why capitalism cannot be reformed

7 06 2013

By John Keeley

There are many people who regard themselves as left-wing who do not want to get rid of capitalism. Not only Ed Miliband & the Green Party in Brighton, but also some who consider themselves to the left of Labour in the new Left Unity grouping. They believe capitalism can be made more equal through government action & that the post-war period demonstrates this. In my opinion, they fail to appreciate the material conditions.

Ed Miliband

The post-war prosperity & the increasingly equality, exemplified in more equal access to health care & education, was possible due to a genuinely high rate of profit consequent upon the huge capital devaluation of the depression of the 1930’s, the capital destruction of WWII & huge increases in productivity thanks to the application of oil & gas. Unfortunately, to really grasp this point requires an understanding of how capitalism works & why it is prone to crisis. This isn’t an easy subject, but it’s worth the effort.

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the crisis of capitalism: a socialist perspective

14 04 2013

By Eric Chester

     The global economy is mired in the worst crisis since the Great Depression of the 1930s, and yet capitalism has always been characterized by instability and insecurity. An economic system that operates without an overall plan, and in which powerful economic forces act on the basis of maximizing short-run profits, is a system that is inherently unstable. Marx predicted a collapse of capitalism leading to a revolutionary upsurge as early as the 1850s.[i] This would appear to be one of his predictions that has been contradicted by the course of history, but in fact the global economy has been plunged into one crisis after another.


     The unpleasant reality we confront today is that although capitalism is constantly changing, the impact of these changes is, on balance, overwhelmingly destructive. Indeed, as capitalism grows and expands, it destroys everything in its path. As the system unravels, more and more workers become permanently displaced from the workforce; income and wealth differentials widen within the already industrialized societies, as  an increasing number of countries are added to the list of “failed” nations; and ecological catastrophe threatens the continued existence of the planet as we know it. We are at a crossroads. Either the working class acts as a class and wrests power from the capitalist class, or the system will disintegrate into a catastrophic freefall.

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the slow death of capitalism?

28 03 2013

Post World War II capitalism was able to afford social democracy, says duvinrouge. Profit rates were high after the capital devaluation & destruction of the Great Depression & war. Cheap oil enabled great advances in productivity. In Marxist terms the rate of exploitation increased. This means a larger percentage of the value created by workers was going to the capitalists. But because of the productivity increases, in material terms the workers were actually getting better off (at least in the West) even though they were being exploited more. This enabled the creation of a welfare state: state-funded healthcare, education, pensions & unemployment benefits. Western societies became more equal. With such improvements in living standards there was little reason for the workers to overthrow capitalism.


These improvements began to be tested in the late 1960’s. In 1967 the £ was devalued & at the same time the US$ was coming under increasing pressure, eventually leading to Nixon removing the convertibility to gold in 1971. It may be that these difficulties were based upon a falling rate of profit at the time, but even if this was just a crisis of overproduction, the authorities seemed determined to avoid a re-run of the 1930’s, particularly at the height of the Cold War with the Soviet Union. Keynesian fiscal stimulus seemed to only create inflation. The Phillips Curve gave way to stagflation. With the major currencies threatened with debasement a solution was needed. Neo-liberalised seemed to offer this. Attacking trade union power was seen as the best way to deal with the ‘enemy-within’ & perceived cost-push inflation. Alongside this came the demand to end capital controls so finance capital could overcome restrictions put in place by the now ‘independent’ ex-colonies. A new phase of multi-national globalisation directed by the bankers was beginning. This renewed power of finance capital largely came from financialisation, itself a product of the new fiat currency regime. The wider provision of mortgages & the selling off of social housing, enabled those in the West who still had work, to continue to give credence to the conservative dream of a property-owning ‘democracy’. With the fall of the Berlin Wall & the collapse of the Soviet Empire, the ‘end of history’ & the triumph of capitalism was celebrated, even China was now conceding defeat & turning to capitalism. This offered the ‘masters of the universe’ the opportunity to deindustrialised the West on an even greater scale by exploiting Chinese former peasants at even lower wages. The printing of US dollars in the form of US Treasury Bills bought by rich Arabs & the Chinese keen to keep their currency competitive, enabled the West to live on credit, buying cheap goods from Asia. How could this ever go wrong?

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your money is not safe!

19 03 2013

What’s happening in Cyprus is hugely significant, says duvinrouge. Cypriots are having the money in their bank accounts taken by the government. The question people are now asking is if it can happen in Cyprus, can it happen anywhere?

your money is not safe

To understand what is happening requires an understanding of the nature of the crisis, the crisis of overproduction. Capitalism is based upon commodity production: things are produced for sale, to sell for money, not for immediate consumption. Furthermore, the price must be higher than the costs of production for a profit to be realised. Profit is the objective, not the satisfaction of human needs. But the problem with commodity production is the commodity that acts as the universal equivalent – money – must grow in line with commodity production in general for all the commodities to be sold. If money gets hoarded, e.g. capitalists refuse to invest because profit rates aren’t high enough, then we have stagnation, even a depression. This hoarding of money is what most Keynesians, and some Marxists, see as the cause of the current crisis. Hence they argue that the government must step in with fiscal stimulus until the capitalists return to their senses and start investing again. Crises due to hoarding are possible, but this is not overproduction and not the current crisis.

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why krugman is wrong

31 05 2012

Duvinrouge says many ‘socialists’ have got pleasure from seeing Krugman expose the prejudices and flaws in those advocating austerity as a solution to the crisis. He is right that austerity won’t work and is mainly being pursued for ideological purposes. However, he is wrong to believe that Keynesian fiscal stimulus can solve the crisis. He is wrong because he misdiagnoses the crisis and misunderstands the nature of value.

For Keynesians like Krugman, the problem is a lack of demand because the private sector is not investing. Without a surge in exports they argue that it is the government’s job to take up the slack and restore effective monetary demand. This would have some merit if the problem was just a lack of demand due to producers not investing and instead hoarding their money. But this ignores the mountain of debt and the reasons why there is so much debt.

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interview with andrew kliman

29 04 2012

Duvinrouge: Can you tell me what the key message of your new book, The Failure of Capitalist Production, is?


Andrew Kliman: The Great Recession was waiting to happen. There were unresolved problems in the system of capitalist production that had been building up over a third of a century. The rate of profit fell and never recovered in a sustained manner, which resulted in persistently sluggish investment and economic growth, which in turn resulted in rising debt burdens. And these problems induced governments to solve them or paper them over with policies that made the debt build-up even bigger.

DVR: Your book is full of statistics and as we know interpretations of statistics can be very different. It would appear that your choice of historical cost as opposed to current cost is crucial. Please can you explain the difference?


Accountants can value assets at their current cost or at their original cost when they were acquired. The latter is usually called their “historical cost.” Both methods have their place. But one thing you can’t do is compute the rate of profit, i.e., the rate of return on investment, by dividing profit by the current cost of the capital assets. It’s not wrong to do this; it’s impossible. What you wind up with just isn’t a rate of return on investment. What the assets are currently worth is simply not the same thing as the amount of money that has actually been invested in them. To measure the latter, you have to take their historical cost and subtract depreciation.

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three myths about the crisis

18 09 2011

Conrad Russell challenges common left myths about the meaning of the crisis

This article is designed to question a number of theoretical assumptions implicit in much Marxist – including autonomist or left communist – writing on the crisis. In particular, I want to question assumptions around capitalist contradictions, capitalist decline, and the role assigned to financial and ‘fictitious’ capital.

much left analysis of the crisis leans on a shallow understanding of the financial sector

My argument is that these assumptions paint a model of a decaying ‘collapsing’ capitalism (hence my term ‘collapsism’). They also fetishise the mechanics of capitalist functioning at the expense of the real social relation underlying them – the class struggle.  It is class struggle, not some quasi – mystical ‘debt meltdown’ or ‘falling rate of profit’, which constitutes capitalism’s permanent crisis. Read the rest of this entry »

democracy and self-management in cuba

23 09 2010

Guillermo Almeyra outlines an alternative to the Cuban government’s plans to slash 20% of the workforce and privatise parts of the economy in order to deal with the crisis.

Predictably, the global crisis – together with the criminal US economic blockade – is now taking an even heavier toll on Cuba, reducing levels of tourism and remittances sent home by Cubans abroad.The growing difficulties of the Venezuelan economy, as well as the aggravation of climactic disasters, are also factors we have to consider when looking at how to save the island from economic abyss.

Cuba is a country which has been in deep crisis for more than 20 years – a whole generation – and which has no real change nor encouraging signs on the horizon, merely a hard struggle for survival, which besides is led by the same system and the same leaders who have helped create the current disastrous situation and do not know how to escape it. Read the rest of this entry »

beyond resistance 19th june: ‘capitalist crisis’ and other session details

5 06 2010

Our ‘Beyond Resistance’ summer school is now just two weeks away. The event takes place from 11am-6pm on Saturday 19th June at 96-100 Clifton St, London EC2. All welcome. Click here for a new page listing session and ticketing information.

We have confirmed more details of the session on the capitalist crisis, which will feature speakers David Harvie (Turbulence; The Free Association; Lecturer in Finance and Political Economy, University of Leicester) and Alan Freeman (International Working Group on Value Theory; Co-editor, Critique of Political Economy).

The current crisis has been the worst since the Great Depression. And just as with the great depression it caught the left largely unprepared. The need to understand the current crisis and the nature of crisis under capitalism has never been greater. Read the rest of this entry »

after the general election, what next?

2 06 2010

Mark Ellingsen gave an introduction to a session at the recent Global Commune day school in Edinburgh:

If you ask people what they expect after the general election most people will answer public sector cuts. These will indeed dominate the coming weeks and months, but it is useful to step back and take stock of where we are. Read the rest of this entry »

david harvey: the enigma of capital

5 05 2010

Sharon Borthwick reports on Marxist geographer David Harvey’s recent talk in London

The Great Hall at King’s College London was packed to capacity and beyond on 28th April, with people standing at the sides and sitting in the aisles. It put me in mind of Nathan Coombs surmising on where all the numbers of the left attending academic conferences were the rest of the time.

How can we, maybe, capture and utilise the level of interest shown on these occasions? This particular audience was made up of SWPers and Kings College and other students. The usual papers were sold outside. Read the rest of this entry »

the deficit! the deficit! but what about unemployment?

18 04 2010

by Oisín Mac Giollamóir

Listening to the debate in the media today you would conclude that there is consensus amongst economists that the key problem of the UK economy is the deficit. And the key question is how to cut it. And the key election issue therefore should be how to cut spending. This is not the case.

Working backwards, perhaps the most ridiculous issue here is the notion that the only way of cutting the deficit is by cutting spending. Fraser Nelson of The Spectator goes so far as to say, “Cameron should ban the word ‘deficit’ and simply say ‘overspend’ instead.” It would seem that some right-wing commentators can’t add. A deficit arises when revenue is less than expenditure. An equally good way of cutting the deficit is by increasing revenue, i.e., by raising taxes. Saying the deficit is an ‘overspend’ is as idiotic as calling the deficit an ‘undertax’. Read the rest of this entry »

lightning strikes twice in greece

25 02 2010

by David Broder

On 12th February the Evening Standard boards in London proclaimed “Brown: we won’t pay for Greece bailout”, almost as if darkly parodying the left’s slogan “we won’t pay for their crisis”. But much as the Greek government plans harsh austerity measures to appease its European counterparts, millions of workers are refusing to capitulate.

Yesterday a general strike brought Greece’s planes, trains and buses to a standstill; left schools quiet and government offices empty; and brought thousands of raucous demonstrators into the streets of Athens. Not only was this the second nationwide strike against the budget cuts plan in two weeks, but also marked continued defiance against the new social-democratic PASOK government, just over a year after the December 2008 struggle against the right-wing New Democracy administration. Read the rest of this entry »

crisis ploughs on in united states

25 02 2010

by Dennis Marcucci
from Philadelphia

Worst than expected economic reports and job cut announcements show that the prospects for working people in the USA and around the world are going to worsen. After all, most of the world is capitalist, and most of the world is poor. So what does that tell you about this canker sore of an economic system?

Wall Street economists had said that unemployment claims would fall below 450,000. They were wrong. There was only a slight decrease to 470,000. Any reports have to be viewed with suspicion. I was speaking to an “expert” economist on a radio talk show two weeks ago who was telling the audience how claims for unemployment fell. I said that what is not being reported is (i) workers who exhausted their benefits and are now off the rolls and are viewed as employed. (ii) workers who were collecting benefits and found part time minimum wage employment and (iii) workers working temp jobs or contract work. Read the rest of this entry »


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