WEBVTT NOTE Marxist and Austrian Class Analysis 1 00:00:00.000 --> 00:00:04.280 My topic is Marxist and Austrian class analysis. 2 00:00:04.280 --> 00:00:06.360 I want to do the following. 3 00:00:06.360 --> 00:00:09.960 First, I will present a series of theses 4 00:00:09.960 --> 00:00:15.240 that constitute the hardcore of the Marxist theory of history. 5 00:00:15.240 --> 00:00:19.200 I claim that all of them are essentially correct. 6 00:00:19.200 --> 00:00:22.120 And then I will show how these true theses 7 00:00:22.120 --> 00:00:26.840 are derived in Marxism from a false starting point. 8 00:00:26.840 --> 00:00:29.520 And finally, I want to demonstrate 9 00:00:29.520 --> 00:00:36.400 How Austrianism in the Mises-Rothbard tradition can give a correct, but categorically different 10 00:00:36.400 --> 00:00:39.960 explanation of their validity. 11 00:00:39.960 --> 00:00:45.860 Let me begin with the hardcore of the Marxist belief system. 12 00:00:45.860 --> 00:00:50.920 The history of mankind is the history of class struggles. 13 00:00:50.920 --> 00:00:57.680 It is the history of struggles between a relatively small ruling class and a larger class of the 14 00:00:57.680 --> 00:00:59.320 exploited. 15 00:00:59.320 --> 00:01:06.680 The primary form of exploitation is economic. The ruling class expropriates parts of the 16 00:01:06.680 --> 00:01:14.440 productive output of the exploited or, as Marxists say, it appropriates a social surplus 17 00:01:14.440 --> 00:01:23.960 product and uses it for its own consumptive purposes. Second, the ruling class is unified 18 00:01:23.960 --> 00:01:31.520 by its common interest in upholding its exploitative position and maximizing its exploitatively 19 00:01:31.520 --> 00:01:40.680 appropriated surplus product. It never deliberately gives up power or exploitation income. Instead, 20 00:01:40.680 --> 00:01:47.120 any loss in power or income must be wrestled away from it through struggles whose outcome 21 00:01:47.120 --> 00:01:53.080 ultimately depends on the class consciousness of the exploited, that is, on whether or not 22 00:01:53.080 --> 00:01:59.600 and to what extent the exploited are aware of their own status and are consciously united 23 00:01:59.600 --> 00:02:04.560 with other class members in common opposition to exploitation. 24 00:02:04.560 --> 00:02:13.080 Third, class rule manifests itself primarily in specific arrangements regarding the assignment 25 00:02:13.080 --> 00:02:20.900 of property rights or in Marxist terminology in specific relations of production. 26 00:02:20.900 --> 00:02:26.940 In order to protect these arrangements or production relations, the ruling class forms 27 00:02:26.940 --> 00:02:32.880 and is in command of the state as the apparatus of compulsion and coercion. 28 00:02:32.880 --> 00:02:39.520 The state enforces and helps reproduce a given class structure through the administration 29 00:02:39.520 --> 00:02:47.080 of a system of class justice, and it assists in the creation and the support of an ideological 30 00:02:47.080 --> 00:02:54.120 Superstructure Designed to Lend Legitimacy to the Existence of Class Rule. 31 00:02:54.120 --> 00:03:02.620 Fourth, internally the process of competition within the ruling class generates a tendency 32 00:03:02.620 --> 00:03:06.880 toward increasing concentration and centralization. 33 00:03:06.880 --> 00:03:14.920 A multipolar system of exploitation is gradually supplanted by an oligarchic or monopolistic 34 00:03:14.920 --> 00:03:15.920 one. 35 00:03:15.920 --> 00:03:22.720 Fewer and fewer exploitation centers remain in operation, and those that do are increasingly 36 00:03:22.720 --> 00:03:27.160 integrated into a hierarchical order. 37 00:03:27.160 --> 00:03:33.880 And externally, that is, as regards the international system, this internal centralization process 38 00:03:33.880 --> 00:03:41.200 will lead to imperialist interstate wars and the territorial expansion of exploitative 39 00:03:41.200 --> 00:03:43.000 rule. 40 00:03:43.000 --> 00:04:02.000 5. With the centralization and expansion of exploitative rule gradually approaching its ultimate limit of world domination, class rule will increasingly become incompatible with the further development and improvement of productive forces. 41 00:04:02.000 --> 00:04:16.000 Economic stagnation and crises become more and more characteristic and create the so-called objective conditions for the emergence of a revolutionary class consciousness of the exploited. 42 00:04:16.000 --> 00:04:30.000 The situation becomes ripe for the establishment of a classless society, the withering away of the state, or the replacement of government of men over men by the administration of things. 43 00:04:30.000 --> 00:04:40.000 and, as its result, unheard of economic prosperity. All of these theses can be given a perfectly 44 00:04:40.000 --> 00:04:47.600 good justification, as I will show. Unfortunately, however, it is Marxism which subscribes to 45 00:04:47.600 --> 00:04:54.080 all of them that has done more than any other ideological system to discredit their validity 46 00:04:54.080 --> 00:04:59.920 in deriving them from a patently absurd exploitation theory. 47 00:04:59.920 --> 00:05:04.640 Now what is this Marxist theory of exploitation? 48 00:05:04.640 --> 00:05:12.160 According to Marx, such pre-capitalist social systems as slavery and feudalism are characterized 49 00:05:12.160 --> 00:05:14.600 by exploitation. 50 00:05:14.600 --> 00:05:20.360 There is no quarrel with this, for after all the slave is not a free laborer and he cannot 51 00:05:20.360 --> 00:05:40.360 The interest of the slave and that of the slave owner are indeed antagonistic. The same is true as regards the interest of the feudal lord who extracts a land rent from a peasant who works on land homesteaded by himself. 52 00:05:40.360 --> 00:05:52.360 The same is true as regards the interests of the feudal lord who extracts a land rent from a peasant who works on land homesteaded by himself, that is, by the peasant. 53 00:05:52.360 --> 00:05:56.360 The lord's gains are the peasant's losses. 54 00:05:56.360 --> 00:06:05.360 And it is also undisputed that slavery as well as feudalism indeed hampers the development of productive forces. 55 00:06:05.360 --> 00:06:13.360 Neither slave nor serf will be as productive as they would be without slavery or serf them. 56 00:06:13.360 --> 00:06:21.360 But the genuinely new Marxist idea is that essentially nothing is changed as regards exploitation under capitalism. 57 00:06:21.360 --> 00:06:33.360 That is, if the slave becomes a free laborer or if the peasant decides to farm land homesteaded by someone else and pays rent in exchange for doing so. 58 00:06:33.360 --> 00:06:42.360 To be sure, Marx, in the famous Chapter 24 of the first volume of his Capital, titled 59 00:06:42.360 --> 00:06:50.360 The So-called Original Accumulation, gives a historical account of the emergence of capitalism, 60 00:06:50.360 --> 00:06:56.360 which makes the point that much or even most of the initial capitalist property is the 61 00:06:56.360 --> 00:07:00.360 result of plunder, enclosure and conquest. 62 00:07:00.360 --> 00:07:15.360 And similarly, in chapter 25, on the modern theory of colonialism, the role of force and violence in exporting capitalism to the, as we would now say, third world, is heavily emphasized. 63 00:07:15.360 --> 00:07:25.360 Admittedly, all this is generally correct, and insofar as it is, there can be no quarrel with labeling such capitalism exploitative. 64 00:07:25.360 --> 00:07:33.200 Yet, one should be aware of the fact that Marx here is engaged in a trick. In engaging 65 00:07:33.200 --> 00:07:39.960 in historical investigations and arousing the reader's indignation regarding the brutalities 66 00:07:39.960 --> 00:07:45.760 underlying the formation of many capitalist fortunes, he actually sidesteps the issue 67 00:07:45.760 --> 00:07:53.360 at hand. He distracts from the fact that his thesis is really an entirely different one, 68 00:07:53.360 --> 00:08:15.360 Namely, that even if one were to have a clean capitalism, so to speak, that is, one in which the original appropriation of capital was the result of nothing else but homesteading, work and savings, the capitalist who hired labor to be employed with this capital would nonetheless be engaged in exploitation. 69 00:08:15.360 --> 00:08:23.360 Indeed, Marx considered the proof of this thesis his most important contribution to economic analysis. 70 00:08:23.360 --> 00:08:31.360 What, then, is his proof of the exploitative character of a clean capitalism? 71 00:08:31.360 --> 00:08:42.360 It consists in the observation that the factor prices, in particular the wages paid to laborers by the capitalist, are lower than the output prices. 72 00:08:42.360 --> 00:09:00.360 The laborer, for instance, is paid a wage that represents consumption goods which can be produced in three days, but he actually works five days for his wage and produces an output of consumption goods that exceeds what he receives as remuneration. 73 00:09:00.360 --> 00:09:15.360 The output of the two extra days, the surplus value in Marx's terminology, is appropriated by the capitalist. Hence, according to Marx, there is exploitation. 74 00:09:15.360 --> 00:09:26.360 Now what is wrong with this analysis? The answer becomes obvious once it is asked why the laborer would possibly agree to such a deal. 75 00:09:26.360 --> 00:09:36.360 He agrees because his wage payment represents present goods, while his own labor services represent only future goods. 76 00:09:36.360 --> 00:09:40.360 And he values present goods more highly. 77 00:09:40.360 --> 00:09:50.360 After all, he could also decide not to sell his labor services to the capitalist and then reap the full value of his output himself. 78 00:09:50.360 --> 00:09:57.360 But this would of course imply that he would have to wait longer for any consumption goods to become available to him. 79 00:09:57.360 --> 00:10:09.360 In selling his labor services, he demonstrates that he prefers a smaller amount of consumption goods now over a possibly larger one at some future date. 80 00:10:09.360 --> 00:10:14.360 On the other hand, why would the capitalist want to strike a deal with the laborer? 81 00:10:14.360 --> 00:10:24.360 Why would he want to advance present goods, that is, present money, to the laborer in exchange for services that bear fruit only later? 82 00:10:24.360 --> 00:10:33.360 Obviously, he would not want to pay out, for instance, $100 now if he were to receive the same amount in one year's time. 83 00:10:33.360 --> 00:10:43.360 In that case, why not simply hold on to it for one year and receive the extra benefit of having actual command over it during the entire time? 84 00:10:43.360 --> 00:10:55.360 Instead, he must expect to receive a larger sum than $100 in the future in order to give up $100 now in the form of wages paid to the laborer. 85 00:10:55.360 --> 00:11:01.360 He must expect to be able to earn a profit or, more correctly, an interest return. 86 00:11:01.360 --> 00:11:11.360 And he is constrained by time preferences, the fact that an actor invariably prefers earlier over later goods in yet another way. 87 00:11:11.360 --> 00:11:23.360 If one can obtain a larger sum in the future by sacrificing a smaller one in the present, why then is a capitalist not engaged in more savings than he actually is? 88 00:11:23.360 --> 00:11:31.360 Why does he not hire more laborers than he does, if each one of them promises an additional interest return? 89 00:11:31.360 --> 00:11:38.360 The answer again should be obvious, because the capitalist is a consumer too and cannot help being one. 90 00:11:38.360 --> 00:12:05.360 The amount of his savings and investing is restricting the necessity that he, too, like the laborer, requires a supply of present goods large enough to secure the satisfaction of all those wants, the satisfaction of which during the waiting time is considered more urgent than the advantages which a still greater lengthening of the period of production would provide. 91 00:12:05.360 --> 00:12:16.360 Now, what is wrong with Marx's theory of exploitation, then, is that he does not understand the phenomenon of time preference as a universal category of human action. 92 00:12:16.360 --> 00:12:23.360 That the laborer does not receive his full worth, so to speak, has nothing to do with exploitation, 93 00:12:23.360 --> 00:12:33.360 but merely reflects the fact that it is impossible for man to exchange future goods against present ones, except at a discount. 94 00:12:33.360 --> 00:12:47.360 Contrary to the case of slave and slave master, where the latter benefits at the expense of the former, the relationship between the free laborer and the capitalist is a mutually beneficial one. 95 00:12:47.360 --> 00:12:58.360 The laborer enters the agreement because, given his time preference, he prefers a smaller amount of present goods over a larger future one. 96 00:12:58.360 --> 00:13:11.360 and the capitalist emphasis, because given his time preference, he has a reverse preference order and ranks a larger future amount of goods more highly than a smaller present one. 97 00:13:11.360 --> 00:13:16.360 Their interests are not antagonistic, but harmonious. 98 00:13:16.360 --> 00:13:26.360 Without the capitalist expectation of an interest return, the laborer would be worse off having to wait longer than he wishes to wait. 99 00:13:26.360 --> 00:13:40.360 And without the laborer's preference for present goods, the capitalist would be worse off having to resort to less roundabout and less efficient production methods than those which he desires to adopt. 100 00:13:40.360 --> 00:13:49.360 Nor can the capitalist wage system be regarded as an impediment to the further development of the forces of production, as Marx claims. 101 00:13:49.360 --> 00:14:04.360 If the laborer were not permitted to sell his labor services and the capitalist to buy them, output would lower because production would have to take place with relatively reduced levels of capital accumulation. 102 00:14:04.360 --> 00:14:20.360 Under is through outstanding, producing and or savings. In each case it is brought about with the expectation that it will lead to an increase in the output of future goods. 103 00:14:20.360 --> 00:14:35.360 The value an actor attaches to his capital reflects the value he attaches to all expected future incomes attributable to its cooperation and discounted by his rate of time preference. 104 00:14:35.360 --> 00:15:04.360 If, as in the case of collectively owned factors of production, an actor is no longer granted exclusive control over his accumulated capital and hence over the future income to be derived from its employment, but partial control instead is assigned to non-homesteaders, non-producers and non-savers, the value for him of the expected income and hence that of the capital goods is reduced. 105 00:15:04.360 --> 00:15:11.020 is used. His effective rate of time preference will rise. There will be less homesteading 106 00:15:11.020 --> 00:15:17.820 of resources whose scarcity is recognized and less saving for the maintenance of existing 107 00:15:17.820 --> 00:15:24.060 and the production of new capital goods. The period of production, the roundaboutness of 108 00:15:24.060 --> 00:15:31.740 the production structure will be shortened and relative impoverishment will result. 109 00:15:31.740 --> 00:15:38.280 If Marx's theory of capitalist exploitation and his ideas on how to end exploitation and 110 00:15:38.280 --> 00:15:44.380 establish universal prosperity are false to the point of being ridiculous, it is clear 111 00:15:44.380 --> 00:15:51.740 that any theory of history which can be derived from it must be false too. Or, if it should 112 00:15:51.740 --> 00:15:58.540 be correct, it must have been derived incorrectly. Instead of going through the lengthier task 113 00:15:58.540 --> 00:16:13.540 and the risk of explaining all of the flaws in the Marxist argument as it sets out from its Theory of Capitalist Exploitation and ends with a Theory of History which I presented earlier, I will take a shortcut here. 114 00:16:13.540 --> 00:16:22.540 I will now outline in the briefest possible way the correct Austrian Misesian-Rothbardian Theory of Exploitation. 115 00:16:22.540 --> 00:16:51.540 I will then give an explanatory sketch of how this theory makes sense out of the class theory of history and highlight along the way some key differences between this class theory and the Marxist one and also point out some intellectual affinities between Austrianism and Marxism stemming from their common conviction that there does indeed exist something like exploitation and a ruling class. 116 00:16:52.540 --> 00:17:07.540 The starting point for the Austrian exploitation theory is plain and simple, as it should be. Actually, it has already been established through the analysis of the Marxist theory. 117 00:17:07.540 --> 00:17:21.540 Exploitation characterized the relationship between slave and slave master, and between serf and feudal lord. 118 00:17:21.540 --> 00:17:26.540 But no exploitation was found possible under a clean capitalism. 119 00:17:26.540 --> 00:17:30.540 Now what is the principal difference between these two cases? 120 00:17:30.540 --> 00:17:53.540 The answer is this. The recognition or non-recognition of the homesteading principle. The peasant under feudalism is exploited because he does not have exclusive control over land that he homesteaded and the slave because he has no exclusive control over his own homesteaded body. 121 00:17:53.540 --> 00:18:09.540 If, contrary to this, everyone has exclusive control over his own body, that is, everyone is a free laborer, and acts in accordance with the homesteading principle, there can be no exploitation. 122 00:18:09.540 --> 00:18:38.540 It is logically absurd to claim that a person who homesteads goods not previously homesteaded by anybody else, or who employs such goods in the production of future goods, or who saves presently homesteaded or produced goods in order to increase the future supply of goods, could thereby exploit anybody. Nothing has been taken away from anybody in this process, and additional goods have actually been created. 123 00:18:39.540 --> 00:18:55.540 And it would be equally absurd to claim that an agreement between different homesteaders, savers and producers regarding their non-exploitatively appropriated goods or services could possibly contain any foul play then. 124 00:18:55.540 --> 00:19:03.540 Instead, exploitation takes place whenever any deviation from the homesteading principle occurs. 125 00:19:03.540 --> 00:19:20.540 It is exploitation whenever a person successfully claims partial or full control over resources which he has not homesteaded, saved or produced, and which he has not acquired contractually from a previous producer-owner. 126 00:19:20.540 --> 00:19:31.540 Exploitation is the expropriation of homesteaders, producers and savers by late coming non-homesteaders, non-producers, non-savers and non-contractors. 127 00:19:31.540 --> 00:19:44.540 It is the expropriation of people whose property claims are grounded in work and contract by people whose claims are derived from thin air and who disregard others' works and contracts. 128 00:19:44.540 --> 00:19:52.540 Needless to say, exploitation defined in this way is in fact an integral part of human history. 129 00:19:52.540 --> 00:19:59.540 One can acquire and increase wealth either through homesteading, producing, saving or contracting, 130 00:19:59.540 --> 00:20:04.540 or by expropriating homesteaders, producers, savers or contractors. 131 00:20:04.540 --> 00:20:09.540 There are no other ways. Both methods are natural to mankind. 132 00:20:09.540 --> 00:20:19.540 Alongside homesteading, producing and contracting, there have always been non-productive and non-contractual property acquisitions. 133 00:20:19.540 --> 00:20:29.540 And in the course of economic development, just as the producers and contractors can form firms, enterprises and corporations, 134 00:20:29.540 --> 00:20:36.540 so can exploiters combine to large-scale exploitation enterprises, to governments and states. 135 00:20:36.540 --> 00:21:00.540 The ruling class is initially composed of the members of such an exploitation firm, and with a ruling class established over a given territory and engaged in the expropriation of economic resources from a class of exploited producers, the center of all history indeed becomes the struggle between exploiters and the exploited. 136 00:21:00.540 --> 00:21:17.540 History, then, correctly told, is essentially the history of the victories and defeats of the rulers in their attempt to maximize exploitatively appropriated income and of the ruled in their attempts to resist and reverse this tendency. 137 00:21:17.540 --> 00:21:30.540 It is in this assessment of history that Austrians and Marxists agree, and why a notable intellectual affinity between Austrians and Marxist historical investigations exists. 138 00:21:30.540 --> 00:21:40.540 Both oppose a historiography which recognizes only action or interaction economically and morally all on a par. 139 00:21:40.540 --> 00:21:48.540 And both oppose a historiography that instead of adopting such a value-neutral stand, 140 00:21:48.540 --> 00:21:58.540 thinks that one's own arbitrarily introduced subjective value judgments have to provide the foil for one's historical narratives. 141 00:21:58.540 --> 00:22:12.540 Rather, history must be told in terms of freedom and exploitation, parasitism and economic impoverishment, private property and its destruction. Otherwise, it is told false. 142 00:22:12.540 --> 00:22:31.540 While productive enterprises come into or go out of existence because of voluntary support or its absence, a ruling class never comes to power because there is a demand for it, nor does it abdicate when abdication is demonstrably demanded. 143 00:22:31.540 --> 00:22:41.540 One cannot say by any stretch of the imagination that homesteaders, producers, savers and contractors have demanded their expropriation. 144 00:22:41.540 --> 00:22:50.540 They must be coerced into accepting it, and this proves conclusively that the exploitation firm is not in demand at all. 145 00:22:50.540 --> 00:23:02.540 Nor can one say that a ruling class can be brought down by abstaining from transactions with it in the same way as one can bring down a productive enterprise. 146 00:23:02.540 --> 00:23:12.540 For the ruling class acquires its income through non-productive and non-contractual transactions, and thus is unaffected by boycotts. 147 00:23:12.540 --> 00:23:28.540 Rather, what makes the rise of an exploitation firm possible, and what alone can in turn bring it down, is a specific state of public opinion, or, in Marxist terminology, a specific state of class consciousness. 148 00:23:28.540 --> 00:23:46.540 An exploiter creates victims, and victims are potential enemies. It is possible that this resistance can be lastingly broken down by force in the case of a group of men exploiting another group of roughly the same size. 149 00:23:46.540 --> 00:23:55.540 However, more than force is needed to expand exploitation over a population many times its own size. 150 00:23:55.540 --> 00:24:13.540 For this to happen, a firm must also have public support. A majority of the population must accept the exploitative actions as legitimate. This acceptance can range from active enthusiasm to passive resignation. 151 00:24:13.540 --> 00:24:28.540 But it must be acceptance in the sense that a majority must have given up the idea of actively or passively resisting any attempt to enforce non-productive and non-contractual property acquisitions. 152 00:24:28.540 --> 00:24:33.540 The class consciousness must be low, undeveloped and fuzzy. 153 00:24:33.540 --> 00:24:44.540 Only as long as this state of affairs lasts, is there still room for an exploitative firm to prosper, even if no actual demand for it exists. 154 00:24:44.540 --> 00:24:53.540 Only if and insofar as the exploited and expropriated develop a clear idea of their own situation, 155 00:24:53.540 --> 00:25:08.540 and are united with other members of their class through an ideological movement which gives expression to the idea of a classless society where all exploitation is abolished, can the power of the ruling class be broken? 156 00:25:08.540 --> 00:25:38.540 Only if and insofar as the majority of the exploited public becomes consciously integrated into such a movement and accordingly displays a common outrage over all non-productive or non-contractual property acquisitions shows a common contempt for everyone who engages in such acts and deliberately contributes nothing to help them make successful, not to mention actively trying to obstruct them, 157 00:25:38.540 --> 00:26:08.540 The gradual abolishment of feudal and absolutist rule, and the rise of increasingly capitalist societies in Western Europe and the United States, and along with this unheard of economic growth and rising population numbers, was the result of an increasing class consciousness among the exploited who were ideologically molded together 158 00:26:08.540 --> 00:26:12.540 through the doctrines of natural rights and liberalism. 159 00:26:12.540 --> 00:26:16.540 In this, Austrians and Marxists agree. 160 00:26:16.540 --> 00:26:20.540 They disagree, however, on the next assessment. 161 00:26:20.540 --> 00:26:24.540 The reversal of this liberalization process 162 00:26:24.540 --> 00:26:28.540 and steadily increased levels of exploitation in these societies 163 00:26:28.540 --> 00:26:32.540 since the last third of the 19th century 164 00:26:32.540 --> 00:26:36.540 and particularly pronounced since World War I 165 00:26:36.540 --> 00:27:06.540 are the result of a loss in class-consciousness. In fact, in the Austrian view, Marxism must accept much of the blame for this development by misdirecting attention from the correct exploitation model of the homesteader-producer-saver-contractor versus the non-homesteader-producer-saver-contractor to the fallacious model of the wage-earner versus the capitalist, thereby muddling things up. 166 00:27:06.540 --> 00:27:32.540 The establishment of a ruling class over an exploited one many times its own size by coercion and the manipulation of public opinion, that is, a low degree of class consciousness among the exploited, finds its most basic institutional expression in the creation of a system of public law superimposed on private law. 167 00:27:32.540 --> 00:27:43.540 The ruling class sets itself apart and protects its position as a ruling class by adopting a constitution for their firm's operation. 168 00:27:43.540 --> 00:27:58.540 On the one hand, by formalizing the internal operations within the state apparatus as well as its relations vis-à-vis the exploited population, a constitution creates some degree of legal stability. 169 00:27:58.540 --> 00:28:11.540 The more familiar and popular private law notions are incorporated into constitutional and public law, the more conducive this will be to the creation of favorable public opinion. 170 00:28:11.540 --> 00:28:22.540 On the other hand, any constitution and public law also formalizes the exemptory status of the ruling class as regards the homesteading principle. 171 00:28:22.540 --> 00:28:36.540 It formalizes the right of the state's representatives to engage in non-productive and non-contractual property acquisitions and the ultimate subordination of private to public law. 172 00:28:36.540 --> 00:28:49.540 Class justice, that is a dualism of one set of laws for the rulers and another for the ruled, comes to bear in this dualism of public and private law 173 00:28:49.540 --> 00:28:55.540 and in the domination and infiltration of public law over and into private law. 174 00:28:55.540 --> 00:29:05.540 It is not because private property rights are recognized by law, as Marxists think, that class justice is established. 175 00:29:05.540 --> 00:29:16.540 Rather, class justice comes into being precisely whenever a legal distinction exists between a class of persons acting under and being protected by public law 176 00:29:16.540 --> 00:29:24.540 Law and another class acting under and being protected instead by some subordinate private law. 177 00:29:24.540 --> 00:29:31.540 More specifically then, the basic proposition of the Marxist theory of the secular is false. 178 00:29:31.540 --> 00:29:37.540 The state is not exploitative because it protects the capitalist's property rights, 179 00:29:37.540 --> 00:29:44.540 but because it itself is exempt from the restriction of having to acquire property productively 180 00:29:44.540 --> 00:29:52.840 In spite of this fundamental misconception, however, Marxism, because it correctly interprets 181 00:29:52.840 --> 00:29:59.420 the state as exploitative, contrary for instance to the public choice school which sees it 182 00:29:59.420 --> 00:30:05.740 as a normal firm among others, is on to some important insights regarding the logic of 183 00:30:05.740 --> 00:30:08.340 state operations. 184 00:30:08.340 --> 00:30:17.620 For one thing, Marxism recognizes the strategic function of redistributive state policies. 185 00:30:17.620 --> 00:30:23.820 As an exploitative firm, the state must at all times be interested in a low degree of 186 00:30:23.820 --> 00:30:27.120 class consciousness among the ruled. 187 00:30:27.120 --> 00:30:35.100 The redistribution of property and income, a policy of DVD et impera, is the state's 188 00:30:35.100 --> 00:30:41.340 means with which it can create divisiveness among the public and destroy the formation 189 00:30:41.340 --> 00:30:45.500 of a unifying class consciousness of the exploited. 190 00:30:45.500 --> 00:30:53.780 Furthermore, the redistribution of state power itself through democratizing the state constitution 191 00:30:53.780 --> 00:31:00.540 and opening up every ruling position to everyone and granting everyone the right to participate 192 00:31:00.540 --> 00:31:07.220 in the Determination of State Personnel and Policy is a means for reducing the resistance 193 00:31:07.220 --> 00:31:10.380 against exploitation as such. 194 00:31:10.380 --> 00:31:17.440 Secondly, the state is indeed as Marxists see it the great center of ideological propaganda 195 00:31:17.440 --> 00:31:20.660 and mystification. 196 00:31:20.660 --> 00:31:26.200 Exploitation is really freedom, taxes are really voluntary contributions, non-contractual 197 00:31:26.200 --> 00:31:55.640 And finally, Marxists are also correct in noticing the close association between the 198 00:31:55.640 --> 00:32:01.840 The State and Business, especially the banking elite, even though the explanation for it 199 00:32:01.840 --> 00:32:03.400 is faulty. 200 00:32:03.400 --> 00:32:09.240 The reason is not that the bourgeois establishment sees and supports the state as a guarantor 201 00:32:09.240 --> 00:32:13.220 of private property rights and contractualism. 202 00:32:13.220 --> 00:32:20.620 On the contrary, the establishment correctly perceives the state as a very anti-thesis 203 00:32:20.620 --> 00:32:27.300 to Private Property that it is and takes a close interest in it for this reason. 204 00:32:27.300 --> 00:32:32.860 The more successful a business, the less it will excel, but the larger also the potential 205 00:32:32.860 --> 00:32:38.700 gains that can be achieved if it can come under government special protection and is 206 00:32:38.700 --> 00:32:43.340 exempt from the full weight of capitalist competition. 207 00:32:43.340 --> 00:32:49.260 This is why the business establishment is interested in the state and its infiltration. 208 00:32:49.260 --> 00:32:54.260 The ruling elite in turn is interested in close cooperation with the business establishment 209 00:32:54.260 --> 00:32:56.920 because of its financial powers. 210 00:32:56.920 --> 00:33:03.100 In particular, the banking elite is of interest because as an exploitative firm, the state 211 00:33:03.100 --> 00:33:08.280 naturally wishes to possess complete autonomy for counterfeiting. 212 00:33:08.280 --> 00:33:15.060 By offering to cut the banking elite in on its own counterfeiting machinations and allowing 213 00:33:15.060 --> 00:33:35.060 By allowing them to counterfeit on top of its own counterfeited notes under a system of fractional reserve banking, the state can easily reach this goal and establish a system of state-monopolized money and cartelized banking controlled by its central bank. 214 00:33:35.060 --> 00:33:51.060 With this direct counterfeiting connection with the banking system and by extension the bank's major clients, the ruling class in fact extends far beyond the state apparatus to the very nervous centers of civil society. 215 00:33:51.060 --> 00:34:03.060 Not that much different, at least in appearance, from the picture that Marxists like to paint of the cooperation between banking, business elites and the state. 216 00:34:03.060 --> 00:34:12.060 Competition within the ruling class and among different ruling classes brings about a tendency toward increasing concentration. 217 00:34:12.060 --> 00:34:23.060 Marxism is right in this. However, its faulty theory of exploitation again leads it to locate the cause for this tendency in the wrong place. 218 00:34:23.060 --> 00:34:39.060 Marxism sees such a tendency as inherent in capitalist competition. Yet it is precisely so long as people are engaged in a clean capitalism that competition is not a form of zero-sum interaction. 219 00:34:39.060 --> 00:34:47.200 The homes that are the producer, saver and contractor do not gain at another's expense. 220 00:34:47.200 --> 00:34:52.260 Their gains either leave another's physical possessions completely unaffected or they 221 00:34:52.260 --> 00:35:00.500 actually imply mutual gains, as in the case of all contractual exchanges. 222 00:35:00.500 --> 00:35:10.620 Capitalism thus can account for increases in absolute wealth, but under its regime no systematic 223 00:35:10.620 --> 00:35:15.900 tendency toward relative concentration can be said to exist. 224 00:35:15.900 --> 00:35:22.080 Instead, zero-sum interactions characterize not only the relationship between the ruler 225 00:35:22.080 --> 00:35:28.000 and the ruled, but also between competing rulers. 226 00:35:28.000 --> 00:35:39.000 The competition defined as non-productive and non-contractual property acquisitions is only possible as long as there is anything that can be appropriated. 227 00:35:39.000 --> 00:35:47.000 Yet if there were free competition in the business of exploitation, there would obviously be nothing left to expropriate. 228 00:35:47.000 --> 00:35:54.000 Thus, exploitation requires monopoly over some given territory and population. 229 00:35:54.000 --> 00:36:13.000 And the competition between exploiters is by its very nature eliminative and must bring about a tendency toward relative concentration of exploitation firms as well as a tendency towards centralization within each exploitative firm. 230 00:36:13.000 --> 00:36:22.000 The development of states rather than capitalist firms provides the foremost illustration of this tendency. 231 00:36:22.000 --> 00:36:33.000 There are now a significantly smaller number of states with exploitative control over much larger territories than in previous centuries. 232 00:36:33.000 --> 00:36:46.000 And within each state apparatus there has in fact been a constant tendency toward increasing the powers of the central government at the expense of its regional and local subdivisions. 233 00:36:46.000 --> 00:36:53.320 Yet outside the state apparatus a tendency toward relative concentration has also become 234 00:36:53.320 --> 00:36:56.800 apparent and for the same reason. 235 00:36:56.800 --> 00:37:03.240 Not as should be clear by now because of any trade inherent in capitalism but because the 236 00:37:03.240 --> 00:37:10.160 ruling class has expanded its rule into the midst of civil society through the creation 237 00:37:10.160 --> 00:37:15.760 of a state banking business alliance and in particular the establishment of a system of 238 00:37:15.760 --> 00:37:16.760 of Central Banking 239 00:37:16.760 --> 00:37:24.840 If a concentration and centralization of state power then takes place, it is only natural 240 00:37:24.840 --> 00:37:31.320 that this be accompanied by a parallel process of relative concentration and cartelization 241 00:37:31.320 --> 00:37:34.080 of banking and industry. 242 00:37:34.080 --> 00:37:40.400 Along with increased state powers, the associated banking and business establishments powers 243 00:37:40.400 --> 00:37:47.080 of eliminating or putting economic competitors at disadvantage by means of non-productive 244 00:37:47.080 --> 00:37:52.160 or non-contractual expropriation increases. 245 00:37:52.160 --> 00:37:59.760 Business concentration is the reflection of the statization of economic life. 246 00:37:59.760 --> 00:38:06.360 The primary means for the expansion of state power and the elimination of rival exploitation 247 00:38:06.360 --> 00:38:15.320 centers is war and military domination. Interstate competition implies a tendency toward war and 248 00:38:15.320 --> 00:38:23.860 imperialism. As centers of exploitation, their interests are by nature antagonistic. Moreover, 249 00:38:23.860 --> 00:38:30.040 with each of them internally in command of the instrument of taxation and absolute counterfeiting 250 00:38:30.040 --> 00:38:36.040 It is possible for the ruling classes to let others pay for their wars. 251 00:38:36.040 --> 00:38:44.040 Naturally, if one does not have to pay for one's own risky ventures, but can force others to do so, 252 00:38:44.040 --> 00:38:51.040 one tends to be a greater risk-taker and more trigger-happy than one otherwise would be. 253 00:38:51.040 --> 00:39:00.040 Marxism, contrary to much of the so-called bourgeois social sciences, gets the facts right. 254 00:39:00.040 --> 00:39:11.040 There is indeed a tendency toward imperialism operative in history, and the foremost imperialist powers are indeed the most advanced capitalist nations. 255 00:39:11.040 --> 00:39:23.040 Yet the explanation is once again faulty. It is a state, as an institution exempt from the capitalist rules of property acquisitions, that is by nature aggressive. 256 00:39:23.040 --> 00:39:32.040 And the historical evidence of a close correlation between capitalism and imperialism only seemingly contradicts this. 257 00:39:32.040 --> 00:39:48.040 It finds its explanation easily enough in the fact that in order to come out successfully from interstate wars, a state must be in command of sufficient, in relative terms, of sufficient economic resources. 258 00:39:48.040 --> 00:40:14.040 Other things being equal, the state with more ample resources will win. As an exploitative firm, a state is by nature destructive of wealth and capital accumulation. Wealth is produced exclusively by civil society, and the weaker the state's exploitative powers, the more wealth and capital society accumulates. 259 00:40:14.040 --> 00:40:26.040 Thus, paradoxical as it may sound at first, the weaker or the more liberal a state is internally, the further developed capitalism is. 260 00:40:26.040 --> 00:40:39.040 A developed capitalist economy to extract from makes a state richer, and a richer state then makes for more and more successful expansionist wars. 261 00:40:39.040 --> 00:40:51.040 It is this relationship that explains why initially the states of Western Europe, and in particular Great Britain, were the leading imperialist powers, 262 00:40:51.040 --> 00:40:57.040 and why in the 20th century this role has been assumed by the United States. 263 00:40:57.040 --> 00:41:08.040 And a similarly straightforward yet once again entirely non-Marxist explanation exists for the observation always pointed out by Marxists 264 00:41:08.040 --> 00:41:17.040 that the banking and business establishment is usually among the most ardent supporters of military strengths and imperial expansion. 265 00:41:17.040 --> 00:41:24.040 It is not because the expansion of capitalist markets requires exploitation, 266 00:41:24.040 --> 00:41:34.040 but because the expansion of state-protected and privileged businesses requires that such protection be extended also to foreign countries 267 00:41:34.040 --> 00:41:46.040 and that foreign competitors be hampered through non-contractual and non-productive property acquisitions in the same way or even more so than internal competition. 268 00:41:46.040 --> 00:42:02.040 Specifically, the business elite supports imperialism if this imperialism promises to lead to a position of military domination of one's own allied state over another state. 269 00:42:02.040 --> 00:42:13.440 For then, from a position of military strength, it becomes possible to establish a system of, as one might call it, monetary imperialism. 270 00:42:13.440 --> 00:42:24.040 The dominating state will use its superior power to enforce a policy of internationally coordinated inflation. 271 00:42:24.040 --> 00:42:44.040 Its own central bank sets a pace in the process of counterfeiting, and the central banks of the dominated states are ordered to use its currency, the currency of the dominating state, as their own reserve currency and inflate on top of it. 272 00:42:44.040 --> 00:42:53.040 This way, along with the dominating state, its associated banking and business establishment 273 00:42:53.040 --> 00:42:59.600 as the earliest receivers of the counterfeit reserve currency can engage in an almost costless 274 00:42:59.600 --> 00:43:06.200 expropriation also of foreign property owners and income producers. 275 00:43:06.200 --> 00:43:13.280 A double layer of exploitation of a foreign state and a foreign elite on top of a national 276 00:43:13.280 --> 00:43:29.280 The Federal State and a national elite is imposed on the exploited class in the dominated territories, causing prolonged economic dependency and relative economic stagnation vis-a-vis the dominant nation. 277 00:43:29.280 --> 00:43:37.880 It is this very uncapitalist situation that characterizes the status of the United States and the U.S. dollar 278 00:43:37.880 --> 00:43:44.280 and that gives rise to the quite correct charge of U.S. economic exploitation and dollar imperialism. 279 00:43:44.280 --> 00:43:47.280 Now, I come to the last thesis. 280 00:43:47.280 --> 00:43:57.280 The increasing concentration and centralization of exploitative powers leads to economic stagnation, 281 00:43:57.280 --> 00:44:14.280 impedes the development of productive forces and thereby creates the objective conditions for its ultimate demise and the establishment of a classless society capable of producing unheard of economic prosperity. 282 00:44:14.280 --> 00:44:21.780 Contrary to Marxist claims, this is not of course the result of any historical laws. 283 00:44:21.780 --> 00:44:28.280 In fact, there exists no such thing as historical laws as Marxists conceive of them. 284 00:44:28.280 --> 00:44:39.280 Nor is it the result of a tendency for the profit rate to fall with an increased organic composition of capitals, of capital as Marxists phrase it. 285 00:44:39.280 --> 00:44:48.400 is an increase in the proportion of constant capital as compared with variable capital. 286 00:44:48.400 --> 00:44:59.000 Instead, the likelihood of crises that promotes a development of a higher degree are briefly commented. 287 00:44:59.000 --> 00:45:07.200 Exploitation is destructive of wealth formation, yet in the competition of exploitative firms, 288 00:45:07.200 --> 00:45:14.160 that is of states less exploitative ones because they are in command of more 289 00:45:14.160 --> 00:45:21.000 ample resources will win out over more exploitative ones. Hence the process of 290 00:45:21.000 --> 00:45:29.720 economic imperialism specifically of US imperialism initially has a relatively 291 00:45:29.720 --> 00:45:41.720 State rule becomes increasingly recognized as incompatible with the further development of productive forces and economic growth. 292 00:45:41.720 --> 00:45:49.720 Anti-status social pressures mount and bring about a process of withering away the state. 293 00:45:49.720 --> 00:46:01.720 Contrary to the Marxist model, however, if and insofar as this occurs, it will not mean social ownership of means of production. 294 00:46:01.720 --> 00:46:09.720 In fact, not only is social ownership economically inefficient, as I've already explained earlier. 295 00:46:09.720 --> 00:46:16.720 Moreover, it is in fact incompatible with the idea that the state is withering away. 296 00:46:16.720 --> 00:46:42.720 in a way, because if means of production are owned collectively, and if it is realistically assumed that not everybody's idea as to what to do with these means happens to coincide as if by a miracle, then it is precisely socially owned factors of production which require state action. 297 00:46:42.720 --> 00:46:55.720 That is, they require state action in order to impose one person's will on another disagreeing person's will. 298 00:46:55.720 --> 00:47:04.720 Instead, the withering away of the state then, and this is the end of exploitation, 299 00:47:04.720 --> 00:47:11.720 means the establishment of a pure private property society ordered by nothing but private law.