January 30, 2014 12:30 PM ET
Karl Marx
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There's a lot of talk of Karl Marx in the air these
days – from Rush Limbaugh accusing Pope Francis of promoting
"pure Marxism" to a Washington Times writer claiming that New York City Mayor
Bill de Blasio is an "unrepentant Marxist." But few people actually understand
Marx's trenchant critique of capitalism. Most people are vaguely aware of the
radical economist's prediction that capitalism would inevitably be replaced by
communism, but they often misunderstand why he believed this to be true. And
while Marx was wrong about some things, his writings (many of which pre-date the
American Civil War) accurately predicted several aspects of contemporary
capitalism, from the Great Recession to the iPhone 5S in your pocket.
Here are five facts of life in 2014 that Marx's analysis of capitalism
correctly predicted more than a century ago:1. The Great Recession (Capitalism's Chaotic Nature)
The inherently chaotic, crisis-prone nature of capitalism was a key part of Marx's writings. He argued that the relentless drive for profits would lead companies to mechanize their workplaces, producing more and more goods while squeezing workers' wages until they could no longer purchase the products they created. Sure enough, modern historical events from the Great Depression to the dot-com bubble can be traced back to what Marx termed "fictitious capital" – financial instruments like stocks and credit-default swaps. We produce and produce until there is simply no one left to purchase our goods, no new markets, no new debts. The cycle is still playing out before our eyes: Broadly speaking, it's what made the housing market crash in 2008. Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows left to scheme, the whole façade fell apart, just as Marx knew it would.
2. The iPhone 5S (Imaginary Appetites)
Marx warned that capitalism's tendency to
concentrate high value on essentially arbitrary products would, over time, lead
to what he called "a contriving and ever-calculating subservience to inhuman,
sophisticated, unnatural and imaginary appetites." It's a harsh but accurate way
of describing contemporary America, where we enjoy incredible luxury and yet are
driven by a constant need for more and more stuff to buy. Consider the
iPhone 5S you may own. Is it really that much better than the iPhone 5 you had
last year, or the iPhone 4S a year before that? Is it a real need, or an
invented one? While Chinese families fall sick with cancer
from our e-waste, megacorporations are creating entire advertising campaigns around
the idea that we should destroy perfectly good products for
no reason. If Marx could see this kind of thing, he'd nod in recognition.
3. The IMF (The Globalization of Capitalism)Marx's ideas about overproduction led him to predict what is now called globalization – the spread of capitalism across the planet in search of new markets. "The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe," he wrote. "It must nestle everywhere, settle everywhere, establish connections everywhere." While this may seem like an obvious point now, Marx wrote those words in 1848, when globalization was over a century away. And he wasn't just right about what ended up happening in the late 20th century – he was right about why it happened: The relentless search for new markets and cheap labor, as well as the incessant demand for more natural resources, are beasts that demand constant feeding.
4. Walmart (Monopoly)
The classical theory of economics assumed that competition was natural and therefore self-sustaining. Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other. This might have struck his 19th-century readers as odd: As Richard Hofstadter writes, "Americans came to take it for granted that property would be widely diffused, that economic and political power would decentralized." It was only later, in the 20th century, that the trend Marx foresaw began to accelerate. Today, mom-and-pop shops have been replaced by monolithic big-box stores like Walmart, small community banks have been replaced by global banks like J.P. Morgan Chase and small famers have been replaced by the likes of Archer Daniels Midland. The tech world, too, is already becoming centralized, with big corporations sucking up start-ups as fast as they can. Politicians give lip service to what minimal small-business lobby remains and prosecute the most violent of antitrust abuses – but for the most part, we know big business is here to stay.
5. Low Wages, Big Profits (The Reserve Army of Industrial Labor)
Marx believed that wages would be held down by a
"reserve army of labor," which he explained simply using classical economic
techniques: Capitalists wish to pay as little as possible for labor, and this is
easiest to do when there are too many workers floating around. Thus, after a
recession, using a Marxist analysis, we would predict that high unemployment
would keep wages stagnant as profits soared, because workers are too scared of
unemployment to quit their terrible, exploitative jobs. And what do you know? No
less an authority than the Wall Street Journal warns, "Lately, the U.S. recovery has
been displaying some Marxian traits. Corporate profits are on a tear, and rising
productivity has allowed companies to grow without doing much to reduce the vast
ranks of the unemployed." That's because workers are terrified to leave their
jobs and therefore lack bargaining power. It's no surprise that the best time
for equitable growth is during times of "full employment,"
when unemployment is low and workers can threaten to take another job.
In Conclusion:
Marx was wrong about many things. Most of his
writing focuses on a critique of capitalism rather than a proposal of what to
replace it with – which left it open to misinterpretation by madmen like Stalin
in the 20th century. But his work still shapes our world in a positive way as
well. When he argued for a progressive income tax in the Communist
Manifesto, no country had one. Now, there is scarcely a country without a
progressive income tax, and it's one small way that the U.S. tries to fight
income inequality. Marx's moral critique of capitalism and his keen insights
into its inner workings and historical context are still worth paying attention
to. As Robert L. Heilbroner writes, "We turn to Marx, therefore, not because he
is infallible, but because he is inescapable." Today, in a world of both
unheard-of wealth and abject poverty, where the richest 85 people have more wealth than the poorest 3
billion, the famous cry, "Workers of the world unite; you have
nothing to lose but your chains," has yet to lose its
potency.
Read more: http://www.rollingstone.com/music/news/marx-was-right-five-surprising-ways-karl-marx-predicted-2014-20140130#ixzz2sDZ88w27
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