Thoroughly Modern Marx

BY LEO PANITCH | APRIL 15, 2009

The economic crisis has spawned a resurgence of interest in Karl Marx. Worldwide sales of Das

Kapital have shot up (one lone German publisher sold thousands of copies in 2008, compared with 100
the year before), a measure of a crisis so broad in scope and devastation that it has global capitalism -and its high priests -- in an ideological tailspin.
Yet even as faith in neoliberal orthodoxies has imploded, why resurrect Marx? To start, Marx was far
ahead of his time in predicting the successful capitalist globalization of recent decades. He accurately
foresaw many of the fateful factors that would give rise to today's global economic crisis: what he called
the "contradictions" inherent in a world comprised of competitive markets, commodity production, and
financial speculation.

Penning his most famous works in an era when the French and American revolutions were less than a
hundred years old, Marx had premonitions of AIG and Bear Stearns trembling a century and a half later.
He was singularly cognizant of what he called the "most revolutionary part" played in human history by
the bourgeoisie -- those forerunners of today's Wall Street bankers and corporate executives. As Marx
put it in The Communist Manifesto, "The bourgeoisie cannot exist without constantly revolutionizing
the instruments of production, and thereby relations of production, and with them the whole relations of
society.... In one word, it creates a world after its own image."
But Marx was no booster of capitalist globalization in his time or ours. Instead, he understood that "the
need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of
the globe," foreseeing that the development of capitalism would inevitably be "paving the way for more
extensive and exhaustive crises." Marx identified how disastrous speculation could trigger and
exacerbate crises in the whole economy. And he saw through the political illusions of those who would
argue that such crises could be permanently prevented through incremental reform.

Like every revolutionary, Marx wanted to see the old order overthrown in his lifetime. But capitalism
had plenty of life left in it, and he could only glimpse, however perceptively, the mistakes and wrong
turns that future generations would commit. Those of us now cracking open Marx will find he had much
to say that is relevant today, at least for those looking to "recover the spirit of the revolution," not merely
to "set its ghost walking again."

If he were observing the current downturn, Marx would certainly relish pointing out how flaws inherent
in capitalism led to the current crisis. He would see how modern developments in finance, such as

securitization and derivatives, have allowed markets to spread the risks of global economic integration.
Without these innovations, capital accumulation over the previous decades would have been
significantly lower. And so would it have been if finance had not penetrated more and more deeply into
society. The result has been that consumer demand (and hence, prosperity) in recent years has
depended more and more on credit cards and mortgage debt at the same time that the weakened power
of trade unions and cutbacks in social welfare have made people more vulnerable to market shocks.

This leveraged, volatile global financial system contributed to overall economic growth in recent
decades. But it also produced a series of inevitable financial bubbles, the most dangerous of which
emerged in the U.S. housing sector. That bubble's subsequent bursting had such a profound impact
around the globe precisely because of its centrality to sustaining both U.S. consumer demand and
international financial markets. Marx would no doubt point to this crisis as a perfect instance of when
capitalism looks like "the sorcerer who is no longer able to control the powers of the netherworld whom
he has called up by his spells."

Despite the depth of our current predicament, Marx would have no illusions that economic catastrophe
would itself bring about change. He knew very well that capitalism, by its nature, breeds and fosters
social isolation. Such a system, he wrote, "leaves no other nexus between man and man than naked selfinterest, than callous 'cash payment.'" Indeed, capitalism leaves societies mired "in the icy water of
egotistical calculation." The resulting social isolation creates passivity in the face of personal crises, from
factory layoffs to home foreclosures. So, too, does this isolation impede communities of active, informed
citizens from coming together to take up radical alternatives to capitalism.

Marx would ask first and foremost how to overcome this all-consuming social passivity. He thought that
unions and workers' parties developing in his time were a step forward. Thus in Das Kapital he wrote
that the "immediate aim" was "the organization of the proletarians into a class" whose "first task" would
be "to win the battle for democracy." Today, he would encourage the formation of new collective
identities, associations, and institutions within which people could resist the capitalist status quo and
begin deciding how to better fulfill their needs.
No such ambitious vision for enacting change has arisen from the crisis so far, and it is this void that
Marx would find most troubling of all. In the United States, some recent attention-getting proposals
have been derided as "socialist," but only appear to be radical because they go beyond what the left of the
Democratic Party is now prepared to advocate. Dean Baker, codirector of the Center for Economic and
Policy Research, for example, has called for a $2 million cap on certain Wall Street salaries and the
enactment of a financial transactions tax, which would impose an incremental fee on the sale or transfer

of stocks, bonds, and other financial assets. Marx would view this proposal as a perfect case of thinking
inside the box, because it explicitly endorses (even while limiting) the very thing that is now popularly
identified as the problem: a culture of risk disassociated from consequence. Marx would be no less
derisive toward those who think that bank nationalizations -- such as those that took place in Sweden
and Japan during their financial crises in the 1990s -- would amount to real change.