Radical Political Economy by Hahnel Robin

Author:Hahnel, Robin
Language: eng
Format: epub
Publisher: Taylor & Francis (CAM)

Under Consumption Crises

Rosa Luxemburg expounded on the under consumption version of Marxist crisis theory early in the twentieth century, interpreting imperialism as an attempt to secure more buyers through colonization to stave off stagnation from under consumption in advanced capitalist home economies (Luxemburg 1951). Later in the century Paul Sweezy became the foremost Marxist proponent of an under consumption theory of crisis. Sweezy was thoroughly conversant with previous debates about under consumption crises among Marxists, which he summarized and evaluated in Theory of Capitalist Development: Principles of Marxian Political Economy first published in 1942. In 1966, much to the dismay of many Marxists because they did not use the concept “surplus value,” but talked instead simply of an “economic surplus,” Sweezy and Paul Baran published Monopoly Capital: An Essay on the American Economic and Social Order in which they argued that modern US “monopoly capitalism” was intrinsically prone to stagnation for lack of sufficient aggregate demand, and that a great deal of US government behavior, in particular high military spending accelerating the Cold War, could be understood as attempts to counteract this tendency toward ever greater stagnation.

Among Marxist economists debates often rage over how to interpret Marx on any subject, which aspects of Marx’s many theories deserve more or less emphasis, and of relevance here, which of Marx’s different theories of capitalist crisis is most compelling in some particular historical period. Sweezy and Baran are widely considered to be the most important Marxists who argue that stagnation, or what was initially referred to as a crisis of over-production or under consumption, is the most insightful and relevant of Marx’s crisis theories for modern capitalism.

Much of Baran and Sweezy’s analysis of post-WWII US capitalism was indeed insightful. What was not helpful was the impression they left readers that stagnation is inevitable and unavoidable as capitalism advances. What more careful modeling has since demonstrated is that no matter how much wage growth may lag increases in labor productivity, and no matter how much capitalists’ propensity to consume out of a growing share of national income may fall, the sub-optimal growth path this yields can continue indefinitely. In other words, the presumption of an inevitable breakdown is unwarranted. As discussed below, more rigorous modeling by economists beginning with Steve Marglin (1981) demonstrated that there are a number of possible growth trajectories depending on values of key variables, and as undesirable and unnecessary as “profit-led” regimes like those projected by Baran and Sweezy may be, they do not lead to the kind of total breakdown under consumptionist Marxists project. They simply lead to lower rates of capital utilization, and consequently lower levels of production and income than is technically possible.10

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