International Politics SC2050222

Topic: Does the existence of massive global inequality validate Marxist analysis? Why / why not?

Does the existence of massive global inequality validate Marxist analysis? Why / why not?

The existence of massive global inequalities today validates Marxist analysis, to a certain extent. Marxist theory revolves around the notion that capitalism gives rise to antagonistic classes in society, and further, that inequality and poverty are functional components of a capitalist mode of production (Peet, 1975). According to Marx, the core conflict of a capitalist society is between the bourgeoisie1 and the proletariat2 (Marx, 1978), where inequality is created due to the exploitation of the proletariats, or the working class, by the bourgeoisies, the capitalists (Ibid). It is acknowledged that, in todays society, a vast amount of inequality is present, but given the limited scope of this report, the primary focus will be on the recent Global Financial Crisis (known as the GFC from herein), where colossal economic inequality rose to prominence on a global scale. Whilst the paper provides insight as to why Marxist theory is validated by the GFC, it will also focus on the critiques of Sir Karl Popper and others who claim Marxism has its limitations in its application as a theory.

The GFC that struck the world in 2008 was dubbed by many leading economists as the largest financial crisis the world had seen
1

Bourgeoisie, the owners of the social means of productions, retrieved from http://www.marxists.org/glossary/terms/b/o.htm 2 Proletariat, synonymous with working class, retrieved from http://www.marxists.org/glossary/terms/p/r.htm#proletariat

since the Great Depression of the 1930s (Roubini, 2009). It was believed that one of the primary causes of the GFC, specifically in the USA, was the ever-growing inequalities in income and wealth between households in US society and between capital and labour (Kotz, 2009). Parallels can be drawn from the GFC to Marxs beliefs that capitalism would become a global system, where ultimately its inequalities would become intolerable. Marx foresaw a system where enslavement to capital would be rife, with his definition of capital being dead labour which, vampire-like, lives only sucking living labour, and lives the more, the more labour it sucks (Marx, 1867). Marxian economists highlighted that the majority of income growth in the USA from the late 1970s to the mid 2000s was going to the top 10% of wage-earners, whilst at the same time, for the same period measured, real incomes for the lower income earners dropped by 9 cent (McNally, 2009). It was data such as the above that vindicated Marxs central claim, of the instability and power imbalance of the capitalist system. It was measures such as redirecting labour sources to other parts of the world, holding labour costs whilst at the same time increasing its intensity and duration. It was these dynamics of class exploitation, and dehumanization of the workforce through extracting surplus value and appropriating back to the bourgeoisies of the economy, the increasing concentration of wealth, (Marx, 1848) that supports the notion of Marxist theory being validated.

Following on from the above, it would be negligent to not highlight Marxs particular strength of analysing crisis (Baylis, 2011). From a Marxist perspective, a crisis stems from the aforementioned situation whereby capitalists, or the bourgeoisies, have control over society, causing a power imbalance of the system, leading into a depression or recession (Marx, 1867), such as the GFC discussed above. In Das Kapital3, Marx details that these crises, events such as the GFC, arise from the fact that as the bourgeoisies develop more profits, these profits are appropriated into more capital, effectively forcing the real value of labour down. In that particular occurrence, the growth rate of capital will ultimately cause massive convulsions in the system, with enormous implications for individuals around the globe (Baylis, 2011), with economic inequalities almost certain to arise. The above further validates Marxist analysis, when global inequalities are examined through a capitalist system.

Nevertheless, the strength of Marxist analysis has been challenged by many academics. Sir Karl Popper, for example, refers that Marxism is unscientific in it practice. He ridicules Marxism and dismissed it as a faith, because the notion that communism should
3

Refer reference list for Das Kapital source

replace capitalism as a new socio-economic system is historically inevitable, and therefore Marxism is not a theory that can tested and proven incorrect (Popper, 2002). This would hold sway with many leading economists, as in a general sense the capitalist system has proven to be more resilient and flexible than Marx maintained in his writings.

Renowned anarchist Mikhail Alexandrovich Bakunin believed that a fundamental flaw in traditional Marxist theory was that it would inevitably lead to coercion and state domination. He inferred the notion that the greater the power granted among the current proletariats, the greater their fundamental change in their view of society to look down upon other proletariats, or the remaining working class (Bakunin, 1873). He goes on to suggest that should the Marxist communist state take over, those that are uneducated that are considered proletariats in a capitalist system, will fall under a dictatorship and have less power than under the capitalist society (Ibid).

In conclusion, this essay acknowledges that Marxist theory does have some limitations. However, it seeks to provide insight into the recent GFC, and its impact on the world in creating massive

inequalities, and hence validating Marxist analysis. Therefore, it is the view of the writer that Marxs analysis of capitalism can continue to be relevant in todays society, where, with the implications of the GFC, it showed as a theory it can continue to shed light on contemporary issues of inequality, conflict, and instability within the global political economy.

Word count: 923

References:
Bakunin, M., (1873) Statism and Anarchy. Marxists Internet Archive. Retrieved from: http://www.marxists.org/reference/archive/bakunin/works/1873/s tatism-anarchy.htm Baylis, J., Smith, S., Owens, P., (2011), The Globalisation of World Politics, Fifth edition, pp. 132-136

Kotz, D., (2009) The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism, Review of Radical Political Economics Vol.41, No. 3, pp. 305-317.

Marx, K., (1848), The Communist Manifesto, with Frederick Engels)

Marx, K., (1867), Das Kapital, Vol. 1 Marx, K., (1978), Economic and Philosophic Manuscripts of 1844, in R. C. Tucker (ed.), Marx-Engels, Reader. New York: Norton.

McNally, D. (2009) From Financial Crisis to World Slump, Historical Materialism, Vol.17, No. 2, pp. 35-83.

Peet, R., (1975), Inequality and Poverty: A Marxist-Geographic Theory, Annals of the Association of American Geographers, December 1, pp. 564-568

Popper, K., (2002). Conjectures and Refutations: The Growth of Scientific Knowledge. Routledge. p. 449

Roubini, N., Rogoff, K., and Behravesh, N., Worst Financial Crisis Since Great Depression, (2009), Reuters, retrieved from: http://www.reuters.com/article/2009/02/27/idUS193520+27-Feb2009+BW20090227