How SYRIZA economist Milios deliberately distorted Marx’s theory to serve his own purposes

by Jehu

In my previous post, John Milios’s strange explanation of capitalist crises, I noted Marx did not have a theory of crisis. Mind you, everybody who has ever studied Marx’s theory knows this is true and there is not the slightest hint of disagreement about this. Since the lack of theory of crisis is alleged to have such far-reaching theoretical implications, you would think scholars of labor theory would devote at least a paragraph or two to speculating why Marx himself did not feel the need to develop a theory of crisis.

Instead, folks like the German theorist, Michael Heinrich, suggest Marx was so overwhelmed by his subject that he was unable to complete it. Heinrich argues capitalism was rewriting its own code faster than Marx could transcribe it into a finished work. This argument, although having a hint of credibility, is actually self-serving hogwash on the part of Heinrich. For Heinrich’s version of history to be correct, capitalism has to be fundamentally different than what Marx describes in Capital. How different? In the Grundrisse, Marx predicts a specific historical event he believed was inevitable: the complete collapse of commodity production, but Heinrich argues collapse was never inevitable:

“In the so-called ‘Fragment on Machines,’ one finds an outline of a theory of capitalist collapse. With the increasing application of science and technology in the capitalist production process, ‘the immediate labour performed by man himself’ is no longer important, but rather ‘the appropriation of his own general productive power,’ which leads Marx to a sweeping conclusion: ‘As soon as labour in its immediate form has ceased to be the great source of wealth, labour time ceases and must cease to be its measure, and therefore exchange value [must cease to be the measure] of use value. The surplus labour of the masses has ceased to be the condition for the development of general wealth, just as the non-labour of the few has ceased to be the condition for the development of the general powers of the human head. As a result, production based upon exchange value collapses.'”

It is this prediction that turned out to be wrong, says Heinrich. According to Heinrich, Marx, later realizing his prediction was wrong, took his research in another direction, but never completed this work. But, if Heinrich’s argument is true, why did the classical Marxists — those who came after Marx and Engels — continue to debate the issue of a breakdown of commodity production?

The blatant dishonesty of John Milios

In a blatant act of academic dishonesty, Milios never discloses in his own paper that Tugan-Baranowsky was not debating “crisis theory”; he was debating whether there would be a collapse of commodity production as Marx predicted. The question originally raised by Bernstein was not whether capitalism was subject to periodic crises, but whether capitalism would eventually collapse. Henryk Grossman directly quotes Bernstein on this subject so as to leave no confusion as to the subject of the debate among the classical Marxists:

“‘If the triumph of socialism were truly an immanent economic necessity, then it would have to be grounded in a proof of the inevitable economic breakdown of the present order of society’”

No one in the debate over the breakdown of commodity production, which spanned several decades, was debating the causes of capitalist crises; they were debating whether or not capitalism would collapse. The contending schools were the “neo-harmonists” (who believed capitalism would not collapse) and the “catastrophists” (who believed it would).

Unless you understand that the subject of the debate among the classical Marxists was the inevitability of the collapse of capitalism, not the causes of capitalist crises, you will completely miss the debate’s significance. And this is because you would completely miss the significance of the inter-war period for confirming the arguments of the “catastrophists” and dealing a decisive blow to the argument of the “neo-harmonists”. World War I, the Great Depression and World War II, confirmed the predictions of the catastrophists that commodity production would collapse.

As Luxemburg puts it, society indeed was headed to a fork in the road where it would have to choose between socialism or barbarism.

In his paper, John Milios blithely cites Tugan-Baranowsky’s original paper as if history did not prove Tugan-Baranowsky wrong at the cost of 100 million lives. But Tugan-Baranowsky’s argument was simple: There is no immanent economic necessity for capitalism to collapse. In a footnote to his own paper, Milios borrows the relevant characterization of Tugan-Baranowsky’s argument from another writer:

“Tugan-Baranowsky pushed this conclusion to its logical extreme (or almost so) by imagining a (virtually) automated economy in which the production of ever more machines is used to produce even more machines. Similarly, the process of reaching this end-point will involve the realization of surplus value with declining consumption … possibly with the immiseration of the mass of the population. Consumption demand, therefore, has no privileged role in the operation of capitalism”.

Simply stated, capitalism would eventually dispense with all human labor in production without encountering a breakdown of commodity production. Yes, people might balk as unemployment began to approach one hunderd percent, but this was a political quibble between the classes. In theory at least, no material obstacle would stand in the way of the complete abolition of paid labor by capital. This conclusion flatly contradicted Marx’s own theory of capitalist development.

How John Keynes refuted John Milios

Nowhere in his paper does Milios ever directly recognize one salient fact: Tugan-Baranowsky and the neo-harmonists were dealt a crushing real life theoretical defeat, not just by Henryk Grossman and other catastrophists, but by the Great Depression, which brought production to a halt in the advanced countries. In what can only be seen as a grossly bizarre effort to ignore an actual historical event, Milios baldly states Tugan-Baranowsky and the neo-harmonists views, “allows for a Keynesian interpretation of Marx’s theory of expanded reproduction of social capital, according to which a constantly increasing investment demand may always compensate for the lacking demand for consumer goods.”

However, in 1930, Keynes himself refutes the neo-harmonists’ position. According to Keynes, the productivity of labor was now increasing at a rate that the productive employment of a very large mass of capital and labor was now impossible:

“For the moment the very rapidity of these changes is hurting us and bringing difficult problems to solve. Those countries are suffering relatively which are not in the vanguard of progress. We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”

Let me be clear about this: In 1930, Keynes essentially conceded Marx had been right all along; capital had encountered is absolute limit just as he predicted. The breakdown of commodity production, of production on the basis of exchange value, which Marx predicted and which the classical Marxists debated, had at long last arrived.

As I will show next, John Milios and other post-war Marxists deliberately changed Marx’s argument in an effort to rewrite history and make it fit the premises of Keynesian fascist state economic management.

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