Reinvigorating Marx: A critical exploration of value theory in 21st-century capitalism (plus: Re-reading Giovanni Arrighi on the struggle for global hegemony)
Capitalism in the Twenty-first Century Through the Prism of Value
By Guglielmo Carchedi and Michael Roberts
London: Pluto Press 2023.
Capitalism in the Twenty-first Century Through the Prism of Value, by Guglielmo Carchedi and Michael Roberts, aims to explain 21st-century capitalism through Karl Marx’s value theory. It aligns with similar efforts, such as Italian economist Mariana Mazzucato’s The Value of Everything (2018), to reintroduce value theory into mainstream discourse. Unlike works that dismiss the labour theory of value, Carchedi and Roberts ground their analysis in Marx’s theory of value in capitalism.
They delve into critical aspects of modern capitalism, including the value of nature, the relationship between value and money, and the primary divisions within capitalism, such as crises and imperialism. The book’s strength lies in its original research, particularly the chapters on the value-based theory of inflation and economic imperialism. Additionally, it engages with contemporary issues such as COVID-19, examining how the law of value manifests during crises.
The authors investigate surplus value extraction, both domestically and internationally, and the strategies capitalists use to counter the declining rate of profit. They expose how misconceptions and distortions in modern capitalism are often exploited to protect capital's interests, particularly at the expense of labour.
Value, price and the ecological costs of capital accumulation
The book begins by addressing how capitalism disrupts the relationship between humans and nature. Using Marxist value theory, the authors critique methods such as natural capital accounts (NCA), arguing that they fail to accurately measure natural wealth due to a fundamental confusion between value and price. As long as natural goods are not market transactions, their value cannot be accurately estimated, much like how GDP requires imputations for up to 30% of goods and services.
Capitalism seeks to reduce the share of circulating capital relative to fixed capital by driving down input value while expanding commodity production. The book’s first chapter demonstrates how energy revolutions have facilitated new accumulation waves through reducing fixed capital costs and the organic composition of capital.
Their original research shows a strong correlation between carbon emissions and profits, suggesting that faster profit growth leads to increased emissions. The chapter also critiques market-based climate solutions, arguing that they fail because mitigation is not profitable for companies. The degrowth movement is also criticised for lacking a class perspective and an ecological theory of capitalist accumulation.
The authors conclude that controlled and planned growth under socialism, with producers controlling production, is necessary to reduce ecologically destructive production while enhancing sectors focused on human well-being and ecological regeneration.
Challenging conventional wisdom: MMT, cryptocurrencies and inflation
Chapter two critically examines the relationship between value and money, beginning with a critique of Modern Monetary Theory (MMT). The authors argue that MMT overlooks the foundational role of value in money's existence and fails to account for capitalism's nature, creating a fictitious economic world. While Marx sees money as a representation of abstract labour and value, MMT views it as a state product, confusing money with credit/debt.
MMT’s assumption that the state can create money without limits is critiqued, as it ignores the necessity of production to increase money value. The chapter argues profits drive investment, not vice versa, and that private savings enable government deficits. The authors contend that MMT benefits rich countries through currency seigniorage, while smaller economies risk hyperinflation if money is printed excessively.
The chapter also questions whether cryptocurrencies such as bitcoin can challenge capitalism, pointing to their speculative nature and limited functionality as money. Bitcoin fails as a reliable currency because it lacks stability as a store of value, a means of exchange and a unit of account.
The authors introduce the value rate of inflation (VRI) as an alternative measure of inflation, finding that changes in the VRI explain over a third of CPI variations in the US between 1960–2018. They suggest using this indicator to protect labour’s purchasing power in wage negotiations. This Marxist perspective on inflation is gaining traction beyond traditional circles, as seen in the work of economists such as Isabella Weber, who explores the concept of "greedflation" (Weber and Wasner, 2023).
Marx’s theory of crises and economic imperialism
Carchedi and Roberts discuss Marx's theory of crises, attributing capitalist crises to the tendential fall in the profit rate, with its tendencies and counter-tendencies. Using US corporate profit and investment statistics, they demonstrate that every post-WWII crisis followed a peak in profit rates that led to investment collapse. The authors reject underconsumption as a crisis cause, noting that 11 of 12 post-WWII crises were preceded by rising wages.
Economic crises stem from the shrinking ability to valorise capital due to falling profitability. But imperialist exploitation of the capitalist periphery can expand this space. The authors define imperialist exploitation as the long-term net appropriation of surplus value by high-tech countries from low-tech ones, through channels such as currency seigniorage, investment income flows, unequal trade exchange, and exchange rate changes.
Building on previous research (Carchedi and Roberts, 2021), they present a theory of unequal exchange, finding that between 1950–2019, the annual surplus value transfer from dominated to imperialist countries averaged 1% of GDP. Measured against annual export profits, this transfer accounted for more than 40% of imperialist countries' profits. The authors criticise Brazilian economist Ruy Mauro Marini's super-exploitation thesis and oppose using categories like North/South, arguing that they shift focus from exploitation to poverty and undermine global worker solidarity.
Regarding China, the authors conclude it is not an imperialist country, as surplus value transfers from China to the imperialist bloc have averaged 5-10% of its GDP since the 1990s. Although some Marxists characterise China as "an empire in formation" (Katz, 2022), Carchedi and Roberts see it as part of the dominated bloc. They note that emerging economies can only develop by raising productivity with efficient technologies, which imperialist countries will always oppose, as seen in efforts to throttle China’s chip industry (Umbach, 2024).
The path to democratic socialism (not a robot society)
In the final chapters, Carchedi and Roberts discuss how progressive mechanisation and robotisation may affect the future and why socialism is the only alternative to capitalism. They argue robots and AI, while reducing labour costs, do not eliminate capitalist contradictions but rather intensify crises and inequality.
The authors emphasise the materiality and class nature of knowledge production under capitalism, arguing that even in an information society, capitalism's old features would re-emerge. They insist that a society with minimal human toil and no poverty requires a shift to common ownership and advocate for a democratic socialism. Carchedi and Roberts outline an analytical framework for a transitional economy, applying it to the Soviet Union and China.
They briefly treat the topic of state capitalism, which is often used to describe the socio-economic systems in the former Soviet Union and China. This point of view was popular among Yugoslav economists who described the Soviet economy as “etatism” (Horvat, 1982), and more aligned with state capitalism than true socialism. However, Carchedi and Roberts argue the concept of “state capitalism” cannot be applied to the Soviet Union because there was no capitalist competition and the allocation of resources was not left to the decision of individual capitals.
But what about China? While acknowledging the significant capitalist elements in China’s economy, they argue China’s state-owned sector and economic planning represent socialist elements crucial to its industrial policies. They disagree with the view that China is a capitalist country (Milanović, 2019) but describe China as a “trapped transition,” where capitalist and socialist accumulations compete, leading to inconsistent development.
The authors argue that social planning can be rational, efficient and democratic, examining models such as negotiated coordination and participatory economics, which resemble Yugoslav self-management socialism. Despite its failure in Yugoslavia, the viability of this model under different circumstances remains debated. Some radicals claim it was merely capitalism disguised as socialism (Katalenac, 2013), but a more accepted view suggests that Yugoslavia failed due to inadequate reliance on the market and poor balance between self-management and governance (Estrin, 1991). Horvat (2001) blames the 1976 reform for reducing self-management to a façade two decades before Yugoslavia collapsed. The concept of cooperative self-management has re-emerged in mainstream economics, even within capitalist frameworks (Piketty, 2020), suggesting it may still have potential and that it is too early to bury this concept for good.
Carchedi and Roberts' book can be read as either addressing major contemporary capitalism issues individually, or transversally as a collection of value analysis techniques applied to modern capitalism. For example, an analysis of profitability is applied to understand the capitalist drive to intensive use of natural resources to lower the cost of raw materials. The same approach, but in its cyclical form, is used to explain the periodic crises of capitalist production as the average rate of profit falls. Surplus value appropriation as a mechanism to counteract the tendency of the falling rate of profit also plays a major role in explaining economic imperialism and relations of dependency in the capitalist world-system. The book effectively demonstrates the versatility, continued relevance and value of Marxist value theory (pun intended), contributing significantly to the Marxist renaissance in economics.
References
Carchedi, G., & Roberts, M. (2021). “The economics of modern imperialism”. Historical Materialism, 29(4), 23-69.
Estrin, S. (1991). “Yugoslavia: The case of self-managing market socialism”. Journal of Economic Perspectives, 5(4), 187-194.
Horvat, B. (1982). The Political Economy of Socialism. Armonk, NY: M. E. Sharpe, Inc.
Horvat, B. (2001). Ekonomika brzog razvoja. Sarajevo: Forum Bosna.
Katalenac, J. (2013). “Yugoslav Self-Management: Capitalism Under the Red Banner”. Insurgent Notes: Journal of Communist Theory and Practice.
Katz, C. (2022). Dependency Theory After Fifty Years: The Continuing Relevance of Latin American Critical Thought. Chicago: Haymarket Books.
Li, M. (2021). “China: Imperialism or Semi-Periphery?”. Monthly Review, 73(3), 47-74.
Mazzucato, M. (2018). The Value of Everything: Making and Taking in the Global Economy. London: Allen Lane.
Milanović, B. (2019). Capitalism, Alone: The Future of the System That Rules the World. Cambridge, MA: Harvard University Press.
Piketty, T. (2020). Capital and Ideology. Cambridge, MA: Harvard University Press.
Umbach, F. (2024, April 29). “The escalating chip war between China and the West”. GIS.
Weber, I. M., & Wasner, E. (2023). “Sellers’ inflation, profits and conflict: why can large firms hike prices in an emergency?”. Review of Keynesian Economics, 11(2), 183-213.
Re-reading Giovanni Arrighi on the struggle for global hegemony
First published at Elusive Development.
As Branko Milanovic has recently remarked, there are some famous books whose ideas have been so absorbed into social sciences that the books themselves are no longer read. He was speaking about Karl Polyani’s Great Transformation. But the same can be said about other books, such as Giovanni Arrighi’s The Long Twentieth Century: Money, Power, and the Origins of Our Times (1994).
In this book, Arrighi examines the historical development of global capitalism and the cyclical rise and decline of hegemonic powers. He introduces the “two logics” framework as a way to understand the dual but intertwined forces that drive the behavior of states and capitalists within the world-system. This two-logic framework has become a standard reference point for the analysis of modern hegemonic relations (see, for example, Claudio Katz’s recent La crisis del sistema imperial). But what does Arrighi mean by this?
Arrighi argues that global hegemonies operate according to:
- The logic of capital: This logic is primarily economic and focuses on the pursuit of profit and capital accumulation. It reflects the interests of capitalists and corporations who aim to maximize returns through trade, investment, and market expansion.
- The logic of power: This logic is primarily geopolitical and concerns the state’s pursuit of power, security, and influence. It reflects the interests of state actors who prioritize political control, military strength, and strategic dominance.
These logics are not always aligned and can sometimes come into conflict, as states pursue power and security in ways that may disrupt global economic activities, while capitalists seek open markets and stable conditions for profit-making. Thus, the US economic interests in maintaining open markets sometimes clash with its geopolitical interests, leading to conflicts that may disrupt global trade (as seen in sanctions or military interventions). At the same time, China’s geopolitical ambitions, including securing regional dominance, often require state-driven strategies, such as building alliances or military capabilities, that may not align directly with the interests of global capital.
This conceptualization helps to explain the cyclical nature of hegemonic transitions in global capitalism, where economic and political dynamics are interrelated but distinct. It is particularly relevant to understanding imperialism, as hegemonic states navigate both economic and geopolitical pressures in maintaining their global dominance.
The “two logics” framework becomes especially useful in analyzing contemporary geopolitical tensions, such as the conflict between the West on one side, and China and Russia on the other. It explains, for example, why the current US-China rivalry has escalated beyond trade and investment disputes into broader strategic and military tensions, underscoring the complexity of imperial competition in the 21st century.
This framework allows for a more nuanced understanding of how geopolitical and economic interests converge, collide, and shape global developments. When applied to the current tensions involving the West, China, and Russia, this concept illustrates the intricate interplay between state power, economic forces, and imperial dynamics.
Logic of power: Geopolitical tensions
At the heart of the geopolitical conflict is the struggle for global dominance. Russia and China both seek to challenge Western hegemony, while the U.S. and its allies aim to maintain their influence. This struggle can be seen as the manifestation of the logic of power, where state actors prioritize geopolitical control over economic concerns.
Claudio Katz (2023) offers valuable insights into Russia’s evolving role. Katz describes Russia as a “non-hegemonic empire in gestation,” asserting that while Russia does not fit neatly into the imperialist structure dominated by the US, it also harbors imperial ambitions, particularly in its post-Soviet sphere of influence. Katz argues that Russia is attempting to carve out an independent geopolitical path, which explains its confrontational stance toward NATO expansion and its assertive role in Ukraine and other neighboring states.
Boris Kagarlitsky further expands on this in Empire of the Periphery and From Empires to Imperialism, where he characterizes Russia as a “peripheral empire.” According to Kagarlitsky, Russia is caught between the imperial core and the periphery, combining elements of peripheral dependency with imperial ambitions. The annexation of Crimea and support for separatist movements in Ukraine highlight Russia’s efforts to maintain control over its regional sphere, driven by its geopolitical need to buffer against NATO encroachment.
The geopolitical rise of China can be viewed through Katz’s (2023), where he argues that China is not simply a semi-peripheral state, as often suggested, but a potential global center of capitalism. Katz highlights China’s ability to forge new geopolitical alliances, particularly in Latin America and Africa, and its attempt to present itself as an alternative to U.S. imperialism. By promoting regional cooperation through initiatives like the Belt and Road Initiative (BRI), China is asserting itself not just as an economic power but as a geopolitical force capable of challenging Western dominance.
Both Russia and China are working to redefine the global order, particularly as U.S. hegemony wanes. From the logic of power, the alliance between these two nations can be seen as a counter-hegemonic bloc, resisting the Western imperial system.
Logic of capital: Economic rivalry and dependency
While the logic of power focuses on geopolitical dominance, the logic of capital emphasizes the economic motivations and structures underlying the conflict. Here, economic competition between the West and the Sino-Russian bloc becomes crucial to understanding the conflict.
From the perspective of the logic of capital, China’s global economic expansion represents a major challenge to Western capitalism. In Capitalism in the Twenty-First Century, Carchedi and Roberts argue that China’s economic rise, driven by state-directed capital accumulation and its massive surplus extraction from both domestic and foreign investments, presents a serious threat to the Western capitalist system. China’s global investments, particularly in infrastructure and strategic industries through the BRI, are shifting the centers of capital accumulation away from traditional imperialist powers toward China.
While Carchedi and Roberts stop short of labeling China an imperialist power, they point to the economic asymmetries China creates in its trade relationships, particularly with peripheral economies. China’s ability to extract surplus value from its trading partners, much like Western imperialist powers, suggests a reorientation of global capital flows that is undermining Western dominance. Katz (2023) also notes that China’s unequal trade relations with Latin American countries allow it to extract surplus value, although he argues that associational relations could potentially mitigate this dynamic.
For Russia, its economic realignment with China can be understood through Kagarlitsky’s notion of the “peripheral empire.” Isolated by Western sanctions, Russia has increasingly turned to China for trade and investment, signaling an economic reorientation. However, as Kagarlitsky suggests, this relationship is not one of equals. Russia, while geopolitically strong, finds itself economically dependent on China, aligning itself within a new hierarchical structure dominated by China’s superior economic power. Russia’s pivot eastward thus exemplifies the logic of capital, where economic necessity drives geopolitical alliances.
Ukraine: The battleground of capital and power
The situation in Ukraine epitomizes the intersection of both logics. From an economic perspective, Ukraine has long been a site of interest for both Western capital and Russian economic strategy. Its strategic importance as a transit hub for Russian gas to Europe highlights the economic dimension of the conflict. The West’s efforts to integrate Ukraine into neoliberal economic structures through IMF reforms and EU association agreements represent the logic of capital — the desire to open up new markets for Western investment and capital accumulation. Volodymyr Ishchenko’s (2024) analysis in Towards the Abyss describes how the capitalist elites in Ukraine have used the country’s strategic position to play both sides, aligning with the West while maintaining ties with Russia when it suits their interests. The West’s imposition of economic sanctions against Russia after its annexation of Crimea and its involvement in Ukraine reflects an attempt to apply the logic of capital to weaken Russia economically. These sanctions aim to disrupt Russian financial networks, limit capital access, and deter Western corporations from engaging with Russian markets.
However, Ukraine is also a geopolitical battleground, where the logic of power plays out as NATO and the US seek to weaken Russian influence. Geopolitically, Ukraine serves as a buffer zone between Russia and NATO. For Russia, maintaining political control or significant influence over Ukraine is essential for its security, especially given NATO’s eastward expansion since the end of the Cold War. The post-Soviet vicious circle Ishchenko (2024) describes is reflective of how internal capitalist elites manipulate the two logics — using economic opportunities to secure their own power, while navigating the geopolitical landscape to their advantage.
From a power logic perspective, Ukraine becomes a battleground where the struggle between Western powers and Russia over influence and control plays out. This underscores that the conflict is not just about Ukraine’s sovereignty but also a larger confrontation over the structure of the post-Cold War world order.
Long-term implications for global order
Arrighi’s concept of the two logics helps us understand the broader global implications of this conflict. The ongoing rivalry between the West and the Sino-Russian bloc is not simply a matter of economic competition or geopolitical positioning but a complex interplay of both.
The Ukraine conflict highlights a potential shift in global power relations, particularly as Russia turns toward China for economic partnerships and political support. This reorientation toward the East signals that Russia may be looking to escape Western hegemony and realign its geopolitical and economic interests within a different global order, possibly led by China. This reflects how the two logics interact on a global scale — Russia, squeezed out of the Western economic system, seeks an alternative through geopolitical alignment with other rising powers.
The conflict between the U.S.-led West and the Russia-China alliance may suggest a shift toward global multipolarity (despite some claims that a multipolar world is a myth and today’s world is anywhere close to multipolar). As the U.S. struggles to maintain its hegemonic position in both economic and geopolitical terms, China and Russia are emerging as significant challengers. This vision of a multipolar world resonates with Giovanni Arrighi’s ideas, who, in The Long Twentieth Century, discussed the cyclical nature of hegemonic transitions in the world system.
However, this confrontation could also deepen geopolitical fragmentation, leading to the formation of rigid blocs, reminiscent of the Cold War division between the capitalist and socialist worlds, but now framed as the Global North (Western economies) and Global South (emerging economies, including China and Russia). Arrighi’s framework provides a way to see this not just as a geopolitical struggle for power but also as an economic contest for capital accumulation and resource control. Further fragmentation could lead to minimal contact between these blocs, intensifying geopolitical competition and reducing the space for cooperation on global challenges like climate change, pandemic response, or nuclear non-proliferation. This view is reinforced by the writings of Marxist scholars such as Claudio Katz who warns that the West’s aggressive policies towards Russia and China could lead to new forms of economic dependence in the Global South, where countries may have to choose sides, further deepening the global divide.
As Arrighi suggested, the future of the world-system may hinge on how the two logics of capital and power evolve. If China and Russia can effectively navigate the tensions between power and capital, they may create a new global order where Western hegemony is diminished. However, the contradictions between the two logics — particularly the tension between Russia’s geopolitical ambitions and its economic dependence on China — could also limit their ability to challenge the West effectively.
