Marx and Bin Laden

Both have the wrong approach to the problems of economic inequality.

Karl Marx was appalled by the conditions of the workingman in the newly created factories of his day. He lived in an era where children as young as five would work in the mills and adults worked sixteen hour days. Even with this hard labor many working people lived in, or near, poverty.

At the same time the factory owners were developing into a wealthy class that hadn't been seen since the heights of feudalism. Many industrialists had multiple large homes, furnished with costly things and with the household supported by a large servant staff. Writers such as Charles Dickens and Maria Edgeworth highlighted this disparity and called for labor reform.

Osama bin Laden was appalled by the conditions of the workingman in his home country of Saudi Arabia. The wealth of his country is concentrated in the hands of a corrupt and greedy royal family. The opulence of their lifestyle makes the English capitalists of Marx's time look like paupers by comparison. The working conditions for the country are so unfavorable that many of the jobs are done by immigrants with even fewer rights than the common citizen.

Marx was appalled by economic inequality, which he attributed to capitalism. Bin Laden was appalled by economic inequality which he attributed to secularism and corruption.

They both favored radical or even violent changes to society to correct the imbalance. In both cases their prescriptions for change turned out to be the wrong thing. This is because they were attacking the wrong cause.

The wealth inequalities of the Industrial Revolution were not caused by capitalism. Capitalism is a way to organize industrial firms from an economic standpoint. It doesn't say anything about how the earnings of a company are to be distributed. The problems of the industrial age were not who owned the means of production, but how the competing forces in society were managed. With the appropriate laws in place, companies can provide adequate wages and working conditions to their employees regardless of who owns the factory. The inequality was not because of capitalism, but because of the lack of countervailing political power by the workers. Therefore, there was no reason to suppose that shifting ownership of the means of production to the state or the "workers" would change this. As a result of this faulty analysis, activists pursued the wrong objectives for much of the 19th and 20th Centuries. Failed states using the socialist and communist models followed.

At some point in the middle of the 20th century the workers in the industrialized countries gained enough political power to get laws passed which protected their economic rights. Companies continued to be run as capitalist enterprises, but the distribution of wealth became more equitable. Societies which did not grant workers political rights failed to develop robust economies and have all now failed in one fashion or another. As history has shown, capitalism can exist with decent working conditions and a standard of living of the employees. The ownership of the means of production was not the issue.

The wealth inequality of Saudi Arabia and other middle east oil states is the reason why these states have failed to develop. Bin Laden thinks it is due to a lack of true religious piety (especially of his particular variant), but it is not the lack of the "true" religion that is at fault, it is the lack of a balance of forces to represent all the sectors of society. Bin Laden's solution seems to be to force the industrialized nations to withdraw support for the middle east monarchies. Then the real religious leaders will be able to seize control and all will be right. His tactical approach is to attack the industrialized world and its allies and make it too unpleasant for them to stay in the region.

I don't know how much of his beliefs are controlled by religious fervor, but his objectives are ultimately economic. He wants to substitute a religious elite for a royal elite. As the situation in Iran illustrates this change does nothing to solve the economic problems of a society. Religiously organized governments are just as unsuccessful at economic management as were the centralized governments of the socialists and communists. One can expect that if his followers succeed in Saudi Arabia the results will not improve the lot of the working class. Forcing a political or religious doctrine upon a populace leads to economic resistance and inefficiency. The policing needed to keep a resentful workforce in place makes production inefficient and removes all incentives for creativity on the part of the work force. For the ultimate examples, read the accounts of the lives of the slaves in the US and how inefficient the plantation system actually was.

So, in an uncomfortable parallel to the cold war, the west adopts the mistaken analysis of the philosophic leaders of the radical movements and attempts to battle their ideas. Since the underlying assumptions are incorrect, the wrong tactics are used in response.

Economic collapse eventually brought down most of the communist and socialist countries. At the time we were scaring our populations with tales of incipient communist takeovers and the "Red menace", labor was gaining strength and forcing improvements in working conditions and the general standard of living. This led to a more successful society which was better able to combat the iron curtain states from an economic as well as a quality of life position.

Similarly, the threat from Bin Ladenism is not that they want to create an Islamic society in the world, but that they want to correct economic inequality in their homelands by substituting a theocracy for a corrupt puppet regime. The longer we support the corrupt status quo in the middle east the longer it will take for a stable, equitable society to develop. [see the Appendix below for a discussion of the economic conditions in the middle east.]

We don't need to battle for Islamic "hearts and minds", we need to pressure these societies to become more equitable and less corrupt. This is not a simple task, but our present attempts to do this by military force and counter terrorism efforts are not the right path. They do nothing to solve the underlying problems of these states. As history has shown, it was not battling the cold war by persecution of supporters in the west that brought down the centrally planned economies, but the rise of industrial efficiency and the corresponding rise in the standard of living the the working class brought on by labor's ability to gain rights.

The best that society has been able to come up with is a mixed model of some private ownership, some government ownership, and some non-profit ownership. In addition labor, government, and business must all have enough power to balance each other. The ownership of the means of production or the personal beliefs of the individual do not enter into the equation. It's not a perfect model, but it prevents the most serious evils from getting too large. A mixed society allows for experimentation and removes the "know-it-allism" that affects most extremists political groups.

The US, and much of the industrialized world, is now facing a crisis of its own. The balance of forces between labor, government and business has shifted so that business has grown in strength with respect to the others. This has led to a moral decay in the purpose of government. Instead of being the referee and the provider of the social safety net, government has become the rubber stamp of business interests. Public spirited people no longer go into government, instead people from the business community shift back and forth between the two sectors. The labor sector has been weakened as well. It is no longer able to counter business excesses or to get legislation passed, or enforced, that supports the working sector. As a consequence the US, especially, has become more unequal, less competitive, and has a declining standard of living for the working class.

Countries where the labor sector is growing in strength and the government is interested in improving the working conditions are becoming a challenge to the industrialized world. The west needs to strengthen workers rights and the social safety net, not decimate it.

The ideas of Marx and bin Laden are reinterpreted by their direct and indirect followers. In many cases local movements arise with different objectives, but find it convenient to use the language of the movement leaders to gain adherents. This leads to a situation where groups call themselves "Marxists" or "Islamic Fundamentalists", but actually have little in common with the goals of the founders. Those trying to combat these ideologies make the mistake of mistaking the rhetoric of these new groups for their true beliefs. This leads, once again, to applying the wrong solutions to the problems. Many local nationalist campaigns adopt these slogans, but are really interested in seizing power and substituting their oppressive regimes for the existing one.

The perfect example is provided by Lenin whose true objectives only became clear once he had seized power. There was centralized planning, but none of the recommendations of Marx were followed and the USSR was, from the start, an inefficient, corrupt, repressive government which was a far cry from a "workers paradise." We will see how long it will take for the working class in Iran to realize the scope of failure of their theocracy. An easy to read study of the Iranian revolution can be found in the works of Marjane Satrapi.

Appendix

As the table below illustrates Saudi Arabia is the dominant factor in the region in terms of oil production. I have added a column to the usual statistics which shows oil output on a per capita basis. I think this is a better measure of how much of a countries economy is oil-based rather than the misleading GDP per capita. The GDP figure averages the wealth of the ruling elites in each country and makes the poor appear better off than they are. Median GDP per capita figures (which would be more indicative) are not readily available.

As can be seen from this added column Kuwait has the highest output per person, but the small size of its population makes it a small player overall. Saudi Arabia, at 0.34 barrels per person is highly dependent upon oil as the basis for its economy. Compare this with other countries in the region such as Egypt at 0.01 and it is easy to see why there is the potential for social unrest in the region. Not only is wealth distributed unevenly within countries, but the artificial borders that have been established makes the oil wealth extremely uneven between countries.

This disproportion of wealth makes the programs of radical groups more appealing to the underclass. The support by the industrialized countries for the status quo is thus seen as source of the continuing economic disparity and leads to radicalism and Bin Ladenism. True attempts to bring economic and social justice to the region would do much to defuse this, but is currently impractical given the close ties between the western governments and the leading oil companies.


Country GDP
($ billions)
Population
million
Oil
Production
Barrels
per
Person
Government
Head
Bahrain 13 0.7 44,000 .07 King
Egypt 316 77.5  740,000 .01 "President"
Iran 516 68 4 million .06 "President"
Iraq 54 26 2.25 million .08 TBA
Jordan 25 5.8 0 0 King
Kuwait 48 2.3 2.3 1 Prince
Lebanon 19 3.8 0 0 President
Libya 37 5.7 1.5 million .26 "President"
Oman 38 3.0 775,000 .25 Sultan
Qatar 19 0.8 790,000 .98 Prince
Saudi Arabia 310 26 9 million .34 Prince
Syria 60 18 525,000 .03 "President"
United Arab Emerates 64 2.5 2.3 .92 Emir

Moral: An equitable society is a successful society.

Click here to see all my essays in context.
If you have any comments you would like to add email me at robert.feinman@gmail.com
Copyright © 2005 Robert D Feinman
Feel free to use the ideas, but the words are mine.