A Classically Liberal General Critique of Marxism

Ankur Chawla

***Editors Note: This paper discussing Marxism was submitted as a final paper in Spring 2011 at UCSD and was later permitted to be republished on the California Review.

The twentieth century has seen many opposing philosophies that attempt to reconcile economic productivity with democratic ideals such as equality and freedom (which we will attempt to define over the course of this essay). Perhaps chief among these opposing viewpoints are those of Marxism and classical liberalism. Liberalism in this sense is meant to mean economic and even social freedoms which eschew most government oversight, whereas Marxism is generally defined as a social philosophy grounded in ideals such as class equality and social welfare. It is important to note that although there are many different variations of liberals and Marxists, we will stick to these general definitions for the sake of simplicity. This essay will attempt to make a general liberal criticism of Marxist class analysis by critiquing two fundamental Marxist arguments: (a) that the leisure class necessarily dominates the working class, and (b) that the free market is a fundamentally repressive institution. This analysis will in large part concern economics, which both perspectives would use as a necessary premise for their social philosophies. We will use the works of liberal scholar Milton Friedman and Marxist scholars Thorstein Veblen and Herbert Marcuse to further make sense of this argument.

As Veblen argues in his text The Theory of the Leisure Class, a common Marxist criticism of a ‘capitalist’ society is the inevitable formation of the economically dominant group, the leisure class, over the economically (and thus socially) suppressed group, the proletariat (Hollinger 133). This argument, that in a liberalized market class inequality will inevitably rise, is a core tenet of Marxist thought. After all, there will undoubtedly exist capitalists who will be left unchecked to control prices of goods and wages of laborers. They will then proceed to reap the large surplus profits of their subjectively overpriced goods, leaving the workers with a negligible percentage of the profit and creating a large economic gulf between the capitalists and the laborers (this alludes to the opposing subjective and labor economic theories of value). Veblen believes that, left unchecked, the free market creates a leisure class that not only exploits the lower classes, but does so by “withdrawing from them as much as it may of the means of sustenance” (Hollinger 139). Friedman, on the other hand, argues that a competitive market is in fact the most efficient check against the centralization of power in one group’s hands. He argues that a free society (one that practices economic liberalism) “enables economic strength to be a check to political power rather than a reinforcement” (Friedman 15). But one may ask, how does it follow that the economic freedom of capitalists to set their own prices creates a check to power? Friedman makes the argument that capitalism leads to freedom and not class inequality on three levels: the ethical, the utilitarian, and the social.

The first argument is ethical in nature; Friedman makes the case that that a free market is nothing more than a “voluntary co-operation of individuals” that spontaneously work together to coordinate “the economic activities of millions” (Friedman 13). Friedman argues that the only viable alternative to this is a coercive society that must use central planning and military force to run the economy. In this society, the dominant class will be the political one, the one that has the threat of violence against its people. And it must be noted that the dominant class must use this violence to execute its societal planning and engineering in order to fill in the void of the market. This alternative, this path down the road to serfdom, is unethical simply on the grounds that it (a) necessarily creates the very dominant class of people Marxists fear (which we shall henceforth call the ‘planners’), and (b) takes away the freedom of individuals to earn money and voluntarily contract with the most appealing of multiple employers in the market. Veblen notably does not make an explicit argument for strong government coercion as an alternative to voluntary market forces; indeed, his argument is little more than a reaction to ‘the leisure class’, who Friedman would view as productive individuals who were able to make a profit by providing a service obviously valuable to society.

It would seem that the ethical argument against such a system would be sufficient, but Friedman makes a more practical case for market liberalism. His second argument is utilitarian in nature. Friedman makes the case that the free market is inherently self-regulating in that it is able to coordinate the economic activity of nations while not permitting any individuals or groups to control prices of goods and services in an economy. Coffee production, for instance, involves the coordination of literally thousands of individuals, from the farmers to the truck-drivers to the factory workers to the marketing agents to the grocery clerks (Friedman 13). They all work spontaneously, all in self-interest, and all without oversight. Perhaps more important is the fact that rival companies in all aspects of coffee production, for instance, compete with each other to simultaneously drive down prices and drive up quality, creating literally millions of jobs that add value to society (this is an important point, because we often see the state spend resources to ‘create jobs’ that do not add value in society, thus in fact hurting productivity. See: Broken Window Fallacy). This system of competition, done on a non-coercive level and through self-interest, creates wealth for all involved. In a way, the capitalist is the ‘slave’ of the average consumer, attempting to provide him what he desires for as little money as possible. This leads to Friedman’s concept of a free market as the best form of voting, where the consumers vote for what they want to see in society with a formidable form of leverage, their money.

Friedman’s third and final argument for why free markets do not breed class inequality is a social one. He argues that market mechanisms actively foster equality grounded in economic incentives. Many Marxists, Veblen included, often argue that capitalists have such a hold over society that they are free to arbitrarily discriminate against any group of people that they choose, be it due to their gender, their ethnicity, or some other seemingly random reason (Hollinger 136). Friedman makes the case that capitalism in fact regulates against such discrimination of minority groups. He argues that, “there is an economic incentive in a free market to separate economic efficiency from other characteristics of the individual. A businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not” (Friedman 109). Although the knee-jerk reaction to problems of discrimination seems to be the creation of social policies that attempt to ‘fix the problem’, Friedman essentially argues that the best mechanism to reconcile equality with freedom is in fact an unregulated market. Simply put, those who discriminate are at an economic disadvantage and are eventually driven out of business due to a combination of factors such as competition, reputation, and consumer reporting. It is obvious that under this system people will fall through the cracks and discrimination will be essentially legalized, which many Marxists do not fail to point out. However the Marxist solution, as discussed, gives rise to an elite class of planners that are necessarily more repressive than any capitalists could dare to be. Why? Whereas the capitalists face checks and balances to discrimination in a society governed by supply and demand, the planners have no such checks and in fact have the power of coercion at their fingertips. This alternative, the Central Planner Fallacy if you will, breeds a necessarily totalitarian state that forces people to be equal in that they all equally lack the right to voluntary association and basic civil liberties, among other things. A free market, Friedman concludes, is the only true system of equality and democratic ideals; it is blind to factors such as race, and it attempts to truly provide for what the people in a society need while maintaining the integrity and importance of the individual (twentieth century author Ayn Rand’s quote, “the smallest minority on earth is the individual”, rings quite true here).

The second tenet of Marxist doctrine that this essay will attempt to critique is the idea that capitalism is a fundamentally repressive institution. The primary neo-Marxist advocate of this theory is the scholar Herbert Marcuse, who in his text One-Dimensional Man makes the case that man becomes a slave to the modern-day materialistic world of ‘false needs’, rendering himself ‘one-dimensional’ (Hollinger 496). The thrust of his argument lies in the theory that free markets provide people with a false perception of liberty, a “liberty to work or starve” (Hollinger 491). For Marcuse, to be free is to transcend the daily rigors of labor, to have true liberty is to be free from work. To him, the daily rigors in a capitalistic society, which rest on premises of scarcity and toil, are inherently repressive and anti-progressive. As Marcuse states, “‘progress’ is not a neutral term; it moves towards specific ends, and these ends are defined by the possibilities of ameliorating the human condition” (Hollinger 498). Marcuse believes that while a liberalized economy is not coercive in the strictest sense, it is nonetheless repressive on account of its seemingly false choices such as ‘work or starve’, ‘buy this luxury or that luxury’, ‘do this labor or that labor’.

There is no denying that Marcuse presents a powerful argument against the dangers of materialism. However, this essay will make the case that a truly liberalized economy not only accounts for these arguments, but does a far better job of it than a regulated social economy. To begin, we must make note of the fact that Marcuse is making more of a reactionary argument against capitalism than a substantive theory that could viably account for even his own arguments (a recurring theme in Marxist literature, it seems). Indeed, Marcuse himself argues in the last chapter of One-Dimensional Man that his transcendent three-dimensional man will probably never exist in society, and he blames the subversive nature of free markets for ‘dooming’ mankind in this fashion. But the far more important reason for why a liberalized economy is not in fact repressive is the very fact that Marcuse has the liberty to advance his arguments in a free society. As Milton Friedman argues, funds are distributed spontaneously in a free market and can be used for whatever endeavor one chooses, making it “a mark of the political freedom of a capitalist society that men can openly advocate and work for socialism” (Friedman 16). Friedman continues to argue that this is obviously not true the other way around, as advocating for freedom in a Marxist society would entail the impossible task of trying to wrest funds from the state (which would necessarily have full control over wealth production, as we have discussed) in order to undermine it. More importantly, the very voluntary nature of a liberalized economy would in fact allow people to practice communism and transcend Marcuse’s materialistic, one-dimensional world. The major difference? In a free society, people living in a commune would be required to, heaven forbid, voluntarily agree to share their wealth and agree to let the planners regulate their mini-society. Similarly, a man could voluntarily choose to throw off his perceived ‘false consciousness’ and transcend his apparent one-dimensional nature, if that is what he has chosen to do (and as Marcuse himself seems to think he has done). It is absolutely crucial to note that the inherent merits of laissez-faire capitalism, communism, or any other doctrine are irrelevant to this argument. A truly free society (which entails voluntary, non-coercive association, which in turn entails a liberalized economy) will allow for individuals to contract and consent to any form of political or economic institutions that they prefer, letting the merit and validity of these institutions be governed by their effectiveness in society. Why is it that Marxists so often feel the need to discount this crucial factor of voluntary association, to force people into a far more suppressive system that does not dare allow different political and economic systems to be judged on their own merit? By this logic (and using Marcuse’s own definitions), if moving towards ‘progress’ means improving the human condition, and true freedom is the ultimate goal of the human condition, then how can any system that fails to incorporate the voluntary consent of each and every individual (which is fundamental to freedom) ever be progressive?

As Friedman states in the opening pages of Capitalism and Freedom, “the nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth-century liberal regards welfare and equality as either prerequisites of or alternatives to freedom” (Friedman 5). The classical liberal who fought for revolutions against the monarchs all across Europe in 1848 did so because he yearned for freedom, with an understanding that a liberalized economy would be the optimum form of wealth redistribution and promote equality and welfare. The conservative monarchs of nineteenth-century Europe had accumulated and controlled the wealth, and liberal revolutionaries had seen firsthand that even under the most benevolent monarchs, this centralization of power had put society far along the path to serfdom. For Friedman, the fact that Marxism had virtuous intentions was irrelevant. Their solution was a move back towards a pre-1848 Europe, back towards centralization, back towards serfdom. Their reaction against the perceived inequality and repressive nature of liberalized economies may have been a compassionate attempt to account for those who fell through the cracks, but their solutions only served to deteriorate freedoms and institutionalize inequality. In this case, the quote, “the path to hell is paved with good intentions” has never rung more true.

One comment

  1. Esther Baran · ·

    Thorstein Veblen was never a Marxist scholar. Indeed he has been criticized by Marxists for not being one.

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