Jun

20

Carl Menger (1840-1921)At a time when people are concerned about a global outbreak of swine flu, it is interesting to compare it to the danger from ideological menaces. The ideological menace known as Marxism killed at least 100 million in the 20th century; the only comparable catastrophe from a biological menace was smallpox among the native Americans upon contact with Europeans. And that was a highly unusual situation: an entire population that had never been exposed to a virus in an age prior to modern medicine. The Great Influenza Pandemic of 1918 killed between 20 and 40 million, still before the rise of modern medicine. Today the World Health Organization and the Center for Disease Control carefully monitor the incidence of swine flu, ready to deploy the arsenal of modern medicine and public health techniques to limit the spread of any outbreak.

Meanwhile, the Marxist virus continues to remain active in small pockets around the world, albeit mostly isolated at universities. This month, however, Foreign Policy, an award-winning, high profile public policy journal, published an honest-to-goodness article on the revival of Marxism, by a real live Marxist professor, in its most recent issue. The Globe & Mail followed with a public forum on "Is there a Marxist revival?", giving more space to the same Marxist professor who had published the article in Foreign Policy. Should we treat these small public outbreaks, outside the universities, with the same level of concern that we treat localized outbreaks of swine flu?

Since Locke, Hume, Montesquieu, Smith, and Madison, it has been obvious that progress in the wealth and well-being of a society is based on secure and well-defined property rights, limited government, rule of law, and economic freedom. In the 19th century, through these principles Britain and the U.S. became the first nations in history in which a steadily rising standard of living for the masses became a reality. At no point was there an evidentiary foundation for denying the overall perspective of Adam Smith, and by the 1870s Carl Menger 's work (he was the father of the Austrian school of economics) had put Smithian economics on a far more rigorous intellectual foundation. And yet by the 20th century, most intellectuals, including most professors, were rejecting the classical liberal economic model in favor of Marxism, Fabian socialism, or some related variant.

Marxism is so ridiculous that it is difficult to believe that people ever took it seriously or that they could ever take it seriously again. Why bother to refute absurdities? And yet some of us regard the notion that the U.S. government could run General Motors effectively as equally ridiculous, and yet most of the mainstream media seems to accept this proposition as entirely plausible. Earlier this year, Newsweek ran a cover claiming "We Are All Socialists Now" and a rising chorus of sympathetic voices in the media claim that capitalism as we know it has failed.

Meanwhile, intelligent and sophisticated voices, such as economics Nobel laureate Vernon Smith and his co-author Steven Gjerstad are providing coherent, data-driven explanations showing how the government-sponsored housing bubble led to a broader depression. Steven Horwitz has a less rigorous explanation than that given by Smith and Gjerstad, but generally pointing in a similar direction in his, "Open Letter to My Friends on the Left" in which he shows exactly why it is important for the public to realize that once again, the 2008 Fannie Mae-Freddie Mac crisis is a failure of government, not of markets. The Mercatus Center Financial Markets Working Group has been publishing a long series of cutting-edge research on the crisis. Although there are diverse perspectives on both the causes of the crisis and the best regulatory solutions to the crisis at Mercatus, all of the perspectives are solidly grounded in a superb understanding of the strengths and weaknesses of both markets and governments. No one at Mercatus would claim that "We Are All Socialists Now" nor would they believe that the U.S. government can run GM effectively.

In 1905, A.V. Dicey published his "Lectures on the Relation between Law and Public Opinion during the 19th Century", in which he soberly charted the rise and fall of public sympathy for classical liberal thought. In the second edition, published in 1919, he summarizes his 1905 perspective:

The current of opinion had for between thirty and forty years been gradually running with more and more force in the direction of collectivism, with the natural consequence that by 1900 the doctrine of laissez faire, in spite of the large element of truth which it contains, had more or less lost its hold upon the English people.

And then summarizes the state of affairs in 1919:

The main current of legislative opinion from the beginning of the twentieth century has run vehemently towards collectivism.

The rest, as they say, is history. The Soviet Union became the darling of the intellectuals even as forced collectivizations killed millions. John Dewey, arguably America's leading public intellectual in the first part of the 20th century, compared the ethos of Stalin's Russia to "the moving spirit and force of primitive Christianity." Free markets were in retreat throughout most of the 20th century, until Reagan and Thatcher won their respective elections and then the Soviet Union collapsed. For the past twenty years, it looked as if we had reached "The End of History," and the worst nonsense was gone for good.

Whether or not popular opinion in the U.S. and Europe continues to support crippling deficits and crippling government controls over the economy, India and China are not likely to allow themselves to be crippled by socialism again. China, although nominally still communist, continues to generate stunning rates of economic growth through the Special Economic Zones that more closely approximate the economic freedom of Hong Kong than they do any European nation. Even if current rates of Chinese growth are exaggerated, the Chinese are likely to stick to the proven fundamentals of economic freedom rather than spend another century committed to economic nonsense.

The Daily Telegraph has an excellent realist article on China's perspective on climate change :

Here is what Li Gao, China's chief climate change negotiator has to say on the subject:

"Developed countries have neither enough active responses to proposals from developing countries about emission-cut target by 2020, nor interests in providing funds and technologies to help developing countries adapt to climate change."

This is diplomatic hardball speak for: "If you in the West wish us to play your silly carbon emissions cutting game, you must not only bribe us with large sums of money but you must also place your industries at an even greater competitive disadvantage by crippling them with CO2 legislation from which we, in developing countries like China, Brazil and India, shall remain happily exempt."

Whatever ideological viruses that might undermine the economic health of Europe and the developed world, the Chinese will not retreat opportunity to regain the sense of glory they've felt for thousands of centuries.

It is possible to have a strong, healthy, growing economy while still ensuring environmental sustainability. Hayek's insight that free economies that allow for the possibility of countless acts of value creation by countless unknown innovators and entrepreneurs, remains as valid as it was when the Soviet Union collapsed. In the 1980s, while I was a graduate student at the University of Chicago, a computer science professor there noted that any decent university in the U.S. had more computing power than did the entire Soviet Union. This is an apt symbol of the power differential between massively parallel creative possibilities available through freedom, on the one hand, and constrained attempts to innovate through centralized control, on the other.

Most businessmen and investors are busy and content to stay focused on their work day in, day out, leaving the world of ideas to professors, on the one hand, and what Hayek called " the second-hand dealers of ideas, " on the other - the journalists, textbook writers, editorialists, activists, etc. And yet not only is there evidence that most professors lean left, but some professors regard their views as the natural outcome of honest research by more intelligent people:

One possibility is that if a lot of smart, well-educated and conscientious people tend to form left-wing views, then perhaps those views are justified. When a majority of skilled and informed academics converge on a particular theory or set of ideas, we ordinarily tend to respect their authority.

There is a remarkable level of complacency and self-satisfaction among those academics who form left-wing views and who believe they are justified.

Just as academics believe that they are "smart, well-educated, and conscientious," so too might one argue that successful investors are smart, well-educated, and conscientious people who have trained themselves to see reality objectively, because if they do not see reality objectively, they are more likely to lose money. With a few peculiar exceptions (Armand Hammer, George Soros, Warren Buffet), most investors tend to favor capitalism. I would also argue that the challenge of predicting the future, a challenge faced by all investors every day, is a far more rigorous training for seeing reality objectively than is a lifetime spent in academic research and debate. By contrast, in academia a professor such as the Marxist Bertell Ollman can not only publish nonsense in leading academic journals, such as this absurd 1991 prediction made even as the Soviet Union was falling apart,

"Paradoxically enough, the objective conditions for socialism in the USSR are now largely present, but because of the unhappy experience with a regime that called itself 'socialist' the subjective conditions are absent . . . on the other hand . . . the Soviet Union might be saved by a socialist revolution in the West as our capitalist economy goes into a tailspin."

But later win lifetime achievement awards for a lifetime of spouting such nonsense (in 2001 the American Political Science Association gave Ollman a lifetime achievement award for a lifetime of writing about dialectical materialism).

In an ideal world, investors would not make philanthropic investments in universities that harbor anti-capitalist ideological viruses. More realisticaly, they give to their alma maters because of nostalgia, a love of college sports, and due to sophisticated fund-raising through alumni networks. Conversely, they should pro-actively invest in pro-capitalist antibodies that might prevent another outbreak of ideological anti-capitalism. And yet unlike a donation to a mainstream charity, philanthropic donations to pro-market organizations are rarely recognized for the benefit they provide to the public.

It is unthinkable that smart, well-intentioned people would deliberately pay to disseminate swine flu at our universities, and yet each year philanthropists donate tens of billions to universities, most of which is unrestricted. And at present there is a relatively small pool of philanthropists supporting the antibodies to the anti-capitalist virus. At present, it seems unrealistic to believe that Marxism could break out amongst us again, and those who worry about academic Marxism do come off as right-wing cranks.

But in 1999 who would have imagined that ten years later mainstream publications such as Foreign Policy and the Globe and Mail would give space to Marxism in 2009. And who would have imagined in 1909 the nightmare that was the 20th century.

Michael Strong is the co-founder of FLOW, Inc., an organization devoted to "Liberating the Entrepreneurial Spirit for Good," and is the author of Be the Solution : How Entrepreneurs and Conscious Capitalists Can Solve All the World's Problems.


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9 Comments so far

  1. Leon Mayeri on June 21, 2009 1:14 am

    The absence of focused academic discourse on the failures of communist states is as puzzling as it is appalling. With the multitude of historical writings and views on the allied victory in WWII and the horrors that led up to the dismantling of European fascism, we have yet to scratch the surface on the real stories of families and individuals who witnessed and suffered from the “great societies” of the Proletarian Revolution. While some western thinkers became enamored with the alleged virtues of that system, others watched in horror and followed the trail of human repression, from the Balkans to Southeast Asia, to Cuba, and beyond.

    Thanks to the release of well-articulated Soviet archives, we now have an abundance of irrevocable proof that all of the fears or weaknesses we once had toward communism were entirely justified. Yet, we do not have the ability to include this important aspect of history in our college curricula. Our decade after decade hope that Algier Hiss types were innocents has been scrapped to the duping pile of history. Most unfortunately, our so called “enlightened intellectual” strata has done a magnificent job of maintaining their core commitment to the utopian prospects of Marxist statism, in spite of the profound structural disillusionment and proficient mass murdering that accompanied those societies.

  2. reid on June 22, 2009 11:22 am

    Why? Reagan was not a Marxist/Socialist Democrat. Name a major Hollywood producer willing to risk his/her reputation on a movie that ends happily thanks to Reagan. More frightening to the left than validating Reagan the man is validating Reagan's value system. The USSR was evil and he stated it.

  3. George Parkanyi on June 22, 2009 3:41 pm

    I'm not going to defend Marxism, because my birth country Hungary suffered terribly under Soviet and communist rule. However, to liken an idea to a flu that needs to be eradicated is exactly the kind of language that totalitarian regimes use to maintain power - and that ultimately leads to horrendous slaughter.

    All ideas - good or bad - should be a allowed to be discussed freely and openly, as well as their counter-arguments. (At least by adults - although I would go further and argue that schools as well should allow balanced expression of all viewpoints, down to the younger age the better. The acting out of viewpoints is what needs to be managed.)

    Even Marxism had good intentions. It was trying to address the problem of the exploitative and abusive wielding of economic power by the privileged. Recall its 19th century European context; aristocracy was not a meritocracy by any stretch - it was a feudal system that controlled the capital, and where the ordinary person outside the aristocratic circles had little to no independent economic opportunity. This idea of providing more freedom and opportunity to the masses (with all its flawed assumptions about human nature and its naivete about giving power to mobs and to the ignorant) was co-opted by psychopaths like Stalin and Mao. That wasn't Marx's or his ideas' fault. (Stalin and Mao would have used capitalism as their means if they had thought THAT would get them to ultimate power - and Hitler came to power within a capitalist economy.) It's in the use of an idea to justify any means, wherein lies the moral hazard.

    Even if an idea is "bad", conflicting viewpoints have value in providing a point of reference for better ideas.

    Ideas/opinions (an individual's interpretation of environment and information) should be allowed free rein to be debated and to provoke thought, and society should push back strongly whenever someone promotes their suppression -particularly forced suppression. (Note - this does not necessarily apply to information itself. Information not in the public domain is a form of property, and the rights to this property need to be protected - for privacy and economic reasons etc…)

    … in my humble opinion.

    Cheers, George

  4. Craig Bowles on June 23, 2009 8:27 am

    Murray Rothbard says economic theories move in and out of vogue similar to how restaurants move in and out of fashion. It’s not even about disproving them. The scary thing is that Marx may be right in that capitalism changes to socialism on it’s way to communism. Others thought this is probably true and only differ in why they think it happens.

  5. JD on June 23, 2009 3:06 pm

    Please don't forget the looters like Chavez in Venezuela. Marxism is not the cause of the "revolutions" of the plunderers and their accomplices, it's the excuse.

  6. David Whitesel on June 25, 2009 8:39 am

    Who said "Ideas/opinions (an individual's interpretation of environment and information) should be allowed free rein to be debated and to provoke thought, and society should push back strongly whenever someone promotes their suppression -particularly forced suppression."

    [Ed.: please engage in civil and respectful discussion of ideas and not denigration of people].

  7. Adam on June 25, 2009 11:16 pm

    There’s no mystery to the resurgence of Marxism, take your pick of Enron, Worldcom, Madoff, LTCM, AIG, that the relative wealth leads to greater happiness than absolute wealth for the majority of people or that income inequality has been at historic levels and the Proletariat aren’t happy with their slice of the pie. I also find the concept of China being “nominally” communist interesting but I wonder how Tiananmen Square and the tainted milk scandal or the treatment of the Falun Gong fit that model.

  8. Robert Walker on June 27, 2009 8:01 pm

    It's easy to deride socialism for the failures it has engendered, but Mr. Strong is in many respects a socialist. It's pretty certain that he socializes his risk of illness in the form of health insurance, and his risk of dying in life insurance. Those kinds of socialization makes perfect sense. He is willing to accept much reduced risks in exchange for somewhat reduced rewards — who isn't?

  9. Walter on July 8, 2009 1:22 am

    “The ideological menace known as Marxism killed at least 100 million in the 20th century; . . . ”

    Dear Mr. Strong,

    Have you bothered to calculate the deaths eventuated by capitalist cultures? An interesting book, a history on the slave trade, estimated that in North America some 80 millions were killed, a number which pales in comparison to the some 200 millions who lost their lives further south.

    Of course, the incursion of the capitalists was a fact of progress. But for whom?

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