All Commentary
Tuesday, May 1, 2001

May Day: Classlessness and Mr. Marx

Unhampered Capitalism Is As Close to a Classless Society as America Will See

Contributing editor William Peterson is an adjunct scholar with the Heritage Foundation.

May Day is a signal to radical labor groups and parties the world over to take to the streets, make fiery speeches, parade, protest, demonstrate, and carry an increasingly common if bizarre placard, “Capitalism Kills.” So the holiday, set by the Second Socialist Internationale in 1889, comes to hail socialism, resurrect Karl Marx, and make way for what it has long shown itself to be: the pursuit of an idle dream—a classless society.

To be sure, Eurocommunism from East Germany to the Soviet Union collapsed in 1989-1991 and with it its “temporary dictatorship of the proletariat.” But as Nobel economist James Buchanan of George Mason University notes: “Socialism is dead; Leviathan lives.”[1]

How so? It lives on in what British Labor Prime Minister Tony Blair tags the Third Way, in what the West accepts as the welfare state—a costly set of “social safety nets” in which state interventionism and undesignated, yet privileged state classes have become a way of life, as we’ll see.

Recall the opening thought in the Communist Manifesto by Karl Marx and Friedrich Engels (1848): “The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed . . . .” But as economist Ludwig von Mises and historian Ralph Raico noted, these opposed pairs become on examination, either wholly or in part, not economic but legal classifications, a vital distinction.[2]

Marx blamed the condition of an emerging working class on capitalism. But Marx would have been a lot sharper had he seen that that condition came not by capitalism but by its lack, that the state had already asserted its supremacy over the economy by what Adam Smith and others called mercantilism—what we now call state interventionism with its mess of attendant state-dependent classes.

Such interventionism is an assault on private property and a free society. The centrality of private property in the communist brief can be gauged from a line in the Manifesto: “The theory of the Communists can be summed up in the single sentence: Abolition of private property.”

While that abolition was largely attained under Eurocommunism and Mao’s China, a classless society somehow was not. The “temporary dictatorship of the proletariat” proved to be anything but temporary. The state did not wither away. It was at once solidified and oppressive. For Soviet recalcitrants, Siberia was both a threat and a reality. The latent Soviet class struggle—the state versus citizen—hung on for 74 years.

But what about the West and in particular the United States? Marx put forth the idea that the first step is to raise the working class “to the position of the ruling class, to win the battle of democracy.”[3]

Win the battle of democracy? See here a slew of voter-bribing subsidies or privileges including Social Security for seniors, “public education” for youth, crop subsidies for farmers, subsidized college loans for students or targeted tax breaks for their parents, cheap federal flood insurance for farmers and landowners near the Mississippi and other waters prone to flood their banks, and Medicare, Medicaid, and employer tax-deductible health maintenance organizations (that is, third-party payers “freeing” consumers from health costs and thereby hiking medical prices).

Marx also urged the proletariat in each land to use its political supremacy to “wrest, by degrees, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the State.” He put forth ten ways to bring this state of affairs about:[4]

1. Abolition of property in land and application of all rents on land to public purposes. The federal government alone owns around one-third of the land mass of the United States. In an executive order last January, departing President Clinton banned road construction and most commercial logging from 58.5 million acres of U.S. forestland.

2. A heavy or progressive income tax. Goal accomplished, thanks to the Sixteenth Amendment to the Constitution, adopted in 1913.

3. Abolition of all right of inheritance. With the top graduated estate, or death, tax at 55 percent, apart from such state taxes and a federal exemption currently at $675,000 ($1,350,000 for husband and wife), inheritance is under less threat today than earlier—but is still under threat.

4. Confiscation of the property of all emigrants and rebels. Unaccomplished.

5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly. Witness the Federal Reserve System with its enormous power over the money supply and its potential for mischief.

6. Centralization of the means of communication and transport in the hands of the state. The Federal Communications Commission has tight licensing control over the nation’s radio-TV spectrum and cable systems. Regulation and taxation of the Internet are distinct threats.

7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands and the improvement of the soil generally in accordance with a common plan. Planning seems involved in the Tennessee Valley Authority, Hoover Dam, Grand Coulee Authority, U.S. Postal Service, Rural Electrification Service, and different programs of the U.S. Department of Agriculture.

8. Establishment of industrial armies, especially for agriculture. This goal has been advanced with the minimum wage, affirmative action, equal pay, parental leave, maximum hours, ergonomic regulations, and compulsory union laws (save in 21 Taft-Hartley right-to-work states).

9. Combination of agriculture with manufacturing industries and gradual abolition of the distinction between town and country by a more “equitable” distribution of the population over the country. Rent control, zoning laws, and now anti-sprawl agitation and legislation have moved America toward this goal.

10. Free education for all children in public schools and abolition of child factory labor. The word “free” here is a bit fanciful; but “public schools” are government schools that render null and void individual choice, consent, contract, and competition. School propagandizing and erosion of individualism are further problems.

Law of Nature?

Marx believed that “with the inexorability of a law of nature” capitalism is doomed, that the system had become “a fetter on the forces of production.” He was 100 percent wrong. Mises, in a 1920 essay, “Economic Calculation in the Socialist Commonwealth,” held that a socialist economy was a contradiction in terms, that it was inherently unable to economize, especially in trying to optimize the allocation of capital. He wrote: “As soon as one gives up the conception of a freely established monetary price for goods of a higher order, rational production becomes completely impossible,” with the central planners “groping in the dark” in a constant state of confusion and ignorance.[5]

May Day 2001. Is it a day to celebrate Karl Marx and his supposed historical inevitability of classless socialism with the wind-up slogan of the Communist Manifesto: “Working men of all countries, unite!”[6]?

Or is it a day to celebrate Adam Smith and his splendid concept of the “invisible hand,” which harnesses innate self-interest to the public interest, per his famous line in The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest”?

Or is it a day to honor Ludwig von Mises for seeing consumer sovereignty in a fluid market society? As he said in Human Action, in the market, consumers make “poor people rich and rich people poor . . . . To be rich, in a pure market economy, is the outcome of success in filling best the demands of the consumers. A wealthy man can preserve his wealth only by continuing to serve the consumers in the most efficient manner.”[7]

Or is May Day a time to toast U.S. Senator John C. Calhoun? Calhoun said, in an 1836 speech: “A power has risen up in the government greater than the people themselves, consisting of many and various and powerful interests.” In his Disquisition on Government (posthumous, 1854), Calhoun drew attention to the state taxing power, which necessarily divides society into two great classes, the “taxpayers and tax-consumers. But the effect of this is to place them in antagonistic relations.”[8]

“Capitalism Kills.” Ha! I conclude that unhampered capitalism, or a market society, enhances and extends life, and is as close to a classless society as America and the West will see.

Happy May Day.


  1. James Buchanan, “Socialism Is Dead; Leviathan Lives,” Wall Street Journal, editorial page, July 18, 1990.
  2. Ralph Raico, “Classical Liberal Roots of the Marxist Doctrine of Classes,” in Yuri Maltsev, ed., Requiem for Marx (Auburn, Ala.: Ludwig von Mises Institute, 1993), p. 190.
  3. Karl Marx and Friedrich Engels, The Communist Manifesto (New York: Penguin Books, 1967), p. 104.
  4. Ibid., pp. 104-105.
  5. Quoted in Maltsev, p. 11.
  6. Ibid., p. 121.
  7. Human Action: A Treatise on Economics (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 4th revised ed., 1996 [1949]), pp. 270-71.
  8. Quoted by Ralph Raico in Maltsev, p. 218.

  • William H. Peterson (1921-2012) was an economist, businessman and author who wrote extensively on Austrian Economics. He completed his PhD at New York University in 1952 under the supervision of Ludwig von Mises.