Market Dependence Theory

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Context

Ellen Meiksins Wood:

"There is a distinctively Marxist way of focussing on the market and competition, which I’ve tried to identify in a kind of shorthand by talking about the difference between market opportunities and market imperatives, or market-enablement and market-dependence.


What, then, are the political consequences of thinking in terms of market-enablement instead of market-dependence?" (http://monthlyreview.org/1999/09/01/the-politics-of-capitalism)


Discussion

(regarding Robert Brenner's work, see below)

Ellen Meiksins Wood:

"First, in his historical work we get a real advance in the Marxist debate on the origin of capitalism, an explanation that actually does proceed by explaining the emergence of market-dependence. And that historical insight has wider theoretical implications. So there’s a very close connection between Brenner’s historical account of the origin of capitalism and his analysis of the turbulence in contemporary global capitalism.

Brenner’s analysis of the downturn after the long postwar boom begins with a definition of capitalism. Capitalism, he says, is a system in which “economic units—unlike those in previous historical epochs—must depend on the market for everything they need.”3 His argument then proceeds on that basis, building on the premise that what distinguishes capitalism from all other social forms is the market-dependence of all economic actors, and hence their subjection to the imperatives of competition. These imperatives require strategies that lead to success in market competition—specialization, accumulation, enhancing labor-productivity, adopting low-cost techniques, moving in and out of various lines in search of profit, and so on. The result, of course, is a uniquely dynamic system which has produced a historically unprecedented tendency to self-sustaining growth and constant revolutionizing of the forces of production. But—and here is the core of economic turbulence—that very same dynamic is the source of economic downturn and stagnation, a fundamental contradiction at the heart of capitalism.

On the face of it, these propositions may not seem particularly startling. But the point is that Brenner gives market-dependence and subjection to competition an explanatory status distinct and apart from, even prior to, the relation between capital and labor, which Marxists generally regard as capitalism’s defining characteristic (I’ll come back to this later). While he certainly takes full account of the connections between market-dependence and relations of exploitation, he suggests that capitalism is, in the first instance, defined by market-dependence and subjection to competition and that there is an irreducible contradiction in the relation among capitals that is independent of the relation between capital and labor.

On this foundation, Brenner has constructed an analysis of the long postwar downturn that locates the critical mechanism of economic decline in the relation among capitals, as distinct from the relations between capital and labor. Arguing against explanations of the downturn that blame it on a profit squeeze caused by conditions too favorable to labor, he explores the irreducible contradiction in the relation among capitals which is independent of the relation with labor. In a nutshell, the argument explains how the conditions of capitalist competition inevitably lead to overcapacity, and finally to economic downturn, whatever the relations between capital and labor and even when demand is reliable and rising. Investment in fixed capital allows producers to stay in the market even when lower-cost competitors enter the fray, and they can stay in even at a lower rate of profit. But the point is also that the same heavy investment means they must stay in, even just to recoup their costs, or at least it’s hard to get out at the right time. So manufacturers hang on to surplus plant instead of closing it. The end result is a declining rate of aggregate profit across the industry, with wider effects throughout the whole economy.4

Many people on the left have been put off by Brenner’s insistence that the fundamental contradiction that produces economic downturn is rooted in the “horizontal” relation of competition among capitals, as distinct from the “vertical” class relation between capital and labor.5 Surely, many would say, focussing on competition as against class is about as serious a crime as any Marxist could commit, and it surely has serious political implications. Some critics even suggest that this analysis marginalizes class struggle and places “competitiveness” at the center of left politics." (http://monthlyreview.org/1999/09/01/the-politics-of-capitalism)


Source

'The document contained an analysis of the global crisis which was influenced by Robert Brenner’s “The Economics of Global Turbulence“ (discussed in the June issue of Monthly Review)


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