Chares Reeve reviews Marx and Keynes: The Limits of the Mixed Economy by Paul Mattick for Issue 7 of the US libertarian marxist journal. Undated but published late 1978/early 1979.
Marx and Keynes: The Limits of the Mixed Economy, by Paul Mattick, Boston, Porter Sargent, 1969, 341 pp.
Ten years have passed since the publication of Paul Mattick's Marx and Keynes, a decade in which we have all witnessed the collapse of the Keynesian "solution" to the boom-and-bust cycle of the capitalist economy. For several years now economists and politicians, as well as business and labor leaders, have not been able to devise any solutions to the pervasive and persistent problems of simultaneous high rates of inflation and unemployment, slow growth, lagging investment and productivity, and the social divisiveness that accompanies such economic difficulties. In the late 1960s, while neo-Keynesians were proclaiming a new era of permanent prosperity, Mattick was insisting that Keynesian policies do not resolve the fundamental contradictions of capitalist production which manifest themselves in periodic crises and that sooner or later the limits of these stabilization policies would be reached. In his own words : "It is my contention that the Keynesian solution to the economic problems that beset the capitalist world can be of only temporary avail, and the conditions under which it can be successful are in the process of dissolution". (viii) 1 Now, after ten years, the accuracy of Mattick's prediction warrants another look at his book.
Mattick presents a twofold critique of Keynesian economics : first, he focuses on its major theoretical inconsistencies, then he points out the ineffectiveness of Keynesian-inspired policies throughout the capitalist world. Mattick argues persuasively that the mixed economy is still fundamentally a capitalist economy and is therefore still subject to its laws of development as presented by Marx. The existence of government intervention in the economy does not abolish these laws, rather, the effects of such intervention must be analyzed within the context of these constraints. The successful analysis of the dynamics of the mixed economy in terms of Marx's theory of capital accumulation is Mattick's most significant contribution to our understanding of the contemporary world economy. It sets him apart from more well-known American left wing theorists such as Sweezy, Baran, Magdoff, and O'Connor, who by and large claim that Marxist categories need to be revised in light of twentieth century economic developments. For this reason alone Marx and Keynes continues to deserve more serious consideration than it has received in the past decade.
Mattick begins his critique of the Keynesian policy of government economic intervention by illuminating logical inconsistencies in Keynes's theory, as spelled out in The General Theory of Employment, Interest, and Money. For Keynes, governmental intervention was a necessary response to the inability of the capitalist economy to maintain equilibrium conditions at full employment on its own due to a lack of "effective demand". That a lack of adequate demand was not automatically self-correcting and could stabilize the economy at less than full employment was clearly revealed for the first time, according to Keynes, by the depression of 1929. Basing his analysis on the assumption that the sole purpose of economic activity is consumption, Keynes claimed that this insufficiency of effective demand was the result of two psychological factors, the "propensity to consume" and the "inducement to invest". Briefly, both the propensity of the population to consume and the inducement of entrepeneurs to invest decline with the growth of income and the decreasing marginal efficiency (profitability) of capital. This results in the slackening of effective demand and economic stagnation. Keynes believed that it was possible to remedy this deficient demand by government fiscal and monetary policies designed to increase the propensity to consume and to stimulate new capital investments.
As Mattick shows, however, by admitting to "a difference between what he considers the community's chosen propensity to consume and the actually existing social consumption needs" (12) evidenced by the depression itself, and by linking the inducement to invest to expected profitability, Keynes cannot escape the contradictory conclusion that profit-making, not consumption, is the goal of economic activity in capitalism. If the object of economic activity were consumption, Mattick argues, "there would be no problem of effective demand". (12) Furthermore, if profit-making, not consumption, is the goal of capitalist production, the propensity to consume can no longer be regarded as an independent variable whose decline weakens the effective demand, thus halting economic growth. "A lack of effective demand", Mattick asserts, "is just another expression for a lack of capital accumulation and is not an explanation of it". (13) Thus, a consistent analysis of capitalist production and the government intervention it has called forth must lie elsewhere.
After this brief review of Keynesian theory, Mattick summarizes the Marxian theory of capital accumulation. He stresses that prosperity in a capitalist economy depends on the maintenance of a rapid rate of capital accumulation and that crises occur when the accumulation process is retarded. Mattick, following Marx, locates the cause of the decline in accumulation in the economy's inability to produce enough surplus-value to maintain the vigorous rate of expansion achieved during the boom : "... the only possible reason why (capital accumulation) should suddenly be halted is a lack of surplus-value; and this lack must have arisen within and despite the accumulation process". (78) "The real problem of capitalism is a shortage, not an abundance, of surplus-value". (82) That a lack of surplus-value causes crises, is basic to the analysis of the mixed economy and differs fundamentally from the Keynesian viewpoint. Mattick's theory of the mixed economy is also radically different from Baran and Sweezy's argument, a variation on Keynesian themes, that today's economic problems derive from too much surplus, and from other under-consumptionist arguments to the effect that the central problem is a limited demand for consumer goods caused by the fact that the wages which workers receive are less than the value they produce and by the general inability to further extend foreign markets.
Mattick's point that economic crises are breakdowns in the capital accumulation process, due, not to an overproduction of use-values, but rather to an underproduction of surplus-value in terms of the expansion needs of the existing production system, reflects the clearest understanding of Marx's argument in Capital to have appeared in the United States. For Mattick, "even on the assumption that no realization problem exists, it is possible that a discrepancy between material production and value production will arise which will have to be overcome before accumulation can go on". (69-70) In other words, within Marx's theory of Crisis problems of the sphere of circulation, or realization problems such as overproduction of capital and commodities, market disproportionalities, disequilibrium of supply and demand, etc., are not causal factors, but instead are the observable effects of underlying problems in the production of surplus-value.
For Marx, Mattick argues, the fact that the resumption of accumulation which ends the crisis involves the expansion of production beyond what it was when the crisis occurred, proves that the overproduction of commodities in itself cannot cause a crisis. "For the overproduction of capital and commodities, instead of leading to a curtailment of productivity, only accelerates the latter, thereby indicating that the dicrepancy between the production of surplus-value and its realization arises because of a decline in the rate of accumulation". (74) While during the crisis the inability to sell all the commodities which have already been produced is certainly real, the saleability of a larger mass of commodities following the crisis is no less real. A theory of crisis must account for both; it must explain in one unified theory not only how and why crises occur but also how they are overcome. This point may seem too elementary to need repeating, but the fact remains that nearly one hundred years after his death, Marx is the only theorist, whether mainstream or left wing, to have constructed a cogent, unified theory of capitalist development. In this alone lies Marx's central importance for us.
In Marxian theory, economic crises result from conflicts between the enlargement of material production and the expansion of value production occurring in a system where the appropriation and accumulation of surplus-value by private capital is the primary purpose of material production and the motive force of its growth. Capitalists attempt to expand material production without limit in order to accelerate the accumulation of surplus-value, through which new capital is produced and material production further expanded. Obstacles to continued expansion are encountered when, at a certain level of material production characterized by the mass of existing capital of a specific organic composition, the new surplus-value produced and appropriated is insufficient to fund additional expansion at the same rate. Expansion slows, compounding the problem of insufficient surplus-value, and accumulation finally stops. "When the expansion of production outruns its profitability, the accumulation process comes to a halt". (67)
More concretely, the mass of newly produced surplus-value is not sufficient for its distribution among all the individual capitalists in portions large enough for them to achieve accustomed rates of profit. New investment slows and it becomes increasingly difficult for capitalists to meet their debt obligations. Overproduction, unemployment, and bankrupcy result. Prices, both of capital goods and of consumption goods, decline sharply and wage rates drop. Means of production and labor-power can be purchased more cheaply than at the peak of the preceding boom; eventually it becomes possible to once again produce profitably. In theoretical terms, Marx spoke of this process as a restructuring of value relations brought about through the depreciation or outright destruction of capital-values and the increase in the exploitation of labor-power (or rate of surplus-value). Obviously this description is only schematic and is incomplete on many points. Nonetheless it is just as obvious that much of the current stagnation can be characterized in these terms. Furthermore, those phenomena which are novel to postwar recessions, in Mattick's view, can also be incorporated into this framework.
As oversimplified as the above outline is, it illustrates the flavor and importance of Marx's distinction between material and value production, i.e., between use-value and value. Hence, it is not caprice that led Marx to open Capital with a discussion of the use-value and the value aspects of the commodity form itself. The distinction, however, is among the least understood notions in all of Marx's writings. On this point Mattick's discussion of Marx's theory is most noteworthy. His clarity here allows him to clear away much of the intellectual deadwood that has comprised longstanding debates about the transformation problem, the realization problem, the cheapening of constant capital as a long term offset to the tendential fall of the rate of profit, the nature of the Soviet economy, and imperialism.
The concept of use-value is straightforward enough; on the other hand, Marx's use of the concept of value is much more problematic. "When Marx speaks of the 'law of value' as relating to a deeper reality which underlies the capitalist economy", Mattick writes, "he refers to the 'life process of society based on the material process of production'. He was convinced that in all societies, including the hoped for socialist society, a proportioning of social labor in accordance with social needs and reproduction requirements is an inescapable necessity". (29) Quoting from Marx's famous letter to Kugelmann (see Selected Correspondence, p. 251), he continues; "That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance, is self-evident. No natural law can be done away with. What can change in historically different circumstances is only the form in which these proportional distributions of labor asserts themselves. And the form in which this proportional distribution of labor asserts itself in a state of society where the interconnections of social labor are manifested in the private exchange of the individual products of labor, is precisely the exchange-value of these products". (29) That is to say that the concept of value is used to discuss the distribution of social labor in capitalism, where such determinations are made indirectly, through the profitable exchange of the products of labor in the marketplace. Value is the theoretical reflection of what the market, or the fact that all commodities are exchanged, accomplishes in practical activity through the trial-and-error efforts of individual capitalists to make a profit. As such value represents the societal recognition that labor is expended in the production of commodities and not the actual physical labor-time embodied in them.
Expanding upon this, Mattick writes : "The whole social product enters the market in the form of commodities. Whatever part of it cannot be sold has no value, even though labor has been expended upon it. The unsold part of social labor would be a waste of surplus-labor; there simply would be less surplus-value than there was social labor. To realize all the produced surplus-value it is necessary to produce commodities for which there is sufficient demand". (38) "Social demand as revealed by the market is not identical with actually existing social needs but only with the needs within the framework of capitalist production"; (41) i.e., the need to accumulate capital. "As capitalism became the dominant mode of production and the tempo of accumulation increased, 'social demand' became in always greater measure a demand for capital. Supply and demand in the traditional sense ceased to determine the production process; the production of capital, as capital, determined the size and nature of the market demand". (76) Thus, demand is predetermined by the production system.
Marx used the term "socially necessary labor-time" to express this indirect recognition through exchange transactions of expended social labor; he defined value as the socially necessary labor time embodied in commodities. Since this socially necessary aspect is tied to the allocation of total social labor through the profitable exchange of labor's products, "the value concept has meaning only with regard to total social capital". (43) In other words, the value produced by any given productive activity can be conceptualized only in its relation to the overall distribution of labor-power in society. Value is thus defined only in terms of the production system as a whole. Marx's theoretical discussion of the accumulation process is carried out at the level of society as a whole; the concepts he develops in the course of this discussion, the rate of surplus value, the organic composition of capital, and the rate of profit, express changing value relations for the total system, not for individual firms or particular industries. The crisis theory itself explains the dynamic relation between the growth of the total mass of surplus-value and the expansion of the total mass of capital, and the effect of changes in this relation on the development of material production.
Once the distinction between actual labor-time and that labor-time recognized through the market as socially necessary is explained, it becomes clear that by the phrase "destruction of value" what Marx means is the repudiation by society of a part of the labor-time embodied in commodities through the mechanism of falling prices, not the destruction of embodied labor-time which could only be accomplished by destroying the commodities themselves. To restore the balance between the mass of surplus-value and the mass of capital, part of the capital-value is repudiated. "The crisis leaves the use-value side of capital largely unaffected except when the material means of production are actually destroyed, as in times of war. But it affects the value of the total constant capital through the destruction of capital-values during the crisis and ensuing period of depression. The same quantity of use-value now represents a smaller exchange-value". (70) Clearly it is the social form production as a value expansion process which inhibits the growth of material production rather than limits inherent in material production itself. The law of value "asserts itself by way of crises, which restore, not a lost balance between supply and demand in terms of production and consumption, but a temporarily lost but necessary 'equilibrium' between the material production process and the value expansion process". (56)
The significance of the differences between the Marxian and the Keynesian explanation of crises is that the crucial factor which each theory suggests as the cause of the crisis is also the problem which must be overcome if the recovery is to occur (or perhaps, if the crisis is to be avoided in the first place). Thus, Keynesian theory suggests that the remedy for the tendency toward crises is government intervention to stimulate aggregate demand. If the fundamental cause of the crisis is not a lack of effective demand, but rather a lack of surplus value as Marx and Mattick suggest, then government attempts to overcome the crisis through fiscal and monetary policy will be at best misdirected, and ultimately futile. For Mattick, such attempts are counterproductive in the long run. Through government intervention, a portion of the profits of society is consumed rather than accumulated as additional capital, since such intervention is essentially a process whereby the government taxes or borrows a portion of the total profits in the economy, which may otherwise be lying idle because of the depression conditions, and then spends this revenue on armaments, public works, or social services. Even though production and employment may, for a time, be increased by such methods, "a larger share (of profits) now falls, as it were, in the sphere of consumption, and a correspondingly smaller share can be capitalized as additional profit-yielding capital". (159) Thus, "... government-induced production cannot add but can only subtract from the total profit of total social production". (154) Since a lack of surplus-value (or profits) is the cause of the crisis in the first place, the attempt by capital governments to avoid crises by increasing their spending results in a further reduction in the already insufficient profits available for accumulation and, therefore, can only exacerbate the profit shortage.
The Keynesian policies end in a vicious cycle—a declining rate of accumulation makes it necessary for the government to increase its spending, but this increased spending is itself a further drain on the fund for accumulation, resulting in an added decline in accumulation and requiring ever-more government intervention. Mattick concludes, "How much can the government tax and borrow ? Obviously not the whole of the national income. . . there must be a limit to the expansion of the non-profitable part of the economy. When this limit is reached, deficit financing and government-induced production as policies to counteract the social consequences of a declining rate of accumulation must come to an end. The Keynesian solution will stand exposed as a pseudo-solution, capable of postponing but not preventing the contradictory course of capital accumulation as predicted by Marx". (163)
Because the contention that government spending is an encroachment on surplus-value is the crucial point of the analysis of the mixed economy, Mattick's argument to support this formulation needs to be elaborated upon.
Money, in the capitalist economy, serves as a form of capital in the process of being accumulated. In other words, the expansion of capital occurs through successive transformations in the form of capital during the process of production—newly produced surplus-value in money form is transformed into productive commodities, new means of production and labor-power, which are transformed in turn into new commodity products, and these, when sold, become new surplus value in money form, and so forth. Idle capital in money-form, i.e., money which for one reason or another is not presently being used for purposes of accumulation, nonetheless exists as a fund of potential capital. Government use of this idle money-capital, obtained either by taxation or oy borrowing on capital markets, is thus immediately a reduction of the fund for future accumulation. This is true unequivocally since the state offers no equivalent commodity in exchange for the idle money-capital it receives. For taxation this is obvious; it is not true of deficit spending only if the debt is repaid, and at present there is no evidence for believing that this will ever occur. From the vantage point of society as a whole, when the government spends this taxed or borrowed money-capital to stimulate production, it merely returns to private hands what it has previously taken.
As a result, material production is indeed immediately expanded, since private capitalists were not employing this fund capitalistically. But although the state makes use of this potential capital, it too does not employ it as capital. "If the goal of government intervention", Mattick explains, "is the stabilization of the market economy, government-induced production must be non-competitive. Were the government to purchase consumption goods and durables in order to give them away it would reduce the private market demand for these commodities. If the government owned enterprises were to produce such commodities and offered them for sale, it would increase the difficulties of its private competitors by reducing their shares of a limited market demand. Government purchases must fall out of the market system; the production entailed must be supplementary to market production". (150) "Getting their money back through government orders", he continues, "the capitalists provide the government with an equivalent quantity of products. It is this quantity of products which the government 'expropriates' from capital", (161) since "the final product of government-induced production, resulting from a long chain of intermediary production processes, does not have the form of a commodity which could profitably be sold on the market. Whatever entered into its production counts as a production cost and cannot be recovered in a sales price, for there are no buyers of public works and waste production". (154) The cost-price of the final product thus constitutes an absolute deduction from the fund of new surplus-value annually produced for purposes of capital accumulation.
The interest on the mounting national debt, now just under $25 billion annually, comprises an additional deduction from the fund of potential capital. In the Marxian schema, surplus-value is divided into three parts, profit of enterprise, interest on capital advanced and rent. Interest, in the private economy, is the newly produced surplus value which accrues to bank capital for the services it performs such as centralizing capital and extending credit. Government-induced production produces no profits, but the government must still pay interest on the money it borrows. As Mattick demonstrates, "the cost of the debt, that is, the interest paid to the bondholders, must come out of the profits of the relatively diminishing private sector of the economy" (160) through new taxes or additional borrowing. While the idle money-capital paid as interest thus returns to capitalists since this payment "transfers a portion of profits from productive to loan capital" (160), if this money is to be used for accumulation it must be borrowed back by industrial capital, and therefore, must be repaid with interest from the profits it is used to produce.
Monetization of the national debt, that is, the purchase of government securities by the Federal Reserve with newly printed currency, as a deliberate inflationary policy, constitutes a third means by which government spending, in this case deficit-financed spending, reduces the fund of money-capital available for purposes of accumulation. Though deliberate, inflation must be controlled, since the money with which contractors are paid "must retain its value long enough for the private contractors to regain the value expended in the production of government orders and make the customary profit. If their returns were less than their expenditures because of a too rapid devaluation of money, they would find themselves in a state of disinvestment". (185) They would curtail future investments in government sponsored production, creating the opposite if the intended stimulative effect of deficit financing. Nonetheless, even "controlled inflation is already the continuous, if slow, repudiation of all debts, including the national debt. It spreads the expenses of non-profitable government-induced production over a long period of time and over the whole of society". (187) For an example of this one need only consider the frequent plight of bondholders during 1974. At that time a typical twelve month note with a face value of $10,000 was priced to yield approximately 9%. When redeemed one year later the bondholder received $10,000 on an initial investment of $9174 but, taking into account an inflation rate of 12%, a rather conservative estimate, the purchasing power of the $10,000 had decreased to about what $8,800 could have bought a year earlier—a $374 loss on the original investment. While this may seem an extreme case, even a one percent annual depreciation of the value of the national debt is no trifling matter in terms of the future possibilities of accumulation.
While overall, the effect of deficit-spending and the concomitant monetary inflation it permits have decreased the fund of surplus-value available for future accumulation, these policies have been implemented in order to benefit certain sectors of society at the expense of others. At Mattick puts it, "If some prices rise faster than others under inflationary conditions, a situation of advantages and disadvantages will arise. . . Wages, for instance, rise less under inflation than do the prices of other commodities". (180) This happens because "the prices of commodities are set after the labor costs incorporated in them have been settled or paid", therefore "a rise in the cost of labor. . . cannot prevent a still faster rise in the prices of commodities", and "because wages are more sluggish in their movements than commodity prices, inflation leads to higher profits and. . . a higher rate of capital formation". (180-181) "Inflation", Mattick concludes, "is then another form of the subsidization of big business by government. It is merely one of the techniques by which income is transferred from the mass of the population into the hands of government favored corporations". (184)
That inflation is a conscious policy to reduce real wages masked by increased money wages is revealed by Keynes himself. "Every trade union", he writes, "will put up some resistance to a cut in money wages, however small; (but) no trade union would dream of striking on every occasion of a rise in the cost of living". 2 The hoped-for result of this policy, of course, is to increase the rate of capital formation (similar to Marx's rate of accumulation) by redistributing income in favor of profits while simultaneously minimizing labor unrest. What then can one say about the notion, universally promulgated by post-Keynesian economists, that the cause of inflation is "too many dollars chasing too few goods ?" As Mattick points out, "In an economy requiring government-induced demand, the market demand could not possibly exceed the supply". (184) The mechanism by which government deficit spending, financed by monetizing the national debt, is translated into generalized inflation must be explained in a different manner.
For Mattick, deficit spending per se is not inflationary. Capitalists constantly borrow to finance the purchase of more productive plants and equipment. The increased profits realized from the sale of commodities produced at this higher productivity allow them to both retire the debt incurred and set aside funds for future accumulation. Likewise for government deficit spending; if it somehow leads to increased productivity, the debt can be paid while accumulation is fostered. Much to the despair of Keynes and his epigones this has not occurred, rather the national debt has continually multiplied. While government has not yet created the environment for increased capital accumulation, deficit-spending is nonetheless continued to stave off further deterioration in the rate of private capital formation. This demands new tax receipts and additional borrowing. Both to float the new debt and to maintain confidence in the old, the Federal Reserve is forced to increase the money supply through the purchase of existing government bonds with newly printed currency. Not to do so would be to risk the collapse of the multi-trillion debt structure and the entire economic system along with it. The nominally independent Federal Reserve System is thus effectively tied to government fiscal policy.
By increasing the money supply in this manner the Federal Reserve in fact treats government paper as a real commodity-value rather than what it actually is, promises contingent upon future accumulation. For each dollar of debt contracted and monetized, two dollars are substituted : the original one which was exchanged for government paper, representing real commodity-value, plus another which replaces the note when it is taken out of circulation by the Federal Reserve, and, having no backing save the security of the state, represents only fictitious commodity-value. The continual increase in the supply of money allows capitalists to raise the prices of the commodities they produce in order to maintain normal profits by offsetting the cost of taxes and other expenses of government, while it also supports the further extension of credit needed to pay the higher prices. In Mattick's view however, " 'profits' made in this way and 'capital' accumulated in this manner, are mere bookkeeping data relating to the national debt". (151) In other words, to the extent that they represent inflationary price increases these profits are fictitious. Real capitalist profits "can be increased only by increased productivity, and an increasing quantity of capital capable of functioning as capital, and not by the mere availability of means of payments manufactured by government". (187) In the long run this policy amounts to a not so subtle game of brinkmanship.
Still it is generally maintained that the stimulative effects of government fiscal and monetary policy more than compensate for their expense. Arguments to this effect are couched in terms of the so-called "multiplier" effect. The idea is that "an increased income resulting from government expenditures will have subsequent income effects, which will add up to a sum greater than the original spending" with the result that "deficit-spending can be financed out of the savings it has itself created". (157-158) From Mattick's point of view, such statements based on the false assumption that consumption is the purpose of economic activity, simply misconceive the problem. Of course, Mattick grants, "All investments whether of a private or a public character, will increase the national income as they increase national production". (158) The real issue, however, is whether or not the mass of capital increases through the accumulation process. "Since it does not depend on profitability", Mattick argues, "government-induced production can enlarge total social production, but it cannot enlarge the total capital". (158) In other words, while consumption is in fact increased, no addition to the stock of profit-making means of production results. This point is crucial, since only an accelerated rate of accumulation can reverse the trends toward increased government intervention and growth of the national debt.
Furthermore, the argument that the growth of the debt is harmless as long as the national income increases faster than the debt relies on a false logic. "The growing national debt cannot be related to the total national income", Mattick rebuts, "but only to that part of the total which has not been injected into the economy by the government. It is by counting an expense as an income that the illusion arises that the growing national debt is neutralized by a rising national income". (162)
Nonetheless, it is conceivable "that the mere increase or maintenance of a given level of production regardless of profitability may arrest a downward business trend, and may even be instrumental in reversing the trend As deficit-spending reduces unemployment and increases production, it may, under special conditions, induce an acceleration of private investments. If this should be the case, it would increase total income by more than brought forth by deficit-spending, but this multiplication would be due directly to the additional profitable investments, not the additional spending". (159) That such occurrences have not reduced the dependence of the private sector on state intervention is revealed by the tremendous growth of the national debt since 1929, despite variations in the rate of capital formation. Further, such possible government-induced accelerated accumulation would be subject to the same crisis cycle as the apparently self-regulating accumulation process of the nineteenth century. "The fact remains", Mattick concludes, "that private capital formation finds itself in a seemingly insoluable crisis; or rather, that the crisis of capital production which characterizes the twentieth century has not as yet been solved : When viewed from the perspective of profit production, the present differs from the past in that deflationary depression conditions have been supplanted by inflationary depression conditions. In a deflationary depression, production declines because part of the producible commodities cannot be sold profitably, thus preventing the realization of profits and their transformation into additional capital; whereas in an inflationary depression production continues, despite its lack of profitability, by way of credit expansion". (186)
Thus, the mixed economy is revealed to be essentially transient in nature. As the limits of increased government spending are reached, and they are apparently beginning to be reached in the current crisis, capitalists will be faced with a critical dilemma : either they will have to oppose any further increases in government intervention thereby leaving the capitalist economy vulnerable to its crisis tendencies, or they will have to support the destruction of private capital in favor of a state-run "planned economy". It is more and more evident from the current debates about the state of the economy that the choice is being seen in exactly these terms. And even though the latter course would require a revolution of sorts, it would still leave the capitalists as a class in control of social production, albeit collectively through the state rather than privately through individual firms