Neither Karl Marx Nor Adam Smith
January-February 1987By John C. Cort
I've been thinking a lot about Karl Marx lately. Nearly two billion members of the human race liver under Marxist regimes, while leaders of the major opposition to oppressive regimes in Africa and Latin America usually look to Marx -- and sometimes to a queer composite of Marx and Jesus Christ -- as the inspiration and guide to their vision of a just society. And they may live to impose that vision on millions more in those troubled areas of the world.
Meditating on these matters, I have been reading Das Kapital (Capital), Marx's monument to the notion that economics is an exact science that proves, when correctly understood, that the only hope for the human race is to eliminate private ownership of land and other means of production and replace it with, what? Well, mainly state ownership of the same. Marx, though strong in critique of 19th-century capitalism, was painfully weak in explaining what should replace it.
This is a three-volume work, running to over 2,100 pages. It is indeed a monument, if only to the fact that Marx, a brilliant man by any standard, labored like Hercules to prove his point. The three volumes are so impenetrable, murky, boring, and unreadable as to provide prime examples supporting Mark Twain's remark that "a classic is something that everybody wants to have read, but nobody wants to read."
It is puzzling that Das Kapital is the major basis for the claim that Marx provides the answer to the riddle of why, in a world of potential abundance for all, millions of men, women, and children must continue to be ill-fed, ill-clothed, and ill-housed, and that the workers of the world should follow Marxist leadership into a dictatorship of the proletariat that will allegedly put an end to this immoral condition. Perhaps the very impenetrability of the book contributes to the myth that therein, hidden from our poor human comprehension, lies the answer.
Fortunately, one does not need extraordinary training to discover the major point that Marx is trying to make and which he keeps repeating in a thousand variations. Nearly 100 years before Marx published the first volume, Adam Smith had published The Wealth of Nations, the bible of capitalism, which incorporated the other major error of modern times. It is between these two errors and by these two errors that humanity has been seduced, battered, corrupted, and deprived ever since. They are:
(1) Adam Smith: In matters economic, industrial, and commercial, everyone should pursue his or her own interests as vigorously as possible, and by this greedy pursuit of private gain, "an invisible hand" will inevitably work public good.
(2) Karl Marx: When the owner of capital (money, land, and/or means of production and distribution) is permitted to hire others to work for a wage, he or she of necessity creates an exploitive, enslaving, alienating relationship. This relationship is based on the assumption that the worker is working only part of the time for his own benefit and the rest of the time (often an equal amount or more) for the exclusively selfish benefit of the capitalist, who is not entitled to this "surplus-value" or "surplus-labor." Surplus-value is defined as "the difference between the value of the product and the value of the elements consumed in the formation of that product, in other words, of the means of production and the labor-power."
Adam Smith, in effect, taught that the surplus value belonged of right to the capitalist, Marx that it belonged of right to the worker. Both were wrong. In fact, it may have belonged to the consumer, in situations where the capitalist was already making a fair return, a just profit, the worker already making a just or living wage, and the consumer required to pay an unjust price that then went to pay the capitalist an unjust or excessive profit and/or the worker an unjustly high or excessive wage.
As with all popular errors, there was some important truth in both Smith's and Marx's fallacies. Self-interest is a powerful motor for human activity, and, when properly regulated, a legitimate one that can contribute to the common good. Also, capitalists do tend to take advantage of the power over their employees to pay them less than a just wage and to pocket money that, morally speaking, does not belong to them. Thus the need for strong, responsible unions. One should also note that in our time, if not in Marx's, workers sometimes combine in irresponsible unions that force employers to pay them excessive wages that, morally speaking, belong in part to the employer and/or the consumer.
Both Smith and Marx, by reason of their disbelief in Judeo-Christian morality, rejected the ancient and honorable trinity of Just Wage/Just Profit/Just Price, a trinity which then, now, and forever provides the key, the true answer to the dilemma of poverty and hunger in the midst of plenty.
Creating a society that embodies this trinity is not a simple matter. Human beings, once deceived and in pursuit of their own selfish interests, are not easy to free from this deception or, if wedded to deception, to control, especially when they possess large quantities of money and power. As in the United States of America.
Unions can help, the creation of more worker co-operatives can help, government can help, taxing the rich to employ the unemployed can help. And scholars can help -- men and women who are willing to commit their lives to exploding the errors of Adam Smith and Karl Marx and to creating a body of economic thought that is based on justice and can compete with the most competent and sophisticated of capitalist or Marxist economists.
"The children of darkness are wiser in their generation than the children of light." By reason of their superior energy, the children of darkness have been having a field day all over the world, East and West, North and South. It is time we heard from the children of light.
DOSSIER: Christ & Neighbor