Chapter 7 of 12 · The Free Market and Its Enemies: Pseudo-Science, Socialism, and Inflation by Ludwig von Mises
4th Lecture: Marxism, Socialism, and Pseudo-Science
Today I will deal with some of the aspects of the theories of Karl Marx. I want to contribute a little bit to the materialistic interpretation of history. First of all, I must say something about the general philosophy and history of Marx.
In general, philosophical doctrines concerning historical problems are doctrines of a very special type. They try to point out not only what history was in the past but they presume to know what the future has in store for mankind and to offer a solution for future problems. Most philosophers reject this method of thinking. For example, Immanuel Kant [1724–1804] declared that a man who tried to do this would be allocating to himself the ability to see things with the eyes of God.
Nevertheless, in the 1820s Hegel gave such a philosophical interpretation of history. According to Hegel, the driving force of the Industrial Revolution was an entity called Geist, i.e., spirit or mind. Geist has certain aims which it wants to fulfill. The evolution of the Geist of history has now reached its final goal. This final goal, according to Hegel, was the establishment of the kingdom of Prussia of Friedrich Wilhelm III [1770–1840], and of the Prussian Union Church. Critics of this doctrine say this would mean there would be no history in the future because evolution had reached its final end.
In the middle of the nineteenth century, Karl Marx, on his own, developed a philosophy different from that of Hegel. The driving force of Karl Marx was not Geist or spirit but something called the “material productive forces.” These forces push the history of mankind through various successive stages, the next to the last of which is capitalism. After capitalism comes inexorably the last stage—socialism. Therefore, according to this theory, the coming of socialism is inevitable, determined by the forces of history.
The predecessors of Marx, the historic socialists, believed that to realize socialism it was necessary to convince the majority of the people that socialism was the better, or the best system; then the people themselves would bring about the substitution. Karl Marx said nothing about the desirability of socialism; he pretended not to be speaking in favor of socialism. He claimed to have discovered a law of social evolution indicating that socialism was bound to come with the inexorability of a law of nature.
But is socialism better? This question had already been answered by Hegel and Comte. According to their doctrines, it was tacitly assumed that each successive stage of evolution must of necessity be “better” and “higher” than the previous stages. Therefore, to raise the question of whether or not a later evolutionary stage is better is beyond the point. It was obvious. Because socialism would be a later stage, it must of necessity be better.
Marx believed that socialism was just around the corner. After that, all history would come to an end. After that there could be no further development because once the class conflict was eliminated we would be living in a state in which no longer anything important could happen. Here is a quotation illustrating that point from Friedrich Engels [1820–1895], who considered himself not only a great economist but also a great expert on military problems:
In the first place the weapons used have reached such a stage of perfection that further progress which would have any revolutionizing influence is no longer possible. . . . The era of evolution is therefore, in essentials, closed in this direction.[1]
Since then, today’s modern weapons have all been developed.
The most important problem for the doctrine of the inevitability of socialism to explain is how a superhuman entity such as Geist or the “material productive forces” can force individuals to act so that a certain irresistible result must prevail. People have their own individual plans—they aim at various ends. But the inevitability-of-socialism theory maintains that whatever people do they must finally produce the results which Geist or the “material productive forces” wanted to have produced. Two explanations have been suggested.
One group had a very simple solution. This group maintained that people will be forced by “Führers” or supermen to go the way that Geist or the material productive forces indicate. There have always been kings and dictators who have assigned to themselves this superhuman mission. So Stalins, Hitlers, and Mussolinis are elected by history; those who don’t obey their commands must be liquidated because they are against “historical evolution.”
This was not Marx’s idea. The Marxian doctrine was based on the much-discussed “economic dialectic historical materialism.” Materialism is one of the ways in which people try to solve one of the most fundamental and insoluble problems, the relation between the functions of the individual’s soul or mind, on the one hand, and the functions of the body, on the other. Precisely what this relation is remains controversial. There is no doubt that there is some connection, and many attempts have been made to explain it. However, our only interest in such a materialistic explanation at the moment is because of its relation to Karl Marx’s theory.
The materialistic philosopher says that all mental functions of men are simply produced by their bodily organs—by their physical brains. Some eighteenth-century philosophers suggested this idea. In the nineteenth century it was expressed more crudely by some of Marx’s contemporaries, among them the German philosopher Ludwig Andreas Feuerbach [1804–1870], who said bluntly, “Man is what he eats.” This is interesting, but somewhat difficult to accept. Chemically, the secretion of the organs of all normal men is the same. Insofar as they are not, insofar as there are irregularities, these variations indicate a pathological condition and these irregularities are the same for all men in the same pathological condition. Ideas and thoughts, however, are different. Two boys may take the same exam, but their answers to the same questions will be different. The Italian poet Dante wrote beautiful words, while others may have difficulty writing anything at all. Therefore, there is something “fishy” about this doctrine.
Marx rejected this type of materialism, saying these materialistic philosophers were weak in dealing with social problems. In spite of the fact that superficial knowledge of Marx’s own brand of materialism requires very little time, it is not very well known. His particular brand of materialism is expressed on a very few pages of his Critique of Political Economy, the original draft for the first chapter of Das Kapital:
In the social production of their subsistence men enter into determined and necessary relations with each other which are independent of their wills—production-relations which correspond to a definite stage of development of their material productive forces.[2]
The material productive forces produce, independently of the will of the people, definite legal and institutional systems called “production-relations.” Production-relations are the necessary consequences of the material productive forces.
Over and above the production-relations there is a super-structure which includes everything ideological—art, literature, science, religion, and so on. These super-structures are the necessary products of the existing production-relations. The production-relations are, in turn, the necessary consequences of the existing material productive forces, which are the real thing. The material productive forces alone have an individual effect. When the material productive forces change, they inevitably bring about, independently of the will of man, corresponding changes in the production-relations of the social organ, of society. They also bring about changes in the super-structure. Therefore, the important question is: What are the material productive forces?
Here we are faced with Marx’s peculiar technique of not giving definitions of the terms he uses. However, his occasional examples are helpful. Most important is the example which appears in The Poverty of Philosophy (1847). The hand mill gives you “feudal society”; the steam mill gives you “industrial society.” This means that the material productive forces are the tools and machines. It is the tools and machines that are the real things. The tools and machines change; they have a history of their own; they produce first of all the production-relations and the social structure, and above the social structure they produce the super-structure—the literature, religion, and so forth. Other instances lead us to the same conclusions, that what Marx meant by the “material productive forces” were the tools and machines.
But two important questions arise. Tools and machines do not appear in the universe independent of the human mind. They are products of human thought and ideas—they are products of the human mind. Secondly, these tools and machines can only be introduced into practice when the social conditions make it possible—there must first be a certain degree of division of labor in order to apply and to use machines. Without the division of labor, machinery, the product of ideas is useless. Is this really materialism? Thus the evolution of Marx’s ideological factors—the source of ideas, the basic material productive forces—is traced back to products which are themselves the result of the human mind. Therefore, the whole scheme is unsatisfactory.
Marx wanted to show how new ideas originated. He attacked the theories of the eighteenth century, especially those of Scottish historian and philosopher David Hume [1711–1776], that ideas that are the important thing, that changing ideas result in changing conditions. Marx said that ideas are nothing but the necessary outcomes of material factors, products of the material productive forces. But we see that the material productive forces are themselves the products of ideas. Marx’s thinking moves in a circle.
There were others besides Marx who attached enormous importance to inventions and improvements in machines. A little later in the 1870s, Leopold von Ranke [1795–1886] declared that the history of technology is the most important aspect of human history; everything is continued by technology. Marx went farther in saying that everything really and literally depends on changes in technology. But he couldn’t explain everything from the materialistic point of view because tools and machines are themselves products of the human soul.
When Marx died, his friend and collaborator, Friedrich Engels, addressed his friends at the grave. In this speech he tried to condense into a short statement what he considered the great immortal ideas of Marx. This speech contains a slightly new interpretation of Karl Marx. Engels declared that “Like Darwin, who discovered the law of evolution of organic nature, Marx discovered the law of mankind’s historical evolution, i.e., the simple fact, hitherto hidden beneath ideological overgrowths, that men must first of all eat, drink, have shelter and clothing before they can pursue politics, science, art, religion and the like. . . .” This, said Engels, had been unknown before Marx discovered it. But it is obvious; nobody has ever denied it. As a matter of fact, there is an old Latin dictum or saying of the early Middle Ages: “First you must live, then you can be a philosopher.”
It was a wonderful trick of Engels to give this interpretation to Marx because since then, whenever anyone tries to contradict Marx’s theory, he is asked whether he denies that one must first eat and drink before one can write. It is obvious that one must. So you are forced to accept the basis of the Marxian theory.
Marx continues. Society is divided into classes and every member of a class is bound by the laws of history to think according to his class interests. The class allegiance, not only in the present state of society but also in preceding stages when the classes developed, determines the content of a person’s ideas. A person thinks in a certain way because he is a member of a definite class. And as all class members think according to their own class interest, the result is that the interests of those classes which history has selected must finally triumph. Marx’s idea is that the class, not the individual, thinks.
Classes do not create themselves. We make classes by classifying. If a classification is correct and logical, then the classification cannot be attacked. Marx classified people and assumed that there existed an irreconcilable conflict of interests among the several classes. The question is, does such a conflict exist? Marx never proved this. He first presented the theory of classes in the Communist Manifesto of 1848. Later he published lots of other books. But he never told us what a “class” was; he only explained what classes were not.
In one of the volumes of Das Kapital, published by Engels after Marx’s death, there is a chapter titled “Classes.” Here Marx starts out by telling what classes are not. Then the manuscript ends. A note by Engels says the work was never finished. We could feel very sad if we did not know that Marx’s writing was not interrupted by his death; he stopped writing these volumes many years before.
Marx gives examples of class conflict, but they all refer to conditions of status in a caste society, when one is born into a certain caste—nobility, bourgeoisie, serfdom, and so on. Under such circumstances, there is a conflict of interests. Anyone born a member of a definite caste has only as much right and privilege as his father. And then it is correct to say that there are class conflicts. But a society in which there is equality under law and in which everybody is free to do what he wants—in such a society there are no rigid “classes” and no irreconcilable “class” interests.
It follows, therefore, that to talk of the “bourgeoisie” implies that one group has special interests over and above those of the multitudes. This is the philosophy implicit in the U.S. policy that we should grant subsidies to farmers, or special privileges to labor, provide assistance to the “Ruritanians” to keep them from going Communist, and so on. If they want to go Communist, that is best for them. We are living in a world dominated by this “class” philosophy. Referring to the bourgeoisie assumes the Marxian theory of classes.
Even if we assume Marx’s other theses, it is difficult to accept his class argument. Marx admits in the Communist Manifesto that there are people who are class-conscious and those who are not, that the interests of some individual are opposed to the interests of their “class.” Why should an individual think according to the interest of his class if the class interests are different from his own interests? It is said that the workers in the United States are extremely backward in the development of class consciousness. If a lack of class consciousness can exist, how is it possible to say there is such a thing as a class interest?
There are also differences of opinion among various persons as to what the interests of the class really are. The question is, which is right? The Marxians say, “It is very easy to know. If a member of the class thinks differently, he is a class-traitor, a social-traitor. If another man, not a member of the class, thinks differently, there is no need for an explanation.” The difficulty with this is that there are in fact some class members who don’t think along the lines prescribed by their “class interests.”
Another difficulty is that Karl Marx himself, who presumed to speak for the proletarians, was not a proletarian. He was the son of a well-to-do lawyer; he married the daughter of a Prussian Junker; and his brother-in-law was chief of the Prussian police. Then too, his associate, Friedrich Engels, was not a proletarian; he was the son of a manufacturer and he was himself a manufacturer. Their answer to this criticism is:
Finally, in times when the class-struggle nears the decisive hour, the process of dissolution going on within the ruling class—in fact, within the whole range of an old society—assumes such a violent, glaring character that a small section of the ruling class cuts itself adrift and joins the revolutionary class, the class that holds the future in its hand.[3]
But Marx and Engels were not in the rear of the movement—they were in the forefront of the movement. They and other leaders of the movement were also bourgeois.
In England when the Fabian movement developed, continental socialists visiting that country to meet their eminent friends and admirers were often amazed to find that the Fabians were a very socially eminent set. At their dinners they appeared in white tie and tails and the ladies wore jewelry and all the paraphernalia of Victorian society. It is at least questionable that socialism was an outcome of the proletarian mind.
How could a man like Marx fail to realize that it is not “interests” that create ideas, but rather that ideas teach people what their “interests” are? How could he fail to see this? I believe it was because he was fully dominated by the idea that economics is merely food, clothing, and shelter. It was his idea that the starving masses were intent only upon getting food. He was fully convinced that the trend of capitalism was, inevitably, to cause impoverishment of the masses and concentration of the wealth in the hands of a small group. He was convinced that nothing could prevent this trend, and that this trend would finally bring about socialism.
Everybody knows this is not true. But, people answer, it is not true because something happened that Karl Marx could not have foreseen. He did not foresee the union movement and social legislation. But one short paper published by Marx did discuss labor unions and it said it was hopeless for them to try to improve the condition of the workers because the trend of history was in another direction. Real wages inevitably go down and down. Unions should abandon their effort for higher wages and substitute a “conservative” aim—to do away forever with the wage system. Marx was opposed to social legislation—social security and so forth—at least after the 1850s when he affirmed his belief that the material productive forces would bring about changes. If the material productive forces change, the whole structure must necessarily change, because the material productive forces can no longer develop in the old relationship. On the advice of Marx himself and, after his death, of Friedrich Engels, the German Reichstag voted against socialized medicine, social insurance, and labor legislation, calling them frauds to exploit the laboring classes even more than before.
No social formation ever disappears before all the productive forces are developed for which it has room, and new higher relations of production never appear before the material conditions of their existence are matured in the womb of the old society.[4]
Therefore, it was Marx’s thesis that in order to accelerate the coming of socialism, capitalism must first reach maturity. (This is comparable to the “mature capitalism” of the New Deal.) All these methods to “improve” capitalism such as social security, labor legislation, and so forth, are just petty bourgeois policies; they are detrimental to the interests of the workers because they only postpone the maturity of capitalism.
If it is true that the coming of socialism—a blessing for the workers—is independent of the will of men, if it depends exclusively on the maturity of capitalism and the development of the productive forces within capitalism, what is the use of a Socialist Party? Isn’t it preposterous, according to this theory, for man, who has nothing to say as to the future, to attempt to reach a goal? The answer made to that question is that, just as a midwife is necessary to aid a mother give birth, so is the Socialist Party necessary to bring socialism into the world. Sometimes the midwife may interfere and the situation changes, but she serves a purpose.
Thus we see that Marx’s attempt to show that ideas are the products of something material was not too conclusive. He demonstrated only that ideas are produced by forces which are themselves already the products of other ideas. All his theories teach is that among ideas some are more important than others. According to him, the idea that brings about the construction of a new machine, for instance, is more important than the ideas that bring about a poem or a philosophical system. The value of all these mental activities is attacked by Marx. What is the use of poetry, the value of religion, if these are merely consequences of the fact that we have certain tools of production? I wouldn’t even call this theory of Marx’s “materialism.”
In the 1840s and the 1850s, recognized sociologists and economists devastated the teachings of the socialist authors with their criticism. But their critiques did not touch the most important problems. There was no reason for them to do so because they abolished the assertions of their socialistic contemporaries. Karl Marx realized that he couldn’t answer these critiques, and his socialistic doctrines took another turn. First of all he elaborated the theory that everybody is bound by the laws of nature to think in such a way as the interests of his class force him to think. He believed that a man’s theory, no matter with what it deals—whether religion, philosophy, or law—can never give us truth so long as there are classes. Class ideologies, he felt, are obviously false because of their deficiencies and biased to serve the interests of the author. Marxians, even today, believe that they have proved their thesis simply by asserting that there is no such thing as an unbiased search for truth, that man doesn’t search for truth but only for practical results.
For the sake of the argument, if we accept the thesis that all mental activities are motivated by the desire for practical results, we must admit that if a man wanted results, he would aim at a theory which was correct. Pragmatists say “truth” is something that works when applied. Ludwig Boltzmann [1844–1906], a positivist philosopher, said that the proof that our physical theories are correct rests on the fact that machines constructed according to these theories operate as expected. Because people wanted to kill one another by firearms they developed the theory of ballistics. According to Marx, the theory of ballistics was not developed because people wanted to kill other people, but the theories are correct because they wanted to kill. Marx developed his theory because he wanted to say that the proletarians needn’t worry about the bourgeois point of view; what the bourgeois economists said about socialism was of no concern to the workers.
The second point he developed was the theory of the inevitability of the coming of socialism because of the progressive impoverishment of the workers by the capitalists. As socialism is a later stage, Marx said, it is necessarily also a higher stage. It is, therefore, beside the point to develop plans for the future socialistic state. Critics have demolished these ideas saying they cannot work. But Marx said that we do not have to do it; the productive forces will make the plans when everything is ripe.
Marx’s success was enormous. Today, many people who believe that socialism is inevitable consider themselves young Marxists and young Communists. There has been resistance to his historical materialism, but there has been little resistance to the theory of the inevitability of socialism.
The main deficiency of the present-day mentality is precisely the fact that people are rather weak in criticizing the fundamental thesis of Marxism. A book by Alexander Miller on The Christian Significance of Karl Marx (New York: Macmillan, 1947) recommends the use of the Christian religion to endorse not only Marxism itself but also Marxian materialism.
Marx was consistent in rejecting attempts at labor legislation. His theory was that the world must follow a certain sequence of events: (1) feudalism; (2) capitalism; and (3) socialism. Because it was incompatible with his theory, he rejected the theory that one stage could be skipped over. However, when Marx died, Engels found among his belongings a note by Marx on a scrap of paper suggesting that this might be possible. Evidently Marx had scribbled this note one night—in the morning he had thought better of it, realizing that if he agreed to this it would destroy his basic theory. Engels copied the note in his own handwriting and sent it to a woman in Russia who had won some fame because she had killed the police commissar and had been acquitted—such things happened in Russia then. She published it in the 1880s. The Bolsheviks thought this was a wonderful idea—they knew Russia was backward and seized upon this as grounds for believing they wouldn’t have to go through capitalism before attaining socialism, but could skip over that stage.
The importance of Marx is that he branded the doctrines of other humanists as ideologies, false theories which precisely on account of their incorrectness are useful to the class from which they emanate. As an economist Marx was completely dominated by the doctrines of the British classical economists. They developed the important system of political economy, but they failed to solve one fundamental problem—the paradox of value. Their theory seems obvious—people value external things and services because of their utility, because these things can bring about certain useful services—the more useful the service, the greater the value. But they couldn’t explain why one unit weight of gold, which is less useful than iron, is exchanged against a number of such units of iron.
In 1870, the solution to this paradox was discovered independently three different times by three different persons—William Stanley Jevons [1835–1882] in England, Carl Menger [1840–1921] in Austria-Hungary, and Léon Walras [1834–1910] in Switzerland. These three men recognized that only a definite limited quantity of something is traded in any particular exchange. People don’t exchange the total available supply, for instance, of iron or gold. If a man gives several units of iron for one of gold, he doesn’t behave as if he were exchanging the entire stock of iron against the entire stock of gold. The greater the quantity available, the smaller the value per unit, the smaller the satisfaction per unit. This was the marginal-utility theory.
The theory of the classical economists was responsible for the fact that values weren’t traced to the ultimate consumer. This explains why so much value was attached to the theory of buying cheap and selling dear and it led to the misunderstanding of the specter of “the economic man.” This theory dealt only with the businessman, not with the consumer. That would have required starting from the utility, which was not easy for the ordinary person to understand. The important fact is that the two great socialists of the nineteenth century, the radical revolutionary socialist Marx and the parlor socialist, philosopher, and economist John Stuart Mill [1806–1873], were so convinced of the classical theory of value that they never had any doubts about it. That theory of value had already been criticized among others by Ferdinand Lassalle [1825–1864], who had more influence in his day than did Marx. But this classical theory, as perfected by Ricardo, was adopted by Marx. And Mill, in his Principles of Political Economy, published in 1848, stated that the theory of value is solved for all time to come—coming generations could make no further improvement on it.
Marx called the system of the classical economics a bourgeois ideology. Yet what he developed as economic theory was nothing but the classical system shaped a little bit differently and expressed in slightly different words. Marx’s addition to economics is of very little importance. As an economist he more or less repeated what he had heard from others—sometimes calling them idiots, sycophants, and so on—but never deviating very far from their teachings.
Marx explains history as the result of economic class interests. Every situation contains groups who are profiting or suffering in the short run, and it is to these interests that Marx points. For example, if there were a plague or an epidemic, the drug manufacturers and the doctors would profit. Long-run interests are not so obvious and can be determined only by ideas.
[1] [Herr Eugen Dühring’s Revolution in Science (Anti-Dühring) [1878] by Friedrich Engels (New York: International Publishers, 1939), p. 188.]
[2] [Capital, the Communist Manifesto and other Writings by Karl Marx, edited with an introduction by Max Eastman (New York: The Modern Library, 1932), p. 10.]
[3] [Marx, op. cit., p. 331.]
[4] [Marx, op. cit., p. 11.]
The Free Market and Its Enemies: Pseudo-Science, Socialism, and Inflation
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