Samir Amin has been an important participant in the conversation among Marxists for decades. His many books, his articles and his partisanship for the peoples of Asia, the Middle East, and Africa are acknowledged and respected by all those who strive for a world without capitalism.

He has associated his views with Marxism and enthusiastically interprets those views through the prism of the Monthly Review theoretical triad of Paul Sweezy, Paul Baran, and Harry Magdoff. Perhaps he adheres even more faithfully to these views than the current editors of this influential journal.

He shares with Immanuel Wallerstein the World Systems approach, with its emphasis on the “core” and “periphery” distinction in the global economy. Both views have, at different times, exerted great influence among Marxist thinkers and activists, especially in the West. These views have revealed important insights into the mechanism of global capitalism and imperialism. Yet these views are inadequate for a coherent understanding of our world today.

In his new book (The Law of Worldwide Value, Monthly Review Press, 2010), Amin offers a rich, thought-provoking update of his 1978 book The Law of Value and Historical Materialism (Monthly Review Press, 1978) designed to defend his views with respect to the developments leading us into deeper crisis in the twenty-first century.

Much has changed since 1978: the rise and total dominance of neo-liberal thinking and policy in the evolution of capitalism; the dramatic demise of the European socialist community; the rise of the Peoples’ Republic of China as a global economic power; the rise of powerful “emerging” economies in Brazil, India, Russia, and the Republic of Korea; the stagnation of the once-mighty Japanese economy; the rise and possible fall of the European Community; and most important, a profound crisis of capitalism generated by the ascendancy of finance capital in the US. In short, the world is vastly different than the world that Amin wrote of in 1978.

To his credit, Amin offers a vigorous defense of his earlier views in light of the dramatic changes experienced over the last three decades. Unfortunately, events have swept these once persuasive perspectives off the table; capitalism has moved on.

Fundamental to Amin’s perspective is a partisan defense of Marx’s law of value. The law of value for Marx engages a theoretical construct that demonstrates the fundamental relationships inherent in capitalist commodity production. Its import is to expose the components of productive activity and explain how they interact.

With that understanding, the basis for commodity exchange is bared as an expression of uniform, embodied labor. As such, the law holds up well through the long evolution of capitalism from its competitive stages, through the emergence of monopoly capitalism, and its current expression as state-monopoly-capitalism.

Moreover, these revealed relationships give birth to useful technical ratios such as profit, exploitation, and capital composition that further reveal the deep structure of a system of commodity production based upon the selling and buying of labor power.

Marx goes to some lengths to show that the key components that he distills as constitutive of a commodity are fully measured by embodied abstract labor and combine to exhaust the content of a commodity’s value. His most impressive argument is to establish the necessity of such a value theory in establishing the proportionality of values between the various and sundry “products” of capitalist production.

Put succinctly, the law of value explains how things bearing few or no obvious common features can nonetheless be exchanged in a non-random, regular, and rational fashion.

Armed with this theoretical framework, one can further understand the real-world relationships of prices and grasp how they tend to fluctuate around those proportionalities.

Many, following Marx’s refinement of the law of value in Volume III of Capital and Engels’ dogged pursuit of the matter, view the law of value as promising a derivation of real-world prices from Marx’s value theory. This issue consumes many Marxist economists, particularly those schooled in bourgeois economics, who have created a scholarly dust-up for over a century around the so-called “transformation problem.”

Amin offers his own solution to this problem as well as to the challenge of value theory redundancy made by Piero Sraffa (for a relatively straightforward and clear exposition of the issues, the reader might want to read An Introduction to Marxist Economics, George Catephores, pp 87-106).

To my mind, Marx’s law of value is theoretically secure because it constitutes a necessary, though perhaps not sufficient determinant of real-world prices. By explaining the proportionality of prices of different commodities, it avoids the circularity of “cost” theories of price formation and the inadequacy of a supply-and-demand explanation. Bourgeois economics has no counterpart to fulfill this function.

Imperialist Rent

Of more interest is Amin’s innovative project, the expansion of the law of value into a law of global scope, the law of worldwide value. Central to this law is a distinction between those economies of the capitalist “core” – the advanced capitalist countries of Europe, North America and Japan—and the less developed economies of the South or “periphery.” From this once-widely-held thesis, Amin maintains that this distinction is generated and maintained by a structure of “imperialist rent”—a kind of imperial tax, systemic to the era of imperialism and imposed unerringly for the benefit of the core at the expense of the periphery.

There is much to recommend this view, especially as reflecting the world after World War II, with newly liberated, former colonial countries enduring the same kind of subordinate, super-exploitive economic relations as they did while under colonial subjugation. During the post-war era, the living standards on the periphery stagnated or declined, while working people in the core enjoyed some improvements and a relatively stable social life undoubtedly sustained in part by the super-exploitation of the periphery. In the same period, the periphery provided cheap raw materials to the core in exchange for expensive finished products, a clearly unequal exchange imposed by imperialism and inexplicable by mere market forces.

Certainly, these post-war developments provided facile experiential evidence for Amin’s and other theorists’ distinction. However, they were no more than that—they could not carry the weight of the claim that they evidenced a structural feature of global capitalism. They constituted no reflection of the deep logic of capitalism, no modification of Marxism’s fundamental law of value to fit the global economy.

Instead, they reflected historical contingencies in capitalism’s trajectory, contingencies that shifted again in the period to follow, with ever more varied and complex relationships between Amin’s core and periphery.

The bonds of colonialism were not severed easily. Political liberation was much easier to attain than socio-economic emancipation. Imperialism vigorously clung to and often enforced the former relationships. Further, most former colonies (most of the periphery) were deeply scarred by their histories of oppression and pillage. The former Spanish and Portuguese colonies of the New World demonstrate how severely these handicaps and imperial meddling can retard any real development for a very long time. And of course, the legacy of colonialism left few developed, unified peoples’ parties to effectuate a new path.

After the Second World War, the exigencies of the Cold War – the confrontation between the socialist bloc and the advanced capitalist countries—shaped relations between the core and periphery. The socialist community offered substantial material aid to many countries of the periphery (including some of the most active members of the non-aligned movement) in an effort to shore up their resistance to neo-colonial dominance.

The advanced capitalist countries focused on undermining these efforts and maintaining the existing relationships under trusted, subservient regimes. They confronted these challenges covertly or through direct military intervention while establishing strategic outposts throughout the developing world, outposts like Israel, Iran, apartheid South Africa, Taiwan, etc.

Post-war monopoly capital focused on rebuilding a capitalist Europe and Japan because they offered a developed, though damaged, industrial infrastructure vitally in need of investment, and also provided cheap labor; and capital counted these countries as reliable allies in the Cold War. The Soviet effort to assist the periphery in escaping the clutches of neo-colonialism failed. Socialist material aid shifted necessarily to military aid and the countries of the periphery were denied the opportunity to peacefully develop a human and material infrastructure for advancement.

At this time, in the immediate decades after the war, conditions and production and distribution techniques were inadequately developed to fully exploit export-driven economies in the periphery. While cheap labor was available, industrial experience, urbanization, and infrastructure were lacking due to colonialism’s legacy. Similarly, the low levels of consumption from that legacy were unattractive to monopoly capital. The advanced capitalist countries neglected the periphery economically while attempting to dominate it politically.

The relationship between the core and periphery changed substantially over the next thirty years, changes brought on by transformation and advancement of production and distribution techniques, revolutionizing technologies, new divisions of labor, and the creation of an enormous labor market pool wrought by changes in the Chinese road to socialism and the demise of the European socialist states.

The mobility of capital, the de-skilling of many manufacturing processes, new-found logistic efficiencies, cross-border assembly processes, de-regulation, free market ideology and, of course, cheap, flexible labor have created new conditions for exploitation in the periphery.

As a result, many, but certainly not all, of the peripheral nations have enjoyed growth rates far higher than the most advanced capitalist countries, as capital exploits low wage opportunities to shift production and services to its advantage. Where the doors are open, capital flows.

And the former privileged position of the core masses has eroded as productive activity has shifted South and East. Of course standards of living are still much higher in the core, but the trend is towards convergence as low- cost labor pressures those engaged in the diminishing industries of the US and UK core countries.

Without a social net or their former public benefits, the once-socialist countries of Europe share an economic status akin to most peripheral countries. Their low wage levels have served as a magnet for capital and now pressure wage levels in Europe. Lower wage levels of some industrial workers in the US are now serving as leverage against their counterparts in Canada and other countries. In short, the development of the productive forces over past decades has vastly improved the hand of capital’s owners and managers to exploit global labor sources uninhibited by borders.

Thus, capitalism’s trajectory does not support a sharp economic divide between core and periphery. Nor does it support a theoretical addendum to the law of value expressed as “imperialist rent.”

I give core/periphery theorists this: the so-called peripheral countries are carrying the burden of anti-imperialist struggle far more than their brothers and sisters in the “core” who have failed to adequately find their place in this struggle. Remnants of their privileged position, chauvinism, and poisoned ideology keep them compliant as their privileges fade away. This is a matter of shame and embarrassment to those of us who live in the core countries.

Monopoly Capital: Sweezy and Baran

Amin generously acknowledges the intellectual heritage of the important, influential 1966 book, Monopoly Capital, by Paul Sweezy and Paul Baran, and he sees his book as part of the theoretical legacy of their work. Monopoly Capital is essential reading for many reasons, including its demonstration of the tendency of capital to concentration and centralization, a tendency that is well tracked and proven again and again in the pages of the late authors’ worthy journal, Monthly Review.

Sweezy and Baran dissected the sales effort and exposed the enormous material waste concomitant with monopoly capital, the ever-present role of militarism in maintaining the capitalist economic mechanism, and the hollow worth of life under monopoly capitalism. Their 1966 book contributed greatly to our understanding of these features of modern capitalism.

However, Monopoly Capital made a far more controversial claim: it argued that the concentration of capitalist enterprises diminished competition to the point that it changed the basic dynamics of capitalism, necessitating a modification of Marx’s analysis in Capital. Under monopoly (really, oligarchic) conditions, they see the laws of motion and basis for crises as different from what they were in Marx’s era of competitive capitalism.

Lacking competitive price pressure, giant corporations accumulate huge surpluses that cannot be adequately absorbed by reinvesting in capitalist growth when consumption is limited by a persistent rate of labor exploitation and the bounds of the gluttony of the rich. This over-accumulation results in investment in non-productive activities like the sales effort, product differentiation, false needs, military spending, government growth, etc. Eventually, these unproductive uses of the capitalist surplus lead to stagnation.

Amin attempts to demonstrate this theoretical turn by drawing on Marx’s two-sector expanded reproduction schema. He offers an algebraic argument with arithmetic examples to show that, at a given rate of exploitation and organic composition of capital, capital will eventually accumulate beyond the capacity of producer goods investment and investment in mass consumption to absorb it.

Therefore, he argues, we must acknowledge a third sector— a “Department III” in Marx’s nomenclature—that absorbs the over-accumulation. And that third sector is co-extensive with the economic activities detailed in Monopoly Capital (John Bellamy Foster develops a similar three-sector analysis in “Marxian Economics and the State,” Science and Society, Fall, 1982).

It is significant and revealing that Amin’s argument is almost identical to the argument pressed by Henryk Grossmann’s 1929 book, The Law of Accumulation and Breakdown of the Capitalist System. Grossmann, too, uses Marx’s expanded reproduction schema to demonstrate an over-accumulation of capital after finite reproduction cycles. But it is telling that he draws a far different conclusion. Grossmann contends that over-accumulation generates a tendency for the rate of profit to fall (and lead to eventual crises) and not to unproductive or irrational “investment” and stagnation. Some might argue that, given the recent experience of sharp global economic decline following pressure on profitability, Grossmann’s views might offer a more satisfactory explanatory model.

We can credit Amin, Grossmann and Marx (in volume III, part III of Capital) for similar demonstrations of the tendency of capital to over-accumulate (with counter-tendencies discussed by all three), but they each draw different conclusions for the trajectory of capitalism.

In my view, over-accumulation is a persistent and pervasive tendency of capitalism in its competitive and monopoly phases. Indeed, it is, simply put, an inherent tendency in capitalist reproduction. Yet continuous concentration and centralization of capital are consistent with competition (Amin dismissively acknowledges it as “monopolistic competition”). Competition in the era of monopolies exists through changes in the regional and national balance of economic power, technological advantages, new product and industry introduction, rapid changes in manufacturing techniques, different management strategies, etc.—in short, a diverse set of factors beyond price competition. Robert Brenner traces this evolution of “monopolistic competition” convincingly in his account of “the long upturn” in The Economics of Global Turbulence (1998).

As for the absorption of the surplus generated by monopoly capitalism, the Monopoly Capital School underestimated the growth of consumption as a driving force of investment and productive activity. The relatively stagnant consumption base of the late sixties and seventies (in the US) expanded rapidly with women joining the workforce for both reasons of liberation and family survival. Equally, the authors failed to anticipate the explosion of consumer credit as a factor in consumption growth, a development fraught with problems, but powerfully boosting effective consumer demand.

From the eighties forward, the financial sector played a growing, even dominant role in absorbing the enormous monopoly surplus. In Monopoly Capital, Sweezy and Baran devoted a mere three pages to the financial, insurance, and real estate industries. Soon after the turn of this century, financial profits accounted for over 40% of the profits generated by the US economy, demonstrating its dominant role in surplus absorption. The authors vastly underestimated monopoly capitalism’s capacity to mortgage the future; they failed to anticipate how investments and bets on future gains could become the key factor (with disastrous results!) in exploiting the surplus. The relative decline in profitability of productive activity, poised against the growth of the surplus, led to “investment” in high-risk, future-directed speculation. The disaster ensued.

Amin, like his Monthly Review colleagues and many other Marxists, acknowledge this development with the unhelpful term: financialization—-one of those trendy neologisms unrelated to any other aspect of Marxist theory. However, it is not enough to give a name to a profound shift in capitalism’s evolution without an equally deep Marxist analysis of debt and speculative capitalism. To my knowledge, that analysis is still forthcoming.

Old and New

The economic crises of the twenty-first century – the orgy of venture capital and technology speculation and the super-crisis of financial speculation— afford Marxism a new opportunity to both energize a movement for socialism and revitalize the theoretical heritage of Marx, Engels, and Lenin. Both projects are behind schedule.

Crises expose the weaknesses of capitalism, but equally its inner logic. They display the mechanisms that propel growth and accumulation as well as those that produce failure.

Old views, like the ready, but theoretically weak under-consumptionist interpretation of crisis from a Marxist perspective, are swept away by the facts. Hyper-accumulation of capital in the hands of a few was the antecedent of these crises and not a drop in consumption. The economic data prior to the twenty-first-century crises demonstrate this clearly. The destruction of living standards and erosion of consumption were the effect and not the cause, an effect that indeed deepened the crises. Our understanding of capitalism’s dynamic begins with our understanding of the role of surplus and the capitalist’s unending drive to invest surplus profitably. I believe Samir Amin shares the recognition of the central role of accumulation in the system’s mechanism, but he is shackled by the Sweezy/Baran interpretation in applying it to today’s global economy. Sweezy and Baran (and Amin) drew their useful insights from a different era in capitalism’s evolution. Despite Amin’s intelligent efforts to apply those insights to today’s global economy, The Law of Worldwide Value falls short. That era was one of decadence and stagnation; this era is one of decline and multi-faceted crises. For Amin, the “new” is a characterization of our moment as “late capitalism of generalized, financialized, and globalized monopolies.” But this is merely an observation and not a theoretical analysis, an identification and not an explanation.

Different theoretical conclusions must be drawn; and a different politics is necessary.

March 22, 2012