Thursday, 13 February 2014

The relevance and irrelevance of Marxism. An interview with economist, Harry Shutt

Long considered a historical relic, Marxian economics is experiencing something of a renaissance. In contrast to the exhaustion and lack of explanatory power of mainstream economic theories, Marxism offers a ready-made alternative way of interpreting the world. It is described by two proponents as “reality-based economics”. But is an economics laid out in the 19th century still relevant? And if we agree that Marxism contains insights, do we need to be selective about which parts we give credence to? I put these questions to English economist, Harry Shutt, who though not a Marxist, says he is influenced by Marx (among others):

 You responded to a recent blog post by saying that we need to transcend Marxist economics. I’m intrigued by what you mean by this. Does this  mean an economics that retains parts of Marxism but rejects others as redundant and out of date? Which parts?

Precisely. The central part of Marxism, to me, to give credit where it’s due, Marx-Engelism, is the historical method. This is what Engels, in particular, called ‘scientific socialism’. His most famous work is Socialism: Utopian and Scientific and he contrasts the utopian socialism of people like Robert Owen and the idealists with those who saw it as based on hard economics - the fact that you have some things that work and some things that don’t work. Clearly, capitalism, as then conceived, did not work because of the crisis of overproduction. All that was true then and is true now and we have to retain that.

But the other thing that was more important in a way, which Marx and co stressed, in particular, was the technology aspect of things. That is reflected in their historical method, the idea that we are evolving as a species, not just in the Darwinian sense, but in the collective sense of organisation. The major factor behind this is technology. They demonstrated this brilliantly in The Communist Manifesto - why the cottage industries had to disappear and, by organising factory production as they did, people could be so much better off and more productive, awful as the conditions were which existed in the earlier Victorian period. The part that was wrong about the Marxist prospectus is this idea that the evolution of this process would lead to the collapse of capitalism and its replacement with the dominance of the proletariat.

I believe that if Marx were around today, he would say that people who still believe in the dictatorship of the proletariat or that workers, as workers, could or should be in control, were sentimental fetishists. Fetishism is a good Marxist word. André Gorz wrote this book at least 35 years ago, Farewell to the Working Class. Even by the time he wrote the book in the late 1970s, it was pretty obvious that the old skilled working class was disappearing. In those days, it was numerically controlled machine tools that were coming in and making the old time-served turners and fitters completely obsolete. They are now museum pieces.

Technology has changed things. Since Marx wrote all this stuff 150 years ago, and he was living the consequences of the development of the first industrial revolution, we’ve had the second industrial revolution and we now seem to be in the third. And that is rendering the whole idea of large concentrations of labour completely outmoded. I’m amazed that it’s not obvious and that’s why I’m staggered that people like Richard Wolff, who’s obviously otherwise a very intelligent person and understands the failings of the system, and other Marxists, still seem to think that some of kind of workers’ control is the way forward. I would argue that even in the UK, which has not exactly been at the forefront of socialist thinking, but even in the UK, that idea, syndicalism as it was known then, died out after the First World War.

 So what is valuable in Marxism is the recognition that technologies changes and that alters what human beings can do and how productive they are, but the idea that the proletarian can take over and run society that is not true …

It’s actually not clear what Marx meant, but a lot of people have inferred that he meant the workers are going to take over. It was that presumption upon which the Bolshevik Revolution was based, although the workers didn’t take over society. But the theory was that they were going to, and that’s certainly a clear presumption behind Leninism.

 But given that technology is changing what can be done in terms of production but that the working class is not able or is not constituted to take over society, then who is going to change society? Does technology just go on developing?

That is a difficult question to answer. But just because you conclude that labour is not going to do it, organised or otherwise, then that doesn’t mean you see any group exclusively in that role. But what needs to be taken account of is that people are developing solutions at a grassroots level, some of which will work, others won’t, which are seeking to overcome the problem. The word ‘community’ is being used more, and it’s rather a vague word, but people are going to organise in community groups and local groups too, very often. But I see one of the trends of our time, and where it’s leading I can’t be sure, is for people to organise production and finance and markets on a local basis. There are outbreaks of local currencies, you have ‘The Bristol Pound’, and this is a revolt against extreme globalisation, which means that you may have a perfectly decent factory providing, for example, processed food through your local market and suddenly someone can come in from outside and dump a rival product, shall we say UHT milk, from China or somewhere to quote an extreme example, costing next to nothing and that can take away your market and destroy your livelihood. Only a complete lunatic would say that that is a viable and sensible way to organise things but that is what is happening. People are rebelling against that.

 What solutions do you see as viable?

I don’t think there’s ever been a case in history, as the Soviet Union demonstrates, where somebody has designed a blueprint which was imposed from above and that has actually worked. You can only do it under totalitarian conditions and totalitarian conditions contain the seeds of their own destruction. You are going to have to evolve but it will have to evolve under the circumstances of extreme localism. To start with that will mean a serious revolt against globalisation. I think this is beginning to happen, when you see what is happening in Europe over immigration, for example. It is clearly not viable to go on pretending that we can have a completely free labour market in Europe, let alone one which admits, legally or otherwise, millions of people from outside Europe, on the basis that they can take work from people anywhere. That is a recipe for fascism, frankly, and that is where we are heading at the moment. I would suspect, as much as I support the idea of international cooperation, which I hope will not be lost, that what is going to happen is that there will probably be a break-up, not just in Europe but elsewhere, to more fragmented markets, or more separate markets. And people will say we are going to have our own production, our own distribution and we will trade with other countries, we will exchange labour with them, on a negotiated basis, as and when it suits both parties.

So, not having a free labour market in Europe means restrictions on freedom of movement? Does that not involve more deportations of ‘illegal’ immigrants and the ugly use of state power to enforce a ban on economic migration?

Limiting opportunities to seek employment across borders is not the same as restricting freedom of movement. As I tried to suggest in the previous answer, what I envisage is a system of international cooperation - in place of the current jungle of globalisation - in which a) there would be greater emphasis on fostering local provision of goods and services supporting employment of the local population - as well as limiting environmentally undesirable trade in goods which can be sourced locally - and b) income differences between countries would be progressively compressed by regulation. Given the huge existing disparities this would have to be supplemented, at least initially, by international transfers on the basis that these would be the distributed in the form of a Universal Basic Income, albeit not uniform across boundaries. This implies total rejection of the whole ‘race to the bottom’ concept based on the assumption that maximisation of corporate profits is the supreme public good. This would, of course, involve limiting freedom of capital movement as well. In general, though, the emphasis would be on promoting the positive rather than restricting the negative.

So, in the regions or nations that would negotiate their exchanges with other regions or nations, who would control production and distribution? There are leftists – and Marxists - who say enterprises should be controlled by their workforce but you dismiss this as anachronistic. In your books, you say often say the public in general should have voice on the boards of companies. But if we need a new organisation of enterprise, different to the shareholder/corporate model, what should it be?

If I said that the idea of workers' control was anachronistic I was being too kind. It is, in fact, irrational from almost any perspective. It seems logical that in the management of any economy or enterprise production, distribution, prices and incomes should be determined in a way that balances the interests of citizens in their different capacities as consumers, taxpayers, workers, residents of specific localities etc. Workers' exclusive control is thus illogical and discriminatory as well as impractical - if it means workers would also own the enterprise, what happens to their rights as owners when they leave or retire? How will they cope with loss of competitiveness or bankruptcy, as Mondragon businesses have found to be an issue?

The general principle should be that power be devolved as much as possible to the local level. Different forms of enterprise and ownership can be envisaged - including private, cooperative or community ownership - provided all play within the same transparent rules. Overall conformity with the public interest would in principle be assured by representative public bodies licensing enterprises and setting the conditions under which they operate. This would also imply the need for some degree of planning at local, regional and national levels to prevent monopoly exploitation, market disruption and waste of resources.

That also requires a complete rethink of the neoliberal philosophy within markets, and within countries. You have to go back first principles, and ask the questions; What is an economy for? What is it supposed to achieve? Is it the desire to maximise growth, which we are constantly being told it is, and that has been the main theme for the whole of my working life, although that was certainly not the aim before World War Two? People were much more concerned just with survival. The other thing is to look at things like the Universal Declaration of Human Rights. It gives you a clue, the idea of an economy is to provide people with a decent standard of living. There are, of course, different definitions as to what one might mean by that. But quite clearly it should not involve people having to go and beg and humiliate themselves at food banks, which is what we’ve come to. They would now have us believe that this is a normal part of life and what people should accept.

At a time when entrepreneurs and wealthy investors are lauded as ‘wealth creators’ granting the gift of life to the rest of us, isn’t Marx’s labour theory of value important – the recognition that value or wealth comes from labour and people are exploited when they are employed?

The short answer is no. To me, the labour theory of value has always been rather a puzzle in Marxism. Marx got the idea from Ricardo who was certainly not a worshipper of labour. And what he meant by the labour theory of value in determining labour’s share of output is, I think, very hard to pin down. I’ve never quite understood why Marx took it up. The only reason I can advance is that he also had this concept of alienation and part of the significance of that was that labour was engaged in producing all this stuff and the factory system was at the core of things then and there were no robots or anything. Workers were producing all these cheap goods which were exported all over the world and made a few people very rich here, but the workers couldn’t afford to buy them themselves. That was tied up with his view of alienation – in other words, that workers were just cogs in the machine, and were therefore dehumanised.

 What is wealth, then, and how is it created?

I’m looking at it from the collective point of view, which I think Marx would have done too. Wealth is what belongs to all of us. Only in the last few years have I come across this idea, I think it’s called cognitive capitalism. You look around and you see that all the wealth we have around us, whether it’s the public or social infrastructure, the schools, the hospitals, all these things we’ve accumulated over the centuries,  are based on our collective effort. The important point to hang onto is the idea that it is collective, that this belongs to all of us. Therefore to suggest either that it only belongs to wealth creators and this is only made possible by people who have invested their money, supposedly at risk (though in most cases they made damn sure there weren’t any risks), or, on the other hand, by workers who have created it all by the sweat of their brow, this is a mistake. Because, in fact, it’s a combination of all these things. Anyway, the sweat of the brow, insofar as that’s been involved, was shed by people long dead. We can’t say that we’re entitled to more of it, or a share of it because we’re workers now, when, in fact, it was our forebears who sweated and died to produce it. That is, to me, the proper way of viewing it. This comes back to that famous phrase, quoted by Isaac Newton, that “we stand on the shoulders of those who have gone before”.

 I recall a year or two ago somebody wrote a defence of Rupert Murdoch, saying he fed 40,000 people. They didn’t mean he donated to charity but he employed 40,000 people thereby giving them the gift of life and the ability to feed their families. A lot of politicians come out with a similar idea – there are very rich people who have the ability to grant us jobs or increases in our wealth, and we should give them what they want. I think if you want to challenge that idea, you have to come at the idea of wealth creation from a different point of view

What you have just described is an important point to note. But, to my mind, it’s rather obvious – it does not differ in any way from what our feudal masters were saying hundreds of years ago – in other words, we created this and we provided the land and the employment for people and, as a result of that, you are entitled to survive. The implicit idea in that case was that God gave it to them, or the King as was often the case. Another philosopher, whose work is rather contemptible, is John Locke. He developed the idea that anyone who appropriates some land and develops and uses it, because they produce more from it than the original inhabitants, it belongs to them. That idea was somehow related to Calvinist religion and that people who were chosen by God, or were given the opportunity to take hold of the Garden of Eden and turn it into an earthly paradise by their own efforts, somehow deserved more than the rest of us, even though the reason for this distribution of wealth, in the first place, which enabled them to do this, was nothing to do with merit whatsoever. It was purely an accident of birth. And that is really what it comes down to today.

Another thing, which was much mocked by Dickens in Hard Times, was this myth of the self-made man. Nowadays, you get the same sort of thing. Whereas in reality, there are so many cases of people who have come by their wealth and assets by more or less dubious means. The idea that they have a superior right to tell everyone else what to do, is medieval.

 Do we need entrepreneurs to think of new products and new ways of doing things, and are they entitled to more than other people?

No. I’m not saying entrepreneurs are a bad thing. But if you choose to be an entrepreneur like James Dyson, to go out and invent a new vacuum cleaner, if that’s what turns him on, that could be good. He should be properly recognised and rewarded for that. But that doesn’t mean he has the right to go around saying that nobody else should be able to make a vacuum cleaner like his, or if they do, he should be able to take a commission on it. Intellectual property is theft.

Entrepreneurs, inventors, thinkers, they are one of the glories of the human race, really. But inventing new things, finding a cure for cancer or whatever, this is a desirable thing in its own right and if somebody contributes exceptionally to bringing these kinds of things about, then they deserve recognition and compensation for their achievements. That should be enough satisfaction for them. To think that they should also be allowed to rule the world, that’s something else.

 Is an entrepreneur in this sense, different from a person who just has lots of money and invests and creates a new company and jobs? That’s not necessarily an advance, it’s just that they have money and they want more money, and a by-product of that is that some people get jobs?

You’re touching on something else and it’s a very valid point. What you’re talking about is the capitalist urge to growth. This is one of the problems the system suffers from. The profit motive is based on a system of company law, which actually makes shareholders the priority, that they should determine entirely freely, how the resources of a country are disposed of. That inevitably means that you’re going to have a system of profit maximisation and that profit maximisation, in turn, must lead to more investment which leads to speculation and falling rate of profit and busts. It’s all very familiar stuff. And that’s why the only way to prevent that is to change company law so that, in the first instance, limited liability is denied to anyone who does not demonstrate that they are doing something in the public interest, and that has to be constantly monitored. It’s a privilege in other words. It’s an irony that, in many ways, that would take us back to the kind of pre-industrial, if not pre-capitalist, structure of the economy that existed before Adam Smith. The profit motive in the 16th century, was expressed through chartered companies, like the Hudson’s Bay Company or the East India Company. They had a monopoly to go and trade in certain things, but that was granted by the state, the crown and people, in theory and sometimes in practice, had to deliver something back to the state. In many cases, it was just plunder from the Far East, it wasn’t a public good, but that’s the principle. You shouldn’t have any privileges as an enterprise or an entrepreneur, unless you agree in advance to give something back.

Many people recognise how destructive the profit maximising motive is, but effectively with our company law you are institutionalising that. You are saying, not merely that you are permitted to go out and maximise your profits, but you are compelled to do so. It compels you to worship at the altar of the golden calf.

 Isn’t Marxian economics’ recognition that capitalism’s leads to monopoly and oligopoly (truly competitive markets don’t last) and that capitalism is unavoidably unstable (you can’t get rid of boom and bust) also essential if we want to really understand the way the world works?

Absolutely, that is central. Marx was the first person to point these things out. I’m not deeply into the history of economic thought but if there was one economist who recognised this before Marx, it was Malthus, because he pointed out to Ricardo that it was possible to produce more goods than the market could absorb and Ricardo rather dismissed the idea. The contrast there is with Say’s Law, the idea that supply creates its own demand. In many ways, the labour theory of value, which was more like a Ricardian idea, was restatement of Say’s Law because at one level the labour theory of value amounts to saying, ‘I produce, therefore I am’. This was the effectively unchallenged principle of the Soviet Union. One reason why they got into trouble was that they said that even if you exceed your planned target for the manufacture of glass bottles, for example, all you will do is drive down the price and that will benefit everybody. The idea that it was a complete waste of resources never occurred to them.

 One Marxist economist, Andrew Kliman, attributes the ‘malaise’ (as he puts it) in the world economy to the tendency of the rate of profit to decline. But you locate the problem in excess capital (a ‘wall of money’ as you phrase it) needing profitable outlets. Are these two ideas very different and in conflict?

I don’t think they are really. I’m not familiar with Kliman’s work but the tendency of the rate of profit to decline is undoubtedly there. What’s happened spectacularly over the last 40 years, since the post-war boom ended in the West, is that the capitalist establishment, the business community, has been preoccupied with ways of overcoming this problem and the ‘wall of money’ is certainly part of that. In other words, you create huge speculative ways which enable people to invest money in things that are totally unproductive. People have been writing about ‘casino capitalism’ since the 1960s and it becomes just a gambling den, based on speculation. There are people who will tell you that speculation is a valid economic activity that benefits the community and it helps price discovery. Quite honestly, I think such arguments are hardly worthy of consideration, it’s obviously self-destructive and irrational.

 So profit does have a tendency to fall and business is aware of this tendency?

Oh yes. Business in the widest sense. This is why we have this ludicrous superstructure of finance capital in the City of London, which is, in fact, organised gambling.

 Because you can’t make enough money from ordinary production?

No. And then you create ridiculous outlets for funds that are thought to be necessary like pension funds, which are completely unnecessary. You have these fetishisms which are widely held among all political classes in the UK which is that people are not saving enough for their retirement. People shouldn’t have to save anything for their retirement. They may choose to do so if they want to but the way things are now, a fat lot of good it will do them.

 So the tendency of the rate of profit to decline leads to speculation and more crashes?


What’s your view of political Marxism; the concept of a party that represents the working class and seeks to gain power either through a revolution or the ballot box, like the SWP in the UK? A party that attempts to control the state on behalf of the working class and the party knows best …

I would have total contempt for that and, again, like all political movements, political Marxism, in that sense, is no different from organised religion. In other words, it’s designed to give power, cloaked under some ideological mythology, to a certain group of people. Ultimately, quite apart from the fact that so many of these concepts on which it is based, are outmoded, like the labour theory of value, any structure which gives some mystical kind of authority to any individual or group of individuals, so they know better than other people, that is doomed to, not necessarily to failure, but it’s doomed to destroy people rather than help them.

 Given that there are conflicting interpretations about what’s happening in the world and you think you’re right about some things and you disagree with people who also think they are right, how do you get a political movement that avoids the pitfalls of parties and leaders and some people dominating others, how do you get agreement to happen and to manifest itself?

That’s the $64 trillion question. I wish I knew. One of the things I’ve been advocating for a good many years, as other people have, is the idea that you need to make it much more difficult for individual vested interests to get hold of the media, for example, or the airwaves. To overthrow the likes of Murdoch and Fox News, who do an awful lot of damage. As to how we are going to get away from that, in practice, I really don’t know. Let us hope that things like the Internet will open things up sufficiently to permit diversity of opinion, to change attitudes. But you can quite easily see how that can go the other way and, of course, the authorities in places like China and, indeed, closer to home, are desperately trying to do that, because they very much fear the consequences of being found out.

Right now we are living through a fascinating period, (you could call it fascinating if you’re not starving to death), where the means of control are breaking down, partly because the economic system itself is breaking down but you can’t see what’s going to come up to replace it and you get these confused movements, such as in Egypt which is a complete mess, but reflects precisely this kind of dilemma, although there are far worse conditions there than in most western countries. And, heaven knows how it will play out.

I’m about to write again about the determined unreason of our rulers. I’ve been brought up to believe that, for all their faults, our rulers have shown the capacity to adjust to inevitable change when they finally realised it couldn’t be avoided. That is something I’m beginning to doubt. If you look at what’s happening over climate change, quite clearly, if we don’t do something about it, we are all going to perish. You might say the human race has to come to an end anyway at some point, which is obviously true, but for people who are supposed to be the most intelligent creatures ever to exist on this planet, to destroy ourselves in this way seems hard to explain. I don’t think Marx would have been able to explain it.

 Britain and Europe seem trapped inside a winless logic that says we need growth to have employment and thus generate the taxes to pay for social services. But because growth is so insipid, you need to rip up regulations and protection for workers and cut corporate taxation. We need an escape from this growth/wealth prison but how do you mount a “prison break” that doesn’t just result in mass poverty?

That’s a rhetorical question, really. You can’t do it within the existing economic system. In many ways, this point was made by Lord Beveridge. Because you talk about workers’ benefits and the welfare state and Beveridge’s report was highly influential in determining the kind of welfare state that emerged in Britain after the Second World War. He himself said, and this was already known from experience after the First World War, that you couldn’t have a system of welfare, paying out benefits, in an economy that was so unstable that it would fluctuate up and down. He said the whole thing was posited on the basis of maintaining more or less full employment. That’s what’s been totally invalidated. It’s not just capitalist instability, it’s also technological change. You have to have mechanisms for income distribution that overcome these problems and you can’t do that if you just leave everything to speculators and the stock exchange, to put it mildly.

It’s high time we moved on but heaven knows if we will.


  1. I was puzzled by the strength of his attack on worker-controlled enterprises. While I agree it isn't a solution to all our problems, to me it seems like it would be an important part of creating a democratic culture. If you don't control things 8hrs a day 5 days a week then any other democratic component is slightly hollow. Democratic control of a workplace could also be important for developing the skills for democratic control in the wider public realm. I can see that worker-controlled enterprises in themselves wouldn't be enough, but multi-stakeholder co-ops for example already allow enterprises to involve other people in their democratic decision-making. Also I think there needs to be a democratic framework to regulate industries to prevent a race to the bottom - but this could be based partly within the workplace democracy. It should also involve other people in society of course, so that a wider public good can be considered. But workers control of their workplace doesn't preclude any of that and could be an important component of it.

  2. Marx was a relatively obscure and unknown figure for much of his life. The First International gave him some influence among socialists, especially among extremist revolutionaries inspired by the easily read and extremist Communist Manifesto, but he was relatively unknown to the general public until the October Revolution in Russia in 1917, after which he was used in a massive propaganda personality cult and was given an almost religious status.

    Regarding more personal criticisms, although the distinction between Marx's "personal" views and "official" Marxist views is often difficult, one criticism has been of racist views, such as regarding Russians and Slavs. Henry Hyndman, who spent many hours in Marx's company, in his Record of an Adventurous Life, attributed this anti-Russian obsession to Marx's Jewish ethnocentrism.2 These anti-Russian views may have contributed to the mass killings of Russians by Communists who often were from non-Russian ethnic minorities.

    Marx has also been criticized for racist views against many other groups, dislike of the working class, disdain for Western civilization, and general contempt for humanity.

    Marx, notably in his text On the Jewish Question, portrayed Jews as a clannish group engaged in economic exploitation of gentiles, but this would disappear in the future Communist utopian society, although some form of Jewish group identity would continue to exist also there. Some have suggested that Marx viewed his Jewishness as a liability (anti-Semitic views were not uncommon among early socialists, see the anti-Semitism article) and went to elaborate lengths to deny it in order to prevent criticism of his writings. A theme in other anti-Semitic writing (such as in Hitler’s writings) has been to claim that Marx had a specifically Jewish agenda in advocating a world society dominated by Jews in which gentile nationalism, gentile ethnic consciousness, and traditional gentile elites would be eliminated.

    Marx's wife hired a housekeeper when she received some money from an inheritance. Marx's final child was born to the housekeeper. Marx initially lied to his wife and claimed that his friend Engels was the father but eventually confessed.

    The highly educated Marx refused to take an ordinary job, instead preferring to live on handouts from his friend Engels, and in effect preferring that his family should often live in filth and poverty, contributing to four of his children dying before reaching adulthood.

    The class struggle had a just motive, and Socialism at the beginning was in the right. What has happened is that instead of pursuing its original path of seeking after social justice among men. Socialism has turned into a mere doctrine, and one of the chilliest frigidity, and it has no concern, great or small, for the liberation of working men. Karl Marx sat in his study and watched, with horrible impassivity, the most dramatic happenings of his age. With the British factories in Manchester before his eyes, and in the middle of formulating inexorable laws about the accumulation of capital, in the middle of formulating inexorable laws about production and about the interests of employers and workmen, was all the time writing letters to his friend Friedrich Engels, telling him the workers were a mob and a rabble, which need not be bothered with except in so far as they might serve to test out his doctrines.

    This world is now at the disposal of Marx on the one hand, and of Rothschild on the other. What can there be in common between socialism and a leading bank? The point is that authoritarian socialism, Marxist communism, demands a strong centralization of the state. And where there is centralization of the state, there must necessarily be a central bank, and where such a bank exists, the parasitic nation, speculating with the Labour of the people, will be found.

    1. The only socialism that central banks propagate is socialism for the rich - bailouts, rock bottom interest rates, saving massively indebted corporations, and $12 trillion of Quantitative Easing that makes very wealthy people even wealthier. That strikes me as inverted Marxism. Curiously the most notable central banker in the modern era was a disciple of Ayn Rand, not Karl Marx. 'I do have an ideology' Alan Greenspan said. 'My judgement is that free, competitive markets are by far the unrivalled way to organise economies. We have tried regulation, none meaningfully worked." And he ran the Federal Reserve, the most powerful central bank in the world, for 19 years