Mises Wire

What Austrians can Learn from The Socialist Manifesto

The Socialist Manifesto
By Bhaskar Sunkara 
Publisher: Basic Books, April 2019

In seeking to understand and encapsulate the motivation for socialism’s return to the limelight over the previous decade, George Reisman’s particular focus on the failure of economic interventionism as a system is quite useful (Piketty’s Capital: Wrong Theory, Destructive Program). While socialists in all decades have cast their core blame on an essential dynamic of capitalism—the distinction between wage earners and the recipients of profit (capitalists)—they have continued to ignore the fundamental differences between the process of free market capitalism and the effects of a “capitalism” marked by bureaucratization, regimentation, manipulation, and control by the coercive state, also known as interventionism.

Reisman describes our era as one characterized by the “US government’s assault” on the market economic system. He writes that “over the course of several generations, the US government has taxed away trillions upon trillions of dollars that otherwise would have been saved and invested and thereby added to the capital of the American economy.... And its policies of chronic inflation and credit expansion have caused the waste of a substantial portion of the greatly reduced supply of capital that remains.”

Moreover, “massive credit expansion pouring into the real estate market resulted in the last decade in millions of homes being constructed for buyers who could not afford to pay for them, thus representing a massive unremunerated transfer of wealth and causing a corresponding deficiency in the capital of producers throughout the economic system.”

And finally, “the deficiency of capital has been compounded by a steadily growing list of government imposed rules and regulations written and enforced by dozens of government agencies and now amounting to more than 700,000 pages.... These rules and regulations exist for the purpose of forcing business firms to do what is unprofitable or prevent them from doing what is profitable.”

All these (taxes, inflation, and regulation) have undermined the market economy to such an extent that “government’s massive assault on the supply of capital has begun to transform the American economic system from one of continuous economic progress and generally rising living standards into one of stagnation and outright decline.”

This has created a great sense of economic disillusionment among the rising generation of Westerners; and without a proper education in the dynamics of capitalism and an underlying spirit of egalitarian resentment, they are fueled for socioeconomic revolt. Reisman once more:

As people have learned that the economic system is not indestructible, they have turned in anger and resentment against ‘economic inequality,’ as though it were the surviving wealth of others that was the cause of their poverty, rather than the fact that, thanks to the government, others do not have sufficient capital to supply and employ them in the manner they would like.

A New Socialist Manifesto

And thus, into this context of disillusionment and despair comes The Socialist Manifesto, authored by Bhaskar Sunkara, founder and publisher of the growing Jacobin magazine brand. In many ways, this book might strike those familiar with Jacobin as a sort of culmination of the framing, style, and narrative advanced within it over the last near-decade. Indeed, The Socialist Manifesto is not an achievement of original insights seeing the light for the first time, nor is it meant to be—this is not the purpose it seeks to fulfill.

There are several other things that the book is not: a blueprint for a socialist paradise, a policy program manual for the open-minded legislator, a general exposition in defense of the Marxist interpretation of socio-political affairs, or a response to the more important critiques of socialism over the last century and a half. This is consistent both with Jacobin’s demeanor in general and Sunkara as a proponent of a particular socialist tradition, which will be elaborated below.

Rather than explicating a grand socialist interpretation of socio-economic phenomena in the abstract, the book’s role is instead to survey the difficult obstacles the radical left has faced in its struggle against the world and to set the tone for a realistic path into a socialist future. It is intended to embolden and help fill in the gaps for a mainstream audience that is, whether we like it or not, swiftly becoming distrustful of capitalism.

That is to say, it positions itself not as needing to defend a socialistic interpretation of “class relations,” but as painting a picture of hope in an age of economic, and therefore social, despair. It offers a sweeping overview of socialism’s journey from its birth, to its life on the global stage, to its once-presumed death upon the collapse of the Soviet Union. From here, Sunkara offers an explanation for its sudden return and, in light of the frustrations of socialism’s past, puts forth a vision of “how they can win,” to paraphrase the title of chapter nine.

General Observations

This observation—that the book is one of historical narrative and future vision-setting, rather than a case for socialism as a theory—is not itself an indictment of its contents. On the contrary, it is for this reason that the book serves a productive purpose and has direct relevance not only for illuminating the mindset and demeanor of one of the leading outlets for socialist thought, but also for drawing analogies to the recent failures of the once-hopeful “libertarian movement.”

However, in spite of its general usefulness for understanding how a socialist in the twenty-first century might come to terms with socialism’s past failures (in theory and practice), it might dawn on the discerning anti-socialist reader that the socialist resurgence will try to win the future without ever having to deal with the contributions of the antisocialist economists and economic historians of the nineteenth and twentieth centuries.

It is concerning that Sunkara’s book does not deal with Menger’s subjective value theory, Böhm-Bawerk’s destruction of Marxian exploitation, or Mises’s socialist calculation argument precisely because it does not need to. Men believe what they want to believe; they interpret events as they will; and political victory is a reflection of what people do believe, not what is intellectually justifiable. Democracy, Mises once noted, “cannot prevent majorities from falling victim to erroneous ideas and from adopting inappropriate policies which not only fail to realize the ends aimed at but result in disaster. Majorities too may err and destroy our civilization. The good cause will not triumph merely on account of its reasonableness and expediency.”

There is a lesson to be learned here, not only for scholars and laymen well-studied in Austro-libertarian theory, but also for anyone concerned with the rising socialist spirit: socialists do not need to be right in order to make their mark. A correct understanding of the world was not the cause of the Bolshevik Revolution and it was certainly not a prerequisite of their eventual demolition of Eurasia. Whether they are good or evil, ideas—as Richard Weaver famously titled his book—have consequences.

Thus, The Socialist Manifesto enters the fray for those already convinced that socialism is a possible alternative to what we have. It builds on the increasingly popular mindset that capitalism has failed us and that, specific to the concerns of the Marxist ideology, it has especially failed in promoting the participation of the wage-earning class in the magnificent wealth-creation accomplishments of our time. This is an important point: Sunkara does not deny that capitalism has brought to the world a standard of living never yet seen before; in fact, he acknowledges that the present age is “the best time in human history to be alive.” But what is particularly relevant to the application of the old Marxist worker-capitalist class division is the idea that the wage-earner, under the capitalist model, does not reap the just reward for his labor.

The general capitalistic response is to observe that A) this interpretation of things depends on a theory of justice that was long ago swept away by Böhm-Bawerk’s demolition of the exploitation theory and B) that even aside from the dubious ethical foundations, it is in fact the case that working conditions and wage earner standards of living have improved greatly due to capitalism. And yet, if the socialist, as is true of Sunkara, ignores those who make similar arguments to Böhm-Bawerk, it does not matter how wealthy workers become compared to prior ages: they will always and by definition live under a repressive social order.

This makes socialism an idea that is particularly difficult to deal with. Proponents of capitalism who emphasize the tremendous living standards that capitalism has brought to the world must remember that rising material wealth for the working class, in the mind of the educated socialist, does not overcome their particular passion for doing away with wage-earner vs. capitalists as a relational dynamic. The working class’s improvement over time is something that only some socialists will admit to (Sunkara does seem to allude to an admittance here), but nevertheless because the worker does not receive the full profit from his expended labor, the entire dynamic can only be seen as exploitative and oppressive. This jaded interpretation of the relationship between recipients of profit and recipients of wages precludes the socialist from ever letting down his guard.

This is precisely the argument that underlies the entire narrative of The Socialist Manifesto and it is the reason why the true socialist in the general Marxian tradition is completely dissatisfied with the welfare state, so-called social safety nets, unionism, and other “big government” left-social interventions that characterize the Western world. Here, we find the important distinction between the “social democracy” of Scandinavia, Elizabeth Warren, and other leftist interventionists on the one hand, and the “democratic socialism” of Jacobin magazine, the Democratic Socialists of America, and Bernie Sanders (even if the latter is in some ways impure in his socialism) on the other.

In a word, social democracy leverages a system of private ownership of the means of production and adjusts, massages, intervenes, and regulates it on behalf of the poor and underclasses. But democratic socialists maintain that all this is necessarily a continuation of the system which separates the worker from his product (alienation), as well as from the profits that his labor produces (exploitation). Democratic socialism, then, seeks not to grow the government under our present ownership structure, but rather to advance the cause of a complete reshaping of the framework of modern society —that is, to deliver man into the next epoch, the next stage of history.

While this may be considered a silly dogmatism of the socialist ideologue, this is in fact the lesson that Sunkara draws from socialist movement history. From its inception, socialism and the working classes for which it sought liberation would be bound to struggle against the capitalist class and its domination of the state apparatus. Thus, in the third chapter, “The Future We Lost,” Sunkara traces the struggles of post-Marx German socialist party politics. Their failure to organize in a sustaining fashion can be explained by a variety of factors from internal disputes between revolutionaries (Rosa Luxemburg and Karl Kautsky) and reformists (the later Eduard Bernstein, who drifted from his once radical Marxism) to the attempts by Otto von Bismarck to appease the socialists with mass welfare programs.

But Sunkara’s takeaway for our time is that the “social-democratic compromise is inherently unstable,” that the capitalist class will “attempt to undermine the [socialist] program,” and that social democracy isn’t the goal, but is in fact a temporary tool through which the road to true socialism can run. Social democracy, because it maintains and uses the capitalist-dominated state, is inherently unstable and crisis-prone. Thus, “when the crisis comes, the next step isn’t retreat, but to press on further.”

In fact, Ludwig von Mises himself affirms this distinction between the radical (Marxist) socialists and the German reformists. In Omnipotent Government, he writes:

Marxians do not support interventionism. They recognize the correctness of the teachings of economics concerning the frustration of interventionist measures. In so far as some Marxian doctrinaires have recommended interventionism they have done so because they consider it an instrument for paralyzing and destroying the capitalist economy, and hope thereby to accelerate the coming of socialism. But the consistent orthodox Marxians scorn interventionism as idle reformism detrimental to the interests of the proletarians. They do not expect to bring about the socialist utopia by hampering the evolution of capitalism; on the contrary, they believe that only a full development of the productive forces of capitalism can result in socialism. Consistent Marxians abstain from doing anything to interfere with what they deem to be the natural evolution of capitalism.

This leads us backward to the origin and meaning of capitalism itself. If socialism offers an alternative to the modern economic framework, it is therefore implied that we presently do not have socialism. To engage the socialist left, one must be aware of the lens by which they view the world. We Austro-libertarians often observe that the twentieth century is a tale of the rise of statism, of the step-by-step push (and often shove) against free markets, and the continued participation of government in various industries. Defining capitalism as free markets, since the logic and plain meaning of private ownership implies the decision making onus should be on the property-owner, we see in our time a systematic deviation away from the capitalist arrangement. Sometimes, following this way of thinking, we define the current order as the rise of socialism.

In dealing with socialists who find their roots in Karl Marx and his disciples, it is far more helpful to take up the Misesian distinction between socialism and interventionism. As propounded in Kristoffer Hansen’s essay in the summer 2019 Austro Libertarian issue, whereas the latter economic arrangement allows the capitalist system to exist, nevertheless from time to time and in various ways, it intervenes, manipulates, and distorts. However, the idea that interventionism (what Mises called the “hampered market”) should be separated from laissez-faire capitalism is an unnecessary and meaningless distinction in the mind of the socialist; what matters is not whether government participates in the market, but whether capitalists are allowed to arrange capital resources and produce goods for their own profit independent of the profit-sharing participation of the wage-laborers.

That is, do workers own the means of production and therefore have claims to profits, or do capitalists own the means of production and therefore have the claims to profits? This is the fundamental question in the eyes of the socialist. And it is because capitalists, or non-laborers, take a profit and leave the workers with a wage (they completely ignore the possibility of a capitalist loss) that we therefore live in a capitalist world. Social democracy, contrary to true socialism, seeks to maintain this framework and adjust the distribution of wealth in various ways and via various programs and regulations depending on the particular technocratic plan. In this way, Republicans and Democrats, establishment “liberals” and establishment “conservatives,” are merely two camps competing for control of state power, each with a different plan to best manage the economy.

While we free market libertarians would challenge the idea that economic-management from the state constitutes a meaningful capitalism, and therefore maintain the distinction between capitalism and interventionism, it must be realized that the rise of the self-aware socialist such as those associated with Sunkara and Jacobin magazine are not mere big-government Democrat Party hacks. There is important nuance and care involved in a proper understanding of their place on the left.

Moving now to the rise of capitalism in the West, Sunkara observes the tragic dawn of capitalism as a “societal shift as we went from using markets from time to time to producing for the market as our all-consuming task.” That is, before the tragic rise of capitalism, people would enjoy the fruits of their own labor and would engage in market exchanges only as they felt periodically necessarily to attain a good otherwise outside their productive capability. But with the rise of wage-labor as a socio-economic norm, it became the way of the worker to labor for the market’s benefit, not their own. Capitalism, therefore, under Sunkara’s narrative, was a sorrowful development that has caused an immense lack of fulfillment in the lives of those who receive only pitiful wages as they create goods others will enjoy.

This thesis is expressed skillfully, but it is not an original insight by Sunkara, nor is it intended to be. In fact, this is the standard interpretation of the rise of capitalism used by socialists against the capitalist system, and also by advocates of a “third way” alternative between laissez-faire capitalism and socialism; including interventionists and traditionalist “distributists.” While it is by far the minority position in our age to explain this shift in positive rather than negative terms, what Sunkara interprets as a tragic social shift toward “producing for the market” is in fact the discovery that a society that operates under the division of labor produces higher standards of living, for all who participate, than one which is primarily structured around self-sustainability. Few understand that an economy where workers “produce for the market” is the same economy where the market produces for the workers; for all workers are also the market’s consumers.

It may be acceptable that capitalism in a specific sense (using the infamous Enclosure Acts of eighteenth and nineteenth century Britain) was, as Sunkara argues, “an accident of history,” but the primary feature of this new capitalism was the very dynamic that prompted the end of centuries of economic and population stagnation: the division of labor itself. Prior to the development into a capitalistic arrangement, as Friedrich Hayek explains in Capitalism and the Historians, it was the case that “to be left without [the means of production —land and tools] meant in most instances death by starvation or at least the impossibility of procreation.” In other words, the new wage-earning class that socialists deride as the product of capitalism is in fact a group of people who would have, before the division of labor, never even existed.

What is often missed by those who decry the working conditions of the new industrial proletariat is that socialists lean heavily on the horrific description of working-class conditions made by nineteenth century bourgeois writers. These writers compared their own middle-class living standards with the relative ravages of the new impoverished, without even reflecting on the proper comparison: a life of struggle versus nonexistence. As Hayek explains, “the proletariat which capitalism is said to have ‘created’ was thus not a proportion of the population which would have existed without it and which it had degraded to a lower level; it was an additional population which was enabled to grow up by the new opportunities for employment which capitalism provided.” It was capitalism that first birthed the additional population and, over decades, capitalism that improved their lives and conditions.

What Sunkara, after Marx, describes as the great modern tragedy where men “must” participate in an economy where they need to produce for the market, is not even close to Western society’s tragedy; it is instead its greatest boon.

With the above serving as an overview of the book, it is helpful to categorize the remaining thoughts in terms of its key failures, its key successes, and four lessons that we Austro-libertarians might take from the book and its role in the socialist movement.

Three Key Failures

1. As is so common in the socialist interpretation of the world, there is no appreciation for the difference between laissez-faire capitalism and what Mises called the “hampered economy.” By collapsing all post-industrial revolution economies into a broad and vague “capitalism,” they can dismiss the world without having to deal with the specific warnings (and apparent vindication) offered by the laissez-faire proponents against the Western political-economic framework of “interventionism.” Thus, they describe the modern system as “neo-liberalism,” which is the alleged result from a capitalist-state relationship.

Of course, the advocates of the “unhampered market” have long been drowned out and pushed aside while central planners offered to structure the economy from the top-down, dismissing whole cloth what they considered to be outdated analysis of economic problems. Thus, the twentieth-century story of the West is one of state-interventionism, state-driven central banking, and policy after policy of betrayal of the free market. On this issue, and admittedly in understandable Jacobin fashion, the storyline once again refuses to deal with the difference between a free capitalist economy and an economy driven and manipulated by coercive power.

2. While it may have been outside the boundaries of Sunkara’s objectives, it must always be recognized when socialists communicate their vision as if the most devastating critiques of Marxist theory never took place. One can certainly understand their motivation in refusing to recognize these critiques strategically (to affirm their existence would bring them attention), but as long as socialists ignore them, their theory will always remain categorically a failed one. If Mengerian subjective value theory undermined the labor theory of value on which Marxism’s exploitation thesis stood, and if further Böhm-Bawerk exposed the tremendous contradiction of Marx’s exploitation thesis independent even of the value theory, and if Mises proved conclusively that a socialist “economy” could not rationally allocate the factors of production regardless of whether exploitation was legitimate, upon what ground does Marxism stand?

Casting aside questions of whether or not the Soviet system was truly socialistic, or even whether Cuba, Red China, or the myriad other tyrannies to which socialist movements gave way were in fact socialistic at their height, it can never be forgotten that capitalists don’t just have empirical experience on their side, we have theory itself. Marxism misinterprets the relationship between wage-earner and capitalist, and Marxists compound their failures by advocating for a system that contradicts itself, as well as what can be known about human action. But as is so typical, these difficulties are almost never dealt with before impressionable socialist-leaning audiences.

3. The theoretical economic failures of socialism are one thing, but among the most damaging aspects of socialism as a political force is the complete inability to come to terms with the actual contributions that capitalism has provided the world. By this, it is not meant merely that capitalism is preferable to the prior “epoch” of feudalism, nor do we merely mean that capitalism has its here-and-there positives; Sunkara would no doubt affirm these. Rather, at a sweeping narrative level, Sunkara attributes problems to capitalism that do not take into account the reality of these problems independent of capitalism such as scarcity, tradeoffs, and even the problems of social disillusion and emptiness that mark modern society. It is to Sunkara’s detriment that he incorporates the economic aspects of all social difficulty that was a prominent feature of Marx’s theory of progress and historical development. 

To categorize this failure, we might describe it as the general blindness that socialists have to “cause and effect” in analyzing economic and social history. It is cliché to complain about a common ignorance regarding the distinction between correlation and causation, but one must recognize the extent to which socialists fail to comprehend its role in interpreting the development of social phenomena. The end toward which socialism seeks to move mankind has always been an end in search of a theory. They attribute to capitalism problems that are either natural or caused by activities that are themselves deviations from capitalism; and conversely they attribute to socialization (and government) progressions which were in fact caused by capitalism. The lack of demonstrated cause and effect, therefore, is a serious weakness in the overall narrative presented.

Two Qualified Successes

This is a difficult category in which to express oneself clearly, because it can so easily be interpreted by the reader as a softening up toward socialism. So let the above points of failure render this potential interpretation completely false. Leftism as a project, which includes socialism as a species, is the antithesis of all that I hold dear. Nevertheless, an objective criticism of this book can pinpoint several areas of refreshment. 

1. The Socialist Manifesto carries the same overall demeanor and posture, naturally, of Sunkara’s Jacobin magazine. In my mind, one of the core characteristics of Jacobin is that they are tremendously well-informed about the history and struggle of their movement. They view the grand narrative of world affairs, especially at the dawn of international socialism, in an immensely mature and developed fashion. In fact, one might venture so far as to say that this is the socialist’s greatest strength: their interest, despite their misunderstood interpretations, in the unfolding of history at a meta-level. I will be quick to point out that my own fascination with the Jacobin demeanor stems largely from the fact that libertarians are so often (rightly) perceived as having a very poor understanding of the history of human affairs. While this is certainly true of the typical socialist, indeed the typical contemporary man, it is refreshing to think deeply about narratives and meta-human struggles. Engaging with Jacobin intellectually is a fruitful exercise.

2. Whereas many socialists simply scoff at examples such as the Soviet Union and respond that this “wasn’t real socialism,” Sunkara takes the time to struggle through the past failures, to learn lessons from them, and to interpret them in light of their strengths and weaknesses. Whatever can be said about the actual conclusions drawn (mostly, they are wrongheaded and blinded), it is indeed an engaging project that benefits even the critical reader who is able to properly understand the mind of the modern intellectual socialist.

As well, grasping the unfolding of history in our time, learning the motivations and contexts of historical events, and coming to terms with the making of the modern world, renders Sunkara’s endeavor important. After all, whether we like it or not, socialism is on the rise. Should we not understand it? Should defenders of freedom and capitalism not be prepared to correct all who promote the tragic and terrible thinking of the socialist? Quality from our opposition can stir quality in our correction.

Four Lessons for Austro-Libertarians

1. Decentralization is our own path forward. If socialism is on the rise and the impetus of their political engagement seeks to take over the source of power in central governments, it strikes me as completely absurd to fight the fashionable with the unfashionable in the court of modern power. If the Instagram-style socialism of Alexandria Ocasio-Cortez is the medium through which the modern socialists claim their path, does it not seem like a strategic blunder to seek a national strategy? The Jacobin-style socialists have a strategy and emphasis on central power; we ought to take the opposite emphasis: federally political tactics cannot be said to be worthless, but as a whole, decentralism, political and social, can be a much more powerful tide. To the extent that they despise those who withdraw from increasingly centralized political power, to that extent we ought to depend on anti-centralization.

2. Depoliticization is our own path forward. On a related note to the previous point, we must pursue non-political strategies. Entrepreneurship, the extension of our participation in non-political social institutions, and especially the depoliticization of education and understanding of the humanities must be core. The socialists put much stock in political strategies, in using the democratic-public square (a public square which does not carry the same meaning in pre-politicized times) to advance their cause. A key aspect of decentralism, then, is de-politicization in both our activities, preferences, and interpretation of the world around us.

3. We must oppose modern sacred cows. In many ways, socialists have rhetoric on their side. They can claim to be democratic, champions of utopian equality, opposers of “reckless” capitalism, and politically universal. They are entirely correct that they are the fulfillment of the leftist project in our time. Thus, we must not pushback with a “restrained democracy,” or a “reasonable equality,” or anything else that gives them the foundation on which to radicalize the very institutions of modern leftism. Democracy itself must be challenged, egalitarianism itself must be opposed, and the dynamic of capitalism must be defended.

4. We need better libertarians, not merely more libertarians. To challenge the rising narratives of an intellectually-curious socialism, it is important to understand their arguments, be able to refute them, and subsequently present a defensible alternative. While this is becoming increasingly difficult in an era when critical thinking and rhetorical expression are lost arts, ideologies, worldviews, and interpretive frameworks are at the foundation of civilization. To ignore the struggle and difficulty in understanding the world is to sow the seeds for the domination of those who misunderstand it. 

Originally published in Austro-Libertarian Magazine Vol I, No. 3 | Summer 2019

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