The Long Depression

Issue section: 

Why has there has been no real recovery in the world economy since the crash of 2007?

After what is now almost a decade, still there has been no return to pre-crash levels of economic growth and profitability. Unable to explain this grim reality, mainstream economists and many so-called “financial experts” flounder and struggle to explain the economic world we live in today.

Michael Roberts provides a most convincing explanation of how we got to the current economic situation: the “law” developed by Karl Marx that recurrent capitalist crises arise out of contradictions within capitalism that lead to crises of profitability.

Using data to validate this classical Marxist theory, Roberts shows how, “the behaviour of the profit rate confirms the predictions Marx made about the historical trend of the mode of production. There is a tendency for the rate of profit to fall.”

In The Long Depression Roberts brings together much of the analysis he provides on his blog, The Next Recession. In a series of well argued chapters, Roberts provides both a comprehensive history of capitalist crises and an analysis of the current state of the world economy. He uses clear graphs and charts to illustrate and validate his arguments.

Alternative Marxist explanations that claim crises are due not to a crisis of profitability but to under-consumption are countered theoretically. Roberts backs his arguments up with empirical data throughout.

He explains why debt matters; how the slump of 2008 developed into a depression; the crawling recovery in America; the failings of the Euro project.

In no part of the world economy today are there signs of recovery. Japan is still facing stagnation. The emerging markets will not save the world if the West slides back into recession, as Roberts points out.

With the largest economies now growing at well below the previous rate of output, and levels of profitability still low, we are living in a period Roberts describes as the “Long Depression”. There have been two previous long depressions under capitalism — one in the late 19th century, the other in the mid-20th century.

The depression of the 1880-90s ended only after the “bankruptcy of many companies, a huge rise in unemployment, and the destruction of things and people in the millions.” It took the massive destruction of capital in the Second World War for the Great Depression of the 1930s to end.

This book is accessible and thoroughly convincing. It is essential reading for those of us living in today’s Long Depression who, like Roberts, see the need to replace capitalism with “a planned economy owned in common and controlled by the majority”.