Marx Supported the Mill-Tooke-Banking School Theory of the Business Cycle

Despite his overt scorn for John Stuart Mill, Marx was thereby driven into implicit support for the Mill-Tooke-banking school theory of the business cycle [Marx's entire theory of money was profoundly influenced by Thomas Tooke and the banking school. Marx believed, with Tooke, that changes in price levels determined changes in the quantity of money and not vice versa, and that balance of payments deficits were determined by real rather than monetary factors.] As we have seen, the currency school writers themselves were forced into this view after the seeming failure of Peel's Act of 1844 to eradicate business cycles. While all banking school-type theorists on non-monetary disproportionality and over-investment were obliged to admit that expansion of money and bank credit were necessary conditions to a cycle boom, they all proclaimed that credit cycles were only passive resultants of non-monetary cycles of 'over-' and 'under-' trading or of 'speculation'. Thus Millian non-monetary cycle theory permeated the ranks of economists, and encouraged economists, including Marx, to blame the capitalist market economy for the recurrence of business cycles.

--Murray N. Rothbard, Classical Economics, vol. 2 of An Austrian Perspective on the History of Economic Thought (Auburn, AL: Ludwig von Mises Institute, 2006), 432-433, 438n.

Karl Marx Found a Marvellous Weapon in Ricardian Economics, Which Ignores Market Exchanges by Focusing Instead on Production Followed by Distribution of Income

As Karl Marx plunged into the economics of capitalism that would occupy the rest of his life, he found ready at hand a marvellous weapon: Ricardian economics. In contrast to J.B. Say and the French tradition, Ricardo concentrated not on market exchange and its inevitable focus on individual actors and exchangers benefiting from exchange, but on 'production' followed by 'distribution' of income as a distinct and separate process. Ricardo's main focus was on how this social income from production is 'distributed'. Whereas Say or Turgot looked at individual factors of production and how their income emerges from production and exchange, Ricardo focused only on entire, allegedly homogeneous, 'classes' of producers: workers earning wages, capitalists earning 'profits' and landlords acquiring rent.

--Murray N. Rothbard, Classical Economics, vol. 2 of An Austrian Perspective on the History of Economic Thought (Auburn, AL: Ludwig von Mises Institute, 2006), 392.

Rothbard: Communism Is a Dreamworld Because It Believes That Individuals Can Cast Off All Natural Limitations

There he writes that communism 'corresponds to the development of individuals into complete individuals and the casting off of all natural limitations'. How are 'all natural limitations' cast off? - a tall order indeed. Let Marx explain. As soon as the division

of labour comes into being, each man has a particular, exclusive sphere of activity, which is forced upon him...He is a hunter, a fisherman, a shepherd, or a critical critic, and must remain so if he does not want to lose his means of livelihood; while in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic.

More broadly, Gray remarks 'that each individual should have the opportunity of developing all his faculties, physical and mental in all directions, is a dream which will cheer the vision only of the simple-minded, oblivious of the restrictions imposed by the narrow limits of human life'. 'For life', Gray points out, 'is a series of acts of choice, and each choice is at the same time a renunciation...'. The necessity of choice, Gray perceptively reminds us, will exist even under communism.

--Murray N. Rothbard, Classical Economics, vol. 2 of An Austrian Perspective on the History of Economic Thought (Auburn, AL: Ludwig von Mises Institute, 2006), 325.

Rothbard: Communism Will Create a World of Autistic Dilettantes

Particularly important for Marx is that communism does away with the division of labour. By being free of specialization, the division of labour, and working for others (including the consumers) man as labourer is freed from all limits.... as Engels put it in his Anti-Dühring, the disappearance of the division of labour will mean that productive labour will give 'each individual the opportunity to develop all his faculties, physical and mental, in all directions and exercise them to the full'.

The idea of everyone developing all of their faculties 'in all directions' is mind-boggling, and conjures up the absurd picture of a world of autistic dilettantes, each heedless of social demand for their services or products, and each dabbling whimsically and sporadically in every activity. This image is confirmed by Marx's most famous passage describing the communist system in Part I of his 'The German Ideology', an unpublished essay written in 1845-46. There he writes that communism 'corresponds to the development of individuals into complete individuals and the casting off of all natural limitations'. How are 'all natural limitations' cast off? - a tall order indeed.

--Murray N. Rothbard, Classical Economics, vol. 2 of An Austrian Perspective on the History of Economic Thought (Auburn, AL: Ludwig von Mises Institute, 2006), 325.