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Marxian Socialism

Contradictions in Marxist Theory

The Marxist theory describes a number of alleged contradictions in a capitalist society, but the solutions that Marxists offer -- the class struggle, bloody revolutions, and dictatorship of the proletariat -- contain their own contradictions.

Exploitation is the cornerstone of the Marxist theory. Labor theory of value correctly states that labor is the source of wealth, but the conclusion is that owners of capital are not entitled to any share of wealth created by labor. In practical terms, it means that if you own a chicken farm, then your workers create 100% of wealth and value; you create nothing. It does not matter that you bought the land, built the chicken farm, and created jobs for your workers. Now your workers are being exploited by you, the worthless owner of the chicken farm. Exploitation means that you pay your workers less than they deserve. And how much do they deserve? They deserve to be paid so much that your profit equals zero. It means that the selling price equals the cost of production. Any profit is a "surplus value" and evidence of exploitation.

    Marxists are agitating to create a better world, where there is no profit, no surplus value, and no exploitation, but how exactly the promised better world will be better than the present capitalist system? The history of Russian Revolution offers a good understanding of how Marxist brainwash the population with promise of a better future, then make them fight for the better future, and then, when given total control of the government, create institutions of such inhumane terror that any shortcomings of the capitalist system look absolutely insignificant.

    In 1917 Russian Marxists promised to confiscate land from owners of big estates and to redistribute that land to poor peasants. At that time close to 90% of Russia's population were poor peasants. 90% of Russians military were also poor peasants. Agitated by Marxists, soldiers and sailors of military bases around Petersburg, which was the capital of Russia at the time, stormed, guns blazing, and took control of all most important buildings housing the government institutions of Imperial Russia. Almost overnight, the mighty Russian Empire  collapsed and disintegrated.

   And how the peasants were rewarded? They were given land, but were obligated to sell agricultural products to the government at 20% of fair market price. The government exported wheat and some other agricultural products, and used the profit to pay for import of the industrial machinery from the West. That is how industrialization in the Soviet Union was financed. It was financed by robbing the peasants silly.

   Now let's try to answer a very interesting question. Was it morally right to finance industrialization of the Soviet Union by robbing the peasantry? Was it a case of exploitation when producers were paid less than they deserve? Socialists will tell you that there was no exploitation because all the profits went to the government which used the money to accumulate productive capital, and accumulation of productive capital makes the whole economy more productive, which means higher standard of living. As we see, Marxist socialism does not eliminate profit, exploitation, and accumulation of capital; it just makes profit, exploitation and accumulation of capital morally acceptable because the government does it, and not the private individuals.

   Socialism does not eliminate inequality, either economic or social. In the Soviet Union the top level of the Communist Party occupied all the important positions in the government institutions. There was a name for this elite -- Nomenklatura. Marxists and Democratic socialists are always complaining about economic and social inequality in capitalist countries. Well, in any of the Marxist - socialist countries the elite of the ruling party enjoyed economic and social benefits that are in many cases even greater than the benefits capitalists enjoy.

Then why are all those Democratic socialists lamenting about inequality? Because the socialists lost all the standard talking points after the disintegration of the Soviet Empire. Now everyone knows that government ownership of means of production does not make the economy more productive. On the contrary, the point can be made that in capitalist economies profits ( extraction of surplus value) finance accumulation of capital which makes the economy more productive, and which means higher standard of living for the whole society. Democratic socialists have only one avenue left to destroy the capitalist system -- to agitate about inequality, which has been rediscovered as the most important issue of the modern world. Millions of college students in the United States are being brainwashed about growing economic inequality. Hundreds of thousands of students get worthless degrees in subjects like sociology. They have no clue about economics. They have no clue how to reduce poverty by building more housing and producing more goods and services. These "highly educated" people learn only about growing inequality in the U.S. And about the only solution to this problem -- redistribution of wealth and income. To pull off a socialist revolution, Marxists need a certain number of revolutionaries. During the Russian Revolution it was only 1% of 1% of the total population of Russia who stormed buildings and handed the power to the Communists. In the United States, Marxists cannot easily brainwash our military to believe that a Communist dictatorship will be able to establish a heaven on this Earth. We all see how workers' paradise works in Cuba, North Korea, and Venezuela.

   American Marxists have a different strategy to seize power. No, they are not communists like those barbarians in poor countries populated by the backward people. They are just Democratic socialists who just want to reduce inequality. Marxists never proclaim the end goals of the real strategy. No, they are not trying to establish a dictatorship; they are for democracy and a better future. In Russia, and China, and Cuba, and everywhere, those Democratic socialists always promised just to redistribute wealth from the rich to the poor and to give power to the people in a more rational and democratic society. And every time, without a single exception, the promised better future has degenerated into the terror of the French Revolution, Gulag and Nomenklatura of the Russian Revolution, and pain and suffering of ordinary people under a variety of despots. Socialist revolutions always deteriorate and degenerate. The leaders, always under grand illusions and delusions from the start, slowly become disillusioned. They start fighting over tactics, over strategy, over power, and over everything. Then they start settling their differences. The favorite method of the French Revolution was a guillotine. Stalin preferred admissions of counter-revolutionary activities by his rivals after a fair amount of torture, and a single bullet in the back of the head in the dark basement of the Lubyanka jail. It is not that the revolutions begin to eat their children. Rather, the leaders of the revolution begin devouring their child -- the revolution. This is an ugly underbelly of the beast. The permanent revolution requires the permanent struggle against enemy forces and constant elimination of political rivals.

    Democratic socialists would not admit that their revolution would follow the same path as any other socialist revolution. That is why they hide their socialist wolf under the skin of a promised people's democracy. They insist that all they want is equal access to education, healthcare, and housing; higher wages and a bigger piece of the economic pie for the workers; and equal rights for various oppressed groups.

   This kind of program has always been a standard recipe in a cookbook of any Marxist - socialist movement. This recipe is the surface agenda. The real agenda of the Democratic socialists is to eliminate capitalism and establish a Marxist-- socialist system in the end. But the first priority of the democratic socialists is to seize power. That is why they are promising to take from the rich and to give it to the poor. In a society where the majority of voters are not very rich, but are very envious, this recipe is the recipe for success.

Not enough of the poor people to vote democratically for redistribution of wealth? Let's accept millions of poor refugees from all over the world. There are hundreds of millions of women and children who are eligible to seek political asylum in the United States. The strategy of Democratic socialists is to import as much poverty as possible into the US. Sooner or later, the poor will vote, very democratically, to do the redistribution. The United States is just one step away from the socialist revolution. We are losing this country.

   Just take a good look at Sanders supporters who constitute about one half of the Democratic Party. Miseducated in public schools and brainwashed on college campuses by Marxist sociologists, they are demanding economic equality. These "highly educated" people don't even understand what economic equality means and whether it can be achieved. Do they want the burger flippers and sociology professors, most of them communists, to be paid equal wages? We can do it very quickly given that burger flippers are not paid too much. Sanders supporters are complaining about 1% of 1%, and are demanding redistribution. But what is the purpose of redistribution? To improve the living standard of the poor? To give more money for rent? Then landlords will simply increase rent payments, and only the landlords will benefit from redistribution of wealth from the rich to the poor. The only way to reduce poverty is to build much more housing and to keep prices of housing affordable. People do not understand that construction of housing should be financed with loans generated in the financial system, and not with money confiscated from the rich. The problem is that a lot of uninformed people vote, and they can vote us into a downward spiral of revolution, civil war, confiscation of wealth, and then more revolution down the vicious spiral of destruction of American civilization. 


​    The  concept of ownership is so simple and basic that we rarely if ever think about its meaning, even though the concept of ownership is the most important, most fundamental of all concepts in the Marxian theory. The whole  foundation of the Marxian theory --  the notion of exploitation, economic oppression, surplus value, emancipation and liberation, etc. -- rests on the concept of ownership of the means of production, the capital.  According to the Marxist theory, owners of capital (capitalists) exploit workers by extracting "surplus  value". Surplus  value is the difference between cost of production and the selling price. In  accounting, the difference between total cost of production and the revenue received for the product is called profit. In the Marxian theory Marx refers to profit as "surplus value". And what is the reason for that?

 Let's consider a simplified example.  Suppose, an owner of a bakery buys flour for $1, pays his  baker $1 for baking the bread, and sells  the bread for $3, making $1 in  profit. This $1 is a surplus value. Suppose now, the owner sells the bread for $2. In this case, both profit and surplus value equal to zero, there is no "exploitation", but why would anyone have a business if there is no reward for it?

   Suppose, the owner is working in his business as a manager, and he is entitled to earn $1. Now the total costs of the business are: $1 to buy flour, $1 to pay the baker, and $1 to pay the manager, or $3 in total costs. If the bread is sold at cost, then both profit and  surplus value equal to zero, and there is no exploitation. But -- and this is a big "butt" - if profit equals to zero, then investment will ALSO equal to zero.  In other worlds, the economy cannot grow, cannot expand, simply because investment  always comes out of profits.

  Imagine for a minute that you own a chicken farm, and you want to expand your business by adding another building. Where will you get the money to pay for construction of another building? You will get a business loan from a bank, but to make payments on your loan you have to earn profit. In other words, you have to extract "surplus value".  There is absolutely no way to dance around this problem.

   Marx was a genius of communication. He was too smart to advocate doing business without making any profit. Every fool would understand that without profit the  whole economy of any country would  stagnate.  That is why Marx simply reframed the issue. He replaced "profit" with "surplus value", which has a very negative  connotation: Look, the owners are getting rich on surplus value! It worked like magic.  In dark corners of Sociology Departments of American universities, where communists are hiding, they still are teaching students to hate capitalism, as if Cuba and North Korea were examples for people with brains to follow.

   Without profit there is no investment, and no accumulation of capital. It is true for any economic system. In the Soviet Union there was a socialist profit and socialist accumulation of capital. The only difference was the owner of the accumulated capital was the government rather than private persons.

   The  favorite activity of  communists is to lament about the widening gap between the rich and the poor. Let's shine some light into this dark corner. To understand a difficult topic, it is often helpful to imagine situations where things under discussion are taken to extreme levels.  Suppose now, in America Donald Trump owns absolutely all means of production --  apartment buildings, factories, chicken farms, etc.,-- and productivity of work is very high. WTO has been destroyed, and globalization is over. We no longer send our  food to China. We eat it ourselves. With high levels of production, especially in construction and agricultural sectors, every family will be able to rent a decent apartment, and there will be a real chicken in every pot. Why? Because productivity is high!     

  Suppose also, there is another country, like Cuba. No capitalists, no exploitation, just a communist paradise. But the country is very poor, as is always the case under communist rule.  Forget about chickens. They are thinking about eating insects and worms.    

Now, here is a question. In America, only one person is rich (Donald Trump), and the rest of the population do not own any capital. The gap between the rich and the poor has reached the maximum. But people live comfortably. In Cuba, there is no gap between rich  capitalists and poor  workers, but why are they starving? Why can't they grow tropical fruits for export, earn foreign currency, and import chickens? Or why can't they buy chicken feed on the world market and raise chickens for themselves and for export? In America, one person owns 100% of the capital of the whole country. In Cuba, the workers own everything. Why are the Cubans starving? Let's try to formulate the answer.

   In the Marxian theory, extraction of surplus value and accumulation of capital benefit ONLY the owners of capital. But in the hypothetical example where Donald Trump  owns 100% of America's capital the whole country benefits from the accumulation of capital by a single person.

 Imagine for a minute that there was a catastrophic earthquake after a huge flood. As a result, 100% of Trump's capital was destroyed. Not a single apartment or chicken can be found. They no longer exist. Should Americans care about the destruction of Trump's capital? It was ONLY Trump's  capital, right? Was it, really?

  It turns out that workers benefit from accumulation, and suffer from destruction, of capital they do not own.  Capitalists own their capital explicitly, but workers own the same capital implicitly, indirectly, simply because they benefit from accumulation of capital which  they Do Not Own.

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