ReThinking Marx @ Harvard: Was Marx Right?

Several Noted Economists Have Recently Invoked Marx In Their Review Of Our Current Economic Plight… Here’s One More…

An article originated by Umair Haque at the Harvard Business Review blog and adapted by Faustian urGe.

Umair Haque is Director of the Havas Media Lab and author of The New Capitalist Manifesto: Building a Disruptively Better Business. He also founded Bubblegeneration, an agenda-setting advisory boutique that shaped strategies across media and consumer industries.


Introductory Discussion/Clarrification/Caveat:

This discussion is about Marx’s analysis of capitalism… not about communism.

Marx researched the British Library for decades, studying dull statistical economic reports; he sought to understand basic underlying mechanisms of capitalism. 

His studies revealed how capitalism naturally moves through boom and bust cycles – how it is perpetually in crisis – how value is created by both capital and labor – how some capital must be destroyed to restore profit margins – how unemployment levels control the price of labor – and so much more.

Marx’s observation is an analytical description of a vast and complex system, having nothing to do with “communism” or opinion… just as observing how gravity works and describing its laws has nothing to do with being on the left or the right political spectrum. This perspective is Mr Haque’s focus in this article — not a discussion of communism.

Marx managed to reveal, describe, and catalog fundamental characteristics of capitalism at a time when capitalism was still very young. That work is an attempt to understand the nature of capitalism. Such an effort is a partisan-free undertaking because establishing an accurate picture of capitalism is essential to any political party to which you might subscribe.

Unfortunately, in our more modern age, we seem unable to look at Marx’s work  without triggering partisan responses from both left and right. And that gut reaction became a problem for Marx as well during his time, as others appropriated his work analyzing the capitalist system and used it for their own ends. Marx himself once said of some French Communists, “If this is Marxism then I’m no Marxist.”

Given the conflicted state of our current global capitalism, it’s time to look at Marx with fresh eyes. Francis Wheen wrote a superb biography, where he makes a very strong case for a reexamination of his work. What seems odd and strange is that our modern economists and politicians are continually surprised by economic busts, and try to avoid or mitigate them, even while they are a fundamental characteristic of capitalism — economists and politicians, and we “the people,” continually point fingers of blame and responsibility as if the busts can be avoided. They can’t.

What can be done, though, is establishing systems — the social safety net… the dreaded “welfare state” — to mitigate the impact of business cycles and the harsher peculiarities of capitalism.

It’s high time to rediscover, and celebrate, Marx’s analysis of capitalism and recognize its fundamental cycles and integrate them into government plans so that we aren’t continually surprised by events that are natural to our economic system. That’s not Marxism, or communism, it’s just plain common sense. Yet, I fear, we may be lacking such a trait in today’s modern world…



In case you’ve been on Mars (or even just on vacation), here’s a surprising idea that’s been making the rounds lately: there might have been something to Marx’s critiques of capitalism after all.

Now, before you leap into the inter-tubes, seize me by the arm, perform a citizens’ arrest, and frog-march me into the nearest FBI office, exclaiming “See this suspicious looking brown guy? He’s a card-carrying communist!!” please note: I’m… well… not. I’m a staunch believer in capitalism (hence, the title of my book.)

Yet, I do think — and after reading the dismal, dreary headlines every day, not to mention checking the value of one’s 401K, house, job, economy, society, and future lately, I’d bet you do think , too — that prosperity as we know it might be lazily circling the glowing inner rim of the burbling event horizon of a massive super-galactic black hole.

And when it comes to doing much about it (wave hello to your new friend, “double-dip”), well, the status quo’s pretty much out of options, out of ideas, and running out of time (hey, is that a Congressional “super-committee” being stalked by lobbyists I see? Who came up with this brain-melter of an idea?).

Now, please note: This is a hugely divisive topic, and by “was Marx right?” I don’t mean “Communism is the glorious future of humankind, my brothers in arms!! (And I am your leader — bow!!).” For, of course, I think we’ve had plenty of compelling demonstrations that it wasn’t.

Rather, I mean to ask: “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 (and with a grain of salt: since I’m far from a Marxist economist, it’s entirely possible my quick, partial descriptions leave much to be desired).

IMMISERATION. Marx claimed that capitalism would immiserate [economically impoverish] 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 financial 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 “the workers” wouldn’t consistently 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” [accountants and financial analysts who should never be allowed as CEO’s or decision-makers].

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. [Yet, the marginalized lower and middle-classes still rant about the beneficence of pure and free and unfettered markets… look at the Tea Party… supported by “the proles {who} wouldn’t even know they were being exploited.”]

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 and 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 point 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.

Marx’s critiques seem, today, more resonant than we might have guessed.

Now, here’s what I’m not suggesting: that Marx’s prescriptions (you know the score: overthrow, communalize, high-five, live happily ever after) for what to do about the maladies above were desirable, good, or just.

History, I’d argue, suggests Marx’s solutions were anything but “desirable, good, or just.”

Yet nothing’s black or white — and while Marx’s prescriptions were poor, perhaps, if we’re prepared to think subtly, it’s worthwhile separating his diagnoses from his solutions.

Because the truth might just be that the global economy is in historic, generational trouble, plagued by problems the orthodoxy didn’t expect, didn’t see coming, and doesn’t quite know what to do with. Hence, it might just be that if we’re going to turn this crisis upside down, we’re going to have to think outside the big-box store, the McMansion, the dead-end McJob, the bailout, the super-bonus, and the share price.

The future of plenitude probably won’t be Marxian — but it won’t look like the present.

And if we’re going to trace the beginnings of better, more enduring, more authentic, more meaningful, fundamentally more humane paradigm for prosperity, perhaps it’s worthwhile exploring — even when we don’t agree with them — the critiques and prophecies of those who already challenged yesterday’s.


2 responses to “ReThinking Marx @ Harvard: Was Marx Right?

  • missdisplaced

    What will happen when the capitalist economy has no more consumers able to buy?

    Really good post. We talk about Marx (and also Gramsci) quite a lot in my communication classes. It pisses me off when the stupid Teapublicans throw around the “socialist-commie” moniker without any understanding of what it actually means.

  • laurensheil

    I tried to have this conversation with a Tea Partier last year. He didn’t get it and ended up calling me all sorts of nasty names in the process. Sigh- good luck to you.

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