Marx 200

by cominsitu


Rosa Luxemburg Foundation Tell Aviv Office has interviewed three Marxists for our website and asked them what significance and influence Marx’s critique of political economy still has in the present day.

Our interviewees were: Rawda Murkos, who is writing her Phd thesis about work of Palestinian women in the British Mandate of Palestine and is employed as an English teacher at the al-Salam School in Kufur Yassif; Tal Giladi, who is attaining his doctorate in philosophy at the Hebrew University and conducts Marx reading courses at the “Left Center” in Tel Aviv; as well as Moshe Zuckermann, sociologist and a professor of history and philosophy at the Tel Aviv University.


What does “Critique” mean in the “Critique of Political Economy”?

“Where science comes in is to show how the law of value asserts itself.  So, if one wanted to ‘explain’ from the outset all phenomena that apparently contradict the law, one would have to provide the science before the science […] Why then have science at all?”
(Marx-Engels Collected Works, Volume 43, p. 67f., Letter from Marx to Kugelmann, London, July 11, 1868)

The words “critique” and “criticism” are often used.  When we “criticize” something, we often mean that something is not as it should be.  For example, we criticize the fact that there are drastic differences between the amounts in people’s wallets, and that the profits of business are not adequately redistributed.

Marx also engages in criticism in Capital – but in a different way
Marx’s critique is directed against the capitalist mode of production itself, but without making any positive ‘suggestions for improvement’ or proclaiming them as demands.

His critique is also directed against the political economy of the time, that is to say, the scholarly discipline familiar to us today as “economics”.  Its most important representatives at the time were Adam Smith and David Ricardo.  Among other things, Marx accuses them (and others) of not, or not sufficiently, getting to the bottom of preexisting forms and concepts like value, money, capital, and profit.

That led to essential questions remaining unresolved, and the perception that these forms and concepts accompanied every type of economy.  This distorts our perspective of the specificity of the capitalist mode of production, which is not transhistorical, as well as our perspective of other possible economic systems. So, one can say: The aim of the critique of political economy is to question and analyze the forms and concepts of the capitalist mode of production as we encounter them in political economy and everyday life.  Instead of simply accepting them “as they are”, Marx asks: What is value? What is money? What is capital? What is profit? and, What are the social relations that generate these forms and concepts in the first place?  He is concerned with answering the question: What makes the capitalist mode of production the capitalist mode of production?

Marx’s mode of critique thus consists primarily in exactly analyzing and presenting what the capitalist mode of production is, that is to say which practices, concepts, and which (also compulsory) notions, contradictions, misapprehensions, obfuscations etc. accompany it. Over the course of three volumes, he sets out, piece by piece, a theoretical complex that begins at a very high level of abstraction and in the third volume arrives at “concrete forms” (Capital Volume III, p. 117, Penguin Classics edition) as they “appear on the surface of society” and “in the every consciousness of the agents of production themselves.” (ibid.)  At new levels of abstraction, concepts are repeatedly overhauled and reconstructed, without being discarded at their previously depicted levels of abstraction.  On the contrary: each level of presentation and abstraction builds upon the previous one, and is the condition for advancing.  In this manner, Marx develops a theoretical nexus, a type of derivation, which gets to the bottom of the forms and concepts of everyday life and political economy such as, for example, ground rent, profit, and the wage, instead of simply beginning with them.

These fundamental assumptions and concepts also inform our contemporary everyday understanding of economics, and make Marx’s critique of political economy so controversial even today. The central mission of the critique is to make understandable why, in everyday economic understanding and also in political economy (as well as contemporary economics), with the predominant forms and given concepts, it is not – and cannot – be clear that “the value of commodities is determined by the labour they contain” (Capital, Volume III, p. 272) and why profit is no longer traced back to unpaid labor. (ibid.)

The Connecting Factors of Labor and Value
Marx presupposes that labor is the source of value, which is expressed in money.  Only labor creates value.  This is the fundamental assumption of the so-called labor theory of value, which in Marx’s time was not as controversial as it is today.  Marx does not determine value according to an individual point of view in line with the motto: “I like to eat red cherries, but black cherries much more.”  (a popular German children’s song: Rote Kirschen ess ich gern, schwarze noch viel lieber).  Thus black cherries would be considerably more valuable than the red ones, but only if I don’t overeat.  Value is determined socially from the very beginning, not by the preferences of isolated individuals.

Things or goods are initially products of labor of a specific social context.  The ways in which labor is organized in different societies are distinct.  Marx says that things are produced in different societies under different conditions and that it is nonsensical to assume that “the first stone which the savage flings at the wild animal he pursues” (Capital, Volume I, p. 291) is already capital.  Marx makes fun of how concepts of the capitalist mode of production are projected backwards in time onto earlier social formations, such as by R. Torrens in “An essay on the Production of Wealth etc.”: “’In the first stone which the savage flings at the wild animal he pursues, in the first stick that he seizes to strike down the fruit which hangs above his reach, we see the appropriation of one article for the purpose of aiding in the acquisition of another, and thus discover the origin of capital.”  Marx comments with amusement: “No doubt this ‘first stick’ [Stock] would also explain why ‘stock’ in English is synonymous with capital.” (ibid.)

According to Marx, societies are constituted by human labor.  That is in no way antiquated or far-fetched.  Marx writes in the same letter to Ludwig Kugelmann dated July 11, 1868: “Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish.”  (MECW 43, p. 68) That economics at its core has something to do with human labor is evident.  The production of objects of utility and therefore the reproduction of society (or societies) functions first and foremost by means of human labor and through the division of labor, which is not first “invented” by capitalism.

The social nexus is constituted in a unique way under capitalism.  Objects of utility are not produced according to need, but rather are produced in order to sell them and in order to realize a profit.  Investment in means of production and labor-power is undertaken by private businesses on their own initiative and independently of each other.  Without really knowing whether anybody needs these things or how many, and whether anybody can actually pay for them, the things are produced in order to be sold.  On the market, producers no longer have any direct contact with each other.  Their contact is mediated by the things to be sold.  If these things encounter solvent demand, then it’s clear that their labor is part of the total labor of society.  It is first through an amount of money being forked out that the value of commodities is realized.  If not, then they are not part of the total labor of society.  They have no value that can be expressed in an amount of money.

Things appear to have value and a magnitude of value naturally, and they appear to be naturally products of private labor.  These characteristics of labor arise from the social form of labor.  Nonetheless, in our thoughts, they become characteristics of the things themselves.  The result is that we look at a pair of sports shoes and know that it’s worth 100 euros.  If we buy this pair of sports shoes, it actually has value, otherwise we wouldn’t fork out 100 euros for it.  That means we have to relate to things as “things of value”.

Surplus Labor and Surplus Value
The magnitude of value is not determined by individually expended labor-time, but rather by the average socially necessary labor-time required to make a specific product.  Since labor-power is itself a commodity, the magnitude of value of the commodity of labor-power is determined by the value necessary for an average worker to reproduce him- or herself.  That is the value of necessary means of subsistence.  This value of means of subsistence is therefore the value of the commodity of labor-power and is paid as a wage.  Labor-power has the peculiar quality of being the source of value and being able to produce more value than necessary for its own reproduction.  The value created that goes beyond the value of means of subsistence is surplus value.  It results from the fact that labor-power is forced to work longer than would be necessary to recreate its own value.  Labor-power provides surplus labor that is not paid.

The capitalist pockets the surplus value.  The wage laborer only receives the wage.  Regardless of how high this wage is: exploitation always occurs.  Marx refers to the process of appropriating surplus labor as “exploitation”.  This appropriation of the labor of others in the form of surplus value is a central aspect of the capitalist mode of production. The level of exploitation is measured by the rate of surplus value.  Here, the magnitude of surplus value is divided by the magnitude of value of wages.  In this we see the share of the value of labor-power in surplus value, or to put it another way: how much workers work for themselves, and how much they work for capitalists.

The question that arises throughout the three volumes can now be formulated more precisely: How can it be that human labor, as the only source of value, and the appropriation of the labor of others, as the appropriation of surplus value in the total process of the capitalist mode of production, becomes unrecognizable, that is to say, can hardly be perceived at the level of appearances? The fundamental thought that thus arises is: just because labor as the source of value and the appropriation of the labor of others becomes unrecognizable, does not mean that these circumstances cannot have an effect.  The effect is generated across various levels of mediation, at the “end” of which, price does not necessarily correspond to value, and in fact does not necessarily represent value at all (such is the case, for example, with virgin land, which has a price, but no value).

From Surplus Value to Profit
Marx asks how, and by what means, labor as the source of value and the appropriation of surplus labor as surplus value become unrecognizable “on the surface of society” (Capital, Volume III, p. 117).  He thus develops value, surplus value, and the rate of surplus value as analytical concepts, which, however, in the everyday life of people and in the concepts of political economy are already mediated by many circumstances.  Nobody talks about value, surplus value, or the rate of surplus value, but rather about price, profit, and the rate of profit.  In empirical reality, we are dealing with the results of social interrelations, which for that reason cannot be the point of departure for analysis – as they are for political economy.  They are results, i.e. that which must be explained in the first place.

Profit is a mediated and mystifying form of appearance of surplus value: it is the result of the capital advanced for means of production and labor-power.  The fact that money must be advanced for both means of production and labor-power makes labor as the source of surplus value unrecognizable.  The further fact that workers themselves assume that they are paid for their work consolidates this perception that profit arises not due to their efforts, but rather as a result of the capital advanced.  Furthermore, profit is not the surplus that a capitalist appropriates from the surplus labor of the workers he employs.  In reality, an average profit is generated to which all capital advanced relates.  Every capitalist acquires a share in the total social profit.  The share is determined by the relationship to one’s own advanced capital – like in the distribution of dividends by a joint-stock company.

Finally, it appears that the provision of land by landlords is what generates rent.  With the expression “the trinity formula” (Capital, Volume III, p. 953), according to which profit comes from capital, ground rent from land, and the wage from labor, Marx pinpoints the misunderstandings of his contemporaries.  The fact that surplus value is distributed among various functionaries has disappeared in everyday consciousness as well as in the concepts of economics.  Bringing this to light is what is meant by “critique” in Marx’s sense.

Favorite texts on the topic:
Capital, Volumes I-III, Penguin Classics (New York and London), translated by Ben Fowkes and David Fernbach

Anne-Kathrin Krug is an attorney in Berlin and a team organizer for reading groups of Karl Marx’s Capital at the Rosa Luxemburg Foundation. She is a member of the Working Group on the Critique of Law and in this context deals with Marxist legal theory.


The metabolic exchange between nature and society in a mode of production based upon value

So many accusations have been levelled against Marx and, to an even greater extent, his friend and co-author Friedrich Engels in the 150 years since Capital was first published that the charges are almost too many to list. Unlike the political economists that came before him, Marx was supposedly unable to explain price formation. What is more, according to his critics, the predicted immiseration of the working class never occurred, and capitalism was not in a state of collapse, but has instead emerged victorious from the battle between competing social systems.

Marx and Engels are also accused of having paved the way for Stalin’s atrocities with their theoretical and political writings and of thus being the intellectual ringleaders of the crimes committed in the “age of extremes”. Those are the harsh allegations still being penned by journalists even to this day. But some of the yawning gaps, which Marx no doubt left in his work, seem instead to appear as prejudgments: Marx, and especially Engels, supposedly had no answer to the ecological issues that are our main concern today. They are alleged to have overlooked the fact that value is not only created by labor, but by nature too; in their theoretical edifice, nature is afforded less space compared to society, and the monotheistic notion of humanity’s domination of nature is not critically interrogated. But an examination of the blue volumes of Marx and Engels’s collective writings, especially the first volume of Capital in volume 23 (volume 35 of the English-language Marx-Engels Collected Works) shows that readers have left behind stains and finger prints, i.e. traces of their ecological existence. It is impossible to read Marx without any consideration for ecology. One reads Marx with one’s head and, consequently, with reason, but the experience is also tactile as one turns the pages with one’s fingertips.

An author without blind spots in his writing is like a hero without any flaws, the very model of a saint or, in other circles, a monumental bore. Of course, readers living 150 years after the author has passed on are, first of all, smarter – or at least, they should be, even if the author’s name is Karl Marx. But usually this intelligence only suffices to detect those predictions made by the author that have not come to pass, as well as to spot the odd gap in their argument, and announce such discoveries to the world. Some readers are only capable of challenging Marx’s theories armed with just the stale arguments of yesteryear.

Like many other authors, Marx undoubtedly left himself open to attack. These weak points should be seen as a challenge to the reader to improve them with their own thoughts and the resulting arguments. This demands a certain amount of effort, even if the gaps that Marx left behind are so rich with potential that they could give rise to many hundred thoughts. But nobody nurtures these creations in times in which the president of a fake country orders very real and deadly air strikes via Twitter with little contemplation, and when – less outrageously – the critique of ideas, including elaborated theories for which Marx provided a scientific rationale as well as examples, becomes part of a career opportunism that adheres to affirmative conformity, or when some foolish journalist from a well-respected newspaper sets out on a hopeless mission to uncover mistakes.

One does not have to get worked up over gaps

One does not have to get worked up over gaps. We refer to Marx the same way we refer to other great minds who have imparted indispensable knowledge to answer the unresolved questions in our work today. We cannot even name them all because some have become second nature and a part of everyday discourse, so much so that we are surprised when somebody points out the authorship of some familiar thought or saying; for example, that economists are people who know the price of everything but the value of nothing. These words were uttered by the poet Oscar Wilde, who obviously knew better than the elite club of economics Nobel prize winners who regularly meet in Lindau for the purpose of narcissistic self-reflection. Marx said that the coins and cash of the “monetary system” was “essentially Catholic”, whilst “the credit system [was] essentially Protestant”. As proof, he adds that this was already illustrated by the fact that “the Scotch hate gold”. (Capital Vol. III, p. 727.) Today we know that it was primarily Protestants who brought the euro monetary system into being and Protestants who are working to completely abolish cash in Europe. A church struggle waged by monetary means. And Marx had anticipated this since he was aware of the unbreakable bond that existed between a mode of production based upon value and its cultural and ideological constructions.

With every new reading of Capital, one discovers something new. But this is only the case if one approaches the text with curiosity and from a modern-day perspective, and does not read it as commandments carved in tablets of stone. Even 200 years after Marx was born, the pointless endeavor of not wanting to see the world in the same light, but rather to plunge into the twilight of one’s own dimness, persists. There are Wahhabi-style Marxists who demonize a critical re-reading of Capital (such as that of Mathias Greffrath from 2017), but they are now fewer in number.

It is a core intellectual task of the Enlightenment – one could emphatically add, for the purpose of improving humanity – to shine a light on the entire terrain of class struggle, the diversity of social conflicts and their actors, their origins, their dynamics and forms of development, and their intended consequences and unintended side effects. This diversity is now different from how it was during the time of the Russian Revolution in 1917, or a hundred years earlier when Marx was born in Trier in 1818, or in 1867, when Marx hand-delivered the manuscript of Capital to his Hamburg publisher Otto Meissner.

A piece of writing that was theoretical, very complex, and not easily accessible to all became a projectile in the class struggle

It was supposed to be not just a manuscript for a book, but “the most terrible MISSILE that has yet been hurled at the heads of the bourgeoisie”, as Marx wrote to Johann Philipp Becker in a letter on April 17, 1867, shortly after he had been to Hamburg (Marx Engels Collected Works, Volume 42, p. 358). A piece of writing that was theoretical, very complex, and not easily accessible to all became a projectile in the class struggle. A practical test sought to establish its suitability for theoretical work, for creating a strategy, and also developing tactics in the political exercise of generating social and political movement(s). The entire complex of bourgeois society, its economy and ecology, is targeted. Marx stands alone among economists as the only figure who, in categories he examines, considers, and analytically decodes, the “general dialectical context” of matter and value, material and form, use value and exchange value, concrete and abstract labor, nature and society, social structure and individual as well as collective action – thus of theory and practice.

The general context of the “mode of production based upon value” determines the analytical approach, the form and reach of critique. It is holistic, more comprehensive than analytical approaches from other social sciences and theoretical “schools” of economics, which thus exhibit more gaps than theoretical approaches to Marx and Engels’s work. For that reason, Marx is the only economist in whose categorical system the ecological problems of capitalist society can be appropriately analyzed and debated. Is that an arrogant and therefore brazen as well as dumb assumption? Possibly. But there are good arguments that speak for this line of reasoning. Before the beginning of the fossil-fuel driven industrial era, there were also economic theories, hence the history of dogma can be traced back all the way to biblical times. But it is only since man began to use fossil fuels systematically that workers have been able to make use of instruments to alter nature which, on the one hand, can enable the productivity of labor and the “wealth of nations” to be increased to previously unreachable heights, but, on the other, also lead to the destruction of nature. The metabolism of capitalist reproduction comprises both consumption and excretion, i.e. the creation of natural material. However, this mixture cannot always be tolerated by either man or nature. The environmental crisis begins and the effects this shift has upon people’s living conditions are described by Friedrich Engels in his 1844 work Condition of the Working Class in England.

The possibility for growth provides the impetus for both scientific and empirical efforts to systematically research the origins of this new wealth. Does it arise from trade carried out on the market or from the labor performed in the process of production? Those are questions that any kindhearted soul may raise but can give no satisfying answers to. Where good will falls short, science has to take over. A new discipline takes shape, initially, of course, within the traditional science canon. It is therefore no surprise that the pre-revolutionary encyclopedists of 18th-century France believed the answers to economic questions lay in moral doctrine. Here modern neoliberals can only shake their heads. Eventually, political economy came into being. Let us therefore begin with a very brief overview of the most influential schools of economic thought that the world has seen since the 18th century.

1) Classical economists understood that economic value is created by labor and that the key factor is surplus, i.e. surplus value. They also identified the difference between material and value, but failed to recognize their specific social form. To them, capitalism and the market economy were the ultima ratio of the economic as well as the natural order. The difference between the surplus in pre-capitalist societies and surplus value in capitalist society was no more a topic than the possibility of a post-capitalist society or the burning issue that the environment has become today. However, “classical economists” had acknowledged that economics was political and also had something to do with “moral sentiments” and ethics, whilst it also needed to be analytically challenging and, at the same time, be based on norms within the order of polity. Therefore, political economy was – at least at the beginning of the bourgeois era – a self-conscious program to design what Leibniz considered the best of all possible worlds. In the interests of the bourgeoisie (the rising capitalist class), classical political economy was a partisan science. It was still untouched by the conflicts over value judgments unleashed in the 20th century.

2) As early as the beginning of the 18th century, Bernard Mandeville (1703) in his “The Fable of the Bees” and Voltaire in his novel Candide, which took aim at Leibniz, tried to sully the presumptuous and indeed crazy idea of a best possible society. Derision and mockery were admittedly not the “critique of political economy” that Marx had worked on since the 1840s.The political economy that had first arose as a science together with the bourgeoisie did not work its way up to a critique of political economy, but rather followed the easier principle of disembedding all that was economic from social and political contexts as well as from conflicts, pressures of legitimization, traditions, and customs. It fits within the landscape of what is now the prevailing capitalist market economy. Economics mutated into the science of a disembedded market economy, which became the subject of Karl Polanyi’s (1978) research. Economics no longer considered itself to be political economy as the classical economists had designed it to be; it regarded morally justified norms defensively and with skepticism, and was far removed from a materialist and dialectical critique of political economy. The word “economy”, which was reminiscent of material and, therefore, of social and natural substance, was now also deleted and replaced by “economics”. Throughout this history of disembedding, over the course of which every notion of society, politics, culture and nature faded from economics, critique of economic discourses also disappeared, and was consequently dropped from university curricula – disembedded, as it were, from the social context that went by the name “economics”. The dreary state of today’s economics faculties thus has an equally dismal history.

Nature is only interesting as natural capital; human beings as human capital

The neoclassical economists of the 19th century, and especially their neoliberal followers of the 20th century, were therefore only interested in the monetary side of economic processes, and devoted no time to the origin, form, and content of money, which they alone are able to employ to discuss economic issues. That is why, when they rant on about natural capital, they are not able to recognize ecological problems and discuss them sensibly. Notifications from the central banks they have established concerning the quantity of money (which, according to a much-quoted bon mot by the neoliberal high priest Milton Friedman, has been thrown from a helicopter, thus earning the name helicopter money M1, M2, M3, etc.) are enough for them. In their eyes, value created by labor as well as the material economy of matter and energy are of no importance. They are also not interested in the process of production prior to the functioning of the market and the process of disposing of waste, sewage, and exhaust fumes within the natural domain of Planet Earth after products have been produced and consumed. The only thing that matters is that everything has its price, which economists can then calculate. Nature is only interesting as natural capital; human beings as human capital.

That is the nadir of economic intelligence that the Nobel Committee has celebrated with countless prizes. The economist himself concedes that this is inhuman, for the most part, without understanding what he is saying: when he (only in rare cases would “she” apply) tacks very artificial assumptions onto mathematical structure models or assumes the rationality of homo oeconomicus. This is always instrumental and must therefore always exclude from calculation whatever does not appear on the radar of the “economic man” or the “investor”. He is thus absolved from all responsibility for environmental damage as a consequence of the pursuit of profit that drives investment decisions. “Social costs and environmental disruption… may be considered the principal contradiction within the system of business enterprise,” writes K. William Kapp (1971: XIV), one of the few economists to have dealt with the environmental consequences of private capital accumulation.

In neoclassical economics, with its unleashed private capital, drive to accumulation, and rollback of the commons and state regulation, externalization is a structural principle, unavoidable in the modern capitalist economy. Attempts to internalize “social costs” could thus only deliver success if the rationality of capitalist society were to be called into question, i.e. if this society were to be changed. Externalization is therefore an expression (one that economists fail to grasp) of the market economy being disembedded from society and nature, something that Marx criticized as fetishism. This inhibits the understanding that the occupation of the planet for the purpose of capitalist (usually commercial) valorization called “externalization” is nothing less than the digestion of nature in the insatiable, greedy metabolic tract of the economy and society.

3) It was in the Keynesian economics that followed the great global economic crisis of the 1930s that space and time, and therefore categories of nature, were rediscovered as meaningful elements for economists. But understanding was extremely limited, since the main concern was to recognize economic instabilities that arose as the result of the uncertainty of investment decisions that would take effect in the future. A decision is made in the present on the basis of given certainties that arise from periods that are already in the past. Expectations, however, are based upon future revenues. Investments are thus always and necessarily fraught with risk and may fail, since the future is unknown and things can turn out very differently to what the decision-making economic entity had planned. This entity compares external and internal rates of interest, market interest that can be regulated within certain limits by the central bank, and the rate of profit, which is dependent upon productivity and labor costs. Decisions, however, are reliant upon private, profit-focused calculations.

4) Unlike classical economics, neoclassical economics or Keynesianism and its variants, in thermodynamic economics matter and energy and their transformations, i.e. ecological conditions of production, consumption and circulation, are central categories. Thermodynamic economics is the answer provided by economists who are dissatisfied with neoliberal and neoclassical schools of thought that forget nature. It was also directed at Marx’s theory, on the basis, however, of a terribly truncated interpretation of Marx’s analysis of the mode of production based upon value (and indeed not upon matter).

Today, thermodynamic or bioeconomics is usually mentioned in connection with the Romanian mathematician and economist Nicholas Goergescu-Roegen and his principal work from the year 1971. Material and energetic transformations are of fundamental importance to economic analysis and must not be excluded from it, since all economic transactions occur within space and time and an economic science without consideration of physical time and physical space would therefore be absurd as it excludes the possibility of understanding the entropic character of all economic transformations of matter and energy.

Over the course of time, entropy increases, i.e. once used, energy cannot be reused (the case is similar for matter). The quality of labor performance declines. This is pointed out by thermodynamic economics, which, in contrast to neoclassical economics, is able to adequately discuss the externalization of social costs generated in the private economy as mentioned above. However, the analysis of social forms of economic activity is neglected in thermodynamic economics. They are not even considered. The significance of the capitalist drivers behind today’s ecologically disastrous transformations of matter and energy and how they influence ecology and environmental policy are not being sufficiently recognized. Once again, the central role of the category illustrates the dual nature of labor and its product, the commodity, as the “pivot” of political economy (for a more in-depth discussion, see Althusser 2017 a and b).

5) Since its beginning, political economy has been one-sided. Either money is all that matters, or matter and energy are the object of focus. The specific social form of using matter and energy in the capitalist mode of production, and the questions of why money is transformed into capital and why the mode of production then revolutionizes all ways of life do not show up on the radar of economic theorists on either side. This one sidedness is by no means abolished when it is diversified by declaring it “plural economics” and emphasized using multiple names, such as plural economics, ecological, evolutionary economics, commons economics, community economics and post-growth economics (Schneidewind et al. 216).

Hence the science that has, since Marx, been referred to as “the critique of political economy” and which we, along with Friedrich Engels, can refer to as the “science of the dialectical connected whole” or, as we would describe it today, a holistic approach in line with chaos theory, does not arise. Pluralism is good, but not enough to grasp the contradictions and crises of the social dynamic of capitalist economies and the “web of life” (Jason Moore 2015) that they regulate on Planet Earth. Until now, this web of life has remained unrecognized in its total complexity, and might be impossible to grasp scientifically, and also contains many actors that all play a role in social conflicts and in the class struggles of the ecological age. We must grasp them as soon as possible in order to become or remain capable of action. The environmental space at our disposal is not only limited, as has been acknowledged since the 1990s following the insights provided by studies on the limits of growth. Those of us on the “limited planetary sphere” (to use a term quoted by Immanuel Kant) are approaching the “planetary boundaries” marked by an international group of scientists led by Johan Rockström in 2009. We have already crossed some of them. We are living hand-to-mouth. The hand has less and less to offer, but the mouth is still being used as a raging megaphone, primarily by the “great Americans”.

Accumulate, accumulate! That is Moses and the prophets!

The evidence provided by scientists, which proves not only the finiteness of resources but also the decline of Planet Earth as it is being turned into one giant landfill or a dumping ground for hazardous waste, is both obvious and terrifying, all the more so when the capitalist drivers analyzed by Marx, and thus specific to this social formation, are taken into consideration: value production, which treats labor, i.e. human beings, as well as the natural world with absolutely no consideration, and which must be imposed every time against capitalist interests of protecting nature and mankind. “Accumulate, accumulate! That is Moses and the prophets!” (Karl Marx, Capital Volume 1, p. 742) is how Marx cites the iron law of capitalism. Even the self-evident rules of cleanliness must be wrested from capital if they even slightly restrict the creation of surplus value through labor. The antagonism that exists between matter and value, wage labor and capital, nature and society, accumulation and crisis must, therefore, first of all, be understood as an economic contradiction and social conflict within the capitalist mode of production before one can reasonably speak of the common good, post-growth, etc. economics or plural economics, which refuse to acknowledge any systemic constraints.

In neoliberal mainstream economics, the situation is hopeless. But even the pluralist economics of sustainability believes in reconciling the interests of capital with the interest of natural preservation and the interests of workers. Of course, social conflicts are not always conducted on a knife edge; negotiations occur, compromises are possible and even endure for some time. The Sustainable Development Goals (SDG) offer a glimmer of hope and are a signal for the dawning of a new, sustainable post-growth future. We can see some similarities to the events that took place during the periods of reformism, when the labor movement believed in reconciling conflicting class interests. In ecological conflicts too, the necessary groundwork is being laid so that parties can one day march hand in hand toward compromise. But how the desired social-ecological sustainability can be achieved, and what form it should take if capital’s drive to accumulate is not brought to a standstill, that is to say, if Moses and the prophets are not deprived of power, is a topic that has yet to be addressed by plural economics.

There is no other option but to create an economically efficient, socially balanced society organized democratically and ecologically according to principles of sustainability

Marx and Engels wrote in The Communist Manifesto that until now history has been a story of class struggle. And this will continue to be the case. However, in the future struggles will not only take place concerning wages, performance and the quantity and quality of employment within the existing capitalist society, and/or if this societal framework should be overhauled, but also concerning living and working conditions in a society at the limits of planetary capacity. The organization of an imperialism of plunder, as described by David Harvey (2005), or the externalization of burdens and the placing of excessive strain on nature as a result of rational calculations made by “investors”, as described by Lessenich (2016), amount to nothing but desperately patching up a protective fence that has already been torn down. There is no other option but to create an economically efficient, socially balanced society organized democratically and ecologically according to principles of sustainability. Many will note this message with approval. But it does not come from an awareness of the advantages of a post-growth economy, because it cannot exist without transcending capitalism. As has always been the case in history, it is the result of class struggles for a future worth living in, both in the 21st century and beyond: pragmatic political efforts toward a humane and ecological shaping of the total dialectical context.

Altvater, Elmar (2017a): Kapital und Anthropozän, in: Greffrath, Mathias (2017): 53-72
Altvater, Elmar (2017b): Nach 150 Jahren „Das Kapital“ – Kritik der politischen Ökonomie am Plastikstrand, in: Z – Nr. 111, September 2017
Engels, Friedrich: Dialektik der Natur, in: Karl Marx/ Friedrich Engels – Werke. (Karl) Dietz Verlag, Berlin. Band 20. Berlin/DDR. 1962: 305-570.
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Georgescu-Roegen, N. (1971): The Entropy Law and the Economic Process, Cambridge, Mass. (Harvard University Press)
Greffrath, Mathias, Hrsg. (2017): Re: Das Kapital. Politische Ökonomie im 21. Jahrhundert, (Kunstmann) München
Kapp, K. William (1971): The Social Costs of Private Enterprise, New York
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Moore, Jason (2015): Capitalism in the Web of Life, (Verso) London
Polanyi, Karl (1978): The Great Transformation (Suhrkamp) Frankfurt am Main
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Voltaire (1759/1990). Candide oder der Optimismus, (Büchergilde Gutenberg) Frankfurt am Main/ Wien

ELMAR ALTVATER until 2004 professor of (international) political economics at the Department of Political and Social Sciences at the Freie Universität Berlin and now retired. Fields of interest: Research and publications on the politics and economy of globalization, including “Grenzen der Globalisierung” (1996, 7th ed. 2007, “Limitations of Globalization”) and “Globalisierung der Unsicherheit” (2002, “Globalization of Uncertainty”), both together with Birgit Mahnkopf. In addition, publications on the Marxian theory and on the ecological system of the world and global environmental policy. 



Why the erosion of standard employment relations in Europe and North America requires a new interpretation

Politicians, economists and sociologists – they all assumed until recently that in the long term capitalism produces certain »typical« employment relations that harmonize best with profitability and capital accumulation. Reality, however, is considerably more complex.

Capitalism produces and reproduces many different forms of exploitation. Slavery existed not only in early colonialism; it also exists today in various regions such as Amazonia or South Asia. The putting-out system, which has families manufacturing commodities or parts of commodities at home for merchant-producers, is far from being a pre-industrial phenomenon only (as the term »proto-industry« suggests); rather, it is widespread again today and seems to be gaining in importance. And in agriculture, sharecropping – which many consider a thing of the past – has been making a steady comeback since the 1970s in many places, for instance in California.

The notion that there exists within capitalism something resembling a typical or standard employment relation is maintained not only by defenders of the »social market economy«, but also by radical critics of society. The concept of a standard employment relation assumes it is a form of wage labor defined by the following key features:

* continuity and stability of employment;
* full-time employment by a single employer in the latter’s enterprise (not at home);
* a minimum wage level that allows an employee (male or female) to secure the livelihood of a small family;
* legal rights to protection and participation;
* a system of social insurance based on the duration of the employment relation and the income earned.

Social policy for a long time assumed that the »typical employment relation« was the logical end product of capitalist development and that all other forms of employment would gradually dissolve. This view has been undermined since the 1970s at the latest, though. In highly developed countries, a trend has divided the working population into two sectors: a relatively small sector of permanent employees, whose labor processes are rendered more »flexible« by means of just-in-time production, job rotation, quality circles, etc., and an expanding precarious sector of bogus self-employed workers, part-time workers, auxiliary staff, etc. In the Global South, where the standard employment relation has always been a marginal exception rather than the rule, precarious employment relations, underemployment and long-term unemployment have been predominant.

In the Global South it was already understood in the 1960s that regular wage labor had nowhere become predominant, in spite of all the efforts the nations put into »development.« On the contrary, both in rapidly expanding cities and in rural settings, poor households increasingly found themselves forced to combine a variety of survival strategies that despite their diversity all shared one common feature: it was impossible to label them as standard employment relations. This new insight was most prominently reflected by the growing popularity of the concept of the »informal sector«, which made its debut in the early 1970s. Since then, the concept has been criticized countless times, yet given the absence of convincingly more accurate alternatives it remains in widespread use.

Moreover, feminism made it clear that traditional historical and social science theories had heavily relied on an implicit and untenable assumption: the notion that wage workers can only be studied and understood as individuals – whereas in reality they are almost always part of a family household. Thus, the work performed by wage laborers is always only a part of the total work performed within a household.

Recent research has made the mutual links connecting the various criticisms of the old paradigm of the standard employment relation more visible. Though occasionally still vague, the outlines of a new interpretation are beginning to emerge. It is hardly questioned today that an informal sector not only exists in the metropoles as well, but that in many countries it is also expanding. Similarly, the notion that households combine several survival strategies is also becoming more widely accepted.

A global analysis of labor issues focusing on the past two or three centuries teaches us that both historically and spatially, the standard employment relation is in fact rather »atypical.« In the so-called Third World, workers only rarely have employment that is full-time, permanent and linked to social welfare benefits, which is why the small number of workers with relatively protected positions are often considered part of a worker aristocracy – a characterization that is probably not entirely accurate, since these relatively privileged workers often retain close relations to their home villages and transfer a considerable part of their income there.

It is also becoming increasingly clear that the worker households in the metropoles have rarely been fully dependent on wage labor (combined, of course, with domestic work, in particular but not exclusively by women). Nor are they fully dependent on wage labor today. The wage usually has been and continues to be supplemented by the additional incomes of various family members. The incomes take the following forms, among others:

* production of consumer goods for personal use (subsistence work). This includes the production of clothes, the keeping of pigs, chickens and the like, as well as garbage collecting;
* petty commodity production and petty trade, e.g. tailoring, smallholding, collecting rags for resale, hawking, etc.;
* renting out land, work tools, living space, etc., including renting out a bed or room to a bed lodger or subtenant;
* money, goods or services received without any immediate return service, including support from friends and acquaintances in times of need or through charity and welfare;
* appropriation of other people’s property, pilferage at the workplace, theft and embezzlement;
* loans obtained by incremental payment of debts, pawning, etc.

Moreover, recent historical research suggests that the number of working-class families in Europe and North America able to survive on only one wage has always been quite small. The historical significance of the male breadwinner model therefore needs to be strongly qualified. Many family members were often wage-dependent at the same time, with individual family members even holding several jobs simultaneously – a situation we encounter today in the so-called Third World.
In light of this, the erosion of standard employment relations in Europe and North America needs to be reinterpreted as a return to what under the world-capitalist system can seen as the »normal« condition of irregular employment relations.

These new insights have far-reaching implications. First, we now need to qualify the dichotomy of »First« and »Third-World« underclasses somewhat – although of course there continue to be momentous differences. In the cities of the »First« World, social strata are emerging whose employment relations are in some ways beginning to resemble those of the urban poor in the slums of the »Third« World, in spite of the major prosperity gap between both regions.

Second, the dividing lines between wage labor and small business are far more blurred than we have so far assumed. Both in the »Third« and in the »First World« there are extensive gray areas of (bogus) self-employment in which people work, formally, as freelancers although in reality they are dependent on one or two customers only. This type of self-employment has been widespread in peripheral capitalism for decades; recently, it has also been expanding significantly in the metropoles, e.g. in the construction sector. Generally speaking, there seems to be a historical connection in highly developed capitalism between periods of rising unemployment on the one hand and the stagnation or expansion of »small-scale« self-employment on the other.

Third, the boundary between wage laborers and »lumpenproletarians« is also hardly as clear-cut as older theories suggest. On the one hand, regular wage laborers display many forms of »lumpenproletarian« behavior, resorting for example to begging and prostitution as survival strategies in times of distress, or pilfering at the workplace, which from a business perspective is very much a form of criminal behavior. On the other hand, the situation in the Global South directs our attention to a social underclass that can be characterized neither as a reserve army of labor in the Marxian sense nor as part of the classic lumpenproletariat. In this respect, precarious employment relations also make it inevitable to draw up and define new concepts.

Fourth, the concept of »free« wage labor is more ambiguous than generally assumed. According to the classic definition, the doubly free wage laborer disposes of his own labor power as a commodity »as a free man« and »has no other commodity for sale.« In many cases, however, the situation of wage workers is more complex. Even as formally free persons they may be bound to an entrepreneur, e.g. through debt (advances that need to be repaid), accommodation (company housing, etc.) or pension claims.

Fifth and last, the strict distinction between urban and rural areas commonly drawn in Europe needs to be put into perspective. In contrast to what modernization theory would like to have us believe, often the relations between migrants in cities and their home villages do not weaken over time – they intensify. This is probably due to the absence of a system of social security, such that villages function as a social safety net during times of economic crisis. Incidentally, it has been shown that many villages (e.g. in Indonesia during the current crisis) can no longer maintain this function, as the rise of the commodity economy has exhausted their subsistence capacity.

All of this means that the category of the working class assumes a somewhat different meaning and, most importantly, becomes more varied. The standard employment relation is far less »normal« than we have so far assumed. Our task is therefore not primarily to account for the disruption of wage labor relations linked to social welfare benefits, but on the contrary, to establish why at certain points in history standard employment relations emerged at all.

Marcel van der Linden is a senior fellow (and former research director) of the International Institute of Social History and professor of the history of social movements at Amsterdam University. His most recent German publication is “Workers of the World. Eine Globalgeschichte der Arbeit” (Frankfurt on the Main: Campus, 2016).


Michael Roberts on Marx vs. Keynes and why Marx was closer to the truth

In 1926, John Maynard Keynes, already the most celebrated economist and political writer of his time, reviewed the competing ideas of conventional economics (which he called ‘laisser-faire’) and its revolutionary alternative (Marxism).  In his book, Laisser-faire and Communism, Keynes, a contemporary of the Bolshevik leaders Lenin and Trotsky, sought to dismiss the Soviet revolution that had shocked the ruling groups of the rest of the world just a few years before.

His attack was that: how could anything worthwhile come out of communism, based as it was on the ideas and theories of Karl Marx?  “How can I accept the [Communist] doctrine,” Keynes wrote, “which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world?”  And more: “Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values (Keynes, Laissez-Faire and Communism, quoted in Hunt 1979: 377).

Keynes was writing some 60 years after Marx’s Capital was first published.  As the 150th anniversary of the first publication of Capital approaches, can we agree with Keynes damning judgement of Marx’s ideas? Marx’s Capital was a critique of the political economy of his time but it is also a searing analysis of the nature of what we now call capitalism.  Based on a labour theory of value, Marx attempted to show how labour is exploited even though exchange in markets appears to be one of equality.  Above all, Marx’s analysis suggests that capitalism has irreconcilable contradictions that can only be overcome by the replacement of private production for profit with production for need through common ownership and control.

Keynes accepted the mainstream marginal utility theory

In contrast, to this ‘illogical and obsolete’ labour theory of value, Keynes accepted the mainstream marginal utility theory.  When this became the dominant explanation for prices of production in an economy, replacing the labour theory in the later 1870s, Engels remarked: “The fashionable theory just now here is that of Stanley Jevons, according to which value is determined by utility and on the other hand by the limit of supply (i.e. the cost of production), which is merely a confused and circuitous way of saying that value is determined by supply and demand. Vulgar Economy everywhere!” (22 MECW, vol.48, p.136).

Marginal utility theory quickly became untenable even in mainstream circles because subjective value cannot be measured and aggregated, so the psychological foundation of marginal utility was soon given up, but without abandoning the theory itself.  Thus Keynes continued to hold to a scientifically erroneous theory of prices, which was untestable while rubbishing Marx’s objective and testable theory of value based on labour time expended.

For Marx, the driver of capital accumulation is profit.  Profit calls the tune.  Marx explained in Capital and other works that there was an inherent tendency for profitability to decline over time and this downward pressure on profitability would eventually cause a fall in the mass of profits and a crisis and slump would ensue. Think of how a capitalist crisis caused by falling profits can be solved if Marx is right. The only way that it could be ended was if enough capitalists went bankrupt, enough old machinery and plant were close down and enough workers were laid off. Then eventually, the costs of production and investment would be sufficiently reduced to raise the profitability of production for those capitalists still surviving to start to invest again. After a while, however (maybe years, even decades), the law of profitability would again exert its power and the whole ‘crap’, as Marx called it, would start again. Thus we have cycles of booms and slumps.

In contrast, Keynes, denying that profits come from the unpaid labour of the production process, reckoned that it is overall ‘effective demand’ that causes crises, in particular slumps in investment and consumption that lead to reductions in employment, wages and profit. Who is right?  Keynesian theory would suggest that we just have to ‘manage’ the economy it starts slipping into recession and all will be well. This economic management would be: easy money at low interest rates and fiscal stimulus through increased government spending and budget deficits. Well, look what happened from the late 1960s, when Keynesian economics was all the rage and government management of the economy was the order of the day. Even President Nixon then declared that we are ‘all Keynesians now’.  By the end of the 1970s, the strategists of capital had ditched Keynes and opted for what we now call ‘neoliberal’ policies of cutting back on the size of government, privatising, weakening the trade unions, liberalising markets (including financial markets) and imposing tight monetary and fiscal austerity (or at least in part – austerity did not apply to defence and wars!). Why was this? It was because Keynesian policies had failed to avoid new crises, indeed, the biggest worldwide economic slump in capitalism since the war in 1974-75 and then a deeper and more damaging slump in 1980-2. How could there be these new crises if Keynesian economic management was in operation everywhere? Keynesian economics had no answer.

Keynesian policies could even delay the capitalist recovery

What could Marxist economics offer to explain the crisis of the 1970s where Keynesianism had failed?  Marx said that the key to understanding the capitalist mode of production lay in the nature of production to sell commodities on a market for profit. Profit was the key. Marx says: let’s start with profits. If profits fall, then capitalists would stop investing, lay off workers and wages would drop and consumption would fall. And it was not just the slumps of the 1970s.  If we analyse the changes in investment and consumption prior to each recession or slump in the post-war US economy, we find that consumption demand has played little or no leading role in provoking a slump. It is investment that is the crucial swing factor. Take the last Great Recession. A downward movement in corporate profits led investment and GDP by up to two years and the recovery in profits did likewise on the period after 2009. Policies designed to reduce interest rates, or even get some government spending going, namely Keynesian policies, would not avoid these slumps or even get recovery going. Indeed, more spending on welfare and unemployment benefits could drive up taxes and extra borrowing could drive up interest rates. And more government investment that replaced or encroached on private sector investment could be actually damaging to the profitability of capital. So Keynesian policies could even delay the capitalist recovery.

Indeed, the austerity policies of most governments are not as insane as Keynesians think. Keynesians say: why can’t the capitalist sector see that it is their interests for governments to spend more, not less, in a slump?  But neo-liberal policies follow from the need to drive down costs, particularly wage costs, but also taxation and interest costs, and the need to weaken the labour movement so that profits can be raised. It is a perfectly rational policy from the point of view of capital, which is why Keynesian policies were never introduced to any degree in the 1930s or in current Long Depression. Only Marx’s economics could explain the 1970s, not Keynes. Indeed, in a way, the strategists of capital recognised that too. Their aim was to raise the profitability of capital at all costs as the only way out – not to revert to Keynesian ‘demand management’.

Actually, Keynes himself was not on the side of the workers in a solution to a slump. “In emphasising our point of departure from the classical system, we must not overlook an important point of agreement. … with a given organisation, equipment and technique, real wages and the volume of output (and hence of employment) are uniquely correlated, so that, in general, an increase in employment can only occur to the accompaniment of a decline in the rate of real wages. Thus I am not disputing this vital fact which the classical economists have (rightly) asserted as indefeasible.” So cutting real wages was part of the solution to a slump for Keynes, just as it was with neo-liberal austerity measures.

Keynes also had a theory of declining profitability.  But he saw the decline of the rate of profit not as pointing toward a revolutionary transformation in the mode of production, but rather as representing a progressive softening in the antagonism between the capitalists and the working class.  As capital becomes “less scarce” relative to labour, the rate of profit will fall and real wages will rise. More of the total product will therefore go to the working class and less will go to the capitalists – inequality would decline. As the “scarcity-value” of capital dissipated, according to Keynes, economic growth would peter out. Interest rates would fall to zero or very close to zero, causing the gradual extinction of the hateful “money capitalists.” This would leave the industrial and commercial capitalists able to earn a little extra profit by taking on “entrepreneurial” risks.  Wages up, profits up – in a ‘stationary’ world of superabundance. In 1931, at the depth of the Great Depression, Keynes told his students at Cambridge University, many of whom were becoming attracted to the ‘obsolete’ theories of Marx, that they should not worry.  The Great Depression would pass: it was a ‘technical problem’ that could be corrected.  “I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race.” The long-term future under capitalism through an expansion of technology, and assuming no more wars (!) and population control, would be a world of leisure with a 15-hour week and superabundance for all, well before Marx’s 200th anniversary.  This is the opposite of what Marx predicted. Who was right?

 The level of poverty within ‘rich’ modern economies is still high

The evidence since Keynes dismissed Marx’s theories is that, far from finance capital being consigned to history, finance capital has never been more powerful globally; and inequality of wealth and incomes within national economies and globally has never been more extreme since capitalism became the dominant mode of production. Also, most people in the Western world are still working 40-hour weeks and the level of poverty within ‘rich’ modern economies is still high. In the rest of the world, unemployment, sweated labour and poverty are the modal experience. No world of leisure there. For Keynes, capitalism was the only possible system of human social organisation that delivered economic and political power to people like him. Marxism and communism was a threat to that belief. “How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement?”

In Laisser-faire and Communism, Keynes concluded: “For the most part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight”; while Socialism “is, in fact, little better than a dusty survival of a plan to meet the problems of fifty years ago, based on a misunderstanding of what someone said a hundred years ago.” As we approach Marx 200, the evidence tells the opposite. Marx was closer to the truth.


Paul Mattick Snr, Marx and Keynes: the limits of the mixed economy, Horizon Books Boston 1969
Geoff Pilling, The crisis of Keynesian economics; a Marxist view, Croom Helm, London 1987
John Maynard Keynes,The General Theory of Employment, Interest and Money, Macmillan, Cambridge, 1936

MICHAEL ROBERTS is a financial economist who has worked in the City of London for over 30 years.  In his book, The Great Recession: a Marxist view, he forecast the global financial crash.  His latest book, The Long Depression (Haymarket 2016), looks at the causes of the continued stagnation in the world economy since 2009.


Why we ought to read Keynes with Marx in mind, and why doing so can help us learn – from Keynes. A response to Michael Roberts

To many who subscribe to Marx’s theory and critique of political economy, the economist John M. Keynes is a provocation: aside from Marx, hardly any other scholar so fundamentally challenged the predominant economic theory of his time.

It is no surprise then that many believe Keynes should either be measured against Marx or be thought of as a good supplement. This explains the two predominant approaches in dealing with these two theorists. Some would like to place Keynes and Marx together in the same theoretical toolkit. Others believe Keynes is nothing but a wolf in sheep’s clothing: someone who averted capitalism’s downfall after the great crisis of 1929, who reconciled capitalism once and for all with both the working class and social democracy, but who was also as far from fundamentally questioning it as as he sided outspokenly with the bourgeoisie. According to this view, Marx is closer to the truth, as history has proven, since clever management has not been able to stabilize capitalism.

Focusing on this front alone would soon leave us with nothing more to say; we would end up learning little to nothing – even if much that is true has been said and published. For yes, Keynes can be criticized for many of his ideas – Keynesianism is not necessarily left-wing – but unfortunately, critiques rarely reach deeper than that. Like classical political economy, which Marx analyzes in detail, Keynes too fails to reflect on the assumptions shaping his theory – which affects his theoretical understanding of the interconnectedness of his categories.

Keynes agrees with Marx: The »foundation« of value is labor.

Keynes’ reliance on the categories constituting the object of political economy (e.g. money, capital, profit and interest) is entirely superficial. He seems to treat them as suprahistorical and natural facts instead of accounting for them on the basis of specific social relations. For while Keynes agrees with classical political economy that the »foundation« of value is labor (thereby distancing himself from neoclassical economics), he does not ask why commodity-producing labor must express itself in the form of money and capital (as Marx puts it in Capital) – a question that radically sets apart Marx’s research program and perspective not only from that of classical political economy, but from Keynes as well. It is also a question that allows Marx, in contrast to Keynes, not only to claim the constitutive relevance of money for capitalism, but also establish it.

Marx is concerned not only with illustrating how the labor and production process is effectively a process of exploitation. He is also concerned with outlining the social forms within which this process occurs. Marx distinguishes between the concrete-material dimension of the process of social reproduction on the one hand and the historical determination of its form on the other. This is why he is able to demonstrate that the dominance of the capitalist mode of production leads to money becoming the instance through which privately expended labor-power is necessarily socialized. It is only through money that privately expended labor-power becomes part of aggregate social labor – money did not have this status in every society. It is the decoding of the fetishized and inverted expressions of the social metabolism that constitutes the genuine radicality of Marxian theory.

A comprehensive critique of Keynes still needs to be formulated.

Marx would probably have found more than a few words of praise for Keynes. But it is important to recall: The authors Marx heaped praise upon are precisely the ones he also exposed to harsh criticism. And yet: A comprehensive and fundamental critique of Keynes in the Marxian sense has not been formulated – and it can only be rough-drafted here.

Marx criticizes classical political economy for its failure to grasp the systematic interrelationship between commodity production and monetary phenomena (money). While Keynes also takes note of this, his critique remains limited as he does not lay out why there has to be money alongside commodities and why the capitalist economy cannot function without it. Like classical political economy, Keynes does not advance to the point of formulating a distinction that Marx considered the »pivot« of his own critique, namely the distinction between the formal determination of commodity-producing labor as abstract labor on the one hand and labor as concrete and useful on the other – the distinction between the social determination of form and material appearance. Keynes addresses this only in passing.

This theoretical deficit runs through Keynes’ entire body of work. Thus Keynes is unable to explain why under capitalism actors are necessarily plagued by uncertainty. Corporations cannot know with certainty and in advance whether the capital they deploy will be valorized or whether they will be facing bankruptcy. This uncertainty is not, however, a quasi-natural characteristic of the economy. The main reason why Keynes is unable to explain in detail the speculative character of every capitalist transaction is that he fails to see that the capitalist mode of production, in its drive to continually expand the forces of production, constantly revolutionizes economic relations – in ways that often cannot be anticipated. Thus the uncertainty inherent in investment decisions or the sale of commodities is not something natural that one simply needs to come to terms with – which is why Keynes considers money an »ingenious device«; rather, it is an outcome of specifically capitalist relations.

Much the same is true of the category of interest. Keynes cannot explain how it is even possible that a certain sum of money can yield interest – a task that Marx tackles in the third volume of Capital. Keynes considers the credit relation the dominant economic relation. Production begins with an advance of money, a credit received at a certain interest rate. This forces capital to achieve a certain minimum valorization of the advance. So far, so good. What remains unclear, however, is why capital borrows in the first place. It is only the purpose of production, profit and the social necessity of valorizing value, that encourage it to take up credit: on the one hand in order to thrive in the face of competition, on the other, which would be the ideal scenario, to make the most effective use of opportunities for profit. This is why Marx can say that credit is always also the most powerful lever of overproduction.

The work in progress Marx has left behind can be taken further by means of a critique of Keynes.

The critique outlined here shows that Keynes remains bound to what Marx describes as fetishism and inversion – and this is not without its consequences. This could be illustrated by pointing out a number of examples, such as Keynes’ naive faith in progress and his glorification of technology, which went hand in hand with his faith in science and his naturalization of competition and inequality. This critique of Keynes should not, however, allow us to overlook the fact that the great work in progress Marx has left behind can only be taken further by means of a critique of Keynes and others.

This potential emerges clearly, for example, from Marx’s engagement with the critique of Ricardo formulated by Samuel Bailey (1791–1870). Marx considered Bailey a »vulgar economist«, and pulled his work to pieces. But Marx did recognize that Bailey had pinpointed a weakness in Ricardo’s theory. Bailey demonstrated that Ricardo was unable to provide a convincing conceptual distinction between value and exchange value: value, he argued, could not be absolute (value) and relative (exchange value) at the same time. Against the backdrop of Bailey’s critique of Ricardo, Marx was able to formulate a more precise analysis of the value form – although he saw in Bailey nothing but a »verbal wiseacre«.

Who is closer to the truth? Wrong question!

So what does this have to do with Keynes and the debate over whether Marx or Keynes is closer to the truth? This is simply the wrong question. Marx set himself a different task, and ours should therefore be to read Keynes, a deeply bourgeois economist, with Marx in mind.

Marx did not read »his classics« with superficial political interest (an approach he considered a »vulgar« form of scientific criticism); rather, he was interested in learning what genuine phenomena these authors were grappling with and why they had either failed to contextualize their observations or had based their work on certain implicit assumptions they simply left unquestioned. Thanks to his lead, followers of Marx ought to consider ploughing through the works of Keynes (as well as those of Hyman P. Minsky or the neo-Ricardian Piero Sraffa, for example). After all, political economy has evolved since Ricardo, and an up-to-date critique of political economy needs to do more than merely point out that Keynesianism has failed or accuse Keynes of standing on the wrong side of the barricade – in particular since Marx’s critique of political economy is anything but a completed project.

The second and third volumes of Capital were edited by Engels, and the manuscripts have only been fully available since 2012. The excerpts Marx produced in the course of his project have still not been fully published. The critique of political economy is a major work in progress; it has gaps and constructional errors, a fate Marx’s work shares with Keynes’. In his case too, the original text has been subject to revisions. Manuscripts discovered in Keynes’ country house in the mid-1970s show that while he was working on his General Theory, Keynes sketched the outlines of a »monetary theory of production«, for which he drew, among others, on Marx. This means there is a lot of material awaiting critical assessment and reappraisal, in particular because the texts were published at a time when Keynes had been marginalized by the neo-classical mainstream (and a number of Marxist critiques of Keynes had already been formulated). For Keynes early suffered a fate similar to Marx: He was absorbed by a Keynesianism that ultimately had little in common with its namesake. In the words of Minsky: »The popular semi-mathematical statements of The General Theory […] transformed […] into a nice, polite interdependent equilibrium system. […] Keynes’s theory was transformed into a system that sought and sustained equilibrium: Keynes’s theory was stood on its head.«

What then can we learn from Keynes?

The overall process of capitalist production
Keynes begins his analysis of the capitalist production process as a whole where Capital leaves off – and Marx finds himself confronting a number of problems. Marx’s manuscripts for the second volume of Capital show that he was struggling with his material. It is only in the seventh manuscript (written between 1878 and 1880) that he addresses the monetary mediation of the reproduction process. While his overcoming of the »perspective of the monetary veil« (with regard to the circulation process of capital) marks a breakthrough, it also raises many questions that Marx did not address, e.g. concerning the implications of this breakthrough for what he had argued previously and, most importantly, for the reproduction process of aggregate social capital. After all, interest-bearing capital and credit are not addressed until the third volume, the manuscripts for which were, however, written during an earlier period (1863 to 1867). Moreover, the third volume lacks the analysis of aggregate social capital concluding the first two volumes.

The functions of money
Keynes enables us to advance our analysis of the functions of money, e.g. the motives for holding money. In the first volume of Capital (chapter three), Marx addresses hoarding, which seems like a placeholder, since here money is withdrawn from circulation and valorization, and thus made dysfunctional: under capitalism, hoarding makes no sense, and so once the money market and the credit system have been included in the picture, hoarding as a category ought to dissolve. Keynes’ concepts of the liquidity premium, precautionary balance and idle balance allow us to address the holding of money as something that results from the logic of the capitalist reproduction process itself (even though Keynes can not explain why the capitalist mode of production systematically produces uncertainty; these concepts therefore have a certain psychologistic bias – see above).

The hierarchy of currencies
The analysis of money can moreover be extended to currencies, which Marx did not have the time to address, and therefore considered gold to be the global currency – even though the British pound had already assumed this role in his day. After all, money is not simply money. It is always a currency, and as such, it does have a price, unlike what Marx claims in the first volume of Capital: it always has an exchange rate as well as an interest rate. Money capital invests in some currencies more than in others, with one currency situated at the top of the hierarchy of currencies as world money. This is something that can be grasped on the basis of Keynes, and it is vital for the analysis of what Marx calls the world market (cf. the work of the post-Keynesians Paul Davidson and Hansjörg Herr).

The hierarchy of markets
In Keynes, the centrality of money is the basis for a hierarchy of markets: wage-earners receive money from employers, who in turn access it via the capital market in the form of credit. Thus the money and capital market assumes a dominant role vis-à-vis other markets. This is an idea that Marx formulates, but does not elaborate on. It is not without reason that he returned to the subject years later.

Trajectories and forms of economic crisis
During the 1870s and 1880s, Marx developed a renewed interest in the money and capital market, crises, currencies and the central bank. He wanted to understand the development of crises in detail before putting his analyses to paper, and even considered fundamentally revising the first volume of Capital. His reasons for this are content-related, And they are just as rarely discussed as the fact that bourgeois economists such as the post-Keynesian Minsky have much to say about money, monetary crises and the trajectories of crises. Their insights ought to be critically appropriated into the research program that is the critique of political economy (on the most recent crisis, see e.g. Bellofiore/Halevi).

In other words, given the many unresolved issues Marx has left behind, an even closer reading of his works will hardly help us – just as little, in fact, as holding on to the self-satisfied conviction that it is Marx’s position, rather than Keynes’, that we should trust.

Works Cited
John Maynard Keynes, The General Theory of Employment, Interest and Money, London: Macmillan,1936.
John Maynard Keynes, »A Monetary Theory of Production« (1933), in: Collected Writings, vol. 12, London: Macmillan, 1973, pp. 408–411.
John Maynard Keynes, »Towards the General Theory« (1932–1935), in: Collected Writings of John Maynard Keynes, vol. XXIX: The General Theory and After. A Supplement, London: Macmillan, 1979, pp. 35–162.

INGO STÜTZLE has organized reading groups on Karl Marx’s Capital for the Rosa Luxemburg Foundation. He is managing editor of the journal PROKLA. Zeitschrift für kritische Sozialwissenschaften and a contributor to the edition of Marx’s and Engels’ works published by the Karl Dietz Verlag. His most recent publications are a critical introduction to Thomas Piketty (London/New York: Verso 2017; Berlin: Bertz + Fischer, 2014) and “Austerität als politisches Projekt. Von der monetären Integration Europas zur Eurokrise” (Münster: Westfälisches Dampfboot, 2014).