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4-min read

Marx theories need a re-appraisal by both sides of political divide

As his 196th birth anniversary is being observed, it is fitting that his theories are re-evaluated for a changing global economic scenario.

Siddhartha Sarma | IBNLive.com

Updated:May 7, 2014, 11:48 AM IST
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Marx theories need a re-appraisal by both sides of political divide
As his 196th birth anniversary is being observed, it is fitting that his theories are re-evaluated for a changing global economic scenario.

Between us, Karl Marx was asking for it. By framing a critique of capitalism during the heyday of the industrial world, Marx was leaving his theories open to implementation at a political level and, on the other hand, reinterpretation in a post-industrial world. As his 196th birth anniversary is being observed, it is fitting that his theories are re-evaluated for a changing global economic scenario, a time when Marxist theory can be examined without the attendant baggage of the Soviet experiment.

One such study is Thomas Pikett's 'Capital in the Twenty-First Century'. The world of Piketty and his contemporaries is far different from what Marx witnessed or could have predicted. The restructured imperialism of the late 19th century and the capitalist nightmare of King Leopold's Congo ran its course long ago. So did the expanding, bloated and unwieldy colonial empires Marx had criticised as evidence for the fallacies of capitalism.

And yet, in Piketty's account of the last two centuries of world economy, we see how similar today's post-industrial world is to the late 19th century. The economist and author argues, quite persuasively, that in the complex societies of the last two centuries, wealth has universally tended to be concentrated in the hands of a few, and this trend is rising.

In the parallel discourses running between the Left and the Right in developed and developing countries today, the question of inequality in wealth distribution has found diametrically varying explanations. The Left argues for greater government spending and intervention, while the Right advocates freer markets. Piketty attacks both arguments, commenting that rising inequality is certainly the result of free market capitalism. But the Left is not going to be happy when Piketty tells them that traditional left-leaning governments' (such as the UPA) prescriptions including on government spending, taxation and regulation have very little impact on this inequality.

In other words, governments today face a dilemma: freer markets will increase wealth inequality and Left-leaning policies will add to government expenditure without affecting round realities. The only option, it appears, is to see the emergence of a world which Marx would have immediately identified as his own, a world described by such unexpected authors as Honore de Balzac and Jane Austen: in Piketty's words "a patrimonial society" of idle rich with inherited wealth, as the rest of society just struggles to get by.

A dystopian future, but Marx himself might be to blame, or at least his political heirs. Experiments such as the Soviet Union have been cited by modern thinkers as a warning against Marxism's pitfalls when applied as pure dogma, allied with an autocratic, undemocratic political system. Any talk of Marx's relevance - or the inequality existing in his time - inevitably brings forth criticism just as dogmatic as the Marxism that is followed by Leftists today. In such a debate, with so much reluctance to find a meeting ground, government policies either mirror pure capitalism or tend towards Marxist dogma, with no practical solution forthcoming.

But if, like Piketty, one were to examine modern inequality as a continuation of historical instances, one can quite clearly understand that the key to future unrest over wealth distribution needs to be avoided, beginning now. Here the model created by economists such as Angus Maddison is partly to blame for the renewed study of historical wealth of countries through GDP and not wealth distribution.

Maddison, who specialised in quantitative macroeconomic history, went through exhaustive data on wealth of countries to calculate what he called the GDP of these nations through history. His works have been frequently cited by those wanting to explain the current poverty of such countries as India. However, his theories have been criticised, first, because accurate historical economic data is notoriously difficult to come by. And second, GDP alone does not address problems of pre-modern societies such as concentration of wealth in the hands of a few kings and nobility and the absence of mechanisms, taken for granted by modern societies, which help in creating some form of income equality. These include democratic institutions which have emerged only recently.

As India attempts to evolve a new political discourse based on wealth creation, with the growth rate being taken as a convenient measuring rod to determine the economic health of the country, the question of equality needs to be addressed urgently. If it isn't, we will continue to hurtle towards a time when both capitalism's prescription of free trade and socialism's argument for government intervention will have no effect. In such a future, wealth and the benefits of growth will be limited to a few, and unrest will follow.

The best way to see whether Marx is relevant today is, therefore, to see how the last two hundred years have shaped up after Marx. And if we discover that some of his arguments do have a bearing on the present, we should be prepared to re-engage with them, not out of a dogmatic deference to the past, but for a more fulfilling future.

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