Perhaps the single most influential book ever written is Karl Marx’s Das Kapital. The book is often radically misinterpreted, by both its supporters and its critics. Its supporters often read it as an exhortation to violence and radical change, where the book was supposed to be predictive of inevitable trends in history; its critics often read it as a purely economic theory, when in fact Marxism makes observations about human nature. In order to examine the foolishness and ugliness of Marxism, we must begin by examining its key tenets. There are five, in the main: dialectical materialism; the Marxist theory of history; the theory of surplus value and exploitation; class struggle and revolution; the dictatorship of the proletariat and communism.
Dialectical Materialism
We must begin with one of the most commonly-misunderstood aspects of Marxism: dialectical materialism. This term is made of two terms: dialectic, and materialism. Dialectics is taken from the philosopher Georg Friedrich Hegel, who, to radically simplify, posited that truth could be garnered in the conflict between a thesis – an idea – and its opposite – the antithesis, created by a shortcoming in the thesis. Out of this conflict, a synthesis would emerge. Internal contradictions, in Marxist philosophy, breed inevitable revolutions.
Combine this dialectic approach with the materialism of Marx. Marx denied the Divine, and believed that material circumstances lay at the root of human motivation, and material pursuits at the end of human goal-making. In the basic notion of dialectical materialism, then, material needs, lead to a dialectical process whereby the end result is revolution.
Marxist Theory Of History
Marxian dialectical materialism provides the basis for Marx’s interpretation of history. The question for Marx was why certain economic systems gave way to other economic systems. Marx wrote in The Critique of Political Economy:
“At a certain stage of their development, the material forces of production in society come into conflict with the existing relations of production, or – what is but a legal expression for the same thing – with the property relations within which they had been at work before. From forms of development of the forces of production these relations turn into their fetters. Then comes the period of social revolution.”
New technologies and material developments progress beyond the boundaries of the existing relations between people; this conflict creates revolution, and progress. Engels was more clear:
“The ultimate causes of all social changes and political revolutions ought to be sought, not in the minds of men in their increasing insight into eternal truth and justice, but in changes in the mode of production and exchange…”
Ideas are, then, a sort of disguise for underlying economic interests. In reality, it is economic conditions that drive history, not ideas.
Theory of Exploitation
According to Marx, capitalism is marred by internal contradictions. In order to reach this conclusion, Marx has to redefine capital itself. Typically, capital means, according to Adam Smith, “that part of man’s stock which he expects to afford him revenue.” This means, as Marx writes, that “Capital is, among other things, also an instrument of production….Hence capital is a universal, eternal natural phenomenon.” But Marx does not see capital this way.
Instead, capital, as Marx sees it, is “dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.” In other words, capital is just what capital can buy – it is not an element of production, but a form of social relations. Capitalism, then, relies on a group of people who only have the ability to sell their labor, and who must sell their labor to the capitalists. Capitalists who own the means of production – say, on a farm, a plow – can force labor to generate more labor than the laborer would for his own use, and then capture that “surplus labor.” Thus, says Marx, capitalism is a form of slavery that differs from slavery “only in the mode in which this surplus labor is in each case extracted from the actual producer, the laborer.” In reality, says Marx, there is no voluntary trade. There is exploitation. The laborer has no idea when he is working surplus and when he is working for himself because he is being paid a wage rather than just living off the labor of his own hands.
To justify this notion that there is such a thing as “surplus value” in labor being expropriated by the capitalists, Marx had to posit the notion of a true value of labor as opposed to the actual market price of labor. This was not unique to Marx – both Adam Smith and David Ricardo trafficked in a labor theory of value. According to Marx, because capitalists were determined to increase profit; they would therefore have to drive down wages in order to increase profits, leading to the relative immiseration of the proletariat. As Marx wrote:
All means for the development of production undergo a dialectical inversion so that they become a means of domination and exploitation of the producers; they distort the worker into a fragment of a man, they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by turning it into a torment, they alienate from him the intellectual potentialities of the labour process…. as capital accumulates, the situation of the worker, be his payment high or low, must grow worse.
Class Struggle
Marx says that capitalism was necessary in order to build large modes of production, but that this would actually plant the seeds for socialism and communism. Marx writes, “The separation of society into an exploiting and an exploited class, a ruling and an oppressed class, was the necessary consequence of the deficient and restricted development of production in former times.” But capitalism cannot maintain itself, because if capitalism relies on exploitation, and if the most successful capitalists end up monopolists, power is shrunk into fewer and fewer hands — and eventually the exploited will form a class and fight back. That is particularly true as societies grow richer, not poorer – general leisure would become possible, but the proletariat would be immiserated to generate such leisure, and the masses would rebel.
Marx believed that the history of the world was a history of class struggle. Class was defined as oppositional: you were only a member of a class as identified against another class. Just because poor people are poor, then, does not make them a class with a coherent and unified interest. At the same time, Marx says that the history of the world is the history of struggle between the bourgeoisie, who control capital and the means of production, and the proletariat who provide the labor. In The Communist Manifesto, Marx and Engels write:
“the bourgeois relations of production are the last contradictory form of the process of social production, contradictory not in the sense of an individual contradiction, but of a contradiction that is born of the conditions of social existence of individuals; however, the forces of production which develop in the midst of bourgeois society create at the same time the material conditions for resolving this contradiction. With this social development the prehistory of human society ends.”
To end their own alienation, the proletariat will engage in revolution.
Dictatorship of the Proletariat and Communism
That revolution would end in a dictatorship of the proletariat, a transitional stage between capitalism and communism. This dictatorship would be a “democratic republic,” in which the proletariat would form a class dictatorship. Violent revolution may have been the result of Marxist philosophy, but Marx and Engels actually thought that democratic voting would usher in the dictatorship of the proletariat. That dictatorship would last until the “withering away of the state” and the ushering in of communism. Once the alienation of workers has ended – once they are granted the full product of their labors – then “can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: ‘From each according to his ability, to each according to his needs!’” The communist society would do away with key institutions like family and church and replace them with a fulsome view of human happiness. “In place of the old bourgeois society, with its classes and class antagonisms, we shall have an association in which the free development of each is the condition for the free development of all.”
The Critique
So, where was Marx wrong? Pretty much everywhere.
First, Marx’s dialectical materialism – the notion that men are primarily driven by their material circumstances rather than by ideas, and that contradictions within economic systems bring about their own changes – is wrong. Ideas are a massive motivating factor in human life. As George Orwell wrote in 1940 about the rise of Hitler: “Whereas Socialism, and even capitalism in a more grudging way, have said to people, ‘I offer you a good time,’ Hitler has said to them ‘I offer you struggle, danger and death,’ and as a result a whole nation flings itself at his feet.” Marx’s dialectical materialism actually offers a way of just dismissing arguments out of hand as products of “the bourgeois,” rather than coming to grips with them and attempting to refute them.
Marx’s theory of class struggle was similarly incorrect. Marx’s dialectical materialism and theory of history would have predicted an international class revolution prior to World War I; the fact that this did not happen, and that nationalism trumped class struggle, shredded Marxist theory so thoroughly that Vladimir Lenin and Antonio Gramsci were forced to backfill the theory to fit the facts. Marx thought that well-developed capitalists societies would fall into revolution; precisely the opposite happened. Marx thought that democracy would be the source of socialist revolution; instead, violent revolution was. Marx thought workers would be “immiserated” by capitalism; instead, they were immiserated by communism.
Marx’s theory of surplus value was utterly and completely specious. As Carl Menger correctly pointed out, in exploding the labor theory of value, value is subjective; we derive the value of labor from the value we hold for the products and services provided by that labor. No one has ever calculated what they wish to pay for a good or service by calculating labor units. There are no such things as “labor units.” People determine prices by determining what they are willing to give up for a product or service; price of labor is then calculated with reference to that final price. What is more, the production of products or services is not entirely rooted in labor. As Thomas Sowell rightly points out, “Once output is seen as a function of numerous inputs, and the inputs as supplied by more than one class of people, the notion that surplus value arises from labor becomes plainly arbitrary and unsupported.” Once we realize that products and services are the product of an enormous number of diffuse actors, centralization can be seen for what it is: destruction of knowledge, decimation of innovation.
In the end, as Thomas Sowell says, “the Marxian contribution to economics can be readily summarized as virtually zero.” But Marx’s ugly legacy lives on, mainly in providing to those who hate capitalism with the generalized feeling that capitalism has somehow been debunked, without ever having to prove the point.