Tuesday, May 24, 2016

Karl Marx's Theory of the 'Injustice' of Capitalism

Richard Ebeling emails:

Dear Bob,

I have a new article on the "Capitalism Magazine" website on, "Karl Marx's Theory of the 'Injustice' of Capitalism."

In case you forgot to put it on your calendar, May 5th was Karl Marx's birthday. Bernie Sander's run for the White House in the Democratic Party primaries has breathed new life into the socialist "ideal." But it worth remembering the fundamental errors and disastrous consequences from the ideas of the leading advocate of socialism and communism over the last 200 hundred years.

Marx accused the capitalist system of being based on exploitation of the workers through capitalists expropriating a portion of the value of what they produced as their own ill-gotten profits. But not long after Marx's death in the 1880s, the Austrian Economist, Eugen von Boehm-Bawerk showed conclusively that Marx had completely misunderstood the role of profit and interest in the competitive market system, a system that in fact improves the conditions of salaried workers in society and pays them the value of their contributions to the production processes.

After the brutal and murderous experiences of socialism-in-practice in the 20th century, many on "the left" have attempted to protect Marx from the stain of its real world consequences by claiming that all these results were not what Marx "really meant" or wanted. But a careful and straight-forwarded reading of his writings demonstrates that all of those worst features of communist dictatorships and socialist central planning were exactly what Marx proposed and advocated.

Finally, there was a "good" or better side to Karl Marx, the Marx of 1842, who wrote newspaper articles arguing that communism was both impracticable  and undesirable. If only that was the Marx that had prevailed, rather than the Marx who turned into a socialist just a few years later.



1 comment:

  1. ─ "The Austrian economist, Eugen von Boehm-Bawerk, demonstrated that Marx had confused 'profit' with 'interest.' " ─

    I recently engaged a Marxian in the comments section of a Facebook page managed by a free-marketer from Mexico. He kept insisting that in a capitalist economy, the average rate of profit of capital tends to fall and thus cannot be sustained and then challenged me to demonstrate the contrary. Of course I kept telling him many times that Marx was confusing 'profit' with 'interest' just like Bohm-Bawerk had shown so elegantly. I also told him that Capital does NOT return profit, but rather it returns INTEREST. But it was like talking to a wall.

    ─ The 'gain' received by employers over their costs of production, even in long-run equilibrium, was the implicit interest for having 'waited' for the product to be finished and sold ─

    It can be argued that the greater benefit is for the WORKER because he or she is paid WAGES far in advance of the actual sale of the production, thus assuring steady income. The VALUE the Capitalist adds is by lending the worker the tools and capital to make the worker more PRODUCTIVE in order to produce the goods the worker wants, while getting paid wages in the meantime. I told this Marxian "The advantage for the worker is that he gets paid NOW, IMMEDIATELY, the benefit from the future sale of the product without the risk of the sale, the wage being the final product less the discount price which is the interest rate. It is the capitalist who assumes all the risks that the worker avoids."

    Again, it was like talking to a wall.