Many people were deeply saddened at the end of last year to hear of the untimely death of Andrew Glyn, an economist at Oxford University. Andrew (as I shall refer to him henceforth) was a widely respected figure on the left. He was a deeply committed socialist, a superb teacher and, not least, and by all accounts, an immensely warm and well-rounded human being. My aim here, however, is not to add to the obituaries of Andrew, or at least not to write an obituary of the normal kind. Rather, my aim is to clarify what Andrew's contribution to the thinking of the left was and is. I want to identify what his main ideas were, to pinpoint the strengths and weaknesses in his thought, and to consider his lasting contribution.
Andrew was an economist and he was a Marxist. He took both of these things very seriously. By this I mean, first, that his work as an economist was empirically and theoretically rigorous. He was not a hostage to the dogmas of Marxism and he certainly never allowed ready-made formulae to substitute for the uncluttered 'concrete analysis of a concrete situation'. I also mean, second, that his approach to the data before him was consistently informed by a Marxist conception of capitalism as: a dynamic, highly creative, yet volatile and in many ways brutal system; a system based on class division and conflict in which capital faces the perpetual problem of finding ways to extract labour from 'labour-power'. Not least, Andrew had a fundamental belief in the moral imperative of creating a much more egalitarian society.
The profit squeeze
Andrew's early book, co-authored with Bob Sutcliffe, British Capitalism, Workers and the Profit Squeeze (1972), sets out one of the core ideas of Andrew's economics: that British capitalism--indeed, the entire advanced capitalist world--entered, in the late 1960s and 1970s, into a crisis of profitability. Indeed, if it were not out of step with Andrew's character, one might summarise his basic point, insistently pursued over the decades, simply as: 'It's profitability, stupid!' The rate of profit, according to Marx, is the motive force of the capitalist system. It drives accumulation which, in turn, drives growth. If profitability declines too much, then accumulation ceases and the economy enters into a crisis.
The argument set out in British Capitalism was that the profit rate was falling in British capitalism and that this meant there was an incipient economic crisis which, in turn, had precipitated a growing political crisis. Indeed, in a sense, according to Andrew, the economic crisis was itself at base a political crisis. For if one looked at what was causing the decline in profitability one found that it had its roots in the power of organised labour, buoyed by full employment and tight labour markets, and welfare state protections. Organised labour was using its bargaining power to steadily increase wages and, in the process, was causing labour's share of output to increase at the expense of capital. Capital could not fully win back what it had lost in wage negotiations by price increases because the increase in trade competition also associated with the post-war boom meant that there was less room for price increases. Hence the idea of the 'profit squeeze'. Drawing on the insights of the economist Michal Kalecki, Andrew saw the crisis of profitability as reflecting an unresolved political problem in the post-war social democratic settlement: how to reconcile, over the long-run, the strengthening of labour through full employment with the maintenance of the profit which capitalism requires (Kalecki, 1990 ). Marx had argued that capitalism worked by periodically increasing the 'reserve army' of the unemployed in order to discipline workers' demands. If social democracy aspired to abolish the reserve army, could capitalism itself survive?
It is not difficult to use this theory to explain the phenomenon of 'stagflation', the (to many conventional economists of the time) unexpected combination of rising unemployment and high and rising inflation, which afflicted the British and most other advanced capitalist economies in the 1970s, particularly after the rise in oil prices in 1973-74. Rising unemployment and rising inflation were both symptoms of the profit squeeze. Rising inflation reflected capital's effort to pass rising wage costs onto consumers (ultimately, back to labour) through unanticipated price increases, so far as the pressures of international competition would allow (and the collapse of the fixed exchange rate system in the early 1970s meant that domestic price rises could be compensated by a falling exchange rate, albeit at the price of importing even more inflationary pressure). Rising unemployment reflected the incipient crisis related to the decline in profitability and the slow-down in accumulation.
The mix of high/rising unemployment and high/rising inflation reflected a political stalemate: capital was not strong enough politically to push through the policies--that is to say, the level of unemployment--which would bring 'discipline' back to the negotiating table and rescue profitability and so felt compelled to pass cost increases on in rising prices even as unemployment was rising.
This is, clearly, a Marxist account of the economic crisis of the 1970s (and a highly credible one at that). It is important to see, however, that it is not the orthodox Marxist view of the cause of economic crises. Marx himself famously argued that there is a long-run 'tendency' for the rate of profit to fall under capitalism. But his explanation for this trend was not the same as Andrew's explanation for the decline in profitability which brought an end to the post-war boom. The profit rate depends on three key variables: (i) the share of profits in output; (ii) output per employment hour, or labour productivity; and (iii) the ratio of employment hours to the value of the capital stock, or the labour-capital ratio (1). Marx's argument is that there is a long-run tendency for the labour-capital ratio to fall and, hence, a long-run 'tendency' for the rate of profit to fall. This 'tendency' might be offset by changes in the other variables, but, according to Marx, only temporarily.
While some Marxist economists were content to reiterate this theory (if one can really call it that) as the capitalist world went into recession in the 1970s, Andrew controversially rejected it as an account of the contemporary sources of crisis. He contested Marx's arguments theoretically and empirically (Glyn 1972; 1973; Armstrong and Glyn, 1980).
In a book he co-authored with John Harrison in 1980, The British Economic Disaster, Andrew pointed out that, in fact, the tendency for the labour-capital ratio to fall over time had tended to be cancelled out by a tendency for labour productivity to rise, leaving the profit rate unchanged (Glyn and Harrison, 1980). The contemporary pressure on the profit rate came not from the source Marx predicted but from the fall in the profit share, which reflected labour's political power. In Marx's terms, the problem was not a 'rising organic composition of capital', but severe downwards pressure on the 'rate of exploitation'. Labour was simply powerful enough to claim back an increasing amount of the 'surplus labour' which capital extracted from it. In the US, radical economists such as Thomas Weisskopf developed a similar line of argument to explain trends in profitability there (Weisskopf, 1979, Bowles, Gordon and Weisskopf, 1983, 1986). Andrew's scepticism about Marx's theory of the declining rate of profit was one expression of a wider critical reassessment of Marx's economics amongst the radical economists of his generation (see, for example, Steedman, 1977, Rowthorn, 1980). (2)
If a concerted profit squeeze was the fundamental source of the economic malaise of the 1970s, what was the solution? In Andrew's view, at the time, the answer was at once very simple and immensely challenging: a transition to a planned socialist economy achieved through the nationalisation of a large swathe of manufacturing and financial companies on the basis of a revolutionary workers' government. A member of, and economic advisor to, the Militant Tendency, the Trotskyist 'entryist' organisation within the Labour Party, Andrew set out the case for a Militant-style programme in The British Economic Disaster (1980; see also Glyn, 1982).
His position is perhaps best explained by considering why he was unconvinced by the 'Alternative Economic Strategy' (AES) which, in various formulations, attracted much of the left at this time. The AES looked to handle the crisis by a combination of Keynesian reflation backed by a mixture of price controls, import controls and (in some versions) incomes policy, combined with measures of industrial democracy, selective nationalisation and 'planning agreements' between the state and private firms.
Andrew argued that the AES would not deal with the fundamental issue of declining profitability and so would not restore the capitalist incentive to invest. At the same time, it would not give the state the necessary power to compel investment in spite of capitalist intentions. So the economy would continue to stagnate. The only way the AES could conceivably work would be if it...