Marxist economists haven’t died and become part of the fossil record. They’ve adapted and continue to raise critical questions of both Keynesian and Classical economic viewpoints. I recently saw one such viewpoint on LinkTV and felt moved to comment on it.
The lecture in question is called “Capitalism Hits the Fan.” In it, Economics professor Richard Wolff examines what he considers the roots of the current economic mess. He points at how regulations designed to rein in businesses quickly became rules for those businesses to circumvent, get exceptions to, and then eventually abolish. This is true. The Chinese philosopher Zhuang Zi observed as much over 2000 years ago: if rats can learn to avoid traps in the kitchen, how much more so can scoundrels learn to avoid the snares set by the law?
When those regulations went away, corporate profits soared while wages stayed flat. For the last 30 years, wages stayed the same for workers across America as their productivity soared. That explains why the profits also soared. Corporations took those huge profits and then used them to underwrite consumer credit cards. Massive credit spending made up for the lack of wage increases.
And when the things that fueled credit spending, mortgages, took a turn downward, the whole thing unraveled. To be sure, the whole thing unraveled around the world, an element missing in Wolff’s analysis, but we sure did feel a gut punch here in America. Capitalism did not shield us from the ravages of the business cycle. Keynes’ approach to regulate things failed because the regulated lobbied their way into controlling the regulators. So what’s the solution?
Wolff points to companies formed by their workers, such as exist in Silicon Valley, as the way out of the business cycle mess. I agree that they’re novel and full of promise. But “novel” means nothing more than “give it a few more years and someone will figure out a way to pervert it.” I don’t buy the Marxist solutions even though I find their criticisms entirely valid.
So, again, what is the way out? How do we keep this from happening again? Marxist/Socialists propose plans that assume sinners will somehow all decide to become saints. Capitalists propose the notion that there is nothing wrong with pride or greed. Keynesians say, “this time for sure!” as they propose a new round of regulations. I don’t see any of those coming to fruition.
We have to hold ourselves to higher standards and be ever vigilant about what we do. There are traditional principles about thrift, living within our means, and resisting temptations that we need to remember. Just because something is advertised does not mean we must buy it. Just because credit is available does not mean we use it to fund the way we live. Just because another man says there won’t be any problems does not mean that problems are banished forever.
As long as this world spins ’round the sun the way it does now, there will be evil among us. That evil will always be working to subvert any system the good put in place to control it. It is the job of the good to remain vigilant and to not become complacent or permissive. The sad truth about American capitalism is that, as a nation, we have been complacent and permissive for over 150 years. That sort of institutionalized winking and nodding will be difficult to change.