Front Page Titles (by Subject) Engels on Economics - Literature of Liberty, July/September 1979, vol. 2, No. 3
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Engels on Economics - Leonard P. Liggio, Literature of Liberty, July/September 1979, vol. 2, No. 3 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Engels on Economics
“Friedrich Engels and Marxist Economic Theory.” Journal of Political Economy 86 (April 1978): 303–320.
Engels deserves a “more important and more interesting place in the history of economics, Marxist or otherwise, than leading authorities … have been prepared to ascribe to him.” W.O. Henderson's recent two volume Life of Friedrich Engels is no exception.
Engels' economic writings begin with his “Outlines of a Critique of Political Economy” written when he was only 23 years old. Remarkably, this work identified three themes central to Marxism before Marx wrote them. Engels emphasized periodic crises, a theme of great importance to Marxism even though he exaggerated their importance. Second, Engels predicted concentration of business before the joint stock company, and third, he argued that technological change would render Malthus's gloomy predictions obsolete. Significantly, Engels identified a third factor of production after land and labor—the mental element of thought or invention—which he differentiated from “sheer labor.” This idea, if followed up, would have undermined Marx's system from the start.
The theme of technological progress appears again in Engels' “The Principles of Communism,” a first draft of The Communist Manifesto. Engels' Principles, however, contains a description of the workings of the communist economy which was omitted from the Manifesto. (Marx never did tackle the problem of how a communist economy would function.) In this essay, Engels relies on technological progress to eliminate scarcity and the concomitant need for private property. However, he also calls for a period of transition. Hutchison comments “Never has there been a wider contrast or more extreme contradiction between short-term, ‘transitional’ aims and methods requiring the creation of vast bureaucratic vested interests and, on the other hand, what was professed to be the long-term objective of the ‘withering away’ of the state.”
In Poverty of Philosophy (Introduction of Marx's work), Engels attacks the Utopian Socialists, especially Rodbertus, who had proposed a system of labor money based on a labor theory of value. In his attack, Engels gave an excellent description of the role of a competitive market in resource allocation and guidance of production. “Mises and Hayek could hardly have made the point more forcefully.” However, in his and Marx own utopian schemes, he totally ignored the insight in his criticism of the other utopians. Hutchison concludes, “Surely no one in the whole of intellectual history can have looked a major, pressing intellectual and practical problem so clearly and piercingly in the face and then so blithely and confidently passed on without a word.”
The emergence of the concept of society as a distinct entity from that of the state was a slow and gradual achievement. This “depoliticization” of society had ancient roots and increased in tempo with the development of liberalism in the classical sense. Commenting on some essential features of classical liberalism, R.M. Hartwell observes in his introduction to The Politicization of Society (Edited by Kenneth S. Templeton, Jr. Indianapolis: Liberty Press, 1979, p. 7):
The fundamental tenet of classical liberalism was the sufficiency of individual self-determination in belief and conduct as the proper basis of economic and political policy. The main principles of liberalism were: first, in the sociopolitical field, individual freedom and, where it was mutually beneficial, collaboration on a voluntary basis; second, in the juridical field, individual property rights, freedom of contract, and the rule of law; and third, in the economic field, freedom of enterprise, in the form of the self-regulating market, unrestrained by political intervention.
Such themes will be found in the following summaries dealing with social analysis. Equally important, however is the spirit that informs this liberal attitude to man and his world. The liberal temperament, properly so-called, arises in modern Europe, but it should not be narrowly identified with the field of political economy. In the following summaries, we can discern the embryonic forms of the liberal spirit (though we should be cautious of anachronistic misreadings) in ancient Greece and Rome. In other cases, social thinkers who were, by no stretch of the imagination classical liberals, provided influential analyses and concepts that led to both liberal and nonliberal insights (see the cases of Plato, Cicero, and Gaius, the Roman jurist).
In effect, several of these summaries provide a useful archeology of the history of ideas; these summaries concern the various concepts and attitudes that were quarried and transformed into the more articulate and self-conscious liberal spirit of the eighteenth and nineteenth century. Thus, David Shaefer's study of Montaigne (“Montaigne's Political Scepticism”)—included in our summaries—opens up for further research the social and political implications of a sixteenth century “litterateur” whose circle included Estienne de la Boétie and Bodin. [Shaefer pursues a parallel analysis of Montaigne as a seminal thinker in modern liberal political philosophy in his article “The Good, the Beautiful, and the Useful: Montaigne's Transvaluation of Values.” The American Political Science Review 73 (March 1979): 139–154]. Of course many more scholarly researches are needed to critically analyze the background of the liberal tradition. These researches need to be sensitive to the confused tangle of overlapping political, economic, legal, social, ethical, linguistic, and psychological strands of thought.