From the International Socialism, Internal Bulletin, February 1971.
Transcribed by Ted Crawford, September 2012.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
David Yaffe has recently been moving around IS circles saying that the basic positions of the organisation on a whole number of issues are wrong. On the permanent arms economy we are wrong because we “misunderstand” the Marxist theory of the crisis. And our approach to the Labour leaders involves a “failure to understand” reformism.
In the brief space of the internal bulletin I cannot deal with all these issues, or even with all the issues raised in the criticism of the unemployment pamphlet printed above. Instead I want to concentrate on a few only. Comrades will be able to judge Yaffe’s reliability on other issues by his performance on this one.
He writes that the “basic economic analysis in the pamphlet involves an underconsumptionist theory of crisis”. Now, anyone who has actually read the unemployment pamphlet must feel a bit confused by this. There is a section of the pamphlet called the “real cause”. This section does not talk about “underconsumption” but argues that:
“An ever-increasing scale of investment poses problems for big business. Profits do not normally rise at anything like the same speed. The result is that, despite the continual pressure on workers to work harder and make bigger profits, the tendency is for profits as a proportion of investment to fall.”
Comrade Yaffe makes no reference to this passage. Instead, he quotes two passages, one that comes before it in the pamphlet and one that comes after.
The one before reads “It seems that not high wages but low wages should explain growing unemployment.” And that is true. It does “seem” to many people (rightly or wrongly) that if only wages were higher goods produced could be sold. And it is certainly true that wage cuts can only further increase unemployment in the short term. However, if the pamphlet stopped there, Comrade Yaffe would be quite right. We would be unashamed Keynesians, putting forward the view that it is open to the government to push up purchasing power and end the crisis.
What Yaffe refuses to admit in his critique is that the pamphlet does not stop there. It goes on to explain why it is that capitalism cannot adopt what “seems” to be the easy solution to unemployment (raising demand). Or, as the pamphlet puts it on the next page, “The rise in unemployment is a product of the sort of society in which we live.” It goes on to argue (p. 5) that unemployment exists because society is based upon profit making and that (pp. 6–7) inbuilt into capitalist society is a tendency for the rate of profit (“profits as a proportion of investments”) to fall.
If that is “underconsumptionism”, then black is white.
What of Yaffe’s second quote from the pamphlet:
“The capitalist wants to squeeze more and more profits from his workers. The only possible source of these bigger profits is by forcing down the wages of the workers. But such as policy breeds its own problems. If all wages are held down the increased number of goods produced by the bigger and more expensive machines cannot possibly be sold. Workers are not getting enough wages to buy them, which means a further cut in profits.”
Far from being “underconsumptionism”, this is actually the Marxist explanation of why capitalists cannot solve the crisis. If the fall in the rate of profit was the only factor worrying the capitalist, then capitalists could (as comrade Yaffe seems to believe) avoid the crisis by “continual expansion of production by increasing the productivity of labour and the ensuing mass of profits”, or more simply (and more relevant for the state of British capitalism at present, although comrade Yaffe does not want to recognise the facts about the current wage battles) forcing down the real wages of workers.
But, in reality, any such course of action can only result in an increased mass of products that workers cannot consume.
Of course, this alone (no more than the fall in the rate of profit alone) cannot explain crisis. The two have to be seen as dialectically linked in the development of the crisis. But both are there.
That is why Marx could write that:
“The last cause of all real crises always remains the restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire society would be their limit”. (Capital, Vol. III, p. 568)
If we had ignored the crucial role of the falling rate of profit, we would indeed have been guilty of a serious fault, opening us up to “reformist” conclusions. But we did not, despite Comrade Yaffe’s slanders.
But ignoring the role of overproduction in the development of the crisis leads also to reformist conclusions – to the belief that state intervention and increased exploitation of workers can avoid crises. And this is a view that Comrade Yaffe explicitly holds when he says that there would be no crisis if productivity could increase “sufficiently to finance profitability in the private sector and maintain a faster growing public sector” (although, admittedly, he has an unexplained belief that while this happened until recently, it is no longer possible.
The fact is that Comrade Yaffe has in no way even dealt with the arguments in the unemployment pamphlet. Instead, he is engaged in a sort of intellectual witchhunt, seeking out “underconsumptionists” everywhere.
But the fact is that in doing so, he has failed utterly to refer to the arguments put in, what is after all, a short, popular, not particularly detailed and (I hope) not-too-difficult-to-read pamphlet.
If he reads Marx in the same way, then his claims to be a knowledgeable critic of the theory of the permanent arms economy must be very much in question.
Last updated on 15.9.2012