Was Marx Wrong? It's Too Early to Say

by James Oldham

I believe that recent economic events have helped vindicate many of Marx’s theories. As Tom has said, many of Marx’s theories have simply become outdated. Yet, in the 2008 recession - an event which was largely unexpected, with the prime minister of the time, Gordon Brown, previously declaring the “Boom and Bust” cycle of an economy as no more - shows evidence of Marx’s Crisis Theory in action two centuries after he first developed this theory. Furthermore, while not so threatening as a few years ago, economic problems in Greece, Spain and Italy, came close to collapsing the Euro and could have resulted in an even greater economic crisis than the one faced in 2008.

For years “efficient market hypothesis” has been followed, presuming that, in a free market, supply and demand would automatically even out. This was quite contrary to Marx’s beliefs. The question therefore remains: how does a capitalist economy achieve this ironing out of supply and demand? This is where I believe Marx’s Crisis Theory could be correct in modern day terms. Supply and demand even out due to the ability of capitalism to adapt to instability, perhaps to a degree underestimated by Marx; hence the doubts in Marxist economic theory that Tom mentioned in his article and therefore, perhaps, 150 years and no overthrowing of the status quo in Western, capitalist societies. This applies to Marx’s Crisis Theory in how these adaptations leave burdens elsewhere, which is usually down to two reasons: externalizing costs (where costs are reduced by placing the cost of production on something else, for example, the environment) and incurring debt in order to shift the cost of capitalism into the future. Both somewhat rely on acting now and thinking later, again using the example of pollution and how the consequences of it are only catching up to us now. The point is, the consequences of capitalism come in the form of the 2008 recession, where capitalism has pushed its consequences so far into the future that it stretches too thin and snaps.

In Marx’s eyes, the capitalist wrecking ball, sacrificing living standards and government expenditure to up production and maximise profit, only has so much productive force left in it. At some point, the overproduction of goods will catch up with capitalists and, with no consumption in Europe and the USA, China can no longer produce, and, with China no longer producing, Brazil and other economies can longer export raw materials, leading to one big worldwide economic crisis. Therefore, perhaps it is still too early, two hundred years after his birth, to say Karl Marx was wrong.  

Tom Coyle argues that Marx's ideas have not stood the test of time.