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5 Things Marx Wanted to Abolish (Besides Private Property)

One of the remarkable things about The Communist Manifesto is its honesty.

Karl Marx might not have been a very good guy, but he was refreshingly candid about the aims of Communism. This brazenness, one could argue, is baked into the Communist psyche.

“The Communists disdain to conceal their views and aims,” Marx declared in his famous manifesto. “They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a Communistic revolution.”

Like Hitler’s Mein Kampf, readers are presented with a pure, undiluted vision of the author’s ideology (dark as it may be).

Marx’s manifesto is famous for summing up his theory of Communism with a single sentence: “Abolition of private property.” But this was hardly the only thing the philosopher believed must be abolished from bourgeois society in the proletariat’s march to utopia. In his manifesto, Marx highlighted five additional ideas and institutions for eradication.

1. The Family

Marx admits that destroying the family is a thorny topic, even for revolutionaries. “Abolition of the family! Even the most radical flare up at this infamous proposal of the Communists,” he writes.

But he said opponents of this idea fail to understand a key fact about the family.

“On what foundation is the present family, the bourgeois family, based? On capital, on private gain. In its completely developed form, this family exists only among the bourgeoisie,” he writes.

Best of all, abolishing the family would be relatively easy once bourgeois property was abolished. “The bourgeois family will vanish as a matter of course when its complement vanishes, and both will vanish with the vanishing of capital.”

2. Individuality

Marx believed individuality was antithetical to the egalitarianism he envisioned. Therefore, the “individual” must “be swept out of the way, and made impossible.”

Individuality was a social construction of a capitalist society and was deeply intertwined with capital itself.

“In bourgeois society capital is independent and has individuality, while the living person is dependent and has no individuality,” he wrote. “And the abolition of this state of things is called by the bourgeois, abolition of individuality and freedom! And rightly so. The abolition of bourgeois individuality, bourgeois independence, and bourgeois freedom is undoubtedly aimed at.”

3. Eternal Truths

Marx did not appear to believe that any truth existed beyond class struggle.

“The ruling ideas of each age have ever been the ideas of its ruling class,” he argued. “When the ancient world was in its last throes, the ancient religions were overcome by Christianity. When Christian ideas succumbed in the 18th century to rationalist ideas, feudal society fought its death battle with the then revolutionary bourgeoisie.”

He recognized how radical this idea would sound to his readers, particularly since Communism does not seek to modify truth, but to overthrow it. But he argued these people were missing the larger picture.

“‘Undoubtedly,’ it will be said, ‘religious, moral, philosophical, and juridical ideas have been modified in the course of historical development. But religion, morality, philosophy, political science, and law, constantly survived this change.

There are, besides, eternal truths, such as Freedom, Justice, etc., that are common to all states of society. But Communism abolishes eternal truths, it abolishes all religion, and all morality, instead of constituting them on a new basis; it therefore acts in contradiction to all past historical experience.’

What does this accusation reduce itself to? The history of all past society has consisted in the development of class antagonisms, antagonisms that assumed different forms at different epochs.”

4. Nations

Communists, Marx said, are reproached for seeking to abolish countries. These people fail to understand the nature of the proletariat, he wrote.

“The working men have no country. We cannot take from them what they have not got. Since the proletariat must first of all acquire political supremacy, must rise to be the leading class of the nation, must constitute itself the nation, it is so far, itself national, though not in the bourgeois sense of the word.”

Furthermore, largely because of capitalism, he saw hostilities between people of different backgrounds receding. As the proletariat grew in power, there soon would be no need for nations, he wrote.

“National differences and antagonism between peoples are daily more and more vanishing, owing to the development of the bourgeoisie, to freedom of commerce, to the world market, to uniformity in the mode of production and in the conditions of life corresponding thereto.”

5. The Past

Marx saw tradition as a tool of the bourgeoisie. Adherence to the past served as a mere distraction in proletariat’s quest for emancipation and supremacy.

“In bourgeois society,” Marx wrote, “the past dominates the present; in Communist society, the present dominates the past.”

Reprinted from Intellectual Takeout

Jon Miltimore


Jon Miltimore

Jonathan Miltimore is a senior editor at Intellectual Takeout.

This article was originally published on FEE.org. Read the original article.

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An Anniversary of Evil: 100 Years of Communism, 100 Million Deaths

Just in case you didn’t realize, we’re “celebrating” an anniversary.

In 1917, at this time of year, the Bolshevik revolution was occurring in Russia. It resulted in the creation of the Soviet Union, followed in subsequent decades by enslavement of Eastern Europe and communist takeovers in a few other unfortunate nations.

This is a very evil and tragic anniversary, a milestone that merits sad reflection because communism is an evil ideology, and communist governments have butchered about 100 million people.

I’ve written about the horrors that communism has imposed on the people of Cambodia, Cuba, and North Korea, but let’s zoom out and look at this evil ideology from a macro perspective.

My view is that communism is “a disgusting system…that leads to starvation and suffering” and “produces Nazi-level horrors of brutality.”

But others have better summaries of this coercive and totalitarian ideology.

We’ll start with A. Barton Hinkle’s column in Reason.

…the Bolsheviks…seized power from the provisional government that had been installed in the final days of Russia’s Romanov dynasty. The revolution ushered in what would become a century of ghastly sadism. …it is hard even now to grasp the sheer scale of agony imposed by the brutal ideology of collectivism. …In 1997, a French publisher published “The Black Book of communism,” which tried to place a definitive figure on the number of people who died by communism’s hand: 65 million in China, 20 million in the Soviet Union, 2 million in Cambodia, 2 million in North Korea, and so on—more than 90 million lives, all told. …depravity was woven into the sinews of communism by its very nature. The history of the movement is a history of sadistic “struggle sessions” during the Cultural Revolution, of gulags and psychiatric wards in Russia, of the torture and murder of teachers, doctors, and other intellectuals in Cambodia, and on and on.

Here’s some of what Professor Ilya Somin wrote for the Washington Post.

May Day. Since 2007, I have defended the idea of using this date as an international Victims of Communism Day. …Our comparative neglect of communist crimes has serious costs. Victims of Communism Day can serve the dual purpose of appropriately commemorating the millions of victims, and diminishing the likelihood that such atrocities will recur. Just as Holocaust Memorial Day and other similar events help sensitize us to the dangers of racism, anti-Semitism, and radical nationalism, so Victims of Communism Day can increase awareness of the dangers of left-wing forms of totalitarianism, and government control of the economy and civil society.

In an article for National Review, John O’Sullivan explains the tyrannical failure of communism.

Those evil deeds…include the forced famine in Ukraine that murdered millions in a particularly horrible fashion; starting the Second World War jointly with Hitler by agreeing in the Nazi–Soviet Pact to invade Poland and the Baltic states; the Gulag in which millions more perished; and much more. …The Communist experiment failed above all because it was Communist. …Economically, the Soviet Union was a massive failure 70 years later to the point where Gorbachev complained to the Politburo that it exported less annually than Singapore. …it is a fantasy that the USSR compensated for these failures by making greater social gains than liberal capitalism: Doctors had to be bribed; patients had to take bandages and medicines into hospital with them; homelessness in Moscow was reduced by an internal passport system that kept people out of the city; and so on.

We’re just scratching the surface.

As an economist, I focus on the material failure of communism and I’ve tried to make that very clear with comparisons of living standards over time in Cuba and Hong Kong as well as in North Korea and South Korea.

But the evil of communism goes well beyond poverty and deprivation. It also is an ideology of mass murder.

Which is why this tweet from the Russian government is morally offensive.

Yes, the Soviet Union helped defeat the National Socialists of Germany, but keep in mind that Stalin helped trigger the war by inking a secret agreement with Hitler to divide up Poland.

Moreover, the Soviet Union had its own version of the holocaust.

I don’t know who put together this video, but it captures the staggering human cost of communism.

Meanwhile, Dennis Prager lists 6 reasons why communism isn’t hated the same way Nazism is hated.

The only thing I can add to these videos is that there has never been a benign communist regime.

Indeed, political repression and brutality seems to be the key difference between liberal socialism and Marxist socialism.

Let’s close with this chart from Mark Perry at the American Enterprise Institute.

All forms of totalitarianism are bad, oftentimes resulting in mass murder. As Dennis Prager noted in his video, both communism and Nazism are horrid ideologies. Yet for some bizarre reason, some so-called intellectuals still defend the former.

Reposted from International Liberty  

For historic reference information see the website Democide: Murder by Government

Are Tax Cuts Dangerous?

I’ve responded to all sorts of arguments against lower taxes.

  • Tax cuts are “unfair” because rich people will benefit.
  • Tax cuts are wrong because revenue should be going up, not down.
  • Tax cuts are pointless because the economy won’t grow faster.
  • Tax cuts are misguided because there will be more red ink.
  • Tax cuts are risky because vital services would be unfunded.

But I’ve never had to deal with the argument that lower taxes are “dangerous.”

Yet that’s what Ruth Marcus of the Washington Post would like readers to believe. Here’s some of what she wrote today.

…tax cuts — not to mention tax cuts of the magnitude Trump and fellow Republicans contemplate — are worse than unwarranted. They are dangerous.

Dangerous?!?

Before clicking on the headline, my mind raced to imagine what she had in mind. Was she going to argue that lower taxes somehow might cause the nutjob in North Korea to launch a nuke? Was her argument that a tax cut would unleash the Ebola virus in the United States?

Well, you can put your mind at ease. The world isn’t coming to an end. It turns out that Ms. Marcus is simply making a rather hysterical version of the argument that tax cuts are bad because they result in more red ink.

They would add trillions to the national debt at a point when it is already dangerously large as a share of the economy. …the national debt is 77 percent of the economy, the highest since the end of World War II. It is on track to exceed the entire gross domestic product by 2033. That is even without a $1.5 trillion tax cut, the amount envisioned in the just-passed budget resolutions. …the nonpartisan Tax Policy Center found that increased growth would be counteracted within a few years by the drag of higher deficits; overall, the plan would increase deficits by $2.4 trillion during the first decade. …As an economic matter, they are simply reckless.

I’m actually semi-sympathetic to her argument. It isn’t prudent in the long run to reduce revenues and allow a continuing expansion in the burden of government spending. She would be right to hit Republicans for wanting to do the fun part of cutting taxes while ducking the politically difficult task of restraining spending.

That is a recipe for becoming another Greece. Not today. Not next year. Or even 10 years from now. The United States probably has the ability to stumble along for decades without doing anything to reform entitlements (the programs that are causing our long-term fiscal problems).

But I can’t resist making two points.

First, where was Ms. Marcus when Bush was pushing the TARP bailout through Congress? Where was she when Obama was advocating for his faux stimulus? Or the Obamacare boondoggle?

These pieces of legislation were hardly examples of fiscal rectitude, yet a search of her writings does not produce examples of her warning about the “dangerous” implications of more red ink.

Her selective concern about deficits makes me think that what she really wants is bigger government. So if the deficit is increasing because of new spending, that’s fine. But if red ink is increasing because of tax cuts, that’s “dangerous.”

If nothing else, Marcus may deserve membership in the left-wing hypocrisy club.

Second, if Ms. Marcus genuinely cares about deficits, then I’ll forgive her for her past hypocrisy and instead simply ask her to look at the Congressional Budget Office’s most recent long-run fiscal forecast.

She will see that more than 100 percent of America’s future fiscal crisis is due to expected increases in the burden of entitlement spending.

You may be wondering how something can cause more than 100 percent of a problem. Well, if you look closely at that long-run forecast (or previous forecasts), you will discover that tax revenues automatically are expected to increase. Not just in nominal terms. Not just after adjusting for inflation. Tax revenues will climb as a share of overall economic output. By about two percentage points over the next 30 years.

By the way, that built-in tax increase is bigger than the Trump/GOP tax cut, which will only reduce taxes over the next 10 years by $1.5 trillion out of an expected haul of $43 trillion.

Oh, by the way, I’ll add a third point. Advocates of higher taxes should be required to explain why more revenue for Washington will somehow lead to better results than what happened when such policies were adopted in Europe.

In other words, some of us don’t want to “feed the beast.”

Reposted from International Liberty

Free Enterprise, Creative Destruction, and Consumer Power

I fully agree with my leftist friends who say that corporations want to extract every penny they can from consumers. I also (mostly) agree with them when they say corporations are soulless entities that don’t care about people.

But after they’re done venting, I then try to educate them by pointing out that the only way corporations can separate consumers their money is by vigorously competing to provide desirable goods and services at attractive prices.

Moreover, their “soulless” pursuit of those profits (as explained by Walter Williams) will lead them to be efficient and innovative, which boosts overall economic output.

Moreover, in a competitive market, it’s not consumers vs. corporations, it’s corporations vs. corporations with consumers automatically winning.

Mark Perry of the American Enterprise Institute makes a very valuable point about what happens in a free economy.

Comparing the 1955 Fortune 500 companies to the 2017 Fortune 500, there are only 59 companies that appear in both lists (see companies in the graphic above). In other words, fewer than 12% of the Fortune 500 companies included in 1955 were still on the list 62 years later in 2017, and more than 88% of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies (ranked by total revenues).

It’s not just the Fortune 500.

…corporations in the S&P 500 Index in 1965 stayed in the index for an average of 33 years. By 1990, average tenure in the S&P 500 had narrowed to 20 years and is now forecast to shrink to 14 years by 2026. At the current churn rate, about half of today’s S&P 500 firms will be replaced over the next 10 years.

Here’s Mark’s list of companies that have stayed at the top of the Fortune 500 over the past 62 years.

Mark then offers an economic lesson from this data.

The fact that nearly 9 of every 10 Fortune 500 companies in 1955 are gone, merged, or contracted demonstrates that there’s been a lot of market disruption, churning, and Schumpeterian creative destruction over the last six decades. It’s reasonable to assume that when the Fortune 500 list is released 60 years from now in 2077, almost all of today’s Fortune 500 companies will no longer exist as currently configured, having been replaced by new companies in new, emerging industries, and for that we should be extremely thankful. The constant turnover in the Fortune 500 is a positive sign of the dynamism and innovation that characterizes a vibrant consumer-oriented market economy.

He also emphasizes that consumers are the real beneficiaries of this competitive process.

…the creative destruction that results in the constant churning of Fortune 500 (and S&P 500) companies over time is that the process of market disruption is being driven by the endless pursuit of sales and profits that can only come from serving customers with low prices, high-quality products and services, and great customer service. If we think of a company’s annual sales revenues as the number of “dollar votes” it gets every year from providing goods and services to consumers… As consumers, we should appreciate the fact that we are the ultimate beneficiaries of the Schumpeterian creative destruction that drives the dynamism of the market economy and results in a constant churning of the firms who are ultimately fighting to attract as many of our dollar votes as possible.

Incidentally, Mark did this same exercise in 2014 and 2015 and ascertained that there were 61 companies still remaining on the list.

So creative destruction apparently has claimed two more victims.

Or, to be more accurate, the needs and desires of consumers have produced more churning, leading to greater material abundance for America.

I’ll close with two points.

All of which explains why I want separation of business and state.

The bottom line is that an unfettered market produces the best results for the vast majority of people. Yes, people are greedy, but that leads to good outcomes in a capitalist environment.

But we get awful results if cronyism is the dominant system, and that seems to be the direction we’re heading in America.

P.S. Even when corporations try to exploit people in the third world, the pursuit of profits actually results in better lives for the less fortunate.

Reposted from International Liberty

Should the Government Control for Luck?

Some people have natural advantages like inherited wealth and raw talent. But should the government involve itself in squashing those advantages?

Luck egalitarianism is, roughly, the view that inequalities in life prospects resulting from luck are unjust. (There’s a lot to nitpick about that characterization, but it’s a start.) If Amy has better job opportunities than Bob because she happened to have parents who could afford to send her to a fancy private school, that’s unfair.

But It’s Not Fair!

You might even think it’s unfair that Rob Gronkowski makes so much more money than, say, me simply because he was gifted with 6’6” height and fast-twitch muscle fibers that enable him to run a 4.68 40 yard dash. Even if we both work equally hard at our crafts, Gronk will earn more than me because his natural talents are more marketable than mine. But it’s not like Gronk earned those talents; he just got lucky and won the genetic lottery. So it’s wrong for him to make so much more money than I do.

Suppose, for argument’s sake, this account of distributive justice is correct. What institutional conclusions follow? Luck egalitarians suggest that the income disparities between people like me and Gronk show that free markets are unjust. It’s the job of the state to correct for these kinds of market-generated inequalities via regulation and redistribution.

As I detail in my book, luck egalitarians (and fellow travelers who might not apply the label to themselves) are nearly unanimous in their rejection of free-market regimes. Here’s a small sample:

  • “Laissez-faire capitalism (the system of natural liberty) secures only formal equality and rejects both the fair value of the equal political liberties and fair equality of opportunity.” (John Rawls)
  • “Market allocations must be corrected in order to bring some people closer to the share of resources they would have had but for these various differences of initial advantage, luck, and inherent capacity.” (Ronald Dworkin)
  • “Desert as a principle of justice, then, rather than justifying the distributional consequences of free market choices, requires precisely the elimination, or at least the minimization, of the differential brute luck that characterizes the free market […]. The adoption of desert as a principle of justice seems to result in a much more demanding requirement, as far as its implications for the regulation of the market are concerned, than a commitment to voluntariness as a legitimating condition for the imposition of obligations, even when this is suitably revised so as to square up with a defensible account of voluntariness and force.” (Serena Olsaretti)

I could go on, but you get the point: the market generates luck-based inequalities and the state reduces them.

But Is It Better?

One problem with this argument is that you don’t clinch the luck egalitarian case against free markets by simply showing that they create luck-based inequalities. What you need to do is show that the alternative is better. To use an old analogy of mine, showing that Steph Curry misses over half of his three-point shot attempts doesn’t justify benching Steph Curry. To justifiably bench Steph Curry, you’d need to show that his replacement would do better. Similarly, luck egalitarians need to show that a highly regulated market with extensive redistribution will have less luck-based inequality than a libertarian regime.

Here’s a reason for doubting that claim: those who benefit from inherited wealth, elite education, and natural talent in the market also benefit from those factors in politics. Put very roughly, political power will concentrate in the hands of the rich—the very people the political power was created to regulate and restrain. Thus, we might naturally expect such power to be used to increase rather than decrease the advantages of the rich.

Interestingly, this is Rawls’s own view. He says that a

“reason for controlling economic and social inequalities is to prevent one part of society from dominating the rest. When those two kinds of inequalities are large, they tend to support political inequality. As Mill said, the bases of political power are (educated) intelligence, property, and the power of combination, by which he meant the power to cooperate in pursuing one’s political interests. This power allows a few, in virtue of their control over the machinery of state, to enact a system of law and property that ensures their dominant position in the economy as a whole.”

By Rawls’s own lights, the rich will use their “(educated) intelligence, property, and the power of combination” to acquire political power and “enact a system of law and property that ensures their dominant position in the economy as a whole.” But now we can see a problem for Rawls’s view. The people that Rawls wants the state to control (those with property, education, and so on) are the same people that Rawls thinks control the state itself. So how can the state control the rich if the rich control the state? Shouldn’t we instead expect state intervention into the economy to favor the rich? Indeed, this is exactly what we see in many cases: subsidies, licensing, trade restrictions, housing regulations, and so on tend to benefit the rich at the expense of the poor.

Of course, we cannot definitively establish a conclusion about the effects of regulation and redistribution on luck-based inequalities by doing a priori institutional analysis. But at a minimum, luck egalitarians shouldn’t rule out libertarianism as a viable institutional option at the level of philosophical theory. Perhaps libertarianism and luck egalitarianism are compatible after all.

Reprinted from Bleeding Heart Libertarians

If American Healthcare Kills, European Healthcare Kills More

The justification for moving to a socialized healthcare system like those in Europe is preventable deaths, but the numbers don’t bear that out.

The moral argument for universal healthcare is simple: more people receiving medical care means fewer preventable deaths. If universal healthcare, such as single-payer, leads to less death, then it is obviously the superior moral choice. Politicians like Bernie Sanders will go a step further and claim that Republican legislation, in fact, kills people by reducing government-sponsored coverage.

Yet, what if there were evidence to suggest that more people would die under a universal healthcare scheme than under the current US system? What if, by the left’s standards, the American healthcare system is less of a killer than the average European one?

Consider the best estimates of how many people die in the US due to a lack of healthcare. The question is hotly contested, and approximations range from 0 to 45,000 people per year. The latter figure is obviously what most progressives prefer to cite, and although there’s much to doubt about this number, let’s for the sake of argument accept that approximately 45,000 fewer people would die in the US every year if all Americans had decent health insurance.

Now flip the question: How many people die in other countries due to deficiencies in their healthcare systems? And how many people would die in the US if we had treatment outcomes similar to those in other countries?

Socialized Healthcare Has Clear Life-Costs

study by the Fraser Institute titled The Effect of Wait Times on Mortality in Canada estimated that “increases in wait times for medically necessary care in Canada between 1993 and 2009 may have resulted in between 25,456 and 63,090 (with a middle value of 44,273) additional deaths among females.” Adjusting for the difference in populations (the US has about 9 times as many people), that middle value inflates to an estimated 400,000 additional deaths among females over a 16 year period. This translates to an estimated 25,000 additional female deaths each year if the American system were to suffer from increased mortality similar to that experienced in Canada due to increases in wait times. A system that disproportionately harms women? How progressive.

By the “US healthcare kills” logic, any tax increase that stalls productivity is tantamount to killing.

Let’s look at interventional outcomes. According to the CDC, stroke is the cause of more than 130,000 deaths annually in the United States. However, the US has significantly lower rates of 30-day stroke-induced mortality than every other OECD country, aside from Japan and Korea. OECD data suggest that the age- and sex-adjusted mortality rates within Europe would translate to tens of thousands of additional deaths in the US.If America had the 30-day stroke-mortality rate of the UK, for example, we could expect about an additional 38,000 deaths a year. For Canada, that number would be around 43,500. And this only accounts for mortality within a month of having a stroke, which in turn accounts for only 10% of stroke-related deaths.

This is further reflected in overall stroke-mortality statistics: for every 1,000 strokes that occur annually in the US, approximately 170 stroke-related deaths occur. The latter number is 250 and 280 for the UK and Canada respectively. Considering that approximately 795,000 strokes occur each year in the US, the discrepancy in stroke-related mortality is humongous. But don’t expect NPR to run a sob story about a Canadian stroke victim who would’ve survived in an American hospital.

Similarly, cancer-survival rates are considerably higher in the US than in other countries. Check out this data cited by the CDC, which comes from the authoritative CONCORD study on international cancer-survival rates. The US dominates every other country in survival rates for the most deadly forms of cancer.

If we weight the CDC-quoted survival rates for different forms of cancer in accordance with their contribution to overall cancer mortality, we find that, with the UK’s survival rates, there would be about 72,000 additional deaths annually in the United States. There would similarly be about 21,000, 23,000, and 31,000 additional deaths per year with Canadian, French, and German survival rates.

Lives are indeed saved by the many types of superior medical outcomes that are often unique to the US. This is not to mention the innumerable lives saved each year around the world due to medical innovations that are made possible through vibrant US markets. By the “US healthcare kills” logic, any tax increase that stalls productivity, and thus stalls the rate of innovation, is tantamount to killing – which is obviously an absurd conclusion.

The Healthcare Debate Has Been Misframed by Demagogues

I’ll be the first to admit: our medical system is far from optimal. Among other things, soaring healthcare costs certainly need to be controlled, and insuring against medical calamity ought to be much more affordable. But the policy demands advanced by Sanders and his ilk are completely ignorant of the massive deficiencies that are characteristic of universal healthcare systems. They’ll sing songs all day about the 45,000 lives taken every year by greedy insurance executives and their cronies on Capitol Hill, yet remain completely ignorant of the fact that the European systems they fetishize are less humane by their own standards.

If we’re going to call Paul Ryan a killer for curtailing Medicaid spending, then we logically have to apply that epithet to all politicians who advocate for European systems – you know, the systems with outcomes that would result in tens of thousands of additional deaths in the US every year. Paul Ryan may indeed qualify for the Manslaughter Olympics, but Bernie Sanders is poised to smash the world record.

What We’ve Learned About Economics in the Last 100, 150, and 200 Years

2017 marks important anniversaries in the world of economic theory.

The year 2017 is a milestone in both economic history and the history of economics. The Marx-inspired Red October coupe d’état took place in Russia one century ago. The 1st volume of Marx’s Capital, a Critique of Political Economy was published 150 years ago. David Ricardo’s Principles of Political Economy and Taxation was published 200 years ago.

Ricardo’s Law of Comparative Advantage is an application of what economists now term Opportunity Cost.

Death Blow to MercantilismThe bicentennial of Ricardo’s book is worth commemorating because this book finished a crucial debate over the merits of international trade. 18th Century Mercantilists believed that a nation could become wealthier through trade surpluses- by having exports greater than imports. Taxes on foreign goods create a surplus of exports over imports. 18th Century Economists David Hume and Adam Smith each demonstrated flaws in the economic nationalism advocated by Mercantilists. Hume demonstrated that trade surpluses just cause an inflow of money, gold back then, which makes exports more expensive. Smith proved that free trade can make all nations wealthier by allowing each nation to specialize in areas of absolute productivity advantage.

Smith and Hume dealt severe blows to Mercantilism, but Ricardo ended the debate between Mercantilists and Economists. Ricardo proved that free trade will make everyone wealthier by allowing each nation to specialize in areas of comparative productivity advantage. Ricardo pointed the way to both modern economic theory and prosperity. Ricardo’s Law of Comparative Advantage is an application of what economists now term Opportunity Cost. People who choose between goods according to the cost of not having some other real good maximize expected real wealth. The emergence of global trade in the modern world has raised productivity by allowing people to choose the most advantageous options, not just domestically.

The progress achieved from Ricardo’s insight has been limited by two factors. First, Mercantilism remains popular. Second, a third set of ideas emerged to challenge Ricardo. Smith and Ricardo both erred by thinking that the price of a good ultimately depends on labor content. Ricardo pointed the way out of this intellectual error (Opportunity Cost), but Karl Marx took a different path. Marx argued that since all value comes from labor, all profits come from exploiting labor. Marx’s initial critique of Smith-Ricardo political economy was published in 1867, with two additional volumes published posthumously. Marx argued that workers would overthrow capitalists to end misery brought on by capitalists paying them mere subsistence wages.

Problems with Marxism

Problems with Marxism were ascertained during a half-century of debate.  In 1917 the leader of the Bolshevik faction of Marxists, Vladimir Lenin, admitted that the notion of capitalists exploiting workers in each in their own nations was wrong. Why did Lenin concede this point? Because it was obvious that wages and living conditions for workers in the most advanced industrial nations were rising.

Yet somehow Marxism is resurgent and popular in academia.

Since wages in capitalist nations were obviously moving away from, not towards, subsistence levels, Marxists sought some new basis for justifying their belief in capitalist exploitation. Perhaps imperialist powers, like Belgium, France, and England, exploited workers in colonies. Is this theory plausible? No decent person could excuse abuses by the English, French, and especially Belgians, in their colonies.Can Lenin’s revised Marxism explain capitalist development in the United States, Germany, or Sweden? Germany and the US accumulated capital for decades without colonies.  How could the initial phases of German and American industrialization be the result of “surplus value” extracted from future colonies?  Furthermore, Germany and the US acquired relatively small colonies, very small compared to ongoing industrialization in these nations. The U.S. acquired its’ colonies from the 1898 Spanish-American war. Why didn’t Spain develop more substantially while it had colonies?

Do the examples of France and the U.K. actually fit with Lenin’s imperialism theory? No. Industrial development in France and the U.K. began while these nations were just beginning to acquire colonies, and continued even after these colonies were lost around a half-century ago.

Experience over the past 200 years has also shown that Ricardo was right about Mercantilism, yet this repudiated theory remains popular today. Experience over the past 150 years has shown fatal flaws in both Marx’s original and Lenin’s revised version of Marxism, and the theoretical defects of Labor Value theory were completely exposed by Carl Menger in 1871.

The defects of Mercantilism and Marxism are hardly trivial. Red October created a wave of Marxist states, which perpetrated atrocities that dwarfed the abuses of French and Belgian colonials. Yet somehow Marxism is resurgent and popular in academia. Mercantilists stood in the way of the unprecedented economic progress achieved through globalization, yet Mercantilism is resurgent and popular in the White House. One century ago this year the rise of Bolshevism rose to threaten modern progress. Bolshevism drove many others into the extreme nationalist movements of Mussolini and Hitler. Now, a century later, the twin threats of Fascism and Marxism appear resurgent. What can we learn from the resurgence of Nationalism and Marxism? Those who have failed to learn the correct economic lessons of modern history may doom all of us to repeat its worst aspects.

Republished with Permission – Original article may be found at FEE.org

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Government exists by consent of the People

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Politically Short

The American Reality Outside The Beltway

Cafe HayekCafe Hayek - where orders emerge - Article Feed

Government exists by consent of the People

RebelPundit

Media Rebellion from the Streets

Americans for Prosperity

Government exists by consent of the People

Club for Growth || News

Government exists by consent of the People

Laissez Faire

Government exists by consent of the People

Mises Institute

Government exists by consent of the People

DickMorris.com

Government exists by consent of the People

FOX News

Government exists by consent of the People

SteynOnline

Government exists by consent of the People

POLITICO - TOP Stories

Government exists by consent of the People

Breitbart News

Government exists by consent of the People

Huffington Post

Government exists by consent of the People

National Review

Government exists by consent of the People

The Rush Limbaugh Show

Government exists by consent of the People

Events - The Heritage Foundation

Government exists by consent of the People

Cato @ Liberty

Government exists by consent of the People

International Liberty

Restraining Government in America and Around the World

Citizens for Self-Governance

To Govern Ourselves or be Ruled by Them

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