Marx to Debtonomics


Baby Boomers! We hardly knew ye …

Where have you gone Joe DiMaggio, the nations turn their lonely eyes to you?

From spastic to sclerotic in a heartbeat.

But it was all good fun, or at least it was supposed to be, chrome-wheeled fuel-injected stepping out over something or other like a corpse on the sidewalk.

Ben Gray, AP Photo/The Atlanta Journal-Constitution

The boomers are now shuffling off the stage leaving pantloads of trouble behind …

One and a half trillion dollars worth of unpayable student loans, the joke is on who, again?

Men can be distinguished from animals by consciousness, by religion or anything else you like. They themselves begin to distinguish themselves from animals as soon as they begin to produce their means of subsistence, a step which is conditioned by their physical organization. By producing their means of subsistence men are indirectly producing their actual material life.

The 5th of May this year was Karl Marx’ 200th birthday. Besides coming up with a fabulous look, he along with Charles Darwin were the seminal provocateurs of the late-middle Industrial Revolution. Whereas Darwin skewered the creationist affectations at the center of mercantile society — we’re just monkeys after all — Marx took aim at the infrastructure and prime movers of the organization itself. Wrenched by the poverty and distress of 19th century industrial labor and the gilded luxury of the bosses, Marx critiqued society as crass, remorseless, banal, arbitrary and repressive, a mediocre manufactured product no different from the floods of ‘goods’ spat out in torrents from the satanic mills and factories, unmitigated by virtue or invisible hands. Marx was a mirror for what he described: Godless, rational, irreverent and assiduous.

“The history of all hitherto existing society is the history of class struggles.”

According to Marx, labor creates wealth – surplus value. Business ownership of the financial, manufacturing and distribution infrastructure allows them to capture labor’s value-added surplus for themselves. Business also ‘owns’ the ideological armature (marketing) of the economy so it rationalizes deploying political violence against labor whenever necessary. Technology gives bosses the means to arbitrage the labor-price, pitting each worker against the rest or labor in one place against labor elsewhere. Technology also reinforces the owner advantage by enabling new, fashionable enterprises to undermine the old with ruinous competition; enterprises where labor night otherwise be able to gain advantages of their own.

To the merchants and industrialists, Marx was an irritant who threatened to rile up their workers as well as deter any customers who might have consciences. Alongside Frederick Engels, Marx became synonymous with communism and rebellion, then with a significant form of the great 20th century political innovation, the single party police state. ‘Marxism’ wound up catching the blame for excesses of dictators such as Josef Stalin and Mao Zedong, but what propelled these regimes was not as much Marx or his analysis but the same infrastructure and motive forces that powered industrial capitalism: the advancement of technology; expanding access to resources especially fossil fuels; railroads, steamships, telegraph and telephone, the radio and mass media, machine guns and airplanes, inexpensive broadsheet publishing, the same marketing/propaganda and the Taylorist revolution in business management which made it possible for a small number of bosses to manage in every possible way the entire working lives of tens of thousands of individuals. It was a small jump from dominating the workforce in an industry to entire populations around the clock, to eliminate any distance from working lives to the private lives of individuals no matter how insignificant their role in society.

Marx championed socialism even though he did not invent it. Socialism demands public ownership or control of ‘productive’ infrastructure. It offers workers the chance to gain something more than the choice between wage slavery and destitution. The appeal of socialism tends to increase during money panics and crashes such as the Great Depression or during periods of capitalistic overreach or follies as World War I or the Vietnam War. The appeal wanes during economic booms and ‘gold rushes’, when workers believe they can join the privileged classes, when social equality movements are compromised or outwitted, after periods of active repression; ‘Red Scares’ when socialists are rounded up and sent to prison.

The younger, cosmopolitan boomers were attracted to Marx because he was the ultimate dirty hippie … the bête noire of World War II’s Greatest Generation: those washed out, pallid, gas-guzzling, Negro-hating, Ford Fairlane driving, mac-and-cheese gobbling American suburbanites; he was the hairy, exotic European golem who would slither down the chimney in the middle of the night like a vampire bat and take it all away.

The risk became palpable as technological development offered Moscow the means to annihilate everyone including themselves. The forces of decency were marshaled in the US and unleashed around the world to combat the ‘Red Scare’ (profit from it) wherever it might take root, in Asia, Hollywood and the US State Department. With the opening of China to dollar trade and the collapse of the Soviet Union, the menace that gave Marx his potency evaporated, he was reconfigured into a harmless pop-culture cartoon character, a Warholian ‘bad boy’ in the mold of William Burroughs. Like Warhol himself, but not exactly, Marx become (posthumously) famous, arguably the world’s best known economist … as well as one of the least read …

For what it’s worth, Karl Marx turns out to have been an excellent economist, producing a useful, critical rendering how the commercial economies of his time functioned:

“The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous “cash payment”. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.”

— Communist Manifesto (1848)

If this sounds familiar it should …

Unlike previous cultures which ‘sold’ permanence and stability, the culture of modernity markets a narrative of perpetual progress and material development. Implicit in the narrative is that what has preceded the present has no value and is being superseded. Modernity is destabilizing along with its institutions. What is useful and worthwhile on day one is disposable on day two. The goods produced by modernity reflect the marketing requirements the culture makes on itself. Since fashion is false what modernity markets is its own false-ness. As such the primary narrative is another self- referential scam.

Culture Change, Broken Chains

 

Here Marx is rehabilitated … outlines the trajectory of late-stage capitalism and its current existential crisis:

“Anyone reading the (Communist) manifesto today will be surprised to discover a picture of a world much like our own, teetering fearfully on the edge of technological innovation. In the manifesto’s time, it was the steam engine that posed the greatest challenge to the rhythms and routines of feudal life. The peasantry were swept into the cogs and wheels of this machinery and a new class of masters, the factory owners and the merchants, usurped the landed gentry’s control over society. Now, it is artificial intelligence and automation that loom as disruptive threats, promising to sweep away “all fixed, fast-frozen relations”. “Constantly revolutionizing … instruments of production,” the manifesto proclaims, transform “the whole relations of society”, bringing about “constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation”.

— Yanos Varoufakis

Marx correctly observed the ‘periodic crises’ were due in part to over-production, inventory excess also shortages of money:

“there are times when it is impossible to sell all commodities, for instance in London and Hamburg during certain stages of the commercial crisis of 1857/58 there were indeed more buyers than sellers of one commodity, i.e., money, and more sellers than buyers as regards all other forms of money, i.e, commodities. The metaphysical equilibrium of purchases and sales is confined to the fact that every purchase is a sale and every sale a purchase, but this gives poor comfort to the possessors of commodities who unable to make a sale cannot accordingly make a purchase either.”

Marx entertained a rational money theory whereby a commodity gains a different, separate character — ‘moneyness’ — when used as a means of exchange. Marx expanded David Ricardo’s labor theory of value; he outlined the loanable funds model, he examined credit and derivatives, described finance as actively expanding business activity rather than being simply warehouses for surplus value; he understood the relation between velocity of money and circulation, the interconnections between institutions (also described by Walter Bagehot in ‘Lombard Street’), the relation between the state and monetary system/central banks, also international finance and ‘world money’. Marx the globalist understood the aim of business was free trade everywhere, and free exchange of capital (money) everywhere.

Marx believed that commercial capitalism would fail due to both a permanent shortage of profit consequent to malinvestment and excess capacity plus managers’ incompetence rendering them useless at managing. Afterward would come socialism, the system whereby workers owned the means of production and kept surplus value for themselves.

Comparing Different Schools of Economics

CATEGORY CLASSICAL NEOCLASSICAL MARXIST DEVELOPMENTALIST AUSTRIAN
The economy is made up of … classes individuals classes no strong views but more focused on classes individuals
Individuals are … selfish but rationals (but rationality is described in class terms) selfish and rational selfish and rational, except for workers fighting for socialism no strong view selfish but layered (rational only because of an unquestioning acceptance of tradition
The World is … certain (‘iron laws’) certain with calculable risk certain (‘laws of motion’) uncertain but no strong view complex and uncertain
The most important domain of the economy is … production exchange and consumption production production exchange
Economies change through … capital accumulation (investment) individual choices class struggle, capital accumulation and technological progress developments in productive capabilities individual choices but rooted in tradition
Policy recommendations; free market free market or interventionism, depending upon the economist’s view on market failures and government failures socialist revolution and central planning free market free market

This graphic is part of a larger piece from Ha-joon Chang. It offers some of the various disciplines or schools of economic reasoning. Marx’ ideology is compared to others (click to see the larger graph including Debtonomics).

Societies tend not to be the property of specific groups, nor are they easily divided. Instead they are the outcome of billions of us relentlessly re-inventing the world for our own purposes every single day. Production is an abstraction: there is transformation and consumption. All industry is simply a form of consumption; industries’ product is trivia; ultimately waste and entropy: the more effort expended producing more trivia => more entropy produced faster. What drives societies is a kind of defensive self-interest: should an economic actor, firm or individual, fail to act to its own advantage, other actors will take its place. There are no classes, only a gradation or scale upon which the meanest of our species is simply a reduced version of his- or her betters: every worker a robber baron in miniature.

The next part will compare Marx to Debtonomics in more detail.

13 thoughts on “Marx to Debtonomics

  1. Ken Barrows

    Sorry, Yanos, artificial intelligence and automation aren’t going to do sh**. Or, if they are, at least let me know how much power consumption it will take first.

    1. steve from virginia Post author

      It’s probably less energy demanding to mine gold than mine bitcoins …

  2. Creedon

    Doug Noland is saying that the emerging market debt fiasco is reaching critical mass. We shall see, for how long wall street can ignore what is going on; not to mention, pretty much all central banks world wide. The world’s debt system has maxed out.

  3. dolf is back

    Good to see you still going, though you don’t really need to. The archives of this blog will be well worth reading for a century to come, should the future generations have the means.

    I myself had an anxiety crisis recently and have had to give up doom. There’s no point, we are rendered powerless and it will only quicken the process of destroying me before my time.

    Here in America the kids are killing each other in the schools. What other evidence do you people want.

  4. Eeyores enigma

    Kids are killing themselves 100 more than each other but that doesn’t sell as well “gunz are bad”.

    You want to stop school shootings (and maybe suicides while we’re at it) give the kids a world worth living in.

  5. Being Frank

    An economy? That’s simple. I’ve been to parts of the world where the economy consisted of collecting and drying camel dung. The more you collect the richer you become and the more wives and kids you get to have. The people who can’t get out of bed to take part in the economy don’t get to procreate, so good for the gene pool. The wives and kids collect the water to grow the food.
    So what more could a bloke want than food and a variety of sexual partners?
    And then the missionaries turn up to destroy a way of life that had been sustainable for 1000’s of years.

  6. Tagio

    Thanks, Steve, good article, I look forward to Part II.

    I re-read your article, “Culture Change, Broken Chains,” which, like many of your articles, made a lot more sense to me on another, read through after some time has passed so that your ideas can sink in. By virtue of this article, https://www.theguardian.com/commentisfree/2012/mar/30/guy-debord-society-spectacle , I recently ran across, and am working my way through, Guy Debord’s, “The Society of the Spectacle.” http://library.nothingness.org/articles/SI/en/pub_contents/4
    Many of your thoughts in Culture Change resonate very strongly with Debord’s. If you haven’t read him, you may find it profitable to do so. Forgive the long excerpt below, but I want to give you and your readers an illustration of some of Debord’s thoughts, which I think very much overlap your own in important respects. See., e.g., ##69 and 70 below.

    “66

    Every given commodity fights for itself, cannot acknowledge the others, and attempts to impose itself everywhere as if it were the only one. The spectacle, then, is the epic poem of this struggle, an epic which cannot be concluded by the fall of any Troy. The spectacle does not sing the praises of men and their weapons, but of commodities and their passions. In this blind struggle every commodity. pursuing its passion, unconsciously realizes something higher: the becoming-world of the commodity, which is also the becoming-commodity of the world. Thus, by means of a ruse of commodity logic, what’s specific in the commodity wears itself out in the fight while the commodity-form moves toward its absolute realization.

    67

    The satisfaction which no longer comes from the use of abundant commodities is now sought in the recognition of their value as commodities: the use of commodities becomes sufficient unto itself; the consumer is filled with religious fervor for the sovereign liberty of the commodities. Waves of enthusiasm for a given product, supported and spread by all the media of communication, are thus propagated with lightning speed. A style of dress emerges from a film; a magazine promotes night spots which launch various clothing fads. Just when the mass of commodities slides toward puerility, the puerile itself becomes a special commodity; this is epitomized by the gadget. We can recognize a mystical abandon to the transcendence of the commodity in free gifts, such as key chains which are not bought but are included by advertisers with prestigious purchases, or which flow by exchange in their own sphere. One who collects the key chains which have been manufactured for collection, accumulates the indulgences of the commodity, a glorious sign of his real presence among the faithful. Reified man advertises the proof of his intimacy with the commodity. The fetishism of commodities reaches moments of fervent exaltation similar to the ecstasies of the convulsions and miracles of the old religious fetishism. The only use which remains here is the fundamental use of submission.

    68

    The pseudo-need imposed by modern consumption clearly cannot be opposed by any genuine need or desire which is not itself shaped by society and its history. The abundant commodity stands for the total breach in the organic development of social needs. Its mechanical accumulation liberates unlimited artificiality, in the face of which living desire is helpless. The cumulative power of independent artificiality saws everywhere the falsification of social life.

    69

    In the image of the society happily unified by consumption, real division is only suspended until the next non-accomplishment in consumption. Every single product represents the hope for a dazzling shortcut to the promised land of total consumption and is ceremoniously presented as the decisive entity. But as with the diffusion of seemingly aristocratic first names carried by almost all individuals of the same age, the objects which promise unique powers can be recommended to the devotion of the masses only if they’re produced in quantities large enough for mass consumption. A product acquires prestige when it is placed at the center of social life as the revealed mystery of the ultimate goal of production. But the object which was prestigious in the spectacle becomes vulgar as soon as it is taken home by its consumer–and by all its other consumers. It reveals its essential poverty (which naturally comes to it from the misery of its production) too late. But by then another object already carries the justification of the system and demands to be acknowledged.

    70

    The fraud of satisfaction exposes itself by being replaced, by following the change of products and of the general conditions of production. That which asserted its definitive excellence with perfect impudence nevertheless changes, both in the diffuse and the concentrated spectacle, and it is the system alone which must continue: Stalin as well as the outmoded commodity are denounced precisely by those who imposed them. Every new lie of advertising is also an avowal of the previous lie. The fall of every figure with totalitarian power reveals the illusory community which had approved him unanimously, and which had been nothing more than an agglomeration of solitudes without illusions.

    71

    What the spectacle offers as eternal is based on change and must change with its base. The spectacle is absolutely dogmatic and at the same time cannot really achieve any solid dogma. Nothing stops for the spectacle; this condition is natural to it, yet completely opposed to its inclination.

    72

    The unreal unity proclaimed by the spectacle masks the class division on which the real unity of the capitalist made of production rests. What obliges the producers to participate in the construction of the world is also what separates them from it. What brings together men liberated from their local and national boundaries is also what pulls them apart. What requires a more profound rationality is also what nourishes the irrationality of hierarchic exploitation and repression. What creates the abstract power of society creates its concrete unfreedom.”

    Cheers

    1. steve from virginia Post author

      As in the ‘Manifesto’:

      “The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

      “Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.”

      1. Eeyores enigma

        Most everyone I talk to about this concept (and I am careful not to mention Marx and couch the message in such a way as to not sound too Marxist) feels that this is a very good thing and ultimately leads to a fair, equitable, and therefor peaceful world. I suppose in an infinite world it might just be.

  7. Creedon

    The book the ‘Clock’, by James Lincoln Collier and Christopher Collier examines the rise of the industrial revolution in the textile mills of Connecticut, in a book of fiction.

    Things are of the Snake,

    The horseman serves the horse,
    The neatherd serves the neat,
    The merchant serves the purse,
    The eater serves his meat,
    Tis the day of the chattel,
    Web to weave, and corn to grind,
    Things are in the saddle,
    and ride mankind.

    Ralph Waldo Emerson

  8. Oilcrashing

    Hello everyone again, thanks everyone for your reply in Steve’s last entry.

    I think the currency crisis in some Emerging markets is starting to affect the fuel availability. We talked about Argentina and Turkey, but it seems that Brazil is also experiencing a really serious social upheaval in the form of a massive truck strike. High gas prices are hurting especially the transportation sector and the military is being called to clear the highways. For some countries, a barrel of oil is right now more costly than it was during 2007-2008.

    https://www.zerohedge.com/news/2018-05-26/brazilian-military-deployed-break-trucking-state-emergency-worsens

  9. Mike Hart

    “I met a traveller from an antique land,
    Who said—“Two vast and trunkless legs of stone
    Stand in the desert. . . . Near them, on the sand,
    Half sunk a shattered visage lies, whose frown,
    And wrinkled lip, and sneer of cold command,
    Tell that its sculptor well those passions read
    Which yet survive, stamped on these lifeless things,
    The hand that mocked them, and the heart that fed;
    And on the pedestal, these words appear:
    My name is Ozymandias, King of Kings;
    Look on my Works, ye Mighty, and despair!
    Nothing beside remains. Round the decay
    Of that colossal Wreck, boundless and bare
    The lone and level sands stretch far away.” (Shelley)

    Marx was correct and always was, so was Keynes, and Malthus and Ludlum.

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