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.
The result of credit compulsion was rather paradoxical. The 1980s solution saved the banks (and the bankers) from the debt crisis, but in the long run increased burden of repayment, and in this way decreased living standards in Latin America. A better solution would have been debt reduction at an earlier stage of the crisis.
In today’s circumstances, the financial system would have been better off if some version of US Treasury Secretary Henry Paulson’s original plan to purchase toxic assets and take them off banks’ balance sheets had been realized. But that proved too complex, because valuing each asset raised different and unique problems.
In running away from complexity, we have come to look for simple solutions. When opening a new building at the London School of Economics, the Queen of England asked why no one had predicted the crisis. In fact, the clearest anticipation was given by two British comedians (John Bird and John Fortune) over a year ago, at a time when high-powered financiers were still in denial.
In other words, the financial world has reached a kind of carnival season, in which fools are wise and clever people turn out to be idiots.
When economic activity starts up again after a deep recession, it will not be as a consequence of people having been compelled to channel financial resources into the projects selected as politically desirable, but as a result of new ideas. The “Marxist” revival was probably an inevitable byproduct of the current crisis. But its acolytes should reflect on the uniformly disastrous results of centralized credit provision in the past.
Harold James is professor of history and international affairs at the Woodrow Wilson School, Princeton University and professor of history at the European University Institute, Florence.
COPYRIGHT: PROJECT SYNDICATE
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations