Marx, Engels and the Squalidization Insufficiency March 5, 2014Posted by olvidadorio in Economics.
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Marx and Engels are commonly ridiculed for predicting the proletarian uprising with “scientific certainty”. Both were convinced that capitalist exploitation would inevitably lead to further impoverishment of the working class, to ultimate squalor and that resistance would naturally arise: Capital’s scramble for profits and greater power would depress wages, in turn decreasing buying power, further exacerbating cost-cutting pressure on capitalists, etc… The cycle of the market would form a screw, digging deeper into its own demise.
Now let’s check history to see how well that went… Oops. Amongst the most common and obvious snides to be heaved at this prediction of proletarian uprising has been that it simply didn’t happen. Granted, it did not. Which, if you think like me begs the question: Why?
A commonly held belief is that consumption was so exorbitant that there was no chance for a downward spiral to develop. The industrial nations “opened up” ever new “markets” continuously (i.e. found a state or swaths of individuals willing and able to buy something new), to a point where demand for labor would continue to rise, allowing workers to negotiate for higher wages and ultimately more buying power (i.e. new markets), keeping the wheels of consumption and production in constant spin.
While this effect truly did occur (granted, with many hiccups and anomalies along the way) there is an underlying monstrous factor which mostly goes completely overlooked:
What Marx, Engels, as well as their critics failed to see (or foresee) was the sheer abundance of resources we found and were able to pull out of the earth, particularly using machines. With these means only were we able to feed the endless gluttony of human consumption and do this magic thing called “opening up new markets”. Without the resources to build stuff, there’s not much of a market to open. Only because of the extraction of fossil coal, and later oil, we were able to expand industrialism’s productive fruits to larger and larger swaths of the world population, and most essentially: We were able to do so without any skin off the elite’s teeth. They could get rich, everyone could get rich… It was all the better and none the worse. (simplified)
It must however be noted that this effect is a gigantic historic anomaly: For the overwhelming majority of human existence (on the basis of which, naturally, Marx & Engels made their predictions, whether they believed so or not), resources were a zero-sum game. For higher-ranking individuals to get ahead, others must be reduced to squalor. This has been the case from Pharaonic times all the way to the modern-day garment factories of Bangladesh.
The modern-day globalized garment factory is a clear example that capitalism has no built-in compunction about continuing to treat humans like dirt, just the same as the system operates fine while turning paupers into consumers (and the other way around). Conversely, just as we can find pockets of the ancient economic zero-sum game extending into the upward growth-slope of early industrial capitalism (i.e. Bangladesh), we can also find it cropping up again within the economics of decay and late-stage capitalism.
Such is basically the profit-model of low-wage and no-wage enterprises like Wal-Mart (the poster-child bad boy) or Amazon (the slicker one): Destroy healthy-margin local business, suppress the class of people doing the actual work to significantly lower social status and wealth. This is acheived by exploiting modern means of communication and control, as well as a more orderly and uniform society with ever more complex schemes of regulations and legal pitfalls (favoring the large) to build bigger and more brittle control structures. Finally you skim off riches at the top of a much wider and shallower pool. The recipe is simple: lower margins off more items. This is a resource-poor, non-growth (at least in any valuable sense of the term), zero-sum profit model. It comes perhaps as no surprise that such a model arose just about in a time when the USA’s abundant mineral wealth began to wane.
To be clear, our marvellous historic anomaly of bountiful resources is ending as we speak. The world once again has become a zero-sum game — or is at least in the process of becoming such. Yes I know, it may not feel that way yet, but this is mainly because we’re just tearing through the remaining resources at a faster rate while simultaneously fine-tuning our processes so as to do the same with less. Nevertheless there will have to be an adjustment of our overall mentality to accommodate the reality of a bounded world. Furthermore I would posit that our economic world-view and economic theory will follow course. (I – for one – predict a resurgence of the ill-advisedly maligned physiocrats.)
Of course, none of this means there will be a proletarian uprising in western industrial nations of any sorts, but that’s another topic for another time (and perhaps not at all)…
As a final note: I do wonder to which extent one might apply Marx’s theory to present-day China. After all, it is an advancing industrial nation bumping up against resource constraints. — Hence it might not get to play the game that saved us western industrialites from squalidization.
I know that so far the Chinese economy has been able to play the expanding-markets and rising-pay game successfully. However, even after throwing the American consumer under the bus (with a little help of the US elite) and outsourcing much of their harsh working conditions to other countries (southern Asia, Africa), Chinese growth in terms of physical wealth to the masses will falter. What will happen then, once looming shortage in raw materials builds pressure to either taper off wage increases or speed up inflation? (This pressure arises since the elites will need to limit mass consumption if they want to maintain their accustomed level of access to capital returns and material goods. The peeling off of the US-American lower- and middle class is an example of this effect in slow-motion.)
All this depends on how long China can continue to ride the upward slope and build up a system-affine middle class. Once real difficulties kick in though, setting the stage with an external military threat might be a good option to provide a mental framework to the masses, in order to mediate as to why their lot is not improving. This is both expedient and natural, as there will be growing geopolitical rivalries involving China, shifting from the US to the rising Russian Federation.
However, even given this militaristic pressure-release valve, expect more cunning and ambitious elements within the Communist Party of China to start re-discovering their “red roots” (maybe in a form of palace revolt) in order to ride the rising tide of discontent.