Marxism

D. Allen DaltonECON 325 – Radical Economics

Boise State UniversityFall 2011

Karl Marx(1818-1883)

Friedrich Engels (1820-1895)

The Place of Marx in HET• As a social philosopher, Marx’s place

in the history of economic thought is second, if to anyone, only to Adam Smith.

• As an economist, Marx’s contributions to modern economic analysis are minimal.– Vast literature on “Marxism” – Difficulty of presentation; idiosyncratic

vocabulary; foreign philosophical and economic frameworks

Marx’s Life• Born May 5, 1818 to ethnically Jewish lawyer

Heinrich Marx– (née Herschel Mordechai)– convert to Prussian state religion of Lutheranism, though

his philosophy was liberal deism• Studied at Universities of Bonn and Berlin

– Heavily subsidized by his father– Associates with Young (or Left) Hegelians

• Doctoral thesis accepted at University of Jena (1841)

• 1843, married Jenny von Westphalen, daughter of prominent Prussian civil servant

• Undertakes career in journalism– Emigrated to Paris in 1843 to escape Prussian

censorship, seeks out Friedrich Engels after reading Engels’ “Outlines of a Critique of Political Economy”

Marx’s Life– Expelled from France in 1845, moved to Belgium;

expelled from Belgium during 1848 Revolution, returned to Prussia; expelled from Prussia in 1849, took up residence in London

– Becomes foreign correspondent of New York Daily Tribune in 1851

• Remainder of life spent working on his economic and philosophical treatises under the subsidy of his family and friends, especially Engels– Marx’s “income” in 1863 would have put him in the top

5% of British income earners; yet he was throughout his life battling creditors

• Delegate to First International at London in 1864 as representative of German workers– disagreement with Bakunin splits International and leads

to move of General Council from London to New York

Marx’s Works• Economic and Philosophical Manuscripts (c.

1844, pub. 1932)• Critique of Hegel’s Philosophy of Right

(1843)• The Poverty of Philosophy (1847)• The Manifesto of the Communist Party

(1848)• Contribution to a Critique of Political

Economy (1859, pub. 1941)• Capital: Critique of political economy,

(1867, 1885, 1894)• Theories of Surplus Value, (1862, pub.

1905-10)

Understanding Marx• G.W.F. Hegel, The Phenomenology of

Mind (1807)– Idealist philosopher, tradition of Plato– Traces the development of Mind from its

first appearance as conscious individual minds to the status of universal Mind, free and fully self-conscious• Historically necessary process determined

by the logic of contradictions• As individual minds, Mind is “alienated” from

itself

Understanding Marx• Young Hegelians put a “materialist” spin

on this argument– Mind becomes human self-consciousness– Liberation of humanity becomes the goal of

history

• Ludwig Feuerbach was the first to advance the Young Hegelian cause– The Essence of Christianity (1841) – Religion is a form of alienation; what we

believe of God is merely humans projecting there attributes in purified form onto an “other”, thereby reducing ourselves

Understanding Marx• Marx adopts Feuerbach’s program but

sees in commercial society the chief form of human alienation:“Money is the universal, self-constituted

value of all things. Hence it has robbed the whole world, the human world as well as nature, of its proper value. Money is the alienated essence of man’s labor and life, and this alien essence dominates him as he worships it.”

- On the Jewish Question (1843)

Understanding Marx• Private property, competition, and greed

are historically contingent• “You are what you produce” – free

productive activity as the essence of human life

• “Alienated labor and alienated humanity” – under both slavery and wage-employment workers do not control what they produce and production (in accumulated form) is used against them

• The role of the proletariat – property-less, their only attribute is their humanity

Understanding Marx• The goal of history is the liberation

of humanity; the elevation from its alienated status under the regime of private property to the enjoyment of true freedom under communism

Marxist Economics• Purpose of Capital is to understand

the “laws of motion” of the capitalist mode of production.

• The capitalist mode of production consists of laborers creating value but being employed by capitalists; labor has become an “alienated” commodity.– In a capitalist society, the objective is to

produce surplus exchange value (M – C – M’); in contrast, simple commodity production (C – M – C) is governed by use value.

Marxist Economics• Labor-power is the source of all

value.• Capital is “stored-up” labor power.• As a consequence of the workings

of the capitalist mode of production, the relative situation of laborers to capitalists will deteriorate.

• Intermittent “crises” exhibit the contradictions of capitalism and lead to revolution.

Marxist Economics• Does Marx have a labor theory of value?• What is the nature of the contradictions

of capitalism?• What is the nature of economic crises?• Does the rate of profit fall over time

under capitalism?• What is the nature of the increasing

misery of the working class?• Will capitalism collapse or be

overthrown?

Marxist Economics• The central problem of capitalism is an

allocation problem – the allocation of labor-power to the production of commodities.– Those who demand are not those who produce;

production is for the market and not for use.

• The “law of value” is the process by which the economy allocates labor-power to the components of total output.– This process is an undirected, competitive

process of price and quantity adjustments in different sectors; in this process capital is directed and redirected to different ventures in search of profits.

Marxist Economics• Disproportionality in production of

different commodities lead to crises.– Inherent in capitalism because production is

divorced from demand (producers can’t accurately forecast consumers wants).

– Critical of Malthus, Sismondi, Say and Ricardo– Financial panic, increased money demand

and credit contraction as result of selling at loss leads to spreading of crisis to entire economy. Prices correct imbalances but in ways that lead, rather than prevent crises.

• Problem of growing sectors; why is credit collapse general?

– Ever-widening (not deepening crises) increases size of impoverished proletariat.

Evaluating Marx• If he held a labor theory of value,

Marx failed to solve the transformation problem.

• Fundamental error: special nature of labor as source of value and relation to standards of living.– APL > w.

• As an economist he is a “minor Post-Ricardian.”

Evaluating Marx

• It is Marxist political philosophy – and his conception of freedom – that continues to captivate people.

• Liberal conception of freedom – absence of direct external interference from others

• Marxist conception of freedom –control over the outcomes of

social processes

Evaluating Marx

Singer on Marx• Marx’s lasting contributions

– The collective irrationality of market processes•Roads, cars and a bus

– Flexibility of human nature in relation to social and economic relations

Evaluating Marx

Singer on Marx• Material abundance under a

rationally planned economy• Marx v. Bakunin on human nature

“Marx saw that capitalism is a wasteful, irrational system which controls us when we should be controlling it. This insight is still valid; but we can now see that the construction of a free and equal society is a more difficult task than Marx realized.”

- Peter Singer, Marx, p.100