Brenner wants to explain two developments in particular. Firstly, the long boom in the major capitalist countries between 1950 and 1973, and secondly the equally long downturn from 1973 to the present. His explanation of these phenomena is basically very simple, though he links it to a large amount of historical detail (much of which is very interesting).
He sees the turn from boom to downturn as being fundamentally caused by competition between different nationally based capitalisms. In particular he argues that it was the rise of Japan and Germany as competitors to the USA which first fuelled the boom, which was largely based on growth in those countries, and then led to a world wide crisis of over-production and over-capacity.
Competition from Japan and Germany has meant that US and other manufacturers have faced a crisis of profitability since 1965 or so, which has become acute since 1973 and has persisted almost to the present day. This has fed through into lower investment and so into lower productivity. Lower productivity has meant that capitalists have been desperate to keep wages down and have correspondingly led a massive assault on working class organisation, especially in the USA.
This assault has been partially successful in the US, according to Brenner. Wage growth has been held down so much that profitability has recovered in the last few years, allowing for a weak and sporadic boom. But this boom is at the expense of capitalists elsewhere, especially those in Japan, Germany and East Asia who have been squeezed out of export markets by US competition and are now in deep crisis.
Brenner presents his account of the boom and downturn as being fundamentally different from the Marxist analyses previously offered. There are three main variants of these. First, there are a variety of accounts which are based on Marx's theory of the tendency of the rate of profit to fall. For Marx profits only arise through the exploitation of living labour in the productive process. Use of plant and machinery can not on its own create profit, it only allows for the employment of workers who do create profit and value. Technological change, by increasing the volume of such plant and machinery used by each individual worker, tends to drive the overall profit rate down, because capitalists have to lay out more capital for each worker they are employing. This mechanism is seen to be at the root of the collapse of profitability at the onset of the downturn in the early 1970s.
The second major account of the transition from boom to downturn is the `profit squeeze' approach. This sees the crisis as being caused by worker militancy which raised wages and led to profits being cut back. The third approach is the `regulation' approach, originating in France. This view sees the crisis as being caused by the exhaustion of the `Fordist' approach to economic regulation, based on high productivity due to assembly line production coupled with high levels of demand stemming from wage growth and from welfare state expenditure. The crisis of Fordism, it is argued, is rooted in a decline in productivity growth which threatens the balance between production and consumption.
Brenner dismisses the theory of the falling rate of profit quite quickly.
He then treats the other two approaches as being essentially similar, in that both are based on seeing the crisis as being rooted in working class resistance to capital - either over wages or over productivity. In contrast, he argues, it is competition between capitalists that is key to the downturn and relations between capital and labour follow from the way this competition has developed.
If Brenner had managed to develop a distinctive and convincing Marxist account of the boom and downturn which was superior to the available alternatives then that would have been a major development. Unfortunately, his analysis is a failure. It is not as different from existing views as he maintains and in many ways it is actually weaker. To see this we need to look at three things; Brenner's method, his theory of economic crisis and his account of the post-war economy.
Brenner does not really use Marx's concepts at all. Most of his work is simply an analysis of the influence of three factors on the rate of profit - namely the distribution of income, productivity and the ability of capitalists to raise prices. There is nothing in this analysis which would be strange to mainstream economists.
That does not of course mean it is necessarily wrong. But it does raise questions about the view of New Left Review that Brenner's work provides the basis for a renewal of Marxism.
More seriously Brenner presents a view of crisis as being determined essentially by just one factor - inter-capitalist competition). It is worth comparing his account with that of Ernest Mandel in his book Late Capitalism, the most detailed account of the post-war boom to have emerged from the Fourth International.
Mandel argues that the rate of profit is determined by (is a `seismograph of the history of') no fewer than six fundamental variables. `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 basic laws of development is necessary in order to produce any particular outcome' he states.
He traces the effects of these variables through a number of concrete developments such as the evolution of arms production, technical change and the transformation of raw materials production. Compared to the richness of this account, Brenner's analysis appears rather simplistic.
Mandel often runs into quite severe difficulties as a result of the complexity of his model. But these difficulties arise from the complexity of capitalism itself and cannot be evaded by arguing that capitalist development is reducible to the effect of just one variable.
Brenner's analysis of the tendency of the profit rate to fall clearly shows the weakness of his approach. His attack sees Marx's theory as arguing that profits will always and inevitably fall under capitalism. Marx's position is rather that there is a tendency for them to fall. The actual course of the profit rate depends on the interaction of this tendency with other factors such as those considered by Mandel.
Brenner analyses Marx as if he were writing mainstream economics with various factors acting simultaneously to produce an equilibrium rate of profit. But this was not Marx's approach. For him capitalist production was fundamentally marked by the way it takes place in time and so new developments constantly disrupt any equilibrium. The tendency for profits to fall arises from just such an approach and cannot be understood in a static framework.
Criticisms of Brenner's method are not enough to show his theory is wrong. However, there are real problems with the theory itself. Most importantly, any theory of crisis based on capitalist competition comes up against the problem that such competition is essentially redistributive. It can explain why one firm or country enters difficulties when it is out-competed. But it cannot show why the capitalist world as a whole should enter a downturn.
Brenner's answer to this is that established companies do not respond to new competition by leaving the market. Because they have invested large amounts in the past in fixed capital (such as buildings, plant and machinery) they are prepared to stay in business and compete against newcomers by lowering prices. They aim just to make a profit on their circulating capital (wages and raw materials payments). But by doing this they lower the overall rate of profit for all concerned, both themselves and the new entrants. This is the response that Brenner sees US companies making to Japanese and German competition in the 1970s and 1980s.
There are two questions about this. When the new entrants realise that the existing companies will be prepared to lower prices rather than give up the market to them why don't they stop entering the market? There is a long-standing tradition in orthodox economics which sees exactly this mechanism as being a way of stopping new companies entering markets.
What motivates new entrants to come into the market even when they know it will lower profits? Secondly, once fixed capital has worn out, why don't the existing firms leave the market and restructure their activities by moving to areas where profits are higher and there is less competition? Brenner does not really answer either of these questions. He analyses the first by saying that the entering firm may simply miscalculate or may have a strategic reason for accepting a lower rate of profit (page 27).
But such strategic reasons are surely based on expecting higher profits in the future. Without these occurring Brenner seems to be saying that the crisis resulted simply from capitalist irrationality.
Brenner's answer to the second question rests on his account of post-war
economic history. Here, however, he gradually moves away from the theoretical framework he has earlier outlined and introduces a number of new factors. The central one of these is the role of exchange rates. In his narrative account Brenner sees the movement of exchange rates as the main way in which US capital has competed with Japanese and German capital. As Japan and Germany moved into the US market and out-competed US companies in the late 1960s, the US responded (for almost two decades) with a sustained devaluation of the dollar, raising their competitors' costs and lowering their profits. In this way US firms were able to remain in the market at the cost of lower profitability worldwide.
The difficulty of this account is that, again, exchange rate changes are redistributive. They can explain the transfer of wealth between different national capitalisms but not a generalised crisis across the capitalist world.
For example, the fall of the dollar opened up two possibilities. First by raising incomes in countries like Japan and Germany it could have opened up new markets for US goods. Secondly, by lowering the cost of raw materials (oil for example is priced in dollars) it could have boosted profitability in those countries and helped them compete in the US and other markets. It could also, of course, have lowered costs for the increasing number of US multinationals producing abroad. It is not clear why such exchange rate changes should have led to generalised crisis.
Actually, Brenner's analysis of the link between exchange rate changes and crisis is spelt out by implication on pages 28 and 29 of his book. The basic argument is that some of the gains of higher exchange rates in Japan and Germany went, not to capitalists, but to workers. Wages did not fall in those countries to reflect the extra purchasing power of the mark and the yen and as a result German and Japanese companies became uncompetitive. But this means that Brenner's account is not as different from the profit squeeze and regulation approaches as he hopes. They emphasise workers militancy and see restraints on capitalists in raising prices as a secondary factor. Brenner sees these restraints as central and workers militancy as a secondary factor.
But both work in the same framework.
Even if we accept that capitalist competition may have sparked off the downturn, it is still hard to explain why it has persisted for 25 years.
Brenner has two further arguments here. First, he argues that the explosion of debt in the capitalist world has hindered the restructuring of capital. But he fails to put forward any detailed analysis of why this should be the case and why financial capitalists should have failed to enforce restructuring. Secondly, he argues that monetarism, by creating such an acute crisis in the early 1980s, made restructuring difficult by closing down opportunities for profitable production in new areas. But this ignores the way in which crises have always been seen as providing the basis for restructuring and change in the Marxist tradition.
Analytically, despite individual insights, Brenner fails to help us understand the long boom and the following downturn, and by extension the current economic crisis. He is certainly right to argue that inter-capitalist competition must be a part of any explanation of booms and crises. But this is hardly a new insight, and the links Brenner proposes between such competition and other key areas, for example class struggle and technological change, are simplistic and misleading.
Politically, however, the book is even more problematic. The best political conclusion that can be drawn from Brenner's work is a reformist one - that the USA, EU and Japan should jointly agree to co-ordinate their production and share out markets more equitably. The worst though is a reactionary one - that the problems in each individual economy spring not from the nature of capitalism itself but from the producers living and working in other countries. Sadly, Brenner's account may well turn out to be an obstruction to the forging of that international working class solidarity which is the only solution to the current economic turmoil.