I was wondering recently why Marx would be so incorrect and yet semi-ironically so appealing. I was given the answer, “People just want something for nothing,” while I’m sure that covers some Marxists it certainly doesn’t accurately describe every Marxist I know, so I was dissatisfied.
I began searching. I read the following summary of Marx’ criticism of capitalism from the website Worker’s World, it was taken from a speech given by Richard Kossally:
“It is necessary for the capitalists to drop the price of the product in order to outsell their competition. But if prices are lowered, then many more items have to be produced and sold for the capitalist to maintain or increase his or her profits. Production soon outpaces consumption, as this competition eventually leads to more products on the market than can be sold at a profit.”
The most striking thing about this line of reasoning is that literally none of it is true. It’s 100% false. Every statement uttered is incorrect. Communism is the most false theory ever.
1) It is necessary for the capitalists to drop the price of the product in order to outsell their competition.
This is untrue. One company can outspend their competition in areas such as marketing, customer service, or location, and while having a higher price still outperform their competition.
It’s also false to say that a lower price necessitates increased demand. Stocks, for example, can increase in price and this causes excitement in the market further increasing demand. Consultants can price their labor so cheaply so as not to be taken seriously; sometimes they have to increase their price to be taken seriously by bigger companies. Jewelry is another example where often times where an increased price will increase demand for the jewel.
2) But if prices are lowered, then many more items have to be produced and sold for the capitalist to maintain or increase his or her profits.
This is also untrue. A company might be able to lower prices because of better margins from technological advancement, easing their production costs, or decreased taxes. With a lower price, but better profit margins, profits have increased without production increasing.
3) Production soon outpaces consumption, as this competition eventually leads to more products on the market than can be sold at a profit.
This is sometimes untrue. Sometimes supply outpaces demand other times demand outpaces supply. Price corrections sort this out, usually quite quickly; the speaker believed that massive economic catastrophe sorts this out but his view has no bearing on reality.
The speaker was using Marxist reasoning and was completely wrong about everything he believed in this regard.
Why then does Marxism appeal to people?
First and foremost, it appeals to people who don’t understand anything about business.
Those ignorant of business can be generalized into two categories, those who manage to succeed in our economic system despite their ignorance of business and those who fail because of their ignorance of business.
Those who fail in our economic system, and feel impoverished because of it, find solace in Marx.
The people who don’t possess a meaningful enough understanding of business to refute Marx are often the very people Marx was trying to help. His writing even gives them the illusion of an ethical justification to steal from others who haven’t been impoverished by crony-capitalism to improve their situation. Marx comes as a breath of fresh air to these people.
The second category is the people who, in spite of their financial ignorance have managed to perform economically-well in our society. These are often influential people, they are politicians (it isn’t necessary to speak with understanding on finances to be a successful politician, it’s necessary to speak persuasively on financial matters to be a successful politician), they are philosophers (like me), they are educators, and academics in general.
These people are like the rest of us who have ethics and don’t like seeing suffering, but believe Marxist ideas can ameliorate the situation because they don’t possess the financial acumen to refute Marx. They then go around influencing other people to adopt this nonsensical thinking, which is easily exposed as vacuous.
In terms of answering the question about Marx’ popularity, it is necessary to examine who finds his theories appealing. Ignorance of business doesn’t explain it entirely, but it does explain a great extent of it.
Brandon Kirby
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What Marx is talking about is a “general glut”, i.e. when you have too low pay for people to buy the industrial production. This is what is known in Keynesian economics as a “demand slump”, and it is corrected by extra government spending. The effect is real, and it was Marx who described it precisely for the first time. You are getting a mangled version from the socialist website, the version in Capital is correct and modern.
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