Karl Marx is Back in Style

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.

Heilbroner concludes:

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.

Karl Marx Will Have the Last Laugh

Recently I watched Michael Moore's latest film “Capitalism: A Love Story.” I think it was his best film; the only one that compares is his first, “Roger and Me.” In particular he did a good job laying out the history of the last 75 years, how the regulations and policies of the New Deal era brought about a golden era of middle-class prosperity which was then eviscerated by Reagan-era (and later) deregulation.

In one of the special features Moore speculates about what economic system will follow capitalism. I have often pondered that myself, and my conclusion is that Karl Marx had it right: socialism will succeed capitalism, and then communism will replace socialism.

I think Marx has been greatly misunderstood, including by people like Lenin and Stalin. Marx’s theory held that socialist revolutions would occur only in the most advanced capitalist countries; he envisioned it happening first in his home country of Germany. Russia would have been one of the last countries Marx would have thought ready for socialism: at the time of their 1917 revolution they had barely progressed past feudalism. Russia was not the capitalist, industrialized nation that Marx theorized was required for the advance to socialism.

Lately I have been thinking that Karl Marx will ultimately have the last laugh. In the 1990’s it must have been very difficult for Marxist scholars as triumphant conservatives proclaimed the “end of history”: supposedly capitalist democracy had triumphed over evil totalitarian socialism.

But now the financial crisis of 2008 showed the inherent weakness in unregulated capitalism. The financial system required a huge influx of government money to keep it from collapsing. What most of us don’t know is that similar government rescues have happened many times since the late 1970s, when the dismantling of New-Deal-era financial industry regulations began. I’ve just read Robert Kuttner’s “The Squandering of America,” published before this latest crisis in 2007, and he wrote: “In fact, the Federal Reserve System since the early 1980s, under Volcker and Greenspan, aggressively intervened in the economy more than a dozen times to countermand catastrophic market-driven disasters that could have caused repeats of the Great Depression.”

In his book Kuttner advocates a managed form of capitalism as a way to bring wide-spread prosperity.

What do I mean when I use the word “socialism”? An aggressively managed capitalism. One of the misconceptions about socialism is people think it equates with Marxism, and the “ownership of the means of production by the proletariat.” That is incorrect. The word “socialism” was coined in the early 1800s, before Marx, to describe the ideas of many early critics of industrial capitalism.

The American Heritage New Dictionary of Cultural Literacy defines socialism as “An economic system in which the production and distribution of goods are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity.”

In the United States today we have a system in which there is quite a bit of “government control of the production of goods.” The minimum wage, health and safety laws, and pollution regulations are all examples of the way our government controls the way goods are produced in this country.

There was a period of time in this country when capitalism was much more unrestrained; it was known as the Gilded Age. This was the latter half of the nineteenth century. If you’d like to know a little about what life looked like under this rawer form of capitalism, read The Jungle, by Upton Sinclair (life without worker protections), or Terrors of the Table: The Curious History of Nutrition, by Walter Gratzer (life without food inspections).

One chapter of Gratzer’s book is entitled “Cheats and Poisoners,” and I recommend it to anyone who doesn’t believe in government regulation, because here is portrayed what the food supply looked like in those happy days before government started meddling in business. One example: watering-down of milk was extremely common, and something had to be done to conceal the dilution: “So flour, sugar, chalk, plaster of Paris, or ground rice, or a mixture of several of these, could be added, and a little pulped calves’ brains were found highly effective, especially to simulate cream. Another repellant stratagem was to throw snails into watered milk to thicken it with their mucous and lend an attractive froth.” Who needs the FDA, right?

A great example of socialism that we all participate in is insurance: many people pool their money to cover the few who suffer disasters.

We pool our resources when we pay taxes, and purchase such items as police and fire protection which protect everyone in the society (ideally). Your house may never burn down, and you may never have need of the police department, but do you begrudge them your tax dollars?

A free market fundamentalist would actually argue against the existence of these socialist protections. Fire-extinguishing could be a lucrative private business—why not have every householder contract with a private business for fire protection? Actually, this was how it was done for most of history. One of the richest men who ever lived was a Roman general and politician named Marcus Licinius Crassus. He owned much of Rome, and he built this empire through fire. When a fire had broken out Crassus would travel to the scene and purchase the burning building and the imperiled surrounding buildings at a steep discount. His small army of slaves would then put out the fire and rebuild.

Another form of socialism is the protection of the well-being of citizens: Social Security, Medicaid, and unemployment insurance for example. Of course the United States lags behind most advanced industrialized nations in this area, but the point remains, the United States does currently have socialist programs.

The truth is, our country has been moving away from capitalism in the direction of socialism for more than a hundred years now, and, no matter how loud the teabaggers yell, there is no turning back.