Was Marx correct about capitalism or just bureaucracy in general?

from Leis Network - Organizational development and complexity

The voices against capitalism grow every more harsh. But are they really just speaking about bureaucracy? The issue with damning the system through caricature is that once it becomes conventional crowd wisdom, it is extraordinarily difficult to dislodge.

Weaknesses of capitalism

One of the prisms of contention concerns capitalism and its weaknesses. And while the popular press concedes that communism was a failure, there remains a significant cross-disciplinary academic crowd that insists a kinder, gentler society is possible, but is left untried. This assertion is becoming more difficult to make given that many forms of government of the leftward side of the spectrum, all versions of socialism, have generally been tried in one European country or the other, and they are all structurally inviable.

Karl Marx from the Library of Congress

And European countries are excellent incubators for experiment; smaller populations, controllable geographies, comparatively non-corrupted, and a healthy, educated populace. These attributes define an open, adaptable and not unwieldy landscape in which to brave a new world. Why then, are they all failing absent serious and drastic reduction in government?

What of Marx does survive? The philosopher Brian Leiter makes the point that the labor theory of value and the theory of the falling rate of profit have both been disproved, albeit there is a small vocal left-libertarian chorus that stands by them. But Mr. Leiter points out that Marx did characterize capitalism correctly:

capitalism continues to conquer the globe; its effect is the gradual erasure of cultural and regional identities; growing economic inequality is the norm in the advanced capitalist societies; where capitalism triumphs, market norms gradually dominate all spheres of life, public and private; class position continues to be the defining determinant of political outlook; the dominant class dominates the political process which, in turn, does its bidding; and so on. (The article, above, includes citations to supporting evidence.)

Particularly important, in my view, remains the Marxian theory of ideology, which predicts that the ruling ideas in any well-functioning society will be ideas that promote the interests of the ruling class in that society, i.e., the class that is economically dominant.

Leiter Reports: A Philosophy Blog: What is Living and What is Dead in Marx?

Bureaucracy vs. capitalism

But should we be surprised by the assertions of Marx? Are these actually attributes of capitalism, or of dominant bureaucracies? We could prescribe the same attributes to the Mayan culture, or to Rome, or on a shorter time line, even of Stalinist Russia. That is, any successful bureaucracy inevitably takes on these self-preservative traits at the expense of the organization.

As to the assertion that the dominant class eventually structures its ideology to protect itself and its interests, even the YMCA began as an organization with the purpose to help the poor, and now caters to its main contributors. Here Olson in The Rise and Decline of Nations suggests all bureaucracies inevitably fall prey to their most boisterous and influential constituents.

Since so few companies survive either, most of them victims of their own entrenched interests and exigent annuity streams, bureaucracy becomes a prevailing and ultimately damning theme in all of these tales.

Are we now talking about crony capitalism, or the inherent danger of bureaucracy? Is it possible for a nation, even when it is founded on the rule of law and limited government, to resist the temptation of encroachment and ultimately bankrupt itself in a surreal combination of sentimentality and special interest? For the most damning result is not just the warren of twisted incentives and pay-offs, but the statist mess it makes of the society or organization it governs. We are now in the ironic position that banks can legally hypothecate their client’s assets while Marlene Schmuck cannot sell baked muffins out of her own house.

Taylor and the bourgeoisie

Arguably the most enduring trait of Marxian philosophy still remains. And that is the prevalent dichotomy of the bourgeoisie and the proletariat. In fact it is difficult to walk the hallways of any company and not hear the unspoken assumption of management vs. worker, even as the media and the current President increase the volume regarding greed, income inequality and capital vs. worker.

The Taylor theory of management actually buttresses this view. Our left brain predilection for process in preference to discernment produces a natural tendency for hierarchy. But there is an argument to be made that here again, Marx was fabulously and gloriously incorrect. For there is no obvious disconnection between capital and the worker. There is only the struggle to add value and emotively, to gain validation. Capital follows any seemingly good idea, regardless of its author.

If value and validation are the key to a vibrant and advancing society, then the natural dichotomy is between the entrepreneur/worker (for what is the difference?) and suffering and statist power or bureaucracy. For it is bureaucracy that limits right brain activity. It is bureaucracy that does not value adaptability or engagement or creativity. And it is bureaucracy that inevitably protects itself, succumbs to special interest, and is especially prone to corruption and favoritism.

That Marx did not see that political and bureaucratic totalitarianism was the natural derivative of his socialist theories is the most damning articulation of his tautologies. Every version of bureaucracy, especially socialism and communism, eventually ensures little or no growth, innovation. These are the ingredients which bake inadaptability into the organization. And they automatically produce an expiry date.

Bureaucracy: implications for markets and organizations

It is through market induced variation and trial and failure that emergence and innovation; value, is produced. Capital follows. There is a great argument to be made that organizations are decentralizing not as a function of technology, but the other way around. They are discovering that the Taylor model, like the Marxian dichotomy, are incorrect. That cross-functional teams, and now cross-hierarchical teams (in a much flatter topology) are the natural form of congregations and organizations of people.

We may need some hierarchy and bureaucracy. But communication, vision, and some of our other traditional reasons for employing them were never wholly correct. And placing people in such positions of power is, like fame, an extremely unnatural and often self-destructive thing to do. In fact we intuitively sense that the best leaders understand this structural issue, and strive to combat it.