Marxian Economics and the Great Depression

Abstract

The Great Depression was by far the most severe economic crisis in the history of capitalism. In the United States real GNP fell by 9.9 per cent in 1930, a further 7.7 per cent in 1931, and by 14.8 per cent in 1932. In the latter year industrial production in both Germany and the US was no less than 47 per cent below its 1929 level (for the other capitalist powers the collapse was less complete, but nevertheless severe).1 Marxian economists asked two questions about this cataclysm. What did it mean for the future of the capitalist system and the prospects for socialism? And how could it be explained consistently with Marx’s theory of crisis? Neither question was simple. Marx’s theory of capitalist crisis was nowhere well worked out, nor, indeed, even organised systematically, while the political history of the 1930s involved novel developments. The most notable phenomena were the success of fascism in Germany, the New Deal in the United States and the growth of state intervention elsewhere. They raised once again the question of the state’s role in modern capitalism and the basis of mass support for reaction or reform rather than revolution.