The monetary and the military: revisiting Kidron’s permanent arms economy

Issue: 171

Joseph Choonara

Marxist political economy has a two-fold interest in the economics of defence.1 On the one hand, Marxism has proposed explanations for the extent and scope of defence spending in contemporary capitalism, drawing on theories of imperialism.2 On the other hand, following the upsurge in military expenditure during the two world wars and the subsequent Cold War, defence spending has been proposed as a factor shaping the broader political economy of capitalism.

One noteworthy instance of the latter is found in the work of the late Michael Kidron, a former editor of this journal. In Kidron’s theory of the permanent arms economy (PAE), first formulated in the early 1960s, arms expenditure was central to explaining the sustained boom experienced by capitalism in the three post-war decades—“les trente glorieuses” (the glorious thirty), as Jean Fourastié dubbed them.3 Kidron’s approach involved an iconoclastic re-examination of Marxist political economy, applying it to a capitalism that had changed, not just since Karl Marx’s day, but since the foundational work on imperialism by a later generation of Marxists, including Lenin, Rosa Luxemburg, Nikolai Bukharin and Leon Trotsky. This was undertaken not primarily out of intellectual curiosity but rather in order to guide far-left political activism in the period.

The PAE theory spawned controversy within Marxist political economy, remaining prominent enough that, as late as 1992, “The Permanent Arms Economy” formed an entire chapter in the second volume of Michael C Howard and John E King’s authoritative History of Marxian Economics.4 A quarter of a century later, Kidron is barely known, even among radical political economists.5 However, a new edition of Kidron’s selected writings places his analysis in the hands of a younger generation.6 In light of this, the current article will present the theory as developed by Kidron, showing its origins within discussions in Trotskyist circles and the originality of his approach. It will set out some of the controversies surrounding the PAE, acknowledging genuine issues with the theory as formulated by Kidron but also contesting his misrepresentation as a theorist of underconsumption by much of the later literature. It will then seek to reformulate the PAE as a theory of waste—or, more accurately, unproductive consumption—and show that this is an approach that can be sustained in the face of the various criticisms of the PAE.


Kidron was one of the outstanding theorists of the Socialist Review Group (SRG), later the International Socialists (IS), which emerged out of a crisis of the British Trotskyist movement in the late 1940s. He occupied this place alongside the founder of the group, his brother-in-law Ygael Gluckstein, better known by the pseudonym Tony Cliff, a Palestinian Jewish Marxist who emigrated to Britain in 1946.7 The IS would emerge as a significant force on the far left in 1968, when, in the course of a year of revolt by students and workers, it grew to about 1,000 members.8 Eventually, in 1977, it renamed itself the Socialist Workers Party (SWP). Prior to 1968, the IS had remained a tiny, loosely organised grouping, notable for its re-examination of orthodox Trotskyist theory.

The first fruit of this process was Cliff’s theory of “bureaucratic state capitalism”. Trotsky had, in the years before his assassination in 1940, insisted that the Soviet Union was a “degenerated workers’ state”, preserving the material legacy of the 1917 workers’ revolution but presided over by an unstable Stalinist bureaucracy.9 Cliff, by contrast, argued that by the late 1920s a fully-fledged counter-revolution had taken place.10 The Stalinist bureaucracy had established itself as a new ruling class. Internally, the Soviet Union functioned like a giant factory, allocating resources using non-market mechanisms, but externally, in the face of inter-imperialist rivalries, it was compelled to build up its military and industrial base. This imposed a similar pattern of exploitation and capital accumulation on the Soviet Union as in the West, forcing it into the mould of a capitalist state, albeit with the absence of a class of private capitalists. Cliff’s analysis was first published in 1948 as a book-length internal bulletin of the Trotskyist Revolutionary Communist Party, which would soon collapse into factionalism. By 1950, Cliff’s supporters were excluded from its main successor, Gerry Healy’s “The Club”.11 Three years later, Kidron, another Jewish Marxist, born in Cape Town in 1930, arrived in Britain. After intense debate with Cliff, Kidron began to collaborate with the SRG.12

This organisational context is important, because the starting point for Kidron was not an abstract interest in political economy, but rather the need to explain the contemporary political situation. Another of Trotsky’s late prognoses was that capitalism had entered its “death agony”, that “in an epoch of decaying capitalism…there can be no discussion of systematic social reforms and the raising of the masses’ living standards”.13 After the war, orthodox Trotskyism continued prophesying the system’s imminent collapse into slump, yet by the time Kidron arrived in Britain it was evident that capitalism was booming.14 One response was to accept that capitalism had overcome the crisis tendencies identified by Marxist political economy. Kidron, by contrast, sought to explain both the boom and its limits by reapplying Marx’s method of analysis to capitalism while recognising the system’s contemporary features.

In formulating the PAE, Kidron drew on and criticised a range of theories that had earlier permeated the left.15 One factor prompting Kidron to take up his pen was an emerging literature on what former US president Dwight D Eisenhower had called the “military-industrial complex”, exemplified in the writings of the investigative journalist Fred J Cook on the “warfare state”.16 Cook claimed the US was committed to constructing and maintaining an industrial system designed to wage total war:

Only the Second World War had relieved the trauma of the Great Depression; only huge military expenditures had brought full employment and real prosperity. Big business interests…had formed a wartime partnership with generals and admirals… Business had never known such a bonanza—nor had the military. Neither would have been human had they wanted to kill the goose that laid the golden egg… Economic self-interest became chained to the maintenance of the military budget at unprecedented levels—a performance that could be justified and maintained only by an ever-present menace.17

Although Cook suggested this explosion of military spending might initially have had the Keynesian effect of boosting employment and prosperity, at least for areas where production was concentrated, he argued that military spending would ultimately become a “drag on the economy”.18 Here, unlike in Kidron’s writing, the system of military spending was viewed as self-perpetuating primarily due to domestic interests rather than inter-imperialist rivalry. Nevertheless, the question of the contradictory effects of arms spending had been posed, even if not yet in the framework of Marxist political economy.

A more obvious influence on Kidron were the writings of the fascinating US Trotskyist, Edward Solomon, who later changed his legal surname to Sard in order to take up a position at the Massachusetts Institute of Technology, then under an administration that imposed antisemitic admissions and hiring policies.19 Sard’s writings on what he called the “permanent war economy” were published under the pseudonyms Walter J Oakes and T N Vance. Like Cliff and Kidron, Sard would eventually break with mainstream Trotskyism on the question of the nature of the Soviet Union; in this regard, Sard followed Max Shachtman, who, as early as 1940, identified Russia as a new form of “bureaucratic collectivism”.20 The phrase “permanent war economy” would sporadically appear in the documents of Shachtman’s Workers’ Party from 1941, although Sard soon became distant from the organisation.21

By 1944, a more developed version of the theory had taken shape. Sard rooted the economic transformation in the context of inter-imperialist rivalry, in particular “preparations…for World War III”.22 The war economy was, for Sard, characterised by the legitimation, even in peacetime, of significant expenditure directed towards the goal of waging war. Arms spending would, as Kidron later argued, be replicated globally by other ruling classes. Though articulated somewhat vaguely, the economic implication was that the correct level of state expenditure could act as an outlet for accumulated unpaid labour (“surplus labour” in Marxist terms), which, if otherwise allowed to spill into the economy, would result in “economic disequilibrium”.23 Although in principle this could be accomplished by programmes such as the New Deal, such spending incurred the wrath of capitalists in a way that arms expenditure might not. The impact of arms spending would be to move the US towards the goal of full employment without encroaching on capitalist interests. Any problems associated with this “type of consumption (waste) of surplus labour…appear to be solvable and, in any case, can be postponed. The deluge may come, but the next generation…will have to face it”.24

The precise conception of crisis set out in this version of the argument is unclear. Sard mentions the “law of the tendency of the rate of profit to fall”, which often informs Marxist theories of crisis.25 However, his focus is on the results of this crisis tendency: polarisation between classes and rising unemployment, which the permanent war economy might, in the short term, ameliorate. In the 1944 iteration of the theory, there is an ambiguity as to whether the mechanism is genuinely Marxist or just a variant of a Keynesian approach in which the state stimulates consumption, driving up effective demand and ensuring that the economy equilibrates at high levels of employment. As we will see, Kidron’s approach is not entirely free of this ambiguity.

Sard considered the forms of production involved here as “unproductive”.26 In Marxist terms, unproductive implies an absence of the production of surplus value, which results from surplus labour and forms the basis for profits. The question of whether arms production is actually unproductive plagued subsequent Marxist analyses, including Kidron’s. Sard also suggested that, because of the unproductive nature of these expenditures, high employment would come at the price of declining living standards. This contrasts with Kidron’s view in his PAE, which envisaged, at least initially, rising living standards—and Sard himself struggled to reconcile his position with the improved situation for many US workers by the late 1950s.27

A later article, published under the pseudonym Vance in 1951—which somewhat confusingly cites Oakes in the third person, not always uncritically—further develops the analysis.28 This estimates direct and indirect US “war outlays”, the latter including payments to veterans and overseas military aid, at a little over 10 percent of output for 1949, projecting them rising to over 20 percent over the next four years.29 While the basic dynamic of the permanent war economy is carried over from Sard’s earlier work, there are significant modifications. For instance, he now writes, “We do not entirely share Oakes’ conclusion concerning the slowing up of the rate of class polarisation”, although he continues to emphasise the impact of the permanent war economy in reducing unemployment.30 There is now also greater emphasis on high levels of accumulation of capital, resulting in sustained high levels of production:

There is a permanent growth in the state bureaucracy, with the state, in effect, guaranteeing the profits of the bourgeoisie. Both profits and production remain at very high levels, as does employment. In this connection Oakes made his most serious mistake, as he apparently did not fully take into account the implications of his own theory and therefore understated future levels of both production and employment.31

The political implications include struggles over the cost of living, largely taking the form of battles over the impact of inflation, which was now built into the economy due to continuous rapid accumulation. US imperialism would increasingly extend military aid overseas in its efforts to contain the Soviet Union. Finally, the capitalist class would increasingly penetrate the state bureaucracy, even as the state presented itself as an independent arbiter between capitalists and workers.

Another pertinent feature of the Vance article, given that the permanent war economy has sometimes been dismissed as “Keynesianism”, is its discussion of John Maynard Keynes.32 Sard, like many other Marxists, identifies the limits to Keynes in “his complete inability to understand the origin and nature of profits”:

Why “effective demand” periodically is “deficient” requires an insight into the inner workings of capitalism impossible to attain without such basic Marxian tools as the labour theory of value, the laws of capital accumulation and the falling average rate of profit.33

Here we get a version of Sard much more in tune with Marxist theories of crisis focused on the movements of profitability. Sard’s calculations suggest that profit rates were sustained at high levels in the period from the Second World War until 1950, and this is why the permanent war economy had been a “lifesaver…to the bourgeoisie”.34 The pattern is clearer when profits are extended to encompass all forms of surplus value because “the capitalist who obtains profit must pay substantial tribute to the more parasitic members of the capitalist class who collect interest, rent, royalties and absurdly large salaries”.35 Sard argues:

(1) The permanent war economy not only succeeded in restoring the profitability of US capitalism, but actually managed to increase the average rate of profit until 1944. Thus, there is a definite correlation between the ratio of war outlays to total output and the average rate of profit… (2) The Marxian law of the falling average rate of profit reasserts itself following the end of the Second World War, although it is significant that the maintenance of a 10 percent ratio of war outlays to total output is sufficient, in the short run at any rate, to maintain the average rate of profit at a higher level than existed in 1939 or even in 1940.36

The capacity of military spending to sustain profitability without annulling the laws of motion of capitalism features in Kidron’s PAE. However, the mechanism in Sard seems to be the capacity of war outlays to reduce the organic composition of capital (in Marxist terms, the ratio of the value of constant capital mobilised to variable capital):

The decline in the organic composition of capital during the war years is not surprising in view of the huge increase in the ratio of war outlays to total output. It can be directly traced to the decline in the productivity of labour that takes place in wartime, the physical necessity of increasing output through abnormal reliance on manpower, the drastic decline in net private capital formation and the vicissitudes of the class struggle that placed the proletariat in a position to accomplish a slight reduction in the rate of surplus value.37

In order to avoid a rising organic composition reasserting itself, increasingly vast outlays of military spending are required; indeed, this is depicted as the only path open to US capitalism until the outbreak of World War III, which Sard, in both 1944 and 1951, treats as an inevitability.

Sard’s work, though unacknowledged at the time, appears to have influenced Kidron’s co-thinker Cliff, who penned an article entitled “Perspectives for the Permanent War Economy” in 1957.38 This brief article differs from Kidron’s work by advancing a clearly underconsumptionist conception of crisis and appealing to a Keynesian multiplier effect to explain the role of arms spending.39 However, unlike Sard, Cliff emphasises the role of this arms spending in allowing a sustained period of rising living standards among workers.

In a similar, but more developed, vein to Cliff’s article is the work of authors associated with the US periodical Monthly Review. Paul Sweezy and Paul Baran, in particular, could emphasise a Keynesian-inflected reading of arms spending, which fitted well with their attempt to construct a specifically underconsumptionist version of Marxist crisis theory.40 Indeed, Ernest Haberkern has explicitly claimed Sard as a precursor to the Monthly Review approach, rather unfairly dubbing Sard a theorist of “military Keynesianism”.41 The label fits better for Sweezy, whose work would increasingly emphasise the capacity of monopolies to distort Marx’s law of value, setting monopoly prices and attracting super-profits, which they would struggle to dispose of due to a reluctance to invest in their own industry in order to reduce prices.42 This culminates in a theory of “monopoly capitalism”, defining “surplus” as simply the gap between output and production costs.43 As David Harvey remarks, this “abandonment of the ‘competitive model’ in Marx certainly does entail abandoning the law of value—which, to their credit, Baran and Sweezy are fully prepared to do”.44

In this approach, the emphasis is on rising surplus and the problems of surplus “absorption”. The limited capacity for either investment or consumption of surplus necessitates vast fields of “waste” production. Military spending is, for Sweezy and Baran, necessitated by imperialism, with US spending reflecting its leading role in this system as it emerged from the Second World War.45 However, the resulting colossal military apparatus helps prevent the system slipping into stagnation, providing an outlet—via the state—for some surpluses.46 Though there might be political limits to military spending, the most important economic limit is the increasingly technological character of war, which limits its effectiveness in achieving full employment.47

Kidron’s theory

Kidron’s achievement is to integrate the insights offered by Sard with the efforts to comprehend the nature of post-war capitalism by Sweezy, Baran, Cliff and others on the basis of a thoroughgoing application of the Marxist law of value.

That Kidron’s PAE was motivated by an effort to map out a political course for socialists was clear from the context in which he first formulated many of the central ideas. Although the PAE is best known through a series of texts published from the late 1960s, many of the essentials were in place earlier, specifically in his “Rejoinder to Left Reformism”.48 The context was a debate on reformism from 1961-2 in the pages of this journal, whose editorial board at that time included people beyond the SRG/IS tradition. One such person was Henry Collins, whose resignation from the journal board prompted Kidron, on behalf of the editors, to ask Collins for an article defending his left-reformist approach.49 This unsurprisingly generated replies: first a rather timeless rebuttal from the now well-known philosopher, then SRG member, Alasdair MacIntyre, and later, given the perceived inadequacies of MacIntyre’s rejoinder, from Kidron himself.50

The political function of Kidron’s elaboration of the PAE was to challenge a specific argument presented by Collins but common on the reformist left. This was that state planning had created the conditions for full employment and improving living standards, and socialists should simply push for this planning to have a socialist colouration. Kidron makes a number of points in response, but central to his argument is the PAE as an explanation for the unprecedented boom of Western capitalism.

Kidron first presents the idea that crisis is intrinsic to capitalism because of its essential laws of motion. Class divisions mean that resources derived from production are not channelled towards meeting current and future needs, but towards profit-making; competition between capitalists mean that they must re-invest their profits in a process of uncoordinated accumulation. This leads both to what Kidron calls “periodic crises of overproduction” and the “long-term decline in the rate of profit which…presaged for Marx a future of increasingly catastrophic slumps”.51 Overproduction can be seen as the flipside of underconsumptionism; otherwise, one might ask, overproduction relative to what? However, Kidron seems to identify overproduction with periodic breakdowns of the circuit of capital, rather than seeing overproduction or underconsumption as continuous structural features of late capitalism in the manner of the Monthly Review school. The underlying structural factor is the law of the tendency of the rate of profit to fall (henceforth, LTRPF), which operates as a long-term secular trend.52 Moreover, he immediately contrasts a “reformist” conception, in which planning constantly expands markets, limiting the tendency for underconsumption, with a mechanism in which capitalism destroys some of its “accumulating productive capacity”.53 The main problems with Kidron’s discussion of crisis are, first, his failure to fully integrate the long and short-term drivers of crisis; second, an implicit suggestion that overproduction is simply relative to consumer demand, neglecting the role of capitalist investment as a driver of demand.

How does the PAE affect the drives towards crisis identified by Kidron? He acknowledges that the phase of capitalist development following the war involved a far greater degree of state involvement in the economy. However, a central element in this, and the most important factor in explaining the relative stability of capitalist growth, was military expenditure: “Since about 1950, something like half of the investable surplus in Britain…has been diverted through taxation from productive accumulation to the military budget”.54 Kidron then offers three ways in which this ameliorates crisis tendencies. First, it reduces the problems of “overinvestment” and “overproduction”. Kidron is here referring to both the frenzy of accumulation that leads to periodic gluts and the LTRPF. Second, Kidron responds to Collins’s approach to crisis, which introduced into the discussion a “disproportionality” theory of crisis alongside the LTRPF.55 Here the argument made by Collins is that a factor causing crises is imbalances between the rate of growth of the sectors of the economy producing means of production and those producing consumer goods. Although Kidron does not sufficiently elaborate the point, he claims the PAE reduces disproportionalities between the sectors of the economy producing means of consumption and means of production, allowing a “looser form of planning”.56 What Kidron may have in mind here is that weapons production, which rests heavily on the capital goods-creating department, can grow or shrink, giving greater flexibility to capitalism. Third, the employment of workers in the military sector means, for Kidron, that the demand for labour power is high, leading to rising living standards (within the limits of continuing high profitability). This effect would diminish over time unless arms production grew to an unrealistic degree as a share of the economy, outpacing the decline in the cost of constant capital and the growth of the labour force.57

Kidron definitely could have offered more explanation of the relative weight and interrelation of these various factors—although that was hardly the main function of the article. Nevertheless, it seems clear that the first factor is the central one. This emerges sharply in his discussion of the tensions in the PAE:

The boom is on. Rather than being a product of planning, it is a natural outcome of the creation of war market from the ruins of productive investment. True, individual capitalists mutter darkly about taxation and inflation. If only the “burden of defence” were less, they might be able to exploit the boom by investing, selling and expanding more. True too that the capitalist class in one country might find the burden debilitating in international competition, and might even take steps—as the British bourgeoisie has done since 1953 under pressure of foreign, particularly German, competition in traditional markets—to reduce it. But whether they like it or not, an end to “defence” would mean an end to the boom and—to anticipate—of the capitalist system.58

Leaving to one side the hyperbole in the final clause, we have a vision of the PAE as a mechanism sustaining the boom by reducing the rate of accumulation, slowing the decline in profitability and diminishing the possibility of overproduction. Note that there is no reason to assume rising profit rates, as Sard had suggested; the point is merely that they declined relatively slowly through the period. The competitive dynamic of capitalism resurfaces at the international level, with states such as Germany and Japan, denied any opportunity to engage in large-scale arms expenditure at the end of the Second World War, benefiting from the generalised boom of the system, which sustained export markets, without themselves experiencing the burden of arms spending. This too is an important feature of all later iterations of the theory. It also fitted together with another element of the SRG/IS tradition, which saw competition increasingly projected to the international level, where various state-capitalist blocs would vie with one another. The Soviet Union was a pure bureaucratic state capitalism, but the same tendency existed elsewhere too.59

After this 1961 article, there were several restatements of the theory by Kidron. Here I summarise some of his important additions, qualifications and modifications. Kidron’s later self-reflective critique of the PAE is considered in a subsequent section.

“A Permanent Arms Economy” (1967)

This article, reproduced as chapter three of Western Capitalism since the War, introduces itself by arguing for an exogenous mechanism ensuring the stability of capitalism.60 It retains the idea of arms purchases draining resources that could have been used to expand capital, helping to explain near full employment and a diminishing rate of accumulation, thus abating the crisis tendencies of capitalism.

There is again an ambiguity in Kidron’s formulation, because, in the opening sections, he emphasises the “permanent threat of overproduction” faced by capitalism (but not, he writes, a threat of “permanent overproduction”, distancing himself from the Monthly Review approach). This carry-over from his earlier work is especially unfortunate, as the central factor discussed in the body of the article now appears more clearly as the LTRPF.61 Indeed, there is now a new element of this analysis of profitability: “Since arms are a luxury in a sense that they are used neither as instruments of production nor as a means of subsistence, in the production of other commodities, their production has no effect on profit rates overall”.62

Here the argument becomes complex. First, Kidron presents the implications of rapid expansion of “productive expenditure”: “it would lead to such a rapid build-up of the capital:labour (value) ratio, Marx’s organic composition of capital, and such a low average rate of profit as a consequence that even the most marginal rise in real wages would precipitate bankruptcy and slump”.63 He adds:

Marx’s argument rested on two assumptions, both realistic: first, that all output flows back into the system as productive inputs through either workers’ or capitalists’ productive consumption…second, that in a closed system like this the allocation would swing progressively in favour of investment.64

The first assumption, Kidron argues, no longer holds. There are leaks from the circuit of capital. In searching for intellectual resources, Kidron here turns to two writers: Ladislaus von Bortkiewicz and Pierro Sraffa.65 What appealed was their analysis of “Department III”, a sector of the economy producing neither means of production (Department I) nor means of consumption (Department II), but luxury goods consumed by the capitalist class. Kidron refers to this as “non-productive Department III”. “Von Bortkiewicz proved…that the organic composition of capital in luxury goods production…had no part in determining the rate of profit”.66 Sraffa, Kidron argues, generalised this argument, showing that it applies to all products that are used neither as means of production nor means of consumption. Kidron concludes, “Seen from this angle…arms production is the key…offset to the tendency of the rate of profit to fall”.67 Kidron’s reliance on these theorists is discussed below.

“Maginot Marxism: Mandel’s Economics” (1969)

In the context of a polemic against Ernest Mandel, a leading economist among mainstream Trotskyists, Kidron offers an additional refinement. Here the mechanism specified is again linked to the LTRPF, but it is expressed in different terms:

If “labour-intensive” goods were systematically drawn off, the overall organic composition of capital would rise faster than in a closed system. However, if “capital-intensive” goods were drawn off, the rise would be slower and…could even stop or be reversed. In such a case there would be no decline in the average rate of profit.68

Again, whether this is necessary to sustain the concept of the PAE is examined below. A subsequent 1971 article essentially repeats the points elaborated here and above, and is not considered separately.69


Kidron’s PAE has never been universally popular among Marxists. Early critiques were penned by Trotskyist authors such as Mandel, as well as by other left-wing economists within the pages of the Bulletin of the Conference of Socialist Economics and its successor, Capital & Class. These publications were major forums for discussions of value theory, reflecting the renewed interest in Marxist political economy in this period “pioneered by writers like Baran and Sweezy, Mandel and Kidron”.70 However, Kidron does not seem to have been particularly engaged in the most exacting, and at times arguably esoteric, discussions of value theory in the 1970s, becoming an easy target for those more focused on methodological rigour. Kidron acerbically writes of the “censorious chalking of blackboards from new entrants into academia via the Communist Party”, adding that the PAE was accused of being “empirically wrong, theoretically heterodox and loose in logic”.71 The debates of the 1970s established four main lines of attack, considered below.

Kidron as an underconsumptionist?

The first line of attack is that Kidron is, in effect, an underconsumptionist, or even Keynesian, thinker, who can be bundled together with the Monthly Review tradition of Sweezy and Baran. Few of the critics making this accusation seem aware that Kidron’s initial impetus in developing the PAE was to criticise the Keynesian conception of capitalism expressed in the debate on left reformism. Most focus on Kidron’s Western Capitalism since the War, where the opening lines of chapter three contain Kidron’s formulation regarding the “permanent threat of overproduction”.

Kidron is in fact condemned as an underconsumptionist from two contradictory perspectives. David Yaffe was among the first to take aim at Kidron’s perceived softness towards underconsumptionism.72 Yaffe accepts many of the premises of Marxist political economy but rejects Kidron’s mechanism for the PAE. For Yaffe, the draining of surplus value away from productive capital in fact accelerates the falling rate of profit by building up what he calls “total social capital”, resulting in stagnation.73 However, contrary to Yaffe’s approach, it is perfectly reasonable to envisage a capitalism in which a greater mass of unproductive expenditure co-exists with productive capital that receives a high, if declining, rate of profit. In addition, there is nothing in the PAE excluding eventual stagnation. Nonetheless, for Yaffe, the failure of Kidron to specify correctly the mechanism through which the PAE operates left him a Keynesian by default, reliant on a mechanism in which the state boosts demand through military expenditure.

David Purdy, by contrast, dismisses Yaffe’s work as a “fundamentalist” criticism of the PAE.74 This is partially because Purdy is, unlike Yaffe, sympathetic to the approaches of Bortkiewicz and Sraffa. However, Purdy’s main objection is that Kidron is over-reliant on the LTRPF and that, in reality, no such tendency exists.75 Howard and King put forward a similar criticism, defending Kidron’s use of Bortkiewicz and Sraffa but criticising the LTRPF.76 In their view, the movement of the organic composition of capital is indeterminate, and so too is profitability. This, again, leaves Kidron a Keynesian by default.77 Whether this criticism is compelling will depend on how strongly one adheres to the LTRPF as an explanation of crisis.78

For Kidron, it seems, there is no escape from the taint of underconsumptionism. Unfortunately, Purdy’s article has often been taken as the final word on the subject. For instance, Purdy is cited in articles by Ron Smith and John Weeks.79 Smith challenges both Keynesian approaches and approaches that focus on LTRPF, simply conflating the two as underconsumptionist.80 Although Kidron is mentioned, the distinctive ideas in the PAE are never actually explored, and he is unceremoniously lumped together with Mandel, and Sweezy and Baran, ignoring the real tensions between them. Several articles by Paul Dunne cite and restate Smith’s position.81 In later works, Dunne, with various collaborators, does distinguish between underconsumptionist approaches and Kidron’s mechanism, though without actually engaging with Kidron’s argument.82 Similarly Weeks mentions Kidron in passing at the start of his article but aims his fire on purely underconsumptionist theories, advancing his own version of LTRPF.83

Adem Elveren and Sara Hsu, in two otherwise interesting discussions of the relationship between military expenditure and profit rates, present Kidron as simply “reframing” Baran and Sweezy’s theory, again with no discussion of his distinctive ideas.84 In particular, Elveren’s 2019 book, supposedly a Marxist perspective on The Economics of Military Spending, is astonishing for its pseudo-engagement with Kidron. Even while noting in passing the impact that the PAE was seen as having on profit rates, Elveren repeatedly characterises Kidron as an underconsumptionist or as someone who simply revised Sweezy and Baran.85 George Georgiou’s survey of approaches to the political economy of military expenditure makes only a minimal attempt to explicate Kidron’s approach.86 Nonetheless, he fails to situate this in the context of Kidron’s discussion of the LTRPF and thus claims a unity between Kidron’s approach and the underconsumptionist approach of Sweezy and Baran: “One is merely a corollary of the other”.87 This is in contrast to the wide-ranging discussion of socialist approaches to militarism by Donald MacKenzie, published in the same issue of Capital & Class, which identifies the slowing of the LTRPF due to the “siphoning off of surplus value” as “the distinctive contribution of Kidron”.88

A lack of empirical underpinnings?

Kidron has also been challenged on an empirical basis. Smith focuses his empirical argument against the PAE on demonstrating the failure of arms spending to raise aggregate demand, boost employment or stabilise economic growth.89 However, this is only an adequate test of Kidron’s theory if PAE is conflated with underconsumptionist theories, which, as we have seen, is precisely what Smith does. Moreover, there is no empirical consideration of the relationship between arms spending and profitability offered here. Indeed, by Smith’s admission, his own empirical analysis rests on “Keynesian rather than Marxist categories”.90 Similar issues apply to the critiques noted by Fanny Coulomb and Renaud Bellais.91 Moreover, the empirical test of the PAE cannot simply rest on the correlation between economic expansion and arms expenditure in a particular country because, as Kidron argues, countries with strong exports that do not engage in arms expenditure might well benefit from the PAE.

There have also been claims that the PAE, a theory developed to explain the long post-war boom, could not come to terms with the resumption of crises in the 1970s. Georgiou asks how one can reconcile Kidron’s thesis “with the fact that we are now in a period of crisis”, despite continued high levels of arms spending.92 Without intervening on the debate about the validity of the PAE, MacKenzie, by contrast, advocates a position in which arms spending can have either a beneficial or detrimental effect in different historical phases.93 This approach is perfectly compatible with Kidron’s PAE; as noted above, the process of slowing accumulation can, in the long-run, promote stagnation as well as prolonging expansion. MacKenzie is, though, right when he argues that the extent to which theories such as the PAE had fallen from favour by the early 1980s reflected not so much empirical or theoretical refutation as the re-emergence of crisis: “We now face not boom plus arms spending but rather recession plus arms spending”.94 Interestingly, Elveren and Hsu, exploring the empirical effects of military spending across the major economies, find a positive effect of arms spending on profitability prior to the 1980s, after which the effect no longer applies. Although they explain this in terms of aggregate demand, these findings could be taken as confirmation of Kidron’s approach once the PAE is understood as prolonging expansion before giving way to stagnation.95

An economistic perspective?

Another challenge to Kidron has been that he locates arms spending in an economic rather than political context, seeing it as a method of crisis alleviation rather than a factor necessitated by inter-imperialist rivalry. This is central to Smith’s criticisms of underconsumptionist approaches, to which he assimilates Kidron.96 So too with Georgiou, for whom Kidron neglects the historical specificity of the arms race and “is concerned with the economic function of military expenditure within an unchanging capitalist economy”.97 To anyone acquainted with Kidron’s writings, these claims are absurd. Kidron’s whole approach is founded on the notion that capitalism had been transformed, not just since Marx’s day but also since the classical period of imperialism prior to the First World War.98 Moreover, the element of the classical theory of imperialism that Kidron retains is precisely that of inter-imperialist rivalry necessitating high levels of military spending.99

A more subtle version of this objection occurs in MacKenzie, who, in the course of presenting his own approach to the emergent culture of militarism within capitalism, suggests that Kidron falls short in not explaining how this pressure can work between allies, as opposed to enemies.100 It is true that there were different levels of arms spending in the context of the Cold War. However, as noted above, particular economies could benefit from arms spending elsewhere in the system, as was the case for Germany and Japan. Moreover, high levels of arms spending might be necessitated precisely by being part of an alliance. Hence the well-known debates within NATO about countries such as Britain and France maintaining high levels of military spending.

A lack of theoretical rigour?

For Trotskyists of a more orthodox persuasion than Kidron, Mandel, who devotes a chapter of his Late Capitalism to “The permanent arms economy and late capitalism”, is a key point of reference.101 Mandel identifies three ways in which arms expenditure might alleviate the crisis tendencies of capitalism. The first involves overcoming the disproportionalities between Departments I and II. Through the construction of a series of “reproduction schemes”—formulae linking the various departments—Mandel concludes that this would only be the case if wages were sustained and surplus value drained off from other capitalists for arms production. He rules this out as contrary to the logic of capital, although it is not entirely clear why enforced military competition between states at the expense of the short-term profits of capitalist enterprises is outside this logic. Indeed, the theory of imperialism can be taken as an expression of the competitive dynamic of capitalism translated into the international field where it intersects with geopolitical rivalries.102

The second mechanism Mandel discusses is the one identified by Kidron, that of ameliorating the LTRPF. Here he identifies a genuinely problematic aspect of Kidron’s position, namely his stress on the inability of a rising organic composition of capital in Department III to affect overall profitability. Mandel criticises Kidron’s reliance on Bortkiewicz and Sraffa in making this argument. This criticism has been repeated by others. James Cypher acerbically notes: “Kidron’s proof of this is ex cathedra—and his bishop is a strange one—Piero Sraffa”.103 Yaffe similarly rejects Kidron’s use of these theorists; like Mandel, he sees them as returning to a Ricardian (or neo-Ricardian) approach, which replaces Marx’s concept of “value” with that of “labour time” inputs.104 There have been a number of devastating critiques of neo-Ricardianism from a range of Marxist positions, the details of which will not be rehearsed here.105 One particularly relevant issue is that the systems of simultaneous equations mobilised by neo-Ricardian theorists tend to assume, unrealistically, an economy in equilibrium, in which, for instance, inputs into a cycle of production are valued at the same level as outputs from the same cycle.106 This is untenable in a real capitalist economy and must be rejected in favour of a “temporal” analysis.107 Indeed, Chris Harman, the most prominent political economist in the tradition inaugurated by Kidron, was avowedly a “temporalist”.108 Fortunately, as discussed below, Kidron’s neo-Ricardian argument need not be central to the PAE.

In his own analysis, Mandel rejects the first and second mechanisms for the PAE alleviating crisis in favour of a third—finding an outlet for “surplus capital which can no longer be invested productively”.109 This actually positions Mandel, despite his far more orthodox use of value theory, much closer than Kidron to the Monthly Review school with its stress on the “disposal of surplus” problem.110


One of the most cutting critiques of the PAE came from Kidron himself.111 In 1977, Kidron contributed to the 100th issue of the first series of this journal, which he had once edited. As with all of Kidron’s writings, this was an attempt to identify, with customary boldness, emergent features of the capitalist system. To the fore was the notion of global capitalism as a series of interlocking and competing state capitalisms in both the East and the West. Under these conditions, writes Kidron, “The state presides over the fortunes of a single national capital”.112 Functions such as the reproduction of labour power, formerly private activities undertaken mainly in the household, supported by unproductive state functions, were now being fully integrated into the activities of state capitalisms. Kidron drew some pessimistic conclusions. Unions were now largely integrated into capital and labour struggles merely preserved the privilege of a minority of skilled workers. Here, though, I focus solely on the theoretical and empirical issues that arise from Kidron’s reformulations.

First, the notion of a fully-consummated state capitalist system led Kidron to argue that the idea of “productive” expenditure had to be rethought:

In…a system of private capital the tendency is for productive spending or accumulation to be undertaken by capitals, and waste….spending to be undertaken by the non-capitalist society, either directly or through the state… In considering such a system, it makes sense to segregate the two sectors: a productive capitalist sector and a non-productive…non-capitalist sector.113

If this is no longer the case, and “non-productive expenditure essential to the system has to be borne by capitals directly”, there can be no “leaks” from the system.114 Waste spending could simply be treated as constant capital, leading to a rapidly declining rate of profit, an argument not entirely dissimilar to Yaffe’s. A central theoretical issue here arises from a mistaken conception of productive expenditure developed in Kidron’s earlier work. Kidron claims there are “two criteria of productiveness” that Marx “used interchangeably—employment by capital and augmenting capital”.115 In fact, despite various shifts in his formulations and emphases, Marx tends, in his most systematic writings, to argue that productive labour is characterised by “valorisation”, a process in which surplus value is generated for capital through the exploitation of labour.116 This is typical of labour carried out under conditions of capitalist employment to produce commodities, whether material goods or immaterial services, which are sold for profit. Productive capitalists, who employ this labour, are productive according to a capitalist, rather than normative, criterion.

At first glance, it appears that Kidron is saying that the accumulation of capital through the consumption of surplus value can also make expenditure productive. In fact, there is a subtle distinction. For Kidron, as capitalism aged it made more sense to claim that “productive labour…must be defined as labour whose final output is or can be an input into further production”, in other words producing a commodity that could be consumed productively.117 By this criterion, the labour of workers in the arms-producing industries is seen as unproductive regardless of whether it yields surplus value for the arms producing capitalist, and regardless of whether arms-producing capitalists engage in accumulation. Marx would certainly reject this approach, writing, for instance, “The producer of tobacco is productive, although the consumption of tobacco is unproductive. Production for unproductive consumption is quite as productive as that for productive consumption”.118 Aside from the question of fidelity to Marx, by blurring the distinction between labour that does not create surplus value, processes that do not augment capital, and the production of Department III goods, Kidron is introducing considerable conceptual confusion into attempts to understand the working of capitalism.

Moreover, Kidron’s association of unproductive labour with “non-capitalist society” is alien to Marx’s political economy. Marx discusses myriad forms of capitalist activity that do not generate surplus value: bookkeeping, the activities of buying and selling undertaken by merchants, the disciplining of workers by managers, and so on.119 These fields of activity are nonetheless an intrinsic part of the capitalist system, not some non-capitalist sphere developing in parallel with it.

A second issue with Kidron’s article is its one-sided conception of state capitalism. Even at the time of publication, there was considerable unevenness regarding the extent to which private capital and the state were fused together. Given what, with benefit of hindsight, we now know—that capitalism was about to enter a period characterised by cross-border flows of goods and capital; the pure state capitalisms of the East would go into crisis or, in the case of China, increasingly integrate into circuits of global capitalism; neoliberal policies would soon be the order of the day—it is clear that Kidron’s judgement was awry. Not only had the stabilising effect of the PAE begun to transform into a drain on states undertaking arms spending, but this coincided with a breakdown of the state capitalist model in its purer forms.120

Kidron’s 1977 article was met by a rebuttal from Chris Harman, who was soon to become the IS’s most prominent political economist and defender of the PAE.121 Harman’s criticisms parallel those noted above, and he would further develop his approach in a series of articles written in the early 1980s, forming the basis for his Explaining the Crisis. Far more clearly than in Kidron’s work, this book places the LTRPF at the centre of its account of crisis, helping Harman disentangle the PAE from the underconsumptionist formulations that did sometimes appear in the work of Kidron.122 In his effort to establish clearer foundations for the PAE, Harman cites a passage from Marx in Grundrisse, one of the early manuscripts for what became Capital, which helpfully suggests a category of “unproductive consumption”.123 In the context of a discussion of the tendencies driving capitalism into crises, which in turn pave the way for a resumption of capitalist expansion, Marx writes: “There are moments in the developed movement of capital that delay this movement other than by crises”.124 One of these is the “unproductive waste of a great portion of capital”. Marx adds, slightly gnomically: “The unproductive consumption of capital replaces it on one side, annihilates it on the other.” By the time Harman wrote his final book, Zombie Capitalism, whose emphasis is on the crisis of 2008-9 rather than those of the 1970s or early 1980s, he would present an even more succinct version of the PAE in his discussion of the post-war boom:

The military consumed an enormous quantity of investible surplus value that would otherwise have gone into the productive economy… Arms expenditure…might be a deduction from profits in the short term, but in the long term it had the impact of reducing the funds available for further accumulation and so slowed the rise in the ratio of investment to the employed labour force.125

What’s left of the PAE?

As this suggests, detours into Sraffian economics and intricate discussion of the precise relation between “Department III” and the rate of profit are unnecessary in defending Kidron’s core thesis. It is also unnecessary to agree with Kidron’s dubious claim that arms production is “unproductive”. Instead, the focus ought to be on the PAE as a theory of waste or unproductive consumption that helps make sense of a period of capitalist development. By way of conclusion, I will elaborate the mechanism of the PAE from this perspective.

The easiest way to conceptualise the effect of arms expenditure is through a simple thought experiment. Although the state system is central to the theory, for illustrative purposes the mediating role of the state in taxing capital and purchasing armaments can be ignored. Instead, it is posited that capitalists themselves are compelled to purchase arms from arms-producing capitalists. Other deductions from surplus value, such as interest payments, are ignored and it is assumed all capitalists are productive.

Without this compulsion to buy arms, capitalists could reinvest all their surplus value from the first round of production. As a new round of production begins, the value of the expanded capital would be consumed, its value, along with the newly produced surplus value, re-emerging in the products of this new round. With the repetition of this pattern, tendentially, surplus value would be increasingly channelled into constant capital, in line with Marx’s LTRPF, ultimately undermining profitability.

Contrast this to the situation when the compulsion to buy arms is introduced. Now the upper limit of investable surplus value is reduced. Some of the surplus value from the first round is instead spent on arms. The capitalists never recoup this portion of their surplus value because weapons are not consumed productively. Of course, value is instead realised among arms-producing capitalists after the first round. If the arms only contained surplus value, and this was immediately reinvested by the arms-producing capitalists, the situation would be little different to that described above. However, this is not the case; the arms contain both the value of capital consumed in their production and surplus value. Overall, therefore, the total investable surplus value available to the capitalist class as a whole must fall. The capacity to accumulate is reduced and the LTRPF retarded.

Table 1: Military expenditure as percentage of GDP, selected countries

(.. = unknown, * = estimated)126









United States








































Source: SPIRI data

In principle any form of waste expenditure might play this role, and in his final writings Harman was keen to integrate the PAE into a broader theory of waste.127 As we have seen, Kidron, reasonably for the period he was exploring, emphasises the enforced nature of military spending in the context of inter-imperialist rivalry. Although in absolute terms arms spending remains high today, in relative terms it represents a less important factor in the global economy (see table 1). Furthermore, in conditions far from the boom of the immediate post-war decades, the role of arms spending as a dead weight on the economy, rather than as its stabiliser, is more apparent. The epoch of the PAE is over and—short of a new boom and a new Cold War—is unlikely to return. In spite of this, re-reading Kidron’s insights, whatever the strengths and weaknesses of his exposition of the PAE theory, still provides a crucial ingredient for understanding that historical period along with insights into what a creative Marxist political economy can offer.

Joseph Choonara is the editor of International Socialism. He is the author of A Reader’s Guide to Marx’s Capital (Bookmarks, 2017) and Unravelling Capitalism: A Guide to Marxist Political Economy (2nd edition: Bookmarks, 2017).


1 Thanks to Alex Callinicos, John Rudge and Ian Birchall for comments on earlier drafts of this article.

2 Brewer, 1990; Callinicos, 2009.

3 Fourastié, 1979.

4 Howard and King, 1992, pp149-164.

5 Outside of Marxist political economy, Kidron is today better known as a cartographer and the author, alongside Ronald Segal, of The State of the World Atlas (Pluto, 1981).

6 Kidron, 2018a.

7 Kidron was the brother of Cliff’s partner, Chanie Rosenberg, a significant and formidable socialist in her own right, who sadly died just before this issue of International Socialism went to press. See Gluckstein, 2021.

8 Birchall, 2011, p299.

9 Trotsky, 1964, p47; Birchall, 2011, pp88-89.

10 Cliff, 2003a.

11 Birchall, 2011, pp128-134.

12 Kuper, 2018, p2.

13 Trotsky, 1964, p9.

14 Birchall, 2011, pp95-97.

15 Kidron’s work in this period was intensely political, demonstrating little deference for current academic niceties, so it is often unclear where Kidron is drawing on other authors or on ideas widely discussed on the left.

16 Kuper and Palmer, 2020.

17 Cook, 1964, p104.

18 Cook, 1964, p107.

19 Van der Linden, 2018, p121.

20 Shachtman, 1947.

21 Van der Linden, 2018, pp122-123.

22 Oakes, 1944, p11.

23 Oakes, 1944, p12.

24 Oakes, 1944, p13. A digression into the basic propositions of Marxist value theory may at this point be required for those unfamiliar with it. Only a brief summary is offered, with propositions that are controversial even within Marxist political economy neither justified nor developed. For accessible introductions, see Fine and Saad-Filho, 2016, and Choonara, 2017.
(1) The source of new value in capitalist production is the expenditure of living labour by workers hired by capital. Value is abstract labour, crystallised in commodities. Here abstract implies labour stripped of its specific, concrete qualities.
(2) Production of commodities brings together living labour with dead labour, non-human means of production (for example, raw materials, plant and equipment) that are themselves products of past labour.
(3) The total value contained in a commodity is given by total amount of labour time required in its production. This is socially necessary labour time, using typical production methods and intensity of labour. The total value of the commodity will reflect both the expenditure of living labour and the consumption of dead labour.
(4) Dead labour represents neither a profit nor a loss to the capitalist who mobilises it. They purchase it at its value and its value passes into the final commodity. Because its value is conserved, Marx calls value advanced in this way constant capital.
(5) Living labour differs in that the value advanced to hire living labour, which Marx calls variable capital, is typically less than the value it can create. For instance, a worker may work for ten hours but it is possible that only, say, five hours are required to generate sufficient value to cover their wage.
(6) Capitalism is thus inherently exploitative. The working day is divided into paid and unpaid portions. The unpaid portions are surplus labour, resulting in surplus value for the capitalist. This is the source of profits.
(7) The rate of profit is the ratio between surplus value and investment (both constant and variable capital). Marx suggests the rate of profit tends to fall—his famous law of the tendency of the rate of profit to fall. The reason is that capitalists are engaged in competition, which takes the form of price-cutting. The most effective way to cheapen commodities is to reduce the socially necessary labour time contained in each by rendering labour more productive. Historically this has usually been achieved by automation, which involves harnessing an ever greater value of constant capital relative to variable capital. Paradoxically, this entirely rational action by individual capitalists, when carried on across the system as a whole, tends to increase overall investment relative to surplus value, undermining profitability.
(8) There are counteracting tendencies that tend to raise the rate of profit. The first, increasing the degree of exploitation, is straightforward, but also has clear limits such as the limited duration of the working day and potential resistance from workers. The second, the cheapening of the means of production, is more important in the long run. The very tendency that undermines profitability can also make investments cheaper by reducing their price. However, in practice, the level of investment overall has tended to rise rather than fall in value terms. Profit rates most readily rise in moments of destruction and devaluation of capital on a large scale—moments of crisis associated with the failure of unprofitable capitals, fire-sales of goods and means of production, and credit deleveraging. Crisis itself paves the way for a rebound of profit rates.
(9) This abstract account needs substantial modification to develop a more concrete analysis. For instance, the preceding assumes that all capitalists produce goods or services that are sold as commodities. In reality, many capitalists are engaged in activities that Marx dubs unproductive because they produce no surplus value, even if they do lead to profit-making by participating in a broader process of redistributing surplus value across the economy.

25 Oakes, 1944, p13.

26 Oakes, 1944, p14.

27 Van der Linden, 2018.

28 This article appeared in New International, published by the successor to the Workers Party, which had, by now, warmed to Sard’s concept of the permanent war economy, and of which Sard was a sympathiser—van der Linden 2018, p126.

29 Vance, 1951.

30 Vance, 1951.

31 Vance, 1951.

32 The dismissal extends to Kidron (2018b, p140), who describes Sard’s version of the theory as “heavily Keynesian”—see Pozo, 2010, p122.

33 Vance, 1951.

34 Vance 1951, table IV, column 4.

35 Vance 1951, table VI, column 8.

36 Vance, 1951.

37 Vance 1951.

38 See Cliff, 2003b. A year earlier, Kidron (1956) had argued that the post-war boom, based on rebuilding and satisfying pent-up demand, was exhausted by 1949, with only a mini-boom accompanying the Korean War and offsetting the tendency towards slump. This seems to have been the orthodoxy in the SRG at this time. Two years later, Kidron (1958a, 1958b) continued to argue that capitalism can only offer “slump” or “war”, and that arms spending could produce only a “mini-boom”. In the US, a similar perspective was offered by another Trotskyist, Harry Braverman, writing as Harry Frankel in the journal American Socialist, who used the term “arms economy” (Frankel, 1952) and, a little later, in the context of a review of a book by Paul Baran, the term “permanent arms economy” (Braverman, 1957, p13). As far as I am aware, this is the first use of the phrase. Kidron was familiar with American Socialist, according to John Rudge, who has access to Kidron’s archive.

39 Cliff, 2003b, pp171, 172.

40 Sweezy, 1970, pp162-189.

41 Haberkern, 2009.

42 Sweezy, 1970, pp272-277.

43 Sweezy and Baran, 1968, pp23, 80, 87.

44 Harvey, 2006, p141.

45 Sweezy and Baran, 1968, pp178-205.

46 Sweezy and Baran, 1968, p211.

47 Sweezy and Baran, 1968, pp211-212.

48 One advantage of the 2018 collection, Capitalism and Theory, over the eponymous 1974 collection is that the former includes this early article (Kidron, 2018c). The term PAE had been used by Kidron a little earlier, in November 1959, when it was mentioned in passing as the ideological basis of right-wing social democracy (Kidron, 1959).

49 Collins, 1961.

50 Subsequent contributions came from Ken Coates and Peter van Oertzen, with a final reply by Collins. I am very grateful to John Rudge for offering some of the context based on Kidron’s archive.

51 Kidron, 2018c, p14.

52 I have argued elsewhere that one way of conceiving the LTRPF (and its counteracting tendencies) is as a law that operates with cyclical elements but becomes increasingly secular as a result of changes to the capitalist system—see Choonara, 2018. There is another interesting precursor, though one without any direct influence on Kidron of which I am aware, in connecting arms expenditure to the rate of profit. This was the Parti Ouvrier Français (French Workers’ Party), dubbed the Guesdists after one of their founders, Jules Guesde, who was later best known for his treachery in joining the French wartime government in 1914. Prior to the war, the Guesdists criticised the build-up of armaments for a war that they thought would not happen, arguing that preparation for war “shored up national capitalisms otherwise doomed by the ‘falling rate of profit’.”—Stuart, 2006, p44. See also Birchall, 2008.

53 Kidron, 2018c, p14.

54 Kidron, 2018c, p16.

55 Clarke, 1994, discusses various Marxist disproportionality theories in a book-length study of Marx and crisis. See also, Callinicos, 2014, pp235-286.

56 Kidron, 2018c, p16.

57 Kidron, 2018c, p21.

58 Kidron, 2018c, p17.

59 Kidron, 2018c, p23.

60 Kidron, 1968.

61 Kidron, 2018d, pp51, 55.

62 Kidron, 2018d, pp51-52.

63 Kidron, 2018d, pp54-55.

64 Kidron, 2018d, p55.

65 Bortkiewicz, 1949; Sraffa, 1960.

66 Kidron, 2018d, p55.

67 Kidron, 2018d, p56.

68 Kidron, 2018e, p73.

69 Kidron, 2018f.

70 Radice, 1980.

71 Kidron, 2018b, p140. John Rudge has pointed out in personal correspondence, drawing on letters sent by Kidron in 1972 while he was a visiting professor at the University of California, that, even at this time, Kidron did not consider the PAE a complete theory. He refers to himself in one letter “quarrying a hefty block of matter that might one day be a free-standing theory of the arms economy”.

72 Yaffe was a member of an undeclared minority faction within the IS in the early 1970s, and some of his criticisms of Kidron were published in the group’s internal bulletin, complete with equations. They were met by general incomprehension from most members, according to Ian Birchall (personal communication). Kidron produced a brief, acerbic reply to one of Yaffe’s interventions, restating the essence of the PAE and adding: “But still, bully for Yaffe. He has rooted for and found some of the weaknesses in our presentation of the theory. That is his strength and our good fortune. But there is a theory to present. And that is his misfortune and our strength.”—Kidron, 1973.

73 Yaffe, 1972, p50.

74 Purdy, 1973, pp14-17.

75 Purdy, 1973, pp17-24.

76 Howard and King, 1992, p158.

77 Purdy, 1973, p22.

78 For empirical and theoretical defences, see Carchedi and Roberts, 2018; Callinicos and Choonara, 2016.

79 Smith, 1977; Weeks, 1977.

80 Smith, 1977, p65.

81 Dunne, 1990, 1993, 1995.

82 Dunne and Braddon, 2008; Dunne and Coulomb, 2008.

83 Weeks, 1977, p281.

84 Elveren and Hsu, 2016; Elveren and Hsu, 2018.

85 Elveren, 2019, pp8-9, 30, 74-75, 81-82, 132-134.

86 Georgiou, 1983.

87 Georgiou, 1983, p192.

88 MacKenzie, 1983, p47.

89 Smith, 1977.

90 Smith, 1977, p69.

91 Coulomb and Bellais, 2008, p357.

92 Georgiou, 1983, p201.

93 MacKenzie, 1983.

94 MacKenzie, 1983, p47.

95 Elveren and Hsu, 2016.

96 Smith, 1977.

97 Georgiou, 1983, p192.

98 Kidron, 2018g.

99 Kidron, 2018d, pp56-57.

100 MacKenzie, 1983, p50.

101 Mandel, 1975.

102 Callinicos, 2009, pp67-73.

103 Cypher, 1985, p278.

104 Yaffe, 1972, p53.

105 See, for instance, Fine and Harris, 1979; Saad-Filho, 2002, pp23-25; Kliman, 2007.

106 Yaffe, 1972, p53.

107 Kliman, 2007.

108 Harman, 2009, pp46-50.

109 Mandel, 1975, p293.

110 Coulomb and Bellais, 2008, p356.

111 Kidron, 2018b.

112 Kidron, 2018b, p134.

113 Kidron, 2018b, p141.

114 Kidron, 2018b, p141.

115 Kidron, 2018h, p94.

116 Marx, 1990, pp1038-1049; 1969, p152.

117 Kidron, 2018h, p95.

118 Marx, 1973, p306.

119 Marx, 1992, pp207-214; 1991, pp392, 394; 1972, p505.

120 Harman, 2009, pp198, 207.

121 Harman, 1977. For more on Harman’s political economy, see Choonara, 2009, and Callinicos, 2020.

122 Harman includes in his discussion complex secondary effects of the rise of the organic composition of capital, involving the flow of capital through the system to transform values into what Marx calls “prices of production”—see Harman, 1999, pp39-43. At an abstract level this suggests that a rising organic composition of capital in Department III depresses prices in other departments, potentially counteracting some of the decline in the general rate of profit. Fully understanding the implications involves developing a sophisticated temporal model of the global capitalist economy. I will focus instead on what I see as the primary mechanism through which the PAE works rather than these secondary modifications.

123 Harman, 1999, p38.

124 Marx, 1973, pp750-751.

125 Harman, 2009, pp167-168. This is close to Kidron’s own brief summation of the theory in a 1973 IS internal bulletin in response to Yaffe: “Military expenditure affects both the rate and the mass of profit. It sustains the rate by preventing or slowing down the rise in the organic composition of capital in the productive sector… At the same time military expenditure cuts into the mass of profit available to the productive sector.”—Kidron, 1973.

126 Estimates for Soviet defence expenditure are controversial. Evidence suggests they follow a similar pattern to those of the US, but are probably at a consistently higher level of expenditure relative to GDP—see Noren, 1995.

127 Harman, 2009, pp121-139, 167. This was also reflected in my conversations with Chris while we produced this journal together prior to his death in 2009.


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