S&S Quarterly, Inc.

Guilford Press

Crises Lasting for Decades

Author(s): John Bellamy Foster
Source: Science & Society, Vol. 54, No. 1 (Spring, 1990), pp. 73-81
Published by: Guilford Press
Stable URL: http://www.jstor.org/stable/40403049 .
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CRISES LASTING FOR DECADES

73

SciencefcfSociety,Vol. 54, No. 1, Spring 1990, 73-81

CRISES LASTING FOR DECADES

debatewilldegenerateintoa towerof babel
Sometimesa theoretical
without
becausetheparticipants,
beingawareofthefact,are answering
essentialto
notthesamequestionbutdifferent
questions.It is therefore
be clear about whatis being asked. In the case of my essayin The
in a
(Foster,1987),whichHowardShermancriticizes
Economy
Imperiled
&fSociety
recentarticleinScience
(Sherman,1989),thequestionwasgiven
is distinguished
in thetitle:"Whatis Stagnation?"
Moreover,
stagnation
fromthe businesscyclein a sentencethatrefersto the formeras a
of
fluctuations
ofslowgrowth"aroundwhichtherecurrent
"trend-line"
intheotherarticle
thebusinesscycleoccur"(Foster,1987,59). Similarly,
thatShermancriticizes
along withmyown- "Power,Accumulation,
and Bowles- theauthorsalso make
and Crisis"byGordon,Weisskopf
to
itclearthatwhattheyare trying addressat thatpointis "thestagnationoftheUnitedStateseconomyoverthelasttwodecades. . ." (GWB,
1987,53).
contributions
as iftheywere
treatsthesespecific
Sherman,however,
of
different
course
with
the
concernedprimarily
(but
related)
very
a degreeof confusionintothe
subjectof thebusinesscycle,throwing
discussionas a result. Neithera demand-sidenor a supply-side
a fullydeveloped"profit-squeeze
approach,Shermantellsus,constitutes
to
hastobe "squeezed
be
since
of
the
squeezedsomething
cycle,
theory"
Marxists"(a label thatSherman
fromtwo sides." Both "supply-side
Marxists"
and Bowles),and "demand-side
appliestoGordon,Weisskopf
and
are
which
he
includes
under
Baran,Sweezy
(a label
myself) said to
are crushedbetweentwoinexoreduce"theMarxistnotionthatprofits
rableforcesin eachexpansion"tojust "oneessentialaspector relation."
Shermanconcludes,deservesthelabel"profit
Neitherofthesetheories,
squeeze."Indeed,"Foster,"he pointsout,"didnotuse thewordsprofit
squeeze" (Sherman,1989,65). This label Shermanthenclaimsas his
or
ownafterproposinga "two-horned"
"generalprofitsqueezetheory"
model.
"nutcracker"
whatis happeninghere,I think,is to
The bestwayto understand
viewtheproblemin termsofSherman'sownpreviouswork,particularly
thathe has withthe
differences
in relationto certainlong-standing
with
associated
Baran
and
's
theory
Sweezy Monopoly
Capital(1966).Shermanhas alwaysbeen firstand foremost
a theorist
of thebusinesscycle,
and in thiscontext,as wellas in his studiesof monopolyprofits,
has

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74

SCIENCE tf SOCIETY

mademajorcontributions.
thelimitsofhisanalysiscan be
Nevertheless,
seen in the factthathe has persistently
and categorically
denied any
of
crisis.
theories
to
theories
of
secular
crises,"he
"[A]ll
validity
long-run
. . ." (Sherman,1984,91). Furtherwroteat one point,"are incorrect
himself
used thisstanceto distinguish
more,Shermanhas frequently
This
can
be
seen
fromthetradition
Baran
and
by
Sweezy.
represented
of
review
mostclearlyin thefollowing
from
Sherman's
quote
Monopoly
Economic
Review:
CapitalfortheAmerican
ofboomand
suffers
Marxarguedthatcompetitive
[W]here
cycles
capitalism
bust(butsaid"thereare no permanent
crises. . ."), Baranand Sweezysee
andstagnatoward
slowedgrowth
a permanent
tendency
monopoly
producing
tion.(Sherman,
1966,920.)
and Marx here is
drawnbetweenBaran/Sweezy
The distinction
of
a
more
or
less
since
the
tendency
"permanent
misleading,
postulate
towardslowedgrowth"(subjectto variouscountervailing
influences)
under monopolycapitalismcannotbe reasonablyjuxtaposedto the
footnote
thatMarxdirectedatAdamSmithina five-line
remarks
cryptic
is
here
to
which
in Theories
Sherman
Value,
(Marx,
alluding
ofSurplus
Baran and Sweezycould neverbe accusedof
1968,497n). Certainly,
whichis what
fallingrateof profit,
arguingthatthereis a permanent
Marxseemsto be criticizing
Smithforin thatpassage.Moreover,Marx
himselfwas soon to developa fallingrateof profittheoryof his own
thatthe
pointingto secularcrisistendencies.Finally,it is significant
in
of
is
visible
under
late
Engels'
possibility stagnation
capitalism already
1884prefaceto thefirstGermaneditionof Marx'sPoverty
ofPhilosophy.
in worldtrade,
Thus at the end of a discussionof sharpfluctuations
adds
the
footnote:
Engels
following
Atleast,thiswasthecaseuntilrecently.
oftheworld
SinceEngland's
monopoly
ofFrance,
Germarket
isbeingmoreandmoreshattered
bytheparticipation
in worldtrade,a newformofequalization
and,aboveall,ofAmerica
many,
andthemarket]
The periodof
[between
production
appearstobe operating.
thecrisisstillfailsto appear.If it shouldfail
generalprosperity
preceding
become
thenormal
condithenchronic
wouldnecessarily
altogether,
stagnation
tionof modernindustry,
withonlyinsignificant
fluctuations.
(Engels,1963,
20n.)
The largelyscholasticissue of whetheror not Marx and Engels
oflong-run
a minor
thepossibility
crisis,is,however,
actuallyrecognized
matter.More important
is the factthatShermanhimselfquiteclearly
oftheproblemofeconomic
hasan aversiontoanyseriousconsideration
or
conceivable
form
of
secularcrisis.Butin rejectother
stagnation, any

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CRISES LASTING FOR DECADES

75

thatthelargerhistorical
ingthishe is closinghiseyesto thesignificance
of the economy.This
has forthe concretefunctioning
environment
is
modern
dilemma
best
of
the
graspedin termsofthe
stagnation
aspect
. . . thatlong-run
Kalecki:
"Our
shows
statement
analysis
by
following
in
not
inherent
the
is
capitalisteconomy.Thus specific
development
to
factors'
are
required sustaina long-runupwardmove'development
ment"(Kalecki,1965, 161). In contrast,Shermancomplainsabout
theoriesthatattribute"each recoveryto an externalshock(such as
or wars).It is farmoreimpressive
innovations
[he says]to presenta
the
leads
to depressions,
how
but
that
capitalist
system
theory explains
tendto lead to recoveries"
also howdepressionseventually
(Sherman,
1989,67).
thatsevereeconomic
Butis itreallypossibletoargueso confidently
- as ifthe
to
full
tend
to
lead"
recoveries
downturns
always"eventually
some
were
automatic
mechas
the
as
well
trend,
cycle,
governedby
anism?In the populargame "TrivialPursuit"(if memoryserves)the
answergivento thequestion"whendid theGreatDepressionend?"is
as Schumpeter
said.
"1933."This is whentherecovery
began"ofitself,"
ratewasstill14%,and in 1938
in 1937theunemployment
Nevertheless,
fullrecovery
did comeofcourse.Butitcamenot
itwas 19%.Eventually
of eitherthe regularbusiness
as a resultof theautomaticfunctioning
but
as
a
or
a
consequenceoftheSecondWorld
mythical
longcycle,
cycle
wouldappeartoagreewiththeestablishment
War!Sherman'sargument
viewpointthat the problemwould have "eventually"been solved
oftheeconomywithout
anyhelpfrom
workings
throughtheautomatic
In contrast,
wouldargue
theorists
thestateor themilitary.
stagnation
thatwhilethisis possiblethefactremainsthattheSecondWorldWar
solutiontothecrisis,and thisinitselfshouldsuggestthat
wascapitalism's
thereis muchmoreat issueherethansimplythebusinesscycle.
tomakesenseofthisintermsofconventional
It isofcoursedifficult
to thinkof theeconomyas
economictrainingsinceone is conditioned
as
as over the shortrun.
the
well
over
run,
long
"self-equilibrating"
Indeed, adherenceto such viewsis oftenseen as a litmustest of
withinthe profession.
Still,Marxistpoliticaleconomists
respectability
shouldtakeseriouslyKalecki'squestionabouttheseculartrend:"Why
onceithas deviateddownwardfromthepath
cannota capitalist
system,
finditselfin a positionof long-term
of expandedreproduction,
simple
(Kalecki,1984,164).Kalecki'sownanswerwasthatthere
reproduction?"
thisfrom
inthenatureofthecapitalist
is nothing
economythatprevents
tomoveawayfrom
happening.Thisbeingthecase itbecomesnecessary
mechanicaleconomicmodelsand examineeconomichistory,where
thereis some hope of findingan answer.One need onlyadd thatthe
be asked,eitherinthe1930sor overthelasttwo
questionwouldscarcely

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76

SCIENCE fcfSOCIETY

werenotactuallypresentand yetunaccounted
decades,if stagnation
for.
thatShermanhasalwayshad a strongaversion
Once itis recognized
morefully
to theoriesofsecularcrisis,one is in a positiontounderstand
his own approach.In Sherman'snumerousarticleson economiccrisis
Marx'stheoryof thefallingrateof profitbasedon risingorganiccompositionis subsumedunder the categoryof a cyclicaltheorywhich
theoryof
emphasizes"risingmaterialcosts."In likefashion,stagnation
whichhasinvestment
thetypeadvancedbyBaran,Sweezyand Magdoff,
as its centralconcern,gets subsumedunder the categoryof "un- whichis said, virtually
to
by definition,
theory"
derconsumption
those
such
as
Profit
theories
of
investment.
the
squeeze
ignore problem
treatedmorestraightand Bowlesare generally
of Gordon,Weisskopf
a
business
this
is
since
cycletheory.Yet,even here
mainly
forwardly,
of thelong
tendsto neglecttheirtreatment
Shermancharacteristically
into
a secular
to
their
stretch
which
is
how
theory
theytry
cycle
analysis.
tobe fair.Foralthoughhe
In all ofthisShermanis,I believe,trying
does notgivemuchcredenceto problemsof secularcrisishe wantsto
show thateach of theseapproacheshas some limitedvaliditywhen
sincethebusiness
placedin thecontextofthebusinesscycle.Moreover,
of developtrend
the
while
is
definition
long-run
symmetrical,
cycle by
with
mentfollowsa somewhatmoreindeterminate
Sherman,
pattern,
contributions
is inclinedto thinkof theoretical
hiseyeson theformer,
in relationto the latteras one-sided.
thatwere designedprimarily
triesto overcomethisone-sidedness
Indeed, he valiantly
by meansof
in
all sidesof
which
"two-horned
dilemmas"
alone
by
proposing
thought
theproblemare givenequal importance.
Yet,to me thisseemsto be a
clearcase of whatC. WrightMills(1959) called"thedemocratic
theory
- a typeof "liberalpracticality"
thatalwaysstressesbalof knowledge"
whileexcluding,by
influences,
ance, equilibriumand countervailing
of long-term
unevendevelopfiat,any possibility
generaltheoretical
on secularcrisesofslowgrowth,
ment.In anycase,fortheorists
focusing
in thenameofthebusinesscycleand balanced
Sherman'smodifications
removefromthe problemall of itsmostcriticalaspects.
thinking
the case wherethe traditionidentifiedwith
This is particularly
of this
Baran and Sweezy'sMonopoly
Capitalis concerned.For thinkers
determinants
of the
concernis thehistorical
kindthemaintheoretical
accumulation
(or savings-and-investment)
process.Althoughthishas its
discussionsregarding
historical
short-run,
cyclicalaspect,meaningful
- whichinvolvetheexpansionofcapacity,
theprojecteduse
investment
ofthatcapacity,
the
relative
innovation,
(and
development
expectations,
stages of development)of departmentsI and II in the Marxian

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CRISES LASTING FOR DECADES

77

schemes,etc.- are not easilydealt within termsof a

reproduction
mechanical
modelofthebusinesscycle.Accumulation
is therestylized,
in a long-run
foretreatedpredominantly
context.
This is notto saythat
but simplythat the nature of
cyclicalinfluencesare unimportant,
one
toward
a longerview,gearedto the
accumulation
drives
necessarily
trendratherthanthecycle.
thatwhenShermantakesa theory
ofthis
Hence,itis notsurprising
sortand triesto subsumeit withinan analysisthattakesonlythecycle
he arrivesat the conseriously,carefully
removing
anylong-run
influences,

clusionthatitone-sidedly
investment.
Thus he writesthat"J.B.
neglects
views
the
Foster,following
expressedbySweezyand BaraninMonopoly
the
as
sees
problem a torrentof supplyfacinga verylimited
Capital,
consumerdemand"(Sherman,1989,64). ThisseemstoreduceMonopoly
work,to a crude versionof
Capital,in additionto myown derivative
even
the
After
mostsimplemodel has to
all,
underconsumptionism.
and
both
investment.
Sherman'sinterpretation
consumption
encompass
has to be heldup againsttheactualfactthatthebulkofwhat
therefore
theoristslike Baran, Sweezyand Magdoffhave writtenhas focused
If one looksat Monopoly
squarelyon investment.
Capitalitself,virtually
at
all
one
discounts
the
discussion
of
the
saleseffort)
is really
nothing (if
of theworking
said abouttheconsumption
class,sincethefocusof the
of thesurplus,and workers,
entirebookis on theabsorption
as is well
known,haveno accessto surplus!Whilethekeydiscussionof capitalist
occupiesthreepages,thebulkoftherestoftheir367-page
consumption
withhistorical
concerned
conditionsgoverninginvestment,
is
analysis
and
international
capitalist
expansion.
spending,
government
to understandhow Baran and Sweezy's
It is thereforedifficult
analysiscanbe treatedbyone criticafteranother(forShermanis notthe
first
todo so) as ifitone-sidedly
Indeed,bysaying
stopsatconsumption.
thatthe problemposed bytheMonopoly
Capitaltheory"is a torrentof
a
limited
consumer
demand" Shermanhimself
very
supply facing
of
this
which
the
theory
starting
saysthesurplushastobe
point
equates
absorbedbycapitalsincethemassof consumersdo nothave accessto
thefactthatthechief
ignoring
surplus- withitsmainfocus,completely
concernof theanalysisis whatgovernsinvestment
itself.
The mainevidencethatShermanpointsto in attempting
to prove
the existenceof such a simplistic
however,is
underconsumptionism,
drawnfrommyownessay.Shermanquotesfromthefollowing
passage,
whichI willnowrequotein full,placinginitalicsthosepartsthathe had
replacedwithellipses:
intonewinvestment
wouldmeanthat
[A]nycontinualplowingbackof profits

the means of production (Department

1 in theMarxian reproduction
the
schemes,

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78

SCIENCE o SOCIETY

would expand verymuch fasterthan

demandfor whichcomesoutofgrossprofits),
articlesof consumption(or Department
2, thedemandfor whichcomesmainly
from

boom.Butitis a
ofeveryaccumulation
wages).This is,in fact,thebasicpattern
deconditions
on historical
process.Sooneror later(depending
self-annihilating
the means of
thedegreeto whichtheinvestment
processis self-sustaining)
termining

thata socialdisproporextent
are builtup to sucha prodigious
production
detoproduceandthecorresponding
thecapacity
between
tionality
develops
thenoccurs.
rootedin overexploitation
mand.A crisisof overaccumulation
1987,61.)
(Foster,
is thewayin whichShermansummarizes
The following
myargumentin theabovequote:
as outputbecause
In otherwords,workers'
paydoesnotexpandas rapidly
is
andtherateofexploitation
aretoostrong,
workers
aretooweak,capitalists
demandthanavailmeanslessconsumer
lesspayforworkers
Relatively
rising.
ablegoods.(Sherman,
1989,63.)
Now thismaybe whatShermanwantsme to say,butitis notwhat
Whatthisdoes is give
wassaid,so the"inotherwords"is a nonsequitur.
thatthe argumentis concernedsimplywithconthe falseimpression
downon thesame
Indeed,further
sumptionand neglectsinvestment.
is
seen
often
demand
"domestic
that
he
states
[by"demand-side
page
thatinvestwith
the
consumer
as
demand,
theorists"] only
assumption
ofconsumption."
derivative
mentis merely
Yet,intheforegoing
passage
of
withtheintention
frommyessay(whichShermanpickedoutprecisely
of
accumulation
I
refer
to
own
his
(investaspects
argument)
backingup
Marx'sdepartment
overaccumulation,
I) a number
ment,accumulation,
as a
of times.In addition,in pointingto demandand notconsumption
constrainton the expansionof productivecapacityI was explicitly
Nor is a
thematterin a waythatencompassedinvestment.
formulating
investment
and
between
functional
consumption
relationship
simple
thedegreeto
factors
thatdetermine
sinceI refertohistorical
postulated,
in any givenperiod.To be sure,
is self-sustaining
whichinvestment
insuggesting
thatmyargument
Shermaniscorrect
pointstoa risingrate
as a keypartof thedialecticof crisis.But to reducethe
of exploitation
whole questionto one of "consumerdemand"not onlydistortsthe
its
butremovestheverythingthatconstituted
analysisthatI presented,
centralfocus:capitalformation.
is thatShermanhimselfhas
Whatmakesthisdoublydisturbing
tosayin hisarticleabouttheaccumulation
virtually
nothingmeaningful
is treatedsimplyas a componentin aggreprocessas such.Investment
does notseemto be an
gateincomeor demand.Hence,accumulation

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CRISES LASTING FOR DECADES

79

objectofanalysisinand ofitselfin hismodel,despitethefactthatthisis

crisis.This seemsto reflecta
thecruxof thecontemporary
stagnation
beliefthatonceitis shownthatthereare twojaws (supplyand demand)
thatsqueezes(cracks?)profitsin each businesscycle
to the nutcracker
has
solved
thewholeproblemof economiccrisis,including
one
peak,
accumulation.
I was also perplexedwhenI read Sherman'scontention
thatmy
role
of
the
of
the
costs
and
"neglects
supply," wage
analysisone-sidedly
which
costsin particular
(Sherman,1989,64). The rateof exploitation,
Shermanhimselfsays is at the core of my analysis,is Marx's main
is
concept.Logically,to say thatthe rate of exploitation
supply-side
unit
labor
costs
than
to
that
it
more
is
no
say
"neglects"
falling(the
rising
main contentionof Gordon,Weisskopfand Bowles).To suggestas
both
Shermandoes thatthewholetruthis thattherateof exploitation
thatcostand
risesand fallsoverthecourseof thecycle(and further
to different
assertthemselves
demandconstraints
degreesat various
the
within
an
simply
ignores questionofsecularcrisis.
expansion),
points
For a crisisof slowgrowthlastingfordecadescan onlyexistif either
supply-sideor demand-side constraintsassert themselvesdistherewouldsimplybe a
overthelonghaul.Otherwise
proportionately
in
neoclassical
economics.
as
HereSpinomovingequilibrium postulated
estnegatio"(everydeterminaza's famousphrase:"Omnisdeterminado
tionis a negation)comesto mind.
thatShermandraws?In closing
Whatare thepoliticalimplications
modelis superiorto otherMarxiancrisis
he saysthathis"nutcracker"
willend
that"onlytheend of capitalism
theoriessinceit demonstrates
thebusinesscycle."In Sherman'sviewthisis a valuableconclusionsince
Marxistsupply-sidetheorists
"implythatlowerwages could prevent
crises,"whileMarxistdemand-sidetheorists"erroneously
implythat
I rubbed
crises"
Here
could
1989,
(Sherman,
70).
prevent
higherwages
to
for
It
is
not
in
disbelief!
Gordon,
my
place
speak
Weisskopf
myeyes
and Bowles,butI don'tthinktheyimplythatloweringwagescouldend
- whatShermanis sayinghere.
thebusiness
cycle
to whichI belong,and can
However,I can speakforthetradition
thata policyof promotinghigherwages
thereforestatedefinitively
whichis an inherent
wouldnotend thebusinesscycleundercapitalism,
process.Norare higherwagesas suchthebest
partoftheaccumulation
- thoughI wouldneverattemptto
wayto deal withpresentproblems
forthem.There are of courseother
discourageworkersfromfighting
incomeand wealthlikeoverhauling
a regressive
routesto redistributing
statespending
tax structure,
cuttingmilitary
spending,and increasing
on education,health,and housing,as wellas on combatingpoverty,

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80

SCIENCE sf
SOCIETY

and repairinginfrastructure.
These may
cleaningup theenvironment
be
consistent
but
to
notsoundlikerevolutionary
theymustbe
policies,
withinan anti-capitalist
constructed
logic.
Havingreachedsucha pointin thediscussionitis no doubtworthnot
whiletotakea lookat theworldaroundus. We havebeenwitnessing
for
most
of
that
but
also
for
decades
two
relative
now,
stagnation
only
of supply-side
restructuring
designed
perioda verydeliberatestrategy
classitselfsees as a problemof structural
to redresswhatthecapitalist
unemhas included:breakingunions,promoting
crisis.This strategy
back
on
state
down
spendingthat
wages,cutting
ployment,
driving
incomeand
benefitsthe poor,alteringthe tax systemto redistribute
obstaclesto
wealthfromthepoor to therich,and forcibly
eliminating
of
the
thefreeflowofcapitalin theunderdeveloped
globe.It is
regions
influenced
most
that
has
of
our
time
thisoverwhelming
myown
reality
an
which
has
been
as
a
economist,
attempt
by
governed
thinking political
of
mantle
the
to resisttheseconcretepractices
ideological
bycombating
which
are
clothed.
in
economics
they
supply-side
And in thefaceof thisdetermined
globalonslaughtbycapitalthe
mostpowerfulconclusionthatShermanhimselfis able to giveus, in
whatpurportsto be a moredevelopedtheoryofeconomiccrisis,is that
I thinkthismayhaveto do
to capitalism!
thebusinesscycleis inherent
withthe factthathe is askingthewrongquestion.
JOHN BELLAMY FOSTER

of Sociology
Department
University
of Oregon
REFERENCES
Baran,PaulA.,and PaulM. Sweezy.1966.Monopoly
Capital.NewYork:Monthly
ReviewPress.
Engels,Frederick.1963(1884). "Prefaceto theFirstGermanEdition."In Karl
Publishers.
New York:International
Marx,ThePoverty
ofPhilosophy.
etai, eds.,
In RobertCherry,
Foster,
JohnBellamy.1987."WhatIs Stagnation?"
for
Radical
Political
TheImperiled
New
York:
Union
Economics,
Economy.
59-70.
GWB. 1987.Gordon,DavidM.,ThomasWeisskopf
and SamuelBowles."Power,
and Crisis."In RobertCherry,et al., eds., The Imperiled
Accumulation,
New York:UnionforRadicalPoliticalEconomics,
43-57.
Economy.
New York: AugustusM.
Kalecki,Michal.1965. Theory
Dynamics.
ofEconomic
Kelley.

This content downloaded from 62.122.79.46 on Tue, 10 Jun 2014 20:35:12 PM

All use subject to JSTOR Terms and Conditions

CRISES LASTING FOR DECADES

81

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Vol. 54, No. 1, Spring1990,81-85

SciencefcfSociety,

SHERMAN ON CRISES: A COMMENT

in Sciencesf
Howard Sherman'srecentcommunication
(1989)
Society
thecurrentstateof
pointforunderstanding
presentsa usefulstarting
as represented
Marxiancrisistheory,
byhisownwork,and bytheworks
- byJohnBellamyFoster,and by David Gordon,Tom
he criticizes
and Sam Bowles(GWB).The presentcommentfocusseson
Weisskopf,
of Sherman'sapproach,and also
whatI see as themajorcontributions
in
his
on some weaknesses
argument.
and Quibbles
Agreements
First,I believeShermanis correctinarguingthata completetheory
of crisismustinvolveboth "supplyside" and "demandside" factors
mainstream
(Devine,1983; 1987a; 1987b).But importing
terminology
Whileit is
intothetheory(as popularizedbyGWB) can be confusing.
is
less
for
true thatmarket-oriented
outsiders
and has
jargon
scary
withmainstream
obviousconnections
macroeconomic
debates,it hin-

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