Citizen Economists » Karl Marx

Is the U.S. on the Road to Socialism? (Part 2)

J.D. Seagraves — Wed, 29 Oct 2008 21:00:14 +0000

Last week, I looked at the first five planks of Karl Marx’s Communist Manifesto and the extent to which they have been integrated into the U.S. government. This week, I’ll examine planks 6-10.

6. Centralization of the means of communication and transport in the hands of the State.

Check. We have the Federal Aviation Administration (FAA), the Interstate Commerce Commission (ICC) and government ownership of Amtrak, the U.S. Interstate Highway System and its centralized funding, and the Federal Communications Commission (FCC) to regulate everything from radio and TV to telephones. Even satellite radio is regulated by the state, limiting the band to just two stations (Sirius and XM) who then had to ask the government’s permission to merge.

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands; and the improvement of the soil generally in accordance with a common plan.

President Truman socialized the steel industry in 1952, reasoning that steel was vital to America’s defensive interests. With a military-industrial complex so vast, what isn’t “vital” these days? Regardless, the Supreme Court rejected this Marx-like expropriation after the fact. Would today’s SCOTUS remain as true to the Constitution? The EPA and various environmental regulations do much of what’s included in the second half of the plank above. Overall, we’re not quite there on #7 — a half-hearted cheer (perhaps more of a whimper) for capitalism.

8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.

Both John McCain and Barack Obama favor some type of mandatory “national service.” The Army Corps of Engineers is a psuedo-industrial army. FDR’s WPA projects would certainly fit the bill, and as the current recession turns into a depression, don’t be surprised to see the next president reinstitute public works projects.

9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equable distribution of the population over the country.

Various zoning, anti-”sprawl,” and “smart growth” policies fit the bill here.

10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.

Just as with plank #5 (”Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly”), the U.S. passes this test with flying colors. Not only is education in America “free and cumpulsory,” it is also federally controlled, now more than ever thanks to the disastrous No Child Left Behind. Anti-child workplace discrimination was codified by various “progressive” reforms in the early 20th century — long after most child labor had stopped, voluntarily, as living standards rose thanks to the free market — and today’s schools meet an updated version of combining education with “industrial production” in that they’re designed primarily to train children to be “good” employees.

In Conclusion

Karl Marx was a brilliant man who properly diagnosed the ills of what he called “capitalism” — a system in which the rich and propertied classes were given legal sanction to plunder the poor and working classes. Marx believed that all nations with “capitalism” (as he defined it) would eventually disintegrate into socialism and then the true worker’s paradise of Communism. The five tenets above, along with the previous five, were the preconditions that Marx thought needed to be met before a “capitalist” nation could become socialist (and then Communist). We’re almost there.

But as brilliant as Marx’s analysis of “capitalism” was, his solution — Communism — was utterly off the mark.

What we need in America is true capitalism: a system of peaceful and voluntary exchange, wherein capital is employed in the best interests of its private owners and without government interference. To the extent that capitalism and its Invisible Hand are allowed to operate, living standards of all from the poorest to the richest are improved. To the extent that the government intervenes, we become more like Marx’s version of “capitalism” and take another step on the road to his nightmarish vision of the total state.

Financial Bailouts: Is the U.S. on the Road to Socialism? (Part 1)

J.D. Seagraves — Wed, 22 Oct 2008 21:00:31 +0000

All nation-states reside somewhere on the continuum between laissez-faire and total-state central planning. No country is completely capitalist and no country (with the possible exception of North Korea) is entirely socialist. So how are we to define roughly “capitalist” and “socialist” countries? Where is the dividing line? How do we know if we are still a capitalist country?

Ludwig von Mises said the difference between a roughly capitalist country and roughly socialist one was a functioning stock market. In a socialist country, Mises said a market simply could not function. With the recent unprecedented interventions into the economy, the stock market isn’t functioning. Is this a temporary setback or have we passed a crucial threshold into socialism?

In this first of a two-part blog series, I will examine how the American system compares to the 10 planks of Karl Marx’s Communist Manifesto . According to Marx, these were the ten preconditions a country needed to meet before transitioning from capitalism to socialism.

1. Abolition of property in land and application of all rents of land to public purposes.

We still use the term “real estate,” which is derived from the historic “royal estate,” meaning that royalty (the government) was the true owner of all lands. Although the U.S. has a noble history of homesteading and laissez-faire, we now impose property taxes on the supposedly private property of individuals and evict them if they don’t pay. That sounds an awful lot like the rent system of feudalism and Marx’s manifesto.

Eminent domain further calls into question whether people really own their land. The Constitution, itself a step away from the comparative laissez-faire of the Articles of Confederation, gave the federal government the authority to seize private property for public purposes. Now, thanks to the Supreme Court’s Kelo Decision, government at all levels can take “your” land and give it to Wal-Mart for the “public purpose” of “economic development.”

2. A heavy progressive or graduated income tax.

Although the top marginal tax rates have dropped considerably from the peaks above 90%, the graduated income tax is a staple of the U.S. economic order. Barack Obama would raise taxes on the wealthiest, making the tax code more “progressive,” but John McCain wouldn’t undo the progressivism of the code: it’s here to stay.

3. Abolition of all right of inheritance.

We still have the right to transfer property upon our deaths, but that right is subject to taxation. Still, not “all rights” of inheritance have been abolished, so I guess we fail to meet Marx’s third condition.

4. Confiscation of the property of all emigrants and rebels.

We don’t quite meet the grade here, either. No one dare act in open rebellion to the all-powerful federal government — we haven’t had any “rebels” since the War Between the States, in which the North followed Marx’s prescription and confiscated the property of rebels. Marx, it is said, was an admirer of Lincoln.

5. Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

There’s no ambiguity whatsoever here: we have exactly the system Marx envisioned in the Communist Manifesto. And what’s more, there’s literally no disagreement on the matter between the nation’s dominant political parties.

Credit is centralized in the hands of the Federal Reserve, the country’s national bank. The Federal Reserve System acts as a cartel with an exclusive monopoly on credit and money creation. Thus, the government can easily fund pseudo-Marxist schemes via its printing presses — which has allowed it to cut back on Marx’s heavy progressive tax code. Even Marx could not have imagined the willingness with which people all over the world trade real goods and services for essentially worthless paper notes. In this area, we’ve out-Marxed Marx!

Next time, I’ll look at the remaining five planks:

Centralization of the means of communication and transport in the hands of the State.
Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands; and the improvement of the soil generally in accordance with a common plan.
Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equable distribution of the population over the country.
Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.