Thoughts on economics and liberty

The great follies of Karl Marx and the socialists

Capitalism or the overall mechanism of freedom, which comprises free markets and democracy, is infinitely better than what Karl Marx (1818–83) portrayed in his 1848 Communist Manifesto. I would like to digress for a moment here and explore this rather interesting and earth-shaking discovery!

In political philosophy, the age of thirty at which Marx wrote his Manifesto is considered very young. Marx was a baby philosopher then; quite immature and unable to plumb the depths of the ambitions for freedom of the human spirit that philosophers who preceded him had first articulated. It can be stated with some confidence that political philosophers should try to gain life experience at that age, not pen inflammatory pieces that over-emphasize their ignorance. Unfortunately, through sheer repetition of the wild claims made by Marx in the Manifesto it appears that his deadly ideology of communism persuaded many people to stop investigating the truth about capitalism. Given the vigour of the Manifesto’s expression, Marxism became the new Gospel for many people, particularly its later avatars of Fabian socialism in India. And so Marx’s followers diligently killed or made poor millions of people for 150 years while at the same time claiming that capitalism was to blame for these deaths and poverty.
But let us look at Marx’s arguments more carefully, though briefly. It may come as a surprise to some of us, but Marx pointed out a number of good things about capitalism in his Manifesto even as he painted a gloomy picture of its allegedly insurmountable shortcomings. Marx said that ‘capitalists’ – a word which to him included industrialists, landlords, shopkeepers and pawnbrokers (but which to me is much narrower, meaning those who understand freedom) – were part of ‘the modern bourgeois society that has sprouted from the ruins of feudal society’. Now, at first blush it would seem that, if nothing else, sprouting from the ruins of feudalism is a step in the right direction. Capitalism was surely on to something! Some other quotations from Marx are noted below, with my comments italicized in brackets:
‘The bourgeoisie cannot exist without constantly revolutionising the instruments of production’ [technological innovation is good]. ‘[It also has] the need of a constantly expanding market for its products’ [this is a competitive and productive endeavour that enhances the wealth of nations].
‘The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation’ [that is a great achievement, to be a civilizing force].
‘The bourgeoisie has […] created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life’ [here’s another important feature of capitalism, though this statement needlessly insults people who may choose, upon having considered various options, to live in rural areas].
In general, we can agree with these parts of Marx’s characterization of capitalism. If so, why did Marx go on to oppose capitalism and want to topple it? Well, what seems to have happened is that after noting its many advances, Marx began to doubt – quite wrongly as it turned out – whether a worker in a capitalist society would ever get to acquire ownership over property. He wrote, ‘we Communists have been reproached with the desire of abolishing the right of personally acquiring property as the fruit of a man’s own labour, which property is alleged to be the groundwork of all personal freedom, activity and independence […] [h]ard-won, self-acquired, self-earned property! […] [D]oes wage-labour create any property for the labourer? Not a bit’ [False!! – this being my heated exclamation of protest, obviously].
Marx actually went wrong by a mile here; off on a complete tangent. He was, for some unknown reason, not aware of the growing evidence of the dramatic improvements in the lot of workers even in incipient capitalist societies. For example, writing about the changes to the conditions of agricultural labourers and factory workers during the early stages of industrialization, the great economic historian, Rondo Cameron,[i] notes, ‘That factory workers received higher wages than either agricultural labourers or workers in domestic industry there can be no doubt’. England also experienced a ‘rapid rise in population during the early stages of industrialisation’. This indicates that relatively better nutrition and sanitary conditions prevailed in urban areas at that time, particularly better access to health. Public health initiatives were also starting to make a significant dent on infant mortality. For instance, in 1847–8 the British Parliament adopted a sanitary code for all of England and Wales excluding London. A few years later, Louis Pasteur of France proved beyond doubt that germs led to disease. Cameron then notes, ‘the general trend of real wages was upward’ at that time. These, then, are the high-level facts of the time of Marx which indicate that rapid scientific and economic advances were taking place exactly when young Marx was hastily jumping to wrong conclusions.
But 100 years of experience then available to Marx was perhaps somewhat mixed. Why don’t we look at the facts prevailing now and see what happens in capitalist societies? In 1848, the theory of freedom and its practice, namely, of democratic free markets, had barely found a foothold. Today we are able to call upon 250 years of experience. Early trends found in Marx’s time have become totally obvious. Today we are able to note unequivocally that the average worker in a capitalist society is much better off than an average worker under any alternative system. There are no two opinions about this fact of life.

In addition, there are great equality incomes at the professional levels. In a modern capitalist society, all occupations pay almost equally well at that level. For example, a good professor and a good plumber earn about the same (both earn above $100,000 in Australia today). That is due to the extremely high productivity of plumbers in these countries who are extensively trained in modern, productive technology. Morarji Desai
 made his first visit abroad in 1958, to Britain, USA and Canada. He found that capitalist societies were very equitable, more so socially. He remarked to Welles Hangen, an American journalist, after his trip, that ‘In your country the manager and the worker sit together without any embarrassment. Many times the worker’s clothes are as good as his boss’s and the car he drives to work is also as good’.[ii] Marx simply did not live long enough to see the long term impacts of capitalism; and like a bad scientist he ignored evidence of the increasing prosperity of workers in capitalist societies in his lifetime.
On the other hand, workers in feudal and socialist society remain pathetically poor, albeit equally.Only the corrupt are rich in such societies. Incomes in capitalist societies are highly unequal, but as we have seen, this moral inequality, in that it is based on justice and voluntary, non-coercive trade. Such inequality is superior and even, arguably, desirable. In this manner, the level of overall morality in a society is perhaps the strongest signal of capitalism. (Now that I think of it, I should have put morality as a key indicator in Chapter 2; but it is implicit in the discussion on the culture of free societies and in the high levels of corruption found in socialist societies.) The main point is that inequality in capitalist societies doesn’t remain fixed over generations as with feudal societies; an unskilled worker’s children can easily become entrepreneurs and prosper through diligence. At the same time, it is not uncommon for a wealthy person’s children to regress into penury.
We have seen that a capitalist society rewards people objectively through the balance of demand and supply for their contributions through the market. Rewards are not dependent on who one’s father was, or on the colour of one’s skin. Bill Gate’s father could have been a ‘lowly’ black cleaner, and it would have mattered not one bit to Bill Gate’s future. He would have still become the richest man in the world and equally respected. Capitalism is a fair system which gives everybody an equal chance to excel and prosper. Everyone can be rich in a free society. And happy.
Indeed, the classification by Marx of the society into classes such as workers and the bourgeoisie is completely unsustainable today. Capitalism has rich texture; it is not uni-dimensional like socialism.In a free society a person can become rich and poor in the same lifetime. And today, managers are a kind of worker; and knowledge workers are a kind of manager. There are no distinctions of class possible today.
These, then, are some of the true facts regarding capitalist societies. Unfortunately, based on his serious misinterpretations, or misrepresentations of the truth, Marx asked workers of the world to revolt against capitalism. He did not recommend making improvements to capitalism through peaceful, voluntary negotiations. He wanted capitalism abolished. He rallied workers: ‘Workers of the world unite; you have nothing to lose but your chains’. According to him, workers needed to divest capitalists of their wealth (through violence, of course), and take charge of productive resources. Marx did not give directions on how the management of factories would change hands. Would the managers – who are also workers, but skilled workers – have to be demoted, and those without such knowledge and ability promoted to lead factories? Was merit to be turned on its head? Whether he wanted it this way or not, that is exactly what happened at least under India’s socialist regime in our public sector undertakings.
Marx’s implicit recommendation was clearly to encourage plunder. Anyone with wealth was now to be game for our envious passions. When discussing this comment about socialist plunder, one of my friends asked me, ‘The rich don’t plunder?’, to which the answer in a free society should be given in the following way: ‘First, to be rich is not a crime. Indeed, profit earned through just means based on persuasion and voluntary exchange, where each party to a trade becomes better off, is philosophically just and eminently moral. It can’t be related to plunder in any way. Plunder requires coercion to be employed. Second, a free society does not assassinate the character generally of all richpersonsas a group.The issue of plunder has to be tested objectively in each individual case. Plunder is a definite crime in a free society and no one is exempt from punishment on being found guilty of plunder. Our inquiries may find that some of the rich have plundered; but perhaps not all have. We may also find that some of the poor have plundered as well; but that not all have. In brief, whoever has plundered must be tried and punished’.
Communists prefer to use force to obtain their objectives. According to that vile communist, Mao Zedong, ‘all political power flows out of the barrel of a gun’.[iii] Nothing could be more abhorrent and revolting, coming from a political leader. Leaders should speak the language of moderation, peace and freedom; not of violence. Such messages of hate and disrespect of life are in gross opposition to the philosophy of freedom. Freedom demands respect for life and everyone’s freedom. Violence is never a part of it. It treats life almost as a sacred thing.
From the time of Marx, capitalism acquired a bad odour about it. In India, Nehru led a crusade against this word. At least two generations of Indians have now been poisoned against capitalism. But we know now, at last, the real truth – that capitalism is an ethical, just and equitable system built on the foundation of freedom and equality of opportunity.

[This is an extract from Breaking Free of Nehru]

[i] Cameron, Rondo, A Concise Economic History of the World, Oxford University Press, New York, 1993, pp.187–9.

[ii] Cited in Hangen’s book, After Nehru, Who?, Rupert Hart-Davis, London, 1963, p.43.

[iii]Madsen, Richard, (1996). Review of David E. Apter and Tony Saich’s book Revolutionary Discourse in Mao’s Republic. Contemporary Sociology. Vol. 25(2). p.187.

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One thought on “The great follies of Karl Marx and the socialists
  1. someone

    > According to that vile communist, Mao Zedong, ‘all political power flows out of the barrel of a gun

    The translation is incorrect.

    The correct one is “State power is created by gun barrels”.

    Mao was just trying to justify the Chinese communist revolution as did many other revolutionaries with their own wars. The author’s arguments seem reasonable until you think a lot more deeply about humanity.


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