Marcello Musto (ed), Karl Marx’s Grundrisse: Foundations of the Critique of Political Economy 150 Years Later (Routledge, 2008), £65
The current global financial meltdown highlights the need to both grasp and apply Karl Marx’s analysis of the crisis-prone and exploitative capitalist economy. The Grundrisse is a manuscript in which Marx elaborated his plan for his major work, Capital, and developed his understanding of the central characteristics of capitalism. This collection of essays, edited by Marcello Musto, reappraises the Grundrisse and considers some of the questions that Marx himself explored, such as the relationship between the “financial” and “real” economy, the development of capitalism as a global system and the resulting possibility of global crisis.
The first such global economic crisis, in 1857_8, inspired Marx to write the Grundrisse. As Michael R Krätke writes, “This time, the crisis was no longer a local affair but was bound to affect the whole world market; this time, the crisis was to become an industrial crisis exceeding all preceding crises in scale and scope.” Marx understood the imperative that drove the capitalist system to spread to all corners of the globe in search of markets and, along with that, the propensity for crises to spread across the globe.
Krätke sets out Marx’s explanation of the interaction between the different aspects of the crisis: “While the monetary crisis in London was easing off, the commercial and industrial crisis was gaining momentum and led to ‘an industrial breakdown in the manufacturing districts’ without precedence. All the export markets for British industry were now heavily overstocked, the commercial crisis, the ever growing number of failures and bankruptcies among the merchants and bankers began to hit back upon the industrial producers and the financial and monetary crisis was spreading from one of the financial centres of the capitalist world to the other.”
The relationship between finance and the core of the system is critical to understanding the current crisis. Marx’s criticism of the failures of mainstream economists in 1857 is just as apt today: “Experts had failed to disclose the laws which rule the crises of the world market and had ignored its periodical and cyclical character…[by allowing] particular features of this new crisis to overshadow those elements that all crises of the capitalist world economy have in common they have failed to grasp both”. Krätke argues that financial crisis must be studied through an analysis of the dynamics of the system as a whole.
An issue that could have been further developed in the collection is Marx’s analysis of the role of credit. This has added relevance today because the recent collapse of the US housing bubble occurred in the wake of over a decade of speculative bubbles fuelled by cheap credit.
In the Grundrisse Marx argued that circulation is intimately linked to the production process itself, as a product’s value can only be realised when it is a commodity on the market. However, it is down to chance whether the different processes within the circuit of capital interrelate smoothly to realise profit for capital and enable renewal of the capital accumulation cycle.
Here credit plays a contradictory role. It can temporarily extend the possibilities for capital to expand by allowing capitalists to borrow more money than they could individually accumulate. Yet the recent surge in financial speculation shows how this can worsen the crisis precisely because it spreads it across both the financial and productive sectors of the economy. This can directly limit the productive process itself, as is currently taking place.
Marx’s view that credit facilitates capitalism, and also potentially delays the onset of deeper crisis, runs counter to an argument by Iring Fetscher in this collection. Fetscher argues, “Globalised capitalism has succeeded in counteracting ‘the tendential decline in the profit rate’ over so long a term that its effects have to all intents and purposes been neutralised.” However, the Grundrisse itself is an argument about the applicability, indeed the centrality, of the law of the tendency of the rate of profit to fall. Slow growth in profit rates since the mid-1980s has been achieved largely by holding down workers’ wages and recently by achieving profits through cheap credit and financial speculation. However, as we can see now, such speculation only delays the onset of even deeper crisis.
The current economic crisis has been driven by the core dynamic of capitalism—competition for profit. The tendency for the rate of profit to fall explains why this process is itself contradictory. Competition between individual capitalists results in increasing investment in constant capital, such as machinery, rather than value_adding human labour, decreasing the general rate of profit over time.
Joachim Bischoff and Christoph Lieber relate Marx’s understanding of competition in the Grundrisse to contemporary neoliberalism. Neoliberalism is a contemporary manifestation of the idea that capitalism provides individual freedom through competition. Yet in reality, instead of individuals being set free, neoliberalism seeks to break down any barriers to profit, extolling unregulated competition between capitalists and attempting to justify increased exploitation of wage labour. The political contradictions of the neoliberal form of capitalism, exposed in the crisis, provide arguments against a system based on the need to intensify exploitation.
This collection also considers how, in many areas of the world from the US to Italy to Australia, the translation, publication and interest in the Grundrisse in the 1970s was fuelled by a thirst for radical knowledge to understand a divided world in crisis. Marx’s work is best appreciated not only as a thorough explanation of our system but also as the means by which to develop arguments for struggle against it. As recession once again spreads across the global economy, this re-evaluation of the Grundrisse is a useful contribution to develop and consolidate arguments for a socialist society, free from the contradictions and exploitation that Marx demonstrated are fundamental features of capitalism.