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Quotation of the Day…

… is from pages 183 of my late Nobel-laureate colleague Jim Buchanan‘s 1990 essay “Socialism Is Dead but Leviathan Lives On,” as this essay is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:

We must, I think, appreciate the rhetorical genius of Marx in his ability to convert arguments advanced in support of market organisation into what could be made to appear to be support for a particular distributional class, the capitalists. By clever substitution of emotion-laden terminology, the market system became ‘capitalism’, and the search of every persons for his own advantage became the profit-seeking of the greedy capitalists. This rhetorical genius, coupled with totally erroneous economic analysis embedded into pseudo-scientific jargon about the laws of history, was highly successful in elevating the distributional issue to centre stage, to the relative neglect of the allocational and growth elements that were central in the classical teachings. And, further, the whole Marxian- socialist challenge was introduced into the political arena in the middle of the post-Hegelian epoch, during which the state was conceptualised only in a romantic vision completely divorced from the observable reality of politics.

DBx: The poor understanding of economic and political institutions that Marx did so much to promote remains widespread today.  “Progressive” and hard-left opponents of markets hold mistaken – or, at the very least, highly questionable – presumptions about reality, which include:

– Wealth is either fixed in amount, or, while it might be destroyed or diminished by certain human activities (such as war), if wealth grows this growth occurs largely independently of human ideas, choices, actions, and institutions;

– trade and commerce, therefore, are largely zero-sum – that is, each exchange situation pits a party who will win against one who will lose;

– trade and commerce, in turn, involve activities that are thus, at best, suspect; trade and commerce too often reward greediness and duplicity while penalizing generosity and honesty;

– the ‘distribution’ of wealth – whether conceived as financial flows or assets, or as access to real goods and services – is determined largely by power;

– prices set on markets are largely arbitrary; prices seldom play any role beyond determining how much one party ‘wins’ from trade and how much the other party ‘loses’ or fails to justly gain;

– each of a handful of large groups of people, mostly as conceptualized by intellectuals with no understanding of economics, has its own ‘interests’ – interests that are shared by all members of the group and that are at odds with the interests of other groups; for example, ‘labor’ has interests that are are shared by all workers and that are at odds with the interests of ’employers’;

– while the state can be captured by ill-intentioned people, the state – especially under unlimited majoritarian rule – is also the only possible savior of the powerless against the predations and frauds of the powerful;

– absent vigorous state intervention, ordinary people – people whose main asset is the value of their own labor – lack both the power to get their fair share of society’s wealth and the intelligence or self-discipline to use wisely whatever share of wealth they do manage to secure;

– social progress is achieved by the powerless grabbing power under the leadership of men and women of singular vision, intelligence, and courage; ‘the People’ will be led to the Promised Land – can be led to the Promised Land – only if they faithfully follow their caring messiahs;

– those who argue in favor of free markets are either soulless mercenary cronies for the powerful propertied class or they are ideologically blinded dupes for this class; no intelligent and decent person could possibly deny the enormous benefits available to ‘the People’ when the state is empowered to work on their behalf against the propertied few.

Fallacies all.


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