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July 13, 2019 - Freedomain Radio - Stefan Molyneux
39:32
Marx Was Right: Five Ways Karl Marx Predicted 2014 - Rebutted!
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Hi everybody, it's Stefan Molyneux from Freedom Aid Radio.
I hope you're doing well.
So a number of alert listeners have sent me an article, which they've asked for some thoughts on.
The article is entitled, Marx Was Right!
Five Correct Predictions About Modern Capitalism, by a fellow named Sean McElwee, who I guess is proving to us once more that one of the last good free marketers to come out of Scotland went by the name of Adam Smith.
So he writes, there's a lot of talk of Karl Marx in the air these days, from Rush Limbaugh accusing Pope Francis of promoting pure Marxism, to a Washington Times writer claiming that New York City Mayor Bill de Blasio is an unrepentant Marxist.
But few people actually understand Marx's trenchant critique of capitalism.
All right.
Danger Will Robinson alert 101.
He's using the word capitalism twice now, once in the title and once in the body, the first paragraph.
He has not defined what capitalism is.
Kind of important.
You know, if you're going to critique something, you should really define what it is.
So I'll help you, though not him, by telling you that capitalism, of course, is a system of respect for property rights and the non-initiation of force.
People think it's like trade or barter or money or finances or anything like that.
No.
It's whatever happens when you stop shooting people and stealing their stuff.
That's really the... or threatening to shoot them and stealing their stuff.
So, capitalism is the private ownership of private property combined with the non-aggression principle, the non-initiation of force.
So, it's not just stuff that happens now where there are tall buildings and guys in suits with monocles.
I mean, this is nonsense, right?
Anyway, he goes on and says, most people are vaguely aware of the radical economist's prediction that capitalism would inevitably be replaced by communism, but they often misunderstand why he believed this to be true.
And while Marx was wrong about some things, wrong about some things.
So, of course, Marx proclaimed that his system would create a paradise on earth, lead to increased wealth and the flourishing of the human spirit.
Communism, when implemented, resulted in the deaths of hundreds of millions of people.
That's a little bit wrong, I think, and it's important to understand why.
He was also wrong about more minor things like his labor theory of value, that the real value in a factory with the labor is not the capital investments and improvements made by the owner of the factory or the person who set up the business or whose family saved or whatever to create the machines or anything like that.
So yeah, I mean, I would say that if I release a vaccine that is supposed to save hundreds of millions of lives, and it in fact causes hundreds of millions of people to die in agony, say, well, you know, he got a few things wrong, you know, like that vaccine, but his theories were really interesting and positive and useful and good.
I don't know.
I mean, maybe I'm just over-afflicted with compassion for the endless victims of communism who were disassembled like a Meccano set in the hands of a three-year-old by totalitarian states.
Maybe I just have an excess of compassion for the victims of communism.
But I think just saying he was wrong about some things, you know, like he didn't dot a few I's and cross a few T's, seems to kind of skate over the frozen bodies of Solzhenitsyn and his companions in the endless gulags of Soviet Union, and in the tens of millions who died in Chinese communism, and those who died under Cambodia, and those who are currently suffering in the remnants of communism all over the world.
I think just to sort of brush over that shows the average level of humanity shown by a broken frozen robot, which I would assume is in place of his heart.
So he says, and while Marx was wrong about some things, keep moving, keep moving, step over the bodies, his writings, many of which predate the American Civil War, accurately predicted several aspects of contemporary capitalism, from the Great Recession to the iPhone 5S.
In your pocket.
Okay, so his argument is that Marxism is somehow opposed to, or the opposite of, contemporary capitalism.
Well, that is a pretty testable hypothesis, and of course you've been told, no doubt, particularly if you live in America, that we won the Cold War, we defeated communism, and so on.
So we're going to have a quick sprint through.
They planted the Communist Manifesto just to make sure that the contemporary economic system throughout the West, and particularly in the US, has nothing to do with it.
So, 1.
Abolition of private property and the application of all rent to public purpose.
So you've got various zoning, school and property taxes, there's the Bureau of Land Management, and there's the 14th Amendment of the U.S.
Constitution.
Basically, if you live, say, attached to the ground, then you have to pay rent to the government in the form of property tax, or the government will take away your property.
So everything is owned by the government.
All land is owned by the government, and all property is owned by the government.
You are suffered to live there if you pay them off in terms of property taxes.
So the government is the rentier of everything and of course the US government, the federal government owns a third of America so a pretty solid implementation of the first platform of the communist manifesto but let's call it capitalism because that way we can keep our propaganda going.
Number two.
This will shock you if you don't know it.
What was the second platform of the Communist Manifesto?
A heavy progressive or graduated income tax.
Now this one may have escaped your attention but every April 15th you are asked to grab your shoelaces while the IRS greases up its accountants and burrows into your innards to take out most of your spleen and half of your money.
So The focus of the Communist Manifesto on creating a heavily graduated income tax has been achieved throughout the entire Western world, which has so amazingly wonderfully defeated Communism.
So yeah, number two, absolutely achieved.
Number three was abolition of all rights of inheritance.
So there's a federal and a state.
Estate tax was implemented in 1916.
Reformed probate laws and limited inheritance via arbitrary inheritance tax statutes.
So the government, of course, you have no right of inheritance anymore.
The government can arbitrarily take whatever they want from whatever inheritance you leave.
So it's not that there's no inheritance possible anymore, but the government takes It's cut.
And the reason the government does that is if it taxed your inheritance at 100% you'd simply spend it all before you died and they wouldn't get that cut.
They let you leave some so they can take more.
Right?
So, number three has been pretty solidly implemented.
Third platform of the Communist Manifesto.
So these are government seizures, tax liens, and there's an Executive Order 11490, which gives private land to the Department of Urban Development.
They can just seize your land and build a highway.
The imprisonment of, quote, terrorists and those who speak out or write against the government, which was the 1997 Crime or Terrorist Bill.
IRS confiscation of property without due process, the seizure of property for the war on drugs without due process, and so on.
So, yeah, you disagree, your property can be seized.
Number five in the Communist Manifesto was centralization of credit in the hands of the state by means of a national bank with state capital and an exclusive monopoly.
Well, of course, this is the Federal Reserve, a credit and debt system nationally organized by the Federal Reserve Act 1913.
All local banks are members of the Fed system and are regulated by the Federal Deposit Insurance Corporation.
So, mostly implemented.
Platform five.
Let's see if we can find one that hasn't been implemented at all.
Number six in the Communist Manifesto, centralization of the means of communication and transportation in the hands of the state.
Ooh, imagine!
Of course, that's the Federal Communications Commission, FCC, Department of Transportation, mandated through the ICC Act of 1887, Commission's Act of 1934.
The Interstate Commerce Commission was established in 1938.
Federal Aviation Administration, Federal Communications Commission, Executive Orders 11.490, 10.999, as well as State Mandated Driver's License and Department of Transportation Regulations.
And of course, the government basically runs almost all of the roads, controls most of the airports and the ports and so on.
And the rails, of course, Amtrak is heavily subsidized and partly nationalized, so yeah, pretty well implemented for Section 6, because this, you see, is what we call capitalism, which is where almost all of the mandates of the Communist Manifesto have been implemented.
7.
In the Communist Manifesto, extension of factories and instruments of production owned by the state, and the bringing into cultivation of wastelands.
Not the T.S.
Eliot poem, sadly.
And the improvement of the soil, generally in accordance with the Common Plan.
So this is called Corporate Capacity, the Desert Entry Act, and the Department of Agriculture, and the Department of Commerce and Labor, Department of the Interior, the Environmental Protection Agency, Bureau of Land Management, Bureau of Reclamation, Bureau of Mines, National Park Service, and the IRS control of business through corporate regulations.
And of course, huge amounts of industries throughout the West have been nationalized.
Energy industries, water, so on, electricity, this has all been nationalized.
Not all in the US, but throughout a lot of the West.
So yeah, pretty well implemented.
Number eight on the Communist Manifesto.
Equal liability of all to labor.
Establishment of industrial armies, especially for agriculture.
So this is the Social Security Administration and the Department of Labor.
The national debt and inflation caused by the communal bank has caused the need for a two-income family.
Women in the workplace since the 1920s.
Nineteenth Amendment of the U.S.
Constitution, Civil Rights Act of 1964.
And the general public sector, public sector unions, affirmative action, federal public works program, and so on and so fairly well implemented.
Number eight.
Number nine.
Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country by a more equitable distribution of the population over the country.
And there's a planning reorganization act from 1949, super corporate farms, massive farm subsidies going out to American farmers, and a wide variety of executive orders has Implemented this to some degree.
Number 10.
Well, imagine, you know, the communist manifesto called for free education for all children in government schools.
Gosh, imagine!
Imagine if we'd surrendered our children to the government for free!
Gosh, we'd be complete communists!
Abolition of children's factory labor in the present form, combination of education with industrial production.
And of course people are taxed at gunpoint to support what are called public schools, which train the young to work for the communal debt system, Department of Education, NEA, outcome-based education, and so on.
So yeah, I think calling it somehow capitalism when the majority of the planks of the communist manifesto have been implemented throughout the West Well, the kind of ignorance that takes a prodigious amount of willpower.
I mean, to not notice that the government controls, say, debt and money, the money supply, and still call it capitalism.
Capitalism is when the government does not interfere in private property rights, which means anyone can create currency, and the government certainly has no monopoly on currency, and the government cannot, in fact, create currency at all.
That's sort of the basis behind the tiny government capitalist idea, the laissez-faire or laissez-faire capitalist idea.
So the fact that the children are indoctrinated for over a decade in government schools, the fact that the government controls all land and all buildings and you have to pay them rent in order to maintain your dwelling there, the fact that the government has hundreds of thousands of regulations governing all forms of voluntary Interactions in terms of trade, the fact that the government steals from people at gunpoint, spends the money and then taxes the next generation to pay for social security.
These things are somewhat important.
The fact that government manipulation of interest rates and the money supply has created a massive and mutant financial sector.
That the fact that the government manipulation of the money supply creates housing bubbles and tax bubbles, the crashes of which sometimes strip upwards of forty percent of the nation's wealth, the fact that increasing government control of welfare, of transportation, of energy policies, you name it.
The idea that this is somehow some flourishing, interference-free, coercive-free market capitalism requires A level of self-deception that borders on the psychotic and in fact sails way past the sociopathic.
So, let's see what this deluded fellow has to say going forward.
Here are five facts of life in 2014 that Marx's analysis of capitalism correctly predicted more than a century ago.
One, the Great Recession, capitalism's chaotic nature.
The inherently chaotic, crisis-prone nature of capitalism was a key part of Marx's writings.
Now, There are significant critiques of the Federal Reserve's role in creating booms and busts.
One of those has been acknowledged as true by the Federal Reserve itself, which was, for instance, the boom of the 1920s followed by the 13-year Great Depression of the 1930s, which was instrumental in Provoking a wee little conflict called the Second World War, resulting in the deaths of 40 million people and the surrender of all of Eastern Europe to totalitarian communism.
You know, not unimportant in terms of what the Federal Reserve set into motion.
Ben Bernanke has admitted this.
So, and of course, the Federal Reserve is a complete opposite of capitalism.
It is a government-controlled, fascistic monopoly on money and interest rates.
So, again, this is just... the people who've never read anything against their own opinions, never delved into anything... I mean, this is fundamentally religious in nature.
I mean, these are just people who only read the Bible and never read any Richard Dawkins recites or critiques of the Bible.
This is fundamentalism.
You must expose yourself to beliefs opposite from what you believe.
If you don't, you are worse than a fool.
You are a corrupter of the intellectual rigor, self-criticism and moral fiber of mankind.
You are a virus.
So, yes, there is creative destruction in the free market.
But that occurs within specific industries due to specific innovations.
Someone might invent some cool new way of building cars, but that doesn't affect the economy as a whole.
When you want to look what affects the economy as a whole, you look for government policy, because that's the only thing, it's the only agency which can coercively and directly affect everything that goes on in the market.
When the government screws up money and interest rates, sending all the wrong signals to entrepreneurs, widely understood as a cause to the boom-bust cycle, It's nothing to do with the free market.
It's the complete opposite of the free market.
It's sort of like saying, well, you know, in prison people trade cigarettes for blowjobs, therefore perfect free market.
The fact that they're in prison, almost always unjustly as a result of state initiatives like the war on drugs, you know, if you miss that, if you talk about the free markets in prisons and you don't mention that they're in prisons, I don't even know what to say to your level of unreality.
I mean, all I can do is shout into your head and wait for the echo to come back, because that's all you're doing with the general thoughts of mankind.
To go on, the man writes, Marx argued that the relentless drive for profits would lead companies to mechanize their workplaces, producing more and more goods while squeezing workers' wages until they could no longer purchase the goods they created.
The mechanization of the workforce does proceed, slowly and gradually, and so on.
So, for instance, at the turn of the century, 80 to 90 percent of Americans were involved in farming.
Now it's like 2 percent.
And people left the farms because there was mechanization, because there were plows, there were combine harvesters, there was threshing machines, there was a wide variety of mechanization.
On the farm.
And yay!
I mean, isn't that great?
We could get rid of unemployment tomorrow.
Just get rid of farm machinery and we have to pick everything and harvest everything and plant everything by hand.
And we would all have a job, but we'd all pretty much starve to death.
So...
It's not a drive for profits that fundamentally leads people to mechanize their workplaces.
It is when the value of human capital diminishes relative to mechanization.
In other words, if a McDonald's cash register worker costs 20 bucks an hour, then you have a huge incentive to automate that process.
So what drives up?
Well, minimum wages drive it up, unionization drives it up, and inflation drives it up, and all of those are very important.
And the fact that governments, after 12 years, produce people who have almost zero value economically, after 12 years of training, governments produce people who have almost zero value economically, is horrendous, and further drives automation.
And, of course, this sounds like, you know, I say unions are bad.
There's nothing wrong with unions, if they're voluntary.
When they're coercive and monopolistic, then that is not, obviously, morally valid.
It's evil and it's against the non-initiation of force.
So, why would you want to create... Why would you want to fire all your workers and then have no one to sell to?
That would be a very bad business plan.
It happens because governments distort the markets.
So he goes on to say, sure enough, modern historical events from the Great Depression to the dot-com bubble can be traced back to what Marx termed fictitious capital, financial instruments like stocks and credit default swaps.
So fictitious capital, would that be sort of like the Federal Reserve creating money out of nothing through a government-granted monopoly?
Would it be forcing people to use Federal Reserve notes and shutting down or stealing all the gold or all of the other resources from people who are trying to create alternative currencies, a fascistic monopoly on the creation of currency?
That, to me, would actually sound a little bit like fictitious capital.
And anybody who talks about fictitious capital without mentioning the Federal Reserve is after your wallet.
He says, we produce and produce until there is simply no one left to purchase our goods.
No new markets, no new debts.
The cycle is still playing out before our eyes.
Broadly speaking, it's what made the housing market crash in 2008.
Okay, this guy doesn't have a clue about anything.
And when people say broadly speaking, it means I don't have any details to support it, but you know...
Let's just, you know, trust me, we'll keep moving.
The housing market crash in 2008 was a wide variety of government programs that fundamentally drove it.
The massive printing of money and the restraining of interest rates, keeping interest rates artificially low, forcing banks through the Community Reinvestment Act to provide loans to people who didn't qualify, to minorities, to low-income people and so on, and then the sudden
Anyway, I'll get into all of this, and I've done tons of shows on the housing crash, but the idea that it's somehow innate to capitalism to continually and wildly misallocate capital is insane.
Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt.
When there were no subprime borrowers left to scheme, the whole facade fell apart, just as Marx knew it would.
So if the taking on debt is bad, then the government shouldn't have any national debt, right?
If the government has national debt, it's a violation of private property, particularly the property rights and economic integrity and inviolability of the next generation.
So this is, again, all nonsense.
Two, the iPhone S. Imaginary appetites.
Marx warned that capitalism's tendency to concentrate high value on essentially arbitrary products would over time lead to what he called a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural, and imaginary appetites.
It's a harsh but accurate way of describing contemporary America, where we enjoy incredible luxury and yet are driven by a constant need for more and more stuff to buy.
Consider the iPhone S you may own.
Is it really that much better than the iPhone 5 you had last year or the iPhone 4S a year before that?
Is it a real need or an invented one?
It takes an extraordinary amount of arrogance to tell people that their needs are not valid.
You know, I have a need to write this article and publish it on the web.
You have a need for an iPhone 5.
My need is valid.
Your need is invalid.
I mean, the idea that accelerating technology is a negative written by a guy who enjoys posting things on the web?
Again, I mean, I try to choke back the aneurysms when faced with this level of rank insanity.
We want more and more stuff.
Of course we do.
It's a foundational tenet of economics that human desires are unlimited and resources are limited, which is why you need economics or why you need intelligent market-driven resource allocation.
Human desires are infinite.
You will never have enough time in the day.
You will never have a computer that's fast enough or does everything that you want.
You will never have enough resources.
I mean, this is just natural.
This is why we don't live in caves and the fact that this guy is able to publish on the web while complaining that technology advances.
Again, what do you say?
So he says, while Chinese families fall sick with cancer from our e-waste.
Well, in China you go to jail for 12 years for trying to form a union.
That's a government In China they create massive artificial cities that nobody goes to live in.
That's not the market that does that.
That's the fascistic central totalitarian remnants of communist economic central planning.
So the Chinese and Indian markets in particular have some elements of the free market, but are still largely centrally controlled and centrally planned, in particular because governments control The money, of course, is the water in which the market swims in and if the whole market gets sick, you look at the water, of course, right?
And if you think that there's a free market, the first place you look is to the money.
If the government controls the money supply and the interest rates, you do not have a free market at all.
Anyway, so megacorporations are creating entire advertising campaigns around the idea that we should destroy perfectly good products for no reason.
So this is a joke, which is, you know, well, I have, there's a great new cell phone that's coming out, but my existing cell phone still works, and so this is a joke that people accidentally break their cell phones so they can justify upgrading to a new one.
I mean, this is a joke.
I hope, I mean, maybe he doesn't understand that, maybe he has the typical Scottish sense of humor, but anyway.
The IMF, the globalization of capitalism.
Marx's ideas about overproduction led him to predict what is now called globalization, the spread of capitalism across the planet in search of new markets.
Quote, the need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe, he wrote.
It must nestle everywhere, settle everywhere, establish connections everywhere.
While this may seem like an obvious point now, Marx wrote these words in 1848 when globalization was over a century away.
Oh, come on!
God, read a tiny amount of history.
Globalization was actually greater about a hundred years ago than it is today, because back then the globalization of human beings was huge.
I mean, imagine how easy it was to go from Poland to the United States in the 1870s.
You could travel all throughout the world.
You didn't need a passport, and as long as you weren't coughing up a lung when you stepped off the boat, you could just go live and work anywhere that you wanted.
And the mobility of labor in the 19th century up until just before the First World War and through the First World War, the mobility of labor is astounding.
Now the only people who don't need passports to get into another country are soldiers, and they force their way in through gunpoint at the expense of the local citizenry.
So the idea that globalization is some new thing, and there are huge tariff walls that are up now that weren't there before, the amount of local regulations of business, a huge barriers to entry to other businesses, there's less globalization now than there was a hundred years ago.
But again, this guy lives in cliches, not in reality, and so we shouldn't really expect much more.
And he goes, he says, and he wasn't just right about what ended up happening in the late 20th century.
He was right about why it happened.
The relentless search for new markets and cheap labor, as well as the incessant demand for more natural resources, a beast that demand constant feeding.
So it's weird because I think he views business as like a hyena or a jackal just prowling around trying to eat up people and resources.
I can't imagine this guy's ever had anything to do with an actual business, and the number of people who write about the economy and economics who've never actually run a business, I mean, it's almost as absurd as putting someone in charge of an economy who's never actually run a business.
I actually did run a business.
I got my first job when I was 10.
I've run a business for about 15 years, a variety of businesses.
You can't just go around and set up shop.
There has to be local consumer demand for what it is that you're selling.
Business is not a push environment.
It is a pull environment.
According to Say's law, which is that supply creates its own demand, like you didn't know you wanted a cell phone until a cell phone existed.
There's some aspect to that, but that's only in the R&D phase, the research and development.
You actually have to have local demand for whatever good or services you're providing.
So, a better way, the relentless search for new markets and cheap labor.
What that means is, the relentless search to satisfy consumer demand around the world.
Because that's what businesses do.
They satisfy consumer demand.
Want food?
Hey, here's some food!
that set up a grocery store.
Would you like a house?
Okay, let's build some houses.
Sewage?
Useful, helpful.
Medicine?
Yes, useful, helpful.
Electronics?
Yes, useful, helpful.
So, the relentless search to satisfy voluntary customer demand is the reality of how business operates in a free market, and the degree to which there is still remnants of the free market around the world, that's where it operates.
But the idea that the businesses just plow in and destroy things and so on, I mean, again, this is just insane.
4. Walmart.
Monopoly.
The classical theory of economics assumed that competition was natural and therefore self-sustaining.
I don't know what that means.
Marx, however, argued that market power would actually be centralized in large monopoly firms as businesses increasingly preyed upon each other.
Oh yeah, so this is the idea that, you know, dog-eat-dog capitalism, businesses preying on each other.
No, businesses compete with each other.
Look, I've seen lots of races on the Olympics.
I've never seen the winner eat the losers.
Right?
All they do is they run a little faster.
They get across that finish line quicker and that's part of the fun of the competition.
They don't... Would you say that Gymnasts prey on each other for medals.
I mean, it's nonsense.
They don't prey on each other.
They compete to win.
And that's what businesses do.
And the way that you win is you satisfy consumer demand better than your competitor.
And satisfying consumer demand, satisfying consumer preferences, you know, I mean, movies don't prey on each other.
They just attempt to satisfy whoever is going to buy a movie ticket more than the movie next door.
But this metaphor that people use, like it's somehow win-lose, I mean, it's silly, right?
I mean, we all compete with each other.
I mean, I'm reading this guy's article rather than reading someone else's article, so he has a monopoly of my attention on his article.
Does that mean that I've somehow murdered his competitors or preyed upon?
No, it's just nonsense, anyway.
This might have struck his 19th century readers as odd.
As Richard Hofstadter writes, quote, Americans came to take it for granted that property would be widely diffused, that economic and political power would Decentralized.
I think he meant to say would be decentralized.
It was only later in the 20th century that the trend Marx foresaw began to accelerate.
Today mom-and-pop shops have been replaced by monolithic big-box stores like Walmart.
Mom-and-pop shops, that's just... Small businesses are important for economic growth, they innovate, they create, but they're very unstable.
They come and they go, which results in a huge destruction of human capital, right?
You learn some specific business by working there for two years and it goes out of business, you've got to retrain for something else.
So, small companies economically are very unstable and create and destroy jobs all the time.
Larger companies tend to retain the value of human capital.
Now you might want to have a look at Econ Talk with Russ Roberts.
There's a writer who got a job at Walmart and found that everybody there pretty much liked it.
And Walmart offered you free training.
They would even pay for you to train.
There were kiosks that would allow you to take training and upgrade your skills to any time that you wanted.
And there's this weird thing where it's like they're all of these nice little local stores and then somehow like this big giant District 9 spaceborg, Walmart comes in and squishes them.
But this is not how it works.
The customers in the neighborhood prefer Walmart to the mom-and-pop shops.
Sorry, that's the way it is.
And let me say that again.
It's really important to understand.
Walmart can't make any money if people prefer the other stores.
Right?
So, Walmart has to go in where people want to shop at Walmart.
And the fact that Walmart more satisfies people than mom-and-pop shops is good, and also we should recognize it's pretty environmentally friendly.
So rather than having to go to three or four different stores driving each way each time, you just go to Walmart and you pick up everything you need.
Rather than having to do price comparisons on the smaller stores, you know Walmart is incredibly aggressive on price, so you save all that time from having to go shop around, look online, compare store prices and so on.
You know you go to Walmart, it's just cheaper.
So it's environmentally friendly and it saves people a lot of time to go to Walmart.
Walmart is so hard on their negotiations they've been credited with reducing inflation by upwards of a full percentage point in the entire US economy.
So it saves people a lot of time, energy and resources to go to Walmart.
They prefer it to the mom-and-pop shops.
So you may get upset with people's choices.
But you can't blame manifestations of people's choices for... you can't blame that manifestation.
I mean, you may not like Justin Bieber's music, but a lot of people do.
To damn Justin Bieber and his prevalence is to damn everyone who has those choices.
He's just a manifestation.
You know, it's like saying, this statue is beautiful, but its shadow is ugly.
I mean, it doesn't make any sense.
These are just choices that people make.
Small community banks have been replaced by global banks.
Global banks like JPMorgan Chase.
Well, of course they have.
Because when you're a big bank you can give a lot of money to a political candidate and you can get 700 billion dollars in bailouts.
Small banks can't.
I mean, obviously, the massive amount of too-big-to-fail and massive amounts of subsidies that go to giant financial institutions has resulted in massive mergers of those financial institutions so that they are deemed now too-big-to-fail and can be guaranteed, or virtually guaranteed, bailouts should they run into trouble.
So investors want to invest in those banks that are too big to fail.
So this is the result of the government forcing taxpayers to bail out banks.
It's not a result of the free market, for God's sakes.
Like, think for a second before you type.
Small farmers have been replaced by the likes of Archer Daniels Midland.
Of course.
Because the vast majority of government subsidies for farms go to the larger corporations.
Of course, because the larger corporations can give more money to political candidates.
They can buy the levers of political power, much more so than small farmers can.
So, again, all you're talking about is the effects of government policy, which is antithetical to the free market.
The initiation of force to violate property rights is the antithesis of the free market.
The tech world, too, is already becoming centralized with big corporations sucking up startups as fast as they can.
Sucking up startups!
You know, they want to sell to the big corporations, right?
I mean, I was involved in the sale of a tech company.
We were pretty happy to do that.
And, of course, big corporations, why do they do so well in the remnants of the free market?
Because they get this wonderful monopoly called intellectual property, patents, copyrights.
These are all violations of rational property rights.
Intellectual property allows you to command what everyone else in the whole world can do with their own property.
That is not rational.
That is not moral.
That is not just.
That is not right.
It's never been part of the free market.
It always has to be enforced by the state.
And big companies, they have, they can afford the legions of lawyers to fight off copyright infringements and intellectual property and patent problems and patent trolls and all of that.
So of course you've got this screwed up system.
Of patents and copyrights and all of that sort of stuff.
And so naturally you have the centralization of economic power in larger and larger institutions.
Of course, we just get rid of that stuff which has nothing to do with the free market and the problem is solved.
Politicians give lip service to what minimal small business lobby remains and prosecute the most violent of antitrust abuses.
But for the most part we know big business is here to stay.
Sure.
5.
Low Wages, Big Profits – The Reserve Army of Industrial Labour Marx believed that wages would be held down by a reserve army of labour, which he explained simply using classical economic techniques.
Capitalists wish to pay as little as possible for labour, and this is easiest to do when there are too many workers floating around.
Thus, after a recession, using a Marxist analysis, we would predict that high unemployment would keep wages stagnant as profits soared because workers are too scared of unemployment to quit their terrible exploitative jobs.
And what do you know?
No less an authority in the Wall Street Journal warns.
Lately, the US recovery has been displaying some Marxian traits.
Corporate profits are on a tear and rising productivity has allowed companies to grow without doing much to reduce the vast ranks of the unemployed.
That's because workers are terrified to leave their jobs and therefore lack bargaining power.
It's no surprise that the best time for equitable growth is during times of full employment when unemployment is low and workers can threaten to take Another job.
Okay, yeah, so you definitely want to increase demand for workers.
And, you know, one way to do that is to not allow unions to have a monopoly on the workplace.
I think that's kind of important.
That way the job mobility is very high.
You also want to break down licenses so people can compete with each other.
You want to make sure that you break down licenses for the trades and for Health care and for doing stock trading and so on.
You want to break down all those licenses to increase the mobility of labor.
You also want to make sure that kids come out of school in sort of late teenage years with lots of skills.
That way companies will have to bid more for them, but that's not what happens of course.
You learn almost nothing of any economic use in government schools.
Of course, you want to also make sure that people aren't tied to their jobs by employer-provided health care coverage, which comes directly out of... In the Second World War, you weren't allowed to give people raises.
The government banned that, so companies began paying for their health care instead.
And then that became a tax deduction, which then stuck there.
The government should know... I mean, the employers should know what pay for your health care, and they pay for your car insurance.
But this is just something that the government has enforced and maintained and so on and this is another reason why people don't want to change jobs and of course the money that is taken out of circulation to pay for unemployment insurance would otherwise be left in the hands of companies who would be expanding and growing and would be are competing for workers.
And so this reserve army of the unemployed is twofold, right?
You take money from businesses to pay for unemployment insurance, and then there are lots of people looking for work and there's less money to hire them.
That brings things down.
If you raise the costs of labor, then you are going to reduce the demand for workers.
So when you add on social security taxes and tariffs and you add on various employment statutes in France, it's virtually impossible to fire people.
And then what happens is you make it very expensive to fire people.
You make it very expensive to fire people.
And therefore, there's lower demand for labor.
This increases automation artificially.
And then you get this reserve army, but it's nothing to do with The free market.
In the free market, if there's an excess of labor, the price of labor will go down, or more people will choose to be entrepreneurs.
Right?
Because if you can't get a job for much...
Then, and there's an excess of people looking for work, then become an employer, start your dream job, start your own business, and hire people.
But that's not really allowed in the modern economy because of the government.
In conclusion, Marx was wrong about many things.
Most of his writing focuses on a critique of capitalism rather than a proposal of what to replace it with, which left it open to misinterpretation by madmen like Stalin in the 20th century.
Yes, yes, Hitler just misinterpreted some things.
But his work still shapes our world in positive ways as well.
Well, when he argued for a progressive income tax in the Communist Manifesto, no country had one.
Now, there is scarcely a country without a progressive income tax.
And it's one small way that the US tries to fight income inequality.
I don't think that the income tax in the United States is a small way to fight income inequality, and the reality is it does not fight income inequality.
Since the 1960s, really since the 1930s under FDR's New Deal, but under Lyndon Johnson's Great Society programs of the 1960s, the U.S.
government has had as its explicit goal the reduction of income inequality, and income inequality has risen, because force achieves the opposite of what you claim it is supposed to do.
Marx's moral critique of capitalism and his keen insights into its inner workings and historical context are still worth paying attention to.
As Robert L. Heinbruner writes, we turn to Marx, therefore, not because he is infallible, but because he is inescapable.
Today, in a world of both unheard-of wealth and abject poverty, where the richest 85 people have more wealth than the poorest 3 billion, the famous cry, workers of the world, unite, you have nothing to lose but your chains, has yet to lose its potency.
Well, the reality of course is that governments are larger and more powerful than they've ever been at the expense of the free market, so the fact that you have enormous political power combining with state-created and protected corporatism, corporations are not a product of the free market but of the government-controlled and rich bribed legal system, of course we're going to continue to have inequality growing until we actually get rid of some of these implemented
Manifestations of the Communist Manifesto and return to some voluntarism and freedom and you will find these problems solved and the true evils of Marxist doctrine will then be revealed and the problems that we have in a society are not the result of an excess of liberty in our economic interactions.
This is Stefan Molyneux from Free Domain Radio.
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