RESEÑA BIBLIOGRÁFICA CAPITALISM: COMPETITION, CONFLICT, CRISES ANWAR SHAIKH by Francisco A. Martínez Hernández Universidad Anáhuac México Víctor M. Isidro Luna Universidad Nacional Autónoma de México In 1,024 pages, seventeen chapters, and divided in three books, plus seventeen appendixes, Anwar Shaikh, one of the leading scholars and a distinguished Professor of Economics at the New School for Social Research, presents a path breaking and monumental book which main objective is the unified study of the logic, history, dynamics, and crises of the capitalist system. Throughout this book, the author confronts his own perspective and method of the classical political economy with major New York, NY, Oxford schools of economic thought such as neoclassical, mon- University Press, 2016, etarist, and different branches of the post-Keynesian 979 pp. school. The main hypothesis of the author is that capitalism main driver is the constant seeking for higher profits in a competitive environment that operates through a pro- cess that the author describes as a ‘real competition’. This position is completely different from the neoclassical view of perfect competition and the post-Keynesian notion of imperfect competition. This basic concept of real competition that Shaikh adopts throughout his magnum opus can be traced back to the writings of Smith, Ricardo, Marx, and Harrod. Essentially, this approach considers competition as a process of intense rivalry among firms in the classical sense, where all pro- http://dx.doi.org/10.22201/fe.01851667p.2020.311.72441 © 2020 Universidad Nacional Autónoma de México, Facultad de Economía. Este es un artículo Open Access bajo la licencia CC BY-NC-ND IE, 79(311), enero-marzo de 2020 137 (http://creativecommons.org/licenses/by-nc-nd/4.0/). ducers try to get a share of their mar- foundations but also it may create ket by lowering costs through wage new research avenues in economic reduction and technological change. analysis, just as Marshall’s Principles This turbulent process of ferocious of Economics, or Keynes’ General competition leads to the formation Theory did. For example, in micro- of a leading (regulating) produc- economics (on its connection with er-capital which tends to establish macroeconomics), while portraying the lowest unit cost-price of produc- different working shifts in the labor tion at which other firms-prices will process, arise different shapes in cost gravitate. As such, this competition curves that can lead to the identifica- process as warfare happens within tion of different lowest regions of the and inter industries, including other average variable cost (avc) according economic sectors, tending to estab- to the chosen working shift (chapter lish other regulating prices or key 4, pp. 156-159). Then given the low- rates such as the general rate of profit, est avc, one can identify a normal the rate of interest, relative prices, capacity utilization rate at the macro wages, equities, expected return of level under the process of real com- capital (investment), and exchange petition (chapter 12, pp. 551-552). rates. Accordingly, this mechanism At the macro level, most common of real competition outlines the short models in macroeconomics take for and long-term patterns of econom- granted that aggregate investment ic growth, income distribution, and and savings are equal at any point economic cycles (e.g. Kondratiev). in time, and in general, it is assumed Thereby, for the author, the search that the saving rate is constant. By for profits regulates both supply and contrast, Shaikh distinguishes one demand and could even determine short run cycle of three to five years the degree of state intervention. as a typology to describe the short- In our opinion, besides the ex- run adjustment between the demand haustive and excellent analysis of the and supply, inventories and profit rate history of economic thought and sev- equalization. Furthermore, by defin- eral classical macro dynamic models, ing the long run cycle between seven an outstanding contribution of this to eleven years, Shaikh found that book to the economic science is the capacity utilization, labor market, treatment of time within the con- and reposition of capital are the main cept of real competition. In doing so, determinants of long-term fluctu- it does not only show the deficien- ations. It is significant to note that cies in traditional micro and macro these typologies (chapter 3, p. 109) 138 IE, 79(311), enero-marzo de 2020 • http://dx.doi.org/10.22201/fe.01851667p.2020.311.72441 emerge from his acute knowledge of variables or equations, which can of the national income and product be subject to empirical analysis. For accounts (nipa) in addition to oth- instance, he starts by analyzing eco- er sources of data, which the author nomics facts in a historical context. uses thoroughly to construct many Then, he moves on confronting other economic series and to show different empirical results adopting the classi- and unique economic patterns. cal perspective in terms of theory as Another key result of Shaikh’s work well as modeling; subsequently, by by considering time and his concept narrowing down the subject of study of real competition is the discovery of to a set of a manageable set of vari- a new and stable Classical version ables, he conducts empirical analy- of the Phillips curve which defines sis through the use of mathematical the patterns between real wages and models, statistical (graphics) and productivity. Most significantly, it econometric models in addition to clarifies the links between these fac- mathematical programming. In this tors with the levels of unemployment way, Shaikh approaches the subject by intensity, showing the intricate in- considering first the complexity of an teractions among state intervention, economic system and then attempt- workers and capitalists in determin- ing to simplify his analysis. In what ing the rate of unemployment, wages, follows, we discuss the content of the and profits. The author obtained these book and then we turn to exploring results through careful analysis of some suggestions for improvement data and using the classical political for a possible next edition of this fas- economy framework without relying cinating book. on the assumption of rational expec- The whole volume is comprised tations like other economists such as of three books. Part 1 “Foundations of Friedman and Phelps. Finally, another the Analysis” contents six chapters path breaking result is that in chap- (1-6). Chapter 1 is a detailed and ter 3 there is a derivation of a down- well-documented introduction of ward negative sloping demand curve the whole book where the key con- without using the neoclassical famous cepts are defined. Chapter 2 is a neat assumptions of hyper-rationality, op- empirical description of how a capi- timization, perfect information, and talist economy behaves (unemploy- representative agents. ment, productivity, price levels, profit Shaikh’s methodological approach rate, growth, etc.). Growth as well as focuses on boiling down complex short-and long-term fluctuations are real problems into a manageable set considered by Shaikh to be inward Reseña bibliográfica 139 characteristics of the capitalist sys- Chapter 5 advances two approach- tem. Finally, chapter 2 underscored es in the conceptualization of money the difference between incremen- and exchange. First of all, Shaikh ex- tal and average rates of profitability plains that exchange is an economic which, according to the author, only institution that gives rise to money. the former is relevant to new capital, He reckons that while the emergence so “they should be equalized by the of a state is significant to understand mobility of (new) capital across sec- the origins of fiat money at a later tors” (p. 73). Chapter 3 will appeal stage, he does not believe in Chartal- to young and old scholars because of ists theories, which posit that the state its abandonment of unrealistic mi- was responsible to create money from croeconomics foundations. In this early times. Chapter 6 is dedicated chapter, Shaikh rejects almost the to show that profits are the engine whole set of neoclassical assump- of the capitalist system. Shaikh de- tions to derive the demand curve. fines capital as a “thing” that produc- Through simulation of a different es profits, and he distinguishes two micro model, Shaikh concludes that types of profit: On production and social aggregates are very different upon alienation. Finally, he presents from individual behaviors. different empirical measures of the In chapter 4, Shaikh critiques evolution of the rate of profit. neoclassical and post-Keynesian cost Part 2 “Real Competition” is dedi- curves. First, he argues that neoclas- cated to the analysis of real competi- sical cost-curves do not have any tion with five chapters (7-11). Chap- reason to include average profit as ter 7 encompasses “the theory of real a cost because a firm’s cost is repre- competition”. In this chapter, Shaikh sented by labor, machinery, and de- asserts that firms compete with each preciation. Additionally, in his view other using three mechanisms of cut- post-Keynesians are mi taken to think ting costs: Technical change, wage that the markup is the source of prof- reduction, and the increase in the its. Second, for Shaikh it is quite im- length or intensity of the working portant to recognize that there is a day. These mechanisms in one way time dimension behind any process or another are usually glossed over of production, whereby the cost- or disregarded by other schools of curves modify their shape because thought in general. If new investment of the total duration of the working has a higher expected rate of prof- day and the consideration of different it in some specific industries, then working shifts. capital will move to these areas of 140 IE, 79(311), enero-marzo de 2020 • http://dx.doi.org/10.22201/fe.01851667p.2020.311.72441 higher profitability.