Did Karl Marx Foresee Trump's Rise?

Most mainstream American and European economists stopped studying Karl Marx when the Cold War ended in 1991. His denunciation of capitalism and proposed communist uprising proved too impractical for the Soviet Union and its Eastern Bloc to effectively execute. Even China’s economy shifted away from its communist tendencies over three decades ago, operating as more of a state-run capitalist system today. Yet with many of his ideas discredited decades ago, Marx’s Communist Manifesto is still the third most frequently assigned text at American universities, trumping household names like Adam Smith’s The Wealth of Nations and Milton Friedman’s Capitalism and Freedom. As I’ll explain, this may not be such a bad thing: despite most career economists and politicians disregarding Marxist theory, one of his ideas maintains significant relevance in today’s political climate.

In his 19th century heyday, Marx gained notoriety for his radical ideas about shifting labor and capital. Although disproved by others, his labor theory of value (LTV) ‒ the idea that a good’s value is contingent upon the number of human labor hours needed to produce it ‒ is still included in many economics textbooks. Despite its conceptual errors, understanding LTV is a requirement for foreseeing Marx’s five steps that lead to a capitalist system’s downfall. In Das Kapital, Marx proclaims that many companies begin to exchange human labor for machinery as they compete to increase their production capacity. Marx predicates this substitution on the LTV ‒ as a company’s production capacity increases, so too does the amount of labor needed to produce their goods. Eventually, with companies incentivized to minimize their costs and earn higher profits than their competitors, many begin exploiting workers by halting any wage increases, stretching their hours and speeding up their work pace. Yet because the supply of human labor is both limited (Marx channels his inner Malthus here) and less productive than machines, wealthy companies begin firing workers and automating their production process. With unemployment rising and the macroeconomy expanding its output, unsold goods are left toiling on store shelves and an endless cycle of poverty ensues. According to Marx, the unemployed now band together and form a ‘reserve army of labor’ to uproot the entire capitalist system in favor of a worker-led communist one. He excitingly describes this further in his infamous Communist Manifesto: 

 “The Communists disdain to conceal their views and aims. They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win. WORKING MEN OF ALL COUNTRIES, UNITE!” (Section 4 Paragraph 11)

Before totally disregarding Marx’s communist revolution as an idyllic fantasy, let’s take a step back and note the remarkable similarities between Marx’s reserve army and the United States’s own white working class. America, and much of the developed economy, is now in a peculiar and unfamiliar place. Emerging technology and factory automation threaten millions of low-wage unskilled workers across the country. Much of the Rust Belt, which once reflected a booming American manufacturing sector, now looks like an abandoned shell of itself. One Ball State University study estimates that 87% of the manufacturing job losses are a result of automation, rather than “bad” trade deals shifting jobs to lower-wage countries like Mexico or China. Yet despite thousands of recent factory closures and worker layoffs, aggregate manufacturing output is at a record high. Marx preempted this dichotomy. He recognized that increasingly efficient machines (or robots, in this case) would concentrate capital into a wealthy few, raise unemployment and expand total production. This economic scenario sets the stage for those unemployed workers to revolt, or in today’s context, demand political change.

Although I don’t believe the American capitalist system will be overtaken by angry unemployed workers, which is the inevitable next step in Marxist theory, I do believe that our political system has been temporarily hijacked by Donald Trump’s own minion of Marx’s reserve army. Trump, like Geert Wilders, Boris Johnson, Marine Le Pen and other European right-wing populists, owes his political support to newly unemployed working class citizens. He edged Hillary Clinton by 39% amongst white voters without college degrees, serving as further testament to his intentional courting of formerly employed factory workers. As the Washington Post points out, many of those voters helped him win Rust Belt states like Michigan, Pennsylvania, and Wisconsin ‒ three states that hadn’t gone red since either 1984 or 1988. Is it a coincidence that Marx-esque unemployed factory workers are demanding a complete shift in Washington? Unhinged by job loss, political gridlock, and allegiance to big business (or capitalists, as Marx would argue), this reserve army undoubtedly helped fuel Trump’s November victory. What’s more, Marx may have brilliantly foreseen America’s current economic and political firestorm without even knowing it, nearly 150 years before anyone else.

So what’s next? In Marxist theory, the same group that elected Trump would eventually topple the entire political system and run it themselves. With Trump reneging on many of his campaign promises that wooed those voters in the first place, it’s not impossible to imagine a disgruntled reserve army rallying against Trump during the next four years. His favorability ratings are at historically low levels during only his first few months in office, and unless he can curb the emerging technology behind factory automation and job loss, his doomsday might be near. In other words, continuing the steamy rhetoric against bad trade deals might only get him so far.

- Jordan Wolken

Other Resources to Read:

 https://monthlyreview.org/2011/11/01/the-global-reserve-army-of-labor-and-the-new-imperialism

 http://www.nytimes.com/1989/10/25/us/education-the-mainstreaming-of-marxism-in-us-colleges.html

https://www.wired.com/2016/12/trump-cant-deliver-rust-belt-jobs-work-changed/

Putin’s Economic Crisis

Much of the dialogue surrounding Russia’s sudden withdrawal from Syria portrays Vladimir Putin as a scheming mastermind who defeated the Obama administration in an Syrian proxy war. While Putin attempts to make a show of Russian military strength, he can’t afford the muscle show in Syria anymore. Putin is broke.

 We’ve all seen the shirtless pictures of Putin riding on horses and hunting. These images, along with the Russian military, are part of a massive propaganda campaign to restore a sense of national pride in Russia. Putin’s efforts to increase nationalism stem from his attempt to retain control of the masses and loyalty from his supporters while the economy crashes. The state of the insecure economy is nothing new to Russia, but after several years of economic turmoil, this drop in oil prices could greatly diminish Putin’s popularity.

The Russian economy, which relies heavily on the petroleum industry, has been in shambles since 2015. International sanctions, a drop in the price of oil, and structural instability of the market decimated the economy. Russia’s GDP shrank by about 5%, and on top of that, the price of crude oil plummeted again to a low of USD 30 a barrel in February. The government gets nearly half of its revenue from oil and natural gas, and right now, the budget assumes the price of oil is USD 50 a barrel. If the price of oil does not rise soon, Russia’s GDP growth will take another hit this year.  

Though Putin’s popularity remains shockingly high throughout years of recession, as a result of numerous propaganda campaigns, it is starting to fall as Russians watch their money funnel into a war in Syria and a failing economic system. Putin made a risky play in Syria; he chose to risk further ruining the economy in hopes of solidifying Russian influence in the Middle East. Bashar al-Assad is Putin’s last ally in the Middle East, and if rebel fighters overthrew Assad, Putin would face the consequences. Russia’s influence has faded since the collapse of the Soviet Union in 1991, and another perceived “loss” of Syria to the Americans cannot bode well for Putin in Russia. In addition to facing the anger of the populace, Putin also has to face the Kremlin and explain his failure, which could ultimately result in his impeachment. Rather than risk this, Putin chose to fight in Syria, and it happened to pay off. He did effectively eliminate most of the rebels with his bombing campaign and reinforce Assad’s regime, but his underlying weakness shows in the sudden withdraw from Syria. Putin had to leave, because he cannot afford to stay.

Russia is not a military superpower. Reinforcing Russia’s military might and influence worldwide is only a short term fix to boost Putin’s dying popularity. People will not be satisfied with Putin if he does fix the economy, because at the end of the day, Russian nationalism won’t put food on the table.

- Jessica Steele