The recent revival of Marx on the Continent is causing a lot of chatter. Das Kapital is now selling like the latest batch of hot cakes, proving that even commies prefer to own the book. Ironic because they could watch David Harvey’s lecture series on Das Kapital online for free.
By Daniel Taghioff.
This development has brought on a wave of angst across the civilised world, as middle-class lefties realise they will have to brush up on their modes of production and dust off their anecdotes on ideology (See Thus Passim). But the thing is, none of this is difficult. So with no further fanfare, here it is:
The THUS potted guide to political economy:
Profit: If you have an unhealthily high rate of profit the money moves away from the poor to the rich. If you have a low rate of profit the rich get pissed off.
Capitalist Crises: Too much of the former, you crush the poor – who then, incidentally, can’t buy stuff. Too much of the latter, a counter-revolution like Neo-liberalism.
An even briefer history of Neo-Liberalism: TheThatcher revolution and ’Reaganomics‘ both inspired by Milton Friedman (and Ayn Rand et al) led to redistribution of wealth, largely from the middle to the top and ‘light touch’ regulation in the financial markets. The stated objective was smaller government and an end to Keynesian supply-side economic dogma, but this didn’t happen. It all went horribly wrong (Thus passim).
Inequality: The poor got richer (in absolute terms) despite the robbery from above because there were more resources coming in from the environment.
The environment: A lack of natural resources makes inequality more of a problem (free summary), as you loose cheapo consumer goods as a way of buying off the poor, and as prices spike, especially for food… (Thus passim).
Productivity: Productivity gains or ‘advanced technology’ allegedly defeated Marxism, or rather the lumbering economic giant of Communism. But in reality, it actually dramatically increased natural resource usage. All that growth from the ‘white heat of technology’ can be accounted for as increased available energy in the economy,(Full text here) which nowadays means Big Oil.
Consumption: Productivity should really be measured in terms of goods per unit of natural resource. This is not going up anywhere near fast enough (look at page 20). To quote Monbiot (if you must- JK) “if our economy grows at 3% between now and 2030, we will consume in that period economic resources equivalent to all those we have consumed since humans first stood on two legs.” Hence we are running out of stuff, like Oil, though there will be peak other things too, like available fresh water.
Revolution: So there will be a crunch (or several). Printing money will not buy us out of trouble if there isn’t stuff to buy (Thus passim). Developing countries, especially those with a a big exposure to food price rises such as India will not be able to hold onto democracy if basic natural resources totally deplete. Revolutions, on a small or large scale are imminent. We are in for some interesting decades (Thus Passim)…
Conclusion: This recession is a phoney war. Our kids won’t need to worry about levels of debt – which, by the way, are notional – a future dictatorship of the proletariat could abolish these by simply refusing to honour them (or just by printing money). Our kids (and their parents) need to worry about natural resources, because we can’t print more of them.
4 Comments
Yes, neoclassical economics is a fraud; it is opinion, paid for by and in the service of the rich, masquerading as science. But it is not just the omission of nature’s free inputs that makes it bad science; there are two other equally important flaws. 1) The failure to separate out the category of assets that command ‘rent’, defined as excess earnings from monopolisation; without this you cannot explain distributions and inequalities of wealth, and if you can’t explain them, you can’t create policies to alter them. 2) The failure to acknowledge the importance of values other than material values in human societies. Neoclassical economics treats humans as robots programmed with Pareto utility optimisation programs. It may be true that for specific purposes, you can explain a lot of behaviour by assuming that humans do behave ‘as if’ they were robots. But unless the theory also fits into a larger scheme in which humans behave differently, then it is bound to fail at the most crucial points (as it has recently), since it is when they are under pressure that humans do change their behaviour, and do so (predictably) in ways that contradict neoclassical assumptions.
I think we have to avoid being single-tracked into resources/environment as THE cause of current theory’s inadequacy. Chaos theory is on its way into economics as well as the other social sciences.’Tipping points’ become the key issue: where are they?- not just in resources such as water/oil, but in urbanisation, communication, production systems.
Yes, oil will go to $200 and we won’t be able to afford all those energy slaves whose output we live on now. But we’ll find other and equally unsustainable and inequitable ways to live if we’re still using the wrong maps.
Hmm, yes, good points.
1) Theory of rents very interesting. But isn’t monopolisation very much driven by economies of scale, which are in turn driven by energy? Don’t want to be reductionist (OK, no its not all the environment clearly, that is a polemic to try and show its gaping ommission) but surely there are connections?
2) Values. This one is interesting. Been reading about how Marxism was not “scientific” only but was based on philosophical / spiritual value calls about alienation, or in other words what it is to be human and what it is to live a good life. Seems like all social theories carry this kind of assumed Anthropology within them. Would love to do an article about that, but how to make it a good read?
3) Chaos theory. This is veeery interesting, as it puts the focus away from linear and equilibrium-based models. Follows understanding of disturbance and far-from equilibrium systems in ecology. Economics in a Post-New-Orleans world. Wonder if there will be an economics of recovery from disturbance… Any threads to follow on that?
4) Oil and inequity. Yes, you are right, we will manage to do inequity whatever the circumstances (sigh) unless we improve the politics. No easy answers there then…
Interestingly Krugman comes out in the New York Times to say that the fabled US productivity growth since 1995 is indeed a fable.
http://tinyurl.com/d2ezmg
Seems like most of the numbers were based on the financial sector, which it turns out wasn’t very productive, because in effect it was just making up money from no-where.
And, if you follow the link he provides, it seems like Europe, with its nasty unions and welfare states, has been doing a better job of raising both living standards and productivity all along.
Which is not that weird when you think about workplace relations and the fact that public goods like health are generally much more expensive and stressful when provided privately. Pity the British Political classes missed that one.
Never underestimate the power of the financial illusion, hey.
“Yes, oil will go to $200 and we won’t be able to afford all those energy slaves whose output we live on now. But we’ll find other and equally unsustainable and inequitable ways to live if we’re still using the wrong maps.”
I guess one point to consider is that the natural resource issues will create so much instability in developing countries, many of whom are nuclear armed, that we will effectively be forced to change our maps.
Sadly, civilised scholarly debate is seldom what leads change, it is political unrest. What the debate does is gives those changes form, and hopefully prevents then from creating too much havoc of their own.