Ownership of Capital

Speakers
Dan Russell,

Release Date
September 7, 2017

Topic

Basic Economics Economics
Description

Marx wanted to end inequality, but he said redistributing wealth was the wrong way to do it. Watch more with Dr. Russell.

    1. Critique of the Gotha Programme (essay): Karl Marx argues against the redistribution of wealth to solve inequality. 
    2. The Fundamental Fallacy of Redistribution (article): Alan Reynolds busts the myth that Marx believed in income redistribution, and explains that the idea may have come from David Ricardo and John Stuart Mill. 
    3. The Gig Economy Makes Karl Marx’s Dreams Come True (article): Max Borders argues the gig economy puts the means of production in the hands of workers.

Daniel Russell: Ownership of Capital.
When people think of Karl Marx they usually think of two things: (1)The injustice of inequality and standards of living. And (2) The necessity of lessening inequality by taking wealth from some people and redistributing it to other people. But that’s only half right, Marx certainly was worried about inequality, but he thought that redistributing wealth was entirely the wrong thing to do about it.
This is a point that he made in an 1875 essay called, “The Critique of the Gotha Programme,” where he argued that the architects of the German Socialist Workers Party were getting his views all wrong. The main idea behind the Gotha Programme was that it takes a village for people to produce anything. So what ever people produce should be distributed equally across the whole village. Now that sounds like what we think of Socialism, and evidently that’s how it sounded to the Gotha Congress back in 1875. But Marx himself thought that this was, well, nothing more than a tired argument that people would pull out of storage whenever they wanted to make self-serving claims about how much control they should have, over what someone else has made. Politicians would argue that nobody can build anything without government, so government should be first in line for whatever gets build. In fact Marx said that Capitalists could have made exactly the same argument for themselves, since nobody can build anything without capital either.
What really bothered Marx was that how anything gets built in the first place depends on the whole way that economic production is structured in society. Focusing on the final product of that economic activity and arguing over who should get it was completely beside the point. It’s no good to let people do what they have to do to create wealth by the rules of the game and then redistribute the wealth when you prefer a different outcome. The real point was whether the rules of production made society a better or a worse place for everyone. If something needs to change, Marx argued, then the change must be nothing short of an overhaul of the rules themselves.
So one thing that Marx made clear was that he did not advocate redistribution. Actually Marx was a vocal opponent of redistribution. If there’s something wrong with what owners of capital earn, Marx argued, then capital shouldn’t be owned by private owners. What Marx really advocated was a comprehensive restructuring of how wealth is created in the first place, in order to eliminate inequality. One major change was that resources must no longer be allocated by the price system, rather the government should own all the means of production, including both capital, land, and everything produced should go into a single pot, from which everyone would receive whatever they needed.
Now Marx saw that at first laborers would expect to get more out of the pot, if they had done more of the work to fill it, and that would leave some inequality. So the other major change was that work must no longer be rewarded with wages. Marx predicted that humans themselves would change, eventually the aftereffects of market society would wear of and spending one’s life working in the service of others would become life’s greatest reward. Then at last society would be whole, harmonious, and healthy, and it’s guiding principle would be from each according to his ability, to each according to his needs.
Whatever you think of Marx there’s at least one idea that is hard to argue with. Marx perceived that however economic production is organized, it will have a deep impact on every aspect of human life. The key therefore is to organize ourselves in such a way that we can live together in peace and prosperity. The real question is what kind of society best helps us do that, and that is ultimately what’s at stake between one form of economic production and another.