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The life blood of capitalism

Marxist Analysis · 2026-05-13

Core Argument

The central thesis is that the long-term trajectory of US corporate profitability reveals a secular decline in the health of capitalism, despite periodic recoveries. Michael Roberts argues that the profit share of US output, while recovering from the 2001 recession, remains structurally below the levels of the post-war "golden age" of the 1960s. Each subsequent cyclical peak in profitability is lower than the last, indicating that capitalism's capacity to restore its own vital functions is weakening over time. The article claims that this deterioration is not a temporary malady but a systemic condition, and that the measures taken to reverse it — attacks on labour, wars, and economic destruction — are themselves symptoms of the underlying disease.

Theoretical Grounding

The analysis is rooted in Marx's law of the tendency of the rate of profit to fall, though Roberts deploys it cautiously. He does not mechanically assert the law as a predictive formula but uses it as an organising framework for interpreting empirical data. The article distinguishes between the Marxist concept of profit as surplus value — measured against total capital advanced (constant and variable capital) — and the official government measure of profit as a share of sales or GDP. Roberts acknowledges this limitation but argues that the official data still reveals meaningful trends.

The piece sits within the tradition of Marxist crisis theory that emphasises profitability as the key indicator of capitalist health, following the work of writers like Andrew Glyn and Robert Brenner. It rejects both neoclassical apologetics (the system works for all) and reformist optimism (the system can be managed into stability). The argument is also implicitly a critique of "long boom" theories that treat the post-war period as normal and the subsequent decades as anomalous — Roberts inverts this, treating the golden age as historically exceptional and the secular decline as the underlying reality.

Conjunctural Relevance

The article was written in September 2005, a moment when the US economy was experiencing a cyclical recovery from the 2001 recession. Official figures showed corporate profits at near-record levels as a share of GDP. Roberts cuts against the prevailing mood of triumphalism by placing these figures in a longer historical frame.

Key data points:

  • US corporate profits (after tax) reached approximately 8% of sales in 2005, up from a low of 4% in November 2001, but still below the 1997 peak of 9%.
  • Pre-tax profits reached nearly 12% in 2005, still below the 1997 peak of 13%, and far below the 15-20% range common in the 1960s.
  • Each cyclical peak since the 1960s has been lower than the last: 1978 (14%), 1989 (10%), 1997 (13%), 2005 (12%).
  • The 2001 recession, though "mild" in terms of output decline, saw profits slump to 6% of sales before tax.

Roberts connects this profitability crisis to the political and geopolitical strategies of US capitalism: the crushing of trade unions, the dismantling of the welfare state, the Vietnam War, the installation of Israel as a regional proxy, and the direct occupation of Iraq. These are not external disturbances to an otherwise healthy system but necessary responses to its internal weakening.

Where the Argument Continues

The article is an early statement of a theme that Roberts has developed extensively over the subsequent two decades. It leaves several questions open:

  • The relationship between profitability and investment: The article asserts that low profits reduce investment but does not explore the mechanisms by which fictitious capital and financialisation have allowed accumulation to continue despite falling profitability. This is taken up in later IDOM articles on the 2008 crash and the "Great Recession".
  • The global dimension: The article notes that the secular decline is mirrored in the UK, Europe, Japan, and Australia, but does not examine the differential impact on emerging economies or the role of China as a source of cheap labour and countervailing force. This becomes a central theme in Roberts' later work on the "law of value" in a globalised economy.
  • The next recession: The article predicts that "with the next recession, profitability will plunge to even lower depths." The 2008-09 global financial crisis confirmed this, and Roberts has since written extensively on the failure of post-2008 recovery to restore profitability to previous peaks.
  • The political implications: The article ends with a polemical flourish but does not develop a strategic perspective for the working class. This is addressed in other IDOM articles and in the broader theoretical work of the Revolutionary Communist International on the transition from capitalism to socialism.

Connections

  • Andrew Glyn, Capitalism Unleashed (2006): Glyn's empirical work on the profitability crisis in advanced economies is a key reference point for Roberts' analysis.
  • Robert Brenner, The Economics of Global Turbulence (1998): Brenner's account of the long downturn from the 1970s onwards provides the historical framework that Roberts adopts.
  • Marx, Capital Volume III, Part III: The law of the tendency of the rate of profit to fall and its counteracting factors are the theoretical foundation of the article.
  • Ernest Mandel, Late Capitalism (1972): Mandel's analysis of the long waves of capitalist development and the structural crisis of the 1970s anticipates Roberts' argument about secular decline.
  • Michael Roberts, The Long Depression (2016): This book extends the argument of the 2005 article through the 2008 crash and the subsequent period of stagnation.
  • IDOM articles on the 2008 crash and the "Great Recession": These develop the empirical and theoretical case first sketched in this article.

Key Quotes

  1. "Profits are the lifeblood of capitalism. If a capitalist investor or owner of a business cannot make a profit, he or she soon stops investing capital or employing workers to produce things or provide services."

  2. "The steady decline of the ability of capitalists to extract profits from their workforces is revealed even more clearly when we look at the profit figures before tax."

  3. "Whatever US corporations do: cut the workforce, employ casual and temporary labour, use the latest hi-tech equipment, relocate to cheaper places around the globe, try to protect their profits with tariffs and trade restrictions, it seems that they cannot restore the great days of the 1960s."

  4. "Marx's great economic law of the tendency of the rate of profit to decline is visible in these figures. Sure, there are periods when the use of new technology and the ability to weaken the ability of the workforce globally to obtain decent wages and conditions allow capitalists to restore somewhat their profitability."

  5. "The huge cost, not just in lives and livelihoods for the masses, but also in productive resources and profits made by capitalism, was necessary - for capitalism. It was needed in order to try and reverse or slow the inevitable decline in the economic health of the system."

  6. "If profits are the lifeblood of capitalism, then the blood of the US and the top capitalist nations keeps seeping away. They desperately suck harder on the labour power of the working-class globally to get more blood."