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Cooking The Books 2:A Nobel Prize for Marx?

“If Karl Marx and V. I. Lenin were alive today, they would be leading contenders for the Nobel Prize in economics”, wrote Paul Craig Roberts, former editor of the Wall Street Journal and an Assistant Secretary of the Treasury under Reagan, in an article on Counterpunch last year

“Marx”, he added in explanation, “predicted the growing misery of working people, and Lenin foresaw the subordination of the production of goods to financial capital's accumulation of profits based on the purchase and sale of paper instruments.”

Lenin first. He didn’t write much on economics but the two books he published on the subject are not too bad. Both rejected “underconsumptionism”. The first, The Development of Capitalism in Russia (1899) was a refutation of the Narodnik view that capitalism could not develop in Russia because of a lack of markets. The second, Imperialism, the Highest Stage of Capitalism (1916), argued that the imperialism that characterised the thirty or so years till the WWI was caused by profits in colonies being higher than at home. (The nonsense about some workers in the imperialist countries sharing in the exploitation of the colonies was only added in the introduction to the 1920 French and German editions). It was heavily based on a work, Finance Capital, A Study in the Latest Phase of Capitalist Development (1910), by the Austrian Social Democrat Rudolf Hilferding. So, if anyone deserves a Nobel Prize for analysing financial capital (at least in continental Europe) it would be Hilferding rather than Lenin.

As to Marx, he did write of the “increasing immiseration” of the working class as capitalism developed, but he did not intend this to be understood as the whole class necessarily becoming worse off materially. “Misery” included the quality of life and work and social factors such as the gap between rich and poor and not just the quantity of goods consumed. So misery could increase along with increased consumption. If Marx had meant “increasing pauperisation” (a view long supported by the old Communist Party) then he would have been proved wrong and so be out of the running for a Nobel Prize.

Even so, Roberts wrote that the working class in America is now materially worse off than it was twenty years ago:

“In this first decade of the 21st century there has been no increase in the real incomes of working Americans. There has been a sharp decline in their wealth. In the 21st century Americans have suffered two major stock market crashes and the destruction of their real estate wealth. Some studies have concluded that the real incomes of Americans, except for the financial oligarchy of the super rich, are less today than in the 1980s and even the 1970s. I have not examined these studies of family income to determine whether they are biased by the rise in divorce and percentage of single parent households. However, for the last decade it is clear that real take-home pay has declined.”

The explanation he offers is “financial capital’s power to force the relocation of production for domestic markets to foreign shores. Wall Street’s pressures, including pressures from takeovers, forced American manufacturing firms to ‘increase shareholders’ earnings.’ This was done by substituting cheap foreign labor for American labor.”

There could be something in this but there’s no way of reversing it. Capital will always flow where the profits are highest. That’s its nature.