It seems that we will never be free of Marxism. Despite the violent history of the 20th century and all the blood and barbed wire that have resulted from this ideology, it keeps cropping up again and again in different forms generation after generation. Why is this? What appeal does Marxism have, particularly for the intellectual mind? Why, despite all the fallacies of Marxian socialism having long since been exploded by Ludwig von Mises, and the historical failure of the USSR along with other communist states, can’t we be rid of it?
The first question to answer is what exactly is Marxism? Marx wrote on a lot of different things, mostly capitalism. He wrote three huge volumes collectively called Capital. The funny thing about these is that the third volume, released posthumously, seems to contradict things he wrote in the first two. Marx never actually laid out any theory or vision for his socialist utopia. He did make some suggestions for preliminary steps to get there in the Communist Manifesto. These steps are a horror show and involve the state pretty much taking over absolutely everything.
So then what really is Marxism? Marxism is a variety of political economy. It is mixture of economic theories and political values that when put together form a coherent political philosophy. Marx’s political economy logically leads right to violent communist revolution as the only solution to the problems he creates, as we shall see.
The goal of Marx’s particular political economy is to develop a theory of exploitation of labor, thus justifying violent action by the working class to “re-appropriate” the means of production from the evil capitalists. Marx starts out with a new interpretation of the classical Labor Theory of Value (LTV). This theory states that the value of a product is determined by the labor time necessary to produce it. Marx adds in the caveat that labor must be “socially necessary” in order to produce value. While obviously false, and long since surpassed by the more sophisticated theory of Marginal Utility, this theory presents an irresistible attraction for those wanting to come up with an exploitation theory. Marx’s exploitation theory states that since the value of a product is bound up with the labor time necessary to produce it, any profit that the capitalist takes is necessarily taken out of the worker’s hide and is a form of exploitation. Essentially the profit of the capitalist represents unpaid labor time by the worker. This is called the theory of Surplus Value.
This theory ignores the time value of money, among other errors. Marx ignores the fact that the capitalist takes a risk and must wait to realize his profit. He may not even make a profit, yet the worker gets paid for his labor anyway, and he gets paid right away. The capitalist performs the service to the worker of waiting and risk-taking. The worker can do this too, yet he demonstrates by his actions that he would rather not. His time preference is higher, and he would rather collect a check now and play it safe.
The purpose of Marx’s political economy and all his theorizing is to come up with a reason for a so-called “worker’s” revolution. If the evil capitalists are stealing the value created by the workers, then the workers are justified in stealing it back. Thus we get Marx’s recommendations for state communism and violent action on the part of the working class.
So we can define Marxism as a variety of political economy that bases itself on a Labor Theory of Value, derives a theory of exploitation of labor and then recommends militant working class action and socialism or communism as the cure. The exploitation of labor comes from the fact that the capitalist, in order to realize profits must necessarily be taking for himself value created by a worker’s labor time.
This theory seems to have some kind of permanent grasp on the imagination of intellectuals. The most recent revival of Marxist political economy is actually being smuggled in under the guise of libertarianism. So-called “left-libertarian” theorist Kevin Carson has recently come up with a new economic theory based on a rather old and obscure left-anarchist system called “mutualism.” His theory is a synthesis of the ideas of 19th century anarchist thinkers like Pierre-Joseph Proudhon and Benjamin Tucker. He also adds in a bit of Marx and even Murray Rothbard among other Austrians. While he takes from all these disparate, and even contradictory sources, his theory comes out to be yet another rehashing of the basics of Marxist political economy.
My suspicion is that Carson’s motivation for developing this system is a desire to come up with a theory to fit a preconceived conclusion. The conclusion being virtually identical to the Marxist conclusion that labor is exploited by capital, capitalists do not really own their property and militant working class action leading to socialism/communism is the answer. Interestingly Carson’s own critique of marginalist economists is that they are opportunists just seeking to find an apology for big business. I agree with Stephan Kinsella that left-libertarian ideology probably comes from an unwillingness to abandon certain sentimental left-wing prejudices like localism, wage-slavery, alienation of labor and romantic rhapsodizing over the plight of “the workers.”
Carson uses his own version of a LTV in designing his system, but he also endorses Marx’s defense of the objective LTV from it’s subjectivist and marginalist critics. Ultimately any LTV will have to propose an objective value to labor in order to get to an exploitation theory. Carson says Marx is correct that “socially necessary” labor time is a valid response to the marginalist criticism Marxist LTV, but Carson’s own subjective LTV takes a different approach. However, there is not really anything new in Carson’s formulation. It’s just a reversal of standard subjective, marginal value theory applied to a laborer’s view of his own labor. Carson’s theory is an attempt to to get from there to an objective value of labor, as we shall see. Carson says:
“A producer will continue to bring his goods to market only if he receives a price necessary, in his subjective evaluation, to compensate him for the disutility involved in producing them. And he will be unable to charge a price greater than this necessary amount, for a very long time, if market entry is free and supply is elastic, because competitors will enter the field until price equals the disutility of producing the final increment of the commodity.”
There is not much here that has not already been said by marginal utility theory. At a given price per hour a laborer will continue to bring his goods to market (work) until such time as the disutility of continuing becomes too much for him (he gets tired or fed up) or he physically collapses (or until the office runs out of coffee). The lower the hourly wage in this circumstance the quicker the disutility will cause the laborer to stop. One problem that jumps out immediately is that this theory does not seem to take into account the differences between individual laborers and instead views labor as an undifferentiated blob.
Another problem comes from the attempt to derive an exploitation theory from this formula. Carson says that disutility will continue to adjust the price of labor upward until an equilibrium price is reached. This price would then represent the objective exchange-value of labor. So the combination of all the subjective valuations by laborers of their own labor equals the objective value of labor. Commodity prices thus trend toward this equilibrium, a price where supply exactly meets demand and there is zero profit. Theoretically a capitalist cannot charge more for a commodity than this labor/disutility equilibrium price. So where does profit come from?
Fundamentally, the subjective LTV claims that the exchange value of commodities is determined by the opportunity cost of labor. Ultimately, all factors of production can be reduced to labor and thus can be valued according to this opportunity cost. Any profit the capitalist takes represents a difference between what is paid to labor and labor’s true value as determined by opportunity cost. So just like in classical Marxism we have arrived at the idea that the capitalist is stealing surplus value from workers.
From here Carson can now go where he wants to go and start in on his exploitation theory. Since prices tend toward equilibrium and zero profit on a free market, the only remaining source of disequilibrium is the disutility of labor. Thus labor is the source of profit, yet the profit is taken by the capitalist not the worker. And therefore we have exploitation. Profits are necessarily taken out of the hide of workers. Now Carson can conclude all that he wants to about the exploitative nature of capitalism, but he can also say that he advocates a free market. A free market where no one profits and everyone is organized into voluntary socialist communes and collectives, but still a free market.
There are a few problems with this. A free market is good because price signals organize resources as best as possible in regards to the subjective valuations of individuals, not because it avoids profit and exploitation. A market is dynamic and discovers how meet people’s desires on a daily basis, not something that is designed to meet equilibrium. Another problem is that this theory appears to argue that labor is exploited because it begins work at rates that are below what would be necessary to get labor to begin work. But those rates cannot be determined until labor starts working in the first place. This is a very confusing logical contradiction.
Carson argues that the state is the primary tool used by capitalists to create the disequilibrium that allows them to extract profits. Capitalists do this by using the state to limit competition from other capitalists and thus driving up prices. But this is really just a caveat that is added on later. There is no reason why the state is a necessary element in this exploitation theory at all. Why would the state be the only source of disequilibrium? Why would the state be the only reason that capitalists take the profits that are rightly due to the workers? This theory would seem to claim that the state is a huge conspiracy by capitalists to create disequilibrium, and thus create conditions for profit taking. This ignores the numerous other interest groups that the state serves, including big labor unions and including the state itself.
This theory would also seem to negate itself. The theory that disutility labor is the only remaining source of disequilibrium, and thus the source of profits is no longer valid once there is another source of disequilibrium: the state. The state’s limiting of competition from other capitalists would actually mean that profits can be realized in another way than by exploiting labor. Capitalists actually exploit other capitalists, create disequilibrium and thus profit (I would actually argue that this happens in reality, but from a different theoretical perspective). No need for labor to come into the equation. In fact, the state would seem to be the worker’s friend here because it sets the capitalists against each other and prevents them from being the ones that must be exploited for capitalists to profit. From here we can see the theory falling further and further into contradiction with it’s goal of proving capitalist exploitation.
Another standard left-libertarian exploitation theory is that workers do not really agree to be wage laborers and enter into voluntary contracts, as the “vulgar” Austrians would have it, because capitalists are privileged by the state. The workers have no chance to become capitalists themselves, and thus it is not an even playing field where all options are open to workers. It is certainly true that measures taken by the state to regulate, control and cartelize business do raise barriers to entry that make it harder for workers to start businesses and compete with established capitalists. This valid observation does not validate the LTV though, or necessarily mean that workers are exploited by anyone other than the state. It does not follow from this that workers do not voluntarily enter into contracts or that they take jobs for any reason other than that they prefer doing so to other options. This version of exploitation theory ignores the extent to which business owners themselves are exploited by the state and the fact that workers in state protected unions are themselves exploiters of capitalists along with virtually everyone else in society.
The state makes it hard to start a business, and we all suffer for it. No aspect of Marxist political economy is made true by this fact. Nothing follows from this other than the understanding that we ought to get rid of the state. Left-libertarians do not provide an adequate theory as to why this fact means that those capitalists that make it through the statist web are necessarily immoral or exploitative. It’s not that exploitation is not possible, just that there is no reason — and no argument provided — as to why it is necessarily a rule under state-regulated capitalism. If anyone and everyone that prospers under the state is guilty, then all of us have unclean hands and it really doesn’t mean anything to criticize anyone for immorality or exploitation. We are all just exploiting each other all the time by profiting while the sate exists. No one can be good, so whats the point?
While Carson disagrees with Marx on certain points, and I certainly cannot accuse him of being a statist, his method and motives follow the Marxist map. Carson does claim labor as the ultimate source of value. He does claim workers are exploited under capitalism. He does claim that profits are the result of capitalists seizing the value from unpaid labor time. He does claim that capitalists in a statist system are not legitimate property owners. And finally he does defend militant working class action and call for socialism as the solution. This is why I say that Carson is a Marxist at heart, if not necessarily an orthodox Marxist in his economics. Ultimately I think Carson’s ideas are potentially dangerous and run the risk of endorsing or excusing violence, as long as it is violence aimed at the proper class of victim: capitalists.