Economist, September 12, 2015, “Special lie,” Al Jazeera. Report.” 33 Kathryn J. Edin and H. Luke Shaefer, $2,00 a Day: 30 Economic Report of the President , 2016. Living on Almost Nothing in America. 192 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY It is telling that, in the U.S., the Employment - organizing in the private sector has fallen in the Population Ratio for high school and college - U.S. to about 6.7 percent of the workforce . 36 educated workers is declining, but the ratio for those without a high scho ol education has increased. 34 The effect of permanent unemployment on While this may or may not be a permanent trend capitalism has been profound. It is destabilizing (the unemployment rate is still markedly higher for capitalism. The current hegemony of neoliberal those without a high school degree), it is indicative ideology is an attempt to justify the combination of of job replacement of more skilled jobs. Clearly an the glut of commodities and the generation, by aspect of both the tec hnological unemployment and capital, of per manent unemployment. If workers are the export of jobs is the deskilling of workers and permanently unemployed — if there is no the hiring of the least skilled for the shrinking job expectation that they will be needed in the labor pool. Computerization has removed much of the force — then for the capitalists there is no longer a skill needed in many jobs. While this process has need for education, health care, the social safety net, been noted in the past, 35 i t is happening even more jobs and higher wage s. Thus, we see capitalist rapidly in the present. policies aimed at cutting the budget for education and health care, and the social safety net. Real Another aspect of increasing attention to the retail wages are currently at the level of the 1950s. Job sector is that the overproduction of commodities — creation is mainly in jobs associated with the lowest particularly with less and less labor — requires wages: retail and food s ervice. 37 more and more capital to fund the realization or circ ulation process, including more advertising, to Cuts in budgets are universally taken in the name of sell the mass of commodities at a profit. Debt is a balancing the budget. But the reality is that the primary method of increasing the circulation of capitalist class is paying less and less in taxes and commodities. therefore causing budget crises throughout the world, but specifically in the U.S. This i s the direct The above facts suggest that further technological result of their effort to increase both the rate and development is not a solution to the proble ms of mass of profits. The increases in production of unemployment, falling wages and the slashing of commodities that result from the technological the social safety net. For example, the myth that war revolution have made the process of realization of generates employment both through the military and profit more difficult. Both the squeeze on p rofits through contractors is especially pernicious. It is and the out - of - control rise in debt are the result. clear through the last dozen years that war n o longer does what World War II did. Fewer, technologically With no need for the social safety net, there has equipped soldiers use gear that is produced by been an increase in the need by capital for police, computerization and hardly makes a dent in the prisons, homeland security and other methods of employment statistics. social control. These do not seem to be affec ted by the budget crisis brought on by capital. Thus, the These development have also been disastrous for rightward drift of ideology and politics has a union organizing. With smaller plants and shops, material basis rooted in the changing technological changing contractual relationships, the use of basis of the economy. If that is the case, then the employment agencies in staffing and the threat of expectation is that the rightward drift of poli tics will both offshoring and technological replacement, continue with the threat of a leap to more draconian politics.

36 Wikiped ia, https://en.wikipedia.org/wiki/Labor_ unions _in_the_Unit 34 See Paul Craig Roberts. “Quarterly Report.” ed_States. 35 Braverman , Labor and Monopoly Capital. 37 Peery, op.cit . 193 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY To sum up, three great developments have altered appropriation by the capitalists of this surplus value the conditions of labor internationally over the past that underlies the dynamic of class relationships in decades. They are the destruction of the agricultural capitalist society. and rural - based economies of the neocolonies, the decline of manufacture as the economic basis of at A well - grounded, coherent and materialist notion of least the advanced capitalist world, and the collapse surplus value is the pillar on which the materialist of socialist states, drawing the working class of the theory of class society, class dynamics, and class ex - socialist states into the international, capitalist struggle rests. Without such a notion historical labor market. The revolution in electronic dynamics are reduced to the eternal struggle technology was central to the first two of these between geopolitical, territorially based groups and developments, and it can be argued that it was their efforts to accumulate wealth and res ources. In relevant to the third. Any adequate analysis of the particular the explication of the notion of “ profit,” international economy must have these the basic form in which surplus value is developments as its starting point. appropriated under capitalism, depends on such an analysis. The Sou rce of Capitalist Profits The exact measure of value of specific As Marx makes clear, class society is founded on commodities, individually or collectively, is — the appropriation by the ruling class of the products a ccording to Marx himself — indeterminable, but of human labor as created by the laboring classes. fortunately not of importance to an understanding of Capitalism is fundamentally a system based on capitalism. But understanding the value concept is commodity production. The ins truments of basic to understanding the underpinnings of the production — machinery and equipment, natural capitalist economy. The classical economists, resources and human labor power — have Smith, Rica rdo, and Marx advocated a labor theory themselves been made commodities. Under of value, where value was ultimately measured by capitalism each commodity has the quality of being the total labor time embedded in a commodity. a value and this expresses the fact that commodities Contemporary neo - classical theories, as well as are products of human labor. The quality of being a Keynesian economists, advocate a subjective theory value is expressed in two ways. First, the of value, the value of a commodity being based on commodity is a use value in that it must have a its utility, its usefulness to the consumer, as genuine social use to human society. That aggregated by its market price. usefulness cannot be directly quantified. Second, the commodity has exchange value, wh ich The classical economists, correctly in our view, saw expresses its quantitative aspect — the amount of the day - to - day fluctuations of supply and demand as human labor required to produce it — through leading to variations around the real valu e of a being compared to and exchangeable with other commodity. The notion of an ideal, market commodities. 38 equilibrium developed by the neo - classicals to underlie their models is a metaphysical fantasy not The production of each commodity within the even approximately realized in the real world. capitalist mode of production implies that the comm odity is produced to increase the wealth of the Value depends on a two - fold dialectic. The first is capitalist. The increase in wealth is measured in the dial ectic between concrete labor into abstract value terms by the difference between the cost of labor. Concrete labor is the specific work done by a the final commodity in value terms and the full given laborer, which varies qualitatively from exchange value of the commodity. That increase in worker to worker. Abstract labor is what makes all wealth is denoted as “ surplus value. ” It is the work qualitatively the same. The idea is that substantially di fferent types of labor — concrete 38 see Callinicos, Deciphering Capital for a nice labor — are conceptually similar: they are discussion of this point. Page 159 - 69. 194 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY comparable in the abstract, which Marx calls surplus value is raised but then avoided. Instead “abstract labor.” Differences of skill levels represent different modes of “financial profit” are examined. 39 compound levels of simple abstract labor and provide correspondingly more valu e within a given There are other problems in the labor theory of periods. The second is that the value of each va lue that remain unresolved. Much Marxist commodity is given only by the “ socially necessary economic discourse (Some of these discussions are labor” for its production. Commodities produced by summed up and discussed in detail in Callinicos, processes that use more or less labor still contain the Deciphering Capital ) 40 and theorizing over the past value given only by the socially ne cessary labor decades have been devoted to this. One such time. problem is the questi on of the long - term tendency for the rate of profit to fall. We won’t go further Additionally, consideration must be made for other into the details at this point except to reassert the value added. Transporting goods to the consumer, necessity that an explicit, clear, and workable theory whether that means getting them to the tail outlet or of value is fundamental to any in - depth analysis of directly to the final user, adds value. necessary the current st age of capitalism. storage of both raw material in puts to production and of the final output, adds value. Communication, The Production of Surplus Value when it is part of the production process, also adds value. Marketing, retail and financing do not add The fundamental source of profit is surplus value value, but are deductions from the surplus value generated in commodity production and realized in generated by the commodity. circulation. The circuit of the modern capitalist enterprise described by Marx (M - C - P - C’ - M ’) is Anot her problem is the relationship between prices fairly clear. Note that the initial money, M, and labor values. The classical economists knew involves the financing of production in order to that prices and labor values, at least under purchase commodities, C, including fixed plant and capitalism, were different. Marx’s theory clarified equipment, raw materials and labor. To raise the the inconsistencies of his predecessors and funds, the productive capitalist must turn to the formulated the probl em in precise terms. It is clear financial sector for interest - bearing loanable funds that prices deviate systematically from values. Profit and stock offerings. The final result, M’, the — the monetized form of surplus value — is original amount of money plus the profit, is the determined not just in production, but based on actual purpose of capitalist production. 41 The net capital put forth in the spheres of both production profit, after interest and taxes, consists of retained and realization (marketi ng, retail and wholesale). earnings and divid ends to be distributed to owners. However, calculating that transformation from This shows that the productive sector already values to prices — even theoretically — has proven involves the financial sector as a central aspect of extremely difficult. It is known as the capitalist production, not as something simply “ transformation problem. ” Analysis of the grafted on as an auxiliary feature. Additionally, the transformation problem has been a cottage industry financial sector evolv ed the production and issuance among Marxist scholars. of complex financial instruments, a hugely profitable business. Lapavitsas, in Profiting Without Producing , asserts that a firm grasp of the notion of profit is an However the creation of surplus value is in the essential starting point to understanding production phase, P. There are two crucial issues contemporary financialization. However, his here. The first is to describe this phase simply yet shallow analysis of surplus value seriously weakens adequatel y. Besides the labor and inputs to his efforts. In Chapter 6, for example, “ The Conundrum of Financial Profit,” the question of 39 Lapavitsas, op. cit. pp. 138 - 47 40 Callinicos, op. cit. 41 Marx, Capital , Vol. II, Part I . 195 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY assembly and machine work, costs — as mentioned is accomplished primarily through privatization and above — include aspects of transportation of the includes the process of making publi c goods goods to their next destination, other essential commodities, subjecting them to private market distribution activities, storage, necessary relations. In recent decades transforming social administration, and aspects of labor involved in services into commodities provided by private pricing and financing. Again, the central point is not owners has profoundly deepened this process. The to determine the value of a commodity, but the real - state contracts out social services to private world process of pricing, a process Marx makes corporatio ns, for example transferring provision of explicit in Capital. 42 The second is to recognize that education to privately held charter schools. today, production of many serv ices create surplus Accumulation by dispossession has expanded to value. Medical care, education, governmentally include transferring ownership of natural and social contracted out production of infrastructure, resources — even such a basic collective necessity information technology services and many other as water — from col lective to private ownership. services constitute not just profit producing, but surplus value producing activities. Today, eve n Note that accumulation by dispossession is related commodity production in many areas is being to labor exploitation, since it is part and parcel of transformed into the provision of services; the continuing extension of formal capitalist information technology equipment provision and relations of production into virtually every nook and maintenance is a good example. 43 cranny of society by making everything a commodity produced for profit. Therefore for Accumulation by Dispossession analytical purposes it is useful to regard accumulation by dispossession as a distinct process As Marx pointed out in The Critique of the Gotha of value creation and ruling class accumulation of Progra m , the sometime socialist slogan “ All wealth wealth. is created by labor” is wrong. 44 Natural resources — land fertility, minerals, water sources, animal life, Workers’ income and profit plant life, climate conditions — all play an essential role in the creation of wealth. In pre - class socie ty In Mar x ’s classic formulation, the value of any everyone — that is no one in particular — owned commodity or collection of commodities, t, can be these resources. Use of them is shared through seen to consist of three factors: t = c + v + s, where custom and collective agreement. In class society, c is the value of the constant (fixed and circulating) the ruling class owns the bulk of them. Marx capital used up in the process, P, producing t. The identified the process of transforming ownership qu antity v + s is the value created by the labor in from the col lective to the ruling class as the producing t. Variable capital, v is the part of that Primitive Accumulation. This was the beginning of value given to workers in wages and benefits and s, accumulation under the capitalist system: the the surplus value, is simply (v + s) - v. The surplus accumulation of wealth at one pole and the value, s is the profit expressed in value terms accumulation of dispossessed laborers at the other. 45 (which may be different from the profit in money terms). Today, capitalists continue to privatize publicly owned goods, that is, goods owned in common. Note that while v + s is a technical quantity David Harvey has called this process “ accumulation determined by the conditions of production, the by dispossession.” 46 Accumulation by dispossession decomposition of this sum into the components v and s is dependent on historical factors, including 42 Marx, Capital , Vols 2 and 3. asp ects of the class struggle, meaning it will vary in 43 see The Economist , Jan 14, 2017. terms of location and time. 44 Marx, The Critique of the Gotha Program. 45 Capital, Vol. I, Part VIII. 46 Harvey, The New Imperialism. 196 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY In order to maximize profits, capitalists work to privatization of the retirement system further increase s, which they do either through the creation depress workers’ living standards. These forms drag of absolute surplus value or by increasing relative the workers into the financial sector as well and are surplus value. Incr easing absolute surplus value pointed out by Lapavitsas as the financialization of means increasing the length of the working day the wor king class. 49 without increasing workers’ wages. Super - Exploitation Increasing relative surplus value means changing the proportion of s to v (s/v), also referred to as the The discrepancy in workers’ consumption between Rate of Exploitation (s’ = s/v). This is done in the “ advanced” industrial economies, the imperialist various ways. The key is to reduce the amount of centers, and the less developed world, more time the worker spends recreating the value of his or precisely the neocolonies, has long been recognized her labor power, which is encapsulated in v, the as a fundamental characte ristic of modern variable capital. Marx identified a number of ways imperialism. Taking advantage of this discrepancy this can be done. Ways include increasing to generate greater profit has been the driving force productivity through automation or the in the export of capital, and more generally in the reorganization of work, increasing the intensity of creation of international production chains by the labor, hiring entire the families and paying each major corporations, which forms the structure of the family member less (this is an important aspect of contemporary international economic order. This is the super - exploitation of women and children), and a major source of the increase in surplus value. of creating n ew technologies that give the capitalist Understanding this process in terms of the basic an advantage over competitors, thereby gleaning Marxist categories described above is crucial in extra surplus value. 47 integrating our observations about th e contemporary world economy with our basic theoretical An important aspect of the creation of relative framework. surplus value is the depression of the price of labor power below its value. The worker sells hi s or her We will examine this in more detail in the following ability to work on the open market. The value of section of imperialism, but we can frame our basic this labor power is the total value of the idea more precisely as follows. The fundamental commodities — food, clothing, shelter and basic formula flowing from the initial Ma rxist articulation services — necessary for the maintenance and is: reproduction of the working class. Under some conditions, the capitalist can pay less than the actual π = s / (c+v) = (s/v) / ((c/v ) + 1) = s’/(q+1) cost of keeping workers and their families alive. 48 When the price of labor falls below the subsistence Where π = s/(c+v) is the (value) rate of profit, s’ = level — that is, below the value of labor power — s/v is the rate of exploitation, and q = c/v is the the worker must scramble to survive, to feed, house organic composition of capital, also in value terms. and clothe his or her family, and just to make ends meet. Although there is some dispute about this in Marxist circles, the organic composition of capital is Inflation, taxes, and debt service (interest on generally regarded as given by technical mortgages, credit cards and loans) are modern ways considerations more or less independent of the the capitalist class as a whole continues to depress location of production. Clearly, the rate of profit workers’ income. Student loans are of particular and the rate of exploitation are close ly correlated. note. A lso, the rising costs of insurance and the

47 Capital , Vol. I, Part V 48 For an excellent discussion, see John Smith, 49 Lapavitsas, pp. 139 - 41, and David Harvey, Seventeen Imp erialism in the Twenty - First Century . Contradictions… , pp. 238 - 45 197 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY The notion of super - exploitation arises from the the integrated world capitalist system, characterized conviction that the rate of exploitation is higher in by the increasing technological development of the neocolonies, which implies that the rate of profit production on the one hand and the increasing is potentially higher there. But under capitalism degradation of the conditions of labor in both the (money) rates of profit tend to equalize, which advanced capitalist heartland and in the neocolonies means that the exchange values of goods traded on the other. between the imperialist centers and neocolonies are distorted from their real value to favor the Commodity production today is g lobal. The imperialist imperialist centers. Goods produced in the centers reap super - profits from the neocolonies. But neocolonies are exchanged below value to the production today in both the imperialist centers and in imperia list centers this gives rise to a whole theory the neocolonies is or ganically tied to electronic, robotic of unequal trade, 50 which is then taken by some production, and information technology - based planning and organization. This is true in every aspect of capitalist Marxists as the key to understanding imperialism production: in capital - intensive manufacturing, in and its relationship to the lack of development in the transportation, in the service sector, in marketing and neocolonies. particularly in the financial sector.

We wish to note here, as well, that capitali st profits In many cases, particularly in the neocolonies but overall are increased by bringing more labor into increasingly in the imperialist centers, work in these the production process. According to the UN technologically advanced plants is low paid, insecure Industrial Development Organization (UNIDO), in and precarious. Many plants can only be characterized as 1991 there were 234 million people in sweatshops, reducing workers to conditions of semi - manufacturing in the neocolonies. In 2014, there slavery and using other primitive forms of low - wage were 304 million manufacturing jobs in the exploitation. It is particularly bad in agriculture, mining, assembly, transportation, warehousing, and retailing. neocolonies. 51 This obviously increases the overall production of surplus value. Most of these workers It is this double movement that i s characteristic of this are undoubtedly subject to super - exploitation. period. It is produced by the contradictory character of contemporary capital accumulation, which, on one hand Note that the discussion above involves the is driven by technological advance in the means of relationship between labor values a nd money prices; production and on the other by a steady degradation of the transformation problem casts a deep shadow. human labor. W hile bourgeois economists tend to see these two phenomena as opposites, in fact under We will take these ideas up in more detail in the capitalism they are organically linked and mutually following section on imperialism. reinforcing. Marxists need to better understand and articulate this linkage and its dynamics.

On Imperialism This imperialist explo itation is characterized by super - exploitation, deriving super - profits from the neocolonies, No serious observer can doubt the economic, as analyzed by Lenin and others. 52 These super - profits military, and political domination of the ex - colonies are derived from all methods of deriving profits: — now neocolonies, but referred to in bourgeois increasing both absolute and relative surplus value, analysis by the obscurantist term Lesser Developed reduct ion of the payment for work below the value of Countries (LDCs) — by the major capitalist powers. labor power and primitive accumulation: out and out Imperialism is a fundamental aspect of the heart and usurpation of public goods for private use. nature of the capitalist system today. We n ow look at some of the theoretical issues raised in analyzing Pay is often at or below subsistence levels, kept there by austerity programs and the existence of a body of

50 per manently unemployed workers. This is not simply the see, for example, Samir Amin, Unequal Development army of unemployed envisioned by Marx — the reserve 51 Quoted in “Politicians cannot bring back old - fashioned factory jobs,” The Economis t, January 14, 2017. 52 Lenin and others (Hilferding & Kautsky??) 198 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY army of labor maintained to provide for the expanding regard. Treaties, such as the North American Free Trade needs of capitalist production while holding down wages Agreement (NAFTA), the Trans - Pacific Partnership — but a growing surplus population that mu st hustle for (TPP) and the Transatlantic Trade and Investment existence in a capitalist economy that has no hope or Partnership (TTIP), make the situation even worse for aspiration to employ them in any productive capacity. the working class. What is happening in the neocolonies This is exemplified by the over two billion people who is increasingly occur ring in imperialist countries as well. live on less than $2.00 per day. 53 Furthermore, transfer pricing means that profits are accounted for by transnational firms in the country most Much of the primitive accumulation is accomp lished convenient for them, so taxes — and the resultant through unequal treaties and contracts, particularly for government income — are reduced to the minimum. oil and other mineral rights and the control of resources, including the production of food. Treaties force “free” It is w ell known that Lenin, in Imperialism: The trade on the countries, keeping those countries from highest stage of capitalism , and in Imperialism and protecting higher cost i ndustries and higher cost the split in socialism , refers to the use of super - production of goods, including food. The local political profits gleaned from the colonies to “ bribe” the leadership and bourgeoisie have similar economic upper stratum of the working class. In his analysis, interests to the imperialists and therefore enter these he refers to the labor aristocracy, but also cites deals that leave the general population economically Engel's reference to this phenomenon as the devastated. The re is also the growth of a middle class in 54 many neocolonies, many who see themselves as “ bourgeoisification of the working class.” Thus, benefiting from imperialism and are a political support the capitalist class buys social passivity from the for capitalist hegemony. working class by paying a section of it higher wages and salaries an d providing “ extra” benefits. This is In order to employ, feed and care for their populations, not to say that the working class does not have to neocolonies are forced into d ebt. These lead to austerity struggle mightily to win these concessions; it measures, further exacerbating the problems of the merely asserts that there is enough profit in the neocolonial world. The role of the International system that victory can be won by the workers. Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) are well known in this The imperialist countr ies continue to use “ no small

53 part” (Lenin's words) of these super - profits to The numbers of people in the world living in extreme socially pacify the working class in the imperialist poverty is the subject of much debate with neoliberals countries. This social benefit today applies to a insisting that this number has dropped dramatically over the past quarter of a ce ntury. For example The much larger section of the working class, not just a Economist claimed (June 1, 2013) that between 1990 and labor aristocracy. In fact, these social benefits have 2010 those living in extreme poverty (on less than $1.25 created what is generally referred to as the middle a day) had declined by almost a billion. An article in Al class. Jazeera by Jason Hickel of the London School of Economics (Aug ust 21, 2014), however, demolishes this There are, confusingly, two definitions of the claim by examining these figures in detail, showing that middle class. The historically derived definition false accounting and massaging the definition of poverty applies mainly to craftsmen and shopkeepers, small accounts for the bulk of this supposed decrease. business and pr ofessional people, government According to economist Peter Edwards of Newcastle officials, some farmers and skilled workers. In Un iversity, whose results are described in Hickel’ s Marxist terms, this included the petit bourgeois, article, “ they need roughly double the current IPL [International Poverty Line], or a minimum of $2.50 per government officials, and the labor aristocracy. The day. … An IPL of $2.50 shows a poverty headcount of more widely adapted usage is that it applies to not around 3.1 billion, almost triple what the Worl d Bank only those sections ref erred to in the historical and the [UN’s] Millennium Campaign would have us definition, but to a broader section of the working believe. It also shows that poverty is getting worse, not better, with nearly 353 million more people impoverished today than in 1981. With China taken out 54 Lenin, Imperialism : The highest stage of capitalism , of the equation, that number shoots up to 85 2 million.” and Imperialism and the Split in Socialism. 199 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY class: those who are able to maintain or at least middle class, the opposite phenomenon has set in credibly aspire to maintain, a middle class life style. over the past decades. The reality of today's This is in line with Engel's reference to a economy is that these economic privileges are being “ bourgeoisified working cl ass.” removed, precipitating members of the middle class into the ranks of the working class prop er. This has Thomas Piketty, in his recent examination of taken place in both the industrialized imperial income inequality, Capital in the 21 st Century , centers and in the neocolonies. refers to the creation of this middle class among advanced industrial economies — he identifies it Both the expansion of capitalism to every corner of with 40 percent of the population — as one of the the globe and the introduction of high technology seminal economic changes in the twentieth into the economy, paradoxically, tends to lower century. 55 In popular parlance — particularly in profits. 56 I n an effort to maintain profits, the political discourse — this is the definition in capitalist class is driving down wages and common use. eliminating social programs in the name of government fiscal responsibility and efficient use of The economic elevation of this section of the resources. The capitalists shift the tax burden onto working class occurs through higher wages, higher workers and maintain a sma ll but persistent rate of salaries, socia l programs and particularly the inflation to cut wages. As a result of the reduction in creation of a social safety net, which is much more living standards and social benefits, workers turn to meager in the neocolonial world. Still, many of the borrowing in an attempt to maintain their more prosperous neo - colonies have taken on some possessions (houses, cars, etc.) and standard of aspects of the social safety net and social programs living (education for their c hildren, their health care, for the same reason that they have been adopted in etc.) This is the content of the austerity programs in the imperialist countries: to buy social passivity both the neo - colonies and imperialist countries. This from the affected section of the working class and is all accompanied by the move to cut taxes on the separate them from the other workers in the neo - bourgeoisie by cutting social programs and the colonies, the poorer sections of the working class in social safety net. their own country. T he contradictory character of international capitalism is most profoundly T he phenomena described above raises profound displayed in these phenomena. theoretical questions for Marxist analysis, and clarity on these questions is crucial for developing The rise and perpetuation of the middle class has viable programs and political campaigns. We will been historically and still is a key ideological elaborate on a couple of them. justification for bourgeois rule. The importance of this bourgeoisified section of the working class is An important trend in Marxis t theory arose after primarily ideological. Their higher standard of World War II, although the source goes back to living has allowed them to accumulate some Lenin and Rosa Luxembourg, pioneered by writers personal property, such as houses, retirement funds such as Samir Amin ( Unequal Development ), and estates left their progeny. Nevertheless, they are Arighiri Emanuel ( Unequal Exchange ) and Andre more c orrectly seen as “ bourgeoisified ” in the Gunder Frank ( Dependent Accumulation … ), 57 who ideological sense in that these small privileges lead attempt ed to clarify the theoretical basis of super - them to support the current economic system less profits and super - exploitation in the neo - colonies. they lose their “ privileges.” 56 If π = s’ / ( c’+1), an increasing q, the Organic In contrast to the historic trend of the rise of Composition of Capital, tends to lower π, the Rate of substantial sections of the wor king class to the Profit. See the initial analysis in the text. 57 Samir Amin ( Unequal Development ), Arighiri Emanuel ( Unequal Exchange ) and Andre Gunder Frank 55 Piketty, Capital in the 21 st Century. ( Dependent A ccumulation … ) 200 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY This was referred to as “ dependency theory” or the productivity enters the theory via q = c /v, the “ theory of unequal exchange.” The basis of this Organic Composition of Capital. The tendency to theory was the focus on the higher rate of identify labor productivity with q however is not exploitation, whi ch led, in equilibrium, to a higher correct. A higher q will mean the same product is rate of profit on investment in the neocolonies. The produced with less labor but with more machinery. flow of capital tends to equalize the rate of profit. Marxists cannot separate the contribution of labor But because of over investment and over production from capital as one can in the bourgeois model. in the high profit industries, the prices of the goods Thus the notion that a higher q, which historically produc ed in the neocolonies for the international has been the case in the industrialized world, will market were forced below their values. This was the necessarily lead to higher real wages does not basis of unequal exchange. This led to the logically follow. In fact, with the demand for labor neocolonies being trapped in labor - intensive dec reasing, a higher q might lead to lower wages, as production which blocked the development of high seems to be occurring in the industrial centers. The technology, capital - int ensive industry and which impact of a rising q depends on the level of the ratio consigned them to a state of permanent poverty and in the economic sectors producing for workers’ technological backwardness. consumption. For example, technological developmen ts might make the cost of workers Due to the spurt of industrialization in some consumption goods less, but not necessarily so. neocolonies, and particularly in China, the theory China — where many U.S. consumption goods are languished over the last two decades. The spurt produced — is experiencing rising labor costs. seems to contradict the predictions of dependency theory, despite the fact that China does not quite fit Of course q has to be taken into account in any the description of a neocolony. However writers dynamic theory of international production. Perhaps such as Amin, and more recently John Smith, based the initial dependency theorists erred in not doing on the research of Andy Higgenbottom 58 , have so, but the arguments of Amin, John Smith, et. al. attempted to r evive a version that is appropriate to seem to us to be much stronger than that of their contemporary conditions. We think this effort has European Marxist critics. some merit and wish to note some of the theoretical points. The gap between the creation of value and the creati on of wealth over the last 35 years is a major From the beginning, both the mainstream theoretical issue for a Marxist theory of current economists, in so far as they paid attention to imperialism. It is related to growing economic dependency theory and unequal exchange, and inequality, now acknowledged by all. According to many orthodox Marxists, faulted the dependency John Smith’s figures the world industrial workforce theorists for ignoring the higher labor productivity, increased from about 400 million to a little less then which supposedly was the basis of higher wages in 700 million between 1980 and 2010. 60 There are the industrialized centers. For the bourgeois indications that it may be falling since then. For economists the argument is straig htforward: they example, manufacturing employment in China has define labor productivity as the marginal product of labor via a production function. For Marxists who want to be theoretically consistent, production Controversy.” Eventually Samuelson conceded that in functions have dubious validity. 59 In Marx, labor “ in theory” the critics were right, but the neo - classicals simply ignored this result and continued to promote the 58 John Smith, Ibid. centrality of a general production function . Even such a 59 The theoretical coherence of the production function knowledgeable and progressive economist as Thomas in a system with many capital products, central to neo - Picketty seems bewildered by this result. ( see Kurz and classical macro - economics, was challenged by Pierro Salvadori, pp. 427 - 468, for a full and knowledgeable Sraffa, Joan Robinson and her associates, and defended discussion of the “ Cambridge Capital Controversy.”) by Pa ul Samuelson in the famous “ Cambridge Capital 60 John Smith, op. cit . 201 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY fallen by 25 percent since 1996. 61 Yet wealth, contradictions of current capitalism. There seems to however defined and m easured in real dollars, be much force in their arguments and empirical data increased many times this difference. Of course, the they muster to support it, even though the dramatic increase in the productive parts of the measurement of global profit rates is a tricky and service sector (e.g., health care) also generated real complicated affair, and there are theoretical issues value, but not nearly enough to account for the in relating q — a value magnitude — to money manifold increase in wealt h. The growth in Gross rates of profit. 64 World Product (GWP), as estimated by the World Economics website, is roughly consistent with the Perhaps the most basic strategic question we can growth in labor. However, according to a Credit consider is whether the current dominance of Suisse report the world wealth has more then finance is a pas sing phase of capitalism, or whether doubled since 2000, a period of recession and slow it has become a permanent central feature. How growth. 62 does this relate to the fact that the enormous increase of reserves in the hands of banks and It appears obvious that much of this increase in financial institutions has not resulted in an wealth takes the form of financial securities and investment boom? Bourgeois econo mic theory claims; that is: debt. Marxists consider this artificial would predict such a boom, but instead, we have wealth since it doesn’t represent production of any seen the stagnation of real investment despite low real products or use values. It rather reflects the interest rates. We have also seen the stagnation of current capitalist consensus, or more likely economic growth worldwide, which is certainly illusions, about future profits. However this tyranny linked to the stagnation in real investment. of paper values, the constant struggle to sustain it and grow it, impacts profoundly the nature and We are convinced that the failure of Lapavitsas and behavior of contemporary imperial ism. Any other recent Keynesian - Marxist theorists to take up adequate Marxist analysis must explain this the questions raised in the previous paragraphs in a phenomenon and link it to the fundamental concepts serious way is tied to their refusal to bring of Marxian economics. Although Smith doesn’t fundamental Marxist categories into play, including attempt this, he is certainly correct in his insistence the theory of value, the theory of exploitation and that it is necessary to link this development with the circuit of production. Even though they retain a Marxian value theory and the fundamental circuit of certain political sympathy toward socialism and the production. workers movement, and wish to be associated with the Marxist tradition of analysis, they seem to have Understanding what is happening to the rate of lost faith in these fundamental Marxist categories as profit under contemporary imperialism is related to a basis for analysis. Instead they have embraced this question, and perhaps more fundamental. Is it Keynesianism as the only adequate tool kit for rising, falling, remaining stagnant, risi ng in one macroeconomic analysis. Being locked into sector and falling in another? There is an important Keynesian models not only determines the answers school of contemporary Marxist economists, to basic questi ons, but even more importantly including Anwar Shaikh and Michael Roberts, 63 determines the questions that are asked. who believe that a falling rate of profit — a tendency endemic to developed capitalism due to Marx, along with the classic economists, was the increas ing Organic Composition of C apital (c’ = interested in analyzing the coherence and c/v) — is the key to understanding the major sustainability of wealth creation and distribution, which was implicit in the logic of emerging 61 Brynj olfsson and McAfee, The Second Machine Age , capitalism. The classical economists understood that p 183; Parry & Brody 62 World Economic website: weforum.org, and Credit 64 See Moseley, 2016 and Roberts’ review of Moseley Suisse, Report. for a detailed, contempora ry Marxist discussion of this 63 Anwar Shaikh, 1987 and Michael Roberts, 2012. question. 202 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY to do this they needed a theory of value that of air, fresh water, farmland and ocean sources of underlay the volatility and randomness of market nutrition threaten our basic necessities and threaten pricing. They further understood that there was a to unleash an international holocaust over t he next configuration of class structure and differences that half century. Of current concern is the release of gen erated social conflict over distribution. What carbon into the atmosphere due to the insane Marx saw more clearly was that class conflict was expansion of fossil fuel use, which intensifies global central in the making of history. The drive to warming and climate change. Among other accumulate capital, which led inevitably to class devastating consequences, that will result in the conflict, was baked into the foundations of floodin g of low altitude and coastal regions forcing capitalism and dis tinguished capitalism from all the relocation of hundreds of millions of people. previous modes of production. It was within this framework that he developed his basic concepts of From a Marxist point of view this process of surplus value, exploitation, composition of capital, environmental degradation is a manifestation and the circuit of production and distribution, labor inevitable consequence of two of the fundamental power and the fundament al relationships between components of co ntemporary capitalist imperialism them. He sketched out the relationships between in its drive to sustain capital accumulation and these Marxian concepts and the traditional basic surplus value, components that we have already concepts of economics: price, profit, wages, rent discussed and money. The first is the connection to appropriation by We believe that a broad and deep understanding of dispossession. Turning the once communal and contemporary imperiali sm, and in particular its fundamental necessit ies of human existence (air, economic core, is a necessary component of any food, water, shelter, fuel, child and elder care, etc.) sustainable working - class political revival. Marxist into commodities opens the possibility, and then the economic theory provides the basic and the necessity, of the subordination of their provision to necessary theoretical tools for forging such an profit making. Multi - national corporations and their understanding. There have been many ser ious and local allie s, desperate to invest their accumulated interesting attempts to theorize about imperialism profits at a high rate of return, seize local and from a Marxist perspective over the past decades national communal assets and state - run industries. but few of them seem to have grasped the basic These are often made vulnerable to capture by direction of development. Our view is that a major compliant neocolonial regimes and through the part of the problem is the premature abandonment manipulations of inter national financial interests of the basic Marxist categories. Certainly these who control debt and money supply. categories have to be refined and contextualized to analyze contemporary reality. We are not urging a The result is the overuse, abuse, and failure to ritualistic repeating or quoting of Marx’s maintain these precious resources as the new terminology and phrasing as the key to owners — giant capitalist enterprises — engage in a contemporary wisdom; s ome of his formulations frantic game to realize the fruits of their investment may need revision or at least enrichment. However, in the shortest possible time period and then move the Marxist framework served the workers on to more lucrative prospects. The result of this movement well over a century of development. wild speculation on natural resources, and their over use, is the dramatic degradation of the environment, the neglect of their long - term main tenance and their Imperialism and the Environmental Crises inevitable degradation. Colonialism and earlier forms of imperialist control exhibited the same Nothing indicates the contradictions, and social c ost tendencies, but earlier efforts lacked the technology of contemporary imperialism more then the growing and organizational sophistication to inflict the environmental crises. The degradation of the quality current levels of damage.

203 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY enormous, and the international ruling class is The second c onnection — and more neglected in simply unwilling to take such risks even to avoid Marxist theorizing — is the relationship between climate catastrophe. increasing absolute surplus value (super - exploitation) and environmental degradation. The conclusion is that contemporary capitalism needs to, and is willing and able to impose The level of super - exploitation cannot be measured unlimited social misery on the work ing class as long simply by comparing the money value of wages to as ruling class hegemony is unchallenged. that of profits. The degradation of the social Catastrophic climate change, and the broader conditions of working class life is a form of super - devastation to the natural and social environment exploitation. Thus, the contemporary movement are not only possible, but also probable and from the countryside to the city, leading to a vast acceptable to our capitalist rulers because they oversupply of potential industrial labor, damp ens underst and that serious steps to avoid this would real wage rates and traditional social benefits for the threaten their class rule. The real issue is whether industrial working class. This is as much a this is acceptable to the working class. Without manifestation of super - exploitation as is direct wage challenging the current system of bourgeois rule the cutting and the lengthening of the working day. environmental movement may achieve gains around the margi ns or in isolated regions, or gain A weakness of much theorizing on the unenforceable rhetorical commitments (such as the environmenta l crises is the separation of recent Paris accords) but will not be able to fend off environmental degradation from the geo - political the catastrophe that awaits us. functioning of contemporary capitalism. Nigeria, for example, has 173 million people, the great majority Strategy for a New Period trapped in poverty and unemployment and engulfed in bitter social, regio nal and religious conflict. We are in a new period of capitalism. While the Crude oil constitutes over 80 percent of the value of notions of globalization, financialization, and its foreign exports; natural gas constitutes about 65 imperialism describe fundamental features of it, another 10 percent. To substantially decrease its they are not adequate to fully understanding the pumping of oil and natural gas would very likely current conjuncture. One must confront, from a lead to social chaos a nd civil war as the ruling Marxist perspective, the more basic features, the military elite — which gobbles up the bulk of the actual changes in the structural and technological export earnings — and their repressive apparatus foundations of capitalism and in the mode of broke into factions, each hoping to retain their production, in the living and working conditions spoils. Nigeria is only one of many nations balanced that flow from these basic changes and that mold on the edge of disintegratio n and dependent on the the lives of the working class internationally. We export of fossil fuels to avoid falling into the abyss. have focused on this aspect in t he previous sections.

The point is that the stability and coherence of the In this section we would like to indicate current world capitalist order is dependent on a political/strategic consequences that emerge from number of structural underpinnings, one of these our analysis. Politically, for us, the most salient fact being the fossil fuel ind ustry. It is not simply that is that no viable, mass - based working class politics the industry is unwilling to leave most of $27 66 exists at this moment, at leas t in the U.S. Without trillion of fossil fuel in the ground, as would be such a politics and the level of organization and necessary for a serious attack on climate change. mobilization which is central to it, little can be done Even if it were, the social and geo - political to transform the current situation, a disastrous state consequences of such a decision would be of political decline and increasing social misery for

65 the working class b oth in the U.S. and CIA, World Factbook . internationally. 66 Boyce, “Rent in a warming world,” Dollars and Sense . 204 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY but gone. Gone is the socialist bloc and with it the A working class politics, and the organization and contradicti on between imperialism and socialism. mobilization that grows out of it, cannot arise from The few remaining socialist countries are, of course, the efforts of radical intellectuals. While there is a important and must be defended, but they no longer crucial role for conscious revolutionaries, working constitute a main strategic concern for the class p olitics must arise organically from the revolutionary movement. struggles of workers against the daily injustices and oppression of life under capitalism and in doing so Colonies, likewise, are a thing of the past , replaced create a broad layer of revolutionary workers by neocolonies, open to all imperialist countries to committed to fundamental social transformation. In invest in and exploit. There are direct colonies; this process, radical, and in particular Marxist - Puerto Rico is an example. But for the most part, inspired analysis has an important role to play in like the socialist countries, direct colonies that clarifying alternative visions and strategy, and at a imperialist countries fought over and dir ectly minimum sweeping away ideological blinkers administered are a thing of the past. Today, the imposed over the last few decades of unchallenged world has imperialist countries and neocolonies, bourgeois hegemony. Th e bulk of this obfuscation which while economically controlled by the and confusion was the conscious result of the imperialists are ostensibly politically independent. powerful international propaganda campaign, the There are also intermediate states such as Russia, mass media and the education system, to make Iran and, most importantly, China. While remaining bourgeois ideology the common sense of the at a level of industrialization below that of the major masses. But the Marxist left also bears some imperial blocs, these countries are competing with re sponsibility for its disoriented, confused and the imperialist countries while striving to join them. incoherent response to this campaign, particularly Thus, the struggle for legal political independ ence is since the fall of the Soviet bloc. no longer the major thrust of the world revolutionary movement. In the previous sections we reaffirmed the importance of reasserting the centrality of Marxist Finally, there are established imperialist blocs, political economy in an ana lysis of the current mainly Japan, Europe and the United States. These conjuncture. What we want to do in this section is compete economically, but are not facing each other make certain suggestions to the Marxist left on at gunpoint — as they were in t he colonial period political problems and contradictions it must — over redivision of the world. In fact, the chance explicitly address as serious issues. Slogans and of inter - imperialist war is relatively remote. The traditional formulae are insufficient if it wants to economies are deeply integrated. All acknowledge reach out to a substantial layer of the working class. the military supremacy of the U.S., which is These issues are difficult and we certainly don’t primarily aimed at repressing political resistance have or present any pat answers here, but we are and opposition in the neocolonies and thwarting the convinced that unless Marxists take them up in a ambitions and challenges to U.S. hegemony by the fresh, sharp and detailed manner, we wil l remain emerging powers, Russia, China and Iran. These irrelevant to any emerging workers movement. battles are being played out in the Middle East, in the Ukraine, and in East Asia. The contradictions of the current period have returned to the classic formulation: the working This leaves t he main contradiction: between class versus capitalist class, but on a much higher, workers and capitalists. Now we see direct global level. In the period of classical imperialism, exploitation of the workers in the neocolonies by there were three major contradictions: the the imperialists of all countries. The fight is both contradiction between socialism and capitalism, within the imperialist countries, where the standard between colonies and imperialists, and between of living of workers is be ing driven down, and in different imperialists. These contradictions are all the neocolonies, where the standard of living

205 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY remains abysmal. This raises the question of the role basis of their economic position in society. There is of revolutionaries: those interested in the route to a a huge amount of immigration into the U.S. and socialist future now. these immigrants constitute an important section of the working class, whether or not they have The role of the revolutionaries in each country is to documents. It is these divisions that have kept the organize the workers in that country to fight in their working class immobilized over the years. own behalf and to gain real political power. It is an international struggle, waged in each country. At We must recognize that t he white worker plays a some point, it will be necessary to coordinate this central role in the revolutionary movement in the struggle at the international level. It is al so the role United States. They still constitute the majority of of revolutionaries in the imperialist countries to the working class. They will constitute the base of a fight against military aggression directed at the fascist movement it they are not won over to neocolonies, particularly when the imperialists are revolution. The idea that the white section of the fighting against the revolutionary movements of the working class is too reactionary to be won over workers. must be abandoned and ways of educating them and winning them over to their own defense must be In order to struggle effecti vely, the revolutionaries mastered. The capitalists know this and regularly must recognize the differences within the working use the white section of the working clas s as crucial class itself. The struggle always and everywhere is swing votes in getting Democratic or Republican in defense of the poorest, most vulnerable section of Party candidates elected, as the recent Trump the working class, regardless of country. There is victory shows. vast poverty in the neo colonies and it must be the role of revolutionaries to fight in the interests of the On the other hand, the middle class, the upper layer workers in those countries. But there is also real of the working class that believes it still has an poverty in the imperialist countries. The active economic stake in capitalism, must also be seen to workers must defend the least advantaged among be multi - racial. There is a large and growing section their own working class . This is where defense and of African Americans who are “middle class.” The mobilization of the permanently unemployed, semi - same is true of Latinos, Asians and other racial and employed, and those restricted to the informal national groupings. The political result of this sector — those most deprived by the economic social/economic reality is th e physical and political system — are of great importance. The reason we isolation of whites — particularly white workers — emphasize the lower layers of the worki ng class is from blacks and other groups. Both groups, the not primarily moral; it is basically strategic. It is middle class of color and the historically privileged largely from this strata that the most solid and upper layer of white workers, see the other group as determined support will be found to carry through a threat “to their slice o f the pie.” the profound, sometimes chaotic, and surely contentious social/economic transformation that is Since this is the reality that faces revolutionaries, necessary. we must recognize that it is not possible, at the moment, to unite the entire working class. The The U.S., for example, is the base of global bourgeoisified section — the so - called middle class imperialism. Racial divisions — particularly — still believes it has economic and pol itical between black and white, but also between all interests in defending capitalism. Politically the persons of color and the whites — are of historically Democratic and Republican Parties will continue to evolved centrality in the U.S. We must recognize exploit this in promoting bourgeois politics. The that workers are workers regardless of color. There Republicans appeal to the legitimacy of historic are white workers in as much poverty today as white skin privilege, while the Democrats, under the African American workers. We must be able to slogan of equal opportunity, promise to open the unite black, white, Latino and other workers on the

206 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY doors of comfort and prosperity to worthy people of Organization is key. Revolutionaries have to color. remember that the effort is not to unite the left; it is to unite the working class around the interests of its Gender divisions within the class are also crucial. most disadvantaged section. In order to do this, we The majority of the population, nationally and need organizations of revolutionaries. The current internationally, and the majority of the wo rking organizations of communists and socialists around class are women. Women workers are worse off the world seem inadequate. We need refreshed economically than men and are more readily thrown theoretical advances as the foundation of a new out of the workforce. Thus, they also constitute a program based in the reality of today. majority of the permanently unemployed and underemployed section that now is at the heart of Much of the left has taken one of two paths: either the working class. We must depend on women in the organizations have become focused on reform or the struggle in their own self - defense. They must be they have become primarily anti - imperialist. On the an integral part of every revolutionary organization one hand, currents like most contemporary social and movement of the workers. Of course, we realize democracy, which aims to “fix” capitalism through some women form an integral part of the middle a slow, reform - based transition from capitalism to class and retain ties to capitalism. However, we socialism within the current political structure, are must direct our appeal to working women’s interests no longer viable. The economic/political reality of as workers. We must work to unite those workers the day is of a capitalist class that continually on the basis of their economic position, that is, on tightens the screws on the workers across the globe . their poverty. It forces the dominant ideology, and the political apparatus that reflects that ideology, continually to The point for revolutionaries is for the working the right. Thus, the idea that “we” can get “them” to class to gain political power. Without real political adapt capitalism to the needs of the workers, or power, the working class is left with a series of even the needs of human survival, is utopian. good ideas that cannot be materialized. This is the prime internationalist responsibility of Our analysis shows that ruling class will fight revolutionaries. The idea is to find strategies that substantial political and social reforms with build politi cal power. The period is ripe for this. increasing ferocity, knowing that its continued hegemony is at stake. The fight for whatever The bourgeois political parties are splitting, both to reforms can be won in this context will be difficult the left and to the right and in many different and the result s limited. Private property is the basic countries. This is a golden opportunity for the relation of production that is being expanded: revolutionaries to work within the political process socialization of ownership is being contracted, not to win work ers to a political position independent of expanded. The most dramatic example is the veto the capitalist class. This is the process of building power the international fossil fuel industry has over class consciousness stage by stage. Not to do so is energy regulat ion — despite the acknowledgement to leave the door open for fascism. One strategy that fossil fuel use is responsible for climate change many are working on in the U.S. is the creation of a — which is producing environmental disaster. Only third , multi - class progressive party, as a step to a class - conscious movement of workers in their own building an actual workers’ party. Our view, defense — one that is prepared to liquidate the however, emphasizes consolidation of real political private oil and na tural gas monopolies — can power on the part of the workers themselves. The confront that. recent electoral efforts of Bernie Sanders has opened up a discu ssion of socialism that can Of course revolutionaries must remain active in stimulate working class consciousness. mass movements for democratic, progressive reform. Such movements are basic in expanding and driving forward the mobilization and consciousness

207 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY of progressive forces . At the same we must not revolutionary strategy and practice within these forget Marx’s dictum that the aim of our political movements that allow the capitalists — at least up activity is not this or that reform — or even a whole to now — to contain these movements and ch annel series of reforms — but to advance the long - term their demands. One cannot overemphasize the interests of the working class. This requires a importance of such a movement, and its potential fundamental transformation o f the existing for raising fundamental political issues and social/economic system, a revolution that requires mobilizing masses of young people. Yet without a the replacement of the capitalist ruling class by the firm and explicit working class perspective, such collective working class. Thus, the role of movements ten d to flame out, as their activists revolutionaries in the reform movement is to point become demoralized due to lack of immediate out that the reforms can only be consolid ated victories. through socialist revolution. It is the role of revolutionaries to carry out their Along with a revival of Social Democracy, we see responsibilities within the working class. Only the rise of the anti - imperialist parties and through the most dedicated study and practice can formations. Some are based on ethnic or nationalist the science of Marxism again begin to grow within drives of an earlier epoch and others on “orthodox” the working class movement in this country. formulations that are based in the Marxist - Leninist Countless examples across the globe in recent years theory of a century ago. This is equally unreal, as have proven that without Marxist theory and society, technology and the working class are strategy as a guide, the working class cannot sustain fundamentally different today than they were in forward movement. One sa lient example is the Arab 1917. While the strength of the Marxist - oriented Spring, in which the Egyptian working class played anti - imperialist groups is thei r commitment to forms a major role but was unable to exert leadership. The of Marxism, the weakness is that they reject the idea time is ripe. It is the revolutionaries who must step that society has advanced in fundamental ways up and play their historic role. beyond the period of classical imperialism. While critical of the orientation of r eformist Social For example, for the millions of permanently Democrats, anti - imperialist nationalists and unemployed and semi - employed workers not in the orthodox Marxist groups, we understand that any formal labor force, there is no provision of services mass working class movement, the building of at a point of production. These workers face the which is, in our opinion, the main strategic goal, state directly. Whether it is jobs, health care, the will involve the essential participation of many environment or any other concern, there is no major id eological and political currents. We must struggle employer to contest with. More and more, the to avoid the curse of sectarianism, particularly struggles are politicized. present when the organized revolutionary left is small and weak. We must be prepared to work in a Revolutionary organizations must be national in comradely and principled manner with all who are form and international in content. The revolutionary committed to such a movement, despite workers themselves must decide — in struggle — disagreements. In the final analysis it will be the what this means. In forming these organizations, engaged working class, not our polemics, which they must unite the movements that actually exist will determine the success or failure of the within each country. The capitalists are brilliant and movement. dedicated to keeping us separated. How else is it that the struggles in the U.S. against the killing of This leaves questions for future consideration and African American men has been kept from being a study. First and fo remost, what is the period, the massive, nation - wide movement demanding stage of capitalism we are in? What are the forms of reform? Yes, there are national expressions, such as organization we should consider, given the current Black Lives Matter, but it is the lack of a broad state of technological advance, social networking

208 Volume 11, Number 2 AMERICAN REVIEW OF P OLITICAL ECONOMY and universal communication? What strategies for rebuilding the workin g class movement and We also insist that it is necessary to recognize that attaining real political power are the most viable? th e relations of production, while retaining their These are questions that must be considered, studied foundation in the private ownership of the means of and tested in the crucible of struggle. production, have gone through profound alteration within capitalism over its 200 years of development. Conclusion These changes have been particularly profound over t he last half - century. We have articulated what we In this essay we have attempted to re - assert the regard as the most important of these changes in the importance of a Marxian appr oach to the current body of this essay. We claim that it is required to world conjuncture. Our fundamental assumption is articulate new forms of organization and struggle that capitalism over the past half century — while it that confront these changes. has retained its basic nature as a system of private property and therefore of labor exploitation — has, This may seem heret ical to those who believe that at the same time, been fund amentally altered both Marx and Lenin have laid down the fundamental economically and socially, a change made possible analysis, theoretical and strategic, and that our job is by profound technological developments. This to organize around their principles. We believe that process — reflecting both continuity and change — their original insights and historical materialist poses enormous problems of analysis for those of us approach remain v alid, but that such insights must looking to foster revolutionary cha nge in an unjust be developed — and yes, altered — to fit changing and oppressive system that dominates the entire reality. In this essay we have attempted to separate globe. It is this dialectic between continuity and and reassert what is fundamental and remains valid change – which is the most difficult thing to grasp – from certain traditional Marxist positions that seem that is, at the same time, the key to understanding outmoded. the current situation. M arxism should be treated as a science, not a In terms o f continuity we believe that a historical religion. Just as modern physics began with Galileo materialist approach, based on the fundamental and Newton’s shattering theoretical breakthroughs, insights of the Marxist tradition, remains the basis relativity theory and quantum mechanics have of a correct analysis of capitalism. It provides the subsequently altered our perception of reality. What theoretical, analytic, and strategic foundations for seems clea r to us is that the struggle to construct a building a workers movement for socialism. This world free of class exploitation is a long and very represents a tremendous intellectual and political difficult one, with many twists and turns, and challenge at this time for a relatively small and subject to setbacks and defeats, as well as victories marginalized group of socialist activists. We take and triumphs. What we — all of us — can do is solace in the fact that this situation is not contribute ou r insights and thoughts to this mission unprecedented in t he history of the socialist in the belief that our collective efforts will movement. Capitalism, as Marx and Engels contribute to develop the kind of renewal that only a brilliantly described in the Communist Manifesto , revolutionary workers movement can achieve. has been dynamic and changing since its birth. 67 Socialism, as the movement of a revolutionary Bibliography working class, has experienced lows as well as highs throughout its history. Yet the working class Samir Amin, 1976, Unequal Development: An movement, often pronounced historically exhausted, Essay on the S ocial Formations of Peripheral has time and again risen from the ashes, to posit the Capitalism New York: Monthly Review Press. possibility of socialist revolution. David Autor, David Dorn and Gordon Hanson, 67 Marx and Engels, Manifesto of the Communist Party “ The China Syndrome: Local labor market effects

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