What do libertarians often misunderstand about socialism?

Karl Marx - still relevant today?

Karl Marx was born 200 years ago. Many aspects of his analysis of capitalism have a core that could still be topical today: globalization and “exploitation”, contradiction between capital and labor, unequal income distribution, crisis-prone capitalism and the tendency for the rate of profit to fall. Marx was a philosopher and social critic, but also a representative of political economy. His economic theses are, however, largely considered to be out of date by the authors of the Zeitschrift. They corresponded to the zeitgeist and the living conditions of the 19th century, which have fundamentally improved through social reforms, productivity advances and the growing importance of the state, at least in the industrialized nations.

Karl Marx as a classic: freedom philosopher, system thinker, economic self-taught, political demagogue

Karl Homann, Ingo Pies

First things first: A sober look at the terrible experiences of the 20th century (and contemporary Venezuela) makes the inevitable conclusion that the social revolutionary hopes of Marxism have failed economically, socially and politically. At best, those who cannot be taught hold on to the erroneous belief that current problems in modern world society can be reversed for the better through a state-organized socialization of the means of production. To put it in a medical metaphor: the expropriation of the capitalists propagated by Karl Marx is poison for productive social cooperation and has not proven to be medicine in any dosage. This recipe does not cure, but makes you terminally ill - it costs human lives and corrodes the roots of modern civilization.

Marx as a political revolutionary is out. But that does not mean that it is also finished as a theory building classic. But on the contrary! We want to try to do justice to Karl Marx in his ambivalence. We characterize him (1) as a philosopher of freedom, (2) as a pioneer of systems thinking, (3) as an economic self-taught and finally (4) as a political demagogue.

Karl Marx as a philosopher of freedom

Many people consider Marx a collectivist. They believe that he took the view that the community - that is, a collective category such as the class - has normative priority over the individual, that it is more important to him than individual freedom and the well-being of the individual. If you stick to your texts, this is simply wrong. In reality, Marx stands entirely in the tradition of classical philosophy, which he studied intensively, as it was developed in the Enlightenment and by Kant and Hegel.

The wrong impression has probably arisen from the fact that Marx vehemently took to the field against liberalism. Therefore, if you don't look closely, it's easy to overlook the fact that he was claiming to inherit the legacy of liberalism. He aimed to outbid liberalism in terms of the emancipation of man - of all people! To this end, Marx impaled a misunderstanding that Hegel had already criticized, namely the misunderstanding that the emancipation of the individual consists in being free from society. This special variant of a libertarian, above all natural law, understanding of freedom based specifically on John Locke interprets collective arrangements - such as the administration of justice or tax collection - as coercion and thus as a threat to individual freedom. The striking counter-argument from Marx (and before him: Hegel) reads in a modern formulation: Robinson Crusoe, who lived alone on his island before Friday's arrival, is not free, but lonely. The institutions of the state and society are not to be thought of as threats and restrictions, but as safeguards and extensions of individual freedom. Emphatic freedom does not exist from, but only in company with others.

One must not misunderstand this argument as collectivism. Marx did not want less freedom, but more freedom. For him, it was not about the individual subordinating himself to the collective, but about the fact that every person needs his fellow human beings in order to be able to fully develop as a person. This position does not stand outside the liberal tradition of Western philosophy, but within and is firmly anchored there. Aristotle did not define man as a monad, but as a zoon politikon, as a citizen of the polis, who needs community and its recognition in order to be able to fully develop himself and his potential as a person. Individual freedom is constituted in a social process: Individuation takes place as socialization. Therefore, to use Kant's doctrine of law, the arbitrariness of the one must be combined with the arbitrariness of the other according to a general law of freedom. Or expressed in contract theory with Hobbes: Freedom does not exist in the state of nature, but only in the state of society. Individual freedom must be produced collectively.

In this regard, Marx is still relevant today, especially since he pointed out earlier than others how much the individual emancipation of children and adults depends on not spending the entire day, not the entire week, not the entire year at work . For Marx, freedom and leisure belonged closely together. And education was very important to him for the development of his personality.

Karl Marx as a pioneer of systems thinking

Marx is occasionally accused of disregarding morality. Indeed, there are many formulations in which he expresses himself contemptuously about moralizing contemporaries. Just read his invectives against the views he branded in the Communist Manifesto as Christian, conservative or utopian socialism. Or his derogatory remarks about justice.

Viewed correctly, such a dispute was not about the moral goal, but only about the means to achieve it. For Marx it was clear that the aim was to work towards a just state of affairs "in which the free development of everyone is the condition for the free development of all" 1. Precisely because the realization of this goal was so close to his heart, he developed an allergy to mere appeals and the mirror-image blame for non-compliance. Marx did not just want to demand the emancipation of man, he wanted to promote it. Accepting Hegel's criticism of the abstract ought, he did not want to stop at moralizing know-it-alls, but to advance to the active improvement of social grievances. He not only wanted to long for moral progress as intensely as possible, but also to bring it to life.

Marx turned against the - from his point of view incorrect - diagnosis that the deplorable situation of the workers in capitalism was due to the individual moral deficits of the entrepreneurs: to their egoism, their pursuit of profit, their greed or their lack of empathy, altruism and solidarity. Marx considered such an attribution to individual motives naive. He himself represented a different cause diagnosis. From his point of view, the problem to be solved was not to be found in the area of ​​entrepreneurial will, but in the area of ​​entrepreneurial ability. Marx interpreted competition as a capitalist system imperative. He considered it pious wishful thinking to want to oppose this with moral appeals. From his point of view, competition leaves the entrepreneur - no matter how morally minded (or want to) - no choice but to constantly strive for the highest possible profits. In modern terms, this is the entrepreneur's system function, to which there is no alternative within the competitive market system. In this context, in the first volume of his “Capital”, Marx spoke of “the economic character masks of the people” 2 and of the “compulsory law of competition” 3.

Methodologically, Marx places himself in the tradition of classical economics when he interprets morally deplorable grievances - such as poverty and misery of the proletarians - as the unintended result of intentional action, i.e. as a system sequence that no individual entrepreneur has ever consciously strived for and for them no individual entrepreneur is morally responsible (to be held). He did not believe in directing moralizing blame on individuals because he did not see the condition of the workers as being caused by the bad intentions of the capitalists. Based on his systematic considerations, Karl Marx turned against the expectation or even demand of the individual entrepreneur to improve the lot of the workers through voluntary wage increases (or through a marginally more generous treatment). He did not define the problem as a personal recklessness that was individually responsible, but as a structural recklessness anchored in the system and consequently not individually responsible. As a pioneer of systems thinking, Karl Marx was an enlightener who pointed out the limits of individual morality in structural problems.

Karl Marx as an economic autodidact

For political reasons, Marx's path to a university career in Prussia was blocked. Persecuted by the authorities, he fled into exile and ended up in the reading room of the British Museum. There he deepened his economic knowledge. But he made a capital mistake in his analysis, which we would like to clear up here in a nutshell.

Marx rejected reforms within the capitalist system and instead voted with all radicalism for a (world) revolutionary system change. The main reason for this was that he considered it impossible to improve the situation of the workers intrinsically in the system. From his point of view, due to the rural exodus and the increasing use of labor-saving machines, there was an “industrial reserve army”, which in the cities meant that the labor demand of the employers could not keep pace with the labor supply of the proletarians. Marx supported the assumption that the capitalists always occupy the shorter side of the market on the labor market, so that the proletarians are condemned to compete with one another - with the unpleasant but inevitable consequence that wages cannot rise above the subsistence level. For Marx the proletarians were the system victims of capitalist competition. This diagnosis made him a revolutionary in the name of freedom.

The capital error that Marx made in his analysis can easily be identified retrospectively: Marx, like the other classics of the “political economy”, was dependent on purely verbal considerations. The tools of the neoclassical, which works with formal models, were developed much later. Our reading is that Marx developed his own labor market analysis in analogy to the classic goods market analysis and that he made a very specific fallacy here.

To put it neoclassically, Karl Marx overlooked the fact that, in contrast to the goods market, the long-term supply curve on the labor market does not run horizontally, but vertically from full employment onwards. In contrast to capital, the production factor labor is not arbitrarily mobile. In other words: the industrial reserve army is exhaustible. For this reason, technologically induced expansions in corporate labor demand do not lead ad infinitum to more employment, but instead translate into higher wages, better working conditions and increasingly generous social benefits due to the perfectly normal market logic.

Marx's diagnosis was therefore a misdiagnosis. Due to a mistaken conclusion by analogy, it was categorically blind to the fact that the capitalist logic of competition is reversed at the moment when labor becomes scarce and entrepreneurs begin to compete for workers, which systematically increases their wages and standard of living. Marx fundamentally misunderstood that the relationship between labor and capital is by no means antagonistic: in competition, wages depend on productivity. Productivity, in turn, is influenced by the capitalization of jobs. Therefore the economic ABC is: workers need capital. So it becomes understandable why, beyond all rhetoric, modern capitalism is not characterized by class struggle, but by lived social partnership.

Karl Marx as a political demagogue

Marx not only misdiagnosed capitalism. With his verbal power he has also developed a new language that was specifically designed to discredit the system he rejected and to fuel the class struggle in order to shorten the path to world revolution - and thus the “birth pangs” of a better world. Marx was an extraordinarily eloquent thinker and, as a linguist, was especially a master of outrage rhetoric: instead of social partnership, he propagated class struggle. Marx (dis) qualified the market context of private-law exchange relationships as a system of exploitation. He characterized voluntary employment as wage slavery. He demonized the market as a system.

The complete arsenal of this powerful system distortion is still active in our vocabulary today and culturally and politically virulent. This is associated with a danger that we would like to point out in conclusion: In modern democracies - especially in times of crisis - there is a noticeable tendency to ask the wrong questions in political discourse. The still popular terms and categories of thought of the Marxist world of ideas instinctively guide one to rely on the overriding of the market in order to solve pressing problems, instead of thinking about whether a superior problem solution could perhaps consist in making markets more effective through regulatory policy through appropriate institutional setting of the course to put. Marxism, which is latently anchored in our linguistic culture, blinds us to the fact that capitalist mass production leads to mass prosperity with material and immaterial emancipation achievements, from which - especially on a global scale - the poorest of the poor benefit sustainably.

We have to subject our social arsenal of rhetoric to a fundamental revision in order to open our eyes to the fact that the social and ecological challenges facing us are not through system-breaking revolutions, but only through systemic reforms - not through a maximally invasive abolition, but only through gradual reprogramming of capitalism: through a clever institutionalization of the performance competition and the incentive effects emanating from it - can be approached with the prospect of success.

Provided with a suitable framework, markets enable solidarity among strangers. So you let yourself be employed for moral issues. Markets make it possible to switch from intended neighborly love to practiced love for distant ones, i.e. what is actually possible - by motive - only in small community groups, to be realized by system function on a (global) social scale. To discredit the market economy as a system of exploitation may appeal to gut instincts, but is in fact misleading. Here ethics must warn against an emotionalizing moralization.

We want to add two more warnings:

  1. The Marxist revolutionary narrative confuses poverty with exploitation. It is undisputed that the workers who poured from the countryside to the cities in 19th century Britain were poor and suffered from deplorable living conditions. But capitalism did not create this poverty, it found it - and abolished it!
  2. If one thinks the Marxist concept of exploitation through to the end, one arrives at a surprising realization: capitalism is not a system for the exploitation of workers, but a system for the exploitation of companies. After all, it is not the workers, but the companies, who are forced by competition to pass on the vast majority of the added value they produce to their contractual partners in the market: in the form of higher wages for their employees and in the form of lower prices to their customers. The generally rising standard of living is the result of a diffusion (= "socialization") of entrepreneurial innovation rents forced by competitive markets.

Conclusion: Marxism fails to recognize - and distort its rhetoric - the foundations, the achievements and especially the "added value" of modern civilization.

  • 1 Marx-Engels-Werke, Vol. 4, p. 482.
  • 2 Ibid., Vol. 23, p. 100.
  • 3 Ibid., Vol. 23, p. 337.

On the topicality of Karl Marx

Jürgen Kromphardt

Schumpeter 1 differentiates between Marx the prophet, the sociologist, the teacher and the economist, while here I am only looking at the economist.My starting point is: Economists who have died a long time are up-to-date - or to put it more cautiously: potentially up-to-date - if they have dealt with problems that are largely neglected in today's discussion or if they have used methods to develop their theses that are still fruitful today could be, but can hardly be used any more.

The contribution of the dialectical method

In today's macroeconomics2, models dominate in which either a stable macroeconomic equilibrium with full employment is quickly achieved through flexible wages and prices or wage and price rigidities prevent the economy from realizing this equilibrium sooner than in the long term. In both variants, the result is a stable state that can only be changed by permanent exogenous shocks.

The dialectical method used by Marx - as opposed to Hegel - is based on a different perspective. Their basic idea is not to regard the existing form of a system as permanent. Rather, every economic and social system contains contradictions and conflicts of interest that urge changes to the system and enforce them in a dialectical process of thesis, antithesis and synthesis. It is necessary to recognize this dynamic, system-immanent process and its driving forces; for the object that a researcher analyzes appears initially as a unified one, as a synthesis. It is the task of the dialectical worker to recognize the contradicting components - theses and antitheses - and to derive developments in the past and in the future from them.

The inclusion of this point of view and the associated variety of methods could be more insightful.

The problem of income distribution

More relevant at the moment, however, is the return to the importance of income distribution. This has been neglected for a surprisingly long time in modern economics and only attracted more attention after the work of Piketty3.

With Piketty, whose title alludes to the main work of Karl Marx, and especially in the discussion he sparked, the personal income distribution is in the foreground and less the distribution of income among the large social groups. The phenomenon that is so conspicuous today that it is not the capital owners but the employed board members and top managers of large companies who can agree on extremely lucrative terms with each other has probably contributed to this weighting.

The role of income distribution in classical economics

For Karl Marx, the way in which the national income is divided between workers and capitalists (to use his terminology) in the capitalist system played the decisive role both in his rejection of this system and in his theoretical considerations and predictions. With this focus, Marx is in the tradition of classical economics. David Ricardo, who wrote at the beginning of the 19th century and dominated the economic discussion until the middle of the 19th century, made the explanation of income distribution and the long-term consequences of its change in his "Principles of Political Economy and Taxation" 4 as the main task of Economics explained.

For Ricardo, the distribution of national income among wages, profits and land rent and its long-term development was central. In his analysis he assumed (like Adam Smith) that workers' wages will remain at the subsistence level. However, this does not benefit the manufacturing companies. Rather, with the growing population, which was observed almost everywhere in the 19th century, increasingly poor soils have to be plowed. This has consequences: Since the owners of the better land can enforce a higher land rent (differential rent), the total share of land rent in national income increases. This is possible - since the workers must receive at least a wage equal to the subsistence level, at the expense of profits. In the long term, these tend towards zero; the accumulation of capital slackens and the growth process comes to an end.

When Marx published Volume 1 of his main work “Das Kapital” 5 around 30 years later, the assumption was still plausible that the wages of workers who were neither allowed to join trade unions nor were allowed to strike would continue to determine (economically and socially) in the future ) Remain subsistence level. Ricardo's thesis, however, became obsolete with the abolition of the grain tariffs in 1846: Now - at least in Great Britain - the food demand could also be covered by imports, especially from the USA, which was endowed with productive soils. The cultivation of poor soils in Great Britain had become superfluous.

The central distribution conflict in Marx

In Marx's case, the central conflict of distribution exists between the workers and the owners of real capital, which is invested more and more extensively, especially in industry. Workers and physical capital jointly produce the national product. The politically and economically weak workers receive their subsistence wages; the surplus product going beyond this falls to the capitalists. The gifted polemicist Marx speaks of exploitation because the workers should actually be entitled to the entire product. In capitalism, however, labor is treated as a commodity and is therefore rewarded at its "cost of reproduction". She receives the wages at which the working class reproduces itself, which also includes the rearing of the offspring.

In the context of his labor value theory, Marx derives “exploitation” as inherent in the system, but only in the case of unlimited competition between the workers. As long as this persists and the cost of reproduction does not change, wages remain constant. This is ensured by the structural change, driven primarily by technical progress, which is inherent in the capitalist system (Schumpeter's "creative destruction") and which repeatedly releases workers who then have to look for a new job, since they are dependent on their earned income for a living therefore have to accept the prevailing wage rate. The constant replenishment of what Marx called this “industrial reserve army” means that the wage level remains at the subsistence level, even if individual groups of workers have enforced higher wages for a limited space and time. The concentration of companies into ever larger units observed by Marx and expected for the future also increased the market power of companies in their sales markets and on the labor market.

The “appropriation” of the surplus product by the capitalists, strongly criticized by Marx, also has fatal consequences for the economy as a whole; because because of the persistence of wages at the subsistence level, according to Marx, “a constant dichotomy must arise between the limited dimensions of consumption on a capitalist basis and a production that constantly strives beyond this immanent barrier” 6. This conflict of interest and its one-sided solution is the "ultimate reason" for the recurring crises of the capitalist system, which then as now is far from continuous growth.

The crises of capitalism and its collapse

Marx does not, however, deduce the consequences of this conflict in detail. In order to explain the crisis, he concentrates on the causes of the "tendency of the rate of profit to fall" and its effects on the production and investment activities of entrepreneurs. With their help, Marx explains the regularly recurring crises in capitalism.

With Marx, these crises ensure that the capitalist growth process does not gradually wane as with Ricardo. Rather, Marx expects that he will come to an end at the moment when the capitalist relations of production “turn from the forms of development of the productive forces into their fetters”. Marx made this prognosis as early as 1867 in Volume 1 of “Capital”, referring on the one hand to the concentration process of companies and on the other hand to the impoverishment of the masses that he expected. This impoverishment made him not only passively await the end of capitalism. Rather, he was politically committed to it, starting with the “Communist Manifesto”, which he wrote in 1848 together with Friedrich Engels.7 The “tendency of the rate of profit to fall”, on the other hand, is only dealt with in Volume 3, published posthumously in 1894, along with opposing tendencies . Its justification has the decisive weakness that it neglects the positive effect of increasing labor productivity on the rate of profit

It was left to Keynes in his “General Theory of Employment, Interest and Money” 9 to analyze the effects of the “dichotomy” between consumer goods production and consumer goods demand as well as the development of investment on aggregate demand in more detail and thus a new perspective on relative demand To bring the importance of the supply and demand of goods into the national economy. However, this view was often vehemently rejected by the mainstream, also for ideological reasons, among other things because with Keynes the private virtue of saving becomes an act that is disadvantageous for the economy as a whole. Marx, on the other hand, considered the sphere of production to be the decisive sphere in the tradition of Adam Smith and Ricardo, while he classified the sphere of circulation as subordinate, which is quite understandable for the 19th century, which was characterized by the limited supply of goods.

Reasons for Marx's false prognoses: institutional changes

The collapse of capitalism that Marx expected and predicted in the foreseeable future has not yet occurred. Why did his prognoses turn out to be wrong? There are four reasons for this:

  • First, the tendency he claimed of a falling rate of profit did not prevail against the counter-tendencies which he himself has dealt with at length.
  • Second, in long struggles and political disputes, the workers won the right to form trade unions and to strike for their demands. This enabled them to overcome the limit on their wages to the subsistence level and, by and large, to orient their wages towards the increase in labor productivity. Marx did not foresee this momentous institutional change. Overcoming the “dichotomy” has always been accompanied by complaints from capitalists and neoclassical economists about excessive wages. These did not include the "dual character" of wages, being costs for the company and income for the employee, in their considerations and, with a view to almost always existing unemployment, claimed that excessive wages were the cause and would lead to further increases greater unemployment and loss of international competitiveness.
  • Thirdly, the increasing political and economic dominance of the contradiction between workers and companies, presumably expected by Marx, did not occur, since the liberal professions, the craft businesses, those employed in the public sector and the farmers form an extensive "middle class" outside of this contradiction and at least in part become a more stable one contribute to economic development.
  • Fourth, the acceptance and stabilization of the capitalist system contributed to the fact that the state took on far-reaching tasks; These went far beyond the measures of British factory legislation, which Marx described in detail, which restricted child labor and women’s labor in the mining industry and generally limited daily working hours. However - heavily criticized by Marx - there was a lack of controls over compliance, just as compliance with the minimum wage and illegal work is very inadequately controlled today. Bismarck's social laws, with which compulsory health insurance in Marx ‘year of death in 1883, accident insurance in the following year, and old-age and disability insurance in 1885, were a big step towards expanding the state-controlled sector. The state took on further tasks in the field of education (above all through compulsory schooling), which led to higher state spending, as the state financed school attendance in whole or in part itself and demanded less school fees from the parents. As a result of these and many other regulations, the ratio of government expenditure to national income in Germany rose in the 100 years from 1872 to 1971 from 18.5% to 41.0% .10 This expansion of the public sector is likely not only to have contributed to the acceptance of the capitalist system but also to greater economic stability, especially when the public sector was prepared to go into debt in times of crisis instead of trying to compensate for its declining income by reducing its expenditure or increasing its income.

Persistence of susceptibility to crises

However, the capitalist system is not immune to crises, as the severe financial and economic crisis from 2008 onwards has shown. This was triggered by the financial sector, which - incorrectly, little or no regulation - had established itself and uninhibitedly built up huge risks. Lured by frivolous profit promises, companies and households were looking for profitable investments for their surplus funds; because the companies were and are less and less willing to use their very high profits, mainly due to restricted competition, to finance real investments. At the same time, it is practically impossible for those earning high and high incomes to spend all of their income on consumer goods. Instead, they invest their savings in securities or ship them to tax havens.

This exacerbates the problem that, given the prevailing distribution of income among social groups and among individuals, it is increasingly common that neither consumption nor investment in property ensure a sufficiently high demand for work. Keynes had already warned in 1937 of the impending danger of chronic underemployment and called for basic measures: “If capitalist society rejects a more equal distribution of incomes and the forces of banking and finance succeed in maintaining the rate of interest somewhere near the figure which ruled on the average during the nineteenth century ..., then a chronic tendency towards the underemployment of resources must in the end sap and destroy that form of society. "11

In 1943, Keynes made more concrete proposals in a memorandum12 for the time after the reconstruction phase: “It will become necessary to encourage wise consumption and discourage saving, and to absorb some part of the unwarranted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours. " Marx also advocated shortening working hours, but mainly because of the devastating effect of the working hours of the time on health and on the possibilities of shaping one's life.

For Germany, these recommendations do not seem topical, but only because we are solving the problem of insufficient aggregate demand at the expense of other countries by means of our huge surplus in the current account.


The unequal distribution of income and its effects on the total demand for goods build a bridge from Marx to Keynes. Marx ‘The prognosis of a steadily increasing“ conflict ”has proven to be wrong, but it sharpens the awareness of the importance of social and political processes that can fundamentally change institutional regulations. For this reason alone, Marx is relevant.

  • 1 J. Schumpeter: Capitalism, Socialism and Democracy, New York 1942. In German: Capitalism, Socialism and Democracy, 2nd edition, Munich (Leo Lehner) 1950; as well as (general to Schumpeter) H. D. Kurz, R. Sturn: Schumpeter für Jederman. On the restlessness of capitalism, FAZ book, Frankfurt 2015.
  • 2 For a knowledgeable account of the complicated and intricate history of macroeconomics see P. Spahn: Streit um die Makroökonomie. Theory-historical debates from Wicksell to Woodford, Marburg 2016.
  • 3 T. Piketty: Capital in the 21st Century, Munich 2014.
  • 4 D. Ricardo: On the Principles of Political Economy and Taxation, 1st ed., London 1817. New edition by P. Sraffa (Ed.): The Works and Correspondence of David Ricardo, Vol. I, Cambridge 1951. In German: HD Kurz, C. Gehrke (Ed.): Principles of Political Economy and Taxation, Marburg 1994.
  • 5 K. Marx: Capital. Critique of Political Economy, Vol. 1, 1st ed., Hamburg 1867. 4th ed. 1890. Reprinted in Marx-Engels-Werke (MEW), Vol. 23.
  • 6 K. Marx: Capital. Critique of Political Economy, 3rd vol. Edited by F. Engels, Hamburg 1894, p. 267. Reprinted in Marx-Engels-Werke (MEW), vol. 25.
  • 7 K. Marx, F. Engels: Manifesto of the Communist Party, London 1848. Reprinted in Marx-Engels-Werke (MEW), Vol. 4.
  • 8 J. Kromphardt: Analyzes and models of capitalism from Adam Smith to financial capitalism, Marburg 2015.
  • 9 y.M. Keynes: The General Theory of Employment, Interest and Money, London 1936.
  • 10 From: E. Novotny: The Public Sector. Introduction to Public Finance, 3rd edition, Berlin 1996. Quoted from J. Kromphardt, a. a. Cit., P. 181.
  • 11 J. M. Keynes: Some Economic Consequences of a Declining Population, "Eugenics Review", 1937. Reprinted in: Collected Writings (CW), Vol. XIV: The General Theory and After, p. 132.
  • 12 J. M. Keynes: Memorandum: The Long-Term Problem of Full Employment, 1943, Collected Writings (CW), Vol. 27, p. 343.

The importance of Karl Marx for understanding today's economy

Werner Plump

Does Karl Marx have anything else to say to the contemporary world? Is it economically up-to-date, and in view of the 2007 crisis, is it more up-to-date than ever, as many mostly political observers say? Or is he a figure of the 19th century, of great interest in terms of the history of ideas and ideas, and as an individual still of perhaps not representative, but nevertheless characteristic significance for his age, but ultimately irrelevant for our present, which he could not have known?

The relevant articles published recently between the 150th anniversary of the publication of the first volume of “Capital” and the imminent 200th birthday of Karl Marx are of divided opinion; while the more recent biographies of Karl Marx quite consistently historicize, 1 elsewhere there is a repeated commitment to Marx's topicality and the current importance of his great works, 2 or, more cautiously, a tracing of Marx's world of thought and its relevance today which, one must also soberly state, were neither read intensively in the 19th century, because they either did not exist or were barely understandable, nor are they really popular in the present. The point of reference are mostly those writings that made Marx popular, the adaptations by Friedrich Engels, 4 the summaries by Karl Kautsky5 or the textbooks that remained easily available in the 20th century from the Soviet Union and the GDR

Not a consistent work

There is therefore still a lot of speculation about Marx, although the progress of the work on the Marx-Engels Complete Edition now allows good access to Marx's oeuvre.7 But as the most recent Marx biography by Gareth Stedman Jones based on this shows in detail, The sources that have now been opened up reveal neither a consistent work nor a consistent thinker, but rather show an erratic, not always original intellectual development and a work that has remained fragmentary and incomplete in every respect

In particular, Marx's attempts at reactivating are owed more to the criticism of the current economic conditions and their theoretical rationalization than to an intensive examination of his economic analysis, which deals with the existing texts in a very differentiated way and does not allow clear, especially clear political judgments Ultimately, most of the updates are not about a serious discussion of Karl Marx, but about maintaining the critical claim to the current economic order and demonstrating at least the fundamental possibility of alternative drafts of order that leave the real or supposed problems of capitalism behind, The reference to Karl Marx in particular has the advantage of being able to focus on contemporary criticism without being overly speculated on the likelihood and functionality of possible alternatives 10

Past updates

From a historical point of view, then, the current reawakening of Marx is by no means the first. As early as the 1970s there was a remarkable, extensive and, above all, multifaceted Marx renaissance in the old Federal Republic, which in turn was in many ways in the tradition of the early Frankfurt School from the late 1920s and 1930s. And also the intense debates about the question of the right strategy formation of the labor movement before the First World War, mostly known in Germany as the revisionism dispute, 11 were less questions of the right political point of view, as the critics of the renegade Eduard Bernstein in particular never tire of asserting , but rather disputes about an appropriate continuation of Marxist positions under the conditions of the early 20th century, after some of the expectations and prognoses attributed to Marx had just not been fulfilled

In general, there seems to be a remarkable rhythm in the reactivations, which on the one hand react to the recurring crises in capitalism, on the other hand have to deal with the fact that at least every crisis so far has not led into the abyss, but into a renewed upswing.13 Either had Marx was right and it was important to bring him to bear again despite all the supposed errors and false prognoses, or he had to be reinterpreted in view of the lack of his prognoses. The thought that he could simply have made inaccurate assertions in many things or that his epigones had inappropriately simplified him was at least taboo in the world of his followers. And in view of the hope of salvation from the social and moral abysses of modern economy, which is supposedly associated with Marx’s work, this world was (and is) by no means limited to the circle of its close followers; his message radiates far beyond that. 14

Problematic work value theory

To this day, Marx has remained the incarnate synonym for overcoming and overcoming capitalism, and this is how he is remembered and staged. His economic analyzes have long been refuted or deconstructed as being time-bound.15 This applies in particular to three essential building blocks of his theory, namely the thesis of the impoverishment of the working class, the thesis of the falling rate of profit and the idea of ​​the centralization and concentration of the Capital as a condition for the emergence of an alleged monopoly or finance capitalism. 16

Marx did not comment on some topics that are extremely topical today; in particular, money, credit and financial markets play a subordinate role for him, so that little can be found in Marx's analysis of the current reality of global capitalism, for example on price formation on the financial markets. But he can hardly be blamed for that, who has not been able to know the economic reality since the 1880s. His adherence to the labor value theory is more likely to be criticized, but this is the core of his conception with which he believed he could scientifically prove the assertion of the constitutive importance of exploitation for modern capitalism. Biographically, it is understandable that he did not want to do without this, as his supposed evidence of the necessary exploitation through the dual character of human labor and the production of surplus value made possible by it distinguished him from the competing currents of Bakunin, Proudhon and the other early socialists who fought social inequality and the misery of the workers appeared to be due to capitalist arbitrariness, bank fraud and immoral acts. Marx scientific socialism supposedly did not have this Achilles heel; The exploitation of the workers was not an avoidable mistake, but a basic feature of capitalist commodity production, which insofar could not be reformed but had to be abolished.

The labor value theory probably also plunged Marx into those unsolved, even unsolvable questions that are now called the "transformation problem" and prevented him from completing large parts of the manuscripts of "Capital" “Capital” showed, quite apart from that.17 It was by no means easy to show how objective (exchange) values ​​are transformed into volatile prices and how prices relate to values, even if with the law of value according to which the The sum of all prices is equal to the sum of all values, at least a kind of formula compromise seemed to be found, which is not only meaningless in many things, such as pricing on the financial markets, but also inconceivable for a number of goods and ultimately not really shown conceptually can be. There is much to suggest that Marx was aware of this and therefore did not release his manuscripts for printing; in any case, he left no doubt that he did not consider his work to be finished

Labor value theory today is not something that is really of interest outside the history of economic dogma.19 The present day's allegations of exploitation are usually not based on labor value theory, but rather focus on unequal exchange, violence and robbery, as well as taking advantage, especially in the context of so-called global inequality 20 Whether these accusations are correct is not to be discussed here; In any case, it has little to do with Marx, who, to the annoyance of many current post-colonial positions, viewed colonialism as a driver of progress in an essentially frozen world.21 But even his above-mentioned three theses are difficult to maintain economically. The thesis of the impoverishment of the workers has its core less in Malthusian or Ricardian ideas of the limited wage funds or the wage-depressing competition between workers, although Marx also found the idea of ​​maintaining an industrial reserve army to keep wages low quite attractive.

For Marx, impoverishment was simply an expression of the competitive compulsion to optimize the production of absolute surplus value as a prerequisite for asserting oneself against competitors. The competitive struggle forces production to become cheaper, to lower the price of production as a prerequisite for selling one's own production on the market and realizing the surplus value, i.e. making a profit. In the resulting limited consumption, which was essentially determined by wage income, Marx saw the real Achilles' heel of capitalism: “The ultimate reason for all crises is always the poverty and consumption restrictions of the masses in relation to the drive of capitalist production, the productive forces to develop in such a way as if only the absolute consumption capacity of society formed its limit. ”22

The history of capitalism has decisively refuted this assumption made by Marx. What still seemed evident in the period of pauperism during the first half of the 19th century and still had a lot to offer in the years up to around 1880, afterwards no longer corresponded to reality with rising wages and falling working hours, especially not in the centers of the capitalist development. The epicenter of capitalist dynamism, the USA, was characterized by high wages and a corresponding standard of living, which was also achieved in certain European centers. Even in rather poor Germany, however, the situation of the workers improved to such an extent that revolutionary Marxism lost its traction and the workers' movement adjusted to fighting for reforms on this side of the system threshold. The left criticism of revisionism sought to justify this improved position of the workers with the exploitation of the colonies; Imperialism dropped a few crumbs of its raids in favor of the workers in the centers, but that did not change anything in the matter of the impoverishment of the workers. But these were all already adjustment maneuvers, at least no longer Marx Denken original thinking, which accepted the absolute impoverishment of the working class as imperative, indeed presupposed it. What Marx, shaped by the social experiences of his time, could not and would not see, was the fact that capitalism presupposes and continuously reproduces social inequality, but by no means poverty! 23

Trend in the rate of profit falling

The theoretical impoverishment assumptions have proven to be incorrect. The same thing happened with the thesis that the rate of profit tended to fall, whose labor value theoretical prerequisites (organic composition of capital, production of absolute and relative surplus value) do not apply anyway, but which also completely underestimated technical change or simply assumed, without evidence, that capitalism itself would become decisively obstruct this technical change, the "production relations" would in the course of time become a "fetter" for the "development of productive forces". Even assuming that in the case of established and tried-and-tested productions, the competition would ultimately push prices down to the level of production costs and thus tend to make realizable profits disappear, this need not apply to all innovative areas of the economy. As long as an economic system is innovative, it is not threatened with the prophesied doom through self-suffocation, but the recovery process always starts anew. The irony then was that it was not the capitalist economic order that stagnated technologically and ultimately was literally suffocated by it, but the socialist alternative, which at least conceptually was not allowed to have these problems at all.24

The underestimation of the technical and economic structural change was also related to the third problematic assumption, namely the assumed concentration and centralization of capital, which later made various theoretical developments (monopoly capitalism, finance capital, state monopoly capitalism, etc.) appear plausible to Marx's followers. But the idea of ​​the dominance of a few “monopolies” could hardly be justified empirically, even in the limited framework of the individual economies, if one did not want to explain the formation of individual large corporations to a general legality of capitalism, as was the fashion around 1900; it also completely ignored the fact that technological change can dramatically change the whole look of an economy in a relatively short period of time. While the heavy industrial corporations of the years before 1914 appeared to be the ultimate form of powerful monopoly, they found themselves in a permanent crisis in the interwar period and finally, after a brief boom in war and reconstruction, largely cleared the field in the 1960s.

The formation of groups is therefore by no means the last word in structural change; As a dominant model, they are economically excluded anyway, since technology and markets often do not allow such concentrations at all, and as Ronald H. Coase already showed in the 1930s, economic growth can only be a sensible strategy to a limited extent. His argument that the internal transaction costs would rapidly grow prohibitively above a certain organizational size25 was shown in the comprehensive restructuring concepts of the 1970s and 1980s, in which a large part of the old corporations or conglomerates that had become too large had to be given up. At that time, the decline of the old Deutschland AG began, but also the melting or disappearance of the former major US corporations. This did not mean, and does not mean, that no new large structures can and did not arise; but it is impossible to assume a general law here, as it used to be almost a matter of course.


The modern economy is much more changeable, flexible and adaptable than Karl Marx assumed and than his followers wanted to fix and fix it. From the beginning, Marx’s concept of capitalism and thus that of his epigones was designed as a “self-fulfilling prophecy”; capitalism could not be anything other than a kind of “sickness to death”; its description was therefore also always its pathology. That seemed so evident, and it seems so obvious to today's criticism of capitalism, which is at least partially based on Marx, that it is no longer questioned, but serves as a starting point.

This leads to empirically untenable statements and, above all, to great illusions about the possibility of economic alternatives, which at least so far have disappointed everyone without being characterized by less social misery or less ecological devastation than damned capitalism. What Marx has to say to the present is very limited. He correctly saw the inner expansion dynamics of capitalism and made the associated crisis dynamics an issue, but placed everything in an analytical and historical-philosophical framework that was not only inaccurate, but now hardly seems comprehensible. As seductive as the hopes of salvation may be, they are also dangerous, as the history of real socialism has shown. In any case, it is not harmless.

  • 1 G. Stedman Jones: Karl Marx. The biography, Frankfurt a. M. 2017; J. Sperber: Karl Marx. His life and his century, Munich 2013. For a quick, informative overview see now W. Nippel: Karl Marx, Munich 2018.
  • 2 For example D. Dath: Looking instead of believing.An experience report from long-distance Marx reading; U. Herrmann: "Capital" and its meaning; H.-W. Sinn: What Marx still has to say to us today, all in: Aus Politik und Zeitgeschichte, 67th vol. (2017), H. 19-20, S. 17-22, S. 23-28, S. 29-33 .
  • 3 T. Steinfeld: Lord of the Ghosts. The thoughts of Karl Marx, Munich 2017.
  • 4 T. Hunt: Friedrich Engels. The man who invented Marxism, Berlin 2012.
  • 5 K. Kautsky: Karl Marx ‘economic teachings, Stuttgart 1912.
  • 6 C. Morina: The Invention of Marxism. How an idea conquered the world, Munich 2017.
  • 7 Cf. in addition to the prospectus of the Marx-Engels complete edition, the articles in the Marx-Engels-Jahrbuch 2012/13.
  • 8 G. Stedman Jones, op. a. O.
  • 9 See, for example, B. Schefold: Making Sense of Marxian Crisis Theory in the Light of the History of Economic Thought: Real and Monetary Factors, in: Marx-Engels-Jahrbuch 2015/16, Berlin 2016, pp. 28-44.
  • 10 Remarkable in this context, however, P. Mason: Post-capitalism. Ground plans of a coming economy, Berlin 2016, which shares the judgments about capitalism ascribed to Marx, but assumes that in the digital age the importance of human labor will decline to such an extent that the production of surplus value becomes irrelevant, a rather bold hope.
  • 11 H. Grebing: The revisionism. From Amber to the Prague Spring, Munich 1977.
  • 12 C. Morina, op. a. Cit., P. 199 ff .; H. de Man: On the Psychology of Socialism, Jena 1927.
  • 13 W. Plumpe: Konjunkturen der Kapitalismuskritik, in: Merkur. German magazine for European thinking, 66th volume (2012), no. 757, pp. 523-529.
  • 14 A. Künzli: Mine and yours. On the history of ideas of the hostility to property, Cologne 1986.
  • 15 General M. Berger: Karl Marx, Paderborn 2008, pp. 22-33.
  • 16 On this and the individual passages in the capital, see M. Berger: Karl Marx: “Das Kapital”, Paderborn 2013.
  • 17 G. Stedman Jones, op. a. O., Chapter 10.
  • 18 Ibid, pp. 505-515; J. A. Schumpeter: Capitalism, Socialism and Democracy, Bern 1946, pp. 43-79.
  • 19 B. Schefold (Ed.): Economic Classics in Change, Theoretical essays by David Ricardo, Alfred Marshall, Vladimir K. Dimitriev and Piero Sraffa, Frankfurt a. M. 1986.
  • 20 S. Lessenich: Next to us the flood. The externalization company and its price, Munich 2016.
  • 21 G. Stedman Jones, loc. a. O., chap. 10.
  • 22 Marx-Engels-Werke, vol. 25, p. 501.
  • 23 Current information on this A. Deaton: Der große Ausbruch, Stuttgart 2015 (first English 2013).
  • 24 For this J. Kornai: The socialist system. The political economy of communism, Baden-Baden 1995 (first English 1992).
  • 25 R. H. Coase: The Nature of the Firm, in: R. H. Coase: The Firm, the Market, and the Law, Chicago 1992.

Marx currently?

Bertram Schefold

Marx currently? It seems so. Table 1 shows how Marx dominated the discussion during the economic crisis and beyond. The Corriere della Sera is a liberal paper, La Republicca is more on the left and the Frankfurter Allgemeine Zeitung is known in this country. The frequency of mentions by Marx during five years was compared with the mentions of Keynes and with the mentions of perhaps the most famous liberal economist, Ludwig Erhard in Germany and Luigi Einaudi in Italy. As you can see, Marx dominates the field by far, with the strange difference that in Italy the mentions with the time lag to the outbreak of the economic crisis in the Corriere decline very clearly, in the Repubblica less and so Keynes and Einaudi gain ground, while Marx in the Frankfurter Allgemeine Zeitung holds better.

A feat, one might say, because Marx was not only an economist, but also a philosopher, historian and a figure in world history. But Keynes was also versatile: politician, essayist, art collector, theater founder and member of the Bloomsbury Circle. Einaudi was Italian President, Erhard Minister of Economics. And the fame of Marx in his other functions is probably based not least on the scientific rank he acquired as the author of “Das Kapital, First Volume”.

I have dealt with this work again and again for a good fifty years and have had surprises with it. His artistic design and consistency impressed me enormously at a young age, as much as totalitarianism was terrifying, then there were years of critical debate. The Keynesians at Cambridge had learned from Marx, but only adopted what could be translated into their language of economics or social history. Joan Robinson once indicated that she admired the book as a “work of art”, but woe if one tried to explain away or even to excuse the logical flaws in the economic analysis that she believed she had discovered in Marx. Meanwhile, the supporters of critical theory in Frankfurt were occupied with Marx's theory of value forms. When I was talking to Sraffa about it one evening, he told me it should be thought about. When I tried to explain it to Maurice Dobb, Great Britain's most famous Marxist economist, he admitted, with the polite frankness for which he was famous, that he had never observed this line of thought in Marx.

Table 1
The weight of Marx in relation to other economists 1
Quoted economist200820092010201120122013
Corriere della Sera
La Repubblica
Frankfurter Allgemeine Zeitung