Essay Introduction

In "Where Karl Marx Went Wrong," Samuel B. Pettengill acknowledges that while Karl Marx accurately reported the grim industrial conditions of the nineteenth century, his diagnosis and proposed remedy were fundamentally flawed. Pettengill argues that the suffering Marx witnessed was not the result of capitalist greed or exploitation, but rather of low productivity caused by primitive tools. The cure, therefore, was not the class struggle or state ownership, but the invention and application of better tools and machinery—the very fruits of the competitive enterprise system Marx condemned. An accompanying extract by Benjamin F. Fairless supplements this view, pointing out that Marx failed to foresee that capitalism would eventually enable workers to own the means of production themselves through the purchase of corporate stock, thus aligning the interests of owners and employees.

Where Karl Marx Went Wrong

by Samuel B. Pettengill

Now that the whole nation is talking about the communist threat to the country—at home and abroad—it seems a good time to ask what is really wrong with Marxism.

In 1848, Karl Marx and Frederick Engels wrote The Communist Manifesto, which begins with these words: "A specter is haunting Europe—the specter of Communism." This reads like today’s newspaper. Yet the words were written one year before gold was discovered in California, before the covered wagons began to roll across the plains. Please keep this date in mind. It is significant to what I shall say.

In London a few years later, Marx wrote Das Kapital—the "bible" of the Communists and Socialists. As a reporter, Marx was accurate. The conditions of the workers in England a century ago, as he pointed out, were very grim. Women with ropes over their shoulders pulled canal boats along the towpaths. Women were harnessed like beasts of burden to cars pulling coal out of British mines. Children went to work in the textile mills when they were nine or ten years old, and they worked 12 to 15 hours a day. It was said that the beds in which they slept never got cold as one shift took the place of the other. It was said that they were "machines by day and beasts by night." Tuberculosis and other diseases killed them off like flies.

Yes, conditions were terrible. Not only Marx, but other warm-hearted men—Charles Dickens, John Ruskin, Thomas Carlyle—poured out a literature of protest, which was read around the world.

On his facts, Marx can scarcely be challenged. But his diagnosis was wrong; and, therefore, the remedy he prescribed was wrong also.

A Gospel Of Hate

Marx said that these terrible conditions were due to greed, exploitation, and the theft by the owners of the mines and mills of the "surplus value" produced by the workers. That was his diagnosis. And to some extent, it was partly correct. Man’s inhumanity to man has always been a factor in human affairs. Greed can never be defended—whether in business or in government. Sympathy for the underdog will always have its work to do—always, certainly, in the communist nations with their forced labor camps and human slavery.

The remedy advanced by Marx was to preach the gospel of hate, of the class struggle, of the redistribution of wealth, of the confiscation of property and its ownership and management by the state—which always means the politicians. But greed and exploitation are not cured by socialism. Stalin and Molotov live like oriental potentates, giving state dinners that would make Nero and Caligula green with envy—all this in the name of the down-trodden proletariat!

Greed, however, was not the main reason for the conditions which Marx described. If all the wealth of the owners of the mines and mills had been redistributed to the workers, it would have relieved their condition but slightly, and for but a short time.

So, the class struggle, as the remedy for these conditions, was wrong. What then was the real trouble, and what is the true remedy?

Low Productivity At Fault

The real trouble was the low productivity of the workers. And, as workers can be paid only out of production—whether in England a century ago or in Russia today—wages must be low and hours of work long when production is low.

Production was low because tools and equipment were poor; because human backs had to do what slaves of iron and steel do today here in America; because capital had not been accumulated to buy better tools; because freedom had so recently emerged from centuries of feudalism that the inventors and scientists and businessmen had not had a chance to dream and to plan. They have had that chance today here in America.

Listen. In 1940, before war increased our production, it was estimated that electric power alone in this country was performing work equal to the labor of 500,000,000 men, each working eight hours a day. This is equal to nearly ten times the total human labor force employed in America and 50 times the number employed in manufacturing—and that leaves out steam power and gasoline power and windmill power, with their tremendous contributions for increasing the productivity of workers and thereby lifting burdens from human backs.

No wonder America outproduced the world in this last war! No wonder wages are higher here than anywhere in the world! While Marx preached the gospel of hate and the class struggle, America gave the green light to the Edisons, the Whitneys, the Burbanks, and the Fords.

James Watt, the inventor of the steam engine which revolutionized the modern world, and those who followed him in the competitive struggle to make a better engine and sell it for less, did more to take women out of the coal mines and off the towpaths of the canal boats, more to take children out of the factories, than did all the Socialists and Communists and politicians of the world combined.

Yet Watt’s name would be unknown today if one of these despised capitalists, a man named Matthew Boulton, had not risked $150,000 on Watt’s invention. Would he, by the way, dare take that risk under today’s taxation?

A Measure Of Progress

One measure of the progress of civilization is the extent to which mechanical horsepower and tools supplement human labor. The steam engine did more to outlaw slavery, both in England and America, than did all the political humanitarians put together.

The laboratories do far more for mankind than do the legislatures. If modern Americans were to go back to the same tools and horsepower that were available when Benjamin Franklin was trying to capture lightning from the sky, our production of wealth would at once go down 90 per cent; wages would go down in proportion; hours of labor would increase to the limit of human endurance; the population would necessarily decrease drastically; and nothing that governments or humanitarians or labor unions or Communists could do would prevent it.

Terrible Conditions

I mentioned the discovery of gold in California in connection with The Communist Manifesto of 1848. With pick and shovel and a pan in which to wash gravel from gold, didn’t men work long hours for a meager return, or for none? Didn’t they sleep in filthy cabins and live on jerked meat, and weren’t they often covered with lice?

If you saw that great motion picture, The Covered Wagon, you will recall the scenes of terrible toil—of men and women and children pulling the wagons across rivers and the trackless desert and over the Continental Divide; of families, on foot, pushing handcarts from the Mississippi to Salt Lake.

Yet, were those conditions due to greed and exploitation? No, the people were working for themselves. What was wrong? The answer is poor tools. The plow of the pioneer was a wooden plow, constantly breaking, constantly needing repairs.

Poor Transportation

In Vermont where I was raised, a man back in my great-grandfather’s time dug some iron ore out of a hill. He put 100 pounds in a bag on his back and walked 80 miles through the wilderness to sell it to an iron foundry in Troy, New York; and then he walked home—an infinite expenditure of human energy for an insignificant return.

What was wrong? Greed? Exploitation? The class struggle? No—he was working for himself. There was no relationship of employer and employee; no one was stealing the "surplus produce" of his labor. He kept all of it—and it was little indeed.

What was wrong? Why did he have to work so hard for so little? The answer is poor tools. Today the steam engine, in the form of the modern locomotive, could move his 100 pounds of iron ore 80 miles for four cents—or a ton, one mile for one cent! Railroads, paved highways, motor trucks, and automobiles have solved his problem and will do it even better in the days to come, if we stay American.

The Profit Motive

Let us say that James Watt and the man who financed his project were not humanitarians. Let us say that they put their brains and money together in a common enterprise for the profit motive. What of it? Was the result good or bad? Did they take the women out of the coal mines or did Karl Marx, with his gospel of hate and the class struggle?

What did the profit motive do? It made Watt and his partner, and all who followed them, work to make better engines and to offer them at a lower price to get the market from their competitors.

Was the result good or bad? The profit motive is just as honorable and useful to mankind as is the wage motive. Both do infinite good.

The wage motive prompts men to become skilled and efficient so they can produce more and earn higher wages; and because they do, all mankind benefits.

The profit motive prompts men to make better tools and to cut costs in order to sell cheaper; and again, all mankind benefits.

Competitive Effort Needed

The radio which only 25 years ago sold for $300 now sells for $30 or less, and it is a better radio.

Has the result of the competitive struggle in the field of radio been good or bad? The result has been good—humanitarian, if you please. It brings the news of the world, good music, and discussions of public affairs to the remotest farmhouses and to people on their sickbeds.

Not many centuries ago, starvation was a common occurrence—even in England, where 90 per cent of the people lived on the land. Was the conquest of starvation a humanitarian thing? What conquered it? Who conquered it? Karl Marx? No!

In America, the time in the field required to raise an acre of wheat has gone down from 60 hours of human labor in 1830 to two hours or less in 1930. What caused this decrease? The steel plow, the tractor, the harvester, better seed, the conquest of insects and plant diseases, and cheap transportation were responsible. Today, American wheat feeds millions in a Europe that is adopting the philosophy of Karl Marx!

Aluminum was so expensive in 1870 that Napoleon III of France had an aluminum table set—more valuable than gold—for state dinners. Today, aluminum is commonplace in the American kitchen.

The Answer

No, my friends, Karl Marx did not have the answer—he lifted no burdens from human backs. The answer is not in the class struggle. The answer is in competitive free enterprise. The answer is in the cooperation of inventor and investor; in the cooperation of the manager and the worker with his know-how. The answer is to substitute slaves of iron and steel for the strength of human backs. The answer is constitutional liberty, which sets men free and says that what any man honestly makes is his "to have and to hold."

Wages can be paid only out of the product; and the larger the production, the higher the wage. The more money that is invested in horsepower and equipment—the more capital that is put to work—the less will children and women and men have to work at killing toil. The true remedy for our troubles is more capitalism, not less.

EDITOR’S NOTE: Benjamin F. Fairless, in The Great Mistake of Karl Marx from which the following is extracted, points out still another idea.

KARL MARX completely rejected the only economic system on earth under which it is possible for the workers themselves to own, to control, and to manage directly the facilities of production. And shocking as the news may be to the disciples of Marx, that system is capitalism!

Here in America, ownership of our biggest and most important industries is sold daily, in little pieces, on the stock market. It is constantly changing hands; and if the workers of this country truly wish to own the tools of production, they can do so very simply.

They do not have to seize the government by force of arms. They do not even have to win an election. All in the world they have to do is to buy, in the open market, the capital stock of the corporation they want to own—just as millions of other Americans have been doing for many decades.

Figure It Out

Now I imagine that some persons may say: "Oh, that’s all very good in theory; but, of course, it isn’t possible in practice. No group of workers could ever purchase the great multibillion dollar corporations that we have today."

Well, the other day I did a little simple arithmetic. The results may be as amazing to you as they were to me. At today’s market prices, the employees of U. S. Steel could buy every share of the outstanding common stock of the Corporation just as easily and just as cheaply as they can purchase one of the higher-priced automobiles.

We have approximately 300,000 employees. That is not just steelworkers, of course. It is all our workers—including me. And together, they could buy all the common stock of the Corporation by purchasing just 87 shares apiece. At today’s prices, the total cost of 87 shares is less than $3,500. And at today’s wages, the average steelworker earns that much in approximately ten months.

Ten Dollars

By investing $10 a week apiece—which is about what our steelworkers gained in the recent wage increase—the employees of U. S. Steel could buy all of the outstanding common stock in less than seven years; and—except for the relatively small fixed sum that is paid in dividends on the preferred stock—our employees would then be entitled to receive all of those so-called "bloated profits" they have heard so much about. But here, I’m afraid they would be in for a disappointing surprise. At current rates, the total dividend on 87 shares is only $261 a year.

But in order to control U. S. Steel, the employees would not even have to purchase 87 shares apiece; they would need only to purchase enough of the stock to give them a voting majority. Then they could elect their own Board of Directors, fire the present management, put their own president in my job, and run the business to suit themselves.

Before they become too overjoyed at this prospect, however, they should be warned that they still would not be their own bosses; for the true bosses of every American business are its customers. And unless those customers are satisfied as to the quality and price of the product, there will be no business and there will be no jobs. But as long as the new owners of the company could keep the customers happy, they could run the show exactly as they pleased.

If the workers of America ever did own the tools of production, all of us would quickly learn a few fundamental and simple economic truths that have somehow escaped a great many of our people. We would learn that this endless conflict between owner and worker over the division of income is the sheerest, unadulterated folly.

Of the total sum which the employees and the owners of U. S. Steel divided between them last year, more than 92 per cent went to the employees, while less than 8 per cent went to the owners. Yet that small share which went to the owners was the total "rent" we paid them for all of the billions of dollars worth of plants and furnaces and facilities we used in making steel. And without these facilities, of course, our men could not have made any steel at all.

A Startling Fact

Suppose the workers take everything the owners receive for the use of these tools—suppose they wipe out all of the dividends completely and forever—what would each get? Less than a dollar a day! And meanwhile this process would destroy the company, destroy our jobs, work infinite harm upon a vast segment of our national economy, and wipe out the savings which more than 275,000 of our fellow Americans have invested in our business. And for what? For the price of about three cartons of cigarettes a week, apiece!

American workers will never improve their standard of living by grabbing the meager share which the owners get. They will improve their position only by producing more; for if we produce more goods, we shall have more goods to divide among ourselves. If we produce fewer goods, we shall have less to divide and less to live on.

And there we have the simple, economic truth of the matter. To live better, we must produce more; but production is the result of teamwork, not of conflict. We cannot produce by fighting each other and hating each other; for by doing that, we destroy ourselves. And we shall only achieve our fullest measure of production when we begin to understand that the interests of worker and owner are not antagonistic, but identical—that under our American system of enterprise, it is impossible over a period of time for one to prosper while the other suffers.

About the Author

Samuel B. Pettengill is a former member of Congress from Indiana (1931-1939). "Where Karl Marx Went Wrong" was first delivered as a radio address (ABC network, April 6, 1947) and was revised for the 1953 publication by the Foundation.

Attribution

Pettengill, Samuel B. "Where Karl Marx Went Wrong." In Essays on Liberty, Vol. 2, 65-76. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1954.