A Critique of Mises’ Criticism of Marx
Author: Dimitrije Birač[1]
Summary
The main theme of this work is critique of Mises’ criticism of Marx. It is divided into six parts and conclusion. The first part explains the hypothesis and motives of this work. Main representative of Austrian school — Ludwig von Mises — as the radical critic of Marx’s economic thought and Marx’s thought in general, unsuccessfully studies its basics and also did not manage to display them with full truth. He didn’t accomplish that and therefore his critique of Marx is false and brought to question Mises’ integrity and honor as a scientist. Work describes chapter by chapter Mises’ book in which he criticizes Marx’s thought and proves Mises’ incredibility and dishonesty as a scientist and as a critic. The second part explores Mises’ critique of certain philosophical foundations of Marx’s thought. Further, the third part describes certain criticism of Marx’s political thought. The fourth part analyzes Mises’ critique of Marx’s understanding of economic issues including the iron law of wages and economic crises.
Keywords: Mises, Marx, critique, Marxism, dialectical materialism, philosophy
1. Introduction
Of all the schools of economic thought that are critical of the Marxist school, there is one whose criticism goes beyond the boundaries of this world. Criticism of this school, literally, as if she has no stronghold in reality. She perfected the criticism of the teachings of Marx and his followers in such a way that she easily attracts a neutral reader with her simple, erroneous and tendentious statements. Its main principles in the critical approach do not start from credibility, correctness, scientificity, thoroughness and understanding of critical matter. No, she is only interested in proving her own a priori theses by extracting dubious sentences and statements from their context in order to then compose a critique. How solid this criticism is can only be assumed, since its foundations are very weak.
It is about the Austrian school of economic thought, whose founders are Carl Menger and Friedrich von Wieser, and whose main representatives are Eugen von Böhm-Bawerk, Ludwig von Mises and Friedrich von Hayek. Somewhere also known as the Viennese school, the Austrian school of economic thought arose at the time when the marginal theory of utility was actualized. This theory, with all its specifics, is very antagonistic towards Marx’s labor theory of value. Not only has Marx’s labor theory been tried (and is still being tried) for years to be refuted with various proofs, but also the theoretical building built on its foundations is constantly being tried to be demolished. Böhm-Bawerk had already taken up this work in his well-known criticism of Marx. He was answered by Rudolf Hilferding, a member of the German Social Democratic Party and the author of Financial Capital, and later by Bukharin, one of the most famous Russian Marxists, economic theorists and a leader of the Bolshevik Party, who attended his lectures. The latter’s work is entitled Economic Theory of the Leisure Class and criticizes in detail the methodology of the Austrian school. Criticisms of Marxism would later be given by Hayek, who regularly wrote about Marx and Marxists in his books, and especially about participants in the Russian revolution. Finally, Mises also tackled this work.
The latter is considered an expert in Marxism and socialism, and the followers of the Austrian school usually point to or refer to Ludwig von Mises when discussing Marxists. The more ambitious followers take into account Böhm-Bawerk and Hayek (especially his work The Road to Serfdom), but basically Mises is enough for them. His work Socialism: An Economic and Sociological Analysis (1922) is considered by them to be an indisputable scientific critique of socialism and Marxism. It would be expected that a Marxist would subject this very work to criticism and at the same time answer all the accusations of the Austrians in general. In this paper, we take a different path and turn to Mises, who is thirty years older, and to his lectures that he gave in San Francisco at the public library on June 23.6. — 3.7.1952. and which bear the title Marxism Unmasked: From Delusion to Destruction.
The reason why we decided to analyze his lectures lies in the fact that the Austrian critique of Marxism (whose representative here is Mises) has a fundamental weakness. It manifests itself in improper and incorrect quoting of authors who are the subject of criticism, as well as in insufficient understanding of their claims and thoughts. We will not go into the methodological assumptions of Mises and point out their theoretical unsustainability, we will not analyze Mises’ theoretical assumptions or investigate their implications. Our work is mainly focused on proving Mises’ misrepresentation, misinterpretation and insufficient understanding of Marx’s teaching. If we succeed in this, then any serious theoretical consideration of Mises’ (and thus also the Austrian) criticism of Marxism is superfluous, because it turned out that he did not fulfill the basic condition for it — a detailed knowledge of the matter he criticizes.
Accordingly, these lectures by Mises with such a tendentious title were chosen, and that was when he was not too young to possibly be acquitted of the charge of falsification. In these lectures, he, more confidently than ever before, presents the theory of Marxism, giving us arguments for his claims and thus convincing the audience and readers of his theses. Therefore, the reader will see, we follow Mises through those lectures (the first five) in which he criticizes Marx in detail, while we do not deal with the other lectures.
We believe that the importance of this work lies in the fact that in our, at least recent, economic thought, there is no work that deals with this topic, i.e. the topic of falsifying Marx’s thought. True, in some works the authors have written incidentally about the way in which the Austrian school approaches the criticism of Marxism, but no one has yet devoted an entire work to that type of criticism and provided evidence for it. We must note that although the text itself is somewhat longer, it would have been at least several times longer if we had taken into account all the false statements of Mises. In that forest of misinformation, we decided to list and elaborate only those that, despite their importance, were obvious or were glaring evidence in support of our hypothesis, strictly keeping account of space (the wider scope of the work, amounting to thirty-eight pages).
The message of this text can be reduced to the following: when criticizing the opinion and teachings of an author, it is necessary to first of all study his works, because any other study of critics contains the danger of being led astray. In other words, in order to be able to criticize the ideas of the certain author, they must first be understood. At the same time, it is the duty of every critic to adhere to the principles of integrity and truthfulness.
2. Critique of the first lecture entitled “Mind, Materialism, and the Fate of Man”
The first lecture Mises begins with the key one in Marxism, with Marx’s philosophy of history. If we understand it, we will very easily understand Marxism and its intentions. However, in order to understand the philosophy of history advocated by Marx, Mises directs us to the right path — Marx’s materialism. But how does Mises explain Marx’s materialism? He defines it doubly. The first definition, which is not important for us here, says that materialism refers to something material — tangible, like a house, jewelry, clothes, finally like money, and that a materialist is not interested in art, culture, etc. Even today, a person can be said to be materialistic in the sense that he enjoys money and everything that money can buy. The second definition, according to Mises, clarifies materialism as “a special group of solutions proposed to a basic philosophical problem — the relation between the human mind or soul on the one side, and the human body and the physiological functions of the body on the other side.” (Mises, 2006: 17).
We believe that here Mises makes a big mistake because he does not recognize the fundamental problem of philosophy in general, and materialistic philosophy in particular. Namely, the fundamental problem of materialism cannot possibly be the relationship between the human mind (soul) and the body itself and its physiological functions. Man is nature, an inseparable part of it, and his primary relationship is the relationship between himself and nature, that is, everything that is not man. If man is interested in the body and bodily functions, it is again a question of the necessity of survival in nature. A man who deals with himself — in Mises’ sense — cannot survive, because that would mean retiring into himself and not keeping an account of nature and natural forces. Therefore, the basic question of philosophy (materialistic) is that of the relationship of “our thoughts to the external world that surrounds us” (Deborin, 1960: 315). The relationship between the subject and the object — this is the correct beginning of the philosophy in question, as well as philosophy in general. While, unfortunately, another teaching is confirmed in Mises — solipsism. And this is necessary where “individual knowledge is taken as a starting point, i.e. where the thinker stands on the positions of subjective idealism” (ibid.: 29).
Mises further divides “those philosophical materialists” into two schools of thought, of which the second school is important for our work[2] and we will pay attention to it. Its basis is the physiological doctrine, which, according to Mises, was formed in a primitive way by Ludwig Feurbach and Karl Vogt, in Marx’s “early days”. The main idea is that thoughts and ideas are brain secretions. Although not doubting that the physiological materialists claimed that thought is a secretion of the brain, in Marx’s writings the mentioned two philosophers cannot be found anywhere in the same sentence, and for a reason. While German classical philosophy ends with Feuerbach, Vogt is just one of the primitive materialists. After all, he is also responsible for the conflict with Marx, which we will learn about later in the text. What is more important here is Mises’ ‘knowledge’ that Feuerbach influenced Marx with his physiological doctrine. Anyone who has at least read Marx’s Theses on Feuerbach, which mark a critique and break with previous French materialism and German idealism, knows that Marx does not mention Feuerbach at all in the sense of Mises. For Mises, who has insufficient knowledge of the history of philosophy, Vogt and Feuerbach are very similar. Nevertheless, one is a disciple of Hegel who made a qualitative step forward in relation to Hegel’s teachings, and the other advocated physiological materialism. That Mises’ claims cannot be attributed to Feuerbach is also shown by his quote cited by Plekhanov, recognized by many Russian Marxists as the ‘father’ of Russian Marxism and as the best popularizer of the ideas of Marx and Engels: “The book of nature — Feuerbach said excellently — is not chaos at all without the order of thrown letters, chaos in which reason would be the first to bring mutual connection and order, subjectively and arbitrarily combining letters into sentences with meaning. No, reason separates and unites things on the basis of the characteristics given to it by the external senses; we separate what is separate in nature and connect what is connected in it; we submit one thing to another as cause and effect because such is their factual, sensory, real, objective mutual relationship” (Feuerbach according to Plekhanov, 1962: 378). Based on the above, we could ask Mises the question, is there place for the claim that thought is a secretion of the brain?[3] According to Mises’ ignorance or misunderstanding of Feuerbach and the influence of his philosophy on Marxism, we can state that Mises’ tendentious and wrong conclusion that Marx belongs to physiological materialism is quite logical.
So then, for Mises, Marx’s ‘physiological’ materialism is wrong because it leads to a dead end. If it were cognitively valid, then we would be able to know how each individual would react in every situation. The tactics of the leader of the Austrian school — Ludwig von Mises — can already be seen here: it is necessary to prove that Marx’s philosophy is absurd, but it is a philosophy that he, Mises, has already distorted. Then he verifies this distorted philosophy using bad examples, all on the basis of poor knowledge of the history of philosophy. How else to explain the confusion of Marx’s materialism than the one he finally overcame in the Theses on Feurbach? But since Mises knows from the beginning what his goal is, he has no problem at all in proving the ‘absurd’ philosophy of Marx.
Mises justifies himself with an argumentum ad hominem: “It is not easy to know exactly what influenced Marx because he had personal hatreds and envies. (sic!)” (ibid.: 19). We can conclude that any even more important thinker can be understood through his ideas only if that person is benevolent and if he is morally right! Although Marx had neither hatreds nor envies, and this can be verified very easily by reading his correspondence, it is shameful that such assertions serve as assumptions for a professor in his research.
***
The next logical sequence of Mises refers to his conclusion that Marx and Engels “rejoiced at every new machine, thinking that meant socialism was just around the corner” (Mises, 2006: 20). He first stated that although Marx did not give an exact definition of the material productive forces anywhere, after examining his writings one can see that the material productive forces are actually tools and machines. He then cites a quote from The Poverty of Philosophy by which Marx claims that while the hand mill produces feudalism, the steam mill produces capitalism. If we follow Mises, it is logical to expect that Marx is also preparing some new machine for the production of socialism, as yet undiscovered. Let’s summarize in the style of Mises: the productive forces are machines, machines produced capitalism, so they will produce socialism. Ergo, let’s look forward to the new machines! Can this reasoning of Ludwig von Mises be called scientific? It cannot.
First of all, let’s start with the truth. In Theories of Surplus Value II, Marx says what he means by productive forces: “division of labor, machinery, the application of natural forces and science to private production” (Marx, 1972: 422). Adolf Dragičević complements the statement and writes that “productive forces are subordinated natural forces, fertility of the land, navigable rivers, system of active means of work, application of chemistry in industry and agriculture, transport, human community, experience and education of producers, division of labor, science, cooperation etc.” (Dragičević, 1965: 171). Mises cannot always come to the conclusion that productive forces are not exclusively tangible things, machines and tools.
What can Marx tell us about all this? “Social relations are closely bound up with productive forces. In acquiring new productive forces men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations. The hand-mill gives you society with the feudal lord; the steam-mill society with the industrial capitalist.” (Marx, 1946: 94, italics by D.B.).
When the neutral reader tries to understand the quote from Marx in the direction of Mises, which was later accepted by other members of the Austrian School such as Hayek and others, it turns out that Marx claimed that one machine produces one social system. Exactly! Earlier in the text, we provided a quote containing a sentence that Mises falsified. And what does that quote say? It’s just that every society at a certain stage of development consists of certain production forces and production relations, that is, that, in this case, capitalist production forces are incompatible with feudal production relations[4] and vice versa.
However, Mises did not consider only tools as productive forces, although he unilaterally stated so. That’s the problem with his way of presentation — he notes something wrong, and then corrects it by making the next mistake, but in a different thesis. Thus, Mises expands his thought about tools as productive forces, stating that “tools don’t fall from heaven. They are the products of ideas.” The following sentences in his text reduce to this thought: since tools are the products of ideas, then it is paradoxical that Marx tries to explain the development of ideas by means of tools. And in order for tools and machines to appear, a division of labor is necessary, which cannot exist without the finite existence of ideas. Mises then points out: “The origin of these ideas cannot be explained by something which is possible only in a society, which is itself the product of ideas” (Mises, 2006: 20).
It is hard to resist the impression that Mises is an idealist in the philosophical sense and at a much lower level than the German idealists, and that it is then logical that he neither can nor wants to understand Marx.[5] We have seen that he reduced Marx’s philosophy to a paradox — an idea produces an idea. But Mises is completely unfamiliar with the question of the influence of the material environment and everything that makes it as a totality, on the production of machines and tools, and ultimately on the division of labor. Yes, ideas produced machines and tools, after all, Marx already in Capital noted one of the key differences between man and animal — the first always has in his head what he will create later; but these ideas are not abstract, they are conditioned. Society does not use the bow and arrow if it is engaged in fishing, or, conversely, it does not use nets and hooks, if it is surrounded by land full of wild game. Some countries have far more developed machinery for extracting oil, while in others it does not exist at all. For example, a country like Czech Republic cannot become a naval power. The production of machines, rightly says Mises, did not fall from the sky, but it did not simply come from an idea either. Therefore, tools and machines are determined by such and such needs, and they are conditioned by the environment and society, and by no means primarily by an idea.
It’s the same with the division of labor. The social division of labor and consciousness are closely related to each other, but the division of labor, whether Mises admits it or not, initially does not depend on the will of man, but on his need. In order for man to survive, he must produce, and since he does not choose where he will be born, he uses what is at hand to produce material life. The social division of labor is also conditioned by the geographical and natural position of a certain community and society. Analogously, the technical division of labor within a company is conditioned by the needs of that company, which themselves suffer from its feedback. The ideas of competent persons, who have certain predispositions of course, are an expression of this dynamic.
However, Mises goes further: “Marx and Engels, who claimed that the proletarian mind was different from the mind of the bourgeoisie, were in an awkward position. So they included a passage in the Communist Manifesto to explain: “When the time comes, some members of the bourgeoisie join the rising classes.” However, if it is possible for some men to free themselves from the law of class interests, then the law is no longer a general law.” (Mises, 2006: 23).
Mises’ thinking can be seen from the attached quote: Marx and Engels construct their teaching on ideology on the difference between worker and bourgeois minds, which are directly determined by class interests. Although such a strict statement was never made by Marx and Engels, Mises still attributes it to them and goes on to say that they realized that they were not of working-class origin, that is, that their minds were not working-class, and they wanted to put themselves at the head of the working-class movement. The only solution they had at their disposal, and Mises refers to it, is to go back in time, to be precise in late 1847, and write a paragraph in which they admit that “some members of the bourgeoisie” can still join the workers. With this return and annex, Marx and Engels settled the matter. But, notes Mises, the matter is still not completely resolved because their law, according to which an individual cannot free himself from his class interests, then ceases to be general because there are some exceptions.
Mises’ understanding of laws is one-sided and leads only to a dead end. Marx did not understand laws as rigidly as Mises attributes to him, because otherwise it would have meant that he attributed only a passive role to man in history. Where would we finally arrive if we understood laws in Mises’ way? Does the existence of airplanes mean that the law of gravity does not apply? Of course not.
In times of crisis and revolution, things move and change with such speed and intensity that even the terms that express these changes take on new meanings. The essence of the matter is to recognize this and become aware of the existing class interests and, finally, to see the progressiveness of a certain class and then decide on one’s own actions. Therefore, there is nothing strange that Marx and Engels joined the working class as members of another class. They became aware of the progressiveness of the working class and put themselves at its disposal. It is very questionable how the two of them would have come to this realization in the first place if they did not belong to the citizenry. It is precisely this class position and the social and cultural consequences that it brings with it that enabled them to reach a situation where they can develop the necessary self-awareness. But that does not mean that all members of the petty and big bourgeoisie automatically followed that path. This only provides an answer to the question of why the teaching in question appeared in that context and not in another, temporal and spatial context.
It is hard to believe that Mises is ignorant because in the following example we see that he once again uses falsification and deception of the reader when he claims that “Marx said, as Hegel had, that there was history in the past, but there will be no history anymore when we have reached a state that is satisfactory” (Mises, 2006: 24). Then from this follows the conclusion that Marx “adopted the Hegelian system” (ibid.). Another proof of the respected professor Mises, who reduces a complex philosophical teaching to a short sentence, which serves him to prove whether Marx is with Hegel or not.
Regarding Marx’s statement about history in the past, let’s hear what he really has to say about it: “The bourgeois mode of production is the last antagonistic form of the social process of production — antagonistic not in the sense of individual antagonism but of an antagonism that emanates from the individuals’ social conditions of existence — but the productive forces developing within bourgeois society create also the material conditions for a solution of this antagonism. The prehistory of human society accordingly closes with this social formation.” (Marx, 1956: 9, italics by D.B.). Marx did not claim what Mises imputes to him here, but the exact opposite. When the relations of production in which class antagonism is a necessary condition for any progress come to an end, i.e. when conditions are created for new relations of production that abolish the earlier form, only then will the history of humanity begin.[6] Because then the problem of the production of material life will be taken over by society in a conscious and planned way, so each individual will dedicate himself to his own development in the full sense of the word.
3. Critique of the second lecture entitled “Class Conflict and Revolutionary Socialism”
The second chapter Mises begins with the statement that for Marx interests are “independent of human ideas and thoughts.” (Mises, 2006: 26). Furthermore, for Marx, socialism is the “ideal system” for workers. It is very characteristic that terms like “ideal system” are used because they again indicate the bias of our critic from the position of idealism. Anyone who has read even a few of Marx’s works would encounter a reluctance to use such terms. Marx’s philosophy and method did not allow him to use terms like ideal, just, good, etc. in an absolute sense. If he sometimes used them, it was either in political programs (when he criticized them) or to respond with the critic’s vocabulary. For the dialectician Marx, there are no absolute, metaphysical terms, therefore Mises makes a big mistake in imputing such nonsense to Marx.
After that, the thought is imputed to Marx that class interests determine the opinions of individuals and that such a situation “causes irreconcilable conflicts between the various classes” (ibid.). Mises seems to have become entangled in his own web of traps. What is it about? First, he said that for Marx, interest is something independent of ideas and thoughts, and then that this ‘independent’ interest determines (therefore, puts them in a special dependence!) these same thoughts. We cannot argue here with Mises, when he himself does not really know what he wants to say.
Mises goes on to refer to Marx’s paper Value, Price and Profit (1865). It is necessary to cite a large part of the Mises quote to see the specificity of the situation. According to him, in that paper and lecture, Marx “pointed out that the methods of the union movement were very bad and must be changed. Paraphrasing: “The unions want to improve the fate of the workers within the framework of the capitalist system — this is hopeless and useless.Within the framework of the capitalist system there is no possibility of improving the state of the workers… The unions must abandon this ‘conservative’ policy; they must adopt the revolutionary policy. They must fight for the abolition of the wage society as such and work for the coming of socialism.” (ibid.). Mises psychoanalytically concludes that Marx “didn’t have the courage” to publish this paper during his lifetime.[7]
To an uninformed reader, this quote means nothing and does not see a problem in it. But to those who know Marx’s work, this is a scandalously serious falsification and another means of Mises’ reckoning with Marx. Any words are superfluous here, except Marx’s. First, let’s look at what Marx wrote to Engels on the day of the presentation (May 20, 1865): “This evening a special session of the International. A good old fellow, an old Owenist, Weston (carpenter) has put forward the two following propositions (…):
1. that a general rise in the rate of wages would be of no use to the workers;
2. that therefore, etc., the trade unions have a harmful effect.
…I am, of course, expected to supply refutation. (…)” (Marx, Engels, 1959: 298).
And let’s look at what he says in the presentation or paper itself: “(…) is this saying that the working class ought to renounce their resistance against the encroachments of capital, and abandon their attempts at making the best of the occasional chances for their temporary improvement? If they did, they would be degraded to one level mass of broken wretches past salvation. By cowardly giving way in their everyday conflict with capital, they would certainly disqualify themselves for the initiating of any larger movement.” (Marx, 2009: 163, italics by D.B.)
Therefore, if Marx clearly and loudly says that the working class (through the trade unions) should and must fight against capital and its consequences, then how does Mises turn this into a statement that not only does it not need to and does not have to fight, but that it is harmful politics? This is the most common subterfuge.
The most important part of this chapter consists in Mises’ claim that “Marx believed in the “iron law of wages.”” (Mises, 2006: 28). Therefore, we will devote the following lines to these claims.
First, regarding the iron law of wages, in which Marx allegedly believed, Mises explains it to the reader in his own peculiar way. “This law considers the worker to be some kind of microbe or rodent without free choice or free will.” (ibid.) The level of wages is determined by the amount of food and other necessities for the maintenance and reproduction of the worker and his children. Consequently, if the level rises, the number of workers also increases, and then this increase reduces the level of wages. Here, Mises deliberately confuses, with a tried and tested tactic, Marx’s definition of the value of labor power and the bourgeois economists’ definition of the value of labor. Thus, Marx strictly distinguished labor power and labor, as well as the value of labor power and its price. The price of labor power, i.e. wages, almost never matches its value. So, for Marx, the wage is not what the worker receives for his daily, weekly, monthly work, but is the price of his commodity, labor power.[8]
Nevertheless, in order not only to refute Mises, let’s hear what Marx and Engels say about this law. “It was an immense moral defeat for our Party to allow the ‘iron law of wages’ and other Lassallean phrases to be foisted upon it.” — Engels wrote to August Bebel on October 12, 1875. (Engels, 1973: 125, italics by D.B.). In Capital, as if he knew what Mises would later accuse him of, Marx writes: “Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle. They are, therefore, not determined by the variations of the absolute number of the working population, but by the varying proportions in which the working class is divided into active and reserve army…
Yet this is the dogma of the economists. (…) The higher wages stimulate the working population to more rapid multiplication… Wages fall, and now we have the reverse of the medal. (…) The working population is little by little decimated as the result of the fall in wages (…) A beautiful mode of motion this for developed capitalist production! (…) Here the political economist thinks he sees the why and wherefore of an absolute increase of workers accompanying an increase of wages, and of a diminution of wages accompanying an absolute increase of laborers…” (Marx, 1947: 566–568, italics by D.B.)
As can be seen from the quote, Marx did not advocate or believe in the iron law of wages. Apart from the fact that he used the dialectical method in his study of capitalism, so he could not eo ipso advocate the iron law, he also distinguished labor power from labor, whereby he took the price of labor power, not labor, as wages. It really looks like Mises hasn’t read Capital.
After completely wrongly attributing the mentioned law to Marx, Mises goes further and claims: “There is an insoluble contradiction between the Marxian idea of the iron law of wage rates (…) and his philosophy of history, which maintains that the workers will be more and more impoverished until they are driven to open rebellion, thus bringing about socialism. Of course, both doctrines are untenable. What is amazing is that, during the century since Marx’s writings, no one has pointed out this contradiction” (Mises, 2006: 28). The point of Mises’ statement is that common sense cannot at the same time advocate a law according to which wages cannot fall below a certain level (this would mean a shortage of workers) and further pauperization of workers. Our critic is satisfied because he found the key contradiction of Marx’s theory in question and thus proved its inconsistency. There’s just one problem. Marx did not advocate the iron law of wages. All of Mises’ claims fall into the water since he had a false (not just wrong) assumption about Marx with the Iron Law, so we wonder how such a ‘discovery’ is even “amazing” to Mises.
This example is extremely important because it points to Mises’ modus operandi not only in this writing, but in all his writings concerning Marx, Marxism and socialism. So, Mises a priori makes a judgment about Marx that is negative from his position and then he wants to prove that judgment with all the force of “arguments”. Instead of reading and studying Marx’s books and writings, after which he would draw the necessary conclusions, Mises prefers to choose (and his audience appreciates this) pre-constructed claims, which then distorted quotes from Marx’s books will only confirm. Something that Marx will conclude in his literary style after a few pages of introduction and analysis, Mises will take as a dogma, as his only statement because it coincides with what he wants to falsify.[9]
Mises continues the cannonade and claims that Marx’s theory was “destroyed” (!) because he didn’t see that the most important characteristic of capitalism was large-scale production for the needs of the masses and that the main objective of capitalists is “to produce for the broad masses” (ibid.: 29). Marx had a different method that Mises did not understand, so he actually noticed the main feature of capitalism, that is, developed commodity production. If he did not see the importance of large-scale production, then why the chapters on machinery and large-scale production in Capital? Whoever read his works could easily come to the conclusion about large-scale production, but also to the conclusion that in a system in which the commodity is the basic form, the labor power takes also the form of the commodity, and that is the specific difference of capitalism compared to other forms of production.
But let’s look at an interesting fact. Mises determines the main goal of the capitalist, so according to him, the capitalist enters the business only because, or at least mainly because, to produce for the masses. Profit is secondary to him. Mises here clearly shows an apologetic trait that obscures his view of economic reality. In his eyes, a capitalist is a person who above all takes care of other people’s needs. However, the real truth is that every capitalist’s first priority is profit. He goes into business to make a profit, but since he does not operate outside of society, he also has to take care of social needs. And that’s exactly what Marx had in mind when he said that it is less important to the capitalist what goods he produces, and more important whether his sale makes a profit. So, the goal is to produce surplus value (profit), and the means are goods, that is, social needs. That this statement is correct can be seen from the fact that capitalists produce for customers the most and above all counting on their purchasing power. Therefore, let the reader judge for himself whether Marx’s analysis of capitalists or Mises’ apology is more objective (scientific).
4. Critique of the third lecture entitled “Individualism and the Industrial Revolution”
At the beginning of this lecture, Mises emphasizes the role of the individual in history and the role allegedly attributed to the individual by Marx. It is well known how important the individual is to liberals, especially to the Austrian school, which raised this interpretation to a higher (and not better) level.
Mises begins his falsification of classical Marxism by claiming that according to Marx and Engels “the individual was a negligible thing in the eyes of the nation” and that they “denied that the individual played a role in historical evolution. According to them, history goes its own way.” (ibid.: 34–35).
We have deliberately listed several claims in a row, in order to get a better picture of Mises’ criticism. And it essentially reads: for Marx, the individual is irrelevant (unlike the Austrians, who build the entire theory on the individual, but Robinson’s), history develops without asking him for anything, and if he dares and rises above historical development, that it doesn’t mean anything anyway, because if he isn’t there, someone else will come.
Before we begin to respond to the criticism, it should be noted that our critic, in addition to a deeper knowledge of Marxism, also lacks a dialectical view. He cannot understand, as will be seen below, the importance of movement, that this movement is permanent and that many contradictions arise from it, which are resolved in the synthesis; and that one should always keep in mind that it is about totality. Nature is a totality, and the fact that reason divides and assembles it, that reason abstracts and concretizes, that it, finally, systematizes and classifies, does not mean that nature itself does the same. Nature is the unity of everything, it does not know mammals, cephalopods and countless other genera, species, etc. Society does not exist without nature, therefore we must never lose the connection between society and nature.
Now let’s hear what Marx says about the understanding of history and what can be applied to Mises: “(…) in any interpretation of history one has first of all to observe this fundamental fact (the production of material life, op. D.B.) in all its significance and all its implications and to accord it its due importance. (…)” (Marx, Engels, 1967: 373).
The next question is what is history. Although we stated earlier that Marx made a distinction between history and prehistory, in the sense that the latter ends with the abolition of the last form of the antagonistic relation of production, we can state what Marx means by the human development so far, for which the name of history has become established.
For him, history is a “succession of the separate generations”, each of which uses for its own purpose, i.e. the purpose of reproduction of material and biological life, the productive forces it has encountered, which have been handed over to it from previous generations and which it will hand over to future generations. It is a special characteristic of each generation that on the one hand it continues the inherited “activity” under completely changed circumstances, and on the other hand, it “modifies the old circumstances with a completely changed activity” (ibid.: 392–93). The basis of human history so far is the struggle with nature and natural forces and the increasing mastery and control over them. Man is forced to do this, because if he does not produce, if he does not exchange matter with nature, if he does not harness natural forces, he, as a part of nature, will not survive. From this existential need, man conquers nature and puts it more and more at his service. This process also ties together all previous production methods, of which capitalism has proven to be the best. It enabled by far the biggest shift in the fight with nature. However, this system developed (and continues to develop) the prerequisites for a future mode of production that will solve the existential issues of the human race through social cooperation and planning, not through the market and class antagonisms.
When we said this and when we saw how much role Marx gave to man, then how can it be claimed that man is neglected or that history is simply something that passes independently of man. Well, man makes history! And it is precisely the essence of Marx’s teachings that for the first time, with the abolition of capitalism, man will create history consciously, that he will not wander like a blind man in a crowd, that he will not have to step on another man to save himself. However, Mises is not satisfied with that. He wants some individual in abstracto; an individual who does not exist anywhere, except in his imagination and who is free in everything, and freedom is, of course, also seen as a concept in itself. This stems, after all, from the fact that Mises believes that “ideas create history” (Mises, 2013). Because of this, he falls into the trap that Marx foresaw a long time ago and now seems to suggest to Mises: “Whilst in ordinary life every shopkeeper is very well able to distinguish between what somebody professes to be and what he really is, our historians (in this case we can say: our critic, op. D.B.) have not yet won even this trivial insight. They take every epoch at its word and believe that everything it says and imagines about itself is true.” (Marx, Engels, 1967: 397).
We can move on to the burning point, which all liberals refer to — the role of the individual (personality) in history. True, here Marx and Engels did not give the individual an all-powerful role, as attributed to him by Mises, and that is why he attacks them. For him, it is the individual who sets history in motion, as an instrument of some great idea that has no foothold in certain material circumstances, but moves by itself. The idea of freedom is usually taken as an example. Thus, this idea floats in the air and guides each individual, who then controls history and overcomes many obstacles to the final victory of freedom. The paradox of everything is that these advocates have concrete freedom in mind, freedom in a specific time and space, while advocating abstract freedom, a freedom that is again a construct of some mind that actually exists.
Marx and Engels denied, of course, such a role of the individual — an all-powerful savior. However, they gave him a big role, but in a certain space and time. So, he cannot radically change the immediate course of history, but he can really influence that course. Thanks to him, things can speed up or slow down, develop or stunt. Finally, he himself (his mind) is a product of the time in which he lives. But, it is better to cite some quotes, because as we have stated, our goal is not exclusively to advocate Marx’s theories, but also to provide the reader with an insight into his written thoughts that Mises so persistently denies.
That Marx considered the individual (individuals) to be important is also shown by a letter to his friend and doctor Kugelman, where he writes: “These accidents themselves fall naturally into the general course of development and are compensated again by other accidents. But acceleration and delay are very dependent upon such “accidents”, which included the “accident” of the character of those who at first stand at the head of the movement. The decisive, unfavorable “accident” this time is by no means to be found in the general conditions of French society, but in the presence of the Prussians in France and their position right before Paris.” (Marx — Engels, 1957: 27, italics by D.B.) This refers to the events related to the Paris Commune, and as we can see, for Marx, the decision fell because of the Prussians, whose leader, we can agree, was Bismarck.
If the reader wonders what Marx has in mind when he talks about “accidents”, then the explanation can be found in Engels, who writes that the unconscious and unplanned way in which people make their history (and here again it is proven that for Marx and Engels people make their own history) causes various “intersections” of their aspirations which, in addition to necessity, take the “supplementary form” of coincidence.
He clarified the role of a great personality even more explicitly, so we will quote a part of the quote: “That such and such a man and precisely that man arises at that particular time in that given country is of course pure accident. But cut him out and there will be a demand for a substitute, and this substitute will be found, good or bad, but in the long run he will be found. That Napoleon, just that particular Corsican, should have been the military dictator whom the French Republic, exhausted by its own war, had rendered necessary, was an accident; but that, if a Napoleon had been lacking, another would have filled the place, is proved by the fact that the man has always been found as soon as he became necessary: Caesar, Augustus, Cromwell, etc. (Marx, Engels, 1979c: 183).
On the other hand, Marx is correct enough to recognize the individual’s social belonging, but nothing more than that. No individual is strong and important enough to rise above the society to which he belongs. Otherwise, that individual would be abstract, not concrete, that is, he would be a product of our heads, not our society.
Mises further assures us that “Karl Marx believed that capital accumulation was an obstacle. In his eyes, the only explanation for wealth accumulation was that somebody has robbed somebody else.” (Mises, 2006: 35–36) Mises does not explain to us in what sense Marx meant this in relation to the accumulation of capital. Anyone who has read at least the first volume of Capital would know that Marx considered the accumulation of capital necessary in the development of capitalism. Finally, the accumulation of capital accelerated the centralization and concentration of the means of production and thus enabled a qualitative change towards the abolition of capitalism. Accumulation of capital can only be an obstacle from the point of view of capital as a whole, because a crisis is inherent to the capital-relation that comes in a more destructive form, the more accumulation there is. However, from the point of view of individual capital, it is very desirable because it ensures its survival.
Mises wants to play us out here, that accumulation is based on robbery. He does not tell us whether it is the primitive accumulation of capital or simply the accumulation of capital. The difference is big. We believe that he is referring to the latter (although he would be happy to play us out with the first, which Marx did not hide was of a robbery nature), so it is worth a closer look. The accumulation of capital is a necessary consequence of the logic of capital, which is based on the exploitation of workers and the production of surplus value. The exploitation of workers was proved in detail by Marx in the first volume of Capital and we will not present it in detail here. The key point is this: Marx assumed the complete equality of workers and capital, an equality that was confirmed by the labor contract. The worker, as the owner of a special commodity — labor power — gets what it costs, and the capitalist, as a buyer, gets it for consumption. Here, therefore, one commodity (money) is exchanged for another commodity (labour power). Although Marx always assumes the legal side of the capital-labour relationship, he deals with the economic side. In other words, equality of capital and labor exists de jure, but does not exist de facto. Marx himself wrote in one place that if the position of labor were really equal to the position of capital, then laws protecting labor would be superfluous. The mere fact that there is a labor law indicates the supremacy of capital.
Nevertheless, Marx does not portray this process as an unjust process, nor does he portray the capitalist as a bad man. In the preface, he indicated that the capitalist is the embodiment of capital as a relationship. He approaches the economic process as a scientist, as a researcher who investigates sine ira et studio, therefore to say about Marx as an economist that he described the exploitation of workers mostly in non-economic terms, means either ignorance of his theory or its deliberate falsification.
Here’s what Marx wrote about it: “At any rate, in my presentation even, “profit on capital” is in actual fact not “a subtraction from, or robbery of, the worker.” On the contrary, I depict the capitalist as the necessary functionary of capitalist production and demonstrate at great length that he not only “subtracts” or “robs” but enforces the production of surplus value, thus first helping to create what is to be subtracted; what is more, I demonstrate in detail that even if only equivalents were exchanged in the exchange of commodities, the capitalist — as soon as he pays the worker the real value of his labour-power — would have every right, i.e. such right as corresponds to this mode of production, to surplus-value.” (Marx, Engels, 1979b: 302).
Mises goes further than that, largely falsifying Marx’s theory of crises (Mises uses the term depression here). So he attributes the following to Marx: since, according to his theory, the capitalists deprive the workers of part of the production (cut them off), they are not in a position to consume the total production. “This is very bad” — this is the scientific conclusion of Mises (Mises, 2006: 36)! The part that the workers produced remains, therefore, unconsumed and because of this, economic depressions arise. In other words, Marx declared the insufficient consumption of workers to be the main cause of the crisis in capitalism. Further on in the text, Mises wants to show that this is incorrect. We will not go into the clarification of Mises’ claim, firstly because the theory of Marx itself is given wrongly and secondly, that is the modus operandi of professor Mises because he aligns his a priori claims with the conclusion at any cost.
Mises imputed Matlhus’ theory of sub-consumption (it was presented earlier and better by Sismondi) to Marx. This theory of Malthus says that the continuous operation of capitalism can be ensured by the landowners, clergy, etc., because they will consume the total production, not the workers or the capitalists. The first because they receive a salary that is less than the value of the goods they produce (for Malthus, profit is simply an addition that the capitalist places on the value of the goods), and the second because their goal is accumulation (Rubin, 1929: 297–98). Therefore, if there were no third parties, there would be under-consumption because the produced goods could not be sold.[10]
Although Marx was well aware of the fact that there is a mass of poor people in capitalism and that workers are not able to spend as much as the system needs, he did not base his crisis theory on this. To say that crises arise because the workers cannot buy all the goods is a superficial and insufficient observation, an observation that Marx could not allow himself, if for nothing then because of his method. In general, the possibility of crisis arises from the unity of the opposites of the capital process. “The circulation process as a whole or the reproduction process of capital as a whole is the unity of its production phase and its circulation phase, so that it comprises both these processes or phases. (…) If they were only separate, without being a unity, then their unity could not be established by force and there could be no crisis.” (Marx, 1972: 410)
The key to the disruption is the hyper-production of goods and the hyper-accumulation of capital. Production regardless of the market, therefore regardless of workers-consumers, is “in the nature of capitalist production” (ibid.: 417).
Why does production push forward so much? For two reasons: “Because the capital invested in production is continually growing; secondly because the capital is constantly used more productively; in the course of reproduction and accumulation, small improvements are continuously building up, which eventually alter the whole level of production.” (ibid.: 418)
We can see here that Marx had in mind production, not consumption, as the dominant reason. To say that only production is to blame would not be correct, but his dialectical method does not allow rigid and simple statements.
We have not yet reached the role of workers — consumers in crises, the role that Mises hastily assigned to them. He did not ask himself whether workers are the only consumers? Are they the biggest consumers? First, let’s state the key claim of Marx, which Mises did not foresee. “So long as the workers produce surplus value, they are able to consume. As soon as they cease to produce it, their consumption ceases, because their production ceases.” As we can see, production does not fall because consumption falls, it is the other way around, consumption falls because production also falls. This is from the position of the worker, mentioned by Mises. The worker is more important in production than in consumption.
We mention this because our professor missed the main point, which Marx states, as if he knew what his critics would seize on: “The mere relationship of wage-labourer and capitalist implies: 1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material; 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus-product.” (ibid.: 415). The second relationship has already been essentially described a little earlier in the text. However, the issue is in the first relationship, in that workers are not the biggest consumers. Mises forgot that consumers are also capitalists — producers of means of production, then means of consumption, which are roughly divided into those who produce necessities of life and those who produce luxury products. The latter are defined by Marx as those who deviate from the average consumption of workers. Therefore, if the worker does not buy the means of production (although he consumes them because he works on them), nor luxury products, then how can that worker be the main culprit of crises? He barely buys even the necessities of life to keep himself alive, and by life we mean a certain average of a certain level of development of society in space and time.[11]
So, it is completely obvious that the driving spirit (this is said conditionally and refers to competition) of capitalism to produce and accumulate without limits, anarchy and separation of the entire process of capital are the predominant causes of crises in capitalism in general. We do not list causes such as the tendency of the rate of profit to fall, the contradiction between social production and private appropriation, and even the contradiction in the appearance of the commodity itself (which is described in the first pages of Capital I) because they are all interrelated and because Marx focused on the first causes when he presented the theory of crises in Theories of Surplus Value II (1979).
This attitude towards Marx’s theory is not surprising since, for Mises, Marx was “economically ignorant”. As a counterargument, we can cite the claims of Ratko Zelenika and Roman Rozdolsky that Marx read at least 1,500 books and that his excerpts and notes on economic issues alone amount to about 1,300 pages — until 1859 and the publication of his Contribution to the Critique of Political Economy (Zelenika, 1998: 430). We can see what the rate was from the fact that from September 1850 to October 1851 Marx excerpted the works of fifty-two economists (Rozdolsky, 1975: 14).
7. Conclusion
The Austrian school of economic thought is known as a great critic of Marxism. All its followers act in a similar way when it comes to Marx’s thought. They don’t try hard enough to study the subject of research, they often cite Marx’s quotes out of context, sometimes they falsify them, they misinterpret thoughts that, due to their coherence, deserve to be understood and interpreted correctly. In general, the Austrians have a specific method: they prove and verify very violently the a priori thesis, which often reduces to pointing out Marx’s fallacies, errors, inconsistencies, logical unsustainability and failed economic and political conclusions. Instead of verifying the initial thesis itself, that is, that it is their main analytical preoccupation, they start from it as a given. And the verification of the initial thesis should take place through a detailed study and mastery of the subject of research (critique).
The most famous face of this school in matters of Marxism is still Ludwig von Mises. He went the farthest in criticizing both Marx’s thought and socialism. His mentor and teacher Böhm-Bawerk was the first to write a critique of Marx’s economic system, but Mises devoted a good part of his scientific career to it. His results are all the more disappointing.
Mises is the authority of the Austrian school in matters of Marxism. That is exactly why it was necessary to deal with his criticism. But deal with his criticism of Marxism, not the socialist revolution or socialism itself. We were not interested in his works in the first decades of the last century, but in his lectures after the Second World War, which were published into a book called Marxism Unmasked: From Delusion to Destruction. As a sufficiently mature intellectual, after many written works, after several decades of dealing with Marx’s thought, Mises spoke and wrote quite frankly about his results. Instead of analyzing his works on the impossibility of socialism and planning, we analyzed his treatment of Marx. Namely, scientific socialism is linked to Marx’s name, and if his teaching is not understood, the system it wants to build can be even less understood. In addition, we wanted to show Mises’ modus operandi in a specific case.
At the same time, our analysis aimed simply to point out the wrong, falsifying and destructive approach of Mises. It was not a difficult task because of the large number of arguments in favor of it. However, we had to systematize them and leave some out. This is the significance of this paper — it contains for the first time misquotes, misinformation and false statements of the main representative of the Austrian school, and confronts them with the original writings in Marx’s works. In this way, the reader can see the bankruptcy of the Austrian school.
Therefore, we are not interested here in historical circumstances, theoretical analysis of the background of Mises’ forgeries, or further explanations. We wanted to show that Mises was not able to do the most basic thing in any critical analysis — study the object of criticism!
The theoretical foundations of any school of economic thought rest on the critique of its predecessors or ideological opponents. It can be a complete negation and rejection or a synthesis of related ideas through their (critical) elaboration. Accordingly, the question arises — how can we consider the Austrian school in general, and Mises in particular, credible when their theory was partly developed not by negation or synthesis of ideas, but by mutilating them in the manner of Procrustes?
Translation from Croatian: Tomislav Zahov
REFERENCE
1. Dragičević A. (1965). Leksikon političke ekonomije 2. Zagreb: Informator
2. Deborin A. (1960). Uvod u filozofiju dijalektičkog materijalizma sa predgovorom Plehanova. Sarajevo: Veselin Masleša
3. Engels F. (1973). Razvoj socijalizma od utopije do nauke. Zagreb: Naprijed
4. Godechot J. (1987). Revolucije 1848. Beograd: Nolit
5. Lukač Dž. (1977). Lenjin. Studija o povezanosti njegovih ideja. Beograd: BIGZ
6. Marx — Engels (1957). Pisma o historijskom materijalizmu. Beograd: Kultura
- (1958). PREPISKA; II. tom (1854–1860). Beograd: Kultura
- (1959). PREPISKA; III. tom (1861–1867). Beograd: Kultura
- (1967). Rani radovi. Zagreb: Naprijed
- (1977). Dela (tom 15). Beograd: Institute za međunarodni radnički pokret
7. Marx K. (1946). Beda filozofije. Beograd: Kultura
- (1947). Kapital I. Zagreb: Kultura
- (1956). Prilog kritici političke ekonomije. Beograd: Kultura
- (1972). Teorije o višku vrijednosti II. Beograd: Prosveta
- (1973). Kritika gotskog programa, Zagreb: Naprijed
- (1979). Osnovi kritike političke ekonomije I. Beograd: Prosveta
8. Mehring F. (1958). Karl Marks. Beograd: Kultura
9. Mises, L. (2006). Marxism Unmasked: From Delusion to Destruction. New York: Foundation for Economic Education
10. Plekhanov, V.G. (1953.). Protiv revizionizma. Zagreb: Kultura
- (1958.). Prilozi historiji materijalizma. Zagreb: Naprijed
- (1962.). Iz filozofskih radova (zbornik). Zagreb: Naprijed
12. Rosdolsky R. (1975.). Prilog povijesti nastajanja Marxova “Kapitala”: nacrt
“Kapitala” iz 1857–1858 I, II. Beograd: ‘Komunist’
13. Rubin I. (1979). A History of Economic Thought. London: Ink Links Ltd
14. Wheen F. (2009). Marxov kapital. Zagreb: Srednja Europa
15. Zelenika R. (1998). Metodologija i tehnologija izrade znanstvenog i stručnog djela Rijeka: Ekonomski fakultet u Rijeci
Internet sources:
15.Marx K., Nadnica, cijena i profit, 2009, http://www.scribd.com/doc/23313535/Karl-Marks-Nadnica-Cijena-i-Profit
16.Mises, L., Ekonomija i pobuna protiv razuma-1, 2013 http://katalaksija.com/2013/04/25/ekonomija-i-pobuna-protiv-razuma-1/
17.Riazanov D., Lassalle and Bismarck, 1928, http://marxists.org/archive/riazanov/1928/07/lassalle.htm
[1]D. Birać, mag. oec., external associate on the course History of Economic Thought, Faculty of Economics — Zagreb. (E-mail: dimitrije.birac@gmail.com). The paper Kritika Misesove kritike Marxa was received by the editors on June 9, 2014, and was accepted for publication on December 19, 2014. EKONOMSKI PREGLED, 65 (6) 614–634 (2014)
[2]The first school of thought views man as a machine.
[3] Incidentally, this statement is associated with George Cabanis (1750–1808), a French doctor and philosophical materialist. He said that the brain secretes thought, just as the liver secretes bile, but that thought is closer to reality than some metaphysical chatter that separates thought from the brain and brain processes (see Huxley’s quote in Plekhanov, 1953: 149). The question of why Mises did not check this, but attributed the statement to Vogt or Feuerbach, is simply a rhetorical question.
[4] Moreover, we have been convinced on the basis of several examples that capital radically and quickly removes residual relations once the society for which they are characteristic comes into contact with it.
[5] That we are right is shown by the following statements from the chapter III Economics and the Revolt Against Reason: “It is ideas that make history, and not history that makes ideas. (…) The spirit — the mythical prime mover — operates according to a definite plan. It leads mankind through various preliminary stages to the final bliss of socialism” (Mises, 2013). Apart from the fact that the first claim is the idealistic definition par excellence, we see that even in the criticism of socialists, Mises cannot but turn that criticism into an idealistic rant.
[6] Someone can argue that we are brabbling about the term ‘history’ at this point, but when it comes to such disrespect and incorrectness towards Marx’s claims that Mises makes, it is necessary to warn about every detail.
[7] In general, according to Mises every problem causes Marx to postpone his works for later. Thus in the chapter III Economics and the Revolt Against Reason: “Marx’s only reaction to the marginal theory of value was that he postponed the publication of the later volumes of his main treatise. They were made accessible to the public only after his death.” (Mises, 2013, italics by D.B.).
[8] “And after this understanding (that wage is the price of labor power, not labor, op. D.B.) has gained more and more ground in our party, some return to Lassalle’s dogma although they must have known that Lassalle did not know what wages were, but, following in the wake of the bourgeois economists, took the appearance for the essence of the matter.” (Marx, 1973: 107). Here we see that in the Critique of the Gotha Programme Marx referred to this significant problem of the iron law.
[9] By the way, other Austrian zealously adopted this method, so they pointed to Lenin’s definition according to which socialism equals electrification plus Soviet power, in order to portray the Bolsheviks as some suspicious types prone to strange definitions.
[10] Here Keynes stands in the position of Malthus, but with him, essentially, the effective demand comes from the state.
[11] If you don’t believe it, look at the position of workers in today’s times when it comes to the necessities of life and only them.
