Karl Marx has returned, if not quite from the grave then from history’s dustbin. German Finance Minister Peer Steinbruck recently said that Marx’s answers “may not be irrelevant” to today’s problems. French President Nicolas Sarkozy allowed himself to be photographed leafing through the pages of Marx’s Das Kapital. A German filmmaker, Alexander Kluge, is promising to turn Das Kapital into a movie.
Few of today’s new “Marxists” want to spell out the attractions of a man who wanted to unite German philosophy (building on Hegel) with British political economy (carrying on from David Ricardo), and thereby turn two rather conservative traditions into a theory of radical revolution.
Marx was certainly a perceptive analyst of the 19th century’s version of globalization. In 1848, in The Communist Manifesto, he wrote: “In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.”
To be sure, there were plenty of other 19th-century commentators who analyzed the creation of global networks. But we do not see a new rush for the works of such figures as John Stuart Mill or Paul Leroy-Beaulieu.
The implication of Marx’s renewed popularity is that capitalism is now universally accepted as being fundamentally broken, with the financial system at the heart of the problem. Marx’s description of “the fetishism of commodities” — the translation of goods into tradable assets, disembodied from either the process of creation or their usefulness — seems entirely relevant to the complex process of securitization, in which values seem to be hidden by obscure transactions.
From the analysis of the deceptive nature of complexity, there followed the recommendation of The Communist Manifesto that seems most attractive to contemporary “Marxists.”
It came as point five in a 10-point program. Point five, which was preceded by “confiscation of the property of all emigrants and rebels,” was “centralization of credit in the hands of the State, by means of a national bank with State property and an exclusive monopoly.”
The major problem in the aftermath of today’s financial crisis is that banks are no longer providing credit for many transactions needed in the basic operation of the economy. Even the recapitalization of banks through state assistance has not been enough to revive economic activity.
In the face of the difficulties of big automobile producers and smaller suppliers alike, many are demanding that, as part of the rescue package, the state should compel banks to lend. Everyone thinks of the horse that can be led to water, but cannot be made to drink.
Even pro-market commentators have taken up the cry that the market will not provide the needed credit.
State-compelled lending has been adopted in the past, and not just in the central planning systems of communist economies. It was part of the standard armory of early modern European states as they dealt with their creditors. Immediately after World War II, it was at the heart of French economic policy.
More recently, in the early 1980s, the IMF and the central banks in the big industrial countries teamed up to pressure banks into extending more credit to the big Latin American debtor countries. Many bankers grumbled about having to throw good money after bad, but they gave in under the threat of greater regulatory intervention.