Liberty Matters

Marxism What Is It Good For? Absolutely Nothing – Say It Again


I have greatly enjoyed the back and forth in this discussion. And if a student asked me, I of course would recommend reading Marx with great care and charity. But I would also hope that they would see that greater power of analysis is to be found in David Hume and Adam Smith, in J. B. Say, in David Ricardo, in J. S. Mill, and of course in Carl Menger, Eugen Böhm-Bawerk, Ludwig von Mises, F. A. Hayek, and a host of other thinkers who addressed the questions of the politics and economics of socialism.
Virgil, Dave, Steve, and I share a common "professor" – Don Lavoie. Don was among the most important, if not the most important, intellectual influence in our lives. He was a model scholar and demanded that we read others with care and charity. He wrestled with Marx as a scholar and scientist of the capitalist system and as an inspiration for real-world activism throughout the 20th century. (Lavoie 1985a) But Don also never shied away discussing the political and economic illusions of socialism and the death and destruction that were the consequences of Marxism in practice. (Lavoie 1985b and 1986)
Here, as I see it, is the bottom line in the 100-plus years of critical examination of Marx's thought. His theoretical apparatus has been demonstrated to have fundamental contradictions, and his empirical claims have been refuted repeatedly. This was the case from the very beginning of his intellectual career. Alternative socialist thinkers such as Mikhail Bakunin challenged Marx on both theoretical and strategic grounds. (Bakunin 1873) This battle over the strategic implications for socialist activism would rage from the mid-19th through the mid-20th centuries and even resurfaces today. Böhm-Bawerk's Karl Marx and the Close of His System demonstrated the fundamental contradictions in Marx's value and exploitation theory. Empirically, Marx's predictions about the increasing concentration of capital and the declining rate of profit, etc. have all been thoroughly disputed by careful economic analysis. Consider, e.g., G. Warren Nutter's Enterprise Monopoly in the United States, 1899-1958 (1969), where he shows that the march of market forces in history go in the opposite direction from that predicted by Marx.
Are there problems with power? Can economic interests align themselves with state entities to reap monopoly profits? Do modern state-capitalist economies suffer from disproportionality and thus periodic crises? Of course they do. Does the modern state-capitalist economy seem cold and remote to participants? Yes it does. In my last contribution to this dialogue, I stressed the importance of recognizing the "sharp objects" in the economic and social processes of human affairs. But I would argue we have better theories and analyses of power, of alienation, of exploitation, of the rivalry of market competition, and of periodic crises than those offered by Marx. The classical political economists and the early neoclassical economists offered us far superior theories of wage determination, resource allocation in general, the coordination of economic activities through time, the rivalrous activity of the market process, and the cause and consequences of periodic crises.  As economists and political economists, we should be teaching and talking about those other theories, rather than Marxism.
We now are teaching kids who have no memory of socialism in practice in their lifetimes. The millions dead are just words and numbers on pages. The economic deprivation of the Soviet system is forgotten, and the ongoing tragedies of real-existing socialism in places like Venezuela are excused away. The Nordic states are held up as shining examples of what democratic socialism can achieve, without any recognition of the reality of the fiscal reforms of the 1990s, the unique circumstances of small homogeneous populations, and the economic-freedom scores these countries receive. The socialist rhetoric that is used by politicians and activists is seductive, but it does not stand up to analytical or empirical scrutiny. It is our responsibility as social scientists to stress the analytical and the empirical.
There is much to learn from studying the social tensions that we can identify in our experience with commercial society, and no doubt thinkers such as Rousseau and Marx offered criticisms of commercial society. But were they good critics? Making that judgment is less complicated than we often want to admit.
Communism and socialism are simply not philosophical ideals that humanity has failed to live up to, but instead are a set of philosophical propositions that fail to address the demands of humanity. These are fundamentally flawed notions of social organization and social cooperation. And no amount of care and charity in reading through the works of the leading thinkers can escape that ultimate judgment because Marx's arguments committed logical contradictions and his empirical proclamations were vacuous.
So we need to study the serious flaws of state monopoly capitalism, not with the analytics of Marx but with the analytical tools of mainline economics and political economy – rational choice, thorough-going subjectivism, and the dynamic processes of adaptation and adjustment that coordinate economic activities through time. In the end, neither Marx's analytics nor his overall vision of the capitalist present or the socialist future should inspire a new generation of students. These conversations should take Marx and Marxism so seriously that we are willing to challenge his work with the same radical spirit that he exhibited. Where his criticisms of the doctrines of classical political economy and the capitalist system missed their mark, those of us trained in mainline economics and liberal political economy cannot miss our mark when it comes to socialism and communism. The stakes are too high.