Marx, Uno and the Critique of Economics

This chapter tracks how I originally came to economics, Marxism and Uno, together with the circumstances in which I began studying Marxian economics under Uno’s guidance in my undergraduate years, and took a deep interest in it. I will then explain the reasons for my subsequently pursuing graduate training in mainstream, bourgeois economics in the West. It foregrounds questions of my interest in Hegel’s dialectic on the one hand and in the general equilibrium approach to economics in the Walrasian tradition on the other, two things that do not at first sight seem to mix very well. Therefore, I will explain the way in which they are related to each other in my Unoist view of economics. I wish to state here that I could come to the present (and hopefully more adequate) understanding of Uno’s teachings only very recently, quite a bit after my retirement from active service as an economics instructor.

Broadly, Marx’s “economics” tends to be grouped together with others, such as the economics of Adam Smith and Ricardo, as “classical”. The most obvious reason for that is their shared commitment to some form of the “labour theory of value”, something that mainstream economics today generally sets to one side. It is, therefore, necessary first to explore and ponder why and in what manner Marx intensely examined the prior history of political economy, so as to critically appropriate its classical (and bourgeois) version. In this connection, we need to focus especially on the labour theory of value, which both the classical economists and Marx shared, while carefully examining how Marx’s version of it differs from the classical one. What marks Marx’s labour theory of value as distinct from that of the classical school, and in what ways does that difference matter? I will address this question by explaining what the labour theory of value should correctly mean, and in what sense it holds the key to the veracity of economic theory. I will also affirm that, short of grasping this point, no one can hope to comprehend economics as scientific (and objective) knowledge.

Today, the prevailing view is that “bourgeois” economics has attained paradigmatic legitimacy by being “naturalized”, i.e., by pretending to have become an “objective science”, however imperfect, in the same sense as a natural science is believed to be. That is quite different from what I have been claiming here so far, namely that Marxian economics (and more precisely its Unoist variation) represents an objective knowledge of capitalism (or the “capitalist mode of production”, more precisely) as the base (or “substructure”) of modern society, which is a historical society. It is, therefore, quite important to clarify and to stress the point here again that objectivity in the natural sciences is quite different from that in a social science, such as economics. If, indeed, one tries carelessly to import the idea of objectivity in the natural sciences into the social-scientific discipline of economics, one is bound to be caught in a “contradiction” even in the formal-logical sense. For, that would mean to assert, in effect, that capitalism is as immutable as nature is. In that case, capitalism could not possibly be a historical society, a society that comes into being at one point in history and departs from it at another. I have tried to show, however, that to regard capitalism as immutable as “nature” would amount to (or would be equivalent to) believing that it is God’s design, and that, with that sort of presupposition, economics is bound to degenerate into a religious dogma, and cannot remain a science in pursuit of any objective knowledge pertaining to ourselves and our deeds as human beings. Only the most reactionary brand of the bourgeois-modern school of economics, which glorifies capitalism as an end in itself, can uphold such a monstrously unreasonable idea without any scruple.

Uno’s approach to economics, as the study of capitalism, is characterized by its method of sharply distinguishing the three levels of abstraction: (1) the level of the pure theory of capitalism (his genriron), (2) that of its stages-theory of capitalist development (his dankaïron) and (3) that of concrete-empirical history of all capitalisms (his genjô-bunseki). Uno often criticized the usual practice typical of conventional Marxists in applying the same term “necessity (Notwendigkeit)” indiscriminately to characterize the theoretical regularity of “periodic economic crises”, the predictability of the outbreak of an “imperialist war”, or the desirability of the victory in a “proletarian revolution”. According to him, the first necessity is a purely logical one, which can be rigorously demonstrated; the second necessity has to do with the stages-theoretic prognosis that capitalism will most likely end in a military confrontation between a coalition of old imperialist powers and several newly emerging imperialist nations, which are vying with them on the other; while the third necessity has to do only with the ideological wish or belief that Marxism may eventually prevail in history. He also rejected the Marxists’ easy practice of flaunting an undependable claim to the dialectical unity of theory and history, of logic and practice and so on, which amounts to no more than their ideological self-deception. Theory (the “logical synthesis of capitalism”) and history (the “empirical histories of manifold capitalisms”) must be mediated by the mid-range theory (or “stages-theory”) of capitalist development, in just the same way as Hegel’s “metaphysical logic” and “empirical studies of factual disciplines” must be mediated by his “philosophies of nature and of finite spirit” (I also wish to add here that”imperialism” as the final stage of capitalist development ended irrevocably with the world war of 1914–18, and cannot directly explain such more recent phenomena as “Fordism”, “neo-liberalism”, “globalization” and the like, which appear in the subsequent phase of the “disintegration of capitalism” as opposed to that of its “development”).

Uno learned from Marx the method of “critiquing” classical political economy, and that, by faithfully following that method, Uno discovered in effect the “rational kernel of the dialectic within the mystical shell” of Hegel’s idealist philosophy. Having thus established the materialist “dialectic of capital” as the theory of economics, a factual science, at the core of Marxism, he in effect “inverted” its conventional view. In doing so, Uno also discovered the sense in which the knowledge of human society can be judged to be “objective”, though in a sense quite different from that in which the knowledge of a natural science is commonly believed to be so. Furthermore, Uno’s implicit Hegelianism has enabled him to defy the modern philosophical tradition of the “dichotomy between the physical and the spiritual”, and Kant’s thesis pertaining to the impossibility of penetrating the thing-in-itself of an object of study in the sphere of the non-spiritual, i.e., the factual. For, there exists a “social (inter-human) space” yet to be explored between the spiritual and the physical. Uno also discovered that social science must begin with investigations into “capitalist society”, a particular case, before arriving at a more general idea of what any “human society” may be like, rather than the other way round. We need to pay due attention to this feature of Uno’s thought which requires us to go from the best developed particular (capitalism) to arrive at the general (human society in general), rather than the other way round, in quest of true social-scientific knowledge.

In this section, I first wish to explain how I understand the current, worldwide economic crisis in the longue-durée history of capitalism. In regard to “capitalism”, I have already claimed, in Part I, that its phase (or process) of “development” through the three stages of mercantilism, liberalism and imperialism, ended irrevocably with the First World War (1914–1918), and that a new phase (or process) of its “disintegration”, which I often also categorize as that of the “ex-capitalist transition”, began thereafter. What distinguishes these two phases (or processes) of capitalism (here again in the sense of Marx’s “capitalist mode of production”) is that, in the former, the system was basically self-regulatory, both in its macroeconomic and microeconomic aspect, whereas in the latter, that is no longer the case. In other words, during capitalism in its “developmental phases”, both the macro-law of (relative surplus) population, which determined the value of labour-power, at its near full employment level, given the available state of industrial technology, and the micro-law of value (or of average profit), which tended to ensure a near-optimal allocation of productive resources (including especially of productive labour) to all the branches of industry, enforced themselves automatically. The bourgeois nation-state was thus a “minimalist state” in the sense that it interfered least with this dependable self-regulatory mechanism that was inherent in genuine capitalism. In the latter “phase of capitalism’s disintegration”, however, these two basic laws do not enforce themselves automatically any more, as they are both paralyzed and thus dysfunctional. It is for that reason that the nation-state had to adopt the new form of the so-called mixed economy, whereby to intervene with its macroeconomic policies. Only by means of these policies can both the highest possible activity level of the economy together with a near-optimum supply of active money (by fiat, and thus not based on gold) be achieved. That would also entail microeconomic (industry-specific) policies of regulation so as to ensure society’s overall welfare. Although this general trend has been understood and accepted as a “fact” even by bourgeois economics, the latter never engaged itself in seriously reflecting on the meaning of that fact. Nor did it really comprehend the reason why these policies have nowadays become indispensable. Bourgeois economics has not really accounted for the reason why the international gold standard (or any other commodity-money) system could not be restored after WWI. It, therefore, failed to account for the reason why the minimalist “bourgeois state” must now be replaced by a more munificent “welfare state”, in order to adequately support the needs of our real economic life in society. The nature of the present malfunctioning of the world economy will not be grasped, for as long as the profession of economics continues to equivocate on this crucial matter.

In reviewing the process of the “disintegration of capitalism” above, I referred only in passing to the evolution of bourgeois economics during that process. But the prevailing opinion today is that bourgeois economics has somehow attained “paradigmatic legitimacy” given that it appears to have been “naturalized” as an “objective science”, however imperfectly. Such a misguided view, though I have already dismissed it out of hand, has been reinforced particularly after the “neoclassical resurgence” in bourgeois economics in the 1980s, together with the rejection of Keynes that followed, especially after the end of the Cold War. In this chapter, I wish to review how in the course of the disintegration of capitalism that sort of self-deceptive view has demonstrated its remarkable staying power through the vicissitudes of an eventful economic history from the Peace of Versailles to the present. The third generation neoclassical economists found that, with the sudden disappearance of their strong rival (the German school of Socialpolitik), the so-far distinct regional difference of style among themselves in Europe (with centres in Vienna, Lausanne and Cambridge) also disappeared, as their influence extended also to the United States. Perhaps they were also influenced, in the meantime, by the new developments in physics in the light of discoveries of quantum mechanics and relativity. But if we examine the economic history of the world during the disintegrative process of capitalism, it is clear that the intense feeling of nostalgia towards modernity and civil society never ceased to support and inspire the dominant power-structure of the existing society, and empowered it to resist all the symptoms of post-modern society, including Keynesianism with its curt message of the “euthanasia of the rentier”.

Capitalism in its phase of “disintegration” as opposed to that of “development” is no longer “self-regulating”, and that is the reason why a national economy in the age of “capitalism in disintegration” cannot hope to automatically achieve its highest attainable activity level, in the “sub-phase of average activity” through typical capitalist business cycles, characterized by decennial, Juglar-type periodicity. Even business cycles become irregular and fail to retain the typically decennial Juglar pattern. In order then to achieve the same (or a similar) goal, without depending on the automatic working of the self-regulatory mechanism of capitalism, the nation-state must now judiciously operate its macroeconomic policies, fiscal and monetary. These are the policies that the United States first introduced by virtue of the Employment Act of 1946 and so marked a turning-point. So far as mainstream bourgeois economics was concerned, it accepted these two macroeconomic policies “in practice”, fiscal policy to invigorate and monetary policy to restrain the economy of the private sector, as the case might be, but without due scientific reflection as to their necessity and rationale. It merely accepted the convention that the Treasury should be in charge of fiscal policy, while the Central Bank should likewise be entrusted to operate monetary policy, simply as some counter-cyclical measures to stabilize the otherwise uncertain private economy, without realizing that such an easy “division of labour” would only end in the sterile Hicksian analysis, based on the celebrated diagram in which the so-called IS and LM curves cross, as popularized by all bourgeois textbooks on macroeconomics. My view, however, is that, so long as we continue to be trapped by that type of superficial analysis, the present world economy will never be salvaged from its persistent and steadily aggravating deflation by means of any currently standardized macroeconomic policy.

I believe I have established in the above the correct method with which we may address the problems of the world economy today. I am, however, quite aware that my proposal flies in the face of the present state of the profession. I, therefore, wish to stress once again that all the so-called tools of monetary policy, as usually popularized in mainstream textbooks, are without exception “asymmetrical” in the sense that, even though they are perfectly effective in restraining an already overheated inflationary economy, they are completely powerless in reactivating one that has already been trapped in the doldrums for some time. This fact was not unknown in the past as indicated by the famous and venerable metaphor that we can move a thing towards us by “pulling a string”, but we cannot move it away from us by “pushing a string”. Yet, more recently, with the eclipse of Keynes’ prestige, it has been falsely claimed that, in the present condition of the economy, Keynesian fiscal policy has entirely lost its effectiveness, and that we have no choice under the circumstances but to creatively adapt the tools of monetary policy in dealing with the current, worldwide impasse of persistent deflation and economic slowdown, macroeconomically. However, the so-called monetary policy of Quantitative Easing (QE) recently invented and enforced has proven to be a complete failure with a view to relaunching or reactivating today’s sluggish world economy, which, since the “subprime” crisis of 2008 that terminated the “housing bubble”, has remained completely powerless in making a dent in the persistent stagnation. In order for the world economy to retrieve health and stability, it will be necessary to stop deflation first, and, above all, in the so-called advanced countries, by holding back the uncontrolled activities of “casino capital” decisively.

Now that the “disintegration of capitalism” has become definitive and its end imminent, we must next and last think of a “transition away from capitalism” towards what Uno called a “new historical society”, the economic substructure of which may be labelled “socialism” in the good old tradition of both Marxism and Uno. Yet, “socialism” in this context is still only a name that we tentatively apply to the as yet largely unknown substructure of Uno’s “new historical society” (today more commonly referred to as “post-modern society”), that has yet to evolve. It would, therefore, be both utopian and idealist to talk about it in detail at this point. In the meantime, however, it is now clear that the time-honoured “bourgeois state”, the traditional form of the nation-state that served as a (political and legal-administrative) “carapace” within which to develop our real economic life under capitalism will cease to serve our purpose. It has become necessary for us to deliberately seek a “welfare state”, as a new form of the nation-state, into which the bourgeois state must transform itself. It is in the process of creatively adapting this “welfare state” most effectively to the needs and aspirations of the new style of our economic life that we may be in a position to definitively terminate capitalism, and to introduce in its place a proper management of the substructure fit for a “new historical society”. In the meantime, the prevailing trend towards so-called globalization does not in any sense reflect the socialist’s old idea (or dream) of the “withering away” of the (bourgeois) nation-state, which will become real only when national borders become irrelevant to the real economic life of all humans.