Not too long ago, Christopher Hitchens was busying himself justifying George W. Bush, the neocons, and the Iraq war—er, “liberation”—on avowedly Marxian grounds. (It would seem justifying Dubya, Frumy, and Wolfowitz requires some kind to recourse of Marxism.) And the columnist was rewarded with the warm embrace of the flagship of American conservatism. In the Age of Obama, Hitch has himself been liberated from the burden of Left-neocon triangulation and can now just write about how much he loves Marx. And something seems to be in the air. For just last week, the President of France, Nicolas Sarkozy, who arrived on the scene in 2007 as a Team America neocon idol, has been spied paging through a dog-eared copy of Das Kapital. (Perhaps now the Maoist French philosopher Alain Badiou might want to rethink his claim that after the election of Sarko, the global human subject ceased to exist.)
This great dialectical reversal, or return to roots, or outburst of honesty, or whatever is happening, portends a coming bombardment of articles and books on why Karl Marx “matters”—perhaps “now more than ever”—and how the bearded sage has finally been proven right by the collapse of the Lehman Bros. investment bank. From out the woodwork will come legions of professors with endowed chairs in polysci and “literature,” all eager to exact revenge for the “End of History” triumphalism they had to endure for the past 15 years.
Foreign Policy magazine, the organ of the Carnegie Endowment for Peace, is out in front of the pack on these matters, and so here we go:
The economic crisis has spawned a resurgence of interest in Karl Marx. Worldwide sales of Das Kapital have shot up (one lone German publisher sold thousands of copies in 2008, compared with 100 the year before), a measure of a crisis so broad in scope and devastation that it has global capitalism—and its high priests—in an ideological tailspin.
Yet even as faith in neoliberal orthodoxies has imploded, why resurrect Marx? To start, Marx was far ahead of his time in predicting the successful capitalist globalization of recent decades. He accurately foresaw many of the fateful factors that would give rise to today’s global economic crisis: what he called the ‘contradictions’ inherent in a world comprised of competitive markets, commodity production, and financial speculation.
Penning his most famous works in an era when the French and American revolutions were less than a hundred years old, Marx had premonitions of AIG and Bear Stearns trembling a century and a half later. He was singularly cognizant of what he called the “most revolutionary part” played in human history by the bourgeoisie—those forerunners of today’s Wall Street bankers and corporate executives. As Marx put it in The Communist Manifesto, “The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby relations of production, and with them the whole relations of society. . . . In one word, it creates a world after its own image.
“Contradictions” inherent in capitalism, eh? The author of the above paragraphs, Canadian tenured radical Leo Panitch, doesn’t exactly explain how our current woes were caused by the immiseration of the working class or a crisis of overproduction, or any of the economic concepts Marx actually wrote about—suffice it to say that he saw it all coming.
Well… I think Marx is a highly relevant thinker to the present age—but then not because the Labor Theory of Value reveals much of anything about the current crisis. First off, pace Panitch, Marx actually had a great deal of admiration for the bourgeoisie, whom he praised for transforming the means of production (that is, manufacturing and technology, not exactly the financial instruments of today’s Wall Streeters.) Marx dreamed that the world the industrialists made might soon canvas the entire globe, wiping away the last remnants of traditional, pre-modern social orders—and then, just in time, collapse so that a communistic society could arise. It’s a worldview very unlike that of contemporary radicals, or at least the people one meets at WTO and Davos protests, most all of whom view “capitalism” as categorically evil and soul-destroying, and something which, if it’s not stopped right away, might raise ocean levels to the point that authenticity in the Third World is washed away. Contempo Marxism’s milder, more bureaucratic practitioners might only want global capitalism with a human face, not revolution, but they, too, view industrial development as a practice of strictly limited value, and which should be capped and controlled whenever possible.
Marx, on the other hand, is a bright-eyed futurist (his forecasts of collapse not withstanding), and in the few passages in which he describes utopia, it’s a techno Wonderland in which working people are fishermen in the morning, literary critics by mid afternoon, the division of labor rendered unnecessary. Marx has more in common with the Silicon Valley guru who waxes lyrical about the revolutionary possibilities of Twitter than he does with the current “far Left,” which has oddly embraced the ascetic ideal and low-flush toilets. Spiked‘s Brendan O’Neill, who can rightly call himself a Marxist, is one of the few on the Left to have properly understood “austerity chic” and the life-hating animus behind “green,” a worldview in which“Can I recycle my granny?” is a major eco-dilemma.
And pace Panitch again, the heroic, world-transforming bourgeoisie of Marx’s imagination is not particularly well represented by today’s Wall Street banksters. And in turn, the financial instruments that got them in trouble, “mortgage-backed securities,” “collaterized debt obligations,” etc., are expressions of the absence of capitalism (as Marx and other Classical economists understood it) in America rather than its triumph.
To understand this, one should ask why Wall Street needed to cook up a derivatives market for mortgages to finance the housing boom in the first place. The answer is simply that there wasn’t enough real credit. Capitalism (before it destroys your soul and disenchants the world) is about delaying consumption and investing savings (that is, “capital”) in future production. Put simply, you put your money in the bank, which, in turn, loans it out to someone who plans to make stuff. The problem is that for the past 25 years, Americans’ rate of personal savings has dwindled to zero, finally going negative in 2005. No savings means no capital means no capitalism, and the securitization process was the only way the massive expansion of mortgage credit was possible.
To a large extent, the lack of savings resulted from the fact that prices were inflated upwards at such a clip that wages and salaries couldn’t keep up. But much of this has to do as well with America’s emergence in the twenty-first century as a post-bourgeois social order. The Protestant Work Ethic of delayed gratification had given way to “Your Best Life Now!,” saving was replaced with credit-card binging at the megamall. The middle classes began resorting to house flipping and home-equity loans as sources of income, or as ways of funding their totally awesome lifestyles; the lower orders were, in turn, funneled into the heavily socialized healthcare industry. (Between 2001-2006, healthcare added 1.7 million jobs, the rest of the private sector, zippo; healthcare’s now the only sector besides government that isn’t shrinking). On the whole, Americans were redeployed into industries that were either financed by massive deficit spending on the part of the government (healthcare) or unsustainable government-induced credit expansion (the housing boom). Or if you were really lucky, you got a job in finance.
As Addison Wiggin has documented, the steady growth of GDP over the past decade was purchased by taking on more and more and more debt: “Under Mr. Greenspan’s term, U.S. credit and debt added up to $8.505 trillion. That means it took $4.80 of new debt to create one dollar of GDP. And now, with the burden of U.S. credit and debt up to 9.149 trillion under his successor, Ben Bernanke, it will take more than $5 to create one dollar of GDP.” These diminishing returns should be pretty alarming to our government leaders, as in the past months we’ve added an additional 2 trillion of debt and gotten negative 6 percent GDP growth out the other end. We’re only now facing a full-blown economic crisis, but capitalism collapsed quite some time ago.
What has replaced capitalism in America isn’t quite communism… But that doesn’t mean there aren’t aspects of the American system that wouldn’t positively recommend themselves to Karl Marx. Long, long before the TEA party protestors and the Texas governor were outraged over Barack Obama’s “socialist” tendencies, America had already implemented no less than five of the ten necessary components of a worker’s social order outlined by Marx and Engels in The Manifesto: the progressive income tax, centralization of credit in the banks of the state (Federal Reserve System), agricultural policy, and compulsory public education. And Washington now seems close to checking off Numero Uno on the list—the abolition of real property rights in land and the “application of all rents of land to public purposes”—with its recent intervention in the housing market, breaking contracts that only years before it spurred lenders to make.
Since the fall of the Soviet Union, American “liberals” were referring less often to “market failures,” and instead had begun pursuing what Peter Brimelow has called “neo-socialism”: Government wouldn’t so much correct market inefficiencies as harness capitalism in order to expand “diversity” and equality—George W. Bush’s attempt to institute affirmative action in “subprime” mortgage lending being the example par excellence. Neosocialism. Retrosocialism. At this point, it looks like bureaucrats will get to experiment with a little bit of both.
It’s only dumb Marxists like Professor Panitch who are oblivious to these developments, and instead prattle on about how the über-capitalist USA might, in its moment of crisis, learn something from its intellectual adversary, Karl Marx. Take, for instance, one of Panitch’s supposedly “radical” Marxist proposal, which was “ironically” put forth by an insider of the current financial system:
Ironically, one of the most radical proposals making the rounds today has come from an economist at the London School of Economics, Willem Buiter, a former member of the Bank of England’s Monetary Policy Committee and certainly no Marxist. Buiter has proposed that the whole financial sector be turned into a public utility. Because banks in the contemporary world cannot exist without public deposit insurance and public central banks that act as lenders of last resort, there is no case, he argues, for their continuing existence as privately owned, profit-seeking institutions. Instead they should be publicly owned and run as public services.
Yet what exactly is “too big to fail”—or the 96-4% “public-private partnerships” Tim Geithner has invited hedge funds to take part in—other than a transformation of the financial industry into a sort of public-spirited social service? This isn’t to say that certain people don’t profit, mightily, by gaming the bailout system. But when Ben Bernanke and Hank Paulson sat down former Bank of America CEO Ken Lewis last September and essentially ordered him to purchase Merrill Lynch—and commit obvious insurance fraud—the Fed Chairman’s and Secretary of the Treasury’s motives were entirely “patriotic.” Even if the whole thing amounted to welfare for the rich, and even if massive corruption was inevitable, the pair of bankers were attempting, quite genuinely, to “save capitalism” with a new social program. In both an expansion of government and a coup d’état by big finance, Wall Street and Washington highjacked one another. It’s a transformation that’s difficult, if not impossible, to undo. And I seriously doubt it will be before the United States goes the way of the Soviet Union.
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