Marxian economics
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- Note: Marxian economics is not restricted to Marxist economics, as it includes the economic thought of those inspired by Marx's works who do not identify with "Marxism" as a political ideology.
Marxian economics refers to a body of economic thought stemming from the work of Karl Marx.
The adherents of Marxian economics, particularly in academia, distinguish it from Marxism as a political ideology, arguing that Marx's approach to understanding the economy is intellectually valuable per se, independent of Marx's advocacy for revolutionary socialism or the inevitability of proletarian revolution.[1][2] It does not lean entirely upon the work of Marx and other widely known Marxists (Lenin, Trotsky, etc.), but may draw from a range of Marxist and non-Marxist sources. His work is seen as the basis for a viable analytic framework and an alternative to more conventional neoclassical economics.
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[edit] Marx and classical economics
Marx's economics took as its starting point the work of the best-known economists of his day, the British classical economists. Among these economists were Adam Smith, Thomas Malthus, and David Ricardo.
Smith, in The Wealth of Nations, argued that the most important characteristic of a market economy was that it permitted a rapid growth in productive abilities. Smith claimed that a growing market stimulated a greater "division of labor" (i.e., specialization of businesses and/or workers) and this, in turn, led to greater productivity. Although Smith generally said little about laborers, he did note that an increased division of labor could at some point cause harm[citation needed] to those whose jobs became narrower and narrower as the division of labor expanded.
Marx followed Smith by claiming that the most important (and perhaps only) beneficial economic consequence of capitalism was a rapid growth in productivity abilities. Marx also expanded greatly on the notion that laborers could come to harm as capitalism became more productive.
Additionally, in Theories of Surplus Value, Marx noted, "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 labour—agricultural labour —that creates surplus-value....But to Adam Smith, it is general social labour—no matter in what use-values it manifests itself—the mere quantity of necessary labour, 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 labour, appropriated by the owners of the material conditions of labour in the exchange with living labour."
Malthus' claim, in "An Essay on the Principle of Population", that population growth was the primary cause of subsistence level wages for laborers provoked Marx to develop an alternative theory of wage determination. Whereas Malthus presented an ahistorical theory of population growth, Marx offered a theory of how a relative surplus population in capitalism tended to push wages to subsistence levels. Marx saw this relative surplus population as coming from economic causes and not from biological causes (as in Malthus). This economic-based theory of surplus population is often labeled as Marx's theory of the reserve army of labour.
Ricardo developed a theory of distribution within capitalism, that is, a theory of how the output of society is distributed to classes within society. The most mature version of his theory, presented in On the Principles of Political Economy and Taxation, was based on a labor theory of value in which the value of any produced object is equal to the labor embodied in the objected. (Adam Smith also presented a labor theory of value but it was only incompletely realized.) Also notable in Ricardo's economic theory was that profit was a deduction from society's output and that wages and profit were inversely related: an increase in profit came at the expense of a reduction in wages.
Marx built much of the formal economic analysis found in Capital on Ricardo's theory of the economy.
[edit] Marx's economic theories
Marx's major work on political economy was Capital: A Critique of Political Economy (better known by the German title Das Kapital), a three-volume work, of which only the first volume was published in his lifetime (the others were produced by Engels from Marx's notes). Marx wrote other treatises on economics: Critique of Political Economy, one of his early works, was mostly incorporated into Capital, especially the beginning of Volume I. Marx's notes made in preparing to write Capital were published years later under the title Grundrisse.
Marx begins his analysis of capitalism with an analysis of the commodity. The first sentence of Capital, Volume I states: "The wealth of those societies in which the capitalist mode of production prevails, presents itself as 'an immense accumulation of commodities,' its unit being a single commodity."
Under the labour theory of value, the direct value of a commodity stems solely from the socially necessary labour time invested in it. But commodities also have a use value (that is, the direct utility gained from an item) and an exchange value (roughly equivalent to its market price, though Marxian economics would measure it in labour time). For example, the use value of a carrot lies in eating it and no longer being hungry, while its exchange value might be found in the quantity of gold (whose true value also lies in the labour which extracted it) which it could be sold for.
However, capitalists do not pay workers the full value of the commodities they produce. The gap between the value a worker produces and his or her wages are a form of unpaid labour, known as surplus value.
Moreover, Marx notes that markets tend to obscure the social relationships and processes of production, a phenomenon he termed commodity fetishism. Consumers see a commodity only in market terms. In looking to obtain something as private property, they consider only its exchange value, rather than its labour value.
[edit] Criticisms
V. K. Dmitriev, writing in 1898,[3] Ladislaus von Bortkiewicz, writing in 1906-07,[4] and subsequent critics have alleged that Marx's value theory 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.[5] Likewise, Marx's law of the tendency of the rate of profit to fall says that labor-saving technological changes tend to lower the economy-wide rate of profit. However, the corrected version of this law — Okishio's theorem — implies that such technological changes tend to raise the rate of profit.[6]
The inconsistency allegations have been a prominent feature of Marxian economics and the debate surrounding it since the 1970s.[7] Andrew Kliman argues that, since internally inconsistent theories cannot possibly be right, the inconsistency charges serve to legitimate the suppression of Marx's critique of political economy and current-day research based upon it, as well as the correction of Marx's alleged inconsistencies.[8]
Critics who have alleged that Marx has been proved internally inconsistent include former and current Marxian and/or Sraffian economists, such as Paul Sweezy,[9] Nobuo Okishio,[10] Ian Steedman,[11] John Roemer,[12] Gary Mongiovi,[13] and David Laibman[14], who propose that the field be grounded in their correct versions of Marxian economics instead of in Marx's critique of political economy in the original form in which he presented and developed it in Capital.[15]
Proponents of the Temporal Single System Interpretation (TSSI) of Marx's value theory claim that the supposed inconsistencies are actually the result of misinterpretation; they argue that when Marx's theory is understood as "temporal" and "single-system," the alleged internal inconsistencies disappear. In a recent survey of the debate, a proponent of the TSSI concludes that "the proofs of inconsistency are no longer defended; the entire case against Marx has been reduced to the interpretive issue."[16]
[edit] Austrian critics
The internal inconsistency allegations are distinct from the critique put forward by Eugen von Böhm-Bawerk, a prominent member of the Austrian School. Allegations of a "transformation problem" in Marx's argument that all profit under capitalism derives from the exploitation of workers may refer either to Bortkiewicz's allegation of an internal inconsistency in Chapter 9 of Volume III of Das Kapital or to Böhm-Bawerk's charge that the price theories of Volumes I and III are incompatible.
The Austrian School was the first group of liberal economists to systematically challenge Marxian economics. This was partly a reaction to the Methodenstreit, an attack on the Hegelian doctrines of the Historical School. Some Marxist authors have attempted to portray the Austrian school as a "bourgeois reaction" to Marx[citation needed] However, opponents argue that it could not have been a reaction, since Carl Menger wrote his Principles of Economics at almost the same time as Marx was completing Das Kapital.
The Austrian economists were, however, the first to clash directly with Marxism, since both dealt with such subjects as money, capital, business cycles, and economic processes. Böhm-Bawerk wrote extensive critiques of Marx in the 1880s and 1890s, and several prominent Marxists, including Rudolf Hilferding, attended Böhm-Bawerk's seminar in 1905-1906.
In contrast, the classical economists had shown little interest in such topics, and many of them did not even gain familiarity with Marx's ideas until well into the twentieth century[citation needed].
[edit] Current theorizing in Marxian economics
Marxian economics has been built upon by many others, beginning almost at the moment of Marx's death. The second and third volumes of Das Kapital were edited by his close associate Friedrich Engels, based on Marx's notes. Marx's Theories of Surplus value was edited by Karl Kautsky. Some economists draw on, or have drawn on, Marxian economics together with other theoretical perspectives, in an eclectic manner, or in order to synthesize them. Those who refer to non-mainstream, or heterodox, economics as a single entity often include Marxian economics within it.
Colleges and universities that either offer one or more courses on Marxian economics, or that teach one or more economics courses on other topics from a perpective that they designate as Marxian or Marxist, include the University of Massachusetts Amherst, University of Massachusetts Boston, University of Maine, New School University, University of Missouri–Kansas City, Colorado State University, University of Leeds, University of Manchester, School of Oriental and African Studies, University of Maastricht, and University of Bremen.[17]
English-language journals include Capital & Class, Historical Materialism, Monthly Review, and Rethinking Marxism.
[edit] See also
- Das Kapital
- Capitalist mode of production
- List of marxian economists
- Capital accumulation
- Surplus value
- Surplus product
- Surplus labour
- Labour power
- Law of value
- Unequal exchange
- Value product
- Productive and unproductive labour
- Socialist economics
[edit] Footnotes
- ^ The Neo-Marxian Schools. The New School. Retrieved on 2007-08-23.
- ^ Munro, John. Some Basic Principles of Marxian Economics. University of Toronto. Retrieved on 2007-08-23.
- ^ V. K. Dmitriev, 1974 (1898), Economic Essays on Value, Competition and Utility. Cambridge: Cambridge Univ. Press
- ^ Ladislaus von Bortkiewicz, 1952 (1906–1907), "Value and Price in the Marxian System", International Economic Papers 2, 5–60; Ladislaus von Bortkiewicz, 1984 (1907), "On the Correction of Marx’s Fundamental Theoretical Construction in the Third Volume of Capital". In Eugen von Böhm-Bawerk 1984 (1896), Karl Marx and the Close of his System, Philadelphia: Orion Editions.
- ^ M. C. Howard and J. E. King. (1992) A History of Marxian Economics: Volume II, 1929–1990, chapter 12, sect. III. Princeton, NJ: Princeton Univ. Press.
- ^ M. C. Howard and J. E. King. (1992) A History of Marxian Economics: Volume II, 1929–1990, chapter 7, sects. II-IV. Princeton, NJ: Princeton Univ. Press.
- ^ See M. C. Howard and J. E. King, 1992, A History of Marxian Economics: Volume II, 1929–1990. Princeton, NJ: Princeton Univ. Press.
- ^ Kliman states that "Marx’s value theory would be necessarily wrong if it were internally inconsistent. Internally inconsistent theories may be appealing, intuitively plausible and even obvious, and consistent with all available empirical evidence––but they cannot be right. It is necessary to reject them or correct them. Thus the alleged proofs of inconsistency trump all other considerations, disqualifying Marx’s theory at the starting gate. By doing so, they provide the principal justification for the suppression of this theory as well as the suppression of, and the denial of resources needed to carry out, present-day research based upon it. This greatly inhibits its further development. So does the very charge of inconsistency. What person of intellectual integrity would want to join a research program founded on (what she believes to be) a theory that is internally inconsistent and therefore false?" (Andrew Kliman, Reclaiming Marx's "Capital": A Refutation of the Myth of Inconsistency, Lanham, MD: Lexington Books, 2007, p. 3, emphasis in original). The connection between the inconsistency allegations and the lack of study of Marx’s theories was argued further by John Cassidy ("The Return of Karl Marx," The New Yorker, Oct. 20 & 27, 1997, p. 252): "His mathematical model of the economy, which depended on the idea that labor is the source of all value, was riven with internal inconsistencies and is rarely studied these days."
- ^ "Only one conclusion is possible, namely, that the Marxian method of transformation [of commodity values into prices of production] is logically unsatisfactory." Paul M. Sweezy, 1970 (1942), The Theory of Capitalist Development, p. 15. New York: Modern Reader Paperbacks.
- ^ Nobuo Okishio, 1961, "Technical Changes and the Rate of Profit," Kobe University Economic Review 7, pp. 85–99.
- ^ "[P]hysical quantities ... suffice to determine the rate of profit (and the associated prices of production) .... [I]t follows that value magnitudes are, at best, redundant in the determination of the rate of profit (and prices of production)." "Marx’s value reasoning––hardly a peripheral aspect of his work––must therefore be abandoned, in the interest of developing a coherent materialist theory of capitalism." Ian Steedman, 1977, Marx after Sraffa, p. 202, p. 207. London: New Left Books
- ^ "[The falling-rate-of-profit] position is rebutted in Chapter 5 by a theorem which states that ... competitive innovations result in a rising rate of profit. There seems to be no hope for a theory of the falling rate of profit within the strict confines of the environment that Marx suggested as relevant." John Roemer, Analytical Foundations of Marxian Economic Theory, p. 12. Cambridge: Cambridge Univ. Press, 1981.
- ^ "Marx did make a number of errors in elaborating his theory of value and the profit rate .... [H]is would-be Temporal Single System defenders ... camouflage Marx’s errors." "Marx’s value analysis does indeed contain errors." Gary Mongiovi, 2002, "Vulgar Economy in Marxian Garb: A critique of temporal single-system Marxism," Review of Radical Political Economics 34:4, p. 393 (abstract)
- ^ "An Error II is an inconsistency, whose removal through development of the theory leaves the foundations of the theory intact. Now I believe that Marx left us with a few Errors II." David Laibman, "Rhetoric and Substance in Value Theory" in Alan Freeman, Andrew Kliman, and Julian Wells (eds.), The New Value Controversy and the Foundations of Economics, Cheltenham, UK: Edward Elgar, 2004, p. 17
- ^ See Andrew Kliman, Reclaiming Marx's "Capital": A Refutation of the Myth of Inconsistency, esp. p. 210-211.
- ^ Andrew Kliman, Reclaiming Marx's "Capital", Lanham, MD: Lexington Books, p. 208, emphases in original.
- ^ Schools. HETecon.com. Retrieved on: August 23, 2007.
[edit] References
- J.E. Roemer (1987). "Marxian value analysis," The New Palgrave: A Dictionary of Economics, v. 3, pp. 383-87.
- Andrew Glyn (1987). "Marxist economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 390-95.
- Lenny Flank, 'Contradictions of Capitalism: An Introduction to Marxist Economics', St Petersburg, Florida: Red and Black Publishers, 2007. ISBN 978-1-979-1813-9-9.
- Thomas T. Sekine, The Dialectic of Capital. A Study of the Inner Logic of Capitalism, 2 volumes (preliminary edition), Tokyo 1986; ISBN 4-924750-44-9 (vol. 1), ISBN 4-924750-34-4 (vol. 2).
