Posts Tagged ‘exploitation’

Capital

First, there was Marx for Beginners by Mexican cartoonist Rius [pdf]. Then, there were the two on-line lecture series by Stephen Resnick and David Harvey.

Now, there’s a new resource—a book and a set of Powerpoint slides—called PolyluxMarx: An Illustrated Workbook for Studying Marx’s Capital, by Valeria Bruschi, Antonella Muzzupappa, Sabine Nuss, Anne Stecklner, and Ingo Stützle, translated by Alexander Locascio, which can ordered from Monthly Review Press and is available on-line.

The Great Recession, triggered by the collapse of financial markets in 2008, struck with such ferocity that millions of people began to question the rationality of our capitalist economic system. And as scholars, journalists, and activists tried to comprehend what was happening, they were forced to look deeply into the nature of capitalism—inevitably leading them to the work of Karl Marx. Now, Marx is enjoying a worldwide rediscovery and resurrection, and his masterwork, Capital , has found its way back into college classrooms, labor unions, the Occupy movement, study groups, and into the hands of disillusioned young people.

Reading Capital can be a daunting endeavor and most readers need guidance when tackling this complex work. PolyluxMarx provides such guidance.

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Once again, the work of Hyman Minsky has been discovered—this time, by the BBC.

Minsky’s main idea is so simple that it could fit on a T-shirt, with just three words: “Stability is destabilising.”

Most macroeconomists work with what they call “equilibrium models” – the idea is that a modern market economy is fundamentally stable. That is not to say nothing ever changes but it grows in a steady way.

To generate an economic crisis or a sudden boom some sort of external shock has to occur – whether that be a rise in oil prices, a war or the invention of the internet.

Minsky disagreed. He thought that the system itself could generate shocks through its own internal dynamics. He believed that during periods of economic stability, banks, firms and other economic agents become complacent.

They assume that the good times will keep on going and begin to take ever greater risks in pursuit of profit. So the seeds of the next crisis are sown in the good time.

Much the same can be said about Marx’s work. In both theories, crises are endogenously produced within the capitalist system itself.

The approaches differ, of course: while Minsky focused on rising debt and complacency, Marx emphasized class exploitation and capitalist competition. But it doesn’t take much work to combine the insights of the two thinkers to identify what we might call the “Minsky-Marx moment”—the moment when, as a result of rising debt and competition over the surplus, the whole house of cards falls down.

But you won’t find either in modern macroeconomics. In fact, if you search inside one of the leading texts—Robert Barro’s Macroeconomics: A Modern Approach—you won’t find even a single mention of Minsky or Marx.

It’s no wonder modern mainstream macroeconomists and their students had so little to offer in terms of understanding how and why the latest crisis occurred or what to do once the house of cards did in fact come tumbling down.

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It just so happens I’m finishing up the course on Marxian economic theory this week with, among other readings, the Communist Manifesto. The students haven’t read it before (in contrast to previous generations, who had encountered in either in high school or some other college course) but it should be an interesting discussion.

And if students are not acquainted with that text, they won’t fully understand the recent conversation between Paul Jay and Chris Hedges [ht: db], in which Jay refers to Hedges’s 20 October essay, “Let’s Get This Class War Started.”

JAY: Now, you write something here which, you know, if you–you would not be allowed to say on mainstream news anywhere. You write: “Class struggle defines most of human history. Marx got this right. The sooner we realize that we are locked in deadly warfare with our ruling, corporate elite, the sooner we will realize that these elites must be overthrown.” There’s a massive campaign not even to use the words class warfare. In fact, if you talk class, people accuse you of being essentially anti-American.

HEDGES: I don’t think you can understand the nature of capitalism if you don’t understand the nature of class warfare. You know, if I was running a Wall Street firm, I’d only hire Marxian economists, because they understand that capitalism is about exploitation. Marx got that right.

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The other day, I posted a few paragraphs from the new Roman Catholic Pope Francis’s apostolic exhortation Evangelii Gaudium (which translates as “The Joy of the Gospel”).

I’ve now had a chance to read the entire text (available here), which seems to have gotten some notice around the world (although, best I can tell, there’s still no comment from the likes of Paul Ryan, who would steal bread from the mouths of the poor in the name of saving them from anything but the market).

The document as a whole is a call to a new kind of evangelization on the part of Catholics, both clerical and lay. (On Michael Sean Winters’s interpretation, “The Pope is calling the Church to be a missionary Church, an evangelizing Church, and the privileged path of fidelity to the Gospel is service to the poor.”) The main sections on economics are located in chapter 2 (“Amid the Crisis of Communal Commitment”) and chapter 4 (“The Social Dimension of Evangelization”).

The paragraphs I posted before are from chapter 2, in which Francis identifies the nature of the world in which he is making his call for a new missionary church. Permit me to repeat them here:

53. Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “throw away” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

These paragraphs contain a number of remarkable statements. First, as I explained to students in class earlier this week, Francis actually raises opposition to economic inequality and exclusion—to an economy that “kills”—to the level of a commandment. Second, “exclusion” (by an economy that creates “outcasts” and leftovers”) is added to, but does not simply replace, the problems of “oppression” and “exploitation” (of people who presumably join the excluded as the great mass of the “powerless” who are fed on by the “powerful”). Third, he invokes a society of the market spectacle, which both offers us new things to purchase and treats human beings themselves as commodities, “to be used and then discarded.” And, finally, he asserts that “trickle-down” economics, which some people continue to defend, “has never been confirmed by the facts.”*

The following paragraphs expand the critique of current economic arrangements by referring to how money and finance are out of control (in the form of the “idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose” and “financial speculation”), the existence of increasing inequality (“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few”), the negative effects on the natural environment (“this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule”), and the causes of violence (“until exclusion and inequality in society and between peoples are reversed, it will be impossible to eliminate violence,” and “This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root”).

Taken together, the various points comprise an honest critique of the existing set of economic arrangements and institutions of the sort we never read or hear from mainstream economists and politicians, who either ignore and seek merely to ameliorate some of the effects of the kind of economic devastation we’ve witnessed in recent years. It’s also as clear an analysis of the current context to be found anywhere, which should serve as the background for any pronouncement of where we are and what should be done.

The second major set of statements about the economy occurs in chapter 4, where Francis outlines what the “preferential option for the poor” actually means. Again, let me reproduce some paragraphs from the text:

202. The need to resolve the structural causes of poverty cannot be delayed, not only for the pragmatic reason of its urgency for the good order of society, but because society needs to be cured of a sickness which is weakening and frustrating it, and which can only lead to new crises. Welfare projects, which meet certain urgent needs, should be considered merely temporary responses. As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems. Inequality is the root of social ills. . .

204. We can no longer trust in the unseen forces and the invisible hand of the market. Growth in justice requires more than economic growth, while presupposing such growth: it requires decisions, programmes, mechanisms and processes specifically geared to a better distribution of income, the creation of sources of employment and an integral promotion of the poor which goes beyond a simple welfare mentality. I am far from proposing an irresponsible populism, but the economy can no longer turn to remedies that are a new poison, such as attempting to increase profits by reducing the work force and thereby adding to the ranks of the excluded.

Here, Francis returns to the issue of inequality (“the root of social ills”), the structural causes of poverty (which cannot be resolved simply by “Welfare projects, which meet certain urgent needs”), and the centrality of the profit motive in creating inequality and exclusion (which means “the economy can no longer turn to remedies that are a new poison”).

And what needs to be done? A bit earlier, Francis provides the broad outlines of an alternative approach:

192. Yet we desire even more than this; our dream soars higher. We are not simply talking about ensuring nourishment or a “dignified sustenance” for all people, but also their “general temporal welfare and prosperity”. This means education, access to health care, and above all employment, for it is through free, creative, participatory and mutually supportive labour that human beings express and enhance the dignity of their lives. A just wage enables them to have adequate access to all the other goods which are destined for our common use.

The challenge, then, is to devise a set of economic institutions that make sure people have access to a basic set of goods and services (including education and access to health care) and employment (based on a “just wage”)—and the work people do, to “express and enhance the dignity of their lives,” needs to be very different from what it is now (inasmuch at it needs to be “free, creative, participatory and mutually supportive”).

In other words, Francis, without providing institutional details, outlines a general approach to work that simply cannot be provided by the current wages system. It creates an opening to imagine a radical reorganization of the economy, at both the microeconomic and macroeconomic levels, in which workers participate in making the fundamental decisions in their workplaces and the economy as a whole is coordinated (might we say planned?) so that existing inequalities and forms of exclusion are eliminated.

In the end, Evangelii Gaudium suggests a fundamental reorientation of the current economic debate: to admit the devastating effects of current economic arrangements on the broad masses of the population and to take up the imperative of restructuring the economy in the interests not of the tiny minority at the top but of those at the bottom who are subjected on a daily basis to processes of exploitation, oppression, and exclusion.

We will know we are in the midst of such a new economic debate when the news of an elderly homeless person who dies of exposure makes at least as much news as when the stock market loses a couple of points.

 

*The students asked me the other day if, in fact, trickle-down theory had ever been “confirmed by the facts.” I led the usual discussion of different criteria and sets of facts and then showed them this chart:

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Not much confirmation of trickle-down economics there.

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This is a closeup of the bench [ht: ke] in honor of Steve Resnick that was recently installed outside Thompson Hall at the University of Masschusetts Amherst.

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I’m intrigued by the increasing references to rent-seeking as a way of making sense of the groteque unequal distribution of income in the United States. What explains this trend?

We now have Joseph Stiglitz, Josh Bivens and Lawrence Mishel, and Paul Krugman all referring to rents or rent-seeking in order to analyze how the 1 percent has managed to capture a larger and larger share of the income generated within the U.S. economy. It seems that, within “polite company” (or at least what passes for polite company within mainstream economics), it’s now permissible to invoke and describe the rent-seeking behavior of the economic elite (in a manner analogous to the way rent was originally used, to describe what landlords received for the use of their land, as the return obtained by virtue of ownership, not because of anything they actually did or produced).

Here’s my sense: the obscene amounts of income going into the pockets of the top 1 percent and the fact that much of that income is associated with what are increasingly seen as economically useless activities (such as returns to stock ownership, serving as Chief Executive Officers of large corporations, and the financial sector) have put the final nail in the coffin of neoclassical marginal productivity theory. It’s simply become increasingly difficult to square the concentration of income among those at the very top (and the stagnation of incomes for pretty much everyone else) with the idea that everybody gets what they deserve, according to their marginal contributions to production.

So, what’s the alternative? Well, clearly the idea of surplus extraction and distribution is one way of making sense of the problem. But such a theory of income distribution brings with it notions of class and exploitation—and, of course, a critique of capitalism. The idea of rent-seeking is thus a way out. It represents a critique of the marginal-productivity theory of distribution but it refuses the idea that the incomes of the those at the top can be explained by their capturing a larger and larger share of the surplus produced by those who labor at the bottom.

As for me, I’m curious to see in which directions this debate will go in the coming months and years, as the top 1 percent continue to grab the money and run.

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Liberal economic and political thinkers have a problem. They’re stuck between a rock and hard place—between redistribution and predistribution. What they don’t want to do is move beyond that dilemma and look at the real problem: distribution.

Clearly, liberals are concerned about the unequal distribution of income.* How could they not be? The current distribution of income is obscenely unequal, and that inequality (starting in the 1970s) probably played on important role in creating the conditions for the crash of 2007-07 and the Second Great Depression.

The question is, where should they look for a solution? For some (like Paul Krugman), the answer can’t be education. Instead, we need “a strong social safety net, one that guarantees not just health care but a minimum income, too,” which would be financed out of higher taxes on wealthy individuals and corporate profits. In other words, a redistribution of income through government programs.

For others (like Jacob Hacker), “mopping up after markets” is not the solution. He proposes a predistribution formula consisting of liberal macroeconomic policies, quality public services, and countervailing (effectively, pro-labor) powers in markets.

For all their specific difference, basically, today, liberal predistribution looks an awful lot like liberal redistribution.

But something has in fact changed: both the redistribution and predistribution agendas are predicated on a theory of income inequality different from what it was only a few years ago. Then, the focus was on technology, skills, and inequality between different groups of workers. Now, the concern is between capital and labor. In other words, class.

And you can’t fix the problem of class, of the growing gap between profits and wages, through either redistribution or predistribution. You have to focus on distribution itself: on the fact that one class (capital) is in the position to appropriate the surplus produced by the other class (labor), which in turn serves to reproduce the structure according to which a tiny minority at the top is able to appropriate the surplus produced by the large majority at the bottom.

Marxists call that exploitation. And the only way to deal with the problems caused by the grotesquely unequal distribution of income is to eliminate exploitation itself.

 

*That’s why they have a problem conservatives don’t have. Conservative thinkers simply continue to assert that the unequal distribution of income is not a problem—because people get what they deserve and, besides, they’re better off than their counterparts were in previous times.