John Bellamy Foster

Tag: Fred Magdoff

  • “Foreword,” to Fred Magdoff and Chris Williams,” Creating an Ecological Society: Toward a Revolutionary Transofmration

    “Foreword,” to Fred Magdoff and Chris Williams,” Creating an Ecological Society: Toward a Revolutionary Transofmration

    “Foreword,” to Fred Magdoff and Chris Williams,” Creating an Ecological Society: Toward a Revolutionary Transofmration

    (forthcoming, Monthly Review Press, 2017), 10 pp.

  • Stagnation and Financialization

    Stagnation and Financialization

    “Stagnation and Financialization: The Nature of the Contradiction” [PDF] (coauthored with Fred Magdoff, Magdoff listed first) Monthly Review vol. 66, no. 1 (May 2014), pp. 1-24. DOI: 10.14452/MR-066-01-2014-05_1

    More than six years after the beginning of the Great Recession in the United States, and nearly five years since it was officially declared over in this country, the core economies of the capitalist world system remain crisis-ridden. The jobs lost in the downturn in the United States have not yet been fully recovered and the economy remains sluggish. In Europe the crisis has hardly abated at all and a number of the peripheral European Union countries are in what can only be called a depression—especially Greece, Spain, and Portugal. The last member of the triad of advanced capitalist centers, Japan, has gone through what have been called two “lost decades” of slow growth and deflation and is attempting once again to jump-start the economy through a combination of devaluation of the yen and deficit spending.

    Translations:
    • Chinese translation by Zhou Ying in Young China 6790 (June 2014).

     

  • The Plight of the U.S. Working Class

    The Plight of the U.S. Working Class

    “The Plight of the U.S. Working Class” [PDF], (coauthored with Fred Magdoff, Magdoff listed first), Monthly Review vol.65, no. 8 (January 2014), pp. 1-22. DOI: 10.14452/MR-065-08-2014-01_1

    Modern capitalism, sociologist Max Weber famously observed early in the twentieth century, is based on “the rational capitalistic organization of (formally) free labor.” But the “rationality” of the system in this sphere, as Weber was to acknowledge elsewhere, was so restrictive as to be in reality “irrational.” Despite its formal freedom, labor under capitalism was substantively unfree.… This was in accordance with the argument advanced in Karl Marx’s Capital. Since the vast majority of individuals in the capitalist system are divorced from the means of production they have no other way to survive but to sell their labor power to those who own these means, that is, the capitalist class.… The result is a strong tendency to the polarization of income and wealth in society. The more the social productivity of labor grows the more it serves to promote the wealth and power of private capital, while at the same time increasing the relative poverty and economic dependency of the workers.

     

  • Class War and Labor’s Declining Share

    Class War and Labor’s Declining Share

    “Class War and Labor’s Declining Share”, (coauthored with Fred Magdoff; Magdoff listed first), Monthly Review vol. 64, no. 10 (March 2013), pp. 1-11. DOI: 10.14452/MR-064-10-2013-03_1

    Given [the] background of high unemployment, lower-wage jobs, and smaller portions of the pie going to workers, it should come as no surprise that, according to the U.S. Census Bureau, nearly 50 million people in the United States live in poverty (with income in 2011 below $23,021 for a family of four) while another 50 million live between the poverty level and twice the poverty level—one paycheck away from economic disaster. Thus, the poor (those in poverty or near poverty), most of whom belong to the working poor, account for approximately 100 million people, fully one-third of the entire U.S. population.… Wage repression and high unemployment are the dominant realities of our time. A vast redistribution of income—Robin Hood in reverse—is occurring that is boosting the share of income to capital, even in a stagnating economy. Is it any wonder, then, that for years on end polls have shown a majority of the population agreeing with the statement that the United States is on the wrong track and not headed in the right direction?

    Translations:
    • Turkish translation in Monthly Review, Turkish edition (October 2013), pp. 29- 41.

     

  • Marx and Engels and ‘Small is Beautiful’- A Reply

    “Marx and Engels and ‘Small is Beautiful’—A Reply” [PDF] (coauthored with Samar Bagchi, Fred Magdoff), Monthly Review, vol. 63, no. 9 (February 2012), pp. 53-55.
    [Bangla language edition printed in Bangla Monthly Review, September 2012.]

    I am a regular reader of Monthly Review. I read with interest the recent articles on ecology and Marxism (Fred Magdoff and John Bellamy Foster, “What Every Environmentalist Needs to Know About Capitalism,” MR, March 2010, and Fred Magdoff, “Ecological Civilization,” MR, January 2011). It is true that Marx and Engels conceive that capitalism engenders a “metabolic rift” in nature and society. But both of them emphasize that the industrial growth that socialism would produce is beyond imagination under capitalism. Engels writes in Principles of Communism: “Once liberated from the pressure of private ownership, large-scale industry will develop on a scale that will make its present level of development seem as paltry as seems the manufacturing system compared with the large-scale industry of our time. This development of industry will provide society with a sufficient quantity of products to satisfy the needs of all.”

    In The Communist Manifesto Marx and Engels note: “The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.” Soviet leadership took these words literally and wanted to outrace the United States in per capita production and collapsed.

    In the middle of the nineteenth century, it was impossible for Marx and Engels to envisage the ecological catastrophe that a constantly expanding industrial society can ensue.

    India’s Gandhi understood this. He writes in the beginning of the twentieth century: “God forbid India should ever take to industrialization after the manner of the West. The economic imperialism of a single tiny island kingdom is today keeping the world in chains. If an entire nation of 300 million took to similar economic exploitation, it would strip the world bare like locusts.” We can understand this today. If India and China, with a population of more than 2.5 billion, develops an ecological footprint of ten hectares per person as in the United States, which the rich and middle class of India are trying to emulate, the whole world will be stripped bare like locusts within a few decades. We have to redefine what is “development” or “civilization.” The creative outpourings of Mediterranean civilization, the ancient Indians, the Islamic civilization, and the renaissance in Europe are highly valued even today, compared to which, “We are hollow men / We are stuffed men / Our headpiece filled with straw,” as T.S Eliot said. But they did not have Coca-Cola, Pepsi, Internet, and rockets. The only advantage thatHomo sapiens has over other species is its immense capacity to create literature, music, arts, science, etc. which other species do not possess. A civilized society will foster creative potential and not the gluttonous consumerism of the industrial society.

    I think it is only a classless, egalitarian society with equity and justice, a simple-living society with decentralization of economy and polity, and gender equality that can bring an ecological civilization. More than 80 percent of the population in third world countries like India lead a very simple life. We have to remember Gandhi’s saying: “Nature has given man enough to satisfy his need but not enough to satisfy his greed.” It is perhaps very simple for a country like India to start an ecological society. But it is difficult for the Western society whose enchanting glamour is based on the sucking of blood and sweat of the periphery for more than 150 years. The dispossessed of the world have to engage in struggle and a process of construction to bring into existence an ecological society.

    I would very much like my views to be printed in MR and a debate generated. Best wishes and regards from a 79-year-oldie!

    A Response

    John Bellamy Foster and Fred Magdoff

    Thank you for your letter. Your argument with regard to Marx and Engels is one that we have frequently heard, but with which we cannot agree in entirety. You begin by acknowledging the importance of the concept of “metabolic rift” as presented by the 49-year-old Marx of Capital, and then you suggest that this outlook was contradicted by the views of the 29-year-old Marx and the 27-year-old Engels of The Communist Manifesto. But do not their later, more mature assessments take precedence over their earlier ones?

    Marx and Engels’s thinking was not frozen in place in 1848. They continued to expand their knowledge as they progressed in their study of capitalism (as indicated by the concept of the metabolic rift). Theirs was an age of growing environmental awareness, and to their credit, they learned extensively from this, developing their own ecological assessment and building it into their overall critique of capitalism. In this, Marx’s Capital went considerably beyond theCommunist Manifesto—which was written well before Marx carried out his full critique of political economy. Where Capital and the Manifesto conflict, then, it is Capital that we should see as representing Marx’s developed view.

    Marx and Engels were acutely aware of the waste and environmental destruction that capitalism brought, as they indicated in numerous passages, though, as you say, they could not “envisage the [full] ecological catastrophe that a constantly expanding industrial society can ensue.” Marx found Tyndall’s experiments on the sun’s rays fascinating, sometimes attended the latter’s lectures in London in the early 1860s, and may even have been there when Tyndall first demonstrated his discovery that carbon dioxide, along with other gases, generated a greenhouse effect. Yet no one at that time could have foreseen the kind of planetary climate change that we are facing today as a result of this same greenhouse effect and climate forcing by human beings. But what of that? Marx’s real importance to the ecological discussion lies elsewhere, in his recognition of the deep, systematic, and enormously destructive conflict between capitalism and the environment. Marx, after Liebig, depicted industrial capitalism as a robbery-system (Raubbau) in its relation to nature. On that he left no doubt.

    What appears at first glance to be your strongest piece of evidence that Marx and Engels were uncritical proponents of industrialization is the quote from Engels’s Principles of Communism—a work that was written as a preliminary draft for what later became The Communist Manifesto. But it is significant that Marx, who at this point had more critical reservations about the ecological underside of industrialization than Engels did, chose not to incorporate that statement into the Manifesto itself.

    To be sure, the Manifesto declared that in the context of a revolution against capitalism the proletariat would have “to increase the total productive forces of society as rapidly as possible.” Marx and Engels were no enemies of industrialization per se, and by today’s standards these were still quite undeveloped economies. But the founders of historical materialism never saw this expansion of productive forces as the ultimate end of society. Rather, socialism/communism as an end goal, as Marx was later to explain in Capital, had to do with the rational regulation by the associated producers of the metabolic relations between nature and humanity, and therefore of the productive relations of human beings themselves. The object was to change the social relations—not in order to expand production, but in order to create a more human and sustainable community that fulfilled genuine needs. (Even in Engels’ quote from Principles of Communism he does not advocate perpetual growth, but industrialization to the point at which it would be possible “to satisfy the needs of all.”) There is no evidence of an empty worship of productivism in Marx’s thought. To the contrary, Paul Burkett has provided a fascinating description of “Marx’s Vision of Sustainable Human Development” (MR, October 2005).

    It is commonplace for critics of Marx and Engels on ecology to point their finger—as you do here—at the tragedy of the Soviet Union and the damage it inflicted on its environment (in which the Soviet Union, unfortunately, was hardly unique). But the Soviet Union in the 1920s had the most developed ecological science in the world and was extremely advanced in introducing ecological practices. All of this, however, was obliterated in the subsequent purge under Stalin. This was a tragedy of Marxism no doubt, but not one that could be easily laid at the feet of its classical founders. Some of the key victims of the purges, such as Bukharin, Vavilov, Hessen, and Uranovsky, were leading ecological thinkers as well as Marxists.

    As for the rest of your letter, we are in broad agreement. Gandhi’s eloquent statement was one of the earliest expressions of what is today called “the impossibility theorem” of ecology. As we observed in the opening sentences of our book, What Every Environmentalist Needs to Know About Capitalism (Monthly Review Press, 2011—expanded from our earlier article):

    Ecological economist Herman Daly is well known for emphasizing what he called the “Impossibility Theorem” of unlimited economic growth in a limited environment. Put, concretely, an extension of a U.S.-style high consumption economy to the entire world of 7 billion people—much less the 9 billion-plus world population projected for the middle of the present century—is a flat impossibility. In this book we are concerned with extending Daly’s Impossibility Theorem by introducing what we regard to be its most important corollary: the continuation for any length of time of capitalism, as a grow-or-die system dedicated to unlimited capital accumulation, is itself a flat impossibility.

    Like you we believe that the ecological and social revolution that is necessary to change this situation has its basis first and foremost in the global periphery and what we have called in our book the “environmental proletariat.” But all peoples of the world will need to join in struggle to this same end—if we are to succeed. And to accomplish this they will need a developed critique of capitalism, and a strong commitment to socialism, i.e., a society of substantive equality and sustainable human development.

  • Marx and Engels and ‘Small Is Beautiful’

    “Marx and Engels and ‘Small Is Beautiful’ & A Response,” [PDF] (Samar Bagchi, John Bellamy Foster and Fred Magdoff) Monthly Review, vol. 63, no. 9 (February 2012), pp. 52-55.

    I am a regular reader of Monthly Review. I read with interest the recent articles on ecology and Marxism…. It is true that Marx and Engels conceived that capitalism engenders a “metabolic rift” in nature and society. But both of them emphasized that the industrial growth that socialism would produce is beyond imagination under capitalism…. In the middle of the nineteenth century, it was impossible for Marx and Engels to envisage the ecological catastrophe that a constantly expanding industrial society can ensue.

  • What Every Environmentalist Needs to Know About Capitalism

    What Every Environmentalist Needs to Know About Capitalism

    What Every Environmentalist Needs to Know About Capitalism: A Citizen’s Guide to Capitalism and the Environment“What Every Environmentalist Needs to Know About Capitalism: A Citizen’s Guide to Capitalism and the Environment,” (co-authored with Fred Magdoff, Magdoff listed first, New York: Monthly Review Press, 2011), 187 pp.

    There is a growing consensus that the planet is heading toward environmental catastrophe: climate change, ocean acidification, ozone depletion, global freshwater use, loss of biodiversity, and chemical pollution all threaten our future unless we act. What is less clear is how humanity should respond. The contemporary environmental movement is the site of many competing plans and prescriptions, and composed of a diverse set of actors, from militant activists to corporate chief executives.

    This short, readable book is a sharply argued manifesto for those environmentalists who reject schemes of “green capitalism” or piecemeal reform. Environmental and economic scholars Magdoff and Foster contend that the struggle to reverse ecological degradation requires a firm grasp of economic reality. Going further, they argue that efforts to reform capitalism along environmental lines or rely solely on new technology to avert catastrophe misses the point. The main cause of the looming environmental disaster is the driving logic of the system itself, and those in power—no matter how “green”—are incapable of making the changes that are necessary.

    What Every Environmentalist Needs To Know about Capitalism tackles the two largest issues of our time, the ecological crisis and the faltering capitalist economy, in a way that is thorough, accessible, and sure to provoke debate in the environmental movement.

    Reviews:

    I’m not sure who needs to read this relentlessly persuasive book more: environmentalists who imagine we can solve the ecological crisis without confronting capitalism, or leftists who have yet to recognize the ecological crisis as the highest expression of the capitalist threat. How about both, and then some. Indispensable.

    —Naomi Klein, author, The Shock Doctrine

    As we journey through the early stages of the end of the industrial mind an ecological world view awaits us on the horizon. We have no map, but rather a wildly oscillating compass needle. These two bold grown-ups, old hands at hard thinking, are steadying the needle. This book properly pondered will reveal that capitalism is the product of abstract thought whose particularity is to propel us to the edge of humanity’s version of a Petri dish.

    —Wes Jackson, President, The Land Institute

    With the debate about environmental collapse so dominated by technological, population, and market-based solutions, this book is a powerful antidote. Only by addressing global capitalism can we hope to avert catastrophe. Magdoff and Foster have written an up-to-date, accessible, and comprehensive account of a grim situation, yet manage to inspire the reader with their call for an ‘ecological revolution,’ already in process in parts of the world. An essential book for classroom use, to give to friends who need to learn more about what’s happening to the planet, or for the nightstand as a continual reminder of what’s really important.

    —Juliet Schor, author, True Wealth: How and Why Millions of Americans are Creating a Time-Rich, Ecologically-Light, Small-Scale, High-Satisfaction Economy

    A superb introduction to an essential conversation about capitalism’s ability to coexist with environmental progress. Magdoff and Foster do an excellent job of addressing the important issues at stake in this debate.

    —Michael T. Klare, author, Rising Powers, Shrinking Planet: The New Geopolitics of Energy

    Environmental destruction isn’t caused by ignorance or mistaken policies: it is the inevitable result of a social and economic system that puts profit before people and must constantly expand to survive. In this short and clearly written book, Magdoff and Foster explain why that is, why there can be no permanent solution to the environmental crisis so long as capitalism continues, and why greens and socialists must join forces to make an ecological revolution. Every socialist should buy two copies: one to read and learn from, and another to give to a friend who wants to go beyond environmental concern to effective action.

    —Ian Angus, editor, Climate and Capitalism

    Translations:
    • Turkish translation by Original Aksakal, Trails Publishing (2014).
    • German translation, Hamburg: Laika-Verlag, 2012.

  • The Great Financial Crisis—Three Years On

    “The Great Financial Crisis—Three Years On” (coauthored with Fred Magdoff), Monthly Review, vol. 62, no. 5 (October 2010): 52-55.

    The Great Financial Crisis began in the summer of 2007 and three years later, despite a putative “recovery,” it is still having profound effects in the United States, Europe, and in much of the world. Austerity is being forced on working people in many countries. Matters are especially difficult in Greece, a country that is being compelled by the demands of bankers, including the International Monetary Fund, to squeeze its workers in return for loans from abroad to help pay down government debts. Official unemployment in the United States is still around 10 percent, and real unemployment is much higher. An unprecedented 44 percent of the officially unemployed have been without work for over six months. A record number of people are receiving government food assistance as well as meals and groceries from charities. Many U.S. states and cities, facing large shortfalls in their budgets due to falling tax revenues, are cutting jobs and reducing funding for schools and social programs.Much of the attention devoted to determining the cause of the crisis has been directed at the role of “subprime” mortgages in the United States that were sold to low-income people who had little chance of being able to pay the mortgages on their homes. Many of these subprime loans were given out under predatory terms that were especially unfavorable to the unsuspecting borrowers. The bundling of these loans together to be sold to institutions around the world served to spread significant risk far and wide.Yet, despite the instability generated by such loans, and a whole host of exotic financial instruments associated with them, the very severity of the Great Financial Crisis suggests that it was not primarily a product of such speculative practices. Rather, it was the outcome in the main of long-term structural factors, reflected in the secular decline in economic growth rates and the long-run increase of financial fragility and instability.The economic growth rates of the rich countries at the center of the capitalist world system have been shifting into low gear for decades. In the United States, average GDP growth, corrected for inflation, dropped from 4.4 percent in the 1960s, to 3.3 in the 1970s, 3.1 in the 1980s and 1990s, and 1.9 in the 2000s (2000 to 2009). In response to these conditions of deepening economic stagnation within the “real economy,” excess money capital flowed into the financial sector seeking quick returns, leading to the creation of a massive financial superstructure on top of a weakening economic base. This resort to speculative finance as a wealth-generation strategy gave rise to huge artificial profits (and capital gains) seemingly out of thin air—with no real relation to the commodity economy.In this situation, larger and larger infusions of debt—household, corporate, and government—were needed to generate a given level of growth. At the same time, the whole debt balloon, which more and more took on the character of Ponzi finance, required constant infusions of cash merely to stave off the inevitable crash. The result was a literal explosion of debt, which reached an astronomical 350 percent of U.S. GDP by 2007.

    Financial bubbles are invariably symptoms of deeper underlying problems. To focus simply on subprime loans, or even the housing bubble itself, as the real cause of the crisis—as most orthodox economic commentators have done—is thus to mistake the symptom for the disease. If it hadn’t been for the housing bubble in the United States, there would have been another bubble that would have likely led to essentially the same results. Since the 1970s, the economy has seen more and more “credit crunches,” with central banks each time rushing in at the first sign of trouble to bail out failing financial institutions. This, however, has contributed to the growing financial fragility, while the underlying problem of stagnation has remained unaddressed.

    Three years since the onset of the Great Financial Crisis, matters have become so serious that Paul Krugman, winner of the Bank of Sweden’s Nobel Memorial Prize in the Economic Sciences, has declared that we are now in (or entering) a Third Depression, i.e., a third period of economic stagnation. This Third Depression, he suggests, resembles both the stagnation that began in Europe and the United States in the 1870s, which he labels the Long Depression, and the stagnation of the 1930s, or the Great Depression. As Krugman writes: “We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost—to the world economy, and, above all, to the millions of lives blighted by the absence of jobs—will nonetheless be immense.” Krugman contends that “this third depression will be primarily the result of a failure of policy”—the continuation, even in a severe downturn of the neoliberal policy of austerity aimed at erasing government deficits, as opposed to adopting a strong Keynesian stimulus policy as a way out of the crisis.1

    It is true that misguided neoliberal deficit-fighting economic policies during a slump will cause further damage to economic prospects. But Keynesian stimulus offers no genuine solution. The real problem, we argue, is not economic policy but capitalist development itself. Our thesis, in the briefest possible terms, is that the advanced capitalist economies are caught in a tendency to stagnation resulting from the dual processes of industrial maturation and monopolistic accumulation. Financialization (the shift in the center of gravity of the capitalist economy from production to finance) is to be regarded as a compensatory mechanism that has helped to lift the economic system under these circumstances, but at the expense of increased fragility. Capitalism is thus caught in what we call a “stagnation-financialization trap.”

    All of this is connected to the class structure of monopoly-finance capital, which has produced levels of inequality without precedent in the advanced capitalist world. The so-called “Forbes 400,” the 400 richest Americans, now own about as much wealth as the bottom half of the population, some 150 million people. A number of Citigroup analysts have recently argued that the United States and other rich economies are now so top heavy from the standpoint of wealth and income distribution that they are best described as “plutonomies,” in which small class fractions control increasingly large portions of social wealth.2

    To be sure, emerging economies, notably China and India, have not yet acquired the diseases of maturity and monopolization in the sense of the advanced capitalist states and thus are relatively free from the chronic illness that has crippled the countries at the center of the system. But emerging countries are far from being immune to the problems generated. Indeed, there is every reason to believe that they too will be impacted in multiple ways in today’s globalized economy as a result of the weakening of the system at its core. It is worth noting that the Long Depression was followed by a great wave of imperialist expansion leading up to the First World War, while the Great Depression led to the inter-imperialist conflict of the Second World War. The current Third Depression is already pointing ominously to heightened imperial conflict, centered especially in the Persian Gulf, which could potentially lead to devastating consequences for humanity as a whole.

    If all this were not enough, the world is now facing an even more serious peril: a rapidly accelerating planetary ecological crisis that threatens, if radical changes are not made in the next decade or two, the eventual collapse of most of the world’s ecosystems, together with human civilization itself.

    There is only one possible solution to this all-encompassing planetary crisis, and that is the euthanasia of capitalism, replacing it with a new economy geared to sustainable human development, ecological plenitude, and the cultivation of genuine human community. The sooner we begin to construct this qualitatively new system through our mass struggles, the better the long-term prospects for humanity and the earth will be.

    Eugene, Oregon
    Burlington, Vermont
    June 30, 2010

    [English language version of preface to the Bangla edition of The Great Financial Crisis. Spanish language translation by Alberto Nadal in El Diario Internacional (December 2010). Italian version published by Attac Italia, January 7, 2011, at HYPERLINK” http://www.italia.attac.org/spip/spip.php?article3525″
    http://www.italia.attac.org/spip/spip.php?article3525. French translation printed by Le  HYPERLINK “http://translate.googleusercontent.com/translate_c?anno=2&hl=en&rurl=translate.google.com&sl=fr&tl=en&u=http://www.cadtm.org/&usg=ALkJrhhASr3MtAqVLKrb5KmngEWMpdgxrA” Comité pour l’Annulation de la Dette du Tiers Monde, December 29, 2010. Galician translation published by Avantar, December 21, 2010, http://www.galizacig.com/avantar/autor/john-bellamy-foster-e-fred-magdoff. Spanish translation by Alberto Nadal in Viento Sur, November 11, 2010. Catalan translation published by En Lluita,  HYPERLINK “http://www.enlluita.org/site/?q=node/3150” http://www.enlluita.org/site/?q=node/3150. Turkish translation appears in Kapitalizmin Finansal Krizi, edited by Prof. Dr. Abdullah Ersoy (Ankara, Turkey: Imaj Publishing, 2011), 330pp.]

    Notes

    1. ↩ Paul Krugman, “The Third Depression,” New York Times, June 28, 2010.
    2. ↩ Matthew Miller and Duncan Greenberg, ed., “The Richest People in America” (2009), Forbes, http://forbes.com; Arthur B. Kennickell, “Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007,” Federal Reserve Board Working Paper 2009-13, 2009, 55, 63; Ajay Kapur, Niall Macleod, and Narendra Singh, “Plutonomy: Buying Luxury, Explaining Global Imbalances,” Citigroup Research, October 16, 2005; and “Revisiting Plutonomy: The Rich Get Richer,” Citigroup Research, March 5, 2006.

     

  • What Every Environmentalist Needs to Know About Capitalism

    What Every Environmentalist Needs to Know About Capitalism

    “What Every Environmentalist Needs to Know About Capitalism“, (coauthored with Fred Magdoff, Foster listed second), Monthly Review, vol. 61, no. 10 (March 2010), pp.1-30. DOI: 10.14452/MR-061-10-2010-03_1

    For those concerned with the fate of the earth, the time has come to face facts: not simply the dire reality of climate change but also the pressing need for social-system change. The failure to arrive at a world climate agreement in Copenhagen in December 2009 was not simply an abdication of world leadership, as is often suggested, but had deeper roots in the inability of the capitalist system to address the accelerating threat to life on the planet. Knowledge of the nature and limits of capitalism, and the means of transcending it, has therefore become a matter of survival. In the words of Fidel Castro in December 2009: “Until very recently, the discussion [on the future of world society] revolved around the kind of society we would have. Today, the discussion centers on whether human society will survive.”

    Translations:
    • Bangla translation by Farooque Chowdhury in Bangla Monthly Review, vol. 2, no. 3 (June 2010). Translated by Farooque Chowdhury.
    • Spanish translation by Observatorio Petrolero Sur printed by the Corporación para la Educación, el Desarrollo y la Investigación Popular – Instituto Nacional Sindical at http://www.cedins.org, June 13, 2011.
    • Galician translation by Xosé Díaz Díaz in Terra e Tempo no. 4 (2010), http://www.terraetempo.net.

     

  • The Great Financial Crisis

    The Great Financial Crisis

    The Great Financial Crisis“The Great Financial Crisis: Causes and Consequences,” (coauthored with Fred Magdoff, Foster listed first, New York: Monthly Review Press, 2009), 160 pp.

    Editions:

    • Indian edition (English) published by Cornerstone Books, Kharagpur, 2009.

    Translations:

    • Korean translation from Eulyoo Publishers.
    • Czech language edition published by Grimmus, Czech Republic, 2009.
    • Spanish translation, Fondo De Cultura Económico (Spain), 2009.
    • Bangla translation by Farooque Chowdhury (Dhaka: Shahitya Prakash, 2011).
    • Arabic translation by Ateyyah Kareem Al Zafiri (Afaq Educational Services Company, Kuwait City, Kuwait, 2013).
    • Selected chapters appear in Kapitalizmin Finansal Krizi (Turkish), edited by Prof. Dr. Abdullah Ersoy (Ankara, Turkey: Imaj Publishing, 2011), 330pp.

    The bursting of the housing bubble and the ensuing financial debacle have left most people, including many economists and financial experts asking: Why did this happen? If they had been reading Monthly Review, and were familiar with such articles as “The Household Debt Bubble,” “The Explosion of Debt and Speculation,” and “The Financialization of Capitalism,” they would not have needed to ask. In their new book, The Great Financial Crisis: Causes and Consequences, Monthly Review editor John Bellamy Foster and long-time Monthly Review contributor, Fred Magdoff, update this analysis, exploring the whole course of what is now known as “the worst financial crisis since the Great Depression”: from the debt explosion and housing bubble to the subprime debacle and federal bailout. They argue that this latest financial crash, although greater than any since 1929, is itself a symptom of deeper problems connected to the stagnation of the “real” or productive economy of mature capitalism. Financial bubbles have become the chief means of countering stagnation, but these inevitably burst, bringing the underlying economic problems back to the surface. The only recourse of the system: new and bigger bubbles, leading, as they too pop, to still greater financial crises and worsening conditions of production—in what has now become a vicious cycle.

    With this as their key, Foster and Magdoff are able to examine the complex interconnections associated with rising debt, weakening production and investment, stagnant wages, burgeoning unemployment, rapidly growing class inequality, spiraling global economic instability, and spreading militarism and imperialism. At the center of the story is the latest phase of capitalism, “monopoly-finance capital,” that has generated a giant casino economy and promotes enormously exorbitant, exploitative, and corrupt practices as well as violence abroad—all geared to finding and protecting profitable ways to invest the corporate capital surplus. Meanwhile, the real, pressing needs of most people in the society go unaddressed. The only genuine way out of trap, The Great Financial Crisis argues, is the promotion of those very measures—such as massively expanding socially useful public spending, improving the security of the working class, and democratizing ownership of productive property—that are invariably opposed by the current system of wealth and power. If the legendary Mother Jones was right, and we must educate ourselves for the coming struggle, then this book is today’s most essential reading.

    Reviews:

    …an insightful account of the roots of the crisis.

    —Noam Chomsky, Hopes and Prospects

    With all the charges of ‘socialist’ hurled at Barack Obama from the howling back benches, I decided it was time to find out what some real socialists are saying about the crisis of monopoly capitalism. It’s a short book long on insight.

    —Bill Moyers, on selecting the book for his booklist

    In this timely and thorough analysis of the current financial crisis, Foster and Magdoff explore its roots and the radical changes that might be undertaken in response. . . . This book makes a valuable contribution to the ongoing examination of our current debt crisis, one that deserves our full attention.

    —Publishers Weekly

    Those interested in the Marxist perspective should get hold of The Great Financial Crisis. . . . It is a fascinating read.

    —Larry Elliot, economics editor, The Guardian

    Follows Marxist writers Harry Magdoff and Paul Sweezy in arguing that ‘stagnation’ is the normal state of capitalism (or what the present authors term ‘monopoly-finance capital’). To preserve ‘growth,’ finance becomes increasingly decoupled from investment in real things, but in doing so it creates bubbles, and we all know what happens when they are pricked … Foster and Magdoff did call out an imminent collapse of the US “household debt bubble” as far back as spring 2006.

    —The Guardian

    I like to hope that some members of the economics profession, some journalists who routinely interpret economics for the general public, and even (could we hope?) some public officials unafraid to think what had previously been the unthinkable (namely that radical leftists have something useful to say about the U.S. economy and economic policy) will take up this book and engage with it. . . . We ignore the arguments of this book and other dissenting economists at our peril.

    —Michael Meeropol, Challenge magazine

    The challenge for the left is to articulate both the temporary nature of capitalism’s fixes and of capitalism itself in accessible terms. This book is a useful weapon for all who strive to do so.

    —Morning Star

    Everyone at last knows we are in a great financial crisis. Foster and Magdoff have seen it coming for some time now. If you want a clear and cogent explanation of the reality of our debt crisis and what might be done about it, this is your book.

    —Immanuel Wallerstein, Yale University

    The Great Financial Crisis will be extremely useful for all who are trying to sort out the meaning of the most serious crisis U.S. and global capitalism has faced in eighty years. Few today are able both to make sense of the details of the modern ‘financial architecture’ that turned a predictable burst in the U.S. housing bubble into a full scale financial meltdown, and also to bring an historical perspective stemming from the work of Keynes, Hansen, Steindl, Kalecki, Minsky, Galbraith, and of course Marx, Sweezy, and Harry Magdoff. Because the authors could draw on their own excellent coverage of the lead up to the crisis in the pages of Monthly Review magazine, we have an invaluable book available to us much sooner than would otherwise be possible.

    —Robin Hahnel, Professor of Economics, American University

    Those of us who are dissatisfied with the analyses of the financial-economic meltdown of 2008 that attribute it to easily remediable ‘mistakes’ on the part of financial institutions, regulators, or policy-makers can learn a lot from John Bellamy Foster and Fred Magdoff’s The Great Financial Crisis: Causes and Consequences. Foster and Magdoff follow up the theses of Paul Sweezy, Paul Baran, and Harry Magdoff that diagnose the structural problems of U.S. capitalism in its chronic tendency toward stagnation rooted in inadequate business investment and leading to slow growth, unemployment of labor, and low utilization of capital. This book makes the case that the excesses of financialization and the widening inequality of income distribution are themselves indirect effects of stagnation in the real economy, and explains with sobering clarity why the roots of this crisis may turn out to be deep and difficult to address with conventional policy measures.

    —Duncan K Foley, Leo Model Professor of Economics

    New School for Social Research

    Much of the analysis of the latest economic meltdown has been confined to explanations about the housing bubble and bust. In The Great Financial Crisis, Foster and Magdoff take a broader approach, presenting a rigorous and sorely needed historical and forward-looking perspective of the capitalist system out of control. With intricate detail, Foster and Magdoff contextualize the housing debt and speculative bubble within its rightful place at the core of an accelerated period of the financialization of capital, eloquently arguing why a people-first, or socialistic, approach to this crisis is the most logical way to stabilize the general economy.

    —Nomi Prins, author of Other People’s Money and Jacked

    Harry Magdoff and Paul Sweezy, to whom this book is dedicated, analyzed the financial crisis as inseparable from the tendency to stagnation of monopoly capital. The present book is written in the same spirit and brings their approach fully up to date under the circumstances of ‘monopoly-finance capital.’ It underlines that, whatever might be attempted today, the necessarily recurring crisis is bound to get worse without remedying the causes of stagnation. Thus Foster and Fred Magdoff rightly stress that ‘the answer lies in a truly revolutionary reconstruction of the entire society.’ Their book is a worthy memorial to Harry Magdoff and Paul Sweezy.

    —István Mészáros, author of The Challenge and Burden of Historical Time

    and Beyond Capital

    Foster and Magdoff’s very readable account of the crisis merits close and wide attention. Their analysis of consumer debt burdens is the perfect antidote for everyone who is tired of hearing how ‘we’ went on a consumption binge, and their historically sensitive discussions of the roots of the crisis are fresh and provocative.

    —Thomas Ferguson, University of Massachusetts, Boston

    Author of The Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems

    John Bellamy Foster and Fred Magdoff’s book on ‘The Great Financial Crisis’ is an excellent example for the usefulness of studying Marx’s works and that of other Marxist political economists, e.g. the writings of Paul M. Sweezy and Harry Magdoff, in order to better grasp the dynamics and contradictions of the financial turmoil and its implications for social conflict. The disastrous contemporary financial crisis cannot be understood as the consequence of a ‘wrong regulation’ of the world of finance. It is an emanation of the ‘real’ accumulation process of financialized monopoly capital.

    —Elmar Altvater, Otto-Suhr-Institute of the Free University of Berlin

    Foster and Magdoff’s new book presents a sharp and stimulating analysis of the historical origins and structural roots of the current financial crisis. The authors argue that the implosion is a logical consequence of the contradictions of monopoly finance capital—contradictions that are reflected in the twin processes of financialization and stagnation that have dominated the development of the U.S. economy in the recent decades. It is an essential read if the mea culpas and post mortems of ‘the experts’ faced suddenly with ‘a fundamental flaw’ in the logic of unregulated markets have left you demanding a more penetrating account of this crisis.

    —Ramaa Vasudevan, Colorado State University

    A must read! Here is an excellent guide to understanding the role debt overload and the stagnation of real economy played in the recent crisis, in the tradition of Sweezy and Magdoff.

    —Michael Perelman, Professor of Economics, California State University at Chico

    Author of Railroading Economics, The Invention of Capitalism

    and The Confiscation of American Prosperity

    The financial crisis of 2007–08, and with more certainly in store for 2009 and beyond, is one of the great calamities of modern neoliberal capitalism. But it should come as no surprise for regular readers of John Bellamy Foster and Fred Magdoff’s writings over the past few years in Monthly Review. In a series of highly accessible and cogent articles, they have consistently explained both the build up to the crisis and its consequences. The Great Financial Crisis brings their ideas together in one place. It is compelling reading for anyone seeking to both understand and change the world we live in today.

    —Robert Pollin, Professor of Economics and Co-Director, Political Economy Research Institute (PERI), University of Massachusetts-Amherst