Mr. Strachey and Capitalism
By R. F. HARROD
THE capitalist system may be attacked on two sides. It may be attacked because it entails great injustice and in- humanity, or because it does not work. Mr.- Strachey, though he throws out hints with regard' to the former, is mainly concerned with the latter theme. In the firmer field of controversy, it is possible to seek peace by securing wide agreement that change is desirable, by utilizing our resources of good will on both sides in order to bring about a gradual regeneration of our social system. On the face of it this seems a more hopeful method than to declare immediate war between the parties and fan the flames of resentment and bitterness, when for all we know from the ensuing strife may emerge not the new ideal but an older, more barbaric way of living. Man was nurtured in conflict, and its recru- descence may be expected to revive the old instincts, passions and taboos of millenia of human history, with which civiliz- ation has only just now found means of dispensing.
A sense that the call to arms is not the wisest course for achieving social justice is perhaps the reason why the assailants of capitalism have for long laid greater stress on the other kind of attack. If an economic system based on the profit motive is necessarily doomed to rapid deterioration or increas- ing exploitation, it is foolish to aim at a juster social system by the method of gradual reformation. The ineluctable /ogic of the capitalist system will frustrate all etforts of reformers. It is bound to go from bad to worse until the profit motive is eliminated.
In arguing that this is so, Mr. Strachey on the one hand points to our present troubles, and on the other compares the explanations of them given by capitalist economists" with that given by Marx. That there are troubles cannot be doubted. Answers to the questions whether they will increase and whether they are remediable without revolution depend on why they do in fact occur. Unfortunately we do not know very much about this. Diagnosis has so far been lamentably inadequate. When Mr. Strachey is criticizing current explanations of the trade cycle he is on very strong ground. He does indeed- devote -rather too much attention to a particular school of writers, whose views, however interest- ing, must not be taken to represent an agreed verdict of the best authorities. It is as well to admit, however, that the
problem is still an unsolved one. • What follows ? If a disease has eluded satisfactory diagnosis, it cannot be inferred that it is mortal. At this point Mr. Strachey produces Marx. Where "capitalist economists" have failed, Marx, we are told, has succeeded. Mr. Strachey gives an extraordinarily lucid, fresh and vigorous account of the Marxian theory of value. Modern Socialists are apt to neglect this aspect of Marxism and to concentrate on'Marx's vaguer generalities. But it appeals to Mr. Strachey's virile mind. It was a remarkable intellectual achievement of- rib little inherent interest. It provides a self-consistent set of categories for analysing a situation, which should' be judged not by their aesthetic quality, but by their applicability to actual problems.
Mr. Strachey's concern is crisis and depression. He adduces Marx's doctrine (derived, it must be said, from classical econo- mists) that in the absence of counteracting causes the rate of profit must tend to fall with progress. Mr. Strachey convicts "capitalist economists" belonging to widely ,different schools The Nature of Capitalist Crisis.- -By -John Ihraehc..4y..- (Gollancz. 10s. ed.) "
of alike finding a recipe for our troubles in the restoration of profits. But if Marx is right, he argues, this restoration can only be achieved by the retardation of progress--which is a sort of liature's cure actually provided by crisis and depression —or by a reduction of the workers' standard of living.
It is a fundamental fatilt in the main Marxian analysis that it does not distinguish between profit and interest. For the proposition that in a progressive State the rate of interest must fall in the absence of counteracting causes, Mr. Strachey would find general agreement among "capitalist economists." If the distinction between profit and interest is recognized, this fall is not inconsistent with a revival of profit. The antinomy is resolved: may not be impossible to work for a slow reform of the profit economy, if resistance to a falling rate of interest can be overceme.
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But what of the diagnosis of the crisis ? It must -be con- fessed that Mr. Strachey's crucial chapter, entitled "The Two- Faced Law," is unconvincing. Put -briefly, the argumentils that if the share of the product going to wage-earners (and therefore the rate of "surplus-value ") is constant, the rate of profit on capital must fall in inverse proportion to the increase of capital employed. Capitalists, it is held, will not mind this fall in the rate if the absolute amount of profit which they get does not fall. But this does fall, if the amount of capital employed by them is not increased sufficiently to offset the fall in the rate per unit. If that happens, the capitalists refuse to keep the machine working and crisis . follows. But, it must be objected, if the number of workers employed is constant, the amount of capital must necessarily be increased just sufficiently to offset the fall in the rate per unit earned, and the alleged' cause of crisis does not occur ; for if the rate of surplus-value earned remains the same, the total profit on capital does also To get his results, Mr. Strachey supposes arbitrary changes in the method of pro- duction, the relations of which to the rate of profit are not analysed. But this means that the fundamental problem is not analysed, that there is no real diagnosis. Mr. Strachey has some perfectly legitimate jokes at the expense of the economists, but where they have failed, neither he nor Marx has succeeded. So-we are left where we were—in ignorance.
Yet we are not in utter darkness. Something is already understood, some progress has been achieved, strenuous efforts are being made on many sides. Will not Mr. Strachey be patient and desist from stirring up strife in the hope that a reliable diagnosis will ultimately be forthcoming ? Anyhow, let him not be moved in his choice between peace and war by the belief that he has a reliable one of his own ! • Meanwhile, he has produced a most interesting and stimu- lating book. It is impossible not to admire his freshness and vigour, his clarity and buoyancy. He apologizes for being an amateur. But he has clearly read widely and thought hard. He has made an heroic effort to see the problem as a whole and to understand the inter-relatedness of much detailed work of other writers. The reader may feel inclined to succumb in the midst of some of Mr: Strachey's more elaborate exposi- tions, but he should be- stimulated by -his author's example, and he will be rewarded; for there is a line of connected thought running through this book. It is a fine example of work by a talented mind striving, in default of authoritative guidance, to unravel for itself the problems of the modern world, urged on by-consciousness of the fateful character of current events, and fortified by a deep sense of responsibility.,
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