[Marxism] Re: Bhagwati's defense of Mankiw

Louis Proyect lnp3 at panix.com
Mon Feb 16 08:12:25 MST 2004

Julio Huato wrote:
> It is anathema to some people on these lists, but in my view Marx's 
> emphasis on the progressive character of capitalist production in 
> certain settings is not that far from Bhagwati's insisting that 
> capitalism in the Third World is "a dissolvent of reactionary forms of 
> privilege."  As Ahmet knows, among conventional economists, Bhagwati has 
> been one of the few who have worked seriously on the political economy 
> of profit seeking, something that -- in spite of some terminological and 
> methodological misunderstanding -- is not alien to the classic 
> distinction between productive and unproductive labor.

Can you hear Marx tittering in Highgate?

If only socialists had studied Marx properly, they would have known all 
along that capitalism would triumph. Meghnad Desai gets behind the 
slogans in Marx's Revenge

Faisal Islam
Sunday May 19, 2002
The Observer

Marx's Revenge
Meghnad Desai
Verso £19, pp383

Practical jokes, last laughs and vengeance would have been more the 
sphere of Groucho rather than Karl Marx. But Meghnad Desai argues that 
the great thinker's most prominent legacy was a huge confidence trick. 
Capitalism has now triumphed, it is 'the only game in town', statist 
socialism is 'dead', and, yes, that is what Marx had said would happen 
all along.

Desai, a London School of Economics professor and Labour peer, performs 
conceptual somersaults to pursue this contention. Most of the evidence 
comes from Marx's economic writings, ignored by everyone apart from 
Desai, previously the author of a textbook on the subject. Marx's 
Revenge is, however, far broader than that, racing through a history of 
economic thought, which is vital in that it shows what incubates the 
contemporary consensus in economics.

The key to understanding why Marx is tittering in Highgate Cemetery is 
the difference between the words Marxian and Marxist. The former refers 
to those who faithfully study all his works, specifically his analytical 
writings about the dynamics of capitalism; the latter is the reductive 
Bolshevism that emerged in the last century, shaped by Lenin's pamphlet 
on imperialism and these days incorporating a wide span of belief, 
including the fringes of fascism.

Marx recognised this trend. On hearing of the establishment of a Marxist 
party in France, he famously said: 'Je ne suis pas marxiste'. But he was 
subsequently ignored. Marxism in the twentieth century became defined by 
interpretations such as Lenin's Imperialism: the highest stage of 

In the 1920s, Das Kapital dropped off the Marxist's must-read list. 
Imperialism became the key text beside the Communist manifesto. Almost 
all debates about Marxian economics, particularly on the fall in the 
rate of profitability over time, were ruled out as 'uninteresting 
scholasticism'. 'The answers were known, Marx became a bundle of 
catechisms,' writes Desai.

Marx developed some pioneering economics. He was the first economist to 
incorporate an explanation of boom and bust within his theory. He 
constructed a simple model to show how profit came from the exploitation 
of the 'surplus value' of labour. This led to the ups and downs of 
profitability. But in volume II of Das Kapital Marx calculates a 
numerical scheme of a capitalist economy which does not run into crisis 
and enjoys perpetual growth.

The later volumes were published after his death, after Engels assembled 
Marx's notes. The famous words about the tendency to a falling rate of 
profit giving rise to the end of capitalism is hardly mentioned in 
volume III, argues Desai, and mentioned only as a possibility in volume 
I and in the Communist manifesto. So this misconception, misreading, or 
perhaps highly selective reading, of Marx has led to a vulgar 
simplificaton of what was a complex and nuanced body of work.

Desai's chapter six shows why some Marxists may have skipped the surplus 
profit exploitation equilibrium models. These technicalities, crucial to 
Desai's understanding of Marx, do not trip off the tongue as lightly as 
the 'revolt of the lumpenproletariat'. 'Popular Marxism' took Marx's 
more prophetic writings on the fate of capitalism, without noting that 
Marx had not given a timescale. If socialism is destined to usurp 
capitalism, but the transition period could last many hundreds of years, 
as the transitions between previous modes of production like feudalism 
and capitalism had lasted, then the prediction is not entirely helpful.

It is the political economy equivalent of Michael Fish telling us to 
wrap up warm because the Ice Age will return at some point. Rather than 
get his revenge, Desai's work seems to show Marx hedged his bets. If 
that is true, why should we care that his more obscure work has been 

In the process of explaining Marx's Revenge, Desai illuminates the work 
of Smith, Hegel, Popper, Polanyi, Keynes and Samuelson. A similarly 
revisionist tract would show that Adam Smith was not quite the market 
fundamentalist he is assumed to be.

Economics is more than a social science. It has become the theology of 
public policy in liberal democracies, justifying how societies are 
taxed, the ownership of the media and immigration policy. As its norms 
encroach on many other disciplines, such as politics, sociology, the 
law, even biology, its base assumptions and its evolution require a 
mainstream dissemination. Desai refers to this as 'social astronomy' 
which would be fair if it concerned only descriptive analyses of the 
structures in society. Unfortunately, Marxists appear to have indulged 
in too much social astrology.

It is an important book because of who it is directed at. Nobody in Wall 
Street or the City of London will care that Marx is now on their side. 
But for those who still express moral indignation at pronounced and 
prolonged inequality and poverty, the market is the most likely rescue 

Whether it is called the market, or capitalism, or neoliberalism, it is 
a tool that has not yet been harnessed fully for poverty alleviation. As 
Desai points out, the market is a tool for eliminating scarcity. It is 
departures from the free market, such as big subsidies for agriculture 
in rich countries, that are doing most to solidify poverty. Even from a 
tactical perspective, arguments expressed in the language of the free 
market are listened to, whereas moral sentimentality about excessive 
inequality is worthy but ineffective.


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