Will Yearsley, “Masters of Money (Episode 3:Marx)” (2012)
The third and final episode of this rather so-so series on significant economist / philosophers who influenced 20th century politics and economics focuses on a 19th century philosopher, Karl Marx, more usually thought of as the father of Communism, with all the historical, political and cultural baggage that followed in its wake: the aim is to find if Marx’s writings have anything to say about the Global Financial Crisis of 2008, what caused it and what will follow afterwards. Presented by Stephanie Flanders, the episode is a fairly broad summary of what Marx had to say about capitalism, what he thought its problems and prospects were, and whether he might be right or wrong.
Turns out that Marx indeed had a lot to say about capitalism and, moreover, had a great admiration for its dynamism and capability as a system of organising society and generating culture in the way it directs the production and distribution of goods and services. At the same time, Marx realised that this system has an essential weakness: it is a system that lurches from one economic crisis to the next. The system is inherently unstable and is only as good as the current temporary fix. The problem is that money is central to the way capitalism operates: the price mechanism depends on money as a measure of value and determines what goods and services are produced and how they are distributed. The production, distribution and sale of goods and services generate profits for the capitalists, the owners of the means of production, distribution and pricing. At the same time, the capitalists are loath to pay more wages to the workers, whose brains and hands produce, distribute and sell the goods and services, as higher labour costs will eat into the capitalists’ profits. The problem is, who buys the goods and services? … well, it’s none other than workers. The result is that capitalism constantly moves towards a state in which capitalists seek as much profit as they can from the surplus value of the workers’ labour (the value of the goods that is over and above the cost of labour in producing the goods) but because the workers don’t earn enough from what they make, they can’t buy the goods. This sets up a situation in which too little money chases too many goods and services (deflation) and, as Keynes recognised, this will depress consumption which in turn depresses business confidence, leading to a contraction in production which in turn forces capitalists to sack workers. Unemployment shoots up, prices of items might slump (or they might not), people have nothing and become desperate.
Marx’s theory, when applied to the current global economic scenery, has quite a lot to commend it. Since 1980, when economic and financial deregulation became the trend to break the previous decade’s economic fug, workers’ real wages (as opposed to money wages) have fallen, capitalists’ profits and incomes have risen, social-economic inequalities have widened. The demise of Communism and the opening up of new economies in eastern Europe and Asia, especially China, have brought in new workers into global capitalist systems leading to outsourcing of work from First World countries to Second and Third World countries, depressing wages and standards of living in the First World while raising them in Second and Third World nations. First World economies attempted to stave off discontent by the relaxation of controls on credit and banks, exhilarated with the freedom and power that financial deregulation brought, were only too happy to oblige; the result was a series of financial bubbles, starting with savings and loan financing bubbles, various other Ponzi schemes, the subprime mortgage bubble, the dotcom bubble and currently (in the US anyway) the student loan bubble and the shale oil bubble and other related fossil fuel bubbles. All this activity in its essence follows Marx’s prediction.
Marx correctly saw that capitalism itself was the problem and the solution was to get rid of it; unfortunately he was unable to propose an alternative system of determining and organising the institutions, the structures, networks and relationships needed to pinpoint people’s needs and wants, find the raw materials and create and produce from them the items and services to serve those needs and wants, and then distribute them in ways that would fulfill or at least satisfy those needs and wants quickly and without wastage. As presenter Stephanie Flanders observes, Marx was no more able to predict our present world than a mediaeval peasant could have predicted Marx’s world. The program concludes that, for now, capitalism will continue to muddle along, lurching from one economic or financial crisis to the next, patching up leakages here and there, and somehow satisfy most people’s needs and wants. There may be talk of revolution but current political and economic institutions and structures remain firmly in place.
The impression that comes to me is that the program, like Marx in his later years, suffers from a failure of imagination. The system may not be perfect, the program seems to say, but it’s worked fine in the past, it brought wealth and decent standards of living to huge numbers of people across the planet so it must have done some good – all it needs is the right adjustment and the next temporary fix that comes along hopefully will last a lot longer than the previous technical fixes. Look at food production: capitalism, thanks to private companies, has brought fresh food from all over the world to people in First World countries – or so says the program. The problem with this though is that, as Marx realised, capitalism creates society and culture in its image, and the society and culture it produced was a rapacious one that in its extreme manifestation was economic imperialism during the nineteenth and twentieth centuries. So much of what we enjoy is possible because governments and the private companies have often worked to deny other people’s needs, wants, rights and freedoms and taken land and its bounty away from them to produce goods to sell to us for profit. The fresh food we enjoy is food that could have fed its rightful owners first. In addition, what freedoms, rights and luxuries we enjoy or take for granted often turns out to been things our ancestors fought and died for in the form of protests, demonstrations and industrial unrest. Any trickle-down of wealth from private companies and corporations (the modern capitalists) to workers is something that had to be legislated for by governments pressured by voters and lobby groups on their behalf.
Capitalism survives because the society it creates keeps people in competition against one another, helping to create what Marx called anomie, and enables capitalists and those who work for them (governments and armed forces in the main) to exercise soft power over workers through culture. The program itself and many of the people Flanders consults and interviews in the program are examples of the exercise and maintenance of soft power. Technology also is another form of soft power that enables capitalism to survive. What will overthrow capitalism will either be capitalism continuing down its own cul-de-sac, becoming in the process a sociopathic parody of itself, cannibalising its children perhaps; or a completely new system of organising production and distribution of goods and services, underpinned by values that encourage co-operation instead of competition, diversity and tolerance of opinion and creativity instead of a polarised view of the world (capitalists versus workers), and a standard of measuring people and the objects they produce and consume that encourages the preservation of life on its own merits instead of its exploitation for the benefit of a few.
In particular, a system of exchange of goods and services that does not rely on debt in order to create money and circulate it is needed in a post-capitalist society; as some commentators have argued and still do, the use of debt in driving the flow of money forces individuals, groups and many businesses, even large companies, alike to give up power to banks and other financial institutions. The financial economy usurps the real economy in determining what is produced and who consumes it. Interestingly, debt was something that Marx failed to incorporate in his analysis of capitalism.
While the “Masters of Money” series can be interesting at times, it works best as an introduction to the work of the three economists / philosophers featured but that is really all that can be said for it. I sense a distinct lack of interest on the BBC’s part in exploring and questioning issues deeply. To me, that squares with the BBC becoming more of a mouthpiece for global plutocrat interests.