May 25, 2024

What is Marxist Economics?

Marxist economics refers to a style of economic thought coined by the 19th century philosophers and economists Karl Marx and Friedrich Engels . Marxist economics emerged as a critique of classical political economy and later as a critique of capitalism.

Marxist economics ‘ critique of capitalism focused mainly on the distribution of surplus products and surplus value. More succinctly, Marx argued that the capitalist class obtains wealth through the exploitation of others. Marxist economics is not widely used today, but in the 20th century it was adopted and used in Eastern Europe, especially in the USSR.

Marxist economics spread rapidly in Eastern Europe with the October Revolution in Russia in 1917. On the other hand, this system collapsed before the 20th century was completed. Many countries such as East Germany, Czechoslovakia, Poland, Yugoslavia and Hungary, especially the USSR, abandoned the Marxist economic thinking style at the same speed.

Labor Theory of Value in Marxist Economics

Karl Marx’s ideas around the labor theory of value formed the basic building block of Marxist economics. This theory states that the value of a commodity is determined by the average amount of time required to produce that commodity . At this stage, we believe that it would be correct to give a simple example for a better understanding of the labor theory of value.

For example, if the production of trousers in a factory costs twice the labor required to produce a shirt, as a natural consequence of this, one trousers will have to be exchanged for two shirts, so one trousers will be worth two shirts.

The labor theory of value was popular with Marx as well as some well-known economists such as Adam Smith and David Ricardo. However, Karl Marx and Marxist economics took the labor theory of value to a higher level. In this respect, Marx made an important distinction between labor power and labor in his labor theory of value. He interpreted labor power as the worker’s potential or ability to work, and defined labor as the actual act of producing value.

Besides all this, Karl Marx defended the view that the cost of labor power is the total hours and costs carried by society to provide the worker with the necessary working capacity.

In Marxist economic thinking, Marx came to the conclusion that workers’ wages should be directly proportional to the worker’s labor power. The concept of labor power led Marx to question the distribution of surplus value in a capitalist society. He argued that capitalist system players overwork workers in order to make a profit, which causes workers to produce more value than they should be paid for.

Value and Use Value in Marxist Economics

Marxist economics held the view that the price or value of a commodity could be based on one of two things. Karl Marx separated them into value or use value . For Marx, value expressed the value of the commodity in comparison to other commodities, while use value expressed the usefulness of a commodity or the criterion for completing subsequent tasks.

Marx focused on the view that any value in commodities in general derives from human labor. In this framework, he argued that the concept of value is common among all commodities and that human labor is essentially the basic thing that creates commodities. This is why Karl Marx and Marxist economics adopted the labor theory of value.

Critique of Marxist Economics Against Capitalism

The alienation of workers and the unequal distribution of surplus product and surplus value were among the two most fundamental criticisms of Marxist economics towards the system of capitalism. However, Marxist economics’ critique of capitalism did not end there.

Karl Marx put a lot of emphasis on the theory of alienation . According to his theory, with capitalism, people were alienated from themselves, their labor, relationships, the world and even life. According to Marx, this was due to supply and demand in the free market.

Claiming that the free market forces people to work overtime and work on jobs they do not want to do, Marx argued that people will feel like machines for this reason.

Finally, it should be noted that Marxist economics is inconsistent at one point. On the other hand, modern socialists today clearly state that they do not agree with Marxism’s notion of the need for revolution in order to achieve a socialist society.

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