Saving Capitalism?

Why Professors of economics?

Why professors of economics? The answer is simple. Their function with capitalism’s education system is to fill-up students’ notebooks with economics orthodoxy – known as “neo-classical theory” – in order to defend capitalism and the privilege and luxury of the capitalist class. They direct the research of post-graduates, research that uncritically supports commodity production and exchange for profit. They supervise PhD candidates whose doctorates never question the private ownership of the means of production and distrubution. They publish papers in “learned journals” which never call into question the profit system. They act as Government advisors in the administration of capitalism and some will become “economic theorists” with economic schools given after their name. And then there are the honours - Knighthoods, peerages, a Nobel Prize in economics and a TIMES obituary. And of course the publication of books!

In their recent book “THE ECONOCRACY: THE PERILS OF LEAVING ECONOMICS TO THE EXPERTS” (2017), the authors, J. Earle, C. Moran and Z. Ward-Perkins take apart what passes for economics and the teaching of the subject to undergraduates. The authors remark that:

Economics education (today) involves memorising and regurgitating neo-classical economic theory uncritically” (p.50).

So, there is no encouragement for students to read Marx’s scientific study of capitalism; a bit like physics students being warned off Newtonian physics. Consequently, university economics departments are producing graduates incapable of understanding capitalism, that is, unless some students begin to think for themselves and bother to open-up the pages of CAPITAL rather than dreaming of six-figure salaries in the City.

Professors of economics do not want to understand capitalism in the way that Marx did when he was alive, let alone teach their students to look at capitalism as a system of class exploitation and economic crises. There is no critique of political economy (now known as economics). There is no desire to see capitalism set within a historical context with a beginning and a potential end in class struggle. The important questions Marx asked about capitalism are just passed over in silence.

The main function of professors of economics is to produce, reproduce, and disseminate ruling class ideas about the ownership of the means of production and distribution. They defend the wages system – they would never call for its abolition. And they do this year after year with the publication of a stream of books, many either verbally incomprehensible to read or filled with mathematical equations “proving” that we all live in the best of all possible worlds.

Professor Robert Reich is no exception to the hundreds of economic apologists who defend the profit system. Robert Reich is Chancellor’s Professor of Public Policy at the Richard and Rhoda Goldman School of Public Policy at the University of California, Berkeley. He was a former Labor Secretary under Bill Clinton and he is a dyed-in- the-wool Keynesian. His new book is, “ SAVING CAPITALSIM: FOR THE MANY, NOT THE FEW” has been published to enraptured acclaim by his many admirers. “Another bloody economics Professor trying to save capitalism!” we hear you say. ‘fraid so.

Saving Capitalism?

Reich is critical of the historical drift of capitalism in the West, particularly the US. He notes that there has been a decline in the number of trade unions in the US. Fifty years ago General Motors, were paying workers $35 an hour in today’s dollars but the typical entry-level Walmart worker is about $9 an hour. Walmart has no union at all. In the 1950s, a third of all private-sector workers in the US belonged to a trade union; now fewer than 7% do (p. xiii).

Reich wants capitalism to work “for the many not the few”. He believes that there is a problem with contemporary capitalism. In the 1950s, 1 percent of Americans took home 9 to 10 percent of total income; (Introduction pp. xvi). There is now, he believes, a vast and unhealthy concentration of political and economic power within the capitalist class to the exclusion of the rest of society. And he is not wrong. In 2016 eight men owned as almost as much wealth as half the world’s population but now it is about five whose combined wealth is equal to that of half the rest of the world’s population (COMMON DREAMS

.org, June 11th 2017). Such disparity of wealth, he considers, is a threat to capitalism – a “steady undermining of the trust modern societies need for growth and stability” (p. xvi). His solution is for the Government to raise taxes on the wealthy. In other words, he advocates a distributive reform of capitalism not to dissimilar to Jeremy Corbyn.

However, Reich does not question capitalism. After all, he is a professor of economics. Instead he asks the question “Who is the government for?” He believes that there is a need for the vast majority to gain control over the government for social ends. Reich thinks that “we can make capitalism work for most of us rather than for the relative handful” (p. xx). He considers his proposals can save capitalism from its own excesses (p. xxi).

Reich, of course, dismisses Marx without appearing to have read him:

Contrary to Karl Marx, there is nothing about capitalism that leads inexorably to mounting economic insecurity and widening inequality. The basic rules of capitalism are not written in stone. They are written and implemented by human beings” (p. xvi)

Reich does not accept that there are economic laws acting on commodity production and exchange for profit. Capitalism’s “basic” rules mean simply that this is a system of production for profit, and the source of profit is the unpaid labour time of the workers, what Marx called “surplus value”.

Reich proposes a countervailing power to the one that exists today. His proposal is to:

…provide all Americans, beginning the month they turn 18 and continuing each month thereafter, a basic minimum income that enables them to be economically independent and self-sufficient” ( p. 214).

Reich looks at Keynes’s 1928 essay ECONOMIC POSSIBILITIES FOR OUR GRANDCHILDREN, for inspiration.

In this essay, Keynes remarked:

…by 2028 technological advances would create an age of abundance in which no one would need to worry about making money, leaving us with the challenge of how best to use their resulting freedom and leisure”.

Reich believes he goes further than Keynes. He concludes:

A basic minimum, financed through reduced property rights for the future heirs of breakthrough technologies, would realize Keynes’s vision

”. However is this really going “further than Keynes”? Keynes didn’t specify how to pay for a national minimum wage in “an age of abundance” but the cost, in both cases, would fall on the capitalist class. So, it is hardly a more “radical” proposition.

Reich says that the idea of a basic income can be traced back to Thomas Paine, author of COMMON SENSE (1776). In AGRARIAN JUSTICE (1797), Paine advocated basic minimum income money from taxation on inherited land on the grounds that original common property taken away as private property was “a just indemnity”.

Paine thought economic independence would allow everyone to democratically participate in society, not just the few.

Reich is also convinced that Robots will take away millions of jobs. He believes that, because of the subsequent unemployment, a social wealth tax should be introduced from the inheritance on those who gained from the benefits created by the use of robotics and artificial intelligence. Like Paine, Reich believes that this basic income would lead to a more inclusive society. If this does not happen, he warns, “capitalism as we know it will not survive” (p. 217).

Reich fails to understand the function of the capitalist state. It does not exist to redistribute wealth like some latter-day Robin Hood. The State or more precisely, the machinery of government, including the armed forces, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers. And this system of class exploitation was also in place when Professor Reich was Labour Secretary under Bill Clinton.

According to the on-line magazine Counter Punch:

During Bill Clinton’s two terms in office, 1992-2000, 45 percent of all the income growth during the period went to the wealthiest 1 percent of families in the US, according to IRS data gathered by economist, Emmanuel Saez, of the University of California, Berkeley”.

So what was Professor Reich doing during this period? Playing golf? Strumming the guitar while Clinton played the saxophone? There is no record in his book to show he was actively trying to reverse the process of the concentration of wealth into the hands of the top 1% he is now complaining about.

Marx and the immiserisation of the Working Class

Marx did not argue that there would be a continued immiserisation of the working class in terms of wages. Marx did not hold to an iron law of wages. In CAPITALhe wrote:

It follows therefore that in proportion as capital accumulates, the situation of the worker be his payment high or low, must grow worse” (CAPITAL Volume 1, Chapter 25, p799, Penguin ed.)

It did not matter if the working class were tied to capital by chains made from iron or from gold; they still were an exploited class of wage-slaves.

In CAPITAL Marx gave a more nuanced view of the consequences of capital accumulation. He remarked that:

Along with the constant decrease in the number of capitalist magnates, who usurp and monopolize all the advantages of this process of transformation, the mass of misery, oppression, slavery, degradation and exploitation grows; but with it also grows the revolt of the working class, a class constantly increasing in numbers, and trained, united and organized by the very mechanism of the capitalist process of production” (CAPITAL Volume 1, Chapter32, The Historical Tendency of Capitalist Accumulation, p. 929).

No time-frame was given by Marx for the “revolt of the working class” that would lead to social revolution and the establishment of socialism. Of course, there been barriers placed in front of workers to block a clear understanding of their class interst; social reforms, religion, nationalism, blaming other workers, support for leaders and so on. Nevertheless these are surmountable forces. There is no barrier so strong as to stop workers to think and act in their own interest. The world’s working class forms the majority of the world’s populations. The working class still have a world to win.

Unlike Marx, Professor Reich, as with Keynes before him, does not want to see a social revolution and the establishment of a world without wages, labour markets and class exploitation. As a professor of economic he looks to economic reform to save capitalism from itself. That is what professors of economics do.

However, you just cannot will away the problems thrown up by capitalism. The economic laws of capitalism cannot be prevented from exercising their periodic social destruction, particularly by economists. First and foremost there is the existence of the trade cycle with its economic crisis and subsequent trade depression. Professor Reich should remember with humility that Keynesianism policies failed to prevent an economic crisis in the 1970s, bringing with it higher unemployment, stagflation, social misery and economic pain.

The crisis of 1973 was the reason why Keynesianism was universally replaced, first with Monetarism, (which also failed to prevent economic crises), and then “neo-classical” economics (or economic liberalism) which likewise failed to prevent an economic crisis in 2008, one which resulted in another severe and deep economic depression from which we are still feeling the effects. Not only does capitalism periodically give the working class high level s of unemployment, its politicians give also the workers “austerity” as governments try to help the capitalists to become more profitable.

What is also missing from Professor Reich’s book is the practical and urgent possibility of meeting human needs by the establishment of socialism/communism (both words mean the same thing). Once socialism is understood by a majority of workers why waste your time on universal basic incomes. And, contra Keynes, only socialism can set the foundations for a society of abundance.

From Each According to Ability

And here we can apply Marx’s dictum: “From each according to ability to each according to need” (The Critique of the Gotha Programme

The world’s working class needs to establish a new social system in which production and distribution takes place solely and directly for use, not as now for profit. Workers do not need to retain an exploitive social system but instead establish socialism in which there is adequate housing, food, and so on produced to enable everyone to flourish and take part in the democratic affairs of society. The working class do not need capitalism. There is nothing in the wages system for workers. Only Socialism can guarantee production and distribution for the many, not the few.

With "from each according to ability, to each according to need" applied globally there will no longer be poverty, malnutrition and the other ills which flow from global capitalism. Architects, doctors, plumbers, nurses, mid-wives and millions of others will simply give their talents and expertise voluntarily to society as a whole, as and when it is required, to ensure peoples’ various needs are met given the level of the techniques of production and distribution at the time. Peoples’ abilities and needs will vary in socialism but what binds Marx’s dictum together is that wealth would be held democratically and in common for the benefit of all society.

From each according to ability” will not only be voluntary but those giving their labour will know and see that they will contribute to a social system worth living in - a system based on meeting human needs and democratic involvement in the affairs of society. That is why socialism has to be established by a socialist majority knowing what they are doing, agreeing with the socialist case and being prepared to act voluntarily as and when required. Nothing less than the formation of a socialist majority taking conscious and political action will do for the establishment of world socialism.

Capitalism can never be made to work in the interest of all society. Capitalism is not worth saving. A social system for the many, not the few is socialism; the common ownership and democratic control of the means of production and distribution by all of society.

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Object and Declaration of Principles


The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.