Fraser Institute hack: Way off the Marx

By Stephen Gowans

The January 30th edition of the state-owned Zimbabwean newspaper, The Herald, featured an article by Herbert Grubel, a professor emeritus of economics at Simon Fraser University at Vancouver and senior fellow at the ultra-right Fraser Institute, reprinted from The African Executive. In his article, titled “Global economic crisis: Can Marxism help?” Grubel argues that Marx was wrong in saying the way out of a capitalist economic crisis is to pay workers more. Instead, he contends, governments should offer workers no income support and allow troubled industries to collapse as the best way to end the global economic crisis quickly.

Grubel’s argument suffers from one fatal mistake and one absurdity.

The mistake is in incorrectly attributing an underconsumption theory of economic slowdown (the idea that workers don’t buy enough to keep the economy afloat because they’re paid less than the value of the goods and services they produce) to Karl Marx. Marx did not favor underconsumption as the explanation of capitalist crises, though many Marxists have and still do. At the same time, many non-Marxists have espoused and continue to promote underconsumptionist views. The idea that capitalism regularly falters because workers aren’t paid enough is neither Marx’s view nor peculiar to Marxists.

Argument based on one fatal flaw and one absurdity.
Herbert Grubel: Argument based on one fatal flaw and one absurdity.

Marx favored the view that capitalist economies regularly lapse into crisis because the rate of profit falls to such a low level that capitalists are no longer prepared to make new investments. One of the leading contemporary proponents of this view, Anwar Shaikh, echoes Grubel’s argument that measures to protect wages and bail out distressed industries are more likely to prolong a period of economic stagnation than jump start an economy. In other words, Grubel is not as far from Marx as he thinks.

But where Grubel parts company with Marx is in proposing that unemployment, shrinking wages and shuttered industries amount to a solution. It does if the problem is saving capitalism, so that it can continue in its accustomed course of lurching from one crisis to another. But if our concern is with the welfare of the greatest number, regularly throwing people out of work, cutting their wages, and subjecting them to cruel hardships, is hardly a solution.

Marx wasn’t interested in prescribing measures to keep capitalism afloat, precisely because he believed capitalism’s crisis-prone nature was inherent in the system itself. Instead, he predicted that the majority would create an alternative system based on public ownership that harnessed the economy to serve their own needs, rather than continuing in the current vein of having to sacrifice themselves, their interests and their welfare to make capitalism work (and capitalists – the patrons of Gruber’s Fraser Institute – rich).

Anyone told they have to work longer hours for less, or endure a prolonged period of unemployment, in order to once again pull the capitalist economy out of yet another slump, might reasonably ask themselves whether the economic system they’re expected to endure such significant sacrifices for, is really worth saving.

Grubel – an ideologue for the capitalist interests that fund the Fraser Institute — absurdly seems to think it is (go figure). Marx didn’t, no more than he thought low pay causes capitalist crises.

One thought on “Fraser Institute hack: Way off the Marx

  1. The government in Australia has decided to throw 42 billion dollars at the crisis.A large part of the population will be given one off payments of $950.This will only be of temporary relief to some parts of the profit system and unless the government gives this payment every week to constitute a liveable wage it can only be temporary.The collapse of markets on an international scale and huge debts owed by the populace throught the world,huge sums spent on wars of colonialism and redivision are symptomatic of imperialism,the highest stage of capitalism.The fact of the matter is,there is no more profit to be made.The level of economic activity will have to shrink to the size of wich the capitalist class will invest its finance capital.Anything that dosnt make profit will become a liability and discarded and the pressure will be on for privatisation of sections of the public sector that can make profit,water,electricity and hospitals to name some.All facilitated by a compliant state.The struggle for higher wages will intensify as the crisis bites,the class struggles will continue and no capitalist will hand over a wage rise unless forced,crisis or no crisis.It is the private accumulation of social wealth that is the problem,[wich wage struggles are linked].Wage rises will not save capitalist accumulation from its terminal conditions.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s