“In many…points in Political Economy, men are prone to confound cause and effect. It is not that pearls fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.”
Richard Whately ( 1787- 1863) Church of Ireland Archbishop of Dublin.
In May we noted the two hundredth anniversary of the birth of Karl Marx. The celebrations were muted. But one story hit the headlines. The Chinese government was moved to present the city of Trier, the old rascal’s birthplace, with an immense bust of the great man. There was, apparently, panic among the city fathers when they realised that the bronze concerned would actually have to be erected, and could not easily be offloaded on ebay!
It is indeed easy to laugh at Marx. There are undoubtedly elements of farce in his story, and there are laugh-out-loud moments in Leopold Schwartzschild’s “Karl Marx, The Red Prussian” ( New York, 1947 ). However the boils, the pregnant housemaid, the foxhunting on a drugged horse, and the all too frequent begging letters to his rich friend Engels, are not the whole story. He was, as Anthony Flew said of St Paul, “a first rate intellectual.” “Capital” can be compared with St Augustine’s “City of God.” There is serious intellectual meat in Marx. But we should not forget that the whole thing ended in terrible tears, as anyone who has browsed in (say ) Robert Conquest’s “The Great Terror, Stalin’s Purge of The Thirties.”” ( London, 1968,1971 ) will confirm. It behoves us then to understand at least something of what he said, why he said it, why what he said has proved so poor an explanation of what it purported to illuminate, why his predictions proved so inaccurate, and why despite this the stance he adopted- if not in fact his ideas- still exercises a spell over so many of our contemporaries.
Let’s imagine for a moment that Marx was interviewed by an inquisitive journalist as he made his way home from his marathon labours in the British Museum: “What are you doing Dr Marx?”
What would he have replied? He would, I think, probably have offered to give two answers. In the first place he might have wanted to talk about his revolutionary activity. But while perhaps significant at the time, all that is of little relevance today. Political extremists, both reactionary and revolutionary, were two a penny in nineteenth century Europe, and there was little to distinguish Marx from plenty of other actors on that crowded stage.
When pressed about his ideas rather than his activity Marx would have wanted to distinguish himself from the Utopian socialist with whom he was surrounded in the revolutionary subculture. Instead Marx would have stressed his militant atheism, ( about which more later ) and emphasised that he rejected all religious and idealistic interpretations of what was happening. He would have claimed that he was interested only in the material factors that were at work. He would have gone to say that he was developing a scientific understanding of the way in which capitalist societies worked and that he planned to show in his writings that the market-based economies were doomed. He would have explained his visits to his favourite desk in the Reading Room of The British Museum by saying that he was using the information that he found there to penetrate into the core of the capitalist economy and to discover the true source of huge wealth that he ( and everybody else) saw being accumulated around him.
He would have boasted that he was basing his ideas on the writings of classical economists like Smith and Ricardo. They had enunciated what has become known as the Labour Theory of Value. The gist of this was that the value of an object was determined by the amount of time which had been spent making it. This meant that those who made the goods concerned were really the rightful possessors of all the value that they had created. If this was true then it was obvious that the capitalist system which had grown up first in England and then spread across the world was profoundly unjust, as in such societies the bosses removed a proportion of the wealth that the workers had created, called it “profit”, and then used it for their own purposes.
For Marx such societies were not merely unjust-although he would have had objected to the idealistic nature of such a term- but far more importantly they were certain to be overturned by revolutions because were run in a way which was inherently unsustainable. Marx believed that he had discovered the laws that governed the development and dissolution of capitalist society. As the population increased so the wages of the workers would decline, as would the level of profit that the capitalists could take out of the system. In this way poverty would increase at the bottom of the society, the smaller capitalists would be remorselessly driven out of business by the larger, and wealth would become concentrated in the hands of a few super capitalists. Such a society would necessarily be unstable. The point would come when revolution would break out and as Marx famously put it, the expropriators would be expropriated. From the ruins a socialist society would emerge which would itself give way to a glorious communist future in which all would live in harmony, freely giving according to their ability receiving according to their need. The theory, or perhaps rather the vision, is a powerful one. And it is no surprise that it is made converts in every continent and class as it combines the appeal of religion and science and appears to make sense of suffering and injustice, and the same time seems suggests a remedy for them.
In getting to grips with Marx’s thought we always need to bear in mind that he was not simply a materialist, but in a profoundly radical way an atheist. He had rebelled against God before he had rebelled against capitalism. His atheism meant that for him the course of causation was truncated. For him, stuff just existed. There was for him no need to look beyond it. In other words the reality that he experienced as a brute fact was all that there was. It was this form of reasoning that Marx exported from metaphysics into the study of how business works.
Browsing in “Capital” I was immediately struck by the sense that this was a world view only tenuously connected with the realities of the economy that it purported to describe. The gulf between “Capital” and say T.S. Ashton’s “The Industrial Revolution” (1948) or even more pertinently Barrie Trinder’s “Britain’s Industrial Revolution, The Making of a Manufacturing People 1700-1870 ” ( 2013 ), WAS troublingly wide. What was going on? While it was true that Marx was alert to the sufferings of those at the bottom of society in the way that many were not I still did not feel that I was seeing a real economy at work. It was, of course, obvious that Marx had “done his homework” in the B.M. but there was clearly still something missing from his account. For enlightenment as to what this might be I turned to von Mises’ “Socialism” to find that von Mises seemed at first to have been almost as puzzled as I was. But ultimately von Mises had put his finger on it. For Marx, Mises said, the businessman is ultimately alien to the process of production.
This is an absolute bull’s eye. The reader of “Capital” is given absolutely no image of what businessmen actually do. It was obvious as I read that Marx had never spoken to a manufacturer- except of course Engels -and rarely to a worker. Indeed Engels pointed out that Marx had no understanding of company accounts. Just as Marx had excluded divine thought from the creation of the universe so he excluded the role of the businessman from the creation operation of a business. As a young man growing up in provincial Germany the businesses which he came in contact with would have been fairly simple, and run along customary lines. Skill would have been needed to run the bakery in Trier- but not much imagination or creativity. However, all this was about to change. In the early years of Marx’s life huge economic changes were afoot. The fact that he was born in 1818 is a key to understanding both what he wrote, and explains why his ideas have not proved as insightful as he imagined.
A new character was bursting onto the European stage- the creative entrepreneur, whose wealth derived from the way in which he was able to combine a myriad of previously existing factors into a new whole that was far more productive and valuable than the sum of the parts used to create it. Let one example from a slightly later period suffice. In his classic “The Great Plains” ( New York, 1931 ) Walter Prescott Webb tells ( pp. 295-318 ) the story of barbed wire an invention that had a huge impact on the development of agriculture in the United States. The key moment came when a farmer called J. F. Gladen realised ( in 1873 ) that in order to make an effective and cheap fence it was necessary to hang the spikes on the wire, and then worked out how this could be done by braiding several strands of wire together. It was the need for this sort of creativity in any sophisticated economy that Marx completely missed. Consequently he also failed to understand why and how the economy of the nineteenth century was becoming far productive than any that had previously existed.
This is not, of course, to suggest that this flowering of the creative spirit and the industrial growth that went with it was an entirely benign process. It wasn’t. The first years of what became known as the Industrial Revolution were extremely difficult for much of the working class. And these difficulties misled Marx into thinking that Capitalism was INHERENTLY exploitative The application of science and of rational business methods to the whole process of getting and spending was at the same time liberating and damaging. One the one hand the new methods radically improved the way that people ran their economic lives, and on the other hand they destroyed jobs in the older industries, and created a deracinated working class, concentrated in new and unlovely towns.
This dark side of early British industrial capitalism was all the more sombre in periods of economic difficulty. According to H.B. Acton, the 1840’s- the so called “Hungry Forties” were crucial for an understanding of “What Marx really said.” – to quote the title of his fascinating little book on the subject. ( New York, 1971, p 6) Acton stresses that this was the decade which provided the experiences which moulded Marx’s ideas about capitalism. It was indeed during this decade of hardship and poverty that he and Engels first enunciated their beliefs about the future of Capitalist society in “The Communist Manifesto” ( 1848 )- a year which saw revolutions break out all across continental Europe, as well as huge protests in England and another rising in Ireland. This is the context in which Marx formed his ideas about the exploitive nature of capitalism.
However he failed to see a host of other factors in the society which largely vitiated his pessimistic conclusions. Indeed the whole history of the LATE nineteenth century tells against his interpretation of events. Just as he blinded himself to the part that businessmen were playing in creating wealth, so too he failed to see the way in which politicians would ultimately react rationally to the deplorable living and working conditions that he and others had drawn attention to by passing and enforcing appropriate legislation. Nor did Marx show any understanding of the way in which the working class could use the Parliamentary system to advance its welfare. He also completely missed the extent to which the working class would develop its own self-help institutions within the broad framework of the capitalist system. Far many people it made more sense to save for a rainy day than to hope for a revolution.
Crucially, Marx missed the fact that rising productivity meant that employers could afford to pay their workers more- much more. This in turn meant that far from becoming poorer, the working class was becoming much more prosperous. During the years in the middle of the century when Marx was beavering away in the British Museum an extraordinary transformation was taking place. According to W.H. Mallock, writing in 1894- ( only eleven years after Marx died ) the working class then received an income significantly larger than the income of THE WHOLE OF THE UNITED KINGDOM in 1837! While this improvement was neither universal nor continuous the broad certainty is that in the second half of the nineteenth century the conditions of the working class were significantly better than they had been when Marx was growing up. (This is confirmed by everybody- except Marx- who has studied the period, including such left-leaning historians as Sir Robert Ensor.)
What then are we to make of Marx and his system ? Were his ideas merely a time bound reflection of what was happening in the early nineteenth century? This is probably the correct view. Capitalism, and the liberal institutions it alone sustains, has proved far more successful and adaptable than the left has ever grasped. , But we should recall- how can we easily forget?- that Marxism has proved itself adaptable too. Like John Brown’s, Marx’s body lies a mouldering in the grave, and like John Brown’s soul, Marx’s spirit or rather his thought, have gone marching on although in a strangely transformed way.
The curious fact is that Marxism’s capacity to survive has come not from its inherent credibility, which is low, but rather from the fact that a sect of Marxists levered itself into power in the Russian Empire during the First World War. Marxism was given additional credibility when the Non-socialist economies of the West got themselves into deep trouble after the Wall Street Crash of 1929. And this in its turn produced a fascist/ Nazi wave which, as it turned, out could be dismantled only with the military assistance of the Marxists in Moscow. And then after WW2 came the whole drama of decolonisation, which was successfully exploited by Marxist propagandists.
In the long run however none of these factors could do anything to repair the weaknesses in the original theory or to hide the success of the market based economies. Indeed the car crash that the Soviet economy became provided further evidence for what such critics of Marxism as W.H. Mallock and Ludwig von Mises had been saying in the previous century .However- and here we have an adaptation that Darwin, if not Marx, would have appreciated by the nineteen fifties the left had redrafted Marxism in a daring way. Instead of talking about the labour theory of value, the increasing poverty of the working class, and the wonders that would follow the revolution, the critics of capitalism began to claim not that it failed to produce wealth but that the wealth it created obliged people to live in an inauthentic and alienated way. Indeed some of them got close to asserting that capitalism far from making people too poor, had made them too rich.
Instead then of being a precise (and at least in form, scientific ) critique of capitalist economies, the Marxist cry turned into a vague condemnation of “the system”, and a demand not just economic justice but the transformation of western civilization as a whole. While Marx asserted that everything could be reduced to economics, and claimed that the laws he had discovered pointed inevitably towards a communist future, the middle class radicals who appropriated his name in the sixties and afterwards saw economics as merely one front in their total war on the oppressive structures that they found almost everywhere. For the New Left, there was nothing inevitable about the process. For them activism and the personal sense of satisfaction that it gave them was everything. Thus it was that the “hard” economic teachings of the bearded sage of Maitland Park were abandoned even by those who still claimed to be marching behind the red flag. The newly erected monument in Trier is then less a shrine to the aspirations of whatever is left of the working class than to the frustrations of a decadent bourgeoisie.
Just as I was finishing this piece I found a volume I had long forgotten by Arnold Lunn called “Revolutionary Socialism” ( London, 1939) jammed into an obscure book case. When I was finally able to extract it, I discovered within it ( p. 237-8 ) the quotation from Archbishop Whately which adorns the start of this piece.
I have tried to keep most of the references to books I have helped me within the main text. But there are a few others that I think I should mention. Schartzschild- the details of which are in the text- is funny but unfair. But he is useful though for his description of Marx’s theory- 318 ff. Also important is Robert Payne’s “Marx” ( New York, 1968) which contains some delightful snippets including the fact Engels was a talented amateur cook- his lobster salad being particularly highly regarded!
I also want to mention C. Northcote Parkinson’s “Left Luggage, From Marx to Wilson” ( London, 1967 ). This is a much more serious book than the author’s reputation as a humourist would suggest. Parkinson points out (p. 45-6) that Marx had announced his theory before doing the research on which it was allegedly based, and that anyway, at the time he was writing, very little was known about economic history.
E.L. Woodward, “The Age of Reform” (Oxford, 1938) is of interest because he points out (p. 123-4 ) that Marx was by no means alone in using the writings of the classical economists to attack capitalism. Was Marx perhaps less original than his fans have often implied?
Pauline Gregg’s “ A Social and Economic History of Britain 1760-1963, ( London,1965) is particularly good on factory legislation ( p.120 ff ) and self-help ( p. 314 ff). It is important to note that much of the impetus behind factory legislation- hours and conditions of work and so forth came from Tories ( p.125 ). In fact several prominent radicals opposed the Factory Legislation- see Woodward above p.142. It is undeniable that such legislation was introduced much too slowly- although it is worth noting that the first, admittedly modest, piece of factory legislation was introduced in 1802- sixteen years before Marx was born. To start with there was also a serious problem in the enforcement of what Factory Legislation was passed, partly because many of the magistrates charged with doing so were themselves factory owners.
There is no need to further belabour the values of W.H.Mallock’s writings on this site. The place to start is the section about Mallock in Kirk’s “The Conservative Mind.” The snippet included in the text come from “Labour and the Popular Welfare” ( London, 1894)p. 249-250.
The passage from Ensor I am thinking about is to be found on p134-5 of his “England, 1870-1914” ( Oxford,1966). Ensor also mentions the valuable part played by Friendly Societies in providing assistance to some working class women when they had children. ( p. 499 )
The point that pure Marxism- grounded in the Labour Theory of Value- was more or less past its sell by date in the late nineteenth century is made by Peter Gay, in “The Dilemma of Democratic Socialism, Edward Bernstein’s challenge to Marx” (New York, 1962/1952 ). Gay’s book contains some good summaries of Marx’s thought which I have found useful.
I have not looked at my copy for ages but anyone who is interested in The New Left should get a copy of “Second Thoughts, Former Radicals Look Back at the Sixties” ( Madison Books, Lanham, New York and London, 1989 )
One of the many great advantages of Barrie Trinder’s book about the Industrial Revolution is that deals with business activities in Ireland. For the part played by Irish radicals in England see Woodward above p.129-130.
For- so to speak- the reverse of what Marx was writing about see J. Mordaunt Cook “The Rise of the Nouveax Riches, Style and Status in Victorian and Edwardian Architecture”( London, 1999.”- the subject matter of which is far wider than its title .implies. R.M.