ECONOMIC PROBLEMS AND MARXIAN ANALYSIS by RICHARD D.

WOLFF

The last ten years in the United States have seen average real wages fall and
the incidence of proverty and homelessness rise. We have had very high rates of
inflation, unemployment, interest, and business bankruptcies. Some of these
rates were unprecedented in recent United States history, expecting world wars
and the Great Depression. Yet, in out very uneven economic system, the Reagan
tax cuts and defense spending pumped up many corporate balance sheets and
made rich Americans richer still. As happened before, the stock market
consequently flared in a speculative frenzy and then crashed. The United States
shifted from an international creditor to a debtor status. Basic industries were
crippled by foreign competition. Firms that made big profits used them to arrange
megamergers rather than to expand to rebuild industrial capacity. The
oligopolized banking structure became dependent on massive, uncollectable
loans both to foreign debtors and to wild speculators in the domestic energy and
real estate sectors. The collapse of medium and small farms remains endemic
across the country. The labor union movement declined sharply and now
represents barely a sixth of the non-supervisory labor force. The increased
inequality of income distribution sharpens social divisions and conflicts
everywhere.

Perhaps most significantly, the U.S. economy was and remains extremely
unstable (as well as uneven in how it distributes the social costs of its instability).
Not just stocks and bonds, but also dollar exchange rates, levels of industrial
capacity utilization, real estate values, and so forth, oscillated dramatically. After
severe recessions in the 1970s and early 1980s, another is now widely expected
for this year or next.

University and private forecasters missed virtually all of this with few exceptions.
Republicans and Democrats did no better. They have now hitched their political
wagons to one or another simple-minded "essential cause of our troubles." The
culprit is either the budget deficit, long-developing problems are transformed into
simple issues susceptible to quick fixes if only this or that character is elected
president. The economics profession -- at least that part honest enough to admit
it -- has been depressed at its incapacity to understand, let alone fore-see, what
happened or what is likely to happen. We face an economy out of control and
apparently beyond the reliable comprehension.

I want to argue that one component of this mess is the narrowness of what
passes for economic knowledge in the United States today. Of the two basic
alternative theories across the world today -- neoclassical and Marxian
economics -- only one is taught systematically in virtually all American
universities today. The same one is the shared basis of public discussions in the
media and debates among liberals and conservatives. Unable to draw upon the
insights of the alternative, Americans are left floundering within the narrow
confines of an economic theory increasingly inadequate to the problems they
face. The alternative, Marxian theory, approaches the U.S. economy very
differently. However, because of unfamiliarity with is basis arguments, we need
to devote a few sentences to them. Then we can sketch what the Marxian theory
can tell us about the U.S. economic today.

First, Marxian theory does not see that economy as a unified entity. Instead it
sees divisions: prosperity for some is recession for others, government policies
hut some and help others, inflations bring pain to some, profits to others.
Secondly, it focuses attention on a particular division in society because
neoclassical theory simply refuses to see or analyze it and because that refusal
blinds neoclassical theory to important aspects of U.S. economic and social
problems.

The particular division of interest to Marxists is class, but what they mean by that
differs from what most Americans think. Class refers to a kind of process which
divides people in almost every society. In any society, some people do the
"productive labor" to make the goods and services desired by that society. The
labor not only to produce the goods and services necessary for their own
standard of consumption. They always labor additional time to produce a
"surplus" which is distributed to others. This immediately raises the question for
Marxian analysis: who gets this surplus and who decides what is to be done with
it?

In every society, certain people receive this surplus as the obvious, necessary,
appropriate behavior in the culture of that society. In slave societies, the fruit the
slave labor is automatically appropriated by the slave master. In feudal societies,
peasants regularly deliver their surpluses to feudal lords. In capitalist societies,
laborers think it perfectly appropriate to pass the surplus they produce to their
employers -- as their "profits" - to do with as they please.

Those who appropriate this surplus then distribute it in ways aimed to ensure
their continued ability to appropriate surplus. They hire supervisors to make sure
productive workers pump out that surplus. They pay taxes for governments to
educate young people to become productive surplus producers and to be
satisfied in that position. They also keep part of the surplus to sustain wealthy
lifestyles that become the envy of laborers who hope, by being good surplus
producers, to earn enough to copy those lifestyles.

In the United States, the basis appropriators of most of the surplus produced are
corporate boards of directors. They receive the surplus -- profits -- produced by
productive laborers. They decide how to distribute the profits to keep their
surplus-generating corporations in business. In the 1960s and 1970s, however,
many U.S. corporations encountered several problems in keeping the surplus-
producing system going.

They had trouble selling what their laborers produced, because foreign capitalists
had succeeded in getting their laborers to work for less money with more efficient
machinery than U.S. corporations had installed. Fewer sales meant less surplus.
They also could keep less of what surplus they did appropriate from their
laborers, state, and local governments to finance social programs which, in their
view, did not help their profits. They had to use surplus as well to pay for such
"government intrusions" as environmental protection regulations.

Led by the major corporations, U.S. surplus appropriators reacted to these

problems by moving to reestablish the conditions of surplus appropriation in the
United States. They successfully pressured Democrats and Republicans to adopt
a program to achieve the following all at once:

-- lower taxes on corporations and wealthy investors

-- lower real wages

-- better terms for competing with foreign capitalists

-- abolition of costly government regulations These steps were implemented in

the later 1970s and especially under Reagan. The result was and continues to be
just those conditions described in the opening paragraphs of this article. Surplus
appropriation has gone up for many corporations. The "Reagan recovery" has
been good for them, even while it was a perfectly predictable disaster for so
many others.

This all-too-brief sketch of a Marxian analysis suggests two conclusions. First,

only systematic exposure to the subtleties of Marxian analysis will permit
Americans to learn, examine and tests its insights for use in dealing with current
problems. That would require a genuine opening of schools, college courses, and
public discussion to Marxian perspectives.

Second, different groups of the United States have different interests in regard to
economic problems. The problems of some are the solutions for others.
Government cutbacks may have hurt millions, but they permitted reduced
corporate taxes. Falling real wages may have pushed millions of women with
children to enter into wage labor and forced them to their families to undergo
difficult, painful, and costly adjustments, but they raised corporate surplus
 appropriation. The Marxian analysis of class reveals such important division
within the United States and examines their effects. It also suggests some
different ways to change the United States to deal with "its" economic problems.

I do not have the space here to detail these, but one deserve mention. Changing
the class structure is necessary to extract the United States from the endless
pressure of surplus appropriators (the small minority) who manipulate economic
conditions (the lives of the vast majority) to secure their positions as
appropriators. Suppose that the appropriators of the surplus were the same
people as those who produced it, that they arranged democratic means to
discuss how the surplus they produced would be utilized their economic power
and resulting political influence to make the economic serve their interests above
all else.

That dream has motivated many Marxist theorists as they have carefully
developed, changed, tested, and refined their complex class analyses over the
last 100 years. Their work poses basis, serious questions and challenges to the
current state of U.S. economic difficulties. It also offers powerful insights which
can help fashion changes adequate finally to overcome those difficulties. Will
U.S. universities continue to serve the narrowest of interest by fearfully refusing
to allow faculty and students to explore Marxian theory?

Source Citation (MLA 8th Edition)

Wolff, Richard D. "Economic problems and Marxian analysis." Monthly Review, June 1988, p.
38+. Academic
OneFile, go.galegroup.com/ps/i.do?p=AONE&sw=w&u=oran95108&v=2.1&id=GALE%7CA6793043&it=r
&asid=16002107605059c104f0bba5751ef85e. Accessed 17 May 2017.