From International Socialism (1st series), No.35, Winter 1968/69, pp.40-41.
Transcribed & marked up by Einde O’Callaghan for ETOL.
Western Capitalism Since The War
Weidenfeld & Nicolson, 36s
The central task Michael Kidron has set himself in this book is to expose what he sees as the continued instability and fragility of western capitalism, features marked by a facade of recent impressive achievements – more or less sustained economic growth, high employment and relative stability. These achievements form part of a self-sustaining virtuous circle or casual loop in which high employment leads to growth and growth to stability: the interconnections make the task of uncovering the primary casual mechanism the more difficult, for everything seems to stand or fall together. Is the rate of technological innovation the cause of growth? Or is it a feature itself caused by and not the cause of, the pace of growth? Is the progressive Liberalisation and growth of trade a cause of, or caused by economic growth? One perhaps tends here to want an all-or-nothing answer, to seek the monistic explanation too vigorously; no one can deny that both trade and technological innovation are liable to be in part induced features of the growth of the capitalist system. But Michael Kidron may go too far in denying either any trace of an independent role.
Certainly, it seems clear that the performance of the economy cannot be credited, so far as credit is due, to systematic Keynesian policies on the part of the government. It is not just that, as Kidron rightly remarks, government fiscal (and monetary) policy has sometimes been adjusted in inappropriate ways, but that the relative scale of government spending and taxing has throughout the post-war period been inadequate to explain post-war performance as compared with pre-war performance. It can of course be argued that despite the recorded ineptitude of the governmental authorities in controlling minor economic fluctuations, there has been sufficient faith that governments would intervene to prevent a major slump as to make such intervention unnecessary. By its nature this proposition cannot of course be tested; but it looks like a slick rather than a convincing idea.
In Kidron’s view, the basic cause of the phase of post-war growth in capitalist economies is to be found in the devotion of large proportions of productive activity to arms production. The chapter (chapter 3) in which he argues this and points to emergent instabilities is the key to the book. A number of arguments are adduced in favour of the thesis that without arms production, the system would be exposed to crises of underconsumption. Arms production breeds technological spinoffs; it replicates itself throughout the system with one country following another; and it would be difficult to replace with alternative government expenditure (for this would either be ‘productive’, so entering into competition with the private sector, or inflationary). There is also an argument, based on Von Bortkiewicz-Sraffa, which seeks to suggest that arms production can be viewed as a productive activity of the ‘Department III’ type in a Marxian scheme, and that it serves to halt the decline in the rate of profit. The argument on this point is rather brief and not altogether convincing. There seems to be some conflict between assuming both that taxes are effectively levied on capitalists and that taxes on firms are passed on to consumers through higher prices ( = reduced real wages); and whilst an increase in activity in ‘Department III’ allows the organic composition of capital to grow without causing a fall in the rate of profit, this is not to say that the tendency for a fall in the rate of profit, if there is one, is actually prevented by such an expansion in activity (which Kidron, perhaps without meaning to, appears to say). Presumably, if there would otherwise be a tendency for the rate of profit to fall for classical Marxian reasons, an ever-expanding rate of arms production must occur to prevent it. But the argument for a falling rate of profit is subject to a number of qualifications and in assessing the alternatives to arms production Kidron seems to me to make far too little of the possibilities of a reduction in rates of tax and to be over-assertive in his argument about alternative forms of government expenditure. Some of the points he makes about instabilities due to arms production also suffer from too brief a treatment.
Now that the infatuation of the 1950s with the ‘new capitalism’ has been punctured, there will no doubt be further studies designed to explain the post-war performance of capitalism from basic perspectives. Michael Kidron’s book contains a number of interesting insights and ideas; it provokes rather than settles questions and while this is a defect of a sort it is more importantly a virtue.
Last updated on 4.1.2008