Was Karl Marx a Public-Choice Theorist?

• Author: Munger, Michael C.
• Position: Critical essay

[I] still consider myself part of the "left," but it's a "left" that mostly only exists in my mind. It's a "left" that believes that the redeemable parts of Marx reveal him as one of the first public choice thinkers; so he's of the "right" too.

--W. Kindred Winecoff, "Romney! Obama! Same Effing Difference"

My introduction to the writings of Karl Marx was in 1977, when I was a college sophomore, at the hands of my Davidson College professor Ernest F. Patterson. "Red Ernie" was a student of Clarence Ayres, a luminary of the Texas Institutionalist School. As a consequence, it may be that my situating of Marx as an institutionalist and public-choice innovator has to do as much with how I learned Marx's ideas as with what he actually wrote.

But I don't think so. Marx, like Adam Smith, is often quoted or referenced but rarely actually read. And like Smith, Marx rewards a careful reading. Much of Marx's comprehensive view is wrong, in some cases catastrophically wrong. But, as W. Kindred Winecoff (2012) claims, the "redeemable parts" of Marx show some profound insights into the problems of capitalism in democratic states.

In this essay, I outline (briefly, with the problems of superficiality that brevity entails) the main parts of Marx's social theory. Then I discuss his anticipation of three areas of "public-choice" theory before drawing conclusions.

An Overview of Marx and Das Kapital

The short version of "Marxism" goes like this: the motor animating historical change is class struggle. Two large-scale social phenomena condition class struggle: institutions and ideologies. Loosely, institutions are the set of formal and informal rules that create the context for struggle, and ideologies are the set of norms and shared consciousness that create the justifications for that struggle or for accepting existing conditions without struggle.

There is dialectical conflict and evolutionary change in each of the three domains--class struggle, institutions, and ideologies. The underlying cause, the prime mover, is always class struggle, which in most institutional contexts is a political struggle. The form of the political struggle may be violent revolution outside of current institutions or the takeover of existing institutions under the rules; it depends. There is a deep schism in Marxist practice between those who favor active revolution--for which early Marx can be cited as an authority--and those who favor parliamentary or (in the United Kingdom) Fabian socialist takeover--for which late Marx can be invoked.

Evolutionary forces are also at work on institutions and ideologies, or the shared, culturally determined belief systems called "consciousness." Generally, institutions evolve more or less continuously, as the logic of feudalism first and then market systems have grinded along, given the participants' self-interests. Though Marx himself (unsurprisingly) did not use game theory or even a simple "prisoners' dilemma" scenario, many of his arguments and conclusions are easily adapted to this logic. Members of ruling classes, either the nobility in feudalism or capitalists in markets system, individually do what they perceive as being in their self-interest. But the aggregate consequences are the destruction of the wealth and sources of power of the ruling class for any institutional arrangement that contains "contradictions" or inconsistencies between individual incentives and group outcomes.

Ideologies, in contrast to institutions, are relatively persistent and change only in abrupt and possibly chaotic bursts. In evolutionary terms, this process is more like the "punctuated equilibrium" of species replacement than the incremental change represented by adaptation within a species. Ideologies are an important part of the "superstructure" that is built on top of institutions, and the persistence of the hard but brittle superstructure is in tension with the relatively plastic but powerful evolution of underlying institutions and economic relations.

Marx saw ideas and ideologies at best as epiphenomena and at worst as stupefying galimatias. As he saw it, only economic relations, in the form of the institutions that condition class struggle, will evolve according to a definite, scientific materialistic dialectic. Of course, Marx himself wrote about ideas, and he thought that those ideas mattered. But he thought of himself as doing physics, identifying the material laws of the motion of societies. These laws weren't ideas at all, but a description of the underlying forces that were clearly at work in the world for anyone with eyes to see. That's the reason why volume 1 of Kapital is often read, volume 2 is sometimes read or at least started, and volume 3 was never actually completed by Marx, and at this point is read only by poets. His "method" was proof by forward reference, writing down the main outlines in volume 1 and promising to return to flesh out the details later. When the details proved difficult and in fact impossible to write down, Marx turned to mysticism about the future and invective about the perfidy of his enemies.

In a market system, as Marx saw it, the institutions of markets for production and of capitalism (with most profits going to owners of capital) for distribution were supported by an ideological superstructure that united a mythology of "primitive accumulation" and Judeo-Christian guilt. Marx was working on a genuine puzzle, one that today we might paraphrase this way: Why is it that the people who work hard and sweat, who have to shower after work, devote all the effort, while the people who sit around, shower before work, put on a suit, and stay in the air-conditioning get paid so much more?

The answer, according to the classical economists such as Adam Smith, is that the poor are poor through no fault of their own directly, but poverty is the visitation of the punishment of the sins of their fathers. Specifically--and this is most clearly spelled out in chapter 26 of volume 1 of Kapital--people who are poor now are the descendants of people who long ago lacked the character and moral qualities that would have led to saving. As Marx put it,

[T]he accumulation of capital presupposes surplus-value; surplus-value presupposes capitalistic production; capitalistic production presupposes the pre-existence of considerable masses of capital and of labour power in the hands of producers of commodities. The whole movement, therefore, seems to turn in a vicious circle, out of which we can only get by supposing a primitive accumulation [what Adam Smith had called "previous accumulation"] preceding capitalistic accumulation; an accumulation not the result of the capitalistic mode of production, but its starting point. (1887, vol. 1, chap. 26) My parents were careful, thrifty, and prudent; consequently, I have enough capital to buy tools and a factory. Your parents were dissolute, profligate spendthrifts, so you have to work and sweat.

Marx's reaction to this claim has to rank as one of the great rhetorical turns in the history of economic thought. The argument should be quoted at some length (I...