Just a lot of Marxian hot air

“Capitalism” isn’t a word used by proponents of the market. It is an expression used by Left-wing writers, including Marxists. Those who believe in the market believe markets sustain choice and competition, and thereby drive efficiency in all markets — land, capital, labour and so on.

Thus, markets are as much about labourism and landism, as they are about capitalism.

Nor are markets independent of an institutional structure and rule of law. Superiority of markets vis-à-vis all other alternatives is both a theoretical and empirical proposition.

It’s theoretical because that’s the core of general equilibrium theory and efficiency in allocation of resources. It’s empirical because growth and development, including human development, track records are better in economies that have moved towards market principles.

A deviation from market principles, such as in x or y country, and distortion of rule of law or regulation there, doesn’t alter either of those principles. Nor does absence of markets, such as through externalities, natural monopolies or asymmetry of information, establish the superiority of an alternative.

Whenever an alternative has been tried, the experience has been worse, reminding one of Winston Churchill’s famous quote on democracy. That’s the reason most countries in the world have moved towards “capitalism”.

David Harvey is an anthropologist and geographer, and an influential one at that.

Beyond his seminal contribution to urbanisation, theory of geography and spatial development in subsequent years, he has increasingly been drawn towards dialectical materialism and Marxism. Several of his earlier books have been more thought-provoking than the current one, provocatively titled Seventeen Contradictions and the End of Capitalism . Other than an introduction and a conclusion, the seventeen chapters in this book are each about one of these contradictions.

Since a lot of Marxist literature is about semantics and taxonomy, it seems to be pointless to list out these 17 “contradictions”, since titles of the chapters mean little unless the chapters themselves are read. Suffice to say, leftist and Marxist literature often asks the right questions. Unfortunately, it comes up with the wrong answers.

The refrain in this volume is no different from that in Harvey’s earlier books — inequality and inequity compounded by variations within race, and protection of the environment. The “variations within race” requires explanation. “Capitalism” is almost uniformly defined (in this volume) with the US experience as a base.

Hence, the race bit. In a country like India, questions about inequality/inequity might also be defined in terms of religion/ethnicity/caste/gender. As a converse, the phrase “neo-liberal” is bandied around, without really explaining what it means. David Harvey is not an economist and doesn’t pretend to be.

Unlike other social scientists, for better or for worse, economists tend to pin things down and make them specific. Thomas Piketty ( Capital in the Twenty-First Century ) is a recent example.

If definitions are specific and data are cited, one can question them, as has been the case with Piketty. In the absence of that, stuck with polemics and taxonomy, there is nothing much to say. As for the death of capitalism bit, since the days of Karl Marx, that has been repeated ad nauseam . The existence of a “contradiction” doesn’t guarantee demise. All societies have contradictions, tensions and conflicts.

A system only collapses if it doesn’t know how to adapt. In simple terms, Marx’s Capital made some assumptions about the nature of capitalist society, as he then found and defined it. The problem of course was that “capitalism”, however it was defined, adapted and the Marxian assumptions were fallacious. Capitalism didn’t die.

This is what Paul Samuelson once wrote about Marx: “I have dealt with Karl Marx the economist, not Marx the philosopher of history and revolution. A minor Post-Ricardian, Marx was an autodidact cut off in his lifetime from competent criticism and stimulus.” The point is a simple one. Karl Marx died in 1883. Without discounting the importance of Marx’s contribution then, does our understanding of societies and economic development improve if one remains fixated on a framework that was articulated then?

Marxist theoreticians will disagree, which is the reason why they love expressions like “praxis” and “praxology”, terms that David Harvey also uses. Hence, you have a statement like the following: “The direct provision of adequate use values for all (housing, education, food security etc.) takes precedence over their provision through a profit-maximising market system that concentrates exchange values in a few private hands and allocates goods on the basis of ability to pay.”

Everyone gets the general idea. But was it necessary to use those terms and do they help?

Or take the following: “All inequalities in material provision are abolished other than those entailed in the principle of ‘from each according to his, her or their capacities and to each according to his, her, or their needs’.”

The last is less about capitalism and more about what an ideal socialist society should be, reminiscent of Marx in Critique of the Gotha Program .

The only country which tried to implement this in some sense was China between late-1950s and mid-1960s and it didn’t work. Thus, we partly have a critique of capitalism that doesn’t help much and partly we have a Utopian ideal that has never worked.

Nevertheless, the book underlines “the importance of waging war…within capitalism as a whole”. However, neither of these criticisms is likely to put off the avid Marxist, especially when the book has been written by someone like David Harvey.

For non-Marxist readers, read the book only if you are prepared to tolerate heavy jargon, semantics and taxonomy and if you want to get a glimmer of what is wrong with the US economy. For the last, there are of course better and more readable books, shorn of the praxis.

By the way, Lincoln Steffens was a US-based reporter who wrote a lot about unfair urbanisation in the US. He went to the Soviet Union and coined the expression, “I have seen the future, and it works.”

By the time his memoirs were published, his enthusiasm for communism had disappeared. That’s the case with many countries too. They embraced “capitalism” because they saw the past in “communist” societies and it did not work.

The reviewer is an economist and a professor at the Centre for Policy Research, New Delhi

COMMENT NOW