Liberty in Focus

Understanding and applying the outlook of personal rights and freedom.

Core Problems of Marxist Economics and Philosophy

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Karl Marx - Author of the Communist Manifesto

Far too often in our political discourse, we tend to rely on platitudes and generalizations as our basis for criticism of philosophical opponents.  This approach may save us time, create good one-liners, and inspire loyalty from those who are likewise less-than-informed about the true nuances of the position of our opponent, but it is not an approach likely to make constructive progress or convince anyone not already disposed to agreement.

In the following article I have taken a close examination of what I can best ascertain to be the core premises of Karl Marx‘s theories and identified what I believe to be the problems in Marx’s assertions.

The Labor Theory of Value

The labor theory of value is central to Marx’s economics.  He adopted this theory from Adam Smith (“Wealth of Nations”) which is a fact often pointed out by opponents of the free market, but Smith was hardly a free market purist and his free-market economics was full of flaws.  By borrowing Smith’s theory of value, Marx built his economics and, I maintain, even his central political conclusions on an irreparable error of reasoning.

Under the labor theory of value, the price of a good is a direct derivative of the labor performed in its creation or provision.  Therefore, to Marx, the profits derived from the sale of goods can only come at the expense of the just price deserved by the worker who performed the labor to create it.  Because price is a reflection of the labor involved, any difference between wages and that price paid (profit) is, to Marx, an inherent exploitation.

Most economists, however, no longer take the labor theory of value or Marx’s specific economics seriously… even those who advocate socialistic policies for philosophical reasons.  This is largely due to the work of Austrian school and Neo-classical economists in the late 1800’s who developed the subjective theory of value.  Rather than viewing it as an intrinsic reflection of the amount of labor expended, these economists theorized that value or price is a function of two parties and their determination of value based on subjective personal criteria.  If value were not subjective, no exchange would occur because both parties must believe the exchange to be beneficial.  Therefore “profit” becomes not a disparity between the objective price to which labor is entitled and wages paid, but simply function of voluntary exchange for subjectively determined value.  Under the subjective value theory, the laborer has no inherent entitlement to anything other than the wage voluntarily agreed to be paid which is also itself a function of the subjective theory of value, being the price of labor.

Because the labor theory is a presumption so central to Marx’s conclusions, and not just his economics, the irreparable flaws in the labor theory permeate all of Marx’s theory.

Defining the Bourgeois

Marx’s theory is predicated on the class distinction between the Bourgeois and the Proletariat.  For Marx, the defining characteristic of the Bourgeois is its ownership of capital property, or the “means of production.” and thus the Proletariat are defined by their consequent non-ownership of the means of production and their resulting need to rely on the sale of labor for subsistence.

There are a few easily identifiable logical problems with this distinction which make it difficult to draw, and which make the presumed ever-increasing polarity between these two classes which is foundational to Marx’s theory a very problematic approach.

  1. How is this distinction to be drawn for purposes of deposing the Bourgeois of their means of production and bring it under the control of the Dictatorship of the Proletariat?  Many individuals of a wide range of economic circumstances own property which can be used as a means of production, and even more so who own property that could be rendered capable of such in a situation of incentive or need.  It is hard to see how any property fully falls outside of this distinction, and as a result how the Bourgeois is to be distinguished from property owners in general.
  2. Is not labor itself also a “means of production” in society?  Is this “human resource” of labor also to be brought under collective ownership in the dictatorship of the Proletariat, or is individual ownership of one’s own person to be retained?  The violent and oppressive history of the varied attempts to implement the Dictatorship of the Proletariat would certainly demonstrate at the very least a tendency toward state ownership of even this natural property.
  3. Once separated from their ownership of the means of production, does the group formerly referred to as the Bourgeois retain this label?  Since the defining characteristic of the Bourgeois is its ownership of the means of production, why do the individuals vested with the trust of managing the Dictatorship of the Proletariat not simply become a new Bourgeois, now that they have effective ownership and control of the means of production?
  4. Does not the feasibility of any revolution require participation by at least an element of the Bourgeois?  Military conflict implies, at least to some minimal degree, the employment of capital or productive means in the process.  This would make a Proletarian revolution, at least as a means for forcibly confiscating the productive property of the Bourgeois, a practical impossibility.

It seems the distinctions here are too nebulous to provide a definitive formula for action and policy, and thus would tend instead to simply justify with general rhetoric, revolutionary violence aimed at particular targets.  These would inevitably be those chosen by the revolutionary mob and would-be managers under the new regime, but would not necessarily include the entire Bourgeois as defined by Marx.

It is also important to note that Marx did not formulate a specific plan or picture of the resulting state after the revolution like more idealistic communal thinkers such as Plato and St. Thomas More (Utopia).  He instead viewed the rise in unrest and revolution among the working classes to be a historical inevitability.  To this extent, given the rise of labor-themed revolution worldwide in the generations since his writing, we must acknowledge that he has been vindicated by history.  How much this was a function of accurate prognostication or merely self-fulfilling prophecy is still up for debate.


Written by Spencer Morgan

March 6, 2011 at 8:34 pm

Posted in History, Philosophy

One Response

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  1. A really good, clean-cut critique!


    April 6, 2013 at 10:14 pm

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