ECONOMICS OF NEOCAPITALISM
[The following article, reviewing an essay by Ernest Mandel published in Cuba, appeared in two parts in Revolucién, the daily Havana newspaper which was recently combined with Hoy in a new pube lication, Granma, The first part was published Sepbunb er 25, the second September 29, The author of the article is Rail Roa Kouri,]
The critics of capitalism -- and still more so the Marxists -cannot fail to note the high economic level it reached in the decade from 1954 to 1964, and particularly among the countries of Western Europe and Japan, Ernest Mandel, a well-known Belgian socialist, author of numerous essays and books on Marxist economics, analyzes the phenomenon in an essay entitled, 'La economfa del neo-capitalismo,"
The growth of the capitalist economy since the second world war, declares Mandel, cannot be explained solely on the basis of reconstruction activities, although these were an important base of the industrial boom in Western Europe, From the point of view of the history of “economic cycles," we are undergoing a new "Kondratiev," i.e., a long-term wave which includes various normal cycles.
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Today it appears -- contrary to what many economists assumed in the thirties and forties -- that after the long-range cycle of stagnation that began in 1913 and ended in 1939, world capitalism entered a new cycle of accelerated growth in 1940, which will probably last until the end of the sixties, according to Mandel,
On the other hand, one of the salient features of contemporary capitalism is the existence of a movement of technical innovations == generally known under the name of the "third industrial - revolution" -- which has a tendency to be permanent, something without precedent in the history of capitalism. Its origin is precisely in the armaments race.
Traditionally, a technological innovation does not immediately follow a technological invention; on the contrary, many inventions are not utilized until the complete exhaustion of the current technological processes and the investments in fixed capital which they involve. However, the armaments race has reduced the interval between the time of a technological invention and its industrial application. The acceleration in the use of technological innovations has likewise reduced the duration of the economic cycle from 810 years to 45 years, For Marx, the length of the economic cycle depended mainly on the time utilized to renew the investment in fixed capital. With the growing utilization of technological innovations, the time has been reduced to almost half,
In the opposite direction, if the rate of technological inno} vations should diminish, as a result of partial disarmament, for example, the "life of investments in fixed capital would tend to be prolonged and the economic cycles would slow down. According to Mandel, there are indications -- not fully confirmed -- that this has actually happened in the United States since the economic recession of 1960-61,
If the history of capitalism has always been dominated by the law of unequal development between countries, regions within the same country, and between industry and agriculture, today it is necessary to center attention on the unequal development of the various branches of industry in each country. In the case of the U.S. this appears in the weak growth of the traditional sectors (steel, coal, textiles) and the enormous expansion of such sectors as chemicals, electronics and electricity. It is precisely the demand generated by the indus= tries of a high rate of development that explains the high level of expansion in the majority of the imperialist countries,
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Neocapitalism, according to Ernest Mandel, is the new modus operandi of the capitalist system, the distinctive features of which flow from the organic necessities of capital itself, as well as the attempts made by the system to counteract the world development of the anticapitalist forees of the socialist camp and the national
freedom revolutions.
These can be summarized in four fundamental characteristics: (1) The growth of technological innovations and the shortening of the "life" of investments in fixed capital impose the need to carry out exact calculations on depreciation and obsolescence, as well as better planning of long-range costs, (2) The "third industrial revo« lution" produces ‘greater disparity between productive capacity and effective demand in the "market," thereby inducing a constant rise in sales costs which. reduces .surplus-value. (3) The need to prevent a crisis like that of 1929 has resulted in greater state interven= tion in the capitalist economy -- the state now guaranteeing the profits of private enterprises, directly or indirectly, through more or less disguised subsidies going so far as “nationalization of the losses. (4) The combination of these factors leads to the gradual oe eS sotion of "planning" (or, better, programming) in capitalist
economy, serving in a certain sense to "rationalize" the investment of capital,
Although the majority of these "yolans" contain considerable errors in forecasting and have not prevented the creation of excess capacity on a big scale, it would be futile, according to Mandel, to deny its usefulness to the big monopolies. If the successes of neo= capitalism appear brilliant, to judge by the results of the last decade, its internal contradictions == which are superimposed on the general contradictions of the capitalist mode of production == are already giving trouble.
In the first place, as neocapitalism generates a higher rate of growth, in such a way as to amortize fixed capital more rapidly, it also tends to reduce the industrial reserve army and to create conditions of full employment. Thus it destroys one of the basic mechanisms of the capitalist system, creating a growing contradic~ tion between the needs of neocapitalist programming and the pressure of the working class for constant wage increases.
To resolve this contradiction, neocapitalism has practiced two kinds of economic and political solutions: (a) the massive application of automation in order to reconstitute the industrial reserve army, and (b) the imposition of restrictions on the working class, such as the suppressior#*of the right to strike (Taft-Hartley Act in ‘the U.S.3 antistrike laws in France; fines, etc.).
*The Cuban author makes a theoretical mistake here, A rise in sales costs does not reduce the amount of surplus-value, but only the amount of industrial profits, -- Editor,
**rhis again is a mistake by the Cuban author. The correct term should be "limitation of the right to strike," -- Editor.
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This policy, declares Mandel, despite its favorable shorterun effects, tends to be self=defeating for the system.
A massive increase in fixed equipment, financed by means of a considerable increase in profits, cannot help but result in an extraordinary growth in the productive capacity of society, includ ing consumer goods, which, in the long-run, comes into conflict with a reduction in buying power due to the stagnation in wage levels and jobs. . ;
These contradictions indicate, in addition, that the present rate of capitalist growth cannot be kept up after the present decade,
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