Born in Trier, Germany, 1818 - I've visited his home.
Father was a respected lawyer who advocated a Republican Germany.
Studied at universities in Bonn and Berlin, decided to become a philosopher instead of a lawyer (Ph.D., 1841, Univ. of Jena).
Would spend his life writing on philosophy, politics, economics, and history.
Made very important contributions to sociology and anthropology.
Married Jenny von Westphalen in 1843, daughter of a Prussian aristocrat.
They had five children (three daughters survived).
They all often lived in terrible poverty.
Marx became a journalist, then editor of the Rheinische Zeitung - it was supressed in 1843.
Moved to Paris to take over a short-lived radical newspaper - he was expelled.
By 1844, Marx demonstrated in his philosophical writings
that he had become a communist.
In Brussels, he was caught up in the uprisings of 1848.
He met Friedrich Engels - a respected financial figure in Manchester, England.They wrote the Communist Manifesto.He moved to London in 1849, where he studied and wrote in the British Museum, and he wrote articles with Engels' help for the New York Tribune. He also worked for 18 years on Das Kapital: Volume I was completed in 1865, Engels edited and published the rest after Marx died (Vol. II was published in 1885, III in 1894, IV in 1910).
He was expelled again by the Belgian King.
He was very involved in socialist politics:1847-1848 Communist League commissioned the ManifestoMarx died in 1883, two years after his wife.
1864-1874 - International Workingmen's Association (First International)
Ineffective 1879 Second International
Active in attacking other socialists, e.g.
Poverty of Philosophy, against Proudhon,
Critique of the Gotha Programme of 1875,
and had Bakunin expelled from the first International in 1872.
One of his last quotations, interestingly enough, was, "I am not a Marxist."
We could study Marx for years without fully examining every aspect of his philosophy.
Here are some influential aspects:
1) His conception of history based on Hegel's Dialectic, Materialism, and Class Struggle.
Hegel's conflict of Thesis and Antithesis, resulting in Synthesis2) His outrage at the poverty and inequality of 19th Century Europe.
Applied to history, this conflict yields change like tectonic plates grinding together.
Hegel focused on ideas, but Marx believed that the economic (material) basis of society was fundamental.
Productive forces determine productive relations and the superstructure of society.
He looked at economies as systems, with both an internal logic and contradictions.
Primitive Communism, Slave Economy, Feudalism, Capitalism, et cetera.
History is a process, a grinding inexorable machine continuing to an end that can be reasoned out.
(For the revolutionary philosopher who could see where history was moving, Marx left a place for him to change history by awakening the masses.)
"Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly found, given, and transmitted from the past." (Heilbroner, p. 142)
Historical Materialism is still very influential.
Marx was incredible at describing the depths of poverty and exploitation which economists at the time mostly ignored.3) His view that most philosophers and economists were mere apologists for the existing order, and his intolerance of any disagreement from other socialists.
Unfortunately, this made him hard to argue with. It is similar to the doctrine of Satan, and helped make Marxism what one scholar called, "the first secular religion."4) His Labor Theory of Value and his predictions for the demise of capitalism
(Chart linking profit to the reserve army of the unemployed, exploitation, competition, capital accumulation, falling rates of profit, concentration, crises of underconsumption and overproduction, immiserization of the proletariat, government as the agent of the capitalist class, rising proletariat class consciousness, and eventual revolution.)5) He was very weak on the description of what happens after the revolution.
Unfortunately, this theory did not hold up well.
It predicted a negative correlation between capital-labor ratios and profit. It led to nonsensical interpretations of value. It was internally inconsistent with regards to capitalist self-interest. It did not fit the actual pattern of revolution. However, for a while it seemed to describe what was actually happening in the capitalist economies.
Like Capitalism emerged from the destruction of Feudalism,
Marx argued Socialism would be the intermediate step
to Communism and the End of History.
Capitalism was a necessary step, an "engine of progress" necessary to end scarcity.
Socialism would be characterized by the Dictatorship of the Proletariat over the State
The State would then act to eliminate the vestiges of Capitalism, to eliminate the division of classes, to eliminate the exploitation of labor, to eliminate the capitalist preference for self over society, to eliminate the use of private markets and speculation, to eliminate nationalism, sexism, racism, and war, and to eliminate the production of useless and unnecessary goods.
Socialism would follow the rule, "From each according to his ability, to each according to his labor."
Communism would follow, "From each according to his ability, to each according to his need." (Blanc)
Under Communism, the State would wither away, people would no longer specialize but would become more fully creative, money would cease being used, and people would self-organize their economy in the interest of all society.
When we refer to communism, we mean a political philosophy, not an existing economy.
Marx called Owen, Fourier, St. Simon, and others "Utopian Socialists," but I would argue that he was the ultimate utopian. He explained Socialism and Communism more by what they weren't than what they were. He never really explained how Socialism would really work.
There were Socialists who disagreed with Marx.
Vladimer Lenin, however, updated Marx and figured out how to carry out the revolution and actually create a socialist state.
Theories - Monopoly Capitalism, Uneven Development, Imperialism, and the Weak Link.
From What is to be Done? (1902): The Revolution could not be carried out in daylight, but would instead require a secretive vanguard of professionals under authoritarian leadership.
This caused a split in the Russian SDP at their first congress in 1903. Lenin's faction was temporarily a majority (Bolsheviks, from Russian for "majority", root bolshoi for "big").
Ultimately, after Czar Nicholas II abdicated in 1917 due to food riots brought on by WWI, and was replaced by a well-meaning but weak government under Kerensky, the Bolsheviks seized their chance and stormed the Winter Palace in St. Petersburg. They took control of the city and fought a gradual civil war, which they won by 1921. Aristocracy and former capitalists largely eliminated by secret police.
Initially, Lenin attempted to move too fast, with War Communism. Treaty with Germany led to Allied invasion, plus war with Poland and civil war. Military discipline over country, requisitioning of peasant production, eliminating money, labor armies, nationalized industry under state control, et cetera. A real disaster - terrible famine (5 million deaths), inability to coordinate economy. Some debate on whether policies were ideological or a pragmatic response to war.
In 1921, Lenin took "one step backwards to go two steps forward" and began the New Economic Policy, which reintroduced markets and limited private entrepreneurship, eliminated the system of military discipline and protected workers' rights, replaced arbitrary, outright confiscation with taxation, and encouraged farmers to "get rich" by selling more food to the state.
Ultimately, however, the concentration of authoritarian power in the Communist Party under the auspices of the Dictatorship of the Proletariat, the paternalistic view that only the true revolutionary saw the truth and could speak for everybody else, and the focus on secrecy brought about opportunities for the rise of charismatic and ruthless people like Josef Stalin in Russia (which changed the name of its empire to the USSR, soviet meaning workers' committees), Kim Il-Sung in North Korea, Mao Zedong in China, et cetera. This is no mere coincidence.
Stalin eliminated almost all the original Bolsheviks to consolidate his complete control, and in 1928 began out a program to eliminate private ownership and replace it with ownership by the state, eliminate markets and replace them with state management (called central planning, in a great misnomer). Agriculture was brutally collectivized, industry was nationalized, and the secret police went after the merest hint of dissent.
It was one thing to eliminate private ownership and replace it with state control. It is another thing entirely to figure out how to coordinate the myriad interconnections of a complex economy.
Walras first contributed the ideas behind general equilibrium.
Pareto established the conditions for efficient use of resources, that relative prices equate relative marginal valuations with relative marginal costs.
Barone laid out the mathematical conditions that would be required, and demonstrated that a solution was theoretically possible (if practically impossible).
von Mises argued that markets were necessary to determine marginal valuations, and thus necessary to rationally and efficiently allocate resources to competing uses. He further argued that incentives could not be socialized.
Lange tried to answer von Mises, though in my opinion he failed. He proposed a trial-and-error system in which state ownership of capital and other resources could find the right price through trial and error, and all other prices could be determined by free markets in which state firms sold their goods to consumers. State managers would be required to follow the rules derived from efficient perfect competition (Marginal Cost = Price at minimum Average Cost), and thus potentially could be even more efficient. This basic model was later modified by Nove, Yunker, and Vanek.
However, the debate was academic, because Stalin eventually implemented a form of planning based on quantities, not prices, that could be incorporated into a massive mathematical model called the central plan. Adherents of socialist believed that deliberate and scientific central planning could be more rational and efficient than the chaotic results of markets, a faith that Hayek called "the fatal conceit".
Theoretically, the central plan can link up the available resources and technology to production in every firm, linking outputs of one firm to inputs required by another and final demands of society.
Though central planning was very good at mobilizing resources for a relatively less-developed economy without well-functioning markets, and good at leading to rapid growth due to high rates of investment, however inefficient, it was terrible at organizing a complex economy, rationally allocating resources, motivating participants, and encouraging technological innovation.
- Unfortunately, it requires that the central planners collect accurate information on everything, but managers did not like the planners knowing everything and planners lacked infinite data collection resources, so the information was usually of poor quality and quickly outdated.
- It requires that the relationship between inputs and output be linear, so it does not allow for changing input mixes due to changing input scarcity or technology.
- It requires planners to choose final demands of society with no information on people's preferences for goods or work. As a result, it focused on the preferences of the Communist Party, and their preferences were often for more investment in heavy industry and little growth in consumer goods.
- It requires that state firms fulfill the directives of the plan to the letter, but if the plan is flawed then a lot of silliness can emerge. It seriously discourages managerial innovation.
- It requires a limited number of equations since the number of computations (even for linear equations) rises at an exponential rate of the number of equations and variables. Thus, the planners tended to excessively aggregate, separate different regions into autarkies, and excessively simplify.
- Prices were set by the state planners, and only used for accounting purposes. Thus, there was no easy means of alleviating shortages of desirable goods or surpluses of undesirable ones, and profit had no meaning if output and input prices were arbitrary. Since desirable goods could not be bought, cash income held little incentive since it could not be spent.
- Because consumer goods were underproduced and in chronic shortage, cash income could not be spent and workers were "forced" to save. These savings could be used for more investment, usually in heavy industry rather than consumer goods production.
- Because there was no private ownership, state firms could overuse natural resources (which in Marxist theory have no value) without having to pay for them. As the Chinese saying goes, "That which is owned by everybody is owned by nobody," and the damage to the environment was catastrophic.
- Because the state allocated labor and capital through the plan instead of rationing them through the market, firms had what Kornai called an insatiable "investment hunger" and also hoarded labor and other inputs.
- Because the state required a certain quota of output but did not require that it be sold on a market, and because price was linked to cost rather than value (remember, to Marx value came from labor, not desirability), there was no need to produce quality goods. Firms could still always find a buyer for their goods but both consumers and firms had difficulties finding a seller, creating a "seller's market".
- Because profit had no meaning, because the system worked arbitrarily, and everybody knew it (though few would say it out loud for fear of the secret police), managers had little incentive to reduce costs and increase profits through better management. Instead, they negotiated with the planners for more inputs, lower output quotas, and more favorable prices.