Richard Wolff and the deepening crisis

Michael Roberts stll stands behind Karl Marx’s law of the tendency of the rate of profit to fall

« For Wolff, the “classic contradiction” of capitalism is that capitalists “paid insufficient wages to enable workers to purchase growing capitalist output” (p166). But the main contradiction, in my view, lies not in ‘insufficient wages’ but in Marx’s law of the tendency of the rate of profit to fall. This tendency can for periods (sometimes long) be counteracted by more exploitation and new technology, but it eventually operates to drive down profitability and total profits, leading to a collapse in investment and then incomes and employment.

This explanation is entirely missing in Wolff’s book. Wolff’s five reasons for the Long Depression are true only because they describe the nature of the current low-growth world, but the explanation lies with continued low profitability (near post-war lows), a failure to reduce debt levels and the failure of business investment to recover as a result. It’s not too much cash and capacity but too little profit.

Wolff does take up the “truth about profits” p81, but only to tell us that “profits have risen dramatically over the last 30 years”. This is true if measured against GDP, as many do. But this really only measures profit margins (profits per unit of output) not profitability in the Marxist sense, as profits over the stock of capital and labour employed. On that measure, profitability has risen somewhat since the 1980s, only to start to decline again from the end of 1990s and is now below levels achieved 20 years ago in most major capitalist economies. And now even profit margins are falling. By the way, Wolff’s book concentrates almost totally on the US capitalist experience. »

Michael Roberts Blog

Capitalism’s crisis deepens by Richard D Wolff, Haymarket Books $18.95

The New York Times magazine has described Richard Wolff as “probably America’s most prominent Marxist economist”.  And that is probably not an exaggeration in the description of this emeritus Professor of Economics at the University of Massachusetts, Amherst and visiting professor at the New School University in New York.

Richard Wolff has been one of a handful of Marxist economists with full tenure at an American university.  And he has worked tirelessly to bring home to students and all who would listen in the US the Marxist alternative explanation of the nature of US capitalism and its current crisis.  Wolff has written several important economics books, sometimes with his close collaborator, Stephen A. Resnick.  In particular, their recent book,  Contending Economic Theories, neoclassical, Keynesian and Marxian is a very useful and clear explanation of the main strands of economics for…

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