In “Postcapitalism: A Guide to Our Future”, English journalist and broadcaster Paul Mason sets out in the third chapter to build on the theories of waves and cycles, and how Marxists leaned heavily on the idea of that capitalism was inevitability doomed to collapse. He starts in the near present (2008) with the resurgent popularity of Karl Marx, or “Marx-mania” as he puts it, and then works his way back bringing in the entire panoply of Marxist dramatis personnæ — many of whom were unknown to me.
According to Karl Marx, capitalism is beset by crises and breakdowns making it inherently unstable. While classical economists Adam Smith and Malthus explored the limits to capital as “barriers to expansion, decline of profit, and the fragility of stable growth”, Marxist theorists Rudolf Hilferding and Rosa Luxembourg by contrast awaited its doom.
My own curiosity had previously led me to Richard D. Wolff, an economics professor turned Marxist rock star in the wake of society’s disillusionment with the current state of capitalism. Among his followers he’s best known for the quip, “If you lived with a roommate as unstable as capitalism, you would have moved out long ago.”
Listen to Professor Richard D. Wolff’s widely popular monthly updates (May 2016):
Mason focuses on the theorists and activists of the early twentieth century and how their interpretations influenced the inter-war years and the rise of the Soviet Union. Luxemburg, who was critical of Lenin (but who was embraced by later communist acolytes), asked questions that we’re asking again today: “What happens when the whole world is industrialised?” and “What happens if it can’t create new markets within the existing economy?” She proposed that capitalism is not cyclical, but is in fact fatally flawed (a conceit held by Wolff and many others today). Observing the increasing financialisation of the economy, Hilferding concurred that “finance-dominated capitalism was proof of the system’s imminent doom”. Mason both praises these theorists when they moved toward concrete facts and criticizes them for their abstractions, particularly for ignoring the adaptive nature of capitalism.
Here’s Noam Chomsky on Rosa Luxemburg and Revolution (2013)
Mason ends the chapter describing the “perfect wave”, aka the typical wave structure of capitalism (I paraphrase here):
- The start of a wave is usually preceded by the build-up of capital in the finance system
- Once new technologies, business models and market structures, capital rushes in.
- In each up cycle, the economy has no trouble absorbing new workers into the workforce.
- When the ‘golden age’ stalls, there is a traumatic break point.
- Now the adaptations: attacks on wages, redistribution projects; and recessions become more frequent.
- If adaptation fails, capital retreats from the productive sector and into finance systems (as we’re seeing right now).
All of this of course is to pave the way for the premise of the book: “That there is a different route beyond capitalism”.