So Let the Battle Begin

I suppose that the Trump victory in the fall of 2016 always came with a question mark. Is this what Americans really want? In the last year it has been easy to believe that the liberals and the Democratic Party of Obama's conceit, the Clintons' corruption, and the faith in government force, were a busted flush.

Of course they aren't busted. Not at all. That's because liberalism is a genuine movement of the People of the Creative Self that want, as part of their creative project, to create a new society. And that's because the Democratic Party is a genuinely modern political party that trades votes for plunder, in the good old way that goes back to the Vikings plundering up the rivers of Britain and the young lads of hunter-gatherer tribes launching regular dawn raids on the neighboring village.

When you combine the two, the creative project of the People of the Creative Self and the offer of regular, profitable plunder to people not yet acculturated to the modern city economy, the folk I call the People of the Subordinate Self, you have a great political coalition. And this coalition naturally lines up against the other great coalition of the modern era, the bourgeois People of the Responsible Self that live by going to work, obeying the law, and following the rules of the market economy.

Under President Obama, the coalition of the creative and the subordinate became a little lazy, believing its own bullshit that the arc of history was going to bend towards justice, just because. But instead we got a Republican Congress and, the shock of the ages, in President Trump, a man who had never run  for political office before, and roundly beat all the usual suspects for the presidential nomination of the Republican Party.

With the results of this November's off-off-year elections, particularly in Virginia, it is clear that the Democrats are serious again. Perhaps that's because they have purged all their Obama and Clinton people and are are now getting back to basics and concentrating on getting elected again. And certainly their revival must be because their base supporters are energized again, genuinely hating the deplorable presidency of Trump and everything he stands for.

Some people say that both political parties are in trouble, but I doubt it. I suspect that the parties are merely adjusting their fighting stance and are recruiting new coalitions with which to wage the eternal politics of division.

What is clear is that the old Republican Party didn't really have enough support to form a ruling class in its post-Reagan Bush era. It could govern from time to time, but the ruling class was still the left-leaning People of the Creative Self that believed in their right and destiny to build a just society that would be a comfortable place for creative people to create, and in which the workers and peasants would gratefully accept the plunder acquired by the creative class in their permanent war on the market economy.

Only, of course, the workers and peasants were now the women and minorities of the welfare state.

So all Donald Trump has done is revive the old Reagan coalition, that successfully hijacked the "Reagan Democrats" from the Democratic Party following the tumultuous Sixties in which the working class followers of the Democrats felt abandoned by the party that used to love and adore the working stiff. It is not exactly brain surgery.

The received wisdom about the Trump campaign and the Trump presidency is that it is almost an accident, that Trump is a lightweight that barged his way into the presidency with a volley of insults. But this is always the line on the latest Republican leader: he's an idiot, a B-movie actor, an amiable dunce.

Suppose Trump knows what he is doing? Suppose that the attack on the GOP establishment is based on a strategic appreciation that its globalist, minimal state philosophy just cannot assemble a lasting, ruling coalition? Suppose the appeal to the white working class is based on deep, serious political analysis? Suppose the brashness of the Trump persona is based on a deep understanding that the People of the Responsible Self and the white working class need to feel that they have someone in their corner, defending their culture of working hard, following the rules, and obeying the law?

Suppose that the plan was all along that Steve Bannon would spend six months in the White House planning the next campaign, and would exit at just the right time to launch a party-wide effort to recruit candidates aligned with the new Republican coalition that would include the small-government Republicans and the white working class that wanted a party that fought their corner?

Suppose that the Trump general staff assumed all along that once Trump got elected the Democrats would reenergize their base and fan the hatred of Trump and his deplorables to white heat?

Well, then, there is only one thing to say: let the battle begin.

But, as Andrew Breitbart said, politics is downstream from culture, and the culture war is just as important as the political war. In my view the culture war must be based on my Perfect Plan of culture war.

First, the central human need of our time is to teach people the way of the city, to create a culture that rewards and encourages people that get out of their identity ghetto and enter the full membership of the People of the Responsible Self, the city people, the bourgeoisie. And it is a crime against humanity that the left has battled for 150 years to keep the migrants to the city ghettoized in their pre-city tribes.

Second, the People of the Creative Self need to be taught to be compassionate and understanding towards the People of the Responsible Self. And it is a crime against humanity to wage a culture war on them.

Let us spend a little time explaining what I mean by cultural compassion and understanding.

I mean, on the notions of the developmental psychologists, that advanced people need to understand that less advanced people cannot grasp the wonders of their sophisticated world view, and this is natural and physical, and that it is unjust to force them into subjection to the advanced view. But what does that understanding and compassion mean for advanced people, for the People of the Creative Self in practice? It means understanding that the overwhelming number of people in America and the world do not see the point of the creative life: not at all. If they are People of the Responsible Self, they believe in following the rules, going to work, and obeying the law. If they are People of the Subordinate Self it means finding a patron, a Big Man, to protect them from the dangers of the world. On the detail level, it means understanding of the importance of the Axial Age religions that teach people the culture of the city. It means respect for marriage and family and conventional life styles. And it means pulling back from the current war to force ordinary people to kow-tow to the sexual experimentation culture of the People of the Creative Self: indeed, the creative class should accept the timeless advice of actress Mrs. Patrick Campbell: do whatever you want, but don't frighten the horses. Or, to use the line of Charles Taylor, understand that the culture of expressive individualism of the creative class is not for everyone, however compelling it may be for an up-and-coming creative, and the beginning of wisdom is to understand that.

I think that this simple Perfect Plan is the beginning of wisdom, and that any creative person should be able to get it, and understand it, and learn to live a life of true compassion and understanding. But I realize that many people get a little too enthusiastic about their culture and beliefs, and begin to believe that people that disagree with them are a problem, indeed, dangerous. So I expect that the battle of politics will be combined with a battle of culture, and that we are facing a war to the knife.

And that's a shame. If everyone would agree with me and my sensible ideas we could all live happily ever after.

Communism Week: My Perfect Plan

To round off Communism Week let's talk about what needs to be done.

We have seen that Marx, for all his knowledge of the classical economists, got his economics wrong, because the dichotomy between use value and exchange value was exploded in the marginal revolution, and because he was wrong that the market economy would subside into a steady state with all the profits and opportunities squeezed out of it.

We have seen that Marx's war on the bourgeoisie was foolish because the bourgeoisie is not that interested in power. You want to help the poor, or the workers, or women or minorities? Sure, the bourgeoisie will grumble about it, but it will always listen to reason.

We have seen that socialism and fascism are best seen as nostalgic movements that want to return to a pre-industrial Garden of Eden, but that goes against the eternal truth that once you have eaten of the Tree of Knowledge you can never go back, not unless you forget what you have learned.

And we have seen that the nature of the market economy and its foundational uncertainty bears an uncanny resemblance to the uncertainties and probabilities at the center of modern physics where daily-life concepts cannot be used as a direct understanding of things in themselves.

So what do we do?

Thank you Senator, I am glad you asked that. As a help to policy professionals I have devised the following Perfect Plan to right the ship of state and steer it in the right direction.

In Part One of my Perfect Plan, I propose that the basic fact of our age is the world-wide migration of people from the country to the city. So the question is: how can we help the migrants learn, first, how to cope with their new life in the city, and then learn to wive and thrive in the city culture and economy with the best of them and become city people?

I have said that the French for city people is bourgeoisie, and that the left has declared war on the bourgeoisie. Obviously this is madness. Instead of enrolling the migrants to the city as soldiers in a war on the bourgeoisie, we should be sending the migrants to cultural appropriation boot camp so the migrants can steal the culture of the bourgeoisie root and branch and learn how to become the bourgeoisie.

We know what not to do. Don't teach the migrants that by joining a union they can stave off the sovereignty of the market. Don't entangle them in the nets of the welfare state which is bound to run out of other peoples' money. Don't subsidize failure and give people lifetime pensions for not working or not marrying. Don't poison them with identity politics and teach them to separate themselves from the majority culture and keep their pre-industrial culture.

So what to do? Teach people the culture of The Road to the Middle Class, which means religion, education, mutual aid, and living under law.

There is a lot to learn about how to become a stick-in-the-mud bourgeois. You need to learn to trust other people; you need to learn how to serve your fellow humans with a useful skill and keep updating it; you need to learn to accept the verdict of the market with a good will. Above all you need to live and let live.

Part Two of my Perfect Plan is even more sensible. It is to institute a culture of tolerance among the People of the Creative Self, the artists and writers and activists that presently rule the the culture of  the world. Right now, artists and writers and activists learn that there is nothing worse than the responsible culture of the bourgeoisie unless it is the racist sexist homophobic culture of the white working class. They learn that the stick-in-the-mud bourgeois is the very thing that is preventing the arc of history from bending towards justice.

Now I accept that the People of the Creative Self are the wonder of the age, that their creative culture is what differentiates us from the animals. But not all of us are ready, willing, and able to ascend the golden staircase to the ethereal heights of the creative culture. Moreover, as in many things, many are called to be creative, but few are chosen. What happens to those that would like to be creative but just can't quite make the grade? The answer is obvious. For those of us without the crown of laurels we must live as ordinary people that go to work, obey the law, and follow the rules. And the Olympian gods that wear the laurel should understand that but for the grace of God they would be ordinary people going to work, obeying the law, and following the rules.

You would think that this notion of tolerance for other people would be a no-brainer, but it obviously isn't, not when a presidential candidate can go around telling her creative-class supporters that half the country is composed of racist sexist homophobic deplorables. But I get where this comes from. In the old days, the creative class felt themselves to be an embattled minority that had to defend each others' backs, although even back in those days there were actresses like Mrs. Patrick Campbell that advised creatives not to frighten the horses in the street. But that is no more. Today the People of the Creative Self can swarm around anyone they don't like and get them fired from their job. They have the power, in other words, to dominate the public square.

This power, I suggest, is a Bad Thing. The whole point of laws and tolerance and live-and-let-live is that it is not a good idea for anyone to so dominate the public square that they can deny it to other people. In fact this sort of power is only warranted in times of genuine emergency, when a nation or a people are threatened with an existential peril. The rest of the time we should all combine to name and shame those people who want to name and shame people that don't agree with them.

Imagine a world that does all it can to teach people how to adopt the culture of the city.

Imagine a world in which people do not try to seize political power so they can give the products of other peoples' work to their political supporters.

Imagine a world in which people did not hang on like grim death to jobs and wages and pensions that cannot be sustained.

Imagine a world in which the educated and cultural elite did not sneer at those less evolved and less fortunate than themselves.

Imagine a world that has escaped from the present deplorable situation still riddled with the exploded ideas of Marx and the Bolshevik Revolution and a naive faith in political power and has moved forward, with the aid of my Perfect Plan, into broad sunlit uplands.

It's easy if you try.

Communism Week: The Real Revolution of the Modern Age

Our age has been a great age of unimaginable novelty and "progress." But it has also been a great age of nostalgia and reaction, the eternal yearning for a lost Garden of Eden. It has seen cultural movements longing for the lost community of the village in socialism, and other movements returning to the old community bonds of blood and land in fascism. Meanwhile most of the rest of us have found refuge in the materialist, mechanical model of the world that rose to majesty in the last millennium and seemed to predict the movement of the heavens: the science of Galileo and Newton.

But even the mechanical world of substance and absolute space and time has fallen by the wayside, and this has precipitated a revolution in thought and deed beyond imagining. For we have now learned that the micro world of the "atom" and the macro world of the "universe" cannot be understood in terms of the familiar world of day-to-day life and the mechanical world of Newton, of ballistics and action and reaction.

Up until yesterday you could understand the flight of a cannon ball or the operation of a heat engine or the forces in a building structure from notions very near to daily life. Even the motions of the planets could be understood in these terms. But in the modern science of quantum mechanics, that undergirds everything from smartphones to laser lighting to electricity, the old concepts of daily life no longer apply. Energy is neither particle nor wave, yet its operations must be understood as a bit of both. The nearer you get to an elementary state the less you can consider things as anything other than a state function of probabilities. This would be intolerable but for the fact that quantum mechanics and its probabilities and uncertainties works, and not only works, but works miracles.

The impossible wonders of the quantum world are happily handled for us by intermediaries, the scientists, technologists, and businessmen that know how to unlock its wonders. They have provided us with interfaces, the light switch and the touch screen, that enable us to use these wondrous gadgets by actions common in daily life: the flip of the switch, the dab of the finger. And so we use the unfathomable world of the quantum state in daily life, even though the quantum world is indescribable and the kid transmitting her latest trivial act to her friends on Instagram knows nothing of its mysteries.

But there is another world that is just as unfathomable and indescribable. It is the world of the modern  economy, and the market economy is just as mysterious and indescribable as the world of the quantum. And yet the modern economy has poured riches unimaginable upon us, in the Great Enrichment of the last 200 years that, in the United States has increased personal income from $4 per person per day to $140 per person per day, all in "real" dollars. You could look it up.

We are all terrified by the implacable power of the market that has given us so much, and so we have deputized political leaders and their henchmen to pummel the market into submission, or at least something less frightening. Needless to say, they have done it very badly, and no wonder. Politics is division and distrust, yet the modern economy requires us all to engage in its global trust network, trusting anyone that can be trusted. Government is force, yet the modern economy requires us to be sensitive to the slightest economic breeze and trim our sails to its vagaries. System and hierarchy are domination, yet the market yields up its power to anyone that can innovate and serve the consumer.

We must accept the obvious. The tools and the culture of politics do not work in the modern market age. The more force, the more division, the more system, the more you get North Korea, or the Soviet Union, or Castro's Cuba, or the wreck of Venezuela. The modern economy and modern society must work on the foundation of what we might call the "market state function," expressed in its prices, and the willing surrender of everyone to its signals. But how do we neutralize the terror of the market, the helplessness we all feel as individual humans before the searing power of the market, and steer people away from the natural instinct to create a personal refuge from the terrors of the market.

Maybe the way to make the market work for all of us right in front of our eyes, in the smartphone and its applications. The cumbersome world of the taxicab is transformed when you create an application, per Uber and Lyft, that connect buyer and seller, resolve the higgling of the market into a simple offer of a price, and regulate all market participants through the operation of the 5-star rating system that enforces the market's culture of trust. The innovation of AirBnB allows individual householders to enter into the hospitality market with the same market reach as any global hotel chain.

Each of these applications includes three crucial features: First is the universal reach, instantly, to anyone with a smartphone and the app. Second is the payment method, integrated into the app, so that payment, and the whole complicated problem of billing and accounts receivable is not an issue. Third is the rating system that leans very hard on everyone to be trustworthy.

I suspect that, where the smartphone "app" is concerned, you ain't seen nothing yet. Its power lies in the way that it reduces the frightening complexity and terror of the marketplace to operations of daily life that anyone can understand and easily accept, the flip of the switch, and the dab of the finger, the shaking of hands.

The role of politics and government is to protect us from existential perils, and one of the existential perils is the terror of the all-powerful marketplace. Unfortunately, as vast human experiments have proved, from plantation slavery to collective agriculture to nationalized industry, politics cannot protect us from the existential peril of the marketplace; it only makes things worse. The most obvious example of this truth is the real live political and economic experiment of the last 65 years in Korea. From a land devastated by civil war we have today a socialist North Korea with a per-capita GDP of about $600 per year, and capitalist South Korea with a per-capita GDP of $27,500 per year. Case closed.

But we can implement interfaces with the marketplace to make it less terrifying. Indeed, we already have. So it only remains for each of us to lead, follow, or get out of the way of this beneficial enrichment, and abandon the false gods of politics as the way to bend the arc of history towards justice.

Because we can tame the terrors of the marketplace, not by the crush of the clunking fist or the divisive tricks of the politician, but by softening the terrors of unfathomable marketplace into the familiar actions of daily life that are programmed into us by human life down the ages.

That is the story of our time: the Double Revolution, in science and society, that is transforming our lives.

The challenge of our time is this: to humanize the terror of the universe and the market into the familiar acts and operations of daily life. And yield up astonishing cooperation and prosperity for every human that believes and practices its protocols.

But how do we do this? I'm glad you asked.

Next up: My Perfect Plan to solve all our problems.

Communism Week: The Problem With Political Power

When a man like President Obama rephrases the hope of Dr. Martin Luther King that the arc of history bends towards justice, he means that only politics can bend the world towards justice.

That is the Great White Hope of the left, that the sorrows of the world can be healed with politics, and specifically, a politics of equality and liberation -- directed of course, by people like us.

Of course this is a misreading of the nature of politics, which is simply to rally the people and unify them against an existential threat, usually represented by the tribe across the river or in the next village.

In the larger communities of the agricultural or industrial era that extends beyond the blood kindred this means that politics involves dividing people: three tribes against two, or two tribes against one.

Simply put: in order to unite people into a cause you must divide them off from something else. This obviously worked well in the hunter-gather age, because then humans were divided into tribes of the kindred and really were in existential peril from the neighboring tribe attempting to invade their land and appropriate its food-bearing potential.

In the agricultural age and especially the industrial age politics has adapted into the imagined tribe of the noble's peasants and followers, and now into the imagined community of the nation state. Still, up until yesterday, the noble or the leader of the nation state ruled a people that lived off the land, the produce of its rich acres. Up until yesterday the world could still be understood in the loyalty to clan and kindred or an imagined clan or kindred: if you belonged your owed loyalty to your clan chieftain or national monarch, and the chieftain or monarch protected you on your land from others that might want to appropriate your land.

Not any more. Instead of the comforts of tribal belonging we have the paradox of individualism. Each of us is no longer primarily the member of a tribe, but a responsible individual that must go out and find, each for himself, a way to work and thrive and this life is no longer manifested in a subordination to a lord of the land, or the boss of a factory, but in subordination to the supply and demand of the market.

This is very new and very frightening. I think this is the most important thing to understand about the modern world and to understand the way that politics and culture and work and play operate today.

I think that the rise of socialism and fascism both represent a deep aching for the imagined security and familiarity of the old equality of the hunter-gatherer village, and the old loyalty of blood, and the old attachment to land. So socialism and communism imagine that the old way yielded a satisfying equality in which everyone belonged and everyone mattered. Fascism -- here used just as a descriptive, not a pejorative -- imagines the comfortable past when everyone belonged to a blood kindred that had lived upon its ancestral lands since time immemorial.

But socialism and fascism are not solutions to the modern problem. The millions of graves give eternal testimony to that.

The modern era offers a different proposition. It merely says that each of us, as individuals, should subordinate ourselves to the needs and the demands of others, in other words, offer our skills and labor on the labor market and accept the decision of the market with grace and good cheer.

Anyone that has ever been "unemployed" or searching for work understands the holy terror of such a situation. How do I know that there are any jobs out there? How do I know what skills are in demand? How can I possibly measure up to the implacable demands of the employers? Everything is uncertain, contingent, and apparently chaotic. And above all, terrifying.

And so we have looked to politicians and activists to protect us from the existential peril of the marketplace. And politicians and activists have offered solutions from the past, in government and political division. But politics and government are clearly not the appropriate means.

We know this because huge and tragic human experiments have been conducted over the last century in attempt to show that politics and government can protect us against the existential terror of the market place. These vast human experiments have proved, from plantation slavery to collective agriculture to nationalized industry, that politics cannot protect us from the existential peril of the marketplace; it only makes things worse.  The most obvious example of this truth is the real live experiment of the last 65 years in Korea. From a land devastated by civil war we have socialist North Korea with a per-capita GDP  of about $600 per year, and capitalist South Korea with a per-capita GDP of about $27,500 per year.

The per-capita GDP of North Korea is below the per-capita GDP of the United States in 1800. The per-capita GDP in South Korea is about the same as the US per-capita GDP in 1994. Case closed.

And things are not so good the lands of "social democracy" where politics and government are used to obtain economic security for the politically connected from the rest of the community that is not so politically connected, and promises of security have been made that cannot be redeemed. The fact is that government and politics do not deliver prosperity and security; they are only tools to defend against existential peril.

Yet, we still need some means to soften the terror of our subordination to the marketplace, because we humans are designed and built to live and wive and thrive in human face-to-face community and not in the cheerless canyons of the market's domain where there seems to be no place where weary can shelter in the shade.

The question is what would work to humanize the terrible power of the marketplace. That is the topic of The Real Revolution of the Modern Age.

Communism Week: Marx's War on the Bourgeoisie

One of the takeaways from The Communist Manifesto of Marx and Engels is the belief that the old feudal order of nobles and peasants would be replaced by a neo-feudal order of capitalists and proletarians. They two would-be revolutionaries leave us in no doubt that the relations of capitalists to proletarians will be a reprise of the relations between nobles and peasants.

In one word, for exploitation, veiled by religious and political illusions, [the bourgeoisie] has substituted naked, shameless, direct, brutal exploitation.

And really, why not? Of course the bourgeoisie would act like any other ruling class that had come into power. It would take advantage of its power, erect ideological ramparts to defend its power, just like every other ruling class down the ages.

But what happened?

What happened is that the bourgeoisie did not take advantage of its power. Having obtained the political power in the middle-class revolutions of the early modern period, it then proceeded to give the vote to the proletarians in their turn, and allowed the proletarians to enact the whole neo-feudal welfare state with benefits and goodies mainly paid for by the bourgeoisie.

But why? Why did the bourgeoisie not bid for total power? And why did the Educated Youth of the 19th century insist that the bourgeoisie would bid for total power?

Let us first deal with the simple issue. All politics is "us" against "them," of course, mobilizing our guys, the good guys, against the evil overloads and exploiters that are planning to take over and conquer us. The genius of Marx and Engels and the left that followed them was to perceive that class politics should be the "us" and "them," the politics of the future. Thus it made perfect sense to argue that the "them" of the new politics were rulers like like the old ones, only these new monsters would step out from the usual veiled apologies for power and substitute "naked, shameless, direct, brutal exploitation" for the usual identification of the ruler with God.

And really, why not? Why wouldn't the bourgeoisie follow in the footsteps of all previous rulers and rule over the proletarians like the feudal lords did over their peasants.

But they didn't. Remarkably, the bourgeoisie was not that interested in power, and it still isn't. It didn't make a bid for total political power, not in the 19th century, and not in the 20th century. Even the great business titans, men like John D. Rockefeller and Andrew Carnegie, men that had established monumental fortunes from cheap oil and cheap steel, did not use their wealth to obtain political power. Instead they retired from business and used their wealth to create modern philanthropy. Today's titans seem to be more interested in eradicating malaria and going to Mars. But why?

In my view this is not from any particular virtue in the business titans, but from the basic nature of business. Business is not about seizing power and forcing people to do your will. It just doesn't work that way. Business is built on trust and reciprocity, coming up with good ideas, serving the consumer and figuring out how to make your employees more productive.

Even the slave plantations, the first instance of large-scale capitalist enterprise, decided that it was better and more profitable to encourage the slaves to grow their own food and use their own initiative, than to use them as mere human machines.

This is a stunning change in human culture, that other people are trustable suppliers and customers rather than dangerous threats to our way of life. In my view it issues from the change from agriculture as the basis of economic life to the present industrial and post-industrial economy. Back in the old days, possession of land was the basis of wealth, and you had to defend your land to the death else someone would come and seize your land and plunder your wealth and leave you to die. Today possession of a great idea is the basis of wealth. Everything else can be bought and sold on the market. It doesn't make any sense to conquer and plunder, because every factory, every business contributes to the whole, and loot and plunder ruptures the normal economic relationships and just reduces the wealth of all.

I forgive Marx and Engels for not seeing this 170 years ago; who knew back then? I do not feel so forgiving towards their modern epigones; they have learned nothing and forgotten nothing.

The fact is that the modern bourgeoisie, the middle-class responsible people that go to work, pay their taxes, and follow the rules, are the salt of the earth, and the people that want to marginalize the middle class are monsters.

Next up: The Problem With Political Power.

Communism Week: Marx's Economic Errors

After the fun of revolutionary politics in the 1840s Karl Marx settled down to write an economic treatise, Capital: a Critique of Political Economy. He took the basics of the classical economists and used it to prove that, indeed, the capitalist economy was horribly oppressive.

Today I am going to look at two of Marx's assertions: first, that capitalism leads to "immiseration" of the working class and the petit-bourgeoisie; second, that wage labor and production for profit are inherently oppressive.

First of all, "immiseration." Marx rightly understood, from the logic of markets, that profits get squeezed out of any industry, and that that the downward pressures on prices in a mature industry would necessarily cause a downward pressure on wages. If there are good profits to be made on capital invested in a particular industry, then everyone will crowd into this "good thing" until the goodness is all squeezed out of it. This is certainly true; it happens again and again as a once bright young industry matures and competition drives prices down. But it is not just the workers and the white-collar workers that suffer. The capital returns go down for the widows and orphans, and so does the remuneration captured by top managers. So Marx is wrong to say that the workers are uniquely immiserated by mature capitalism. Everyone suffers when an industry declines and falls.

Actually, what really happens in a mature industry is that the workers expect to keep their above-market wages, the managers expect to keep their above-market salaries and bonuses, and the stockholders expect to receive their customary dividends. Then one day the whole thing collapses, because too much debt, and everyone is out of a job or out of money.

But Marx was wrong in a bigger sense. Capitalism is an emerging phenomenon that constantly renews itself. Money is constantly looking for new opportunities; ambitious young men are constantly trying out ideas that they hope will become the next big thing; young workers naturally move to where the jobs are to get hired into growing, profitable industries. And, what nobody knew in the 1840s was that with the textile revolution and the railway revolution that had utterly changed the face of Europe, you ain't seen nothing yet. Because the next big thing was oil, then electricity, then automobiles, then electronics, then information.

Marx was also wrong in sneering at wage labor. His analysis was based on the understanding of value developed by the classical economists. They observed that there were two kinds of value: use value and exchange value. Some commodities, like gold, had a high exchange value, but little use value; while other commodities, like labor, were intrinsically useful, but with very low exchange value. Marx boiled this down into contrasting "production for use" against "production for profit." Well, yes, but if you don't make a profit on your production then your production is not very long for this world. For Marx, workers working for wages were basically exploited because they did not receive the full value added in their labor; the employer captured a good part of the "surplus value" added by labor.

True, workers don't capture the full value added. But in taking fixed wages, they are assigning a certain amount of risk away from themselves. Prices for products fluctuate; so if wages are kept steady then someone has to accept the risk that the wages may squeeze profits if product prices go down. The worker getting fixed wages is not necessarily at a disadvantage. Compare a factory worker with a peasant farmer renting land. The peasant has to face the full risk of fluctuating agricultural prices. But the factory worker has assigned to the factory employer the risk of fluctuating product prices. When you accept risk you have the opportunity for big gains -- and big losses.

It is not surprising that Marx got a bunch of things wrong in his Capital. That is the way the world works: two steps forward and one step backward. The problem is that you will read the work of a modern Marxist in vain to find any understanding of how our knowledge about the economy and markets has advanced since Marx wrote his great work.

For instance, the first volume of Capital was published in 1867. But in 1870, the marginal revolution was introduced by Menger in Austria, Jevons in Britain, and Walras in Switzerland. In marginal economics, value is set in the price "at the margin" at the latest sale on the market. That is all. You will look in vain to see marginalism dealt with in the works of the Marxists.

But the spirit of Marx lives on, that workers are especially vulnerable to exploitation; that there is something underhanded about "production for profit;" that there is something virtuous about economic activity outside the profit system in "production for use" and in cooperatives and non-profits.

Why has capitalism gotten such a bad rap over the years? I will try to address that in the last of this series.

Meanwhile stay tuned for Marx's War on the Bourgeoisie.

Communism Week: Europe in the 1840s

This week everyone is marking the centenary of the Bolshevik October Revolution in 1917. So I think it is a good idea to spend a week on this blog reviewing Communism and its sister Socialism. And the place to start, in my view, is Europe in the 1840s.

I propose that it was natural for young heads full of mush, chaps like Karl Marx, son of the leading lawyer in Trier, in Germany just a few kilometers east of the border with Luxembourg, and Friedrich Engels, son of a cotton manufacturer, to think that things were going to hell and needed a complete makeover.

First of all, the end result of the French Revolution, a breakout of the emerging bourgeoisie, was that the kings returned to France, and in the Treaty of Vienna the kings of Europe reorganized things to make life difficult for a post-monarchical world to be born. In Germany, in particular, the spirit of German Liberation of 1806, in which the Kings of Prussia used chaps like Alexander von Humboldt to reorganize education and son-of-a-sergeant Gerhard von Scharnhorst to reorganize the army, died with the reassertion of monarchical power after the defeat of France. Remember, we were supposed to be in a Age of Reason. How come all the reasoning ended up in a return of kings and bishops? If you were a son of the bourgeoisie it looked like all that Enlightenment had been for nothing. Stronger measures were needed.

Then there was the emerging market economy and factory production. It's easy for us to look back at the Great Enrichment, that raised real per-capita income from $1-3 per day in 1800 to $100 per day today, and realize that all the turmoil had a happy ending. But in the early to mid 19th century, it looked chaotic and brutal, and you had ordinary people fighting against it. You had Luddites breaking machines; you had the Scottish Insurrection of 1820; you had Tolpuddle Martyrs being convicted in 1834 of organizing a union and getting transported to Australia. It is not hard to imagine a social and economic disaster coming out of the cotton textile factories and then the railway revolution. Where would it all end?

We now know that the in the first half of the 19th century a new world was aborning, transforming utterly the economy, religion, government, culture. But when you are living through a transformation you do not know the outcome, and all around you people are insisting that the world is going to hell in a handbasket, you tend to think that Something Must Be Done to make us safe. But how?

The new age philosopher Ken Wilber built his system on the work of the developmental psychologists, people like Piaget and Kohlberg and Beck and Cowan. The developmental idea is that humans ascend through different psychological stages both in individual lives and in society as a whole. But when things go wrong, then people instinctively go back down the development ladder to "what worked." That is the best explanation I have heard for fascism. When the mechanistic market economy seemed to fail after World War I, Hitler led the Germans back to blood and soil; the racism of Aryans and the conquest of the East. And the Jews, who exemplified the market economy, were to blame.

So naturally, chaps like Marx and Engels, marinating in all the ideological frenzies of 19th century universities, actually looked back to the good old days of village communitarianism in order to solve the problems of the emerging industrial era. They knew that feudalism was wrong; they prophesied that the market economy would make the bourgeoisie into the new feudal lords. So they wanted to go back a couple of stages to the good old village community of equality. That is what humans do when things seem to be going wrong. They go back to the past.

It is a particular irony that the political-religious movement that saw itself as the acme of the future was actually "reactionary," looking for solutions in the past. Hey, that's the way the world works.

And you could say that Trumpism is a response to the failures of globalism, saying "let's go back to the good old ways of the nation state and Make America Great Again."

Of course Communism and Socialism have been horrible disasters, economically, religiously, culturally, and politically, with 100 million dead over the last century, and billions more subjected to poverty and misery. You could say that it has failed, every time it has been tried. So in the next few days, we shall look at what went wrong, and why:

Marx's Economic Errors

Marx's War on the Bourgeoisie

The Problem with Political Power

The Real Revolution of the Modern Age

My Perfect Plan to solve all our problems.