Frank Li — What If Karl Marx Was Right, Mostly?

The image below summarizes Marx's works in a nutshell: his societal development model goes through several stages, from some early societies (e.g. slavery) to feudalism, to capitalism, to socialism, and finally to communism.

At a very high level, this model is correct.

Two "communists", Lenin and Mao, capitalized on this model more than anybody else. Both eventually failed for the same reason: They jumped from feudalism to socialism via a violent revolution that destroyed capitalism, albeit very primitive in their respective countries. As a result, the USSR was a total disaster, so was China under Mao (1949-1976)!

It's time for "capitalists" to accept this model as well, with a twist in details ...

4. The Loop Theory

The image below highlights my Loop Theory. It simply extends and truncates Marx's model as follows:

Capitalism and socialism are in a loop, requiring balancing from time to time. Socialism, if poorly managed, may set us back to feudalism. 

Communism is so far away that it should be ignored as irrelevant.

For more, read: Loop Theory - Capitalism vs. Socialism.…

1. Marx was a radical social critic of his time. Outstandingly, his analysis of capitalism, the most successful political and economic system of his time, remains most thorough and insightful to date.

2. On communism, ignore it, as it's irrelevant - Nobody has ever really had it (e.g. China under Mao was really feudalism, with Mao being the last Emperor, not communism per se), and nobody will, in the next 1,000 years, at least!...

I think that as a high level summary, Frank Li has this essentially correct. I agree with his assumption that communism is incompatible with with "human nature" as it presently exists and likely will continue to remain chiefly in this form for the foreseeable future. Yet, what we call "human nature" is malleable and transformable. 

Socialism and its higher form communism require a much higher level of collective consciousness than is presently the general case. Therefore, these forms do not scale under existing conditions, that is, in the absence of a transformation of collective consciousness. However, both are possible successively, communism being a higher form than socialism. But this is possible only given the requisite evolution of the general level of collective consciousness so that love prevails. 

To their credit, Marx and Engels were able to capture this in their thought, but they were unable to correctly assess the conditions requisite for historical unfolding. This had unfortunate consequences. But it would be even more unfortunate to conclude that they were absolutely wrong about this.

According to perennial wisdom, ideal society is achievable, and it is an ideal that true progressives should be envisioning based on the principle:  "Visualize and actualize." In a broad sense this involves raising the general level of education. 

Perennial wisdom teaches that in order to achieve human potential, education needs to be both horizontal, encompassing all aspects of the gross world as a system, and also vertical, integrating the gross, subtle, and causals worlds as relative manifestations of the absolute as that which does not change. This is the whole. Presently, this realization is dim to non-existent in the prevailing level of collective consciousness in this dark age.

Econintersect
What If Karl Marx Was Right, Mostly?
Frank Li | Chinese ex-pat, Founder and President of W.E.I. (West-East International), a Chicago-based import & export company, B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering

Chris Dillow — Against high CEO pay

Imagine we lived in a feudal society in which lords exploited peasants. A defender of the system might argue that wealthy lords perform a useful service; they protect their peasants from invasion and theft thus giving them security and a little prosperity. And competition between lords should improve these services; bad lords will find their lands and peasants seized by better lords who become wealthier as a result.

Such an argument would, however, miss the point. The case against feudalism is that the system as a whole is unjust and inefficient. The fact that good lords provide services and are richer than bad ones is quite compatible with this.

This analogy came to mind whilst reading Ben Ramanauskas’s defence of high CEO pay. The fact that good CEOs make a positive difference to a company does not in itself justify a system in which CEOs in aggregate – many of whom are far from good – get fortunes.
Two big facts suggest that such a system might well be inefficient....

The fundamental principle is the same in feudalism and capitalism. Both are based on rent extraction.

Unsurprisingly, then, there is little clear link between CEO pay (pdf) and corporate performance. It might be that high pay is better explained by rent-seeking than as a reward for maximizing shareholder value - though as it's almost impossible to know in most cases what constitutes maximal value, we might never know for sure.

In fact, my analogy with feudal lords is too generous to CEOs. Whereas (arguendo) a bad lord would pay for his incompetence perhaps with his life, bad CEOs walk away with fat pay cheques.

When so-called free marketeers try to defend bosses’ pay, they do the cause of free markets a huge dis-service by encouraging people to equate free markets with what is in effect a rigged system whereby bosses enrich themselves with no obvious benefit to the rest of us.

To the degree that perfect competition doesn't exist, owing to asymmetries, then rent-seeking takes over.  It's the "rational" thing to do for "utility maximizing agents."

Stumbling and Mumbling
Against high CEO pay
Chris Dillow | Investors Chronicle

Richard D. Wolff — Economic Theorists: The High Priests of Capitalism

Richard Wolff traces a pattern of advocacy in social, political, and economic explanation. One might also call it persuasion.

Truthout | OpEd
Economic Theorists: The High Priests of Capitalism
Richard D. Wolff, Truthout | Op-Ed

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a visiting professor of economics at the University of Paris (France), I (Sorbonne). His work is available at rdwolff.com and at democracyatwork.info.

Also

Poverty Has Always Accompanied Capitalism
Mark Karlin interviews Richard D. Wolff for Truthout
See also

Stumbling and Mumbling
Cognitive biases, ideology & control
Chris Dillow | Investors Chronicle

Daniel Little — Large structures and social change

The relationship between feudalism and the origins of capitalism was of great interest to Marx.…

The question of the transition from feudalism to capitalism remained central for subsequent Marxist thinkers.….

More recent views of the origins of capitalism have merged Marxism and some of the key ideas of post-colonialism. An interesting current example is Alexander Anievas and Kerem Nişancıoğlu's How the West Came to Rule: The Geopolitical Origins of Capitalism, a 2015 book from Pluto Press.

Anievas and Nişancıoğlu offer an account of the transition to capitalism that emphasizes the international character of the transition from the start. Their story differs in some important ways from the classic Marxian account, according to which European feudalism possessed its own dynamic of conflict between forces and relations of production, eventuating in the emergence of a new social order, capitalism. Anievas and Nişancıoğlu reject a "Eurocentric" approach to the emergence of capitalism and industrial revolution; rather, international trade, war, and colonialism were essential components of the emergence of the capitalist mode of production.…

There is an important historiographical issue here that is illustrated in these works by Dobb, Anievas and Nişancıoğlu, and Brenner: to what extent is it feasible to look for large macro-processes and transitions in history? Should we expect large social and economic factors writing out social change? Or is history more contingent and more multi-pathed than that? My own view is that the latter approach is correct (link). Neither technology (link) nor population (link) nor class conflict (link) suffices to explain large historical change. Rather, large structures and small innovations add up to contingent and variable pathways of historical development. We've gotten past the "agent-structure" debate; but perhaps we still have the "large factor, small factor" debate standing in front of us (link). And the solution may be the same: both large structures and contingent local arrangements are involved in the development of new social systems.

My view is that different accounts are useful. The simplest accounts are generally highly abstract and therefore only approximate, but they capture key features. However, they also stand in need of articulation in terms of nuance. Consequently, there might be many levels of account with different degrees of generality and nuance, or different methods of approach appropriate for the same issue.

Each of these levels can be viewed as a different type of tool, or as a microscopic with lenses of different power. There isn't one best explanation or method in an absolute sense but rather a best explanation of method for the task at hand.

For example, one method of attack or defense in debate is to request greater clarification or more granularity. There is no end to satisfying this in the case of perverse questioning.

Understanding Society

Large structures and social change
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Daniel Little — Origins of feudalism in the West

In the grand historical march postulated by historical materialism, ancient slavery and medieval feudalism preceded capitalism as distinct systems of domination and exploitation (e.g. Perry Anderson's Passages from Antiquity to Feudalism). In each social order small elites captured great wealth from the mass of producers, whether enslaved farmers and artisans in the ancient (Roman) world or bonded serfs in the feudal world. And whether we go for "internal contradictions within the forces and relations of production" or other more contingent causes of change, the evolution of European social and economic systems from the Roman Republic through the millennium of Western European feudalism to the "breakthrough" of industrialism in Britain is one of the truly important macro-histories available for study. (China's economic history from its earliest dynasties to the last moments of the Qing is another, and India's longue durée economic history is equally important.)

But how should this story be understood -- as the necessary unfolding of some set of systemic and historical imperatives, or as a process substantially more contingent and piecemeal than that?

Patrick Geary's Before France and Germany: The Creation and Transformation of the Merovingian World is a fascinating study of the centuries-long transition from Romanized barbarian Europe to barbarian Roman society. The book is couched as late Roman history, and in fact the words "feudal" and "feudalism" never appear in the book. But what Geary is describing is precisely this: the emergence of a feudal society and economy out of the late Roman Empire in the West.…

Understanding Society

Origins of feudalism in the West
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Ian Welsh — Capitalism and Good Post-Capitalism

Ian reflects on the forced transition from feudalism to capitalism through enclosure and urbanization, and what the transition to post-capitalism needs to involve. At least, the peasants, serfs, and tenant farmers were self-sufficient under feudalism. Under capitalism they became wage serfs and debt slaves. Post capitalism is about fixing that.

Ian Welsh
Capitalism and Good Post-Capitalism

Days of Revolt: How We Got to Junk Economics — Chris Hedges interviews Michael Hudson

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is the author of The Bubble and Beyond and Finance Capitalism and its Discontents. His most recent book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

CHRIS HEDGES: Hi, I'm Chris Hedges. Welcome to Days of Revolt. Today in a two-part series we're going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there, in the first segment, and secondly, where we're going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don’t succeed if you don’t grasp Marx's dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.…

Real News Network
Days of Revolt: How We Got to Junk Economics

Chris Hedges interviews Michael Hudson

Feudalism, Fascism, Libertarianism and Economics — Book Announcement

"Eric Zuesse has written a provocative and challenging volume, though in my opinion he sometimes goes too far in his criticisms and claims. This book proposes two new postulates to replace existing ones that are at the foundation of microeconomic theory. It cites the existing body of empirical findings in economics as being the reasons for them, and it presents a strong empirical case for each of its two new postulates as being true and the one that it is replacing as being false. I regard his book as the work of a serious, committed scholar whose views deserve to be taken seriously."

— Geoffrey Harcourt

Published 9 Mar 2015 by WEA Books, 288 pages, $10.00 

This book is available to download in PDF, EPUB (for iPad etc.) and MOBI (for Kindle etc.)

From the WEA Books page:

The WEA is pleased to announce the launch of WEA Books.

All our e-books are priced at $10.00. But if you join the WEA and pay a voluntary annual membership fee of $25, $50 or $150 you will, in the year following payment, be entitled to 3, 7, or 22 free e-books.

Most books are available to download in PDF, EPUB (iPad) and MOBI (Kindle) formats.

Real-World Economics Review Blog
Feudalism, Fascism, Libertarianism and Economics by Eric Zuesse
Editor

Matt Bruenig — On Piketty and Growth

Aziz notes that if you actually look back before modern capitalism, inequality was higher. Why was that? Because it was low-growth. Why would that make inequality higher then? Because with growth that low ... the spread between r and g is very high! That's Piketty's entire point!

Piketty spends plenty of time in the book talking about low or no-growth agricultural societies and the way in which the wealth accumulation dynamics of such societies will drive severe wealth inequalities. His main point about wealth inequality going forward is that declining growth will make us more similar to those societies than we are used to. There is nothing bizarre about this. If your theory is that growth will decline, it actually makes incredible amounts of sense to compare it to periods where growth was lower.

Aziz seems caught up in feudalism versus capitalism for some reason here, when Piketty's point is about the spread between r and g in both systems. His point is that the spread between the r and g in the future is going to be closer to feudal-era spreads than the exceptionally narrow spreads we've seen in the last few decades.

Demos — Policy Shop
On Piketty and Growth
Matt Bruenig

See also Bruenig's Quick Note on Piketty, Savings Rates, and Rates of Return

The most important point to take away here is the savings point reflected in the first graph. Piketty's wealth inequality divergence theory requires the wealthy to save somewhat more than the non-wealthy, and it appears that they do that pretty consistently across time.

Kevin McKenna — Scotland has the most inequitable land ownership in the west. Why?

Scotland still operating under the manor system of late feudal times?

The Guardian | The Observer

Scotland has the most inequitable land ownership in the west. Why?

Kevin McKenna | The Observer

Mike Konczal — We Already Tried Libertarianism - It Was Called Feudalism

Mostly stuff we've discussed here in the comments — ad nauseam, but of interest in that Konczal looks at Robert Nozick rather than Murray Rothbard.

The Libs have already spammed the comments over there.

One comment is useful to note, however. Nozick differs in some significant ways from Rothbard, and Rothbard is much more representative of contemporary Libertarianism in the US than Nozick.

Next New Deal — Rortybomb
We Already Tried Libertarianism - It Was Called Feudalism
Mike Konczal
(h/t Mark Thoma at Economist's View)

Randy Wray — Why We’re Screwed

We are so screwed. These people did not act out of ignorance but greed, and they are winning. Randy lays out the gory details and explains why. It's the F-word. Fraud. And it leads to feudalism.

Randy nails it:

...they are not planning and conspiring for the restoration of feudalism. Still, that is the default scenario—the outcome that will emerge in the absence of action.

 In the second, the 99% occupy, shut down, and obliterate Wall Street. Honestly, I have no idea how that can happen. I am waiting for suggestions.

Read it at Economonitor | Great Leap Forward
Why We’re Screwed
by L. Randall Wray