Issues in Capitalism: Marx versus Keynes
Andrew N. Liburd-Noble
SOCS 1349: Introduction to Business in Society
Prof. Patrick Clark
December 5, 2023
Capitalism is an economic and political system where trade and production
are relied upon by individuals. This is the type of system that is set in Canada and
most of Western society. there have been many economists who have had
varying opinions about the capitalistic society, notably, there have been two
economists who have had a tremendous impact on our perspective about
capitalism as a society, those people are Karl Heinrich Marx and John Maynard
Keynes. These two people have created two different ways of looking at society,
Marxism and Keynesian economics. Both views have an idea of what benefits the
economy best and how to tackle various problems going on in society, such as
unemployment, wage gaps between the upper and lower class, and the
involvement of the government in the market. These are all valid issues and
questions in society that need to be addressed with some type of action, and both
views have some sort of method of dealing with these affairs. In my opinion, the
ways of dealing with these issues from each perspective have benefits as well as
disadvantages, but I seem to agree with the ideas of Keynes more frequently.
When thinking about the population, and some of the problems that need
to be addressed, unemployment is an increasing problem going on in our society
that seems to increasingly be getting worse. That is why economists have and are
continuing to try and come up with a solution that can decrease unemployment
percentages and will eventually eliminate unemployment. With the help of
economists like Marx and Keynes, there have been many ways of combating
unemployment within the general population. The way society is set up is so
there are individuals who own corporations and firms that provide services and
goods for people, this system has its perks as well as problems that contribute to
unemployment in society. When trying to understand how to solve this issue we
can get a greater understanding of how to come up with solutions through the
lens of Marx and Keynes, and to come up with the best way to suppress
unemployment. When it comes to how Marxists look at the problem, they don’t
see it as much of a hindrance in our society, but more as a motivator to help keep
the urge for getting people in the market, and be employed, “In short, generate
unemployment and you will curb workers’ powers of resistance” the fewer people
in a workforce who want to rebel and change the status quo, the more people
who will conform and a create a constant supply of workers for firms and
corporations, creating more dedicated members of the workforce, “By fostering
job insecurity in these ways, a new political climate was engineered, one designed
to buttress market discipline” (McNally, D. 2011, p. 115). Compared to Keynes
who would think that unemployment is something that needs to be dealt with
through some means. For Keynes, the best solution was for the government to
intervene in the market, especially unemployment in markets and society. The
best way to get people jobs is to create them. Through government loans and
funding of private corporations such as grants and loans, construction of
government buildings and areas, in general, an increase in government spending
will decrease the rate of unemployment. The government ended up using these
methods of market stimulation to help increase the supply of jobs, “In the
Keynesian diagnosis, the cause of unemployment was the insufficiency of
demand. Hence any redistribution of income downwards to people who consume
most of it and any expansion of government spending will stimulate production
and reduce unemployment” (Przeworski, A. 1985, p. 209). This is the way I think
will always work best in the effort to decrease unemployment. Even though, using
a fear-based incentive for loss of job and income may be effective in some
situations, for the most part, governments stepping in and creating jobs for the
populations will be more effective and efficient for decreasing unemployment.
Within a capitalistic society, another issue that causes trouble for workers is
the drastic degree of income between the wealthy and poor. Especially for the
poverty-stricken people in society, the difference in income is a rising concern due
to the pricing of goods and services seemingly rising each year. This becomes an
even more glaring and obvious concern when you see those with huge amounts
of wealth are only getting wealthier, “The richest families in the U.S. have
experienced greater gains in wealth than other families in recent decades, a trend
that reinforces the growing concentration of financial resources at the top”
(Horowitz, J. 2020). Those with very little who were already struggling, now see
the money they own lose more and more of its value until they can no longer
afford to live within society. Therefore, looking at this problem through the lens
of Marx and Keynes we come up with different solutions and ideas about
decreasing the gap between the rich and poor. Keynes believes that the best way
for society to handle the wage gap problem is to have the government intervene.
One way the government influences the spread of wealth is through taxation, by
creating higher tax rates for people with a higher income, and a lower tax rate for
those with lower income, this and anything that increases the wage or benefits
for workers like putting a price floor like minimum wage or the government
supplying some sort of payment to those who are struggling to afford necessities,
“Increases in wages and transfers as well as "welfare" spending appear, therefore,
as hindrances. So does taxation of the wealthy” (Przeworski, A. 1985, p.212). In
contrast, how Marx might view the topic, he would believe that when it comes to
who owns the wealth and how the gap between the two is getting bigger in a
capitalistic society, those with little value end up getting used by those with lots
of wealth, and it is because of unfair treatment the income is not evenly
distributed. Discriminations with certain groups of people such as people of
colour, women, homosexuals, religion, and many more different groups of people
are not treated the same. They believe due to these prejudiced beliefs, they are
not being treated the same in the workforce which in turn leads to less income for
these communities and creates a further reliance on loans, which creates
unpayable dept, “The deep structural issue, in other words, has to do with the
dialectics of race and class in a neoliberal capitalism increasingly reliant on debtfuelled spending” (McNally, D. 2011, p. 125). When it comes to viewing the gap
between the wealthy and the poor, I seem to side with Marx and Marxism more
on this problem. Yet I still do agree that the government relying on some sort of
aid for the poor and a higher tax for the rich will even out the incomes, I believe
that there will be a lesser gap in income if society could get rid of discrimination.
Nevertheless, when it comes to looking at capitalism through the lens of
Marx and Keynes the ideals and view, I side with more are Keynes. Even though
there are some benefits from the point of view of a Marxist, about discrimination
in society causing drastic differences in wealth, I believe that the government
should be involved in the market to regulate and aid in times of need. Without
government involvement, it would cause unemployment and an exponential
increase in the gap in income between the wealthy and the poverty-stricken.
References:
McNally, D. (2011). Chapter 5- Debt, Discipline, and Dispossession: Race, Class, and the
Global Slump. In Global Slump(113-145). Fernwood Press.
Przeworski, A. (1985). Chapter 6- Democratic Capitalism at a Crossroads. In Capitalism
and Social Democracy (205-221). Cambridge University Press.
Horowitz, J. (2020). Most Americans Say there is Too Moch Economic Inequality in the
U.S., but Fewer Than Half Call It a Top Priority: 1. Trends in Income and Wealt Inequity. Pew
Research Center.
https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/