From the iPhone 5S to corporate globalization, modern life is
full of evidence of Marx's foresight
By SEAN MCELWEE
January
30, 2014 12:30 PM ET
Karl Marx Roger Viollet Collection/Getty Images
There's a
lot of talk of Karl Marx in the air these days – from Rush Limbaugh accusing Pope Francis of promoting "pure
Marxism" to a Washington Times writer claiming that New York City Mayor Bill de Blasio is
an "unrepentant Marxist." But few people actually understand Marx's
trenchant critique of capitalism. Most people are vaguely aware of the radical
economist's prediction that capitalism would inevitably be replaced by
communism, but they often misunderstand why he believed this to be true. And
while Marx was wrong about some things, his writings (many of which pre-date
the American Civil War) accurately predicted several aspects of contemporary
capitalism, from the Great Recession to the iPhone 5S in your pocket.
Here are
five facts of life in 2014 that Marx's analysis of capitalism correctly
predicted more than a century ago:
1. The Great Recession (Capitalism's Chaotic Nature)
The
inherently chaotic, crisis-prone nature of capitalism was a key part of Marx's
writings. He argued that the relentless drive for profits would lead companies
to mechanize their workplaces, producing more and more goods while squeezing
workers' wages until they could no longer purchase the products they created.
Sure enough, modern historical events from the Great Depression to the dot-com
bubble can be traced back to what Marx termed "fictitious capital" –
financial instruments like stocks and credit-default swaps. We produce and
produce until there is simply no one left to purchase our goods, no new
markets, no new debts. The cycle is still playing out before our eyes: Broadly
speaking, it's what made the housing market crash in 2008. Decades of deepening
inequality reduced incomes, which led more and more Americans to take on debt.
When there were no subprime borrows left to scheme, the whole façade fell
apart, just as Marx knew it would.
2. The iPhone 5S (Imaginary Appetites)
Marx
warned that capitalism's tendency to concentrate high value on essentially
arbitrary products would, over time, lead to what he called "a contriving
and ever-calculating subservience to inhuman, sophisticated, unnatural and
imaginary appetites." It's a harsh but accurate way of describing
contemporary America, where we enjoy incredible luxury and yet are driven by a
constant need for more and more stuff to buy. Consider the
iPhone 5S you may own. Is it really that much better than the iPhone 5 you had
last year, or the iPhone 4S a year before that? Is it a real need, or an
invented one? While Chinese families fall sick with cancer from our e-waste, megacorporations
are creatingentire advertising campaigns around the idea that we
should destroy
perfectly good products for no reason. If Marx could see
this kind of thing, he'd nod in recognition.
3. The IMF (The Globalization of Capitalism)
Marx's
ideas about overproduction led him to predict what is now called
globalization – the spread of capitalism across the planet in search of
new markets. "The need of a constantly expanding market for its products
chases the bourgeoisie over the entire surface of the globe," he wrote.
"It must nestle everywhere, settle everywhere, establish connections
everywhere." While this may seem like an obvious point now, Marx wrote
those words in 1848, when globalization was over a century away. And he wasn't
just right about what ended up happening in the late 20th century – he was
right about why it happened: The relentless search for new markets and cheap
labor, as well as the incessant demand for more natural resources, are beasts
that demand constant feeding.
4. Walmart (Monopoly)
The
classical theory of economics assumed that competition was natural and
therefore self-sustaining. Marx, however, argued that market power would
actually be centralized in large monopoly firms as businesses increasingly
preyed upon each other. This might have struck his 19th-century readers as odd:
As Richard Hofstadter writes, "Americans came to take it for granted that
property would be widely diffused, that economic and political power would
decentralized." It was only later, in the 20th century, that the trend
Marx foresaw began to accelerate. Today, mom-and-pop shops have been replaced
by monolithic big-box stores like Walmart, small community banks have been
replaced by global banks like J.P. Morgan Chase and small famers have been
replaced by the likes of Archer Daniels Midland. The tech world, too, is
already becoming centralized, with big corporations sucking up start-ups as
fast as they can. Politicians give lip service to what minimal small-business
lobby remains and prosecute the most violent of antitrust abuses – but for the
most part, we know big business is here to stay.
5. Low Wages, Big Profits (The Reserve Army of Industrial Labor)
Marx
believed that wages would be held down by a "reserve army of labor,"
which he explained simply using classical economic techniques: Capitalists wish
to pay as little as possible for labor, and this is easiest to do when there
are too many workers floating around. Thus, after a recession, using a Marxist
analysis, we would predict that high unemployment would keep wages stagnant as
profits soared, because workers are too scared of unemployment to quit their
terrible, exploitative jobs. And what do you know? No less an authority than
the Wall Street Journal warns, "Lately, the U.S. recovery has been displaying
some Marxian traits. Corporate profits are on a tear, and rising productivity
has allowed companies to grow without doing much to reduce the vast ranks of
the unemployed." That's because workers are terrified to leave their jobs
and therefore lack bargaining power. It's no surprise that the best time for
equitable growth is during times of "full employment," when
unemployment is low and workers can threaten to take another job.
In Conclusion:
Marx was
wrong about many things. Most of his writing focuses on a critique of
capitalism rather than a proposal of what to replace it with – which left it
open to misinterpretation by madmen like Stalin in the 20th century. But his
work still shapes our world in a positive way as well. When he argued for a
progressive income tax in the Communist Manifesto, no country had
one. Now, there is scarcely a country without a progressive income tax, and
it's one small way that the U.S. tries to fight income inequality. Marx's moral
critique of capitalism and his keen insights into its inner workings and
historical context are still worth paying attention to. As Robert L. Heilbroner
writes, "We turn to Marx, therefore, not because he is infallible, but
because he is inescapable." Today, in a world of both unheard-of wealth
and abject poverty, where the richest 85 people have more wealth than the poorest 3 billion, the
famous cry, "Workers of the world unite; you have nothing
to lose but your chains," has yet to lose its potency.
.jpg)
.jpg)
