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Monday, August 9, 2010


I cannot possibly reply adequately to the many lengthy, intelligent, and thoughtful comments that were provoked by my effort to launch a discussion about ideology, but I must at least try, so herewith a series of responses. Forgive me if I fail to answer your questions or speak directly to your concerns.

1. I began with the emergence of capitalism as the dominant form of social and economic organization in Europe in the early nineteenth century for two reasons: First, because I believe it is impossible to think clearly about our situation today without coming to grips with the nature of capitalism; and Second, because I always try to understand a complicated subject by looking at it in its simplest form and then explicating the complications and elaborations of it as responses to or outgrowths of that simpler form. Speaking about philosophy, that is what I did in explaining Kant's CRITIQUE OF PURE REASON and, rather less importantly, Rawls' A THEORY OF JUSTICE, and that is what I did in my book on Marx's economic theories, UNDERSTANDING MARX.

2. The Labor Theory of Value began as an attempt by Adam Smith and David Ricardo to give a theoretical explanation of the determination of price in a capitalist market, and thereby to explain the division of the social product among landed interests, entrepreneurs, and workers. It was taken up by Marx in a brilliant, but ultimately unsuccessful, effort to demonstrate, by means of a distinction between labor and labor power, that profit, and thus capitalism, rests upon the exploitation of the working class. Marx was right about that claim, but his theoretical proof was flawed. Capitalism does rest on exploitation, and Marx is correct when he says that the exploitation is made possible by the fact that the vast majority of people in a capitalist economy have been separated from control over the means of production. I have gone into this in very great detail both in UNDERSTANDING MARX and in a series of articles, the most important of which is "A Critique and Reinterpretation of Marx's Labor Theory of Value," which is online.

3. Capitalism depends for its continued profitability on an endless search for cheap labor, a search that today encompasses the entire world. Everything Marx said about the Reserve Army of the Unemployed in England now applies quite directly to the world reserve army of unemployed, making it possible for capital in the economically advanced countries to find cheap labor abroad. These days, this is called outsourcing.

4. The Economics profession has spent the last century and a half producing ever more sophisticated mathematical justifications for the simple fact of exploitation [such as the theory of marginal product], but the same obscene contrast between wealth and poverty that stared everyone in the face in early nineteenth century England is before us today.

5. Marx's analysis failed in several absolutely central ways to grasp the future development of capitalism. [I have gone into this in some detail in my paper "The Future of Socialism," also online.] The two most important failures are, First, his failure to foresee and to explain the emergence of a stable and seemingly permanent pyramid of wages and salaries, resulting not in every greater solidarity of the working class but in relative exploitation and the fragmentation of the working class, and Second, his failure to foresee the capacity of capital to overcome its competition sufficiently to work together to save capitalism through control of the state and through fiscal and monetary policies [Keynesianism]. Marx also failed to anticipate the inability of capitalism to eliminate or weaken the irrational forces of religious, racial, ethnic, and national sentiment in the world, a fact of which we are all now painfully aware.

6. We live now in a world in which no one seems capable any longer in even conceiving of an alternative to capitalism. Virtually everyone left, right, and center begins by singing paeans of praise to what they call "the free market," and then arguing about what small portion of the surplus social product should be shunted to the workers to keep them quiet and happy. I am not really interested in discussing the comments of academic philosophers like Rawls or Nussbaum or Parfitt et al, because they do not seem to me to be talking about the world we actually live in, the world of rampant global capitalism. We need desperately, and I am not competent to give, an analysis of the emergence of financial capitalism that will complement Marx's analysis of industrial capitalism.

7. Finally, and for me at any rate most distressingly, the many powerful critiques of the present situation share with my own feeble efforts the weakness that they are not grounded in a real world movement among the exploited to mobilize and change the social order. People like me, caustic though we may be in our criticism of capitalism, are in fact comfortably insulated from the evils we decry. This gives to what we say an airy insubstantiality that no amount of theoretical penetration can overcome,.


David Pilavin said...

A question:

Do you think that the term "working class" is still relevant to our days? If yes, what is the criteria that makes one belong to it?

To put it otherwise:

Is the distinction between the exploiters and the exploited, in your opinion, a dichotomic one?

Robert Paul Wolff said...

To give a short answer to a very deep and complicated question: I do think the term still has use, but the distinction is no longer dichotomous. Hence my passing reference to "relative exploitation." This complication goes along with the correlative complication introduced by the phenomenon of joint stock corporations, in which those who control the corporation and reap enormous rewards are, technically, employees. This is an enormous subject, of course, which I have barely alluded to here.

Chris said...

Do you know any good literature that details the history of the corporation? Perhaps in its early stages to its now leviathan stage?

I think better understanding the history of corporations hitherto would offer keener insight into critiquing just how unnatural 'business as usual' really is.

Robert Paul Wolff said...

Hmm. I am terrible about bibliography, because I read so little. There is the classic work, Adolph Berle, Jr., Power Without Property [1959]. And there have been a good many radical economists who have written about this. A good place to look might be the website of the Union for Radical Political Economy [URPE].

Chris said...

I suspected you were someone who read voraciously! Interesting...
Thank you for the recommends.

Scott said...

Sorry to press this but we're still talking about capitalism without you having defined it.

Robert Paul Wolff said...

By capitalism I mean an economic system characterized by commodity production [production for exchange in the market and for profit rather than for use], private ownership of the means of production, and wage labor. In such an economic system, economic agents [workers, consumers, owners of capital, managers of capital enterprises] have an instrumental and impersonal relationship to one another, rather than a communal or traditional or fraternal or other relationship. Capitalism is characterized [although this is not a matter of definition, but rather a fact initially discovered by Marx] by systematic and thoroughgoing mystification of the real relationships between people. [See my book, MONEYBAGS MUST BE SO LUCKY, for an explication of this phenomenon of mystification.]

Doesw that help?

Chris said...

In the spirit of your last post, it might also be beneficial to define Socialism. Since Socialism carries a bad connotation in many Western circles. A lot of people presume Socialism to be authoritarian, in line with the Socialism of Stalin, some Bolsheviks, North Korea, etc. Where as I believe Marx, and others, had their sights aimed at a more communal Socialism.

Mike said...

Robert (if I may),

You say: "The Economics profession has spent the last century and a half producing ever more sophisticated mathematical justifications for the simple fact of exploitation [such as the theory of marginal product], but the same obscene contrast between wealth and poverty that stared everyone in the face in early nineteenth century England is before us today."

But is the contrast between wealth and poverty now really as obscene as it once was? What made the contrast between rich and poor so obscene 200 years ago was not just that the rich were so much richer than the poor but that the poor were so badly off. Today, however, the poor do not seem all that badly off, especially compared to how they once were. Indeed, by historical standards, the poor are living fantastically good lives. So I would submit to you that that is the real justification for capitalism, or for "exploitation", as you call it, and not anything having to do with marginal products.

Scott said...

That helps a great deal, thanks Professor.

Perhaps in the future we can discuss whether or not current proposed alternatives to the status quo such as agorism, mutualism and freed markets are forms of capitalism.

Mack said...

I tend to agree with Mike. I certainly disagree with anybody who says that capitalism is about egalitarianism; but I think that's a straw man. Capitalism creates and often perpetuates inequalities, but works off the 'rising tide' principle. Now, based on my limited understanding of happiness research - specifically, how happiness is always relative - that may mean that capitalism perpetuates dissatisfaction, but in material terms, the poor are much better off than they were, say, 100 years ago.

Robert Paul Wolff said...

Sigh. This is what I mean by mystification. In a global capitalist regime, such as exists today, the poor are the billion or so people who are living barely at survival levels, as well as the many many more -- a billion, at least? -- whose condition is no better than, and very probably often worse than, that of the London poor of the 1850s. But of course you don't see those poor. They are overseas, they are not Americans, so they don't count when we have these discussions. Who, do you suppose, makes the cheap t-shirts and table lamps and laptops whose low price sustains my high standard of living? And even in the United States, who makes my bed and cleans my room when I stay in a hotel? Who picks the strawberries I get inexpensively at the supermarket? A rising tide indeed. I am not talking about relative deprivation and the psychological trauma of not driving an Audi.

Chris said...

I know 1/6th of the world goes to bed starving, and probably the same 1/6th goes to bed without access to clean drinking water. Interestingly enough, those are worse statistics than Native American Indians would of subjected themselves to, and they had no industry whatsoever. Wolff is right, you're thinking is mystical, and faith-based.

JP said...

Robert, are you denying that, using a consistent standard, the percentage of people in absolute poverty has fallen remarkably in the last 100+ years? I thought this was uncontroversial.

I have better sources at the office, but, to take an example, do you think that articles like "THE WORLD DISTRIBUTION OF INCOME:
PERIOD(*)" by Xavier Sala-i-Martin (professor at Columbia, available online) are massively wrong? Even critics of this article do not, as far as I know, deny that the number of people in poverty has fallen dramatically.

JP said...

In my post above, last line, I said "number of people in poverty has fallen dramatically". My mistake, I meant "percentage of people in poverty", not absolute number (i.e. the same measure as used at the beginning of the post).

Mack said...

Yes: it is absolutely the case that even now, a large percentage of the world is impoverished. Isn't it also the case that many fewer do so than ever have? If groups of people were impoverished 100 years ago, and still are, and other groups were similarly impoverished, and now aren't, isn't the outcome, while certainly not good, better than if both groups were still poor?

Robert Paul Wolff said...

Folks, folks, what on earth are we arguing about? I am sure the proportion of people in abject poverty has fallen over the past century [although this is a little tricky. In Africa, for example, there was not the sort of starvation and abject poverty we see now before the arrival of colonial Europeans]. Marx insisted that capitalism had an explosive effect on the productive capacity of the world economy. It is that explosion in production that makes possible, for the first time in history, a truly humane society. Instead, we get obscene wealth side by side with grinding poverty, and when I protest at the obscenity of the wealth, I am told, "the grinding poverty is not quite as bad as it was two centuries ago." Is that really what you want on your bumper sticker? I cannot believe I am hearing this. Next, you will be telling me that a 10% unemployment rate is "structural" and hence cannot be eliminated, and that wall street "masters of the universe" should be thanked for making global capital flows more efficient.

I think I am going to go back to playing FreeCell and try to get my win percentage up from 96% to 97%.

JP said...

Robert, I don't really see what you are objecting to. In order to evaluate capitalism we need to reach some sort of rough agreement on recent economic history. I know of no better way of doing this than looking statistics and trying to figure out which stats are most trustworthy and meaningful. For example, World bank figures (some quick googling reveals) indicate that absolute poverty has fallen from 80% to 20% of world population between 1820 to 1990.

Now I don't know where they get these figures from, but surely we are not going to get very far until we decide what to make of such numbers and what to attribute them to. Because if this is directly attributable to capitalism then it is the kind of thing that fits nicely on a bumper sticker.

Chris said...

JP, how about the fact that in the 19th century the world population was 1 billion. Presently, 1 billion people go to bed starving and without access to drinking water. Essentially you're trying to justify the fact that if you multiply the population of the 19th century by 6, and leave the original 1 billion to rot away in missery, the remaining 5/6ths have every right to feel comfortable in their present positions.

Furthermore, you keep stating that it's capitalism that allows for the sanctity of this comfortably. But in Indigenous societies, you simply didn't see these kind of exploitation and oppression, and many of their subjective attitudes towards their living standards were quite content.

Affluence does not make a life worth living, nor more enjoyable, nor more just. Other factors, outside of economics, have a large role to play in that.

JP said...

Chris, I am not trying to justify anything, I apologise if I gave that impression. (I would suggest that your blanket claim about 'indigenous societies' won't stand up to scrutiny, but that is another story entirely.) I did also not attribute the percentage fall solely to capitalism, but said that we need to discuss what to attribute it to. (In part this must be due simply to science and technology per se, to attribute this purely to capitalism would be odd. Living standards in the USSR also rose, at least until the 1970's, I think.)

My point is simply this: I would like to know what Professor Wolff takes the empirical record of the last 100+ years to be, specifically the record in terms of absolute poverty and income inequality, as these seem to be the key issues, economics-wise.

Mike said...


The people who pick my strawberries go through a lot of trouble to be able to do so, which suggests to me that their work, while poorly compensated relative to middle class American standards, is extremely well compensated relative to whatever work they could get in their home village. I hasten to add, of course, that it is unfortunate that such a crummy job is someone's best option. But, for all that, we should give capitalism its due. It has given the poor much better options than they once had, even if these options fall short of what people like us think is acceptable. I don't think any other economic system can claim to have helped the poor nearly as much, though I'd love to be persuaded otherwise.

Chris said...

Mike shouldn't your claim not be made by the man receiving the strawberries, but those doing the picking? Instead of asking Wolff, ask the pickers if they are content and happy, and feel as if feeding you is worth the effort?

That's the problem with capitalism and turning laborers into commodities, it no longer matters what they think - so long as they 'do'/obey. And those of us on the other end of the strawberry patch, can do the thinking for them.

Mike said...


I'm not sure I get your point. All I'm suggesting is that global capitalism has given the poor better options than they would have had without it. The question is not how the migrant worker feels about picking strawberries, but how he feels about picking strawberries relative to how he would feel about the best work option he would have in the absence of global capitalism. That's a tough counterfactual to evaluate, but I think it works out in capitalism's favor.

NotHobbes said...

"Today, however, the poor do not seem all that badly off"

How can hunger in the modern age be considered any different to hunger 200 years ago?

You have obviously never experienced anything like the conditions that millions of people throughout the world have to endure on a daily basis and your comments are of little comfort to anyone who has. What next? TB and rickets are not as bad as they were in Victorian times as healthcare has improved?