ABSTRACT
This chapter focuses on Andrew Kliman's book The Failure of Capitalist Production, the recent financial crisis and the Great Recession in the United States. Capitalism, he argues, contains a tendency for the rate of profit to fall. The reasons for this are nested in a complex Marxist analysis, provided in detail within the book. Capitalist companies adopt labor-saving technologies that boost productivity. If the problem with deficit spending is that it is inflationary, and if the problem with capitalism is that it contains a deflationary tendency then it is too easy to see how the two wrongs can make a right. If the government can always engineer inflation, capitalism cannot be doomed to a falling rate of profit. Kliman's story seems to be that as profits fall, investment temporarily increases, though it is increasingly risky and unproductive investment. Thus Kliman's argument that the falling rate of profit makes financial crises inevitable simply ignores the potential role of government policy.
