Marxism can still change the world

In November 2008, at the height of the global financial crisis, Queen Elizabeth visited the London School of Economics. In the course of this visit she asked the assembled economists why they had not seen the financial crisis coming. Not having any immediate answers, the economists consulted and ran seminars. Six months later they sent a collective letter to Her Majesty explaining that some mix of hubris and failure to confront systemic risks lay at the root of their failures. Neglecting systemic risks appears particularly egregious. Most of us would not choose to board an airplane that had not been checked for systemic risks.

My new book, The Story of Capital, seeks to interrogate the internal malfunctions and systemic risks within capital’s mode of production, but it does so with the aid of rather special theoretical tools drawn from Marx’s work on the political economy of capital. While Marx famously proclaimed that our aim should not be to understand the world but to change it, he put an enormous amount of time and effort into understanding that which he sought to change. Indeed, his practice suggests that he believed it vital to understand capital in order to change it.

“The exact development of the concept of capital is necessary,” he wrote in the Grundrisse (also the source of all quotations henceforth), “since it is the fundamental concept of modern economics, just as capital itself… is the foundation of bourgeois society. The sharp formulation of the presuppositions of the [capital] relation must bring out all the contradictions of bourgeois production, as well as the boundary where it drives beyond itself.” Notice Marx’s appeal here to the term “contradiction”. He holds that “capital contains contradictions” and that our purpose “is to develop them fully”. Contradiction is not a term to be found in the neoclassical, Ricardian or even Keynesian playbooks. But it is a foundational term for Marx’s conception of capital. So why is it so important?

Bourgeois political economy of any stripe is divided into microeconomics (the theory of the firm) and macroeconomics (the theory of national and global economies). Despite many attempts, it has proven impossible to derive macro principles from micro theory or vice versa. For Marx, however, this contradiction is the foundation for theory construction rather than a barrier to understanding. Individual capitalists driven by the coercive laws of competition adopt technologies that increase the productivity of the labour they employ.

But in Marx’s theory, labour is the source of all value. Rising labour productivity diminishes the number of labourers required. Less value is produced. The result, other things remaining equal, is a crisis of falling profitability. This theoretical insight arises out of the contradiction between macro and micro requirements. Put another way, individual capitalists working to maximise the rate of return on their capital produce an aggregate result which is less and less favourable for capital accumulation. The problem then arises: who is going to save capital from the rational but destructive behaviour of individual capitalists, disciplined by the coercive laws of free market competition?

All manner of research disciplines (such as economics) and policy institutes (such as the Institute of Economic Affairs and the International Monetary Fund) are set up to find answers to these questions. Problems have solutions. Contradictions do not. They are permanent points of tension that can only be managed within the system in which they are embedded. They only go away when the system as a whole disappears. I am, for example, constantly managing the contradictions between my professional life requirements and my personal desires and responsibilities. Much of the time the contradiction remains latent and quiescent, but if my university is taken over by authoritarians (as was the Central European University in Hungary), then this contradiction becomes the locus of a personal crisis.

Therefore the problem for the political economist is to identify and situate the primary contradictions of capital (e.g. the contested relation between capital and labour) and to describe its laws of motion. As the market exchange system becomes more general and systematised, so participants acquire (the Grundrisse again) “objective dependency relations… in antithesis to those of personal dependence” that earlier prevailed. “Individuals are now ruled by abstractions whereas earlier they depended on one another. The abstraction, or idea, however, is nothing more than the theoretical expression of those material relations which are their lord and master.”

The ruling ideas are those of the ruling class and those associated with the dominant state power (until recently, the US). These “relations can be expressed, of course, only in ideas, and thus philosophers have determined the reign of ideas to be the peculiarity of the new age and have identified the creation of free individuality with the ideological overthrow of this reign. This error was all the more easily committed, from the ideological standpoint, as this reign… appears within the consciousness of individuals as the reign of ideas, and because the belief in the permanence of these ideas, i.e. of these objective relations of dependency, is of course consolidated, nourished and inculcated by the ruling classes by all means available.”

This, of course, was exactly what Hayek, Milton Freeman, Keith Joseph, the Institute of Economic Affairs and Margaret Thatcher so expertly organised and accomplished in the 1980s turn to neoliberalism. “There is no alternative”—Tina—Thatcher declared, and many accepted this slogan as gospel truth. In this way, ideas become a “material force” in human history. It is in the ideological realm that we became aware of these ruling ideas and fight them out via ideological struggles. In the 1980s, freshly funded neoliberal think-tanks flourished, the Keynesians were side-lined, the billionaire faction began its rise, working class institutions failed and Marx was mocked out of existence.

The Story of Capital is the latest (and maybe the last) of a series of books that I refer to in retrospect as “the Marx Project”. I say “in retrospect” since I had no idea until recently that such a project had been in the making. So what was this “Marx Project” all about? It had long been obvious that Marx was not well understood, let alone actively embraced, and that much work was needed to make his work more accessible. This was not only because of general ignorance based in avoidance and right-wing distortions but also because of some of the more dogmatic presentations on the part of the sectarian left.

Academic Marxism, meanwhile, seemed for the most part hell-bent on making Marx’s thought even more complicated than it already was. I had to some degree contributed to this in writing Limits to Capital (a work which, at the time of its publication—1982—was depicted by one reviewer as “another milestone for geography and another mill-stone around graduate students necks”). There clearly was a space in which I could take the experience of teaching Volume One of Marx’s Capital at least once every year after 1971 and put it to good use. In some years in the 1970s I had taught it three or more times both on and off campus (when I taught it in the university I always did so in addition to my contractual teaching load so nobody could claim I was neglecting my academic duties in favour of politics!).

I aimed throughout to simplify and clarify Marx’s argument without dumbing it down or resorting to simplicities. I tried not to impose any particular reading of Marx, though it is impossible of course not to base the teaching in one’s own interpretations (mine is just one out of many plausible readings). I wanted to open a door into Marx’s thinking so that readers could pass through it and create their own understandings on the other side. That is the spirit in which the video series and the written companions to Marx’s Capital and Grundrisse were also constructed.

But I also felt a pressing need to illustrate the contemporary relevance of Marx’s thinking for politics. This carried with it an obligation to identify not only what we might learn from Marx but what he had left incomplete, assumed away or simply (heaven forbid!) gotten wrong. It also entailed recognising what was outdated in his thinking and what was not. The question that was very much on my mind was: What is it that reading Marx can teach us today and what is it that we have to do for ourselves to understand the world around us?

I set out to illustrate the utility of Marx’s method as well as of his concrete theorisations by putting my understanding of them to work in analysing contemporary events and issues. Only relatively late in the day did I realise I was bridging the gap between two of Marx’s seminal political works. More recent books as part of this “Marx Project” include Seventeen Contradictions and the End of Capitalism where I define what anti-capitalism might entail and give rational reasons for becoming anti-capitalist in the light of the contemporary state of things; as well as Marx, Capital and the Madness of Economic Reason where I offer a systemisation of Marx’s work in an attempt to explain the contemporary crises of capital. Each one of my books has explored a particular aspect of Marx’s analysis in relation to a particular topic or situation. I hoped that the cumulative effect would be to encourage others to read Marx carefully and openly as a way into such practical studies.

The Story of Capital is one more step in telling the story of capital in a way that people can, I hope, understand and use both personally and politically. Collectively, we can indeed change this world, even though, as Marx points out, this is never under conditions of our own choosing. But the theoretical dissection of those conditions is a vital precursor towards changing them, and, on that basis, I offer this text in the quest to build a more humane and ecologically sensitive alternative.

This is an edited extract from The Story of Capital

[Further reading: The Marx whisperer]