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Critique of Nov. 6 Economic Crisis Conference Announcement (original version)

The following are the original, October 29, 2010 version, and the November 3 version, of the article. The revised version of November 11 is here.

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October 29, 2010 version

By Stephen Block (Montreal).

Marxists need to find their way to the Keynesian economic left, its only true prospect to solve what they believe now ails the world

[Editor’s note: The following is a revised version of the article, submitted by the author on November 3, 2010. The original version of October 29, 2010 is here.]

First, thanks for the invitation to make a few comments.

My initial comments were to bear on the incessant and irresolvable disputes between Keynesians and Marxists and more generally between “social democrats” and Marxists, a key one revolving around the jettisoning of labour value theory from the latters’ concerns.

So let me put that into a larger context and at the same time address the theme of your conference.

The [“Economic Crisis & Left Responses”] conference proposes to examine such issues as a “double-dip recession”; then you state that

The U.S. government’s efforts to prevent another Great Depression have left it saddled with a serious debt problem that could impede efforts to stabilize the economy for a long time to come. The future is especially uncertain, and “the new normal” may prove to be very difficult, economically and politically.

Let me just address what you have already undertaken in this brief proposal.

The language used in the above paragraph really is the language of mainstream (and neoclassical) economics. The left, to be left while being aware, should not be adopting this type of language, nor the line of analysis it implies. What I believe and have believed for a good long time is that the Marxist left has been inevitably led to this path because of a poor comprehension of, or an incomplete overview of economics and economic policy-making of the 20th century. Here, in a nutshell, is where I believe Marxism has gone wrong and why it is now inching closer to embracing theories which are entirely antithetical and antipathetical to sound left thinking.

First, Marxists see the world in bifurcated bi-polar terms: the capitalist (theoretical) world and the Marxist (theoretical) world. Either one addresses capitalism and attempts to destroy or abolish it, or one does not and is the enemy. Accordingly, no other theories are pertinent, workable, or morally or politically acceptable. Unfortunately, this seems to preclude the only policies (left Post-Keynesian) which may prevent or help resolve economic crises in the short or medium term. In addition, most Marxists are not technically trained economists. Indeed for the most part they are barely literate in economic policy matters. They operate largely on the basis of, and according to premises derived from, sociology or philosophy. So while there are some very good and capable economists on the left, their work is virtually ignored, overlooked or misunderstood by the Marxist left. This includes the work of Post-Keynesians who also happen to be Marxists or post-Marxists. Consequently when other Marxists get around to looking at economic policy discussions, such as this one, they fail to adopt, or appreciate the need to adopt, an orthodox Keynesian perspective; unfortunately they similarly seem not to know how to distinguish such a perspective from the bastardized Keynesian positions adopted by the mainstream of the economics profession during the 1960’s and 1970’s, consequently they develop a contempt for the latter, confusing it with the former. From my understanding, this problem derives from this view that as capitalism must be defeated, any economists seen to be making compromises, not only should not be trusted, but their theories need not be explored––with all Keynesians summarily put into that pigpen.

Now Keynesian economics is, initially, not an easy nut to crack. It requires careful study, good tutelage, and mentoring. But, as many who have undertaken it know, the venture is well worth it and indeed quite necessary. Further, without meaning to be too condescending, post-Keynesian economic discussions are very complicated and require work to understand them and consequently it could be far more comfortable to dig deeper and deeper into aspects of Marxist theory than to pursue a theoretical shift, especially one that may ask for some technical expertise in the field of economics; economics per se, is a field many of us on the left have tended to avoid for many, many reasons. I am arguing that in spite of this tendency, this personal tendency, this preference, in many instances this matter of taste, becoming more technically adept, or even just more literate in economic policy making, is utterly crucial; really the only issue here. Yet this fact, this reality is continually ignored by the Marxist left. The result is a lessened ability of such Marxists to understand the relationship between economics and public policy.

Generally speaking, public policy has itself been ignored within Marxist circles since 1917; the results of that failure should have been evident as the Soviet Union struggled to develop its own indigenous post-“revolutionary” set of public policies. But even with the collapse of the Soviet sphere, and this is telling, the only policy alternatives then contemplated were found in a turn to the far right, to the economic policies of Milton Friedman and Friedrich Hayek. That was simply because Soviet policies were reduced to an empty shell and a Keynesian alternative was nowhere to be found in the post-Gorbachev era, as it was missing in the long period prior; the Soviet left seemed not to understand how not engaging in policy studies of the kind explored in many social democratic countries was the real undoing of Soviet socialism. So too, the lesson is applicable within US Marxist theoretical circles today.

Again, this problem derives really from a philosophical commitment to Marxism, and it shows. Recall how Marx implored theorists and activists alike to understand that the point was to change the world, not just “interpret” it, and that doing so involved understanding objective conditions. In the 20th century this has best been undertaken, not by Marxists but by Keynesians who have come to understand the relationship between laissez-faire economics and human misery and how best to combat both. In recent times, some Marxists turned to progressive Keynesianism, adding a more distinct emphasis on social justice considerations. But during the period of roughly 1917 to 1990, outside of the Soviet sphere, there were all kinds of socio-political developments involving the left in power. Many countries, including those of Scandinavia, Britain, Italy and France, flirted with, or had some very radical governments of the left. (See the historical record of the Harold Wilson government in Britain, to take one instance.) In each and every case (of the most radical Western governments coming to power) these governments relied primarily, if not virtually entirely, on good sound Keynesian welfare economics, including full employment policies, as well as interest rate and taxation policies––to bring about greater equity––mixed with studies and eventually policies that developed “efficiency criteria for nationalized industries” (see the book of the same title), within a left social democratic framework. Enormous progress was made in developing institutions that provided services to people and not just profits to a handful. But, for the most part, these undertakings never made it to the US , and with a few exceptions, people on the left in the US remain entirely unaware of such theoretical and policy developments that exist beyond the borders of the US, unless they are directly involved in policy making themselves.

In addition, through no fault of their own, because the US suffered under McCarthyism, the new generation had no memory and no understanding whatsoever of such undertakings, but which were quite general within Northern European countries, Canada and increasingly so today in Central and South American countries. Now even China, in its capitalist phase, has turned to left Keynesians and post Keynesians (many of whom are also Marxists) to address policy issues, such as:

*interest rate policy (Keynes advocated keeping it low);

*employment (Keynesians always aim for full employment);

*deficit financing (Keynesians always favour enough deficit financing to overcome unemployment)

*and finally tax policy (Keynesians, aside from the equity issue, favour taxing the rich––to control inflation––as an alternative to raising interest rates during boom times; generally Keynesians do not fear modest inflation. Aside from this, taxing the rich and generally having a progressive tax policy leads to a more socially as well as economically more productive society as the system is not just more fair, it puts more money into circulation and into the hands of the non-wealthy and thereby less is horded or redirected by the idle rich to nefarious ends – such as controlling elections and thereby leading countries into foreign wars to expand multinational corporate markets, etc).

These policies work and if they had been in place, along with stringent market regulations, the economic crises of the past two decades would not have developed.

There are economists in the US worth listening to and some good thinkers/writers: Robert Kuttner, William Greider, Robert Reich, and Paul Krugman. Paul Davidson is a Keynesian economist with considerable technical expertise, even while his writing may be tough to follow. Harold Chorney has a blog that addresses many important contemporary policy issues. Helen Ginsburg has led discussions on full employment for a good long while, while Henry Liu understands the politics of Marxism and the public policy concerns of a country like China. (There are many others and I apologize for being so selective in this list. A review of the archives of the old Post-Keynesian List would unearth the names of some important contributors.)

The issue emphasized since the great economic collapse of 2007 has been how much to spend to rescue the economic system and restore stability and presumably employment, although clearly the latter will always get the shortest shrift. Post-Keynesians would all have said: spend more or less double what the government eventually did spend (somewhere in the neighbourhood of 1.4 trillion instead of the approximately 800 billion it spent); and do it while you can. In the attempt to be “moderate”, in order to face the apparent political realities of the US, and in order to secure enough votes, or so the story goes, or because of inflation fears and debt fears (the first of these being non-existent because the US has eliminated its well paid unionized labour force and the second needing to be ignored to facilitate a return to full employment), the Obama government was not able to, or in any event did not spend enough to offset growing unemployment. Now come the cries of the US being “saddled with a serious debt problem”. These cries need to be ignored, not idly repeated!

By even using this terminology, the Marxist left would betray the fact that many Marxists are, in economic policy terms, centrist and even right of center. Indeed many socialists and Marxists, both in and out of power, make the tragic mistake of adopting far right austerity perspectives (See Greece). In brief, the bi-polar world the Marxist left envisions does not really exist. The real world of the 20th century, in spite of the Cold War, and away from the ideological inanities that ensued therein, the real polarity was and is between proponents and opponents of a vigourous, regulated welfare state. Marxists rejected Keynesianism because it “saved capitalism from itself” and for this they believed it ought never to be forgiven. Also, because of Keynesianism’s association with the welfare state, where social democrats themselves it seems can never be forgiven for their treachery in doing in their allies on the Marxist left, Keynesianism would get doubly hostile treatment. Ironically, this parallels how the political and economic right, led by Milton Friedman and Friedrich Hayek, conflated Marxism and Keynesianism, for its own Cold War purposes, not just thereby reducing Keynesian welfare spending to “command and control” economic policy making a la Soviet style, but more importantly thereby leading us to a policy world where the absence of the Soviet influence supposedly always should now lead us to the absence of Keynesian welfare policies as well––in other words, to a truly laissez-faire (monetarist), interest rate policy, to control the money supply and inflation and to an austere fiscal policy. This is a pit the Marxist left seems to fallen into, within a post-Soviet world, notably, following the advice, ironically, but somewhat predictably, of its mortal enemies, while ignoring potential advice of Keynesians far more sympathetic to issues of social justice. Here again this was predictable in the absence of a Keynesian alternative in the Soviet and Marxist theoretical worlds as it then would be in the post Soviet world.

In the meantime, Keynesian economists and policy analysts developed increasing levels of sophistication in dealing with policy issues and Marxists remained content with a kind of navel-gazing largely around issues such as labour value theory. As much validity as it may have theoretically, it simply does address larger issues of employment and the methods by which fair wages and equity are achieved ultimately. Being limited in scope, labour theory of value is both an easier academic issue to focus on and a terrific distraction. In addition, the purism of political Marxism, and that of the principled and conscientious left generally, has led to other very poor strategic decisions. Recall that the initial successes of the left were really all around successful organizing efforts of various kinds. But since the 1960’s, unions and union jobs in the US have been decimated by Republican regimes which then have also appointed an increasingly far right, pro-business Supreme Court to overturn or re-interpret (“de facto amend”) labour codes and the collective bargaining process. Meanwhile, the Marxist left often proudly eschews “electoral politics” as morally beneath them.

By the time these words are considered, the US Congress will return to the far political right. What is the left saying about this? A book is published condemning Obama for being a sell-out, for not passing a health care bill with a public option. As much as I, a Canadian, favour a public option, the enemy at this point is not Obama; it is Rupert Murdoch and the far right. For over forty years the left in the US has refused to engage in the kind of strategic warfare the right has with great success. The right has studied and imitated the left, even regularly citing Saul Alinsky, the great left theorist of organization and activism. They have chosen to organize in the face of the left’s successes, and have done it very well, albeit around polemics, invectives, demagoguery and electoral politics. I have myself very often raised the issue of the election of Nixon, whose election changed the entire landscape of the world, for the worse. Many on the left still refuse to forgive Hubert Humphrey’s alleged pro-war treachery and regret for not a moment that they would (symbolically or albeit theoretically) stand idly by while Nixon was elected. Again, the greater enemy was Humphrey and not Nixon?! This to me shows not just poor judgment and political immaturity but a true irresponsibility and failure to understand the American left’s unique role in preventing, if nothing else, the most grotesque examples of American imperialism, much of which may well have been delayed or curtailed by the election of Humphrey rather than Nixon­­––not that it was entirely the left’s fault or doing, nor even that Humphrey necessarily needs adulation by comparison. He simply likely would have been far better for labour and in many other important respects.

Today, those who refuse to vote commit the same political atrocity and within that context they demonstrate politically what they are also prone to––in economic policy making terms. They simply do not understand that first we need to avoid far-right consequences, because one leads to another. Nor is it the case that severe economic times bring about a left revolution. As we have seen, it is far more likely to bring about the rise of the right, especially as the right is actively and shamelessly involved in manipulating bad times for its own purposes. This is a lesson the left seems to refuse to face, even though it happens time and again, or perhaps while it becomes too complacent or spoiled by its own successes, both personal and political, it refuses to, in the recent words of Katrina vanden Heuvel , “stand and fight”.

Finally, none of us have the luxury of acting or voting strictly in regards to our own personal tastes. The political left in this respect is extremely indulgent in not understanding its own duty and its own power to persuade. On economic matters, it should fall in with the Keynesian left, study Keynesian theory, orthodox Keynesian theory that is, or at least familiarize itself with the debates therein; it should come to know the difference between the orthodox Keynesians and the true compromisers who are too often identified as Keynesians, understand this technically where possible at the very least politically, and then follow the lead of competent left economists, some of whom happily are Marxists as well as Keynesians. They have discovered that there is no contradiction in being both. This is the most important lesson to learn within the context of solving economic crises and ameliorating affronts to social justice––in the short and medium term. This is by far and really the only way for the Marxist vision of human social justice to succeed either in the short and medium term; then we can let the long run take care of itself, until we get there.

.

November 3, 2010 version

By Stephen Block (Montreal).

Marxists need to find their way to the Keynesian economic left, its only true prospect to solve what they believe now ails the world

First, thanks for the invitation to make a few comments.

My initial comments were to bear on the incessant and irresolvable dispute between Keynesians and Marxists and more generally between “social democrats” and Marxists, a key one revolving around the jettisoning of labour value theory from the formers’ concerns.

So let me put that into a larger context and at the same time address the theme of your conference.

The [“Economic Crisis & Left Responses”] conference proposes to examine such issues as a “double-dip recession”; then you state that

The U.S. government’s efforts to prevent another Great Depression have left it saddled with a serious debt problem that could impede efforts to stabilize the economy for a long time to come. The future is especially uncertain, and “the new normal” may prove to be very difficult, economically and politically.

So let me just address what you have already undertaken in this brief proposal.

The language used in the above paragraph really is the language of mainstream (and neoclassical) economics. The left, to be left while being aware, should not be adopting this type of language, and the line of analysis it implies. What I believe and have believed for a good long time is that the Marxist left has been inevitably led to this path because of fundamental misunderstandings, most notably a poor comprehension or overview analysis of economics and economic policy-making of the 20th century. Here, in a nutshell, is where I believe Marxism has gone wrong and why it is now inching closer to embracing theories which are entirely antithetical and antipathetical to sound left thinking.

First, Marxists too often see the world in bifurcated bi-polar terms: the capitalist (theoretical) world and the Marxist (theoretical) world. Either one addresses capitalism and attempts to destroy or abolish it, or one does not. Accordingly, to other theories are pertinent, workable or morally acceptable. Unfortunately, this seems to preclude the only policies (left Post-Keynesian) which may prevent or help resolve economic crises in the short or medium term. In addition, most Marxists are not technically trained economists. They operate largely on the basis, and according to premises derived from, sociology or philosophy. And while there are some very good and capable economists on the left, their work is virtually always ignored by the Marxist left, overlooked or misunderstood. (Even when Marxists get around to looking at Keynesian discussions, they fail to adopt or appreciate the need to adopt the orthodox Keynesian perspective – or even how to distinguish it from neo-Keynesian or bastardized Keynesian positions of the mainstream.) From my understanding, this problem derives from the view that as capitalism must be defeated, any economists seen to be making compromises not only should not be trusted but their theories need not be explored – with all Keynesians summarily put into that pigpen. In part I believe this to be a rationalization because many left alternative economics theories, notably post-Keynesian, many of which also happen to be propounded by Marxists or former Marxists who are also post-Keynesian, are very complicated and require work to understand them and it is far easier and more comfortable to dig deeper into aspects of Marxist theory than to pursue a theoretical change, especially one that may involve the adoption of technical expertise in the field of economics per se, a filed the left in general has tended to avoid. From my perspective becoming a technically adept economist is utterly crucial and really the only issue and yet it is continually ignored by the Marxist left resulting in a lessened ability of Marxists to understand the relationship between economics and public policy. Generally speaking, public policy has been itself ignored since 1917; the results of that failure should have been evident but even with the collapse of the Soviet sphere and its turn to the far right economic policies of Friedman and Hayek, the left still seemed not to understand how not engaging in policy studies of the kind explored in many social democratic countries was the real undoing of Soviet socialism.

Again, this derives really from a philosophical commitment to Marxism, and it shows. Now during the period of roughly 1917 to 1990, there were all kinds of socio-political developments involving the left in power. Many many countries, including those of Scandinavia and Britain and Italy and France, flirted with, or had some very radical governments of the left. In each and every case these governments relied primarily, if not virtually entirely, on good sound Keynesian welfare economics, mixed with studies and eventually policies that developed “efficiency criteria for nationalized industries”, within a left social democratic framework.

Now within the US, which suffered under McCarthyism, the new generation had no memory and no understanding whatsoever of such undertakings, which were quite general within Northern European countries, Canada and some Central and increasingly so, South American countries. Even China, in its capitalist phase, has turned to left Keynesians and post Keynesians (many who are also Marxists) to address issues such as interest rate policy (Keynes advocated keeping it low), employment (Keynesians always aim for full employment) and deficit financing (Keynesians always favour enough deficit financing to overcome unemployment) and finally tax policy (Keynesians, aside from the equity issue, favour taxing the rich rather than raising interest rates to control inflation but generally do not fear modest inflation).

These policies work and if they had been in place, along with stringent market regulations, the economic crises of the past two decades would not have developed.

There are economists in the US worth listening to and some good thinkers/ writers: Robert Kuttner, William Greider, Robert Reich, and Paul Krugman to a lesser degree. Paul Davidson has considerable technical expertise while someone like Henry Liu understands the politics of Marxism and the public policy concerns of a country like China. (There are many others and I apologize for being so selective in this list. A review of the archives of the old Post-Keynesian List would unearth the names of some important contributors.)

The issue since 2007 has been how much to spend. Post-Keynesians would all have said: spend more or less double what the government eventually spent; do it while you can. In the attempt to be “moderate,” in order to secure enough votes and because of inflation fears and debt fears (the first is non-existent because the US has eliminated its well paid unionized labour force and the second needs to be ignored to facilitate a return to full employment) the Obama government was not able to spend enough to keep the ship afloat. Now come the cries of the US being “saddled with a serious debt problem.” By even using this terminology, this betrays the fact that many on the Marxist left are, in economic policy terms, very much centrists and even right of center. In brief, the bi-polar world the Marxist envisions does not really exist. The real world of the 20th century, in spite of the Cold War and away from the ideological inanities that ensued therein, the real polarity was between proponents and opponents of a vigourous welfare state. Marxists rejected Keynesianism because it “saved capitalism from itself” and for this believed it ought never to be forgiven, but also because of its association with the welfare state; social democrats themselves it seems can never be forgiven for their treachery in doing in their allies on the Marxist left

In the meantime, Keynesians and policy analysts developed increasing levels of sophistication in dealing with policy issues and Marxists remained content with a kind of navel-gazing largely around issues such as labour value theory. As much validity as it has, it simply does address larger issues of employment and the methods by which fair wages are achieved ultimately. Unions and union jobs have been decimated by Republican regimes which more increasingly to the right and a pro-business Supreme Court. The Marxist elf often eschew “electoral politics” as they are morally beneath them. At the same time, being limited in scope, labour theory of value is both an easier academic issue to focus on and at the same time a terrific distraction.Now in addition, the purism of the political Marxist, but non-Marxist but fairly principles and conscientious left has led to other very poor strategic decisions. Recall that the initial successes of the left were really all around successful organizing efforts of various kinds.

By the time these words are considered, the US Congress will return to the far political right. What is the left saying about this? A book is published condemning Obama for being a sell-out, for not passing a health care bill with a public option. As much as I, a Canadian, favours a public option, the enemy at this point is not Obama; it is Rupert Murdoch and the far right. For over forty years the left in the US has refused to engage in the kind of strategic warfare the right has with great success. I have very often raised the issue of the election of Nixon, whose election changed the entire landscape of the world for the worse. Many on the left still refuse to forgive Hubert Humphrey and regret for not a moment that they stood idly by while Nixon was elected. Again, the greater enemy was Humphrey and not Nixon?! This to me shows not just poor judgement and political immaturity but a true irresponsibility and failure to understand the American left’s unique role in preventing, if nothing else, the most grossly grotesque examples of American imperialism, much of which may well have been delayed or curtailed by the election of Humphrey rather than Nixon–not that it was entirely their fault of course.

Today, those who refuse to vote commit the same political atrocity and within that context they demonstrate politically what they are also prone to in terms of economic policy making perspectives. They simply do not understand that first we need to avoid far-right consequences because one leads to another. It is not the case that severe economic times brings about a left revolution. As we have seen, it is far more likely to bring about the rise of the right especially as the right is actively and shamelessly involved in manipulating bad times for their own purposes. This is a lesson the left seems to refuse to face, even though it happens time and again.

Finally, none of us have the luxury of acting or voting strictly in regards to our own personal tastes. The political left in this respect is extremely indulgent in not understanding its own duty and its own power to persuade. On economic matters then, it should fall in with the Keynesian left, study Keynesian theory, orthodox Keynesian theory that is; come to know the difference between the orthodox Keynesians and the sell-outs who are too often identified as Keynesians, understand this technically, understands it politically and then follow the lead of competent left economists who just happen often also to be Marxists as well as Keynesians. There is no contradiction. This is the most important lesson to learn with the context of solving economic crises and ameliorating affronts to social justice -in the short and medium term. This is by far and really the only way for Marxist vision a and goal of human social justice to succeed in the short and medium term and then let the long run take care of itself.

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