Friday, July 7, 2017

What is the Case against Marxism in a Nutshell?

That is, what is the case against the actual theory presented by Karl Marx in volume 1 of Capital? This was the only volume of Capital that Marx published in his lifetime, and volume 3 contradicts volume 1 in important respects.

First, we need to know what Marx actually argued in volume 1 of Capital.

The essence of Marx’s theory and his conception of the historical tendency of capitalism is as follows:
(1) Marx had an elaborate labour theory of value on which he founded volume 1 of Capital (see here). Marx understood “value” in the following terms:
(1) the substance of value is abstract socially necessary labour time, which must be defined as a homogeneous unit capable of aggregating and measuring all heterogeneous types of human labour-power (Marx 1906: 45–46);

(2) so therefore value is abstract, socially necessary labour time embodied, crystallised, or materialised in commodities, and

(3) the magnitude of value or quantitative measure of value is the amount of abstract socially necessary labour time, counted in homogeneous units (Marx 1906: 45–46).
Marx also thought that market prices move around and are determined by labour values, since the latter are the equilibrium price anchors for a capitalist system.

(2) capitalism tends to increase the (1) accumulation, (2) concentration (accumulation over time) and (3) centralisation of capital. Capitalism will therefore have a tremendous tendency towards monopoly.

(3) capitalism will tend to destroy more and more capitalists and result in huge centralisation of capital (or monopoly) and reduce even capitalists to the proletarian class;

(4) capitalism will tend to use more and more machines and automation in production resulting in a huge body of unemployed people.

(5) the industrial reserve army of labour (the unemployed) grows and grows, and helps to hold real wages in check (see Chapter 25 of Capital). Even more, Marx thought that a large and growing industrial reserve army is a necessary condition of capitalism: it was a “condition of existence of the capitalist mode of production” (Marx 1906: 646).

(6) the tendency of capitalism is to keep the real wage at a subsistence level, which is the value of the maintenance and reproduction of labour-power (on this, see Chapter 25 of Capital and here). Wages rise and fall around this subsistence level as an equilibrium process;

(7) machines will only increase the intensity, speed and arduousness of work for the proletarians and their misery (see Chapter 15 of volume 1), and also increase the employment of women and children who are paid a lower wage than adult men (although government laws might counter this latter trend to some extent). The adult men are then increasing thrown out of work by machines and women and children replace them with lower wages;

(8) volume 3 of Capital adds to this the tendency of the profit rate to fall, but this mechanism is not invoked in volume 1 as one of the causes of the collapse, and some modern Marxists now dispute just how important the tendency of the falling rate of profit was for the final collapse of capitalism in Marx’s theory, as the emphasis given to this may be more the result of Engels’ tendentious editing of volume 3 of Capital.

(9) eventually almost the whole of society is reduced to the proletarian class with only a tiny handful of monopoly capitalists, who according to Marx “usurp and monopolise all advantages of this process of transformation” (Marx 1906: 836).

(10) the huge and constantly growing class of proletarians, who are kept in poverty with a subsistence wage, are subject to an increasing “mass of misery, oppression, slavery, degradation, [and] exploitation” (Marx 1906: 836). As in the passage of Engels quoted by Marx, the “other classes perish and disappear in the face of Modern Industry” (Marx 1906: 837, n. 1).

(11) finally, the proletarians eventually organise and rebel against capitalism, overthrowing the system.
Now these theories and predictions judged in their totality were not the long-run tendency of capitalism.

Even if a few elements are true (e.g., the increasing use of machines), nevertheless Marx’s vision is a Marxist caricature of capitalism which has been falsified by history.

We can run through the problems and failed predictions of Marxism as follows:
(1) Marx’s labour theory of value is false. The a priori argument for the labour theory of value in volume 1 of Marx’s Capital is a non sequitur and later contradicts itself, as detailed here and here. There are devastating problems with the very concept of a homogeneous unit of abstract, socially necessary labour time and serious empirical problems with the theory, as I show here. The very concept, as Marx defines it, cannot be accepted or defended as coherent or meaningful, and is contrary to the empirical evidence. The labour theory does not explain price determination (for how most prices are actually determined, see here), and the theory of price determination in volume 3 of Capital is inconsistent with that in volume 1. See here.

(2) the tendency to monopoly has its limits even in capitalism, and the extreme and increasing degree of monopoly as predicted by Marx goes well beyond anything observed in real world capitalism;

(3) the size of the working class eventually stabilised and society was swelled by a growing and prosperous middle class and social mobility. Unemployment rates in capitalism are simply a cyclical result of the business cycle: even in the 19th century, unemployment rates did not grow and grow in the long run, as Marx’s theory predicts, but normally simply moved around a point somewhat above full employment, as John Maynard Keynes pointed out:
“our actual experience … [sc. is] that we oscillate, avoiding the gravest extremes of fluctuation in employment and in prices in both directions, round an intermediate position appreciably below full employment and appreciably above the minimum employment a decline below which would endanger life.”
Keynes, J. M. 1936. General Theory of Employment, Interest, and Money , Chapter 18.
https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch18.htm
(4) Marx thought that the large industrial reserve army is a necessary consequence and necessary condition of capitalism, but this is incorrect. In the Keynesian era of full employment, where there was very low unemployment and indeed labour scarcity in the advanced capitalist world, but capitalism continued and thrived – indeed we now call it the “Golden Age” of capitalism.

(5) the long-run tendency of capitalism, even in the 19th century, was to massively increase the real wage, which has soared above subsistence level, even for workers (see here and here).

(6) the growing real wage and rising disposable income even of workers in capitalism also allowed a massive capacity for production of new commodities and new opportunities for employment (e.g., especially in services and middle class employment), which in turn has helped to overcome technological unemployment.

(7) Marx’s claim that machines, generally speaking, are an unmitigated evil in capitalism whose primary effect is to increase the intensity and speed of work by labourers is an outrageous falsehood – a perversion of history and reality. In reality, machines have, generally speaking, tended to decrease the intensity, difficulty and monotony of human labour and often reduced to human labour to lighter work of visual inspection and overseeing of machine work, not physical labour. On this, see here and here. Advanced capitalist nations have also virtually eliminated child labour as well, and in our time have tended to pay women the same hourly wage for the same type of work as men.

(8) highly developed and advanced Western capitalist states like Britain and the US proved the most resistant to communism and Marxism (contrary to Marx’s theory), and when communist revolutions broke out it was in backward Russia and China. Even the communist outbreaks in Germany and Italy at the end of the First World War were more the result of the collapse of those nations under the strain of war, and not in line with the vision Marx had predicted (as I noted here).
In the Keynesian era of full employment from 1946 to 1973, mixed economy capitalism produced a golden age.

Of course, since the 1970s we have entered a a disastrous and regressive era of Neoliberal economics, but, even so, the consequences of that Neoliberalism are not in line with all of the predictions of Marxism as listed above.

The end of the Keynesian period and the return to revived neoclassical theories from the 1970s brought with it a return to lower growth, higher unemployment, stagnating real wages, and higher income inequality, but, above all, a transnational globalised neoliberal capitalism which has shipped a great deal of Western manufacturing and jobs to the Third World, and allowed legal and illegal Third World mass immigration into the West to lower wage costs, displace native workers and even replace populations.

To the extent that early Marxists dealt with issues of immigration and open borders, many welcomed it.

Engels in The Principles of Communism (written in 1847) welcomed the destruction and erasure of ethnic and national groups:
“What will be the attitude of communism to existing nationalities?

The nationalities of the peoples associating themselves in accordance with the principle of community will be compelled to mingle with each other as a result of this association and thereby to dissolve themselves, just as the various estate and class distinctions must disappear through the abolition of their basis, private property.”
https://www.marxists.org/archive/marx/works/1847/11/prin-com.htm
Lenin saw open borders as “progressive”:
“There can be no doubt that dire poverty alone compels people to abandon their native land, and that the capitalists exploit the immigrant workers in the most shameless manner. But only reactionaries can shut their eyes to the progressive significance of this modern migration of nations. Emancipation from the yoke of capital is impossible without the further development of capitalism, and without the class struggle that is based on it. And it is into this struggle that capitalism is drawing the masses of the working people of the whole world, breaking down the musty, fusty habits of local life, breaking down national barriers and prejudices, uniting workers from all countries in huge factories and mines in America, Germany, and so forth.

America heads the list of countries which import workers. …. The bourgeoisie incites the workers of one nation against those of another in the endeavour to keep them disunited. Class-conscious workers, realising that the break-down of all the national barriers by capitalism is inevitable and progressive, are trying to help to enlighten and organise their fellow-workers from the backward countries.”
V. I. Lenin, “Capitalism and Workers’ Immigration,” Za Pravdu No. 22, October 29, 1913.
https://www.marxists.org/archive/lenin/works/1913/oct/29.htm
So early Marxists saw mass immigration and the destruction of national differences as “progressive” and thought that once people were been mixed up into multicultural or multi-ethnic states, this will create a huge class-conscious proletarian movement, which would then overthrow capitalism. This was yet another Marxist delusion.

Instead, unending Third World mass immigration means the dispossession of the people of the Western world, the Islamisation of our societies, the transformation of our nations into dysfunctional, Balkanised areas with rent-seeking nepotistic and mutually hostile ethnic and religious groups fighting for control of the state.

The deteriorating plight of Western workers and even segments of the middle class by Neoliberalism, the Islamisation of our societies, and Third World immigration has not produced any renewed Marxist or Communist movements of any political importance in the First World.

Rather, more and more people have reacted with increased support for nationalist and protectionist conservatives, and Marxists and Communists – where they still exist – militantly support the disastrous mass immigration policies that more and more people hate and reject.

In particular, modern Marxists are mired in irrational regressive left and Cultural Leftist delusions, such as Third Wave feminism, the idea that all cultures are equal and the nonsense that mass immigration is always a positive force.

That is why Marxism is destined for the dustbin of history.

BIBLIOGRAPHY
Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

10 comments:

  1. Isn't the marxist theory of prices and mark-up pricing fairly similar? In the marxist theory of prices, prices represent the underlying labor costs, with capitalists taking a cut as surplus value. In mark-up pricing, prices represent underlying costs plus a mark-up for profit. Seems fairly similar to me. The major difference would be that in the marxist theory, all costs basically reduce to labor costs, while this isn't the case in mark-up pricing (i think).

    ReplyDelete
  2. It isn’t the state that will “wither away”, it’s the dominance of Finance. And that is why the natural philosophical concept of grace as in monetary and economic Gifting is the new paradigm necessary to be integrated into the debt based money and digital pricing systems. And of course all of the other aspects of that concept will apply to and will need to be aligned with every other facet of economic theory and regulation thereof….as has always been the case with a paradigm change, i.e. everything adapts to the new paradigm…not the other way around.

    To reject Wisdomics-Gracenomics is to have absent or incomplete mental integrations likely on several subjects/bodies of knowledge. Sorry, grace is complete integration and continuous integrating, and the rational consideration of morals, i.e. ethics.

    ReplyDelete
  3. Interesting article! Two concerns arise for me and I am wondering how you would respond to them.

    Describing Marx's theory of value you say:

    the substance of value is abstract socially necessary labour time, which must be defined as a homogeneous unit capable of aggregating and measuring all heterogeneous types of human labour-power

    You respond, saying:

    There are devastating problems with the very concept of a homogeneous unit of abstract, socially necessary labour time and serious empirical problems with the theory, as I show here. The very concept, as Marx defines it, cannot be accepted or defended as coherent or meaningful, and is contrary to the empirical evidence.

    But in defining the units he would use in The General Theory Keynes wrote:

    In dealing with the theory of employment I propose, therefore, to make use of only two fundamental units of quantity, namely, quantities of money-value and quantities of employment. The first of these is strictly homogeneous, and the second can be made so.

    So Keynes, like Marx, uses "a homogeneous unit capable of aggregating and measuring all heterogeneous types of human labour-power".

    Thinking along similar lines, Adam Smith wrote:

    If the one species of labour should be more severe than the other, some allowance will naturally be made for this superior hardship; and the produce of one hour's labour in the one way may frequently exchange for that of two hours labour in the other.

    Here is my question: If Marx's view is unacceptable, are the views of Keynes and Smith also unacceptable? Or if their views are acceptable, why is Marx's not?


    My second concern arises as your description of the problem continues:

    The labour theory does not explain price determination (for how most prices are actually determined, see here), and the theory of price determination in volume 3 of Capital is inconsistent with that in volume 1.

    I followed the link and see that you say

    Mark-up prices are set ... on the basis of (1) total average unit costs plus (2) a profit mark-up

    I agree with carlninja1: Seems fairly similar to me.

    I understand that prices vary with respect to costs. Still, it seems that costs create a dividing line that separates profit from loss. I think Marx's theory of value, and Smith's, are too readily dismissed.

    ReplyDelete
  4. Integrate the truths, workabilities and highest ethical considerations of Keynes, Marx and Smith. When in doubt integrate!...and keep on integrating and you'll end up with economic wisdom.

    ReplyDelete
  5. Marx was right when he argued that the industrial reserve army of labour (the unemployed) grows and grows, and helps to hold real wages in check. The U.S. keeps an intentional 5-6 percent unemployment rate, part of what Milton Friedman calls "the natural rate of unemployment." Whenever unemployment falls below that, the economy starts "overheating," or developing a bad case of inflation. To combat this, the Federal Reserve tightens the money supply, which lowers inflation but raises unemployment back to 5-6 percent. What this means is that there will always be more workers than jobs, and workers have to compete for those jobs, accepting lower wages to get them.

    ReplyDelete
  6. Arguing over the true points and fallacies of economic theories is largely irrelevant once it is realized that continuous borrowing is REQUIRED in order to keep the economy's nose above water. The actual problem is with the money system and its enforcement of its paradigms of Debt and Loan Only. And this is why monetary Gifting intelligently integrated/saturated into the economy is the new paradigm. Guys like Steve Keen and Michael Hudson, and people like Ellen Brown all recommend policies and reforms that perfectly echo and reflect individual fragmentary aspects of the concept behind the new paradigm of Gifting and so are not fully aware of the concept itself. Their investigative perspective is only from economics and is only about reform. Being educated on economics largely by Keen and integrating my adult studies of philosophy and the world's wisdom traditions into the analysis has enabled me to fully flesh out the primary concept behind the new paradigm and develop and extend the where, when and how of the specific policies that will end Finance's current tyrannically dominating paradigms and so free both the individual and enterprise as well as the entirety of profit making systems.

    ReplyDelete
  7. We met the underlying growth of unemployment with world wars, the 8-hour working day, and jobsworthism. Free consumption doesn't seem to mop up unemployment alone and in future I believe maintaining full employment will require compulsory consumption.

    ReplyDelete
  8. The labour theory of value seems sentimental to me at a time when people are not in touch with the hands that feed them.

    I suppose there's Fairtrade and organic where the emotions of the consumer provide pity pennies for labour. And I suppose there's danger money in jobs of superior hardship, but you're not being paid to face the danger, you're being paid because no one else will.

    ReplyDelete
  9. https://ianwrightsite.wordpress.com/2017/05/19/just-what-is-a-labour-value-anyway/
    https://ianwrightsite.files.wordpress.com/2017/04/general-theory-labour-value2.pdf
    https://ianwrightsite.wordpress.com/2017/05/19/just-what-is-a-labour-value-anyway/
    https://ianwrightsite.wordpress.com/
    It seems to me that Ian Wright has solved the main problems you mentioned...

    ReplyDelete
  10. "the size of the working class eventually stabilised and society was swelled by a growing and prosperous middle class and social mobility."
    -------------------------------

    In pre-industrial states, the most part of the people was engaged in agriculture. In today's United Kingdom, for example, less than 1% of the people is so engaged. This does not say that the UK has found how to do live without food but it says there is a huge increase in agricultural productivity. It is similar with industrial production: a smaller % of the people must work in manufacturing to produce a given sum of output. The idea that the manufacturing disappeared speaks of a European or North American aspect. What has in fact happened is that the Western European industrial nations now import industrial products from Asian nations. Although manufacturing labor may be going away in one part of the world it is coming in another.

    ReplyDelete