Why Karl Marx was a genius | Steve Keen and Lex Fridman

you mentioned karl marx as um one of the great intellects economic thinkers ever yeah he's not he might be number one you study him quite a bit you disagree with him quite a bit yeah but you still think he's a powerful powerful mind yeah a powerful mind so first of all let's let's just explore the human um uh why do you say so what's interesting in that mind in the way he saw the world what are the insights that you find brilliant the marx once described his major workers towards a critical uh examination of everything existing so he's a modest bastard yeah so he he wanted to understand and criticize everything yeah and uh even he he wasn't trained directly by hegel but he was his teachers were hegelian philosophers and what hegel developed was a concept called dialectics and dialectics is a philosophy of change and when most people hear the word dialectics they come up with this unpronounceable trio of words called thesis antithesis synthesis i can barely get the words out myself yeah and that actually is not hegel at all that's another german philosopher oh fiction i thought it was kind no effect well i'm not sure you could i mix them up all germans like you've seen to me yeah there we go um so but if you look this beautiful book called marks and contradiction you want to find a great explanation for marx's philosophy i've forgotten the author i think it's wild w i lda marx and contradiction and he points out the actual origins of marx's philosophy i didn't know that when i first read mark so i became exposed to marx when i was a student at sydney university and we'd had a strike at the university over the teaching of philosophy and what happened was the philosophy department had a lot of radical philosophers in it and a conservative chief philosopher and the the radicals wanted to have a course on what they called feminist aspects of philosophical sorry philosophical aspects of feminist thought and the staff voted in favor of it this is back in the days when university departments were democratic the professor opposed it he got it blocked at a high level the staff left frogged over that and then finally the vice chancellor blocked it so that led to a strike over the teaching of philosophy at sydney university which at one stage over pretty over half the students were on strike okay economics began out of that teaching of a philosophy of feminism yes that it's good to be that's such a different life to what we're living now but that's the academic milieu in which i developed all my ideas and and i had become a critic i've gone from being a believer of mainstream economics when i was a first year student to disbelieving it halfway through first year okay and i then spent a long time trying to change it and getting nowhere and then this philosophy strike happened and we took it on in economics and we formed what's called the political political economy movement and had a successful strike we actually uh managed to pressure the university into establishing a department of political economy at sydney university as well as the department of economics what was the foundational ideas were you resistant to the whole censorship of why aren't we having why can't you have a philosophy of anything kind of course well it was with much more libertarian in the genuine sense of the word period of time at the end of the beginning of the 60s beginning of the 70s than the word libertarian has been corrupted since then but it really was about free thought and you went to university to learn it was about education i remember having a fight with my father once where dad was angry about the marks i was getting some of my courses and he said if you don't get a decent result you won't get a a decent job and i said i'm not here to get a job i'm here to get an education oh wow okay now the thing is ultimately it's been a pretty good job for me as well this is in sydney by the way and sydney in summer is absolutely gorgeous and what does us bunch of lefties decide to do during summer but read karl marx yeah on the beach or uh actually inside the uh of the room of the philosophy department at the university of sydney in the main quadrangle there's sandstone all around us and we've a bunch of about 20 or 30 of us reading our way through marks capital and i remember walking off to that meeting with one of my friends uh who's the law student and we this was a period of a huge construction boom in sydney so the whole skyline which we could see from the campus was full of what they call kangaroo cranes which were an australian invention that are cranes that can be leapfrogged over each other to build a skyscraper so here you are reading karl marx looking at the at the mechanisms of capitalism i looked at those mechanisms and i knew marx argued that labor was the only source of value yeah and he said machinery doesn't add value so the cranes are worthless i'm looking at these cranes i'm thinking i want a very good explanation by marks as to why these cranes don't add value so reading through the first seven chapters of capital what you found was marks applying this dialectic and like the 50 and stuff is that is not how marx thought at all i was reading trying to find this thesis antithesis synthesis and it's not there at all in any of marx's works and i've read everything he's ever written on economics from 1844 to 1894 when he was his last books were published there's not one word of mention of that what he does talk about is foreground and background intention and his idea of a dialectic is that there is a unity will exist in society and that unity can be individual there can be a commodity anything at all the the unity will be understood by that society one particular aspect will be focused upon so if you think about the human being in capitalism the focus on the human being as an object is their capacity to work you're a worker okay that's put in the foreground the fact that you're human and you want to play a guitar and go surfing and make love and all the other things that humans do is pushed into the background there's a tension between the two of those and that can transform that unity over time and that's a beautiful dynamic vision of change so dialectics is a philosophy of change so synthesis antithesis is uh what does every idea have a counter argument yeah there's a positive and negative and you bring them together somehow and then mark says this foreground background foreground is all what we think of as economics and backgrounds all the lovemaking we do as humans that sort of thing and and why is what's why is there attention well because you imagine if you imagine the unity like if you take a human you know any previous it could go back to cro-magnon days when we're you know living in caves and we've got to go hunting and cook food and stuff like that but there's no social hierarchy as we've become used to so you don't get labored as a worker or a capitalist you're just a human in that situation then you'll you've got more of an integrated view of who you are and i think that's one of the appeals of a tribal a genuine tribal culture that you get treated for the whole of who you are you've certainly categorized you're male you're female you're young you're old you're a hunter you're a you're a tool maker et cetera et cetera but you're treated as more an integrated object when you get put in a complex society like a capitalist society then one side of you is emphasized and the others are de-emphasized so is it fair to say that the background is like our basic fundamental humanity and the foreground is the machine of capitalism effectively and when you look at in terms of a human but what marx did is apply this to a commodity he said what is the essential unity in a capitalist economy and the essential unity is a commodity okay that's such a the essential unit the essential unity was the unit unity an object in society okay okay so he started from the point of view of trying to understand what how exchange occurs how do we set prices and his starting vision was to say that a commodity is a unity in a capitalist economy the part of the unity that we focus upon is the its exchange value a capitalist produces a commodity not because of its qualitative characteristics but because it be sold for a profit so the foreground aspect of a commodity is its exchange value the background aspect of it it won't succeed as a commodity unless it has a use value so the background is the utility thing yeah see if you made something which didn't work okay yeah then it has you might be able to sell it but it has no utility that can't you can't make that into a commodity a broken thing can't be sold does that have the subjective yeah it has to have the subjective side for people as well as the objective so the objective is what capitalists worry about i'll give you my favorite counter example of that i was in i took a bunch of australian journalists to china way back in the period when the gang of four was was being on trial and we did a tour of the forbidden city in beijing and at that stage all the artifacts of the royal family the emperor were actually in the building still and we walked past one of them and it was this gold solid gold bar about this long shaped like a fist turned over like this and on this side there were rubies emeralds diamonds you'd never seen gemstones i mean gems that big and one of the journalists asked me what i thought it was and i said oh it's obvious jane is the back scratcher i walked away she caught up with me about 20 minutes later that i asked one of the guys it is a backscratcher wow so here's a back scratcher for the emperor made of solid gold with diamonds and rubies and emeralds during the scratching yeah and that's that's a commodity in a feudal society okay the cost doesn't matter you want the most elaborate beautiful thing because you're the emperor so you in that in a feudal society the commodity what's focused upon is the utility and the cost of production when you when you're the emperor is immaterial capitalism reverses that so the commodity in a capitalist economy is the plastic two dollar scratcher you can get from kmart or target yeah and so the the use value is necessary but irrelevant to forming the price now that was a completely different vision of exchanging capitalism to what i found in the neoclassical theory because that says it's the marginal utility and the marginal cost of everything that determines the exchange ratio and the crazy thing about that is not so much the marginal utility but the argument in in the neoclassical theory is that the price ratio the price will when there's an exchange going on there's two person two commodity exchange of com of two commodities between two people uh they will show the the price will change until such time as the ratio of the marginal utilities is equal to the ratio of the marginal costs that's supposed to be the equilibrium now mark says that's that's a previous society where you exchange stuff that you happen to have the stuff somebody else happened to have without any real production mechanism being involved and he said that's like when you when you have an eight two ancient trial or two tribes meeting for the very first time and one tribe can make something the other tribe can't make and they will therefore the price they were willing to pay will reflect how unique this other object is that the this one tribe can make and the other can't so for example the story of manhattan being sold for 40 glass beads it's actually 40 glass trading booths i believe it is a true story but the thing is the indians couldn't make glass beads so they value the glass beads of the island of manhattan okay which is a utility-based comparison what mark said that's the very initial contact over time even if you don't know the technology over time you start to realize how much work goes involved to making what they're selling you versus what you're selling to them and you start making stuff specifically for sale so you know elon's not losing personal utility each time a model 3 goes out the door there's no he might get utility out of the fact that he's created that vehicle that concept and manufactures it and so on but he's not losing utility each time a model t forward goes out the door for going back for the ancient ancient commodity there so the utility plays no role in setting price in marx's model whereas it's essential in the neoclassical model what's the difference between utility and marginal utility what does the word marginal mean and why is this such a problem it turns marginal utility well the utility itself has different meanings in the two schools of thought if you take the classical school of thought which when marx comes from utility is effectively objective so the utility of a chair is that you can sit in it okay not how comfortable it makes you feel yeah okay now if you think about the utility of the chairs we're both sitting and they're identical from a classical point of view we're both sitting okay but from the neoclassical point of view it's how comfortable it makes you feel and that depends upon your subjective feelings of comfort you might be far more comfortable in the identical chair that i'm sitting in than i am yeah and therefore the comparison is difficult and therefore working out a ratio involves you've got a decline in your each time you give away a chair in exchange for a iphone you have a fall in your utility okay but and then therefore you want a higher return because you're losing more utility each time the the more chairs you give away the less utility you're getting from chairs so there's a decline in your utility that's your your marginal utility so it's including your subjective valuation in setting the price and what mark's pointed out is this is a caricature of actual change in the capitalist economy because we have in a capitalist economy huge factories sending out huge quantities specifically for sale they've got no utility to the um seller unless they're sold okay so it's a it's a very different vision of where how prices said and marx used that to explain where profit comes from but he made a mistake and his argument was that talking about a worker uh as now your unity this foreground background tension thing the foreground is that you hire a worker for their cost of production and the cost of production is a subsistence wage okay the utility to the buyer is the fact that they can work in a factory now it might take six hours let's say to make the means of subsistence and that's the exchange value and that's what the capitalist pays as a wage to the worker but they can work in the factory for 12 hours that's the utility twelve minus six is six surplus of value hours and that's where profit comes from and that was marx's argument and i thought it was brilliant but it also applied to machinery right okay let's let's let's say no no deep deep is good you just want to define uh terms don't take that statement out of context the internet please okay uh you said buyer seller worker in a factory who's the seller who's the buyer well you know why is the worker the buyer well the work is the commodity in this case because when if you're going to make stuff in a factory you've got to hire workers yes okay and what marx is saying the buyer in that situation is a capitalist so what does the buyer pay he says he pays the exchange value that's they get back to the commodity thing that this is because that's the starting point he said the essential unity in a capitalist economy is the commodity a commodity has two characteristics exchange value and use value okay exchange value of a commodity in a capitalist economy will be its cost of production the use value is what you do with it okay once you've purchased it but labor is a commodity in this case when you're when a worker is being hired for a job yes so the workers labor has an exchange value and a use value as well yeah youth value use value of a worker's labor exchange value let me think about that so that so the hours they put in here's the use value interesting so what uh what does the worker want in this what are the motivations are we not considering the worker in this context as a human being that's actually that's that's the next layer what what mark's good was just like a a layered cake starting from the foundation of saying straight commodity exchange and then saying well you're treating a workers a commodity now a commodity is something you know like this okay that has so far as i'm aware no soul okay yeah not going to be complaining if i turn it upside down it'll fall over but yeah so that's there's no soul there as a human is both a commodity and a non-commodity yeah and therefore there'll be a tension in the person i'm being treated as a commodity here i'm being paid just enough to stay alive you know i've got a wife and kids back at home yeah so that that is another layer of thinking in marks and on that lady then says well workers will therefore demand more than their value so that's when you get like political you get political and you get money coming above that and so on but the basic idea starts from the commodities the fundamental unity and capitalism the important commodity in marx's thinking was the worker because that's where he said profit came from yeah okay and then that explains the motivation of the capitalist and that ultimately sort of labor theory of value and marx's arguments about how capitalism will come to an end you

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Id: rku3SygaBVU

Length: 18min 36sec (1116 seconds)

Published: Mon Jul 18 2022