Suppose, then, that Feuerbach’s thesis is true: human beings invented God. Marx’s innovation is to attempt to explain why it is true. Yet should we accept that religion has its source in our misery, and, specifically, the misery of alienation? One difficulty is that even in relatively affluent societies religion continues to exist, even among the more affluent classes. So at least at first sight it is hard to see religion in all its manifestations as a solace. Of course, there are several Marxist-style replies that could be made. First, although some contemporary societies are relatively affluent in material goods, they are still class divided and thus still alienated. So we do all need consolation after all. Second, and distinctly, the existence of religion in class-divided societies is very useful in keeping the workers in check. Distracted by thoughts of heaven, they are less likely to protest about hell on earth. This connects with the theory of ideology. Their social betters have every reason to perpetrate this myth, for their own self-interest. [...]

So Marx makes two predictions that do not seem to follow from the basic theory of historical materialism. This yields a startling result: one can believe Marx’s theory of history, yet argue that within this theory there is no good reason to think that capitalism will end, or, if it does, that it will be replaced by communism. This would make one a very peculiar sort of follower of Marx, but is an entirely coherent position.

But what about the theory itself ? Nothing I have said so far is intended to cast doubt on the main claims that history is the story of the development of human productive power, or that societies rise and fall on the basis of whether they further or impede that growth. So we should look at this now.

Much of the weight of the theory comes down to the following claim: that should a form of society frustrate the growth of the productive forces, then, eventually, that society will give way. Now this may be true, and certainly supporters of Marx have tried hard to establish it. But let us consider a (fictional) example. Imagine a society of great class division. A small aristocracy has both wealth and power, and is protected in its privilege by a strong, well-paid, military. The remainder of the people, who do most of the work, are relatively impoverished. However their sense of community is so strong that they do not resent their place in society, and their religious belief further supports their acquiescence. They see their rulers as social betters, entitled to their advantages.

So the labour theory of value does not explain the source of profit. Consequently the law of the declining rate of profit fails too, for that starts from the assumption that only labour can create value. Does it also follow that workers are not even exploited? Here opinions differ. Some have argued that once the labour theory of value falls there is no basis left for the charge that workers are exploited. But others believe that there is still a strong argument to be made. Suppose you work eight hours a day. Imagine that there is nothing you can buy with your wage that took more than a total of four hours to make. There appears, then, a clear sense in which you have lost something in this. We can say, surely, that there has been an unequal exchange of labour. Someone else is getting the benefit of some of your labour. The truth of this does not depend on any particular theory of value or profit.

Now, is it true that workers under capitalism are exploited in this sense? For the affluent workers of developed economies, probably not. Most Western workers can command more hours of labour than they have to work; provided it is the labour of Third World workers. A day’s Western wages might buy you weeks of an Indian or Chinese labourer’s work. These are the truly exploited (although who is the exploiter is a more subtle question); and often work in exactly the condition Marx wrote about in the England of the mid-nineteenth century.

The now well-known point is that the market is a fantastic information exchange. Changing prices are signals of shortage and surplus. Furthermore, the capitalist market gives people an incentive to respond to these signals in the search to maximize profits (private vices, public virtues again). Take away the market and the profit motive and you remove both signal and incentive. However skilled the planner, it is impossible to gain the quantity of fine-grained information about consumer demand and changing market conditions that even a small market automatically produces. But even if we did have this information, responding efficiently also relies on a level of good will and power we are unlikely to see. Despite its apparent attractions a planned economy just cannot do what it is designed for.