My name is Mark Biernat, and I am getting a Ph.D. in Economics. Although I focus on Monetary theory, I do touch on the ideas of Karl Marx, as capital theory and monetary theory are connected.
I get a lot of Marxist commenting on my blog. They often bring up labor exploitation and how the world would be better off without capitalism. Let’s look at some ideas by Marx a little closer.
What did Marx really say about labor exploitation?
Marx believed that labor exploitation was a key aspect of capitalism. He argued that the bourgeoisie, or the owners of capital, exploited the proletariat, or the workers, by paying them less than the value of their labor. Hmm, is this ever true when there is free movement of labor and capital?
This surplus value was then appropriated by the bourgeoisie as profit, leading to the perpetuation of the class divide between the rich and the poor. Karl saw this exploitation as a fundamental feature of the capitalist system and viewed it as a driver of social and economic inequality. However, Marx wrote at a specific time with a limited worldview.
Why is Marxist theory incorrect when it comes to the labor theory of value?
Marx’s labor theory of value has been subject to criticism from various economic, philosophical, and historical perspectives. Marx clearly overlooked:
- Relevance in a modern economy: Critics argue that the labor theory of value does not accurately reflect the complex and dynamic nature of modern economies and the multiple factors that contribute to the determination of market prices.
- The subjectivity of value: The labor theory of value assumes that the value of a good is determined by the amount of labor embodied in it, neglecting other important factors such as demand, technological progress, and the cost of inputs.
- Ignores opportunity cost: The labor theory of value fails to consider the opportunity cost of labor, i.e., the potential benefits that could be derived from using the same resources in alternative ways.
- Historical accuracy: The labor theory of value has been criticized for its accuracy, with some arguing that it oversimplifies the historical development of the capitalist system and the role of labor in it.
- The world is much more complex than Marx imagined; it is not about mining coal and digging ditches today.
What do Austrian Economists think of the Marxist theory?
You have to love the Austrian Economists; they are perhaps the clearest thinkers as they are well-versed in the history of economic thought. The Austrian economists are critical of Marxist theory, particularly its labor theory of value and the role it assigns to the state in the economy. Austrian economists argue that value is subjective and depends on individual preferences, not the amount of labor embodied in a good or service. They rejected and still reject the idea that the state should play a significant role in the economy, advocating for a market-based approach characterized by private property rights and minimal government intervention.
Austrian economists are also not a fan of Marxist ideas about class struggle and the idea that capitalism leads to exploitation and inequality. On the contrary, they argue that capitalism leads to economic growth and prosperity and that the market mechanism ensures that resources are allocated in the most efficient manner. If you want prosperity and equality, do the opposite of what Marx wrote.
What are the most Marxist countries in the world?
Here are some countries that are connected to the Marxist ideology simply ask yourself do you personally want to live in these countries?
- China: After the Communist revolution in 1949, China established a socialist planned economy, though it has since shifted towards a more market-oriented system.
- Cuba: After the Cuban Revolution in 1959, Cuba established a socialist state and became a close ally of the Soviet Union.
- Vietnam: After the end of the Vietnam War, Vietnam established a socialist republic and has undergone significant economic reforms in recent years.
- North Korea: North Korea was established as a socialist state after the Korean War and remained one of the last remaining socialist countries in the world.
- Laos: Laos is a socialist republic that has implemented significant economic reforms in recent years, though it remains one of the poorest countries in the region.
What are the least Marxist countries in the world today?
In stark contrast, here are some of the last Marxist countries. Would you want to live here?
- United States: The United States has a capitalist economy and a political system based on democratic principles and limited government intervention.
- United Kingdom: The United Kingdom has a market-oriented economy and a parliamentary system and is generally considered to be less influenced by Marxist ideology.
- Australia: Australia has a capitalist economy and a parliamentary system and has been described as having a limited influence from Marxist ideology.
- Canada: Canada has a mixed economy and a parliamentary system and is generally considered to be less influenced by Marxist ideology.
- Japan: Japan has a capitalist economy and a parliamentary system and has been described as having limited influence from Marxist ideology.
Which Austrian Economists are most critical of Marx?
If you want to read up on or prep for a debate on Marxism I recommend the following Austrian economists who have been most vocal in their criticism of Marx include:
- Ludwig von Mises: Mises was a pioneering Austrian economist who was a strong critic of Marxist economics and the idea of socialism. He argued that socialism was incompatible with the basic principles of a market economy and that it led to economic inefficiency and decreased prosperity.
- Friedrich Hayek: Hayek was a leading Austrian economist who was critical of Marxist ideas about central planning and the role of the state in the economy. He argued that central planning was inherently inefficient and that the market mechanism was a more effective means of allocating resources.
- Murray Rothbard: Rothbard was an influential Austrian economist who was a strong critic of Marxist economics and the idea of socialism. He argued that socialism was incompatible with individual freedom and that it led to economic inefficiency and decreased prosperity.
These economists, and others associated with the Austrian School, have been influential in shaping modern economic thought and have had a lasting impact on how economists view the economy and the role of government in it.
If you have questions about Marxism, just contact me.
Oh, one more thing, here is Karl Marx’s writing in Pdf.