Despite being a liberal and a college student, I’m fairly centrist in my economic views. I don’t believe that the free market solves everything, but I am also assuredly not a Marxist. If anything, I’m probably a Keynesian with a neoliberal streak. That being said, I think Marxism – despite being naively utopian, wrong about the labor theory of value, and incorrect in its belief that capitalism inexorably leads to imperialist wars – did get one thing right: It understands that economics does not exist independent of the broader world.
As you might remember from my post The Arrogance of Economists, I tend to view economists as naively arrogant regarding the explanatory power of their field. This is, of course, not to say that economics is not a crucial social science and a powerful, illuminating field. The problem is that economists, for the most part, are so impressed by themselves and their work that they rarely consider how it fits into the broader body of social science literature (ie. political science, psychology, sociology, etc.). This is an enormous problem because it means that while economists have a pretty good track record of determining optimal systems for the efficient production and distribution of goods and services, they tend to ignore political and sociological issues that impede the implementation of their highly rationalist theories. Trade theory is a great example of this. Nearly every economist agrees that increased trade boosts economic growth in an economy. Frankly, the evidence on this is overwhelming. However, because trade raises overall growth levels, many Neoclassical economists simply assume that those who benefit from trade (based on the Heckscher-Ohlin Model) will simply subsidize those who are made relatively worse off. Obviously this is utterly false because if those who benefited from trade subsidized those who suffered from trade, Bernie and Donald wouldn’t have done so incredibly well this past election cycle. Of course, if economists had deigned to examine political psychology or how American political institutions work, they would have realized that their trade distribution model is far too Pollyannish for the real world. Unsurprisingly, though, most of these Neoclassical economists didn’t bother to look at other fields.
Marxism doesn’t make this mistake. Indeed, its entire goal is to understand class relations within a broader politico-economic framework. Marx and his supporters were clearly wrong in many of their predictions, but they also did get some things right like the role of technology in shaping the direction of proletarian labor. Ultimately, my point here is not to parse Marx’s theory or defend or attack his writings. People far smarter and better versed in economic theory than I have already established a truly impressive literature base examining just those kinds of questions. I do, however, want to praise the Marxist school for recognizing that there is more to human interaction than just the mindless movement toward ever greater efficiency. Institutions matter, people’s behavior matters, and the distribution of power matters. Too many economists ignore the works of other brilliant social theorists simply because they aren’t economists. I believe that is a grave mistake. Even though history has proven most of his theory to be incorrect, Marx at least tried to incorporate non-economic thought into his understanding of the world.