Key stages in the decline of academic Marxism
The fact that my previous post, on John Rawls and the death of Western Marxism, attracted several times more readers than anything I’ve previously published on Substack, forced me to acknowledge that, at a fundamental level, I have no idea what people are interested in reading these days. If I did, I would have written the piece a bit differently, and a bit less casually.
Specifically, the piece that I wrote was intended to explain just one debate that occurred, within the field of political philosophy, during my lifetime. It was not intended to be a global account of the fate of Western Marxism. What I described was, in a sense, the last nail in the coffin of Marxist theory (at least among philosophers). But it was hardly the first! A lot of reader commentary was of the “what about this problem?” or “what about that problem?” variety. I thought it might therefore be useful to sketch out a more complete picture. Consider it fan-service for all my new subscribers.
To keep things simple, I will be setting aside the impact that political events (such as the collapse of the Soviet Union) had on the fortunes of Marxism, in order to focus on its intellectual history. The purpose of all of this, as with my previous post, is to explain why there are not many Marxists around any more in universities, despite the fact that there are plenty of left-wing academics. Otherwise put, the goal is to explain why someone like Thomas Piketty, who talks a pretty good game, is not a Marxist in any sense of the term – his class analysis is not Marxist, his normative stance is egalitarian, not Marxist, his account of how capitalism produces inequality is not Marxist, and he mainly wants to reform the tax system rather than overthrow capitalism. So even though he enjoys giving off Marxist vibes, he is actually a pure embodiment of the current liberal-egalitarian hegemony that I described in my previous post.
The decline of academic Marxism began with its status as a social-scientific theory. Only later did Marxism get resurrected as an explicitly normative critique, at which point it died the second death that I described. The major problems with scientific Marxism started showing up pretty early in the 20th century. These included:
1. The labour theory of value. The first and by far the biggest problem for Marxism stemmed from the declining fortunes of the labour theory of value. The primary difference between “classical” economics (which was the standard 19th century view) and “neoclassical” economics (which is the view held by practically every economist today), is that classical economists like Marx believed that the prices of commodities were determined by the amount of labour-time involved in their production, whereas neoclassical economists believe that prices are determined by the forces of supply and demand. The crucial shift occurred in the work of Alfred Marshall, who pioneered the style of “marginalist” analysis, using the familiar supply and demand curves, that is now taught to undergraduates everywhere in the world. This analysis has a number of advantages, the most important being that it incorporates demand-side considerations (i.e. how much people want various goods), which were neglected in classical theory.
Many Marxists have sought to avoid these difficulties by interpreting the labour theory as a metaphysical claim about the ultimate origins of economic value. There is, after all, some sense in which labour does create all value, since capital is merely an accumulation of embodied labour. The problem is that Marx made a number of much more specific, empirical claims about the economy, which depended upon the prices of goods actually being determined by the amount of labour necessary for their production. Most importantly, his concept of surplus value only made sense if the actual price of labour, and the actual price of the commodities produced through labour, were determined by the amount of labour-time involved in their production. So if the labour theory of value turns out to be empirically false, as a claim about how equilibrium market prices are determined, this renders the concept of surplus value meaningless. Once you take away that concept, a lot of other dominoes start to fall...
Many philosophers, by the way, still have not received the memo on this, and so continue to use the concept of surplus value, without apology, or without explaining what they mean by it. This has become the economic equivalent of talking about phlogiston.
2. The crisis theory. Throughout most of the 19th century it was not so unreasonable to expect the capitalist system to collapse of its own accord, because it was extremely unstable. Between 1870 and 1914, for example, the U.S. economy went through 11 recessions, along with 7 full-scale banking panics. Unfortunately, like most 19th century economists, Marx did not have a very good understanding of what was causing these boom and bust cycles. He made a number of provocative claims about the “crisis tendencies” of capitalism, but there is little agreement among his interpreters about what his precise theory was. His most concrete suggestion seemed to be that capital accumulation would increase the mechanization of production, which would flood the market with commodities at the same time that it depressed wages, leading to increasingly severe problems of underconsumption/overproduction.
This entire way of thinking was overturned by John Maynard Keynes, who showed that the shortfall in demand observable during a recession was not caused by overproduction, but rather by a shortage of money. (There is a famous Paul Krugman column that explains this point in very simple terms.) The implication was that the business cycle, which Marx had taken to reveal a deep “contradiction” within the capitalist system, was actually more of an adjustment problem in the monetary system, which could be addressed through a combination of bank regulation, control of interest rates, and state spending. This was not just a theoretical breakthrough, it led to a series of policy changes that actually succeeded in moderating the business cycle, drastically reducing the instability of the capitalist system.
Marx, by contrast, had no way of explaining even some of the most basic features of recessions, like the fact that they are often preceded by crises in the banking system. His way of thinking about these problems has been completely superseded by 20th century developments in economic theory. (Consider, for example, this video, which purports to offer a Marxist explanation of the 2008 financial crisis. If you pay careful attention, you will notice that at the crucial junctures it fails to offer any actual explanation for anything.)
3. Historical materialism. The above two problems were sufficient to persuade most economists to abandon Marxism. But of course Marx was much more than just an economist, he was a vastly influential social theorist. In particular, he was one of the first to make a serious effort to explain why societies change over time, or why they exhibit progress. This was the essence of his “historical materialism,” which differed from prevailing “idealistic” accounts by claiming that it was the development of productive technology that served as the driving force of historical change. Although this shift in emphasis provided an important corrective to many older views, few people now consider Marx’s central claims about class conflict and base-superstructure relations to be literally correct.
The first and most important setback to historical materialism stemmed from its failure to anticipate, or to offer a persuasive explanation for, the importance of nationalism in the 20th century. Marx categorized religion as an element of the superstructure, which could impede historical progress, but was not actually a moving part in the machinery of social change. (Max Weber famously cast doubt on this view.) Marxists were inclined to categorize nationalism the same way, and so were caught flat-footed by the ease with which working class solidarity could be fractured along national and ethnic lines. Furthermore, with respect to technological change, Marx focused entirely on the development of productive technology, and so had nothing to say about the role that changes in military technology played in human history. Indeed, Marx basically had no place for the military as a social actor in his account of historical development. Both of these omissions became rather glaring after the Second World War, which made Marx’s theory seem hopelessly inadequate.
So while many social scientists continued to do work that was clearly influenced by historical materialism, the views that came to prevail incorporated many, many more moving parts than Marx’s (e.g. see Arthur Stinchcombe’s Economic Sociology, or Michael Mann’s The Sources of Social Power for a sample).
4. Post-scarcity conditions. One of the reasons that Marx said very little about the organization of a future communist society is that he expected the progress of industrialism to create what has subsequently become known as “post-scarcity” conditions. The general thought is that the productivity gains achieved through mechanization of labour would increase to the point where the needs of everyone could easily be satisfied, which would lead to the abolition of “the commodity form.” According to this view, we do not need any principled way to resolve distributive conflict, because property is about to become obsolete – at the “highest stage” of communism everyone will have so much of everything that there will no longer be anything worth being possessive over.
Although some people are still attracted to this view, most think that it was dealt a death blow by Thorstein Veblen, in The Theory of the Leisure Class, where he pointed out that general satiation is impossible, because so much of our material consumption is instrumental to the attainment of outcomes that are zero-sum at the population level (the most obvious example being social status). This generates competitive consumption, which “stands ready to absorb any increase in the community’s industrial efficiency or output of goods, after the most elementary physical wants have been provided for.” (Sigmund Freud made a related point, in Civilization and its Discontents, which combined with the superior analysis of fascism offered by psychoanalysis gave rise to the Frankfurt School strand of neo-Marxism that sought to blend Marx and Freud.)
The suggestion that post-scarcity conditions will never be realized pushed a lot of people to think that socialism required a normative theory, such as a theory of distributive justice, because if we cannot rely on growth to make class conflict disappear, then we need to think up better ways to manage, or perhaps resolve, the problems it gives rise to.
5. Socialist calculation debate. Once the idea of post-scarcity conditions was taken off the table, many theorists found themselves confronting the same problem that real-existing socialist societies were facing: after you get rid of the market, how are workers supposed to know what they should be producing? It is easy to see that every society – socialist or capitalist – will need a system of prices even to begin answering this question. With respect to our assessment of capitalism, however, Friedrich Hayek changed the game quite dramatically, by suggesting that the most important argument for the invisible hand of the market was not that it allowed us to economize on moral motivation (as Adam Smith had suggested), but that it did a better job calculating prices than any directly cooperative system (such as a bureaucracy, or even a giant computer) could. This gave rise to the so-called “socialist calculation debate,” over whether it was even possible to replace the market in this regard. The stakes, one should note, were high, because if Veblen was right, and post-scarcity conditions would never be reached, then the situation that real-existing socialist societies found themselves in – trying to calculate how much of each good to produce, across the entire economy – was not merely a transitional phase, but was the permanent condition of socialist societies.
Technically speaking, the socialists won the calculation debate, but it was a pyrrhic victory. While they succeeded in showing that it was possible to calculate all these prices, the conditions that would have to be satisfied, in order to do so, were so onerous that, for all practical purposes, markets would always be superior. Because of this – and here was the truly momentous shift – practically every socialist abandoned the commitment to central planning, shifting their support to socialist schemes that preserved competitive markets as the mechanism to determine prices. This remains true today – no matter how vociferously self-styled socialists may denounce capitalism, when you press them on what they imagine the alternative to be, the answer is usually some hand-wavey version of “market socialism.” This is fine, as far as it goes, except that once you accept the need for markets to set prices, it basically lets all the air out of the tires, because “market socialism” retains most of the features that people have traditionally disliked about capitalism (e.g. profit-oriented firms, unemployment, pollution, recessions, payments to providers of capital, commodification, alienation, etc.).
The problem for socialists is that, once they start to think seriously about how a socialist economy would work, they wind up on a slippery slope, where the commitment to a revolutionary overthrow of capitalism gradually gets whittled down to a series of rather tepid proposals for corporate governance reform. They often try to avoid this by adopting some vague commitment to worker cooperatives (yay Mondragon!) or workplace democracy. But this can only be sustained by ignoring the rather substantial contemporary literature showing that questions about the ownership of the firm are vastly less important, with respect to its behaviour, than how the firm resolves its internal agency problems. Furthermore, the desire to get rid of shareholders usually just becomes a recipe for empowering banks (after all, the money has to come from somewhere...). At the end of the day, le jeu n’en vaut pas la chandelle – instead of demanding socialism, one might as well just use the existing state, and the existing tax system, to fiddle around with capitalism.
In reality, most academics simply avoid thinking too hard about these sort of “socialist blueprints,” because they sense that the results will be depressing. As a result, even those who insist on calling themselves Marxists are paper tigers (as Mao would say), because they don’t have any coherent plan for organizing an economy along non-capitalist principles, just a grab-bag full of stuff that we already know doesn’t work (or that, like Mondragon, has never been successfully reproduced).
All of this is background to the story that I was telling, in my previous post, about the rather surprising resurgence of academic Marxism in the 1970s as a normative critique of capitalism, and the eventual decline of that research program.
Each of the five points discussed above, by the way, gave rise to an enormous current of “neo-Marxism,” among those who sought to abandon Marx’s evidently-incorrect view on that particular question but to retain other aspects of his doctrine. As time wore on, however, so many different forms of neo-Marxism developed that there was no longer any overlap between them, and therefore nothing that could coherently be described as “the Marxist tradition.”
For those who find this story disappointing, I offer the following by way of consolation: No matter what you think is important or true in Marxism, there is now some better theory, that allows you to articulate that conviction more clearly and persuasively, without encumbering yourself with false and unsustainable theoretical commitments. Apart from its enduring power as a rhetorical gesture, Marxism has become otiose.