Paul Mattick 1974

Economic Crisis and Crisis Theory

Source: Class against Class.


Chapter 1. Bourgeois Economics
Chapter 2. Marx’s Crisis Theory
Chapter 3. The Epigones
Chapter 4. Splendor and Misery of the Mixed Economy
Chapter 5. Ernest Mandel’s Late Capitalism


It was not so long ago that Keynesian economics seemed to offer instrumentalities not only to overcome depressions but to avoid them altogether. This is no longer true, as we find ourselves in a post-Keynesian world in which neither the equilibrium tendencies of supply and demand nor Keynesian interventions in the economic processes are able to prevent the steady deterioration of the economy through rising inflation and growing unemployment. Due to the long postwar prosperity in the leading capitalist nations, this has come to many people as an unpleasant surprise and has led to a new concern with the problem of the capitalist crisis. Although largely ignored by bourgeois economists before 1929, crises accompanied the whole of capitalistic development as the decisive “regulator” of the capital accumulation process. It is thus worthwhile to take an overall look at the crisis cycle both as it has asserted itself historically and with respect to the responses it evoked in economic theory.

As regards bourgeois economics, however, there is very little to say, as its general equilibrium theory has no room for the dynamics of the dis-equilibrating process of capital expansion. Accumulation appears here as a matter of “saving,” or as a phenomenon of “growth,” for which an equilibrium path must be found in order to escape the persistent “business cycle.” That the problem is considered at all reflects the inescapable recognition that many, or all, of the categories of bourgeois economic theory have no more bearing on long-run capitalistic development than on the everyday production and exchange relations of the capitalist market. There is a strong tendency to look back to classical political economy, or even to Marx, in search for a more useful theoretical approach for solutions to the problems of capital production. In this connection it is interesting to note that the questions raised by present-day economists merely repeat, but in a shallower form, the discussions around the crisis problem carried on in the Marxist camp around the turn of the century. These controversies, too, concerned the possibility of an “equilibrium path” leading to a crisis-free, harmonious development.

The different and contradictory interpretations of Marx’s crisis theory may provide some comfort to its opponents, but they indicate no more than the infiltration of bourgeois economic concepts into Marxian doctrine as the theoretical complement to the practical integration of the socialist movement into the capitalist system. There was, and is, a two-pronged endeavor to reconcile, at least to some extent, the historical antagonism between Marxism and bourgeois economic theory, which finds its reflection in an increasing eclecticism in both quarters. That the crisis of Marxism is still deepening may be surmised from the article on Ernest Mandel’s book on “late capitalism,” which brings the discussion, so to speak, up to date and confronts it with undiluted Marxist crisis theory.