Marxian economics

• 1. Foundations And Origins

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  Karl Marx published the first volume of Das Kapital in 1867, marking a decisive break from classical political economy. This work emerged as a direct response to Adam Smith's The Wealth of Nations and David Ricardo's On the Principles of Political Economy and Taxation. Smith argued that market economies naturally corrected themselves over time through division of labor. Marx agreed with Smith on the productivity gains but diverged sharply on the consequences for workers. He noted that increased specialization could harm those whose jobs became narrower. Marx also challenged Thomas Malthus' claim in An Essay on the Principle of Population that population growth caused subsistence wages. Instead, Marx developed an economic theory where relative surplus populations pushed wages down due to capitalist structures rather than biological factors. Friedrich Engels later edited the second and third volumes of Das Kapital based on Marx's notes after his death. These unfinished manuscripts were eventually published by Engels to complete the critique of political economy.

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• 2. Labor Theory Mechanics

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  Marx defined value as socially necessary labor time invested in producing a commodity. A worker's wage covered only the necessary means of subsistence required to maintain their family and future work capacity. The rest of the working day constituted surplus labor pocketed by capitalists as profit. This gap between produced value and paid wages formed what Marx called surplus value. Markets tended to obscure these social relationships, creating what he termed commodity fetishism. People focused on commodities without recognizing the underlying labor processes. Concrete labor produced qualitatively different goods like farming or tailoring. Abstract labor represented general human labor power expenditure used to compare values quantitatively. Technological progress reduced individual item values while increasing total output per time period. This dynamic meant subsistence items became cheaper even if working hours remained constant. The ratio of capital spent on machinery versus labor was known as the composition of capital. Constant capital grew preponderant over variable capital as technical advancement increased business scale.

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• 3. Crisis And Cycles

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  Robert Heilbroner observed that no economist of Marx's time recognized crisis propensity as an inherent feature of capitalism. Future events indicated his prediction of successive boom and crash cycles. Richard Goodwin formalized this theory in 1967 with a paper titled A Growth Cycle published during the centenary year of Capital Volume I. Marx proposed resolving contradictions between private ownership and social production through socialization of means. He postulated rational management would replace chaotic market forces driven by sum of individual preferences. Economies of Marxist states in the 20th century exhibited chronic shortages and second economies for basic goods. János Kornai theorized these systems as shortage economies characterized by overcentralization. While some attributed problems to consistency with Marxian method, others noted measurable performance issues in planned economies. These economies employed product balances linear programming and input-output planning techniques. Dembinski argued Marx's determination of labor value helped explain their decline when accurately assessed. The tendency of profit rates to fall remained a subject of debate among economists throughout the 20th century.

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• 4. Dialectical Methodology

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  Marx adapted dialectics from Georg Wilhelm Friedrich Hegel to structure economic analysis. This method focused on relation and change rather than seeing the universe as separate stable objects. One component involved abstraction from undifferentiated data or organic whole systems. Another component was dialectical deduction of categories like commodity form money form and capital form. Marx used Hegel's notion that forms had to be systematically deduced instead of grasped outwardly. Historical periodization varied but essentially included primitive communism slave societies feudalism capitalism socialism and communism. Historians placed capitalism's beginning between about 1450 according to Sombart and sometime in the 17th century per Hobsbawm. Marx began Capital Volume I with discussion of commodities calling Chapter One simply Commodities. He stated wealth presented itself as an immense accumulation of commodities with unit being single commodity. Value manifested common substance whenever commodities exchanged for one another. Use-value represented usefulness while exchange-value showed proportion by which goods traded. Only human labor provided relevant commonality across all commodities produced by people.

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• 5. Internal Debates And Critiques

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  V. K. Dmitriev wrote Economic Essays on Value Competition and Utility in 1898 challenging internal consistency. Ladislaus von Bortkiewicz published Value and Price in the Marxian System during 1906, 07 claiming Marx drew conclusions not following premises. Critics alleged correcting errors meant aggregate price and profit no longer equaled value and surplus value. This called into question exploitation as sole source of profit. N. Okishio devised a theorem in 1961 showing profit rates must rise if capitalists pursued cost-cutting without wage increases. The inconsistency allegations became prominent feature since the 1970s. Paul Sweezy concluded transformation of values into prices logically unsatisfactory. Ian Steedman argued physical quantities sufficed to determine profit rates making value magnitudes redundant. John Roemer stated competitive innovations resulted in rising profit rates within strict environment Marx suggested. Proponents of temporal single-system interpretation claimed inconsistencies resulted from misinterpretation rather than theory flaws. Maurice Dobb remained orthodox Marxist economist associated with this current despite these challenges. Some economists like George Stigler and Robert Solow declared Marxist economics irrelevant to English-speaking economics having virtually no impact.

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• 6. Neo-Marxian Evolution

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  Terms neo-Marxian post-Marxian and radical political economics first appeared in 1970s and 1980s referring distinct tradition stemming from Marxian thought. Leading figures associated with leftist Monthly Review School developed dependency and world systems theories. Exploitation classified it as Marxist involved external rather than normal internal exploitation of classical Marxism. Michał Kalecki Josef Steindl Paul A. Baran and Paul Sweezy stressed monopolistic oligarchical nature over competition. Marc Fleurbaey Samuel Bowles David Gordon John Roemer Herbert Gintis Jon Elster Adam Przeworski adopted neoclassical techniques including game theory mathematical modeling. Analytical Marxism represented one such tendency demonstrating concepts like exploitation class conflict. Polish economists Michał Kalecki Rosa Luxemburg Henryk Grossman Adam Przeworski Oskar Lange influenced school developing underconsumption theories. Most official communist parties denounced neo-Marxian theories as bourgeois economics yet some served advisers to socialist Third World governments. Neo-marxist theories proved influential study of Imperialism. Paul A. Baran introduced potential economic surplus concept dealing complexities raised by monopoly capital dominance. He defined actual economic surplus difference between current output and consumption equaling savings or accumulation. Potential economic surplus measured difference between possible production and essential consumption. Baran used surplus concept analyze underdeveloped economies in Political Economy of Growth.

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• 7. Global Reception And Legacy

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  Universities offering courses include Colorado State University The New School for Social Research School of Oriental and African Studies Federal University of Rio de Janeiro State University of Campinas Maastricht University University of Bremen University of California Riverside University of Leeds University of Maine University of Manchester University of Massachusetts Amherst University of Massachusetts Boston University of Missouri, Kansas City University of Sheffield University of Utah University of Calcutta York University Toronto. English-language journals included Capital & Class Historical Materialism Monthly Review Rethinking Marxism Review of Radical Political Economics Studies in Political Economy. George Stigler and Robert Solow stated Marxist economics represented small minority modern economists having virtually no impact. Professor Jonathon Sperber noted elements like base superstructure exploitation crises remained salient today with contemporary updates. Other aspects like labor theory value tendency profit rate fall seen less relevant. Economies of Marxist states criticized overcentralization shortage goods prevalence second economies black markets basic goods. János Kornai theorized systems as chronic shortage economies exhibiting measurable performance issues. Despite marginalization mainstream English-speaking economics certain concepts fitted use capitalist systems. Joseph Schumpeter's notion creative destruction derived from Marxian analysis of capital accumulation business cycle. Some ideas contributed mainstream understanding global economy while others faced scrutiny nominally communist countries planning 20th century.

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