A Roadmap of Crisis Theories

This post could also be entitled, 'The Gurus of Contemporary Marxist Theory', interpreting 'Marxist' rather broadly.

A year ago, when I started to pay more attention to economics, I was clueless as to where to go for high-quality Marxist analysis (even at the start of my search I was not in any doubt that neoclassical economics - in its denial of the class structure of capitalism - was intellectually bankrupt).

I knew about Ernest Mandel of course, but who else was worth reading, and what were the key issues in contemporary debates?

On the latter question I soon discovered that the most important issue was, of course, the Marxist theory of crisis.

From Michael Roberts

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On page 15 of Michael Roberts's book, "The Long Depression", he shows a variant of the roadmap below from the San Francisco Bay Area Marxist Study Group (click on image to make larger and more legible).

San Francisco Bay Area Marxist Study Group via Nick Johnson

Incidentally I'm comfortable with Michael Roberts's take on the world because, like him, I'm hard left on the diagram above all the way down 😎.

Roberts is also not that tribal, seeking to understand rather than denounce. This is just as well as he secretly seems as convinced as I am that capitalism has at least another century before the imminence of total automation make production solely for the valorisation of capital essentially impossible.

This view of capitalism's likely future rather depends upon Marx's law of the ‘tendency of the rate of profit to fall’ (TRPF) applying over the long-term. I'm good with that as an empirical reality, increasing automation being the causal mechanism.

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So who are the top gurus of Marxist thinking today? I've already mentioned Michael Roberts who has a prolific blog. I should also mention Sam Williams at "A Critique of Crisis Theory".

Moving now to the superstars, we have Dave Harvey, Michael Heinrich and Anwar Shaikh. I have bought books authored by all three. I'd also mention Andrew Kliman, whose book (below) I've just acquired.

Amazon link

While not a Marxist, radical Keynesian Steve Keen gets an honourable mention for bearing the wrath and fury of the entire neoclassical establishment with courage and fortitude. Roberts writes about him here.

So I'm very much a work-in-progress at the moment, struggling hard to get an intuitive view of the dynamics of capitalist economies at all time scales (Michael Roberts's views on cycles are persuasive).

In the background Marx's own writings, Capital Vols 2, 3 and 4 are still on the stack.

Bed bugs: from holiday to home

From The Times today:

"“Bed bugs are having a global resurgence,” William Hentley, from Sheffield University, said. “There’s quite a lot of research looking at how they disperse in apartment buildings, but very little is currently known about how they get from one country to another.”

"We assumed they hitchhiked on humans, but how? For an experiment published in the journal Scientific Reports, he and his colleagues decided to investigate. They had a hunch that the weak link may not be humans, but their smelly luggage. Members of his laboratory spent a day wearing clothes, then piled them in a heap in a room with an infestation. In an identical room they did the same, but with clean clothes.

“We found twice as many bugs on bags containing dirty clothes,” Dr Hentley said. Thanks to the smell, they “found what they thought was a human host.” Then the human takes the bag home, and the bed bugs spread."

I notice they found bedbugs in all the clothes, dirty or not.

We normally take a plastic bin bag and store dirty laundry in that. Probably the slippery sides would be a deterrent .. if we ever frequented the kind of establishment likely to house cimex lectularius.

"Dr Hentley said that when he travels he now keeps a tightly sealed bag, and tries to put it on metal luggage racks, as bed bugs can’t climb shiny surfaces."

The bane of our lives is usually the whining mosquito.

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Weird fact from the Wikipedia page: "DNA from human blood meals can be recovered from bed bugs for up to 90 days, which mean they can be used for forensic purposes in identifying on whom the bed bugs have fed."

Here's my tip, which depends on a successful genome to facial appearance mapping. Collect blood-DNA from the collected insects, transcribe each separate genome and reverse-engineer facial appearance. Compare with photos of the prime target. You've identified his or her genome.

Ham Wall (RSPB) - Somerset Levels

We visited the Ham Wall nature reserve this morning. It's on the Somerset Levels, quite close to the Isle of Avalon Glastonbury.

A general view of the wetlands near the entrance

Glastonbury Tor - notice the displaying Cormorant on the lake

This 'rather large Kingfisher' is probably a Heron (or Little Egret)

The author and his wife on the infinite Way

The Adders at 2 ex 9

A Frant Cormorant at 1.5 ex 7

Looking towards the Mendips and the barely-visible 300 metre TV transmitter

Click on any of the pictures to make them larger.

As we traversed the lengthy path which runs - pretty much in a straight line - for 2.7 km through the wetland, we encountered a small ecology of senior citizens, often festooned with long-lens cameras. Cyclists were also common, along with Red Admiral butterflies .. and the usual profusion of regular flies with their unhealthy regard for human hair.

Ham Wall, with its dense reed-beds, is a local centre for starling murmurations but that's all finished now for the year.

A run on Zopa?

There is no evidence for, or imminent possibility of, a run on Zopa.

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OK, now we've got the scaremongering out of the way, let's examine the substantive issue.

From Wikipedia:

"Zopa enables investors to lend to UK consumers directly through its peer-to-peer lending platform.

"Borrowers can take out loans between £500 and £25,000. Typically individuals use these to funds to help buy a car, consolidate debts, cover home improvements or weddings. All applicants are credit-checked by Zopa.

"Investors’ money enters a queue to be lent in one of three products, which vary according to the risk, returns and accessibility they offer. Once the money reaches the front of the queue, it is split into micro-loans (typically of £10-20 each) that go to multiple borrowers. Investors then receive monthly repayments of interest and capital, which they can relend to compound the interest."

We have funds in Zopa so we have a personal interest in this issue.

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Both Steve Keen and Michael Roberts have warned about the overhang of corporate and consumer debt in the UK economy .. portending an upcoming recession. As regards consumer debt, according to This is Money,

"We know that it is largely credit cards, personal loans and car finance, but we aren't quite sure who is doing the borrowing and why – beyond the helpful statistics that debt charities can provide.

Some of this pile of credit card and personal loan debt is down to people who can't make ends meet any other way, a considerable amount is down to others who prefer to live beyond their means and borrow a better lifestyle today from their earnings tomorrow.

"The £201 billion debt pile is now within touching distance of its peak of £208 billion in September 2008 when the financial crisis was in full flow. In the crisis, as worried lenders slammed the doors after the horse had bolted - and done an entire lap of the field – consumer credit dried up and borrowing fell, down to about £160 billion in 2013 to 2014.

"Since then it has been on the rise.

"But that in itself and the absolute size of the pile is not necessarily a problem.You would expect consumer credit to rise in an economic recovery and as long as people's ability to pay back that debt is improving through rising wages, then a higher debt pile becomes an economic factor, not an issue.

"There's a problem in Britain though. Our ability to pay back debt hasn't been improving – real wages have fallen.

"Once our earnings are adjusted for inflation, we have less money to pay back our debt today than we did at the financial crisis peak. The other factor that comes into play here, of course, is interest rates. These, as you won't need to be told, are super low. If you can borrow at those low rates then the affordability of your debt is better, yet here there are also some problems. Firstly, rates will one day have to rise. ..."

A rise in interest rates and/or a pullback from QE could both reduce demand in the economy. As a recession bites, unemployment rises as businesses contract or go bust (see "Zombies hold back the recovery"). The unemployed find it hard to repay debts.

Schroders' chart shows how many months the market has expected to wait for a first
rate rise over the past year. One is now expected in about 10 months, sooner than previously.

With interest rates rising and incomes falling, many consumers will be in difficulties. Perhaps they will be unable to service their debts to credit card companies .. and to peer-to-peer lenders such as Zopa.

But events may move faster yet. Given a tired Tory government with a wafer-thin majority, a political crisis could result in a Corbyn electoral victory .. which might then trigger an economic crisis sooner than we might think.

In normal times, Zopa's bad-debt protocol and stringent credit checks mitigate the risks of default. But in a systemic crisis, the number of bad debts could spiral. This could make loan-books unsaleable for savers trying to exit before they lose the preponderance of their investments. And Zopa is not covered by the UK Government's Financial Services Compensation Scheme.

So the conclusion I draw is to keep a prudent eye on the state of the economy. If we seem poised to enter a consumer-debt-fuelled recession of any severity, I'd be thinking of exiting Zopa earlier rather than later. In the meantime we're quietly reducing our exposure.

Why no mathematical models of Marxist economics?

It's been commonplace in recent decades to observe, even decry the extreme mathematization of orthodox micro- and macroeconomics. But Marxist economics - still an active area of research - remains resolutely descriptive and verbal.

Amazon link

If, nevertheless, you search you come across "Mathematical Model of Marxist Economics" (2015) by Wu Yifeng - but that's in Chinese.

Amazon link

In English we have "Analytical Foundations of Marxian Economic Theory" by John E. Roemer (1989) which is available, partially, as a PDF. Roemer says some sensible things in the introduction about his approach:

"the microfoundations approach consists of deriving the aggregate behavior of an economy as a consequence of the actions of individuals, who are postulated to behave in some specified way. I have taken this approach throughout the book.

For example, in the chapters on the falling rate of profit, it is postulated that a technical innovation is introduced only if it increases profits for a capitalist. This micro approach is different from a macro approach, which might say: We postulate that technical change takes the form of an increasing aggregate organic composition of capital.

From the micro vantage point, one is not allowed to postulate an increasing organic composition of capital unless one can show what individual entrepreneurial mechanism leads to it.

Marxists might question the microfoundations methodology because one of the forceful points of Marx's theory is that the individual is not the relevant unit to examine - it is the class. This might lead one to try and build a model in which classes are the atoms of the system.

I think it should be possible to produce such a model, but I do not believe that model would be contradictory to the ones I have described in this book. The reason is this: that individuals act as members of a class, rather than as individuals, should be a theorem in Marxian economics, not a postulate.

Marx's point is that despite the capitalist's incarnation as a human being, he or she is forced by the system to act as an agent for the self-expansion of capital. Workers, similarly, may have their individual yearnings and habits, but conditions of life force them to acquire a class consciousness and to act, at times, as agents of the working class as a whole and not as their own agent. (This might be the situation, for instance, in a strike, where the striker takes great chances for the good of the strike, which are not personally worthwhile.)

In each case, Marx has claimed that although people exist organically as individuals, we can conclude that they act as members of classes. It is in this sense that class behavior is a theorem and not a postulate of the Marxian theory.

Taking the argument a step further, I would say that it is not only admissible, but important, to take a microfoundations approach in Marxian theory. A common error in Marxian discussions is functionalism: to assume that a mechanism necessarily exists to perform actions that must be performed to reproduce the system.

Put more simply, if the occurrence of X will further the reproduction of capitalist relations, then X occurs. For example, if racist attitudes exist among the working class, then capital will be strong. Therefore, capitalism foments racism.

What is missing here is a description of the mechanism by which this is accomplished. It may be in the interest of capital as a whole to maintain discriminatory wage differentials for black and white workers of equal productivity, but why should the individual, profit-maximizing capitalist respect this differential when he or she can increase profits by unraveling the differential - that is, by hiring only black workers at a slightly higher wage than they are receiving under the racist regime? [For one answer to this question, see Roemer (1979c).]

If we postulate capitalism as a system of anarchic, competitive capitals, each bent on its own expansion, we must face this sort of contradiction from functionalist arguments.

Another example comes from some Marxist-radical theories of education. Capitalism does not require a highly educated working class, so the theory goes, but it does require a well-socialized and docile working class. Schools, then, will serve the role of socializing and channeling people into capitalist society, but not of educating them.

Now, this conclusion may be true, but the functionalist nature of the argument eclipses the mysterious and difficult part of the phenomenon - how does capitalism ensure this role for schools, when teachers try to teach, students try to learn, and so on?

A third example is the role of the state. The capitalist state acts in the interests of the capitalist class - that is the theory. But the theory cannot be convincing unless one can demonstrate the mechanism by which this occurs, especially because capitals do not have a habit of cooperating with each other, as the primary aspect of each capital's existence is self-expansion and competition against other capitals.

What one requires, then, are microfoundations for the role of racism, education, and the state under capitalism. Other examples abound. In the cases when capitalism is guided as if by an invisible hand to coordinate its preservation in the ways mentioned, one requires an explanation of how anarchic capitals produce such a result.

 A second form of functionalism that exists among Marxists is the converse of the first form: If X has occurred, then X must be in the interests of capital. We again can take an example from education:

Because we observe compulsory education, it must be that capital requires such for its reproduction. But this may not be the case: compulsory education may exist because the working class fought for it.

One can find many examples of this form of functionalism in Marxian work: The general consequence of the error is to attribute an omnipotence to the capitalist class that it does not possess in Marxian theory. The capitalist class is pushed along by historical developments: Not everything that happens under capitalism was planned by it, nor is in its best interests. In fact, according to Marx, the general tide of historical development favors the working class. Again, a defense against this form of functionalism is a microfoundations approach.

There is a third form of functionalism among Marxists that, strangely, seems diametrically opposed to the first two forms: If the occurrence of X is necessary for the demise of capitalism, then X will come to pass. We can see the general rule of which these different functionalist forms are special cases if we phrase the general functionalist position this way. We postulate a certain outcome for the social system; functionalism then takes the form of claiming that only events occur which lead to that outcome.

In the first two forms of functionalism discussed, the outcome is the reproduction of capitalist relations; in the third form, the outcome is the transformation of capitalism into socialism. Perhaps the first two forms of functionalism are short-run variants, and the third form is a long-run variant of the general functionalist interpretation of Marxism.

Examples of the third form of functionalism in Marxian economics are prevalent in crisis theory. The system must have crises, because crisis is necessary for capitalist demise. The rate of profit must fall, because only in this way can crisis be brought about. The working class must become impoverished, because otherwise it will never perform its revolutionary task. Bourgeois democracy must transform itself into fascism, because only fascism will heighten the contradictions of capitalism sufficiently to produce revolutionary transformation, which must occur. These arguments are less than convincing; the form of functionalism they involve is similar to that of the utopian socialism of Marx's time, which postulated socialist transformation without a mechanism.

Marx's method was to counter utopian thinking by trying to expose the mechanism that would bring the socialist transformation about. ...

Finally, the equilibrium method has been used in the models in this book. While I have defended the approach of mathematical modeling, and the microfoundations approach, I have less confidence about the equilibrium method. Like many economists of my generation, I am strongly influenced by the power of the equilibrium method: of examining a model when it is at rest, so to speak, in the sense that all the rules that describe how its parts work are simultaneously fulfilled.

What is disturbing about the equilibrium method is that it pictures the typical position of the system as a position the system rarely or never enjoys. Of course, no sophisticated economic model builder would claim that economies are in equilibrium in the sense of a static equilibrium model. A model is only an ideal type.

However, there seems to be a deep contradiction between using models whose main analytical trick is to postulate a position that is precisely at variance with the most interesting and important aspect of capitalist economy as described by Marxian theory - its incessant, contradictory motion.

There is, therefore, the danger that if this intuition is correct, the equilibrium method will prevent one from seeing the most important aspects of the Marxian theory of capital. Knowing no other method, I use the equilibrium method, with the vague thought that, when rereading these pages in twenty years, its obsolescence as a modeling tool for Marxian theory may be clear.

(I might add that there is plenty of precedent in Marx's modeling of his theory for the equilibrium method: Consider, for example, the notion of equalization of profit rates among capitals, or the models of balanced growth designed to show that capitalism was capable of reproducing itself.) ..."

After this thoughtful introduction we encounter chapter 1.

"1 Equilibrium and reproducibility: the linear model

1.1 A brief review

We begin with a discussion of what constitutes an equilibrium, in Marxian terms, of a capitalist economy, and for this chapter we study a linear, Leontief specification of production.

Capitalists all have access to the same Leontief production system {A, L}, where

   A is an n x n input matrix of commodities

   L is a 1 x n vector of direct labor inputs.

If p is a l x n commodity price vector and the wage is normalized at unity so that prices p are interpreted as wage prices, then the usual notion of an equilibrium-price vector in a Marxian system is a vector p for which there exists a nonnegative number π such that

   p = (1 + π)(pA + L)           (1.1)

The vector pA + L is the vector of unit costs of production (assuming that there are no fixed capital costs), and so π may be interpreted as the uniform profit rate for the economy.

There may be, of course, many pairs (p, π) satisfying Equation 1.1.

We add more information to the system by requiring that workers each receive a subsistence vector of commodities b, an n x 1 vector. By subsistence, we mean simply that the wage must be precisely sufficient for b to be affordable, thus

   pb = 1                                 (1.2)

Here, the unit of time that denominates L, which is the same unit of time for which the wage of unity is paid, is to be thought of as one working day.

Combining (1.1) and (1.2), we see immediately that

   p = (1 + π)p(A + bL)         (1.3)

Thus, for a vector p satisfying (1.1) and (1.2) to exist, it is necessary and sufficient that the augmented input coefficient matrix M = A + bL possess an eigenvalue 1/(1 + π) that does not exceed one, to which can be associated a nonnegative eigenvector p.

According to the Frobenius—Perron theorem, if M is an indecomposable matrix, then M has a unique eigenvalue that can qualify; that is, M possesses a unique positive eigenvalue to which can be associated a nonnegative eigenvector. It is, furthermore, the content of Morishima-Okishio's fundamental Marxian theorem (FMT) that if the rate of exploitation e is positive, then the Frobenius eigenvalue of M will be less than one, and so the associated profit rate will be strictly positive. ..."

and so it goes on. One reviewer writes:

"The analytical rigor in treating the subject is among the things that make the book worth buying for anyone interested in mathematical economics: sitting down with paper and pencil for a couple of months in reading the book will be a beautiful intellectual experience, and it will add a whole set of "weapons" to the neoclassically trained economist."

But perhaps we just don't yet have the right (agent-based?) mathematics for Marx.

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I'm been reading Duncan Foley's excellent primer on Capital.

PDF link

Foley is a clear and creative thinker who is prepared to bring some simple mathematics to the table. He's interested in presenting the conceptual apparatus of Marxism in an orderly manner rather than simply providing a slimmed-down exegesis of the books themselves. His approach is very much rooted in applying Marxism to the present day economy, which informs both his appraisal and his examples.

He reconstructs in mathematical form the circulation of capital and Marx's simple and expanded reproduction equations before moving on to the 'transformation problem', crisis theories and Marx's concept of socialism. Here's the table of contents:

Contents

1 On Reading Marx: Method                            1
2 The Commodity: Labor, Value, Money        12
3 The Theory of Capital and Surplus Value    31
4 Production under Capitalism                       49
5 The Reproduction of Capital                       62
6 The Equalization of the Rate of Profit         91
7 The Division of Surplus Value                   105
8 The Falling Rate of Profit                          125
9 The Theory of Capitalist Crisis                  141
10 Socialism                                                 158
Suggested Readings                                    173
References                                                   177
Index                                                             181

In addition as you can see, this introductory book is quite short.
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When I did my PhD research - the formal theory of intentional agents - I explicitly rejected the framework of differential equations used by the control theorists and the cyberneticists (cf Ross Ashby). For the same reason I am somewhat skeptical about aspects of Peter Turchin's Cliodynamics.

My approach was in the classical AI tradition of modal logics and generalised automata theory where intentional agents (those with perceptions, beliefs, goals, plans, actions) are modelled explicitly. I still think this is the best approach to a twenty-first century formalised Marxist psychohistory where we're interested in history at the simulation level.

Review: "The Long Depression" by Michael Roberts

Amazon link

I've now completed Michael Roberts's book. I'm struck by how much of the material in it was previously aired on his prolific (and excellent) blog.

Here's the review from Socialist Review.

"Michael Roberts provides a most convincing explanation of how we got to the current economic situation: the “law” developed by Karl Marx that recurrent capitalist crises arise out of contradictions within capitalism that lead to crises of profitability.

Using data to validate this classical Marxist theory, Roberts shows how, “the behaviour of the profit rate confirms the predictions Marx made about the historical trend of the mode of production. There is a tendency for the rate of profit to fall.”

In The Long Depression Roberts brings together much of the analysis he provides on his blog, The Next Recession. In a series of well argued chapters, Roberts provides both a comprehensive history of capitalist crises and an analysis of the current state of the world economy. He uses clear graphs and charts to illustrate and validate his arguments.

Alternative Marxist explanations that claim crises are due not to a crisis of profitability but to under-consumption are countered theoretically. Roberts backs his arguments up with empirical data throughout.

He explains why debt matters; how the slump of 2008 developed into a depression; the crawling recovery in America; the failings of the Euro project.

In no part of the world economy today are there signs of recovery. Japan is still facing stagnation. The emerging markets will not save the world if the West slides back into recession, as Roberts points out.

With the largest economies now growing at well below the previous rate of output, and levels of profitability still low, we are living in a period Roberts describes as the “Long Depression”. There have been two previous long depressions under capitalism — one in the late 19th century, the other in the mid-20th century.

The depression of the 1880-90s ended only after the “bankruptcy of many companies, a huge rise in unemployment, and the destruction of things and people in the millions.” It took the massive destruction of capital in the Second World War for the Great Depression of the 1930s to end."

This book is not an easy read - it's rather dry. You are overwhelmed by graphs, statistics and deep, deep dives into economic history. On the other hand, the writing is intelligent, you sense the sophistication of the analytic hinterland and you really do need to know these things to understand the world we live in.

Roberts explains (p. 6):

"this book is not theoretical, although the different theories presented to explain economic depressions are discussed and criticised on their merits from a Marxist viewpoint. But the critique is mainly based on using empirical evidence. I leave the theoretical debates and, in particular, the theoretical defense of Marx's crisis theory to other authors and another day."

His note here points to "Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s" by Michael Heinrich.

As someone who was seeking a clear conceptual framework to understand the dynamics of our present predicament, I was disappointed at the amount of conceptual reverse engineering I had to do on the text. So on balance a good factual and statistical account of the economic state of the world and its trend behaviour, supporting a compelling paradigm. It needs to be augmented by a high-quality theoretical exposition of Marx's crisis theory, which the author suggests Heinrich can provide.*

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* I'm somewhat surprised by this reference of Roberts, as on the substantive issues of the origins of capitalist crises he and Heinrich appear to be at loggerheads.

Zombies hold back the recovery

Michael Roberts emphasises in his book, "The Long Depression", that capitalist economies recover from recessions - slumps - only by the restoration of the rate of profit. This comes about via three mechanisms:

1. Reduction in taxes on business revenue streams (via Government cuts and 'austerity')
2. Reduction in workers' real wages, benefits, conditions and bargaining power 
3. Devaluation of constant capital.

All of these phenomena will naturally be politically contested by workers but the mechanism I found most difficult to understand was the third. How does constant capital get devalued in a slump?

Here is what Stuart Easterling had to say.

"Another factor in restoring profitable accumulation is a depreciation in the price of constant capital (tools and machines). Consider, for example, a capitalist who purchased a computer for $1,000. A couple of years later he goes out of business, and one of his competitors wants to buy up his assets. By that time the value of the machine has fallen (it can be produced much quicker) and so the price is only $750. Obtaining the computer at the new price devalues the capital, as described earlier in the case of the Tecan machine.

"However, let’s also assume that the bankrupted capitalist is desperate to unload his assets, in order to pay his debts. Therefore, he sells his computer for only $500. The machine has therefore also depreciated in price. Most importantly, the surviving capitalist benefits from this.

"In certain circumstances, constant capital can also be depreciated through overproduction; that is, if computers are heavily overproduced, they can be purchased on the cheap by capitalists seeking to restore their accumulation.

"Hence, as Marx notes, during crises "part of the commodities on the market can complete their process of circulation and reproduction [purchase and sale] only through an immense contraction in their prices.... The elements of fixed capital are depreciated to a greater or lesser degree in just the same way [Capital, Volume III, Chapter 15, Section 3]."

"In other cases, capital that can no longer be profitably employed is simply destroyed: A bankrupt steel factory’s machines may just lay idle and rust, for example. Through this process of devaluation, depreciation and destruction, the surviving capitalists are able to renew profitable capital accumulation."

This process of creative discussion is currently on hold in the UK economy, where much capital languishes in "zombie companies" just ticking over, barely able to pay the interest on their debts. If interest rates rise, expect a wave of bankruptcies, unemployment and depreciation of constant capital as described above.

Roberts predicts a new recession over the next few years.

Preobrazhensky's lessons for Corbyn?*

PDF

With the Labour Party possibly, or even likely, to form the next UK administration, attention turns to how seriously to take their economic programme. I mentioned the Marxist economist, Michaels Roberts's views in my previous post. He reflects the Marxist orthodoxy: that attempts to implement socialist policies within the framework of a capitalist economy and state create a protracted economic and political crisis. Either the workers movement will transcend capitalist relations of production (OK, this is a euphemism for socialist revolution) .. or there will be a catastrophic defeat for the labour movement ushering in a period of reaction and a new rise in the capitalist economy.

I agree those are the alternatives and would expect the latter outcome with overwhelming probability.

It is, however, interesting to think about the nature of the economy after a successful socialist revolution. Unfortunately, the only example we have is the extremely atypical case (as regards 21st century advanced capitalism) of Soviet Russia in the 1920s.

Yevgeni Preobrazhensky was

"... a member of the governing Central Committee of the Bolshevik faction and, its successor, the All-Union Communist Party, Preobrazhensky is remembered as a leading voice for the rapid industrialisation of peasant Russia through a concentration on state-owned heavy industry.

"Closely associated with Leon Trotsky and the Left Opposition movement of the 1920s, Preobrazhensky fell afoul of the secret police during the decade of the 1930s, suffering expulsion from the Communist Party and internal exile in 1932 and a new arrest ending in execution in 1937 during the Great Purge. ...

"He argued in The New Economics that the USSR had to undertake the "primitive accumulation" that early capitalist societies had had to. That is, the peasants' agricultural surplus had to be appropriated to invest in industry. Thus the Soviet Union had to undertake by planning in "socialist primitive accumulation" what England had undergone by happenstance in the 17th century.

"This theory was criticized politically and associated with Trotsky and the Left Opposition, but it was arguably put into practice by Stalin in the 1930s, as when Joseph Stalin said in a speech that the Soviet Union had to accomplish in a decade what England had taken centuries to do in terms of economic development in order to be prepared for an invasion from the West. This argument is disputed by Trotskyists and Soviet historians."

I'm interested to understand his theoretical analysis of economics in a society no longer based on generalised commodity production so have added Preobrazhensky's book to my reading stack (already way too big). Given the current revival of interest in Marxism - as the ideological foundations of neoliberalism continue to fray - perhaps it's time to issue a new edition on Amazon and Kindle?

There are some hard-liners in the Corbyn leadership (McDonnell and Milne) but I suspect that in office they would behave more like a traditional European Socialist Party. But who knows?

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* What are the lessons? I haven't read the book yet, but perhaps that he should refrain from at least the gratuitous killing of the kulaks?

"The Long Depression" - Michael Roberts

Amazon link

I've been impressed by Michael Roberts's blog posts, on the right sidebar here in the web view. He is insistent that lack of profitability is both the proximate cause of crises and the underlying reason for long depressions, such as the one we're currently experiencing. He is also prepared to make predictions.

So this seemed to be the book to get (published in July 2016) to learn more about his thinking. Here's the Amazon summary.

"Setting out from an unapologetic Marxist perspective, The Long Depression argues that the global economy remains in the throes of a depression. Making the case that the profitability of capital is too low, and the debt built up before the Great Recession too high, leading radical economist Michael Roberts persuasively presents his case that this depression will persist until the profitability of capital is restored through yet another slump."

Here is Michael Roberts talking on "Economic crisis and the long depression" at Marxism 2017:

Roberts talks for 33 minutes - he's interesting, rather tribal, but can perhaps be forgiven in the circumstances. Then there are a number of questions/contributions from the floor until at 54 minutes Roberts again takes the microphone to respond.

His most interesting point is at 1 hour 3 mins when he gives the example of Venezuela as a government which was trying to implement populist measures 'outside the envelope' of what is possible within a capitalist economy. The economy crashes, of course.

Two minutes later he's comparing the situation there with a possible Corbyn government taking office during the predicted next recession. The divergence between what will be promised and what will be possible will be extreme. Roberts is understandably skeptical about 'post-capitalism in one country', seeing the modern economy as inherently global in scale.

But what lesson are we to draw from this? It's a very stupid general who marches the proletarian troops to battle knowing they are to be slaughtered. Yet the idea of global socialist revolution starting via a Corbyn victory in the UK is risible.

So, Michael Roberts, what is to be done?

I suspect that Roberts is well aware that capitalism still has a way to go before immanent contradictions lead to its supersession. The driver for that will not be voluntaristic vanguard parties (hello, SWP?) but the trend to total automation.

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I'll let you know what I think: it's competing with Steve Keen's book and Capital Vol 2 at the moment. But I think it's a priority.

Dining in the underpass (a Mayflower diary)

1. In Which We Encounter a Hipster Cafe in a Poor Neighbourhood (Tuesday 19th)

We're staying in the Holiday Inn, Bristol at the Stokes Croft (St James Barton) roundabout tonight. Check-in isn't until 3 pm so we're wandering the (rather poor) neighbourhood first.

Hilarious so far. The area (the bearpit in the plaza in the centre of the roundabout) has been occupied by anti-austerity protesters and dossers. Everything is covered in graffiti. There is parkour and a woman sitting in lotus position on the asphalt shouting random stuff to passers-by. We hasten on.

We visit the nearby St James Priory cafe. Hipster-friendly but the toilets have MI6-style key-code pads (the code is printed on your receipt). Keeps the dossers out.

I had lost my receipt but a kind woman gives us hers.
I fail by misreading C9367Z as C93672; who knows
why Clare's attempt (above) doesn't work.

We watch carefully as it keeps one in every two customers out too. As both Clare and myself fail, we resort to tailgating.

We decide to move on to Bristol Museum and Art Gallery. It's the start of term at Bristol University, hard to traverse the pavement at the top of Park Street for registering students.

I particularly liked this Xenomorph at Bristol Art Gallery

2. In Which We Check-In to the Bristol Holiday Inn

Meanwhile our hotel has had a partial aircon failure. We have been moved to an inferior room at a discount. Oh, and for similar dosser-related reasons the lifts only work via an elaborate protocol with the keycard. After abject failure we call the reception woman to tutor us.

The Chinese restaurant that's so highly recommended - adjacent to the bearpit - had its steel shutters down when we passed earlier. The metal was covered in graffiti and the place looked like a garage on a derelict estate.

By half past six when we decide to eat, it's opened to reveal a classic Chinese restaurant frontage. They can't do much about the area, though. Clare whispers that we should look inside first to see if they have tablecloths.

The Mayflower: a highly-recommended Chinese restaurant

Bristol has world-class graffiti

Inside it is a jewel - a large Chinese contingent vouches for authenticity

Pictured as we left - the Mayflower is to the right; there is a homeless man
in a tent somewhere off-picture.

The food is truly excellent.

3. In Which We Visit A Pub I Last Attended 49 Years Ago

The Christmas Steps

The progressive headmaster of Bristol Grammar School arranged weekly lectures for sixth formers back in 1968. We all trooped down to the Big Hall where an invited speaker would broaden our minds. Some of us had an alternative vision, however. The 17 year old me - with some equally-bohemian friends - would instead migrate to the Christmas Steps pub for an hour of underage drinking.

My favourite drink was a pint of Brown and Bitter. Only later did I discover that this traditional Bristol mix used the bottle of Brown Ale to disguise adulterated Bitter. Apparently I was insulting the Publican every time I ordered it.

No matter. Eventually the headmaster took a roll-call and we were all exposed. Most were caned, but I escaped as I was about to leave school. I was merely interrogated as to why I had done it. I replied that having opened an opportunity for choice, it was naive of the school authorities to imagine that some people wouldn't exercise it.

I hope they were pleased with this adolescent insight.

4. The Next Day Where We Visit Whitchurch Garden Christmas Centre

Whitchurch Garden Centre (!?)

Little Red Riding Hood and an animated Beaver

On the way back to Wells this morning, with Clare needing a bag of mulch, we stopped at the Whitchurch Garden Centre (we had not visited before). The vista above greeted us .. .

Marx and a Universal Basic Income (UBI)

Marx, as far as I know, did not explicitly write about the impact on capitalism of the widespread introduction of a universal basic income.

He did however, (in chapter 33 of Capital, Vol 1) write about an equivalent situation: the economics of the early Australian and American colonies.

Because the land was unowned, it was possible for new, penniless immigrants to rapidly acquire a homestead for themselves and their families, making them effectively self-sufficient.

"Free Americans, who cultivate the soil, follow many other occupations. Some portion of the furniture and tools which they use is commonly made by themselves. They frequently build their own houses, and carry to market, at whatever distance, the produce of their own industry. They are spinners and weavers; they make soap and candles, as well as, in many cases, shoes and clothes for their own use. In America the cultivation of land is often the secondary pursuit of a blacksmith, a miller or a shopkeeper.”

This makes capitalist production difficult.

"The absolute population here increases much more quickly than in the mother-country, because many labourers enter this world as ready-made adults, and yet the labour-market is always understocked. The law of supply and demand of labour falls to pieces.

On the one hand, the old world constantly throws in capital, thirsting after exploitation ...; on the other, the regular reproduction of the wage labourer as wage labourer comes into collision with impediments the most impertinent and in part invincible. ...

The wage-worker of to-day is to-morrow an independent peasant, or artisan, working for himself. He vanishes from the labour-market, but not into the workhouse. This constant transformation of the wage-labourers into independent producers, who work for themselves instead of for capital, and enrich themselves instead of the capitalist gentry, reacts in its turn very perversely on the conditions of the labour-market. ...

It avails him [the capitalist] nothing, if he is so cunning as to import from Europe, with his own capital, his own wage-workers. They soon “cease ... to be labourers for hire; they... become independent landowners, if not competitors with their former masters in the labour-market.” ...

“Our capital,” says one of the characters in the melodrama, "was ready for many operations which require a considerable period of time for their completion; but we could not begin such operations with labour which, we knew, would soon leave us. If we had been sure of retaining the labour of such emigrants, we should have been glad to have engaged it at once, and for a high price: and we should have engaged it, even though we had been sure it would leave us, provided we had been sure of a fresh supply whenever we might need it.”

But sadly not. This little difficulty in kick-starting American capitalism was, however, only temporary.

"On the one hand, the enormous and ceaseless stream of men, year after year driven upon America, leaves behind a stationary sediment in the east of the United States, the wave of immigration from Europe throwing men on the labour-market there more rapidly than the wave of emigration westwards can wash them away.

On the other hand, the American Civil War brought in its train a colossal national debt, and, with it, pressure of taxes, the rise of the vilest financial aristocracy, the squandering of a huge part of the public land on speculative companies for the exploitation of railways, mines, &c., in brief, the most rapid centralisation of capital.

The great republic has, therefore, ceased to be the promised land for emigrant labourers. Capitalistic production advances there with giant strides, even though the lowering of wages and the dependence of the wage-worker are yet far from being brought down to the normal European level."

In Marx's time, the mid-nineteenth century, working class factory life was truly horrendous. This is well-documented in the later chapters of Capital Vol 1.

What lessons can we learn for the twenty first century?

If people can genuinely acquire the necessities of life without labouring for wages then most - given a free choice - won't be signing up as employees. They may do voluntary work or various leisure activities .. but clocking in every day? Forget it .. though work that was interesting and not coercive might still attract a few economically-self-supporting individuals.

I offer you the example of the recently-retired on good pensions.

Taken in the round a UBI set at the level of the average wage would be strongly subversive of the continued operation of a capitalist economy. Pitched at a subsistence level as a variant of welfare, it's a different story.

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Capital Volume 1, which I've just completed, is an eclectic book. The first four chapters are rather abstract, dry and repetitious although not too intellectually demanding. They are necessary, however, to establish the foundation for the rest of the book.

Subsequent chapters alternate between conceptual analysis (interesting but quite repetitive) and detailed anthropological/statistical studies buttressing and illustrating the economics. Generally they come down to the appalling conditions of the working class of the time, mostly in England.

The last part of the volume is a very interesting account of the process of capitalist rise from the ashes of feudalism. Broadly answering the question: where did the working class and the capitalist class actually come from?

Marx is a very verbal thinker, avoiding mathematics and equations. Everything is explained in words which can help understanding while simultaneously hindering it. If only he had formalised his concepts while retaining the helpfully-tutorial explanations; most modern accounts do that.

I personally found it useful to have Marx's reproduction equations in mind as I read the volume.

Next is Volume 2, where we move from production to exchange.

The gag is on

Walking down to Waitrose this morning - and dragging the new sholley, my weight-training-induced sore forearms still haven't gone away and it's 'no more Mr Heavy-Shopping-Bags' - I ventured this thought to Clare.

"Shall I tell you the new thing I've learned today?"

Grudging acquiescence.

"You know I'm continually fascinated by the way AI and robotics are going to transform capitalism, and how exactly that transformation's going to work ..."

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The new thing was from Part 2 of Michael Roberts' insightful series, 'Robots and AI: utopia or dystopia?' ..

"The question often posed at this point is: who are the owners of the robots and their products and services going to sell to make a profit?  If workers are not working and receiving no income, then surely there is massive overproduction and underconsumption?  So, in the last analysis, it is the underconsumption of the masses that brings capitalism down?

"Again, I think this is a misunderstanding.  Such a robot economy is not capitalist any more; it is more like a slave economy.  The owners of the means of production (robots) now have a super-abundant economy of things and services at zero cost (robots making robots making robots).  The owners can just consume.  They don’t need to make ‘a profit’, just as the aristocrat slave owners in Rome just consumed and did not run businesses to make a profit.

"This does not deliver an overproduction crisis in the capitalist sense (relative to profit) nor ‘underconsumption’ (lack of purchasing power or effective demand for goods on a market), except in the physical sense of poverty. ..."

Roberts here puts his finger on the key mode of production change required by total automation: production of exchange-values collapses and all production is of use-values, just like in slave-owning antiquity.

The issue is, who gets to be the recipient of such wonders of production, the owners of the robots .. or everyone? It seems contentious.

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Where to start? The only place was the labour theory of value.

"So Marx said that the capitalist pays the worker the value of his labour-power - what it costs to maintain the worker as an effective employee - and sets him to work. But the value the worker actually creates in his day's labour is more than this, and that value belongs to the capitalist, creating his profit once realised in the exchange process.

"But if the worker is replaced by a robot ..."

But Clare was having none of this.

"That can't be right. If the worker is paid less than what he produces, then the employer won't be able to sell all his products. No, Marx was quite wrong."

I hesitatingly began to talk about Marx's simple and expanded reproduction equations, Departments I and II .. but the audience had switched off.

In truth, I don't think the objection can be addressed in ordinary conversation, the sources of demand being manyfold: in addition to the needs of proletarians you will find capitalists' spending on themselves, the market for reproduction and expansion of the means of production .. .

No less a luminary than Rosa Luxemburg got it wrong.

In fact I explained quite clearly both simple reproduction and expanded reproduction within capitalism on this blog, but if you review the two posts you will see the analysis is not wholly trivial.

This afternoon I considered going through the spreadsheets with her - and decided against having my arm bitten off.

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You may have heard over the last couple of days: Mathematicians Measure Infinities and Find They’re Equal.

It relates to whether there are cardinal numbers between the infinity representing the size of the natural numbers and the larger infinity capturing the size of the real numbers. The continuum hypothesis says no, but that can't be proven using the normal axioms of set theory.

The work of Malliaris and Shelah has some bearing on the matter although not all is completely clear (is the cardinality of p = t the same as the continuum?).

I said to Clare, "Did you know there are different sizes of infinity?"

She snorted, "That kind of nonsense is just what gives mathematics a bad name."

I advanced on her with paper and pen; she sat back on the couch, closed her eyes, put her hands over her ears and started to hum.

Steve Keen and Anwar Shaikh

In the 1970s the International Marxist Group (IMG) was known as the most intellectual of the far-left organisations. Theory was taken seriously but as a member in my early twenties I never learned much economics - I was not the only one. An abiding memory was of a conference where a senior comrade gave a speech on economic perspectives: a colleague whispered to me that all he had done was take an editorial from The Economist that week and dress it up in Marxist language - I was appalled.

Amazon link

I'm in two minds about Steve Keen's book. I understand that it's dumbed down, written for students contemplating entering university-level economics. The book describes the vast arc of economics history stretching from the classical era of Adam Smith, David Ricardo and Karl Marx (who arguably terminated that tradition by making it politically explosive) through to the rise of the neoclassical tradition, Keynesianism and the confusion we are in today (Sam Williams' analysis is shorter and more definitive).

On the downside, in areas I know something about (quantum mechanics, special relativity) Keen's writing is confused although blusteringly self-confident. Throughout the book he has eschewed equations and diagrams, which is insane - he is reduced to conveying exactly the same concepts in prose which completely obscures his narrative. I was concentrating closely and his verbal arguments elide important steps and don't really hang together.

So I'm thinking Keen is interesting but intellectually underpowered, the kind of tourist guide who you sense isn't really authoritative.

The guy I'm really meant to read, apparently, is Anwar Shaikh.

Amazon link

Sam Williams writes:

"Shaikh’s book is by a modern university-educated economist written for other modern university-educated economists. Economics blogger Michael Roberts in his review says Shaikh’s “Capitalism” is more difficult than Marx’s “Capital.” I agree with Roberts on this point, and I think it is important to examine why this is so.

One reason is that Shaikh’s book demands a thoroughgoing knowledge of Marx’s work, including all three volumes of “Capital.” But it also requires a thoroughgoing knowledge of modern orthodox bourgeois economics—neoclassical marginalism. While parts of the book use Marxist language, the bulk of it is written in both the language of English and mathematics in a way that will be familiar only to those well grounded in orthodox bourgeois economics.

Shaikh provides some “translation” between the terminology employed by Marx and that used by modern economists, but it is hardly sufficient. In addition, where in the many places Shaikh uses the jargon of neo-classcal marginalism in place of basic Marxist concepts, it renders his language imprecise. Marx’s terminology was designed to describe in precise terms his analysis of capitalism. The terminology of neo-classical marginalism was developed for quite different purposes, to say the least, though it’s always possible to see what Shaikh is getting at provided the reader is sufficiently fluent in both “languages.”

Shaikh does provide a useful appendix listing the meaning of symbols he uses in his mathematical equations. The list is a long one.

Marxist political activists, even if they are highly educated Marxists but lack knowledge in today’s bourgeois economic orthodoxy, will have trouble understanding the book. But professional economists thoroughly grounded in modern bourgeois economics will be if anything in even greater trouble. The reason is that trained as they are in present-day bourgeois economics, they will also have a great deal of difficultly with the book unless they also have a thorough grounding in Marx. Though they will feel “more at home” with much of the terminology than will Marxist political activists, the Marxist foundations of the book will escape them.

The professional economists who will have the least difficulty with “Capitalism” are those familiar with the work of the Italian-British economist Piero Sraffa. For those somewhat familiar with Shaikh’s work, this will be no surprise. Much of Shaikh’s work has revolved around the “transformation problem”—the problem of transforming Marx’s values—or direct prices—into prices of production.

Shaikh has spent a considerable part of his career in refuting the suggestion by various critics of Marx that Sraffa’s work has both refuted Marx’s theory of value and surplus value and rendered it unnecessary. Essentially, these critics—also mostly university-educated economists—hold that the capitalist economy can best be described in terms of prices of production. According to them, analyzing capitalism in terms of “value” merely gets in the way.

But even professional economists familiar with Sraffa, unless well grounded in Marx, will not find “Capitalism” an easy read. I would most certainly not recommend Shaikh’s “Capitalism” as an introduction to modern Marxist economic thought.

None of this detracts from the importance of this work, however. Shaikh is undoubtedly one of the most important economic thinkers of our time. What it does mean is that it may take many years—or decades—for the arguments in this book to be assimilated into the understanding of the workers’ movement. I hope to contribute to this process in this extended review and critique."

So this is exciting and daunting! Although Michael Roberts in his review strikes a cautionary note.

Amazon link

Here is my go-forward plan (I have almost completed Capital Vol 1).

1. Read Capital Vols 2 and 3 and Theories of Surplus Value (Vol 4)
2. Read David Harvey's "Limits to Capital"
3. Engage with Shaikh's book (or watch the video lectures).

I would like to complete this plan within my lifetime.

Diary: crown prep

Eight minutes and twenty seconds ago I was sitting on the couch, fidgeting and waiting for the right moment to leave.

Now I'm walking down the road towards the dentist. I'm going for crown preparation - always unpleasant. I'm a bit spaced out, to be frank.

I see a man walking 15 yards in front of me: same age, same clothes, same appearance. I think: "It's almost like I'm looking at my future self ten seconds time."

I make a note of where he passes. Ten seconds later I pass that very same spot. I think: "I'm now my future self."

I look at the sun, a vague ball through scudding clouds. I'm seeing the sun in its past, eight minutes and twenty seconds ago.

"Hello sun," I think, "You seem pretty solid for an object existing at the same time as I was fidgeting on the couch." I guess my former self is as real as the sun.

My crown prep will take 50 minutes. As I approach the dentist, I imagine my future self passing me in the other direction, on the way home, the ordeal complete. That future self exists just as much as I do right now, entering the surgery. But just elsewhen.

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My new dentist is a young Polish woman, mid-twenties, with a brisk no-nonsense style. I'm guessing INTJ - she's usefully keen on explanation. She looks like an alien in her smock, full-face mask, cap, magnifying goggles and blinding-white forehead LED.

She's good with the injection, though; slow and gentle. I say how much I appreciate a dentist with empathy. The two of them giggle.

Then it's twenty minutes of electric drill whining in my mouth. The top-left molar is being ground down, shaped, flattened. I don't feel much - it's just stressing.

The really uncomfortable part is the mould, which feels like a length of squiggy plasticine cupped in a long, thin plastic container whose edge bites into my cheek.

"Bite hard and hold," she says. The two or three minutes is painful and interminable.

The final part, where she glues a temporary crown, is relatively uneventful. I have to come back in two weeks to have the real thing fitted.

"Don't worry if it comes off," are her final words.

I leave the dentist, start to walk home. 'Oh yes', I think, 'I'm now that future self I was so busy inferring but couldn't actually see 50 minutes ago.' *

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The temporary crown survived dinner and even flossing, but split in two and detached on encountering a xylitol chewing gum.

There's a little sensitive area at the back which is forcing me to bite on the right. But it's pointless getting a new temporary crown - it would never survive.

Two weeks.

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* I wrote about this (more correctly!) here .. the physicist's view as expressed by Einstein. You can see that my musings were all just a coping mechanism!