Tuesday, October 03, 2006


Notes from our discussion of section 2: Bastiat and Carey

Notes by Martin Thomas
This passage stands apart from the rest of the Grundrisse. It was written earlier than the rest. It does not fit in to the Introduction or either of the two "chapters", on money and on capital. It has the character of a more-or-less autonomous, self-contained essay.
However, it chimes in with the line of thought of the Grundrisse in its attitude to capitalist development. As in the body of the Grundrisse, Marx sees capitalist development as disharmonious, but as revolutionary and progressive precisely in its disharmony, in its tendency to develop the contradictions which will contain with them the possibility of revolutionary conflict leading to a freer development of humankind.
His attitude here both to capitalist development in general, but also to the question of free trade and protectionism, is the same as in his Speech on the Question of Free Trade from 1848 - the only early text of his apart from the Communist Manifesto and The Poverty of Philosophy which he reckoned worthy of mention when he wrote his Preface to the Contribution to the Critique of Political Economy in 1859. Marx, and Engels after Marx's death, would argue that same attitude on free trade and protectionism right through to Engels' death in 1895.
In 1848, Marx lambasts free trade. "To sum up, what is free trade, what is free trade under the present condition of society? It is freedom of capital". But then he declares: "Do not imagine, gentlemen, that in criticizing freedom of trade we have the least intention of defending the system of protection.
"One may declare oneself an enemy of the constitutional regime without declaring oneself a friend of the ancient regime... In general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade".
The US economist Henry Carey (1793-1879) was a protectionist - motivated, so Marx writes, by an idealisation of autonomous capitalist development in the USA, which he wanted to protect against the destructive influence of the more-advanced capitalist development of England.
Marx criticises both Carey's naively optimistic attitude to autonomous capitalist development in the USA, and his naively "pessimistic" attitude to world-market capitalist development. "Hence when the economic relations confront him in their truth, i.e. in their universal reality, his principled optimism turns into a denunciatory, irritated pessimism".
Marx's criticism of Carey has great relevance for a criticism of the "Yankophobia" which substitutes for Marxism among much of the left today - making a reactive, negativist hostility to the USA serve in place of a dialectical criticism of capital.
Marx remarks that: "What Russia is, politically, for Urquhart, England is, economically, for Carey". David Urquhart was a maverick political figure who blamed all political evils in the mid-19th century world on Tsarist Russia, and thus ended up supporting or endorsing reactionary forces which came into conflict with Russia such as the decaying Ottoman Empire.
Marx too, of course, was hostile to Tsarist Russia in his own way. But much of the left today is hostile to the USA in the way that Urquhart was hostile to Russia. Any force in conflict with the USA, no matter how reactionary and sectarian - Milosevic, the Taliban, Saddam Hussein, the current Sunni-supremacist "resistance" in Iraq, Hamas, Hezbollah - gets at least de facto support.
To the economic processes unleashed by US-dominated globalisation - which are much more analogous to the impact of newly-industrial Britain on the 19th century world than to anything Tsarist Russia did internationally - they react with "denunciatory, irritated pessimism" like Carey's, while to national-capitalist development (i.e. development of the same processes on a more primitive scale) in Venezuela, Iran, or wherever they react with credulous optimism.
The parallel is given added bite by the fact that the idealised nation which Carey is championing against the blight of the world-market superpower of the time (Britain) is none other than the USA, the world-market superpower of today.
Ideas similar to Carey's were influential among leftish people in the USA for years to come. I don't know whether Carey's writings, specifically, were influential. The short-lived but briefly sizeable Populist movement of the late 1880s and early 1890s was genuinely leftist, but tended to identify its enemy not as capital but as foreign (meaning British, or sometimes Jewish) capital. The USA had high tariffs for this whole period.
Marx's critique of Carey as idealising a local, part-developed, exceptional manifestation of the same capitalist relations to "the universal reality" of which he reacts with bewildered pessimism maybe also has some relevance to the left Yankophobia of today which harbours under its hostility to the US a vastly exaggerated notion of the potency of US capital. I'm thinking of the attitude which assumes that every evil in the world is engineered by the CIA - i.e. that the CIA has the competence and the power to make all those evil things happen, to make them happen according to plan, and to push aside all other factors in the situation. Or of the attitude which assumes that world-market capitalist development everywhere is nothing other than a creation of and a service to US multinationals.
In Marx's critique of Carey we can also see some pointers to what's wrong with the "anti-state" free-marketeers, who argue that capitalism would work fine if it were not for the blundering and interference of the state. Carey blames state influences for disharmonies. Marx replies that "these state influences, public debt, taxes, etc. grow out of the bourgeois relations themselves". (Marx does not explain exactly how the bourgeois state "grows out of the bourgeois relations themselves" - that is a theoretical task he outlined but left unfinished at his death).
The counterpoint to Marx's criticism of Carey in this essay is a criticism of the French economist Frederic Bastiat (1801-1850), who was a free-trader, extolling "Anglo-American" developed-capitalist relations as a harmonious alternative to the "stunted French form" of capitalism, capitalism "in a land where [the] laws [of bourgeois society] were never allowed to realise themselves".
Marx's criticism of Bastiat gives us many pointers today against the idealists and optimists of capitalist globalisation. Marx notes that "Bastiat... presents fantasy history, his abstractions sometimes in the form of arguments, another time in the form of supposed events, which however have never and nowhere happened". He presents a thin, abstract argument, in contrast to Carey's being "rich... in, so to speak, bonafide research in economic science... catalogue-like erudition".
Aren't the "optimists" of capitalist globalisation just like that? They have to concede the contradictions - the growing inequality, poverty, and marginalisation alongside burgeoning riches. But then they protest that if it all happened free of interferences, impediments, and "outdated" restrictions, it would be much more harmonious. Where can we see that actual proof of that harmony. Only in "fantasy history... abstractions... supposed events, which however have never and nowhere happened".
In the discussion, we looked at modern bourgeois economics. Some people said that the bourgeois theorists are defined by an adherence to an ideal of balanced and harmonious growth. I said I don't think so.
A theoretical scheme of (static) general equilibrium plays an important role in some bourgeois economics, from Walras (1874-77) through to Arrow and Debreu (1959), who finally formalised it mathematically in a fairly thorough way. But to identify modern bourgeois economics with general-equilibrium doctrines is grossly simplistic.
Take, for example, the famous contemporary general-equilibrium theorist Frank Hahn. How does he argue for the importance of the mathematical theory of Arrow-Debreu? Emphatically not by claiming that it is an accurate picture of reality. "The Arrow-Debreu equilibrium is very useful when for instance one comes to argue with someone who maintains that we need not worry about exhaustible resources because they will always have prices which ensure their ‘proper’ use... A quick way of disposing of the claim is to note that an Arrow-Debreu equilibrium must be an assumption he is making for the economy and then to show why the economy cannot be in this state. This negative role of Arrow-Debreu equilibrium, I consider almost to be sufficient justification for it..." (On the notion of equilibrium in economics, 1973). And to people who object to developing any general-equilibrium theory at all, Hahn replies that Marx's reproduction schemes, worked out subject to the condition that they balance, are just as much a "general equilibrium" scheme as Arrow-Debreu.
And then there are plenty of bourgeois economists who are much more hostile to general-equilibrium theorising than Hahn. The whole "Austrian school" - Hayek and similar writers - is very hostile to it, and stresses what they see as the necessary unpredictability of economic activity.
In fact, the main drift of modern bourgeois theory is to emphasise the inevitability, the irreducibility, and the valuable creative role of disorder and unpredictability. Many modern bourgeois theorists are vehemently critical of past bourgeois attempts to guide bourgeois economies - claiming that, based on inadequate information, they are bound to be wrong and have perverse results - and dismiss "socialism" as only an extreme form of those mistaken attempts.
To try to knock down modern bourgeois economics by knocking down general-equilibrium theory would be to miss the mark.
Finally, in our discussion Murray drew attention to Marx's scorn for the bourgeois economists of his time. After Smith and Ricardo, he said, they had produced only "eclectic, syncretistic compendia... [or] deeper elaboration of individual branches... a literature of epigones..." Isn't some of that criticism an appropriate comment on the poverty of Marxist economic-theoretical work since Marx, or at least in recent decades?

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