Marxism confronts the Zombie Apocalypse: Review of Zombie Capitalism

Chris Harman's Zombie Capitalism is a must read if you want to:

Understand economy and politics
Understand the world today
Understand the 2007-2008 economic crisis
Understand why the US has been involved in so many wars
Understand Marxism.

Let me state that the last purpose--understanding Marxism--is really how Harman addresses all of the other issues. And having said that, let me add that this is a must read book. For everyone, not just Marxists, or pseudo-Marxists like myself.

The one insight that, according to Harman, Marx provided and explains political economy, war, the economic crisis, the long-boom of the 20th century, and the failure of first, Keynes, then the Chicago school to explain any of the booms and busts of capitalism is this one: the falling rate of profit. As Harman notes, this concept is (1) the most difficult of Marx's to understand, (2) taken by him from Smith and Ricardo, and (3) rejected by mainstream economists and many Marxist economists. Yet, if Harman's analysis is right, it is the only thing that explains the whole history of boom and bust in capitalism, which no economic theory has been able to do.
So what is the falling rate of profit?

In short, capital investment grows more rapidly than the source of profit. As a consequence, there will he a downward pressure for the ratio of profit to investment--on the rate of profit.

Labor is the source of value--a point denied by mainstream economists yet used by governments to determine their incomes (go figure, right?). Capitalists must increase the value they squeeze from labor by investing in the means of production--tools, machines, computers, etc. Yet, these never add to value, they only extract it at higher rates. So, at some point, the capitalist will reach a point at which he can extract no more value from labor but he has these investments. Thus, the ratio between investment in the means of production to labor (the source of value) reaches a crisis point. The profit rate falls.

As soon as the profit rate falls, individual capitalists extract themselves from further production, laying off workers and ending loans to others. These actions create a feed-back cycle in which other capitalists lay off and stop investing, until the system crumbles... or at least, until the system contracts so much that we hit a recession or (God-forbid) a depression.

Harman uses the first quarter of his book to lay-out Marx's theory. This presentation is clear, though difficult at times (for a non-economist like myself), is short on graphs, but has enough to make his points. He clears up some debate within Marxist economic theory in the process, again never getting too complicated, but only trying to help the reader understand the present world. Part Two of the book examines different explanations for the long-boom of the 20th century, when growth occurred without recession for 40 years. He finds these explanations faulty, and presents the falling rate of profit as the appropriate explanation. Part Three examines global instability after the long boom on similar lines. The last quarter of the book examines the limits of the capitalist system as a whole.

The most important here is what you might find in Naomi Klein's This Changes Everything but presented from the perspective of economic theory and Marxism. In short, capitalism faces a limit in what it can extract from the Earth, and we have nearly reached that limit. Yet, capitalism, like a zombie, continues mindlessly eating and eating its own.

The book presents our doom facing us, yet does not end negatively. Harman points out different possibilities for changing the system. In the chapter, "Who Can Overcome?" Harman defends Marx's reliance on the proletariat and provides enough statistics to convince this former-skeptic that the proletariat is large enough in the world to mount a revolution. As I have argued elsewhere, Harman argues here that the system creates needs that it cannot satisfy, leaving the working class frustrated. The task is for the working class to overcome the fragmentation within it to unite in solidarity and overthrow the capitalists who keep them--us--down.

---