Why does anyone believe Marxism?
How to (murderously) not understand commerce
The response to ’s first essay in his series on the strange and disorienting times in which we find ourselves has been nothing short of extraordinary. Hundreds of new subscribers have signed up, people are making payment pledges, and wrote this thoughtful response.
All of which made me realise that I really should explain how I came to commission 26 essays (in total) on an issue that is at once both pressing and apparently insoluble.
By way of background, I originally bought a short piece from Lorenzo arguing that problems with accurate evidence-gathering and approaches to finding truth in the social sciences long predate Wokery. Wokism, we suspected, had simply made an existing problem even worse.
Lorenzo used one or two case studies in his original piece, andof challenged him on approaching the issue in that way, arguing that a generalised pattern of evidentiary carelessness across entire disciplines was needed in order to make out the claim.
I thought this was genuinely interesting & worth pursuing, and commissioned the essays. I’ll edit and publish them weekly over the next six or so months, but on the understanding that Lorenzo is happy to make changes and respond to comments as they’re published. He’s currently revising two of the later essays in response to Arnold Kling’s piece, for example. This, of course, is made possible by the publication schedule.
Once again, the publication schedule is available here, and will remain pinned at the top of my substack throughout the publication process. I’ll also link each essay there as it’s published.
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Note: at the end of each essay, you’ll find a detailed bibliography and suggestions for further reading.
The record of revolutionary Marxism as a ruling ideology is quite simply the worst record of any political philosophy in human history. It has the worst record for mass murder: in the order of 100 million dead from the deliberate killings, starvations and policies of Marxist regimes. It has the worst record for tyranny: every single revolutionary Marxist state has been a tyranny. It has an appalling record for cruelty mixed in with the mass murder. It has generated a series of natural experiments of divided or adjacent societies where the Marxist regime has, over time, done much worse in promoting human flourishing than its mercantile equivalent.
The economic successes of Marxist regimes, such as they are, have either come from adding inputs to known production processes (typically, shifting peasant labour into factories) or from allowing commercial processes in flagrant contradiction of its own ideology.
What sort of mind looks at this record and says “yes, this ideology of appalling failure, murder, and misery deserves more chances?”
There are three possible responses to the historical record from believing Marxists. One is, that it is justified because of the goal of replacing “capitalism”. That is, to be a willing advocate of the utility of tyranny and mass murder. Such a person should not be acceptable in polite society, let alone employed by any taxpayer-funded educational institution.
The second response is to deny that there is such a record of tyranny and mass murder. Such a person is so utterly delusional, they also should not be accepted in polite society, let alone employed by any taxpayer-funded educational institution.
The third response is to claim that all the above is “not authentic Marxism”. This is the “No True Scotsman” fallacy, and is a ludicrous fig-leaf for discounting an appalling record of tyranny and mass murder.
Who, for example, would try to excuse the Holocaust on the grounds that “it wasn’t authentic Nazism”? When you see the Holocaust as an authentic manifestation of Nazism, while arguing the Holodomor is not an authentic manifestation of Marxism, even when revolutionary Marxism produced similar terror-famines in other times and places, then you have an utterly morally and intellectually diseased (and contemptible) perspective.
The people who perpetrated the Holodomor (and other terror-famines) claimed to be Marxists. They cited Marx’s theories and writings to justify what they did. We now know, since opening Soviet archives, that they used the language of Marxism even in their most private communications. They were believing Marxists all the way down.
Moreover, as we shall see, every appalling aspect of revolutionary Marxist regimes is a direct consequence of Marx’s theories. The problem was not they were not doing “authentic Marxism”.
It was that they were.
The “not authentic Marxism” claim is an attempt to rescue the claim that Marxism is true from its appalling track record. One might think that the appalling record of Marxism in power would be powerful evidence that it is not true. Which just points to how much work the “not authentic Marxism” claim is trying to do.
The claim of non-authenticity is, however, false because the failures of Marxist regimes flow directly from Marx’s theories, and specifically from their falsity.
Warrant for mass murder
The mass murders of Marxism were justified by Marx’s theory of surplus value. Surplus value is a theory of parasitism: that owners of productive property are oppressors who exploit workers and extract a surplus that is unearned.
If you convince a sufficiently large group of Homo sapiens that some group is made up of economic parasites whose removal from society will make society work better, and you richer, mass murder is primed to follow. Every massacre of every market minority (Jews, overseas Chinese, Igbo, Armenians…) has had a claim of parasitism as part of the motivating and/or justifying murderous animus.
Marx’s theory of surplus value, of economic parasitism, is not only predictably a theory of mass murder; every revolutionary Marxist regime has used it as a justification for mass murder, whether killing hundreds, thousands or millions. To say that such mass murder is not authentically Marxist is ridiculous: it shows a stunning lack of historical understanding or awareness.
This view of a group of economic actors as inherently parasitic was a ready weapon against any group it was desired to repress or eliminate. Those declared to be Kulaks, for example.
That such claims of parasitism were part of the justification for the Holocaust, whose primary target, Jews, are the classic market minority, just emphasises how contemptible is the claim that the Holocaust is authentically Nazi, but the Holodomor (and the other terror-famines) are not authentically Marxist.
Especially as the Nazis, in their slaughters within the bloodlands of Eastern Europe, were doing exactly the same thing Marxist regimes did in their mass slaughters: building a new social order by eliminating what they declared to be human dross. In both case, not merely the human dross, but the parasitical human dross.
Enthusiasm for social change through elimination of the human dross that stood in the way of the transformation of human society was best expressed by Marx’s friend, patron and intellectual interlocutor, Frederich Engels, in an 1849 article on The Magyar Struggle published in the newspaper Marx edited:
The next world war will result in the disappearance from the face of the earth not only of reactionary classes and dynasties, but also of entire reactionary peoples. And that, too, is a step forward.
There is, moreover, a striking difference between the Nazi Holocaust and the various Marxist megacides. The Nazi regime mostly mass slaughtered outside its heartland. For within Germany, the Nazis were “restoring” order. The Holocaust overwhelmingly took place in the bloodlands of states broken by Nazi conquest, not in Germany itself.
The various Marxist megacides took place within their own territories, within what that Marxist state firmly controlled. The Nazis slaughtered during war, the Marxists during peace.
Much of the commentary on the Holocaust has operated as a shield from history. For, without the Nazi slaughters, revolutionary Marxism stands naked in its level of systematic mass murder.
Jewish activists and lobbyists use the Holocaust to purvey a sense of Jews as unique victims. This has let loose a destructive paranoia (“the Holocaust could happen anywhere!”) that has generated, at times, a psychopathic activism.
Moreover, if you immerse yourself in Nazi and Communist propaganda, one finds that the base emotion of Nazi propaganda is love: a love of people and place. The base emotion of Communist propaganda is anger.
It turns out, even the perverse love of Nazism was inhibited from engaging in mass slaughter within its valorised landscape of order. A landscape of states they had destroyed and displaced? That they were entirely willing to fill with corpses.
The perverse reasoned anger of revolutionary Marxism had no such inhibitions or requirements.
Anger is very much the underlying emotion of Marx’s reasoning. It remains the most conspicuous public emotion of the adherents of politics of the transformational future, of a society free of alienation and exploitation. Anger that the world is not as they wish it to be and rage at those who impede the path to that imagined future.
A politics of anger attracts the angry. Especially frustrated lower-tier members of elites who are willing to burn down what exists to displace those above them. To displace the currently successful. A social pattern that Marx also exemplifies. This is very much social justice as moralised social strategy.
Not understanding commerce
Marx simply did not understand commerce, and he encouraged generations of academics and intellectuals to not understand commerce. Indeed, to despise and disparage commerce from the lofty heights of their not-understanding.
Both capitalism and capitalist are analytically unfortunate terms. Terms of disparagement are rarely conceptually sound tools of analysis, though they can be excellent for polemics parading as analysis.
At the centre of mercantile societies is not capital, it is commerce; a process of discovery and coordination. Theories of economic growth that do not make discovery and coordination front-and-centre in the analysis, but rather treat the factors of production mechanistically (add the factors together and growth happens: something the concept of capitalism encourages) fail. Decades of foreign aid have provided many illustrative examples of the failure of such mechanistic thinking.
Understanding comes from seeing social dynamics as being (genetically varied) strategising agents using information to respond to incentives. As evolutionary biologist Robert Trivers points out, there are few things more conducive to nonsense in the social sciences than starting one’s causal analysis at the social level and working downwards.
A person engaged in commerce is not well described as a capitalist. Often, they are not using their own capital. It was, for instance, a great strength of medieval commerce that it developed mechanisms whereby the merchant could access the capital of others (both financial and physical).
To be engaged in commerce is to operate at the intersection of land, labour and capital. There are four key commercial functions: identify a commercial opportunity, assemble resources (land, labour, capital) to seek to exploit that (expected) commercial opportunity, manage those resources, and cover the risks of all these processes. This means accepting that the commercial opportunity may be non-existent or not profitable.
Commerce is always and everywhere a process of discovery requiring coordination. Commerce is a matter of information, incentives, risk. Of these, managing risk is at the centre of how commerce is structured.
While societies have developed a range of mercantile structures, such structures typically show strong selection for forms of commercial activity that perform those four functions in ways that align incentives and information. The most persistent feature is that whoever puts the package together gains any profit, but also has to cover any loss.
This encourages folk to seek commercial opportunities, to economise on resources, to manage them efficiently, in order to gain profit and avoid loss. Social mechanisms that align information and incentives are selected for, those that misalign them are selected against.
A classic problem with state production is that, if losses can be loaded onto the taxpayer, there is much less incentive to manage resources efficiently. If decision-makers are paid regardless of profitability or revenue, there is also much less incentive to engage in the discovery of economic opportunities.
The failure to perform, or even value, these functions has much to do with why command economies persistently underperform their mercantile equivalents. Indeed, lapse into economic stagnation.
Command economies select for elite domination, not for discovery, innovation or efficiency. Their structures for the latter are dysfunctional, being typically reduced to copying production techniques discovered by mercantile societies that are oriented toward such discovery.
Because they follow Marx’s analysis, command economies do not value these functions. They do not identify their importance and do not replicate them, except where external competition forces them to.
The only solution Marxist regimes have been able to find to avoid economic stagnation is to permit the commercial activity that Marx’s theory says is inherently exploitive. Which, of course, creates a profound tension with the justifying (Marxist) ideology of such regimes.
The failure is Marx’s. Marx cannot usefully distinguish between serfdom (a taxing arrangement), slavery (a domination relationship based on stripping from the slave any standing or connection to others, other than their master) and employment (a commercial relationship based on mutual gain) because of his impoverished theory of social dynamics.
Perhaps Marx’s most contemptible piece of rhetoric is wage-slave. You have to be remarkably ignorant, or remarkably lacking in human discernment, to find that an appropriate piece of rhetoric.
Let us be quite clear what is implied by the claim that commercial activity is inherently exploitive, that to successfully produce more value than is used is to be an exploitive parasite. (Presumably, making a loss means one is an unsuccessful parasite.)
The underlying claim is that not only do key commercial functions have no value except as expressions of “labour” but that, left to themselves, workers would spontaneously and systematically engage in these key activities. This is nonsense on stilts.
Creating vanguard capital
Here is a fundamental social reality: workers are not a coordinating class. They can organise themselves in unions and similar bodies, but coordination on a grander scale is not what the working class does, nor has ever done.
Not a single Marxist regime anywhere, ever, has brought the working class to power. None can, because the workers are not a coordinating class.
The best the workers can do as workers is to be able to self-organise and to vote. All revolutionary Marxist regimes ruthlessly suppress the former and turn the latter into public rituals of subordination to the ruling elite. What the Marxist transformation of society requires is spectacular levels of social coordination whereby the populace are not citizens to be served but human clay to be moulded.
The lie at the heart of Marxism is the claim that its underlying dynamic is the liberation of the workers. No, its underlying dynamic is to create, justify, motivate and empower vanguard capital.
What is vanguard capital? The conjunction of human capital and social capital (connections and networking) incorporating:
the skills, knowledge, motivation and networking to politically coordinate entry into organisations and institutions, shifting them towards the politics of the possessors of said capital.
Vanguard capital typically uses a particular political lexicon as a mutual identification and coordinating mechanism. Possessors of vanguard capital are the ruling elite in revolutionary Marxist regimes. The Jacobins of the French Revolutionary were the modern prototype of vanguard capital in the service of the politics of the imagined, transformational future.
As vanguard capital is about moralised status and power, it is prone to purity spirals and callout culture. In embracing grand historical, moral, or religious purposes (or some combination thereof) possessors of vanguard capital resist being agents of the wider society, the wider citizenry. On the contrary, they seek to mould and subordinate the citizenry to their grand purpose.
Lenin (1870-1924) was a theorist and practitioner of vanguard capital. When Rudi Dutschke (1940-1979) famously talked of the long march through the institutions, he was mobilising and using vanguard capital. Saul Alinsky’s Rules for Radicals is an operational manual for vanguard capital. Christians, marching through the institutions of the Roman Empire, were the first significant practitioners of vanguard capital.
In all cases, the splendour of the future project obscured the full implications of the practice. That folk did not call what they were creating, and using, vanguard capital, matters not.
Just as others beside Lenin have applied the Jacobin model of politics—coordinated politics unlimited in scope (everything is politicised) and unlimited in means (up to and including mass murder)—without being as explicit about it as Lenin was.
Lenin was open about Jacobinising Marxism. As he proceeded to brutally and tyrannically demonstrate when in power, recreating the horrors of the Jacobin response to the 1793-6 Vendée revolt on a much vaster scale. As did Stalin, Mao, Pol Pot, and Mengistu (b.1937) after him.
The Jacobin model fits with the politics of the transformational future; with the grandiosity of such politics; with the transformation being so wonderful everything must be subordinated to it. Hence the concomitant ruthlessness.
But any politics of grand imaginings can be Jacobinised. Thus, Fascism was the Jacobinising of Italian nationalism and National Socialism the Jacobinising of volkisch (“Aryan”) racism.
The notion of capitalism is not much better than the notion of capitalist. What marks the modern world is not mass production, nor factories, nor mass commerce, nor corporations—all those date back to the ancient or the medieval world. At its peak of production, the Venetian Arsenal could turn out a galley a day.
What marks the modern world is the mass application of energy to transport, communication and production.
Most people now living would not exist without what is called capitalism. By contrast, there is no population which has experienced a net increase because of Marxism. Creating net decreases in population, however, Marxism has proved well able to do.
Networked globalisation starts with the European age of discovery and the trade networks created therefrom.
Without converging prices, one does not have globalised markets. The sheer scale of the expansion in water transport (both ships and canals) in the Atlantic economy created a sort of local globalisation.
Mass globalisation seriously takes off from the 1820s development of steamships and railways, the application of steam power to transport. Only then do we get the mass transport of goods on a scale such that prices start converging globally.
The unprecedented creation of mass prosperity was due to the explosion in productive capital, a huge increase in available energy, and ways of using both. Applications that derived from processes of commercial discovery.
Mercantile society is generally positive for workers, especially if it generates more and more productive capital. Marx had so little concept of relative scarcity, he could not see that if capital increases faster than labour, that raises the productivity and the relative scarcity of labour, tending to push wages up, not down. The countries with the highest wages have the highest levels of capital; those with the least capital, have the lowest wages.
Capitalism is a profoundly misleading term. One popularised by Marx’s polemics, and simplistically mechanistic conceptual frameworks, that in turn encourages the simplistic and mechanistic analysis of social dynamics.
Shifting status strategies
The key discoveries of the Industrial Revolution were not made by the corresponding gentleman-scholars who drove the Scientific Revolution. They were made by jobbing artisans, craftsmen, and tinkerers engaged in acts of commercial discovery.
What the Scientific and the Industrial Revolutions do have in common is a vital shift in dominant status strategies. As we have already noted, humans have three forms of status: dominance (status through fear), prestige (status through competence) and propriety (status through norm adherence).
Both the Scientific and Industrial Revolution rested on a shift in dominant status strategies from propriety to prestige. The disruptions of prestige-through-discovery were thus able to break out of the confines of propriety-from-conformity.
The creative destruction of science, technology and commerce is socially disruptive. Without the status protection of prestige-through-discovery, the conformist cohesion of status-through-propriety tends to throttle such socially-disruptive discovery.
Human societies face a constant tendency to fall back into the social stagnation of the gossip trap. Of enforcing conformity through criticism, ridicule and shunning. Processes that social media are currently supercharging.
Marx comprehensively failed to understand commerce and mercantile society. He did, however, teach many intellectuals a language with which to despise commerce while not understanding it.
As I’ll explore in the next essay, Marx’s misunderstanding of class, surplus and the state was even more disastrously wrong.
Ronald Findlay and Kevin O’Rourke, Power and Plenty: Trade, War and the World Economy in the Second Millennium, Princeton University Press, 2007.
Frank H. Knight, Risk, Uncertainty and Profit, Cosimo, , 2005.
Orlando Patterson, Slavery and Social Death: A Comparative Study, Harvard University Press, , 2018.
Timothy Snyder, Bloodlands: Europe Between Hitler and Stalin, The Bodley Head, 2010.
Will Storr, The Status Game: On Social Position And How We Use It, HarperCollins, 2022.
Robert Trivers, The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life, Basic Books, , 2013.
Articles, papers, book chapters, podcasts
V.I.Lenin, ‘One Step Forward, Two Steps Back: (The Crisis In Our Party),’ February-May 1904, published in book form in Geneva, May 1904.
V.I.Lenin, ‘Can “Jacobinism” Frighten the Working Class?,’ Pravda, No. 90, July 7 (June 24), 1917.
Karl Marx, ‘Value, Price and Profit’, in The Essential Left: Five Classic Texts on the Principles of Socialism, ed. David McLellan, Unwin, , 1985, 51-106.
The Nazi hates the banker because he is a Jew, The communist hates the Jew because he is a banker.
Great article! a while ago i read two great books which delved even more deeply into the "uninstinctual nature" of market economies; "the capitalism paradox" by paul rubin and "why we bite the invisible hand" by peter foster; both are very informative and well written