I have put the following post up on reddit (link) for discussion. Comments here are welcome but I expect there will be more discussion there than here.
I'll try to articulate a critique of marxism that makes sense to me. Marxism was developed in the 19th Century when Reason and Science as a conquering force from the Enlightenment, which more or less overwhelmed religious belief, was seen as either a higher form of thought or at least a sufficient form of thought to solve all the significant problems in the world. Marx called his form of socialism "scientific" in contrast to utopian socialism. Marx's historical and dialectical materialism was influence by Hegel's idea that there were clear historical laws which, with much effort, could be discovered, articulated and provide a guide to scientific action.
When you put together the overarching concept of "scientific socialism", combined with a monistic (rather than pluralism) One TrueWay world view, expounded by Plekhanov and adopted by Lenin, and further combined with a (perhaps unconscious) fact-value or science - ethics dichotomy (rather than a distinction) then you end up with an overly deterministic way of evaluating how the world works.
Engels said that freedom is the recognition of necessity and this is the marxist view of virtue or ethics. This downplays the importance of ethics in our thinking in general and provides a basis for totalitarianism. The quickest way to achieve justice for the oppressed is to seize political power by whatever means available and implement the socialist order.
The "necessity" of overthrowing capitalism by revolution and establishing a dictatorship of the proletariat has led in practice to a dictatorship by the communist party. Democracy is denied since the masses are denied the right to reintroduce capitalism if 51% desire that. Communists are not the best democrats. Unfortunately, in practice, this has led to the Gulag (1). The historical facts have been endlessly debated, disputed, interpreted and reinterpreted. Marxists always admit that errors have been made but they can be corrected. What I am trying to outline here is the underlying cause, an overestimation of the role of Science as in "scientific socialism".
My argument here is not that any particular or detailed contribution by Marx is clearly wrong. For instance, Capital in my view is a brilliant critique of the political economy. It is also true that at certain times in history there was little alternative but to become a communist. If you were a Jew, or indeed any decent person, in Europe facing the rise of the National Socialists in the 1930s the only good options were to become a communist, since the alternative opposition was pathetic, or run away.
I am not arguing that capitalism is a good system. Capitalism is a terrible system. It is just that all the alternatives we have tried so far have turned out to be worse. (to paraphrase Winston Churchill)
This is a philosophical critique. Dialectics and Logic, the tools of scientific socialism are very useful and have their place in good analysis. It is just that they do not and cannot provide a One True Way forward. The core problem is that Marxism was built on a theory of the role Science that was plausible in the 19th Century but which we need to re-evaluate today.
(1) update 9th September 2014: My understanding now is that gulag's existed in Stalin's USSR but not in Mao's China. Red Guards being sent to the countryside at the end of the Cultural Revolution as a policy decision to narrow the city-country gap is a different concept to a gulag (prison with forced labour). The Red Guards in China's countryside were not detained there against their will, long term.
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