It is the 200th birthday of Karl Marx this year. Marking this occasion, Professor O. Tserenchimed from the National Academy of Governance has published Dietmar Dath’s book ‘Karl Marx’, having translated it from German to Mongolian. On 5 December, I had an opportunity facilitate an interesting discussion organized with the initiative by Stefan Duppel Hermann, Ambassador of the Federal Republic of Germany to Mongolia. A large group, including the translator of the book, scholars, and current and former state officials took part in this discussion.
Given nearly 70 years of Mongolian history are directly connected to the theories of Karl Marx, the discussion focused on what his key ideologies were, why countries who followed the theories ended up collapsing, and how it reflects on resolving challenges faced around the world today.
The spectre of communism
The Communist Manifesto written by Karl Marx and Friedrich Engels and published in London in 1848 starts with the sentence “A spectre is haunting Europe — the spectre of communism.” The manifesto, which is said to be the most influential political doctrine, reads “The history of all hitherto existing society is the history of class struggles” and capitalism will eventually be replaced by communism. Twenty years later, Marx wrote in his famous work ‘Capital’ that, in a capitalist society, the class struggle would occur between the working class (the proletariat) who must sell their own labour power and the capitalists (the bourgeoisie) who owns the means of production. He then elaborates that this struggle would take place until such time as the means of production are owned by all, instead of individuals or a part of the group. At that stage, the next society – communism – would be formed.
In 1917, Lenin started leading the work to put this theory into practice in Russia. It resulted in Russia’s Bolsheviks shooting their king to death, setting a working-class dictatorship led by the Communist Party, removing private ownership and putting everything under public ownership, and outing all farming land under one cooperative management. Then it did not take long before Russia suffered a large-scale famine. Fast forward to post World War II, communism spread to many countries in Eastern Europe and Asia.
In the late 1980’s the economies and the governments of socialist states collapsed, leading to a mass exodus of individuals to the West. The Communism experiment claimed the lives of around a 100 million people worldwide, 65 million in China, 25 million in the Soviet Union and 40,000 in Mongolia.
It does not work when the means of production is forcefully taken over from capitalists and put under public ownership. History has proven that the development of any country cannot be fathomed without private property and the free market. Communism really is a horrifying spectre.
Internal conflict within capitalism
Despite the collapse of the communist system, certain countries still hold on to the ideology of building a society based on public ownership and working class unions. The experiment is still ongoing in nearly a dozen countries, including North Korea, Cuba, and Venezuela. Millions of people are living without freedom of speech and suffering from poverty, powerless before dictators.
The class struggle between the owners of the means of production and the working class who sell their labour power, elaborated by Marx, looks set to escalate in the 21st century. A 2016 report by the Economist magazine said that more than half of the youth in the United States do not support capitalism. Poverty levels are not going down while the gap in income keeps expanding in society. It has recently materialised in the yellow vest movement taking place in France. Even after the government withdrew its decision to increase fuel prices, the movement is still expanding and demanding that President Macron step down. The protesters are opposing the increasing cost of living, growing poverty in the lower levels of society, expanding government expenditure, and higher tax rates. It has been reported that 75 per cent of French people support the movement. With no option other than taking action, President Macron is increasing the minimum wage by 100 euros starting from 2019.
French economist Thomas Piketty’s book ‘Capital in the 21st century’ has been gaining popularity. He studied global data from the last 300 years and provided evidence that income inequality is growing and the class struggle coined by Marx is truly happening. Piketty proposes a higher tax for the wealthiest, which, given the rise of inequality, is deemed natural. France currently imposes over 50 per cent tax on high income, which resulted in the wealthy obtaining citizenship from other countries and investing in low-tax jurisdictions.
In order to reduce the consequences of income inequality and ensure an equal starting point for everyone, Germany has made education free at all levels, which offers an equal opportunity of success for children from poorer families. When babies are born with vitamin deficiency, it impacts on their mental and physical development. Therefore, some Western countries have started providing vitamins to pregnant women for free.
Fixing capitalism yet again
Capitalism is a free market system, which has created the most value throughout history, delivering greater improvements in people’s livelihoods compared to other systems. With the birth of the democratic system, political and economic freedom became available to the largest population ever in history.
The existence of this system is dependent on a free market based on private ownership and free competition. The role of government here is to safeguard people’s rights and freedoms, ensure their safety, and protect the security of their property. The system goes into decline when people stop trusting the free market and when there is no free competition. Throughout history, fixes were made to the system following over expansion of the role of government and the weakening of free competition. An example would be the reforms led by Margaret Thatcher in Britain and by Ronald Reagan in the United States in the 1980s.
This time the Economist (November 15, 2018. p.13) proposes that capitalism should be fixed under three directions to revive the market.
The first direction focuses on ensuring clients who are using technology have the right to decide who can use their personal information, and making sure protection of intellectual property also gives incentives for new creations.
The second direction is abandoning the government requirements for special permits that came into existence through lobbyists, professional licenses, and other requirements that are not related to competition. Today 20 per cent of the U.S. workforce have special permits, while the percentage stood at only five per cent in 1950.
The third direction focuses on amending legislation against monopolies to ensure it is aligned with the 21st century trends and circumstances, which includes stopping any company from harming consumer rights by abusing their monopoly.
2018.12.13
Trans. by B.Amar