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Discussing Marx with zloj and russiangambit

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September 09, 2010 – Comments (41)

I'm very excited for this post.  I've spent the last 2-3 weeks working my way through Marx's Das Kapital Volume I, along with a couple of critical works.  I will get into the critical works a little later. 

This is not a book review.  This isn't a debate, per se, either.  We are lucky to have with us two individuals that saw application (or inappropriate application) of Marxist doctrine first hand.  But there's more than that.  I happen to really enjoy zloj and russiangambit's writings.  russiangambit doesn't blog much, but provides us with very insightful commentary on some of the most controversial topics..  zloj will always be a special adversary.  We agree on so much, but on certain issues we will most likely be perpetually opposed.  That, however, is made up by zloj's willingness to investigate opposing viewpoints and his very funny and insightful criticisms of both the American Left and Right.  In other words, zloj always surprises me - and usually pleasantly!

I'm going to keep this initial post short. I hope you will keep up by clicking the "Follow" button as this discussion may go on for several days.  I certainly welcome any participation outside of my guests, but please keep the discussion topically relevant and cordial.   Thanks!

(Quick note: if I make a reference to the book, I will be usinig chapter numbers instead of page numbers.  The copy I used for this post is here and does not have page numbers.)

I'm going to start this discussion with two questions (of course, you know me, I have many many more), but I'll let zloj and rg answer them and then we'll move on.

1. The major shortcoming of the classical economists was their price theory.  They didn't have a satisfactory explanation of why things you don't need to survive cost so much more than things you do. If you turn to Chapter V of Adam Smith's Wealth of Nations: "Of the Real and Nominal Price of Commodities, or of Their Price in Labour, and Their Price in Money", you will find an explanation of vlaue that is a Labor Theory of Value.  In other words, the value things comes from the labor the person expends in creating it.

This is a very similar theory to Marx's Transformation of Labor into Value in Chapter 19 of Das Kapital.  But neither Smith nor Marx offered a satisfactory explanation as to why reality differed from their theory.  For Marx, market prices are "accidental-market prices" (Chapter 19). 

I think Marx was a victim of classical economists more than knew.  Das Kapital was printed in 1867.  In 1873, Carl Menger published Principles of Economics, which explained price formation as a subjective evaluation of the marginal utility of the next available unit (bottle water is plentiful relative to high quality diamonds, so the economic actor gains more utility by adding one diamond than by adding one bottle of water.)  Marx never published a rebuttal or critique of Menger. 

Did Marx or any of his adherents ever address the "marginalist revolution" - as it came to be called?  Did Soviet scholars ever address subjective price formation?  How did the Soviets apply the Labor Theory of Value in practice? 

2.  Karl Marx was no friend of The State - the corrupt governments of Europe, more precisely. Chapter 28, for example, lists some of the atrocious policies European governments employed to exploit the working class.  Certainly, no libertarian can object to Marx's view that The State has used force to extract wealth from the poor for centuries.  What explanation, if any, did Marx ever provide for why the forces working against those policies (laissez-faire thinkers of the period, for example the persecuted School of Salamanca, and the working class citizens) failed to stop the onslaught of exploitative legislation?

And to take it the next step further, why did Marx believe that strengthening the coercive apparatus (The State) that instituting these cruelties would lead to a "withering away" of The State.

Let the discussion begin....

David in Qatar

41 Comments – Post Your Own

#1) On September 09, 2010 at 1:38 PM, MegaMicrocap (< 20) wrote:

Have you read Schumpeter - Capitalism, Socialism and Democracy?  A lot of that is devoted to critique of Marx, especially price theory.

All of us have seen Marxist doctrine in action to some extent, not just zloj and rg.  His economic and political ideas resulted in some massive failures, but they had some seeds of truth, particularly sociological.  I.e. a way of looking at people's relationships involving money, not a prescriptive approach to changing society.

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#2) On September 09, 2010 at 2:44 PM, starbucks4ever (97.39) wrote:

Hi whereaminow,

I can't answer your 2 questions right away before I refresh my rusty memory and do some more reading, but your last question is very easy to answer. Marx felt that the State was not evil or good by itself, but the ruling class makes it so. What was an instrument of oppression in the hands of the bourgeoisie would become an instrument of justice and equality for all in the hands of the proletariat. Now, does this make any sense? Obviously not. Did Marx realize that the average worker did not have better genes than the average capitalist? Most certainly yes. However, this was the time when genetic determinism was out of fashion and "social environment" or "upbringing" was thought to shape the individual's character. So in a just society everybody would behave ethically and the state set up by the proletarians would be free of corruption. Marx had no understanding of people's psychology and he swallowed that nonsense hook, line and sinker. Also, I guess that he badly wanted to believe it because otherwise his theory was running into obvious difficulties. And it's really ironic, because had he given it more thought, he would have realized that he should be seeking allies among the hated bourgeoisie rather than Joe-the-Sixpence factory workers. If anyone, it was the CEOs who could understand his ideas and, at least partially, put them into practice.  

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#3) On September 09, 2010 at 3:15 PM, whereaminow (20.24) wrote:

MegaMicrocap,

I have not read that book, unfortunately.  I agree that elements of Marxism are evident everywhere.  I think that's one of the reasons I am so curious about it. If so much of it has been implemented worldwide without my consent, I certainly want to learn more about it!

zloj,

What was an instrument of oppression in the hands of the bourgeoisie would become an instrument of justice and equality for all in the hands of the proletariat.

That does clarify Marx's thought process.  And, if we just look around us at American politics and imperialism, I would be Marx could level the same criticism today.  If our political class or ruling class is bought by the bankers, how can we expect them to do anything but serve the banker's interests?  And this will become clear when the interests of the bankers are in direct contradiction to the interests of the working man.

Marx calls it capitalism, but today it would be called crony capitalism, and since Marx pretty much coined the term capitalism anyway, he can use it however he wants.  So, by Marx definition, yes I oppose capitalism too.  

And it's really ironic, because had he given it more thought, he would have realized that he should be seeking allies among the hated bourgeoisie rather than Joe-the-Sixpence factory workers.

That's interesting, and it leads me into another thought about Marx, in general, that I never understood.  If he truly felt that the bourgeoisie were playing the inevitable part of bringing about socialism by first bringing about capitalism, why did he also despise them?  For, if historical progression is out of their control, aren't they heroes?  Without them, there would be no eventual socialism?  I guess I just don't get why Marxists would hate capitalists so much, if they also believe that capitalism is necessary for socialism to come about and that capitalism is just an historical stage in the progression whether they like it or not.

David in Qatar

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#4) On September 09, 2010 at 4:38 PM, starbucks4ever (97.39) wrote:

" For, if historical progression is out of their control, aren't they heroes?  "

The answer is yes. If you happen to live in a feudal society, you should, as a good Marxist, support the bourgeoisie. You don't yet have the conditions for Socialism. At this point, Capitalism is both necessary and progressive. Or, at any rate, it offers you as much progress as you can get. When the conditions become ripe for Socialism - then the bourgeoisie, by seeking to perpetuate an obsolete social order, will become a reactionary force, and this is when you should oppose it and hate it, but no earlier than that. This is how Marx saw it. 

Now, Lenin turned it all upside down. By Marxist definition, Russia was just transitioning from Feudalism to Capitalism, which meant that a proletarian revolution would have to wait another 50 years or so. But life was too short, and he wanted to enjoy power while he was still alive. So he changed the Scripture and said that while generally speaking, it was wrong to have a revolution at this point, but in Russia's case the stars just aligned the right way, so it was OK to go ahead. Since he won, it became the official Party line, and it was accepted that he did not revision but develop Marxism by taking it a step further. But despite this this elaborate demagoguery, the fact remains that Lenin was guilty of revisionism.

As you can see, distortions of the original massage by Marx's disciples started from Day One. 

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#5) On September 09, 2010 at 4:40 PM, starbucks4ever (97.39) wrote:

message of course (the spell checker did not catch that :)

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#6) On September 09, 2010 at 5:31 PM, whereaminow (20.24) wrote:

zloj,

I'm impressed that you use spell checker.  I'm way too lazy for that :)

Now, Lenin turned it all upside down...the fact remains that Lenin was guilty of revisionism.

Here's a case where I agree with you and disagree with libertarians.  Lenin didn't practice Marxist-Leninism or whatever they call it.  He was a tyrant who occiasonally trotted out Marx to provide ex post facto justification for his rule. 

Mises contends that Lenin was doomed to fail with War Communism because he destroyed the currency.  I think that is one of the worst variations of socialist thought, in general - from Fourier to Lenin - was that they could do away with money, without providing a satisfactory explanation of how goods would be distributed without it.  I don't know if Lenin bought into that or if he just wanted to destroy the private sector to strengthen his power.  Any thoughts on why Lenin destroyed the currency during those first years?

David in Qatar

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#7) On September 09, 2010 at 6:21 PM, brokhernowhysher (68.11) wrote:

Great discussion you've got going,keep it up.

whereaminow, your comment on Lenin not practicing Marxist-Leninsm, but just occasionally trotting it out for justification is true for all communist leaders.  They know it isn't working, but they fall prey to the same peoples psychology zloj mentioned.  They like the power and use it to reward friends and punish enemies.  

In a large sense people in communist countries do have their characters shaped by "social environment" or "upbringing"(zloj's reply on 9/9/10 at 2:44).  They see that the way to get ahead in the communist system is not by hard work, but by parroting the party line  and cultivating high placed friends.  The phrase "do as I say, not as I do" just popped into my head.

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#8) On September 09, 2010 at 6:35 PM, russiangambit (29.21) wrote:

> They see that the way to get ahead in the communist system is not by hard work, but by parroting the party line  and cultivating high placed friends.  The phrase "do as I say, not as I do" just popped into my head.

That is true in any system. It is a personal choice whether you step on that path or not. It was one of big reasons why I chose to concentrate on math. In science there is no lying  - you are right or you are wrong, and it is up to your own abilities to a large degree, not your powerful friends.

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#9) On September 09, 2010 at 6:43 PM, russiangambit (29.21) wrote:

> Here's a case where I agree with you and disagree with libertarians.  Lenin didn't practice Marxist-Leninism or whatever they call it.  He was a tyrant who occiasonally trotted out Marx to provide ex post facto justification for his rule. 

Lenin is a very intresting character. From reading  number of his works I can say that he was a populist first of all ( think Glenn Beck but with a very high IQ) , sort of like Hitler. He was a very sharp and a talented speaker.

As to what was truly going through his head vs. the official line written in his speeches I have no idea.

The reason the economy was destroyed was simple actually.  Communists needed to finance the army and their friends . The country was in a state of complete anarchy for 2-3 years. Communists used all the gold reserves and then some to finance themselves.

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#10) On September 09, 2010 at 6:49 PM, starbucks4ever (97.39) wrote:

"Any thoughts on why Lenin destroyed the currency during those first years?"

I don't think it was by design. He was just facing an economic ruin and he responded in the same way as Mugabe did in Zimbabwe. By 1921, everybody was a billionaire and nobody would sell you a loaf of bread for any amount of money.  

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#11) On September 09, 2010 at 6:54 PM, russiangambit (29.21) wrote:

> How did the Soviets apply the Labor Theory of Value in practice? 

They had 2-stage theory for valuing the labor. The assumption was , of course, that everybody will work honestly and at their full capacity for the benefit of the state and future generations (what were they smoking right? But that selfsheness was actually achieved to a large degree. It is only later in 80s that people started getting disillusioned. That was an extremly profound experiment in shaping human nature).

Socialism - everyone contributes at their full ability and paid by the results of their labor.

Communism - everyone contributes at their full ability and gets whatever their needs are via a central communist distribution system. 

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#12) On September 09, 2010 at 7:03 PM, russiangambit (29.21) wrote:

> And to take it the next step further, why did Marx believe that strengthening the coercive apparatus (The State) that instituting these cruelties would lead to a "withering away" of The State.

It was along the lines that the people who have nothing left to lose and live in concentration (due to working at the factories)rebel. His view of capitalists was that they were sort of like the pigs - they will never stop until they extract the very last ounce of profit from the working class. So they would continue getting richer while the poor become poorer and more fed up.

This is not exactly what happened. It turns out that the rising tide lifts all boats. Plus, organized labor was able to negotiate improvements without having to overthrow capitalism alltogether. Perhaps, it was in large part due to the fear on the capitalist countries part of ending up like Russia. So, they tried to keep the plebs happy. Isn't it why we have social nets in the US such as welfare and unemployement and so on - to keep disenfranchised elements placated?

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#13) On September 09, 2010 at 7:05 PM, whereaminow (20.24) wrote:

alcon,

I'll be back tomorrow, but I just want to say thanks for all the recs and great discussion so far.  

I've got more questions and criticisms to bring up but there's this little thing called the start of football season that is about to occupy my time. :)  I've got NFL.com access and I think tonight's game is on Showtime Arabia's Fox Sports channel. 

Looking forward to tomorrow's discussion!

David in Qatar

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#14) On September 09, 2010 at 7:13 PM, Option1307 (29.70) wrote:

+1, interesting stuff.

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#15) On September 09, 2010 at 8:12 PM, russiangambit (29.21) wrote:

OK, last thing for today. When you look at socialism/ communism theory you have to understand that it is not only economic theory but is also a philosophy. It has a lot to do  with the meaning of life, bringing meaning and purpose to life  beyound simply making money and profit.

The capitalist society is so resilient because it is based on one the main features of humanity - selfishness. Everyone is out on their own for the betterment of their own life. But after you got more money than you can spend then what? Ah, there is religion to cater to your spiritual needs. I find it extermly funny how on one hand americans are extermly religious and on the other hand extermly selfish, while religion is all about self-sacrifice.

But anyway, in the earlier times religion was more like a sedative it promised that after a short miserable life on earth (for an average worker) , eternal paradise awaited them if only they followed the rules. Communist/ socialist hated religion for this reason, it was keeping poor in complince. They sought to supplant that goal of religious paradise with another goal - making life better for everybody in this life, on earth. After all, you would do anything to better your children lives, right? It is  a worthy goal to work towards.

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#16) On September 09, 2010 at 11:50 PM, kstarich (30.36) wrote:

David

Great discussion.  I think the concept of Nazism, more rules, regulations is rising up again.  I see it in the astrology.  Pluto in Capricorn is just that either dictatorship or very conservative values,  It will be one extreme or the other because Pluto is never lukewarm.

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#17) On September 10, 2010 at 3:00 AM, awallejr (83.78) wrote:

Just to add my 2 cents, since I did study the time period back during my college days.  Marx's hope for any type of revolution was in an industrial nation, Germany actually being the prime candidate. The ultimate revolution in Russia was more of an uprising against the war (World War I) than any economic revolution.  And what followed involved several revolutions, such as Red Russian versus White Russian.  Zloj did make an accurate point in that Lenin was more of a "revisionist" of Marx, since Lenin was more of a politician than an economist. 

Probably the 2 most important figures, besides Lenin, were Trotsky and Stalin.  Ultimately Trotsky was gotten rid of and Stalin rose to power, assuming total control after Lenin died.

An excellent read, if you are interested is Adam Ulam's book Expansion and Coexistence: the history of Soviet Foreign Policy from 1917-1967.

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#18) On September 10, 2010 at 3:33 AM, valunvesthere (< 20) wrote:

Possibly the best analogy of the MECHANICS OF ECONOMICS IN SOCIALISM, COMMUNISM, & CAPITALISM is from part of a paragraph in an article from THE VANCOUVER SUN on January 19/09.

"Socialism: You have two cows. The state nationalizes one and gives it to your neighbour. Communism: You have two cows. The state takes both and gives you some milk. Traditional Capitalism: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income."

Chris

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#19) On September 10, 2010 at 11:06 AM, starbucks4ever (97.39) wrote:

whereaminow,

Now, I am not ready yet to answer your question about LTV - that's quite a reading list that you gave me :) But we can at least make sure that we're on the same page with regard to its definition.

I noticed the classical definition quickly leads one astray when one starts thinking about the labor spent in production plus the labor spent in producing means of production, plus the labor to produce the means of production to produce the means of production...plus consideration of opportunity costs to explain why labor chose to produce item A instead of B an so on.

On the other hand, if you look at this definition from a capitalist perspective, it becomes easy to redefine it in intuitive terms.

In the perfect competition model, you cannot charge more for an item than what it cost you to produce the item. Well, you charge just a little more so you don't wind up working for free, but the competition is so perfect that in the limiting case, the profit margin goes to zero. So perhaps we can describe LTV as follows;

The intrinsic value of an item is the price at which it will sell in a perfectly competitive market, assuming no objective scarcity of raw materials or any other inputs, save labor; no artificial scarcity due to permits, quotas, licences, patents, or other forms of regulation; no excise taxes; and assuming no labor is wasted in unproductive activities such as military, gambling, stock speculation, lobbying, etc.

In other words, if all 100% of the price you pay goes to reward labor, and nothing goes to reward capital, rent, and natural resources, then voila - here is your labor value.

What do you think? 

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#20) On September 10, 2010 at 11:17 AM, russiangambit (29.21) wrote:

#18 - even under socialism you cannot have 2 cows, they belong to the state and you  and your neighbour work at the state farm to get the milk. The means of production are owned by the state, not just the results.

Under socialism you still have currency, though. And through that the dsitribution is controlled. Under communism you don't need money. Everything is "free". you won't take more than you produced, right?

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#21) On September 10, 2010 at 11:22 AM, russiangambit (29.21) wrote:

> The ultimate revolution in Russia was more of an uprising against the war (World War I) than any economic revolution.  And what followed involved several revolutions, such as Red Russian versus White Russian.  Zloj did make an accurate point in that Lenin was more of a "revisionist" of Marx, since Lenin was more of a politician than an economist. 

Lenin was a lawyer, just like the majority of the US polticians, lol.

Yes, not many people know that tussian revolution started as a democratic revolution on a path to capitalism from monarchy. There wre multiple parties at that time. And Russia was a democracy for something like 6 months until communists took over via a military coup ( so called socialist revolution), Anarchy ensued and a civil war (between reds and whites)  that lasted 5 years. The democarts/ capitalists were cuaght in between red (communists) and whites (monarchists) not sure which side to support. They didn't have the resources/ clout to mount an army of their own.

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#22) On September 10, 2010 at 3:22 PM, whereaminow (20.24) wrote:

hi russian,

I have another question about marxism for you, and anyone who wishes to discuss it, but first I wanna address the point about selfishness and capitalism.

I don't think selfishness is mark against free-market capitalism any more than it is against any other type of economic or political system, be it crony capitalism, mercanitilism, market socialism, or communism.  Selfishness is clearly a part of human nature and not subject to change any time soon.  There are selfish businessmen, but there also selfish professors, lawyers, central planners, dentists, etc..  In a free market system, however, the selfish can only acquire things by providing things of value to others voluntarily.  In other systems listed, they can get what they want by employing the coercive aparatus of the State.  

Now, the Marx question:

Marx believed in something called polylogism, that is that people from different classes had different logic.  The working class has a different logic than the capitalist, for example.  If this is the case, why is it that all of the prominent socialists are bourgeois?  Upton Sinclair was a multi-millionaire.  Engels was an industrialist.  The Fabians were all well-to-do.  Marx, himself, was bourgeois.   Most modern day American socialists are among the wealthiest Americans  I guess, what doesn't make sense to me, is that if the proletariat had a unique proletariat logic and that logic called for socialism as the path to freedom, why is there no great proletarian thinker or writer that has laid out the path for them?  Why are people, members of the bourgeoisie who think differently than they do, planning their great freedom for them?

David in Qatar

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#23) On September 10, 2010 at 3:45 PM, russiangambit (29.21) wrote:

> Why are people, members of the bourgeoisie who think differently than they do, planning their great freedom for them?

Because back then there was no such thing as welfare. If you wanted to eat, you had to work. You didn't have the luxury of spending your time working on theories. Plus, writing and communicating the ideas requires education, which these people didn't have.

It is always like this - it is always people who already ahve their needs met that worry about poor. it all goes back to the meaning of life. Once you have everything you ever wanted, what is next, what is the purpose of life? Most find it in charity and helping others. You can't take the money with you into the grave.

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#24) On September 10, 2010 at 3:50 PM, starbucks4ever (97.39) wrote:

#22,

I think what you call polylogism is a reference to his "being determines consciousness" maxim. Yes, he said that, but he was talking about social views (if you're in a high bracket, you will feel lower taxes are a good thing, then your fortunes worsen and you become a tax-and-spend Keynesian...you get the idea:) I don't think he ever applied that to exact sciences the way the Nazis did. At least, I've never heard the word polylogism back in the USSR!

Although, he did once remark, half-jokingly, that the multiplication table would be disputed if it affected people's financial interests. But if you look around you will see many people here in America who do in fact deny the multiplication table :)

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#25) On September 10, 2010 at 3:54 PM, whereaminow (20.24) wrote:

russian,

Do you think it's possible that many of the historically significant socialists were drawn to it because they had a existential crisis, a disconnected guiltiness, between the amount of wealth they had and the amount of value they had provided to society?  

I ask this because I don't see the small business owner, struggling to keep his or her business afloat, feeling very guilty or inclined to support socialism.  They work to provide value and probably don't understand why anyone finds this to be something shameful.  The "champagne socialist", by contrast, has a dilemna.

David in Qatar

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#26) On September 10, 2010 at 3:59 PM, whereaminow (20.24) wrote:

zloj,

LOL, excellent comment.  Most definitely true!  I guess you are right that polylogism was more of a Nazi invention than a Marxist one.

Do you think Marx was accurate in his description of class consciousness?  Libertarians assert that the class strife is between those who use the State for gain and those who are forced to provide those gains by coercion.  Isn't that somewhat similar to Marx, particularly if you take Marx's view that the bourgeois, for all purposes, directs State affairs against the working class?

David in Qatar

 

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#27) On September 10, 2010 at 4:20 PM, russiangambit (29.21) wrote:

> Do you think it's possible that many of the historically significant socialists were drawn to it because they had a existential crisis, a disconnected guiltiness, between the amount of wealth they had and the amount of value they had provided to society?  

Yes, something like that. I think communism is a form of religion , sort of like buddism where we all get together and sing kumbayaa, because you are a part of everybody and everybody is a part of you. At the end of life most people turn to religion and I guess some turned to socialism/ communism. But that is my own interpretation, not the official line.

The official line really based everything on the differences between classes, inability to move between the classes and one class having power over another, and holding on tight on this power because it provided it good life at the expense of the other class. If you look at the modern US you will see all of this going on, not at an exterme but still pertty obvious. Why US working class isn't rebelling? Because it is brainwashed, has some welfare programs to placate them and also not desperate enough. After all, even US unemployed live better than middle class in many emerging countries. However, f US wealthy are smart ( or at least have enough sense of self-preservation) they'll do something about the wealth gap and  difficulty of moving between the classes. I think this is probably what motivates Buffet for one.

The bttom line is that it is indisputable that there is class struggle in a capitalist society. What I am not sure about is why the answer to that struggle is communism? It is clearly not.

 

 

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#28) On September 10, 2010 at 4:46 PM, starbucks4ever (97.39) wrote:

#26,

That's an excellent question. I believe he was accurate, but only to a degree.

I've heard it many times that the bourgeoisie is directing state affairs against the workers. That's what they taught it in school. Every time I heard that, I kept wondering, how it could be. Did the average rank-and-file capitalist just walk up to Reagan and ordered him to raise workers' taxes or whatever? I felt pretty sure that most capitalists did not know Reagan personally, in fact, it's unlikely they would even know anyone in the Administration :) So I always took that statement with a grain of salt.

On the other hand, I do think class interest exist, and class consciousness is real. But it doesn't work in such primitive ways as our poor history teacher told us. Obama most certainly does not take bribes from bankers, in fact, none of the American presidents was ever caught taking bribes. It works on the gut feeling level of "ours" against "theirs". You just feel that certain proposals are good and other proposals are bad. If you spent your childhood in an upscale community playing football with the children of your CEO neighbors, you will feel that inequality of income is a good thing. You won't need to be bribed to defend their interests. You will be an honest man, acting on your beliefs, and yet you will be representing your class. This is true for most people.

But of course it's not cut in stone. We know in fact that most fanatical champions of interests on any social group are usually outsiders. Abraham Lincoln, for one, was as white as one can possibly be.

So, to answer your question, I think that statement, "one's social being determines one's social consciousness" is true for most people, but for some it should read "one's social consciousness determines one's social being".

 

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#29) On September 11, 2010 at 3:27 AM, valunvesthere (< 20) wrote:

#20 In any system we as humans want more! If theres giveaways we lineup and line up again till there's nothing left. I've seen people holding up lines and won't move unless they've gotten more freebies. I also want to mention that in theory and on paper communism looks good. In practice it'll never work because those in power can abuse and manipulate with no opposition government questioning the decision makers. In any system those in power can also abuse and manipulate but not to the extreme as communism because opposition government is an obstacle. In short communism goes through revolutions and coups while alot of other systems such as North Americans goes through elections every 4 years. Finally, elections make politicians travel a straighter line than a appointed communist member.

Chris

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#30) On September 13, 2010 at 9:42 PM, rfaramir (29.30) wrote:

"Marx felt that the State was not evil or good by itself, but the ruling class makes it so."

 

That was his big mistake.  The State is by definition the local monopoly of legalized force.  This coercion is necessarily evil and inefficient.

As far as the diamonds/water apparent paradox, it is ironic that Smith himself had an answer in his earlier writings (The Theory of Moral Sentiments).  I suspect that the lectures were somewhat inherited from his teachers and he never quite understood the point, which was known as far back as the Scholastics.

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#31) On September 20, 2010 at 4:01 AM, starbucks4ever (97.39) wrote:

Hi whereaminow,

Here is what I can say regarding your 2 original questions.

I've just read a few selected pages from Das Kapital, and my opinion of Marx after reading them is lower than it was before reading them. I say lower, because his book is written in that pseudo-philosophical language that I can't stand. The simpler the idea, the more pages he covers with letters to obfuscate the thing that could be said in one sentence. And they still call him a revolutionary? What a nonsense! That was the work of a Hegelian philospher who in real life would not find the way from his house to the grocery store.

Having said that, his version of LTV is fine with me, and I don't see how it contradicts Marginalism. They just have different ranges of applicability. LTV is applicable when there are no constraints on production. Marginalism is applicable when we see production bottlenecks everywhere. In feudal societies everything from coal to hammers and nails to money is in short supply. The early Capitalism must then be 100% marginalistic. As it develops, shortages become less common and applicability of LTV increases. Marx was living in an industrialized country where everything, it seemed, could be produced in any quantity without much trouble. The exploitation of workers by factory owners was quite horrible at that time.He focused on what looked to him like the main issue. It's a shame that Adam Smith did not think of Marginalism. In his time it would work with nearly 100% accuracy. The classical theory of economics was developed in the order opposite to the natural order!

According to Wikipedia, Marx never wrote a rebuttal. Whether he read Menger at all is uncertain. Later Marxists did try to raise objections but I don't think the critical excerpts here

http://en.wikipedia.org/wiki/Marginalism#The_Marginal_Revolution

refute marginalism. They are either attacking a straw man, or provide some minor clarifications. Dobb has a point when he talks about distribution of income. Bukharin deserves more respect than Marx as a writer because his essay is at least readable. He says that marginalism just deals with one specific moment of time and he is right. But so what? Newton's laws also deal with one moment of time but then we integrate over time and get the equation of motion, and so it must be with the economy. This is not a refutation of marginalism. I agree with Bukharin when he suggests that scarcity of supply has been overrated by the Austrians, but he stops there and doesn't elaborate much.

After Bukharin, nobody really tried hard to disprove marginal utility theories because Soviet Marxists just stopped reading them. To show interest in bourgeois writings was too dangerous. Bukharin himself was now the enemy of the people and his "Economic Theory of the Leisure Class" was no longer recommended reading. The Marxist would just order the complete works of Stalin from the library, buy the latest issue of Pravda, and try to guess which quote from Stalin offered him the best chance to live another day. Economic discussion died in the 1930s and it remained dead even after Stalin kicked off. 

In practice, economic planners had little use for unreadable philosophical treatises. The fact is that no Soviet citizen ever read the complete works of Marx. Practical planning realized Marx's dream in the sense that there was no exploitation of workers. Of course, the planners still took surplus value away from workers to make capital investments. But the Soviet economy realized some savings by not having to reward those two factors of production, "land" and "capital". But in other respects planning was much closer to the marginal utility model because the state always had to make decisions which industry was most important at the moment. Didn't I mention that the Revolution happened too early, and without industrial base you are always going to have shortages of everything?

On the consumer side of the equation, people obviously made decisions based on marginal utility, like any other consumers. In the black market, it was ordinary laws of supply and demand. In state-run stores, shortages often made it difficult to compare the utility of nonexistent bananas vs. nonexistent pineapples. But the empty story shelves is still a cliche. Many varieties of goods were available and planners could easily see by looking at the inventories if a product was selling well. Soviet-made shoes, for one, were frequently overstoked. They were very good shoes, but for some reason consumers craved Puma and Adidas brands - those western imports were only sold on the black market for obscene amounts of money, and they were not even good ones, but people bought them for prestige anyway - marginal utility approach was working! 

On the producer side, decisions were made by planners based more on intuition than on exact calculation (Mises is smiling from Heaven now), and that did not make these decisions any worse (and now Mises is crying). Nobody needed exact calculations to the third decimal point because from the first look at your grocery store it was very obvious which items had to be produced. Planning was not the problem. Most planners were honest professionals who knew their job and did it well. The problem was in the political system. Planning officials were ordered to divert all resources to the production of tanks and planes and they complied even though they knew well that this was not what consumers wanted. And then, under Brezhnev, the system started to get more and more corrupt. It was not corrupt in the sense that everybody was stealing. Far from that. But it was corrupt in the sense that it was now suppressing any signals of distress - that was a new feature that started only in the 1970s, but it spread like a wildfire and eventually destroyed the country. The leader wanted to hear only good news and he surrounded himself with cronies whose job was to protect him from negative signals by destroying the source of the signal. So if a planning official said that it was necessary to quadruple the import of bananas because that's what consumers craved most desperately, he was sacked the next day and replaced with a bootlicker who reported that Soviet consumers were already happy at having produced an incredible 5 kg of iron per capita above the plan. In a normal country such leader and his party would be removed from power at the next election. But we had only one party with only one leader. At the election, the leader always received 100% of the vote. His rival, who was nobody, received 0%. In the absence of a feedback mechanism, the system could not control itself just as a man cannot remain healthy once he suppresses his immune system. The planning system simply died of political AIDS.

 

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#32) On September 20, 2010 at 6:59 PM, starbucks4ever (97.39) wrote:

And yes, your second question...I know that Marx generally had a low opinion of bourgeois thinkers. He thought their love of profits predisposed their thinking and nothing good for the proletariat would ever result from their writings.

Now, here is how I decipher Marx's logic. In his model, there is always a surplus ("reserve army") of labor - a consequence of automated production. Therefore even if the legislation were 100% libertarian competition among capitalists would fail to limit exploitation of workers as wages would gravitate to a subsistence minimum.

Thus oppressive legislation was really a non-issue. It has served its function at the "initial accumulation" stage. Its only purpose was to accelerate formation of the working class and it accomplished its mission. Now, in the 19th century, it was already becoming redundant as far as capitalists were concerned, and they were already repealing some of that legislation. So the libertarian thinkers were really fighting against a straw man; whether they succeeded or failed was irrelevant. 

In the 16th century they could not succeed because that would interfere with historical progress. In this sense, they were reactionaries. Fighting against enclosures would slow down the arrival of Capitalism and in Marxist dialectics, betting against progress if always futile. After the laws have played their role, they could be repealed or moderated, and the "forces working against those policies" could celebrate a partial victory. But it was a victory in name only. The real credit belongs to Capitalism. It had already overgrown its childhood stage and did not need anachronisms any longer.

As a side note, the draconian zoning rules left over from the Enclosure era are still alive in today's Britain as well as in America, and today's laissez-faire thinkers don't have any greater success opposing them than they did in the 16th century. 

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#33) On September 20, 2010 at 9:06 PM, NOTvuffett (< 20) wrote:

All I needed to know about Marxism was made clear to me by Pol Pot and the Khmer Rouge.  He studied Marxism in France and then put it into practice. A huge pile of skulls was the result. Maybe zzlangerhans or portefuille can give us an idea of how much space 2 million skulls would occupy. Porte could probably give us a graph or two.  Lordrobot could probably calculate the angle of repose for a pile of skulls, lol.

The current administration seems to favor a 'command and control' economy, it is not far removed from the concepts of Marxism or Fascism.

I know that this is not an appropriate forum for purely political discussions, but when politics impact your personal finances, I don't see anything wrong with it.

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#34) On September 21, 2010 at 5:07 PM, whereaminow (20.24) wrote:

zloj,

I'm sorry I wasn't able to keep this discussion going.  I was just, unfortunately, too busy with work.  However, I should have a chance this week to read your last few comments and respond.  

This has been a great discussion and I want to thank you and russiangambit for sharing your thoughts with us.  I learned a lot and I am very grateful.

David in Qatar 

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#35) On September 21, 2010 at 10:18 PM, starbucks4ever (97.39) wrote:

#29,

" In short communism goes through revolutions and coups while alot of other systems such as North Americans goes through elections every 4 years"

That's a poor argument. Marx never said that within the proletarian party you can't have democratic discussions and meaningful elections of leaders. Totalitarian regimes arise in countries with poor political culture where the elites don't know how to organize themselves in political clubs and only know how to submit to one-person rule. This has nothing to do with the economic system. It just so happened that Communists took power in the countries that had no democratic traditions except, maybe, just maybe, Eastern Germany. And it's not for nothing that GDR had a semblance of a multi-party system and it also did better economically than the rest of the bunch. 

#33,

Pol Pot was always the odd man out among the Communist leaders. The Soviets never recognized his government. And it was the communist Vietnamese who finally stopped him. The democratic Americans never bothered to try to remove him from power, they were too busy destroying Vietnam and supporting dictators to worry about invading the only "communist" country they should have invaded. 

And yes, speaking of free-market Capitalism, should I talk about Pinochet and his exemplary human rights record? "All I ever needed to know about Capitalism was made clear to me ..." etc.

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#36) On September 22, 2010 at 1:39 AM, whereaminow (20.24) wrote:

zloj,

You're not the first person to use Pinochet to pummel free market capitalism. My enviro-nazi troll lucas1985 went the same route on me.

When you say, "David, just because a guy says he's a Marxist, doesn't mean he's a Marxist."

The same applies with men like Pinochet (and Republicans, in general) and their free market claims.

Pinochet was a military dictator, installed in power by a violent coup with the aid of the most anti-free market and anti-liberty organization in America, the CIA.  

This totally incompetent organization often claims to support our freedoms - the last line of defense rofl - against the enemy.  The CIA is the enemy of freedom.

Pinochet and his supporters can say whatever they want.  He was a fascist reactionary.  It's quite unreal to me that a guy can institute a few market reforms on the one hand, while brutally suppressing dissenters and engaging in good old fashioned mercantilism with the other, and be called a free market capitalist.

That's setting the bar just a little too low, eh?  Heck, if Pinochet is a free market capitalist, Bill Clinton is Ludwig Von Mises and Obama is Murray Rothbard.

David in Qatar

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#37) On September 22, 2010 at 11:13 AM, starbucks4ever (97.39) wrote:

I was just pointing out the fallacy of equating Marxism=Khmer Rogue. Similar "equations" would include "Free Market=Pinochet", "Christianity=Inquisition", "Liberte = Robespierre", "Germany=Hitler", and so on. One has to blind in order not to see that Communist regimes varied from country to country. Cuba is not Cambodia, and Bolgaria is not China. And Yaruzelsky is not Stalin. 

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#38) On September 25, 2010 at 12:39 PM, whereaminow (20.24) wrote:

zloj,

Your comments in #31 and #32 are very interesting reads.  I enjoyed them a lot, even if it took me a few days to get to them.

Mises is crying lol.  Well, there's no crying in Heaven!!!

No one knows exactly what the prime reason for the Soviet's collapse was.  It's a Theory of Economic Calculation, not a Law.  I, and most Austrians, do not see a way around it.  Others claim they do.  But we would never attempt to stop a socialist community from trying it out. 

Rothbard was 'ex-communicated' from the Old Right for saying that the Cold War was not necessary, the Soviets will collapse from economic calculation problems.  We don't know for sure that he's right.  We barely know anything for sure about American's economic system - a system we can inspect with freedom and openness far greater than that found in Soviet Russia.

That leads me to what I think is Hayek's best feature as an economist.  He, unlike Rothbard (who I love for other reasons), promoted the idea that an economist first must realize how little we really know about the world, the plans we design, and how those plans will impact everyone.  Sadly, I don't think many economists start from this point.  I don't think any Federal Reserve economist thinks of himself in this way.

I want to touch on the "tanks and planes" argument.  For the most part, I'm with you here.  I have a laundry list of reasons why governments, in general, spend money they don't have on military hardware that only brings about their own destruction (see America in 2020).  I'm sympathetic to the argument that you don't ask a government consumed with murdering enemies, both real and imagined, to be in charge of healing the sick, but it may work in countries not consumed with dealing out death.

Quick note, the Germans did this as well under Bismark, as did the Italians during Mussolini's rule, as well as the Romans and Egyptians way way back.  Promoting social welfare with one hand while becoming increasingly militaristic on the other is not a Cold War phenomenon.

I just want to point out that the vast of majority of libertarians have a far greater desire to remove the war machine before doing anything else.  I've talked about talking a step-by-step approach to bringing about a free society.  I think that starts with ending the impulse to empire consuming modern America.  The wars have to end or we are going to lose everything.  In fact, if we just stopped there, that would be enough to bring me joy during my lifetime.

What more can I add to the discussion of political corruption?  Not much.  I've always said I think you see problems exactly the same way as I do but I just disagree with your conclusions.  

I'm going to spend more time thinking about your analysis of LTV and marginalism and respond at a later time.

Thanks for a great discussion!

David in Qatar 

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#39) On September 25, 2010 at 8:56 PM, starbucks4ever (97.39) wrote:

Thanks, whereaminow,

It was a good discussion and I also learned some new information from it.

I feel we missed a lot back in the USSR by shutting ourselves from "bourgeois" economic science. There is absolutely no justification for it. Who ever decided that a good Comrade must be ignorant of contemporary capitalist theories and practices? It was that paranoid fear of competition on the part of apparatchiks, they feared they couldn't make a compelling argument in defense of the system. 

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#40) On December 03, 2010 at 7:36 AM, Alexinthebox55 (90.26) wrote:

Карл Маркс и его идеи... такая глупость. Он был умным. Но его идеи в практике не реально могут существовать, потому что мы все знаем, что это ерунда, что мы можем вместе жить просто с помощью государства. 

Средний класс имеет намного больше власти, чем Маркс думал. Имея много власти и умея влиять на много, их решения были самыми важными.

Маркс только был против коррупции в Европе, но основе одного из самых коррумпированных обществ или государств в истории мира было создано ему. Поэтому, его смысл еще не понимаю.

Кажется, либеральное общество сейчас наверное лучше знает ошибки СССР. Но, к сожалению, мы просто можем ждать, надеясь, чтоб. не повторить ошибки прошлого.

Злой и Русскийгамбит, я этот блог пост пишу за вас, ребята! Вы наши люди. наши настоящий русские. 

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#41) On December 05, 2010 at 4:27 AM, whereaminow (20.24) wrote:

Thanks to Google Translate here is Alexinthebox55's comment.

"Karl Marx and his ideas ... so stupid. He was smart. But his ideas into practice may not really exist, because we all know that this is nonsense that we can live together simply by the state.

The middle class has much more power than Marx thought.
Having a lot of power and being able to influence many of their solutions were the most important.

Marx was only against Corruption in Europe, but from one of the most corrupt societies or states in the history of the world was created by him.
Therefore, its meaning still do not understand.

It seems that liberal society is now probably knows better than the error of the USSR. But, unfortunately, we can just wait, hoping to.
not to repeat past mistakes.

Angry and Russkiygambit, I am writing this blog post for you guys! You are our people.
Our real Russian."

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