Views on Marx and Keynes and the End of History, Part II

Les Schaffer schaffer at
Sun Feb 25 12:21:49 MST 2001

[ Part II from Henry Liu ]

The problem is not the division of labor, but the artificial denial of
the labor theory of value. The Cold War was an ideological war, but it
was fought with captialistic means.  Thus the so-called socialist
economies had to skip the evolutionary historical dialectics to jump
from feudal agricultural economies to socialist industrial economies
from a abject poverty base.  Marx's notion of socialism evolving from
advance state of capitalism was blocked by pervasive political
interference.  Yes, the capitalist West produced more wealth than the
socialist East and the Third World.  But that is hardly proof of the
failure of socialism.  It only proved that wealth as defined in the
capitalist system is best produced under captialism, a tautological
effect.  True socialism lies still ahead in human history.  That is
why the end of history line is merely empty self-congratulation.  On a
practical level, the fact that Professor Skidelsky now serves as a
director of the nation's fifth largest mutual fund is eveidence of
creeping socialism, albeit the corporate variety.

Skidelsky allows: "This strand of Marxism is still alive (mixed up
with other traditions) as a protest against the mindless consumption
which may be interpreted as the compensation modern society offers for
the loss of human significance in the work many people do. Its effect
on contemporary politics, particularly those of the left-center, is
seen in the rhetorical extension of the concept of ownership to
include control of the processes by which decisions are made and human
lives affected.  This ramifies into arguments for participation,
decentralization, and communitarianism, and animates ecological
politics, gender politics, and so on. It could be argued that the new
electronic technologies generated by capitalism work to the same end
by creating "virtual" communities linked through the Internet.
Evidently, there is a great deal more to be said about the human
consequences of capitalism."

Skidelsky goes on:
" 2. Marx's theory of the class struggle as the motor of social change
is also dead, though it may have had some validity in the past."

The evidence is far from clear on this point.  It fact even US labor
is beginning to understand that the enemies of US workers are not
Third World workers, but the corporate structure in the core and their
Third World elite lackies.  It was reported that civil society and
political leaders warned Sunday, January 28, 2001 at Davos, the annual
fest of globalized capitalism, that globalization backlash could swell
and trigger violent confrontations unless its economic benefits are
distributed more fairly and solutions are found to stem growing
poverty and inequality. The President of the World Bank James
Wolfensohn, noted that 80 percent of the world's population, or 4.8
billion people, enjoy only 20 percent of the world's income, and the
remaining 20 percent enjoy 80 percent of the income.  Looking ahead,
Wolfensohn pointed out that in 25 years time the world's population
will reach 8 billion and all but 3 percent of this increase would go
to developing countries, which will have a population of 6.8 billion.
Poverty and inequality, he said, "are not just an issue for the poor "
but for the entire world and is an issue of peace.  The end of history

Skidelsky: "Capitalism, he (Marx) said, created the proletariat which
would destroy it, by concentrating all the means of production in a
few hands. (On how the destruction would come about Marx was unclear,
since he never succeeded in proving that capitalism was economically
unviable.  He relied on the accumulation of contradictions resulting
from this situation to bring about the transformation to socialism.)
In practice, it is capitalism, not communism, which has been the
greater dissolver of classes, by enabling an ever-increasing fraction
of the population to acquire assets other than their labor power, in
the form of shares, small businesses, and other entitlements to
streams of income not deriving from work. This is exactly the reverse
of what Marx foresaw."

Skidelsky may be correct if he means to say that Marxist conjecture
alerted capitalism to incorporate reforms and regulation to deal with
the "accumulation of contrdictions".  One can reach socialism a number
of way, through violent revolution or through gradual evolution.  The
advance toward relative classless society is a testimony to
capitalism's adoption of Marxist concepts rather than a failure of
Marxism.  For the benign results of modified capitalism come precisely
from a curbing of its doctrinare excesses.

The Skidelsky delivers the coup de grace: "There remains a puzzle. In
his preface to A Critique of Political Economy (1859), Marx wrote: 'No
social order ever perishes before all the productive forces, for which
there is room in it, have developed; and new higher relations of
production never appear before the material conditions of their
existence have matured in the womb of the old society.' Why then did
he (Marx) expect a successful socialist revolution in the infancy of
the industrial system? In reply, it is tempting to venture a
non-Marxist generalization. The danger to the established order is
greatest in the youth of capitalism, when traditional society comes
under challenge. It recedes as capitalism gets established, contrary
to Marx's scheme, in which it grows with capitalist
contradictions. All the major anticapitalist revolutions of modern
times occurred at the wrong time and in the wrong place for Marxists,
particularly in Russia and China, but they bear out this general
principle. Had tsarism had ten more years, Russia would never have
experienced the Bolshevik nightmare."

True, socialism then would emerge more readily in the US and Germany.
Had monarchy survivied in more European countries, social monarchy
would have replaced social democracy.

Skidelsky: "3. In its crude form historical materialism is untenable.
It ignores both the fact that the set of circumstances shaping the way
people think and feel goes beyond their place in the productive system
and that ideas change much more slowly than the methods of production.
Yet a less intransigent version of historical materialism remains the
only secular alternative to religious metanarratives. Thinkers in the
Marxist tradition, or influenced by ideas of historical materialism,
such as Daniel Bell, Fredric Jameson, and Perry Anderson, have been by
far the most interesting interpreters of the changes in the economy,
state, society, and culture which have occurred in the last
twenty-five years. But they are just interpreters, fulfilling the
function Marx gave philosophers. Many of them have highly paid jobs in
American universities."

This is the kind of complacency one hears a lot at cosy after dinner
talks in British men's clubs.  Academic eonomists have by and large
isolated themselves from grass root populism.

Skidelsky: "4. Although Marx failed to clinch his demonstration that
capitalism was bound to collapse, he understood, rightly, that it was
a system with deep and persistent problems. The expectation of
large-scale economic crises has receded from our consciousness. This
does not mean that they will not happen. Then the discourse will
change once more."

Apparently Professor Skidelsky has missed the entire 1990s when large
scale financial crises occurred every three or four years around the
globe.  But Skidelsky is a fine scholar who has a thorough
understanding of Keynes whose undestanding of Marx led him to focus on
the need for full employment of rising eages in an economy.  Keynes
saved capitalism by applying Marxism to rein it in.

Skidelsky ends: "All this, and much more, might have been said by a
fin de si?cle biographer of Marx. But such matters were not in Wheen's
province; his achievement is quite different. In The 18th Brumaire of
Louis Bonaparte, Marx wrote that "all...personages of great importance
in world history occur, as it were, twice...the first time as tragedy,
the second time as farce." For all his prescience, Marx could scarcely
have predicted that this would be his own fate."

The crucification of Christ was a tragedy; his resurrection was a

Yes a classless society would still not be the end of history, any
more than the emergence of absolute monarchy.  But getting there is
half the fun.

Now, lets turning the table around and look at Brad DeLong's review of
the final volume of Skidelsky's three-volume work on Keyens:

DeLong attributed Skidelsky's alleged anti-American interpretation to
the latter's not being an economist (some kind of inside joke?): "And
because Skidelsky is not an economist, he overstates the gap between
John Maynard Keynes and U.S. Treasury official Harry Dexter White in
their joint design of the post-World War II international monetary
system at Bretton Woods and elsewhere. Skidelsky (p. 239) writes of
the relationship between Keynes and White as a 'battle between the
two...  one of the grand political duels of the Second World War,
though it was largely buried in financial minutiae...' But that is a
gross misrepresentation. When an economist like me (DeLong) looks at
the competing Keynes and White plans for post-WWII monetary
reconstruction, I am struck not by their differences but by their
extraordinary similarities. The White plan called for a Bank for
Reconstruction (now the World Bank) to finance an enormous amount of
investment in the post-World War II decades. The White plan called for
an International Stabilization Fund to repair the flaws in the
interwar golds standard: to make explicit and to enforce the rules of
behavior expected of countries, to manage exchange rate changes, to
assist in resolving balance of payments problems, to encourage tariff
reduction and free trade, and to control destabilizing movements of
"hot money" like we saw in Mexico in 1995 and in East Asia in 1997.
The Keynes plan called for the same. Oh there were differences, and
the differences were important. Keynes envisioned a much better-funded
institution than White did, capable of taking action on a much larger
scale. (I should point out that the IMF today has only a fraction of
the resources that White thought necessary, and only a tiny fraction
of resources that Keynes thought desirable.) Keynes saw a balance of
payments imbalance as a problem for both surplus and deficit
countries, both of which needed to be encouraged to change their
policies. White saw a balance of payments deficit as the problem of
the country running the deficit which needed to change its policies to
correct the problem. (I think White was mistaken: Keynes was more
farsighted.) Skidelsky widens the gap between the two to an immense
gulf (p. 245): "The White and Keynes plans were based on different
concepts... loans out of subscribed capital... [or] overdrafts
[created] out of nothing.... For the British, the White Plan spelled
financial orthodoxy, the gold standard, and deflation; the the
Americans, the Keynes plan spelled reckless experiment and
inflation..." He sees the differences as the result of American
malevolence (p. xx): "Harry Dexter White of the US Treasury wanted to
cripple Britain in order to clear the ground for a post-war
American-Soviet alliance..."  But Skidelsky is wrong. He quotes
(p. 253) a critic of both plans who had a much clearer view of what
was at stake. This critic at the time saw both plans as near-identical
twins: "both plans set up a super-national Brains Trust which is to
think for the world and plan for the world, and to tell the
governments of the world what to do.' They were both British plans...
both reflected trends in Keynesian thinking and British monetary
policy..." Keynes agreed that the differences were less important than
the similarities. He focused not on what was left undone but on what
was accomplished, and what was accomplished was "... a revolutionary
change for the better compared with the position in the interwar
period..." (p.  328). What about American malevolence seeking to
cripple Britain? It is only fair to counterbalance Skidelsky's view of
Harry Dexter White--a complex man, Russian agent of influence, New
Dealer, ruthless bureaucratic infighter, accomplished technocrat, and
co-architect of the post-World War II international monetary system
that played a key role in giving the world economy its fastest
generation of growth ever--with John Maynard Keynes's view (p. 323):
"With Harry White, as you may suppose, we have been spending a vast
amount of time... over-bearing, a bad colleague, always trying to
bounce you, aesthetically oppressive...  not the faintest conception
of how to behave.... At the same time, I have a very great respect and
even liking for him. A very able and devoted public servant, carrying
an immense burden of responsibility and initiative, of high integrity
and of clear-sighted idealistic international purpose, genuinely
intending to do his best for the world.

Moreover, his over-powering will combined with the fact that he has
constructive ideas mean that he does get things done, which few here
do.  They way to reach him is to respect his purpose, arouse his
intellectual interest (it is a great softener to intercourse that it
is easy to arouse his genuine interest in the merits of any issue),
and to tell him very frankly and firmly without finesse when he has
gone off the rails..." Keynes's true adversary wasn't Harry Dexter
White. His true adversaries were those who feared any form of
international financial management, or those who wanted tight controls
over all international economic transactions. But Skidelsky does not
see this."

DeLong's view can only be argued from a purely economics perspectives.
But the struggle between Keynes and White was political.  The subtle
economics difference between the two plan represented a huge gulf
politically.  The Keynes plan fitted the need of a financially drained
British Empire while the White plan fitted the needs of a financially
well heeled US.  Neo-liberal economists, of whom DeLong is a card
carrying member and an active participant in the Clinton White House,
never understood the political implication of their economic logic, as
eveidenced by Larry Summers' infamous World Bank memo.  Which leads to
DeLong's next criticism of Skidelsky: "I've (DeLong) talked about the
good and the bad. Now I have to talk about the ugly--even though the
ugly takes up a very small number of pages in the book, and appears to
be an afterthought largely confined to the introduction.  Skidelsky
appears to have fallen under the influence of a strange and sinister
sect of British imperial conservatives who believe that somehow the
U.S.  during World War II provided aid to Britain on niggardly terms,
terms guaranteed to destroy Britain as a great power. Skidelsky writes
(p. xx) of the "...intensity and often bitterness of the struggle
between Britain and America for post-war position which went on under
the facade of the Grand Alliance. When the European war started,
Britain, not Germany, was seen by most American leaders as America's
chief rival..."  The chief accusation seems to be that America
squeezed Britain's financial resources dry before it would open the
spigots of Lend-Lease aid, and so destroyed Britain as a great
power. Any economist would know that this is total nonsense.  But even
though it is nonsense, Skidelsky seems to believe it. He writes of how
(p. xv) "Churchill fought to preserve Britain and its Empire against
Nazi Germany. Keynes fought to preserve Britain as a Great Power
against the United States. The war against Germany was won; but, in
helping to win it, Britain lost both Empire and greatness..." He
writes of how (p. xxi) it was a tragedy that Hitler's being "in charge
of a great nation... threw Britain into the arms of America as a
suppliant, and therefore subordinate: a subordination masked by the
illusion of a 'special relationship'...". He even seems (I can barely
believe it) to feel some regret that the British government's
"...underlying belief that the New World had to be yoked... to the
Old" led to "...the deference Britain paid to America's wishes... and
its failure to exploit crucial elements in its bargaining
position--like fighting a more limited war, or even making a separate
peace with Germany..." (p. 180)."

Anyone who reads declassified documents on war time Allied summits
will find a lot of evidence to support Skidelsky's observations.
Until his untimely death, FDR was on a collision course with Churchill
on the war's objective vis-a-vis British colonialism.  It was not
until Truman replaced FDR that US policy accepted British insistance
on the preservation of the British Empire as a war aim.  This policy
change greatly limited US option in developing a viable post war
policy toward new emerging nations of the Third World. that eventually
led to the Vietnam War, by equating Third War nationalism with

DeLong: "But everyone knows that a Britain that made peace with Hitler
in 1941 because American Lend-Lease aid was insufficiently generous
would not be great. Britain fought to defeat a tyranny, not to
preserve an empire."

This is embarrasing self deception. Even the US only declared war on
Germany after Pearl Harbor.  German tyranny had by then been going on
for a number of years.  Prominent Americans were actively against US
involvement and many were actively pro Germany until after Pearl

WWII was a conflict of geo-political interests among great powers.
The struggle against tyranny image was an afterthought icing on the
cake.  DeLong is obviously suffering from the Quiet American syndrome.

Henry C.K. Liu

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