Posts Tagged ‘socialism’

In this post, I continue the draft of sections of my forthcoming book, “Marxian Economics: An Introduction.” This, like the previous four posts (hereherehere, and here), is written to serve as the basis for chapter 1, Marxian Economics Today. The text of this post should pretty much finish up the draft of the first chapter.

Is Marxian Economics Still Relevant?

It’s an obvious question for those of us living now, in the twenty-first century. Is Marxian economics still relevant?

After all, Marx wrote Capital in the middle of the nineteenth century, when both capitalism and mainstream economics were quite different from what they are today.

Back in the mid-1800s, capitalism was a relatively new way of organizing economic and social life; having emerged first in Great Britain, it still encompassed a small part of the world. As Marx looked around him, he saw both the tremendous progress and the horrendous conditions of the Industrial Revolution. The introduction of steam power, gigantic factories, growing cities, and increased production. And thus great wealth, at least on the part of the small group of successful merchants and industrial capitalists at the top of the economic pyramid. But also squalor, malnutrition, low wages, and long working hours for factory workers—men, women, and children.

Radically new ideas both prepared the ground for, and emerged as a result of, the emergence and spread of capitalism. New freedoms, such as the possibility of buying and selling people’s ability to work, and the consequent abolition of slavery, the ownership of human chattel. New forms of political representation, like democracy, which entailed the abolition (or at least the curtailing) of monarchies. And new sciences, including evolutionary biology, first elaborated in Charles Darwin’s On the Origin of Species (or, more completely, On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life).

The world today is, of course, quite different. We take for granted many of the ideas that were once considered radically new. While other ideas, which were barely even imagined at the time, are today considered novel: demands for a guaranteed income, the extension of democracy beyond politics to workplaces, and synthetic biology.

As for capitalism, in some parts of the world, it would be immediately recognizable by nineteenth-century observers. Giant steel mills, workers denied the right to form labor unions, polluted living environments, minds and bodies damaged by demanding and dangerous jobs. Elsewhere, capitalism has changed in many ways, both large and small. Cutting-edge technologies in the twenty-first century include robotics, extended reality, and artificial intelligence. Production of many goods and services is dispersed around the world instead of being concentrated in single factories. And a much larger share of production and of the world’s population—although certainly not all—has become part of capitalism.

And yet. . .The gap between a small group at the top and everyone else is increasing. Workers still labor much longer, even utilizing much more productive technologies, than many had predicted. Squalor, hunger, and poverty are still the condition of many in the world today—to which we need to add the dangers created by the looming climate crisis.

Throughout this book, we will therefore have to ask, is the kind of critique of capitalism that Marx pioneered more than 150 years ago relevant, at least in board outlines, to contemporary economies? And, following on that, in what ways have Marxian economists changed and extended their theory to account for the many changes the world has undergone since the mid-1800s?

Much the same question holds for the Marxian critique of mainstream economics. In what ways might Marx’s original critique of classical political economy be relevant to contemporary mainstream—neoclassical and Keynesian—economics?

As will see in the next chapter, Smith and the other classical political economists made five major claims about capitalism, which Marx in his own writings then criticized. They are, in no particular order, the following:

  1. Capitalism produces more wealth, and thus higher levels of economic development.
  2. Capitalism is characterized by stable growth.
  3. Everybody gets what they deserve within capitalism.
  4. Capitalists are heroes.
  5. Capitalism represents the end of history.

We’ve already touched on the first three in previous sections of this chapter, and we will return to them in some detail in the remainder of the book. For example, capitalism produces more wealth but, Marx argues, it only does so on the basis of class exploitation. Capitalism is inherently unstable because of the private appropriation and distribution of the surplus. And, even if commodities are bought and sold at their values, capitalism is based on a fundamental class injustice, whereby the producers of the surplus are excluded from participating in decisions about that surplus.

What about the other two claims? Capitalists are celebrated but only if they accumulate more capital and thus create the conditions for more wealth and more employment. If they don’t, and that is often the case, then there’s nothing heroic about their activities. As for capitalism representing the end of history—the problem is, it still rests on class exploitation, not unlike feudalism, slavery, and other societies in which workers produce, but do not participate in appropriating, the surplus. That still leaves the possibility of creating an economy without that class injustice.

Those, in short, are Marx’s main criticisms of classical political economy.

Contemporary mainstream economists, as is turns out, makes all five of those claims. They don’t do so in the same manner as the classicals but they make them nonetheless.

  1. Capitalism produces more wealth, and thus higher levels of economic development—and it’s now measured in terms of Gross Domestic Product and GDP per capita.
  2. Capitalism is characterized by stable growth—and the possibility of crises is not even included in contemporary mainstream models.
  3. Everybody gets what they deserve within capitalism—especially when, in the modern view, all “factors of production” receive their marginal contributions to production.
  4. Capitalists are heroes—to which modern mainstream economists add that everyone is a capitalist, since they have to decide how to rationally utilize their human capital.
  5. Capitalism is fundamentally different from previous ways of organizing economic and social life, such as feudalism and slavery—although in one crucial dimension it’s exactly the same: capitalists are just like feudal lords and slaveowners in appropriating the surplus produced by others.

So, while the language and methods of mainstream economics have changed since Marx’s time, many of Marx’s criticisms do seem to carry over to contemporary mainstream economics.

We will see, in the remainder of the book, just exactly how that works.

This Book

The other eight chapters of this book are designed to flesh out and explore in much more detail the issues raised in previous sections of this chapter.

Chapter 2, Marxian Economics Versus Mainstream Economics

The aim of this chapter is to explain how the Marxian critique of political economy has, from the very beginning, been a two-fold critique: a critique of mainstream economic theory and of capitalism, the economic system celebrated by mainstream economists. We will discuss the key differences between Marxian and mainstream approaches to economic analysis, both then and now.

Chapter 3, Toward a Critique of Political Economy

I do not presume that readers will have any background in Marxian economic and social theory. In this chapter, we discover where Marx’s critique of political economy came from—in British political economy, French socialism, and German philosophy—and how his ideas changed and developed in some of the key texts of the “early” Marxian tradition prior to writing Capital.

Chapter 4, Commodities and Money

In this chapter, I will present the material contained in the first three chapters of volume 1 of Capital, perhaps the most difficult and misinterpreted section of that book. Marx begins with the commodity, proceeds to discuss such topics as use-value, exchange-value, and value, presents the problem of “commodity fetishism,” and then introduces money.

Chapter 5, Surplus-Value and Exploitation

The goal of this chapter is to explain how Marx, starting with the presumption of equal exchange, ends up showing how capitalism is based on surplus-value and class exploitation.

Chapter 6, Distributions of Surplus-Value

According to Marx, once surplus-value is extracted from workers, it is then distributed to others for various uses: the “accumulation of capital,” the salaries of corporate executives, the financial sector, and so on. Herein are the origins of the theory of economic growth and the treatment of the role of instability and crises within capitalist economies, as well as the Marxian understanding of the distribution of income.

Chapter 7, Applications of Marxian Economics

How have Marxist concepts been applied to major trends, debates, and events in recent decades? In this chapter, we examine the ways Marxist thinkers, especially younger scholars and activists, have opened up and applied Marxian economics to the theory of the firm, imperialism and globalization, development in the Global South, the role of finance, systemic racism, gendered hierarchies, and the relationship between capitalist and noncapitalist economies in contemporary societies.

Chapter 8, Debates in and around Marxian Economics

Marxian economic theory has, of course, been discussed and debated from the very beginning—by both Marxian and mainstream economists. In this chapter, I present some of the key criticisms of Marxian economics by mainstream economists, focusing in particular on their rejection of the labor theory of value. I also explain some of the key debates among different schools of thought within the Marxian tradition and present their contributions to contemporary Marxian economics.

Chapter 9, Transitions to and from Capitalism

Much to the surprise of many students, Marx (and his frequent collaborator Engels) never presented a blueprint of socialism or communism, either in Capital or anywhere else. However, Marxian economics is based on a clear understanding that capitalism has both a historical beginning and a possible end. In this concluding chapter, I discuss how Marx and later generations of Marxian economists have analyzed both the transition to capitalism (e.g., from feudalism in Western Europe) and the transition to noncapitalism (in the contemporary world).

Before We Dive In

As I wrote above, this book is not written with a presumption that readers have any kind of background in Marxian economic and social theory. Much the same holds for mainstream economic theory. Perhaps some readers will have learned some Marx or mainstream economics in the course of their studies but, if not, everything they need to understand Marxian economics is presented in this book.

Here are some other issues I’d like readers to keep in mind as you work your way through this book.

As is often the case in theoretical debates, the same words often have different meanings. So, for example, the way Marx defines and uses such concepts as markets, value, labor, capital are quite different from what they mean in mainstream economics. To help you make sense of those differences, I have included a brief glossary of terms at the beginning of the book. You should feel free to turn back to it on a regular basis as you work your way through the remaining chapters. In Part 2 of the book (Chapters 4, 5, and 6), all concepts will be carefully defined, while using as little technical jargon as possible. I have also added a couple of technical appendices for readers who want to follow up on the discussion in the main text.

Since we’re dealing with economics, some technical language and illustrations are indispensable. I have kept them to a minimum but readers should be prepared for some statistical charts, a few equations, and a bit of algebra. I’ll pass on the best piece of advice I received as a student: when something doesn’t make sense immediately, be prepared to work it out with paper and pencil.

The context for Marx’s critique of political economy, written in the middle of the nineteenth century, is unfamiliar to many of us in the twenty-first century. How many of us today have read Hegel, after all? The necessary background will be covered later, in Chapters 2 and 3.

While Marx’s name has long been linked with socialism and communism, readers won’t find any kind of blueprint or detailed plan for either idea in Marx’s writings. Nor does any general—valid for all times and places—economic policy or political program follow from his work. That’s a topic we will return to in Chapter 9.

This book is prepared as a stand-alone introduction to Marxian economics. No other texts are necessary to understand the material in this book. However, I have added references (to specific works and chapters) in the event readers want to use this book as a companion text, as they read Capital and other writings by Marx.

Finally, while the book is aimed at students in economics (both undergraduate and post-graduate), it will also be relevant for and accessible to students in other disciplines—such as sociology, geography, history, and cultural studies. My fervent hope is it will also be useful to interested individuals who are not currently college and university students, because a clear and concise introduction to Marxian economics is relevant to their work and lives.

In this post, I continue the draft of sections of my forthcoming book, “Marxian Economics: An Introduction.” This, like the previous three posts (here, here, and here), is written to serve as the basis for chapter 1, Marxian Economics Today.

Why study Marxian economics?

One of the best reasons for studying Marxian economics is to understand all those criticisms—the criticisms of mainstream economic theory and the criticisms of capitalism.

Students of economics (and, really, all citizens in the world today) need to have an understanding of where those criticisms came from and what implications they have.

Marx certainly took those criticisms seriously. As he carried out his in-depth study of both the mainstream economic theory and of the capitalist system of his day, his work was influenced by the criticisms that had been developed before he even turned his attention to economics. And then, in turn, Marx’s critique of political economy has influenced generations of economists, students, and activists. While certainly not the only critical theory that can be found within the discipline of economics, Marxian economics has served as a touchstone for many of those theories, not to mention public debates about both economics and capitalism around the world.

Understanding both the broad outlines and the specific steps of Marxian economics is therefore crucial to making sense of all those debates.

Consider a contemporary example. On 26 February 2019, Alexandiria Ocasio-Cortez responded to Ivanka Trump’s attack on her idea of a living wage by explaining that “A living wage isn’t a gift, it’s a right. Workers are often paid far less than the value they create.”

While there’s no evidence that Ocasio-Cortez ever studied Marxian economics (or, for that matter, considers herself a Marxist), certainly the idea that within capitalism workers are often paid less than the value they produce resonates with Marxian criticisms of both mainstream economic theory and capitalism.

Mainstream economists, as any student of contemporary mainstream microeconomics is aware, generally presume that workers’ wages are equal to their marginal contributions to production. The same is true of capitalists’ profits and landlords’ rents. Everyone within a market system, mainstream economists argue (after a great deal of theoretical work, involving lots of equations and graphs), gets what they deserve. Therefore, since capitalism delivers “just deserts,” it should be considered fair.

Not so quick, says Ocasio-Cortez, just like Marx decades before her. If workers are paid less than the value they create, then they are “exploited”—that is, they produce a surplus that goes not to them, but to their employers. And while Marxian economists argue a living wage wouldn’t by itself eliminate that exploitation, it would certainly lessen it and improve workers’ standard of living.

Much the same holds for alternatives to capitalism. They often take their name from some version of socialism (and sometimes communism). That’s why Ocasio-Cortez calls herself a “democratic socialist.” It’s also why so many people these days, especially young people, have positive views of socialism—even more so than capitalism. That represents a big break both from mainstream economists and from their parents and grandparents.

Moreover, many ideas and policies that were once labeled (and then quickly dismissed) as “Marxist” or “socialist” are now accepted parts of the contemporary economic and social landscape. Progressive income taxes, a social security system for retirees, public healthcare and health insurance, minimum wages, labor unions for workers in private industry and public services—all were at one time derided, and now they form part of the common sense of how we think about economic and social policy. Much the same kind of change may now be taking place—for example, with the Green New Deal and the links between contemporary capitalism and the history of slavery.

Marxian Economics Today

So, it’s a fascinating time to be studying Marxian economics. It’s a way of learning some of the main criticisms of mainstream economic theory and of capitalism, now as in the past. It also serves to lift the taboos and learn that there are in fact alternatives to how economics is often taught and used to celebrate the status quo and deny the possibility of other ways of organizing economic and social life.

In the most general sense, studying Marxian economics is a path to learn what it means to be an intellectual. Within modernity, intellectuals are necessarily critical thinkers. Whether professors in colleges and universities or people who work in research units of enterprises or government offices, or really anyone who has to think and make decisions on or off the job, as intellectuals, they have to follow ideas wherever they might go. That means not being afraid of the conclusions they reach or of conflict with the powers that be.

That tradition of critical thinking is in fact what animated the work of Marx (along with Engels). He didn’t have a predetermined path. Instead, he worked his way through existing economic theory, carefully and critically engaging the process whereby mainstream economists produced their extreme conclusions. He then started from the same general premises they did—in a sense, offering mainstream economists their strongest possible case—and showed how it was simply impossible for capitalism to fulfill its stated promises.

For example, capitalism holds up “just deserts” as an ideal—everybody gets what they deserve—but it actually means that most people are forced to surrender the surplus they create to their employers, who are allowed to either keep it (and do with it what they want) or distribute it to still others (the tiny group at the top that manages the way those enterprises operate). Capitalism also pledges stable growth and full employment but then, precisely because of that private control over the surplus, regularly delivers boom-and-bust cycles and throws millions out of work.

So, Marx, following his critical procedure, arrived at quite different conclusions—conclusions that were at odds both with those of mainstream economics and of capitalism itself. And then he kept going—with more reading and more thinking and more political activity. He established some initial ideas, threads that were then picked up and extended by other Marxian economists, right on down to the present.

The implication, of course, is Marx didn’t provide a settled theory, to be simplistically or dogmatically applied, but instead a tradition of critical thinking and action.

And, as we will see over the course of this book, the effects of his work have been felt not just in economics, but in many other academic disciplines, from sociology and anthropology through political science and cultural studies to philosophy and biology. In fact, one of the most famous and influential historians of the nineteenth century, whose books are read by thousands of college and university students around the world every year, is the British Marxist Eric Hobsbawm.

In this post, I continue the draft of sections of my forthcoming book, “Marxian Economics: An Introduction.” This, like the previous two posts, is for chapter 1, Marxian Economics Today.

Beyond the Mainstream

This is certainly not the first time people have looked beyond mainstream economics. There is a long history of criticisms of both mainstream economic theory and capitalism from the very beginning. Although students won’t have read about them in traditional economics textbooks.

Those texts are generally written with the presumption there’s only one economic theory and one economic system. The existence of Marxian economics opens up the debate, creating space for both multiple ways of thinking about economics and a variety of different economic systems.

Criticisms of Mainstream Economic Theory

In the history of economic thought, criticisms of the mainstream approach were formulated early on. Adam Smith, David Ricardo, and others (such as Jean-Baptiste Say, Thomas Robert Malthus, and John Stuart Mill) developed classical political economy in the late-eighteenth and early-nineteenth centuries, when the new economic system we now call capitalism was just getting off the ground—and almost immediately their approach was debated and challenged.

The classical political economists developed a labor theory of value to analyze the value of commodities, the goods and services that were bought and sold on markets. They utilized that labor theory of value to then argue that capitalism, based on increasing productivity and free international trade, would lead to the growth of industry and an increase in the wealth of nations.

The early critics of classical political economy included a wide variety of writers, especially in the United Kingdom and Western Europe, from Thomas Carlyle (an English Romantic who expressed his opposition to the market system, because it rewarded “salesmanship” and not hard work) and John Barton (a British Quaker who argued that the introduction of labor-saving machinery would permanently displace workers who would not be absorbed by other branches of industry) to Jean-Charles-Léonard Simonde de Sismondi (a Swiss historian who viewed capitalism as being detrimental to the interests of the poor and particularly prone to crisis brought about by an insufficient general demand for goods) and Thomas Hodgskin (an English socialist, critic of capitalism, and defender of both free trade and early trade unions).

In the middle of the nineteenth century, Marx (along with his friend and frequent collaborator Friedrich Engels) became a close student of classical political economy, developing his now-famous critique. During the course of his writings, he expressed both admiration for and opposition to the methods and the conclusions of the classical political economists. Over the course of this book, we will examine in considerable detail the ways Marx and later Marxian economists both built on and broke from classical political economy.

But the debate about early mainstream economics didn’t stop there.

In the late 1800s, a new school of economic thought, neoclassical economics was created, which represented both an extension of and break from classical political economy, although in a manner quite different from that of Marx. The early neoclassicals—such as William Stanley Jevons, Karl Menger, and Léon Walras—rejected the classicals’ labor theory of value, in favor of consumer utility, but accepted the classicals’ celebration of capitalism’s rising productivity and free trade. Hence, both the “neo” and the “classical” of their name.

The neoclassical economists’ basic argument was that, if all markets are allowed to operate freely, all consumers would maximize utility, all firms would maximize profits, and the economy as a whole would reach full employment. The “invisible hand” became the central thesis of contemporary mainstream microeconomics.

And it had general validity within mainstream economics until the Great Depression of the 1930s, when in the United States and elsewhere capitalist economies crashed and the unemployment rate soared to over 25 percent. Not surprisingly, the neoclassical orthodoxy was challenged at the time by many economists, including John Maynard Keynes. Keynes’s idea was that, because of fundamental uncertainty, especially on the part of investors, it was highly likely that capitalist economies would regularly operate at less-than-full employment. The need for the “visible hand” of government intervention to achieve full employment was the basis of the mainstream macroeconomics.

Attempts to combine neoclassical microeconomics and Keynesian macroeconomics—the invisible hand of markets and the visible hand of government fiscal and monetary policy—have defined mainstream economics ever since. That’s why, today, in most departments, mainstream economics is still taught in two separate courses, microeconomics and macroeconomics. And very few of them include any references to other approaches, especially Marxian economics.

Criticisms of Capitalism

Just as mainstream economic theory has been challenged from the very beginning, so has capitalism, the economic and social system celebrated by mainstream economists.

Perhaps the most famous early mass movement against capitalism was directed by the Luddites, a radical faction of English textile workers who in the early-nineteenth century attacked mills and destroyed textile machinery as a form of protest against low pay and harsh working conditions. While the name has come to be associated with anyone opposed to the use of new technologies, the actual historical movement objected to machinery that was introduced to speed up production and change the terms of negotiation in favor of employers and against workers.

Later, when workers were able to form labor unions—against a great deal of opposition from their employers and governments that backed those employers—they developed new strategies to challenge the ways they were considered and treated within capitalism. They often demanded higher pay, more secure employment, additional benefits, and even a say in how the enterprises in which they worked were managed. Depending on the situation, they set up picket lines, went on strike, occupied their workplaces, and organized unemployed workers. In many cases, while the workers were primarily concerning with meeting their daily needs, their activities were treated as attacks on capitalism itself.

That was certainly the case in the campaign for an eight-hour workday, which reached its peak in May 1886 in Haymarket Square in Chicago. It began as a peaceful rally to limit the length of the workday (at the time, workers were regularly required to labor much longer—often 10, 12, or more hours a day, without overtime pay) and then, when the police intervened to disperse the gathering, it became a full-on riot with a number of casualties. Ironically, in commemoration of the rally, 1 May has come to be celebrated around the world as Labor Day—except as it turns out, in the United States, where Labor Day was pushed back to the first Monday in September and no law has ever been passed to limit the length of the workday.

While many of the movements that have challenged capitalism have emerged from, been based on, or allied with workers and labor unions, many others have not. Students may recognize the names of some of the early utopian socialists and utopian experiments (although you probably read about them in courses other than economics): Charles Fourier, Henri de Saint-Simon, Robert Owen, and Henry George. Beginning in the nineteenth century, in the United States and around the world, groups of individuals (often, but not always, influenced by various strands of socialist thinking) formed “intentional communities” and cooperative societies. The Shakers (in the United States) and Mondragón (in Spain) are perhaps the best known.

And the list of critics of capitalism—both individuals and movements—goes on. It includes, of course, a wide variety of left-wing populist, socialist, and communist political parties (some of which have come to power, either through democratic elections or revolutions). A fundamental questioning of the capitalist system has also emerged from and influenced many other individuals, groups, and traditions, from civil rights leaders (such as Martin Luther King, Jr., in the United States) and religious groups (for example, the liberation theologians in Latin America) to independence movements (Angola and Mozambique are cases in point) and transnational protests (like Occupy Wall Street).

What can we conclude from this brief survey? From the very beginning, both mainstream economic thought and capitalism have brought forth their critical others.

EcgTgVvUMAAxg0q

Special mention

wasserman

10_103

Special mention

237596  pizarro-2

plagueinsurance915

Special mention

f3f0d01ba2a2b0ce0a8b01a6e76534c2  237048

2423cd46-077b-4274-84b1-9b08f8a8343e-031820ThompsonAirlinesWeb

Special mention

Toles  21_20

236629

Special mention

We_Are_Socialists_Now_Ted_Rall_1088x725-700x470  236644

KW1-2 KW2-2

KW3-2 KW4-2

KW5-1 KW6-1

Special mention

lubchansky-3