Question

Why were karl Marx and Ricardo pessimistic about the growth and development process?

Answer 1

Answer:) The classical economists of eighteenth and nineteenth century, Karl Marx (1818 – 1883) and David Ricardo (1772 – 1823), hold pessimistic view about the future of growth and development process. The theories of growth and development propounded by these classical economists took a pessimistic view with Ricardo explaining that the population pressure on agriculture, that is on food supply, would result in diminishing returns to agricultural land and thus, squeeze in the profit of the industry sector. As a result, there would be no reinvestment of the profit in the agriculture leading to stagnation in the production of output in the economy. While, Karl Marx considered exploitation of working class by the hands of wealthy capitalists leading to rise of socialism as the economic system.

These economists, however, failed to take into consideration the role of technology in advancing agricultural growth and thereby increasing labour productivity.

In his Principles of Political Economy and Taxation (1817), Ricardo predicted that amongst the three classes of the community; namely landlords, capitalist and labourers; landowners or landlords would receive increasing proportion of national income while, capitalists would receive less amount. Further, this would lead to economic stagnation, in Ricardo’s words the ‘stationary state’, with no growth where “the whole net income of the country would belong to the landlords… and almost the whole produce of the country, after paying the labourers, will be the property of the owners of land and the receivers of tithes and taxes.” This would result in no productive reinvestment of profit and therefore stop the expansion of output in the economy.

Karl Marx, a German economist and a political thinker, viewed capitalism as a source of disharmony that would create class struggle between the two classes of society that is wealthy capitalists and underpaid workers. In his Das Kapital (1867), Marx propounded the self-destruction of capitalism, and exploitation of working class for profit leading to the subsequent rise of communism. According to Marx, fall in capitalism would sow the seeds of communism wherein people would own the means of production. Thus, there would be an end to the exploitation of labour class by the hands of capitalists.