Why Keynes was wrong

RP 171 () / Review

Terry Eagleton, Why Marx Was Right, Yale University Press, New Haven CT, 2011. 258 pp., £16.99 hb., 978 0 30016 943 0.

Paul Mattick, Business As Usual: The Economic Crisis and the Failure of Capitalism, Reaktion Books, London, 2011. 126 pp. £12.95 pb., 978 1 86189 801 2.

Stephen Harper

In 2008, as journalists and pundits struggled to account for the return of a crisis that was not – following political promises of ‘the end of boom and bust’ – supposed to recur, copies of Capital and The Communist Manifesto reportedly flew off bookshop shelves. Even some mainstream media commentators began to wonder if Marx might have been right all along. But such doubts – coming from commentators not accustomed to harbouring them – were often as ephemeral as they were grudging, and lay readers seeking robust but accessible understandings of Marxist thought have hardly been well served in recent years. This year, however, has seen the publication of at least two new, highly accessible books – written by, respectively, a veteran Marxist literary critic and one of the US’s most clear-sighted Marxist polymaths – which argue, in detail, for the continuing and deepening relevance of Marx’s ideas for our times.

In Why Marx Was Right, with characteristic erudition and verve, Terry Eagleton addresses the commonplace charges that Marxism represents a utopian, soulless, outdated, unduly statist, unnecessarily violent or economically determinist school of thought. Eagleton gamely takes on and demolishes these criticisms one by one, showing Marx to be a flexible, pragmatic and undogmatic thinker and arguing for the eminently human – even humanist – character of Marx’s political outlook. Importantly, too, he distances Marxism from the terrorisitic regimes of the twentieth century that claimed to operate in its name. Maoism and Stalinism, he notes, were ‘botched, bloody experiments which made the very idea of socialism stink in the nostrils of those elsewhere in the world who had most to benefit from it’.The criticisms of Marxism addressed in the book are the ones typically levelled by Marx’s right-wing critics (while they are not mentioned by name, the latter would surely include philosophical anti-Marxists such as John Gray) – and rightly so, since these are the criticisms that Eagleton’s intended audience is most likely to have encountered. Those seeking some discussion of the more sophisticated interventions into Marxist theory made by anarchists, autonomists and left communists will, however, be disappointed. Indeed, while it would be impossible for a short polemic such as Eagleton’s to deal even cursorily with every political school of thought influenced by Marxism, the version of Marxism defended here is broadly Trotskyist, and other Marxist traditions are given somewhat short shrift. Eagleton dismisses as ‘ultra left’, for example, those Marxists who ‘look to revolution rather than to parliamentary democracy and social reform’, a point which is followed by a joking footnote that mocks the supposed absurdity of left-communist positions: ‘In the militant 1970s, … the true purists or ultraleftists … were those who were able to return an unequivocal No to the question “Would you call the bourgeois fire brigade”.’ This dismissiveness towards ‘ultra left’ positions is unfortunate, since elsewhere in the book Eagleton is at pains to emphasize that matters to which he devotes extended discussion – such as the desirability of ‘market socialism’ – have been the subject of serious debate among Marxists themselves; but it is also indicative of Eagleton’s tendency to emphasize the humanistic and reformist, rather than the revolutionary, aspects of Marx’s thought.

Indeed, while Eagleton is certainly not neglectful of history – he notes, for example, that the composition of the working class has changed significantly since Marx’s time – he does tend to present the reformist character of nineteenth-century socialism as more or less adequate in the current era. But capitalism today is not the same as that which confronted workers in Marx’s time. The nineteenth century, for all its horrors, was a period of rising wages and capitalist expansion, in which unions served as more or less effective organs of working-class reformism. The revolutionary wave of the early twentieth century, by contrast, indicated that the communist transformation of society was possible. The state, meanwhile, has grown enormously in size and scope since that period, absorbing the unions, which have in turn played a mostly reactionary role by supporting the world wars and dividing struggling workers by nation, sector and job role – however militant their rank-and-file members may be. However one describes such historical shifts (as a movement from formal to real subsumption, from ascendance to decadence, etc.), their political ramifications cannot be ignored. The qualitative differences between the capitalism of Marx’s day and ours have changed the rules of the game, transforming the nature of working- class organs of struggle. Admittedly, it is difficult to take full account of a century and a half of capitalist development in a short polemic such as Eagleton’s; nevertheless, Why Marx Was Right does rather underestimate the dramatic shift in the nature of capitalism since the beginning of the twentieth century and its implications for proletarian political strategy.

On a more prosaic level, some readers may find the relentlessly puckish literary style of Why Marx Was Right irritating. Eagleton, as always, is droll; but the characteristic trope of illustrating abstract concepts with vividly concrete images and eccentric analogies – to which the author gives full rein – is often more grating than illuminating. ‘To judge socialism by its results in one desperately isolated country’, he writes of the Soviet Union under Stalin, ‘would be like drawing conclusions about the human race from a study of psychopaths in Kalamazoo’. Despite these reservations, however, Why Marx Was Right will provide reassurance to newcomers to Marxism – of which, in these troubled times, there are many – that Marx did not hold all, or even any, of the views attributed to him by his detractors.

Since Eagleton is more concerned with defending Marxism from attack than advocating it as a means of critique, a better – albeit less stirring – title for his book might be Why Marx Wasn’t Wrong. In fact, Eagleton’s actual title rather better describes the stance of Paul Mattick Junior’s  Business As Usual. At just 126 pages including footnotes, Mattick’s book offers a Marxist explanation of capitalist crisis for a lay readership in a highly condensed format. Beginning with an analysis of the longue durée of capitalist business cycles, Mattick shows, in characteristically precise and jargon-free prose, how Marxian economic theory offers resources for explaining the latest crisis of the system in its historical context. Mattick is well qualified for this task: just as his father, the council communist Paul Mattick Senior, had used Marxian economics to predict the ultimate failure of postwar welfare Keynsianism in his 1962 book Marx and Keynes, Mattick’s Marxist method has enabled him correctly to predict the ways in which the economic crisis would unfold since 2007. As Mattick stresses, such predictional accuracy is not a matter of intelligence or insight, but is rather ‘a matter of knowing how to think about what is going on’. Indeed, continuing the theme of one of Mattick’s earlier books, Social Knowledge, Marxism is posited here as the best guide to acquiring knowledge in the social sciences. As such, one of this book’s clearest messages – recalling his father’s argument in Marx and Keynes – has  to do with the bankruptcy of mainstream economic analysis.

In the first part of the book, Mattick addresses some common misconceptions, arguing that economic crises are not, as is often claimed, caused by ‘exogenous shocks’ to the system, but are internal to the dynamics of capitalism. However, the central problem with mainstream accounts of the recent crisis, Mattick argues, lies in their mistaken assumption that the point of capitalism is to create goods in order to satisfy consumer demand, rather than that capitalists aim to create profit. Thus, in response to Keynesian commentators such as Paul Krugman, whose recommendations for beating the recession include massive stimulus spending and job-creation schemes, Mattick points out that ‘capitalism is a system not for providing “employment” as an abstract goal, but for employing people who produce profits’. And therein lies the problem. Following the work of Robert Brenner, Mattick points to the more or less steady decline, since the mid-1970s, in levels of capital investment and profitability – a decline that would have led to a crisis much earlier had its effects not been staved off by enormous levels of private, public and government debt.

While emphasizing the cyclical nature of economic downturn, Mattick notes that the present crisis is unfolding in a radically different context to that of earlier depressions. The state-capitalist solution of large-scale government spending that was implemented by leaders from Roosevelt to Hitler in response to the depression of the 1930s is virtually impossible to implement today (and in any case, as Mattick points out, it was actually the Second World War, not these Keyenesian measures, that finally enabled capitalism to climb out of depression). Keynesians, argues Mattick, have never faced up to the long-term consequences of government borrowing, which has now spiralled out of control – in the USA it has risen from $16 billion in 1930 to £12.5 trillion today – raising the prospect of default for many countries. Governments are therefore caught between the rock of allowing the crisis to ‘play out’, imposing austerity and trying to contain the ensuing social unrest, and the hard place of stimulus spending, which will lead to disastrously high levels of government debt.

An added problem is that capitalism today is integrated as never before in its history, so that any solutions that capitalism invents to remedy its own problems must be international in nature – a virtual impossibility in a world of competing nation-states. World war has, of course, traditionally offered one such global solution for capitalism; but, as Mattick notes, although the world today is racked by conflict, mobilizing an (as yet) undefeated working class for a world war would prove difficult for the ruling class (although, in a world full of nuclear weapons, one wonders if troop mobilization would even be necessary). Moreover, even if the economy does temporarily recover, this will only exacerbate the environmental destruction and depletion of natural resources that already threaten to render the planet uninhabitable for human life.

In the book’s final pages, Mattick is upbeat about the decline of the ‘traditional’ Left of ‘parties, unions and radical sects’, arguing that the solution to the problems created by capitalism will have to come through the actions of ordinary people. This might begin with people simply taking and using housing, food and other goods, organizing production and distribution to meet their own needs. In this, Mattick sounds a refreshingly pragmatic and undogmatic note, and, unlike Eagleton, shows an awareness that organs such as the unions no longer serve the progressive function they once did. Inevitably, however, some Marxists will feel that Mattick, by seeming to present the overcoming of capitalist social relations as a process of communization that bypasses the need for proletarian dictatorship, underestimates the importance of working-class political organization to any post-capitalist transition.

Some will say, too, that Mattick’s account of economic crisis overemphasizes the causal importance of the tendency of the rate of profit to fall. There is a significant divergence, for example, between Mattick’s focus on profit rate and the more pluralist account of capitalist crisis given in David Harvey’s The Enigma of Capital (another of the few accessible Marxist books about the crisis to have appeared of late). Those interested in Mattick’s critique of Harvey’s position will, however, need to look elsewhere for illumination, since Mattick focuses here primarily on his own thesis, rather than engaging in lengthy dialogues with the arguments of others. Still, whatever view one takes of the role of profit rates in capitalist crisis, Mattick’s book valuably locates the roots of the crisis in the nature of the capitalist system, providing a forceful counter-argument to those liberal-left commentators who have sought to blame the recent crisis on ‘greedy bankers’, ‘neoliberalism’ or other manifestations of ‘excessive’ capitalism, while arguing for a return to a regulated Keynesianism. Like his father before him, Mattick argues convincingly that neither the ‘free market’ nor the Keynesian policies of the ruling class offers a way to overcome the cycle of boom-and-bust in an increasingly beleaguered system. Indeed, both Eagleton’s and Mattick’s books serve as accessible reminders that, as Sartre observed half a century ago in Search for a Method, we cannot ‘go beyond’ Marxism until we have transcended the circumstances which engendered it.