Critique of Nov. 6 Economic Crisis Conference Announcement

By Stephen Block (Montreal).

Marxist-Humanists need to find their way to the Keynesian economic left, the only true prospect for solving what they believe now ails the world

[Editor’s note: The following is a revised version of the article, submitted by the author on November 11, 2010. The versions of October 29 and November 3, 2010 are here.]

First, thanks for the invitation to make a few comments.

My initial comments were to bear on the incessant and irresolvable disputes between Keynesians and Marxists and more generally between “social democrats” and Marxists, a key point of contention revolving around the jettisoning of labour value theory from the formers’ concerns.

So let me put that into a larger context and at the same time address the theme of your conference.

The conference proposes to examine such issues as a “double-dip recession”; then you state that

The U.S. government’s efforts to prevent another Great Depression have left it saddled with a serious debt problem that could impede efforts to stabilize the economy for a long time to come. The future is especially uncertain, and “the new normal” may prove to be very difficult, economically and politically.

Let me just address what you have already undertaken in this brief proposal.

The language used in the above paragraph really is the language of mainstream (and neoclassical) economics. The left, to be left, should not be adopting this type of language nor the line of analysis it implies. What I believe and have believed for a good long time is that the Marxist left would  inevitably be led to this path because of a poor comprehension and an incomplete overview of economics and economic policy-making of the 20th century. Here, in a nutshell, is where I believe Marxism has gone wrong and why it is now inching closer to embracing theories which are entirely antithetical and antipathetical to sound left thinking.

First, Marxists see the world in bifurcated bi-polar terms: the capitalist (theoretical) world and the Marxist (theoretical) world–with the emphasis on “theoretical” intentional. Accordingly, either one addresses capitalism and attempts to destroy or abolish it, or one is the enemy. Accordingly, no other theories are pertinent, workable, or morally or politically acceptable. Unfortunately, this seems to preclude the only policies (left Post-Keynesian) which could prevent or help resolve economic crises in the short or medium term. As most Marxists are not technically trained economists, indeed often they are insufficiently literate in economic policy matters, they derive most of their understanding from sociology or philosophy. So while there are some very good and capable economists on the left, their work is virtually ignored, overlooked or misunderstood by many on the Marxist left. This includes the ignoring of the work of some Post-Keynesians who also happen to be Marxists or post-Marxists. Consequently when other Marxists get around to looking at economic policy discussions, such as this one, they fail to adopt, or appreciate the need to adopt, an orthodox (or “fundamental”) Keynesian perspective; unfortunately they seem similarly not to know how to distinguish such a perspective from the bastardized Keynesian positions adopted by the mainstream of the economics profession during the 1960’s and 1970’s. Consequently while they rightly develop a contempt for the latter, they confuse or conflate the former with it. Further, this problem derives from this view that as capitalism must be defeated, any economists seen to be making compromises with the economic structures in place not only should not be trusted, their theories need not be explored–with all Keynesians summarily put into that one pigpen.

Now Keynesian economics is, initially, not an easy nut to crack. It requires careful study as well as good tutelage and mentoring. But, as many who have undertaken it know, the venture is well worth it and indeed is quite necessary. Further, without meaning to be too condescending, Post-Keynesian economic discussions are very complicated. Consequently it could be far more comfortable to dig deeper and deeper into aspects of Marxist theory than to pursue a theoretical shift, especially one that may ask for some technical expertise in the field of economics; economics per se, is a field many of us on the left have tended to avoid for many many reasons. I am arguing that in spite of this tendency, this personal tendency, this preference, in many instances this matter of taste, becoming  more technically adept, or even just more literate in economic policy making, is utterly crucial. Yet this fact, this reality is continually ignored by most on the Marxist left. The result is a lessened ability of such Marxists to understand the relationship between economics and public policy.

Generally speaking, public policy has itself been ignored within Marxist circles roughly since 1917; the results of that failure should have been evident as the Soviet Union struggled to develop its own indigenous post-“revolutionary” set of public policies. But even with the collapse of the Soviet sphere, and this is telling, the only policy alternatives to be seriously considered, then adopted in the wake of the collapse, were found in the economic policies of Milton Friedman and Friedrich Hayek. Libertarianism, of the right, did not just offer a long-standing critique of “statist” communism, totalitarian Marxism and “command and control” economics, when it was time to choose an alternative to Marxism, with Keynesianism already long dismissed as counter-revolutionary revisionism, the only choice was to adopt far more reactionary laissez-faire, “free-market” policies long refuted and rejected by Keynes and his followers. So while Soviet policies were reduced to an empty shell, a Keynesian alternative was nowhere to be found in the post-Gorbachev era, as it was missing in the long period prior; the Soviet left seemed not to understand how not engaging in policy studies, of the kind explored in many social democratic countries throughout Europe, was the real undoing of Soviet socialism. So too, I fear the same lesson is applicable within US Marxist theoretical circles today.

Again, this problem derives really from a philosophical commitment to Marxism, absent an accurate, sober assessment of current conditions, and it shows. Recall how Marx implored theorists and activists alike to understand that the point was to change the world not just “interpret” it and that doing so involved understanding objective conditions? In the 20th century this has best been undertaken, not by Marxists but by Keynesians and proponents of a well-regulated welfare state who long ago came to understand the relationship between laissez-faire economics and human misery, and how best to combat both. In recent times, some Marxists have turned to progressive Keynesianism. But during the period of roughly 1917 to 1990, outside of the Soviet sphere, there were all kinds of socio-political developments involving the left in power. Many countries, including those of Scandinavia, Britain, Italy and France, flirted with, or had some very radical governments of the left. (See the historical record of the Harold Wilson government in Britain, to take one instance.) In each and every case (of the most radical Western governments coming to power) these governments relied primarily, if not virtually entirely, on good sound Keynesian welfare economics, including full employment policies, progressive (monetary) interest rate policies and taxation policies–to bring about greater equity; this was eventually mixed with studies and eventually policies that developed “efficiency criteria for nationalized industries”[1] within a left social democratic framework.  All this was ignored within Marxist/Soviet circles. Enormous practical progress was made in developing institutions that provided services to people and not just profits to a handful. For the most part, neither these undertakings, nor the policies undergirding them made it to the US . And with a few exceptions, people on the left in the US remain entirely unaware of such theoretical and policy developments beyond the borders of the US, unless they are directly involved in policy making themselves.

In addition, through no fault of their own, because the US suffered under McCarthyism, as it still does, new generations have no “institutional” memory and no understanding of undertakings which were once envisioned by the left in the US and were quite generally established within Northern European countries, Canada and increasingly today in Central and South America. Now even China, in its capitalist phase, has turned to left Keynesians and post Keynesians (many of whom are also Marxists) to address trade policy and currency issue, as well as policy issues such as:

*interest rate policy (Keynes advocated keeping it low);

*employment (Keynesians always aim for full employment);

*deficit financing (Keynesians always favour enough deficit financing to overcome unemployment)

* tax policy (Keynesians, aside from the equity issue, favour taxing the rich–to control inflation–as an alternative to raising interest rates during boom times; generally Keynesians do not fear modest inflation. Aside from this, taxing the rich and generally having a progressive tax policy leads to a more socially and economically productive society as the system is not just more fair, it puts more money into circulation and into the hands of the non-wealthy;  thereby less is hoarded or redirected  by the idle rich to nefarious ends–such as controlling elections, or otherwise leading countries into foreign wars to expand multinational corporate markets, etc).

True Keynesian policies work, and if they had been in place, along with stringent market regulations, the economic crises of the past two decades would not have developed.

There are economists in the US worth listening to and some good thinkers/writers: Robert Kuttner, William Greider, Robert Reich, and recently Paul Krugman. Paul Davidson is a Keynesian economist with considerable technical expertise, even while his writing may be tough to follow. Edward Nell has written a thoroughly intriguing book along with philosopher Martin Hollis which provides an excellent introduction for Marxists into the world of economics.[2] Harold Chorney has a blog that addresses many important contemporary policy issues. Helen Ginsburg has led discussions on full employment for a good long while, while Henry Liu understands the politics of Marxism and the public policy concerns of a country like China. (There are many others and I apologize for being so selective in this list. A review of the archives of the old Post-Keynesian List would unearth the names of some important contributors.) [3]

The primary issue in the wake of the great economic collapse of 2007 has been how much to spend to rescue the economy (or read “economic system”) and restore stability and presumably employment, although clearly the latter always gets the shortest shrift. Post-Keynesians would all have said: spend more or less double what the government eventually did spend (somewhere in the neighbourhood of 1.4 trillion instead of the approximately 800 billion it spent); and do it while you can. In order to face the apparent political realities of the US, to secure enough votes in Congress, or so the story goes, or because of inflation and debt fears (the first of these being non-existent because the US has eliminated its well paid unionized labour force and the second needing to be ignored to facilitate a return to full employment), the Obama government was not able to, or in any event did not spend enough to offset growing unemployment. Now come the cries of the US being “saddled with a serious debt problem”.  These cries need to be ignored, not idly repeated! By even using this terminology, the Marxist Humanist left would betray the fact that many Marxists are, in economic policy terms, centrist and even right of center in their instincts. Indeed many socialists and Marxists, both in and out of power, make the tragic mistake of adopting far right austerity perspectives (See Greece).

In brief, the bi-polar world the Marxist left envisions does not really exist, at least as they envision it. The real world of the 20th century, in spite of the Cold War, and away from the ideological inanities that ensued therein, the real polarity was and has been between proponents and opponents of a vigourous, regulated welfare state. Marxists rejected Keynesianism because it “saved capitalism from itself” and for this they believed it ought never to be forgiven. Similarly, with the welfare state, where it seems social democrats themselves can never be forgiven for their treachery in doing in their allies on the Marxist left, and the welfare state seeming like a pale imitation of the real thing, Marxists overlook the only viable alternative to what Marx described as crass and naked avariciousness. Ironically, this parallels how the political and economic right, led by Milton Friedman and Friedrich Hayek, conflated Marxism and Keynesianism, for its own Cold War purposes, not just thereby reducing Keynesian welfare spending to “command and control” economic policy making, a la Soviet style, but more importantly thereby  leading us to a policy world where the absence of the Soviet influence supposedly also should mean the absence of Keynesian welfare policies as well. In other words, we should live in a truly laissez-faire non-regulatory world,  governed by a (monetarist) interest rate policy where inflation is controlled through control of the money supply and where an austere fiscal policy is adopted permanently. This is a pit the Marxist left risks falling into, as it seems too often to be open to considering  in a post-Soviet world, while notably following the advice, ironically, but somewhat predictably, of its mortal “free-market” enemies; and doing so while ignoring potential advice of Keynesians who would be far more sympathetic to the end of social justice.

In the meantime, while Keynesian economists and policy analysts developed increasing levels of sophistication in dealing with policy issues, Marxists remained content with a kind of navel-gazing largely around issues such as labour value theory. This is not to say that a labour theory of value has no merit. It is to say that as much validity as it may have theoretically, it simply does not practically address larger issues of employment and the methods by which fair wages and equity are achieved ultimately, as much as it may pain me to say so. Being limited in scope, a labour theory of value can become both an easier academic issue to focus on and a terrific distraction while the practical measures Keynesianism has to offer are ignored, or rationalized away. Although in the best of all possible theoretical worlds we could have both. In addition though, the purism of political Marxism, and that of the principled and conscientious left generally, has led to other very poor strategic decisions. Recall that the initial successes of the left were really all around organizing efforts of various kinds. But since the 1960’s, unions and union jobs in the US have been decimated by successive Republican regimes and the memory of these successes fades further into oblivion as reactionaries have succeeded in appointing increasingly far right, pro-business judges to the Supreme Court; they in turn overturn or re-interpret (“de facto amend”) labour codes, abolish fair practices and tamper with the collective bargaining rights while undermining the entire process. Meanwhile, the Marxist left often proudly eschews “electoral politics” as morally beneath them.  But electoral politics have made all these changes possible.

By the time these words are considered, the US Congress will return to the far political right. What is the left saying about this? A book is published condemning Obama for being a sell-out, for not passing a health care bill with a public option. As much as I, a Canadian, would favour a public option, the enemy at this point is not Obama, it is Rupert Murdoch and the far right. For over forty years the left in the US has too often refused to engage in the kind of strategic warfare the right has with great success. The right has studied and imitated the left, even regularly citing and mimicking Saul Alinsky, the great left theorist of organization and activism. They have chosen to organize in the face of the left’s successes, and have done it very well, albeit around polemics, invectives, demagoguery and electoral politics. I have myself very often raised the issue of the election of Nixon, whose election changed the entire landscape of the world, for the worse. Many on the left still refuse to forgive Hubert Humphrey’s alleged pro-war treachery and regret for not a moment that they would (symbolically or albeit theoretically) stand idly by while Nixon was elected. Again, the greater enemy was Humphrey and not Nixon?! This to me shows not just poor judgment and political immaturity but a true irresponsibility and failure to understand the American left’s unique role in preventing, if nothing else, the most grotesque examples of American imperialism, much of which may well have been delayed or curtailed by the election of Humphrey rather than Nixon–not that it was entirely the left’s fault or doing, nor even that Humphrey necessarily needs adulation by comparison. He simply likely would have been far better for labour, more reliable as a peace candidate, far less of a Cold Warrior or of an aggressive imperialist. In the end, a different outcome in that election would have changed the direction of world history in many important respects.

Today, those who refuse to vote, or organize, or even support those who organize around the issue of getting out the vote (read ACORN), commit the same political atrocity and within that context they demonstrate politically what they are also prone to  in economic policy making terms. They simply do not understand that first we need to avoid far-right consequences, because one leads to another. Yes the “domino” theory was right after all. For it is not the case that severe economic times bring about a left revolution; as we have seen, it is far more likely to bring about the rise of the right, as the right will always actively and shamelessly involve itself in manipulating bad times for its own purposes, especially when given carte blanche and an unimpeded pathway to victory. This is a lesson the left seems to refuse to face, even though it happens time and again. Or perhaps the explanation is that the left has become too complacent, spoiled by its own successes, both personal and political. For whatever reason, strategic or otherwise, it refuses to, in the recent words of Katrina vanden Heuvel , “stand and fight”.

In the final analysis, none of us has the luxury of acting or voting strictly in regards to our own personal tastes. The political left in this respect is extremely indulgent in not understanding its own duty and its own power to persuade. On economic matters, it should fall in with the Keynesian left, and neither begrudge it its good work nor disdain its competence. It should study Keynesian theory, orthodox Keynesian theory that is, or at least familiarize itself with the debates therein; it should come to know the difference between what the orthodox Keynesians and the compromisers who are too often identified as Keynesians, alternatively have to offer, understand this technically where possible but at the very least politically, and then follow the lead of competent left economists, some of whom happily are Marxists as well as Keynesians. For they have discovered a most important lesson: that there is no contradiction in being both. In fact this is by far and really the only lesson to be learnt within the context of a discussion on solving major economic crises and ameliorating affronts to social justice–both in the short and medium term. It is also consequently the best way for the Marxist vision of human social justice to prevail, either in the short or medium term. We would then be in the position to let the long run take care of itself, until we get there.

And until then, Marxist-humanism = post-Keynesianism.

[1]See the book of the same title: Efficiency Criteria for Nationalized Industries: A Study of the Misapplication of Micro-Economic Theory, by Alec Nove. Toronto: Univ. Of Toronto Press, 1973.

[2] See Rational Economic Man: A Philosophical Critique of Neo-Classical Economics, by Martin Hollis and Edward Nell. London: Cambridge University Press, 1975.

[3] See entries on line for lists of Post-Keynesian economists. Ric Holt was the long time moderator of the Post Keynesian Theory (PKT) discussion list and has a webpage devoted to PKT as well.

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