Chris Harman

Zombie Capitalism

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Absolute surplus value: The increase in surplus value that occurs when working hours are increased without a parallel increase in pay.

Abstract labour: What all particular acts of labour have in common under capitalism; is measured in terms of the proportion each constitutes of the total socially necessary labour time expended in the economy as a whole.

Austrian School: Version of bourgeois economics which tends to see economic crises as inevitable, but necessary for continued economic growth. Best known figures Friedrich August von Hayek and Joseph Schumpeter.

Autarchy: Attempt to cut an economy off from trade links with the rest of the world.

Baran, Paul: Marxist theorist who argued that development was only possible in Global South through a break with capitalism. Collaborator of Paul Sweezy.

Bauer, Otto: Austrian Marxist of first third of 20th century who followed a policy of trying to reform capitalism.

Bernstein, Edward: “Revisionist” critic of revolutionary Marxism within German socialist movement at beginning of 20th century.

Bills: Documents issued by banks and other capitalist firms that act as IOUs as they grant each other credit.

Böhm-Bawerk, Eugen von: One of the founders of neoclassical economics, wrote best known critique of Marx’s work.

Bortkiewicz, Ladislaus von: Polish economist at beginning of 20th century who carried through a serious examination of Marx’s work but rejected some of its crucial findings.

Bretton Woods: Venue of the conference that set up the post World War Two financial system based on gold and dollars. Name given to that system until its collapse in 1971.

BRICS: Initials standing for Brazil, Russia, India, China and South Africa.

Bukharin, Nicolai: Bolshevik leader and economist theorist; executed by Stalin in 1938.

Capitals: Term often used to describe economically competing units of capitalist system (whether individual owners, firms or states).

Centralisation of capital: Tendency for capital to pass into fewer and fewer hands through takeovers, mergers, etc, so that whole capitalist system is under direct control of fewer competing capitals.

Chicago School: Followers of Milton Friedman and monetarism.

Circulating capital: See Fixed capital.

Clark, John Bates: American economist, one of the founders of neoclassical economics.

Cliff, Tony: Palestinian born Marxist resident in Britain through second half of 20th century; developed theory of state capitalism and, in a rudimentary form, of the permanent arms economy.

Commercial capital: Investment aimed at making a profit from the buying and selling of goods as distinct from their production. Sometimes called merchant’s capital.

Commodity: Something bought and sold on the market. Commodities are commonly called “goods” in English.

Concentration of capital: Growth in size of the individual competing capitals that make up the capitalist system.

Concrete labour: Refers to the specific characteristics of any act of labour – what distinguishes, for example, the labour of a carpenter from that of a bus driver.

Constant capital: Marx’s term for a capitalist’s investment in plant, machinery, raw material and components (in other words, the means of production), denoted by c.

Corey, Lewis: Also known as Louis Fraina, an early member of the American Communist Party who later wrote an important Marxist analysis of the slump of the 1930s.

CPSU: Communist Party of the Soviet Union, ruling party within USSR. Its general secretaries – Stalin, Khrushchev, Brezhnev, Andropov, Chernenko and finally Gorbachev – ran the state.

Credit crunch: When buying and lending seizes up in the banking system and the wider economy.

Cultural Revolution: Political turmoil in China in the late 1960s and early 1970s.

Davos: Swiss ski resort where World Economic Forum of leading industrialists, financiers, government ministers and economists takes place each year.

Dead labour: Term used by Marx to describe commodities made in the past but used in production in the present.

Deficit financing: The method by which a government pays for the excess of expenditure over receipts from taxation by borrowing.

Deflation: A fall in prices, normally associated with impact of economic crisis.

Department One: Section of economy which is involved in turning out equipment and materials for further production (called by mainstream economists “capital goods”).

Department Two: Section of economy concerned with turning out goods which will be consumed by workers (sometimes called “wage goods”).

Department Three: Section of economy which turns out goods which will not be used as means and materials of production, and which will not be consumed by workers either – in other words the section that turns out “luxury goods” for consumption by the ruling class, armaments and so on. Sometimes referred to as Department 2a.

Dependency theory: Theory very widespread in 1950s and 1960s which held that dependence of Third World economies on advanced economies prevented economic development.

Depreciation of capital: Reduction in the price of plant, machinery and so on during their period of operation. This can be due to wear and tear, or to the “devaluation” of capital (see below).

Derivatives: Financial contracts designed to allow investors to insure themselves against future changes in prices. Derivatives trading developed as a means of speculating on interest or exchange rates, and then into a form of financial gambling on changes in markets in general.

Devaluation of capital: Reduction in the value of plant, equipment and so on as technical advance allows a greater amount to be produced with a given quantity of labour time.

Euromoney (Eurodollars): Vast pool of finance, denominated in dollars but held outside the US, which grew up in late 1960s and 1970s, beyond the control of national governments.

Eurozone: Currency union of 16 European Union states which have adopted the euro as their sole legal tender. It currently consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

Exchange value: Term used by Smith, Ricardo and Marx for worth of commodities in terms of other commodities. See Value and Use value.

Expenses of production: Spending which capitals have to undertake to stay in business, but which does not materially expand the output of commodities (for instance, spending on marketing goods, advertising, protecting plant and machinery).

Fiat money: Form of money that has no intrinsic value apart from a guarantee from a government, e.g. tokens such as notes and coins made of cheap metal. Stands in contrast to monetary medium made of or exchangeable for material with value in its own right, such as gold or silver.

Fictitious capital: Things like shares and real estate investments that are not part of the process of production but which provide the owners with an income out of surplus value.

FDI: Foreign Direct Investment, investment by a firm in one country which gives it more than 10 per cent of ownership of a firm in another country. Investment that does not give that level of ownership or control is called portfolio investment.

Finance capital: Capital in the financial as opposed to productive and sales sectors of the economy. Often used to imply that financiers are the real power in the economy as a whole.

Financialisation: Growth of the financial section of the economy and its influence. Often the term implies this is detrimental to capital in other sectors.

Fiscal measures: Tax and spending undertaken by governments.

Fischer, Irving: Leading neoclassical economist in US in first third of 20th century.

Fixed capital: Capital invested in plant and equipment which last for several cycles of production. Contrasts with circulating capital, which is invested in things that are used up in each cycle of production and have to be replaced for the next one, ie raw materials, components and labour power.

Fordism: Term sometimes used to describe capitalism from 1920 to mid-1970s. Implies supposed cooperation between firms in mass production industries with unions to keep up wage rates.

Formal sector: Jobs in which workers have legal employment rights.

Friedman, Milton: Conservative free market economists who believed state could stop crises by correct control of money supply. Inspired “monetarist” policies of Margaret Thatcher in early 1980s.

Galbraith, John Kenneth: American economist of the post-war decades critical of unrestrained free markets.

GDP: Gross Domestic Product, measure of the market value of all final goods and services made within the borders of a nation over a year.

GNP: Gross National Product, as GDP but also includes the net income from overseas investment.

Gold standard: System under which states tied the value of their national currencies to quantities of gold and paid off debts to each other with it. States broke with it during World War One and from the early 1930s to the end of World War Two. Operated in modified form under post-1945 Bretton Woods system that collapsed in 1971.

Golden Age: Term sometimes used for long boom in the decades following the Second World War.

Great Depression: Term used for period of crises in the 1870s and 1880s, and again for slump of the 1930s.

Grossman, Henryk: Polish-Austrian Marxist activist and economist of first half of twentieth century.

Hansen, Alvin: One of leading mainstream US economists of middle third of 20th century, converted to Keynesianism by crisis of 1930s.

Hayek, Friedrich August von: Conservative economist who opposed attempts of state to mitigate impact of economic crises, claiming this could only make things worse. Admired by Margaret Thatcher.

Hilferding, Rudolf: Published pioneering work on impact of finance and monopoly on capitalism, but later served as finance minister in Weimar Republic and opposed revolutionary socialism.

Hobson, J.A.: British liberal economist of beginning of 20th century, argued that imperialism suited finance but not the rest of capitalism.

Human capital: Term used by mainstream economists to describe the skills employees gain from education and training.

ILO: International Labour Organisation, a United Nations agency dealing with labour issues.

IMF: International Monetary Fund, international body dominated by old industrial countries (particularly the US) which, along with the World Bank, lends money to countries in economic difficulties in return for them accepting tight controls over their policies.

Import substitutionism: Attempt to speed up industrialisation by blocking imports and providing protected market for local capitalists.

Informal sector: Jobs where workers do not have formal employment rights.

Jevons, William Stanley: British economist of 1860s–70s, a founder of neoclassical economics.

Kautsky, Karl: Most prominent Marxist at beginning of 20th century, later opposed revolutionary approach.

Keynesianism: Economic doctrine based upon ideas of the British economist of the inter-war years, J.M. Keynes. Holds that governments can prevent recessions and slumps by spending which is greater than their income from taxation (so-called “deficit financing”).

Kidron, Mike: Marxist economist resident in Britain in second half of 20th century who further developed theory of permanent arms economy out of ideas of T.N. Vance and Tony Cliff.

Labour power: Capacity to work, which is bought by capitalists by the hour, day, week or month when they employ workers.

Labour theory of value: View developed by Marx (on basis of ideas of previous thinkers such as Smith and Ricardo) that there is an objective measurement of the value of goods, which is ultimately responsible for determining their prices. This is the “socially necessary” labour time needed to produce them – in other words, that across the system as a whole, using the prevailing level of technique, skill and effort. For Marx’s own accounts of the theory, see Wage Labour and Capital, The Critique of Political Economy and chapter one of Capital, Volume One.

Leverage: Borrowing to magnify the buying power of small cash payments for shares, property and other assets.

Liquidity: Having cash in hand (or assets that can be easily turned into cash) to meet claims that fall due or, in the case of a bank, meet withdrawal requests.

Luxemburg, Rosa: Polish-German Marxist, leader of revolutionary opposition in Germany to First World War, murdered by counter-revolutionaries in January 1919.

Macroeconomic: Referring to economy as whole, as opposed to “microeconomic” relations between individual elements within it. “Macroeconomics” is a branch of mainstream economics concerned with trying to guide national economies.

Marginalism: Another name for neoclassical economics.

Marshall, Alfred: British economist of late 19th and early 20th centuries and a key figure in neoclassical economics.

Menger, Carl: Austrian economist, one of the founders of neoclassical economics.

Mercantile or merchant capital: Investment aimed at making a profit without engaging in production, for instance in the buying and selling of goods.

Mercosur: A regional trade agreement between some Southern American states (Argentina, Brazil, Paraguay and Uruguay).

Microeconomic: See Macroeconomic.

“Military Keynesianism”: Term used for economic impact of rising military expenditure paid for out of government debt during Ronald Reagan presidency in 1980s US.

Minsky, Hyman: Non-orthodox mainstream economist of mid-20th century who recognised inevitability of speculative booms and busts for capitalism.

MITI: Ministry of International Trade and Industry, powerful Japanese government agency.

Monetarism: Doctrine which holds crises cannot be solved by governments increasing their spending to more than their tax income. Increasing the supply of money, this holds, will simply lead to higher prices. Under the name the quantity theory of money, this was the orthodoxy in bourgeois economics before the rise of Keynesianism in the 1930s, and became fashionable again in the mid-1970s.

“Monetary measures”: Attempt to regulate economy, preventing inflation and countering recessions by government contraction or expansion of amount of money that is circulating.

Money capital: Money held with the intention of increasing its value, either as part of the process of productive investment, or through lending to others.

Moral depreciation of capital: Loss of value of plant and capitals as it becomes obsolescent in the face of rapid technological advance.

NAIRU: Non-Accelerating Inflation Rate of Unemployment, see Natural Rate of Unemployment.

Natural Rate of Unemployment: Level which free market economists decided was necessary for capitalism to avoid accelerating inflation. Also called NAIRU – Non-Accelerating Inflation Rate of Unemployment.

Neoclassical economics: Dominant school in bourgeois economics since the end of the 19th century. Believes value depends on the “marginal” satisfaction people get from goods, and justifies profit as a result of the “marginal productivity of capital”. Also known as “marginalism”.

Neoliberal: “Liberal” is term used in continental Europe meaning “free market”, so neoliberal means a return to free market economic measures. Used by some people on left to refer to attacks on workers’ conditions and welfare benefits. Also sometimes used to describe period from mid-1970s to present.

“New Classical” School: School of free market economics which developed in 1980s; holds that a market economy will stay in equilibrium unless subject to external forces or interference by state, monopolies or trade union action.

NICs: Newly Industrialising Countries of 1960 to 1980s, like South Korea, Brazil, Taiwan.

Nomenklaturists: Those holding high up, privileged positions in state and industry in old Eastern Bloc countries before 1989–91.

Non-productive consumption: The use of goods in ways which serve neither to produce new plant, machinery, raw materials and so on (“means of production”) nor to provide for the consumption needs of workers. The use of goods for the consumption of the ruling class, for advertising and marketing or for arms, all fall into this category.

Non-productive expenditures: Expenditures undertaken by capitalists or the state over and above what is necessary for the production of commodities (includes spending on consumption of the ruling class, on its personal servants, on the “expenses of production” and so on).

OECD: Organisation of Economic Cooperation and Development. Organisation of the established industrialised countries with an important research arm.

Oil shock: Sudden increase in price of oil, especially as a result of the Arab-Israel war of October 1973.

Okishio’s theorem: Theory which claims to disprove Marx’s tendency of the rate of profit to fall.

OPEC: Organization of the Petroleum Exporting Countries, a cartel currently made up of twelve countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

Organic composition of capital: Ratio of the value of investment in plant, machinery, raw materials and so on (“means of production”) to the value of expenditure on employing productive labour. Using Marxist terminology, this is the ratio of constant capital to variable capital, or c/v. See also Technical composition of capital.

Organised sector: Term used in India for formal sector, i.e. where workers have legal working rights.

Pareto, Vilfredo: Italian neoclassical economist at turn of the 20th century, who supported Mussolini’s rise to power.

Plaza Accord: 1985 Agreement by Japan and Germany to allow the value of their currencies to rise so as make it easier for the US to export.

Ponzi scheme: A fraudulent scheme which pays profits to old investors out of money collected from new investors.

Preobrazhensky, Evgeny: Russian Bolshevik activist and economist, executed by Stalin in 1937.

Private equity funds: Investment vehicle where rich individuals come together to buy shares in companies in order to make a profit.

Productive expenditures: Spending which is necessary if commodities are to be produced and surplus value created (spending on the means and materials of production on the one hand, and on workers’ wages on the other).

Productive labour: Labour which contributes to the creation of surplus value.

Profits, mass of: Total profits of a particular capitalist. Measured in pounds, dollars and other currency.

Profit, rate of: Ratio of surplus value to capital invested. Measured as a percentage. Denoted as s/(c+v).

Profit share: Proportion of total output of a firm or country that goes in profits, as opposed to wages.

Rate of exploitation: Ratio of surplus value to wages (strictly speaking only the wages of workers who produce commodities should be counted). It can be expressed another way, as the ratio of the time the worker spends producing surplus value for the capitalist, compared to the time he or she spends on producing goods equivalent to his or her living standard. Also called rate of surplus value, that is, the ratio of surplus value to variable capital, and depicted as s/v.

Realisation: Term used by Marx to describe the successful sale of produced commodities so as to achieve a profit.

“Regulation” theorists: French school of economists influenced by Marxism who periodise 20th century capitalism into Fordist and post-Fordist phases.

Relative surplus value: Increase in surplus value obtained when time it takes for workers to produce the equivalent of their own wage is reduced, so causing a greater portion of their working time to go to the capitalist.

Rentier: Old fashioned term describing someone who lives off unearned income such as rent or dividends.

Reserve army of labour: Pool of unemployed workers used by capital to keep down the wages of those with jobs and who are able to be drawn into industry with the periodic expansion of production.

Ricardo, David: Political economist of first decades of 19th century, developed labour theory of value and an important influence on Marx’s ideas.

Robinson, Joan: Radical Keynesian economist of middle third of 20th century, broke with neoclassical school but rejected Marx’s theory of value.

Samuelson, Paul: Major populariser of the mainstream synthesis of neoclassical and Keynesian ideas through his economic textbook in post-war decades, and adviser to the Kennedy government in the US.

Say’s law: Supposed law that holds there cannot be any general overproduction of goods because each time someone sells something someone else buys it.

Schumpeter, Joseph: Austrian economist of first half of 20th century. Supported capitalism but rejected idea that it developed smoothly, coined phrase “creative destruction”.

Smith, Adam: Most important political economist of latter part of 18th century. Distorted presentations of his ideas now constitute apologies for capitalism, but a critical use of many of his concepts was important to Marx.

Socially necessary labour time: Labour time needed to produce a certain good, using average techniques prevailing throughout economy and working at average intensity of effort. Determines the amount of abstract labour – and therefore value – embodied in a commodity.

Social wage: Term used to describe welfare, health and other benefits supplied through the state which improve workers’ living standards.

Solvency: Ability of firms or individuals to pay off all debts providing they have time to turn their own assets into cash.

Sraffa, Piero: Cambridge economist who refuted basic contentions of orthodox bourgeois economics, the “neoclassical” marginalist school. His followers tend to base themselves on Ricardo rather than Marx and reject the Marxist theory of the falling rate of profit, and usually see crisis as arising when wages cut into profits. They are often known as “neo-Ricardians”, although Sraffa regarded himself as in the Marxist tradition.

Strachey, John: Best known purveyor of Marxist interpretations of slump of 1930s in Britain, Labour Party minister in the late 1940s and Keynesian apologist for right wing Labour ideas in 1950s.

Surplus value: Marx’s term for excess value produced by the exploitation of workers. It forms the basis for the profit of the individual capitalist plus what he pays out to others in the form of rent, interest payments and taxation (plus what he spends on “non-productive activities”). Denoted by s.

Sweezy, Paul: American economist who wrote a pathbreaking account of development of Marxist ideas in 1940s (The Theory of Capitalist Development) and, with Baran, an account of mid-20th century capitalism in 1960s (Monopoly Capital).

Tariffs: Taxes on imports, designed to raise their price and so make it easier for local producers to dominate markets.

Taylorism: Technique of so-called “scientific management”, based upon time and motion studies of every act of labour. Spread through industry in the early 20th century.

Technical composition of capital: Physical ratio of plant, machinery, raw materials and so on (“means and materials of production”) to total labour employed. When this ratio is measured in value terms rather than physical terms, it becomes the “organic composition of capital”.

Terms of trade: The relative prices of a country’s exports to imports. An improvement to the terms of trade means a country has to pay less for the products it imports.

Tigers: Term used for East and South East Asian industrialising economies.

Transformation problem: Problem which arises when the attempt is made to move from Marx’s account of capitalism in terms of value to the prices at which goods are actually bought and sold. Many economists have claimed it is impossible to solve the problem, and that therefore Marxist economics must be abandoned.

Triad: The three major parts of the industrialised capitalist world, i.e. North America, Europe and Japan.

Trusts: Associations of industrial concerns which collaborate to carve up markets and force up selling prices.

Turnover time of capital: Time taken from beginning of production process to final sale of goods.

UNCTAD: United Nations Conference on Trade and Development, a development agency and important source of economic statistics.

Under-consumptionism: Theory which blames capitalist crisis not on the law of the falling rate of profit, but on the alleged inability of capitalism to provide a market for all goods produced within it. The first versions of the theory were put forward by early 19th century economists such as Jean Charles Leonard de Sismondi, but it has been developed since both by Marxists (from Rosa Luxemburg to Paul Baran and Paul Sweezy) and by Keynesians.

Use value: Immediate useful qualities of a commodity. See Exchange Value.

Valorisation: Term used in some translations of Marx’s capital for the self-expansion of capital, based on the French translation of the German word Verwertung.

Value: Amount of abstract labour contained in a commodity; determines its exchange value and, after some redistribution of surplus value between capitalists, its price. See Exchange Value.

Value composition of capital: Ratio of constant to variable capital, differs from organic composition by taking into account changes due to other factors as well as change in technical composition.

Vance, T.N.: American economist who developed theory of “permanent war economy” in 1940s and 1950s.

Variable capital: Marx’s term for capital invested in employing wage labour. Denoted by v.

Volcker, Paul: Head of US Federal Reserve in the late 1970s and 1980s.

Volcker shock or Coup: Sudden increase in US interest rates in 1979.

Walras, Leon: French economist of latter part of 19th century; a founder of neoclassical economics.

World Bank: See International Monetary Fund.

WTO: World Trade Organisation, international agency that aims to promote free trade and neoliberal agenda.

Last updated on 05 April 2020