Capitalism in the Twenty-first Century Through the Prism of Value
By Guglielmo Carchedi and Michael Roberts
London: Pluto Press, 2023
Capitalism in the Twenty-first Century Through the Prism of Value, by Guglielmo Carchedi and Michael Roberts, aims to explain 21st-century capitalism through Karl Marx’s value theory. It aligns with similar efforts, such as Italian economist Mariana Mazzucato’s The Value of Everything, to reintroduce value theory into mainstream discourse. Unlike works that dismiss the labour theory of value, Carchedi and Roberts ground their analysis in Marx’s theory of value in capitalism.
They delve into critical aspects of modern capitalism, including the value of nature, the relationship between value and money, and the primary divisions within capitalism, such as crises and imperialism. The book’s strength lies in its original research, particularly the chapters on the value-based theory of inflation and economic imperialism. Additionally, it engages with contemporary issues such as COVID-19, examining how the law of value manifests during crises.
The authors investigate surplus value extraction, domestically and internationally, and the strategies capitalists use to counter the declining rate of profit. They expose how misconceptions and distortions in modern capitalism are often exploited to protect capital's interests, particularly at the expense of labour.
Value, price and the ecological costs of capital accumulation
The book begins by addressing how capitalism disrupts the relationship between humans and nature. Using Marxist value theory, the authors critique methods such as natural capital accounts (NCA), arguing that they fail to accurately measure natural wealth due to a fundamental confusion between value and price. As long as natural goods are not market transactions, their value cannot be accurately estimated, much like how gross domestic product requires imputations for up to 30% of goods and services.
Capitalism seeks to reduce the share of circulating capital relative to fixed capital by driving down input value while expanding commodity production. The book’s first chapter demonstrates how energy revolutions have facilitated new accumulation waves through reducing fixed capital costs and the organic composition of capital.
Their original research shows a strong correlation between carbon emissions and profits, suggesting that faster profit growth leads to increased emissions. The chapter also critiques market-based climate solutions, arguing that they fail because mitigation is not profitable for companies. The degrowth movement is also criticised for lacking a class perspective and an ecological theory of capitalist accumulation.
The authors conclude that controlled and planned growth under socialism, with producers controlling production, is necessary to reduce ecologically destructive production while enhancing sectors focused on human well-being and ecological regeneration.
Challenging conventional wisdom: MMT, cryptocurrencies and inflation
Chapter two critically examines the relationship between value and money, beginning with a critique of Modern Monetary Theory (MMT). The authors argue that MMT overlooks the foundational role of value in money's existence and fails to account for capitalism's nature, creating a fictitious economic world. While Marx sees money as a representation of abstract labour and value, MMT views it as a state product, confusing money with credit/debt.
MMT’s assumption that the state can create money without limits is critiqued, as it ignores the necessity of production to increase money value. The chapter argues profits drive investment, not vice versa, and that private savings enable government deficits. The authors contend that MMT benefits rich countries through currency seigniorage [the profit made by a government from minting currency], while smaller economies risk hyperinflation if money is printed excessively.
The chapter also questions whether cryptocurrencies such as bitcoin can challenge capitalism, pointing to their speculative nature and limited functionality as money. Bitcoin fails as a reliable currency because it lacks stability as a store of value, a means of exchange and a unit of account.
The authors introduce the value rate of inflation (VRI) as an alternative measure of inflation, finding that changes in the VRI explain over a third of CPI variations in the United States between 1960–2018. They suggest using this indicator to protect labour’s purchasing power in wage negotiations. This Marxist perspective on inflation is gaining traction beyond traditional circles, as seen in the work of economists such as Isabella Weber, who explores the concept of "greedflation".
Marx’s theory of crises and economic imperialism
Carchedi and Roberts discuss Marx's theory of crises, attributing capitalist crises to the tendential fall in the profit rate, with its tendencies and counter-tendencies. Using US corporate profit and investment statistics, they demonstrate that every post-WWII crisis followed a peak in profit rates that led to investment collapse. The authors reject underconsumption as a crisis cause, noting that 11 of 12 post-WWII crises were preceded by rising wages.
Economic crises stem from the shrinking ability to valorise capital due to falling profitability. But imperialist exploitation of the capitalist periphery can expand this space. The authors define imperialist exploitation as the long-term net appropriation of surplus value by high-tech countries from low-tech ones, through channels such as currency seigniorage, investment income flows, unequal trade exchange, and exchange rate changes.
Building on previous research, they present a theory of unequal exchange, finding that between 1950–2019, the annual surplus value transfer from dominated to imperialist countries averaged 1% of GDP. Measured against annual export profits, this transfer accounted for more than 40% of imperialist countries' profits. The authors criticise Brazilian economist Ruy Mauro Marini's super-exploitation thesis and oppose using categories like North/South, arguing that they shift focus from exploitation to poverty and undermine global worker solidarity.
Regarding China, the authors conclude it is not an imperialist country, as surplus value transfers from China to the imperialist bloc have averaged 5‒10% of its GDP since the 1990s. Although some Marxists characterise China as "an empire in formation", Carchedi and Roberts see it as part of the dominated bloc. They note that emerging economies can only develop by raising productivity with efficient technologies, which imperialist countries will always oppose, as seen in efforts to throttle China’s chip industry.
The path to democratic socialism (not a robot society)
In the final chapters, Carchedi and Roberts discuss how progressive mechanisation and robotisation may affect the future and why socialism is the only alternative to capitalism. They argue robots and AI, while reducing labour costs, do not eliminate capitalist contradictions but rather intensify crises and inequality.
The authors emphasise the materiality and class nature of knowledge production under capitalism, arguing that even in an information society, capitalism's old features would re-emerge. They insist that a society with minimal human toil and no poverty requires a shift to common ownership and advocate for a democratic socialism. Carchedi and Roberts outline an analytical framework for a transitional economy, applying it to the Soviet Union and China.
They briefly treat the topic of state capitalism, which is often used to describe the socio-economic systems in the former Soviet Union and China. This point of view was popular among Yugoslav economists who described the Soviet economy as “etatism”, and more aligned with state capitalism than true socialism. However, Carchedi and Roberts argue the concept of “state capitalism” cannot be applied to the Soviet Union because there was no capitalist competition and the allocation of resources was not left to the decision of individual capitals.
But what about China? While acknowledging the significant capitalist elements in China’s economy, they argue China’s state-owned sector and economic planning represent socialist elements crucial to its industrial policies. They disagree with the view that China is a capitalist country but describe China as a “trapped transition”, where capitalist and socialist accumulations compete, leading to inconsistent development.
The authors argue that social planning can be rational, efficient and democratic, examining models such as negotiated coordination and participatory economics, which resemble Yugoslav self-management socialism. Despite its failure in Yugoslavia, the viability of this model under different circumstances remains debated. Some radicals claim it was merely capitalism disguised as socialism, but a more accepted view suggests that Yugoslavia failed due to inadequate reliance on the market and poor balance between self-management and governance. Horvat blames the 1976 reform for reducing self-management to a façade two decades before Yugoslavia collapsed. The concept of cooperative self-management has re-emerged in mainstream economics, even within capitalist frameworks, suggesting it may still have potential and that it is too early to bury this concept for good.
Carchedi and Roberts' book can be read as either addressing major contemporary capitalism issues individually, or transversally as a collection of value analysis techniques applied to modern capitalism. For example, an analysis of profitability is applied to understand the capitalist drive to intensive use of natural resources to lower the cost of raw materials. The same approach, but in its cyclical form, is used to explain the periodic crises of capitalist production as the average rate of profit falls. Surplus value appropriation as a mechanism to counteract the tendency of the falling rate of profit also plays a major role in explaining economic imperialism and relations of dependency in the capitalist world-system. The book effectively demonstrates the versatility, continued relevance and value of Marxist value theory (pun intended), contributing significantly to the Marxist renaissance in economics.
[Reprinted from links.org.au.]