Re: [Marxism] open question...

[Louis Proyect <lnp3@xxxxxxxxx>]

> There's much 'educated' talk about Marxism being a flawed system and its 
> remaining adherents followers of some sort of economic religious faith. 
> Since I have no formal training in economics (I'm studying philosophy), I 
> was wondering if anyone could recommend any good papers (a book might be a 
> little long at this point) dealing with this subject. I get the impression 
> that much of the mainstream economic community has a particular ideology, 
> but since the discipline is shrouded in much mystery for those outside it, 
> it becomes difficult to know what is questionable. Can anyone shed some light?

I would recommend a book first of all. Michael Yates's "Naming the System" 
skewers neoclassical economics and presents an easily understood Marxist 
analysis of the global economy. If you don't want to read an entire book, 
I'd go to the Monthly Review website (monthlyreview.org) and do a search on 
"Yates". It will turn up articles such as these:

The Rich, the Poor, and the Economists
by Michael D. Yates

In the New York Times of December 15, 2001, there is an article titled, 
?Grounded by an Income Gap.? The subject of the article is the growing 
income gap between the richest and the poorest people in the United States, 
a disparity greater here than in any other industrialized nation. 
Apparently the reasons for this inequality have been vexing the brains of 
our best economists. Martin Feldstein, Harvard professor and, under Reagan, 
the chairman of the Council of Economic Advisors, is quoted as follows: 
?Why there has been increasing inequality in this country is one of the big 
puzzles in our field and has absorbed a lot of intellectual effort.? But, 
this effort has apparently been wasted, since he goes on to say, ?But if 
you ask me whether we should worry about the fact that some people on Wall 
Street and basketball players are making a lot of money, I say no.?

Before I comment on Professor Feldstein?s rather remarkable statements, let 
me say something about Feldstein?s own work. Before he became Reagan?s 
chief economist, he was an expert on the economics of social security. In 
published papers, he claimed to have empirically demonstrated that the 
social security system in the United States inhibited savings. Since 
savings are the source of capital investment, the implication of his 
research was that the social security system also reduced investment and 
thereby reduced the growth rate of the economy, since investment is the 
engine of economic growth.

Feldstein?s work fit nicely into the growing conservative movement which 
arose after the post World War Two boom came to an end in the early 1970s. 
The Keynesian economics that was gospel during my college years was giving 
way to a return to the pre-Keynesian theory that ?freely? operating markets 
(free from the poison of government control and regulation) were the only 
solution to all economic problems. Led by the famous ?Chicago Boys,? 
especially Milton Friedman, the anti-Keynesians carried the day in the 
economics profession and still do. No wonder, then, that when Ronald Reagan 
became president, he tapped Feldstein to chair the Council. For years, 
Reagan had been railing against social security from his General Electric 
radio pulpit. Now here was an economist who could lend professional 
credence to Reagan?s reactionary views. Social Security would be a tough 
nut to crack. It was an extremely popular program, run with great 
efficiency and effective in sharply reducing poverty among the elderly.

There was just one problem. Feldstein?s research was fatally flawed. Two 
staff economists at the Social Security Administration asked Feldstein for 
his supporting data. After three years of repeated requests, he sent the 
data to them. When they tried to use Feldstein?s numbers to replicate his 
results, however, they could not. They uncovered an error in the computer 
program Feldstein had used, and when they corrected the error, the results 
were exactly the opposite of Feldstein?s. That is to say, the social 
security system actually encouraged savings and, according to Feldstein?s 
cherished ?free market? theory, facilitated capital formation and economic 
growth. (For more on this, see ??Superstar? Feldstein and His Little 
Mistake? in Dollars & Sense, Dec. 1980, pp. 1-2 and the citations therein.)

In a field like physics, when the data consistently fail to support a 
hypothesis, the hypothesis is eventually rejected. A scientist who 
continues to hold to a rejected hypothesis will eventually lose his 
scientific reputation. But in economics matters are not so straightforward. 
To the best of my knowledge, Feldstein never acknowledged that his research 
was worthless. In fact, a short time after his mistake was exposed, he 
claimed to have redone his research and found his original result. Nor has 
he become a champion of the social security system. He is today one the 
most virulent proponents of privatization, and he continues to cook his 
numbers. He kept his privileged position at Harvard, from which he has made 
millions of dollars as a consultant. As the Times article gives proof, he 
is still being sought after for pithy quotes in his later middle age.

The reason why a person like Feldstein can continue to prosper in the face 
of what should have been a devastating professional scandal is simple ? 
money and power. The social security trust funds contain billions of 
dollars, and those who own our society?s property want that money. It is 
not now available to them, but it would be if social security were 
abolished or to use the euphemism of the day, ?privatized.? Today, 
economists continue to tell lies about social security, a program as sound 
as it ever was but under growing and relentless attack. Feldstein and 
others like him provide a veneer of ?science? to justify what is nothing 
more than the theft of the people?s money.

Which gets us back to inequality. Anyone willing to look can see that a 
society in which wealth ownership is extraordinarily unequal, as it is in 
every capitalist country, must by its very nature also be one in which 
incomes are also unequal. And anyone with any connection at all to reality 
knows that those with the lion?s share of the wealth (and income) call the 
shots in everything that matters ? politics and culture to name just two ? 
and this power puts still more money into their hands. It also follows, as 
the night follows the day, that there can be no such thing as equal 
opportunity in a hopelessly inegalitarian society. Just perform a thought 
experiment. Imagine two child, one born into the poorest family in the 
United States and one born into the richest. Imagine further that all 
necessities, indeed all useful things, must be purchased in the 
marketplace. The results of such an untrammeled capitalism, just the kind 
Feldstein prescribes, are easy to predict. If the poor child is lucky 
enough to survive, he or she will assuredly have close to a zero 
opportunity to rise to the top. The rich child, on the other hand, can be 
completely incompetent but will never fall to the bottom or anywhere close 
to it.

If we add to the inherent law of capitalist inequality policies designed by 
the wealthy to make them richer, inequality will worsen as it has in the 
United States. As the Economic Policy Institute and many other scholars 
have shown with meticulous and uncooked research, the employer-led and 
government-abetted attack on labor unions, the class nature of the schools, 
the implementation of job-destroying and income-reducing trade policies, 
the stagnant minimum wage, all have contributed to growing inequality. Not 
to mention racism and sexism. Yet Feldstein and his ilk profess 
incomprehension. Or, worse yet, they blame the victims. They say that 
teenage pregnancy is a primary cause of poverty. In intellectual 
desperation, they even say that ?low cognitive ability? is the culprit. Not 
only is this bankrupt, but given the racial composition of those at the 
bottom of our society, it is racist (as is Feldstein?s equation of Wall 
Street operators and basketball players).

Yes, the last 25 years have witnesses a marked transfer of money from the 
poor to the rich. But contrary to the cant of economists like Feldstein, 
this has everything to do with capitalism and the actions of politicians 
beholden to and increasingly a part of the wealthy class. No wonder the 
economists, whose own place high up the income scale is so often tied to 
their championing of this unfair and repugnant system, would rather ignore 
this truth (and the voluminous evidence supporting it) or claim not to 
understand it or say its not a problem but a socially desirable state of 
affairs. This is what the wealthy demand, and this is what the rest of us 
must think if the entire ideological edifice buttressing capitalism is not 
to crumble to the ground.

Let me make two final comments. First, the Times article ends by noting 
that Adam Smith, himself, was concerned with equity. Smith said, ?No 
society can surely be flourishing and happy, of which the far greater part 
of the members are poor and miserable.? That the ?far greater part of the 
members are poor and miserable? cannot be doubted; this is truer today than 
it was in 1776 if only because then a much higher proportion of the world?s 
population could grow its own food. But the article fails to note Smith?s 
remedy for human misery ? education in homeopathic doses. Second, lest we 
doubt the class biases of Feldstein and company, let us remember that after 
the fascist generals murdered Salvador Allende and began to round up, 
torture (including electric shock), and murder their enemies, the ?Chicago 
Boys? were recommending neoliberal ?shock treatment? for the economy.


--

www.marxmail.org


_______________________________________________
Marxism mailing list
Marxism@xxxxxxxxxxxxxxxxxxx
http://lists.econ.utah.edu/mailman/listinfo/marxism