The God that Failed: A Marxist Perspective on the Financial Crisis - Coursework Example

 The God that Failed: A Marxist Perspective on the Financial Crisis The writings of Karl Marx have inevitably shaped the course of world history, both through the political manifestation of his principles and by the shifting of the methodological paradigms in sociology, economics, and other soft sciences. The Marxist ideal state remains something that many contemporary theorists and common people alike still look to as guidance for the construction of a better world to live in. Intellectuals like British economist Joan Robinson, Frankfurt school theorists Theodor Adorno and Max Horkheimer, French historians of the Annales school, British literary critic Frederic Jameson, and German sociologist Max Weber all have researched and presented Marxist perspectives in their fields. Marx’s lasting influence has ensured his lasting place in the idealisms of people across time and space. In the face of the current financial crisis, people in Germany have turned to Karl Marx for guidance (Connolly). This is understandable, given the widely-held notion that laissez-faire capitalism, the subject of so much Marxist vitriol, is the villain and mastermind of the crisis. Thus, it seems that the works of Marx and other Leftist thinkers might have some relevance in creating a lasting solution to the problem. As Machiavelli famously said, “For the great majority of mankind are satisfied with appearances, as though they were realities, and are more often influenced by the things that seem than by those that are” (Hacker 179). As educated citizens, we must resolve not to be satisfied with the superficialities of the appearances, and seek reality. Analyzing Marxist theory and its impact allows us to understand what is beyond mere appearance. From the given facts of reality we can derive a normative prescription for the world to follow: steps that involve listening to the words eternal in their wisdom. Karl Marx, as alluded to before, left a lasting impact on many fields; of these perhaps the sociology of work in particular felt the largest effect. He accounted for the fundamentally political relationship between employer and employee, as well as the materiality of class conflict. This analysis remains pivotal in the sociological examination of work. Marx pushed forward the prospect of a sociological approach to work, which he delimited the scope “to the sociology of the factory”. Marx’s analysis provided the foundation of the relationship between home and work. Along with this came a description of exploitation irrespective of class (Grint 95). Although the crux of Marxist theory has been applied to the formation of a novel economic system, the body of his work really leads credence to the notion of a specific sociology of work, dealing with primarily Marxist notions of alienation and labour necessity. The material nature of human thought, as conditioned and determined by economic and social forces (or, in particular, the means of production), was an idea proposed by Marx that helped shift the sociological paradigm in labour. This methodological theory of dialectical materialism held that forces in history create social change, which turned out to be an ambitious hypothesis in sociology. This, as suggested by the Communist Manifesto, would mean that human history was created and invariably shaped by the clashes of classes. Marx took this conception of history and society one step further: that a post-capitalist world would be an enlightened socialist one, in which the business and working classes had lost a long war of attrition. The dichotomy between the two had been crushed and all people live together, for one another. Even though Marxist economic and philosophical principles remain controversial, especially so since the collapse of those countries founded upon them, his contribution to sociology lasts even to the present day (Dawson and Daniel). To a large extent, the current global financial crisis is an economic one: with economic causes and economic effects. However, applying simply only Marxist economic principles in trying to understand them would be a mistake, for Marx’s greatest contributions perhaps came from his sociological concepts. A large part of the financial crisis has much to do not only with how markets respond to change, but to how people and societies respond to change. Clearly, a large amount of change is occurring, with official statistics reporting that all major areas of the world’s economy are in recessions, from the United States, to England, to the rest of Europe, and Japan. The hardest hit among these is the epicentre: the United States, where unemployment is rising and home prices continue to slide. Private corporations are seeking billion dollar loans to keep them from insolvency and “the world now faces ‘the worst recession since the Great Depression” (Beams). The automobile industry in America provides a perfect microcosm of the problems that afflict the entire global community as a result of the credit crisis. It is most desirable insofar as the details of the industry’s strife is readily available for public scrutiny. Examining it alone gives us the ability to extrapolate easily, while examining the real issues carefully. The demand for automobiles around the world has dropped sharply, which could spell the end of millions of jobs in America. An estimated one in ten jobs in the United States is related in some way to automobile manufacturing (Rampell). Car companies from across the globe, including Germany, Japan, China, and America, have all fell, even as much as 45.6% in the case of Chrysler. These manufacturers, in an effort to create profit, create products that the market cannot allocate with the overproduction of vehicles. This consumer boom in demand was driven by credit, which Marx said is the means by which a market can be extended beyond what is natural. In our current stage, what Marx suggested has become a reality, and surplus commodities cannot be traded. Credit, freely available, caused the problems seen today. The unprecedented expansion of credit in the past fed the high levels of American demand, which has reached its limits. The economy has contracted since no one wishes to borrow and even fewer wish to lend. American citizens now have only little to spend and many debts to repay. The fall in home prices makes many people’s greatest asset too great of a cost to maintain. Bankers today are responding to the foolishness of their zealous, lend-to-anyone attitude of the past, and confidence is hard to find. And it is confidence in a credit-driven society that makes the entire system work. The collapse of demand, aggravated by the drying up of credit, has caused not only an automotive crisis but also an entire system collapse. The crisis is really one of overproduction: the inability of large corporations to response to across-the-board economic change. Private citizens, unable to keep up with the consumer economy, have responded to these changes; but the suppliers have not. The aforementioned case of the automotive industry provides an interesting case study. In the United States, car companies like Chrysler and General Motors tried their hand at boosting their marketshare by discounts, which temporarily fixed the problem but at the cost of profit margins. Now, a taxpayer bailout, they say, is necessary to save millions of jobs. For the sake of protectionism, and saving “American jobs”, politicians decided to keep useless institutions afloat (Hutchinson). But these businesses will never produce with the same level of efficiency and automation that they have in the past. They have become another government program, marked by inefficiency and stagnation. In Europe as well, government officials are granting assistance to carmakers; Germany, Sweden, France, and England would all be heavily hit by a failure in the industry’s eventual collapse. State intervention in these businesses’ affairs, and their partial nationalization, seems at first to be in accordance with Marxist principles. It is, after all, state control of the means of production, which eases class struggles. However, recent actions taken by the American and other federal governments have not directed resources to easing the plight of the proletariat, but has only served to alienate them further. Having been long told that there “is no money for universal healthcare, public day care, lower tuition fees, and so on”, the government is now spending trillions of dollars to stimulate failed companies, serving the interests of the rich, and making a new “socialism for the rich”. These state interventions are inspired by fear over the collapse of capitalism and for running a deficit, not concerned about the welfare of the masses that make it all possible. In the future, when China and the rest of America’s debtors call their loans in, public services will inevitably be cut: social services like healthcare and education, and private firms will all be sacrificed. The solution to the widely-believed “crisis of capitalism”, taken from a Marxist perspective, has to deal with something more fundamental. Sociologically, the current crisis is exactly one that Marx could have predicted: the culmination of class struggles into the collapse of entire economic systems. Nationalization, Marx would say, is the answer to the problem: along with the democratic control by workers in concert with social planning by workers, society, and the state. This, of course, presupposes a real market for which the workers are producing—not the failed capitalist market, but a socialized system of transportation. It would be absurd to build a central planned automotive sector without central planned transportation. With tremendous resources wasted by private citizens using their own means of transportation daily, the Marxist solution would be to coordinate production and transportation. Closed automotive factories would be reopened and staffed with workers, producing environmentally mass transit vehicles like buses and trains. For Marx, the immediate failure of capitalism will not simply “go away”. It is only one in a continuous cycle of crisis and collapse. In a manner of speaking, there is no better time for the nationalization of industry. The planning and nationalization of transportation in the world economy, of course, would merely complement the nationalization of all industries. For once, the entire world would be organized around mankind’s massive store of resources and body of knowledge—expressed in the form of a classless society. The only solution, Marx would say, is in the final collapse of capitalism in favour of a system that saves the environment, jobs, communities all from the brink of destruction. Instead of letting producers, in the free market incapable of responding to change from consumers, destroy the world with their incompetence, Marxism would say that confidence could be restored across the board. A state-controlled means of production would ensure lasting stability, something that the free market has never been capable of providing. Karl Marx left a large influence not only on the economic and political philosophic thought of the entire world, but also largely in the area of sociology. His sociological principles provide an excellence framework for understanding the causes and effects of the financial meltdown that affects every country and every person, in some way, on Earth. His writings also shed light on what his idea of a solution to the problem would be, assuming Marx would be personally unaffected by the tremendous disaster of these principles being put into practice in the real world. Marx is, of course, the foremost critic of capitalism, and it is his arguments that people are constantly berated with during the perceived failure of an allegedly “free market” economy. The effects of the financial crisis are truly global in their reach, with the entire disaster having been started in the United States. We understand how to apply Marx by understanding the system that America has built in the past and how it failed on a massive, macroeconomic scale. By learning to transcend the appearances, a student of markets can examine them critically: scrutinizing whether Marx has anything real or substantive to say, or whether his polemics were actually theoretical garbage, as history seemed to prove. Clearly, a problem existed in the American economic system. No one should be fully convinced that it was capitalism that failed, as opposed to a Marxism cleverly disguised and misrepresented as laissez-faire. Works Cited Beams, Nick. The World Economic Crisis: A Marxist Analysis. 18 December 2008. 22 March 2009 . Connolly, Kate. Booklovers turn to Karl Marx as financial crisis bites in Germany. 15 October 2008. 21 March 2009 . Dawson, Patrick and Lisa Daniel. "Social Innovation, Sustainable Futures and Commercial Concerns: People, Profits and Social Well-being." 10 March 2003. University of Wollongong. 22 March 2009 . Debusmann, Bernd. Karl Marx and the world financial crisis. 15 October 2008. 20 March 2009 . Grint, Keith. The Sociology of Work: Introduction. 3rd Edition. New York: Polity, 2005. Hacker, Andrew. Political Theory: Philosophy, Ideology, Science. New York: Macmillan, 1961. Hutchinson, Martin. Obama and protectionism. 27 February 2008. 22 March 2009 . Rampell, Catherine. How Many Jobs Depend on the Big Three? 17 November 2008. 22 March 2009 . Read More