Marxism
D. Allen Dalton
ECON 325 – Radical Economics
Boise State University
Fall 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. 190510)
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 laborpower 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 PostRicardian.”
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