STOCK MARKET WATCH -- Monday, 21 May 2012

[Demeter]

8. Inequality or Sustainability? Why Madison Needs Marx

http://www.nationofchange.org/inequality-or-sustainability-why-madison-needs-marx-1337223969

Marx famously said that the bourgeoisie unwittingly produces its own gravediggers. Marx was convinced that capitalism inexorably gives rise to an elite social class whose members create an economy that contains the seeds of its own destruction. The prime movers in Marx's theory of history – a.k.a., dialectical materialism – assumed the form of a rising middle class of merchants who, in Marx's time, were emerging as the industrial giants he called "monopoly capitalists". Capitalism in its advanced stages produced a few big winners and multitudes of losers, the latter constituting a vast underclass of exploited workers who were increasingly impoverished, alienated, and dehumanized.

The super-capitalists who emerge as the champions of the new economic order soon come to abhor the very system that creates them. Once ensconced at the commanding heights of the economy they naturally want to eliminate competitors. They want control. To protect their wealth, they need power. Power to minimize risks and flatten out the business cycle. They understand all too well that the power to tax is the power to destroy (or to create tax loopholes). They want the state to stay out of the economy, but protect business from "unfair" competition and encroachments of all kinds. And from the workers.

But that was then and this is now. Today, Communism and Marx are equally discredited. Right? The failure of Communism according to Wall Street's grand princes, corporate raiders, the conservative press, the elite business-school professoriate, and a host of other apologists for Capitalism proved that Marx was wrong – about everything. But clearly Marx's critics protest too much. In fact, the failure of Communism proved nothing of the kind. Communism as it was radically reinterpreted and applied by Lenin and Stalin in the Soviet Union used Marx as a fig leaf for a totalitarian political order that was, ironically, unsustainable because it attempted to run the economy without any reference to market forces or economic "laws". Which is not to say that Marxism offers a coherent set of prescriptions to cure all the ills of modern society – indeed, Marx himself had surprisingly little of interest to say about how to set things right. But Marx was right in his analysis of what was wrong with capitalism and the kind of representative democracy James Madison enshrined in the Federalist Papers (especially #10). In focusing on the tendency of capitalism to reproduce the extreme inequality associated with feudalism, Marx had an insight that deserves far more attention than it has gotten in the United States, especially since it's now clear that Madison's "cure" for factions isn't working.

Madison recognized the danger and identified its source: The most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society." His solution was to create a large republic encompassing a great variety of interests and parties. Of course, unlike Europe, democracy in America makes room for only two viable political parties; these two parties, Republicans and Democrats are so entrenched, and the legislative process so sclerotic, that virtually nothing creative or restorative ever emerges from the U.S. Congress now – quite the opposite. And starting in the 1980s the Reagan Revolution crushed what remained of the free-wheeling, faction-friendly pluralism Madison imagined. Face it: in the USA today, the nice idea of a political order equally friendly to a diversity of interests – or even opinions – is dead....