Was Marx Right After All?

Happy May Day Comrades!  Matt Yglesias took this International Workers Day to write a fascinating look back on Marx's ideas prompted by liberal economist Brad DeLong's re-posting of a talk he gave in 2009 about understanding Marxist thought. 

I suppose I should take some time to point out that neither I, nor Yglesias nor DeLong are communists.  Conservatives have taken to use terms like socialist and communist as slurs to throw at anyone left to Atilla The Hun these days and this just confuses people, but if you still don't know what a communist is, I'd suggest Wikipedia.  I'd also note that it is important to remember that people in the 20th Century used Marxist thought to develop political movements that are responsible for a great deal of human suffering.  Throat clearing aside though, Marx made some predictions about capitalism 150 years ago that seem eerily relative since 2008.

Ygelsias points out that DeLong's talk:

...offers a number of criticisms of Marx that I would have enthusiastically endorsed in 2009 but which look weaker four years later. In particular, DeLong says that Marx the political activist was too pessimistic about the idea that the ruling class would agree to make economic growth pareto optimal within the context of a market economy:

[T]hat even though the ruling class could appease the working class by using the state to redistribute and share the fruits of economic growth it would never do so. They would be trapped by their own ideological legitimations--they really do believe that it is in some sense “unjust” for a factor of production to earn more than its marginal product. Hence social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would collapse or be overthrown. The Wall Street Journal editorial page works day and night 365 days a year to make Marx’s prediction come true. But I think this, too, is wrong.

To me that unquestionably looked wrong as of 2009. But in the interim, those Wall Street Journal editorial page tendencies have grown much stronger. You see a rising tide of Rand-inflected moralism about market outcomes and a reduced emphasis on Friedman-style pragmatism. You also see a sharply reduced emphasis on belief in any kind of macroeconomic stabilization policy, in favor of a "let them eat cake slash move to North Dakota" moralism about unemployment. Last but by no means least, it really has become the conventional wisdom among American elites that the appropriate policy response to fiscal imbalance in a time of high and rising income inequality is restore balance by reducing the scope and generosity of social insurance programs. 

In short high unemployment, stagnant wages, and low growth may be bad for society over all, but to the existing economic elite they aren't bad at all.  High unemployment allows firms to pay less both to new workers and prevent their current workers for getting improvements in compensation or working conditions.  In practical terms this means that major companies can do things like hire a bunch of temps with no benefits, low wages and no job security instead of having to hire people full time.  Since payroll is the single largest overhead cost for most firms, any means of cutting it-be it by hiring temps or by simply paying new people less-will almost certainly result in higher profits and a corresponding increase in stock price.

Secondly, Marx's idea that the ruling elite would always and necessarily be opposed to any form of redistribution of wealth or social action to help the losers in a free market economy once seemed foolish.  But the popularity of Randian thought and political argument's like Mitt Romney's "makers versus takers" seem to show this tread emerging in a very real and political sense over the last few years.  Political observers of all stripes were shocked that a presidential candidate would speak so crudely when Romney initially rolled this out, but it would never have surprised a Marxist.

Ygleisas concludes with this:

In summary, I'm not a Marxist. But I worry that political conservatives are going to turn me into one. My view is that full employment and robust systems of redistribution from the more fortunate to the less fortunate are possible. I see real evidence for this in the world. The Obama administration has actually enacted a lot of redistribution programs, and the government of Australia has maintained consistent full employment policies for a long time now. But the collapse of the Soviet Union, a good thing on its own terms, has had the bad consequence of breeding massive complacency among the upper classes in the West. It used to seem important to people in the rich countries to prove that market economies not only could but in fact would lead to broadly rising living standards.  

Looking back on the rise of Marxist political movements, one thing you are struck by a overarching trend where the powers that be refuse to reform or try and improve their society, like Czar Nicholas II in Russia or the Kuomintang in China, resulted in a communist revolution.  I certainly hope this trend isn't reimerging, but as Vice has pointed out, politics in austerity-torn countries in Europe is already starting to get scary.