About this Book
One of Econlib's aims is to put online the most significant works in the history of economic thought, and there can be no doubting the significance of Marx's influence on both economic theory in the late 19th century and on the creation of Marxist states in the 20th century. From the time of the emergence of modern socialism in the 1840s (especially in France and Germany), free market economists have criticised socialist theory and it is thus useful to place that criticism in its intellectual context, namely beside the main work of one of its leading theorists, Karl Marx.
In 1848, when Europe was wracked by a series of revolutions in which both liberals and socialists participated and which both lost out to the forces of conservative monarchism or Bonapartism, John Stuart Mill published his Principles of Political Economy. The chapter on Property shows how important Mill thought it was to confront the socialist challenge to classical liberal economic theory. In hindsight it might appear that Mill was too accommodating to socialist criticism, but I would argue that in fact he offered a reasonable framework for comparing the two systems of thought, which the events of the late 20th century have finally brought to a conclusion which was not possible in his lifetime. Mill states in Book II Chapter I "Of Property" that a fair comparison of the free market and socialism would compare both the ideal of liberalism with that of socialism, as well as the practice of liberalism versus the practice of socialism. In 1848 the ideals of both were becoming better known (and there were some aspects of the ideal of socialism which Mill found intriguing) but the practice of each was still not conclusive. Mill correctly observed that in 1848 no European society had yet created a society fully based upon private property and free exchange and any future socialist experiment on a state-wide basis was many decades in the future. After the experiments in Marxist central planning with the Bolshevik Revolution in 1917, the Chinese Communists in 1949, and numerous other Marxist states in the post-1945 period, there can be no doubt that the reservations Mill had about the practicality of fully-functioning socialism were completely borne out by historical events. What Mill could never have imagined, the slaughter of tens of millions of people in an effort to make socialism work, has ended for good any argument concerning the Marxist form of socialism.
Econlib now offers online two important defences of the socialist ideal, Karl Marx's three volume work on Capital and the collection of essays on Fabian socialism edited by George Bernard Shaw. These can be read in the light of the criticism they provoked among defenders of individual liberty and the free market: Eugen Richter's anti-Marxist Pictures of the Socialistic Future, Thomas Mackay's 2 volume collection of essays rebutting Fabian socialism, Ludwig von Mises post-1917 critique of Socialism. One should not forget that Frederic Bastiat was active during the rise of socialism in France during the 1840s and that many of his essays are aimed at rebutting the socialists of his day. The same is true for Gustave de Molinari and the other authors of the Dictionnaire d'economie politique (1852). Several key articles on communism and socialism from the Dictionnaire are translated and reprinted in Lalor's Cyclopedia.
For further reading on Marx's Capital see David L. Prychitko's essay "The Nature and Significance of Marx's Capital: A Critique of Political Economy".
For further readings on socialism see the following entries in the Concise Encyclopedia of Economics: Eastern Europe, Marxism, and Socialism.