Ethan Yang ’20
About a week ago, I had the great privilege of being able to attend a faculty luncheon featuring a famous economist who happen to be delivering a guest lecture at Trinity. At the table there was a diverse set of departments present ranging from political science professors, to language, to economists from a variety of traditions. The topic at hand was the ideas of Karl Marx and how they happen to intersect with a major school of libertarian-capitalist thought, a very contradictory discovery indeed. Although some of the professors in the room hated to admit it and some certainly tried their best to disagree, it was quite obvious that everyone was basically coming to the same conclusion just phrased differently. This affirmed a suspicion of mine that differing political camps have far more in common than they think. If we move past the petty partisanship, we will arrive at a common truth.
One of the core topics of discussion that arose was the sustainability of a capitalist market in a democracy, the major threat to democracy, and capitalism being monopolies enforced by a government controlled by corporations or vice versa. Karl Marx wrote about the contradictory tendencies of capitalism to create such monopolies despite the need for a free and competitive market for capitalism to survive. Generally speaking, he wrote that the natural tendencies for profit maximizing entities is to preserve said profit. Because of the natural tendency for profit to decrease in a competitive market, capitalist actors will employ monopolistic practices to quash competition and preserve profits. This is accomplished by lobbying the government to enact protectionist policies and barriers to entry for new firms or products to the market place. As a result, the capitalist system grinds to a halt, production slows, quality degenerates, and all sorts of negative ramifications start to occur. This is presumably one of the key contradictions Marx points out in capitalism. As much as people like to make fun of Marxists for not having a grasp of economics, this is actually Econ 101.
Curiously enough, advocates for free markets and capitalism would say basically the same thing with a couple changes. They would all agree that competition and market forces tend to drive profit downwards. Companies who wish to do what is natural and preserve their profits have two options: innovate or run to the government for help. For example, Toyota can’t keep making the same car if it wishes to stay profitable, therefore it comes up with new models with attractive features like higher fuel efficiency and safety instruments. However, companies can’t help but to solicit the hand of government. Energy companies are but one example.
Whether its fading coal companies or flawed green energy projects, regulatory favors and massive injections of tax payer dollars are handed out to countless corporations in return for political favors. This relationship is incredibly toxic and Marxist and Capitalists can agree on that. It is only natural when you have a system of private property and accumulation combined with the coercive abilities of government. In a democracy, since there is a need to constantly curry votes and raise money for campaigns, this is not ideal.
There are a few commonly cited solutions. One is to abolish capitalism, not only is that impossible but even Marx admitted that markets were an incredibly productive mechanism. We’ve also tried Communism, which wasn’t the best idea. The other is some sort of ultra-principled dictatorship where the government with absolute power can do what’s best for the people and keep the markets open and free. This is also impossible and horrifying. The last idea is another stroke of irony. A republican system of limited government based on what the American Founders intended to create. They placed restrictions on the size and capabilities of government because they knew that forces such as greed can and will lead to abuses of power. Both a Marxist and a Capitalist should agree if we are going to have a democracy that a smaller state, with plenty of constitutional restrictions on power, is necessary. If we are to fight the natural cronyism inherent to capitalism noted by Marx, we must ensure that the government cannot be used to further the profit maximizing agendas of corporations. In order to preserve a free and prosperous market that can provide the abundance that society needs, we must ensure the government is restrained by a more expansive constitution and has less capabilities to regulate our lives. We should force government to restrict itself to the duty prescribed by the Founders: preserve our rights to life, liberty, and property. Only then can we ensure that the blessings of our liberal democracy are conserved for generations to come.