The second lecture of Marxism Unmasked can be understood in several parts: class interests, the iron law of wages, capitalism, scientific and utopian socialism, and revolution.

Class interest

As established in lecture one, the origin of the ideas of men is problematic for Marxism because of the contradictions in the explanation given for them. The materialist explanation and the claim that class interest determined the thoughts of men do not make for a coherent system, though they do make for a convenient one. The claims conclude that socialism is inevitable because it is meant to solve the contradiction caused by conflicting class interests.

“The fundamental concept of the Communist Manifesto (1848) was of ‘class’ and ‘class conflict.’”

Like tools, classifications do not exist in nature; they are the product of ideas. But, for Mises, the problem with class analysis is not that they are a product of human analysis. Instead, the question is whether we can use the concept of social classes like Karl Marx did —and Mises suggests we can’t.

It is not enough to say that where there is an interest, men must act according to it. Two questions must be addressed: to what end and through which method will the end be attained? Consider how Marx dealt with the conservative unions, who were quite literally those who comprised the proletariat class. If anyone possessed the interest of the proletariat class, it would be them. But Marx did not see eye to eye with them. They wanted better working conditions, and Marx wanted the abolition of wage labor. These are two different ends coming from one interest. They wanted political influence to achieve that reform, but Marx wanted revolution. One class interest could not answer the two-question posed by mises without conflict.

The proletarian unions and Marx disagreed as to what was in the ‘interest’ of the proletarians.

In such circumstances, who errs? The class or the individual member of that class?

The Iron Law of Wages

The iron law of wages is the economic calculation of the wage system adopted by Marx. The principles of the theory are still found today in many areas of political discourse, like in the fight for a living wage.

The iron law determines the wages of a worker by calculating the necessities required for the worker to produce for industry, i.e., show up to a factory and be able to reproduce a new generation of workers at the same time. According to the theory, if the wages rose above that threshold, the number of workers would rise, forcing the wages to fall back in line with the previous standard. This law of wages was in direct opposition to the Marxian idea that capitalism would continuously drive the wages lower, further impoverishing the working class, forcing the proletariat class to revolution,  and the advent of socialism.

Of course, both doctrines are untenable. Even 50 years ago, the leading socialist writers were forced to resort to other elaborate schemes to support their theories. What is amazing is that, during the century since Marx's writings, no one has pointed out this contradiction. And this contradiction is not the only contradiction in Marx.

Capitalism

A second problem with Marx’s economic position is that he mischaracterized the aim of capitalistic endeavors. The aim of capitalism is the efficient production of goods for the masses. Mises points out that those who wish to be critical often overlook one simple fact. In a capitalist society, the workers are also the customers. The same person making the products will eventually consume them, creating a dualism that Marxism does not acknowledge.

In his capacity as a wage earner, the worker cannot determine what is to be made. But in his capacity as a customer, he is really the boss and tells his boss, the entrepreneur, what to do. His boss must obey the orders of the workers as they are members of the buying public.

The increase in population and the improvement in poverty levels across the industrialized world are testaments to this claim. That some would prefer the factory worker be unable to buy what he produces by eradicating mass production does not negate this fact. Moreover, modern government involvement has allowed those who do not compete for customers to survive and enrich themselves through government spending, seemingly discrediting this view of a market economy. But the government is an interventionalist entity, not a value-creating one— this is outside the scope of lecture two. (editor's note).

Given that Marx did not acknowledge the goal of capitalism, he took it upon himself to explain the logical end of capitalism. Hegelian logic can be explained as the synthesis (negation of the negation) of a thesis and its antithesis (negation of the thesis). According to Marx, the logical argument was as follows:

Thesis: Private ownership of the means of production by every individual worker. E.g., farmers and artisans who owned the tools of their trade.

Negation of thesis: ownership under capitalism. E.g., the tools are owned by a capitalist who does not share in the production process.

Negation of the negation: ownership of the tools is owned by the whole society.

Applying this logic allowed Marx to claim he had discovered the law of historical evolution and branded it “scientific socialism.”

Scientific vs. Utopian Socialism

Since Marx had proven that socialism was a logical conclusion, there was no need to argue that socialism's structures were better than any alternative. There was no sense arguing for the inevitable. Those who tried to persuade others to accept socialism on its merits Marx called utopians. Socialism was the scientific conclusion that did not require a change in opinions. How did Marx approach this claim of inevitability? By establishing a doctrine of revolution.

According to Marx, the socialist party was not to influence but to bring about the inevitable. Revolutionary action does not change history; it moves it along its already established route. The then popularized word “scientific” allowed Marx and Engels to gain attention while dodging severe criticism. The revolutionary mentality is closely associated with proletarian class interests, yet, proletarian membership did not guarantee one would possess that particular interest. Mises notes Marxists' behavior toward Tomas Masaryk [1850-1937], the son of poor farmers and workers they considered bourgeois.

How could he be considered ‘bourgeois’ if Marx and Engels called themselves ‘proletarian’?

Revolution

The question of who possesses the gifts of Marx, the gift of thinking of proletarian class interest, was the leading cause of the issues of historical attempts to establish socialism. The issue was magnified after Marx and Engels were gone, and one need only look at the relationship among Marxist thinkers to see the problems created by Marx. For example, Karl Kautsky [1854-1938] was branded a “social traitor” for the crime of not consenting to the efforts of Lenin when he tried to revolutionize the world.

Revolution would, as a result, come with a side dish of the use of force and liquidation. The relationship between the Bolsheviks and the Mensheviks is notable here, as are the differences between Trotsky and Stalin.

If you cannot discuss philosophical differences of opinion in the same way you discuss other problems, you must find another solution –though violence and power.

The ideas of Marx lend themselves well to establishing hierarchies that are, needless to say, not material realities. Everything become subject to the discretion of the leader. Not only matters of policy, law, and economy, but even the sciences fell victim to class interests.

For instance, if there is a difference of opinion with regard to science or genetics, it must be decided by the leader. This is the necessary unavoidable consequence of the fact that, according to Marxist doctrine, you do not consider the possibility of dissent among honest people; either you think as I do or you're a traitor and must be liquidated.

Conclusion

Differences of opinion born of the same class interests manifested themselves through the debate over revolution and intervention. The communist manifesto was an interventionalist doctrine. One that called for the praise of political intervention as a sign of the end of capitalism, while at other times they claimed these measures were wholly inadequate and were simply a small disruption needed to spark a more extensive, presumably more effective, revolution. Regardless, everything pointed to the inevitability of socialism.

All quotations are taken from the PDF publication on Mises.org. You may download the entire work Marxism unmasked here! Commentary not found in the lectures themselves are additions by Omar Moreno author of this summary of the work by Ludwig von Mises.