DOES Marxist economics provide an understanding of capitalist crisis superior to that offered by its mainstream counterpart? Are those of us who have mastered its basic texts about to emerge as infallible pundits in 24/7 media demand, thanks to a command of Gnostic wisdom denied to the Harvard MBAs at Goldman Sachs and Lehman Brothers?
I’m asking myself these questions after spending summer ploughing through volume one of Capital for a second time, guided by a brilliant series of online lectures from the estimable David Harvey.
The conclusion has to be that – unsurprisingly – there are limits to what any book published in 1867 can tell us about the reality of 2008. If the far left did indeed have any actionable special insight into the real workings of the capitalist system, ex-Trots would be ten a penny on Wall Street.
The standard jibe from leading Keynesian Paul Samuelson is that Marx – considered as an economist - constitutes at best a ‘minor post-Ricardian’. As the critics point out, the man was a philosopher with no formal training in other disciplines.
Moreover, it is impossible to carry out serious empirical economic research within Marxist categories. Given the way that data is collected, one cannot even calculate the organic composition of capital or the rate of exploitation in anything other than approximate terms.
Thus the in house theoretician of the largest British far left group clings to the line that capitalism has been stagnating since the 1970s, insisting that the rate of profit has continued to fall. From observation alone, such propositions looks crazy; but they cannot readily be refuted by statistics.
It is rather better to understand Capital not as a body of operational economic theory, then, but as a substantial philosophical critique of capitalism unchecked. Marx’s project was very much to take the ideological presuppositions of the classical political economists, and take them to their logical conclusion.
But capitalism was not unchecked. It wasn’t in 1867, and is far less so today. Even Britain’s emasculated trade unions can provide millions of workers with elementary protection against capitalist excesses, within a legal framework designed to provide just that, developed by governments of all stripes.
At the theoretical level, even capitalists know they need effective consumer demand, although that doesn’t stop them imposing de facto pay cuts on their own workforces where they can get away with it.
The result has been that working class standards of living have indubitably risen, decade on decade. When I was growing up in 1960s, wall-to-wall carpets, telephones, colour televisions, and central heating did not come as standard in working class homes. Mind you, the Oslers were posher than some on our street; we had an inside lav.
In these days of 42” plasma screens, broadband internet and two week package holidays in Thailand, we have clearly not been enduring the immiserisation of the core section of the employed proletariat.
You can of course argue that these levels of consumption have been bolstered by credit or superexploitation of the third world, or flow from the lessening of socially necessary labour time inherent in technological advance. Such observations are true in as far as they go, but how the trick has been pulled off is a secondary point.
There is also a critique – rooted in Marx’s earlier writings, but clearly present in a more developed form in Capital - based on alienation; this is the notion that capital, the very product of the collective worker’s labour, comes to loom large over the collective worker.
But then, few people in unstimulating employment need to have the concept ‘work sucks’ spelled out to them in terminology ultimately derived from the tradition German idealist philosophy.
So within our intellectual framework, what can we add to the debate that is now starting? Perhaps the most important argument the far left can hammer home is our insistence on the cyclical nature of capitalism. Gordon Brown really thought he had abolished boom and bust; it looks like he is just about to find out that he was badly wrong on that one.
Sadly for us, Marx died before he got round to drawing up a definitive account of his theories on these matters. Anything we say on this score has to be constructed indirectly. But the millions that will find themselves out of work across the advanced capitalist countries in the years ahead will make the case more eloquently then words ever will.
There is a surprisingly deep ecological vein to be found in Capital, too. Marx very much sees the way in which humanity reproduces itself as based on the interaction of human labour on nature. Much of it is pertinent at a time when the future of the planet is at stake.
Finally, we can show how the market cannot deliver public goods. There is no country in the world in which universal education or healthcare is provided without the substantial intervention of the state. We have to transcend the logic of the market and impose the political economy of the working class in its place, crisis or no crisis.
Posted at 14:14, 13 October 2008
Comments (20)
Well I think that being able to write Theories of Surplus Value is some qualification in economics.
Broadly you are correct Dave, that marxist economics doesn't provide a magic insight into the workings of the system, that makes redundant the need to study in detail the more recent developments (last 150 years) in an enormously complex system.
However, in the old man's defence, the theory of value does have the merit of being the best available explanation of how wealth is created - and of curse builds upon the Phioscrats, as well as Adam Smith and Ricardo.
Subsequent theories designed to refute marxism by providing alternative theories for where profitabilty enters the system, such as mrginal utility convincingly demolished by Bukharin the "ecomic theiries of the leisure class" really come over as mysticism and obfuscation, despite some moments of genius and insighht.
Shouldn't you be reading volume 3?
Several points. Firstly, which of the classical economists did have 'formal training' in the discipline of economics (and indeed formal training in disciplines apart from philosophy). Was economics even that much of a specialisation before they began writing on it (indeed was it a specialisation until relatively recently)?
Secondly, I'd agree with tb that you really can't judge Marx's economic proficiency on Capital Volume 1 alone. He wrote a wealth of other things, and volumes 2 and 3 are full to the brim with nire cibcrete data, I'm also sceptical of the idea that Marx's work compltely precludes an empirical research programme, particularly considering the wealth of empirical data that can be found in the work of Marxist economists.
Thirdly, I find a statement such as 'ex-Trots would be ten a penny on Wall Street'. I mean Wall Street economists have hardly covered themselves in glory recently, have they? Also, there are plenty of other reasons why you wouldn't find ex-Trots on Wall Street, not least because I would imagine it was a place somewhat inhospitable to those of such persuasions. Furhter, I'm not really sure that employment in Wall Street can really be counted as a criterion for being 'correct', there are surely a wealth of other reasons why Marxists are not present, hegemonic, ideological and political. If we want to look at 'professional' qualifications perhaps we'd be better to point to those Marxists - both present and past - who were in fact profession economists.
I'm also confused by your distinction between taking capitalism unchecked to its logical conclusion and economics. Neo-classical economics is almost exclusively based on 'logical' and 'abstracted' models. If you are simply saying that Marx is pointing to *tendencies*, well then, yes, but I don't think anyone seeks to deny this. But that being said at least Marx's project does acknowledge the role of politics, political agency etc. in a way that neo-classical orthodoxy has failed to do.
On 'absolute immeriseration', well I've always been sceptical about the importance of this. Marx seems to think that relative immiseration may be enough. And if you want to simply dismiss the explanations of some people that link the wealth of the core with the poverty of the periphery, well then do, but don't pretend it isn't important. This also leads me onto another consideration. I don't think it's fair to identify Marxism *just* with Marx (and with whatevr the SWP say) there have been (and continues to be) a goodly number of respected Marxist and Marxian economists who exercised definite influence on som government policy.
On the falling rate of profit. Well, my impression is that this is not so ludicrous as it sounds. The point is that the rate (a tendency) is constantly offset by certain political and economic moves, which boom and then bust. I mean, Bob Brenner has been pretty good on the credit issue, and has said some fairly prescient things.
To quote an even older writer (Chaucer) who was quoting from an even more ancient book (The Bible) 'Take the wheat and leave the chaff.'.
But then, few people in unstimulating employment need to have the concept ‘work sucks’ spelled out to them in terminology ultimately derived from the tradition German idealist philosophy.
Marx did not say 'work sucks'. He said that 'work sucks' under capitalist conditions of production. You need to explain why, if workers understand immediately, from their own experience, the concept of alienation, without requiring it 'spelled out', class consciousness fails to develop.
I'd say a major factor in this failure stems from the perception of 'work sucks' as a universal condition and the lack of understanding that work might not suck under a different form of organization, an alternative vision of labour elucidated in Marx's writings.
That's all very well - but I think it's time to move beyond theory - to action.
Let's buy a bank. I reckon that HSBC will be worth about £1000 by Xmas at the rate that it's share price is currently falling. I'm sure we could get together and get the £1000 together and then run it as a worker's co-operative.
And incidentally I wonder whether the government has already bought it's majority stake in the banks - and if so has lost billions today. Smart work, Gordon, you moron.
(P.S. I've already bought Barrow in Furnace Building Society for £6.75 this morning - I should have looked a bit more closely first as I now owe £275M. Help!).
Damn, I apologise for that typo above about Barrow in Furness, probably sub-consciously prompted by a London receptionist who once wrote I had a message from someone in Burrow in Furnace. And I was a Northerner, once.
"There is no country in the world in which universal education or healthcare is provided without the substantial intervention of the state."
You're absolutely right, apart from the education system in Sweden.
Oh, and the education system and healthcare system in Holland.
Oh, and healthcare in France.
Oh, and education in Hong Kong.
Oh, and healthcare in Germany.
Oh, and healthcare in Singapore.
Oh, and education in the USA.
Oh, and healthcare in Switzerland.
Oh, and education in Ireland.
And that's just off the top of my head - there is plenty more where that came from.
There isn't substantial state intervention in education in the USA?
Erm, where do most children go to school?
LfaT
Yep, you've floored me here. I'm not sure what you're on about.
How is healthcare and education happening in these places without state intervention?
I'd genuinely like to know, because it would be news to me.
When I was growing up in 1960s, wall-to-wall carpets, telephones, colour televisions, and central heating did not come as standard in working class homes. Mind you, the Oslers were posher than some on our street; we had an inside lav.
I'd like to say it was a "lifestyle choice" of mine to not have most of these things, but it's low wages...
And: Tory: it's just not true to claim that healthcare in Germany is provided without the substantial intervention of the state. It might not be a NHS model over here, but the state do play a large role in controlling it, indeed, to a greater extent than ever before.
And why's that? Because the (supposedly) 'non-profit' organisations running it (or at least the bureaucracy which props up the healthcare system) are, hm, wasteful and crap, and because the system - as was - is on the verge of collapsing. If I wasn't off to my GP now, I'd elaborate.
"You can of course argue that these levels of consumption have been bolstered by credit or superexploitation of the third world" but you would be wrong to because that would be to completely misunderstand how the world trading sytem works.
Conor
I suspect you and I have rather different understandings of 'how the world trading system works'.
Which of them amounts to misunderstanding is another debate entirely.
Well maybe so - and I agree it is another debate -but how have "levels of consumption" been bolstered by "superexploitation of the third world"?
Name a "third world" country that is poorer today than it was (say) 10 years ago because it has increased its trade with the rest of the world or received more foreign investment?
The countries that are poorer today are mainly those that have been locked out of the international trading system and, therefore by your definition, have not been "exploited" by western consumers.
Well, I with Wallerstein's argument that in practice, many countries in the third world are effectively exporting socially necessary labour time - to use the Marxist terminology - at below its exchange value of labour power in the purchasing country. This is exploitation.
Moreover, much of that depends on such variables as exchange rates and commodity prices.
For instance, last time I checked, Zambia was in deep shit because of a huge fall in the price of copper, its main export.
It had played the globalisation game ... and was suffering as a result.
Note I said 'last time I checked'; the shortfall could now be made up and more, or Zambia could be even worse off.
But Zambia has no chance of rational economic development if it has to contend with that kind of instability and vaguary.
In case anyone's interested I wrote a brief summary of the crash last week.
http://www.permanentrevolution.net/entry/2366
Seems like a long time ago.
Sure commodity prices go up and down - and that is one reason why developing countries want to move up the productive chain.
In Brazil, for example, we have had a couple of good years of economic growth because of high commodity crises. Our currency crashed last week because if Europe and the US go into recession, these prices will fall. There is a good piece by Kevin Gallagher at Comment is Free on this:
http://www.guardian.co.uk/commentisfree/2008/oct/14/economy-development
His point on the way in which the Brazilian government invested to develop Embraer is particularly pertinent. But the idea that western consumers have become rich by somehow "sucking wealth" out of the "third world" is just a parody of how the world economy actually works. What is worse is that it feeds protectionist sentiment on parts of the left - and that is one of the major causes of world poverty.
And here's a great piece by Paul Kruggman on technology, jobs, and the future of capitalism
http://www.slate.com/id/1916/
I think the reason why (as you point out) the left has had so little of interest to say about the current economic crisis is because they start with some basically simple wrong assumptions.
You can pile fact upon fact on top of sophisticated philosophical theory, but if your starting point is that "technological advance destroys jobs" or "western consumers are enriching themselves by sucking money out of the third world" then you are never going to understand the way the real world works.
I'm not sure 'the left' can be said to unproblematically believe the former. Insofar as we believe the latter it isn't a starting point but a conclusion.
But the West does become rich by sucking wealth from the Third world.
The Bank of England and the Federal Reserve regularly publish the stats to prove it.