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[W]e should be aiming at a steady long-period trend towards a reduction in the scale of net investment and an increase in the scale of consumption (or, alternatively, leisure).

J.M. Keynes, ‘The Long-Term Problem of Full Employment’

From industrialisation to the present day, Alan Nasser, author of Overripe Economy, writes a genealogy of the emergence of a finance-ridden, authoritarian, austerity-plagued American capitalism.

Surveying the ruthlessly competitive capitalism of the nineteenth century, the maturation of industrial capitalism in the 1920s, the rise and fall of capitalism’s Golden Age and the ensuing decline towards the modern era. Nasser reveals why the emergence of the persistent austerity of financialised neoliberal capitalism is the natural outcome of mature capitalism’s evolution.


John Maynard Keynes predicted that the time would come when industrial capitalism’s productivity would become so great, and its capital goods both so abundant, cheap, and labour-saving, that the expected return on superfluous private capital would decline, investment would shift from productive projects to speculative ones, and the ranks of the technologically unemployed would swell. He argued that what would save capitalism from the ensuing likelihood of financial bubbles, real-economy depression and the threat of either fascism or socialist revolution – he was averse to both – was a transition from private to public investment and substantially shortening the work week by ‘spreading the bread thin on the butter,’ with all employable workers enjoying higher wages and shorter and rotating shifts on the remaining jobs. The result would substantially increase leisure time, allowing persons finally the ability to cultivate the vast range of non-material talents and capacities we all harbour, but cannot cultivate under capitalist conditions. Both Marx and Keynes saw that this development would mark the birth of a new, flourished human being.

Beginning with nineteenth-century American industrialization, Overripe Economy describes the historical process by which Keynes’s prediction of superabundant, increasingly cheaper and continuously labour-saving capital goods has been not merely achieved but overachieved and in half the time Keynes imagined the process would take. The same historical process has generated the dire consequences anticipated by both Marx and Keynes: a shift of wealth and income from production to finance, increased financial instability entailing mounting fragility in the productive economy, burgeoning inequality on a global scale, declining living standards and authoritarian politics. Historical experience confirms that such conditions mark the widening of austerity and precarity and consequently the decline of democracy and the emergence of repressive government. One of the tasks of this book is to trace in historical detail the process, beginning with the industrialization of America, that makes increasingly evident the incompatibility of capitalism and democracy. The author intends this historical argument to constitute a powerful case for the urgency of economic democracy, i.e., democratic socialism.


The entire historical narrative is informed and unified by the concepts of disaccumulation, a term introduced by the late historian Martin Sklar and further developed by the contemporary historian James Livingston, and industrial maturity. The accumulation of American capital commenced with industrialisation. The establishment of an infrastructure of railroads, steel production, mining and petroleum extraction attracted both investment capital and skilled labour to the capital goods sector of the economy. During basic industrialisation both production and productivity increased dramatically. As productivity advanced, as it always must under capitalism, capital goods became both more efficient and cheaper. With this development in full swing, the production or accumulation of the means of production ceased to be heavily capital – and labour – attracting. Thus, began the process of disaccumulation: the capital goods sector began to shed both labour and capital. More efficient equipment led to the displacement of labour and required declining investment outlays. We are familiar with the production process tending to displace labour from more to less productive endeavours. But the same process displaces capital also, a notion with which we are less familiar. When the production process requires both smaller investment outlays in absolute money terms, and investment becomes a declining percentage of the Gross Domestic Product, the economy has achieved basic industrialisation; it has become industrially mature.

Ripened if you will… The time has come when only rising levels of private and public consumption, made possible by the declining net investment of exploding surplus capital, can avert the persistent austerity the developed capitalist world has exhibited since the beginning of deindustrialisation in the mid-1970s.

Overripe Economy traces the political-economic long-term atrophy of net investment from 1911 onward, when the growth rate of both investment spending and real GNP or Net National Product began a significant slowdown, and the ratio of net investment to national output exhibited secular decline. This persisted through the boom years of consumer capitalism, the ‘roaring twenties,’ when net investment stood at zero. Between 1900 and 1930 the percentage of national income saved each year tended to increase even as the portion invested in productive equipment tended to decline. Since the digitalisation of production, the business press has been replete with reports of the IT-induced intensification of the tendency of the cost of capital goods to fall. Surplus capital burgeons and is hoarded or finds its way not into real-economy investment or increased production, but into financial sources of profit, now taking the predominant form of higher share prices and dividend payouts generated by massive stock buybacks. Because these buybacks are largely based on leverage and not equity, a massive debt bubble is forming among non-financial corporations. This portends yet another crisis based on unpayable debt.

Investment has ceased to be the driving force of capitalist production. This requires a fundamental rethinking of the fons et origo of the accumulation of capital, of capitalism’s Prime Mover. The system is no longer investment-driven; it must be consumption-driven. Neoclassical theory cannot accommodate this momentous historical shift. Indeed, Marxian economics adheres to the M-C-M schematism, where M represents the allegedly originating and ever-central investment impetus. One of this book’s central theses is that the notion of capitalism as essentially investment-driven is peculiar to the period of industrialisation and is now historically and theoretically deficient and, most significantly, leads to a regime chronically prone to ineluctable credit crises. And implicit in that arrangement, the book argues, is both a long-term tendency to depress living standards and the political policy of imposing, indeed enforcing, precarity upon a widening swath of the working population. Here is the key to the much-lamented decline of the American middle class. The book’s argument demonstrates that if the legitimate needs of working people are to be met, the economic settlement must be directed by the conviction that sustainable growth, full employment and just living standards must be driven not by further and greater capital accumulation, but by rising levels of private and social consumption and public investment supported by higher wages, shorter work hours and greater leisure time. Only economic democracy, democratic socialism, can deliver this kind of society.

We must remind ourselves that the U.S. working class has enjoyed, over its entire existence, a mere thirty-three years of alleged ‘prosperity,’ the ‘roaring twenties’ (1922-29) and the New Deal/Great Society ‘Golden Age’ (1949-73). During each of these periods working households were able to enjoy ‘American exceptionalism’ only by assuming cumulative and unsustainable debt. And during the twenties, 71 percent of working households were on or below the poverty line, inequality was very great – 1928 exhibited the twentieth century’s greatest inequality year to date. It was followed one year later by the great Depression. During the Golden Age 1928’s inequality was for the first time matched for record inequality in 2007, followed once more one year later by the Great Recession. The costs of investment-driven and, I argue, therefore credit-driven, capitalism, are not negligible. These costs are entirely borne by the working class; the fortunes of the financial ruling class have never been more superfluous.

Because the prevailing investment-driven settlement structurally generates surplus capital, an un – and underemployed surplus population, widespread insecurity, pervasive social dislocation and portents of fascist rule, the settlement urged by the young Marx and by Keynes in Economic Possibilities For Our Grandchildren is not merely a ‘better idea.’ It is one of the two salient alternatives the evolution of capitalism has placed on history’s agenda. Only one is consistent with the interests of the working class. The other is a return to what has been the historical default position of capitalism: a working population condemned to penury and, as is becoming increasingly clear, debt peonage. Socialism or barbarism?


Overripe Economy: American Capitalism and the Crisis of Democracy by Alan Nasser is available from Pluto Press


Alan Nasser is Professor Emeritus of Political Economy and Philosophy at The Evergreen State College in Olympia, WA and has lectured at universities across the world, including Oxford University. His writing over the last thirty years has dealt with political and economic issues, as well as legal theory, philosophy and psychoanalysis. He is a frequent contributor to CounterPunch and Monthly Review, and is a member of the Union for Radical Political Economists.