Review of "The Economics Of Global Turbulence", Robert Brenner, Verso £25
Eight years ago an entire edition of the journal New Left Review was devoted to Robert Brenner's analysis of contemporary capitalism under the title The Economics of Global Turbulence. Now Verso has reprinted that long out of print journal article, with a new preface and an 80-page afterword, in which Brenner covers developments over the last eight years.
Brenner argues that world capitalism has moved from a period of sustained and stable growth, the so called "long boom", to a period of instability and turbulence. The turning point was 1973. He provides great detail of this transition by focusing on the US, Germany and Japan.
Although many other economists have examined this turning point, Brenner's analysis has some distinctive features. He does not make use of the labour theory of value, Karl Marx's central tool for analysing capitalism, nor does Brenner agree with Marx's account of the tendency for profit rates to fall over time. However, he does identify the turning point with a decline in the rate of profit, which he attributes to the effects of capitalist competition.
Essentially, Brenner argues that the long boom was based on a coming together of circumstances that generated high levels of investment and growth on the basis of strong profits, and these depended on US economic hegemony. Things began to go awry when manufacturing industry in Germany and Japan began to develop to a point where they not only could compete with the US but could gain productivity advantages over US companies.
Mainstream economic theory predicts that firms with higher productivity than others will squeeze out the less productive and so sustain the "average rate of profit". But when companies reach a certain size the less productive aren't squeezed out. They simply take a lower profit on their goods. This causes overproduction and brings down the overall rate of profit with "turbulent" consequences.
Now this is a controversial theory, both in terms of its own coherence and its applicability to the post-war world. Brenner's original article generated a very vigorous debate in which some leading Marxist economists examined and critiqued a number of aspects of his view. It's a shame that this new volume has no response to any of these criticisms. But whether or not you sign up to Brenner's underlying analysis, the great strength of this work is the detailed description of developments in the world economy and responses to those developments.
In the only really new part of the book, its last 40 pages or so, Brenner focuses on attempts by the US state to escape the serious downturn of 2000-1 by lowering interest rates, borrowing huge sums of money at the federal level and allowing a debt financed consumer boom to take off.
The 1980s saw right wing military Keynesianism - with its huge arms expenditure directed by the state - saving the US, and by extension the world economy. The early years of the 21st century have seen a sort of private sector consumer-led Keynesianism. And this has been supplied by a rapidly growing Chinese economy that is itself riven with contradictions.
Brenner is right to be cautious about analysing the future of the world economy. Things are just too complicated to enable accurate predictions to be made. But he is clear that there is no sign that the turbulence of the past has been laid to rest, and there are many signs that stormy waters lie ahead.