NOTHING THAT LENIN OR STALIN IMPLEMENTED IN SOVIET RUSSIA OR MAO IN CHINA, FOR EXAMPLE, WAS NOT CALLED FOR OR IMPLIED IN MARX’S OWN WRITINGS AND ARGUMENTS. FOR THE SOCIALIST HORRORS OF THE 20TH CENTURY, THERE IS ONLY ONE VERDICT TO BE PRONOUNCED AGAINST MARX: GUILTY AS CHARGED.
Some people may have missed it on their calendar, but May 5th was Karl Marx’s birthday. It is worth recalling, also, that there was a time when Marx was an anti-communist.
Karl Marx was born on May 5, 1818 in the German Rhineland town of Trier, and died on March 14, 1883 in London.
It is said that by its fruit you will know the tree. The last one hundred years is a clear testament to the consequences of Marx’s influence on modern history.
Accepting the “classical” labor theory of value, he concluded the workers were “exploited” by the “capitalists.” Marx claimed that “profit” was a portion of the workers’ output extracted by the property owners as the “price” the workers had to pay to have access to the privately owned physical means of production, without which they could not produce and survive.
The Austrian economist, Eugen von Boehm-Bawerk, demonstrated that Marx had confused “”profit” with “interest.” In a competitive market, profit is a temporary discrepancy between selling price and costs-prices, eventually competed away by businesses bidding up wages for workers (and other resource prices) to work for them, and those same businesses then competing for consumers to buy their output by offering their wares at better selling prices than their rivals.
What Marx had failed to fully understand was that production takes time, and that if workers would not or could not wait until the product was finished and sold to consumers to receive their wages, then someone had to “advance” those wages to them over the production period.
That, Boehm-Bawerk showed, is what the employers did, so that what workers received while working was the discounted value of their marginal product. The “gain” received by employers over their costs of production, even in long-run equilibrium, was the implicit interest for having ‘waited” for the product to be finished and sold, when they might have done other things with the “savings” they had advanced to those workers during the period of production.
If it is recognized that “time” has value, and, therefore, an intertemporal price, the notion that workers were or could be “exploited” in open, competitive markets for resources and finished goods was fundamentally wrong.
On this foundation of sand, Marx constructed his theory of the “injustice” of capitalism that has, in various forms, continued to plague the ideas and policies of countries around the world.