Economic Problems and Marxian Analysis

By Wolff, Richard D. | Monthly Review, June 1988 | Go to article overview

Economic Problems and Marxian Analysis


Wolff, Richard D., Monthly Review


ECONOMIC PROBLEMS AND MARXIAN ANALYSIS by RICHARD D. WOLFF

The last ten years in the United States have seen average real wages fall and the incidence of proverty and homelessness rise. We have had very high rates of inflation, unemployment, interest, and business bankruptcies. Some of these rates were unprecedented in recent United States history, expecting world wars and the Great Depression. Yet, in out very uneven economic system, the Reagan tax cuts and defense spending pumped up many corporate balance sheets and made rich Americans richer still. As happened before, the stock market consequently flared in a speculative frenzy and then crashed. The United States shifted from an international creditor to a debtor status. Basic industries were crippled by foreign competition. Firms that made big profits used them to arrange megamergers rather than to expand to rebuild industrial capacity. The oligopolized banking structure became dependent on massive, uncollectable loans both to foreign debotors and to wild speculators in the domestic energy and real estate sectors. The collapse of medium and small farms remains endemic across the country. The labor union movement declined sharply and now represents barely a sixth of the non-supervisory labor force. The increased inequality of income distribution sharpens social divisions and conflicts everywhere.

Perhaps most significantly, the U.S. economy was and remains extremely unstable (as well as uneven in how it distributes the social costs of its instability). Not just stocks and bonds, but also dollar exchange rates, levels of industrial capacity utilization, real estate values, and so forth, oscillated dramatically. After severe recessions in the 1970s and early 1980s, another is now widely expected for this year or next.

Univeristy and private forecasters missed virtually all of this with few exceptions. Republicans and Democrats did no better. They have now hitched their political wagons to one or another simple-minded "essential cause of our troubles." The culprit is either the budget deficit, long-developing problems are transformed into simple issues susceptible to quick fixes if only this or that character is elected president. The economics profession -- at least that part honest enough to admit it -- has been depressed at its incapacity to understand, let alone fore-see, what happened or what is likely to happen. We face an economy out of control and apparently beyond the reliable comprehension.

I want to argue that one component of this mess is the narrowness of what passes for economic knowledge in the United States today. Of the two basic alternative theories across the world today -- neoclassical and Marxian economics -- only one is taught systematically in virtually all American universities today. The same one is the shared basis of public discussions in the media and debates among liberals and conservatives. Unable to draw upon the insights of the alternative, Americans are left floundering within the narrow confines of an economic theory increasingly inadequate to the problems they face. The alternative, Marxian theory, approches the U.S. economy very differently. However, because of unfamilarity with is basis arguments, we need to devote a few sentences to them. Then we can sketch what the Marxian theory can tell us about the U.S. economic today.

First, Marxian theory does not see that economy as a unified entity. Instead it sees divisions: prosperity for some is recession for others, government policies hut some and help others, inflations bring pain to some, profits to others. Secondly, it focuses attention on a particular division in society because neoclassical theory simply refuses to see or analyze it and because that refusal blinds neoclassical theory to important aspects of U.S. economic and social problems.

The particualr division of interest to Marxists is class, but what they mean by that differs from what most Americans think. …

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