Marxism Curse or Blessing?

 

Marxism: Curse or Blessing?

Joshua Ocheja

                                                                               

A specter is haunting Europe -- the specter of Marxism.

 Marxism is both a theory and a practice. The theories of Marxism are sometimes called dialectical materialism; to be clear there is no one answers to a question. A theory is based on a particular set of conditions that are always finite, and thus, any theory is necessarily limited. To test the validity of theories, Marxists rely on practice as the criteria of truth. Using such methodology Marx and Engel examined history, theories of the class struggle, the basis of social relations through economics, and the form of society that could follow capitalism. However it should be noted that these theories are not immutable truths; they follow something similar to the scientific method.

 Naturally, there are countless examples of Marxist theories that have been modified, revised, or changed. A situation that has availed relevant and up to date answers for modern times.

The Economies of the world are groaning under recession, for reasons that could be

attributed to greed and sharp practices in high places.

The effect trickles down like rainfall, blooming under the recklessness of a few. One might tend to agree with the fact that Marxism as a philosophy is both evil and good, however it rests on us to view the society from the Marxist point of view that posit that the wealth of a nation should not be rested in the hands of a few.

 This single practice gave rise to various class struggles in the society, a phenomenon that will exist for all time. The history of all hitherto existing society is the history of class struggles.

The world is at risk of losing its anchor. In other words, booms and slumps – bubbles and crashes – are an essential part of capitalism. So long as capitalism persists, we will be forced to endure these convulsions, laced with insecurity, home repossessions and unemployment.

Modern capitalism needs well-functioning banks. Businesses and individuals need liquidity and an effective means of turning their savings into productive investments. But banks perform this function by making bets on the future. This is the purpose for their existence no doubt but it makes them inherently unstable. They tend to over-extend themselves in the good times and are over-cautious in the bad, exacerbating booms and bust.

There have been far reaching effects of the global financial crunch on the market. The monetary policy has been very much lenient in the past resulting in a credit bubble. It is feared that the burst of this bubble would lead to a replication of the Great Depression of the 1930s at the global level. 

The chaotic and unplanned nature of the market makes it near-impossible to predict the long-term consequences of any action taken by governments or regulators.

So, what caused this financial crisis? One can blame the collapse of house prices. This was brought about as investors began to realize that a large proportion of the debt securities that they were trading were based on sub-prime mortgages that were never going to be paid back. (Debt securities are financial assets based on debt; for example, if you or I take out a mortgage on a house, our bank will sell that mortgage, our debt, on as a security, which will be traded on the market. If we default on our debt, the security becomes worthless.)

However, whilst the collapse of house prices was indeed the straw that broke the camel’s back, this suggests that it was already heavily laden with straw, as Marxists understand that historical events don’t occur in a vacuum; rather, they are a result of the build up of contradictions within the system. Once the contradictions become sharp enough, a single event is enough to trigger an explosion.

What were these contradictions? The following quote from the Financial Times gives an indication:

“The degree of leverage that these institutions took on is indefensible. The average large securities firm was leveraged 27 to 1 in mid-2007. They were not regulated by any prudential supervisor. In effect, they regulated themselves. The lack of transparency was stunning. Many big lenders did not disclose off-balance-sheet risks. In some cases, they did not understand these risks themselves. More fundamentally, they allowed a second, huge financial system to develop outside the normal banking network. It consisted of investment banks, mortgage finance companies and the likes. It was unregulated, not transparent and way too leveraged. But with nine separate and mostly ineffective financial regulators, these risks were ignored. That is, until this second system crashed.”

Marxists traditionally link capitalist crisis to the tendency of the rate of profit (surplus value extracted per unit capital invested) to fall over time. In order to deduce this assertion, Marx divides this ‘unit capital invested’ into two parts: constant capital, which invested in the production process (e.g. the plant, raw materials etc.); and variable capital, which is invested in staff wages. Surplus value can only be extracted from workers, not machines. Surplus value is the value of the labor given by a worker above and beyond that which is paid to him or her as wages; hence it is the source of profit for the capitalist. Therefore, increasing the constant capital, for example, by investing in new machinery, whilst doubtless improving the production process, will mean that for the same surplus value extracted, a greater total capital (constant and variable) will have been invested; hence, the rate of profit will fall. This manifests itself as a fall in prices of commodities.

Of course, this tendency is not a law – there are other interacting factors which can cause the rate of profit to rise. Marx identified more intense exploitation of labor, reduction of wages below their value, cheapening of the elements of constant capital, and the increase in share capital, amongst other factors.

There is always a time-lag between crises in the financial markets and their effect on the ‘real’ economy, these effects will be felt soon enough, in the form of job losses as companies ‘rationalize’ to safeguard their profits, home repossessions for those who can’t pay their mortgages, inability of small businesses to secure credit, etc. This will naturally lead to an ambiance of depression.

Marxists believe control of the economy should not be left to the anarchy of the capitalist market. But are disgusted by the way the working class has been asked to foot the bill for this debacle, whilst the vermin in human form that made millions have got away scot-free. Before the taxpayer is asked to come up with a single penny (or cent), these executives, financial ‘advisors’ and traders whose lust for profit sustains this insane system should have their bank accounts emptied out. It is not acceptable that in the fat years they make huge profits and bonuses, and in the thin years they get bailed out by the rest of us. And nor should nationalizations be carried out simply with the aim of re-privatizing them later, when things pick up.

Capitalism has failed to provide a decent standard of living and a secure future, and its failure has plunged millions of workers across America and the world into poverty. Yes, we should nationalize the banks, but if we pay for them, we should benefit from them.

This shows that capitalism is not only a breeder of economic crisis, war and waste, but is also a system of grotesque exploitation and injustice. When Marx wrote Das Kapital around 150 years ago, he argued that "pauperism (poverty) forms the condition of capitalist production and of the capitalist development of wealth... in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse".

In other words, capitalism breeds inequality of income earned and wealth owned between the very rich capitalists and the mass of working people. And capitalism can only function by driving workers to the limit in hours of work, in bad conditions and often in near slave labor.

 

 

                                                                                       

 

                                         

                                         

 

                                                                                               

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