Socialist Worker

Unravelling Capitalism: A Return to Marx

Joseph Choonara talked to Socialist Worker about his new book Unravelling Capitalism and the renewed interest in Marxist economic ideas

Issue No. 2152

Cover of Unravelling Capitalism

Cover of Unravelling Capitalism

‘Since the first signs of the current crisis began to emerge in 2007 there has been growing interest in Karl Marx’s greatest work, Capital, especially in universities.

Many people are struggling to get to grips with how the capitalist system functions and how it malfunctions.

The reason for the sudden swell in interest is clear – world markets are going badly wrong and mainstream economists cannot explain what is happening.

This comes on top of a longer-term revival of Marxism which stretches back to the emergence of the anti-capitalist movement in the late 1990s.

There is a large audience of people who are interested in something that goes beyond the ABC of Marx’s ideas and who already feel that mainstream economics is inadequate.

People want something that explains some of the more advanced concepts that Marx develops in the three volumes of Capital, including subjects that are particularly relevant at the moment such as the analysis of finance and economic crisis.

The first section of my book explains the labour theory of value, which is Marx’s starting point. He argues that commodities have value, not because of the genius of the entrepreneur, but because they are produced by labour. Already this is a revolutionary idea.

But Marx goes further by showing that labour power itself becomes a special type of commodity under capitalism.

This labour power creates new value, but when capitalists purchase labour power they only have to hand over enough value, in the form of the wage, to the worker to get them back in work the next day.

Surplus value is the name given to the gap between the new value workers create and the amount they receive.

The existence of surplus value, the source of profit, shows that there is exploitation taking place.

This is one of the fundamental points that Marx makes in the first volume of Capital – that profit is the result of exploiting “living labour”, workers involved in capitalist enterprises.


The second part of the book is about the dynamic of the system. Capitalists don’t just exploit workers. They are also locked into competition with each other.

They compete by taking the surplus value they pump out of workers and investing in “dead labour” – machinery and equipment produced by workers in the past, as opposed to the living labour of the workers they employ. Marx called this process accumulation.

The printing press my book was produced on probably cost about

£2 million and could be operated by a single printer. Thirty years ago it would have been produced on a press costing £250,000, operated by three or four workers.

This type of accumulation has two effects. On the one hand, the new printing press is vastly more productive – it can produce books at a much faster rate.

So the value of each book produced on the press falls because there is less labour time embodied in it. Capitalists who invest like this in new machinery can compete by lowering their prices.

That’s why the drive to exploit and accumulate is endless – any capitalist who refused to exploit workers sufficiently and accumulate would soon be left behind in the battle of competition. This makes capitalism the most dynamic system.

On the other hand, accumulation also makes capitalism a chaotic, destructive and crisis-prone system.

For instance, as accumulation proceeds capitalists now find they are investing in ever-greater amounts of dead labour, without a similar expansion of living labour.

That means their investment rises faster than their profits. In other words, the return on their investment, or the rate of profit, tends to fall.

That’s a problem because the rate of profit in turn governs how fast accumulation can take place.

People often say, “That’s all very well, but Marx was writing a century and a half ago, surely the system has changed.” And they’re right.

Marxism isn’t a fixed dogma that we can just endlessly repeat. We have to understand how capitalism changes as it ages.

In the third section of my book I briefly explore the history of the system. For instance, Marx points out that as capitalism ages, enterprises tend to get bigger as they accumulate and merge with each other in each wave of crisis.

That changes the nature of the system. Marx sees crisis as a process of creative destruction that can, for a while, restore capitalism to some kind of health.

But as the enterprises that make up the system grow, the prospect of the failure of giant multinationals poses too great a danger to the system.

You only have to think of the chaos caused by the collapse of Lehman Brothers last year, or the debate in the US Congress about the potential collapse of Ford, Chrysler or General Motors.

States tend to intervene to stop these firms going under. But this means that the problems associated with the system can continue to build up over time.

In other ways the system has changed less dramatically that people sometimes suggest. Most workers in Britain are employed by enterprises with more than 250 employees and in the US by those with more than 500 employees.

These figures have been rising in recent years. Some of these will still be in manufacturing.

The workforce in some industries has been reduced, sometimes because the work has shifted elsewhere, but more generally because automation means that fewer workers are required.

One of the insanities of capitalism is that introducing new machinery tends to mean that a group of workers are cast onto the scrapheap rather than making people’s lives easier by reducing the time they have to work.

But the smaller number workers who remain in a particular industry can end up with massive power in their hands.

For instance a 2008 strike by Boeing machinists concentrated at one plant cost the multinational $100 million a day and impacted on companies as far away as France and Japan.

There has also been a growth of the workforce in other sectors. For instance, there are more service workers in Britain. But many of these are producing commodities for the market and profits for the bosses.

Marx didn’t see the distinction between manufacturing and services as particularly fundamental. It doesn’t matter if you’re assembling cars for Ford or assembling burgers for Burger King.

Even those who don’t directly generate profit – such as transport, health or education workers in the public sector – are today essential to the system as a whole.

That means that they have enormous power, as we see each time the tube workers in London go on strike.


Marx’s ideas are key to understanding the current economic meltdown. Mainstream economists concentrate on the financial aspects of the crisis.

Marx was interested in, and wrote extensively on, finance but he saw it as connected to wider economic processes in what is known as the “real economy”.

Starting from a Marxist perspective would mean looking at the long-term dynamic of the system.

For three decades after the war the economy boomed, but in 1973 there was a return to recession. Profits plummeted and while there have been periods of growth and even boom, profits never returned to the heights of the post-war period.

Capitalists launched an offensive against workers, squeezing them harder and holding down their wages.

At the same time capitalists and states looked for other places to invest, outside the rather unprofitable “real economy”.

This meant lending money to workers in countries such as the US and Britain, allowing them to consume even though their wages were being kept low. And it meant creating a series of speculative bubbles that gave the impression of profitability.

That’s why the crisis is systemic – it reflects wider, unresolved problems in the economy, not just a problem with the banking system or stock markets.

Marxism gives the broad trajectory of the system but it can’t predict every twist and turn. The current crisis is extremely serious and the potential consequences are enormous.

But there can be some recovery, even if only temporary, like there was in the US from 1933 to 1937.

And there can be stagnation rather than collapse, as happened in Japan for much of the 1990s.

It’s always tempting to make detailed, usually dire, predictions or to get sucked into the superficial world of the financial pages which vacillate wildly between blind optimism and panic.

The important thing is to recognise that the crisis creates fractures at the top of society, creating space for struggle at the bottom to break through.

Socialists have to seize on instances of workers fighting back and build and generalise these examples. At the same time we have to spell out the insanity of this system and the need for an alternative.’

Unravelling Capitalism: A Guide to Marxist Political Economy, by Joseph Choonara, £7.99. Available from Bookmarks, the socialist bookshop. Call 020 7637 1848 or go to »

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Tue 19 May 2009, 19:01 BST
Issue No. 2152
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