Marx's Revenge: The Resurgence of Capitalism and the Death of Statist Socialism

by Meghnad Desai

In this provocative and enthusiastically revisionist book, the distinguished economist Meghnad Desai argues that capitalism’s recent efflorescence is something Karl Marx anticipated and indeed would, in a certain sense, have welcomed. Capitalism, as Marx understood it, would only reach its limits when it was no longer capable of progress. Desai argues that globalization, in bringing the possibility of open competition on world markets to producers in the Third World, has proved that capitalism is still capable of moving forwards. Marx’s Revenge opens with a consideration of the ideas of Adam Smith and Hegel. It proceeds to look at the nuances in the work of Marx himself, and concludes with a survey of more recent economists who studied capitalism and attempted to unravel its secrets, including Joseph Schumpeter, John Maynard Keynes and Friedrich Hayek.

Genres: Economics, History, Politics, Nonfiction, Philosophy, The United States Of America, Russia

320 pages, Hardcover

First published April 1, 2002

About the author

Meghnad Desai is emeritus professor of economics, London School of Economics, where he was also founder and former director of the Global Governance Research Centre. He is a member of the House of Lords and chairman of the Official Monetary and Financial Institutions Forum.

Reviews

[Stephen · Rating 4 out of 5]

What I got from this book I wasn't expecting at all. For one, I received a greater appreciation for American influence in 20th century history. For once it isn't the usual narrative of divide and conquer so that the world could be flooded with our crappy entertainment values.

Most writing having to do with economics is dull in the extreme for beginning from a position of orthodoxy. I can't stand it. And yet I'm interested in it. In the autumn of 2006 I overheard - eavesdropped, actually - an Irish agitator "mentoring" a working-class Bostonian at the Au Bon Pain across from Harvard, talking about, "you know who's going to get screwed in the next downturn, don't you? New homeowners. The fucking banks own 'em." The working class Bostonian with hoodie talked about "mobility (of seeking work) isn't such a bad thing." They were pretty much spot on about what happened two years later with the financial crisis. No one else I was reading (or overhearing) was speaking that way. The Bostonian was recommending a small bookshop in Davis Square to the Irishman. "It has a small Marxist section," he said excitedly to the point of lifting off his seat. (Sadly the shop is now gone.) "I looked for the Gramsci you were talking about the other day but the only copy they had was all Xeroxed and shit."

If you had a more liberal approach to Marx's writings you should be able to speak about Hayek in the same breath as Marx, which Desai does. He tries to frame Marx as an Enlightenment figure, one more classically trained in literature than usually given credit for. Desai's critics call this kind of reading perverse. It sounds too conservative. Marx was a revolutionary and that's that.

"Desai is wrong about austerity." "He is wrong about the 2008 collapse." "He leaves no room for fiscal expansion and is an apologist for neoliberalism."

I have no way of knowing if these criticisms are valid or not precisely because I've avoided economics for it lacking literature. Not to mention literature being written under the pretense of transcending economics.

All in all, Desai's book helped me rethink history, specifically what terms like "neoliberal" and "state intervention" really mean. That's something few Marxists or conservatives have been able to get me to do. It was extremely beneficial to read this book against "lost cause" literature like Deutscher's work on Trotsky. Suddenly all the post-1968 liberal writers I once admired (Hitchens, Eagleton, Judt, et al) look empty in comparison to those who are not giving us moral positions with which to judge others but for how to think more democratically. Few of any of them (including Desai) can hold a candle to Tocqueville though, who for my tastes still reigns supreme. That man was truly a poet; he could see it all.

[Christopher · Rating 4 out of 5]

Two books in one. First, it is a history of economic thought from the perspective of a well-respected Marxist economist from the London School of Economics who has (at least somewhat) embraced neoliberalism. The history if fascinating and is an excellent introduction to Marx's writings and economic models, as well as the subsequent legacy from Lenin to Rosa Luxembourg and to the humanitarian atrocities of Stalin and Mao and beyond. For me, it was fascinating to see the difference between Marxism of the west vs the east, which ultimately became communism through democracy and after capitalism, rather than communism through dictator and without capitalism.

This brings us to the second purpose of this book. Desai argues that Marx would have embraced the version of capitalism that endured by the end of the 20th century. Foremost, Marx, a humanist, would have been appalled at Lenin's and especially Stalin's use of his name. Even in his own life, commenting on Germany and France's first attempt to create a socialist party, Marx responded, "je ne sais pas marxiste." Let alone the lack of democratic representation under Stalin and Mao. Marx's first goal was the emancipation and freedom of the lower class. He also clearly argued that Socialism was the next step AFTER capitalism had run its course. Once innovation stopped, and the benefits of capitalism had been reaped, the oppressed working class would receive their due. What Marx did not anticipate is the increased democratic representation of the working class after his death. (Only 20% of men in the UK had the right to vote in 1870, for example). This increased proletariat power in government allowed for more powerful labor unions, and greater working conditions.

For context, the German Social Democratic Party, the country's first, was considered a threat by Bismark, because they advocated for democratic representation, an 8-hour work day, and no child labor. Not exactly "communistic", today.

Desai's Marxist revisionism may be a bit much to say he would have embraced Reagan/Thatcher Neoliberalism, but he does add nuance to Marx's complex and unclear writings. Perhaps Marx's legacy, today, in the 21st century is a bit more than, as Paul Samuelson called Marx, "a minor post-Ricardian."

[Dan · Rating 4 out of 5]

first, let's explain the four stars... for about two years now, i've been half-heartedly trying to give myself some basic understanding of economic history. it's not the sort of thing that comes easy to me - in fact, the experience has lead me to believe i may be slightly dyslexic (for real!) - but i think it's been a worthwhile endeavor. and as a basic history of economics - the kind that begins with adam smith and ends with globalization - marx's revenge is about as lucid as it gets. don't get me wrong - portions of it still went over my head. but i've come to believe that a book on economics that doesn't occasionally leap past my head is almost certainly dumbing shit down in a major way.

though desai's book is clear and informative, it is certainly not neutral. it not only has a clear agenda - it has a really weird clear agenda. if i'm grasping the thesis correctly, desai essentially argues that:

* almost all of history's so-called "marxists" have read him insufficiently and misinterpreted many of his ideas (fair enough).
* the marx of the communist manifesto is a lot different than the marx who decided to devote three gigantic volumes to the history of capitalism (i'll take desai's word for it).
* the project of globalization was well under way in the early 20th century, but was interrupted by two disastrous world wars implemented by state apparatuses influenced by a variety of economic isolationisms, with varying agendas (things get weirder here).
* marx believed that capitalism would only end when it had exhausted its ability to adapt and innovate, and our current late/globalized/neoliberal/reagan/thatcher capitalism has proven that it is still vital (maybe, but i find this point depressing).
* therefore, being that the communist experiments of the 20th century proved problematic, marx's real influence is yet to come (but don't hold your breath, because desai doesn't say much about how).

got all that? as you might imagine, it's kind of tough to determine where the author stands in relation to all of this. he's obviously sympathetic to marx in a unique sort of way. he's also extremely skeptical of state power at certain points (particularly during his confusing pseudo-critique of keynes). add to that skepticism an underlying affection for markets and he can sound libertarian from time to time as well. but he also seems to think that if capitalism confronts a truly catastrophic crisis, marx may still be the key a truly revolutionary society (if read thoroughly).

i'm not sure i grasped all of the finer points of this book. and i'm certainly not sold on a lot of its pro-market bullet points (if that's even what he intends them to be). but i don't read books to have my own biases parroted back at me. marx's revenge is a remarkably argued polemic... regardless of whether or not i buy into it.

[Richard · Rating 4 out of 5]

A provocative treatment of Marxism that argues Marx's mature theories regarding capitalism as espoused in Capital did not - contra Lenin and Stalin - necessarily envisage a fatal crisis within capitalism born of inevitably falling profits. Desai argues that Marx, left room for the possibility that capitalsim could endure and, moreoever, was rightfully leary about those who sought to ameliorate capitalism's excesses via intervention within the market.

Desai reads Marx as a critic of capitalism who apprecited the fact that capitalism represented an advance over previous historical epochs. Furthermore, globalization in many ways represents a culminating capitalist order that Marx would approve.

As a Marxist of Indian heritage coming of age during the height of the Keynsian ascendency post 1945, Desai was clearly shaken to the core by the dissolution of the Soviet Union, the triumph of free market ideology, and the popularity of Thatcher and Reagan. However, Marx's Revenge was written prior to the Financial Crisis of 2007-2008 and consequently his critique of Keynes seems, in retrospect, premature. (Although, it must be added, subsequent writings appear to look askance at folks like Paul Krugman who view capitalism's most recent crisis as a vindication of Keynes.)

[Joe · Rating 4 out of 5]

A Marxist Against All Forms of Romantic Anti-Capitalism and Revolutionary Marxism

The Argument

Our author, Meghnad Desai, shocks marxist revolutionaries and romantic anti-capitalists everywhere when, at the very beginning of the book (p. 3), he tells us that Marx would prefer the market to rule the economy rather than the state ruling the economy. "The idea that socialism would be brought about by the state was alien to everything he stood for. (p. 4)" Yes, I agree. The market forces us to be free(r); in the name of security, states (socialist or otherwise) must always hide that freedom from us. Marx thought that the market forces us to find both our independence (from God and State) and our interdependence, and therefore, our Humanity. - And who knows? Then, eventually, perhaps one day to dialectically change even that!

Unlike our romantic anti-capitalists, Marx was a progressive and an admirer of technology. As one of the two greatest dialecticians (he stood Hegels dialectic right side up) of the nineteenth century he knew full well that nothing in the material or social world disappears by magic. Regarding the change from the capitalist mode of production to the socialist mode of production Desai argues throughout this book that the genuinely Marxist understanding is that "any particular mode disappeared only after its full potential had been exhausted... (p. 7)" And our author adds that there isn't anything that can change that.

In a nutshell, it is this that our author is trying to prove throughout this book. He is arguing that Capitalisms full potential has yet to be realized! The notion that Marx could have supported the Russian Revolution as it historically developed, that is, socialism being foisted upon a non-capitalist state out of the blue, without any other socialist states in europe, is silly -if not hilarious. Indeed, even the bolshevik party didn't initially believe it! They "fully expected a chain of revolutions to break out in Germany, France, and perhaps even England. (p. 8)" It didn't happen. And in trying to do what Marx believed could never happen, the communist party of Lenin created one of the greatest abominations that the world has ever seen.

But according to our author, this disgraceful episode was barely Marxist. "...Marx had the last laugh. He was not wrong, not simplistic, not mechanical. Capitalism would not go away until after it had exhausted its potential. (p. 9)" Period. But this is what our marxisant revolutionaries will never believe. As the USSR decayed our 'marxist' intellectuals then put their faith in the Far East. But over the last two decades China too has embraced capitalism. Now these 'marxists' "desperately hope that some limits will be found to global capitalism. Perhaps the environment. Perhaps the resurgence of the nation-state, or a regional superstate. Or even a global-level co-ordination among the nation-states through the UN or G-7 or G-77. Something to tame capitalism, to stop its rampant progress."

Of course, Marx would never have looked for the limits of capital from any 'external agents'. Is Capitalism then eternal? No. It "will be in the daily practice of the people working the machinery of capitalism that its limits will be felt, and it will be overcome by them. (p. 10)" Exactly when does this happen? No one knows. Our author pointedly says that "Marx was an astronomer of history, not an astrologer." In order to demonstrate this our author presents in this book a theoretical-historical study of capitalism that draws not only on Marx, but on Adam Smith and Hegel, and Schumpeter, Keynes, Hayek and Polanyi too. In this book our author intends to show that not only have all the purported ways to overcome or tame capitalism have failed, but that this failure is itself predicted by Marx!

Above I have only limned the broad contours of the argument that our author presented in the beginning of this book. But everywhere and always, it is the details that matter. I leave it to the interested reader to pursue them. For what it is worth, I found the argument quite convincing...

Some Quotes

I know that many of you doubt that Marx ever had anything good to say about Capitalism; so I will share a few quotes.

1. "No social order ever disappears before all the productive forces for which there is room in it have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore, mankind only sets itself such tasks as it can solve; since looking at the matter more closely we will always find that the task itself arises only when the material conditions necessary for its solution already exist, or are at least in the process of formation."
(Marx, Contribution to Political Economy. Quoted by Desai, p.44)

One could argue that Desai hangs his whole argument off this quote. It would be, I think, better to say that the genesis of his argument begins precisely here.

2. Next, Desai also argues that, in a qualified sense, Marx was also an imperialist! Of course, he is so only in the sense that he believes that it is capitalism, and only capitalism, which can and must overcome the earlier stages of development of the colonies.

"Marx had welcomed the British East India Company's role in destroying the old precapitalist institutions in India; his only complaint was that they had not finished the job properly in 1857, when the company was replaced by the British government. He and Engels had approved of France's takeover of Algeria. In Marx's view, capitalism was a progressive force which had to destroy older modes even if this destruction was effected by a colonial power. This embarrassing legacy was suppressed or explained away. Marx became cast as a firm anti-imperialist writer as well as an anticapitalist one. The Narodniks' delusions about skipping the capitalist stage altogether and jumping on to socialism were now given Marxist garb."
(Desai, pgs. 154-155)

This 'Narodnik delusion', that one could somehow go directly from a peasant economy to a socialist one has, since the Russian Revolution and the bolshevism of Lenin and Trotsky, unfortunately become ever more so the generally accepted marxisant understanding. But this Third Worldist gibberish was never taught by Marx!

3. From Marx himself we read the following account of capitalist progress:
-...the exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations -- production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfahig], hence cultured to a high degree -- is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds.
Thus, just as production founded on capital creates universal industriousness on one side -- i.e. surplus labour, value-creating labour -- so does it create on the other side a system of general exploitation of the natural and human qualities, a system of general utility, utilizing science itself just as much as all the physical and mental qualities, while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange. Thus capital creates the bourgeois society, and the universal appropriation of nature as well as of the social bond itself by the members of society. Hence the great civilizing influence of capital... its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry. For the first time, nature becomes purely an object for humankind, purely a matter of utility; ceases to be recognized as a power for itself; and the theoretical discovery of its autonomous laws appears merely as a ruse so as to subjugate it under human needs, whether as an object of consumption or as a means of production. In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent, encrusted satisfactions of present needs, and reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs, the all-sided development of production, and the exploitation and exchange of natural and mental forces.
But from the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it, and, since every such barrier contradicts its character, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension.-
(Marx, Grundrisse, NY. 1973 p.409-10.)

So yes, Marx certainly includes Capitalism (and Socialism, of course) within the universalistic Enlightenment project (a project that originates in europe, btw) and he admires it for that. The romantic anti-capitalist left, like the fascist right, can only despise the progressivism of Marx. Marx rightly, in my opinion, underlines the localism and 'nature idolatry' of all previous social formations. He admires capitalisms destruction of all this. Of course it goes without saying (or at least it should) that he sees the often terrible human cost (we are all merely tools of and cogs in the machinery of capitalism) and that he always sees that capitalism itself needs to be overcome.
Apologies for this long quote but I thought it nicely nicely brought out both the wonderful and dreadful nature of Capitalism.

Thoughts

To put it as bluntly and tersely as possible, thus leaving out many moderating details, Marx thought that Capitalism was the greatest thing that ever happened on the face of the earth. Except, of course, for the Socialism to come. If you want to know how socialism could (in the late modern period) still rise in spite of the romantic reactionaries and revolutionary fetishists that have called themselves 'marxists' since very near the beginning of the movement, read this book. Only four stars because one day I would like to review Marx on Kapital (one of the later volumes) and give him five.

Desai argues, quite correctly according to the original theory of Marx, that the only way Capitalism will come to an end is when it is no longer a progressive force. (Again, by 'progressive' Marx merely means whether or not Capitalism can still increase the total productive force of human labor.) Well, this could be exactly what 'Globalization' is - the last stage of Capitalism. But instead of welcoming it; the revolutionary and romantic Left opposes it - and thus they can (if successful) only extend the life of Capital indefinitely. This is a brilliant argument put forward by Desai, - and I think it may even be correct!

Now, how could our current globalization be stopped? While many leftists retain hope that the 'global south' will somehow stop globalization, I agree with our author that developments in China have shown that this hope is almost certainly yet another illusion. The only other possibility I see now is that nineteenth century geo-politics proves prophetic and the dichotomy between land-power and sea-power proves insurmountable and the tsunami of globalizing capital breaks up on the bleak landscape (or dries up in the frigid deserts) of central eurasia. The enfants on the left may even attempt to show that this last is itself somehow 'progressive'; but they would be terribly wrong. Their attempts to prove this would merely be the past; mythified, sanitized and ideologized. Geopolitically speaking, land-power is inherently 'the past'. But the geopolitical contrast of land-power and sea-power will one day (I hope!) be the subject of another review.

So then, did Marx not make any mistakes? Of course he did, everyone does. The largest one was his belief that the transition to socialism was near. I believe his revolutionary work in the Communist League and the First International was a waste of time. His efforts were more profitably spent in his never ending study of political economy. And to be honest, I don't think that the process of globalization is anywhere near complete. Even if Desai is correct in his understanding of Marx, the arrival of socialism might still be several centuries from now. So no, I do not think that any of us living today will know whether or not Desai is correct in his understanding of Marx.

Again, Marx's understanding of the inevitability of the fall of capitalism, and the resulting rise of socialism, could indeed be right. The problem is that he wildly over-estimated the 'lateness' of the capitalist mode of production. In other words, the revolutionary aspect of his thought was at war with the economical/historical/political/sociological aspects of his thought. The latter could still be true even if the former (that is, the revolutionary) was entirely wrong. Marx, at times, fiercely criticized utopian and romantic anti-capitalism. As fate would have it, today it seems that revolutionary communism was, in effect, but another example of these two futilities.

In Closing

I should close by pointing out that in this book there are many quite interesting and surprising points that I have not mentioned in this short review. For instance, Desai discusses how in Capital Volume II Marx himself seemingly indicates the possibility that capitalism could perpetuate itself indefinitely! See for instance chapter 5 and 6 (especially pages 69 - 74) of this book regarding this. What? Wait a minute! In Capital, volume 1, chapter 32, it appeared pretty clear that capitalisms doom was inevitable. However our author argues that "all it says, in a rather roundabout way, is that the transition from capitalism to socialism will take less time than the transition from feudalism to capitalism. But that could mean anywhere between four and six hundred years. (p. 93)" (As mentioned above, the end of capitalism cum globalization might not be close.)

Also, another thought I found myself having while reading this is that if Lord Desai is right about how Marx should be read then Marx should never have achieved anywhere near the historical importance he surely has. Stripped of his revolutionism and also the romanticism/utopianism of his followers, who would Marx have been? Paul Samuelson once said that:
"From the viewpoint of pure economic theory, Karl Marx can be regarded as a minor post-Ricardian."
And, if Desai's understanding of Marx were to become the norm, of course this would be perfectly true ...until capitalism collapsed as Marx (again, as here understood by Desai) predicted. The Marx that Desai reveals is a Marx for economists and historians and sociologists only.
...And I guarantee that almost no one will be satisfied with that.

I found this book to be an exciting read. There are many points and details that Desai brings out regarding Das Kapital and its interpretation that I found quite intriguing. Whether you are a revolutionary socialist, a reformist socialist, a former socialist or a non-socialist, I believe you will find this book worthy of your time.

[Peter Harrison · Rating 4 out of 5]

This book is built on the idea of division in the thought of Marx between the Communist Manifesto written in 1848 when he was 30 and Capital, the result of 20 years of research into the political economy of capitalism with the first volume published in 1867 and the second and third volumes tidied up by Engels and published after Marx's death in 1883.

Desai's theory is that the fire-and-brimstone denunciations of the imminent collapse of capitalism belong to the younger Marx. By 1867 an older and wiser Marx's economic thinking suggests in fact that capitalism could continue to reproduce itself almost indefinitely, while remaining subject to cyclical instability. Desai considers it unfortunate that subsequent socialist thinking was he believes more influenced by the younger Marx's description of the inevitable death of capitalism than by his more sober analysis.

There is support for this idea that the later Marx believed capitalism was not at risk of imminent collapse in particular in the second volume of Capital and Marx's "reproduction schema" which suggest a stable capitalism able to grow continuously. While this is true I am more persauded (following Harvey) by the idea that what Marx in fact demonstrates is the improbability of the conditions for these schema remaining true over the long term, in particular the time taken to realise commodities during circulation. Coupled with some oddities in Desai's presentation (especially in the different implications of use and exchange value) make this interesting but not convincing.

Having outlined this proposition, for most of the rest of the book Desai follows the story of economic thought from Marx until the early 2000's when the book was written through marginalism, the Keynesians, Soviet communism, and on to the triumph of neoliberalism and the collapse of state socialism. This is an interesting summary, describing the development of economic thought from a left-leaning although not necessarily Marxist perspective. Desai assumes three essential approaches - capitalism, socialism 'within' capitalism (ie. reformist socialist parties), and socialism 'outside' capitalism (ie. Soviet state socialism).

The book ends with the the collapse of Soviet state socialism and the final disillusionment of western socialist parties and the victory of neoliberalism seeming to suggest that capitalism can indeed continue essentially forever, thereby validating the older Marx's analysis and disproving the theory of its inevitable collapse which had inspired Soviet communism. Desai doesn't foresee the financial crash, and while it is harsh to criticise him for that it is interesting to speculate whether his conclusion would have been different if the book had been written afterwards. In fact it seems that capitalism hasn't found the key to its revival in the return of globalism and the bypassing of the nation state as Desai suggests. The financial crisis has challenged all that, and while Marx's idea that capitalism would collapse hasn't been realised it certainly seems that it is set on a path that is a good deal less stable than proposed here.

This review is also on my blog here:
https://marxadventure.wordpress.com/2...

[Eric Hudson · Rating 3 out of 5]

If I were to receive a comprehension grade for this book, it would be a C/C+. Containing the technical writing of an intellectually rigorous international economics text book matched with witty historical and "current" commentary, this book is a brilliant and strenuous review of Marx, demonstrating his brilliance formed as the best student of capitalism. Its pretty amazing
especially considering how ignorant Americans are of his work.

The problem is that this book isn't accessible for those with out formal training in micro economics. Even I had a very difficult time understanding it. But it was a fun attempt

[Frederick Allen · Rating 4 out of 5]

An interesting Historical Analysis of the rise and fall of Keynesianism, Developmentism, Statist Socialism and non Free-Market Capitalism. I was expecting a bit more philosophical argument, but even without it, Desai's explanation of Economic History is accessible to the average person while still being rigorous enough for the Professional. If you want a brief overview of Marxist Theories and how they have influenced the history of Modern Economics I recommend this book. Marx has had his revenge, but I doubt if Marx would be happy about it.

[Kevin Lewis]

An attempt to clear the dirt from Marx's name, analyze his true predictions for the future of Capitalism and its eventual demise. Seems a bit self-defeating, but of course I haven't finished it.

[Ethan · Rating 4 out of 5]

Given the latest crisis in Capitalism, this book could use some updating. Still, a very intersting summary history of economic thought from Adam Smith to the (almost) present.