Notes on Marx, Hayek, and globalization

MARX'S REVENGE: THE RESURGENCE OF CAPITALISM AND THE DEATH OF STATIST SOCIALISM by Meghnad Desai. “In the triumphant resurgence of capitalism-and, indeed, its global reach—the one thinker who is vindicated is Karl Marx. Not only that. The demise of the socialist experiment inaugurated by October 1917 would not distress but cheer Karl Marx if, as an atheist, he occupies any part of Hell, Purgatory or Heaven. Indeed, if it came to a choice between whether the market or the state should rule the economy, modern libertarians would be as shocked as modern socialists (social democrats et al.) to find Marx on the side of the market.”

So writes Meghnad Desai in Marx's Revenge, one of the sharpest, most engaging books I've had the pleasure of reading in years. Desai, the Director of the Centre for the Study of Global Governance at the London School of Economics, offers a brilliant history of Marx and Marxism, detailing the much revered (and reviled) thinker's intellectual roots, his critics, revisionists, and disciples, and his decidedly positive view of the phenomenon we now call globalization.

In essence, Desai makes the case for “classical Marxism,” the nineteenth century variety that studied Adam Smith's Wealth of Nations, championed free trade, and opposed tariffs and other economic controls. Capitalism, Marx argued, will not end until it has exhausted its progressive potential. Given the tremendous growth now occurring in India and China, the end appears far from imminent. “The continuing dynamism of capitalism at the beginning of the twenty-first century,” Desai writes, “is Marx's revenge on the Marxists—on all those who, in his name, lied and cheated and murdered, and offered false hope.”

For Desai, today's globalization is a revival of capitalism's late nineteenth century phase, which was increasingly global until it was brought to a screeching and bloody halt by the horrors of the Great War and the rise of “capitalism in one country” (USA) and “socialism in one country” (USSR). Desai traces these developments, offering an economic history of the past one hundred and fifty years. Early chapters provide concise, illuminating overviews of Smith and Hegel, while in later pages Desai draws vivid intellectual portraits of some of capitalism's keenest students, including Rosa Luxemburg, V.I. Lenin, Ludwig von Mises, Joseph Schumpeter, and John Maynard Keynes.

Notably, Desai shows real interest in the ideas of F.A. Hayek, particularly Hayek's emphasis on spontaneous order, unintended consequences, the signaling function of prices, and the division of knowledge. In an earlier essay, in fact, Desai skillfully distinguishes between neo-liberalism, which he considers a right-wing variant of twentieth-century central planning, and libertarianism, which he describes as “organicist,” or holding the nineteenth century idea of the economy as a self-organizing system: the result of human action not human design.

Thus, we find many of today's conservatives (neo-liberals) advocating control of the money supply (via a central bank, one of the hallmarks of the command economy), protectionism for “vital” industries (consider Bush's tariffs on steel and shrimp), and massive subsidies for corporations and agribusinesses. Libertarians, on the other hand, advocate universal free trade precisely because it is so progressive, undermining the privileges, hierarchies, and traditions beloved by both the left and right—a process Schumpeter likened to a “gale of creative destruction.”

Or, as Hayek writes in “Why I Am Not a Conservative,” the epilogue to his book The Constitution of Liberty: “So far as much of current governmental action is concerned, there is in the present world very little reason for the liberal [Hayek's preferred term for libertarian] to wish to preserve things as they are. It would seem to the liberal, indeed, that what is most urgently needed in most parts of the world is a thorough sweeping away of the obstacles to free growth.”

As Desai shows, Marx would have agreed with Hayek on this point and a few others besides.