THIS was the title of a recent piece in the Economist (May 11, 2017). Why does one of the capitalism’s leading mouthpiece think, ‘Marx becomes more relevant by the day’?
In recent years, Marx attracted attention from other leading magazines and newspapers which generally promote a free market or laissez-faire capitalist economic system. For example, the Financial Times (May 28, 2017), in reviewing Terry Eagleton’s Why Marx was Right (Yale University Press), believed that there should be ‘a version of Marx for our times.’ Similarly, Harvard Business Review (September 7, 2011) under the title ‘Was Marx Right?’, persuasively answered, ‘yes’, at least in his diagnoses of the maladies of industrial age capitalism.
Let me here explain why Marx is still alive and relevant.
Marx claimed that capitalism would immiserate workers: labour would be ‘exploited’ that real wages would fall, and working conditions would deteriorate. Real wage of workers in most industrialised countries remained stagnant or has fallen since the 1970s according to a landmark 2008 OECD report, ‘Growing Unequal?’ The ILO’s ‘World of Work Report 2008’ confirms this and documents the same for developing countries since the early 1980s with the start of the latest wave of globalisation.
As real wages have failed to keep pace with productivity, labour’s share of income has plunged, and the lion’s share of growth has accrued to those at the very top in almost every country, including in former socialist countries as well as in China and Vietnam since their embracing of free-market principles. As labour markets around the world are deregulated, working hours increased together with unpaid over-time, job insecurity heightened with increasing unemployment, underemployment, casualisation and outsourcing. Rising inequality world-wide has become a global concern.
This outcome leads to Marx’s prediction that there would be ‘poverty in the midst of plenty.’ He also argued that as workers were paid less and less, they would no longer be able to purchase the products they created. Thus, capitalism would be prone to chronic, perpetual crises of overproduction, while deepening inequality and reduced incomes would trap more and more people in debt.
From Great Depression of the 1930s to the Great Recession of recent years (2008–2009), almost every financial and economic crisis can be traced back to what Marx termed ‘fictitious capital’ — financial instruments like stocks and credit-default swaps that facilitate over-borrowing and indebtedness.
Ironically, Marx also said, despite squeezing workers, real profit rate would fall as economies stagnate under the weight of over production. While academics debate about the Marx’s prediction about falling rate of profit, it is not difficult to see happening as a significant component of what companies now announce as ‘profit’ is artificial, earned by transferring value, rather than creating it.
Thus, Marx foresaw a number of survival mechanisms for industrial capitalism, such as creation of artificial demand, monopolisation and globalisation.
Was not Marx right when we see relentless marketing campaigns for new products which have no real use? Is the latest iPhone model really that much better than the earlier versions? Is it a real need, or an invented one? While people in poor countries are having cancer from electronic product waste, mega corporations are engaged in advertising campaigns around the idea that we should destroy perfectly good products for no reason.
There is a commodity fetishism — commodities are now revered and worshipped, obscuring the value of and in the very people who have laboured over them in the first place, as observed by Marx. This alienating process is making workers disengaged, demoralised, unmotivated, uninspired. But workers do not feel it as they too suffer from commodity fetishism caused by glittering advertising campaigns.
The accelerated rise of global corporations such as Walmart or Monsanto, only confirms Marx’s prediction about monopolisation. The big companies and financial institutions are gobbling up small retailers and producers. Large monopoly firms and businesses even prey upon each other to increase their market power. Mergers and acquisitions are the only economic activities in town; but they do not add new productive capacity, while profits are artificially bloated by downsizing the workforce and inflating the stock market.
Marx wrote in 1848, ‘The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.’ This is no longer just an idea or hypothesis conceived more than one and a half century ago. It is now real: the multinational corporations are relentlessly searching for new markets, cheap labour and more natural resources.
‘Globalisation’ at the behest of MNCs and facilitated by international financial institutions, such as the IMF and the World Bank, is rapidly transforming the world into a single market, with the nations of Europe, Asia and the Americas evolving into three rival trading blocs within that market. Globalisation has become a buzzword of the late 20th century on the lips of everybody, from the president of communist China to the president of the United States.
Of course, we are seeing some backlash lately as ‘old established national industries have been destroyed or are daily being destroyed’ in the words of Marx, and local or national values are levelled to create a global culture and consumer class through the spread of Facebook, Coke, McDonalds and the like from one end to the other end of the globe. But as Marx foresaw, income and wealth gaps are getting bigger while the world is flattened by the forces of global capitalism.
So, no wonder, even a non-Marxist and one of the world’s richest business person, George Soros, is convinced that Marx is becoming truer as time progresses, and the New Yorker proclaimed Marx as ‘the next big thinker’ of the new century. It should also not surprise that Marx’s ideas are now routinely copied without even attribution to him by many contemporary thinkers, such as president Clinton’s former adviser, James Carville. At the core of Clinton’s famous liner, ‘It’s the economy, stupid’ was Marx’s ‘materialist conception of history’, introduced in his 1846 The German Ideology.
Sir John Hicks, a Nobel prize-winning economist, noted in 1969, that when it comes to theories of history Karl Marx still has the field pretty much to himself. Hicks wrote, ‘It is extraordinary that 100 years after Das Kapital… so little else should have emerged.’
Marx was certainly not infallible. Many of the predictions he made about the eventual collapse of capitalism and its replacement with communism can be said not exactly in congruence with what has happened so far. However, it would be fair to note that most of his writings focused on a critique of capitalism rather than a proposal of what to replace it with. Yet, at least one idea he had in the Communist Manifesto has become a vital instrument to smoothen the rough edges of capitalism. When Marx argued for a progressive income tax, no country had one. But, now there is hardly a country without a progressive income tax, and it is recognised as a potent tool to fight income inequality.
In sum, Marx’s work still shapes our world. Marx’s moral critique of capitalism; his keen insights into its inner workings and historical context can equip us for a proper understanding of challenges of our time. As Robert L Heilbroner, a leading economic philosopher, reminds us, ‘We turn to Marx, therefore, not because he is infallible, but because he is inescapable.’
Today, in a world where abject poverty coexist with obnoxious luxury, where the world’s eight richest billionaires control the same wealth between them as the poorest half of the globe’s population, where the richest 1 per cent own more wealth than the rest of the planet, and when the influencing magazine, Fortune (7 August, 2015) reports that the pay gap between an average worker and an executive can be more than 300 times, the famous cry, ‘Workers of the world unite; you have nothing to lose but your chains’, has yet to lose its relevance.
Anis Chowdhury, adjunct professor, University of New South Wales and Western Sydney University (Australia), was professor of economics at the University of Western Sydney between 2001 and 2012 and held senior United Nations positions in New York and Bangkok during 2012-2016.
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