With a major capitalist crisis upon us, the pertinence of the Marxian critique becomes evident, once again. In contrast, mainstream economics does not admit crisis as inherent to the capitalist economy. For the dominant school of thought, whatever problems occur can be explained by failures in policy; they are not intrinsic to capitalism.
In his study Marxism: For and Against Robert Heilbroner said that Marx had revealed the invisible nature of capitalism. In economic life, things were not as they appeared on the surface. Commodities hid social relations. Supply did not create demand. Producers did not always find purchasers.
Marxian accounts of capitalist crisis crowd each other, unread, on library bookshelves. While orthodox economics does not admit that the system itself fails, you just have to look at any news report to know differently. Economists assume equilibrium in markets happens automatically. Prices are thought to move to restore balance. Out in the real world, crises show up when workers cannot find work, and sellers do not find buyers.
In the economic recovery plan of the U.S. Treasury Department, public credit is mobilized to bailout the owners of the banking system, complete with bonuses for management. Meanwhile mortgage lenders foreclose on homeowners.
The Marxian critique focuses on the dynamic relationship between the forces of production available in a society, and its social relationships. The capacity of a society to produce beyond its immediate needs rests on the combination of productive forces available to it, including science, technology, human ingenuity of all types and natural resources. By this measure of productive capacity every American family should be a homeowner.
The legal expropriation by the capitalist class of the surplus produced by people working together creates the clash between exploited and exploiter. With the full power of the American state committed to saving investors in insolvent banks, the class nature of capitalist society is held up for all to see.
From a Marxian perspective what gets produced and how the proceeds get distributed are the outcome of social relations established within production. When those relations fetter the forces of production, the time is ripe for a social revolution. The people who do the work deserve the full proceeds of what is produced. Instead billions of dollars are wasted on military expenditures, and in conspicuous consumption by the wealthy.
Marx turned 30 in 1848, the revolutionary year in Europe. The young Marx trained as a philosopher, and turned to journalism when his radical views closed the door to an academic career. A noted political activist, with Fredrick Engels, he co-wrote the most important political pamphlet of the 19th century, The Communist Manifesto.
The mature Marx worked preparing Das Kapital in the reading room of the British Museum. In a preparatory work, the preface to A Contribution to the Critique of Political Economy, he sketched an account of the nature of the social world that while it was modified in subsequent work, remains the clearest account of his thought. The introduction to the same work, only published later, goes even deeper into his conception of how the world can best be understood.
Karl Marx spent much of his life in Britain studying and commentating on political economy. Still, today in Canada, following the lead of the American academy, his rethinking of economics as the history of social classes in conflict is treated as lying outside normal economic science.
It is easy to dismiss Marx either by guilt through association given the sins of his followers, or by an ad hominen "he was a communist, not an economist." But not only does the Marxian perspective help to understand the current financial crisis, his theory of history is central to contemporary social science.
Duncan Cameron writes from Vancouver.