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Marx-lite Meets the Investor Class

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With the polite and well–scrubbed ghost of Karl Marx now making regular appearances on television talk shows and being given column space in the mainstream press the apparent question is: what does it mean? While broadening the realm of economic concern to include criticism of conspicuous economic dysfunction might serve a useful social purpose, is it Marx the political economist or Marx the revolutionary who is being resurrected and furthermore, are these dissociable? The question is worth asking because a lot of partial solutions to the issues of dramatically skewed income and wealth distribution and the power they have over Western governments have been put forward but few if any have been implemented. In fact, in meaningful ways the trajectory of Western political economy is away from social reconciliation. A new New Deal was conceived by center-left economists and put forward in 2008 – 2009 and a small, ill conceived and largely ineffectual economic stimulus program was all that came of it. And a wide variety of well conceived and socially constructive policy recommendations continue to be put forward with apparently diminishing prospects for their being implemented. So assuming for the moment the Marx-lite revival underway has content behind it, what is the goal of clear analysis if it is relegated to column inches rather than social action?saez income data stock returns_html_m2b9cfada

The tendency thus far has been to limit analysis to income and wealth distribution. But are these causes, effects or both? (Both) The increasing hold that concentrated wealth has on ‘politics’ is clear but to what extent has economics ever not been tied to politics in the capitalist West? The twentieth century saw increasing integration of government research, programs and expenditures with ‘private’ economic production. The resurrection of market economics in the 1970s that is now running head-on into this Marx-lite revival always sat atop actual political economy of integrated public-private production. ‘Technology,’ computers, software, telecommunications and their aggregation with the Internet were broadly incubated in government labs or in public-private partnerships and were then put forward as the ‘face’ of capitalist innovation. The ‘trade agreements’ of Western renown / infamy are imperial documents, the formalization of asymmetrical political-economic relations enforced through threats and the occasional use of both ‘soft’ and ‘hard’ power. ‘Finance’ has long had quasi-governmental power through ‘its’ right to create money by making loans. And the history, particularly since the onset of capitalist revival economics in the 1970s, has been of government supporting finance whenever ‘market’ outcomes threatened the survival of major Wall Street banks. In other words, the mainstream economic theory of recent decades has never been more than tangentially related to ‘the facts’ of government-industry nexus.

The fact of the re-emergence of Marx-lite economics puts a damper on the oft-made contention that current social relations were ‘always this way.’ Said re-emergence is pointing to current and evolving social conditions that either aren’t well explained by mainstream economics or are contradicted by it. And part of the danger of limiting Marxian critique to income ‘inequality’ is that related issues of social dysfunction will be left out of consideration. The public-private surveillance state is metaphor for these broader relations of economic exploitation, social repression and technocratic control in the service of particular interests against the broader social interest. This can be seen in the erosion of the ‘common carrier’ requirement, known more broadly as ‘net neutrality,’ to turn the ‘public sphere’ of the Internet into a series of related ‘tollbooths’ for economic extraction. As is becoming increasingly apparent, technology, telecommunications and Internet companies have been in collusion with the Federal government for decades now to install / instantiate the technical apparatus of surveillance and to reorder broader social-economic technologies so that alternatives to them become increasingly difficult to use. The use of ‘gotcha’ business practices like General Mills’ recent ‘implied consent’ claim of forfeiting potential litigation against the company by ‘liking’ it through social media ties to insurance industry practices of ‘minimizing’ the payment of claims through threats / use of litigation, to banks abusing foreclosure procedures by forging documents and to the producers of genetically modified food effectively shielding themselves from disclosure. As social facts these are indication-metaphor for emerging social dysfunction that goes beyond income ‘inequality.’

Much as Marx has for a very long time been right below the surface of Western economics Matt Taibbi’s new book Divide: American Injustice in the Age of the Wealth Gap follows Glenn Greenwald and a host of others in making the relation between economic dysfunction and broader social pathologies. The much commented upon fact that no bankers went to prison for the crimes that led to the economic carnage of the Great Recession is broadened to make clear that an entire economic class is functionally immune from the legal consequences of their socially destructive acts. Much as the mythology of the ‘self-made’ person appeals to the perceived social virtues of hard work, intelligence and skill, the ‘self-made’ poor appeals to these same perceived virtues if distinctly not to ‘the facts.’ Part of what is fascinating in these wildly different legal outcomes is that they can be left at to point of outcomes with virtually none of the story being lost. This is to say that the corrupted legislative process that creates laws to benefit the rich, the corrupted judiciary process dependent on the illusion that the capacity to defend oneself is independent of having the means to do so, racist policing dependent on narrow definitions of ‘crime’ and racist tactics and a system of incarceration that assigns economic value to the incarcerated (for-profit prisons), can be very clearly seen in the social space between who goes to prison and who doesn’t. Determining causal direction might be more difficult if wealth didn’t buy access to legislators, competent legal defense, the ability to live in neighborhoods not subject to social repression through police harassment and the ability to stay out of prison that results from this totality. Equitable distribution of wealth would certainly help alleviate these conditions. But what is illustrated by their facts is Marxian class division in its most basic form. In other words, ‘the problem’ runs much deeper than Marx-lite policy prescriptions are likely to encompass.

Implied in passive policy ‘recommendations’ is that there are no social emergencies in need of immediate resolution. As the number of food stamp (SNAP Supplemental Nutrition Assistance Program) recipients has increased their economic circumstance has continued to decline. Mass incarceration is class and race based social savagery indicative of radical social dysfunction, as is racist policing prevalent across the US. Unemployment and underemployment are rendering an increasing proportion of the population unable to provide for themselves in a basic way. While these are nominally addressed through Marx-lite policy ‘recommendations,’ what isn’t yet in evidence is any concrete ability to get them implemented. Framed differently, the ‘evolution versus revolution’ imperative depends very much on where one is sitting in the social hierarchy. This isn’t to suggest that at present broad social rebellion seems either imminent or probable. But to bring this full circle, the fact of Marx-lite revival indicates the growing recognition that social problems are both poorly explained by heretofore-dominant modes of explanation and are apparently irresolvable through existing channels of social resolution. Without a programmatic approach to social resolution policy ‘discussions’ based on Marx-lite economic insights are little more than entertainment for the pundit class. To be clear, there are a lot of people living through social emergencies well described by Marx’s critique of capitalism. The question for Marx-lite economists and political commentators is why Marx himself saw the need for revolutionary change to address the social emergencies that capitalism produces if making policy recommendations would have sufficed?

The most fundamental paradox left unexplained in Marx-lite economics is how Marx’s identification of the internal contradictions of capitalism could be converted into policies that ‘improve’ capitalism? This point isn’t an ideologically ossified either / or, it is to break through the strategies of circumscription that somehow always leave in place an ‘outside’ to be exploited. The New Deal in the US left the very worst Western imperialist tendencies in place while providing a patina of civilization to ‘managed’ capitalism. This is to argue that if the problem leading to income and wealth ‘inequality’ is the ‘system’ of capitalist distribution then global capitalism is the realm of concern, not national policies per se. The New Deal left in place an internal / external divide that (temporarily) salved this internal contradiction with the apparent effect of further facilitating external contradiction. Cold War rhetoric was used in many cases as cover for rank imperial predations. At this point the fair question to ask is: how is broadening the realm of concern possible if implementing national policies of social reconciliation seems improbable? The answer back depends both on the nature of the analysis and where one stands in relation to it. Again, the current dissociation of Marx-lite from Marx the revolutionary begs the question of why Marx was revolutionary if policy prescriptions would accomplish his ‘goals.’

Of some consequence is that the ‘income inequality’ story nearly ‘corrected’ itself by degree in 2008. To be more tedious than usual for a moment, the point of some recent confusion, the relation of wealth to capital, is further confused by stock to flow, the ‘rate of return’ to wealth and the growth rate of economic production. Illustrated, admittedly simplistically, in the graph below is the relation of the growth of the value of the stock market to the growth in income of the top one-half of one percent of those who receive income. For comparison, the flat-ish yellow line at the bottom illustrates the average income for everyone including the other 99.5% of income receivers. Had the prices of the financial assets the wealthy overwhelmingly own not ‘recovered’ neither would ‘income inequality’ have recovered. By lowering the ‘price’ of financial leverage (interest rates) while allowing it to increase as asset ‘quality’ fell the Obama administration and the Federal Reserve ‘recovered’ the financial asset price inflation that has been under way since the 1980s. The story is iterative and more complicated than this, but not much. A ground level way to understand this is that through inflating the prices of financial assets hedge funds were able to use their monetized value to buy foreclosed houses in bulk at pennies on the dollar. And the houses were foreclosed on because they were ‘bought’ with predatory loans made by the very same banks at the heart of financial asset price inflation. Had the Wall Street banks been allowed to ‘fail,’ been subjected to much lauded ‘market forces’ nationalized and turned into utilities, the likelihood of the subsequent rise in financial asset prices would have been much diminished.

Rob Urie is an artist and political economist. His book Zen Economics will be published by CounterPunch / AK Press shortly.

Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.

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