In honor of May 1, Brad DeLong reposted a very interesting 2009 talk he delivered on “Understanding Karl Marx” that offers a number of criticisms of Marx that I would have enthusiastically endorsed in 2009 but which look weaker four years later. In particular, DeLong says that Marx the political activist was too pessimistic about the idea that the ruling class would agree to make economic growth pareto optimal within the context of a market economy:
[T]hat even though the ruling class could appease the working class by using the state to redistribute and share the fruits of economic growth it would never do so. They would be trapped by their own ideological legitimations–they really do believe that it is in some sense “unjust” for a factor of production to earn more than its marginal product. Hence social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would collapse or be overthrown. The Wall Street Journal editorial page works day and night 365 days a year to make Marx’s prediction come true. But I think this, too, is wrong.
To me that unquestionably looked wrong as of 2009. But in the interim, those Wall Street Journal editorial page tendencies have grown much stronger. You see a rising tide of Rand-inflected moralism about market outcomes and a reduced emphasis on Friedman-style pragmatism. You also see a sharply reduced emphasis on belief in any kind of macroeconomic stabilization policy, in favor of a “let them eat cake slash move to North Dakota” moralism about unemployment. Last but by no means least, it really has become the conventional wisdom among American elites that the appropriate policy response to fiscal imbalance in a time of high and rising income inequality is to restore balance by reducing the scope and generosity of social insurance programs.
Marx believed that capital is not a complement to but a substitute for labor. Thus technological progress and capital accumulation that raise average labor productivity also lower the working-class wage. Hence the market system simply could not deliver a good or half-good society but only a combination of obscene luxury and mass poverty. This is an empirical question. Marx’s belief seems to me to be simply wrong.
This is an empirical question and I continue to believe that Marx’s belief is wrong. But the fact is that profit margins are high and rising while wages are at best stagnating. My view is that this is a cyclical phenomenon that represents a failure of the technocratic apparatus of macroeconomic stabilization. But to me the striking political fact is that I hear more and more people disagreeing with me about this not only on the left but on the right. Marx’s thought has its origins in the classic economics of Smith and Ricardo, and the growing popularity of neo-Ricardian ideas—ideas that take the form, no this isn’t a massive policy failure it just reflects the inevitable forces of technology/globalization—on the political right ties in to the first point about the apparatus of ideological legitimation.
In summary, I’m not a Marxist. But I worry that political conservatives are going to turn me into one. My view is that full employment and robust systems of redistribution from the more fortunate to the less fortunate are possible. I see real evidence for this in the world. The Obama administration has actually enacted a lot of redistribution programs, and the government of Australia has maintained consistent full employment policies for a long time now. But the collapse of the Soviet Union, a good thing on its own terms, has had the bad consequence of breeding massive complacency among the upper classes in the West. It used to seem important to people in the rich countries to prove that market economies not only could but in fact would lead to broadly rising living standards. But today we’re living in a 401(k) world.