Contending Economic Theories (Cambridge, MA: M.I.T. Press, 2012)

Richard D. Wolff and Stephen A. Resnick, Contending Economic Theories (Cambridge, MA: M.I.T. Press, 2012)

Like a virtual college course, this accessible, easy-to-understand book lets you sit in on its authors’ economics class. The ideas are highly consistent; everything fits into a structure.

Professor Wolff speaks frequently on the radio, at university and seminar meetings. I have observed that he is particularly good at engaging new listeners. In this book, we know from the start where the authors stand. Their balanced, simple arguments are easy to grasp, demystified so as not to scare off the uninitiated, to reach the widest spectrum of people.

Professor Wolff is very matter-of-fact, plain spoken and emphatic, not hesitant or soft-spoken in any way. His formidable presentation leaves an unprepared antagonist almost disarmed, with no way to answer him. The same strength is present in this book, which I highly recommend to anyone seeking to understand the world’s economic systems.

The book presents the world’s three economic systems: Neo-classical, Keynesian and Socialist.

The neo-classical system is a “privately owned and privately run economy,” favored by the University of Chicago School of Business, the Friedman clones, who believe in dog-eat-dog capitalism, with minimal taxes, no obligations of the companies, all-out free market, Karl Rove-style capitalism. In a real free market system, bankrupt companies or banks would go out of business.

The Keynesian model, purportedly more liberal, involves active state intervention to maintain the system, and has been the policy of most Western administrations since the 1930s. This is what the Friedman Chicago Boys most opposed, supposedly. The government subsidizes the system. Some firms are deemed “too big to fail” and put on the public teat. And somehow firms like AIG remain private.

The book does not present the darker side of Keynes. John Maynard Keynes knew his system would work best under a dictatorship. Learning that his ideas were actually being applied in Hitler’s Germany, in the never-reprinted 1936 first edition of General Theory Keynes admitted “the theory … is much more easily adapted to the conditions of a totalitarian state.”

Keynesian economics is like Green Economy – despite the claims to benefit society, the investors’ right to earn a Profit and maintain “Growth” comes first. Real welfare or ecology is a distant second. Clearly, in any clash between these priorities, “Growth” always wins. Though the authors recognize that Keynesianism is only a disguised version of capitalism, they do not directly criticize the mainstream canard that it is a “midpoint” option or combination of both capitalism and socialism.

After decades of hard-right neo-classical economics, in the wake of the 2008 crash, the bailouts are a classic ongoing example of Keynesian methadone – government-administered dope to sustain a state of dependence, decay and stagnation. Saving the system, they put off inevitable disaster.

Socialism. Among the world’s many stripes of left-wing theoreticians, Wolff and Resnick maintain a delicate balance between being openly radical socialists and sober economics teachers.

Professors Wolff and Resnick establish that the Soviet Union was not an example of the Socialism they propose. They describe it instead as a case of “State-Capitalism,” in which “the surplus appropriators… are state officials.”

“True Socialism” is presented as a benign “house cleansing,” a new system that will benefit everyone and leave few disturbed. Not addressed is how we’re supposed to get there, especially with today’s crises and wars. It is presented not as the outcome of a gradual process but rather as an end stage of development.

In a speech, Wolff compared an imaginary self-governing, socialist system of the future to a group of long-haired Silicon Valley computer geeks, who program hard all week. However on Fridays they come to their workplace and sit around the room, their feet up on the conference table, and decide what to do with their profits.

I think such a vision would at first attract only a minority of workers. Most would choose to stay home. We have such a virulent consumerist culture that it will take people a long time to accept a collectivist mindset.

Wolff and Resnick’s socialism sounds so sensible and benign; as if we could put it into practice tomorrow. As economists, Wolff and Resnick have to be tolerant of predominant capitalist views. They seem non-confrontational. Their study does not cover the process of transformation to a new social system, nor how that struggle itself would color the outcome.

Are “We, The People” supposed to be so tolerant and understanding of these “high worth individuals” among us, billionaires who own vast natural resources, oil wells, mineral deposits, utilities, banks and factories, often ill-gotten at the source? How about vulture capitalists and loan sharks? Will they willingly agree to any form of socialism?

The book opens areas for discussion with people for whom the words Socialism and Communism are anathema, who think we must have private ownership of large businesses. The book is incredibly valuable as a bridge to this world, to the many millions of people who would not otherwise listen to a Marxist argument or Socialist approach, except if couched in relatively non-threatening language.

Marx’s ideas are in play again worldwide. Consideration of socialist solutions for the future and the teaching of Karl Marx’s classics like Capital are on the rise. People not previously acquainted with these ideas are learning about them anew and this book is a great way to be introduced to them.

Reviewed by Dimitri Devyatkin Independent film and video maker New York City www.devyatkin.org