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Marxian Perspective on the Global Crisis: “Povorot” or “Perelom”?

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Critique of the New Consensus Macroeconomics and Implications for India

Part of the book series: India Studies in Business and Economics ((ISBE))

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Abstract

This chapter presents an overview of the Marxian perspective on the global crisis. Karl Marx had a full-fledged theory of the economic crises of capitalism. Authors like Mandel and Clarke have tried to adapt the orthodox Marxian theory to the characteristics of the kind of “mature” capitalism that prevails in the developed economies of the West currently. While most of the other theories of crises regard them as arising from market and/or regulatory failure, greed, speculation or some other aberrations, the Marxian theory regards crises as a dialectical process, arising from the contradictions between the means and methods of production and the social milieu within which this production takes place. Crucial to the Marxian theory of crises is the proposition that the rate of profit in a capitalist economy exhibits a tendency to fall, and it is in the efforts of capitalists to counteract this tendency that the roots of crises lie.

Povorot is Russian for “turning point”, while Perelom stands for “breaking point”.

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Notes

  1. 1.

    The complete description of the causes and occurrence of crises is given in Chap. 15 of Capital (vol. 3).

  2. 2.

    Economies of scope refer to the efficiencies that a firm can exploit by diversifying its lines of production, in contrast to economies of scale which arise from expanding the scale of production of a single good.

  3. 3.

    The data are from Bricker et al. (2014).

  4. 4.

    Pettifor (2008) neatly sums up these measures as (i) the “taming” of financial markets, (ii) “upsizing” the state and (iii) “downsizing” the global unified market for financial funds.

  5. 5.

    It (such a programme) would defend state-level health and education projects against budget cuts; finance long-delayed upgrades for our roads, bridges, railroads and water management systems; and underwrite investments in energy efficiency–including building retrofits and public transportation–as well as new wind, solar, geothermal and biomass technologies (Pollin 2008, p. 14).

  6. 6.

    Coordinated fiscal stimuli can create balance of payments surpluses in some countries and deficits in others. Patnaik (2009, p. 53), suggests that the surplus created should be distributed to the deficit countries as grants but with the proviso that these grants should be used for imports and not to build up reserves. A mechanism to implement such a scheme seems difficult to devise.

  7. 7.

    The introduction of the bancor would reduce considerably the role of the US$ as a reserve currency.

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  1. Indira Gandhi Institute of Development Research, Mumbai, India

    Dilip M. Nachane

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Nachane, D.M. (2018). Marxian Perspective on the Global Crisis: “Povorot” or “Perelom”?. In: Critique of the New Consensus Macroeconomics and Implications for India. India Studies in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-3920-8_10

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  • DOI: https://doi.org/10.1007/978-81-322-3920-8_10

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