More Than We Pay For
I wrote this in 2001.
In The Manifesto of the Communist Party (1848), Marx and Engels made an accusation against the capitalist order: the system cares only about money.
The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors,” and has left no other nexus between man and man than naked self-interest, than callous “cash payment.” It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.
The familiar phrase, “cash nexus,” is derived from this passage. It is a term of calumny.
Ludwig von Mises titled Human Action to make clear that the free market economy is a subset of a more general science of human action, which rests on an axiom: “Human action is purposeful behavior” (p. 11). “Action means the employment of means for the attainment of ends” (p. 13). The logic of economics is not primarily about money; it is about choice.
Whenever we forget this, we fall into a trap set by Marx. We reduce everything to the cash nexus. This is reductionism, both socially and intellectually. It weakens the case for freedom.
Mises distinguished what he called praxeology from catallactics. The former is the general science of human action. The latter is the narrower science of economics (p. 3). These terms have not caught on, but we should not confuse them or what they represent.
There is a great temptation to reduce everything to monetary profit and loss, to balance sheets with numbers. This is not only an intellectual error, it is a moral error. Oscar Wilde’s aphorism applies: the cynic is a person who knows the price of everything and the value of nothing.
The defense of the free market should not exclude non-monetary motivation. If it does, it becomes foolish, as well as an easy target of religious people, including Marxists, who are deeply religious people. (Gary North, Marx’s Religion of Revolution: Regeneration Through Chaos [1968, 1988], which is on-line free of charge at here.