Romantic Notions: Why People Revere Karl Marx When They Know He’s Wrong

November 29, 2016

Political economics is not for the faint of heart, as Deirdre McCloskey has learned from experience. The distinguished professor of economics, history, English, and communication at the University of Illinois at Chicago, not only has studied Karl Marx, but has looked at the phenomenon of why people study Karl Marx, even revere him in some cases, when they know he’s wrong.

In her most recent essay on Marx, McCloskey admits that Marx is a fascinating subject, even though saying so has caused her much consternation over the years.

I enrage my friends on the right by stating the obvious, that Marx was the greatest social scientist of the 19th century, without compare. But then I enrage my friends on the left by adding, which is my point here, that he was nonetheless mistaken on almost every point of economics and of history. Which is why I haven’t got any friends.

Marx’s legacy has endured to this day despite the error of his theories and overall wrongness of pretty much every facet of his arguments. Nonetheless, McCloskey describes how his lasting impact may be due to the tendency of Marxists — or “Marxians” or “Marxoids” as McCloskey describes their evolution over the decades — to romanticize that which sounds ideal, even if completely irredeemable in practice.  Another part of it is the tendency to demonize everything anti-Marx as motivated purely by “evil,” in other words, by an expectation of profit. Still another part is a tendency of otherwise cordial Marxists to refuse to challenge one another, even when in general agreement with others’ conversation points.

McCloskey cites from her own experience.

Some years ago I mildly remarked to a gathering of my beloved Department of English at the University of Illinois at Chicago that the speaker who had just concluded his presentation, a fashionable Marxian imported from New York, just might not have got the economic history exactly right. The speaker responded in a sentence, “Oh, I see that you are a neoliberal” and sat down. That was it, and none of my colleagues, mostly themselves Marxians or Marxoids or cautious fellow travelers, would speak up to insist that he respond more fully to someone who after all had some claim to knowing a little about economics and history. I was startled by his exhibition of proud ignorance and saddened by the implicit agreement in the room that one is not to “listen, really listen, to one’s friends’ questions and objections” and certainly not to those of one’s party enemies. The result of a century of name-calling-as-argument, from “Bernsteinian revisionism” and “economism” to “bourgeois” and “neoliberal,” and not listening, really listening, has had the scientific result one might expect.

Part of its endurance may be that Marxism as a philosophy is “fairly easy to master, but sufficiently mysterious to attract young people,” McCloskey notes. It is like atheism in its “macho positivism” — it is “courageously tough,” hence its appeal in particular to males; and it is built on traditional, even biblical, narrative styles of storytelling — the underdog facing a stronger and more powerful challenger who has the ability, and perhaps even the inclination, to ruin those who get in his way. The capitalist Goliath vs. the David guildsman.

But, therein lies the starkest and most obvious problem with Marxism, McCloskey explains: the left’s “professionalization of history” is built upon an ahistorical foundation.  The vernacular used by Marx has been completely repurposed, if not fully recast, to categorize individuals and groups as falling into one of two roles, despite all parts of the capitalist equation applying to all participants in all exchanges.

(Marx’s) foundational labor theory of value was wrong, as every serious student of the matter has agreed for the past century and a half. … (V)alue is determined by how much people want things, considering the income available, not by how much effort the seller put into the things, and that the wage is determined not by bargaining strength but by the market value of what the last worker produces, considering that free labor is a little mobile. …

Everyone buying labor, for example, is a “capitalist” by a consistent use of the word, and therefore “exploiting.” … (A)sk the inhabitants of the Indus valley civilization or those who traded with them in the third millennium BCE from the Horn of Africa or indirectly from Sumer if the trade was “exploitative.”

“Equal trade,” a phrase that floats in the background of many Marxian discussions of exchange, sounds generously wise. It is not. We trade precisely because we differ — if you wish because of a species of “inequality”— not because we pointlessly trade your frog for my identical frog of equal value to us both.

In truth, after all, “surplus value” is “extracted” every time you exchange anything for something else — or else you wouldn’t do it, would you, now? You are a “capitalist” when you buy a cup of coffee served by an “exploited” owner of a coffee shop. She gets the profit of a price higher than the lowest she would accept, and you get a cup of coffee for lower than the highest price you would accept—which is why exchange happens, earning a profit for both sides.

A member of the “working class,” such as you or I, gets profit likewise from our employments. The working class in any case is not peculiar to modern times. It has existed anciently … Under the Marxist definition of workers a CEO hired at $20,000,000 a year to drive Home Depot into the ditch is a worker, too, because he was hired. The “relations of production” therefore do not have the explanatory force that Marxists attribute to them. So the Marxist word “capitalist” and its derivative dating from (Werner) Sombart, “capitalism,” which are supposed to have historically unique relations of production, but don’t, serve to mislead people into thinking that there is something especially modern about banking and finance and profits (which is mistaken … ).

“Unequal bargaining power” and “unequal trade” can only mean market outcomes that we wish were different, wishing that the hungry farmer’s cotton sold for 15 cents rather than 10 cents a pound, that the Indian worker got $10 an hour instead of pennies. No one bargains when they have options, and markets, as against literal enslavements, bring options, however nasty.

No, market outcomes aren’t always equal, but over time, the overall outcome has been to lift incomes as well as human dignity by measurable and immeasurable sums.

Just as recently as 40 years ago, the world faced a bottom 4 billion out of a total human population of merely 5 billion, with no prospects. Now the abysmally poor are a bottom billion out of 7 billion, which is bad, but much, much better than in 1976, and historically unique.

Since 1976, that is, most of the poorest people in the world have been getting better off almost every year. From 1981 to 2008 the share of the world’s population living at the level of Afghanistan, a horrible $2 a day (expressed, if roughly, in present-day US prices allowing for the cost of living; US income now is $130 a day), fell from 70 percent to 42 percent. The share of the world’s population living on an appalling $1.25 a day, as in Liberia (the experiment in sending African Americans with longer American lineages than most European-origin Americans “back to Africa”), fell from 53 percent to 22 percent. It fell, in other words, by more than half. From 2005 to 2008 even sub-Saharan Africa, for the first time since its independence from the colonial powers half a century earlier, shared on average in the betterment.

As for earning a fair wage, state interference, if anything, has distorted real wages, but efforts to keep raising the minimum prove that mandated minimums don’t “work as advertised.” If that were the case, Venezuela, for instance, wouldn’t be suffering from empty grocery shelves or creating a new era of boat people in search of more hospitable shores.

Finally, Marxism encourages the romantic notions of the left because his own words have been misquoted, McCloskey states. Morality arguments claiming that capitalism is the equivalent of “greed” rarely appear in the arguments Marx made to describe man’s pursuit of gain.

More so, the sins of capitalism ascribed to it by the Marxian left have not, in fact, come to pass.

Left feminists have supposed that trade-tested betterment damages women, when it has in fact liberated and enriched them.  … The left has said in sequence, 1848 to the present, that capitalism results in impoverishment (it has not), in alienation (not), exploitation of the Third World (not), spiritual corruption (not), inequality (not), and, recently, environmental decay (correctible, socialism having done much worse).”

But in this late day and age, an admission of misplaced romanticism has been superseded by the quest for political supremacy.

In keeping with the simplicities of the early-life formation of political opinions, the left now supposes that rightists are simply bad people, who do not care about the poor, and are therefore not to be listened to. By contrast, the right is more likely to believe that the leftists are simply misled — not entirely bad people, though shamefully ignorant — and therefore that they might be open to patient factual and logical correction.

McCloskey closes with a plea to her “friends on the left (and less hopefully with my enemies there),” that they take a look at how liberalism and socialism compare over the centuries and reach the conclusion “that Smith’s liberalism, not Marx’s socialism or its shadows in regulation, has achieved since 1800 a pretty good approximation to human flourishing.”

Read McCloskey’s entire essay here.

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Edmund Burke: The Link Between Economic Liberty and Human Flourishing

November 8, 2016

Edmund Burke is one of the most famous philosophers in the Western world. A member of the British Parliament from Ireland in the 18th century, Burke, a gifted orator and author, was not an economist, but had a major impact on the field of “political economy.”

Author Yuval Levin, in one of a new volume of essays on the great philosophers and their impact on economic liberty and human flourishing, notes that Burke’s thinking centered on the complexity of society, and with it, the inherent inability to regulate all manner of it without a moral consensus.

For him, economic life was best understood from the bottom up. He suggested that the power of markets, in our modern parlance, was that they enabled decisions to be made close to the ground and so aggregated society’s knowledge in much the same way that our other core social institutions do.

Note the emphasis on “social” institutions. Burke was fully aware that many people were not exposed to opportunity to improve their lives, and he wasn’t a huge believer that a high tide would lift all boats. But he was hugely skeptical of the ability of some so-called equalizing central force to intervene and correct course. In other words, he opposed government intervention in economic exchange.

At the same time, Burke did not believe in the principle of “rugged individualism” as a means by which society should manage itself because people whose limits come only from self-imposed guidelines are subject to injury from their own whims and foolish ways. In short, he questioned whether liberty could survive if each person is going to be left to his own devices.

Levin quotes Burke directly to elucidate the point.

Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites. In proportion as their love to justice is above their rapacity, in proportion as their soundness and sobriety of understanding is above their vanity and presumption, in proportion as they are more disposed to listen to the counsels of the wise and good, in preference to the flattery of knaves. Society cannot exist, unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.

Levin then uses a principle of physics to sum up Burke’s position on why society is the force by which to constrain man: something can’t come from nothing.

Each human being arrives in the world as a new member of an old order, and far from a constraint upon our freedom that must be overcome, this fact is what makes our freedom possible. The primary reason for that, Burke argues, is that human beings have to be formed for freedom and are not born with that form. It is a social achievement. Social theories that begin with the free and rational individual alone seemed to him to beg a question they can never answer: where does this free person come from? Every person, after all, comes from a family—which is not a liberal institution—and enters the world both unable to exercise freedom and encumbered by all kinds of social relations that operate as restraints. To get from that beginning to the exercise of liberty, let alone to a society of free people exercising their liberty, requires much more than the absence of restraint.

Nonetheless, Burke believed that society would reach agreement and cooperation through a gradual evolution of its own morés, not the controlling external power of a technocratic central authority.

Through continuous, incremental change at the margins rather than sharp breaks and jostles, societies come to express in their institutions, charters, traditions, and habits a kind of simulacrum of the standard of justice. Society as it exists after such long experience comes to offer an approximation of society as it should exist.

In practical terms, Burke opposed what is now well-known as minimum wage, and he argued that employer and employee would be able to negotiate terms favorable to their own self-interests. He rejected what would come to be known as a central principle of Marxism, the effort to create “compulsory equalizations.” He said it would pull down the top toward the bottom rather than raise the bottom to what the top could achieve. Burke himself warns what comes from that effort to make all things equal:

A perfect equality will indeed be produced; that is to say, equal want, equal wretchedness, equal beggary, and on the part of the partitioners, a woeful, helpless, and desperate disappointment.

While Burke is quoted at length by Levin to describe the debate of farmer or laborer and employer over wages, Levin points out that Burke lived in a pre-industrial era, and that the market economy would end up disrupting pretty much every social arrangement — whether it be family, housing, congregation, or small business — as Burke knew them and from which he built his theory of political economy.

How Burke would have dealt with these new arrangements can only be guessed, though it’s safe to presume he would have come at them from a point of humility and humanism.

Read more about Edmund Burke and the political economy.

Read more from the great philosophers series.

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The Never-Ending Battle Between Public Good and Private Property

October 11, 2016

In today’s American society, the battle between the public good vs. private rights manifests itself weekly, with reports of court cases and government regulations involving eminent domain, property rights, appropriate levels of taxation, and other disputes between individual freedom and society’s demands.

It’s no wonder. The argument over the exact balance between public and private has been going on for centuries.

In the second in a series of essays in the new volume, Economic Freedom and Human Flourishing: Perspectives from Political Philosophy, Peter B. Josephson explains how philosophers, John Locke and Thomas Hobbes, two kingpins of modern political thought, were in conflict over the tradeoffs between public good vs. private rights, though in the end they ended up coming to conclusions that were more alike than different.

As for the similarities, the two great philosophers spoke about the state of nature, and the notion of natural equality and liberty, wholly separate from the machinations of man, which created government and institutions. This natural world is where man is given his existence, his independence, which cannot be denied. Life is valued equally, and not to be decreed by one person or institution over another.

But is this state of nature good, or does it need to be contained? Josephson of Saint Anselm College explains how the two disagreed.

Hobbes famously explains that in the state of nature there is no ‘mine and thine,’ and ‘no place for industry, because the fruit thereof is uncer­tain, and consequently, no culture of the earth . . . no commodious building . . . no knowledge of the face of the earth.’ In Hobbes’ account, the condition of perfect liberty and equality—our natu­ral, ungoverned condition—is a state of war: a war of all against all that produces a condition that is ‘solitary, poor, nasty, brutish, and short.’ On the other hand, Locke describes a state of nature that includes natural rights to property and therefore an account of natural justice. Locke carefully distinguishes the state of nature from the state of war and describes the state of nature initially as a state of ‘perfect freedom’ and ‘equality,’ governed by a ‘law of nature’ that teaches anyone ‘who will but consult it’ that ‘no one ought to harm another.‘ In describing the ‘plain difference’ between the state of nature and a state of war, Locke writes that they are ‘as far distant, as a State of Peace, Good Will, Mutual Assistance, and Preservation, and a State of Enmity, Malice, Violence, and Mutual Destruction are from one another.’

As a result, Hobbes believes an absolute sovereign is needed to save us from ourselves while at the same time, our need for self-preservation means we must establish for ourselves a system to protect us from the haphazard or overbearing nature of a sovereign who would kill us to keep us from killing each other.

On the other side, for Locke, individuals agree to be guided by a common set of rules and leaders, but we submit to them out of convenience because we seek to work in harmony. No sovereign can remove our good from within us by telling us how or what to be. Political power is established according to a set of laws by which we consent to be governed.

Unlike our liberty, the philosophers disagree on man’s natural rights to property, though they eventually lead to the same place. On the one hand,

Hobbes insists that prop­erty is not natural, that it is rather a creation of the sovereign, sub­ject to consent and political authority, and so readers should expect extensive exercise of government authority over the private property it has created. …

In contrast, Locke insists that property rights are natural, and that each individual naturally holds a property right that is not at all dependent on the consent of others. In other words, we need no one’s permission to build our own property, not even the per­mission of the government.

So how is it possible that these two men, opposite sides of the coin, collectively have created the ground game on which so much of modern-day political society operates? They are in a constant battle between what is of the public concern, and what is private. It is that battle that we contest over and over again in the partisan realms of American governance.

For Hobbes, “political authority is necessary for the very creation and security of property; order precedes prosperity.” The sovereign basically hands out the property, and the rights to it, while at the same time the sovereign does not have total ownership in the first place, and the means of production cannot be centralized because if something goes wrong, everyone suffers. He suggests taxation as a means to make sure no one runs away with too much of a good thing.

For Locke, personal industry results in public good by its very nature. At the same time, while labor is the manifestation of our natural right, not all labor will be equal, and the overabundance of one man’s accumulation can result in scarcity for another. Since it is the natural right of everyone to exist, as a result, man needs to smooth over the unevenness, but Locke asserts that can only occur with the consent of the property, or labor, owner to contribute to the public good.

So how do we get to flourish as humans if we’re constantly being clipped and groomed and subject to the rule of law? Are we decent enough to contribute on our own, without a push from a central authority? Are we too unruly to be left alone? Can we have both personal success and achieve the summum bonum, the highest good?

Josephson explains:

As a response to that natural state of war, so-called lib­eral government is asked to respect and secure private natural rights, and to moderate or regulate the assertion of those rights. That is, we demand liberty, and also a defense against the dominion of others. Property, broadly understood, grounds the rights of individuals to govern themselves, and those rights also help establish a limit on the claims of others or the authority of the government. …

Liberalism thus seems an instrumental political arrangement, one that makes possible the private pursuit of diverse good lives with­out imposing a particular telos on its citizens. An essential instru­ment of this liberty—and therefore of the opportunity for human flourishing—is protection of the rights of private property. Rights of private property can ensure a level of sustenance and even indepen­dence that is instrumentally necessary for any good life.

Though life in the liberal regime thus promises neutrality with respect to conceptions of the good, in practice the new liberal regime cannot help imposing its own conception of the good or the tolera­ble on its subjects. Liberalism is “not mere proceduralism, nor is it neutral with respect to ways of life or virtues.”95 While the regime permits private pursuits of diverse goods, it also largely consigns those pursuits to the private sphere. The public realm still insists on particular characteristic actions. The free individual who can make his own way or chart her own course in the world must have certain capacities. Such a person must be independent and hardworking. Because of the liberal foundation in natural equality and natural lib­erty, such a person must respect the independence and hard work of others. And so liberalism insists on certain modern virtues, includ­ing industriousness and self-reliance, and toleration and civility. It rewards innovation and pragmatism more than tradition and phil­osophic speculation. Goods of the soul may be pursued freely in private. Lives devoted to faith or philosophy, to heroic virtue, or to pleasure must be moderated in the service of peace, preservation, and prosperity.

No regime is truly neutral with respect to the good life. The instru­ments of liberal life become the ends in themselves, and these new good lives may lack the lofty allure or ambition of the old. Modern liberalism secures a realm of privacy that makes some human flour­ishing possible, but that may not incline us toward teleological con­ceptions of the good. In its elevation of the instruments of the good life, liberalism may even close our minds to conceptions of ultimate goods. Without a teleological account of human flourishing the idea of the greatest good becomes, for the philosophers of modern liberty, nothing more than a matter of taste, and taste is so much a matter of private judgment that we find it increasingly difficult to consider ultimate goods—and the common good—seriously. Thus egalitar­ian liberalism has a tendency toward relativism. And yet liberalism properly understood is not neutral; it asserts its own particular claim to the good. Taking liberalism’s particular claim seriously would be the first step toward a serious reappraisal of the alternatives—and especially of the claims of faith, philosophy, and heroic virtue.

Read Peter B. Josephson’s entire essay on Hobbes, Locke, and the Problems of Political Economy.

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Can Modern Economics Help Us Achieve Happiness?

October 5, 2016

Harvey C. Mansfield of Harvard University and Hoover Institution fame has contributed a most useful essay to the new edited volume, Economics and Human Flourishing: Perspectives from Political Philosophy, explaining how Aristotle applied economics to happiness, and how the study of economics has been twisted by today’s economists and political “scientists” to limit people in their ability to be virtuous.

Aristotle wrote comprehensively on both economics and the flourishing life. Modern economics makes its way without study of the ‘flourishing life,’ which is one translation of what Aristotle meant by happiness. For him, as for common sense, happiness is the goal of ethics and politics, and ultimately of economics. At present, however, economics contents itself with the ‘pursuit of happiness’ (to borrow from the Declaration of Independence), a catchall category that specifies at great length how to pursue but hardly at all what to pursue. …

Originally — and this is in Aristotle as well as in the founders of modern economics — economics supposed that it could define needs or necessities as opposed to surplus or superfluities. But necessities have a way of expanding from survival to comfort and from comfort to perfect assurance, so that it seems safer, and scientifically more exact, to consider them infinite and thus decline to define them.

Economics becomes the science of getting more without ever saying how much more. It is because of its exactness that science requires this vagueness. Economics must either be exact or fall silent; it disdains and rejects the possibility of an inexact statement that is merely probable and better than nothing. It may attempt to evade the difficulty by defining ‘probability’ exactly. The result would be either a vague definition of exact or an exact definition of vague— which leaves the common sense ‘probable’ in charge. So the science of more, of ‘growth,’ drops the utilitarian posture that requires a definition of utility—possibly contestable — and turns to ‘preferences’ that are admittedly quite subjective. Thus does the objectivity of economics require that it surrender totally to human subjectivity. And as the measuring of preferences becomes increasingly sophisticated, which means increasingly mathematical, economics becomes increasingly vague as to its end and continually further from defining the ‘flourishing life.’ …

Turning to Aristotle, we see him considering ways of life with a view to which is best rather than calculation of what brings in more. More what, he wants to know, and how much more? For him the ‘pursuit’ of happiness implies an end to the pursuit, since endless pursuit is futile and irrational. All human beings pursue happiness; everything else is instrumental to happiness and pursued because it brings happiness. Even virtue, though an end in itself and often involving sacrifice, is also pursued as the means to happiness. Virtue won’t, or at least shouldn’t, make you miserable, Aristotle says, somewhat optimistically. To be happy is to be at rest, as we say, ‘sitting pretty.’ Those who scramble without end don’t know how to stop, don’t know how to enjoy. ‘Enjoy!’ we say today in moments of respite; Aristotle would say that enjoyment (not relaxation) is the whole purpose of scrambling to get ahead. Relaxation is to gain respite from scrambling so that one can resume it refreshed, but enjoyment is satisfaction in an end attained. …

Reading from Aristotle’s Ethics as well as his Politics, we see he maintains that virtue is the core of happiness. He means this in both a normative and a descriptive sense. Descriptively, every society has a virtue or cluster of virtues that it promotes as characterizing its way of life and defining its notion of happiness, often in his day the virtue of courage or martial spirit. But as every society claims that its prized virtue is best, Aristotle feels bound to judge normatively whether this claim is correct. For him there is no unbridgeable distinction between fact and value. …

Now it is obvious that virtue cannot assure happiness. This is true not so much because we often witness the sad fact of virtue unrewarded—for virtue is its own reward (not always sufficient!)— but because we observe virtue thwarted for lack of means. Virtue stands in need of “equipment,” Aristotle says nicely. It needs good fortune or the gods’ blessing (implied in the Greek word for happiness, eudaimonia, well-blessed), and it needs wealth. One cannot be generous without wealth to give away. Here enters the need for economics as akin to a science of wealth-getting but distinct from it because economics needs to be limited. Aristotle does not hold to the purity of virtue understood as bringing no personal advantage (called “altruism”), but he does agree that wealth-getting is morally dangerous. It is essentially instrumental to virtue but can often become an end in itself regardless of virtue, Aristotle here in accord with Karl Marx. Money monetizes everything, as with the touch of King Midas, and thereby seems to dissolve all value except itself.

Virtue as the core of happiness is a habit, not a calculation. If you have to calculate the advantage from virtue, you are no longer being virtuous for the sake of virtue, which is no longer virtuous. You are merely behaving virtuously while others are watching, which is not enough. Virtue is in the intent as well as in the action. …

(W)hat makes virtue noble is doing it for its own sake rather than for your private advantage. Yet Aristotle, still eschewing moral purity, says that virtue is for your advantage as well. Virtue makes you a better person, and perhaps a still better person if you realize that your virtue makes you better. For virtue is enhanced when aware of itself as the best kind of enjoyment. Similarly, the virtuous person does not seek pleasure, but he gets pleasure as a by-product of his virtue, taking a moderate pleasure in doing good and avoiding too much self-congratulation or superiority. …

We need a return to reason, to Aristotelian reason. The reason of economics is not empirical as it claims. It is based on the dubious presumption that human beings suffer in a condition of scarcity or necessity that will oblige them with their ‘preferences’ (really, their necessities) to choose in ways that economists can predict and then control. This sort of reason begins in a dubious presumption that denies human freedom, and it dissolves, we have seen, in vagueness that fails to specify a reasonable goal of human life. Aristotle’s reason, by contrast, admits human necessities, for he was one of the founders of economics. But, because it is more empirical than economics by itself on the basis of human experience, it also seeks, through the soul, to come to terms with human nobility and freedom. Aristotle’s reason does its best to define the flourishing life, at its peak as well as in average, and measure the ordinary and the common by what is best and rare.

Mind-blowing, right? That’s just part of the essay. The notion of virtue, necessity, and decision-making has been impacted by the operation of modern politics. Mansfield describes some of the implications of this evolution on American society.

You can read the whole essay here.

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