The return of socialist economics

Published: Sunday | May 24, 2009

Ian Boyne

The global economic crisis has exposed the weaknesses of neo-liberal economics, the inherent hazards of the market and of antrammelled liberalisation and deregulation, and has sent capitalism's advocates on the defensive.

It is now quite mainstream to bash the market system and capitalism and, in fact, everybody is getting into the act. In the April issue of Harper's magazine, there is a cover story 'Maxed Out: How Predatory Lenders Ruined the Economy'. In this essay, the author shows how the financialisation of the American economy has devastated manufacturing and significantly damaged the interests of workers.

Domestic corporate profits

"What is history really but a turf war between manufacturing, labour and the banks?" The banks were the winners up to September last year. From 1973 to 1985 the financial sector never earned more than 16 per cent of domestic corporate profits in America. In the 1990s the figure varied between 21 per cent and 30 per cent.

But during this decade it reached 41 per cent in the US financial sector, the top executives were earning 344 times more money than the average employee. And while between 1948 and 1982 average compensation in the financial sector ranged between 99 per cent and 108 per cent of the average for all domestic private industries in the US, from 1983 it has shot up reaching 181 per cent in 2007.

A mainstream magazine like the Atlantic has even gone as far as to assert that the financial sector oligarchy has captured the US state. This coming from no less an authority than a former chief economist at the International Monetary Fund (IMF), Simon Johnson, in an article in the May issue of the magazine titled 'The Quiet Coup'.

"The crash has laid bare unpleasant truths about the United States. One of the most alarming things is that the finance industry has effectively captured our government. If the IMF staff could speak freely about the US, it would tell us what it tells all countries in this situation: Recovery will fail unless we break the financial oligarchy that is blocking essential reform."

The article calls for outright nationalisation "As the IMF understands (and as the US government itself has insisted to multiple emerging market economies in the past), the most direct way to do this is nationalisation."

Mainstream publication

This is from a mainstream publication, not the liberal Nation magazine or the New Left Review. It is not only those on the far right who have been screaming that socialist economics is back. Indeed, not only has Keynesianism and Fabian socialist and progressive economics returned, but Marxian economics as well.

Some Marxists have been coming out of the woodwork these days and have received a new lease on life and a new boldness; indeed, they have experienced a resurrection, though as atheists, the irony of the description would not be lost on them. On Thursday, the Trotskyite, the World Socialist website, published the resolution, "The World economic crisis, the failure of capitalism and the case for socialism", a resolution already given the amen by the gathering of true believers. It is one of a series gloating over the global crisis of capitalism and the devastation wreaked by runaway neo-liberalism. (The same has been taking place on the In Defence of Marxism website) I have always had fundamental philosophical problems with Marxism, aside from its obvious economic failures. In this resolution passed easily no doubt by the faithful, it says, "To the workers who ask, "Why is it necessary to adopt a socialist programme? We answer because the capitalist system has failed!" This is an excellent demonstration of the kind of fallacious, non sequitur reasoning which characterises much Marxist discourse, especially by many of its political activists and activist academicians. It is a discourse inundated with philosophical naivety and nauseating unsophistication.

Fact of capitalism

The fact that capitalism has failed does not mean that its antithesis will succeed. That is like saying the fact that secularism has failed, then Christianity must be the answer. I read and listen to the Caribbean Marxists, too, and they don't exhibit any greater philosophical sophistication and intellectual rigour. They regurgitate the same tired, old rhetoric which they employ as a substitute for reasoning, and they mistake ad hominem attacks for serious critique. They'll probably just dismiss me as a "lackey of the bourgeois state", a "paid intellectual prostitute" who must sing for my supper and "dance to the tune of his blood-sucking masters". And that would be sufficient as a critique of my objections to their cherished and unchallengeable dogmas.

The fact that neo-liberal capitalism has failed the masses and that globalisation has not fulfilled its vaunted developmental claims does not mean Marxian economics would do any better, or that it would be politically feasible under present global circumstances. Politics is the art of the possible, a fact that the idealistic Marxists has fail to grasp. For Marxian economics to prove its worth it has to do more than provide an abundance of empirical data showing the failures of neo-liberalism, imperialism and capitalist "development".

The Marxists have put together some impressive facts and arguments from conservative sources themselves to show just how much capitalism has failed the masses. The current global economic crisis has proved a "blessing" to the renaissance of Marxian economics. But I am afraid they will have to do more than demonstrate the failures of capitalism. Marxists will have to prove that their economics represents a viable alternative to capitalist economics and that it is feasible and implementable in this global environment. I challenge any Marxist to debate me on this.

I have always felt that Leon Trotsky was on to something when he proclaimed that it was impossible to have "socialism in one country"; that for socialism to succeed you would need to have international working class solidarity and power. Today globalisation has deepened the power of global capitalism and made it more difficult to build that international socialist corps. The disintegration of the Soviet Union and eastern European communism has vanquished any hope of any single country building a successful Marxist economy. With the entire crisis in global capitalism, as the noted political scientist Walter Russell Mean has recently pointed out in Foreign Affairs, Western capitalism is still strong.

Third-World debts

On the Marxist website, In Defence of Marxism, we read in the "Make the bosses pay Manifesto of the International Marxist Tendency: "We demand an immediate cancellation of all Third- World debts". That is well and good if multilateral pressure is brought on creditor nations to take such an action. But the view of some local Marxists that Jamaica should unilaterally renounce the debt is appallingly naive in this era of intense globalisation. As to whether it is just for Jamaica to be paying 57 cents out of each dollar for debt and as to whether the interest rates charged are usurious and immoral is one thing. We are not arguing justice, we are arguing practicality.

What would be the immediate effect of Jamaica's cancelling its debts? Autarky. Jamaica would have to be prepared to be out of the international financial and trading system. Don't mention Argentina. Any mention of Argentina exposes you to the charge of obscurantism and ignorance as some countries are deemed too big to fail and have a level of clout which allows them to take certain risks which a small, poor, strategically insignificant open economy like Jamaica cannot take.

Unilateral actions

There are some countries which could take some unilateral actions without suffering the kinds of consequences that a highly import-dependent and indebted country like Jamaica cannot take. A country which does not have to import as much of its basic foods and raw materials has to carefully strategise with its international masters. This might be a repugnant and painful to Marxist idealists, but it is a part of the realism to which their iron-clad ideology blinds them.

Marxism shares much with religious fundamentalism. Both are closed systems, impervious to falsification and wedded to pre-modern epistemologies. Our Caribbean Marxists speak and write as though they are unaware of the profound insights from postmodernism and postmodernist philosophers like Jacques Derrida, Jean-Francois Lyotard and Michel Foucault. Orthodox Marxists hold to scientism masquerading as genuine empirical science.

Marxism, like religious fundamentalism, has its own apocalyptic (hence Marxists, like Christian end-time fanatics, salivate over crises); its chosen group (the working class, comparable to Fundamentalists' One True Religion). Marxists have their own adversary, the capitalist class and their own "Revelation" - "the objective laws of history".

Marxist economics is driven more by wishful thinking, idealism and fantasy than by a realistic appraisal of objective realities. In the same manifesto the Marxists demand "expropriation of the property of the big landowners. Nationalise the property of the transnationals". They should remind us what happened in Zimbabwe and how the working class benefited from that. PULL Marxist economics is impractical, unworkable and utopian. It is anything but scientific, though that very concept of science has undergone a Copernican Revolution since the Enlightenment.

Our Caribbean Marxists especially need a crash course in postmodernist philosophy. (Perhaps Kamau Chionesu could assist them).

As a religious person, I share many of the sentiments of the Marxists. I have the same kind of moral outrage to oppressive capitalist society and to the ravages of imperialism. But the Marxists would dismiss me as an idealistic Saint-Simonian without a scientific theory to guide me to "objective reality" (which even a reading of Hobbes and Kant should warn them against).

They subscribe to the philosophical heresy that Engels first proclaimed at the graveside of Karl Marx. In his eulogy he said just as Charles Darwin had discovered the laws of natural development so Karl Marx has discovered the laws of social development. That fed the epistemological triumphalism which has been the Achilles' heel of Marxism.

Yes, let us debate economic alternatives and let us debate socialism in all its elements. Capitalism has not delivered the goods to the masses. But that is no reason to resort to failed Marxist economics.

Ian Boyne is veteran journalist who may be reached at or