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Slouching Towards Utopia?
11:
6698
words
DRAFT
5.04 May 1, 2019
Slouching Towards Utopia?
:
An
Economic History of the
Long
Twentieth
Century
XI. Alternatives: Marxism
J. Bradford DeLong
U.C. Berkeley
Economics and Blum Center,
NBER
, WCEG
<
https://www.icloud.com/pages/0zjREMgiTKAS3yCYAWV2dbTIg
>
By the early 1930s it seemed pretty clear to almost all that the global economic and
the national political-economic orders had failed.
They had failed to restore the upward march of prosperity seen before World War I.
They had failed to provide a land fi t for heroes to live in. They had failed to
generate stable high unemployment.
They had failed to provide citizens with the Polanyian rights—to a secure place in
a stable community, to confi dence that your job or at least the ability to fi nd a new
and better or as-good job easily would be there, to incomes that corresponded to
what you deserve. They had even failed to provide the rights that a market society
is supposed to focus on: that ownership of property gives you security, prosperity,
and power. The coming of the Great Depression had demonstrated that property
rights are only worth much in a well-functioning economy. Political insurgencies
had demonstrated that property rights themselves could be up for grabs—that a
society that could not secure the Polanyian rights could not guarantee property
rights. And the coming of truly mass politics—reinforced by new modes of social
media, like the radio—had shown elites that patterns of deference, authority,
respect, and the formation of societal consensus were up for grabs as well. Power
had to flow from a mass political base, security had to flow from confi dence that
the system would work, and prosperity had to flow from an economy in which
there was enough demand to make ownership of property worth something.
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But if representative elected
parliamentary
assemblies doing the governing and if
markets doing the economizing manifestly did not do the job, what were the
alternatives. Were there alternatives? There were. They were two: call them
Marxism and fascism. This chapter deals with Marxism.
11.1: Karl Marx Thought
I write “Marxism” rather than “socialism” because socialism had, by 1930,
transformed itself from a river to a delta. Many who called themselves “socialist”
by 1930 held that in a good society there ought to be enormous scope for
individual initiative, for diversity, for the decentralization of decision making, for
liberal values, and for private property. Nearly all who called themselves liberals
believed that there was substantial scope for government provision, for progressive
taxes and social welfare spending, for government price regulation—an
overwhelming scope in the case of monopoly—and in public ownership. the
question was an empirical one: private where private belongs, public where it was
needed, with circumstances altering cases. And representative democracy and
rational argument could be trusted to settle things case-by-case.
But there were those who were less meliorist. They tended to think that classes
whose interests were opposed to the general and public interest—especially the
rich—should not be allowed to vote or speak. Because their interest was in the
oppression and impoverishment of others, their weight in public discourse and
decision making could only degrade the quality of decisions. Because the rich
could buy large megaphones, their speech could seriously degrade the public
sphere. Because the rich could hire guards and mercenaries, they could not be
trusted to acquiesce when the mechanisms of representative government decided
against them—they would then resort to what Karl Marx and Friedrich Engels
called a “pro-slavery rebellion”, harking back to American southern slaveholders’
refusal to accept the election of Abraham Lincoln in 1860, and appealing to force.
So the people needed to be ready to stand to arms to suppress such a rebellion. And
perhaps the people needed to do more—to stand to arms to overcome institutional
or bureaucratic blockages, or even, perhaps, to offset the hegemony of the ideas of
the ruling class in the public sphere.
I will call these “Marxists”. They offered an alternative to the market economy, to
an economy with a large amount of private property, and to representative and
parliamentary democracy. But what this alternative was was not clear to Marx and
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Engels and to their fi rst generation successors. It was only when movements
calling themselves “Marxists” began to exercise power, whether dictatorial or
democratic, after World War I that they began groping to fi nd out.
11.1.
1
:
The
M
ost
R
evolutionary
C
lass
Karl Marx, one of the few in the
early 1900s
to
fore
see
anything like
the explosion
of wealth
that the long
twentieth century would bring, mocked the sober, dark-
suited businessmen of his time. They claimed to want only stability. Their claimed
to view revolution with horror. Yet they were themselves, in a sense, the most
ruthless revolutionaries the world had ever seen.
The business class—
what Marx
call
ed
the
bourgeoisie
, grabbing a French concept for his German texts, and what
most translations leave in its French original
—were indeed a most revolutionary
and progressive class. In a real sense, the prehistory during which scarcity, want,
and oppression had been human destiny was about to end. It was the business class
of entrepreneurs and investors, together with the market economy that pitted
individual businessmen against each other through competition, that was
responsible for this greatest of all revolutions in the potential human condition.
But Marx also saw an overpowering danger: the economic system that the
bourgeoisie had created would soon become the main obstacle to happiness. It
could, Marx thought, create wealth, but it could not distribute wealth evenly.
Alongside prosperity would
inevitably
come increasing polarization of wealth. The
rich would become richer. The poor
would become
poorer, kept in a poverty made
all the more hateful because needless.
11.1.
2
:
The
L
abor
T
heory of
V
alue
Marx tried to make his argument as simple and convincing as one, two, three. He
chose to analyze the economy using “labor value” units: defi ne the production of
the average worker to have a labor value of one. As time passes and productivity
grows, the quantity of commodities that make up this one unit of value will
increase. As long as this is remembered, the use of labor values is innocuous:
production can be measured in any units as long as they are used consistently.
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At any given time, the economy as a whole has a fi xed, set stock of capital
.
The
economy also has a set total flow of annual profi ts.
The economy has a profi t rate,
the quotient of profi ts and the capital stock. T
he
economy has as set total flow of
annual wages
paid to workers
.
I
t must be—arithmetically—that
when you add
wages per worker to the product of the profi t rate and the capital stock per worker
that the sum total is always one, for wages per worker and profi ts per worker have
to add up to total production. That is a matter of the defi nition of labor value.
Now, Marx argued, let
time pass and economic development progres
s. The labor
value of total production remains at one: more goods are produced, but each has a
lower value.
As economic development progresses, it becomes more capital
intensive: more and more sophisticated machines are used by the average worker.
Workers and businesses that refuse to change with the times and with progress fi nd
themselves using more labor than is socially necessary to produce commodities.
They
will lose market share and
go bankrupt as o
ther, more ef
fi
cient, more modern
firms
and workers
undersell them.
So capital per worker is rising. And that means
that there is downward pressure on both the rate of profi t and on wages per worker.
But the economic system requires profits to function. If the rate of profit drops too
low, then investors will stop investing. A falloff in investment causes a depression
and unemployment. During the depression wages will drop, and the depression will
not lift until the rate of profit is once again up above some minimum acceptable
rate necessary to induce the business class to invest again.
As time passes,
therefore, periods of depression and high unemployment will grow more frequent
and deeper. And as time passes the downward pressure exerted on wages will push
them lower and lower. Marx saw a future, as long as the capitalist economy was
allowed to run, in which society became richer and richer while the overwhelming
majority of society’s cities become poorer and poorer:
The more productive capital grows, the more the division of labor and the
application of machinery expands. The more the division of labor and the
application of machinery expands, the more competition among the workers
expands and the more their wages contract. [T]he forest of uplifted arms
demanding work becomes thicker and thicker, while the arms themselves become
thinner and thinner.
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11.1.3: Revolution!
Fortunately for humanity, Marx thought, his dystopian vision of what late
capitalism would be would not be the end state of human history. The rule of the
business class was and would create a truly prosperous society: “mo
re massive
and more colossal productive forces than have all preceding generations together.
..
machinery, application of chemistry to industry and agriculture, steam-navigation,
railways, electric telegraphs, clearing of whole continents for cultivation,
canalisation of rivers, whole populations conjured out of the ground—what earlier
century had even a presentiment that such productive forces slumbered in the lap
of social labour?
” And then the rule of the business class would “
produce
…
above
all
…
its own grave-diggers
”.
How would this happen? Increasing capital intensity, increasing development of
machinery, increasing scale of production would all gather workers into larger and
larger groups: turn production from an individual or a small-group to a mass and a
collective affair. The workers would fi nd it easy to organize. The workers would
fi nd it obvious that to treat the immense economic productivity of the value chain
in which they and their skills were embedded as the private property of a single
boss, or even a group of shareholders, was absurd. Then: “
centralisation of the
means of production and socialisation of labour at last reach a point where they
become incompatible with their capitalist integument. This integument is burst
asunder. The knell of capitalist private property sounds. The expropriators are
expropriated.
”
Perhaps this happens from a democratic revolution that turns into a social
revolution. Perhaps this happens from the free vote of a representative assembly
with the interests of the masses at heart—but that was unlikely, for the rich were
unlikely to passively surrender their property. But it would happen. What would
society be like after the revolution. Marx wrote: “
capitalist private property
…
is
the fi rst negation of individual private property
… founded on…
labour
”. That
means: individual private property is built up by workers from their sweat and
savings, but the capitalist system takes that away from them because individual
workers fi nd they cannot compete in the marketplace with large scale capitalist
production. Then Marx wrote: “
capitalist production begets, with
…
inexorability
…
the negation of negation. This does not re-establish private property for the
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producer, but gives him
…
individual property based
on…
cooperation and the
possession in common of the land and of the means of production.
”
And, Marx wrote, this will happen easily. The business class had needed centuries
of violence and starvation to carry out the “
transformation of scattered private
property, arising from individual labour, into capitalist private property
”. But the
socialist revolution simply requires “
the expropriation of a few usurpers by the
mass of the people
”. The organization and bureaucracy for collective production
would already exist. All that had to happen was the replacement of the bosses and
the plutocrats by the people, who would then democratically decide upon a
common plan for “
xtension of factories and instruments of production owned by
the State; the bringing into cultivation of waste-lands, and the improvement of the
soil generally
”.
11.1.4: What Went Wrong?
Now this did not happen. Clearly there were holes in Marx’s analytic argument.
For one thing, increasing immiserization of the working class did not happen—at
least not after the 1840s. In the 1930s the forest of uplifted arms demanding work
did indeed grow thicker and thicker, but then in the 1950s that forest became again
thin, and the arms themselves never became thinner and thinner. Marxists sought to
reinterpret Marx as meaning
meant to imply that the absolute standard of living of
workers falls, but only that relative standards of living
would
fall—that workers
would feel rel
a
tively deprived as they gazed on palaces of the rich. But those who
hold to such an interpretation have a very hard time facing passages in Marx’s
writings like
: economic law “
rivets the laborer to capital more firmly than the
wedges of Vulcan did Prometheus to the rock
…
an accumulation of misery,
corresponding with accumulation of capital. Accumulation of wealth at one pole is,
therefore, at the same time accumulation of misery, agony of toil, slavery,
ignorance, brutality, mental degradation
…
on the side of the [working] class
.”
One thing that went wrong is that Marx forgot that he was working in labor-value
units. Yes, over time technology makes production more and more capital-intensive
in the sense that the typical worker has more and more sophisticated machines to
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assist him or her. But over time technology makes those machines cheaper in terms
of the amount of labor needed to produce them. The physical capital-labor rises.
The labor value of each unit of capital falls. What happens to the labor-value
capital-labor ratio? It has no necessary trend. Thus there is no inevitable and
necessary downward pressure on the rate of profi t, and no
inevitable and necessary
downward pressure on
even the share of production workers capture in their
wages.
A second thing went wrong with Marx’s analysis. Notice that phrase above:
“negation of the negation”? What does it mean? That is Hegel. Marx had begun his
career as an abstract German philosopher, writing a dissertation on Greek
philosophers Democritus and Epicurus. That remained the baseline of his thought
all his life. It was not helpful. It led him to see things that were not, and not to see
things that were.
11.1.5: Why?
Why did
Marx
go wrong?
Consider that he had
only one example of industrialization to draw on: Britain. In
Britain large and visible sections of the working class were worse off in 1840 than
in 1790.
Technological unemployment was a powerful thing. The construction of
d
ark satanic mills in Lancashire left rural weaving skills useless, and populations
impoverished. Andrew Carnegie's father was an impoverished handloom weaver in
rural Scotland. Deprived of his livelihood, the family emigrated to America.
Some
economists Marx’s
said that the plight of the weavers was awful, but that
nothing
should
be done
, for a
ttempts to ease their lot would only decrease the
speed with which they abandoned the industry for other employments and increase
the total mass of misery generated by technological change. Is it any wonder that
Marx
, seeing this,
turned his mind to trying to discover why it was that the
tremendous advances in productivity of the industrial revolution did not raise the
standard of living of the poor?
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But Marx mistook the birth pangs of industrial market capitalism for its death
throes. In 1848 the belief that market capitalism inevitably produced a distribution
of income that was unbearable and
immiserizing
was
not
reasonable. By 1867,
when Marx published the first volume of Capital, such a belief was eccentric. And
by 1883, when Marx died, such a belief was indefensible. By 1914 or 1933 it was a
doctrine not of reason, but of pure faith alone.
And Marx was always, in one of his modes, a prophet: someone who had eaten the
same magic mushrooms that John the Theologian had found on the island of
Patmos. It is hard to read the “
centralisation
…
expropriated
” passage I quoted
above without being reminded of the Great Voice saying: “
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 are passed away
”.
But if Marx was so wrong,
why, then, spill so much ink on Marx? Because Marx
became the prophet and his writings became the sacred texts of what can only be
described as a Major World Religion. As interpreted by Lenin and others,
he was
the source
of the major political forces of the twentieth century. Without Marx, the
history of the twentieth century would have been unimaginably different: probably
much better, possibly much worse, but very much other than it actually was
11.2: Really Existing Socialism
A
s Europe industrialized in the second half of the nineteenth century and the first
quarter of the twentieth, its politics became dominated by Marxian socialism. This
is not to say that political parties pledging allegiance to Marxian versions of
socialism won and held power: by and large they did not. But political debate
revolved around the question of what should be done to deal with, ameliorate, or
accept the forces pushing for
some more-or-less Marxian version of
socialism:
that
became the axis around which politics revolved.
Marxism then mutated in the 1910s and after into something different. Call it—as
those who ran it after World War II did—
really existing socialism
. It was
socialism
in that it claimed to be as close as there was or could be to Marx's and other
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socialists’ of the 1800s hopes. It was
existing
in that it was there, on the ground, in
régimes that at their peak ruled perhaps one-third of the world’s population. It was
real
in that it was not an intellectual utopian fantasy but rather a necessary
compromise with the messiness of this world.
It is now gone. Throughout most of really existing socialism’s career, Marx would
probably have regarded most of it with the dismay and perhaps disdain that St.
Paul would have felt for those who claimed that once you had formed a
relationship accepting Jesus Christ as your personal savior it was unimportant
whether you fed your hungry, nursed your sick, and visited your imprisoned
neighbors. But there is no régime on earth today that Marx would see as even a
partial instantiation of what he had wanted to see.
11.2.1: Forming Lenin’s Régime
11.2.1.1: The October Revolution and the Russian Civil War
Really existing socialism
as we
knew
it was born when Vladimir Lenin’s fraction
of the Russian left seized power in
the Russian Empire in
a late-1917 coup from
the post-Czarist Social Democratic government led by
Alexander
Kerensky.
It is hard to imagine why those who led the Russian Empire felt it had need to
support the Serbian government against the Austro-Hungarians after terrorists with
close links to elements in the Serbian security services had assassinated the heir to
the Austro-Hungarian throne. “We will back you against Vienna and Budapest in
almost all cases—but open hunting season on the close relatives of crowned heads-
of-state is an exception” would have been a perfectly credible and defensible
position. It is especially hard to understand because wars stress régimes, and
everyone in 1914 knew that the Czarist Imperial Russian régime was under
immense stress already.
Almost all observers had long seen Czarist Russia as heading for a revolution—
including the Czar’s government. In 1914 Russia was perhaps half as rich as the
United States and two-thirds as rich as Germany, and more unequal than both:
fi gure four dollars a day as a typical standard of living. Life expectancy at birth
was barely thirty years at a time when western Europe was 50, and the United
States 55. Its wealthy classes were dominated by aristocratic landlords who had no
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positive societal role. Its educated classes were in close cultural contact with
western Europe, especially France: only one of the fi rst 68 words of Tolstoy’s
novel
War and Peace
is Russian—pomest’ya, a feudal estate governed by the rules
of lordship and vassalage rather than private property—and the other 67 are
French. Ideas about equality before the law, governments deriving their just powers
from the consent of the governed, meritocracy and the end of caste-status
privileges, and constitutions had been flowing into Russia through the window on
the West that was the Czar Peter the Great-built Baltic Sea port capital of St.
Petersburg for centuries.
The government had been looking—hoping—for a way out for a while.
A successful, cheap war might have been a way out. Indeed, Russia had blundered
into the 1905 Russo-Japanese War, a war that it lost decisively, in large part
because some of the Czar’s officials thought that war was a way out. They
expected to easily defeat an inferior “Asian” power: Russian forces had found it
easy to march east-southeast across central-Asian Turkestan from the Aral Sea up
the Syr Darya River, and easy to establish Vladivostok next to Japan and absorb
Manchuria into their sphere of influence. They had hoped that a “short victorious
war” would distract popular attention and dampen the smoldering fires of
revolution. They had been wrong. The Czarist regime barely survived the uprising
of 1905 triggered by the short unvictorious war against Japan.
But rather than avoid war, Nicholas II Romanov and his advisors embraced it. And
the Czarist régime did not survive the First World War: military defeat left the Czar
without supporters; Nicholas II Romanov fell in February 1917. An interim
government led by Alexander Kerensky tried to continue Russian participation in
World War I and held an election for a constituent assembly to write a constitution
while various political groups struggled got advantage. Lenin won the struggle in
the capital of St. Petersburg with a coup in mid-fall.
A brutal Civil War followed, as “White” supporters of the Czar, local autocrats
seeking effective independence, Lenin’s “Red” followers, stray other forces—
including a Czech army that found itself effective ruler of Siberia for a while, and
Japanese regiments fought back and forth over much of Russia for three years. The
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