Robert Brenner’s Unprofitable Theory of Global Stagnation

Robert Brenner’s theory of the post-1973 global economy — which depicts a long era of “stagnation” caused by chronic industrial overcapacity — is logically dubious and doesn’t fit the facts. But the t

Over the past twenty-five years, UCLA economic historian Robert Brenner, a longtime contributor to the New Left Review, has developed an increasingly influential theory of what he calls “the long downturn” — the global economic slowdown that began in 1973 with the passing of the postwar boom.

In Brenner’s account, for a half century the world economy has stagnated under the weight of a long crisis of profitability caused by chronic overcapacity in global manufacturing — a problem that first made itself felt with the postwar reentry of German and Japanese firms into already-saturated export markets, but which has only gotten worse with time.

For Brenner, chronic overcapacity is the symptom of a flaw in the economic mechanism of capitalism, arising from the unplanned anarchy of market production: firms in overcrowded industries, saddled with sunk costs in the form of fixed capital, lack the incentive to withdraw from unprofitable lines of business, resulting in intractable pileups of excess capacity that breed cutthroat competition, sinking profit rates, and, ultimately, stagnation.

The politics of the Brenner thesis might not be obvious to the naked eye, but we got a glimpse of it earlier this year via a commentary by the Berkeley sociologist Dylan Riley, a sometime coauthor of Brenner’s, criticizing certain socialists for what Riley thought were their overly indulgent evaluations of the Biden administration’s industrial policies.

Whatever the merits of his case, what was notable about Riley’s article was the use he was able to make of Brenner’s economic framework in service of a political argument: Bidenomics, he believes, will result in “a massive exacerbation of the problems of overcapacity on a world scale,” and this fact, in his judgment, exposes “neo- Kautskyite” socialists as lacking a “credible answer to the structural logic of capital.”

Crisis in Theory

Some readers might still be puzzled about what the connection is, exactly. Why should the prospect of, say, overcapacity in the global solar panel industry exert any influence one way or the other on how socialists judge something like the Inflation Reduction Act? As Eric Levitz of New York Magazine pointed out, a “global glut of low-carbon technology” is hard to see as a nightmare scenario, to put it mildly.

But what might seem like a non sequitur becomes less mysterious once you’ve grasped the political subtext underlying Brenner’s theory of the long downturn.

[Read the rest at Jacobin.]