Liberty Matters

Marx and Some ‘Sharp Objects’ and ‘Dead Ends’

I very much like Pete Boettke's notion of "sharp objects" which classical liberals have to at least blunt or at best remove from the paths of ordinary working people. To his credit, Marx did articulate a critique of several of these "sharp objects," but he was not alone alone in this, either from the socialist side (Proudhon remains an underappreciated critic) or from the free-market side. I would include the following issues as the sharpest of the sharp objects which afflicted people in mid-century Europe:
  1. exploitation by the privileged classes
  2. high (indirect) taxes on the poor
  3. the high cost of food, clothing, and other staples
  4. prohibitions on entering certain trades or starting one's own business
  5. the dislocation of employment caused by technological change
  6. the business cycle with its periods of unemployment
The historian needs to compare the understanding of and proposed solutions to these problems by the various groups which existed at the time, such as the conservatives, classical liberals, and socialists and Marxists (S&Ms). Of the three groups, I would argue that only the classical liberals and the S&Ms understood and opposed problems 1, 2, and 3 but differed over who was actually doing the exploiting or why staples cost so much. (Classical liberals said it was tariff protection, the Marxist the inefficiencies of capitalist production or the greed of producers.) Only the classical liberals appreciated and opposed problem 4, the solution to which was to be found in drastically limiting the power of the state: that is, ending legal privileges to favored producers, cutting taxes (especially indirect taxes on the poor), cutting spending (especially on the military), opening all trades and occupations, and introducing complete free trade and laissez faire.
Both classical liberals and S&Ms appreciated problems 5 and 6 but differed on how to solve them. Neither had any real answer to problem 5 except to "wait it out"; the Marxists until the "capitalist system" had done the dirty work of transforming the economy by creating large-scale industry, which would then fall into the lap of the waiting communists; the classical liberals until the economy had become productive and diverse enough to make this only a temporary problem. No group at the time had an adequate explanation for or solution to problem number 6, except for a handful of theorists such as Charles Coquelin (1802–1852), who advocated free banking in place of monopoly state banks.[25] The solutions offered by S&Ms (state ownership, dispossession of property owners, the end of wage labor, the end to or strict regulation of profit, interest, and rent), I would argue, were worse than the problems they were intended to solve and would have catastrophic consequences in the 20th century.
In addition to these "sharp objects," I would also suggest that there were a lot of "dead ends" in Marx's theory which led him and his followers badly astray over the 170 years since he wrote The Communist Manifesto. These are of two kinds -- errors of commission and errors of omission. The errors of commission included the following false beliefs which badly hampered the Marxists' understanding of how the economy worked and thus would prevent their attempts to fix its perceived problems:[26]
  1. the myth of alienation caused by the division of labor
  2. the labor theory of value
  3. the theory of surplus value
  4. the  belief that competition would drive profits down, leading to increasing concentration and monopolization for businesses to survive
  5. the belief that competition would drive wages down to unsustainable mere-subsistence levels (the immiseration of the workers)
  6. the belief that socialism would bring rational planning and economic abundance once the inefficiencies and exploitation of the capitalist system had been removed.
The errors of omission were the neglect key aspects of the competitive free-market system which S&Ms did not understand or rejected and which led them ultimately to misunderstand how capitalism worked. I would argue that ideas about most (but perhaps not all) of these aspects were in circulation at the time Marx wrote and that he would have come across them in the course of his deep reading of political economy, but which he rejected for various reasons. These errors of omission include:
  1. the role consumers played in driving production (thus we should talk about "consumerism," rule of consumers, rather than "capitalism" (rule by capital or capitalists)
  2. the importance of profits in directing producers to the most urgent needs of consumers
  3. the dynamic role of entrepreneurs in making production and distribution of goods and services possible
  4. the point that both parties to a voluntary exchange benefited
  5. the point that services, not just the production of goods by means of physical labor, also created wealth
  6. the ignoring of several other key issues, such as the role of incentives, the problem of scarcity, the problem of risk, and the importance of ideas (especially in the Misesian notion of the role ideas play in forming what we think our "material interests" are).
Before anybody can begin softening the sharp objects, they have to stop going down dead ends. This also applies to the modern Amherst School of post-Marxism, which David P. suggests we consider seriously. Until all socialist critics of free markets stop going down these intellectual and empirical dead ends, any moral critique of capitalism they produce will be as flimsy as Marx's. Even if they mean well.
[25.] Charles Coquelin, Du Crédit et des Banques (Paris: Guillaumin, 1848).
[26.] I go into the errors in more detail in my "Socialism: A Study Guide and Reader" on the OLL: </pages/socialism>.