Question

Marxian economic theory criticizes capitalism systemically, explain how the basic Marxian analysis of capitalism supports this criticism

Answer 1

• Marx’s Critique of Classical Economics

• It seems hardly necessary to stress the fact that Marx was among the warmest admirers as well as the keenest students of that trend in economic thinking for which he invented the term ‘classical political economy’.
• It is important to remember that Marx used this term in a way radically different from that of many later writers, in particular Keynes. By classical political economy Marx meant to designate that strand in economic theory originating in France with Boisguillebert (1646-1714) and in Britain with William Petty (1623-87) and reaching its high point with the work of Smith and Ricardo (1772-1823) who ‘gave to classical political economy its final shape’ (Marx, Critique of Political Economy).
• It is important to keep this definition in view because the term ‘classical economics’ has often been used in a much broader sense – for Keynes it was a school embracing all those who, following Ricardo, subscribed to one version or another of Say’s Law, who believed, that is to say, in the self-regulating nature of capitalist economy. On such a definition, classical economics culminated with Marshall and Pigou. (For Marx’s characterisation of classical economy, see Marx, 1, footnote) Marx was always conscious of the enduring achievements of this school when contrasted with the work of the ‘vulgar school’, which emerged in the period following Ricardo’s death. In Marx’s estimation, classical political economy constituted a decisive stage in the investigation of the capitalist mode of production; around 1830 this phase begins to draw to a close, a close intimately bound up, for Marx, with the appearance of a new social and political force increasingly conscious of itself, the working class.
• Marx did not, of course, mean to imply that in a somewhat mystical manner the modern working class ‘killed’ political economy. Rather he wished to stress that the methodological limitations of classical political economy increasingly paralysed it in the face of this new phenomenon.

• The ahistorical nature of political economy

• For Marx, Physiocracy was the first genuine school in political economy. It consisted of a group of writers all of whom sought to provide a critique of mercantilism, a system which had imagined that value and its magnitude resulted from exchange.

• Against this the Physiocrats counterposed the notion that forms of production were physiological forms arising from the necessities of production and independent of will and politics. They thereby turned the attention of economics towards a study of the social conditions of production. We know of course that the decisive weakness of this school lay in the fact that this production was seen only in its immediate, concrete form; for according to Quesnay and his followers labour on the land was alone productive of value, a conception which persisted with Smith, although in the case of the latter it occupies only a subordinate position.

• This narrowness in the Physiocratic view was, Marx held, a reflection of the then limited stage reached in eighteenth-century French economy which remained predominantly based upon agriculture. Despite this limitation, the work of the Physiocrats none the less constituted a decisive step forward for all the work that was to follow in the investigation of capitalist economy. This was so because the source of contradictions in the Physiocratic system stemmed from its efforts to analyse feudalism from a consistently bourgeois standpoint.