Transilvania, 2020 (Anul 126, nr. 1-6)

2020-05-01 / nr. 5

CO Death wish: The self-defeating economics of revisionist Marxism in Weimar Germany From 1919 to 1933, the SPD was the dominant political force of the Weimar Republic. But its electoral successes exposed a major flaw: while the party inherited from the Marxist generation of the late 19th century the most, sophisticated economic criticism of capitalism, their economic blueprints for how to govern under capitalism were blurry, to say the least. This flaw came to haunt the party by the 1930s. Beyond social reformism (an issue where some progressive bourgeois parties were keen to compete) and endless agonies over nationalization, during the teens and the 1920s the social democrats were not all that different in their economics from liberals. As soon as they came to power, they understood that without nationalizations even the most conciliatory path to socialism has an elusive end. Nationalizations risked the militarized backlash of the owners of capital (which would have killed reforms) and were also to be difficult to operationalize so that they could actually help workers, rather than create penury7. Discussions over nationalizations in the Red Vienna of the 1920s, for example, quickly pointed out that even if the backlash would be contained, the planning apparatus for the nationalized economy was missing and without it there was complete uncertainty about how to ensure the survival (let alone functioning) of the nationalized firms given the complexity of international supply chains and monetary' system revolving around the dollar, a currency whose home social-democrats realistically expected no left turn for the foreseeable future.15 Owing to the political and technical difficulties of the matter,16 ruling social-democrats In Germany limited themselves to ad hoc measures meant to improve the conditions of workers (minimum wage, income taxes, old age benefits, affordable housing), but which were nevertheless consistent with the economic philosophy and political strategy of both progressive bourgeois parties and the emerging Nazis. This was tantamount to paralysis on economic policy in general and the macroeconomic management of capitalist recessions in particular. At the basis of this was the neglect of the economic short term and the surrender of Marxists to the economics of liberalism. As Mark Blyth put it with characteristic wit: “Both orthodox Marxists and orthodox liberals were at one with Ricardo and Marx in their understanding of the economy. Both theorists (and both movements) were classicists, materialists, and both admitted no doubt as the ubiquity of economic forces and the futility' of political intervention. Both ‘did nothing' for different reasons, due to different (but strangely similar) interpretations of the same social reality; and both were destroyed in the maelstrom that followed their passivity.”17 In practical terms it meant the SPD would adopt austerity in recessions so that any gains made in income redistribution would be wiped out by the recurrent crises of capitalism.18 As Przcworski noted: “The economic theory of the Left was the theory that criticized capitalism, claimed the superiority of socialism, and led to a programme of nationalization of the means of production. Once this programme was suspended-it was not yet abandoned-no socialist economic policy was left. Socialists behaved like all other parties: with some distributional bias toward their constituency but full of respect for the golden principles of the balanced budget, deflationary anti-crisis policies, gold standard, and so on.”19 More concretely, during the 1920s Hilferding, the SPD's chief economist and author of the party’s economic program revised the orthodox Marxist line that the crisis of capitalism was imminent and terminal and instead advanced that capitalism had become more stable through reforms and from within its structures one can begin to work on the transition to socialism. However, he was ultimately a Marxist economist so he “[cjould not abandon the belief that economic forces and not political power were the ultimate arbiter of history. When placed in a position of power, he tended to base his actions on the prescriptions of orthodox economic theory, relying in crises on the ‘self-regulating’ powers of the capitalist system. Hilferding could not accept the possibility that market trends could, or should, be interfered with by politicians. Since both neoclassical and Marxist theory relied on ineluctable economic mechanisms and denigrated government intervention in the economy, orthodox Marxists, Hilferding once noted, were the last and best of the classical economics.”20 In contrast to the party7, the economists of the social democratic labor confederation ADGB, the country’s largest, proposed a proto-Keynesian demand management system similar to that of the Nordic parties. The program was reliant on deficit-financed public works, welfare rights and, going beyond Keynes, workplace democracy. However, their proposals were dismissed by the party, with Hilferding chastising the program’s economic activism as inconsistent with the Marxist thesis that the “capitalist logic” of the business cycle had to run its liquidationist course in recessions, no matter how deep they may be. As he put it, “we can’t say anything concrete to the people about how and by what means we would end the crisis,” adding thai demand management “questions the very foundations of our program (...) Marx’s theory of labor value (...) the conviction that labor, and labor alone, creates value (...).” Like a textbook liberal economist, Hilferding warned that the union’s policy program would be inflationary. In 5

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