Capitalism and Theory: Selected Writings of Michael Kidron

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When Michael Kidron began writing after the Second World War, socialists faced many new challenges. Yet very few heeded the revolutionary Leon Trotsky’s injunction to “face reality squarely”. Instead, most opted to repeat the old formulas. Kidron was part of the tiny Socialist Review Group around Tony Cliff, forerunners of the Socialist Workers Party, which had begun to develop an analysis to the new questions thrown up after the war.

While reading Capitalism and Theory is interesting, it can seem very out of place to today’s debates. But many of his insights can arm us for them. For instance, many on the Labour left are grappling with how a socialist alternative to neoliberalism could work. And the ideas of a “mixed economy”, greater state intervention and industrial planning are all hallmarks of their alternative.

In the 1950s capitalism saw an unprecedented “long boom”, with rising living standards for the working class. Explanations abounded. Was it simply a fluke? Or was it down to growing national and international planning? And, if so, some on the left argued we could ditch the old aim of the revolutionary socialist transformation of society.

The first essay, Reform and Revolution: Rejoinder to Left Reformism II (1961), polemicised against the idea that state planning lay behind post war capitalist stability or was leading to socialism. Kidron had begun to develop the “theory of the permanent arms economy” as an alternative explanation.

He argued that capitalist stability was in fact “the natural outcome of the creation of a war market from the ruins of productive investment” where workers had wages to spend.

Now, in truth, there isn’t a single theory of the permanent arms economy and in later essays there is a shift in emphasis. What comes across is Kidron’s grasp of Marxist “value theory”, prefiguring some of the debates that would take place in the 1970s and 1980s.

This focused on the impact of arms production on what Marx termed the tendency for the rate of profit to fall.

For Marxists, human “living labour” is the source of value, which lays the basis of capitalists’ profits. Capitalists are also locked into competition with one another. And this forces them to invest more into the latest technologies and more efficient methods of production in order to get ahead of their rivals.

While this can help individual capitalists grab a greater share of profit, it increases the ratio of investment to the employed labour force. And, as only labour can create new value, there is a downward pressure on the rate of profit.

But arms production is a form of waste, because it doesn’t add to further capital accumulation. Tanks and missiles do not re-enter production as capital or wage goods, they sit there waiting to be used until obsolescence.

Kidron wrote, “Since [arms] production is a leak on high capital intensity, it tends to offset the system’s inbuilt bias towards declining rates of profit”. This saw the rate of profit decline at a lower rate during the post war period.

There are continuing differences among Marxists about how this mechanism works. Some of the debates are in the essay Two Insights Don’t Make A Theory, part of an unfinished debate between Kidron and Chris Harman. But the permanent arms economy remains an important rejoinder to the idea that Keynesian policies were behind the long boom.

Other essays show Kidron’s breadth. His background as a development economist comes out in the powerful essay, Black Reformism: The Theory of Unequal Exchange.

Running through Kidron’s work was his belief that socialism was based on working class people liberating themselves and running society; and that socialists had to look for the points where struggle could be stoked and encouraged.