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Sydney Ideas Sydney Ideas Key Thinkers Lecture SeriesKey Thinkers Lecture Series

Karl Marx

Overheads used by John Buchanan12 August 2009

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IntroductionIntroduction

• The pleasure of ideas and thinking

• Arts revival

• Consumer-driven approach

• Question: Why is Marx still relevant and exciting?

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The Challenge: Where do you begin?The Challenge: Where do you begin?• Marx as historical figure

• Marx as political influence

• Academic ‘Marxism’ Industry

• The two Marx’s

• Revolutionary / activist

• Researcher / analyst

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Bases for evaluationBases for evaluation• Disciplines: history, law and economics

• Outlook of an applied labour market researcher

• Former environment, student and union activist

• Understanding social realityie contributions to analysis/systematic thinking

• Case studies from the world of work

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Structure of PresentationStructure of Presentation• Essentials of his life and politics

• The essentials of his analytical legacy• Social philosophy• Historical materialism• Political economy

• Assessing his analytical legacy• analytical outlook (ie predisposition)• analytical leads (ie history and political economy) • analytical mode (ie epistemology)• analytical limits (ie closures)

• Conclusion

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Essentials of his life• Remarkable career

• Remarkable support (friend + wife)

• Remarkably common weaknesses

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Analytical Essentials (I) : Analytical Essentials (I) : Social PhilosophySocial Philosophy• Connoisseur of paradox + contradiction

=> grasping dialectal dynamics• Key human traits

- need to consume- ability to produce

• Key features of human existence- scarcity- surplus

• Distinctiveness of human potential- capable of so much more

- projective consciousness

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Marx’s Essentials (II): Historical MaterialismMarx’s Essentials (II): Historical Materialism

ProjectiveConsciousnessCooperates in setting of scarcity and surplus

Forces of production- materials- technology- labour

Mode of production- Asiatic- Ancient- Feudal- Capitalist

Politics Ideology+ +

Law CultureSuperstructure

Relations ofProduction

ie property relations

Socialformation

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• Example: Brenner on role of the peasantry – causality contingent

Analytical Essentials (II): Analytical Essentials (II): Historical MaterialismHistorical Materialism

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• Marx’s great project

• Distinctiveness of capitalism: world of commodities

• Three distinct dynamics of capitalism:– trade cycle [Capital Vol I]– growth dynamics [Capital Vol II]– falling rate of profit [Capital Vol III]

Analytical Essentials (III): Analytical Essentials (III): Political EconomyPolitical Economy

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• Markets long predate capitalism– but primarily for use values– C M C

• Under capitalism markets predominate– Overwhelming for exchange value

– M C M’

Distinctiveness of Capitalism: outwardly a Distinctiveness of Capitalism: outwardly a world of commodity exchangeworld of commodity exchange

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Profits

Employment

Wages

Employment

Unemployment

WagesProfits

New Technology Investment

[Capital Vol I]

Trade Cycle: understanding booms/busts

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Understanding how output, income and expenditure rise (Capital Vol II)

Two Sector example: capital goods and consumption goods (ie Departments I+II)

→ Key issue: flow of capital, labour and surplusinvestment, wages and profits

: provided capital and labour replenished + profits ploughed back in necessary ratios => steady state growth possible

Growth theory:

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→ But challenges are real

: differential rates of productivity growth between sectors

: consumption patterns don’t automatically adjust

: surplus can be misallocated

=> Potential for crisis of ‘structural adjustment’

Growth theory:

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• Capitalists ↑ investments to ↑ profit by ↓employment- BUT: if surplus does not rise, profits fall

“Wages must not rise faster than growth in productivity”

=> Crisis in profitability is always potentially there

Falling rate of profit: The Key Driver [Capital Vol III]

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• This is a tendency, not a certainty. Counter trends include:– New inventions cheaper goods + ↑ demand (Marx)

– Mergers & acquisitions concentrations of capital and scale economies (Marx)

– Wages fall below subsistence level (Earned income tax Credits)

– Foreign trade: export capital, import raw materials and consumer goods (“Globalisation”)

=> Crises can be avoided

Falling rate of profit: The Key Driver [Capital Vol III]

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1. Concentration of means of production abolish private property

2. Labour constantly reorganised:

co-operation, re-divisions of labour + united with science

abolish private labour

3. Creation of a world market

Capitalism grows but in a contradictory way via crises and cycles.

Whether crises are terminal is an empirical not conceptual question

Marx’s three cardinal facts of capitalist production

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Assessing the analytical legacy

• Predisposition

• Analytical leads

• Mode of inquiry and presentation

• Closures

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Analytical Predisposition I

• The power of paradoxesnon-linear thinking

• Understanding dynamism/tendencies and countervailing tendencies

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Analytical PredispositionAnalytical Predisposition• The great taboo: What is wrong with the private

property system?ie. Questioning of established social relations

• Legacy- opens up space

: analytically: politically/policy

• Example - Swedish union wages policy + Wage Earner Funds

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Analytical LeadsAnalytical Leads• The importance of production and social surplus

• Legacy - offers powerful leads for inquiry

• Example- rising non-standard employment + accumulation based on inequality

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0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

years

prof

it ra

tes

NONFARMNONFARM NONMFGRMFGR

Source: Robert Brenner (UCLA) "The Boom and the "Bubble" (Verso 2002)

US net profit rates, 1948-1999(adjusted for indirect business taxes)

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Retained EarningsDividendsInterest

1990-96(%)

403624

Source: Robert Brenner, The Economics of Global Turbulence, New Left Review, No 299, June, 1990

1950-65(%)

7525

0.01

Retained earnings, interest and dividends 1950-65 - 1990-1996

Distribution of US profits in manufacturingDistribution of US profits in manufacturing

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Macro circuits: households and firmsMacro circuits: households and firms

Composition of DemandDistribution of income Tastes Distribution System

Households by Type:Size/no. of personsEconomically activeWelfare/private pension

Composition of EmploymentManufacturing/services/governmentFull-time/part-timeTemporary/permanent Male/female Manual/non-manual

Firms by SectorManufacturingServicesPublic

Source: Froud etal 1997, ‘From Social Settlement to Household Lottery: Economy and Society’, Vol 26, No 3, 1997 pp340-72

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Analytical Mode (epistemology)Analytical Mode (epistemology)• Pragmatic realism• Legacy

- conceptual precision: historical + logical- immense appetite for the empirical- validation through practice

• Example- skill formation problems in Victorian manufacturing

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Marx’s method of inquiry

2. Historical analysis3. Structural analysis

1. Research 4. Presentation

5. Validation

The Challenge for Victorian Manufacturing:Deployment Crushing Development of Labour

Excess capacity

Intense competition

Skill impacts•Direct•indirect

“Farmers eating their seeds”

New organisational forms

Fuels new revitalised growth path

Breakdown in on + off job training

Changing role of large workplaces

Implications:(i) limited capacity to handle:•New skill requirements•Established skill requirements(ii) Victorian innovation provide future pointers

Scenario A: Upward Spiral•‘Turning the tide’•Building new capacity•Modernising existing capacity

Scenario B: Downward Spiral: steady slide of manufacturing

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Method of presentationMethod of presentation

• Drew on all realms of human understanding to grasp the dynamism of capitalism

- Combined both ‘science’ and art

• ‘Capital’ as a work that captures all facets of social complexity

- Interest in the ‘artistic whole’

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Analytical ClosuresAnalytical Closures• Technicist and reductionist (tendencies)

- problem shared with liberals (eg Adam Smith)• Legacy

- limits analytical and political possibilities in the current situation

- neglected dynamics of consumption• Examples

- labour as a commodity (Biernacki 1995)- consumption and status anxiety (Schor, Frank, de Botton)

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ConclusionConclusionWhy is Marx still relevant and exciting?

• Analytical predisposition ► opens up space

• Analytical categories ► powerful leads in inquiry

• Analytical approach ► links theory, data and practice

• Analytical closures: can be transcended

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ConclusionConclusionBasically:

Marx offers powerful pointers for understanding

the past and present to better guide the struggle

for a more just future

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References: K.Marx & F.Engels:The Communist Manifesto, originally published 1848K.Marx: Contribution to a Critique of Political Economy, originally published in 1859 (especially preface and

introduction)

Commentaries:(a) General overviewFrancis Wheen, Karl Marx. A Life, Fourth Estate, London, 2000Jonathan Wolff, Why read Marx today?, Oxford UP, 2002

(b) Historical materialismJohn McMurtry, Structure of Marx World View, Princeton UP, 1978

(c) Political economyMichael Lebowitz, ‘Karl Marx: The Needs of Capital vs. the Needs of Human Beings ’ in Douglas Dowd (ed),

Understanding Capitalism. Critical Analysis from Karl Marx to Amartya Sen, Pluto Press, London, 2002 pp 17 - 36

Francis Wheen, Marx’s Das Kapital. A Biography, Allen and Unwin, Sydney, 2006

(d) Marxian Analysis of the current situationMeghnad Desai, Marx’s Revenge. The Resurgence of Capitalism and the Death of Statist Socialism, Verso, London

2002Robert Brenner, ‘Towards the Precipice’, London Review of Books, Volume 25, No 3, 2003.Robert Brenner, JeongSeong-jin, ‘Overproduction not Financial Collapse is the Heart of the Crisis: The US, East

Asia and the World’, The Asia-Pacific Journal, Vol 6-1-09, February 7, 2009 [http://www.japanfocus.org/articles/print_article/3043]