The Review of Austrian Economics, 17:1, 5–39, 2004.
2004 Kluwer Academic Publishers. Manufactured in The Netherlands.
Economic Organization, Distribution and the
Equality Issue: The Marx-Engels Perspective
SAMUEL HOLLANDER firstname.lastname@example.org
Department of Economics, Ben-Gurion University of the Negev, Beer Sheva, Israel 84105
Abstract. This paper has four related themes. It demonstrates that Marx’s Communism in its ﬁrst or Socialist
phase would recognize the essential inequality of labour on grounds of efﬁciency and growth. It offers an expla-
nation for the apparent paradox that Marx and Engels championed a fully-ﬂedged control system notwithstanding
appreciation of the allocation functions of a competitive market system. It highlights common ground relating to
market process between Marx and Engels and the modern “classical liberals” Mises and Hayek. And it traces the
evolutionary nature of the Marx-Engels perspective on transitions between and within economic systems.
KeyWords: socialist systems, comparative systems, transitional economics, Marxian socialism, classical
JEL classiﬁcation: B14, B24, B31, B51, B53, P30.
My ﬁrst concern is the treatment of distribution by Marx and Engels within the general
framework of “Historical Materialism.” After a brief review of their rejection of egalitar-
ian schemes based on “justice” or “morality” (Section 2.1), I proceed to their objections
on grounds of the impossibility of divorcing distribution from conditions of production
and the related exchange system. I demonstrate ﬁrst that growing inequality is accorded a
strategic and essential role in the evolution of a capitalist-exchange economy (Section 2.2).
(In any event, Marx and Engels seem to have downplayed the quantitative signiﬁcance
for labour even of major transfers.) That the pattern of distribution could not be altered
unilaterally without damaging consequences for production, is then shown to govern their
hostility to schemes of Communist organization entailing wages paid according to “equal
right” and “the undiminished proceeds of labour” (Section 2.3). In brief, Marx’s Commu-
nism in its ﬁrst phase (sometimes referred to as the Socialist phase), when there remains
a residual inﬂuence exerted by the preceding institution,
would recognize the essential
inequality of labour on grounds of efﬁciency and growth; the celebrated dictum “from
each according to his abilities to each according to his needs” applied only in a utopian
phase. Engels’ rendition of these themes is approached in terms of his critique of D¨uhring
A high degree of respect for the allocative role of markets is then brought into the
picture to explain Marx’s rejection of contemporary rent-conﬁscation and price-control
schemes (Section 4). I seek in this context to understand the championship of a