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Introduction to the Second Edition of The Theory of Monopoly Capitalism

The present-day world can only be described to present-day people if it is described as capable of transformation. —Bertolt Brecht1

The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy was initially written thirty years ago this coming year as my doctoral dissertation at York University in Toronto. It was expanded into a larger book form with three additional chapters (on the state, imperialism, and socialist construction) and published by Monthly Review Press two years later.2 The analysis of both the dissertation and the book focused primarily on the work of Paul Baran and Paul Sweezy, and particularly on the debate that had grown up around their book, Monopoly Capital: An Essay on the American Economic and Social Order (1966).3 In this respect The Theory of Monopoly Capitalism was specifically designed, as its subtitle indicated, as an “elaboration” of their underlying theoretical perspective and its wider implications.

My original motives for the analysis were twofold: (1) to provide a more thoroughgoing explanation of the economic surplus concept and the theory of accumulation to which it was related, and (2) to correct certain misconceptions of Baran and Sweezy’s analysis that had arisen as a result of the “back to Marx” intellectual movement of the 1970s—and that had led to various traditionalist or “fundamentalist” Marxian criticisms of their work.

The Theory of Monopoly Capitalism was an organic product of my own formative intellectual development. For me the late 1960s and early ‘70s were dominated by opposition to U.S. imperialism, particularly the Vietnam War and the U.S.-backed coup in Chile, and by the economic storms of this period that culminated in the crisis of 1974–1975. I first read Monopoly Capital in 1974 when I was studying economics at the Evergreen State College in Olympia, Washington, and like other radical students that I was associated with at the time (most notably Robert McChesney) the immediate effect of encountering Baran and Sweezy’s analysis was profound, and, as it turned out, long-lasting. No other work was so influential among left political economists in the United States at that time. I found the historical depth and breadth of Monopoly Capital astounding.

We read Monopoly Capital back to back with our neoclassical economics texts, but also alongside other works in Marxian political economy such as Ernest Mandel’s Marxist Economic Theory; E. K. Hunt and Howard J. Sherman’s Economics: Mainstream and Radical Views; Sherman’s Radical Political Economy; Andre Gunder Frank’s Capitalism and Underdevelopment in Latin America; Harry Magdoff’s The Age of Imperialism; Sweezy’s The Theory of Capitalist Development; James O’Connor’s The Fiscal Crisis of the State; and Harry Braverman’s Labor and Monopoly Capital.4 But it was Monopoly Capital that constituted both for myself and for those with whom I was most closely associated the essence of the Marxian political-economic view in the early to mid–1970s.

One small book that we read in our classwork at the time, Assar Lindbeck’s influential The Political Economy of the New Left, engaged in a polemic against the radical economics that had arisen in the United States associated with the founding in 1968 of the Union of Radical Political Economics (URPE) and centering its criticism on Monopoly Capital.5 My fellow students and I traveled to an URPE conference in 1975 to hear some of the new developments in radical political economy first hand.

Later, as a graduate student specializing in political-economic studies at York University in Toronto in the late 1970s and early ‘80s, I was to study Marx’s Capital much more intensively than I had previously and was attracted for a short time to the more fundamentalist analyses of thinkers like Ben Fine, Laurence Harris, David Yaffe, and Paul Mattick.6 All of these writers had criticized Baran and Sweezy’s Monopoly Capital for its rejection of the significance under monopoly capitalism of Marx’s law of the tendency of the rate of profit to fall. The falling rate of profit theory had not occupied a central place in Marxian political economy prior to that time, but in the 1970s it was increasingly adopted by Marxists as the final word in economic crisis theory at all stages of capitalist development.7 After an attempt to apply this theory to present-day economic reality in a paper I wrote at the time I decided that there were a host of theoretical, empirical, and historical problems that made the analysis largely inapplicable to the problems of late twentieth-century monopoly capitalism. Although Marx’s critique of political economy remains the necessary starting point of all thoroughgoing analyses of capitalism, a realistic treatment of the twentieth-century economy required the additional assessment of conditions specific to monopoly capitalism, without which there could be no analysis of “the present as history.”8

It was then that the historian Gabriel Kolko, with whom I was studying U.S. political-economic history, introduced me to the debates that were taking place on excess capacity statistics in the United States—relating this to Josef Steindl’s Maturity and Stagnation in American Capitalism, a new edition of which had just been published by Monthly Review Press.9 I discovered in Steindl’s work, and that of Michał Kalecki dating back to the 1930s, the real basis of much of Baran and Sweezy’s argument in Monopoly Capital—and with that a powerful tradition of Marxian political economy, rooted in Marx but connected to current monopoly-capitalist conditions, and to what could be referred to as an “overaccumulation” theory of crisis.10 I wrote a hundred-page manuscript for my course with Kolko entitled, “The United States and Monopoly Capital: The Issue of Excess Capacity,” which I sent to Sweezy. He responded enthusiastically and I soon became a regular contributor to Monthly Review, then edited by Magdoff and Sweezy—beginning with “Is Monopoly Capitalism an Illusion?” in 1981. I was eventually to join Sweezy, Magdoff, and McChesney as an editor of Monthly Review in 2000—a position that I continue to occupy today.11

Baran and Sweezy had made their most original contributions in Monopoly Capital in their introduction of the concept of economic surplus. The concept was rooted in the labor theory of value and in Marx’s concept of surplus value. But it was also intended to extend the analysis, making it easier to address the questions of waste in monopoly capitalism.12 It was this topic, inspired in part by the work of the Polish political economist Henryk Szlajfer with whom I edited The Faltering Economy: The Problem of Accumulation Under Monopoly Capitalism in 1984, that was to become the central focus of my work in the early 1980s, leading to The Theory of Monopoly Capitalism.13

Other developments in Marxian political economy were occurring at the same time. One of these was the growing fundamentalist criticism of the concept of monopoly capitalism—which had long been a central category in Marxian theory, dating back to the work of thinkers such as Rudolf Hilferding, Rosa Luxemburg, and V.I. Lenin, and prefigured by Marx’s own analysis of the concentration and centralization of capital. Increasingly traditionalist Marxists in the early 1980s argued that the notion of monopoly capitalism had no basis in Marx, and that there had been no lessening of competition—even with respect to price competition, which was presented as an inviolable condition of capitalism. The trends toward concentration and centralization of production and monopoly profits, it was said, had been exaggerated.14 Related to this was a misguided critique of Baran and Sweezy as crude “underconsumptionists.” This criticism was based both on the systematic neglect of the historical development of this term (the predominant usage of which had changed over time—no longer including what Schumpeter had called the “non-spending” type of theory), and of the evolution of Baran and Sweezy’s later analysis, which led, as Sweezy indicated as early as the 1950s, to a theory of “overaccumulation.”15 Another frequent criticism was that Baran and Sweezy had abandoned the labor theory of value in developing the concept of economic surplus.16 Still further disagreements had to do with criticisms that some left thinkers had launched at Marxian dependency theory—directed even against its most sophisticated versions as represented by Baran and Samir Amin—questioning the notion that the countries at the center of the system exploited and hindered the development of those in the periphery.17 Finally, there were debates about the fiscal crisis of the state and the role of the state and class in “actually existing socialism.” All of these issues were taken up in the book.

Three decades later much has changed, in ways that make the reissuing of The Theory of Monopoly Capitalism in a new edition seem useful and timely. The scholarly research into Baran and Sweezy’s Monopoly Capital has expanded enormously in the intervening years, most notably with the publication of the two missing chapters of Monopoly Capital—one on the theoretical implications of their analysis for economics, the other on culture and communications—and through research into their joint correspondence. The Great Financial Crisis and the resurfacing of economic stagnation have engendered new interest in this tradition of thought. Under this historical impetus the theory itself has advanced to address new developments, particularly with respect to the understanding of stagnation, financialization, and the globalization of monopoly capital. No less important is the expansion of the political-economic critique associated with Monopoly Capital to other realms, such as communications, the environment, and to a reemerging class struggle. All of this can be seen as reflecting a general historical analysis of global monopoly-finance capital, understood as a new phase of the monopoly stage of capitalism.

The Missing Chapters

When Monopoly Capital was published in 1966, Paul Sweezy indicated that two of the chapters drafted for the book had been left out of the final manuscript, due to Baran’s death in March 1964 and questions regarding the drafts which had not yet been resolved.18 In August 2011, these missing chapters were located, nearly a half-century after they were written. “Some Theoretical Implications” was published in the July–August 2012 issue of Monthly Review.19 “The Quality of Monopoly Capitalist Society: Culture and Communications” appears in this issue.20

“Some Theoretical Implications” demonstrated how Baran and Sweezy connected their central concept of the economic surplus (which they defined as “the difference between total social output and the socially necessary costs of producing it”) to Marx’s labor theory of value.21 More specifically, it provided an explanation of the relation of wages to the value of labor power under monopoly capital. It thus helped solve the main theoretical conundrum raised by the chapter on “The Absorption of Surplus: The Sales Effort” in Monopoly Capital: If unproductive labor/waste penetrated into the production process itself under monopoly capitalism, what was the effect of this on the Marxian theory of surplus value (and on the economic surplus, the additional category introduced by Baran and Sweezy)?22

Baran and Sweezy’s chief theoretical innovation in “Some Theoretical Implications” was to utilize Marx’s concept of “profits by deduction” in order to answer this question. Marx had used this category on various occasions throughout his writings. In the third volume of Capital, he explained that monopoly price could be accounted for in part by the power of capital to “press wages below the value of labour-power, but only if they previously stood about the physical minimum. In this case, the monopoly price is paid by deduction from real wages (i.e. from the amount of use-values that the worker receives for the same amount of labour) and from the profit of other capitalists.”23

According to Baran and Sweezy in “Some Theoretical Implications,” Marx’s use of profits by deduction here offered a basis for understanding the problem of the relation of wages to the value of labor power under monopoly capital. Workers, partly through the action of trade unions in the monopolistic sector of the economy, were able to raise wages above the value of labor power—or the level necessary under given historical conditions to guarantee the supply of labor. However, this increase of wages above the value of labor power was hardly a straightforward progressive development since this primarily took the form of the incorporation of unproductive labor/waste, i.e., specifically capitalist use values aimed at absorbing surplus, into the production of wage goods—in ways that diminished whatever real gains workers experienced.

In effect, all wage goods under monopoly capitalism incorporated to varying degrees two components: Wv, reflecting genuine use values to workers and corresponding to the historically determined value of labor power (constituting genuine use values required by workers as compensation for the labor power expended), and WS, corresponding to specifically capitalist use values incorporated into the wage goods and thus constituting a form of waste that served only to realize surplus (value).24 Under these conditions, real wages (controlling for inflation) could increase, while at the same time a shift could take place from WV to WS, leaving the workers worse off than before.

In “Some Theoretical Implications” Baran and Sweezy thus indicated their broad agreement with Cambridge economist Piero Sraffa’s notion that wages contained an element of surplus.25 However, they explained this in terms derived from Marx, in the form of the systematic incorporation of waste into wage goods themselves, or WS. In this view it was WV rather than wages as a whole that corresponded to the use values necessary to reproduce the value of labor power, and hence the real value (measured in use value terms) of labor power.26 At the same time workers were not able to extricate themselves from the specifically capitalist use values built into wage goods and constituting WS. This provided a much deeper critical standpoint, highlighting the indispensable role of the economic surplus category as a supplement to surplus value.27

Looked at from this standpoint, workers could be seen as more heavily exploited, and the real surplus or social accumulation fund actually and potentially available to society (which included such waste-incorporated production) could be perceived as increasing—even if the wage share remained stable or even rose—provided that any upward shift in the wages of workers took the form of the relative growth of WS. Under the regime of monopoly capital more and more of what was counted as costs of production were actually elements of the sales effort, such as car model changes, package design, and advertising. These were forms of wasted surplus that the workers had to pay for in purchasing a commodity—simply to get the portion of the product that consisted of genuine use values. All of this reflected the fact, as stated in The Theory of Monopoly Capitalism, that “under monopoly capitalism a growing proportion of workers employed within production itself are, to borrow a phrase from Marx, ‘useful and necessary only because of the faulty social relations—they owe their existence to social evils.’”28

Indeed, from the very beginning the most difficult problem raised by the conceptual apparatus of Monopoly Capital was conceiving the various forms of waste in the economic process, and the role of unproductive labor in the system (labor that did not generate surplus directly for capitalists but was nonetheless “useful” for monopoly capital since it helped absorb a portion of the surplus generated). As Sweezy had written in a letter to Baran as early as 1956, ten years before the publication of their book:

The real problems, it seems to me, are:

  1. To get a good working idea of what is surplus, and for this the first essential is to understand that it is related only indirectly to ordinary distribution of income data. Lots of wages are paid out of surplus, i.e., whole categories of workers absorb surplus—likewise whole “industries” like advertising and finance. The trouble is that this creates very tricky problems and paradoxes. One has to go back to classical-Marxian ideas of productive and unproductive labor and adapt them to modern conditions and (if possible) statistics. This is a crucial branch of theory which does not exist for the Keynesians and other neo-classics.
  2. Analysis of the production sector. (The generation of surplus.) The institutional capitalist—laws of operation, relation to class structure and behavior, etc. Price policy, wage policy, technological compulsions, etc., etc.
  3. Analysis of the unproductive sector (absorption of surplus). The different categories of “absorbers”: luxury consumers, unproductive “industries,” government, etc., including complex transfer relations.
  4. The interactions of the productive and unproductive sectors—full of unexplored problems. In an underdeveloped capitalist economy, e.g. it might do to assume that wages and profits in the unproductive sector are determined in the (much larger) productive sector. But obviously that won’t do in an economy like the U.S. today in which the unproductive sector may well be larger than the productive.
  5. The crucial contradiction, i.e., that “working well” for a system of this type means, indeed necessitates, a growing departure from the possible attainments of the system’s resources (in human, natural and technological terms) in the line of welfare, abolition of exploitation, freeing civilization from the poison of wealth fetishization, etc. What we have is a progressive degradation of civilization instead of its progressive improvement.29

The Theory of Monopoly Capitalism was centered on precisely this core conceptual structure of Baran and Sweezy’s analysis—the treatment of economic surplus and waste—while also seeking to correct misinterpretations of their work. The economic surplus was understood as the full social accumulation fund potentially available in a rationally organized society, much of which was systematically wasted away under monopoly capitalism.30 I ended my book by noting: “Only Baran and Sweezy [after Veblen] extended the concept of waste into the ‘consumption basket of wage goods.’ And it seems probable that this is the missing link in the understanding the evolution of class relationships under monopoly capitalism.” The enigma here, however, was not one that I could solve and the basic question remained.31

The discovery of the hitherto unknown “Some Theoretical Implications” has confirmed the interpretation of their work provided in The Theory of Monopoly Capitalism, while offering a definitive answer to the frequent criticism of their work for having rejected the labor theory of value—as well as the closely connected criticism that their analysis had “no theory of wages at all.”32 With Baran and Sweezy’s analysis of the role of profits by deduction under monopoly capital—linking their analysis more explicitly to Marx’s surplus value—now finally available, new, and potentially fruitful lines of inquiry within Marxian political economy are opened up. Not the least important of these new developments, as we shall see, is the linking of Baran and Sweezy’s concept of waste under monopoly capital to the Marxian ecological critique.

The publication of Baran and Sweezy’s other missing chapter, “The Quality of Monopoly Capitalist Society: Culture and Communications,” helps resolve another anomaly related to Monopoly Capital. In the 1970s, in particular, a new critical literature on the political economy of communication arose in universities in Canada, the United States, the United Kingdom, and elsewhere. One of the founders of the political economy of communication, Dallas Smythe, singled out Monopoly Capital in particular for critique in his formative article, “Communications: The Blind Spot of Western Marxism.”33 Such criticisms of their work for neglecting communication in their analysis in Monopoly Capital have continued to the present day.

However, the discovery of the missing chapter on culture, focusing on book publishing and broadcasting—when coupled with their work on advertising and Leo Huberman and Sweezy’s critique of the Federal Communications Commission and broadcasting—dramatically altered the picture in this respect. In this missing chapter Baran and Sweezy introduced a critique of the “cultural apparatus of monopoly capitalism” growing out of the analysis of Brecht and the Frankfurt School (with which Baran was associated) and at the same time closely related to foundational work in the political economy of communication by such thinkers as C. Wright Mills, Raymond Williams, and Ralph Miliband. The work of Baran, Sweezy, Mills, Williams, and Miliband in this respect was aimed explicitly at the political struggle over the cultural apparatus—at a time, in the early 1960s, when the issue was not conceived primarily as an “academic” one. Today, when technological change—including the whole digital revolution—along with renewed concentration and centralization of media, have brought the issue of radical communication reform back into the public eye, these works can be seen as acquiring renewed importance.

Labor and Monopoly-Finance Capital

If Baran and Sweezy’s Monopoly Capital appeared on a surface reading to have ignored the whole question of the value of labor power and wage determination—an issue that was not entirely clarified until the publication of “Some Theoretical Implications”—their neglect of the labor process itself was explicitly highlighted by them as a self-imposed boundary of their “essay-sketch” as they called it. As they wrote,

We do not claim that directing attention to the generation and absorption of surplus gives a complete picture of this or any other society. And we are particularly conscious of the fact that this approach, as we have used it, has resulted in almost total neglect of a subject which occupies a central place in Marx’s study of capitalism: the labor process. We stress the crucial role of technological change in the development of monopoly capitalism but make no attempt to inquire systematically into the consequences which the particular kinds of technological change characteristic of the monopoly capitalist period have had for the nature of work, the composition (and differentiation) of the working class, the psychology of workers, the forces of working-class organization and struggle, and so on. These are all obviously important studies which would have to be dealt with in any comprehensive study of monopoly capitalism.34

This omission was in large part repaired within a decade of Baran’s death by Harry Braverman in his Labor and Monopoly Capital, published in 1974. Braverman’s work consisted of a brilliant resurrection of Marx’s labor process analysis, placing this in the context of Frederick Winslow Taylor’s theory of scientific management and the new conditions represented by monopoly capital.35 Baran and Sweezy contended in the closing chapter of their book that the revolutionary momentum in history had shifted from the industrial proletariat in the advanced capitalist economies to the emerging proletariat of the periphery. The main hope of revolt in the center at that time, seemed to be occurring on the margins—particularly the revolts of people of color and students, but with the larger part of the working class left out of the struggle. For Baran and Sweezy, however, the issue of the working class in the center remained crucial and was at the heart of their long-term analysis, despite its quiescence at the time.36

Braverman’s work thus began a long process of incorporating the analysis of the working class within the center of the political-economic critique of monopoly capital. Magdoff and Sweezy’s articles in Monthly Review in the 1970s, ‘80s, and ‘90s dealing with rising unemployment played more than a small part in this. A bigger role in this respect, however, was represented by the work of Michael Yates, who has written a series of critical analyses linked to the general monopoly-capital tradition, in such works as Why Unions Matter; Longer Hours, Fewer Jobs; Naming the System; and More Unequal (the last an edited collection).37 Yates’s work stands out, not only in the clarity of its political-economic perspective, but also in its presentation of the real working class, with race, gender, ethnicity, and sexual orientation occupying a central place in the analysis, along with the consideration of the international setting of working-class struggles.

However, for Sweezy the most important weakness of the theoretical perspective introduced in Monopoly Capital lay elsewhere: in its failure to integrate the financial structure of the system into its central theme of the absorption of the economic surplus. As he stated in 1991, on the twenty-fifth anniversary of his book with Baran, this failure was the result of weaknesses in the whole way in which capital accumulation has been traditionally conceived:

Why did Monopoly Capital fail to anticipate the changes in the structure and functioning of the system [with respect to financialization] that have taken place in the last twenty-five years? Basically, I think the answer is that its conceptualization of the capital accumulation process is one-sided and incomplete. In the established tradition of both mainstream and Marxian economics, we treated capital accumulation as being essentially a matter of adding to the stock of existing capital goods. But in reality this is only one aspect of the problem. Accumulation is also a matter of adding to the stock of financial assets. The two aspects are of course interrelated, but the nature of this interrelation is problematic to say the least. The traditional way of handling the problem has been in effect to assume it away: for example, buying stocks and bonds (two of the simpler forms of financial assets) is assumed to be merely an indirect way of buying real capital goods. This is hardly ever true, and it can be totally misleading.

This is not the place to try to point the way to a more satisfactory conceptualization of the capital accumulation process. It is at best an extremely complicated and difficult problem, and I am frank to say that I have no clues to its solution. But I can say with some confidence that achieving a better understanding of the monopoly capitalist society of today will be possible only on the basis of a more adequate theory of capital accumulation, with special emphasis on the interaction of its real and financial aspects, than we now possess.38

Monopoly Capital had not entirely ignored the role of the financial sector, but rather had included a brief section at the end of the chapter on “The Sales Effort” dealing with FIRE (finance, insurance, and real estate) as a “means of utilizing surplus.” In fact, Sweezy had recognized the problem of incorporating finance into the argument as early as 1956, in his letter to Baran quoted above. Moreover, Magdoff, who joined Sweezy as coeditor of Monthly Review following Huberman’s death in 1968, had underscored the issue of the rising debt structure in the U.S. economy in an article he wrote for The Socialist Register in 1965.39

I thus on one occasion indicated to Sweezy that I thought his criticisms of Monopoly Capital for failing to address financialization were too severe. To point to the importance of a development prior to its historical ascendancy—as their book had, in the section at the end of “The Sales Effort” chapter—was remarkable in itself. However, he did not choose to take this way out. His concern was not so much with the book itself but with the basic theory, which he thought remained deficient in this respect. He did not know how to answer this question, nor did anyone else. As he said at one point:

I sometimes have the feeling that economics now is in need of a general theory, in the sense that physics seems to be in need of a general theory, i.e., that there are a lot of things that are going on that don’t fit into the standard physical theories. And they are looking for a general field theory which would unify all of it. They don’t have it yet. In economics, we need a theory which integrates finance and production, the circuits of capital of a financial and a real productive character much more effectively than our traditional theories do. I don’t see that anyone is actually producing it. Some people are beginning to become aware of the need for it, but it’s terribly complicated. And I’m sure that I’m too old to be able to think of those things. I can get snatches, insights here and there, but I can’t put it together into a comprehensive theoretical framework. I think it will take somebody who starts differently and isn’t so totally dominated by M-C-M, the industrial circuit, with the financial circuits always being treated as epiphenomenal, not part of the essential reality.40

All of this related to the political-economic history that followed the reemergence of the stagnation tendency in the mid–1970s. Initially, the economic crisis of the 1970s seemed fully to confirm Baran and Sweezy’s argument in Monopoly Capital. Magdoff and Sweezy, writing in Monthly Review, interpreted this as the development of stagnation, or slow growth and rising unemployment and excess capacity, due to the effects of monopolization and industrial maturation on accumulation in the advanced capitalist economies. This made it harder and harder to expand the capital goods sector. The system constantly threatened to sputter out due to the effects of capital accumulation in the past and the vast amassing of productive capacity, much of which lay idle, discouraging new investment. Military spending could help soak up some of the excess surplus, but short of a truly epoch-making innovation capable of driving the whole capital accumulation process to new levels there was no escaping the fundamental trap.

If the system did not actually sink into a deep stagnation, Magdoff and Sweezy were quick to conclude, it was mainly because more and more surplus was flowing in a paradoxical way into the realm of the financial superstructure of the economy, lifting the system by indirectly stimulating production (or what was sometimes called “the real economy”), through employment in that sector and the effects of wealth creation on capitalist-class expenditures, particularly luxury consumption.41 The main political-economic project, pursued both empirically and theoretically, in Monthly Review, beginning in the 1970s but increasingly becoming the overriding focus of the editors in the 1980s, was the financial explosion—what Sweezy in 1997 was to call “the financialization of the capital accumulation process.” The fundamental analysis was laid out in Magdoff and Sweezy’s 1987 book, Stagnation and the Financial Explosion.42

The Theory of Monopoly Capitalism, published on the twentieth anniversary of Monopoly Capital, made not the slightest mention of this problem—beyond pointing out that Baran and Sweezy had seen finance as one form of the “diversion” of economic surplus, given the stagnation of investment.43 This reflected a conscious decision that I made when I wrote the book. In 1975, when I attended my first Union for Radical Political Economics conference, Magdoff and Sweezy’s “Banks Skating on Thin Ice” article had just been published and was quite the rage.44 In the early 1980s, as I entered more directly into these discussions, I became acutely aware of the central focus on the financial explosion and its significance for accumulation. Magdoff, in particular, continually encouraged all of the younger political economists associated with Monthly Review to make this their central area of research, and Sweezy seconded this at every opportunity. A few individuals, most notably Robert Pollin, followed this advice.45

My own response was different. Neither mainstream nor Marxian economics offered any real basis for a theoretical understanding of the questions then being raised with regard to the financial explosion. I studied, in addition to Magdoff and Sweezy’s own work on the subject, the writings of Hyman Minsky on financial instability. I tried also to see how the financial explosion might be connected to Steindl’s theory. But in 1984, at the time I wrote my dissertation, I could see no way of dealing adequately with the problem of exploding finance and its relation to monopoly and stagnation, and, rather than float some loose hypotheses, I left it out of the analysis. I was unable to appreciate fully the challenge of analyzing problems that, although real, seemed unanswerable—at least in the historical present. Hence, my basic reaction to discussions of the financial explosion was similar to those of most of my peers: this could only mean a financial bubble, followed by a financial crisis or meltdown. All of this had happened innumerable times in the history of capitalism. The deeper questions raised by financialization as an economic trend possibly lasting for decades, which Magdoff and Sweezy were beginning to pose—and the relation of this to the transformation of the capital accumulation process—hardly penetrated my consciousness at the time. And to the extent that such questions did in some dim way enter into my thinking I could see no meaningful theoretical way of approaching them. In the early-to-mid-1980s the big build up of private debt and the rapid growth of financial innovation still had the feel of a new historical development, and the concrete bases of analyzing it in terms of the present as history (apart from what was known about financial cycles) were scarcely available at the time.

It was not until the great Stock Market Crash of 1987 that it was clear how much the system had changed as a result of financialization. It was at this time that Magdoff and Sweezy began to articulate the first real outlines of a theoretical analysis of the changes in the capital accumulation process due to the financial explosion.46 Sweezy made this most explicit in 1994 in “The Triumph of Financial Capital” where he pointed to:

the development, in the last twenty years or so of a relatively independent—relative, that is, to what went before—financial superstructure sitting on top of the world economy and most of its national units. It is made up of banks—central, regional, and local—and a host of dealers in a bewildering variety of financial assets and services, all interconnected by a network of markets, some of which are structured and regulated, others informal and unregulated. Such an entity is multi-dimensional, and there is no conceptual unit that could be used to measure its size. But that it is very large and growing is not only intuitively evident but clearly reflected in statistics that relate to measurable aspects of the whole.

I said that this financial superstructure has been the creation of the last two decades. This means that its emergence was roughly contemporaneous with the return of stagnation in the 1970s. But doesn’t that fly in the face of all previous experience? Traditionally financial expansion has gone hand-in-hand with prosperity in the real economy. Is it really possible that this is no longer true, that now in the late twentieth century the opposite is more nearly the case: in other words, that now financial expansion feeds not on a healthy real economy but a stagnant one?

The answer to this question, I think, is yes it is possible, and it has been happening. And I will add that I am quite convinced that the inverted relation between the financial and the real is the key to understanding the new trends in the world [economy].47

One result of financialization, he stated, was a shift in power within the capitalist class. “The locus of economic power has shifted along with the ascendancy of financial capital. It has long been taken for granted, especially among radicals, that the seat of power in capitalist society was in the boardrooms of a few hundred giant multinational corporations.” But in the late 1990s this was no longer the case in the same sense: “real power is not so much in corporate boardrooms as in the financial markets.”48

What distinguished Magdoff and Sweezy’s analysis from all other discussions of financial instability was precisely the fact that they saw financialization as a trend arising from long-run stagnation of capital formation in the center-capitalist countries—as opposed to mere financial bubbles and crises that appeared sporadically, usually at the peak of a production boom, over the history of the system. As the stagnating accumulation process became more and more dominated by the growth of financialization in the 1980s and after, the nature of the system was transformed, altering the relation between the productive and financial circles of capital in ways that were difficult to discern. Nonetheless, financialization carried with it its own limits and crises, leading to financial implosions that reverberated back on the real economy.

When I became coeditor of Monthly Review in 2000, the first article I took the main responsibility in drafting was on “Working-Class Households and the Burden of Debt,” focusing specifically on the increasingly debt-ridden condition of the lower income-quintiles of the population, including the potential consequences in terms of laying the grounds for “cascading defaults” and the advent of a serious financial crisis.49 The next year I wrote an article together with Magdoff and McChesney that focused on “The New Economy: Myth and Reality” and pointed to the structural weaknesses of the financial speculation linked to the expansion of high technology.50 While we were working on these articles the high-tech stock market crash occurred, followed by a deeper stagnation and working-class defaults. In subsequent years we returned to these problems, referring in passing as early as 2002 to the possible bursting of the real-estate bubble.51 However, it was not until 2006 that I realized the full magnitude of the housing bubble when I took up the subject of working-class debt once again in an empirical analysis of “The Household Debt Bubble.” Fred Magdoff (Harry’s son) followed this up later that year with a statistical treatment of “The Explosion of Debt and Speculation.” With this as the background, I wrote my article “Monopoly-Finance Capital” in 2006, on the fortieth anniversary of Monopoly Capital, where I returned to the basic theory attempting to synthesize the arguments on stagnation and financialization that had been developed, primarily by Magdoff and Sweezy, over the previous four decades, and articulating this as a new phase of the monopoly stage of capitalism—or what I called “monopoly-finance capital.”

A central concept that emerged from this work was the notion of the “stagnation-financialization trap.” Although financialization was in many ways a response to the long-term economic slowdown that began in the 1970s it was unable to overcome the atrophy of accumulation within the “real economy,” creating instead a system that was more unstable, unpredictable, and more difficult to control. This underlying conception was at the root of the articles that Fred Magdoff and I wrote on financialization and crisis before and after the bubble popped in 2007–2008, leading to the publication of The Great Financial Crisis in January 2009 only a few months after the collapse of Lehman Brothers.52

Three years later in 2012 McChesney and I wrote The Endless Crisis, explaining that the stagnation now clearly afflicting the capitalist core of the world economy, while surfacing only as a result of the financial crisis, was in itself the underlying problem, out of which financialization had emerged as a countervailing factor. It followed that there was no visible solution in sight for the system at present other than further financialization with the accompanying financial bubbles, leading to still bigger meltdowns down the road. According to this interpretation, what is known today as neoliberalism represents the dominant political-economic strategy of capital in the phase of monopoly-finance capital. The diversion of cash flow to the financial sector and the preservation and enhancement of financial assets have become in many ways more important than production or employment, requiring that the state be increasingly subjected to the needs of the plutocracy.53

The Endless Crisis also included three other innovations within this theoretical tradition. First, it explored the continuing concentration and centralization of the economy both within the United States and internationally, demonstrating that monopoly power, marked by the growth of what Sweezy had called a “community of oligopolies” dominating over the economy as a whole, had continued to grow within both the U.S. and world economies.54 By the beginning of the new millennium the top 200 corporations in the United States accounted for about 30 percent of gross profits in the economy (up from about 13 percent in 1950), while at the world level the top 500 global corporations received nearly 40 percent of total global revenue (up from less than 20 percent in 1960).55 Second, building on the early work of Stephen Hymer (including articles that had appeared in Monthly Review), The Endless Crisis showed how the internationalization of monopoly capital had globalized production through a “divide-and-conquer” system of global labor arbitrage. This shifted production to those global export platforms with the lowest unit labor costs, taking advantage of a vast global reserve army of labor that outnumbered the world’s active, formal labor army. Third, this general analysis of the globalization of production under the hegemony of monopoly-finance capital was extended to the rapidly expanding Chinese economy and the growing contradictions associated with both its internal labor force exploitation and its lopsided integration within the world economy.56

Imperialism: Continuity and Change

Undoubtedly, changed world conditions, with the advent of a more globalized production system, make the treatment of imperialism and dependency in The Theory of Monopoly Capitalism appear dated three decades later. But the continuities with the past, where imperialism is concerned, loom larger than those changes that distinguish the present. Since the beginnings of capitalism the dominant context at the international level has been that of an imperialist world system. The chapter on imperialism in The Theory of Monopoly Capitalismwas concerned with criticisms of Marxian dependency theory by more traditionalist (sometimes Eurocentric) Marxists who rejected it for its alleged: (1) “third worldism,” (2) focus on exchange rather than production, (3) lack of class analysis, and (4) contention that third world countries could not economically develop. Most such criticisms at the time were aimed at the early work of Frank, particularly Capitalism and Underdevelopment in Latin America. The argument that I put forward in The Theory of Monopoly Capitalism was that Frank’s work in this respect—while it attracted a lot of attention due to the forcefulness of his contentions, and constituted an important contribution—was not the strongest version of the Marxian theory of imperialism and dependent accumulation. The more sophisticated analyses could be traced to the earlier, more foundational work of Baran, in particular, and also Samir Amin, representing more dynamic approaches rooted in class analysis, the Marxian theory of accumulation, and the treatment of economic surplus. Where thinkers of the caliber of Baran and Amin were concerned, the sometimes-doctrinaire criticisms leveled against Marxian theories of imperialism and dependency fell short of their targets.

At the time that I was writing The Theory of Monopoly Capitalism I tended to think of the broad dependency perspective as having arisen primarily in Latin America, with Baran and Amin (the former coming out of the debates in Russia and Germany, the latter rooted in African conditions) as Marxian outliers who nonetheless had played critical roles in its development. I was ignorant of the extent to which the dependency approach to imperialism, and with this the extent to which Baran’s (and also to a degree Amin’s) theory, had emerged in a fairly straight line out of the efforts of the early Comintern under the leadership of Lenin to formulate a theory of imperialism that captured the full dimension of the imperialist exploitation of third world countries. As the Research Unit for Political Economy in Mumbai, India has demonstrated, Baran’s perspective can be traced back to the theses advanced by Lenin and representatives of peripheral-capitalist countries at the Second Congress of the Comintern in 1920 and in its Sixth Congress in 1928. Mao Zedong developed these theses further in relation to Chinese conditions beginning in 1926. Other major figures in these debates in the 1920s were M. N. Roy in India and José Carlos Mariátegui in Peru.57

As a Russian-born-and-educated Marxist, Baran was undoubtedly well aware of these debates, which influenced his own systematization of the Marxian dependency (or dependent development) theory. What Baran brought to this debate that was unique was an analysis focusing on the utilization of actual, potential, and planned surplus—a perspective drawn from socialist planning that established the theoretical basis for third world revolution, influencing figures like Che Guevara.

Developing his own analysis independently and in parallel ways, between the late 1950s and the early ‘80s Samir Amin crafted a theory of accumulation on a world scale that explored such issues as unequal exchange/superexploitation, the role of monopoly capital in imperialism, autocentric versus disarticulated accumulation, delinking, and economic self-reliance in post-revolutionary societies. In my view, this was the most authentic and developed Marxian theory of imperialism in the late twentieth century, deriving not from a set of sterile formulae, but rather the product of historical analysis and historical contingency. Sweezy’s later writings on imperialism were deeply influenced by Amin, emphasizing the much higher rate of exploitation in the periphery. Meanwhile Magdoff provided a powerful historical approach to the evolution of imperialist relations as they arose in the center-capitalist nations, coupled with an understanding of the economic (and military) aspects of this—including a critique of the growing debt trap imposed on the periphery.

But how relevant is all of this today, in the age of neoliberal globalization and with the growth of emerging economies? Has not development in the global South taken off? Here it is necessary to take a hard look at reality. Although a handful of emerging economies, mostly in East Asia, have achieved high rates of growth in recent decades the continuance of the imperialist world system as a whole is scarcely in doubt. The gap between the richest and poorest regions of the world in the last quarter of the twentieth century rose from 13:1 to 19:1.58 From 1970 to 1989 the annual average per capita GDP of the developing countries (excluding China) was a mere 6.1 percent of the per capita GDP of the G7 countries (the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada). From 1990 to 2006 (just prior to the Great Financial Crisis) this dropped to 5.6 percent. Meanwhile, the average GDP per capita of the forty-eight Least Developed Countries (a U.N.-designated subset of developing countries) as a share of average G7 GDP per capita declined from 1.4 percent in 1970–1989 to 0.96 percent in 2000–2006.59 Given that income inequality is rapidly increasing almost everywhere in the world in the age of globalizing monopoly-finance capital, the gap in income and wealth between those at the top and those at the bottom of the world hierarchy is widening by leaps and bounds. In 2008 the richest 10 percent of the world’s population consumed 59 percent of world output, in contrast to the poorest 10 percent, which consumed a mere 0.5 percent (with the poorest 50 percent consuming 7.2 percent).60

Indeed, appearances today can be extremely deceptive. The more globalized capitalist economy of the twenty-first century, in which the giant corporations based in the center of the capitalist world have shifted much of their production to the periphery (with the produced goods then in large part shipped back to the center to be sold), has altered the shape of the world economy in ways that appear to contradict classical theories of imperialism rooted in the exploitation of the global South by the global North.61 Yet, while it is true that a handful of emerging economies, led by China, are catching up in terms of measured GDP with the countries of the triad (the United States and Canada, Europe, and Japan), the siphoning off of economic surplus (or “value capture”) from the global South as a whole is nonetheless expanding rapidly under the system of global arbitrage unleashed by the giant multinationals.

For example, in 2006 Apple had a gross profit margin of 52 percent on its iPod production subcontracted overseas. The main reason for these exorbitant profits was the fact that the 12,500 Chinese production workers received a wage rate that was only 3.2 percent of the hourly wages of U.S. production workers for what was undoubtedly even more intensive labor. Overall gross profit margins on iPhones in 2009 were 64 percent, reflecting the fact that the wages of Chinese workers assembling the iPhones represented only 3.6 of the total manufacturing cost (shipping price) of the phone.62 Such enormous surplus value captured from abroad magnifies problems of overaccumulation in the core.

In recent years Samir Amin has expanded the analysis of imperialism by developing a theory of imperialist rent based on what he has called the emerging “law of worldwide value.” Explaining the origins of this analysis he writes:

Baran, Sweezy, and Magdoff have brought about a qualitative advance in this domain [the understanding of monopoly capital]. They alone allow an understanding of the nature of capitalism in our time, both its tendency to stagnate and the ways in which it tries to overcome that tendency (especially financialization).

Extending that analysis, I have put forward the thesis that the advanced degree of centralization of capital, henceforward characteristic of contemporary capitalism, made it worthwhile to speak, for the first time, of a system of generalized, globalized, and financialized oligopolies—the basis for the crystallization of a collective imperialism of the triad of the United States, Europe and Japan.63

This new imperialism of our time, led by a resurgent U.S. hegemony, albeit now increasingly reliant on a “global NATO,” has resorted to enhanced military spending and outright war to consolidate its power. This can be seen in the wars in the Balkans, the Middle East, and surrounding regions since the fall of the Soviet Union (which had served as a restraining force) representing the advent of a more naked imperialism.64 Meanwhile, the same triadic formation has been at the forefront of neoliberal globalization aimed at weakening all points of resistance to monopoly-finance capital, while reducing unit labor costs globally and siphoning more surplus to the benefit of the core. In these circumstances, the continuing need for revolution in the global South is shown by the Bolivarian revolution in Venezuela, long under the U.S. thumb in alliance with a small local ruling class, but now free to redistribute its considerable surplus to meet the needs of its population and forge a more sustainable development path (if one still dependent on fossil-fuel exports). Hence, despite changed circumstances it remains true that for most of the population of the periphery genuine progress in terms of the creation of a society of substantive equality and sustainable human development must be revolutionary, as was argued in The Theory of Monopoly Capitalism.

The State in Capitalism and Socialism

The state in capitalist society, Baran and Sweezy insisted in Monopoly Capital, was a capitalist state: one that was “democratic in form and plutocratic in content.” Although “the people exercise sovereign power,” in reality “a relatively small oligarchy rules supreme.” This did not mean that the rule of the capitalist class was an unmediated one. Rather, in the U.S. case, all sorts of structures had been built into the U.S. constitution by its founding figures—and have further evolved since—designed to ensure that the state would primarily serve propertied interests rather than popular sovereignty. Moreover, there was a “latent contradiction in the system.”65 Any success in the realm of democratic action and the assertion of popular sovereignty, insofar as it meant shifting economic and social power significantly in favor of the populace, tended to generate a crisis of class power, in which the ruling class quickly moved to rein in the possibilities for meaningful change. Progressive reform movements, if and when they triumphed, found their political practice narrowly confined within the limits of what could be accomplished without compromising capital accumulation or the political-economic rule of the vested interests.

Written in the 1980s, the discussion of “The State Economy” in The Theory of Monopoly Capitalism focused on the issue of “the fiscal crisis of the state” from the standpoint of the debates engendered by the supply-side economics and neoliberal policy of the Reagan period. My analysis pointed to deficiencies in both O’Connor’s fiscal crisis theory and Baran and Sweezy’s earlier treatment of state spending in Monopoly Capital. The critique in this sphere, I argued, had to start with the fact that the tax state was a capitalist state with the attendant political-economic limitations on its capacity to tax concentrated income and wealth; while, conversely, taxation of working-class income tended to increase the surplus and worsen the underlying tendency to stagnation. This analysis was built on the work of Schumpeter, Kalecki, Steindl, Baran (in The Political Economy of Growth), and the later writings in Monthly Review by Craig Medlen, along with Magdoff and Sweezy.66 Regressive tax policies of the kind increasingly advanced by capital worsened the problem of overaccumulation. Given the inherent long-term limits of deficit financing, taxation of profits and wealth was necessary to stabilize the economy.

The crisis of the tax state that was rapidly emerging in the 1980s was thus attributed directly to the long-term decline in corporate taxation and taxes on higher income brackets. Today this argument is even more relevant with the further development of neoliberal monopoly-finance capital. Regressive tax cuts accompanied by cutbacks in welfare state spending and increased subsidies to capital have created a perpetual fiscal crisis of the state. The result has been the diversion of more and more cash flow into financial sectors (particularly via insurance and private pension plans), heightened unemployment (and underemployment), expanded military and penal spending, stripped-down education, circumscribed access to health services, and a further disciplining of the working class. All this is in line with what Naomi Klein has called “disaster capitalism.”67

A later chapter dealt with the problems of the state and socialist construction in post-revolutionary societies. If the capitalist class in monopoly capitalism masqueraded as an economic elite devoid of political interests, the party bureaucrats or nomenklatura in the former Soviet-type societies masqueraded as a political elite devoid of economic interests. In both cases, the nature of class power over or through the state was denied. The analysis of Soviet-type societies in The Theory of Monopoly Capitalism was written only months after Gorbachev’s historic rise to power and well before the historical implications of that rise were clear. I adopted Sweezy’s post-revolutionary society thesis that these societies were, as I put it, “class-exploitative societies of a new kind”—neither capitalist nor identifiable as socialist in the sense of moving toward socialism.68 In post-revolutionary societies the inherent drive to accumulation was lacking and the utilization of the surplus was politicized. But this had not prevented the rise of a new ruling class, whose position, however, was more tenuous than that of the capitalist class in the West. Nor did it prevent the proletarianization to a large extent of the workers, who, though lacking in some crucial freedoms, also enjoyed certain guarantees in terms of employment, housing, welfare, etc. not present under the dominant forms of capitalism at a similar level of development. Two things seemed clear: (1) Soviet-type societies by the 1980s were stagnating socially and economically, and (2) the very politicization of the utilization of surplus meant that there were only two choices—the demise of the system from above or its regeneration from below. The future of the system would not be determined, I suggested, by economic laws, but by a struggle over the state direction of the economy and the role of the state class.

Beyond this it appeared difficult at the time to say anything. Hence, the analysis of these contradictions was tacked on to the end of the book and the treatment was short and indeterminate. History would decide. Five years later the Soviet Union was no more—not, as a result of a revolt from below, but due to a transition to capitalism initiated and carried out from above. In China, too, the full extent of the shift to the capitalist road introduced from above—or, as William Hinton called it, The Great Reversal—was made clear by the events at Tiananmen Square.69

Today the lessons of the defeat of the first great revolt against the capitalist system have been incorporated into subsequent revolutions, leading to a renewal of socialism as the necessary historical alternative in the twenty-first century.70 What I consider to be the foremost analysis of socialist transition, taking into account both the nature of monopoly capitalism and the failures of actually existing socialism—and indeed representing the most comprehensive theoretical appraisal of Marxism in its time—appeared in 1995 in the form of István Mészáros’s monumental work Beyond Capital.71 The owl of Minerva had flown. Socialist strategy and practice were being reinvented for the new millennium.72

Communication and the Environment: New Critical Areas

In the early 1960s through the early ‘70s in both Britain and the United States (the timing was different in the two countries) a “critical juncture” arose in which the cultural apparatus of society broadly, and specifically the monopolistic media systems, were being challenged politically.73 Baran, Sweezy, and Huberman, along with other figures, such as C. Wright Mills, Raymond Williams, and Ralph Miliband, all wrote critiques of communication in these years—though in the case of Baran and Sweezy’s chapter on culture and communications this had remained unpublished, and in the case of Mills, what he left behind in this respect consisted of a few critical talks, while his planned work on the topic of “the cultural apparatus” remained unwritten.

In the 1970s a tradition of the political economy of the media arose in the academy on a basis quite different than what had occupied the 1960s radicals. What resulted was in some ways a more far-reaching critique, but in a context where the issues were seen as less concrete, political, and strategic. What was lost was the real, immediate movement for change. Nonetheless, such founding figures of the political economy of communication as Dallas Smythe and Herbert Schiller made major contributions that paved the way for others to follow.74 However, it was McChesney, coming later, who was to play the leading role in integrating communication theory with the critique of monopoly capital, in such works as Rich Media, Poor Democracy; Communication Revolution; The Political Economy of the Media; and Digital Disconnect.75

The speed with which the entire digital realm, including the Internet, has been transformed into an oligopolistic sphere undoubtedly dumbfounded those who had been blinded by the dominant myths, such as Bill Gates’s prediction of a “friction-free capitalism.”76 Today we are in a new critical juncture where a political struggle over communication is taking place that makes the early work of Baran and Sweezy, along with that of Huberman, Mills, Miliband, and Williams, of crucial importance. As McChesney writes in the conclusion to Digital Disconnect: “When the dust clears on this critical juncture, if our societies have not been fundamentally transformed for the better, if democracy has not triumphed over capital, the digital revolution may prove to have been a revolution in name only, an ironic, tragic reminder of the growing gap between the potential and the reality of human society.”77

For some of us studying Baran and Sweezy’s Monopoly Capital in the 1970s, in the era of a rising environmental movement, their work—with its emphasis on waste and the real potential to reshape society in more rational ways that met human needs—was deeply ecological. Indeed, their work inspired some of the early critical syntheses in environmental sociology.78 Sweezy’s 1973 article “Cars and Cities” and his later “Capitalism and the Environment” were pioneering contributions to Marxian ecology.79

In 1994 I wrote The Vulnerable Planet: A Short Economic History of the Environment in an attempt to provide both a historical-materialist interpretation of the emerging global ecological disruption, and an analysis that integrated environmental issues with the theory of monopoly capital—as witnessed by the connections drawn between the work of Barry Commoner, criticizing the synthetic age, and Baran, Sweezy, and Braverman.80 However, like others in the first generation of what is sometimes called “ecological Marxism,” I found myself grafting historical-materialist conceptions onto what was essentially the general “green” theory of mainstream environmentalism. Since the main currents of Marxist thinking had for generations been largely divorced from ecological considerations (a problem not confined to Marxism of course), I concluded that it was necessary to go back to classical Marxism in this respect in order to reconstruct the basis of a full-fledged critique. Paul Burkett, in his Marx and Nature, and myself in Marx’s Ecology, carried out this task separately in 1999 and 2000 from different but complementary perspectives, launching what could be called a second stage in ecological Marxism.81 It is only more recently, however, that the necessary first attempts have been made (in what might be called a third phase in contemporary Marxist ecology) to connect this developing Marxian ecological analysis to the reality of monopoly-finance capital, as in my article “The Ecology of Marxian Political Economy.”82

The Revolutionary Confrontation of Reality with Reason

What made Baran and Sweezy’s analysis in Monopoly Capital so important is that—to paraphrase Brecht—it described present-day reality in the only way that it can be described, by pointing to the potential for its transformation. In The Political Economy of Growth, Baran wrote:

The development of capitalism in general and its last phase—monopoly capitalism—in particular, while nowhere near creating anything resembling a good society, has produced the objective potentialities for the emergence of such a society. The prodigious expansion of the forces of production which has taken place during the period of imperialism, although a by-product of war, exploitation, and waste, has indeed laid the foundations for the truly affluent society of the future. But such a society cannot evolve under the rule of an oligarchy administering society’s vast resources for the benefit of a few hundred giant corporations and with the all-controlling purpose of the preservation of the status quo. Such a society can become reality only when its abundant resources will be administered by a human “association in which the free development of each is the condition for the free development of all.”83

It was this potential for a different kind of society which Baran and Sweezy discovered in the waste and irrationality of the monopoly-capitalist order that constituted the uncompromising realism of their analysis: the annihilation of all reification.


  1. Bertolt Brecht, Brecht on Theater (New York: Hill and Wang, 1964), 274.
  2. John Bellamy Foster, The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy (New York: Monthly Review Press, 1986).
  3. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
  4. Ernest Mandel, Marxian Economic Theory, 2 volumes (New York: Monthly Review Press, 1968); E.K. Hunt and Howard J. Sherman, Economics: An Introduction to Traditional and Radical Views (New York: Harper and Row, 1972); Howard J. Sherman, Radical Political Economy (New York: Basic Books, 1972); Andre Gunder Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967); Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969); Paul M. Sweezy, The Theory of Capitalist Development (New York: Monthly Review Press, 1972); James O’Connor, The Fiscal Crisis of the State (New York: St. Martin’s Press, 1973); and Harry Braverman, Labor and Monopoly Capital (New York: Monthly Review Press, 1974).
  5. Assar Lindbeck, The Political Economy of the New Left (New York: Harper and Row, 1971).
  6. Ben Fine and Laurence Harris, “Controversial Issues in Marxian Economic Theory,” The Socialist Register 1976 (London: Merlin Press, 1976): 141–78; David Yaffe, “The Marxian Theory of Crisis, Capital and the State,” Economy and Society 2, no. 2 (1973): 186–232; Paul Mattick, Marx and Keynes (Boston: P. Sargent, 1969).
  7. It is often forgotten that Marxian contributions to crisis theory after Marx (including Engels) rarely focused on the falling rate of profit theory. Rather, the debates involving thinkers like Tugan-Baranovsky, Kautsky, Luxemburg, Bukharin, Lenin, as well as most theorists in the post-First World War generation, were concerned with questions of disproportionality (from the standpoint of Marx’s reproduction schemes) and realization crisis. Henryk Grossman was the leading exception to this rule. Hence, the resurrection of Marx’s tendential law of the falling rate of profit in the 1970s constituted a break with earlier Marxist analyses. Marx himself, it has been shown, was increasingly unsatisfied with his uncompleted work on the falling rate of profit, and appeared to distance himself from this “tendential law” in his final writings. See Michael Heinrich, “Crisis Theory, the Law of the Tendency of the Rate of Profit to Fall, and Marx’s Studies in the 1870s,” Monthly Review 64, no. 11 (April 2013): 15–31.
  8. Paul M. Sweezy, The Present as History (New York: Monthly Review Press, 1953), 111–19.
  9. Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976; originally published in 1952). Kolko was a good friend of Paul Mattick and admired his work, but had made substantial use of Steindl’s work in the development of his own magisterial analysis of the foundations of modern U.S. political economy. See Gabriel Kolko, Main Currents in Modern American History (New York: Harper and Row, 1976), 101–5, 406–7.
  10. The fact that their analysis was in large part based on Kalecki and Steindl (but sought to enlarge the analysis by using the concept of surplus to address questions such as the roles played by the state and economic waste in the formation of the monopoly capitalist order as a whole) was emphasized by Baran and Sweezy, Monopoly Capital, 56.
  11. John Bellamy Foster, “Is Monopoly Capitalism an Illusion?” Monthly Review 33, no. 4 (September 1981): 36–47. In 1989 I became a member of the board of directors of the Monthly Review Foundation along with the informal editorial committee.
  12. Amin succinctly put it: “We have…to consider the deformation of the price system linked to the emergence of oligopolies/monopolies and above all to take fully into account the gigantic transformation of the system of expanded equilibrium resulting, after the First, but above all after the Second World War, from the accelerated expansion of a third department—of absorption of surplus surplus-value. Baran and Sweezy, with the concept of surplus that they put forward, replied to the challenge and unhesitatingly extended and enriched Marxian theory. I claim that those Marxists who still refuse to recognize the central importance of Baran and Sweezy’s contribution lack the means to put forth an effective critique of contemporary capitalism. Their ‘Marxism’ thus remains confined to exegeses of Marx’s texts.” Samir Amin, The Law of Worldwide Value (New York: Monthly Review Press, 2010), 12–13.
  13. See Henryk Szlajfer, “Economic Surplus and Surplus Value Under Monopoly Capitalism” and “Waste, Marxian Theory, and Monopoly Capital,” in John Bellamy Foster and Henryk Szlajfer, eds., The Faltering Economy: The Problem of Accumulation Under Monopoly Capitalism (New York: Monthly Review Press, 1984), 262–321.
  14. See, for example, John Weeks, Capital and Exploitation (Princeton: Princeton University Press, 1981); Willi Semmler, Competition, Monopoly and Differential Profit Rates (New York: Columbia University Press, 1984).
  15. For an example of this criticism of their work see Michael Bleaney, Underconsumption Theories (New York: International Publishers, 1976), 11–14, 102–19, 225–48. For a reply see The Theory of Monopoly Capitalism, 19–21, 74–93. See also the editorial introduction to Jonathan Penzner, Harry Magdoff, and Paul M. Sweezy, “Capitalism and the Fallacy of Crude Underconsumptionism,” Monthly Review 64, no. 8 (January 2013): 45–48.
  16. See Paul Mattick, Anti-Bolshevik Communism (London: Merlin Press, 1978), 191–92. Even today, Howard and King—disregarding the evidence to the contrary in Monopoly Capital itself, Sweezy’s statements in this regard, and my own argument in The Theory of Monopoly Capitalism—blithely contend: “Above all, the labour theory of value plays no part in Baran and Sweezy’s theory.” M.C. Howard and J.E. King, A History of Marxian Economics, vol. 2 (Princeton: Princeton University Press, 1992), 120. This claim has now been laid to rest by the publication of “Some Theoretical Implications” (see below).
  17. The best-known work attacking Marxian notions of imperialism as involving the inherent exploitation within the capitalist system of the global South by the global North was Bill Warren, Imperialism: Pioneer of Capitalism (London: New Left Books, 1980).
  18. Paul M. Sweezy in “Preface,” Baran and Sweezy, Monopoly Capital, viii–ix.
  19. Paul A. Baran and Paul M. Sweezy, “Some Theoretical Implications,” Monthly Review 64, no. 3 (July–August 2012): 24–59. For background and analysis see John Bellamy Foster, “A Missing Chapter of Monopoly Capital,” Monthly Review 64, no. 3 (July–August 2012): 3–23.
  20. Baran and Sweezy’s draft chapter on culture and communications dealt also with mental health (and was originally entitled “The Quality of Monopoly Capitalist Society: Culture and Mental Health”). It was the latter part of the chapter that remained unfinished and hence was left out of the version published in this issue, re-entitled “The Quality of Monopoly Capitalist Society: Culture and Communications.” Both of these chapters that were left out of the book were drafted by Baran and largely carry his imprint. But given the constant input by Sweezy and his own edits to the manuscripts they are attributed here to both authors.
  21. Baran and Sweezy, Monopoly Capital, 112.
  22. The notion of the penetration of the sales effort into production under monopoly capitalism, could be traced, as Baran and Sweezy noted in Monopoly Capital, to Thorstein Veblen. In their correspondence they referred to this as “the interpenetration effect.” See Baran and Sweezy, Monopoly Capital, 131–39; Thorstein Veblen, Absentee Ownership and the Case of Business Enterprise in Modern Times (New York: Augustus M. Kelley, 1984), 284–325; Paul A. Baran and Paul M. Sweezy, “Last Letters,” Monthly Review 64, no. 3 (July–August 2012): 73.
  23. Karl Marx, Capital, vol. 3 (London: Penguin, 1981), 1001.
  24. I have introduced the symbols, WV (standing for that component of wage goods that represent genuine use values entering into the real value of labor power) and WS (representing that portion of wage goods that consist of specifically capitalist use values, and hence a disguised form of surplus—and waste) here in order to draw out the implications of Baran and Sweezy’s analysis of profit by deduction under monopoly capitalism in “Some Theoretical Implications.”
  25. Piero Sraffa, Production of Commodities By Means of Commodities: Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press, 1962), 9ff; Baran and Sweezy, “Some Theoretical Implications,” 54.
  26. It should be mentioned that WV in Baran and Sweezy’s sense should in no way be confused with physical subsistence; there is always a historical element to it. In discussing how the sales effort penetrated into the production process in the case of cars they pointed to the fins and chrome on automobiles; model changes consisting of superficial alterations for marketing purposes; product obsolescence, etc. See Baran and Sweezy, Monopoly Capital, 133–38. There was no implication in their analysis, however, that the motor vehicle as a basic means of transportation, while obviously not a requirement of physical subsistence, should thereby be excluded from the historically determined value of labor power.
  27. The analysis gets much more complex if the effects of such unproductive costs borne by the working class are differentiated in terms of whether they are borne by productive or unproductive labor. Profits by deduction only increase the net social surplus in the case of productive labor. Thus to the extent that workers engaged in productive labor are compelled to pay the higher prices necessary to purchase waste built into wage goods (reflecting a shift in their wage basket from WV to WS) total surplus can be said to have grown. This is not the case where workers engaged in unproductive labor are concerned, since their labor does not generate surplus. Yet, such labor does enable the greater absorption of surplus and the proliferation of specifically capitalist use values and thus is functional for the system. Workers engaged in unproductive labor, moreover, are also materially worse off to the extent that they are compelled to devote a larger and larger part of their wages to the purchase of specifically capitalist use values embodied in wage goods. Thus unproductive labor constitutes the indispensable basis of the waste circuit propping up the entire monopoly-capitalist system. See Baran and Sweezy, Monopoly Capital, 125–26.
  28. Foster, The Theory of Monopoly Capitalism, 42; Karl Marx, Theories of Surplus Value (Moscow: Progress Publishers, 1963), 289.
  29. Paul M. Sweezy to Paul A. Baran, November 25, 1956 (Monthly Review Foundation archives).
  30. Joseph Phillips’s empirical demonstration of the tendency of the surplus to rise in Monopoly Capital, which was subject to some criticisms, was followed by other attempts. See Edward N. Wolff, “Unproductive Labor and the Rate of Surplus Value in the United States, 1947–1967,” Research in Political Economy 1 (1977): 87–115; Michael Dawson and John Bellamy Foster, “The Tendency of the Surplus to Rise, 1963–1988,” in John B. Davis, ed., The Economic Surplus in the Advanced Economies (Brookfield, VT: Edward Elgar, 1992), 42–70.
  31. Foster, The Theory of Monopoly Capitalism, 218. In the late 1980s I received a small summer grant to pursue work on a planned book to be called Wage-Labor and Monopoly Capital, conceived as filling the theoretical gap between Baran and Sweezy’s Monopoly Capital and Braverman’s Labor and Monopoly Capital. However, the task, it soon became clear, would mean a reconstruction of Marx’s entire wage theory on which there was not at that time a single book-length study, and which presented daunting problems. At the same time, my interest in environmental issues grew, steering me in that direction—so the projected study on wage labor under monopoly capitalism was never carried out beyond the original prospectus.
  32. Howard and King, A History of Marxian Economics, vol. 2, 122. Ironically, Marx’s own wage theory has been so thoroughly neglected that modern Marxian political economy remains extraordinarily weak in this area. In this respect, an invaluable reconstruction has been provided in Kenneth Lapides, Marx’s Wage Theory in Historical Perspective (Tucson: Wheatmark, 2008). When placed in the context of Marx’s own wage theory and the development of their argument on this basis in “Some Theoretical Implications,” Baran and Sweezy’s contribution stands out as an extraordinary attempt to advance Marxian theory in line with historical changes.
  33. See, for example, Dan Schiller, How to Think About Information (Urbana: University of Illinois Press, 2006), chapter 1.
  34. Baran and Sweezy, Monopoly Capital, 8–9.
  35. Braverman not only built on Baran and Sweezy’s argument in Monopoly Capital, but drew heavily in his analysis of the scientific-technical revolution in part three of his book on an anonymous pamphlet that Sweezy had written in 1957 for the New York stock exchange investment house, Model, Roland, and Stone, on The Scientific-Industrial Revolution. See Braverman, Labor and Monopoly Capital, 115; Paul M. Sweezy (writing anonymously), Scientific-Industrial Revolution (New York: Model, Roland, and Stone, 1957).
  36. As Sweezy later stated: “The nonrevolutionary character of the United States and the other advanced capitalist countries today seems to me so obvious that I cannot see how it can be denied by anyone with an elementary respect for facts. But this does not mean that this is a permanent state of affairs, nor does it mean that revolutionaries should shun or downgrade educational and organizing activity among workers.” Paul M. Sweezy, Modern Capitalism and Other Essays (New York: Monthly Review Press, 1972), vii.
  37. Michael Yates, Longer Hours, Fewer Jobs (New York: Monthly Review Press, 1994); Naming the System (New York: Monthly Review Press, 2003); More Unequal: Aspects of Class in the United States (New York: Monthly Review Press, 2007); Why Unions Matter (New York: Monthly Review Press, 2009).
  38. Paul M. Sweezy, “Monopoly Capital After Twenty-Five Years,” Monthly Review 43, no. 7 (December 1991): 52–57. The term “real economy” is used here in a special sense, in line with economic theory, to refer to production/output as opposed to finance/speculation and other elements belonging to the monetary realm. Insisting that the financial system was in fact “real” Magdoff and Sweezy more often used the term “production” in preference to “real economy.”
  39. Paul M. Sweezy and Harry Magdoff, The Dynamics of U.S. Capitalism (New York: Monthly Review Press, 1972), 7–29.
  40. Paul M. Sweezy, “Interview with Paul Sweezy,” Monthly Review 38, no. 11 (April 1987): 19.
  41. The main elements of their analysis in all of these respects were already evident in the mid–1970s. See Harry Magdoff and Paul M. Sweezy, The End of Prosperity (New York: Monthly Review Press, 1977), 133–36.
  42. Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987).
  43. Foster, The Theory of Monopoly Capitalism, 95. Here I also cited Magdoff and Sweezy’s article on “Production and Finance” from the May 1983 issue of Monthly Review.
  44. Magdoff and Sweezy, The End of Prosperity, 33–53.
  45. See Robert Pollin, “Remembering Harry Magdoff,” Counterpunch, January 6–8, 2006,; see also Robert Pollin, Counters of Descent (London: Verso, 2003).
  46. See Harry Magoff and Paul M. Sweezy, The Irreversible Crisis (New York: Monthly Review Press, 1988). Hyman Minsky too was affected by the 1987 Stock Market Crash, which caused him to introduce his notion of “money-market capitalism” in 1989 (in a volume to which I also contributed); see Hyman P. Minsky, “Financial Crises and the Evolution of Capitalism,” in Mark Gottdiener and Nicos Kominos, eds., Capitalist Development and Crisis Theory (London: Macmillan, 1989), 391–403. Some parts of a new theory of financialization, it should be noted, had already been articulated by Magdoff and Sweezy in their article “Production and Finance” as early as 1983. See Magdoff and Sweezy, Stagnation and the Financial Explosion, 93–105.
  47. Paul M. Sweezy, “The Triumph of Financial Capital,” Monthly Review 46, no. 2 (June 1994): 7–8.
  48. Ibid, 9–10. To the extent that this was a straightforward shift in power to financial capital this could be seen in the changing locus of wealth generation within the capitalist class itself. This issue was taken up in John Bellamy Foster and Hannah Holleman, “The Financial Power Elite,” Monthly Review 62, no. 1 (May 2010): 1–19.
  49. John Bellamy Foster, Harry Magdoff, and Robert W. McChesney, “Working-Class Households and the Burden of Debt,” Monthly Review 52, no. 1 (May 2000): 1–11.
  50. John Bellamy Foster, Harry Magdoff, and Robert W. McChesney, “The New Economy: Myth and Reality,Monthly Review 52, no. 11 (April 2001): 1–15.
  51. John Bellamy Foster, Harry Magdoff, and Robert W. McChesney, “Crises: One After Another for the Life of the System,” Monthly Review 54, no. 6 (November 2002): 48.
  52. John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009).
  53. John Bellamy Foster and Robert W. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China (New York: Monthly Review Press, 2012).
  54. Sweezy, “Monopoly Capital After Twenty-Five Years,” 53.
  55. Foster and McChesney, The Endless Crisis, 71, 76–77.
  56. Some critics such as M.C. Howard and J.E. King have argued, against Baran and Sweezy, that international competition invalidated their argument: “The ‘degree of monopoly’ in many industries,” they write, “should be measured on a global rather than a purely national scale, given the post-war liberalisation of trade and capital flows, and the continuous and growing pressure of international competition. On these arguments ‘monopoly capital’ is an illusion.” Howard and King, A History of Marxian Economics, vol. 2, 123. One might reply, however, that the internationalization of monopoly capital with the rapid oligopolization of the world economy is primarily a result of the growth of multinational (or transnational) corporations—a phenomenon that was highlighted early on in the analysis of Baran, Sweezy, Magdoff, and Hymer. From this standpoint, the problem with Howard and King’s criticism is that their argument with respect to international influences is not international enough. While the notion of “the growing pressure of international competition” appears to be the dominant reality from the very limited standpoint of any given national economy, this is in reality a global phenomenon affecting all countries alike and representing the concentration and centralization of capital on a world scale. After all, the battle at the global level is a fight between world-straddling mega-corporations. The result is that fewer and fewer firms come to dominate larger and larger portions of the global economy, increasing the global degree of monopoly.
  57. Research Unit for Political Economy, “On the History of Imperialism Theory,” Monthly Review 59, no. 7 (December 2007): 42–50.
  58. Angus Maddison, The World Economy: A Millennial Perspective (Paris: Development Centre, OECD, 2001), 125–26; John Bellamy Foster, “The Imperialist World System,” Monthly Review 59, no. 1 (May 2007): 10–14.
  59. These lines are taken word for word from Fred Magdoff and John Bellamy Foster, What Every Environmentalist Needs to Know About Capitalism (New York: Monthly Review Press, 2011), 65. (Empirical analysis was done with the help of R. Jamil Jonna.) On the original data see: UNCTADstat, “Nominal and Real GDP, Total and Per Capita, Annual, 1970–2009 (US Dollars at constant prices [2005] and constant exchange rates [2005])” and “Total Population, Annual, 1950–2005,” UNCTAD provides aggregate GDP per capita data for the G8, but the series is discontinuous because data for Russia are only available from 1992 to the present. For the G7 figures, Russia was excluded and GDP per capita was manually calculated using total GDP and population. Today the Least Development Countries, as designated by the United Nations, include thirty-three in Africa, fourteen in Asia, and one Latin America and the Caribbean.
  60. World Bank, 2008 World Development Index, 4, This index is unusual in that it combines measures of inequality within countries with measures of inequality between countries (using producer price parities) in order to develop estimates of the share of consumption by world income deciles. See also Fred Magdoff, “Global Resource Depletion,” Monthly Review 64, no. 8 (January 2013): 23–34.
  61. The extent to which Marx’s own approach belongs to the classical understanding of the exploitation of the periphery by the center has recently been reappraised in Kevin Anderson, Marx at the Margins (Chicago: University of Chicago Press, 2010).
  62. John Smith, “The GDP Illusion,” Monthly Review 64, no. 3 (July–August 2012): 88–91; Foster and McChesney, The Endless Crisis, 137–40; see also Greg Linden, Jason Dedrick, and Kenneth L. Kraemer, Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod, Personal Computing Industry Center, University of California at Irvine, January 2009,; Yuqing Xing and Neal Detert, How the iPhone Widens the United States Trade Deficit with the People’s Republic of China, ADBI Working Paper, Asian Development Bank Institute, December 2010; revised May 2011,
  63. Samir Amin, The Law of Worldwide Value (New York: Monthly Review Press, 2010), 28–29.
  64. John Bellamy Foster, Naked Imperialism (New York: Monthly Review Press, 2006); Horace Campbell, Global NATO and the Catastrophic Failure in Libya (New York: Monthly Review Press, 2013); John Bellamy Foster, Hannah Holleman, and Robert W. McChesney, “The U.S. Imperial Triangle and Military Spending,” Monthly Review 60, no. 5 (October 2008): 1–19.
  65. Baran and Sweezy, Monopoly Capital, 155–57.
  66. See especially Craig Medlen, “Corporate Taxes and the Federal Deficit,” Monthly Review 36, no. 6 (November 1984): 10–26; Baran, The Political Economy of Growth, 123–27.
  67. Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Metropolitan Books/Henry Holt, 2007).
  68. Paul M. Sweezy, Post-Revolutionary Society (New York: Monthly Review Press, 1980).
  69. William Hinton, The Great Reversal (New York: Monthly Review Press, 1990).
  70. John Bellamy Foster, “The Renewing of Socialism,” Monthly Review 57, no. 3 (July–August 2005): 1–18.
  71. István Mészáros, Beyond Capital (New York: Monthly Review Press, 1995). See also Michael A. Lebowitz, The Contradictions of Real Socialism (New York: Monthly Review Press, 2012).
  72. This was precisely what Daniel Singer had called for in Whose Millennium: Theirs or Ours? (New York: Monthly Review Press, 1999).
  73. On the concept of “critical juncture” in this context see Robert W. McChesney, Communication Revolution: Critical Junctures and the Future of Media (New York: New Press, 2007).
  74. Dallas Smythe, “Communications: Blindspot of Western Marxism,” Canadian Journal of Political and Social Theory 1, no. 3 (Fall 1977): 1–27; Herbert Schiller, Mass Communications and American Empire (Boston: Beacon Press, 1971).
  75. Robert W. McChesney, Rich Media, Poor Democracy (New York: New Press, 1999); Communication Revolution (New York: New Press, 2007); The Political Economy of the Media (New York: Monthly Review Press, 2008); and Digital Disconnect (New York: New Press, 2013). See also Edward S. Herman and Robert W. McChesney, The Global Media: The New Missionaries of Global Capitalism (London: Cassell, 1997).
  76. Bill Gates, The Road Ahead (New York: Viking, 1995), 241–42.
  77. McChesney, Digital Disconnect, 232.
  78. See Charles H. Anderson, The Sociology of Survival (Homewood, IL: Dorsey Press, 1976); Allan Schnaiberg, The Environment: From Surplus to Scarcity (New York: Oxford University Press, 1980).
  79. Paul M. Sweezy, “Cars and Cities,” Monthly Review 24, no. 11 (April 1973): 1–18, and “Capitalism and the Environment,” Monthly Review 41, no. 2 (June 1989): 1–10.
  80. John Bellamy Foster, The Vulnerable Planet (New York: Monthly Review Press, 1994).
  81. Paul Burkett, Marx and Nature (New York: St. Martin’s Press, 1999); John Bellamy Foster, Marx’s Ecology (New York: Monthly Review Press, 2000). See also John Bellamy Foster, “Marx’s Theory of Metabolic Rift,” American Journal of Sociology 105, no. 2 (September 1999): 366–405. The distinction between the first and second stages of ecological socialism was introduced in John Bellamy Foster, “Review of Environmental Politics: Analyses and Alternatives (a special, Autumn 2000, issue of Capital and Class),” Historical Materialism 8 (Summer 2001): 461–77.
  82. John Bellamy Foster, “The Ecology of Marxian Political Economy,” Monthly Review 63, no. 4 (September 2011): 1–16; see also Magdoff and Foster, What Every Environmentalist Needs to Know About Capitalism, and John Bellamy Foster, Brett Clark, and Richard York, The Ecological Rift (New York: Monthly Review Press, 2010).
  83. Baran, The Political Economy of Growth, xxiv.
2013, Volume 65, Issue 03 (July-August)
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