The National Question and the Question of Crisis: Volume 26

In the second half of the 1980s, together with Perestroika in the Soviet Union, a process took place to end the Cold War as a confrontation between the United States of America and the Soviet Union. At the same time, this process caused the collapse of the Soviet Union and socialist system and thereafter the separation and independence of the many nationalities that constituted the Soviet socialist system in the East and South Europe. However to our regret, such nationalities could not enjoy freedom by independence, but went to brutal wars between separated nationalities. Even after many local wars and brutalities we cannot yet find the final solution through peace and justice for peoples.

Since the election of June 2009, the Islamic Republic of Iran has witnessed a huge crisis with the outburst of street protests and demonstrations, challenging its validity. Indeed, it has been so intense that it has shaken the whole Islamic Republic for the first time since the 1979 Iranian revolution. What has happened since the disputed election was an upheaval few had anticipated, an opening of Pandora's box, with millions daring to question the, Velayate Fagih, the most important constituent of the Islamic Republic. This postelection period has created a “revolutionary”’ potential that has so far been met with repressive force and violence on the part of the ruling elites leaving no leverage for compromise. Of course, in the 30 years since the revolution, the Islamic Republic's power structures have faced factionalism. These recent developments demonstrate how deeply rooted run the contradictions and differences between the various groups. This upheaval has thrown all sorts of questions into the air: could Iran remain as a Republic? Or would Iran turn into a God's Kingdom, ever more dictatorial in its approach? Or would the splits within the ruling elites continue to crack the fabric of the regime? Will there be a similar schism to that which took place during the Constitutional Revolution in the early 20th century when a leading member of the clergy, Noori, was finally hanged in July 1909 for being openly against reform? Finally, what is the possibility of change beyond the Islamic Republic in Iran?

This chapter challenges the denial of “underconsumption” – the role of consumption demand in capitalist reproduction and its paucity in crises – in contemporary Marxism. At stake are better understandings not only of crisis theory but also, inter alia, of imperialism, “reformism,” and Marx's intellectual legacy. The chapter shows how the centrality of consumption demand is underlined in the three volumes of Capital and the Grundrisse, and goes on to discuss the origins, weaknesses, and persistence of this denial. The chapter also shows that Marx did not regard underconsumption as a moralistic argument about unfulfilled need. The denial originates not in Marx but in productionism, the idea that capitalism is a system of “production for production's sake.”

Originating in the overkill of Tugan Baranowski's refutation of the Russian populists’ view that capitalist development was impossible in Russia due to lack of a home market, productionism is based on his attempt to force Marxism into the marginalist and the general equilibrium framework. Despite its antipathy with Marxism, most contemporary Marxist economics are based on it. Inevitably its adherence to Say's Law – the denial of the possibility of gluts in the market – infects the tendency to assume that capitalism's contradictions do not lie in circulation. Productionism's denial of the importance of consumption demand also rests on nonsequiturs, nondialectical thinking, and an underestimation of the contradictions in capitalism Marx identified, other than the tendency of the rate of profit to fall. The chapter ends by showing the centrality of demand in the recent historical evolution of capitalism as reconstructed by Robert Brenner, followed by a discussion of whether underconsumption is “reformist.”

In Volume I of Capital, Marx offers actual data from a Manchester spinning factory describing that business. In Volume II, he offers schemes of reproduction to help understand accumulation of capital while mentioning numbers that actually suggest correlation to the spinning factory data. Nevertheless, Marx seems to slide over the costs of new machinery when analyzing accumulation, instead focusing on wear and tear (depreciation). In this chapter, we offer a modeling of accumulation that takes account of modern estimates of the composition of capital, that is, the relation of labor time invested in constant capital compared to the labor time employed with that constant capital, relying principally upon U.S. and Canadian estimates.

We find empirically that the composition of capital fluctuates but does not show much trend. We also consider levels of the rate of exploitation and of utilization of surplus value required for achieving actual historical levels of accumulation of capital, and include consideration of the turnover of capital. We find that only a small portion of surplus value, perhaps 10%, is required for actually achieved accumulation. This suggests that a focus on the utilization of surplus value for the accumulation of capital misses vast other terrains for the utilization of surplus value.

Our result is suggestive of an overemphasis within Marxist political economy on accumulation of capital.

The chapter presents an overview of major currency and international capital market movements after World War II, showing that the movements brought about by US investments in the fifties and sixties that created the offshore Eurodollar bear resemblance to what is now taking place between the United States as the world's investor and China. International money is created in a triangular process of long and short lending intermediated by short borrowing. The imbalances often recorded on US current account are to some extent counterbalanced by the huge returns accruing to businesses of the west. This follows the “dark matter” theory but with the twist that real value is extracted through foreign direct investment in line with the rationale of Eurodollar flows. However, threats are also created in this way. Rather than in superficial notions of instability in currency markets, the high returns on capital abroad have been instrumental both in the deindustrialization of the west and the maintenance of a high rate of consumption through the financialization of the housing market. The eventual overdrive precipitated the crisis starting in 2007, but the dollar relationship with China continues unabatedly.

This chapter restores the concepts of freedom, consciousness, and choice to our understanding of “economic laws,” so we may discuss how to respond to economic crisis. These are absent from orthodox economics that presents “globalization” or “the markets” as the outcome of unstoppable forces outside human control.

They were integral to the emancipatory political economy of Karl Marx but have been lost to Marxism, which appears as the inspiration for mechanical, fatalistic determinism. This confusion arises from Marxism's absorption of the idea, originating in French positivism, that social laws are automatic and inevitable.

The chapter contests the organizing principle of this view: that economic laws are predictive, telling us what must happen. Marx's laws are relational, not predictive, laying bare the connection between two apparently distinct forms of appearance of the same thing, such as labor and price. Such laws open the door to democracy and choice, but do not unambiguously predict the future because what happens depends on our actions.

The commodity form conceals these laws, disguising the true social and class relations of society. Accumulation, however, undermines the circumstances that permit the commodity to play this role. The result is crisis, defined in this chapter as the point when the blind laws of the commodity form are suspended and open political forces come into play.

In past crises, capitalism has restored the rate of profit through such destructive interventions as imperialism, war, and fascism. Economic laws, properly defined, offer society the real choice of alternative outcomes from crisis.

This chapter gives an interpretation of basic elements of Marx's scientific method, focusing on his exposition in the first edition of the first chapter of Capital I. It can be shown that Marx's critique of political economy rests on fundamentals that are traceable in many a philosophical endeavor. This goes especially for categories and concepts relating to the theory of science and epistemology formulated in earlier German philosophy dating back to Kant. I try to demonstrate that such fundamental categories, expressed through our basic thought determinations – universality, particularity, and individuality – are developed through the judgmental and syllogistic forms of logic common to Marx and his immediate predecessors inside philosophy – thinkers as relevant in the modern world as they were in the adolescence of capitalism. Furthermore, I want to show how the concept of time is crucial in uniting the thought-determinations in question. The investigation tries to make it clear that the scrutiny of social forms of thought pursued by Marx amounts to a valid, immanent criticism of all the fundamentals of traditional bourgeois theory of science and economics. To this effect, the chapter evaluates some characteristics of the philosophies of Kant and Hegel. Also, to clarify the profundity of Marx's thinking and the thoroughness of his analysis, I go back to some of the philosophical ideas which were starting points for men like Kant and Hegel, especially in the form that we meet them in the classical political philosophy of Hobbes.