Socialized Health Care: The Communist Dream and the Soviet Reality

Socialized Health Care: The Communist Dream and the Soviet Reality

The utopian ideal of equality of circumstances has captured people’s imagination since ancient times. If only everybody could have the same of everything the world would be different. There would be no envy, no crime, no poverty, no greed, and no unhappiness. From Plato to Karl Marx, many thinkers looked to the state for the creation of that heaven on earth. In our own times, this dream has remained alive in the form of the welfare state, and today it shows itself most distinctly in the appeal of government-managed health care.

Isn’t it obvious, many ask, that government can supply medical care more fairly and less expensively than the selfish profit-oriented free market? Let us remind ourselves that in the Soviet Union the road to medical-care hell was paved with the same good intentions. In October 1917, the Marxist dreams of coming to political power came true in Russia. Now that everyone was to be equal in all aspects of their lives, people would no longer die in the streets from illness. Free medical care would be available for all, rather than reserved only for the “greedy rich.”

But what did the Bolsheviks destroy and what did they create?

In Old Russia, medical care was a consumer-oriented business. Doctors’ incomes and their standard of living were totally dependent upon professionalism and reputation in the wider community. Patients decided which doctor to use, which hospital to go to, and which pharmaceutical products to trust. Doctors worked hard to establish their reputation, an important part of which came from providing charity care for the poor. As in the West, all Russian doctors upon graduation from medical school took the Hippocratic Oath, in which they swore never to reject anyone who needed medical assistance—and as a rule they were loyal to their oath.

In Russian urban areas, there were charity hospitals and out-patient care for the poor and their families. In rural areas, peasants would often pay doctors with a chicken, potatoes, bread, or in the form of domestic services—or received their medical treatment for free. Under the private medical system in Old Russia, doctors were able to earn a comfortable living and therefore could afford to be generous in supplying charity services to those who were in need.

Expectations of high income, along with the status of being a member of a respected profession, generated strong competition for acceptance into medical schools. The best were accepted as students, and the most qualified were hired as professors. At the beginning of the 20th century, the quality of Russian medical care and medical research was internationally recognized. Was it a perfect system? Of course not. But contrary to the socialist myth-makers, medical care in Imperial Russia was widely available and provided in a fairly cost-efficient manner. Both the profit motive of the competitive marketplace and the spirit of charity assured the provision of quality medical services throughout Russian society.

This, then, was the system the Bolsheviks wanted to destroy. Unfortunately, many Russian intellectuals, including medical doctors themselves, were infected with the socialist disease. Seeing so much poverty in a still underdeveloped Russia, many doctors turned their back on the free market and came to believe that government management could create a better society through planned equality of living conditions, education, and certainly medical care. Thus, guided by wrong ideas, the members of the medical profession helped to destroy with their own hands a health-care system that, while certainly not perfect, provided people with skilled treatment, regardless of their income or social background.

Equality for All

In 1917, like everything else, medical services were nationalized by the new socialist government. Gradually, small medical practices disappeared and a network of big, factory-like hospitals and out-patient clinics were established all around the country. Everyone was registered in both out-patient clinics and hospitals according to their government-assigned residence. Patient choice was completely taken away by the Soviet State, which took full responsibility for centrally planning each individual’s medical expenses and health care.

With the elimination of private expenditures for health services, the form and amount of medical care were now dependent upon the budgetary priorities of the State. All members of the medical industry were put on low fixed monthly salaries and were mandated to examine and treat an overwhelming daily quota of patients. Medical research became dependent upon inadequate annual budgetary allocations from the government. Doctors’ and nurses’ incomes no longer depended on their professional skills or the number of patients they treated. Total unionization of the medical profession made it practically impossible for anyone to be fired. Without markets and prices determining the value and availability of health care, the government imposed a rationing system for medical services and pharmaceutical products.

Specialized services (mammograms, ultrasounds, and so forth) were available only in a few select hospitals where the doctors were supposed to treat patients as well as participate in research. For example, in the case of brain or cardiovascular surgery and treatment, there were only a few specialized hospitals available in the entire country. People sometimes died waiting in line to be admitted for these treatments.

Medical care became a producer-oriented industry, instead of the consumer-oriented market that it had been in Old Russia. But even the State cannot kill the market, just as the State cannot repeal the laws of God and nature. The market was simply driven “underground,” and thus became the black market. The black-market response to State-rationing occurred immediately. Doctors’ services and pharmaceutical products (both domestic and foreign-made), as well as access to medical-testing equipment, became available for bribes. Unfortunately, only the wealthy elite could afford expensive black-market medical services, while the poor majority could no longer count upon charity.
In the world of “free” medical care in the Soviet Union, people often had to have connections to obtain many of the medicines prescribed by physicians to save their family members and friends. Indifferent and often hostile nurses and orderlies had to be bribed to change a patient’s bedpan or to provide ordinary attention that any American would take for granted during a stay in a hospital.
Hospital wards were crowded and far from antiseptically clean. Anesthetics and basic painkillers were frequently unavailable. The crying of patients in pain could sometimes be heard from outside a hospital by passersby.

Some Are More Equal than Others

Not surprisingly, those in the political elite did not want to be treated in the medical system provided for “the people.” One of the greatest myths about the Soviet Union was its supposed equality for all. No society was so divided into privileged groups and classes as was Soviet society. Where an individual stood in the political hierarchy of the Communist Party and the bureaucratic structure of the socialist economy determined his access to all the essentials as well as the luxuries of life.
Special hospitals were created all around the Soviet Union. These were reserved for the members of the Central Committee of the Communist Party, the Council of Ministers, the local and regional Party elites, and so forth. The “servants of the people,” as a result, received a qualitatively different level of medical care than “the masses.” The privileged few had access not only to Soviet-made drugs and medications but also to Western European and American medicines and equipment, which could never be within the reach of the ordinary “proletarian” patient.

Affirmative Action, Soviet Style

The nature and quality of medical education were affected, as well. Bribes and connections determined both the hiring and admission processes in medical schools. Skills and professionalism mattered very little, and service to the community did not matter at all.

This poor medical care was reinforced by the fact that entrance into higher education in the Soviet Union was dictated by a system of affirmative action that had been introduced shortly after the triumph of the Socialist Revolution in 1917. At first belonging to a social class —worker, peasant, or intellectual—determined the entry quotas into colleges, universities, and technical schools. But the Soviet affirmative action system was soon expanded to include gender and ethnic classifications as well. A young person’s professional and career opportunities were greatly influenced not by his individual merit but by whether he was, for example, a Russian, an Uzbek, a Georgian, a Lithuanian, a Jew, or somebody else. Every class, gender, and ethnic group had its own quota for admission and hiring into institutions of higher learning.

Connections, bribes, class, gender, and ethnicity heavily determined who were admitted into and graduated from medical schools throughout the Soviet Union. Thus the supplies of hospitals, physicians, medical equipment, and pharmaceuticals all became victims of socialist central planning and political priorities just like everything else in the “workers’ paradise.” At the end of the 20th century, Russia was infamous for having one of the worst health-care systems in the world.

In bitter situations, Russians often respond with jokes and anecdotes. In one of them, an American and a Soviet doctor are talking. The American says, “Dear colleague, our profession is imperfect. You treat the patient from one disease and he dies from another.” The Soviet doctor replies, “No, dear colleague, this is not the case with me. Mine die from whatever I treat them.”

It is easy to say that the present system is imperfect and a radical change will make it perfect in a relatively short period of time. But there are always lessons from history from which to learn. Sometimes, your neighbor’s history warns you which path never to follow.

---

Anna Ebeling was born, raised, and educated in the former Soviet Union. Living much of her life in the heart of what Ronald Reagan called “the evil empire,” she experienced first hand the reality of “the workers’ paradise.” Her stories of the absurdities of life in the collectivist utopia are many. Anna met Richard Ebeling in Moscow in May 1991 and married him later that year. Together they joined the defenders of liberty and faced Soviet tanks at the Russian Parliament in Moscow during the attempted hard-line communist coup d’état.

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New Australia & other Socialist/Communist Failures by Benjamin V. Hubbard 1915

New Australia and other Socialist Failures by Benjamin Vestal Hubbard 1915

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Utopian and other Socialists have attempted many times to form communities on the Socialistic principles of common ownership and communistic rules. After trial, all of these have been failures.
Scientific Socialism now claims that Socialism cannot be made successful unless practiced the world over.

This is bad logic under the axiom, "that what is a failure in part will be a failure in total." The following is a list of the Socialist communities that have failed:

France—Commune of 1793, Baboeuf Conspiracy, Saint Simonism, French National Workshops, Paris Commune of 1871, Brest Municipality, the Glassworks of Albi, the Miners' Mine.

Great Britain—Owenism at New Lanark, Orbiston and Tytherby Communities, Labor Colony at Laindon, Labor Colony at Hollesby Bay, Labor Colony at South Oakenden.

American—Nauvoo, 1ll. (New Icaria), the Rappites, New Harmony, Oneida Community, Red Bank Social State, Mount Whitney, Communism in Paraguay, New Australia.

Imperial Failures—Murray River Settlement, Alice River Settlements.

The most notable failure was the community, New Australia, established in Paraguay in 1893, having a total of 450 colonists and being granted by the Paraguan government 450,000 acres of land, one-half heavily timbered, a great part of this timber being valuable hardwoods, which could have been sold at a good price, and rafted down the river by cheap water transportation. The balance of the land was prairie land, excellent for pastures. The colonists were relieved from taxation for a long period of time, and were allowed to make importations free of duty. Each colonist contributed $300 or more to the general fund, and they owned their own ship of 600 tons capacity, together with 2,500 cattle. They were allowed to manage their own colony according to their own laws and without any interference from the Paraguan government, and nothing but bad management and the lack of personal motives stood in the way of their success.

Among other rules they adopted the following:

"Ownership and conduct by the community of all land, tools, industries, production in exchange and distribution. Saving by community of all capital needed by the community; maintenance of children by community; protection, education and general well-being of each individual guaranteed by community. After all this has been done, the balance of the wealth co-operatively produced shall be divided equally between every adult member, without regard to sex, age, office or physical or mental capacity.

"Female suffrage and equality of the sexes in all matters.

"Religion not to be officially recognized by the community."

Inside of two years the colony was disbanded, and those colonists who remained abandoned the idea of Socialism and went back to the individual life.

In the latter part of the colony's existence the children who were under the care of the community for their food, clothing and education were fed three times a day a diet of cornmeal, sweet potatoes and mandoica, making a variety by leaving one of these off every meal.

No timber had been cut by the "comrades" because each was too lazy to do the chopping, and as the 2,500 head of cattle had been sold they were deprived of milk and butter.

Thus the greatest Socialistic settlement ever promoted came to disastrous failure.

The following from the past is a vivid summary of Socialism:

"I have consulted our philosophers, I have perused their books, I have examined their several opinions, I have found them all proud, positive and dogmatizing even in their pretended skepticism, knowing everything, proving nothing, and ridiculing one another, and this is the only point in which they concur, and in which they are right. Daring when they attack, they defend themselves without vigor. If you consider their arguments, they have none but for destruction. Where is the philosopher who, for his own glory, would not willingly deceive the whole human race? Where is he who, in the secret of his heart, proposes any other object than his own distinction? Provided he can raise himself above the commonalty, provided he can eclipse his competitors, he has reached the summit of his ambition. The great thing for him is to think differently from other people. Shun, shun, then, those who, under pretense of explaining nature, sow in the hearts of men the most dispiriting doctrines, whose skepticism is far more affirmative and dogmatical than the decided tone of their adversaries. Under pretense of being themselves the only people enlightened, they imperiously subject us to their magisterial decisions, and would fain palm upon us, for the true causes of things, the unintelligible systems they have erected in their own heads; whilst they overturn, destroy and trample under foot all that mankind reveres, snatch from the afflicted the only comfort left them in their misery, from the rich and great the only curb that can restrain their passions; tear from the heart all remorse of vice, all hopes of virtue; they still boast themselves benefactors of mankind. 'Truth,' they say, 'is never hurtful to man.' I believe that as well as they, and the same, in my opinion, is proof that what they teach is not the truth."—Rousseau, as quoted by Gandolphy in his defense of the Ancient Faith.

The Lost Literature of Socialism

The Lost Literature of Socialism

The literature of socialism is lost only in the sense of not having been read for a very long time. George Watson has been re-reading this literature as a professional literary critic, with strong interests in both political affairs and the history of ideas. Many of his findings are astonishing. Perhaps for readers today the most astonishing of all is that “In the European century that began in the 1840s, from Engels’ article of 1849 down to the death of Hitler, everyone who advocated genocide called himself a socialist and no conservative, liberal, anarchist or independent did anything of the kind.” (The term “genocide” in Watson’s usage is not confined to the extermination only of races or of ethnic groups, but embraces also the liquidation of such other complete human categories as “enemies of the people” and “the Kulaks as a class.”)

Although Watson himself unfortunately never defines the key word “socialism,” he is apparently following throughout the usage of the old British Labour Party. From its foundation, it proclaimed itself a socialist party and stated its aim in Clause IV of its constitution—thereafter printed on every membership card—as being “the public ownership of all the means of production, distribution and exchange.”

Watson distinguishes three periods in the history of this socialist idea. The first, the Age of Conception, runs from the 1840s to the Bolshevik coup of 1917; the second, the Age of Fulfilment, continues until the Communist seizure of power in China in 1949; the third, the Age of Decline, continues until the fall of the Berlin Wall in 1989.

During the Age of Conception, many were attracted to socialism precisely because they already saw it as what Watson calls a “Tory project,” a project necessarily involving rule by an irresponsible elite. Some of these elitists, such as the science fiction writer H.G. Wells and the dramatist Bernard Shaw, lived long enough into the Age of Fulfilment to welcome this aspect of the realization in the USSR of the socialist vision. Before World War I, other socialists, such as the novelist Jack London and the psychologist Havelock Ellis, saw socialism as leading both fortunately and necessarily to the triumph of the white races over the black and the brown.

For those of us born before World War II, the most interesting section of the book is that dealing with the intellectual relations between the teachings of Adolf Hitler and those of Marx and his professed followers among Hitler’s contemporaries. In his autobiography, and in recorded conversations with intimates among his own followers, Hitler said such things as, “I have learned a great deal from Marxism, as I do not hesitate to admit,” that “the whole of National Socialism is based on Marx,” and that without racist commitments his own political movement “would really do nothing more than compete with Marxism on its own ground.”

Hitler was not in these statements saying that he either was or ever had been a Marxist. From his first political activity, he had always been opposed to communism, but that was not because it was socialist, but because it was internationalist. Hitler, although born and raised in Austria, had always been a dedicated German nationalist.

Even those who are aware that Hitler’s party was the National Socialist German Workers’ Party have doubted the sincerity of its socialist professions. This is in part because Hitler, upon coming to power, refrained for tactical reasons from launching an immediate and extensive program of state takeovers of private industries, and in part because these skeptics have not enjoyed the benefits of Watson’s re-readings of the lost literature of socialism.

His chapter on “Marx and the Holocaust” begins by telling us that Rudolf Hoess, commandant of the infamous Auschwitz death camp, recalled in his memoirs that even at the height of the Nazi-Soviet war of 1941-45, his colleagues had respected the socialist example of an exterminatory program based on forced labor. Watson then proceeds to deploy further evidence of Soviet influence on the Nazis and to cite other relevant passages from the works of Marx, Engels, Lenin, and other socialist luminaries, all presenting candidates for or possible methods of genocide. The connection between socialism and genocide could hardly be made any clearer.

From all this, Watson concludes that “it is becoming ever more probable that it was not just the idea of genocide that the Nazis owed to Marx and the Marxists, but its detailed practice too, not excluding camps and gas chambers. The shadow of the socialist idea grows longer and longer.”
Antony Flew is Emeritus Professor of Philosophy, University of Reading, England.

Antony Flew

Antony Flew was an English philosopher. Belonging to the analytic and evidentialist schools of thought, Flew was most notable for his work related to the philosophy of religion. During the course of his career he taught at the universities of Oxford, Aberdeen, Keele and Reading, and at York University in Toronto.

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Birth Rates are at Historic Lows and Here's a Major Reason

Birth Rates are at Historic Lows and Here's a Major Reason

For 100 years, the US government has tracked the birth rate. It is now at historic lows. There are many reasons, but one has to do with the dramatic change in the way society regards the economic value of kids.

To illustrate the point, let’s reflect on the continuing popularity of Anne of Green Gables, the 1908 book by Canadian writer Lucy M. Montgomery. Yes, it is charming, and ridiculously so. It’s beyond me why the new Netflix rendering (Anne with an E) is getting bad reviews. It’s probably because so many people are attached to the book and the myriad previous cinematic renderings. Still, I find the new one delightful in every way, and I’ve been thinking on precisely why.

Before the Progressive Era, children were regarded as aspiring adults with as many responsibilities as they could handle. 

Beyond the solid acting and timeless story of a brilliant orphan growing up and finding her way in the world, the show introduces us into a time gone by. It is set on Prince Edward Island sometime in the late 19th century, before cars, phones, and indoor temperature control. So, sure, that’s different. So is the language and cultural mores.

The Status of Kids 
That’s not what truly strikes us, however. What is dazzling to watch is the completely different relationship between kids and adults that existed then. The status of kids in society was unlike today.
They were aspiring adults and given as many responsibilities as they could handle within their range of competence, which was always shifting in the direction of more and more. 

There was no Department of Labor and Department of Human Resources to "protect" them from living full lives. Kids in those days were regarded as valuable because they were tangibly productive. They worked, gained skills, and produced for their families or otherwise worked for businesses here and there. They were assets. As they gained skills, discipline, and a work ethic, they could become ever more valuable to their custodians and communities. This is a major reason why people wanted them. And the kids, in turn, were socialized to be grateful to their benefactors whether at home or work.

And notice from the story of Anne that a main job of kids in those days was to care for people in their aging years. So kids were valuable on both ends of the life spectrum: as co-workers when the kids are young and then as helpers as their custodians age.

What’s different today? Now kids are mostly a financial cost and defined as such, because the law, educational system, and welfare state make it that way. Oh sure, people still love their kids. Emotionally and spiritually, we speak piously and beautifully of the infinite value of their lives. 
And, of course, everyone agrees. There is a social status that comes with having kids and they can be an entryway to new friend networks. 

And yet. Let’s talk dollars and cents. When considering whether to have kids, people know that they will contribute little to household management, and nothing positive to the bottom line, and then they must consider how much they will have to spend. You can look it up on online cost calculators. For example, if you are married and want two kids in the American South, you are going to spend $732K. That’s a daunting figure, and that’s before you start shelling out for college.

In return for which, they offer...the infinite value of their very existence.

Is it any wonder that the birthrate has fallen to its lowest level in more than 100 years? Yes, there are other reasons having to do with technology and greater economic certainty. Still, if you forcibly reduce the value of anything, and people have any choice over it, they will produce less and less of it. This is precisely what has happened to the status of children over the last century.

Why Would You Want to Be Anne?
How did this happen? Let’s look at the story of Anne.
If you forcibly reduce the value of anything, and people have any choice over it, they will produce less and less of it.

Anne is 13 years old when the story starts. She has lived a very hard life due to circumstances beyond her control. She had lived in the orphanage but gets a new start when a family adopts her, in order to get a obtain a worker who only needs room and board. The family asked for a boy from the orphanage but there was some mix up and they sent a girl. The adoptive family (an aging brother and sister) reluctantly agree to keep her only after she charms them and proves that she can bring productivity to the household. She shows off her skills, among which include her incredible erudition.
It was a much poorer world, obviously, and only the rich kids could afford to be in school full time. Anne was mostly self taught but she loved reading, dreaming, fantasizing, imagining. She read whenever she could, by candlelight, exhausted at the end of the day. And she was brilliant, even without focus or being institutionalized.

A reason this story has riveted children for so many generations comes down to the challenges, opportunities, tragedies, and triumphs she experiences in an exciting, varied, interesting life – which is to say, a life in an economically free society. She was a child in a world that aspired for her to become an adult, and deal with actual adult-like tasks and responsibilities. Yes, that involved schooling but this was not forced and it was not the only purpose of her life. She could even drink wine! 
Back then, kids were not nationalized by the state, their every move controlled by public institutions, and forbidden from working by the government. They were challenged with as many adult responsibilities as they could handle. That Anne works hard, can do anything a boy can do, picks up vast skills, and her path of learning is largely unscripted is a real source of delight for readers and viewers. She proves herself up to the task.

What Changed?
Soon after the book was written, public policy concerning kids began to change. Public schooling was made nearly universal in the developed world. Private schooling began its long path of decline to the point that by mid-century they were operated either by churches or only available to the rich. These public schools entered on the trajectory of every government project: planned, managed from the top, treating every student as an unindividuated unit of an aggregate, soldiers in a. kid army, each put through the paces for twelve years.

During the New Deal, “Child labor” was completely banned. It remains so today, with rare exceptions.

Then school was made compulsory in the Progressive Era. Families and kids had no choice. In such a world, would Anne have been adopted? Why would she be? Instead of realizing her value, she would have been stuffed into a holding cell for twelve years, and her caretakers would have been fiduciarily responsible for providing room and board with no compensation. There would have been no market for her person at all.

A couple of decades later, public policy went the full way. During the New Deal, “Child labor” was completely banned. It remains so today, with rare exceptions (you can be a child actor and you can work for your family business). Mostly kids are denied their inherent human rights to work and prevented from being valuable to others according to their own skills and desires.

The law books say you can work from 14 but the limits are too strict and the paperwork too long. Even at 16, there are jobs you can have and jobs you are allowed to accept. You aren’t really free to earn money serving others until you are 18, by which time kids are socialized to want to do anything but that.

And all of this is done for their well being.

Then governments instituted Social Security, medical care for the aged, and publicly funded homes for the “retired.” That lets kids completely off the hook for taking care of their parents. The inverse also becomes true: they are less valuable to parents because they are no longer necessary for end-of-life care.

Public policy killed the value of kids in the world, denying their rights to choose, work, and serve others.

The upshot is that public policy killed the value of kids in the world, denying their rights to choose, work, and serve others. Society literally decided to devalue them to the point that they are all cost when young and unnecessary when their caretakers are old.

It’s even worse. Kids today are corralled into collectives defined by age, given an authority figure to lord over them and lecture them for 12 years, and the only job they are allowed to have is to cough back the information the teacher tells them, sitting in desks, day after day for the whole of their growing up.

When we discover that the kids are bored and misbehave, we stuff them full of drugs, belittle them, jail them for misbehavior, and finally turn them out into the world at the age of 18 with no skills, work ethic, or knowledge of what it means actually to succeed in life.

We no longer live in an agricultural or even industrial age that was physically grueling (the great excuse for why we stop allowing them remunerative work). In digital times, there are whole worlds of safe work that kids could do while learning and enjoying life. Kids would have such better lives. We just don’t allow it.

We think Anne’s orphanage was cruel. But she escaped because an adoptive family saw her value. She found her groove. At least she didn’t grow up in today’s regimented, regulated, exclusionary world from which there is no escape for any kids, ever.

Bring Back Green Gables
My own theory of why we love this book and can’t get enough of the movies about a story so far back in time is simple: kids in those days were regarded by society as real human beings with rights and dignity and opportunity. They could live full and wonderful lives. They lived real lives as part of real life.

Their rights were not systematically violated by the law in the name of helping them. The Progressives came along and deployed the violence of the state to make their lives better, and here we are today. 

Is it any wonder that we are nostalgic about the life of kids in those days? And is it any wonder that people have to think very carefully about producing them today?

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

This article was originally published on FEE.org. Read the original article.

Jane Austen the Austrian Economist

Austen the Austrian

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It is a truth universally acknowledged that a scholar in possession of a Freeman column must be in want of a discussion of economics in Jane Austen’s novels.

The only question, really, is why it has taken me so long. Jane Austen’s novels of “three or four families in a country village” have long been favorites of those who love both literature and finance. The actuary Daniel Skwire (yes, relation) has detailed the accuracy of Austen’s actuarial calculations, and political scientist Michael Chwe’s recent book explores how game theory threads through Austen’s content. Students for Liberty will be starting a virtual reading group soon on Austen’s Sense and Sensibility and Smith’s Theory of Moral Sentiments.

Tyler Cowen has spoken of "novels as models" of economic behavior. The bluntness with which Austen’s characters discuss matters of finance, Austen’s detailed consideration of her characters’ decision-making processes, and the tightly focused world of her novels, makes them ideal literary models of an economic world.
Austen’s Emma has been somewhat neglected by the economically oriented Austenites. This may well be because Emma is Austen’s only heroine who is not in any financial straits whatsoever. She is so well off, in fact, that she often says she plans never to marry, as she has no need. Even the prospect of permanent spinsterhood doesn’t frighten her. As she notes:

I shall not be a poor old maid; and it is poverty only which makes celibacy contemptible to a generous public! A single woman with a very narrow income, cannot but be a ridiculous disagreeable old maid! …but a single woman, of good fortune, is always respectable, and may be as sensible and pleasant as anybody else. And the distinction is not quite so much against the candour and common sense of the world as appears at first; for a very narrow income has a tendency to contract the mind, and sour the temper. Those who can barely live, and who live perforce in a very small, and generally very inferior, society, may well be illiberal and cross.

Emma Woodhouse, “handsome, clever, and rich,” doesn’t have much reason to talk or think a great deal about money. And with “very little to distress or vex her,” she doesn’t have the promisingly romantic/comic frustrations of an Elizabeth Bennet or the compelling misfortunes of an Anne Elliot. But with her own life apparently in order, Emma has a great deal of reason to think and talk about other people, and this is where the economic lessons of Emma come to the fore.

Emma Woodhouse is a planner, and one of the things she is most interested in planning is other people’s love lives. As the novel opens, Emma has just attended the wedding of her former governess, a match for which Emma takes credit. Her friend Mr. Knightley cautions her against priding herself on making such matches, reminding her that she did very little and that “a straightforward, open-hearted man like Weston, and a rational, unaffected woman like Miss Taylor, may be safely left to manage their own concerns. You are more likely to have done harm to yourself, than good to them, by interference.” But these cautions are to no avail. Emma, bored now that Miss Taylor is no longer around to amuse and distract her, decides to marry off her friend Harriet Smith. Harriet already has a beau, a respectable young farmer. But he does not match Emma’s ambitions for her friend. So she encourages Harriet to turn her attentions elsewhere.

Mr. Elton was the very person fixed on by Emma for driving the young farmer out of Harriet’s head. She thought it would be an excellent match; and only too palpably desirable, natural, and probable, for her to have much merit in planning it. She feared it was what every body else must think of and predict. It was not likely, however, that any body should have equaled her in the date of the plan…

So far as Emma can see, there is only one problem with the match she has designed. It is so perfect and so natural that she won’t get sufficient credit for it.

Naturally, the perfect and natural match goes horribly wrong. Mr. Elton turns out to be in love with Emma. Harriet throws over her perfectly respectable farmer and begins to chase increasingly ill-suited gentlemen, and everyone is miserable. Even Emma, the great planner, is left to realize, in a moment of despair, that

The first error and the worst lay at her door. It was foolish, it was wrong, to take so active a part in bringing any two people together. It was adventuring too far, assuming too much, making light of what ought to be serious, a trick of what ought to be simple. She was quite concerned and ashamed, and resolved to do such things no more.

Emma’s resolve lasts about as long as the latest style of pelisse at the local shop, and after the comic arrangements and rearrangements of the young people in the story and some hard-earned lessons about why merely being handsome, clever, and rich is insufficient to make one “as sensible and pleasant as everyone else,” the novel comes to a satisfyingly romantic close.

Along the way, Austen has taught her audience another important lesson. She has taught them about the dangers and the egotism of planning for other people. In his essay “Kinds of Rationalism,” F. A. Hayek refers to “an order which we cannot improve upon but only disturb by attempting to change by deliberate arrangement any one part of it.” This is the kind of order in which Emma lives. And attempting to improve it by rearranging the romantic affairs of her friends produces enormous disturbances. Her utter failure to bring about the matches she thinks are appropriate, and her consistent inability to see the plans and preferences of even her closest friends, make Emma an ideal exemplar of Hayek’s critique of “the claim that man is capable of co-ordinating his activities successfully through a full explicit evaluation of the consequences of all possible alternatives of action, and in full knowledge of all the circumstances.” And Emma’s egotism and meddling remind us of nothing so much of Hayek’s comment that such planning “involves not only a colossal presumption concerning our intellectual powers, but also a complete misconception of the kind of world in which we live.”

This fall, the creators of the popular webseries The Lizzie Bennet Diaries, which re-envisioned Pride and Prejudice as Lizzie Bennet’s video blog, will begin running Emma Approved, a similarly high-tech update of Austen’s Emma. It may be too much to hope that the writers have read Hayek, but if they have read their Austen with due care and attention, we may well have a new pop culture voice contributing to the Austrian critique of planning.

Sarah Skwire

Sarah Skwire is the Literary Editor of FEE.org and a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis. She is a member of the FEE Faculty Network. Email

This article was originally published on FEE.org. Read the original article.

Marx and the Manifesto

Marx and the Manifesto

Mr. Baker teaches in the school system in Lubbock, Texas.

It has been more than one hundred and thirty years since The Communist Manifesto burst onto the scene during the tumultuous days of unrest and reaction immediately preceding the March Revolution. It passed almost unnoticed except among the more rabid, inmost core of professional revolutionaries. At the time it certainly made little enough of an impression. Dr. Marx’s strident pamphlet did not win for its authors (the ever-present Friedrich Engels shared in its creation) overnight recognition as leading lights of the communist movement. All that came later. But as the book aged, it assumed cyclopean dimensions—giant, intimidating, formidable. Its subsequent reputation has been inflated beyond any contributions it may have originally advanced. But—for good or ill—flawed or not, the Manifesto is still a potent force upon the world political scene in this age of the so-called "common man." Like the legendary dragon’s teeth of ancient mythology, its dormant fertility retains the seeds of future life. Warriors sprout wherever the message of The Communist Manifesto has penetrated.

But warriors loyal to whom? To what cause? In behalf of which current brand of socialism/communism? Which of all the contending utopias is the "true religion?"1 Upon this matter The Communist Manifesto maintains a lordly and indifferent silence.

In this chaotic muddle of claim and counterclaim battle the "true believers," each asserting his own legitimacy and the apostolic purity of his own descent. Each seeks to promote his own cause and to expose his rivals as the petty bourgeois pretenders that they really are. Socialist turns murderously upon socialist. All heretics must be denounced and liquidated—many are called but few are chosen.

The Communist Manifesto was hastily written on the eve of the 1848 German Civil War when the fatherland stood on the brink of chaos and discord. Into the Manifesto Marx poured his soul, his hates—above all his hates—his ambitions, his unbridled mysticism, his vitriolic diatribes against the evil as he understood it. It was a work born of blood, desire, and unremitting (or so it must have often appeared) toil. Like all books it was the product of endless, patient, countless hours. One must imagine Marx as he really was: an energetic glutton for almost unbroken study; the relentless devouring of book after book until he had found just the right word, phrase, or idea. His was a Spartan regimen of stoic simplicity, this angry patriarch of economic Prussianism.

Setting and Background

On the other hand, there was more to The Communist Manifesto than mere "booklearning" and the printed word. The Manifesto could just as easily be portrayed as the child of fierce, surreptitious debates in crumbling, rickety garrets, nocturnal discussions in seedy tenements, and of jocular (and, just as often, not-so-jocular) conversations within the myriad little Bohemian cafes that dotted nineteenth century Paris, Brussels, and Cologne.

In what follows, this paper shall critique the economic underpinnings (both stated and implied) of The Communist Manifesto. In each section I shall first summarize Marx’s evaluation of a given problem followed by my own analysis of the Marxist paradigm. Each section shall deal with a specific topic treated in the Manifesto. In Section I, I shall attempt to unravel the tangled threads of the so-called "commercial crises." By contrasting Marx’s "static" model to the dynamic structure of "real life" capitalism based upon the expectations of profit-motivated entrepreneurs, this paper shall attempt to clear up some of the ambiguities that have hitherto existed concerning the functioning of the price structure in periods of serious business decline. (Some overlapping with Section III is necessary here.) This shall involve a rather prolonged delineation of cause-and-effect: something completely ignored by Dr. Marx in his sketchy treatment of "bourgeois" economics. This should be especially relevant in today’s harrowing economic atmosphere when the old bugaboos of unemployment, "underconsumption," and "overproduction" are again rearing their unwelcome heads.

Section II examines the notions of class and class struggle. Does man really live at perpetual war with his neighbors (especially those of another "class")? Do "classes" really exist? In the analysis of the class struggle much emphasis will be placed upon the dichotomy between the eternal struggle within the animal world and the world of civilized society—characterized by the division of labor. Marxist polylogism—the theory of different "class logics"—is also briefly considered in Section II.

Section III takes a look at the theory of value in general and the labor theory of value (which Marx utilized) in particular. It is the contention of this section that the market, capitalism, economic depressions—indeed, any of the varied activities of human action—cannot be properly understood without a workable theory of value. Marx, like the classical economists of his day, fell into disrepute over the defective theory of value which he propounded. Section III attempts to establish that all value is subjective—and therefore out of the province of the scientific economist. With a personal, subjective theory of value it becomes pure pedantry to talk about "overproduction" (in the classical, Marxist sense), "surplus value," "capitalistic expropriation," and other such examples of emotional claptrap. (In its treatment of commercial crises, Section I also attempts to lay the labor theory to rest by contending that labor is not homogenous as Marx tacitly assumed. By taking issue with the homogeneity of labor and wages, an important prop is kicked out from underneath the already shaky platform of Marxist economic theory.)

Section IV is two-pronged. The first problem deals with the efficient allocation of labor in the socialist commonwealth. Deprived of the capitalistic tools of monetary calculation, how can the socialistic board of production provide meaningful production quotas? Indeed, how can it possibly even know what to produce? Is it possible, for example, lacking a labor market in the old capitalistic sense, for the socialist commonwealth to know whether or not a specific labor project is creating or consuming capital? Secondly, Section IV attempts to ascertain the fate of the individual laborer within the socialist framework. What is the status of the laborer in the Worker’s Paradise?

A brief look into Marx’s Communist Manifesto is now in order.

I. The Commercial Crises

According to Marx, one distinguishing feature of capitalism was the periodic recurrence of commercial crises. Under the direction of the greedy bourgeoisie, factories inundated society with the "epidemic of overproduction." In this grievous state of affairs:

Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? because there is too much civilization, too much means of subsistence, too much industry, too much commerce.2

Thus, the great paradox: society drowns in a sea of wealth, poverty amidst plenty. This poverty and degradation, this "famine" result not in spite of man’s opulence and wealth, but precisely because of it. The wealthier man becomes, the worse off he really is. Wealth can bring nothing but grinding poverty. Man is suddenly faced with "too much wealth," "too much of the means of subsistence." This could only happen, Marx assured his readers, because bourgeois society was "too narrow" to comprise the wealth created for them.

Capitalism, then, dies of gluttony. More correctly, capitalistic society dies of hunger induced by indigestion. These "paradoxes" of capitalism were insolvable to Marx. He shrugged them off by saying that capitalism contained within itself the seeds of its own destruction, ³ its own "negation." Production, therefore, was nothing other than a juggernaut relentlessly crushing everything in its path. Trade and prosperity were nothing else but the dormant seeds of a future crash. The only refuge from poverty (the effects of the crash) was to abstain from production and trade. In a word, the only refuge from poverty is poverty itself.

Unanswered Questions in the Marxian Analysis

Marx did not carry his own arguments to their ultimate logical conclusions. His analysis stopped precisely where the intriguing questions pile up and beg to be answered. For example, one might ask, "Yes, but what makes all this overproduction possible? What prevents the capitalists, motivated by greed as they are, from learning by their past mistakes? At what point does ‘production’ become ‘overproduction’? Overproduction by whom and in relation to what? How is this manifested and discovered in the marketplace? At what point do the effects of overproduction make themselves known to society? What accounts for this sudden ‘cluster of errors,’ all turning up at the same time?" The Communist Manifesto greets all these inquiries with stony silence.

The "overproduction" theory is a most naive view, at best, of the capitalistic mode of production.⁴ The contradictory analysis which Marx painted of capitalism can only result in blatant, unexplainable absurdities utterly divorced from the real world of production. It is difficult even to conceive of such a state of affairs as "too much" production, "too much" subsistence, "too much" civilization. The fundamental condition of life is scarcity. The means of production and the ends they can attain are always necessarily limited. They cannot satisfy desires in unlimited abundance. Each product and means of production (including labor) is strictly circumscribed in the tasks and services which they can perform. Unlimited production is impossible.

Scarcity is reflected by desires and wants. However, scarcity is relative. Relative to what? In the market society the relative scarcity of different products is mirrored by price. Prices exist because scarcity exists. When a good is no longer scarce (i.e., if it is available in unlimited abundance or if demand vanishes) it will not be able to command a price in the marketplace. In other words, its "price" will fall to zero.

"Overproduction"

So, then, what makes "overproduction" possible? The Marxist theory evokes a mental image of a mountain of goods piling higher and higher, being effortlessly kicked out by mindless automatons with a total disregard for reality. ⁵ This analysis reveals a faulty understanding of the entrepreneur and of his role in the process of production. Like anyone else, the entrepreneur is a human being perhaps no smarter and no duller than anyone else. Like his fellow beings all his action is predicated upon expectations. What are the "expectations" of the entrepreneur? To make a profit. He will be able to continue in his capacity of production only as long as he is able to make a profit.

The Marxist theory begs the question: why would industrialists be so willing or even able to produce when no one either can or will buy their products? How and why, with bulging inventories of unpurchased goods, would assembly belts continue to roll? Continued production under such circumstances would be suicidal and impossible. But capitalists are neither suicidal, overly charitable, nor infinitely rich. The Marxist sees the entrepreneur (or capitalist), however, as a total nitwit, completely unable to adapt to changing circumstances. And whatever else might be said of the industrialist magnate, he is not lacking in versatility. How could such a condition (overproduction) exist outside the realm of fairy tales and propaganda pamphlets? The law of scarcity has never been repealed. The tissue of fallacies must be faced: the theory of overproduction is long overdue for a well-deserved rest.

The Element of Timing

Marx’s theory of overproduction overlooked other vital questions of practical significance: how does one account for the critical element of timing? Why, for example, do the forces of overproduction and unemployment dovetail and emerge all at once in The Crash? Why the sudden cluster of errors?

Now there is nothing more certain than that all men are fallible and often err. And, it is only to be expected that entrepreneurs and capitalists, like other mortals, will certainly make their quota of mistakes. They, too, will occasionally "miss the mark." But is it not a bit ironic that all entrepreneurs (as evidenced by the "crises") just happen to make the same mistake (overproduction) at the same time? What would account for this singular state of affairs? This is a serious omission on the part of Marx. It is as if all were well with the world one day and then is jarred awake the next day to a surprisingly different state of affairs (the crises). One can be pardoned for not taking Marx too seriously in this matter.

There are other problems with the Marxist analysis of "commercial crises." If at some point there has been overproduction, there must be some culprits hiding in the bushes somewhere. These unsavory characters would certainly be worth our bitterest opprobrium and vituperation. Just who is it, exactly, that performs such anti-social deeds? Who is the guilty party? According to Marx, it is the "workers," of course, who produce. They are the sole contributors to the productive process. Since capitalists and bourgeois entrepreneurs are only idle parasites devoid of any economic (productive) significance, it stands to reason that it is the "workers" who have been "overproducing." But which workers?

Medical technicians? Broadway actors? Lathe operators? Perhaps chicken pluckers? Plumbers? Maybe garbage collectors? What kinds of goods and services? Just "things in general"? If so, what kinds of things? Perhaps stethoscopes or trigger guards or saddles? Toilet tissue or fingernail clippers? Perhaps book binderies or economic treatises and revolutionary pamphlets? Seminar papers? "Overproduction" of what, by whom, in relation to what?

Homogenous Factors

Marx, like many of his disciples, labored under the delusion that labor, production, and wages were homogenous. All "labor" was alike, all "production" was alike, all wages were the same. This was an unforgivable blunder. Marx was completely wrapped up in his acidic, piecemeal approach to the study of capitalism. He did not have time for such things as detached observation. The Communist Manifesto is not a dispassionate analysis of labor and wages. With his heated invective and imprecation it is not surprising that he so often missed the mark. Because he so slavishly devoted himself to the "exploitation" theory of labor, he was completely helpless when it came to the task of dissecting and analyzing processes and categories.

The truth is that all workers are not alike; they are not "equal."⁶ If labor is "exploited" (how else are the capitalists enabled to accumulate bulging warehouses of unsalable inventories?), precisely what kind of labor? A Robert Redford or a Muhammad Ali? An Elvis Presley?7 Is the Iron Law of Wages, so gloomily trumpeted by David Ricardo and echoed by Karl Marx, equally grinding upon each and all? How does this fit in with the Marxist theory of overproduction and the Crises? Silence.

The too-much-means-of-subsistence approach has produced a crown of thorns for the more consistent advocates of this doctrine. The remedy which has always enticed and suggested itself to post-Marxist and neo-Marxist economists and ministers of state is to encourage the current political regime and the unions to smash the instruments of production, burn the "surplus" goods, and "plow under" unharvested crops. All this is for the good of the Commonwealth.

A Saturation Point

Perhaps the most fatal fallacy of all implied in the overproduction argument, however, is that only a certain amount of production is desirable, that society can assimilate only a very limited amount of goods. Beyond that point production becomes dangerous and anti-social, resulting in grave ills. What next? Must there be firing squads appointed to liquidate the most vigorous and talented of workers? Or maybe it would be well to award some medal or cash award to those workers who best succeed in stretching five minute coffee breaks to half an hour, or to those who sabotage factory machinery?

The Marxists (and their intellectual cousins) are not prepared to surrender. Is it not true that many companies during the Great Depression of the 1930s were caught with large inventories on their hands? And did not many of these products sit unmoved for many years? Indeed, is it not true that some of these products were never able to be sold? Is this not a vindication of Marx and his theory?

Now, some things must be conceded. The devil, so to speak, must be given his due. It is beyond a doubt that many warehouses bulged with unmovable goods during the gloomy 1930s. But it is not for the reasons implied in the overproduction argument. The point which most advocates of the "overproduction" theory of economic woes ignore is that almost any product can be sold at some price. In a capitalistic economy supply will always equal demand because prices will always be plumb with demand and supply. If there is an "inventory" or "overproduction" crisis, it can only mean that prices are too high.

Enforced Scarcity

This problem prevailed throughout the 1930s because the federal government in Washington imposed rigid, unrealistic minimum price controls upon the economy. This "trapped" many products in warehouses where they eventually rusted, rotted, or became obsolete. In other words, people were not allowed to consume because of minimum price controls. The result was enforced scarcity (the implied Marxist ideal) amid consumable inventories (the "too much" means of subsistence noted by Marx). But why? The market was "overstocked" and "underconsumed" precisely because the market was not allowed to function in relation to the true state of supply and demand. So, sure, conditions might arise in which consumers "underconsume"; but, again, not for the reasons implied and stated by the Marxists and neoMarxists.

The industrialist has every interest in making sure that the "worker" can "buy the product." When the market, regulated and harassed by bureaucratic nonsense, fails to "deliver the goods," it isn’t the fault of those engaged in production. ("That’s free enterprise for you" is the smug reply to the paralysis which follows each new hamstringing of the market. "The days of capitalism are numbered," intone the regulators as they fire another broadside at the wobbling edifice.)

It was only when the wage and price administrators refused to allow downward flexibility, thus crippling the market mechanism, that a full-blown depression was ushered in. When prices are forcibly thrown into disjunction, chaos results. When prices are arbitrarily frozen at a disequilibrium, "under-consumption" (thus giving the appearance of "overproduction") is inescapable. This alone could account for the aberration of the Great Depression. A suddenly imposed minimum price control which catches everybody off guard would have the effect of declining business activity and "unwanted" inventories. This alone could account for the "cluster of errors" which crop up all at once. Economic panics and commercial crises are not the consequence of capitalism as The Communist Manifesto avers, but the all-too-predictable sequel of Statism.8

II. Class and Class Struggle

As far as Marx was concerned, all mankind is split into two separate and distinct classes. These two classes are locked in an eternal contest for supremacy and, ultimately, existence.⁹ In fact, all the history of civilization and the society of man could be summed up with the idea of class conflict. Marx himself did not formulate this idea of mutual extermination. It had been around for a long time cloaked in many different guises. In this particular doctrine he seems to have been influenced by his old friends, the French socialists.

There was no doubt in Marx’s mind that hostility between the classes was both inevitable and praiseworthy. He saw no reason why there should be harmony instead of discord. As members of separate and distinct social entities there could be no question of collaboration between the two. There could not be any question of a "commonweal." What benefited one class ipso facto vitiated the well-being of the other. Society, viewed in this manner, could be nothing else but a brutal civil war, a face-off between belligerents.

What Dr. Marx and all his friends contended was true—if one assumes that he was describing the animal kingdom where the "law of the jungle" literally prevails and from which there is no escape. The great error of Marx was to assume that human society was merely a pitched battle but one step removed from the world of animal strife. In the world of animals, specimen is arrayed against specimen, competing in a grim struggle for life’s meager necessities. These requisites for continued life are severely limited. Victory in snatching substance from a competitor’s mouth spells the difference between continued existence or death by slow starvation and attrition.

When two dogs snarl over an irreplaceable bone, one dog wins and the other loses. One dog receives an extended lease on life, a temporary reprieve from morbidity. The other is that much closer to death’s door. With diminishing vitality he must once again take up his quest for a paltry meal. Even the winning dog must retire to lick his wounds and festering sores incurred in battle. In this world of the animals, ferocity and belligerence are everything. One dies that another might live to battle again.

With man it is different. Under the division of labor—which Marx and the cafe intellectuals detested—each contributes to the process of production (not the snatch-and-grab of the animal world) whereby the human race is enabled to survive. In this man differs from the lower kingdoms of life.

The Iron Law of Wages

In the construction of his model Utopia, Marx was misled by David Ricardo’s specious Iron Law of Wages which carelessly decreed perpetual hunger and privation for the laborer.10 Ultimately, he would be reduced to such a state of destitution that bare survival would be all he could ever expect for himself and his unfortunate dependents. Armed with this dismal weapon Marx strode forth to do battle with capitalism.

They met on uneven ground. With almost mechanical thoroughness the "sycophants and apologists of world capitalism" mutilated his conscripted ideology. (Years later, tired and reeling under the hammer blows of the unimpressed economists, Marx would try a new tactic: he stifled all criticism by labeling Marxism as "scientific communism." Opposition vanished.) At any rate, the Iron Law was later discarded as excess baggage. The history of the Industrial Revolution has successfully refuted that saturnine prognostication; even the Marxist theoreticians have retired from its defense.

Marxism asserts that each man’s thinking is determined by his class affiliation. Each individual is, in effect, a prisoner of his class logic, "the will of your class."¹¹ From this there is no escape. It is the task of communism to unmask the "sycophants" of capital., It is enough to lay bare the background of one’s intellectual opposition. This will suffice to reveal his class motives. A "bourgeois philosophy" must be rejected simply because a "bourgeois" was its creator. Professor von Mises makes this point about various theories of polylogism:12

“They never ventured to demonstrate precisely in what the logic of the proletarians differs from the logic of the bourgeois, or in what the logic of the Aryans differs from the logic of the non-Aryans, or the logic of the Germans from the logic of the French or the British. In the eyes of the Marxians the Ricardian theory of comparative cost is spurious because Ricardo was a bourgeois. The German racists condemn the same theory because Ricardo was a Jew, and the German nationalists because he was an Englishman. Some German professors advanced all these three arguments together against the validity of Ricardo’s teachings. However, it is not enough to reject theory wholesale by unmasking the background of its author.”

Marx was impotent in the face of criticism. He was fully aware of his incompetence in refuting the economists’ objections to his work. His doctrine of different class logics was a last-ditch attempt to remove the lofty theories of "scientific socialism" from the paltry scrutiny of pedants and "bourgeois" academicians. Marxism did not fare well in the bright glare of intellectual discussion. Better to clothe it in the mysticism of Hegelianism and the "inner voice."

After having drawn and quartered mankind, after having arbitrarily divided it into two armed camps, Marx decreed that absolute conformity within the class structure was inevitable. To prove this, he cited "bourgeois" thinking over against "proletarian" thought. This would assure that each robot act to the "best interest" of his own class. But what is the "best interest" of one’s own class and how can it be known? (Even robots must have their instructions.) Did, for example, the capitalist Engels, son of a wealthy industrialist, and the bourgeois Marx, son of a well-to-do lawyer and husband to a scion of the Prussian nobility and landed gentry, act in the "best interests" of their class by authoring The Communist Manifesto and calling upon the workers of the world to unite? Even Marx had to admit that, in fact, the "organization of the proletarians"" are upset by none other than individual competing proletarians. Obviously there are a few such tempestuous individuals within the bourgeois class structure as well. A chink in the armor perhaps?

Marx and his cronies were sure that class consciousness was the only motivation for human action. It was the sole criteria by which individual performance could be interpreted." In the overzealous construction of this dubious paradigm Marx completely overlooked the role of nationalism ("The workingman has no country."), racism, religion, age, sex, and a host of other variables which help in determining man’s attitude and outlook. There is, of course, nothing logically impermissible about dividing society up into classes—whether two or two thousand—no matter how arbitrary that division may be. It would be wrong however, to assert that such is the only way of looking at or dealing with civilization.

Nevertheless, not all concepts and propositions regarding classes are equally valid. One may preach (as Marx did) about "class rule" until the cows come home. But mere parroting does not make rhetoric any more of a reality. "Classes" do not govern or hold office; "classes" do not accept bribes; "classes" do not embark upon political campaigns; "classes" do not canvass political districts and solicit votes; individuals do. To equate the actions and identity of one individual with the actions and identity of a "class" is a deplorable and contemptible boner.

III. Value

Marx and others of his day were misled by the labor theory of value propounded by the classical economists. According to this assumption, as Marx correctly noted in The Communist Manifesto, the price of a commodity (including labor) is equal to the cost of production.¹⁶ An object is only "worth" what "labor" goes into it. Today it is very easy to explode this myth. The truth is, however, that the labor theory of value is still widely held in one form or another by many economists who otherwise lay no claim to the tenets of socialism or to classical economic analysis. These mistaken doctrines have, in their turns, given birth to a host of ills—not the least of which has been a marked hostility to capitalism and its productive structure. This enmity poisons relations between entire nations and large segments of populations within those separate states.

Karl Marx was totally correct in his interpretation of the labor theory of value. For years the apologists of capitalism and free trade pressed this doctrine into the employ of their own peculiar philosophy. It was a well-tooled weapon in their arsenal. Nobody was more surprised than they when the socialists stormed the barricades and wheeled it into an about-face. Adam Smith and his circle of admirers erred when they assumed that laissez faire capitalism could be justified by an appeal to this spurious doctrine. As elaborated by Marx, the labor theory was simply a fallacious dogma carried through to its ultimate logical conclusion. The third generation classical economists were shocked and dismayed by the ease with which their own ordnance could be turned upon themselves. Thus, crippled by a crotchety principle for many years, no adequate defense of capitalism could be formulated. As long as "labor" was employed as the cornerstone of value, it proved to be an impossible task.

All value is subjective. There can be no question of any so-called "intrinsic" or "surplus" value. No value can exist independent of the mental act of valuation. There can be no "value" without a "valuer." It is useless and vain to postulate "worth" independent of what conscious individuals are willing to exchange for it. The quest for absolute value is an endless labyrinth. When the Marxian socialists commandeered the labor theory of value and appropriated it for their own cause, they felt as if a great coup d’etat had been engineered. But the spoils of war proved to be a bomb with a delayed fuse. In the end it served thesocialists no better than it had the economists.

The labor theory of value is an "objective" theory of value. It presupposes Absolute Value, independent of individuals. If it can be established that "value" is a necessary consequence of "labor," then a plausible case might be advanced for supporting the labor theory. In fact, it cannot. One might "labor" for days on end digging potholes in Farmer Brown’s turnip patch. His only reward will be a cartridge of buckshot from the wrong end of a shotgun. The inept artist might "labor" many months on a "Mona Lisa" that is "worth" less than the canvas upon which it is painted. On the other hand, the owner of previously unusable property might awaken to find his deed has appreciated in value because of the proposed construction of a superhighway nearby. No labor has been expended.

There can be no doubt as to the untenability of the labor theory of value. If the price of commodity A (including the commodity labor) is equal to the cost of production B, what, one may ask, determines the cost of production B? It is no answer to reply: the cost of production B1. There is no infinite regression. Sooner or later, one comes upon the original goods and factors of production. What determined their value? At this point it will be easy to simply shrug the shoulders and answer: "supply and demand." But what accounts for supply and demand? This is precisely where the classical economists (including Marx) remained silent.

All value springs ultimately from the subjective valuations of individuals as they make their choices in the daily plebiscite of the marketplace. Without an inner process of valuation the old economic standbys of "supply and demand" could not exist. What else is the market price but supply and demand? What is supply and demand but the individual evaluations of buyers and potential buyers?

There is no appeal, no recourse from the dictates of the customer. In the realm of economics it is pointless to declaim the "real value" of one’s pet project, investment, or labor. There is no "real value" in the world of production and trade but what people are willing to obtain by exchange. It is vain to stubbornly argue the "intrinsic" or "real value" of a product which can be "moved" for only a fraction of its overhead.

Marx went to great pains to demonstrate that the workers were dupes enslaved by heartless felons who were forever depriving them of their "surplus value." For the insolence of these capricious capitalists, the dialectical forces of materialism had decreed an apocalyptic day of vengeance, judgment, and retaliation. Then the benighted masses could be set free. The labor theory was a fountainhead of Marx’s analysis. He wielded it well. With it he slew many a dragon; he formulated with it the concept of exploitation, of class conflict, and of labor and wages. With its collapse the Marxist structure must collapse as well.

IV. Labor and the Socialist Commonwealth

It is no secret that Marx wanted to abolish capitalism. He decried the "exploitation" of workers by owners and viewed the labor market as little better than a slave auction. As far as Marx was concerned, laborers were the unwitting victims of the callous, hardhearted businessman. He felt it was absolutely deplorable that the laborers "sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market."" The only alternative, Marx felt, was to abolish the market society.

It is positively true that "laborers" must "sell themselves" in order to survive. Certainly they are subject to the "vicissitudes of competition" —as is everyone engaged in earning his "daily bread." But how would all this change under a communist economy? Specifically, having abolished the structure of the market (including its interlocking relationships between prices, production, and the supply of goods and services), what part would labor play in the socialist commonwealth?

Production Comes First

Obviously, the first task of the socialist commonwealth is to provide for production. Labor will be no less a necessity than it had been under capitalism. Once the market and the existing structure of production and distribution have been abolished, what then? How will the administration allot its resources? Upon what will they depend as a reliable guide for future production? Marx himself was silent on these matters. That he had an inkling of the can of worms he opened will be demonstrated later. (Marx was an advocate of communism—not state capitalism. He did not want merely to exchange one tyranny for another. Therefore, there could be no question of a market structure of prices to guide the decisions of the Socialist Planning Board. But as to how those decisions should be arrived at Marx never said.)

Under a "pure communism" there can be no money—and therefore no meaningful structure of prices to direct and allocate the flow of goods and services.¹⁸ Nowhere has man succeeded in abolishing capitalism without immediate chaos. All such ventures are doomed to failure and have always resulted in a hasty retreat to the safer confines of the "mixed economy"—where the administration may enjoy the blessings of capitalism with the bureaucratic trappings of State power and control.

Again, Lenin and his authoritarian successors were fully aware that they had failed to create the communist utopia. For this they had (and have) many excuses and justifications. Someday (they seem to be saying) when greed and venal corruption no longer rule man’s heart, when all these great evils and inequities have disappeared, then the Blessed Day will be ushered in and the pure in heart shall inherit their collectivist paradise. Until then, communist leaders and citizens are forced to play the capitalists’ game of money exchange and market prices. The failure is not the fault of world-wide communism, but, rather of the venal capitalists who have sabotaged the global effort of the workers. The point is, however, that for one reason or another, communism has never "worked." Chaos has always followed in its wake, and, barring an elemental change in man’s basic nature, it probably always will.

Efficient Use of Resources

The communist society must labor and exploit its resources as efficiently as possible. Not only must the Planning Board of Socialist Production determine how and what will be produced when and where, but it must also make vital decisions regarding the procurement of laborers for the projects which it deems most necessary. The utilization, channeling, and allotment of labor goes hand-in-hand with the procurement thereof. How will this be done?

Marx had some notion of the problems involved in the dismemberment of the market and its attendant structure of prices which have hitherto directed and guided entrepreneurs in production decisions. Specifically, what is the nature of labor under a socialist commonwealth? Marx provided some important clues: "Equal liability of all to labor. Establishment of industrial armies, especially for agriculture. Combination of agriculture with manufacturing industries. Gradual abolition between town and country by a more equable distribution of the population over the country."19

In short, without a price-allocation system inherent in the market economy, the only viable alternative is an order of "liability" to labor where conscripts are massed into "industrial armies."²⁰ Laborers will no longer be able to freely select the type and place of employment—the levee en masse will take its place. Labor laws replace market prices. Serfdom replaces free choice and the "invisible hand."

Of course, the "industrial army," as Marx correctly noted, would come under the direct control of its totalitarian leaders. Without the flexibility of the pricing system, this army will find itself "relocated" from time to time to ensure a "more equable distribution of the population over the country." Their country cannot have its cake and eat it too. Either it must submit to the "vicissitudes" of the market or succumb to the absolutism of its socialist dictatorship. The question is not: will there or won’t there be "planning"? The only legitimate question to be asked at this point is: "who shall do the planning?"

Presumably (optimistically) the plans of the socialist commonwealth will be made for and in behalf of The Public. Marx spoke quite a lot of "the public." Such cliches never solve anything. They merely promote a scramble for all the myriads of special interest groups to see who gets to be "the public." The great problem of the socialist commonwealth is "Le public, c’est moi."

Conclusion

What might one safely conclude about Karl Marx and his curious tract? What kind of person would it take to write the Manifesto? Marx must certainly have imagined himself as the noble St. George sent to right wrongs and rescue the proletariat in distress. He, Karl Marx, did not tilt with windmills; he preferred to slay dragons. But how real were those dragons which he sallied forth to dismember? How much shadow and how much substance? What was rhetoric and what reality? Which of the Marxist tenets have remained unexploded by the "apologists and sycophants" which Marx so despised?

Karl Marx was not quite the heroic figure about which he surely fantasized. Like another crusader of a distant age, he too was ensnared by his own delusions, the victim of his own fallacies. And, like the ludicrous knight of La Mancha, Marx’s own literary page was not gifted with any better perception. Marx and Engels committed their blunders together. Their incessant disparagement of the market society and the dynamic Age of Liberalism has taken its toll. The Marxist fetish for capitalistic windmills rages unabated.

Every prophet must have a Babylon. The spark kindled in Berlin grew throughout his life and raged into a conflagration. With all the holy zeal of the True Believer and the self-righteous authority of an Old Testament patriarch, the sage of Trier endlessly denounced the "oppressive" bourgeois and proclaimed the inevitability of socialism. This jihad (as all jihads are) was holy, just, and irrevocable. The vast multitude would rise up in defiance of their chains and shrug off the parasitic edifice of landlords, employers, and usurers. This day of liberation would be the death-knell of capitalism and of the expropriation of the many by the few.

An Appeal to Arms

Marx was the eternal Prussian, boiling and seething with Teutonic wrath. He had, so to speak, traveled his own road to Damascus, revealed to man the dictates of the inner voice and communed with the Burning Bush. The fervent Dr. Marx was still young when he returned from Mt. Sinai with the burning tablets of the Manifesto still smoldering in his affectionate embrace. This dictum was to be the law and schoolmaster which would guide man to the Promised Land, eradicating for all time to come the despicable golden calf of capitalism and "unconscionable Free Trade." The days of Moloch were numbered.21

The Communist Manifesto is not a sophisticated economic analysis. It is propaganda and must be read as such. The rantings, the genuflections at the altar of "the Public," the "workers," and the "dictatorship of the Proletariat" are served up without grace so to speak. To be sure, The Communist Manifesto reflected many of the fallacies of the day. It was a looking glass into the mentality of French Socialism, classical economics, German philosophy, and a moral tradition which stretches back at least to the age of Socrates. The image which stares back at us is the bristling insolence of the armed thug.

The Communist Manifesto is an appeal to arms. It calls for blood and death. Hand in hand the twin concepts of fear and faith etch themselves upon the mind of the True Believer. It is not an appeal to reason. Its final argument is the smoking barrel of a loaded gun.

A Bibliography of primary and secondary sources drawn upon in preparing this paper is available upon request, The Foundation for Economic Education, Irvington-on-Hudson, N.Y. 10533.

—Footnotes—

¹It is an error to assume that "pure" socialism/communism can or ever has existed independent of doctrinal disagreements, policy priorities, and the multitude of petty jealousies and squabbles among those vying for supreme power within the Party itself and the political structure of the specific socialist commonwealth. It is even more grievous to suggest that the dawn of socialism will usher in an era of love, brotherhood, and equality for all men everywhere. Each brand of socialism possesses its own unique flavor. There is, in the world today, a multiplicity of socialism with a multiplicity of conflicting goals.

²Karl Marx and Friedrich Engels, "Manifesto of the Communist Party," in Collected Works, Vol. VI: Marx and Engels: 1845-48 (New York: International Publishers, 1976), p. 490.

³p. 496.

^4This paper is not concerned with individual value structures. Ultimate value judgments are not the province of the economist. As such, this paper does not take issue with what the market produces (or what the consumer demands) but with how available supplies are allocated once they "hit" the market. In other words, given specific production goals and capacities, is it possible to trigger a commercial crisis by producing more than the populace can consume? (This is not to say no "oughts" exist, simply that they have no place in this specific work.)

⁵Marx may have anticipated this question in the Manifesto when he said: "The conditions of bourgeois society are too narrow to comprise the wealth created by them." But if this is true, why create this wealth? To what "conditions" is Marx referring? No clue. Wealth created by whom? For whom? To what end? These represent lamentable gaps in the Marxist theory of "overproduction" and depression. Unless this pertinent information is revealed, there can be no intelligent support for his questionable paradigm.

^6,Cookie cutters are not in the same league as surgery assistants. This also involves different qualities of work within the same occupation. Marx greatly erred by asserting in the Manifesto (p. 492), ". . . machinery obliterates all distinctions of labor, and nearly everywhere reduces wages to the same low level." Even if all "labor" were industrial labor, this would still be largely untrue.

⁷The Communist Manifesto was intended as a timeless work of doctrine. In exploding the tenets of dogmatism it is not necessary to limit oneself to an historical analysis of then-current personages and ideas. What counts is the ultimate truth or falsity of the ideology under consideration.

⁸For a relevant discussion of the regulated market during the late 19208 and early 1930s, see Murray Rothbard’s excellent America’s Great Depression (Kansas City: Sheed and Ward, Inc., 1963). This book effectively shatters any illusions about the laissez-faire character of the decade prior to 1932.

⁹Marx and Engels, note especially pp. 484 and 485.

¹⁰Ibid., p. 495. "The modem laborer, on the contrary, instead of rising with the progress of industry, sinks deeper and deeper below the conditions of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth." See also p. 491: "Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence for his maintenance and for the propagation of his race."

¹¹Ibid., p. 501

¹²For an excellent exposition of the doctrine of polylogism (many logics), see Ludwig von Mises’ Human Action: A Treatise on Economics (Chicago: Henry Regnery Company, 1949, pp. 75-84).

¹³Ibid., p. 75.

¹⁴Marx and Engels, p. 493. See also p. 496 where Marx asserts that, "Wage labour rests exclusively on competition between the laborers." (emphasis mine).

¹⁵Years later Engels made a rather feeble attempt to deny that Marx places exclusive faith in class determinism. Nevertheless, true or not, that is largely the tone of his published works and recorded speeches. For a typical Marxist statement regarding class determinism, see Marx and Engels, p. 501.

¹⁶p. 491. "But the price of a commodity, and therefore also of labour, is equal to its cost of production." Labor wages were supposed to decline as the "repulsiveness of the work increases" (p. 491). Further, the "labor theory" is implied in referring to the lower classes as the "working class" (emphasis mine). Only labor could "create capital." (p. 498)

William L. Baker

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