Imagine for a moment that you live in the most fair and equitable economy you can dream up. There are some very specific things that most people in the developed world, especially Americans, would think would be a part of this.
There would be upward mobility, where family circumstances do not determine the kids’ future. People could find their own way according to their own talents and choices as to what makes a good life. Money would rarely limit dreams, as a free-flowing capital market would provide funding for good ideas at reasonable rates. Most would own their own homes and have control over their own destiny. Workers would own the company they work for, banking their retirement at a reasonable age on the place that they helped build. Basics like food and access to health care would not be expensive.
Such a place is the embodiment of pieces of both the Democratic and Republican parties in odd turns. This place of the imagination is also pretty close to the perfect state envisioned by Karl Marx.
Karl Marx
The world rarely understands the work of Karl Marx in a way that makes sense. His work was taken over by radicals nearly 200 years ago and morphed into something even Marx could not relate to – at the end of his life he famously said “The last thing on this earth I would want to be called is a Marxist”. 100 years ago the perverted form of his work was crystallized into a “Socialist Republic” – Communism as we came to know it. It was a brutal dictatorship that ran nearly the opposite of Marx’s vision.
What Marx laid out in “Capital” was a new way of looking at human history. The struggles of history were not about the nobility of kings but the way material goods and land were distributed among people. It was all about the stuff – who had it, how it was created, and how it could be taken away. The lack of the basic scratch to survive started revolutions and was the primary threat to the ancient order that stood two centuries ago.
Two things should stand out right away. The first is that this is the prevailing view of all history among even very “conservative” people right now. The second is that when you avoid big “Marxist” terms like “dialectical materialism” the real meat of this analysis starts to sound pretty obvious.
In this Marx’s view of history, it seemed clear that where he stood at the early end of early industrialization was not a place that could possibly last forever. The skies that separated monarchs from their supposed divine charge were thickened with black smoke that separated the two as clearly as night and dim day. That’s how Marx came to see history as progressing from where he was into something else – a classless society where workers owned companies and basic needs were taken care of.
That wasn’t realized in the Soviet Union. It came true much more clearly in Employee Stock Ownership Plans, 401ks, and a host of programs that make up the social safety net of a developed nation. We are far more “Marxist” today than anyone who ever made that claim.
This may sound academic, but there are interesting features of this Marxist world in which we live that seem hard to explain. The first is that of the six largest economies (by currency), #1 Euroland, #2 USofA, #4 Japan and #6 UK are struggling under the weight of government systems that appear to be based on the free market but are in fact tilted towards socialized risk for the financial industry. The ones that are doing well? #3 China and #5 Brasil, both of which are much more overtly “socialist” (though I would not bet on hard-core China too heavily in the near future).
But if you want to find a European nation that is doing pretty well, look to Sweden – often a bulwark of Social Democracy and scorned by lovers of the Free Market™ everywhere.
There is a lesson here. As we think about the Next Economy and how we can shape it, the struggles of people to obtain basic freedom, especially freedom from want and desperation, very much defines our world. But that world is not contained easily in a narrow mythology defined two centuries ago. That world also defined something that we came to think of as our enemy, even as we worked to achieve what was truly at the heart of it.
Revolution? An awakening of the Romantic spirit? It’s been there all along. And, in odd ways, we were doing pretty well before we became horribly distracted – in different ways than other people became distracted, but whatever. Let’s try to keep our eyes on what’s important, shall we?
Barataria - The work of Erik Hare 
There are like a billion ways to look at anything, so if this is one way I’m all for it. The Cold War is over we don’t have to have a red scare anymore.
Yes. We can learn a lot from many different places! An open mind takes in everything at face value, and Marx seems to have gotten a pretty bum take in history, IMHO.
I’m intrigued, but I have no idea where you are going with this. It only makes sense for us as a nation to talk about the rules of the game when it comes to finance and how it works best for us but this is a bit much for me. Besides we can’t even pass a budget in congress so how could we ever get past things like communism even if we should (and I’m not saying we should either).
So you lost me on this one. Yes, we did a lot of things right and we have a lot to be thankful for. We could do better. But looking back to Marx seems like a wasted effort to me.
Marx lived a long time ago, yes, but he did see a lot of things happening in the future – things that are really only now coming to fruition. He did see the age of kings give way to capitalism and that eventually to something like the globalism we enjoy today. I think that, along with the way he viewed history (now accepted) as very valuable.
Perhaps it’s just another way that things are completely upside-down in today’s world, but I do think there is a lesson here.
worker’s paradise? hardly. but your point is well taken. this is not un-american at all! we can do much better & we know better.
Exactly. I think if we look at what we have achieved we can use American ideals and achievements and put them into a Marxist framework very easily – much more easily than they can make the narrative work for themselves in China, frankly.
Even if workers in a company equally own the company, there is still the question of who manages the company. Opinions would have to be aggregated. If the company is an internally managed democracy, that would be one form of socialist production. However, one conundrum of the political theory of socialism is how to get people who own assets to share it with others and to get them to share the management in a democratic fashion rather than a semi-authoritarian fashion. We know that if you take away productive assets from people they don’t like it. The challenge is whether they are open to negotiating if they are under the threat of partial or complete expropriation.
If a nation takes over all companies as a type of social ownership, I think economics shows that the companies will lose the incentive to be run properly and whether price can be effectively taken into account.
China’s government and economy is probably worth studying since they are some sort of state capitalism.
To me, it comes down to how labor is organized. We all know that unions are on the decline, and I don’t see that changing given the change in how work is being done (ie, the Gig Economy). I agree (and think Marx would, too!) that an authoritarian concept of sharing is not the ultimate. But the concept of a largely “classless society” is a pretty strong value here in the Midwest, even if it’s not a reality. Much of this is a social contract which in traditional St Paul works out pretty well on a voluntary basis.
China is a very strange example in so many ways, and I would like to think about it more. What on earth is their economy right now?
Mr Hare – Marx is misunderstood because “his work was taken over by radicals”??? How about because demonizing Marx has been a constant tool in the propaganda toolkit of concentrated private wealth since forever? I haven’t read Marx widely but I know he was a nearly flawless expostulator of the relation between economic and social conditions and would have predicted the flow of history pretty precisely to the present day but for failing to account for the evolution of the techniques of propaganda that has allowed capital to keep the great bulk of folks from recognizing and acting in their own and society’s interests. No thoughtful person thinks that Leninism or Soviet state capitalism had anything to do with Marx. If our society wanted to utilize Marx’s insights, it would be simple. Except for concentrated wealth and its control over the limits of our discourse. As a society, we’ll sooner see Noam Chomsky named to Mitt Romney’s cabinet than turn to Marx’s useful insights.
OK, I’ll admit that the demonizing has been important, but only because you admitted that Leninism isn’t really Marxism. 🙂 It’s a mixed-up history that I glossed over a bit too quickly – I really didn’t want this to get too long (which it did anyway).
But yes, Marx’s insights were largely academic, very useful – and adopted far more widely than most people would ever understand. I find that fascinating, especially as I consider how more socialist nations appear to be doing quite well lately. The rise of Brasil, for example, is not a capitalist story, but one of a social concept of markets working in a way that seems global from the outset.
The demonization of Marx is largely propaganda, yes. But it didn’t stop Marxism all the same. Fascinating, iddn’t it?
We could talk about this for hours, I’m sure! ;_)
There are two fundamental reasons why Marxism has failed wherever it’s been tried, and it would have failed even without the brutal totalitarian regimes who used force to try to implement it.
The first is that Uncle Karl was either ignorant of, or totally discounted the role of human nature. Any psychologist will tell you that it’s human nature to respond to incentives. Whereas capitalism is based on the system of incentive and reward, Marxism is based on the assumption that a man will produce for the good of the collective without a corresponding reward.
Human nature says that when a factory worker realizes that his pay will be the same as the guy next to him, regardless of their relative quality or productivity, the quality and quantity of his work will soon seek the lowest common denominator. We all remember the stories from the old soviet union of how the Russian citizens would have to wait months or years for delivery of a new car or kitchen appliance and when it finally arrived, there was a good chance that it wouldn’t work properly because of the shoddy workmanship.
The second fundamental reason why Marxism doesn’t work is because it features a planned economy instead of a market economy. That means that planners, usually government bureacrats, decide what products and in what quantities the state factories will produce over a period of time. The soviet union was run by a series of five-year plans that laid out what the factories would produce. But in a nation of virtually any size, it’s impossible for anyone or even a computer program to predict beforehand what the people will want or need.
The result is bare shelves in the stores and limited choices of what is available to buy. I remember back in the 70s helping a family of Russian immigrants who had just arrived in Saint Paul. We went grocery shopping at the Supervalu store on West 7th street and they honestly couldn’t believe their eyes. They spent over an hour in the store, slowly walking up and down the isles, excitedly pointing and talking to each other, shaking their heads at the unimaginable bounty. They marveled at the huge supply of meat and vegetables. They giggled at the dozens of brands of breakfast cereal to choose from. Every university econ student would be well served to have that experience.
The products that filled those shelves weren’t the result of a planned economy. They were the result of free market economy. Instead of the goverrnment telling the people what they would buy, the people tell the merchants what they want to buy and the merchant knows to put it on their shelves or their competitor across the street will.
So the reason why Marxism has failed and capitalism has succeeded is because Karl Marx’s ignorance of human nature failed to provide incentive and reward on the job and consumer choice in the marketplace.
Won’t disagree with you, but I will now offer this earlier post of mine on Marx as a bookend to this piece. Marx did have a tendency to be half-right about nearly everything, which is still quite remarkable for someone predicting the future centuries on.
Leaving aside details like central planning (and you’ll find I’m the most vocal critic of all forms of Big – Big Government, Big Business, Big Ideas, etc.) what is remarkable to me is an understanding of what people really want in the long run. It isn’t really stuff, at least not once the basics of life are taken care of – at least not for most people.
And there is a role for some central planning, assuming it works by and for the marketplace. Once again, it comes down to the long and short run of things – and nations like Brazil that have charted their own rise in the world seem to need some degree of organization, at the very least.
It’s worth a lot of thinking. We are going to enter a new economy before we end this Depression, and it will not be like the last one. Can we define it more than it defines us? What do we really want or need as a people? What basic values and aspirations go into this social thing called an “economy”?
A free people organized democratically have to work it out for themselves, somehow. I’m sure that this starts by talking about it and keeping our minds very open, at least through an initial “brainstorming”.
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Erik, in your view, how should labor be organized.
I don’t have a good answer in any kind of flexible workforce, ie a “Gig Economy”. It would be great if something more like “Guilds” were formed around professions, but that naturally relies on a restriction to a free market – and there are always hungry people out there who undercut as well as prospective clients who really don’t care that much about quality. Formation of effective guilds with effective accreditation programs has proven to be essentially impossible.
So backing away from the ideal case we go from absolutely nothing to … ? I just don’t have a good answer, short of full employment.
Can you write a column about the things you like about Sweden?
All I know is that things are going well there. They handled their banking crisis by nationalizing the banks that were failing (temporarily) and forgiving a lot of loans, so they got through the crisis back in 2009 and appear strong. That’s about all there is that I can say!
What I meant is I’m interested in what you like about Sweden’s democratic capitalist system compared to the US. Either policies or outcomes, 3 or 4 things.
It is an amusing piece
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