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A Farewell to Marx: An Outline and Appraisal of
His Theories. By David Conway. New York: Penguin
Books, 1987.

David Conway's book supplies what many have been seeking for a
long time—a reliable introductory study of Marxism which can be
recommended without reservation to students. But he has also ac-
complished more. Even experienced scholars will find his discussion
insightful and original.

The author concentrates his discussion around one central ques-
tion: on what grounds did Marx condemn capitalism and wish to
replace it with socialism? Three issues come to the fore in Marx's
response. First, Marx believed that capitalism causes alienation, a
dire though nebulous state of affairs which socialism would overcome.
Second, capitalism rests on exploitation of the working class. Third,
capitalism, once a progressive system, now blocks the growth of the
forces of production. Inevitable economic crises will replace it with
socialism. In this system, central planning will enable production tc
increase to a vast extent.

Conway rejects all of these Marxist claims and in the course of his
analysis of them gives a masterly conspectus of the entire Marxist
system. To turn at once to the first issue on Conway’s agenda, our
author gives short shrift to “alienation,” a much discussed word that
has behind it little substance.

Marx believed that workers under capitalism lack autonomy,
since they work for capitalist employers and do not decide for them-
selves what they wish to produce. Nor does the capitalist have in mind
the development of the laborer’s creative powers. On the contrary,
capitalism rests upon the division of labor. The consequence of this
method, in which tasks are split up into small, specialized operations,
is that work often stultifies creativity.

Conway disposes of Marx’s indictment quite easily. If workers
want “creative” work, they are free to demand this, and whatever
other conditions they wish, from their employers. Workers are alsc
free under capitalism to establish firms under their own control: what
could be more autonomous than this?

There is, however, one “catch.” No guarantee exists that workers
in “creative” conditions will be able to earn enough money to justify

The Review of Austrian Economics, Vol. 4, 1990, pp. 234-40
ISSN 0889-3047

234


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Book Reviews 235

the greater production costs of these conditions. If workers do cover
the increased costs, it is hardly likely that their salaries will be as
high as under capitalism.

For this the reason is evident. If creative, “non-alienated” condi-
tions were more productive than those that at present exist, employ-
ers would rush to establish them. As Marx himself noted, capitalists
aim constantly for profit and they are hardly likely to overlook a
superior way of inducing more and better work.

The facts, unfortunately for Marx, are entirely otherwise. It is just
the system of division of labor which he condemns, not his non-alien-
ated utopia, that is most productive. If so, then a well-established
economic theory tells us that wages will be higher here than under
alternative methods of production. Labor receives the discounted
marginal value of its product. Less technically, the wages of labor
depends on what it produces. If, then, “better” working conditions
reduce production, wages will also fall.

Much to the surprise of some Marxists, if no one else, workers
usually prefer higher wages to the “creative” work others think best
for them. If workers choose more pay over the alleged benefits of
“non-alienated” work, is this not a supreme example of autonomy? By
earning more money than otherwise possible, workers increase the
goods and services available to them. Some workers are benighted
enough to prefer watching baseball on television to spending time in
socialist “re-education” camps.

But, the socialist will say, why choose between better working
conditions and more goods and services? Under central planning, one
can have both. A“higher” stage of socialism, at any rate, will in Marx's
words make “the free development of each the condition for the free
development of all.”

Such promises have by now a hollow ring. No reason exists for
thinking central planning will aid in overcoming alienation. As Con-
way notes: “Let us first consider the claim advanced by Marx that
communism permits each individual to do what he likes, as he likes,
when he likes during the period of work. This, surely, must be rejected
as purest fantasy. Apart from anything else it seems totally incom-
patible with having a centrally planned economy. How could planners
ensure that there would be enough people in each branch of industry
at each moment of the working day should each individual have
complete freedom to decide what he does during it?” (p. 47).

Further, a socialist economy of any complexity would not work at
all. Here of course the calculation argument of Ludwig von Mises is
decisive: without markets, a developed economy will be unable to
produce capital goods efficiently. Briefly put, Mises has removed
socialism as a “live option.”

I venture to suggest that Conway ought to have made more use of


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236 The Review of Austrian Economics, Volume 4

this decisive point. He does mention the calculation argument, which
he terms “the argument from ignorance” (pp. 184-85). But he credits
it to Friedrich A. Hayek, not Mises; and he thus does not state it in
its strongest form.

Though Conway’s treatment of alienation on the whole deserves
‘high praise, the most outstanding part of the book is his section on
exploitation under capitalism. As Conway notes, “exploitation” is a
technical term in Marx’s economics. Marx believes that workers sold
their. employers their labor power—their capacity to labor—while
their wages were determined by the cost of the commodities workers
required to subsist. More exactly, the “cost” of labor depends on what
a particular society regards as an acceptable standard of life. As
Conway notes, this need not be bare physical subsistence (p. 97). The
gap that existed between labor power and the cost of labor explained
the secret of capital. How, if a capitalist both bought and sold everything
at its value, could he make a profit? Marx’s account. of labor provided
his answer, and it is this very gap that constitutes exploitation.

If capitalism has a “secret,” then as Conway shows, Marx’s ac-
count leaves it a very well kept secret indeed. His explanation of profit
relies on the labor theory of value. Conway, here following the classic
treatment of Béhm-Bawerk, demolishes this theory quickly and ef-

fectively. It assumes that in an exchange, each commodity traded has
an equal value with whatever in that exchange is given up for it. On
this assumption, Marx inquires: what do all commodities have in
common that enables us to determine the ratios at which commodities
equal each other? He locates the answer in labor. Two commodities
exchange in proportion to the average socially necessary labor time
required to produce each one. . °

This account goes wrong from the start. An exchange is not an
equality, far from it. Each person in an exchange prefers what he
obtains to what he gives up: how could the trade otherwise voluntarily
take place? An exchange is then a double inequality, not an equality.
And on this sounder theory, one can readily build up a theory of value
much superior to the Marxist account. Conway presents this compet-
ing view, the subjective or marginal utility theory of value, in a clear
and simple way (pp. 98ff). And on this account, the worker is not

“exploited.”

Perhaps wisely, Conway passes by the complicated ‘transforma-
tion problem.” This'is Marx’s convoluted attempt to square the cir
cle—his attempt to show that his labor theory could explain why
prices of production do not correspond to labor values. Bshm-Bawerk
exploded for all time Marx’s manifold fallacies here.

Instead, our author turns to ethics: does capitalism wrongfully
exploit the worker? Here “exploit” is used not in its technical sense
in Marxist economics, but i in its ordinary language meaning. Inciden-


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Book Reviews 237

tally, Marx’s choice of the term “exploitation” has considerable rhe-
torical force. It would not follow, if his view of economics were right,
that there is anything unsatisfactory in labor’s receiving less than its
capacity for labor enables it to produce. But the use of the word
“exploitation” serves to make part of Marx’s case for him. It is quite
easy to forget Marx’s technical meaning and slide over to the ordinary
language use, in which exploitation by definition is objectionable.

But to return to Conway, on what grounds do Marxists claim
workers are exploited? Much of their case rests on the false assump-
tion that the capitalist is not doing anything. But surely providing
capital is an essential task of production. Nor is Marx justified in
ridiculing the theory that interest payments reward capitalists for
abstinence. No doubt capitalists could not in all cases readily con-
sume personally the wealth they now invest: but they need not invest
anything. The fact that they do invest, then, does indicate a sacrifice
of possible consumption (p. 112). Conway’s case could have been made
even more effectively had he explicitly brought in the Austrian view
that interest payments reflect the rate of time preference.

Suppose one grants that Conway is right. Capitalists are not
useless drones but exercise a productive function of vital significance.
A socialist might attack on a different front: he might admit that
capitalists are productive but deny that they have justly obtained
their property.

To this Conway has a ready reply. He denies that it is unjust for
individuals to hold land and other resources for productive purposes.
Appropriating unowned land, e.g., need not prevent anyone else from
access to the means he or she needs to have a fulfilling life. Hence
morality imposes no bar against appropriation.

In this argument, Conway appeals to a principle of rights that
strikes me as dubious. Following the philosopher Samuel Scheffler,
Conway states: “we shall construe every person as having a natural
right to a sufficient share of every good capable of distribution whose
enjoyment is a necessary condition of a person’s having a reasonable
chance of living a decent and fulfilling life.” (pp. 117-18). (Conway
holds that the right is subject to one qualification, but this does not
affect our discussion.) As Conway interprets this principle, it allows
property acquisition subject to something quite like the “Lockean
proviso”: there must be “enough and as good” (p. 19) of whatever is
appropriated left over for others.

I cannot think that the restrictions Conway's principle impose on
acquisition of property can be defended in the fashion our author sets
forward. Why does everyone have so extensive a natural right as
Scheffler’s principle mandates? Do persons physically unable to pro-
vide for themselves have a natural right that others provide them
with medicine and nursing care? Are those with high standards of


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238 The Review of Austrian Economics, Volume 4

living obligated to devote large shares of their resources to aiding the
destitute in Ethiopia and Bangladesh? Though I cannot argue the
point here, I think that the straight-forward Rothbardian variant of
Lockean rights avoids these and other problems.

But even if Conway’s view of rights is wrong, his adoption of it
serves a useful purpose in the case against Marxism. If even his
overly permissive view of rights allows property rights, how much
more can they be supported on a more restricted view of the goods
and services people are entitled to claim from others?

One escape remains to the Marxist. He may hold that, whether or
not there is in principle an objection on moral grounds to private
property, in practice the question admits of but one response. In
actually existing capitalism, wealth was mainly acquired through
plunder of colonies and the use of slave labor.

This Conway denies. He claims that “landed and colonial wealth
played virtually no part in financing the first capitalist industrial
ventures.” In fact, capital expanded through exactly the account Marx
ridiculed; businessmen in the Industrial Revolution tended to
“plough back” nearly all their profits in further investment (p. 111.
Conway's sources are works of R. Cameron and F. Crouzet, as cited
at pp. 214-15.)

Capitalism, Conway has abundantly shown, stands acquitted of
the charge of exploitation. But what of the Marxist claim that the
capitalist system leads inevitably to crisis and collapse? Here, space
compels me to be brief. Suffice it to say that this claim too stands
bereft of support.

Marx's theory of capitalist development has both a general basis
in the “laws” of history and includes specific means by which capital-
ism fulfills these supposed laws of history. The first of these depends
on the view that productive forces—roughly the technology and meth-
ods of production that exist at a time—tend continually to grow. The
economic system that exists at a particular stage of history is the one
that best enables the forces of production to grow. When the system
reaches the limits of the growth of capital within it, a new system will
replace it. Conway notes that Marx’s explanation of the economic
system is a functional one. That is, he explains the economic system
by its role in promoting the growth of the forces of production.

But this sort of explanation is at best incomplete. The growth of
the forces of production does not precede the system whose existence
it is supposed to explain. How then is it supposed to explain it?
Granted the “function” of the system, some causal account is needed
to explain how the economic system exists. Otherwise, our causal
explanation will go in the wrong direction—the (later) production
forces will “cause” the (earlier) system that enables them to develop.
In a detailed discussion, Conway maintains that G. A. Cohen, the


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Book Reviews 239

leading supporter of this sort of functional account, has not filled his
analysis out in an acceptable way (pp. 73-75).

There is a further point that to my mind invalidates the Marxist
theory. Why should we assume that each new economic system is the
one that will allow the maximum development of the productive
forces possible at a particular time in history? Isn’t it the case, e.g.,
that capitalism would have been a more productive economic system
than feudalism? (I cannot think acceptable the contention of Douglas
North that feudalism is a type of capitalism. But if one thinks there
is “something to” this, rephrase the point: isn’t a capitalist system
that need not be bound by feudal restrictions always more productive
than one that is thus restricted?)

Conway shows very well that Marx’s specific mechanisms de-
signed to explain the collapse of capitalism fail of their purpose.
Marx’s account here relies on the theory that the rate of profit tends
under capitalism to fall: his argument for this is a tissue of error (pp.
113-39). As Conway notes, on the best account of the business cycle,
that of Ludwig von Mises, depression is not intrinsic to capitalism. It
results from the collapse of overinvestment due to government-in-
duced expansion of bank credit. Depression is a problem not of the
free market, but of governmental interference with it (pp. 140-41).

I have so far been in entire accord with the main lines of Conway’s
presentation. But I fear I must part company with him in his fifth
chapter, “Politics.” Here he argues that Marx favored democracy:
unlike Lenin and his successors, Marx did not favor the suppression
of workers and their subjection to the minority dictatorship of a
“vanguard” party. Conway fully and fairly presents the evidence
against his view (pp. 148ff); he nevertheless holds that even such
phrases as the “dictatorship of the proletariat” are not what they
seem. He interprets Marx’s advocacy of dictatorship in a way that
leaves him still a democrat.

It seems to me that Conway has here fallen into a trap. No doubt
Marx did support certain freedoms for “workers.” But the proletariat
hardly subsumes everyone within society: and there is no evidence
that Marx thought of extending “democratic” freedoms to non-prole-
tarian opponents of socialism.

Further, even if one confines the discussion to workers, one needs
to distinguish, in a way that Conway fails to do, between democracy
and civil liberties. The fact that Marx wished workers to take an
active role in government hardly shows that he wished to extend civil
liberties to workers who opposed socialism. Would he not more likely
have regarded them as “class traitors” to be dealt with ruthlessly?

Conway's last full chapter, “Theory or Ideology,” is strikingly
original. He denies that Marx has made a case for his claim that
morality reflects class interests. What exactly is the argument that


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240 | The Review of Austrian Economics, Volume 4

moral judgments are not objectively true? Marx offers none—he
simply dismisses morality with a wave of the hand.

‘Conway's case so far, while perfectly in order, follows standard
lines. His originality emerges in his treatment of the related Marxist
claim that religion is ideological. Here he counters by presenting with
apparent approval Schopenhauer’s assertion that some religions—
Christianity, Brahmanism, and Buddhism—allegorically present the
truth of the human condition. The truth in question is that of the
futility of life and the need for a release from the domination of the
will. Many will find this more than a little outré. A less radical
response to Marx might content itself with noting that specific reli-
gious claims need to be discussed rather than dismissed en bloc. But
like all of Conway’s book, his view is clearly presented and provoca-
tive. a Co

I do not think anyone can finish Conway’s excellent book without
learning a great deal about both-Marxism and effective philosophical
argument.

~ David Gordon
The Ludwig von Mises Institute