Chris Dillow: Markets need Marxism

Chris Dillow explains why Markets need Marxism.

All this poses the question. Why, then, haven't we seen state help to create what Robert Shiller has called financial democracy?

It's certainly not because of a commitment to laissez-faire: the massive implicit subsidy to banks tells us that the state is very happy to intervene in the financial system.

Instead, the answer was pointed out by Marx: the state serves the interests of capitalists, not the people. And financial capital would rather financial markets consisted of rent-seeking than of enhancing aggregate welfare. Crony capitalism has encouraged  financialization (pdf), not financial democracy.

In this sense, a well-functioning market economy requires that the state be freed from the grip of capitalists. In some respects it is capitalism that is the enemy of a market economy, and Marxism that is its friend.

Emphasis Mine

The question of whether markets should be retained under Socialism is a vexed one. Some Marxists think markets are a panacea for the distribution problem for the industrialized world. Others think that centralized planning does away with markets altogether.