Tag: Marx

Remembering Jim Crotty

Last weekend I went up to Amherst, for an event — half conference, half memorial — in honor of Jim Crotty.

Jim was a very important presence for me when I was at a graduate student at the University of Massachusetts, as he was for many people who passed through the economics program there in the 1980s, 1990s and 2000s. His approach to economics, drawing on the traditions of Marx and Keynes, was for us almost the definition of heterodox macroeconomics. He was also a model for us as a human being. He never wavered from his political commitments, and he was — as many speakers at the event testified — a wonderful person, down to earth, warm and outgoing.

Some years ago, Arjun Jayadev and I recorded a long interview with Jim. INET has put video of the interview online. (The videos are somewhat abridged; you can read the full transcript here. ) I think the interview managed to capture Jim’s broader outlook as well as his economics interests. (Well, some of them — his interests were very broad!) He also has some very interesting things to say about the origins of radical economics as a distinct body of thought in the 1970s. I think the videos are well worth watching, if you want to get a sense (or a reminder) of what Jim Crotty was all about.

I wrote a piece on his work in 2016, to go along with the interviews. That piece focuses on his argument for taking Keynes seriously as a socialist, the argument which later became his last published work, Keynes against Capitalism. (There is an earlier draft that circulated within the UMass economics department, which I think makes the argument more clearly than the published book does.)

For this event, Arjun and I wrote an article on Jim, talking more about what his teaching meant for us and how one might carry his vision forward. It will be published in an upcoming special issue of the Review of Radical Political Economics, along with a number of other pieces on Jim’ thought and work. Here are some excerpts from our contribution. You can read the whole thing here, if you’re interested.

 

 

“If Keynes were Alive Today…”: Reflections on Jim Crotty

by Arjun Jayadev and J. W. Mason

Jim Crotty’s ECO 710 was for us, as for hundreds of UMass grad students over the past 40 years, the starting point for systematic thought about the economy as a whole. In this he was, like all the great teachers, presenting not so much any particular technique or ideas as himself as a model – a touchstone to go back to when you hit a dead end, and a living example of how to be a serious economist-in-the-world. The content of the class varied over the years, but it usually involved a close reading of The General Theory, with a focus on its three great advances— fundamental uncertainty, liquidity preference and effective demand.

Perhaps the most distinctive aspect of Jim’s pedagogy and scholarship, almost alone among economists we have known, was his ability to synthesise these two thinkers in ways that gave equal weight to both, that placed them in conversation rather than in tension. Crotty’s Marx anticipates Minsky, while his Keynes is a political radical – a socialist – in ways that few others have recognized.

Perhaps his most profound contribution to both traditions was the brilliant 1985 article “The Centrality of Money, Credit, and Financial Intermediation in Marx’s Crisis Theory” (Crotty 1985). There, he developed the idea that the Marxian vision of capitalist crises could only be understood in terms of the development of the credit and the financial system – that it was only via financial commitments that a fall in the profit rate could lead to an abrupt crisis rather than just a slower pace of accumulation. His reconstruction of a vision of the credit system that may either dampen or amplify disruptions to the underlying process of production suggests that Marx anticipated the ideas about financial fragility later developed in the Post Keynesian tradition. With a critical difference: While Minsky has finance calling the tune, in the Marx-Crotty version the ultimate source of instability is in the real world of labor and capital.

For us, Jim’s most important work came in four areas. The first was the interplay of real and financial instability in capitalist crises, as in the 1985 article and his work after 2008. Second was the shifting relationship between shareholders and managers in the governance of corporations. Third was his insistence on the importance of fundamental uncertainty for macroeconomic theory – if we imagine one phrase in Jim’s voice, it is “we simply do not know.” Last, chronologically, but certainly not least, was his rehabilitation of Keynes’ socialist politics – a socialist Keynes to go with his Minskyan Marx.

Most of Crotty’s published work fits within the broad post-Keynesian tradition. But his earlier and stronger commitment was to Marx. In a series of papers in the 1970s with Raford Boddy he put class conflict and imperialism front and centre in the analysis of contemporary capitalism, exploring Marxian crisis theory and what it could illuminate about contemporary macroeconomic problems. From the mid-1980s onward, his published work no longer used an explicitly Marxist framework, and the name Keynes appears much more often than that of Marx. But this was a matter of shifting focus and circumstances rather than any more fundamental re-evaluation. In a conversation with us in 2016, he described Marx as: “clearly the more brilliant social scientist and thinker and philosopher” of the two, “with a much more ambitious project, with clearer and deeper political roots.” And yet, he added: “I am writing a book about Keynes.”

Marx on the Corporation

(I wrote this post back in 2015, and for some reason never posted it. The inspiration was a column by Matt Levine, where he wondered what Marx would think of the modern corporation.)

Let’s begin at the beginning.

Capital, for Marx, is not a thing, it’s a social relation, a way of organizing human activity. Or from another point of view, it’s a process. It’s the conversion of a sum of money into a mass of commodities, which are transformed through a production process into a different mass of commodities, which are converted back into a (hopefully greater) sum of money, allowing the process to start again.  Capital is a sum of money yielding a return, and it is a mass of commodities used in production, and it is a form of authority over the production process, each in turn.

When we have a single representative enterprise, managed by its owner and financed out of its own retained profits, then there’s no need to worry about where the “capitalist” is in this process. They are the owner of the money, and they are the steward of the means of production, and they are master of the production process. Whatever happens in the circuit of capital, the capitalist is the one who makes it happen.

This is the framework of Volume 1 of Capital. There the capitalist is just the personification of capital. But once credit markets allow capitalists to use loaned funds rather than their own, and even more once we have joint-stock enterprises with salaried managers in charge of the production process, these roles are no longer played by the same individuals. And it is not at all obvious what the relationships are between them, or which of them should be considered the capitalist.  This is the subject of part V of Volume 3 of Capital Vol. 3, which explores the relation of ownership of money as such (“interest-bearing capital”) with ownership of capitalist enterprises.

For present purposes, the interesting part begins in chapter 23. There Marx introduces the distinction between the money-capitalist who owns money but does not manage the production process, and the industrial, functioning or productive capitalist who controls the enterprise but depends on money acquired from elsewhere. “The productive capitalist who operates on borrowed funds,” he writes, “represents capital only as functioning capital,” that is, only in the production process itself. “He is the personification of capital as long as … it is profitably invested in industry or commerce, and such operations are undertaken with it … as are prescribed by the branch of industry concerned.”

The possibility of carrying out a capitalist enterprise with borrowed funds implies a division of the surplus into two parts — one attributable to management of the enterprise, the other to ownership as such. “The specific social attribute of capital under capitalist production — that of being property commanding the labour-power of another” now appears as interest, the return simply on owning money. So “the other part of surplus-value — profit of enterprise — must necessarily appear as coming not from capital as such, but from the process of production… Therefore, the industrial capitalist, as distinct from the owner of capital [appears] … as a functionary irrespective of capital,… indeed as a wage-labourer.”

So now we have one set of individuals personifying capital at the M moment, when capital is in its most abstract form as money, and a different set of individuals personifying it in the C and P moments, when capital is crystallized in a particular productive activity. One effect of this separation is to obscure the link between profit and the labor process: The money-owners who receive profit in the form of interest (or dividends) are different from the actual managers of the production process. Not only that, the two often experience themselves as opposed. In this sense, the division between the money-capitalist and the industrial capitalist blurs the lines of social conflict.

Marx continues:

Interest as such expresses … the ownership of capital as a means of appropriating the products of the labour of others. But it represents this characteristic of capital as something which belongs to it outside the production process… Interest represents this characteristic not as directly counterposed to labour, but rather as unrelated to labour, and simply as a relationship of one capitalist to another. … In interest, therefore, in that specific form of profit in which the antithetical character of capital assumes an independent form, this is done in such a way that the antithesis is completely obliterated and abstracted. Interest is a relationship between two capitalists, not between capitalist and labourer.

We might read Marx here as warning against an easy opposition between “productive” and “financial” capital, in which we can with good conscience take the side of the former. On the contrary, these are just shares of the same surplus extracted from us in the labor process. It’s important to note in this context that Marx speaks of a “productive capitalist,” not of productive capital. The productive capitalist and the money capitalist are, so to speak, two human bodies that the same capital occupies in turn.

Once the pirates have burned your fields, seized your possessions and carried off your daughters, it shouldn’t matter to you how they divide up the booty: I think this is a valid reading of Marx’s argument here. Or as he puts it: “If the capitalist is the owner of the capital on which he operates, he pockets the whole surplus-value. It is absolutely immaterial to the labourer whether the capitalist does this, or whether he has to pay a part of it to a third person as its legal proprietor.”

But while the development of interest-bearing capital obscures the true relations of production in one sense, it clarifies them in another. It separates the claims exercised by ownership as such, from the claims due to the specific labor performed by the capitalist within the enterprise. With the owner-manager, these two are mixed together. (This is still a big problem for the national accounts.) Now, the part of apparent profit that was really payment for the labor of the capitalist appears in a distinct form as “wages of superintendence.”

Marx’s analysis here seems like a good starting point for discussions of the position of managers in modern economies.

The specific functions which the capitalist as such has to perform, … [with the development of credit] are presented as mere functions of labour. He creates surplus-value not because he works as a capitalist, but because he also works, regardless of his capacity of capitalist. This portion of surplus-value is thus no longer surplus-value, but its opposite, an equivalent for labour performed. … the process of exploitation itself appears as a simple labour-process in which the functioning capitalist merely performs a different kind of labour than the labourer.

As Marx later emphasizes, one consequence of the development of management as a distinct category of labor is that the profits still received by owners can no longer be justified as the compensation for organizing the production process. But what about the managers themselves, how should we think about them? Are they really laborers, or capitalists? Well, both — their position is ambiguous. On the one hand, they are performing a social coordination function, that any extended division of labor will require. But on the other hand, they are the representatives of the capitalist class in the coercive, adversarial labor process that is specific to capitalism.

The discussion is worth quoting at length:

The labour of supervision and management is naturally required wherever the direct process of production assumes the form of a combined social process, and not of the isolated labour of independent producers. However, it has a double nature. On the one hand, all labour in which many individuals co-operate necessarily requires a commanding will to co-ordinate and unify the process … much like that of an orchestra conductor. This is a productive job, which must be performed in every combined mode of production.

On the other hand … supervision work necessarily arises in all modes of production based on the antithesis between the labourer, as the direct producer, and the owner of the means of production. The greater this antagonism, the greater the role played by supervision. Hence it reaches its peak in the slave system. But it is indispensable also in the capitalist mode of production, since the production process in it is simultaneously a process by which the capitalist consumes labour-power. Just as in despotic states, supervision and all-round interference by the government involves both the performance of common activities arising from the nature of all communities, and the specific functions arising from the antithesis between the government and the mass of the people.

In one of those acid asides that makes him so bracing to read, Marx quotes an American defender of slavery explaining that since slaves were unwilling to do plantation labor on their own, it was only right to compensate the masters for the effort required to compel them to work. In this sense it doesn’t matter that the Bosses are performing productive labor. Their claims are just a version of the German nihilists’: It’s only fair that you give me what I want, since I’ve gone to such effort to take it from you. Or Dinesh D’Souza’s argument that equality of opportunity would be unfair to him, since he’s gone to great effort to give his kids an advantage over others.

But again, the industrial capitalist is not only a slave-driver. They do have an essential coordinating function, even if it is performed by the same people, and in the same activities, as the coercive labor-discipline that extracts greater effort from workers and deprives them of their autonomy. The ways these two sides of the labor process develop together is one of the major contributions of Marxist and Marx-influenced work, I think — Braverman, Noble, Marglin, Barbara Garson. It seems to me that, paradoxical as it might sound, it’s this positive role of managers that is ultimately the stronger argument against capitalism. Because the development of professional management fatally undermines the supposed connection between the economic function performed by capitalists, and the economic form of property ownership. 

Marx makes just this argument:

The capitalist mode of production has brought matters to a point where the work of supervision, entirely divorced from the ownership of capital, is always readily obtainable. It has, therefore, come to be useless for the capitalist to perform it himself. An orchestra conductor need not own the instruments of his orchestra, nor is it within the scope of his duties as conductor to have anything to do with the “wages” of the other musicians. Co-operative factories furnish proof that the capitalist has become no less redundant as a functionary in production… Inasmuch as the capitalist’s work does not …  confine itself solely to the function of exploiting the labour of others; inasmuch as it therefore originates from the social form of the labour-process, from combination and co-operation of many in pursuance of a common result, it is … independent of capital.

The connection Marx makes between joint-stock companies (what we would today call corporations) and cooperative enterprises is to me one of the most interesting parts of this whole section. In both, the critical thing is that the work of management, or coordintion, is just one kind of labor among others, and has no neceessary connection to ownership claims.

The wages of management both for the commercial and industrial manager are completely isolated from the profits of enterprise in the co-operative factories of labourers, as well as in capitalist stock companies. … Stock companies in general — developed with the credit system — have an increasing tendency to separate this work of management as a function from the ownership of capital… just as the development of bourgeois society witnessed a separation of the functions of judges and administrators from land-ownership, whose attributes they were in feudal times. Since, on the one hand, … money-capital itself assumes a social character with the advance of credit, being concentrated in banks and loaned out by them instead of its original owners, and since, on the other hand, the mere manager who has no title whatever to the capital, … performs all the real functions pertaining to the functioning capitalist as such, only the functionary remains and the capitalist disappears as superfluous from the production process.

This, to me, is one of the central ways in which we can see capitalism as a necessary step on the way to socialism. Only under capitalism has large scale industry developed; only the acid of  the market was able to break the bonds of small family productive units and free their constituent pieces for recombination on a much larger scale. So the only form in which the organization of large-scale enterprises is familiar to us is as capitalist enterprises. (At least, this is Marx’s argument. Arguably he understates the ability of states to organize production on a large scale.) But just because large industrial enterprises and capitalism have gone together historically, it doesn’t follow that that capitalism is the only institutional setting in which they can exist, or that the conditions required for their development are required for their continued existence.

In fact, as capitalist enterprises develop, their internal organization becomes progressively less market-like. Markets exist only at the surfaces, the external membranes, of enterprises, which internally are organized on quite different principles; and as the scale of enterprises grows, less and less economic life takes place on those surfaces. So while capital continues, nominally, to be privately owned, relations of ownership play less and less of a role in the concrete organization of production. The “mere manager” as Marx says, “has no title whatever to the capital”; nonetheless, he or she “performs all the real functions” of the capitalist.

When Marx was writing this in the 1870s, he thought the trend towards the separation of ownership from control was clearly established, even if most capitalist enterprises at the time were still directly managed by their owners.

With the development of co-operation on the part of the labourers, and of stock enterprises on the part of the bourgeoisie, even the last pretext for the confusion of profit of enterprise and wages of management was removed, and profit appeared also in practice as it undeniably appeared in theory, as mere surplus-value, a value for which no equivalent was paid.

That’s as far as the argument gets in chapter 23.

The next few chapters are focused on the other side of the question, interest-bearing capital — that is,capital that appears to its owners simply as money, without being embodied in any production process.  Chapter 24 is an attack on writers who reduce both to money capital, and imagine that the accumulation of capital is just an example of the power of compound interest. (Among other things, this chapter anticipates the essential points of left critiques of Piketty by people like Galbraith and Varoufakis, and by me.) Chapter 26 attacks the opposite conflation — the treatment of money as just capital in general, and of interest as simply a reflection of the physical productivity of capital rather than a specifically monetary phenomenon. This is today’s orthodoxy, represented for Marx by Lord Overstone. Chapter 25 anticipates Minsky on the elasticity of finance, and takes the side of the credit-money theorists like Thornton and banking-school writers like Tooke and Fullarton, against quantity theorists and the currency school. Marx’s debt to Ricardo is well known, but it’s less recognized how much he learned from this group of writers — the best discussion I know is by Arie Arnon. When Tooke died, Marx wrote to Engels that he had been “the last English economist of any value.”

Marx returns to the industrial or functioning capitalist in chapter 27, which is focused on joint-stock companies. Marx credits stock companies with “an enormous expansion of the scale of production and of enterprises, that was impossible for individual capitals.” And critically these new enterprises are public in both name and substance (the “public” in “publicly-traded corporations” is significant.)

The development of joint stock companies continues the sociological transformation that begins with the development of interest-bearing capital and the ability to operate on borrowed funds — that is, the 

transformation of the actually functioning capitalist into a mere manager, administrator of other people’s capital, and of the owner of capital into a mere owner, a mere money-capitalist. Even if the dividends which they receive include the interest and the profit of enterprise, … this total profit is henceforth received only in the form of interest, i.e., as mere compensation for owning capital that now is entirely divorced from the function in the actual process of reproduction, just as this function in the person of the manager is divorced from ownership of capital. … This result of the ultimate development of capitalist production is a necessary transitional phase towards the reconversion of capital into the property of producers, although no longer as the private property of the individual producers, but rather … as outright social property. … the stock company is a transition toward the conversion of all functions in the reproduction process which still remain linked with capitalist property, into mere functions of associated producers.

In short, the joint stock company “is the abolition of the capitalist mode of production within the capitalist mode of production itself.”

Work, Unemployment and Aggregate Demand

(I originally posted this as a series of comments on a 2012 post at Steve Randy Waldman’s Interfluidity. In that post, Steve suggested that we should think of redistribution under capitalism as “the poor collectively sell[ing] insurance against riot and revolution, which the rich are happy to pay for with modest quantities of efficiently produced goods.”)


In Theories of Surplus Value, Marx writes:

Assume that the productivity of industry is so advanced that whereas earlier two-thirds of the population were directly engaged in material production, now it is only one-third. Previously 2/3 produced means of subsistence for 3/3; now 1/3 produce for 3/3. Previously 1/3 was net revenue (as distinct from the revenue of the labourers), now 2/3. Leaving [class] contradictions out of account, the nation would now use 1/3 of its time for direct production, where previously it needed 2/3. Equally distributed, all would have 2/3 more time for unproductive labour and leisure. But in capitalist production everything seems and in fact is contradictory… Those two-thirds of the population consist partly of the owners of profit and rent, partly of unproductive labourers (who also, owing to competition, are badly paid). The latter help the former to consume the revenue and give them in return an equivalent in services—or impose their services on them, like the political unproductive labourers. It can be supposed that—with the exception of the horde of flunkeys, the soldiers, sailors, police, lower officials and so on, mistresses, grooms, clowns and jugglers—these unproductive labourers will on the whole have a higher level of culture than the unproductive workers had previously, and in particular that ill-paid artists, musicians, lawyers, physicians, scholars, schoolmasters, inventors, etc., will also have increased in number.

A large and growing share of employment, in other words, is unnecessary from a technical standpoint. It exists because useless jobs are more conducive to social stability than either mass poverty or a social wage. The payments the majority of the population receives for not rioting or rebelling look better when they are dressed up as payment for our work as mistresses, grooms, jugglers — or as yoga instructors or economics professors. This way, people are still dependent on a boss. In a differently organized world, we could dispense with most of these jobs and take the benefits of increased productivity in some combination of shorter hours for productive workers and a shift toward more intrinsically fulfilling (craft-like) forms of productive work.

By starting from here we can think more sensibly about employment and unemployment. From a macroeconomic standpoint, all we need is that expenditure on unproductive labor changes in some rough proportion with income.

From my point of view, the essential facts about employment are (1) As long as the most socially accepted form of claim on the social product is wages for work, work will be found for people, along the lines Marx suggests. (This is not true in poor societies, where a large portion of the poor engage in subsistence labor, of either the traditional or garbage-picking variety.) And (2) In the short run, employment will rise and fall as the rich feel a smaller or a greater need for the insurance-value of financial wealth.

As soon as you being to think about employment in terms of an input of labor to a production process, you’ve taken a wrong turn. We should not try to give supply-based explanations of unemployment, i.e. to show how the allocation of some stock of productive resources by some decision makers could generate unemployment. Unemployment is strictly a phenomenon of aggregate demand.

Unemployment in advanced countries is not characterized by exogenous factor supplies and Leontief-type production functions, where some factors are exhausted leaving an excess supply of their complements.  (The implicit model that lies behind various robots-will-take-all-the-jobs stories.) Unemployment in capitalist economies involves laid-off workers and idle factories; it involves unemployed construction workers and rising homelessness; it involves idle farmworkers and apples rotting on the trees. Unemployment never develops because we need fewer people to make the stuff, but because less stuff is being made. (Again, things are different in poor countries, and in the early stages of industrialization historically.) Unemployment cannot be explained without talking about aggregate demand any more than financial crises can be explained without talking about money and credit. It exists only to the extent that income and expenditure are determined simultaneously.

Unemployment rises when planned money expenditure falls for a given expected money income. Unemployment falls when planned money expenditure rises for a given expected money income. Conditions of production have no (direct) effect one way or the other.

Recognizing that unemployment is an aggregate expenditure phenomenon, not a labor-market phenomenon, helps avoid many errors. For example:

It is natural to think of unemployed people as people not engaged in productive work. This is wrong. The two things have nothing to do with each other. Unemployed people are those whose usual or primary claim on the social product takes the form of a wage, but who are not currently receiving a wage. There are lots of people who do not receive wages but are not unemployed because they have other claims on the social product — children, retirees, students, caregivers, the institutionalized, etc. Almost all of tehse people are capable of productive work, and many are actively engaged in it — caregiving and other forms of household production are essential to society’s continued existence. At the same time, there many people who do receive wages but who are not engaged in productive work; one way to define these is as people whose employment forms part of consumption out of profits or rents.

While there is no relationship between people’s capability for and/or engagement in useful work, on the one hand, and employment, on the other, there is a close link between aggregate expenditure and employment, simply because a very large fraction of expenditure takes the form directly or indirectly of wages, and aggregate wages adjust mainly on the extensive rather than the intensive margin. So when we see people unemployed, we should never ask, why does the production of society’s desired outputs no longer require their labor input? That is a nonsense question that will lead nowhere but confusion. Instead we should ask, why has there been a fall in planned expenditure?

————————

Going beyond the 2012 conversation, two further thoughts:

1. The tendency to talk about unemployment in terms of why some peoples’ labor is no longer needed for production, is symptomatic of a larger confusion. This is the confusion of imagining money claims and payments as a more or less transparent representation of physical and social realities, as opposed to a distinct system that rests on but is substantially independent from underlying social and biological existence. Baseball requires human beings who can throw, hit and run; but the rules of baseball are not simply shorthand for people’s general activity of throwing, hitting and running. Needless to say, economics education assiduously cultivates the mixing-up of the money game with the substrate upon which it is played.

2. It’s natural to think of productive and unproductive labor as two distinct kinds of employment, or at least as opposite poles on a well-defined continuum. Marx usually writes this way. But I don’t think this is right, or at least it becomes less valid as the division of labor becomes more extensive and as productive activity becomes more directly social and involves more coordination of activities widely separated in space and time, and more dependent on the accumulation of scientific and technical knowledge.

Today our collective productive and creative activity requires the compliance of a very large number of people, both active and passive. This post will never be read by anyone if I don’t keep on typing. It will also never be read if the various tasks aren’t performed that are required to operate the servers where this blog is hosted, my internet connection and yours, the various nodes between our computers, the utilities that supply electricity to all the above, and so on. It would not be read if someone hadn’t assembled the computers, and transported and sold them to us; and if someone hadn’t developed the required technologies, step by step as far back as you want to go. It would not be read, or at least not by anyone except me and a few friends, if various people hadn’t linked to this blog over the years, and shared it on social media; and more broadly, if the development of blogs hadn’t gotten people into the habit of reading posts like this. Also, the post won’t be read if someone breaks into my house before before I finish writing it, and steals my laptop or smashes it with a hammer.

All of these steps are necessary to the production of a blog post. Some of them we recognize as “labor” entitled to wages, like whoever is watching the dials at Ravenswood. Some we definitely don’t, like the all-important not-stealing and not-smashing steps. And the status of some, like linking and sharing,  is being renegotiated. Again, a factory only runs if the workers choose to show up rather than stay home in bed; we reserve a share of the factory’s output to reward them for making that choice. It also only runs if passersby choose not to throw bricks through the windows; we don’t reserve any share of the output for them. But if we were going to write down the physical requirements for production to take place, the two choices would enter equivalently.

In a context where a large part of the conditions of production appear as tangible goods with physically rival uses; where the knowledge required for production was not itself produced for the market; where patterns of consumption are stable; where the division of labor is limited; where most cooperation takes the form of arms-length exchanges of goods rather than active coordination of productive activity; where production does not involve large commitments of fixed capital that are vulnerable to disruption; then the idea that there are distinct identifiable factors of production might not be too big a distortion of reality. In that context, splitting claims on the social product into shares attributable to each “factor” is not too disruptive; if anything, it can be a great catalyst for the development of productive capacities. But as the development of capitalism transforms and extends the division of labor, it becomes more and more difficult to separate out which activities that are contributing to a particular production process. So terms like productivity or productive labor lose touch with social reality.

You can find this argument in chapters 13-14 and 32 of Capital Volume 1. The brief discussion in chapter 32 is especially interesting, since Marx makes it clear that it is precisely this process that will bring capitalism to an end — not a fall in the rate of profit, which is never mentioned, nor a violent overthrow, which is explicitly rejected. But that thought will have to wait for another time.

Marx’s “On ‘The Jewish Question'”

Over at Crooked Timber, Corey Robin has a very short post suggesting that “Islam is the 21st Century’s Jewish Question,” which has attracted a long and perhaps predictably heated comments thread. Some of the more agitated commenters at CT apparently think that such comparisons are inherently dishonest or immoral.  To me, it seems obvious that, however you weigh the similarities and differences in this particular case, the historical experience of anti-semitism is an important reference point for thinking about the way various Others are regarded today.

I don’t want to relitigate that comment thread here — except, again, to say that I don’t see anything unreasonable or offensive about the comparison Corey is making. No, the reason I’m writing this is that Corey’s mention of it reminded me of what a brilliant and profound, and profoundly misunderstood, essay Marx’s “On ‘The Jewish Question'” is.

The essay is a response to Bruno Bauer – note the additional quote marks in the title. Bauer in turn is responding to various demands for emancipation of Germany’s Jews from the legal restrictions they were subject to. Bauer has two objections. First, he says, there are no citizens in Germany, only different classes of subjects with their own distinct privileges and assigned roles. Jews have one set, Christians have another, but no one is free. Second, even if freedom were possible in Germany, Jews could only become citizens if they were willing to limit their Jewisness to private life — no special accomodations for religious observance, no maintaining their own institutions. “The Jew must retreat behind the citizen.”

Marx replies: All that is true as far as it goes. But that only shows the limitations of the liberal conception of freedom. It is true, as Bauer says, that political emancipation requires the Jews (like everyone else) to make their religion a purely private matter, but all that shows is how far short political emancipation falls of human emancipation.

Human emancipation would recognize that we exist only in relation to myriad other people, and in these relationships we are conscious, moral, rational beings, making choices about our collective lives. Political emancipation, by contrast, isolates our conscious collective life in the political sphere, leaving us disconnected egoists in our private life.

Where the political state has attained its true development, man … leads a twofold life, a heavenly and an earthly life: life in the political community, in which he considers himself a communal being, and life in civil society, in which he acts as a private individual, regards other men as a means, degrades himself into a means, and becomes the plaything of alien powers. … In his most immediate reality, in civil society, man is a secular being. Here, where he regards himself as a real individual, and is so regarded by others, he is a fictitious phenomenon. In the state, on the other hand, where man is regarded as a species-being, he is the imaginary member of an illusory sovereignty, is deprived of his real individual life and endowed with an unreal universality.

Political emancipation allows people to participate in collective decision-making but only on condition that they give up or deny any concrete, organic identity or connections they have beyond abstract citizenship. While in private life people are free to be really ourselves, but disconnected from the society we continue to depend on, we experience this freedom as being “the plaything of alien powers.”

This connects directly back to the Jewish Question: Judaism is the kind of community or collective identity that people must give up to become citizens in the liberal state. Or rather, pretend to give up:

Man, as the adherent of a particular religion, finds himself in conflict with his citizenship and with other men as members of the community. This conflict reduces itself to the secular division between the political state and civil society. For man as a bourgeois, “life in the state” is “only a semblance or a temporary exception to the essential and the rule.” Of course, the bourgeois, like the Jew, remains only sophistically in the sphere of political life, just as the citoyen only sophistically remains a Jew or a bourgeois. But, this sophistry is not personal. It is the sophistry of the political state itself. The difference between the merchant and the citizen, between the day-laborer and the citizen, between the landowner and the citizen, between the merchant and the citizen, between the living individual and the citizen. The contradiction in which the religious man finds himself with the political man is the same contradiction in which the bourgeois finds himself with the citoyen, and the member of civil society with his political lion’s skin.

While liberal political life is organized on the principle of reasoned debate between disinterested equals, it is not actually the case that inequality and particular interests disappear. One important thing to note in this passage: Here, as elsewhere, Jewishness is only one of various examples of a particular identity. Which should make clear: This is an essay about the limits of political freedom in the liberal state, not an essay about Jews. It’s an essay about “The Jewish Question,” not about the Jewish Question.

So: Under the bourgeois state (of which Marx already recognizes the northern US as offering the purest example) religion goes from being the most public question, to the most private. “Religion … is no longer the essence of community, but … the expression of man’s separation from his community … It is only the abstract avowal of specific perversity, private whimsy, and arbitrariness.” It is, in short, just a matter of taste.

In the private sphere we are all just automatic pleasure-and-pain machines; our capacity for moral and rational action is limited to the political sphere. Just look at the distinction the French Revolution made between the “rights of the citizen” and the “rights of man”:

The rights of man, … as distinct from the rights of the citizen, are nothing but the rights of a member of civil society, the rights of egoistic man, separated from other men and from the community. … It is the question of the liberty of man as an isolated monad. … The rights of man appear as “natural” rights because conscious activity is concentrated on the political act. … Political emancipation is the reduction of man, on the one hand, to a member of civil society, to an egoistic, independent individual, and on the other, to a citizen, a juridical person.

Economics, perhaps even more than other social sciences, has taken this distinction and made it doctrine. A core methodological assumption of economics is that private choices are purely arbitrary, they are given natural facts. We can’t discuss them, debate them, subject them to reason: De gustibus non est disputandum. In private life, we are animals or not even, we are mechanical objects. Where economics poses a choice, it is invariably: What should the State do?

There is a more direct connection with economics, too. While individuals in civil society are conceived of as monads, they do still relate to each other, through the medium of property. Marx:

The practical application of man’s right to liberty is man’s right to private property …, the right to enjoy one’s property … without regard to other men, independently of society, the right of self-interest. This individual liberty … makes every man see in other men not the realization of his own freedom, but the barrier to it.

Social life, to take another tack, is a series of hugely complicated coordination problems. When these problems are solved through norms or tradition, or through rational debate, we experience their resolution as freedom. We see ourselves doing what is right, because it is right. When they are solved by markets or other forms of coercion, we experience unfreedom. One person decides and the rest of us comply.

At the start of the essay, Marx poses the question: “Does the standpoint of political emancipation give the right to demand from the Jew the abolition of Judaism?” Here towards the end, it’s clear that Marx’s answer is, No. A democratic politics that allows us to act as rational beings only by denying our particular identities is no true democracy. And a private life that allows us our individuality only as arbitrary personal tastes, and in which have no organic ties or moral duties to anyone else, offers no true freedom. Marx does hope and expect that Judaism, like all religions, will eventually disappear. But that’s only possible once the separation of political life and civil society has been transcended. We will be able to dispense with religion only once we are able to act as moral agents in our daily lives. Or as he says:

Only when the real, individual man reabsorbs in himself the abstract citizen, and as an individual human being has become a species-being in his everyday life, and in his particular situation, only when man has recognized and organized his own powers and, consequently, no longer separates power from himself in the shape of political power, only then will human emancipation have been accomplished.

What Comes Before Capital?

“The wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities.'”

Everyone knows that line. If your intellectual formation is like mine, it has approximately the same status as “In the beginning God created the heavens and the earth.”

The rabbis, I’m told, used to like to point out that in Hebrew the first letter of “In the beginning…” looks like a box with three sides, and only one opening. This was to convey the message, don’t ask what happened before, or what might be happening somewhere else. The only story we care about starts here.

We all have our rabbis. But we keep asking anyway, what comes before? What comes before that first sentence of Capital, what’s happening elsewhere? What form does wealth (claims on the good life) take in societies where the capitalist mode of production doesn’t prevail? And apart from how it appears, or presents itself, what can we say about what it really is?

I think the biggest problem with how people read Capital is, they don’t take the subtitle seriously: It really is a “critique of political economy.” There’s an overarching irony, the whole thing is written under the sign of the hypothetical. (In general, I think this irony is one of the most important, and hardest, things that students have to learn in any field.) The whole book is written to show that even if everything Ricardo said was true, capitalism would still be an unjust and inhumane (and unstable, though that doesn’t come til later) economic system. But that’s not the same as saying that everything Ricardo says really is true. In my opinion — people I respect disagree — everything Marx says about the Labor Theory of Value is preceded by an implicit “even if…” It shouldn’t be interpreted as a set of positive claims about the world.

So what does Marx positively believe? For this, I think we have to turn to the early writings. I know these are deep waters, on which I am innocently paddling about in my little water wings. But in my opinion, the Economic and Philosophic Manuscripts of 1844 are the essential “before” to Capital.

In Capital, exploitation is defined in terms of the share of the product (already quantifiable; the transformation of the infinitely heterogeneous content of human activity into a mass of commodities has already taken place) to which claims accrue as a result of wage labor. But in the Manuscripts, he says

A forcing-up of wages (disregarding all other difficulties, including the fact that it would only be by force, too, that the higher wages, being an anomaly, could be maintained) would … be nothing but better payment for the slave, and would not conquer either for the worker or for labour their human status and dignity.

Or equivalently, “The alienation of the product of labour merely summarizes the alienation in the work activity itself.” What’s important is exhausting one’s creative powers on alien ends. How many channels you have on tv afterward doesn’t matter.

Alienated labor means (to take various of Marx’s definitions):  “the work is external to the worker”; the worker “does not fulfill himself in his work”; the worker “does not develop freely his mental and physical energies”; “work is not voluntary, but imposed, forced labour”; work “is not the satisfaction of a need, but a means for satisfying other needs”; the worker “does not belong to himself but to another person.” This is the non-quantifiable fact about life under life under capitalism for which questions about the distribution of commodities are a stand-in. Everything that happens in Capital, happens after this.