Whenever i read a stimulating book that challenges the predominant ideology of our day, ‘free market’ capitalism, I am reminded of a Renaissance astronomer from Poland. Nicolaus Copernicus proposed a radical new theory of the solar system, which was at first ignored by clerics and rulers, but eventually infuriated them, and with good reason. For the political and economic costs of maintaining their power over the tax-paying and tithe-paying masses were at a minimum, so long as people were led to believe that God had anointed the rulers and that the Church spoke for God. For Copernicus to repudiate a millennial Ptolemaic astronomy was tantamount to doubting divine authority, since it was God who had created the existing celestial and terrestrial orders, in which the sun revolved around the earth, and subjects obeyed those He had put over them. The Pope and his bishops, kings, princes and those who depended on them, could not have the geometry of the heavens questioned because its artificer was the indispensable warrant of their own power and privileges.

Robert Brenner’s Economics of Global Turbulence does not subscribe to the modern Ptolemaic cosmology of Markt über Alles and its kindred canons, espoused by the motley crew of politicians, industrialists, financiers and rentiers who command political and economic power today, and the multitude of experts and gurus, among them neoclassical economists, who reproduce this outlook. It is a work of prodigious research, whose intellectual ambition is always expressed in a measured and scholarly way, that makes it a pleasure to read. As a long-time student of the economic history of the major industrial economies, I find Brenner’s command of the post-war performances of the American, German and Japanese economies truly impressive. I am especially struck by his mastery of the recent economic history of Japan, the primary subject of my own research.

That said, as is to be expected of any ambitious and pugnacious book, Brenner’s work can be questioned in several aspects. In order to make what I hope will be constructive criticisms within a limited space, I will focus on three critical issues. Firstly, I will argue that Brenner’s analysis needs to become systemic—that is, more focused on the core characteristics of contemporary capitalism, the better to support his central thesis that it has suffered from declining rates of profit since the turn of the seventies. Secondly, I will contend that Brenner’s discussions of the post-war and near-future economic performance of the industrial economies would have gained from taking account of the history of cycles of technological change. Thirdly, I believe his rebukes of latter-day capitalism would be significantly more effective if he recognized, more fully than he has done so far, the substantive differences between the American and the Japanese–German variants of it. These three criticisms are closely intertwined, and even in a short compass I am confident readers will have little difficulty in seeing the analytic overlap between them.

In support of his central thesis that rates of profit have declined, across the whole advanced capitalist world, since the seventies, Brenner musters a mass of empirical data and, at times, selected elements and vocabulary of neoclassical economic analysis. However, he does not offer a systemic analysis—that is, one based on an articulated, internally coherent view of the political and economic characteristics and core dynamics of modern capitalism. The analytic underpinning of his broad case comes in the tenth chapter of his book, ‘Why The Long Downturn? An Overview’, as well as in a few pages summarizing his alternative to the ‘supply-side argument’.footnote1 These are written from the ‘capitalist’ point of view—that is, of those who decide whether to invest or disinvest in productive capacity. Brenner notes that capitalists do not necessarily disinvest even when their rate of profit is declining, because their enterprises enjoy various advantages as established firms within a given market, which include good information about this market, long-standing relationships with suppliers and customers, and above all technical knowledge. He is also aware that firms have large sunk costs, which motivate them to do their best to increase sales abroad rather than reduce productive capacity, and that firms can and do incur debt to prolong their production.

Brenner’s discussion of the reasons why capacity reduction may not occur, so leading to excess capacity and a declining rate of profit, is persuasive until one realizes he has taken into account only the outlook of capitalists as they react to what they are expected to react to: costs of inputs (capital and labour), changing prices of their products, competition from rival firms, market shares, entry barriers to their respective markets, etc. He does bring in differing institutional features of the American, German and Japanese scene that affect such variables. But he does not delve into many economic factors that—indirectly, but very substantively—affect, indeed often determine, the decisions that capitalists make. That is to say, his account of the ‘long downturn’ is not embedded within the broader framework of a systemic analysis. Let me explain.