Ernest Mandel

Late Capitalism


One of the central purposes of this book is to provide a Marxist explanation of the causes of the long post-war wave of rapid growth in the international capitalist economy, which took both non-Marxist and Marxist economists by surprise; and at the same time to establish the inherent limits of this period, which ensured that it would be followed by another long wave of increasing social and economic crisis for world capitalism, characterized by a far lower rate of overall growth. When this work was first written and published in German in 1970–72, its basic theses still appeared to many readers empirically unproven or dubious, and were greeted with widespread scepticism – despite the premonitory signs of the breakdown of the international monetary system from 1967 onwards, and the mass explosion in France in May 1968. Today, few can doubt that the critical turning-point in post-war economic development is behind us and not in front of us, and that the ‘long boom’ is now a thing of the past. Belief in the permanence of rapid growth and full employment within the ‘mixed economy’ has proved a myth. This book tries to explain why this was necessarily so, and what the consequences of the actual dynamics of post-war capitalism are likely to be, within the framework of classical Marxist categories.

In revising Late Capitalism for the English-language edition, we have sought to resist the temptation to incorporate extensive new materials in it, to demonstrate the corroboration by events of our original arguments. We have instead corrected or clarified subsidiary formulations, and brought relevant statistics up to date. All further comments will be reserved for the international debate now under way on the general contradictions and long-term trends of world capitalism in its present phase, for an understanding of which Late Capitalism advances certain new hypotheses. Whether they are sufficient and coherent or not, only history will judge. We have no reason to fear its verdict.

For the fundamental aim of the present work is to provide an explanation of the history of the capitalist mode of production in the 20th century, capable of mediating the laws of motion of ‘capital in general’ with the concrete phenomenal forms of ‘many capitals’. All attempts, either to confine analysis merely to the latter, or to deduce them directly from the former, are without methodological justification or hope of practical success. For a Marxist, it should be plain that the class struggle between capital and labour, the role of the bourgeois State and late capitalist ideology, the concrete and mutable structure of world trade, and the predominant forms of surplus-profit, all need to be incorporated into any account of the successive historical stages of capitalist development, and of the contemporary phase of late capitalism itself. In seeking to fulfil these objectives, the present work has assumed a structure not unrelated to the plan that Marx originally projected for Capital – that is to say, it deals with capital in general; competition; credit; share capital; landed property; wage-labour; state; foreign trade; and world market (in which final part Marx wanted to include world economic crises). I have not, however, followed every section of this plan, from which the final version of Marx’s Capital itself, of course, deviated widely.

The first four chapters of Late Capitalism set the overall framework for the book. They deal respectively with the preliminary problem of method (Chapter 1); the relation between the development of the capitalist mode of production, with its inner contradictions, and the creation of a socio-geographic milieu adequate to its needs – i.e., the world market (Chapters 2 and 3); and the connection between the development of capitalist technology and the valorization of capital itself (Chapters 3 and 4). Readers who are less versed or interested in theory can omit the first chapter or leave it till the end of the book.

The nine analytic chapters which follow deal with the main features of late capitalism in logico-historical order: its original point of departure – the radical improvement in the conditions for the valorization of capital which resulted from the historic defeats of the working-class by fascism and war (Chapter 5); its subsequent development through the Third Technological Revolution (Chapter 6); its specific traits as a new phase in the development of capital – the abbreviation of the life-cycle of fixed capital, the acceleration of technological innovation (rents from which become the main form of monopolistic surplus-profits under late capitalism), and the absorption of surplus-capital by permanent rearmament (Chapters 7, 8 and 9); its particular interconnexion with the world market – the international concentration and centralization of capital that generates the multinational corporation as the main phenomenal form of capital, and the uneven exchange between nations producing commodities at different levels of average productivity of labour, that dominates world trade (Chapters 10 and 11); and its new forms and ‘solutions’ of the problem of realization – permanent inflation and the typical late-capitalist trade-cycle, which combines a classical industrial cycle with a credit-expansion and credit-contraction ‘counter-cycle’ under the sign of inflation (Chapters 12 and 13).

The last five chapters are by contrast synthesizing in character.

They seek to bring together the results of the preceding analysis, and try to show the ways in which the fundamental laws of motion and the inherent contradictions of capital not merely continue to operate, but actually find their most extreme expression in late capitalism (Chapters 14 to 18).

Two warnings are needed here. Firstly, the term’ late capitalism’ in no way suggests that capitalism has changed in essence, rendering the analytic findings of Marx’s Capital and Lenin’s Imperialism out of date. Just as Lenin was only able to develop his account of imperialism on the basis of Capital, as confirmation of the general laws governing the whole course of the capitalist mode of production discovered by Marx, so today we can only attempt to provide a Marxist analysis of late capitalism on the basis of Lenin’s study of Imperialism. The era of late capitalism is not a new epoch of capitalist development. It is merely a further development of the imperialist, monopoly-capitalist epoch. By implication, the characteristics of the imperialist epoch enumerated by Lenin thus remain fully valid for late capitalism.

Secondly, we must express our regret at not being able to propose a better term for this historical era than ‘late capitalism’ – a term that is unsatisfactory because it is one of chronology, not of synthesis. In Chapter 16 of this book we explain why it remains preferable to the notion of ‘state monopoly capitalism’. Its superiority over the term ‘nee-capitalism’ is obvious – given the ambiguity of the latter, which can be interpreted to-imply either a radical continuity or discontinuity with traditional capitalism. In the near future, perhaps, discussion will yield us a better term of synthesis. In the meantime, we have retained the notion of ‘late capitalism’, judging it to be the most serviceable term available, and above all believing that what is really important is not to name, but to explain the historical development that has occurred in our age.

Late Capitalism tries to explain the post-war history of the capitalist mode of production in terms of the basic laws of motion of capitalism discovered by Marx in Capital. In other words, it attempts to demonstrate that the ‘abstract’ laws of motion of this mode of production remain operative and verifiable in and through the unfolding ‘concrete’ history of contemporary capitalism. It thereby runs directly counter to two basic trends in current socio-economic thought. It does not accept the assumption of those – in either academic or Marxist circles – who believe that Neo-Keynesian techniques, state intervention, monopoly power, private and public ‘planning’, or whatever combination of them each particular author or school prefers, are capable of neutralizing or cancelling the long-term laws of motion of capital. Nor, on the other hand, does it accept the opposite (but in reality converse) thesis that these economic laws of motion are so ‘abstract’ that they cannot manifest themselves in ‘real history’ at all, and that therefore the only function of an economist is to show how and why they become distorted or deviated by accidental factors in its actual development – not to show how they are manifested and confirmed in concrete and visible processes.

The recent revival of Marxist economics (which we predicted some time ago) has been a particularly gratifying phenomenon of the last few years. However, it must be conceded that the present re-appropriation of the past history of Marxist theory by a younger generation of socialist scholars and workers, is a difficult and exacting task. This is especially true for readers in the Anglo-Saxon world, to whom some of the classical authorities discussed in this book – for example, in Chapters 1 and 4 – may still be largely unknown. Reference to these ‘older’ debates of the pre-1939 epoch is, however, in no way a mere matter of piety or erudition. For the great controversies of that time were directly concerned with the pivotal problems posed by the basic contradictions and long-term trends of bourgeois society, for Marxist theory. These problems are still very much with us today. Fascism and Stalinism eventually silenced nearly all the theorists of the earlier heyday of Marxist economic debate. But they could not suppress their intellectual legacy. It would be much harder to solve the central problems of capitalism today, without a due recovery of this heritage.

In the last decade, the revival of Marxist economic theory has coincided with a Neo-Ricardian assault upon ‘neo-classical’ marginalism, led by the so-called Cambridge School inspired by Piero Sraffa. While any rehabilitation of the labour theory of value, even in a pre-Marxist version, can only be welcomed, we ourselves remain convinced that no real synthesis is possible between Neo-Ricardianism and Marxism. Contemporary Marxists have a duty to defend all those decisive advances accomplished by Marx over Ricardo, which Neo-Ricardian theorists are now seeking to rescind. The present work is not concerned with the problem of the relationship between the two systems, except at one point: the specific issue of the role of arms production in the formation of the average rate of profit – in other words, the question of the transformation of values into prices of production, which is briefly discussed in Chapter 9.

The most serious difficulty for me in writing this book was the fact that Roman Rosdolsky, the political economist who was closest to me theoretically and politically in our time, died before I could start work on it. Memories of our common discussions and study of his great posthumous work, Zur Entstehungsgeschichte des Marx’schen Kapital, had therefore, so far as possible, to be a ‘substitute’ for the constructive criticisms of this gifted theorist.

The socialist students and assistant lecturers of the Faculty of Political Sciences at the Free University of West Berlin, who invited me to be visiting professor in the Winter Semester of 1970–71, provided the ‘external pressure’ – so often necessary for an author – to induce me to formulate my theoretical views on late capitalism in the systematic form in which they are presented here. They also gave me the leisure needed for this purpose.

I therefore dedicate this work to my late friend and comrade Roman Rosdolsky, who helped to found the Communist Party of the Western Ukraine and was a member of its Central Committee, who helped to create the Trotskyist movement in the Western Ukraine, and who during his whole life remained true to the cause of the emancipation of the working-class and the international socialist revolution, and in the darkest years of our turbulent century ensured the continuity of the theoretical tradition of revolutionary Marxism; and to the socialist students and assistant lecturers of the Free University of West Berlin, whose critical and creative intelligence will preserve and extend this tradition.

Last updated on 4 June 2014