The Force of Marx

In response to a discussion of communism.

When I studied economics in college, my favorite professor was a Marxist, so I took Marxian economics, socialism vs. capitalism and any other classes that he taught. He made several of the points that you make below. However, having spent several years teaching economics myself, I now believe that Marx really did get it wrong. He made some critical mistakes.

He argued (as many economists before him) for the labor theory of value. This is the idea that the value of a product is based on the amount of labor used to create the product. It was not until the development of marginal analysis in the 1880s that a good alternative to the labor theory of value was developed. However, Marx went a step farther than Smith and Ricardo and argued that only labor should be rewarded in the economy and that returns paid to any others (e.g. profits and rents) are simply theft. Thus, capitalists, landlords, merchants, professionals, any class other than laborers are simply thieves.

Well, if you are going to reward only labor, then you cannot have a free market system in which price is used to allocate scarce resources. Such a system rewards people in addition to the workers. Likewise, private property had to go. Thus, having eliminated the basic market structure, it is no accident that a central authority was needed to make decisions about production and distribution in communist countries.

Marx also insisted on economic equality. According to Marx, distribution is to be determined by need. Once need becomes the determinant for distribution, there is no longer an incentive to produce. After all, you will receive what you "need," not what you "produce." The road to success to be become "needy" not to become productive.

In Utah, we had an experiment in collectivism in the 1860s. The Mormon Church established as a religious principle what was called the United Order. In most towns it failed in months. In one town it lasted for a few years. But, even among very devoted people jealously and anger soon developed as people argued that they were working harder than others, but that they were receiving nothing more for their efforts. The difference between Utah and the USSR was that in Utah the leadership was unwilling to use force to ensure the survival of the system.

Having taken away the profit motive, Lenin and Stalin had to develop another incentive to keep the system functioning. Of course terror on a massive scale was the answer. They were willing to murder millions to ensure the survival of the revolution.

There is an amazing book, which was first published in France in 1999 entitled "The Black Book of Communism." Many of the authors were themselves communists, before the Soviet archives were opened to the world and they peered in. In the book there is a summary of the numbers killed by communist regimes. On page 4, "The Black Book of Communism" contains the following summary of the numbers killed:

USSR: 20 million deaths

China: 65 million deaths

Vietnam: 1 million deaths

North Korea: 2 million deaths

Cambodia: 2 million deaths

Eastern Europe: 1 million deaths

Latin America: 150,000 deaths

Africa: 1.7 million deaths

Afghanistan: 1.5 million deaths

The international Communist movement and Communist parties not in power: about 10,000 deaths

The total approaches 100 million people killed.

Once the voluntary mechanism of exchange through the market is removed, alternative mechanisms for ensuring production and distribution must be implemented through force. This is where Marx was wrong. Marx missed the inevitable conclusion that his system would have to be implemented by force, rather than becoming the Utopia that he desired.

		September 10, 2005 *The Force of Marx*
	In response to *a discussion of communism.* When I studied economics in college, my favorite professor was a Marxist, so I took Marxian economics, socialism vs. capitalism and any other classes that he taught. He made several of the points that you make below. However, having spent several years teaching economics myself, I now believe that Marx really did get it wrong. He made some critical mistakes. He argued (as many economists before him) for the labor theory of value. This is the idea that the value of a product is based on the amount of labor used to create the product. It was not until the development of marginal analysis in the 1880s that a good alternative to the labor theory of value was developed. However, Marx went a step farther than Smith and Ricardo and argued that only labor should be rewarded in the economy and that returns paid to any others (e.g. profits and rents) are simply theft. Thus, capitalists, landlords, merchants, professionals, any class other than laborers are simply thieves. Well, if you are going to reward only labor, then you cannot have a free market system in which price is used to allocate scarce resources. Such a system rewards people in addition to the workers. Likewise, private property had to go. Thus, having eliminated the basic market structure, it is no accident that a central authority was needed to make decisions about production and distribution in communist countries. Marx also insisted on economic equality. According to Marx, distribution is to be determined by need. Once need becomes the determinant for distribution, there is no longer an incentive to produce. After all, you will receive what you "need," not what you "produce." The road to success to be become "needy" not to become productive. In Utah, we had an experiment in collectivism in the 1860s. The Mormon Church established as a religious principle what was called the United Order. In most towns it failed in months. In one town it lasted for a few years. But, even among very devoted people jealously and anger soon developed as people argued that they were working harder than others, but that they were receiving nothing more for their efforts. The difference between Utah and the USSR was that in Utah the leadership was unwilling to use force to ensure the survival of the system. Having taken away the profit motive, Lenin and Stalin had to develop another incentive to keep the system functioning. Of course terror on a massive scale was the answer. They were willing to murder millions to ensure the survival of the revolution. There is an amazing book, which was first published in France in 1999 entitled "The Black Book of Communism." Many of the authors were themselves communists, before the Soviet archives were opened to the world and they peered in. In the book there is a summary of the numbers killed by communist regimes. On page 4, "The Black Book of Communism" contains the following summary of the numbers killed: USSR: 20 million deaths China: 65 million deaths Vietnam: 1 million deaths North Korea: 2 million deaths Cambodia: 2 million deaths Eastern Europe: 1 million deaths Latin America: 150,000 deaths Africa: 1.7 million deaths Afghanistan: 1.5 million deaths The international Communist movement and Communist parties not in power: about 10,000 deaths The total approaches 100 million people killed. Once the voluntary mechanism of exchange through the market is removed, alternative mechanisms for ensuring production and distribution must be implemented through force. This is where Marx was wrong. Marx missed the inevitable conclusion that his system would have to be implemented by force, rather than becoming the Utopia that he desired.