Book Review: Capital,Exploitation and Economic Crisis

Capital, Exploitation and Economic Crisis is an updated and rewritten version of John Weeks’s original Capital and Exploitation (1981). The current version presents the main upshots of Marx’s political economy—the theory of value, exploitation, money, competition, circulation, accumulation, and crisis—with a specific focus on building toward an analysis of the current crisis. Weeks says that the differences between the new and old versions of the book “are on every page” (Weeks 2010: xv); there is a new chapter on the circuit of capital, new appendices to many of the chapters, an expanded discussion of money and credit, and a recently added final chapter on the crisis of the late 2000s. Weeks’s current edition contributes to the analyses of the crisis of the late 2000s, particularly those of a Marxist leaning, ¹ and the literature dealing with financialization. ² Additionally, it also fits within the broader literature on Marxian value theory and political economy.

The first three chapters provide an exposition of Marx’s theory of value that is not the standard presentation. Chapter one begins by presenting Engels’s discussion ³ of Marx’s law of value in order to set up the counterfactual that value cannot be explained by beginning with exchange value. Chapter two builds on chapter one to develop value as a social relation, the concept of abstract labor, and Marx’s law of value as an underlying regulator of capitalism. Chapter three presents Marx’s theory of exploitation and covers the tendency toward equalization of the general rate of profit, but does not give much attention to the transformation problem and the associated literature. Chapter four presents Marx’s circuit of capital and the important nuances of circulation obfuscating real phenomena of capitalism, while contrasting Marx’s analysis with Keynesian aggregate demand analysis. These first four chapters make the book’s intended audience unclear. It is difficult to discern whether it is meant for newcomers to Marx’s work, or those already steeped in the literature. Beginning the value theory portion of the book with Engels’s discussion of Marx’s law of value could be confusing to the uninitiated reader.

Chapters five and six extend the value theory discussion of the first three chapters to include Marx’s theory of money, specifically commodity money. Weeks develops Marx’s theory of money as a necessary component of the theory of value, and gold is asserted to be the general equivalent (Weeks 2010: 65). Additionally, Weeks asserts that gold serves as the commodity basis of money, and the general equivalent, even in the era of state-issued fiat money (Weeks 2010: 66). Furthermore, he asserts that an understanding of commodity money is necessary to understand financial crises (Weeks 2010: 71). One question left open by this presentation is through what social process(es) does gold remain the general equivalent when states no longer honor convertibility into gold, and any rush to gold from fiat money is inevitably subject to market phenomena? Weeks implies that the state issuing of fiat money with no explicit guarantee of some rate of conversion to gold does not mean that gold is no longer the general equivalent. A detailed discussion of how gold remains money in the face of fiat money, and how this treatment of money stands in relation to those stemming from Rubin (1990) and the Duménil-Foley interpretation ⁴ of Marx, would be an interesting addition to the discussion of Marx’s theory of money, but this presentation leaves these questions open.

Chapter seven extends the analysis of money to develop the Marxist theory of credit and financial capital. The presentation and development of Marx’s theory of credit provides a clear breakdown of what can be a challenging portion of Capital. The exposition of credit as divorcing value (and exchange) from its material base, the formation of finance capital as a claim on surplus value that is independent of industrial capital, and the eventual tensions in these developments that lead to financial crisis (as the redistribution of surplus value is prioritized over its creation) provide a cogent account of the foundation upon which Marxist investigations into finance rest. Additionally, Weeks’s claim that all crises are financial (Weeks 2010: 87) adds a wrinkle to the discussion of Marxist theories of crisis. Marx discussed a handful of reasons for crisis (overaccumulation, the falling rate of profit, disproportionality, and financial instability), and the presentation in this book begs the question: can these reasons for crisis in Marx all be traced to finance? Weeks implies that even overaccumulation or falling rate of profit explanations of crisis can be traced to finance, or, at the least, that the channel for their realization is finance.

Chapters eight and nine present Marx’s theory of competition in contrast to neoclassical treatments, as well as fixed capital and technical change. Chapter ten then presents the story of accumulation and of the inevitability of crisis. In Weeks’s presentation, crisis is inevitable because the extension of credit and its inherent creation of instability entail that, at some point, the demand for the money commodity will outstrip the demand for commodities (Weeks 2010: 136), thus causing a crisis. The devaluation of capital then becomes necessary to restore the profit rate and accumulation once again. This theory of crisis is then used in chapter eleven to analyze the crisis of the late 2000s as an episode of financial collapse that strangled the production of surplus value to the point of wider economic turmoil. Wrapping up this chapter is a discussion of ways to save capitalism from its self-inflicted crises. Four suggestions are proposed: (1) nationalizing the financial system; (2) “purposeful macroeconomic policy” (Weeks 2010: 151), including fixed exchange rates and strict capital controls; (3) diligent regulation of labor markets; and (4) protection of workers’ right to organize. Weeks believes that the combination of these policies could lead to “capitalism without severe crises” (Weeks 2010: 151). The aim of these four policies is to harness the tensions in capitalism that lead to crisis, particularly those tensions between commodity circulation, credit, and money that arise in the sphere of finance. The discussion of these suggestions fits into the discourse regarding policy responses to the most recent crisis, but some readers may wonder why there is no discussion of possibilities for ending the social relations of capitalism, considering this is a strong theme in Marxist literature. A discussion of this kind could follow from Weeks’s four policy suggestions.

A benefit of state control of the financial sector presented by Weeks is the ability to direct available capital to productive investments. State management of the financial sector amounts to state control over a large portion (potentially almost all) of the surplus value produced in the economy. This situation provides a platform on which a discussion of more socialized methods of managing the reinvestment of surplus value could take place. Thus, there is the potential to address questions of socialism and ending the class relations of capitalism in Weeks’s suggestions, but they are not explicitly addressed. Additionally, the question of how to eliminate exploitation remains open. The other three policy suggestions are equally intriguing and present their own avenues for future discussion and extension.

Capital, Exploitation and Economic Crisis provides a comprehensive overview of Marx’s Capital and achieves this in a manageable number of pages. A shortcoming of the book is that the intended audience can be unclear at times. On the one hand Weeks’s reconstruction of Marx’s theories throughout the book is often done in a way that would provide clarity for a new reader of Capital who is having difficulty with Marx’s original presentation. The exception to this would be chapter one beginning with Engels’s discussion of the law of value in order to develop the impossibility of understanding the nature of value through exchange value alone. Additionally, there are frequent references to Keynes and critiques of neoclassical economics throughout the book. Such references may not be fully appreciated by readers who are unfamiliar with Keynes, or Keynesian and Marxist critiques of neoclassical economics. Thus, at certain points it seems as though the book is geared toward newcomers to Marx’s work, and at other points it seems as though it is geared to those who are actively engaged in debates concerning Marxian political economy, as well as Marxist and Keynesian critiques of neoclassical economics. Readers who would find the book most interesting are somewhere in between. The book provides a good way for those who are partial to the critiques of neoclassical economics from Keynesian and Marxist schools of thought to deepen their understanding of Marx and how his work fits into the larger body of left-wing, non-mainstream economics.