Marxism/Socialism... Introduction

Copyright ©2018 by George Reisman. All rights reserved, except that this post may be reproduced and distributed electronically, but only in full, including graphic(s), and with notification to the author at greisman1937@gmail.com.

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Introduction

On April 30 of this year [2018], The New York Times ran an op-ed piece titled “Happy Birthday, Karl Marx. You Were Right!”[1] In view of the fact that the implementation of Marx’s philosophy in the Soviet Union and in Communist China resulted in general economic chaos, including shortages, rationing, interminable waiting lines (14 hours a week just to buy food), and multiple families having to live in the same apartment, plus forced labor, concentration camps, show trials and periodic purges to shift the blame for it all, a reign of terror, famines, and as many as 62 million murders in the Soviet Union and 76 million in Communist China (including those killed by the government-caused famines)[2]—in view of all this, congratulating Marx on being right boggles the mind. Marx could be right only if one’s standard of right was human misery and death. Only someone utterly depraved could make such a statement. Only an utterly depraved, despicable newspaper could endorse such a statement, and the feather-weight rationalizations offered in support of it, by printing the piece.

In every essential respect, the philosophy of Marxism/Socialism is a philosophy designed for sociopaths—for people who attempt to appear merely as seeking to do good, by posturing as friends of the poor and of humanity at large, but who have no respect for the individual rights of others, who have no awareness that others have independent minds and think and plan on their own initiative, who denounce such thinking and planning as “anarchy” (an “anarchy of production”) and try to squelch it, who regard others as mere objects to be willingly or unwillingly manipulated in the achievement of the Marxists’/Socialists’ grand plans for the human race, and whose response to the suffering and deaths of millions is along the lines of “to make an omelet, you have to break some eggs.” Marxism/Socialism is a philosophy for the depraved, for those of a warped intellectual and moral capacity and thus capable of appearing now as morons and now as murderers. It is a philosophy designed for a special breed of such vermin: for those who, despite often thinking at the level of morons, nevertheless believe that they are more intelligent than other people, so much more intelligent in fact, that they know better how to run other people’s lives than those other people themselves do and are entitled to use force to impose their will on them. Marxism/Socialism is the philosophy of a breed of mental cases whose ignorance is exceeded only by its arrogance and viciousness.

The Times’ endorsement of Marx was not an isolated event. In June, a New York State Democratic congressional primary was won by a member of the Democratic Socialists of America, an organization that has grown rapidly since the presidential candidacy of the self-described socialist Sen. Bernie Sanders. Sanders’ candidacy has been followed by a resurgence of socialism both on college campuses and in the Democratic Party. It has gone so far in the Democratic Party that former FBI Director James Comey, a current supporter of the Democrats, has believed it necessary to tweet, “Democrats, please, please don’t lose your minds and rush to the socialist left.”

The resurgence of Marxist/Socialist ideas should not be surprising. Despite the fall of Communist regimes around the world, the essential ideas of Marxism/Socialism remained, and still remain, largely untouched and unchallenged. These ideas pertain to the relationship between capitalists and wage earners, and they are accepted by the great majority of people in the United States and throughout the world.

They are accepted not as being descriptive of the way conditions actually are in the United States or in any other advanced country of the present day, but as descriptive of the way conditions would be in the absence of major government intervention. And they are accepted as both descriptive and explanatory of the way conditions were in the nineteenth century.

Thus, people believe that in the absence of government intervention in the form of pro-union, minimum-wage, maximum-hours, and child-labor legislation, and laws regulating working conditions, the capitalists, in their greedy pursuit of profits, would drive wages down to, or even below, minimum physical subsistence, lengthen the hours of work to the maximum possible, force small children to work in factories and mines, and make working conditions unbearable for all. All that allegedly stands in the way of this nightmare-world ready to be unleashed by the unrestricted operation of capitalism and the profit motive is legislation inspired by Marxism/Socialism. This view of things appears to be held¸ and to have been held for more than a century, by virtually all Democrats and perhaps half or more of the Republicans.

The refutation of these and many other major errors about the nature of capitalism, along with a demonstration of the destructive and totalitarian nature of socialism, is the subject of this essay. To connect these remarks to the title of my essay, let me say that Marxism/Socialism is a philosophy conceived in gross error and ignorance about the nature of capitalism, above all about the nature of the relationship between capitalists, profits, and wages. Socialism is little more than a violent rejection of capitalism, based on this combination of errors and ignorance, and which, once having managed to destroy capitalism, results in economic chaos, enslavement, terror, and mass murder. Socialism and its consequences can be likened to the assault of a barbarian tribe become enraged at the relative prosperity of a civilized land. After destroying the fields, the livestock, the roads, and the aqueducts of the civilized land, it finds itself with nothing but a few remaining scraps over which its members kill one another. That is the essential situation of today’s socialist barbarians, inspired by Marx to hate capitalists and the civilization that they have built.

What the socialist barbarians destroy is private ownership of the means of production, the profit motive, private saving and capital accumulation, competition, and the price system. In destroying them, these barbarians have no idea that in doing so they are destroying the foundations of material civilization, in which they have shared and could continue to share. It is the purpose of this essay to teach those of them that both know how to read and have not yet reached the point of burning the writings they fear, the actual nature of capitalism and of Marxism/Socialism, in the hope that they will then become defenders, rather than destroyers, of capitalist civilization.

Next Post: I. 1. The Essential Nature of Socialism: The Need for Armed Robbery to Establish It

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[1] See https://nyti.ms/2r9pP4k.

[2] R. J. Rummel, Death By Government (New Brunswick, N.J., Transaction Publishers, 1994), n. 1.

Comments in Response to Marxism-Inspired Article in New York Times

The main article on page one of today’s (February 10, 2014) New York Times is inspired by Marxism. The article attempts to deny that raising wages reduces employment. The substance of its denial is the mere fact that employers make this claim. The Times’ position is that if capitalists claim something, it can’t be true—because it is capitalists who claim it. The Times and its staff are wedded to the proposition that capitalism is a system functioning exclusively in the interests of a handful of capitalist exploiters and against the interests of the overwhelming majority of mankind (think of the “1%” vs. the “99%,” which is the current popularization of this dogma). This belief is assumed to be true beyond any possible question and any attempt to challenge it, it is believed, can only reflect dishonesty on the part of whoever dares to do so and should immediately be ignored as soon as the slightest connection can be found to the interests of capitalists.

I have tweeted on the article on Twitter.

More importantly, I’ve managed to get The Times to publish two comments of mine relevant to the article. My comments appear on The Times website, accompanying the online version of the article. Each comment can be found by clicking on its title.

My First Comment that can be found on The New York Times website:

One of the most fundamental principles of economics is that, other things being equal, the higher is the price, the lower is the quantity demanded. Applied to wages, this means that, other things being equal, the higher is the wage, the smaller is the number of workers employed.

The truth of these propositions is not diminished in any way by the fact that interested parties use them. In this case the interested parties are using a scientific truth, just as a patient with an interest in saving his life relies on the scientific truths established by medical science.

Empirical studies showing wage increases without decreases in employment, indeed, wage increases accompanied by actual increases in employment, do not invalidate the fact price (wage) and quantity demanded are inversely related. The relationship holds OTHER THINGS BEING EQUAL. If over the same period of time that wages rise, the quantity of money and volume of spending in the economic system also rise, the same or a larger number of workers can be employed. However, if their wages did not rise, or rose by less, the number of workers employed would have increased by still more. In this case, the unemployment that results from a higher wage is to be understood as being in comparison with the greater amount of employment that would have existed in the absence of the wage increase.
A fundamental fact to keep in mind is that any given amount of spending can buy more the lower are prices/wages. This is a fact of arithmetic.

My Second Comment that can be found on TheNew York Times website:

Whoever is concerned with raising the standard of living of the average wage earner needs to realize that that standard of living is not determined by the height of the worker’s money wages. What it is determined by is his wages RELATIVE TO THE PRICES he must pay as a consumer. Before the introduction of the Euro, every Italian worker earned millions every year—millions of almost worthless Lira. Despite being multi-millionaires, the standard of living of Italian workers was very low, because prices were extremely high.

The standard of living of all workers taken together is simply not increased by increasing their money wages. What increases money wages across the board is basically just an increase in the quantity of money and volume of spending in the economic system. But that same increase operates equally to raise prices, thereby preventing any rise in the general standard of living.

What allows the workers’ standard of living to rise is improvements in the output per worker. The same number of workers, or a larger number of workers, each on average producing more, implies an increase in the supply of consumers’ goods relative to the supply of labor, and thus, as far as it goes, a fall in prices relative to wages.

However counterintuitive it may be, the rise in the workers' standard of living comes about not by virtue of the workers earning more money, but by virtue of the rise in output per worker holding the rise in prices below the rise in wages.

The Fundamental Obstacles to Economic Recovery: Marxism and Keynesianism

In a previous article, I explained how falling prices, far from being deflation, are actually the antidote to deflation. They are the antidote, I explained, because they enable the reduced amount of spending that deflation entails to buy as much as did the previously larger amount of spending that took place in the economic system prior to the deflation.

Despite the fact that the freedom of prices and wages to fall is the simple and obvious way to achieve economic recovery, two fundamental obstacles stand in the way. One is the exploitation theory of Karl Marx. The other is the doctrine of unemployment equilibrium, which was propounded by Lord Keynes.

According to Marxism, any freedom of wages to fall is a freedom for capitalists to intensify the exploitation of labor and to drive wages to or even below the level of minimum subsistence. This dire outcome can allegedly be prevented only by government interference in the form of minimum-wage and pro-union legislation. Such legislation, of course, makes reductions in wages simply illegal in all those instances in which the legal minimum wage would have to be breached. It also makes reductions in wages illegal in all those cases in which carrying them out depends on the ability to replace union workers with non-union workers in defiance of existing laws or government regulations. The influence of labor unions on wages pervades the economic system, with government protection of labor unions serving to prevent wages from falling even in companies and industries in which there are no unions. This is because non-union employers must pay wages fairly close to what union workers receive lest their workers too decide to unionize. In that case, the firms would be faced not only with having to pay union wages but also with all of the inefficiencies caused by union work rules.

The Keynesian unemployment equilibrium doctrine claims that it would make no difference even if wages and prices were totally free to fall. In that case, say the Keynesians, all that would happen is that total spending in the economic system would fall in proportion to the fall in wages and prices.

Thus, say the Keynesians, if, in response to an economy-wide fall in total spending of, say, 10 percent, wages and prices also fell by 10 percent, then instead of 90 percent of the original total spending now buying as much as did the original spending, total spending would fall by a further 10 percent. As a result, say the Keynesians, no additional goods or services whatever would be bought; all that would allegedly be accomplished is to make the deflation worse than before, as sales revenues and incomes throughout the economic system fell still further.

In sum, while the influence of Marxism stands directly in the path of a fall in wage rates and prices, by blocking its way with laws and threats, Keynesianism aims to prevent any attempt to overcome these obstacles by allegedly demonstrating the futility and harm of doing so.

Both doctrines are fundamental obstacles in the way of economic recovery and must be deprived of influence over public opinion in order for economic recovery to take place. The prerequisite of this necessary change in public opinion is the existence of a powerful, demonstration of the utter fallaciousness of these doctrines that at the same time proves that a free market is the foundation both of full employment and of progressively rising real wages.

Happily, this demonstration already exists, in full detail. It can be found in my book Capitalism: A Treatise on Economics, in the 269 pages that comprise Chapters 11, 13-15, and 18, which are respectively titled “The Division of Labor and the Concept of Productive Activity,” “Productionism, Say’s Law, and Unemployment,” “The Productivity Theory of Wages,” “Aggregate Production, Aggregate Spending, and the Role of Saving in Spending,” and “Keynesianism: a Critique.”


Copyright © 2009, by George Reisman. George Reisman, Ph.D. is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. He is also a Senior Fellow at the Goldwater Institute. His web site is www.capitalism.net and his blog is www.georgereisman.com/blog/. A pdf replica of his book can be downloaded to the reader’s hard drive simply by clicking on the book’s title, above, and then saving the file when it appears on the screen.