Economics of the Future: Winning the Future

[This is the second of two related posts. The first one is directly below.]

In this review of two books--both Marxian views of contemporary economics-- in the London Review of Books (February 3, 2011), Benjamin Kunkel articulates his own ideas on what economics can tell us about our present and future, based in part on these books.

I'm not going to review his review but simply jump to what I understand as his basic argument and conclusion, and then to the conclusion I draw from that. The problem capitalism faces is having too much money (money it can't invest because markets are already saturated so there's no point in making more stuff), which throws the producer-consumer system out of whack, showing up first of all as decreasing profits. For awhile recently, that surplus went into unreal estate and other fictitious financial fields, but we know what happened with all of that.

Part of the problem--and this is where Marx comes in--is that capitalism is not used to dealing with the fact that labor has to be paid enough to be consumers of the products it makes. There always exists "the fundamental antagonism between capital and labour, with their opposing pursuits of profits and wages..." But even with strong labor unions and relatively enlightened capitalism,"the antagonistic nature of class society nevertheless prevents such a balance from being struck except occasionally and by accident, to be immediately upset by any advantage gained by labour or more likely by capital."

So that's not the entire answer, nor could it be, because there's still the problem inherent in capitalism--the whole idea is to make more money on the stuff you make than you spend on producing it, and the surplus is often way more than even the grossest plutocrats can spend (which is one reason that corporations are sitting on two trillion bucks while unemployment is a shade under 9%.)

In the past that surplus went into huge investments, sometimes by corporations but quite often the much bigger investment projects led by government: "Examples on a grand scale would be the British boom in railway construction of the 1820s, the Second Empire modernisation of Paris, the suburbanisation of the US after World War Two, and the recent international pullulation of commercial and residential towers..."

Now add the huge factor that Marx didn't figure on, and that even most contemporary economics ignores: the ravaged Earth. "In the recently published Ecological Rift: Capitalism’s War on the Earth, John Bellamy Foster and his Marxist co-authors refer to the identification by a group of scientists, including the leading American climatologist James Hansen, of nine ‘planetary boundaries’ that civilisation transgresses at its peril. Already three – concentrations of carbon in the atmosphere, loss of nitrogen from the soil and the extinction of other species – have been exceeded. These are impediments to endless capital accumulation that future crisis theories will have to reckon with..."

Add to that Peak Oil and you've got problems on a scale that threaten to wreck not only the endless growth mandated by classic capitalism, not to mention its habitual predation, but any chance at the "steady-state" economy the world would otherwise be evolving towards, at least as an alternative to economic suicide.

Now this is about where Kunkel leaves off. He offers no prescriptions. But to me they are obvious: that surplus goes into massive investments necessary if civilization has any chance of transitioning into the future more or less intact. The ravaging of the planet means that there are places for that surplus to go, stuff to invest in, that just happens to be stuff we need in order to survive. They include the kind of investments in a clean energy industry that President Obama is sponsoring in his "Winning the Future" initiative, which are similar in kind if not quite up to the scale that the leaders of China are instituting, among others.

They have to be bigger, but they can't stop there. Investments are required in the means to reduce and virtually eliminate carbon pollution, and control other greenhouse gases. Investments are required in infrastructure of all kinds--physical and organizational--to cope with the inevitable effects of the Climate Crisis that are in the cards, due to past carbon pollution.

All of this is necessary to save the future--I've been saying that for awhile now, of course. Only this time, the argument is also based on economics. It's a way for capitalism to save itself, maybe. That this analysis comes from Marxian analysts is just too damn bad, but sooner or later capitalism is going to have to get over itself. It will be the hard way or the easy way. Well, there is no easy way. But some ways are easier than others, and this way is the easiest--and the most hopeful--I've seen.

Economics of the Future: Marx on Paper

Like most people--including (especially) those who define and disdain Marxism--I haven't read Marx, or very much of him. While his name is a curse word in American discourse, in England at least not everyone is afraid to even read his work. And Terry Eagleton is one of those not even afraid to write about him.

He's got a review in the March 3 London Review of Books of a book by another Brit, Eric Hobsbawm, called How to Change the World: Marx and Marxism 1840-2011. It's the latest of several interesting reviews in that publication about Marx's economics or Marxian economic analyses. It's not the one I find most interesting, but it's probably a good idea to clear the air about Marx with a few quotes from it.

Eagleton asks why Marx is in such disrepute--he figures this began in the mid 70s, though here in the U.S. it's more like the 80s. The fall of the Soviet Union was widely seen as the last bit of evidence that Marx was wrong, as well as advocating a system of evil. On that advocacy, people like me in my generation took the prevailing bombast in the depths of the Cold War with a hefty grain of salt. Because we were against the Vietnam War and the excesses of capitalism, we were called Marxist tools, or even more extremely, as following the dictates of our Soviet Communist masters. That was a laugh. We knew it wasn't true about us, so it seemed likely a lot of other bullshit being promulgated about Marx wasn't true either.

What little we knew about Marx--like his adoption of Hegel's thesis/antithesis/synthesis, the class struggle, etc.--had nothing logically to do with Soviet totalitarianism. Stalin was more in tune with Hitler than anything we knew about Marx. Eagleton/Hobsbawm support that view, on the advocacy("Revolution was to be seen not simply as a sudden transfer of power but as the prelude to a lengthy, complex, unpredictable period of transition;" "the word ‘dictatorship’ in the phrase ‘dictatorship of the proletariat’, used by Marx to describe the Paris Commune, means nothing like what it means today" ) as well as economic analysis.

Demonizing Marx has a handy class-based utility: without factoring in "labor" (i.e. everybody except the rich captialists), economic analysis doesn't have to take their interests or their worth into account. And that's been the pattern. Marx didn't invent the class system--which is pretty obvious to the English, where classes have been central to their history for centuries. It is obviously in the interests of the rich plutocrats of America to expunge the very notion that there are classes here. There's a certain romantic appeal to the notion, but there are bosses and the bossed and everybody knows it. Just as there are producers and customers, although the fact that a lot of those customers or consumers are also labor is what a lot of these economic analyses leave out. (And incidentally, according to Eagleton, Marx had high praise for the middle class.)

These oligarchs also have a vested interest in the idea of capitalism triumphant--the perfect system. Why not? It's been perfect for them. The only way that makes sense is if you ignore most of the world and what happens there. The idea has been made more difficult to stomach by the capitalist-fueled Great Recession, and near Greatest Depression. So at least in England some are going back to check out what Marx actually wrote.

But even so, as Eagleton points out, the contemporary analysis of real world economics and actual capitalism must take into account one particular situation that Marx did not clearly foresee:

"Capitalism may be teetering on the verge of ruin, but it may not be socialism that replaces it. It may be fascism, or barbarism. Hobsbawm reminds us of a small but significant phrase in The Communist Manifesto which has been well-nigh universally overlooked: capitalism, Marx writes ominously, might end ‘in the common ruin of the contending classes’. It is not out of the question that the only socialism we shall witness is one that we shall be forced into by material circumstance after a nuclear or ecological catastrophe. Like other 19th-century believers in progress, Marx did not foresee the possibility of the human race growing so technologically ingenious that it ends up wiping itself out."

The runaway consequences of human-made technologies--notably the Climate Crisis-- have changed the game, big time. While setting the record straight and gleaning Marx on paper for any relevant insights to the present and future are reasonable activities, what interests me has more to do with an analysis of the economics of the future that makes sense, regardless of its inspirations. As it turns out, there is such an analysis, which provides a guide to the future that at least gives us a chance to avoid humanity wiping itself out. That's the topic of my next post on this subject.