The Failure of Marxism & Capitalism as Necessary Political and Economic Entities

By Richard L. Dixon

The premise that the classical schools of Marxism and Capitalism are the basic economic and

political foundations of the industrialized West is a misnomer. They are instead predatory

systems which has caused the death of millions around the world. The purpose of this paper is to

do a brief comparison of the two systems and how their failings in governments around the world

cause have been averted with the adaptation of a system of Physical Economics (the American

System of Political Economy) which is neither capitalistic or Marxism in nature.

First & foremost Marxism in its purest state is nothing more than schizophrenic romantic

nationalism. It is a debased philosophy floundering on the ideology of sentimentalism. “Because

the foundation of communism rests on romanticism, those who continue to espouse it can do so

only contrary to the warrant of reason and science, and can defend it only with their eyes closed

to the fact that it is obsolete as an ideology. Already when it was found that the basic predictions

of Marxism were not going to be realised, it should have been put aside. However, it was not

abandoned.” (Harun Yahya, 2002).

The lynchpin to the bankrupt Marxism ideology was that worldwide revolutions would happen in

such heavily industrialized countries as England and Germany. Its basic foundation was built on

the theory of materialism which has since been disproved by many historians and social

scientists. The revolution that both Karl Marx and Fredrich Engel were hoping for in the

industrialized countries never materialized. That revolution they so passionately predicted to

unite the workers of the world, happened instead in Russia which was a backwards agrarian

country still steeped in a feudalistic system. Russia was ripe for a socialistic revolution because it
had been defeated in two major wars Russo-Japanese War of 1905 and WWI. Czar Nicholas was

no visionary leader has had been Peter the Great. He opted to keep the status quo unaware of the

growing seed of discontent growing like a cancer in the rank and file of his populace. Hence

Vladimir Lenin (a German by birth) played on that discontent and bought forth a revolution that

he thought would be spontaneous and would spread to the rest of the world as we know it.

“Lenin asserted that it was not in advanced countries such as England where the revolution

would occur, but in unindustrialized countries like Russia. He said that communism would be

successful there, and from there would spread throughout the whole world. To realize his dream,

he spent many years, both inside and outside Russia, making reparations for the revolution. The

opportunity for him to come to power arose from the confusion caused by World War l.

Lenin's predictions, like those of Marx, came to nothing. Neither was the system he founded

successful, nor did communism spread throughout the world. Today, the Soviet Union that Lenin

founded has drifted into history, and the communist system it forced on those countries it

occupied has collapsed everywhere. It is accepted that communism was the gravest and most

unsuccessful political experiment of the twentieth century.” (Harun Yahya).

Marxism failed at complete wealth distribution because it did not have a viable Middle Class and

in essence descended into a degenerate workers state. I believe that it is important to lay out the

definition of a degenerate workers state as coined by Leo Trotsky to get a general understanding

of the Soviet System under the rule of Joseph Stalin. “The term degenerated workers' state is

commonly used to refer only to the Soviet Union. The term deformed workers' state is used [by

some] to describe states other than the Soviet Union which are or were based upon nationalized

property, but in which the working class never held direct political power. The term degenerated

workers' state is commonly used to refer only to the Soviet Union. The term deformed workers'
state is used [by some] to describe states other than the Soviet Union which are or were based

upon nationalized property, but in which the working class never held direct political power.”

(National Master Encyclopedia).

Trotsky was disenchanted with the path that the Soviet Union had taken because it strayed from

its true course to be a workers paradise. To Trotsky, the Soviet Union had descended into an over

bloated bureaucracy. Its attempt at collectivism had failed and the power of the workers had

resorted back to the state. There has and continues to be disagreement whether the Soviet Union

evolved into state capitalism, bureaucratic collectivism or a degenerate workers state. It is my

firm belief that the USSR progressed into a point during its political evolution that it exhibited all

three traits.

It morphed into these entities because it failed miserably in terms of wealth distribution by the

means of collectivism. “Collectivism is a form of anthropomorphism. It attempts to see a group

of individuals as having a single identity similar to a person. The collective is claimed to have

ideas, and can think. It has purpose, and it acts to achieve goals. It even has a personality, called

culture. It claims to have moral rules the collective should follow. It claims to have collective

rights, as well.” (Importance of Philosophy).

Of all the avowed Marxists vision of a Utopian Workers State, the closest had to be Leo Trotsky.

Trotsky’s argument and main focus in creating the true Workers State as espoused by Karl Marx,

was decentralization and power to the common people.

“The radical alteration of the criterion lay in converting nationalized property from a necessary

characteristic of a workers’ state into an adequate characteristic. In other words, Trotsky began to

argue that no matter how degenerated and anti-proletarian, and even counter-revolutionary the

political regime in the country, Russia nevertheless remained a (degenerated or “counter-

revolutionary”) workers’ state so long as property (the means of production and exchange)

remained nationalized or state property.

It should be borne in mind that Trotsky did not hold that the existence of nationalized property

was in itself adequate for a consistent development toward socialism. That required, he rightly

emphasized, a socialist proletariat in political power and the victorious revolution in the

advanced countries of the West. And, he added, given the absence of the political power of the

workers and the revolution in the West, the workers’ state would continue to degenerate and

eventually collapse entirely. But so long as nationalized property remained more or less intact,

Russia still remained a workers’ state.” (Max Shachtman, April 1943).

It was his discontent with the collapse of the Soviet System under the rule of Joseph Stalin, that

Trotsky advocated an armed revolt which ultimately leads to his banishment and his

assassination by Ramón Mercader, a Soviet Agent in Mexico City August 20, 1940 with an ice

axe. (Yes Vladimir Putin was not the first to silence his enemies while they are in exile as in the

case of former KGB agent and critic Alexander Litvinenko poisoned by Andrei Lugovoy with

polonium-210 which induced acute radiation syndrome and his eventual death).

Yet even Trotsky with all his talk, philosophy, and ideology and true ownership by the worker

class and distrust of the bourgeoisie, could not get it right about the importance of a viable

middleclass as the financial catalyst in terms of efficiency and true wealth redistribution. “This is

an iron law that derives from the fundamentally different nature of the class rule of the proletariat

as contrasted with the class rule of any private-property-owning class. For example: Under a

Bonapartist regime, be it of the early (Napoleon I or III) or the modern (Bruning or outright

fascist) variety, the class rule of the bourgeoisie is maintained and fortified by virtue of two

interrelated reasons:
 1. Although the bourgeoisie does not enjoy full or direct political power, it continues to

own, as individuals and as a class, the means of production and exchange, and to draw

profit and power from this ownership and

2. The regime which deprives the bourgeois class of full or direct political power uses that

power to strengthen, to consolidate, and to expand the social order of capitalism, to

benefit the bourgeoisie in the most easily ascertainable tangible manner. Similarly, though

not identically, under feudalism, where ownership of land was in private hands.

The proletariat, however, is not, never was and never will be a private-property-owning class. It

comes to power, and lays the basis tor an evolution to socialism, by nationalizing property and

vesting its ownership in the hands of the state, making it state property as a preliminary to

transforming it into social property. The state is not a class, but the complex of institutions of

coercion (army, police, prisons, officials, etc.). Once the means of production and exchange have

been made state property, the question, “Who is the ruling class” is resolved simply by

answering the question: “In whose hands is the state?” It cannot be resolved by answering the

question: “In whose hands is the property?” because no class then owns the property, at least not

in the sense in which all preceding classes have owned property.” (Max Shachtman).

It is important to lay this groundwork because the past Marxist folly of collectivism, state-

control, nationalization, and state capitalism based on the failed Totalitarian Models of Joseph

Stalin (of Russia), Pol Pot (of Cambodia), Mao Zedong (of China) and his failed Peoples

Revolution, Kim Il-sung and his son Kim Jong-il (of North Korea), or Fidel Castro and his

brother Raoul (of Cuba) with their lunatic stogie Ernesto "Che" Guevara were responsible for the

death of up to 100 million people. In essence, their rule wasn’t about wealth distribution it was
about having a Godlike aura about them which developed (especially in the case of Kim Jong-il)

into a Cult status and following.

Now that I have laid out the failings of Marxism, I believe that is necessary to take a hard look of

the other broken system called Capitalism or the politically collect term called globalization or

unregulated free trade. The spread of globalization or unregulated free trade as it exists today is a

failure. It has devastated many economies. The inequalities which exist in countries such as

Nigeria, is an indirect result of Colonial Imperialism. These countries were left in a weakened

state by the brutal rule of the governments of Great Britain, France, Germany, Spain, Portugal,

and Belgium. All the imperialists cared about was stealing, plundering, and raping these

countries of their natural resources. In fact, they practiced a brutal form of Capitalism called

Laissez-faire which was the fictitious creation of British Philosopher Herbert Spencer.

“Herbert Spencer believed that the government should have only two purposes. One was to

defend the nation against foreign invasion. The other was to protect citizens and their property

from criminals. Any other government action was "over-legislation."

Spencer opposed government aid to the poor. He said that it encouraged laziness and vice. He

objected to a public school system since it forced taxpayers to pay for the education of other

people's children. He opposed laws regulating housing, sanitation, and health conditions because

they interfered with the rights of property owners.

Spencer said that diseases "are among the penalties Nature has attached to ignorance and

imbecility, and should not, therefore, be tampered with." He even faulted private organizations

like the National Society for the Prevention of Cruelty to Children because they encouraged

legislation.
In the economic arena, Spencer advocated a laissez-faire system that tolerated no government

regulation of private enterprise. He considered most taxation as confiscation of wealth and

undermining the natural evolution of society.” (Constitutional Rights Foundation).

The basic premise of laissez-faire capitalism was Social Darwinism. In fact, it was Mr. Spencer

who coined the phrase “survival of the fittest.” The Colonial mentality doing that time period

took this philosophy to justify their empires because they truly believed that it was their inherent

right due to their intellectual, moral, and physical superiority over the indigenous inhabitants of

those lands. Hence this false belief gave rise to the term the “White Man’s Burden” as coined by

Rudyard Kipling to describe the moral obligation to bring the savage races up to European

standards. Laissez-faire capitalism or unregulated globalization back then just as it does now,

exploited indigenous people through the use of cheap labor to produce cheap products that they

dumped on other countries. Two prime examples that come to mind was the production of

Opium in India that the East Indian Trading Company dumped on the Chinese which resulted in

massive addiction. When the Chinese objected, the British military pummeled them with Naval

Artillery in Two Opium Wars and the Boxer Rebellion. The other example was the institution of

slavery in the agrarian South during the Civil War. The South was England’s greatest trading

partner and provided them a readily supply of cheap cotton for their textile mills. Meanwhile, the

slaves lived in a state of poverty, starvation, and famine which by the look of things was even

worst on a grand scale compared to the living conditions in most LDC’s (Low Developing

Countries). It was the great Frederick Douglas in one of his essays who made a direct correlation

between Free Trade and Slavery.

“Cheap Labor is a phrase that has no cheering music for the masses. Those who demand it, and

seek to acquire it, have but little sympathy with common humanity. It is the cry of the few
against the many. When we inquire who are the men that are continually vociferating for cheap

labor, we find not the poor, the simple, and the lowly; not the class who dig and toil for their

daily bread; not the landless, feeble, and defenseless portion of society, but the rich and

powerful, the crafty and scheming, those who live by the sweat of other men's faces, and who

have no intention of cheapening labor by adding themselves to the laboring forces of society. It is

the deceitful cry of the fortunate against the unfortunate, of the idle against the industrious, of the

taper-fingered dandy against the hard-handed working man. Labor is a noble word, and expresses

a noble idea. Cheap labor, too, seems harmless enough, sounds well to hear, and looks well upon

paper.

But what does it mean? Who does it bless or benefit? The answer is already more than indicated.

A moment's thought will show that cheap labor in the mouths of those who seek it means not

cheap labor, but the opposite. It means not cheap labor, but dear labor. Not abundant labor, but

scarce labor; not more work, but more workmen. It means that condition of things in which the

laborers shall be so largely in excess of the work needed to be done, that the capitalist shall be

able to command all the laborers he wants, at prices only enough to keep the laborer above the

point of starvation. It means ease and luxury to the rich, wretchedness and misery to the poor.

The former slave owners of the South want cheap labor; they want it from Germany and from

Ireland; they want it from China and Japan; they want it from anywhere in the world, but from

Africa. They want to be independent of their former slaves, and bring their noses to the

grindstone. They are not alone in this want, nor is their want a new one. The African slave trade

with all its train of horrors, was instituted and carried on to supply the opulent landholding

inhabitants of this country with cheap labor; and the same lust for gain, the same love of ease,

and loathing of labor, which originated that infernal traffic, discloses itself in the modern cry for
cheap labor and the fair-seeming schemes for supplying the demand. So rapidly does one evil

succeed another, and so closely does the succeeding evil resemble the one destroyed, that only a

very comprehensive view can afford a basis of faith in the possibility of reform, and recognition

of the fact of human progress.” (Frederick Douglas, August 17, 1871).

It is quite evident in the context of this argument about the only differences separating Marxism

and Capitalism is that one sides with the proletariat and the other with the bourgeoisie. Both are

similar because they emphasis materialism, class struggle, and the possession of wealth. To

Marx, both free trade and the British System of Political Economy were the best models in the

world to date. “Capitalism is the elaboration of a syllogism composed of three general

propositions. Firstly he attempts to persuade the reader that the existing British System of

political economy, as best defended earlier by Mr. Ricardo, is the highest form of society yet to

appear. Secondly he distinguishes between the prices and values of commodities, for the purpose

of arguing that the development of the productive powers of labor through the progress of

manufacturing is a desirable feature of capitalism, which would be desired even in the absence of

the capitalists. Finally, he argues that the accumulation of wealth by capitalists increases the

tendency of that accumulation to act as an obstacle to continued development of the productive

forces. The development of this third proposition is not completed, but the direction of his

argument is clear.” (Dr. Karl Marx Refuted, 1870).

Hence, Marx saw free trade and capitalism as the instruments that would bring about a

worldwide revolution because the possession of wealth by the ruling class at the expense of the

working class through the exploitation of their labor. To Marx they served as a catalyst of

consciousness among the workers in the industrialized world in such countries as England and

Germany, which at this time along with the United States and France were the most advanced
industrial powers in the world. “Karl Marx advocated Free Trade, i.e. Capitalism, because (a)

whereas Protection builds up the nation-state, Free Trade breaks it down, as a prelude to the

creation of a world-state by the Capitalists (b) Free Trade breaks down traditional culture, as a

prelude to the creation of a world culture (c) Free Trade exacerbates class warfare, and through

this the Capitalists will lose control of the world-state - they will be defeated by the

impoverished classes, with the help of their backers in the higher classes.” (Peter Meyers, July 7,

2003).

Yet Marx made a serious error in his analysis that labor created wealth and not production

created wealth. That error occurred because he concentrated on the distribution of wealth instead

of the production aspect by which wealth is created. The esteem lawyer, philosopher,

entrepreneur, and social activist Louis O. Keslo in his essay entitled “Karl Marx: The Almost

Capitalist,” pointed out the errors in Marx’s Das Capital. “Marx’s second great error prevented

him from seeing that the ideal “classless society,” of which he dreamed, is not one in which a

political group in power has the function of distributing wealth. It is rather the political economy

in which the individual ownership of property-particularly capital instruments-is spread over the

entire population. Only such a broad distribution of private economic power can guarantee

individual freedom and the power of the people as a whole to limit or turn out at will a political

group in power.” (Louis O. Kelso, March, 1957). In Kelso’s eyes, Marx would be an adherent

where everyone would have the right to ownership because the rules of the game are changed to

facilitate this process by creating equal opportunity within a capitalistic mode.

It is my firm belief that the reason why wealth redistribution has largely failed because it is

authoritarian in nature and does not matter if the government that is in power is democratic or

not. It does mean though that a society’s economic assets or GDP are measured incorrectly by
wealth from a financial perspective instead of one based on a physical model. Therefore

Classical Marxism and Capitalist theory greatly erred in by defining wealth in terms of financial

markets, class, and a violent struggle between the workers and the wealthy. It is a dispute

between those who espouse collectivism and those who embrace individualism. There is no

political or philosophical bridge in the scheme of things. Physical economics on the other end

bridges that great divide and provides a more firm foundation in relevant economic theory.

“Physical economics is a school of thought and area of research in economics that aims to study

the economy along the lines of natural sciences (in particular, physics) with the use of

mathematical modeling. Physical economics puts aside the financial and monetary aspects of the

economy, and treats the economy of the world, a nation, or region as en entity analogous to a

living organism, or, in other words, a single, integrated, self-reproducing physical process.”

(Freebase).

Accordingly, a nation may be rich in market financial capital but economically poor where it

comes to fixed based assets like infrastructure development such as roads, bridges, railroads,

dams, canals, and reservoirs. Therefore we can conclude that true wealth redistribution in a

society is based on how well the government improves the general livelihood and welfare of its

citizens through infrastructure development, enhancement, and improvement. . “We begin with

infrastructure, the power, transportation, water, public health, education, and related systems

which create the conditions under which populations can grow and thrive. The more developed

the infrastructure of a nation, the more efficiently its economy can operate; and the more

developed the infrastructure of the world, the more efficient, global commerce.” (Marcia Merry

Baker & John Hoefle, December 26, 2008). Therefore one can see that wealth redistribution by

a democratic nation-state from a financial perspective is a pancreas and not a solution. In fact,
the primary purpose of finance is the issuance of credit to fund the industries that drive the

economic engines of a national economy. “There is a role for finance in modern life, but finance

is properly viewed as a handmaiden to the productive sector. It is the productive sector which

generates the wealth, and the productive sector to which we must direct our attention if we are to

survive.” (Marcia Merry Baker & John Hoefle).

Therefore true wealth is how government invests in its people and there is no

financial price tag that can be readily applied. Alfred Lawson in his book entitled

“Direct Credit for Everyone” really highlights this point. “Wealth is anything and

everything made valuable by human effort. The total wealth of the United States (1931) is

generally estimated at about $400,000,000,000. This means that there is eighty times more

wealth in this country than there is money in circulation.

This wealth principally consists of inventions; factories; machinery; manufactured products;

crops; live stock; mines; quarries; raw materials; railroad, steamship, bus, truck, airplane and

other means of transportation and distribution; good highways; bridges; telephones; telegraphs;

radios; entertainment outfits; literature; paintings; city and country real estate including farms

and all kinds of public and private buildings.

All of which was made valuable by everybody.

There is no part of wealth that any one person has made completely. Every one has helped

everybody to give value to everything.” (Alfred Lawson, 1931).

Such a statement puts the arguments of struggle between the Industrial and workers class at bay

because the primary purpose of any sovereign republic is to improve the general welfare for all

and there should be no distinction between the two.

 Endnotes

1. Harun Yahya, Romanticism: A Weapon of Satan. (New Delhi: Millat Book Center, 2002),

45.

2. Ibid., 42.

3. Nation Master Encyclopedia, “Degenerated Workers State,”

http://www.nationmaster.com/encyclopedia/Degenerated-workers'-state (accessed

September 3, 2009).

4. Importance of Philosophy, “Collectivism,

http://www.importanceofphilosophy.com/Evil_Collectivism.html (accessed September 3,

2009).

5. Max Shachtman, “Introduction to Trotsky on the Worker’s State,” Marxists Internet

Archives. Taken from New International, Vol.IX No.4 (Whole No.74), April 1943,

http://www.marxists.org/archive/shachtma/1943/04/intro-trotsky.htm (accessed January

22, 2009), 121-124.

6. Ibid., 121-124.

7. Constitutional Rights Foundation, “Social Darwinism and American Laissez-faire

Capitalism,” http://www.crf-usa.org/bill-of-rights-in-action/bria-19-2-b.html (accessed

September 3, 2009).

8. Douglas, Frederick. “Cheap Labor” Frederick Douglass Attacks the Fraud of Free Trade.

(August 17, 1871), New Federalist Archives (1998),

http://american_almanac.tripod.com/fredfree.htm (accessed September 3, 2009).

9. Dr. Karl Marx Refuted: By A Veteran of The War,” (Philadelphia, 1870), Reprinted In

The Campaigner Special Supplement “The Attack To Which Karl Marx Could Have Not

Replied! Dr. Karl Marx Refuted, (October 1983).

10. Peter Myers, “Why Karl Marx Advocated Free Trade (Capitalism),” July 7, 2003

http://users.cyberone.com.au/myers/classwar.html (accessed September 3, 2009).

11. Louis O. Kelso, “Karl Marx: The Almost Capitalist, “Center for Economic & Social

Justice, Originally Printed in The American Bar Association Journal, March 1957

http://www.cesj.org/thirdway/almostcapitalist.htm (accessed September 3, 2009).

12. Freebase, “Physical Economics Topics,’

http://www.freebase.com/view/en/physical_economics (accessed September 3, 2009),

13. Marcia Merry Baker and John Hoefle, “A Real Stimulus Requires Physical Economy, Not

Money,” Executive Intelligence Review, (December 26, 2008),

http://www.larouchepub.com/other/2008/3550econ_not_money.html (accessed January

23, 2009).

14. Ibid.

15. Alfred Lawson, Direct Credits for Everyone, (Sturtevant, Wisconsin: University of

Lawsonomy, 1931) http://www.lawsonomy.org/DCEverybody107.html (accessed

September 3, 2009).