Posts Tagged ‘Marx’

The current situation in Greece appears hopeless. After two European bailouts and five years of Draconian austerity measures, which have left much of Greece in tatters, the Syriza-led government has been forced to accept a third bailout and the imposition of new austerity measures, which will only continue the current depression and leave the country with no real prospects of repaying the accumulation of new debts.

If that’s not a hopeless situation, I don’t know what is.

But Slavoj Žižek [ht: db] invokes Giorgio Agamben to the effect that “thought is the courage of hopelessness.”

The true courage is not to imagine an alternative, but to accept the consequences of the fact that there is no clearly discernible alternative: the dream of an alternative is a sign of theoretical cowardice; it functions as a fetish that prevents us thinking through to the end the deadlock of our predicament. In short, the true courage is to admit that the light at the end of the tunnel is most likely the headlights of another train approaching us from the opposite direction. There is no better example of the need for such courage than Greece today.

I think Žižek is right, although Marx may have put it even better: “You will hardly suggest that my opinion of the present is too exalted and if I do not despair about it, this is only because its desperate position fills me with hope.”

Marx (in a May 1843 letter) was responding to Arnold Ruge, who had expressed a resigned certainty that there could be no popular revolution in Germany. Marx then proceeds to demonstrate how we need to “start all over again”—by studying the philistine “lords of the world” (“lords of the world only in the sense that they fill it with their presence, as worms fill a corpse”), who wallow in “their passive and thoughtless existence.” Marx concludes with the hope that the “enemies of philistinism, i.e., all thinking and suffering people” will eventually arrive at a critical understanding of the old order, which will serve to create a fundamental rupture within existing society and usher in a new one.

The same task has to be taken up today in Greece and, even more so, Europe. Each day we learn more (e.g., thanks to Neil Irwin and others) about how Germany prevailed in the negotiations over Greece in the most recent bailout—and how the rest of Europe (from Lisbon to Latvia) accepted and reinforced the terms of the deal.

The temerity of the Greek government was to challenge the idea that “business as usual”—strict adherence to the existing rules and procedures, from bankers’ dress codes and polite public pronouncements to suggestions (by, among others, Slovenian Finance Minister Dusan Mramor and Wolfgang Schäuble) that the only way the mounting debt could be written down was for Greece to “temporarily” leave the euro zone—would solve the existing problems in Greece and the other austerity-ravaged countries in Europe.

In the end, of course, the Greeks lost. Thus, they have been forced to cobble together parliamentary votes that roll back some of the anti-austerity measures adopted by Syriza since assuming power in January, in addition to levying higher taxes and renewing the program to privatize state assets—just to fend off a liquidity crisis in the banking sector and then to enter into a new round of negotiations over the exact terms of the bailout.

The current situation does, indeed, appear hopeless.

However, in challenging the terms of the bailout—first, in supporting the “no” vote in the 5 July referendum and, then, in Prime Minister Alexis Tsipras’s statements that his government would not implement reform measures beyond those agreed with lenders at the euro zone summit this month—the Greek government has come to represent all the “thinking and suffering people” of Europe and to expose the “passive and thoughtless existence” that characterizes the “lords of the world” who currently reign on that continent.

It is one moment in a long process that is showing the world how the current system cannot solve the problems it has created.

That, perhaps, should fill us with hope.

Apparently, the British artist-film-maker Isaac Julien is directing a public reading of all three volumes of Marx’s Capital at the Venice Biennale [ht: sk]. (Julien is the director of a 2013 film Kapital, which is also being shown at the biennale.)

Perhaps it was too much to ask that the curator of the biennale’s central exhibition, Okwui Enwezor, actually understand his Marx (although the reporter, Charlotte Higgins, evidently does):

So what is the corollary of staging Das Kapital? I ask Enwezor. Did not Marx foresee the end of capitalism, inevitably brought down by its internal contradictions? “His programme was to use capitalism to achieve social equality,” says Enwezor. “I don’t think that Marx, had he lived, would have wanted capitalism to end.” I am slightly confused by this: I am no Marx expert, but I had gained the distinct impression that although Marx admired the energy and inventiveness of capitalism, he wanted it overthrown and replaced with a system that allowed people justice and dignity.

employment gap

Mainstream economists have, it seems, rediscovered what we’ve known since at least the middle of the nineteenth century: capitalism produces a relative surplus population of unemployed and unemployed workers. And that surplus of labor puts downward pressure on workers’ wages.

Back then it was called the “industrial reserve army.” I have referred to it since 2010 as the “reserve army of the underemployed.” David G. Blanchflower and Andrew T. Levin now point to the same phenomenon in terms of the “employment gap,” that is, the combination of conventional unemployment (individuals who did have a job, are now not working at all, and are actively searching for a job), underemployment (that is, people working part time who want a full-time job), and hidden unemployment (people who are not actively searching but who would rejoin the workforce if the job market were stronger).

What Blanchflower and Levin find is instructive.

First, the conventional unemployment rate has not served as an accurate reflection of the evolution of labor market slack.

it is evident that the U.S. economic recovery remains far from complete in spite of apparently reassuring recent signals from the conventional unemployment rate. Indeed, while the unemployment gap has become quite small, the incidence of underemployment remains elevated and the size of the labor force remains well below CBO’s assessment of its potential. In particular, the employment gap currently stands at 1.9 percent, suggesting that the “true” unemployment rate (including underemployment and hidden unemployment) should be viewed as around 71⁄2 percent. Gauged in human terms, the current magnitude of the employment shortfall is equivalent to about 3.3 million full-time jobs.

Second, in recent years, wage growth has been pushed down by a combination of the unemployment rate, the nonparticipation rate, and the underemployment rate. In particular,

we suspect that the wage curve is relatively flat at elevated levels of labor market slack, i.e., a decline in slack does not generate any significant wage pressures as long as the level of slack remains large. As noted above, our benchmark analysis indicates that the true unemployment rate is currently around 71⁄2 percent—a notable decline from its peak of more than 10 percent but still well above its longer-run normal level of around 5 percent. Thus, the shape of the wage curve can explain why nominal wage growth has remained stagnant at around 2 percent over the past few years even as the employment gap has diminished substantially. Moreover, our interpretation suggests that nominal wages will not begin to accelerate until labor market slack diminishes substantially further and and the true unemployment rate approaches its longer-run normal level of around 5 percent.

In other words, what Blanchflower and Levin have discovered is that there is a large relative surplus population of workers and that the existence of such a reserve army has a dampening effect on workers’ wages.

Now, all they need to do is discover a third component of what we’ve known since the Mohr wrote back in 1867: “The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production”


I’m off tomorrow to teach a couple of classes and to give a university-wide lecture on “Utopia and Critique: A Marxian Perspective” at Manchester University.

From my opening remarks:

It is indeed a sign of our times that I have been invited to address you all this evening on the idea of utopia and from an explicitly Marxian perspective. It’s a sign that, in the midst of the Second Great Depression, capitalism is being calling into question and more and more people are searching for and imagining alternatives. And it’s a sign of the vibrancy of this university, which clearly welcomes the discussion of critique, even as across the country students and faculty members are being encouraged to put aside critical thinking and get on with the business of education.


My article, “Contending Economic Theories: Which Side Are You On?” has just been published on Taylor & Francis Online for the journal Rethinking Marxism.

The first 50 interested readers (actually 49, since I downloaded a copy for myself) can download the text of the article here.



As I noted a few days ago (in discussing the notion of human capital), the concept of capital has undergone an extraordinary redefinition and expansion in recent years. Now, in the work of mainstream economists, it has come to refer to, in addition to physical capital, human, social, intellectual, and many other forms of capital.

What’s going on?

My sense is that, whereas capital traditionally referred to the property of capitalists—and thus their claim on some portion of new value created in the form of profits—it now means something very different: any stock that can be accumulated over time to yield an income (or at least, as in the case of housing, a flow of benefits). One interpretation, then, is we’re being moved by this reimagining of capital further and further away from any notion of class (such as implied by the differences between capital and labor and the accumulation of capital by and for the benefit of a tiny minority in society). But there is, I think, a somewhat different interpretation: we’re still obsessed by class (perhaps even more than before) and, precisely because of that, the mainstream project is to turn all of us into capitalists, with the shared goal of accumulating and managing our individual portfolios of various forms of capital.

Income share by labor and corps to 2011

It is perhaps not a coincidence that capital is being redefined and expanded precisely when the “capital share”—that is, the share of national income going to corporate profits—has reached record highs (not coincidentally, just as the wage share is at a record low) and some (such as Thomas Piketty and sympathetic readers) are expressing a worry that current trends in the unequal distribution of wealth may, if they continue, represent a return to the réntier incomes and inherited wealth characteristic of “patrimonial capitalism.”

So, capital is still a problem that haunts economics.

The problem of capital can be traced back to the first texts of modern economics. While I don’t have the space here to present a full history of economic thought, it is important to note that, for Adam Smith, the stock of physical capital played an important role in creating the wealth of nations. But, at the same time, Smith worried that capitalists might not carry out their “historical mission” of accumulating capital—if, for example, they chose to divert some of their profits to other uses, such as luxury consumption. David Ricardo, too, worried about the capitalists’ mission—if, with continual growth, the declining fertility of land under cultivation meant that rent on the land cut into profits and thus slowed the process of accumulation. Marx, of course, challenged both the classicals’ definition of capital—preferring to see it as a social relationship, rather than a thing—and their worry that the accumulation of capital (in the form of c and v, constant and variable capital) would slow as a result of exogenous events—because, for Marx, the problems were endogenous, as capital itself created obstacles to smooth and continuous accumulation. Even in early neoclassical growth theory (for example, in the Solow model), capital carried the hint of class, as it still had to be accumulated by a small group of investors—with the caveat, of course, that labor also stood to benefit as a result of more jobs and a higher marginal productivity.

But that previous class dimension of capital seems to have radically changed with the proliferation of new, expanded notions of capital.

This issue of capital came up as I was reading the commentaries on Piketty’s book that were delivered in a session at the recent American Economic Association meetings. All of the respondents—mainstream economists of various hues and stripes—took issue with Piketty’s definition and measurement of wealth. However, let me for the sake of this post, focus on one of them, by David Weil [pdf]. Weil’s view is that, in addition to productive capital (the K one finds, alongside labor, in the usual neoclassical production function), capital should also include two other forms of wealth: human capital and “transfer wealth.” In his hands, labor income is now transformed into another kind of return on capital, the result of which is that a portion of national income (his calculations indicate 38 percent) represents a payment for education above and beyond “brute” labor. Human capital has the additional advantage, for mainstream economists like Weil, that it is more equally distributed (“there is a limit to how much human capital even the richest parent can cram into the head of his or her child”) than physical or financial capital. And then there are the Social Security payments workers rely on as retirement income. Weil also wants to treat them as capital, as a “transfer wealth.” He does acknowledge potential objections (“Ownership of transfer wealth conveys no control rights, and it can’t be sold or borrowed against, although it is not clear that these characteristics would be very valuable to those who hold it. Because it is annuitized, transfer wealth does not pass on to heirs, and so it is certainly true it affects the dynamics of inequality differently than market wealth.”) but then, impressed with the “gross size of these transfer claims,” Weil proceeds to treat them as a form of individual wealth—instead of as a social claim by one group of former workers on the surplus being created by existing workers.

The proliferation of these notions moves capital further and further away from its previous associations, in one way or another, with class and the process of producing, capturing, and utilizing the surplus in the form of capitalist profits. That’s one of the effects of redefining capital and imagining that wages and Social Security represent different returns on capital.

At the same time, the new forms of capital continue to be haunted by the issue of class, precisely in the insistence that everyone—not just capitalists—owns some and that forms such as human capital and “transfer wealth” are more equitably distributed than traditional (physical and financial) capital. In other words, mainstream economists’ attempts to redefine and expand what we mean by capital still carry the whiff of a claim on net income that is something above and beyond what laborers receive by exchanging their ability to work for a wage.

The problem, of course, is that the more capital is detached from the traditional role of the capitalist—to serve as “a machine for the conversion of this surplus-value into additional capital”—the more it calls into question the idea that the class of capitalists serves any particular role at all in today’s society. This is a problem that, of course, has reinforced by the onset and enduring legacy of the most severe crisis since the First Great Depression.

In this sense, the proliferation of new forms of capital—in the midst of the growing inequality that both caused and is now the consequence of the Second Great Depression—merely serves to remind us of the antithesis between the character of wealth as socially produced and privately captured. That is the real problem with capital that simply can’t be solved within the existing economic institutions.

*This illustration was produced by the Capital Drawing Group.

pek 9780415110266

By his own account, Yanis Varoufakis is an “erratic Marxist.” He’s also, it appears, a committed critic of postmodernism.

In my previous discussion of Varoufakis’s interpretation of Marxism, I deliberately avoided mentioning his “pot shot” at postmodernism:

A Greek or a Portuguese or an Italian exit from the eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe is would be in the grip of vicious stagflation. Who do you think would benefit from this development? A progressive left, that will rise Phoenix-like from the ashes of Europe’s public institutions? Or the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs? I have absolutely no doubt as to which of the two will do best from a disintegration of the eurozone.

I, for one, am not prepared to blow fresh wind into the sails of this postmodern version of the 1930s.

But, as friends reminded me, I had forgotten (or repressed?) Varoufakis’s earlier attack on postmodernism, which he delivered in two reviews (or two versions of a review) of a book on postmodernism and economics.

As it turns out, I had a hand in the book in question, Postmodernism, Economics, and Knowledgewhich I edited with two close friends and comrades: Jack Amariglio and Stephen Cullenberg.

In the longer version of the review, which appeared in 2002 in the Journal of Economic Methodology [unfortunately gated], Varoufakis was actually quite complimentary about at least some aspects of the book.

Anyone interested in the postmodern stirrings of economic discourse should turn immediately to Post-Modernism, Economics and Knowledge, edited by S. Cullenberg, J. Amariglio and D. Ruccio (Routledge 2001). It explicates Postmodernity’s various strands succinctly and with sensitivity to the large retinue of meanings that the postmodern condition has acquired over the years. It comprises twenty-two taut, well-crafted chapters categorised in seven distinct parts blending nicely into one another. Of the contributors most are economists, albeit of a somewhat iconoclastic disposition, while three philosophers, one English professor and one anthropologist combine forces with them to offer the reader a delightful mixture of perspectives. Perhaps the book’s greatest asset is its clear, thoughtful introduction that gives the whole edifice its integrity, restrains the wayward tendencies of some contributors and whets the reader’s appetite.

But then, in the rest of the review, and especially in the shorter version published in The Post-Autistic Economics Review, Varoufakis spends most of his time attacking postmodernism, presumably to warn off “young dissidents” who are or might be attracted to the idea (“the task of the PAE movement must be to clear the way for radical criticism that avoids the postmodern trap as resolutely as it opposes economic autism”). His basic argument is that the postmodern critique of mainstream economics is doomed to failure, by first being absorbed into mainstream economics and then strengthening it (“Postmodernity unwittingly blows fresh wind in the sails of neoclassicism, the undisputed champion of the deconstructed human agent. While warning us correctly that new authoritarianisms will be born when we get caught up in our own rhetoric, it offers no resistance to the current authoritarianism of neoclassical economics and, more so, the socio-economic system that it serves”), supplemented by the all-too-common allusion that postmodernism is the easy way out (“the postmodern turn will be chosen by pseudo-dissidents whose prime interests lie in acquiring a chic image”).

And the alternative? Varoufakis proposes “an historically grounded understanding of how systematic patterns of power and economics are the joint products of the continual feedback between technological developments and evolving social formations” guided by “an unbending commitment to a rational transformation of society.”

Now, in the reminder of this comment I don’t want to offer a defense of our project of postmodern criticism (developed in that book or in other volumes, such as Postmodern Materialism and the Future of Marxist Theory and Postmodern Moments in Modern Economics). Suffice it to say, given our work on the journal Rethinking Marxism and our other Marxist associations, we’ve never been particularly sympathetic either to neoclassical economics or to capitalism. On the contrary.

What interests me more, given the current crises of capitalism and the predicament of the Left (whether in Greece, Spain, or the United States), are the terms with which we can formulate our critique. Varoufakis sees (or at least saw) a strict dichotomy: postmodern fragmentation or rational transformation. For me, there is no such dichotomy, at least if we allow that rationality is itself a contradictory discursive and social construction. If so, then the battle is between different rationalities, which of course have very different effects.

One rationality, embodied as much in the troika’s formula of austerity for Greece as in the lopsided economy recovery in the United States, is captured by neoclassical economics: everybody gets what they deserve, as long as free markets are unleashed on the world. The other rationality starts with the proposition that everyone should get what they deserve but they don’t—and can’t—within existing economic institutions. Those institutions—capitalist institutions—make “just deserts” impossible.

That idea, that there’s a clash of rationalities within the world today, is precisely an effect of the postmodern questioning of metanarratives. Postmodernism, in this sense, represents a critique of a singular (humanist) rationality, just as it serves to undermine the neoclassical claim of a monopoly on scientific knowledge (indeed, the scientism that animates much of economic theory, mainstream as well as heterodox), the presumption of causal hierarchies within economic analysis (again, both mainstream and heterodox), and much else.

My point is not to simply reverse Varoufakis’s claims, for example, by asserting that fragmentation, irrationality, disunity, and so on are necessarily progressive and that esssentialism, rationality, and unity are necessarily regressive. None of those moves is necessarily one or another, outside of a particular historical conjuncture.

And that’s the point, isn’t it? The effects of the moves that we make, the demands we hold up, the criticisms we formulate depend on a specific context, on what is taken to be the existing common sense and how best to disrupt that common sense. The fact is, modernism (at least in economics) has long been associated with a humanist, universal, scientistic set of claims, and part of the task of carrying out a ruthless criticism of mainstream economics is to challenge and deconstruct those claims (including the idea that such claims are even possible).

Is that all? No, of course not. In my view, the postmodern critique of mainstream economics needs to be supplemented by a Marxist critique. But, I want to be clear, it also goes in the other direction: that Marxist critique (traditionally formulated in terms of “laws of motion,” a hierarchy of base and superstructure, and so on) needs to be supplemented by postmodernism.

In the end, the Varoufakises of the world may disagree. However, what I believe we can come to some agreement on is the need to continue to criticize “the inexorable devaluation of political goods, the vulgar commodification of human bodies and values, the impossibility of conceptualising freedom-from-the-market, the depiction of Central Banks as ‘independent’ only when under the thumb of financial capital, the confusion of liberty with the freedom to exploit and to demean and, above all else, the portrayal of coercion as tâtonnement.”

In my view, both postmodernism and Marxism, each in their different ways, play useful roles in carrying out that critique.