Matias Vernengo — Was Marx right? Nice of you to ask, but...

Matias Vernengo (who has actually read Marx closely) sets the record straight.

Naked Keynesianism
Was Marx right? Nice of you to ask, but...Matias Vernengo | Associate Professor of Economics, University of Utah

To amplify: The Soviet Union was not a test of Marx's economic thinking, nor does the dissolution of the USSR show that Marx's economics failed. This fable needs to be put to rest.

Where Marx did go wrong was, first, in thinking that communist revolution would occur in capitalist countries. This was a political judgment that did not happen.

The countries that adopted Marxism-Leninism (which is different from Marx's economics) were relatively backward technologically and largely agricultural in comparison with European countries where manufacturing was developed and the industrial age solidly established. Marx was not thinking of Russia, where the pressing issue at the time was land reform.

Marxism-Leninism flourished in Russia and in its Chinese adaptation as Maoism. While the USSR obviously failed in that it is no more, it would be simplistic to claim that this failure was to the errors in Marx's thinking or even because of Marxism-Leninism. The situation is far more complex than that. Moreover, China has moved beyond Maoism toward market socialism and is doing quite well economically.

Taking to people from the former USSR and satellites, the story I hear is that what they learned about socialism as schoolchildren did not match what they saw when they grew up as discovered what was really going on politically and economically. These people, now in the US, say that they are experiencing the same phenomenon with respect to democracy and the market economy, which is pretty much as was described negatively in their upbringing under communism.

The problem is that communism and democratic capitalism, have not lived up to the representation. Why? Because the state is controlled by a power elite that administers it in favor of its own interests rather than in the interest of all, which are often overlooked or even sacrificed to benefit the interests of the elite. If Marxism failed in the USSR and Eastern Europe, it was a failure to actually implement it, or, really, to be able to implement it. Just was popular democracy has not been implemented in the West, where "government of the people, by the people and for the people" is still merely a slogan.

Marx's second major mistake was in thinking that by changing the economic infrastructure a more ideal society could be formed. However, Marx did not think that this would happen automatically either. He reasoned that it would require a period of transition during which what he called "the dictatorship of the proletariat" would be needed to effect the transition by the means it deemed necessary. In practice this would be the administration of the communist faction.

Mikhail Bakunin correctly perceived the danger in this idea of dictatorship, saying, "If you took the most ardent revolutionary, vested him in absolute power, within a year he would be worse than the Tsar himself."

What actually happened was just that. As the feudal aristocracy was replaced by the haute bourgeoisie in capitalism, the former ruling class and bureaucrats in Russia and China were replaced by the commissars as the new ruling elite. Stalin and Mao became more authoritarian and wielded greater power than the tsar or emperor, as Bakunin had predicted would happen.

The Vietnamese have a proverb about this: "The dungheap remains the same, only the flies change."

However, the notion of the dictatorship of the proletariat has nothing to do with Marx's economics, but rather his sociology and politics. What happened subsequently has little relation to the unfolding of events as Marx had conceived either. The state not only did not wither away but turned into a totalitarian monster ruled on the military model while proclaiming to be socialist.

There were two major reasons for the failure of Russia and the USSR, and neither are attributable to Marx's economics.

First, from its inception the Soviet Union was faced with a powerful adversary in terms of a capitalist coalition that was opposed to socialism as a threat. Regime change was a high priority. Therefore, Lenin and the communist leaders had to devote a significant portion of their political focus and economic output to military buildup right from the start.

In a relatively short time, a matter of decades, the USSR became the military equal of the Western powers. Transforming a backward group of nations into a global superpower in such as short time was an incredible achievement, albeit accomplished at great cost. This should be recognized as a great success in industrialization and technological innovation. The USSR was the first in space, for example.

Secondly, the USSR failed economically not simply because its command economy could not compete with the invisible hand of markets. The failure was due largely to capture, cronyism and corruption, the same factors that are undermining democracy in the capitalist world today.

Why? Because politics is about power, and those with a hunger for power self-select for leadership in the absence of a cultural and institutional environment that prevents this from happening. This all but guarantees rule by a power elite.

Examined from the institutional point of view, failure to adopt a market system was hardly the only factor in the breakup of the USSR, and it could have been avoided within the broad framework of a Marxian economics and a conducive cultural and institutional environment.

Of course, I am not claiming that Marx was right either. He wrote in a different time in terms of a context that no longer exists. So did Adam Smith. If Adam Smith still has something to say to us today, then presumably Marx might, too.