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June 23, 2002
SYNDICATED: Capitalism’s champion
Practical jokes, last laughs and vengeance would have been more the sphere of Groucho rather than Karl Marx. But Meghnad Desai argues that the great thinker’s most prominent legacy was a huge confidence trick. Capitalism has now triumphed, it is “the only game in town”, statist socialism is “dead”, and, yes, that is what Marx had said would happen all along.
Desai, a London School of Economics professor and Labour peer, performs conceptual somersaults to pursue this contention. Most of the evidence comes from Marx’s economic writings, ignored by everyone apart from Desai, the author of a textbook on the subject. Marx’s revenge is, however, far broader than that, racing through a history of economic thought, which is vital in that it shows what incubates the contemporary consensus in economics.
The key to understanding why Marx is tittering in Highgate Cemetery is the difference between the words Marxian and Marxist. The former refers to those who faithfully study all his works, specifically his analytical writings about the dynamics of capitalism; the latter is the reductive Bolshevism that emerged in the last century, shaped by Lenin’s pamphlet on imperialism and these days incorporating a wide span of belief, including the fringes of fascism.
Marx recognized this trend. On hearing of the establishment of a Marxist party in France, he famously said: “Tout ce que je sais, c’est je ne suis pas Marxiste.” (All I know is that I am not a Marxist.) But he was subsequently ignored. Marxism in the twentieth century became defined by interpretations such as Lenin’s Imperialism: the highest stage of capitalism.
In the 1920s Das Kapital dropped off the Marxist’s must-read list. Imperialism became the key text beside The Communist manifesto. Almost all debates about Marxian economics, particularly on the fall in the rate of profitability over time, were ruled out as “uninteresting scholasticism”. “The answers were known, Marx became a bundle of catechisms,” writes Desai.
Marx developed some pioneering economics. He was the first economist to incorporate an explanation of boom and bust within his theory. He constructed a simple model to show how profit came from the exploitation of the “surplus value” of labour. This led to the ups and downs of profitability. But in volume two of Das Kapital Marx calculates a numerical scheme of a capitalist economy that does not run into crisis and enjoys perpetual growth.
The latter volumes were published after his death, after Engels assembled Marx’s notes. The famous words about the tendency to a falling rate of profit giving rise to the end of capitalism is hardly mentioned in volume three, argues Desai, and mentioned only as a possibility in volume one and in The Communist manifesto. So this misconception, misreading, or perhaps highly selective reading, of Marx has led to a vulgar simplification of what was a complex and nuanced body of work.
In the process of explaining Marx’s revenge, Desai illuminates the work of Smith, Hegel, Popper, Polanyi, Keynes and Samuelson. A similarly revisionist tract would show that Adam Smith was not quite the market fundamentalist he is assumed to be. Economics is more than a social science. It has become the theology of public policy in liberal democracies, justifying how societies are taxed, the ownership of the media and immigration policy. As its norms encroach on many other disciplines, such as politics, sociology, the law, even biology, its base assumptions and its evolution require a mainstream dissemination.
This is an important book because of whom it is directed at. Nobody in Wall Street or the City of London will care that Marx is now on their side. But for those who still express moral indignation at pronounced and prolonged inequality and poverty, the market is the most likely rescue route.
Whether it is called the market, or capitalism, or neoliberalism, it is a tool that has not yet been harnessed fully for poverty alleviation. As Desai points out, the market is a tool for eliminating scarcity. It is departures from the free market, such as big subsidies for agriculture in rich countries, that are doing most to solidify poverty. Even from a tactical perspective, arguments expressed in the language of the free market are listened to, whereas moral sentimentality about excessive inequality is worthy but ineffective. — Dawn/Observer news service
Marx’s revenge
By Meghnad Desai
Verso
ISBN 1-85984-644-0
383pp £19
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