Business as Usual: The Economic Crisis and the Failure of Capitalism

by Paul Mattick Jr.

The recent global economic downturn has affected nearly everyone in every corner of the globe. Its vast reach and lingering effects have made it difficult to pinpoint its exact cause, and while some economists point to the risks inherent in the modern financial system, others blame long-term imbalances in the world economy. Into this debate steps Paul Mattick, who, in Business as Usual, explains the global economic downturn in relation to the development of the world economy since World War II, but also as a fundamental example of the cycle of crisis and recovery that has characterized capitalism since the early nineteenth century.

Mattick explains that today’s recession is not the result of a singular financial event but instead is a manifestation of long-term processes within the world economy. Mattick argues that the economic downturn can best be understood within the context of business cycles, which are unavoidable in a free-market economy. He uses this explanation as a springboard for exploring the nature of our capitalist society and its prospects for the future.

Although Business as Usual engages with many economic theories, both mainstream and left-wing, Mattick’s accessible writing opens the subject up in order for non-specialists to understand the current economic climate not as the effect of a financial crisis, but as a manifestation of a truth about the social and economic system in which we live. As a result the book is ideal for anyone who wants to gain a succinct and jargon-free understanding of recent economic events, and, just as important, the overall dynamics of the capitalist system itself.

Genres: Economics, Nonfiction, Politics

126 pages, Paperback

First published January 1, 2011

About the author

Paul Mattick Jr. (born 1944) is a Marxist theorist and philosopher.

He is the son of council communist theoreticians Paul Mattick Sr. (1904-1981) (author Paul Mattick) and Ilse Mattick (1919-2009).

Mattick obtained his PhD from Harvard in 1981, and is currently chair of the Department of Philosophy at Adelphi University in New York. He was previously the editor of the International Journal of Political Economy, and is the author of several books on philosophy of language, aesthetics, and the critique of political economy.

Reviews

[C · Rating 4 out of 5]

Paul Mattick is a fantastic speaker. I highly suggest to anyone interested in the recent recession: watch his youtube videos and recent discussion for the Platypus society. Moreover, he writes as clearly as he speaks. However, when it comes to actually comprehending the financial crisis in intimate detail, I somewhat prefer Andrew Kliman's presentation, which has far more statistics, and graphs, and the feeling of a solid well thought out presentation and all encompassing theory. Mattick is more or less giving the reader a spotty historical account of the booms and bust of the capitalist mode of production; which is very interesting, and very hard to do in a mere 100 pages. That said, because he spends so much time on the history of capitalism, much of the actual recession is somewhat left out. And because it is more or less a history book of the overall problems of capitalism, the nuance that each boom-bust cycle deserves, it also somewhat left out.

Still, it's overall a good book, and can be read in a matter of hours. It's also good to see people like Mattick and Kliman offering a very unique take on capitalism, and how it operates. So, purchase Kliman for an intimate understanding of our recession, purchase Mattick for a sleek history of why capitalism is prone to erratic behavior (although by always being erratic, one could say it's also always stable).

[Ben · Rating 5 out of 5]

The Left that began with industrial capitalism in the 1800s, grew through the nineteenth century and reached its greatest development during the first quarter of the twentieth, no longer exists. This fact has been given recognition under many different descriptions: as the 'end of ideology', and the supposed disappearance of class as a social principle, celebrated by American sociologists in the 1950s; as the advent of 'one-dimensional man' lamented by prominent voices on the left in the late 1960s; in a particularly muddled fashion, in the 1980s, as 'post-modernism'; after the fall of Communism in the intellectually weaker form of the 'end of history'. However it is described, it is obvious that the old organizations of the Left, both larger political parties and smaller, generally more radical sects, have lost all significance as agents of social transformation, and that even the ideologies and slogans of the past have decreasing purchase on people's imaginations.

[Ruairí]

Holds up well as an accessible introduction to the critique of political economy in the context of the financial crash from the world’s foremost (and possibly only) leftcom nepo baby. Very nicely reconstructs Marx’s core critique with only two references to Marx himself - one of which is to mention that nobody read capital because of its high level of abstraction.

The fundamental problem of mature capitalist economies Mattick identifies - the failure to recover any kind of broad based return to profitability - and the schizophrenic policy responses to that problem (massive state-led stimulus combined with brutal austerity) remain. In Britain the problems are often expressed in discourse as lack of investment and low productivity. These are clearly just second order expressions of low profitability. Of all recent efforts to address this, Rachel Reeves seems to be the only one to grasp the problem at some level, hence the enthusiasm for de-risking, a genuinely morbid symptom of late capitalism where the state directly guarantees and subsidises profits to induce private investment.

Mattick’s ortho-Marxist framework offers an explanation AI-mania has taken particular hold here. As the most radically deindustrialised developed country we have been especially exposed to increasing service-sector cost disease, eating into already low profits which only gets worse over time as the sector proves resistant to automation which could improve profitability through increased productivity, enabling firms to shed labour. AI in theory kills two birds with one stone, making unproductive state administration (which has picked up labour market slack) more efficient while cutting the Gordian knot of service-sector productivity. Seems hard to imagine that this offers any long term respite let alone a return to sustained growth, especially given the international situation.

One thing I’ve never understood about left-ish arguments for ‘reindustrialisation’ as an alternative response to all this is how its meant to work when every advanced capitalist country also wants to do this. Is the argument seriously that Britain can compete on international markets with the EU, the states and China? Seems a totally absurd prospect fuelled by an unexamined return to economic nationalism. You aren’t getting your ‘good union jobs’ at the steel mill back folks. Best case scenario maybe all of this kicks the mega-crisis down the road just far enough (but not too far!) so we can have authoritarian thousand-year Burnhamreich instead of god-emperor farage.

[G J · Rating 5 out of 5]

Conventional politics when it comes to the economy presents multiple options available to the voting public typically in the form of increased government spending or increased privatization with many permutations of these basic choices. Often they are even discussed in an ideological fashion as which is more just or appeals to a particular moral paradigm. Paul Mattick Jr. in Business as Usual dispels a lot of the myths that surround economic decision making in politics especially when it comes to economic crisis.

Contrary to some thinking economic decisions made in capitalist countries are reactions to the almost unwieldy nature of capitalist production. All economic policy is typically a reaction to crisis rather than proceeding crisis. The nature of economic downturn/recession/depressions in their variety of permutations are unavoidable in capitalism regardless of the face of political party in power (true regardless of right/left leaning ideology) because the very mechanisms that force capitalist firms to be more competitive and be more efficient cause a crisis of profitability. In capitalism, a firm's sole motivation if profit, and all of its actions are pursuant to this cause. It is not a matter of morality, ideology, or the particular capitalist running the firm. By the very nature of competition if a firm does not make a profit it will cease to exist. As such it must increase the productivity of the labor it employs and increase its internal production process (typically technological advancements that decrease costs or increase net production). However the more efficient a firm becomes the closer the price of its commodities come to cost and as such less profit is made in each profit. This tendency of the rate of profitability to fall (although countervailing forces do exist, it is a general tendency not an absolute law over small periods of time) is a key instigator to economic collapse and is unavoidable in this method of production.
This is the broad strokes to Mattick's analysis of economic collapse. In this book he expertly and concisely explores the history of political/economic thought on economic breakdown. Demonstrates with clarity the role of profitability for economic activity, and how this tendency of the rate of profit to fall is the key indicator (there are additional historical contingencies) to recession. Normally a recession is overcome by the devaluation of capital such that profitability becomes possible again as less capital is needed for investment, giving rise to the observable business cycle. Mattick explores the economic turbulence observable throughout the post-WWII era to demonstrate the the recession of 2007/8 did not come out of nowhere and while it may be a surprise for some this is merely the same pattern of economic collapse that has been observable as early as the late 18th century.

This last recession has cleared the air and taken away a lot of the legitimacy in economics as a legitimate science since its main advocates are no longer able to accurately predict this phenomenon that has been reoccurring for centuries and their proposed solutions are just rehashed strategies of economic stimulus or privatization that do not address this recurrent problem. Unfortunately the main vocal advocates of change essentialize this problem to individual greedy speculative investors or just a matter of wealth redistribution. If these simple explanations ring hollow that is because they are. The lack a systemic analysis of cause and effect of economic turbulence and the functioning of the capitalist system. Demands for a return to New Deal politics or European social democracy ignore the specific historical conditions that made Keynesianism possible. Instead Mattick offers a short systemic analysis of economic collapse and its inevitability under capitalism. In its place he advocates for a different means of distribution. Just as he points out in the book what kind of crazy world have we created where overproduction of commodities poses an obstacle to their distribution and further production. Social democracy and further lasse-faire market systems are both unable to resolve the crisis and we must think deeper about the underlying mechanisms of our system of production.

[Ian Zimmermann · Rating 5 out of 5]

This book is not only a thought-provoking study of the 2007 financial crisis, but also, more generally, a very useful introduction to Marx's understanding of how capitalism works. Mattick's fascinating book combines a compact history of capitalism (with a focus on its tendency to produce those peculiar crises that are specifically "economic" in character) with some theoretical basics of Marxian theory.