Esmond Birnie: Marx’s record as an economic prophet is a chequered one

Karl Marx
Karl Marx

Politicians are often criticised for using excessive spin and for being strangers to the truth.

Given that, the UK shadow (Labour Party) chancellor John McDonnell MP should be praised for saying what he really thought in a pre-election interview when he argued there was a lot to learn from Karl Marx and particularly his great work; the book Capital.

Shadow Chancellor John McDonnell (centre) arrives at BBC Broadcasting House in London for an interview in June. In an earlier BBC interview, in May, he said there was a lot to learn from Marx's Das Kapital. Photo: Ben Stevens/PA Wire

Shadow Chancellor John McDonnell (centre) arrives at BBC Broadcasting House in London for an interview in June. In an earlier BBC interview, in May, he said there was a lot to learn from Marx's Das Kapital. Photo: Ben Stevens/PA Wire

Was he right?

Some might find McDonnell’s claim very surprising; wasn’t Marxism consigned to the dustbin of history after the Berlin Wall came down and the Soviet Union collapsed? In fact, and this would no doubt please Mr McDonnell, interest in Marx’s thought has increased since the banking crisis and recession in 2007-9.

It is true that from the 1960s onwards attempts have been made to re-make Marx as a Romantic thinker, an early hippy or ecologist.

However, Marx regarded himself primarily as an economist who had discovered how capitalism really works. That, indeed, is what Mr McDonnell is mainly interested in.

Dr Esmond Birnie, senior economist in the Ulster University Economic Policy Centre. Picture by Brian Little

Dr Esmond Birnie, senior economist in the Ulster University Economic Policy Centre. Picture by Brian Little

Marx’s record as an economic prophet is in fact a chequered one: What he wrote does not always make clear whether Marx envisaged that wage earners would suffer an absolute or relative decline in their earnings.

It is true that for many people in the UK today they are earning less today than they were ten years ago once inflation is allowed for.

At the same time, I think a Marx living in 2017 would be surprised by how much average working class and middle class living standards have risen over the last century and a half.

Marx probably was predicting not that the working class would earn less but that there would be ever widening inequality between them and the rich.

The long run statistical record of inequality in the UK and USA has actually been a mixed one – inequality reached a peak just before the 1929 Wall Street crash, declined during the first couple of post-Second World War decades, rose again in the early 2000s and has probably declined since the 2008 banking crisis.

Marx is on stronger ground in terms of some of the other characteristics he identified in nineteenth century capitalism – the increased application of scientific research to modern industry, the emergence of super-large businesses and corporations and a repeated pattern of boom and slump.

Given the complexity of the modern market economy we should not be surprised it does not always work well and it may be miraculous it works as well as it does.

To conclude, we can share Marx’s passion against poverty and the instability in our existing economic system.

We just do not need his economic theory to explain what’s wrong or what we should do about it.

Finally, the relationship between what Marx wrote and the totalitarianism of some of his twentieth century totalitarian disciples is complex.

Das Kapital did not make the labour camp and the purges of Stalin’s Russia inevitable.

Where Marx bears some moral responsibility is in terms of the example he set of extreme political hatred and intolerance.

This is one reason why people should read Marx – they will discover the amount of vitriol he poured over his opponents including not just the capitalists but anyone who dared have an alternative theory of socialism.

• Dr Esmond Birnie is senior economists in the Ulster University Economic Policy Centre