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The reactionary effect of Marxism

By Lorenzo

Who make up the one group that humanities and social science academics typically feel entitled to analyse and pontificate about without actually studying them in any serious sense? Without talking to them, following them around, examining their letters, documents and memoirs, or reading the work of anyone who has.

That would be business folk.

(And it is slightly scary how many economists only don’t fall into this category because they have read Ronald Coase‘s seminal 1937 article The Nature of the Firm [pdf].)

I was reminded of this recently when I started reading Charles Tilly’s Coercion, Capital and European States: AD 990 – 1992, which has become the modern classic analysis of European state formation. I can see good reasons why — the book is clearly written, asks excellent questions, shows a nice sense of the diversity of European state development, seeks to balance economic and political analysis.

Doing the pander

Alas, I can also see bad reasons why it has been an academic success — it panders to the apparently endless desire of humanities academics in particular to sneer at commerce and business folk. Such pandering can and has propelled far more mediocre efforts to academic prominence. A nice Australian example being Michael Pusey’s Economic Rationalism in Canberra: A Nation-building State Changes Its Mind whose content and academic success in Australia is a triumph of pandering over understanding. (Economic rationalism is not a term used much nowadays, but Gregory Whitwell — author of the excellent The Treasury Line – provides a nice discussion of its meanings here.)

Reviews of Pusey’s opus by Fred Argy (in Economic Papers), Richard Blandy (in The Australian Quarterly) and John Stone (in Quadrant) covered the failings of Pusey’s analysis (using the term loosely) fairly thoroughly. A data-rich explanation of the shift in Oz public policy is provided here (pdf), including a side-swipe at Pusey; though the combination of Howard-Costello tax reforms and RBA stabilisation policy led to better outcomes than the paper implies.

An upside of Pusey’s efforts is that it did help inspire William Coleman’s magisterial Economics and Its Enemies: Two Centuries of Anti-Economics.

Capital capers

Tilly seeks to create an analytical paralleling of capital and coercion. The former being the realm of “exploitation” and the latter of “domination”.



So the more capital, the more “exploitation”? So an American worker is more “exploited” than a landless peasant on a latifundium in a capital-starved agrarian society? Do people who write this stuff — and those who buy into it – listen to themselves?

That increasing the level of capital in a society increases the return to labour — since it increases the scarcity of labour compared to capital — would seem to imply (in Tilly’s analytical framework) that workers are the more exploited the more prosperous they are.  At which point one can only agree with Andre the Giant‘s Fezzik [Inigo Montoya] — that word, I do not think it means what you think it means.

One also wonders where, in this analytical universe, one puts slavery, serfdom and other forms of human bondage — the point of which is precisely that they are the operation of coercive domination to deny labour its scarcity returns above that necessary for subsistence.

Furthermore, in Tilly’s analytical universe, capital does not get created, it “accumulates”. Capital — the accumulated scum of economic exploitation.

Of course, if one uses the language of capital being created, then business folk become creators and, clearly, we can’t have that!

Nor see commerce as a realm of consent, because that might generate a rather disturbing contrast with the realm of coercion. Though perhaps not as disturbing as all that — one can talk of gains from order as well as gains from trade. And Tilly’s analysis of the path of state formation does include a very important role for implicit or explicit social bargaining, while he never loses sight of the fact that the state is, at its core, always a coercive structure.

Tilly defines capital thusly:

Let us think of capital generously, including any tangible mobile resources, and enforceable claims on such resources. Capitalists, then, are people who specialise in the accumulation, purchase and sale of capital. They occupy the realm of exploitation, where the relations of production and exchange yield surpluses, and capitalists capture them (p.17).

Perhaps factories are also capital, even though they are not terribly mobile? And, if they are not capital, what are they?

Risky business

But leave that aside; Tilly buys into the perennial notion of surpluses as just being “yielded” by the processes of “production and exchange”. Yet a driving factor in commerce is that there are no guarantees of such “surpluses”. The risk of loss is a real one and much commercial activity is structured to deal with it; to deal with risks in general. A huge part of the story of the Commercial Revolution in Europe is precisely the secular drop in risks — particularly as reflected in interest rates. A drop in risk levels from the interaction between technology and institutional change that is at the heart of the Commercial Revolution and which made the creation of capital strikingly easier over time.

European global dominance starts with the Commercial Revolution, though it was pushed along by the Scientific Revolution and sealed by the Industrial Revolution. Until, of course, the patterns thereof started to be exported elsewhere and the further consequences of the Industrial Revolution began to undermine imperial rule.

That Tilly does not really “get” commerce is particularly clear when he discusses the interaction between capital and cities — he sees the development of cities as coming from the accumulation and concentration of capital, thereby paralleling the development of states from the accumulation and concentration of coercion. Since, in his analytical framework, capital “accumulates” rather than being created, the notion of cities as being good places to transact is obscured. By contrast, medieval lords were well aware that providing protection and ease of transaction could promote a new city as a node of trade and commerce — the medieval notion of a (new) borough was strikingly similar to the modern notion of enterprise zone.  At times, capital in Tilly’s analysis seems perilously close to an exogenous force that drives social phenomena.

Status games

In all this, Tilly is just part of the at least 2,500 year tradition of clerics, clerisies and intellectuals dating back at least to Plato, Aristotle and Kong Qiu despising commerce and merchants as vulgar and amoral. Though the tradition went into something of a regression from the mid C17th to the mid C19th — from John to John; from John Locke to John Stuart Mill (plus a nod to the great C19th populariser of liberal political thought, Herbert Spencer). (A review of a book on this tradition is here [pdf].)

But the tradition resurged with a vengeance with the intellectual popularity of Marxism. To the extent that most academic writing about economics and commerce which is not explicitly based on various forms of economics is largely derivative from Marxism. An analysis which gets in the way of understanding actual commerce and the importance of gains from trade (why do people keep coming back?), transaction costs and risk management.

In its status-driven antipathy to business folk and commerce, Marxism has proved to be quite reactionary. Though, that is hardly the only way it turned out to be so. That Leninism (or derivatives thereof) proved to be the only effective way to politically operationalise [revolutionary] Marxism led to elite politics of the most ruthless and entitled kind. With its reintroduction of slavery (in the labour camps), serfdom (the ban on leaving a workplace without its permission — the essence of serfdom) and extremely controlling and hierarchical politics, Leninism was much more a very nasty throwback to the monumentalist labour service autocracies of Pharaonic Egypt or the Khmer Empire than to anything that can plausibly labelled “progressive”.

Nor were Leninist states modernising in anything except the most banally technological sense. The essence of modernity is about expanding possibilities — very much what Leninist states have not been about. Which is why they are mostly no longer with us. They may have been the political embodiment of high modernism, but actual modernity has proved to be too much for them. Apart from the bizarre North Korean dynastic theocracy — the most atavistic of the lot — the remaining notionally Leninist states are in the process of living the Eastern European joke. (What is socialism? The hardest and most difficult road from capitalism to capitalism.)


Honouring the divine ruling family

In reinvigorating the long tradition of status-driven sneering at commerce and merchants, Marxism proved to be deeply reactionary. Indeed, pervasively reactionary.

But dressing up old ideas in allegedly “cutting edge” language and declaring them progressive has continued to be a fun game for intellectuals. Consider post-moderism — indeterminacy of meaning was a hot topic for Socrates and the boys. As it was in medieval discussions of the problems of translation. (One Orthodox theologian is supposed to have joked that he could not translate the doctrine of the Trinity from Greek to Latin without committing several heresies.)

They might also consider how “progressive” al-Ghazali‘s embracing of what we would now call Humean scepticism proved to be for Islamic science.

I understand the enduring status-appeal of sneering at commerce and merchants. But watching a first class mind trip over its analytical framework — as in Tilly’s Coercion, Capital and European States – remains an unfortunate sight.


  1. Mel
    Posted January 17, 2014 at 9:58 am | Permalink

    Sadly your opinion of Marxism is a mirror image of the lefty social scientist’s sneering view of capitalism. Both are simplistic, highly emotive and not terribly enlightening.

    That Leninism (or derivatives thereof) proved to be the only effective way to politically operationalise Marxism led to elite politics of the most ruthless and entitled kind.

    This simply isn’t true and you know it isn’t true.

    Marxism in the developed western democracies has been “politically operationalised” through trade unions, the Eurocommunist parties in Europe and through wave after wave of progressive social movements.

    Marxist folk like Bayard Rustin were out batting for gays and others who needed someone to bat for them while lesser men such as yourself were fretting in the closet and licking the back of the Queen’s head.

    ps. I hope you enjoyed your holiday break :)

  2. Posted January 17, 2014 at 8:44 pm | Permalink

    M@1 First, Marxism was not needed to have a trade union movement, nor a working-class based Party, as the Anglosphere demonstrates.

    And if you want to argue that the Social Democratic Parties were the other way of operationalising Marxism, to the extent that they were, the effect was still reactionary.

    (1) The more the Social Democratic/Socialist Party was Marxist-based, the larger the Leninist offshoot post-1917.

    (2) The larger the Leninist offshoot, the larger the countervailing Fascisrt/Nazi/Authoritarian Right movement.

    (3) The more based on Marxism the Social Democratic/Socialist Party was, the more it ignored peasant small-holders as a voting class.

    (4) The more they were ignored by the major Centre-Left Party–and the larger and more threatening the Leninist offshoot–the more rural voters became a support base for the Fascist/Nazi/Authoritarian Right movement.

    Hence, the more Marxist-based the Social Democratic/Socialist Party, the more reactionary the effect, because the more successful the Fascist/Nazi/Authoritarian Right movement was.

    Eurocommunism was mostly about trying to shed the deadweight of revolutionary Marxism. (Either becoming more like the Parties that had Never Gone There or who had largely dropped Marxism.) With precious little actual Marxism left after that was done. (And the more there was, the less successful the Party tended to be in the longer term.)

    As for all those progressive movements; most of the recent ones flowed out of the US of A, with minimal Marxist influence. And, to the extent of such influence, it has mostly been a deadweight and/or embarrassment. Especially when it comes to coalition building, which is how such movements “get the numbers”.

    On balance, Marxism has been far more a destructive deadweight for progressive movements than a benefit. Not least for its tendency to give its adherents the belief that they know what people should want/need rather actually want/need.

  3. Posted January 17, 2014 at 8:45 pm | Permalink

    P.S. Yes, I did, thank you — hoped you enjoyed yours :)

  4. Mel
    Posted January 17, 2014 at 10:57 pm | Permalink

    Sorry Lorenzo but your judgement is obscured by your visceral hatred of Marxism. I, as you well know, have no love of Marxism but I can see that it has produced material benefits in the western democracies.

    Hitler didn’t rise to power on the back of fears of home grown communism, in fact communism was very much weakened by the time the Reichstag effectively voted him dictator. Economic factors and the machinations of the political right- from the classical liberals through to the conservatives- were much more important factors.

    The Marxist parties of western Europe were at their strongest just after World War Two ended, with the French communists having half a million members and securing the highest or second highest number of votes through to the early 1950s. Your thesis is falsified as this did not lead to the rise of fascism.

    Marxism played an important role in political labour in the Anglosphere indirectly through its strength in industrial labour and also through so many centre-left politicians having first gone through a Marxist phase.

    The exception is America, which not coincidentally has a far more unequal distribution of wealth, lower minimum wages and significantly worse working conditions than other wealthy western nations.

  5. Mel
    Posted January 19, 2014 at 8:12 am | Permalink

    Prof John Quiggin exposes Lorenzo’s magisterial William Coleman as something of a fraud and a tosser:

    They [William Coleman and Alf Hagger] criticise statistical claims made by non-economists like Manne and Pusey, but play fast and loose with the data themselves. A typical example is the following (p 113) ‘Pusey in February 1992 diagnosed the New Zealand economy as dead in the water. Over the next five years, New Zealand’s real GDP rose by 22 per cent’. Why, one might ask, does this refutation refer to a five-year period? Coleman and Hagger know, but unwary readers may not, that after a five-year recovery, the New Zealand economy relapsed into recession in 1997, and was once again ‘dead in the water’ by the late 1990s.
    More trivially, Coleman and Hagger make repeated fun of Pusey’s misspelling of proper names. Yet they refer to their prominent colleague, Wolfgang Kasper, as ‘Kaspar’. Fellow-economist Brian Dollery comes off even worse, appearing as ‘Brean Dollery’ in the text and ‘Brean Dolery’ in the index. It is hard to avoid such errors, but those who live in glass houses shouldn’t throw stones.

    Connoisseurs of vituperation, a field in which Australians have long excelled, will find this book a worthy addition to their shelves. Those looking for a balanced view of economic rationalism and its critics would do better to seek out the ‘indefensible’ volume edited by King and Lloyd.

    Lorenzo, I’d like to see you head over to Quiggin’s site occasionally to try to match wits with him.

  6. Posted January 21, 2014 at 11:41 am | Permalink

    M@5 Coleman’s book never refers to Pusey at all, so Quiggin is clearly referring to some other piece. The book remains a very impressive piece of work.

    Moreover, clearly New Zealand’s economy was not “dead in the water” when Pusey wrote his book (1991) or his February 1992 piece, which is the issue in question.

    Economic reform worked much better in Australia than in New Zealand, probably because the Australian version had to be more negotiated and because Australia is a larger and more broadly based economy (so any given policy regime will have an easier time of it in Australia).

    Quiggin is not above very dubious arguments himself (such as capital should be government owned because government has a lower rate of interest).

  7. Posted January 21, 2014 at 12:06 pm | Permalink


    Fascism and Nazism were completely discredited by their WWII defeat, so what happened afterwards is completely separate. In the interwar period, it is clearly true that the bigger the Leninist movement, the stronger the Fascist/Nazi/Authoritarian Right movement.

    Hitler only managed to get into power on the basis of his electoral success (see above). Actually, Weimar politicians did an impressive job of keeping him out of power for as long as they did, given how many seats the Nazis had in the Reichstag.

    It was only after the Nazi vote dropped a bit (making him seem more manageable) but the KPD vote kept growing that he was able to put together the coalition that gave him power in Reichstag. Once he had that, dictatorship was all but inevitable. It was, however, clearly the KPD threat that gave the Nazis so much political oomph.

    Moreover, Lenin provided the political model that Mussolini and Hitler adopted to their projects. This is explicit in the case of Mussolini–who not only wrote on it, but also came out of the same revolutionary socialist milieu as Lenin (including exile in Switzerland)–but is hardly less obvious in the case of Hitler.

    As for various Labor activists having a Marxist phase, that could be also read as something they had to get over to be effective. The notion that without Marxism there would have been no socialist/labour movement just strikes me as silly. My point is that Marxism got in the way by loading folk with unfortunate ideological blinkers and scaring many punters.

    As for the US, it was very hard to build any sort of socialist/labour movement because the high rate of diverse migration (and high rate of mobility within the US) continually broke up potential working-class-based coalitions. Nativism was a constant temptation — not least because the levels of immigration were against the interests of resident workers.

    Also, existing political parties were already trying to corral working class votes, the working class did not have to fight its way into political representation. Hence the Republicans denounced the “slave power” and offered trade protection, while the Democrats offered blocking blacks from voting (and so diluting white voting power).

    Moreover, the “open frontier” provided another outlet for aspirations.

    All of which got in the way of an effective working class movement, which provided Marxism less of a host to colonise. “Little Marxism” was more a product of why the US was hostile territory to any sort of socialist movement.

    The sheer scale and diversity of the country still gets in the way of having as complete a welfare system as we do. And makes it much more likely to have higher levels of inequality. (As, of course, does importing quite a lot of third world workers and peasants.)

  8. Mel
    Posted January 22, 2014 at 9:44 am | Permalink

    Quiggin is not above very dubious arguments himself (such as capital should be government owned because government has a lower rate of interest).

    There is more to the argument than that and the facts speak for themselves. Many economists (IPA and CIS hacks notwithstanding) have also arrived at the conclusion that the public has not benefited from most privatisation efforts.

  9. Mel
    Posted January 22, 2014 at 10:06 am | Permalink

    This Quiggin argument sounds very sensible and one again experience has shown it to be correct.

    I imagine the few “successful” privatisations usually result from screwing down wages and the unpaid overtime of staff fearful of losing their jobs. I wouldn’t call that a massive advance in human welfare.

    … it is clearly true that the bigger the Leninist movement, the stronger the Fascist/Nazi/Authoritarian Right movement.

    German Nazism was a completely different species from Italian Fascism. I don’t agree with any analysis that treats them as essentially the same.

    And yes, the discontents that gave rise to German communism also gave rise to Nazism and to some extent they then exerted causation on each other. But you overstate your case and if Marxism had not existed some other species of radical left worker communism or anarchism would have filled the gap.

  10. kvd
    Posted January 22, 2014 at 2:00 pm | Permalink

    Leaving aside Professor Quiggin’s ‘dubious arguments’ as Lorenzo put it, I must say I agree with Mel.

    I’d be interested to hear Lorenzo’s examples of successful privatisations in the past 40 years or so, and also Mel’s “the few successful”: I’m wondering which is meant?

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