May 5th 2018 marked the 200th anniversary of the birth of Karl Marx. We review some economists’ takes on the controversial philosopher’s legacy.









Project Syndicate has a collection of earlier pieces written by J. Bradford Delong, Kenneth Rogoff, Nouriel Roubini, and Yanis Varoufakis. In the 2018 contribution, Peter Singer argues that the most important takeaway from Marx’s view of history is negative: the evolution of ideas, religions, and political institutions is not independent of the tools we use to satisfy our needs, nor of the economic structures we organise around those tools, and the financial interests they create. He concludes that if this seems too obvious to need stating, it is because we have internalised this view and in that sense, we are all Marxists now.

The Economist argues that the chief reason for the continuing interest in Marx is that his ideas are more relevant than they have been for decades. The post-war consensus that shifted power from capital to labour and produced a “great compression” in living standards is fading. Globalisation and the rise of a virtual economy are producing a version of capitalism that seems to be out of control. The backwards flow of power from labour to capital is beginning to produce a popular—and often populist—reaction.

Capitalism, Marx maintained, is by its nature a global system. That is as true today as it was in the Victorian era: the two most striking developments of the past 30 years are the progressive dismantling of barriers to the free movement of the factors of production and the rise of the emerging world. He thought capitalism had a tendency towards monopoly, and again this seems to be a reasonable description of the commercial world that is being shaped by globalisation and the internet. In Marx’s view capitalism yielded an army of casual labourers who existed from one job to the other. During the long post-war boom this seemed like a nonsense, yet Marx’s argument is gaining urgency with the raise of the gig economy.

Still, the rehabilitation ought not to go too far, as Marx’s errors far outnumbered his insights. His greatest failure was that he underestimated the ability of people to solve the evident problems of capitalism through rational discussion and compromise. He believed history was a chariot thundering to a predetermined end, but liberal reformers have repeatedly proved him wrong. Today’s great question is whether those achievements can be repeated, against the backlash against capitalism that is mounting.

Branko Milanovic looks at Marx’s intellectual influence using a counterfactual approach. Toward the end of his life, Marx was not widely known. Had not Engels spent more than ten years putting Marx’s papers in order and producing two additional volumes of Das Capital, Marx’s fame would have been minimal. Due to Engels’s work, the first decade of the 20th century saw increasing influence of Marxist thought. Even so, however, Marx’s influence would have steadily gone down as the social-democrats in Germany moved toward reformism and “revisionism”. But then the second event – the October Revolution – came, and transformed the scene. Marx’s thinking, became unavoidable in most of Europe, whether among intellectuals, political activists, labour leaders and ordinary workers. Then, as the Comintern began to get engaged into anti-imperialist struggles in the Third World, Marx’s influence expanded to the areas no one could have predicted it would. He became the ideologue of the new movements for social revolution and national liberation in Asia, Africa and Latin America. The fall of communist regimes brought an eclipse of Marx’s thought, but then the third event – globalised capitalism that exhibits all the features that Marx described in Das Capital, and the Global Financial Crisis – made his thought relevant again. Milanovic thinks that Marx’s influence is inextricably linked with capitalism. So long as capitalism exists, Marx will be read as its most astute analyst. If capitalism ceases to exist, he will be read as its best critic. So whether we believe that in another 200 years, capitalism will be with us or not, we can be sure that Marx will.

Michael Roberts – who identifies as a Marxist economist – has a long post comparing Keynes and Marx’s ideas that are sometimes described as similar. Proponents of the similarity view argue that both Marx and Keynes think there is something wrong with capitalism, they both have a falling rate of profit theory, they both wanted the ‘socialisation of investment’ and they both wanted and expected the disappearance of finance capital. But similarities are superficial, as for Keynes there was no theory of exploitation of labour power, their theories of a falling rate of profit are grounded on very different premises, and Keynes’ “socialisation of investment” is hardly meant as expropriation of capitalists. Roberts argues that the differences ought to be spelled out, because the dominant analysis of capitalism adopted in the labour movements of the major capitalist economies, especially by the leaders of those movements, is Keynesian theory and policy, not Marx.

J. Bradford DeLong has slideshow looking at Marx “the prophet”, Marx “the activist” and Marx “the economist”. Marx “the economist” had, in Delong’s view, three good ideas. He recognising the business cycle – i.e. that financial crises and depressions were a deep disability of the system. He got the game-changer nature of the Industrial Revolution right, and he got a lot about the development of modern capitalism in England right too. He also had three bad ideas. First, he believed that capital could never be a complement but had to be a substitute for labour (see also his Project Syndicate piece on this). Second, he mistook the effects of capitalism for the effects of poverty. And third, he believed capitalist market economy was incapable of delivering an acceptable distribution of income (to which Western Europe over the past 50 years serves as a counter-example).

DeLong’s analysis had been picked up back in 2013 by Matthew Yglesias, who said he would have enthusiastically endorsed Delong’s criticisms in 2009, but they look weaker four years later. In particular, Yglesias disagrees with DeLong’s view that Marx was too pessimistic about the idea that the ruling class would agree to make economic growth pareto optimal within the context of a market economy. But Yglesias argues that it has become the conventional wisdom among American elites that the appropriate policy response to fiscal imbalance in a time of high and rising income inequality is to restore balance by reducing the scope and generosity of social insurance programs.

Noah Smith writes on Bloomberg that we should remember Marx for all the things he got wrong. This dramatic record of failure should make us wonder whether there was something inherently and terribly wrong with the German thinker’s core ideas. Smith cites Delong’s analysis and thinks the preference for revolution over evolution is key. Successful revolutions tend to be those like the American Revolution, which overthrow foreign rule while keeping local institutions largely intact. Violent social upheavals like the Russian Revolution or the Chinese Civil War have, more often than not, led both to ongoing social divisions and bitterness, and to the rise of opportunistic, megalomaniac leaders. Meanwhile, the most successful examples of socialism — the mixed economies of the Scandinavian countries, France, Germany, and Canada — came not from the violent overthrow of the old order, but from gradual change within the democratic, partly capitalist system. Real socialist success has been of the gradual, incrementalist kind, more in line with the visions of thinkers like Eduard Bernstein than to the dramatic, violent prophecies of Marx. Through repeated experimentation, societies like those of Denmark, France and Canada have found ways to use government to make society more equal without killing the golden goose of private enterprise. So although Marx was far-sighted in identifying some of the problems of capitalism, he got the solution very wrong. Remembering this is the best way to commemorate his birthday.

Timothy Taylor (Conversable Economist) discusses a passage from from Economic and Philosophical Manuscripts (1844). He thinks Marxist views are categorically wrong as a description of the subject of economics. But as a description of how people can feel in a world of choices and scarcity, Marx seems to be touching on some deeper truths. Marx’s words echo with the insight that many people do indeed live through when their job feels like a burden that they cannot put down. Many people wish that they could spend their time in other ways. Many people would like to have more consumption in various forms. Many people worry about having enough money in the bank to cover an emergency, or enough for retirement. These economic pressures and worries and fears can shape what kind of people we are and how we act, sometimes in unpleasant ways. Contra Marx, however, our economies worries are don’t arise because money is our master and jobs are enslavement. Instead, it’s all just tradeoffs, just reality, just various aspects of the human condition. For those living in the United States 200 years after Marx was born – Taylor concludes – it’s worth remembering what “enslavement” really mean, and keep the perspective that these other economic stresses are first-world problems.

Carl Bildt thinks there is nothing to the standard argument that communist atrocities throughout the twentieth century were due to some sort of distortion of Marx’s thought, for which the man himself can scarcely be held responsible. Marx regarded private property as the source of all evil in the emerging capitalist societies of his day. Accordingly, he believed that only by abolishing it could society’s class divisions be healed, and a harmonious future ensured. These assertions were not made as speculation, but rather as scientific claims about what the future held in store. Because Marxism treats all contradictions in society as the products of a class struggle that will disappear when private property does, dissent after the establishment of communism is impossible.Thus, Marxist regimes have in fact been logical extensions of his doctrines. Bildt thinks that two hundred years after Marx’s birth, it is certainly wise to reflect on his intellectual legacy, and we should do so not in celebration, but to inoculate our open societies against the totalitarian temptation that lurks in his false theories.