Politics and Capitalist Stagnation

Live from New York

Last night, I attended a very interesting panel put on by the New Left Review about Dylan Riley and Robert Brenner’s piece in the newest issue, “The Long Downturn and Its Political Results.” The panelists were Brenner and Riley, philosopher Nancy Fraser, and historians Tim Barker and Matt Karp.

The thesis of Brenner and Riley’s essay is that for the past 50 years or so, the advanced capitalist world has been in a period of stagnation with declining profits due to competitive pressures from “late arrivals,” new capitalist powers that developed their productive capacity after the United States. The first wave of these late arrivals was Japan and West Germany; the “Big One” is obviously China. Because of this uneven development, the capitalist world-system is now awash with redundancies and overcapacity: too much stuff, not enough demand. This puts immense downward pressure on profits. According to Brenner and Riley, this has led to a new paradigm or accumulative regime they call “political capitalism.” Short on profitable investment opportunities, capitalists instead invest in politics itself and attempt to capture regulatory advantages, financial chicanery, favorable monetary policy, or even get involved in straight-up shakedowns, boondoggles. and kleptocracy. The capitalists have gone from profit-seekers to rent-seekers; in the words of Brenner and Riley, they are going after “a return on investment largely or completely divorced from material production.”

On the labor side of the equation, the working class has become split between fractions of workers who relate to these incentives in different ways. A big one is credentialed vs. non-credentialed workers. Credentialed workers—sometimes called the professional-managerial class—stick with the old center-left parties because of the money they can provide for health and education sectors, and the non-credentialed respond to the siren-song of trade protectionism and anti-immigration politics. Riley and Brenner explain the decline of classical social democratic politics—the era of generous redistribution and worker protections—by arguing that class compromise is only possible under the old high-profitability, high-productivity, high-growth conditions that prevailed before the 1970s. The famous “neoliberal turn” is not the result of capitalists turning evil or treacherous, but just responding to the pressures of the stagnating system.

I have to say that despite the sometimes brilliant points of their critics, I find Riley and Brenner’s theory elegant and increasingly persuasive. My intuition is that it provides the deep structure I was grasping at in my own research. In the introduction to my book, I found a few economic factors that conditioned the rise of right-wing populism. The most obvious one that jibes with Riley and Brenner’s analysis is the importance of the “late arrivals:” the problem of Japan, Germany, and to a lesser extent, South Korea were explicitly a part of the political appeals of Perot, Buchanan, and even Duke. Related to that was the squeezed situation that seemed to be prevailing across the economy at the time. The economists I cited called it a period of “fratricidal competition,” a phrase that Marx originally coined. Here’s how James Crotty describes it in his paper, “Rethinking Marxian Investment Theory: Keynes-Minsky Instability, Competitive Regime Shifts and Coerced Investment:”

Among the “stylized facts” which characterize this period are: competitive intensity rose dramatically, profit rates plunged, growth in domestic and world markets stagnated, and real interest rates spiked. In response to this threat to their growth and survival, many corporations radically altered their competitive strategy. They viciously attacked their workers (wholesale firings and take-away contracts were common), closed older plants, drastically reduced capacity-expanding investment, lowered R&D budgets and undertook major new labor-saving, cost-cutting investment projects that had to be debt-financed because profits had collapsed.

What I was grasping at was the form of politics that emerged in the era of my book was analogous or structurally formed by this Darwinian, zero-sum race to the bottom. You have a fragmented and disintegrated economy and, therefore, a fragmented and disintegrated politics. If you’ll allow me to gripe for a moment, this was totally missed by many commentators on the book, who criticized it for not dealing with “neoliberalism” enough. If they read more carefully, they’d have noticed how economically deterministic the book really is! Okay, gripe over.

I wanted to ask a question, and I was able to chat briefly with Brenner at the end, but what I’d like to understand better is the role of technology in all this. From what I can understand, technological development is of secondary importance to Brenner. The accumulation crisis comes first. The key profit pressure comes from uneven national development, not from what orthodox Marxists call the “organic composition of capital.” Very simply, the organic composition is the idea that as capitalists invest more in machinery relative to labor—seeming like a clever way to generate new profits—this actually tends to depress profit rates over the long term, because only labor produces surplus value. But I can’t help thinking how important technological advances are to understanding the modern “relations of production:” the split between credentialed and uncredentialed workers, the importance or declining importance of degrees, of physical brawn, the changing significance of gender norms, etc., etc. “Everything is computer,” one might say. The proletariat, the working class, is created around and by the machines. And the machines must be understood in terms of class struggle as well: they are tools of the capitalist class to beat back the advances of the working class, either in wages or political strength.

My next, related question is AI. AI capex fits very nicely into Brenner/Riley as a kind of politically constituted boondoggle of stagnant capitalism. And it might be another way to squeeze a dime out of an unprofitable system. If it does what the capitalists say it will do, it will boost productivity and get us out of the profitability crisis. But the non-market mediated investment might be creating just more and more overcapacity. Anyway, these are desultory thougths and I’d just like to know what Brenner and Riley would have to say about AI in terms of their theory?