Leiter on Marx

by Chris Bertram on December 3, 2003

Check out Brian Leiter’s take on what is living (and dead) in Marx’s philosophy. I seem to remember Ernest Gellner writing of Marx somewhere, that even where Marx gives the wrong answers he often asks the right questions, chief among which is “cui bono?”

{ 29 comments }

1

Zizka 12.04.03 at 12:30 am

I’ve floated this idea a bunch of times with no positive or negative response: among other things, we have globalized the “reserve army of the unemployed”. Already jobs which left the US for Mexico because of lower wages there are leaving Mexico for Thailand (or wherever) when Mexican wages start to rise. (This keeps the wonderful things the Mexicans were promised from happening.) Countries which succeed in collecting capital (e.g., Taiwan), usually by protectionist methods now disallowed by the WTO et al, succeed in improving themselves, but countries which rely simply on selling cheap labor won’t be able to until world employment reaches 100%.

I claim that this also explains a supposed paradox: how America achieved near-full employment without wage-price inflation during much of the last decade or two. On the one hand, the threat of job export kept wages down. On the other, unemployment figures were always false because of the large number of illegals and potential illegals (here and in Mexico) available to work if needed.

So shouldn’t the “reserve army of the employed” be on the list of living concepts of Marxism?

And also, what happens when world employment reaches 100%?

2

Will 12.04.03 at 1:36 am

The title brings to mind Bendetto Croce’s _What is Living and What is Dead in the Philosophy of Hegel?_ I remember Daniel Singer supplying a quotation from Croce — “Marxism is definitely dead for mankind” — from 1907. Reports of Marxism’s demise are continually exaggerated.

3

Brett Bellmore 12.04.03 at 2:44 am

Yeah, kind of like Count Dracula…

4

Will 12.04.03 at 3:14 am

Like capital: “dead labor which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.” ;-)

5

Doug Muir 12.04.03 at 8:56 am

“On the one hand, the threat of job export kept wages down.”

That’s odd; I had the impression real wages rose steadily throughout the 1990s.

[googles]

‘From the fourth quarter of 1990 to the fourth quarter of 2000, real average hourly wages for production and nonsupervisory workers rose at a 1.1% annual rate (adjusting for inflation using the personal consumption deflator), for a total wage gain of 11%.

‘[R]eal wage and salary income per worker, as derived from the national income accounts, rose at a 1.7% annual rate from 1990 to 2000, compared to 0.3% growth over the previous two decades.’

Freely granted, wages didn’t rise nearly as fast as productivity. Which is an odd and interesting fact that leads one down some interesting pathways. But that’s something else again.

“countries which rely simply on selling cheap labor won’t be able to until world employment reaches 100%.”

Well, duh. Sorry, but that’s not exactly a blinding insight. (In fact, driving this point home is part of what I do for a living.)

“unemployment figures were always false because of the large number of illegals and potential illegals (here and in Mexico) available to work if needed.”

And that one is just plain wrong; go back and look at what unemployment figures actually measure.

“globalizing the reserve army”… um, labor market analysis has moved forward a bit since 1870. Let’s just say that the consensus is not in favor of Marx here. (Though no doubt the consensus is just a ‘ruling idea’ of the economically dominant elite.)

As to the main post… eh. Sometimes I feel like yanking Chris’ chain on Marx, sometimes I don’t.

Off to lunch.

Doug M.

6

Chirag Kasbekar 12.04.03 at 9:02 am

The websiteI’ve helped my friend Gus fiZerega put up has enough fodder for Leiter-Marx-public choice type ideas about the ‘ruling class’.

A good discussion of some of this is in the ‘political cultural’ approach of Neil Fligstein’s work — see: The Architecture of Markets.

But I’m a little sceptical of the idea that regulatory capture is purely a ‘ruling class’ phenomenon.

The Marxian view seems a too simplistic/stylised view of complex reality.

What say, Chris?

7

Chirag Kasbekar 12.04.03 at 9:05 am

Sorry, that was Gus diZerega, not Gus fiZerega.

8

Chirag Kasbekar 12.04.03 at 11:10 am

Another problem, of course, with a ruling class approach, is that power is homogenised.

Cui bono? Certainly not the same bunch of people every time.

As Fligstein puts it:

“Marxist approaches to markets focus on the organisation of economic elites and usually see them as controlling a given market or capturing Congress or regulatory agencies. The organization of elites and their ability to co-opt political actors should not be underestimated. But one of the biggest problems of this approach is explaining disunity or conflict within elites. As markets come into existence and are transformed, economic elites frequently come into conflict with one another. One elite with a very different conception of doing business can overthrow other elites.”

Indeed, Fligstein’s point in his ‘markets as politics’ approach (which I think is a rather good approach to these issues) is that market activity consists in large part of political activity between capitalists.

You might say that this conflict doesn’t go very far. That discourse is controlled by the elites.

Gus diZerega, I think, has some interesting thoughts on elites and democratic discourse. He thinks people who think elites control discourse are thinking in terms more appropriate to instrumental organisations, hierarchies. While democracies are more like self-organising systems — networks.

But then concentration in the US media concerns him greatly.

(Sorry for making this a Gus diZerega and Neil Fligstein thread instead of a Marx thread. I will stop now.)

9

dsquared 12.04.03 at 11:55 am

I must say that I thought Doug M’s response to Zizka’s quite sensible post was a bit on the pettifogging and nitpicking side. In my book “kept wage down” means “made wages lower than would otherwise have been the case”, and an unemployment statistic is “false” if it doesn’t accurately measure the reserve army of labour. But maybe that’s just me.

10

Doug Muir 12.04.03 at 1:36 pm

““kept wage down” means “made wages lower than would otherwise have been the case””

The problem with this is that it’s nonfalsifiable. If I say that real wages went up, you can always say that they somehow /should/ have gone up more.

(It’s like the people who claim that Ronald Reagan’s arms buildup broke the Soviet Union by forcing them into an unaffordable arms race. When you show them that Soviet military spending either rose very modestly or stagnated during the 1980s, they promptly say that it /should have/ decreased, and that Reagan broke them by forcing them to _maintain_ military spending instead of decreasing it.

(It’s a conversation I used to have a lot, never mind why. Different polarity, same wavelength.)

For the record, I think real wages could have, and perhaps should have, risen more than they did in the ’90s. But I don’t think it has anything to do with “the reserve army of the unemployed”.

“and an unemployment statistic is “false” if it doesn’t accurately measure the reserve army of labour. But maybe that’s just me.”

I think it’s just you. — The unemployment statistics actually do have problems; topic for another time. Employed illegals actually lower the real unemployment rate, you know.

I have trouble understanding how “illegals and potential illegals, here and in Mexico” are keeping aggregate real wages from growing.

Depress ’em in particular sectors, sure. But aggregate? Nuh-uh, the macro don’t work.

N.B., this is why I rather deliberately looked for a cite that mentioned production and nonsupervisory workers — viz., exactly the sectors where you’d expect to find downward pressure from that global army. But this group grew only a little slower than the aggregate, and still scored nontrivial real gains.

A specific example close to home. If memory serves, zizka’s last job was working as a shipping and receiving person in a bookstore. (Correct me if I’m wrong.) Now, shipping and receiving is a job that has become noticeably more productive per worker in the last 20 years, for a variety of reasons. So zizka’s salary should have increased quite a lot in real terms compared to a similar job c. 1980.

I bet it didn’t, or didn’t much; hence the productivity-wage gap. On the other hand, you got some ‘splainin to do, Lucy, before you can show me how the wage paid a stoop laborer in Oaxaca, or a garment worker in Yucatan, or even a shipping clerk in Mexico city, helped keep down the wages of a shipping clerk in the Pacific Northwest.

If zizka was suffering from direct competition from illegals, that’d be something else again; but I have a sneaking suspicion that wasn’t the case. (Again, please correct me if I’m wrong, zizka.)

In other words, I have a lot of problems with zizka’s formulation, but I guess my biggest one is the naive assumption that labor markets (1) are unified, and (2) clear quickly. They aren’t, and they don’t.

I remember the 1990s as a time when sectoral labor shortages were all over the news, from IT workers to junior officers in the US military. But maybe that’s just me.

— Actually, I would rather read a Gus diZerega and Neil Fligstein thread than another Marx thread. Much rather.

Doug M.

11

nnyhav 12.04.03 at 2:04 pm

Does no one read Aron anymore?

12

schnauze 12.04.03 at 2:58 pm

I think Leiter’s post is great…until he gets to the topic of ideology. Knowing something about language and its role in society, I just don’t buy that you can call certain ideas true or false in this way, especially free from context. Otherwise, I liked where he puts his chips, ie on Marx’s continuing explanatory power.

13

Rich Puchalsky 12.04.03 at 4:38 pm

I think that Leiter’s post can be summarized as saying that really two ideas have survived from Marx, a) capitalism triumphs and takes over older forms of social relationships, b) the ideas that dominate society are those that favor the interests of the ruling class. Then he points out that the second of these ideas really goes back to the ancient Greeks. That’s a pretty piss-poor record, isn’t it?

I have trouble seeing “capitalism triumphs” as such a great prediction from Marx, given that it was part of prediction that capitalism would lead to communism, which sure doesn’t look like it’s happening anywhere, especially in the most advanced capitalist countries. So Marx is left with an idea that was represented quite well by the anicent Greeks.

So why should anyone read Marx again?

14

Zizka 12.04.03 at 4:50 pm

Full-employment without wage-price inflation is regarded as something that needs to be explained. I suggested an explanation. The economists who rejected the Marxist concept of “reserve army of the unemployed” were the same ones who had problems with full employment without wage-price inflation. (Simply pointing out that most economists rejected Marx’s analysis long ago is not a strong response to my suggestion that they shouldn’t have done so).

Doug has an unhealthy interest in my employment history. None of the factors he or I talked about affected my own job situation which was a slightly-featherbedded, overpaid public sector job. For that reason I did not mention my job in my post. (My present situation IS impacted, however, by the wonderful “jobless recovery” we’re now enjoying.)

I was basing my suggestion on a large mass of anecdotal information — not only jobs which have gone overseas, but companies which negotiated lower wages and benefits while threatening to go overseas, the whole agricultural sector (in which I once did work, in fact), the whole food-processing and meat-packing sector, janitorial and landscaping work, and whatever manufacturing remains. I didn’t have an economist’s analysis of the situation, but it doesn’t seem to me that Muir does either, except sufficiently to flick some shit my way.

Muir did not respond to my suggestion that the gains promised to Mexico may never appear, since their jobs can go to Thailand and Bangla Desh. Nor to my somewhat undeveloped idea that the gains seen by Taiwan, S. Korea, etc. were made under different rules than those presently being imposed on “developing” countries. (In part because Taiwan and So. Korea were favored as key military allies during the critical period.)

Finally, my question was not “Why did American wages remain so terribly low without rising at all?” It was “How did we get full employment without wage-price inflation?” — a questions which I believe economists ask themselves.

15

Chirag Kasbekar 12.04.03 at 5:02 pm

Zizka,

Do you mean to say that it’s bad that those jobs are going to Thailand or Bangladesh?

Or that Mexico’s wages will now fall?

16

Chirag Kasbekar 12.04.03 at 5:10 pm

And why is it suddenly more profound to call them a ‘reserve army of unemployed’ when they can more easily be called an excess supply of labour?

BTW, this might be relevant.

17

dsquared 12.04.03 at 6:26 pm

Just to point out that it’s the opposite of the truth to suggest that “most economists rejected the idea of the reserve army of the unemployed”; in its form as the “Non Accelerating Inflation Rate of Unemployment”, it’s absolutely orthodox.

Chirag; It’s more profound (or at least, more correct) to use a term like “reserve army” which implies that the effect of unemployment on wage demands is the result of an intentional policy, than a term like “excess supply”, which implies that it arose by accident.

18

Chirag Kasbekar 12.04.03 at 6:32 pm

dsquared:

Yes, that’s what I was getting at. How is it intentional in reality?

19

Chirag Kasbekar 12.04.03 at 6:45 pm

dsquared,

OK, sorry — have to leave for the hospital (grandma’s in bad shape) — so posted in haste.

I get your point, even if it doesn’t convince me totally.

20

Barry 12.04.03 at 6:45 pm

Doug, IIRC, the *late* 1990’s saw a labor shortage. The early 1990’s didn’t.

21

Doug Muir 12.04.03 at 7:08 pm

This isn’t the first time I’ve seen Dave claim that NAIRU means Marx Wuz Right, but I still can’t figure out what he’s on about.

One, NAIRU is hedged about with so many exceptions and restrictions that quite a few economists no longer consider it a particularly useful conceptual tool. (To give just one example: try reconciling NAIRU with the /employment/ rate. Turns out to be a lot trickier and more contingent than it looks. Google on, for instance, David Altig — he’s vice president of the Federal Reserve and hardly a wild-eyed radical, and he thinks NAIRU has long outlived whatever usefulness it may have had.

Two, NAIRU is empirical and descriptive, not normative. It’s just the rate of unemployment that, based on historical experience, doesn’t seem to affect inflation. It doesn’t make policy; all it does is provide a tool (of whatever worth) for trying to judge the effects of policy choices.

Dan seems to be implying that — gasp — sometimes the Fed has raised interest rates knowing that it will increase unemployment. Well, yeah, it has; and sometimes it has kept interest rates low, knowing full well that it would result in inflation. The latter choice has been out of style in the last generation or so, but it happened repeatedly in the 1960s and ’70s.

NAIRU doesn’t drive either choice; it just provides (perhaps) a way to measure the costs and benefits.

3) And it’s got jack to do with a “reserve army of the unemployed”, which was Marx’s way of expressing the fairly obvious point that high unemployment tends to put downward pressure on wages. But inflation /also/ tends to reduce real wages. (The only time since WWII that real US wages have actually gone backwards, in the aggregate, was during the two sharp bouts of inflation in the 1970s.) IOW, the smart worker wants a macroeconomic environment with low unemployment and low inflation too.

Marx seems to have somewhat conflated rising wages with rising prices. Not entirely his fault; inflation was not well understood at all during the 1860s and ’70s. (Conventional wisdom was that it was purely a result of debasing the currency, and IMS that’s exactly how Marx treated it in _Capital_.) Deflation was the much more serious threat back then. Well, that day may come again, but that’s another story.

So, I don’t understand what you’re getting at with the NAIRU. Am I missing something?

Doug M.

22

msw 12.04.03 at 7:25 pm

“Depress ‘em in particular sectors, sure. But aggregate? Nuh-uh, the macro don’t work.”

I’m willing to be convinced of this, because economists seem awfully confident on this score, but my anectodal experience doesn’t fit. (I remember being shocked at a sign in a local Subway restaurant offering 2x the minimum wage plus medical benefits, circa 1998. I’m not seeing signs like that anymore, and I doubt that it’s because of a loosening demand for fast-food workers.) Labor seems more fungible to me than the “foreign competition is irrelevant” crowd believes.

“I remember the 1990s as a time when sectoral labor shortages were all over the news, from IT workers to junior officers in the US military. But maybe that’s just me.”

Saying that they were sectoral begs the question. What’s the difference between lots of sectors experiencing labor shortages and a general shortage of “labor”? And if the latter is possible, then offshoring seems to me to be a way to gain access to Marx’s “reserve army of the unemployed”.

msw

23

dsquared 12.04.03 at 7:37 pm

Any output gap model, or Taylor rule, has a long term NAIRU, or something operationally equivalent to a NAIRU as its engine. Any central bank which sets policy rates using such a model is, fairly explicitly, aiming to trade off employment against inflation. Any such central bank, therefore, is relying on the chilling effect of a reserve of unemployed workers to keep down wage demands. Marx’s “reserve army of labour” argument was that the unemployed under capitalism serve the function of keeping down wage demands.

I utterly disagree, by the way, that NAIRU was primarily (in importance or in history) an empirical concept rather than a theoretical one.

24

Zizka 12.04.03 at 7:42 pm

If jobs start moving from Mexico to Thailand as soon as Mexican wages start to rise, that means that some of the benefits that were promised to Mexico from NAFTA will not be realized. The same thing can happen to Thailand if jobs jump to Bangla Desh. Only when everybody in the world has a job can we see the third world rise to first world standards.

It’s not a bad thing for Thailand to get jobs, but as long as employers are able to shop among the global reserve army for the lowest wages, there are pretty strict limits to how much can be expected from that kind of development.

As far as I know “wage-price inflation” is not a peculiar 1870-1880 error of Marx’s, but a well-known, orthodox, contemporary concept. I certainly didn’t make the term up. Likewise the idea that you raise interest rates to keep inflation down at the cost of increasing unemployment.

Marx’s version of the truism, as opposed to the rebranded orthodox version, highlights some of the political and social consequences of the situation. And I’m still not convinced that the high-unemployment / low-inflation miracle of the 90’s wasn’t due to the fact that the labor force was being counted nationally for statistical purposes whereas hiring was being done globally.

25

Lawrence Krubner 12.05.03 at 1:33 am

Fernand Braudel, in the epilogue to his work Civilization and Capitalism, gives a history of the words “capital”, “capitalist”, and “capitalism”. He says that Marx died before the word “capitalism” came into wide spread use, and he says that Marx never used the word in any of the books published while he was alive.

I don’t know enough of Marx’s work to say with certainty that he never used the word. I do know that it doesn’t show up in the Communist Manifesto. For instance, go to this page and search for the word “capitalism”:
http://www.anu.edu.au/polsci/marx/classics/manifesto.html

Every word has a peculiar meaning and flavor, its connotation and denotation. How can we be sure that Marx predicted the triumph of capitalism if he never said so? How can we be sure he predicted its demise if he never said so? We know he said that the bourgeious order would eventually be overthrown and replaced by a proletarian order, but on what grounds do we make the assumption that what he really meant is that communism would triumph over capitalism?

Braudel goes on to question the usefulness of the word “capitalism”, which seems to mean different things to different people, but then finally he concludes that if we got rid of the word we would soon miss it and want it back.

I’m not so sure. I think if we got rid of the word our thinking and writing regarding economics would suddenly take on a wonderful lucidity.

I have heard some strange usages of the word “capitalism” or, if not strange, perhaps I mean highly varied. Libertarians mean one thing, pacifists another, union organizers another, rock musicians another, and business people another. I’ve heard George H. Bush called a socialist (this from a libertarian in New Hampshire), and I’ve heard Bill Clinton called the best apologist for capitalist imperialism that ever lived (this from someone on the left). I’ve heard capitalism called a Jewish conspiracy to undermine our Christian values. I’ve heard capitalism called the plan of our Founding Fathers. I’ve heard it said that Jesus promoted capitalism. I heard it said that he didn’t.

I personally don’t believe in the existence of capitalism. I don’t believe that the word refers to a definite thing. There is “no there, there.” There is so little agreement on the meaning of the word, that the word basically has no value. It is, at best, a reflective symbolic term, meaning whatever a person needs it to mean at any given time. I once listened to a Rush Limbaugh show (I do this every once in awhile) and during a single show he used the term in 3 different, highly distinct ways. Depending on who is talking, and what they want to say, capitalism can be a moral system, an economic system, or a racial system, and depending who is talking, it can be a positive or a negative as either one of these things.

I do recognize that one of my great weaknesses is my preference for empirical thinking over conceptual thinking. And if the word does productive work for conceptualists, then of course we must keep it. But for empirisists like me, hungry for something concrete, its demise would be greatly welcome.

26

Doug Muir 12.05.03 at 12:06 pm

“output gap model, or Taylor rule, has a long term NAIRU, or something operationally equivalent to a NAIRU as its engine. Any central bank which sets policy rates using such a model is, fairly explicitly, aiming to trade off employment against inflation. Any such central bank, therefore, is relying on the chilling effect of a reserve of unemployed workers to keep down wage demands.”

Well, I see your problem right there: unstated assumption between the penultimate and final sentences. You’re assuming that wage demands are the primary driver for inflation.

Sometimes that’s true, but usually it isn’t. Neither of the last two inflationary bouts in the US had anything to do with wage rises. (I’m talking 1973 and 1978 here. Most economists don’t count the sharp but brief 1991 spike in the CPI as an inflationary episode, and neither do I — although I notice that one wasn’t driven by wage demands either.)

To find wage-powered inflation in the US numbers, you have to go all the way back to 1969, and as inflation episodes go that was pretty small potatoes. The most savage recent attack of inflation, 1978-81, came at a period when real wages were slowly but steadily falling, and unemployment was high and (in the last three inflationary quarters) rising.

When Volcker cranked interest rates into orbit, he wasn’t trying to depress wages — they were already depressed — he was trying to cut prices. And in fact the next year saw a modest /rise/ in real wages… accompanied by skyrocketing unemployment, to be sure.

Me, I’d guess that wage increases overshot the declining inflation rate in the early ’80s, enough to to offset the wage-depressing effect of high unemployment. That’s speculation; but the numbers are real, and they don’t match your model.

Moving forward a few years, we see the next big hike in interest rates coming in 1994, when the Fed more than doubled them as a pre-emptive strike against inflation. Hmm, what happened to real wages in the mid-1990s? Anyone? Bueller? Bueller?

I’d ask you to check your assumptions, but I have a feeling it’s not gonna happen.

Look, the Fed’s mandate is to promote price stability, not wage stability. And it’s, well, it /is/ Econ 101 that the two are only loosely coupled; most obviously, increases in productivity can allow wage increases without price increases.

And the Fed is entirely aware of this. You might want to look at the work of Todd E. Clark, another Vice President at the Fed. He’s written a modest pile of papers explicitly rejecting the notion that wage increases lead to inflation. (Interestingly, he thinks it’s more likely to work the other way around. Not exactly what you’d expect from a Federal Reserve VP in this day and age, but there it is.)

BTW, even the strongest supporters of NAIRU now concede that they no longer believe in a “long term NAIRU”.

Doug M.

27

Doug Muir 12.05.03 at 12:08 pm

“I utterly disagree, by the way, that NAIRU was primarily (in importance or in history) an empirical concept rather than a theoretical one.”

“What, exactly, is the NAIRU? Strictly speaking the definition is statistical, not theoretical.”

— Federal Reserve VP David Altig and Federal Reserve economist Paul Gomme, 2000

“[T]he contribution of unemployment rates to future inflation is about as close to an empirical fact as we get in this business. And that contribution is, at the empirical level,
the entire content of the NAIRU.”

— Paul Davidson, 1997

We might be talking about two different things. The idea that there was such a thing as NAIRU, you’re half right — it was a theoretical construct, although one based on empirical experience.

But an attempt to actually model or predict NAIRU — no, you’re wrong. The literature of the last 30 years is littered with unsuccessful attempts to show what NAIRU was. Not a one of them worked in the long run. In the end economists had to look at what had actually happened, and try to use that as a guide. Putting aside whether that approach worked either, it’s the one that has come to dominate discussions of NAIRU.

Doug M.

28

Doug Muir 12.05.03 at 12:33 pm

Yes, zizka, there is such a thing as wage-price inflation. And there are such things as poisonous snakes.

But not all snakes are poisonous, and not all poisonous animals are snakes.

Similarly, not all inflation is driven by wage increases, and not all wage increases lead to inflation.

In fact, in advanced countries in the last 30 years or so, the two phenomena have become increasingly decoupled; we’ve seen inflation without wage increases (late 1970s) and wage increases without inflation (mid-late 1990s).

Does that help?

Doug M.

29

Zizka 12.05.03 at 3:20 pm

Thank you Doug. You ahve a real consistency in your responses. Is what you just wrote germane to either of the points I tried to make?

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