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May 27, 2014

What's the Big Deal About Wealth Inequality? (Steven Den Beste)

I learned about this from Lee Harris. It has to do with the "immiseration thesis" of Karl Marx.

So in order for revolutionary activity to have a chance of succeeding, there is an unavoidable precondition: The workers must have become much poorer over time. Furthermore, there had to be not merely an increase of poverty, but a conviction on the part of the workers that their material circumstances would only get worse, and not better — and this would require genuine misery.

This is the immiserization thesis of Marx. And it is central to revolutionary Marxism, since if capitalism produces no widespread misery, then it also produces no fatal internal contradiction: If everyone is getting better off through capitalism, who will dream of struggling to overthrow it? Only genuine misery on the part of the workers would be sufficient to overturn the whole apparatus of the capitalist state, simply because, as Marx insisted, the capitalist class could not be realistically expected to relinquish control of the state apparatus and, with it, the monopoly of force. In this, Marx was absolutely correct. No capitalist society has ever willingly liquidated itself, and it is utopian to think that any ever will. Therefore, in order to achieve the goal of socialism, nothing short of a complete revolution would do; and this means, in point of fact, a full-fledged civil war not just within one society, but across the globe. Without this catastrophic upheaval, capitalism would remain completely in control of the social order and all socialist schemes would be reduced to pipe dreams.

The immiserization thesis, therefore, is critical to Marx, for without it there would be no objective conditions in response to which workers might be driven to overthrow the capitalist system. If the workers were becoming better off with time, then why jump into an utterly untested and highly speculative economic scheme? Especially when even socialists themselves were bitterly divided over what such a scheme would be like in actual practice. Indeed, Marx never committed himself to offering a single suggestion about how socialism would actually function in the real world.

Time has not been kind to the immiseration thesis, because capitalism did indeed make the lot of the workers better and better. By the middle of the 20th century, the proletariat in the western industrial states had achieved a level of wealth and comfort which was the envy of the world. They mostly owned their homes (minus bank loans) and they had indoor plumbing, electric lighting, stoves, televisions, radios, and cars. They had plenty to eat, and closets full of clothes. This is not the stuff of revolutionary vigor, and contemporary socialists despaired. What can make these bastards rise up in revolt?

The new concept, according to Harris, was known as "relative immiseration". Basically it was an appeal to envy: yeah, I've got a lot of stuff but he has more than I do.

By the twentieth century the immiserization thesis was already beginning to look shaky. Empirical evidence, drawn either by impressionistic observation or systematic statistical studies, began to suggest that there was something wrong with the classical version of the thesis, and an attempt was made to save it by redefining immiserization to mean not an absolute increase in misery, but merely a relative one. This gloss allowed a vast increase in empirical plausibility, since it accepted the fact that the workers were indeed getting better off under the capitalist system but went on to argue that they were not getting better off at the same rate as the capitalists.

The problem with this revision lay not in its economic premises, but its political ones. Could one realistically believe that workers would overthrow an economic system that was continually improving their own lot, simply because that of the capitalist class was improving at a marginally better rate? Certainly, the workers might envy the capitalists; but such emotions simply could not supply the gigantic impetus required to overthrow a structure as massive as the capitalist system. Before the workers of a capitalist society could unite, they had to feel that they had literally nothing to lose — nothing to lose but their proverbial chains. For if they had homes and cars and boats and rvs to lose as well, then it became quite another matter.

In short, the relative immiserization thesis was simply not the stuff that drives people to the barricades. At most it could fuel the gradualist reforms of the evolutionary ideal of socialism — a position identified with Eduard Bernstein.

One theory the Marxists embraced was the idea that miserable people in poor nations might end up being the stuff of revolution. The problem with this idea is that it required them to rise militarily not just against their own nations, but also against the wealthy nations -- who had extremely powerful militaries, not to mention nuclear weapons. That really didn't seem very plausible.

But there was a brief period of euphoria for modern Marxists after the 9/11 attack, when it seemed as if it might well be the first blow of poor 3rd world people against the capitalist West. Of course, the people who made that attack, and the ones who planned it, weren't from poor 3rd world nations. And anyway, it didn't end up working out.

The recent publication of "Capital in the 21st Century" by Thomas Piketty is the latest attempt to revive the relative immiseration thesis. Marxists have pretty much given up on the 3rd world as their saviours, and returned to hoping they can somehow get the 1st world proletariat to rise up. The extended economic malaise since the crash in 2008 has encouraged them in this, and Piketty's book is an attempt to show that increasing inequality of wealth is a real phenomenon.

Recently it's been claimed that he cooked his data and his calculations, with made up values and fudge factors. It has been claimed that if you take out all those things, the data doesn't back up his conclusions. A lot of people are going to be looking into this, and in a few months we'll have a better idea about it. But no matter how that turns out, it isn't ultimately going to be what the Marxists want it to be. Envy is not the stuff of which revolutionary fervor is made. Even if Piketty is accurate, the relative immiseration thesis is still a fantasy.

But western Marxists will still screech about it, because they have nothing else. It's their best card, even though it's a deuce.

-- In case it's not clear, this is a post written by Steven Den Best. I (ace) am just posting it.

Fixed: Steven alerted me that there was one error in the piece, misnaming "Capital in the 21st Century" as "Capitalism in the 21st Century."

I didn't correct that before I posted, despite being alerted to it, so that error is actually mine. [ace]

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posted by Ace at 01:12 PM

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