crisis: a unifying theory?

2 09 2012

Duvinrouge puts forward a theory of crisis to unify Marxists.

There are two main Marxist explanations of crises: the falling rate of profit school & the underconsumption/realisation problem school. I think once it is recognised that there are two types of theoretical crisis, both can be seen as offering valid explanations.

The two types of crisis are cyclical & breakdown. I realise that ‘breakdown’ is an emotive word & most Marxists shy away from it. I have no problem with it because I firmly believe that capitalism is historically limited & that breakdown doesn’t refer to something totally separate from the class struggle. I see a breakdown crisis relating to a falling rate of profit within the constraints of a finite earth. Part 3 of Volume III of Marx’s Capital, ‘The Law of the Tendential Fall in the Rate of Profit’ argues capital accumulation itself (i.e. economic growth) causes the ratio of constant capital (factories, machines, raw materials, etc) to grow relative to variable capital (labour time). This is known as the rise in the organic composition of capital. There are offsetting tendencies, but all things being equal, as the ratio grows so the rate of profit falls. Now put this in the context of supply side constraints, particularly population growth & so labour time, we can see that to offset the fall in the rate of profit under conditions where there can be no growth in absolute surplus value, the capitalists have to increase relative surplus value. In otherwords, take more of the value created by labour so labourers keep even less of the value they create. Without offsetting increases in the productivity of subsistence goods the living standards of workers fall. Under such conditions the class conflict becomes more obvious & revolutionary ideas are more appealling. An actual worldwide socialist revolution becomes a real, even likely, possibility.

But can the falling rate of profit provide an explanation for the business cycle? I don’t think so. I think once we recognise that paying with credit is not the same as paying with money & that debts have to eventually be paid off with money (at least for individuals; for corporations & governments they can only become a certain percentage of income), we can see that values can vary from aggregate prices. Once it’s realised that debt saturation has been reached there’s a credit crunch, financial crisis & then recession. I think this offers an explanation for cyclical crises (not necessarily all of them as there can be other shocks, but the abstract cyclical crisis).

None of this is to dispute that behind the current crisis of overproduction lies the falling rate of profit. That financialisation, even the fiat money regime, is a reaction to this profitability crisis. That what we have now is more than an abstract cyclical crisis. That’s not to say it’s a foregone conclusion that capitalism is finished. It may be that the 1930′s had a similar profitability crisis & the advent of cheap energy (oil/electrification) along with the massive capital devaluation of the depression & WWII restored the rate of profit. This time around it’s harder to see a way out for capitalism.

All this brings us to an explanation of crisis that recognises both the falling rate of profit & the realisation problem. A unified Marxist theory of crisis.

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6 responses

2 09 2012

There are two aspects worthy of particular note in this positive contribution. The first is the compound nature of the present crisis. Since the circuit of capital realisation must go through many separate but inter-dependent stages, from initial capital investment, through production stages and marketing stages to its final augmented realisation, many forms of break-down and relative over-productions can take place. The cause of one interruption or breakdown can be a cause of another and the complexity in fully developed capitalism can mask the origin or even – simultaneous or complimentary origins.

Marx recognised this and his theoretical works in economics were abstractions (valid he argued in Grundrisse, Capital and Theories of Surplus Value) from that multiple daily/hourly/geographically changing complex reality to show how the contradictions were still there in the most pure form of capital imaginable. Given this complexity, there will of course be dispute or disagreements by those who study Marx and the current crisis over which problem came first or is the most dominating or pre-dominating influence. Amongst those who seriously oppose capital this should be a comradely, collective educational process of enlightenment for those engaged in the study and those who are reading the discussions. That way the collective benefits and the understanding spreads.

However, there is another factor negatively at work in such debates which should not be overlooked. It is the fact that much of the left is split into warring factions and sects, whose purpose is to win the ‘battle of ideas’ in order to be viewed as an elite worthy of intellectual and/or organisational leadership. Such debates are often sustained by those who wish to attract followers, rather than equals. This determines to some extent the often disparaging ‘tone’ of such discussions and the positions (again frequently) dogmatically adopted are defended by all means possible – including lengthy jargon-riddled sectarian diatribes. This way an individual may gain, by others deciding to give way or even metaphorically walk away – but the understanding too frequently narrows.

Such debates often produce more heat than light and cause many readers – the audience – so to speak – will also turn away. So the second aspect – the search for a unified theory of crisis, in order to create unity – however laudable the intention, may therefore be frustrated by the complexity of the global interconnections of the financial, industrial economic sectors, as well as the sectarian need for point-scoring and doing demolition job’s on those with a different view.

Maybe all we can hope for is that people respect each others contributions and offer them as such, rather than push them forward as the ‘truth’ in opposition to ‘error’ and achieve solidarity in practice. Maybe we should accept that absolute unity of thinking is undesirable and unlikely outside of a religion. My own latest contribution toward understanding the compound nature of the current crisis is entitled ‘The Five-Fold Crisis of Capitalism’ at



9 10 2012

Five-fold crisis (Roy) – Super-clear article that you don’t get in the papers. Except for a few allusions of what people must do in your final paragraph, I’d like to see more people discuss how such a media-controlled, dumbed-down population can ever be stirred out of their apathy. A good place to start is to identify why they’re so apathetic. What motivates them? What would they fight for / against? Do they understand what is happening but choose to lie low for the easy life? Are they completely unaware of how the media operates? (I don’t believe most are) Who owns it? Quite how rich rich people actually are around the world? And that they have far less in common with those rich people of their own nationality than they do with the workers in other countries.

Just like spreading ridiculous conspiracy theories makes the real dodgy deals harder to see, maybe there’s an MO that can be successfully followed to prick up peoples ears, especially at this time when those ears in many places are craving to understand what they did wrong and why the people responsible for it are still super-rich while they are supposed to suffer in silence.

9 10 2012
Roy Ratcliffe

Thanks for your positive comments Dave. I have written two more recent articles on my blog (‘Bailouts and Banks'; and ‘Bonds and Bubbles’) which try to make clear the situation with regard to some of the recent actions and proposals, by those wedded to the system.

10 10 2012
Roy Ratcliffe

Hi Dave!

I didn’t have time yesterday to address your main point as to a discussion on why people aren’t as involved as they could be. I think there is no easy answer to that question. The situation of structural crisis, is so new in the lives of most people today that everyone is trying to make sense of it in different ways. Some think it is just another recession, others that there is nothing they can do, yet others who think the previous forms of struggle will work etc. If the anti-capitalist left, those who should have most insight, cannot make their minds up how to orientate themselves, overcome their fragmentation and unite, how difficult must it be for young, old, male, female, black, white, disabled to unite against what is happening. And then there is the question of fighting for what? That vision has been muddied by the Leninist and Stalinist distortions of post-capitalism. As yet for most people, it is seen as a struggle against nasty Tories, rather than against a system in severe structural crisis. In an article last year ‘Who are the 99%‘ on my blog at I looked at the different categories making up those who might struggle, and suggested that;

“An additional problem is created if, in the unfolding crisis, each of the above sectors focus attention on only its own immediate concerns. In that case they will be isolated from each other and it will be easy for the political elite to defeat even the stronger more organised ones, sector by sector. So unless a movement arises which will embrace and articulate the needs of these sectors, along with other sectors, then many millions will at best be indifferent to the coming struggles and campaigns. Yet what ought to be a further cause for concern with continued sectional activism is that individuals among these weaker sectors, if not alternatively inspired, will also be the potential recruits to the nationalist and divisive rhetoric of the political elite or the proto-fascist revival currently under way. For these reasons care should be taken (by those of us who consider capitalism to be a moribund system of episodic economic crisis and terminal ecological crisis) in just how we relate to the 99%, their initial concerns and the reforms they propose. “



16 01 2013

Well, Capitalism is in decadence since early 19 th century and burgouisie yet not accepting it and forcing the world towards the deterioration day by day……I was searching any international organization that yet defend the Marxist theory.
I want to discuss it in detail .please keep me posting the related article.

16 01 2013

If you are on facebook there’s a group called Marxist Crisis Theory you can join.


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