This is a complete peculiarity, as the substantiation of successful ideas is shown through their implementation and not through their theoretical analysis. Every idea seems to be the perfect and unique solution when having been only applied on paper but being introduced in society is a much different thing.

Cooperation or Oppression?

Marx severely criticises the State to, later on, justify the dictatorship of the proletariat, which means building up a new and renovated State, but now in hands of the ones Marx considers should govern. Through this system, the proletariat will end up being the high class of society just by following the State’s structure, as it is a monopoly that benefits consistently those who are in in the Administration.

Marx portrays capitalism as an inhumane ideology that has been promoted by a lack of knowledge. How can an ideology that is based on shared knowledge and distributed information for the correct and efficient function of markets be based on a lack of knowledge?

Capitalism in brief

Capitalism is just the free Exchange of good and services following the wills of households without the State intervention, but with the State protection through the enforcement of the rule of law, which provides security for contracts and allows freedom of transaction and trade to be protected from fraudulent external agents.

One of Marx’s greatest lies is that which says that “merchants and entrepreneurs are expropriating wealth from workers through the concept of capital gain or surpluses”. The reality is that this exploitation really doesn’t exist, as contracts are voluntary and previously negotiated but never enforced. Those poverty conditions and high costs of living which sometimes force workers to accept a salary below their needs are created by the same socialist thinkers and politicians that impose capital gain tax or wage tax of over 40% or 50%. It is true that governments can’t raise wages, but they can increase disposable income and purchasing power, how? By slashing taxes.

Marxists in their capital gain theory don’t take into account investment in real capital, either fixed or circulating, which needs to be done by the entrepreneur and has an implicit risk in it, as any kind of investment. A large part of the revenue generated by a firm is due to capital expenditure and not so much due to workers and their added value. For example, in a denim factory, without a machine to wash, dry and transform fabric, it will be impossible for the workers to produce denim at the volume and speed they actually do.

In this case, the cost of capital (investment) which is confronted by the entrepreneur, will have a risk of not being returned and even generate losses, which is why all revenue and profits generated by capital (capital productivity) is usually reinvested in the firm’s future operations or just enjoyed by the entrepreneur due to the risk implicit in the investment, which is usually called return of investment (ROI), or risky return in high-risk operations.

Marxists in the today’s world employ a concept that never matches with reality. To what Marxists are referring with the term “neoliberalism” is really to mercantilism, which is an ideology that was widely put into practice from the 16th-18th century in Europe, based on interventionist State policies in the economy, which lead to the creation of monopolies and autarchies, through subsidization of unproductive sectors which are considered of “national relevance”, and through tight control of monetary policy and outflow of fiat money, to control inflation. It is necessary to bear in mind, that what Marxists normally criticise as capitalism is really “neomercantilism”.

Price controls are an important Marxist measure. Price controls were one of the main proposals of Marx to “abolish capitalism and lead to the dictatorship of the proletariat” from the State. The argument that Price fixation could work is based on the false Intrinsic theory of value, that sustains that each fair price, independently if it is intrinsic or objective, should be fixed by the State based on the amount of labour that has been put into its production.

To simply argue this theory, it is valid to say how these rules will cause enterprises to look forward to a capital-intensive model, reducing prices and being more competitive in the market, and as communists tend to don’t like this, they will finally end up performing several expropriations of private firms and premises, ending up as Cuba or Venezuela sunken in misery.

The failed Utopia

Marxism has shown in various different ways that it is a utopian ideology which promotes economic inefficiency which leads to poverty and hunger. His theories are based just on subjective forms and never on practical studies which have resulted valid when applied to reality. Marxism has caused hundreds of millions of deaths throughout history. It has been estimated that at least 150 million people may have died (more than that of in WWII) at the hands of Marxist regimes around the world. (source) Every communist regime in the 20th century strived or succeeded in imposing cruel and comprehensive dictatorship over the societies under their power, what they call rights of proletariats. Mind control through agitprop, restraint, and persuasion were rigorously put into effect to inculcate “socialist values” and destroy bourgeois, capitalist thinking.

It is not just that Marx failed as an economist by not being able to create a system of efficient growth and progress, but instead, he depicted a system of starvation, death and misery. As a futurologist, he was even less successful, as he predicted the end of capitalism based on his theory of dialectic materialism, but even nowadays in 2020, capitalism is still alive and stronger than ever. We have had to pass through several hard crises, but capitalism has always survived.

The post CAPITALISM VS SOCIALISM: RELEVANCE OF MARXISM THEORY IN TODAY’S WORLD appeared first on WISER WORLD.