Sunday, April 11, 2021

Part VIII: What Marx Got Wrong — Robert Paul Wolf

A number of readers have raised important questions that I need to address, but before turning my attention to that I have decided to finish my exposition. I am sure it is clear that I have vastly more to say than I am putting into this little multipart essay – I mean, I have published two books and a number of lengthy articles on the subject. My purpose here has been simply to highlight my claim that it is possible to bring the literary criticism and the mathematical economics together in a fruitful fashion.

I am fond of saying that Karl Marx was the greatest student of society who ever lived and I genuinely believe that, but I do not think he was a prophet or messenger from God. He was a student of society, which means that he looked at the world around them, studied it as deeply as he could, analyzed it as best he could, got a great many things – important things – right, and of course got a number of things wrong. Today, I want to talk about what he got wrong or more broadly what he failed to foresee, because understanding those failures or inadequacies can help us to understand a good deal about the world in which we live....

I agree with this, although I would add that Marx was deeply educated in almost everything that related to the subject in which he was interested. He read voraciously and, living in London, had the British Library at his disposal. This had a great impacted his work

It is highly doubtful that Marx considered himself to be an oracle any more than does any genuine scientist, since science is tentative on emergent data. Rather, he was consciously following a scientific approach as it was understood in his time. I use the terms "Marxist" and "Marxian" to distinguish between dogmatism and historicism in the approach to understanding Marx.

Moreover, Marx, unlike conventional economists, recognized that social science is historical, hence unlike natural science. He was attempting to explain the "nature" of capitalism as he saw it, and as it turns out he did not foresee the development of capitalism in the direction it took, especially toward finance capitalism (Marxian economist Michael Hudson). What I think he would say is that the development of capitalism would follow the same general rules (admitting of special cases as "exceptions") as long as the mode of production remained the essentially the same. 

Marx was fully conscious of the potential for the mode of production to change, and he expected it to tend in the direction of socialism owing the historical dynamic as he saw in from the historical, sociological and anthropological point of view, a far broader point of view than others had taken. This dynamic is driving the the dialectic of different forces conflicting and change is gradual. 

Feudalism did not just disappear overnight with the rise of capitalism and remnants of feudalism is are still active and incorporated into capitalism, e.g., as land rent. Characteristically, capitalism has absorbed this by treating land as capital, and now folding labor into capital also as "human capital" (see link below). 

Marx did not fail to notice this phenomenon, which he called "labor power." Capital purchases and uses labor power in the market just like any other commodity and extracts surplus value based on organizing labor power in production of commodities by commodities. Workers rent their labor power to capital as a commodity in the labor market.

Capitalism is a hungry beast difficult to satiate since it is based on accumulation, euphemistically termed "growth."As Michael Hudson has pointed out in this regard, capitalism has also integrated (neo-feudal) rent into capitalism with the rise of private debt and financialization, whereas the objective of classical economics and Marx as its culmination, was to eliminate rent as a remnant of feudalism.

The Philosopher's Stone
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst


Naked Capitalism
Measuring Human Capital: Learning Matters More than Schooling
Noam Angrist, Fellow, Oxford; Consultant, World Bank; Cofounder, Young Love; Simeon Djankov, Policy Director, Financial Markets Group, London School of Economics, and Pinelopi Goldberg, Elihu Professor of Economics, Yale University


Calgacus said...

Two things to remember is that (a) Wolff is a follower of Kant, and thinks Hegel was wrong.
(b) As Lenin said, you can't understand Marx at all without understanding Hegel, so none of the Marxists of his time understood Marx.

Most of these things he is saying Marx got wrong - are very wrong itself.

1) But to put the matter simply in a phrase, Marx failed to foresee Keynes.

This is a minority viewpoint, but he did not fail to foresee Keynes. The real Keynes was a socialist, someone basically on the side of the working class. James Crotty's recent book explains such things, which is of course the MMT line. Judge by actions, not words. True Keynesianism was "socialization of the means of production" targeted at the working class, aiming at "the euthanasia of the rentier".

Many, probably most "marxists", "socialists" are economic morons like Michael Roberts, who in effect exalt Marx's essentially wrong, essentially neoclassical, right wing pro-capitalist goldbuggery theory of money above everything else he said (including Marx's valid insights on money). [Peter Cooper is of course the opposite of this, saying sense, not nonsense like Roberts.]

So throughout history most Western socialists end up being to the right of Keynes, to the right of the (New Deal) liberals. Spout bloodcurdling revolutionary slogans. Then fall into line like slaves under the iron heel of the dictatorship of bourgeosie in practice, especially when, against all their efforts, the socialists actually attain power. And then before, after and during the most spectacular betrayals, whine, whine, whine about how the bad capitawist impewiawists forced the betrayal that snatched defeat out of the jaws of victory. Then these whines and excuses are accepted universally, consolidating the ideological setup for the next cycle of betrayals.

Which would Marx have supported? The true Keynesianism constituted Marx's own sort of program - and was led by the two countries, the USA & the UK where Marx foresaw "revolution" via gradual peaceful reform was possible. The more prevalent false Keynesianism, military Keynesianism - well, Marx & Engels saw and criticized that in nascent form, in Bismarck's adoption of socialist measures towards right-wing ends. As for the Western "Marxists" - his comments would probably been filled with unprintable obscenities.

2) The second thing Marx failed to foresee or to appreciate was the power and permanence of the national, racial, and religious identifications.

OK. Wolff is right here.

3) The third thing Marx failed to foresee was that capitalism, as it grew in the way that he anticipated it would, would morph into shareholder ownership of capitalist enterprises. .. but he himself did not, so far as I know, anticipate the rise of the limited liability joint stock enterprise.

This is completely wrong. It just shows Wolff's ignorance. Marx saw what was happening and considered it as a positive step toward socialization of the means of production. He could not see everything, could not anticipate everything that happened and written after his death in 1883, but Wolff is just plain wrong. This is the kind of thing that would never appear in an academic book or paper. Some referee or reviewer or editor would write a letter to Wolff setting him straight, pointing him to the literature on it.

4) Marx completely failed to see that a permanent steeply pyramidal structure of jobs, wages, and salaries would become the seemingly unalterable face of mature capitalism. (Rather than a two class society capitalists vs workers)

Again, Wolff is completely wrong. Sometimes Marx wrote that way, but he wasn't blind - he saw what was happening, the multiplication of intermediate classes. Think it even has some name in Marxist literature. Some of the stuff he is wrong about - just read Michael Harrington's books on socialism and Marx - amply refuted with plenty of citations.

AXEC / E.K-H said...

NOTE on Robert Paul Wolff on ‘What Marx Got Wrong’

The history of economic thought is the history of scientific failure and Marx is NO exception. What he got wrong is the foundational concept of profit and therefore his whole analytical superstructure is proto-scientific garbage.#1

Marx was NOT a scientist but a journalist/pamphleteer and an agenda pusher.#2, #3

Egmont Kakarot-Handtke

#1 Marx and Marxists ― too stupid for the elementary algebra of profit

#2 Marx, the moron

#3 Links on Karl Marx

Tom Hickey said...

@ Calgacus

Thanks for the detailed comment. Here are a couple of thoughts.

1. I think that RPW may have confused Keynes' pitting "liberalism" against "communism" with Keynes supposedly dismissing Marx/socialism as a defender of capitalism — and also confused about Marx not foreseeing Keynes.

I don't think that Keynes was opposing "capitalism" to "socialism." Keynes was not a communist but he was also not a defender or champion of liberal economics in the sense it was understood by American and British elites as "capitalism," e.g, "sound money/Treasury view. However, Keynes did oppose the violent overthrow of liberal democracy and he was anxious to do what he could to prevent it.

Actually, neither Marx nor Keynes were trained economists. Keynes took only an undergrad course in econ. He was trained in mathematics. Marx was trained in philosophy and law. So of the big three, Smith and Marx were both trained in philosophy and Keynes in math.

But Keynes did identify as a bourgeois liberal in the sense of his being an elitist based on learning and culture. He did not self-identify with the masses. While Marx identified with the masses, I am not sure he would have individually, anymore than Lord Keynes, but Keynes was honest about being conservative in this sense. Incidentally, Jenny Marx, Karl's wife, was a German aristocrat, in a curious juxtaposition with Keynes.

I think "two Marxes" are visible. The first Marx viewed capitalism as developing into socialism over time, similar to the way feudalism had developed into capitalism as technological innovation changed the dominant mode of production from agriculture (land cultivation) to industry (factory production). Again, with digitization, the mode of production is shifting and what will emerge in unclear overall, as well as how it will affect workers.

The second Marx was a political activist committed to social change. He believed that activism could speed up the historical unfolding. The first Marx would have foreseen something like Keynes proposed emerging, along with a trend toward a mixed economy and democratic socialism on the way to social democracy, which would eventually culminate in communism. The second Marx want to rush the process and it did not work very well to date.


Tom Hickey said...


2. Marx almost certainly knew about limited liability, which can be traced to the 11th century, and also the joint stock corporation, which extends to the 17th century. He may not have foreseen the development of the limited liability corporation into contemporary managerial capitalism as dominant in industry and finance. Managerial capitalism, along with finance capitalism, are much more decisively influential than the limited liability corporate form that underlies both.

While Marx did foresee monopoly capital, he may not have foreseen how managerial and finance capital would come to dominate capitalism in its present form in the US and UK.

Of course, Marx could not be expected to foresee emergent phenomena specifically, but he anticipated this by adopting a dynamic historical approach that was flexible, as a good student of history would.

Marx's analysis of capitalism is essentially analysis of a liberal economics (bourgeois liberalism) that is based on an absolute property right and a class structure that introduces asymmetry by conferring power on property ownership.

This is essentially the English system arising from John Locke and the British class structure. Britain was the most advanced capitalist country at the time, prior to WWI, which ended feudalism in Europe and resulted in a new world order in which the US was increasingly dominant. This would be solidified by the outcome of WWII, with Britain and Europe struggling with the aftereffects, while the US was untouched domestically.

China and Russia imposed communism prematurely with devastating consequences. Russia collapsed and largely threw in the towel. China adapted and now successfully pursuing a gradualist approach. This is too gradual for the US, so the US is reacting negatively.


AXEC / E.K-H said...

Tom Hickey

Marx was NOT a scientist/philosopher/satanist but a stupid/corrupt political agenda-pusher.

Egmont Kakarot-Handtke

Peter Pan said...

30 years since the collapse of the USSR, and people are still arguing ideology instead of policy. Where's the dustbin when you need it?