Is Marx Still Relevant?

Peter Singer

Vintage stamp with German creator of communism Karl Marx

MELBOURNE – From 1949, when Mao Zedong’s communists triumphed in China’s civil war, until the collapse of the Berlin Wall 40 years later, Karl Marx’s historical significance was unsurpassed. Nearly four of every ten people on earth lived under governments that claimed to be Marxist, and in many other countries Marxism was the dominant ideology of the left, while the policies of the right were often based on how to counter Marxism.

Once communism collapsed in the Soviet Union and its satellites, however, Marx’s influence plummeted. On the 200th anniversary of Marx’s birth on May 5, 1818, it isn’t far-fetched to suggest that his predictions have been falsified, his theories discredited, and his ideas rendered obsolete. So why should we care about his legacy in the twenty-first century?

Marx’s reputation was severely damaged by the atrocities committed by regimes that called themselves Marxist, although there is no evidence that Marx himself would have supported such crimes. But communism collapsed largely because, as practiced in the Soviet bloc and in China under Mao, it failed to provide people with a standard of living that could compete with that of most people in the capitalist economies.1

These failures do not reflect flaws in Marx’s depiction of communism, because Marx never depicted it: he showed not the slightest interest in the details of how a communist society would function. Instead, the failures of communism point to a deeper flaw: Marx’s false view of human nature.

There is, Marx thought, no such thing as an inherent or biological human nature. The human essence is, he wrote in his Theses on Feuerbach, “the ensemble of the social relations.” It follows then, that if you change the social relations – for example, by changing the economic basis of society and abolishing the relationship between capitalist and worker – people in the new society will be very different from the way they were under capitalism.

Marx did not arrive at this conviction through detailed studies of human nature under different economic systems. It was, rather, an application of Hegel’s view of history. According to Hegel, the goal of history is the liberation of the human spirit, which will occur when we all understand that we are part of a universal human mind. Marx transformed this “idealist” account into a “materialist” one, in which the driving force of history is the satisfaction of our material needs, and liberation is achieved by class struggle. The working class will be the means to universal liberation because it is the negation of private property, and hence will usher in collective ownership of the means of production.

Once workers owned the means of production collectively, Marx thought, the “springs of cooperative wealth” would flow more abundantly than those of private wealth – so abundantly, in fact, that distribution would cease to be a problem. That is why he saw no need to go into detail about how income or goods would be distributed. In fact, when Marx read a proposed platform for a merger of two German socialist parties, he described phrases like “fair distribution” and “equal right” as “obsolete verbal rubbish.” They belonged, he thought, to an era of scarcity that the revolution would bring to an end.

The Soviet Union proved that abolishing private ownership of the means of production does not change human nature. Most humans, instead of devoting themselves to the common good, continue to seek power, privilege, and luxury for themselves and those close to them. Ironically, the clearest demonstration that the springs of private wealth flow more abundantly than those of collective wealth can be seen in the history of the one major country that still proclaims its adherence to Marxism.

Under Mao, most Chinese lived in poverty. China’s economy started to grow rapidly only after 1978, when Mao’s successor, Deng Xiaoping (who had proclaimed that, “It doesn’t matter if a cat is black or white, as long as it catches mice”) allowed private enterprises to be established. Deng’s reforms eventually lifted 800 million people out of extreme poverty, but also created a society with greater income inequality than any European country (and much greater than the United States). Although China still proclaims that it is building “socialism with Chinese characteristics,” it is not easy to see what is socialist, let alone Marxist, about its economy.1

If China is no longer significantly influenced by Marx’s thought, we can conclude that in politics, as in economics, he is indeed irrelevant. Yet his intellectual influence remains. His materialist theory of history has, in an attenuated form, become part of our understanding of the forces that determine the direction of human society. We do not have to believe that, as Marx once incautiously put it, the hand-mill gives us a society with feudal lords, and the steam-mill a society with industrial capitalists. In other writings, Marx suggested a more complex view, in which there is interaction among all aspects of society.

The most important takeaway from Marx’s view of history is negative: the evolution of ideas, religions, and political institutions is not independent of the tools we use to satisfy our needs, nor of the economic structures we organize around those tools, and the financial interests they create. If this seems too obvious to need stating, it is because we have internalized this view. In that sense, we are all Marxists now.

Peter Singer is Professor of Bioethics at Princeton University, Laureate Professor in the School of Historical and Philosophical Studies at the University of Melbourne, and founder of the non-profit organization The Life You Can Save. His books include Animal Liberation, Practical Ethics, The Ethics of What We Eat (with Jim Mason), Rethinking Life and Death, The Point of View of the Universe, co-authored with Katarzyna de Lazari-Radek, The Most Good You Can Do, Famine, Affluence, and Morality, One World Now, Ethics in the Real World, and Utilitarianism: A Very Short Introduction, also with Katarzyna de Lazari-Radek. In 2013, he was named the world's third "most influential contemporary thinker" by the Gottlieb Duttweiler Institute.

CIA nominee’s insider history raises deep state fears

Only following White House orders will be no defence for the agency’s decisions

Edward Luce

Gina Haspel's appointment as CIA head would reduce the stigma of the agency's post-9/11 activities, while Donald Trump would have an intelligence chief who does as she is told

Contrary to popular belief, Donald Trump and the deep state are getting along fine. Mr Trump wants Gina Haspel, a career intelligence officer, to head the CIA. She once oversaw a “black site” where terror suspects were subjected to “enhanced interrogation”, better known as torture. That is one reason the CIA is pushing hard for her to be confirmed: her elevation would reduce the stigma of the agency’s post-9/11 activities.

Mr Trump, meanwhile, would have an intelligence chief with a record of doing what she is told. Both sides are happy. The rest of us should therefore be worried.

For all I know, Ms Haspel is a public servant of the highest probity. Efforts to depict her as villainous are likely to backfire. The truth is that we are ignorant of what she believes. In its push to secure one of its own — the first field operative to be nominated in almost 50 years — the CIA has declassified flattering material on Ms Haspel’s career. But it has ignored Senate requests to shed light on the darker parts. This includes the waterboarding sessions at the Thai site she ran, and her alleged role in the deletion of dozens of interrogation videos.

These are classic deep state tactics. Elected officials are being treated like mushrooms: they are kept in the dark and fed manure.

But it is not how the American system is meant to work. Under US law, officials can be held criminally liable for carrying out an illegal order, including torture and destroying evidence. Following orders is no defence. Public officials pledge to uphold the constitution. They do not swear obedience to their boss.

This is where concerns about Mr Trump’s motives come in. He is at war with other parts of the US government, notably the FBI and the Department of Justice. Both are doing their best to avoid becoming instruments of Mr Trump’s will. He has made it clear that he resents their independence. That is why he fired James Comey, the previous head of the FBI. It may also be why he wants Ms Haspel as CIA director. Would she swear fealty to Mr Trump?

Unless the CIA declassifies Ms Haspel’s full history, we have little idea what she would do. It would be a gamble to trust that she would stand up to Mr Trump. Having once been involved in the destruction of evidence of alleged CIA law breaking, what is to stop her from doing it again?

It is possible that Ms Haspel now believes what happened was wrong — yet thought she should protect CIA morale by getting rid of evidence of its post-9/11 excesses. That is a defensible stance. But what does Mr Trump believe the CIA can do for him? During the 2016 campaign, he said that waterboarding was not nearly “tough enough”. He also vowed to attack the jihadist group Isis by killing their families in reprisal. When asked what he would do if the US military refused to obey him, he replied: “If I say do it, they’re going to do it.”

As far as we know, Mr Trump has not issued such orders. Indeed, he has not mentioned torture since taking office. Perhaps — like much of what he says — Mr Trump was playing to the gallery. That is the comforting explanation. The likelier one is that he is sticking to his deal with Jim Mattis, the secretary of defence.

In his job interview, the former general told Mr Trump that torture does not work. “Give me a pack of cigarettes and a couple of beers and I do better with that,” he said. As long as Mr Mattis is around, Mr Trump will be wary of crossing that red line.

But Mr Mattis is a lonelier figure than he was a few weeks ago. Both John Bolton, the national security adviser, and Michael Pompeo, the nominee for secretary of state, are far more in tune with Mr Trump’s instincts. Mr Bolton has replaced much of the national security staff with people who share his worldview. His new deputy is Mira Ricardel, who was blocked by Mr Mattis for a Pentagon position. She was also vetoed by the office of Rex Tillerson, the recently fired secretary of state. Now she has real power. One of her goals is to exert White House control over the Pentagon. Whether Mr Mattis survives is an open question. He once joked that Mr Bolton was the “devil incarnate”. Perhaps there was an edge to his humour.

Either way, the deep state is alive and well. Barack Obama promised to close Guantánamo Bay.

The prison is still running. He also said he would ban torture. Today the US has a president who has praised waterboarding. His CIA nominee authorised it.

The Senate has received ample warning before it votes on her confirmation. Fool me once, shame on you. Fool me twice, shame on me.

Venezuela Just Sealed Its Own Fate - Oil Production Set To Plummet

by: HFIR

- Venezuela arrested two Chevron employees because of their unwillingness to participate in corruption.

- International oil companies were the only reason Venezuela's oil production wasn't expected to plummet below 1 million b/d.

- Now that risk is starting to increase.

- In any event, even if Venezuela somehow magically keeps production flat, the global oil market deficit is -0.7 million b/d. If IOCs pullout, the deficit increases to -1.55 million b/d. 

Venezuela just sealed its own fate with the latest discovery that the battered oil nation arrested two employees of Chevron (NYSE:CVX). In an exclusive published yesterday, Reuters reported that:
Source: Reuters
For those of you that are not familiar with why this is so important, international oil companies (IOCs) are the only reason why oil production in Venezuela has not plummeted. In a highly recommended report written by Francisco Monaldi, an expert on Venezuela's oil industry and a fellow in Latin American Energy Policy at the Rice University's Baker Institute, here's the segment on his forecast for Venezuela's oil production this year:
It is far more likely that investment remains at the current level or declines, production in PDVSA-operated fields continues to fall, and the joint-venture production stagnates or slowly declines. In this case, while production would continue falling for the next few years, it would probably not collapse. Rather, production would asymptotically reach a level (e.g., 1 to 1.2 million b/d) at which it would stagnate. This is expected because remaining production would be concentrated in newer fields, operated by joint ventures, and in the Orinoco extra-heavy Oil Belt-areas in which decline has been less pronounced. 
There is, of course, a risk of production collapsing much further than forecasted here, due to a combination of events such as an oil strike, a full-blown credit default, generalized international sanctions, or massive civil unrest, all possible occurrences. In the case of default and stringent sanctions, PDVSA would rely extensively on Chinese and Russian national oil companies, both for marketing the oil to limit the impact of sanctions and for operating the joint ventures. 
An intermediate, albeit unlikely, scenario to consider is one in which a shift within the government occurs, opening doors for limited economic reforms. Such a scenario would lead to stabilization in oil production levels at around 1.5 to 1.7 million b/d. This outlook would require that Western companies stay and slightly increase investment, in an environment of limited sanctions, debt restructuring, and some basic macroeconomic reforms, under a favorable oil price environment-a serendipitous confluence of preconditions that remains implausible. Limited natural-gas exports to Trinidad would also occur in this scenario. 
Finally, in a full-on successful transition scenario, Western companies would play a major role in the recovery of the Venezuelan oil sector, along with national oil companies from China, Russia, and India. As in most oil-exporting countries, PDVSA would likely continue to play a prominent role, but that would require a major restructuring of the company, refocusing it on commercial oil and gas ventures.

As you can see in our highlighted section above from the article, the scenario of both stagnating production, stabilizing production, and recovery in production require none other than the help of Western companies.
But will they help?
Chopping the hand that feeds you
In the latest scandal, Venezuela charged two Chevron employees with treason for refusing to sign a parts contract for a joint venture with PDVSA.
We quote:
The two Chevron employees were jailed when they refused to sign a supply contract written by PDVSA executives under an emergency decree - which skips the competitive bidding process, according to a half-dozen sources close to the case.  
Such decrees have been cited by Venezuela prosecutors as a means of extracting bribes in some recent PDVSA corruption cases. 
The Chevron employees balked when the parts were listed at more than double their market price in a contract worth several million dollars, one of the sources told Reuters.  
The workers oversaw operations and procurement at Petropiar, an oil upgrading project co-owned by PDVSA and Chevron to transform Orinoco Belt's extra heavy crude into an exportable product.
This type of corruption has been widespread and explains in part why Venezuela's oil production looks something like this:
But with the arrest of Chevron's two employees, will this start the exodus of IOCs from Venezuela? If so, what are the dire consequences?
Interestingly enough, Schlumberger (SLB) and Halliburton (HAL) have now both written off their remaining investments in Venezuela.
  • SLB took a pre-tax write-down of $938 million in Q4 2017.
  • HAL has now written off its remaining $312 million investment.
SLB's CEO, Paal Kibsgaard, took it one step further in the latest earnings call and said Venezuela's oil production was in "free fall."

The negativity surrounding the loss of hope from servicing operators to the latest arrest of its JV partner employees are only piling onto the dire situation we are seeing from Venezuela, but the significance of these two events cannot be dismissed so easily because IOCs are needed in order to keep Venezuela's oil production from free falling to nothingness.
What happens if IOCs pullout and what happens to the global oil market balance?
Here's how you should size up the situation with Venezuela.
  • Current production ~1.5 million b/d.
  • Natural decline possible to ~1.1 million b/d this year.
  • JVs holding up production from falling below 1 million b/d.
OPEC production in March 2018 was 31.83 million b/d. Call on OPEC increases to ~33 million b/d by end of 2018.
If Venezuela's oil production falls to ~1.1 million b/d, that will decrease OPEC's production by another ~400k b/d to ~31.4 million b/d. That would require other members to increase production by ~1.6 million b/d by the end of 2018 to prevent more storage draws.
If IOCs pullout, the support underneath Venezuela could get yanked resulting in a substantial loss in production. Our view would be a free fall to ~600k b/d to ~700k b/d or an additional loss of ~400k b/d to ~500k b/d.
Here's a table breakdown:
Source: HFI Research
As you can see in the table above, even if Venezuela kept its production flat, which in our view is the best case, the global oil market deficit remains at -0.7 million b/d. And the deficit only increases from here on out, so oil bulls can view the demise of Venezuela's oil production as a sort of margin of safety or "free call option" to the upside.
Too little, too late
The situation in Venezuela is simply too little too late. No matter what Maduro does for the oil industry now, nothing will correct the steep production declines we are seeing. As the tensions grow with its IOC JV partners, we think the possibility of IOCs leaving is no longer a nonexistent risk factor. In the event that Chevron decides to exit Venezuela for fear of more government retaliatory tactics like this, oil production could fall through the pivotal 1 million b/d and the real death spiral begins.

For the global oil market, whether Venezuela's oil production stabilizes or declines further won't change the fact that it's in a deficit and will continue to be in a deficit into next year. For oil bulls then, this scenario analysis is pure upside.

The Future of Tech Policy

Michael J. Boskin

STANFORD – Technology and the largest tech firms are becoming increasingly controversial. Today, there are growing concerns about third parties accessing and manipulating Facebook user data; and before that, there was a raging debate about whether the government should be able to unlock devices belonging to suspects of terrorism or other crimes. More broadly, technology-driven job dislocation has become a source of constant anxiety.

For all of these reasons, technology policy has taken center stage, as I predicted it would exactly one year ago. Facebook Chairman and CEO Mark Zuckerberg recently conceded in congressional testimony that some regulation of his industry is necessary, and there is now an open window of opportunity to pursue new policies for the sector. In formulating such policies – whether through legislation, regulatory rule-setting, international agreements, or measures addressing related issues such as tax and trade – the goal should be to limit the downsides of technology without stifling innovation. To that end, five interrelated issues should be kept in mind.

The first is privacy. Although the European Union’s far-reaching General Data Protection Regulation (GDPR) goes into force on May 25, it will not offer any protection for non-Europeans. In the case of Facebook, that translates into 1.5 billion users, almost all of whom have clicked to agree to the company’s terms of service without having read them.

There are currently proposals to require tech companies to obtain an affirmative opt-in from users before collecting their data, and to allow users to retrieve or erase their data easily. How customers and companies, including new entrants, would react to such rules remains to be seen.

To collect more data, firms might offer users inducements beyond the putatively free services they already provide, and that may or may not slow down the pace at which they can enhance services or add newfeatures.

The second issue is market power. In the early years of the Internet, an infant tech industry pled for a hands-off approach to regulation and taxation. But now, the four largest US firms by market capitalization – Apple, Google, Microsoft, and Amazon – are all tech companies (as of this writing, Berkshire Hathaway had edged out Facebook for fifth place). Devising sensible policies on this front will require that we first define the market, and then decide what level of concentration, and over what time frame, constitutes a threat to competition.

The tech sector seems to follow a classic pattern of Schumpeterian creative destruction, whereby successive waves of monopoly ascension give way to displacement: cell phones replaced landlines; email displaced postal mail; and social media and texting are supplanting phone calls.

Currently, Apple and Google hold a duopoly on smartphone operating systems, yet they compete vigorously to improve their features and roll out new products. Meanwhile, the iOS and Android app stores have become both a point of entry for many small businesses and a barrier to entry for new smartphone providers. Likewise, Facebook and Google dominate the digital advertising market, but their profits allow them to offer ostensibly free email and social-media services that benefit consumers.

Elsewhere, the US government is trying to block a merger between the telecom giants AT&T and Time Warner, which owns a movie studio, cable television stations, and print publications. Whereas regulators worry that the merger would lead to higher prices, AT&T argues that it is facing direct competition from tech giants like Netflix and Amazon, which both offer online video streaming and original programming. (Amazon is also dominant in online retail and data-center infrastructure.) The question, then, is whether the current competition among the behemoths more than offsets their market power.

A third issue concerns the control of information. Owing to the convenience and addictiveness of smartphones and social media, many people now get news exclusively from online platforms like Facebook. And yet the microtargeted advertising model used by Google and Facebook has disrupted print journalism’s traditional source of revenue, along with coverage of state and local governments.

Even worse, social-media algorithms tend to amplify the most extreme material at the expense of more credible sources. But efforts to eliminate material viewed as extreme by some will raise the specter of censorship. Conservatives, especially, fear that left-leaning companies in Silicon Valley will be allowed to decide what counts as acceptable debate.

The fourth issue is the concentration of wealth. The founders of today’s tech giants are now among the world’s wealthiest people, with Amazon’s Jeff Bezos topping the list. But their growing fortunes stand in stark contrast to decades of slow wage growth, which is creating a political backlash.

Still, the creative destruction of the digital era has also enriched many tech workers and investors, while reducing the fortunes of previous incumbents. It has both destroyed and created well-paying jobs. And, most important, it has produced goods and services that make virtually all of us better off.

Policies to address distributional concerns should not suppress entrepreneurship or discourage work, saving, and investment, especially for new market entrants. For example, a capital-gains tax, whatever its distributional intent, amounts to a tax on becoming rich. And yet creating incentives for people to improve their lot is what drives broad-based prosperity.

The last issue concerns national security and national economic interests. This month, a number of tech firms, including Microsoft and Facebook, declared that they will not assist any government in conducting offensive cyberwarfare operations, and that they will defend unconditionally any countries or individuals targeted by a cyber attack. Does that really include a cyber attack against North Korea or Iran to preempt a nuclear event?

With respect to economic interests, all governments look for ways to help their countries’ own industries, whether through regulation, subsidies, or trade barriers. But China has been playing a different game with its alleged theft of intellectual property and forced technology transfers.

With China expanding its cyberwarfare capabilities and investing in vital telecom infrastructure, the US government recently saw fit to bar US firms from selling components to the Chinese telecom giant ZTE. In response, China is now holding up the US chipmaker Qualcomm’s acquisition of the Dutch semiconductor firm NXP.

All of these issues will shape the future of tech policy, and thus future innovations and the benefits they bring to society.

Michael J. Boskin is Professor of Economics at Stanford University and Senior Fellow at the Hoover Institution. He was Chairman of George H. W. Bush’s Council of Economic Advisers from 1989 to 1993, and headed the so-called Boskin Commission, a congressional advisory body that highlighted errors in official US inflation estimates.