Three years after its publication in Germany, Ernest Mandel’s Late Capitalism has now appeared in a revised and updated English edition. footnote1 Whatever one’s criticisms, it is a major contribution to the revival of Marxist economics now occurring in Britain and some other Western countries. Indeed it is, in my opinion, one of the two most important works of Marxist political economy to have appeared in English during the past decade, the other being Harry Braverman’s Labor and Monopoly Capital. Mandel, like Braverman, takes as his startingpoint capitalist production, rather than income distribution and demand, which for many years have dominated socialist and radical thought in Britain. Naturally, he considers demand and distribution; however, these are seen, not as independent entities, but as conditioned by and dependent on what happens in the sphere of production. This approach represents a return to the concerns of classical Marxism; at the same time, potentially, such an approach could herald a new era in the development of Marxism in Britain, where until recently it has existed under the shadow of left Keynesianism, lacking any genuine theoretical basis of its own. Late Capitalism is not an easy book to read; its subject matter is extremely complex, its approach is often eclectic and its arguments are at times confused or unnecessarily abstruse. Nonetheless, to anyone patient enough to master its contents, it contains a wealth of ideas and empirical material and is a work of truly creative Marxism. In the space of a single review it is impossible to do justice to a book whose coverage is so vast, so I shall consider only those aspects which I have found particularly interesting.

Mandel begins with a chapter on method entitled ‘The Laws of Motion and the History of Capital’ in which he makes a forceful plea for the reintegration of theory and history. He then asks ‘Why is it that the integration of theory and history which Marx applied with such mastery in the Grundrisse and Capital has never since been repeated successfully, to explain . . . successive stages of the capitalist mode of production? Why is there still no satisfactory history of capitalism as a function of the inner laws of capital . . . and still less a satisfactory explanation of the new stage in the history of capitalism which clearly began after the Second World War?’ His answer is as follows. In part he blames the social pressures of Stalinism, which discouraged a creative approach to political economy and replaced theory by apologetics. More fundamentally, however, he points to a problem in the realm of theory itself, arguing that twentieth-century Marxism has developed according to a certain inner logic which has seriously inhibited its ability to formulate adequate theories and explain concrete events. He identifies two specific aspects of this logic as primarily responsible: 1. the use of Marx’s reproduction schemas for purposes for which they were never intended; 2. the monocausal nature of twentieth-century Marxism, whose practitioners have tried to explain the whole of capitalist development in terms of a single key factor, such as the anarchy of production or the difficulty of realizing surplus-value.

The reproduction schemas, claims Mandel, were designed for one purpose only, to explain ‘why and how an economic system based on “pure” market anarchy in which economic life seems to be determined by millions of unrelated decisions to buy and sell does not lead to continuous chaos and constant interruptions of the social and economic processes of reproduction, but instead on the whole functions normally . . .’ and thus ‘to prove that it is possible for the capitalist mode of production to exist at all’. I agree that this was one of the purposes for which the reproduction schemas were designed, but surely there were others? For example, Marx used the schemas to analyse what Keynesians nowadays call the ‘circular flow of income’ and it is fair to say that he anticipated modern national income accounting by many decades. He drew his inspiration from the Physiocrats and used the schemas with great effect in criticizing Adam Smith’s analysis of national income. On the other hand, Mandel is correct in saying that the schemas were primarily designed for the analysis of equilibrium and that later Marxists often used them inappropriately to analyse disequilibrium situations. He makes too much of this point, however, and his criticism of Hilferding is unconvincing.

Mandel is more impressive when dealing with the second aspect of twentieth-century Marxism—its monocausal nature. He argues forcefully that ‘any single factor assumption is clearly opposed to the notion of the capitalist mode of production as a dynamic totality in which the interplay of all the basis laws of development is necessary in order to produce any particular outcome. This notion means that up to a certain point all the basic variables of this mode of production can partially and periodically perform the rôle of autonomous variables—naturally not to the point of complete independence, but in interplay constantly articulated through the laws of development of the whole capitalist mode of production.’ He then criticizes a number of famous Marxists for their exclusive concern with one single factor—Rosa Luxemburg for her obsession with the realization of surplus-value, Henryk Grossman for his mechanical breakdown theory, and so on.

Mandel’s criticism of monocausal theories is, of course, correct. Marxism has undoubtedly been held back by its failure to develop more elaborate theories and by its futile search for the universal answer, the unique factor whose operation determines the entire course of history. On the other hand, having correctly criticized earlier Marxists and specified what must be done, Mandel rather under-estimates the complexity of this task and certainly does not live up to his own promises. Although he discusses at length many different aspects of capitalism, he fails to produce a convincing picture of how they interconnect in either the long or the short term. His basic analysis is of the classical falling-rate-of-profit type and depends almost exclusively on movements in the rate of surplus-value and the organic composition of capital. Problems of realization and interdepartmental proportions are discussed, but they are never properly integrated with the basic theory, and the result is sometimes confusing. It is never clear, for example, whether Mandel considers capitalism has an inherent tendency towards overproduction which periodically expresses itself in a falling rate of profit, or whether overproduction itself is caused by a falling rate of profit. As a result, his repeated references to demand and realization exist in something of a vacuum, and one is left wondering what, if any, is their connection with his basic theory of development.