Recently, footage of the Shadow Chancellor, Labour MP John McDonnell, discussing the 2007 Financial Crisis in 2013 has surfaced. The veteran left-wing backbencher was recorded commenting:
“We’ve got to demand systemic change. Look, I’m straight, I’m honest with people: I’m a Marxist. This is a classic crisis of the economy – a classic capitalist crisis. I’ve been waiting for this for a generation! For Christ’s sake don’t waste it, you know; let’s use this to explain to people this system based on greed and profit does not work.”
McDonnell has come under fire for appearing to revel in an economic crisis that resulted in job losses, recession, and not insignificant suffering. His somewhat glib response was that he was “joking”. In fairness, he probably did not mean that he was delighted by the actual impact of the crisis. That said, his comments do still reveal that he is entirely unsuited to being anywhere near power of any kind, let alone being Chancellor of the Exchequer.
Being a Marxist entails being economically illiterate and historically ignorant. It can, and in McDonnell’s case does, also imply valuing theory over people.
The financial crisis does not require a Marxist framework for explanation. From a reasonable left-wing perspective, it was the result of excessively light-touch regulation and over-reliance on the efficient market hypothesis. A better explanation is that the wrong kind of regulation was in place, which incentivised sub-prime lending. A focus on monetary policy is also instructive, with the Federal Reserve’s ultra-low Interest Rates in the early 2000s contributing to the growth of the housing bubble.
So the crisis does not vindicate Marxism. And Marxism requires extremely good vindication, given its track record, even setting aside the tyranny and massacres that it inspired and justified. Many of its central assumptions, such as the Labour Theory of Value, have been out-dated for over a century. No convincing rebuttal of marginalism has ever been advanced. Marxism’s predictions and theories about class-conflict are, at best, one-dimensional and over-simplified.
The same is true of the demand for “systemic change” and rejection of a system “based on greed and profit”. There are absolutely no success stories (quite literally none). There are no alternatives to the price system and market exchange for organising an economy. There is, of course, plenty of room for debate about what kind of market economy you want. However, whether or not you want to have more worker-owned co-operatives or a more redistributive social democracy, this can only exist within a market-based system. The profit motive is needed as an economic incentive, and greed is a universal feature of human nature that can be harnessed but not eradicated.
Command economies have consistently failed to meet people’s basic needs and have inevitably collapsed because it is impossible to circumvent the need for price signals and giving economic actors the freedom to utilise dispersed knowledge. Fantasies about a magical ‘gift economy’ remain fantasies.
Regardless of whether or not McDonnell really had been salivating over the prospect of economic collapse, his conception of it as a necessary step towards achieving Marxist systemic change is revealing. The problems of real people in the here and now are perhaps an unfortunate inconvenience, but they remain trivial compared to the heroic narrative of the workers of the world throwing off the shackles of reality.