Marx and Keynes: The Limits of the Mixed Economy

by Paul Mattick, Rhiza (Cover Art)

Un jour, une crise, grave, brutale, dévasta l'économie mondiale : les usines fermèrent, le chômage explosa, les maisons furent hypothéquées, leurs habitants jetés sur les routes et les banques cessèrent de prêter à ceux qui en avaient le plus besoin. On parla alors de dépasser le marché, de moraliser l'économie libérale, d'inventer un avenir humaniste alternatif. On parla même d'un retour du marxisme. Enfin Keynes parut et l'économie mixte dont il s'institua le théoricien insuffla une seconde vie au système capitaliste, démentant du même coup les prédictions de Marx. Mais ce système n'était-il pas appelé à se heurter de nouveau, un autre jour, à des limites historiques ? À cette question essentielle, Paul Mattick (1904, Berlin - 1981, Boston), militant et théoricien de la gauche allemande révolutionnaire et antistalinienne, refusant la dictature du parti centralisé au profit de l'auto-organisation ouvrière à travers des conseils élus, a consacré cet ouvrage qui traite de problèmes fondamentaux - l'accumulation du capital, la monnaie, l'automation, le sous-développement, le capitalisme d'État, etc. De la confrontation entre Keynes et Marx, il conclut que nombre d'analyses de ce dernier ont encore partie liée avec l'avenir, notre avenir.

Genres: Economics, Nonfiction, Politics, History

Paperback

First published January 1, 1969

About the author

Paul Mattick, Sr. (March 13, 1904 – February 7, 1981) was a Marxist political writer and social revolutionary, whose thought can be placed within the council communist and left communist traditions.

Father of author Paul Mattick Jr..

Reviews

[Elle · Rating 5 out of 5]

He didn't get everything right, he perhaps underestimated how successfully the ruling classes of the advanced capitalist economies would be in their fight to roll-back those entrenched gains of the mixed economy – but this is by far one of the best general guides to Marx, his theory of value, and it's consequences for price, competition, the falling rate of profit, crises, automation, imperialism, underdevelopment, unequal exchange and war – and how this contrasts with Keynes, whose 'solutions' to the crisis of capitalist stagnation would prove to be fleeting, limited and ultimately unsuccessful. Sections on the USSR are less convincing, apart from some interesting bits on the law of value under socialism, but I don't think that really matters any more.

Although Mattick's explanations of value and the falling rate of profit may not be the most newbie friendly, they are accurate and faithful representations of Marx's arguments, and I would certainly recommend this to friends interested in the implications of Marx's thought for understanding contemporary capitalism over David Harvey's 'The Limits to Capital' – which is quite popular but I found it to have too many theoretical flaws and inconsistencies.

[Micah · Rating 1 out of 5]

An extremely tedious book. Mattick is known as a council communist, so I thought he might be original and open-minded. For interesting council communism one should turn to Pannekoek or Socialisme ou Barbarie, however; here Mattick simply re-states the most orthodox Marxist economic ideas, in less clear terms than Marx himself, using the Marxist style of argumentation where Marx is right simply because he is Marx. Using the labor theory of value, Mattick reiterates the basic Marxist idea that capitalism's central problem is a rising "organic composition" of capital and resultant decline of profitability. The thing is, the labor theory of value, while interesting as a philosophical reflection on abstraction or reification, is patently false, on logical and empirical grounds, as an explanation for how actual economies function. The economy operates in terms of prices, not values. To his credit, Mattick admits this, but clings to the idea that an abstract value model somehow "ultimately" explains the "totality" of capitalism, even if it doesn't explain any of the concrete events and trends in the actually observable economy. (For his part, Marx obviously thought that values and prices would converge.)

Even today Marxists are rehearsing the arguments in this book; the quasi-Keynesian "underconsumptionists" of Monthly Review are under attack by Kliman the "overproductionist." Mattick is solidly overproductionist - again, the central idea being that the quantity of means of production (i.e. the "value" of physical plant) is too large relative to exploitable labor, the only source of profit if you believe in something called "value," leading to a decline in the rate of profit, which is supposed to lead to disastrous consequences. (Although it’s become a real obsession for Marxists, in the part of Capital published in his lifetime Marx gives little emphasis to a falling rate of profit, instead stressing unemployment and concentration of capital.) Mattick (and now Kliman) thinks it's more "radical" to say that capitalism can’t be reformed because of the law of value, and on the basis of some questionable assumptions, argues that government intervention is useless. Of course, capitalism has undergone reforms, and the real question is whether we even desire a reformed capitalism. In any case, all sides can marshal statistics in their support - leading one to believe that a strictly quantifiable and "scientific" treatment of a closed "economic" space is quite impossible.

What's interesting is that Marx and Marxists obviously came to more or less correct conclusions on the basis of faulty premises. But Keynes basically came to the same (fairly obvious and palpable) conclusions: that a capitalist economy operates for the profit of a specific class of non-laborers, that it leads to periodic crises, unemployment, stagnation, declining profit rates, reduced investment and increased speculation, etc. What's characteristic of Marxism is the unfounded confidence that some "secret truth" had been uncovered by Marx in value theory that exhaustively explains all of this and "objectively" proves that the system can't really function. It's odd that even "libertarian" Marxists can't see the authoritarian character, not of Marxist statism (which is bad enough), but of Marx's "scientific" economic theory itself and the centrality he gives to it.

Is there a "structural" reason the Keynesian experiment was short-lived, leading to neo-liberalism and the current crisis? The question seems complex and undecided. Partly it may have to do with profit rates and excessive plant. But the labor theory of value isn't the place to look for answers; more mundane phenomena like international competition and class struggle (something which, curiously enough, doesn't really factor into Marx's Capital) are probably the independent variables.

[Sam Whitehill · Rating 5 out of 5]

During the nearly three decades of post war affluence and optimism, Paul Mattick maintained a critical Marxist perspective. Rather than retreat from an embrace of the proletariat as revolutionary agent (à la Marcuse), and rather than formulating a theory of a new form of capitalism, freed from many of its crisis tendencies (à la Baran and Sweezy), Mattick attacked the economic orthodoxy of the time as a new veil on the same old contradictions. “The temporary success of Keynesian policies has given rise to the conviction that a way has finally been found to deal effectively with capitalism’s difficulties and thus dissolve the system’s revolutionary potentialities. But this conviction is an illusion” (Page 336). I’d say subsequent history has affirmed this notion.

[Roberto Yoed · Rating 3 out of 5]

An excellent critique to Keynes based on the marxist theory.

The only downside of this book, aside from the anti-soviet subtle stance, are the more "dense" chapters, specifically it's "explaination" of the falling rate of profit (I firmly believe the author didn't know what it was nor the relation of variable capital and constant capital in the determination of the organic composition of capital).

[univocity · Rating 5 out of 5]

Very likely the only work after Grossman written about crisis theory that was worth the paper it took to print -- Mattick's ineliminable pessimism (maintained at the height of post-war prosperity) was, and is, demonstrably justified, and in a period when nearly every theorist considered that, somehow, "contradictions had been overcome from within the system." (See Castoriadis, or Marcuse, for particularly embarrassing examples.)

It's also worth noting that it is precisely Mattick's determinism and fidelity to Grossman -- and not his anodyne councilism -- that has become an avowed and notable influence on the most interesting recent communist theorists: Jehu Eaves, "Monsieur Dupont," and Théorie Communiste, to name only a few.

[Bernard · Rating 4 out of 5]

About 1/3 to 1/2 of the book (depending on your temperament) is incredibly tedious waffling on Marxian economics. The drag in some of the earlier chapters where Mattick goes over basic Marxian concepts was frustrating enough for me to put the book down for quite a while. Nevertheless, the chapters introducing and directly critiquing Keynesian economics are absolutely brilliant and essential reading. Mattick also shines when he applies his critique to specific aspects of modern economics, such as economic development, international trade, and technology, providing both a current reference text for militants as well as a substantial continuation of Marx's work. It is these chapters that make the book incredible, and it is all the greater a shame that the anthology structure of the text, Mattick's rambling writing style, and a lack of republication under the scrutiny of an intelligent editor undermine it. Both in and against the book's favour, the boring chapters alternate to some degree with the great chapters, so the actual experience of reading the book isn't a constant slog either, though the penultimate chapters soured the modest epilogue.

[Petrino · Rating 4 out of 5]

This was a very thought-provoking read. It was written in 1969, when the crisis of capitalism was re-emerging and before the turn to Neoliberalism. It was interesting to read a Marxist analysis of Keynes' policies and why neither the "mixed economies" of the West nor the state capitalist regimes had fundamentally solved the contradictions of capitalism. The book makes few predictions, but what little is there does jibe with the emergence of Neoliberalism in the next decade.

Mattick's explanation of the Labor Theory of Value, the theory of accumulation and the tendency of the rate of profit to fall are also very interesting. He explains those concepts in slightly different ways than I have read previously.

Mattick considered himself an "Anti-Bolshevik Communist." Some of his other works I believe develop this idea more thoroughly but there are shades of it here as he criticizes the Bolshevik economic policies starting right after the revolution.

[Jeff · Rating 5 out of 5]

This is the best book I read in 2012--highly recommended for anyone in dialogue with advocates of the Franken-Keynes theory of economy-salvation that Krugman, et al. are floating these days. Also highly recommended as a primer on the application of categories from the theoretical framework of Capital (Marx), which are quite abstract, to the world of deficit-financed military-Keynesian FDR-LBJ realities. The author has some hilarious turns of phrase and provides a great explanation and summary of concepts from Mr. Marx as well as from Lord J.M. Keynes.

[Hélder Fontes · Rating 2 out of 5]

Extremamente denso. O autor fica enredado em conceitos muito abstratos, com fraco ou nennhum poder de síntese e de explicação. Os primeiros capítulos são um martírio, mas melhora significativamente a partir do meio do livro.
Contudo, parece-me que o livro foi escrito para especialistas na economia marxista e keynesiana (e mesmo estes tenho dúvidas que compreendo).

[Erwan Moysan · Rating 4 out of 5]

One of the best critiques of political economy after Marx. The Marxian criticism of Keynesian policies is devestating and the crisis theory on point. Unfortunately the last bit of the book isn't the best on Soviet capitalism (the USSR immune to crisis, really?).

[Mascifer · Rating 5 out of 5]

Pretty devastating to public policy graduates

[Nick Meyer · Rating 5 out of 5]

no matter how heavy handed the state manages its economy, no matter how much imperialist war, no matter how quick they can “respond” to crises in the business cycle, the entire bourgeois order is one collapse, stagnation, or chronic depression away from the inevitable upheaval.

[Paul · Rating 3 out of 5]

Newly relevant stuff. A little abstract, but useful given that we are returning to state intervention.

[Paul D'Amato · Rating 4 out of 5]

Very good Marxist analysis of Keynesian economics