The second part of Michael Roberts’ report from the American Economics Association (AEA) in New Orleans, this time focusing on the radical economists. First part can be read here.
Michael Roberts is an Economist in the City of London and a prolific blogger
Cross-posted from Michael Roberts’s Blog
Instead, the sessions focused on whether monopoly power was the dominant development in 21st century capitalism. And of course, Ukraine was also a key issue – and it is interesting to compare the approaches of the mainstream sessions (see ASSA part one) to that of the radical sessions.
On monopoly power, Lenore Palladino of UMA wanted to make a distinction between firms and corporations to show that the latter were dominated by shareholder power to the expense of what she called ‘stakeholders’, as developed in progressive law. I was unclear where this took us.
Zhongjin Li University of Missouri-Kansas City drew on the insights of the monopoly capital school to argue that ‘platform power’ ie (data and apps) depends on massive capital from the financial market and so has become a new frontier of ‘financialization’. In doing so, big tech in this hierarchical platform economy increases income inequality, exacerbates overcapacity and generate financial bubbles, thus intensifying the tendency of economic stagnation in this era of monopoly capital. Readers will know my critique of the monopoly capital thesis of 21st century capitalism.
Cecilia Rikap from City University London presented a paper similar to that delivered at the recent Historical Materialism conference; namely that there is a new type of monopoly based in ‘knowledge’ markets. In this era of intellectual property and knowledge production, these companies have a monopoly over innovation (like algorithms) and so have established permanent monopoly power. It is no longer a question of monopoly in markets but power over innovation. I was not convinced of this view at HM last November.
Herman Mark Schwartz University of Virginia criticised the ‘intangibles’ thesis of Haskel and Westlake’s Capitalism without Capital for implying that ‘intangibles’ have changed the very basis of capitalist accumulation. Instead, intangibles should be seen as just a new form of capital that allows ‘knowledge’ monopolies to capture the bulk of profits. That critique seems right to me.
But my criticism of the intangibles thesis is different; it is not that the knowledge ‘monopolies’ are causing ‘secular stagnation’ as the monopoly capital school wants to argue. Indeed, the ‘moral depreciation’ of intangibles is probably even greater than tangibles and so increases the contradictions of capitalist accumulation. For an individual capitalist, protecting profit gained from a new piece of research or software, or the branding of a company, becomes much more difficult when software can easily be replicated and brands copied. Thus we have the position where the new leading sectors are increasingly investing in intangibles while investment overall falls along with productivity and profitability. Marx’s law of profitability is not modified but intensified.
On international trade, Maha Rafi Atal of Glasgow University seemed to suggest that the collapse of trade regulation by the World Trade Organization could be replaced by bilateral agreements to regulate unfair practices – hmm.
There were also papers on whether a combination of free trade agreements and tight monetary policy by central banks would impose stagnation on emerging economies (Devika Dutt, USC); and the rise of crypto-curriecies in poor countries being used as a solution to currency crises there (Hanin Khawaja New School for Social Research).
The URPE session on Ukraine was revealing in its completely different analysis to that of the mainstream sessions (see ASSA part one). David Kotz set the scene in his paper, Imperialism and the Ukraine War. Kotz saw the war as driven by the imperialist ambitions of both Russia and the U.S, namely after the full emergence of post-Soviet Russia as an autocratic capitalist state with an oligarchic capitalist class dependent on export of raw materials and metals; and the post-Cold War strategy of the U.S. government to prevent the emergence of any powerful rival state to the U.S. Such rivalries between powerful capitalist states were an inevitable feature of a world divided into capitalist states. “As long as capitalism persists, avoiding such wars requires efforts to reach compromises between the conflicting imperial ambitions of large capitalist states. Big state influence over smaller states around its borders can be resisted with force of arms by other big states only at the cost of war and its attendant destruction.”
Alan Cafruny Hamilton College took a similar position. The war in Ukraine has deepened Europe’s dependence on the American power at a time when the United States is neither able nor willing to underwrite European economic prosperity given its own broader vulnerabilities and global objectives. This proxy war has reasserted and extended U.S. power in Europe but at the cost of growing instability within the transatlantic space and beyond.
Hene Grabel posed the possibility that the war would lead to new alignments geopolitically and allow ‘permissive multilateralisms’ rather than nostalgia for a liberal world order or a new Bretton Woods. She thought that would be good news. Sounded optimistic to me. Ann Davis also discussed the prospects of developing a new world order that replaces US hegemony and so perhaps the BRICS would now come onto the stage outside the influence of the US.
Despite my disappointment at some of the URPE sessions, there were two excellent papers on capitalist accumulation and its impact on labour. Carlos Duque of UNAM Mexico followed up his excellent paper of 2021 on the rate of profit in Colombia, which supported Marx’s law of profitability, with a new paper on the accumulation of capital and employment.
Duque showed that Marx’s general law of accumulation holds, not only in the advanced capitalist economies, but also in the Global South.. The level of employment has a significant long-term relationship (cointegration) with both the fixed capital stock and labor productivity. In line with Marx’s theory, ie. the level of employment expands with fixed capital stock and contracts with labor productivity. In turn, the mass of profits has positive effects on both the fixed capital stock and the labor productivity. This supports Marx’s theory of ‘capital-biased technical change’ ie a rising organic composition of capital. “The overall results are consistent with the Marxian economics framework presented in the paper but not with other economic paradigms like the neoclassical or Keynesian where, for instance, there is no Marx’s biased technological change and the effects of employment over profits are positive.”
And another Latin American Marxist economist, Sergio Camara from UNAM, came to similar conclusions in his paper on The General Law of Capitalist Accumulation and a Labor-Shortage Theory of Cycles. Camara showed that Marx’s general law has both short term and long term consequences. In the short term, capital investment can increase employment and cause labour shortages, but longer term, it will shed labour and restore the industrial reserve army. It’s a cyclical process.
It was good to finish a review of these radical sessions with some further empirical support for Marx’s law of accumulation.
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