Bhupinder blogs:
It was Marx who had analyzed the phenomenon of capitalism when it was still nascent- foretelling its demise not so much because it was his wish, but pointing out that that the system is inherently unstable and full of contradictions. The Marxist conception of the State as an expression of class power is again vindicated by the manner in which the federal governments in leading capitalist countries- the US, UK, Japan, Australia and even the puny India- has stepped into the rescue and “buy” back sunk investments. It suits these governments to step out of business activities when it suits the latter, and step in when it suits them too, that is having the cake and eat it too! Noam Chomsky once called the US (that’s true of most capitalist countries) – socialism for the rich.
This of course, is not unprecedented. Again it was Marx (or Engels) who commented in the preface to the second edition of Das Capital, that the crisis of the capitalism system of production (not to say of distribution) is inherent because while production grows in geometrical progression, markets expand only in an arithmetic progression. Since then, the web of conflicts and contractions within the capitalist system has only grown more complex.
In a recent BBC viewpoint blurb, Noam Chomsky had what I think was a clear and rather brilliant way of summarizing the federal bail-outs (and our economy’s relation to business in general) as “designed in large measure to socialise cost and risk and privatize profit, without a public voice. “
You could increase the dampening effect, btw, by requiring recapture — i.e. ever dollar someone makes over $500,000.00 would be subject to recapture — kind of like if you get an advance on a book, usually the publisher gets to off-set the advance, but if the book tanks, they can’t come get the money from you.
Where would discount mortgage brokers be if they were looking at repaying commissions made on selling the things, at least over the first 500,000.00 a year.
Where would the head of AIG be? Sure, he repaid $115 million out of the billion dollars he took in bonuses, but with recapture he would be on the hook for all of that billion except for the first 500,000.00.
That would change a lot of the short horizon thinking that goes on where people are aimed at results that are charted in this year’s bonuses, with the though that at the end of next year they will be moving on.
This is one of maybe three important points that Marx came *THIS* close to getting exactly right, only to be screwed up by his supply-side bias, his bizzare evidence-free reading of history and the false assumptions of the capitalist class he bought into. Capitalists must produce to earn a profit, and they must also keep down the costs of business, including labor, meaning that periodically there will be a lack of people to buy what is being produced. Exactly right.
The inheirent contradiction in Marx is that he credits capitalism with engineering nearly miraculous levels of productive technology, points out (rightly) that the poor (“workers”) are not benefitting as much as they deserve to, then states that the workers must therefor seize the means of production, destroy capitalism, and replace it with… well, there is no way to actually know see, because he is doing a scientific study of history and there is no crystal ball with which to see the future.
The reason he cannot imagine what will come next is that a non-capitalist ecconomy that retains the productive technologies of capitalism is an oxymoron. CAPITALISM ITSELF *is* the technology generating miraculous levels of production. You cannot cook the capitalist goose because THAT is what is laying the golden eggs.
Instead of destoying capitalism, the poor must seize THAT for themselves. Among other results, sending the benefits of capitalist production down to least well-off will ensure most of it will be consumed, thus ensuring demand for what is produced. A demand-side ecconomy will not have the periodic crises that supply-side capitalism creates.
Interestingly enough, Devnavda, the increasing shift to symbolic analysis and mental work as the basis of the capitalist economy is moving us to a demand-side model. The problem with workers “seizing the means of production” – more realistically, given the historical tendency of “seizing” to mean “destroying”, “CREATING the means of production”, has always been that the workers didn’t have the resources or the ability to concentrate them to create working capital. Co-ops were an attempt to get around that by having the workers combine to create capital on their own, and it worked, but it’s hard to scale up.
That’s no longer true. The most important element of capital these days is human capital – skills, expertise, articulated and unarticulated knowledge. That’s capital that ordinary people can develop for themselves. More importantly, because of technological changes and the shift towards an information economy, they can deploy it for themselves; in Marx’ day, sure, you could become a really really skilled worker and be more valuable, and even see some of that value returned to you, but for the most part you couldn’t set up shop yourself no matter how good you were.
These days, you can. And millions are.
Robert-
I mostly agree. You provide a good argument for greater public funding of higher education, as well as for a basic income, which would allow adults to take the time off when they decide is neccessary to further educate themselves.
As for the historical tendency to conflate “seizing” the means of production with “destroying” them, I would say that most of that conflation occurs after the publication of Marx’s ideas, as an unfortunate direct result. Ideas have consequenses.
Well, it’s an argument for public education that increases human capital, anyway. I’m not sure what a degree in European History does to improve the economic value of one’s output ;)
It will be interesting to see what happens when, as the Marxists put it, “the State as an expression of class power” combines with the “working” class owning much of the means of production, between their ears. Classical capitalists will remain important, because money always talks, but what happens when being poor in the developed world is a reflection of individual failure (or inability) to develop human capital, and not the result of economic decisions made by other people?
It won’t be tomorrow, but it will be in my lifetime.