That's Karl Marx, not Groucho, I'm talking about today. I am Brad DeLong, and this is my afternoon coffee...
This week I asked my graduate students to write on the following question: whether--and how--Karl Marx is relevant to a twenty-first century neoclassical economist. They turned it around, and asked me to answer the same question. So here goes...
First, let me say that I am here to talk about Marx the economist. Marx did not divide himself into Marx the moralist-prophet, Marx the political activist, and Marx the economist. But we do. I'll talk about Marx the moralist-prophet and Marx the political activist some other time. But today I am interested only in Marx the economist, who I think is worth studying for five reasons:
First, Marx the economist was among the very first to get the industrial revolution right: to understand what it meant for human possibilities and the human destiny in a sense that people like Adam Smith did not.
Second, Marx the economist got a lot about the economic history of the development of modern capitalism in England right--not everything, but he is still very much worth grappling with as an economic historian of 1500-1850.
Third, fourth, and fifth, Marx made a three-fold critique of the capitalist economy he say developing. He believed, third, that a system that reduced everybody to some form of prostitute working for wages and wages alone--in which people viewed their jobs not as ways to gain honor or professions that they were born into or as ways to serve their fellow-man or expressions of their inmost essence as a species-being but as ways to earn money so that you can begin your real life when the five o'clock whistle blows--that such an economy is an insult, delivering low utility, and also sociologically and psychologically unsustainable in the long run.
Fourth, Marx believed that the capitalist economy was incapable of delivering an acceptable distribution of income for anything but the briefest historical epochs.
Fifth, Marx was among the very first to recognize that the fever-fits of financial crisis and depression that afflict modern market economies were not a passing phase or something that could be easily cured, but rather a deep disability of the system--as we are being reminded once again right now, this time with Ben Bernanke in the Hot Seat.
Now we modern neoliberals have parries to these latter three critiques.
On the business cycle, we respond that Keynesianism--or monetarism, if you prefer--gives us the tools to transform the business cycle from a life-threatening economic yellow fever of the society into the occasional night sweats and fevers: that with economic policy quinine we can manage if not banish the disease.
On the distribution of income, we respond that Beveridgism or Myrdahlism--social democracy, progressive income taxes, a very large and well-established safety net, public education to a high standard, channels for upward mobility, and all the panoply of the twentieth-century social-democratic mixed-economy democratic state can banish like bad dreams all Marx's fears that capitalist prosperity must be accompanied by great inequality and great misery.
On the cash nexus, we modern neoliberals shrug our shoulders and say that we are in favor of a market economy but not of a market society, and that there is no reason why people cannot find jobs they like or insist on differentials that compensate them for jobs they don't. And we go on to say that the demand for and forecast of utopia--that jumped-up monkeys with big brains be perfectly happy--is a demand and forecast that belongs in the Book of Daniel or of the Apocalypse, not something that has any place in a work of political economy relevant to this fallen world.
I am Brad DeLong. And this is my afternoon coffee.