Chris Sciabarra's Attempt to Reverse-Engineer Marx

Chris M. Sciabarra sciabrrc at is2.NYU.EDU
Wed Sep 20 11:52:21 MDT 1995

On Wed, 20 Sep 1995, Doug Henwood wrote:

> *Statist* crisis? This is old territory, I know, but I can't help myself.
> Libertarians, even those as sophisticated as CMS, have a vision of a "pure"
> capitalism onto which meddlesome states are always grafting their
> distortions. This vision of capitalism seems as utopian as anything the
> utopian socialists ever came up with. Has there *ever* been a significant
> capitalism that wasn't pioneered and sustained by state action? And doesn't
> the extraordinary history of the 19th century, of boom followed by bust,
> show that capitalism is quite capable of generating its own crises without
> a meddlesome state's help? (Historical factoid: in the second half of the
> 19C, the US economy spent about half its time in recession/depression;
> since 1945, it's been cut in half, to a quarter of the time.)

Well Doug -- I don't know if I'm ready to start carting out the
statistics, but I do believe that the history of capitalism is
inseparable from state influences.  There has never been such a thing as
a totally free market-- and I think you may be right to see this vision
as "utopian as anything the utopian socialists ever came up with."
Nevertheless, I think that there is merit to
the "process of abstraction" -- that is, we need to trace the various
influences of "economic" and "political" and "cultural" etc., factors on
the development of the social totality.  I think that history bears me
out on this one, but it would take us well beyond the confines of a
Marxism list to discuss this at any great length.  Simply put, the most
insidious form of state influence in the development of the social
economy is the tie of government and the
banking sector.  Throughout the history of capitalism, specifically the
so-called "golden age" of the 19th century, one will see continuing
attempts by banks to inflate the money supply, and through a virtual
counterfeiting process, devalue the currency in an effort to get rich.
Banks have also, always, been very closely tied to the state, especially
since the most important means of funding wars has been through the
creation of a state-banking nexus, or National Bank.  It is no
coincidence that national banks and national specie flourish in the years
prior to war-making, and throughout the war periods.  The boom and bust
cycles of the 19th century can be very closely tied to monetary
expansion, and consequent bursts of malinvestment in capital intensive
industries, only leading to the inevitable bust when consumer demand
fails to materialize.  The Austrians, I think, are very good in this
area, and amazingly similar to Karl Marx, who saw the banks in their
incestuous ties to the state as the "pivot" of the credit system, and the
source of much economic instability.  The difference of course, between
Austrians and Marxists is that Austrians would seek to end financial
monopolies which, in 1913, reached their height in the creation of the
Federal Reserve System.  That system enabled banks to inflate the
currency collectively through a variety of institutional mechanisms,
socializing risks inevitably, and early on, generating a boom in the
1920s that made the crash and depression just as inevitable.  As for
the "lack" of recession and depression in the post-1945 era, I would say
that much of the recessionary tendencies have been masked by massive
distortions caused by a permanent war economy.   We also have a way of
exporting economic problems into the international arena, and we must
never lose sight of the fact that the "economy" is an artificial
construct when viewed strictly in terms of nation-states; it is global
and must be analyzed as such.
					- Chris
Dr. Chris M. Sciabarra
Visiting Scholar, NYU Department of Politics
INTERNET:  sciabrrc at

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