I pointed out yesterday that Marx was right: inequality generates an ideology which defends that inequality. This, though, is just one of many instances in which experimental or empirical evidence has vindicated him.For example:
- The "economics of life" literature pioneered (pdf) by Gary Becker - as exemplified by Jeremy Greenwood's work on how technical change has changed sexual mores and family life - confirms Marx's claim that "The mode of production of material life conditions the general process of social, political and intellectual life."
- Some experimental evidence vindicates Marx's claim that hierarchy doesn't simply increase efficiency, but also leads to exploitation.
- A lot of public choice work is consistent with Marx's claim that "the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie".
- Marx's claim that capitalism is prone to crises looks better than the simpler class of DSGE models which under-rated the chance of crisis.
- Work on cognitive biases inspired by Daniel Kahneman corroborates Marx's theory of ideology.
- The evidence that robots have not (yet?) depressed demand (pdf) for labour might be consistent with Marx's view that new machinery doesn't hurt labour but capital, because it causes older technologies to suffer "moral depreciation" as they can no longer compete against the newer, better equipment.
- Even the much-maligned labour theory of value fits a lot of facts.
In light of this long list, it shouldn't be surprising that Marxian economics helps shed light upon important contemporary issues. His theory of a declining profit rate - which happens to be true (pdf) - should be part of any theory of secular stagnation. Class struggle, power and exploitation are at least as reasonable ways of thinking about inequality as marginal product theory. Long-term moves in share prices are due in surprisingly large (pdf) part to class struggle. And Marx's work on technical change should feature in the debate about the impact of robots on work and society. (Hint: capital competes with other capital, not just labour.)
Of course, Marx wasn't right about everything - but nobody is. I'm not at all sure that capitalism has a tendency to ever-increasing monopoly. And his idea that the working class would become an agent of revolutionary change has been wrong. For these reasons, we should, in Yanis Varoufakis's lovely phrase, be "erratic Marxists".
When I say "we", I don't just mean we Marxists. I mean all economists. I suffer no dissonance at all between writing (more or less) conventional economics in my day job and being some kind of Marxist. The important distinction is not between heterodox and orthodox economics, but between
good and bad economics - and Marx is often good economics, in the sense of fitting the facts.
In fact, though, there's another reason why orthodox economists should be (partly) Marxist. It's that a class society militates against rational economic policy, in three ways:
- It increases popular support for immigration controls. In a class-divided society poorer workers see migrant workers and think (wrongly, but sincerely): "they're taking my job." In an egalitarian society, they'd be quicker to see that migrants free them to do more productive work.
- A big reason why we don't have a rational fiscal policy is that it runs against the interests of capital. As Kalecki said, big business would rather that employment depended upon their confidence. And we might add that finance capital would prefer a loose money/tight fiscal policy mix. Reducing capitalists' power might be an essential prerequisite for sensible fiscal policy.
- Capitalism quickly degenerates into crony capitalism or corporatism because capitalists buy political influence. If you want a properly freeish market economy, you should therefore favour institutional changes which reduce the power of the rich.
So, here's my message to all non-Marxist economists. You should take Marx more seriously. I mean, you're not just shills for the rich are you?