Question

We have experienced the so called “great-recession.” Indicate if Marx’s “law of motion” of capitalism can or cannot explain what lead to the “great recession.” If you on the other hand think that some but not all of the laws apply indicate which ones do and which do not. Give examples to support your assertions.

Answer 1

Ans:-

We have experienced the so called great recession. Indicate if Marx’s law of motion of capitalism can or cannot explain what lead to the great recession if you on the other hand think that some but not all of the laws apply indicate which ones do and which do not. Give examples to support your assertions.

To begin with the laws of motion as stated by Karl Marx (1818-1883), that essentially represents the cyclical behavior of the capitalist economy. A capitalist economy described succinctly as the system of production whereby the resources of production is owned by some and the workers works with the resources to produce goods and services. Marx posited that the owner of these resources in this process appropriates surplus labor from the workers to create wealth that is again in turn used to sustain the system and increase the surplus by the workers to be appropriated by the owners of resources. This appropriation of surplus labor is termed as exploitation. The said production process leads to the market where the realization of value of the produce occurs. And as theorized by Marx, economic crises would occur in the capitalist system due to over production of commodities, leading to lower wages and finally low income and depression. This is from the laws of motion of capitalist business cycle. All the six Laws are as follows,

• The capitalist's compulsion to accumulate: According to this law seeking profit is at the basis of all business operations especially the big organisations.
• The tendency towards constant technological revolutions: The only way to beat the competition prevailing among the organisations the only way pout is to constantly compete to innovate new production techniques in machineries and that would be supported by the rational and self-interested laborers. Capitalism thus thrives on completion and these technological revolutions for example. In terms of the neoclassical production function.
• The capitalists' unquenchable thirst for surplus-value extraction: the profit can only be earned by increasing the unpaid work from workers through either increasing work hours or employing labor saving technological innovations. The former increase in work hour is named as the essential surplus and the latter is termed as the relative surplus. Increasing relative surplus is one of the prime goals of the capitalist organisations. Both are extracted to generate profit and surplus values.
• The tendency towards growing social polarization: Due to the capitalist process, as the concentration of capital in the law before, polarization in simple term means creation of poles that are disparate in terms of social and economic endowments and characters, like the capitalist bourgeois and the proletariat class.
• The tendency towards growing objective socialization of labor: Socialization as envisaged by Marx is not easy to capture in few words however , the socialization of labor is basically the process if expansion of organisations into trans and multinational organisations have workers class that are huge and is almost as socialistic unit functioning in a system, as large as a nation. This process of socialization among the labors harbors the seed or socialism in the process, according to Marx.
• The inevitability of economic crises under capitalism: Finally the last law strikingly foretold the economic crises that were forthcoming in the neo-liberal economic system across the globe. However the reason of the crises dined and also studied by Marx saw that over production by the capitalist system, due to increasing production and appropriation and exploitation of the surplus value form the workers.

Finally, coming to the economic crisis named as the great recession that broke out in the year 2007 ending in the 2009. The reasons that led to the crises were mostly financial and mortgage issues. However, the subprime crisis and the mortgage issues if looked into does to some extent if not all can be addressed using the laws of motion of Marx’s framework. As for the last law, the problem of mortgage did occur due to the over production and also consumption however failing to pay for the production. And spiraling its effects into banking sector and finally the globe. For example, The over production of real estate however failing to realize the value to support the system, the market collapsed. The second problem referred to as the subprime crisis was also due to excessive risk taking behaviors among the investors. This is also in line with the first, second and third law of continuous compulsion to accumulate, compete and profit seeking by less emphasis on workers development and more on technological advancement. the forth and fifth law cannot be directly linked to the process of economic crises due to the problem of tracing social events directly in to economic classes and also to account to the social transformation and perceptions. However, it can be ascertained that the outburst of the economic crises, globally did experience horrible and dire situations among the working classes and the masses, irrespective of the initial economic status. Hence it can be concluded that the economic crises can be explained in terms of some of Marx's laws.

However the laws does have fair share of critiques, like the definition and functioning of organic composition of capital, the involvement of Capital and Labor saving technologies cannot be explained using the laws. Also the actual scenario of today shows many discrepancies like decreased trade unions and problem of inclusion of the development discourse in Marxist framework.