The Faux Karl Marx: Bankers, Come Clean, You Have Nothing to Lose But Your Dignity

By Tracy Dove, Ph.D
Editor, The Russia News Service

February 17, 2009

The stimulus package has been approved, but no one likes it very much and as a result money is still evaporating on Wall Street. The fiat currencies of the world are feeling the shaky ground below them, and central bankers in London, Washington DC and Tokyo are wondering to what level the public debt must grow before the public loses interest in purchasing it. It's a financial Armageddon which is on the minds of bank CEO's around the world they have in mind- an unimaginable day when the ATMs just don't work anymore. Just shy of 141 years ago, Karl Marx described how the capitalist system would crumble, and he was incredibly detailed about it in a book called Das Kapital. In the light of what's shaking the stability of our 401 (k) plans, it might warrant a look if we are there yet.

There is a quotation flying in and out of email boxes of the financial capitals of the world, and it goes something like this:

"Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take more and more expensive credits, until debt becomes unbearable. The unpaid debt will lead to the bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Communism."

Sound eerily like what we are facing today? It should send a shiver down your back if it was really Karl Marx who wrote it- but it wasn't. Based on the scale of ridiculousness it seems that the banking industry's Corporate Culture and Imaging Department has moved to the dreary dungeons of Wall Street, from where the new generation of bankers are trying out some really new ideas. If we give them credit for cleverness then we can assume the paragraphlet above was crafted to test the waters of public gullibility- then based on the chatter it has generated it seems that the wizards of finance have surpassed even their own expectations. It's a shame no one reads Marx anymore, especially since it was thanks to this ideology that we got us a Cold War which generated trillions of dollars and provided the US State and Defense Departments (as well as countless churches) with their raison d'etre for most of the 20th century. The reality on the ground may look a lot like the foreboding quotation above, but that was just the banks spreading rumors, trying to the get bank bailout bill passed and their stocks up. Marx meant something entirely different in 1867.

Firstly, the big thing in the 19th century was class conflict, and Marx believed that falling wages would affect one class more than another, precipitating revolution. He explained it through an interesting concept known as “added value”- which is simply the amount retained in a sales price after labor, materials and costs are factored in. While this sounds a lot like what we call “profit”, it's a little more complicated than that. Marx believed that the change in labor relations was what changed everything: the working class became exactly that once they lost their tools and control over their labor and became a wage-earning class. This allowed the capitalist form of exploitation to emerge, the misery from which, he believed, would bring about world revolution.

So no consumer-driven bankruptcies, like in the quotation above. Marx was more troubled by housing; interestingly, much of his work was dedicated to the lack of housing in 19th century England and the revolt that would eventually come once the Proletariat wouldn't take living in deplorable conditions anymore. The housing problem then isn't the same problem we have today: this is where you can read the bankers' trade into this misquotation- they are trying to vindicate themselves in the eyes of today's readers. In that faux Marx above it was the “owners of capital”- and not the banks- which were responsible for the ensuing revolution.

And lastly, any well-read westerner today could read into that quotation the most ridiculous of claims: that the workers would be forced to take out bank credit. In most of the 19th century, banks served at best as a place to store your money- if you had any. No banks were handing out credit lines, and department stores were not giving away store credit. Banks were investment tools, and most of the rewards or shocks experienced were something that the working classes were spared.

Yes, working classes- in the plural- as Marx admitted that it was difficult to get these classes to unite. Today's designation of classes is based on income statistics, and whatever the middle class is it is apparently the one getting the shaft these days. It's an entirely different world than the one Marx was writing for 141 years ago. What we have today is a simple international banking crisis that has left the world in debt. Marxism has little to do with our present concerns, only that we can be sure that capitalists- as well as the middle class- will take a financial hit. Chances are that the working classes- if there are any left- might actually come out of this all the better when compared with the losses assigned to the holders of equity, bonds and property. The bankers are in their last throes of insolvency- but the Marx quotation was a pretty good joke- while it lasted.

Tracy Dove, editor of The Russia News Service, is a Professor of History and Dean of Summer Programs for the Lessing Institute. He also teaches history at the Anglo-American College in Prague.

See all previous articles by Tracy Dove here.