No Matter Your Opinion on Marx, You’re Wrong

by Jonathan D. Fitzgerald

Objection: Marxism is a dream of utopia. It believes in the possibility of a perfect society, without hardship, suffering, violence or conflict. Under communism there will be no rivalry, selfishness, possessiveness, competition or inequality. Nobody will work, human beings will live in complete harmony with one another, and the flow of material goods will be endless. This astonishingly naïve vision springs from a credulous faith in human nature. Human viciousness is simply set aside. The fact that we are naturally selfish, acquisitive, aggressive and competitive creatures, and that no amount of social engineering can alter this fact, is simply overlooked. Marx’s dewy-eyed vision of the future reflects the absurd unreality of his politics as a whole.
– Terry Eagleton

Good books force you to challenge long-held beliefs and assumptions. Great books do this unexpectedly. For this reason, in many ways, Why Marx Was Right, by Terry Eagleton, is a great book.

In the fourth chapter, Eagleton takes to task the oft-held assertion that “Marxism is a dream of utopia.” In debunking this assumption, it becomes clear that the present, where we are starting from, is more important to Marx than the future. Similarly, for the purpose of addressing Eagleton’s book, I believe, it is important to note the present that the reviewer is writing from. As this book works on the reader’s assumptions, those assumptions must first be elucidated.

Early in chapter four, Eagleton recounts the joke of the hard-headed Irishman who, when asked the way to the train station, replies: “Well, I wouldn’t start from here.” Of course, as Eagleton notes, “There is…nowhere else to start from.” I start from the place of Marxist sympathizer. While I would never describe myself as a Marxist, I admire much about socialism and, in the past, could often be heard reciting what has become a well-rehearsed apology for Marxism. “Marxism,” I would say to my more-than-likely-conservative interlocutor, “is an ideal that doesn’t work in the real world because it calls upon humanity to be at its best, whereas capitalism thrives on us being at our worst.”

Seems reasonable, right? And to be honest when I selected the “utopia” chapter from Why Marx Was Right to consider for this series, I did so on the ill-fated assumption that I would find confirmation of my long held beliefs about Marxism. I could not have been more wrong. Rather than exclusively answering some close-minded anti-Marxist’s assumption that Marx is calling for a perfect society, Eagleton was writing for me; even in my attempt to defend Marxism, I am guilty of grossly misunderstanding it.

So, back to the notion that the future has to begin in the present. Eagleton begins with an assertion that rings true, but challenges the conventional belief that the role of prophets is to predict the future. This, he says, has never been the case from the time of the Biblical prophets. What they do, instead, is decry the societal ills that are threatening to destroy a particular society. In this way, Eagleton says, Marx was a prophet who was not really all that interested in what a particular future might look like, except to the extent that it will be informed by the present. And to this point, Marx says, all progress and civilization has been marked by “barbarism and benightedness.”

For any future to come about, then, there would have to be a break from this history, which Marx famously refers to as “prehistory.” Elements of our present, the working class for Marx, must be both “a present reality and the agent by which it is transformed…provides the link between the present and the future.” Therefore, the future that Marx might have imagined contains elements of the present, because this is inevitably where we are starting from, but will ultimately represent a break from this present. “History has to be broken and remade,” as Eagleton puts it.

What is it then that must be remade? The institutions, of course. This emphasis is particularly important for me because it comes up against one of my personal misconceptions about Marxism: in order for Marxism to succeed, human nature would have to be somehow different, better, really. But for Marx this was not the case. Much of chapter four involves Eagleton exploring the various ways in which people’s behavior is shaped by institutions and not the other way around. He begins by suggesting, “socialism is the point where we begin collectively to determine our destinies.” The institutions, because they actually require more participation from all citizens than democratic institutions do, actually represent “democracy taken with full seriousness.”

Given the freedom Eagleton posits that socialist institutions will allow, individuals actually have more opportunity to realize their individuality in a number of ways including, for Eagleton, spiritually. Eagleton points out, “the freedom and leisure which this would grant men and women can then provide the context for their fuller spiritual flourishing.” When citizens are no longer in constant competition with one another, they can actually help each other flourish. Eagleton writes, “Only through others can we finally come into our own.”

I know what you’re thinking. This is beginning to sound like the notion of utopia that Eagleton set out to contradict. Two things are important to remember here. The first is that for Marx this change starts with the institutions and not the individuals. It is true that individuals under a competitive capitalist society are forced to privilege their own flourishing over others, but if the institutions change in such a way that removes the institutional necessity of competition, people might actually contribute to one another’s well being.

If this is still sounding utopian, turn the page and Eagleton offers his second defense: “Communism would not spell the end of human strife.” For several pages he goes to great length to explain that he acknowledges that bad things could and would still happen in a Marxist society, though he qualifies that the scale of these bad things would be smaller than they have the potential to be under capitalism. Eagleton writes that a shift from capitalism to communism would mean that, “Some of the root causes of our moral deficiencies would have been removed.” Therefore, though there is the potential that under different institutions certain behaviors would be changed, Marxism allows for the fact that human beings are still fallible.

The solution then, for Eagleton and Marx, is to change institutions and practices in order to bring about change in people. This argument is perhaps his most convincing as he sites a number of changed practices from society’s view on the equality of genders to, perhaps most effectively, penal reform. “We now take these changes so much for granted,” he says, “that we would be revolted by the idea of breaking murderers on a wheel.” The important idea here is that human behavior and opinion does change, is shaped by the institutions that rule the day. Citing such ingrained formalities as shaking hands upon meeting or driving on the left side of the road for Britons, Eagleton posits, “Institutions shape our inner experience.” There is a moment here in the reading where the kind of change he is suggesting actually does seem quite possible.

Finally, Eagleton debunks the view held by many, including myself, that the telos of communism is equality. This is not what Marx had in mind at all. He acknowledged, according to Eagleton, that “social leveling” was not only impossible, but not desirable. Further, he notes that Marx regarded the notion of equality as “the abstract equality of middle-class democracy, where our formal equality as voters and citizens serves more to obscure real inequalities of wealth and class.” The answer to this abstract equality, Eagleton says, is genuine equality, which doesn’t treat everyone the same, but acknowledges and attends equally to the different needs of people.

Though it doesn’t seem to be Eagleton’s intention to spark revolution and bring about an immediate shift to socialism, he does at times make a convincing argument for how changing certain key institutions could lead to a change in peoples’ practices. And, in many ways, this change looks ideal. But there’s that notion again, idealism or utopianism is what Eagleton set out to argue against in the first place. A certain degree of idealism, it seems, is necessary no matter what the political philosophy. Eagleton writes, “Those who scoff at socialist ideals should remember that the free market can never be perfectly realized either.”

Certainly, this chapter – and the argument it contains – has flaws. In his attempt to counteract the utopian perception of socialism, Eagleton spends an uncomfortable amount of time recounting the kinds of things that could still go wrong – there will still be “chancers, toadies, bullies, cheats, loafers, scroungers, freeloaders, free riders and occasional psychopaths” in a socialist society. Additionally, Eagleton’s writing style has become somewhat formulaic; he makes a difficult point and then chases it with a sly one-liner attack, typically on the United States or Britain. It gets to the point that the reader can predict the oncoming one-liner many sentences in advance.

These flaws aside, I found myself challenged by Eagleton’s assertions in ways that I definitely did not expect. Where I thought I would find affirmation, I found confrontation. And though I may not be any closer to believing that Marxism can or will take hold in the Western world, I will, at the very least, have to restructure my reasons for thinking this.

Jonathan D. Fitzgerald is an editor at Patrol, columnist at Patheos, freelance writer, and educator. He holds degrees from Gordon College and University of Massachusetts–Boston. Currently living in Jersey City, he will be moving to his native Boston soon.

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16 thoughts on “No Matter Your Opinion on Marx, You’re Wrong

  1. Let’s allow that institutions can shape individuals, and in real and meaningful ways. Does it then follow that institutions can shape human nature?

    • Two things are clear: 1) There are certain fundamental and unchangeable characteristics that humans exhibit (at least in aggregate), and 2) Human behavior is quite elastic, as can be seen both in individuals and in groups. If institutions could shape human nature, then it wouldn’t be human nature, at least as I understand the term. Of course, the way one categorizes different behaviors (as inborn or merely(!) ingrained) to a great extent determines one’s political philosophy. It sounds like Eagleton understands this, hence his examples of institutions shaping attitudes and behaviors that seem self-evidently correct today.

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  3. Thanks for your post, Jonathan. The focus on practices and institutions is a good one, and relevant to my essay as well. I’m curious about the prospect of changing institutions “in such a way that removes the institutional necessity of competition”; what do you think Eagleton has in mind?

  4. A few thoughts, for what they’re worth…

    – Institutions are people. Governments are people. Companies are people. None of these can be remade, reformed, or otherwise changed in the abstract – only by change in individual people.

    – It is certainly not true that “individuals under a competitive capitalist society are forced to privilege their own flourishing over others.” Individuals in a capitalist free market are free to choose their economic courses of action. One is free to give away all of his possessions or to live modestly or attempt to amass great wealth. Groups of people are also free to decide to voluntarily share all that they have amongst themselves. Freedom is the bedrock value in free market capitalism.

    Side note on the building of wealth: there are some common misconceptions about wealth and greed. There are plenty of poor people and socialists along with rich people and capitalists who are greedy. Greed is not a means. Greed is a (loathsome) motivation. Greed does not create wealth. Wealth is created in one of three ways: independent production or discovery or resources (very rare – e.g. finding gold), trading goods and services voluntarily with fellow men, or forced acquisition (i.e. theft/pillage/plunder) from fellow men. Historically, the last is the most common. In a free market, the overwhelmingly dominant mechanism for building wealth is voluntary trade.

    – It is true that no economic philosophy can be “purely” implemented. In light of this fact, an empirical test is warranted. What have been the results of actual implementations of various systems? In all societies, the wealthiest live in relative luxury. In societies that have had relatively free market capitalism, people at all economic levels have benefited vastly more than in those societies that most significantly depart from capitalism. There is simply no question when results are considered rather than intentions.

    – I, too, sympathize with the intent of socialists and communists insofar as they desire to have a fair, just, and equitable society where ordinary people live fulfilling lives. For people who choose to create voluntary communities to live out these ideas, I wish them well (and then wonder how long it will take before they abandon the effort or seek support from those outside the community). I have no sympathy for attempts to enact these systems by force through seizure of others people’s property (the standard approach).

    – It is for good reason that it is rare to find economists or economic historians who support Marx. (His advocates are somewhat more common among English Lit professors like Eagleton.)

    – Benson, you might find it interesting that Thomas Sowell, an author I have frequently recommended, is a former Marxist (before he studied economics). He wrote a book on the subject, Marxism: Philosophy and Economics. It is a fair treatment of Marx and worthwhile for those interested in this discussion.

  5. Thoughtful post, Jonathan. It’s always heartening to read about how people’s ideas can be challenged and even changed, in particular your own about Marxism.

    Speaking of change, I have little problem with the idea that people can be changed from the outside in, as it were, so that the institution changes the person. Such change doesn’t entail that human nature must change. I don’t think Marx was a Richard Rorty, for whom human nature seemed to be a very maleable thing.

    That said, it still seems that Eagleton has not given an answer so much as he has changed the question. He has not argued that Marx did not have a utopic vision for society. It seems Marxism still has that vision, only it will realize it by different means. Eagleton seems to say that the Marxist vision will be realized by changing the institution, which will bring out the best in our human nature and so forth. The utopia is still there.

    Also, I’m curious. We’ve said that “human equality” is not the telos. What is?

    It’s a question that Marxism doesn’t really seem to answer other than to say we should magnify the ideals of the Enlightenment to their fullest extent. This idea of “flourishing” seems to mean whatever the person flourishing wants it to mean, as long as it happens within the confines of said Enlightenment ideals.

    The idea of a telos in Marxism becomes a very hopeless subject, such that the former Marxist Alasdair MacIntyre eventually gave up on that grand materialist philosopher and has since become a Thomist.

    In short, I don’t think Eagleton dismisses Marxist utopia, and I don’t think he should. Every society should be shooting for something. But the truth is that Marxism has no real telos, and without it human nature will only flourish into nothing.

  6. Yes, we must start from here. The deeper you go into the problems of the present, the more clearly you see where things must go – which leads to a program.

    In a time of a record-setting gap between the rich and the rest of us, the matter of equality does matter. No Rich, No Poor.

  7. Hiller, I’ll only address a few points. First, institutions are not only people, which is why they are called institutions and not a group of people. Institutions have their own bylaws, constraints, forms and culture which are not reducible to people. Ignoring these factors by reductively asserting “institutions are people” misses most of what goes on in institutions. Will changing individual members change the institutions? Yes, but not if you ignore the influence institutions have on people. That is one of the main points of this post.

    Second, the phrase “free market capitalism” is as much an oxymoron as “free-market socialism.” The view is an artifact of a Romantic view of the history of capitalism that ignores what it actually is: the State subsidization of capital through coercion.

    Third, while socialism is worse than capitalism, capitalist countries are surviving only 1) by the importation of future resources through the vehicle of debt which future generations will have to pay back or 2) by saving resources by having below replacement levels of children. Is there a capitalist country that manages to keep its standard of living apart from debt and while maintaining population? No significant ones I am aware of; maybe tiny ones about the size of similarly successful nations with higher levels of government intervention.

  8. Albert, thanks for your response. As always, these discussions would be more nuanced and pleasant over good food and drink, but since blog comments is the forum, here goes:

    Regarding institutions, I think we would agree that all aspects are created (in the worldly sense, at least) by people. While they are a method of perpetuating ideas, any influence an institution has in the short or long term is simply the influence of people. Bylaws, culture, constraints, etc are utterly impotent apart from individual people communicating, advocating, following, believing, and enforcing them. Thus, the concept of institutions influencing people rather than vice versa is a meaningless abstraction.

    Your description of capitalism as “the State subsidization of capital through coercion” sounds like a twist on distributism. Is it a reference to protection of private property and the fact that some people start out with more than others? If so, does it matter that the largest fortunes in capitalist countries are made within one generation (not as a result of some original allocation)? Do you propose an alternate solution – forced redistribution, wealth limits, or something else? It seems that your definition of capitalism departs from normal usage, so I’m interested to learn more about your position.

    Was there a typo in your debt comment? I assume you meant “consumption of current resources through the vehicle of debt”. If not, I didn’t understand the point. The vast (govt) debt that I agree is a major problem for many countries that have historically been relatively capitalist is not propping up free market capitalism, which calls for a relatively small government sector, but rather is a result of a trend toward socialism and a departure from free market capitalism. Ironically, China, the country most often cited as the holder of debt, may be trending toward free market capitalism as fast as historically capitalist countries are trending away from it! The political system is not free, but the shift beginning in the 1980s from state-owned industries with a centrally planned economy to privately-owned companies and a market-oriented (i.e. capitalist) economy has resulted in enormous growth.

    The comment about population growth is based on a myth. People are the most valuable “resource”. Is there any country that had a higher standard of living when it’s population was lower? Malthus may be right eventually, but he hasn’t been yet.

  9. Hiller, thanks for your response.

    I’m sorry, but it’s pretty clear to me that “institutions are people” is a simplistic reduction of what an institution is. Obviously, bylaws, culture and constraints are impotent apart from people living them out. That’s why I never reduced institutions to bylaws, culture, constraints, etc. But you did reduce institutions to people… and this is precisely the problem I–along with social theorists like Marx and Eagleton as well as non-Marxists like James D. Hunter, Charles Taylor, and James K. A. Smith– see. But we may just have to disagree.

    My description of capitalism as “the State subsidization of capital through coercion” is not a description of distributism, but a description of actual capitalism, the only kind of capitalism that existed and exists today rather than some idealized dream the pursuit of which allows us to ignore the ways the market is not free in capitalism. The essay I linked to above, “The Iron Fist Behind the Invisible Hand,” is enough to chew on. With respect to an actual political program, the first things to do would not be to have the government do more, but to repeal existing laws and regulations which favor and directly/indirectly subsidize large corporations at the expense of smaller businesses and labor. Actually, the very first thing to do would be to break apart the four largest banks into much smaller institutions, which is eminently justified by their market failures and subsequent bailouts. Then there is the Farm bill, etc. etc.

    I need to go, but I will get to the rest of your response later.

  10. My point about debt was unclear. What I mean is that current standards of living in capitalist countries are not possible apart from their reliance on increasing debt; it is the equivalent of me taking out a $100k loan, increasing my standard of living by buying things, and claiming I am richer while ignoring the fact that my standard of living is a result of debts that must be paid back. Of course, the difference is that the individual eventually has to pay the money back since debts are not transferable between generations; but this is not true with respect to national debt which is transferred between generations of taxpayers. That is, today’s children and grandchildren will have to pay back the debts their grandparents incurred to finance the grandparents’ debt-fueled standard of living by reducing their [the kids] own standard of living. Our picture of the success of capitalist countries would look very different if we paid back our debts.

    With respect to population, it appears I was unclear as well. I agree with you that people are the most valuable “resource” and that Malthus was wrong. The problem is that capitalist countries in practice disagree with both of us: we have sub-replacement fertility, meaning we are having fewer kids than we need to replace ourselves, but the negative economic consequences of this manifest only in the long-term. Short-term, however, it is actually great for a generation to have fewer kids. Here’s an example. A couple makes $80k a year. Having children in America costs on average $10k a year per child. Now, they’re faced with a decision: have two kids and spend $20k a year on them, or spend and invest that $20k a year on nicer cars, 401ks, a nicer house, whatever else they like. Not having to spend their money on kids means their material standard of living is higher. This is because previous generations have already invested in the current adult generation, so the current adult generation is benefiting from their parents’ investment and their own productivity–but they are not continuing the cycle of investing in the next generation by having kids. They are keeping the resources for themselves. This is what sub-replacement fertility means.

    And the problem is that over the long-term, fewer children are being born to support 1) the proportionately greater numbers of the aging, and 2) the next generations. Children are our wealth: but only in the long-term.

    Current standards of living are artificially high because the baby-boomer generation did not have as many children (and invest in them) as necessary to replace themselves and drive the economy. This will quickly become apparent as the baby-boomers age and retire.

    The overall point is: much of the apparent benefits and higher standard of living in capitalist countries are illusory, e.g. an artifact of sub-replacement fertility and debt… among many other things.

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  12. Albert,

    I think we agree on a good deal of substance, but while I trust you have reasons for defining “capitalism” as you do, the departure from common usage does make it more difficult to communicate. I share your distaste for cronyism and your concern for the way it affects the economy, but it is common across all systems and hardly a unique criticism of capitalism.

    Though it’s probably true that there has never been a pure example of capitalism or any other economic system, it is instructive to consider real examples on a spectrum of ideals. When doing so, we find great clarity on which part of the spectrum promotes greatest growth and material benefit across the wealth/income range and that is free market capitalism (traditionally understood).

    My primary point on institutions and people is that it is absurd to suggest that we should have institutions influence people as if institutions are independent actors. You are correct that I neglected definitional nuance in making the point. Regardless, I think we would do well to focus more on people than abstract stand-ins. (e.g. “institutions provide direction…” or “corporations have responsibility to…” or “governments are accountable for…”, etc)

    I read “Iron Fist” when you mentioned it previously as well as some other linked articles. I didn’t find it very persuasive at all as economic theory. The focus on land as capital is anachronistic and largely irrelevant today. Land ownership and wealth used to be fairly tightly coupled, but no longer. Furthermore, it is quite common in relatively capitalist countries for people to start their own enterprises with very little and amass wealth. This completely undermines the criticism of original allocation.

    On children and debt, I don’t think historical data supports your claims (though I appreciate the clarification). The US is still growing in population. Many other relatively capitalist countries are still growing as well. The debt that our govt representatives have placed on us is far more crippling than it is enabling today (I’m not a Keynesian; btw, individually-incurred debt is a bit of a different story, but much less concerning as a whole). The debt is due to a departure from free market capitalist principle (i.e. massively expanded entitlement programs) and its explosion is fairly new in relatively capitalist countries, not generally or historically characteristic of capitalism. Putting semantics aside, I am in agreement with most of your more concrete policy suggestions.

    Let’s free ourselves to move on to the next topic. I hope I’ve clarified my perspective a bit, but I doubt we’re making any ground at this point. I’ve only read part of your chapter review post, but hope to read the rest soon.

    • Hiller,

      I disagree with your primary point regarding the “absurdity” of speaking of institutions influencing people. Institutions do influence people through uniquely institutional activities. When Congress passes a law, it is _Congress_ that passes a law with the authority that belongs to it as an institution, not merely a collection of individuals. You can have the same exact people in the Senate be a part of a book club, and they would not be able to do the same things while meeting as a book club as they would when convened in the Senate. Institutions are more than the sum of the individual human beings in them. It bewilders me why one would try to reduce institutions to people, as if the other aspects of institutions do not matter.

      The Iron Fist Behind the Invisible Hand” is not an articulation of economic theory. It’s a detailed, historical essay demonstrating that capitalism is, inherently, not a free market economic system because of the inherent political subsidies to capital, and not merely “land as capital” but–as one would expect in modern times–money as capital and intellectual property as capital, which renders your next comment null. This is quite clear from the essay, and I am not sure how one could miss it, nor do I think the evidence can be so easily dismissed:

      THE MONEY MONOPOLY. In every system of class exploitation, a ruling class controls access to the means of production in order to extract tribute from labor. Under capitalism, access to capital is restricted by the money monopoly, by which the state or banking system is given a monopoly on the medium of exchange, and alternative media of exchange are prohibited. The money monopoly also includes entry barriers against cooperative banks and prohibitions against private issuance of banknotes, by which access to finance capital is restricted and interest rates are kept artificially high.

      Individualist and mutualist anarchists like William Greene [Mutual Banking], Benjamin Tucker [Instead of a Book], and J. B. Robertson [The Economics of Liberty] viewed the money monopoly as central to the capitalist system of privilege. In a genuinely free banking market, any group of individuals could form a mutual bank and issue monetized credit in the form of bank notes against any form of collateral they chose, with acceptance of these notes as tender being a condition of membership. Greene speculated that a mutual bank might choose to honor not only marketable property as collateral, but the “pledging … [of] future production.” [p. 73]. The result would be a reduction in interest rates, through competition, to the cost of administrative overhead–less than one percent.

      Abundant cheap credit would drastically alter the balance of power between capital and labor, and returns on labor would replace returns on capital as the dominant form of economic activity. According to Robinson,

      Upon the monopoly rate of interest for money that is… forced upon us by law, is based the whole system of interest upon capital, that permeates all modern business.

      With free banking, interest upon bonds of all kinds and dividends upon stock would fall to the minimum bank interest charge. The so-called rent of houses… would fall to the cost of maintenance and replacement.

      All that part of the product which is now taken by interest would belong to the producer. Capital, however… defined, would practically cease to exist as an income producing fund, for the simple reason that if money, wherewith to buy capital, could be obtained for one-half of one per cent, capital itself could command no higher price [pp. 80-81].

      And the result would be a drastically improved bargaining position for tenants and workers against the owners of land and capital. According to Gary Elkin, Tucker’s free market anarchism carried certain inherent lib- ertarian socialist implications:

      It’s important to note that because of Tucker’s proposal to increase the bargaining power of workers through access to mutual credit, his so-called Individualist anarchism is not only compatible with workers’ control but would in fact promote it. For if access to mutual credit were to increase the bargaining power of workers to the extent that Tucker claimed it would, they would then be able to (1) demand and get workplace democracy, and (2) pool their credit buy and own companies collectively.

      The banking monopoly was not only the “lynchpin of capitalism,” but also the seed from which the landlord’s monopoly grew. Without a money monopoly, the price of land would be much lower, and promote “the process of reducing rents toward zero.” [Gary Elkin, "Benjamin Tucker--Anarchist or Capitalist"].

      Given the worker’s improved bargaining position, “capitalists’ ability to extract surplus value from the labor of employees would be eliminated or at least greatly reduced.” [Gary Elkin, Mutual Banking]. As compensation for labor approached value-added, returns on capital were driven down by market competition, and the value of corporate stock consequently plummeted, the worker would become a de facto co-owner of his workplace, even if the company remained nominally stockholder-owned.

      Near-zero interest rates would increase the independence of labor in all sorts of interesting ways. For one thing, anyone with a twenty-year mortgage at 8% now could, in the absence of usury, pay it off in ten years. Most people in their 30S would have their houses paid off. Between this and the nonexistence of high-interest credit card debt, two of the greatest sources of anxiety to keep one’s job at any cost would disappear. In addition, many workers would have large savings (“go to hell money”). Signifi- cant numbers would retire in their forties or fifties, cut back to part-time, or start businesses; with jobs competing for workers, the effect on bargaining power would be revolutionary.

      Our hypothetical world of free credit in many ways resembles the situation in colonial societies. E. G. Wakefield, in View of the Art of Colon- ization, wrote of the unacceptably weak position of the employing class when self-employment with one’s own property was readily available. In colonies, there was a tight labor market and poor labor discipline because of the abundance of cheap land. “Not only does the degree of exploitation of the wage-labourer remain indecently low. The wage-labourer loses into the bar- gain, along with the relation of dependence, also the sentiment of depen- dence on the abstemious capitalist.”

      Where land is cheap and all men are free, where every one who so pleases can obtain a piece of land for himself, not only is labour very dear, as respects the labourers’ share of the product, but the diffi- culty is to obtain combined labour at any price.

      This environment also prevented the concentration of wealth, as Wakefield commented: “Few, even of those whose lives are unusually long, can accumulate great masses of wealth.” As a result, colonial elites petitioned the mother country for imported labor and for restrictions on land for settlement. According to Wakefield’s disciple Herman Merivale, there was an “urgent desire for cheaper and more subservient labourers–for a class to whom the capitalist might dictate terms, instead of being dictated to by them.” [Maurice Dobb, Studies in the Development of Capitalism; Marx, Chapter 33: "The New Theory of Colonialism," in Capital Vol. 1].

      In addition to all this, central banking systems perform additional service to the interests of capital. First of all, the chief requirement of finance capitalists is to avoid inflation, in order to allow predictable returns on investment. This is ostensibly the primary purpose of the Federal Reserve and other central banks. But at least as important is the role of the central banks in promoting what they consider a “natural” level of unemployment–until the 1990s around six per cent. The reason is that when unemployment goes much below this figure, labor becomes increasingly uppity and presses for better pay and working conditions and more autonomy. Wor- kers are willing to take a lot less crap off the boss when they know they can find a job at least as good the next day. On the other hand, nothing is so effective in “getting your mind right” as the knowledge that people are lined up to take your job.

      The Clinton “prosperity” is a seeming exception to this principle. As unemployment threatened to drop below the four per cent mark, some members of the Federal Reserve agitated to raise interest rates and take off the “inflationary” pressure by throwing a few million workers on the street. But as Greenspan [Testimony of Chairman Alan Greenspan] testified before the Senate Banking Committee, the situation was unique. Given the degree of job insecurity in the high-tech economy, there was “[a]typical restraint on compensation increases.” In 1996, even with a tight labor market, 46% of workers at large firms were fearful of layoffs–compared to only 25% in 1991, when unemplojment was much higher.

      The reluctance of workers to leave their jobs to seek other em- ployment as the labor market tightened has provided further evidence of such concern, as has the tendency toward longer labor union contracts. For many decades, contracts rarely exceeded three years. Today, one can point to five- and six-year contracts–contracts that are commonly characterized by an emphasis on job security and that involve only modest wage increases. The low level of work stoppages of recent years also attests to concern about job security.

      Thus the willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented. For the bosses, the high-tech economy is the next best thing to high unemployment for keeping our minds right. “Fighting inflation” translates operationally to increasing job insecurity and making workers less likely to strike or to look for new jobs.

      PATENTS. The patent privilege has been used on a massive scale to promote concentration of capital, erect entry barriers, and maintain a monopoly of advanced technology in the hands of western corporations. It is hard even to imagine how much more decentralized the economy would be without it. Right-libertarian Murray Rothbard considered patents a fundamental violation of free market principles.

      The man who has not bought a machine and who arrives at the same invention independently, will, on the free market, be perfectly able to use and sell his invention. Patents prevent a man from using his invention even though all the property is his and he has not stolen the inven- tion, either explicitly or implicitly, from the first inventor. Pa- tents, therefore, are grants of exclusive monopoly privilege by the State and are invasions of property rights on the market. [Man, Economy, and State vol. 2 p. 655]

      Patents make an astronomical price difference. Until the early 1970s, for example, Italy did not recognize drug patents. As a result, Roche Products charged the British national health a price over 40 times greater for patented components of Librium and Valium than charged by competitors in Italy [Raghavan, Recolonization p. 124].

      Patents suppress innovation as much as they encourage it. Chakravarthi Raghavan pointed out that research scientists who actually do the work of inventing are required to sign over patent rights as a condition of employ- ment, while patents and industrial security programs prevent sharing of information, and suppress competition in further improvement of patented inventions. [op. cit. p. 118] Rothbard likewise argued that patents elim- inate “the competitive spur for further research” because incremental inno- vation based on others’ patents is prohibited, and because the holder can “rest on his laurels for the entire period of the patent,” with no fear of a competitor improving his invention. And they hamper technical progress because “mechanical inventions are discoveries of natural law rather than individual creations, and hence similar independent inventions occur all the time. The simultaneity of inventions is a familiar historical fact.” [op. cit. pp. 655, 658-659].

      The intellectual property regime under the Uruguay Round of GATT goes far beyond traditional patent law in suppressing innovation. One benefit of traditional patent law, at least, was that it required an invention under patent to be published. Under U.S. pressure, however, “trade secrets” were included in GATT. As a result, governments will be required to help sup- press information not formally protected by patents [Raghavan, op. cit. p. 122].

      And patents are not necessary as an incentive to innovate. According to Rothbard, invention is rewarded by the competitive advantage accruing to the first developer of an idea. This is borne out by F. M. Scherer’s testimony before the FTC in 1995 [Hearings on Global and Innovation-Based Compe- tition]. Scherer spoke of a survey of 91 companies in which only seven “accorded high significance to patent protection as a factor in their R & D investments.” Most of them described patents as “the least important of considerations.” Most companies considered their chief motivation in R & D decisions to be “the necessity of remaining competitive, the desire for efficient production, and the desire to expand and diversify their sales.” In another study, Scherer found no negative effect on R & D spending as a result of compulsory licensing of patents. A survey of U.S. firms found that 86% of inventions would have been developed without patents. In the case of automobiles, office equipment, rubber products, and textiles, the figure was 100%.

      The one exception was drugs, in which 60% supposedly would not have been invented. I suspect disingenuousness on the part of the respondants, however. For one thing, drug companies get an unusually high portion of their R & D funding from the government, and many of their most lucrative products were developed entirely at government expense. And Scherer himself cited evidence to the contrary. The reputation advantage for being the first into a market is considerable. For example in the late 1970s, the structure of the industry and pricing behavior was found to be very similar between drugs with and those without patents. Being the first mover with a non-patented drug allowed a company to maintain a 30% market share and to charge premium prices.

      The injustice of patent monopolies is exacerbated by government funding of research and innovation, with private industry reaping monopoly profits from technology it didn’t spend a penny to develop. In 1999, extending the research and experimentation tax credit was, along with extensions of a number of other corporate tax preferences, considered the most urgent busi- ness of the Congressional leadership. Hastert, when asked if any elements of the tax bill were essential, said: “I think the [tax preference] extenders are something we’re going to have to work on.” Ways and Means Chair Bill Archer added, “before the year is out… we will do the extenders in a very stripped down bill that doesn’t include anything else.” A five-year extension of the research and experimentation credit (retroactive to 1 July 1999) was expected to cost $13.1 billion. (That credit makes the effective tax rate on R & D spending less than zero.) [Citizens for Tax Justice, GOP Leaders Distill Essence of Tax Plan].

      The Government Patent Policy Act of 1980, with 1984 and 1986 amend- ments, allowed private industry to keep patents on products developed with government R & D money–and then to charge ten, twenty, or forty times the cost of production. For example, AZT was developed with government money and in the public domain since 1964. The patent was given away to Burroughs Wellcome Corp. [Chris Lewis, "Public Assets, Private Profits"].

      As if the deck were not sufficiently stacked already, the pharmaceutical companies in 1999 actually lobbied Congress to extend certain patents by two years by a special act of private law [Benjamin Grove, "Gibbons backs drug-monopoly bill"].

      Patents have been used throughout the twentieth century “to circumvent antitrutst laws,” according to David Noble. They were “bought up in large numbers to suppress competition,” which also resulted in “the suppression of invention itself.” [America by Design, pp. 84-109]. Edwin Prindle, a corporate patent lawyer, wrote in 1906:

      Patents are the best and most effective means of controlling competition. They occasionally give absolute command of the market, enabling their owner to name the price without regard to the cost of production…. Patents are the only legal form of absolute monopoly [America by Design p. 90].

      Patents played a key role in the formation of the electrical appliance, communications, and chemical industries. G. E. and Westinghouse expanded to dominate the electrical manufacturing market at the turn of the century largely through patent control. In 1906 they curtailed the patent litiga- tion between them by pooling their patents. AT&T also expanded “primarily through strategies of patent monopoly.” The American chemical industry was marginal until 1917, when Attorney-General Mitchell Palmer seized German patents and distributed them among the major American chemical companies. DuPont got licenses on 300 of the 735 patents [America by Design pp. 10, 16].

      Patents are also being used on a global scale to lock the transnational corporations into a permanent monopoly of productive technology. The single most totalitarian provision of the Uruguay Round is probably its “intellectual property” provisions. GATT has extended both the scope and duration of patents far beyond anything ever envisioned in original patent law. In England, patents were originally for fourteen years–the time needed to train two journeymen in succession (and by analogy, the time necessary to go into production and reap the initial profit for originality). By that stan- dard, given the shorter training times required today, and the shorter lifespan of technology, the period of monopoly should be shorter. Instead, the U.S. seeks to extend them to fifty years [Raghavan, Recolonization pp. 119-120]. According to Martin Khor Kok Peng, the U.S. is by far the most absolutist of the participants in the Uruguay Round. Unlike the European Community, and for biological processes for animal and plant protection [The Uruguay Round and Third World Sovereignty p. 28].

      The provisions for biotech are really a way of increasing trade barriers, and forcing consumers to subsidize the TNCs engaged in agribusiness. The U.S. seeks to apply patents to genetically-modified organisms, effectively pirating the work of generations of Third World breeders by isolating beneficial genes in traditonal varieties and incorporating them in new GMOs–and maybe even enforcing patent rights against the traditional variety which was the source of the genetic material. For example Monsanto has attempted to use the presence of their DNA in a crop as prima facie evidence of pirating–when it is much more likely that their variety cross-pollinated and contaminated the farmer’s crop against his will. The Pinkerton agency, by the way, plays a leading role in investigating such charges–that’s right, the same folks who have been breaking strikes and kicking organizers down stairs for the past century. Even jack-booted thugs have to diversify to make it in the global economy.

      The developed world has pushed particularly hard to protect industries relying on or producing “generic technologies,” and to restrict diffusion of “dual use” technologies. The U. S.-Japanese trade agreement on semi-conductors, for example, is a “cartel-like, ‘managed trade’ agreement.” So much for “free trade.” [Dieter Ernst, "Technology, Economic Security and Latecomer Idustrialization," in Raghavan Pp. 39-40].

      Patent law traditionally required a holder to work the invention in a country in order to receive patent protection. U.K. law allowed compulsory licensing after three years if an invention was not being worked, or being worked fully, and demand was being met “to a substantial extent” by impor- tation; or where the export market was not being supplied because of the patentee’s refusal to grant licenses on reasonable terms [Raghavan pp. 120, 138].

      The central motivation in the GATT intellectual property regime, how- ever, is to permanently lock in the collective monopoly of advanced technology by TNCs, and prevent independent competition from ever arising in the Third World. It would, as Martin Khor Kok Peng writes, “effectively pre- vent the diffusion of technology to the Third World, and would tremendously increase monopoly royalties of the TNCs whilst curbing the potential devel- opment of Third World technology.” Only one percent of patents worldwide are owned in the Third World. Of patents granted in the 1970s by Third World countries, 84% were foreign-owned. But fewer than 5% of foreign-owned patents were actually used in production. As we saw before, the purpose of owning a patent is not necessarily to use it, but to prevent anyone else from using it [op. cit. pp. 29-30].

      Raghavan summed up nicely the effect on the Third World:

      Given the vast outlays in R and D and investments, as well as the short life cycle of some of these products, the leading Industrial Nations are trying to prevent emergence of competition by controlling… the flows of technology to others. The Uruguay round is being sought to be used to create export monopolies for the products of Industrial Nations, and block or slow down the rise of competitive rivals, particularly in the newly industrializing Third World countries. At the same time the technologies of senescent industries of the north are sought to be exported to the South under conditions of assured rentier income [op. cit. p. 96].

      Corporate propagandists piously denounce anti-globalists as enemies of the Third World, seeking to use trade barriers to maintain an affluent Western lifestyle at the expense of the poor nations. The above measures–trade barriers–to permanently suppress Third World technology and keep the South as a big sweatshop, give the lie to this “humanitarian” concern. This is not a case of differing opinions, or of sincerely mistaken understanding of the facts. Setting aside false subtleties, what we see here is pure evil at work–Orwell’s “boot stamping on a human face forever.” If any archi- tects of this policy believe it to be for general human well-being, it only shows the capacity of ideology to justify the oppressor to himself and enable him to sleep at night.

      Another major theft of peasant land was the “reform” of land law by the seventeenth century Restoration Parliament. The aristocracy abolished feudal tenures and converted their own estate in the land, until then “only a feudal title,” into “rights of modern private property.” In the process, they abolished the tenure rights of copyholders. Copyholders were de jure tenants under feudal law, but once they paid a negligible quit-rent fixed by custom, the land was theirs to sell or bequeath. In substance copyhold tenure was a manorial equivalent of freehold; but since it derived from custom it was enforceable only in the manor courts. Under the “reform,” tenants in copyhold became tenants at-will, who could be evicted or charged whatever rent their lord saw fit [Marx, "The Expropriation..."].

      Another form of expropriation, which began in late medieval times and increased drastically in the eighteenth century, was the enclosure of commons–in which, again, the peasants communally had as absolute a right of property as any defended by today’s “property rights” advocates. Not counting enclosures before 1700, the Hammonds estimated total enclosures in the eighteenth and nineteenth centuries at a sixth or a fifth of the arable land in England [Village Labourer 42]. E. J. Hobsbawm and George Rude estimated enclosures between 1750 and 1850 alone as transforming “something like one quarter of the cultivated acreage from open field, common land, meadow or waste into private fields….” [Captain Swing 27].

      The ruling classes saw the peasants’ right in commons as a source of economic independence from capitalist and landlord, and thus a threat to be destroyed. Enclosure eliminated “a dangerous centre of indiscipline” and compelled workers to sell their labor on the masters’ terms. Arthur Young, a Lincolnshire gentleman, described the commons as “a breeding-ground for ‘barbarians,’ ‘nursing up a mischievous race of people’.” “[E]very one but an idiot knows,” he wrote, “that the lower classes must be kept poor, or they will never be industrious.” The Commercial and Agricultural Magazine warned in 1800 that leaving the laborer “possessed of more land than his family can cultivate in the evenings” meant that “the farmer can no longer depend on him for constant work.” [Thompson, The Making of the English Working Class, 219-220, 358]. Sir Richard Price commented on the conversion of self-sufficient proprietors into “a body of men who earn their subsis- tence by working for others.” There would, “perhaps, be more labour, be- cause there will be more compulsion to it.” [Marx, "The Expropriation...."].

      Marx cited parliamentary “acts of enclosure” as evidence that the commons, far from being the “private property of the great landlords who have taken the place of the feudal lords,” actually required “a parlia- mentary coup detat… for its transformation into private property.” ["The Expropriation...."]. The process of primitive accumulation, in all its brutality, was summed up by the same author:

      these new freedmen [i.e. former serfs] became sellers of themselves only after they had been robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements. And the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire ["Chapter 26: The Secret of Primitive Accumulation," Capital Vol. 1].

      Even then, the working class was not sufficiently powerless. The state had to regulate the movement of labor, serve as a labor exchange on behalf of capitalists, and maintain order. The system of parish regulation of the movement of people, under the poor laws and vagrancy laws, resembled the internal passport system of South Africa, or the reconstruction era Black Codes. It “had the same effect on the English agricultural labourer,” Marx wrote, “as the edict of the Tartar Boris Godunov on the Russian peasantry.” ["The Expropriation..."] Adam Smith ventured that there was “scarce a poor man in England of forty years of age… who has not in some part of his life felt himself most cruelly oppressed by this ill-contrived law of settle- ments.” [Wealth of Nations 61].

      The state maintained work discipline by keeping laborers from voting with their feet. It was hard to persuade parish authorities to grant a man a certificate entitling him to move to another parish to seek work. Workers were forced to stay put and bargain for work in a buyer’s market [Smith 60-61].

      How did you miss that?

      Regarding, children and debt, my claim was that capitalist countries have below-replacement fertility. You suggest that the growing population of capitalist countries disproves what is an empirical fact. Of course it does not, since the population rise is from immigration and not from above-replacement fertility and also since, logically, a growing population is consistent with below-replacement fertility until the cohort that has below-replacement fertility begins to die. In other words, it is only as the baby-boomer generation dies that we will see the demographic consequences of their below-replacement fertility. Right now, we’re mostly seeing the “Greatest Generation” dying and so population wise we’re still growing because they birthed the baby-boomers at above-replacement levels. Once the massive generation of baby-boomers runs their course, we’ll see the population decline because there won’t be enough. This is simply logic applied to the length of generations.
      You can see this dynamic visually here:

      Capitalism is not “free market” just because capitalists want it be recognized as such. It’s free in so far as the political subsidies are not inherent to capitalism… and actual history shows that it is. If you disagree, I’d like to see you argue that enclosure laws didn’t exist in Britain or that interest rates are not controlled by the central banks. It’s funny that central planning is derided by “free market capitalists” … except when it’s central banking.

  13. Pingback: Who’s Afraid of Karl Marx? A Blog Discussion on “Why Marx Was Right” | Bensonian

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