karl marx (1818-1883) and friedrich engels (1820-1905) [1]

Karl Marx (1818-1883) and Friedrich Engels (1820-1905) [1]


Marx - Outline1. The “Theory of History”: ‘Historical Materialism’ [19]2. Capitalism’s “Contradictions” - Three Major Theses:

(1) Value = (somehow) Labour [6, 13, 25](2) Exploitation [29](3) Class Conflict [34](3a) Ideology [17, 54]

4. Socialism: “all power to the people” - planning ... [47, 56](a) the “dictatorship of the proletariat” [59](b) the “ultimate” stateless society: “From each according to his ability, to each according to his need” [52](c) Marx’s bad economics [68-70]

5. An important question: what’s it all about? probably equality (despite Marx’s dumping on “justice” [45])


• 1. Early Manuscripts (1844): Estranged [aka “Alienated”] Labour • the alienation of labour:• First, the fact that labour is external to the worker

• Second, self-estrangement - the relation of the worker to his own activity as an alien activity not belonging to him

• Third, alienation from the human species. (This is via alienation from nature in general (“man’s inorganic body”)

• “First it estranges the life of the species and individual life, and then it makes individual life in its abstract form the purpose of the life of the species, likewise in an abstract and estranged form.”

• - What does all this stuff come to?• A lot of it is romanticism

The question is whether it is also romantic rubbishMy suggested answer is: yup!Frankly, all this manufactured stuff, and the changes we make to the environment in order to produce it,

is well worth it!- Certainly the worker himself thinks so!


• Estranged Labour (continued)• “So much does labour's realization appear as loss of reality that the worker loses reality to the point

of starving to death.”• [cute, but in fact false.] • “objectification”: loss of the object - the worker is robbed of the objects most necessary not only

for his life but for his work. • [note that if you lack what is necessary for life, then you’re dead!]• “the more objects the worker produces the fewer can he possess”• and “the more he falls under the dominion of his product, capital.”• “All these consequences are contained in the definition that the worker is related to the product

of his labour as to an alien object.”• [So who wants to possess a million ball bearings?] • [The question is whether he gains from the trade...]• “nature provides labor with the means of life” • (1) with objects on which to operate• (2) means for the physical subsistence of the worker himself.• “Thus the more the worker by his labour appropriates the external world, the more he deprives

himself of means of life.”• 1. “the external world more and more ceases to be an object belonging to his labour - to be his

labour's means of life”• [?? Last I heard workers actually did work in the external world...]


• [work] “more and more ceases to be means for the physical subsistence of the worker.”

• [Presumably this is based on the claim that workers were starving etc. But they weren’t (for one thing. We’ll soon get to Marx’s theory according to which they were supposed to be ...]

• [Note: As work becomes more efficient, the worker’s specific product is “less and less” something he either wants or could live on. True.

• But then, he is paid for doing what he does and he buys a better living with this than he could make for himself.

• So - where’s the beef?]• Thus the worker becomes a slave of his object, • In that: “it is only as a worker that he continues to maintain himself as a

physical subject, • and that it is only as a physical subject that he is a worker.• [This raises the question: Well, so?• also the comment: Funny thing for a “materialist” to be complaining about!]


• “The laws of political economy express the estrangement of the worker” • 1. the more the worker produces, the less he has to consume; • Comment: (1) assumes diminishing real wages - empirically false and economic

nonsense• 2. the more values he creates, the more valueless he becomes; • Comment: (2) speak for yourself, Karl! [... or does he mean that more output gets the

workers less wages? That’s in general not true, however.]• 3. the better formed his product, the more deformed the worker; • Comment: (3) life expectancy rose throughout the 19th c. How did that happen??• 4. the more civilized his object, the more barbarous the worker; • Comment: (4) is working away in primitive conditions with hand labor “civilized”?• 5. the mightier labour becomes, the more powerless the worker; • Comment: (5) the worker produces far more per person/hour. (In close cooperation with

many others, of course. Does the socialist Marx object to that??) • 6. the more ingenious labour becomes, the duller becomes the worker • Comment:(6) this depends.... but was sometimes true - but it’s not an inherent necessity

(modern workers have to be pretty smart...]• - the question is, how much does it matter? And how rectifiable is it? example, the

Swedish factory which put teams together making entire engines instead of just bits In any case, this is a complaint about industrial technology, not about capitalism


• Political economy conceals the estrangement inherent in the nature of labour by not considering the direct relationship between the worker (labourer) and production.

• Marx’s assertions: “Labour produces:

• for the rich wonderful things - but for the worker, privation.

• for the rich, palaces - but for the worker, hovels.

• for the rich, beauty - but for the worker, deformity.

• It replaces labour by machines - and it turns workers into machines.

• It produces intelligence - but for the worker, idiocy, cretinism.”

• [All this rests on empirical claims that mostly aren’t in fact true]


• II. estrangement in the act of production • First, labour is external - it does not belong to his “essential being”• in his work - he does not affirm himself but denies himself, • not content but unhappy, does not develop freely • - mortifies his body and ruins his mind• [note: Marx complained of the “idiocy of country life” too...] • He only feels himself outside his work; in his work feels outside himself • “at home when he is not working, and when working not at home”• [cute, but is that necessarily bad?] • His labour is therefore not voluntary, but coerced; it is forced labour• [interesting use of the word therefore’!]• “not the satisfaction of a need - merely a means to satisfy needs external to it.” • “Work’s alien character: not his own, but someone else's - does not belong to him - in

it he belongs, not to himself, but to another.”• [again - not literally ...] • “not his spontaneous activity” -> It belongs to another; it is the loss of his self.• “in his human functions he feels himself to be an animal.” • What is animal becomes human and what is human becomes animal.• [More Romanticism....]


• III. Man is a “species being” - • “in practice and in theory he adopts the species as his object [?]• “treats himself as a universal and therefore a free being.• “The universality of man is in practice manifested precisely in the universality

which makes all nature his inorganic body • “Nature is man's inorganic body• “Man lives on nature - nature is his body• “nature is linked to itself, for man is a part of nature.”• [note: if so, of course, it is impossible for industrial arrangements to undo it]• In estranging from man (1) nature, and (2) himself - estranged labour

estranges the species from man. • It turns the life of the species into a means of individual life. • “it makes individual life in its abstract form the purpose of the life of the

species, • “likewise in an abstract and estranged form.”• [Is there a real point here? Or is this more romanticism?]•


• 2. The Communist Manifesto (1848)

• Condemnation of the “bourgeoisie”:

• The bourgeoisie is unfit any longer to be the ruling class in society

• - to impose its conditions of existence upon society as an overriding law.

• “it is incompetent to assure an existence to its slave within his slavery

• “it cannot help letting him sink into such a state ...

• The essential condition for the existence and sway of the bourgeois class, is the formation and augmentation of capital;

• the condition for capital is wage-labor.

• Wage-labor rests exclusively on competition between the laborers.

• The advance of industry replaces the isolation of the laborers

• by their revolutionary combination, due to association.

• modern industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products.

• What the bourgeoisie therefore produces, above all, are its own gravediggers

• [More of Marx’s Hegelian penchant for opposites...]

• “Its fall and the victory of the proletariat are equally inevitable...”


• Property, Freedom, history:

• property relations are subject to historical change

• French Revolution: abolished feudal property - replaced it with bourgeois property

• communism would be: not the abolition of property generally, but the abolition of bourgeois property

• But modern bourgeois private property is based on class antagonisms,

• = the exploitation of the many by the few.

• Communism summed up in the single sentence: Abolition of private property.

• “Hard-won, self-acquired, self-earned property!”

• [Marx, who never did a stick of work in his life, implies that people who don’t “work” don’t deserve to make a lot of money. We’ll see ...!]

• Do you mean the property of the petty artisan and of the small peasant, a form of property that preceded the bourgeois form?

• - the development of industry has to a great extent already destroyed it

• Or do you mean modern bourgeois private property?

• But does wage-labor create any property for the laborer? Not a bit.• [Karl didn’t bother to look ....]


• It creates capital, i.e., that kind of property which exploits wage-labor,

• (now) property is based on the antagonism of capital and wage-labor.

• To be a capitalist, is to have not only a purely personal, but a social status in production.

• Capital is a collective product

• - the united action of many members, nay, of all members of society, sets in motion.

• -> Capital is therefore not a personal, it is a social, power.

• So, when capital is converted into common property [by the revolution]

• - personal property is not thereby transformed into social property

• It is only the social character of the property that is changed.

• It loses its class character ...

• [uh, huh ....] [This is sophistry. The fact is that the socialist revolution would take possessions from their owners, who lose control over them (which is what ownership consists in). “Socialization” makes a real difference.


• Bad Economics 100:

• Let us now take wage-labor.

• The average price of wage-labor is the minimum wage

• [uh., huh ....]

• = what’s absolutely requisite to keep the laborer in bare existence

• - “merely suffices to prolong and reproduce a bare existence”

• “We by no means intend to abolish personal appropriation of the products of labor, an appropriation that is made for the maintenance and reproduction of human life, and that leaves no surplus wherewith to command the labor of others.”

•

• [??]


• Bad Economics 100:

• the laborer lives merely to increase capital

• - only insofar as the interest of the ruling class requires it

• living labor is but a means to increase accumulated labor

• In Communist society: accumulated labor [i.e. capital] is but a means to widen, to enrich, to promote the existence of the laborer

• [all this rests on the theorizing in Capital, which we look at soon.]

• [i.e., capital will be run in the interest of the workers ...

• [...by the Central Committee, of course...!]

• In bourgeois society, therefore, the past dominates the present;

• in Communist society, the present dominates the past

• [more cuteness]


• In bourgeois society capital is independent , while the living person is dependent and has no individuality. [??]

• By freedom is meant, under the present bourgeois conditions of production, free trade, free selling and buying.

• If selling and buying disappears, free selling and buying disappears also.

• talk about free selling and buying has a meaning only in contrast with restricted selling and buying, with the fettered traders of the Middle Ages

• - “but have no meaning when opposed to the Communist abolition of buying and selling, of the bourgeois conditions of production, and of the bourgeoisie itself”

• The abolition of bourgeois individuality, bourgeois independence, and bourgeois freedom is undoubtedly aimed at [by the communists]

• You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the nonexistence of any property for the immense majority of society.


• From the moment when labor can no longer be converted into capital, money, or rent, into a social power capable of being monopolized,

• - you say, individuality vanishes.

• by "individual" you mean no other person than the bourgeois, than the middle-class owner of property

• This person must, indeed, be swept out of the way

• Communism deprives no man of the power to appropriate the products of society ...

• all that it does is to deprive him of the power to subjugate the labor of others by means of such appropriation...

• [we’ll see!]


• Culture and Ideology as Class-Relative • Just as, to the bourgeois, the disappearance of class property is the

disappearance of production itself, so the disappearance of class culture is to him identical with the disappearance of all culture.

• But that culture, the loss of which he laments, is, for the enormous majority, a mere training to act as a machine.

• “you apply, to our intended abolition of bourgeois property, the standard of your bourgeois notions of freedom, culture, law, etc.

• “Your very ideas are but the outgrowth of the conditions of your bourgeois production and bourgeois property,

• “your jurisprudence is but the will of your class made into a law for all• “- a will whose essential character and direction are determined by the

economic conditions of existence of your class”• [we bourgeois] transform into eternal laws of nature and of reason, the social

forms springing from your present mode of production and form of property• -- historical relations that rise and disappear in the progress of production• --a misconception you share with every ruling class that has preceded you.


• man's ideas, views, and conceptions, in one word, man's consciousness,

• changes with every change in the conditions of his material existence, in his social relations and his social life

• the history of ideas proves that intellectual production changes its character in proportion as material production is changed

• The ruling ideas of each age have ever been the ideas of its ruling class...

• [An important Marxian claim. But what does it mean?

• Stay tuned ...]


• Mature Marx

• 1. Marx’s “Historical Materialism”

•

Main elements: BASE: (a) Relations of production (e.g., A owns B’s labor -> A tells B what to produce ..)

(b) Forces of production (e.g. steam power ...)

Law, Morals, Religion, Culture

etc.

a) (Social) Relations of Production

b) (Material) Forces of Production

Superstructure

Base:


• SUPERSTRUCTURE: “legal and political” superstructure to which correspond “definite forms of social consciousness”

• Thesis: Social productive relations (a) correspond to a definite “stage of development” of (b) material productive forces

• Sum of (a + b) constitutes the economic structure of society - the “real foundation” on which rises (3) and (4).

• [historical] Materialism: Social Consciousness must be explained from the “contradictions of material life” [“dialectical” Materialism - conflict between the social productive forces and the relations of production --

• -->The mode of production of material life “conditions” the social, political and intellectual life process in general

• [‘conditions’? or ‘determines’? Marx says, “Consciousness doesn’t determine our being - social being determines consciousness”]


• [not in selection: “Political power, properly so called, is merely the organised power of one class for oppressing another.”

• capitalist State: a “committee for managing the common affairs of the bougeoisie”]

• The Key: As productive forces develop, they “conflict with the existing relations of production”; These relations “turn into their fetters” -> an epoch of revolution begins.

• Marx’s historical stages:

• Primitive Communism Ultra-low tech common ownership

• Oriental Despotism slave society

• Feudalism peasants go with land... knights rule

• Capitalism Private ownership of Means of Production

• Socialism Centralized ownership of MP

• Communism “From each according to Ability, To each according to his Need” - anarchy on

that principle ...


• >> Bourgeois relations of production are “the last antagonistic form of the social process of production” - arising from the social conditions of life of the individuals

• - The productive forces “developing in the womb” of bourgeois society create the material conditions for the solution of that antagonism.

• This social formation “brings, therefore, the prehistory of human society to a close”

• Now for the analysis of the last pre-socialist phase of humanity: Capitalism

• Inevitable? .....

• [In the Russian and Chinese cases, the revolutionists jumped stages -

• This brings up the question about “inevitability” - the revolutionists apparently felt they could avoid the inevitable!

• There are grave doubts about all historicist theories ..... people appear to be quite a bit too cussedly independent to conform to such theories!


• Capital [Das Kapital]

• - Marx’s magnum opus - his last word on economic/social theory• In 3 (or 4?) volumes - vol. I, 1867 [vol. 2, 1885; vol. 3, 1894

• a “vol. 4”, was not published in their lifetime

• see the Wikipedia article - http://en.wikipedia.org/wiki/Das_Kapital

• The book is Marx’s Analysis of the “Capitalist Mode of Production”)

• Intended as a work of social science, not ethics

• Definition: Capitalism = Free Market economy = Everything (labor and productive equipment, and consumer goods) is owned (and therefore able to be bought and sold) by individuals and privately acting groups [acting for their own various interests - presumptively, to make as much money as possible]

• ‘Free” market: No legal obstacles to voluntary exchange - only to involuntary (forced) exchanges. [contrasts, say, with feudal society...]


• Capital [Das Kapital]: The Three Major Ideas

• I. Theory of Value: value as ‘socially necessary labour’

• II. Exploitation: capitalists “appropriate” labour from workers

• III. Classes: Antagonism between owners and workers


• I. Marx’s version of the “Labour Theory of Value"

• 1. Marx’s argument for having a “theory” on this

• Commodity : object, for sale, that satisfies human wants (all sorts)

• 1.1 A vital distinction: Use-value vs. Exchange-value:

• Use-value= Utility -- properties of things making them fit for use (or “consumption”) (“the constitute the substance of all wealth, whatever may be the social form of that wealth”)

• Exchange-value: proportion in which values in use of one sort are exchanged (on a free market) for those of another sort. [roughly, price]

• Exchange-value “appears to be purely relative”

• Marx notes that an intrinsic exchange value (inherent in commodities) “seems a contradiction”

• 1.2. BUT: Things that exchange must be equal to each other -> (1) exchange-values “express something equal”

• (2) exchange-value is only the mode of expression of something contained in it, yet distinguishable from it -- there is something common to both. The two must therefore be equal to a third, which “in itself is neither the one nor the other”

• [Note: why can’t this just be effective demand?... ]


• I. "Theory of Value"

• 1.3 Exchange is an act characterised by “total abstraction from use-value” Leave out use-value -> only one thing remains: being products of labour - human labour in the abstract -- Human labour-power has been expended in their production “as crystals of this social substance”

• So: X has value only because human labour in the abstract has been embodied in X - measured by the quantity of the value-creating substance, the labour, contained in it


• 1.4. Labour Theory of Value - (1) The Simple Version:

• (Where x and y are individual items,

Price of item X: Price of Y :: Labor in X: Labor in Y

[Px:Py :: Lx:Ly]

• I.e., the price of commodities is directly proportional to the labor in them

• [Observation (known to Marx): This would make inefficiently produced objects worth more than efficiently produced ones. This is obviously false - for the Consumer, Price is proportional to the thing’s utility, not to its contained labour.]

• 1.5. (2) “Sophisticated” version, first stage: Averaging

• Price of average X: Price of average Y):: Average Labor in x: Average Labor in y

• ie., P(av x):P(av y)::L(av x):L(av y)

• [comment: this also is clearly false]


• 1.6. (3) Final form:

• The value of one commodity is to the value of any other, as the labour-time necessary for the production of the one is to that necessary for the production of the other - “Socially Necessary Labour Time”: P (x): P(y):: SNLT (x): SNLT(y)

• [SNLT]: “Socially necessary labour-time”

• def: “homogeneous human labour (total labour-power of society), embodied in the sum of all commodities Each of these units is the same as any other, so far as it has the character of [1] the average labour-power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is [2] needed on an average, no more than is socially necessary.


• example: - “The power-loom reduced by half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers required the same time as before” - “but for all that, the product of one hour of their labour represented after the change only half an hour's social labour - and consequently fell to one-half its former value”

• “The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it”

• “reduction of skilled labour to average social labour (“constantly in practice going on”, and “unavoidable”: e.g., one day of skilled to six days of unskilled labour .....

• 1.7. Measuring the “intensity” of labour ....• Comment: Notice that the labor “fell in value” -- i.e., the unit used to determine price

fell in value! Labor is being measured by output!]• - Marx doesn’t go on to ask how you compare outputs: e.g.,how do you compare the

labor of a mathematician with that of a bricklayer? • A good answer - and really the only answer possible - is: see how much people want

mathematics relative to bricklaying....]• - The theory is now circular: it “explains” market prices by “labor” -- but it

measures labor on the basis of market price!• - Since some form of the Labor theory is presupposed by the entirety of Marx’s

economics, this is a FATAL flaw...• NOTE: READ BASTIAT “ON VALUE” (p. 176 ff)


• BASTIAT “ON VALUE” (p. 176 ff)

• Air• 5.20 And since what is gratuitous cannot have value, the notion of value implying acquisition through effort, it

follows that value too will be misunderstood if we extend its meaning to include, in whole or in part, those things that are received as gifts from Nature, instead of restricting its meaning to the human contribution only.

• Air, then, has utility, but no value. It has no value, because, since it occasions no effort, it calls for no service.

• 5.36 But if a man goes down to the bottom of a river in a diving bell, a foreign body is introduced between the air and his lungs; to re-establish connections, the pump must be set in motion; then there is effort to be exerted, pains to be taken; and certainly the man will be ready to co-operate, for his life is at stake, and no service to him could be greater.

• The Diamond• 5.51 I take a stroll along the seashore.

• A stroke of good luck puts a superb diamond into my hand. I have come into possession of a considerable amount of value.

• Why? Am I going to contribute something great to humanity? Have I toiled long and arduously? Neither the one nor the other.

• Why, then, does the diamond have such value?


• BASTIAT “ON VALUE” (p. 176 ff)• Why the diamond has such value:

• Because the person to whom I give it believes that I am rendering him a great service, all the greater because many rich people would like to have it, and I alone can render it.

• Their judgment is open to question, granted. It is based on vanity and love of display, granted again. But the judgment exists in the mind of a man ready to act in accordance with it, and that is enough.

• 5.52 We could say that this judgment is far from being based on a reasonable evaluation of the diamond's utility; indeed, it is quite the contrary.

• But making great sacrifices for the useless is the very nature and purpose of ostentation.

• 5.53 Value, far from having any necessary relation to the labor performed by the person rendering

the service, is more likely to be proportionate, we may say, to the amount of labor spared the person receiving the service; and this is the law of values.

• “ We shall describe later the admirable mechanism that tends to keep value and labor in balance when the latter is free; but it is nonetheless true that value is determined less by the effort expended by the person serving than by the effort spared the person served.”


• A Dialogue about the diamond:

• 5.54 The transaction relating to the diamond may be supposed to give rise to a dialogue of this nature:

• 5.55 "Let me have your diamond, please."

• 5.56 "I am quite willing; give me your whole year's labor in exchange."

• 5.57 "But, my dear sir, getting it didn't cost you a minute's time."

• 5.58 "Well, then, the way is open to you to find that kind of minute."

• 5.59 "But, in all justice, we ought to exchange on terms of equal labor."

• 5.60 "No, in all justice, you set a price on your services, and I set one on mine. I am not forcing you; why should you force me? Give me a whole year's labor, or go find your own diamond."

• 5.61 "But that would entail ten years of painful search, and probable disappointment at the end. I find it wiser and more profitable to spend ten years in some other way."

• 5.62 "And that is just why I feel that I am still doing you a service when I ask only for one year. I am saving you nine years, and for that reason I consider this service of great value. If I appear demanding to you, it is because you consider only the labor I have performed; but consider also the labor that I save you, and you will find that I am almost too easy."


• II. Exploitation

• 1. The Capitalist

• (Note: `M->C->M' refers to `Money into Commodity into Money')

• “The expansion of value, M->C->M, becomes his subjective aim” - “the sole motive of his operations”

• Use-values are not the real aim of the capitalist -- profit-making alone is what he aims at

• - the capitalist is a “rational miser”

• [Note: Recall from the Early Mss: “labour produces for the rich , palaces -but for the worker, hovels”

• -- But if the capitalist invests as much of his money as possible -- then he lives in the hovel!

• ... Marx fails to see the irony: on his picture, the capitalist is, in real terms (i.e., “material” terms) a pure altruist: everything he does benefits others - none of it himself!]


• 2. Labour's relation to Capital:• “The labourer works for the capitalist instead of for himself” • [this is a misuse of the word ‘for’: all it means is that he’s not self-employed. • But of course, his motive is to maximize his own income, not the capitalist’s.]• The argument:• If Capitalist [C] pays for a day's labour-power • - the worker’s Product is the property of the capitalist and not that of the worker, its

immediate producer• and W - the seller of labour-power - parts with it at its value, • so, the right to use that power for a day belongs to W• the use-value he has sold [L] in exchange with C is the consumption of the commodity

purchased (namely his work, thus promoting aims of capitalist). • That is: the capitalist consumes (uses) the worker’s labour in production• “The labour-process is a process between things that the capitalist has purchased,

things that have become C’s property. The product of this process belongs, therefore, to him.” [yes...]


• 3. Surplus-Value: Profit and “Exploitation”

• Essential Distinction re the “value of labor-power”:

• (a) INPUT value: Value of a day's labour-power: = the means of subsistence required for its production

• (b) OUTPUT value: “the living labour that it can call into action” - i.e., power to produce

• These, Marx points out [correctly], are two different things

• Marxian thesis: The former determines the exchange-value of the labour power, the latter is its use-value


• Surplus-Value: Profit and “Exploitation” (continued)

• 4. Origin of Profit:• Behold! - Its exchange-value is less than its use-value • - That’s where profit comes from! • “The difference of the two values was what the capitalist had in view”• [Ingenious application of a hopeless theory]• - Labor: is the source not only of value, but of “more value than it has itself”• The seller of labour-power realises its exchange-value, and parts with its use-

value. He cannot take the one without giving the other• Thus ... Profit! • and therefore -- Exploitation!• [conclusion: capitalism exploits workers]• [this is clearly true. • question: Is it a problem??]


• 5. The trouble with Marx’s Critique• ‘exploitation’ is ambiguous:• (a) Pejorative: to exploit is to harm, to ill-use the thing for one’s own gain• (b) Neutral: to exploit is to use, gain some advantage by using - nothing said,

one way or the other, about its effects on the exploited.• Point: What Marx calls “exploitation” is (usually) good for you!• Laborer’s options:• product real wage % exploited net gain• cottage 1 1 0 1• factory 10 2 80% 2

• The worker’s exploitational take-home pay is twice than the unexploited condition!

• -Of course, the capitalist makes still more. • Q: So what? • [the worker looks at it from his own point of view - in which, it’s better!]


• 6. Marx’s “General law of Capitalist Accumulation”

• The very nature of accumulation excludes every diminution in the degree of exploitation of labour

• ... “It cannot be otherwise in a mode of production in which the labourer exists to satisfy the needs of self-expansion of existing values, instead of, on the contrary, material wealth existing to satisfy the needs of development on the part of the labourer.”

• “The industrial reserve army weighs down the active labour-army”

• [Note: this is empirical and theoretical nonsense.]

• Polarization: Accumulation reproduces the capital-relation on a progressive scale - more larger capitalists at this pole, more wage-workers at that --- leading to ....

• “Immiseration”: The greater the social wealth, the greater is the industrial reserve army: the more extensive the industrial reserve army, the greater is official pauperism.

• The absolute general law of capitalist accumulation:

• “The labouring population always increases more rapidly than the conditions under which capital can employ this increase for its own self-expansion.”

• [but, note:] “Like all other laws it is modified in its working by many circumstances, the analysis of which does not concern us here.”

• [no explanation why this “must” be so, of course ....]


• Note: Marx’s claim here implies that as capitalist economies expand, unemployment must rise, at least over the long run.

• But this is not true: In no country has there been a constant increase over long periods.

• -> [Narveson says: In contemporary times, unemployment is largely an artefact of government policy: governments buy unemployment. In the Great Depression, they, more or less inadvertently, caused it.

• This is because the price of labour is not allowed to fall as demand decreases• Full employment is where all available labour is purchased economically• - that is, in such a way that it produces something that somebody else is willing and able

to pay for] • [This last is not contentious. The former is.]


• III. Marx’s theory of Class Antagonism

• Claim: Capitalists and Workers are at Loggerheads

• Marx’s Thesis in general:

• 1. Constantly diminishing number of the magnates of capital

• 2. Usurp and monopolise all advantages of this process of transformation

• 3. so, their activity produces a “growing mass of misery, oppression, slavery, degradation, exploitation”

• 4. and the growth of working-class revolt (“always increasing in numbers - disciplined, united, organised by the very mechanism of the process of capitalist production itself”)

• 5. The “monopoly of capital” becomes “a fetter upon the mode of production”

• 6. Revolution: “This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.”

• -> In short, “capitalist production begets, with the inexorability of a law of Nature, its own negation.

• Socialist revolution is “the negation of negation”


• The Problem with Marx’s argument:• Individual worker A and A’s employer have a partial conflict of interest, yes:

more for worker, less for capitalist ... • (but if the capitalist makes his demands too high, the worker quits and goes

elsewhere)• -> BUT is the working class in conflict with the owning class?• No! Capitalists make money by selling the product of mass production.• There isn’t anybody else to sell them to than workers. (on Marx’s view)• -> Therefore, the more the other guy’s workers get paid, the better that is for

the capitalist.• Moreover, all capitalists (and all workers) are in competition with each

other• -->--> There is no “class interest” of the kind Marxism proclaims• The whole thing is an analytical absurdity!• > And, no class competition....

• The claim that there is class competition is fallacious.


• [Notes: (1) the real wages of the typical English workman are estimated to have doubled about every twenty years during the industrialization era. (Engels’ study, “The conditions of the English Working Class in 1844”, didn’t benefit from another look in 1864 or 1884...)]

• (2) A theoretical Query: why would an employer want his employees to starve??]

• --> the more he works, the more he “falls under the dominion of his product, capital”

• [Note: In a capitalist economy, the worker normally produces things that he

• (a) doesn’t get to keep, as such - but

• (b) typically has no interest in even if he could (100,000 ball bearings a day). Is that what he means by ‘alienation’? If so, so what?

• > These consequences are “contained in the definition” that

• the worker is related to the product of his labour as to an alien object

• - ‘alien’ because he doesn’t use it himself? True.

• - But, ‘alien’ because its production does him no good? False.


• The Baseline Fallacy (again):• There is no entailment relation between • (1) Worker (W) works for Capitalist (C), and • (2) C makes W worse off • The major issue here is the appropriate baseline for worsening (or “harming”)• The natural one is: Where W was before • “The more the worker spends himself, the more powerful the alien objective world

becomes” [(1) meaning what? (2) does the worker care about this particular kind of “power”?]

• [Note that Marx’s dicta ought to apply to an airline pilot making $200,000/yr just as much as to a worker in a shirt factory]

• “-- for the rich, intelligence - but for the worker, idiocy, cretinism”] • [>> note: Does it produce “cretinism” for the worker? That suggests that he wasn’t

cretinous before, but is now. Is that right?]• “in the very act of production The worker estranges himself from himself” [Does

Marx mean that the worker doesn’t particularly like his job? If so, what else is new? But seeing that it is the source of his livelihood, he might well come to like it after all! --- see next slide ....]


• The Right question: How much does the worker like his job • (a) at the pay he’s getting • (b) compared to the alternatives? • - If he prefers some actual alternative to the one he’s got, then why doesn’t he

take it? • [Question: does someone owe him a job? • Evidently Marxists (and many others) think so. But - why?]• >> Marx needs to argue that somehow capitalism is depriving him of desirable

alternatives - that it coerces the worker. • We need an analysis of coercion:• Coercion: A coerces B =• (1) B prefers x to y at the time the interaction takes place, T 0

• (2) A intervenes at t1 such that • (3) B’s doing x at t2 would be worse, rather than better, for B• (4) in consequence of which, B chooses y at t2

• It is not true that job offers or acceptances coerce people • - (Not if you go by people’s own word about it)


• Marx saw the fabulous expansionary tendencies of capitalism...

• How will he show us that lots of other neat jobs would be available if we didn’t have free ownership of capital?

• [There’s very good reason for thinking that there will not be]

• >> What about such claims as that the work “does not belong to his essential being” - Is this factor, whatever it is, supposed to be something that workers actually care about??

• If “the worker no longer feels himself to be freely active in any but his animal functions”, that doesn’t sound too good.

• But is it true? Is it a complaint that the worker doesn’t have enough leisure time? [Maybe he’d rather have more pay. When Parliament proposed a mandatory limit to the working day, a lot of workers voted against it...]

• >> Or that “It makes individual life in its abstract form the purpose of the life of the species, likewise in an abstract and estranged form”?

• [Should we say: “Sure, why not?”]


• Culture and Ideology as Class-Relative • “Your very ideas are but the outgrowth of the conditions of your bourgeois

production and bourgeois property”• Bourgeois jurisprudence is but the “will of your class made into a law for all” - as

determined by the economic conditions of that class• A “selfish misconception” induces the bourgeoisie to transform into “eternal laws of

nature and of reason” the social forms springing from your present mode of production and form of property

• Man's ideas, views, and conceptions change with every change in the conditions of his material existence, in his social relations and social life.

• The ruling ideas of each age have ever been the ideas of its ruling class...• Question: does it follow that those ideas are (a) false? Or (b) that they have no truth-

value??• Ideology - the real story?• Why or how would the “ruling class” control our thinking? • - Need a nonmysterious explanation• - Obvious possibilities: • (a) we are dependent on them, so we tend to think in such a way as not to rock the boat; • (b) they have more power of propaganda than we do.


• [note: Marx & Engels were members of the bourgeoisie... Why weren’t they capitalists??]

• Question: Who are the ruling class?

• - not the capitalists.

• In a democracy, the plausible answer is that it’s

• (a) the majority -- almost none of whom are capitalists, on Marx’s account; or

• (b) elected members of government (elected, almost entirely, by noncapitalists)

• [‘The “ideology” of the ruling class will apparently be what ordinary voters believe...

• [Or is it what their legislators tell them to believe?

• [or both? ...]


• The Theory of Socialism• 5. On the Division of Labour in Production (Friedrich Engels)• In every society: the producers don’t control the means of production• - -the means of production control the producers - • [they are] “means for the subjection of the producers to the means of production”• Esp. true of the division of labour --• 1. the separation of town and country [- which “stupefies” - Marx didn’t have a high

opinion of farmers!]• 2. Modern industry “degrades the labourer to a mere appendage of a machine”• Socialism: “society makes itself the master of all the means of production to use them in

accordance with a social plan”• -- “puts an end to the former subjection of men to their own means of production• “It goes without saying that society cannot free itself unless every individual is freed”• The former division of labour must disappear• Its place must be taken by an organization ... in which productive labour, instead of

being a means of subjugating men, will become a means of their emancipation• (“offers each individual the opportunity to develop all his faculties, physical and mental,

in all directions and exercise them to the full”)• “Today this is no longer a fantasy, no longer a pious wish.”• Comment: it’s exactly as much of a fantasy as it ever was: viz., a pious wish...


• Critique of the Gotha Program: Marx on “justice”

• What is "a fair distribution"? Do not the bourgeois assert that the present-day distribution is "fair"?

• And is it not, in fact, the only "fair" distribution on the basis of the present-day mode of production?

• (- “what a crime it is to force on our Party again, as dogmas .. obsolete verbal rubbish - ideological nonsense about right and other trash so common among the democrats and French Socialists”)

• “Are economic relations regulated by legal conceptions or do not, on the contrary, legal relations arise from economic ones?


• [from the proposed Gotha Program of the Communists] we learn that "the proceeds of labour belong undiminished with equal right to all members of society."

• "To all members of society"? To those who do not work as well? What remains then of the "undiminished proceeds of labour"? Only to those members of society who work? What remains then of the "equal right" of all members of society?

• There must be deducted: replacement costs, capital expansion, reserve insurance funds, education, health, administration not belonging to production. [will, Marx thinks, be “reduced” under socialism...]

• In co-operative society based on common ownership, producers do not exchange their products -- individual labour no longer exists in an indirect fashion but directly as a component part of the total labour. The phrase "proceeds of labour" thus loses all meaning ...

• Comment: That’s exactly what makes socialism impossible, according to the Austrian school...


• [Marx on Socialism, Phase I:]• Society as it emerges from capitalist society - “still stamped with the birth

marks of the old society”• Accordingly, the individual producer receives back from society--after

the deductions have been made--exactly what he gives to it. What he has given to it is his individual quantum of labour.

• [Note: ‘same amount of labour’, remember, is now meaningless, since there is no exchange]

• “the exchange of equivalents in commodity exchange only exists on the average and not in the individual case

• [Which means that many workers will think they are getting gypped, while the inefficient will have a field day!]

• The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour

• Right by its very nature can consist only in the application of an equal standard; but unequal individuals are measurable only by an equal standard


• Two “Phases” of Socialism:

• 1. [Stalinism] “..these defects [his word] are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.

• - a mistake to stress so-called distribution : Distribution of means of consumption are a function of the distribution of the conditions of production - which is due to the mode of production itself

• - Therefore, in Capitalism, the material conditions of production are in the hands of non-workers -- If they are “the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one.”

• The question then arises: what transformation will the state undergo in communist society?

• This question can only be answered scientifically - “one does not get a flea-hop nearer by combining the word people with the word state”


• Between capitalist and communist society lies the period of the revolutionary transformation of the one into the other - in which the state can be nothing but the revolutionary dictatorship of the proletariat.

• After that, the “withering away of the state” --• 2. The “higher phase”: Ultimate Communism:• - “antithesis between mental and physical labour has vanished• - labour has become not only a means of life but life's prime want• - “the springs of co-operative wealth flow more abundantly• - The principle, “From each according to his ability, to each

according to his needs!” sets in .... • [Question: Why should I care about your needs?• Marx’s answer might be: Well, I don’t now, while we’re under the sway of the

bourgeoisie, but when things are done right, I will!• - And how does he know that?• - Probable answer: because the people in power will damn well see to it that I

do, like it or not ...!]


• Socialism, Utopian and Scientific• Modern socialism is, in its essence, the direct product of the recognition, on

the one hand, of the class antagonism existing the society of today between proprietors and non-proprietors,

• Classic philosophy (Locke, etc.): “this kingdom of reason was nothing more than the idealised kingdom of the bourgeoisie”

• - Modern industry develops both (1) the conflicts which make necessary a revolution And (2) in these gigantic productive forces, the means of ending these conflicts

• Capitalism: “the elements of general wealth are present in abundance - but "abundance becomes the source of distress and want"

• “The capitalistic mode of production stands convicted of its own incapacity to further direct these productive forces - there’s a “rebellion of the productive forces”

• “production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society

• The state - will ultimately have to undertake the direction of production


• State ownership of the productive forces - not the solution of the conflict ...

• but concealed within it are the technical conditions that form the elements of that solution

• -- practical recognition of the social nature of the modern forces of production, and therefore in the harmonising of the modes of production, appropriation, and exchange with the socialised character of the means of production

• * this can only come about by “society openly and directly taking possession of the productive forces”

• Active social forces work blindly -- when once we understand them, we can subject them more and more to our own will

• [Question: who is ‘we’? You and I - or the Communist Party?]

• The proletariat seizes political power and turns the means of production into state property.

• In doing this, it abolishes all class distinctions and antagonisms, also the state as state.


• Property and Freedom

• Communism: abolition, not of property generally, but of bourgeois property

• “When capital is converted into common property, it is only the social character of the property that is changed. It loses its class character.”

• [The “means” formerly controlled by a subset of people are now controlled by everybody rather than some subset of people. But is this necessarily an improvement?

• Aristotle’s insight: people manage their own things better than other people do.


• Marxian version of Anarchism

• “The state was the official representative of society-- but not really: actually, only the class which itself represented”

• Abolish class rule, - and the state is no longer necessary.

• The state is not "abolished". It dies out.

• The law of division of labour lies at the basis of the division into classes - still carried out by means of violence and robbery, trickery and fraud

• [why do they say that? It’s pretty obviously untrue]

• Marx: The ruling class consolidates its power at the expense of the working class - an “intensified exploitation of the masses”

• [Compare: Governments exist to extract wealth from the governed.

• This does not mean the capitalist class.... socialist rulers manage it quite well!]


• Marxian version of Anarchism• Dominance of bourgeoisie was based upon the insufficiency of production

• - abolition of classes presupposes a degree of historical evolution

• This point is now reached - the “political and intellectual bankruptcy” of the bourgeoisie” manifests itself as “economic bankruptcy recurs regularly every ten years”

• In every crisis, society stands helpless, face to face with the absurd contradiction that the producers have nothing to consume, because consumers are wanting

• The socialised appropriation of the means of production does away, not only with the present artificial restrictions upon production

• etc., etc. ...

• [But. no idea of how to do the “planning” .....]


• On Morality • “Conceptions of good and evil have varied much from nation to nation and from age to

age - often been in direct contradiction to each other.• Today we have:• - Christian-feudal morality, which divides into Catholic and Protestant morality “each of

which has no lack of subdivisions”• - modern-bourgeois morality• - the proletarian morality of the future• [note that Engels doesn’t try to tell us just what this is...• if he has in mind the Marxian slogan, then note that it was also suggested by

Aquinas ......• --> “three great groups of moral theories” which are in force simultaneously and

alongside each other. Which, then, is the true one? • Not one, in the sense of absolute finality• (the one with the maximum elements promising permanence in the present... is

“proletarian morality”)• They represent three different stages of the same historical development• At approximately similar stages of economic development moral theories must of

necessity be more or less in agreement


• “Is respect for property an eternal moral injunction? By no means:

• “In a society in which all motives for stealing have been done away with - only lunatics would ever steal - one would be laughed at who tried solemnly to proclaim the eternal truth: Thou shalt not steal!

• [Note: that was Hume’s thought-experiment: abolish scarcity, and there’s no need for property]

• We maintain that all moral theories have been hitherto the product of the economic conditions of society obtaining at the time [Note: Why only “hitherto”?]

• Morality has always been class morality

• A really human morality which stands above class antagonisms and above any recollection of them becomes possible only at a stage of society which has not only overcome class antagonisms but has even forgotten them in practical life

• [uh, huh .... But Marx and Engels’ preaching of class hatred doesn’t exactly promote this state of affairs ...]


Socialism

• if capitalism is private, socialism is public ownership of the “means of production”• Distributively, the public already does, and must, “own” everything [there isn’t anybody

else!] • So Marxian socialism = collective ownership • Each member of the collective has a voice and a vote • regarding what to produce and how to distribute it• So economic decisions are made by voting - not by trading• Why? • - presumably, to make people better off. • - in their own view??• Or in the view of some special persons • - the Central Committee of the Communist Party? • Not much....

Karl Marx (1818-1883) and Friedrich Engels (1820-1905) [62]• [Socialism has been the latter in all Communist states.]

• Yet in principle Marx thought that each individual person counted.

• And if you don’t count a person’s own view

• of what he himself values, then what do you count?

• (And if that doesn’t count, then why bother to give him

• a vote?

• [Socialist countries, of course, saw to it that he

• didn’t have a real vote.

• When all the other would-be parties are illegal - or exterminated

• - what does it mean to have a “vote”?]

• But even if the vote is real, is there any reason to think that will

• help?

Karl Marx (1818-1883) and Friedrich Engels (1820-1905) [63]• The idea is that the “exploitation of the masses” gets so extreme that they revolt

(roughly).

• The modern student should be aware that this isn’t what actually

happened, nor is it humanly likely that it ever would.

• In the first place, ‘exploitation’is, to be blunt, bunk, so the basic premise of the theory is false.

• the exploited masses getting together and rising up to shake off their masters....

• will it happen?

• There are two different problems here - both fatal,.

• first place: it is not in any given worker’s interest to support the revolution,

• even if it would be a good thing for the working class (which it also isn’t)

• Any given worker will be worried about his wife and kids, where the next meal

• will come from, and whether he personally will get shot up there on the barricades; most of them will stay home and let the other guys do it. Unless force is used -

• Which it will be, because of the next point.

Karl Marx (1818-1883) and Friedrich Engels (1820-1905) [64]• Mises: Our selections conclude with the thought that what we will have in the immediate

post-capitalist phase is the Revolutionary Dictatorship of the Proletariat. • it is not “the Proletariat,” but their self-appointed spokespeople, in the driver’s seat -• what they had, and any socialism would have, is certainly a dictatorship.• At this point, Plato has become a kind of Thrasymachus.• Do we want to be under the thumb of a self-interested gangster? • Or do we prefer an ideological gangster who tells us what’s good for us, and to take it• and shut up, or else? Rule by the Mafia, or by the Central Committee?• “To each according to his Ability, To Each according to his Need!” • That implies that each person regards each other person as his friend, or indeed, his

daughter (“Comrade!”) - Good luck, Karl! • Well, one thought is that if each individual was a multi-millionaire, then he would be

inclined to spend a lot of money on his• neighbor’s “needs.” A large problem now is: who assesses these “needs”? And how? Do I

really need a new Porsche? Maybe not, but how do I persuade somebody else who thinks he does that he doesn’t?

• The idea that someday we will have so much that distribution - that is, resolving competing desires for it - just won’t be a problem is, when you contemplate this, seen to be in Cloud Cuckoo-Land.

• Until then, of course, force will have to be used - right? • “Of course, Comrade Sergeivich!”


• The point of socialism was to produce to a “plan”

• - instead of leaving production to the “anarchy of the market.”

• That means a few (supposed) experts sitting around a table, not a

• vast meeting of all the people or a ballot.

• There are far too many decisions to make to do it that way anyway.

• The anarchy of production is in fact the genius of capitalism

• Socialist Management: A problem

The “Calculation Debate”

- question: without prices, can rational economic decisions be made?


• And it calls for direction of the economy for the General Good. • - Directing, by whom? • Answer: the Intellectuals - the self-appointed• (leaders of the Revolution: Marx, Lenin, Trotsky, etc.)• They in turn will give way to the Stalins and the Kim Il Sungs.• This is inevitable. It is literally impossible revolution to happen as Marx says.

• As to the impossibility of Socialism itself:• thoroughgoingly socialist economy• compared with a mixed economy that is fairly• its inferiority has been demonstrated decisively by the Eastern European and

Chinese experiences • - except, perhaps, to die-hards, who create excuses why in this• particular case it hasn’t worked out ...• [case: China under Mao experienced the greatest starvation in history. It was • all due to stupid economics (collective farming....)


• Socialist Calculation Debate• - began with an article by Ludwig von Mises (1921)• argued that the kind of information you need to manage an economy from a central agency is• in principle impossible to have without markets

• Socialist rejoinder: construct a mimic of capitalist pricing • - and use that as your database for the Managers.

• The fact that this could only work “in principle” was widely overlooked, until• recently when Robert Heilbroner, long a sympathizer with Marxism if not an actual Marxist,

summed it up thus in 1990: • “It turns out, of course, that Mises was right.”

• That is to say, on the theoretical front, buttressed by what we now know about data (what with• computers and so on), the battle is over: socialism is• indeed, impossible. Period. • [See the superlative book by• David Ramsay Steele, From Marx to Mises.]• What Marx objected to as the “anarchy of production and exchange” is precisely capitalism’s

glory.


• The market is anarchic - decentralized.

• It is also, in its way, orderly:

• market activities establish prices, which

• are knowable and fairly predictable (in the short term, at least)

• But Socialism eliminates the market.

• Production decisions are supposed to by a rational “plan.”

• But how is the plan made and what is it about?

• forbidding questio: is it possible to have, literally, a “rational plan”?


• the problem• The “means of production,” - the materials, equipment, organization of labor, and so on,

required for production to take place.

• It must somehow be decided just what is going to be produced, and how.

• If you eliminate the market, you eliminate a huge source of

• information - price information, information about how

• much various things are worth to the consumers we are

• supposedly trying to help.

• Given that information, you can make some educated conjectures about what would

• sell and what wouldn’t. Moreover, you can organize your production efficiently, minimizing costs by picking the suppliers who give you the best prices.

• But how do you make any such estimates if you have no market?


• How do you calculate those things?

• Answer: very badly

• example: the food situation in the USSR.

• After the disaster of the first few years, the Kremlin decided to allow the peasant a tiny bit of private land, whose produced could be sold at market.

• 3% of the land was set aside for this. During the Soviet years,

• fully 30% of all the food produced in the USSR came

• from those little plots.


• Marx:

• "the realm of freedom actually begins only where labor which is determined by necessity and mundane considerations ceases;

• thus in the very nature of things it lies beyond the sphere of actual material

• production.

• ... Freedom in this field can only consist in

• socialized man, the associated producers, rationally

• regulating their interchange with Nature,

• bringing it

• under their common control, instead of being ruled by it

• as by the blind forces of Nature .. but it nonetheless remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom... .

• The shortening of the working day is its basic prerequisite.”

• [e.g. in France where the Law confines the work week to 35 hrs...]


• Does Marx mean that production has to have expanded to the point where everybody can have everything he wants, so that there is no conflict among people?

• Is this asserted as a necessary condition for the onset of communism?

• If so, we may be completely confident that that day will never come.

• People’s wants are open-ended. Hockey players manage to spend incomes twenty times my own. How do they do it? We middle class types wonder, but the answer is the same as how we manage to spend all of our own ample incomes now, though they are many times what we earned back in

• graduate school. No problem!

• Socialists: our extravagent lust after more material goods is merely a byproduct of capitalist brainwashing...

• [-- Or is the socialist’s tendency to say what he says the product of socialist brainwashing?]

• It certainly isn’t derived from observation of real people, whose choice-behavior strongly suggests that they actually like and want good cars, big houses, trips to Florida, and so on

• ... Again, notice the socialist’s real contempt for ordinary people,

• -- whose professed preferences and choice-behavior is not allowed to count

• as evidence of what’s good for them.

• [cf. Al Gore, whose house consumes 20 times the energy of normal people’s houses, and who preaches the evils of CO2 emitting...]

[73]• What Everyone Should Know about Economics and Prosperity• [James Gwartney and Richard Stroup]• Key Elements of Economic Progress:

• 1. Incentives Matter• 2. There is no such thing as a Free Lunch• 3. Voluntary Exchange Promotes Progress• 4. Transaction Costs are an Obstacle• 5. Increases in Real Income depend on increases in Real

Output• 6. Sources of Income Growth:

– a) Improvements in Worker Skills– b) Capital Formation– c) Technological Advancement– d) better economic organization

• *7. People earn Income by Helping Others• *8. Profits direct activity toward increased wealth• **9. Invisible Hand: Market Prices harmonize personal and general

welfare• 10. Ignoring Secondary and Long-term Effects is the most common

error• [This last is especially relevant to politics.• Democracy disconnects people from reality. Politicians emphasize benefits, de-emphasize costs, of

their proposals. Conversely, they emphasize downsides of private activity, de-emphasize benefits.]


• Seven major Sources of Economic Progress• 1. Private ownership• 2. Freedom of Exchange• 3. Competitive Markets• 4. Efficient Capital Markets• 5. Monetary Stability• 6. Low Taxes• 7. Free Trade


• Role of Government• 1. Protecting Individual Rights• 2. not a corrective device• 3. Cost of Government:

– a) decline in private sector output– b) cost of tax compliance– c) gains from exchanges prohibited by government are lost– [example: minimum wage laws, rent control]

• 4. Special Interest Groups use democracy to fleece people [Bastiat’s point]

• 5. Budget deficits are hard for democratic politicians to avoid• 6. Coercive philanthropy moves society from production toward

plunder• 7. Cost of Government transfers tends to exceed their benefits• 8. Central Planning wastes resources, retards economic progress• 9. Competition among components of government is essential• 10. Constitutional rules harmonizing politics and economic

promote progress

karl marx (1818-1883) and friedrich engels (1820-1905) [1]

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