Finance capital!

Marxism has become awfully unfashionable in the last four decades, and not without good reason. Its utopian experiments have failed, and even in academia, where it was very strong (though hardly dominant) when I entered graduate school in 1971, it has been overtaken by more trendy ideologies involving gender and race. The experience of countries like the Soviet Union and China suggest that its visions simply do not reflect human nature, although the Chinese experiment has shown, to the surprise of many, how surprisingly it can evolve. Yet ironically, it has occurred to me over the last couple of months, one could argue that at no time have advanced countries seemed closer to confirming certain critical Marxist-Leninist hypotheses than right now.

Let us get one thing on the table first: Marxism would never have become so influential had not Marx come up with some world-historical insights of great importance. Marx understood both the significance of the bourgeois and capitalist revolutions--which were actually only just beginning in Germany when he began studying these questions--and some of the consequences that they were destined to have. The failure of regimes based upon his thinking should not blind us to the genius of some of his thought--for instance, with respect to the relations between the newly capitalist West and the rest of the world. Here, in one of his most striking passages, is how he and Engels described that iteration in the Communist Manifesto, written in 1848.

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.

One must keep in mind that when this passage was published in 1848, the whole gigantic process it describes had barely begun. That is evidence both of the genius and the flaws in Marxist theory: while on the one hand Marx could see where certain only embryonic developments would lead, he also committed himself to a vision of a world transformed by further processes--the proletarian revolution--that had not yet even begun. Had he stuck to analyzing bourgeois capitalism and its consequences his work might have been more enduring. As it was it provided a foundation for various political movements, the most important of which was led by V. I. Lenin.

In 1917, at the height of the First World War, Lenin published Imperialism, the Highest Stage of Capitalism., many of whose ideas were borrowed from a bourgeois English critic of imperialism, J. A. Hobson. There were, as I recall, three major parts of Lenin's argument.

First, finance, rather than industry, had become, Lenin argued, the leading sector of capitalist economies. Secondly, having exhausted opportunities for investment at home, capital was forced to seek new markets for investment abroad, most notably in Asia and Africa. And thirdly, because finance capital controlled governments, the World War had broken out because of the efforts of the leading industrial powers to control larger shares of those critical new markets in poorer countries of the world.

Like Marx's passage about the worldwide impact of capitalism, these arguments had more than a grain of truth. Tragically, although the European nations, the United States and Japan did not need to control third world countries, the desire to do so was indeed large part of the reason for the outbreak (and the persistence) of the First World War. The Second World War grew out of German and Japanese attempts to find a different solution to the problem of resources and markets, by conquering autarkic empires. The capitalists, however, learned from their mistakes. For the last 60 years the industrialized world has accepted the political and military pre-eminence of the United States and the economically privileged status of the dollar, largely, I would argue, to avoid the kind of political and economic competition that had such disastrous consequences in the first half of the last century. Competition among capitalists did not become hopeless.

At the same time, capital, and production, have been flowing steadily to the Third World for a long time now, chasing cheap labor, just as Marx and Lenin had predicted. Again some cooperative relationships have emerged: China wisely (in my opinion) takes the dollars it accumulates by producing for our needs and invests them in American securities. But this process has actually brought about something that Marx predicted for industrial economies: the gradual impoverishment of the proletariat. In the middle of the last century, shaken by Fascism and Communism, the western nations wisely promoted trade unions and a variety of benefits for ordinary people. Now, especially here in the United States, unions and the good jobs they protected have been in headlong retreat for more than thirty years. Indeed, the whole drama of our current political crisis, as I have already argued here, revolves around the issue of whether the Obama Administration will actually be able to give the American working class a better life, or whether enough of them will be moved by anger and resentments to return the Republican Party to power.

But the last and most troubling aspect of Marxist Leninism at the moment has to do with finance capital. Our economy remains a mess. The President made a serious mistake yesterday, in my opinion, to suggest that the economic news in any way suggested that we were emerging from the recession. Jobs are still down and unemployed Americans are still on the rise. The only reason the unemployment rate dropped last month was that the total of those employed and seeking work fell, as more people dropped out of the labor force. I plan to investigate this situation more thoroughly this week; suffice it to say for the moment that things are not, as yet, improving.

Yet despite this, Wall Street has been in the midst of an extraordinary rally for months, and is threatening the 10,000 barrier again. Finance capital--as embodied in the big banks, also showing renewed profits, and Wall Street--suddenly seems to me to be more or less completely disconnected from the actual productive sectors of the economy, and from the life of ordinary Americans. This is a staggering and obviously very important development. The stock market began as a place where business firms could raise money they would repay in profits, but it now seems to be something very different, a speculative futures market which will go up as long as there is money to fuel it. And that money, of which there has been more than enough for the last six months or so, is not coming from any increase in economic activity. I am afraid, in fact, that it is coming from the enormous infusions of cash the Federal Reserve Board is putting into securities markets, and I read one article from the Wall Street Journal some time ago that suggested it was coming from the stimulus. The apparent lack of much connection between the fortunes of our financial giants and the American people strikes me as worthy of more investigation. It is not reassuring.

Marxism and Leninism are not the answer to our current woes--but I do not think we know what the answer is. I am not sure anyone really understands our economy as it has evolved, or how to make it benefit the mass of Americans. I am sure we can make some progress, but only by admitting what we do not know.