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The Theories of Karl Marx were wrong (Marxism series - part 1)
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Perhaps one of the biggest influences on those who decry the inherent flaws in capitalism is the 19th century writer Karl Marx. Many of those that cry the loudest about how the fatcats in charge of the corporations of modern society are unfairly cheating workers out of their fare share of the economic pie use arguments and slogans first promoted by him in his books and pamphlets. What many don't consider is the flaws in his own arguments.
From each according to their abilities, to each according to their needs.
It’s a simple one line philosophy, and yet it underpins one of the major arguments against capitalism by claiming that this new system can provide for everyone's needs. Unfortunately, that is also its greatest flaw. What's funny is that one of the best responses to that line appears in the book The Last Centurion by John Ringo where he has his narrator observe, "I have no abilities but I have lots of needs."
In the book, the character saying that actually doesn't fit his own comment, but it does demonstrate the problem with Marx's theory. Without some incentive to show your full ability, its easy to laze around and live off the abilities of others, since your needs are fulfilled whether or not you put your best effort forth. At least if you take Marx's theory to its basic level, that is what you get. This fact is why few communes manage to stay open and successful for long periods of time. Unless there is a way to force everyone to contribute over time some members will skip work and put extra burdens on those who attempt to maintain the system. It will finally crash.
Try reading the book Animal Farm by George Orwell, despite being a work of fiction it represents a wonderful example of how most attempts to form a Marxist community end up working. Eventually some group within the larger community ends up taking over and reaping the larger rewards for themselves, rather than allowing all the people united to see the fruits of their labors. I expect that Karl Marx would be surprised and dismayed by how his philosophy has worked when attempted, although should he end up in charge, perhaps he would not have minded, it's no secret that he struggled financially through most of his life.
What's interesting is that not all of what Marx believed and wrote about was wrong. The wikipedia file on him notes that he believed:
Capitalism can stimulate considerable growth because the capitalist can, and has an incentive to, reinvest profits in new technologies and capital equipment. Marx considered the capitalist class to be the most revolutionary in history, because it constantly improved the means of production. But Marx argued that capitalism was prone to periodic crises. He suggested that over time, capitalists would invest more and more in new technologies, and less and less in labor. Since Marx believed that surplus value appropriated from labor is the source of profits, he concluded that the rate of profit would fall even as the economy grew. When the rate of profit falls below a certain point, the result would be a recession or depression in which certain sectors of the economy would collapse. Marx thought that during such an economic crisis the price of labor would also fall, and eventually make possible the investment in new technologies and the growth of new sectors of the economy.
This part of his philosophy appears to be true, especially if one considers the current economic crisis. Its clear that companies were placing the bulk of their investment into technology and little into improving and expanding their labor force. And since the start of the recession in 2007, companies have attempted to reduce the price of labor through layoffs, cutting hours and in a few cases even reducing the actual wages they pay an individual. His insight into the workings of capitalists was very accurate, but he failed to understand how and why capitalists made the decisions they did, and that is where his theory fails. Tomorrow, I'll look into where and why his theory went astray.
