They think its all over - is it

Marxist Analysis · 2026-05-13

Core Argument¶

The article's central thesis is that the apparent economic recovery in the US and world capitalist economy in 2001–2002 is a mirage. Michael Roberts argues that the "mildest recession ever" was in fact a deeply abnormal downturn whose peculiar features — rising consumer spending, growing managerial employment, and continued productivity growth — masked rather than resolved the underlying crisis. The recovery, such as it is, rests on unsustainable foundations: collapsing profits, record corporate debt, and consumer spending fuelled by borrowing rather than genuine accumulation. The central claim is that without a restoration of profitability, there can be no real investment-led recovery, and the economy faces the prospect of a second downturn — a "double-dip" — that will expose the false optimism of the capitalist media and policymakers.

Theoretical Grounding¶

The analysis is grounded in the Marxist theory of crisis, specifically the centrality of the profit rate to the dynamics of capitalist accumulation. Roberts draws on the classical Marxist tradition — Marx's own analysis of the tendency of the rate of profit to fall and the counteracting tendencies — rather than on Keynesian or underconsumptionist frameworks. The argument is that profits are not merely one indicator among many but the decisive variable: without a sufficient rate of profit, capitalists will not invest, and without investment, there can be no sustained recovery.

The article also deploys a Marxist critique of the "New Economy" ideology that dominated the late 1990s boom. The claim that information technology and new management practices had permanently raised productivity and abolished the business cycle is exposed as ideological: rising productivity did not translate into higher profits because it was absorbed by intensified competition and falling prices. This is a concrete application of Marx's insight that competition among capitals drives down the rate of profit, even as individual capitalists seek to raise it through innovation.

The analysis sits within the Marxist tradition that rejects both reformist optimism about managed capitalism and catastrophist expectations of imminent collapse. Roberts is careful to distinguish between a genuine structural crisis and a temporary downturn, arguing that the peculiar features of the 2001 recession reflect the specific conditions of the late 1990s bubble — overaccumulation of capital, massive fictitious capital formation, and unprecedented corporate indebtedness — rather than any fundamental change in the laws of motion of capitalism.

Conjunctural Relevance¶

The article was written in July 2005, looking back at the 2001 recession and the subsequent "recovery." The specific conjunctural features Roberts identifies are:

The 2001 recession's peculiar character: GDP contracted only slightly (0.4% in Q4 2001), consumer spending rose at a 6% annual rate during the downturn, and managerial employment actually increased by 2.9%. This was unlike any previous post-war recession.
The collapse of profitability: Corporate profits fell for five consecutive quarters worldwide, the largest drop in three decades. Profit margins were at their lowest since the 1930s Depression.
The debt overhang: US corporate debt reached $4.93 trillion by September 2001. From 1995–2000, for every dollar added to net fixed investment, $7.70 was added to indebtedness. The corporate sector had not "cleaned up" its balance sheet as in previous recessions.
The productivity paradox: Productivity continued rising at over 5% annually during the recession — normally it falls — but this did not translate into higher profits because it was competed away through falling prices (wholesale prices falling at 2.6% annually, consumer prices rising at just 0.1%).
Consumer debt: Consumers were spending "as though we were at the top of a boom" but were "more deeply in debt than ever before," making further consumption-led growth unsustainable.

Roberts explicitly warns of a "double-dip" recession, noting that in every post-war downturn (1957, 1960, 1969–70, 1973–74, 1980–82), initial GDP contraction was followed by a brief recovery and then a second fall. The article was prescient: the 2001 recession was followed by a weak, jobless recovery, and the underlying contradictions — particularly the housing bubble that replaced the tech bubble as the driver of fictitious capital — would culminate in the 2008 global financial crisis.

Where the Argument Continues¶

This article is an early statement of themes that Roberts would develop extensively in subsequent work. The argument continues in:

Roberts' later IDOM articles on the 2008 crisis, where the same analytical framework — collapsing profitability, debt saturation, and the limits of fictitious capital — is applied to the much deeper crash that followed the housing bubble.
Roberts' book The Great Recession: A Marxist View (2009), which extends the analysis of the 2001–2002 period into a full account of the 2008 crisis, showing how the failure to restore profitability after the 2001 recession led to the even更大 crash.
The ongoing debate within Marxist economics about the "law of the tendency of the rate of profit to fall" as the primary explanation for capitalist crises. Roberts has continued to defend this position against underconsumptionist and Keynesian alternatives in numerous articles and in his later book The Long Depression (2016).
Against the Stream episodes where Roberts discusses the relationship between the 2001 recession, the 2008 crash, and the subsequent "long depression" of slow growth and low profitability that has characterised the world economy since.

Connections¶

This article should be read alongside:

Marx's Capital, Volume III, Part III — the theoretical foundation for the analysis of the profit rate and crisis.
Roberts' later article "The Great Recession: A Marxist View" (2009) — which shows how the contradictions identified in 2005 played out in the 2008 crash.
The IDOM article "The US Economy: Still Not Out of the Woods" (2003) — which develops the argument about the weakness of the recovery in more detail.
Ernest Mandel's Late Capitalism — for the broader theoretical framework of long waves and the relationship between technological change and profitability.
Andrew Kliman's The Failure of Capitalist Production — for a rigorous empirical defence of the law of the tendency of the rate of profit to fall as the explanation for the 2008 crisis, which builds on the same analytical tradition as Roberts' work.

Key Quotes¶

"Without profits, there will be no investment and no recovery."
"In the fourth quarter of last year, profits fell another 8% and profit margins (the difference between the costs of production for each unit and the sale price) are at their lowest levels since the Depression of the 1930s. And that's key."
"Huge investment in new technology was accompanied by no rise in prices. Profits disappeared with inflation. US prices are now hardly rising. In the last three months, the rise has been just 0.1%!"
"From 1995-2000 US business net fixed capital investment edged up $321 billion but indebtedness ballooned by $2,472 billion. For each dollar added to net new fixed investment, there were 7.7 dollars added to indebtedness."
"With consumers already spending as though we were at the top of a boom, and more deeply in debt than ever before, capitalists can hardly expect Americans to do more spending."
"So we may go from the recession that never was, to the recovery that never came."