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Economics and Foucauldian educational philosophy: a polemical essay.

Soon after the publication of Volume I of Capital, bourgeois political economy itself underwent a major change. Under the newly adopted name of "economics," it ceased all attempts to explain the totality of social exchanges, and turned its attention to the way in which fields of desire and modes of rational calculation lead to the maximization of utility in individual subjects (whether consumers or firms) at any particular time. Older questions of social reproduction were either refracted in the categories of the new discourse, or became meaningless for economists. For late nineteenth-century economists such as Walrus, Pareto, Jevons, and Menger, there could not be such a thing as a crisis. (Caffentzis, 2013: 259)

1. Introduction

In his bracing "Four Contexts" essay Michael A. Peters unearths the classical taproots of the philosophy of education and argues for the contemporary relevance of the ideal of a general education that spans philosophy, politics and economics. After tracing the hiving off of economics from philosophy in classical Scottish political economy, he stresses the importance of Michel Foucault's work for reuniting and socially contextualising these discourses. A compelling case is presented for philosophers of education to engage with some form of heterodox economic analysis in order to grasp neoliberalism's educational implications. As I see it, this call for transdisciplinary dialogue has come at just the right moment. At the time of writing (mid-October 2013) the US economy was perched once again on the perilous edge due to a political impasse over the debt ceiling that resulted in a two-week shutdown of key federal government services. More broadly, in the Great Recession's aftermath the flow-on effects of fiscal belt-tightening austerity measures continue to ramify throughout the core economies.

In this essay I try to catch the ball Michael A. Peters has set in flight. I argue for dialogue between Foucauldian educational philosophers with an interest in neoliberalism and scholars who work a Marxian vein of economic theory in order to understand the causes and consequences of capitalism's financialised phase. Meeting at the intersection of financialisation and neoliberalism, each of these scholarly groupings, I believe, has something to offer the other.

2. Orthodox Economics; Orgasmic Economics

Understanding financialised capitalism in crisis is simply too important to leave to professional economists, particularly insofar as the resulting fiscal strictures are negatively impacting public education in the Western style economies. There is every reason, therefore, for philosophers of education who are favourably predisposed to critical social philosophy to be interested in "economics". Yet, without a background in classical political economy the second of the four contexts--that enables the contextualization of contemporary economic explanations, it is sometimes difficult to sift the wheat from the chaff. The temptation is simply to turn to the accounts of the Global Financial Crisis offered by contemporary big-name economists who give the impression of breaking with economic orthodoxy, and to take what they say at face value. Educationalists should be particularly wary of those who blame swings in confidence (Reinhart and Rogoff, 2011), evolutionarily bequeathed "animal spirits" (Akerlof and Shiller, 2009)--and a veritable potpourri of other factors that turn the attention back upon human (rather than socio-institutional) failings.

The recourse to evolutionary psychology leads to biologistic explanations which give capitalism an essentialized psychological core. For instance, advocates of folk economics suggest fixed attributes of the psyche anchored in the biological propensities of an inner self, evolved in the period long before capitalism, carry forward to the present day and influence the contemporary economic agent's behavior (Rubin, 2003). Crises then become expressions of the "animal spirits" that evolutionary explanations of capitalism's cyclicality point to--wherein crisis tendencies are seen as the logical consequence of the psychological propensity to act irrationally, to engage in herding behaviour, and so forth. Behavioural economics is an expression of this trend in economic thought (Ariely, 2009). It is the logical outcome of the conjoining of psychology with economic analysis of non-rational economic conduct that Foucault (2010: 269-270) presciently noted in the work of Gary Becker in the late 1970s.

My point is that economists' own critiques of the homo economicus rational actor model often lapse into psychologism. Of course, this problem is not unique to new economic perspectives such as folk economics and behavioural economics; economic geography, business history and economic history, and even cultural political economy are just as susceptible. Indeed, a psychoanalytic variant of cultural political economy is complicit in locating the roots of the Global Financial Crisis not in capitalism's contradictory tendencies but rather in the upwelling of deep-seated urges located within the murky recesses of the psyche. I am thinking here of Crosthwaite (2010) who explains financial crises by reference to financial traders' "libidinal satisfaction" achieved in destructive behaviour that emanates from a death drive. Though it no doubt goes down well in humanities faculty soirees, this explanation is so myopic that it warrants comparison with the risible sex-economy theory that Wilhelm Reich (1973) elaborated in The Function of the Orgasm.

Yet, not all economists' explanations of what triggered the US financial meltdown are so deeply rooted in the quirks of human psychology. In fact, many believe that financial crises cannot be attributed solely - or even primarily--to the propensities (or proclivities) of individuals. The problems are systemic and they need systemic explanations. With respect to the US origins of the Global Financial Crisis, Stiglitz (2009) accords primacy to the failure to regulate banks. Krugman (2009: 163) agrees that an unregulated shadow banking system was to blame. But he also discusses macroeconomic cycles and pinpoints an underlying demand side problem: "insufficient private spending to make use of the available productive capacity" (Krugman, 2009: 182). This starts to resemble the kind of systemic explanation of financialisation in terms of underlying structural weaknesses in the US economy that one finds in analyses by Marxist political economists. But Krugman is stuck within an establishment economics perspective central to which is the notion that it is always possible to fine-tune the rattle out of the capitalist economic engine.

3. Forego the Low-Hanging Fruit

For philosophers of education who want to understand the origins of the Global Financial Crisis and the interplay between neoliberalism and financialisation, I have two suggestions. Firstly, look for heterodox alternatives to economists like Stiglitz and Krugman who get a lot of airplay due to their status as economics Nobel Laureates--augmented in Krugman's case through his journalistic and online commentaries. Though they offer systemic explanations, they accept the framework of capitalism as inevitable and end up stuck trying to propose solutions to problems within a system that is--as the Marxist scholars Foster and McChesney (2012) compellingly argue--increasingly socially irrational on a worldwide scale. I return to their work below, but it is worth mentioning here that establishment-type economists have a strong gag reflex when it comes to anything to do with Marx or Marxism. Krugman (2009: 11-14) for example pushes the standard line about the former Soviet Union as one of a number of "Marxist regimes" that failed; the implication is that nothing with the word "Marxist" in it--economics included--is any good.

Secondly, I believe that it important to eschew work by philosophers who have just a dilettantish dabble in Marxian political economy. The French philosopher Bernard Stiegler is at the top of my list. I have singled this author out because what he has written about the technology driven effects of mediatisation on education, in my view, has much to recommend it (Reveley, 2014). On the other hand, the merits of his educational analysis do not extend to what he says about contemporary capitalism. Consequently, his work is seductive yet flawed; the problem is that he seems to understand not much of Marx's Capital.

Stiegler is preoccupied with consumption, or the realm of circulation, at the expense of analysing capitalism's surplus-producing circuits. His most recent book to be translated into English, What Makes Life Worth Living, is littered with references to contemporary capitalism as "consumerist capitalism" (Stiegler, 2013: 75). Indeed, in the work where he most explicitly deals with economic issues, For a New Critique of Political Economy, Stiegler (2010) argues that consumption can counter--temporarily at least--the tendency of the rate of profit to fall. This is one of the main crisis potentials Marx identified as being inherent to capitalism. As will be apparent in my subsequent discussion of Kliman (2012), consumption demand has nothing directly to do with this tendency, either as its cause or solution. Stiegler mixes oil and water.

I would counsel against rushing to embrace Stiegler's attempt to tie financialisation and everything else back to libidinal economies of consumption--in yet another form of orgasmic economics. For me, the party is going on elsewhere. I turn now to discuss some recently published Marxist analyses of the financial crisis and Great Recession that allow for a reasoned discussion about the role of consumption demand and financialisation in the shorting out of the capitalist circuit.

4. Accounts of Financialised Capitalism in Crisis

If we forego orthodox economics, orgasmic (libidinal) economics, and lightweight post-Marxist frameworks for understanding financialisation, what is left? Well, quite a lot in actual fact. There is ample work by scholars who press Marxian political economy into service to fashion rigorous explanations of US capitalism's recent recourse to financialisation. I will discuss two noteworthy examples: Kliman's (2012) Failure of Capitalist Production, and Foster and McChesney's (2012) Endless Crisis. These works--not at all abstruse or pedestrian--exemplify two distinct positions on the Marxist keyboard for understanding what led to the Great Recession. Published in the same year, they are written from a common vantage point.

Though the authors differ substantially in their views of the role of worker-derived consumption demand, they agree that financialisation is a symptom rather than a crisis cause. This point is succinctly expressed by the subtitle of Kliman's book: Underlying Causes of the Great Recession.

Foster and McChesney

John Bellamy Foster is a practising sociologist and editor of the New York socialist magazine Monthly Review. He had a longstanding association with its founding editor Paul Sweezy who with Paul Baran wrote the pathbreaking Monopoly Capital (Baran and Sweezy, 1968). (1) The idea that economic growth can stall due to insufficient consumption demand runs like a leitmotif back through this study of US capitalism to earlier work by Sweezy (1962: 180) in which he pinpoints a "tendency to underconsumption." (2) This is the springboard for Foster and McChesney (2012) to advance their overaccumulation thesis. What this means is that they identify financialisation as a response to an inbuilt tendency in capitalism towards the over-accumulation of capital. Overaccumulation, as they define it, is merely the opposite side of the underconsumptionist coin. (3) Channelling Sweezy, their explanation of overaccumulation is worth quoting at length.

Those on the receiving end of the economic surplus (surplus value) generated in production are constantly seeking to enlarge their profits and wealth through new investment and further augmentation of their capital (society's productive capacity). But this inevitably runs up against the relative deprivation of the underlying population, which is the inverse of this growing surplus. Hence, the system is confronted with insufficient effective demand--with barriers to consumption leading eventually to barriers to investment. Growing excess capacity serves to shut off new capital formation, since corporations are not eager to invest in new plant and equipment [accumulate capital, that is] when substantial portions of their existing capacity are idle. This tendency to overaccumulation becomes increasingly dominant in mature, monopolistic capitalism, slowing the trend-rate of growth around which business cycle fluctuations occur, and thus raising the specter of long-term economic stagnation. (Foster and McChesney, 2012: 34)

The primacy they accord to a lack of effective demand in blocking investment is worth underscoring. When they use the term "underlying population", they are in actuality referring to consumption demand derived primarily from wage-earners. So consumption demand blocks investment demand. As we shall see, this contention is not uncontroversial. Kliman, for one, disagrees with it.

Foster and McChesney say that within the US potential blockages to consumption demand existed since the 1970s when real wages started to fall. The crisis potential was only averted--temporarily at least--by a massive growth in household debt which underpropped demand, but ultimately led to:

the creation in the end of a household bubble, rooted in the securitization of home mortgages. The bursting of the "housing bubble" was the inevitable result of the destruction of the household finances of the great majority of the working population. (Foster and McChesney, 2012: 45)

The key point is that the stagnation tendency, which disrupted the process of capital accumulation, created the economic seedbed in which financialisation could flourish. Opportunities to draw profits from productive reinvestment in new means of production and labour-power dried up, so:

capital (via corporations and individual investors) poured its excess surplus/savings into finance, speculating in the increase in [financial] asset prices. Financial institutions, meanwhile, on their part, found new, innovative ways to accommodate this vast inflow of money capital and to leverage the financial superstructure of the economy up to ever greater heights with added borrowing--facilitated by all sorts of exotic financial instruments, such as derivatives, options, [and] securitization. (Foster and McChesney, 2012: 42)

Foster and McChesney describe the current economic situation as an "endless crisis" in which the US, like a giant drug addict, pushes more financialisation in an effort to stave off economic stagnation. An entropic, irrational systemic tendency results in capitalism being caught in a:

stagnation-financialization trap, whereby financial expansion has become the main "fix" for the system, yet is incapable of overcoming the underlying structural weakness of the economy. (Foster and McChesney, 2012: 44)

Their point is that financialisation supplies nothing but a friable short-term high.


Andrew "Drew" Kliman is a leading exponent of the Temporal Single-System Interpretation (TSSI) of Marxian value-theoretic analysis. To the uninitiated this may seem complicated and arcane, but it is not. TSSI simply is one approach to unfinished business in Part Two of the third volume of Marx's Capital, which was published posthumously. Marx did not quite get around to transforming prices of production (denominated in value expressed as socially necessary labour-time) into money prices and running these through a second cycle of production featuring monetised constant capital, variable capital, and surplus value. One reading of Marx is that there are in fact two systems--one of values and another of prices--but Kliman (2007) and others in the TSSI school say there is just one system. It is not my intention to enter these debates, the contours of which can be followed in a volume edited by Freeman, Kliman and Wells (2004). Rather, I want to compare and contrast Kliman's explanation of the US crisis with that of Foster and McChesney.

Kliman defends Marx's discovery that the rate of profit has a tendency to decline by virtue of capitalism's own--contradictory--internal logic. (This is not unrelated to TSSI, as it influences how he measures the rate of profit.) He places even more emphasis than Foster and McChesney on financialisation as an epiphenomenal froth atop capitalism's deeper economic waves. The key point of difference is as follows.

According to Kliman, capitalism simply does not ineluctably tend towards overaccumulation or, as he expresses it, underconsumption. This is not merely an empirical claim about the dynamical characteristics of the US economy. He argues not just that "underconsumption should be rejected as an explanatory factor in the present case"--the financial crisis and ensuing slump--but that "it should indeed be rejected everywhere and always, because underconsumptionist theory rests on an elemental (and elementary) logical error that makes it untenable" (Kliman, 2012: 160). The error is to assume that "if something increases forever, it must also increase boundlessly" (p. 160). The "something" in question is "production for production's sake" (p. 164), unmediated by personal (wage-earner derived) consumption demand. Not all surplus value stems from capitalist firms selling things to consumers; firms sell things to each other, and this exchange can elicit the self-expansion of value through capital accumulation based on increasing investment demand. What he tells us is that it is indeed theoretically possible for economic growth to:

occur indefinitely, despite a relative decline in consumption demand, by means of an increase in the demand for machines to produce new machines and a relative expansion of machine production. ... [Consequently] it is logically possible that production can take place for the sake of production, indefinitely and to an increasing degree (Kliman, 2012: 164, emphasis in original)

So one should not assume that lack of worker-based consumption demand automatically and unambiguously leads to economic downturns; the economic slack can be taken up by the capital goods (machine production) sector, through firms making and selling plant and machinery to other firms.

What of the empirical case against underconsumptionists? Well, he demonstrates that real wages in the US have not, in fact, fallen since 1980; rather they have risen--albeit slowly (Kliman 2012: 156). He says that underconsumptionist claims that they fell are due to measurement errors. But this is almost beside the point, as rising investment demand in any case outstripped increases in personal consumption demand, with the former growing nearly five times faster than the latter (Kliman, 2012: 176). The upshot is this: the current crisis does not spring from the realm of consumption. By extension, the crisis is not explicable in terms of libidinal economies of desire limply dwindling down (contra Stiegler), or a drop in wage-earners' real income that drew them into a financial circuit based on cheap and shonky home loans (contra Foster and McChesney).

To explain the recent crisis of US capitalism, Kliman distinguishes between proximate and mediate causes. In his view, the mediate (indirect or underlying) cause of the crisis was not financialisation per se but rather the tendency for the rate of profit to decline. Simply put, this tendency inheres in the tendency of productive reinvestment in new and better techniques of production to increase the proportion of constant capital (machinery) to variable capital (wage-earners). When it is not offset by an increase in the rate of exploitation or destruction of fixed constant capital (by taking productive capacity offline, depreciating it at ever faster rates, writing down its book value and so on), the rate of profit will--by definition--decline. (4) Empirically, Kliman (2012: 83) demonstrates that the rate of profit (estimated in line with TSSI assumptions) has been falling in the US since the 1950s. During the 1970s this resulted in the US economy tipping towards persistent stagnation. The "economic slumps of the mid-1970s and early 1980s" did not pave the way for a recovery in the profit rate (Kliman, 2012: 74). This, he argues, is because "the amount of capital value destroyed" in the period "was not enough to restore the rate of profit and thereby allow productive investment to proceed at a healthy pace" (Kliman, 2012: 13).

The causal sequence that resulted in the crisis began with a secular and persistent fall in the rate of profit that, in turn, precipitated "increased speculation and the build-up of debt that cannot be repaid" (Kliman, 2012: 22). To paraphrase his explanation, the latter factors were the proximate (immediate or direct) causes of the crisis. In a nutshell:

the housing bubble formed and persisted, not because the U.S. economy was strong during the 2000s, but because it was weak. In particular, the weakness of the economy is what impelled the Fed to stimulate it artificially ... [.] (Kliman, 2012: 38)

Though one might disagree with his TSSI assumptions, the logic of Kliman's argument is unassailable.

5. Foucault, Financialisation, Neoliberalism and Crisis

While Kliman differs with Foster and McChesney over the nature of capitalism's crisis tendencies, they agree that it is these tendencies--rather than regulation, political policies, discourse, or ideology--that are the root cause of financialisation. Moreover, what they say about neoliberalism in the US milieu brings them close to Michael A. Peters' Third Context ("Foucault on Neoliberal Governmentality"). They eschew the notion that neoliberalism is merely a free-market ideology promulgated by economists who carried it vector-like into the state, infected politicians and political discourse, and thereby led to policies which caused the financial crisis through lax financial regulation. "Instead", Foster and McChesney (2012: 62) insist, "neoliberalism is best seen as the political expression of capital's response to the stagnation-financialization trap." In the US this response entailed intervention to "prop up the leading financial institutions and to socialize their losses, while retaining an explicit policy of non-intervention during periods when the financial bubble is expanding" (Foster and McChesney, 2012: 45).

By the same token, Kliman maintains that "'Neoliberalism' and 'financialized capitalism'... are the tail, not the dog that wags it" (Kliman, 2012: 50). He too points to neoliberalism's currently "non-ideological" character: the quick move by the US government to bail out financial institutions was a pragmatic intervention to combat the entropic tendencies of the system as a whole (Kliman, 2012: 183). Neoliberalism thus is an eminently flexible institutionalised function intertwined the state apparatus itself. It is geared to an accumulation phase in which financialisation is a response to the causally prior phenomenon of economic stagnation that arises from capitalism's overaccumulation tendency (in Foster and McChesney's view), or tendency for rate of profit to decline (in Kliman's view).

This interpretation of neoliberalism is not incongruent with Foucauldian analyses of neoliberal governmentality. I do not mean Foucault's emphasis on the social construction of subjectivity and types of persons--self-entrepreneurs and the like--from which capitalism benefits (Newton, 2004). Rather, the bit of Foucauldian work that the analysis by Kliman and Foster-McChesney fits with is the conceptualisation of neoliberalism as a technology of governmentality--a context-bound institutional reflex that constructs, mediates and reinforces economic arrangements. What Foucault supplies in particular is the historical setting in which to contextualise the contemporary direction of US neoliberalism. In The Birth of Biopolitics he tracks the development of technologies of liberal and neoliberal governmentality within the American milieu, arguing that neoliberalism there has always had an element of ambiguity and situational contingency (Foucault, 2010: 218).

In turn, what Marxist political economy provides to Foucauldians is a much needed coherent theory of economic crisis rooted in relations of production and social reproduction. This is notably absent from Foucault's own work. As the philosopher George Caffentzis insightfully observes, Foucault:

fails to explain crises of social reproduction, because for him crisis and discontinuity are permanent conditions of social reproduction ... Foucault rules out both the neoclassic assumption that social reproduction is governed by a centripetal, equilibrium-tending market and the Marxian view of crisis as a product of class struggle. Rather, he pictures it as the result of "unbalanced, heterogeneous, unstable, and tense force relations." This means that crisis is literally everywhere; it is another name for Power itself, it is the norm in a society where a la Hobbes, war is omnipresent, so that war itself needs no special explanation. (Caffentzis, 2013: 266)

Though there is more to the Marxian view than class struggle, the fundamental point is that a theory of capitalist crisis must be factored back into Foucauldian frameworks of analysis.

6. Concluding Remarks

When considering the prospect of reading and debating mature works of radical political economics it is important to get beyond the orthodox economists' reflexive gag. I am not saying it is always easy to do so, especially when vituperative disagreements occur between the proponents of different Marxian value-theoretic traditions. Kliman (2012: 218), for instance, includes a link to an audio-recorded debate he had with the French Marxist economist Gerard Dumenil at a conference in New York in 2010. He calls it the "Showdown at the HM Corral" (Kliman, 2010). There were no six-shooters there on that day, but the verbal exchange was robust to say the least. (5) This sort of thing is just the iceberg's tip. In 2007, while visiting a university in New York City, I was regaled with a story about a Marxist scholar who threatened legal action against a radical political economy journal for alleged bias against their work.

In view of such ructions, I have occasionally been tempted to think about Marxist economics as discourse, much as McCloskey (1998) analysed conventional economics as rhetoric, and to refract it through a Foucauldian archaeological lens. In view of current economic conditions, however, getting sidetracked into a debate about the proneness of Marxist economic "science" to internecine conflict is pointless. In any case, the type of will to truth Nietzsche (1965) criticised lurks beneath much scholarly work, regardless of its political complexion or disciplinary setting.

At present the most fertile ground for dialogue between Marxists and Foucauldians is not the micropolitics of disciplinary knowledges but rather issues of crisis, financialisation and neoliberalism. It is heartening to see that this discussion is starting to happen within the philosophy of education. Michael A. Peters is at the forefront of this effort. In a recent paper on how economic stagnation is limiting young people's life-chances, he argues for superimposing Marx onto Foucault, then turning the spit and reading Marx back through Foucault (Peters and Besley, 2013). Hopefully what I have written in this essay will give others a nudge in the same direction.


Akerlof, G. A., and Shiller, R. J. (2009), Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism. Princeton, NJ: Princeton University Press.

Ariely, D. (2009), Predictably Irrational: The Hidden Forces that Shape Our Decisions. London: Harper.

Baran, P. A., and Sweezy, P. M. (1968), Monopoly Capital: An Essay on the American Economic and Social Order. New York: Modern Reader Paperbacks.

Caffentzis, G. (2013), In Letters of Blood and Fire: Work, Machines, and the Crisis of Capitalism. Oakland, CA: PM Press.

Crosthwaite, P. (2010), "Blood on the Trading Floor," Angelaki: Journal of the Theoretical Humanities 15(2): 3-18.

Foucault, M. (2010), The Birth of Biopolitics: Lectures at the College De France, 1978-79. Trans. G. Burchell. New York: Palgrave Macmillan.

Foster, J. B., and McChesney, R. W. (2012), The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China. New York: Monthly Review Press.

Freeman, A., Kliman, A., and Wells, J. (2004), The New Value Controversy and the Foundations of Economics. Cheltenham: Edward Elgar.

Kliman, A. (2007), Reclaiming Marx's 'Capital': A Refutation of the Myth of Inconsistency. Lanham, MD: Lexington Books.

Kliman, A. (2010), "Showdown at the HM Corral: On Dumenil and Levy's Cherry Picking of the Data," at 20at%20the%20HM%20Corral%20pdf%202.19.10.pdf

Kliman, A. (2012), The Failure of Capitalist Production: Underlying Causes of the Great Recession. London: Pluto Press.

Krugman, P. (2009), The Return of Depression Economics and the Crisis of 2008. New York: W.W. Norton & Company.

McCloskey, D. (1998), The Rhetoric of Economics. Madison, WI: The University of Wisconsin Press.

Newton, T. (2004), "From Freemasons to the Employee: Organization, History and Subjectivity," Organization Studies 25(8): 1363-1387.

Nietzsche, F. (1965), Beyond Good and Evil. Chicago, IL: Henry Regnery Company / Gateway.

Peters, M., and Besley, T. (2013), "Marx and Foucault: Subjectivity, Employability and the Crisis of Youth Unemployment in the Great Global Recession," Policy Futures in Education 11(6): 779-784.

Reveley, J. (2014) "Mindfulness Training and the Economisation of Attention: A Stiglieran View," Educational Philosophy and Theory. Forthcoming.

Reich, W. (1973 [1942]), The Function of the Orgasm: Sex-Economic Problems of Biological Energy. New York: Farrar, Straus and Giroux.

Reinhart, C.M. and Rogoff, K.S. (2011), This Time is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press.

Rubin, P. H. (2003), "Folk Economics," Southern Economic Journal 70(1): 157-171.

Stiegler, B. (2010), For a New Critique of Political Economy. Cambridge: Polity Press.

Stiegler, B. (2013), What Makes Life Worth Living: On Pharmacology. Cambridge: Polity Press.

Stiglitz, J. (2009), "The Anatomy of a Murder: Who Killed America's Economy?" Critical Review 21(2/3): 329-339.

Sweezy, P.M. (1962) The Theory of Capitalist Development: Principles of Marxian Political Economy. London: Dennis Dobson.


University of Wollongong


(1.) See the Wikipedia entries for Foster and the Monthly Review respectively at:;

(2.) Monopoly Capital was originally published in 1966 and Sweezy's Theory of Capitalist Development in 1942.

(3.) Sweezy (1962: 180) envisages circumstances where 'there are idle productive resources which are not utilized to produce additional capacity, because it is realized that the additional capacity would be redundant relative to the demand for the commodities it could produce.'

(4.) A simple algebraic example will suffice to demonstrate this point. I use standard Marxian notation: s (surplus value), c (constant capital, both fixed and circulating), and v (variable capital, or wages). The rate of profit can be written as s/c+v, which combines the rate of exploitation (s/v) and the organic composition of capital (c/v). If the rate of profit is divided by v, the resultant is:

[s/v]/[c/[v + 1]

Clearly, when c/v increases and s/v remains static--and assuming that c does not change--the rate of profit falls.

(5.) The file containing the audio recording of the panel discussion at the 2010 Historical Materialism conference can be downloaded at: site/radicalperspectivesonthecrisis/audiovideo/audiohistoricalmaterialism2010nycoriginsofthecrisis-moseleyklimanmohun

James Reveley is an Associate Professor in the Faculty of Business at the University of Wollongong (NSW, Australia). His research interests include the changing nature of education, work and organisation in financialised capitalism. His work has been published in journals such as Human Relations, Organization, Science and Society, and Policy Futures in Education.
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