More Marx

One of the points of my previous post, although it may have been obscured, is that there is no solution for the unemployment crisis under the current economic paradigm. All of the supposed "solutions" are meaningless as long as libertarian globalized corporate capitalism is allowed to continue unabated. The problems with capitalism as a system were articulted by Marx, but ignored for ages because of the disasterous experiments that supposedly claimed Marx's legacy.

Now let me state this clearly - I am not, nor have ever been, a member of the Communist party. I'm no Marxist or Comminist or socialist, or any other "-ist". In my opinion "pure" socialism is a disaster, just like "pure" capitalism is becoming more and more of a disaster in the US. As I'm fond of saying, capitalism doesn't work without socialism, and vice-versa (as Cuba is now discovering and taking steps to rectify).

So I discovered this article by Umair Haique. I've read Umair's stuff before and heard interviews with him - and I think he's one of the smartest economic writers today. He's a capitalist - but realizes the flaws in the system and realizes we cannot continue going the way we are and expect this system to last. He is the latest to weigh in on whether we have something to learn from the Great Satan. Here are excerpts:

Let's take Marx's big critiques of industrial age capitalism, one by one (and with a grain of salt: since I'm far from a Marxist economist, it's entirely possible my quick, partial descriptions leave much to be desired).

Immiseration. Marx claimed that capitalism would immiserate workers: he meant that labor would be "exploited" — not just in a purely ethical sense, but in a narrower economic one: that real wages would fall, and working conditions would deteriorate. How was Marx doing on this score? I'd say middlingly: wages in many advanced economies — notably, the most purely capitalist in a financialized sense — have failed to keep pace with productivity; not for years, but for decades. (America's median wage has been stagnant for roughly 40 years.) In macro terms, labor's share of income has plummeted, while the lion's share of growth has accrued to those at the very top.

Crisis. As workers were paid less and less, capitalism would be prone to chronic, perpetual crises of overproduction — for they wouldn't have the means to purchase or invest in enough goods to keep the economy humming. As Marx put it, there was likely to be "poverty in the midst of plenty." How's Marx doing on this score? Not bad, I'd say: the last three decades have in fact been characterized by global crises of what you might crudely call overproduction (think: too little demand chasing too many disposable widgets, resulting in a massive global debt crisis, as vanishing middle classes took on more and more debt to compensate for stagnant real wages).

Stagnation. Here's Marx's most controversial — and most curious — prediction. That as economies stagnated, real rates of profit would fall. How does this one hold up? On first glance, it seems to have been totally discredited: corporate profits have broken through the roof and into the stratosphere. But think about it again, in economic terms: Marx's prediction concerned "real profit," not just the mystery-meat numbers served up by beancounters, and chewed over with gusto by "analysts." When seen in those terms, Marx might be said to have been onto something: though corporations book nominal profits, I'd suggest a significant component of that "profit" is artificial, earned by transferring value, rather than creating it (just ask mega-banks, Big Energy, or Big Food). I've termed this "thin value" and Michael Porter has described it as a failure to create "shared value." Replace "declining real profit" with "shrinking real value" and it's analogous to what Tyler Cowen and I have called a Great Stagnation (though our casus belli for it differs significantly from Marx's).

Alienation. As workers were divorced from the output of their labor, Marx claimed, their sense of self-determination dwindled, alienating them from a sense of meaning, purpose, and fulfillment. How's Marx doing on this score? I'd say quite well: even the most self-proclaimed humane modern workplaces, for all their creature comforts, are bastions of bone-crushing tedium and soul-sucking mediocrity, filled with dreary meetings, dismal tasks, and pointless objectives that are well, just a little bit alienating. If sweating over the font in a PowerPoint deck for the mega-leveraged buyout of a line of designer diapers is the portrait of modern "work," then call me — and I'd bet most of you — alienated: disengaged, demoralized, unmotivated, uninspired, and about as fulfilled as a stoic Zen Master forced to watch an endless loop of Cowboys and Aliens. [this the the best part of the article. I LOVE this! - CH]


False consciousness. According to Marx, one of the most pernicious aspects of industrial age capitalism was that the proles wouldn't even know they were being exploited — and might even celebrate the very factors behind their exploitation, in a kind of ideological Stockholm Syndrome that concealed and misrepresented the relations of power between classes. How's Marx doing on this score? You tell me. I'll merely point out: America's largest private employer is Walmart. America's second largest employer is McDonald's. [See What's the matter with Kansas - CH]

Commodity fetishism. A fetishized object is one which is more than a symbol: it's believed to have actually the power the symbol represents (like an idol, or a totem with magical properties). Marx claimed that under industrial age capitalism's rules, commodities became revered talismans, worshipped through transactional exchanges, imbued with mystical powers that give them inherent value — and obscuring the value of and in the very people who've worked labored over them in the first place. It's one of Marx's most subtle and nuanced concepts. Does it hold water? Again, I'll merely pointing to societies in furious pursuit of more, bigger, faster, cheaper, nastier, now, whether it's the retail temples of America's mega-malls, or London rioters stealing, not bread, but video games. [No mention of iPods or 'Black Friday?-CH]

Marx's critiques seem, today, more resonant than we might have guessed. Now, here's what I'm not suggesting: that Marx's prescriptions (you know the score: overthrow, communalize, high-five, live happily ever after) for what to do about the maladies above were desirable, good, or just. History, I'd argue, suggests they were anything but. Yet nothing's black or white — and while Marx's prescriptions were poor, perhaps, if we're prepared to think subtly, it's worthwhile separating his diagnoses from them.

Because the truth might just be that the global economy is in historic, generational trouble, plagued by problems the orthodoxy didn't expect, didn't see coming, and doesn't quite know what to do with. Hence, it might just be that if we're going to turn this crisis upside down, we're going to have to think outside the big-box store, the McMansion, the dead-end McJob, the bailout, the super-bonus, and the share price.

The future of plenitude probably won't be Marxian — but it won't look like the present. And if we're going to trace the beginnings of better, more enduring, more authentic, more meaningful, fundamentally more humane paradigm for prosperity, perhaps it's worthwhile exploring — even when we don't agree with them — the critiques and prophecies of those who already They apparently challenged yesterday's.

I think the last paragraph really says it as well as I could. It's the capitalists who are ruining capitalism. They apparently think that they will be safely insulated from the immiseration of the population in their urban penthouses and gated resort communities (the latest scheme from libertarian billionaires is to live on artificial offshore islands - seriously, I am not making this up!). They are convinced that their ownership of the media and use of propaganda is powerful enough to keep the masses complacent, even through mass unemployment, falling living standards, and loss of hope. It's quite a gamble, but I've seen enough libertarian conservatives in my time to know that their are several characteristics that define them - boundless arrogance, greed, and sociopathy.

Finally I'd like to highlight one particularly insightful comment under the above article:

This discussion is about Marx's analysis of capitalism, not about communism. He sat in the British Library for decades, studying very dry, economic reports, he was trying to understand basic underlying mechanisms of capitalism.

He discovered how capitalism naturally moves through boom and bust cycles; how it is perpetually in crisis; how value is created by labor; how some capital must be destroyed to restore profit margins; how unemployment levels are used to control the price of labor; and so much more.

It is a description of a vast, complex system, it has nothing to do with communism or opinion, just as observing how gravity works and describing its laws has nothing to do with being on the left or the right.That's Mr Haque's focus in this article - not a discussion of communism.

Marx managed to uncover, describe, and catalog fundamental characteristics of capitalism at a time when capitalism was still very young. That work is about trying to understand the nature of capitalism.

This is a partisan-free undertaking because having an accurate picture of capitalism is *essential* to whichever political party you subscribe to.

Unfortunately, we can't look at Marx's work in this area without triggering partisan responses from both left and right, which is a shame. And that became a problem for Marx too, during his time, as others took his work on analyzing the capitalist system and used it for their own ends. He once said of some French Communists, "If this is Marxism then I'm no Marxist."

It's time to look at Marx with fresh eyes. I highly recommend Francis Wheen's superb biography, where he makes a very strong case for a reexamination of his work.What bothers me hugely is that our economists and politicians are continually surprised by economic busts and try to avoid or mitigate them yet they are a fundamental characteristic of capitalism -- they point fingers of blame and responsibility as if the busts can be avoided. They can't.

If you have a planned (communist) economy you might be able to avoid busts but not in a capitalist economy.

It's high time to rediscover, and celebrate, Marx's analysis of capitalism and recognize its fundamental cycles and integrate them into government plans so that we aren't continually surprised by events that are natural to our economic system. That's not Marxism, or communism, it's just plain common sense.

Well said. Actually, all of the comments are pretty enlightening. Too bad all the page bloat crashes my crappy laptop.