Economic Systems

Lecture Notes

MARXISM

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MARXISM

Marxism is not just economics - although economics or rather "political economy" is probably the most essential part of it. Marxism is a complex system of social sciences and it was even presumed to provide a general methodology for natural sciences.

 

Marxism consists of:  

philosophy                     "Dialectical Materialism"

sociology                       "Historical materialism"

economics                      "Political Economy"

Founders:

 

 

 

 

 

Karl Marx  

 

(1818 - 1883)

 

 

 

 

 



 

 

 

 

Friedrich Engels

 

(1820 - 1895).

 

 

 

 

 

Marxism was not invented by Marx and Engels from scratch, rather they integrated and transmuted several theories and doctrines of their predecessors.


 

Three sources of Marxism:

 

 

 

 

   Marxism acquired:  

Dialectics from Hegel
 

Materialism from  Feuerbach

 

  theory
  of
Alienation

from Hegel

<=====
 

 
 
Humanism
 from  Feuerbach
     
=====>


Criticism of social  irrationality  and exploitation 

 from socialists,

 

St. Simon

<======
Fourier
======>
 

Labor theory of value, the role of technical progress, subsistence wage and income distribution theory 

 from

English Classical Economists

 

Smith 

 <==

 and

 Ricardo

==>
 

 

Of course, there were many other predecessors. Among them a special importance had a group of English socialists known as

Left Ricardians,

who adopted Ricardian theory of value and distribution and reinterpreted it as the theory of exploitation of labor by capital. This group consisted of

Robert Owen,

Thomas Hodgskin,

John Francis Bray

and John Gray.

They saw distribution of income in a capitalist society as unjust and unnatural and were striving to create a just society where workers would get the full product of their work.

LINKS: X X X X

 

Dialectical Materialism

Materialism here means a philosophical view regarding matter as primary and mind, ideas, spirit or God as derived from matter, or specifically as products of the function of human brain. For Marxists God does not exist. This implies atheism and not just agnosticism.

Dialectics is a complex philosophical view developed by Hegel. It can be briefly summarized in the following principles:

Relations: Things should not be viewed as isolated but in their relations to other things.
 

The idea of change: the world and everything in it are in continuous motion and change; nothing remains constant.

 

Contradictions: Conflict and 'struggle' of two opposite sides can be seen everywhere.
 

The idea of progress: The change is not haphazard, it goes from simple to more complex. The world is continually improving. A contradiction, i.e. the struggle of opposing sides, is the source of continuous change, the inherent engine of progress and development.
 

Essence vs. appearance: essence (substance) is the true nature of things and it is determined by the internal contradictions. One cannot grasp essence by pure observation. What we see is just a 'surface phenomenon' the superficial appearance, while the essence is hidden 'under the surface'. Appearance is misleading, it fools us to believe that things are different than they really are. To find the truth means to unravel the essence, to find-out what the inner contradictions are.
 

Unity of evolution and revolution: Development proceeds first through a sequence of small 'quantitative' changes. This is the process of evolution during which the essence remains unchanged and the tension resulting from internal contradictions is increasing. Then suddenly the contradictions explode, the old essence is destroyed and replaced by a new essence characterized by different contradictions - this is revolution during which the 'quality' is changed. Progress is the unity of quantitative and qualitative changes. It is the unity of evolution and revolution.
 

Negation of negation and the triad: the development comes in three stages (triad) with two qualitative breaks (revolutions). All starts with the first stage called the thesis. First revolution negates the thesis and results in the antithesis. The second revolution negates the first - it is the 'negation of negation' - and creates the third stage that is the synthesis of both previous stages.

 

 

 

thesis
---------------

 

antithesis
----------------
negation

synthesis
-----------------
negation
of negation

 

 

Historical Materialism

It is the application of the dialectical materialism to human history. Marx claimed to have discovered the 'laws of motion' for the society.

 

Historical materialism is based on the economic interpretation of history - the major changes in political, social, legal etc. institutions and ideas are being explained from the changes in the nature of the economic system. The economy is considered to be ‘the basis’ of the society. The political, legal, social etc. institutions and ideas are then considered to be 'the superstructure' above the economic basis. The evolution of the economic basis is the 'driving' force of the history.

The economic basis consists of two opposites that are in the continuous struggle, namely ‘the forces of production’ and ‘the relations of production’. The term 'forces of production' means all what determines productivity and its growth. It is the Marxist way of referring to innovations and technical progress. The term 'relations of production' is the Marxist way of referring to economic institutions such as private or public property, market etc.

Contradictions between forces and relations of production are the essence of the social system and the inherent driving force of the economic and social progress. Forces of production are in continuous process of quantitative evolutionary change, while relations of production tend to be conservative. When the contradiction between the new forces of production and the outdated relations of production becomes unendurable revolution brings qualitative change: it destroys the old relations and creates new ones. The new and more progressive economic basis with different essence is created. In contemporary terminology this says that the incessant technical progress triggers adjustments in economic institutions.

Each revolutionary change in the economic basis is then followed by a transformation of the superstructure. That is political, legal and other social institutions and ideas adjust with a time-lag to the changed economic institutions.

A good example of historical materialism is in "Socialism: Utopian and Scientific" by Engels  

 Stages of the evolution:

Marxists believe that during its history the human society evolves in predetermined stages. There are three basic steps (a triad); another triad within the middle step an two substages of the final stage of Communism.

 

Communism

 

Socialism

Communism

proper

 

 

 

Slavery

 

Feudalism

Capitalism

synthesis

classless society

Primmitive

Communism

antithesis

class societies

 

thesis

classless society

 

Combined there are five stages of evolution:

 Primitive Communism: these are tribal societies before the advent of civilization. Technology (forces of production) is so primitive that people produce barely enough for their survival. Everybody has to work; no ‘surplus’ product to be appropriated by anybody exists; common property; there are no classes.

 

Slavery: as in ancient Greece and Rome. New technology leads to increased productivity. Slaves are able to produce more than they need for own survival; this ‘surplus product’ is appropriated by slave masters; private ownership emerges; society splits into the class of exploiters and exploited; exploiters do not need to work; they may devote their time to arts, science and administration; emergence of state and law; exploiters become ‘ruling class’. This is an enormous progress against the primitive communism. But slaves have no incentive to use improved technology. The ‘relations of production’ are in conflict with new progressive ‘forces of production’. Class war develops, revolution destroys the system.

 

Feudalism:  as in European states in middle ages. New class configuration: feudal lords (exploiters - ruling class) vs. serfs (exploited class). Feudalism leads to technological progress because serfs have better incentives to work. Further development of arts and sciences. Feudalism is a higher stage then slavery but it has its own limits. New scientific and technological discoveries require free workers to be employed in large scale production. Bourgeois revolutions, like the French or American revolutions destroy feudalism. They liberate serfs from dependence on lords and thus prepare the ground for new class structure of the society.

 

Capitalism:  in Marxist interpretation is just another stage of socio-economic development. It is the last class society. The essence of capitalism is exploitation of workers (proletariat) by capitalists (bourgeoisie) with resulting class struggle. The 'relations of production' are characterized by private ownership and the prevalence of 'commodity production' (market). The 'forces of production' are characterized by the fast growth of productivity due to the 'division of labor' (specialization) and mechanization. The industrial revolution resulted in mass production with intricate inter-industry relations. In the capitalist market economy goods are not produced by an individual producer for a small number of local consumers as in the past, but by the huge collectives of workers - sometimes spread over the whole country or even over many countries - for thousands or millions of consumers. The 'forces of production' acquired the 'social character' but the 'relations of production' are still based on private ownership and 'anarchy' of the market. This is the main contradiction of capitalism which - according to Marxist analysis - must lead to revolution, abolition of private property and capitalist relations of production.

 

Communism:   that emerges from revolutionary destruction of capitalism is again a classless society. It removes exploitation and unequal income distribution. It also unleashes the fetters by which the capitalist relations of production shackled the forces of production. The advanced technology would lead to such a high productivity, that everybody would be able to share equally in the economic output. There will be no need for private appropriation and exploitation. Public ownership and the rational central control (planning) of the economy would allow even faster growth of productivity than under capitalism. Communism would defeat capitalism not only by being more just in distribution of income, but also by being more productive, more technologically advanced. This was the prediction of Marx. Also communism was expected to have two phases: the first one called socialism would be still limited in its productivity and, therefore, the income distribution would have to be based on each persons contribution to the common output of the society. In the second stage the productivity would be so high that all the needs of each person could be fully satiated.

 

 Click bellow for excerpts from 

 Links: X X X X X X

 

Alienation

 

Young Marx enthusiastically adopted Hegel's theory of alienation (estrangement) of labor and in his "Economic and Philosophical Manuscripts" made the following interpretation and elaboration of it: (Note that for the whole century these "Manuscripts" were unknown to Marx's followers. They were discovered and first published after the World War II. Immediately they attracted a lot of attention among Western leftist intellectuals (e.g. Erich Fromm, T. Bottomore) who favored the humanist interpretation of Marxism. The official Soviet reaction was to dismiss the "Manuscripts" as a product of immature Marx before he became a "Marxist".)

 

 

Alienation of the product from the worker (objectification): "the relationship of the worker to the product of labor as an alien object which dominates him". "The worker becomes poorer the more wealth he produces...the object produced by labor... now stands opposed to it as an alien being, as a power independent of the producer. ...The life which [the worker] has given to the object sets itself against him as an alien hostile force."

 

Alienation of the process of work from the worker (unfulfilled self-realization): "the relationship of the worker to the act of production ... to his own activity as something alien and not belonging to him, activity as suffering (passivity), strength as powerlessness, creation as emasculation, the personal physical and mental energy of worker...as an activity which is directed against himself...this is self-alienation."

 

Alienation of man from human existence (dehumanization): "Alienated labor takes away the object of production from man, it takes away his human life, his real objectivity as human being...Just as alienated labor transforms free and self-directed activity into a means, so it transforms human life of a man into a means of physical existence."

 

Alienation of man from man: "A direct consequence of the alienation of man from the product of his labor, from his life activity and from his human life is that man is alienated from other men.

 

Private property and alienation: "Only in the final stage of the development of private property is its secret revealed, namely that it is on one hand the product of alienated labor, and on the other hand the means by which the labor is alienated, the realization of this alienation."

Communism:

"Communism is the positive abolition of private property, of human self-alienation, and thus the real appropriation of human nature through and for man. It is , therefore, the return of man himself as a social, i.e. really human, being, a complete and conscious return which assimilates all the wealth of previous development. Communism as a fully developed naturalism is humanism and as a fully-developed humanism is naturalism. It is the definitive resolution of the antagonism between man and nature, and between man and man. It is the true solution of the conflict between existence and essence, between objectification and self-affirmation, between freedom and necessity, between individual and species. It is the solution of the riddle of history and knows itself to be this solution."

 

 

 

 

 

 

 

 

 

 

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