Friday, February 20, 2015

A Greek Marxist

Yanis Varoufakis has written a piece that appeared in the Guardian recounting his Marxist views and their relevance in today’s economic climate[1]. I will try to recount some of his observations as they also lend a light upon the current Greek crisis. Greece is a challenging country. I had a company there once and unlike any of my other companies could never seem to get it started. There was one bureaucratic roadblock after another, one reason for delay, one need for another person, added space, and more time. Greece was and is fundamentally dysfunctional. This is quite strange because the Greeks outside of Greece are very entrepreneurial, very productive, and very successful. Thus one may ask; what does the Greek peninsula do to falter basic Greek capabilities?

Let us examine Varoufakis and his journey with Marx. He states:

My view on this dilemma has always been that the powers that be are never perturbed by theories that embark from assumptions different to their own. The only thing that can destabilize and genuinely challenge mainstream, neoclassical economists is the demonstration of the internal inconsistency of their own models. It was for this reason that, from the very beginning, I chose to delve into the guts of neoclassical theory and to spend next to no energy trying to develop alternative, Marxist models of capitalism. My reasons, I submit, were quite Marxist.

His argument is that capitalism is flawed and to demonstrate this fundamental flaw and to demonstrate it is necessary not to examine and defend Marx but to examine and explain the flaws of capitalism itself, many which he claims are self-evident from the current crisis.

He sees the Marxist world as did Marx, and he recounts it as follows:

Marx created a narrative populated by workers, capitalists, officials and scientists who were history’s dramatis personae. They struggled to harness reason and science in the context of empowering humanity while, contrary to their intentions, unleashing demonic forces that usurped and subverted their own freedom and humanity.

The Marxist view of the existence of disparate but well defined “groups” rather than individuals was a means to explain the basis for the ultimate clash via his dialectic process. He continues with his dialectic understanding by stating:

This dialectical perspective, where everything is pregnant with its opposite, and the eager eye with which Marx discerned the potential for change in what seemed to be the most unchanging of social structures, helped me to grasp the great contradictions of the capitalist era. It dissolved the paradox of an age that generated the most remarkable wealth and, in the same breath, the most conspicuous poverty. Today, turning to the European crisis, the crisis in the United States and the long-term stagnation of Japanese capitalism, most commentators fail to appreciate the dialectical process under their nose. They recognize the mountain of debts and banking losses but neglect the opposite side of the same coin: the mountain of idle savings that are “frozen” by fear and thus fail to convert into productive investments. A Marxist alertness to binary oppositions might have opened their eyes.

Here he posits some Marxist opposition yet he is near impossible to follow as to just what that binary opposition is. The US economic problems are fundamentally political and secondarily structural. The core to the collapse in 2008 was a result of political changes in the late 1990s as well as accomplices in Government who facilitated and then protected those whose actions led to the collapse. One must recall that it was the Government housing agencies which led the way with overextending in real estate and that were Government action and not a rational market response.

The Marxist view of anti-individualism, the existence and commonality of labor, may have had validity in the 19th Century but the core changes in the economy today are fundamentally driven by the destruction of that commonality. Production line workers are replaced by robots, the ultimate Marxist proletariat. Technology is fundamentally individual but it requires effort, more effort than just “showing up” at the assembly line. He continues:

Both electricity and labour can be thought of as commodities. Indeed, both employers and workers struggle to commodify labour. Employers use all their ingenuity, and that of their HR management minions, to quantify measure and homogenize labour. Meanwhile, prospective employees go through the wringer in an anxious attempt to commodify their labour power, to write and rewrite their CVs in order to portray themselves as purveyors of quantifiable labour units. And there’s the rub. If workers and employers ever succeed in commodifying labour fully, capitalism will perish. This is an insight without which capitalism’s tendency to generate crises can never be fully grasped and, also, an insight that no one has access to without some exposure to Marx’s thought.

His observation above is of merit. Indeed one sees new workers trying to seek employment by commoditizing themselves as what they perceive are interchangeable units of production. In reality business needs flexible and creative workers. I have often said and have often acted upon the selection of a good High School grad versus a University post grad. It is essential in today’s world to have an employee who can adapt rather than conform. That being so, the concept flies in the face of Marx.

The author continues:

If capital ever succeeds in quantifying, and subsequently fully commodifying, labour, as it is constantly trying to, it will also squeeze that indeterminate, recalcitrant human freedom from within labour that allows for the generation of value. Marx’s brilliant insight into the essence of capitalist crises was precisely this: the greater capitalism’s success in turning labour into a commodity the less the value of each unit of output it generates, the lower the profit rate and, ultimately, the nearer the next recession of the economy as a system. The portrayal of human freedom as an economic category is unique in Marx, making possible a distinctively dramatic and analytically astute interpretation of capitalism’s propensity to snatch recession, even depression, from the jaws of growth.

Somehow he sees this power of “capital” and its control over “labor” as the ultimate Marxist dialectic. That view is in sharp contrast to the changing reality of the evolving entrepreneurial world. Greeks leave Greece and prosper by adapting, by being individuals, not by being cogs. In Greece, so many line-up at the dole of Government jobs, lack creativity, and become the Marxist pool of labor.

He then discusses the issue of markets. Namely “markets” as a mechanism to deal with everything in our daily lives from health care to pollution control. He states:

In his recent book Never Let a Serious Crisis Go to Waste, the historian of economic thought, Philip Mirowski, has highlighted the neoliberals’ success in convincing a large array of people that markets are not just a useful means to an end but also an end in themselves. According to this view, while collective action and public institutions are never able to “get it right”, the unfettered operations of decentralized private interest are guaranteed to produce not only the right outcomes but also the right desires, character, ethos even. The best example of this form of neoliberal crassness is, of course, the debate on how to deal with climate change. Neoliberals have rushed in to argue that, if anything is to be done, it must take the form of creating a quasi-market for “bads” (eg an emissions trading scheme), since only markets “know” how to price goods and bads appropriately. To understand why such a quasi-market solution is bound to fail and, more importantly, where the motivation comes from for such “solutions”, one can do much worse than to become acquainted with the logic of capital accumulation that Marx outlined and the Polish economist Michal Kalecki adapted to a world ruled by networked oligopolies.
Neoliberals have rushed in with quasi-market responses to climate change, such as emissions trading schemes.

Indeed markets have limits, and sometimes economists tend to value them where they really do not belong. Take the market mechanism to control pollution or carbon emissions. Frankly, if it is a problem, then the solution is technical, not political, that is a “market” solution. All too often these “market” solutions are euphemisms for political beliefs. A prime example is the Pigou tax. Some neo-liberal economists are enamored with them. They see them as a fancy and efficient way to control a perceived problem. In fact if it is a technical problem, carbon gas, then the solution must be a technical one, not a political one.

Finally he makes some interesting remarks as to the mathematical characterization of economics.

Why did Marx not recognize that no truth about capitalism can ever spring out of any mathematical model? If I am right, Marx knew what he was doing. He understood, or had the capacity to know, that a comprehensive theory of value cannot be accommodated within a mathematical model of a dynamic capitalist economy. He was, I have no doubt, aware that a proper economic theory must respect the idea that the rules of the undetermined are themselves undetermined. In economic terms this meant a recognition that the market power, and thus the profitability, of capitalists was not necessarily reducible to their capacity to extract labour from employees; that some capitalists can extract more from a given pool of labour or from a given community of consumers for reasons that are external to Marx’s own theory.

Indeed, mathematical models in economics work if they are ex post facto accounting models, dealing with tautological facts, but all too often stretch the slightest truth when they prognosticate.

As a closing statement he appeals to the perceived loss of human equality. He bases that view on the following observation:

My personal nadir came at an airport. Some moneyed outfit had invited me to give a keynote speech on the European crisis and had forked out the ludicrous sum necessary to buy me a first-class ticket. On my way back home, tired and with several flights under my belt, I was making my way past the long queue of economy passengers, to get to my gate. Suddenly I noticed, with horror, how easy it was for my mind to be infected with the sense that I was entitled to bypass the hoi polloi. I realized how readily I could forget that which my leftwing mind had always known: that nothing succeeds in reproducing itself better than a false sense of entitlement. Forging alliances with reactionary forces, as I think we should do to stabilize Europe today, brings us up against the risk of becoming co-opted, of shedding our radicalism through the warm glow of having “arrived” in the corridors of power.

Instead of bemoaning his failure to be with the masses, he should be happy that the masses have the ability to travel. The economic messes we have, albeit shabby at times, have actually enabled the masses to live better lives and enjoy a modicum of equality amongst the power elite.