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Marxism vs libertarianism

Marxist Theory · 2026-05-13

Core Argument

The article argues that libertarian economics — specifically the Austrian School tradition of Hayek, Mises, and Böhm-Bawerk — does not constitute a serious scientific challenge to Marxism, but rather a retreat into subjective idealism that serves as an apology for capitalism. The central claim is twofold: first, that the marginal utility theory of value is philosophically and methodologically inferior to the labour theory of value, because it abandons the search for objective economic laws in favour of subjective consumer preferences; second, that the "socialist calculation problem" — the claim that rational economic planning is impossible without market prices — is a false problem that confuses a technical question of calculation with a political question of class power. The article insists that genuine socialist planning is not only possible but already partially demonstrated within capitalist firms like Walmart, and that the real obstacle to rational economic organisation is not the impossibility of calculation but the private ownership of the means of production and the class interests that defend it.

Theoretical Grounding

The analysis is rooted in classical Marxist political economy, drawing directly on Marx's Capital (particularly volume one's treatment of the labour theory of value, socially necessary labour time, and the distinction between labour and labour power), Engels's Anti-Dühring (the dialectical conception of freedom as insight into necessity, and the contradiction between organised production within the firm and anarchy between firms), and Trotsky's The Revolution Betrayed and The Soviet Economy in Danger (the materialist explanation of bureaucracy, the transitional role of market mechanisms under workers' democracy, and the insistence that planning is a political rather than purely technical problem). The article situates itself within the Marxist tradition's long-standing critique of vulgar economics — Marx's own term for post-Ricardian bourgeois economists who abandoned scientific analysis for apologetics — and explicitly positions the Austrian School as the latest iteration of this retreat. The philosophical framework is dialectical materialism, counterposed to the subjective idealism of Mach, the Vienna Circle, and the Austrian marginalists. Lenin's Materialism and Empirio-Criticism is invoked as the key polemical reference for defending materialism against subjectivist philosophy.

Conjunctural Relevance

The article was published in August 2022, and its opening paragraphs directly reference the post-pandemic conjuncture: supply chain bottlenecks, labour shortages, inflation eroding real incomes, and the grotesque spectacle of 100,000 pigs being slaughtered and discarded in Britain due to a lack of butchers while supermarket shelves are bare. The housing crisis — empty homes used as speculation alongside homelessness — is cited as further evidence of capitalism's irrationality. The climate catastrophe is named as an existential crisis that capitalism cannot solve. The article notes that free-market ideologues have been quieter during the crisis, but that their core assumptions remain embedded in university economics departments and textbooks via the "efficient market hypothesis." It also observes that during the pandemic, the same libertarians who denounce state intervention ran to governments for bailouts, with $17 trillion in direct fiscal support and $10 trillion in central bank injections. The conjuncture is thus presented as one in which capitalism's contradictions are particularly visible, making the theoretical defence of Marxism — and the critique of libertarian apologetics — urgently relevant.

Where the Argument Continues

The article is itself a developed treatment of themes that recur across the IDOM corpus. The critique of marginal utility theory connects to broader IDOM treatments of Marxist economics, particularly the labour theory of value and the tendency of the rate of profit to fall. The "socialist calculation debate" is handled in greater depth in other IDOM articles on economic planning and the Soviet Union. Trotsky's writings on the transitional economy — The Revolution Betrayed and The Soviet Economy in Danger — are the natural next texts for a reader wanting to pursue the argument about planning, workers' democracy, and the market under socialism. The article's treatment of Keynesianism versus Hayekianism as two sides of the same capitalist coin is a recurring IDOM theme, developed further in articles on neoliberalism, the 2008 crash, and the political economy of the pandemic. The philosophical defence of materialism against subjectivism points back to Lenin's Materialism and Empirio-Criticism and forward to IDOM treatments of dialectics and the Marxist method. The article's closing appeal to Engels's "leap from the kingdom of necessity to the kingdom of freedom" connects to broader IDOM discussions of socialist transition and communist society.

Connections

  • Marx, Capital, Volume One (especially chapters on the labour theory of value, commodity fetishism, and the contradiction between organised production within the firm and anarchy between firms)
  • Engels, Anti-Dühring (Part II on political economy, Part III on socialism, the conception of freedom as insight into necessity)
  • Trotsky, The Revolution Betrayed (chapters on the Soviet economy and bureaucracy)
  • Trotsky, The Soviet Economy in Danger
  • Lenin, Materialism and Empirio-Criticism (defence of materialism against subjective idealism)
  • Leigh Phillips and Michal Rozworski, People's Republic of Walmart (empirical argument about planning within capitalist firms)
  • Janek Wasserman, The Marginal Revolutionaries (history of the Austrian School, cited in the article)
  • IDOM articles on the labour theory of value, the tendency of the rate of profit to fall, economic crises, and socialist planning
  • Against the Stream episodes on Marxist economics and the critique of libertarianism

Key Quotes

  1. "Marginal utility theory, on the other hand, looks only at prices; only at the superficial appearance, and not at the underlying laws of motion. Like Oscar Wilde's cynic, the marginalists 'know the price of everything, and the value of nothing'."

  2. "The real problem, therefore, as Trotsky underlined, is not an 'economic calculation' one, but a political one. It is not a question of calculation, but of class; a question of power — that is, which class owns and runs the means of production? And according to what laws? On what basis — for needs or profits?"

  3. "The struggle between living interests, as the fundamental factor of planning, leads us into the domain of politics, which is concentrated economics. The instruments of the social groups of Soviet society are — should be: the Soviets, the trade unions, the co-operatives, and in first place the ruling party."

  4. "Even when everyone is acting 'rationally', pursuing their own self-interest, as Smith, Hayek, and all the other liberals and libertarians suggest they should, the result is an outcome that is deeply irrational for society as a whole. Even when (or exactly when) capitalism is working just as it should, in other words, this is precisely when it doesn't work at all."

  5. "Freedom therefore consists in the control over ourselves and over external nature, a control founded on knowledge of natural necessity; it is therefore necessarily a product of historical development." (Engels, Anti-Dühring, quoted in the article)

  6. "The fundamental evil of the capitalist system is not the extravagance of the possessing classes, however disgusting that may be in itself, but the fact that in order to guarantee its right to extravagance the bourgeoisie maintains its private ownership of the means of production, thus condemning the economic system to anarchy and decay." (Trotsky, The Revolution Betrayed, quoted in the article)