Capitalism, Socialism and other terms to be avoided

Capitalism is a term coined, or at least popularised, by the enemies of the system they labelled capitalism. It was understood from the start to have a pejorative connotation and the term’s use is still dominated by that pejorative connotation. Despite the efforts of supporters of capitalism-so-labelled to reclaim capitalism as a positive, or at least neutral, label; particularly based on historical experience.

One should always be wary of any term where the pejorative element built in. Even if you somehow do not let the pejorative element infect your own thought, it is going to be there in the mind of many, often most, readers.

Socialism is a term coined, or at least popularised, by the proponents of the system they labelled socialism. It was understood from the start to have a positive, indeed overwhelmingly positive, connotation and its use is still dominated in many quarters by that positive connotation. This despite the efforts of the opponents of “socialism” to give it thoroughly negative connotations, particularly based on historical experience.

Capitalism has at least has some vague consensus on what the term means. Socialism does not even have that, as recent American politics has demonstrated, thanks to the attempts of Sen. Bernie Sanders, self-proclaimed socialist, to win the Democratic Party nomination for President of the United States.

Capitalism has some vague consensus regarding what the term means because almost everyone agrees that there is currently, and has been, a lot of it. Apart from some labelling of command economies as state capitalism, there is a general consensus that we more or less know capitalism when we see it.

There is no such consensus around socialism, mainly because socialists typically want to dissociate the term from every command economy that has ever operated, or patent embarrassments such as Venezuela. Conversely, the enemies of socialism what to hang every command economy that has ever operated, and embarrassments such as Venezuela, on any use of socialism.

If socialism has never been “really” tried, then it can never have failed. Or if there is this new form or conception of socialism that has never been tried, then clearly it has nothing to do with any command economy that has ever operated, or any embarrassment such as Venezuela.

Of course, one might suspect that this attempt to constantly separate socialism from history might be a bit of a warning sign. Especially if folk want to play the game of comparing the ideal of socialism (carefully separated from history) with the practice of capitalism (often using carefully edited, selected or re-construed bits of history).

For me, there is a simple solution. Avoid, as much as possible, using either term. Then you can at least aspire to some analytical rigour.

Other possibilities

That does not remotely foreclose considering new social possibilities. It just means trying to do so with some analytical precision without dragging along the deadweight of fraught ideological conflicts.

Moreover, contemplating the social possibilities that do not seem to be much explored can be a very useful exercise. To consider the dogs that don’t bark in the night.

If not separating workers from the product of their labour, or simply having the workers in charge, is such a fine thing, one might think that would be entirely possible to set up worker-controlled companies. Then the non-alienated, self-controlled workers might be expected to produce so well that they can outcompete capital-owned firms in the market place.

Of course, if your notion of alienation covers any attempt to produce for exchange, then even in a worker-controlled firm workers will be alienated from their labour. Of course, not producing for exchange then reduces Homo sapiens to the economic level of every other species on the planet. One might consider the possibility that producing for exchange permits the scaling up of production and consumption far more extensively or efficiently than any other way of dealing with the issues of subsistence and surplus. So, perhaps giving up an advantage that may predate our emergence as a species is not a good move.

Let’s assume that something we have been doing for maybe 320,000 years or so (and certainly for 200,000 years), exchanging things we have produced, is not some alienating disaster, and go with worker control is good. Worker-controlled firms is still an entirely possible option. So, why don’t we see far more of such?

What is a firm? A firm is a mechanism for lowering transaction costs and dealing with risk. Do we want to dump risk on to labour or on to capital? Surely, on to capital. So, a labour-controlled firm is going to make the decisions, and is going to need capital, but will also want to dump the risk onto the holders of capital.

So, which firms are going to operate better? Those where control ultimately rests with those who have to deal with the risks or those where control ultimately rests with those who get to systematically dump risk on to others?

Clearly the former. The owners of a capital-owned firm get the residual income from the firm because they also cover the residual losses from the firms.

Moreover, when we say “worker controlled”, which workers? The original workers presumably. But what if you want to hire new staff, do they get the same control rights? Suppose the firm has too many workers, it needs to lay off staff, how do you decide that? What are the dynamics of a group of workers who every so often may have to vote on who gets to be ejected from the firm?

Capital-owned firms solve these problems by essentially having a market in control. The more you are willing to buy in, the more control you have. If you want to leave, you sell your control rights. Decisions about hiring and firing are left with those who are managing the firm. (And firms with mechanisms for workers to become shareholders are still capital-owned firms.)

What about coordination issues as a worker-controlled firm gets bigger?

At this point, we can see why the somewhat Darwinian selection processes of markets select for capital-owned firms and not worker-controlled ones. It is not that worker-controlled firms are illegal, it is that they represent a risk-and-decision profile that no one (including workers) are likely to invest in. The closest we get are partnerships, and they represent human-capital firms, not worker-control.

And about the state

Consider again the question: which firms are going to operate better? Those where control ultimately rests with those who have to deal with the risks or those where control ultimately rests with those who get to dump the risk on to others? Here’s something to conjure with. Is not: a structure where control ultimately rests with those who get to dump the risk on to others, a pretty good description of the state?

People (often with good reason) complain about the socialisation of losses and the privatisation of profits. But that is precisely what an awful lot of state politics is about. Shifting benefits to one group and costs, including risks, to another because the coercive power of the state makes that a game that can be played (and is obviously one with significant potential pay-offs). When one sees risks being shifted from capital to labour, there is generally some state action underlying it.

This is why the term state capitalism has a little bit of purchase behind it. If you squint just right.

In a command economy, the state owns all (or almost all) the capital. So, in a command economy, risk regularly gets dumped by the capital-owning state on to labour. Including risks of mass starvation or environmental degradation. But that is not because capital owns the state, but because the state owns the capital.

Lenin, Stalin, Mao, etc. did not control the state due to their ownership of capital, they controlled the creation and use of capital due to their control of the state. To call such capitalist or capitalism is to get the causal drivers entirely the wrong way around.

So, yes, it is significant that state owns the capital in a command economy. It affects its patterns of behaviour and means there is no significant non-state control of surplus, so no significant basis of institutional resistance to the power of (those who control) the state. But the capital is entirely subordinate to the state. So, the society is not capitalist.

And we are back with avoiding the use of terms so weighed down with emotionally-laden connotations. Because, without those connotations, there would be no incentive to so badly mis-characterise the relevant social, political and economic dynamics.

The insidious reach of error

I have become deeply interested in the origins of money, which means reading the work of various historical anthropologists. As is often the case when reading other social scientists on matters of economic significance, one comes across a fair bit of economist envy. Compared to other social science academics (and, for that matter, humanities academics), economists' skills are generally far more in demand outside academe; economists tend to get more, and more highly paid, consultancy work; they get to be talking heads commenting on events much more; and have more influence over public policy. What's not to envy?

Worse, economics keeps invading other disciplines. Run down the list of what people get Nobel memorial prizes in Economics for and there seems to be no part of the domain of social science that economics and economists are not willing to invade. Worse again, mainstream economics tends to be enamoured of markets and private property, they study wealth and tend to approve of use of market mechanisms in general. All realms most academics have little to do with, are not comfortable in and often resent.

All of which shows up in the politics and outlooks typical in much of academe--especially when (other) academics write about economics and economic issues. This is not helped by the fact that being self-consciously clever folk simply living in "capitalist" economies seems lead to the conclusion that academics understand "capitalism"; a conclusion which is regularly adhered to more strongly than is warranted.

I once asked an Israeli archaeologist why archaeologists (and historical anthropologists) seem to be so influenced by Karl Marx. He replied that it was because Marx talked about economic surplus and they study the products of economic surplus, which makes sense. Though the appeal of broadly Marxian ideas to humanities and social science academics generally is clearly strong; an understandable reaction to academics' circumstances and common resentments.

All of which has made it easier, alas, for one of Marx's more profound errors to become part of many people's common wisdom. An idea set out in the first chapter of Das Kapital:

…[commodities of equal value] must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal; secondly, exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it.

The notion that exchange is a matter of matching equivalences keeps turning up in the writings of anthropologists on money. It is a deeply wrong-headed way to look at exchange. Trades, exchanges, happen at points of intersection, not points of equivalence. The supply-and-demand "scissors" economists are so fond of are a good way to express what is going on.

It also helps explain why trade-with-strangers is regarded in many cultures as a dubious process, one that merges into swindling.

Trade as swindle
Suppose we have two peoples who are in contact with each other, perhaps across a sea.  One, call them the Cols, have a river that runs with gold. You put a fleece in the river, leave it for a while, come back and lo!, it has flecks of gold all through it. You retrieve your now golden fleece, pick out the gold and repeat.  Gold is not such a big deal to the Cols, because it is so easy for them to get hold of it.

Then there is another people, call them the Crims, who have an easy salt mine in their territory. You take a pick, swing it a couple of times, and loosen as much salt as you can carry. Salt is not such a big deal to the Crims, because it is so easy for them to get hold of it.

Clearly, the Cols and the Crims will swap gold for salt. Clearly, the Cols value the salt they get more than the gold they trade away, while the Crims will value the gold they get more than the salt they trade away. Each will leave thinking they have got a really good deal. Indeed, it is likely they will think they have been clever in convincing the other mob to trade away something "clearly" worth less for something "clearly" much more valuable. Trade with strangers is obviously a matter of ripping off the strangers.

First, there is no "equivalence" here, merely a point of intersection.  Secondly, both groups will be quite correct in thinking they "ripped" off the other mob because, in terms of their own valuations, they did.  The trade occurred because they had different, but intersecting, valuations. Which allowed both sides to enjoy gains from trade; to be better off than they were before the trade.

If trade was a matter of swapping things of equivalent value to the participants, no one would bother. It is precisely the different valuations that makes trade worth doing. If you see exchange as swapping equivalences, you will miss its nature and point.

Finding what is not there
But it is worse than that. You will start looking for what intrinsic "thing" makes them equivalent--in the case of Marx, leading on to the labour theory of value. The statement from Marx quoted above is only one of three false claims he makes in his argument for the labour theory of value. It is the second such, the first being:

The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity.

This is wrong, for utility is utility to someone. So, the utility of a thing does have existence apart from that commodity, it exists in the relation of the thing to the purposes of anyone who has a use for it. Having got utility and equivalence wrong, Marx then moves on to the third false claim:

… if then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour.

Which is also not true. Commodities also have the qualities of being made of materials (what economists call ‘land’) and by tools (what economists call ‘capital’); labour on its own produces little or nothing.

Even more basically, to be exchanged, such things have to be controlled by someone. Locke’s metaphor that a person in the state of nature acquires something by “mixing his labour” with it is misleading: what they do is take control of it (and, more importantly, that control is acknowledged by others). Any contribution of labour to exchange—whether in production or the realisation of value in exchange—is framed by such control: as is also true of land and capital. Moreover, the control has to matter: the thing has to have sufficient scarcity and be sufficiently wanted by someone for such control to matter. We can control a twig, but who cares? (Acknowledged) control, scarcity and wanting are the bases of exchange.

The search for a "common property" in things exchanged is completely wrong-headed, because exchange is a matter of intersecting differences, not matching equivalences.  One can, of course, compare the currently operating intersections of supply and demand and decide that at $50 for a pair of shoes then "equals" 10 cups of coffee at $5 each. But that is still not matching equivalences, it is matching points of intersection. Which will change as supply and demand for shoes and coffee change.

Pointing out that, for example, allocation of labour tends to shift with price merely tells us that we allocate labour towards things we value. We do the same with land and capital, it is just that we can usually do so with labour quicker and easier.

All of which hardly exhausts how thinking of trade as matching equivalences will lead one astray. It will, for example, encourage a quite mechanistic approach to economic activity, as if economies can be planned so as to just turn out the right mix of equivalences. Ironically, the search for some underlying extrinsic value (even in labour) that explains said "equivalences" does not humanise economic activity, it dehumanises it because it completely abstracts away from the diversity of human valuations, the human purposes, that drive economic activity.

It will also devalue private transactions--capitalist acts between consenting adults--since that is just "swapping equivalences", not expressing preferences and improving utility. Which then undermines restraining state action, since "managing" swapping equivalences is rather a different thing than blocking mutually beneficial transactions. As the discovery role of private transactions is thereby also devalued ("equivalences" are "easily" knowable), the knowledge of officials is exaggerated, their ignorance minimised. It becomes that much easier to be dreadfully complacent about the problems in Seeing Like A State.

So, whenever you come across someone writing about exchange as "matching equivalences" you will be observing some who, in Keynes's words, is the slave of a defunct economist and who understands economic activity and commerce (and, for that matter "capitalism") a great deal less than they think they do.

[Cross-posted at Skepticlawyer and at Critical Thinking Applied.]

Inalienable rights (1): a history and critique

An essay by David Ellerman, Translatio versus Concessio: Retrieving the Debate about Contracts of Alienation with an Application to Today’s Employment Contract (pdf), provides an excellent and revealing intellectual history on the concept of inalienable rights. He uses it to critique the master-and-servant employment contract and argue for corporate democracy, based on a labour theory of property. These conclusions are far more drastic in their implications he appears to realise, but the discussion of the history of the concept of inalienable rights is most instructive in its own right.

Ellerman starts by pointing out that the coercion-versus-consent dichotomy of modern liberal theory ignores a strain of contractarian theory that held that political and economic subordination could be justified on a contractarian basis. In response, a theory of inalienable rights, rights that could not be traded away by any contract, implicit or explicit, was developed.

As part of drawing implications for modern corporations and the employment contracts, Ellerman notes that rulers were regarded as owners of their lands, but that ownership has become separated from rulership. (At least in most states: under Leninism ownership and rulership were re-conjoined. As they are whenever the state engages in direct economic activity.) Without wanting to deny the exploitive side of medieval rulership, it was also a way of providing public goods in a period of limited trade and very limited administrative capacity.

Ellerman notes that:

The only people who are under the authority of the owners and their agents are the ones who work their property, the employees of the corporation.

So ownership does currently entail governance. Which we take for granted:

But the “very idea” that the employees qua workers (i.e., as those who are governed or managed) would have any standing in that governance seems an outlandish perversion of the very idea of “ownership.”

As outlandish as serfs voting on matters pertaining to medieval lordship would have appeared back then.

Ellerman asks:

If political governance was previously thought to be based on land ownership and now isn’t, then what about the connection between corporate ownership and workplace governance? What is the legal basis for the rights of government or management not over the land, buildings, or machinery of the corporation but over all the people who work in a corporation?

and notes that modern responses to that question are somewhat confused.

Ellerman wants to develop an alternative view:

… that the conflict is not between democracy and private property but between democracy and the contract to alienate the right of self-governance in the workplace, the employment contract.

He defines an employment contract as being:

… contracts for a person of full capacity to voluntarily take on or accept the legal role of a person of diminished capacity or of a non-person.

To sustain this antipathy, Ellerman seeks to retrieve the history of inalienable rights, in particular:

Today, we see slavery simply as a coercive involuntary relationship. That may largely suffice as a matter of historical fact but that is not what the intellectual debate was about. Since Antiquity, there were rather sophisticated defenses of slavery as being based on contract, an implicit or explicit self-enslavement contract. The history of anti-slavery thought was not just fussing about the reality of any alleged consent; it is the history of theorizing about how a voluntary self-sale contract would be inherently invalid.

For this shifted the debate from arguing over the facts of the level of consent involved to a straight coercion-versus-consent issue since certain basic liberties were not alienable: they were instead inalienable rights.

As Ellerman notes, after taking us through the various streams of contractarian thought justifying subjection:

If modern contractarian liberals had recognized the past contractarian arguments for slavery (and autocracy), then they might be in the uncomfortable position of disagreeing with those proslavery thinkers only in matters of fact. They might be reduced to arguing on empirical grounds that the implied contract for society has “genuine” tacit consent, but that the implied slavery contract did not. It is no surprise that modern liberalism has just avoided this quandary by promulgating the consent-or-coercion version of the slavery debates.

Since the problem the doctrine of inalienable rights was developed to deal with has “gone away”, modern liberal theory puts the dichotomy as being between consent and coercion, losing the notion of inalienable rights, with the difficulty that that would appear to allow voluntary sale of oneself—i.e. slavery. An implication that Robert Nozick, for example, was prepared to embrace and which, as Ellerman points out, is implicit in neoclassical economic theory since the bar on capitalizing labour is a barrier to full allocative efficiency.

But consent-versus-coercion was not the dividing line for notions of popular sovereignty and the illegitimacy of slavery. Instead:

… this question of translatio or concessio—alienation or delegation of the right of government in the contract—that is the key question, not consent versus coercion. Consent is on both sides of that alienation (translatio) versus delegation (concessio) question. The alienation version of the contract became a sophisticated tacit contract defense of non-democratic government wherever the latter existed as a settled condition. And the delegation version of the contract became the foundation for democratic theory.

If one could not alienate personal sovereignty, then all legitimate political power was only delegated.

The alienation approach of sovereignty being based on a pactum subjectionis has some major thinkers behind it: such as Thomas Aquinas, Hugo Grotius and Thomas Hobbes (a famous example of an advocate) while Robert Nozick updated it.

An example Ellerman does not use, but which has continuing power, is the Islamic theory of the dhimmi, which is very much a pactum subjectionis. The dhimmi gets the protection of the designated subordinate status but forfeits that protection if they fail to keep their pact of subordination.

Delegation theory
While the alienation of sovereignty theory dated back to classical Antiquity, the delegation theory seems to arise in the later medieval period with thinkers such as Marsilius of Padua and Bartolus of Saxoferrato. The line of argument developed was essentially that an alienation contract turned a person into a thing, and this was inherently invalid:

Applying this argument requires prior analysis to tell when a contract puts a person in the legal role of a non-person. Having the role of a non-person is not necessarily explicit in the contract and is has nothing to do with the payment in the contract, the incompleteness of the contract, or the like. Persons and things can be distinguished on the basis of decision making and responsibility.

To put it another way, it was illegitimate to alienate one’s personhood.
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Contracts that do such are “institutionalised frauds” that:

… always has one revealing moment when even the most slavishly conforming observers can see the legal fiction behind the system. That is when the legalized thing would commit a crime. Then the “thing” would be suddenly metamorphosed—in the eyes of the law—back into being a person to be held legally responsible for the crime.

So, for example, in antebellum Alabama, a court asserted that slaves were persons for criminal law but things for civil law:

Since there was no legal theory that slaves physically became things in their “civil acts”, the fiction involved in treating slaves as “things” was clear. And this is a question of the facts about human nature, facts that are unchanged by consent or contract.

Which Ellerman holds applies directly to the “self-rental” contract, the modern employment contract:

… I cannot in fact “transfer” my own action for the long or short term. The factual inalienability of responsible human action and decision making is independent of the duration of the contract. The factual inalienability is also independent of the compensation paid in the contract …

And so independent of any theory of exploitation.

The Stoics held, contra Aristotle, that no one was a slave by their nature—slavery was an external condition to the internal freedom of the soul. This notion of inner freedom re-emerged during the Reformation in the notion of liberty of conscience. Francis Hutcheson, Adam Smith’s predecessor in the chair of moral philosophy at Glasgow, developed the inalienabililty theory most explicitly, writing that:

Our rights are either alienable, or unalienable. The former are known by these two characters jointly, that the translation of them to others can be made effectually, and that some interest of society, or individuals consistently with it, may frequently require such translations. Thus our right to our goods and labours is naturally alienable. But where translation cannot be made with, or where no good in human life requires it, the right is unalienable, and cannot be justly claimed by any other but the person originally possessing it.

Hutcheson held the right of private judgment unalienable, for example, since it could not really be changed at the whim of another.

Hutcheson’s theory of unalienable rights was taken by Jefferson and famously placed in the US Declaration of Independence. But:

… the theory behind the notion of inalienable rights was lost in the transition from the Scottish Enlightenment to the slave-holding society of antebellum America.

The phraseology continues when the underlying theory does not.

Hegel also held to a theory of inalienable rights, holding that alienation could not apply to one’s own personality. Hence:

… those goods, or rather substantive characteristics, which constitute my own private personality and the universal essence of my self-consciousness are inalienable and my right to them is imprescriptible.

Ellerman has an amusing go at Marx for missing this analysis of alienation in the work of his teacher and for going for a labour theory of value rather than a labour theory of property. Though a labour theory of property makes no more sense than a labour theory of value, as it suffers from the same problems—it elevates source-of over reason-for, on the way through getting the nature of the thing quite mistaken. (Ellerman develops his theory of property more here [pdf].)

Once, however, the question of what can and cannot be legitimately alienated is clearly put, the employment contract does look rather problematic:

Take, for example, the approach to the employment contract as the workplace pactum subjectionis. The key to the intellectual history was to understand the distinction between two opposite types of social contract—a distinction that started to emerge in the late medieval work of Marsilius of Padua and Bartolus of Saxoferrato. On the one side was the social contract wherein a people would alienate and transfer their rights of self-determination to a sovereign. The sovereign was not a delegate, representative, or trustee for the people. The sovereign ruled in the sovereign’s own name; the people were subjects. On the other side was the idea of a social contract as a democratic constitution erected to secure the inalienable rights rather than to alienate them. Those who wield political authority over the citizens do so as their delegates, representatives, or trustees; they govern in the name of the people.

Ellerman’s argument is that workers in a corporation are in the same position as the sovereign people in a polity. He approvingly quotes a 1966 passage by Abram Chayes:

The analogy between state and corporation has been congenial to American lawmakers, legislative and judicial. The shareholders were the electorate, the directors the legislature, enacting general policies and committing them to the officers for execution. . . .
Shareholder democracy, so-called, is misconceived because the shareholders are not the governed of the corporation whose consent must be sought.

The consent of holders of capital definitely has to be sought, but the key word here is ‘governed’. Employees are governed in a way that shareholders are not.

Ellerman asks:

Perhaps the public-private distinction somehow makes a difference? Does anyone think that the persons who have a de facto inalienable capacity for decision making in the public sphere suddenly morph into talking instruments in the private sphere?
Since the answers are so blindingly obvious, the usual response is apparently to not think about it. “Responsible” thinkers just don’t go there.

Ellerman then analyses various patterns of people “just not going there” in their thinking. That employees are effectively non-persons in civil law but suddenly fully responsible in criminal matters, he argues, shows that the employment contract is an unsustainable legal fiction.

Ellerman then looks at the structure of rights in an employment firm, noting that de facto responsibility does not line up with legal responsibility. He considers various other forms (historical and imagined) of alienation contracts before concluding:

All these contracts have the same scheme. An adult person with full capacity voluntarily agrees for whatever reason and in return for whatever consideration to accept a lesser legal role. But they do not in fact alienate their capacity as a person in order to fulfill that diminished legal role. Instead the law accepts their (non-criminous) obedience to the master as “fulfilling” the contract. Then the rights and obligations follow the legal role (e.g., the slave of a master, the subject of a sovereign, the femme covert of her baron, the employee of the employer, and so forth)—as if the person were not in fact a person of full capacity. The whole scheme amounts to a fiction and fraud on an institutional scale that nonetheless parades upon the historical stage as a contractual institution based on consent.

In other words, the employment contract alienates what cannot be legitimately alienated. Hence:

Contrary to the blinkered vision of liberal apologetics, we have seen that the subtle issues lie all within the domain of consent (little subtlety is required to be against coercion). The “consent of the governed” to a Hobbesian pactum subjectionis is not democracy, and the employment contract is the mini–Hobbesian contract for the workplace. Thus once the question is posed as consent to alienation versus consent to delegation, then the daunted affinity of “liberal-capitalism” with democracy is demolished. The historical bedfellows of the employment contract are the pactum subjectionis and the self-sale contract. A true affinity to democracy would entail the abolition of the employment contract in favor of all firms being organized as workplace democracies.

If so, a question that immediately arises is how such firms would begin in the first place. (And why are they not created now?)

[This discussion is concludedcontinued in my next two posts.]

About Marx, Marxism and Leninism

This extends comments I made here and here.


In response to a dissection of a speech by Karl Rove defending “enhanced torture techniques”, the following comment was made:

… am I a simplistic and lazy Marxist if I say the relentless slavery to the demands of capital in these discourses is a necessary and screamingly sufficient reason for dismissal?


To which I responded: Yes.



Consider the levelling simplicity of the quoted comment. Whose capital? How defined? Is there only one set of such demands? Is there only one way such putative "demands" can be satisfied? What are the mechanisms of transmission that lead to the observed variety of views?

There are so many problems with Marxism (in any form) it is hard to know where to start. But the complete denial of the reality of politics involved—politics as a way of dealing with diverse interests and perceptions—is precisely why Marxism has such an appalling record when put into any sort of practice. For such a ludicrously mechanical view of politics must dismiss all the weary learning about how to manage the reality of politics it so completely fails to acknowledge.

It is not serious analysis to categorise politics (particularly as specific a policy issue as “enhanced interrogation”) as responding to the demands of “capital”, it is category-mysticism passing itself off as analysis. In the context of debate over “enhanced interrogation techniques”, one merely has to look at the history of torture in the common law to see what utter nonsense such simplistic “analysis” is.

But that levelling simplicity is, of course, central to the appeal. It is so simple anyone can do it: and with such a minimal burden of knowledge and research effort too. Determine the “class”, apply the “analysis” and, hey presto!, the “conclusion” follows. One that provides both a cosy sense of cognitive superiority (“I know how things really work”) and moral superiority (“I am not motivated by such vile thinking”).

Such analysis has the particular appeal to an academe that can parade how virtuously "not commercial" it is: all the more virtuous the more really, really, evil commerce (maleficent capital and capitalism) is.


As a system of analysis, Marxism explains almost nothing well. That people often act out of self-interest is hardly news. Reducing such self-interest to "class" or "profit" is puerile, as any perusal of the history of Leninism itself amply demonstrates.



An analysis of American politics that holds that corporate interests automatically trump union and public sector interests is equally puerile, especially given that public employment has increasingly become a device for enriching a privileged caste at the expense of the general public.

The class analysis of Marxism does not work, as class does not order human behaviour in the way it claims. In particular, it confuses common (as in similar) patterns of action with common (as in collective) action, so fails to grip reality. Firms could not exist if capital was not in competition with capital and labour was not in competition with labour. (Indeed, the power of unions rests on excluding labour competition, aka ‘scabs’.)
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What Marxism does is provide a "sophisticated" form of theomachy (the belief that social events are determined by powerful hidden forces—unless one is one blessed with appropriate gnosis) coupled with a belief in the absolute value of one's ultimate goal and a vindication to wage a war against people as-they-are in the name of people as-they-are-deemed-to-ought-to-be. 
Doing so while also feeding the academy's widespread anti-commercial prejudices. There is nothing "accidental" about the history of Marxism, or why it is one of those "exploded systems" that, as Adam Smith denounced more than two centuries ago, live on in academe after vanishing elsewhere.

The labour theory of value is nonsense, and murderous and tyrannical nonsense at that, since the notion of "one true class" has exactly the same oppressive and murderous implications as "one true sexuality", "one true race", "one true religion" etc. What Marx’s labour theory of value says, after all, is that all those participants in the economic process who are not providing labour are exploitative parasites who can be dispensed with: indeed, ought to be dispensed with. The oppressive and murderous implications of that are perfectly obvious and have been played out in country after country. For such people are not only dispensable, they are vile exploiters and barriers to the creation of the “final society”.

This problem is inherent in Marxism’s Hegelian roots. Hegel held that the contradictions of metaphysics are a correct picture of a reality with contradiction at its heart. Hegel taught that reality reflects ideas that are in endless contention as thesis leads to antithesis leading to synthesis leading to a new thesis and so on. These ideas are manifested in civilisations which are thus in endless, and profound, conflict. Such that, in Hegel’s words, the state “… is the march of God through history”: a march that is, as Gilson notes, is “strewn with ruins” for, as Hegel tells us:

This military class is the class of universality.

The class through which history is violently resolved with maximum metaphysical pretension. A universe of contradictory strife hovering on a climactic resolution: one can see that Marx is indeed a disciple of Hegel—a philosophy of profound violence with no higher truth to restrain it than its commitment to the final synthesis. This is revolutionary as ubermensch who is beyond morality and history, because they transcend both, with the workers cast as the “universal class” but even more universal, for they will be the only class left.

Of course, if the State is such a metaphysically heroic entity, it can be so heroic in all sorts of causes. Including manifesting the will of the volk in history, seeking lebensraum: resources clear of ethnic obstructions just as Marxism sought resources cleared of class obstructions.

Marx and Engels had a view of masses of their fellow humans as “dispensable” that goes right back to the beginnings of their career:

The next world war will result in the disappearance from the face of the earth not only of reactionary classes and dynasties, but also of entire reactionary peoples. And that, too, is a step forward.

A view, one notes, that is a ethnically-exterminating as anything in the Nazi vision.

This all based on a theory of exploitation that relies on playing (inconsistent) games with the concept of labour. Since the underlying economic analysis is nonsense, attempting to put it into practice ends up with seriously dysfunctional economies where economic roles that are not admitted to be legitimate are performed (badly) by complex bureaucracies that evolve into semi-hereditary engines of privilege. Not as some “perversion” of the ideology but following quite directly from its patterns and structure, from its logic.

It is truly amazing to have people teach Marxism, a philosophy all about the logic of history, and yet claim that the history of Marxism does not reveal its logic.

Pointing to social democracy (the merging of socialism with liberalism) as an alternative Marxian path is otiose, since there is a clear history to social democracy: the socialist element declines while the liberal element increases over time due to the brute reality that socialism does not work. Subject to the selection processes of competitive politics (both in internal elections and with competing jurisdictions), the dysfunctional (socialist) elements of social democracy get increasingly abandoned over time as they are found not to work.

Academic theorists, isolated from the consequences of their ideas except as status markers, may either ignore this, explain it away or sneer at it but the lessons are clear for those with eyes to see.

But one of the big problems with Marxism is precisely the way it encourages a crippled epistemology (pdf). Consider this quote from a philosopher who teaches Marx at university:

But if there's one thing that we ought to have learned from Marx, it is that bourgeois ideology tends to be totalizing and, hence, none of us are entirely free of its distorting effects. And so, even as I attempt to chip away at and unscramble some of the bourgeois misconceptions above, I must also remain attentive to my own bourgeois blind spots.


I hate this sort of thinking. It is essentially an open invitation to develop contempt for one's "unenlightened" fellow citizens. That societies and cultures have operating presumptions that are deeply embedded is obviously true. But that is a very different notion than this "suffocating blanket" concept of systematic delusion and malign power over perception and understanding.



Such an analysis of social cognition also naturally generates a crippled epistemology by discouraging (or even blocking) openness to inconvenient evidence. Rather than thinking people might have good reasons—grounded in how things are—for thinking as they do, it is an open invitation to dismiss any inconvenient views as “bourgeois ideology”. That is, as a form of delusion: a diagnosis that cuts one off from a huge amount of information about social reality.

A problem in teaching Marxism to student is

... their identification of Marxism with Soviet and Chinese practice

But Soviet and Chinese practice have something to do with Marxism. Indeed, they, in fact, express the underlying logic of operationalising Marxism pretty well, as discussed above. The "Lenin was a bad Marxist" and "it just hasn't been tried properly" are defensive justifications rather than hard-headed analysis.



Radical change in the society-transformed sense may not be impossible: but the record is pretty clear that it is a bloody (literally) bad idea: not least because it presumes a knowledge of the working of society that is both profoundly arrogant and profoundly wrong.

It is also inherently tyrannical. If one “knows” the end of society, the end of history, how things should be “objectively”, then one can dispense with consulting the general public on the way through. Along with Marxism’s dismissal of ordinary human cognition, such an outlook naturally leads to the dismissal of politics (in the Aristotelian sense) noted above, and with it all the human learning about such politics and the dangers of politics: as it dismisses human learning about so much.

Marxism is a form of “objective” teleology, and all such is inherently dismissive of human agency (this is true of Thomism as well as Marxism): with consequences that have been repeatedly played out in the oppressions that flow from the notion that “error has no rights” because human action and cognition is held to be legitimate only if it serves the designated morally trumping ends.

An example of Marxism’s dismissal of inconvenient human cognition is provided vividly in Marx’s attitude to Jewish identity:

Once society has succeeded in abolishing the empirical essence of Judaism – huckstering and its preconditions – the Jew will have become impossible, because his consciousness no longer has an object, because the subjective basis of Judaism, practical need, has been humanized, and because the conflict between man’s individual-sensuous existence and his species-existence has been abolished.
The social emancipation of the Jew is the emancipation of society from Judaism.

People do not get to define themselves: Marxism gets to define them. The attempt to insulate Marx from the negative features of Marxist history simply does not work.

Marxism is based on a profoundly mistaken analysis of economic activity. One that allows dramatic dismissal of the remarkable achievements of market societies as inherently “exploitive” in the name of a self-satisfied “vision splendid” by its adherents. Marxism has an underlying logic that the attempts to operationalise it in fact express revealingly. The attempts to “quarantine off” that profoundly revealing experience is (as we can see in this amusing lecture on the legacy of Adam Smith versus the legacy of Karl Marx here) a contemptible reaction to massive human suffering: a mirror of Marxism’s dismissal of inconvenient human achievement and inconvenient human cognition.

Dismissals that lead directly to its profoundly oppressive record, as all criticism or disagreement can be dismissed either as delusion or as blocking the great transformative goal or both. A goal that also leads to Marxism-in-practice’s profoundly oppressive record as it is so morally trumping it has been taken, again and again, to justify any action deemed to further its achievement. Including re-instituting slavery and serdom.

Even the leadership worship one sees in Leninist states flows naturally from this teleological cognitive arrogance, for if the role of the revolutionary state is to be the agent of History, if social transformation comes from having the correct policies correctly implemented, then of course the leadership—as the central instrument of this process of transformation—must epitomise and embody this profound cognitive and moral understanding. The leadership-worship of the Kim Family Regime is just an extreme manifestation of an inherent tendency. As is, of course, the treating of Marx himself as a secular prophet.

What Marxism has going for it—apart from its offer of profound gnosis—is the epitome of the politics of grand, transformative “good intentions”. Since academics are not actually responsible for making anything work in the world (even the consequences of their teaching are born by their students, not them), still less do they have to live with the consequences of their idea, they are naturally strongly inclined to the politics of grand “good intentions” as—being insulated from responsibility of making things in the world work—their intentions can be “purer” and “grander” than anyone else’s. Hence the wish to insulate the grand intentions of Marxism from the horrors of its implementation: such self-indulgent self-exculpation is not, however, worthy of a moment’s respect.

Marxism as a system of thought is not a distillation of history. It is, in a profound and pervasive sense, a flight from history as-it-is into a delusion about history as-it-is-deemed-to-be.

Marxism is a philosophy to be studied for its effect on history and as a warning. It is not a philosophy to be respected, let alone followed.

Using Marx’s analysis against Marxist critique

Marxian economic analysis and Marxist critique of capitalism—the value judgments Marx's followers have typically made about capitalists and capitalist enterprises—do not sit together as well as is often thought.

Marx's labour theory of value says value is created by socially necessary abstract labour time. Any particular worker working on any particular thing may, in fact, not successfully create value. But, if something has value, that value is equal to the socially necessary abstract labour time embodied in that thing.

Thus labour as-it-is-in-the-world (“crude labour”) is distinct from labour-that-creates-value. A distinction necessary to give the labour theory of value any chance of working, since it is perfectly obvious that labour can be misapplied to varying degrees, that not everything with exchange value is the product of labour, not everything produced by labour has value and the exchange value of something can shift dramatically after it has been produced

The problem with this distinction between “crude” labour and socially necessary abstract labour time (apart from difficulties with it as a theory of value) is that it destroys the moral judgement that is derived from the labour theory of value—that is, that surplus value is exploitative because only workers create value.

If crude labour =/= value, then we do not know, until it is validated by exchange, whether any particular labour effort has created value or not (and how much). So, clearly there is a role in organising labour to attempt to create value. There is also the matter of covering risks involved in producing value. This not a matter of risk per se – any form of income in the production process involves risk: hence, for example, the risk premium for particular jobs. It is a matter of providing a guarantee for income variability from the uncertainty about whether exchange-value will be created or not sufficient to cover the costs of production.

Hence profit is not exploitation, it is the return on a necessary economic role given that output of crude labour =/= value.

Moreover, wider returns to capital are also justified, since the level of capital determines how much socially necessary abstract labour time is needed to create value. The more effectively applied the capital, the more value is created and the higher the return to labour.

So, while the analytical form of the labour theory of value separates the socially necessary abstract labour time that creates value from “crude labour”, it does so at the cost of demolishing the basis for the normative conclusions of Marxism embodied in the theory of surplus value-as-exploitation.

The falsity of the labour theory of value

Marx’s argument—as set out in the first chapter of Das Kapital—for the labour theory of value is based on three false claims. The first is:

The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity.

This is wrong, for utility is utility to someone. The utility comes from its connection to their purposes. So, the utility of a thing does have existence apart from that commodity, it exists in the relation of the thing to the purposes of anyone who has a use for it.

The second is:

…[commodities of equal value] must, as exchange values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange values of a given commodity express something equal; secondly, exchange value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it.

Which is equally wrong, since variation in value (between people, across time and space) is what drives trade in the first place. Each person trades something that they value less for something they value more: the exchange value is a point of intersection. There can be no trade without such variation. Indeed, much of commerce is finding people who put an intersecting valuation on things you want to exchange: hence the gains from trade (each person ending up with something they value more than what they gave up). If there were genuine indifference by both parties to each item (i.e. they both valued them equally), the exchange would not be worth the bother. Trade began operating across vast differences comparatively early in human history precisely because things increase in exchange value the more scarce they are—hence trade items moving from places of less scarcity to places of more, in long chains of shifting intersections of different valuations. Marx’s finding of some “common quality” creating some equality in exchange does not define the nature of exchange, it abolishes its underlying reality and driver.

What both these errors do is separate exchange value from what people want. The subjective element of value is replaced by a (spurious) objectivity.

The third false claim is:

… if then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour.

Which is also not true. Commodities also have the qualities of being made of materials (what economists call ‘land’) and by tools (what economists call ‘capital’): labour on its own produces little or nothing.

Even more basically, to be exchanged, such things have to be controlled by someone. Locke’s metaphor that a person in the state of nature acquires something by “mixing his labour” with it is misleading: what they do is take control of it. Any contribution of labour to exchange—whether in production or the realisation of value in exchange—is framed by such control: as is also true of land and capital.* Moreover, the control has to matter: the thing has to have sufficient scarcity and be sufficiently wanted by someone for such control to matter. We can control a twig, but who cares? Control, scarcity and wanting are the bases of exchange value.

Having, in fact, not established the labour theory of value, Marx is confronted with the problem that not everything with exchange value is the product of labour, not everything produced by labour has value and the exchange value of something can shift dramatically after it has been produced. So, to maintain his theory, Marx cannot use the term labour (or, for that matter, value) in the way they are normally used. Hence we end up with labour in Marxian economic theory meaning socially necessary abstract labour time: a rather odd, “Platonic form” of labour. The socially necessary part being rhetorically necessary, as it allows labour to be redefined so it “fits” with the evidence. (How do we know any given bit of labour is “socially necessary”? Why, because it produces something of value, of course!)

If one is so gauche as to argue against the labour theory of value by referring to labour as it actually appears in an economy, one finds that one has so misunderstood. Even though Marx and his followers promptly draw moral implications which are precisely anchored in labour-as-what-workers-do, it is simply not kosher to infer back from that, that labour in Marxian economics means what you would ordinarily think it means. Marxism uses the notion of “labour” as what-workers-do to get its moral rhetoric working—but shifts to socially necessary abstract labour time whenever that gets awkward. It invokes the power of particular words (‘labour’, ‘value’) but evades the meaning that gives them that power.

When arguing with Marxists and Marxians, it is very easy to get lost in their logical traps. They certainly are.

* Locke's metaphor has had a long and deleterious effect on the development of economic thought, since it encouraged looking at exchange as being a culmination of a productive process (which it may or may not be, and to varying degrees of success) rather than as a purposive act of (changing) control, which it always is. The importance of economic property rights (who has actual control of something) is brilliantly analysed in Yoram Barzel, The Economic Analysis of Property Rights, part of the transaction costs revolution which is steadily transforming economics. Barzel demonstrates that economic property rights are basic to economic analysis, not some ancillary add-on.

ADDENDA Adam Smith scholar Gavin Kennedy argues, very plausibly, that Smith did not hold a labour theory of value. Smith viewed labour as a measure of value, not a source of it. If one reads the key passage in The Wealth of Nations, this seems correct:

The real price of everything what everything costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, who want to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who posses it and who want to exchange it for some new production is precisely equal to the quantity of labour which it can enable them to purchase or command. ( WN I.v.2: 47-48)

Smith's thinking strikes me as a little confused, and one can see why a cursory reading might be taken as expressing labour as a source of value, but what Smith is about here is labour as a measure of value. Smith is, at least in part, expressing the notion of opportunity cost.