In the News (from RollingStone): “There’s a lot of talk of Karl Marx in the air these days … But few people actually understand Marx’s trenchant critique of capitalism. Most people are vaguely aware of the radical economist’s prediction that capitalism would inevitably be replaced by communism, but they often misunderstand why he believed this to be true. …
“Here are five facts of life in 2014 that Marx’s analysis of capitalism correctly predicted more than a century ago:
1. The Great Recession (Capitalism’s Chaotic Nature)
The inherently chaotic, crisis-prone nature of capitalism was a key part of Marx’s writings. He argued that the relentless drive for profits would lead companies to mechanize their workplaces, producing more and more goods while squeezing workers’ wages until they could no longer purchase the products they created. Sure enough, modern historical events from the Great Depression to the dot-com bubble can be traced back to what Marx termed ‘fictitious capital’ – financial instruments like stocks and credit-default swaps. We produce and produce until there is simply no one left to purchase our goods, no new markets, no new debts. The cycle is still playing out before our eyes: Broadly speaking, it’s what made the housing market crash in 2008. Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows left to scheme, the whole façade fell apart, just as Marx knew it would.
2. The iPhone 5S (Imaginary Appetites). Marx warned that capitalism’s tendency to concentrate high value on essentially arbitrary products would, over time, lead to what he called ‘a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural and imaginary appetites.’ It’s a harsh but accurate way of describing contemporary America, where we enjoy incredible luxury and yet are driven by a constant need for more and more stuff to buy… While Chinese families fall sick with cancer from our e-waste, megacorporations are creating entire advertising campaigns around the idea that we should destroy perfectly good products for no reason.
3. The IMF (The Globalization of Capitalism). Marx’s ideas about overproduction led him to predict what is now called globalization – the spread of capitalism across the planet in search of new markets. ‘The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe,’ he wrote. ‘It must nestle everywhere, settle everywhere, establish connections everywhere.’ While this may seem like an obvious point now, Marx wrote those words in 1848, when globalization was over a century away. And he wasn’t just right about what ended up happening in the late 20th century – he was right about why it happened: The relentless search for new markets and cheap labor, as well as the incessant demand for more natural resources, are beasts that demand constant feeding.
4. Walmart (Monopoly). The classical theory of economics assumed that competition was natural and therefore self-sustaining. Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other… Politicians give lip service to what minimal small-business lobby remains and prosecute the most violent of antitrust abuses – but for the most part, we know big business is here to stay.
5. Low Wages, Big Profits (The Reserve Army of Industrial Labor). Marx believed that wages would be held down by a ‘reserve army of labor,’ which he explained simply using classical economic techniques: Capitalists wish to pay as little as possible for labor, and this is easiest to do when there are too many workers floating around. Thus, after a recession, using a Marxist analysis, we would predict that high unemployment would keep wages stagnant as profits soared, because workers are too scared of unemployment to quit their terrible, exploitative jobs.
In Conclusion: Marx was wrong about many things. Most of his writing focuses on a critique of capitalism rather than a proposal of what to replace it with. But his work still shapes our world in a positive way as well. When he argued for a progressive income tax in the Communist Manifesto, no country had one. Now, there is scarcely a country without a progressive income tax, and it’s one small way that the U.S. tries to fight income inequality. Marx’s moral critique of capitalism and his keen insights into its inner workings and historical context are still worth paying attention to. As Robert L. Heilbroner writes, ‘We turn to Marx, therefore, not because he is infallible, but because he is inescapable.’”
My Comment: Baal HaSulam’s opinion is that, tracing the mechanism of natural development, Marx noted only the results of the positive and negative forces, i.e., creation and destruction that are produced in society.
Accordingly, he planned his tactics and did not pay attention to the causal factors that lead to such consequences. It’s like a doctor who does not pay attention to the root of the disease and treats the patient based just on its external manifestations (modern medicine operates on the same principle).
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In the News (from Forbes): “Last week a failure by Shanghai Chaori Solar Energy to meet interest payments on its debt became China’s first onshore corporate bond default, prompting some alarmed and alarming talk about a wave of defaults across China. …
