Exploring the Birth of Marxism in the Shadow of Capitalism
Written on
Chapter 1: The Utopians and Their Challenge to Capitalism
In the previous discussion, we examined Robert Owen, a prominent Utopian who emerged to contest capitalism amidst the turmoil caused by industrialization. A more notable critique, which continues to resonate today, originated from Karl Marx and Friedrich Engels, the latter being a cotton manufacturer himself, through their 1848 work, the Communist Manifesto.
The Manifesto contained numerous misconceptions that reflected the limited economic understanding of that era. David Ricardo significantly advanced modern economics by introducing the concept of comparative advantage, illustrating how trade benefits everyone involved when each party specializes in what they do best. Specialization leads to an increase in overall production, ensuring that all parties are better off than if they were self-sufficient.
Despite this, Ricardo viewed the economy as an ongoing conflict among the "factors of production"—land, labor, and capital. Today, we recognize that trade fosters collaboration and mutual benefits rather than a zero-sum game. Yet, this notion of a fixed economic pie played a crucial role in the foundation of Marxism.
Thomas Malthus, a prominent figure advocating the fixed-pie view, believed that population growth would inevitably outpace production capabilities. Although he was accurate in his observations at the time of writing in 1798, he failed to grasp capitalism's capacity for dramatically increasing production even with unchanged resources.
Another significant misconception adopted by Marxism was the labor theory of value. Both Ricardo and Adam Smith, integral figures in what is now termed the Classical School of economics, subscribed to this theory, which was eventually dismissed. Contemporary understanding recognizes that goods result from a combination of land (or natural resources), labor, capital, and entrepreneurship, each of which must receive a return to justify production. The labor theory suggested that the value of a good was entirely dependent on the labor invested in its creation. Thus, an item taking two hours to produce should logically command twice the price of one taking just one hour.
If this were indeed accurate, it becomes evident how Marx and Engels conceived the idea of labor exploitation—however, we now understand that a product's price is determined by the dynamics of supply and demand, not merely the labor costs involved.
Marx and Engels: Ideological Architects
Although Engels is less recognized today, his disdain for capitalism was as profound as Marx's. Born into privilege as the son of a successful German mill owner, Engels was dispatched to England to manage the Manchester branch, with the hope that this experience would temper his revolutionary inclinations. Instead, he perceived the mill workers in Manchester as ripe for insurrection, which fueled much of the moral outrage found in his significant collaboration with Marx, The Communist Manifesto. This short yet impactful document became a critical text in the anti-capitalist movement, serving as a scathing critique of the Manchester cotton industry during the "hungry" 1840s.
The Manifesto delineates two distinct classes: the bourgeoisie, representing the capitalists or business owners, and the proletariat, the workers. According to Marxism, the bourgeoisie wields all power while exploiting the proletariat. This exploitation, as Marx predicted, would eventually culminate in a proletarian revolution, resulting in the abolishment of private property and the establishment of Communism.
However, the actual mechanisms of Communism were described only vaguely. A Communist society would supposedly regulate "general production" and allow individuals the freedom to pursue various activities throughout the day—such as hunting, fishing, and cattle rearing—without constraints. As noted by economic historian Alexander Gray, Marx may have underestimated the natural instincts of cattle regarding their treatment.
The social upheaval triggered by early industrialization was undoubtedly harsh, reminiscent of contemporary concerns surrounding the rise of AI technology. While it's understandable to harbor resistance against capitalism, as demonstrated by Utopians and Marxists, the Manifesto ultimately lacks depth and intellectual rigor.
A privileged son (Engels) and a self-absorbed intellectual (Marx) crafted a simplistic narrative that sought to place themselves or similar individuals in positions of authority. They distilled Adam Smith's intricate analysis of human nature in The Theory of Moral Sentiments into a binary world defined solely by greedy business owners and exploited workers.
Marx and Engels contended that a revolution was inevitable, yet their writings acknowledged the necessity of force to achieve their ends. The Manifesto states:
"The Communists disdain to conceal their views and aims…They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win…Workers of all lands, unite."
Despite several European revolutions occurring in 1848, they were not influenced by the Manifesto, which was published that same year. Engels's aspiration for a Communist uprising in England also failed to materialize, as real wages for the "proletariat" were on the rise. Contrary to their expectations, the advantages of capitalism overshadowed the challenges posed by early industrialization.
Marx chose to overlook or misinterpret this reality, steadfastly believing in the inevitability of Communism. Unfortunately, as history reveals, their ideas later informed various regimes in the 20th century, resulting in countless deaths.
The legacy of Marxism, particularly as modified by Lenin and Stalin, unleashed a series of social engineering experiments that left scars on the 20th century, from the decaying industrial landscapes of the former Soviet Union to the tragic events in Kampuchea and Cuba's oppressive regime. Yet, despite the disastrous outcomes of Marxism and the remarkable successes of free enterprise, capitalism continues to face vehement criticism.
Conclusion: The Persistence of Marxist Ideals
Although Soviet Communism has collapsed, the immature ideologies of Marx and Engels persist. By the 1950s, their ideas were repackaged in academia as critical theory. However, at its core lies the same simplistic dichotomy of oppressors and the oppressed.
This perspective is evident in critical race theory, which identifies white men as oppressors while categorizing everyone else as oppressed. This worldview, rooted in Marxist thought, fosters a grim perception of reality that often leads to violence and aspirations for revolution that would ultimately place them in power.
It is crucial to challenge collectivist Marxist ideologies with the reality of the mutual benefits of free-market capitalism. We must reject the Malthusian, fixed-pie worldview that pits us against one another in a struggle for scarce resources.
This chapter has explored two significant movements that criticized capitalism. The subsequent chapter will examine Ayn Rand, who is often seen as a champion of capitalism. However, as Foster suggests, her perspectives may also represent a simplistic interpretation of reality that critics of capitalism can leverage.
The video titled "Consequences Matter: Thomas Sowell on 'Social Justice Fallacies'" discusses the implications of social justice theories and critiques their foundational assumptions.