Editor’s note: This review of Ernest Mandel’s book Marxist Economic Theory was first published in the May 1970 and June-July 1970 issues of News & Letters. Dunayevskaya followed this with another major critique of Mandel in the wake of the mid-1970s global capitalist economic crisis, “Today’s Global Crisis, Marx’s Capital, and the Marxist Epigones Who Try to Truncate It and the Understanding of Today’s Crises,” in 1976, which can be found in the collection Marx’s Philosophy of Revolution in Permanence for Our Day, chapter 6. Many thanks to the friend of Marxist-Humanism who transcribed the present piece.

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by Raya Dunayevskaya

Bourgeois reviewers have heaped extravagant praise upon this two-volume study by a Marxist (Trotskyist). Part of the acclaim is, no doubt, due to the author’s declaration “…we have strictly abstained from quoting the sacred texts or interpreting these quotations.” Bourgeois writers love to gloat over a Marxist’s seeming disparagement of works by Marx as “sacred texts,” especially when this is followed by: “As against that, we quote abundantly from the chief economists, economic historians, ethnologists, anthropologists, sociologists and psychologists of our times[…]” (p. 17)

Part of the encomium may be due to the author’s “erudition.” Ernest Mandel roams all over the world, over a period of no less than 7,000 years—from prehistoric times to the “socialist society”—and backs up his 734 pages of text with a 36-page bibliography and 24-page index. The text carries 962 references which take up 32 pages, and lengthy, over-lengthy footnotes dot the pages of the book.

The Praise and the Stabilizer

Ernest Mandel was especially praised for (as The Economist puts it) “replacing Marx’s Victorian facts and statistics by contemporary empirical material…”[1] Pragmatists have always been under the illusion that statistical data can replace methodology and refute Marx’s analysis of the law of motion of capitalism as headed toward collapse. Although Ernest Mandel does not take exception to Marx’s analysis, the reviewers were too pleased with the tone of the work to debate that “attitude.” The author based his own interpretation of capitalist decline on modern capitalism’s “long stagnation.” Ordinarily the bourgeois reviewers would have rushed to dispute this contention with statistics about capitalism’s “phenomenal growth.” Why not this time?

Well, for one thing, there is Ernest Mandel’s non-Marxist contention that capital crises are due, not directly to the exploitative and perverse relations at the point of production, but “to inadequacy…of monetarily effective demand” (p. 343).

Bourgeois authors love to tarry in the market and concentrate on money rather than go into the factory and concentrate on relations of men at the point of production. Nevertheless, this departure from Marx’s theory of crisis would not, in and of itself, have pinpointed the feeling of elation among the bourgeois economists. Other Marxists, from the great revolutionary martyr, Rosa Luxemburg, to the pedantic Marxist economist, Paul Sweezy, have made similar underconsumptionist departures from Marx’s strict production theory of crisis without having brought such high recognition for erudition and objectivity.[2]

Had the departure from a strict production theory to a market analysis not been followed by the strictly capitalistic (private, and state-capitalist) corollary, that state-induced “monetary effective demand” acts as a stabilizer of the economy, praise would not have been so lavish. In a word, what produced the euphoria among bourgeois reviewers was that final market plunge by Mandel, who (after another 200 pages of “data”) landed on his statist head, declaiming: “The capitalist economy of this phase tends to insure greater stability, both of consumption and of investment…” (p. 259). (We will return to this point later).

Today-ness and Methodology

So determined is Mandel not “to restrict” himself to following the dialectic structure of “the chapters” of Capital that he deludes himself to thinking that it is not a departure from the dialectic methodology, but only from the data in these “chapters,” “written in the last century” (p. 17). However it soon turns out that he also disregards Lenin’s analysis of Imperialism, which is very much of the 20th century.

In a word, this is not merely a question of updating statistics, or of starting “from the empirical data of the science of today.” Chapters 12 and 13—“Monopoly Capitalism” and “Imperialism”—do abound in the latest statistics and the author’s wide readings are here a great deal more relevant than either those on “ethnology” or “de-Westernization” which reveal the Western bias by concentrating on the primitive.

The new remains pragmatic not only as to context but as to methodology. Monopoly capitalism is related to “the second industrial revolution” instead of, as with Lenin, the dialectical principle of the transformation into opposite—both of competition into monopoly, and part of the labor force into an aristocracy of labor at the same time as a new revolutionary force arises from the national struggles against imperialism.

For the sake of argument—and because it is the determinant for all Marxists—let us limit ourselves to Marx and give Mandel the benefit of the doubt, that the only reason for not following the structure of Capital was to begin with the new, and not merely to sum up what happened in the 19th century. Unfortunately, it turns out that, along with breaking up the dialectical structure of Capital, Mandel also divests the economic categories—commodity, money, value, labor—of their specifically capitalistic nature, thereby not only deviating from Marx’s analysis of the economic categories and their fetishistic appearance, but also covering up Marx’s original, historic, contribution—the split in the category of labor into abstract and concrete, which Marx considered nothing short of “the pivot on which a clear comprehension of political economy turns.”[3]

Instead, Mandel begins with “Labor, Necessary Product, Surplus Product,” starting “with communities such as Minkopies (inhabiting the shores of the Andaman Islands)…” (p. 27), “the neolithic revolution” (p. 28), and before the reader can reach capitalism, the point of concentration of Marxian “economics,” he must also follow Mandel upon his discovery of “a communist state in Bahrain and the Yemen which survived for over 100 years (from the eleventh to the twelfth century)…” (p. 176).

Tailending Communist Revisionism

Accidentally or not accidentally, this kind of writing of “history” in a work that is supposed to detail “Marxist Economic Theory” is a way of denuding economic categories of their specifically capitalistic nature in the precise manner in which the Stalinist theoreticians achieved the feat, that is to say, by breaking with the dialectical structure of Capital. Without proper accreditation, Mandel has absorbed the startling 1943 reversal[4] of Marx’s analysis of the law of value which Marx considered the mainspring of capitalism, but which Mandel, following the Russian revisionists, strips of its strictly capitalistic nature.

This is not just a question of not “beginning” with what Marx began his analysis—the famous Chapter 1 of Capital which Lenin had accused “none of the Marxists” of understanding because they had not understood “the whole of the Logic [i.e. Hegel’s Science of Logic]” Nor is it a question of beginning, instead, with what is new in the epoch an author analyzes. Rather it is a way of presenting capitalistic economic categories as if they had “always” existed—long before capitalism and long after capitalism is abolished.

The Russians dared lay hands on Capital in order to attempt to clothe the naked exploitation of their state-capitalist society in “new” Marxist garments. Why does Mandel do it—keep the silence?

The Russians labored 10 years[5] before they could write as if that had always been the interpretation of Marxian economics. Mandel begins there straightaway. This is not because Mandel is the brilliant one. The Russians have a 20-year priority in that field. But the Communist state-capitalists had to, first—upon the direct orders of Stalin—make the admission that they were changing “the teaching” of Marxian political economy. They then had to make sure that the texts prior to 1943 did a “disappearing act” in order, from then on, to begin writing without further ado about the “orthodox” interpretation of the law of value. Above all, they had to work out the consequences of the break with the structure of Capital which reveals not only the exploitative nature but also the perversity of capitalism: The machine is master of man, which gives rise to the fetishistic appearance of commodities and presents the relations between men as if they were mere exchange of things.

Then, and only then, could the Russian theoreticians, Stalinized and “de-Stalinized,” write as if the startling 1943 revision was “Marxism.” It isn’t that the erudite Mandel hadn’t “read” the controversies.[6] Rather, the loss of memory was planned for purposes of presenting a “true rebirth”: “After Stalin’s death, and especially after the effects of Khrushchev’s reforms had been exhausted, Soviet economic thought underwent a true re-birth” (p. 726).

Ernest Mandel did finally call attention to the fact that Russian economists had “for a long time” debated the survival of “economic categories” in the USSR. (The quotation marks are Mandel’s way of not revealing that Marxian categories are shorthand for capitalistic, and only capitalistic, production relations.) This attempt to cover his flanks after his failure to deal with the startling 1943 revision of the Marxian law of value cites meetings of academicians, “notably…in 1951, in Dec. 1956, and in June 1958” (p. 566). The postwar (1946) Varga controversy was not an un-notable event. Since, however, his memory conveniently extended back only to 1951, he also manages to ignore it. Yet that involved the entire staff of the Institute of World Economics which Eugene Varga headed.[7]

Changes in the Political Economy of Capitalism Resulting from the Second World War, by Varga, raised the critical question so dear to the heart of Mandel—the possibility that state intervention, even under private capitalism, could prevent economic crises. And, for a moment, the issue in dispute extended itself to the problem Lenin first posed during World War I, that of state-capitalism, a question that Mandel avoids like the plague.[8]

Our concern with Mandel’s studied disregard of the Russian revisions, as well as of the theory of state-capitalism, is not just for purposes of exposé. Although it explodes his claim to objectivity, to a “scientific” analysis, it is not Mandel’s subjectivism that is of moment. What is at issue is the non-Marxist nature of his economic theories which rests on the illusion that the state intervention in the economy, “is an involuntary homage rendered to socialism by capital” (p. 541).

Inexorably, this has led Mandel to see a change of goals for the proletariat during what he calls “the epoch of capitalist decline” which, nevertheless, “educates the working class to interest in the management of enterprises and the regulation of the economy as a whole…” (p. 536).

The Class Struggle and the Plan

Because Mandel doesn’t see today’s problems, the class struggle exists for him only as something past. Thus, the section that deals with class struggles turns out to relate mainly to a non-capitalist era.

He begins with slave uprisings from Spartacus to the “black slaves used by Arabs to drain the Shatt-el-Arab who arose in revolt (868)” (p. 175). The erudite Mr. Mandel then tells us about the first recorded strike in history, that of “Egyptian workers who were working, about 1165 B.C., under Ramses III, at Dehrel-Medina, on the west bank of the Nile, near Thebes” (p. 176, ftn). He then goes into the peasant revolts in China. And even when we finally reach an industrial year, 1853, it turns out to relate, not to Europe which had been uprooted by the 1848 proletarian revolutions, but to Japan, beset by peasant revolts for 250 years: “No less than 1,100 insurrections occurred between 1603 and 1853” (p. 176).

No doubt all this sounded very revolutionary to Mandel. Hadn’t one of Marx’s most famous statements been: “All history is the history of class struggles”?

The trouble with Mandel is that the working class exists for him, not as subject, but as object. His pragmatism makes hash out of both theory and history, of the universal and the concrete, and, most of all, of the class struggle and the plan. He seems to be totally unaware of the fact that, unless the new stage of economy is grasped in strict relationship to the self-activity of the workers, and their mode of resistance, the crisis at each stage of production which is in need of solution is “solved” technically, that is to say, through new ways of extracting more unpaid hours of labor.

This “technical trap” waits any Marxist who fails to see that the workers’ resistance to the “Plan” is due to the workers’ superior knowledge, that what is “ideally” the Plan is, in fact, the undisputed authority of the capitalists. Private or state, the hierarchical structure—from “lead” man on the line, through plant managers (and including political economists)—is the command to obey the dictates of the automated machines.

To Mandel, however, even when he deals with the present epoch, and though he describes it as one of “long-term stagnation” (p. 531), state intervention still acts as “stabilizer.” And so great are the glories of state intervention (plus, of course, the organized workers’ ability to extract a rise in real wages) that it serves Mandel as a sort of a transition point to the Russian economy, which he declares “does not display any of the fundamental aspects of capitalist economy” (p. 560). This fetishization of statified economy holds him a prisoner to such an extent that he even accepts, as necessary, “capitalistic primitive accumulation”! (p. 561)

He does admit that, at least in the distributive sphere, the Russian economy displays “the bourgeois character of the phenomenon of inequality of the norms of payment for work that exists in the USSR” (p. 565). That is to say, it is OK for wages to be poor, poorer even than under private capitalism. Nothing about the conditions of labor, not even the existence of “the system of forced labor camps” (p. 597) seems to disturb Mandel enough not to fetishize nationalized property as “transitional to socialism”!

As we see, Mandel’s silence on the matter of the theoretic revisions wasn’t a mere question of theory. It was a question of failing to recognize the counterrevolution in the relations of men at the point of production which came to full theoretic bloom in the revision of Marx’s greatest work, Capital.

The most telling consequence of the revisions of the Marxian law of value, insofar as Mandel’s work is concerned, can be seen in his theory of crises under private capitalism.

Crises

On the one hand, Mandel goes to great lengths to expound Marx’s central point about crises—the decline in the rate of profit. He illustrates well the question of the rate of profit as a relationship of surplus value (unpaid hours of labor) to total capital (constant capital, or machinery, plus variable capital, or- labor power). Since constant capital grows faster than variable capital, whereas surplus value comes from variable capital only, there is no way to escape the decline in the rate of profit.

The many counteracting tendencies—the growth of the mass of profits, the increasing productivity of labor, big capital eating little capital—allow the capitalists to luxuriate in the mass of profits, unmindful of the decline in the rate of these profits. But that overriding, contradictory fact of capitalistic production doesn’t “go away.” The cyclical crises keep reappearing to prove there is no escape from the ultimate reckoning of capitalist production as a production of values and surplus values, accumulation and expansion of surplus value, without which capitalist production stops.

On the other hand, as we’ve indicated previously, Mandel says, at the same time, that it is the “lack of monetarily effective demand” which is the cause of crises. He also holds the view that organized labor is able to gain a substantial increase in real wages at the expense of capital’s extraction of surplus value; that is to say, even when there is no rise in the productivity of labor. He thereby forgets altogether Marx’s principle that “the diminution of unpaid labour can never reach a point at which it would threaten the system itself… Accumulation is the independent, not the dependent, variable.”[9]

Deviations

This does not end Mandel’s deviation from Marx’s theory of crises. He also holds that the “fundamental contradiction of the age of capitalist decline (is) the contradiction of over-capitalization” (p. 521), as if the failure to invest is due, not to insufficient profitability at the point of production, but to lack of markets. So bedazzled is Mandel with the refinements of bourgeois political economy in market mechanisms that he falls prey even to the spurious “multiplier” and “accelerator principle.”

Obviously, he has read altogether too many books by bourgeois economists on the market phenomena of crises. Contrary to bourgeois economists, however, he has a guilty conscience about remaining so long with the epiphenomenal. He waspishly reproaches them for ignoring the law of uneven development which, to him, is not only “a universal law of human history” (p. 91), but also the key to crises.

There is one thing he has failed to note. This “new” way of expressing the disproportionality between the two main departments of production—means of production and means of consumption—is the very problem that Marx deliberately excluded from consideration. This was so, not because Marx didn’t know it as a fact of production, but because it isn’t the key to crises. On the contrary, it would have diverted from the supreme reason for capitalistic crises—the exploitation of labor by capital through the instrumentality of the machine. That is to say, the payment of labor at value (the minimum it takes to maintain him and reproduce his kind), the extraction from him of the maximum of unpaid hours of labor through the ever greater expansion of machinery and ever decreasing use, relatively, of living labor.

No wonder that the bourgeois reviewers were so pleased with Mandel’s view of the market mechanisms acting as “stabilizers.” Mandel wanted to synthesize the overproduction, underconsumption disproportionality theories of crises with Marx’s, which is related strictly to the law of value and surplus value. But as Marx said of Proudhon, “He wishes to be a synthesis, he is a composite error.”[10]

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[1] The Economist, September 22, 1962.

[2] For Dunayevskaya’s analysis of Luxemburg’s theory of accumulation see chapter 3 of Rosa Luxemburg, Women’s Liberation and Marx’s Philosophy of Revolution.

[3] Capital, Vol. I. p. 48

[4] The article from Pod Znamenem Marxizma (Under the Banner of Marxism) “Teaching of Economics In the Soviet Union,” along with my commentary, was published in the American Economic Review, No. 3, 1944. [The title of this article is “A New Revision of Marxian Economics.” It was republished in Russia: From Proletarian Revolution to State-Capitalist Counter-Revolution, chapter 9.]

[5] The Textbook of Political Economy was published in 1954.

[6] Ernest Mandel happened to have been the person who debated me in 1947 when I presented the theory of state-capitalism, which I was the first to work out from original Russian sources on the basis of the first three Five Year Plans, when the Russians were still denying the operation of the law of value in their “socialist land.” (“Analysis of the Russian Economy,” New International, Dec. 1942, Jan. 1943, Feb. 1943 [It was republished in Russia: From Proletarian Revolution to State-Capitalist Counter-Revolution, chapter 9]; and again in Dec. 1946 and Jan. 1947, and after World War II, I analyzed the Fourth Five Year Plan, “New Developments In Stalin’s Russia” in Labor Action, October 1946.) Following that conference of the Fourth International, the French Trotskyist theoretical journal, of which Mandel was an editor, published my article on the Varga controversy (Quatrieme Internationale, January-February 1948).

[7] The Stenographic Report of the Discussion was published in English by Public Affairs Press, Washington, D.C.

[8] This is not just a question of calculatedly disregarding crucial Russian debates, much less a matter of “slighting” me who happened to have been the first to expound the theory of state-capitalism from original sources of the Five Year Plans (see footnote 6). There is outright dishonesty in the one and only reference to a work on state-capitalism—The Nature of Stalinist Russia by Ygael Gluckstein (Tony Cliff)—and another by one holding a state-capitalist position, Amadeo Bordiga, writing in Dialogue with Stalin. Instead of stating simply that both are Marxists (and one, Bordiga, was nothing less than a member of the Executive Committee of the Third International during Lenin’s, not Stalin’s, lifetime) the reader has been led to believe that the authors were “sociologists.” “Contrary to what is alleged by a number of sociologists, who try to make use of the Marxist method of analysis,” reads the Mandel text (p. 560). To complete the deliberate befuddlement, Mandel has, between the two works by revolutionary Marxists, sandwiched in a book by a social democrat—The Real Soviet Russia, by D. Dallinger.

[9] Capital, Vol. I, p. 679

[10] The Poverty of Philosophy, p. 137