Sweezy
came from a prosperous East Coast American family: his father
was the Vice-President of the First National Bank of New York.
He was rich, brilliant, and extraordinarily handsome. (Alice
Thorner, the well-known scholar on contemporary India who
was a friend of Sweezy, was a part of the Monthly Review family,
and belonged, with her late husband Daniel, to the same circle
of East Coast radicals as Sweezy, before being forced to emigrate
during the McCarthy years, describes him as having the stunning
looks of a "Greek God"). He went to Harvard as a
matter of course, where he and the renowned "mainstream"
economist Paul Samuelson, were among the favourite students
of Joseph Schumpeter. His doctoral dissertation on Monopoly
and Competition in the English Coal Trade 1550-1850 (which
was published in the same Harvard series as Samuelson's Foundations
of Economic Analysis) was much more than an excursus into
economic history; it was a critical and brilliant examination
of Alfred Marshall's "biological" theory explaining
the rise and decline of firms, which was so influential at
the time.
It was common for the children of the East Coast establishment
to have a stint in England, preferably at the London School
of Economics, before settling down to their chosen careers,
and accordingly Sweezy went for a while from Harvard to LSE.
(John F. Kennedy for instance was to do the same some years
later). At LSE he duly enrolled to attend the lectures of
Friedrich Von Hayek, whom Lionel Robbins had brought from
the continent to counter the influence of Keynes in English
intellectual life. Hayek's strong and persistent attacks on
Marx in the course of his lectures persuaded Sweezy to make
a proper study of Marxism. At the end of that study he was
a Marxist! And the result of that study was his magnum opus,
The Theory of Capitalist Development (1942), its title inspired
by his old teacher Joseph Schumpeter's book, The Theory of
Economic Development. (The English edition of Sweezy's book
with a foreword by Maurice Dobb was published in 1946.)
Meanwhile Sweezy had joined the economics faculty at Harvard;
but when the time came for Harvard to take the "up or
out" decision in the case of Sweezy, the clear pointer
was towards an "out" decision, his Marxist predilections
having become apparent meanwhile. Sweezy did not wait for
the decision; he resigned from the Harvard faculty. It is
ironical that both Sweezy and Samuelson, representing very
different ideological positions, had to suffer victimization
at Harvard, though each for a different reason: Sweezy for
his Marxism, and Samuelson allegedly for his Jewishness. But
while Samuelson migrated only a few hundred meters to join
and build up the economics faculty at MIT, Sweezy gave up
his academic career altogether, and set up, along with his
friend Leo Huberman (well-known for his excellent introduction
to Marxism, Man's Worldly Goods), a journal Monthly Review,
which, it would be no exaggeration to say, became the most
significant socialist journal anywhere in the world in the
English language. (Among its first set of contributors was
Albert Einstein with his essay "Why Socialism"?)
The popularity of Monthly Review arose from its simplicity,
its concreteness, and its concern with the third world. It
did not have any of the narcissism, the Euro-centrism, and
the penchant for "smartness", for "high-browism",
and for coquetry with words that one often finds in many European
Left journals. The reason for this contrast lay partly in
its American-ness (which in "highbrow" European
Left circles is often referred to as American "moralism"
but one of whose constituents is a very large dose of honesty);
it lay partly in the predominance of economics in MR, a subject,
which though technical, does not easily lend itself to highbrowism
(and MR's economics got a solid anchorage in empirical research
once Harry Magdoff, a reputed applied economist of the Left
and a former member of the Roosevelt administration joined
Sweezy as a co-editor); it lay partly in Sweezy's own extraordinary
clarity of mind; but it lay above all in the centrality of
imperialism in MR's overall theoretical perspective. No other
Marxist journal in the English language (and that naturally
excludes Jean-Paul Sartre's Les Temps Moderne) kept imperialism
so firmly in the centre of the picture as MR (and Harry Magdoff
was to write an extremely influential book on the subject
The Age of Imperialism), which is hardly surprising, since
it was a journal coming out of the leading metropolis of the
leading imperialist power of the post-war period.
Of particular interest to MR readers were the "Notes
of the Month" which the editors used to write in every
issue of MR, which gave a remarkable insight inter alia into
the functioning of American capitalism. (These have been collected
in several volumes under the co-authorship of Sweezy and Magdoff
and published by Monthly Review Press).
Sweezy did not keep himself confined to editing MR and writing
outstanding books. He was an activist who threw himself into
all the major political issues that came up during his eventful
life, from the defence of the Soviet Union , to the fight
against fascism, to the defence of the Cuban Revolution (Che
Guevara was a personal friend of Baran and Sweezy), to the
struggle against US aggression on Vietnam, to solidarity with
the student upsurge of the late sixties.
In 1954, at the height of the McCarthyite witch-hunt, Sweezy
was summoned on two occasions to appear before the Attorney
General of New Hampshire who had been conferred wide-ranging
powers to investigate "subversive activities". Upon
his refusal to answer questions he was declared to have been
in contempt of court and sent to the county jail (though he
was released on bail). His appeal against the contempt verdict
was turned down by the New Hampshire Supreme Court, but upheld
eventually by the U.S. Supreme Court in 1957.
The revival of interest in Marxism on the campuses in the
late sixties led to Sweezy's visiting several universities
to lecture on Marxism, until he discovered that University
administrations were using his visits as an excuse for denying
tenure to young Marxist scholars. Their argument was that
a tenured faculty of Marxist scholars was unnecessary in view
of the availability of distinguished Marxists from outside.
Upon learning this, Sweezy discontinued these visits. During
the war, when the Left supported the war effort against fascism,
Sweezy was associated with the Office of Strategic Security
(OSS) which was to become the precursor of the CIA.
Someone once remarked that while Sweezy's The Theory of Capitalist
Development was the most significant work on the Left produced
in America in the decade of the forties, Paul Baran's The
Political Economy of Growth was the most significant work
on the Left produced in America in the decade of the fifties,
and Baran and Sweezy's Monopoly Capital was the most significant
work on the Left produced in America in the decade of the
sixties. Monopoly Capital, dedicated to Che, took ten years
to write, and Baran passed away before it was published. Sweezy
not only brought out the joint work but lectured widely to
spread the central message of the book. When he was invited
to deliver the prestigious Marshall lectures at Cambridge
University, U.K., the theme he chose was: "The Theory
of Monopoly Capitalism".
After the programme of two lectures was over at Cambridge,
there was the official reception, at which Joan Robinson happened
to be discussing the lectures with a group of people that
included myself. She ended the discussion by saying: "I
disagree with Paul on several issues, but he is a real saint."
The term may appear odd being applied to a Marxist, but what
stood out about Paul Sweezy, in addition to his brilliance,
his intellectual calibre and his profound commitment to the
cause of socialism, was a nobility of character that is indeed
extremely rare to find.
Sweezy's enduring contribution to "mainstream" economics
is the so-called "kinked demand curve" which oligopolists
are supposed to face. The idea that in oligopoly markets a
reduction in price by any seller leads to retaliatory reductions
by others while an increase in price does not lead to any
corresponding increase, thus giving rise to a "kink"
in the perceived demand curve of each seller at the prevailing
price, was originally advanced to explain the stability in
oligopoly price. But the idea is a powerful one which can
be incorporated into a variety of theories about oligopoly
pricing; it constitutes the primary explanation of why price
competition is eschewed under oligopoly.
But Sweezy himself was rather dismissive about this paper
even as he was writing it. And in any case, this contribution
pales into insignificance in comparison with his awesome achievement,
The Theory of Capitalist Development (TCD). TCD was remarkable
for a number of reasons: first, it was an extraordinarily
lucid presentation of Marx's ideas on economics, one which
has remained unsurpassed in the more than six decades that
have elapsed since it first appeared. Secondly, it was a convincing
demonstration of the proposition that the essentials of Keynes'
ideas which were then shaking the world were already embedded
in Marx's writings, a proposition that was remarkably bold
and original in a situation where orthodox Marxists were treating
Keynesian theory with barely concealed animosity. Thirdly,
it introduced to the English-speaking readers for the first
time a whole range of Marxist economic ideas that had developed
in the continent by thinkers from Kautsky, to Hilferding,
to Grossman, to Rosa Luxemburg, to Tugan-Baranovsky, to Louis
Boudin, to Otto Bauer, to Nikolai Bukharin. The fact that
there was an extraordinarily rich literature in the Marxist
economic tradition was brought home to the Anglo-Saxon world
with a vengeance. Fourthly, it provided a cogent explanation
of contemporary phenomena, such as inter-imperialist rivalry,
and fascism, starting from the basics of Marxist economic
theory, not as accidental or conjunctural occurrences, but
as phenomena rooted in the political economy of capitalism.
And finally, and most significantly, it advanced a theory
of "underconsumption" which was to dominate the
Marxist economic discourse thenceforth. Indeed both Baran's
The Political Economy of Growth, and Baran and Sweezy's Monopoly
Capital were basically re-iterations and refinements of the
"under-consumptionist" theory first advanced in
TCD.
"Underconsumptionism", which refers to the view
that a shift in the distribution of social income away from
the workers to the capitalists, produces, through shrinking
demand, a tendency towards stagnation under capitalism, was
of course an old idea. It had been advanced by a host of writers
from Sismondi to Hobson, to Luxemburg, to Otto Bauer. Sweezy's,
and Baran's, contribution was to argue that "underconsumptionism"
was an ex ante tendency (which I shall explain shortly), and
to eliminate thereby a whole range of confusions surrounding
the theory. The theory for the first time acquired a rigorous
totality.
The standard objections to "underconsumptionism"
were two-fold: first, there was no perceived tendency towards
secular stagnation in the capitalist world. True, the inter-war
years had witnessed the "Great Depression" which
had persisted until the start of re-armament (in fascist countries
earlier, and in liberal capitalist countries under the fascist
threat), but this did not amount to a secular tendency, since
post-war capitalism had experienced remarkable growth rates.
Secondly, there was not even any statistical evidence to show
that the share of profits in output was rising in the advanced
capitalist countries as predicted by the underconsumptionist
argument. (Nicholas Kaldor had made this point in a review
of Paul Baran's book).
Baran and Sweezy's ingenious answer to these objections can
be explained with a simple arithmetical example. Suppose the
total output is 100, of which wages constitute 50 and profits
50; workers' consumption is 50, capitalists' consumption is
25 and investment is 25. Now suppose that the distribution
changes to 40:60 between wages and profits, and that capitalists'
consumption and investment remain unchanged. Since workers
cannot consume beyond their wages, total demand in the economy
would be only 90 compared to 100 earlier. But if the State
chips in with an expenditure of 10 which it raises through
a tax on profits, then we shall once again have an output
of 100, and (post-tax) profits of 50 (though the wage bill
would be 40).Neither the total output nor the share of post-tax
profits in it would have changed compared to the initial situation,
even though clearly there has been an ex-ante tendency towards
underconsumption. In other words, the ex ante tendency towards
underconsumption, which underlies the new situation, is not
(and indeed is scarcely ever) directly visible: it has called
forth and is therefore camouflaged by State intervention.
This, Baran and Sweezy argued, is exactly what was happening
in post-war capitalism, where State intervention, taking the
form of larger military expenditure, had prevented the realization
of the ex ante tendency towards underconsumption.
This argument whose empirical merit we need not go into here,
had however the following implications: first, since advanced
capitalism had succeeded to a large extent in manipulating
its internal contradictions, the main resistance to it could
come only from the "outlying regions" of the third
world where its military might was being put to use for imposing
a new imperial order (in which, as Magdoff was to argue, the
need for raw materials played a crucial role); secondly, it
is its oppressiveness and irrationality, as opposed to any
internal politico-economic crisis arising from its unworkability
on account of the playing out of its immanent laws, that constituted
the real flaw of contemporary capitalism. The system in other
words was not one that got bogged down in crises and stagnation,
but one that worked by wasting huge amounts of resources on
maintaining a military machine for terrorizing the world,
especially the third world.
A similar view was held at the time by many; it was explicitly
articulated by Herbert Marcuse, among others. Not surprisingly
however it brought forth accusations against Baran and Sweezy
in traditional Left circles in the advanced capitalist countries,
which were disturbed at the absence of any explicit role of
significance for the metropolitan proletariat in the latter's
scheme of things, that they were being "moralists"
and "third worldists". The reference to "moralism"
as a trait of the American Left complemented this; even Joan
Robinson's reference to Sweezy as a "saint" had
a faint echo of this perception (its laudatoriness reflecting
her own ideological position which was Left Keynesian). The
other side of the same coin however was Baran and Sweezy's
recognition of the pre-eminent role of imperialism, which,
as already mentioned, scarcely gets the attention it deserves
in traditional Marxist writings in the advanced capitalist
countries. Baran and Sweezy's alleged "third worldism"
in other words was but the obverse of the centrality of imperialism
in their perception. There is a tension here which I shall
take up later.
Of course advanced capitalism has developed a whole range
of new contradictions, arising from the emergence of a new
form of international finance capital and the globalization
of finance that it promotes, which have undermined the scope
for State intervention of the Keynesian kind that Baran and
Sweezy had taken for granted in Monopoly Capital. Nonetheless
the tendency towards underconsumption highlighted by them
has to be reckoned with as a basic element in any analysis
of contemporary capitalism. (This tendency however need not
be analyzed only within the confines of the advanced capitalist
world in isolation: a relative shift of income from the poor
of the world to the rich can also contribute to this tendency).
The emphasis on underconsumptionism in Sweezy was not an isolated
intellectual act; it was an integral part of Sweezy's Marxism.
After the publication of Maurice Dobb's Studies in the Development
of Capitalism, Sweezy had been involved in a famous debate
with Dobb (a debate in which Rodney Hilton, Takahashi and
Christopher Hill had joined later) on the transition from
feudalism to capitalism (because of which the debate is sometimes
referred to as the "Transition Debate"). That debate
need not be reviewed here but the essential point of Sweezy's
intervention, on the basis of Henri Pirenne's work, was that
the opening up of Mediterranean trade had played a crucial
role in the undermining of feudalism and the ushering in of
capitalism. (Dobb's reply to this was that the impact of trade
depended on the internal state of the mode of production under
consideration, and that trade had even given rise to a "second
serfdom" in Eastern Europe).
The real point about Sweezy's intervention to my mind however
had been to underscore the role of demand-side factors; and
even his underconsumptionism was concerned with demand-side
factors. In other words there is a continuity of thought in
Sweezy between his underconsumptionism and his stance in the
transition debate. But since the question of demand is supposed
to belong to the realm of circulation as distinct from the
realm of production to which Marxism accords primacy, those
Marxists who have been concerned with the demand-side have
often been attacked for diluting Marxism, the classic example
of which was Bukharin's attack on Rosa Luxemburg. At the same
time however if one does not consider the demand-side and
hence the sphere of circulation, and remains confined to the
realm of production alone, then one necessarily remains focussed
on an isolated capitalist economy, where the workers and the
capitalists face one another in the production process, and
there is no necessary role for imperialism, in the inclusive
sense covering both the colonial and what Lenin called the
imperial phases, in the process of capital accumulation. One
can introduce imperialism into the analysis in such a case
only as an empirical factor (e.g. the fact that capitalism
cannot do without tropical raw materials), but it has no role
in the Law of Motion of capitalism. It is not accidental that
even a scholar like Maurice Dobb who was committed to the
traditional Marxist emphasis on the production side could
not incorporate the role of primitive accumulation of capital
in the form of colonial loot into his analysis of the transition
to capitalism.
Putting the matter differently there has been, as mentioned
earlier, a tension within Marxist analysis between those who
have given primacy to the production side to the exclusion
of the demand side and hence willy-nilly missed the significance
of imperialism, and those who have paid greater attention
to the demand side, and therefore been more sensitive to the
role of imperialism, but in the process willy-nilly deviated
from many of the traditional Marxist emphases. It is not surprising
then that the alleged weaknesses of Sweezy's Marxism can also
be considered to be the real strength of his analysis, and
have been so considered.
No doubt with further development of Marxist theory the tension
just alluded to would get resolved in due course (through
the emergence of a richer Marxist understanding); but to that
further work, and indeed to the recognition of the need for
that further work, Paul Sweezy would be celebrated as having
made a seminal contribution. He would be celebrated not only
as a saint but also as a sage.
March 16, 2004. |