Friday, July 01, 2005

Marx's Critical Errors

I don't know if this is original, I'm certainly not an expert in this field, but I'd like to share some of the observations I've made about socialist ideology. A lot of this is obviously garnered from bits and pieces of stuff I've read but don't want to go back and organize. Regardless, it's only a blog, and so I will argue in this and subsequent posts that Marxists have made 3 critical errors in the formulation of their political theories. These are:

1) They failed to recognize the difficulty of efficient allocation of material resources in a society.

2) They made incorrect assumptions concerning the malleability of human nature and human conduct.

3) Closely related to #2, they failed to turn their analytical tools toward the examination of themselves and their own movement.

In my opinion, these errors have led directly to the failure of one socialist state after another in the last 100 years and cement the impracticality of Marxist ideals.

Point #3 is covered in this previous post of mine.

Regarding the first point:

In capitalist market societies, the most severe penalties are reserved for those who allocate capital in an inefficient manner. The investor who makes an unwise investment will be severely penalized through the loss, in some cases the total loss, of their wealth. As a result, capital is allocated very carefully and with meticulous attention to detail. The task of allocating capital is usually left to super-specialized experts in that field directly related to the project at hand. The effect of this is that very little capital is wasted, and this accrues to the good of all citizens in the society. The worker in a capitalist society can usually rest assured that his or her efforts will go toward the elevation of living standards for the whole society whether it be his or her own living standards or those of others. Very little of their effort will go to waste, and so everyone receives more of the benefit of that wealth creation.

By contrast, the centrally controlled economies of Soviet style governments are usually very wasteful of capital. Allocation of capital is often political and is done by bureaucrats with agendas other than efficiency. The workers can see this and are therefore not motivated to achieve optimal productivity. The overall effect is a lower standard of living for most people than might have been possible. Often the entire economy eventually collapses under this inefficiency.

The error that Marx made and that Marxists continue to make is to assume that capital allocation is a trivial matter. Their assumption is that once capital is in hand it is a simple matter to turn it to good use, but the very opposite is manifestly the case. It is hard to imagine a more motivated group of managers than capitalists who are under the threat of economic ruination if they make a mistake. It is hard to imagine how a group of bureaucrats with a government sinecure could possible match the performance of capitalist investors, and yet that is just the bet that Marxists have always made.

This is an impossibly intractable problem for Marxists. The whole point of Marxism is that allocation of excess wealth produced by workers would be under the authority not of capitalists but of the workers themselves in a "democratic" fashion. But this kind of politics is absolutely the worst way to make critical decisions of capital allocation. The fatal inefficiency of Marxists economies is therefore inevitable.

If FDR Had Been Republican

Dateline: Hawaii, April 28, 1945.

Well into the third week of the invasion of Okinawa, congressional Democrats criticized the President for poor planning and execution of the invasion.

"The troops are bogged down in the southern part of the island, we haven't made any progress in days. How could this have happened?" said Theodore Kennedy, Mass. Democrat.

Other Democrats questioned the reasoning behind the decision to attack the island in the first place. "It makes no sense to attack this island, everyone knows the Japanese are on the mainland," said one congressional staffer. "The War in Okinawa has turned into a quagmire. We need to get the troops out and turn out attention to what's really important, like finding Tojo."

Democrats expressed their alarm at the magnitude of American casualty figures. "This is completely crazy," said one. "We are losing thousands in one day."

Other Democrats expressed doubt about the likelihood of winning against such an intractable and fanatical foe. "This war is unwinnable. We've lost dozens of ships to suicide rocket-bomb pilots, we can't possibly continue at this pace."

Some even insisted that the President had lied about the reasons for the invasion. "He said that we needed that island as a launching point for air attacks on the Japanese mainland, but we are already attacking the mainland from other air bases."

Meanwhile, reports of prisoner abuse continue to crop up from interviews of Japanese prisoners of war. "It is well known throughout the Japanese Empire that American soldiers rape and kill their women prisoners and eat the livers of Japanese children," a Red Cross representative reported.

In a related matter, for the forth week in a row Democrats demanded hearings into overcharging of the Government by Boeing for high altitude bombers. "Everone knows this war is nothing more that a scheme to enrich the President's friends," said an unnamed source.

Democrats also renewed their demands for disclosure regarding the super secret Manhatten Project. "Hundreds of millions of dollars have gone into a secret military project that we aren't even allowed to examine. As far as we can tell not one dime of that money has gone to anything practical for the war effort."