Guglielmo Carchedi Was a Pathbreaking Marxist Economist

In October, the radical left lost Guglielmo Carchedi — “Mino” to his friends and comrades — who died in his sleep at the age of eighty-five. He was one of the great Marxist thinkers of our times.

I first met him in London a few years after the economic meltdown of 2007–9, at a conference I organized for the journal International Socialism to explore the dynamics of that crisis. He spoke patiently and calmly, setting out his views with authority and an unwavering confidence in the power of Marxist theory. I heard him many more times over the next few years, always speaking with the same measured style. On occasion, he ended his presentations with a shy smile and the Latin “QED,” quod erat demonstrandum: “that which was to be demonstrated.”

It was always a delight when our paths crossed. Often I would encounter him in conjunction with Michael Roberts, with whom Carchedi would form a close personal and intellectual relationship.

The partnership was a fitting one. Roberts, himself a fine political economist, complemented Carchedi’s theoretical subtlety with a keen eye for a potential audience and a flair for showmanship, qualities long evident on Roberts’s indispensable blog. In turn, for Roberts, Carchedi was a mentor in the realm of dialectics and Marxist value theory. Together they produced a stream of articles; an edited collection, World in Crisis: A Global Analysis of Marx’s Law of Profitability; and a coauthored book, Capitalism in the Twenty-first Century Through the Prism of Value.

Carchedi was a kind and modest man, generous with his time when younger Marxists sought advice from him. He was refreshingly uninterested in whether those he spoke to worked in the academy or were simply left militants with a thirst for theory, as I was when we first met. He saw his work not merely as addressing a series of intellectual puzzles but as a contribution to the struggles of the working class.

It is a great boon that new generations can continue to benefit from his wisdom through his writings. Here I will focus on some of his early contributions, which deserve broader appreciation.

Middle-Class Problems

The writing partnership with Roberts has helped win Carchedi a new readership. However, few among the younger generation of Marxists are aware of his early contributions to class theory, especially on the nature of the middle class.

One of his first articles, “On the economic identification of the middle class,” appeared in 1975 in the journal Economy and Society. A second piece, “Reproduction of social classes at the level of production relations,” appeared in the same publication a couple of issues later. They would form two chapters of a book, On the Economic Identification of Social Classes.

After much searching, I managed to get hold of a battered secondhand copy that North Staffordshire Polytechnic had marked “discarded from stock.” As with many niche academic texts of the period, the printers made the plates from the output of an electric typewriter. Only in 2024 did the publisher, Routledge, again make a facsimile of the text available.

Carchedi’s contribution to class theory appeared in the shadow of better-known works by two authors grappling with similar problems. The first was the Greek-French Marxist Nicos Poulantzas, whose Classes in Contemporary Capitalism appeared in English in 1975. The second was Erik Olin Wright, whose first major foray into class theory, Class, Crisis and the State, appeared in 1978. Carchedi’s account, I would argue, offered a more convincing resolution than either of its major rivals.

The new middle class has been a thorny problem for Marxist theory. Karl Marx saw capitalists and workers as the major contending classes within capitalism. He saw the former as the rulers of such societies and the latter as their potential adversaries, capable of overthrowing the rule of capital and beginning the process of forging a communist society.

There was, Marx acknowledged, a substantial petty bourgeoisie, consisting of smallholders of capital, such as shopkeepers or artisans, along with their rural counterpart, the peasantry. Yet as capitalism came to predominate, it would, as Marx put it, “cut up” members of these groups “into two persons,” forcing them to adapt to the new society by operating as both capitalist and worker.

There was no reason to imagine the petty bourgeoisie would vanish, but over long periods of time, the two key classes of capitalist society could begin to absorb such groups. This happens, for instance, when a peasant becomes successful enough to start hiring and exploiting wage labor. Conversely, it happens when a peasant can no longer reproduce themselves without turning to wage labor and subjecting themselves to exploitation at the hands of a capitalist.

But where did this leave the new intermediate layers that modern capitalism created, such as the managers and supervisors that large enterprises required, or technicians and engineers? They worked for a wage, just like workers, but their role set them apart from the mass of wage labor. For some, this called into question the whole Marxist approach to class — or at least blurred beyond recognition the lines demarcating the classes of capitalism.

Poulantzas had sought to resolve this issue by presenting a very restrictive conception of the working class, focused on “productive” workers (those who generate profit for capital) involved in creating material commodities. He assigned anyone who did not meet these criteria — service sector workers, those working in the sphere of circulation, and so on — to a “new petty bourgeoisie” on the grounds of their economic position. To this, he added “political” criteria, allowing him also to thrust managers into this new class, and “ideological” criteria, allowing him to add mental laborers.

As Wright complained, Poulantzas’s approach would make about 70 percent of the US labor force of the time petty bourgeois, many of them on the grounds of ideology and politics. To regard, say, teachers or nurses as petty bourgeois seems particularly out of tune with today’s reality: such groups are clearly subject to the degrading power of capital and are often at the forefront of workplace struggle.

Wright’s own alternative was to deal with these ambiguities through a notion of “objectively contradictory class locations,” avoiding forcing groups such as managers into either the class of capitalists or workers. However, Wright’s approach introduced a complication. He sought to apply his approach both to groups caught between capitalists and workers in the workplace, such as managers, and to other groups — semiautonomous wage-earners and small employers — he identified as lying between the traditional petty bourgeoisie and either workers or capitalists.

This unnecessarily complicates the position of the petty bourgeoisie, whose very nature allows them to shade into the two major classes. The new middle class is a distinctive type of formation, requiring a different approach.

Wright himself would come to reject elements of his earlier contribution. In his later work, he suggested that he had previously overemphasized criteria such as autonomy in identifying class locations at the expense of exploitation.

However, from the mid-1980s, Wright increasingly drew on analytical Marxist thinkers such as John Roemer rather than on Marx’s own approach to exploitation. Roemer was skeptical of the value theory Marx developed in Capital, recasting exploitation as a matter of the different assets that individuals possess. As well as capitalist property, such assets could, in Wright’s new class model, be “organizational assets” or “skills.” The result was a fragmentation of the class structure, leading to myriad different class locations.

Carchedi’s Alternative

Carchedi offered a way out of this morass, drawing on Marx’s Capital. Groups such as managers in modern enterprises must perform two contradictory functions within capitalist production. These are not simply different technical functions; they are social functions, reflecting the imperatives of rival classes.

On the one hand, managers perform some functions of the “collective worker,” including coordinating the labor process, something necessary in any large, complex workplace, in any type of society. On the other hand, they also perform “global functions of capital,” roles of control and surveillance necessary because the workplace sits within a class-divided society. As Carchedi wrote, they are a special group of waged employees forming a “hierarchically organized ensemble, “who collectively perform what used to be the function of an individual capitalist” alongside activities appropriate to the collective worker.

These contradictory functions combine differently in different concrete jobs, influencing whether sections of the new middle class side with workers in struggle or align with their capitalist employers. The configuration of these functions is not static; it shifts with technological change, management culls, and restructurings.

For those Marxists who paid attention, notably Bob Carter, Carchedi’s theory would form the basis for later work, both theoretical accounts of the new middle class and empirical studies of workplaces. It provided a missing link between the labor process analysis that Harry Braverman pioneered in the early 1970s and a sophisticated Marxist class theory.

From Class to Value

Carchedi’s early work on class may superficially seem disconnected from his later work on political economy. However, there are clear links. These become apparent in an exchange with Wright in 1989, which appeared in the collection The Debate on Classes.

Here Carchedi criticized two elements of Wright’s methodology. The first was Wright’s embrace of analytical Marxism’s claim that there is no distinctive Marxist method, that the methods of mainstream social science will suffice. In place of this, Carchedi emphasized a dialectical approach.

This meant acknowledging the crucial roles of social structures, which develop independent of the will of particular individuals. However, these structures are not static but subject to dynamism and change.

This concern with method would persist. It is no coincidence that his 2011 book, Behind the Crisis, opens with a heading: “The need for dialectics.” Almost all of Carchedi’s major writings contain a discussion of method, emphasizing Marx’s dialectical standpoint.

Second, Carchedi reasserted the centrality of Marx’s value theory. Here he would offer another pioneering contribution, as one of the progenitors, along with Alan Freeman and Andrew Kliman, of what its proponents came to call the Temporal Single System Interpretation of Marx.

When analytical Marxists such as Roemer and Wright claimed Marx’s value theory was flawed, they were scrutinizing a modified version of the theory.

For Carchedi, their approach drew heavily on an approach pioneered by figures such as Piero Sraffa, which revived elements of the approach of to the labor theory of value of Marx’s predecessor, David Ricardo.

This “neo-Ricardianism” treated production not as a social and historical process but as a primarily technical one, in which a set of commodities gives rise to another set of commodities. The exploitation of labor ceases to play any distinctive role in creating new value. Neo-Ricardians, conceiving of the economy in this way, could model it through a set of simultaneous equations.

As Carchedi pointed out, one of the key weaknesses in this approach was its neglect of the concept of time. Neo-Ricardians unrealistically assumed that the prices of the outputs of a given cycle of production were the same as the prices of the equivalent inputs into that cycle. Carchedi insisted on reintroducing time, following Marx in resisting seeing capitalism as a system in static equilibrium.

One advantage to this approach was that it helped Carchedi to resolve what Marxists call the “transformation problem.” Marx’s Capital proposes that the value of commodities reflects the labor time that their production typically requires. This includes both the “living labor” of the workers producing them and the “dead labor,” the labor that workers expended in the past to create the material means of production that the process uses up.

This had implications for the rate of profit, the ratio between profit and investment. For Marx, living labor had the distinctive role of creating new value. Because labor can do so in excess of the cost of its reproduction (the wage), this gives rise to profits.

But because the ratio of living and dead labor varies between branches of the economy, Marx’s approach implied a different rate of profit in each. Yet even in Marx’s day, economists observed that profit rates tend to converge over time. Marx reconciled theory with reality through his transformation of values into “prices of production.”

Capital migrates toward branches of the economy where profit rates are high, disrupting the price level as social demand and supply shift. Were this process to reach its conclusion, it would redistribute value between capitalists such that each receives the same average rate of profit on their investment. In fact, as Carchedi showed, this was only a tendency, and new disruptions upset any potential equilibrium long before the system could reach it.

Many critics, starting with Eugen von Böhm-Bawerk in 1896, followed by Ladislau von Bortkiewicz, Paul Sweezy, and Ian Steedman, have faulted Marx for considering only how this transformation of values into prices of production affects the outputs of production, without also transforming the value of inputs. For those working with an atemporal, equilibrium model, such as the neo-Ricardians, making this further transformation allowed them to detach the system of prices of production from value theory altogether.

Carchedi argued that no such detachment was necessary. When capitalists obtain inputs for a new cycle of production, the value they advance is simply the price of production with which they left the previous cycle. This was what Carchedi termed their “social value.” Prices of production are, he proposed, not merely “determined by values but rather are their concrete form of existence.”

Falling Profit Rates

The hallmark of great Marxist political economy is to synthesize the often rather abstract discussions of value theory with an empirical understanding of a dynamic, changing, and crisis-prone system. This was very much on display in what I consider Carchedi’s finest work, Frontiers of Political Economy. Here Carchedi clarified and extended Marx’s approach in Capital while seeking to apply it to contemporary capitalism.

The result is dazzling. Carchedi’s book deals with the intricacies of price formation in the context of uneven and complex processes of intercapitalist competition, first on the national terrain and then on a global scale, where, for instance, wage levels differ sharply. Besides the transformation problem discussed above, he investigated a range of controversies, such as precisely which forms of labor do and don’t produce value and how to account for different skill levels among workers.

At the center of the book, a chapter on “Growth, crises, inflation and crashes” develops themes that would become prominent in his work. Here he focused on Marx’s “tendency of the rate of profit to fall” (TRPF).

Capitalists must advance an ever-greater mass of capital, in the form of dead labor, to grab their share of the pool of profit that the system generates. But because only living labor generates new value, the scale of the employed workforce and the extent of its exploitation ultimately limit the size of this pool. The more dynamic capitalism is in mobilizing a greater amount of dead labor through automation and the expansion of capital, the more this tends to choke off future profits relative to investment, helping pave the way for crises.

The TRPF has been a source of considerable controversy among Marxists. For some, it is an unnecessary distraction from value theory. For others, it is so hedged with counteracting tendencies that no one can grasp an overall pattern. For others still, the empirical evidence has falsified it.

Carchedi argued that the TRPF should remain at the center of crisis theory. It was, he maintained, the ultimate expression of the contradictions of capitalism. This was because, as Marx had proposed, the very processes that impel capitalism forward — exploitation, competition, accumulation — can, through the TRPF, begin to undermine future accumulation.

In his account, Carchedi acknowledged various counteracting tendencies, such as the intensification of exploitation from the 1980s, but argued that, in the long run, the TRPF overpowered these. It might also appear that financial expansion had injected new dynamism into capitalism. Yet for Carchedi, this reflected how the TRPF in productive sectors encouraged capital to shift into the sphere of finance, feeding speculative bubbles and ultimately financial crises. The meltdown of 2007–9 was not, in this account, a purely financial phenomenon but one ultimately rooted in the productive economy, the realm of workers’ exploitation and the site where their potential power concentrates.

Carchedi’s Legacy

I have only touched on a few elements of Carchedi’s contribution. His career saw him explore many other themes, ranging from the class nature of European integration to the relationship between value theory and artificial intelligence. It is far better that the interested reader consults such works for themselves to understand their richness and diversity. Doing so will also make clear the passion that motivated him.

On that, let the final word go to Carchedi himself, from his acceptance speech on receiving the World Marxian Economics Award in 2021. Contrasting the 1960s and ’70s, a time of great hope for those on the radical left, with the present period, he said:

An economic and financial crisis of major proportions is again knocking at the door; the destruction of our natural habitat proceeds unchecked; the divide between the poor of the world and the absurdly rich has never been so great; the dark clouds of a new world war are gathering on the horizon; right-wing ideologies resurrect and even fascism is raising its ugly face again. These are the dangers the new generations will have to face. The difficulties ahead for them will be immense. But the contradictory nature of the system is such that each time capitalism wins, the anti-capitalist forces regroup and counterattack with new forms of resistance. My hope is that my work will be of some help in their struggle.

This article originally appeared in Jacobin, a democratic socialist magazine publishing long-form essays and analysis on politics, economics, and culture. Subscribe to the print edition for $20 a year.