We have seen that most economic historians and economists, both bourgeois and Marxist, agree that the concrete history of the capitalist mode of production shows alternating periods of rapid expansion lasting for several decades, followed by periods of much slower growth or semi-stagnation of varying lengths. There has been much dispute about whether these alternations represent cyclical forces operating from within the capitalist economy or are caused by changes of a non-cyclical nature in the “external environment.”
Class War at Home, Imperialist War Abroad
Last month, June 2025, saw the twelve-day U.S.-Israeli war against Iran. On July 4, U.S. Independence Day, Donald Trump signed his “Big Beautiful Bill.” The bill means class war at home, and the twelve-day war against Iran points to more imperialist war abroad. This month, we examine the class war at home and the capitalist war economy.
Trump’s Big Beautiful Bill is a massive attack on the working class, science, art, education, and human culture in general. We could write volumes about this wretched thing, but we will zero in on the attack on the working class. The spearhead is the attack on the Medicaid program. To grasp its importance, it helps to understand Marx’s theory of wage labor and surplus value.
Henryk Grossman and Long Cycles
Henryk Grossman was born to Jewish parents in 1881 in what is now Krakow, Poland. (1) The Austrian-Hungarian Empire ruled Krakow at the time. As a high school student, he became politically active and joined the Social Democratic Party of Galicia. The Social Democratic Party of Galicia was dominated by followers of Józef Piłsudski (1867-1935), the future nationalist dictator of Poland. Galicia is a geographic region spanning what is now southeastern Poland and western Ukraine. It is not the community in Spain of the same name.
In 1905, Grossman was part of a split of Jewish workers from the Social Democratic Party of Galicia, which formed the Jewish Socialist Party of Galicia.
After the Russian Revolution, he joined the newly formed Polish Communist Party, which sought to unite both the Polish and Jewish workers of Poland in a united revolutionary party of the working class.
MAGA
On June 13, 2025, Israel attacked Iran. It is clear that the Trump regime knew it was coming and approved of it. Then, on June 22, the U.S. directly attacked the peaceful Iranian nuclear energy program with bunker-busting bombs. On June 25, the U.S. and the Zionist entity announced they were halting the bombing attacks for the time being, and Iran then halted its counterattacks against the Zionist entity, ending what is being called “the twelve-day war” for now. Next month, we will examine the consequences of the twelve-day war.
Last month, I noted that the tariff war shows we are entering a period similar to that between August 1914 and August 1945. The U.S.-Israeli twelve-day war against Iran confirms it. Significantly, Israel has threatened to launch such a war many times over the last 30 years, claiming it was concerned Iran was developing nuclear bombs. This is even though there is no indication Iran was interested in developing a nuclear bomb — Iran’s clergy-run regime has declared many times that nuclear weapons are sinful and forbidden by the Muslim religion and God.
One or Two or Many Cycles?
In the chapters on the “ideal” industrial cycle, I assumed that there is one capitalist economic cycle, what Marx called the industrial cycle. Furthermore, I assumed that all the contradictions of capitalist production accumulated during this cycle of about ten years are then discharged in a single crisis at the end of the cycle. If actual industrial cycles corresponded to the “ideal cycle” I described, each cycle would have a crisis, a depression, a phase of average prosperity, and a boom of more or less equal length.
Even if there were a tendency for the length of the various stages to change over time, this would be a secular process, not a cyclical one. Concrete industrial cycles differ from each other. These differences are not a matter of theory but a matter of empirical fact. Are the sometimes drastic differences observed among individual concrete cycles due to accidental forces, secular forces, or cyclical tendencies at work?
In addition to the possible existence of a long cycle, many economists have claimed that a short cycle of about 40 to 48 months exists. A complete theory of crises and capitalist economic cycles also has to account for the existence of this cycle.
To my knowledge, at least five different economic cycles within the capitalist economy have been proposed at one time or another. Perhaps readers have heard of even more.
The Long Cycle and Historical Trends
The question of whether, in addition to the industrial cycle of more or less ten years’ duration, there is a longer cycle extending over several “10-year” cycles has divided Marxists as well as bourgeois economists who have shown interest in business cycles.
Keynes and the falling rate of profit
Keynes, along with Adam Smith, Ricardo, Marx, and even the classical marginalists, believed that the long-term trend of the rate of profit was downward. However, Keynes and other marginalists gave different explanations than Marx for this tendency.
Unraveling of the Post-1945 Order
As May winds down, the Gaza genocide continues, as do negotiations to end the Russo-Ukraine war, with no clear end in sight as of this writing. The Republican House of Representatives passed a bill now being considered by the Senate aimed at big cuts in government-supported Medicaid and possible cuts in Medicare and Social Security. The bill also features making earlier Trump-Republican tax cuts permanent, as well as adding more.
Liberals and progressives claim Republicans want to cut Medicaid to finance the tax cuts (capitalists don’t like to pay taxes) — but this is not their main motive.
Cutting Medicaid forces more of the poor onto the labor market by making them financially desperate to find a job or go without medical insurance. Nothing is being done to make more jobs available, nor are there plans to force bosses to provide medical insurance or wages sufficient to afford private insurance. They are intended to force people to work for wages that do not even pay the value of their labor power.
Keynes on the ‘Trade Cycle’
Keynes, throughout the “General Theory,” was concerned with explaining how his marginalist equation of “equilibrium” — marginal efficiency of capital = rate of (money) interest — could correspond to mass unemployment. The industrial cycle itself was of secondary concern for him. Nevertheless, in Chapter 22, entitled “Notes on the Trade Cycle,” Keynes does deal with the industrial cycle, or as he called it in the English manner, the “trade cycle.”
Keynes Attempts To Generalize Marginalist Theory
In previous chapters, we saw that Keynes denied that the unpaid labor of the working class produced surplus value. So, how does surplus value — profit, interest, and rent — arise, according to Keynes, if the working class does not produce it?
A Critique of Crisis Theory 