Karl Marx is not exactly an oft-discussed figure in economics anymore. The collapse of the Soviet Union and other nominally communist countries has led to Marx becoming an after thought in economic discussion. Is spite of this, Marxism is still quite popular world wide, if not very much in America. Despite the lack of attention, Marx’s predictions have often been proven correct. For example, Marx’s discussion of the “inter-dependence of nations” in his and Engels’ Communist Manifesto is a strikingly accurate description of the development of globalization. The last few decades of American economic development give a lot of credence to some of Marx’s predictions.
Doug Henwood at the New York Times has a great description of changes in economic history from a Marxist perspective. During the 1970s, inflation skyrocketed and corporate profits fell. Henwood puts the cause of this in Marxist terms, class relations had broken down and labor had lost fear of their bosses. In response, the Fed raised rates to control inflation, sending the economy into a recession. Reagan was elected and preceded to weaken union power and begin his trickle-down economic policies. This resulted in a rise in productivity with relatively stagnant real wages. The Atlantic’s graph evidences this divergence between wages and productivity clearly. The result of this divergence was increased concentration of wealth and, consequently, economic power. The Center on Budget and Policy Priorities has a good collection of statistics on income inequality, but the central point is the top one percent have become significantly wealthier compared with the rest of the economy. In Das Kapital, Marx discussed “capitalist accumulation” and the increasing concentration of economic power often as a flaw of capitalism, and recent data certainly backs this up.
Another central point of Marx’s ideas were the increasing misery of the proletariat. This point is often dismissed due to the rise of quality of life since the time Marx was writing. While it is true that workers today are better off than when Marx was writing, this growth may be reversing. The recent rise of populist movements and a few other facts indicate that perhaps Marx was at least partially correct. First, income mobility has been declining. What this means is that children are becoming less likely to earn more than their parents. NPR reports that only approximately fifty percent of children will out-earn their parents. Stanford’s study indicates that the fraction of children earning more than their parents has fallen from ninety percent since the 1940s. In addition to the earning potential of younger people decreasing, even more drastic conditions are becoming apparent. “Deaths of despair” have seen a significant increase recently. A paper by Anne Case and Angus Deaton evidences the rise in mortality of middle aged white people in the United States between 1999 and 2013. The largest reason for this rise in mortality was due to increases in deaths due to drug and alcohol poisonings, suicide, and liver diseases. Individuals with less education were the ones with the sharpest increase in mortality. Case and Deaton blamed financial strain for this rise. The Atlantic breaks down the financial strains that the less educated are facing, and much of it is based in the decline in jobs in manufacturing and construction, labor-intensive roles. Case and Deaton directly mention the increased likelihood of not being better off than their parents as a potential cause for the higher mortality. These two statistics certainly seem to indicate that a “miserable proletariat” is not at all far from the truth.
Marx’s predictions may not have all come true, but the same can be said of virtually all other economists. Unlike other economic thinkers, however, Marx is largely ignored in economic education. Despite this, Marx’s critique of capitalism must not be taken lightly as central points have come true.