Marxism’s Fatal Flaw

Marxism’s Fatal Flaw

Marx’s social-democratic critics recognized a fundamental point that the great economist missed: that a better world was not inevitable, but achievable, and that their job was to bring that world into being through politics.

Two hundred years after Marx’s birth, Marxism is experiencing a renaissance. Sales of Capital, The Communist Manifesto, and Marx’s have soared since 2008, and intellectuals are publishing books like Why Marx was Right and proclaiming Marxism to be the best guide to understanding the contemporary world.

On one level, this is not surprising. With the functioning and fate of capitalism again at the top of the political agenda, few intellectuals can match the scope of Marx’s analyses; unlike most contemporary thinkers, he focused on capitalism’s social as well as its economic dynamics. But Marx ultimately neglected politics, and this was his fatal flaw as well as the fatal flaw of movements claiming to work in his name. As the left again faces the urgent task of coming up with compelling interpretations of and solutions to capitalism’s problems, it is critical that it not make the same mistakes it did in the past.

The emergence of capitalism in the eighteenth and nineteenth centuries led to unprecedented economic growth and personal freedom, but also dramatic inequality, social dislocation, and atomization. The most powerful critique of this new order came from Karl Marx. Marx’s thought evolved over time but its most distinctive feature was historical materialism—the idea that history was propelled forward by economic development and the class conflict it generated. It was, as he put it, “a question of . . . laws . . . tendencies working with iron necessity towards inevitable results.” Because capitalism’s development was inexorable, there was little point in thinking about the actual transition from capitalism to socialism or the role the left might play in actively creating a better world. Marxism, as I have written elsewhere, was thus stamped by the primacy of economics: it was based on a belief that economic forces are more powerful than political ones, and attempts to interfere with them will not fundamentally change outcomes and may even be counterproductive. Ironically, Marxism shares this quality with liberalism, limiting the political attractiveness of both as well as their ability to generate practical economic responses to capitalism’s problems, particularly during times of crisis like we are experiencing today.

Reflecting this, by the late nineteenth century, Marxism was already running into trouble. Far from collapsing, capitalism was being shored up in Europe as bourgeois states undertook significant political, social, and economic reforms to stave off more radical challenges. Equally important, Marxism’s emphasis on the primacy of economics was out of step with the psycho-political needs of populations suffering from the globalization and rapid and disorienting social and technological change sweeping the globe during this time. These conditions helped feed the rise of nationalist movements across Europe, promising to put an end to the disorder and divisions caused by liberal capitalism and restore a sense of purpose and unity to a corrupt and amoral bourgeois world. These conditions also led the left to split into three different camps.

One remained committed to orthodox Marxism and argued that while Marx may have been wrong about the imminence of capitalism’s collapse, he was basically right in arguing that it could not persist indefinitely. Others, no longer accepting the economic determinism and political passivity of this course, argued that if a better world was not coming about as the result of inevitable economic developments, it would have to be created by human action. The best known of these “revisionists” was Lenin, who argued that history could be spurred along by a revolutionary vanguard. This approach, of course, paved the way for the horrors of communism, where the end of eliminating capitalism was used to justify brutal means. Other revisionists argued that a better world could emerge by using the political powers of a democratic state. This approach came to be known as social democracy, anchored by the conviction that it was possible and desirable to maximize capitalism’s upsides while minimizing its downsides.

These debates simmered until events reached a critical juncture during the interwar years. In Europe the chaos generated by Great Depression in particular forced the left to confront head-on its views about capitalism and the uses of political power. Those remaining true to Marxism believed that there was little they could or should do in response to capitalism’s crisis. For example, Rudolf Hilferding, the most important economic theorist of Germany’s Social Democratic Party (SPD), claimed an “offensive economic policy” was useless because the driving force of history was the “logic of capitalism.” Skeptical that politicians could resolve the Depression on their own, he rejected activist, Keynesian economic policies. (Since neoclassical liberalism and orthodox Marxism put their faith in ineluctable economic developments and denigrated political interference in the economy, orthodox Marxists, Hilferding once noted, were the last and best of the classical economists.) Proto–social democratic revisionists, on the other hand, argued that waiting for capitalism to collapse to deliver a better world was a recipe for economic and political disaster. Instead, the time had come for the left to commit itself to “the primacy of politics”—to using political power to begin actively transforming capitalism. Hendrik de Man and his Plan du Travail, which proposed an active government response to the Depression and an evolutionary transformation of capitalism, were popular in Belgium, Holland, and France; in Germany and Austria, reformers advocated government intervention in the economy and proto-Keynesian programs; and in Sweden, the Social Democratic Party (SAP) initiated the single most ambitious attempt to reshape capitalism from within. But since gaining political power required majority support, social democrats also argued for a cross-class strategy as opposed to a class-struggle strategy. This was important not merely to win elections, but also because social democrats recognized the danger of not actively responding to the anger and frustration that were feeding fascism and nationalism. Budding social democrats therefore embraced communitarian appeals to the “people” and the “common good.” This social democratic approach had its fullest flowering in Sweden, where the SAP joined its efforts to gradually socialize the economy with a promise to turn Sweden into a folkhemmet or “people’s home.” While in countries such as Germany and Italy the fascist right assumed the mantle of economic intervention and national solidarity, in Sweden the social democrats became the champions of the “people” and the nation.

After the horrors of the interwar period and the Second World War, actors across the West and across the political spectrum recognized that making democracy work would require a new relationship between states and markets: the former had to ensure that the social chaos, class conflict, and extremism generated by the latter could not be allowed again. Even politicians in United States accepted that stabilizing liberal democracy meant not going back to the socioeconomic status quo ante. Reflecting this, in his opening speech to the Bretton Woods conference, U.S. Treasury Secretary Henry Morgenthau noted, “All of us have seen the great economic tragedy of our time. We saw the worldwide depression of the 1930s. . . . We saw bewilderment and bitterness become the breeders of fascism and, finally, of war.” To prevent these conditions from recurring, Morgenthau argued national governments would have to be able to do more to protect people from capitalism’s “malign effects.” That meant imposing limits on markets and an increased role for the state in protecting citizens from social and economic dislocation. These principles were embedded into Europe’s postwar political economies and the American-led international economic system.

For decades this order preformed remarkably well, in the global North at least. The thirty years after 1945 marked western Europe’s fastest period of growth and, equally important, the benefits of growth were broadly distributed. This “social democratic” version of capitalism facilitated compromises between workers and employers, rich and poor, and attenuated the view, prevalent during the nineteenth and early twentieth centuries, that capitalism was a zero-sum game. It thereby helped undercut support for the far left and right and increased support for democracy.

By the 1970s, however, the postwar order was running out of steam economically, providing an opening for a neoliberal right that had been organizing and thinking about what it saw as the drawbacks of the postwar order and was ready with explanations for the West’s problems as well as solutions to them. The collapse of communism provided neoliberalism with a further boost by promoting market triumphalism and removing the external enemy—communism—that had led many on the right to view checks on markets as a reasonable price to pay to counter left-wing radicalism. By the end of the twentieth century an emboldened neoliberalism, insisting that markets worked best when left alone and the best government was one that interfered with them the least, had captured the ideological high ground, and many social-democratic parties, too, began to aquiesce, chipping away at the restrictions the postwar order had placed on markets.

This neoliberal turn led to the economic opposite of what was achieved during the postwar period—slow and inequitable growth—with predictable political consequences. During the postwar period the success of democracy in Europe in particular was built upon a belief in the primacy of politics: governments promised citizens that they could and would protect them from social dislocation and economic suffering. But over the past decades national governments have lost power to markets, international organizations, technocrats, and in Europe the EU, leading many to conclude that their leaders were no willing or able to do so. The result has been growing democratic dissatisfaction and support for populist right-wing movements that promise to blow the system up.

The West is currently in the midst of perhaps it greatest crisis since the end of the Second World War. The irony is that the contemporary period resembles in important ways the one in which Marx came of age. Then as now, capitalism was bringing the world together and generating prosperity for some and economic and social dislocation for many. The neoliberal right’s reaction has been to double down on the primacy of economics, calling for more leeway for markets, more limits on state regulation, and more welfare-state cutbacks. As in the past, such policies have generated economic inequality, social divisions, and political dissatisfaction and extremism. In response, some liberals have begun questioning the viability and even desirability of democracy. This is also, unfortunately, nothing new: during the nineteenth century, liberals like Alexis de Tocqueville and John Stuart Mill lived in mortal fear of the threat to private property posed by democratization, and during the twentieth century, libertarian icons like Friedrich Hayek and Ludwig von Mises argued that if democracy threatened markets, it should be reined in. Today books with titles Against Democracy, Against Elections, and Democracy and Political Ignorance are increasingly common.

Parts of the left have also reacted to the current crisis by returning to arguments based on the primacy of economics: Marxism, as noted, is again fashionable and figures on the left increasingly denounce capitalism as irredemable and claim a better world can only emerge with its transcendence. No longer confined to the academic and activist left, this outlook has been lent credence by some of today’s most prominent intellectuals. Thomas Piketty’s Capital in the Twenty-First Century (itself an attempt to update Marx’s perhaps most famous work) is invoked as proof that extreme economic inequality is inexorably produced by capitalism. Wolfgang Streeck, meanwhile, has influentially argued that the contemporary crisis is simply a manifestation of “an endemic conflict between capitalist markets and democratic politics.” It is, as he puts it, a “utopian” fantasy to assume the two can be reconciled.

What these thinkers miss is that it was only through a belief in the primacy of politics, as instantiated in the postwar social democratic settlement, that capitalism and democracy proved able to coexist amicably. Without the economic growth generated by capitalism, dramatic improvements of Western living standards would not have been possible. Without the social protections and limits on markets imposed by states, the benefits of capitalism would not have been distributed so widely, and economic, political, and social stability would have been impossible to achieve. A tragic irony is that the very success of this social-democratic compromise made it seem routine; we forget how transformative it actually was. Partially as a result, social movements were often slow to react when at the end of the twentieth century the West began abandoning this compromise. This has brought the reemergence of a form of capitalism Marx would have recognized: prone to crises, growing inequality, social conflict, and in tension with democracy.

Key to the democratic left’s success in the past was a conviction that a better world was not inevitable, but achievable, and that its job was to bring that world into being. As the social-democratic critics of Marxism realized over a century ago, and as I’ve noted in these pages before, the most important thing that politics can provide is a sense of the possible. Against Marxist economic determinism and liberal laissez-faire, they argued that it was possible, indeed necessary, to use political power to maximize capitalism’s upsides while minimizing its downsides. The result was the most successful political movement of the twentieth century, one that shaped the basic social-democratic order that is hanging by a thread today across Europe. The problems of the twenty-first century may be different in form, but they are not different in kind. The goal of the left must now be figuring out how that accomplishment can be repeated during the contemporary era.

Sheri Berman is a professor of political science at Barnard College and a member of the Dissent editorial board.

Read more on Marx and Marxism in the Dissent archives.