What Matthew Yglesias still doesn’t get about Marx

By Leo Panitch

I appreciate Matthew Yglesias’s recognition of the need to take Marx seriously, although the reasons for this go well beyond Marx’s foresight regarding how endemic financial crisis would be in capitalism. In fact, Yglesias is right that Marx is not unique in this respect. I chose my words very carefully when I praised Marx for the tools he gave us to understand the “contradictions” inherent in a world comprised of “competitive markets, commodity production, and financial speculation.”

For Marx, the exploitative social relations of commodity production and the anarchy of competitive markets were more fundamental characteristics of capitalism than financial speculation. For Marxists, the significance of finance lies in terms of its connection to production and competition. Moreover, the tools Marx gives us are necessary not only to understand moments of crisis. They are needed to properly understand how it is that capitalism’s fundamental characteristics of exploitation and alienation, class inequality and social isolation are reproduced in commodity production and market competition even in periods of capitalist dynamism, and how this too plays a role in generating both financial speculation and future crises.

This brings me to Yglesias’s misleading notion that just because many Western European parties originally influenced by Marxism still go by “socialist” or “social democratic” names, this means they are receptive to Marxist ideas today. Far from it. Indeed, the evolution of these parties has been one long history of distancing themselves from Marx. Anthony Crosland’s The Future of Socialism, first published in 1956, famously encapsulated the thinking of a whole generation of socialist and labour party leaders and intellectuals in Western Europe countries with the argument that the post-war “transformation of capitalism” had, once and for all, proved the Marxist analysis of capitalism wrong.

According to Crosland the post-war world had witnessed three “fundamental” changes: 1) the capitalist class has lost its “commanding position” vis-à-vis governments; 2) there had been a “decisive shift” of class power towards the working class at the expense of business; and 3) the very nature of the business class had changed in terms of the diminished power of banks and financial markets.

Notably, Crosland refused to adopt what he called “the current fashion” of sneering at Marx, who was, in his view, was “a towering giant among socialist thinkers” whose work made the classical economists “look flat, pedestrian and circumscribed by comparison…only moral dwarfs, or people devoid of imagination, sneer at men like that.” But whereas Marx had been relevant until the Second World War, Crosland insisted that after it he was not. With the assumptions that the New Deal and post-war reforms and regulations were permanent and irreversible and that they had contained capitalism’s crisis tendencies as well fundamental class inequalities, not only the British Labour Party but also such original proponents of Marxian class struggle as the German and Swedish Social Democratic parties had ostentatiously renounced any association with Marxism by the 1960s.

From today’s perspective, it is obvious how mistaken it was to think that capitalism had changed its spots. Indeed, the very notion that reforms were irreversible was already disproved by the 1970s when not only politicians like Thatcher and Regan but also European social democratic politicians concluded that the full employment and welfare state reforms had made workers too “militant” or too “lazy” and that this was causing inflation, fiscal deficits and lower productivity. When their attempts to deal with this through corporatist ‘social contract’ treaties between capital and labour (that Marx would have especially derided) failed, it didn’t take too long before they embraced the free market solutions of the neoliberals, including especially the opening up of capital markets — with Sweden leading the way in the 1980s (culminating in Sweden’s massive financial crisis in the early 1990s) and Germany and rest of Europe going even further in this direction right up to the moment when the current crisis struck in 2007.

Yglesias doesn’t get it. It is those who look back to the old regulations and reforms that are the real conservatives in terms of what is necessary, and the real cynics in terms of what is possible. While it is true that some countries’ regulations and reforms were more extensive and long-lasting than others, this mainly had to do with the strength of their trade unions and socialist political culture at the time when these reforms were introduced, and as these strengths diminished — very much encouraged by the socialist party leaders and their house intellectuals and media — the trajectory of these societies moved more and more in a neoliberal direction. As my article emphasized, Marx would not tell us to search for this or that policy fix in the face of this crisis. He would tell us to try to develop the popular revolutionary aspirations, consciousness and capacity to build the kinds of movements and parties oriented to getting rid of capitalism, and (unlike the old European social democratic parties) having the nerve to go through with it.

This would have to involve not only democratizing the state and the economy but also the media — which has played a massive role in encouraging all the fashionable sneering at Marx and that went on recent decades no less than in the 1950s. Yglesias is perceptive to note that FP‘s cover – imaginative and arresting as it certainly is — may have the effect of encouraging readers not to take Marx too seriously. It is notable that the editors’ notes to the current issue admit that the consensus among the people invited to write about “what is to be done” is more Schumpeterian than Marxian. Sad to say, this was precisely the case with the New Dealers and post-war reformers. But Yglesias seems to be very much in this camp himself, incapable of looking beyond reforms that would give us “a bit less equality” while patching up capitalism once again.

One can’t really take Marx seriously while ignoring his main message, i.e. the need for movements from below to renew “the spirit of revolution.”

Leo Panitch is Canada research chair in comparative political economy and distinguished research professor of political science at York University in Toronto, and coeditor of the annual Socialist Register.

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