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The economic crisis and the crisis in economics

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the post-war economic boom and subsequent crisis were not anomalies requiring new economic theory, but rather confirmations of Marx's law of the tendency of the rate of profit to fall. The central claim is that bourgeois economics — whether Keynesian, monetarist, or supply-side — has been consistently incapable of explaining or resolving capitalism's inherent contradictions. The crisis in economics is itself a symptom of the crisis in capitalism. The article uses the work of Andrew Glyn (AG) to illustrate the difference between an empiricist approach that grasps surface phenomena (falling profitability driven by wage pressure) and a Marxist approach that derives the profit squeeze from the deeper mechanisms of capital accumulation.

Theoretical Grounding

The analysis is rooted in Marx's law of the tendency of the rate of profit to fall, understood not as a mechanical prediction but as the expression of capitalism's internal contradictions — rising organic composition of capital, overaccumulation, and the periodic destruction of capital values. The article draws a sharp methodological distinction between empiricism (starting from observed facts and building theory upward) and dialectical materialism (starting from abstract categories like value and surplus-value and working toward the concrete). This is explicitly grounded in Marx's Introduction to the Critique of Political Economy (the Grundrisse). The article situates itself within the Marxist tradition that has always understood crises as inherent to capitalism, in opposition to Keynesian and neoclassical frameworks that treat crises as external shocks or policy failures.

Conjunctural Relevance

The article was written in 2009, in the immediate aftermath of the global financial crisis. It connects the post-war British experience — the long boom, the profit squeeze of the 1970s, the defeat of the miners, the rise of monetarism and supply-side economics — to the contemporary moment. It notes that New Labour under Blair and Brown continued Thatcher's anti-union agenda, citing Blair's boast that British law is "the most restrictive on trade unions in the western world." The article identifies the 48-hour working week directive, benefit conditionality, and anti-strike laws as ongoing class struggle measures dressed as economic policy. The conjuncture is one where bourgeois economics has no coherent answer to crisis — monetarism is abandoned even by its practitioners, and supply-side economics is exposed as "right wing prejudice dressed up as economic theory."

Where the Argument Continues

This article is part of a broader debate within the Revolutionary Communist International on the tendency of the rate of profit to fall and post-war capitalism. It explicitly references two companion pieces:

  • Introduction to debate between AG and MB on The tendency of the rate of profit to fall and post-war capitalism (Mick Brooks)
  • A reply to AG (Mick Brooks), which responds to A critique by AG

The argument continues in the ongoing work of the RCI on the nature of the current long downturn, the relationship between class struggle and profitability, and the critique of reformist strategies (including the Alternative Economic Strategy of the 1970s). The article leaves open the question of how the 2008 crisis fits into the longer trajectory of falling profitability — a question taken up in subsequent IDOM articles on the Great Recession and the eurozone crisis.

Connections

  • Marx, Capital Volume 3 (Part 3 on the law of the tendency of the rate of profit to fall)
  • Marx, Grundrisse (Introduction on method)
  • Trotsky, Where is Britain Going? (1925) — early Marxist analysis of British decline
  • Andrew Glyn and Bob Sutcliffe, British Capitalism, Workers and the Profit Squeeze (1972) — the empiricist account the article engages with
  • Angus Maddison, Phases of Capitalist Development (1982) — data on long-run growth
  • Lord Kaldor, The Scourge of Monetarism — Keynesian critique of monetarism
  • Stuart Holland, Strategy for Socialism and Socialist Challenge — left reformist programmes of the 1970s

Key Quotes

  1. "From first principles (Marx's tendency for the rate of profit to fall) the Marxists had anticipated a crisis of profitability. AG provided the documentation."

  2. "The 'facts' as he saw them led him to the theory. This is the method of empiricism."

  3. "We can see now that AG adhered to the first method criticized by Marx, the grasping of important surface phenomena of the capitalist economy to derive a theoretical explanation. The Marxist analysis of capitalism was theory-driven from the outset."

  4. "The economic policy of monetarism... is another example of a class struggle policy rather than a rational solution to the problems of capitalism."

  5. "But if monetarism was a 'moment of madness' for the economics profession, that madness had a purpose. It legitimized a new era of mass unemployment with the excuse that 'there was no alternative'."

  6. "Supply side economics is just right wing prejudice dressed up as economic theory."