It is a challenge to read through the three volumes of Marx’s Capital. Few people do it anymore. Political scientists and philosophers of past generations were intimately familiar with the writings of Marx. The existence of the Soviet Union gave Marx a perpetual relevance in the politics of the era. The fall of the Soviet Union and the rise of neoliberal economic philosophy since then has given the impression Marx has become obsolete. Even China has abandoned Marxism for a state-based capitalism, despite Xi Jinping’s claims of his admiration and appreciation for the works of Marx.
Of course, it is likely there will always remain iconoclasts who embrace Marx for his ability to antagonize through his words and through his status as a symbol. But there are no true believers left. This is partly due to the way politics has evolved. Liberalism has become conservative while conservatism has become radical. Marx represents a radicalism of the left. What is radicalism? Well, radicalism advocates for the abolition of institutions. It does not look to reform or adapt, but to eradicate existing structures without any need a clear conception of what may take its place. Marx saw no role for religion. He questioned the role of the nuclear family. And he saw the modern economic institutions of capitalism as exploitive.
Today it is right-wing politics which seeks to tear apart institutions. The modern state is not a single institution but a combination of distinct ones with different sources of legitimacy and purpose. The left has become a defender of the modern political state, while the politics of the right seek to undermine it often without clear solutions. The politics of the right have become dystopic through a philosophy that has embraced the mantra that government does not work. This is a radical notion because it is no longer based in reform but an abolition or destruction of the state.
Marx lost his place in contemporary politics because radicalism no longer belongs to the left. He also advocated an abolition of the state, but it had a different purpose than the contemporary right and held a vastly different vision of society. Marxist ideas no longer have the same relevance because the left has become fundamentally conservative while contemporary conservativism has become radical. There is no place for a radicalism of the left. Despite the claims of the far right, few left-wing intellectuals advocate the abolition of contemporary institutions. Instead, the left advocates for inclusion, progress, and reform. Same-sex marriage is a perfect example where the left recognized the value of a conservative institution through its demands for reform rather than an effort to minimize its importance and ultimately pursue its destruction. The most progressive demands of the left today are conservative in their substance.
So why read Marx at all? Or rather why read his most difficult and voluminous works? Every intellectual reads The Communist Manifesto if for no other reason than as an historical curiosity. A few of the most well-read will read the first volume of Capital, but very few go on to dissect the later volumes published posthumously. It is no longer important to read them as economic theory. Nonetheless, all three volumes contribute to the most serious critique of economic philosophy that liberalism has ever faced.
My reflections upon the first two volumes of Capital have not focused on the economics of Marxism. Instead, my aim has been to uncover the philosophies which shape economics and the politics they influence. The first volume reframes economic ideas. It inverts the supply-demand model because it assumes supply precedes demand. Liberal economics makes a subtle assumption of latent demand. There is an expectation that production does not arise without demand for its products. Marxism inverts this expectation. It assumes production comes first. It is through surplus production that creates new demands and allows for specialization and trade. The second volume philosophizes the principles of accounting and finance to explain how the circulation of capital transforms the priorities and possibilities of production.
Marx uses the third volume of Capital to explain value. For all the bravado of Marx in his writing, there is a failure to completely think through an adequate theory of value. This is the Achilles’ heel of socialist economics. Marx believes labor creates value so anything that is not the product of labor is worthless. Banking and trade are superfluous because “No value is produced in the process of circulation.” Marx goes further to declare land is worthless unless it has been improved through labor. He writes, “The earth is not the product of labour and therefore has no value.”
Critics of socialism make the nonsensical argument that socialism diminishes the value of hard work. The reality is Marx gave preeminence to “hard work” in his theory of value. Capitalism, on the other hand, is largely ambivalent to hard work or effort. For example, a widget is not worth more because it takes longer to produce. Its value is determined by its supply and its demand. If there are 100 widgets produced and there are 100 customers willing to pay $1 for each widget, its price is likely to gravitate toward $1. This is its value. It does not matter whether it takes one minute or one hour to produce each widget. Marx, on the other hand, argues its value is based in the time it takes to produce. Capitalism, though, focuses on outcomes rather than labor expended. Indeed, capitalism rewards those who find ways to deliver value while reducing labor. These are entirely different notions of value.
It is important to note Marx makes distinctions between different types of value. He recognizes the price value may not match the value from the labor expended. Moreover, the price value may not equate to the use value. But Marx continues to come back to labor as the origination for the source of value. Productivity gains produce what Marx calls surplus value. This is value produced beyond the means for subsistence. It is important to note surplus value is not a condition of capitalist economics. Surplus value exists anytime there is production beyond the means for subsistence.
Surplus value, of course, becomes a loaded term because Marx claims capitalism allows capitalists to capture surplus value in the form of profits. But surplus value is not synonymous with profit because unprofitable businesses continue to extract surplus value. The uncertainty of profitability for business is a problem for Marx. Indeed, Marx offers no explanation of risk nor does he incorporate it into his theory of value. Rather he makes effort to minimize the notion of risk, “What the speculating wholesale merchant risks is social property, not his own.” Marx redefines the conception of ownership to undermine real considerations made in business because they undermine his theory of value.
So, what happens to the surplus value of an unprofitable business? Marx does not believe their labor is valued less. Labor has a value independent of the work produced according to his theory. There is no sense of waste. It is true Marx recognizes depreciation, but he interprets this as a form of consumption. Indeed, this is similar to how modern accounting explains depreciation on an income statement or a balance sheet. But for Marx the value is not really consumed but transferred to the new commodity. It is unintelligible to Marx to explain the depreciation of equipment that has gone unused or wasted.
Waste is a challenge Marx avoids in his voluminous writings. Joseph Schumpeter demonstrates how waste is intrinsic to the “creative destruction” endemic to capitalism’s ability to regenerate in the midst of perpetual crisis. Marx seems to believe the value of a commodity retains its value until it has been used. But this is an absurd assumption. A lost or broken article is wasted regardless of the time spent on its production or its price paid. Imagine a coat purchased for $50. The buyer expects to receive value from its use through practical benefits like its warmth or emotional benefits like its aesthetics or style. But its value is not realized if it is destroyed shortly after its purchase. Imagine it is burnt in a fire. Its value is lost. Imagine it is forgotten in storage where it decays from humidity and mold. Its value is not the same once it is found again. Its anticipated value was never realized in either case.
Modern economics establishes value from future expectations. This notion is entirely foreign to Marx. That said, Marx is right that price rarely matches the value of a commodity. Consumers expect the value of a purchase is greater than the price paid, but there is no certainty. Value is based on expectations. Sometimes expectations are grounded in market values or price because they intend to resell the commodity at some point. People typically buy a house with an expectation they will sell it in the future. Some people consider resale value when they buy cars. But most commodities are bought for consumption. Price is considered in relation to similar products or services, but value must first be demonstrated for the item itself.
Tips are a rare example where value is established for work already performed. The customer determines the value of a service after it has already been done. There are some social norms for tips, but the customer has complete control to determine the price or value. Typically, value is entirely unknown. It is rarely obtained upon the sales transaction. It is obtained over time and used to evaluate (often implicitly or subconsciously) future purchase decisions. Rarely does anyone consider the metaphysical implications of value. It is generally considered as a transactional relationship determined through the market. But Marx is right that there is a distinction between the price paid and the value received. However, he is wrong to believe the value is captured through the labor expended.
Marx recognizes an alienation from the source of value brought about by urbanization and specialization in the economy. People in traditional economies have a clearer sense of value because they know the time it takes to perform different work and know the cost of the materials necessary for production. Specialization is rudimentary enough so people regularly observe the time it takes to do a job they may not do themselves. Productivity increases are largely captured by the community because the value of a product or service is grounded in the time it takes for production. Scholars and professionals become increasingly detached from traditional labor. They have little sense of the work of auto mechanics, plumbers, or electricians so they have little sense of how to value or evaluate their work. Blue collar workers, on the other hand, still have a better sense of the value of similar labor. They are more likely to do home repairs on their own and understand the value of the work from a specialist like a contractor or electrician. Specialization alienates this relationship. Commodification prices products below the cost of traditional production. Capitalism erodes the traditional sense between labor and value because it accelerates the process of specialization and commodification.
The fundamental problem in Marx’s economic thought was never a tendency to discourage work. On the contrary, its philosophical foundations overvalue labor. Rather it discourages innovations to increase productivity because it values the labor itself rather than the outcome of the labor. Capitalism has flaws, but its focus on outcomes allows it to find ways to reduce labor through productivity. Increased productivity leads to greater specialization which leads to further increases in productiveness. Marx recognized this tendency because he understood how capitalism used surplus value to produce more surplus value. He understood that capitalism finds ways to reinvest in itself.
Marx offers opportunities to examine contemporary economics with a fresh perspective. But his ideas can only go so far. Despite his ridicule of past economists, his own ideas deserve ridicule for the absurdities they produce. It is unfathomable to consider land unvaluable even in his own day. Workers and peasants continued to immigrate to the United States for the virgin land Marx considered devoid of any value. Speculation on uncultivated land was a widespread practice in the United States dating back before the American Revolution. Marx requires a series of mental gymnastics to explain away these phenomena and ignores many more. These are the intellectual practices Marx decries in others but remains oblivious in his own work. Simply said, these are reasons to avoid a wholesale embrace of Marxist thought. Nonetheless, the role of Marx today is to force philosophers, economists, and political theorists to deal with difficult questions they avoid due to limited perspective. Marxism turns economic ideas around in several ways to force economic thought and political theory to consider them from new angles. It tests assumptions and forces many revisions that are often taken for granted.
Finally, Karl Marx remains an influential figure to this day. His ideas are present either directly or indirectly in philosophy, economics, sociology, and political science. Marx was required reading for past generations of scholars. It has been my generation which has begun to ignore Marx. It has been my generation who has viewed his ideas as largely irrelevant to understand politics and economics. There is a clear divide between the scholarship before and after 1989. This was the year of Fukuyama’s seminal essay “The End of History?” In many ways, it was the end of Marx. It marks the fall of the Iron Curtain from Eastern Europe. Marx had already fallen out of fashion in the West as Reagan and Thatcher set in motion Movement Conservatism based on an embrace of free-market economics. But there is something different in the literature after 1989. This is the moment intellectuals abandoned Karl Marx.