This past Tuesday I had the chance to attend a lecture by Simon Head organized by the New School economics department and SCEPA. Head’s presentation had an interestingly bold question to answer that I am sure attracted most of the audience, myself included. Was Marx Right After All?
Simon Head is a Senior Fellow at the Institute for Public Knowledge at NYU, a Senior Member of St Antony’s College, Oxford, Director of Programs at the New York Review of Books Foundation, and a contributor to The Review. His latest book “Mindless: Why Smarter Machines are Making Dumber Humans” has received media attention, and Simon himself has been interviewed by the New York Times. In it Head promotes the idea that modern technological devices are used by the services industry in order to optimize production, without caring about the dehumanizing effect caused by such process. This of course had an influence in his evaluation of Marx’s predictions.
The lecture started with Simon distinguishing between two routes one might take in order to evaluate the historical performance of Marxism. The first one, was simply to study the history of the Soviet Union and the Chinese Revolution. This route, he argued, was filled with a terrible human loss that derived from the atrocities committed by these regimes. The second route, he identified with the role the Social Democratic Party of Germany had in the process of industrialization that the country went through years before the First World War. Germany’s industrialization was remarkably different than England’s, the latter being the primary “input” from which Marx developed his analysis of the capitalist mode of production.
England’s industrialization, in contrast to Germany’s according to Simon, was characterized by extremely precarious working conditions. This was used by Marx to emphasize some aspects that he considered inherent to capitalism itself, namely the alienation of the proletariat, the incapacity of man to self-realize itself, and the horrible living conditions. Germany’s industrialization on the contrary saw an active role of the Social Democratic Party, which, according to Simon, was determinant in the rise of the German welfare state. This distinct processes of evolution become important once they are considered related Marx’s prediction of the eventual fall of the system as a whole.
In this context, the rise of the welfare state is a countertendency that emerges from what Marxist called the superstructure. Simon emphasized a couple of times that the construction of the welfare state (he also used the example of the U.S.) are motivated through political pressure. Therefore, the causal relation no longer goes from the material base (the economy) to the ideological and political structure, but in turn we have something akin to a hermeneutic loop, both of them depend from and affect each other. Due to this it is possible to realize why Marx’s apocalyptic prediction never came to be. However, there is nothing to fear for us who like gloomy predictions about the future, since (and this is how he wraps it all up with his book) the services sector of the economy presents some of the characteristics Marx identified in the 19th century industrial sector of England. Thus, it serves as a force that pushes the system towards its intended path of destruction.
Despite all of this, at the end of this story Marx is still wrong, which is an answer that no longer surprises me given the current state of economic science. However, I have some problems with how we reach such a conclusion. First of all, the idea that the superstructure can have effects on the material base was already present in Marxist thought. Mao, realized this and that motivated him to put forward the Cultural Revolution. The reason for this lies in the normative nature of economics. As human beings theorize about their economic relations (economics) and reenact such thoughts during their social life (economy) the superstructure has influence on the material base (See Warren Samuels (1988)). However, the question now must center itself on the degree of influence it can perform.
This brings me to a comment of one of our own NSSR economics students during the talk regarding global value chains. Despite the rise of adequate working conditions in first world countries, big firms have sought a cheap labor force in poor countries. In order to guarantee a pool of cheap labor, there is a tendency to push neoliberal reforms in these countries, which are in turn not compatible with a welfare state. This brings forward something that my professors like to emphasize: capitalism is a profit-driven system, and one way to increase profits (broadly speaking) is to reduce wages.
Was Marx Right After All? I don’t know, but as long as we perform analysis only looking at the so called “developed economies” we might never find out.