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About NYU Press A publisher of original scholarship since its founding in 1916, New York University Press Produces more than 100 new books each year, with a backlist of 3,000 titles in print Working across the humanities and social sciences, NYU Press has award-winning lists in sociology, law, cultural and American studies, religion, American history, anthropology, politics, criminology, media and communication, literary studies, and psychology The Theory of Monopoly Capitalism The Theory of MONOPOLY CAPITALISM An Elaboration of Marxian Political Economy NEW EDITION John Bellamy Foster Copyright © 2014 by John Bellamy Foster All Rights Reserved First published by Monthly Review Press 1986 Foster, John Bellamy The theory of monopoly capitalism : an elaboration of Marxian political economy / John Bellamy Foster — New Edition pages cm ISBN 978-1-58367-441-3 (paperback) — ISBN 978-1-58367-442-0 (cloth) Capitalism Marxian economics I Title HB501.F66 2014 330.12’2—dc23 2014011332 Monthly Review Press 146 West 29th Street, Suite 6W New York, New York 10001 www.monthlyreview.org 54321 Contents Preface to the New Edition Preface to the First Edition Introduction to the New Edition The Monopoly Capital Debate The Economic Surplus Concept Free Competition and Monopoly Capital Accumulation and Crisis The Issue of Excess Capacity The State of the Economy Imperialism and the Political Economy of Growth Some Notes on Socialist Construction and Postrevolutionary Society Appendix: The Early Introduction Notes Index Preface to the New Edition The publication of a new edition of The Theory of Monopoly Capitalism thirty years after it made its first appearance as a doctoral dissertation, and twenty-eight years after its expansion into a book, is testimony both to the power of the tradition of political-economic thought that it sought to elaborate and to the deepening stagnation of the capitalist economy to which that tradition owes its continuing relevance In 2004 John Kenneth Galbraith critically observed in The Economics of Innocent Fraud that “the phrase ‘monopoly capitalism,” once in common use, has been dropped from the academic and political lexicon.”1 Today concerns regarding monopoly capital have reemerged, along with stagnation, financial instability, the reserve army of the unemployed, imperialism, class struggle, the fiscal crisis of the state, economic/ecological waste, and the future of both capitalism and socialism Such phenomena are all regularly addressed in both mainstream and radical outlets in response to the undeniable structural crisis of our age The result has been growing interest in the theory of monopoly capitalism, and in the debates that it engendered within Marxian theory in the 1970s and 1980s, as discussed in this book Nevertheless, theory in social science is historically specific The last three decades have seen massive economic, geopolitical, and environmental changes Monopoly capital has evolved, in its more advanced phase, into global monopoly-finance capital This new edition of The Theory of Monopoly Capitalism therefore includes an extensive “Introduction to the New Edition” on the changes in history—and theory—that have taken place over the last thirty years The intention is to bring the argument up to date at least in outline form, and to point to analyses that succeeded this one However, aside from a few corrections in the original text and the addition of this new preface and the lengthy new introduction the book remains in its essentials unaltered In this respect I made a conscious decision to leave The Theory of Monopoly Capitalism as it came into the world, with all its limitations—but also added historical meaning—associated with the specific time and conditions under which it was written In this edition I would like to underscore my continuing debt to my current colleagues at Monthly Review Foundation: Scott Borchert, Brett Clark, Susie Day, Hannah Holleman, R Jamil Jonna, Fred Magdoff, John Mage (who inspired me to prepare this new edition), Martin Paddio, John Simon, Spencer Sunshine, and Michael Yates I would also like to thank Robert W McChesney who has shared in these ideas since the 1970s My father, William E Foster, taught me much of what I know about the socialist view of the world at an early age and continues to teach me even today To Carrie Ann Naumoff I owe all that is most important: written on every page —Eugene, Oregon July 20, 2013 Preface to the First Edition This book is a revised and expanded version of my doctoral dissertation, defended at York University in Toronto in October 1984 Although its main concern is with the work of Paul Baran and Paul M Sweezy, this is mainly a vehicle for examining an entire tradition of thought, loosely associated with the magazine Monthly Review, to which numerous theorists—some of no less importance—have contributed In this respect, Baran and Sweezy belong to what might be referred to—after Gramsci, though not precisely in his way—as a “collective intellectual.” I would like to thank Gabriel Kolko, Paul M Sweezy, Harry Magdoff, Henryk Flakierski, Robert Albritton, Leo Panitch, and Susan Lowes for help related to the writing of this study I have also benefited from correspondence on issues discussed here with Henryk Szlajfer, Jacob Morris, Howard Sherman, Lynn Turgeon, Victor Lippit, and Michael Lebowitz Bob McChesney and Len McComb provided the initial inspiration for this line of research Cathy Gage, Griff Cunningham, David Lumsden, Brigitte Maheux, and Laura Tamkin helped provide the necessary motivation Lastly, I would like to indicate my debt over the years to Kara Baxter, for her forbearance and much else besides —Eugene, Oregon January 1986 Introduction to the New Edition The present-day world can only be described to present-day people if it is described as capable of transformation — Bertolt Brecht1 The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy was initially written thirty years ago as my doctoral dissertation at York University in Toronto It was expanded into a larger book form with three additional chapters (on the state, imperialism, and socialist construction) and published by Monthly Review Press two years later.2 The analysis of both the dissertation and the book focused primarily on the work of Paul Baran and Paul Sweezy, and particularly on the debate that had grown up around their book, Monopoly Capital: An Essay on the American Economic and Social Order (1966).3 In this respect The Theory of Monopoly Capitalism was specifically designed, as its subtitle indicated, as an “elaboration” of their underlying theoretical perspective and its wider implications My original motives for the analysis were twofold: (1) to provide a more thoroughgoing explanation of the economic surplus concept and the theory of accumulation to which it was related, and (2) to correct certain misconceptions of Baran and Sweezy’s analysis that had arisen as a result of the “back to Marx” intellectual movement of the 1970s—and that had led to various traditionalist or “fundamentalist” Marxian criticisms of their work The Theory of Monopoly Capitalism was an organic product of my own formative intellectual development For me the late 1960s and early ‘70s were dominated by opposition to U.S imperialism, particularly the Vietnam War and the U.S.-backed coup in Chile, and by the economic storms of this period that culminated in the crisis of 1974-1975 I first read Monopoly Capital in 1974 when I was studying economics at the Evergreen State College in Olympia, Washington, and like other radical students that I was associated with at the time (most notably Robert McChesney) the immediate effect of encountering Baran and Sweezy’s analysis was profound, and, as it turned out, long-lasting No other work was so influential among left political economists in the United States at that time I found the historical depth and breadth of Monopoly Capital astounding We read Monopoly Capital back to back with our neoclassical economics texts, but also alongside other works in Marxian political economy such as Ernest Mandel’s Marxist Economic Theory; E K Hunt and Howard J Sherman’s Economics: Mainstream and Radical Views; Sherman’s Radical Political Economy; Andre Gunder Frank’s Capitalism and Underdevelopment in Latin America; Harry Magdoff’s The Age of Imperialism; Sweezy’s The Theory of Capitalist Development; James O’Connor’s The Fiscal Crisis of the State; and Harry Braverman’s Labor and Monopoly Capital.4 But it was Monopoly Capital that constituted both for myself and for those with whom I was most closely associated the essence of the Marxian political-economic view in the early to mid-1970s One small book that we read in our classwork at the time, Assar Lindbeck’s influential The Political Economy of the New Left, engaged in a polemic against the radical economics that had arisen in the United States associated with the founding in 1968 of the Union of Radical Political Economics (URPE) and centering its criticism on Monopoly Capital.5 My fellow students and I traveled to an URPE conference in 1975 to hear some of the new developments in radical political economy first hand Later, as a graduate student specializing in political-economic studies at York University in Toronto in the late 1970s and early ’80s, I was to study Marx’s Capital much more intensively than I had previously and was attracted for a short time to the more fundamentalist analyses of thinkers like Ben Fine, Laurence Harris, David Yaffe, and Paul Mattick.6 All of these writers had criticized Baran and Sweezy’s Monopoly Capital for its rejection of the significance under monopoly capitalism of Marx’s law of the tendency of the rate of profit to fall The falling rate of profit theory had not occupied a central place in Marxian political economy prior to that time, but in the 1970s it was increasingly adopted by fundamentalist Marxists as the final word in economic crisis theory at all stages of capitalist development.7 After an attempt to apply this theory to present-day economic reality in a paper I wrote at the time I decided that there were a host of theoretical, empirical, and historical problems that made the analysis largely inapplicable to the problems of late twentiethcentury monopoly capitalism Although Marx’s critique of political economy remains the necessary starting point of all thoroughgoing analyses of capitalism, a realistic treatment of the twentieth-century economy required the additional assessment of conditions specific to monopoly capitalism, without which there could be no analysis of “the present as history.”8 It was then that the historian Gabriel Kolko, with whom I was studying U.S political-economic history, introduced me to the debates that were taking place on excess capacity statistics in the United States—relating this to Josef Steindl’s Maturity and Stagnation in American Capitalism, a new edition of which had just been published by Monthly Review Press.9 I discovered in Steindl’s work, and that of Michal Kalecki dating back to the 1930s, the real basis of much of Baran and Sweezy’s argument in Monopoly Capital—and with that a powerful tradition of Marxian political economy, rooted in Marx but connected to current monopoly-capitalist conditions, and to what could be referred to as an “overaccumulation” theory of crisis.10 I wrote a hundred-page manuscript for my course with Kolko entitled, “The United States and Monopoly Capital: The Issue of Excess Capacity,” which I sent to Sweezy He responded enthusiastically and I soon became a regular contributor to Monthly Review, then edited by Magdoff and Sweezy—beginning with “Is Monopoly Capitalism an Illusion?” in 1981 I was eventually to join Sweezy, Magdoff, and McChesney as an editor of Monthly Review in 2000—a position that I continue to occupy today.11 Baran and Sweezy had made their most original contributions in Monopoly Capital in their introduction of the concept of economic surplus The concept was rooted in the labor theory of value and in Marx’s concept of surplus value But it was also intended to extend the analysis, making it easier to address the questions of waste in monopoly capitalism.12 It was this topic, inspired in part by the work of the Polish political economist Henryk Szlajfer with whom I edited The Faltering Economy: The Problem of Accumulation Under Monopoly Capitalism in 1984, that was to become the central focus of my work in the early 1980s, leading to The Theory of Monopoly Capitalism.13 Other developments in Marxian political economy were occurring at the same time One of these was the growing fundamentalist criticism of the concept of monopoly capitalism—which had long been a central category in Marxian theory, dating back to the work of thinkers such as Rudolf Hilferding, Rosa Luxemburg, and VI Lenin, and prefigured by Marx’s own analysis of the concentration and centralization of capital Increasingly traditionalist Marxists in the early 1980s argued that the notion of monopoly capitalism had no basis in Marx, and that there had been no lessening of competition—even with respect to price competition, which was presented as an on “necessity of imperialism,” 189 on Soviet model of development, 199 Malthus, Thomas, 25, 75, 218 Mandel, Ernest, 18, 26 Marginal costs, rising, pure competition and, 54 Market concentration: and Marx’s theory of competition, 70 as measure of monopoly power, 70–71 Market perfection, pure competition characterized by conditions of, 53 Market research expenses, 95 Marshall, Alfred, 53 Marx, Karl, 75 accumulation theory, monopoly capitalism and, 60 on bourgeois society, 219 on capitalist production and consumption, 76 on circulation expenses, 37 on competition, 55–60 conception of class, 168–69 and dependency theory, 189–92 on differences between various economic forms of society, 214–15 expectation of socialism, monopoly capitalism and, 61–62 on items comprising surplus value, 16–17 on market concentration, 70 on monopoly price, 62–63 reasons for lack of monopoly stage theory, 69 reproduction schemes of, 181, 202–10 on role of competition in laws of capital, 52 and specifically capitalist use values, 39 theory of value and theory of concentration, 72 on underconsumption, 19, 86–88 on unproductive expenditures, 94–95 on unproductive labor, 32–33, 97 use of economic surplus category by, 27–28, 37 See also Capital (Marx); Marxist economists; and entries beginning with “Marxian” and “Marxism” Marx and Keynes (Mattick), 12 Marxian analysis of capitalism, and assumption of competitive economy, 51 Marxian crisis theory, underconsumption in, 75–83 “Marxian Theory of Crisis, Capital, and the State, The” (Yaffe), 12 Marxian value theory See Labor theory of value Marxism: on competitiveness, 18–19 criticisms of Western-centered, 219–20 historical changes and, 45–50 and perception of capitalism as transitory system, 47 See also Marxist economics “Marxism and Revolution 100 Years After Marx” (Sweezy), 219 Marxist economics: and criticisms of dependency theory, 160–61, 189–92 postrevolutionary societies and, 23 Mattick, Paul, 12, 18, 24, 25, 26, 46, 69 Maturity and Stagnation in American Capitalism (Steindl), 75, 136, 140–41 Means of production, rate of growth of, ratio of rate of growth in output of consumption goods to, 77– 78, 80–82 Medlen, Craig, 21, 141–44 Merchant bourgeoisie of underdeveloped countries, and economic surplus, 169–70 Mergers: main forms of, 71 “political capitalism” and, 154 transition to monopoly capitalism and, 64–65 Mexico, loans to, 187–88 Military spending, 21–22, 95 and absorption of surplus, 12, 155–57 diminishing impact on economic growth, 156–58 and economic surplus in underdeveloped countries, 166 growth and, 152 political strategy for left and, 159 replacement by civilian spending, 147–49 stagnation and, 103–4 Mill, John Stuart, 25, 53, 55 Miller, S M., 188 Millibrand, Ralph, 148 “Model of Economic Growth, A” (Kaldor), 35 Monopolistic competition, 69 Monopoly: criticisms of, reformism and, 73 Marxian accumulation theory and, 60 theory of competition and, 59–64 See also Monopoly Capital; Monopoly capitalism Monopoly Capital: An Essay on the American Economic and Social Order (Baran and Sweezy): accumulation theory and crisis, 74–106 analytical approach of, 15–16 on bourgeois democracy, 151–52 capacity utilization model, 107–27 on composition of government expenditures in class society, 146–58 concept of waste in, 218 early introduction to, 221–24 economic surplus concept in, 16–18, 24–29 on economic waste, 93–101 and extension of surplus value category, 15 on free competition basis of Marxian analysis of capitalism, 51–59 on government expenditures under competitive and monopoly capitalism, 132–34 as idealistic resurrection of feudal monopolies, 67–69 on innovations and investment, 101–4 investment theory, 88–93 on need for analysis of monopoly capitalism, 221–24 on overaccumulation and modes of surplus absorption, 19–21 on overthrow of monopoly capitalism, 219–20 state spending in, 21–22 and supply side theory, 11–16 on tendency of surplus to rise, 13 on theory of accumulation, 74 on unproductive labor, 97–98 Monopoly capitalism: competition under, 18–19, 69 defenses of stage theory of, 69–73 definition of, 104 early theorists of, 65 and excess capacity, 107–27 investment decisions in, 66 irrationality of, 217–20 liberal reform of, 148–54 need for new interpretation of, 222–24 overthrow of, 219–20 political needs of, 127 purpose of, 219 and reversal of relationship between exchange value and use value, 100 surplus under, 12 tendency to freeze into static models, 70 transition from freely competitive capitalism to, 64–65 Monopoly power: market concentration and measurement of, 70–71 shift from industry- to firm-based analysis of, 71 Monopoly prices: increased corporate income tax and, 130 Marx on, 62–63 output restrictions and, 112 Sweezy on, 63–64 taxation and, 143–44 Monthly Review, 141, 180, 188 Morris, Jacob, 98, 101 Mosley, Hugh, 21, 129 “Multiplier effect,” and industrialization in underdeveloped countries, 171 Nathan, Otto, 34 National bourgeoisie, and economic development, 174, 177 National income: increasing share of wages in, 14 rate of increase of, full employment and, 84 rate of investment and, 84–85 “Natural prices.” See Prices of production “Need for Tax Reform, The” (Sweezy and Magdoff), 145–46 Needs, convergence with demand, 206–10 Neoclassical economics: assumption of pure competition in, 54, 55 competition in, 52–53, 59 “earned” incomes in, 25 imperfect competition theory of, 18–19 prices of production in, 25 and static models of competition, 70 on taxation, 130–31 “Neocolonial states,” 175 tariffs in, 209 Neo-Marxian economics: on competition, 60 on investment under monopoly capitalism, 20 liberal theory and, 73 on structure of output, 101 on potential rate of profit and realized rate of profit, 105 Neo-Ricardians: on competition, 55–59 and profit-squeeze interpretation of economic crises, 14 and rejection of labor theory of value, 15 underexploitation theory of, 12 Net investment, source of in postrevolutionary China, 199–202 New Deal, 154 New Deal-type third world regimes, 173–75 New industries: accumulation and, 88 as counteracting force to underconsumption, 78, 79 diminishing in relative importance, 80 investment and stagnation and, 102–4 See also Innovations “New middle class,” unproductive consumption and, 79 Nonproductive expenditures See Unproductive expenditures Nonproductive labor See Unproductive labor Nuclear war, military spending and, 156–57 Nurkse, Ragnar, 197 O’Connor, James, 21, 146 on state fiscal crisis, 128–30 on taxation of monopoly capitalists, 135, 144 OPEC reserves, 185 Organic composition of capital, rising: increased rate of exploitation of labor power and, 13 investment-consumption relationship and, 81 Ornstein, Stanley, 71 Output: and forms of economic surplus, 28 regulation under monopoly capitalism, 20 Output-capacity output ratio, effective demand gap and, 97 Overaccumulation under monopoly capitalism, 19–21, 83–93 See also Surplus absorption Overpopulation, as reason for underdevelopment, 163, 167–68 Overproduction of commodities, underconsumption and, 78 Pace, Prudence Posner, 158–59 Peasantry: and land reform in China, 199–202 and mobilization of surplus in socialist economic development model, 194–95 in Soviet model of development, 193, 194, 198–99 Pechman, Joseph A., 143 Per capita income, industrialization and, 167 Perry, George, 115, 117, 127 Petroleum industry, capacity utilization in, 123 Phillips, Joseph D., 43, 44–45 Planned economic surplus, 23–30 arrested development and, 161 Planned obsolescence, 39, 40–41, 100 Plant size, in U.S and U.S.S.R., 205 Political Economy of Growth, The (Baran), 22, 25, 67, 75, 88, 193, 199, 206–7 development theory, 161–76 on unproductive labor, 97 use of economic surplus concept in, 27–33 Political power: formal and substantive, 22 in Soviet-type society, 215–16 Population growth, as counteracting force to underconsumption, 78 See also Overpopulation Postrevolutionary societies, debate over, 23 Postrevolutionary economic development, 193–220 Chinese model of, 199–202 form of state and, 209–10 political structure of, 209–10 surplus product and, 23 Thomas’s “convergence strategy” for, 202–10 See also Socialism; Soviet development model; Soviet-type societies Potential economic surplus, 28–29 actual investment in underdeveloped nations and, 165–66 absorption of, formal use value and, 39 arrested development and, 161–76 compared to planned surplus, 29–31 concealed, 50 distinguishing between types of, 30–31 economic waste and, 14–15, 95 falling rate of profit and, 35 in India, 175 and land reform in China, 200–202 statistical trace in unemployment and unutilized productive capacity, 107 upward shift in profitability schedules of monopolies and, 36 utilization under monopoly capitalism, 19 Potential social accumulation fund, economic surplus concept and, 34 Prices of production: competition and, 52 in labor theory of value, 25 monopoly capitalism and distortions in, 50 monopoly price and, 63–64 See also Monopoly price Primitive accumulation stage: role of capitalism in underdeveloped countries and, 163 Soviet model of development and, 193–99 Principles (Ricardo), 55 Private property principle, capital taxation proposal and, 135 “Problem of Capital Accumulation, The” (Domar), 83–85 Produced and realized surplus value, economic surplus as equivalent to, 44 Product differentiation, competition and, 59 Product homogeneity, 59 Product mix for commodity, actual and hypothetical, 40–41 Production: capital-intensive vs labor-intensive in Soviet economic development model, 197–98 determination of socially necessary costs of, 39–40 economies of scale in, see Economies of scale irrational and wasteful organization of, 29 selling costs and, 38–39 under socialism, 215 See also Prices of production Productive capacity Productive capacity: idle, state spending and, 21–22 underutilization of, 78 See also Capacity utilization; Full capacity utilization Productivity: increased taxation and, 130 measurement of, 126–27 See also Capacity utilization; Productive capacity Profit-squeeze interpretation, 13, 14 and rejection of labor theory of value, 15 and shift to demand-side theory, 15 stagnation theory and, 14–15 Profit rates: of competitive and monopoly capitalism, 66 monopoly capitalism and, 19, 68, 71–72 relationship to capacity utilization, see Profitability schedule Szlajfer’s formula for, 96–97 See also Falling rate of profit theory; Profits Profitability schedule, capacity utilization and, 90–91 Profits: formula for, 134 tax cuts to corporations and, 140 treated as surplus, 15 during wartime, 124 See also Aggregate profits; Profit rates Property income, definition of, 43 Proudhon, 68, 160 Public relations expenses, 95 Pure competition: assumption of, 57 conditions for, 53, 59 reliance of general equilibrium theory on, 53–54, 55 Ragan, James, 118–19 Railroads, investment and, 102 Reagonomics, 14, 15 Real wages: in Brazil, 182 decline in, 141, 145 monopoly price and, 62–63 Realization costs, economic surplus and, 16 Realization crisis, 20 and limitation on capitalist accumulation, 77 in long run, 101–4 and relationship of use value to exchange value, 100 and underconsumption, 75, 103–4 Reform of monopoly capitalism, 148–54 and political demands of left, 158–59 state spending and, 22 See also Liberal politics Relative overexploitation of labor power, 12 Relative prices theory, monopoly and, 72, 73 “Reply to Critics” (Sweezy), 84–85 Report (Loeb), 109–11 Resources: availability, World War II productive capacity and, 125–26 and convergence of use and demand, 203–10 underemployment or mis-employment of, 28 “Responsibility of the Left, The” (Magdoff and Sweezy), 158–59 “Reverse flow process,” and loans-from developed to underdeveloped nations, 23, 186–89 Ricardo, David, 25, 53, 57, 218 on tax policy, 130–31 See also Neo-Ricardian economics Rinfret-Boston Associates capacity utilization index, 120 Rise of the Authoritarian State in Peripheral Societies, The (Thomas), 208–10 Robb, Lewis, 124–26 Robinson, Joan, 100–101, 207 Rodbertus, 75, 76 Ruling class, in Soviet Union, 211–16 Ste Croix, Geoffrey de, 168–69 Sales effort, as economic waste, 95 See also Circulation expenses; Selling costs Sales outlets, excessive number of, 95 Salesmen, salaries and bonuses of, 95 Salvati, M., 34 Samuelson, Paul, 11 Savings, investment and, 106, 131–32 Say’s Law of Markets, 30, 42, 105–6, 131 Schumpeter, Joseph, 22, 69, 76, 88, 92, 121, 130–31, 150, 213 Scientific management, reduction in heavy investment and, 92–93 “Second Crisis of Economic Theory, The” (Robinson), 100–101 Sekine, Thomas, 49 Selling costs: calculation of economic surplus and, 44–45 components of, 38 economic surplus concept and, 36, 37–42 penetration into production process, 49–50 socially necessary and unnecessary, 41–42 See also Circulation expenses Semifeudal landlord class, 169–70 Semmler, Willi, 18, 68, 69, 70 Shaikh, Anwar, 19, 82–83 Sherman, Howard, 18, 68, 69, 71, 75 Sismondi, 75 Szlajfer, 37 Small enterprises, number of, pure competition and, 59 Smith, Adam, 25, 53, 57 Snyder, Carl, 77–78, 80 Social accumulation fund: economic surplus category and, 17, 28 economic waste and, 95 produced and realized surplus value and, 17 unproductive labor and, 46 utilization of, see Economic surplus absorption Social capital, 146 definition of, 128 Social democracy See Reforms of monopoly capitalism Social expenses, 146 definition of, 128 Social needs, state spending and, 21–22 Social output, composition of, 100–101 Social reproduction, formal use values and, 39 See also Marx, Karl, reproduction schemes of Social security taxes, 147 Socialism: economic surplus concept and, 47 economic waste and, 100 evaluation of nonproductive labor from viewpoint of, 99 Marx and prospects for, 61–62, 69 mergers as harbinger of, 65 and planned economic surplus, 28, 31 relationship to reformism, 149 selling costs as socially unnecessary in, 41–42 See also Planned economic surplus; Postrevolutionary economic development Socialism in Cuba (Huberman and Sweezy), 202 Socially necessary costs: in competitive model of capitalism, 38–39 formal use values and, 39–40 unproductive labor and, 36–37 Society as a whole, unproductive labor from standpoint of, 98, 99 See also Socialism Soviet economic development model, 193–99 and choice between capital-intensive and labor-intensive methods of production, 197–98 “laws” of, 198–99 and surplus allocation between heavy and light industry, 195–96 See also Soviet-type societies Soviet Union Soviet-type societies: economic development in, 210–17, 220 and economic laws, 215–16 ruling class control of level of politicization in, 215–16 as socialist, degenerate workers’ states, capitalist, or new type of social formation, 210–15 utilization of surplus in, 213–15 Soviet Union: Bettelheim’s analysis of, 211–12 Sweezy’s analysis of, 212–15 See also Soviet-type societies Sraffa, Piero, 99, 205 Stagflation, causes of, 11 Stagnation: corporate profit taxes and, 141–44 economic waste and surplus absorption and, 93–101 epoch-making innovations and, 101–4 and excess capacity, 107–27 military spending and, 156–58 overaccumulation and, 83–93 profit-squeeze argument and, 14–15 Steindl on, 141 tax policy and, 140–41 tendency toward, vs economic breakdown, 80 transfer payments and, 147 underutilization of productive capacity and, 78 “Stagnation Theory and Stagnation Policy” (Steindl), 141 Stalin, 215 “Star Wars,” 157 Stanfield, Ron, 20, 44, 109–11, 113–14, 115, 120 State economy, 128–59 and absorption of economic surplus in underdeveloped countries, 169–70 and arrested development of underdeveloped countries, 173–75 and capital outlays, 79–80 fiscal crisis in, 21, 128–30 in Japan, 145–46 political strategies for left and, 158–59 in post-World War II period, financing of, 135–37 and structural gap theory, 21, 128–29 surplus and taxation in, 130–46 and upkeep of state apparatus, 15 See also Government expenditures; Taxation Stavenhagen, Rudolgo, 161–76 Stavrianos, L S., 220 Steam engine, industrial revolution and, 102 Steel industry, closings in, 126 Steindl, Josef, 14, 19, 20, 21, 68, 74, 101 and capacity utilization concept, 110, 111, 112 on postwar recovery of capitalism, 136 on taxation and stagnation, 140–41 on underconsumption, 85–88 Stengl, Mitchell, 46–47 Stigler, George, 57 Streever, Donald, 113–14, 119, 122, 125 Structural gap between state expenditures and revenues, 128–29 Japan and, 146 Successive approximations method, economic surplus concept and, 34 Superexploitation See Dependency theory Supervisory labor, as unproductive labor, 32 Supply-side economic theory: economic crises and, 11–16 monopoly capitalism and, 15–16 taxation and, 131 Surplus See Economic surplus; Surplus value Surplus-extraction theses See Dependency theory Surplus productive capacity, accumulation under monopoly capitalism and, 20–21 Surplus value: accumulation and, 77 circulation costs and, 37 economic surplus concept and, 13, 15, 24–50 in manufacturing industry in advanced capitalist and underdeveloped countries, 166 Marx’s conception of exploitation and, 168 monopoly price and, 62–63 unproductive labor criteria and, 33 Sutcliffe, Robert, 14, 204 Sweezy, Paul, 14, 22, 161, 193 analysis of Soviet Union, 210–17 on dependent development, 178–79 on diversification of industry in postrevolutionary economies, 202, 204 on irrationality of monopoly capitalism, 217–20 on monopoly price and surplus value, 63–64 on new industries and underconsumption, 102–3 on prospects for liberal capitalist reform, 148–54 underconsumptionist approach of, 19–20, 76–83 See also Monopoly Capital; Theory of Capitalist Development, The Sylos-Labini, Paolo, 21, 131–32, 146, 158 Szlajfer, Henryk, 17–18, 20, 24, 27, 29, 30, 34, 39, 49, 50, 101 on components of economic surplus, 44 on potential surplus concept, 30–31 on relationship between use value and exchange value, 100 and Sraffian formula for rate of profit, 96–97 on unproductive labor, 98–100 Szymanski, Albert, 22–23, 185–86, 188 Tariffs, postrevolutionary economic development and, 208–9 Tax revolts, 129 Taxation: British economy and, 140 and capital tax proposal, 134–36 composition of, 136–38 constraints on state and, 129 economic growth and reductions in, 139–40 economic surplus and, 130–46 government spending and, 133–34 Kalecki on, 134–37 political strategy for left and, 159 stagnation and, 140–43 tax cuts on corporate profits, 11, 139–40 in U.S and Japan compared, 145–46 of workers, government expenditures financed by, 136–37 See also Corporate income tax Taylorism See Scientific management Technological change See Innovations; New industries Thatcher government, economic policies of, 14 Theories of Surplus Value (Marx), 16 Theory of Capitalist Development, The (Sweezy), 19, 58, 66, 71, 75, 93, 102, 148–54 “Theory of Commodity Income and Capital Taxation, A” (Kalecki), 134–37 Third world See Dependency theory; Economic development Thomas, Clive, 23 on essential characteristics of authoritarian states, 209–10 on postrevolutionary economic development, 202–10 Total output, consumption and, 84–85 Total surplus value, economic surplus and, 34 Trade policies, postrevolutionary economic development and, 208–9 Transfer payments, 147 Transformation problem: and convergence strategy for postrevolutionary economic development, 202–10 luxury goods production and, 98–99 Tugan-Baranovski, Michael, 76, 77, 82, 85, 89–90, 103 Turner, H A., 140, 141 Underconsumption, 14, 75–83 accumulation and, 85–88, 104–6 and counteracting forces under capitalism, 78–80 critiques of law of rising surplus and, 19–21 crude variants of in Marx’s time, 75–76 falling rate of profit theory and, 82 manifestations of, 78 monopoly capitalism and, 66 new industries and, 102–4 realization crisis and, 103–4 state spending and, 21 Steindl on, 85–88 Sweezy on, 76–83 See also Realization crisis Underconsumption Theories (Bleaney), 136–37 Underdeveloped countries, use of economic surplus concept in regard to, 27–28 See also Dependency theory; Economic development Underemployment: output foregone through, potential economic surplus and, 29 and secular stagnation under advanced capitalism, 12 Underexploitation of labor, 12 relative, economic crisis and, 14 Unemployment: calculation of economic surplus and, 45 economic analysis and, 120 and economic surplus and surplus value, 44 full capacity utilization concept and, 36 potential surplus and, 14–15, 35 savings and, 132 and unabsorbed surplus, 12 Unequal exchange theory, 22 United States economy: causes of crisis of early 1970s in, 11–16 composition of state spending in, 21–22 fiscal crisis and, 128–30 transition to monopoly capitalism, 64–65 Unproductive consumption, as counteracting force to underconsumption, 78, 79 See also Economic waste Unproductive expenditures: corporate taxes and decline in, 142–44 and determination of utilization of potential surplus product, 105 growth rate and, 158 long-run realization problem and, 101–4 Unproductive labor: accumulation and, 20 computation of, 40–41 critical perspectives associated with, 98 historical changes in nature of, 46 incomes of, 15 Marx’s criteria for, 32–33 output lost through, potential surplus and, 29 in Political Economy of Growth, 31–32 role of, 17–18 selling costs and, 36–42 surplus and surplus value and, 15, 16 U.S News World Report, 156 U.S Steel Corporation: formation of, 64 profitability schedule studies, 90–91 profits and capacity utilization of, 35–36 Use values: and computation of useless labor integrated into production, 40–41 criteria for unproductive labor and, 33, 99 exchange values and, 76, 77 “formal,” 39 in freely competitive and monopoly capitalism, 39 investment-consumption relationship and, 82–83 relationship to exchange value, 100 socially irrational, as “essential costs,” 17 Veblen, Thorstein, 38, 65, 124, 125, 218 on military spending, 156, 157 on underutilization of productive capacity, 106–9 Vertical integration, 65, 70–71 “Vicious cycle of poverty” theory of underdevelopment, 15–16, 163, 165 Vietnam war: capacity utilization during, 122 increasing share of wage in national income during, 14 Wages: increased share of national income, 14 monopoly price and, 62–63 tax on, investment and, 134 Walton, Paul, 69 War spending See Military spending Warren, Bill, 182 Wartime, capacity utilization during, 107–9, 124–26 Waste See Economic waste Wasted surplus See Potential economic surplus Weeks, John, 18, 22, 58, 59, 67–69, 160–61, 189–90 Weisskopf, Thomas, 14, 119, 158 Welfare state spending See Social expenses Wharton index of capacity utilization, 111, 114, 115, 116–17 Wilkinson, Frank, 140, 141 Williams, Philip, 55, 56, 58, 69 Wolff, Edward, 44 Wolin, Sheldon, 159 Works Progress Administration (WPA), 158 World War II: capacity utilization during, 124–26 effects on GNP, 152 impact on capacity utilization and employment, 122 Wright, Erik Olin, 74, 104–5, 148 Yaffe, David, 12, 18, 19, 47, 75 Yoshida, Y., 81 Zeitlin, Irving, 163–64 Zeluck, Steve, critique of monopoly stage theory, 68–69, 71, 73 John Kenneth Galbraith, The Economics of Innocent Fraud (Boston: Houghton Mifflin, 2004), 12 ... interests Written in the 1980s, the discussion of The State Economy” in The Theory of Monopoly Capitalism focused on the issue of the fiscal crisis of the state” from the standpoint of the debates engendered... remained.31 The discovery of the hitherto unknown “Some Theoretical Implications” has confirmed the interpretation of their work provided in The Theory of Monopoly Capitalism, while offering a... Monopoly Capital for its rejection of the significance under monopoly capitalism of Marx’s law of the tendency of the rate of profit to fall The falling rate of profit theory had not occupied a central