Economic Realities and the Marx Mystique

飞雪寒冰

In the beginning was Karl Marx with a vision of how the Industrial Revolution would transform everything, and would be followed by a great communist social revolution — greater than the political French Revolution — that would wash us onto the shores of Utopia.

The mature Marx saw the economy as the key to history: Every forecast and historical interpretation must be based on the economy's logic of development. This project, carried forward by others, ran dry. And when Marx and Friedrich Engels' writings became sacred texts for the world religion called communism, things spiraled out of control.

But let's go back to a time before Marxism lost its innocence. Let's go back and look at the thinker Marx, and what he actually wrote and thought.

Marx had a three-part intellectual trajectory. He started as a German philosopher. Then he became a French-style political activist, political analyst and political historian. He ended up trying to become a British-style economist and economic historian.

At the start of his career, Marx believed that all we need for true human emancipation is to think correctly about freedom and necessity. Later, he recognized that thought is not enough; that we have to organize, politically. And then in the final stage, he thought that political organization has to go with, not against, the grain of the truly decisive factor -- the extraordinary economic changes that the coming of the Industrial Revolution was bringing to the world.

飞雪寒冰

At each stage, Marx showed the enthusiasm of a true-believing convert: It was never the case that philosophy alone could bring Utopia. It was never the case that all problems would be resolved after revolution, nor that the underlying economic mode of production was the base, and that its evolution determined the shape of the superstructure.

Marx never completed the intellectual trajectory he set himself on. He tried as hard as he could to become a classical, British economist. But he didn't make it; the elderly, mature Marx was mainly an economist and economic historian, but also part political activist and prophet.

Any major prophecy of a glorious, utopian future is bound to be hollow when applied to this world. New Jerusalem does not descend from the clouds "prepared as a Bride adorned for her Husband," as the Bible says, and a Great Voice does not declare, "I shall wipe away all tears from their eyes; and there shall be no more death, neither sorrow, nor crying. Neither shall there be any more pain, for the former things have passed away."

Marx the political activist has, I think, relatively little to teach us. He thought the revolutions of the 19th and 20th centuries would be stoked by factory workers. Instead, they were stoked by peasants. He thought they would take place in the richest countries in the world. But they took place in some of the poorest. And the governments that ruled after the revolution did not replace the governments of men that administrate or establish a free society of associated producers living in abundance.

Marx the economist had six big things to say, some valuable for today and some not. Call them the three goods and the three bads.

飞雪寒冰

Marx was among the very first to recognize that the fever-fits of financial crisis and depression that afflict modern market economies were not a passing phase or something that could be easily cured, but rather a deep disability of the system. That was a good. We are being reminded of this now. Marx pointed a spotlight in the right direction. He thought that cycles and crises showed the long-term unsustainability of the system. We modern, neo-liberal economists view it not as a fatal lymphoma but rather like malaria: Keynesianism -- or monetarism, if you prefer -- gives us the tools to transform the business cycle from a life-threatening yellow fever into occasional night sweats. With economic policy as quinine, we can manage the disease.

Marx was among the first to get the Industrial Revolution right and understand what it meant. The ancient Greek philosopher Aristotle argued in his work Politics that it was impossible to love wisdom without owning many slaves, or without instruments like “the statues of Daedalus, or the tripods of Hephaestus," and if "the shuttle would weave and the plectrum touch the lyre without a hand to guide them, chief workmen would not want servants, nor masters slaves." Marx saw the Industrial Revolution was giving us the statues of Daedalus, the tripods of Hephaestus, looms that wove and lyres that played by themselves, opening the possibility of a society in which people could love wisdom without being supported by the labor of a mass of illiterate, brutalized, half-starved and overworked slaves.

Marx the economist got it right when he observed that the benefits of industrialization do take a long time – even generations -- to kick in, while the costs of redistribution and power grabs -- in the interest of efficiency and rising, politically powerful mercantile classes -- kick in immediately.

Now, on to the three bads.

飞雪寒冰

Marx believed capital does not complement but substitutes for labor. Thus, technological progress and capital accumulation that raise average labor productivity also lower working class wages. Hence, the market system simply could only deliver a combination of obscene luxury and mass poverty. This belief seems to have been simply wrong.

Marx did not like the society of the cash nexus. He believed a system that reduced people to working for wages and wages alone was bad. Instead, he thought people should view their jobs as expressions of their species-being -- ways to gain honor, or as professions they were born or designed to do, or as ways to serve their fellow humans. Here, I think, Marx mistook the effects of capitalism for the effects of poverty. The demand for a world in which people do things for each other purely out of beneficence rather than interest and incentives leads you down a very dangerous road, for societies that try to abolish the cash nexus in favor of public-spirited benevolence do not long succeed.

Marx believed that the capitalist market economy was incapable of delivering an acceptable distribution of income for anything but the briefest of historical intervals. As best as I can see, he was pushed to that position by watching the French Second Republic of 1848-'51, in which the ruling class came to prefer a charismatic mountebank for a dictator -- Napoleon III -- over democracy because dictatorship promises to safeguard property in a way democracy does not. Hence, Marx saw political democracy as only surviving as long as the rulers could pull the wool over the workers' eyes, and then collapse. Yet social democracy, progressive income taxes, a very large and well-established safety net, public education with high standards, channels for upward mobility, and all the panoply of the 20th century social democratic mixed-economy democratic state seem able to reduce Marx's fears.

The good things that Marx was able to think must, I believe, be credited to his own account -- his thoughtfulness, industry, intelligence and desperate desire to try to get things right. The bad things stemmed, I believe, from his intellectual roots: Marx's beginnings in German philosophy, and the fact that he hooked up in the 1840s with Engels, whose family owned textile factories in Manchester.

Let's focus on Manchester.

飞雪寒冰

The British interests of the German partnership of Ermen and Engels were not in London or Birmingham, but Manchester. Engels' 1845 Condition of the Working Class in England, cribbed for Section 1 of the Communist Manifesto, was about the condition of the working class in Manchester. Yet as historian Asa Briggs stressed forcefully in a 1963 work, Manchester was not typical of England. Briggs quotes Alexis de Tocqueville's descriptions of Manchester as a city with "a few great capitalists, thousands of poor workmen and little middle class," compared to Birmingham with "few large industries, many small industrialists.... Workers work in their own houses or in little workshops in company with the master himself.... The working people of Birmingham seem more healthy, better off, more orderly and more moral than those of Manchester."

Briggs speculated that Engels' book might have been very different indeed had Ermen and Engels' interests been elsewhere than Manchester: "His conception of 'class' and his theories of the role of class in history might have been very different.... Marx might have been not a communist but a currency reformer."

Back in 1998, George Boyer of Cornell University took a look at the historical circumstances of the composition of the Manifesto. He wrote that the average age of death for "mechanics, laborers and their families" in Manchester was 17, compared to 38 in rural Rutlandshire, even though laborers' wages were at least twice as high in Manchester. Moreover, 57 percent of the children born in Manchester to working class parents died before their fifth birthday.

Engels arrived in Manchester in late fall 1842, Boyer noted, as Britain was just beginning to recover from the deep depression of 1841-'42. Engels wrote in 1845 about "crowds of unemployed working men at every street corner, and many mills were still standing idle." The Economist reported that in the first six months of 1848 (as the Manifesto was being written), 18.6 percent of the workforce at Manchester's cotton mills was unemployed, and another 9.5 percent only worked for only short periods.

British philosopher John Stuart Mill concluded in 1848 that "hitherto, it is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being. They have enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes." Marx and Engels were not alone in asserting that the standard of living was quite poor, and perhaps declining, during the "hungry '40s." Army recruits born around 1850 were shorter than those born around 1820.

飞雪寒冰

It looks as if Marx and Engels wrote the Manifesto -- and made their permanent intellectual commitments -- in 1848, at the nadir of living standards as far as British Lancashire textile workers were concerned. Their assertion that wages declined as capitalism progressed looks good until 1848 if you take Manchester as your guide. Thereafter, it proved wrong. By 1880, manual workers were earning 40 percent more than in 1850. Parliament began to regulate conditions of employment in the 1840s. Parliament began to regulate public health in the 1850s. Parliament doubled the urban electorate in 1867, just as Volume 1 of Capital was published. Parliament gave unions official sanction to bargain collectively in the 1870s.

Marx appears to have responded to this not by rethinking his opposition to markets as social allocation mechanisms or by reworking his analyses of the dynamics of economic growth, capital accumulation, and the real wage level, but by blaming British workers for not acting according to his model in response to his predictions of continued impoverishment and ever-larger business cycles – predictions that had not come to pass. Boyer quotes Marx writing in 1878 about how British workers "had got to the point when (the British working class) was nothing more than the tail of the Great Liberal Party, i.e. of the oppressors, the capitalists." And Boyer quotes Engels writing in 1894 of how "one is indeed driven to despair by these English workers... bourgeois ideas... viewpoints... narrow-mindedness."

In the late 1870s -- after the failure of the British working class to become more militant, the failure of the Paris Commune, the founding of the French Third Republic, and Otto von Bismarck's creation of a unified and Prussified German Empire -- Marx and Engels started turning their attention toward Russia.