Marxian Economics

Refences

• Marxian Economics Wikipedia Article

Related

• Reserve army of labor
• • A concept in Marx's critique of political economy. It refers to the unemployed or underemployed in capitalistic society.
• Dialectic
• • Refers to dialogue between two people holding different points of view about a subject but wishing to arrive at the truth through reasoned argumentation.
• Hegel
• • German philosopher and one of the most influential figures of German idealism and 19th-century political philosophy.
• Abstraction
• • A process wherein general rules and concepts are derived from usage and classification of specific examples, literal signifiers, first principles, or other methods.

Introduction

Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian economists tend to accept the concept of the economy prima facie. Marxian economics comprises comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other; in many cases Marxian analysis is used to complement, or to supplement, other economic approaches.

• A Marxian economist is not necessarily a Marxist and vice-versa.
• • They share a semantic field, while allowing both connotative and denotative differences.
• Marxian economics concerns itself variously with the analysis of crisis in capitalism, the role and distribution of the surplus product and surplus value in various types of economic systems, the nature and origin of economic value, the impact of class and class struggle on economic and political processes, and the process of economic evolution.
• Considered a heterodox school, the Marxian school has been criticized by claims relating to inconsistency, failed predictions, and scrutiny of nominally communist countries' economic planning in the 20th century.
• Certain concepts developed in Marxian economics, especially those related to capital accumulation and the business cycle, have been fitted for use in capitalist systems/
• Marx's magnum opus on critique of political economy was Das Kapital (Capital: A Critique of Political Economy)

Marx's Critique of Classical Economics

• Mark took the most well-known economists of his day, Adam Smith and David Ricardo, as the starting point for his work.
• Marx followed Smith by claiming that the most important beneficial economic consequence of capitalism was a rapid growth in productive abilities.
• Mark in Theories of Surplus Value:

We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital. In their view, it is only one definite kind of concrete labor—agricultural labor—that creates surplus-value... But to Adam Smith, it is general social labor — no matter in what use-values it manifests itself — the mere quantity of necessary labor, which creates value. Surplus-value, whether it takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labor, appropriated by the owners of the material conditions of labor in the exchange with living labor

• Mark built on Ricardo's idea that the value of any produced object is equal to the labor embodied in the object.
• Marx criticized two features of bourgeois economy he perceived as main factors preventing full realization of society's production power: ownership of the means of production, and allegedly irrational operation of the economy, which leads to disturbances and surplus.

When society, by taking possession of all means of production and using them on a planned basis, has freed itself and all its members from the bondage in which they are now held by these means of production which they themselves have produced but which confront them as an irresistible alien force.
- Fredrich Engels, Anti-Dühring

Marx's Critique of Political Economy According To Marxist Economists

• According to some, Marx employed a labor theory of value, which holds of a commodity is the socially necessary labor time invested in it. In this model, capitalists do not pay workers the full value for the commodities they produce; rather, they compensate the worker only for the necessary labor only (the worker's wage, which covers only the necessary means of sustenance in order to maintain him working in the present and his family in the future as a group).
• Marx theorized the gap between the value a worker produces and his wage is a form of unpaid labor, known as surplus value.
• To resolve the bourgeois contradiction between the ownership of the means of production and the social act of production itself, Marx proposed socialization of the means of production.

Methodology

• Marx used dialectics, a method that he adapted from the works of Hegel.
• Dialectics focuses on relation and change, and tries to avoid seeing the universe as composed of separate objects, each with essentially stable unchanging characteristics.
• Marx regarded history s having passed through several stages. The details of his periodization vary somewhat through his works, but it essentially is: Primitive communism Slave Societies Feudalism Capitalism Socialism Communism. Marx occupied himself primarily with describing Capitalism.
• Marx defines a commodity as a product of human labor that is produced for sale in a market, and many products of human labor are commodities.

Commodities

• The worth of a commodity can be conceived of in two different ways, which Marx calls use-value and value. A commodity's use-value is its usefulness for fulfilling some practical purpose. Value is, on the other hand, a measure of a commodity's worth in comparison to other commodities.
• Marx argued that if value if a property common to all commodities, then whatever it is derived from, whatever determines it, must be common to all commodities. This is human labor according to Marx.
• Marx concluded that the value of a commodity is simply the amount of human labor required to produce it.
• Marx specified that it is not the actual amount of labor that went into a commodity that determines its value, but the amount of labor that a work of average energy and ability, working with average intensity, using the prevailing techniques of the day, would need to produce it.

Money

• Marx held that metallic money, such as gold, s a commodity, and its value is the labor time necessary to produce it (mine it, smelt it, etc.).
• He argued tat gold and silver are conventionally used as money because they embody a large amount of labor in a small, durable, form, which is convenient.

Production

• Marx lists the elementary factors of production as:

1. Labor, the personal activity of man
2. The subject of labor: the thing worked on
3. The instruments of labor: tools, laboring domestic animals like horses, chemicals used in modifying the subject, etc.

• The subjects of labor and the instruments of labor together are called the means of production. Relations of production are the relations human beings adopt toward each other as part of the production process.

Abstract Labor

• Marx separates labor into two different types: concrete and abstract labor. Concrete labor can be thought of as the unique characteristics of labor such as the work of a farmer versus a tailor. Abstract labor is the general conceptualization of human labor. It represents the expenditure of simple human labor power.
• Abstract labor is the basic unit of value and is basis for Marx's labor theory of value.

Surplus Value

• According to Marx, in capitalism, workers own their labor power, but do not own the means of production through which they can actualize their labor power and generate use-values. Marx claims capitalists desire profit or surplus value and the only way for them to gain surplus-value is by paying the workers' exchange-value, not their use-value. The difference between the two is the surplus-value generated.

Effect of Technical Progress

• Scale of enterprise, specialization of labor, and the introduction of machinery tend to increase the productivity of labor under Capitalism under Marx. These allow labor to produce more items at less value per item.
• Technological advancement tends to increase the amount of capital needed to start a business, and it tends to result in an increasing preponderance of capital being spent on means of production as opposed to labor. Marx called the ratio of these two kinds of capital the composition of capital.

Criticism

• Much of the critique of classical Marxian economics came from Marxian economists that revised Marx's original theory, or the Austrian School of economics.

Critics have claimed that Marx's labor theory of value and law of the tendency of the rate of profit to fall are internally inconsistent. In other words, the critics allege that Marx drew conclusions that actually do not follow from his theoretical premises. Once these alleged errors are corrected, his conclusion that aggregate price and profit are determined by, and equal to, aggregate value and surplus value no longer holds true. This result calls into question his theory that the exploitation of workers is the sole source of profit.

• The economists of Marxist states in the 20th century have been criticized for exhibiting over centralization and shortage of goods and the prevalence of second economies for very basic goods.

Relevance in Economics

• According to most economists, Marxian economics are not relevant to English-speaking economics, having virtually no impact.
• Some economists say that some elements, such as base and superstructure, exploitation of workers within the free market, and crises of capitalism, remain salient today, albeit with contemporary updates.

Neo-Marxian Economics

• The terms neo-Marxian, post-Marxian, and radical political economics were first used to refer to a distinct tradition of economic theory in the 1970s and 1980s that stems from Marxian economic thought.
• In industrial economics, the neo-Marxian approach stresses the monopolistic and oligarchic rather than competitive nature of capitalism.
• Some neo-Marians served as advisers to socialist or Third World developing governments. Neo-Marxist theories were influential in the study of imperialism.

Concepts

• Big business can maintain selling prices at high levels while still competing to cut costs, advertise and market their products. However, competition is generally limited with a few large capital formations sharing various markets, with the exception of a few actual monopolies.
• Exploitation focuses on low wage workers and groups at home, especially minorities. Average earners see the pressures in drive for production destroy their human relationships, leading to wider alienation and hostility.
• The whole system is largely irrational since though individuals may make rational decisions, the ultimate systemic goals are not.