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July 21, 2006

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chris y

Dialectics is indeed nonsense if you take Marx at face value, but if you strip away the pseudo-science and the pompous special language, what remains - the insight that outcomes are generally both contingent and probabilistic - is worth bearing in mind.

Ajay

That last quote strikes me as grossly false. While he's saying that capitalism warps human nature (a very broad point for which arguments can be made both for and against), he's also saying that life is worse under capitalism. While this may have been open to debate in his lifetime, nobody who has followed the progress of capitalist societies since then can make that claim.

dsquared

The labour theory of value isn't nonsense! It's at least as good as any competing theory of value, and the attempt by neoclassical economics to try and get along without any theory of value keeps showing up in all sorts of nasty little problems.

AJE

dsquared: What's wrong with Carl Menger's theory of value?

Chris: As someone who's very interested in behavioural economics but from the opposite starting point, I fail to see why your passage is more inevitable than mine.

Marx's theory of ideology attempted to show how people's material conditions distorted their perceptions of reality.

Surely material conditions aren't sufficient conditions to explain "distorted perceptions of reality". Surely two people with exactly the same material conditions will still see the world and interpret it in different ways? As soon as one acknowledges subjectivism, Kahneman & Tversky become relevent. You don't need any reliance on how material conditions effect ideology, and therefore I don't see what bridges Marx to Elster. Material conditions don't mean that you and I have different cognitive biases - the simple fact that we're humans does.

I'm not doubting that you've made that journey, but I wish to point out that there's an alternate path so I find a link from Marx to behavioural economics as being somewhat flimsy.

chris

AJE - you're right, of course - there are many ways to get to behavioural economics. I was merely describing my path, and I think Elster's. The point is to show that Marx has led us into wisdom.
Ajay - Marx was a little more nuanced than I gave credit for; he did credit capitalism with rescuing people from rural idiocy.
A lot depends here upon what you mean by capitalism. If you mean merely free markets (as too many people are wrongly prone to do), I'd say capitalism can be good for us, as it breeds self-sufficiency and an egalitarian spirit. But the division of labour does damage us, as Adam Smith pointed out.So too do status inequalities and the pursuit of power.

AJE

Out of curiosity, there's typically two responses to behavioural anomolies. Firstly we can conclude that human's aren't as rational as economic theory assumes, and this justifies some intervention to correct for the observed biases/mistakes. Secondly we can conclude that the rules of the game determine outcomes, retaining the assumption that people are rational (encompassing bounded rationality, rational ignorance etc).

I would have thought - and would be interested if you agree - that loosely speaking those who arrive at behavioural economics through Marx are more likely to follow the former, and those who come from Austrian-type subjectivism the latter.

I'm sure Marx has delivered many people to wisdom, and I wouldn't trust anyone who wasn't a radical in their youth, but I'm not confident that Marxist baggage is the best means to interpret the important contributions of behavioural economics.

Ajay

Chris, it certainly seems like Marx is blaming capitalism for all the world's problems in that passage. As for what I mean by capitalism, I suppose I mean the usual complement, private ownership and free markets. I wouldn't place division of labor, status inequalities, or pursuit of power in that description though they can all be empowered in a capitalist system. I consider division of labor a principle of logistics, one that is employed by any type of modern government, and status inequalities and the pursuit of power as the nature of man. The question is how best to manage those last two and I think capitalism (perhaps blended appropriately) does the best job.

Going back to the point about specialization damaging people, I can see the problems there as I often declaim them myself. But, I think the people who talk about this damage often ignore the alternative, which is to get caught up in so many minor but necessary daily tasks that one ends up similarly deficient, only that you take a different path to get there. On average, people are actually better off (more knowledgeable, moral, etc.) when specialized, though maybe not by as much as one would hope.

chris

AJE - I guess you must be right as sociological fact; people who get to behavioural economics via Marx are more likely to favour state intervention.
But is this really true to Marx? He was, famously, reluctant to give much of a blueprint about what a socialist society should be, and Engels at least looked forward to the withering away of the state.
Aside from a few scattered lines (most famously in the Communist Manifesto), there's not much suppport for big government in classical Marxism.

AJE

I wasn't really thinking of intervention per se, but the type of intervention - we can view unsatisfactory outcomes as either being the result of behaviour or institutions. One solution (which i think is consistent with Marxism) is to stress the importance of a change in behaviour. The other solution (i.e. Austrian/subjectivism) is to take behaviour as given but alter institutions to enable the invisible hand.

Is that accurate?

chris

AJE - it's a nice distinction, but a little overdrawn.
Yes, Marx did urge a change in behaviour - a rise in class consciousness, and was vague about institutional change. So in that respect he differs from Austrians.
But Austrians, in practice, also call for a change in consciousness as a prelude to changing institutions. Marx wanted citizens to wake up to how bosses rip them off. Austrians want them to wake up to how politicians rip them off. Both bosses and politicians use (deliberately and accidentally) ideological ruses and cognitive biases to hide these facts.
Maybe Austrians and Marxists have more in common - to their mutual credit - than either would like to admit!

AJE

My own reluctance to embrace Marx stems from ignorance rather than pride, but I agree that there's gains from trade to be made!!

dsquared

AJE: Menger's theory of value is fine, but it is rather intrinsically linked to the specific structure of Austrian economics, whereas LTV had sufficient generality to be used by Smith, Ricardo, Marx and Sraffa.

AJE

Sorry, but I really can't see how that's a reason for favouring LTV over Menger. Who cares how general something is if it's wrong?

Shuggy

"Much of the substance of Marx - the labour theory of value, dialectics - is nonsense. But his looser influence, upon me at least, is enormous and, I think, very valuable."

Interesting. Have you come across Eric Hobsbawm's essays 'On History'? He argues something very similar and with regards histiography at least he suggests that Marx's 'looser influence' is such that it will soon make little sense to refer to someone as a 'Marxist historian'.

Phil Jackson

“Technology and money-making are fundamentals - the base. All else is superstructure. For this reason, we regard cultural politics as epiphenomenal, as childish posturing.”

Not quite. Marx also saw classes and inter-class relationships as integral to the base’s conditions of production – “In the course of social and economic production men enter into certain relations, and certain conditions are formed by them….These conditions of production correspond to a certain stage of development of the material forces of production”.

For an example of the base/superstructure relationship we can look at the Reformation, where Marxist historians generally view the rise of protestantism as an outward (cultural) expression of the following base activities: (a) the rise of the bourgeoisie, and (b) the resulting bourgeois-proletarian relationship. These emerging forces come into conflict with the static feudal elements within both the base (the lord-peasant ‘contract’) and the superstructural expression of that system (in the C16th: Catholicism - amongst other things), and hence the religious wars of that period , where people consciously fought for religious ideals but – according to Marxists – were in truth largely representing class interests.

John Strachey gives this rather neat explanation of all this kind of thing in his summary of the late C18th revolutions: “Men think that they overthrow, say, a feudalist monarchy for the sake of liberty, equality and fraternity. And so they do. This is the only conscious motive in their heads, and it is absurd to deny that is their real motive. The ideology (the general world outlook) of which the slogan ‘liberty, equality and fraternity’ is the epitome, has filled their consciousness completely. It is only if we go behind this ideology that we discover that it has grown out of the conflict between changing, developing, technical and economic conditions and a static political structure.”
The Theory and Practice of Socialism; ch. xxviii; 1936.

Phil Jackson

“Much of the substance of Marx - the labour theory of value, dialectics - is nonsense”

You have intellectually castrated Marx by throwing aside the dialectic, reducing him to the level of those squeaky-voiced utopians he so despised. Marx was not dreaming up some blueprint for a nicer society; his credibility rests emphatically upon his insistence on the scientific nature of his analysis, and, to this end, he had famously inverted Hegel’s dialectic into the material base so that it became – through the mechanism of dynamic class antagonisms – the driver of a historical law that is supposedly both rational and predictable. Without the dialectic, Marx’s work becomes merely flaccid and sentimental; you have shrunken him to the level of an idle chatterer.

About bloody time, too. Well done.

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