In Karl Marx’s and Frederick Engels’ early portrayal of communism, they envisioned an end to the artificial scarcity and economic turbulence they believed was set in place by the private ownership of capital. No longer would an individual be confined to an “exclusive sphere of activity, which is forced upon him and from which he cannot escape.” Instead, if he or she so wishes, it is possible “to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise [literature] after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”

The alienation of man from his labor, which Marx contended was the result of treating labor as a commodity of production, no longer played such an explicit role as it had in the above quotes from his then-unpublished “The German Ideology.” Instead, the theme of his work began to analyze class struggle as the moving force behind history, and he extended his continuum of thoughts on alienation with his critique of the division of labor. It was these early manuscripts that would become unified in the first volume of “Capital.” His thesis was that private property had an inborn tendency to become more and more centrally managed due to the antagonistic relationship between capital owners and propertyless laborers, who were left with no option but to sell the only commodity they had — labor power. Marx reasoned that like any commodity, the average price of labor would fall to the average cost of its production, which for the laborer meant the cost of a subsistence living in society.

It was an ingenious revelation, and one on its face that was perfectly plausible according to the prevailing theory of value at that time. The capitalist could appropriate labor for the cost of maintaining a subsistence living and then sell the products of that labor for the market value set by supply and demand, reaping the “surplus value” of labor without doing additional work. Marx was not content with just ensuring higher wages for labor; he believed wage labor itself was abominable.

Except, Marx acknowledged that contrary to his theory, by historical records, the “surplus value” of production was in direct proportion to the total capital invested, not just the labor power invested in production. He said, “It appears therefore that here the theory of value is irreconcilable with the actual movement of things, irreconcilable with the actual phenomena of production, and that, on this account, the attempt to understand the latter must be given up.”

A Libertarian Theory of Exploitation

Communists are right in viewing the state as exploitative, but not because it upholds property rights, but because the state exists only by systematically usurping those rights. What would prevail in a stateless society — one without government propaganda championing that “taxation is voluntary,” “voting is freedom,” and “government is security” — is a strengthened sense of property rights and individual autonomy.

Despite the obstacles of state coercion, we create society anew each day for the mutual benefit of all; what makes this social cooperation possible is the existence of a medium of exchange. I do not mean to say that the desire for monetary gain should be the focus of our social relationships either. My point is that you cannot have meaningful and enduring fraternity without private property, firsthand, and an independent means of economic calculation, secondly.

Without money, sunk is a division of labor, which more easily enables seemingly opposing economic interests to become complementary to one another for the benefit of the whole of society and themselves. Competition within a market framework has to do with excelling to the utmost and providing an understanding of who best serve at any particular position. Without such a division of labor, there would be no society, and mankind would exist in a literal Hobbesian war of all against all. Yet, our productive capacity allows us to transform less valuable resources into more valuable resources for consumption and savings (later consumption). This means that life does not require the sacrifice of others. This understanding allows us to plan for long-range goals to achieve prosperity. A secured sense of private property rights permits such long-range thinking.

Please note that this is not an apology for the current economic model. I am calling for a radical break with statism and collectivism. In fact, I agree with Marx’s major historical tenets describing the development of economic history, yet his explanation for class exploitation, the rise of class privilege, the cartelization of power within the state and business, and the imperialist conquest to stifle foreign competition all fall short because he falsely pinpoints “wage slavery” as the culprit for those evils.

This is partly forgivable since his economic model was based on the labor theory of value, which predated other classical economics as far back as Adam Smith. Marx failed to account for the time dimension in the relationship between the capitalist and laborer. In theory, Marx should witnessed that the laborer is receiving a present good (his wages) at a discounted rate of interest for the time until the capitalist is able to bring the product to market in the future. Wages are in effect an advanced payment on future revenues.

In practice, today’s “capitalists” are able to create greater demand for their services through legal tender laws and restrictions on the availability of cooperative credit. Existing anti-labor laws, direct and indirect corporate subsidizes, monetary inflation by the central bank, and the general insecurity caused by government manipulation of the consumer and employment markets also put employees in less of a bargaining position to their bosses. In a genuine free market, one without government privilege and artificial barriers to entry, fewer large businesses would undoubtedly exist and we would be far wealthier. So employees who chose wage labor as an occupation would be in a greater position to demand better wages and benefits.

I think part of Marx’s confusion came about because of his conflicting views of the function of the state. On one hand, he viewed it as the tool of the ruling class, who he hoped might be the proletariats one day. In other writings of his and Engels’, he also saw it as always working against the interest of the society (and it does). All in all, the classical liberal theories including, but not limited to, Adolphe Blanqui offer clearer insights into the problematic entanglement of capitalism and the state and how the two together promote conflict for the purpose of exploitation.

Image credit: ®Dave, with a Creative Commons license