Marx and Smith vs. Liberals

Any self-respecting economist should periodically give not just analytics, but something more fundamental that drives science even a little forward. Let’s go.

In 2009 Éric Toussaint wrote an article, Adam Smith is closer to Karl Marx than those showering praise on Smith today. I not only agree with its content, but I would also add Max Weber there.

Because even Adam Smith in the 1770s explicitly wrote that “the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master’s profit”.

I.e., Smith 70 years before Marx confirmed there was surplus value.

And the “alleged contradiction” between Smith and Marx’s works, about which we’ve heard about for a very long time and often, is largely far-fetched and ideologised. Rather, Marx on many positions complemented and developed Smith’s thoughts.

Stalin, by the way, perceived the concept of value added under socialism in a special way, dividing “work for oneself” (remuneration of labour) and “work for society” (surplus value). I.e., for Stalin, the place of a capitalist, who appropriated part of the worker’s work, was occupied by society as a whole (or the state as its subject representative).

The whole socialist theory yells: “This is state capitalism!” But I digress.

Equally far-fetched was the distinction between the economies of the early USSR and the modern United States.

Moreover, the crisis in both countries began at almost the same time. In the late 20s, the NEP stalled in the Soviet Union, and the Great Depression started in the United States.

And the way they came out of this crisis in many ways was similar. We have industrialisation and collectivisation, in the USA – destruction of small farms (in the USSR, however, the famine of the early 30s was caused by crop failure, and in the USA farmers were simply ruined and deprived of their livelihood, as a result of which about 8 million people died from hunger).

In general, the consolidation of land farms is logical and effective, because large commodity production is always more efficient and profitable than small ones (nobody argued with this even a hundred years ago).

We have a state economy, and in the United States: the reforms of Roosevelt (actually John Maynard Keynes) to strengthen the role of the state in the economy.

It’s just that in the USSR Lenin directly wrote that “we are building specific (people’s) state capitalism”, and Keynes bashfully called it “state intervention in the economy”, i.e., temporary and forced measures.

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At the same time, at some moments, such as the confiscation of all gold from the population, the US government was much more radical, and spat on the “inviolability of private property” from a high bell tower.

There’s one subtlety here. Attention! The methods of recovery from the crisis of the 20s of both the USSR and the United States were largely the same – strict state regulation of strategic sectors of the economy.

But! In the USSR, the beneficiary of state intervention in the economy was the state itself, and through it, indirectly, the whole people.

And in the United States, the beneficiary of government intervention was large capital. First industrial and then financial.

As I always say with regard to the state, it is not necessary to scold the instrument, it is necessary to see who uses it and why.

So Keynes’ reforms in the US proved to be so effective that (even though Keynes himself denied he was a socialist) it led to a very strong increase in the number of communists/socialists in the US. Because “state regulation rules”, he-he.

Rather, Keynes can ironically be called a “socialist against his will”. Because in 1932 he wrote that “economic policy should focus on reducing the high unemployment rate, the distribution of income on the basis of equality: he believed that if the government did not achieve full employment and achieve relative equality, there was a serious threat of fascism or Bolshevik communism winning”.

I.e., if a real socialist wants the good of people out of love for them, Keynes wanted the same out of fear.

But even Keynes’ position is still much better than his main opponents. Because if Keynes believed that in times of crisis, wages needed to be raised to stimulate consumption (which is logical), his main opponent Hayek believed that the opposite was the case – wages needed to be cut to [no argument].

And here in 1947 Milton Friedman, Hayek, and Mises (who even called these three economists?!) create the Mont Pelerin Society.

I quote Anderson (1996): At the end of the meeting, the Mont Pelerin Society was formed – a kind of neoliberal Freemasonry, well organised, elected by its activities to sow neoliberal teachings with regular international meetings.

The ideology of neoliberalism was based on the “teaching” of the ignorant Swede Alisa Rosenbaum (aka “Ayn Rand”), set out in “Atlas Shrugged”.

To understand the scale of insanity:

  • Alisa never had an economic education. She is a seamstress.
  • “Atlas Shrugged” is the most common book in the United States after the Bible.
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Ayn Rand volunteered to participate in the congressional hearings on the Communist Party’s influence on the American film industry. She not only supported the commission, but also brought an ideological basis for a ban on the profession for Communists and the creation of black lists. I.e., she was also a snitch.

So, Friedman, Hayek, and Mises all supported Alisa Rosenbaum’s sectarian delusions about “creating hard-working capitalists” and “parasitic lazy workers”.

This (attention!) directly contradicts Adam Smith’s teaching of surplus value. This very clearly and unambiguously characterises both these “academic economists”, forgive me Hegel, and their sectarian faith.

To be honest, I until recently believed that the Mont Pelerin Society, like the neoliberal ideology in general, was created for the ideological struggle against the USSR.

But recently I came across a number of publications that clearly indicated that it was a secondary task for them (the USSR is still far away from the USA), and they first and foremost fought Keynesianism.

For this purpose, they established three “economic schools” – the Geneva Institute of International Relations, the London School of Economics, and the University of Chicago.

However, it is clear why they hated and feared Keynes so much:

  • His reforms led to an increase in left-wing sentiment in the United States (and not only);
  • He had many strong pupils and followers.

For example, one of Keynes’ followers was the Argentine economist Raúl Prebisch, who developed a theory of dependent development (all real leftists and/or patriots must mandatorily be familiar with it) and justified the need for an import substitution strategy.

And on the basis of Prebisch’s statements, Wallerstein had already developed a world-system analysis.

I.e., all these people purposefully and at the level of scientific knowledge fought against imperialism, tied to financial/speculative capital. This thing will be stronger than Goethe’s Faust.

Another student and follower of Keynes was the distinguished American economist John Kenneth Galbraith, who is the creator of the theory of mature corporations and is considered to be the founder of “new socialism” (or “Socialism 2.0”).

While Keynesians moved economic science forward, the neoliberals were giving each other undeserved Nobel prizes in economics behind the scenes.

And modern Keynesians believe that money issuance, banking, and financial transactions on stock exchanges should be tightly regulated by the state (preventing the creation of financial bubbles and limiting speculation), and often even take it into their own hands. You understand that this is an attack on the foundations of financial globalism?

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Most importantly, the peak of its power and the prosperity of the United States were reached just at the time of Keynesianism’s dominance – in the 50s and 60s, when the middle class exceeded 60% of the population.

And then the neoliberals came with their “Reagan” (though rather “friedmanomics”) and made the United States hooked on the printing press.

This is what is called “Dutch disease”, in which the most profitable occupation is the printing of money (and its subsequent redistribution through Wall Street and several of the largest banks), making all other occupations economically meaningless – and this gradually leads to a decline in production.

Is it not clear that under the leadership of the sectarians Friedman, Hayek, and Mises, who denied Adam Smith’s basic surplus value postulates, America simply couldn’t have been successful? They never had such a task – they always served the interests of bankers.

After all, as the same Adam Smith said, “producing nations thrive”.

This article could end here, but I do need to add why I think Trump won’t succeed.

Because he, for all his conservatism and pragmatism, is not Keynesian enough.

1. In order for America to try to break out of the unfolding recession, wages need to be raised to stimulate consumption. As Ron Paul suggested in the last presidential election: “Instead of saving banks, it is better to just give this money to Americans.”

2. But this in itself is not enough, because if you simply raise wages, this money will be spent not on the purchase of goods, but on the payments on loans. I.e., they’ll flow to the bankers again.

Therefore, it is necessary to transfer control over systemically important banks to the state and to simply write off most of the loans of the population. Yes, it will collapse the fortunes of the financial oligarchy, but who cares? They are still all from the liberal wing of the Democratic Party, they are not sorry (actually, the United States went into decline precisely because of their greed).

However, this requires unparalleled courage (Kennedy was killed for less) and control over the intelligence agencies. In the meantime, Trump cannot even jail Biden (far from the largest figure among globalists) for corruption.

Aleksandr Rodgers

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