“Class, Crisis & the State” by Erik Olin Wright, 1976-1978-1979 (Part 2)
Wright was a Marxist sociologist who specialized in
analyses of politics, class and economics.
In the second part of this book he looks at 3 ‘Marxist’ theories of
crisis in capitalist economies; and secondly, goes on to compare Max Weber and V.
Lenin over the issue of the state. His
method in the first is to combine all the theories as relevant at times, while
trying to find a medium between Weber and Lenin on how to deal with the
capitalist state, i.e. in his words “using
the capitalist state to destroy the capitalist state.” Shades of the 2 and a Half International!
A Crisis
Wright runs us through the basics of the Marxist analysis
of labor and surplus value; the conversion of surplus value into constant and
variable capital and the push for capital reproduction on an ‘every-expanding
scale.’ He uses complex graphs and math to
partly prove his points, but these are for specialists. The three theories
Wright deals with regarding capitalist accumulation failures are: #1) falling
rate of profit. #2) under-consumption. #3) rising wages. Wright adds a very
interesting caveat, that ‘the state’ – the Keynesian state specifically – has a
‘contradictory’ role in accumulation. In
other words it doesn’t just prop up capital with indirect aide, it can drain
capital as well with various ‘unproductive’ and ‘non-commodified’ investments
like welfare, unemployment insurance, military spending and the like. Ultimately
it is unsustainable in a capitalist context. This is why a growing wing of
capital opposes the ‘welfare’ state, especially in unprofitable times. Wright does not intend to look at circulation
issues – debt, credit and monetary values.
Wright asks if a stagnant, no-growth, non-accumulating, ‘stagflation’
capital is possible as a form of permanent crisis, but leaves it at that.
Certainly that has happened, so it is possible historically, and for certain
firms, inevitable. “Accumulation plays a
vital role in containing and channeling the class struggle” according to
Wright, so guess what happens when the money runs down? Repression and
austerity! Welcome to the actual reality
of economics in class society.
1) Wright explains that, for the ‘falling rate of profit’
argument, since the only source of surplus value (profits) is living labor,
investments in substitutes like equipment, machines, robots, software and
buildings has a ‘tendency’ to reduce profit rates. Marx explained this in Das Capital. A drop in
profits creates a crisis, which the larger capitalists respond to by liquidating weak
capitals and bankruptcies, but also attacking the working class through various
means – speed-up, layoffs, price rises, cutting production and the like.
2) The second so-called reason for crises is that workers’ are unable to buy things, so production stalls and profits fall. The underconsumptionists look to ‘consumption’ as the driver of profitability, not production. The ‘falling rate of profit’ folks would say this is a result of a profit drop, not the cause, just as overproduction is a result. Engels pointed out that ‘underconsumption’ is a standard state for the world working class, and for Sweezy it becomes worse under monopoly / oligopoly capitalism. This impacts smaller, ‘competitive’ capital and its workers, along with rents. Methods to deal with underconsumption by ‘unproductive’ or even wasteful expenditures include using consumer credit, planned obsolescence and Keynesian state intervention in the economy to prop it up.
3) The third idea, which has also been proclaimed by Wall
Streeters, is that higher wages drive down profits, and incidentally, boost
inflation as capitalists try to stabilize profit rates. This is a result of successful class struggle
by workers, in effect taking back some profit in the struggle over the surplus.
Class struggle also affects the length of the work day and the intensity of
work. This is inevitable in a class society, but it can also go the other way,
as has been the case since the late 1970s in the U.S. This history undermines this argument as a reason for crisis, as a number have happened since 1978. Its proponents believe these crises are ways to discipline labor and push down
wages.
Wright thinks all of these things can contribute to crisis,
and are ‘integrated’ either as dominos or as a web of interactions in a crisis
economy. He leans a bit more to argument #1, as a ‘high organic composition of capital’ weakens attempts to increase
exploitation. While he did not find much
data to support #1 in the 1970s, Michael Roberts and others have since provided
strong evidence. The weakening of the profit rate, for whatever reason, leads
to movements towards speculation.
Wright points out ‘tight’ domestic labor markets mean that
capital has to import labor from other countries, certainly relevant now in the
context of Trump’s counter-productive terror campaign against immigrants. Wright discusses the concept of ‘unproductive’
state welfare and military expenditures that come out of tax revenues from
labor and capital He moderates this view by observing that the state
also indirectly supports capitalist business accumulation and exploitation in
myriad ways. So the state has a dual
economic function. Wright consequently understands that all taxation is not a drain on
surplus value, as the libertarians would have it.
The
State and ...
Max Weber insisted that a ‘rational’ and well-run
parliament skilled at compromise is the key to democracy. If it existed, the ‘bureaucracy’ of the state
would be reined in by this extraordinary parliament. Lenin insisted in “State and Revolution” that any bourgeois parliament was dominated
by large capital and so was the upper bureaucracy in that state. All of it had to be overthrown for actual democracy - workers democracy - to take hold. For
democracy, Weber posited an efficient parliament; Lenin soviets. Weber thought the soviet, as a form of direct
democracy (also called council, assembly, commune), was impossible. Lenin said it worked during the Paris
Commune. He pointed out that a ‘well
run’ parliament was possible, but still inimical to the interests of the
working class. Weber claimed the state was neutral; Lenin knew it was not.
These two ideas are polar opposites.
Wright expounds on each opinion, revealing the weakness in
Weber’s classless congress and uses history to poke holes in Lenin’s theory
about Soviets. Lenin thought a rooted
and efficient ‘vanguard party’ and an educated working class would solve
bureaucratic problems in the soviet state.
Wright spots Lenin’s inability to locate contradictions within such a single party or state. Wright thought a
growing bureaucracy was inevitable in a capitalist state. Lenin understood the value of scientific and
trained experts in various disciplines in government, as long as they were
under proletarian leadership. Weber
ignores experts and believes everyone in government is a ‘bureaucrat.’
Wright’s solution to this debate is to posit that “socialists can use the capitalist state to destroy the capitalist state.” Wright does not identify this as a social democratic tactic. He explains that this might be possible because, in the face of a capital strike or economic sabotage by capitalists, the state’s financial role is large enough that it can defeat or stabilize the working classes’ living conditions. He advocates a socialist government back nearly all efforts by social movements and unions in their efforts to further democratize government beyond just voting. He advocates working with the ‘extra-parliamentary revolutionary left,’ not repressing it. He points out that the lower ranks of civil servants are proletarianized now and, while they live off tax revenue, they could play a vital role in replacing the top capitalist bureaucrats in government. Lastly, he thinks that the Left can split the military when the inevitable attempt of a capitalist coup or counter-revolution happens.
Wright never mentions fascism. He does not advocate dual power, workplace committees or assemblies/ councils/ communes/ soviets, nor arming the working class to the point of having workers’ guards. He has nothing to say about nationalizing basic industries, rent control or a debt jubilee. He ignores transitional demands that strengthen the class, though he hints at an elected workers’ government pushing in that direction.
Wright’s prediction for the future was for greater state involvement, which has certainly happened in one way, but not that way he thought. While the state has repeatedly had to prop up capital during crises – see especially in 2008 – neo-liberalism and libertarian ideas on the dominating role of the market have become the rule. Under Trump and the Republican Party it has become a scorched earth tactic, as it has in other authoritarian ‘democracies.’ Wright underestimated the vileness of capital in the 1970s, which also undermines both Weber's 'rational' parliaments and the underconsumptionists' love of Keynes.
This is a thoughtful book worth reading, filled with newish ideas and accurate perceptions, even if you don’t agree with all of them.
Prior blogspot reviews on this subject, use blog search
box, upper left, to investigate our 19 year archive, using these terms: “Erik
Olin Wright,” “Lenin,” “Weber,” “falling rate of profit,”
“underconsumptionism,” “Monthly Review,” “Michael Roberts.”
And I bought the book at May Day Books!
Red Frog / June 16, 2025