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Late Capitalism by Ernest Mandel

Robert L. Heilbroner & Edward J. Nell

To cite this article: Robert L. Heilbroner & Edward J. Nell (1977) Late Capitalism by Ernest
Mandel, Challenge, 20:5, 70-72, DOI: 10.1080/05775132.1977.11470370

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Download by: [University of Pennsylvania] Date: 10 May 2016, At: 19:17

 REVIEW
Late Capitalism
By Ernest Mandel. Translated from the German by loris De Bres.
Atlantic Highlands, N.J.: Humanities Press, Inc., 1976.618 pp. $23.50
Robert L. Heilbroner and Edward J. Nell
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Sartre once asserted. that Marxism
was "the necessary philosophy of our
times." Ernest Mandel's book can be
taken as a practical demonstration of
the truth"'-and the limits of the truth
-of that proposition. Vulnerable to
many technical, philosophic, and his-
torical criticisms, Late Capitalism
nonetheless succeeds in a project that
has regularly eluded the grasp of con-
ventional academic analysis. This is
to produce a study of contemporary
society in which economic, political,
and social elements interweave so
clos'ely that society appears, as in fact
it is, a seamless web, rather than a
Frankenstein monster sewn together
'from the "disciplines" of university
departments.
Mandel's achievement is surely
testimony to his unusual erudition,
already evident in his previous Marx-
ist Economic Theory (New York Re-
view, June 5, 1969). But the basic
credit belongs to the unifying coher-
ence that his Marxist perspective re-
veals. For Mandel begins with the
Marxist idea of a "mode of produc-
tion" as' constituting the essential
identifying elenient of a society. A
mode of production, which is Marx's.
own term, is not just an economic
mechanism. It is a relationship, at
once cohesive and explosive, between
the techniques and human capacities
70 C1IPJle~geINovembe.r-December 1977
I ,.' "~,.'. ,. ~'., !. , "
role in holding it together, so in the
idea of a mode of production, one
aspect of society will provide the cru-
cial unit of c0I?-ceptual disassembly.
In different societies this key element
may differ. In the modes of produc-
tion characteristic of ancient Greece
or Rome it was probably the institu-
tion of slavery; in tribal society per-
haps that of kinship; in feudal society
that of vassalage. For capitalism, the
element that unlocks the puzzle for
Marxists is the complicated process
by which labor is exploited to create
commodities that must be sold for
of a given society and its institutions a profit on a competitive market-
and beliefs. This way of conceiving place. *
of a socioeconomic formation (to use Mandel calls this complex process
a bit of current Marxist jargon) "the operation of the law af value"
forces us to take into account its . -a terminology sure to confuse the
technology, its organizational forms, conventional economist. By the "law
its class structure, its ideology, its of value" Mandel means the process
politics, and even its philosophy, of buying wage labor, turning it into
each part of which exerts its influ- commodities, selling the commodi-
ence on every othet part, and each ties for profit, and contending with
part of which, in turn, is shaped by the pressures of competition. It is
the impingement of other portions of this elaborate, concentrated process
the whole. which gives a specificity to capital-
Thus society is a Chinese puzzle, ism, and accordingly, it is this pro-
from which no piece can be extracted cess that enables Mandel to inquire
without dismantling the whole. Yet, whether Late Capitalism is a differ-
just as a Chinese puzzle has one piece ent mode of production-a different
which is the key to taking the puzzle socioeconomic formation-from that
apart although it plays no special analyzed by Marx in the 1860s.
*The word "exploitation" is a great sticking point for the comprehension of Marxism,
since it brings to mind the spectre of Blake's dark Satanic mills. It is not this form of
misery, which can be found in many kinds of societies, to which exploitation refers. It is
rather the assumption, peculiar to capitalism, that the owners of land and capital are
entitled to the same kind of reward for allowing "their" wealth to be used in the process of
prodUction as that to which labor is entitled. Capitalism does this not only by legitimizing
the rights of property owners toa portion of social output, but by disguising the role of
ownership in this sharing-out process. For land and capital, under capitalism, "earn" their
rewards, just as does labor, according to the measurable increase in output that can be
attributed to an acre of land, a machine, or a man-hour of work. The subversive secret of
Marxist analysis--one that wiII not be discovered in the pages of most conventional
textbooks-is that the earnings of capital and land are in fact snatched away from their
owners. If machines could strike and land could protest, they would certainly claim to
have been robbed. As the class that builds and operates that capital, and inhabits that
land, labor asserts its rights to society's product (however it may be divided up), and
puts forward its claim to having been exploited. .
ROBERT L. HEILBRONER and EDWARD J. NELL are Professors of Economics at the
New School for Social Research. .
 Mandel finds that it is not. The
rights of property are still valid and
indeed imperious. The wage system
continues the masked exploitation of
labor. Commodities-that is, objects
containing labor power that has been
mysteriously transmuted into prop-
erty claims-still dominate the eco-
nomic life of society. And the mysti-
fications themselves, the "fetishisms
of commodities" and "reifications of
social relations" of which Marx
spoke, still command our unthinking
assent, and thereby form the basis of
our dominant ideologies.
Thus late capitalism is still cap-
italism, and as such subject to the
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contradictory forces to which "the
law of value" gives rise. These "con-
tradictions" were the hallmark of
classical capitalism in Marx's day,
and in Mandel's eyes are still its cru-
cial weakness. Labor is paid as little
as possible to create room for prop-
erty's claims, but capitalism must
pay the price for this exploitation in
a tendency for mass buying power to
be insufficient. This drive for profits
leads firms to compete by substitut-
ing cheap machines for dear labor,
but the labor-displacing process nar-
rows the base of labor input from
which property must ultimately ex-
tract its claims. Private rationality
breeds public chaos. Capitalists as a
class have common social and politi-
cal interests; but as businessmen they
undermine one another.
And so Mandel claims that the
classic Marxian analysis, with its em-
phasis on the social and political
pressures that arise from the op-
eration of the law of value, is still
relevant. This does not mean that
changes have not occurred. Over and
above "normal" profits, corporations
today garner the superprofits of tech-
nological "rents" unknown in Marx's
time, at least until newcomers erode
their monopolistic advantages. Mod-
ern corporations, unlike the firms of
Marx's day, ca,n plan and manage
their affairs, as Galbraith has empha-
sized, albeit subject to the difficulties
of rational decision-making in an
unplanned, "irrational" setting. The
government today mitigates the de-
structiveness of the uncurbed busi-
ness cycle, although it can only ma-
neuver within the limits of a world
of competitive nation-states, recalci-
trant political interest groups, and in-
violable canons of property interest.
Late capitalism is therefore not so
vulnerable as early capitalism in
some respects; in others-such as
the relations between rich and poor
countries-perhaps more so. The
difficulties that it encounters are not
precisely the same as those of earlier
days because the balance and config-
uration of social forces has altered.
Yet, for all these differences, Man-
del's central point is that the pres-
ence of the law of value condemns
Late Capitalism, as it did earlier cap-
italism, to the consequences of its
profound inner contradictions; and
that Late Capitalism must continue
to suffer these consequences until
the law of value has been displaced
by some other central mechanism,
vaguely referred to by Mandel as
socialism.
Thus far we have merely indi-
cated Mandel's forceful reassertion
of the continuing validity of classical
Marxism. His own contribution is to
bring to Marxian economic analysis a
considerable advance in sophistica-
tion. Traditionally, Marxian econo-
mists have sought the key to capital-
ist movement in one dominant trend,
be it underconsumption, or the "an-
archy" of the market, or the pressure
of wages on profits, or the stresses
of imperialism. Mandel chooses in-
stead a multicausal approach which
focuses all these and still other ele-
ments on what he calls the "seismo-
graph of capitalist history"-the rate
of profit. Movements in the rate of
profit then become the resultant of
the contending forces within the sys-
tem, signaling whether the system is
in a period of expansiveness or con-
November-December 1977/Challenge
traction, but variations in the profit
rate do not yet explain or locate the
sources of capitalist buoyancy or
decline.
This multicausality deprives Man-
del's model of the sharp predictive
power of a simpler conception, but it
yields a richer explanation of the
past. In particular, his examination
of the dynamics behind profit rates
leads to an exposition of capital-
ist evolution as a rhythm of "long
waves," first proposed by the Russian
economist N. D. Kondratieff in the
1920s. According to the long wave
analysis, we find periods of faster-
than-average growth and higher-
than-normal profits for a series of
roughly twenty-five-year-Iong up-
swings, dating from 1193, 1848,
1894, and 1940, followed by periods
of approximately equal length, the
latest of these dating from 1967, in
which a prevailing undertow slows
down performance.
Each upswing and each down-
swing has its peculiar concatenation
of causal elements: the first industrial
revolution for the first upswing; the
expansion of the world market com-
bined with railroadization for the
second; the heyday of imperialist
expansion for the third; the "sec-
ond" technological revolution of the
1894-1913 period for the fourth;
the post-World-War-II reconstruc-
tion boom for the most recent. What-
ever the underlying causes, all the
booms mobilize the investment sec-
tor, creating superprofits in a group
of leading industries. Eventually cap-
ital from less-favored industries
forces its way into the high profit
areas, bringing profits back into line.
The once-favored industries then find
themselves overbuilt in terms of prof-
itability. A slump occurs in which
capital is "devalorized"-written
down to reduce debts and fixed costs,
A period of waiting occurs, until new
investment outlets appear, sufficient-
ly large to bring another long-term
propulsion that tilts the "normal"
71
 business cycle upwards.
From this secular pattern of rise
and faU, recurrent expansion and ex-
haustion, unsuccessful but continuing
working class pressure against prop-
. erty, emerge the main sociopolitical,
as well as the maiil economic, devel-
opme~ts of Late Capitalism. Infla-
tion arisesfron,t a PQlitical acquies-
cep.c~ in monetary policies necessary
to fores~all the greater evil of depres-
si<;m and to "guarantee" continued
growth. Automation appears as the
logical' consequence of the capitalist
process of extending labor-saving
n,tachinery to gain competitive prof-
its. Corporate internal planning fol-
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~ows on the attainment of the massive
size of the individual firms that sur-
vive the competitive workings of the
market. The extension of the appara-
tus of the State reflects efforts to miti-
gate the workings of the law of value
and to depoliticize the economic pro-
cess by planning .for the "public
good." An arms economy utilizes the
tension between capitalism and so-
cialism to stimulate private industry
with(ju~ suffering the effects of an in-
crease in saleable goods. Ideology
turns away from the naked defense
of property rights characteristic of
early capitalism, and dwells on the
technical and technological "ration-
ality" of an advanced industrial
system.
All these complex processes delay
afld redirect the fundamental contra-
dictions of the syst~m":':"its tendency
to overrun its own mass buying pow-
er, its !lelf-destructive planlessness,
its gradual attainment of a subversive
self-understa!1ding by the growth
of working class consciousness. But
eventually the contradictions become
too severe, the internal strains too
great, the imposition on the public's
credulity too great. The system fails;
another system, forged from the will
of the people, takes over.
There is much here that can be
quarreled with. A central difficulty
lies in an absence of any explanation
72 C!lal!enge/November-December 1977
for the twenty-five-year periodicity
of the underlying cycle of expansion
and contraction. Why are the twenty-
five fat years followed by twenty-five
lean ones? Why has each period of
retrenchment been followed by a
time of reinvigoration? The problem
of explaining periodicity has always
evaded exponents of Kondratieff's
long' swings, and Mandel has no ex-
planation to offer.
There are other problems. Mandel
argues that arms expenditures are re-
quired to maintain a sagging aggre-
gate demand for goqds. But arms
spending is financed by taxes that fall
mainly on workers and the consum-
ing pUblic. Aggregate demand will
therefore remain the same. Here
and elsewhere, Mandel tries toextri-
ca,te himself from analytIcal diffi-
culties with elaborate but uncon-
vincing arithmetic, following the old-
fashioned procedures of Marx. Many
reviewers of Mandel's book have
fastened on this cumbersome and
question~begging procedure and they
are quite right.
~till deeper problems can be enu-
merated. Political theorists will argue
over his account of the role of the
state. SoCiologists will dispute his
treatment of class. Philosophers will
note that a tutelary deity called the
Dialectic spIiles over his system
much as did the Invisible Hand over
that of Adam Smith. But merely to
list these problems is to give some
idea of the scope of the book, partic-
ularly when it is realized that these
topics are not merely "covered" but
inextricably woven into a single
fabric. Mandel takes as his starting
point that "no arbitrary separation
of the social or socio-:political sphere
frolli. the economic sphere can pro-
vide a satisfactory answer to the
question of the overall nature of Late
Capitalism." It is to his enormous
credit that he has produced a book
in which that seamless quality is re-
stored to social analysis. Let the
critics ask themselves what other
analysis of modern capitalism ap-
proaches this one in learning, imagi-
nation, boldne$S,an9,penetration.,It
is a book to be learned from, whether
or not swallowed whole. It is only
fair to add, however, that Mandel's
style is dreadfully Ponderous, and
that no concessions are made to the
uninitiated or merely casually inter-
ested reader.
There is, moreover, one great
weakness which must be placed in
the other pan of the scales. We tum
to Marxist analysis not only to probe
more deeply into the nature of our .
contemporary society, but also to
gain some sense of the direction of
events, the terminus toward which
history. is proceeding. Here Mandel
is of little use. There is no opera-
tional timetable in his roller coaster
theory of capitalist movement: we
do not know' which downswing will
be the last Therefore, we do not
know whether Late Capitalism will
not merely be followed by Later Cap-
italism. The arguments for the super-
cession of the capitalist mode of pro,.
duction by a socialist mode are wi$-
ful: the last words of the book read,
"the mass revolutionary movement
of the international working class is
now approaching." Mandel "woyld .,-
be hard pressed to demonstrate the
plausibility of those words to a skep-
ti~al audience. Worse yet, there are
elements in the dimly glimpsed future
that raise old misgivings about the
easy deformation of Marxist thought· .
into totalitarian patterns. Mandel
writes' (page 496): "Proletarian class
consciousness c~ only' be achieved
and exercized collectively, whereas
each worker [in bourgeois society] is
admitted to the ballot booth only as
an isolated and atomized individual."
The italics in that sentence are Man.,
del's. What possibilities for libera-
tions and imprisonments, for 'kib-
butzes and chain gangs, for moral
equivalents of war and warlike equiv-
alents of morality lie immanent in
those italics!