The return of Mr Marx

[Thinking Man's Idiot]

The return of Mr Marx

(Tuesday 04 November 2008)



KEITH FLETT outlines why Marx is the most significant commentator to reflect on the current financial crisis.

MARX is back. The Financial Times has recently been carrying articles about Marx's theory of capitalist crisis.

An understanding of why capitalism is a crisis-prone system and why there is a tendency of the rate of profit to fall is essential for socialist activists.

But Marx was not just someone with a particularly acute understanding of how the capitalist economy did or did not work. He was also around at the time of several of the most significant capitalist crises of the 19th century.

It is Marx the historical commentator that I am interested in here.
The best sources on this are his journalism in the New York Tribune and his correspondence, mostly with Engels. These days, much of this is available free of charge on the internet at marxists.org


The autumn 1847 crisis was like the 2008 crisis - one of the banking system and of speculation.

The railway boom which led to the construction of the network that we know today had begun in the early 1840s. Large amounts of money were invested in schemes to build railways, but not all of these schemes were genuine. As the railway bubble burst, like the subprime mortgage bubble today, a crisis of cash flow - liquidity - followed.

The Bank of England, which had been set up by the Bank Act of 1844, did not have enough funds to deal with the crisis and a serious depression followed. It led to the revolutionary events of 1848, although arguably concessions by the ruling class - the repeal of the Corn Laws and the Ten Hours Act limiting hours of labour - averted a serious revolutionary outbreak in Britain.

Marx wrote of the 1847 crisis in the New York Tribune on November 21 1857, noting that the suspension of the Bank Act to get around its impact had amounted to a "farce."

There was a further crisis in 1857. Marx, who was then living in London, was able both to commentate on it and, as a perpetual pauper, to feel its impact at first hand.

The farce repeated itself and the Bank Act had to be suspended again as an economic crisis which started in the US hit home in Britain. Globalisation was around even in the early days of market capitalism.

Engels wrote to Marx on the October 29 1857 noting that the "American crash is superb" and that "nous avons maintenant de la chance."

Unfortunately, much to Marx and Engels's frustration, the state of Chartism in 1857 meant that the opportunity for revolution passed by.

It is important to make the point that a capitalist crisis was seen as a chance for the left, not an automatic passport to socialism.

The 1857 crisis had an unfortunate personal impact on Marx. His articles in the Tribune, one of his main sources of income, were restricted to one a week.

By December 18 1857, Marx was writing to Engels, "I have just received a third final warning from the rotten rate collector to the effect that, if I haven't paid by Monday, they put a broker in the house."

Marx went on to complain that, because credit had ceased thanks to the crisis, he had to pay everything in cash.

Marx made it clear, again worth underlining in response to cynics and critics, that his personal situation was a minor distraction to the wider work of understanding and making propaganda about the capitalist crisis.

He wrote to Engels in December 1857 that it was interesting to note that the "capitalists who so vociferously opposed the right to work are now everywhere demanding public support from their governments and hence advocating the right to profit at public expense," a point as valid for the crisis of 2008 as it was in 1847 and 1857.

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