I was recently invited to lecture on Marx and Marxism at the CUNY College of Staten Island. These are my slides, which may be a bit too verbose for a typical presentation. I typed more text in them than prudent, because I wanted those not attending the lecture to be able to follow its content more easily.
Although I concluded the slides by calling young people to study Marx seriously, I also said that the “real struggle” of our times, if one is to stick to the spirit of Marxism, is not to restore some “true Marxism” or anything of the sort, but rather to deal with our situation here and now, what affects us most gravely and immediately and, hence, we are in a better position to influence. I said that if the doctrines of Marx and his followers are to prove helpful to our “real struggle,” it will be only after a process of critical appropriation, guided by a proper consideration of our concrete needs and powers. I tried to paraphrase Marx’s famous words in the 18th Brumaire of Louis Bonaparte (1852), namely that our revolutions will not find their imagery and poetry in the ideas of 19th or even 20th century socialists, but that we will have to create them anew (though hopefully not from scratch, but create them nonetheless) in response to our own circumstances.
A propos of the Chan-Zuckerberg initiative to save in taxes while pretending to care about the public good, following on the leads of Gates, Buffett, and others, and also of the discussion on whether Trump’s fortune would have been best served by his taking his inheritance and plugging it in a passive indexed stock fund, I feel that I need to clarify this for those of us trained in the habits of mind of the economists:
One may think that a person’s marginal contribution (which in an idealized competitive environment translates into her/his income) is attributable to that individual and, therefore, the individual deserves it. But this is a big fat fallacy. One can argue that the marginal product results from the addition of that individual to the “production function” just as much as one can say it results from the pre-existing conditions, the individual producers already in the mix, the capital infrastructure, etc. Since the individual in question is not responsible for the pre-existence of her/his technological and social context (the product of prior history), then there’s no theory of dessert here.
Decomposing in one’s mind a complex phenomenon into its more elementary parts does not reduce it to them in reality. The actual phenomenon is an “emergent property” of the elements in mutual interaction.
Update: This entry expands on an idea I posted on my Facebook page regarding this piece in Die Spiegel:
My ironic comment on Facebook was:
It is “their” money (replies the Die Spiegel’s philistine), money which they made all on their own, by themselves, with no help from anybody else, with no help from workers or from the rest of society or from the legacy of prior generations of humans who bled, sweated, and cried rivers. They could have made just as much money had they been living alone in some other solitary planet, like cosmic Robinson Crusoes. In fact, living alone in some other planet, they would have made substantially more money, since they would not have had to pay any taxes to anyfreakingbody. Ship them to Mars so they can thrive unencumbered by any social more.
Paul Krugman column today “marks to market” his early prediction that, from the get-go, the European monetary union was bound to “fail.” That may seem impressive to some readers, but I am going to argue next that Paul Krugman’s apparent prescience is evidence of a formalistic or, perhaps more appropriately, a reified conception of social life, and that this reified or fetishistic conception of social life is a big part of the problem. Here’s why.
By and large, we live in a society in which capital rules. In this setting, the essence of the social condition of humanity lies in the distribution of wealth ownership (i.e., who winds up deciding on, using, or consuming the subsequent flow of social production, a.k.a. income). The question of who, right now, owns the productive wealth of society (i.e. who will control and benefit from the deployment of such productive wealth over time) is the fundamental social question. (Notice the “right now” conditional clause in my sentence, as the present is the only real time, as Octavio Paz used to say. The past was, but is now irretrievably gone, and the future is not here yet.)
Any “mechanism” by which wealth ownership is transferred from person to person right now — be it exchange in markets, fiscal transfers, gift giving, etc. — either increases or not the measure of control that capital exercises over our lives at this very moment. Non-owners, regular working people, obviously tug the rope in exactly the opposite direction so they enhance their current control over their own lives.
People like Krugman (let’s call them “economists”) focus on the “legal fiction” of ownership. They take the content of that legal form as warranted. And insofar as the “legal fiction” matches the “economic content” (who effectively owns what), then the economists are on target. But crises are precisely the situations in which the divorce between the “legal fiction” of ownership and its effective “economic content” suddenly bubbles to the surface of life.
Consider the subprime mortgage boom. You have poverty in the U.S., exacerbated by four to five decades of real-wage stagnation. Working people bearing the brunt of the economy’s “systemic risk.” That is the tragic reality that a term such as “poverty” or “inequality” captures. Capital seeks its own expansion, people and nature be damned (as Pope Francis so eloquently puts it in his Laudato Si), but capitalists need people not only to make what they sell but also to buy it, and impoverished working people as consumers lack the ability to pay in cash for their purchases. Creative bankers offer them loans, persuade them to borrow against their future (and very uncertain!) income. (By definition of poverty, the future income of the poor is very uncertain.) The bankers don’t need to try very hard. Impoverished workers will jump at the prospect of receiving credit.
What can workers do in the situation? If you are given a credit line, and you are hungry, need medical care, etc., by all means you are going to eat, have your medical needs taken care of, etc., even if you must max out your credit card! If you need shelter, you will borrow to buy a house, even if you may eventually have to face eviction! Etc.
But if many people do that, that’s unsustainable! — Paul Krugman will argue; and he’ll be very right, formally so. It looks like a matter of simple arithmetic. You can project people’s current income (or some other likely income) and see whether a debt of a given size can be repaid or not. But this kind of exercise is based on assumptions that we must question, however warranted they may appear to be; namely, that the face value of debt is to be honored, that the state will deploy resources to enforce the debt, that people will comply, etc.
When the crisis comes (and it’ll come, indeed it came already, and it will recur no doubt while capital continues to rule our lives)… well, people will cross the proverbial bridge when they come to it. Working people will then have to realize that wealth redistribution is required to make legal form correspond to economic substance and, furthermore, that the way in which people access the entire stock of society’s wealth needs serious reorganization. Meanwhile, as they say in Mexico: “Who can take away what we already danced?” Who can take away the food we already ate, the medical services we already received, the housing services we already enjoyed?
It is a matter of available alternatives. If the argument is that working people should not enter into a mortgage contract when they can instead receive housing for free, then the formalistic argument is exactly right. However, if the argument is instead that working people should go homeless now because borrowing to buy a house will expose them to mass foreclosure and humiliating eviction tomorrow, then the argument is vacuuos. If a more secure way exists for people to meet their needs, people will take it. If it does not exist, people will take their chances. Simple as that. (I know there are intermediate scenarios between free housing and homelessness, but I am taking the polar extremes to emphasize my point.)
The key point is that when tomorrow comes, the enforcement of financial claims will have to collide with the reality on the ground. It will not be a slam dunk. Those financial claims will have to be viewed as legitimate for people to comply with them, their enforcement will entail a cost, the fact that their enforcement requires to mobilize the machinery of the state is also crucial, and that terrain is contested politically.
The fight, of course, will continue, though now, in the midst of the crisis, over who will have (and how much) access to present and future food, medical care, housing, etc. That is the essential Gordian knot that workers must cut if they are going to survive and even emerge stronger from the crisis. Possession is not too bad a position from which to bargain. The onus is on the creditor to collect, to carry out an eviction, etc. Maybe under these new conditions, we’ll be able to wage a better fight for public health care, public housing, etc.
Back to the story about the European monetary union. In the 1990s, when the euro was being put together, Krugman’s argument was that, without fiscal unity, the euro would be something akin to the old, rigid, and failed gold standard, making up for a strong cycle. The larger the euro boom, the more catastrophic the upcoming euro bust. Back then, one could see their point, but there wasn’t or couldn’t be much of a left opposition in Greece or Spain to getting on the euro train. This is why the predictive marksmanship of Krugman et al is not as impressive as it seems at first sight. Back then the debate was academic in the ivory-tower sense. Politically, the argument was technocratic and, hence, untimely. If I had been the left in Greece, I would not have cared much about the issue, because whether to join the euro or not would be largely beyond my control and therefore irrelevant to the immediate needs of working people in Greece at the time!
Was it not reckless, irresponsible, etc. to go along with the euro? No. It was not. Back in the late 1980s and 1990s, when the monetary union was being cooked, the workers in Greece, Spain, etc. were in no position to act “prudently” and “responsible” with regard to the monetary union. Under the circumstances, the prospects of a booming capitalist economy advanced the immediate interest of these workers. Remember, those were the times when the Cold War was ending, there was “no alternative” to capitalism, etc. In this fundamental sense, Krugman and those who argued like him were wrong back then!
But regardless of who was right or wrong, in the abstract or in the concrete, it is not too bad an outcome when the veil of legality or finance that clouds the effective distribution of wealth evaporates before our eyes, and the balance of class forces between wealth owners and direct producers appears to us in all its raw nakedness.
I spent the weekend at the EEA annual conference in Manhattan, and as usual when mainstream economists interact with Marxists, and vice versa, these gatherings become much like a Babel tower, where people exchange confused stares once the respective vernaculars fail to communicate.
So, here, let me attempt some translation and clarification of key concepts:
We Marxists believe that mainstream economists don’t get the point of Marx’s labor theory of value, which in fact is —duly generalized — a labor theory of any and all social structures. The economists’ interest is limited to pinning down relative prices. The issue of how much importance a society (almost entirely reduced to markets) attributes to one good in comparison to that of another good consumes all their curiosity. (Among the economists who share the view that the theory of value is all about relative prices, one may include Joan Robinson, Piero Sraffa, and virtually the entire Cambridge UK crowd). But the what, in the last analysis, is being compared appears irrelevant to them. Samuelson (1952, “Economic Theory and Mathematics,” AER 42(2), pp. 62-63) famously quipped:
I suspect that certain cultures develop certain ways of tackling problems. In nineteenth century German economics it was popular and customary to ask about a problem like interest or value: What is the essence of interest or value? After this qualitative question is answered, then the quantitative level of the rate of interest or price-ratio can be settled. Now I happen to think that this is sterile methodology. But I cannot blame it on the German language.
Menger said that mathematics was all very well for certain descriptive purposes, but that it did not enable you to get at the essence of a phenomenon. I wish I thought it were true that the language of mathematics had some special faculty of drawing attention away from pseudo problems of qualitative essence. For, unlike Menger, I should consider that a great advantage.
In spite of Samuelson (and Sraffa, etc.), I will argue that, when mainstream economics (from Pareto on) moved away from utilitarianism and emptied the concept of utility from any “metaphysical” content — i.e. it turned it into an abstraction that only represents a (binary) preference relation predicated on a set of alternative uses of wealth (as a premise on which to erect the demand relation, etc.), they made a fateful move that, on the one hand, got them closer to the true nature of social (e.g economic) relations, while, contradictorily, on the other hand, distanced them from such true nature rather drastically.
How did this operation get them closer to the truth? They got closer to the truth because with their new formalization they were capable of clarifying more rigorously the quantitative structures involved — namely the determination in a highly abstract sense of the vector of relative prices that at each given time guides the allocation of (in Marxist terms) the productive forces of labor in a highly idealized capitalist setting. And, a well-versed-in-Hegel Marxist would admit that a quality is a rather limited, one sided abstraction unless you determine its quantitative bounds — its measure.
How did they get further away from the truth? Firstly, they revealed with their action how scared they were about touching up on the ultimate human substance involved in so-called “economic processes”: the qualitative aspect of value burned their hands. And why wouldn’t that be a legitimate matter of inquiry? The utilitarians, at least, had the notion that the calculus of human pleasure and pain underpinned the allocation of the productive forces of labor across alternatives and, in the last analysis, across the various human needs. The use of this framework by Menger and the founders of the marginal approach was a natural step. Their aversion to socialism may have prevented them from examining Marx’s propositions with an open mind. The feeling was mutual. On the other side of the divide, the Marxist response (by an overworked Friederich Engels,[*] and then by Werner Sombart, Rudolf Hilferding, Nikolai Bukharin, et alia) was one of impatience and rejection. The socialist movement seemed to be in a roll: No time to doubt it’s own established doctrine.
As a result, the point was missed. And for this, I address now my fellow Marxists. With the benefit of hindsight: A more dialectical reply to the marginalist challenge would have pursued the thread of utility to its logical conclusion:
- To start, accept prima facie the notion that the determination of relative market prices (or, over the long run, as the noise of short term variations smooths out, of the relative prices of production) has some connection with what people anticipate to experience as they use or consume the goods involved.
- Note that this type of subjective activity (the experience of consumption in the narrower sense, if limited to the sensations of pleasure and pain) is rather passive and doesn’t quite distinguish us, humans, from other animal species. The higher functions of our bodies, those we convey in the category of rational thought, are absent or eclipsed. In fact, what is specifically human in our metabolic exchange with the rest of nature is not consumption in that narrow sense, but production: the purposeful or conscious transformation of nature into a world for us, a world that fits our designs or serves our needs as humans.
- Remark that, in this light, consumption is only specifically human as it becomes more purposeful and, hence, a mere subordinated element of the process of production considered in its recurrence and totality, i.e. an element of the process of reproduction.
- Point out that that the guiding force in the process of production is, indeed subjective activity: conscious human activity, i.e. human labor.
- Note also that, once consumption is viewed as a specifically human activity, then the whole point of consumption — i.e. of the personal production of oneself — is the expansion of that specifically human attribute: the productive force of our labor. For, why do humans consume in the last analysis? If it is for mere survival as our instincts dictate, then we are barely raising above the rest of nature. So, what do we reproduce ourselves for, if our reproduction is to be mindful? It stands to reason that qua humans we reproduce ourselves only to expand our humanity, which amounts to saying: we reproduce ourselves to expand the productive force of our labor. As I like to put it, paraphrasing the title of Piero Sraffa’s main work, social life is the production of humanity by means of humanity, which is to say, the production of productive force of labor by means of productive force of labor.
- So, admit that the marginal school was right that value was about determining the relative importance of things for us, which indeed requires comparing their relative usefulness, but that this does not deny that the comparison is, ultimately, a comparison of relative “costs” and “benefits” in terms of the productive force of labor. It is all about us. We cannot measure the importance of things for us but by reference to ourselves. Things matter as a projection of our humanity. To paraphrase Protagoras: We humans are the measure of all things.
- Remark that since the division of labor, the existence of labor as a fragmented mosaic of diverse activities embodied by different individuals, is only an element or expression of the combination or social unity of labor. No society and, hence, no humanity are possible if labor remains divided.
- So, note that the relative importance of goods, i.e. the determination of their value, is not individual, but social in character — that the social character of labor under capitalism is mediated by market exchange, that the aparent autonomy of the private producers from one another is relative and, even illusory, and thus that the values of commodities represent a synthesis expressing the social validation of individual valuations (of individual needs and powers). Marx was entirely justified in presenting usefulness or use value as only a premise, but not the specific content or “substance” of value. Value is, like Marx suggested in volume 3 of Capital, the particular historical form that the relative social importance of goods takes under capitalism — thus implying that deciding on the relative social importance of goods (and its proper practical quantitative determination) will remain a task also in an organized, planned, socialist society.[**]
- It is only in this sense, of not acknowledging the social character of seemingly independent private production under capitalism, not seeing that the division of labor imposed in fact a rigid interdependence among the different units and branches of production considered as a totality, that the dismissal of the determination of the content of value in terms of utility (in the utilitarian sense) as subjective and, hence, partial, and the affirmation Marxian determination of value in terms of social labor as (socially) objective and, hence, more comprehensive was apt. Only in that sense: labor, at its point of direct existence as individual labor, is as subjective an activity as the enjoyment of consumption.
- Conclude that, if society is this small portion of the universe that has evolved dynamic, active self reflective properties that we characterize as human proper, then utility dissolves into labor.
[*] In the preface to the volume 3 of Capital (in M&E, Collected Works, vol. 37, p. 13), Engels devoted half a paragraph to, in passing, deride the “Jevons’ and Menger’s theory of use value and marginal utility.”
[**] Given the scant importance Marxists have paid to this passage, here is the quote (Marx, Capital, vol. 3, in M&E, Collected Works, vol. 37, p. 868), with my emphasis:
Although the form of labour as wage labour is decisive for the form of the entire process and the specific mode of production itself, it is not wage labour which determines value. In the determination of value, it is a question of social labour time in general, the quantity of labour which society generally has at its disposal, and whose relative absorption by the various products determines, as it were, their respective social importance.
And here is Engels (Anti-Duhring, in M&E, Collected Works, vol. 25, pp.
Hence, on the assumptions we made above, society will not assign values to products. It will not express the simple fact that the hundred square yards of cloth have required for their production, say, a thousand hours of labour in the oblique and meaningless way, stating that they have the value of a thousand hours of labour. It is true that even then it will still be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labour-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan. People will be able to manage everything very simply, without the intervention of much-vaunted “value”.*
* As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labour on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Französische Jahrbücher, p. 95.a) The scientific justification for this statement, however, as can be seen, was made possible only by Marx’s Capital.
Is there something fundamentally important, not just formal but substantive, that Marxists miss by not taking seriously the mainstream approach to economics? I believe so. That is the concept of duality of resource allocation and value. This, I will argue, is something that Marx did see (I will show evidence), but Marx’s followers (with the exception of Oskar Lange and the mathematical economic schools in the Soviet Union, Poland, etc.) by and large, couldn’t even see it go over their heads. I will discuss that in my next post.
There is no point in pandering to the biases, if not outright malice, of those with power and wealth who tear off their delicate garments condemning the rioting actions in Ferguson — or of those less wealthy and less powerful who gladly drink their kool aid. And that is when these actions have been indeed willfully taken by regular people, rather than being cop-staged provocations (more frequent than one would want to believe).