Misunderstanding Marx: Brad Delong and the Collapse of Neoliberalism
by Thomas Riggins
The blogosphere has lately witnessed some interest in a lecture, "Understanding Marxism" posted by Professor Brad Delong of the University of California and a former Clinton administration official. Delong calls himself a neoliberal economist and his lecture is such a confused jumble of misrepresentations and misunderstandings of even the most elementary rudiments of Marxism that its refutation will serve the two fold purpose of clarifying some elementary ideas of basic Marxism 101 and of exposing the absolute insipidity of neoliberal thinking.
The first thing that struck me about this article, "Understanding Karl Marx" by Brad Delong, besides how poorly written it was, is how uninformed the author appears to be on both the origins of Marxism and just what Marx thought. It takes a lot of HUTSPAH to write an article when you don't yourself appear to understand what you are writing about.
Take the opening sentence of the article: "In the beginning was Karl Marx, with his vision of how the Industrial Revolution would transform everything and be followed by a Great Communist Social Revolution-- greater than the political French Revolution-- that would wash us up on the shores of Utopia." Already we can see Delong's understanding is based more on Tom Stoppard than Das Kapital.
Anyone familiar with Marx realizes that he was not the "beginning" of the theory and practice of socialism associated with his name. Both he, and his intellectual collaborator Frederich Engels, arrived at their theories based on the work of a long history of thinkers, both in economics and philosophy, that preceded them. Neither were "utopians" in any use of that term that is relevant to the history of early socialist theory or practice, nor would they have juxtaposed a communist revolution as "social" as compared to an inferior French revolution that was "political."
This first sentence is a hint of what is to come. A series of ill informed assertions and claims, without any supporting arguments in most cases, personal opinions and prejudices put forth in a pontifical manner, and value judgments dished out as if they were factual statements. I haven't the inclination to deal with all the nonsense in this garbled attack on Marx, but I will highlight a few examples of what I am referring to to give the reader some basis to evaluate my criticisms.
Delong says that Marx was "part prophet" and gives some of Marx's opinions about the future of India to demonstrate that he was a failure. This from a man who considers Milton Friedman and Lawrence Summers as two of his gurus and was caught as flat footed as were most in his profession by the collapse of the world capitalist economy.
What did Marx say about India? He said that building a network of railroads would be the "forerunner of modern industry" in that country. That this would lead to the economic development of India but it would not solve the problems of backwardness and poverty for the Indian masses. Every thing Marx said in the rather long extract Delong gives from his writings on India has come to pass. All, except one thing. Marx claimed that until socialism is established in the most industrially advanced countries (and thus is introduced to the more backward) human degradation and exploitation will continue under the capitalist system.
To this Delong replies: "Large-scale prophecy of a glorious utopian future is bound to be false when applied to this world." He follows this up with a lot of idiotic comments about the New Jerusalem and Marx's not having visited the island of Patmos (the old stomping grounds of St. John the Divine). Delong clearly thinks that human exploitation and degradation will never end in any kind of socialist future. He is perfectly content with making his own large-scale prophecy and ridicules Marx not so much for prophecy making but for not seeing the future through the eyes of the Ayatollah Friedman-- the true prophet of the glorious future of the unregulated market.
He now tells us what he sees as the "three big ideas" of "Marx the political activist." All three turn out to be theoretical ideas (which were never held by Marx in the simple minded way Delong presents them) and have nothing to do with activism. Marx's activism consisted of forming the International Workingmen's Association, agitating for reforms and improvements in the conditions of the working class (and the abolition of slavery) by giving talks and speeches to worker's groups, and writing popular pamphlets and newspaper articles to raise the class consciousness of working people.
Here are the three "activist" ideas according to Delong. First, before capitalism, exploited people were hypnotized into believing their exploiters "deserved" to take their spoils, but under capitalism "naked exploitation" would be revealed and "class society could not survive." Delong thinks this "completely wrong." But Marx had no such thoughts about the exploited people in pre capitalist times, being fully aware of the numerous slave rebellions and wars against exploitation in the classical world and of the many peasant uprisings in the Middle Ages. As for the awareness of the "naked exploitation" of capitalist society, well the outcome of this is yet to be determined, but Marx was under no delusion that "awareness" alone (i.e., class consciousness) would lead to liberation. He was talking about the struggle of an entire historical epoch, a struggle that is going on at this very moment and we understand very well whose side Delong represents.
Second, the ruling class will never share the social product they control with the workers. Social democracy, which provides income relief and social benefits for the working class will "inevitably collapse or be overthrown" because the right wing doesn't believe it is just to pay workers more than their "marginal product" ( which can only mean to pay them more than the wages socially necessary to reproduce their class). This is very confused thinking. Delong means a faction of the ruling class will never share the wealth because for social democracy to be overthrown by the right wing, then the "left" wing of the ruling class would have to be in power. In a proper socialist state there would be no right wing left to overthrow the workers. But Marx cannot have thought along these lines because in his day there was no distinction between "social democracy" and "socialism." Delong is trying to read back into Marx his limited understanding of twentieth century history.
Third, Marx thought people would work in factories and live in cities, realize their common interests, revolt, and make a just society. Peasants could not do that because they were isolated in the old days and were like "a sack of potatoes which can attain no organization." Delong has obviously missed The Peasant War in Germany when thousands of sacks of potatoes from all over the place rose up to prevent themselves from being mashed, roasted and boiled. Delong tells us that working class consciousness "as a primary source " of identification was weak as ethnos and nationality were more important. He gives 1914 as an example. It is true working class leaders in most countries sided with their governments but not all. The socialist leaders in Russia and the U.S. did not, for example. But workers still thought of themselves as workers for all that. Class struggle and class consciousness still dominate many sections of the working class in different countries and defines their political struggles to this day. Here I think Delong mistook a passing phase for an enduring trend.
Next, Delong moves to "Marx the economist." Here he discusses six of Marx's "big ideas" which he classifies as the "the three goods and the three bads." Lets look at the three goods first.
1. He says Marx was one of the first to realize that periodical crises were a feature of capitalism. By gosh we are having one of them right now-- with Delong's buddies and acquaintances, Tim Geithner, Ben Bernanke and Larry Summers, "in the Hot Seats." But not to worry. Delong tells us he doesn't think that Marx is correct in holding that "financial crises [Marx speaks of crises of over production] were evidence of the long-term unsustainability of the system." Well, that's a relief. "We modern neoliberal economists," Delong writes, "view it not as a fatal lymphoma, but rather like malaria." Delong says we have the tools to save the economy these days-- they are Keynesianism, or if you don't like that, we have monetarism (Friedman). The fact that we can choose, as we "prefer" Delong says, between two conflicting theories gives the impression that neoliberals don't know what they are talking about. In any event, since crises are like malaria they are not "life threatening" but more like "occasional night sweats and fevers." Delong says we have the "economic policy quinine" [two flavors in fact] to manage the problems. I sure hope no one discovers that there are drug resistant forms of malaria. The patient just might die!
2. The second good was that Marx got the industrial revolution right, that it had the possibility to create an abundance to make a great a society where "we people can be lovers of wisdom without being supported by the labor of a mass of illiterate, brutalized, half-starved, and overworked slaves." Delong says that previous societies needed these overworked slaves to produce the surplus that the thinkers and lovers of wisdom needed to live off of. Delong is correct if he thinks Marx saw that industrial capitalism would lead to the abandonment and abolishment of slavery as the major source for the extraction of surplus value for the ruling class and that wage labor (or wage slavery) would become the new means to extract surplus value. In fact feudalism had already abolished slavery. But he is a real nit if he thinks the capitalist system which he is so enamored of, has come anywhere near doing this. Workers in the advanced capitalist countries certainly live better than they did two hundred years ago but they are not part of that "we" that Delong is part of that can sit around loving wisdom all day without depending on the labors of others. The conditions of living of most working people and especially agricultural workers all over the world leaves much to be desired. Marx thought that the possibility of abundance for the people's of the world abided in the creation of SOCIALISM not NAFTA.
3. The Third Good, according to Delong, was that Marx got a lot of the history of England right and his history of the development of capitalism 1500--1850 is still "worth grappling with." Delong agrees with Marx that "the benefits of industrialization" take "generations to kick in" while the "costs of redistributions and power grabs in the interests of market efficiency and the politically powerful rising mercantile classes kick in immediately." This is a round about way of saying capitalism benefits the elite (the capitalists) from the git-go but workers and ordinary people have to wait "generations" to get any benefits. This is the really, really, really slow trickle down theory. Well, so much for the three goods, lets look at the three bads.
1. The First Bad. Delong says Marx holds that increase in labor productivity leads to lower wages for workers therefore capitalism leads to "a combination of obscene luxury and mass poverty." Delong says this is an "empirical question" and he just thinks Marx is wrong. Yes, and Marx would agree with Delong if that is how the problem is formulated. There are issues here. Marx distinguished between absolute and relative wages and said that as labor becomes more productive its RELATIVE position with respect to the capitalist widens. An example would be the gap between the average workers pay and that of the top capitalists was about 1 to 40 twenty years ago and its now about 1 to 400! Marx talked about the ABSOLUTE decline in wages (or income) for the unemployed people who made up the reserve army of labor and others marginalized by society-- the homeless, the mentally ill, the uneducated, etc. The second issue is that Marx was writing about capitalism as it was in the 1850s-- not the capitalism of today that has implemented REFORMS to prevent this absolute immiseration of people. Reforms in large measure prompted by the growth of the labor movement and the influence of progressive demands inspired by the works of Karl Marx. So, Marx was basically correct and the First Bad is not a bad at all.
2. The Second Bad. Delong says Marx thought working for wages was bad and wanted a more humane society so people could "serve their fellow humans." Marx didn't express himself this way at all. He didn't talk about wage labor being "bad". He analyzed how capitalism functions and what its consequences were. Delong thinks he was moralizing about the poor living conditions of the workers in his day. Delong says he thinks "Marx mistook the effects of capitalism for the effects of poverty." What Delong doesn't see is that if you live under a capitalist system and have widespread poverty, that poverty is an effect of the system. Anyway, Delong is all for the "cash nexus" relations of capitalism. People who try to build society on other foundations "do not wind up in their happy place." I suppose we are in a "happy place" today. But that's life. "We neoliberal economists," Delong writes, "shrug our shoulders" and believe "there is no reason why people cannot find jobs they like [he has got to be smoking something-- they can't find jobs at all!] or insist on differentials that compensate them for jobs they don't." Really now. I don't like my job and I insist that I get paid more money as a result. After all wages are not determined by the costs of replacing labor power, but by whether or not I like my job. If I Iike it you can pay me less by the way. This guy is supposed to know something about economics?
3. The Third Bad. We are told Marx thought capitalism "was incapable of delivering an acceptable distribution of income for anything but the briefest of historical intervals." Why? Delong thought Marx was "pushed" to that view by watching the rise to power of Napoleon III backed by a ruling class that thought democracy only lasted as long it could "pull the wool over the workers eyes" and" their property would be saver under a dictatorship." This is actually a meaningless theory as Delong gives us no way to quantifiably measure what he means by "acceptable distribution of wages" or "briefest historical interval." Marx thought that capitalism functions by exploiting the labor power of workers and extracting surplus value from it. In Das Kapital he provides a mathematical formulation of this thesis which allows for the quantification and measurement of the factors involved in this process so that scientific understanding can be achieved. Delong provides only feeling, half baked opinions and vague impressions, all, very subjective, of why he "thinks" Marx is wrong. He tells us that an acceptable income distribution may be hard to maintain but Marx is too rigid in saying the ruling class is "incapable" of providing it. A counter example is Europe in the last 50 years [no U.S. example?] where the creation of "the twentieth- century social democratic mixed economy democratic state can abolish all Marx's fears that capitalist prosperity must be accomplished by great inequality and great misery." Does it now? Social democracy has mixed a great deal of Marxism into capitalism to get that hybrid economy-- progressive income tax, public education, a "well-established public safety net"-- all adopted from the demands in the COMMUNIST MANIFESTO, and not very high on the to do list of American shoulder shrugging neoliberals. Meanwhile, since the "Crash of '08" the working class in Europe has become mobilized to fight back against neoliberal policies which want to shred the safety net and roll back the worker's gains of the last 50 years. In the U.S. workers and their unions are also gearing up to fight back against neoliberalism: you have only to look around you to see that Marx's views are so far superior to the ramblings of Delong and his fellow neoliberals that professional economists (non Marxists) are no longer to be taken seriously.
Delong thinks Marx was a great thinker, almost as great as he himself, (remember the Three Goods) and now wants to figure out how he could have arrived at the Three Bads (which we have seen are really just another Three Goods, for a total of Six Goods.) All Marx's mistakes, Delong says, ultimately derive from two sources: Hegel and Engels.
Lets look at Hegel first. It appears that Delong was bored by reading the first chapter of Das Kapital (he says so) and didn't understand it all. He was especially driven to distraction by the last section on the "Fetishism of Commodities". All that Hegelian dialectic was too much for him-- especially the idea that it is "value" not real "prices" that "are the elements of the real important reality."
Delong declares, "Now I have never found anybody who thinks this way." I am sure that he hasn't. That is why what passes for "economics" in the U.S. is junk science and Delong and his tribe were caught flatfooted by the crisis of 2008. They haven't the faintest idea how the real economy works.
This is one of the reasons Business Week recently asked "What Good Are Economists Anyway?" This was the title of an article by Peter Coy in the 4-27-2009 issue. He writes "Economists mostly failed to predict the worse economic crisis since the 1930s. Now they can't agree how to solve it. People are beginning to wonder: What good are economists anyway." Coy thinks they have some value yet but you only have read Delong to realize they are mostly worthless except as propagandists for the failed free market. I agree with the housing bloger on patrick.net, quoted my Coy, who wrote: "If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables." A few days in the fields and Delong would know the difference between "value" and "price."
Here is how he understands it now. "Things have value not because of the abstraction that socially-necessary labor time is needed to produce them but because of the concretion [?!] that somebody somewhere wants to use it [i.e., a commodity] and has something else that others find useful to trade in turn." That is just pure idealist hogwash. The whole capitalist system boils down to somebody somewhere wants something I have and I want something they have. This is the Iranian Bazaar Model. Because Marx was led astray into his Hegelian version of the labor theory of value he "vanishes into the swamp which is the attempt to reconcile the labor theory of value with economic reality, and never comes out."
Why is Delong so opposed to Marx on this issue? Because if Marx is right Delong knows that capitalism, the system he supports, is an oppressive unjust system. If "the system forces you to sell your labor power for its value which is less than the value of the goods you make [then] human freedom is totally incompatible with wage labor or market exchange" [he should have just said capitalism-- there are markets in non capitalist systems]. Now if capitalism is unjust "that leads the political movements that Marx founded down very strange and very destructive roads." As if the capitalist movements which brought us the international slave trade, colonization, two world wars, and the present mess have not taken us down some "very destructive roads." Well, Delong tells us at this point that he has "done" Hegel and now he will take care of the Engels connection.
To make a long story short, Delong thinks that because Engels' family owned factories in Manchester, and Manchester was indeed a horrible place of dark Satanic mills in 1848, Marx got a bad impression of capitalism. But Manchester was the exception.
If Engels had lived in Birmingham Marx would have seen a different side of capitalism. Birmingham had few large factories and many workers worked from home and or worked in small establishments with the master. In other words, by looking at Manchester, the heart of the Industrial revolution in Britain, instead of Birmingham, a backwater that was lagging behind and still representative of the past rather than the future of capitalist development, Marx misrepresented the facts.
Such is how Delong attempts to "understand" Marxism. With "economists" such as this representing contemporary capitalist "thought" is it too much to hope for that we will soon see the speedy dissolution of this out of date and ruinous social formation?