Karl Marx
The Father of Communism
Masters of Money
Dover, the most dangerous man in Europe is about to arrive on Britain’s shores. His preachings are so incendiary, he’s been forced out of his native country.
Only liberal Britain will tolerate his presence on her soil. He heads to London to live in exile. The year is 1849. But today, that man’s writings are still dangerous. They are so radical, so revolutionary, they continue to divide the world. It’s been more than 150 years since he started writing about the world. But you know what? If you’re looking for an explanation of the global economic crisis, he’s a surprisingly good place to start.
With everything going so wrong, you have to wonder, is Karl Marx turning out to be right? Most people know Karl Marx as the father of communism. You might be surprised to hear that most of what he wrote was about capitalism. And today his ideas about that are being taken seriously right at the heart of global business.
“His analysis was pretty on the button and explains a lot, I think, about some of the things that we see going on around in our economy today.”
For Karl Marx, the best argument against capitalism was that it was inherently unfair. His ideas on inequality have more resonance than ever today.
“What Marx did do is to install this sense of urgency. Things cannot go on for ever the way they are.”
In 1989, Karl Marx’s reputation lay in ruins. For most of us, the fall of the Berlin wall meant the end of Marx. Millions rejected the horrors of the violent and repressive police state. And because the Communist countries claimed Karl Marx as their inspiration, his ideas were cast aside, as well.
When this wall came down, I was just studying economics at University. Back then we knew, or we thought we knew, two things about Marxism, Communism.
One was it hadn’t delivered freedom for the workers. Quite the opposite. And the other, just as bad if you are an economist, is that it hadn’t delivered prosperity. The Communist approach to the economy just hadn’t worked. While the free-market West took great strides, the Communist planned economies had been left behind. Marx’s reputation as an economist was in shreds.
In the last few years, something strange has happened. It’s like the global financial crisis has brought Karl Marx back from the dead. And we still don’t care what he said about communism, but people are going back to his damning assessment of capitalism, all its deep-seated flaws, with a nagging doubt. Is it all now coming true?
When times were good Karl Marx was nowhere. But now the Western economies are in crisis he’s attracting new interest right at the heart of the economic establishment.
From a former IMF chief economist…
Professor Raghuram Rajan “Marx is right on a number of dimensions. He certainly is right that income inequality can be a source of tremendous tension.”
From the man who saw the 2008 crisis coming.
Professor Nouriel Roubini “He had understood that there are situations in which capitalism and globalisation can lead to economic crisis.”
And an economist at one of the world’s leading banks.
George Magnus “It’s quite hard to convince people who live in Chelsea or Chelmsford that this is all of great relevance to them, but actually, it’s worth a bash.”
Anyone in Chelsea or Chelmsford who thinks Karl Marx is only about communism, is in for a shock. It’s what he said about capitalism that rings so true today.
Karl Marx’s key insight was that capitalism was inherently unstable. He said we’d lurch from crisis to crisis and society would become increasingly unequal.
Marx divided the world into bosses and workers. For him, they would always be at odds and that the battle was a recipe for crises. To make profit, bosses squeeze what they pay workers. The crisis comes when workers then don’t have enough money to buy what bosses are trying to sell them.
And for decades after World War II, that looked completely wrong. We had years of stable growth, and the workers were taking a larger and larger share of the pie. But not any more.
Martin Jacques “Marx would explain that this crisis in terms of the fact that ordinary people haven’t got enough money to spend. Why haven’t they got enough money to spend? Because there’s been a big redistribution, over the last few decades, away from ordinary people towards capital, towards wealth.”
And for Marx, there’s no turning back. He thought there were laws of motion running through human history. Capitalism would produce bigger and bigger crises and then it would collapse. And he believed that the force driving us to this final collapse was the same one that built our world in the first place – the power of money.
Professor David Harvey “Marx had a very simple formulation about crises, which is that they are manifestations of the fundamental flaws, or contradictions, as he called them, of capitalism.”
