I make many mistakes. A while back I set up a google alert for “Federal Reserve.” I was interesting in the broad range of popular, journalistic, and academic representations of the Fed I would find on a daily basis throughout the financial crisis. For the most part, there was no broad range. It was all either Goldbugism or crazy conspiracy theories. A current google alert I have is for “Marxian.” I might as well have just added worldnewsdaily to my google reader. Every once in a while I get an actual link to something about Marxian political economy, but it is mostly nonsense about Obama.
Every once in a while the nonsense has a pseudo-academic character, where the author who might have had some small encounter with Marx in college, attempts to further the Obama-as-Islamo-Lenin horror fantasy of the netroots right with fancy words, delineating how Obama’s policies or words can be traced back to the Monster (Marx). The generous part of me reads these posts as misguided, and not consciously dishonest. Without doubt, Obama’s economic policies are somewhat at odds with many popular understandings of capitalism. But this has much less to do with the exoticism of Obama (the rhetoric of exotification in these pieces are not really dog whistles – they are air horns), than with the massive gap between pop-Hayekian free market absolutism that exists on the right, and almost all academic and applied policy economics. Compared to ideas assuming all taxation is evil, there are zero market failures, there is no need for stabilization policies (fiscal or monetary) of any sort, etc. Mankiw’s principles textbook comes off like the communist manifesto.
Maybe I’m being too generous, assuming honest mistakes, but today’s google alert on Obama’s Marxian ideology comes from an econ PhD – Obama’s Labor Theory of Value!!!! (Exclamation points are my own!). It is hard to be generous here, and my assumption is that this is just dishonest (the author is well aware how silly his argument is, but the cause of defeating Obama outweighs the cost of dishonesty), and best ignored, but I thought it might be fun as a late afternoon break to take it apart. I’ll put quotes from Ross in italics so that they are not confused with those from Obama, Marx, or any other communists.
Beyond being infuriating and insulting, President Obama’s now notorious “you didn’t build that” speech probably left many people puzzled. It is so foreign to how most Americans think they might have wondered where such thinking comes from.
Let me guess. It comes from either Marx or Muhammad (PBUH). Am I right?
Whether or not you think it’s accurate to call Obama a Marxist, his perspective on how the economy works is Marxian through and through. More specifically, it is a reflection of what’s referred to as Marx’s “labor theory of value.”
Aha! One point for me. Here, for the sake of sanity, is Obama’s actual quote:
“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”
I honestly do not understand how an econ PhD is confused by this. I understand some might not like it, but it is not exotic. Conservative economists might we disagree with the policies Obama supports with this speech, but the idea itself is really mundane. Most broadly, the success an individual has is influenced by things out of their control, provided by friends, family, community and/or government policy. Obama is saying that Mark Zuckerberg would not have developed Facebook if he lived in the 16th Century (or if it weren’t for Friendster). I expect a Republican economist like Mankiw, who wants marginal tax rates lowered so badly he is willing to hold his nose as Romney/Ryan ignore just about everything in his textbooks, will object to Obama: “Yes, obviously society, and infrastructure and public goods matter, but we still think taxes should be lowered.” That is a fair response. Acting as if Obama’s claim can only be explained through a hidden Marxist ideology is either unfair/dishonest, or shows a complete lack of understanding of any economic theory.
This is an important point for me. I would disagree with claims that Obama’s policies are socialist. Ross is doing something that is much more offensive intellectually. He is taking a quote that is very simple to understand, translatable (in different ways with different consequences) into just about any economic doctrine, and presenting it as uniquely Marxist. He also happens to butcher Marx along the way.
That theory [labor theory of value] is defined in the Dictionary of Economics as “[t]he worth of a product or service is in proportion to the labor employed to generate it.”
Economists not under the spell of Marxism consider the labor theory of value to be a convoluted mess. Marx himself had great difficulty papering over the logical gaps and contradictions of the theory. One obvious problem is that “labor” is not a homogeneous resource. Furthermore, it is not the only scarce resource necessary for the production of practically every product or service.
By “under the spell of Marxism,” we might substitute “those who actually understand it as opposed to looking it up in the Dictionary of Economics.” I don’t say this in a jerky “you don’t understand it so you are stupid and I am smart” way. I mean it in a kind, “maybe it is not worth arguing about Marx if you haven’t read Marx” way. That concrete labor is not homogenous (a dentist is different than a bartender) may be obvious, but it is not a problem. I wonder what Ross thinks about production functions. His last point is also obvious but not obviously a problem. Of course labor is not the only resource used in making things. What does that have to do with anything? Maybe it has something to do with a bad interpretation of a weak and ambiguous definition of the labor theory of value.
The question of how relative prices are determined is still a central question in economics. “Price theory” is what comprises most of microeconomics.
Today the mainstream conclusion about what determines relative prices is that they result from the interaction of “supply and demand.” In the context of price theory, supply and demand are like file drawers where numerous factors can be organized and analyzed.
Today? This is like super really old stuff. If Ross finds a time machine, he better bring something better than “today’s…conclusion that they result from the interaction of supply and demand” back with him to the 19th Century. Nobody, especially Marx, would be impressed. Marx was absolutely aware of supply and demand, and took it for granted. If Ross wants to argue, like many economists since, that Marx’s attempt to go deeper than supply and demand through the LTV let him do so, but you can’t have read Marx and believe this would be a novel idea to him.
The price of any product is affected by the quantity of all the resources necessary to produce it — labor, energy, land, information, time, for example. Marx’s position was that only one of these resources mattered, i.e., labor.
Wow, either Marx is stupid, or, Ross has no clue what Marx’s position is. Here is Marx himself (beginning of Capital V1 Ch8):
The various factors of the labour-process play different parts in forming the value of the product.
The labourer adds fresh value to the subject of his labour by expending upon it a given amount of additional labour, no matter what the specific character and utility of that labour may be. On the other hand, the values of the means of production used up in the process do not matter at all. The price of a train and a sandwich are about equal since all the resources that go into the production of trains don’t matter.
Just joking. That is not what Marx said. Here is the actual quote:
The various factors of the labour-process play different parts in forming the value of the product.
The labourer adds fresh value to the subject of his labour by expending upon it a given amount of additional labour, no matter what the specific character and utility of that labour may be. On the other hand, the values of the means of production used up in the process are preserved, and present themselves afresh as constituent parts of the value of the product; the values of the cotton and the spindle, for instance, re-appear again in the value of the yarn. The value of the means of production is therefore preserved, by being transferred to the product.
I have no doubt that even if Ross did understand the labor theory of value, he would disagree with it. I can accept that. But calling his account a straw man is being kind.
It also begs the question, if Marx was so dumb, why was the critique of Marx so complicated? Did he not once wonder: “If Marx thinks the massive machinery and costly resources involved in many production processes have zero influence on prices, why would Samuelson have to even write about the obscure transformation problem?” Heck, Samuelson participates in a colloquim “On Marx, The Transformation Problem) (Journal of Economic Literature, Vol. 12, No. 1 (Mar., 1974)). Wouldn’t one the most important economists of the 20th century have better things to do than worry about someone as absurdly moronic as Ross’s version of Marx? (To be clear, I’m not calling any actual living or historical person a moron. The moronic figure I refer to is the Marx Ross imagines existed) Even if you are convinced Bohm-Bawerk closed Marx’s system, why couldn’t he have just done it in a simple sentence? Maybe Marx’s economics is not what Ross thinks it is.
It is not clear Ross read the full Obama quote. But if he did, does he not realize that his bizarre interpretation of Marx exonerates Obama from the charge he is a Marxist. If non-labor resources are completely irrelevant why is Obama going on about the internet? The emphasis on infrastructure (broadly speaking) made by liberals in defending taxes would make no sense in Ross’s Marxism.
Nothing really makes sense here. I’m beginning to think this is just about labeling Obama foreign in a fancy way. I want to be fair and generous, but I also want to understand how Ross links Obama’s idea that things other than individual effort matter to a supposed Marxian doctrine that states only individual effort matters.
Furthermore, he devoted none of his attention to the demand side of price determination. It’s as though he tried to design a pair of scissors using a single blade and, in fact, only a small piece of a single blade. I don’t think that it’s an exaggeration to say that no economist, other than true-believer Marxists, thinks that the labor theory of value makes any economic sense or is useful in understanding how an economy actually works.
Furthermore, he devoted none of his attention to what Marx wrote (or Obama said). It’s as though he tried to define Marxism using a single dictionary definition (or Fox and Friends)…
Let me grant Ross a point. Most economists do not hold a labor theory of value these days. Most economists also think calling Obama a Marxist is wacky. Ross should probably not be making appeals to the authority of the economics profession.
In his classic textbook on the history of economic thought, William Fellner poses the following question about the labor theory of value and offers an explanation:
What function does the theory perform in the Marxian system, and why do contemporary Marxists continue to cling to it? The answer, we suggest, is that a simple and sweeping doctrine of exploitation is the essence of Marxism as a creed, and that it is impossible to obtain a doctrine of exploitation as simple and sweeping as is the Marxian from premises other than the “worker’s right to the whole produce.” Marxism as a creed is founded on the idea that all income going to the owners of wealth results from exploitation. The Marxian creed requires the exploitation doctrine as its foundation. (Emphasis in original.) — William Fellner, Modern Economic Analysis
This is the best part of the piece. If you get rid of the rhetoric of “simple and sweeping” there is a somewhat defensible point here. The concept of exploitation is closely linked to a labor theory of value, and is important for Marxian economics. Of course, the labor theory of value has nothing to do with Ross explanation of it, and (somehow) even less to do with Obama.
A belief in the labor theory of value is what explains the hostility toward profits that is so prevalent on the left. If labor is 100 percent responsible for the creation of value, profit is theft. Profits are only possible if labor is exploited and only if capitalists get what’s not rightfully theirs. Likewise, property is theft, as are various forms of capital. Marx is the inventor of the word “capitalism.” His turgid three volume magnum opus is titled Das Kapital.
I wish this were true. It does matter what one means by the left. If Obama is included, I suppose Ross means people to the left of George Bush (the elder), and in that case this is absolutely wrong. Yes, in contemporary American political debate there is concern over the distribution of income/wealth. Some of it comes from a Marxian critique, but not when we are talking about the democratic party. It is much more likely (if we are talking about mainstream national liberal-progressive or democratic party figures) that this concern is motivated by things like: market failures; an institutionalist view of bargaining and income; a normative position that a more even distribution of income is desirable (even if the neoclassical theory of income determination was a good approximation); etc. These people distinguish good/honest profits from bad/dishonest profits. They distinguish between the deserving and undeserving rich, or, between reasonable and excessive profits. I assume Ross would disagree with these distinctions, but they are not Marxian.
In countless ways Marxism is an intellectual mess. Theoretically it makes no sense.
If Marxian economics was what Ross thought it was, I too, would think it is an intellectual mess. Similarly, if peanut butter was made from cockroaches, I would think it was disgusting. Luckily, peanut butter is made from peanuts (delicious!) and Marxism has nothing to do with Ross’s story.
In practice it has led not to utopia, but to dystopia. The most horrific and repressive regimes in the world today — North Korea, Cuba, and Zimbabwe, for example — are Marxian in theory and practice.
So, you’re telling me that in North Korea workers have total control over society’s wealth? How would that be possible in a “horrific and repressive regime?” While we are playing this association game, conservatives like the US Declaration of Independence. The Declaration contains the phrase “life, liberty, and the pursuit of happiness,” which was likely inspired by (or eerily similar to) Locke’s “life, liberty, and estate.” Locke had a labor theory of value, and so did Marx…so conservatives support the government of North Korea (sic)!
Nevertheless, a Marxian view of the world continues to be popular on the left. Obama’s speech reflects his deeply held belief that business owners do not deserve the share of income and wealth they receive. All value ought to go to the workers.
Again, there might be some truth to the first sentence, except, by left he probably means Nancy Pelosi. Also, Big HUGE JUMP!!!!!! If this is Obama’s deeply held belief, it is so deeeep we can’t even see it. (Let me guess – that is what makes it so dangerous?)
Any other outcome is the result of “the exploitation of humans by humans.” According to Marx, that’s what happens under capitalism and will continue to happen until private property rights are abolished. Only then can true equality be achieved.
Ok, then why is Obama messing around with taxes and not abolishing private property. Is that is for the second term?
It’s important to remember that even bankrupt ideas can be popular over long periods of time. Two other leading examples are Malthusianism and Keynesianism. Their predictions and policy prescriptions have proven wrong countless times, yet as doctrines they still hold wide appeal. Malthus’s Essay on the Principle of Population was published in 1798 and Keynes’ General Theory of Employment, Interest, and Money was published in 1936. The failure of the Democrats’ massive stimulus spending ought to be enough to toss Keynesianism into the dumpster of ideas that sound good but turn out to be disasters when applied to the real world.
Any empirical argument that has to rely (not simply use, but rely) on rhetoric like massive is probably a bad one. Here is how it goes:
A: The failure of the Democrats’ massive stimulus spending ought to be enough to toss Keynesianism into the dumpster of ideas that sound good but turn out to be disasters when applied to the real world.
B: Well, have you considered the fact that you had cuts on the state and local level?
A: But the spending is astronomical!
B: What does astronomical even mean in this context? Have you considered the size of spending to the size of the economy? To the magnitude of the recession? To anything?
A: But they are massive and astronomical!
Marx fully expected capitalism to collapse within a few years after the publication of The Communist Manifesto in 1848. V. I. Lenin’s Imperialism: The Highest Stage of Capitalism, published in 1916, was essentially an attempt to explain why capitalism still existed. By then Marxists fully expected that capitalism would be long gone.
I don’t know where Ross gets his expected expiration date from. So Marx was pessimistic about capitalism, a pessimism he adopted (and transformed) from the same classical economists free market economists adore as great visionaries. Mainstream textbooks love to present Smith and Ricardo as brilliant in advancing our understanding of a capitalist economy. Guess what, a worker’s life sucks in their theory too. If anything, Marx has a much more optimistic view of progress for workers under capitalism (the moral and social components of the wage which can be influenced by workers struggle).
This is all sorta interesting, but then I remember – this is supposed to be about Obama being a Marxist. What do Marxist debates on the breakdown of capitalism have to do with Obama or the sinister idea that infrastructure matters? Nothing, I guess. I suppose these words are meant to scare people (Obama Marx Capitalism End Lenin Foreign), and not to advance an argument.
One thing that J.M. Keynes got right was his understanding of the power of ideology. In the final paragraph of The General Theory he wrote, “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.… Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Yeah, that is a good one. I like it too. The question is, what academic scribbler speaks through Ross? I honestly have no clue.
Whether or not Barack Obama is a Marxist depends on how you define Marxist.
Whether or not Barack Obama is a Marxist depends on whether you define Marxist in a reasonable or absurd way. Obama is not an actual Marxist in any of the senses you could find in the many actually existing Marxisms. Even more damning to Ross is that he imagines this completely false version of what Marx thought, and still can’t link Obama’s ideas to it. If Ross can not make up (completely unconstrained by anything Marx actually wrote) any (fictitious) version of Marxism in which Obama is a Marxist, haven’t we found the most convincing evidence that Obama just might not be a Marxist. Of course, in Marxian economics we would refer to his effort as socially unnecessary labor time (this might not be technically true – but it is a decent enough pun).
Most everyone who acts like a Marxist reacts strongly if called a Marxist.
See, when Obama supporters say he is not a Marxist is just proves how Marxist he is. Who reacts strongly to being called a Marxist? Well, obviously, people who are actually Marxists!
Whoever denied it, supplied it.
If Obama weighs as much as a duck he must be a witch! (Who are you who are so wise in the ways of science?)
There are probably a hundred Marxists for every one who admits to being one.
If there are so many Marxists, why would Obama’s Marxism sound foreign to how most Americans think?
The birth certificate I would like to see is one that would show where Obama’s ideology was born.
I see what you did there.
(edit: fixed some formatting, although it is still a little messy – apologies.)