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As we know, the Austrian School is - but is not limited to - a heterodox branch of bourgeois economics. It is, however, founded upon a more-or-less explicitly political project. And this project continues to animate its zombie, and its zombified victims, infected by its bite. But then the Austrians’ iteration of the new (in the 1870s) bourgeois economic doctrine of marginalism was always a political project, even in its dry theoretical basis.

Marginalism itself arose as a way to escape the increasing obviousness of the fact that capital exploits labour. This was a necessary project as capital spread across the globe. It took the conscious form of an attempt to address genuine weaknesses in the classical labour theory of value. These weaknesses were interpreted as evidence that the theory needed to be discarded precisely because the class position/alignment of the theoreticians addressing the issue pushed them towards a view of value which did not derive from labour. It became an even more necessary project after the Paris Commune scared the shit out of the bourgeoisie.

The Austrian School, in the person of Menger, helped create marginalism. But it continued to exist as a distinct trend within marginalism because of the nature of Menger’s iteration of marginalist ideas – namely his rejection of mathematics; vociferous and foundational opposition to what was called the ‘Historical School’, basing himself on “general laws” and “typical phenomena” rather than historical specifics – which he passed down to a succession of thinkers which formed the Austrian tradition. For contingent historical reasons (the intellectual climate of fin de siècle Austria, the existence of Austro-Marxism, etc), the Austrian marginalists were the ones who concerned themselves most especially with attacks on Marx in particular and socialism in general. They made the political (i.e. class) aspects of marginalism relatively explicit, at least in terms of what they attacked. The Austrian trend within marginalism was the most consciously ideological. This approach is inherently ideological. Bohm-Bawerk develops Menger in direct response to Marx, and this as a result of combat with Austro-Marxism. But the emphasis on the subjective and the general is political in itself. It is based on a class position, and on interests.

I think there is a question as to what extent the Austrian School actually exists in any coherent form rather than as a broad tendency or aesthetic, with its opposition to Marx and socialism as its most important markers. There are delineable basic intellectual principles, but even they tend to be quite flexible. Thinkers within the Austrian tradition will disagree about many things, some of them quite fundamental. This is worth mentioning because it can cause trouble as one generalises – which one needs to do unless one is engaged in a detailed account. What is true of one ‘Austrian’ is not true of another. The Austrian School has a built-in defence mechanism which makes it hard to take aim at: it doesn’t really exist. That’s a somewhat cheeky and overstated way of saying that its members believe all sorts of things, many of which are contradictory, some at a fundamental level. It might be objected that the same is true of Marxists - and I’d thank anyone making that objection for thus acknowledging that Marxism is a living, evolving, internally differentiated body of thought rather than a monolith. I’d also admit the similarity, before explaining why I think so many variants of Marxism have got it wrong, in a way similar to how different types of Austrians probably argue.

As ever, to the extent that a delineable intellectual grouping can be said to exist as a discrete thing – be it ‘Marxism’ or ‘The Austrian School’ or whatever – it does so to the extent that people decide to look at it that way. I would argue, however, that there is a core to Marxism that cannot be removed or effaced without fundamentally changing what it is. And that core is to do with what it aims at in material terms. To be blunter: it’s to do with whose side it’s on. This is where, if you’ll pardon me, we discover the material and objective basis of the value of a system of thought – i.e. the work it is based on, and the conditions and result of that work… the social relations, in other words – as opposed to the subjective and superficial perception of its value, i.e. the ideology built on top of it. As Lukacs observed, Marxism is the theory and practice of the proletarian revolution. If it ceases to be that, then it has ceased to be itself. That actually puts a lot of what has been called, or gone under the name of, ‘Marxism’ in the bin. And quite right too. Stalinism, for all that it was part of Marxism, or claimed to be (and we have to acknowledge that “thing of darkness” ours while also repudiating it), was counter-revolutionary, reactionary, and always stifled revolution from below. It was Marxism in the same way that paella with anti-freeze baked into it (by a spouse longing for both freedom and an insurance policy dividend) is dinner.

From here the slide to sectarian and theoretical arguments is inevitable. Inevitable in the same way Marx thought socialism was inevitable, i.e. the predictable outcome of the process underway, provided certain actions are consciously followed. And I’ll buck that inevitability, in the same way the capitalist system managed to buck the inevitability of socialism. (The very bucking which birthed Stalinism, as it happens.) To be blunt, I’ll dodge these issues for another time. I will, however, take advantage of the fact that we’ve ended up back at theory so quickly (as opposed to action) to say that I don’t really think there’s a distinction. Indeed, the refusal of the distinction is central to Marxism. We call it praxis. The unity of theory and practice. Theory as realised in, and expanded by, its own implementation. Because the proletarian revolution (or the self-liberation of the working class and thus of humanity as a whole) is at the core of every major theoretical tenet of Marx’s thought, from his theory of history to his analysis of capitalism. To the extent that variants of Marxism lose contact with Marx’s theory, they betray proletarian revolution. To the extent that they betray proletarian revolution, they lose track of Marx’s theory. (This sounds like doctrinaire dogmatism. But it’s not a claim that Marx is infallible - he manifestly is not – but rather that the core of his thought is always working class self-emancipation.)

Again, there is a superficial similarity with the Austrian School, but only in form, not in content. The similarity relies upon the rejection of the unity of theory and practice, the embrace of the subjective at the expense of the objective (though this is actually far too crude a dichotomy for Marx, once you get into the deep end). Because the Austrian School is also, in crude terms, an activist project. One might even call it the activist wing of marginalism. There’s the form that resembles Marxism, albeit glibly. The Austrian school also ultimately takes its coherent identity from what it aims at in material terms, from whose side it’s on. The answer in their case is, of course, that they’re on the side of the ruling class, of capital. And from a particular standpoint within capitalist social relations.

We’ve arrived at the Marxist insight that ideology is class-based (like many of Marx’s insights, an incorporation of an older observation within a new and cogent overarching theory of history). Paradoxically, the fact that Marxism’s ultimate aim is universal human emancipation means that its theoretical foundations are relatively compact and tightly integrated. It must be based on a fundamental and radical truth of human life, and must build its entire edifice atop that fundamental and radical truth, if it is to give theoretical and practical expression to the struggle to achieve universal human emancipation. If it is to be the theoretical expression of the historic liberation of humanity, it must construct itself on the basis of a theoretical understanding of something basic to all human history. Not to human nature, mind. Marx believed in human nature, but as something creative which freed us by its plasticity and mutability. (Whether or not Marxism achieves its vaulting ambitions is another matter; that’s not what I’m going to go into here.)

Conversely, the Austrian School’s aim is the safeguarding of the interests of a particular class, the ruling class – though it does not generally use that term, c.f. the preference in Hayek for words like ‘entrepreneurs’ and ‘employers’, etc. But he means, in Marxist terms, the bourgeoisie. The aim is particular rather than universal because it is the championing of a class that is particular rather than universal. We know it is particular because it is limited to a particular class in a historically limited epoch, a class which exists by virtue of an antagonism or contradiction between it and the majority class in that epoch. That epoch is characterised by this contradiction. (Here we see demonstrated the integratedness of Marx’s thinking, because here we see a coherent and revealing picture emerging from the confluence of historical materialism, class, dialectics, etc.)

The aim of Austrian ideas, a function of the championing of the particular class, is the perpetuation into a vacuous eternity of a particular historical epoch or moment, the one they created and still run: capitalism. (I don’t mean to imply that it is unusual in this respect, except perhaps in the degree of its commitment and consciousness of its mission. This is another respect in which it superficially mirrors the Marxist intellectual project, its chosen foe: it is consciously an activist intellectual project aimed at epochal historical intervention on behalf of a class. The counter-attack models itself – gradually, through adaptation - on its foe. Much the same thing is true of fascism, with its aping of socialism… though, for all that they are family, the Austrian School and fascism are distinct and separate.)

The eternity mentioned above exists in two senses: the eternal perpetuation aimed at, and the transhistorical innateness being claimed. It is a ‘bad infinity’, multiplied by two. Again, the Austrian School wouldn’t use these terms, and would repudiate them if they were put to it. But that’s what it amounts to.

It won’t have escaped your attention that these projects are not just twins and antagonists but, as reflections will be, are the reverse of each other. Marxism aims at theoretical unity to achieve the liberation of the universal; the Austrians engage in theoretical disunity around a gelling aesthetic because their aim is the preservation of the particular, the local, the fixed. Notice, also, the fundamentally integrated nature of Marxism versus the fundamentally disintegrated nature of Austrian ideas. The Austrian School is an aesthetic acting as a shell which contains a coalition of impulses. It’s like a miniature of all reactionary thinking, which is a coalition around the defence of existing power structures, bound by aesthetics. This reaches its apotheosis in fascism, which is – as Benjamin observed – the utter aestheticization of politics. Marxism, by contrast, is – or at least should be – an integrated network of critical impulses, based on a coherent material theory of history, bound by an awareness of the complex and often contradictory nature of social relations.

Fundamental loyalties and aims aside, the Austrian School found its actual historic role, I suggest, in being an ideological centre of gravity to the right of the bourgeois mainstream. This is the position that enabled it to both influence the rise of neoliberalism and then become a stern critic of actual neoliberal praxis. It serves capitalism by being fanatically pro-capitalism while also lurking at the extreme rightward fringe of capitalist society’s intellectual, ideological, and political range of what is acceptably avowable. Its position explains its role - similar to other iterations of extreme reactionary bourgeois thinking - as a rightward drag factor.

Capitalist society can allow such rightward drags to pull it their way at times of necessity, i.e. times of real or perceived crisis. At such times, capitalist society ‘selects’ ideological positions (from that ‘reserve army of ideologies’ we previously talked about) which are available, based on their comparative material and ideological strength in the context. If you like, it makes a subjective judgement of their marginal utility. Sometimes - depending upon the demands of the moment - such positions then go on to become influential, even sometimes dominant. The selection of marginalism as a new mainstream in bourgeois economics is itself an example of this.

(We don’t need to posit an ahistorical anti-socialist fanaticism leading several bourgeois academics to conspire to concoct an alibit for capital. Their class position and/or alignment leads them to respond to an idea they find inherently unpalatable and problematic – i.e. the labour theory of value – because it increasingly contradicts with the dominant imperatives of the world with which they’re aligned. They develop, as replacements, ideas that make more sense to them. This also is governed by their position.)

But - and here we reach something important - the specific iteration of bourgeois class interests embodied by the Austrian version of marginalism arises not from the bourgeoisie as a whole but from a particular stratum within the bourgeoisie.

As Bukharin pointed out, the whole concept of marginal utility is developed from the standpoint of the ‘rentier’ stratum within bourgeois society, a stratum separated from production. As such, it arises from and expresses rising trends within capitalism of its day which have only become more pronounced and dominant with time:

The capitalist evolution of the last few decades involved a swift accumulation of “capital values.” As a result of the development of the various forms of credit, the accumulated surplus flows into the pockets of persons having no relation whatever to production; the number of these persons is constantly increasing and constitutes a whole class of society — that of the rentier. To be sure, this group of the bourgeoisie is not a social class in the true sense of the word, but rather a certain group within the ranks of the capitalist bourgeoisie; yet it displays certain traits of a “social psychology” that are characteristic of it alone. With the evolution of stock corporations and banks, with the rise of an enormous traffic in securities, this social group becomes more and more evident and intrenched. The field of its economic activity is predominantly that of a circulation of financial paper — the Stock Exchange. It is characteristic enough that within this group, living on the income from securities, there are a number of different shades; the extreme type is the stratum which is not only independent of production, but also independent of the circulation process altogether. These are, above all, the owners of gilt-edged securities: national bonds, secure obligations of various kinds. Furthermore, there are persons who have invested their fortunes in real estate and draw permanent and secure incomes from the latter. These categories are not even troubled by the disturbance of the Stock Exchange, while shareholders, being closely connected with the ups and downs of speculation, may, in a single day, either lose everything or become rich men. While these persons are thus living the life of the market, beginning in the morning with attendance at the Exchange and ending in the evening with a perusal of the quotations and the commercial supplements, the groups enjoying the income of silt-edged securities have severed this bond connecting them with the social-economic life and have emerged from the sphere of circulation. Furthermore, the more highly developed the credit system, the more elastic it has become, the greater is the possibility of “growing fat” and becoming “indolent and inactive.” The capitalist mechanism itself takes care of this matter; by making the organisational functioning of a considerable number of entrepreneurs socially superfluous, it simultaneously eliminates these “superfluous elements” from the immediate operations of the economic life. These elements are secreted to the surface of the economic life like the “circles of fat on the surface of the soup” — to use Sombart’s apt expression. And it must be remembered that the owners of gilt-edged securities do not represent a decreasing stream of the bourgeoisie of coupon-cutters, but that, on the contrary, this stream is constantly increasing. … This stratum of the bourgeoisie is distinctly parasitical; it develops the same psychological traits as may be found in the decayed nobility at the end of the ancien regime and the heads of the financial aristocracy of the same epoch. The most characteristic trait of this stratum, one which sharply distinguishes it both from the proletariat and the other bourgeois types is, as we have already seen, its removal from the economic life. It participates directly neither in the activities of production nor in trade; its representatives often do not even cut their own coupons. The “sphere of activities” of these rentiers may perhaps be most generally termed the sphere of consumption. Consumption is the basis of the entire life of the rentiers and the “psychology of pure consumption” imparts to this life its specific style. The consuming rentier is concerned only with riding mounts, with expensive rugs, fragrant cigars, the wine of Tokay. A rentier, if he speaks of work at all means the “work” of picking flowers or calling for a ticket at the box office of the opera. Production, the work necessary for the creation of material commodities, lies beyond his horizon and is therefore an accident in his life. There is no mention of genuine active work for him; his whole psychology presents only passive shades; the philosophy, the aesthetics of these rentiers, is purely descriptive in character; they completely lack the active element so typical of the ideology of the proletariat. For the proletariat lives in the sphere of production, comes in direct contact with “matter,” from which it is transformed into “material,” into an object of labour. The proletariat is an eye-witness to the gigantic growth of the production forces of capitalist society, of the new and more and more complicated machine technology, making possible the throwing of larger and larger quantities of commodities on the market, with. prices going lower and lower. the more the process of technical perfection progresses. The psychology of the producer is therefore characteristic of the proletarian, while the psychology of the consumer is characteristic of the rentier.

Bukharin takes these developments as signifying the decline of capitalism. As it turned out, they signified a shift by which capitalism could adapt and survive… though we might paradoxically say that capitalism has adapted and survived so long precisely by managing, staving off, and even making a virtue of, its own morbid symptoms. Bukhrain goes on to describe the decline as stemming from the fact that the capitalist class has "already lost its functions of social utility". True enough. And his summary of the new spirit of the bourgeoisie will be familiar to anyone who pays attention to the dominant culture of Western capitalism, run by and serving

a peculiar social type that is characterised particularly by its asociality. While the bourgeoisie as such is individualistic from its very cradle — for the basis of its existence is the economic cell which is engaged in the bitter struggle of competition for independent existence with other cells — this individualism in the case of the rentier becomes more and more pronounced. The rentier knows nothing of the social life at all; he stands apart from it; the social bonds are loosed; even the general trials of the class cannot weld together the “social atoms.” There disappears not only the interest in capitalist enterprises, but any interest in the “social” altogether. The ideology of a stratum of this type is necessarily strongly individualistic. This individualism expresses itself with particular sharpness in the aesthetics of this class. Any treatment of social themes appears to it eo ipso as “inartistic,” “coarse.” “tendencious.”

Marginalist ideas may not have arisen directly and crudely from the rentier stratum, but they didn’t need to. They expressed a social position made possible by, and in alliance with, the same developments which gave rise to that stratum. They become adopted – though not hegemonically in their Austrian flavour – for the same reason. In more prosaic terms, the position of the middle class scholar/academic is – at least in the time period we’re speaking about – itself an explanation for how the ideas of that class come to be published and taught, etc. The ideas form an ideological option, which is selected by similar processes. And so on. Such things still go on, which is one reason for the reactionary insistence upon the supposed left-wing dominance of the academy. It's not dissimilar to the way in which various competing political imperatives in 'communist' (i.e. bureaucratic state capitalist) Russia, representing different competing positions within the bureaucratic ruling class, were counched in different varieties of Marxist language (and here our reliance on Bukhrian is ironic, given subsequent developments in his life).

Similarly, 20th century capitalism, wracked by various crises, selected first statist government (in various forms) followed by, after more crises, neoliberalism. Neoliberalism, as the child of Hayek (not alone but above all others) was, in a very fundamental way, a product of the Austrian School. The Austrian School thus played its role beautifully. It is, I’m sure, no accident that neoliberalism greatly expanded the class of disconnected ‘rentiers’ and their hangers-on which Bukharin speaks of (in necessarily prototypical terms) as being the class basis of Austrian (and marginalist) ideology. Neoliberalism evolved out of the Austrian School without replacing it – in the same way that humans evolved from apes without replacing them. Something similar happened with libertarianism - though modern libertarianism seems to have evolved convergently from several different directions before (partially but tormentedly) converging.

The Austrians’ continuing position at the far rightward end of the ideological spectrum puts them right in the liminal space between the outer edges of orthodoxy and of heterodoxy. It put them into near contact with fascism – which, contrary to the myth of fascism as an aberrant alien ideology, is the furthest ideological extreme of bourgeois ideology - and another resource for capitalism in time of crisis. This is why, in the age of neoliberalism, and particularly in the period just around the ‘fall of communism’ when Western capitalism felt freed from the shackles placed on it by having to oppose an ostensibly rival system, Austrian dogma metastasized into something extremely dangerous and reactionary which we’ve already touched on: paleolibertarianism.