Harvard Business Review Blog Asks: "Was Marx Right?"

Another day, and another socialist fundamentalist confusing our crony-capitalist, half socialist and half fascist society with a free-market, capitalist economy goes to Marx to find the salute. This is just a few days after an investment banker at UBS was turning to Marx for solutions to the current crisis.

This time, it's Harvard Business Review Blog's to raise the question: Was Marx Right? Here's a blog post from someone who introduces himself as a free-market capitalist and who is trying to understand whether Marx's diagnoses were right — unfortunately, the points he makes show a complete lack of understanding of what Free Market stands for, and what capitalism is. And consequently, most of the ills of our society, which are attributed to the socialistic governments which lead us (inflation, fiat currency, partial reserve banking, central planning of everything from healthcare to insurance to interest rates) are seen as result of the free market.

Finally, I think I'll stick to my point of just saying: each country gets the politicians and the society they deserve. And it's particularly the case. The fact most people are happy to eat at McDonald's, to shop at Wal-Mart and to work for Wal-Mart is perfectly in symbioses with my theory of Dark Ages 2.0.

The fact that people prefer to watch X-Factor or Loft-Story or any other useless TV show instead of educating themselves and trying to rise as a society is the result.

And people being completely uneducated and living in nanny-states, looking for the government to provide food, labor, protection and — it is the case in Europe, holidays as a human right — is the reason why there are still so many looking at theories which have failed the test of reality many times already, after having been discredited in theory and yet, they are happy to repeat over and over again the same mistakes.

Enough for the rant, here are some quotes which really depressed me to the core.

I mean: "Was there maybe a tiny mote of insight or two hidden in Marx's diagnoses of the maladies of industrial age capitalism?" 

Let's take Marx's big critiques of industrial age capitalism, one by one [...] 

Immiseration. Marx claimed that capitalism would immiserate workers: he meant that labor would be "exploited" — not just in a purely ethical sense, but in a narrower economic one: that real wages would fall, and working conditions would deteriorate. How was Marx doing on this score? I'd say middlingly: wages in many advanced economies — notably, the most purely capitalist in a financialized sense — have failed to keep pace with productivity; not for years, but for decades. (America's median wage has been stagnant for roughly 40 years.) In macro terms, labor's share of income has plummeted, while the lion's share of growth has accrued to those at the very top. 

Crisis. As workers were paid less and less, capitalism would be prone to chronic, perpetual crises of overproduction — for they wouldn't have the means to purchase or invest in enough goods to keep the economy humming. As Marx put it, there was likely to be "poverty in the midst of plenty." How's Marx doing on this score? Not bad, I'd say: the last three decades have in fact been characterized by global crises of what you might crudely call overproduction (think: too little demand chasing too many disposable widgets, resulting in a massive global debt crisis, as vanishing middle classes took on more and more debt to compensate for stagnant real wages). 

Stagnation. Here's Marx's most controversial — and most curious — prediction. That as economies stagnated, real rates of profit would fall. How does this one hold up? On first glance, it seems to have been totally discredited: corporate profits have broken through the roof and into the stratosphere. But think about it again, in economic terms: Marx's prediction concerned "real profit," not just the mystery-meat numbers served up by beancounters, and chewed over with gusto by "analysts." When seen in those terms, Marx might be said to have been onto something: though corporations book nominal profits, I'd suggest a significant component of that "profit" is artificial, earned by transferring value, rather than creating it (just ask mega-banks, Big Energy, or Big Food). I've termed this "thin value" and Michael Porter has described it as a failure to create "shared value." Replace "declining real profit" with "shrinking real value" and it's analogous to what Tyler Cowen and I have called a Great Stagnation (though our casus belli for it differs significantly from Marx's). 

Alienation. As workers were divorced from the output of their labor, Marx claimed, their sense of self-determination dwindled, alienating them from a sense of meaning, purpose, and fulfillment. How's Marx doing on this score? I'd say quite well: even the most self-proclaimed humane modern workplaces, for all their creature comforts, are bastions of bone-crushing tedium and soul-sucking mediocrity, filled with dreary meetings, dismal tasks, and pointless objectives that are well, just a little bit alienating. If sweating over the font in a PowerPoint deck for the mega-leveraged buyout of a line of designer diapers is the portrait of modern "work," then call me — and I'd bet most of you — alienated: disengaged, demoralized, unmotivated, uninspired, and about as fulfilled as a stoic Zen Master forced to watch an endless loop of Cowboys and Aliens. 

False consciousness. According to Marx, one of the most pernicious aspects of industrial age capitalism was that the proles wouldn't even know they were being exploited — and might even celebrate the very factors behind their exploitation, in a kind of ideological Stockholm Syndrome that concealed and misrepresented the relations of power between classes. How's Marx doing on this score? You tell me. I'll merely point out: America's largest private employer is Walmart. America's second largest employer is McDonald's.  

Commodity fetishism. A fetishized object is one which is more than a symbol: it's believed to have actually the power the symbol represents (like an idol, or a totem with magical properties). Marx claimed that under industrial age capitalism's rules, commodities became revered talismans, worshipped through transactional exchanges, imbued with mystical powers that give them inherent value — and obscuring the value of and in the very people who've worked labored over them in the first place. It's one of Marx's most subtle and nuanced concepts. Does it hold water? Again, I'll merely pointing to societies in furious pursuit of more, bigger, faster, cheaper, nastier, now, whether it's the retail temples of America's mega-malls, or London rioters stealing, not bread, but video games.