By Fred Block, whose new book Capitalism: The Future of an Illusion is being published this month by the University of California Press. He is a Research Professor of Sociology at the University of California, Davis. Originally published at the Institute for New Economic Thinking website
200 years after Marx’s birth, many elites have taken unabashed pride in capitalism, a term that originally had negative connotations. To make our economy more just, we must reclaim Marx’s understanding of capitalism’s contradictions.
Even 200 years after his birth, Karl Marx cannot rest easily in his grave. His fundamental theoretical achievement has been appropriated by his sworn enemies to defend the very institutions he despised. The term “capitalism” that was popularized by Marx’s followers has been redefined to persuade people that even modest reforms of our economic arrangements will inevitably damage the economy’s main engines and do more harm than good. Conservatives have taken Marx’s ideas and turned them upside down.
Marx himself did not actually use the word “capitalism”—he typically referred to “bourgeois society” or “the reign of capital”—but his followers in the mass socialist parties of the late 19th Century and early 20th Century popularized it to great effect. Capitalism, they argued, was to blame for poverty, unemployment, miserable working conditions, and periodic economic crises. After the Bolshevik Revolution, Soviet propagandists tirelessly linked every problem of the West to the evils of capitalism.
After World War II, defenders of the American economic system almost always used the term “free enterprise” as a way to highlight the lack of political freedom in the Soviet Bloc countries. Even in the mid-1960’s, the word capitalism was still used primarily by those sympathetic to the Soviet Union and Communist China.
The situation changed when thinkers on the Right realized the power of taking a negative term and giving it a positive spin. This was what the Black Power movement had done; the word “black” previously had negative associations, but the movement empowered people to say: “We are black and we are proud.” One of the innovators who pioneered this rhetorical move with “capitalism” was Malcolm Forbes, the publisher of Forbes Magazine who adopted the advertising slogan: “Forbes—a capitalist tool.” Denouncing a politician as a capitalist tool had been one of the most stinging indictments in the Left’s arsenal, but Forbes was telling his readers they should be proud to be capitalists.
However, the most influential work along these lines was done by Irving Kristol, an advisor to Ronald Reagan who is credited with founding neoconservativism, the movement of liberals who abandoned the social, economic, and foreign policies of the Democratic Party in the 1970’s and 1980’s. In the late 1970’s, Kristol published a book called, Two Cheers for Capitalism. Kristol knew his Marx very well; decades earlier he had been part of a Left-wing faction at New York’s City College that was famous for its sophistication in wielding Marxist theory. Kristol recognized that appropriating the idea of a “capitalist system” from the Left could have extraordinary benefits for conservative thinkers.
Both in the 1930’s and in the 1960’s, the Left in the U.S. had progressed not by fundamentally challenging the existing order, but by creating new social programs such as Social Security, Medicare, and Medicaid and by extending the structure of economic regulation to include labor relations, consumer protection, and environmental protection. The Right tried to resist these initiatives, but it lost out because liberals and progressives could argue that these measures did not challenge the market but just made it work in a way that was better and fairer.
But Kristol insisted that capitalism was a unified and completely coherent system, so that changing any aspect of it would produce an equal and opposite reaction. Ever since, conservatives have been arguing that the reason that the economy is performing badly is that all of the well-intentioned measures pushed by the Left have impaired the capitalist system’s functioning. Thus, we must roll back spending programs and regulation to realize the system’s full potential.
It is not coincidental that the Right has been winning the battle of ideas ever since Irving Kristol turned Karl Marx on his head. Left scholars and activists continue to denounce the evils of capitalism, but when they do so, they actually reinforce the Right’s claim that capitalism is an unchanging and unchangeable system whose fundamental logic must be obeyed.
While Marx urged his followers to overturn capitalism rather than reform it, he insisted that capitalism was actually incoherent, irrational, flexible and constantly changing. It is Kristol’s definition of capitalism as unchanging, unchangeable, and unified that is an illusion. The reality is that making our society more egalitarian, more just, more democratic and more environmentally sustainable would also make our economy stronger. To win urgently needed reforms, we need new concepts and new language. This would not fit Marx’s revolutionary vision, but it is what our times demand.