Book Review: An Austrian Perspective on The History of Economic Thought, Part III

Posted on June 8, 2012 by


Note: this is Part III of a four-part book review. Parts 1 and 2 can be read here and here.

Karl Marx and Marxism

Rothbard’s work ends with a very large and detailed and frankly disconcerting discussion of Marx, his life as a young man, his militant atheism and mysticism, and his dyspeptic theorizing. Here, the heritage that Marx owes to Smithian and Ricardian thought are laid bare for the reader, as he drives home his earlier claim that Smithian thought is responsible for much modern economic mischief. To this end, Rothbard presents evidence that Marx adopts many Smithian-Ricardian-Millian tenets wholesale, for instance, the class-warfare model, the labor theory of value, the equalitarian notion that all laborers are indistinguishable from one another, the claim that capital will accumulate and strangle profits, and the theory of underconsumption/overproduction (i.e., production increases until the point it outstrips the ability of the people to consume) and its putative tie to the business cycle. But Marx also struck out on his own while building on his ideological forebears, particularly with this “law of centralization of capital”, in which Marx introduces his own theory as to why profits narrow over time (Smith and Ricardo had their own farcical theories), only in this case, Marx links these narrowing profits with the need for capitalists to squeeze the proletariat harder and harder until production outstrips the proletariat’s ability to consume. These unconsumed inventories, according to Marx, then spark the business cycle, as companies must somehow clear this excess inventory low prices. Economic dislocation results, which swells the ranks of the proletariat, which is inflated further by capitalists going abroad for laborers to pull into the capitalistic exploitative economic system. In keeping with the post-Enlightenment economic tradition of scientism, Marx’s theorizing aspired to be “scientific” and leveraged mechanized models to explain economic behavior. As Rothbard put it, Marx’s theories were in

desperate service to the fanatical and crazed messianic goal of destruction of the division of labor and indeed of man’s very individuality, and to the apocalyptic creation of an allegedly inevitable collectivist world order, an atheized variant of a venerable Christian heresy….A convincing case can be made, indeed, that the well-known horrors of twentieth century communism: of Lenin, Stalin, Mao and Pol Pot, can be considered the logical unfolding, the embodiment, of the nineteenth century vision of their master, Karl Marx

This chapter on Marx is one of the most aggressive take-downs of the Marxist economics I have ever read, and occupies roughly 1/5 of the book. I cannot hope to do Rothbard’s exposition justice…I can only suggest that you read it in toto yourself.

It is with Marx that Rothbard’s book ends, which is too bad, because I would have like to have seen Rothbard tie Keynes into the flow of economic historical thought and connect the historical dots between Smith, Ricardo, Mill, Marx and Keynes.

Next: Analysis and Random Thoughts