I wrote: >> I wanted to add that Bob Brenner's excellent new book argues that international competition between the advanced capitalist countries led to the crisis of the 1970s, while a similar analysis applies to the competition in East Asia that led to the 1997 crisis.<< Sam writes: >One of the things I found odd about Brenner's latest effort is that class struggle plays no role in his explanation.< Class struggle plays no role in Brenner's general explantion of the economic crisis of the advanced capitalist world of the late 1960s and early 1970s. His argument is instead that the rich capitalist countries were competing with each other, leading to an overinvestment process, which led to excess capacity which prevented manufacturing capitalists from raising mark-ups on variable costs in order to protect profit rates. However, class struggle does play a role, as part of his structural description of capitalism (as a class society) and as part of his historical narrative (i.e., the employers' offensive against labor). His main point is to argue against those who argue that the reason why the rich countries went into crisis was because the working class was "too strong," so that the crisis might have been avoided (in the counterfactual world) if the working class had been more mellow, less militant. In different terms, he's opposing the "contradictions of Keynesianism" thesis in which the successful Keynesian efforts to maintain high profit realization during the 1950s and early 1960s led to increased difficulty in producing profits in the late 1960s. From what I've read, he makes a pretty convincing case. (I made the analogy above between the situation of the rich countries in the late 1960s and early 1970s and that of the Southeast Asian "emerging markets" circa 1997. In defense of Brenner, I would ask if the SE Asian crisis could be explained by working-class aggression squeezing profit rates.) BTW, he does note various cases where unions and workers (taking advantage of relatively tight labor markets) did squeeze profits. However, he argues that in the greater scheme of things, he argues that this phenomenon should be seen more as an effect than a cause. In this, his story is a lot like that of Marx in vol. I of CAPITAL (ch. 25). Marx and Brenner are both wrong if the organizational strength of the working class is steadily increasing (as opposed to a conjunctural increase in workers' power due to rapid accumulation). However, I don't see that as having happened in the three countries that Brenner focuses on (the US, Japan, West Germany). Perhaps Brenner's view looks worse if we interpret working-class power in broader terms, because his emphasis is on blue-collar workers, especially in manufacturing. I would interpret working class power as having been relatively strong during the 1950s and 1960s in the sense that many workers (including white-collar bureaucrats) had some kind of job security and insulation from the labor market, along with defined-benefit pensions and the like. Though beneficial to capitalists in the short run, in the longer run, such insulation constrained capitalist efforts to raise profit rates. This kind of thing -- which might be seen as an example of the "contradictions of Keynesianism" theory broadly interpreted -- doesn't show up very explicitly in Brenner's model. Or rather he mentions it, but doesn't stress its role. >This is odd after he took many other Marxists to task for abandoning class struggle in his other well-known article "Critique of Neo-Smithian Marxism". What he gives in his latest work is a Neo-Smithian account of recent economic history.< I read Brenner as presenting a "middle level" theory of the crisis of the rich capitalist countries in the late 1960s and 1970s (in the middle between high theory and empirical description). He takes the Marxian stuff (the theory that distinguishes his theory from neo-Smithianism) _for granted_. But it's there, as part of the general capitalist process that he describes, which includes relative surplus-value extraction and the like. Some would have started the book with an abstract discussion of value theory and surplus-value extraction, along with a final solution to the transformation problem, but Brenner's an historian who is trying to explain a concrete series of events and so introduces only those theories that are necessary to his exposition. >In my, admittedly superficial, reading of Brenner there are at least prima facie similarities between his account and a simple neo-classical model where profits are driven to zero through competition. < As you say, Brenner's theory of competition (which is like Marx's theory) is very similar to that of the neoclassicals on a superficial level. But we shouldn't reject absolutely everything that the neoclassicals say. The key problem is usually with what they leave out (things like time and relationships between people) rather than with what their theory says: in this context, the neoclassical theory is static, with some shock causing monopoly profits to arise (or allowing competition where none had existed before) -- leading to the automatic and smooth competition away of monopoly profits. I interpret Brenner's description not in terms of some exogenous shock as much as in terms of the uneven development of nation-state-based capitalisms on a world scale. Further, the adjustment process is not smooth or automatic, since capitalists cling to existing fixed capital and try to make it profitable again, so that overproduction persists. Though Brenner doesn't draw out the theoretical differences between himself and the neoclassicals, his treatment of the rate of profit is different. For the NCs, the normal profit rate on fixed capital in real production would simply equal its opportunity cost, which I guess would equal the real interest rate on financial investment, with adjustments for risk, liquidity, and tax differences (which begs the question of how the real interest rate on financial investment is determined). (These "normal" profits are typically seen as _costs_ by the NCs, so that zero-profit equilibrium has normal profits being received.) There's some of that in Brenner, but he also emphasizes the role of the rate of profit as indicating the economy's capacity to generate a surplus product and thus to accumulate capital. The profit rate also helps determine capitalists' expected rate of profit (Keyne's marginal efficiency of capital), determining the incentive to accumulate. Also, Brenner suggests that a low rate of profit makes an economy more vulnerable to shocks, because more firms are on the edge of bankruptcy. (p. 6-7) Brenner's theory is inherently dynamic (and non-equilibrium), unlike the neoclassical theory. (In addition, Brenner's analysis suggests that capital as a whole can receive below-normal profit rates for long periods of time; a situation of zero profits for him would have zero normal profits.) Crucially, Brenner (unlike the NCs) sees class struggle as important determinant of the rate of profit, so that the RoP is not some technically-determined number as in marginal productivity theory: the successful efforts by US, Japanese, and W. German capitalists to tame labor encouraged real wages to fall behind productivity growth, which boosted the profit rate. In theory, a strong labor movement could have stifled the profit rate, but Brenner's evidence and argument suggests that this did not happen in the late 1960s and early 1970s, except to the extent that labor's resistance prevented capitalists for compensating for increased international competition. BTW, I haven't read all of his book (since I can't find my photocopy of the chapters 4 and after), but I would interpret what I've read as saying that the system of unevenly developing nation-state-based capitalism led to the crisis, which in turn sped up the end of the nation-state-based "model," i.e., the spurt of globalization that has characterized the last quarter century. >Ben Fine has an article in the latest Capital and Class detailing this criticism. As I understand it, policy, starting in the late 70's with Volker were meant to re-impose discipline on the working class which had gotten a little uppity in the 60's and 70's. Expectations were rising perhaps.< I haven't read Ben Fine's article. My sub to C & C expired and they never asked me to re-sub, so I never got around to it. The short description you give suggests what the difference is between Fine and Brenner: whereas Fine seems to say that Volckerism was a counterattack against the working class, which had gotten too uppity, Brenner would interpret Volckerism as part of a continuing effort to solve US international competition problems that had arisen in the late 1960s by making the working class pay for efforts to boost profit rates (assuming that the rest of Brenner's book is consistent with the part I've read). I'd have to see both Fine's and Brenner's empirical and theoretical arguments to decide which was right. BTW, I am not Brenner, so I can't defend his views much further than this. I can only defend my own views, which have some similarities to Brenner's on some issues but add a lot on other issues. (For example, in all of his stuff I've read, he doesn't talk about the possibility to global competition may cause global underconsumption problems, something I stress.) Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/Faculty/JDevine/jdevine.html Bombing DESTROYS human rights. US/NATO out of Serbia!
