Greenspan versus Marx
Posted on Thursday 26 January, 2012
Filed Under Anti-capitalism, Theory
A LOT of people on the free market right have a simplistic two-word explanation for why the world economy is currently close to the edge of a frighteningly steep cliff: Alan Greenspan.
Throw those Marxist and Keynesian textbooks out the window, people. We are where we are because the former chairman of the Federal Reserve responded to the dot com crash with a cheap money policy that fed the real estate bubble that triggered the credit crunch.
One of his predecessors in that office remarked that the job of a central banker is to take away the punch bowl before the party gets going. The charge is that Greenspan topped it up with a healthy slug of Havana Club Añejo 7 Años. Or more likely, nasty capitalist Bacardi, I guess.
It is gratifying to see the bastards blaming one of their own. Greenspan’s credentials on the other side of the spectrum to mine were once regarded impressive indeed. As a young man, he was a close friend of no lesser a rightwing pin-up gal than Ayn Rand.
Greenspan pops up in the Financial Times this morning, with a thinkpiece defence of capitalism that centres on an argument lefties have heard many times before.
Compare post-1945 East Germany with post-1945 West Germany, and see which did better. Look at how China has been doing since it turned to the market. Whatever you think about capitalism, it has delivered a tenfold increase in real GDP per capita over the last two centuries.
Marx would have absolutely agreed. None of his writings – or at least, none that I have read – anywhere disputes the impressive dynamism that capitalism displayed in his time. What is at issue in volumes two and three of Capital is whether that dynamism can be sustained indefinitely as capitalism ages.
Nor did every Marxist defend the Deutsche Demokratische Republik when it was up and running, of course. A substantial minority of us were well aware of its failings, both economic and political.
So what is the difference between the left and the right on these issues? In short, the right regards capitalism as humanity’s final form of economic organisation.
Occasional downturns are simply a comparatively minor price to pay for a secular upwards trend towards ever greater prosperity for ever greater numbers of people. Even now, for the likes of Greenspan, nothing is wrong with capitalism that more capitalism cannot fix.
The left will instead point to the increasing frequency of recessions since the 1970s, declining rates of growth and even declining rates of profit, permanent mass unemployment, rising inequality and the exploitation of labour power as reasons to demur.
For us, the only real surprise is that these tendencies have been in abeyance for the last three decades. Actually existing capitalism is a long way away from the Platonic form that the erstwhile Fed boss seemingly regards as the norm.
The best polemicists from both camps have been arguing this one out for several generations. The years ahead may well show which side was right all along.
<<Go back
Comments
18 Responses to “Greenspan versus Marx”
Leave a Reply
‘the right’ are cretins. we should not waste any time on them. Other than werking out how to crush them and destroy their very being (including their families and offspring). Re-read the classics and learn from them. Trotsky, Lenin, Serge, Mao et al. we need to grasp the totality. And move on from there.
Found dead in a badger den in Wales.
http://www.dailytelegraph.com.au/news/weird/gordon-ramsays-dwarf-porn-double-found-dead-in-a-badger-den-in-wales/story-e6frev20-1226137951576
http://www.dailytelegraph.com.au/news/weird/gordon-ramsays-dwarf-porn-double-found-dead-in-a-badger-den-in-wales/story-e6frev20-1226137951576
this story really does describe modernity in all its guises more accurately than any book length treatise ever could. gawwd help us all.
What Modernity is is a “dead, half eaten, Gordaon Ramsey dwarf porn double”?
Suicide by badger!?
Greenspan was the godfather of `monetarism’ so no wonder the monetarists felt betrayed when he turned on the printing presses. Nobody’s jaw dropped further than Greenspan’s when the banks collapsed and his theory of the `enlightened self-interest’ of the free market and private finance was completely and utterly flawed. What those daft monetarists don’t realise is that he abandoned his principles to bail out the super rich clients of the bankrupt banks not to pay for health care for the poor. I’d say they are caught in a contradiction but the middle classes, like workers and the poor, will also be the victims of the hyper inflation that results from loose money.
A true socialist economy will outperform capitalism.
Dave: do you really, really think that leading capitalist bankers and captains of industry believe that capitalism will spread prosperity, or do you think they knowd that it will lead to greater immiseration of the majority of the sentient beings on this planet, but as they will not be among that host they couldn’t give a fuck.
The late Stan Getz to blame for world financial crisis
An article in the New York Times, “Taking a hard new look at the Greenspan legacy” has led many people to conclude that the present capitalist crisis might have been less disastrous had Alan Greenspan pursued the musical career on tenor sax that he always craved:
THE FINANCIAL CRISIS : A QUESTION ABOUT JAZZ
Who’s to blame for the financial crisis? I would say Stan Getz, the eminent jazz musician who died in 1991. The New York Times (October 8th 2008) is saying in an article headed “Taking a Hard New Look at the Greenspan Legacy“, that his far too liberal free market policies made for today’s catastrophe. People who have read the memoirs of Greenspan published last autumn, know that Greenspan started his professional career in various big bands in the New York area. One day he had to sit next to Stan Getz and heard him play. He realized that he would never achieve the musical level of Getz, so decided to change course and become an economist instead. The rest of the story we all know. What if he never met Stan Getz? AND EVEN NOW THERE ARE STILL PEOPLE WHO DON’T BELIEVE JAZZ IS IMPORTANT!
Chris. How do you know that as it has never been tried and tested.
Yeah, I heard that Goldman Sachs, Morgan Stanley, Merrill Lynch and George Soros were something of a sensation.
Nothing but memories, a shame, but there you go, right time, right place and all that.
That is surely the ideological difference between the neo-liberals and socialists. The former thinks this is ‘as good as it gets’ while the latter can look back at history and see clearly that ‘things change’.
Ha, two movie titles in one sentence.
Very thoughtful post, David. Also reminds me of how fans of Adam Smith always tend to be capitalist headbangers, ignoring Smith’s criticism of aspects of capitalism. Would Smith be overjoyed with today’s capitalism? Would he not have made salient criticisms of how it has developed?
fu(h
O
F
F
re Smith :
That’s what capitalism’s about – finding new ways to do things that can make more profit.
Usually, that’s beneficial. Our capitalist builds a better mousetrap and people beat a path to his door. He makes lots of dosh, we get better mousetraps and everyone’s happy except the mice (and maybe a few cats rendered redundant by technology).
But we don’t make mousetraps in the UK any more – they’re made in China, where, confounding the hi-tech/hi-wage example of the previous 200 years, industry is hi-tech, low wage (although that may be a high wage in Chinese terms). The hi-wage UK is left with a people-intensive “service sector” in which the costs of the people increase faster than the cost of goods, because human productivity, say in hairdressing or nursing, cannot by the nature of the work increase as fast as industrial productivity.
But cheap world transport – and change in British culture – changes Smith’s model. Eamonn Butler’s Adam Smith Primer tells us :
The workers’ best friends, Smith surmises, are rising national income and capital growth, because they bid up wages. A landlord with surplus revenue will hire more servants. A weaver or a shoemaker with surplus capital will hire assistants. In other words, the demand for labour rises when – and only when – national wealth rises. The ‘liberal reward of labour’ depends entirely on economic growth.
That scenario supposes a fixed (in the short term, anyway) supply of labour. What if our landlord, weaver or shoemaker could import an almost unlimited number of low-paid servants and assistants ? What if, on top of that, their low pay was topped up by government through a tax credit system – a system originally designed to take low-paid Britons out of poverty ?
If the wages are low enough there’s no reason why even in a system of economic stasis or recession our landlord shouldn’t hire more servants. There’s also nothing to stop him sacking the servants he has and replacing them more cheaply from the almost unlimited pool of new labour.
What was stopping it in Adam Smith’s day was the cost of transport, the absence of a government pledged to abolish child poverty (aka “subsidise an employers low wages from tax receipts”) and the fact that the locals just wouldn’t wear it. A load of foreigners coming in and taking our jobs ? No way!
Now transport’s cheap, there’s that lovely subsidy, and above all the moral and political objections to undercutting “our own people” (a phrase which immediately brands the utterer with the indelible scar of racism) have been totally marginalised and discredited. The trades unions, which instinctively understood the objections to cheap ‘scab’ (non-unionised) labour, now welcome the undercutting of an entire working class.
A good capitalist will naturally take advantage of this situation. No conspiracy necessary.
What if you have a blog and some neo-nazi obsessively wibbles about the ‘yellow peril’, ‘slavic untermenschen’ and the ‘pollution of national life’?
Laban Tall, why not stop talking to yourself and make an effort at talking to others?
I don’t know what the Marxist critique of capitalism is (though I think it is more than just whether capitalism can retain the ‘dynamism’) but I know what mine are (in no particular order):
1. Huge inequalities in wealth, where the individual stands and falls in the marketplace. So for eg a footballer can earn in a week what another will take a lifetime to earn.
2. A system built on exploitation.
3. A system with no regard for anything (including the planet itself) other than endless production for productions sake or ‘dynamism’ if you like.
4. A system that creates greed and avarice, where a sense of community is replaced by selfish ‘animal spirits’. Where the endless need to consume is the first priority.
5. A system that wastes precious resources with the most incredible inefficiency and thoughtlessness.
6. A system that embeds anxiety, nervousness and depression into humanity.
7. A system that creates crippling hierachy and squanders the talents of most people.
8. A system where all are free but everywhere one looks there are people in chains.