Rethinking Crisis Theory?

Economic crisis in the form of a recession in the advanced countries has provoked several scholars to re-examine the theories propounded by classical writers including Marx. Those who were critical about the miscarriage of Marxian prediction of the so-called ‘law of the tendency of falling rate of profit’ during the peak days of capitalism appear to muse now.

There are scholars who are still working on the ideas of great thinkers unlike some political parties. It is in this context, the 17th annual Conference of the Indian Political Economy Association took place in the University of Hyderabad recently. I was invited to deliver the valedictory address (being former founding Member and office-bearer). Some young scholars from different parts of the country and also a few from outside were found dabbling with old and obsolete concepts without relating them to the existing conditions in the sessions.

Political Economy is not a religion and its importance is recognised when there was a transition from feudalism to capitalism in the 19th century and its relevance is felt now when the globalisation project is in deep crisis. Therefore, scholars should realise that unless the epistemology of the discipline is enhanced and strengthened, its relevance may not last long.

There are different shades of Political Economy taught and discussed in Social Sciences. Its popularity has gone down now in most of the universities due to several reasons and due to deliberate academic neglect. For instance, the UGC curriculum centre in Economics did not recognise the subject at all and in most of the universities, I am told even Economic Thought or Political Ideas are not taught. In fact, the Chicago School of Political Economy and its high priests, who were behind the Non-Marxian theory of withering away of state, have done great damage to the dispassionate academic quest in educational institutions by espousing only one side view.

India is not an exception to this trend. However, one of the prominent and the dominant approach of Political Economy based on Marxian theory is still surviving despite the collapse of Soviet or Chinese official patronage. In fact, the academic discourse now gains objectivity due to absence of the official bogey. It is anticipated that prospective scholars and thinkers who are searching for alternative sources of intellectual insights would soon bring a paradigm shift.

There are three important academic developments in the Marxian Political Economy. The German scholar and economist Michael Heinrich in his “An Introduction to the Three Volumes of Karl Marx’s Capital” published by Monthly Press in 2012 and in his expository article in April 2013, brought out a contentious revelation. The maligned theory of crisis of falling rate of profit in Capital, according to Heinrich is an edited version of Engels and not that of Marx.

As a German, Heinrich had access to all Marx’s material and found that 1865 manuscripts of Marx were edited by Engels heavily revising to construct the third chapter on “Law”. He has condensed it to divide it into four subsections and the original seven chapters were reorganised in to seven parts. Then what is the problem? Heinrich argues that Marx was still researching and trying to understand the dynamics of capitalist system and the law was only a disparate theory and not a comprehensive Law.

The fact that he tried to use mathematical examples to explain the falling rate of profit with the increase in constant capital and declining surplus value (with lower number of workers due to increase in productivity etc) is only a discrete attempt. He has also explained that Marx was collecting data and information (even learnt Russian) to understand the American system of capitalism where presence of interest bearing capital and credit have dissipated the tendency of falling rate of profit. Therefore, we need to understand the essence of Marx’s argument and not the actual events.

The arguments of Heinrich are contested by Michael Roberts through his blog. According to Roberts, the falling rate of profit even within the given theory is proved in the UK and USA. He has estimated the rate of profit by using the standard Marxist concepts of organic composition of capital, surplus value and rate of profit in the two most advanced capitalist countries during 1963-2008. He found that profits fell by 28 per cent, organic composition rose by 20 per cent and surplus value fell by 19 per cent during 1963-75 in the UK.

It is estimated that between 1996 and 2008, profits fell by 11 per cent, organic composition rose by 16 per cent and surplus value remained secularly stagnant. It is now left to the scholars to examine to what extent Marxian theory of crisis is relevant or irrelevant and to what extent Lenin who explained the tyranny of Finance Capital in his elaboration of Imperialism (Globalisation) would be useful.

The second most important criticism against Marxism is the alleged absence of analysis of human element in the mechanical application of Historical Materialism. One may leisurely and dispassionately look at his theories now and their application in countries like India.

One may also address the criticism that why India could not produce a Gramsci, Ho Chi Minh etc, probably to dabble with the so-called objective and subjective conditions. Why is it that the Asiatic Mode of Production (exception Sardesai, Harbans Mukhia, Shakti Padhi, etc) was not given importance in the mainstream Marxist discourse to understand the vexed question of Caste? How do we understand a situation like Telangana even 65 years after independence?

There are attempts by independent scholars to address some of these questions, but the hegemony of organised few, it is alleged, did not allow the lone voices to be heard to. In fact, scholars like Eric Fromm published “Marx’s Concept of Man” in 1961. Fromm, one of the topmost Psychologists of last century analysed Marx’s Philosophical and Economic Manuscripts 1859, to discover the humanist traditions in the elaboration of concept of “Alienation”. The spiritual emancipation of man from the chains of economic determinism as elucidated in ‘labourer exists for the process of production and not the process of production for the labourer’ are to be re-visited.

How the classes in contemporary capitalism are to be understood. Are the classes and castes means the same thing? Is the concept of New Petty Bourgeois advanced by Nicos Poulantazas applicable to India? How do we account for those who assert that, ‘we are poor in economic terms and not by the prestige of caste’, in the urban slums? Do the ICT professionals and Finance Managers who serve the interests of capital come under NPB? Has the concept of New Imperialism understood in the Indian context? These are some of the important questions that should make the academic scholars to bother to make Political Economy really a tool in the hands of the oppressed.