Kris Morgan 1/25/18
Karl Marx is one of history’s most controversial figures. Those of us who are politically engaged will inevitably have to resolve his ideas with our own beliefs, whether we reject or accept them. Not only was he a staunch nemesis of capitalism, he and Friedrich Engels developed a competing economic system that does not rely on private property, capital investments, or entrepreneurship. Since we do live in a capitalist society, it is beneficial to revisit his critiques of capitalism, which were rolled out in the late 19th century in Das Kapital.
In 2014 Sean McElwee of Rolling Stone wrote an article based on Marx’s analysis of capitalism titled “Why Marx Was Right: Five Surprising Ways Marx Predicted 2014”. These included the chaotic nature of capitalism, imaginary appetites, globalization, monopoly, and the impoverishment of the middle class. On the surface, there is plenty of evidence that suggests Marx was correct. The middle class is diminishing, we are still recovering from the real estate collapse, and it’s safe to say we all have things we don’t need. Additionally, WalMart dominates and presently operates stores in 44 countries. However, in spite of proving correct in his long-term economic predictions, Marx was wrong on every point.
On the chaos of capitalism, McElwee’s argument in favor of Marx went as follows: “Broadly speaking, it’s what made the housing market crash in 2008. Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows (sic) left to scheme, the whole façade fell apart, just as Marx knew it would.” This is true, but what is also apparent is the domination of the financial system by the Federal Reserve, through Act of Congress, since 1913. With the ability to offer loans at lower-than-market rates, combined with Fannie Mae and Freddie Mac (chartered by Congress in 1938 and 1970 respectively) and the Community Reinvestment Act, we can safely say we have not had a free market for quite some time. The chaos we experience is the result of central planning, not free markets.
Of imaginary appetites, Marx stated capitalism would lead to “a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural and imaginary appetites.” McElwee then surmises that though cell phones change very little with each progression, we purchase the latest anyways. But this is more a statement about human demands than the capitalist system of private property. The capitalist economy is nothing more than the notion that if left alone, people will store a supply of goods to satisfy perceived demand. Should our preferences change, production and marketing strategies will change as well. That is the strength of markets. The fact that so many have the means and time to focus on the latest and greatest advances, rather than whether we will eat, is a sign that we have surpassed basic subsistence.
In 1848 Marx predicted globalization, arguing “It must nestle everywhere, settle everywhere, establish connections everywhere.” It is undeniable that capitalists want to trade with as many people as possible, however, is this not true of every economic organization? Communism itself is an international force the same way capitalism is. Neither ideology can be said to be a complete reality so long as the global community is mixed. Each will strive for what they perceive as the liberation of others as well as the advancement of its own agenda.
Monopoly is also a part of his critique of the market economy. According to the article, “Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other.” Wal Mart’s success is then used as an example. While we can agree Wal Mart has controlled the market, we cannot agree it is entirely due to market forces. Since the Progressive Era industry has turned to government for cartelization and other benefits. According to Forbes, Walmart cost taxpayers $6.2bn in public assistance. It is officially safe to stop pretending Walmart is an example of out-of-control free trade.
As Murray Rothbard pointed out, “The government interventions of the Progressive Era were systemic devices to restrict competition and cartelize industry… Just as other industries turned to the government to impose cartelization that could not be maintained on the market, so the banks turned to government to enable them to expand money and credit without being held back by the demands for redemption by competing banks.” Do we honestly believe the rich fund political campaigns and lobby politicians to make sure things are always fair?
Finally, we address the diminishing middle class. With the aforementioned interventions, dispelling this myth should be a piece of cake. The central bank disrupting the economy and causing malinvestments and subsequent bailouts, devaluation of currency, and cartelization of industry, we have an obvious recipe for corporate oligarchy.
Marx would have been right on all points had he simply used the phrase ‘state capitalism’ or ‘crony capitalism’. The only way one can conclude Marx was correct in his analysis of the market economy is by completely ignoring all state interventions. Free market economists, such as viewed by the Austrian School, do not consider central bans, whimsical regulations, nor any other infringements on property as part of capitalism. There is simply no basis to attribute flaws in society under the broad umbrella of free market deficiencies.
These predictions under the conditions of our current political system are obvious. Of course big business pays for favors from big government. Even Obamacare worked to enrich the health insurance industry as well as big pharma, while our premiums skyrocket. The alliance between industry and politics is unholy, damaging, and has nothing at all to do with free trade. Indeed, Free Market economists not only made the same predictions, but in his latest work The Progressive Era, Murray Rothbard offers a historical record of it! When the extreme rich use their money to influence politicians, politics itself becomes nothing more than one massive marketing campaign.
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