This is the second instalment of a multi-part series. Read part one here.

OK, so Marx, and the Marxist tradition, got a description correct in many respects of the way capitalism is working now. The important point to remember is that Marx isn’t a bounded “philosopher” like Aquinas or Locke, arguing for an eternal, particular truth — he had a specific argument about the way capitalism worked at the time. But he also had a general theory of how knowledge worked — that we must assume a material, extended world of knowable processes; that we ourselves transform, as a species that has come to acquire consciousness and the possibility of projective action.

Marx thus contemplated that large parts of his particular theory could be overthrown. Indeed, as Gareth Steadman Jones’ recent biography reveals, he was convinced by the 1870s that Capital would have to be redone. And it was.

But the crucial point is that Marx is not simply Marx. He’s Hilferding, whose 1910 Finance Capital could be seen as volume five of Capital (Volume four? Too complicated to explain). He’s Paul Sweezy and Paul Baran, whose 1964 Monopoly Capital is a pretty good account of Facebook, Google, etc, from half a century away; Samir Amin, whose account of systematic underdevelopment Accumulation On a World Scale shows why China roared ahead, while India has put a light overlay of urbanism across stagnation, and large parts of Africa have gone backwards. He’s all these, and more, and I choose them because they have followed the straight-arrow “Marxian” economic tradition.

What did Marx and the Marxists get wrong at a deep level? The greatest challenge was from the Austrian tradition, which first tackled Marx in Bohm-Bawerk’s Karl Marx and the Close of his System, which argued that Marx had compared apples and angle-grinders in his argument as to how a deep structure of “value” — as cost of production — related to prices. Bohm-Bawerk suggested that two different ways of doing that in Capital showed a sleight-of-hand, which made a fall in the rate of profit appear inevitable, when there was no such guarantee.

The “transformation problem” debate has continued for a century. Marx had never said that the rate of profit would bust through all other conditions to doom capital mathematically. Cartel-isation, monopoly and capitalist state terror could potentially keep the thing bubbling along until the organised working class ended it. For the most part, he saw capitalism as a system with, potentially, a long way to go.

The Austrians also made a challenge as to how any form of steered socialism could work — “the problem of the millions” — but that was about socialism, rather than capitalism per se. The most serious challenge came from the “neo-Ricardian” Piero Sraffa, with his 1960 book Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory.

In this 60-page work, Sraffa showed that both Marx and marginal utilitarians took certain variables as constants to ground their theories. Marx, for Sraffa, is a rival post-Ricardian, who takes human labour as a special type of production input, and assigns it a value at a certain time, and then generalises that to a production process over a time series in ways that do not cohere; marginal utilitarians by contrast do not acknowledge that the circular mathematics of product “switching” render the real calculation of marginal advantage simply magical thinking (this is one base of Steve Keen’s assault on economics as a “naked emperor”). (This is my ham-fisted take; I’m open to correction).

Sraffa was a leftist — a friend and supporter of the Italian communist Gramsci — and his argument was political; a capitalist state could keep capitalism going by endlessly resetting wage/profit ratios, interest rates, etc. (Sraffa, a Cambridge man, was also more or less a co-author of Keynes’s General Theory, and many of the ideas leading to the Bretton Woods post-World War II order are arguably, partly at least, his). In 1978, Ian Steedman produced Marx After Sraffa, which expounded the argument in great detail, and more or less smashed “inevitabilist” Marxism to pieces. The book sent a generation of ’60s/’70s Marxist intellectuals out of the movement altogether, and towards postmodernism and post-Marxist politics.

Since then, there have been renewed challenges to the Sraffian critique, from schools such as the TSSI group, and others (don’t ask). And, in historical terms, we can see that the end of capitalism is being talked about by everyone. So what’s happening, and where’s the revolutionary working class who were going to deliver the killing blow? We’ll see, in part three, next week …