Marx Was Right: Five Surprising Ways Karl Marx Predicted 2014 February 2, 2014Posted by rogerhollander in Marx and Marxism, Revolution.
Tags: capitalism, communist manifesto, corporate profits, economic cycles, economics, globalization, industrial labor, karl marx, marxism, marxist economics, Marxist Humanism, monopoly, monopoly capitalism, progressive income tax, Raya Dunayevskaya, roger hollander, sean mcelwee, unemployment
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Roger’s note: I find it interesting that journalists cannot write positive things about Marx with a caveat to show, I guess, that they are not slavish ideological Marxists. Marx did not consider himself to be a prophet or a maker of blueprints for the future. If so much of what he projected has come to be true it is because of his profound intellectual and analytic digging and not because he was some kind of a seer into the future. First of all Marx was a philosopher, not an economist. More specifically a philosopher of human liberation. He realized that he needed a complete understanding of the history of human development and economics (he read and absorbed every one of the political economists of his day, from Adam Smith and Ricardo and Malthus to names you and I have never heard of) in order to develop a philosophy that contained the theory and practice for human individual and social liberation. Furthermore, it is not untrue but rather misleading to state that “Most of his writing focuses on a critique of capitalism rather than a proposal of what to replace it with.” With a particular reference to the Paris Commune, he often wrote of a future of “freely associated labor.” He wrote about the “withering away of the state” and, of course, his most profound “vision” of a future classless world was described in his classic: “from each according to his/her need; to each according to his/her ability” (I added the gender neutrality of which Marx would have approved). I found the best introduction to Marx was through his so-called “early writings” or “economic manuscripts” (I have the old Bottomore edition); and for a deeper understanding of Marx, the writings of Raya Dunayevskaya, the founder of Marxist-Humanism.
There’s a lot of talk of Karl Marx in the air these days – from Rush Limbaugh accusing Pope Francis of promoting “pure Marxism” to a Washington Times writer claiming that New York City Mayor Bill de Blasio is an “unrepentant Marxist.” But few people actually understand Marx’s trenchant critique of capitalism. Most people are vaguely aware of the radical economist’s prediction that capitalism would inevitably be replaced by communism, but they often misunderstand why he believed this to be true. And while Marx was wrong about some things, his writings (many of which pre-date the American Civil War) accurately predicted several aspects of contemporary capitalism, from the Great Recession to the iPhone 5S in your pocket.
Here are five facts of life in 2014 that Marx’s analysis of capitalism correctly predicted more than a century ago:
1. The Great Recession (Capitalism’s Chaotic Nature)
The inherently chaotic, crisis-prone nature of capitalism was a key part of Marx’s writings. He argued that the relentless drive for profits would lead companies to mechanize their workplaces, producing more and more goods while squeezing workers’ wages until they could no longer purchase the products they created. Sure enough, modern historical events from the Great Depression to the dot-com bubble can be traced back to what Marx termed “fictitious capital” – financial instruments like stocks and credit-default swaps. We produce and produce until there is simply no one left to purchase our goods, no new markets, no new debts. The cycle is still playing out before our eyes: Broadly speaking, it’s what made the housing market crash in 2008. Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows left to scheme, the whole façade fell apart, just as Marx knew it would.
2. The iPhone 5S (Imaginary Appetites)
Marx warned that capitalism’s tendency to concentrate high value on essentially arbitrary products would, over time, lead to what he called “a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural and imaginary appetites.” It’s a harsh but accurate way of describing contemporary America, where we enjoy incredible luxury and yet are driven by a constant need for more and more stuff to buy. Consider the iPhone 5S you may own. Is it really that much better than the iPhone 5 you had last year, or the iPhone 4S a year before that? Is it a real need, or an invented one? While Chinese families fall sick with cancer from our e-waste, megacorporations are creating entire advertising campaigns around the idea that we should destroy perfectly good products for no reason. If Marx could see this kind of thing, he’d nod in recognition.
3. The IMF (The Globalization of Capitalism)
Marx’s ideas about overproduction led him to predict what is now called globalization – the spread of capitalism across the planet in search of new markets. “The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe,” he wrote. “It must nestle everywhere, settle everywhere, establish connections everywhere.” While this may seem like an obvious point now, Marx wrote those words in 1848, when globalization was over a century away. And he wasn’t just right about what ended up happening in the late 20th century – he was right about why it happened: The relentless search for new markets and cheap labor, as well as the incessant demand for more natural resources, are beasts that demand constant feeding.
4. Walmart (Monopoly)
The classical theory of economics assumed that competition was natural and therefore self-sustaining. Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other. This might have struck his 19th-century readers as odd: As Richard Hofstadter writes, “Americans came to take it for granted that property would be widely diffused, that economic and political power would decentralized.” It was only later, in the 20th century, that the trend Marx foresaw began to accelerate. Today, mom-and-pop shops have been replaced by monolithic big-box stores like Walmart, small community banks have been replaced by global banks like J.P. Morgan Chase and small famers have been replaced by the likes of Archer Daniels Midland. The tech world, too, is already becoming centralized, with big corporations sucking up start-ups as fast as they can. Politicians give lip service to what minimal small-business lobby remains and prosecute the most violent of antitrust abuses – but for the most part, we know big business is here to stay.
5. Low Wages, Big Profits (The Reserve Army of Industrial Labor)
Marx believed that wages would be held down by a “reserve army of labor,” which he explained simply using classical economic techniques: Capitalists wish to pay as little as possible for labor, and this is easiest to do when there are too many workers floating around. Thus, after a recession, using a Marxist analysis, we would predict that high unemployment would keep wages stagnant as profits soared, because workers are too scared of unemployment to quit their terrible, exploitative jobs. And what do you know? No less an authority than the Wall Street Journal warns, “Lately, the U.S. recovery has been displaying some Marxian traits. Corporate profits are on a tear, and rising productivity has allowed companies to grow without doing much to reduce the vast ranks of the unemployed.” That’s because workers are terrified to leave their jobs and therefore lack bargaining power. It’s no surprise that the best time for equitable growth is during times of “full employment,” when unemployment is low and workers can threaten to take another job.
Marx was wrong about many things. Most of his writing focuses on a critique of capitalism rather than a proposal of what to replace it with – which left it open to misinterpretation by madmen like Stalin in the 20th century. But his work still shapes our world in a positive way as well. When he argued for a progressive income tax in the Communist Manifesto, no country had one. Now, there is scarcely a country without a progressive income tax, and it’s one small way that the U.S. tries to fight income inequality. Marx’s moral critique of capitalism and his keen insights into its inner workings and historical context are still worth paying attention to. As Robert L. Heilbroner writes, “We turn to Marx, therefore, not because he is infallible, but because he is inescapable.” Today, in a world of both unheard-of wealth and abject poverty, where the richest 85 people have more wealth than the poorest 3 billion, the famous cry, “Workers of the world unite; you have nothing to lose but your chains,” has yet to lose its potency.
David Suzuki: A Canadian Treasure August 8, 2013Posted by rogerhollander in Canada, Environment.
Tags: biodiversity, biosphere, david suzuki, economics, environment, roger hollander
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Actually, “the Rich” Don’t “Create Jobs,” We Do May 14, 2011Posted by rogerhollander in Economic Crisis, Labor.
Tags: Adam Smith, capitalism, dave johnson, democracy, economics, job creation, jobs, karl marx, labor, labour, roger hollander, taxation, taxes
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Roger’s comment: the article below correctly debunks the false notion that capital creates jobs; it is a philosophy that is aggressively promoted by … you guessed it … those who own and control capital. Interestingly, it was not Karl Marx but rather the founder of capitalist ideology, Adam Smith, who first developed the “the labor theory of value,” that is, the notion that new value is created by human labor. Marx built upon Smith’s work to show that capitalists who employ living labor skim off from the sale of goods and services what they call profits, what Marxists call “surplus value.” Since all value is created by labor, this skimming off is nothing less than pure and simple theft. But what, you ask, of the poor capitalist who takes the risk of starting a business, using his capital to employ workers? The answer is that the capital owned by the capitalist belonged to the workers who created the value in the first place, what Marx called “dead labor.” He explained that the present era of capitalist relations in production was ushered in by the “primitive accumulation” of capital.
Here is how he explained it: “The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalled the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlandsfrom Spain, assumes giant dimensions in England’s Anti-Jacobin War, and is still going on in the opium wars against China, &c. The different moments of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In Englandat the end of the 17th century, they arrive in a systematic combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But they all employ the power of the State, the concentrated and organised force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with the new one. It is itself an economic power.” (Karl Marx, Capital, Vol. ?, Chapter 31).
Adam Smith saw it differently: “In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress ofEnglandtowards opulence and improvement in almost all former times. …
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense. … They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.” (Adam Smith, Wealth of Nations, Book II, Chapter II [cited in Toronto Globe and Mail, April 5, 2008])
It is no wonder that the fat cat capitalists and their running dog Republican pimps love Adam Smith’s way of looking at the picture. Unfortunately, it is pure unadulterated BS.
You hear it again and again, variation after variation on a core message: if you tax rich people it kills jobs. You hear about “job-killing tax hikes,” or that “taxing the rich hurts jobs,” “taxes kill jobs,” “taxes take money out of the economy, “if you tax the rich they won’t be able to provide jobs.” … on and on it goes. So do we really depend on “the rich” to “create” jobs? Or do jobs get created when they fill a need?
Here is a recent typical example, Obama Touts Job-Killing Tax Plan, written by a “senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth,”
Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers.
Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government.
Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand’s classic novel “Atlas Shrugged.” …
Producers and Parasites
The idea that there are producers and parasites as expressed in the example above has become a core philosophy of conservatives. They claim that wealthy people “produce” and are rich because they “produce.” The rest of us are “parasites” who suck blood and energy from the productive rich, by taxing them. In this belief system, We, the People are basically just “the help” who are otherwise in the way, and taxing the producers to pay for our “entitlements.” We “take money” from the producers through taxes, which are “redistributed” to the parasites. They repeat the slogan, “Taxes are theft,” and take the “money we earned” by “force” (i.e. government.)
Republican Speaker of the House John Boehner echoes this core philosophy of “producers” and “parasites,” saying yesterday,
I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea,” he said. “For those people to give that money to the government…means it wont get reinvested in our economy at a time when we’re trying to create jobs.”
“The very people” who “hire people” shouldn’t have to pay taxes because that money is then taken out of the productive economy and just given to the parasites — “the help” — meaning you and me…
So is it true? Do “they” create jobs? Do we “depend on” the wealthy to “create jobs?”
Demand Creates Jobs
I used to own a business and have been in senior positions at other businesses, and I know many others who have started and operated businesses of all sizes. I can tell you from direct experience that I tried very hard to employ the right number of people. What I mean by this is that when there were lots of customers I would add people to meet the demand. And when demand slacked off I had to let people go.
If I had extra money I wouldn’t just hire people to sit around and read the paper. And if I had more customers than I could handle that – the revenue generated by meeting the additional demand from the extra customers — is what would pay for employing more people to meet the demand. It is a pretty simple equation:
you employ the right number of people to meet the demand your business has.
If you ask around you will find that every business tries to employ the right number of people to meet the demand. Any business owner or manager will tell you that they hire based on need, not on how much they have in the bank. (Read more here, in last year’s Businesses Do Not Create Jobs.)
Taxes make absolutely no difference in the hiring equation.
In fact, paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed. You don’t even calculate your taxes until well after the hiring decision has been made. You don;t lay people off to “cover” your taxes. And even if you did lay people off to “cover’ taxes it would lower your costs and you would have more profit, which means you would have more taxes… except that laying someone off when you had demand would cause you to have less revenue, … and you see how ridiculous it is to associate taxes with hiring at all!
People coming in the door and buying things is what creates jobs.
The Rich Do Not Create Jobs
Lots of regular people having money to spend is what creates jobs and businesses. That is the basic idea of demand-side economics and it works. In a consumer-driven economy designed to serve people, regular people with money in their pockets is what keeps everything going. And the equal opportunity of democracy with its reinvestment in infrastructure and education and the other fruits of democracy is fundamental to keeping a demand-side economy functioning.
When all the money goes to a few at the top everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going.
Democracy Creates Jobs
This idea that a few wealthy people — the “producers” — hand everything down to the rest of us — “the parasites” — is fundamentally at odds with the concept of democracy. In a democracy we all have an equal voice and an equal stake in how our society and our economy does. We do not “depend” on the good graces of a favored few for our livelihoods. We all are supposed to have an equal opportunity, and equal rights. And there are things we are all entitled to — “entitlements” — that we get just because we were born here. But we all share in the responsibility to cover the costs of democracy –
with the rich having a greater responsibility than the rest of us because they receive the most benefit from it.
This is why we have “progressive taxes” where the rates are supposed to go up as the income does.
Taxes Are The Lifeblood Of Democracy And The Prosperity That Democracy Produces
In a democracy the rich are supposed to pay more to cover things like building and maintaining the roads and schools because these are the things that enable their wealth. They actually do use the roads and schools more because the roads enable their businesses to prosper and the schools provide educated employees. But it isn’t just that the rich use roads more, it is that everyone has a right to use roads and a right to transportation because we are a democracy and everyone has the same rights. And as a citizen in a democracy you have an obligation to pay your share for that.
A democracy is supposed have a progressive tax structure that is in proportion to the means to pay. We do this becausethose who get more from the system do so because the democratic system offers them that ability. Their wealth is because of our system and therefore they owe back to the system in proportion. (Plus, history has taught the lesson that great wealth opposes democracy, so democracy must oppose the accumulation of great, disproportional wealth. In other words, part of the contract of living in a democracy is your obligation to protect the democracy and high taxes at the top is one of those protections.)
The conservative “producer and parasite” anti-tax philosophy is fundamentally at odds with the concepts of democracy (which they proudly acknowledge - see more here, and here) and should be understood and criticized as such. Taxes do not “take money out of the economy” they enable the economy. The rich do not “create jobs, We, the People create jobs
The Economic Boondoggle Explained: You’ll Laugh as You Weep November 22, 2010Posted by rogerhollander in Economic Crisis, Humor.
Tags: bailout, Ben Bernanke, corruption, deregulation, Economic Crisis, economic policy, economics, Federal Reserve, Goldman Sachs, journalism, matt taibbi, quantitative easing, robert fisk, roger hollander, the fed, Wall Street
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I came across this amazing video while Googling Matt Taibbi, who in is own right is an amazing journalist, writes for Rolling Stone. Go to www.alternativeradio.org and order his amazing “Corruption: From Russia to Wall Street,” an address he gave in Boulder, Colorado. While you’re there, check out Robert Fisk, another incredibly incisive tell-it-like-it-is journalist. You won’t find this kind of reporting in the mainstream media.
Go to the following link and listen to what is without a doubt the funniest video ever made about the Fed, quantitative easing, and Ben Bernanke. Make sure you’re in a place where you can laugh freely, and press play:
Roger Hollander, November 22, 2010
One Man’s Bid to Aid the Environment December 24, 2008Posted by rogerhollander in Environment.
Tags: activis, amy goodman, Bush, civil disobedience, conservation, democracy, development, direct action, ecology, economics, edward abbey, environment, gas companies, iww, land grab, Obama, oil companies, protest, public lands, roger hollander, salt lake city, tim dechristopher, utah, utah phillips
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Posted on Dec 23, 2008
By Amy Goodman
Tim DeChristopher is an economics student at the University of Utah in Salt Lake City. He had just finished his last final exam before winter break. One of the exam questions was: If the oil and gas companies are the only ones who bid on public lands, are the true costs of oil and gas exploitation reflected in the prices paid?
DeChristopher was inspired. He finished the exam, threw on his red parka and went off to the controversial Bureau of Land Management land auction that the Southern Utah Wilderness Alliance called “the Bush administration’s last great gift to the oil and gas industry.” Instead of joining the protest outside, he registered as a bidder, then bought 22,000 acres of public land. That is, he successfully bid on the public properties, located near the Arches and Canyonlands National Parks and Dinosaur National Monument, and other pristine areas. The price tag: more than $1.7 million.
He told me: “Once I started buying up every parcel, they understood pretty clearly what was going on … they stopped the auction, and some federal agents came in and took me out. I guess there was a lot of chaos, and they didn’t really know how to proceed at that point.”
Patrick Shea, a former BLM director, is representing DeChristopher. Shea told the Deseret News: “What Tim did was in the best tradition of civil disobedience, he did this without causing any physical or material harm. His purpose was to draw attention to the illegitimacy and immorality of the process.”
There is a long tradition of disrupting land development in Utah. In his memoir, “Desert Solitaire,” Edward Abbey, the writer and activist, wrote: “Wilderness. The word itself is music. … We scarcely know what we mean by the term, though the sound of it draws all whose nerves and emotions have not yet been irreparably stunned, deadened, numbed by the caterwauling of commerce, the sweating scramble for profit and domination.”
Abbey’s novel “The Monkey Wrench Gang” inspired a generation of environmental activists to take “direct action,” disrupting “development.” As The Salt Lake Tribune reported on DeChristopher: “He didn’t pour sugar into a bulldozer’s gas tank. He didn’t spike a tree or set a billboard on fire. But wielding only a bidder’s paddle, a University of Utah student just as surely monkey-wrenched a federal oil- and gas-lease sale Friday, ensuring that thousands of acres near two southern Utah national parks won’t be opened to drilling anytime soon.”
Likewise, the late Utah Phillips, folk musician, activist and longtime Utah resident, often invoked the Industrial Workers of the World adage: “Direct action gets the goods.”
More than just scenic beauty will be harmed by these BLM sales. Drilling impacts air and water quality. According to High Country News, “The BLM had not analyzed impacts on ozone levels from some 2,300 wells drilled in the area since 2004 … nor had it predicted air impacts from the estimated 6,300 new wells approved in the plan.” ProPublica reports that the Colorado River “powers homes for 3 million people, nourishes 15 percent of the nation’s crops and provides drinking water to one in 12 Americans. Now a rush to develop domestic oil, gas and uranium deposits along the river and its tributaries threatens its future.”
After being questioned by federal authorities, DeChristopher was released.
The U.S. attorney is currently weighing charges against the student. DeChristopher reflects: “This has really been emotional and hopeful for me to see the kind of support over the last couple of days … for all the problems that people can talk about in this country and for all the apathy and the eight years of oppression and the decades of eroding civil liberties, America is still very much the kind of place that when you stand up for what is right, you never stand alone.”
His disruption of the auction has temporarily blocked the Bush-enabled land grab by the oil and gas industries. If DeChristopher can come up with $45,000 by Dec. 29, he can make the first payment on the land, possibly avoiding any claim of fraud. If the BLM opts to re-auction the land, that can’t happen until after the Obama administration takes over.
The outcome of the sales, if they happen at all, will probably be different, thanks to the direct action of an activist, raising his voice, and his bidding paddle, in opposition.
Denis Moynihan contributed research to this column.
Amy Goodman is the host of “Democracy Now!,” a daily international TV/radio news hour airing on more than 700 stations in North America.
© 2008 Amy Goodman
Distributed by King Features Syndicate