Why Joseph Heath and co. can’t make sense of Marx
The paradigmatic blinders of neoclassical economics
[Drawing by
]I've been reading your newspapers […] They are all proclaiming that my ideas are dead! It's nothing new. These clowns have been saying this for more than a hundred years. Don’t you wonder: why is it necessary to declare me dead again and again?
- Marx in Soho: A Play on History (1999), Howard Zinn[1]
Marx's ideas have been declared dead so many times that Howard Zinn wrote a play about it in the 90s. Most recently, here on Substack, Joseph Heath wrote about “John Rawls and the death of Western Marxism,” and “Key stages in the decline of academic Marxism,” raising a series of five problems which resulted in the “decline of academic Marxism,” and its “status as a social-scientific theory.”
According to Heath, the “last nail in the coffin” for Western Marxism involves the best minds in the game realizing that Marx’s theory of exploitation didn't work, as a technical or objective explanation of phenomena, so analytical Marxist philosophers decided they needed a normative, or moral, concept of exploitation, but in the course of trying to derive one, they realized they cared more about inequality as an injustice as theorized by Rawls—and thus, they quietly became liberals. Any remaining Marxists, Heath argues, either missed the memo, are stubbornly ignoring the fact that Marx’s theory makes no sense, or are making a rhetorical gesture.
This is an absurd conclusion as contemporary academic literature on these topics continues to be written and published today. Haymarket Books, for example, regularly publishes new and old works from its vast Historical Materialism series and its Studies in Critical Social Sciences series. One example which couldn’t be more relevant to the topics Heath raises in his two Substack essays is Christoph Henning’s 2014 Philosophy After Marx: 100 Years of Misreadings and the Normative Turn in Political Philosophy—but maybe Heath missed the memo on this book!
As I’ll show here, the issue with Heath’s account is that the problems he raises against Marx’s theory, in both of his essays, are framed within the paradigm of neoclassical economics—a paradigm which, as Henning makes clear in Philosophy After Marx, is incapable of making sense of Marx.
It is easy to understand just what was new in the ‘neo’-classical approach when one considers the range of phenomenon ignored by it.
Henning, Philosophy After Marx
Ignoring production, class, growth, and crisis
In relation to “classical” economics—that of Adam Smith and David Ricardo—Marx can be seen as a culminating point, a pushing of this paradigm to its limits. Classical economists focus on production, on productive activity as underlying all economic phenomena. They emphasize conflict among and between classes, as defined by their relations within the production process.
Marx's pointed emphasis on economic class struggles, whose effects extend all the way into politics, merely thought this [classical] approach to its logical conclusion. The same is true of his skeptical view of the trends associated with continuous growth, such as the immiseration and exclusion of broad sections of the population, the periodic outbreak of crises and the destruction of nature.[3]
Contrary to all of this focus on production, “neoclassical” economics, which emerged right around the time of the appearance of Marx’s “mature” works, particularly those of the three-volume masterwork Capital, is a reaction to Marx—as Henning describes it, a “counter-utopia”[4]—and a total break from the entire paradigm of classical political economy, which was so interwoven within Marx’s work that it could not be considered without actually addressing his work.[5]
By assuming a perspective that focuses on exchange, [neoclassical theory] shifts attention away from production – be it the cultivation of land, handicraft or industrial manufacturing. Neoclassical economics is at pain to avoid production. One consequence of this is the loss of the historical dimension.[6]
With an individualistic approach to economics, neoclassical theory ignores the function of economic classes “which the classics distinguished in terms of their positions within the process of production.” As Henning explains, “[f]rom the point of view of neoclassical economics, there exists only individuals who strive for maximum utility.”[7]
[ has a great article on this topic, how the social aspect of economics has been entirely abstracted out of modern economic theory.]
Thus, while classical economics was fundamentally objective, neoclassical economics is fundamentally subjective, individualist, ahistorical, not dealing with society in any direct or explicit fashion. It is a static and peaceful vision, an inapplicable vision of economy: “the character of the theory is highly artificial; there is hardly any way to apply to reality” because “[s]ubjective utility […] is neither observable nor otherwise ascertainable. One can neither compare nor add together the subjective utility of different persons.”[8] Moreover, this theoretical paradigm generally cannot account for growth or crisis: “The neoclassical growth theory that was eventually developed is a supplement to a theory whose basic approach is static.”[9]
By contrast, Marx’s theory is entirely oriented around an attempt to understand growth under capitalism, as a process of production, and its consistently turbulent nature:
its ongoing expansion under capitalism and the fact that this expansion tended to occur ‘turbulently’, rather than steadily. Thus dynamic growth is one of the basic assumptions upon which Marx’s economic theory rests.[10]
Neoclassical theory is not any one school of economics but rather a general paradigm according to which virtually all new economics of the twentieth century, despite representing various “schools,” generally fit within. Its “subjectivist approach” is the dominant paradigm according to which economic topics are commonly discussed today:
fluctuating stock-market prices are explained in terms of the short-term preferences and subjective valuations of speculators, unemployment is seen to result from the ‘unwillingness’ of the unemployed, and the causes of economic growth are sought in the psychic conditions of […] ‘pioneering entrepreneurs.’[11]
Refutations of Marx by neoclassical economists operate from within the subjective and individualist paradigm which ignores production, and thus they struggle to make sense of Marx’s labor theory of value, a theory which runs through the heart of Marx’s long-term analysis of capitalism.
Because of the dominance of the neoclassical paradigm within economic literature, and the futile attempt by many Marxists to defend Marx within it, ‘economics’ was increasingly taken to refer to this paradigm only. When philosophers speak of economics today, as in the debate on Rawls or in business ethics, they do so from within this paradigm – even or especially when they are criticizing it philosophically.
Henning, Philosophy After Marx
Heath on the Rawls debate and decline of academic Marxism
The most central point of criticism of Heath’s two essays focuses on Marx’s labor theory of value and how Marx’s understanding of exploitation appeared obsolete to many in the light of the increased standard of living seen between the 50s and the 70s:
Over the course of the 20th century […] the claim [that Marx’s term “exploitation” was merely a technical term used to describe the extraction of surplus value from labour] became increasingly less useful, because the prospects for the collapse of capitalism came to seem increasingly remote. Most importantly, workers did not become “immiserated,” as Marx predicted, but rather experienced robust wage growth, so that by the beginning of the 1970s it was really not obvious to anyone that workers had reasons of self-interest to support socialist revolution.[13]
As Heath tells it, the debate on Rawls is about how Marxists tried and failed to develop a normative or moral critique of capitalism based in exploitation rather than homing in, as Rawls did, on the injustice of inequality.
The most natural way to specify the wrongness of exploitation is to say that workers are entitled to the fruits of their labour, and so if they receive something less than this, they are being treated unjustly. (This is why Marxists are wedded to the labour theory of value – because it makes this normative claim seem intuitively natural and compelling.)[14]
Try as they may, Heath explains, all the very smart people who sweated over their need to abandon a technical understanding of exploitation and subsequently failed to derive a compelling normative explanation of exploitation, opted for the more compelling moral critique of inequality and thereby subtly became liberal Rawlsian egalitarians. Anyone who is still a Marxist, Heath adds, has either missed the memo, is making a rhetorical gesture, or is stubbornly avoiding “serious Marxist theory,” like that of those great minds who abandoned Marx, theory which inevitably “turns you into a liberal.” As Heath writes,
I can understand why some people might be reluctant to read serious Marxist theory, if the primary upshot is that it turns you into a liberal, but if the alternative is the style of aggressive, in-your-face stupidity found in Jacobin magazine (i.e. “I’m going to talk like a Marxist, even though none of it makes any sense, because you can’t stop me!”), then it seems to me a price worth paying.[15]
Heath’s conviction that “none of it makes any sense,” even to anyone purporting to represent Marx’s theory, is quite telling—an inability to Make sense of Marx’s theory is common to the history of attempts to refute Marx from within the paradigm of neoclassical economics, which is the case in both of Heath’s essays: both the debate on Rawls itself and the arguments Heath offers in his second essay operate squarely from within that paradigm: an individualistic, ahistorical paradigm divorced from any analysis of production.
The labor theory of value was rejected by neoclassical economists because the very way in which [Marx] framed the question seemed to them to make no sense.
Henning, Philosophy After Marx
A misunderstanding of the labor theory of value
In the second essay, Heath presents a series of five topics of Marxism the problems of which, as he explains, resulted in the “decline of academic Marxism:” 1) Marx’s labour theory of value, 2) crisis theory 3) historical materialism as class analysis 4) the idea of post-scarcity 5) the socialist calculation debate.
Each of the topics themselves (at least the first four) are in Marx’s theory linked up with the labor theory of value, a theory which, as Henning explains, is incomprehensible from within the paradigm of neoclassical economics.
Heath begins his critique of Marx’s theory of value by distinguishing between classical and neoclassical economics: “classical economists like Marx believed that the prices of commodities were determined by the amount of labour-time involved in their production, whereas neoclassical economists believe that prices are determined by the forces of supply and demand.”[17] Interestingly, Heath first concedes the basic idea about value being derived from labor: “There is, after all, some sense in which labour does create all value, since capital is merely an accumulation of embodied labour.” However, he then presents an attempted refutation of the theory which some neoclassical economists have made:
The problem is that Marx made a number of much more specific, empirical claims about the economy, which depended upon the prices of goods actually being determined by the amount of labour necessary for their production. Most importantly, his concept of surplus value only made sense if the actual price of labour, and the actual price of the commodities produced through labour, were determined by the amount of labour-time involved in their production. So if the labour theory of value turns out to be empirically false, as a claim about how equilibrium market prices are determined, this renders the concept of surplus value meaningless. Once you take away that concept, a lot of other dominoes start to fall...[18]
In Philosophy After Marx, Henning addresses the misunderstanding behind this “refutation” directly. Marx never denied that “two products that contain the same amount of labor can sell at quite different prices, due to supply and demand.” However, in Marx’s theory,
The value of the single good is not determined by the labor time that was actually spent to produce it; it is determined by the amount of labor time that is ‘socially necessary’ at the current level of technological development. If the average amount of labor time required for producing a certain good is twenty hours, the producer who takes 30 hours will not be able to sell his product at a higher price, since his price will be undercut by other producers. Hence, this refutation is based on a misunderstanding.[19]
In order to explain the labor theory of value in the first volume of Capital, Marx explicitly makes a simplifying assumption that commodities are sold at their values, but in the third volume, as Henning explains, “he takes into count other factors that contribute to price determination of immediate market prices.”[20]
The labor theory of value has explanatory power which neoclassical economics lacks, with important political implications. Oscillations of price according to supply and demand “settle within an ascertainable range,” as Henning explains, “supply and demand are themselves determined by additional factors,” real factors which effect long-term fluctuations in price and which cannot be simply explained by supply and demand.[21]
His labor theory of value examines the range within which prices are pushed upward and downward by fluctuations in supply and demand. The labor theory of value was rejected by neoclassical economists because the very way in which he framed the question seemed to them to make no sense. Yet the category of individual ‘utility’ is hardly less mysterious than that of value. It merely has a narrower focus. The neoclassical ‘theory of prices’ explains prices in terms of prices. It can rely only on other prices, which must be given. This approach allows one to register fluctuations in price, but not to explain them.[22]
Key for our discussion here in relation to Heath is that other elements of Marx’s theory which he takes issue with—particularly, crisis theory and class conflict as the motor of history (historical materialism)—are inextricably linked to the labor theory of value, which from the neoclassical paradigm makes no sense, focused as it is on the short-term framing of supply and demand.
Price determination was not the issue addressed by the labor theory of value. Rather, what it did was to allow one to establish the relationship between phenomena such as the decrease in the mass of profit appropriated by industrialists as determined by a larger share of ‘unproductive’ labor, the general fall in the average rate of profit and the investment in bottlenecks associated with it, growth cycles and crises in general, and the analysis of social classes and their political altercations. All of these phenomena are linked to the concept of value, and can, therefore, neither be explained nor even properly grasped by the neoclassical analysis.[23]
The neoclassical stance from which Heath operates fails to appreciate or even understand the long-term view Marx’s theory provides and operates within, the actual questions with which it’s concerned.
This paradigmatic limitation comes through in the first essay when Heath points to the apparent obsolescence of Marx’s theory given that, by the 70s, as Heath writes, “workers did not become ‘immiserated,’ as Marx predicted, but rather experienced robust wage growth.” However, Marx did not predict ever-increasing immiseration and/or decline in standard of living. Rather, he anticipated periods of rising wages, but he understood how wages could increase independently and even simultaneously with increases in exploitation. As Henning writes:
the mature Marx [the Marx of Capital] understood exploitation in terms of the ratio of productivity increases to wage increases. When productivity increases more rapidly than wages, as is to be expected, the capitalist obtains a higher share of surplus value from the labor he has purchased than before. Thus the rate of exploitation has risen despite the rise in wages.[24]
To be sure, there is no doubt an element of truth in this part of Heath’s story—the notion of decreased interest in Marx in light of a period of wage growth—though it’s not due to a fundamental flaw in Marx theory. It's not surprising that a certain number of people would abandon Marx’s theory during steadily rising standards of living between the 50s and 70s, whether because of common misunderstandings of Marx or because they lost interest in or belief in the possibility or need for socialism (we should also not ignore the impact of the McCarthy red scare). On the flip side, however, since the 70s, we’ve seen towns decimated by job displacement as factories from the old centers of capital (esp. the U.S.) moved elsewhere, as well as the stagnation of real wages amid steadily increasing productivity, to and through another major global crisis. Thus, we would see renewed interest in Marx. Hence, Zinn’s play on the return of Marx despite repeated declarations of the “death” of Marxism.
There are further political implications, as Henning explains, to the relinquishing of the labor theory of value by neoclassical economics:
without the labour theory of value, one cannot demand wage increases, since every wage that is paid on a free market appears ‘fair’; […] A fall in the rate of profit will then be attributed to ‘excessively high’ wages, rather than to the inner workings of capitalist development, such as the rising organic composition of capital. All unpleasant elements of Marxian theory are related to the theory of value: the collective bargaining of trade unions is related to ‘exploitation’, and the revolutionary rhetoric of communist parties is related to the ‘theory of crisis’. In this sense, focusing criticism on the theory of value was a clever move. […] Regardless of whether or not this was the intention behind the abandonment of the objective concept of value, the effect was politically desirable, from entrepreneurs’ point of view.[25]
The fourth problem Heath raises (from which he deduces the fifth) is the apparent impossibility of a “post-scarcity” society, taking Marx’s view to be that we could rely on growth “to make class conflict disappear.”[26] However, this fundamentally misses the actual nature of the way distribution of wealth across class lines operates as a function of capitalist production in Marx’s view, how production continually reproduces and expands the class divide. If there is any hint at the inevitable collapse of capitalism in Marx’s Capital, it is in regard to the accumulation and concentration of capital, not a definite endpoint of abundance. Capitalism requires and regularly reproduces scarcity despite overabundance.
Heath’s fifth and final claim is about the “socialist calculation” debate between central planning and market-oriented socialism: “most academics simply avoid thinking too hard about these sort of ‘socialist blueprints,’ because they sense that the results will be depressing.”
Here’s a couple of good articles on the topic, one representing central planning (
), the other representing market-oriented ideas ():
Lastly, I’ll leave you with this gem, a performance of Zinn’s play Marx in Soho.
Notes
[1]. Howard Zinn (1999) Marx in Soho: A Play on History (Chicago: Haymarket Books), 1-2.
[2]. Christoph Henning (2015) Philosophy After Marx: 100 Years of Misreadings and the Normative Turn in Political Philosophy, trans. by Max Henninger (Chicago: Haymarket Books), 123.
[3]. Ibid, 127
[4]. Ibid, 122.
[5]. Ibid, 129.
[6]. Ibid, 123.
[7]. Ibid, 123-4.
[8]. Ibid, 126.
[9]. Ibid, 125.
[10]. Ibid.
[11]. Ibid, 126.
[12]. Ibid, 131.
[13]. Heath, https://josephheath.substack.com/p/john-rawls-and-the-death-of-western
[14]. Ibid.
[15]. Ibid.
[16]. Henning, 133.
[17]. Heath, https://josephheath.substack.com/p/key-stages-in-the-decline-of-academic
[18]. Ibid.
[19]. Henning, 134-5.
[20]. Ibid, 135.
[21]. Ibid, 132-3.
[22]. 133.
[23]. Ibid.
[24]. Ibid, 25.
[25]. Ibid, 134.
[26]. Heath, https://josephheath.substack.com/p/key-stages-in-the-decline-of-academic