Manas Chakravarty: Capitalist Marx and socialist Smith

WATCHWORD

Marxists, everybody knows, are rabidly anti-capitalist, anti-globalisation, anti-free trade dinosaurs, which is why the markets shudder every time one of them opens his mouth.

But few people, including present-day Marxists, bother to find out what Marx actually had to say about capitalism and globalisation. It turns out to be quite a surprise.

Contrary to what most people think, Marx was an ardent globaliser, and his hymn to capitalism in the Communist Manifesto needs to be quoted at length.

"The bourgeoisie," says Marx, "by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation.

The cheap prices of commodities are the heavy artillery with which it forces the barbarians' intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves.

In one word, it creates a world after its own image." Simply put, capitalism is civilisation. Capitalism "has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals". It has "created more massive and more colossal productive forces than have all preceding generations together".

Consider his opinion about the global market, opinions that could easily be echoed by capitalism's most eloquent advocates, "Modern industry has established the world market... This market has given an immense development to commerce, to navigation, to communication by land. This development has in turn, reacted on the extension of industry; in proportion as industry, commerce, navigation, railways extended, in the same proportion the bourgeoisie developed, increased its capital, and pushed into the background every class handed down from the Middle Ages."

Globalisation, according to Marx, even leads to world peace: "National differences and antagonisms between peoples are daily more and more vanishing, owing to the development of the bourgeoisie, to freedom of commerce, to the world market, to uniformity in the mode of production and in the conditions of life corresponding thereto."

He was also a great supporter of free trade, pointing out in a speech that "in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favour of free trade".

Moreover, Marx believed that capitalism was a vast improvement on the earlier, pre-capitalist "Asiatic mode of production" prevailing in countries like India, and that the global diffusion of capitalism would help developing countries.

In 1867, he wrote: "The country that is more developed industrially only shows, to the less developed, the image of its own future."

In short, Marx believed that it was only after capitalism spread out all over the globe, displacing pre-capitalist forms of society and economy, that the time would be ripe to usher in communism.

Of course, he lost no opportunity of pointing to the injustices of capitalism, but note how different his vision was from the views held by latter-day Marxists.

If Marx the communist had a tender spot for capitalism, capitalism's demi-god, Adam Smith, had a pretty low opinion about capitalists. One of his well-known jibes against them is: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Smith concluded his chapter on profits in The Wealth of Nations with the comment: "Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people."

He says that while "the violence and injustice of the rulers of mankind is an ancient evil" it is not as bad as "the mean rapacity, the monopolising spirit of merchants and manufacturers, who neither are nor ought to be, the rulers of mankind".

And on trade unions: "We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But...masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labor above their actual rate."

Putting it simply, there is much in Marx that is pro-capitalist, and much in Smith that is not. Marxists, as well as popular opinion, need to recognise that fact.

manas@business-standard.com