Article ID: JAR1421 | By: Jay W. Richards`


This article first appeared in the Christian Research Journal, volume 42, number 1 (2019). For further information or to subscribe to the Christian Research Journal please click here.


The last few years have been distressing for Christians who grasp economics. The year 2017 was the 100th anniversary of Russia’s communist revolution. To mark the grim occasion, the New York Times treated readers to a series that tried to put a positive spin on an event that launched the greatest killing spree in human history.

Then in 2018, there were celebrations around the world for the 200th birthday of Karl Marx — the thinker who most inspired twentieth-century communism. Teen Vogue has a glowing story introducing Marx. The author told its readers that they could “use Karl Marx’s ideas to use history and class struggles to better understand how the current sociopolitical climate in America came to be.”1

Controversial filmmaker Michael Moore, whose net worth is an estimated $50 million, tweeted, “Happy 200th Birthday Karl Marx! You believed that everyone should have a seat at the table & that the greed of the rich would eventually bring us all down. You believed that everyone deserves a slice of the pie. You knew that the super wealthy were out to grab whatever they could.” About the same time, Jason Barker, an associate professor of philosophy at Kyung Hee University in South Korea and author of the novel Marx Returns, published a commentary in the New York Times declaring, “Happy Birthday, Karl Marx. You Were Right!”2

MARX’S KEY ARGUMENT

To see how bad this is, it helps to know something about Marx’s philosophy of history and its real-world consequences. Karl Marx was born to a middle-class family in Germany in 1818, and went on to study law and philosophy, with a keen interest in the German philosopher Ludwig Feuerbach’s (1804–1872) critique of the systematic thought of the greatest of all German philosophers, Georg Wilhelm Friedrich Hegel (1770–1831). Because of his radical writings, Marx ended up as an exile in London — a man without a country. What little income he had came mostly from his fellow German revolutionary Friedrich Engels (1820–1895), who enjoyed the largesse of a well-off father. Marx never completed his massive magnum opus, Das Kapital. But his basic theory is clear in the 1848 political pamphlet he coauthored with Engels, The Communist Manifesto.

Unlike Hegel, who saw reality as the dialectical working-out of mind and ideas, Marx was a staunch materialist. His own philosophy was a hybrid called dialectical materialism: only matter, in conflict and then resolution across time, really mattered. Everything else is determined by this process.

Working out this logic in their Manifesto, Marx and Engels describe history as a series of struggles between oppressors and oppressed, each struggle punctuated by an upheaval in which one system gives rise to another. The original state of man, they claimed, was a primitive communism without private property. The mass slavery of Egypt and other ancient cultures represented the fall from this primeval state of innocence. The slave system eventually gave way to feudalism, with poor serfs caring for large tracts of land owned by nobles. Then feudalism gave way to capitalism, with its productive industrial centers.

In modern “capitalist” societies (that’s their word), the capitalist class who own most of society’s wealth and means of production (what they call the bourgeoisie) seek above all else to increase their profits. To accomplish this, they pay workers as little as they can while taking the “surplus value” produced by the workers as profit. With those profits, they then invest in tools and factories to extract more from the labor of fewer laborers, which again creates more surplus value. The capitalists compete to produce more and more with less and less. Workers become more and more alienated from the fruits of their labor, as capitalists skim more and more of the surplus value of their work without giving them just compensation.

The bigger and better capitalists beat out the smaller ones. These big businesses can then produce far more with still fewer workers. In this way, the few remaining business owners inevitably grow fatter and richer, while a growing pool of laborers grow poorer. Capitalism thus sows the seeds of its own destruction by creating a large oppressed population that will at some point have to revolt against its oppressors to escape the vicious cycle of disparity.

The workers, Marx and Engels predicted, would usher in the “dictatorship of the proletariat,” where the people — that is, the state — would own all industry. But for those afraid of big government, don’t worry. This would be merely a temporary socialist phase on the road to full communism, where the state would wither away into a brotherhood of man, and milk and honey would flow down streets of gleaming gold, or something like that.

CONTRADICTORY

Marx’s theory has the same malady as every materialist theory: it contradicts the existence of the theorist. If everyone’s thinking is determined by his material class consciousness, which distorts the way one sees the world, how exactly did Marx and Engels manage to transcend their class consciousness?

Both were members of the bourgeoisie — though one a pauper and the other independently wealthy — and yet they held the same basic philosophy. And they thought that philosophy represented the proper viewpoint of the proletariat. If they could transcend their class consciousness, how could they claim that no one else could?

AN ARGUMENT FROM A FALSE PREMISE

Besides the self-refuting foundations of Marx’s theory is its abysmal economics. The prediction Marx and Engels made rests on a false central premise. The mistake wasn’t unique to them. For centuries, economists and philosophers were confused about economic value.3 They thought that how much it costs to produce something determines how much it is worth.

But this is clearly wrong; even Marx’s loyal followers quickly dispensed with this theory — though to this day they haven’t shaken it off.

Think of a real-estate developer who buys a plot of land and plans to build ten new houses on it, each a different color. He then hires construction workers and pays them all twenty dollars an hour. One of the houses, a pink house, takes ten slow laborers twelve months to build, while another house, a yellow house, gets put together by three men in a month. So, the pink house cost much more to build than the yellow house. For the developer to meet his costs, then, he’ll have to charge far more for the pink house than for the yellow house.

Let’s say it cost him $500,000 to produce the pink house, but only $200,000 to build the yellow house. So, the pink house will be worth more than the yellow house, right?

Wrong. The fact that it took more labor to build the pink house doesn’t mean that anyone will prefer the pink house over the yellow house. In truth, the developer failed to gauge the market properly. He made a mistake by building a house that no one wants, at least not for $500,000. His cost exceeded the economic value of the house. How does he find out what the house is worth? Well, following the trusty link between supply and demand, he can keep lowering the price until he finds a buyer. If at some point he finds someone who will pay $200,000 for the house, he’s discovered roughly what it’s worth. That’s because the economic value of something is determined by how much someone is willing to give up to get it.

Of course, labor often adds value to a product. But equipment, investment money, creative input, choice of location, and other factors all add value — but only if they produce something people want at a price someone will pay. Someone can dig a ditch in a field until his hands are raw, and then fill it in again, without making anything that anyone wants. In that case, there’s a lot of labor, but no economic value. The refilled hole is still worthless.

This may have been Marx’s biggest blunder, since his prophecy that “capitalism” would destroy itself hinged on this labor theory of value.4 Without his definition of value, however, his argument collapses. If there’s competition for labor, then the workers have received roughly what their labor is worth, and what they agreed to in a contract. The factory owner wisely has combined their labor with his resources. He then markets and sells the goods for more than they cost to produce but not more than others will freely pay. He’s rewarded with profit for his entrepreneurial effort. There’s no injustice here, no exploitation, and no contradiction that must lead to class warfare and revolution.

Even in Marx’s lifetime, his prophecies clashed with reality. He spent his later years in England writing but never completing his masterwork, Das Kapital (German: Capital). And while he scribbled away in his study, laborers’ wages in England were rising, not falling.5 This happened because the labor of a construction worker with access to a tractor is worth far more than the same worker with a shovel — no matter who owns the tractor or the shovel. Marx’s theory blinded him to this obvious fact.

WHAT REALLY HAPPENED

When a communist revolution inspired by Marx finally succeeded in Russia in 1917, it didn’t happen according to Marx’s prediction. The bloody coup was led by revolutionary and politician Vladimir Lenin (1870–1924), and other intellectuals in an agrarian culture that had little history with either democracy or industrial capitalism. “Communism,” as Harvard historian Richard Pipes has put it, “did not come to Russia as the result of a popular uprising: it was imposed on her from above by a small minority hiding behind democratic slogans.”6 This was the pattern of communist revolutions throughout the twentieth century.

Lenin’s despotism was followed by Joseph Stalin’s (1878–1953), whose Communist Party led the Soviet Union from the mid-1920s until 1953 and whose policies destroyed the livelihoods of industrial workers and created a forced famine in 1932 and 1933 that killed millions of peasants. Combined with various purges of Communist Party officials, Stalin orchestrated the largest-scale massacre of a domestic population in history. At its height in 1937 and 1938, there were on average 1,000 political executions per day, not including the countless millions sent to labor camps.7

Such tragedy was not the exception but the rule for other communist experiments in the twentieth century. Whatever Marx expected, revolutions never sprang up in advanced industrial societies where there was a strong rule of law, but in poor agrarian cultures with career tracks for despots.

In the 1990s, a group of scholars documented the total communist death toll across all countries. In their Black Book of Communism (1997), they estimate conservatively that between 85 million and 100 million human beings lost their lives to communist experiments in the twentieth century.8 Never has an idea had such catastrophic consequences.

 

FROM VENEZUELA TO VIRGINIA?

MARXISM REBRANDED AS SOCIALISM TODAY

In 2018, the word communism has been dropped like a bad blind date. But Karl Marx is making a comeback, and socialism has been rebranded. By the time Bernie Sanders gave Hillary Clinton a run for her money in 2016, the makeover was complete.

A 2016 Harvard IOP poll found that around one in six young voters identified as socialist, and a whopping one in three said they support socialism.9 Hostility to free enterprise is almost as common on the left as on the right. Many young, confused conservatives now try to show how “woke” they are by denouncing capitalism and even playing footsie with socialism.

No one longs for gulags, of course, but the appeal of socialism lingers. If you point out its sorry history, its new partisans will insist that, say, China under Mao or the Soviet Union under Stalin or Venezuela under Maduro were not true socialism. (No one ever says that about Nazism.)

Probe a bit deeper, and you’ll find few of the people who campaign for socialism know what the word means. They associate it with pleasing mental images. They imagine a peaceful Scandinavian village where everyone has a Volvo in the garage, plenty of (non-GMO) fish and cheese in the pantry, cradle-to-grave health coverage and job security, and two months’ paid vacation every year.

Sorry, no. Socialism refers to an economic system in which private property is abolished, and the “means of production” are owned by the state. The friendlier way of putting that is to say that property is owned “by the people,” though that always means the state. Here’s Merriam-Webster’s dictionary definition: socialism is “a way of organizing a society in which major industries are owned and controlled by the government rather than by individual people and companies.”

Get that definition on the table, link it to Lenin and Stalin, and you’ll find very few takers. Few twentysomethings are gung-ho to have the government take over Apple, Starbucks, Microsoft, Chobani Yogurt, Google, Ben and Jerry’s Ice Cream, or their favorite food trucks and farmers’ markets. Not even “democratic socialist” Bernie Sanders calls for that. He just wants to get ever closer to socialism by way of the ballot box rather than by bullets. Here’s the problem. We all know today that all the communist-orchestrated blood baths of the twentieth century are the grim reminder that ideas have consequences. What many today do not want to admit is that these horrific episodes were and are the fruit of socialism. Any wonder why the Soviet Union called itself the Union of Soviet Socialist Republics?

In sum, “communists,” following Marxist theory, created “socialist” states in the hope of bringing about a future stateless utopia, which they called “communism.” So, proponents of socialism aren’t just misusing the word. They’re ignoring its history and the grim reality to which it refers.10

That’s why we all must be exposed, over and over, to reality — to the monstrous events of Marxist, communist, and socialist history and to economic truths that help explain it. And we must understand how deeply diabolical is the thinking of the man who inspired these events.

Jay W. Richards, PhD, is an assistant research professor in the Busch School of Business at the Catholic University of America. A revised, ten-year anniversary edition of his book Money, Greed, and God was released in spring 2019.

NOTES

  1. Danielle Corcione, “Who Is Karl Marx: Meet the Anti-Capitalist Scholar,” Teen Vogue, May 10, 2018, https://www.teenvogue.com/story/who-is-karl-marx?.
  2. Jason Barker, “Happy Birthday, Karl Marx. You Were Right!” New York Times, April 30, 2018, https://mobile.nytimes.com/2018/04/30/opinion/karl-marx-at-200-influence.html.
  3. Smith leads with this idea of valuing things in terms of labor or cost of production in An Inquiry into the Nature and Causes of the Wealth of Nations, Edwin Cannan (New York: Modern Library, 1994), lix. Nevertheless, the idea was more central to Marx’s thought than to Smith’s.
  4. Marx tried to get around these problems by defining economic value in terms of “socially necessary labor.” This just moves the problem back a step. What is socially necessary? If we say labor is socially necessary if it produces some good or service that someone values, then the labor theory collapses into the “subjective theory” of economic value. So, Marx’s qualification of his labor theory of value, if followed consistently, guts the theory itself.
  5. Richard Pipes, Communism: A History (New York: Modern Library Chronicles, 2003), 17. In England, real income per capita doubled from 1760 to 1860. See Nicholas F. R. Crafts, British Economic Growth during the Industrial Revolution (Oxford: Clarendon Press, 1985). See also the discussion in Thomas Woods, The Church and the Market: A Catholic Defense of the Free Economy (Lanham, MD: Lexington Books, 2005), 169–74.
  6. Pipes, Communism, 38–39.
  7. Pipes, Communism, 67.
  8. Martin Malia, “Foreword: The Uses of Atrocity,” in The Black Book of Communism: Crimes, Terror, Repression, Stephane Courtois et al., trans. Jonathan Murphy an Mark Kramer (Cambridge, MA: Harvard University Press, 1999), x.
  9. Harvard IOP Spring 2016 Poll, “Clinton In Commanding Lead Over Trump among Young Voters, Harvard Youth Poll Finds,” Institute of Politics, April 25, 2016, http://iop.harvard.edu/youth-poll/past/harvard-iop-spring-2016-poll.
  10. Andrew Roberts discusses the confusing usage of “socialism” and “communism” in the post-Soviet world in “The State of Socialism: A Note on Terminology,” Slavic Review 63, no. 2 (Summer 2004).