* The Economist Magazine, Marxism and the Conventional Wisdom

June 9th, 2016
in macroeconomics
by Philip Pilkington
Fixing the Economists Article of the Week
A while back I came across a rather awful piece on The Economist's website entitled A Marxist Theory is (Sort Of) Right. The piece is indicative of what I think to be a far more general trend in contemporary intellectual life: namely, the fact that Marxism exists as a sort of weird counterpart to what we generally call the ‘conventional wisdom’.

Follow up:
Before I saw the article in The Economist, I wrote a post dealing with JK Galbraith and what he called the ‘conventional wisdom’ but perhaps I should again provide a nice quote from his The Affluent Society that lays out once more what the conventional wisdom is.
Because familiarity is such an important test of acceptability, the acceptable ideas have great stability. They are highly predictable. It will be convenient to have a name for the ideas which are esteemed at any time for their acceptability, and it should be a term that emphasizes this predictability. I shall refer to these ideas henceforth as the Conventional Wisdom. (p18)

That’s a rather nice summary: the conventional wisdom is characterised by ideas that are stable, predictable and, above all, familiar. With this in mind we can approach The Economist article but first a word on the publication.
The Economist magazine is perhaps the prime organ that disseminates the conventional wisdom that exists in the economics profession today. It is geared toward a popular audience — unlike, the far more sophisticated and specialist Financial Times — and can thus regularly be found, for example, in the dentist’s waiting-room. Whereas the Financial Times is a serious organ that seeks to provide real, tangible information in fairly concentrated form to an audience that actually uses such information in their professional lives, The Economist is better thought of as a sort of upmarket glossy magazine providing whimsy for a middle manager or a lawyer awaiting a filling or a root canal.

Many - on the political left, for example - inaccurately portray the magazine as being right-wing. But it is only as right-wing as the politics of the day; no more, no less. If the politics were to take a left turn, The Economist would follow. Likewise many in the heterodox economics community mistake the magazine for being neoclassical or marginalist. This is slightly more accurate but nevertheless somewhat misleading: The Economist is as neoclassical or marginalist as the economics profession of the day. If economics were to take a more Keynesian turn - which it does on occasion these days - the magazine would follow.

The Economist is really a sort of mirror reflecting back on society the economic orthodoxy of the day and it is for this reason - and almost no other, barring perhaps the occasional attractively presented graph - that it is interesting.

But back to Marxism. Many - both on the political left and in the heterodox community - get a bit jumpy when The Economist uses the ‘M-word’, seeing in it a sort of victory. While the political left may be somewhat correct in that a dominant ideology on that side of the fence is getting the spotlight, the heterodox community are being wholly misled. This is because they misunderstand Marxism as being some sort of remedy to the conventional wisdom. But it is, in fact, no such thing.

Think about this for a moment. You’re in your late-teens or very early twenties. You’re attending university. How difficult is it for you to be exposed to Marxist ideas? Not very! In fact, it is almost a rite of passage. In the humanities department there is always a few Marxist professors; pamphleteering in the halls are members of some Marxian socialist faction or other; while heading up the protests against, say, cuts to the university budget is a Trotskyist from the socialist or Green party.

As I said above, Marxism exists as a sort of weird flipside to the conventional wisdom. “Don’t be fooled by all that,” the Marxists of various stripes will have said:


“its really the opposite of the propaganda they’re feeding you!”

In the world of Marxism many of the tenets of the conventional wisdom are literally overturned rather than properly interrogated. What is good in the conventional wisdom becomes bad on the Marxist reading.

Free trade is a salient example, as this is what The Economist article above is dealing with. In the conventional wisdom free trade is universally a good thing. In economics this is backed up by what can only be called a dogma in the form of the Ricardian idea of the so-called law of comparative advantage. On the Marxist reading free trade is all about exploitation and imperialism plain and simple. The trick here is often not to really analyse the truth content of, for example, a given trade policy or the theory of comparative advantage, but rather to just label it ‘evil’ rather than ‘good’; thus inverting what one thinks to be the moral consensus in Western capitalist democracies.

Those that generally adhere to the conventional wisdom then latch onto this and begin to associate, in the discourses of economics and politics, any position taken that seems to run contrary to the conventional wisdom with Marxism. That is precisely what the anonymous writer of The Economist article in question has done.

In the article the author discusses an IMF study that tests the Singer-Prebisch hypothesis against data going back to 1650. The thesis states that the terms of trade between those who produce manufacturing goods (secondary goods) and those who produce commodities (primary goods) deteriorates over time. This, of course, leads to a questioning of the so-called law of comparative advantage which would generally encourage developing countries to produce primary goods for the developed world as it is in their comparative advantage to do so.

Is there anything Marxist about this idea? Certainly not at a theoretical level. Although a Marxist may use the Singer-Prebisch hypothesis as part of a more general assertion that the developed world is ‘exploiting’ the developing world and extracting surplus value from them, the hypothesis does not contain within it any such moral judgments. It is merely a hypothesis about empirical facts. (And one which, it would seem from both common sense and the IMF study in question, contains a great deal of truth.)

The only reason that it is seen as Marxist for those so heavily sedated by the conventional wisdom is that they know nothing else. Anything in economics and politics that fall outside of the conventional wisdom leads the adherent of said conventional wisdom on a trip down memory lane to their university days; to their Marxist sociology professor and their encounter with socialist pamphleteers. “If it sounds like it goes against free trade and comparative advantage,” reasons the adherent of the conventional wisdom, “then it must be Marxism.”

Such a view is completely bizarre for anyone with an ounce of knowledge of the history of free trade. By such a reading, of course, the founding father and first US Treasury Secretary Alexander Hamilton would be a Marxist given that he entirely rejected free trade and comparative advantage in his seminal Report on Manufactures. Keynes too rejected the doctrine of laissez faire and free trade as early as 1926 in his The End of Laissez Fairre. Does that make Keynes a Marxist? Well, that would certainly be rather odd since in the aforementioned essay he writes:


But Marxian socialism must always remain a portent to the historians of opinion — how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men and, through them, the events of history.

Obviously Keynes did not see scepticism with regards to free trade and laissez fairre as being synonymous with Marxism.

One could think up numerous other examples; the German historical school would be a case in point. But I think, at this stage, the reader gets my point.

Marxism is the inverse of the conventional wisdom and in its own strange way it insulates and protects it. Marxists themselves are often just spouting the conventional wisdom in its inverted form and, by doing so, they give those who adhere to the conventional wisdom a perfect label which they can tack onto anything that doesn’t fit with their preconceived notions. Thus far from being anathema to the conventional wisdom, Marxism is a sort of negative foundation upon which it rests.

Marxism provides a nice dichotomy: if you reject the moral consensus invert everything you’re taught and become a Marxist; while if you support the moral consensus adhere to everything you’re taught and label anything that doesn’t fit the bill as Marxism so that your intellectual circuits don’t become scrambled and you don’t have to think through the merits and truth content of your ideas. Such a “good” versus “evil” battle serves everyone nicely, it would seem. That is, I think, largely the function of Marxism today. As to why it rose to such a position, this is tied up with the history of the 20th century; with the Soviet Union and the labour movements and that is another day’s discussion.