Tag: Karl Marx

The Fundamental Fallacy of Redistribution

The idea that government could redistribute income willy-nilly with impunity did not originate with Senator Bernie Sanders. On the contrary, it may have begun with two of the most famous 19th Century economists, David Ricardo and John Stuart Mill.   Karl Marx, on the other side, found the idea preposterous, calling it “vulgar socialism.”

Mill wrote, “The laws and conditions of the production of wealth partake of the character of physical truths.  There is nothing optional or arbitrary about them… . It is not so with the Distribution of Wealth.  That is a matter of human institution only.  The things once there, mankind, individually, can do with them as they like.”[1]

Mill’s distinction between production and distribution appears to encourage the view that any sort of government intervention in distribution is utterly harmless – a free lunch.  But redistribution aims to take money from people who earned it and give it to those who did not.  And that, of course, has adverse effects on the incentives of those who receive the government’s benefits and on taxpayers who finance those benefits.

David Ricardo had earlier made the identical mistake. In his 1936 book The Good Society (p. 196), Walter Lippmann criticized Ricardo as being “not concerned with the increase of wealth, for wealth was increasing and the economists did not need to worry about that.” But Ricardo saw income distribution as an interesting issue of political economy and “set out to ascertain ‘the laws which determine the division of the produce of industry among the classes who concur in its formation.’

Lippmann wisely argued that, “separating the production of wealth from the distribution of wealth” was “almost certainly an error. For the amount of wealth which is available for distribution cannot in fact be separated from the proportions in which it is distributed… . Moreover, the proportion in which wealth is distributed must have an effect on the amount produced.” 

The third classical economist to address this issue was Karl Marx.  There were many fatal flaws in Marxism, including the whole notion that a society is divided into two armies – workers and capitalists.[2]  Late in his career, however, Marx wrote a fascinating 1875 letter to his allies in the German Social Democratic movement criticizing a redistributionist scheme he found unworkable.  In this famous “Critique of the Gotha Program,” Marx was highly critical of “vulgar socialism” and considered the whole notion of “fair distribution” to be “obsolete verbal rubbish.”  In response to the Gotha’s program claim that society’s production should be equally distributed to all, Marx asked, “To those who do not work as well? … But one man is superior to another physically or mentally and so supplies more labor in the same time, or can labor for a longer time… . This equal right is an unequal right for unequal labor… It is, therefore, a right to inequality…”  

France Will Show U.S. How (Not) to Do It

Francois Hollande is a man on a mission—to increase the top rate of tax on income to 75 percent. The Socialist candidate, who is poised to beat Nicolas Sarkozy in the French presidential election, said, “Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it’s not possible to have that level of income.”

Hollande’s “unassailable” logic aside, the measure would remind those who are too young to remember the 1970s of what happens when the rapacious state makes work really unprofitable. I can just see the Whitehall mandarins wring their hands with joy as thousands of French high-earners, from actors to businessmen, pour across the English Channel to London. If anything, the disastrous effect of the French tax will be greater than four decades ago—the world, after all, has become even more competitive and the cost of relocation has fallen appreciably. Karl Marx is supposed to have said that “history repeats itself, first as tragedy, second as farce.” Hollande may well prove him right.

New Cato Unbound: Culture, Tradition, and the Modern World

Conservatives often talk about the modern world in terms of decline. Old traditions fall victim to market dynamism, integration, and globalization, and our society is the poorer for it. Newer isn’t better — it’s more superficial, less rooted, and less secure.

Those who make this type of argument are frequently tempted toward the creation of group rights or privileged statuses for traditional identities, behaviors, or social norms. Oddly, the left has at times agreed on just this critique, and on just these sorts of privileges in response. The authentic past, the authentic identity must be preserved, even at the cost of classical liberal ideas of rights. Marxist critiques of capitalist culture have long made just this point. As Marx himself famously said, industrialism means that “all that is solid melts into air.” To many, stopping it from doing so seems possibly a good idea.

In this month’s lead essay, political theorist Russell Arben Fox sounds a cautionary note. Traditions have always evolved, he argues; there is no pristine, fully authentic past out there to be found. In a sense, for a tradition to be authentic at all is for it to be flexible and subject to change. The way to honor the past, he suggests, is to be conscious of it, yes, but also of the world in which we live, today. Both straightforward traditionalism and the Marxist-inspired critique of it commit the same error. They both seem to believe that the truest, most unvarnished past is out there, waiting to be found, somewhere. (Somewhen?)

Is he right? Obviously, we are dealing with questions that involve culture as much as politics. To help sort them out, we have invited journalist and blogger Eve Tushnet, historian John Fea, and doctoral candidate in government James Poulos, known for his extensive freelance journalism and blogging, notably at Postmodern Conservative and Ricochet.com.