March 2014

Marx Was Right: Five Surprising Ways Karl Marx Predicted 2014

Written by Sean McElwee

Sean McElwee is a researcher and writer based in New York. His work has been featured on Policyshop, Salon, The Atlan- tic and The Rolling Stone.

Recently he wrote an article that ap- peared in 30 Jan 2014 issue of The Roll- ing Stone magazine where he pointed to the fact that Marx predicted that capi- talism would be replaced by communism, and accurately
predicted several as- pects of contemporary capitalism, from the Great Recession to the iPhone 5S.

McElwee's Rolling Stone article cites five facts of life in 2014 that Marx's analysis of capitalism correctly predicted more than a century ago:

1. The Great Recession(Capitalism's Chaotic Nature)

The inherently chaotic, crisis-prone nature of capitalism was a key part of Marx's writings. He argued that the relentless drive for profits and reduced expenses would lead companies to mechanize their workplaces, producing more and more goods while squeezing workers' wages until they could no longer purchase the products they created. Sure enough, modern historical events from the Great Depression to the dot-com bubble (The dot-com bubble was a historic speculative bubble covering roughly 1997–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the Internet sector and related fields) can be traced back to what Marx termed "fictitious capital" – financial instruments like stocks and credit13 default swaps. We produce and produce until there is simply no one left to purchase our goods, no new markets, no new debts. The cycle is still playing out before our eyes: Broadly speaking, it's what made the housing market crash in 2008 (characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages). Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows left to scheme, the whole fa?ade fell apart, just as Marx knew it would.

2 2. The Mobile Phone (Imaginary Appetites)
Marx warned that capitalism's tendency to concentrate high value on essentially arbitrary products would, over time, lead to what he called "a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural and imaginary appetites." It's a harsh but accurate way of describing contemporary America, where incredible luxury is enjoyed and yet a constant need arises for more and more stuff to buy. For the capitalist, Marx wrote, "every product is a bait to lure the essence of the other; his money… every genuine or possible need is a weakness which leads flies to the flypaper." Consider the mobile phone you may own. Is it really that much better than the one you had last year, or the one a year before that? Is it a real need, or an invented one? While Chinese families fall sick with cancer from our e-waste, mega-corporations are creating entire advertising campaigns around the idea that we should destroy perfectly good products for no reason. If Marx could see this kind of thing, he'd nod in recognition.

3. The IMF (The Globalization of Capitalism)
Marx's ideas about overproduction led him to predict what is now called globalization – the spread of capitalism across the planet in search of new markets. "The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe," he wrote. "It must nestle everywhere, settle everywhere and establish connections everywhere." While this may seem like an obvious point now, Marx wrote those words in 1848, when globalization was over a century away. And he wasn't just right about what ended up happening in the late 20th century – he was right about why it happened: The relentless search for new markets and cheap labour, as well as the incessant demand for more natural resources, are beasts that demand constant feeding.

4. Walmart (Monopoly)
The classical theory of economics assumed that competition was natural and therefore self-sustaining. Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other. This might have struck his 19th-century readers as odd: As Richard Hofstadter writes, "Americans came to take it for granted that property would be widely diffused, that economic and political power would decentralize." It was only later, in the 20th century, that the trend Marx foresaw began to accelerate. Today, momand- pop shops have been replaced by monolithic bigbox stores like Walmart (in NZ, The Warehouse) small community banks have been replaced by global banks like J.P. Morgan Chase and small famers have been replaced by the likes of Archer Daniels Midland. The tech world, too, is already becoming centralized, with big corporations sucking up start-ups as fast as they can. Politicians give lip service to what minimal smallbusiness lobby remains and prosecute the most violent of antitrust abuses – but for the most part, we know big business is here to stay.

5. Low Wages (NZ $14.25 an hour), 1st April 2014)
Big Profits (The Reserve Army of Industrial Labour) Marx believed that wages would be held down by a "reserve army of labour," which he explained simply using classical economic techniques: Capitalists wish to pay as little as possible for labour, and this is easiest to do when there are too many workers floating around. Thus, after a recession, using a Marxist analysis, we would predict that high unemployment would keep wages stagnant as profits soared, because workers are too scared of unemployment to quit their terrible, exploitative jobs. And what do you know? No less an authority than the Wall Street Journal warns, "Lately, the U.S. recovery has been displaying some Marxian traits. Corporate profits are on a tear, and rising productivity has allowed