This diary continues my previously initiated series on Heterodox Economics I had initially planned to continue by discussing the problems with free trade dogma, which will be the next topic I take up. However, an interesting diary by Techno
on Thorstein Veblen (one of the great heterodox economists) raised another issue: What is the significance of Karl Marx? In this diary I am going to argue that Marx is a logical place to start for heterodox economics since heterodox economics must reclaim evolution.I’ll leave it to better scholars than myself such Bill Dugger and Howard Sherman to decide whether Marx is relevant to Veblen and Veblen is relevant to Marx and merely shake my head ruefully that techno considers arguments that Marx influenced Veblen to be smear against Veblen.
During discussion with techno about Veblen, techno took great umbrage at my assertion that Marx was a significant influence on Veblen. Techno also appears to believe that Marx’s only appeal was to thugs and that he (Marx) is not worth bothering with. In this diary I want to discuss several ideas that may not have been entirely unique or original to Marx, but were nevertheless ideas that Marx developed in a more thorough and consistent fashion. Unfortunately, there will be many aspects of Marx I have to leave out which others might see as more central to Marx. Marx remains in my view a great and systematic thinker who nonetheless like all great thinkers sometimes contradicted himself and also wound up taking untenable positions. None of this is remotely problematic unless we wish to make Marx into a demi-god or prophet. I simply want to draw attention to the significance of Marx as one source for thinking about heterodox economics.
First, Marx must be viewed as an evolutionary political economist. The difference between evolutionary political economy and “economics” is vast. Economics is first and foremost concerned with how to make the most efficient choice under conditions of scarcity (finite resources). Evolutionary political economy is more interested in how we get to the choices we face today and how we can reshape the choices facing us. Marx provides us with one of the first and most systematic theories of social evolution. Even if he is wrong on many particulars he is worthy of study for devoting significant, sustained attention to this problem.
Second, Marx is a materialist. In his theory of social evolution Marx calls our attention to the fact that humans must interact with the natural environment. So Marx starts with techno-environmental relationships and human action that transforms raw materials into usable final goods and services. Marx recognized that the way we do these things would dramatically influence the rest of our lives. If we spend our time as foragers living off of wild game, nuts, fruits and berries we are going to organize productive life and think about the world in a radically different way than we do as members of industrial society. The idea that our material existence, social existence and even our symbolic interactions all form part of a web of humanly devised social patterns is certainly one of Marx’s enduring contributions. Those who claim that Marx found the symbolic aspect of human existence to be unimportant or irrelevant, and those who claim that Marx reduced all aspects of symbolic existence to the technological-social base of society are people who IMO have never bothered to devote any serious time to reading Marx. In today’s language, Marx was a holist-not a “determinist” or a “reductionist”.
Third, Marx is a conflict theorist and it is his focus on social conflict that provides the key to understanding how and why he thought societies would change. We can perhaps best think of Marx’s focus on social conflict by envisioning a Medieval Manor. On that manor, serfs must spend part of their day working for the lord. The lord is a parasite and lives off the “surplus” of the serfs. This leads to social conflict between lord and serf. Most people when they study feudal society can easily grasp this concept. What startles people is that when we apply it to Marx’s analysis of capitalist production the basic premise retains at least some validity. So workers and capitalists come into conflict just as did lords and serfs. Marx’s understanding of social conflict surrounding access to material resources is yet another of his enduring contributions.
Fourth, Marx gives us a very deep analysis of the problems of the short run business cycle, of the persistence of involuntary unemployment and of long term systemic crises. The key to understanding all of this is the tendency of the long run rate of profit to fall. The profit rate falls in the long run because capitalists must spend more and more just to replenish their capital costs and so the rate of return on capital falls. As it does, new business investment grinds to a standstill and the price of capital plummets, throwing workers into unemployment and the whole system into crisis. New business investment starts up at the bottom of the boom. Curiously, Marx has a theory of wage and price flecibility that does indeed in the long run restore the system to full employment-but- first the system goes through an immensely socially destructive period. Secondly, full employment is never really achieved because capitalism never really puts everyone to work. It maintains a large and ever shifting number of people in a state of permanent unemployment.
A short diary of this cannot adequately address all the aspects of Marx’s thought. In addition, I would list several errors of Marx: teleology (the view that history had an innate drive), his focus on dialectical reasoning (the view that change only comes through the negation of a negation) and his somewhat arbitrary faith in the working class as the repository of the will of history. Furthermore, Marx himself could be viciously intolerant on a personal level. Finally, I agree that Marx read carelessly and applied dogmatically to social ideologies leads us to totalitarianism. That Marx made errors should not blind us to his importance as one of the first great evolutionary political economists.