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Chp 10 : Marxian Socialism (Labor Theory of Value (Capitalism organized…
Chp 10 : Marxian Socialism
Intelectual Influences
Beside Engel, several other intellectuals influenced Marx
Ricardian, role of socialist, Darwinian connection, Hegelian and Feurbach materialism
Theory of History
Marx theory is called
Dialectical Materialism
History is a process through which the
static relations of production come into eventual conflict
with the dynamic forces of production. Conflict revolutionizes the system so that
new relations of production (synthesis) permit the higher development of the forces of production
It is derived from Hegel’s idea that history follows a pattern of progress through (ideological) conflict—
“thesis, antithesis, synthesis”
—called the dialectic and Feuerbach’s idea, called materialism, that the ideas that
people come up with are their ways of making sense of the material conditions
they are in
Stages of Society
Slavery of Antiquity
Production increased, slavery became profitable, class conflict arose
Feudalism
Exploitation of serfs
(An agricultural laborer under various similar systems) is most clearly visible
Under the feudal system
serfs were allow to work a few days per week on the land
assigned to them but
were forced to work the other days on the lord’s land.
Primitive Communism
No antagonistic classes, no exploitation, no class struggles, production low, no slavery
Efficiency of production was very low
and thus
workers could not consistently produce a surplus beyond the subsistence
needed by themselves and their dependents
Capitalism
Great
increase in production
Capitalism would collapse because of
class conflict.
Socialism
Production is planned
The dialectical process continues until finally the
state withers away and pure communism prevails
Communism
Create a classless society and, therefore, it would be the final state of society
LAW OF MOTION OF CAPITALIST
Labor theory of value
Somethg produced for profit and capable of satisfying human wants
To marx,labor times d
etermine the absolute value of goods and services
Marx believed that his l
abor theory stripped away the illusion
that o
wners of the land and capital contribute to commodity value.
Theory of exploitation
Labor power refers to
person ability to work and produce commodities
Labor time is
actual process and duration of work
Surplus value
- the exploitation of workers, cant occur when productivity of labor is low that workers have to consume goods equivalent in value to their own.
Class conflict
capitalist vs poor class
Capital accumulation & falling rate of profit
Centralization of capital & concentration of wealth
the dynamics of capital accumulation and tendency fr recurring business crises centralize the ownership of capital and concentrate wealth in fewer hands.
Capital accumulation & crises
The falling rate of profit is one of the insoluble problem of capitalism
Labor Theory of Value
Capitalism organized society by
putting people to work to produce commodities
that were then sold for a profit and those profits were then
used to reproduce the system and enlarge the imposition
of wor
The value of a commodity determines by the
necessary socially labor time embodied
It includes the
direct labor in producing the commodity
, the labor embodied in the
machinery and raw materials
used and the value transferred to the commodity
Marx argued that the
only source of a firm’s profit is the labor it employs.
Th
e "value" of commodities
can be measured by the
average amount of labor time
required to produce them
Money, and therefore price, were
expressions of value although in the workings of markets the prices of commodities
were not always equal to their values.
To Marx,
labor time determines the absolute value of goods and services
; Ricardo believed that the relative values of different commodities are proportional to the labor time embodied within each
Theory of Exploitation
The key commodity in capitalism was
"labor power,"
the
ability and willingness to work
, that
people were forced to sell to capitalists
.
Capitalist receive profit by buying labor power
Labor power is
person’s ability to work
Labor time is the
duration of wor
k
Assuming that workers are always paid the full value of their labor power
, i.e., that they receive in wages enough to reproduce themselves as a class then as long as the capitalists are able to make workers work more than the time required to produce the necessary means of subsistence (the value of their wages), there will be a surplus,
Capital Accumulation and the Falling Rate of Profi
t
The
capitalists who own the firms have an irrational belief that profits come from the capital goods
(that is, machines) they employ in their firms.
As a result,
they obsessively strive to accumulate capital goods
.
.
This i
ncreases their expenses
but, alas,
not their profits
; thei
r rate of profit decline
s.
Capital Accumulation and Crises
Business crises are a
perpetual feature of capitalism
When the
rate of profit is low
, smaller firms are especially vulnerable to business crises and taken over by larger firms that will result in
concentrates power in the hands of fewer and fewer firms
Moreover, the middle class capitalists who sell their small firms to the big firms then
become new members
of the working class
When big firms become bigger and even more powerful, they try to boost their profits by
increasing the pressure on workers
to, for example,
work longer hours, work for lower wages, etc
Class Conflict
The concentration of wealth in
fewer capitalists
and
impoverishment of the workers
set the stage for class conflict
At some point, the growing but increasingly oppressed working class turns on the capitalists.
This
unleashes a revolution
and brings about the end of capitalism.
Marx’s “Law of Motion” of Capitalism
According to Marx, because
labor is the source of all value, surplus value and profits arise
through exploitation of workers (arrow a).
Competition among capitalists results in capital accumulation which cause the
falling rate of profit, business crisis and technological unemployment
These produce
centralization of capital and concentration of wealth as well
as
rising unemployment and poverty
Contribution
Marx was an important participant in struggle to
establish a suitable theory of value
Marx was one of first economics to note that
business cycle are normal occurence in capitalist economic
Marx accurately
predicted the growth of large-scale enterprise
and
monopoly power
Marx highlighted the
substitution effect
as it applies to labor-saving capital