©Deirdre Nansen McCloskey | COPYRIGHTED MATERIAL

Getting it Right, or Left: Marxism and Competition

by Deirdre McCloskey
Eastern Economic Journal 27 (4, 2001): 515-520
Filed under brief academic items and editorials

It's educational to keep friends around who disagree with you. Amèlie Oksenberg Rorty, a philosopher/anthropologist, once wrote that what is needed in intellectual life is an

ability to engage in continuous conversation, testing one another, discovering our hidden presuppositions, changing our minds because we have listened to the voices of our fellows. Lunatics also change their minds, but their minds change with the tides of the moon and not because they have listened, really listened, to their friends' questions and objections.
Rorty 1983, p. 562

Words for a scholar to live by.

Böste Karl Marx (1953) des Bildhauers
Berlin-Friedrichshain, Strausberger Platz
Most neoclassical/Austrian economists, even Good Old Chicago School economists, don't know about Marxist economics, the kind that still thrives in places like Japan and Italy, not to speak of the Department of English in the U. S. of A., and they don't care. Furthermore, they know what they don't like, and it's not scientific, whatever it is.

I've always cared, and therefore have been ambiguous about not liking it, though I'm not much more learned in Marxism than the other non-Marxists. I care because I've always had a lot of Marxist or marxoid friends, from Rich Weisskoff in 1964 to Nancy Folbre in 2001. It irritates them when I explain that I was briefly a Marxist myself, before I became an economist. The study of economics tends to drive Joan-Baez-type "Marxism" out of a teenager, or at least it did so quite regularly around 1960. I am just one of numerous elderly American academics who in their youths thought Marx had it just right (or in my case more exactly that the anarchists Prince Kropotkin and Emma Goldman had it right; I still share their dim view of state thuggery). Then we 1950s-and-1960s lefties took a college economics course and learned that the first few pages of The Communist Manifesto was nothing like the last word in economics and economic history. (Professors of English, please listen.) Robert Fogel, for example, the empirical, Chicago-School Nobel-laureate in economic history, was a paid organizer for the Communist Party back in the 1950s, when it was dangerous to be one. Robert Nozick, the economics-drenched philosopher at Harvard, describes in his book of free-market political philosophy, Anarchy, State, and Utopia (1974, p. ix) how he went from left to "right." (Libertarians do not like the confusion between us and the country-club fascists implied by the lumpy categorization "right"). All such students of economics c. 1960 learned, either quickly (those other people) or slowly (me), that competition works for poor consumers and that bourgeois economic growth has been massively good for the poor, too.

My Marxist friends suspect that I do not spend enough time listening, really listening to their stuff and therefore do not quite grasp it, which makes my disagreements misinformed. That's correct. It's my fault. I promise to try to listen harder.

But from the listening I have done, I have some quasi-informed opinions about the few Marxists in American economics. I think I grasp for example what the Cambridge, Massachusetts Marxists of my generation, Sam Bowles and Herb Gintis, a few years ahead of me at Harvard graduate school, with Steve Marglin (ditto) and John Roemer, and the political scientist Jon Elster on the side, are trying to do with "analytic Marxism." They appear to be trying to turn Marxism into a version of Chicago-School economics, right down to a fondness for competitive models and an interest in transaction costs. As a Good Old Chicago-School economist myself I can't get too upset. But I don't like what I discern as the reduction of science to blackboard models, especially the game-theoretic ruminations lacking in quantitative oomph that have taken over population biology as well, for the same reasons I do not like it in Nouvelle Chicago (thus McCloskey 1990). But I am open to listening, really listening. Am I right, fellas? You have given up on Marx and have shifted to Friedman and Schelling and Axelrod as your gurus, yes? Good gurus, those, but I wonder if you might be throwing out a baby or two with the bathwater, eh?

I have an especially large number of Marxist friends among what is known as the Rethinking Marxism crowd. Rethinking Marxism is an American journal (quite a good one: I know because it publishes my stuff) critical of Party-line, old-style Marxism, and of the wannabe neoclassicism of the analytical Marxists. The University of Massachusetts at Amherst, where the journal is spiritually centered, has the distinction of being one of the few American graduate programs in economics with any distinctiveness (the libertarians at George Mason are another one; a third, the Austrians at NYU, are under attack from neoclassicals who have persuaded the deans that normal science is best; Texas long ago gave up its institutionalism, UCLA its property-rights specialty, Virginia its monetarism). It's a curiosity of the science of specialization that only a handful of our graduate departments specialize. Most (not my own University of Illinois at Chicago, by the way: come on over and see an empirically oriented department in action) try to be pale versions of MIT c. 1980, and fail. Anyway, the distinctiveness of UMass Amherst is that it shelters Marxists, of all kinds, among them the students of Stephen Resnick and Richard Wolff. The students founded Rethinking Marxism in the early 1990s. As far as I can make out from my friends in the group, such as Jack Amariglio (the retired founding editor of the journal, with whom I teach in Amsterdam every summer) and Steve Cullenberg (who was my chair while visiting Riverside) and David Ruccio (the new editor of the journal, who is a fellow Chicagoan; he teaches at Notre Dame), the key to their approach is a post-modern sensibility. I am strongly in favor of a post-modern sensibility. My current witticism is that I am postmodern, quantitative, free-market feminist--which means: I don't have any friends. (Get it? I have no friends because everyone hates at least one of my descriptors. Ha. Pretty funny, huh?) So I delight in and write for the works of the pomo group, such as their recent, astonishing book Post-Modernism, Economics and Knowledge (2001). Yet for all my hours listening to Jack and Steve and David they realize that I do not quite grasp what they are talking about. I'll keep listening, listening, guys. Promise. I know you care.

The sort of American Marxism I grasp most easily and sympathize with most thoroughly, I think, is one I associate with Robert Heilbroner (whom an editor got me on the basis of what appears to be an exaggerated report to describe in a recent review as "the late": sorry, Bob). I would call it empiricist Marxism. Heilbroner is a lovely man, who certainly gives the impression of being willing to listen, really listen. Now I do not want to overpraise him. True, The Worldly Philosophers (1953 and numerous later editions) made an awful lot of people take up economics. (On second thought maybe that's faint praise!) Yet as a scientific history of economic thought the book has limitations. And Bob's later, historical work sometimes misunderstands what happened in economic history, I would argue. But what is more important than such quibbles is that at the New School for Social Research (now the New School University, with ex-Senator and Vietnam vet Bob Kerrey at its helm, God bless it) Heilbroner was for decades the leading light, encouraging, it would seem, a style of Marxism that took facts seriously. I don't know. Maybe I have the institutional history wrong. I wouldn't be surprised. But it looks to me from the outside that the New School was a model for people like the late lamented David Gordon (a year behind me as a Harvard undergrad) and Will Milberg at the New School and Bill Lazonick at UMass Lowell and Nancy Folbre at UMass Amherst (with whom someday I will have a much-discussed two-day session at a beauty spa getting facials and mudbaths and really working out our differences and our agreements).

The empiricist Marxists follow the tradition of the two St. Pauls of American economic Marxism, Paul Baran (1910-1964) and Paul Sweezy (1910- ). They are chiefly interested in facts. Sweezy's Ph.D. dissertation at Harvard, for example, was a pioneering piece of new economic history, a real piece of science about the British coal trade (Sweezy 1938). I remember reading it with amazement when I myself was working on my dissertation, and thinking to myself, "Whoops: this is the standard for work in economic history---a quarter of a century before I started. I've got to do at least as good a job as this man I disagree with." I doubt I succeeded.

Last June I was at a conference in Oslo of the International Association for Feminist Economics, IAFEE (pronounced "ee-AH-fee"; you ought to join and go.) Not just women, but mostly. Great time, great group, my people---with whom I disagree almost to a woman. No one who attends regularly except Shoshana Grossbard-Shechtman of San Diego State or, less assuredly, Diana Strassmann of Rice, agrees with me much on economics. Most of the IAFEE people, such as Nancy Folbre, hold views I think more or less mistaken---environmentalism, progressive institutionalism, or, to come to the present theme, Marxism.

I was talking with one of the Marxists at lunch, a French Canadian at the one of the Universités du Québec, and she was astonished at my Chicago-School views. I suspect she does not make a habit of keeping friends who disagree with her. She could not believe that someone holding my anti-Marxist views could be sincere or intelligent. At one point she sneeringly objected that I merely "enjoyed arguing," as though I was faking it, and if woken up suddenly in the middle of the night and quizzed groggily on the spot I would admit to actually agreeing with her Marxists ideas. I've noticed over the years that many people have such an opinion about Milton Friedman: he can't really believe all that stuff, can he? It's comforting to think this way, because then you yourself don't have to listen, really listen.

But let's practice. When I would claim that capitalism was good for women my Québecoise acquaintance would counterclaim, with ill-concealed contempt, that of course capitalism is monopolistic, and therefore must be bad. (I note by the way that the recent Court of Appeals decision on Microsoft reaffirms the old legal dictum that monopoly is not per se bad; after all, you have a monopoly on the copyright on the next article you write.) She gave the example of the evil international corporations, natch, to which I replied that they in fact compete with each other. For example, we North American have now more competition in autos than we had in 1960: instead of the Big Three Plus One we have dozens of companies competing for our business, from Korea to Italy. She said that the international corporations exploit the poor in the Third World. I denied it, and added that the monopolies who really hurt the poor are ones she favors, namely, cartels in retail trade protecting Main-Street stores from competition from the big-box people like Walmart or Home Depot. This made her angry, since in her world it's just obvious that big companies are bad. I replied that Adam Smith disapproved of governments run by any shopkeepers, whether little retailers or big importers, and so does the Chicago School (and some Marxists, such as the historian Gabriel Kolko, who delighted us at Chicago in the 1970s by finding that the Interstate Commerce Commission was a conspiracy by---surprise, surprise---the railways themselves). She was puzzled and angry. How can you believe such rubbish?

But listen, really listen. What we agreed on was that the question whether or not competition actually occurs is central to the political economy of capitalism. If capitalism is just a get-rich-quick scheme by fat cats who run the government, then I say, and I'll bet you do, too: tear it down. March on the country club and torch it (you see that I haven't entirely gotten rid of my Emma-Goldman views). Yet if capitalism is an attempted but failed conspiracy, which as though by an invisible hand has enriched the average Canadian by a factor of eight or so since 1900 (and which, as I have argued recently, in fact encourages "bourgeois virtues" better sometimes than the virtues of a military camp or a religious jihad), then I say: three cheers for capitalism. The state of competition that makes the invisible hand open up to the poor---or not---matters crucially to our disagreement over capitalism.

That's what Baran and Sweezy realized long ago in their great book, Monopoly Capital (1966). Like real scientists they asked a question--does capitalism show a tendency to increased monopoly?---and went into the world to find out the answer. That's science, kids. (And it has a long historian in Marxist economics. Aside from the master himself, and Engels, the very matter of monopoly capital was treated in 1920 by Rudolf Hilferding in a thoroughly modern way---the Hilferding index has of course received attention from such anti-Marxists as George Stigler, but Hilferding was an Austrian Marxist.) My conclusions from a lifelong flirtation with Marxism and Marxists is that my kind of economics walks away from a great many answerable scientific questions like this one, which we need to face up to. When Bill Lazonick claims that innovations in British cotton textiles in the 19th century were dominated by motives of union-busting I can't just sneer and ignore his evidence. When Jack Amariglio claims that the market, in which by the way he participates joyously, has evil effects on its participants, I have to listen.

And even on the narrow matter of industrial organization there's a lot to learn. Mainstream neoclassical economics has wandered far off the competitive point. The study of industrial organization has been reduced to chess-problems about game theory, to which unhappily the analytic Marxists contribute. It's a scientific disgrace, as more and more economists are realizing. Meanwhile the great empirical question---Is capitalism competitive?---has been cast aside. The empirical Marxists have at least stuck to the real question. Good for them. Heh, the rest of you: wake up. Become scientists at least as serious as the empirical Marxists. Read Folbre's The Invisible Heart (2001) and see if you can answer it. Believe me, you will not find this an easy standard to meet.

Yet I think a real answer to the real, Marxist question about the competitiveness of capitalism would yield surprising results, not at all like what the Marxists believe. The Northwestern law professor David Haddock and I sketched decades ago an empirical project, never implemented, to find out whether competition has increased or decreased in the past century and a half. We wanted to measure the degree to which an average consumer faced one, two, three, N competitive suppliers for her bread, her roads, her education. We were going to use the vast and unused sources from the consumer's point of view---things like diaries of purchases (in South Asia the middle class habitually keep them, and tot them up annually; imagine what you could do with computer records on individual sales). Our strong suspicion was that falling transport costs (called these days globalization) and the enriching of the product range (reinforced concrete substituting for structural steel, for example; cell phones for land lines) has since 1850 or 1900 increased, not decreased, the degree to which consumers (both final and business consumers) have real choice and the degree therefore to which producers are forced to pass on technological gains. That is, Baran and Sweezy, though asking the right question, had the wrong answer (the date at which they assessed capitalism may have mattered: in 1966 after three or four decades of retreat from libertarian principles---in schemes like resale price maintenance and trade protection and farm policy---the notion that capitalism was growing less competitive may have seemed plausible; it was just about to change). Capitalism in the long view is not monopolistic; it's competitive, and increasingly so. Which if true, my Marxist friends and I agree, would make all the difference.

That, my dears, is the advantage of cultivating friends outside those who every single time agree with you about fundamentals, which are the usual sort of intellectual friends economists favor these days. Disagreeing, if not disagreeable, friends make you a better person and a better scientist, changing your mind not with the tides of the moon, or the dictates of some Party line, but because you have listened, really listened, to your friends' questions and objects. Give it a try.

Works Cited

Amariglio, Jack, Stephen Cullenberg, and David F. Ruccio, eds. Post-Modernism, Economics and Knowledge. London and NY: Routledge, 2001.

Baran, Paul, and Paul Sweezy. Monopoly Capital: An Essay on the American Economic and Social Order. NY: The Monthly Review Press, 1966.

Folbre, Nancy. The Invisible Heart: Economics and Family Values. NY: The New Press, 2001

Heilbroner, Robert. The Worldly Philosophers. NY: Simon and Schuster, 1953 and later editions.

Hilferding, Rudolf. Finance Capital. 1910, in German.

Kolko, Gabriel. Railroads and Regulation. NY: Norton, 1970.

McCloskey, Deirdre. "Their Blackboard Right or Wrong: A Comment on Contested Exchange." Politics and Society 18 (2, June, 1990): 223-232.

Nozick, Robert. Anarchy, State, and Utopia. NY: Basic, 1974.

Rorty, Amelie Oksenberg. "Experiments in Philosophical Genre: Descartes' Meditations." Critical Inquiry 9 (March, 1983): 545-564.

Sweezy, Paul M. Monopoly and Competition in the English Coal Trade, 1550-1850. Cambridge: Harvard University Press, 1938.