krebscycle

Marx considered himself to be carrying on the work of economists like Says and Ricardo – the founders of what has developed into the dominant “neoclassical” economics. It’s customary to think of Ricardo and his “bourgeois” successors as being the antagonists of Marx and his followers but there was a third option represented by the “American system” economists – who, to me, anticipate Keynes. Here’s Marx, deriding Henry Carey:

Now, in the United States bourgeois society is still far too immature for the class struggle to be made perceptible and comprehensible; striking proof of this is provided by C. H. Carey (of Philadelphia), the only North American economist of any note. He attacks Ricardo, the most classic representative of the bourgeoisie and the most stoical opponent of the proletariat, as a man whose works are an arsenal for anarchists and socialists, for all enemies of the bourgeois order. He accuses not only him, but also Malthus, Mill, Say, Torrens, Wakefield, MacCulloch, Senior, Whately, R. Jones, etc. — those who lead the economic dance in Europe — of tearing society apart, and of paving the way for civil war by showing that the economic bases of the various classes are such that they will inevitably give rise to a necessary and ever-growing antagonism between the latter. He tries to refute them, not, it is true, like the fatuous Heinzen, by relating the existence of classes to the existence of political privileges and monopolies but by seeking to demonstrate that economic conditions: rent (landed property), profit (capital) and wages (wage labour), rather than being conditions of struggle and antagonism, are conditions of association and harmony. All he proves, of course, is that the ‘undeveloped’ relations in the United States are, to him, ‘normal relations.’ [ Letter to Weydemeyer] 

The key point that Marx makes here, correctly I think, is that Ricardian economics necessarily implies a brutal “class struggle” between the land owners, investors, and workers “that the economic bases of the various classes are such that they will inevitably give rise to a necessary and ever-growing antagonism between the latter.”  To Ricardo, this was just the natural order of things. To Marx it was a historical period that was both in flux and determined to end in revolution. Here’s Ricardo:

When the market price of labour is below its natural price, the condition of the labourers is most wretched: then poverty deprives them of those comforts which custom renders absolute necessaries. It is only after their privations have reduced their number, or the demand for labour has increased, that the market price of labour will rise to its natural price, and that the labourer will have the moderate comforts which the natural rate of wages will afford.

Here’s Marx, from the same letter:

Now as for myself, I do not claim to have discovered either the existence of classes in modern society or the struggle between them. Long before me, bourgeois historians had described the historical development of this struggle between the classes, as had bourgeois economists their economic anatomy. My own contribution was 1. to show that the existence of classes is merely bound up with certain historical phases in the development of production; 2. that the class struggle necessarily leads to the dictatorship of the proletariat; 3. that this dictatorship itself constitutes no more than a transition to the abolition of all classes and to a classless society.

So,  one fundamental difference between Ricardo and Marx is that Ricardo expects starving workers to starve down to a manageable number in an eternal process and Marx expects them to rebel successfully in a historically mandated Hegelian Redemption.  The sin of Carey is to claim that commerce and industry do not need to be organized in this way but can be made to benefit the commonwealth. Obviously, even in the current recession, the empirical condition of the world shows that Carey was right – that the standard of living of the working class is not constrained by economic law to bump along a “natural” level of poverty immiserating the working class forever or until the Revolution gets scheduled, whichever comes first. Here’s Brad Delong quoting Joan Robinson: 

“[Keynesian success provides] the strongest argument against socialist critics. “You used to complain… with… justification, that a capitalist system that permits heavy and chronic unemployment is indefensible. Now we offer you capitalism with a high and stable level of employment.”… Marxist critics have understood that Keynes’ theory leads to conclusions which from their point of view are reactionary. They therefore deny the logic of [Keynes’s] analysis… [make] alliance with the protagonists of the humbug of finance…. Professor Baran… bring[s] in the quantity theory to show that [Keynesian fiscal polices] cannot work because government expenditure causes inflation. This is another example of confusion between logic and ideology. Because Keynes has shown a way for the capitalist system to remove its most obvious defect, he is a reactionary and therefore his theory is false. But if [Keynes’s] theory were false it would be quite harmless…. [It is that] the diagnosis was correct, the treatment… work[s], and the life of the patient is being prolonged [that is so] disconcerting [to the Marxist] would-be heirs…“] [in the comments]

What Delong does not seem to realize, or more likely has not looked at the implications of,  is that Keynes is similarly devastating to classical economics. Here’s Joan Robinson again:

I was a student at a time when vulgar economics was in a particularly vulgar state. There was Great Britain with never less than a million workers unemployed, and there was I with my supervisor teaching me that it is logically impossible to have unemployment because of Say’s Law.

Now comes Keynes and proves that Say’s Law is nonsense (so did Marx, of course, but my supervisor never drew my attention to Marx’s views on the subject). Moreover (and that is where I am a left-wing Keynesian instead of the other kind), I see at a glance that Keynes is showing that unemployment is going to be a very tough nut to crack, because it is not just an accident – it has a function. In short, Keynes put into my head the very idea of the reserve army of labour that my supervisor had been so careful to keep out of it. [Jacobin] [thanks to Mike Beggs for publishing this]

Carey called Ricardian economics a “system designed to justify the misery it causes” and, it’s fascinating to see that one of Marx’s responses to Carey was a series of essays essentially justifying British colonial rule in India as a necessary step towards first Capitalist excess and second the imagined revolution. But Keynes was not up for the idea either that immiseration was the fate of mankind or the necessary step to utopia.