Remember Marx for How Much He Got Wrong

(Bloomberg) -- On May 5, admirers of Karl Marx celebrated his 200th birthday. Marx didn’t make it to 200, but the ideas he injected into the global conversation and the ideologies that bear his name far outlasted the German economist and philosopher.

As socialist ideas grow in popularity in the U.S., and as the memory of the Cold War fades, respect for Marx is enjoying a bit of a resurgence. In the New York Times, philosophy professor Jason Barker declared that Black Lives Matter and the #MeToo movement are carrying on Marx’s legacy of social critique (a point of view shared by conservatives, who are naturally less happy about it). Meanwhile, writing at the Week, Ryan Cooper said that it was time to normalize the man many consider to be the founder of communism.

But something about this celebration of Marx sits uneasily. For those who have read history or lived through the 20th century, it’s hard to forget the tens of millions of people who starved to death under Mao Zedong, the tens of millions purged, starved or sent to gulags by Joseph Stalin, or the millions slaughtered in Cambodia’s killing fields. Even if Marx himself never advocated genocide, these stupendous atrocities and catastrophic economic blunders were all done in the name of Marxism. From North Korea to Vietnam, 20th-century communism always seem to result in either crimes against humanity, grinding poverty or both. Meanwhile, Venezuela, the most dramatic socialist experiment of the 21st century in a nation with the world’s largest oil reserves, is in full economic collapse.

This dramatic record of failure should make us wonder whether there was something inherently and terribly wrong with the German thinker’s core ideas. Defenders of Marx will say that Stalin, Mao and Pol Pot exemplified only a perverted caricature of Marxism, and that the real thing hasn’t yet been tried. Others will cite Western interference or oil price fluctuations as the reason for socialism's failures. Some will even cite China’s recent growth as a communist success story, conveniently ignoring the fact that the country only recovered from Mao after substantial economic reforms and a huge burst of private-sector activity.

All of these excuses ring hollow. There must be inherent flaws in the ideas that continue to lead countries like Venezuela over economic cliffs.

The best way to look for those flaws is to follow Cooper’s advice and read Marx with judicious detachment. My favorite example of this is a 2013 post in which University of California - Berkeley economic historian Brad DeLong tried to boil Marx’s big ideas down to their essentials, and evaluate each one. While noting some trenchant and foresighted observations the German thinker made about capitalism, DeLong also chronicles his mistakes. Marx, DeLong writes, failed to appreciate the degree to which capital investment raises worker productivity and living standards. He didn’t predict the shift from manufacturing to services. And he underrated the power and usefulness of the signals and incentives created by the price system in a capitalist economy.

Those mistakes alone would be enough to hobble an economy and send any economic doctrine to the rubbish heap. Collectivization of agriculture seems to have been particularly disastrous for farm-based societies like 20th century China and Russia. But they can’t explain why communism was so often accompanied by atrocities, or why leaders like Mao and Stalin persisted in failed policies long past the time when wise, benevolent leaders would have changed course.

The brutality and insanity of communist leaders might have been a historical fluke, but it also could have been rooted in another of what DeLong sees as Marx’s mistake — the preference for revolution over evolution. DeLong writes:

[Marx believed] that even though the ruling class could appease the working class by using the state to redistribute and share the fruits of economic growth it would never do so…Hence social democracy would inevitably collapse…and the system would collapse or be overthrown.

But overthrowing the system has usually been a disaster. Successful revolutions tend to be those like the American Revolution, which overthrow foreign rule while keeping local institutions largely intact. Violent social upheavals like the Russian Revolution or the Chinese Civil War have, more often than not, led both to ongoing social divisions and bitterness, and to the rise of opportunistic, megalomaniac leaders like Stalin and Mao. Even the French Revolution, though it eventually led France to become a stable liberal democracy, only did do after almost a century of atrocities, short-lived dictatorships and civil strife.

Meanwhile, the most successful examples of socialism — the mixed economies of the Scandinavian countries, France, Germany, and Canada — came not from the violent overthrow of the old order, but from gradual change within the democratic, partly capitalist system. These countries have plenty of private businesses, but also fairly high taxes, universal health care, strong social safety nets and a variety of other government tools that keep capitalism from resulting in runaway inequality.

Even in the supposedly capitalist bastion of the U.S., the social safety net is a lot stronger than people give it credit for — thanks to government benefits, America’s child poverty rate is at an all-time low. Meanwhile, almost all rich countries now have progressive income taxes, universal public education and laws against child labor — all things that Marx demanded in 1848 in the Communist Manifesto.

In other words, real socialist success has been of the gradual, incrementalist kind, more in line with the visions of thinkers like Eduard Bernstein than to the dramatic, violent prophecies of Marx. Through repeated experimentation, societies like those of Denmark, France and Canada have found ways to use government to make society more equal without killing the golden goose of private enterprise.

So although Marx was far-sighted in identifying some of the problems of capitalism, he got the solution very wrong. Remembering this is the best way to commemorate his birthday.

©2018 Bloomberg L.P.

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