Marx and Enron

Andrew E. busch

August 1, 2002

One of the unfortunate byproducts of the recent spate of corporate scandals is the renewed boldness of Marxists, who feel vindicated by the turn of events. Ever since the collapse of the Soviet bloc, the radical left has been on the defensive as the advocates of a system of thought discredited by history. One can sense that they have lived a decade or more in a vast intellectual bunker desperately awaiting the slightest sign of economic trouble to seize upon as evidence that Marx and his doctrine should be rehabilitated. Now they are emerging into the daylight.

In one sense, the far left benefited from the fall of communism in the Eastern bloc. Once, they could not evade a comparison between capitalist reality and the miserable thuggery of Marxist reality. Now, they are free simply to compare capitalist reality with Marxist utopian theorizing. It is worthwhile, then, to review both the theory and the reality.

Indeed, the nexus between theory and reality bears the greatest attention. One often hears two related but competing theses regarding Marxism. Some say that it did not fail, but it has never really been tried; others that it is a wonderful theory but just did not work out well in practice. Both of these ideas are demonstrably false.

To take the second notion first, it should not need to be pointed out that a theory that never works in practice is not a wonderful theory but a terrible theory. The whole point of theories of politics and the economy is to predict what actions and modes of living will prove beneficial. When those predictions are consistently refuted by events, the theory has failed.

The first proposition is slightly more difficult to assess, only because its adherents are always free to claim that the latest failed Marxist experiment wasn’t "real Marxism." Thus, critics are presented with a moving target. While a clever tactic, this line of argument is intellectually dishonest, relying on a clear example of circularity: Since Marx is right, he cannot fail. Since x country failed, it cannot be Marxist.

In reality, of course, Marx has been tried, over and over and over again. He failed in practice because his theory was riddled with flaws.

For most Americans above a certain age, this is obvious and does not require elaboration. It would, however, be a mistake to assume that those who have come of age after the end of the Cold War are not vulnerable to the seductions of a repackaged Marxism. In fact, much of the anti-globalization movement is already driven by a kind of fuzzy neo-Marxism. Hence the argument must be made.

Marx’s theories can be divided into two parts: diagnosis and prescription. In his diagnosis, he argued that capitalism is self-destructive because the urge for profits inherent in the system results in pressure to hold down the costs of production. The capitalists accomplish this through holding down labor costs, which impoverishes the workers. Because the workers do not have enough money, they cannot buy all of the goods they produce. This state of "overproduction" (or "underconsumption") leads to recession, which leads to cost cutting (layoffs and pay cuts), which leads to a worse recession, and so on in a downward spiral ending ultimately in revolution by the working class.

As far as it went, there was something to this analysis in its basic form. Some government programs like unemployment insurance were created precisely to forestall this problem by introducing "automatic stabilizers" into the economy—means to break the recessionary spiral by propping up consumption in tough times.

Despite this useful observation, Marx’s diagnosis was wrong-headed in at least three major respects. First, he assumed that this tendency was the central defining factor of capitalism and could not be remedied. He clearly underestimated the capacity of democratic capitalism to adopt counter-measures. Second, his understanding of economics was a simplistic "zero-sum" view in which people who are poor are poor because people who are rich are rich. There was no room in his conception for the dynamism and "win-win" tendency which are arguably the true central features of the system. Finally, at its most basic level, Marx’s analysis was built on a foundation of historical materialism. To Marx, there was no God; there was neither human soul nor human nature; there was no transcendent standard of justice or injustice rooted in natural law; there was no motive for human action beyond the material. All of the complexities of the human race and of human history were reduced to the quest for ownership of the means of production. Class struggle explained all. In this respect, Marx did nothing but anticipate the one-dimensional analyses of a Hitler ("race is everything") or a Mussolini ("the state is everything").

Consequently, his prescription was extremely hazardous. He advocated revolution by the working class, led by the communist party, to establish a dictatorship of the proletariat. The aim of this dictatorship was to use centralized economic power to forcibly eliminate class distinctions. Once classes were done away with, the state itself could "wither away" and humanity could reach its full potential in harmony.

Several of these elements of his theory led quite directly to the result found in the Soviet bloc and other communist dictatorships of the twentieth century. These included a heavy dose of class hatred; the argument that the communist party had a right to lead the revolution because it alone understood the laws of history; the consistent derision of religion, law, and morality; and the call for complete economic centralization in the hands of the state, which he quite openly acknowledged would lead to "despotic inroads on rights." Because there was no human nature, human beings and human society were infinitely malleable and subject to remaking; because there was no objective standard of justice, the ends justified the means. Indeed, it was the very utopianism of the ends—the mad attempt to perfect the human condition—that invited monstrous means. Marx proposed to give the communists greater power than any state had ever possessed over the economic, political, and social life of a nation, and to simultaneously remove from them all traditional moral restraints which might limit their use of that power. The consequences should not have been so difficult to foresee. When Enron or WorldCom or Global Crossing falls into corruption, one company is destroyed and its employees and shareholders are hurt. Where Marxism has ruled, the state itself has invariably turned into one giant Enron—an Enron armed with secret police and concentration camps, no less—from the tentacles of which there is no escape.

This is not a "good theory" which somehow went awry; nor is it a theory so benign that no bad result could issue from it. It is a disaster. It is a reductionist mockery of social science. It is a recipe for political tyranny, economic impoverishment, social decay, and spiritual blight—results which it produced in abundance wherever it was imposed. The last time Marxism was current, 100 million people lost their lives to its fevered adherents. Its recent stirrings, despite its obvious failure, are a testament to the degree to which it is, in its own right, a religion, a matter of faith substituting for reason. However, unlike the religious tradition it meant to abolish—which appeals to both faith and reason, and which emphasizes humility and love—Marxism is a religion of arrogance and hatred, so obtuse and filled with hubris that only affluent intellectuals can believe it.

Andrew E. Busch is an Adjunct Fellow of the John M. Ashbrook Center for Public Affairs and an Associate Professor of Political Science at the University of Denver, where he specializes in American government and politics. Dr. Busch is the author of Ronald Reagan and the Politics of Freedom. He is also the co-author of The Perfect Tie: The True Story of the 2000 Presidential Election.