by Doug Dowd with some pieces by his friends
Toward A Political Economy
For Our Times
Lecture Notes from
Doug Dowd's
Econ Y2K 1999 Classes
by Doug Dowd
(San Francisco, Berkeley, Petaluma, and Palo Alto)
Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4
This is intended both for those who have been in my SF Bay Area classes and for those who are just beginning to attend. It is a written version of the seven or eight class meetings that began in February 1999 and ended in September, put together so we can start from what has already been done instead of having to repeat it.
The class has been called Econ Y2K for shorthand purposes. As most who read this will know, before the class started last year I had prepared a short pamphlet--Toward Understanding Capitalism--meant to serve as something like a preface; it is still available, and may be obtained (for $1) gratis through the web site http://www.vaivecchio.com.
This is the second year of the class, beginning in February, as usual, and ending in September (after which, as every year, I go to live and work in Italy for four months). Before beginning the written version of last year's classes, let me provide a brief summary of the overall plan for the classes, and some of the reasoning underlying it.
As some of you know, I have been giving these community classes for many years. My position is always critical of capitalism and of its economics and will be this year; but this class also differs in a major way: its main aim is not that of criticizing what has been and is (though that cannot be avoided), but of sketching out the foundations for a new political economy.
But note Toward in the title of this treatise (as also in the earlier pamphlet). This class does not seek to provide a full-scale new economics; that is a different and much larger task. Rather, we aim to synthesize and update some of earlier and indispensable economic thought; thus organized for present purposes, it may serve as a foundation studying a full economics for today's world.
This may be put differently. As I have often written and said in our classes, economists should, and by most are mistakenly thought to, answer two simple questions: (1) What do we need to know about the economy? and (2) What must be done in order that it best serve human, social, and environmental needs?
Those are not really simple questions, of course; the responses to them accordingly must be very complex. The abstraction called the economy exists in a swirl of interacting relationships that constitutes the social process, all of whose present moments must be seen as partaking of that complexity. In turn, such complexity must be seen as having arrived carrying the weight of history on its back: the history of human beings as human beings (differing greatly from time to time and place to place), relevant political, socio-economic-cultural-technological history, and, especially in the past century, that of nature.
Marx probably had something like that in mind when (in the 1850s) he wrote:
Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past. The tradition of all the dead generations weighs like a nightmare on the brain of the living.1
What must be learned cannot be accomplished sufficiently in a series of classes, but useful steps in that direction can be accomplished. Although success in such an effort can never be complete, it cannot help but be an improvement over what now passes for economics. As will be commented on soon, important steps toward developing an acceptable (a real) economics for our time are already under way.
The very first steps toward a useful economics--along with their limitations--began to be developed as capitalism came into existence. Although I have been very critical of those who created what became mainstream (classical and neoclassical) economics--Adam Smith, David Ricardo, John Stuart Mill, Alfred Marshall, and John Maynard Keynes, for example--their works were by no means without value. However, most of what will be dealt with here--because in my view it is both pertinent and valuable--was developed by those swimming against and outside the mainstream, moderate or severe critics of capitalism. Of those many contributions, what will be adapted for our classes will be those with the greatest contemporary relevance.
The class may be thought of as falling into Part I and Part II. Part I is much the longer of the two; it began last year and will continue through all this year. Its aim is (a) to summarize and adapt the analytical/theoretical contributions of Marx, Veblen, Gramsci, Keynes, Joan Robinson, Schumpeter, C. Wright Mills, Baran and Sweezy (and some of their "descendants," such as Braverman and O'Connor), and those called institutionalists and post-Keynesians; and (b) to provide relevant information/data regarding various contemporary markets: the economic facts of industrial, labor, financial, foreign trade, etc., and income and wealth distribution (from Bain, Adams, Brady, Mishel, et al.).
Part II may consist merely of a summary or of a semester in itself; we'll see. In either case, it will begin with a critique of recent and generally proposed socioeconomic policies, which (whatever their rhetoric) are designed to serve the felt needs of those now in power. After that, in contrast, we will outline the main elements of a linked program meant to serve human, social, and environmental needs for the present and future. Initially, the emphasis will be on the United States, but that perspective will be integrated with a connected set of principles having the rest of the world (especially its weaker parts) as the focus.
Whether Part II is done briefly or at length, it will then be necessary to move on once more. I have in mind at present that such moving on might well be done best by organizing another set of classes taking the form--but not the usual content--of an introductory university economics course. It would take another two years (and, as usual, no money would change hands). I would not have thought that able to be done except for the appearance of a new introductory economics text (just come to me, and for which I have written a review). The text, by Hugh Stretton, is unique and uniquely valuable--in its breadth and depth and how issues are treated, and in its clarity and good sense and basic human decency.2
Now on to a written version of the 1999 class, worked up from the notes I used in the 1999 class, extended by what I recall of what I said or believe I should have said, and by my memory of class discussions.3 In general, the notes will be written up so as to take the form of chapters. What now follows may be viewed as the first of them.
Notes
1. Part of the opening statement of The Eighteenth Brumaire of Louis Bonaparte, available in many editions, most conveniently in Selected Works of Marx and Engels--to be found both in one and two volumes. return to text
2. The book is A New Introduction to Economics, by Hugh Stretton (London: Pluto Press, 1999, ISBN 0745315313). return to text
3. Reading suggestions will be made as we go along; to begin with, my recommendations are a few books in history of economic thought: Robert Heilbroner, The Worldly Philosophers, Robert Lekachman, History of Economic Ideas, both more readable than is common, and two others that are more technical: Joseph Schumpeter, Ten Great Economists, and Eric Roll, History of Economic Thought. Brushing modesty aside, I also recommend Chapters 1 and 2 of my own U.S. Capitalist Development Since 1776: Of, By, and For Which People? and my Toward Understanding Capitalism (which covers some of the ground of those chapters).
The best book of all, but perhaps read after Heilbroner or Lekachman, is Leo Rogin, The Meaning and Validity of Economic Theory. Rogin was one from whom I believe I learned most in this area, in his class, and from that book. He died very young, in 1947, and the book had to be completed by some of his colleagues (including Robert A. Brady) and some of his students. It was published in 1956 by Harpers, and republished in 1971 by Books for Libraries Press. return to text
One
A Summary Overview of What Economics Has Been
And Is Now, Compared with What it Should be
The Mainstream
No need for needs? In the introduction, it was said that economists should answer two questions: the first concerning what we need to know, the second concerning what must be done to meet human, social, and environmental needs. But the word need cannot be found in the entire theoretical literature of mainstream economics--as though it were a dirty word. It is not difficult to understand why that vacuum exists. Were economists even to begin to seek answers to those questions they would have to construct and learn another discipline, serving a completely different audience: throughout most of capitalism's history, usually unconsciously, economists have served as capital's obliging servants--come what may for people, society, or the environment.
In the unlikely event that mainstream economists were to read the foregoing, they would respond by huffily asserting "Our economics already confronts such questions, as witness its definition: 'Economics is the science of allocating scarce means to unlimited wants.' That is our abstract way of establishing an analytical framework for asking the same questions."
But that is not so for many reasons, among which are (1) means are not scarce and wants are not unlimited, nor do needs and wants mean anything like the same thing; (2) the analytical framework is one based solely on deductive reasoning, of premises and conclusions, of logical "arguments."1
Illogical arguments are of course to be scorned, but logic alone does not constitute science. When the premises (or assumptions) of mainstream economic theory are not only abstract but fanciful, when the facts of socioeconomic reality are assumed away, what is left is not only not scientific, it is ideology.
There is also at least one other reason for rejecting contemporary economic theory in its entirety: (3) it ignores the existence of power.
In a world in which an understanding of economic and political power is required for comprehending both economic functioning and economic policies, mainstream economics manages to deflect its gaze elsewhere (or nowhere).2 In the following pages, we'll gaze directly at the above three--scarce means and unlimited wants, economics as logic only, and power. Very briefly.
Scarce means?
Our means consist of human and other natural resources. Here we'll not discuss the fullness or not of the actual and potential supply of human resources, except to note that our socioeconomy (and others') almost systematically underuses, misuses, and thwarts both actual and potential human resources.
One misapplication is an educational system which--especially, but not exclusively, from kindergarten through high school--is intended to train the young to "take their place" in society, rather than to do everything that can be done to nourish the creative and constructive in all of us, and to assist us in the appreciation and understanding of ourselves and others, of nature, and of society.
As for nonhuman resources, their very definition is determined by the interaction of social and technological processes. Thus, although there was petroleum seeping out of the ground in North America in pre-Columbian times, the people did not see it as a resource, or when they did, saw it as a totally different resource than now.
But surely we are running out of some resources--forests, water, even air, and especially oil? After all . . . But no. As with human resources, the problem is not what exists, but how resources are used, overused, misused, abused. And that applies equally to the air, the seas, minerals, soils, to the entire range of flora and fauna. Often there's some deadly combination, such as the madness of car ownership and use with respect not only to the depletion of petroleum resources, but equally to the poisoning of the air. If we add to these perversions the high percentage of utter waste (much of it destructive wastes) involved in contemporary economies, on both the producing and consuming ends, we are confronted not by a shortage of natural resources but by a socioeconomic system gone berserk.3
Among the leaders of this destructive parade are the purveyors of what has been called the green revolution. The reference is not to the political Greens, but to the chemically based transformation of agriculture in, especially, the poorer countries. Put forth in the name of rescuing the agricultural peoples of those countries, its effects have been very much the opposite: the almost total displacement of those who had earlier survived (however modestly) through traditional subsistence agriculture, engineered by giant companies who produce entirely for export, from which they, not the local inhabitants, take the gains. Meanwhile, millions of people have lost their livelihoods and are now sucked into the overcrowded cities of their own countries or pushed into becoming hard put immigrants elsewhere, where they are increasingly the targets of racists and fascists and even people who have thought of themselves as decent. And not the victimizers, but the victims are blamed for their plight, while the former trumpet their green revolution. And this omits mention of the side-effects of the chemicals employed.4
Unlimited wants?
All human beings have certain basic needs, whose definition changes through history: in our time, those basic needs are adequate food, clothing, shelter, education and health care. Given existing resources and productive capacities (of both goods and services), everyone in the world could have most of those needs satisfied within a few years, and all of them within two or three decades.
Instead, the top twenty percent (at most) of the world's population are being coaxed, seduced, mesmerized--in some sense pressured--into buying increasing quantities of goods and services they don't need--and from which, studies show, they get little or no satisfaction, or downright dissatisfaction. The result is crowded highways and polluted air, a family both of whose adults work and go always deeper in debt and . . .
Meanwhile, in the same period and for the connected reasons, basic needs for a rising number even of some of those in that top twenty percent are met with always greater difficulty--adequate health care, not least.
Confronting Capitalist Reality
Were the proverbial man from Mars to have visited the earth fifty years ago, learned of the technological marvels preceding and following his visit over the next decades, and then examined the socioeconomic condition of peoples in both the rich and the poor countries--not least, in the United States, richest of all--he could come to the conclusion that the animals running the world had gone mad. And he would have been right.
Are we a hopeless species?Saying all this raises an important set of questions concerning what is usually called human nature. Neither implicitly nor explicitly is it suggested here that human beings are naturally sane or reasonable, nor that they are the opposite. We are, instead, both; but our lives are lived out in a shaping society--whether that means family, school, or everything else; and it means all of those. We have in us, that is, both positive and negative, constructive and destructive possibilities: our species produced Einstein and Jack the Ripper, Goethe and Hitler, Beethoven and Clinton.
Marx and Veblen, in their different ways, both saw things this way. Marx saw us as alienated by living under capitalist conditions--and he saw the taproot of that alienation as in the exploitative conditions of work. For Marx, the main motive force of history revolved around the production and reproduction of life: an animal's life (and we are animals) is its activity; thus, first and foremost what humans do is to produce and reproduce the stuff of life (including, of course, themselves). Work is not only natural and necessary, it is fulfilling. Or can be.
Under capitalist conditions it is anything but, except for the lucky few (yours truly among them).
Work or labor? Marx was no romantic. But he noted that however harsh the lives of precapitalist peoples, often as not they had some control over their own work processes (hunting, farming, etc.). That was work, and like many before and since him, Marx made a sharp distinction between work (over which one has at least some control--setting aside natural disasters)--and labor, where someone else has the control.
It is of the very essence of capitalism that people do not work for themselves, but labor for others--others who decide what they will do, when, where, for how long, and why. Having no means of production except their own labor power, workers are thus powerless, and thus, as Marx saw it, alienated from their work, their society, themselves. In words that could have been written yesterday, Marx said,
[T]he work is external to the worker . . . . [It] is not part of his nature; . . . consequently, he does not fulfill himself in his work but denies himself, has a feeling of misery rather than well-being, does not develop freely his mental and physical energies but is physically exhausted and mentally debased . . . . His work is not voluntary but imposed, forced labour. It is not the satisfaction of a need, but only a means for satisfying other needs. Its alien characteristic is clearly shown by the fact that as soon as there is no physical or other compulsion it is avoided like the plague.5
Thorstein Veblen's Instinct of Workmanship (1914), though in a different formulation, agrees with and effectively extends Marx's position. A main difference is that Veblen saw the irrational elements of society as finding fertile ground in, among others, Marx's proletariat, also seeing this, the working class (which he called the underlying population) as irrational precisely because of exploitation. Veblen saw capitalism as nourishing our destructive side and starving (or even punishing) our constructive instincts.
Such matters will come under further scrutiny later in our class. Now we turn to number three of our trio.
Power, Inc.6
If what economists do had no serious consequences--if, that is, it were only an academic activity--we could be as oblivious of them as they are of the real world (including us). Unfortunately, that is not so: even though all the major capitalist powers (and many of the lesser ones) function within the framework of political democracy, majority public opinion supports a status quo always changing for the worse, and worsening always for the majority of the world's population.
The citizenry has the formal right to decide what should and what should not occur in the economy (among other matters), presumably based upon its information and understanding. On economic matters, the affirming origins of that information and understanding are economic experts. This alleged expertise is filtered down to the public in its formal education and by the media. Economists' pronouncements, couched in the language of the free market, almost always ratify (or oppose) whatever it is that the giant corporations and their political allies want (or oppose)--and do so in the name of economic principles. The powers of democracy thus become--not for the first time--the powers of a plutocracy.7
But in the long run? Economics and capitalism came into the world at the same time. From the beginnings of economics (Adam Smith, T.R. Malthus, Jeremy Bentham, and David Ricardo), economics has served to support the interests of capital, but always in the name of general well-being. In the first century or so of industrial capitalism, the ills then afflicting the large majority of the people in both the leading and the imperialized countries might conceivably have been seen as temporary--although numberless thousands of premature deaths are hardly temporary for those dead.
The fabled long run of economics, when everything would be just fine, could conceivably be seen as requiring several decades of industrialization; but two centuries have gone by and the long run has yet to arrive, except for about a maximum of a fifth of the people in the rich countries, and then only for the years 1950-1975. Since then, the good times have been replaced by stagnant or falling real wages and declining health care, education, housing and care of both children and the old. The times never were good for the rest of the people of the world, and they are now ferociously bad.
After more than two centuries of such industrialization, with that pleasant long run yet to be achieved, indeed, with the plight of the people in the formerly imperialized countries more severe for more of their people than ever before, and, for at least the past twenty years, the good times of 1950-1975 for the majority in the richer countries being replaced by stagnant or falling real wages and declining public services (whether in health care, education, housing, or the care of both children and the old)--under such conditions, for economics to continue its praise for the free market approaches mass criminality. Economics has become the propagandist for the deadly games of Big Business--its fig leaf.
Thus, economics is important. When it is ideological rather than scientific in nature, and when that ideology serves the interests of the best-off people in the world at the already great and rapidly rising expense of almost all people, all societies, and all of nature--then it becomes vital for people to know what's going on, why, and what are the desirable and possible alternatives--and, given the present concentration of power, what must be done by ordinary people to translate what is possible and desirable into reality.
Thus, these classes. And now we turn to the critics of capitalism, beginning with Marx. To repeat: with Marx, as in the arguments of all those discussed after him and up to the present, our aim will be to put together a synthesis of useful/necessary analyses, as brought up to date by contemporary processes and relationships and their associated data.
Notes
1. Deductive as distinct from inductive reasoning, where the latter draws generalizations concerning reality, based on the study of that reality, not starting with premises that fit nicely with the economic (or other) policies to be recommended--premises such as assuming that we are rational creatures, where the term itself is defined to mean that anything (and everything) we do is a consequence of our having made calculations, which in turn set anticipated pleasure against anticipated pain (or its modern version, utility vs. disutility) as the means guiding all decisions--by workers, consumers, capitalists. Check yourself out on that. return to text
2. On the surface, it might seem otherwise, for economists do speak of market power. But their analysis of that notion is conducted in a dreamlike manner: they begin where Adam Smith did, arguing that the economy can function well if and only if in no industry does any firm have the power to affect anything except its own decisions on what to produce, when, and how. That is, it has to accept market prices, not set them; it must adjust its supply to the market, rather than (in conjunction with other firms) restrict supply to keep prices up. Nor, among other matters, would there be in the ideal markets any use whatsoever for advertising, for all firms would be producing identical products (and in relatively small quantities).
One doesn't need to be an economist to know that none of those conditions is met in the real world; indeed, it helps not to be an economist, for their training has taught them to shut their eyes to reality. There are economists who do study these matters, and whose studies enable us to know what the realities are, but they have always been at the edges of the profession and in recent years have been totally ignored. return to text
3. I have written a small book regarding this whole matter, The Waste of Nations (1989). In the year of its publication, things had already gone well beyond the point of safety. By now the situation has worsened considerably--and does so at an accelerating rate. return to text
4. See the essays in Bernard Glaser (ed.), The Green Revolution Revisited: Critiques and Alternatives (1987). London, A&U. return to text
5. Karl Marx, Early Writings (1963), translated and edited by T.B. Bottomore. (emphasis in original). Marx wrote this in 1844, as part of his "Economic and Philosophic [or, sometimes, "Paris"] Manuscripts." Interestingly, these were unpublished until 1932. See also the excellent book by Bertell Ollman, Alienation: Marx's Conception of Man in Capitalist Society (1976). For a contemporary view, see Harry Braverman, Labor and Monopoly Capital: The Degradation of Labor in the Twentieth Century (1974). return to text
6. As it happens, that is the title of a very useful paperback (1976), by Morton Mintz and Jerry S. Cohen. Mintz is a respected journalist with the Washington Post and Cohen has served as Chief Counsel for the Antitrust and Monopoly Subcommittee of the U.S. Senate. Written twenty-five years ago, it may be seen now as a well-written, if now also a substantial understatement, of the realities of concentrated power. return to text
7. Also not the first time, but the best-known of such times, was the emergence of a plutocracy in the last quarter of the nineteenth century--the so-called Gilded Age (Mark Twain), also called The Great Barbecue, and the Era of the Robber Barons. There are many differences between then and now. Most important of those are that dominating power is now exercised globally, through the giant transnational corporations (TNCs, hereafter), and that their power goes well beyond what is called economic and political. Because virtually everything has become commodified by now (or shortly will be), the power of money now seeps into every crevice of our existence: Everything for Sale, as the title of a recent book by Robert Kuttner has it (1996). return to text
Two
Karl Marx
Introduction
Some know it, some don't, and some don't want to know it, but almost all those today who seek to understand industrial capitalism do so at least partially with analytical tools initially forged by Karl Marx (1818-1883)--whether or not they do so in his spirit or with his aims. This is to say something else, something stronger: to understand capitalism it is necessary, consciously or not, to use Marxian tools, whatever else (and there is much else) that is also required.
That is so not only--or even mostly--because Marx gave capitalism its name and was the first to perceive its nature. It is also because his prior and ongoing scholarship and intellectual strengths led him to recognize that what was becoming British industrial capitalism constituted what he called a new social formation; and that recognition drove him for decades to discover its economic laws of motion and the fuels and machinery that propel it.1
In the pamphlet Toward Understanding Capitalism, I singled out expansion, exploitation, and oligarchic rule as the imperatives of capitalism. Each of those--or, better, the three seen as one--Marx pulled up from the complex depths of the capitalist social process, examined them at all levels of abstraction and empiricism, and, as he put it "made [capitalism] reveal itself."
For socioeconomic understanding there had never been anything like the corpus of Marx's work; nor is it likely there ever will be again. Not that Marx got everything right or that he studied everything that was necessary; he didn't, he couldn't, and he knew it--not for his time, let alone for ours.
What he could and did do was to pierce through the manifold surface appearances of the capitalist process to see them as an organic whole of interlocking and dynamically related parts with great powers, needs, and consequences--intended or not, positive or negative. For Marx there could never be complete understanding of the social process, and not only because (as he saw it) it is always shifting beneath our feet--and especially so in the capitalist social process, which both feeds upon and nourishes rapid change.2
Earlier we cited Marx's view of history as weighing "like a nightmare on the brain of the living." Here we add what may be seen as the most succinct statement of his theory of history (the most vital phrases of which I have italicized):
In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite state of development of their material forces of production. The sum total of these relations of production constitutes the economic structure of society--the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production in material life determines the social, political and intellectual life processes in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.3
A careful reading of that, in conjunction with "Men make their own history, but . . ." is a good first step (among many that may be taken) for understanding that those who see Marx as an economic determinist are saying more about themselves than about Marx; indeed, it is not too much to say that many of the most virulent critics of Marxian analysis have never bothered to read Marx at all.4
Earlier it was noted that Marx saw both negative and positive consequences of the capitalist process. Negative, it goes without saying; but positive? Just as surely. Marx's radicalism did not innoculate him against the optimism characteristic of his time (especially in Britain--which then was what the USA is now). Marx saw capitalism as the most progressive of all social formations--wrenching peoples and societies loose from a stultifying past, not least, though by no means only, because of its potentially liberating technologies. And he believed that capitalism's achievements would do it in and liberate humanity--painfully, of course. How and why?
The intended achievements of capitalism include ongoing capital accumulation. In turn, that requires and creates a working class, which, thrown together to work in large numbers under one roof (under many such roofs) and under harsh conditions, would--because workers are human--move inexorably toward the organization they need to empower themselves. And because that same accumulation process would, as Marx saw it, just as surely lead to a deep crisis of overproduction, his optimism allowed him to believe that at some point the crisis would meet with the rising strength of the working-class: capitalism would have given birth to its owngravediggers.5
We should live so long (and perhaps some of you will). That was merely one of Marx's failed predictions. In our classes we'll not be concerned with his politics or his optimism; what will occupy us is his analytical apparatus.
For several class meetings to follow, we'll extract the core of Marx's political economy, the basic arguments that constitute those economic laws of motion. They constituted an astute analysis in his own day. With considerable updating they remain so today--indeed, it will be argued that the updating when synthesized with subsequent analyses (by Veblen, et al.) renders his analytical position stronger now than in his own time.
As I was thinking through the nature and structure of this class in 1998, by good fortune I received in the mail from Ed Herman (an old friend and fellow grad student at Berkeley in the late 1940s) a copy of his recent essay "Karl Marx and the Reopening of His System," then not yet published. It has since appeared in New Politics (Winter, 1998). The central part of Herman's essay is entitled "The Marxian Core," and it consists of seven elements. I'll follow his elements, mixed in with some of his and some of my own observations.6
That core will occupy us now for several meetings. Before plunging into it, however, it seems pertinent to return briefly to Marx's notions of alienation--his first major step (1843) toward connecting his political rage with his economic understanding. As was noted earlier, his concern with alienation was focused on what we may call the sociopsychological consequences of exploitation under capitalist conditions.
It is important to note that Marx's views in that connection come into conflict with his optimism concerning the overthrow of capitalism.7 That is, if Marx was correct in seeing workers dehumanized by their powerlessness as workers--which seems incontestable--the question becomes how, over that same period of time, could a workers' movement strengthen to the point that it could overthrow capitalism? It would seem clear, from his own analysis, that the longer capitalism survived, the weaker the possibilities of its being overthrown by a steadily dehumanized working class.
Marx's theory of alienation, as noted earlier, was based on the consequences of being exploited in the processes of production; in Marx's time that was pretty much all that had to be taken into account. But as capitalism survives over time, it does so in dynamic interaction with industrialization, nationalism, and imperialism. That interaction was coming to mean a great deal already in Marx's time, and came to mean considerably more in the twentieth century. Thus, (1) workers in the leading capitalist countries came to achieve incomes beyond mere subsistence before World War I (and much more so after World War II); (2) nationalism and imperialism combined successfully to deflect workers' attentions from their concerns as workers and toward patriotism and the support of militarism; (3) most recently, consumerism, which heightens individualism and greed, has acted to erode workers' solidarity. These matters, weak or nonexistent in Marx's time in terms of workers' consciousness, will be discussed at some length when we examine twentieth century analyses.
The main point here is not that Marx's predictions were wrong; the complexities of the social process pretty much guarantee that virtually all predictions will be wrong--or, if right, are more likely than not to be so by chance. The point, rather, is that however capable analysts may be, their predictions are usually based on hopes and/or fears, more than on reason. Present company excluded, of course.
Now we turn to the core of Marx's political economy.
Marxian Analysis Revisited
If you have not read (or do not remember) the characterization of capitalism put forth in Toward Understanding Capitalism, this would be a good time to give it a look. The reference is to the imperatives of the capitalist social process: exploitation, expansion, and oligarchic rule. As we now examine Herman's seven elements of the Marxian analytical core, a bit of reflection will show that they may be seen as an elaboration of the foregoing three.
The seven will now be listed; we'll then spend some weeks taking them up in order. In doing so, the effort will be made to accomplish several things: (1) to clarify what Marx had to say, (2) to relate his arguments to subsequent and, even more, to contemporary realities, and (3) to see them all as--to use that phrase again, for it is important--in dynamic interaction with each other and, increasingly in our time, with all elements of the social process. I follow the order as put forth by Ed Herman:
1. The profit and accumulation drive
2. Technological change as a system imperative
3. Reserve army mechanism
4. Globalization
5. Instability and crises
6. Control of the State
7. Domination of the superstructure of law and ideology--including courts, academia, media, etc.
In our next chapter, we'll begin to explore these, one by one. But before that, there is a major point to understand that compares Marx with most of the others we'll examine later (Veblen, et al.). That point has to do with what Marx saw as central to his analysis, and how that differs from some subsequent radical critics of capitalism.
For Marx, one could not even think of capitalism except as exploitative and ruled oligarchically; though his theory of surplus value revolves around them, his dynamic analysis--of the accumulation process--takes them as given. The accumulation process is what today is usually called economic expansion (or economic growth). By whatever name, that process is powered by capital accumulation (that is, essentially, investment in increasing productive capacities). In his discussion of this in Capital (I), Marx famously wrote: "Accumulate, accumulate! That is Moses and the Prophets! Accumulation for accumulation's sake, production for production's sake . . ."
Power for Marx needn't be examined specifically, for there was no contest (except within the ruling class--e.g., between industry and agriculture). Oligarchic rule (that is the concentration of power in the hands of a few) could be assumed by Marx because the ownership and control of the means of production implies the powerlessness of the working class. Political democracy as we understand it did not exist in Britain in Marx's time. The vote was for (male) property owners only; and in any case, the State was small, necessary only for class rule at home and whatever was required to pave the way for capital abroad.
Already as the twentieth century began, things had changed in many ways. Consequently, critics of capitalism such as Veblen, Gramsci, Brady, and Baran and Sweezy (among others), had to see power as a much more complicated question.
In all the industrial capitalist nations (except Japan), formal political democracy was in place. As the century went on, and in addition to its two major wars, fascism, revolution, etc., much else had to become part of any working analysis. An adequate analysis of the capitalist process had to become explicitly socioeconomic, taking into account (among other matters), consumerism, advertising (and its selling not only of commodities but ideas), racism, the purchase of power through corruption, and, finally, the management of power.
Thus, although Marx could safely dismiss the State as "merely the executive committee for managing the common affairs of the bourgeoisie," in the present era, we cannot; we must uncover the always spreading and deepening roots of power in contemporary capitalist societies, and integrate that into our economic analysis.8
To put things that way is to say--once more--that insofar as the capitalist social process always and everywhere produces increasingly rapid and increasingly pervasive change (pervasive both within societies and over the globe), any analysis must itself be open to change--or become not only inadequate, but vulnerable to criticisms that, in finding such analytical weak spots, can obscure whatever strengths it may have.
That has happened with Marxian analysis, and is one of the major reasons why criticisms of Marx have been effective; the other major reason is that to accept Marx's reasoning is to become an opponent of capitalism. For some of us, capitalism is part of the good life; for too many, up to now, it's the opposite.
So, on with the good life.
Notes
1. In one of his letters to Engels, Marx notes that in order fully to comprehend capitalism's laws of motion he planned to write four brochures; he only partially completed one such brochure: Capital. Vol. I was completed by him in 1867. Vols. II and III were left incomplete at his death and finished by Friedrich Engels and by Karl Kautsky. Moreover, in order to do those three volumes, Marx had previously completed many other works: the three volumes of his Theories of Surplus Value (in effect, his history of economic thought), the Grundrisse [Foundations] (almost a thousand printed pages of his notes for Capital), and his Contribution to the Critique of Political Economy, from the Preface of which we'll quote soon. It was only in the 1840s that Marx, urged to do so by Engels, began his studies for those works; he continued them into 1883, when he died. return to text
2. Marx's writings move through all levels, from empiricism (as in the information he presents on working conditions in Capital [I]), to very high levels of abstraction, as in the theory of surplus value (the heart of that same volume). Our earlier criticism of mainstream economic theory regarding its abstract nature was not an attack on abstracting as such, but on what was abstracted out--namely, relevant real conditions. Marx himself was clear on this matter when (in Capital [III]) he pointed out that "[T]here would be no need for theory if appearance and reality were identical." Thus, by way of example, were you to stand on a broad plain on a clear day or night, what you would see, looking up in the sky, would seem to be the inside of an inverted bowl, but that is assuredly not what astronomers see. return to text
3. From the "Preface" to the Contribution to the Critique of Political Economy. That was not published in English until 1904; it became the Introduction to the Grundrisse (1859), not published in English until 1933. An excellent way to read through various of Marx's works is in the collection Marx and Engels: Selected Works (1967). It is available in various editions, some in one volume, others in two. In it will be found both the documents from which I have just quoted (Eighteenth Brumaire . . . and Contribution . . . ), along with selections from Capital, the Manifesto, etc. It can be found in some libraries and some bookshops. return to text
4. Much later, when we discuss Joseph A. Schumpeter (briefly), we'll see that though he was conservative to the bone, he had read Marx carefully; and though he disagreed fundamentally not only with Marx's aims but also with important aspects of his analyses, he also had a high regard for certain aspects thereof. But Schumpeter (who died in 1950) was a rarity amongst economists. return to text
5. This is as good a place as any to add that although Marx expected to see capitalism overthrown, he never did lay out any program for what the ensuing society should or could be, except in his famous statement to the effect that socialism would be the first stage of the social process replacing capitalism in which at least some capitalist attitudes survived and the problem of economic scarcity had not yet been eliminated; therefore, "from each according to ability, to each according to work."
A communist society would be one in which the economic problem had been eliminated, through the growth and alteration of productive capacities, and the population had for some time been living as socialists in practice and consciousness: then the principle of income distribution could become "from each according to ability, to each according to need"--that is, a classless society. Any more detailed program, he argued, would be in the nature of "kitchen recipes for the future" and foolish. return to text
6. His official name is Edward S. Herman, and he has written much, within and beyond economics, and always excellently, by himself and with others. By himself (and among other books) he did the important Corporate Control, Corporate Power (1981) and The Washington Connection and Third World Fascism (1979); with Noam Chomsky (and among other books with him) Manufacturing Consent (1988); and with Robert W. McChesney, The Global Media (1997). The reason for the title of his essay, "Karl Marx and the Reopening of His System," is that over a century ago (1889) a leading Austrian economist, Eugen von Bohm-Bawerk, wrote a blasting critique of Marx which, in English, was called Karl Marx and the Close of His System. return to text
7. And when we discuss Veblen and Gramsci, we'll see that this was well understood by them. The whole matter is pursued at some length in Ollman's Alienation, noted earlier--a book very much worth reading, for this and many other important matters. return to text
8. To put it as safely dismiss is unfair to Marx in an important sense: as noted earlier, it was his intention to work through and complete three other brochures, which--had he lived long enough (which nobody could)--would have comprehended the State, sociology, and foreign trade (which comprehended what came to be called imperialism). For Marx, that is, first things came first; for him that could safely mean the political economy he created. For us, the first things must comprehend the entire social process. Child's play. return to text
Three
The Marxian Analytical Core
l. Profit and the accumulation drive1
I have noted that capitalism and economics came into the world hand in hand--or perhaps hand in glove would be more accurate, with economics serving to conceal capitalism's dirty hands.
From its very beginnings, economists have given pride of place to capitalists' drive for profits--as did Marx. But there the similarity ends, both as regards methodology, explanation, and expected consequences--and not only because Marx saw capitalists as rational misers (when he is not seeing them as the Messrs. Moneybags). We take those differences up by beginning with the position of mainstream economics.
This best of all possible worlds A quick summary of mainstream economists' way of treating the area of profits and accumulation is to understand (1) that their analysis is static, taking as given just about everything--time, technology, socioeconomic structures and relations, private property, factor prices (i.e., wages, interest rates, and rents)--which (2) allows profits to be seen as a residual. Thus, if in the short run, profits are excessive (that is, as Ricardo put it, unearned), in the long run, they will be competed away in freely competitive markets, brought down to a normal rate of return (= the natural rate of interest). The result is thus to the betterment of all (if not now, some time later). In any case, everyone is getting just what he or she deserves.
To say that the model that produces such a viewis static is to say much else. Because there is no history, there is no explanation of why there is private property, held by a tiny percentage of the population (of any nation and of the globe),2 or why such property has been, is being, and will be used to the advantage of those few who own and control production (among other sectors) to the very grave disadvantage of almost everyone else. In addition to all else left out of the mainstream model, there is no accounting whatsoever for the State (and its judicial system) that not only allows but facilitates the conditions under which so many live so badly while so few (fifteen percent, at the maximum) live so very well. And, one is tempted to add [and one gives in to the temptation], that tiny privileged minority usually disport themselves as though they were spoiled brats (indeed, they usually are).
Marx's view Profit maximization is also the key for Marx; indeed, the drive for profits and continuous capital accumulation he sees as the life force of capitalism. Unlike for the mainliners (oops! mainstreamers) and quite apart from their idealization of a brutal system, for Marx, capitalism is not a rational, but a wildly irrational system--uncontrolled and uncontrollable, a social monstrosity.
In our classes, I have suggested that a first reading of Capital is best begun not on p. 1, Part I, but in Part VIII. The latter is Marx's historical summing up of the beginnings of capitalism, in the era of what he calls primitive accumulation.3 Here is a sampling of what he means by that term:
The discovery of gold and silver in [Latin] 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, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation.4
When the stage had been set for full-fledged capitalism to take hold, as it was by the close of the eighteenth century in Britain,5the system moved toward realizing the following characteristics: (1) dependence upon maximal exploitation of workers and of nature, (2) an endless extension of its economic, political, and social power at home and abroad to assure ongoing profitability and accumulation, and (3) continuous pressure for always more advantageous technologies and the creation, maintenance, or return of a powerless workforce.
At work within these processes was and is, of course competition between firms in the same (and increasingly different) industries, both despite and because of the ultimate dominance of giants. But it is neither the competition Adam Smith had in mind nor that which is exalted by contemporary economics. Increases in productive efficiency have of course been great throughout capitalism's history, and increases in the real income of significant segments of the working class (in the rich countries) have of course taken place (and are now being taken away). But competition--better seen as rivalry--between corporate giants (whether in autos, appliances, sportswear, computers, or whatever) has done more to increase inefficiency for the whole economy than it has to increase productive efficiency at the plant level, whether the reference is to the costs of packaging, marketing, or deliberate obsolescence (saying nothing yet about the social and political and environmental costs of consumerism).
In our day, what Marx called the accumulation drive has been translated into the iconic role of economic growth. That is, not only for capitalists, but for the entire society--everywhere--accumulation is all: "Growth! . . . is Moses and the Prophets." And the costs of capitalism--never acknowledged by capitalists--are now seen as remediable only by more and more growth, no matter what. Or else they are not seen as costs at all. Thus, the imperatives of capitalism have become internalized as normal and acceptable throughout most of the world.
2. Technological change as a system imperative
We have noted constant change as intrinsic to capitalism. Within that process, technological change was spectacular from the beginnings of industrial production, and has become always more so over time. More specifically, the earliest technological advances as modern industry began were made in the area of production, and the marvel of marvels in those years was the steam engine--first developed to be used in coal mining, then applied to the textile industry, to railroads and ships, and in agriculture. The next big leap took place in the electrical and chemical industries and resulted in a new definition of industrialization. But in our world, technological change has broken through the confines of industry to transform all of life--from entertainment to education to health care to . . . everything.
No significant technological change can occur without significant social change. Thus it is that with the speeding up of the processes of technological change, the processes of social change have accelerated at least as much. Because human beings cannot change their ways of thinking, feeling, and behaving as rapidly as (wanted or unwanted) innovations are implemented in machines (and in all manner of electronics), one consequence of all these changes taken together--and accelerating--has been a social process that is increasingly hectic, verging toward chaos.
Marx had begun to see this as early 1848, when he and Engels wrote the Communist Manifesto. For prescience, this is hard to match; it could have been written tomorrow:
The bourgeoisie [i.e., capitalists] cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society . . . . Constant revolutionizing of production, uninterrupted disturbance of all social conditions, ever-lasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real condition of life and his relations with his kind.
"Man is at last compelled . . ." But among the technologies that swim through all the nooks and crannies of our lives are, of course, those of the media--one of the biggest businesses of all. Marx could not foresee that the very processes that compel us "to face with sober senses" our real conditions of life have spawned the most crucial weapons used by the giant corporations to lead us, instead, to look at our TV and shop (and borrow) until we drop.
Marx could not have foreseen the specific technologies that now dominate us so, but he did understand very well by whom the process of technological change is energized--by whom and for whom:
[W]ithin the capitalist system all methods for raising the social productiveness of labor are brought about at the cost of the individual laborer; all means for the development of production transform themselves into means of domination over, and exploitation of, the producers, they mutilate . . .6
This is not to overlook the role of science and engineering in technological development. They are essential for the processes of invention; but it is innovation (the adoption and use of an invention) that gives that set of changes their fuel, their energy--their financing. In the deep past, that was often so. In our day and age, almost always, the money comes first, the inventions follow.
And of course it is true that along with industrialization, the possibilities of further progress not only increase, but multiply. It was this that caused Veblen to remark that, true though it is that "necessity is the mother of invention," even more so it is that "invention is the mother of necessity."
Be all that as it may, the technological process always increases the power(s) of some capitalists and always increases the powerlessness of some workers. Over the long run it has very much increased the power of capital and very much reduced the power of labor--both within national economies and, especially now, in its abilities to spread over the globe with ease, with dire consequences for the labor movement all over the globe.
In the same processes, and saying something of the same thing, the deskilling of labor has placed a steady downward pressure on the ability of individual or organized labor to defend itself, let alone to gain in strength. Whatever the self-awareness of labor in this respect, it may be assumed that capital is very much aware of how technology enhances its powers--directly and indirectly.7
Those who raise their voices against particular kinds of technological change are derided as Luddites. The reference is to the machine-breakers of the early industrial revolution. But they were not fighting against progress, nor are most of their counterparts today; the fight then and is against the control and use of technological progress for the narrow (and destructive) ends of business and the hell with everyone else. For the Luddites of the past, and for us in the present, there were and are good alternatives.
Before and since the Luddites, the processes of technological change have always increased the power(s) of some capitalists and have always increased the powerlessness of some workers; and over the long run very much more so--until today, as noted, when the ability to ship whole factories and the latest technology across the globe, unique to our age, has come to be perhaps the most dire threat to workers of all time. But the search for good alternativesis not the business of those who have power.
Albert Einstein put it in a nutshell, already in 1917:
Our entire much-praised technological progress, and civilization generally, could be compared to an axe in the hand of a pathological criminal.8
3. The reserve army mechanism
The reserve army is that of unemployed workers. Quoting Herman to begin with, "Marx put great weight on capital's desire and need for slack labor markets. Technological change and cyclical downturns were the key mechanisms whereby this was accomplished in his time." And, adding in globalization (#4 below), the same is true today. Slack labor markets mean increased powerlessness for workers, as they are forced to compete with each other in order to hold or get a job.
In Marx's time both of those keys were being used, as they are today. But today has many differences, as well. Among the most important are that monetary and fiscal policies are used deliberately to keep labor markets slack, as in the USA with the so-called Volcker recession. Paul Volcker (of Wall Street and international finance), appointed head of the Fed by President Carter and continuing under Reagan, in 1980 and then again in 1981-82 deliberately used governmental policy to create unemployment, and thus to keep wages from rising and to hold prices down. Not long after, assisted by the weakness of the labor market, Reagan began his successful antiunion drive, from which organized labor has yet to recover.9 And privatization of formerly public activities assists in the same direction, since government workers are usually better protected (re: benefits, security, etc.) than those in the private sector. All this is much aided and abetted by the processes to be considered next.
4. Globalization
"Capital must nestle everywhere, settle everywhere, establish connexions everywhere." Marx again, and again from the Manifesto, written in his first years of thinking about capitalism. Not a bad beginning. But what he could see as true in his time was much intensified in the last quarter of the nineteenth century in the forms of imperialism. As those processes were spreading throughout the world, hand in hand with capitalism, industrialism, and nationalism, they created a set of horrors that made prior developments--from Attila the Hun through the Spanish Conquest and into the Westward Expansion of the United States--seem, not mild (for they were anything but mild), but limited by comparison. And among their consequences was World War I--and its consequences, which still rumble around the earth like a social tidal wave.
All that was prelude to our globalization. Marx had it right (as exemplified even in the quote concerning primitive accumulation). What he did not and could not foresee was how the politics and, even more, the technology of the late twentieth century would enable and empower capital to penetrate every usable acre of every corner of the earth, and pulling peoples from their prior lives into a process destructive to hundreds of millions of human beings--but very profitable for capital, especially the capital personified in the giant transnational corporations.
Among the many differences between the imperialist period and today's globalization are that (1) the once invaded and occupied countries of the imperialist world are now "independent," and (2) the overlapping technologies of communications, transportation, and production now allow the TNCs to establish themselves as easily (or more easily) in the weaker countries than in the imperialist world. As a result, those same countries have been made not only more dependent economically than ever before but also put under the dominion of companies, not countries and--for the benefit of those companies, not the weaker countries--under the indirect rule of high finance (whether speculators and/or the IMF).
All that would be tragic enough for the peoples of the weaker countries (a good eighty percent of the world's peoples, note); but along with those processes has gone the destruction of the earlier economies of those same peoples.
Those earlier economies were generally those of subsistence agricultural production, often joined with small-scale industry. With the green revolution and the penetration of the TNCs, hundreds of millions of people have been forced off the land (as in the enclosure movement in Britain centuries ago). These people have nowhere to go--except either (as often as not, with their children) into the plants of the TNCs or someplace far away. They may choose to flee, to become immigrants to the richer countries, often as not, illegal and, in any case, powerless and discriminated against. Either way, the long run for those people will come well after their deaths, as it will for almost all their children.
Once more: all that would be bad enough. In the same processes and for closely connected reasons, there has also been a set of negative-to-devastating effects for workers in almost all the richer countries: those (and their families) who have taken the direct hit of downsizing and outsourcing, who have gone from good jobs with good benefits to lousy jobs with no benefits, and who have lost also what is seldom noted but always important--their dignity, their self-respect. As is so often true in such matters, not only are they blamed, but all too often they blame themselves.
I have mentioned that after this year it may be a good idea for us to have an introductory econ class together, using the new book by Hugh Stretton. As I now quote from him on globalization, you'll see why:
It is a program to create private corporate rights to trade, invest, lend or borrow money and buy and own property anywhere in the world without much hindrance by national governments. It would bar governments from most of the common methods of helping or protecting their national industries and employment. It is a winners' program promoted chiefly by some business interests, governments and neoclassical economists in Europe and the United States. One of its purposes is to intensify international competition for jobs. Together with other Right policies it is likely to maintain some unemployment in the rich countries and reduce the wage rates of their lower-paid workers, and reduce the proportions of secure employment. (pp. 179-180)
To which, I add some of what Ed Herman has to say in his section on globalization:
In Marxian terms, the reserve army of labor is being globalized, with firms able to tap pools of cheap labor in Mexico, Indonesia, the Philippines, and China, and bargain for terms friendly to investors across national borders as they have long done among cities and states within countries.It is obvious that this cross-border extension of the reserve army fits the Marxian model distressingly well, with capital finding a new bargaining advantage and threatening steady downward pressure on wages and working conditions in the high wage countries. The organizational challenge to labor is immense.
The threat to labor is exacerbated by the political/economic effects of globalization, with the nation state, like labor, pressured and threatened by the mobility of finance as well as industrial capital. Policies not helpful to capital will be punished by market movements that raise interest rates, lower exchange rates, and shift investment abroad. The welfare state is placed under permanent siege in favor of the de facto 'corporate welfare state.'
As if that were not far more and away too much, the global toughs called TNCs are playing the deadly games called (by William Greider) labor arbitrage, tax arbitrage, and political arbitrage. These refer to the manner in which the TNCs, contaminating and corrupting all governments (including their own), get the cheapest labor working under the worst conditions, along with tax benefits, no unions, and freedom from environmental constraints: all this lauded and hustled by their street shills, otherwise known as economists.10
All this gets worse by the day, everywhere. When taken together with what has been said above and what will follow below, the appropriate response is not to mourn, but to repeat what Joe Hill said just before they executed him: "Organize!"
5. Instability and crises
Like generals fighting the previous war, economists and politicians think of instability and crises in terms of some previous period--usually one idealized and thus misunderstood. With generals, it's some war their side won; for economists (like the business system they serve) it's when the system, as they saw it, was working just dandy. This time around in the United States, the idealized previous period is the much-vaunted prosperity decade of the 1920s. That the 1920s ended with the beginnings of an economic catastrophe and that its "prosperity" was limited to at best twenty-five percent of the population is ignored, or (for younger economists) not even known.11 Nor would they know--or care?--that in the years 1921-1929, wages were flat, while profits rose by sixty-five percent and Wall Street went bananas. Sound familiar?
And what was the then-prevailing view of U.S. (among other) economists as to macroeconomics--that is, what determines economic expansions and contractions, and thus, among other matters, unemployment?
(1) The economy moves through time in a cyclical process--expanding, reaching a peak, and then contracting. And then? Expansion to a peak, then--a cycle, like the rhythm of the seasons: Spring becomes Summer becomes Fall becomes Winter, becomes Spring, becomes . . .
(2) There should be no interference whatsoever in the economy--none at all--except for monetary policy. And what is monetary policy? It is the manipulation of the supply of money and the interest rate. That was done in Britain (until the 1930s) by the Bank of England, an entirely privately owned and controlled bank. In the United States, it was done through the Federal Reserve System, an entirely privately owned system, with the government having the power only to appoint its governors and their chief. Today's Fed, with Alan Greenspan its chief--he who was once (and may still be) a devoted follower of Ayn Rand, crackpot novelist and lover of Kapitalism. (Rand was an émigré from the Soviet Union; that's why the K.)
(3) There's unemployment. Even when it was like that of the 1930s when (officially, which is always an understatement) it was twenty-five percent, and was still more than ten percent in 1941, what was the explanation for it? Why, wouldn't you know it, it was because workers were demanding excessively high wages. There's economics for you in the past.
Today economists are copying their 1920s brethren always more closely (after an interval of about twenty-five years after World War II). But it isn't just monetarism that once more reigns, it is also that deregulation and privatization sit on the same throne, and from which the death of Keynesian fiscal policy and associated social policies was decreed--while these same economists also find some companies too big to fail. (No worker is ever too big to fail.)
Among those too big to fail recently was Long Term Capital Management (LTCM), a giant derivatives speculator, advised by two Nobel Economics winners a while back--winners for their great ideas on speculation in derivatives. (Mr. Nobel, who invented dynamite, would have been proud.) When the sirens went off announcing that LTCM was about to lose $3-to-4 billion and would drag down many big banks who were playing their game, the Fed intervened, in effect, by ordering the banks to give LTCM a very large line of credit.
In the same years in which the movement toward monetarism and deregulation and privatization were taking hold, first in Thatcher's Britain then in Reagan's USA, the IMF--understood by all to be servant mostly to finance, and mostly to U.S. finance--was assuming the role held by the Bank of England in the nineteenth century. Not just by lending, but by withholding loans and/or refusing to support a threatened currency (as during the Asian crisis of 1987), the IMF is able to dictate the entire process of economic development of a large number of countries--and dictate it so that the countries will function to the liking of TNCs and finance.
Time to quote Ed Herman directly again. After noting that instability and crises were very much contained into the 1970s, he adds, regarding the present:
Nevertheless, the immense global credit structure, pervasive speculation and innovating forms of risk-taking, privatization and the shrinkage of the role and power of governments, global interdependence, and the absence of a global lender of last resort, make the system vulnerable as never before. [My emphasis]The current [1997-98] South-Asian crisis has for the first time combined credit and speculative excesses with an environmental crisis, in which the smoke pall from uncontrolled Indonesian fires has curtailed economic activity and frightened foreign investors over a wide area. The dynamic, exploitative and unplanned nature of global capitalism make further unpleasant combinations and surprises highly likely . . .
Especially is this so when one adds to business and governmental recklessness that which is not only encouraged but is required to keep consumption at necessary (which means rising) levels--consumer debt (including borrowing on home equities to plunge in the stock market). This has reached such heights (or depths) that it was a featured article in Business Week (November 1999) under the headline "Is the United States Building a Debt Bomb?" And their answer was yes.
Was Marx on target when he saw that the anarchic nature of capitalism and its permanent tendency toward structural imbalance and speculative excess combine to make capitalism's macroeconomic behavior dangerously unstable? You better believe it--especially now that the State is more in bed with capital than ever before, which is saying a lot.
6. Control of the State
When Marx wrote, the State was of course vital, but nothing like it has been in this century. In nineteenth century Britain, capital's needs were satisfied by laissez-faire capitalism's minimal State, whose functions were to (1) keep down worker unrest, and (2) pave the way for capital abroad. While the State still serves capital for those basic needs, in the past century the State's functions for capital became increasing ubiquitous. Already in 1912, as Woodrow Wilson remarked when he was campaigning for the presidency, "When government becomes important, it becomes important to control the government." He might as well have said "to buy the government." And it has been bought and paid for throughout the twentieth century--with some beneficial deviations for two decades or so after World War II. The main difference between 1912 and the end of the twentieth century is that now almost everyone in the government, and almost everything done by or in the government is bought and paid for--through lobbying, political advertising, and the hard and soft moneys of election campaigns.
The two intervals interrupting that always increasing tendency (in the United States) were first in the 1930s, when the economy had totally collapsed (taking considerable business prestige and power down with it), and later in the 1950s and 1960s, when organized labor, aided and abetted by political activities outside of (or working with) labor, placed significant pressure on all levels of politics and politicians.
With the 1970s all that began to fade or be crushed, through the combination of stagflation and the corporate counterattack--much assisted by the always more effective mind management of the general public through the media (including all too many workers, through cultivated racism and tax resentments focused blaming the poor). All of this was facilitated by the ongoing Cold War and McCarthyism, which, whatever else they meant (e.g., wars in Asia and elsewhere), spelled decimation of left voices in unions, education, entertainment, and politics.
Even one as mildly liberal as J. K. Galbraith was frightened. He observed that we have a democracy, but a democracy of the contented: the best-off twenty percent of the population. They are sufficient to dominate the electoral process, most amenable to the messages of big business and other elements of the Right, and are very protective of their own narrow interests while indifferent (or hostile) to all else.
Among the many fearsome-to-obscene consequences of that condition is that the only direction the State receives is shared by the business community (and, increasingly, its financial sector) and rightwingers. America the beautiful, in a phrase.
7. Domination of the superstructure of law and ideology
"The ruling ideas of any era are the ideas of its ruling class," said Marx. Like virtually all of his good ideas, that one has been much mocked by those in power and, of course, by their conscious or unconscious sycophants--partially confirming Marx's point. 'Twas ever thus. But, once more, what Marx saw in his time has become considerably more so in our time.
For most of the nineteenth century (and earlier, of course), the bulk of the population was not considered to have ideas; or, when the rabble clearly had them, they could be ignored (or killed). As noted earlier, there was not even formal democracy anywhere in the world in Marx's time--except for the severely limited democracy of the United States--and only a small fraction of the world's populations had access to any formal education.
Nowadays, the combination of formal and informal education (from the media and at work, for example) could pose a meaningful threat to those who rule. Fortunately for the latter, the usual submissive attitudes and behavior of the courts, schools, and media are actually or effectively intimidated by and/or for sale to the highest bidder. Capital has most of the money and, directly and indirectly, the power already in hand.
All this is much assisted by the ways and means of consumerism, a tendency now coming to mesmerize virtually everyone, everywhere. The infantile and selfish individualism promoted by consumerism dominates our behavior, our ideas and attitudes, our politics; it is now the reality in every nook and cranny of social existence.
The Marxianepigram by itself explains much of our contemporary political illness. When in future classes, we add to his insights those of Veblen, of Gramsci, of Brady, and (among others) of Baran and Sweezy and other recent works on corporate power and activities--when, that is, we seek to identify the elements of what might be seen as the political sociology of contemporary capitalism-- we'll see that the epigram extended to more recent analyses is more ominous than what was indicated by Marx, which was ominous enough. In short, we have an even larger problem on our hands--where we means the world's people and the planet itself, made more demanding by what we turn to now.
In the century just ended, almost all ordinary people have capitulated all too much to capital's (and its State's) ruling ideas, and that century has witnessed more damage and destruction to human beings, society, and the planet than all the rest of history. Of course, capitalism by itself cannot take the credit for all of that; but when we allow industrialism, nationalism, and imperialism, capitalism's blood brothers, into the analysis and recognize their normal and always rising subservience to capital, we have come effectively close to reality.
Beginning in the 1920s, the most consciously and actively political giant corporation in the United States, perhaps in the world, was General Electric,12 its motto "Progress is our most important product."
We can't survive much more of such progress.
Notes
1. Throughout the discussion of the seven, much of what will be said is my formulation, and much of it I am borrowing from Ed Herman's essay (don't tell him!) which, I remind you (and if you can find it), you can read in full in New Politics (Winter, 1998). return to text
2. The world's 225 richest individuals (sixty of whom are in the USA) have a combined wealth of $1 trillion plus. That is equal to almost half of the annual income of the entire world's population. In the USA, the top one percent have more wealth than the bottom ninety-five percent. In 1983 for the bottom twenty percent, their net worth (what you have, less what you owe) was minus $3,000; with the good times rolling since Clinton took office, in 1997 the minus had risen to $5,600.
The first set of figures is from the UN Development Report of 1998, as reported in the New York Times, September 17, 1998; the second figures are from Boston-based United for a Fair Economy, as found in their excellent pamphlet Shifting Fortunes: The Perils of the Growing American Wealth Gap (1999). return to text
3. Primitive as distinct from capital accumulation. The latter takes hold as industrial capitalism takes hold; for it to do so, there must be a propertyless wage-earning class--propertyless not because it was born that way, but because of history. The particular history Marx has in mind for Britain, which is his focus in Capital, was the enclosure movement. That movement had its beginnings as a rivulet in the late medieval period; by the seventeenth century it was a stream becoming a river; as Adam Smith was writing (1776) it had become a flood: a flood that wiped out the landholding (not owning) yeoman farm families in the hundreds of thousands, leaving them unable to survive except by being exploited. Which allowed capital accumulation. return to text
4. Capital, Vol. I, p. 751. return to text
5. A marvelous book for understanding this is Paul Mantoux, The Industrial Revolution in the Eighteenth Century. Nor would you be sorry were you to read an equally marvelous book on the domestic brutalities comprising the foundations of capitalism, as put forth in R. H. Tawney, The Agrarian Problem in 16th Century England. return to text
6. Capital, I (p. 645). Return
7. See Harry Braverman, Labor and Monopoly Capital: The Degradation of Labor in the Twentieth Century. return to text
8. In a letter to a friend, reproduced in Albert Folsing, Albert Einstein: A Biography (1997). Whether Einstein knew or it not, it is pertinent that Marx saw "civilization" as having begun (in Egypt) as the then state of technological progress allowed an economic surplus to be produced and, along with it, class society. return to text
9. Not only has union membership gone down from over one-third to about one-tenth of the private labor force, but unions since then have been increasingly timid about pressing for anything. return to text
10. Greider has all this and more to say in his excellent book One World: Ready or Not--in my view the best book for understanding globalization. Arbitrage is an old speculative technique, most recently used (apart from the foregoing) by the speculators in the $90 trillion per year derivatives markets--whose aims and consequences make those called scum of the earth seem like peanut venders by comparison. return to text
11. As for prosperity, consider this: the following percentages of families were at or below the povery income level for the years indicated (in 1962 dollars):
Level Under $3,000 |
The official (and understated) figure in 1964 for the income below which a family was considered as poor was $3,000. Note that for the 1920s that places half of the population in poverty. The source for the figures is Herman P. Miller, Rich Man, Poor Man (New York: Crowell, 1971). Miller was with the U.S. Census for thirty years before writing that book. return to text
12. And, after World War II, in its very popular TV program "The General Electric Theater," the man who served as its host and all-round public relations performer for this most ideological of companies was Ronald Reagan. Of such stuff is history made. return to text
Four
Veblen and Gramsci
Introduction
Thorstein Veblen (1857-1929) and Antonio Gramsci (1891-1937) had lives about as different as could be, as between two "white" men. A large part of their differences was attributable to one having been born in the U.S. Midwest and the other in Sardinia. Both, however, may be seen as having extended Marxian analysis.
The however must be accompanied by a large and political however: if confronted with that characterization of his work, Veblen would have mumbled a strong (and intricately-worded) denial, of which, more later. But Gramsci would have agreed. He was one of the founders of the Italian Communist Party (1921) and the founder of the party's Italian daily l'Unità (1924)--even though Mussolini and fascism had been in place for two years. He was arrested and imprisoned two years later; there he stayed until in 1937 he became so ill they released him to a hospital, where he soon died.
Gramsci's life was marked by courage and political forthrightness, even though (as will be seen when we discuss his work in subsequent meetings) the most important of his contributions were written while in the fascist prison.1 As for Veblen, and even though I am his substantial admirer and have (I think) learned much from him, it seems appropriate to characterize his works as resembling camouflaged weapons, and his extension of Marx as covert.
This is not intended to suggest that Veblen was a coward; rather (as I have suggested elsewhere) his writings had the consistency and the chaos of a military campaign necessarily fought on so many fronts that the commanding general expects to lose, and therefore fights with less than maximum effort. That is made more understandable when one notes that Veblen's enemies included important parts of his (and our) world: nationalism and war, the business system and political oligarchy, corrupted educational and hired media system--and among other matters, a tendency on the part of the people toward self-destructive irrationality, a tendency nourished and trained by those in power.
Whatever may be true in the foregoing characterizations, and although for different reasons, both Veblen and Gramsci may be seen as having provided essential critiques and revisions, extensions, and updating of Marxian analysis. Major contributions of Gramsci were (1) to show the many ways in which the Leninist theory of revolution was inadequate for countries other than Russia--and, insufficient even for Russia, if one makes the distinction (as Gramsci did) between capturing the State and achieving the basis for a successful revolution--and (2) to specify what would be adequate. We return to that in the February 2000 classes. Now we begin to work through Veblen's main contributions for understanding our own times--about a century later than his times, which, for his writing, went from the 1890s into the early 1920s.
Thorstein Veblen: Consummate Skeptic
Max Lerner, one of the most useful commentators on Veblen, introduces his collection of essays by seeing and explaining Veblen as an outsider. Veblen was born inside, in the sense of having been born on in a successful farm family in the Midwest. But for what soon became important to him, the world of ideas and understanding, he was the proverbial outsider. Imagine him leaving the small (if good) Carleton College in Minnesota to become a graduate student in philosophy at Yale--and arriving there wearing a coonskin hat. It is likely that Veblen did that quite deliberately, mocking at least as much as being mocked. (Still . . .)
It is interesting that one of Veblen's most penetrating essays (contained in Lerner's book) concerns that group which may be seen as the historical outsiders: Jews.2 After noting that the Jews have always been a tiny minority of Europe's population, Veblen points out that they also contributed a disproportionately high percentage of the leaders of Europe's intellectual achievements, whether in literature, music, art, or science. How to explain that?
Veblen argued as follows. From almost the first moment the Jews settled in Europe (having been hounded out of their Middle Eastern origins and, later, from one European country to another) they were caused to live in isolation from their fellow countryfolk--they were exiled to cities and constrained to dwell in ghettoes.
Note cities and ghettoes. Although, like all ancient peoples, the Jews were agriculturists in their early existence, they were almost entirely city folk from the medieval era on, and were ghettoized to "protect" the rest of the urban population from them. That is, they were kept outside the civilization which surrounded them; inside, in the ghetto, they followed perhaps the most rigorous of all religious dicta, ruled over by the Talmud.
The significance of that set of relationships was that the cities of Europe were the centers of what became modern civilization. The Jews, living in but not in the cities, were (so to speak) frozen in their cultural existence. Jews were not prevented from circulating in the city proper, but at the center of their lives was the virtually static life ruled over by an archaic screed.
Imagine growing up in such a setting: you are a young person, you are required to think and feel within a rigorous religious framework whose reference points are, in effect, timeless. But you are surrounded, both literally and figuratively, by a set of social processes that are moving toward modernity at an always accelerating pace. Within that set of processes are the developments of science, literature--everything. What to accept? It would be enough to make you wonder, to stop and think, to become--Veblen argues--a skeptic, doubting everything, forced to think through what seems to be to what is, and from that--at least for some--to what could be.
And skepticism is the basic element of not only science but all creative thinking. Thus, in becoming (shall we say) disproportionately skeptical, the outsider Jews became disproportionately intellectual. This is not to say that any and all outsiders become so inclined and able. More is involved, much of it mysterious (unless, if then, revealed on the psychoanalyst's couch, etc.), much of it having to do with native abilities, and so on.
But given the latter elements, whatever they may be (and they exist in all peoples, everywhere, as possibilities)3 skepticism in itself is much nourished by the ongoing tensions of the lives of European Jews. And, finally to make the point and close this prolonged observation, Veblen, too, was an outsider, and (as in our heading) a consummate skeptic--and an extraordinarily original thinker who used his skepticism as a platform for exposing what he called the force and fraud of his status quo--and for deflating the hot air balloons of ideology and pretense.4 Luckily for us.5
Before turning to his major works, here some suggestions as to what seem to me to be a good order in which to read Veblen--with which many who respect Veblen would disagree.
Veblen wrote eleven books, and numberless articles and reviews. His first and most famous book was The Theory of the Leisure Class (1899) followed by The Theory of Business Enterprise (1904), then The Instinct of Workmanship (1914), Imperial Germany and the Industrial Revolution (1915), The Nature of Peace (1917), and his last book, in 1923, Absentee Ownership and Business Enterprise. There have also been several books of his collected essays, the most important of which is that which is concerned entirely with economics: The Place of Science in Modern Civilization. (And his book on the university was mentioned in an earlier note.)
As in my recommendations concerning Marx, I propose that you not start with "at the beginning"; rather, for our purposes I think it best to begin with Instinct of Workmanship, thence to The Theory of Business Enterprise and Absentee Ownership. And that's how I'll begin and continue in what follows.6
Veblen and Human Nature
Like Marx, Veblen believed that social understanding required historical understanding, whatever else is also needed; and like Marx, he took serious thought to what makes our species tick. Contrary to popular notions, neither Marx nor Veblen was an economic determinist; both, however, took economic life as central in determining human behavior, energized principally--but not solely--by production and reproduction. It is difficult to see how any species could survive otherwise. We have seen what Marx had to say in these respects; now, a taste of Veblen:
The economic life history of any community is its life history in so far as it is shaped by men's interest in the material means of life. This economic interest has counted for much in shaping the cultural growth of communities . . . . The economic interest goes with men through life . . . . It affects the cultural structure at all points, so that all institutions may be said to be in some measure economic institutions.7
In The Theory of the Leisure Class, the basic concepts were the leisure class,conspicuous consumption, and pecuniary emulation. The last--emulation--is the root of conspicuous consumption, and the inspiration for that emulation is the leisure class. And what is that class?
It is what Marx called the ruling class, but which Veblen--always camouflaging his terms to protect himself (while also confusing his potential supporters)--uses to characterize those exempt from industrial employment: that is, who own and control the means of production, the business class (and their political and religious cohorts). And it is important to understand that when Veblen uses the word industry he is referring to those who do the work; when he uses the term business the reference is to those who own and sell what was produced through industry.
That takes us to a key argument of Veblen regarding human nature, the need for self-respect and dignity.8
[T]he usual basis of self-respect is the respect accorded by one's neighbors. Only individuals with an aberrant temperament can in the long run retain their self-esteem in the face of the disesteem of their fellows. Apparent exceptions to the rule are met with, especially among people with strong religious convictions. But these apparent exceptions are scarcely real exceptions, since such persons commonly fall back on the putative approbation of some supernatural witness to their deeds. (Instinct, p. 30)
Veblen goes on with a most prescient discussion for our time, one that helps to explain the success of consumerism and, its other side, the weakening of solidaristic efforts. He saw the members of each subgroup below the leisure class (what we today vaguely call the middle class and even the poor) as straining to lose their identity with their own group (or class) while seeking to be identified with the group immediately above their own--that is, closer to the leisure class. Something like the behavior that (in the 1920s, when consumerism began in the United States) came to be called keeping up with the Joneses.
The picture thus drawn is one of increasingly pervasive and deepening discontent and striving--precisely what modern advertising seeks to spread and deepen. In that social process, the standard of living becomes the level of those above one's own group: a carrot in front of the donkey's nose. Veblen called this--in 1914, mind you--pecuniary emulation:9
. . . an ideal of consumption that lies just beyond our reach; or to reach which requires some strain emotional and financial. The motive is emulation--the stimulation of an invidious comparison which prompts us to outdo those with whom we are in the habit of classing ourselves.
Then, and remembering that he wrote the Instinct as the Gilded Age was reaching its climax but well before the 1920s began, he foresaw the nature of normal behavior today:
The standard of pecuniary emulation is flexible; and especially it is indefinitely extensible, if only time is allowed for habituation to any increase in pecuniary ability and for acquiring facility in the new and larger scale of expenditure that follows such an increase. It is much more difficult to recede from a scale of expenditure once adopted than it is to extend the accustomed scale in response to an accession of wealth.
Seeing things in Veblen's way is a way of also seeing that in addition to the exploitation of workers in production--and the associated demoralization--that modern capitalism also has the need and (through the media) the ability to carry people back to their adolescence, with its insecurities, its strivings, its single-minded aggressiveness--its dangers to one and all.
Before bringing this section of our discussion to an end (to be continued in the classes of 2000), some important additional observations, which will be pursued again later: Veblen's views of human nature were by no means entirely negative. In his Instinct he sees us as having two sides--constructive and destructive. The constructive side of us--the instinct of workmanship--is what prods us to nourish each other, to learn, to create (whether in technology or the arts, etc.); the destructive side--the instinct of sportsmanship--which he called predatory, is that which brings out the worst in us, as killers, as rulers, as those exempt from industrial pursuits. It is the leisure class that preys on all others, playing out their role through exploit, prowess, fraud, and force, rather than through any direct contributions to production or learning or anything worthwhile. And he made it crystal clear that capitalism, nationalism, and imperialism (always using different words than those) bring out the worst in us.
In keeping with the anthropology of his time (and going beyond it), Veblen saw modern institutions as having arisen out of the earlier savage and barbarian social formations (where savage refers to hunting and fighting for maintenance, and barbarian as having gone beyond that to domesticated agriculture, with village life, etc.). But he saw the hunters and fighters as naturally having gone on to rule over barbarian society and, as well, over subsequent civilized society, despite (and in part because of) its greater complexities and strengths. We'll let it go at that for now, except for one final quotation from Instinct (p. 14):
H]unting and fighting are of a predatory nature; the warrior and hunter alike reap where they have not strewn. Their aggressive assertion of force and sagacity differs obviously from the women's assiduous and uneventful shaping of materials (e.g., farming, cloth-making, pottery); it ("men's work") is not to be accounted productive labor, but rather an acquisition of substance by seizure . . . [and] any effort that does not involve an assertion of prowess comes to be unworthy of man.
1. The forthrightness was lessened only to the degree that everything he wrote had to pass a prison censor, which led him to use terms unlikely to arouse the ire of the guards--e.g., ideological hegemony. return to text
2. "On the Intellectual Preeminence of the Jews in Modern Europe," in Max Lerner, The Portable Veblen. return to text
3. Which reminds me to quote the deservedly eminent biologist Stephen Jay Gould on Einstein: "I am somehow less interested in the weight and convolutions of Einstein's brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops." Food for thought there. return to text
4. In addition to going after business and the State, and among others, he punctured the balloons combining ideology with the pretense of academicians (including, of course, economists) in his The Higher Learning in America: A Memorandum on the Conduct of Universities by Businessmen (1918). It was written in 1908, but not published for ten years--and then only after substituting the above bland subtitle, (A Memorandum . . .) for Veblen's original one, which was A Study in Total Depravity. Veblen was fired from at least two universities, both times for allegedly having affairs with other faculty members' wives. Had that charge been applied to all faculty members, it would have resulted in the mass firings of a good number of the professors of all U.S. colleges and universities. Then and now. So it goes. return to text
5. Those wishing to understand Veblen as a person may look for a recent book by Elizabeth and Henry Jorgensen, Thorstein Veblen: Victorian Firebrand (1999). The major work on Veblen is Joseph Dorfman, Thorstein Veblen and His America (1934). Although Dorfman refers to Veblen's persona and his times (as well as his works), he doesn't probe into Veblen's life as deeply as the Jorgensens. This is not to say that they agree fully with my own observations. return to text
6. I have written a small book, Thorstein Veblen (1964), whose aim was to bring together all of Veblen's writings in such a way that those not knowing his positions could get an overall idea and then go on guided by their own interests. The book has been republished just recently by Transaction Publishers (1999)--as a classic. I'm not sure whether I should feel flattered or begin to look for my mortician-to-be--or both. return to text
7. Note: (has counted for) much not all. From The Place of Science, pp. 76-77. return to text
8. A need, when you reflect on it, that is shared with many other animals. When you walk through a zoo and regard, say, the tigers or the bears, and you see them walking madly in circles (and so on), you are seeing animals in a real sense gone crazy. They are well fed, they are safe, and--having been robbed of what Marx would call their species-being--they have lost themselves. return to text
9. The quotations that follow are taken from Instinct, pp. 102-104. return to text
August 8, 2000