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Lights. Camera.
Action. Das Kapital. Now.
Illustration by Hanoch Piven for
FP
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.”
But Marx was no booster of capitalist globalization in his time or
ours. Instead, he understood that “the need for a constantly expanding market
for its products chases the bourgeoisie over the whole surface of the globe,”
foreseeing that the development of capitalism would inevitably be “paving the
way for more extensive and exhaustive crises.” Marx identified how disastrous
speculation could trigger and exacerbate crises in the whole economy. And he saw
through the political illusions of those who would argue that such crises could
be permanently prevented through incremental reform.
Like every
revolutionary, Marx wanted to see the old order overthrown in his lifetime. But
capitalism had plenty of life left in it, and he could only glimpse, however
perceptively, the mistakes and wrong turns that future generations would commit.
Those of us now cracking open Marx will find he had much to say that is relevant
today, at least for those looking to “recover the spirit of the revolution,” not
merely to “set its ghost walking again.”
If he were observing
the current downturn, Marx would certainly relish pointing out how flaws
inherent in capitalism led to the current crisis. He would see how modern
developments in finance, such as securitization and derivatives, have allowed
markets to spread the risks of global economic integration. Without these
innovations, capital accumulation over the previous decades would have been
significantly lower. And so would it have been if finance had not penetrated
more and more deeply into society. The result has been that consumer demand (and
hence, prosperity) in recent years has depended more and more on credit cards
and mortgage debt at the same time that the weakened power of trade unions and
cutbacks in social welfare have made people more vulnerable to market shocks.
This leveraged, volatile global financial system contributed to overall
economic growth in recent decades. But it also produced a series of inevitable
financial bubbles, the most dangerous of which emerged in the U.S. housing
sector. That bubble’s subsequent bursting had such a profound impact around the
globe precisely because of its centrality to sustaining both U.S. consumer
demand and international financial markets. Marx would no doubt point to this
crisis as a perfect instance of when capitalism looks like “the sorcerer who is
no longer able to control the powers of the netherworld whom he has called up by
his spells.”
Despite the depth of our current predicament, Marx would have
no illusions that economic catastrophe would itself bring about change. He knew
very well that capitalism, by its nature, breeds and fosters social isolation.
Such a system, he wrote, “leaves no other nexus between man and man than naked
self-interest, than callous ‘cash payment.’” Indeed, capitalism leaves societies
mired “in the icy water of egotistical calculation.” The resulting social
isolation creates passivity in the face of personal crises, from factory layoffs
to home foreclosures. So, too, does this isolation impede communities of active,
informed citizens from coming together to take up radical alternatives to
capitalism.
Marx would ask first and foremost how to overcome this
all-consuming social passivity. He thought that unions and workers’ parties
developing in his time were a step forward. Thus in Das Kapital he
wrote that the “immediate aim” was “the organization of the proletarians into a
class” whose “first task” would be “to win the battle for democracy.” Today, he
would encourage the formation of new collective identities, associations, and
institutions within which people could resist the capitalist status quo and
begin deciding how to better fulfill their needs.
No such ambitious vision
for enacting change has arisen from the crisis so far, and it is this void that
Marx would find most troubling of all. In the United States, some recent
attention-getting proposals have been derided as “socialist,” but only appear to
be radical because they go beyond what the left of the Democratic Party is now
prepared to advocate. Dean Baker, codirector of the Center for Economic and
Policy Research, for example, has called for a $2 million cap on certain Wall
Street salaries and the enactment of a financial transactions tax, which would
impose an incremental fee on the sale or transfer of stocks, bonds, and other
financial assets. Marx would view this proposal as a perfect case of thinking
inside the box, because it explicitly endorses (even while limiting) the very
thing that is now popularly identified as the problem: a culture of risk
disassociated from consequence. Marx would be no less derisive toward those who
think that bank nationalizations—such as those that took place in Sweden and
Japan during their financial crises in the 1990s—would amount to real change.
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. This proposal echoes the demand for “centralization of
credit in the banks of the state” that Marx himself made in the
Manifesto. To him, a financial-system overhaul would reinforce the
importance of the working classes’ winning “the battle of democracy” to
radically change the state from an organ imposed upon society to one that
responds to it.
“From financialisation of the economy to the socialisation
of finance,” Buiter wrote, is “a small step for the lawyers, a huge step for
mankind.” Clearly, you don’t need to be a Marxist to have radical aspirations.
You do, however, have to be some sort of Marxist to recognize that even at a
time like the present, when the capitalist class is on its heels, demoralized
and confused, radical change is not likely to start in the form of “a small step
for the lawyers” (presumably after getting all the “stakeholders” to sit down
together in a room to sign a document or two). Marx would tell you that, without
the development of popular forces through radical new movements and parties, the
socialization of finance will fall on infertile ground. Notably, during the
economic crisis of the 1970s, radical forces inside many of Europe’s social
democratic parties put forward similar suggestions, but they were unable to get
the leaders of those parties to go along with proposals they derided as
old-fashioned.
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Attempts to talk
seriously about the need to democratize our economies in such radical ways were
largely shunted aside by parties of all stripes for the next several decades,
and we are still paying the price for marginalizing those ideas. The
irrationality built into the basic logic of capitalist markets—and so deftly
analyzed by Marx—is once again evident. Trying just to stay afloat, each factory
and firm lays off workers and tries to pay less to those kept on. Undermining
job security has the effect of undercutting demand throughout the economy. As
Marx knew, microrational behavior has the worst macroeconomic outcomes. We now
can see where ignoring Marx while trusting in Adam Smith’s “invisible hand” gets
you.
The financial crisis today also exposes irrationalities in realms
beyond finance. one example is U.S. President Barack Obama’s call for trading in
carbon credits as a solution to the climate crisis. In that supposedly
progressive proposal, corporations that meet emissions standards sell credits to
others that fail to meet their own targets. The Kyoto Protocol called for a
similar system swapped across states. Fatefully however, both plans depend on
the same volatile derivatives markets that are inherently open to manipulation
and credit crashes. Marx would insist that, to find solutions to global problems
such as climate change, we need to break with the logic of capitalist markets
rather than use state institutions to reinforce them. Likewise, he would call
for international economic solidarity rather than competition among states. As
he put it in the Manifesto, “United action, of the leading . . .
countries, at least, is the first condition for the emancipation of the
proletariat.”
Yet the work of building new institutions and movements for
change must begin at home. Although he made the call “Workers of the world,
unite!” Marx still insisted that workers in each country “first of all settle
things with their own bourgeoisie.” The measures required to transform existing
economic, political, and legal institutions would “of course be different in
different countries.” But in every case, Marx would insist that the way to bring
about radical change is first to get people to think ambitiously again.
How
likely is that to happen? Even at a moment when the financial crisis is bleeding
dry a vast swath of the world’s people, when collective anxiety shakes every
age, religious, and racial group, and when, as always, the deprivations and
burdens are falling most heavily on ordinary working people, the prognosis is
uncertain. If he were alive today, Marx would not look to pinpoint exactly when
or how the current crisis would end. Rather, he would perhaps note that such
crises are part and parcel of capitalism’s continued dynamic existence.
Reformist politicians who think they can do away with the inherent class
inequalities and recurrent crises of capitalist society are the real romantics
of our day, themselves clinging to a naive utopian vision of what the world
might be. If the current crisis has demonstrated one thing, it is that Marx was
the greater realist.
Leo Panitch
is Canada research chair in comparative political economy and distinguished
research professor of political science at York University in Toronto, and
coeditor of the annual Socialist
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