Socialism and Errors

A tentative thesis: 

The Soviet Union towards the end of  WWII made a mistake similar to the one the Paris Communards made who did not raid the Paris central bank (as Marx thought would have been sensible to pay their soldiers, etc), they did not invade Switzerland and confiscate the ill gotten stashes of the European bourgeoisie who evaded the affects of the carnage and continued to play the stock markets. Instead they acted, post war, in an increasingly imperialist fashion, emulating the bourgeois countries, imposing socialism and giving it, therefore, a bad name across Europe. Why leave Switzerland, the bank of the European bourgeoisie and one big bankroller of the Nazis, untouched? It is unfathomable if you are a communist to grasp why any communist would do this. The centre of European capitalism was, and remains, Switzerland. The answer to this question is key.

We are now living, therefore, in the aftermath of a kind of socialist funk, the result of a lack of resolution and theoretical understanding of Marxism. This is why Greece is so fascinating as a case in the crisis. The Cold War policies that made the Allies turn on the local communists who had bravely fought the Nazis meant Greece was facing years of rightist corruption and money lending to support an unpopular capitalism, it led to the reign of the Generals, and then to the joining of the Eurozone and now Greece’s massive debt crisis, all of it still being fuelled by debt.

Marx and Democracy (notes)

Just as it is not in fact religion that creates man but man who creates religion, so it is not the constitution that creates the people but the people which creates the constitution. In a certain respect, Marx maintains, democracy is to all other forms of the state what Christianity is to all other religions: deified man under the form of a particular religion, and, in the same way, democracy is the essence of every political constitution: it is socialized humankind under the form of a particular constitution of the state. Marx says (note male referent) that while Hegel's idealism proceeds from the state and makes man into the subjectified state, democracy begins with man and makes the state objectified man. He directly counterpoises democracy to Hegel's idealism. From this it becomes evident that "all forms of the state have democracy for their truth, and for that reason are false to the extent that they are not democracy". Marx explains that the right to pardon is the ultimate expression of contingent and arbitrary (undemocratic) choice, and significantly this is what Hegel makes the essential attribute of the monarch: he defines the source of pardon as the 'self-determined' or 'groundless' decision [die grundlose Entscheidung].

...the Estates are, according to Marx, the sanctioned, legal lie of constitutional states, the lie that the state is the people's interest or the people the interest of the state. From here he proceeds to the question of elections: staying within the critique of Hegel, he criticizes the concept of representation: in a choice of such individuals, as have a better understanding of these affairs than their electors have, it is supposed to follow that the relationship which deputies have to their electors is not that of agents. But he says it is only by means of a sophism that Hegel may declare these individuals understand these affairs 'better' and not 'simply'. His conclusion that they do understand these affairs better could be drawn only if the electors had the option of deliberating and deciding themselves about public affairs or of delegating definite individuals to discharge these things, precisely if representation, did not belong essentially to the character of civil society's legislature. But in the state constructed by Hegel representation constitutes precisely the legislature's specific essence, precisely as realized. What is significant for Marx is that Hegel here designates trust as the substance of election, as the substantial relation between electors and deputies, and trust is a personal relationship.

Excerpts from "Marx, Democracy, and the Aesthetic Level" by Gary Tedman.

Neoliberalism, Marx and the 'Marginal Revolution'

Neoliberalism is a contemporary form of economic liberalism that emphasizes the efficiency of private enterprise, liberalized 'free' trade and open markets to promote globalization (a term which might also be interpreted as neo-imperialism). Neoliberals therefore seek to maximize the role of the 'private sector' in determining the political and economic priorities of the world. Neoliberalism seeks to transfer control of the economy from 'public sector' (or state) to the 'private sector' under the belief that it will produce a more efficient government and improve the economy.

The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's 'Washington Consensus', - a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations such as the International Monetary Fund (IMF) and World Bank. Though apparently not Williamson's original intent, the Washington Consensus has anyway become synonymous with the ideas of neoliberal market fundamentalism.

Some claim that Chicago School economists are associated with Washington Consensus The 'Chicago school' of economics describes the neoclassical school of thought within the academic community of economists focusing around the faculty of The University of Chicago, sometimes referred to as the 'freshwater school' of economics in contrast to the 'saltwater school' based in US coastal universities, notably Harvard, MIT, and Berkeley; Chicago is considered one of the world's foremost economics departments; Milton Friedman taught there for more than three decades. A significant body of economists and policy-makers argues that what was wrong with the Washington Consensus as originally formulated by Williamson had less to do with what was included than with what was missing in it, arguing that it was an incomplete project, and that countries in Latin America and elsewhere need to move beyond 'first generation' macroeconomic and trade reforms to a stronger focus on productivity-boosting reforms and direct programs to support the poor.

How did we get to this point in economic science?

'Classical economics' is the term used for the first modern school of economics. The publication of Adam Smith's Wealth of Nations in 1776 is considered to be the birth of the school. Perhaps the central idea behind it is on the ability of the market to be self-correcting as well as being the most superior institution in allocating resources. The implicit assumption is: that all individuals maximize their economic activity. At the root of Smith's modernity, though, is his and Marx's philosophical attitude towards the object of their enquiry and the way this grasped the concept, crucial to economic theory, of value.

The so-called 'paradox of value', or the diamond–water paradox, is the apparent contradiction that, although water is more useful in terms of human survival than diamonds, diamonds command a higher price in the market; Adam Smith is the classic presenter of this paradox. To paraphrase Smith: the one may be called 'value in use' and the other, 'value in exchange', the things which have the greatest value in use often have little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use; nothing is more useful than water, for example, but it will purchase almost nothing; almost nothing can be gained in exchange for it, whilst a diamond has scarce any use-value; but a very great quantity of other goods may frequently be had in exchange for it. For Smith, the real price of every thing, what every thing really costs to the person who wishes to acquire it, is the toil of acquiring and making it, so Smith thereby denied a necessary relationship between price and utility, and price in this view was related to productive labor. In this he was followed by Marx. Advocates of the labor theory of value saw it as the philosophically materialist resolution of the paradox of value.

The so-called 'marginal revolution' which is based on the subjective theory of value, that is understood to have occurred in Europe, led by Carl Menger, William Stanley Jevons, and Leon Walras, gave rise to what is known as the neo-classical synthesis. As we have seen, Marx had developed and used the materialist concept of use-value versus exchange value. Use-value was classically understood to give some measure of objective material usefulness. This was later 'rebranded' in the 'marginal revolution' as 'marginal benefit', which is understood as the utility of a thing counted in terms of 'common units of value', while exchange value is given as the measure of how much one good was priced in terms of another, namely what is now called relative price. The subjective theory of value identifies value as based in the inner desires and needs of the members of a society, as opposed to value being inherent to an object that exists independently of any observer or user. Once this idealist epistemology is taken as the given grounds, it is able to refer to the units of value as subjective units. Today, the marginal utility of a good or service is seen as the utility gained (or lost) from an increase (or decrease) in the consumption of that good or service, so it is the action of subjective consumption that defines the value not the objective existence of the object. Economists therefore sometimes speak of a law of diminishing marginal utility, meaning that the first unit of consumption of a good or service yields more utility than the second and subsequent units.

The concept of marginal utility played a defining conceptual role in the (so-called) marginal revolution of the late 19th century that led to the replacement of the labor theory of value of Adam Smith and Karl Marx by neoclassical value theory in which the relative prices of goods and services are thought to be simultaneously determined by marginal rates of substitution in consumption and marginal rates of transformation in production, which are apparently equal in 'economic equilibrium'. This neo-classical formulation had also been formalized by Alfred Marshall. However, it was the concept of the general equilibrium of Walras that helped solidify the research in economic science as a mathematical and deductive enterprise, the essence of which is still defined as neo-classical and makes up what is currently found in mainstream economics textbooks today. The key implication is usually that what is new (revolutionary) here is the scientific rigor, i.e. that Marx specifically is not supposed to have. In actual fact this rigor is precisely what is missing in this fudge and mystification of use value and exchange value through the concept of the marginal, which serves to obscure its idealist philosophical roots.

Macroeconomics in its modern form began with the publication of John Maynard Keynes's General Theory of Employment, Interest and Money in 1936. Keynes projected an aggregated framework to explain macroeconomic behavior, leading us to the current distinction between micro and macroeconomics. According to Keynesian theory, some individually-rational microeconomic-level actions—if taken collectively by a large proportion of individuals and firms—can lead to inefficient amassed macroeconomic outcomes, wherein the economy operates below its potential output and growth rate. Such a situation had previously been referred to by classical economists as a general glut, which in Marx is described as overproduction. Keynesian economics argues that private sector decisions sometimes lead to these inefficient macroeconomic outcomes and, therefore, advocates interventionist policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the 'business cycle'. Of special importance in Keynes' theories was his explanation of economic behavior as also being led by 'animal spirits'. In this sense, it limited the role for the so-called rational (maximizing) agent. In fact, this foundational ideology of a division of the rational ('angelic') and the irrational ('bestial') in the human subject seems to underpin the whole of modern post Smithian-Marxian economics, as well as the accepted division of macro from microeconomic theory. It avoids confronting the concept and existence of contradiction in the economic system by founding any antagonism ultimately in innate human attributes; although this underlying thesis is rarely invoked as such (it could sound racist), it is nevertheless always implied.

The neo-classical school dominated the field up until the event of the Great Depression. When the Great Depression struck, classical economists (other than Marx), had difficulty explaining how goods could go unsold and workers could be left unemployed, thus with Keynes's publication, certain of its assumptions were rejected. Keynes argued the solution to the Great Depression was to stimulate the economy ('inducement to invest') through a combination of two approaches: a reduction in interest rates and government investment in infrastructure; the theory has it that investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so on and so forth. The initial stimulation is seen as beginning a concatenation of events, whose total increase in economic activity is a multiple of the original investment; it does not explain why the situation arises in the first place, i.e. why the investments that have taken place always/already in the economy are not producing this effect, or the answer is left simply as a fault of policy. The Post-World War II period saw the widespread implementation of Keynesian economic policy in the United States and Western European countries. Its dominance in the field by the 1970s was best reflected by the controversial statement attributed to ex-President Richard Nixon and economist Milton Friedman: "We are all Keynesians now."

A central conclusion of Keynesian economics is that, in some situations, no strong automatic mechanism moves output and employment towards full employment levels. This conclusion conflicts with economic approaches that assume a strong general tendency towards 'equilibrium'. In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of general equilibrium allow for price adjustment to eventually achieve this goal. General equilibrium theory seeks to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium. What here seems to have been omitted is the political as such, politics is subordinated to a technical and instrumental understanding of the problem, and (for instance) an effect, prices, are treated as a cause, or as both cause and effect of its own function. Generally speaking any material foundations or groundings are lost.

With microeconomics, macroeconomics is now one of the two most general fields in economics; the fact that macroeconomics is 'smaller' than economics seems to render the terms faintly ridiculous, notwithstanding. Macroeconomics (from Greek prefix "makros-" meaning "large" + "economics") is the branch of modern economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. They develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior 'determines' prices and quantities in specific markets.

New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis on the neoclassical framework; specifically, it emphasizes the importance of supposedly rigorous foundations based on microeconomics. Macroeconomics descended from the hitherto divided fields of business cycle theory and monetary theory. The quantity theory of money was particularly influential prior to World War II. It took many forms including the version based on the work of Irving Fisher. His work on the quantity theory of money inaugurated the school of economic thought known as monetarism. Both Milton Friedman and James Tobin called Fisher "the greatest economist the United States has ever produced." New classical macroeconomics strives to provide neoclassical microeconomic foundations for macroeconomic analysis; this is in contrast with its rival, the new Keynesian school that uses microfoundations such as 'price stickiness' and imperfect competition to generate macroeconomic models similar to earlier, Keynesian ones.

Problems arose in the Keynesian theory in the 1970s and early 1980s with the onset of 'stagflation'. Stagflation is a situation in which the inflation rate is high and the economic growth rate slows down but unemployment also remains high. The reasons for this were and are often placed upon factors such as oil. The decade of the 1970s saw rising oil prices caused by an OPEC oil embargo on the United States. This oil embargo ostensibly caused both high inflation and a steep economic downturn that in turn generated high unemployment. However, the question arises: what caused the high oil prices in the first place? Is the price of oil an extra economic factor, or totally political? And what was the politics based on which here apparently 'caused' the higher price of oil, if not economic factors? Keynesians were perplexed by the outbreak of stagflation because the original concept of the Phillips curve ruled out concurrent high inflation and high unemployment. The Phillips curve is a historical apparent inverse relationship between the rate of unemployment and the rate of inflation in an economy. Put simply, the lower the unemployment in an economy, the higher the rate of inflation should be. The new classical school emerged in the 1970s as a response to this failure of Keynesian economics to explain stagflation.

During the 1970s in the United States and several other industrialized countries, the Phillips curve concept and analysis became less popular. The new classical and monetarist criticisms led by Robert Lucas, Jr. and Milton Friedman respectively forced the rethinking of Keynesian economics. In particular, Lucas made the 'Lucas critique' that cast doubt on the Keynesian model. The Lucas critique suggested that if we want to predict the effect of a policy experiment, we should model the 'deep parameters' that govern individual behavior, because only such deep models can avoid merely aggregating previous policy; only then can we predict what individuals will do, taking into account the change in policy, and then aggregate the individual decisions to calculate the macroeconomic effects of the policy change. His idea of deep, though, only meant relating to preferences, technology and resource constraints and not a deeper theoretical model in the sense of its philosophical foundations (such as the theory of value). This nevertheless strengthened the case for macro models to be based on microeconomics.

Milton Friedman (July 31, 1912 - November 16, 2006) had already proposed before the phenomenon of stagflation that the Phillips curve did not exist and would fail. On this basis he theorized the existence of a 'natural rate of unemployment' that contradicted the then accepted relationship between inflation and unemployment rate, and this became a concept fundamental to monetarist economics, on which also worked Lucas Papademos (who was to become the 'technocratic' prime minister of Greece during the 2011-12 years of the crisis,; in January 2012 he warned that workers would have to accept cuts in income for a default to be avoided, he also told business and labor leaders that the 'troika'—the European Union, the IMF and the European Central Bank—was looking for Greece to take steps to open up so-called closed professions, as well as adjustments to the minimum wage, abolition of Christmas and summer vacation 'bonuses' and automatic wage increases) and Franco Modigliani. As far as many economists were concerned, the Phillips curve had little or no theoretical basis anyway. Critics like Friedman argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and an only nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result.

In economics, 'adaptive' expectations means that people form their expectations about what will happen in the future based on what has happened in the past. For example, if inflation has been higher than expected in the past, people would revise their expectations for the future. Chicago macroeconomic theory, as above rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics based on the concept of rational expectations. Rational expectations is a hypothesis in economics which holds that agents' predictions of the future value of economically relevant variables are not systematically wrong in that all errors are random. Equivalently, this is to say that agents' expectations equal true statistical expected values. An alternative formulation is that rational expectations are model-consistent expectations, in that the agents inside the model assume the model's predictions are valid. Since most macroeconomic models today study decisions over many periods, the expectations of workers, consumers and firms about future economic conditions are an essential part of the model. How to model these expectations has long been controversial, and it is well known that the macroeconomic predictions of the model may differ depending on the assumptions made about expectations (e.g. see Cobweb model).

To assume rational expectations in this view is to assume that agents' expectations may be individually wrong, but are correct on average. In other words, although the future is not fully predictable, agents' expectations are assumed not to be systematically biased and use all relevant information in forming expectations of economic variables. This way of modeling expectations was originally proposed by John F. Muth (1961) and later became influential when it was used by Robert E. Lucas Jr. and others. Modeling expectations is crucial to all models which study how a large number of individuals, firms and organizations make choices under uncertainty. For example, negotiations between workers and firms will be influenced by the expected level of inflation, and the value of a share of stock is dependent on the expected future income from that stock.

Rational expectations theory is the basis for the 'efficient market hypothesis' (efficient market theory). If a security's price does not reflect all the information about it, then there exist 'unexploited profit opportunities': someone can buy (or sell) the security to make a profit, thus driving the price toward equilibrium. In the strongest versions of these theories, where all profit opportunities have been exploited, all prices in financial markets are deemed 'correct' and reflect market fundamentals (such as future streams of profits and dividends). Each financial investment is as good as any other, while a security's price reflects all information about its intrinsic value.

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including 'frictional' unemployment associated with individuals changing jobs and possibly classical unemployment described as arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labor market institutions. Unexpected inflation might allow unemployment to fall below the 'natural rate' by temporarily depressing real wages, but this effect would dissipate once the expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the 'natural rate' be maintained. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level, the so-called 'natural rate'.

The analysis supporting the natural rate hypothesis proved controversial, because empirical evidence suggested that the 'natural rate' varied over time in ways that could not easily be explained by changes in labor market structures. And the analysis is especially problematic if the Phillips curve displays 'hysteresis', that is, if episodes of high unemployment raise the rate. This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed. As a result of such problems the 'natural rate' terminology was largely dropped in favor of the NAIRU (Non-Accelerating Inflation Rate of Unemployment) , which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time. In short, the conceptual basis of the concept was left fallow, undecided, and ambiguous. There is no theoretical basis for predicting the NAIRU. The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level).

Friedman was an economic advisor to conservative President Ronald Reagan, and his political philosophy extolled the virtues of a free market economic system with minimal intervention. In his 1962 book Capitalism and Freedom, he advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and education vouchers. His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s, and his monetary theory influenced the Federal Reserve's response to the current global financial crisis (2008-12). The advent of the global financial crisis in 2008 caused some resurgence in Keynesian thought and the Chicago school came under attack and has been at least partly blamed for the growing income inequality in the United States. Economist Brad DeLong of the University of California, Berkeley for instance says the Chicago School has experienced an 'intellectual collapse', while Nobel laureate Paul Krugman of Princeton University, said that recent comments from Chicago school economists were "the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten." Critics also charged that the school's belief in human rationality contributed to bubbles such as seen in the financial crisis, and that the school's trust in markets to self-regulate has offered no aid to the economy in the wake of the crisis. The 'new Keynesian' view of the backlash rests on microeconomic models that indicate that nominal wages and prices are 'sticky', i.e. do not change easily or quickly with changes in supply and demand, so that quantity adjustment prevails. According to Paul Krugman, "while I regard the evidence for such stickiness as overwhelming, the assumption of at least temporarily rigid nominal prices is one of those things that works beautifully in practice but very badly in theory." This integration is further spurred by the work of other economists that questions rational decision-making in a perfect information environment as a necessity for micro-economic theory. Imperfect decision-making such as that investigated by Joseph Stiglitz underlines the importance of the management of risk in the economy. Notwithstanding, over time, many macroeconomists have returned to the IS-LM model and the Phillips curve as a first approximation of how an economy works. New versions of the Phillips curve, such as the 'Triangle Model', allow for stagflation, since the curve can shift due to supply shocks or changes in built-in inflation. In the 1990s, the original ideas of 'full employment' had been modified by the NAIRU doctrine. NAIRU advocates suggest restraint in combating unemployment, in case accelerating inflation should result. However, it is unclear exactly what the value of the NAIRU should be—or whether it even exists.

What seems obvious to any reader of Marx is that the effort in modern economics is to avoid looking at contradictions in the capitalist mode of production and how these contradictions enter into the ideology of the economy, the illusions about what the economy is doing and how it is working. Both the Keynesian and Friedmanite economic theories tackle significant problems and proffer solutions to actual economic strife, but they do so one-sidedly so that they are still unable to explain significant factors commonly occurring in the economy: high unemployment while high inflation (stagflation) for Keynes, and now, the collapse of neoliberal economics in the same kind of crisis. Neither form of the perfect market exists in which their respective theories would make sense, yet also putting them together in their positivist (a priori pre-Marxian) synthesis provides no way out. Many other commentators have suggested going back to basics and to the concept of value to look for answers. To look at one, specifically, there are the arguments of Ecological Economics: for this understanding the primary example of the concept of value in neo-classical economics is 'market value', or 'willingness to pay', which is the principal method of accounting used in 'receiver-type' theories, where the receiver (the 'interpreter of the world') determines the value. By contrast, in Ecological Economics value theory is separated into two types: 'donor-type' value and 'receiver-type' value. Ecological economists tend to believe that 'real wealth' needs a donor-determined value as a measure of what things were needed to make an item or generate a service (H.T. Odum 1996). Marx's and the Smithian labor theory of value and the 'Energy' concept is in this interpretation 'donor-type' value theories. Energy theorists, agreeing perhaps with Marx's concept of labor power, believe that this conception of value has relevance to all of philosophy, economics, sociology and psychology as well as Environmental Science (something which Marx was of course aware of long ago).

It is worth noting finally again how these ideas of value are inevitably epistemological (theory of knowledge) definitions and these definitions have inevitable political overtones. The two great camps of philosophy are materialist and idealist. In short, materialism holds that matter exists independently of thought, while idealism takes the contrary view. Marx and Smith's concept of value in their economic theory is philosophically speaking materialist in its theory of knowledge: In this, it is not the receiver's understanding and subjective valuation on the market which determines value, or the movements of the market itself, which would only explain the market by the market and therefore be tautological, but the independent properties of the entity combined with human labor power. Marx (in Volume I of Capital) distinguishes the value of a commodity into its use-value (utility) and exchange (market) value, both of which (aside from naturally occurring use values) are produced through the labor process by labor power, human effort or energy. This division is a theoretical distinction however, and not an absolute epistemological division. A characteristic of modern economics is to take exchange value as the dominant side, to extend its dominance to include dominance over use value, and then to regard this as the actual manifestation of the truth of philosophical idealism, of abstraction and the mind over matter, which in all other respects is the dominance of capital over labor, or as Marx says the dominance of dead labor over living.

Gary Tedman

Class Consciousness v Class Feelings

by Gary Tedman

I must admit to being uncomfortable with the concepts that surround the idea of 'class consciousness', especially the concepts of praxis, reification, and hegemony (incidentally, none of these are to be found in Marx and Engels). Not least problematic for me is the implied insult (to workers) in the notion that some people are unconscious of what they should be conscious of, and that there is a 'real' and a 'false' consciousness.

To Lukács, each social class has a determined class consciousness which it can attain. Class consciousness, as described in his 'History and Class Consciousness' (1923), is opposed to any psychological understanding of consciousness, which forms the basis of individual or group psychology (i.e. Freud). Although rightly opposing the liberal conception of consciousness as the foundation of individual freedom and so the social contract, Lukacs goes to the other extreme and is dialectically Hegelian in his idea of a social totality and essence. For Lukács, "ideology" or "false consciousness" is really a projection of the class consciousness of the bourgeoisie, which functions to prevent the working class from gaining a true consciousness of its position; ideology to him determines the structure of knowledge itself.

Alternatively I believe that all consciousness can be regarded as 'real consciousness'. While it is obviously true that a person can have incorrect or wrong ideas, can be under illusions, this cannot really be a question of their consciousness, as such, being real or false, but just a question of its 'orientation', so to speak.

In any case, in the end there are reasons (material influences) that lead to a person being under the spell of an illusion about reality (for example the inversions and distortions generated by actual lived experience of the capitalist economy), so it is not a question, even, of being fooled by the ideology of the ruling class (not that Georg is this unsubtle). And often these same people still have their hearts in the right place, while I have noticed that those who talk a lot about 'raising consciousness' can be prone to wavering when the chips are down, mainly because their feelings are pointing in another direction.

The class bond, I would say, is always more a question of feeling than consciousness, and I think if you look for feelings you find a different landscape than if you expect to see evidence of 'consciousness' or not. The latter notion is after all very steeped in Idealist philosophy, which of course judges everything from the point of view of Ideas and 'consciousness'.

Nonetheless Lukacs and Gramsci's ideas about the importance of ideology and culture and its relative autonomy are certainly important (though I think Althusser's route with this is more productive, though Althusser as a person presents problems). But I maintain this is also an aesthetic struggle, not one of 'consciousness' especially.

It seems to me that the more Lukacs leans into a Kantian inspired dialectical Idealism in his Marxist philosophy, the more we find he defends the orthodox Marxist position on art (literary and visual), i.e. realism. It is as if he wishes to shore-up his tendency to a philosophical idealism contra Marx's materialism with overt shows of support for Marxism's most 'real' thesis. Wikipedia:

"It is clear that Lukacs regards the representation of reality as art’s chief purpose—in this he is perhaps not in disagreement with the modernists—but he maintains that “If a writer strives to represent reality as it truly is, i.e. if he is an authentic realist, then the question of totality plays a decisive role.” “True realists” demonstrate the importance of the social context, and since the unmasking of this objective totality is a crucial element in Lukacs’ Marxist ideology, he privileges their authorial approach."

Pasted from http://en.wikipedia.org/wiki/Gy%C3%B6rgy_Luk%C3%A1cs

What Marxist would disagree with Lukacs on this? But the trouble is the objective totality that he understands is not in fact a complete one, which it needs to be to really perform the function he ascribes to it.

"Lukacs explains that good realists, such as Thomas Mann, create a contrast between the consciousnesses of their characters (appearance) and a reality independent of them (essence). According to Lukacs, Mann succeeds because he creates this contrast, conversely, modernist writers fail because they portray reality only as it appears to themselves and their characters—subjectively—and “fail to pierce the surface” of these immediate, subjective experiences “to discover the underlying essence, i.e. the real factors that relate their experiences to the hidden social forces that produce them.”…"

Pasted from http://en.wikipedia.org/wiki/Gy%C3%B6rgy_Luk%C3%A1cs

This notion of an underlying essence/totality of capitalist society is a problem, because capitalism is not necessarily a totality or at least is not a unified totality, it is more of a chaotic whole which often comes into conflict with itself (contradiction). This fact means that a wide variety of literary techniques are and will be needed and can be justified to reveal the distinctions and differences between the psychology of a character (say, in a literary work) and the broad social dimensions. After all, the capitalist economic relations are only conventions, they are not natural, and so calling them an 'essence' is itself slightly mystifying about these relations.

Lukacs is right to be suspicious of subjective immediacy, for sure, but the alternative that he offers also has flaws that he fails to see or acknowledge. In this sense, realist art is only one type of art from one specific period of human history, we can understand and appreciate non-realist art from other (non-western) cultures and histories, yet they seem to be outside or excluded from Lukacs' scope: it is also a misnomer, 'realism' is not real (in the sense of materialism) but also a social convention, that of perspective, which indeed has become so common and well-understood that it seems natural to us: but it is not. So two aspects become over-validated and essentialized by Lukacs: the conventions of economic relations and the conventions of pictorial space (narrative realism in the novel).

I like Maxim Gorky's novels (Lukacs uses Gorky as a good realist example) for sure, but I do not rate them as highly as Dostoyevsky, Gogol, or Turgenev, or even Kafka. Gorky, like Zola, tends not to be able to provide a deep psychology for his characters, they seem a bit one dimensional in comparison, and while, like Zola, Gorky is able to describe things and situations very well so that we feel them, almost as well as Lawrence enables you to do, aesthetically, the inner life is missing the contradictions that should be present because of the conflictual circumstances, the 'crazy' contradictions of life in capitalist society. And unlike Lawrence, the inner psychology (or pathology) of the characters is not usually brought out by other alternative means such as in the contrast of this psychology with the natural (non-conventional) physical environment.

In short, Lukacs misses what I have termed the aesthetic level of practice, and his notion of ideological wholeness therefore jumps from the base to the superstructure and back again too quickly and suddenly to be able to capture these subtleties which nevertheless I think he wants to capture and save for us.

This is all mainly because Lukacs misunderstands Marx's initial concept of alienation as a spiritual rather than material-affective (Freudian, perhaps) one. The insistence on an autonomous struggle for class consciousness then in the end works out as yet another call (vulgar materialist Economism notwithstanding) for the supremacy of spirit over matter, and mysticism over science. As if the proletariat had only to grasp dialectical materialism in their consciousness (with the help of some specially 'conscious' people) and all would be solved. Lukacs tries very hard to escape Hegel's orbit, but does not quite succeed.

Before and After Capital

Thomas Riggins

Anyone who reads Marx’s great work CAPITAL today, and the number of new readers is growing, will find, before they hit the first chapter, six prefaces (four to German editions and one each to the French and English editions) and two afterwards (to the French and to the second German editions). Some readers just skip over these preliminary writings and jump into the text, which is fine. This is a good way to get right into the heart of what Marx has to say. But after the first chapter or so it’s a good idea to go back and read what you have skipped over. There are some very interesting remarks and comments from both Marx and Engels to be found there that, if kept in mind, will really help in understanding what Marxism is all about. My purpose here is to highlight some of these remarks that I think are particularly important and to comment on them. I invite readers to comment on this article if they think I have left out anything that should have been highlighted or have misinterpreted a passage. I am not going to go over all the prefaces and afterwards, just the ones I think are the most important.

Marx: Preface to the First German Edition, 1867:

Here we learn that the first volume of Capital is a continuation of Marx's 1859 work A CONTRIBUTION TO THE CRITICISM OF POLITICAL ECONOMY, and that, in fact, the first three chapters of Capital constitute a summary of that earlier work. Marx also tells us that "every beginning is difficult" in science and that, therefore, the first chapter of Capital will be the most difficult. The chapters after it will be easy and straight forward. Since many people bog down in Chapter One and abandon the reading of Capital it is encouraging to note you just have to stick it out with this chapter and the rest of Capital will be easy going.

In this preface we also learn that the laws of capitalist development appear to be universal. Marx has studied its development in England because that country was the most advanced capitalist country. We are told that what is at issue, however, is not how capitalism may develop in this or that country but the laws of capitalism themselves.

The Chinese or Russians, for example, may think they are, or could be immune to the worst features and abuses of American capitalism, and maybe they could be today-- but the Marx of 1867 would not have agreed. He wrote, "it is not a question of the higher or lower degree of development of the social antagonisms that result from the NATURAL LAWS of capitalist production. It is a question of these laws themselves, of these TENDENCIES working with IRON NECESSITY towards INEVITABLE RESULTS. [Throughout I have used CAPITALS to emphasize words I think important].

There may be some confusion between "iron laws" and "tendencies" so let me just say that in Marx's model of capitalism the "iron laws" are really what we would call the logical consequences that result from the premises Marx derives for his model based on an empirical investigation of English capitalism. The real world is vastly more complicated than the model which serves as a guide to its understanding. The" laws" of the model become "tendencies" when they are applied to the understanding of actually existing capitalist systems.

Once we understand the English model, Marx would have us believe that "The country that is more developed industrially only shows, to the less developed, the image of its own future." How to make sense of this? Will third world countries all develop along the path that led to US and European capitalism? Well, Japan did. But Russia industrialized under socialist motivated five year plans and the Chinese and Vietnamese are controlling capitalist development by state supervision, and by a state that is not in the control of the bourgeoisie. So things have become more complicated since 1867.

Why were the Russian and Chinese Revolutions, just to mention two, accompanied with excessive violence (or so it seems to many)? Marx said that the American War of Independence (he does not here call it the American Revolution) was the "tocsin" for the bourgeois revolutions in Europe that followed it. He thought (too optimistically) that the American Civil War was the "tocsin' that would proclaim the coming proletarian revolutions in Europe. He thought "social disintegration" was very far advanced in England and would spread to the rest of Europe.

The rising of the working class, Marx said would be either HUMANE or BRUTAL "according to the degree of development of the working class itself." If Stalin or Mao appear to have been far too brutal we must remind ourselves that the development of the working class in their countries was at a very low level and that Marx had hoped that an advanced humane working class consciousness would have been possible to develop. It didn't work out that way in those countries.

Marx thought it would be to the "advantage" of the capitalist class to help the working class develop itself! Here is what he says: "Apart from higher motives, therefore, their own most important interests dictate to the classes that are for the nonce the ruling ones, the removal of all legally removable hindrances to the free development of the working class." So it is the capitalists who should be supporting EFCA along with the unions! Why is this so? Because a repressed and resentful working class with be a violent and brutal class when it seizes power from the capitalists and you will get Gulags! The capitalists are playing with dynamite when they try to repress the working people.

As for skipping stages of economic development and great leaps forward, Marx had something to say about this as well. It is Marx's aim to discover and explain "the law of motion" of capitalist society. Even when that is done and we understand where capitalism is leading and that socialism will eventually be the outcome we can "neither clear by bold leaps, nor remove by legal enactments, the obstacles offered by the successive phases of [capitalism's] normal development." The best we can do is "shorten and lessen the birth-pangs." Not knowing the difference between these two approaches is responsible for all the failures of socialist states, just as correct application of these distinctions is responsible for their successes.

Marx also wants to stress the scientific qualities of his work. Too often his followers dwell on the moral short comings of the ruling class. Such and such an one is evil, or driven by greed, and they are attacked personally and held responsible for lay offs, factory closings or economic down turns ('greedy bankers", etc.). But Marx says, that his "standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the INDIVIDUAL RESPONSIBLE for relations whose creature he socially remains, however much he may subjectively raise himself above them."

Marx foresees his views will be violently attacked irrespective of their scientific correctness since they will go against "the Furies of private interest" which are "the most violent, mean and malignant passions of the human breast."

As I said before, Marx was too optimistic with regard to the coming end of capitalism which he thought was right around the corner. It was even evident to him that the U.S. was going to be involved in radical change. He says "Mr. Wade, vice-president of the United States, declared in public meetings that, after the abolition of slavery, a radical change of the relations of capital and of property in land is next upon the order of the day." That would have been the success, perhaps, of radical reconstruction. President Andrew Johnson didn't really forcefully back reconstruction and it ultimately failed. Mr. Wade was not the vice-president, there was no vice-president in 1867 when Marx wrote his preface. Benjamin Franklin Wade was president pro tempore of the Senate and next in line to be president if Johnson had been removed from office as a result of his impeachment. Had he become president reconstruction might have taken a different turn. Well, so much for the preface to the first German edition. Lets jump ahead six years and discuss

Marx: Afterward to the Second German Edition, 1873:

In this afterward Marx explains why economics (political economy) can no longer be studied scientifically outside of the socialist movement, or only so studied under certain limitations.

The reason is that capitalism, as all other social formations, is the result of historical developments and has evolved certain characteristics that are historically conditioned and transient. The "laws" of physics may be eternal (e.g., the speed of light) but the "laws" of capitalist production are not. Thus if "the capitalist regime is looked upon as the absolutely final form of social production, instead of as a passing historic phase of its evolution, political economy can remain a science only so long as the class struggle is latent or manifests itself only in isolated and sporadic phenomena."

The class struggle is in full swing today and we cannot expect bourgeois social "scientists" to be anything other than apologists for the capitalist system. The editorial writers for the Wall Street Journal, for example, cannot dispassionately write about health reform, bank regulation, workers rights, etc., in any scientific way involving a non partisan "search for truth."

In England, Marx says, the last person to treat economic problems in an objective manner was David Ricardo (1772-1823) who wrote when "the class struggle was as yet undeveloped." He is still innocent of the historical nature of the antagonistic contradictions between the classes over wages and profits, profits and rent and sees them as an eternal "social law of nature." Capitalism and its contradictions would always be there just as the sun in the sky--- TINA as Ms. Thatcher would say ("There is no alternative.") How far will our bourgeois economists today go out of their way to deny these contradictions and sing the praises of an harmonious society. Regardless of the evidence we are told how business and labor have to work together to make the "system" better as it is the only "system" that really works.

Adam Smith and Ricardo lived in the infancy of the modern industrial world. The struggle between capital and labor then took a back seat to the struggle of the bourgeoisie and the feudal land owners. The first big cyclical crisis of capitalism was the crisis of 1825-- the direct ancestor of the present economic melt down, and the working class makes its debut as a force that actually could threaten bourgeoisdom in 1830 (cf. Victor Hugo's Les Miserables, the book not the Broadway musical!) The workers, however, won't realize their potential until 1848.

After 1830, in Western Europe at any rate, the bourgeoisie was firmly in the saddle and the class struggle was underway in ernest. Marx said this "sounded the knell of scientific bourgeois economy." Now truth took a back seat to those Furies of private interest mentioned above. Truth became a question of what "was useful to capital or harmful, expedient or inexpedient, politically dangerous or not."

This been the case ever since-- from Ivy League economic departments to Fox news by and large even , or more especially, today we have in "place of disinterested inquirers" only "hired prize-fighters; in place of genuine scientific research, the bad conscience and evil intent of apologetic." And, we must admit, our Soviet and Chinese comrades were not above apologetics since once in power they were no longer "disinterested inquirers." It will be a big challenge for Marxist leaders, in and out of power, to establish truly disinterested centers of inquiry because only by a true understanding of reality can they hope to be successful and not repeat the tragic errors of the 1930s and 80s.

After 1848 there were a few bourgeois thinkers that recognized the legitimate claims of the workers and tried to "harmonize" them with the interests of capital. One of the best advocates of this harmonious society approach, Marx says, was John Stuart Mill: yet he only produced "a shallow syncretism." Marx then recommends a book about Mill ("Outlines of Political Economy according to Mill") by N. Tschernyschewsky ("the great Russian scholar and critic".) Don't bother trying to look this critic up under this name-- it is a terrible Cyrillic transliteration of the name of the Russian radical materialist proto-Marxist N.G. Chernyshevsky (1828-1889) the title of whose novel "What Is To Be Done" was used by Lenin for his work of the same name.

Now, a few remarks by Marx on his method and his relation to Hegel. Some writers, who should know better, have criticized Marx for the use of Hegelian "jargon" and the Hegelian dialectic in writing Capital. But Marx is quite clear, in the Afterward, this his dialectical method is the "direct opposite" of that of Hegel. Hegel thinks in the language of German Idealism and tries to construct his dialectic around the concept of the "Idea" as the basis of reality. Marx says that he himself studies external reality to see how we come to get the concepts and ideas (including that of the "Idea) in the first place. Completely unlike Hegel, Marx sees "the ideal" as nothing more than "the material world reflected by the human mind...."

With respect to Hegelian "jargon," Marx says he "coquetted" with Hegelian expressions a little in the chapter on value in order to avow himself as "the pupil of that mighty thinker" in response to the "peevish, arrogant, mediocre" critics of the philosopher who had raised their heads in Germany. Despite Hegel's mystifications, he was still the first to work out the form of a dialectical logic "in a comprehensive and conscious manner." With Hegel, Marx says, the dialectical method "is standing on its head. It must be turned right side up again, if you would discover the rational kernel within the mystical shell." I should also remark that while Marx says his method is the DIRECT OPPOSITE of Hegel's, he and Hegel both believed in the dialectical principle of THE UNITY OF OPPOSITES. This is why Hegel is still read today but from a materialist perspective, and idealists can learn much from Marx.

Finally, it should be noted that even now, in the beginning of the twenty-first century, Marx and his dialectical method are too hot to handle in most economic departments and business schools in the capitalist world. The dialectic is, Marx says, "a scandal and abomination to bourgeoisdom and its doctrinaire professors" because it does not recognize the reality of TINA (there is no alternative to capitalism). The dialectic "includes in its comprehension and affirmative recognition of the existing state of things, at the same time also, the recognition of the negation of that state, of its inevitable breaking up; because it regards every historically developed social form as in fluid movement, and therefore takes into account its transient nature not less than its momentary existence; because it lets nothing impose upon it, and is in its essence critical and revolutionary." And, so now we move on to:

Engels: Preface to the English Edition, 1886:

One of the things Engels wants to do in this preface is to comment on Marx's use of certain traditional terms in political economy such as "rent," "profit." "commodity," "surplus," etc., which Marx has been accused of using in an idiosyncratic way. Engels agrees that Marx uses some of these terms slightly differently that they were used by his predesessors, but that he is clear about when he does so and the reasons for doing so. "It is," Engels says, "however, self-evident that a theory which views modern capitalist production as a mere passing stage in the economic history of mankind, must make use of terms different from those habitual to writers who look upon that form of production as imperishable and final."

I think Engels thought the revolution to replace capitalism was right around the corner. He says the boom and bust cycles of capitalism between 1825 to 1867 "seems" to be over and we are in "the slough of despond of a permanent chronic depression" and that a future "period of prosperity will not come." Well, he missed out on recognizing the tenacity of the capitalist system. We are now in another "slough of despond" but if it is permanent or not I will not venture to guess. We still have not really answered the great question that Engels says faces the capitalists in every depression: "what to do with the unemployed."

He thinks the unemployed might take matters into their own hands for he says "we can almost calculate when the unemployed losing patience will take their own fate into their own hands." I am afraid we can't calculate that either. But one thing is sure. Engels says Das Kapital is often referred to as "the Bible of the working class." If the workers of the world want to come out of the current crisis on top of the situation they had better start reading their Bible.

Engels in fact makes that very same recommendation in this 1886 preface. The workers might very well be able to come to power in a legal and peaceful way in advanced capitalist countries. In the 1880s England was the most developed country by far and Marx thought that in England the social revolution "might be effected entirely by peaceful and legal means." That is what advanced democratic working people should aim for wherever democracy is advanced enough to allow for it. Marx did add that even if the workers achieved victory democratically he expected the ruling class not to submit and to wage a "pro-slavery rebellion" (a reference to the US Civil War).

The challenge facing us now is see how we can deal with the present world economic crisis on the basis of a modern understanding of Marx's great book.