Marx, Kalecki, and The Monthly Review School

By John Bellamy Foster

A historical perspective on the economic stagnation afflicting the United States and the other advanced capitalist economies requires that we go back to the severe downturn of 1974–1975, which marked the end of the post-Second World War prosperity. The dominant interpretation of the mid–1970s recession was that the full employment of the earlier Keynesian era had laid the basis for the crisis by strengthening labor in relation to capital. As a number of prominent left economists, whose outlook did not differ from the mainstream in this respect, put it, the problem was a capitalist class that was “too weak” and a working class that was “too strong.” Empirically, the slump was commonly attributed to a rise in the wage share of income, squeezing profits. This has come to be known as the profit-squeeze theory of crisis ...

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