How Capitalist Economists Appropriated Efficiency, Productivity, and Growth.
And Why the Post-Marxian Left Fell for it by Abandoning Political Economy
Nearly two decades ago, I was studying philosophy, sociology, and psychology in Frankfurt, Germany. Frankfurt was back then a center for academic left-wing thought. You had people like Axel Honneth and even still Jürgen Habermas teaching, and the spirit of Adorno, Horkheimer and so many other great thinkers of the Frankfurt School tradition (Critical Theory) was still heavily influencing disciplines such as philosophy and sociology, though importantly, not economics.
What had already occurred back then—already way before the foundation of the Frankfurt School—is what I deem the central theoretical original sin of the post-Marxian left: The shift from political economy that was central to the thinking of Marx and thinkers like Polanyi, to fields such as culture, art and ‘loftier’ forms of society criticism.
While for Marx ethics was entangled with the psychology of well-being and work, which again was intrinsically meshed and in some sense founded on his economic theory, contemporary left-wing ethics, as well as criticisms of society, regressed to more classic normative considerations or the kind of culture criticism with which we are familiar today, which is usually not grounded in political economy.
Ideological Appropriation and the Structure of Contrarian Logic
This drifting away from political economy—combined with a respectful distance toward economics or flat-out indifference—certainly accounts for the problems that I discuss in this essay. Back in Frankfurt, the campus was covered with stickers and slogans that claimed that ‘efficiency makes ugly’, ‘productivity is evil’, and so forth. This was not the first time I encountered thoughts like that.
Growing up in Germany, a still significant number of people conceived of themselves as old-school social democrats, socialists, or as greens that already back then held ideas that we would today identify with some work in eco-socialism or de-growth economics.
These people voiced their pre-theoretical concerns and suspicions about capitalism—and what would later become to be known more commonly as ‘neoliberalism’—in the form of a general anti-attitude (‘Anti-Haltung’). That means since people identified economic growth, efficiency, or productivity with capitalism—and as capitalism’s strength compared to socialism or communism—they followed a contrarian logic and concluded that growth, efficiency, and productivity must be bad.
This contrarian logic is not confined to non-experts. It is unfortunately a common mode of thinking, that is made worse if we overlook that ideologies often unjustly appropriate certain ideas for themselves, which is even worse if these ideas are commonly needed or refer to real phenomena. A lot of my academic work in philosophy has been concerned with identifying such thinking in academic discourse.
For instance, if academic paradigm x argues that action is governed by rational processes and language, paradigm y likes to claim that action is governed by non-rational processes and does not involve language. Furthermore, paradigm y takes an anti-attitude, and identifies language with rationality, because paradigm x has claimed language for itself and conceived of it as a rational thing.
While some thinkers, such as Marx, Heidegger, or Polanyi were very good at looking through these processes of appropriation (claiming an idea for your ideology) and the resulting anti-attitude by an opposing camp, it seems that their unique critical way of thinking is an art that has been lost in contemporary academia and public intellectual thought as well.
Accordingly, we constantly see that paradigm x can claim idea i for its ideology, and that as a reaction, paradigm y not only does not realize that paradigm x has no right in claiming idea i, but paradigm y goes further in concluding that idea i must be bad and that accordingly the conceptual opposite of idea i must be true. Applied to economics that means that if growth is bad, degrowth must be good, and so forth.
How Capitalist Economists Appropriated Efficiency and its Cognates. And how Left-Wing Intellectuals Let them do so
That brings us to how capitalist, neoclassical, and neoliberal economists—henceforth just ‘economists’—have appropriated central economic ideas and properties, and how the post-Marxian left has not particularly well responded to them.[1]
(Western) Economists, who are overwhelmingly working in the capitalist camp today, have claimed concepts and properties like efficiency, productivity, and economic growth for capitalism (or the ‘free market’ ideology). This has worked in various ways. For instance, economists merely assume that properties like efficiency or productivity are intrinsic features of capitalist ‘free markets’.
They usually do not justify or explain these claims. Economics is in many ways not a very reflective theoretical endeavor. It has no real metaphilosophy, i.e. a discipline in which major presuppositions are discussed and justified. Accordingly, you go usually right if you take economists’ basic assumptions for just that, unjustified assumptions.
And not only that, given the role that economics as a discipline plays in society, they are usually ideological assumptions. As already Marx knew, and many Marxists seem to have forgotten, ‘economics (Nationalökonomie) as a discipline tends to, ‘presuppose what it has to demonstrate in the first place’ (my own translation from the Economic & Philosophic Manuscripts from 1844; in MEW 40, p. 510).
In order to understand how economists have managed over the years to make the general population believe in their identification of efficiency, productivity and growth with capitalism—which were for a long time seen more or less unanimously as both necessary and good—it is important to look at how economists disseminate their ideology in public.
This happens usually by means of economics education, followed by the work that academic and non-academic economists then do in public offices, companies, lobbying firms and news agencies. Silja Graupe has done fantastic research in that respect, in that she has shown how standard economic textbooks merely claim that capitalist ‘free markets’ are efficient, productive and conductive of economic growth, without ever justifying these claims.
Here you might be skeptical. Do economists really not at least attempt to show that ‘free markets’ and capitalism are more efficient or productive than alternative economic systems, such as socialism? I can assure you, they usually don’t. Since economics is a giant discipline, and this a short essay, I try to make this point clear with a particularly salient example.
But let us briefly consider first, what would have to be done to show that capitalist systems are more efficient, productive, or conducive to growth than alternative systems. What would seem the most promising route to establish that capitalist ‘free markets’ were more efficient or productive than other forms of economic organization, would be comparative economics.
Comparative economics means that you compare countries with different economic organization, based on their ‘performance’, or rather, their ability to generate certain results. An ideal comparison might be comparing genuinely capitalist countries, like the US, with countries that are deemed socialist or communist, like the Soviet Union. Such comparisons are far from easy. For instance, you might, like me, think that the Soviet Union was not only not a socialist or communist country, but that identifying it with such did significant harm to left movements everywhere.
But ignoring such worries for the moment, economists usually do not even try to rely on such comparisons to justify their claims. The most striking example of that is in my opinion the work of John Roemer, a Yale economics professor, who self-identifies as an Analytic Marxist. Roemer is famously a so-called ‘Market Socialist’. Market Socialists argue that markets have certain properties that make them more efficient, productive, and conducive to growth than, for instance, Soviet Style versions of central command planning.
How does Roemer, or his famous Market Socialist brethren such as Joseph Carens, David Schweickart, or to a certain extent, the influential political philosopher, G. A. Cohen, demonstrate that markets are more efficient or productive than central planning? Basically, they do not; usually with the exception of footnote references to work done by Alec Nove on the demise of the Soviet Union, in particular, his ‘The Economics of Feasible Socialism’, that is neither discussed nor independently justified by Analytic Marxists. They merely assume, following their capitalist counterparts, that markets are more efficient and productive than other economic systems.
You might think at this point, ‘is it not obvious that the Soviet Union collapsed because it was not capitalist or at least organized around markets; accordingly, do these Analytic Marxists really have to engage with comparative economics’? The simple replies to this are, ‘no it is not’ and ‘yes, they have to’. The Soviet Union could have collapsed for a million other reasons.
For instance, the USSR spent too much of its GDP on its military. Contrary to a free Marxian society it was a dictatorship—in the ‘early’ years under Lenin and Stalin a totalitarian dictatorship of hellish dystopian dimensions. Soviet R&D did not build links between military research and consumer R&D—that means, it had ironically no good industrial policy when it came to innovation and the production of goods that ordinary people desire—or simply, the Soviet Union’s internal economic organization might simply not have been particularly good.
With respect to the latter, Marx was very skeptical that feudal or pre-capitalist countries, which Russia was before it became the USSR, could make the transition to a socialist or communist society, because they in many ways lacked the institutions and know-how to make such a transition sustainably, and might not ever have been able to do so under conditions of totalitarian dictatorship.
However, Roemer et al. do not discuss any of these options, of which some are genuinely based on Marx’s own concerns. Rather, and this not a joke, though it involves a joke, Roemer’s main empirical evidence on worker motivation in the chapter ‘Why the centrally planned economies failed’ of his ‘A future for Socialism’ is based on a supposedly popular joke among Soviet workers that they are lazy and have no motivation to fulfill quotas (…).
That is, Roemer’s ‘evidence’ that markets generate more efficiency and productivity than other forms of economic organization is founded on the capitalist stereotype and platitude that people are most incentivized to work according to ‘carrot and stick’ ‘incentives’—a term that Roemer actually uses and seems to endorse (again, while being one of the most ‘prestigious’ ‘Marxists’ in academia).[3]
What does this mean for my argument? If some of the most prominent Marxists of our time, some of them with significant ‘economic training’, fall for ideological appropriation and contrarian logic—and importantly do not see that capitalist claims would have to rest at least on comparative studies to be remotely justified (and so many other studies besides that)—then you can certainly assume that the situation is not better when it comes to the critical self-awareness of capitalist economists, particularly if you consider that some of the most prestigious research in economics is not based on comparative historic and empirical studies, but on a priori arm chair mathematical models, that resemble rather Leibnizian philosophy than any other modern empirical science.[4]
Sadly, concepts like efficiency and productivity are identified with and appropriated by capitalist economics without argument and justification; and their ideological appropriation has been accepted by left-wing intellectuals and the general public alike.
The Appropriation Intensifies: Shareholder Value, Banker Bonuses, and Globalization
So, if you already think that the situation looks bad, brace yourself, because it is actually way worse. In our public consciousness, it is not only capitalist ‘free markets’ that are identified with efficiency, productivity, and growth. Rather, the most degenerate capitalist institutions and policies are identified with these economic concepts and phenomena.
For instance, McKinsey supposedly creates efficiency, by firing a bunch of people. According to Lloyd Blankfein, the former CEO of Goldman Sachs, his robber baron bankers are among the ‘most productive workers in the world’, basically because they have high wages, and extract the most resources from productive industrial ventures and allocate them to the financial service sector.[5]
The de-industrialization of the West, and the accompanying alienation from work, the mental health epidemic due to terrible labor as well as living conditions, and the erosion of real income and wealth of the Western working class were all celebrated by economists in the name of efficiency.[6]
Business economics professors were seriously telling us that it is okay to earn only half of our past incomes while doing three shit jobs at the same time, if we could buy stuff from China cheaply: That would sufficiently compensate for our losses. And in general, the ideas of shareholder value and the financialization accompanying it, which led to de-investment from production and technological research, were all justified in the name of and identified with efficiency, economic growth, and productivity simpliciter.
If this gaslighting behavior through economists were not already enough, most of them have claimed that efficiency, productivity, and growth—identified with hyper-capitalist policies—are good for everyone or at least for most of the people: Most infamously in the form of so-called ‘trickle-down’ economics.
Trickle-down economics perfidiously combines (a) the claim that alternatives to capitalist efficiency, productivity, and growth are unrealistic (not feasible) and that (b) most, if not all people in a society are better off under capitalism, because the wealth generated through capitalist efficiency, productivity and growth literally ‘trickles’ down from the rich to the poor, which, combined with (a), implies that in capitalism more money trickles down to the poor than wealth would be generated for the poor in all or most other economic systems without trickling down.
Of course, that trickling-down works was never demonstrated by economists, it obviously turned out to be radically false, if it ever was supposed to work instead of a ploy to move income and wealth from the bottom to the top. Besides that, trickle-down economics rests on poor philosophy and psychology, that overlook the mental health damage caused by the inequality in trickle-down economics and the alienation and suffering that results from doing terrible jobs.
That is, not only did this kind of economic brainwashing tremendous damage to many societies, it further intensified the perception of the false link between the consequences of capitalist efficiency, productivity, and growth with efficiency, productivity, and growth simpliciter. And that is fatal for left-wing economic theory because it requires these terms and system properties as much as its capitalist counterparts.
As I will show, efficiency, productivity and economic growth are central to socialist economics, both as concepts and properties of economic systems. However, if there is an anti-attitude towards them, an economic renewal of socialism is bound to fail and we will rather witness economic thinking in the fashion of de-growth and other paradigms that will not only fail, bring poverty and alienation, but even further associate socialism falsely with poverty and economic collapse.
We have Nothing to Fear from Efficiency: Conmen, Lego Bricks, and Industrial Robots
Normally I would argue here for the point that efficiency, productivity, and growth are important for a socialist political economy in the Marxian vein. However, given that I have witnessed in many conversations such a massive anti-attitude towards these concepts and phenomena, I want to first clarify why we do not have to fear anything from efficiency, productivity, and growth per se. The reason for that is that these terms are relational to values. If we use them to achieve the right goals, they are good. Accordingly, we always have to ask, for instance, for whom efficiency is good in economic context x.
Take growth for example. Physical growth is per se neither simply good nor bad. It depends on the context. If you grow to an average or above average height, you usually receive certain benefits, such as healthy bodily functioning. But if you would keep growing beyond certain physically sustainable limits, you would die, because you would collapse under your weight or your organs would fail to serve a body that has grown out of its metabolic limits.
Similarly, if someone is an efficient conman, it means that the person is good at the different aspects of cheating people. However, probably everyone who is not this particular conman—or at least the people in range of their fraudulent behavior—would be worse off the more efficient the fraud gets at cheating people.
Or take productivity. You might be very productive at the task of stapling Lego bricks on top of each other. You have cultivated skills and abilities with unique learning curves that make you proficient at that task. Nobody staples as many Lego bricks on top of each other as you do in the same amount of time, at the same level of quality. However, it is rather questionable whether it is a valuable task for you or anybody else to staple Lego bricks on top of each other for no apparent reason. Accordingly, we cannot claim that productivity is per se either good or bad—rather, it depends on the context.
Concepts like efficiency, productivity, and growth, in themselves, have not only no value, but they also do not even have meaning as such: There is not a thing like efficiency, comparable to how there is a thing like a tree or a table. It makes only sense to talk of efficiency if we embed it in a context of action and goal fulfillment of an action of individuals or systems. Likewise, there is no growth simpliciter and there is no productivity simpliciter.
Let us drive this point home with a few economic examples: If a country’s GDP grows through an inflated financial industry or through an unsustainable housing sector, only a few people benefit, and most people will lose out, as for instance, the subprime crisis has shown. That is, this kind of genuinely capitalist growth is bad. However, if a country’s GDP grows because its renewable energy sector grows, including in terms of efficient energy output, then we deal with a good kind of economic growth.
Similarly, if productivity grows through the automatization of factories, this can be good or bad. If we live in a socialist society in which automatization is used to reduce drudgery and create more production output that is then shared throughout society, productivity growth through automatization is a fantastic thing because it finally frees the working class from drudgery.
If we live in a capitalist society and productivity growth through automatization is used to lay off workers and merely enhance the profits of the capitalist class, then this kind of productivity growth is rather terrible for most ordinary people, though it is great for the owner class.
As the eminent physicist Stephen Hawking brilliantly put it: ‘Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.’
Marxian Political Economy Requires Efficiency, Productivity, and Growth
That being said, technical concepts like efficiency, productivity, and growth and the properties to which they refer are not only important, but they are also indispensable for economic success in a Marxian economy. Marx was among other things concerned with how to efficiently and productively use resources, technology, and organizational techniques, in order to maximize the output of necessary and desired goods with as little work as possible, so that workers have more free time to emancipate and self-realize their personal capabilities according to their own personal preferences.
Marx clearly saw that tribalistic competition among capitalists and the missed opportunity of using the scale and scope of production that only rational society-wide planning can deliver, creates inefficiency and waste.[7] Both inefficiency and waste force workers to use their time inefficiently, thereby reducing their freedom to self-realize in leisure time, even if the means of production were socialized, yet not rationally coordinated and harmonized according to society-wide output goals (centralization of means of production – ‘Zentralisation der Produktionsmittel’, MEW 23, p. 790-91.)
Accordingly, if we want to create an economy that works for the many, we need to create industrial capabilities that efficiently forward our cause. It is an analytic truth, or truism, that if you waste what you have, you will be less able to achieve what you value. In that sense, Marxian economic abundance and freedom of workers from labor drudgery requires technology and organizational know-how that increases efficiency and productivity, and in many ways growth. Yet, by now it should be clear that this is not the kind of efficiency, productivity, and growth that capitalists and neoliberal elites have in mind.
How could the Left ever Fall for this and why we need a Renaissance of Marxian Political Economy
As I said before, there a several reasons why the left fell for the appropriation of essential economic ideas by capitalist economists. Yet, one issue that stands out is certainly that the left for various reasons turned its back on economics and political economy. With this, the left gave itself the death blow that explains its contemporary irrelevance. Marxism was and is essentially philosophical political economy, with strong psychological undertones and originally a historic-organizational method. When the left gave up on philosophical political economy, it alienated itself from itself.
Most of the contemporary left has no real interesting economic ideas of itself. It is usually concerned with varieties of neoliberal ideas in economics and ethics, which it merely gives a more egalitarian direction. Worse, most left intellectuals today are concerned with questions of culture, and write essays on cinema, the arts, and other results of economic phenomena, that Marx correctly called ‘superstructure’, i.e. products and services that are the results of economic processes, however, not themselves the basic phenomena on which we should focus if we want to understand real economic process and the power mechanisms governing them.
This false, alienated theoretical focus, combined with the circumstance that capitalist economists have managed to create the illusion that economics is a science that requires years of technical and formal training in order to be accessible—similar to physics—has left many leftists too afraid to think or comment on economic issues, because they believe that they lack the necessary foundational-technical education.
This is a propagandistic move not uncommon in academia in order to hide theoretical emptiness from critics and the public: Take for instance the work of some analytic philosophers who house utter triviality and blatant falsehoods in a technical formal language, that requires months or years of mastery to use it. That means that elites use code that allows them to express their disdain for ordinary people in arcane nomenclature, it allows doing public policy blatantly for the rich so that the public does not understand it, while it at the same time repels left critics.
That means, that in order to unalienate, become influential again, and to efficiently criticize capitalist economics, the left needs to find its way back to Marx’s political economy—and that means in my opinion ideally going back to Marx (or Polanyi) directly—to their texts.
That means ideally not to take any recourse to commentary or introductory texts simpliciter, and in particular not to those that have been written since (a) the left turned to the arts and culture, and since (b) some people on the left have turned to economic methods that are not only alien to Marxism, but favor due to inbuilt assumptions capitalism (e.g. texts by Market Socialists old and new, Analytic Marxists, and so on).
Finally, with a proper Marxian understanding of economics, leftists will be able to use efficiency, productivity and economic growth correctly, free from capitalist appropriation, and in their favor.
[1] I am aware that there are many economists who do not fall into this category. However, as many as there are, and independent of how great I find their work, as for instance Marina Mazzucato, Ha-Joon Chang, Thomas Piketty, Erik Reinert or Stefanie Kelton, they are in the extreme minority.
[4] The example of John Roemer should let us consider again whether the philosophers and economists at the most prestigious institutions do not have mainly the function to justify neoliberal, capitalist ideology, if primarily, as in the case of Roemer and his fellow Analytic Marxists, by sabotaging Marxism https://doi.org/10.31219/osf.io/x4b2e. I am not claiming that Roemer and other Marxists are doing that on purpose—rather, I think they are selected by neoliberal academia, because they do so.
[5] Additionally, Lloyd Blankfein claimed that Goldman Sachs and its banking peers are ‘doing God’s work’: https://www.reuters.com/article/us-goldmansachs-blankfein-idUSTRE5A719520091108. This statement was made in the aftermath of the subprime crisis, so we need to assume that Lloyd Blankfein envisioned that throwing tens of millions of people out of their houses would bring them closer to God.
[6] Ironically, Larry Summers, economic advisor to Presidents Clinton and Obama, and one of the main architects of today’s neoliberal order, has come to realize the consequences of his own policies, impressively including mass alienation, however, obviously fails to see the causes:
What adds insult to injury here though, is that some of the most ‘prestigious’ Marxian philosophers have overlooked alienation—one of Marx’s major concerns—as an important psychological and ethical phenomenon until recently.
[7] Beth Popp Berman, author of Thinking like an Economist, has referred me in a twitter conversation to the work of Sanjukta Paul, that seems to make a similar case for reclaiming efficiency. However, I think, we have a disagreement about the relevance of the importance of scale economics for efficient production, and the importance of decentralized and small-scale economic activity, that directly pertains to central questions of society wide rational planning that Marx addressed.