Economics, Exploitation

Two Marxist Premises

Consider the following Marxist argument:

  1. Economic freedom and private property in the means of production immiserate almost everyone.
  2. If some economic regime X immiserates almost everyone, then, pro tanto, X is morally bad.
  3. Therefore, pro tanto, economic freedom and private property in the means of production are morally bad

Libertarians deny 1, as they should. Marxist economics is bad economics. Few professional economists are Marxists. Most people who accept Marxist economics are non-economists, and they do so, as far as I can tell, largely because Marxist economics flatters their ideologies.

Many libertarians also deny 2. Perhaps they think they need to deny 2 to protect their ideology. But do they? This is one place where I differ from hard libertarians and why I am more of classical liberal. Premise 2 seems pretty plausible to me. (Note the “pro tanto” qualifier in the premise, as well.) When hard libertarians deny premise 2, they come across to others as free market zealots–“Capitalism, though the sky falls!”.



Think of it this way.

Both the hard libertarian and I both say, “The Marxists are mistaken–free market capitalism does not immiserate the poor.”

The hard libertarian adds, “But if it did, I’d be in favor of free market capitalism anyways.”

I add, “But if it did, I’d want to reject free market capitalism, provided there were a better functioning alternative, and provided this alternative didn’t violate other moral principles.”



  • Aeon Skoble

    Actually, since conditionals with false antecedents are true, Premise 2 there is most definitely true.

    • Sorry, I mean to write it as a subjunctive rather than a material conditional.

      • The statement is actually a universally quantified conditional:

        for any x, if x immiserates almost everyone, then x is pro tanto morally bad.

        There are true instances of the antecedent (pick any communist regime). So the conditional may be taken to be material rather than subjunctive, without detriment to your argument.

  • shemsky

    Jason, do you actually have any evidence that a free market economy would, by itself, immiserate almost everyone? Otherwise, why should any libertarian think that your rationale should apply to a free market economy?

    • Shemsky, I think you misunderstood the post.

      • shemsky

        It wouldn’t be the first time, Jason.

      • shemsky

        Jason, not that I’m trying to tell you what to do, but it just seems to me that it would be much more productive to expend resourses explaining why preventing free exchange causes so much injustice and human misery, rather than to go down the road you’re going.

  • bill woolsey

    Most libertarian economists generally go with some kind of “consequentialism” in rejecting 2.

    To me, the real question is whether the Rothbardian’s really believe what they say or is it some kind of strategic propaganda.

    Anyway, I think the “nearly everyone” is in ever deeper poverty scenarios are of little interest. 

    The more realistic scenario is that the less successful able bodied workers earn plenty to provide for base needs, a large multiple of the consumption of the typical human from the past or what might be obtained by a hunter gatherer.  

    On the other hand, the less sucessful able bodied workers earn less than what the vast majority of able bodied workers earn, and what are luxuries by some kind of objective, historical standard (10,000 years of human existence) are considered necessities.   Surely everyone needs indoor plumbing, multi-room homes, meat and fresh fuits and vegtables year round, cell phones, cable TV, and so on?

    Anyway, is there an injustice to those less sucessful workers?   That is what “social justice” seems to mean.

    Suppose we have 10 people.   One lives a life free of material  want, but the other 9 are much better off materially.   For example, they are 10 times better off.    Now, it is possible to redistribute, but it is very costly.    Taxing the 9 allows the one person to have 1% more real income, but the other 9 end up with approximately, 90% less.   More exactly, they end up with 2% more than the initial income of the person with the low income.  

    So, we had one person free of materal want, and then 9 others with incomes 10 times higher.   Now we have one person, still free of material want but 1% better off.   And the other 9 are much worse off.  They are, of course, free of material want, and actually 1% (approximately) better off than the “poor” person.   And 2% better off than that person was before.  Again, about 90% worse off than before.

    When you say that the justification of social institutions depends on how well off it treats the poor, does that require that this change be made.    The poor person is better off.

    • good_in_theory

      If ‘nearly everyone is in deeper poverty’ scenarios are of little interest, than so are ‘nearly everything redistributed via taxation is deadweight loss’ arguments.

      • bill woolsey

        I think you misunderstand.

        I think that if nearly everyone would be driven into absolute poverty by capitalism, and there were some alternative (besides everyone being in poverty or starvation,) then capitalism would be really bad.  

        I don’t mean to say that the scenario is unrealistic (which it is,) so that is why it doesn’t count.

        I grant that the “capitalism though the sky falls” approach says we should stick with capitalism even if Marxists predictions are correct.  I reject that approach.

        And so, now….

        If most of the redistribution is deadweight loss, does the fact that the poorest person is made better off enough, and that any cost born by the others is irrelevant.

        • good_in_theory

          I’m not sure how I’m misunderstanding you.

          You grant that you are not ‘for capitalism though the sky falls’, but rather think that sky-falling scenarios are of little interest (because they are not realistic – what is more realistic, to you, is “life gets better for everyone but there’s high inequality).

          You then interrogate high inequality scenarios with a thought experiment about redistribution.

          My claim is that this is a similar argument – it’s ‘redistribution though the sky falls’ – e.g. it offers a completely unrealistic scenario, and is thus of little interest (because the sky doesn’t fall).

          Then, there’s this:

          “If most of the redistribution is deadweight loss, does the fact that the poorest person is made better off enough, and that any cost born by the others is irrelevant.”

          I don’t know what you’re saying here, because this is a malformed sentence.

  • shemsky

    If you can show me that a system of free exchange could be the sole cause of mass human impoverishment and misery, then I’ll reconsider my support for free markets. Until then, I’m a big supporter of free markets. Give me a reason why I shouldn’t be.

    • Adam Ricketson

       Shemsky, the basic Marxist model is that all material items (tools, land, etc) become owned by a small fraction of the population, with the vast majority competing for the privilege to access these materials. In this condition, labor alone is not sufficient to allow a person to buy anything more than what they need to survive, so there is a ratcheting effect where more and more people become stuck in poverty.

      So that’s the story. There are plenty of reasons to reject it, but that’s the basic idea that has been expounded repeatedly for a century or two. I don’t know why you insist that it must be the “sole cause” of impoverishment. I think it would be sufficient just that it produces a systematic tendency that amplifies all of the random misfortunes of life.

      • ” . . . the basic Marxist model is that all material items (tools, land, etc) become owned by a small fraction of the population . . . ”

        By that definition, if wealth in the U.S. continues to concentrate in the hands of the few, maybe we’ll invent something called “Marxist capitalism.”

        But, seriously, I don’t see how we can discuss this without defining what we mean by “private property” and “capital,” and how private property rights are prioritized.

  • dang nabbit


    First of all, “hard” libertarian is a semiotic device you guys invented to make your fusionist  selves look better.  Please name one of these “hard’ libertarians that would choose free market capitalism even if it did immiserate the poor. 

  • Aeon Skoble

    “The hard libertarian adds, “But if it did, I’d be in favor of free market capitalism anyways.”
    I add, “But if it did, I’d want to reject free market capitalism, provided there were a better functioning alternative, and provided this alternative didn’t violate other moral principles.””

    These are going to come out the same: 1, your second caveat “provided this didn’t violate other moral principles” rules out stealing, using others as a means, forcing people to serve you, treating others unequally, etc.  And 2, your first caveat rules out anything that Buchanan has written about.

    • j_m_h

      Can you elaborate?  Your first point seems to assume as given underlying structure that define the violation you point. Is there some absolute, one size fits all here?

      I’m not sure I follow how the first caveat rules out Buchanan.

      • Aeon Skoble

        Jason said he’d reject free markets if they impoverished people, provided that the alternative didn’t violate other moral principles.  Forcing Bob to work for Tom violates moral principles, as far as I can tell.  If your use of the expression “absolute” is meant to suggest I’m unduly inflexible, I wonder what Jason could possibly have meant by that.  If there’s any such thing as moral principles, I’m going to say that forcing Bob to serve Tom is bad.  If there’s no such thing as moral principles, this whole conversation is pointless (arguably, all of political philosophy is pointless).  RE my second point, I didn’t mean “rules out Buchanan’s ideas,” I meant “rules out political mechanisms of redistribution that are prone to structural flaws that are now well-known in public choice lit.”

        • j_m_h

          “Forcing Bob to work for Tom violates moral principles, as far as I can tell.”

          But why is that the only alternative? Seems to me that you only get there is you also assume a certain set of underlying rights — allowing for an alternative set might avoid the result you say must follow.

          Sure, you can claim the alternative rights structure is wrong but we do know that different implementations can follow from a common set of general principles. I’m not sure it’s clear that one is the “true” structure and the others false/mistaken

  • Silly Wabbit

    IDK if those are really “marxist” premises.  If anything Marx comes off as amoral and thought that the downfall of capitalism would occur because of what he believed were unstoppable economic forces. 

    Marx’s critique of capitalism wasn’t really a moral one; remember that he thought he was being “scientific”.  He thought capitalism would collapse under its own weight because of its systematic contradictions. Specifically, competition among producers would cause the rate of profit to fall and the house of cards collapses. 

    Marx didn’t have any concept of “economic freedom” as typically espoused by libertarians. 

    I think history has proven Marx incorrect on any number of grounds. So I’m not defending Marx by any means nor do I consider myself in any way Marxist. 

    I’m sure many modern day Marxists (or radical leftists of other stripes) make moral arguments against private property, market exchange etc. but that really isn’t the crux of what Marx had to say. I’m sure in his massive volume of work you could probably find a shred of moralizing. 

    • Damien S.

       “I think history has proven Marx incorrect on any number of grounds”


      Capitalism as he described it is long gone in the rich countries, with high progressive income taxes, public health care, public education, and transportation subsidies, as called for by the Communist Manifesto.  The “dictatorship of the proletariat” was universal suffrage, which has been achieved; the bourgeoisie has had to share political power with with the propertyless.  Low-regulation capitalism faced recurring crises culminating in the Great Depression, and revolution was bought off with drastic social change and increase in governmental role.  That diminished from 1980 on… leading to the Great Recession in 2008.

      Lenin and Mao and their attempts to have socialist revolution led by party vanguard dictatorship in agrarian societies were mostly abject failures, but that’s Lenin and Mao, not Marx, who was describing Germany and England.

      • Silly Wabbit

        Damien after readings tons of Marx and Marxist theory (I don’t count people influenced by Marx like the Frankfurt school as “Marxist” from a political economy standpoint) my conclusion is that  Marx had a powerful critique of capitalism (as he defined it) but ultimately a very circumscribed vision of post-capitalist society. 

        When I say that “history has proven Marx incorrect on any number of grounds” I wasn’t thinking of the USSR or China. I think its reasonable to make a case that those are not “Marxist” regimes. 

        Rather, I was referring to the rise of the welfare state, managerial capitalism, the middle class, consumer society, ecological limits to growth, etc. Marxism, at least in its classical incarnation, doesn’t deal well with any of those considerations. 

        I should also note that I don’t think the Communist Manifesto is especially illustrative of Marx’s thought. 

        • Damien S.

          Yeah, I’m not sure if gradualism and bribing off the revolution was considered impossible or undesirable by Marx; perhaps both, at different points in life.  In fact it’s been done, and doesn’t seem too bad, though arguably still has key instabilities and contradictions.

          Whether he was more right about the critique or more wrong about the prescription is probably an unsettleable matter. 🙂

          • gliberty

            Marx (and of course his followers, such as Lenin) most certainly were against gradualism – believing it to be submission to capitalism – this can be shown by reading their critiques of the gradualists who they fought vehemently against at that time. 

            Recall that Marx’s Germany already had some state-welfare programs at the time as well as unions. Unions fought for labor laws and gradualism, and Marx argued that these were not just ‘not enough’ but were counter-productive if they were all that the people fought for.

            It is true that the ‘capitalism’ of Marx’s time was different from what we have today – but his critique of state help for capitalists, while many on all sides can agree with it, led him to prescribe full state-ownership, dictatorship of the proletariat (which is far more than universal suffrage)  in the transition to’withering away’ of the state and subsequently to communism.  He believed all of this because he believed that private property ownership and commodity production, no matter the ‘concessions’ to the workers, would ultimately lead to concentration of money and power in a few hands, and to crises and collapse.

            See, for example, his Critique of the Gotha Programme. And, by the way, his Communist Manifesto is very representative of his though, but it must be understood in the context of other of his writings.

          • Damien S.

            “already had” — sort of?  Marx died in 1883, and Bismarck invented social insurance in the 1880s. ‘old age pensions, accident insurance, medical care and unemployment insurance’

            Wikipedia does say ‘Germany had a tradition of welfare programs in Prussia and Saxony that began as early as the 1840s’ but doesn’t go into detail.

            And ok, not just universal suffrage, but direct democracy (waffling on whether capitalists were disenfranchised) and majority rule.  Point is, *not* the party vanguard dictatorship of Lenin.  Also, that he was mostly writing in a time when democracy was rare, consisting of the US and maybe Switzerland (not counting the slaves or women).

            The Critique is interesting: ‘Once enough to cover all of these things had been taken out of the
            “proceeds of labour”, Marx believed that what was left should then be
            shared out amongst the workers, with each individual getting goods to
            the equivalent value of how much labour they had invested.[7]
            In this manner, those workers who put in more labour and worked harder
            would get more of the proceeds of the collective labour than someone who
            had not worked as hard.’

            Not quite the stereotypical equal-outcome thing.

          • gliberty

            Yes, Germany had some welfare programs and unions (guilds, etc) before Bismarck – but also Marx was arguing *against* many who simply advocated greatly expanding unionization, labor laws, welfare, etc. This was my main point.

            Although Marx wanted democracy etc as the final result, he did make clear he believed that seizing power and instituting socialism at the state level was necessary *first* before putting through all the democratic institutions–everyone knows that revolutions require power and temporary loss of rights as the bad guys get locked up, etc., and Marx was for revolution and spoke highly of the French revolution and much of the tactics used although he was critical of pure Jacobinism. ALL OF THIS WAS TRUE OF LENIN AS WELL.  Lenin believed he was following Marx truly by first seizing power and instituting common ownership, and then attempting to move toward the democracy, worker-control, and ultimately withering away of the state that Marx spoke of. It is quite possible that Marx would have backed Lenin and the Bolsheviks 100% – certainly many Marxists did.

            As for your last point, be careful to read thoroughly before making conclusions – Marx there is speaking of the first, or lower, stage of communism (called by Lenin ‘Socialism’) not the higher stage (“communism”). First it is “to each according to his work” which is what you cite; then it is “to each according to his needs” which is what people refer to when they talk about equal outcomes. Marx (and Lenin) argued that (1) first the revolutionary party must take power, then (2) they must institute socialism (“to each according to his work”) and then (3) once that is in place and the remnants of the old regime are quashed and the people get used to living in this more communal fashion, then human nature would begin to change, and then democracy can be reintroduced but much more broadly than before, and then (4) the state can wither away. The Bolsheviks successfully did #1 and #2 but #3 just didn’t really work out as expected, and #4 was a far off mirage that was spoken about but would obviously never come – instead the state got stronger in its attempt to force #3.

    • good_in_theory

      To be honest Marx tries to have it both ways.  He is descriptive and polemical at the same time.

      But most people are.  It’s pretty hard (impossible?) to avoid.

      ‘Exploitation isn’t a moralized category, it’s just a technical definition!’
      ‘Self-ownership isn’t a moralized category, it’s just a technical definition!’
      ‘Democracy isn’t a moralized category, it’s just a technical definition!’

      • Silly Wabbit

        Yea that’s basically what I was trying to say. I think that there is some implicit moralizing in most polemicism and Marx was undoubtedly polemical. Of course, that also makes him a much more lively read than other dead bearded guys…..

        • good_in_theory


          “Accompanied by Mr. Moneybags and by the possessor of labour-power, we therefore take leave for a time of this noisy sphere, where everything takes place on the surface and in view of all men, and follow them both into the hidden abode of production, on whose threshold there stares us in the face “No admittance except on business.” Here we shall see, not only how capital produces, but how capital is produced. We shall at last force the secret of profit making.


          “On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the “Free-trader Vulgaris” with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but — a hiding.”

  • Damien S.

     Note (1) and (2) apply to the current USA: overall productivity has increased by like 50% in 30 years, but median real income has been mostly stagnant, with the increase in GDP mostly going to the very top in a skewed power law.

    • good_in_theory

      Is “skewed power law” a redundancy?

  • carlmilsted

    There is a technical term for those who deny 2: assholes.  Under some conditions a regime of private property and free economics can produce the positive feedback driving down wages that Marx considered inherent in capitalism. That is,  the desperate have a worse bargaining position which makes them work harder for less wages which leads to a lower wage rage. See Mother Jones for real world examples.

    But as Adam Smith pointed out in Chapter 9 of his book, accumulated capital should drive the return on capital down and the wages upwards. Once an economy gets over a certain hump, the Marxian dynamic gives way to prosperity for the lower classes, even without unions and a welfare state. This is why Marxism got traction in poorer agrarian nations instead of advanced capitalist nations as Marx predicted. Accumulated capital outraced population growth.

    On the gripping hand, population continues to grow and we aren’t expanding into outer space. The third component of the economy “land” gains importance. Rent-seeking by the rich will pull us back into the poor agrarian dynamic is we don’t do something.

    In other words 1 is very situation dependent. With an open frontier and low population, we can have unbridled capitalism and democracy at the same time. Keep the borders open and continue our anti capital accumulation policies from Keynes and we will either have a welfare state or have a right wing dictatorship to keep the markets free.

    Libertarians need to read more Heinlein and less Rand.

  • bill woolsey


    I think you put too little emphasis on technogy and too much on capital accumulation.   Very classical.   Very Ricardian.   A bit Malthusian.

    It is possible, but hardly necessary.

    By the way, barganing power is relatively unimportant in any large number setting.

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