Gerard Dumenil and Dominique Levy’s latest book ‘The Crisis of Neoliberalism’ is an excellent, though flawed contribution to the burgeoning body of Marxist literature on the current economic crisis. Their analysis starts from the position that capitalism has different phases where it takes different forms, the latest being neoliberalism which emerged out of the crisis of the 1970s andhas been imposed from the core capitalist countries onto the developing world.
Dumenil and Levy argue that the current crisis is the fourth major crisis of modern capitalism, following the crisis of the 1890s, the Great Depression of the 1930s and the crisis of the 1970s. Such crises go beyond ordinary recessions as they are structural so alter the social order and international relations. Thisleads on to one of the central arguments of the book, that they reject monocausal explanations for crises of capitalism instead maintaining they can be caused by a complex multiplicity of reasons. Whilst the crises of the 1890s and 1970s can be explained by declining rates of profit, Dumenil and Levy claim that the Great Depression and the current crisis came out of periods of rising profitability.The Crisis of Neoliberalism understands the period from the structural crisis of the 1970s as one of financial hegemony. US capitalism was the starting point for neoliberalism in its expansion through financialisation and globalisation. This created high incomes for a small elite and excessive consumption. The financial structure was unstable, with slow accumulation and increasingfinancialisation to raise profit with growing domestic debt. The unstable trajectory of the US economy, from too much financialisation led to the current crisis.
Dumenil and Levy’s analysis is fascinating and well argued; however, it fails to provide a theory of crisis as they consider the cause of each crisis to be individual. The reliance on the idea of financialisation as a separate entity within capitalismalso fails to understand capitalism as a totality, instead artificially focusing on one section of it. If the problem was with excess financialisation then regulation of that industry to prevent this in the future could prevent crises of this kind. As financialisation develops out of and is interrelated with productive industry this is not possible. The struggle for profit in the productivesector led to financial speculation to maintain and increase profit, but this in itself depends ultimately back on production thus leads to crisis. Any theory of crisis must therefore account for the underlying factors in financialisation.
To do so, it is necessary to return to a monocausal theory in the tendency of the rate of profit to fall. Joseph Choonara, along with others, has criticised thedata used to demonstrate that the rate of profit was rising in the period prior to the current crisis. The time period selected by Dumenil and Levy and others who counter the theory of the tendency of the rate of profit to fall runs from 1982 through to 2006. However, this fails to account for the fact that there is a business cycle with 1982 representing a low point and 2006 a peak. In other wordscomparing two random points in an economic cycle cannot give any indication of whether the profit rate is falling or rising. Comparing the trough to trough of the cycle in the period leading up to the current crisis and the profit rate has not risen at all. Additionally there has been a downward trend since the 1950s and the end of the great boom. The system has then indeed shown a tendency towardsstagnation which accounts for the recurrence of crises within it.
Dumenil and Levy also maintain that the new neoliberal form of capitalism has three classes. These are the popular class made up of wage earners and low level salaried employers, the capitalist class and an intermediary managerial class. This class sides with either of the other two, changing the social order as they do. In the...
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