August 8, 2010
Why Karl Marx was Wrong about Capitalism
Ludwig von Mises
The Class Struggle
"Abolishing private ownership of the means of production
will establish the classless society"
-- Karl Marx
When the industrial revolution forced Europe to move away from a feudal system, Karl Marx called the new capitalistic industrialists by the name of "bourgeois". The workers of these new industrial factories he called the "proletarians."
"The "bourgeois revolution" has not abolished privilege and discrimination against the masses; it has merely supplanted the old ruling and exploiting class of noblemen by a new ruling and exploiting class, the bourgeoisie.
The exploited class, the proletarians, did not profit from this reform.
They have changed masters but they have remained oppressed and exploited."
-- Karl Marx
Hence, Karl Marx proposed that all industry, controlled by these so-called bourgeoisie, in the name of the best interests of The Masses, be nationalised and made into public corporations.
No mention though about how the public government bourgeoisie, who would replace the private corporate bourgeoisie, would be any better for The Masses, for McDonald's and Apple seem more responsive to the needs of "the Masses" than our own elected officials who no longer seem responsive at all.
A noted scholar by the name of Ludwig von Mises comes to our rescue to explain what really happened after Marx.
The corollary of the alleged progressive impoverishment of the wage earners is the concentration of all riches in the hands of a class of capitalist exploiters whose membership is continually shrinking.
In dealing with this issue Marx failed to take into account the fact that the evolution of big business units does not necessarily involve the concentration of wealth in a few hands. The big business enterprises are almost without exception corporations, precisely because they are too big for single individuals to own them entirely.
The growth of business units has far outstripped the growth of individual fortunes.
...the common stock of a corporation is as a rule not concentrated in the hands of one man.
The bigger the corporation, as a rule, the more widely its shares are distributed.
-- Ludwig von Mises
One of the greatest revelations of von Mises, and a refutation of Marx, is the fact that capitalism benefits the wage-earner as much or more than the wage-payer.
The owners of McDonalds mostly make hamburgers, not Pyramids for their leader or Southern Plantations or colossal governmental statues of former Presidents like Abraham Lincoln.
Capitalism is essentially
-- Mass Production to fill the needs of the Masses --
But Marx always labored under the deceptive conception that the workers are toiling for the sole benefit of an upper class of idle parasites.
He did not see that the workers themselves consume by far the greater part of all the consumers' goods turned out.
The millionaires consume an almost negligible part of what is called the national product.
All branches of big business cater directly or indirectly to the needs of the common man.
The luxury industries never develop beyond small-scale or medium-size units.
The evolution of big business is in itself proof of the fact that the masses and not the nabobs are the main consumers.
Those who deal with the phenomenon of big business under the rubric "concentration of economic power" fail to realize that economic power is vested in the buying public on whose patronage the prosperity of the factories depends.
In his capacity as buyer,
-- the wage earner is the customer who is "always right." --
But Marx [incorrectly] declares that the bourgeoisie "is incompetent to assure an existence to its slave within his slavery."
The whole chain of this reasoning is exploded by the establishment of the fact that the progress of capitalism does not pauperize the wage earners increasingly but on the contrary improves their standard of living
-- Ludwig von Mises
Ludwig von Mises outlines how Karl Marx confused a strictly hereditary CASTE system, as practiced in India or feudal Europe, with a modern CLASS system where any citizen can be in the class of Chairmen of the Board of Directors or the class of a janitor of that corporation.
Where in feudal days of old, the cousin of the King was a prince or a duchess, today, in a modern capitalist country, the cousin of the CEO may very well be the janitor, and where the janitor's son may become the next CEO as the CEO's son becomes the next janitor.
So into this imaginary class/caste bourgeoisie world of Marx's imagination, INDIVIDUALS do not compete AS INDIVIDUALS against their own CLASS of accountants, or CLASS of engineers, or CLASS of managers for good reviews, pay raises and promotions, but instead, according to Marx, these INDIVIDUALS conspire together as a "CLASS of accountants, engineers of managers" to keep outsiders from joining their CLASS ranks.
Ironically, the first thing Judeo-Communists do is to create a CASTE of workers called a UNION, whose goals are to help protect their UNION CASTE.
The classes which Marx distinguishes in a capitalistic society are different. Their membership is fluctuating. Class affiliation is not hereditary.
It is assigned to each individual by a daily repeated plebiscite, as it were, of all the people.
The public in spending and buying determines who should own and run the plants, who should play the parts in the theater performances, who should work in the factories and mines.
Rich men become poor, and poor men rich.
All slaves are united in having a stake in the abolition of slavery, but no such conflicts are present in a society in which all citizens are equal before the law
-- Ludwig von Mises
Capitalism is mass production to fulfill the needs of the masses.
The Masses, when they purchase products as individuals, are the true masters of the economy.
Individual competition in the work force, not union castes, is a vital key to the success of free markets.
Karl Marx was wrong on all counts.
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