[Marxism] Coy comments on Karl Marx

Louis Proyect lnp3 at panix.com
Thu Sep 15 09:57:17 MDT 2011


Opening Remarks September 14, 2011, 11:07 PM EDT
Marx to Market
The economic crisis has made the philosopher’s ideas relevant 
again, but the world shouldn’t forget what Marx got wrong

By Peter Coy

Society generally moves on from its mistakes. Doctors no longer 
drain blood from patients. Aviators don’t try to fly by strapping 
wings to their arms. Nobody still thinks that slavery is a good 
idea. Karl Marx, though, appears to be an exception to the rule of 
live and learn. Marx’s most famous predictions failed; there has 
been no dictatorship of the proletariat, nor has the state 
withered away. His followers included some of the 20th century’s 
worst mass murderers: Lenin, Stalin, Mao, Pol Pot. Yet the gloomy, 
combative philosopher seems to find adherents in each new 
generation of tyrants and dreamers.

You might even say the Bearded One has rarely looked better. The 
current global financial crisis has given rise to a new contingent 
of unlikely admirers. In 2009 the Vatican’s official newspaper, 
L’Osservatore Romano, published an article praising Marx’s 
diagnosis of income inequality, which is quite an endorsement 
considering that Marx declared religion to be “the opium of the 
people.” In Shanghai, the turbo-capitalist hub of 
Communist-in-name-alone China, audiences flocked to a 2010 musical 
based on Capital, Marx’s most famous work. In Japan, Capital is 
now out in a manga version. Brazilians elected a former Marxist 
guerrilla, Dilma Rousseff, as President last year.

The vogue for Marx should be expected at a time when European 
banks stand on the precipice of collapse and poverty levels in the 
U.S. have reached levels not seen in nearly two decades. 
Politicians know they can score points with their constituents by 
kicking job-creating capitalists like mangy curs.

Here’s the surprising thing, though: You don’t have to sleep in a 
Che Guevara T-shirt or throw rocks at McDonald’s to acknowledge 
that Marx’s thought is worth studying, grappling with, and 
possibly even applying to our current challenges. Many of the 
great capitalist thinkers did so, after all. Joseph Schumpeter, 
the guru of “creative destruction” who is a hero to many 
free-marketeers, devoted the first four chapters of his 1942 book, 
Capitalism, Socialism and Democracy, to explorations of Marx the 
Prophet, Marx the Sociologist, Marx the Economist, and Marx the 
Teacher. He went on to say Marx was wrong, but he couldn’t ignore 
the man.

As misguided as Marx was about many things, and as pernicious as 
his influence was in places like the U.S.S.R. and China, there are 
pieces of his (voluminous) writings that are shockingly 
perceptive. One of Marx’s most important contentions was that 
capitalism was inherently unstable. One only has to look at the 
headlines out of Europe—which is haunted by the specter of a 
possible Greek default, a banking disaster, and the collapse of 
the single-currency euro zone—to see that he was right. Marx 
diagnosed capitalism’s instability at a time when his 
contemporaries and predecessors, such as Adam Smith and John 
Stuart Mill, were mostly enthralled by its ability to serve human 

Marx has gotten an attentive reading recently from the likes of 
New York University economist Nouriel Roubini and George Magnus, 
the London-based senior economic adviser to UBS Investment Bank. 
Magnus’s employer, Switzerland-based UBS, is a pillar of the 
financial establishment, with offices in more than 50 countries 
and over $2 trillion in assets. Yet in an Aug. 28 essay for 
Bloomberg View, Magnus wrote that “today’s global economy bears 
some uncanny resemblances” to what Marx foresaw. (Personal opinion 
only, he noted.)

Consider the particulars. As Magnus notes, Marx predicted that 
companies would need fewer workers as they improved productivity, 
creating an “industrial reserve army” of the unemployed whose 
existence would keep downward pressure on wages for the employed. 
It’s hard to argue with that these days, given that the U.S. 
unemployment rate is still more than 9 percent. On Sept. 13 the 
U.S. Census Bureau released data showing that median income fell 
from 1973 through 2010 for full-time, year-round male workers aged 
15 and up, adjusted for inflation. The condition of blue-collar 
workers in the U.S. is still a far cry from the subsistence wage 
and “accumulation of misery” that Marx conjured. But it’s not 
morning in America, either.

Marx loved to bash French economist Jean-Baptiste Say, who argued 
that general gluts cannot exist because the market will always 
match supply and demand. Marx argued that overproduction was in 
fact endemic to capitalism because the proletariat isn’t paid 
enough to buy the stuff that the capitalists produce. Again, that 
theory has lately been hard to dispute. The only way blue-collar 
Americans managed to maintain consumption in the last decade was 
by overborrowing. When the housing market collapsed, many were 
left with crippling debt. The resulting default nightmare is still 
playing itself out.

Admirers of Marx view all this with a rueful I-told-you-so. The 
radical geographer David Harvey, 75, has taught Marx’s Capital for 
40 years at schools including Oxford University, Johns Hopkins 
University, and now the City University of New York Graduate 
Center. Harvey’s office, a block from the Empire State Building, 
is decorated with a silk-screen portrait of Marx, glowering from a 
bookcase. Harvey believes, as Marx did, that capitalists tend to 
sow the seeds of their own destruction. Unbridled capitalism tends 
toward wild excess, so complete deregulation is actually 
disastrous for it in the long run, the professor argues. “The 
Republican Party is en route to destroy capitalism,” Harvey says 
in a pleasant tone, “and they may do a better job of it than the 
working class could.”

But wait. What Marx and his acolytes underappreciated was 
capitalism’s power to heal itself. It may have been his fatal 
intellectual mistake. The Communist Manifesto said that when the 
workers’ revolution came, it would bring free public education for 
children and the abolition of “children’s factory labor in its 
present form.” And yet, as it turned out, the world didn’t require 
a proletarian revolution for those social reforms to occur; all it 
took was enlightened capitalism.

Doctrinaire Marxists love to say that the economic “base” 
determines and controls the sociopolitical “superstructure,” but 
the reverse can be true as well. Political leaders have corrected 
capitalism’s excesses again and again, as in President Teddy 
Roosevelt’s trustbusting campaign, President Franklin Roosevelt’s 
New Deal, and President Lyndon Johnson’s Great Society.

Now, once again, unbridled capitalism is threatening to undermine 
itself. The world’s biggest banks, financially weak but 
politically powerful, are putting the screws on borrowers in an 
attempt to rescue their own balance sheets. Likewise, creditor 
nations such as China and Germany are attempting to shift the pain 
of rebalancing onto debtor nations, even though squeezing them too 
hard threatens to cause an economic and financial disaster.

It’s time for another burst of enlightenment. In years past, 
Britain’s John Maynard Keynes and America’s Hyman P. Minsky 
(author of Stabilizing an Unstable Economy) did capitalism a 
service by diagnosing its tendency toward crisis and advising on 
ways to make things better. The sooner policymakers today 
“recognize we’re facing a once-in-a-lifetime crisis of 
capitalism,” as Magnus writes, “the better equipped they will be 
to manage a way out of it.” Grasping the ways in which Marx was 
right is the first step toward making sure that his predictions of 
capitalism’s downfall remain wrong.

Coy is Bloomberg Businessweek's Economics editor.

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