Roger Baker : Is Marx Still Relevant?

Image from The Great Illuminator.

Confessions of a neo-Marxist:
Why Marx still matters

By Roger Baker / The Rag Blog / August 10, 2010

I suppose I might now call myself a neo-Marxist. This is not to argue that Marx does not need some updating, no matter how keen an observer of the distinctive traits of the capitalism that he closely observed 150 years ago. I remain mindful of the fact that to say that you agree with Marx on anything is still enough to raise eyebrows, and not just here in Texas.

I still maintain that Marx was the first to interpret history and the phases of economic development throughout history in a way that made good sense. To me, Marx put the eventual development of capitalism into historical perspective, and in a way that still seems valid in many respects.

Marx was a radical social reform advocate, but he was also a scholar, an economic historian, and a sociologist who built a logical case for why the world operates in the way that it does. With constant wars and internal conflicts between kingly and peasant classes over the sharing of material goods that has been a constant theme of history.

Marx’s perspective was that, impelled by human social instincts operating on a mass scale, and given an ever higher level of technical knowledge and mastery of nature accumulated throughout human history, the eventual emergence of capitalism out of the early marketplace economy was a highly predictable event. Finance capital survives as the fittest and most aggressive alternative to other varieties of social organization, like feudalism or slavery based on agrarian economies.

Empires fall, and no doubt our global empire will too at some point, but probably in a different and more uniform way than was seen in earlier history. The Roman Empire was about as global as their level of technology and communication and sailing ships would permit in their time.

Now our technology has allowed the global organization of capital. We live in a new global empire linking nearly seven billion humans based on an unsustainable supply of fossil fuel. The modern tentacles of military influence reach and attempt to manage every part of the world.

Economics and politics inseparable

High on my own list of Marx’s important insights was the understanding that economics cannot be separated from politics. Marx understood that economics, far from being a science, dismal or otherwise, is nothing more than the somewhat predictable face of politics. Politics in turn is based on human psychology, which is usefully predictable when it operates on a mass scale.

I believe that history has shown that Marx was wrong when he theorized that an organized working class would eventually overpower private capital, and by whatever means that might require. Marx imagined that the factor that would ultimately limit the global expansion of capital would be an increasingly organized working class, rather than the limits imposed by nature itself, as Malthus had contended.

Why is the ruling class now so dominant and the broader public interest of those below in retreat? The global economy is now a global empire of finance capital centered in New York and London, policed by the U.S. military, and based on the U.S. dollar as its standard exchange currency.

Finance capital has become an economic force with the capacity to quickly shift thousands of jobs between nations in search of higher profit. This is why Marx supported international worker organizations. There is now little contest between global corporations on the one side, and unions and worker organizations, the latter tending to be regional in organization.

Marx was clearly right when he saw that the forces of capital investment would, over time, tend to favor ever-larger and more concentrated wealth. This concentration of the control of the material production of traded goods implies that those in control will tend to get richer at the expense of everyone else. This cannot come as a shock when we see the world today.

So far as I can see, Marx was entirely right about the capitalist system being deeply and inherently prone to periodic economic crisis, when practiced on any scale. One key insight was that unregulated finance capital lacks the critical feedback mechanisms needed to prevent its inherently expansive nature from overshooting its markets.

Marx observed the business cycle in the early capitalist economies, but the same Ponzi-like character of capitalist investment psychology seems to be an inherent trait of all capitalism and on every scale, including the current global situation.

Marx analyzed the root instability as a case of overly optimistic investment psychology stimulating an economy to become over-extended. This leads to the investment in production overshooting underlying market demand.Which in turn leads to a self-perpetuating economic contraction and a credit crisis.

Now we can see the same kind of expansion of capital overshooting the market demand on a global scale. The eternal exponential expansion of the whole investment banking system was, in effect, hedged with securities like credit default swaps, and on a scale that was blind to the absurdity of infinite global expansion.

Oil and water?

Back in my own early days as a socialist, I imagined that there was socialism on one hand, and then there was capitalism on the other. The two were sort of like oil and water, or apples and oranges. Now I tend to accept the view that there is a socialist or government sector (although formally elected, this sector generally reflects the social and economic values of the ruling elite). This public sector operates alongside a private capital or finance sector in every modern advanced economy.

The socialist or government sector of a capitalist economy is usually formally elected. It collects taxes and is responsible for generating the national laws that everyone — including private capital — is legally obliged to follow. It is in this sector that we find the rules of law governing a nation of citizens, although always a nation in which a few are most influential.

Whenever the private sector gets itself into deep trouble, the socialist sector is called upon to come in and take control and impose enough reforms and safeguards and collect enough taxes to save the system. Accordingly, in the depth of the Great Depression, Roosevelt supported strong external banking restrictions designed to keep the finance system from getting overextended and crashing again for a long time to come.

Now I interpret this whole situation as a balancing act between the public and private sectors, ever in conflict, and steering a changing course between strict external governmental authority on one side and the free exercise of rapacious self-interest by private wealth on the other.

At one extreme, it is possible to have a nearly purely socialized command economy in which those in power, elected or unelected, have control of the ruling government sector and army and police, while keeping private capital on a short leash. Perhaps they only allow a small private sector the right to trade or sell produce in the farmer’s market. Think Cuba, maybe.

On the other extreme, you can have a situation where, despite the formality of free elections, private finance capital manages to effectively hijack the socialist/government sector of the economy to its own private benefit, which can destabilize the whole system. Why should the banks and corporations bother to steal elections when it is so easy to buy elections? Especially now that Congress and the president spend most of their time raising money.

The U.S. Senate has now become a blue ribbon example of dysfunctional government, offering a nearly impassible obstacle than can legally block any reform that could weaken the power of private wealth.

A matter of scale

In the times of Marx, the ideology of a ruling class elite dominated the policies of national governments and kingdoms, as it still does. However, the governmental sector of the economy that then governed the conduct of private capital was proportionally a lot smaller than today, and when not, it was usually focused on war, or acquiring the military power to control foreign colonies.

The governmental sector of most capitalist economies has since grown enormously, and in a way that seems designed to stabilize and assist the accumulation of private capital in times of both peace and war, now resembling a publicly funded incubator designed to support the growth of private wealth. Private control can come from a military-industrial complex, or under a permanent governmental bureaucracy able to maintain its influence, despite an elected government.

The U.S. banking empire has now evolved into a symbiotic relationship with the working class of China, delivered as part of a package deal, wherein the Chinese have welcomed foreign investment in return for about two trillion in their accumulated U.S. Treasury debt, This debt is still growing fast and has reached a point where it can never really be repaid in terms of its current stated buying power. Uncle Sam has effectively become an aging de-industrialized oil junkie, and obviously a bad credit risk considering the ever-growing size of his bar tab.

Our U.S. governmental institutions are not able to deliver on existing promises, partly because our politics have become so dysfunctional and distrusted that our system cannot impose much short term sacrifice for long term gain. The U.S. government takes the easy way out by printing money (hidden taxation) rather than by openly raising taxes.

This would make sense in Keynesian terms, but only if there were the prospect of a transition to some plausible and sustainable Plan B policy. Plus there obviously needs to be deep reform of the system to keep another credit and investment bubble from reappearing.

The spoils of global speculation

So what did the U.S. get out of our short-sighted and unregulated global speculation binge? The USA is now an oil addicted nation, with a hollowed out industrial base exported to China. We are now forced to restructure our economy and to try to rebuild a more sustainable infrastructure, but have to do so while deeply in debt. It is probably not going to turn out very happily.

China knows the score, so they are now trying to restructure to break off their precarious relationship with the U.S. The Chinese are cashing in their U.S. treasury bonds as rapidly as is prudent, to buy industrial commodities that can solidify their role as a global power. At least, they have a plan.

Perhaps the Chinese are already socialist, it depends on your definition. The governmental/socialist sector of their economy still seems to have unchallenged authority over their coexisting private capitalist sector. In China, the socialist sector maintains an industrial policy of keeping their yuan undervalued, despite the inflationary implications for their own economy.

By contrast, in the USA the private capital and banking sector has politically hijacked the formally democratic U.S. governmental/socialist sector. The private sector has essentially taken control through a mercenary army of lobbyists that now vastly outnumbers the members of Congress.

The energetic nature of capitalism has created a global trading economy, and this has made global government possible. Now the U.S. is fading as a central source of military and economic authority. This is a pattern of history; historian Paul Kennedy has written about military over-reach as a classic cause of the fall of empires.

Global finance capital is now in vital need of some type of adult supervision. The world needs something like a sober world government or a more powerful United Nations, or perhaps a wise and compassionate World Bank or world court system to impose rational limits or structure to the socially destructive side of private capital.

The rapid approach of peak oil, and its rising import cost as the global oil market tightens up again during the next five years, seems to guarantee that the our current recession will continue long enough to merge with our rising trade deficit problem. Other resource constraints loom, even if an ocean of new oil should be discovered tomorrow.

The current U.S. agricultural sector is unsustainable in many ways, especially where related to oil requirements, fertilizer needs, erosion, fossil water pumping and irrigation, and global warming. Already, the Russian forests seem to be burning due to global warming.

Looking ahead a few years, I think the current economic contraction will be followed by serious inflation or stagflation. One way or another, we will likely see our accustomed U.S. standard of living in decline, and our social institutions will be transformed in unpredictable ways by a new and more difficult material reality. A new reality more based on steady state survival than on the prospect for economic expansion.

Energy considerations alone dictate that the world economy, whether it is capitalist or socialist, is likely to splinter into smaller geopolitical blocs involving much less travel and tonnage of international trade. If the current global empire of capital breaks up like the Roman Empire did, because of growing energy, food, and resource limits, it will need to be restructured based on a more localized system of production.

One influential radical commentator who shares many of my neo-Marxist views on the impact of resource constraints on the evolving world economy is John Bellamy Foster, editor of Monthly Review.

Limits to growth

As Marx said, capital can abide no limits. Whenever there are limits placed in its path of expansion, capital and all its allies will do whatever they can to subvert and undermine any limits to economic growth.

We now live on a planet nearly sucked dry for a fast buck. We have to learn to live with this new reality in ways as tolerant and compassionate as the current situation allows. If our goal is to help build the kindest and best world going forward, we need to understand exactly what went wrong and how we got into our global resource limit predicament.

William Catton’s book Overshoot provides a classic description of the big picture written before many were conscious of the limits to growth. Today there are many who understand and study these limits, among which the Post Carbon Institute is one notable example.

We should start by acknowledging the necessity for some sort of outside regulation of capitalism — or any other system that strives to achieve exponential expansion of human population and its per capita impact, given our world of finite natural limits.

This is not the same outcome that Marx, in trying to understand the tendencies of the early capitalism he studied, could easily have foreseen, but it should be enough to show us that Marx was mostly on the right track in his understanding of the basic nature of capitalism.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog.]

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13 Responses to Roger Baker : Is Marx Still Relevant?

  1. Anonymous says:

    Some misunderstandings about what Marx said.

    Marx did not identify a large State sector with “socialism”. He would term that identification of the two as bourgeois ideology.

    Marx said the State and capitalist businesses actually are joined at the hip. The latter category cannot exist without the former, despite fantasies of right-wing libertarians.

    The State is in reality the “executive committee of the ruling class.”

    The potential of a State to work under anti-capitalistic direction always exists as a theoretical possibility. Hence, the rhetorical anti-statist stance of many capitalists. But capitalists despising the State are like fish despising the ocean they swim in – ridiculous.

    Under socialism, the State under the political rule of the workers would expropriate the means of production from the capitalists. This is “revolutionary dictatorship of the proletariat.”

    Marx wouldn’t say a larger State sector necessarily marks it as being “socialist.”

    The questions for him would be, rather, what are the State’s actions and who rules the State.

    Constant growth of private capital and profit can occur side by side with a greater than proportional growth in State revenue.

    In fact, both private profits and government expenses could rise in the share of national income over time.

    Were all costs and losses ‘socialized’ — while all gains are privatized — both State and corporation can grow at the expense of worker income. So a “bigger government” trend is not necessarily anti-capitalist.

    Some other things missing in this piece:

    -labor theory of value, exploitation, and source of profit

    -crisis theory and how it relates to what’s going on right now.

    -theory or practice of revolution, whether by Marx, Lenin, Mao, or anyone else.

    -dialectical development of capitalism in finance, globalization, or any other respect.

    – working class gets portrayed as never “organized,” therefore not revolutionary. Does this class still exist — either as a class for itself, or in itself? The piece doesn’t say.

    The only respect in which this article addresses anything Marx said is a vague concept that capitalism must constantly grow.

    There is no meaningful discussion here of why this imperative exists. Yet, Marx himself wrote entire volumes on this question.

    The relevance today is whether a sustainable, non-growing version of capitalism is possible.

    While ecological limits to growth were perceived only dimly in the 19th century, admitted in the 20th, and denied in the 21st, Marxian concepts could still shed light on what produces this ‘grow or die’ imperative.

    Today’s burning question is whether economic growth is essential, or merely incidental, to capitalism. Can this be reformed within capitalism or must a revolution occur?

    Finally, the author misunderstands Keynes too, using the government “printing money” trope. What actually happens is BORROWING money, rather than the actual printing of dollar bills to pay bills.

    so long as price inflation is subdued — which it is because of depressed economic conditions — more government debt does not in itself produce inflation.

    Instead, government expansion of debt puts the capitalists’ idle money hoards to work making more money. The State borrows from capitalists at interest, with the debt to be repaid later largely by working class taxpayers.

    Devaluation of the debt by inflation might occur in the future, but is not a present or planned feature of current practice.

    This “analysis” merely skims the surface of the situation. The same “analysis” could have been published by Business Week or the Wall Street Journal.

    Not very radical at all.

  2. Mariann says:

    Despite not being a complete update of Marxist economic and social theory to the present moment, as anonymous so astutely points out, three cheers to Baker for pointing out that which, so far, WSJ and Business Week have failed to do: Marxist analysis is quite relevant today.

    I consider the analytical tools of Marxism to be the most useful of all my political and even life experience. I am no expert in wielding them, even, any more than I am an expert carpenter (wish!), but they are so much more versatile than a hammer OR a sickle!

    What is really needed, I believe, are new translations of Marx and my real fave-rave, F Engels, with fresh annotation to make these tools more accessible to modern readers.

    David McB, if you’re reading the Rag Blog today, whattaya think of that idea?

  3. RogerB says:

    I wrote something too long to directly post here, which answers a number of Anonymous’s criticisms from my own perspective. The following link should open up this document:

    Thanks for raising these issues on smart level of discussion.

    — Roger Baker

  4. Anonymous says:

    like Marx – Mr. Baker is a scholar

  5. Hi Mariann, and the scholars — my goodness, such deep thoughts AND a civil exchange.
    One local scolarly effort in Berlin — a transportation infrastructure study for (re)building tram lines in (neo-) Berlin, Germany,is being conducted, as a small part of the investment decisions to transition to sustainable mobility in this urban area. I find it particularly intersting that the study is being done in Berlin which currently has what here is called a “red-red” coalition government made up of the (neo) Social Democrats and the (neo) “Left” party. I find it helpful that they can now work together — would have saved the Germans, and a lot of us, a lot of trouble if they had been able to work together in the 20’s and 30’s.

  6. Anonymous says:

    Enlightening. I’m waiting for the “What is to be done?” sequel. Al

  7. Mike Hanks says:

    For further reading I suggest:
    “Philosophy and Myth in Karl Marx”
    (second edition)
    Robert Tucker
    Cambridge University Press
    He looks at Marx in a moral and religious frame which is not usually analyzed.
    Robert Tucker, Princeton U. scholar on Soviet Union and Stalin

  8. Mariann says:

    No, really, I would like to see a modern translation/annotation of “What Is To Be Done?” and other Lenin classics as well. I wonder if International Press has any amibtions along these lines…

  9. Steve Russell says:

    I’ve been thinking about this globalization shit that represents most of our major problems and Marx only helps at the margins.

    Capital has sprung loose from national borders.

    Would it help to have labor doing the same even more than it does now?

    Could the developed nations require that workers be offered the option of following their jobs overseas?

  10. Charley says:

    As usual, Roger is on the mark. Probably the only truly Marxist society which has ever existed (at least in modern times) was Albania from the end of World War II to the death of its charismatic leader, Enver Hoxha, in 1985. There was a salary differential of 2/1. In other words, nobody earned more than twice what anyone else did. Unfortunately, after Hoxha’s death, his successor, Ramiz Alia, couldn’t keep Albania from being the last Marxist domino to fall.


  11. Alan L. Maki says:

    One important contribution Marx made that Roger Baker misses completely is that fundamental to Marxism is the need for working class led Communist Parties in every country… this would include right here in the USA.

    Now is the time to build Communist/Marxist Clubs in every place of work, college and university, and in working class communities.

    There is no such thing as Marxism without Communist Parties.

  12. Anonymous says:

    The real split is between social democracy and capitalism as Marx correctly pointed out when he spoke at the Third Internal. The public sector is designed to be temporary i.e. gradual cuts to social programs lead to their extinction. Note that capitalism has become more theory than practice, useful more as mass psychogy/propaganda/ideology in employ of our power elite controllers. I don’t think capitalism operates in a function since anymore–it’s all about social control.

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