Background
Marxian economics is a framework for understanding the functioning of the economy based on the theories of Karl Marx, a 19th-century philosopher, economist, and sociologist. It provides critical insights into the nature of capitalist economies and proposes an eventual transition to a socialist economic system.
Historical Context
Karl Marx developed his economic theories during the Industrial Revolution when capitalism was transforming societies. His works, particularly Das Kapital and the Communist Manifesto, offered a critique of capitalism and predicted its eventual downfall due to inherent contradictions and exploitation mechanisms.
Definitions and Concepts
Marxian economics includes several key concepts:
- Labour Theory of Value: This theory suggests that the value of a commodity is determined by the socially necessary labor time invested in its production.
- Surplus Value: This concept involves the difference between the value produced by labor and the wages paid to labor, which capitalists appropriate.
- Exploitation: Marxian economics argues that capitalists exploit workers by appropriating surplus value. This idea has been extended to describe how more developed countries exploit less developed countries.
Major Analytical Frameworks
Classical Economics
Classical economists like Adam Smith and David Ricardo laid the groundwork for value theory, which Marxian economics critically builds upon, focusing on labor as the source of value creation.
Neoclassical Economics
Though fundamentally different, Marxian economics and Neoclassical economics both study market dynamics, but Marxian theory critiques Neoclassical assumptions about equilibrium and individual rationality.
Keynesian Economics
Both Keynesian and Marxian economics criticize classical economics but propose different remedies; Keynes focuses on governmental intervention while Marx proposes a transition beyond capitalism.
Marxian Economics
Central to Marxian economics is the idea of historical materialism, which analyzes societal changes as a result of economic activities and class struggles.
Institutional Economics
Institutional economics and Marxian economics intersect regarding the importance of power structures and institutions in defining economic outcomes.
Behavioral Economics
Behavioral economics provides insights into individual behaviors that can complement Marxian critiques of systemic exploitation and irrational aspects of capitalist systems.
Post-Keynesian Economics
Post-Keynesian economics, while generally more reformist than revolutionary, shares some criticisms of capitalist production found in Marxian economics.
Austrian Economics
Austrian economics’ focus on individualism and entrepreneurship sharply contrasts with Marxian emphasis on class struggle and exploitation.
Development Economics
Marxian theory has influenced Development Economics, especially discussions surrounding imperialism, neocolonialism, and global inequality.
Monetarism
Monetarism, with its focus on controlling the money supply to manage economic stability, is fundamentally at odds with the Marxian emphasis on inherent capitalist contradictions.
Comparative Analysis
The predictions made by Marxian economics about the inevitability of capitalist crises, boom-bust cycles, and socio-economic inequalities provide robust analytical tools for critiques of contemporary economic systems compared to more conservative or market-oriented theories.
Case Studies
Studies of economies that have undergone significant socialistic transformations, such as those in the former Soviet Union and China, demonstrate the application and challenges of Marxian economic principles.
Suggested Books for Further Studies
- Das Kapital by Karl Marx
- Value, Price and Profit by Karl Marx
- Marx’s Ecology: Materialism and Nature by John Bellamy Foster
- The Economic and Philosophic Manuscripts of 1844 by Karl Marx
- Understanding Capital by Duncan K. Foley
Related Terms with Definitions
- Capitalism: An economic system characterized by private ownership of the means of production, market-based allocation of resources, and profit-driven motives.
- Socialism: An economic system where the means of production are owned and managed collectively or by the state, aiming for equitable distribution of resources.
- Proletariat: The class of people who sell their labor power in exchange for wages in capitalist societies.
- Monopoly: The exclusive control by one company over an entire industry, which Marxian economics predicts as an outcome of capitalist competition.
- Under-consumption: A scenario where capitalist production exceeds the consumption capacity of the population, leading to economic crises according to Marxian theory.
