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March 12, 2008

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Omar Nayeem

The “Manifesto of the Communist Party,” written by Marx and Engels in 1848, serves two primary purposes for economists today. First, it provides an account of the social and economic conditions under which communist thought developed and was articulated. Second, it informs an understanding of communist ideals and principles, which became especially influential in the twentieth century and continue to shape the policies of some nations even today.

The Industrial Revolution brought about unprecedented economic growth. Along with the economic growth came rapid urbanization and other social changes. Marx and Engels devote the first section of their document to a description of the two competing social classes that emerged during this transition period: the bourgeoisie (capitalists or industrialists) and the proletariat (laborers). They note that the exploitation of the proletariat by the bourgeoisie had analogues in preceding historical eras – for example, during medieval times and also during the feudalist age – but that, in their view, the bourgeoisie was a class of people that had only recently seized power from their own former oppressors: the monarchs and nobles of the feudal era. Marx and Engels are clearly troubled by the consequences of the bourgeoisie’s rise; they seem to view the social changes of their era as being unnatural. (They also refer to globalization and colonization and allude to the exploitation of native populations that was taking place in the colonies of capitalist nations, but they seem to be much less concerned with this issue than with the domestic social changes.) Their characterization of events, while certainly not unbiased, nevertheless provides a firsthand account of the changes of this important historical period. Figures related to productivity growth during the industrial era are not difficult to find, but of course these figures alone do not, by themselves, describe all of the changes that were taking place at this time. For economists, and particularly for economic historians, the qualitative account that Marx and Engels present helps to fill this void.

The remainder of the document describes the broad views and goals of the communists and also describes several different forms of socialism and communism that had emerged before Marx and Engels articulated their own ideas. Marx and Engels describe themselves and their co-ideologues as champions of the proletariat. They seek to create political, economic, and social systems in which the working class (which, they contend, constitutes the majority of industrialized societies of their era) holds political power. Many of their prescriptions for achieving this ultimate outcome (for example, the abolition of private property) were radical for their time and are still radical today, but, given the influence of these writings on a number of prominent twentieth century ideologues and political figures, this portion, especially the section titled “Socialist and Communist Literature”, should be of interest to economic historians and also to comparative economists. The “Socialist and Communist Literature” section provides detailed descriptions of a number of different schools of thought that emerged under the broad categories of socialism and communism (at least as Marx and Engels perceive them). All of these schools were formed under unique political, social, and economic conditions that undoubtedly influenced the views of their progenitors; in this sense, the differences in conditions most likely account for a substantial portion of the differences among these schools’ ideologies. Marx and Engels (who themselves acknowledge that their exact prescriptions for social change would vary from society to society) provide detailed descriptions of the different historical contexts in which the different schools emerged; in doing so, they have done modern scholars of these ideologies a great service. While Marx and Engels’ work should not be viewed as a treatise on economic theory, it clearly does have value for modern-day economists that are looking to understand the emergence of one of the most influential ideologies of the last 150 years.

M Larrain

Marx and Engel have argued that, as capitalism evolved, workers would receive a declining share of national income. The experience of the last century has not supported this prediction. Some recent calculations by Robert Allen (2005) have suggested that labor’s share was indeed declining in the decades prior to the publication of the Manifesto. However the stylized fact about the subsequent century and a third has been that labor’s share has no clear trend.

The Communist Manifesto proclaimed the spread of capitalism across the globe in the most unequivocal terms:

“The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere. The bourgeoisie has, through its exploitation of the world market, given a cosmopolitan character to production and consumption in every country.”

An interesting issue to analyze for twenty-first century economists might be the implications of the headlong expansion of capitalism in China and India on the predictions of Marx and Engels. The entry of the vast labor forces of China and India into the world economy might just prove Marx right after all. This suggests that study of the shares of national income going to different factors of production might be interesting once more.

V Paredes

Marx and Engel’s Manifest is more a political document than an economic paper. As Marx and Engel say in the introduction “It is high time that Communists should openly, in the face of the whole world, publish their views, their aims, their tendencies, and meet this nursery tale of the Specter of Communism with a manifesto of the party itself”. The first section begins saying that the history of the world is the struggles between classes. Then it describes the Bourgeois and how will he bourgeoisie lead to crisis. The second section describes the objectives of the communist party, and responds to some of the critics they have received. In part three different types of socialisms are described. Finally, part four describes the relations of the communist’s parties with other parties in different countries and invites working men of all countries to unite. Then what relevance and use has a work like this for economist today?

I think that first of all the Manifest is an historical document. Communism was a very important doctrine. Quoting Marx and Engel, “communism is already acknowledged by all European powers to be itself a power”. Half of the world adopted communism policies, before capitalism became the predominant doctrine. In the first class of Econ 210A we discuss that all data was historical data, so communism, as an important part of history, is worth to study. The Manifest presents a way to view history through class struggles. In the middle ages the antagonism was between serfs and feudal lords and after the industrial revolution the struggle is between the bourgeoisie and proletarians. So the Manifest offers a very interesting way to understand history.

On the other hand, I think that the Manifest, as a political document, doesn’t go very deep in the economic topics. The Manifest is based on a labor theory of value, but this is much more developed in Marx’s Capital. This idea was theoretically very important in classical economics although nowadays it is not very used. So I think Marx’s Capital is more relevant than the Manifest for economists nowadays.

Finally, although Marx predictions were not fulfilled, the Manifesto successfully identifies some of the problems that can be associated with capitalism, as raising inequalities. Marx argues that capitalism will accentuate the differences between classes, and so inequality will grow over time. This is not the case within countries: in many countries, inequality within the country has decreased. But this may be the case between countries: the inequality between countries has increased.

K. Powers

The overarching motif of the Manifesto – that proletarians should overthrow government and institute measures to nurture their own class – is most applicable today in the sense of what Marx himself calls conservative or bourgeois socialism. That is, society should work to uplift those of lower socioeconomic status, but preferably not at great expense to the quality of life for middle and upper classes. In many nations, median income may be too high to incite a working-class revolution. Additionally, I’m not particularly sure labor income is a zero-sum game; redistributing income and education could result in both increases in the overall pie and for the fraction of proletarians.

In addition to an overarching motif of concern for workers of lower socioeconomic status, many smaller lessons and pieces of advice stick out. For instance, Marx notes that civil clashes, and particularly between oppressors and the oppressed, can end in “the common ruin of the contending classes” (3). Not only are the oppressed suffering, as in the case of Darfur, Sudan, but wealthier classes can suffer personal or property damage, as in the L.A. riots.^1 This says nothing of the moral depravity involved in war crimes and other acts committed by oppressors – the horrors of which can take far longer to recover than the economy or infrastructure.

Marx also notes that, “Each step in the development of the bourgeoisie was accompanied by a corresponding political advance of that class” (4). Indeed, contemporary political powers include those interest groups who are able to wield large political donations. And who better to afford large political donations than for-profit organizations? My favorite example of this is Bo Pilgrim, the East Texan chicken magnate, who handed out $10,000 checks on the Senate floor in 1989 to legislators involved in the workers’ compensation debate. Several legislators accepted the checks, only returning the money when the story later appeared in the news.^2 And that wasn’t Pilgrim’s first handout.

“Law, morality, religion, are to him [the proletariat] so many bourgeois prejudices, behind which lurk in ambush just as many bourgeois interests” (11). This reminds me of a church I used to attend in Texas, called Powerhouse Christian Center, whose entrepreneurial pastor moderated the fainting, speaking in tongues, etc. after he realized his brand of Christianity hadn’t attracted a wealthy enough congregation to finance the $3 million building they worshipped in. After the wealthier worshippers came in, rather than returning to his charismatic Christianity of before, the pastor began building more units on the property and, as I recall, holding two sermons on the Christian nature of Christmas shopping. (Sorry for the lack of documentation, you’ll have to trust me on this one.)

Marx does make legitimate points about what types of socialism are failing and why, and I certainly agree that those with economic power almost necessarily gain political power. But given the history of poverty and repression of contemporary Communist nations, I’m not sure I can take his overarching argument to heart.

1. Daniel Wood, ”L.A.’s Darkest Days,” Christian Science Monitor, 29 April 2002 .
2. Robert Bryce, “Not Clucking Around: Texas Poultry King Bo Pilgrim Takes on Senate Finance Committee Chairman Bill Ratliff,” The Austin Chronicle, 3 Nov. 2000 .

Wayne Feng

While in hindsight Marx and Engels were wrong in many respects, their ideas are still relevant today for a “humanizing” effect on economic thought. While not all the occurrences related to Marx, Engels, and communism occurred as they would have predicted the strong influence of Communist thought has no doubt left great footprints in history. It would be easy for economists to pass off these events as “failed experiments” but it may be better to analyze why did people believe in what is now perceived as economically unsound. For us the abolishment of private property (especially bourgeoisie private property) is against some of the core instincts of capitalist thought. However during the time when Marx and Engels started to promote communism, the world was in a situation where labor laws and living conditions were not good for the working class. Reflecting now on the qualms that Marx and Engels pointed out we can see similar issues throughout the world where potential capitalist markets are failing due to inequity or inhumane realities. For Marx this environment of indifference to the worker resulted from the use of money. While it may be hard for us to image a world without money, the idea that money is an alienating force due to the universal general interchange of commodities and labor is something for economists to consider when making policy decisions. What may be good for growth may not be good in other respects. This will lead to people searching for a different social solution such as what Marx and Engels proposed. As capitalism continues to expand and with globalization of the world marketplace, it is even more important for economists to consider past history for social guidance rather than just following models which predict the best future outcome. Even with the “failure” of communism, we see that there have been adaptations to nations which followed communism. Like capitalism, it has adapted over time and shaped itself into a more political structure rather than an economic structure. There is a possibility for communism to exist in place of democracy in a different form for some time, just as it did in the past to replace a capitalist system. Whether or not this can continue even longer and the effects on the marketplace are also of relevance to economists today. What we perceive as advancement and growth have social consequences that cannot be ignored and were not ignored by Marx and Engels. We can learn from their analysis that the social ties of economics and people are very relevant in the future course of history.

Willa

For the Communist Manifesto to offer something to modern economists, it must present something that is both true and generally not known by or forgotten by modern economists. Most likely, a lot of what might be seen as elements of the Communist Manifesto that are absent in modern economic literature are not there because the current economists haven’t thought about the ideas which Marx and Engels present, but rather because they disagree with the factual accuracy or importance of their claims.

So what can it offer? First it presents a reminder of some of the origins of popular beliefs that economists are cold-hearted and overly concerned with efficiency. This matters beyond cocktail party conversations and rather could play a role in making economics insights more applicable and accessible for policy-makers. The Chandler article was a typical example of reducing welfare to a difference between willingness to pay and the price. Underneath all of the discussion of efficiency and the ability of firms to derive more output from the same inputs was the unsaid change in well-being for those providing the inputs. The ethics of paying the lowest wage possible derives support from the belief that profits go to zero, but if that’s not the case, then squeezing “inputs” for more output is open for debate.

Another offering of the communist manifesto is the importance of emiseration in creating revolution. This can cynically provide insight into tools to be used by those who benefit from taking advantage of workers as to how they might be able to convince their workers that they are happy and unconstrained. The appeal of a communist revolution for the worker comes from the worsening of their situation and if managers can provide little benefits – flowers on the chains – they may be able to prevent revolt.

This also points to new areas of research that are being explored. One member of our class may look at the role of economic situations in determining the rise to power of dictators. This is a less-revolutionary or less-successful, but still related application of what Marx and Engels predicted. On a smaller scale the importance of inequality in causing crime is something that the authors of the revolution may have predicted if somebody had asked, “well what if a lot of people got better off but some people just watched and didn’t gain?” Crime could be seen as a personal non-unified and therefore clearly less effective form of revolution that may be more applicable given the changes in the world since this was written.

Finally, the idea of freedom is one that Marx and Engels brought up and continues to be brought up by economists as an important determinant of welfare that pure classical economic theory can prevent. Amartya Sen might be the classic modern example of this. Freedom to do what one wants with private property is not as important when nine-tenths of the population does not have any, as Marx points out and Sen and others later remind us. This challenges pure theory and points to new areas for research to understand how choices can be provided through provision of options – through redistribution – and not only through protection against legal restrictions.

Willa

For the Communist Manifesto to offer something to modern economists, it must present something that is both true and generally not known by or forgotten by modern economists. Most likely, a lot of what might be seen as elements of the Communist Manifesto that are absent in modern economic literature are not there because the current economists haven’t thought about the ideas which Marx and Engels present, but rather because they disagree with the factual accuracy or importance of their claims.

So what can it offer? First it presents a reminder of some of the origins of popular beliefs that economists are cold-hearted and overly concerned with efficiency. This matters beyond cocktail party conversations and rather could play a role in making economics insights more applicable and accessible for policy-makers. The Chandler article was a typical example of reducing welfare to a difference between willingness to pay and the price. Underneath all of the discussion of efficiency and the ability of firms to derive more output from the same inputs was the unsaid change in well-being for those providing the inputs. The ethics of paying the lowest wage possible derives support from the belief that profits go to zero, but if that’s not the case, then squeezing “inputs” for more output is open for debate.

Another offering of the communist manifesto is the importance of emiseration in creating revolution. This can cynically provide insight into tools to be used by those who benefit from taking advantage of workers as to how they might be able to convince their workers that they are happy and unconstrained. The appeal of a communist revolution for the worker comes from the worsening of their situation and if managers can provide little benefits – flowers on the chains – they may be able to prevent revolt.

This also points to new areas of research that are being explored. One member of our class may look at the role of economic situations in determining the rise to power of dictators. This is a less-revolutionary or less-successful, but still related application of what Marx and Engels predicted. On a smaller scale the importance of inequality in causing crime is something that the authors of the revolution may have predicted if somebody had asked, “well what if a lot of people got better off but some people just watched and didn’t gain?” Crime could be seen as a personal non-unified and therefore clearly less effective form of revolution that may be more applicable given the changes in the world since this was written.

Finally, the idea of freedom is one that Marx and Engels brought up and continues to be brought up by economists as an important determinant of welfare that pure classical economic theory can prevent. Amartya Sen might be the classic modern example of this. Freedom to do what one wants with private property is not as important when nine-tenths of the population does not have any, as Marx points out and Sen and others later remind us. This challenges pure theory and points to new areas for research to understand how choices can be provided through provision of options – through redistribution – and not only through protection against legal restrictions.

Ernie Tedeschi

“The bourgeoisie… has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.” So write Marx and Engels in Chapter 1 of their Communist Manifesto. First published in 1848, some may at first regard the Communist Manifesto as a relic of a bygone era, especially now, as many nations which were communist as late as 20 years ago are well on their way down the path of market reform. What relevance could such a tome have to today’s economists? Yet as the passage above reveals, the Manifesto was a reaction (but far from the only reaction) to the economic and social earthquake that was the Industrial Revolution, an age of booming trade and rapid changes in everyday life, of soaring GDP and growing chasms of inequality. We see many parallels in today’s global economy, with new technologies squeezing more productivity and pressure to tear down trade barriers. The world has never been as wealthy as it is now, but, just as in Marx’s time, these unprecedented riches are not distributed equally (and the efficiency of their distribution is also a fair and open question). From its birth in the Communist Manifesto of 1848, it took over 140 years for communism to be discredited to the point where no one viewed it as a serious alternative to basic free market institutions any longer, though fragments of Marx’s ideas remain alive and popular: of the 10 policy planks he and Engels lay out in Chapter 2, two (free education and a progressive income tax) are unambiguously present in the United States of the 21st century, while Marx would likely approve of several other American institutions as well, such as the interstate highway system, the FCC, and, in principle at least, the Federal Reserve. So in one sense, from a public policy perspective, the Communist Manifesto gives us a practical exercise in how world popular opinion will react to the liberal dynamics generally thought to be at work today, dynamics all to similar to the shock early modern Europe must have received two hundred years ago. It also shows how, within this context, opponents to the classical and neo-classical perspectives thought about labor value and productivity. Since ultimately economics is useless in a vacuum, perhaps the primary value of the Communist Manifesto is in using economics to lay the foundation of a political philosophy. Economists who disagree with this philosophy would still do well to similarly think about the broader implications of theory to the social dynamics they explain.

I Romem

I believe Marx and Engels' cynical description of Capitalist society remains surprisingly apt after all this time, however their conclusions are not*.

One paragraph in particular caught my attention, in which Marx and Engels claim that "[the bourgeoisie] compels all nations, on pain of extinction, to adopt the bourgeois mode of production… it creates a world after its own image". While they present this as a highly negative state of affairs, I have seen a very similar argument presented as a contemporary justification for "joining" the global economy. Briefly, the argument states that a nation that chooses to remain autarkic (even in some partial manner) will eventually find itself lagging behind the rest of the world in terms of living standards and technology. Marx and Engels mention cheap commodity prices as the driving force that compels nations to abandon autarky. Their phrase "on pain of extinction" is also apt today in the sense that a nation that resists joining the global economy will find itself sooner or later at the mercy of more materially capable nations (regardless of whether these nations are belligerent or benevolent).

Beyond this, I found Marx and Engels' description of how the bourgeoisie had reduced those practicing every occupation to mere paid wage laborers to have a great deal of truth in it. Ranking of occupations by social prestige, such as the Duncan index, are comprised to a great part by the earning power of these occupations. This is bluntly obvious in America. Nevertheless, even today there is a great deal of variation in occupational prestige that cannot be explained by income – stemming instead from such qualities as the degree of trust placed in the profession (lawyers, doctors), the academic standing of one practicing it, and so forth. Also, the theory of equalizing wage differences is quite relevant, too, despite having a counter logic to that of Marx and Engels' argument.

However, I believe the Capitalist system against which Marx and Engels cry out has outsmarted them on two accounts. First, realizing that the brutal exploitation of the proletariat was unsustainable because of its sheer inhumanity, industry eventually became more humane. A well-known example of this is Henry Ford's insistence on a 5$ /day wage, which at the time was far above typical pay. More generally, the welfare state can be seen as a cure to these ills. Of course, it is also true that the welfare state seems to be vanishing… So secondly, it seems that the Capitalist system has outsmarted Marx and Engels by allowing for a great deal of technological improvement. Proletariat jobs have become much, much fewer, as they have been mechanized, while the majority of the population is employed in more white-collar type occupations. The basic truths of Marx and Engels' arguments apply to this "modern proletariat" as well, but with hardly as much brutality, and I am inclined to believe that this will prevent any revolutionary eruptions of the type they predict and recommend.

* Going off topic for a moment, such aptness in an 1847 description is evidence that the great social changes associated with the industrial revolution were in place long before "the second industrial revolution" of the late 19th century


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