This is a hitherto unpublished chapter of Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966). The text as published here has been edited and includes notes by John Bellamy Foster. The style conforms to that of their book. Part of the original draft chapter, dealing with mental health, was still incomplete at the time of Baran’s death in 1964, and consequently has not be included in this published version. For the larger intellectual context see the introduction to this issue.
The question of “underconsumptionism” is a tangled one—due not only to the commonplace fallacy associated with what is known as “crude underconsumptionism,” but also because the term has been used at various times to refer to what Joseph Schumpeter in his History of Economic Analysis called “non-spending” or effective demand theories (the second in a typology of underconsumption theories designated by Schumpeter). Underconsumption in this sense, however, would encompass theorists like Keynes and Kalecki who focus not on underconsumption per se, but on underinvestment. Hence, the term is no longer applied to theories of this type (except by some Marxian critics of “underconsumptionism”).… In the following exchange with Jonathan Penzner published in the April 1982 issue of Monthly Review, Harry Magdoff and Paul Sweezy, then editors of the magazine, pointed to the fallacy of crude underconsumptionism.
That all is not well in the realm of bourgeois economic theory is strongly felt by its closest observers. Professor Mason’s blunt statement that “the functioning of the corporate system has not to date been adequately explained,” could hardly be contradicted by anyone familiar with contemporary economic literature. Its most conspicuous feature is, indeed, this very failure to come to grips with the most important aspects of what, one would think, should constitute its central problem.… The reasons for this striking reluctance to place the realities of modern capitalism where they belong: at the center of theoretical attention, are not far to seek… There can be no doubt that the model of a perfectly competitive market economy is “more tractable,” that the examination of its manifold properties is more readily achievable by means of conventional tools of economic analysis than that of a system dominated by oligopolistic corporations. It may not be economics’ claim to applause, but it is understandable that most of its practitioners prefer not to tackle “intractable” matters, but to move along the line of the least theoretic resistance. | more…
Correspondence on “Some Theoretical Implications”
These “Last Letters” were written by Baran and Sweezy in late February and early March 1964 and concerned “Some Theoretical Implications,” a chapter that Baran had drafted in 1962 and that they were then revising for their book Monopoly Capital. The discussion was cut short by Baran’s death around two weeks later.… They are published here for the first time. | more…
The question “Why Stagnation?” has a rather special significance for me. I started my graduate work in economics exactly fifty years ago this year. The cyclical downturn which began in 1929 was nearing the bottom. Unemployment in that year, according to government figures, was 23.6 percent of the labor force, and it reached its high point in 1933 at 24.9 percent. It remained in the double-digit range throughout the decade. Still, a recovery began in 1933, and it turned out to be the longest on record up to that time. Even at the top in 1937, however, the unemployment rate was still 14.3 percent, and it jumped up by the end of the year. That also happens to be the year I got my Ph.D. Can you imagine a set of circumstances better calculated to impress upon a young economist the idea that the fundamental economic problem was not cyclical ups and downs but secular stagnation? | more…
In February 2011, while I was drafting what was to become “Monopoly and Competition in Twenty-First Century Capitalism,” written with Robert W. McChesney and R. Jamil Jonna (Monthly Review, April 2011), I decided to take a look at Paul Sweezy’s copy of the original 1942 edition of Joseph Schumpeter’s Capitalism, Socialism, and Democracy, which I had in my possession. In doing so, I came across a folded, two-page document, “The Laws of Capitalism,” tucked into the pages. It was written in ink in Sweezy’s very compact handwriting. In the upper-right-hand corner, Sweezy had jotted (clearly much later) in pencil: “(A debate with J.A.S. before the Harvard Graduate Students’ Economics Club, Littauer Center, probably 1946 or 1947.)” The document consisted of a detailed outline, in full sentences, of a contribution to a debate. I immediately realized that this was Sweezy’s opening talk in the now legendary Sweezy-Schumpeter debate. Until that moment, I, along with everybody else, assumed that no detailed records of the actual talks had survived. | more…
Paul Baran and Paul Sweezy’s voluminous correspondence in the 1950s and early 1960s ranks as one of the crucial exchanges of letters between Marxist political economists in the second half of the twentieth century, and, indeed, in the entire history of Marxist thought.… Only a few letters in their extensive correspondence have been published so far.… We have thus chosen to publish two additional letters here in recognition of the joint centennial of the births of the two Pauls: Paul Baran (1910-1964) and Paul Sweezy (1910-2004). | more…
Though it is neither written nor marketed as such, Who Owns the Sun? by researcher/activists Daniel Berman and John O’Connor, is a devastating indictment of capitalism. As it has developed in the last two centuries, this system is an enormous user of energy, most of it derived from the burning of fossil fuels (coal, oil, natural gas). An additional—and in some parts of the world increasing—source is nuclear fission. Both of these forms of energy are dangerous and environmentally destructive to life on the planet. Burning fossil fuels generates almost all of the greenhouse gasses that have already begun to change the planet’s climate and, if continued at anywhere near the present rates, will trigger a chain reaction of lethal disasters, not in some vaguely distant future but in the next century or so—historically a relatively short span of time. Nuclear fission leaves a legacy of radioactive waste that cannot now, or perhaps ever, be safely disposed of. Clearly if humanity, not to speak of other forms of life, is to have a future, nothing could be more important than phasing out these sources of energy. So much, I believe, is what can be appropriately called ecological common sense | more…
The recession that began in the second quarter of 1981 (the second in two years) dragged on into 1982. Most observers look for some recovery in the second half of the year, but hardly anyone expects it to be vigorous. Meanwhile, all the typical signs of stagnation continue to be in evidence. The official unemployment rate which stood at 7.6 percent in 1981 rose to 9.5 percent by the middle of 1982, and the manufacturing capacity utilization rate fell from 79.9 percent to 69.9 percent in the same period.… The counterpart to this stagnation in the realm of production and employment was a continuing ballooning of the financial superstructure of the economy which, as the essays in this volume have been at pains to emphasize, has been one of the most spectacular features of capitalist development during the post-Second World War period. | more…
Considerations of Environmental Protection Criteria for Radioactive Waste, U.S. Environmental Protection Agency, Office of Radiation Programs, Waste Environmental Standards Program, Washington, D.C. 20460, February 1978.
Most government reports make dull reading, and this one is no exception. But it contains a message which needs to be taken in by everyone even minimally concerned about the future of the human race. That message, quite simply, is that there is not and cannot be a safe program for disposing of radioactive wastes. The reasons are basically simple, do not depend on any complicated scientific arguments, and cannot be refuted or made irrelevant by any conceivable increase in scientific knowledge or technological capability. They can be summed up in a series of quotations from the report. | more…
The question “Why Stagnation?” has a rather special significance for me. I started my graduate work in economics exactly fifty years ago this year. The cyclical downturn which began in 1929 was nearing the bottom. Unemployment in that year, according to government figures, was 23.6 percent of the labor force, and it reached its high point in 1933 at 24.9 percent. It remained in the double-digit range throughout the decade. Still, a recovery began in 1933, and it turned out to be the longest on record up to that time. Even at the top in 1937, however, the unemployment rate was still 14.3 percent, and it jumped up by the end of the year. That also happens to be the year I got my Ph.D. Can you imagine a set of circumstances better calculated to impress upon a young economist the idea that the fundamental economic problem was not cyclical ups and downs but secular stagnation? | more…
Among Marxian economists “monopoly capitalism” is the term widely used to denote the stage of capitalism which dates from approximately the last quarter of the nineteenth century and reaches full maturity in the period after the Second World War. Marx’s Capital, like classical political economy from Adam Smith to John Stuart Mill, was based on the assumption that all commodities are produced by industries consisting of many firms, or capitals in Marx’s terminology, each accounting for a negligible fraction of total output and all responding to the price and profit signals generated by impersonal market forces. Unlike the classical economists, however, Marx recognized that such an economy was inherently unstable and impermanent. The way to succeed in a competitive market is to cut costs and expand production, a process which requires incessant accumulation of capital in ever new technological and organizational forms. In Marx’s words: “The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, ceteris paribus, on the productiveness of labor, and this again on the scale of production. Therefore the larger capitals beat the smaller.” Further, the credit system which “begins as a modest helper of accumulation” soon “becomes a new and formidable weapon in the competition in the competitive struggle, and finally it transforms itself into an immense social mechanism for the centralization of capitals” (Marx, 1894, ch. 27) | more…
It is obvious that humankind has arrived at a crucial turning point in its long history. Nuclear war could terminate the whole human enterprise. But even if this catastrophic ending can be avoided, it is by no means certain that the essential conditions for the survival and development of civilized society as we know it today will continue to exist | more…