...his chapters on monopoly capital, imperialism, and the decline of capitalism are clear and concise, and if they are disappointing it is only because they deserve more of a theoretical background. The facts presented speak for themselves, of course, yet they would be even more eloquent if they were brought in closer contact with Marxian theory, which makes it clear that monopoly and imperialism are not capitalist aberrations but the inevitable consequences of capital production. The material here tells the familiar story of capitalist concentration and centralization on a national and international scale and related state interventions in the economy. What appears to some as a further expansion and extension of capitalism, and as the consolidation of the system through a direct merger of business and government, seems to Mandel sufficient proof that capitalism finds itself in a state of decline, because ‘the increasing practice of intervention in the economy by the state is an involuntary homage rendered to socialism by capitalism.’ [18]

Mandel points out, of course, that state interventions operate within the framework of capitalism in order to consolidate capitalist profit; yet, they have at the same time, the long-term effect of undermining the foundations of the regime. Because it is less and less possible to make profitable use of all capital, Mandel writes, ‘the bourgeois state becomes the essential guarantor of monopoly profits,’ [19] which involves the ‘transfer to private trusts of public property,’ [20] and the ‘growing importance of armaments and a war economy,’ [21] as a substitute ‘market’; a process which, if ‘carried to its logical conclusion necessarily implies a process of contracted reproduction.’ [22] If not carried that far, however, ‘state contracts stimulate production and expansion of productive capacity not only in the directly "militarized" sectors, but also in the raw material sectors, and even, through the increase in general demand thus created, in the consumer goods sectors. So long as there are unused resources in society, this "stimulant" will tend to ensure full employment of them, while in the long run undermining the stability of the currency.’ [23]

This is undoubtedly true, regardless of whether or not there are unused resources. The ‘unused resources’ in capitalism, that is, constant and variable capital, are capitalist property and will be set in motion only when profits are promised and capital is augmented. ‘Public consumption,’ i.e., public works, armaments, and war, subtract from the available surplus-value destined to be turned into additional, surplus-value-producing capital. A progressively increasing non-profitable production implies a declining rate of accumulation and eventually its demise, thus destroying the rationale of capitalist production. In so far as it is not extracted from the mass of the population by way of inflation, the expense of ‘public consumption’ piles up in the national debt for which there is no profit-counterpart. Just as the enlarged ‘market’ is a pseudo-market, so the prosperity released by it is a pseudo-prosperity, which can postpone, but not prevent, the return of crisis conditions. The policy’s applicability is limited, so that even under conditions of government-induced production, unused resources are bound to grow.

An enlarged production is no aid to capitalism. What it needs is a larger production of profits to counteract the tendency of the rate of profit to fall. In dealing with the mixed economy, Mandel forgets his Marxist learning altogether, and his exposition becomes self-contradictory. While pointing out that state interventions are necessary to ensure the profitability of the monopolies, he asserts, at the same time, that ‘trusts no longer suffer from a shortage of capital but rather from an excess of it,’ [24] and that this ‘over-capitalization’ is due to ‘monopoly super-profits,’ [25] which find no outlet in new investments. But if there are such ‘super-profits,’ why should the monopolies require government support to enable them to produce profitably? Obviously, if they are having difficulties finding profitable investment opportunities, these difficulties cannot be alleviated through non-profitable government-induced production. It is precisely because of the fact of insufficient profitability, relative to the existing capital, that investments taper off and thus require government-induced production to forestall economic crisis.

However, Mandel mistakes the lack of private investments, due to a deficient profitability, for an ‘abundance’ of capital relative to the ‘effective demand,’ and holds with the Keynesians that government-induced ‘effective demand’ acts as a ‘stabilizer’ of the economy. ‘Frequently,’ he writes, ‘expanded reproduction may even continue in all sectors, on condition that the rate of expansion is stable or declining, that is, that the armaments sector absorbs the bulk or the whole of the additional resources available in the economy.’ [26] Stability is assured, in his mind, through a limitation of capital accumulation and not through its resumption and acceleration. In this way, he says, ‘the capitalist economy tends to ensure greater stability both of consumption and of investments than in the era of free competition, or than during the first phase of monopoly capitalism; it tends toward a reduction in cyclical fluctuations, resulting above all from the increasing intervention of the state in economic life.’ [27]

To describe this state of bliss by way of government interventions and arms production as an ‘epoch of capitalist decline,’ is understandable only on the basis of Mandel’s assumption that the enlargement of the government-induced sector of the economy is a step towards socialism – seen as a state-controlled economy. In this respect, of course, government ownership would be even better than government control and Mandel does not fail to point out ‘that nationalization of sectors of industry ... can constitute a veritable school of collective economy, provided that the compensation payments to capital are reduced or cancelled, that it is not limited to sectors run at a deficit, that the representatives of private capital are removed from the management, that workers’ participation in the management is ensured, or that this management is subject to democratic workers’ control, and that the nationalized sectors are used by a workers’ government for the purpose of all-round planning, especially to achieve certain objectives of high priority, either social or economic.’ [28] In view of the relative stability achieved by state interventions, Mandel foresees a change of objectives for the proletarian class struggle. ‘Socially and politically,’ he writes, ‘the period of capitalist decline educates the working class to interest itself in the management of enterprises and the regulation of the economy as a whole, just as "free competition" capitalism educated the working class to interest itself in the division of social income between profits and wages.’ [29]

Workers’ control of production presupposes a social revolution. It cannot gradually be achieved under the auspices of a workers’ government which ‘nationalizes sectors of the economy’ [under capitalism] – not to speak of the impossibility of ‘all-round planning’ in a partly nationalized and partly private-enterprise economy. To be sure. Mandel is not opposed to social revolution; yet, already before its occurrence, he envisions its result as a managed economy with ‘workers’ participation,’ not as an economy managed by the producers themselves.