The point is to change it

Marx's analysis of the free-market economy is as relevant as ever, but implicit in every word he wrote is the idea that capitalism "brings into the world the material means of its own destruction."

WITH THE collapse of the Berlin Wall 20 years ago, and during the neoliberal economic boom since, it became very fashionable to declare Marxism dead. But now that the deepest economic crisis since the 1930s has arrived, Karl Marx is suddenly alive again.

Sales of the first volume of Marx's economic blockbuster Capital, a long and somewhat difficult book, have shot up in Germany. "Generally, we have to admit that parts of Marx's theory are not so bad," remarked Germany's Finance Minister, Peer Steinbrück. Pope Benedict XVI--that well-known radical--praised Marx's "great analytical skill."

Even in the United States--the place where we were once told socialism had been dashed on the reefs of roast beef and apple pie, and where up until recently even "liberal" was considered a dirty word--a Rasmussen poll shows 33 percent of people under 30 consider socialism to be better than capitalism. Apparently, the din of capitalist crisis has drowned out the fading mantra of the wonders of the free market.

Marx's analysis of economic crisis is rightly praised, especially when his analysis is compared to economists who are essentially apologists for capitalism, and are therefore incapable of providing an honest assessment of the system. While they concoct formulas that purport to prove that crises have been overcome, or that economic instability is merely accidental, Marx grasped the nature of crisis in a way that few economists do even today.

The chaos of the free marketThe chaos of the free market

"In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed," Marx and his collaborator Frederick Engels wrote in the Communist Manifesto. "In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity--the epidemic of overproduction."

Marx argued that each crisis was overcome by the "enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones." Thus, he argued, the solution to each crisis merely paved "the way for more extensive and more destructive crises."

Marx also had some tantalizing insights into the nature of credit, noting, "The credit system appears as the principal lever of overproduction and excessive speculation in commerce."

The expansion of credit prolongs the boom, but by doing so eventually expands production beyond what the market can absorb profitably. At the peak of an economic upswing, credit speculation takes on a more pronounced character and takes the form of outright gambling.

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As the economy expands and profits are flush, it appears as though money can magically expand itself. Yet in the end, there must be some connection between the production of real wealth and financial speculation. Much of the wealth built up through speculation turns out, when the crisis hits, to be "imaginary money wealth."

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WE MUST, however, qualify what we mean when we say that Marx is fashionable. He's so only up to a point; his "analytical skill" is praised, only to denounce his revolutionary conclusions. A recent Time online article titled "Rethinking Marx" epitomizes this method.

"Hovering out there in the fog, unavoidably, is the towering specter of Karl Marx, the grandfather of political economists," writes Peter Gumbel. "[I]f you leave aside the prophetic, prescriptive parts of Marx's writings, there's a trenchant diagnosis of the underlying problems of a market economy that is surprisingly relevant even today."

It isn't clear, however, what makes this Marx figure hovering out there in the fog so towering if all he has to offer us is a description of how markets lead us periodically into crisis. Only the most ostrich-like economists would deny it at this point. One can't help thinking that Marx is being damned with faint praise.

The truth is that Marx's "trenchant diagnosis" of the failures of capitalism cannot be separated from the "prescriptive parts" of his analysis--the two are indissolubly linked.

Could it be any other way? Is it possible to praise a doctor having a "trenchant diagnosis" of a patient's illness, but who then offers a useless treatment, or no treatment at all?

But this analogy only goes so far. Marx wasn't interested in stitching up the system's wounds, but in showing how its own contradictions might lead to a new form of society.

Marx once wrote that "the philosophers had merely interpreted the world," whereas the "point is to change it." All of his insights into the workings of history and of capitalism were made with this approach in mind.

When, for example, he describes crises, he is showing how capitalism accumulates wealth on one pole, and misery on the other; how the "centralization of the means of production and the socialization of labor reach a point where they become incompatible with their capitalist integument"--that is, with the capitalist form of social organization that encompasses them.

Take, for example, this passage from Capital:

Machinery in itself shortens the hours of labor, but when employed by capital it lengthens them; itself it lightens labor, but when employed by capital it heightens its intensity; itself is a victory of man over the forces of nature but in the hands of capital it makes man the slave of those forces; itself it increases the wealth of the producers, but in the hands of capital it makes them into paupers.

This is not merely an analysis of how capitalism works: it is an indictment of it. Capitalism produces great wealth and then denies its benefits to those who produce it.

Marx thus didn't just analyze and critique the excesses of capitalism. He wanted to show how capitalism was not an eternal system; that it had a birth, and that it would have an end, just like previous economic systems; that capitalism's drive toward ever-greater productive power created conditions making possible a new society free of want and exploitation; and that its own inbuilt contradictions would produce crisis and upheaval that would pave the way for a new social system--provided the exploited class, the working class, could collectively rise up and take the reigns of power, and begin to reorganize society to meet the needs of all.

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IMPLICIT IN all of Marx's economic analysis is the idea that capitalism creates the conditions for its own abolition; in his words, "it brings into the world the material means of its own destruction."

In the Communist Manifesto, Marx and Engels praise the way in which capitalism has unleashed the power of human productivity:

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature's forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground--what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?

Why praise capitalism in a pamphlet proposing its overthrow? Because for Marx and Engels, this development of the productive forces brought about by capitalism created the material conditions to abolish class divisions and inequality. There is now absolutely no reason for there to be poverty in the world.

According to Engels:

[The] industrial revolution...has raised the productive power of human labor to such a high level that--for the first time in the history of humanity--the possibility exists, given a rational division of labor among all, to produce not only enough for the plentiful consumption of all members of society and for an abundant reserve fund, but also to leave each individual sufficient leisure so that what is really worth preserving in historically inherited culture--science, art, human relations is not only preserved, but converted from a monopoly of the ruling class into the common property of the whole of society, and further developed.

As soon as capitalism creates these conditions of abundance, Engels writes:

[E]very excuse disappears for the existence of a ruling class. Was not the final reason with which class differences were defended always: there must be a class which need not plague itself with the production of its daily subsistence, in order that it may have time to look after the intellectual work of society? This talk, which up to now had its great historical justification, has been cut off at the root once and for all by the industrial revolution of the last hundred years."

That is why those who are serious about changing the world must move beyond superficial praise of Marx, and toward a real understanding of his ideas.