How Marxist economists are failing our movement

by Jehu

One thing working for communists at the state and local level in the United States is that state and local governments don’t have access to conventional Keynesian economic policy tools: State and local governments can’t print currency and therefore can’t issue bonds based on a currency they control. If they issue bonds, sooner or later they have to raise taxes or cut spending to pay the debt off. This means state and local governments can’t spend their way out of the contradictions inherent in capitalism.

What does this mean practically?

It means states and cities can’t address unemployment by running deficits as Keynes recommended; they can’t address poverty by handing out food stamps and other palliatives; and they can’t manipulate interest rates to encourage investment. Finally it means states and cities can’t absorb the massive amounts of excess means and labor power that must become capital if employment is to increase.

The reason why SYRIZA government collapsed last year is they ran into this reality. If you cannot control your currency, you cannot implement the sort of policies Keynes recommends to extend the shelf-life of capitalism.

State and local governments don’t control the dollar — and this puts capitalist politicians on an even footing with communists. Since state and local bourgeois politicians can’t print and spend their way out of the contradictions of capitalism, they are vulnerable to a communist alternative that doesn’t rely on printing and spending.

Unfortunately, communists have not developed this alternative and have instead relied on the very assumptions of Keynesian policies that led SYRIZA into it disastrous dead end last year, when they fantasized the EU would be forced to come to their rescue by providing Keynesian stimulus. When that turned out to be a wrong assumption, SYRIZA were left with Grexit, which most of the voters did not support.

Learning the lessons of the SYRIZA debacle

Like SYRIZA, for the last forty years or so communists have seen the Keynesian state dismantled yet have not developed an alternative of their own. When, at last, they gain power, they have no alternative, despite years of asserting an alternative existed. While SYRIZA is a particularly egregious example of communist failure, Philadelphia, Detroit and other American cities are as well.

As we all know, concealed beneath the facade of bustling downtowns all across the US are the massive hidden ills of late capitalism, like poverty and unemployment. Communists, however, have not spoken seriously about these problems, beyond whining about them, because they really have no tools to address them. And they have no tools because Marxist economists have spent the last forty years bemoaning the collapse of the Keynesian state, rather than coming up with real solutions.

To put this bluntly, communists inherited one alternative policy tool from the old Soviet Union, central planning; however, this planning mechanism was based on the assumption of a degree of autarky that is inconceivable in today’s capitalism. It thus offers no more answers to the pressing problems most cities face in the United States than does conventional Keynesian solutions.

The question is how can you stop the slide of working class conditions without assuming Keynesian or Soviet economic mechanisms. We have a completely open economy in which the state has been effectively marginalized by massive global capitalist firms that can move freely from one region to another. (Anyone who thinks I am exaggerating here can revisit the Boeing negotiations.) You also have massive excess capacity throughout the world market with fierce competition between national capitals over markets for their products.

The result is a situation very favorable to us: On the one hand, this means states cannot play the conventional role assigned to them by Soviet and Keynesian theory; on the other hand, it means the state is extremely vulnerable to a challenge from communists. However, as SYRIZA proved, as vulnerable as the state is, you cannot oppose it if you have no alternative of your own to offer. All the alternatives Marxist economists today discuss in their literature assume a necessary role for the state on some level.

The state has no necessary role in economic policy

I find bizarre, because you can go through all four volumes of Capital and find nowhere in them where Marx made the assumption of a necessary role of the state in the capitalist mode of production. How is it Marx could devote more than four or five thousand pages to a subject without discussing a necessary role for the state, but most Marxist economists can’t talk about the same subject for 20 or 30 pages without it all coming down to the state’s economic policies?

Based on the laws Marx disclosed in Capital, is it possible to develop an answer to the ills of capitalism without assuming a necessary role for the state? This, of course, is a larger issue than just the failures of communist economists, because if there is no answer without a necessary role for the state, yet the state is being dismantled by global capital, we’re completely fucked as a class.

In labor theory, the state only has a contingent role, the necessary role lies with labor, not the state. Yet no Marxist economist ever discusses the necessary role labor plays in production when it comes to practical policy recommendations. If this role is ever discussed it is only along the lines proposed by Keynesian and Soviet economic theory, where labor is a mere “factor” in production of value and use values. In Marx’s theory, however, labor is a misfortune, the source of competition and hostility among workers, the creator of the very capital that is responsible for the lot of the laborer. Labor produces poverty at one pole of society and concentrated wealth at the other pole. And labor ultimately renders itself superfluous to even the production of real material wealth.

Nowhere in Marxist economic literature does this view of labor find any practical expression in policy recommendations.

If, in fact, labor is the source of all the ills inherent under the capitalist mode of production, why is it that no Marxist economist today takes the abolition of labor as the starting point of their policy recommendations? As a practical matter, both Keynesian and Soviet economic theory seek to maximize employment of labor through state action. And, as I have argued, both of these approaches to the ills of capitalist society are increasingly less possible with globalization. This means Keynesian or Soviet versions of ‘full employment’ alternatives to abolition of labor are becoming less practical as policy recommendations.

The problem of cities is the problem of labor abolition

Cities like Philadelphia are trapped not by neoliberal ideology, but because globalization has removed the floor under their economies, which were all based on an ever expanding mass of labor. Marxist economists are still living in the middle of the second industrial revolution, while cities are suffering through the third. The folks most affected by the lack of jobs and poverty today — the working class and especially black and brown workers — will never escape on the basis of Keynesian and Soviet economic policies.

This means we can assume bourgeois politicians must fail to even momentarily reverse the growing joblessness and poverty. We know they will fail because we know their policy tools don’t work and can’t work in today’s economic conditions.

What more do communists need than to know their class enemies must fail to halt the decline of the working class? They need policies that can work, of course — policies based on assumptions of labor theory and developed by communist economists. These labor theory based policies must begin with the assumption labor itself must be abolished. The policies assume the abolition of labor cannot be avoided by printing money, handing out food stamps, or wasteful state expenditures on infrastructure.

Let me give one example for policy recommendations. One study examined San Francisco’s vendor program and argues the city has considerable leverage over its vendors:

“Contracting is a critical part of local government service delivery. Each year, San Francisco enters into hundreds of new contracts for social and health services, architecture, design, construction, goods, and other services. Contractors include individuals, small and large companies, and non-profit organizations. In 2002, the Civil Grand Jury estimated that there were in excess of $1 billion in City contracts for professional services alone, with an average duration of two to four years. That figure is only a portion of the total—it does not include construction contracts or contracts to purchase goods and supplies. In the social-service arena alone, San Francisco contracts with 664 different non-profits for over $611 million to provide housing, food, shelters for the homeless, substance abuse prevention, mental health counseling, child-care, services to the elderly, and other services.

To put this in terms any bourgeois simpleton can grasp, this is a lot of market power in the hands of an average size American city.

A city the size of San Francisco has the capacity to, for instance, require all of its contractors to increase the wages of their employees to $40 per hour and to reduce hours of labor to no more than 20 hours per week. This contractual condition requires no expenditures on the part of the city, no deficit financing, no money printing, etc. Through their control of city contracts, communists can impose labor conditions on vendors and contractors to the city that will immediately raise the level of subsistence of the working class, while reducing their hours of labor. At the same time communists can practice what they preach by immediately reducing the hours of labor and raising the wages of city employees as well.

Communists just set a target for hours of labor and wages and impose this as a condition on all of your contractors as well.

Rethinking the role of labor theory in policy

Can this work? Absolutely! During the period of the fight for the eight hours day, government contracts played a critical role by forcing private capitals to reduce hours of labor:

“In 1912 the Federal Public Works Act was passed, which provided that every contract to which the U.S. government was a party must contain an eight-hour day clause. Three year later LaFollette’s Bill established maximum hours for maritime workers. These were preludes to the most important shorter-hours law enacted by Congress during this period — 1916’s Adamson Act, which was passed to counter a threatened nationwide strike, granted rail workers the basic eight hour day. (The law set eight hours as the basic workday and required higher overtime pay for longer hours.)”

The same clause could be imposed today to reduce hours of labor to 20 hours or less.

Why isn’t this sort of approach included in the policy recommendations of any Marxist economist? In my opinion this is because no one is banging on the doors of Marxist economists at the university demanding they get with the program of social emancipation or just fuck off. Folks (and do let me name names) like Kliman, Harvey and a host of other Marxist theorists are so wrapped up in their academic pursuits they haven’t time to think through policy issues for everyday activists. As a result activists and parties are left with the stale, obsolete policies of the Keynesian era that do not work and cannot work today in an open world market.

What is worse is that, even when Keynesian policies did work, they never worked at the state and local level precisely because these governments never controlled the currency. Communists who gained power at the city and state level were always in the same position SYRIZA found itself in last year when it came to power and only had the euro. Which is to say, for the last forty years cities have been a potential laboratory for non-Keynesian, labor theory based approaches to poverty and unemployment. Marxist economists have just preferred to whine about neoliberalism rather than offer real solutions to pressing social problems.

After this horrible election year, many Leftists involved in politics are talking about building a real movement from the bottom up — that means cities and state governments. At this point, this hodge-podge of anti-capitalists currents have no tools at its disposal to run even an average size city like San Francisco or Boston.

They need these tools and Marxist economists have an obligation to provide them.