![]() The first thing one notes, in turning to those accounts that dominate today’s business news, is that corporations are awash in rising profits. In what follows, I will attempt to show concretely, by focusing on current historical developments, why I believe this general approach is vital to the explanation of economic conditions today-at the beginning of a new millennium. Like all theoretical perspectives this one has to be put to the harsh test of reality, and modified where necessary to explain changing historical conditions. All of this means that the system has a powerful tendency towards stagnation, arising from an inability to find outlets for all of the surplus actually and potentially generated at the level of production-a problem partly (but only partly) compensated for by the rise of various countervailing factors, such as the growing sales effort, military spending, and financial expansion. Foreign investment, which once provided an outlet for surplus, has become an efficient device for the transfer of surplus from the periphery to the core of the capitalist system, thereby further compounding the problem. Even the astounding new field of computer/digital technology has so far absorbed only a small part of the massive economic surplus hanging over the economy. Generally, the answer is sought in new investment, but that expansion of capital comes up against consumption limits imposed by the distribution of income: who will buy the increased volume of output? New epoch-making innovations-resembling the steam engine, the railroad, and the automobile in the overall effect on accumulation-could conceivably provide sufficient profitable investment outlets, but such epoch-making innovations are historical rather than economic factors that cannot be counted on to appear when needed or on the scale necessary in terms of surplus absorption. So the problem remains one of how to absorb all of the surplus actually and potentially available. But that is peanuts compared to the size of the growing surplus. True, capitalists can use or waste some of this surplus for personal pleasure. Rising surplus and the accumulation of a mountain of surplus means that capitalist firms are faced with the problem of how to employ all of it, i.e., how to use the piled-up cash to make more profit. A key contradiction of capitalism in its monopoly stage is therefore that of rising surplus and the associated problems of surplus absorption. This perspective, outlined in Baran and Sweezy’s Monopoly Capital, argued that Marx’s “law of the tendency of the rate of profit to fall” was no longer directly applicable to the monopoly capitalist economy that emerged at the beginning of the twentieth century, and had to be replaced by a “law of the tendency of surplus to rise”-where surplus was defined as the difference between the wages of production workers and total value added. Throughout its history, MR has advanced a theoretical view known as monopoly capital or stagnation theory. How central is the concentration and centralization of capital to our understanding of the workings of capitalism today-a full century after Marxists and other radicals first raised the question of monopoly capitalism? Whatever one’s abstract theory is-and all theories by definition rely on a degree of abstraction-its usefulness lies in its capacity to make sense of everyday reality, while providing the strategic analysis necessary for practical revolutionary solutions. Did the revolution in economic thought, associated with thinkers such as Keynes and Kalecki, teach things that Marxist political economists should view as essential? Another disagreement is over the role of monopoly and competition. One of these is over the centrality of the Keynesian revolution to the development of economics. But even among those on the left there are areas of sharp disagreement. The single most important division lies between right and left-a division that has its roots in class. My intention in this article is to use that general analysis to comment on some of the central empirical developments within the economy in our time-in a new millennium and under conditions of the globalization of monopoly capital.Įconomic analysts, as everyone knows, have widely differing views on the way the economy works. It is also meant as a personal expression of my conviction that Monopoly Capital (1966) by Paul Baran and Paul Sweezy, which provided a rich analysis of capital accumulation and crisis rooted in insights from Marx, Keynes, Kalecki, and Schumpeter, is still the most useful starting point from which to view the historical evolution of the United States and other advanced capitalist economies. This article is dedicated to Paul Sweezy on his 90th birthday.
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