Foundations of Marx's Philosophy and Economics

0:00I want to talk today, since it's a very broad topic, having to do with both Marx's philosophy and economics, what I thought I would concentrate on is first to describe certain aspects of Marx's philosophy, in particular, what he thought the proper method was of studying and the proper method of study that he then applied to economic theory. That's to say, the very distinctive kind of economics that Marx attempted in his works is to some extent at least conditioned by his philosophy. So I'll first begin with a brief, some brief comments on the philosophical background.

0:48Now, an unfortunate feature of doing that is that it requires, first, saying something about Hegel, who, as anyone who's looked at Hegel will know, isn't the easiest philosopher to understand. Some of this will be dealt with by Professor Rothbard, particularly on certain parallels between Hegel and Marx and various religious views, so I'll avoid going into that in any The Theory of Money and Credit

2:17German philosopher of the time who said well if you think everything is rational could you deduce the existence of my pen right now and Hegel dismissed that as really not understanding what he meant. What he meant was first we can get the preliminary idea if we look say at any scientific theory that it's in any scientific theory one is unifying things that appear not to be unified at first The Theory of Money and Credit

3:14In the world as we see it, just as we're looking at it, this is dismissed very early as not giving us a very good idea of what things are really like. So, so far we have that there's a unification of things in the sense that a scientific theory unifies things below the surface. The Theory of Money and Credit

5:36Unity of the World. Now, we very often think, say, of a scientific hypothesis or a law as something that people come up with or think about and then try to see whether tests in the actual world and see if it comes true or not, or see if it's false, but Hegel thought that wasn't really what's involved, or that, again, is only true at a very lower level of things. He thought, and this is the peculiar part of his doctrine, which I think is the most difficult to grasp, that logic is something that is not an idea in people's minds, but is something actually present, actually out in the world, that if you look at his greatest work on metaphysics, it's called logic, and it is in this book about thinking, The Theory of Money and Credit The Theory of Money and Credit The Theory of Money and Credit

8:01be part of the world operating and as we'll see when I get to Marx's labor theory of value we'll see exactly how this idea comes in but unfortunately we haven't finished with Hegel yet but fortunately that part the notion of the absolute idea or concept working in the world is most difficult part of the part of Hegel I'll be The Theory of Money and Credit

9:31not observe these rules, and then the connection between the rules and the facts would be accidental whether people followed the ethical prescriptions or not. So, Hegel's ethics, such as they are in fact found in his work, The Philosophy of Right, which could also be translated Philosophy of Law, He thought that ethics wasn't a matter of universal prescriptions, or to the extent it was, that was just of relatively minor significance, but that ethics could only be viewed as part of political life, just as Aristotle had his ethics connected with his politics. Hegel thought that one could only talk about ethics within a certain social system that was constituted by a state, So that unless you have a sort of a concrete society, you're not talking about what the really highest basis of law.

10:34It's a mistake, and he particularly criticized Immanuel Kant for this, to try to view ethics as a part from politics. And Marx, as we'll see, took up this idea very much that he tended to dismiss rights in his own thought, The Theory of Money and Credit General Statement that doesn't lead anywhere, we can only understand this if it's viewed and it's how it's applied in a particular setting, in a particular social system, so we can see this Hegelian point that ethics doesn't come in unless it's viewed in this concrete way.

11:42Now, that is the second part of Hegel's views that I think I wanted to mention. There's one other point, and this one Marx both was influenced by and reacted to some extent against. Hegel thought that although the function of the philosopher was to show that the rationality of things, to show, as I put it, the development of the absolute idea. This could only be attempted for what had already been shown to exist. One couldn't deduce what was going to happen in the future, because that, again, would be a separation of abstract ideas from events, and the events aren't around yet.

12:30If we tried to deduce them, we'd just have certain abstract premises. We wouldn't have the full, what he calls a concrete universal, the Perfect Unification of Concepts and Facts So, remember in the famous preface in the philosophy of right, he describes sort of philosophy painting, what he calls its gray and gray, and then he concludes with the beautiful line, the owl of Minerva takes wing only with the coming of dusk. The Album Nervous, the sort of a symbol of philosophy and he's saying you can only have philosophical explanations of the course of the world after they've taken place. He's denying that one can predict the future. He occasionally did speculate himself on future developments.

13:19For example, he thought the United States would be very important in future, but this is not really part of his system. So where this both influenced Marx and got him into trouble is that Marx wanted very explicitly to advocate a certain type of system, socialism or communism, but he was very much influenced by the Hegelian views that you can't say what's going to happen in the future. So we can see here one reason that he didn't specify in any detail what communist society would be like. This would be going against the method of what Hegel thought was a proper method of studying logic.

14:05I should say I'm by no means pretending that Marx was a disciple of Hegel, but he did study The Theory of Money and Credit

14:41The method that I've been talking about, it sounds rather obscure, but it's a very essential part of what influenced Marx. But when I talked about Marx's philosophical background, it's a mistake to think of Marx as just influenced by Hegel and no one else. We also have to recall that Marx was a materialist, and here most people mention just Ludwig Feuerbach, who criticized religion or viewed religion as sort of just projections of peoples, of sort of ideal human beings onto the world.

15:26He accordingly dismissed some of Hegel's theological speculations as mystification, but the real, I think, more important influence on Marx was more from the Greek materialists. You know, if you look at Marx's doctoral dissertation, it's in Paris in the Systems, Democritus Epicurus. The significance there is not in particular points on their particular points of doctrine, but sort of a basic idea of materialism that as the Greeks practice it which is again similar in one way to Hegel that you're in their view you were looking for an underlying level of things saying the system of democracies what really goes on is in the world is not what we see on the surface just various physical objects but movements of very material particles of various kinds so Just like with Hegel thought was saying that there's sort of a real level that is different from a level of sense certainty, the Greek materialists were also looking for an underlying level.

16:39And here what was important to Marx was that the underlying level has to be material. The Theory of Money and Credit

17:46approach there. So, so far we have, then, this, we'll now shortly see how Marx concretely applied this in his economic social theory, but there's one further fact that I think one has to take account in looking at Marx's philosophy, and this has put him in some difficulties with the Hegelian System. I've referred to it very briefly before, and this is namely that Marx was, during a great part of his life, a professional revolutionary. He was interested in changing the world in a certain direction, not just in studying it.

18:31As he says in one of his famous theses on Feuerbach, this disciple of Hegel, criticized The Philosophers of Hitherto only interpreted the world, the point, however, is to change it. Marx wrote this when he was quite young, but these theses were published in appendix to Engel's work, Ludwig Vorbach, The End of Classical German Philosophy. and so they became known after that but you see how this gets marks into some difficulties with his Hegelian method he's both saying he wants to both apply Hegel's method which is you have to study the world as it actually has come to pass and show the rationality of it again taken in this materialist way showing material forces as having done this but he also wants to change things

19:58Value. Here, this is the notion that commodities exchange according to the socially necessary labor time contained in each required to produce each one. There's some dispute as to whether he meant the socially necessary labor that has produced each one or the socially necessary The Theory of Money and Credit

20:52in which they did. Well, we can see here just this notion I've been talking about of an underlying structure of things or an underlying explanation of things. Marx thought that just to describe the world as it, say the world economic exchange as it actually appeared wouldn't be penetrating to the essence of things. To really understand things one had to go beneath the surface in the way I've tried to describe both the Hegel and, in a different way, the Greek materialist did, so that he thought the labor type, the exchange of labor, in the way I've just described, was what was really taking place beneath the surface of the economy, explaining it, and it was modified in certain ways in the world as we see it.

21:52in the Economic World as we see it, but this was actually going on, explaining and accounting for the world. I think it's important here to see that the argument is sometimes given, say, by— Aseul has this in his 1985 book on Marx, and he said, well, the various refutations of labor theory aren't really that important because Marx was just giving this as the model of what happened. Well, this is just taking—wrongly taking a theory in the way it's taken by certain scientists This is sort of just an idea that the theorist has, it's tested against the world, it ignores Marx's method where the theory is not just an idea he had, but it's supposed to actually be there, underlying things, unless one can argue for it, one doesn't have a correct account of things according to Marx.

22:42Now, just briefly describing what he had in mind in the labor theory. When he said that things exchange according to the socially necessary labor time in each one, we have to understand that he's meaning an equality here in a very strict sense. As you know, there's a standard Austrian refutation of his view, which is that when people exchange, they'll trade only if each person values what he's giving up less than what he's getting, so that you have a double inequality rather than equality.

23:27Now Marx would have, he didn't explicitly consider that account of things since, of course, utility theory hadn't been developed when he was writing. But one can be sure he would have said that's just an explanation at the surface level. This is just what people appear to be doing in the world as we know it. isn't penetrating below the surface to get what he calls a laws of motion or the law of motion of capitalism, which he thought that this materialist method and Hegelian method was really what underlies science as well. He thought that Galileo and Newton had applied just the style of method he had gotten from Hegel as modified a materialist way. So he would have no doubt replied that this This is, to really understand what's going beneath the surface, you have to have his account of things, and as I was suggesting, he takes this equality in a very strict way.

24:32He takes it as an equation where the two things that are exchanged are identical in some way, that say they contain a certain common substance, namely socially necessary labor, that has to be the same in both commodities. So then when he later, probably I think another lecturer is going to deal with this, he gets into difficulties, he tries to come up with some elaborate explanation of how real world prices are derived from this that most economists since the time of Boehm-Bawerk have said doesn't work. But you see, even if he were able to show that it did work, it would only be acceptable If you first agreed with him that there was this underlying level of things that's actually present in the world, it seemed like even if he had succeeded in showing how prices could be derived from labor exchange in a certain way, that would have only been to extricate himself from the difficulty of his own devising.

25:36It's because he was looking at things from the point of view of this particular view The Theory of Money and Credit

26:11of Capitalism by Socialism, one has to, to follow his method, explain things by material forces. Here what was important to him was the so-called forces of production, which is pretty much, were very roughly equivalent to the technology that existed at a particular time. And he saw this as constantly increasing throughout history and bringing about in its weight Changes of the Social System. It wasn't people's ideas that change things. This would be violating proper materialist method, but it was more the development of the material forces in itself that explain things, as he says in his 1858 critique of political economy.

27:00It is not the consciousness of people that determines their being, their social being, but their being that determines their consciousness. So what was going on in the world, the development of forces of production really explained the whole of history. You see, again, he thought, when particularly this was applied to capitalism from his labor theory, he applied this to get an explanation of profit which he thought he could show necessarily arose from the sort of a way in which labor was purchased. I won't go into the technical details of the thing, because I think they don't work even accepting Marx's theory as correct.

27:52I don't think his argument works there, but I think that would probably be... I don't have the argument clearly enough in my mind to be able to present it in a simple The Theory of Money and Credit

28:33Capitalists exploiting the workers through this kind of trick and there would be a constant struggle to increase the forces of production each one would be trying to increase his profit even though Marx thought this would lead to constant crises in the eventual replacement of capitalism by socialism now when you can see how this generates a problem for something I'd earlier mentioned namely According to this Hegelian method, you can only describe things as they've actually taken place. So how could Marx talk about what was going to happen in the future, namely the rise of socialism? Well, Marx had a way of attempting to get around this.

29:22He thought that when he was describing the onset of socialism, this was not something that was coming really in the future, but it was just a description or a brief extension of the present. He has in Das Kapital, the famous statement, the integument of the old order burst, that's to say, all the forces of production developed to the fullest extent possible under capitalism, and then socialism would then automatically come about since it's the development of the forces of production based on this materialist way of understanding things that explains history, taking again this materialist explanation. in combination with Hegel's view of dynamics of the concept operating by its dynamically.

30:12So, in looking at this just briefly, we can see some problems in it other than, of course, resting on the Hegelian method, which isn't very well argued for. When Marx has to assume that each system that develops throughout history is the most productive system possible at that time, but one wonders why is that the case, say, wouldn't it have been more productive had capitalism come about at the time of feudalism? Marx has to think that at the time the feudal system arose, that was the most productive system possible. and he certainly it certainly doesn't seem to be the case why should one think that even if it was more productive than whatever the previous system was how does that show it was the most productive system possible which his theory requires then if one brings in the famous calculation argument of Mises socialism isn't a possible system at all it would lead it could produce attempts to realize it would only if taken in a full-scale way where the economy wouldn't be dependent on capitalist pricing would simply produce economic chaos.

31:32So if Marx is right that the forces of production, development of force of production determines history, that would seem like be an argument in favor of capitalism or the permanence of capitalism rather than socialism. Now, the final point on Marx's account, which is one that was raised with great effect by Mises in his work Theory and History, which I think is the best account of Marx's views of history, the best analysis of Marxism for the aspects of that system that aren't strictly to do with economics. Marx, I mean, Mises pointed out that Marx just assumes these forces are developing themselves.

32:21Again, he's relying on this Hegelian method of just things developing by themselves. It isn't that people are thinking of new methods and kind of always trying to increase things. They have an independent force. Unless you take the Hegelian idea seriously of some sort of logic in the world, this doesn't seem to make much sense. So we can see there are a lot of problems in Marx's account of things that he's been in some sense the prisoner of his method. Now to conclude, I'd like to say a few words on On the topic some of the previous speakers were commenting on this morning, on what type of system Marx wanted in the future, and particularly, as one might expect by now, how the philosophical method he had absorbed from Hegel and the materialists influenced what he thought.

33:24I mean, here, controversy that many people have—that has been discussed by many people is to what extent did, if any, did Marx want a so-called democratic socialism or one consistent with people having liberty? Didn't he seem to portray communism or socialism as a liberation of people? Well, here I think one has to focus on what he called the dictatorship of the proletariat, which would be the initial rule after the overthrow of capitalism. This sounds like, when you first look at it, a rather contradictory phrase in that a dictatorship is taken to be a one-man rule. So how could you have a whole class being a dictator?

34:13But to understand this, one has to see that, as used in the 19th century, dictatorship didn't mean one-man rule, something, say, the way we'd say Stalin or Hitler was a dictator. What it meant was something derived from Roman law, which, of course, Marx had studied when he was in college, which is a temporary delegation of power to someone on an emergency base in which the laws that exist are suspended while whoever is given the delegation can deal with things on an emergency basis. So, by dictatorship of the proletariat, it really means a system in which the proletariat class is crushing all the opposition.

35:04It's dealing with things in emergency basis that Marx, I think, correctly thought there'd be a lot of opposition from capitalists if socialism were ever put into power. And he thought this was the period in which they crushed the opposition. He is quite explicit about that in many places, talking about revolutionary terrorism. So that we can see just from the use of that phrase that it's hardly a system of civil liberties that he has in mind. But to turn more directly to the theme of my lecture, one can see that given his views on the way history worked, He wasn't one to stress liberties at all, not necessarily because he favored a system of arbitrary rule, but because he didn't think abstract ideas such as statements of universal rights were of any importance.

36:06What's important to remember is the underlying material level of things. These are just verbal formulas that don't account for things that really are unimportant. So it's hardly likely he was going to put much stress on them in the actual development of his social ideas. And in fact, he didn't. So that I think one can see just from his method in itself, The Theory of Money and Credit

37:04The important thing is not how socialism would come in, but what happens once it is in.

37:57the Greek materialist and tried to give a few topics in which this how this method is used in his economics and account of history and how it to a large extent constricted his views and led him into error and often dangerous error. Thank you.