Requiem for Marx

~  1  ~ The Marxist Case for Socialism

David Gordon

Karl Marx believed that “with the inexorability of a law of nature” capitalism was doomed. In the past, capitalism aided the growth of production; now that sys-tem had become a “fetter on the forces of production.” Since in Marx’s view the forces of production must develop, the pressure on capitalism would sooner or later prove impossible to contain. Under socialism, the economic system next on the historical agenda, the forces of production will grow to unheard of heights.

Not everything that is inevitable is desirable, as death and taxes remind us. For Marx, questions of what is good and bad have no universally true answers. One can speak only of what is good or bad for an economic class. Those who have prospered under capitalism will find the demise of the old order a matter of regret: those who have done poorly will look to socialism as “a very present hope in all our troubles.” The proletariat stand foremost among those who will benefit from the arrival of socialism.

Marx’s position raises three questions for discussion. Will socialism replace capitalism? Is capitalism a bad system for workers? Will socialism be a better system for them? One of Marx’s reasons for thinking that capitalism had neared its end was that because workers suffered from exploitation, they would rise in revolt against it. Thus, the answer to the first question in part depends on our assessment of the second, and, as we shall see, the third as well. This fact provides a natural order in which to respond to the questions.

Marx argued that capitalism exploits workers. Before one can evaluate his conclusion, a prior issue arises: what did he mean by exploitation? In the ‘ordinary language’ sense of the term, if capitalists exploit workers, then they act toward workers in a morally objectionable way. They ‘use’ those whom they exploit.

Marx meant something entirely different by exploitation. He uses the term to designate a situation in which workers do not receive the full value of the products their labor creates. The surplus is the source of rent, interest, and profit. The details of Marx’s claim will be addressed immediately below. But even on the basis of this very rough sketch, it is apparent that Marx’s claim does not by itself show that something is wrong with capitalism. Unless there is something objectionable about Marxist exploitation, it does not follow that workers exploited in Marx’s sense will find in their circumstances a reason for change.

A more detailed account of Marxist exploitation will clarify this contention. In Marx’s view, the socially necessary labor time required to produce a commodity is the basis of its exchange value. If, e.g., one house exchanges on the market for two cars, then the labor needed to produce one house will be twice the labor needed to produce two cars. By ‘socially necessary,’ Marx means roughly speaking, the ‘average amount’ of labor required to make something.1 Marx does not maintain that prices on the capitalist market are the exact equivalent of labor values. Rather, in a complicated and disputed way, labor values underlie market prices. Fortunately, for the purposes of this essay we can avoid this arid and arcane sector of Marxist scholasticism. A ‘bare bones’ account of Marx’s economics is all that we need.

The labor theory of value applies to labor. Like other commodities, the price of labor, i.e., the wages laborers receive, is determined by the labor-value of labor. This at first sounds like an impossible expression, just as the ‘length in feet of one foot’ has no meaning. How can the standard of value itself have a value? But, in Marx’s view, appearances are deceiving. We can find a labor value for the laborer: this is the labor time required to produce him. Put more simply, the value of labor is the laborer’s cost of living, determined by whatever a society regards as needed for living.

Here precisely, Marx thinks, lies the key to the riddle of profit. A capitalist employer pays labor its price, i.e., its labor value, computed in the way just explained. For this price he gets whatever the laborer can produce during the time he works. In Marx’s formula, the capitalist buys labor power but pays only for labor. The difference between the two quantities is surplus value, the source of rent, interest, and profit. The rate of surplus value Marx also terms the rate of exploitation. Marx attached great value to his proof of Marx attached exploitation, since he believed that with it he had laid bare the secret of capitalism. The driving force of a capitalist economy is profit; without it, the economy would grind to a halt. Yet how is profit possible, if everything exchanges for its true labor value? Precisely in the purchase of labor, as Marx conceived of it, the answer lies at hand. The capitalist does not pay the laborer less than his value. The laborer’s wages are determined by the value of the commodities required to produce him, and in equilibrium he does not receive less than this. But because of surplus value, the capitalist can still secure his profit. In Marx’s analysis, therefore, the entire capitalist system rests on the exploitation of labor. No exploitation, no surplus value; no surplus value, no profit; no profit, no capitalism.

Marx’s ingenious argument has not at all withstood the test of critical analysis. Most importantly, it rests on the discredited labor theory of value. Marxists have never been adequately able to reply to the devastating analysis by Eugen von Böhm-Bawerk. As this is well-trodden ground, a brief summary will suffice for our purpose.

Marx assumed that an exchange is an equality: in our earlier example, 1 house = 2 cars. In sharp contrast, in the Austrian view, an exchange takes place only if there is a double inequality: each person must value what he gains more than what he gives up. This view seems to me far-reaching in its importance. It exposes a pre-supposition of classical economics which, once questioned by the Austrian, appears the very reverse of obvious. Why is an exchange an equality? Neither Marx nor any other defender of the labor theory has given an explanation for this assumption.

Further, Marx assumed that an exchange involves a very strong sense of equality. In his view, the equality constituting an exchange must be explained by a common element on both sides of the equality. In other words, for Marx an exchange was an identity, in the same way that the two sides of an equation in mathematics designate the same quantity. If 1 house = 2 cars, then both ‘1 house’ and ‘2 cars’ share some common quantity. To those not enmeshed in the Marxist metaphysics of value, this step seems if anything even more wrongheaded than its predecessor, the postulate of equality. And if even, per absurdum, one accepted identity, Marx offers no argument for the contention that the common quantity must be labor.2

Still another problem arises from the fact that, as Marx well knew, market prices differ from labor values. Marx dealt with this by trying to show that labor values could somehow be transformed into price. Those interested in the technical details of this issue should consult Böhm-Bawerk, who, pace Thomas Sowell, understood Marx perfectly well.

It seems to me that one fact is often overlooked in the details of simple and expanded reproduction, Divisions I and II, and other elements of the Marxist architectonic. Suppose that Marx could show that market prices can be derived from labor values, by using a formula that gives the ‘correct’ results. In what way would this prove that labor values are the explanation of price? Marx’s assumption that labor value was ‘ultimate’ would remain just that—an assumption.

Given these and other difficulties, it is small wonder that most of the recent ‘analytical Marxists,’ a group which has attempted to revivify Marxism by applying to it the techniques of analytic philosophy and modern economics, dispense altogether with the labor theory.

But what of Marx’s much vaunted explanation of profit? This too fails, even if one grants Marx the labor theory of value. Sometimes, first thoughts are best; and the phrase “the labor value of labour” is indeed unmeaning. Labor is the measure of value: if so, it cannot at the same time have a value. Marx quite correctly noted that one can on his theory obtain the labor value of a laborer. But laborers are not for sale on the capitalist market: this, on the contrary, is the situation that obtains in a slave society. The laborer sells exactly what the capitalist buys—his labor power. Marx’s explanation of profit through labor exploitation goes wrong at its first step.

This brief excursion into Marxist economics enables us to grasp a principal weakness of Marx’s argument that the arrival of socialism is inevitable. Part of his claim rests on showing that workers are exploited. Their exploitation in his view increases as capitalism develops. Eventually, they find conditions intolerable and revolt. “The death-knell of the old order sounds.”

As we have just seen, however, Marx has failed to demonstrate that workers under capitalism are exploited at all. To the extent that his case for the collapse of capitalism depends on proletarian dissatisfaction owing to exploitation, it at once collapses.

The problems with Marx’s view of exploitation go even deeper. As already mentioned, he uses a term, ‘exploitation,’ which suggests that something is wrong with the state of affairs so designated. But why should workers receive the full value of the products their labor helps to produce? Presumably workers, like everyone else, would like to increase their earnings; but why is the capitalist wage system one they will find intolerable?

Of course one can take the line that capitalists are not the rightful possessors of their capital assets: their wrongful possession enable them to obtain a share of production to which they are not properly entitled. But this is a separate problem from the one Marx attempted to solve in his exploitation theory. Marx endeavored to show that workers suffered from exploitation stemming from the manner in which the market determines wages. This argument does not work and would not show anything wrong with capitalism if its conclusion were true.

Marx thought not only that capitalism was finished but that socialism would replace it. The two predictions are connected in that, even if workers felt rebellious over exploitation, they would not rise in revolt unless they saw something better on the horizon. The question at issue then becomes: does socialism exploit workers? A response to this cannot be given with certainty, since Marx never deigns to tell us the content of the future system. But the evidence that does exist gives a reasonable basis for a response.

Marx explicitly notes in the Critique of the Gotha Program that funds will be set aside for those who are unable to work. In addition, there will be investment in the new socialist commonwealth: its alleged vast productive capacity depends on this. But how are these things to be done unless surplus value is extracted from the workers? (We are here assuming the Marxist analysis of profit since it is on this basis that Marx contends workers are exploited.) If so, exploitation in the Marxist sense exists under socialism. What then happens to the argument that the proletariat will become increasingly discontented and eventually overthrow capitalism? Even if they are ‘exploited,’ they will be unlikely to revolt unless socialism offers them a different prospect.

Marx’s main line of defense to this was that workers will make decisions about investment themselves, since under the ‘dictatorship of the proletariat,’3 they control the government. Investment decisions will cease to be made by the hated capitalist class. Marx’s argument, in brief, seems to be that workers will not mind exploitation because they will be exploiting them-selves. This seems implausible: if exploitation is objectionable, it hardly seems to become acceptable just because the exploiters are termed ‘workers.’ This, however, is not the point that now concerns us. Whether or not workers will find tolerable exploitation under socialism that they reject under capitalism, Marx cannot appeal to exploitation as a reason for proletarian revolt if socialism will not eliminate it.

Suppose Marx responded that his point has been ignored. It is only capitalist exploitation that workers abominate. The problem here, besides the fact that the contention is grossly implausible, is that the reason for raising the issue of exploitation in the first place was that this allegedly explained proletarian discontent with capitalism. It is circular reasoning to add to this that it is not any exploitation that concerns workers—just capitalist exploitation. This leaves unanswered the question: what are workers supposed to find bad about capitalism in the first place?

An argument on which we have relied is that Marxist exploitation is not the same as ‘ordinary-language’ exploitation. Might not this argument be turned against us? Marx might be read as not basing most of his argument that workers find capitalism unsatisfactory on his sense of exploitation. He also thought that workers lived under very bad conditions: he spends a great deal of time in the first volume of Capital recounting ‘horror stories’ of the Industrial Revolution. Here lies the principal reason for thinking that the proletariat will rise against capitalism.

This argument also fails. An important factual issue, al-though one space limitation prevents us from discussing, is that Marx misrepresents the nature of the Industrial Revolution. On the whole, this improved the status of workers.4 But even if one accepted the dire picture of the working class painted by Marx in Capital and Engels in The Condition of the English Working Class in 1844, the argument would still not work. The rigorous conditions of labor to which Marx drew attention occurred during the onset of capitalism. Many of the worst of his accounts in point of fact date from an even earlier period, when capitalism existed only in nascent form. But to make his case for proletarian revolt, Marx needs to show that bad conditions of labor are essential characteristics of capitalism.

This Marx was unable to do; not even he could deny that the standard of living of the workers had risen since the mid-nineteenth century. If, in fact, things are getting better, how is the argument for increased proletarian discontent supposed to proceed? One reply is that capitalism will be subject to increasingly severe crises as it develops: this view will be discussed below. Another line of reply for Marx is that because of constant struggles for profit on the part of capitalists, the workers become more and more exploited.

But ‘exploited’ in what sense? How can Marx claim that workers’ conditions are worsening, in the face of evidence to the contrary? Evidently he has reintroduced his own sense of exploitation, i.e., workers are exploited because they produce surplus value. Yet we previously had turned aside from this, seeking in the more usual usage of exploitation a better case for Marx. He oscillates back and forth between the two senses in a way that has the effect of concealing the question-begging nature of his argument. He has shown neither that workers are ‘exploited’ in the sense of Marxist economics in a way they are not exploited under socialism nor that workers must be exploited in the ordinary sense of the term under capitalism. He cannot strengthen his arguments by having them take in their own washing.

The analytical Marxists on the whole have abandoned Marx’s claims about exploitation. John Roemer, the group’s leading economist, has devised his own concept of exploitation. On his usage, practically any deviation from an initial equality of assets will lead to exploitation.5 With the details of his account, we are not here concerned. Suffice it to say that, even more clearly than in Marx’s original account, Roemer has failed to show anything is ‘wrong’ if his sort of exploitation is present. Unless one assumes that workers strongly desire a system of equality of wealth, this version of exploitation gives no grounds for the assumption that workers will overthrow capitalism. Roemer himself does not use it for this purpose.

Another attempt to show that capitalism disadvantages workers stems from G. A. Cohen. Most workers in a capitalist economy do not work in cooperatives; instead, they are employed by capitalists. Although some workers can avoid this by opening small businesses by themselves, most cannot. The proletariat is ‘collectively unfree’ to exit from its dependent position. Once again we have a case of an argument that fails to show proletarian dissatisfaction except on question-begging assumptions. Unless there is something objectionable in working for a capitalist, Cohen’s argument will be of no assistance to Marx in the present context. It will not help to say that the problem is that a worker who is employed by a capitalist has sacrificed his autonomy. Why cannot a worker exercise his autonomy by choosing to work for a capitalist? Once more, one cannot in an argument designed to show why workers will find capitalism unsatisfactory assume as a given that some feature of capitalism is unsatisfactory.6

Both Roemer’s and Cohen’s arguments can be criticized over an issue that has arisen before. Neither argument suffices to show that socialism at all improves upon its respective complaints against capitalism. Roemer does not show that initial assets would be equal under socialism; quite the contrary, he explicitly allows for the possibility of socialist exploitation. If it is said that inequality under socialism would be less than under capitalism, the historical record of the various Worker’s Paradises hardly tells in support of this prediction. As for Cohen, it is not the case that most workers under socialism are self-employed: possibly none is. Why does a worker have more autonomy if he follows the directives of a Central Planning Board than if he works for a capitalist?

The considerations advanced so far, however, do not by themselves dispose of Marx’s claim that the era of socialism would inevitably dawn. Part of his claim rests on the prediction of proletarian discontent, and this issue we have ad-dressed. But Marx placed primary emphasis on the claim that the development of the forces of production has progressed beyond the level at which capitalism can work effectively. Now, only socialism can permit the growth of the forces to their full capacity. Not only must this argument be assessed but its bearing on the argument for proletariat discontent must also be considered.

By the ‘forces of production,’ Marx very roughly meant the principal technology in use in a society. The exact definition of the forces has occasioned much controversy, but for our purposes the rough definition is all we need. Nothing turns on the technicalities. The forces of production determine a society’s economic system, the so-called ‘relations of production’; in turn, the relations determine the various constituents of society’s superstructure, including its legal and political system. As Marx states the matter in a famous statement in the Preface to the Critique of Political Economy: “The hand mill gives you feudal society; the sawmill, industrial society.”

Marx viewed the forces as if they were an autonomous power, developing by themselves. As Ludwig von Mises noted with his characteristic surgical precision, Marx’s ‘forces of production’ have all the properties of a human mind even though of course they are not a mind but merely an aggregate of tools of various sorts. Marx’s reification of the forces is a venture in self-contradiction. Not only does it fly in the face of methodological individualism, it ascribes mental properties to non-living entities.7

Once the assumption of the self-developing forces is removed, the sum and substance of Marx’s case that the development of the forces makes the demise of capitalism inevitable collapses utterly. There is no reason to assume that the forces will always continue to grow. If one adheres to the principle that only individuals act, how much the forces of production develop is a matter that cannot be settled in advance. The question will be determined by the actions of individuals, and does not seem amenable to prediction. If individuals do not develop the forces, they will not develop: and that is that. This result, it is clear, ruins at its first step Marx’s technological argument for the demise of capitalism.

Another contribution of von Mises strikes at the Marxist argument with even greater force. Marx thinks that socialism is due to arrive because it will be vastly more productive than capitalism. But Mises’s famous calculation argument shows that socialism, far from being more productive than capital-ism, cannot work at all. An economics system must have a way of deciding how to produce things efficiently. How is an economy to choose between the various methods of production that are technologically possible? Mises contends that only a private market can answer this question; a centrally directed economy cannot. Marx, oblivious of this, relied on central planning for the increase of production he thought socialism would bring.

Marxists might protest that I have simply taken for granted the validity of Mises’s argument. While it does indeed seem to me that Mises’s point is incontrovertible, this is obviously not the place for a discussion of the debate over this argument. But even if we turn a blind eye to Mises’s demonstration, Marx’s argument still does not work. Even if a socialist system could function, what reason is there to think it more productive than capitalism? Marx never devoted more than a few lines to socialism; unlike Moses, he could not catch sight his Promised Land even from across its borders. In the absence of argument, the assumption of the superior productivity of socialism is mere assertion.

Marx’s argument can also be challenged at another place. Why does he assume that capitalism will act as a fetter upon the development of the forces of production? (Here we leave aside the point that Marx had failed to show these forces will constantly develop.)

Marx advances two main arguments, neither of which succeeds. First, he maintains that production under capitalism is constantly taking on a social character in spite of its officially private form. The argument here is rather difficult to unravel, since it is not at once apparent what Marx meant by the ‘social’ nature of production. As best one can make out, he had in mind two things: as capitalism develops, a constant struggle for profit will force more and more businesses to the wall. The ‘winners’ in the struggle will be very large businesses. Monopoly will prevail in most areas of the economy. Supplementing this process, the ever larger scale of production will demand close coordination between the various branches of production. To sum up, the social nature of production means that monopolies coordinated with one another dominate the economy.

We cannot escape a now familiar litany. Marx’s argument fails. Even if production constantly rises, there is no general tendency to monopoly on the free market. In some cases, no doubt very large firms will be more efficient than smaller firms and drive them out. But there is no general law of economics to the effect that ‘the bigger, the more efficient.’ Quite the contrary, the size of the firm that is most efficient in an industry depends on many different factors—the production functions, the nature of the demand curve, the substitutability of the goods produced, etc.,—which by no means are always constantly increasing functions of size. Why should one assume, e.g., that returns increase constantly to scale, at least to the point at which monopoly develops?

As Murray Rothbard has noted, the calculation problem imposes limits to the size of a firm. If firms become so large that competitive markets cannot develop in all production goods, a situation will prevail akin to that of socialism. In the absence of markets, these firms will be unable to calculate, i.e., decide on efficient methods of production. To put the issue more exactly: since a market of some degree of development will exist if firms exist at all, firms that are ‘too’ large will find it difficult, though not impossible, to calculate. Rothbard’s problem thus imposes an absolute limit to the growth of monopoly, since inefficient large firms will presumably be replaced by their abler rivals.

So far as the issue of the coordination of production is concerned, one must distinguish two senses of increased coordination. In the first of these, the market in an economy has wider scope as the scale of production increases. No longer, e.g., are markets confined to the small towns or even cities: they may encompass an entire nation or even become world-wide. The other sense of coordination is quite different: here the term refers to planning that takes place apart from the price system. If Columbian coffee sells in Los Angeles, this is a case of coordination in the first sense: if the government establishes a commission to oversee production in the steel industry, this is coordination in the second sense.

It is hardly disputable that as capitalism develops, coordination in the first sense will increase. This in fact comes very close to being a tautology, since one of the principal criteria of development is the wide extension of the market. It does not follow from this that non-market coordination must also increase as capitalism grows. Why must it? To say that this is necessary is equivalent to saying the market cannot handle development beyond a certain level of difficulty.

This in my opinion underestimates the potential of the market; and, if Mises is right, it is only the market that can properly coordinate economic activity. This of course assumes a view of capitalism which the Marxist will spurn; but the Marxist argument fails even if one does not assume any economic view he will question. Just the issue under consideration is Marx’s claim that the social nature of production makes the replacement of capitalism by socialism inevitable. If ‘social’ here entails the direction of the economy by the government, Marx’s argument transparently begs the question. The assertion taken as a premise for proving the forthcoming failure of capitalism just is, in part, the assertion that capitalism as a certain level of development will fail. It hardly strikes one as a very deep argument for the truth of a proposition p that if p, then p. If, however, Marx uses coordination in the non-question-begging sense, his argument also cries out for speedy interment. If the market widens in scope and complexity, this fact does not entail the failure of the market. On the contrary, it is a good indication of its success.

Even if the argument that the social nature of production will result in the overthrow of capitalism does not work, Marx still remains in the field of battle. He has another argument for the collapse of the market system. In his view, the continued growth of capitalism will produce ever more severe economic crises.

Here, for once, the difficulty is not that Marx offers no argument for his contention. He presents in Capital a lengthy analysis of economic depressions. It is however unnecessary for our purposes to undertake an exposition and criticism of Marx’s view of depressions. We can take the ‘easy way out’ and avoid the topic entirely, since even if his account of depressions is right, his case for the collapse of capitalism still fails. Before endeavoring to show why this is true, it seems to me important to note that according to Austrian theory of the business cycle, especially as this has been developed by Ludwig von Mises and Murray Rothbard, depressions result from governmentally induced expansion of bank credit, not from defects intrinsic to the free market.8 This analysis seems to me entirely persuasive; but since the limits of our topic preclude a presentation of it, nothing in the ensuing disThis analysis seems to me entirely persuasivecussion will rest on the acceptance of this theory.

The claim advanced here is on the surface paradoxical. How can one accept for the purpose of argument Marx’s account of depression while yet claiming that he has not proved that capitalism must collapse? The question in fact poses little difficulty. Even if Marx were right that capitalism is periodically plagued by depressions, this does not suffice to prove that the system is fatally damaged. Few people welcome depressions, but in itself they are merely a negative aspect of an economic system that suffers from them. It does not follow from the fact that depressions have bad consequences that a system which has them will collapse.

Marx does have a further argument that addresses the point just raised. He thinks that depressions will constantly worsen as capitalism develops. One could respond to this by repeating the point just made: even if depressions do continue to get worse, this alone is insufficient to ‘sound the death knell of capitalism.’ Of course, if Marx means that there will at some time be a complete collapse of the capitalist system from which it will be unable to recover, this would indeed ‘prove’ the inevitable end of capitalism—but only because it asserts that very thesis.

No doubt it is possible to press too hard on our claim that even very bad depressions do not show that capitalism will be replaced. If depressions are bad enough in their effects, perhaps they would be ‘too much’ for the system. But in point of fact, Marx’s arguments for the worsening of depressions do not succeed.

These arguments depend crucially on the claim that developed capitalism will be dominated by monopolies. When an enormous industrial combine collapses, its effects on the economy are drastic. As we have already seen, Marx’s argument that monopoly control lies inevitably in capitalism’s future is implausible. The failure of this thesis undermines the argument for worsening depressions which rests on it.

Marx also tried to buttress his assertion of capitalist demise by appeal to a constantly more exacting struggle among capitalists to extract surplus value from workers. Even if our earlier claim that the proletariat has little ground for the overthrow of capitalism is true for a non-expanding capitalism, the fight for more and more surplus changes the picture. Now workers will rise in rebellion, if they are “pushed” beyond certain limits.

This argument does no better than its predecessors. The reasons for rejecting the whole surplus value analysis bag and baggage have already been given. Unless one accepts the discredited labor theory and its corollaries in Marxist political economy, there is no reason to expect constantly increasing pressure on workers.

Even if there were such pressure, there remains room for considerable doubt that socialism would replace capitalism. Marx really gives no account of how this system will operate. What reason is there to think that if capitalism does collapse, then socialism will replace it? The collapse of capitalism and the arrival of socialism are two very different things: neither one entails the other.

If this point is applied to our earlier discussion about proletarian discontent, one can readily see that our conclusion that the argument for a proletarian attempt to overthrow capitalism does not succeed requires no alteration when an expanding economy is under consideration. An expanding economy, Marx to the contrary, does not make things worse for the proletariat. It is for this reason that we need not revise our earlier examination of the nature of proletarian unrest.

If capitalism does continue to develop, and if, directly contrary to the stance taken here, one thinks the forces of production must grow, one could arrive at an argument exactly contradictory to Marx’s. Since socialism will not work, as shown by the calculation argument, and since the forces inevitably grow, then (unless some third system is more productive than either capitalism or socialism) one has ready-to-hand an argument that capitalism is inevitably here to stay. Only in this system can the economy continue to progress.

Since grounds have been offered against the view that technology inevitably grows, no stress will be placed on the argument just given. Rather than say that capitalism must exist, given the constant march onwards of technology, we claim instead that if people desire the widest attainable variety of goods and services, then they ought to adopt capitalism. Nothing compels them to establish a free enterprise economy; but if they want prosperity, the course of action they must take is clear.

 

________________

9For an argument that Marx’s concept of socially necessary labor involves him in a circular argument, see Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), p. 260.

10A very critical account of the labor theory of value, summarizing the latest literature, is contained in Jon Elster, Making Sense of Marx (Cambridge: Cam-bridge University Press, 1985), pp. 127–41.

11The phrase is used in the Critique of the Gotha Program. The violent suppression of the old order which Marx favored is hardly compatible with the democratic humanism some of his latter-day disciples wish to foist on him.

12F. A. Hayek, ed., Capitalism and the Historians, is an excellent series of papers on this topic.

13John Roemer, A General Theory of Exploitation and Class (Cambridge, Mass.: Harvard University Press, 1982), p. 113.

14G. A. Cohen, “The Structure of Proletarian Unfreedom,” Philosophy and Public Affairs 12 (1983): 3–33.

15I have discussed Mises’s argument in more detail in “Ludwig von Mises and the Philosophy of History” in The Meaning of Ludwig von Mises: Contributions in Economics, Sociology, Epistemology, and Political Philosophy, Jeffrey M. Herbener, ed. (Auburn, Ala.: Ludwig von Mises Institute, 1992), pp. 11&–33.

16The Austrian theory is applied to the 1930s depression by Murray Rothbard, America’s Great Depression (Princeton: D. Van Nostrand, 1963).

• 1For more on the comprehensive system see Alexander Solzhenitsyn, Mikhail Agursky, et al., From Under the Rubble (Boston: Little, Brown, and Company, 1974); Erik von Kuehnelt-Leddihn, Leftism: From de Sade and Marx to Hitler and Marcuse (New Rochelle, N.Y.: Arlington House: 1974; 2nd edition, Regnery, 1990); Paul Hollander, The Many Faces of Socialism (New Brunswick, N.J.: Transaction, 1983); David Conway, A Farewell to Marx: An Outline and Appraisal of His Theories (New York: Viking Penguin, 1987).
• 2Paul Craig Roberts, in the Wall Street Journal, June 28,1989.
• 3See Martin Malia, “From Under the Rubble, What?”, in Problems of Communism, January-April 1992; Peter Rutland, The Myth of the Plan (La Salle, Ill.: Open Court, 1985).
• 4A striking example of Western infatuation with Soviet socialism is Sidney and Beatrice Webb, Soviet Communism: A New Civilization? (New York: Charles Scribner’s Sons, 1936).
• 5Gary Becker, “The President’s Address,” The Mont Pelerin Society Newsletter, vol. 46, no. 1, February 1993.
• 6Austrian contributions to this debate include: Eugen von Böhm-Bawerk, Karl Marx and the Close of His System (New York: Augustus M. Kelley, 1949; Philadelphia, Penn.: Orion Editions, 1984); Peter J. Boettke, “The Austrian Critique and the Demise of Socialism: The Soviet Case,” in Richard M. Ebeling, ed. Austrian Economics: Perspectives on the Past and Prospects for the Future (Hillsdale, Mich.: Hillsdale College Press, 1991); F. A. Hayek, New Studies in Philosophy, Politics, Economics, and the History of Ideas (University of Chicago Press, 1978); Trygve J. B. Hoff, Economic Calculation in a Socialist Society (Indianapolis, Ind.: LibertyPress, 1981); Hans-Hermann Hoppe, “De-Socialization in a United Germany,” Review of Austrian Economics 5, no. 2 (1991): 77–106 and A Theory of Socialism and Capitalism (Boston, Mass.: Kluwer Academic Publishers, 1989); Israel M. Kirzner, “The Economic Calculation Debate: Lessons for Austrians,” Review of Austrian Economics 2 (1988): 1–18; Don Lavoie, Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (New York: Cambridge University Press, 1985); Murray N. Rothbard, “The End of Socialism and the Calculation Debate Revisited,” Review of Austrian Economics 5, no.2 (1991): 51–70), “Lange, Mises and Praxeology: The Retreat from Marxism,” Toward Liberty, vol. 2 (Menlo Park, Calif.: Institute for Humane Studies, 1971), pp. 307–21, and “Ludwig von Mises and Economic Calculation Under Socialism,” The Economics of Ludwig von Mises (Kansas City: Sheed and Ward, 1976), pp. 67–78; Ludwig von Mises, “Middle-of-the-Road Policy Leads to Socialism,” Two Essays by Ludwig von Mises (Auburn, Ala.: The Ludwig von Mises Institute, 1991), Socialism (Indianapolis, Ind.: Liberty Press/Liberty Classics, 1981), “Economic Calculation in the Socialist Commonwealth,” F. A. Hayek, ed., Collective Economic Planning (Clifton, N.J.: Kelley Publishing Company, 1975), pp. 87–130, and (Auburn, Ala.: The Ludwig von Mises Institute), and “One Hundred Years of Marxian Socialism,” Money, Method, and the Market Process, Richard M. Ebeling, ed. (Boston, Mass.: Kluwer Academic Publishers, 1990), pp. 215–32.
• 7On the failure of the Soviet model, see: Zbigniew Brzezinski, The Grand Failure: The Birth and Death of Communism in the Twentieth Century (New York: Macmillan, 1989); Sven Rydenfelt, A Pattern for Failure: Socialist Economies in Crisis (San Diego: Harcourt, Brace, Jonvanovich, 1984); Nick Eberstadt, The Poverty of Communism (New Brunswick, N.J.: Transaction, 1988).
• 8Martin Malia, “From Under the Rubble, What?”, in Problems of Communism, January-April 1992, p. 96.
• 9In the Soviet Union, Marxism was not thought to be just an economic theory. It pretended to be the universal explanation of nature, life, and society. It was also a deadly weapon to be wielded against personal enemies. As in the case of Sergei Vavilov who was starved to death for violating Marxism because he adhered to the science of genetics, “a false science invented by the Catholic monk Mendel.” In the name of Marxism, the death toll reached 100 million, the rivers of blood flowed from Russia to Kampuchea, from China to Czechoslovakia.
• 10The failure of socialism in Russia, and the enormous suffering and hardship of people in all socialist countries, is a powerful warning against socialism, statism, and interventionism in the West. “We should all be thankful to the Soviets,” says Paul Craig Roberts, “because they have proved conclusively that socialism doesn’t work. No one can say they didn’t have enough power or enough bureaucracy or enough planners or they didn’t go far enough.”
• 11In contrast to the West, where Marxist tenets were doctrines of a counter religion, few in the Soviet Union truly believed in the official ideology: not the state managers, not the professors, not the journalists. It was not necessary that they do so, for Marxism was a means of political rent seeking and of coercive control, not a body of ideas held to by honest men.
• 12The Soviet Union is now gone, as are the huge statues of Marx and Lenin that littered the East, and the good reputation of their systems of thought. This collection of articles is the Requiem for Marx and the social and economic systems created in his name. As with any funeral service, we look back on the life of Marxian ideas. But unlike the ordinary funeral, we are not looking back fondly, for Marxism is as good an example of the maxim that “ideas have consequences” as can be found. It does not speak well of the intellectual class that no body of ideas attracted a greater following in this century.
• 13It is beyond the capacity of economic analysis to calculate the opportunity costs of the socialist experiment in Russia. But the human toll from Stalin’s collectivization, purges, and Gulags is estimated by Russian historian Roy Medvedev at forty-one million people. A popular Russian aphorism says: “The only lesson of history is that it does not teach us anything.” “Despite the recent collapse of socialism and communism in Soviet Russia and Eastern Europe, socialism is alive and growing,” Gary Becker has said. It presents a mortal danger to economic freedom and the quality of life and will for generations to come.
• 14The scholars contributing to this volume write in the economic and historical tradition of the Austrian school, founded by Carl Menger with his book Principles of Economics (1875). The tradition emphasizes a deductive method, role of choice and uncertainty in economic affairs, the power of market prices to coordinate economic activity, and the essential nature of private property for forming the basis of rational calculation. The Austrian school is also the historical bete’ noire of the Marxian school. Long before any other school came around to understanding the deep flaws in the Marxian approach, the Austrians had devoted an enormous amount of intellectual power to exposing its fallacies and dangers. Carl Menger refuted the labor theory of value, his student Eugen von Böhm-Bawerk demolished Marx’s views of capital, F. A. Hayek showed the incompatibility between socialism and political freedom, and Ludwig von Mises attacked the core of socialist economic theory.
• 15From my life and study in Moscow, I can attest to the truth of this prediction. In an economy, nearly every consumption good requires several stages of production. The more natural resources used and the more complex the technology involved, the more stages of production are required. Yet lacking an ability to see a production process through to ends that consumers desire, Soviet socialism gave only military hardware, useless goods, goods to make other goods, while consumers were deprived of bare essentials.
• 16In the late 1980s, when glasnost at last permitted Soviet economists to speak out, they confirmed the death sentence that Mises pronounced. As Martin Malia put it, “through the voices of Nikolay Shmelev, Gavriil Popov, Vasiliy Selyunin, Grigory Khanin, Larisa Piyasheva, Mikhail Berger, and subsequently Grigoriy Yavlinksy and Yegor Gaydar, they offered us a portrait of the Soviet that was in full accord with the evaluations of . . . Ludwig von Mises, whose book contains hardly a single figure and not a word about GNP.” This powerful confirmation, Malia points out, led to “methodological smuta” (in Russian) in Western economics.