The following article appeared in Libertarian
Labor Review #17 (Summer 1994).  
 
 Marxism: The Negation of Communism by Jeff Stein

Introduction: Anarchist vs. Marxist Economics
	The main points of disagreement between anarchist and
marxist economics are over the issues of self-management and the
free exchange of products (either goods or services). For
anarchists, the single most important requirement of an economic
revolution is workers' self- management, that workers have direct
control over their own production and distribution of goods and
services. With the exception of the pro- capitalist, phoney
"libertarians" for whom "the market" is synonymous with human
freedom, anarchists see the exchange of products between workplace
associations as a sometimes necessary evil to keep the economy
going until the problem of scarcity has been overcome or
sufficient trust has developed among the workers to freely produce
directly for social needs.

	For Marx and his followers, however, production for
exchange (ie.commodities) is the central feature of the capitalist
system. Production for exchange, instead of for local use, is what
distinguishes capitalism from earlier forms of economics, and is
the source of the division of labor, and the alienation and misery
of the workers. Communism, therefore, was defined by Marx largely
in terms of doing away with commodity exchange, and the only way
to assure this would be done was to assert state control over the
economy and plan the economy centrally.

	This statism of Marx's economics shows up clearly in The
Communist Manifesto, written by Marx and Engels.
...in the most advanced countries, the following [measures] will
be pretty generally applicable... Centralization of credit in the
hands of the state, by means of a national bank with state capital
and an exclusive monopoly... Centralization of the means of
communication and transportation in the hands of the state...
Extension of factories and instruments of production owned by the
state... Establishment of industrial armies, especially for
agriculture. (p.30)

	Central economic planning, however, precludes worker self-
management and direct control of workers over economic
decision-making.  Self-management introduces an unpredictable,
random factor into the economy, which makes central planning
difficult, if not impossible. Even worse, it always presents the
danger of reverting to an exchange economy, if the central plan
collapses. That Marx was hostile to anarchist notions of
self-management is clear in his criticisms of Bakunin:  Under
collective [state-owned] property the so-called popular will
disappears to be replaced by the genuine will of the co-
operative...If Mr. Bakunin understood at least the position of a
manager in a co-operative factory, all his illusions about
domination would go to the devil. He ought to have asked himself
what form the functions of management could assume in such a
workers' state, if he chooses to call it thus.  ("Conspectus of
Bakunin's Book State and Anarchy", in Anarchism and
Anarcho-Syndicalism, pp.150-151)

	Friedrich Engels, Marx's closest political associate, made
this even clearer:
...if [the anarchists] had but given a little study to economic
questions and conditions in modern industry, they would know that
no joint action of any sort is possible without imposing on some
an extraneous will, ie. an authority. Whether it be the will of a
majority of voters, of a leading committee, or of one man, it is
still a will imposed on the dissentients; but without that single
and directing will, no co-operation is possible. Go and run one of
the big Barcelona factories without direction, that is, without
authority! ("Engels to P. Lafargue in Madrid", in Anarchism and
Anarcho-Syndicalism, p. 58)

	The goal of marxist economics is to build one giant,
world-wide, all embracing, harmonious co-operative under central
direction. As Marx described it:
...all labors, in which many individuals co-operate, necessarily
require for the connection and unity of the process one commanding
will, and this performs a function, which does not refer to
fragmentary operations, but to the combined labor of a workshop,
in the same way as does that of a director of an orchestra.
(Capital, Volume III, p.451)

The Dialectical Approach to Communism
	To understand marxist economics, it is necessary to
understand its roots in Hegelian philosophy. Marx and Engels began
as followers of the German philosopher, Hegel. For Hegel and Marx,
the only truly scientific approach to understanding anything,
whether it is religion, nature, politics, or economics is through
dialectical reasoning. Dialectics begins with a logical assumption
or observation, such as A = A, this is called "unity". This,
however, tells us very little about what A is, so we must contrast
it to something else, such as A is not B, which is called
"opposition". Then assuming we have chosen A and B correctly based
upon an definite relationship between A and B, we can put them
together as a set or "category", a "unity of opposites". Out of
this "unity of opposites" comes motion and change, the opposition
is resolved into a new "unity", starting the whole reasoning
process all over again. Eventually by moving from one category to
the next, a system of categories is developed which is able to
account for all the facts, in other words, a scientific model.

	Hegel and his successors, however, claimed that dialectics
was not simply a method of reasoning, but also manifests itself in
nature. All motion and change is a result of opposition to the
current reality. As the philosopher Richard Norman puts it, With
this notion of "development through conflict" we move to a
different concept of contradiction...it introduces a distinctly
new emphasis. What is now asserted is that there are
contradictions in reality in so far as there are conflicts between
antagonistic forces, and that these are the source of all
developments, as evidenced by Newtonian mechanics, the Darwinian
theory of evolution, and the Marxist theory of class struggle.
(Hegel, Marx, and Dialectic, p.56)

	From Hegel, Marx took the idea that history evolves
according to a dialectic, in which societies rise and fall because
of their internal "contradictions" or conflicts, and applied it to
the task of creating communism. Marx criticized earlier socialist
theorists, Fourier, Saint Simon, etc. as having a utopian approach
towards socialism. Since socialism does not exist, one cannot
describe a workable socialist system in the form of an exact
blueprint. The closest one can come to describing socialism or
communism is as a "negation" or the opposite of capitalism.
Communism is the position as the negation of the negation, and
hence is the actual phase necessary for the next stage of
historical development in the process of human emancipation and
recovery. (Karl Marx, Economic and Philosophical Manuscripts of
1844, p.114)

	A "scientific" approach is to study the history of
	economic systems and the factors that cause them to
change. For Marx, the most important factor in bringing about
historical change is the steadily increasing means of production.
Social systems rise and fall because of their ability or inability
to materially improve the lives of their populations. Each new
social system develops because it can do a better job of improving
productivity than the old system. At the same time, however, the
new social system itself is plagued by limitations, or
"contradictions", which can only be resolved by the next
historical stage. Communism, which Marx assumed would be the next
historical stage after capitalism, therefore is to be discovered
by studying the contradictions of capitalism.1

Dialectical Contradictions of Capitalism
	Capitalism is a system of production for exchange instead
of direct use, a commodity economy. All commodities have both a
use value and an exchange value. The exchange value of a commodity
is determined by the average amount of social labor time required
to produce that type of commodity. The value of a commodity,
however, can only be realized by the act of exchange. Thus where
there is no exchange, there has been no value produced, no matter
how much labor time has been spent or how much use might exist for
the product. This is capitalism's first contradiction.

	Furthermore, exchange creates another contradiction for
capitalism, the division of labor. Without the division of labor
into different industries producing different commodities, there
would be no reason for exchange.  But for different types of labor
to be easily exchanged for each other (in their form as
commodities), they must be reduced to a common, abstract form.
Commodities, first of all, enter into the process of exchange just
as they are. The process then differentiates them into commodities
and money, and thus produces an external opposition inherent in
them, as being at once use-values and values. Commodities as
use-values now stand opposed to money as exchange value. On the
other hand, both opposing sides are commodities, unities of
use-value and value. But this unity of differences manifests
itself at two opposite poles in an opposite way. (Capital, Vol. I,
p.117)

	Money, which is both the measure of value and the
universal commodity (in effect becoming labor value in the
abstract), helps to resolve these contradictions by facilitating
exchange. Money, however, creates a new contradiction. Since money
now mediates exchange, it separates the exchange of commodities
into two different transactions, sale and purchase. In order to
buy the commodities of others, it is necessary to sell one's own
commodities to obtain money. And vice versa, in order to sell, it
is necessary to buy and thus, keep money in circulation. When for
some reason beyond the individual capitalist's control,
circulation slows down or stops (usually because capitalists have
collectively created an oversupply of goods which they are unable
to sell at a profit), the system is thrown into crisis.  We see
then, commodities are in love with money, but "the course of true
love never did run smooth". The quantitative division of labor is
brought about in exactly the same spontaneous and accidental
manner as its qualitative division.  The owners of commodities
therefore find out that the same division of labour that turns
them into independent private producers, also frees the social
process of production and the relations of the individual
producers to each other within that process, from all dependence
on the will of the producers, and that seeming mutual independence
of the individuals is supplemented by a system of general and
mutual dependence through or by the means of production. (Capital,
Vol. I, p.121) In a crisis, the antithesis between commodities and
their value- form, money, becomes heightened into an absolute
contradiction. (Capital, Vol. I, p. 151)

	The only way for the capitalist to survive a crisis is to
have sufficient money on hand to wait it out. This is what drives
the capitalist to accumulate money and continually reinvest it as
capital to make more money. It is not simply a matter of greed,
but survival. However, in order to accumulate, it is necessary to
create a surplus. This drive for "surplus- value" is a source of
new contradictions for capitalism. Since commodities must be
exchanged for other commodities of equal value, the only place
where a surplus can be achieved is in the production process.
Labor must be made to produce more value in commodities than it is
paid in wages.  Equality in exchange thus leads to exploitation
and inequality of social classes. The labor theory of value has as
its dialectical corollary, the commodity theory of labor power.
The price of labor power is not the value created by that labor
power, since then there would be no surplus, but the value of
commodities needed to barely sustain the workers and their
families.  The value of labour-power is determined, as in the case
of every other commodity, by the labour-time necessary for
production, and consequently also reproduction, of this special
article...in other words, the value of labour-power is the value
of the means of subsistence necessary for the maintenance of the
labourer...(Capital, Vol. I, p. 189)

	The capitalist has a number of ways for forcing workers to
produce a surplus. The most important of these is the division of
labor. The production process is divided and sub-divided into
specialized tasks, thus forcing workers to become more efficient,
regardless of the increase in stress and brain-numbing monotony
caused. The contradiction resulting from the division of labor is
that it does away with the old, individually isolated labor of
handicrafts and replaces it with a higher form of "co- operative"
social production. The factory creates the social basis for labor
organization, the collective resistance of the working class to
their exploitation. A struggle develops between workers and
employers over wages and the length of the working day.  The
capitalist maintains his rights as a purchaser [of labor power]
when he tries to make the working day as long as possible...the
labourer maintains his right as a seller when he wishes to reduce
the working day to one of definite normal duration...Hence it is
that in the history of capitalist production, the determination of
what is a working day, presents itself as the result of a
struggle, a struggle between collective capital, ie.,the class of
capitalists, and collective labor, ie., the working class.
(Capital, Vol I, p.259)

	The capitalist seeks to resolve this conflict by
minimizing the need for labor through the introduction of
machinery. Machinery allows labor to become even more simplified,
turning skilled laborers into mere machine tenders. Since machine
tending requires little strength or education, male workers can be
replaced with women and children, thereby undermining labor
unions. At the same time, the unemployment caused by replacing
human labor with machines, creates an "industrial reserve army".
The unemployed, desperate for work at any wage level, help to keep
wage rates down at subsistence level. They also form a labor
reserve which can be moved from industry to industry as they are
needed.  The laboring population therefore produces, along with
the accumulation of capital produced by it, the means by which
itself is made relatively superfluous, is turned into a relative
surplus population; and it does this to an always increasing
extent....But if a surplus labouring population is a necessary
product of accumulation or of development of wealth on a
capitalist basis, this surplus population becomes, conversely, the
lever of capitalist accumulation, nay, a condition of existence of
the capitalist mode of production. It forms a disposable
industrial reserve army, that belongs to capital quite as
absolutely as if the latter had bred it at its own cost.
(Capital, Vol I, pp. 692-693)

	As the capitalists mechanize production, however, they sow
the seeds for their own destruction. As workers move from industry
to industry in search of work, the division of labor becomes
meaningless. The specialized worker is replaced by the generalized
worker. As the division of labor becomes unnecessary, the
historical reason for an exchange economy is removed. The
increased interdependence of social production comes more and more
into conflict with private ownership and management of the means
of production. These result in economic crises, the "anarchy" of
the marketplace. The need for economic planning on a large scale
becomes obvious.  The increased volume of industrial
establishments forms everywhere the point of departure for a more
comprehensive organisation of the co-operative labor of many , for
a wider development of their material powers, that is, for the
progressive transformation of isolated processes of production
carried on in accustomed ways into socially combined and
scientifically managed processes of production. (Capital,
Vol.I,p.688)

...the growing accumulation of capital implies its growing
concentration. Thus the power of capital, the personification of
the conditions of social production in the capitalist, grows over
the heads of the real producers. Capital shows itself more and
more as a social power, whose agent the capitalist is, and which
stands no longer in any possible relation to the things which the
labor of any single individual can create. Capital becomes a
strange, independent social power, which stands opposed to
society...The contradiction between capital as a general social
power and as a power of private capitalists over the social
conditions of production develops into an ever more irreconcilable
clash, which implies the dissolution of these
relations...(Capital, Vol. III, p. 310)

	The final collapse of capitalism comes about through the
expansion of the means of production to the point where the labor
value of products reaches a minimum. Since surplus value is a
fraction of labor value, the reduction of the labor power embodied
in commodities, results in a falling rate of profit. Only the
largest capitalists can still make money at low profit margins.
The smaller capitalists are ruined and join the ranks of the
proletariat. Eventually the capitalists curtail production as they
are unable to accumulate any more capital. Capitalism has become a
fetter on production. The destitute workers revolt, establish the
"dictatorship of the proletariat", and the communist mode of
production replaces capitalism.  Centralisation of the means of
production and socialisation of labour at last reach a point where
they become incompatible with their capitalist integument. This
integument is burst asunder. The knell of capitalist private
property sounds. The expropriators are expropriated....capitalist
production begets, with the inexorability of a law of Nature, its
own negation. It is the negation of the negation. (Capital, Vol.
I, p.837)

The Problems with Marxist Economics
	Marxist economics were not necessarily the major advance
in socialist economics that some people think. Marx was not the
first to use the labor theory of value, itself a development of
bourgeois economics, as an indictment against the capitalist
system. Neither was he the first to use dialectics to critique the
capitalist system. Marx's claim to originality lies in the
blending of the labor theory of value into his theory of
dialectical materialism. Where earlier socialist economists
criticized capitalism because it did not obey its own law of
value, Marx argued, on the contrary, that it did, and that
ultimately this would lead to its own destruction. What other
labor value theorists ignored, Marx claimed, was that the exchange
of goods at their labor value went hand in hand with the sale of
labor power at its commodity equivalent. Thus any attempt to use
the labor theory of value to create a more just society based on
the free exchange of goods, was utopian at best, if not totally
reactionary.

	Marx's economic theory rests on a few central ideas, the
labor theory of value, the commodity theory of labor power, and
dialectical materialism.  If these ideas can be disproved, the
marxist theoretical edifice collapses. To begin, let's look at the
labor theory of value. Marx's main argument for the labor theory
of value is that labor is the thing which all commodities have in
common, and that therefore this allows different commodities to be
exchanged. There can be little dispute that labor is the major
factor in production. Yet labor is not the only thing which
commodities have in common. Their production also requires the use
of scarce natural resources and energy.

	Scarcity does play a role in determining the value of
commodities.  Commodities which are the products of scarce raw
materials exchange at higher value than do commodities made with
raw materials of greater availability. Marx unintentionally
admitted as much in his theory of land rent. Marx criticized
Ricardo's theory of rent because Ricardo pointed out that land
rents at different rates based on fertility, without accounting
for "absolute rent", the minimum rental rate based upon the least
fertile land.  The source of absolute rent, Marx argued, is the
monopoly of landowners on all fertile land, which prevents
capitalist farmers from producing agricultural goods without
paying the landlord a fee for using the land.  Rent, therefore, is
a surplus value extracted from agriculture beyond the surplus
value obtained in the production of agricultural commodities. What
did not occur to Marx is that since land is not itself a
manufactured good and thus has no labor value, the paying of a
"surplus value" to the landlord is qualitatively different than
the extraction of a surplus through the manufacturing of
commodities. It is an acknowledgement of the fact that scarce raw
materials, such as arable land, do have exchangeable value,
regardless of whether the landlord is entitled to receive that
value or not.2

	Energy, like scarce raw materials, also contributes to the
value of commodities. As production becomes more mechanized, the
amount of human labor required to produce a commodity decreases.
However, the non-human energy required to produce the commodity
goes up. Energy, since it comes from the consumption of scarce
fuels, has value. Unlike other scarce materials, however, energy
can not be recycled. Unlike machinery, or "constant capital" it
does not accumulate nor depreciate. As production becomes more
mechanized, the labor value of the commodity goes down, while its
energy value rises, and partially offsets the labor saving
involved. The rising cost of energy due to both an increased
demand and diminishing supply, will act to prevent the value of
commodities from falling close to zero, as predicted by Marx's
labor value theory. This trade off between energy and labor,
probably explains the rise of the modern "post-industrial" service
economy, in which manufactured goods of low labor value but high
energy value, are exchanged for labor- intensive services.

	There are, of course, other factors besides scarcity,
labor, and energy, which affect the value of goods and services.
The costs of maintaining the physical and social infrastructure,
come into play, as well as aesthetics, culture, and perhaps many
other influences. The point is that labor power alone, does not
determine exchange value in capitalist society, nor will it in any
future society. Without the labor theory of value, however, the
main driving force in Marx's theory is lost. Capitalism will not
collapse because of its inability to extract a surplus from a
diminishing labor force.

	On the other hand, Marx did not solely base his prediction
that capitalism would collapse on the "falling rate of profit",
but also on the increased class conflict due the commodity theory
of labor power.  According to this theory, under capitalism labor
power is exchanged just like any other commodity. Its value is not
the whole of the product which it produces, but only that portion
necessary to keep the worker alive and to feed his/her children,
the next generation of workers. Marx, to distinguish his theory
from the so-called "iron law of wages", qualified this theory by
saying that the level of necessary wages was "culturally
determined". Thus the wage levels of workers must include more
than just the bare minimum to stay alive, but also must include
the costs of education, and be able to sustain the workers and
their families at a standard considered appropriate for that
country. Marx acknowledged that the trade unions played a
necessary role in keeping up this standard of living. However, the
increasing mechanization of industry, would undermine the efforts
of the unions by pitting them against a growing reserve army of
the unemployed, driving wage levels ever lower, until the
desperate workers would overthrow capitalism.

	Unfortunately, the commodity theory of labor power has
even less to back it up than the labor theory of value. The weak
spot in Marx's argument is his admission that subsistence wages
are "culturally determined" and influenced by union efforts. No
longer are we dealing with economic laws, but with a host of other
variables like the level of union organization, working class
rebelliousness, and cultural expectations about what is an
acceptable standard of living. All these exceptions to the rule
that wage rates are tied to some minimum, invalidate the rule
itself.  The history of the past century, the victories won by the
union movement and the rise of the capitalist welfare state,
demonstrate the fallacy of Marx's argument.

	What is more, the labor theory of value and the commodity
theory of labor power contradict each other. According to Marx,
the labor theory of value must result in a falling rate of profit.
Marx tried to prove this mathematically with his equation for
profit rate, p.r.=s/(c+v), where s is surplus value, c is the
amount of constant capital invested in machinery, and v the
variable capital paid out in wages. If the amount of constant
capital, c, rises while the other two variables remain constant
(ie. a constant rate of exploitation of labor, s/v), the overall
rate of profit must fall. However, this ignores the fact that as
commodities become cheaper due to improved production methods,
workers can purchase more goods with less wages. For there to be a
falling rate of profit, workers real wages (purchasing power) have
to rise above subsistence level. On the other hand, this would
mean that the commodity theory of labor power was invalid.3

	Marx insisted that both theories were true, regardless of
the contradictions, because they were necessary to his theory of
dialectical materialism. According to Marx, capitalism must
develop the means of production to the point where the private
ownership of the means of production is no longer historically
necessary. This is an article of faith, however, since there is no
reason to conclude that communism must necessarily follow
capitalism. Dialectical materialism reduces history to a single
cause, the quest for greater economic productivity. Supposedly
history can be fitted into so many categories based upon a
civilization's increasingly powerful "mode of production", eg.
asiatic, feudal, capitalist and, by extension, socialist. This
model of historical change leaves out many historical variables,
like the role of political institutions, ideology, culture, etc.,
or treats them as secondary effects or "superstructure". Many
historical events have no economic explanation at all, for
instance, the conquest of the Roman empire by relatively
economically backward invaders.

	On the other hand, even supposing dialectical materialism
were true, it does not provide a basis for predicting capitalism's
successor. According to dialectics, the successor to capitalism
must in some way be a negation of capitalism, and in some way a
continuation. Marx arbitrarily concluded that what would be
negated was capitalism's "anarchic" unplanned, exchange system,
but that the technological advances made under capitalism would be
preserved. As empirical evidence for his position, Marx cited the
growing centralization of production in the hands of corporations
and the state. This allowed economic planning to go beyond the
single factory, to embrace a global network of factories,
industries, and regions. Marx saw this as a dialectical tendency
in the direction of communism. As capitalism gave way to more
centralized planning, the absurdity of private ownership would
become obvious to everyone and the remaining capitalists would be
expropriated.

	Now that a century has passed since Marx laid down his
doctrines, it is clear that the centralization of capital has not
brought about progress towards communism. What has occurred is a
tremendous growth in economic bureaucracy, both at the government
and corporate levels.  Instead of disappearing, the capitalists
have melded into the ranks of corporate executives. The lower
level corporate and state functionaries have joined with the small
business people and expanded the middle class.  Certainly this
bureaucratization is a "negation" of old-style capitalism, but it
is not a step closer to communism. A class society, when left to
its own dialectic, does not develop into a classless society, but
just a different type of class society. The ultimate irony has
been in those countries where marxism "succeeded" in overthrowing
capitalism for a time. Marxism became the official ideology of a
new class society. It became its own negation, an Hegelian joke on
humanity.

Marx's Anti-Legacy
	Marx's real contribution to economics was as a capitalist
economist.  By concentrating on capitalism's economic
"contradictions" and helping to reveal the reasons for economic
crises, Marx helped to lay the theoretical groundwork for the
welfare state capitalism of the 20th century. State intervention
in the economy did not undermine capitalism, but helped it gain
stability and entrap the labor movement in a policy of class
collaboration. Marxism, with its dialectical faith that the growth
of capitalism would eventually lead to socialism, only helped
rationalize the political opportunism of its followers. Workers
could be sacrificed today as long as it helped develop the means
of production to the point needed for communism. History would
take care of the rest.

	Whatever the merits of dialectical logic, it is useless as
a tool for building a new society. The means for building a
classless society can not be discovered by criticizing capitalism.
Criticism itself, is impossible without some ideas of how things
could be made better. Thus dialectics is not free of "a priori"
assumptions, which the Hegelians claimed were the problem of
empirical science. Marx assumed that communism would be the next
mode of production after capitalism, and assumed what its
characteristics would be, although he did not draw up a detailed
blueprint.  He then tried to show that this was the direction in
which things were going, and ignored or explained away evidence to
the contrary. History has proven him wrong. The quest for
increasing economic productivity has not brought about the
emancipation of the workers.

	The economics of a classless society can only be
discovered by studying conscious attempts at creating workplaces
and regional economies where workers are not exploited. This means
researching co-operatives, communes, and the economies of
countries undergoing social revolutions.  The successes and
failures of these will suggest what the limits and possibilities
actually are.

Notes

1. For a more detailed explanation of the relation between Marxism
and
	Hegel see Tony Smith's The Logic of Marx's Capital.

2. Marx's criticism of Ricardo's rent analysis is to be found in
his notebooks under "Theories of Surplus Value." See Oakley,
Volume 2, pp. 64, 105, 106

3. See Robinson, p.36

Bibliography

Marx, Karl and others. Anarchism and Anarcho-Syndicalism: Selected
Writings by Marx, Engels, and Lenin, International Publishers, New
York, 1974.  Marx, Karl. Economic and Philosophical Manuscripts of
1844, translated by Martin Milligan. Prometheus Book, Buffalo,
1988.  Marx, Karl. Capital, Volume I, Random House edition, New
York.  Marx, Karl. Capital, Volume III, Charles H. Kerr, Chicago,
1909.  Marx, Karl and Frederick Engels. The Communist Manifesto,
International Publishers, New York, 1971.  Norman, Richard and
Sean Sayers. Hegel, Marx, and Dialectic, Harvester Press,
Brighten, 1980.  Oakley, Allen. Marx's Critique of Political
Economy, Volume 2, Routledge & Kegan Paul, London, 1984.
Robinson, Joan. An Essay on Marxian Economics, MacMillan Press,
Hong Kong, 1982.  Smith, Tony. The Logic of Marx's Capital:
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