For the last few decades, and particularly after the fall of the Soviet Union in 1991, Karl Marx was out of fashion. You couldn’t mention him without people sneering at how out of touch you were. This was the era of triumphalism about capitalism’s victory over communism marked by the publication of The End of History.
I knew this was just temporary, because so much of the prejudice was based on a misunderstanding of what Marx had written. Now that we can’t seem to recover from the Great Recession, and more and more people are aware of increasing income inequality in the U.S., things are changing.
Robert Heilbroner, in his classic book on economics The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (1953), writes that Marx’s analysis of capitalism was superb and accurately forecast many things that have since emerged but were not obvious in his day: “But for all its shortcomings—and it is far from infallible, as we shall see—the Marxist model of how capitalism worked was extraordinarily prophetic.”
Just recently I saw an online essay called Five Surprising Ways Karl Marx was Right. It’s a short article and worth the read.
Here’s a quick summary of five of Marx’s predictions that have come true:
1. Capitalism’s chaotic nature; illustrated by the regular cycles of boom and bust.
2. Capitalism creates imaginary appetites to artificially inflate spending. The article illustrates this with the iPhone—do we really need a new one every year?
3. Globalization. Obvious.
4. Monopoly—WalMart, Google, Microsoft, Amazon…
5. Low wages mean big profits.
Heilbroner discussed Marx’s analysis of these issues, including the last point of the value of a laborer:
[T]he laborer, like the capitalist, sells his product for exactly what it is worth—for its value. And its value, like the value of everything else that is sold, is the amount of labor that goes into it—in this case, the amount of labor it takes to ‘make’ labor-power. In other words, a laborer’s salable energies are worth the amount of socially necessary labor it takes to keep that laborer alive. [Economists Adam] Smith and [David] Ricardo would have agreed entirely: the true value of a workman is the wage he needs in order to exist. It is his subsistence wage.
In other words, capitalism’s measure of the correct wage to pay a worker is that which is just enough to keep him/her alive.
In the end the figure who must be proven wrong is Marx the Economist, Marx the finicky scholar who laboriously sought to prove, through the welter of surface distractions, that the essence of capitalism is self-destruction. The answer to Marx lies not so much in pointing out the injustices of communism as in demonstrating that in a social atmosphere of which Marx never dreamed, capitalism can continue to evolve and to adapt its institutions to the never-satisfied demands of social justice.
We could add a sixth point to the list above: unsustainability. Capitalism needs constant growth in order to work; it is not a sustainable system. This is why Marx said it would self-destruct.
As just one example, how much evidence will need to accumulate that global climate change is happening before we question the right of capitalists to keep digging up more carbon-based fuel? Marx predicted that the system of capitalism would self-destruct; it’s getting to the point where we need to start worrying whether it will take the human race with it.