From the Writings of Raya Dunayevskaya: Deep recession, rate of profit and the supreme commodity, labor power

September 12, 2011

From the Writings of Raya Dunayevskaya

Editor’s note: Written in the midst of the last double-dip recession in the U.S., the piece excerpted here was originally titled, “In the U.S. and globally: deep recession, military buildup and the pulling apart of political alliances.” It was published as the lead article in the April 1982 N&L.

The depth of the economic crisis has sent capitalist ideologues to search for a new expression rather than to face the truth that the U.S. is on the brink of a Depression. The front page of the Business Section of the March 14, 1982, New York Times has come up with the expression, “The Great Repression.” It also names “who” is responsible: “The Government caused it.” This is an apt description of the crisis both economically and politically, at a time when the genocidal war in El Salvador is being propped up by the Reagan Administration. While the New York Times hardly meant to point to the capitalist system itself as the culprit, it is impossible to avoid confrontation with the irreversible decline of capitalism.

The parallelism between the ever-deepening chronic unemployment, the industrial stagnation and the political repression–in Latin America, in the Middle East, and indeed globally–characterizes both the U.S. and that other nuclear Titan, Russia, who are fighting for single world domination to the brink of a nuclear holocaust. The determinant that has so far halted their drive to a war that would put a question mark over the very survival of humanity is the global mass discontent–which is seen not only in the Polish rebellion behind the Iron Curtain, and the open revolt of the masses in Latin America, but also in the undercurrent of revolt in the U.S.


The frantic militarization–not just for this year and next, but over a whole five-year period–adds up to the hallucinatory sum of $1.6 trillion. It speaks loudly and clearly about the coexistence of two total opposites: limitless, unconscionable expenditures for the military, on the one hand; and outright poverty for the millions, on the other….

U.S. scientists have pointed to a corollary to this fantastic expenditure: the military has drained no less than 25% of all scientists worldwide and 60% of overall scientific research. They have also shown that for every billion dollars spent for the military 36,000 fewer jobs are generated than would be generated if that billion were expended in the civilian sector….

So massive have been the anti-nuclear demonstrations, both in the U.S. and in the West in general, that this opposition is the element that has the government leaders throughout the world, and their ideologues, so concerned that they are trying to hide the relationship between the militarization and the state of the economy….

It isn’t only the Reagan Administration but the whole capitalist system that seems to know nothing but how to go from war to depression and back again. We can see the integrality of capitalist economy and actual war not only in general, but very specifically during the last decade. Although the quadrupling of oil prices following the 1973 Arab-Israeli War enabled Western imperialism to blame the whole, deep 1974 economic crisis and soaring inflation rates on the oil sheiks, the truth is that, as much as the quadrupling exacerbated it, it was the Vietnam War that was the main cause of the crisis.[1]…

In a word, short of war, business goes on as usual. Economics remains the gut question, and it helps not a whit that Ronald Reagan’s ideological twin, Prime Minister Margaret Thatcher, also practices “supply-side economics.” On the contrary, in both cases their policy further deepened the economic crises in each country.

As Robert Solomon, the former advisor to the Board of Governors of the Federal Reserve Board, put it in summing up the year, “Demand and supply are the bread and butter of the economists, but the supply-siders would like us to ignore the demand effects of tax cuts. This would be myopic….The classical remedy is a lengthy recession in which workers accept lower wage increases out of fear of losing their jobs.” The labor bureaucracy’s bowing to these capitalist demands with the massive cuts in wages as well as hard-won health and retirement benefits, only spells out the beginning of the end of its leadership, even as it points to the disintegration of capitalism itself.

Instead of Reagan’s tax cuts unleashing a vigorous expansion of the economy, we are now confronted with a prolonged slowdown in growth. David Stockman, Director of Reagan’s Office of Management and Budget, in his confessional in the Atlantic Monthly, put it most succinctly when he proved that supply-side economics was simply “a cover for the reduction of income taxes in the upper bracket.”[2]


The most massive restructuring of industry since the Depression has brought about the most prolonged period of capital shortage. Capital investment fell so greatly that in the non-energy sector there was an under-investment by $50 billion in 1980. With high technology as the main factor, only the biggest monopolies, whether in agriculture or industry, will survive. This, of course, leads to ever greater concentration and centralization of capital in ever fewer hands. Strange as it may sound to those looking only at the lush profits of the few, there is a shortage of capital to sustain the boom that isn’t. But the rate of profit, or what the capitalists call “the average rate of return on equity,” declines.

Without acknowledging that capitalism’s profits come from the unpaid hours of labor of that supreme commodity, labor power, capitalists see that the more machinery they invest in, and the fewer workers they need to run those computerized machines, the less surplus value do they have. In a word, no matter how lush the mass of profits–and only in oil and high technology are they that lush–the rate is less.

The truth is that so large is the capital needed for new investment for each unit of production, that the amount of output in 1980 shrank 38% from what it was in 1978. At present, the average rate of return in industry is just under 8%, which is hardly more than one-half what it was for all U.S. companies only five years ago. We must repeat that what characterizes the global economy–the U.S. and West Europe, Russia and East Europe–is a permanent lower growth rate.

And, despite all the ballyhoo about how people would be “rehired,” as soon as they are retrained in robotics or hired in the service industries, the truth is that manufacturing, even with the economic base having been eroded, is the one that employs one-third of the nation’s work-force.

What they call “a wild ride for U.S. capital in the 1980s” is actually a wild ride for the workers into the permanent army of the unemployed and their pauperization. This is what the economists try to hide by evoking the word “total,” and speaking of the “total factor of productivity,” as if indeed capital were productive. At the same time, these capitalist ideologues themselves call non-productive investments “more like consumption expenditures than an investment.”

In a word, when it gets down to the actual facts, so great is the need for capital investment, per machine or per robotic, and so little is the demand for labor, that they fail to anticipate their rate of profit sinking lower. Since it’s only from living labor that they get all their unpaid hours of labor, and since they do not want to admit any such thing, the cry for inclusion of capital productivity is just one more way to have the mass of profits hide the decline in the rate of profit.

* * *

Over 100 years ago, Karl Marx, who had removed political economy from an intellectualistic debate and centered it on the relations of capital and labor at the point of production, as well as in the political class struggle, had called the decline in the rate of profit the “pons asini” of capitalism:“The real barrier of capitalist production is capital itself.”[3]

It is the inescapable result of that absolute contradiction of capitalism: On the one hand, its technological revolutions are always calling for more and more constant capital, and less and less variable capital (workers); and, on the other hand, the only source of surplus value is from that supreme commodity, labor power.

Ever since then, even those bourgeois ideologues who build their own business cycle theories on this, have been busy pointing instead to what Marx called “counteracting factors,” as if these were not just tendencies but the actual solution, one that would overcome the absolute general contradiction of capitalism and transcend it. The truth is there is no way out of the absolute contradiction.

This does not mean that capitalism will “automatically” collapse. It needs a good, hefty, determined, revolutionary push from the masses of workers. At the present moment, the steelworkers in Belgium, who have already been on General Strike for weeks, are showing the way, but the undercurrent of revolt globally, including the U.S., will not be restricted to strikes. With the coming of Spring we are sure to see massive anti-nuke demonstrations, women’s liberation struggles, the Black masses’ intense opposition to Reaganism, and the outbursts of youth discontent in every field from the unconscionable cuts in education to being thrown into the ranks of the unemployed before they ever had a job. They will surely coalesce not only in expressing their opposition to Reaganism and its immoral minority calling itself the ”Moral Majority,” but in working out so new a relationship of theory to practice as to become the foundation for truly new human relations.



1. For our analysis of the relationship of the economy to the Vietnam War, showing both that war’s degeneracy and its repercussions on the U.S. economy, see the section “U.S. Imperialism-Capitalism in the Throes of Many Crises: Economic, Political, Labor, Racial, Sexist” in our Perspectives 1977-78. See also Marx’s Capital and Today’s Global Crisis, published by News & Letters, 1978.

2. See also John Kenneth Galbraith on “The Budget and the Bust,” New Republic, March 17, 1982.

3.Karl Marx, Capital, Vol. III, p. 293 (Kerr edition), emphasis in the original. See, indeed, the entire Part III on “The Law of the Falling Tendency of the Rate of Profit,” pp. 247-313.

In this year of revolts across the Middle East and North Africa…

Now available in Arabic translation:MarxismAndFreedomInArabic

Marxism and Freedom, from 1776 until Today
the classic book by Raya Dunayevskaya. Made possible by the Victor Serge Foundation, the new translation can be found in pdf form on the web at

“Dunayevskaya [translated] the young Marx’s essays on alienation and humanism…on which she based her new interpretation of Marx. In 1956 the Hungarian revolution of workers and intellectuals against statist Communism, under the banner of Marxist humanism, confirmed Dunayevskaya’s hypothesis. In 1958, she summed up her work to that point in Marxism and Freedom, an essential book that we present to Arabic-speaking readers thanks to the care of our great friend Maâti Monjib.”

–from Richard Greeman’s Preface to the Arabic edition of Marxism and Freedom

For paper copies, please contact:
Maâti Monjib, Enseignant-Chercheur
Institut des Etudes Africaines, Avenue Allal El Fassi
BP: 8968, Code postal:10100
Tel 212(0) 37 77 12 74 or /37 77 12 72,
Fax: 212(0) 37 77 84 25

Leave a Reply

Your email address will not be published.