“The Failure of Capitalist Production” is essential reading for the left— from liberal to Stalinist. Responding to the recent resurgence of advocates for Keynesian style “fixes” to capitalism, Kliman presents the case that papering over problems with state intervention delays, but actually intensifies the inevitable crisis. Kliman empirically deconstructs the arguments which blame the 2007-2008 crisis of capitalism on “greed” rather than inevitable structural flaws in capitalist production— in his words “Blaming the crisis on greed is like blaming a plane crash on gravity”. His scholarly rigor is impeccable, processing slowly and deeply how statistics are manipulated by the left and right to affirm reformist solutions to stabilizing capitalism. Analytically reviewing the economic trouble of the 70’s, he comes to the conclusion (against his own intuition as he explains) that Keynesian policies, coupled with the tendency of the rate of profit (LTRPF) to fall, began a period of stagnation that we have never recovered from. In fact, nearly all of the problems we try to pin to the unique policies of neo-liberalism (unemployment, wealth inequality, low investment in infrastructure, borrowing out of proportion to GDP growth) began in the Keynsian 70’s The main thrust of the book is to explain how the LTRPF can hold water against generally excepted framework from the Okishio theorem, and the claims of dogmaticism by other Marxists, with the implication that turning toward neo-liberalism or the welfare state are equally untenable.

The tendency in Marxist advocated by Kliman and others is called “TSSI”, the “Temporal Single-System Interpretation” that points to the LTRPF as a latent, but persistent cause of crisis, rather than some holy grail that can provide ready-made analysis when things go wrong. The “temporal” in TSSI measures the rate of profit arguably in the way Marx himself did, by looking at the aggregate of total investment in the initial purchase of the means of production, and then measuring this number (historically adjusted for inflation and the like) against produced surplus. This is counter to the tendency of Marxists and some bourgeois economists to measure the rate of profit merely as a relationship between surplus and the portion of constant capital that one is replacing. “Single-System” refers to the correlation between value (socially necessary labor time for production) and price(market variance of value): the relationship is single but irreducible. These points may seem semantic or obscure, but the implications are crucial for a strong analysis, and also for politics. Kliman uses the TSSI as an interpretive tool to combat modern left economic trends, as well as defend Marx from charges of inconsistency that have become orthodox.

The fashionable jargon around “financialization”, the move to a primarily consumer based economy, and the concept of “deindustrialization” are all put through the ringer; Kliman asserts in fact that between 1981 and 2001 corporations invested more in production than in 1947 to 1980. It is perhaps most boldly stated when he explains “The data therefore fail to support the notion that “finance” has become uncoupled from the “real” economy. No neo-liberal shift away from productive investment in favor of portfolio investment took place. The entire fall in the rate of accumulation is therefore attributable to the fall in the rate of profit.” Coupled with the statistic that the global proletariat has actually doubled since the 1970’s, the alleged paradigm shift argued for by post-Marxist/communization theory celebrities like Hardt and Marazzi become rather weak. Marazzi’s contention that “The extraction of value[…] enters directly into the sphere of the circulation of capital” through debt is countered effectively by Kliman, who argues that “ Sales activities, labor performed in financial, real-estate, and insurance industries, and legal activities transfer ownership of already-existing value; the labor of security personnel and some managerial activity protects already-existing value; and the labor of accountants and bookkeepers and some other managerial labor keeps track of already-existing value.” (my emphasis)

Now this may seem counter-intuitive to some, as debt makes up an increasing portion of the GDP, and most of us work in the service sector, or know someone who does. This doesn’t alter the fact that industrial production is at an all time high, and that the debt and securities “explosion” does nothing to fundamentally alter the way value (not to be confused with wealth) is created. Kliman elucidates to the contrary: “Production Investment spending has increased 5 times faster since 1933 than consumption spending. Capitalism doesn’t produce for human need, it is production for productions sake.” Segmenting financialization as the new paradigm over classic production, regardless of the degree to which the two are intertwined, masks capitalisms “dirty little secret” of surplus-value, and has the political ramifications of shifting our analysis away from the working class as the fulcrum for mobilizing and defeating the capitalism. It is pure commodity fetishism to believe that the mere circulation of wealth can stimulate its own surplus-value: the reality of this comes to light when the bubbles burst, and serious liquidity issues arise in regard to these immaterial assets. Debt and financialization are responses to cope with the underlying contradictions of capitalism itself.

Kliman also argues against Harvey and Luxembourg that surplus can increase indefinitely, and that attempting to explain imperialism by claiming capitalism needs to expand outward to find markets for realizing overproduced commodities is misguided. The faulty framework is the assumption that all production is slated for consumption by persons, whereas the majority of value is realized immanently among capitalists. “Let us consider businesses’ productive consumption demand— in other words, their investment demand. It consists of spending by businesses to build structures (factories, malls, offices, and so on), as well as purchases of machinery, other equipment, and software. If investment demand rises, and the rise is large enough to offset the fall in personal consumption demand, a decline in wages or workers’ share of income does not lead to a decline in total demand. It therefore does not lead to an economic crisis or recession. ” The fallacy of assuming that production need be geared toward human consumption stems from the idea that capitalism is a system designed to meet human needs in some way, whereas in reality capitalists would be (and mostly are) wholly content with selling amongst each-other. Kliman goes into great detail on the way the surplus is internally realized, ending with some equations that are a bit above my head, but from following the logical argument, I can see the consistency with Marx’s analysis in Capital volume 2. The evidence to back this claim is partly in relation to the 2008 crisis: “In the 65 years from 1943 to 2007, real personal consumption spending in the U.S. declined only twice, in 1974 and 1980, while there were 23 years in which real gross private domestic investment spending declined. Moreover, the percentage decline in consumption spending in 1974 and 1980 was on average just 7 percent of the percentage decline in investment spending. ” Further evidence emerges when a direct comparison is made: “In the case of the U.S., there is also very good evidence that the share of income devoted to investment rose, and the share devoted to consumption fell, during the three-quarters of a century following 1933, the trough of the Great Depression. ” (investment here referring to investment in the Means of Production)

The most controversial thesis of the book, especially for those of us on the left, is that equal wealth redistribution does not promote a healthy economy. This is of course the political conclusion of underconsumption theory: that people are unable to buy the products they make because of the increasing exploitation and wage depression. The unfortunate reality is that taking a portion of profit from capitalists, who primarily are trading amongst themselves, is actually a detriment to the profit rate, which is at the end of the day the fundamental underpinning of a healthy economy. This isn’t a call to abandon the fight for living wages, or universal health-care, or any of that good stuff; it is a warning that there is no solution within the capitalist economic relationship. To escape perpetual crisis and poverty for the vast majority of people, a revolution must eliminate these perpetuating institutions. The revolution is essential not merely as a measure of vengeance, justice, and morality— the revolution is a necessity to unburden our world from its massive debt by the direct destruction of capital value, and to assure that our new world is unfettered from value creation entirely. No reform or limitation to capitalism can succeed, as capital cannot abide a barrier, and will do it has done since day one: find a way through any fences we build to restrain it. Communism is not a utopian concept, it is the only realistic solution. Kliman elaborates: “Such risk exists only because lenders and borrowers are separate and opposed entities; it would not exist in a communal society. Indeed, the very notion of credit would be meaningless in such a society. Just as an individual or household cannot obtain credit from itself, repay itself, or default on its obligation to repay itself— it simply decides whether to use its resources or hold on to them— neither could a communal society. ”

The excitement around now cliché concepts like “prefigurative politics”, “building a new world within the old”, and other reformist garbage like Hakim Bey’s “Temporary autonomous zone” are also regarded contemptuously by Kliman: “This brings me to the notion of developing socialism within capitalism, enlarging the space of the commons or whatever. Unfortunately, it cannot be done. It has been tried (for instance, in the Israeli kibbutzim) and it does not succeed. The economic laws of the larger system will not allow it. If you buy from the capitalist world “outside,” you also have to sell to it in order to get the money you need to buy from it, and you will not sell anything if your prices are high because your costs of production are high. And if you have debts, you have to repay them.” (my emphasis) The seeds of Stalin’s “socialism in one country” are sown in the conception of creating a community or society that functions in capitalism, yet against it. This is important to firmly lay into anyone and everyone that believes we can overcome this system without a revolution, or that this revolution cannot succeed without an internationalist basis. By “revolution” I don’t mean inter-personally, or temporarily, in art, or the latest Apple product— I mean the working and oppressed peoples, collectively assuming power, smashing the capitalist social relation, and implementing global systematic oppression of the ruling class and their cohorts. As Kliman says “It seems utopian, but we have no alternative”; We have a lot of work to do.

(P.S.) I will forgive the unwarranted criticism of Lenin at the end… this time!


-M