Marx vs. Von Mises on Capitalism

Abby H – P. 5

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As many great philosophers have pondered the ideals of capitalism, an economic system where industry and trade is privately owned, the question of how capitalism has affected society is often brought up. In particular, Karl Marx and Ludwig von Mises have written, with some differing and some similar views, about capitalism and its effects on all classes of society. Marx believed that capitalism provided for a large growth of industrial productive capability of the economy; however, in his opinion, it created two district social classes, the bourgeoisie and the proletariat. The bourgeoisie were characterized as the ones that controlled production and the laborers. The proletariat was depicted quite the opposite as the laborers who owned and controlled nothing but provided the means of production. Marx goes to say that as the bourgeoisie begin to control more and more, they will in affect dehumanize the proletariat and strip them of all that they own. Once the proletariat has been pushed down to their breaking point, they will rise up and overthrow the bourgeoisie, as they will have the numbers on their side. The proletariat will then control all means of production and labor and they will in affect rid the state of capitalism and in turn replace it with socialism, an economic system opposite of capitalism where the working class, or the proletariat, will control the means of production. Marx carries this further to even say that socialism will be replaced by communism, a classless society. Von Mises had quite the opposite view on capitalism than Marx did. He is known today as a defender of capitalism. He believed that capitalism was “not simply mass production, but mass production to satisfy the needs of the masses” (Liberty and Property). These two, one a strong believer in socialistic thinking, Marx, and the other a strong believer in capitalistic thinking, Von Mises, can be compared and contrasted to better understand the idea of capitalism as a whole and how it will affect society.

The root of the difference in opinion between Marx and von Mises is what they value as the biggest concern in any given economic system. Marx believes in the power of the working class and that they should be able to indicate how an economic system should be run like in that of a socialistic economic system. Von Mises, on the other hand, believes that the consumer should dictate how an economic system shall be run like in that of a capitalistic economic system. Because Marx supports the working class and von Mises supports the consumer, they also disagree on the struggle between the classes and the division of labor. Von Mises sees this division of labor as the best way to increase production and bring it to its highest productivity rate. Marx does not deny that von Mises is correct in this regard, he too believes that productivity is at it’s highest point under a capitalistic economic system, however he believes that capitalism will not be able to sustain itself. His concern for the working class drives him to believe that capitalism degrades the working class and that capitalism is “reckless of the health and length of life of the laborer.” Von Mises sees this division of labor and difference in the social gap not as a bad thing like Marx, but rather as a necessary component to preserving civilization. This division of labor, in von Mises’ opinion, requires capitalism in order to sustain. Marx says “ that the forces of capitalism, if left unchecked, tend to make the rich richer and the poor poorer.” Von Mises disagrees in Marx’s idea that capitalism does not benefit only a few rich citizens and discards the majority of society and leaves them poor. Von Mises believes that capitalism actually does keep in mind what will benefit the majority of society by writing what socialism will cause for society. It creates an increasing supply of production for the use of the majority. Von Mises believes that socialism will eliminate any motivation for competition and that “socialism substitutes the sovereignty of a dictator, or committee of dictators, for the sovereignty of the consumers” (Liberty and Property). He says that socialism will fail because it does not have any economic planning.

Marx’s strongest argument is driven by the exploration of the laborer. He sees the laborers become less and less human and more and more of a machine used by the bourgeoisie under capitalism. Von Mises counter acts this argument by stating that these claims are groundless. Marx says that there is no rational planning behind capitalism as it leads to its own destruction, and this was publicly accepted at the time of Marx. However, once von Mises began to stand up for capitalism, he wrote that there was indeed economic planning involved in capitalism and further believed that there was no rational planning in socialism instead. Von Mises gave examples of planning when bourgeoisie decides to expand business. Marx believes that the working class has lost all sort of freedom under capitalism; they are defined by what the bourgeoisie tells them to do, how to act, what to produce, and when to produce it. Von Mises responds to this popular belief by socialists by saying that there “cannot be any freedom under a socialist system” because everyone will the same when the majority rules.

Marx and von Mises did not agree on much expect that capitalism is the best mean of action to increase production. Marx believed that capitalism would slowly place the power in fewer and fewer people’s hands and monopolies would soon start to form. He did slightly agree with von Mises in the fact that a competitive economy does require a elimination of producers however, under von Mises’ preferred economic system, capitalism, Marx believes that too many producers will be eliminated. Marx says that there will be a large gap between the two classes and the there will be a huge displacement of the labors under capitalism. A large argument that dries Marx’s disagreement in a capitalistic economic system comes from what he believes to be a large struggle between the two classes. He believes that as capitalism intensifies it will in affect cause the class struggle to become stronger and stronger until it will at last cause self destruction and the working class with seize control.. Marx says “capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth — the soil and the laborer.” Capitalism, in Marx’s opinion, is an economic system with no stability.
As the debate between Marx and von Mises continues, many other philosophers arrive on the scene to also debate the ides behind capitalism and socialism and how each economic system would ultimately affect society as a whole. Marx disagreed with capitalism because of its inequality amongst the two social classes that the economic system created. Marx saw this inequality first hand and decided to write about during the industrial changes being made in Europe at the time. He saw the working poor become further demoted as the bourgeoisie obtained more power. Marx found that capitalism allowed the rich to become richer and the expense of the poor. Von Mises disagrees with what most of Marx had to say as he emerged as a defender of capitalism. He found that capitalism affected society in a positive way, it allowed for more freedom and was in the best interest of the consumer. These two arguments will continue to be debated today as each man has made such a lasting impression on society and the ideas behind capitalism.

Perry, Richard. “The Ludwig Von Mises Institute.” Liberty and Property by Ludwig Von Mises. N.p., n.d. Web. 10 Dec. 2012.

“Karl Marx.” (Stanford Encyclopedia of Philosophy). N.p., n.d. Web. 10 Dec. 2012.

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