The Marxian methodology of socio-economic analysis, which in principle treats people as members of particular classes and focuses on the ‘struggles’ they undergo as members of their class, is of very limited use for understanding the real world. When you view people as members of homogeneous groups such as ‘the proletariat’ or ‘the bourgeoisie,’ (or even ‘blue collar,’ ‘white collar,’ etc.) it impedes the analysis of the differences in behavior among the individuals who comprise such groups. Taken to an extreme, it leads to a total rejection of the notion that meaningful differences even exist. Marx wrote that one’s lifestyle or habits, outlook, beliefs, values, etc. – the intangibles – have their source in and are shaped by how one makes their living, or how one manipulates the tangible factors of production to create sustenance. In sum, for Marxists, the way one spends their income is determined by how that income is obtained in the first place. A moment’s reflection should reveal just how limited this theory is. Marx could be forgiven because he based his analysis on selective observation of the conditions of the working class in the early stages of industrialization, during which capital was exceedingly scarce and labor exceedingly plentiful. Modern liberal observers likewise often cite the working conditions in China, India and other societies where the rulers have only relatively recently accepted the principle that people build wealth better privately than communally. Of course, liberals argue that government policy was responsible for the improved working conditions of developed nations. This assumes that paying workers more and/or having them work shorter hours can, in itself, increase the material wealth of the workers generally – in short, that industrial productivity can be substantially increased via higher wages and shorter working hours. Yes, these things could boost worker morale and effort, but the tangible productivity increase is very limited. Imagine a situation where 10 workers are tasked with digging a ditch, but they only have 2 shovels to use. At any given moment, 8 workers will be using only their hands, or a spoon, or some implement cruder than a shovel, to work with. Will the job get done faster if the boss gives them a pay raise, or if he invests that same money in an additional shovel for them to use? This shows that where there are too many workers and not enough tools or machines, the marginal productivity of capital is enormous. So the quickest way to boost the material wealth of a society is to encourage business owners to invest as much as possible into capital goods. Back to the point about groups: Capitalism is superior because it gives individuals the choice, regardless of their group affiliation, to take steps to improve their own condition, without having to wait for their peers (much less the entire class they are arbitrarily defined by) to act in unison in trying to forcibly improve their lot at others’ expense. Marxism or communism held that the workers could instantly improve their collective lot by simply taking over the means of production from the capitalists in a revolution. Such a radical approach proved disastrous, but we are still dealing with a residual, less extreme form of it, in which various special interest groups vie for preferential treatment (legislative protection from competition at the hands of other businesses and the changing tastes of consumers) from the government. In other words, there has been a tacit recognition that only certain groups of limited size can at any one time use government to improve their lot at the expense of other groups. Selective redistribution, or a gradual implementation of state communism, has shown viability to the extent that it has yet to completely destroy the incentives of its productive base, the people who save a good portion of their money to invest it in capital goods instead of consuming it all. But as the mushrooming debt of the governments who engage in selective redistribution shows, the bulk of its effects has been deferred to some unknown future time and will manifest in unknown ways (and the ones who will be the least prepared to deal with the looming sovereign debt crisis will be the poorest individuals, who the social programs were purportedly meant to help in the first place). Tax increases meant to fund new programs (and wars) typically only cover the interest payments on the principal that is borrowed and has only been growing. So the last bubble to pop is that of U.S. government debt, which has funded all previous bubbles in the U.S. broad economy that have occurred since the instatement of the Federal Reserve System in 1913. Until it does, many people will not be able to abandon the delusional belief that governments can create wealth. The sooner the Chinese and other newly capitalistic societies catch up to the West in terms of material wealth, the sooner the U.S. dollar printing press, which relies on these countries’ dependence on the U.S. as a major market, breaks down and ‘social’ programs must be funded wholly from taxes. Then their unintended consequences will become clear, and we will either finally abandon Marxist theory once and for all in favor of laissez-faire, or we will ignore the results of Stalin, Mao, and Pol Pot’s experiments and instead try to implement full communism. The balance of public opinion on the eve of the crisis would probably determine which choice is made.
Posted on: Mon, 16 Sep 2013 11:13:37 +0000
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