Lecture three in the collection titled Marxism Unmasked by Ludwig von Mises. The lecture contains the following major sections: liberalism and collectivism, Marx, capitalism and the industrial revolution, and commentary on Marx.

Liberalism and collectivism

The concept of the liberal has been hijacked politically by those who refer to left-wing political idealogues as such. But the term is not used here in this way. Instead, the most straightforward conception of liberalism is freedom. In large part, the discussion of freedom has traditionally been associated with the individual. Mises takes up the aim of rationalist liberals who embarked on a journey to establish governments dedicated to the advancement and protection of the freedom of individuals. The challenge to this idea, the idea of protecting the rights and liberty of individuals, came from collectivists like Friedrich Karl von Savigny [1779-1861]. The collectivist maintained that the source and power of the laws was not the individual and his freedom but the "soul of the whole unit."

It wasn't the individual that thinks—it is the nation or a social entity which uses the individual only for the expression of its own thoughts.

In this regard, Marx parted with Hegel since Hegel maintained that history was an evolution toward a more significant form of freedom for the individual. On the other hand, Marx and Engels were not supporters of individualism. According to Marx, the whole unit goes its way under the guise of material productive forces. The individual could make no difference here. If napoleon were not born, someone else would have taken his place. Given these differences, the proper form of politics would come about through revolution, not constitution.

Revolution is a two-faced coin. On one side, it meant violent revolution and gradual evolution on the other. Marx gave the industrial revolution a particular function as a historical catalyst for change toward socialism. Liberalism, too, served a function to this end. In his eyes, liberalism was a chance for the lords to rid themselves of the responsibility for the livelihoods of enslaved people. If they were equal and thus free, the lords were no longer responsible for them.

It was necessary, [Marx] said, for the workers to be free in order for the exploiter to exploit them. The difference between their situation and that of the slaves and serfs was only that the capitalist had no obligation to care for the workers who were no longer exploitable, while the lord was bound to care for slaves and serfs.

Marx, capitalism, and the industrial revolution

The liberal idea and the industrial revolution created the conditions for the alienation the workers would suffer under capitalism. Unfortunately, many have accepted the Marxist propositions without realizing what contradiction it entails.

Suppose capitalism is a necessary and inevitable step on the road to socialism. In that case, one cannot consistently claim, from the point of view of Marx, that what the capitalist does is ethically and morally bad. Therefore, why does Marx attack the capitalist?

Marx attacked capitalism regardless of whether it was a necessary step toward his conclusion. The theory of underconsumption was one way through which Marx attacked capitalism. He tried to explain economic depression by saying that the capitalist kept a portion of what the workers produced, lowering their consumption which in turn caused the depression. Marx was not consistent on this point. Marxist writers do not worry themselves about explaining this concept either.

Oddly enough, underconsumption did not cause a decrease in population. Quite the contrary, Europe's population in the eighteenth century, grew exponentially. The economy of Europe could not cope with the population growth. Change in the methods of production and capitalist aims changed the "material productive forces" such that necessities became available for the ever-growing population.

If capitalism had not provided the means of sustenance for the "surplus" people, they would have died from starvation. Smallpox accounted for many deaths in pre-capitalist times; it has now been practically wiped out. Improvements in medicine are also a product of capitalism.

The alienation brought about through the freedom of the individual and the Industrial Revolution was not a necessary step to socialism nor was it a catastrophe at all. The advancements in industry and technology were not kept for the wealthy. Advancements in production made the fruits of industry accessible to all. Today most people live at a higher standard of living than centuries ago. With a new capacity to produce, the population grew from five and a half million in 1700 to 60 million by the 1940s. The industrial revolution allowed the lowliest worker to produce for the masses. Marx was blind to what was happening right before his eyes.

The United States does not lend itself well to such comparisons since it began as a capitalist nation. But seven out of eight people living today would not be alive without the industrial revolution.

Are you personally sure that you are the one out of eight who would have lived even in the absence of the Industrial Revolution?

In the latter part of his career, Marx supported economic freedom. He maintained that capitalism should be allowed to develop to maturity. With the intent to allow for the full development of capitalism came opposition to intervention, despite the interventionalist measures listed in the commusnist manifesto. Not even unions were seen as a positive force in the advancement of socialism. Marxists have adopted this opposition to intervention, it would seems. But it seems equally possible that the change of heart did not occur on reasonable grounds. The leaders of the socialist movements opposed other socialist thinkers because they did not want to be the implementor of someone else's plans. Every socialist wants to be the person whose plan is carried out. The concept of social planning was not new to philosophy. Plato schemed about it in the republic, and Hitler continued the tradition. The principles Marxist have used are not unique to them. They have been accepted without questions for 2300 years.

On Marx

Marx developed his concept of class consciousness because he could not respond to the criticism of his system. The concept allowed Marx to say

What you say is not true. It is only ideology. What a man thinks, so long as we do not have a classless society, is necessarily a class ideology—that is, it is based on false consciousness.

Ideology is the mentality that is helpful to a class in achieving its ends. With ideology, one returns to the critique of capitalism. How could bourgeois ideology be bad consciousness if their ideas lead them to act in ways that achieve their ends, ends necessary for the advent of socialism? The problem for Marx is that if he and Engels discovered and shared proletariat ideology, why do we need a bad one? A good consciousness is already available. The answer is that without a bad consciousness, capitalism could not mature, and without mature capitalism, socialism can never come about. "Apologetics for bourgeois production," as Marx called it, helped the capitalist. But how much of their actions need justification? They were bourgeois, programmed to do what history called for; their nature demands that they do what they must, exploit.

Before his death, Marx wrote that Russia could avoid capitalism's maturity period. He never made this public because he realized that such an admission would destroy his entire theory. However, Engels, who was not so bright, published this letter, becoming an essential piece of the Bolshevik Party.

Capitalism is a system if it can be called that, wherein each is promoted according to their merits. When some do not advance over others, these individuals become bitter. Individuals are reluctant to admit that they are not where they want to be because they lack intelligence. These individuals take their lack of intelligence with anger toward society. Socialism offered somewhere for these individuals to hide. Envy plays a role in everything. If everyone is equal, inequality means the system is broken, and there must be a different system.

Marx had "anti-talent" – i.e., a lack of talent.

Marx was ignorant of economics. For those who followed him the question of how best to employ the available tools and factors of production was left to a socialist official, not the entrepreneur, workers, and consumers. Marx did not understand that things needed to be done and this was different from following orders. Socialism can be nothing more than a police state. The entire system ends in incoherence, as does the third volume of Das Kapital, which was nothing more than a collection of nonsensical quotes from British parliamentary committees on money.

Utterly nonsensical!

All quotations are taken from lecture three of  Marxism Unmasked, it can be found here.