Marx, Smith-Or List?

By Lind, Michael | The Nation, October 5, 1998 | Go to article overview

Marx, Smith-Or List?


Lind, Michael, The Nation


MORE THAN 150 YEARS AGO A GERMAN THINKER FORESAW THE PROBLEMS OF UNINHIBITED FREE TRADE IN A GLOBAL ECONOMY OF DEVELOPED AND UNDERDEVELOPED NATIONS.

Michael Lind finds no coherent ideological guidelines for dealing with the global economic' crisis in either socialist or liberal thought. Marxism has had its day, while the liberals are too tied to 'free market" doctrine. For guidance Lind nominates the nineteenth-century economist Friedrich List, whose enlightened economic nationalism rings true today.

The deepening global economic crisis which has now spread from Asia to Russia and may hit Latin America next- -has exposed the poverty of the laissez-faire economic approach that the United States has been urging on the rest of the world. The liberalization of financial markets worldwide has benefited international speculators while crippling the power of governments either in the developed countries or the developing world to promote the long-term interests of their producers and consumers. To make matters worse, the IMF has insisted that countries victimized by the flight of foreign capital undertake reforms that may jeopardize their social stability without necessarily producing prosperity.

Unfortunately, while the economic meltdown of the emerging markets has discredited laissez-faire, it has also exposed the bankruptcy of the conventional leftist and liberal alternatives. Until now, criticism of free-market orthodoxy from the left has been monopolized by democratic socialists and neoliberals. Neither school offers a convincing alternative model of a modern industrial economy.

Democratic socialists argue that their version of socialism was not discredited by the example of Marxism-Leninism. That may be the case. But after almost two centuries, nobody has been able to provide a blueprint of what a functioning democratic socialist industrial economy on a national or global scale would look like. A few vague books and journal articles about "market socialism" do not count. Moreover, it is reasonable to suspect that the absence of the profit motive would produce stagnation in any genuinely socialist economy, even in a society protected by free elections and the rule of law.

If democratic socialists are still too close to Karl Marx, neoliberals like Bill Clinton and Tony Blair have made too many concessions to Adam Smith. Like post-1945 Keynesians, they refuse to challenge the neoclassical economic orthodoxy that makes the state an umpire rather than a participant in a capitalist economy. Instead, neoliberals focus on redistribution by means of a generous safety net and progressive taxation. Not only does this cede the intellectual initiative to the free-market right, it makes neoliberalism irrelevant to the majority of humankind, for whom economic development remains the priority. The neoliberal theory of development, expressed by President Clinton in his remarks in Russia, has been reduced to the assertion that the enforcement of property rights will encourage foreign investment.

Are these the only alternatives to the political economy of the right- an inchoate democratic socialism and a neoliberalism that offers an echo of free-market globalism, not a choice? It is important to recall that socialism and classic liberalism are only two of the three rival traditions of political economy that emerged in the first half of the nineteenth century. The three traditions are symbolized by Karl Marx, Adam Smith and Friedrich List--the German-American theorist and activist who developed the insights of the American Hamiltonian "national economists" into a systematic theory of industrial capitalist economic nationalism. It was List (1789 1846) who taught the Germans and later the Japanese to follow the nineteenth-century American example of using tariffs and other industrial policies to promote the industrialization of their nations. As Chalmers Johnson and James Fallows have observed, this long-neglected figure had more influence on the development of industrial civilization in Europe and East Asia than either Marx or Smith. …

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