Ironically, one of the most radical proposals making the rounds today has come from an economist at the London School of Economics, Willem Buiter, a former member of the Bank of England's Monetary Policy Committee and certainly no Marxist. Buiter has proposed that the whole financial sector be turned into a public utility. Because banks in the contemporary world cannot exist without public deposit insurance and public central banks that act as lenders of last resort, there is no case, he argues, for their continuing existence as privately owned, profit-seeking institutions. Instead they should be publicly owned and run as public services. This proposal echoes the demand for "centralization of credit in the banks of the state" that Marx himself made in the Manifesto. To him, a financial-system overhaul would reinforce the importance of the working classes' winning "the battle of democracy" to radically change the state from an organ imposed upon society to one that responds to it.
"From financialisation of the economy to the socialisation of finance," Buiter wrote, is "a small step for the lawyers, a huge step for mankind." Clearly, you don’t need to be a Marxist to have radical aspirations. You do, however, have to be some sort of Marxist to recognize that even at a time like the present, when the capitalist class is on its heels, demoralized and confused, radical change is not likely to start in the form of "a small step for the lawyers" (presumably after getting all the "stakeholders" to sit down together in a room to sign a document or two). Marx would tell you that, without the development of popular forces through radical new movements and parties, the socialization of finance will fall on infertile ground. Notably, during the economic crisis of the 1970s, radical forces inside many of Europe's social democratic parties put forward similar suggestions, but they were unable to get the leaders of those parties to go along with proposals they derided as old-fashioned.
Attempts to talk seriously about the need to democratize our economies in such radical ways were largely shunted aside by parties of all stripes for the next several decades, and we are still paying the price for marginalizing those ideas. The irrationality built into the basic logic of capitalist markets -- and so deftly analyzed by Marx -- is once again evident. Trying just to stay afloat, each factory and firm lays off workers and tries to pay less to those kept on. Undermining job security has the effect of undercutting demand throughout the economy. As Marx knew, microrational behavior has the worst macroeconomic outcomes. We now can see where ignoring Marx while trusting in Adam Smith’s "invisible hand" gets you.
The financial crisis today also exposes irrationalities in realms beyond finance. One example is U.S. President Barack Obama's call for trading in carbon credits as a solution to the climate crisis. In that supposedly progressive proposal, corporations that meet emissions standards sell credits to others that fail to meet their own targets. The Kyoto Protocol called for a similar system swapped across states. Fatefully however, both plans depend on the same volatile derivatives markets that are inherently open to manipulation and credit crashes. Marx would insist that, to find solutions to global problems such as climate change, we need to break with the logic of capitalist markets rather than use state institutions to reinforce them. Likewise, he would call for international economic solidarity rather than competition among states. As he put it in the Manifesto, "United action, of the leading... countries, at least, is the first condition for the emancipation of the proletariat."
Yet the work of building new institutions and movements for change must begin at home. Although he made the call "Workers of the world, unite!" Marx still insisted that workers in each country "first of all settle things with their own bourgeoisie." The measures required to transform existing economic, political, and legal institutions would "of course be different in different countries." But in every case, Marx would insist that the way to bring about radical change is first to get people to think ambitiously again.
How likely is that to happen? Even at a moment when the financial crisis is bleeding dry a vast swath of the world's people, when collective anxiety shakes every age, religious, and racial group, and when, as always, the deprivations and burdens are falling most heavily on ordinary working people, the prognosis is uncertain. If he were alive today, Marx would not look to pinpoint exactly when or how the current crisis would end. Rather, he would perhaps note that such crises are part and parcel of capitalism's continued dynamic existence. Reformist politicians who think they can do away with the inherent class inequalities and recurrent crises of capitalist society are the real romantics of our day, themselves clinging to a naive utopian vision of what the world might be. If the current crisis has demonstrated one thing, it is that Marx was the greater realist.