Marxists, Sort Of, Speak Out

‘The great promise of capitalism, as first suggested by Adam Smith and recently enshrined in "market fundamentalism," was that we didn't have to figure anything out, because the market would take care of everything for us. Instead of promoting self-reliance, this version of free enterprise fostered passivity in the face of that inscrutable deity, the Market.’ ‘Rising to the Occasion’, by Barbara Ehrenreich & Bill Fletcher Jr in The Nation Blog, HERE:

Comment
You can’t blame Barbara and Bill for repeating the error they have been taught by modern generations of economists since the 1950s. It has nothing to do with their sort of, Marxism (read their post in full from the link).

It would be much better to teach what Adam Smith did say about how markets work within a commercial society (Books I and II of Wealth Of Nations), which includes requirements for the rule of law, personal liberties, and appropriate national policies that were not driven by jealousies of trade, monopoly practices and restrictions, and a lack of care for society as a whole.

Perhaps this extract from Moral Sentiments could help set the scene:

“What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these. Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these. On the contrary, what civil policy can be so ruinous and destructive as the vices of men? The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to.” (Theory Of Moral Sentiments, 1759: Book IV)

A Marxist Turns Adam Smith On His Head

Jayapradeep Viswanath writes in Organiser, New Delhi, India (27 July) HERE:

“A Marxist leader evaluates his ideology—IV:

”Marxian distortion of economics

(This article is based on the book written by Marxist leader P. Kesavan Nair. He is frustrated with Marxism and his expose has become a bestseller in Malayalam.”

“The Wealth of Nation of Adam Smith, published in 1976 (sic) accelerated the growth of capitalism, this book gave theoretical foundation to the market economy. This stimulated the industrialisation in Britain. Smith explained that the wealth of a nation is based on the productivity of its people and, basis of production is human-work and natural resources. He emphasised the necessity of usage of high machineries. Smith believed that the market is an invisible source and it protects the interest of the consumer and the producer. Instead of production for consumption, he said, the consumption should be in accordance with the production. Due to the balance of demand and supply, the free market decides the price of products, Smith argued. It is suitable for the uncontrolled exploitation of nature and labour.”

Comment
Followers of one god (Karl Marx) must be careful not to create another dynasty, even if it is Adam Smith.

Wealth Of Nations did not ‘give a theoretical foundation to the market economy’; it was one of several author's works that discussed how the commercial economy worked (Books I and II of WN). To say that WN, or any other book ‘stimulated the industrialisation in Britain’ is is fanciful.

Whether Smith had published WN or not, the industrialisation of the economy would have continued in ignorance of his works, just as the entire history of commercial societies, and the transition from hunting to herding and farming has commenced and continued over many millennia without the aid of a ‘theoretical foundation’. To indulge in such panegyrics is pure fiction and exaggerates the role of the philosopher (continuing bad habits from a ‘vanguard party’ sect); society does not depend on a book to change. Smith was right; Smith the role of the philosopher is to understand the world, not, as Marx alleged, to change it!

Smith did not “emphasise the necessity of usage of high machineries”. Power-driven machinery hardly existed in Smith’s time; ‘manufacturing’ was by hand-driven not power-driven machines, literally by hand. Power came later.

Smith knew of the Carron ironworks at Falkirk, set up by his friend Dr Roebuck, but he didn’t discuss it, and anyway it was a clear exception to the workhouses and small plants he knew about (the famous pin factory, nail makers, plough makers, weavers, blacksmiths, tanners, stone masons, and so on).

Smith did not believe “that the market is an invisible source and it protects the interest of the consumer and the producer.” It was very visible and he wrote about how it worked very clearly; competition protected the consumer. In fact he never mentioned the invisible hand (Book IV) in connection with his analysis of markets (books I and II).

As for “Instead of production for consumption, he said, the consumption should be in accordance with the production”, the Marxist author is so far wrong, I have to ask if we are reading the same Wealth Of Nations?.

Smith wrote:

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce” [WN IV.viii.49: p 660]

One could add that it was not just in the mercantile system, but also in all state managed economies that “the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.”

Apparently, the original author of these misleading thoughts “is frustrated with Marxism”; I am frustrated with the [Marxist author’s] erroneous exposition of the alleged views of Adam Smith and I despair if this author’s expose is a best seller in any language, anywhere.

Adam Smith Was Not a Precursor of Karl Marx

It’s always pleasing to read letters in the Scottish press from residents debating some of the ideas of Adam Smith from people who appear to have read his works.

Two recent correspondents are Ellis Thorpe (Inverurie, Aberdeenshire) (‘I prefer Adam Smith's idea – tax on what I spend, so what I do pay is "little by little" and how much I pay is my own responsibility', Evening News, 28 April), and Alan Murphy (Edinburgh) (‘Adam Smith's classic Wealth of Nations certainly has something to teach us about taxation (Letters, 29 April). But he did not advocate taxes on spending. He saw them as unfair for the same reasons Ellis Thorpe approves of them: consumption does not always match income; the parsimonious can avoid paying. Worse still, those who live in another country to their source of revenue escape completely.’).

The background, briefly, is that in Scotland there is a debate over the Scottish National Party’s election proposal, which it is trying to implement now that it forms the newly elected Scottish Government in the Edinburgh Parliament, to abolish the local ‘Council Tax’ and replace it with a new local income tax.

The minutia of the political controversy, now in the muted rage stage, would take us beyond the remit of Lost Legacy (and probably beyond the attention spans of our readers), but I would like to comment on one of the statements made by one of the disputants now exchanging carefully aimed (and uniquely brief) arguments they are mustering in the Scottish press.

Alan Murphy writes:

“The pioneer of modern economics is often regarded as the patron saint of capitalism. Read him carefully and you may find a precursor of Karl Marx.”

Not knowing either gentleman – though I confess to having exchanged letters in The Scotsman from time to time with Ellis Thorpe on his views on Adam Smith, but not recently – it is not clear how solid is Alan Murphy’s knowledge of Adam Smith to make his assertion though he advises Ellis Thorpe to ‘read him carefully’.

Without knowing for sure, I would have thought it likely that Ellis Thorpe would be inclined to have a view on the assertion because he stood as a Labour Party candidate for the Scottish Parliament in 2003.

But Alan Murphy’s assertion can be taken several ways, either as a ‘tease’ to a Labour Party member (whom I agree has expressed not entirely ‘warm’ views about Adam Smith in correspondence with me, suggesting that Smith was a ‘bosses’ man’), or as a serious observation about Adam Smith as a ‘precursor’ (a ‘forerunner, herald or harbinger’) of Karl Marx.

The latter view, as a ‘precursor’ could be consequential or trivial: Adam Smith as ‘John the Baptist’ to Karl Marx (a monstrous libel), or Adam Smith among several other early economists that Karl Marx read, summarised, sifted through, and selected from, to draw up his unique blend of economics, political fantasy and future prospects.

I am writing a paper at present, to be presented to the History of Economic Thought conference this coming September in Edinburgh, entitled: ‘Adam Smith and the Labour Theory of Value’, which disposes of the common view among modern economists (few of whom read his works) that Adam Smith had a labour theory of value.

This decidedly breaks the widely proclaimed link between Adam Smith and Ricardo (who did have a labour theory of value) and Karl Marx, who turned it into a religion.

Adam Smith’s views on the ‘liberal reward of high wages’ and its role in ‘spreading opulence’ among the labouring poor and their families was based on ‘equity’ (what is only fair) and the ability of a growing commercial economy to pay higher wages as the demand for labour increased from the growth of an economy.

An opulent economy was characterised by low profit rates (but larger total profits from a larger total annual output of the ‘necessaries, conveniences, and amusements of life’, or GDP) and higher wages above basic subsistence (from the increased demand for labour in a growing economy).

This prospect contrasts with Karl Marx and his expectations of growing immiseration of labour, both those employed and in the unemployed reserve army of labour, all beset by the increased frequency of depressions.

Having read Adam Smith carefully, I do not concur with Alan Murphy’s assertion that he was a precursor of Karl Marx.

Marxist Myopia versus Adam Smith's Optimism

While involuntarily disconnected (a hapless state not recommended for regular bloggers – in fact it is ‘blogging awful’), I came across a highly serious blog, dedicated to what it calls ‘sound proletarian science’, a wholly new notion in the annals of science as science. It will not surprise readers to know that ‘What in the Hell…’, for that is its name, is thoroughly Marxist in orientation, probably deserving of the appellation, ‘intellectual’, as well as ‘deadly serious’, as compared to the usual Marxist rants we get from people loosely acquainted with well-known third-hand quotations, rather than the serious study of the most obscure transcripts of Marx and with a working knowledge of the German that he wrote them in (you also have to be good at reading Marx’s handwriting).

You can find “What in the Hell…” at:

http://whatinthehell.blogsome.com/2006/12/21/is-biopolitical-economy/

This paragraph from it is relevant to Lost Legacy (the rest is also interesting in that mood of ‘if I had the time I would learn something, but …):

“In his 1844 Manuscripts, Marx quotes Adam Smith noting that competition for wages often served to “reduce the wages of labor to what was barely sufficient to keep up the number of laborers.” [Smith I, p. 84] Marx adds, making the point more clearly: “The surplus population would have to die.”

Marx also quotes Eugene Buret, “Labor is life, and if life is not exchanged every day for food, it suffers and soon perishes. If human life is to be regarded as a commodity, we are forced to admit slavery.” [ Eugene Buret, p. 49-50 ] and “The large industrial towns would quickly lose their population of workers if they did not all the time receive a continual stream of healthy people and fresh blood from the surrounding country areas.” This latter quote suggests that Marx’s beloved metaphor of capital as a vampire can be construed not as simply a rhetorical flourish but also as a comment on the biopolitical nature of the capital relation as such. Buret also describes capitalism as a “war of conquest” (20). Marx adds that “political economy knows the worker only as a beast of burden, as an animal reduced to the minimum bodily needs.” This reduction of the body to its minimum for survival is precisely bare life: thinking of the proletariat as proletariat, as bare life, leads to the production of the proletariat as materially existing bare life, life on the edge of death. It is no surprise that Marx refers to the proletariat being treated as a beast, for animalization - based on the separation of humans from other animals - is an old mechanism for treating some bodies as bare life.”

Comment
Note the disembodied use of ‘political economy knows’, a habit among intellectual Marxists, who often use the word ‘capital’ as if ‘it’ has a conscious purpose separate from the people (‘zombies’?) who own it; Smith’s ‘capital stock’ has come ‘alive’ and is free from the mysterious and magic ‘lamp’; ‘globalisation’ is ‘alive’ and humans have become ‘its’ slaves, etc.

I quoted the second paragraph to convey the theme of the entire piece, specifically that weird forces (unfortunately only understood by inductees into Marxism) set out to become all powerful, by destroying the right-less and dispossessed proletariat, torn from the common land farms (visions of hardworking but happy families, dancing round maypoles, swapping philosophical thoughts about the meaning of life, and eating their fill of the products of their labour) and driven into factories and mills by grasping vampire capitalists, and when no longer fit for purpose are spewed out as shrunken, fleshless skeletons, by the uncaring weird forces who rule them.

The extract from Eugene Buret envisages the cycle of hearty proletarians to their early deaths as ‘slaves’, is sustainable only if there is ‘a continual stream of healthy people and fresh blood from the surrounding country areas’. That the industrialization process also accompanied an historically high rapid growth in population seems to eliminate Buret’s fanciful rhetoric and Marx’s elaboration of the same theme.

Looking outside our windows now and again is good for philosophers. Marx has an excuse (he saw what he believed he saw; or more correctly, only imagined what he wanted to believe), but what excuse has the author of ‘What the Hell…’ got when he, or she, sees the ‘working class’ around them living in a degree of opulence beyond the imaginations of Marx and Adam Smith?

Smith’s ‘subsistence’ level of wages (determined by circumstances and custom, not the biological minimum, but by that ‘which is consistent with common humanity’, Wealth of Nations, I.viii.15: p 86) became in Marx’s mind the biological minimum in the ‘vampire’ economy of capitalism (a 19th century word, first used in 1854, and then with monotonous regularity in Marx’s ‘Capital’).

In Marx’s, and his epigones’ imaginations, the immiseration of the working class was inevitable in all its gory details; yet while ‘capitalist’ proletariats flourished under the regimes of rising real wages, the hell envisaged by Karl Marx came to its terminal destination only in the thirty-year history of the concentration camps of Soviet Socialist Russia (and, for a shorter while, in Nazi National Socialist Germany).

Smith had a far more optimistic view of the affects of markets on living standards, especially for the labouring poor and their families) than is justified by Marx (and Marxists) hijacking his name to provide intellectual comforts for absolutely wrong predictions about the future of ‘capitalism’ (a word and a phenomena that Smith knew nothing about in mid-18th century Scotland).

The history of markets under the capitalist mode of production confirms Smith’s optimism.

‘What the Hell’ does that say about Marx’s confident and absolutely wrong predictions?