No, Marx was still wrong

Right, after some faffing around over the summer, proper politics starts again, and where better to start with this ill concieved article where our primate attempts to argue that Marx was partly right about capitalism (actually he doesn't, but it's his title)

It has become an oddly fashionable line to take recently (i.e., in the last generation) that although Marx was wrong about the answer, somehow he was right about his diagnosis of the issues around capitalism - in effect to argue that Das Kapital was right, and The communist manifesto wrong. This is of course absurd, and the issues that Marx was wrong about suggest his diagnosis cannot have been very good either. If you are consistently wrong about the long term economic prospects of the industrialised poor, worng about how they will react and wrong about what the 'post-capitalist' society looks like, then the odds are you were wrong to start with.


To his credit Williams isn't really doing any of this. It's noteworthy that he opens with Trollope, a man much more attuned to how people actually behave than Marx ever was. In fact, much of the article is very sensible: he is of course right to point that trading in debt is not new (though it's much older than the C19), and doesn't fall into the ridiculous trap of arguing that banks should only lend what they have in deposits. Given that stretching beyond that point is the point of a bank, it would be odd to limit them.* However, there is a degree of naivity about the nature of finance and what I think is an arbitrary line between, put crudely, speculation and financing. The archbishop argues that:


'And a particularly significant line is crossed when the borrowing and lending are no longer to do with any kind of equipping someone to do something specific, but exclusively about enabling profit.'

This is a facile distinction and it hinges on a definition of 'specific', which is basically untenable and contains substantial inconsistencies. For example, preumably, mortgages are OK, as they clearly are for something specific (though they have caused much of the problem); government borrowing is borderline if not a problem, as it tends not to be for something specific (but I suspect this is not what he means). The problem is I suspect, those bankers who are dealing with loans fourth or fifth hand, but levelling accusations based on what it's for misses the point. Failing to understand your risk and liabilities is really really stupid, but a significant qualitative line itsn't crossed when you do.


later on we see the real crux of the problem comes when he moves onto the percieved moral issue. Here:


'the deeper moral issue. We find ourselves talking about capital or the market almost as if they were individuals, with purposes and strategies, making choices, deliberating reasonably about how to achieve aims.'

Now, again, this is a really bad idea. Sometimes people use language that suggests the marekt acts like an individual, but that's a convenience. When economists talk about markets, they are really commenting on a number of observed characteristics that have (more or less) predictable outcomes. They know it's not an autonomous individual. So, what is described here is not a moral issue, but a factual error, albeit a big one.

Now, this does mean, following the line of his argument, that a belief in markets that will provide just outcomes is misplaced, but again, this is an absurdity. Markets don't allocate on a principle of justice, but on one of efficiency (even assuming they worked perfectly). Justice isn't a market word.

However, the real problem comes in the last section, where he equates this to idolatry. Now, idolatry is a bit of a problem in the modern world so we get this wishy-washy definition here: 'ascribing independent reality to what you have in fact made yourself .' But that won't do; the second commandment reads as follows (KJV, naturally):

'Thou shalt not make unto thee any graven image, or any likeness of any thing that is in heaven above, or that is in the earth beneath, or that is in the water under the earth: Thou shalt not bow down thyself to them, nor serve them.'

By contrast, the unsupportable breadth of Williams' modern defintion does the decent thing, and collapses. In some philosophical senses, I don't doubt that power, reality and agency can be circumscribed such that this definition works, but given the language here is of a political periodical, it is abundantly clear that power does reside in market forces, and their effects are real. But even if they weren't, the market is not something we have created, it is our behaviour. When the Israelites worshipped the Golden Calf that they had created, it had a physical existence; when our markets collapse, they represents our own debts coming back to haunt us. It is Dr Williams here who is in real danger of ascribing an kind of existence to a form of words, not supporters of market led economies.

We shoudn't expect markets to do what all economists know they cannot, but that doesn't make Marx right, and getting your economics wrong doesn't make you an idolator either.

* Not that this stops people mind. One of the most idiotic comments on the banking crisis that I have heard so far came from Billy Bragg (this is no surprise) on BH no less, where he opined that banks shouldn't lend money they don't have from depositors. I learnt about banks and multipliers at 14. It's not very hard.