Jonathan Nitzan and Shimshon Bichler — Profit from Crisis: Why capitalists do not want recovery, and what that means for America

Can it be true that capitalists prefer crisis over growth? On the face of it, the idea sounds silly. According to Economics 101, everyone loves growth, especially capitalists. Profit and growth go hand in hand. When capitalists profit, real investment rises and the economy thrives, and when the economy booms the profits of capitalists soar. Growth is the very lifeline of capitalists.

Or is it?

What motivates capitalists?

The answer depends on what motivates capitalists. Conventional economic theories tell us that capitalists are hedonic creatures. Like all other economic “agents” – from busy managers and hectic workers to active criminals and idle welfare recipients – their ultimate goal is maximum utility. In order for them to achieve this goal, they need to maximize their profit and interest; and this income – like any other income – depends on economic growth. Conclusion: utility-seeking capitalists have every reason to love booms and hate crises.

But, then, are capitalists really motivated by utility? Is it realistic to believe that large American corporations are guided by the hedonic pleasure of their owners – or do we need a different starting point altogether?

So try this: in our day and age, the key goal of leading capitalists and corporations is not absolute utility but relative power. Their real purpose is not to maximize hedonic pleasure, but to “beat the average.” Their ultimate aim is not to consume more goods and services (although that happens too), but to increase their power over others. And the key measure of this power is their distributive share of income and assets.

Real-World Economics Review Blog
Profit from Crisis: Why capitalists do not want recovery, and what that means for America
Jonathan Nitzan, Professor of Political Economy at York University, Toronto, and Shimshon Bichler, Israeli political economist

Jonathan Nitzan and Shimshon Bichler are the authors of Capital as Power. A Study of Order and Creorder

Conventional theories of capitalism are mired in a deep crisis: after centuries of debate, they are still unable to tell us what capital is. Liberals and Marxists both think of capital as an 'economic' entity that they count in universal units of ‘utils’ or 'abstract labour', respectively. But these units are totally fictitious. Nobody has ever been able to observe or measure them, and for a good reason: they don’t exist. Since liberalism and Marxism depend on these non-existing units, their theories hang in suspension. They cannot explain the process that matters most – the accumulation of capital.

This book offers a radical alternative. According to the authors, capital is not a narrow economic entity, but a symbolic quantification of power. It has little to do with utility or abstract labour, and it extends far beyond machines and production lines. Capital, the authors claim, represents the organized power of dominant capital groups to reshape – or creorder – their society. 

Written in simple language, accessible to lay readers and experts alike, the book develops a novel political economy. It takes the reader through the history, assumptions and limitations of mainstream economics and its associated theories of politics. It examines the evolution of Marxist thinking on accumulation and the state. And it articulates an innovative theory of 'capital as power' and a new history of the 'capitalist mode of power'. 
(download PDF) 

 As Michael Hudson also argues, power is the basis of economic rents.

A Marxist responds.

A Critique of Crisis Theory: From a Marxist perspective
Bichler, Nitzan and Hudson versus Marx

Article one is by two professors of political economy, Shimshon Bichler and Jonathan Nitzan. Bichler teaches at colleges and universities in Israel, and Nitzan at York University in Canada. Article two is by U.S. economist Michael Hudson.

These two articles actually cover quite a lot of ground. Our reader correctly notices an echo of the views of the 19th-century American reformer Henry George. We can also see in these articles the influence of the Monthly Review School. The article by Bichler and Nitzan contains a long and I think revealing self-critical quote by Paul Sweezy that points straight to the weakness of the Monthly Review School.

Therefore, in these two articles we are dealing with three tendencies. One tendency represents the views of Shimshon Bichler and Jonathan Nitzan . A second tendency is the viewpoint of Michael Hudson, and a third the Monthly Review School of Baran and Sweezy and their successors at Monthly Reviewmagazine. Of the three tendencies, only one, Paul Sweezy and his Monthly Review School, is considered a tendency within Marxism. Neither Bichler, Nitzan nor Michael Hudson are Marxists.