Capitalist Crises and the Crisis this Time
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Exactly a hundred and fifty years before the current crisis began in August 2007, the collapse of the Ohio Life Insurance Company in New York triggered what became known as ‘the great crisis of 1857-8’. As Michael Kratke notes, ‘the crisis started exactly as Marx had predicted already in 1850 – with a financial crisis in New York’ and the crisis itself led Marx to extend ‘the scope and scale of his study’ for the Grundrisse notebooks he was working on, so as to take account of ‘the first world economic crisis, affecting all regions of the world’. In their correspondence, Marx and Engels agreed that ‘the crisis was larger and much more severe than any crisis before’, viewing the financial crisis as ‘only the foreplay to the real crisis, the industrial crisis that would affect the very basis of British prosperity and supremacy’.
The Marxist search for a general theory of capitalist crises was intensified in the late 19th and early 20th century. The very prescience with which Marxism in this period theorized inter-imperial rivalry leading to destructive war was now rooted in an expectation that continuing limits to domestic accumulation would drive further the export of capital and the colonization that had come to define the fragmented process of capitalist globalization in the last decades of the 19th century. But Marxist crisis theorists at the time seriously misinterpreted the kind of capitalism developing in the United States, and they more generally underestimated the long-term potential for domestic consumption and accumulation within the leading capitalist states. This was partly due to their failure to appreciate the extent to which working-class industrial and political organizations then emerging would undermine the thesis of the ‘immiseration of the proletariat’. It was also due to their undeveloped theory of the state, which reduced it to an instrument of capital and underestimated its relative autonomy in relation to both imperial and domestic interventions. This shortcoming was also much in evidence among those Marxist theorists who, unlike Luxemburg, began not with underconsumptionist tendencies but, like Hilferding, with the implications of the concentration and centralization of capital and the consequent fusion of industry and finance.
As we have argued in these pages before, the penetration and incorporation of the other developed capitalist states by the US imperial state in the second half of the 20th century rendered this old theory of inter-imperial rivalry increasingly anachronistic. And even as applied to pre-First World War capitalism, the political economy of underconsumption on the one hand and finance capital on the other was problematic; the understanding of the capitalist state was reductionist; and the explanation of imperial expansion was at best partial. Many of these limitations in classical Marxist crisis theories have lingered to this day, and helped keep alive the notion that capitalism is in a late, if not quite final, stage. Since the Great Depression of the 1930s, there has especially been a propensity to see a permanent overaccumulation crisis whose consequences have been consistently delayed by special circumstances like war, waste or bubbles. This runs counter to the insight Marx arrived at shortly after the 1857-8 crisis that ‘permanent crises do not exist’, even while insisting that capitalism would repeatedly throw up new crises. Indeed, insofar as crises are ‘turning-points’, a very important question for Marxists today, especially given the impasse of the Left in face of the first capitalist crisis of the 21st century, is whether this crisis will also be a turning-point in the way the Left thinks about crises.
The Marxist search for a general theory of capitalist crises was intensified in the late 19th and early 20th century. The very prescience with which Marxism in this period theorized inter-imperial rivalry leading to destructive war was now rooted in an expectation that continuing limits to domestic accumulation would drive further the export of capital and the colonization that had come to define the fragmented process of capitalist globalization in the last decades of the 19th century. But Marxist crisis theorists at the time seriously misinterpreted the kind of capitalism developing in the United States, and they more generally underestimated the long-term potential for domestic consumption and accumulation within the leading capitalist states. This was partly due to their failure to appreciate the extent to which working-class industrial and political organizations then emerging would undermine the thesis of the ‘immiseration of the proletariat’. It was also due to their undeveloped theory of the state, which reduced it to an instrument of capital and underestimated its relative autonomy in relation to both imperial and domestic interventions. This shortcoming was also much in evidence among those Marxist theorists who, unlike Luxemburg, began not with underconsumptionist tendencies but, like Hilferding, with the implications of the concentration and centralization of capital and the consequent fusion of industry and finance.
As we have argued in these pages before, the penetration and incorporation of the other developed capitalist states by the US imperial state in the second half of the 20th century rendered this old theory of inter-imperial rivalry increasingly anachronistic. And even as applied to pre-First World War capitalism, the political economy of underconsumption on the one hand and finance capital on the other was problematic; the understanding of the capitalist state was reductionist; and the explanation of imperial expansion was at best partial. Many of these limitations in classical Marxist crisis theories have lingered to this day, and helped keep alive the notion that capitalism is in a late, if not quite final, stage. Since the Great Depression of the 1930s, there has especially been a propensity to see a permanent overaccumulation crisis whose consequences have been consistently delayed by special circumstances like war, waste or bubbles. This runs counter to the insight Marx arrived at shortly after the 1857-8 crisis that ‘permanent crises do not exist’, even while insisting that capitalism would repeatedly throw up new crises. Indeed, insofar as crises are ‘turning-points’, a very important question for Marxists today, especially given the impasse of the Left in face of the first capitalist crisis of the 21st century, is whether this crisis will also be a turning-point in the way the Left thinks about crises.
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