November 27, 2023 • 29 mins
Dr. Dan Sutter, of the Manuel Johnson Center for Political Economy, hosts EconVersations, a program that explores the role of free markets in promoting prosperity through conversations with Manuel Johnson Center faculty and guests. In this episode, Dr. Sutter interviews Dr. Allen Mendenhall, as they discuss whether ESG investing is good for the economy.
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(00:00):
The opinions expressedon this program represent
the viewpoints of individualauthors or contributors,
and do not necessarily reflectthose of Troy University.
This is E Conversations,
a joint production of TroyTrojan Vision and Emmanuel H.
Johnson Centerfor Political Economy.
(00:20):
Now here's your host, Dr.
Dan Sutter.
Hello and welcome to E!
Conversations.I'm your host, Dr.
Dan Sutter of the Johnson Center
for Political Economyat Troy University.
Karl Marx isone of the most well-known
scholars of recent yearsof recent centuries, actually.
(00:42):
His influence can be seen today
all across the higher education,all across many different
fields of higher educationin the academy.
And we can hear echoesof his theory
of exploitationin critical race theory,
a subject that's gottena lot of attention recently.
(01:02):
And yet when he wrote itas an economist, when he wrote
his work, did not immediatelychange the economics or fashion.
In fact, it never really had atremendous impact on economics.
And his work seemedto be fading into obscurity
after his death in the 1880s.
Until that until the RussianRevolution came along in 1917,
(01:26):
when some devotees of Marx,led by Vladimir
Lenin, managed to seize powerand was at the time
the largest nation in the world
and one of the mostpowerful nations in the world.
And they set up a
Soviet who set up a socialist
communist nationinspired by Marx and Marx's
(01:48):
writings and brought greatscholarly attention.
All of a sudden back to Marx.
So was Marx, reallya great scholar
whose ideas were so powerfulthat they should surely be
enlightening,enlightening insight all across
the social sciences today?
Or was his popularityas surge in popularity
(02:11):
really sort of more a productof this historical accident
of some of his followersactually
staging a successful revolution?
Here to talk about his researchon this topic today is Dr.
Phil Magnus of the AmericanInstitute for Economic Research.
Dr. Magnus earned a Ph.D.
in public policyfrom George Mason University,
(02:34):
and he's written numerousarticles
and booksas all of his previous books
Cracks in the Ivory Towerand the 1619 Project, a critique
he is discussed about with meon this show.
So welcome back to the show.
PHIL Yeah, thanks for having me.
So let's get into this.
(02:54):
Tell us a little bit about firstthe toss,
a little bit about Marxin his most famous writings.
Obviously does capital amongst
economists is onewe're familiar with.
And then the Communist Manifestoand some of the measures
by which we can seehow much of it
how much influenceMarx has today.
(03:15):
Right.
So Karl Marx is aan economist and philosopher
in the 19th century,dies in 1883
and publishedseveral works in his lifetime
and even more after
his life was editedby his colleague
Friedrich Engels,and put into print
and then several subsequentsuccessors.
So voluminous writer, but
(03:37):
he was not terribly influentialin his own day.
He was known among the radicalleft of labor activism
as one socialist theorist,but he was also someone
that was very prone to fightingwith other socialists.
So he lived in a very schismaticworld on the very periphery
of the extremeleft of the political spectrum.
(03:58):
Now, where is he today?
Marx is all over the placein universities.
He's one of the most frequently
assigned authors in collegeclassrooms.
A communist
manifesto is always nearthe top of the list
of philosophical works.
It's up there,
usually above Plato's Republic,
and then nothing else even comesclose to it.
He's also one of the mostinfluential figures that cited
(04:21):
in the humanities and certainsocial sciences of all time.
He has a like a massive citationindex
if you look in several fieldsoutside of economics.
So he's a big deal today.
But although his
his work is very influentialnow, you know,
you said he passed away in 1883and in the decades after that,
(04:44):
it seemed like
there's pretty good evidencehis work was sort of
disappearinginto obscurity, his cap.
We can talk a little bitabout why why that was.
And one thing, as you know,
is he
although he's had thistremendous impact
across the humanities and socialsciences, he's never had
a tremendous impactin economics.
(05:05):
So let's talk aboutboth of these.
Why were economistsapparently not as as taken
with his work as some others?
Yes. So his most famous book,
Das Kapital,is published in 1867.
And if you
if you go through the book,it lays out
a theoretical argumentthat's built on something
we refer to as the labortheory of value.
(05:27):
Labor performed to improvesomething is what instills it
with value.
And he takes thisand he runs with it.
So Marx
begins with the labor theoryof value and originate with him.
This had been something
economists have been talkingabout for centuries,
but he absorbsthat is his starting point.
And he basically points out,he says that,
you know, laborersearn a certain level in income.
(05:51):
But we also know thatthe owners of the factories sell
the goods that they produceat a much higher level.
And if you take the differencebetween
the two, it's often quite large.
And he refers to thisas surplus value.
And he says surplusvalue is basically
ill gotten gains that the ownersof capital, the factory owners
have taken away from the peoplethat actually perform the work.
(06:11):
And basically derives the theoryof exploitation from this.
And this is the mechanism thatdrives Marxian theory forward.
Eventually, revolutioncomes among
the proletarian worker classas a result of being exploited,
having the fruits of their labortaken away from them.
So the goal of the socialistrevolution is to rise up, seize
the means of production,and reclaim that surplus value.
(06:33):
So this entire system isbuilt on the labor theory about,
you know,this was published in 1867,
but we also knowfrom the history of economics
that in 1871
an event occurs we now refer toas the marginal revolution.
There was a seriesof simultaneous discoveries
by Karl Maier in Austriaand William Stanley Jevons
(06:54):
in the U.K.,
where they came up with a
an alternative theory of valuethat actually had empirical
validation for it.
This is the subjectiveor marginal theory of value.
Value does not derive
based on the workperformed on something it value.
The value derivesat the moment of the exchange
relative to the next unitthat could be exchanged
and is deeply, deeply influencedby the subjective
(07:16):
preferences of the two partiesto the exchange.
So the labor theory of valueis basically discarded
only four years afterMarx writes this magnum opus
built around the labortheory of value.
What this means is, inthe decades following his death,
all economiststhat engage with them,
they read his workand they're basically saying
this is an obsolete theory.
(07:37):
It's wrong.
It's built aroundan erroneous theory of value.
We've since moved beyond that.
So why are we paying attentionto it?
Right. Yeah.
So then then we have obviously,
we have the Russian Revolutioncome along and so
and so it is possibleto think about like, well,
maybe that had some impact
(07:57):
because clearly Lenin,it was had read and studied Marx
and was being motivatedby Marxist thinking.
And so you've investigated thiswith a paper that's now
been published in a very
in a truly leadingeconomic journal,
the Journal ofPolitical Economy.
So tell us a little bitabout this.
(08:18):
The paper,
this is your coauthor,and then then we'll get into
how you went about tryingto test this idea that maybe
it was the Russian Revolutionand not the power.
And inside of Marx's ideasthat have led them
to be such awell known scholar today.
Exactly.
So this paper basically beganwith a conversation
(08:39):
between myself and my coauthor,
Michael Mikovitsat Northwood University.
And we were lookingat some data, some statistics
using the GoogleIngram database,
and we get into a little bitof what that entails.
But we noticeda very interesting,
just observational trend thatMarx's name is not mentioned
very often in printed works
(09:01):
in his lifetime.
Certainly he's he'sa relatively obscure figure.
Maybe other socialistsare referring to them.
There are socialist pamphlets
that critiqueand engage with him.
And thenthere are a few economists that
basically attack him for havingan incorrect theory of value.
But that's about it.
And this periodlasts from roughly
his lifetimeuntil the early 19 tens.
(09:25):
And then all of a sudden,starting in 1917,
you see references to Marxskyrocket.
They're everywhere.
They're in contemporarynewspapers and books.
They spill overinto academic works.
And, you know, herewe are a century later.
Marx is one of the most citedfigures in all of human history.
(09:45):
So it's a very interesting trendthat he he hovers
at a very low level of referencein print material
for basically his deathuntil 1916.
And then overnight he takes off.
So we got thistheory of the theory
was that basically
the Soviet Unionmust have put Marx on the map.
And this isn'tan original theory to us.
Peoplehave in qualitative research,
(10:06):
observed this beforeacross the political spectrum.
So the Austrian economists,Ludwig von Mises, mentions it
in a series of lectureshe gave in the 1940s.
But also onthe other end of the spectrum,
the Marxist historianEric Hobsbawm
comes up with the same
theory, says that Marx wasrelatively unknown in his day,
and it was really the SovietUnion that put him on the map.
(10:26):
So severalother scholars have posited
this is an explanation of whyMarx is so prominent today.
It's he gainedbasically the credibility boost
that came from the Soviet Union
successfullyexecuting a revolution
made him a salient figure in theintellectual scene as well.
And basically all that
(10:47):
we've seen on Marxistscholarship since then
is built on that boost,
not on things thathe did in his own lifetime.
Here's a table from your with
some data from your papershowing the sort of
your point of like Marx was nothighly regarded this ism
Journal Journal article mentionsof some different economists
and as we can see they're like
(11:08):
Marx wascertainly not out in the lead
you know relative to AdamSmith he's well we hear
Adam Smith being the founderof economics and
one of his contemporarieswould have been Henry George.
And you see he's referencedabout equal to Henry George.
And my you know, although weas economists know who
Henry George is probably a namethat completely is
(11:30):
is not known by many Americanstoday.
Exactly. Exactly.
And George was probablythe closest competitor to Marx
on that list,which is one of the reasons
why we looked at him.
You know, HenryGeorge was an ascendant
figure in the late 19th century,
and he actually ends up insome of our other metrics.
He's actually more famousthan Marx in Marx's lifetime.
(11:52):
But today he's consideredjust a pretty obscure
figure that has a very nichehistory of economic thought.
Following in a few schoolsof thought that follow him.
But they're not anywhere near
the mainstreamof the conversation.
And then the other thing
we noticed as we startedto look across academic journals
there and Marx is
mentioned in certain journals,but it's almost all concentrated
(12:13):
in thingslike the Economic Journal
in the quarterly Journalof Economics, in journals
that had a focus on questionslike the theory of value
in the labortheory of value. And these were
venues that were
engaging in critiquingKarl Marx.
Whereas if you look at thingslike the Journal of Education,
(12:34):
he's almost nonexistent there.
A journal of law,
very limitedhistorical presence,
very limited presencein in literature, in English.
And yet
these are the fields todaywhere Marx is cited everywhere,
and he's almost never citedin the economics journals.
So we've kind of reversed
the entire patternthat shown by this table.
(12:54):
So let's get intosome of the details
of how you wentabout trying to test this,
because it begins youmentioned Google and Graham's.
But explain for uswhat that is and how this is a
great new tool that you canthat we can use in research now.
Yeah.
So Googlevery famously has scanned
entire librariesof major universities
(13:18):
and put them into an onlinesearchable text index.
Now, you can't get
full access to them with someor copyright still, but
their goal is to text scan
basicallythe entirety of human knowledge.
And they started with English
language sources,but they've since expanded to
about a dozen other languages.
(13:38):
The most recent update in 2019.
There are some estimatesthat say
in the neighborhood of ten,maybe even 20% of all books ever
that have ever been written
and published
have now been scanned insome form or another by Google.
And what Google doeswith engrams
is they basically set up aan online tool
(13:58):
where you can search
any name or phrase or wordor group of words together.
And it will calculatehow many times those phrases
or words or names appear
in a given set of text relativeto all other books
that they've scannedfor that year.
So you can getif you search the name
Karl Marx,it'll give you basically
(14:20):
the equivalent of a percentage
of how many
times Marx is mentioned relativeto all the books
that they've scannedfor that year.
And you can do thiswith any name,
any phrase, any wording,and you can start
to see the patternsas they change over time.
So it becamea really interesting tool
because we observedone of the first things we did
when we embarked on this project
is we observe that spikein 1917 around Karl Marx.
(14:43):
Yeah.
So we have this up there nowand if you're looking at this,
we have two lines there.
But right nowwhat we're focusing in
is the solid line becausethat sets the actual number of
citations to Marx from thisGoogle and Grams.
And you see why
maybe it was trending upa little bit,
a little bit higher in the yearsbefore 1970 than
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it is back to the 1880s.
But there is a huge jump there.
And so this certainly is seeyou see it there in the data.
But as economists,especially when we go
about trying to do our research,
even if you seesomething in the data,
we have to be skepticaland you have to try
to ask the question of,well, could it have been
(15:26):
you know, could have happenedfor some other reason?
And and one thingyou could look at
or particularly or wonder is,was there something that drove
a lot of different
authors to be cited, a lot morethan, say, after 1917,
you know,
the World War that was ending
and maybe peoplewere writing a lot
about what the postwar worldshould be like.
And so maybe lots of maybelots of other authors
(15:48):
started to geta lot more mentioned or,
you know, maybelibraries became more efficient
or or whatever it might be.
Therecould be other explanations.
And so to try to explorethis further, you use a strong
empirical technique that's beenrelatively recently devised
by economists and othersocial scientists to study this.
It's called synthetic control.
So tell us a littleabout what's involved with that.
(16:11):
Yeah, so synthetic control, it'sbasically a way of matching
trendlines up until a point,a treatment date.
So our treatment date is builtaround this hypothesis
that the Soviet Unionputs Marx on the map.
It causesa huge spike in his citations.
And we see that visiblyin the in Graham data for Marx.
But to test it,we also going to look
at the counterfactualslike you mentioned.
(16:32):
Is there something elsegoing on?
So what we did is we datascraped the engram database
off of Googleand put together a list of 225
other authors that were eithercontemporaries or Mark.
So basically
writing at the same time as him
to and then anyoneearlier than that.
So we go all the way backto what the ancient world
with Plato and Aristotle andthinkers like that with names
(16:55):
that are basically consideredpart of the intellectual canon.
And then we also augmented that
with looking at other socialistfigures.
So people that were contemporarydebaters of Marx,
that had competing campsin the socialist world,
they may have been prettyobscure themselves,
kind of like Marx,but they were trying a fighting.
It out to be
the leader of the socialistmovement in Marx's lifetime.
(17:16):
So we put togetherthis database, 225 names,
plus Karl Marx of all their yearwe engrams.
And what synthetic control doesis it basically runs
a computer algorithm
and it tries to matchthe other authors
in that database to Karl Marxprior to 1917, for every year
from when we started syntheticcontrol in 1878 to 1916,
(17:39):
the computer is trying to getthe best fit
from weighted numbersthat come out of all of those
other 225 authors.
And what it will do,it will select others
that match Karl Marx'scitation patterns
over that period of time,
and it eventually generatesa fit that we can subject to
all sorts of testing.
We can look for statisticalsignificance
(18:01):
in what we're trying to detectis what would happen
if this supposed positive event,this treatment,
this 1917 event had neverhappened, or what if Lenin's
attempt at revolutionhad been quashed
and then he faded awayinto obscurity?
What would have continued?
Well, the premise here isthat Marx would have continued
to trackall of the authors that fit
(18:23):
his trendline linethe closest prior to 1917.
And that's what gives usthe synthetic counterfactual
that we can projectforward into the future
using the authors that fit Marxthe closest, right?
Yeah, because the idea would be
these peoplefit Marx up until 1916.
So whenever was they,they were following quite long,
but they did not havetheir disciples
(18:46):
take over major countryand take over a country.
And so if you see a divergenceas emerges after that, then
we can at least have someconfidence to say that it was
that that event, as opposed toother economic or social forces,
that that was causing it.
And if you look at this graphhere,
we got the dashed line up there.You can see that.
(19:06):
Yeah, the the dash linedivergence significant.
The dashline does not take a huge jump.
Right.
It just continuesalong at roughly the same level.
It's,you know, in its relatively low.
I mean, it's basically
hovering the same placeit was in the late 19th century.
And some of these figuresthat are composites
(19:27):
of that dash line,we do still study them together,
but we studied them in the sameway we study Henry George
or some very obscure socialistfigures
in the history of economicthought.
It's not like Karl Marx.
The actual citationsthat have just taken off.
Yeah. Is this is just the
the list of the authorsthat you had included in there.
So people can sort of seeI mean, includes Lassalle was a
(19:52):
socialist writer as well,but then you include people
like Oscar Wilde and AbrahamLincoln, even because up
until 1916,those citations to their
name, to their their work weretracking Marx quite similarly.
Right? Right.
Yeah. So it's a composite.
All this adds upto basically 100%.
(20:13):
So these are the weightsof all the different
figures,their citation patterns.
And the really interesting thing
is that the twobiggest weights, so
more than a half comes fromFerdinand Whistle a man
a little over a quarter comesfrom Johann Karl Repurchase
and this makes senseLaSalle and Roberta's were two
socialistcompetitors to Karl Marx.
(20:35):
They were probably precursorsto what we call
the Democratic socialist
tradition, whereas Marx is
the revolutionarysocialist tradition.
If they were writingaround the same time as him
and they had their own groupsof followers
that clashed with the Marxistsin the socialist world.
But the other interesting thingis what Sal brought Burgess
and Marxbasically all hated each other.
(20:57):
They agreed on socialistideals of certain sorts,
and they interactedin the same circles.
But regardless, his followers,for example, accused
Marx of plagiarizing,
using the theory of surplusvalue from Ferdinand WESSEL.
And Marx
had a very notoriously fracturedrelationship that involved
some some very vicious namecalling
(21:18):
and denunciations of each otheras competitor socialists.
So it makes sense thatthose are the heaviest weights.
And then the other weightsyou start to see
are other figuresfrom the 19th century
that were just tracking that gen
And then you continuethis just for, you know,
purposes of illustrationout the president essentially.
(21:41):
And you can sure enough see
yeah this is the same parentsbefore I the real Karl Marx,
starts getting cited a lot morethan the synthetic Karl Marx.
And so, yeah, this patternwasn't just transitory.
Maybe during the early SovietUnion, it continued since.
And of course we know thatbecause Marx gets
we know Marx is cited
a tremendous amount today, butcertainly a lot more than the
(22:03):
that the control groupwould have been.
Absolutely no way.
And you can see that,
you know, that that compositeof all the other authors,
it stays relatively flatacross the century.
Now, I want to cautionagainst projecting
all the way a century later,
because there are many other
intervening eventsthat occurred here.
But we see clearly thatthis is the split.
1917 is the the pointwhere the two lines diverge.
(22:28):
And it's a very pronounceddivergence that just continues
ever since then.
Yeah.
And, you know,
so what we can talk abouta little bit further is like,
you know, you do
a number of additional tasksbecause for our research,
this this becomescritically important.
Peopleare going to want to know,
is there anything elsethat could be explaining this
other than thanwhat you're alleging?
Because if there is, thenwe don't want you to be able
(22:51):
to sort of improperlyallege that
that it wasthe Russian Revolution
when something elsecould explain.
So you do a whole bunchof different tests
and then you also actually test
it, try and see if there'sa statistical significance here.
Could you have
seen something like this happenjust by random chance?
So tell us brieflyabout some of these other things
(23:12):
that you useto try to try to rule out
as possible explanations?Yeah. Yeah.
So we ran a whole seriesof robust robustness checks
to make sure that our
our results were in fact,what we thought they were
and this included.
So one of the first ones we did
Google Ingram's only uses booksto scan library books.
The question comes up, Well,what about newspapers?
(23:33):
What about periodicals?
So we set up a computer scraping
program that scanned overnewspaper databases.
So historical scansof of the daily New York Times
all the way down to the PeoriaExpress News or whatever
it happens to be.
And we looked acrossthese newspaper
databases,scraped the same type of data
(23:54):
for mentions of the name
as a percentageof all newspapers
that had been scannedfor that year.
And we replicated our studyand we independently film
basically more or lessthe same thesis.
Marx is a relatively obscurefigure until 1917,
and then suddenly he'sall over the newspapers.
So there was onecheck that we did.
We also segment it upour author.
(24:16):
So we,
we ran the test over againby excluding other socialists,
and then we limitedto socialist only.
And these are two waysto kind of triangulate,
to figure out that yes,indeed, Marx is pulling away
from the rest of the packof other socialist thinkers.
And that that again came upwith some very strong results.
And then we asked the question,
well, what happened in languagesother than English is English
(24:39):
is by far the biggest partof the Ingram database.
It's the
the language that most scholarlyworks are published in.
But Karl Marxalso wrote in German.
So we looked at the Germanlanguage in grammar database
and then subsequently the Germanlanguage newspaper database
to figure out if the same trendcould be observable.
And it turns out, yes, it is.
(25:01):
So where do the German languagein Braille?
He's againfollowing the same pattern
of relatively lowlevels of citation
matching some fairly obscureother socialist figures.
1917 He skyrockets.
He shoots up in Germanlanguage counts.
But Germanydoes something very interesting.
Very, very different.
This kind of validatedour theory as well as so German
(25:25):
Karl Marx citations continueto increase throughout the 1920s
until 1932 and 1933.
Then they suddenly reverseand drop back down toward that
trend line from the compositeof the other authors.
This is very obviously explainedby one thing
the year that Hitlercame to power
and what did Hitler do?
(25:46):
He censored opposition politicalworks, including Karl Marx.
And then in 1946,
after Germany'sbeen defeated in World War Two,
there's a marxist state
that's proclaimed in EastGermany by the Soviet Union,
and suddenly Marxist citationsshoot off again in German.
So we have a triple treatmenteffect occurring in German
(26:08):
that validates thisoriginal observation.
It's really the Soviet Unionthat's driving it,
and it's other political eventsthat have changed the trend.
So by
by running these other tests,we basically tried to eliminate
alternative hypotheses,
alternative explanationsthat might have otherwise
told us whyMarxist citations took off.
(26:28):
And we found some very robustresults that all triangulate
and pointback to this one thing.
It's the Russian Revolution.
It's the Soviet Union.
Well,
we just have a couple of minutesleft,
so I want to talk a little bit
about someof the implications of this
and what you mentioned earlierand that because a couple of the
writers in this synthetic Marxwere are they're socialists.
(26:48):
And as you mentioned,like relative
to Marx, other socialistswriting in the 1800s
or early 1900s were not alladvocating for a violent
revolt, using that as a wayto bring socialism about.
And, you know,
that's one of the possibleif Marx had remained
one of many different socialistvoices, you know, maybe
(27:10):
proponents, peoplewho saw some value in from each
according to our abilityto each according to need
might have pursued a different,say, more peaceful path
to power in the 20th century.
And maybe some of the
the horrorsthat we observed with
communism where Marx's ideas,wherever they were implemented,
(27:30):
maybe some of thatwas the history of a different.
Absolutely.
So one of the the effectsthat we discern from our data
and sort of these robustnesschecks
is Marx basically crowded outall of his competitors
in the socialist world.
These are peoplethat were basically tracking him
in similar citation patternsprior to 1917.
(27:51):
Many of themwere his contemporaries,
and they had their own factionsdebating each other.
And, you know, it's an openquestion
Would one or more of theseother competing socialists
have become the dominant figuresin the socialist tradition,
had it not been for women?
And we also know from Lenin,
Lennon was very
explicitly drawn to Marx becauseMarx embraced revolution,
(28:11):
wheresome of these other thinkers
said, That's off the table.Violence is wrong.
So yes,you get a very different path.
It could have occurred at awin and not been successful.
Well, thanks so much forcoming on and talk about this is
I found this to bea tremendously enlightening
paper to read.
So thanks againso much for coming on
(28:32):
and thank you allfor joining us.
Join us again next timefor another E conversations.
This has been e conversations,a joint production
of Joy Torture Divisionat the Manuel H.
Johnson Center for PoliticalEconomy at Troy University.
The opinions expressedon this program represent
the viewpoints of individualauthors or contributors,
and do not necessarily reflectthose of Troy University.
This is E Conversations,
a joint production of TroyTrojan Vision and Emmanuel H.
Johnson Centerfor Political Economy.
(00:20):
Now here's your host, Dr.
Dan Sutter.
Hello and welcome to E!
Conversations.I'm your host, Dr.
Dan Sutter of the Johnson Center
for Political Economyat Troy University.
Karl Marx isone of the most well-known
scholars of recent yearsof recent centuries, actually.
(00:42):
His influence can be seen today
all across the higher education,all across many different
fields of higher educationin the academy.
And we can hear echoesof his theory
of exploitationin critical race theory,
a subject that's gottena lot of attention recently.
(01:02):
And yet when he wrote itas an economist, when he wrote
his work, did not immediatelychange the economics or fashion.
In fact, it never really had atremendous impact on economics.
And his work seemedto be fading into obscurity
after his death in the 1880s.
Until that until the RussianRevolution came along in 1917,
(01:26):
when some devotees of Marx,led by Vladimir
Lenin, managed to seize powerand was at the time
the largest nation in the world
and one of the mostpowerful nations in the world.
And they set up a
Soviet who set up a socialist
communist nationinspired by Marx and Marx's
(01:48):
writings and brought greatscholarly attention.
All of a sudden back to Marx.
So was Marx, reallya great scholar
whose ideas were so powerfulthat they should surely be
enlightening,enlightening insight all across
the social sciences today?
Or was his popularityas surge in popularity
(02:11):
really sort of more a productof this historical accident
of some of his followersactually
staging a successful revolution?
Here to talk about his researchon this topic today is Dr.
Phil Magnus of the AmericanInstitute for Economic Research.
Dr. Magnus earned a Ph.D.
in public policyfrom George Mason University,
(02:34):
and he's written numerousarticles
and booksas all of his previous books
Cracks in the Ivory Towerand the 1619 Project, a critique
he is discussed about with meon this show.
So welcome back to the show.
PHIL Yeah, thanks for having me.
So let's get into this.
(02:54):
Tell us a little bit about firstthe toss,
a little bit about Marxin his most famous writings.
Obviously does capital amongst
economists is onewe're familiar with.
And then the Communist Manifestoand some of the measures
by which we can seehow much of it
how much influenceMarx has today.
(03:15):
Right.
So Karl Marx is aan economist and philosopher
in the 19th century,dies in 1883
and publishedseveral works in his lifetime
and even more after
his life was editedby his colleague
Friedrich Engels,and put into print
and then several subsequentsuccessors.
So voluminous writer, but
(03:37):
he was not terribly influentialin his own day.
He was known among the radicalleft of labor activism
as one socialist theorist,but he was also someone
that was very prone to fightingwith other socialists.
So he lived in a very schismaticworld on the very periphery
of the extremeleft of the political spectrum.
(03:58):
Now, where is he today?
Marx is all over the placein universities.
He's one of the most frequently
assigned authors in collegeclassrooms.
A communist
manifesto is always nearthe top of the list
of philosophical works.
It's up there,
usually above Plato's Republic,
and then nothing else even comesclose to it.
He's also one of the mostinfluential figures that cited
(04:21):
in the humanities and certainsocial sciences of all time.
He has a like a massive citationindex
if you look in several fieldsoutside of economics.
So he's a big deal today.
But although his
his work is very influentialnow, you know,
you said he passed away in 1883and in the decades after that,
(04:44):
it seemed like
there's pretty good evidencehis work was sort of
disappearinginto obscurity, his cap.
We can talk a little bitabout why why that was.
And one thing, as you know,
is he
although he's had thistremendous impact
across the humanities and socialsciences, he's never had
a tremendous impactin economics.
(05:05):
So let's talk aboutboth of these.
Why were economistsapparently not as as taken
with his work as some others?
Yes. So his most famous book,
Das Kapital,is published in 1867.
And if you
if you go through the book,it lays out
a theoretical argumentthat's built on something
we refer to as the labortheory of value.
(05:27):
Labor performed to improvesomething is what instills it
with value.
And he takes thisand he runs with it.
So Marx
begins with the labor theoryof value and originate with him.
This had been something
economists have been talkingabout for centuries,
but he absorbsthat is his starting point.
And he basically points out,he says that,
you know, laborersearn a certain level in income.
(05:51):
But we also know thatthe owners of the factories sell
the goods that they produceat a much higher level.
And if you take the differencebetween
the two, it's often quite large.
And he refers to thisas surplus value.
And he says surplusvalue is basically
ill gotten gains that the ownersof capital, the factory owners
have taken away from the peoplethat actually perform the work.
(06:11):
And basically derives the theoryof exploitation from this.
And this is the mechanism thatdrives Marxian theory forward.
Eventually, revolutioncomes among
the proletarian worker classas a result of being exploited,
having the fruits of their labortaken away from them.
So the goal of the socialistrevolution is to rise up, seize
the means of production,and reclaim that surplus value.
(06:33):
So this entire system isbuilt on the labor theory about,
you know,this was published in 1867,
but we also knowfrom the history of economics
that in 1871
an event occurs we now refer toas the marginal revolution.
There was a seriesof simultaneous discoveries
by Karl Maier in Austriaand William Stanley Jevons
(06:54):
in the U.K.,
where they came up with a
an alternative theory of valuethat actually had empirical
validation for it.
This is the subjectiveor marginal theory of value.
Value does not derive
based on the workperformed on something it value.
The value derivesat the moment of the exchange
relative to the next unitthat could be exchanged
and is deeply, deeply influencedby the subjective
(07:16):
preferences of the two partiesto the exchange.
So the labor theory of valueis basically discarded
only four years afterMarx writes this magnum opus
built around the labortheory of value.
What this means is, inthe decades following his death,
all economiststhat engage with them,
they read his workand they're basically saying
this is an obsolete theory.
(07:37):
It's wrong.
It's built aroundan erroneous theory of value.
We've since moved beyond that.
So why are we paying attentionto it?
Right. Yeah.
So then then we have obviously,
we have the Russian Revolutioncome along and so
and so it is possibleto think about like, well,
maybe that had some impact
(07:57):
because clearly Lenin,it was had read and studied Marx
and was being motivatedby Marxist thinking.
And so you've investigated thiswith a paper that's now
been published in a very
in a truly leadingeconomic journal,
the Journal ofPolitical Economy.
So tell us a little bitabout this.
(08:18):
The paper,
this is your coauthor,and then then we'll get into
how you went about tryingto test this idea that maybe
it was the Russian Revolutionand not the power.
And inside of Marx's ideasthat have led them
to be such awell known scholar today.
Exactly.
So this paper basically beganwith a conversation
(08:39):
between myself and my coauthor,
Michael Mikovitsat Northwood University.
And we were lookingat some data, some statistics
using the GoogleIngram database,
and we get into a little bitof what that entails.
But we noticeda very interesting,
just observational trend thatMarx's name is not mentioned
very often in printed works
(09:01):
in his lifetime.
Certainly he's he'sa relatively obscure figure.
Maybe other socialistsare referring to them.
There are socialist pamphlets
that critiqueand engage with him.
And thenthere are a few economists that
basically attack him for havingan incorrect theory of value.
But that's about it.
And this periodlasts from roughly
his lifetimeuntil the early 19 tens.
(09:25):
And then all of a sudden,starting in 1917,
you see references to Marxskyrocket.
They're everywhere.
They're in contemporarynewspapers and books.
They spill overinto academic works.
And, you know, herewe are a century later.
Marx is one of the most citedfigures in all of human history.
(09:45):
So it's a very interesting trendthat he he hovers
at a very low level of referencein print material
for basically his deathuntil 1916.
And then overnight he takes off.
So we got thistheory of the theory
was that basically
the Soviet Unionmust have put Marx on the map.
And this isn'tan original theory to us.
Peoplehave in qualitative research,
(10:06):
observed this beforeacross the political spectrum.
So the Austrian economists,Ludwig von Mises, mentions it
in a series of lectureshe gave in the 1940s.
But also onthe other end of the spectrum,
the Marxist historianEric Hobsbawm
comes up with the same
theory, says that Marx wasrelatively unknown in his day,
and it was really the SovietUnion that put him on the map.
(10:26):
So severalother scholars have posited
this is an explanation of whyMarx is so prominent today.
It's he gainedbasically the credibility boost
that came from the Soviet Union
successfullyexecuting a revolution
made him a salient figure in theintellectual scene as well.
And basically all that
(10:47):
we've seen on Marxistscholarship since then
is built on that boost,
not on things thathe did in his own lifetime.
Here's a table from your with
some data from your papershowing the sort of
your point of like Marx was nothighly regarded this ism
Journal Journal article mentionsof some different economists
and as we can see they're like
(11:08):
Marx wascertainly not out in the lead
you know relative to AdamSmith he's well we hear
Adam Smith being the founderof economics and
one of his contemporarieswould have been Henry George.
And you see he's referencedabout equal to Henry George.
And my you know, although weas economists know who
Henry George is probably a namethat completely is
(11:30):
is not known by many Americanstoday.
Exactly. Exactly.
And George was probablythe closest competitor to Marx
on that list,which is one of the reasons
why we looked at him.
You know, HenryGeorge was an ascendant
figure in the late 19th century,
and he actually ends up insome of our other metrics.
He's actually more famousthan Marx in Marx's lifetime.
(11:52):
But today he's consideredjust a pretty obscure
figure that has a very nichehistory of economic thought.
Following in a few schoolsof thought that follow him.
But they're not anywhere near
the mainstreamof the conversation.
And then the other thing
we noticed as we startedto look across academic journals
there and Marx is
mentioned in certain journals,but it's almost all concentrated
(12:13):
in thingslike the Economic Journal
in the quarterly Journalof Economics, in journals
that had a focus on questionslike the theory of value
in the labortheory of value. And these were
venues that were
engaging in critiquingKarl Marx.
Whereas if you look at thingslike the Journal of Education,
(12:34):
he's almost nonexistent there.
A journal of law,
very limitedhistorical presence,
very limited presencein in literature, in English.
And yet
these are the fields todaywhere Marx is cited everywhere,
and he's almost never citedin the economics journals.
So we've kind of reversed
the entire patternthat shown by this table.
(12:54):
So let's get intosome of the details
of how you wentabout trying to test this,
because it begins youmentioned Google and Graham's.
But explain for uswhat that is and how this is a
great new tool that you canthat we can use in research now.
Yeah.
So Googlevery famously has scanned
entire librariesof major universities
(13:18):
and put them into an onlinesearchable text index.
Now, you can't get
full access to them with someor copyright still, but
their goal is to text scan
basicallythe entirety of human knowledge.
And they started with English
language sources,but they've since expanded to
about a dozen other languages.
(13:38):
The most recent update in 2019.
There are some estimatesthat say
in the neighborhood of ten,maybe even 20% of all books ever
that have ever been written
and published
have now been scanned insome form or another by Google.
And what Google doeswith engrams
is they basically set up aan online tool
(13:58):
where you can search
any name or phrase or wordor group of words together.
And it will calculatehow many times those phrases
or words or names appear
in a given set of text relativeto all other books
that they've scannedfor that year.
So you can getif you search the name
Karl Marx,it'll give you basically
(14:20):
the equivalent of a percentage
of how many
times Marx is mentioned relativeto all the books
that they've scannedfor that year.
And you can do thiswith any name,
any phrase, any wording,and you can start
to see the patternsas they change over time.
So it becamea really interesting tool
because we observedone of the first things we did
when we embarked on this project
is we observe that spikein 1917 around Karl Marx.
(14:43):
Yeah.
So we have this up there nowand if you're looking at this,
we have two lines there.
But right nowwhat we're focusing in
is the solid line becausethat sets the actual number of
citations to Marx from thisGoogle and Grams.
And you see why
maybe it was trending upa little bit,
a little bit higher in the yearsbefore 1970 than
(15:04):
it is back to the 1880s.
But there is a huge jump there.
And so this certainly is seeyou see it there in the data.
But as economists,especially when we go
about trying to do our research,
even if you seesomething in the data,
we have to be skepticaland you have to try
to ask the question of,well, could it have been
(15:26):
you know, could have happenedfor some other reason?
And and one thingyou could look at
or particularly or wonder is,was there something that drove
a lot of different
authors to be cited, a lot morethan, say, after 1917,
you know,
the World War that was ending
and maybe peoplewere writing a lot
about what the postwar worldshould be like.
And so maybe lots of maybelots of other authors
(15:48):
started to geta lot more mentioned or,
you know, maybelibraries became more efficient
or or whatever it might be.
Therecould be other explanations.
And so to try to explorethis further, you use a strong
empirical technique that's beenrelatively recently devised
by economists and othersocial scientists to study this.
It's called synthetic control.
So tell us a littleabout what's involved with that.
(16:11):
Yeah, so synthetic control, it'sbasically a way of matching
trendlines up until a point,a treatment date.
So our treatment date is builtaround this hypothesis
that the Soviet Unionputs Marx on the map.
It causesa huge spike in his citations.
And we see that visiblyin the in Graham data for Marx.
But to test it,we also going to look
at the counterfactualslike you mentioned.
(16:32):
Is there something elsegoing on?
So what we did is we datascraped the engram database
off of Googleand put together a list of 225
other authors that were eithercontemporaries or Mark.
So basically
writing at the same time as him
to and then anyoneearlier than that.
So we go all the way backto what the ancient world
with Plato and Aristotle andthinkers like that with names
(16:55):
that are basically consideredpart of the intellectual canon.
And then we also augmented that
with looking at other socialistfigures.
So people that were contemporarydebaters of Marx,
that had competing campsin the socialist world,
they may have been prettyobscure themselves,
kind of like Marx,but they were trying a fighting.
It out to be
the leader of the socialistmovement in Marx's lifetime.
(17:16):
So we put togetherthis database, 225 names,
plus Karl Marx of all their yearwe engrams.
And what synthetic control doesis it basically runs
a computer algorithm
and it tries to matchthe other authors
in that database to Karl Marxprior to 1917, for every year
from when we started syntheticcontrol in 1878 to 1916,
(17:39):
the computer is trying to getthe best fit
from weighted numbersthat come out of all of those
other 225 authors.
And what it will do,it will select others
that match Karl Marx'scitation patterns
over that period of time,
and it eventually generatesa fit that we can subject to
all sorts of testing.
We can look for statisticalsignificance
(18:01):
in what we're trying to detectis what would happen
if this supposed positive event,this treatment,
this 1917 event had neverhappened, or what if Lenin's
attempt at revolutionhad been quashed
and then he faded awayinto obscurity?
What would have continued?
Well, the premise here isthat Marx would have continued
to trackall of the authors that fit
(18:23):
his trendline linethe closest prior to 1917.
And that's what gives usthe synthetic counterfactual
that we can projectforward into the future
using the authors that fit Marxthe closest, right?
Yeah, because the idea would be
these peoplefit Marx up until 1916.
So whenever was they,they were following quite long,
but they did not havetheir disciples
(18:46):
take over major countryand take over a country.
And so if you see a divergenceas emerges after that, then
we can at least have someconfidence to say that it was
that that event, as opposed toother economic or social forces,
that that was causing it.
And if you look at this graphhere,
we got the dashed line up there.You can see that.
(19:06):
Yeah, the the dash linedivergence significant.
The dashline does not take a huge jump.
Right.
It just continuesalong at roughly the same level.
It's,you know, in its relatively low.
I mean, it's basically
hovering the same placeit was in the late 19th century.
And some of these figuresthat are composites
(19:27):
of that dash line,we do still study them together,
but we studied them in the sameway we study Henry George
or some very obscure socialistfigures
in the history of economicthought.
It's not like Karl Marx.
The actual citationsthat have just taken off.
Yeah. Is this is just the
the list of the authorsthat you had included in there.
So people can sort of seeI mean, includes Lassalle was a
(19:52):
socialist writer as well,but then you include people
like Oscar Wilde and AbrahamLincoln, even because up
until 1916,those citations to their
name, to their their work weretracking Marx quite similarly.
Right? Right.
Yeah. So it's a composite.
All this adds upto basically 100%.
(20:13):
So these are the weightsof all the different
figures,their citation patterns.
And the really interesting thing
is that the twobiggest weights, so
more than a half comes fromFerdinand Whistle a man
a little over a quarter comesfrom Johann Karl Repurchase
and this makes senseLaSalle and Roberta's were two
socialistcompetitors to Karl Marx.
(20:35):
They were probably precursorsto what we call
the Democratic socialist
tradition, whereas Marx is
the revolutionarysocialist tradition.
If they were writingaround the same time as him
and they had their own groupsof followers
that clashed with the Marxistsin the socialist world.
But the other interesting thingis what Sal brought Burgess
and Marxbasically all hated each other.
(20:57):
They agreed on socialistideals of certain sorts,
and they interactedin the same circles.
But regardless, his followers,for example, accused
Marx of plagiarizing,
using the theory of surplusvalue from Ferdinand WESSEL.
And Marx
had a very notoriously fracturedrelationship that involved
some some very vicious namecalling
(21:18):
and denunciations of each otheras competitor socialists.
So it makes sense thatthose are the heaviest weights.
And then the other weightsyou start to see
are other figuresfrom the 19th century
that were just tracking that gen
And then you continuethis just for, you know,
purposes of illustrationout the president essentially.
(21:41):
And you can sure enough see
yeah this is the same parentsbefore I the real Karl Marx,
starts getting cited a lot morethan the synthetic Karl Marx.
And so, yeah, this patternwasn't just transitory.
Maybe during the early SovietUnion, it continued since.
And of course we know thatbecause Marx gets
we know Marx is cited
a tremendous amount today, butcertainly a lot more than the
(22:03):
that the control groupwould have been.
Absolutely no way.
And you can see that,
you know, that that compositeof all the other authors,
it stays relatively flatacross the century.
Now, I want to cautionagainst projecting
all the way a century later,
because there are many other
intervening eventsthat occurred here.
But we see clearly thatthis is the split.
1917 is the the pointwhere the two lines diverge.
(22:28):
And it's a very pronounceddivergence that just continues
ever since then.
Yeah.
And, you know,
so what we can talk abouta little bit further is like,
you know, you do
a number of additional tasksbecause for our research,
this this becomescritically important.
Peopleare going to want to know,
is there anything elsethat could be explaining this
other than thanwhat you're alleging?
Because if there is, thenwe don't want you to be able
(22:51):
to sort of improperlyallege that
that it wasthe Russian Revolution
when something elsecould explain.
So you do a whole bunchof different tests
and then you also actually test
it, try and see if there'sa statistical significance here.
Could you have
seen something like this happenjust by random chance?
So tell us brieflyabout some of these other things
(23:12):
that you useto try to try to rule out
as possible explanations?Yeah. Yeah.
So we ran a whole seriesof robust robustness checks
to make sure that our
our results were in fact,what we thought they were
and this included.
So one of the first ones we did
Google Ingram's only uses booksto scan library books.
The question comes up, Well,what about newspapers?
(23:33):
What about periodicals?
So we set up a computer scraping
program that scanned overnewspaper databases.
So historical scansof of the daily New York Times
all the way down to the PeoriaExpress News or whatever
it happens to be.
And we looked acrossthese newspaper
databases,scraped the same type of data
(23:54):
for mentions of the name
as a percentageof all newspapers
that had been scannedfor that year.
And we replicated our studyand we independently film
basically more or lessthe same thesis.
Marx is a relatively obscurefigure until 1917,
and then suddenly he'sall over the newspapers.
So there was onecheck that we did.
We also segment it upour author.
(24:16):
So we,
we ran the test over againby excluding other socialists,
and then we limitedto socialist only.
And these are two waysto kind of triangulate,
to figure out that yes,indeed, Marx is pulling away
from the rest of the packof other socialist thinkers.
And that that again came upwith some very strong results.
And then we asked the question,
well, what happened in languagesother than English is English
(24:39):
is by far the biggest partof the Ingram database.
It's the
the language that most scholarlyworks are published in.
But Karl Marxalso wrote in German.
So we looked at the Germanlanguage in grammar database
and then subsequently the Germanlanguage newspaper database
to figure out if the same trendcould be observable.
And it turns out, yes, it is.
(25:01):
So where do the German languagein Braille?
He's againfollowing the same pattern
of relatively lowlevels of citation
matching some fairly obscureother socialist figures.
1917 He skyrockets.
He shoots up in Germanlanguage counts.
But Germanydoes something very interesting.
Very, very different.
This kind of validatedour theory as well as so German
(25:25):
Karl Marx citations continueto increase throughout the 1920s
until 1932 and 1933.
Then they suddenly reverseand drop back down toward that
trend line from the compositeof the other authors.
This is very obviously explainedby one thing
the year that Hitlercame to power
and what did Hitler do?
(25:46):
He censored opposition politicalworks, including Karl Marx.
And then in 1946,
after Germany'sbeen defeated in World War Two,
there's a marxist state
that's proclaimed in EastGermany by the Soviet Union,
and suddenly Marxist citationsshoot off again in German.
So we have a triple treatmenteffect occurring in German
(26:08):
that validates thisoriginal observation.
It's really the Soviet Unionthat's driving it,
and it's other political eventsthat have changed the trend.
So by
by running these other tests,we basically tried to eliminate
alternative hypotheses,
alternative explanationsthat might have otherwise
told us whyMarxist citations took off.
(26:28):
And we found some very robustresults that all triangulate
and pointback to this one thing.
It's the Russian Revolution.
It's the Soviet Union.
Well,
we just have a couple of minutesleft,
so I want to talk a little bit
about someof the implications of this
and what you mentioned earlierand that because a couple of the
writers in this synthetic Marxwere are they're socialists.
(26:48):
And as you mentioned,like relative
to Marx, other socialistswriting in the 1800s
or early 1900s were not alladvocating for a violent
revolt, using that as a wayto bring socialism about.
And, you know,
that's one of the possibleif Marx had remained
one of many different socialistvoices, you know, maybe
(27:10):
proponents, peoplewho saw some value in from each
according to our abilityto each according to need
might have pursued a different,say, more peaceful path
to power in the 20th century.
And maybe some of the
the horrorsthat we observed with
communism where Marx's ideas,wherever they were implemented,
(27:30):
maybe some of thatwas the history of a different.
Absolutely.
So one of the the effectsthat we discern from our data
and sort of these robustnesschecks
is Marx basically crowded outall of his competitors
in the socialist world.
These are peoplethat were basically tracking him
in similar citation patternsprior to 1917.
(27:51):
Many of themwere his contemporaries,
and they had their own factionsdebating each other.
And, you know, it's an openquestion
Would one or more of theseother competing socialists
have become the dominant figuresin the socialist tradition,
had it not been for women?
And we also know from Lenin,
Lennon was very
explicitly drawn to Marx becauseMarx embraced revolution,
(28:11):
wheresome of these other thinkers
said, That's off the table.Violence is wrong.
So yes,you get a very different path.
It could have occurred at awin and not been successful.
Well, thanks so much forcoming on and talk about this is
I found this to bea tremendously enlightening
paper to read.
So thanks againso much for coming on
(28:32):
and thank you allfor joining us.
Join us again next timefor another E conversations.
This has been e conversations,a joint production
of Joy Torture Divisionat the Manuel H.
Johnson Center for PoliticalEconomy at Troy University.
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