Samuel Bowles eta Herbert Gintis: Marx-en balio teoriaz

Part Six: Enter the Mathematics

(https://robertpaulwolff.blogspot.com/2021/04/part-six-mathematics-shows-up.html)

Matematika erabiliz: interpretazio neoklasikoa (kalkuluaren bidez) eta klasikoa (ekuazio linealaren bitartez)⁴

Hemen dago segida hori⁸…

(3) Addenda, sozialismoaz

1 1960ko hamarkadan ekonomiari buruz, Marx-ek idatzitakoak bereziki, hamaika lan irakurri nituen, Marx-en Alokairua, Prezioa eta Irabazia liburuxka ederrarekin hasita.

2 AEB-ko Ekonomia Politika Erradikal-eko S. Bowles, H. Gintis, M. Gordon, T. Weisskopf, J. Roemer, eta URPE-ko (Union for Radical Political Economics) beste autore batzuen lanak izan ziren ikertzekoak.

Euskal Herrira itzultzean, zertxobait argitaratu nuen. Garrantzitsuena, agian, ondoko hau: Acción Nacionalista Vasca/Eusko Abertzake Ekintzaren Ildotik.

3 The term was invented by Marxists trying to make sense of something that Marx got wrong.  Recall that when Marx wrote in the early and middle nineteenth century, he believed that he was looking at two complementary developments in the evolution of capitalism that would, in their interaction, eventually lead to a socialist revolution.

The first development was the progressive merger of many small capitals into larger and larger firms.  Competition, Marx was convinced, would lead large capitalist firms to drive smaller capitalist firms to the wall.  Although the story of the last century is complex, Marx’s intuition was essentially correct.  We live now in a world dominated by enormous multi-national corporations whose accumulations of capital dwarf even that of small nations.

Marx was also convinced that the displacement of traditional crafts first by the gathering of craftsmen into manufactories and then by the substitution of machinery for hand-crafting [“manu-facturing”] would progressively reduce the working class to a mass of easily substitutable semi-skilled workers who could with relatively little difficulty be shifted from one line of machine-tending to another as the forces of competition and supply and demand dictated.  There is no doubt that this process was under way when Marx was writing, and as Harry Braverman documents in a classic study, Labor and Monopoly Capital, the process continued well into the twentieth century.

However, the evolution of the working class has proceeded in a manner not anticipated by Marx.  What we find now in the capitalist world is stable, entrenched hierarchies of wage-and-salary earning workers whose work experiences, compensation, and life chances are so varied that nothing remotely resembling working-class solidarity has been able to develop and grow.  From a purely formal perspective, both the men and women who work on the loading-dock or the assembly line and the middle managers in suits who occupy the corner offices are wage-earning employees who do not owe their positions to ownership or control of the means of production, and who must sell their labor to live.

The labor force of a modern capitalist nation is segmented in a number of ways, by gender, by race, by age, and by educational credentials, none of which, not even the last of these, is directly related to their ability to do their jobs.  This segmentation of the work force is used by capital to intensify and solidify exploitation.   Examples abound:  the systematic paying of lower wages to women in comparable jobs;  the collaboration in the nineteenth and early twentieth century between white workers and employers to exclude black workers from industrial jobs, which gave the white workers protection from competition by black workers and enabled employers to pay those white workers lower wages;  the elaborately hierarchical system of education credentials that effectively excludes large segments of the working class from access to less physical wearing and better paying jobs.  And, perhaps most important of all, advances in transportation, shipping, and the scheduling of supplies for production that makes possible systematic outsourcing of jobs to any area of the world in which wages are low.

All of this raises a question that could not easily or naturally be posed within the theoretical confines of Marx’s analysis of capitalism, viz, Does it make sense to speak of some well-paid employees in a corporate hierarchy as being both exploited by the owners of capital and also exploiters of those below them in the wage hierarchy?  In short, can we make sense of the notion of relative exploitation?

One way to think of relative exploitation is as an extension of Marx’s claim that a variety of social or economic fragments — land-owners, financiers, middlemen, bankers — receive transfers of the surplus-labor extracted from the workers in the production process and realized as surplus-value in the market.  If profit is the monetary manifestation of this surplus value, and if some portion of that profit ends up in the pockets of persons who are not themselves owners of capital, then perhaps some of the high wages paid to corporate executives [not to speak of university professors] should be understood not as the cost of reproducing their labor-power but as a share of the surplus value extracted from less well-paid workers.

Does this mean that those in the middle or upper reaches of the wage hierarchy are not exploited, but are only exploiters, like the capitalists?  No, some modern Marxian analysts argue.  There is a structure of relative exploitation, more complex than Marx imagined, within which some individuals are only exploited [low wage workers], some individuals are both exploited and exploiters [high wage workers whose wages are secured and protected by the segmentation of the labor force,] and some individuals are exploiters only [owners of capital or those whom effectively control capital and use that control to direct some portion of the profits into their pockets.]

A classic analysis of this idea of relative exploitation, by my old friends and UMass colleagues Sam Bowles and Herb Gintis, can be found in their 1977 article “The Marxian Theory of Value and Heterogeneous Labour: A Critique and Reformulation”, Cambridge Journal of Economics, Vol. 1(2), pp. 173-192.  [A warning.  The math is somewhat formidable for us novices.]

(Beherago ikusiko dugu lan hori.)

4 There is, of course, vastly more to be said about Marx’s views in volume 1, but I wish at this point to turn to the modern mathematical interpretation of classical Political Economy… Unlike their modern descendants, the classical economists made almost no use at all of formal mathematics. Marx had a go at working out some numerical examples but mostly he botched it and it added very little to his explanation of his theories. When the modern mathematical re-interpreters of Ricardo and Marx undertook to translate their theories into equations, they had to formalize a decision that Ricardo and the others had made more or less without explicitly stating it.

In order to reduce the complexity of real economic activity to equations, economists must in effect choose between supposing that there is one dominant technique for the production of each distinct commodity and supposing that there are an infinite number of techniques for the production of each distinct commodity. To put this point as simply and formulaically as I can, they have to decide whether they are going to use linear algebra or calculus. The neoclassical assumption of an infinity of alternative ways of combining inputs to produce an output lends itself to analysis using calculus and the classical assumption of a single dominant technique of production for each commodity finds its most natural expression in systems of linear equations.

Linear algebra makes it possible to handle formally any finite number of commodities, each one represented by a single vector of inputs per unit of output. One can then manipulate what is called the unit input matrix to derive a variety of powerful conclusions. Since I may have lost many of you at this point, let me give a very simple example which will serve quite adequately to illustrate what I want to say. All this is laid out precisely and at length in my book, Understanding Marx.

Suppose we are talking about an elementary economy in which there are only two commodities, corn and iron. (What we call corn does not grow in England, of course, but the term “corn” was used by the English to mean “the dominant grain of a region,” hence the great debate in the early 19^th century in parliament as well as in the writings of the political economists over the so-called “corn laws” regulating the importation of grain from abroad.)  I have invented the following little corn/iron economy to illustrate what I want to say. Since I am now doing economics, there is no need for me to worry about the real-world relevance of what I am saying.

Suppose it takes 100 units of labor, 2 units of seed corn, and 10 units of iron to produce 300 units of corn. If we use the Greek letter l for labor value or quantity of embodied labor with subscripts indicating whether we are talking about the labor value of corn or the labor value of iron, and if we recall, what is essential, that direct labor must be entered at par since it is labor directly, not indirectly, contributed to the production of the output, then we can write the labor value equation for the corn sector in the following way:

100 + 2l_c+ 10l_i  =   300l_c

In words, this equation says that when producing 300 units of corn, the 100 units of labor directly applied in production and thus embodied in the corn output, added to the amount of labor embodied in the two units of corn used in production and the amount of labor embodied in the 10 units of iron used in production taken altogether equally amount of labor embodied in the 300 units of corn that are the output of the production process.

Using the letter p with appropriate subscripts to stand for the prices of corn and iron, the letter w to stand for the wage paid for the labor, and the Greek letter π to stand for the rate of profit, we can write the corresponding price equations for this little corn/iron model. The price equation in the corn industry looks like this:

(100w + 2p_c+ 10p_i)(1 + π)  =  300p_c

If I choose the appropriate input quantities for the iron sector and carry out a series of mathematical manipulations with which I shall not trouble you, I can demonstrate that the prices of corn and iron are proportional to their labor values, as Ricardo claimed, and also, what is really quite interesting, that these prices and labor values are independent of the wage and the profit rate, which vary inversely to one another, thereby also demonstrating the class conflict between labor and capital. All very impressive.

I spent a very great deal of time plowing through 10 or more thick difficult mathematical economics texts in each of which the theories of Ricardo and Marx were explored in excruciating detail. The big take away from all these books was that both Ricardo and Marx had been, contrary to the conventional wisdom, brilliant intuitive mathematical economists, much of whose theoretical work was sustained by this sophisticated 20^th century analysis.

But as I toiled away at my studies I noticed something curious and eventually troubling. There were symbols in the equations in these books for just about everything that Ricardo and Marx had talked about – symbols for quantities of inputs, symbols for quantities of outputs, symbols for prices of commodities, symbols for quantities of labor, and also the wages of labor, symbols for profit rates earned by capitalists. But nowhere in the equations could I find a symbol for Marx’s signature concept, labor power. Since in Capital Marx had made the distinction between labor and labor power the key to his solution to the central problem of the origin of profit, it seemed to me that any modern mathematical rendering of his theories should have somewhere a symbol for that central concept, but it was nowhere to be found. In effect, the mathematical economists I was reading, all of whom were extremely sympathetic to Marx’s theories, seemed to be saying that his story about the distinction between labor and labor power was simply, in Pooh Bah’s immortal phrase from the Mikado, merely “corroborative detail designed to lend an air of verisimilitude to an otherwise bald and unconvincing narrative.”

At this point a thought occurred to me. (Now, this is a sad tale but I feel compelled to tell it nonetheless.) Since there is no symbol for labor power, the distinction between labor and labor power plays no role at all in the formal analysis of Marx’s theories. To be sure, in the labor value equations the labor inputs are valued at par and in the price equations the price of labor has a letter, w, all its own, but the first is an assumption, not a conclusion, and the second is simply a notational convention. Could one write a set of equations that permitted us to calculate the iron value of labor and corn, rather than the labor value of corn and iron?

Iron value!? What on earth would an iron value be? Nobody ever talks about iron values or corn values but only about labor values. There might in fact be a distinction between labor power and labor and no corresponding distinction between corn power and corn or iron power and iron but if the distinction between labor power and labor did not enter into the equations then that would make no difference.

So I had a go at setting up some corn value and iron value equations and seeing what I would get. The first question – quite important – was whether one could always be sure in calculating iron values or corn values that when the equations were solved those values would be positive. After all, it would not make much sense to say that the amount of corn directly or indirectly required for the production of a unit of iron was negative! Well, a little mathematical manipulation (with some help from friends in the UMass economics department) revealed that so long as there was any surplus of any commodity anywhere in the system, all the corn values, or iron values, or labor values, or x-values in the system would necessarily be positive.

One of Marx’s most striking claims, demonstrated to be correct by the modern mathematical reinterpretations, was that the labor value of the physical surplus is exactly equal to the surplus labor extracted in the production process from the workers – a lovely mathematical demonstration of the fact of exploitation. But a little more manipulation with the equations demonstrated that this was also true for corn values or iron values. The corn value of the physical surplus was exactly equal to the surplus corn value extracted from the corn inputs in the system, and so forth.

In fact every single theoretical claim made by Marx in Volume 1 of Capital (all the claims in volumes two and three, for that matter) could be replicated using these nutty notions of corn value and iron value.

I was remarkably pleased with myself when I had reached these conclusions for I thought that I was the first person in the entire history of the discussion and commentary on the theories of Karl Marx to have even thought of this, let alone to have demonstrated it mathematically.  I told this story on my blog 10 years ago. Let me close this episode in my exposition by reproducing what I wrote there:

In 1981, I published an essay entitled “A Critique and Reinterpretation of Marx’s Labor Theory of Value,” in a journal called PHILOSOPHY AND PUBLIC AFFAIRS. [I believe it is available on-line.] In that essay, I proved an extremely important theorem that shows that Marx was wrong to impute the exploitative capacity of capitalism to the labor/labor power distinction. I was, I firmly believed, the first person ever to realize the underlying logical flaw in Marx’s argument, and to demonstrate it mathematically. The proof was not much from a mathematical point of view. Indeed, when I had first actually proved the theorem several years earlier, I was ignorant of linear algebra, and had used nothing but elementary algebra and some ingenious labeling moves. After the essay appeared [since I made the mistake of publishing it in a philosophy journal, almost no one read it who was capable of appreciating it], the brilliant, mathematically extremely sophisticated Marxist John Roemer published a reply and criticism in the journal in which, in passing, he pointed out that the same theorem had been published two years earlier by Josep M. Vegara in a monograph entitled ECONOMIA POLITICA Y MODELOS MULTISECTORIALES.

Sic transit gloria mundi

5 The distinction between labor and labor power is not the key to understanding both the exploitation that lies at the heart of capitalism. But he is clearly right that the workers are exploited. Furthermore, he is clearly right when he claims that capitalism misrepresents itself as a system founded upon freedom for all including the workers. And he is right that capitalism manages both the mystify itself and, unlike the church, even to conceal the fact of this mystification so that both workers and capitalists and the economists who analyze their doings imagine wrongly that what goes on in the capitalist marketplace is free of the clouds of mystery that surround the altar and the throne.

It was also clear to me that the sophisticated mathematical reinterpretations of the classical school of Political Economy, while they were an enormous analytical advance on the arguments of Marx or Ricardo, completely failed to capture the mystifications of capitalism or the irony in the description of capitalism as a system of “free markets.” So I put to myself a question: is there some way of revising the mathematical analysis so that it preserves the power and clarity that had been achieved by the modern reinterpreters of the classical school while at the same time, in some manner of speaking, introducing the irony into the equations? No one had ever asked this question before, so far as I could tell. Indeed, no one had ever conceived it to be a question one could ask. But I had an idea.

Let us for a moment clear away the equations and ask what Marx is telling us about the situation in which 19^th-century English workers found themselves. He is telling us that by a long historical process the workers have been deprived of control over their own labor, they have been deprived of the tools of their labor, they have been deprived even of the skills which they use in their labor.  As part of what Marx memorably called “the reserve army of the unemployed,” the workers are compelled to accept the wages that the capitalists offer and to labor in the factories in the manner and under the conditions dictated by their employers. They do not have land on which they can grow their own food if they choose not to accept employment in the factories. They do not have looms or forges, spinning jennies or lathes. They have only their own bodies which day after day they apply to the tools and raw materials presented to them by their employers.

Now, in a free market, a competitive market, a capitalist market – so all the classical Political Economists agreed — there is a single ruling rate of profit which is adjusted and regulated by the free choices that capitalists make to move their capital from sector to sector in pursuit of the largest return on their investment. If a capitalist who owns a factory that weaves woolen cloth observes that capitalists in the furniture business make a higher rate of return (and, let us recall, that in the classical school perfect information is assumed), then over time and with some adjustment that capitalist can cash in his investment in the furniture factory and shift it with to a cloth factory. To be sure, this is not a switch that can be made overnight for there is a problem with what is called “fixed capital,” but over time and more or less bumpily, the capital gets transferred to the new sphere of production. This has the double effect of increasing the amount of woolen cloth available in the market and decreasing the amount of furniture available for sale. Changes in the relative size of demand and supply alter the prices at which these goods sell which in turn reduces somewhat the rate of return in the cloth industry and increases it in the furniture industry. So by an unceasing series of such individual capitalist decisions and actions the profit rate is perpetually equilibrated. This is the familiar picture painted by Ricardo and his lesser contemporaries. The system of price equations representing the operations of a capitalist economy provides a mathematical model for this story of what goes on in the normal functioning of capitalism.

Now, since capitalism represents itself – or, more precisely, misrepresents itself – as a system in which the workers must be understood as producers of a commodity, labor, on a par with the furniture producer and the woolen cloth producer, a mathematical model of this economy must include an equation for the labor producing sector. Like all the other equations, this equation must include a profit markup.

Thus far the mystification. Ah, but the labor producers, unlike the furniture producers and the cloth producers, cannot shift their capital to a different line of production when they observe that it pays a higher rate of return, for their capital is nothing other than their bodies and the only way they can cash in their investment in their bodies is by… cashing it in, which is to say dying. This is nothing against capitalism, of course. Capitalism places no legal or other constraint on the choices of the workers. It is just an unfortunate metaphysical accident, perhaps laid at the door of Descartes if someone must be blamed, that the workers’ body and soul are inseparable this side of the grave.

Suppose we were to write a system of equations for an economy in which the workers genuinely are treated as free petty commodity producers of the commodity labor. And suppose we were to express mathematically this unfortunate constraint on the workers’ ability to move their capital into other lines of production, thus in a manner of speaking – and only in a manner of speaking – building the ironic treatment of capitalism as a free market system into the equations.  Well, because of the unfreedom of those condemned to produce labor, the rate of return in that sector may not be equal to the rate of return in the other sectors and so it must be represented by a different variable, which in my new system of equations I arbitrarily decided would be ρ or rho. What mathematical conclusions could we then draw?

Without troubling you overly with the mathematics, and, I might say, hardly surprisingly, it turns out that the total profit appropriated in the system by all of the capitalists exactly equals the profit forgone by the workers on their capital – their bodies – by the fact that they cannot shift that capital about in pursuit of a better rate of return and hence are forced to sell their output below what would otherwise be its equilibrium price. (Those who wish to see all of this demonstrated mathematically can take a look at my essay A Critique and Reinterpretation of Marxist Labor Theory of Value, … http://static.stevereads.com/papers_to_read/a_critique_and_reinterpretation_of_marxs_labor_theory_of_value.pdf) In the world Marx was looking at rho was effectively zero.

And there you have it. In a simple model that abstracts for the moment from any number of complications that in a fully developed theory would of course have to be taken care of, you can see transparently the real root of capitalism’s exploitation of workers, an exploitation, Marx makes clear over hundreds of pages, that was grounded in a long historical process leading from late feudalism to the capitalism of 19^th century England.

This is just a beginning, quite obviously, but it is I think a good beginning for it places center stage in all of its complexity Marxist conception of the essence of capitalism and of the combination of theoretical and literary devices required to capture that complexity. (…)

6 Today, I want to talk about what he got wrong or more broadly what he failed to foresee, because understanding those failures or inadequacies can help us to understand a good deal about the world in which we live.

As I see it, Karl Marx got four big things wrong or failed to foresee them. The first of these concerned how the capitalist class would evolve; the second concerned how the consciousness of the working class would evolve; the third concerned what would happen to capital; and the fourth concerned what would happen to labor. That is a lot of big things. Before I turn to them one by one, let me repeat that Marx got the very biggest thing dead right. He was right about it when he wrote and he is still right about it. One can express that one big thing in a simple sentence only nine words long and those nine words remain the most difficult nine words for the greatest economists in the world to comprehend. Here they are:

Capitalism rests on the exploitation of the working class.

The first thing Marx failed to foresee was that the capitalists, despite their vicious leave no prisoners competition with one another, would manage in a crisis to band together sufficiently to save capitalism itself. Marx was correct that the booms and busts characteristic of early capitalism would get worse and worse until there was a worldwide economic crash. But to put the matter simply in a phrase, Marx failed to foresee Keynes. He understood that the state was the executive committee of the capitalist class but he did not see that the committee would prove capable of pulling capitalism back from the brink each time its own self-destructive expansion and competition threatened its survival.

The second thing Marx failed to foresee or to appreciate was the power and permanence of the national, racial, and religious identifications that in the early days tended to set German workers against French workers, white workers against black workers, Catholic workers against Protestant workers, and all Christian workers against Muslim workers. In the second decade of the 20^th century, socialists like my grandfather confidently predicted that German and French workingmen would not willingly go into the trenches and kill one another for their capitalist masters. Indeed, at the beginning of the first world war, many socialists were pacifists, not out of religious conviction but out of a belief that workers would and ought to be united across national boundaries by their class position in the ever more international capitalist economy. One hundred years later, we are compelled to face the bitter truth that in the lives and passions of hundreds of millions of men and women worldwide, class solidarity is trumped by patriotic nationalism, religious fervor, or racial animosity.

The third thing Marx failed to foresee was that capitalism, as it grew in the way that he anticipated it would, would morph into shareholder ownership of capitalist enterprises. I have talked about this before on this blog and I will not go into any detail about something that is, after all, familiar to us all because it is the world in which we live. Since Marx insisted that the functioning of capitalism could not be traced to the personalities or desires or greed of individual capitalists but had to be understood systematically and structurally, his theory was well positioned to adapt to the new form that capitalism took, but he himself did not, so far as I know, anticipate the rise of the limited liability joint stock enterprise. The complete divorce in the general case (Jeff Bezos to the contrary notwithstanding) of ownership from managerial control is, looked at one way, the perfection and logical conclusion of the tendencies that Marx perceived in the earliest days of the development of capitalism, but of course he did not foresee how it would play out in detail.

And fourth – perhaps most important, to my way of thinking – Marx completely failed to see that a permanent steeply pyramidal structure of jobs, wages, and salaries would become the seemingly unalterable face of mature capitalism. When Marx was writing, capitalism was systematically destroying traditional crafts and guilds and breaking down structures of job knowledge and performance that had characterized the pre-capitalist era. The world that Marx was looking at seemed to be reducing the workers to an undifferentiated mass of semiskilled machine operatives who lacked both tools and skills in particular historical crafts. Indeed, it was this development which encouraged him to believe that class consciousness would grow as workers first in one factory, then in one industry, then in many industries, then in one nation, and finally worldwide would come to understand their common interest in uniting and confronting capital. But what happened in the 20^th century was the emergence of a steep pyramid of jobs and compensations. A manual worker making a barely survivable wage might, from an analytical perspective, occupy the same position in the structure of a capitalist economy as a middle manager of a large corporation making perhaps 40 or 50 times as much money, wearing a suit, getting fringe benefits, and so forth, but there was no likelihood whatsoever that the two of them would make common cause against their common exploiter. Indeed, as my two old University of Massachusetts friends and colleagues Sam Bowles and Herb Gintis demonstrated in a lovely mathematical essay, one could show that in the modern capitalist world relative exploitation had replaced absolute exploitation, so that not only did capital exploit its high paid employees, but they in turn relatively exploited employees further down in the pyramid of wages and salaries.

It follows from all of this that there is a very serious need not to reject Marx’s fundamental insight concerning the exploitative character of capitalism but rather to continue developing modern understandings of contemporary capitalism grounded in that fundamental insight and completely attendant to the realities of 21^st-century international capitalism.

This analysis, which echoes somewhat the analysis I offered in my essay “The Future of Socialism,” goes some way toward explaining to those of us still in mourning why socialism has not succeeded capitalism.

(Ikus gehigarria, beherago.)

7 I trust that is clear.  I absolve myself of all responsibility for the myriad other ways in which people have used the term.

Socialism as an organization of the social relations of production in which the means of production [what is, in a capitalist economy, referred to as “capital”] are collectively owned and managed, and in which major decisions about the allocation of those means of production and about the distribution of the goods and services produced are made collectively for such purposes as the members of the society choose.  Such a system of the social relations of production requires first that the forces of production — the technology and the social organization of production — be sufficiently far developed that their collective ownership and management even becomes possible.  It was for this reason that Marx wrote the statement to which I have so often alluded on this blog about the new order growing in the womb of the old.

Let me expand on this point for a bit, inasmuch as it is often misunderstood even by those who should know better.  The Statistical Abstract of the United States is a big fat book published annually by the U. S. Bureau of Labor Statistics.  Its many hundreds of pages are crammed with charts and tables containing breathtakingly detailed information about virtually every aspect of the American economy and population that one could mention.  A single page of a single volume of the BLS Statistical Abstract contains more concrete information about America than historians devoted to a study of medieval Europe have managed to recapture about that six hundred year period from all the documents and artifacts they have examined.  Precisely how many acres were under cultivation in Burgundy in the eleventh century?  No one knows now, and no one knew at the time.  What was the population of thirteenth century York?  At most, we have guesses extrapolated from parish ledgers and royal tax receipts.  What proportion of the population of Castile was engaged in craft production?  Who knows?  What was the gross output of wheat in Europe in 1217?  Simply to ask the question is to reveal the hopelessness of answering it.  Without vast quantities of detailed information of this sort — the information assembled annually by the BLS — any notion of the collective ownership and management of the means of production of a society is mere fantasy.

In addition to information, socialism requires a rationalization of the organization of production that makes possible large-scale collective decisions about the allocation of productive resources and labor, about sustainable schedules of compensation for labor, or  — a matter of the very greatest collective social importance — about the agreed upon rate of economic growth.  [Once again, credit where credit is due.  John Rawls is the only major political philosopher in the entire history of the subject who even discusses this question of the social rate of growth, in his principal work, A Theory of Justice.]

When Marx was writing, capitalism was still in its infancy.  Nothing had yet evolved remotely resembling the vast, highly integrated assemblages of capital that we know today as major multi-national corporations.  The rationalization of production achieved by modern capitalist corporations is the necessary precondition for the possibility of socialism.  For technical reasons that I explored at length in my essay “The Future of Socialism,” and will not recapitulate here, the major decisions taken by the masters of the modern multinationals are in their logical structure fundamentally political rather than purely economic.  In effect, the elements of economic planning have evolved within capitalism, just as Marx foresaw that they would.  The experiences of Russians in the old Soviet Union or of Chinese in the People’s Republic of China are not apposite to the question of the feasibility of socialism, save negatively, because in neither of those nations had there taken place anything resembling the development of capitalist social relations of production let alone embryonic socialism “in the womb of the old.”

Would socialism be democratic?  Yes, necessarily, because the major means of production cannot be owned and managed collectively any other way.  To be sure, a revolutionary cadre can seize control of the means of production and declare solemnly that they plan to manage those means “in the name of the people,” but we may view all such declarations with the scepticism they deserve.  Could the social relations of production necessary for the very possibility of socialism be developed by fiat “in the name of the people?”  Marx clearly thought not, judging from everything he says in Capital, and I think he was right.

Chris refers us to an inspiring experiment being carried out in the Basque Country.  Worker Cooperatives, of which there are now a great many both abroad and here in the United States, are conscious efforts to transform the social relations of production within the womb of capitalism from the ground up, rather than in the advanced sectors of capitalism, namely the huge multi-nationals.  Can socialism in fact emerge from the expansion and replication of such experiments?  I honestly do not know, and I think it would be unhelpful for me to offer opinions about a subject about which I really know very little.

As I explained in my essay referred to above, the principal obstacle to the sort of evolution toward socialism that Marx anticipated is the stratification of the labor market, a development exactly opposite to what Marx, basing himself on what he observed, believed was the direction of the transformation of labor.  This stratification seems to have destroyed the basis for the worker solidarity on which Marx was counting.

One final point in response to Michael Llenos’ comment.  Socialism as Marx understood it is not a counsel of perfection, an alternative to worldly sinfulness, a utopian dream resting on the transformation of the human spirit.  Socialism does not, for example, presuppose, or indeed have anything at all to do with, the elimination of various unpleasant individual personality traits.  Contrary to the shallow and thoughtless views of many, capitalism is not in any way, shape, or form the embodiment of greed.  Indeed, capitalism requires the disciplining and rationalization of such traits for its effective functioning.  Greed has always been with us.  Cain was greedy.  The Pharaohs of ancient Egypt were greedy.  The Roman emperors were greedy [as were many of the Roman Senators].  Medieval lords were greedy.  Viking raiders were greedy.  Incan dynasts were greedy. Capitalists too are greedy.  All of these folks were also cruel, selfish, dishonest, and self-indulgent.  Indeed, it has even been rumored that Popes have exhibited some of these unfortunate characteristics.  If, God willing, socialism one day should replace advanced capitalism [or as we somewhat optimistically used to say in the old days, “late capitalism,”] I have not the slightest doubt that there will be greedy, cruel, selfish, dishonest, self-indulgent men and women in that new world order, and some of them undoubtedly will rise to positions of great influence, where they will their positions to do quite scrimy things.  That, I am afraid, is the human condition.

Well, so much for socialism on Black Friday.  Consider this my alternative to a day at the big box stores grappling with my neighbors for discount items I do not need.

8 Let me begin by recalling the central point of my essay, “The Future of Socialism.”  (…)  I built that essay around Marx’s brilliant insight that new economic formations develop “in the womb of the old.”  I argued that central planning and the substitution of quasi-political decision making for simple response to the workings of the market was happening right now exactly where Marx would have predicted, not in government departments or on collective farms but in the executive offices of great corporations.  This transformation, a necessary precursor to socialism, is, I argued, not a consequence of the brainwashing of corporate executives by their rad-lib Ivy League professors.  It is a transformation demanded by institutional developments within corporations as they internalize decisions that can no longer be made merely by heeding market signals. 

The evolution of capitalism into an economic system suitable for socialism is happening right now.  True socialism cannot be imposed on a capitalist system unprepared for it, any more than mature capitalist production could have been introduced into medieval France by an inspired king.  Whether socialism will replace capitalism is, alas, not inevitable, or even likely, for reasons I outlined in the essay I have several times referenced.  But it is possible.

A second point, derived from my reading of Thomas Piketty’s important book, Capital in the Twenty-first Century, about which I wrote and posted a 9,000 word review three years ago.  For reasons that Piketty undertakes to explain, hereditary – or, as he calls it, patrimonial – capitalism has historically been the norm and is reemerging now, after an uncharacteristic retreat in the generation and a half after the two world wars and intervening depression of the twentieth century.  When I ask myself:  What single dramatic step would, more than anything else, move America towards socialism?,  the answer that comes back is:  Impose a 100% inheritance and gift tax on all estates greater than fifty times the median annual income of American households [roughly 2.5 million dollars].  The wealth thus taxed would become the property of the state.  Over not too much time, vast swaths of accumulated capital would be collectively owned and managed.

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