A Historical Document: Mistaking the Birth Pangs of Capitalism for Its Death Throes

Karl Marx and Friedrich Engels from the Neue Rheinische Zeitung Revue at the start of 1850:

Reviews from Neue Rheinische Zeitung Revue: [T]he greatest threat to 'order' in England does not lie in the dangers emanating from Paris but is a direct consequence of [England's political, commercial, and financial] order... a fruit from the English liberty tree: a commercial crisis....

[T]he surplus capital of the period of prosperity found its usual outlets blocked. For the speculators there remained only the possibility of unloading all their capital either into industrial production, or into speculative ventures in colonial foodstuffs and the key industrial raw materials.... [I]ndustrial production naturally grew with extraordinary speed, and as a result the markets became saturated. Thus the outbreak of the crisis was significantly accelerated.... For four weeks the situation in the key industry, cotton, has been completely depressed and within this industry it is the main branches — in particular the spinning and weaving of coarse fabrics — which are suffering most. Cotton yarn and coarse calico have already fallen in price far more than raw cotton. Production is being cut back, and almost without exception the factories are working short time....

The results of the commercial crisis now impending will be more serious than ever before.... This dual crisis in England will be accelerated, widened in scope and made even more explosive by the convulsions which are now simultaneously imminent on the Continent; and the continental revolution will take on an unprecedentedly socialist character as a result of the repercussions of the English crisis on the world market.... The Tories have no popular universal panacea for the crisis, such as the repeal of the Corn Laws. They will be forced at least to carry out a parliamentary reform. This means that they cannot avoid assuming power under conditions which will open the doors of Parliament to the proletariat, place its demands on the agenda of the House of Commons and pitch England into the European revolution...

Mistaking the birth pangs of modern capitalism for its death throes

Comments

[vnoe]

Yeah, stupid Marx. He sure should have predicted that high-fructose corn syrup and Hollywood sitcoms will produce generations of dumb fat fucks who keep voting for the same gang of incompetent scoundrels long after anyone with half - sorry - a quarter of the brain would have enough of the presence of mind to get them out of town on the pole. Than again ... what's the difference?

[Matt]

If we talk about the limiting factor of transportation, then something as simple as the development of the clipper ship would have been fundamental. Dropping ocean shipping costs by almost a half would have boosted trade by 20-30%. Sailing came to its peak at 1850. King Cotton and the Yankee Clipper.

[Maynard Handley]

I have a lot of impatience with Marx, but the question is what is he saying here.
If he is predicting the death of Laissez Faire, well, he's correct, isn't he? Last time I checked a whole lot of supposed capitalists were running around talking about what the Fed should be doing.

In a more abstract sense, one could say that the essence of laissez faire (and its bastard children like libertarianism) is the claim that no central control is EVER necessary, that every problem in the economic world, no matter what its cause, can be solved by independent actors all working to individually maximize their situation. Marx claims this is not true, and Marx is correct. We have a long series of examples, from the events that led to the creation of the Fed, to the events that led to the creation of the Railroad Commission of Texas (the Texas version of OPEC, founded 1891) to the Great Depression, that show us there are situations where individual actors, maximizing their own interests, result in outcomes that are generally felt not to be societally optimal.

And, of course, he was correct on the social program as well. The doors WERE opened to the proletariat, who went on to demand 40 hour work weeks, an end to child labor, and all those things that, like carbon tax, are certain according to many of the wealthy of society, to end civilization as we know it.

Sure the man was an idiot in many ways. I have zero patience with the labor theory of value, his whole mindset that ignores the worth of management, entrepreneurialism and science and R&D. His obsession with revolution strikes me as strange (but perhaps is understandable if your only example of great social changes occurring are the English, US and French revolutions --- it's perhaps hard to see that democratic politics will play out as it does and slowly change society if you haven't seen it in action.) But these don't change the fact that he was right a whole lot more often than your average Washington pundit.

[tt]

Notice that Marx thought the key item on the agenda was "open the doors of Parliament to the proletariat". Remember he was writing when there was still a property qualification for voting. This quotation is pretty good evidence that, even in his early years, what he had in mind when he said revolution was more Keir Hardie than Lenin.

[bigTom]

Maynard, I think the coming economic nastiness, which I would attribute largely to all sectors of the economy (worldwide not just the US), discounting the possibility that peak-oil might occur sooner than the energy agencies were telling us. We see lots of individual, and corporate decisions made on the sensible sounding proposition that the conventional wisdom was most probably correct. The fact that should this wisdom be proved wrong (as now seems to be happening) it would be disastrous for the world economy as a whole, and some sort of investment in mitigation would have been wise is an externality not figured into the individual decisions. I think is going to be a pretty stark example of individual decision makers following the invisible hand not taking the steps needed by society overall. An example of this would be investment in hybrid car production. From Toyota's standpoint, not dramatically ramping this up was perfectly rational. A rampup without the oil shock happening would have cost them dearly. Their only loss from not doing it, is an opportunity cost. But the cost to the world economy, of having had no-one make the investment is going to be severe (but widely dispersed).

[P.M.Lawrence]

Vnoe, the clipper ship did NOT improve transportation costs over other sailing ships. It improved speeds, but as it could carry much less for the same cost it was only important for certain special high value cargoes. What did improve transportation costs was iron framed construction, iron stays and the standardisation of rigging so that sailors didn't literally have to learn the ropes on each new ship.

[Gene O'Grady]

Damn. P M Lawrence beat me to it and said it better.

But I'm curious as to why people tend to call all those humongous sailing vessels you see in ca. 1870-1900 pictures of ports from Portland to London "clipper ships." Presumably our grandparents knew the difference, so it must be at least a construct from after-1930 rather than a garbled direct tradition.