Supply-Side University Economics Lesson #18
Memo To: Supply-Side Students
From: Jude Wanniski
Re: Karl Marx and the End of History
This will be the last lesson of the spring semester, in which we have focused on the political side of political economics. After wrestling with how to put a cap on the semester, I decided to do it with the greatest of all modern political economists, Karl Marx. You have at any time been able to go into my long essay of 1994, "Karl Marx Revisited: A Fluid Economy," in which I invited Marx back to look around at the end of the Cold War and collapse of communism, to comment on what he saw. If you have done so, you found that Marx would be quite happy with the way democratic capitalism has developed, and that he would be appalled at the blunders committed in his name, or at least in the name of "Marxist-Leninism." This lecture is more traditional, actually built around an excerpt from a philosophy textbook, Philosophy: History and Problems, a popular work for beginning philosophy students by Samuel Enoch Stumpf of Vanderbilt University. The excerpt on Marx is from the third edition of 1983, published by McGraw-Hill, the fifth edition is available via Amazon. There are many satisfactory reviews of Marx's central thesis of dialectical materialism, but I like Professor Stumpf s clarity and conciseness. The excerpt is only part of what Stumpf has to say about Marx, but it is the most useful for my purpose.
Much of Marx's "economics" was traditional classical theory of the 19th century, much of it now relatively obsolete because it still held to a static "iron law of profits." This was zero-sum thesis that melted with the works of American economists who began developing positive-sum dynamics soon after Marx died in 1883. It flowered with the supply-side work of Frank Knight of the University of Chicago in the 1920s and the demand-side school of John Maynard Keynes in the 1930s.
It was in the political realm that Marx made his greatest contribution, developing a concept of motion in the flow of history that is as important as the laws of motion developed by Isaac Newton in the physical realm. Once you understand that the experiments in communism of this century were not in accord with Marx's laws of political motion, it becomes tantalyzing to realize that he still may have it right. At the very least, we can realize that his ideas are more useful now than they have been at any time since his death. This is because the world has lurched out of the Cold War in need of fresh ideas of political motion. Where do we go from here?
THE EPOCHS OF HISTORY: MARX'S DIALECTIC
Already in his Communist Manifesto, Marx had formulated his basic doctrine, which he considered in many ways original. "What I did that was new," he said, was to prove (1) that the existence of classes is only bound up with particular historic phases in the development of production; (2) that the class struggle necessarily leads to the dictatorship of the proletariat; (3) that the dictatorship itself only constitutes the transition to the abolition of all classes and to a classless society." Later, while in London, he worked out in painstaking detail his argument, which he thought provided scientific support for the more general pronouncements in his Manifesto. Accordingly, he stated in the preface to his Capital, that "it is the ultimate aim of this work, to lay bare the economic law of motion of modern society." This law of motion became his theory of dialectical materialism.
The Five Epochs Marx indicated that the class struggle is bound up with "particular historic phases." He distinguished five such phases, dividing history into five separate epochs. These he called (1) the primitive communal, (2) slave, (3) feudal, (4) capitalist, and, as a prediction of things to come, (5) the socialist and communist phases. For the most part, this was a more or less conventional division of Western social history into its major periods. But what Marx wanted to do was to discover the "law of motion," which could explain not only that history had produced these various epochs but the reasons why these particular epochs unfolded as they did. If he could discover history's law of motion, he could not only explain the past but predict the future. He had assumed that the behavior of individuals and societies is subject to the same kind of analysis as are the objects of physical and biological science. He considered the commodity and value products of economics as being "of the same order as those [minute elements] dealt with in microscopic anatomy." When he analyzed the structure of each historic epoch, he either imposed upon it or abstracted from it the fact of class conflict as the decisive force at work. In time, this conflict itself would have to be analyzed in more detail. Now he looked upon history as the product of conflict and relied heavily upon the Hegelian concept of dialectic to explain it. He, of course, had rejected [G.W.F.] Hegel's idealism but had accepted the general theory of the dialectic movement of history, which Hegel had proposed. Hegel had argued that ideas develop in a dialectic way, through the action and reaction of thought, describing this dialectic process as a movement from thesis to antithesis and then to synthesis, where the synthesis becomes a new thesis and the process goes on and on. In addition, Hegel had said that the external social, political, and economic world is simply the embodiment of men's (and God's) ideas. The development or the movement of the external world is the result of the prior development of ideas. Marx, again, considered Hegel's notion of dialectic a most important tool for understanding history, but, through the powerful influence of [Ludwig] Feuerbach, Marx supplied a materialistic basis for the dialectic. Accordingly, Marx said that "my dialectic method is not only different from the Hegelian, but is its direct opposite. To Hegel, the process of thinking...is the [creator] of the real world...with me, on the contrary, the ideal is nothing else than the material world reflected by the human mind, and translated into forms of thought." History, according to Marx, was to be seen therefore as a movement caused by conflicts in the material order, and for this reason history is a dialectical materialism.
Change: Quantitative and Qualitative
What history shows is that social and economic orders are in a process of change. The effect of Marx's dialectical materialism was to show, also, that since the material order is primary, since it is the basis of what is truly real, there are no stable fixed points in reality because everything is involved in the dialectic process of change. With this view, Marx had rejected the notion that somewhere there are stable, permanent structures of reality or certain "eternal verities." Materialism meant to Marx that the world as we see it is all there is, that the materialist outlook on the world "is simply the conception of nature as it is, without any reservations." Moreover, with [Friedrich] Engels he agreed that all of nature, "from the smallest thing to the biggest, from a grain of sand to the sun...to man, is in...a ceaseless state of movement and change." History is the process of change from one epoch to another in accordance with the rigorous and inexorable laws of historical motion.
For Marxism, change is not the same as mere growth. A society does not simply mature the way a boy becomes a man. Nor does nature simply move in an eternally uniform and constantly repeated circle. It passes through a real history. Change means the emergence of new structures, novel forms. What causes change is simply the quantitative alteration of things, which leads to something qualitatively new. For example, as one increases the temperature of water, it not only becomes warmer, but finally reaches the point at which this quantitative change changes water from a liquid into vapor. Reversing the process, by gradually decreasing the temperature of water, one finally changes it from a liquid to a solid, to ice. Similarly, a large pane of glass can be made to vibrate, the range of the vibrations increasing as the quantity offeree applied to it is increased. But finally, a further addition offeree will no longer add to the quantity of vibration but will, instead, cause a qualitative change, the shattering of the glass. Marx thought that history displays this kind of change by which certain quantitative elements in the economic order finally force a qualitative change in the arrangements of society. This is the process that has moved history from the primitive communal to the slave, and in turn to the feudal and capitalist epochs. Indeed, Marx's prediction that the capitalist order would fall was based upon this notion that the changes in the quantitative factors in capitalism would inevitably destroy capitalism. With the low-key expression of one who was describing how water will turn into steam as the heat is increased, Marx wrote in his Capital that "while there is a progressive diminution in the number of capitalist magnates, there is of course a corresponding increase in the mass of poverty, enslavement, degeneration and exploitation, but at the same time a steady intensification of the role of the working class." Then "the centralization of the means of production and the socialization of labor reach a point where they prove incompatible with their capitalist husk. This bursts asunder. The knell of private property sounds. The expropriators are expropriated." This, on the social level, is what Marx describes as the quantitative leap, which is "the leap to a new aggregate state...where consequently quantity is transformed into quality."
Determinism or Inexorable Law
There is a basic difference between the transformation of water into steam as a laboratory experiment and the movement of society from feudalism to capitalism and finally from capitalism to socialism. The difference is that one can choose to raise or not to raise the temperature of the water. But there are no such hypothetical qualifications surrounding history. Though one can say "if the temperature is raised," he cannot say "if the social order is thus and so." Marxism holds that there is a fundamental "contradiction within the very essence of things" causing the dialectic movement, and though there are ways of delaying or accelerating this inner movement in the nature of things, there is no way to prevent its ultimate unfolding. All things are related to each other causally; nothing floats freely. For this reason there are no isolated events in either physical nature or human behavior or, therefore, in history. That there is a definite and inexorable process of movement and change at work producing "history" is as cerain as the plain fact that nature exists.
This scientific notion that all things behave in accordance with a principle of regularity and predictability, according to "the laws of science," requires that Marxism make some careful distinctions. The laws of physics, for example, describe "mechanical determinism." History, on the other hand, displays a law of determinism but not in a strictly mechanical way. The movement of one billiard ball by another is the typical example of the mechanical mode of determinism. If one can locate an object in space and measure its distance from another object whose velocity can also be measured, it would then be possible to predict the time of the impact and the subsequent trajectories and rates of motion. This mechanical determinism is hardly applicable to such a complex phenomenon as a social order, which does not have the same kind of location in space and time. But society is nevertheless the result of necessary causation and determinism, and its new forms are capable of prediction just as the submicroscopic particles are determined in quantum mechanics, even though there is only "probable" prediction regarding particular particles. Thus, although the specific history of a particular person could not be predicted with any high degree of accuracy, the future state of a social order can be plotted. On the basis, therefore, of his analysis of the various epochs of history, Marx thought he had discovered the built-in law of change in nature, a kind of inexorable inner logic in events, causing history to move from one epoch to the next with a relentless determinism. From this basis, he predicted that capitalism would inevitably fall and would be transformed by the wave of the future, giving way to the qualitatively different social order of socialism and communism.
The End of History
For Marx, history would have an end with the emergence of socialism and finally communism. Here, again, he followed Hegel's theory in an inverted way. For Hegel, the dialectic process comes to an end when the Idea of freedom is perfectly realized, for by definition this would mean the end of all conflict and struggle. Marx, on the other hand, seeing that the dialectic or struggle of opposites is in the material order and therefore in the struggle between the classes, predicted that when the inner contradictions between the classes were resolved, the principle cause of movement and change would disappear, a classless society would emerge where all the forces and interests would be in perfect balance, and this equilibrium would be perpetual. For this reason there could be no further development in history, inasmuch as there would no longer be any conflict to impel history on to any future epoch.
Marx's theory of the dialectic development of the five epochs of history rested upon the distinction between the order of material reality, on the one hand, and the order of human thought on the other. He was convinced that the only way to achieve a realistic understanding of history, and therefore to avoid errors in the practical program of revolutionary activity, was to assess properly the roles of the material order and the order of human thought. Accordingly, Marx made a sharp distinction between the substructure and the superstructure of society. The substructure is the material order, containing the energizing force that moves history, whereas the superstructure consists in men's ideas and simply reflects the configurations of the material order.