BOOK REVIEW: ‘A People’s Guide to Capitalism: An Introduction to Marxist Economics,’ by Chris McKinnon

By Hadas Thier
Haymarket Books, 2018
Hardcover, 293 pages

Hadas Thier has written an exceptional book on Marxist economics. Her People’s Guide to Capitalism is a well-timed contribution for all those seeking critical insights into the machinations of a failing system and the obscurantism of its apologists. She exposes the mystery of capitalist inequality with deceptively simple and straightforward prose. The accessibility of her writing belies the sophistication of her insights and pedagogical talent, a proficiency not always evident in the erudite writings of professional economists. Avoiding the jargon of much contemporary writing on economics, this guide renders Marx’s concepts accessible to a wide audience. It is this ability that makes this the right book at the right time.

Karl Marx’s Capital is a notoriously difficult read, especially Volume I: “A critical analysis of capitalist production.”  Its elusive comprehensibility flows from the nontraditional approach Marx took. His method of scientific inquiry sets out a plan to probe the inner workings and contradictions of the capitalist system. Unlike his contemporaries, in the hard sciences, Marx had to establish a social likeness to the laboratory and its instruments. He accomplished this with the power of abstraction. By isolating and simplifying the key elements of the system, he was able to present them in their clearest form.

The abstract concepts where Marx begins his inquiry are commodities, values and money. These concepts form the bases of the first three chapters of Volume I and have left more than a few readers bewildered and too frustrated to forge ahead. This was a problem, Marx conceded, for which he could imagine no workable solution.

“The method of analysis which I have employed,” he wrote, “and which had not previously been applied to economic subjects, makes the reading of the first chapters rather arduous, and it is to be feared that the French public, always impatient to come to a conclusion, eager to know the connection between general principles and the immediate questions that have aroused their passions, may be disheartened because they will be unable to move on at once. That is a disadvantage I am powerless to overcome, unless it be by forewarning and forearming those readers who zealously seek the truth. There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.”

Thier is a socialist and activist, not an economist. She offers a way into and through Marx’s great work with a clear and readable narrative. Contra Marx, Thier begins with the history of capitalism before moving on to theory. She describes how capitalism emerged from feudalism. On the creation of the two great social classes, the capitalists and proletariat, she writes, “The division of society into haves and have nots did not gently come to pass, and certainly not through the frugalness and intelligence of a small elite. It was the outcome of a violent upheaval, which forced large swaths of the population from their lands and traditional means of self-sufficiency.” “Capital comes [into the world], Marx quipped, dripping from head to foot, from every pore, with blood and dirt.”

Thier extends the thought, “the violence, coercion, legislation and upheavals necessary for the birth of this new system evince just how unnatural and vicious the road to capitalism was.” Brief discussions of the securing of the capitalist state and the “primitive accumulation” of wealth via colonial expropriation, the slave trade, and the plantation economy follow. The next two chapters address the labor theory of value and money. The core of the book covers the myth of free markets and the superiority of Marx’s value theory. Thier stresses that only labor creates value for society as distinct from ‘utility’ and ‘scarcity’ theories of value that are put forth by bourgeois economists.

Thier demystifies the function of money in modern economies, commodity exchange, and describes the function of digital or cryptocurrencies like bitcoin. Marx’s distinction between price and value is revealed here, and Thier shows why capitalists must continuously accumulate capital by exploiting labor power, thereby accelerating the concentration and centralization of wealth, thereby expanding the rift that separates the few from the many. As Marx wrote, “The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.”

Left: title page from the 1867 edition of Capital.
Right: Karl Marx

Thier, in harmony with Marx, views capitalism as a crisis-prone system. And like Marx, Thier does not believe that the working class will automatically defeat capitalism. While it might be true that “the bourgeoisie … produces … its own gravediggers,” Thier explains that Marx did not see that outcome as inevitable. The development of revolutionary, working-class, self-awareness is an essential part of that possibility. The active commitment to class struggle can change workers’ consciousness and enable workers to realize the full potential of their collective agency. “Understanding capitalist crisis,” she writes, “is central to the theory of revolutionary Marxism. The volatility and destruction brought upon by endemic, periodic crises make capitalism a fundamentally precarious system, and at the same time opens the way toward class struggle and the potential for revolution.” Thier asserts that the failure of mainstream economics to concede this point is rooted in a flawed analysis that “starts and ends at the surface of the economy—price fluctuations, monetary policy, and financial markets. But Marxists argue that crises originate at the system’s core and are not imposed on the system from outside.”

Thier’s discussion of crisis theory may skirt orthodoxy. It is overproduction, not underconsumption, she says, that is the is catalyst of economic decline. And her take on the “falling rate of profit” is nuanced and rejects any absolute outcome. Marx’s ‘law of the tendency of the rate of profit to fall’, she says, speaks to the propensity, not the certainty, of declining profits. Quoting Marx, “The tendential fall in the rate of profit is linked with a tendential rise in the rate of surplus value, i.e. in the level of exploitation of labor.” This dual tendency, Thier writes, “increases the rate of exploitation and decreases the rate of profit…but in a way that the former does not keep up with the latter.” The final chapter considers the origins of the ‘Great Recession’ of 2008, linked to the so-called “subprime mortgage crisis.” Thier concludes that it was not mainly a financial crisis, as is often stated, but writes that “there is no hard line between financial and non-financial” interests in the real economy.

A People’s Guide to Capitalism is an invaluable guide to Marx’s Capital and deepens our understanding of the capitalist system. It is a guide for twenty-first-century revolutionaries, packed with contemporary and easily recognizable examples. It is highly recommended to activists and students at all levels of experience. Read this book, discuss it, and apply the deeper understanding gained in the struggles ahead.