Are We Marxians Now? H. Sennholz

HANS F. SENNHOLZ _-..AREWE MARXIANS •NOW~__ IDEAS are the forces that lift or destroy civilization. They bring peace and prosperity, or breed wars and revolutions. Ideas shape our laws and institutions, and gov ern individual action and social relations. No wall or boundary can forcibly retain an idea. It sweeps around the earth like a storm that spares nobody. Ideas are stronger than bombs and missiles, they are mightier than an armada with megatons of explosives. The philosophical, social and economic ideas of Karl Marx have been more influential than those of all other socialists. They have had, and continue to have, a pro found impact not only on the lives of billions of people living in com munist and socialist societies who Dr. Sennholz heads the Department of Eco nomics at Grove City College and is a noted writer and lecturer on monetary and economic principles and practices.

worship him as their apostle and master, but also on the thoughts and policies of all others. Surely, no one would label the American society as "Marxian,'~ or describe our social and economic policies as "Marx inspired." There are very few Americans who would cour ageously confess allegiance to the doctrines of Marx. And yet, seri ous contemplation cannot escape the conclusion that contemporary American thought on some three major issues - the conflict of in terests in society, the concentra.:. tion of business, and our outlook on the world - bears a startling resemblance to the doctrines of Karl Marx. At this place we need not inves tigate why and how this similarity came about, nor ascertain the channels of education and com munication that facilitated the sway of Marxian ideas. In fact, 451 452 THE FREEMAN August in order to demonstra te the re semblance of contemporary thought to Marxian doctrines we need not even prove that Karl Marx was the original author of prevailing American thought.

After all, there were many other originators of socialism whose in tellectual interdependence is dif ficult to record. Economic Conflict Most Americans seem to agree with the Marxian doctrine of poli tical, social and economic conflict. Their traditional belief in a harm ony of interest has gradually given way to trust in conflict and force. Americans now agree with Marx that social groups pursue conflict ing interests that are reflected in antagonistic political and economic programs. Where in the past they had relied on individual initiative and action, they now depend on collective measures through legis lation or regulation, or collective programs for political and eco nomic pressure groups· or business and labor organizations. He who stands alone today without the shelter and security afforded by his interest lobby or union is a rare exception. In every session of Congress hundreds of new laws are passed that aim to confer rights and priv ileges on some groups while re stricting those of others, or grant property and income to some at the expense of others. The political process has become a wrestling match between ever-changing al liances of pressure groups fighting over economic privileges and bene fits. Just listen to· the daily news casts. Most of the reports, whether national or local, deal with the most noisy manifestations of this collective conflict.

Karl Marx was a forceful spokesman of the conflict and ex ploitation doctrine. Even in the United States, this bulwark of the free world, the doctrine has swayed public opinion. It makes its appear ance in the popular notion that the unhampered capitalistic econ omy delivers the wage earners to the discretion and power of wealthy industrialists. The indi vidual worker is said to be help less and in need of legal protec tion in his bargaining with man agement whose primary concerns are power and profit. The un bridled market system with its profit motive and unhampered competition as it prevailed in this country before World War I is condemned for having inflicted hardship and deprivation on many generations of workers. Such no tions, which are popular versions of the exploitation theory, have invaded our colleges and universi ties, indeed all channels of educa tion and communication. They 1972 ARE WE MARXIANS NOW? 453 have radically changed our politi cal parties and our churches. They have given rise to a gigantic labor union movement and to the "New Deal" in social and economic mat ters. In fact, the exploitation theory determines our basic "eco nomic" policies at all levels of government.

Labor Policy The ever-growing mass of labor legislation is one of the fruits of the exploitation theory. Its advo cates credit modern social policy for having reduced the work week to 48, 44, and 40 hours, or· even less. They applaud labor legisla tion for having eliminated women's and children's labor. And they ascribe the present rate of wages to the minimum wage rates set by authoritative intervention. Indeed, practically all labor fm provements are credited to social legislation and labor union inter vention. Compulsory social insurance, in cluding unemployment assistance, Medicare and Medicaid, stem from the same intellectual roots. Capi talism is said to be incapable of giving sustenance to· the unem ployed, sick, or aged laborers. Therefore, social policy must as sure decent living conditions to an ever-larger part of the population. Also, modern taxation reflects our adoption of the exploitation theory. Most taxes aim not only at raising revenue but also at correct ing or alleviating the alleged evils of our economic system. Some taxes aim at a "redistribution" of wealth and income. Confiscatory rates are imposed on entrepreneurs and capitalists whose income and capital are thus transformed into goods for consumption by the "un derprivileged." Other taxes aim at changing business customs and conduct or at regulating produc tionand trade. All presidential candidates promise more of the same.

Our labor unions derive their very justification for existence from the exploitation doctrine. Few Americans would disclaim the boast of union leaders that their unions have raised, and still are raising, wages for all workers through association and collective bargaining. American public opin ion believes that recent history has proved the beneficial nature of trade unionism without which workers would be subjugated to the greed and arbitrariness of their employers. Because of the common fear of labor exploitation, the people suffer strikes or threats of strikes, union coercion and vio lence, and endless agitation of hate and envy by labor leaders against the wicked selfishness of exploiters. To many millions of Americans, membership in a labor union is an 454 THE FREEMAN August important social duty and strike a holy task. Clash of the Generations In recent years the conflict doc trine has been broadened to cover yet another area: the relations be tween different generations. It thereby succeeded in pitting mil lions of American youth against their elders in a so-called "gen eration gap." Numerous student organizations of the "New Left"

are attacking the "establishment" that represents the older genera tion with arguments that are taken without much change from the armory of Marx. The era of campus violence was ushered in by the Students for a Democratic Society (SDS), a quasi-Marxian class organization. It was followed by such groups as the Progressive Labor Party, the Weathermen, the Young Workers Liberation League, the Young Socialist Al liance, the National Peace Action Coalition, the New American Movement, and many others. Al though the members of such mili tant groups comprise only small minorities of students, it appears that many millions of young peo ple agree with the radicals on the existence of conflict.· If there is collective conflict in our social and economic spheres, why should there be peace and harmony be tween the establishment and its opposition, between the older gen eration and youth? Racial Conflict One of the ugliest manifesta tions of the conflict doctrine is found in our race relations. We are told again and again that it is our capitalistic system that im poses conditions of hardship upon a minority of its citizens, and that finally the angriest of them have been driven to assault the exploita tion order . We are accused of wicked standards' of white moral ity and capitalist middle-class be havior that condemns the rioting and looting but lacks human con cern for millions of deprived Ne groes in our midst.

A .solution to the growing prob lems of racial strife is sought in ever-costlier government pro grams, in more public welfare and public care. While Newark was burning, and as twenty-seven Americans were losing their lives there, the Federal Government tried to rush through Congress 8 bill to provide $20 million a yeal for two years to exterminate thE rats that infest the city slums. Ii was suggested that eradicatin~ rats would ultimately help to pre· vent the racial riots, as it woul( indicate to the rioters that some, body really cares. One may agree with the militan "Civil Rights" leaders that, fo: 1972 ARE WE MARXIANS NOW? 455 the first time in American history, political and social conditions are ripe for open rebellion and revolu tion. But our explanation differs fundamentally from theirs. The teachings of conflict and socialism, which for a long time were limited to white pressure groups, have finally reached millions of Ne groes. In their incredible blind ness our political leaders eagerly sow dissatisfaction and make reck less promises of redistribution while condemning the private property order - openly encourag ing Negro protests against that order. It is collectivism, not capi talism, which breeds insurrection and revolution.

Sexual Conflict In the United States the con flict doctrine finally was extended to cover sexual relations. There can be little doubt that women's liberation has become a major and militant movement. In some of its aspects the move ment is hardly new. More than 50 years ago it led to the 19th Constitutional Amendment that gave American women the right to vote. But in recent years, espe cially since the appearance of Simone de Beauvoir's The Sec'ond Sex and Betty Friedan's The Fem inine Mystique, it acquired the familiar symptoms of conflict and confrontation. Some of its radical spokesmen sound like the other conflict champions although they substitute sex for race, class, or generation. Their charges are al most identical: the capitalistic system breeds exploitation and slavery and therefore should be abolished. Economic freedom means freedom for men only, but exploitation and dependence for women. Therefore, it must give way to the political process, to legislation and regulation, in short, to a new order.

Concentrations and Monopolies Although most Americans would disclaim any sympathy for Karl Marx and his teachings, they seem to be in full agreement with him not only on his doctrine of con flict of interest and class struggle but also on his theory of industrial concentration and monopoly. In Das Kapital Karl Marx pro claimed the inevitable coming of socialism on grounds that capital ism causes a gradual pauperiza tion of the working classes. The exploitation profits, which busi nessmen pocket by means of the employment contract, are invested in an ever-growing apparatus of production, today called automa tion, which in turn creates a grow ing .army of unemployed and un deremployed paupers. In the decades that followed the publication of Das Kapital, it 456 THE FREEMAN Au,gust proved to be most difficult to in culcate this doctrine in the minds of American workers. Every year, wages rose and conditions im proved on account of expanding capital investments and rising la bor productivity. In fact, the standards of living of American working people rose to levels that are unprecedented in human his tory. And with the rise in labor productivity and wage rates, the conditions of health, life expect ancy, education, recreation, and leisure improved immeasurably.

A more plausible theory on which the doctrine of inevitability of socialism could be based had to be found. Today, communist pro1Jaganda, whether in the form of arrogant prognostications that our. grandchildren will live under communism or as blaring news casts by Radio Moscow, proclaims the coming of socialism on grounds that capitalism is degen erating to dire monopolism. What ever capitalism may have achieved in the past, its dreadful degen eration gives rise to vast concen trations of wealth matched by dismal poverty, automation and unemployment, and other discrep ancies and imbalances. Prosperity under capitalism, we are told, is only short-lived and must soon give way to monopolistic exploi tation, depression, and unemploy ment. Many Americans are increas ingly receptive to this doctrine. Certainly the Founding Fathers were aware of the inherent dan gers of monopoly. Thomas Jeffer son had even advocated a Con stitutional amendment outlawing monopolies. But the Founding Fathers were also fully aware that governments were spawning the monopolies. Some three hun dred years of European mercan tilistic monopolistic policy had taught them that the government issue of licenses, franchises, reg ulations, and controls gives rise to monopolistic restrictions and economic maladjustments.

The forces of Competition Under the influence of European socialistic thought and Marxian indoctrination, this causal connec tion between government and monopoly has been gradually for gotten. Instead, many Americanf: are now led to believe that the capitalistic market economy breed~ monopolies, and that "big busi· ness" tends to degenerate to mo, nopoly. In reality, the unhamperec market economy, through the op, eration of free competition, pre, vents anyone businessman fron charging monopolistic prices. Eve] if one should be the only produce: in the field, potential competition the competition of substitutes, an4 the elasticity of demand, preven 1972 ARE WE MARXIANS NOW? 457 him from exploiting the situation. Potential competition exists in all fields of production and com merce which everyone is legally free to enter. Most corporations are searching continuously for new lines and items of produc tion. They are eager to invade any field in which business earn ings are unusually high. The in vasion of another field by a cor poration may involve no more than a single retooling or reor ganization that is achieved in a few weeks or months. Or,brand new facilities may be employed for an invasion. Thus, one pro ducer, whether he is a monopolist, duopolist, or a competitor among many, always faces the potential competition of all other producers.

But even if American enter prises failed tq compete with each other and potential competition failed to exert a restraining in fluence on monopolists - which is a most unrealistic assumption the people would escape monopol istic prices through recourse to substitutes. .In many fields the competition of substitutes is more important than that of compet ing enterprises. In· the manufac ture of clothing, for instance, a dozen different materials vie with each other for the consumer's dol lar. The .monopolist of anyone material is powerless because mo nopolistic pricing would induce consumers to switch immediately to other materials. The manufac turers of suspenders compete not only with each other and with potential competitors, but also with the producers of belts. In the transportation industry the railroads compete with trucks, cars, airplanes, pipelines, and ships. Elasticity of Demand The existence of substitutes makes for demand elasticity which, in turn, makes monopolistic pricing unprofitable; for higher product prices would greatly cur tail product demand, and thus sales and income of the monopol ist. Therefore, he again must act as if he were a competitor among many.

All producers, in fact, compete with all other producers for the consumer's dollars. The manufac turer of television sets competes with the manufacturer of freezers and refrigerators. If the monop olist .of one commodity - say, tele vision sets - should raise his price, the consumer may forego the pur chase of a new set and buy in stead a second-hand set or a re frigerator. We consumers do not allocate our income to the satis faction of categories of wants but to that of specific wants yielding the greatest net addition to our well-being. This addition, in turn, 458 THE FREEMAN August is determined by the urgency of our wants and by the cost of satisfaction. This consideration of some fun damental principles of market economics runs counter to the in terpretations offered by Marxian propaganda and, unfortunately, also by many fellow Americans. Our statist politicians and anti trust bureaucrats partially em brace the Marxian explanations.

They subscribe to the theory that our capitalist system breeds mo nopolies. But then they part with Radio Moscow by proclaiming their desire to save this monopoly breeding system from its own des truction. They propose to control the monopolies through govern ment action. Almost every day now, the Antitrust Division of the Department of Justice charges some businessmen with monopolis tic conspiracy. These charges, be ing made in the limelight of world wide publicity, poison the political atmosphere and create a badly distorted picture of our enterprise economy. In fact, the Antitrust Division is one of the most effi cient arms of socialist propaganda. Anticolonialism Many Americans also agree with the Marx-Lenin doctrines of co lonialism and imperialism. In the name of national sovereignty and anticolonialism the United States Government has promoted nation alism and socialism in all corners of the world. It has exerted its great influence toward the reduc tion of European influence and possessions in Asia, Africa, and Latin America. We urged the Dutch to leave Indonesia, we ap plauded the French retreat from Indochina, we blatantly demanded British and French withdrawal from the Suez Canal, we urged the Belgians to leave the Congo, and the French to surrender North Africa, we censured Portu gal for her African possessions and imposed sanctions on Rhodesia.

The Western retreat from Suez to Panama, from Indonesia to Al geria, from the Congo to Morocco evidences an ominous weakness of Western civilization. Blinded by socialistic doctrines and preju dices, our statesmen hail retreat as progress and defeat as victory. Their world view is perverted by conceptions of "capitalist colonial ism," which are derived from the teachings of Marx and Lenin. Echoing the communist leaders in their attacks on the West, they level the charge that European colonialism has kept the economi cally backward nations subjugated for centuries. This misconception of history flows from a bad distortion of facts. The European colonies were acquired during the age of mer1972 ARE WE MARXIANS NOW? 459 cantilism and nationalism. The spirit of capitalism with its con cern for individual freedom and private property, which shaped British foreign policie·s during the nineteenth century, completely transformed colonial possessions.

The British overseas settlers be came virtually independent - en joying a dominion status. All other territories dependent on British rule were governed according to "open-door" principles. The Brit ish Empire was R'vast free-trade area in which the government un dertook only to maintain law and order. Laissez Faire Capitalism is the system of in dividual freedom and private prop erty in production as well as con sumption. In both domestic and foreign affairs it implies laissez faire, which means free trade and an open-door policy that welcomes everyone and discriminates against no one. The exploitation of colonial possessions is inconsistent with the concepts of competitive pri vate enterprise and voluntary ex change. An American or Euro pean business that invests its cap ital in an underdeveloped country does not exploit the natives. Cap ital investments anywhere raise labor productivity and consequent ly wages. The United Fruit Com pany, for instance, did not enslave the people of Latin America by creating plantations in wilder ness. On the contrary, it raised native prod ucti vity and improved working conditions.

And yet, most Americans are convinced that European colonial ism is responsible for world pov erty and upheaval. Why else would the U.S. Government have helped to liquidate European in fluence in all corners of the world and sanction and support revolu tionary movements? Even today it strongly opposes the white admin istrations of Portuguese Africa, Rhodesia and South Africa. Many Americans even approve of the confiscation or nationalization of private enterprises by the govern ments of newly independent coun tries. They agree with the Marx ians the world over that. a sov ereign state can legally seize and confiscate any foreign enterprise in disregard of valid contracts and agreements. This is why the new states in Africa and Asia can seize and destroy huge European investments with impunity. And Fidel Castro could seize more than one billion dollars of American investments. During the eighteenth and nine teenth centuries most Americans were conscious of the natural rights of individuals, and there fore believed in an idea of state sovereignty that was severely lim460 THE FREEMAN August ited by inalienable personal rights.

State sovereignty was encompassed by the individual rights to life, liberty, and property. This con cept of limited state sovereignty, which true friends of freedom continue to embrace, denies the right of any government to seize or nationalize any enterprise with out the owner's consent. Are we Marxians now? Most Americans will indignantly an swer this question in the negative. After all, they nei ther condone dictatorship with its one-party system nor the ruthless suppres sion of dissent and brutal treat ment of dissenters, which charac terize all communist countries. They are "civilized" and therefore abhor all manifestations of in humanity. But unfortunately, many Americans unwittingly share im portant philosophical, sociological, and economic beliefs with Marx ians the world over. These beliefs give rise to policies that please the Marxians. Ultimately, they will breed the very political and eco nomic tyranny which Americans so abhor. fJ IDEAS ON LIBERTY A Useful Product THE BUSINESS GENIUS who makes and markets a useful product and furnishes employment at good wages to hundreds of fathers, serves his community more usefully than a councilman who votes the appropriation of public funds to build playgrounds.

Without the steady production of wealth, the makers of public budgets would be helpless. For this reason the man richly endowed with business sense serves his fellow men best if he continues at his desk to the end of his days. This line of thought does not win easy acceptance because it is only within recent generations that the social significance of busi ness prosperity has been properly valued. It is now becoming more generally recognized that a nation cannot have too many competent businessmen. Prosperity is more a matter of men than natural resources. Poverty and ignorance have cursed and hum bled mankind from the beginning. Intelligent direction of business will eliminate both. From The William Feather Magazine, April, 1972 WINSTON CHURCHILL used to say that Russia is a riddle wrapped in an enigma within a mystery. But to him who has studied that coun try, its history, religion, language, mentality, the truth will come more easily; the many widespread dan gerous cliches will dissolve beforQ his mental eye.