Q. What do Marxists think about technological innovation?
A. As we have seen, the main area of expansion in the present economic cycle (1991-2000) has been the new information technology. Former Labour secretary Robert R. Reich believes that as much as 70 percent of credit for expansion belongs to computers and the Internet. From a Marxist point of view there is nothing new in all of this. It is already anticipated in the Communist Manifesto, never mind Capital. The Manifesto already explains what is ABC for any Marxist - namely, that the capitalist system, unlike any previous system in history can only exist by constantly revolutionising the means of production.
It has become fashionable to talk about the far-reaching effects of information technology. Clearly these are important developments. But there have been such developments in every economic cycle. We refer here not to the trade cycle as such, but to broader historical periods that have characterised different phases of capitalist development, such as the period of the post-War upswing as opposed to the period between the World Wars, for instance. Even the most superficial examination of the broad cycles of capitalism will reveal that every one of them since the Industrial Revolution has been characterised precisely by investment in new technology, with very far reaching consequences. Steam power was the basis of the Industrial Revolution. It revolutionised the production of textiles. This was followed by the railways boom in the second half of the 19th century.
In every cycle, the capitalists seek a profitable field of investment. At present this role is being played by IT. The Internet is without doubt an extremely significant and important invention, with enormous consequences particularly for a socialist planned economy in the future. But to argue that it has so modified the productive system that the boom-slump cycle has been eliminated is simply absurd. In every cycle, as we pointed out in On a Knife's Edge, there were inventions that were no less revolutionary, and often far more so. The effect of the railways, the steamship and the telegraph was far more revolutionising in linking the world together than the Internet. After the railways we had the motor car ("Fordism"), electricity, energy, chemicals, plastics, radio, television, aeroplanes, radar, nuclear power - all these represented great advances.
All these tremendous and impressive technological advances serve to provide us with a glimpse of what would be possible in a future socialist society. However, from the fact that technology exists, one cannot deduce that the economic cycle does not exist. This conclusion does not follow, even from the point of view of formal logic. Seen from a historical perspective it is merely absurd. For example, in the 1920s and 1930s the most staggering technology existed: telephones, electricity, aeroplanes, cars, television and a host of other things, but it could not be developed. Why could it not be developed?
In order for a given technology to be developed, it must be in the interest of that class which has the material power to develop it. This can be shown even in ancient times. The Greeks invented steam power and actually built functioning models of steam engines. But it could not be developed and remained a mere toy and a curiosity. Why? Because the slave economy was based on an apparently unlimited supply of unpaid human labour. Why then should the slave-owners be interested in labour-saving machinery? An analogous situation existed under feudalism, which was based on the bonded labour of the serfs. The feudal landowner also had no interest in investing his surplus on machinery and technology. Why should he when he had at his disposal the labour of the serfs? Only with the advent of capitalism and the industrial revolution does the economy of labour time acquire a crucial importance, and this has been seen at every stage in the development of capitalism for the past 200 years. As Marx explains, capitalism is the only socio-economic system that has ever existed which bases itself on the constant revolutionising of the productive forces.
However, this does not at all mean that the capitalists are interested in investing in technology for its own sake. The bourgeois will invest only insofar as they get a suitable return on their investment, and not one moment longer. At a certain point in the investment cycle, the return on capital is no longer sufficient to warrant further investment. At that point, the capitalists cease to invest and the boom collapses. The mere fact of the existence of technology and productive potential is therefore no guarantee against a crisis. Rather the contrary. It is the uncontrolled flood of investment into new avenues that eventually gives rise to over-investment, over-production, a fall in the rate of profit and ultimately a fall in the mass of profit, leading to a crisis.