"Bidenomics is Working"

From MSNBC to Jacobin, every dopey left outlet is doing what it can to shore up a narrative no one believes.

We have heard the phrase “Bidenomics is working” a lot in the last few months. Numerous efforts have been made by the White House, various institutions, and media outlets to convey to the American public that “the economy is doing great, actually.”

This narrative extends beyond the usual commentary from networks like MSNBC. Even supposedly “anti-capitalist” outlets like Jacobin are refraining from critiquing Biden’s economic policy in favor of criticizing the work of Karl Marx, whom Bhaskar Sunkara, the outlet’s founder and head editor, claims informs his thinking on a fundamental level.

Despite the numerous articles praising the economy, President Biden’s popularity is dwindling. Polls indicate he is facing challenges both regarding the question of his candidacy (2/3 Democrat-leaning voters do not want him as the 2024 nominee) and against his likely general election opponent, former President Donald Trump.

There is a disconnect here. So what is the actual state of the US economy, and does it match what we are being told?

Numbers Don’t Lie

Yale’s Jeffrey Sonnenfeld and Steven Tian wrote for Fortune and Ideas from the Yale School of Management that President Joe Biden and his public investment programs “deserve much of the credit” for the fact that “inflation has fallen from the painful highs that followed the pandemic, even as unemployment has remained low and the stock market has headed upwards.”

The U.S. economy is now pulling off what all these experts said was impossible: strong growth and record employment amidst plummeting inflation. And just as importantly, thanks to Bidenomics, the fruits of economic prosperity are inclusive and broad-based, amidst a renaissance in American manufacturing, investment, and productivity.

- “The Critics of Bidenomics Are Being Proven Wrong” (Ideas from the Yale School of Management, 2023)

We hear a lot of “numbers don’t lie” rhetoric about this. In fact, regarding this subject, it seems to be one of MSNBC’s Medhi Hasan’s favorite phrases. The numbers he and others reference tend to be about unemployment, manufacturing spending, and GDP.

Unemployment figures are always a misleading statistic. The Ludwig Institute for Shared Economic Prosperity tracks what they call the “true rate of unemployment.” At the time of this writing, it is 23%, roughly six times the reported 3.8% unemployment rate (methodology).

So, numbers can lie. That said, “record investment in manufacturing” isn’t a lie; it’s padding. Investment doesn’t actually indicate anything, though. First, a basic assertion: investment doesn’t necessitate a positive outcome. Second, investing after several years of inflation (which we will address shortly) may represent the exploitation of the devaluing of various opportunities.

Along these same lines, GDP grew at a 2.4%, – above the 2.0% that economists had expected – and it’s been used to claim that “all the experts predicting recession have been wrong!”

Here’s the issue: according to the US Bureau of Labor Statistics, between 2011 and 2021 (when Biden took office), inflation had not been at or above 3%. This includes the first (and worst) year of the pandemic. In January 2021, inflation was at 1.4%. By April 2021, it was at 4.2%, higher than it had been since inflation peaked at 5.6% in July of 2008.

By June 2022, inflation was at 9.1%, which it had not been since November of 1981 – several years before I was born. That is to say, since Joe Biden’s inauguration, the dollar has lost about 15% of its exchange value.

We hear plenty of celebration that wages are increasing, but typical workers don’t make enough to get by in any state. Further, the Census Bureau released its annual update on income and poverty. Adjusted for inflation, the median household income dropped by about $1,750 in 2022 from the year before – and dropped an additional $330 from the year before that. So, during Biden’s tenure, household incomes have fallen $2,080, or 2.7%.

Keep in mind the words “adjusted for inflation.” Wages have gone up but the exchange value of the US dollar has gone down.

The Value Crisis

Bidenomics is hardly the “beginning” of the capitalist economy’s problems. We live in imperial-stage capitalism, which is characterized by cyclical crises. The core of these crises is the contradiction Marx and Engels assert defines capitalism: the socialization of production and the private/feudal appropriation of the product (and thus the profit).

This contradiction creates class; socializing production without socializing appropriation creates a conflict of interest on a material basis: the product is appropriated to the owners and isn’t to the workers. Thus, one class accumulates capital while another does not.

Workers are paid a wage, but this creates an issue: as technology and technique progress, the need for labor decreases. The cost of things goes down as fewer workers are paid less money, but consumer buying power collectively decreases.

To compensate, prices go down, but productivity goes up. The market is saturated with product, but as consumer buying power is down, a surplus of goods happens. Because of how things are set up, we have a completely irrational, unsustainable outcome – a falling rate of profit with production being expanded for counterbalance. Marx called this The Crisis of Overproduction, and I have recently called it a “value crisis.”

Note: the rate of profit is not straightforward; one sector may profit while another doesn’t. The overall rate may go down as key sectors go up and vice-versa. This is important to state so that no one thinks I am saying, “Nothing is profitable anymore.”

When these crises come to a head, we have World Wars and Great Depressions. These events take large swaths of the population off the gameboard; millions die and/or industry is totally redirected. Nazi Germany is a perfect example of what happens as imperial-stage capitalism collapses: to stabilize, state and capital must formally merge, specifically in the interest of capital, and consumption must be brought down (I’ll leave you to ruminate as to how Nazi Germany did that).

“Bidenomics” attempts to tackle these problems, and it does so in a way many are characterizing as “a rebuke of neoliberalism” by “embracing Keynesian economics.” John Maynard Keynes advocated for government intervention in the economy, especially during an economic downturn, to stimulate demand and reduce unemployment.

People differentiate this from neoliberalism due to its stated preference for minimal government intervention. However, in practice, neoliberalism involves significant government intervention to protect and advance capitalist interests. Keynesians and neoliberals both recognize that similar forms of state intervention in the economy are ultimately necessary to maintain the capitalist order but might argue about if it is “icky.”

Being both ultimately support the capitalist order, one might think an “anti-capitalist” publication might make the criticism that, while Bidenomics touts growth, people’s real (read: inflation-adjusted) incomes are going down, forcing them to consume less. Thus, this “growth” is questionable.

Instead, Jacobin is pushing its readers to believe Marx “lost interest” in the falling rate of profit and thus is not a valid critique (or basis for criticism of Bidenomics).

The Law of the Tendency of the Rate of Profit to Fall entered the corpus of Marxian thought thanks to Engels’s incorporation of some of these materials in the posthumously published third volume of Capital. But, as Sweezy noted in 1942, Marx’s analysis in that section was “neither systematic nor exhaustive” and “like so much else in Volume III it was left in an unfinished state.”

How central, then, was the FROP to Marx’s view of capitalism? In Marx’s Theory of Crisis, [Simon] Clarke made a compelling case: “Perhaps the best indication of the importance that Marx attached to the law of the tendency of the rate of profit to fall is that he did not mention it in any of the works published in his lifetime, nor did he give it any further consideration in the twenty years of his life that followed the writing of the manuscript on which Volume Three of Capital is based.”

In other words, exactly a century before Mattick’s youthful disciples excitedly rediscovered the FROP, Marx had definitively lost interest in it.

-Seth Ackerman, “Robert Brenner’s Unprofitable Theory of Global Stagnation” (Jacobin, 2023)

I think this is a ridiculous assertion from both Clarke and Ackerman. Firstly, Marx repeatedly describes the law as “the most important law in political economy”; we see this in Theories of Surplus Value (written 1861-63), in Capital Vol. 3 (written in 1864/65), and in a letter to Engels of 30th April 1868 he described it as “one of the greatest triumphs over… all previous economics.”

This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint.

-Karl Marx, Grundrisse (Written in 1858)

Secondly, if Marx had actually abandoned interest in the falling rate of profit, I would disagree with him. Marx is not omniscient and his word is not law. The reason to use Marx as a basis is not “because it’s Marx,” but “because it’s correct.” My loyalty to Marx ends anywhere Marx was shown to be incorrect.

Jacobin’s article shows us various different sets of reporting to show that although overall number go down, when we break it down, number go up. burrrr.

Between 1960–73 and 1973–2019, the “world profit rate” showcased by the World Profitability Dashboard fell by one quarter (from an average of 9.9 percent to an average of 7.2 percent) — but this came in spite of a nearly one-fifth increase in the “undepreciated” profit rate (i.e. the profit-investment ratio, which rose from .99 to 1.16). The reason for the drop was a nearly 40 percent decline in the depreciation factor.

Economists seem to really like this article. I particularly liked this senior economist at a Keynesian think tank’s opinion that it was the “best thing I have ever read from Jacobin, wow.”

Ackerman argues that the falling profit rate itself is questionable and that the data shows that the ratio of current profit to current investment has been rising, not falling. However, I believe the author takes quantitative data at face value and doesn't account for context like inflation. This is hand-waved by acknowledging the “difficulties of measuring the profit rate.”

My issue: the exchange value of a dollar today isn’t the same as tomorrow or yesterday. Today’s dollar is the equivalent of a dime in 1960. If I invested a dollar in 1960 and got back $9 today, that would be on paper (that is, quantitatively) a 900% return on investment. However, I actually would have lost value (specifically, 12%).

Nothing like that is addressed in the long, winding text of Ackerman’s article. Perhaps more bizarre is his choice of image for the header:

In this image and in the article intro, we find Ackerman’s real agenda. Ackerman wishes to address an article by Dylan Riley, a critic of neo-Kautskyism, entitled “Drowning in Deposits,” published in Sidecar.

Riley’s contention is that while the US left criticizes Bidenomics for its political compromises and timidity, it closely resembles the ideas prevalent among those who view the establishment of socialism simply as a modernized New Deal (whom we could group Jacobin, the DSA, AOC, etc. in with). Riley says that both the Biden administration and those he dubs “neo-Kautskyites” ultimately have no solution to the structural logic of capital and thus don’t bother.

The problem is that neither the Biden administration, nor the neo-Kautskyites, have a credible answer to the structural logic of capital. Imagine, for the sake of argument, that Bidenomics in its most ambitious form were successful. What exactly would this mean? Above all it would lead to the onshoring of industrial capacity in both chip manufacturing and green tech. But that process would unfold in a global context in which all the other capitalist powers were vigorously attempting to do more or less the same thing. The consequence of this simultaneous industrialization drive would be a massive exacerbation of the problems of overcapacity on a world scale, putting sharp pressure on the returns of the same private capital that was ‘crowded-in’ by ‘market-making’ industrialization policies.

How might the US government react to this conjuncture? The response would likely be increased state support, which might take the form of monetary juicing leading to asset bubbles (what Robert Brenner has described as ‘bubblenomics’) or direct profitability guarantees. But this would only exacerbate the phenomenon of political capitalism. That is, directly political mechanisms would become increasingly necessary to generate returns.

-Dylan Riley, “Drowning in Deposits”

Ultimately, Ackerman seemingly takes aim to undermine the Marxist critique of reformism. It might be difficult to parse out of this article alone, but to take in his overall body of work, I think this goal can be seen through other Jacobin articles he’s authored, like “Karl Marx Knew That the Struggle for Reforms Was Part of the Struggle for Socialism.” Yes, this is true, but Ackerman sure spends a lot of time primarily focused on reform at the expense of more fundamental change…

He asserts Marx’s falling rate of profit theory “has always been intended to serve as a ‘reform-proof’ theory of crisis,” which is ideologically necessary for revolutionaries. He asserts this is because “for revolutionaries, so much is riding on their contention that extended periods of crisis are built into capitalism.”

Despite the touting of numbers that “can’t lie” and the bluster of rebuking neoliberalism, the true value that the average person is accumulating is less. That is the outcome, regardless of how “Bidenomics” is marketed. Ackerman is attempting to undermine criticism of “Bidenomics” and criticism of reform in general.

Marketing Degrowth as Growth

Last year, I produced a documentary film called Less Sucks: Overpopulation, Eugenics, and Degrowth (also available as a pamphlet). In it, I detailed a lineage that starts with Thomas Robert Malthus, travels through the US eugenics movement, and lands on degrowth. I demonstrated how the slick, green imagery of Jason Hickel’s Less is More is a repackaging of the economic policies R. Palme Dutt criticized in 1934’s Fascism and Social Revolution.

Essentially, Dutt asserts that it is in finance capital’s interest to advocate for the reduction of the productive forces due to the falling rate of profit.

“The modern development of technique and productive powers has reached a point at which the existing capitalist forms are more and more incompatible with the further development of production and utilization of technique.”

“To the modern bourgeois mind and outlook, this process of… restricting of production, in the midst of poverty, appears as a natural and self-evident necessity. Without a sense of contradiction, they proclaim… the policy of restriction of production with the same sense of obvious correctness and common sense with which they preached after the war, the policy of “increased production” as the path to prosperity.

“Correctly they feel no contradiction since both are indispensable to the maintenance of capitalism at the present stage.”

-Rajani Palme Dutt, Fascism and Social Revolution (1934)

At first blush, “Bidenomics” is touting growth – job growth, investment growth, and GDP growth. But, in truth, it has lowered the consumer’s purchasing power. Whether that is its intent, I don’t know or care – but that is its outcome.

While seemingly robust and positive on the surface, the economic power and stability of the average American is not improving. Despite the pronouncements of job creation and economic stimulation, many individuals find themselves mired in the same – if not worsening – financial situation.

The prices of essential goods and services are rising, eating into household incomes and negating any minor wage increases that have been seen. Even with jobs being created, if they don’t pay a living wage, workers still struggle to afford the basics. The result is a working class that’s working harder but not getting ahead, a situation fundamentally at odds with the narrative of economic recovery.

Conclusion

Though the idea our economy is growing is questionable, a key question remains: Growth for whom? If new value is consistently generated in a system that expends as much or more energy on self-replication than generating new value, who does it benefit? If it is not, who does that benefit?

Well, either way, it’s the ruling capitalist class. There has been a massive upward transfer of wealth in the last few years, which is made worse if much of it involves minimal or no new value creation.

The promotion of Bidenomics as a new age of economic prosperity stands in stark contrast to the reality most Americans live in. We’re being told we are getting more as we are getting less.

It isn’t shocking that Biden isn’t polling well “despite turning the economy around.”