Archive for category Marxism

The Conservative Critique of Capitalism

To Limbaugh even a conservative critique of capitalism is "Marxism"

To Limbaugh even a conservative critique of capitalism is “Marxism”

While some on the right claim that President Obama’s health care law amounts to war on Roman Catholicism due to its birth control provisions, others on the right are attacking the head of the Catholic church, Pope Francis I, for being “Marxist.”

The charge is absurd.

Marxism is a particular theory about how history unfolds, an enlightenment style reason-based theory which seeks to objectively show that there is a correct interpretation of history based on the nature of the mode of production – or how value is produced.   Any economic system (slavery, feudalism, capitalism) that generates value through exploitation (a small group benefiting from the work of others) inherently contains contradictions.   Those contradictions inevitably cause the system to collapse, until finally a system with no exploitation (communism – the anti-statist utopian Marxian version) comes without internal contradictions.   History is a human construct, Marxism has no place for a deity.  I very much doubt that the Pontiff believes any of that to be true.

When the Church built the new St. Peter's it used an early capitalist method: selling indulgences (time off from purgatory).   That had an unfortunate side effect for the church: the reformation

When the Church built the new St. Peter’s it used an early capitalist method: selling indulgences (time off from purgatory). That had an unfortunate side effect for the church: the reformation

Pope Francis I instead provides a conservative critique of capitalism, one that echoes some of the anti-Communist John Paul II’s ideas.  The Pontiff released a 50,000 treatise, Evangelii Gaudium” (The Joy of the Gospel), which calls for a series of reforms and admonishes “unfettered” capitalism.  He criticizes trickle down economics, and decries “the idolatry of money” which will lead to a “new tyranny.”   He bemoans the “culture of prosperity” where materialism defines human value, but leaves the majority on the outside, often suffering.   Even those well off feel like their life is lacking because the culture defines so much by material success. People turn artificial wants into perceived needs.

The Pope was not attacking market economics but naive capitalism – those who believe that markets always turn self-interest into the best result possible.   Naive capitalists believe that the “winners” deserve to take as much as they can get away with because they are smarter or work harder.   Moreover, they believe that the game is always open for others to win – that the playing field is level and the market will somehow prevent winners from building structural advantage and using their position in society to benefit themselves and guarantee that they and their children will have a much better shot at continuing to “win.”   Naive capitalists believe the “losers” are inferior – they deserve to be poor.

VATICAN-POPE-AUDIENCE

The Argentinan Pontiff knows poverty – and is becoming very popular among Catholics

The conservative critique of capitalism is not that somehow everyone should be equal.   Traditional conservatism accepts the idea that inequality is inevitable in society, but that it cannot be so pervasive as to be culturally destabilizing.   They distrust capitalism because it debases the culture.   It appeals to the masses, and replaces community with consumption.  It rationalizes wealth inequality without creating a sense of social responsibility.   Conservatives also distrust human nature; they believe that utopian visions of capitalism underestimate human greed, ruthlessness and willingness to cheat/abuse others out of self interest.

Traditional conservatism has an organic view of society – that the culture is an entity that is greater than the sum of the individuals.  It distrusts the radical individualism of naive capitalism, noting that the individual is embedded in a culture and society from which identity, interests, morals and desires all spring.   The culture maintains social stability and order.  Reason alone cannot replace it, since reason is a tool that can rationalize just about anything.   Reason can justify a whole host of contradictory principles and ideals — whatever the individual wants to believe.   That was Edmund Burke’s critique of the French revolution; you take away the cultural glue that holds society together and everything falls apart.

For conservative critics of capitalism, the market doesn’t magically follow the values society holds, nor do peoples’ decisions on what to buy and sell necessarily support their core values.  That’s why people have constructed governments to, among other things, tame the excesses of capitalism.

Count Karl Marx as one of Adam Smith's fans!

Count Karl Marx as one of Adam Smith’s fans!

Even the capitalist hero, Adam Smith, knew markets were not magic.   While naive capitalists use his metaphor of the “hidden hand,” it’s a metaphor he only used once, and in a limited context.   If you actually read Smith’s Wealth of Nations it’s clear that he is critical of the capitalists of his era.   Karl Marx even considered Smith his favorite economist, saying that only in communism would Smith’s ideas work properly.   Those nuances don’t fit into the good vs. evil simplistic dichotomy of the Limbaughesque world.

To be sure, the conservative critique of capitalism is distrustful of big government and efforts to promote equal outcomes.   Conservatives embrace tradition, family, community and custom.  Capitalism does damage to all of those – thanks to capitalism Christmas now is more about shopping than worship.   Thanks to capitalism extended families in close contact have become rare.  A sense of community has been replaced by people who hardly know their neighbors, especially in urban areas.   Custom has been replaced by fad.  Perhaps that is why Limbaugh and others want to try to hide all this using a claim that any critique of capitalism is “Marxist.”

Agree or disagree, the Pope is decrying the materialism, self-centered individualism, and lack of concern for the community that raw capitalism often fosters.   That is a value-based critique, not at all Marxist.    The Limbaughs of the world want to put their hands over their ears and mutter “Marxist, Marxist, Marxist…” because they don’t want to delve into the details of how the world really works —   So much easier to have a “left vs. right” caricature than to actually consider the gritty complexity of reality.

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A New Bretton Woods?

Thanks to government policies we’re unlikely to have bread lines and unemployment reaching over 30%, the current “recession” is looking more and more like the kind of economic event that heralds the end of a particular economic era.  We will get through it and a new era will begin, but things will have to get a lot worse before they get better.   The reason is politics:  people interpret the world through their political lenses and so far have not yet been convinced that real change is needed.

The boom of 1948 to 2008, sixty years of prosperity and growth, can be divided into two parts.  The recession of 1979-83 marks the break between the two.   In the first part the industrialized West produced as much if not more than it consumed, budgets were for the most part in balance, debt accrued in the war was being paid down, and income disparities were narrowing.   The standard of living went up, political stability grew.   However, since the great recession ending in 1983 the industrialized West has gone further into debt than had ever been imaginable, production has shifted to the third world and a series of bubble economies have created the illusion of sustainable prosperity.  In those three decades imbalances were being built that would ultimately ignite a global economic crisis.   It’s far worse than 1980 because debt is massively higher, infrastructure much more out of date, and globalization has altered the nature of the global economy.

Globalization is a mix of the internationalization of global capital and the growth of information technology.   Before 1980 it was difficult to merge companies across borders, invest in foreign markets, and go anywhere on the planet to find the best return on investment.    Now capital has been unleashed from its national borders meaning that business and capital no longer had national loyalties.   Whether this is good or bad is hotly debated.   What is clear is that the global institutional structure that worked so well up through the 80s is no longer adequate.  It was a state-centric approach now serving a world where state sovereignty is weakening.   Current institutions were created when the dominant economies were in the West, closely linked, and relied on the US as the global hegemon to assure defense, provide the global reserve currency (the dollar) and promote free trade.

That old order began with a meeting of economists at the New Hampshire resort of Bretton Woods in July 1944.  They were determined to completely reorganize the entire global economic system.   Their goal was simple: save capitalism.   Capitalism had been thought to have led to the great depression, fascism and systemic collapse.   They believed that with US leadership and the proper institutional infrastructure capitalism could lead to true prosperity.   The resulting “Bretton Woods system,” including fixed exchange rates (through 1971), the General Agreement on Tariffs and Trade (GATT – now the World Trade Organization), the International Monetary Fund (IMF) and the World Bank.   Together these institutions formed the foundation of this new system.   Free trade was the lynchpin and the key to igniting the most impressive economic expansion in world history.

Those institutions are no longer adequate.   The gold standard and the fixed exchange rates were jettisoned when they’d served their purpose in the early seventies.   Once trust in currencies was strong enough so the market could handle currency valuation, there was no need for the gold standard.   The rest of the institutions were built on two principles: a)  state sovereignty; and b) American hegemony.

Hegemony is long gone.   The dominant role of the US had faded by the late 60s, and since then the rise of the EU, Japan, China and others has created a real counter balance to US economic strength.    With $14 trillion of foreign debt and a large current account deficit, the US no longer can snap it’s fingers and expect the world to comply with its wishes.   Sovereignty is vastly overstated.   True sovereignty never really took in much of the third world, while even the develop countries find that globalization vastly limits their capacity to develop national responses to problems.   If the problems are global, a national response is inadequate.   The US used to think that our size made us immune to this; the current crisis shows that is not the case.

The world needs a recasting of global economic institutions designed to function in a world of complex interdependence, powerful non-state actors, and the need for coordinated policy.

If we learned anything from the Great Depression, it’s that markets alone don’t magically fix a broken economy.   To address the current imbalances, there needs to be a global effort to stimulate the economy and adjust the structural imbalances.   This might include a new global reserve currency, acceptance of a weaker dollar, and a massive well orchestrated global intervention in the economy designed to stimulate growth and regenerate markets.   That won’t happen until the situation gets much worse than it currently is.

In the US a huge chunk of the political discourse is run by people who equate any kind of government activism with “socialism,” an absurd charge but one which so tinges the political atmosphere that President Obama can’t even propose higher taxes on the wealthiest without being charged with class warfare.     Right now the Republicans are waging class warfare on the poor, telling them to suffer unemployment and want while protecting the elite who are doing very well.   The Democrats have to make that case boldly, with no apologies.   They have to note that cutting spending stifles economic growth far more than tax increases on those wealthy who now pay historically low rates.

Despite the sloganeering, the goal is not to build socialism, but to correct imbalances that now prevent markets from functioning adequately.   Markets have always needed a regulatory structure of some sort to work — even Adam Smith realized that.   That structure could be a set of local customs and norms in a small setting, state laws and regulations in the post-war setting, and now transnational agreements and policy action.

At some point it will happen.   If President Obama were to lead a call to bring top world economists back to Bretton Woods to plan a new global order, and states had the will to make it happen, it might quickly be as successful as the original Bretton Woods system.   More successful, even, as now third world states would be part of the solution to global problems.   But it’s not going to happen any time soon, thanks to a political mindset that still thinks primarily in terms of independent states rather than an interdependent global system.   That mindset may be strongest in the US, but it exists across the planet — old ways of thinking resist change, even if the world is clearly in transition.

Last time it took a 10 year depression followed by a bloody six year war before the world embraced a new order.    The success of the original Bretton Woods system is clear — never before has so much wealth been created so quickly.   There is no reason to think this can’t be done again, this time involving the resources and dynamism of the entire international community, not just the West.    First there has to be the political will to make it happen.   Things will have to get a lot worse before that political will is evident.   How much worse?    Ten years of depression and six years of war like last time?  I hope not.

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My Marxist Pizza Moment

Another in my series about my adventures with pizza, including Pizza and Me, (8-17-11), Steak Film and Back to Pizza (8-21-11), and Pizza Success (8-23-11):

In general my time working with pizza from Village Inn Pizza to Rocky Rococo’s is an example of learning the business side of the restaurant business as well as the operations.  I was in “management” nearly the whole time, did nightly, weekly and monthly books, was proud of keeping my labor and food costs below the goal, and consistently had the best record for low labor cost percentage.  Yet it was there that I had what I have to call a “Marxist moment” – a time I got so pissed at the corporate capitalist structure that I struck a blow for the workers by allowing free pizza and even beer after close.   I then backtracked and decided that wasn’t the thing to do.   Looking back, I think my basic instincts on politics, ethics and economics can be seen in a microcosm in that experience.

I was still 18, had not started college yet, and in my first months as supervisor.   We were told that the big boss (I forgot his name) was coming from Spokane, Washington, for an inspection of whether Warren had fixed the problems the store had been suffering.   We had to clean the store spotless.     As we worked I started to hear Warren and the assistant manager talking about hiring a prostitute.   They needed to find someone attractive, sexy and not sleazy or scuzzy.   “Hard to do in Sioux Falls,” was one comment.   I just kept working; generally I’m not judgmental so it didn’t seem a big deal.

I also noticed that it was being paid for from the till, and that somehow it seemed the books were being manipulated to cover what the expense was for (“corporate will cover this,” I heard Warren say).   I wasn’t quite sure — I was trying to be observant, but obviously this was done with office whispers, glances and signals.   “What’s going on,” one worker asked.   I shrugged.  “Getting ready for the big boss.”

Finally, the “big boss” arrived.  He was quiet, sneered at the workers, and was fat and ugly.   After being introduced (he muttered something to me, not shaking my hand) I recall walking through the door.   “What’s the big boss like,” someone asked?   I made a face of general disgust.   The guy was gross.   We made little jokes about him (eating the profits, keep him out of sight of the customers or it’ll drive business away, etc.) as he walked around the store, muttering things now and then, but generally seeming to be sort of a dick.

Finally Warren came up to me and said “we’re leaving, the store is yours.”   As they left I heard the big boss asking Warren about “the girl” and assuring him that the money would be “taken care of.”   Warren didn’t seem especially comfortable with all this, but clearly had no choice.   Finally they were out the door.    I waited a few minutes and then took some trash to the dumpster.   The cars were gone.

“God, what a pathetically horrible excuse for a human,” I said loudly as I walked back in.   Everyone laughed, though I was the only one who knew about “the girl.”    We made jokes about his girth and poor social skills as we worked, and I bit my tongue, so tempted to spill the beans about the prostitute.  The next week the assistant manager told everyone the story; my silence had been unnecessary.

I was getting angry thinking about the guy.   He was ugly, gross, and buying a prostitute with Village Inn money, getting wealthy on our work, while we sweat and get paid minimum wage or slightly above.   What’s fair about that?   Who gives that wretched excuse of a human the right to come in, force us to scurry around, please him, and then let him get rich off our work?

“You know what,” I said at about 10:30, “we’re eating on the house tonight, make up a couple large pizzas.”

“Really?”  I think it was a guy named Steve I was working with.   “Cool!”  Steve started making pizzas.   “Why?”

“I’m pissed off at the big boss (I’m sure I used his no forgotten name at the time).”   He’s disgusting, I want to take away some of his profits.”   This was before I had studied anything about political philosophy so I wasn’t really using Marx or any one to justify this, it was an emotional reaction.

“All right!”  The crew was enthused.   We made the pizzas and all of us (about five people at that time) chowed down free of charge (usually food was half price).   After close we even had a few beers.  I realized at that time I was on a dangerous path.  If Warren found out I’d be in big trouble.   “OK,” I said, “this is a one time thing.   Just to spite the big boss.”   There was disappointment at that pronouncement, and others tried to get me to do it again.   I was surprised Warren never found out — or perhaps he did and decided to ignore it that one time.

As I reflect on it, I think the emotion of disgust combined with the realization that a$$holes like the big boss were living pathetic yet wealthy lives on the work of lower paid folk, is the moment I realized that structural force exists in the system.

Yet, the knee jerk reaction to just try to take back value — in this case pizza — to compensate for the exploitation is misguided.   “Workers of the world unite, revolt against the oppressors, take back the means of production” — it was the reaction of 19th Century socialism, a revolt against the system — at least in its logic.   Yet I realized quickly that this was a path that made no sense.   It just wasn’t right.

Maybe the system is unfair, but it’s what it is.   And while the big boss may have been disgusting, he isn’t the whole corporation or system.    There may be exploitation going on, but there is also opportunity.   My ability to get hired and quickly promoted — and reasonably well paid for a high school senior — was testament to what the system could offer.  Compared to other parts of the world, that’s pretty good!    Some might say I stole those pizzas — but I had worked off the clock to avoid overtime enough that I’d contributed free labor to more than pay what they cost.

I determined that my ethics as a manager would be to always respect and treat workers well, and not act like the grotesque blob I thankfully never saw again.    I still think there is a lot of exploitation, and the wealthy use their status to manipulate the system in their favor.   That’s why despite my belief in markets, liberty and individual initiative, I still am not a free market capitalist.  I don’t trust capitalism any more than socialism or any “ism” – human behavior is too complex to be captured by an ideology.

The disgust I felt at the time to me symbolizes the legitimate disgust hard working Americans have about the fat cats — the financial bankers who gamed and rigged the system, the ponzi schemers who manipulated the real estate market, manufactured AAA rated crap derivatives, and pushed us into a global recession.    Yet like most workers, I don’t trust government to come in and equalize things, or to steal from the rich to give to the poor.  Rather, the system needs to provide equal opportunity and block the wealthy from using their status to enhance their opportunities at the expense of others.

Nothing is perfect, and what we have is pretty good.   Rather than destroy it in the quest for some ideal, it’s better to work with it, and try to improve it over time.

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Neo-Marxism Ascendent?

(Thanks to my POS 336 class discussion on globalization, and the second and third chapters of the book Globalisms by Manfred Steger for inspiring this post).

Neo-Marxian theories about the global political economy have been relegated to a secondary position in academia, and outside the third world tend not to be taken seriously by politicians.  Part of it comes simply from the term “Marxian.”   That gets associated with Soviet style communism, an approach to politics and economics which failed utterly.   But neo-Marxian analyses of the global economy are profoundly different than orthodox Marxism, and do not posit some kind of workers and farmers’ paradise in the future.   They often see communism as the major flaw in Marx’s thought — rather than just analyzing how the political economy operates, he tried to imagine some kind of perfectly just system.   That goal led to the horrors associated with Marx’s legacy.

Neo-Marxian analysis is an approach to studying the global political economy in a manner informed by Marx’s structural analysis of capitalism.   It has evolved far beyond Marx, most notably in that it looks at the global economic system while Marx was concerned with a domestic economy.    Perhaps the most famous of these is an approach put forth by Immanuel Wallerstein some time ago called “World Systems Theory” (WST).   Wallerstein was an Africanist who, in studying Africa, realized that underdevelopment there could not be explained or cured by the liberal capitalist theories coming from the West.  He sought to explain the division of the world between a relatively small wealthy core, and an impoverished and underdeveloped periphery.   A small semi-periphery held states that moved beyond poverty and instability, but could not become as wealthy and dominant as core states.

In essence, he posits capitalism as a world system with relations between the core and periphery structured so that the core exploits the periphery for cheap resources and labor, turning those goods into valuable finished products for consumption in the core.    Some finished goods are sold back to the periphery, but consumed by governmental elites whose interests are more in line with those of the core than those within their own country.   The elites in third world states thus find it in their interest to perpetuate structures that benefit the core (one reason corruption is prevalent throughout third world governments).   Because post-colonial states are often fictions with no strong sense of national identity, people go into government more to get rich than out of any idealistic notion of helping their state develop.

For Wallerstein and the numerous “world systems theorists” who followed in his wake, creating a kind of cottage industry of academic neo-Marxism, this world system functions in part through the control of a hegemon who can dominate the system and enforce its rules.   First it was the Netherlands, then Great Britain, and finally the US.   US hegemony started weakening in the 70s, and the current crisis pretty much collapses it.   US military power is seen as less credible after Iraq and Afghanistan, while US economic hegemony has vanished with the current crisis.   The US really lost economic clout with the downsizing of its manufacturing sector after the 1980-83 recession, but managed to retain hegemony by dominating financial markets.   An illusion of economic health existed with the bubble economy, but now huge deficits, a large debt, and dependence on countries like China and Saudi Arabia for maintaining the ability of the government to function, puts the US in a weakened position.   Still an important actor, but not a hegemon.

WST has been effective in predicting the on going division between rich and poor states and the limitations of the semi-periphery (Taiwan, South Korea, Brazil, etc.), but until recently seemed overly pessimistic about the health of global capitalism.   Like all Marxian theories, WST claims that capitalism as it operates in the real world contains contradictions which lead to intermittent crises.   The most dangerous is the problem of over-production which can lead to a credit crisis that can cause systemic failure.   Capitalism runs on credit, you can’t invest without credit, and any threat to the availability of credit is very dangerous.

On September 18, 2008 the world economy nearly collapsed.   Credit markets had seized and if capital wasn’t injected into the system right away there would have almost certainly been a global depression.   I do not think Americans quite comprehend the danger the world economy faced that day, and why it was that free marketeers held their noses and supported a massive federal bailout of the financial industry.   Yet this bailout didn’t solve the problem, it just bought time.   The crisis is still very real, and much like the kind of crises predicted by neo-Marxian analysts.

Now, this may sound weird, but neo-Marxism seems to find some common ground with the ideas of someone associated with a pro-US pro-military approach to globalization, Dr. Thomas P. M. Barnett.   Barnett, who writes for Esquire, has a Ph.D. from Harvard, and has worked in the defense department, puts forth a grand strategy for how to approach globalization.   He defines different types of states: Core states (much like Wallerstein’s core, though including India and China), Gap states (states not integrated into the global economy) and Seam states (those somewhat integrated).   This parallels WST’s Core, Semi-periphery and periphery in a manner that seems almost too obvious to be coincidental (given he has a Ph.D. in Political Science from Harvard, he has to know WST).

Like WST, Barnett looks at globalization as a system that should be global.   Concerned with terrorism and security, he argues that gap states represent the breeding grounds of terrorism, and seam states are places where terrorists could entire the core from the gap.    Globalization thus needs to be protected by both integrating the gap into the global economic system, and fighting anti-globalization forces, particularly jihadist terrorism.     In a way this is similar to neo-conservatism, which also views globalization as a force for good, though Barnett is more realistic about the limits of the US to manage the system alone.  In fact, his approach seems to recognize that a concerted effort in the core to manage globalization is necessary to keep the project alive and avoid systemic collapse.

Not being a Marxian thinker, Barnett seems convinced that if the globalization project is kept alive, then the gap states can successfully integrate into the system and the power of markets and liberty will spread prosperity.   WST would suspect that his approach might only help the global capitalist system overcome current structural weaknesses (especially the collapse of US hegemony) and contradictions (global financial instability and the dollar crisis) to maintain the system.   WST would predict that efforts to integrate the gap/periphery into the global economy would fail because of how the system operates and is structured.

I’m not sure if WST is right or not.   However, it seems to me that of all theories of the political economy that emerged after WWII, neo-Marxian analysis is surviving the current crises and changes brought about by globalization as good if not better than neo-liberal and neo-realist theories.    My own view remains in the constructivist camp for a variety of reasons I won’t get into here.   However, at least in explaining the changing nature of the global political economy, neo-Marxian thought may have to be taken much more seriously.   Non-Marxists like Barnett may already be doing so.

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