The Future of Capitalism After the Financial Crisis
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The Future of Capitalism After the Financial Crisis

Richard Westra, Dennis Badeen, Robert Albritton, Richard Westra, Dennis Badeen, Robert Albritton

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The Future of Capitalism After the Financial Crisis

Richard Westra, Dennis Badeen, Robert Albritton, Richard Westra, Dennis Badeen, Robert Albritton

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The Future of Capitalism After the Financial Crisis: The Varieties of Capitalism Debate in the Age of Austerity contains thirteen world leading political economists writing from within eight different countries who critically analyze the current crisis tendencies of capitalism both globally and in particular countries. Given the likelihood of an increasingly crisis prone future for capitalism, it is important not only to rethink capitalism in its current manifestations or varieties. It is also important to rethink research methods and conceptual frameworks in preparation for understanding an increasingly rocky future in which capitalism itself could go the way of the many species that in the past were endangered only to become extinct.

More and more titles of books and articles are suggesting that capitalism or perhaps civilization itself is endangered if we do not make radical changes in the near future. This book breaks with academic path dependency and attempts to open new vistas of political economy and of multidisciplinary analysis that are crucially important if our thought processes are to be effective in a world in jeopardy.

The varieties of capitalism (VoC) debate itself came into being as the Soviet Union unraveled. It drew in scholarship from a cross-section of Marxian and heterodox political economy. The key argument of VoC was that if capitalism was the only global option then those on the Left must get involved in policy discussions on how capitalist economies can be fashioned to become competitive as well as progressive. However, the financial crisis has seen policy across the advanced economies veer toward competitiveness coupled with austerity. The lesson for the Left is that alternatives to capitalism must be sought in the here and now.

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Part 1
Varieties of Capitalism from beginning to end?
1 From imperialism to Varieties of Capitalism
Richard Westra
The purpose of this chapter is to follow the conceptual trail from the theorizing of imperialism in the field of Marxian political economy to the research agenda of Varieties of Capitalism (VoC).
Marxian political economy is based upon the most significant economic writing of Karl Marx, his monumental three-volume study – Capital. Marx, however, passed away before his masterwork was completed. He even bemoaned pressures to publish it before the intricacies of his theories were better worked out. In a letter to Engels, Marx declares (2014c [1865]):
… I cannot bring myself to send anything off until I have the whole thing in front of me. Whatever shortcomings they may have, the advantage of my writings is that they are an artistic whole, and this can only be achieved through my practice of never having things printed until I have them in front of me in their entirety. This is impossible with Jacob Grimm’s method which is in general better with writings that have no dialectical structure.
Marx’s reference here, as well as in the Afterword to the Second German edition of Capital (and elsewhere) to the dialectical epistemology of Capital has befuddled both followers and critics alike. Yet it did not entail a self-styled “choice” of where to “start” Capital (Marx 2014d [1867]). Rather, as Stefanos Kourkoulakos explains, while formal or axiomatic logic is operable in varied epistemological contexts and may be directed toward explanation of a multiplicity of phenomena across the sciences, the dialectic is a “special purpose” or “content specific” method demanding a theoretical object with unique ontological properties for its operation (Kourkoulakos 2002, pp. 191–94). These properties being, that the object is self-abstracting, self-reifying, and self-revealing (this latter in the sense of the subject matter “telling its own story” from the “inside”).
In the idealist dialectic of G. W. F. Hegel, the “storyteller” was the Absolute or God revealing piecemeal the truth of the universe across the history of philosophy. For Marx, to deploy the special purpose dialectical epistemology in the material world required a theoretical object that is either an Absolute, or evidences “Absolute-like” characteristics. It was Marx’s great acumen to discern that one such object exists in the material world – capital. As put by Moishe Postone (1996, p. 75):
Marx … explicitly characterizes capital as the self-moving substance which is Subject. In doing so, Marx suggests that a … [materialist] Subject in the Hegelian sense does indeed exist in capitalism … Marx analyzes it in terms of the structure of social relations … His analysis suggests that the social relations that characterize capitalism are of a very peculiar sort – they possess attributes that Hegel accorded the Geist.
Marx begins Capital with the commodity because the commodity in the capitalist economy contains the elemental contradiction or dialectical opposition of capital – that between value and use-value. Value is the historically specific, abstract, quantitative principle of capital. Use-value is the transhistorical, concrete, qualitative foundation of all human life. Indeed, it is an ideological ruse of neoclassical economics to study “the economy” (read capitalism) through its yoga of purported “rational” consumer choice, because “consumption” of use-values to materially provision human society is a transhistorical phenomenon. In that fashion, neoclassical economics “naturalizes” its subject matter (“the market,” read capitalism). However, to understand capitalism requires grasp of its cardinal activity of profit-making. Marx, therefore, rightly theorizes the commodity in the first pages of Capital from the perspective of the seller as a good becomes a commodity precisely because its owner is not interested in its use-value or “consumption,” but in its value. Value in this sense always manifests an indifference to use-value. And it is the contradiction between value and use-value inherent in the commodity that drives the dialectic forward to unfold each and every category of Capital so as to expose all the inner secrets of capital as a mode of organizing human economic life. As captured by Robert Albritton (2007, pp. 95–96):
[A] much misunderstood and sometimes maligned category of dialectics is “contradiction”. The use of “contradiction” in dialectical reasoning does not violate the law of non-contradiction in formal logic. To say that within the commodity form there is a contradiction between value and use-value is to say that they are mutually dependent and mutually opposed semi-autonomies. Mutual dependency implies that a value must always be attached to use-value, and mutual opposition implies that as pure quantity, self-expanding value must overcome difficulties posed by incorporating use-value as pure quality. Value must incorporate use-value without compromising its self-expanding quantitativeness, which it does by producing a sequence of categories that overcome and subsume successive use-value obstacles.
Marxian economic theory, in other words, in demonstrating how value surmounts the use-value obstacles confronting it, to reproduce the economic life of a human society as a byproduct of its chrematistic of mercantile wealth augmentation, confirms the historical possibility of capitalism as an “upsidedown,” “alien” order (as Marx variously refers to it). The dialectical circle closes with capital itself becoming a commodity as represented by the fetishistic concept of interest. Where capital appears like the Absolute or Geist, divesting itself of all materiality in the labor and production process to become pure, objective quantity bent upon self-expansion. Approached from another angle, dialectical economic theory synthetically defines capital in its most fundamental incarnation (Westra 2012/13).
But, while Marx’s seeking to operationalize the dialectical epistemology in his three-volume masterpiece, Capital, is testament to his interest in capturing the deep causal structure of logical inner relations of capital, Marx’s work has been largely apprehended as a theory of history and historical directionality – historical materialism (HM) – with Capital pegged as but a subtheory. As argued in greater detail elsewhere (Westra 2009, pp. 46–48), there is no more influential figure in the reconstruction of Marx’s work in terms of an overarching theory of historical directionality foretelling a socialist historical outcome than Second International doyen Karl Kautsky. In fact, the very notion of “Marxism” as a field of study predicated upon writings of Marx originates in Kautsky’s hands. And it is Kautsky who first codifies Marxism as HM.
Kautsky, it is important to understand, had developed his ideas on Marxism without access to Capital as a whole. And, in fact, published a major book, translated into numerous languages with huge influence on a new generation of Marxists, entitled Economic Doctrines of Karl Marx, which was based solely on Volume I of Capital. Kautsky essentially combined insights from Marx’s pithy statement of HM in the Preface to A Contribution to the Critique of Political Economy (Marx 2014b [1859]) with Marx’s iconic closing words in Capital Volume I. Marx proclaimed there: “Centralization of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder … The expropriators are expropriated” (Marx 2014d [1867]).
Mesmerized by the impact of positivism on late nineteenth-century philosophy of science debate, Kautsky argued that Capital provides evidence in a given context of the wider teleology of human history as a whole. He unabashedly asserts, “every step in social science has proved it – that, in the last analysis, the history of mankind is determined … by an economic development which progresses irresistibly, obedient to certain underlying laws” (Kautsky 1971, p. 119). According to Kautsky, it is Marx’s “law” of accumulation which enforces the historical transition from a so-called “petty commodity society” of independent producers to capitalism. And then it propels capitalism towards its demise by “centralizing” capital in fewer and fewer hands, as the “law” simultaneously enlarges the working class and increases worker impoverishment or “immiseration.” In this way it is alleged that capitalism produces its own “gravediggers.”
In Volume II and III of Capital as left by Marx, however, it is never maintained that the logic of capital or law of value, which reproduces economic life in capitalist society as a byproduct of value augmentation, is selfdefeating, leading to the demise of capitalism, as Kautsky contends. Even in Marx’s own explication in Volume III of the law of the tendency for the rate of profit to fall due to the rising organic composition of capital, Marx never argues that the law necessarily spawns combination leading to social class polarization and potential dismounting of capital.
Yet, at the time of his writing, Kautsky’s claims were not critiqued on the basis of their logical deficiencies. But from the vantage point of historical transformations they failed to predict. Because the fact was, the extended economic crisis which wracked the European-centered trading world from approximately 1873 into the 1890s, rather than sounding the death knell of capital, and inciting the proletariat to overthrow capitalism, as Kautsky attributed to Marx’s analysis, was instead resolved by mid-1890 in a renewed bout of prosperity. This situation became the catalyst for the famous “Revisionist Controversy” within Europe’s most formidable socialist party the German SPD (Howard and King 1989, pp. 65–89).
At the center of the “Revisionist Controversy,” which essentially pitted Kautsky against his main protagonist Eduard Bernstein, was the question of whether the shifting tide of capital accumulation obliged the socialist movement to revaluate its aims. That is, if historical laws were expanding the working class, instead of devoting energies to fomenting socialist revolutionary overthrow of capitalism, workers and their political party should concentrate their attention on reforming capitalism and “peacefully” transforming it with attainment of political power in electoral victory. While Kautsky emerged victorious in this clash, which was fought not at the level of high theory but over interpretations of empirical trends of capitalism, if one thing did become clear it was the paucity of solid analysis of the changes capitalism was undergoing. It was from within this intellectual vacuum then that the theorizing of imperialism exploded.
From Capital to imperialism
As the masterful study by Jukka Gronow explains, despite quibbling over the political and strategic implications of imperialism, all turn-of-the-century Marxist theoreticians of imperialism accepted the basic assumptions of Kautsky concerning Marx’s Capital (Gronow, 1986, pp. 57–59, 97–98, 118–19, 161–62).
That is, they approached Capital as a subtheory of HM, the latter conceived as an overarching theory of historical directionality foretelling a socialist historical outcome. As such, Capital is seen as capturing the historical teleology of capitalism beginning with its germination in a supposedly historically existent petty commodity society. From that point of departure capitalism proper is considered by them to be but a short-lived formation wedged between its petty commodity precursor and imperialism. And Capital, in this schema, as the theorizing of historical laws applied to the historical period up to the time of Marx’s passing, is the theory of that short-lived social formation.
Rudolf Hilferding’s book, Finance Capital constitutes the opening salvo in the theorizing of imperialism. As recent commentary has it, Finance Capital “proved to be the most influential text in the entire history of Marxian political economy, only excepting Capital itself” (Howard and King 1989, p. 100). And in fundamental ways, all writers on imperialism follow Hilferding in setting out the unique economic constituents of imperialism (Brewer 1980, pp. 79, 99–100). For Hilferding, what in particular marks imperialism as a new “type” or “period” of capitalism is, first, the morphing of the form of capital from the industrial capital treated by Marx in Capital to finance capital (Hilferding 1981, pp. 223–25). Finance capital, quite simply, involved banks playing an activist role in “socializing” available funds throughout society and deploying the funds to impel the monopolization of commanding heights industries such as steel (over which finance capital exerted control). Second, there is the imperialist state policy of acquiring “economic territory” in support of the monopolistic cartels operated by finance capital. To ensure their monopolistic pricing regime in their “national” markets, and forestall competitive devaluations of capital, imperialist policy enabled finance capital to “dump” its excess production in the captive markets, so the argument went (Hilferding 1981, pp. 213, 318–19, 322–23, 328). Nevertheless, Hilferding never wavers on the view that his theorizing of imperialism, as with Marx’s Capital, is but a subtheory-like intervention or refinement of HM. In the Preface to Finance Capital Hilferding states (1981, p. 23):
Marxism … is only a theory of the laws of motion of society. The Marxist conception of history formulates these laws in general terms, and Marxist economics then applies them to the period of commodity production. The socialist outcome is a result of tendencies which operate in the commodity producing society.
V. I. Lenin is the first Marxist theorist to characterize imperialism as a “stage” of capitalism, though he leaves this conceptualization unrefined (1975, p. 82). As alluded to above, Lenin largely follows Hilferding’s analysis of imperialism as a new “type” of capitalism except, on the one hand, Lenin pegs the “monopoly” structure of the firm as the most salient feature of the era. While on the other hand, Lenin emphasizes the geopolitical dimension of imperialism where imperialist powers seek to divide/re-divide the globe into spheres of influence (Lenin 1975, pp. 77–79, 83, 92). Yet, in keeping with our point above on Marxist theoreticians of imperialism, Lenin declares (2014a [1913]):
[Marx’s] historical materialism [HM] was a great achievement in scientific thinking. The chaos and arbitrariness that had previously reigned in views on history and politics were replaced by a strikingly integral and harmonious scientific theory, which shows how, in consequence of the growth of productive forces, out of one system of social life another and higher system develops … Marx [then] traced the development of capitalism from embryonic commodity economy, from simple exchange, to its highest forms, to large-scale production.
But, given the understanding of HM as an overarching theory of historical directionality foretelling a socialist historical outcome, and the point that Capital, its subtheory of historical directionality, had purportedly been outpaced by historical change with the promise of socialism by its supposed “laws” of accumulation remaining undelivered, the weight of the Marxist qua HM case for socialism fell on the theorizing of imperialism. This transposition has been apprehended in terms of the first “crisis of Marxism” where the theory of imperialism is claimed to “solve” the crisis (McDonough and Drago 1989).
In the explanation given by both Rudolf Hilferding, the formative theorist of imperialism, and V. I. Lenin, who would draw the lessons from theorization of imperialism for socialist practice, the fact that revolution did not follow the first major crisis of capitalism hinged upon the transformed social class conditions of capitalism in its imperialist stage. In his Finance Capital, Hilferding pointed to the spawning of salaried “middle classes” that, while constituting a fraction of the working class, increasingly disdained any iden-tification with the proletariat. Instead, they identified with the petit bourgeois middle classes the growth of which was but another class characteristic of the imperialist era (Hilferding 1981, Chapter 23). Lenin, for his part, pointed to the emergence in the stage of imperialism of what he dubbed an “aristocracy of labour,” which battened on monopolistic protection in commanding heights imperialist industries (Lenin 2014b [1916]). Like Hilferding’s new “middle class,” the “aristocracy of labour” felt a vested interest in the fruits of imperialist policies resulting in a bifurcated labor movement with counter-revolutionary inclinations.
It was the above analysis of transmutations in capitalist social class relations that then led Lenin to formulate his theory of a “global imperialist chain.” That is, notwithstanding his position on the struggle among rival imperialist states over the division of the globe into economic territories, these territories...

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