Marxian economics

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Marxian economics is the economic theory developed by Karl Marx as a tool in the revolutionary struggle. It analyzes capitalism and the economic theories of the capitalists to expose its flaws and their errors, to pierce the mystifying veil that ideology casts over the actual human relationships in capitalism, and to provide the revolutionary workers with an understanding of capitalism that may enable them to destroy it.[1]


In Marxian economics the economy can be analyzed in terms of 1) physical quantities, 2) values, or 3) prices. This is sometimes stated by saying there are 3 'domains': the commodity (physical) domain, the value domain, and the price domain. We can analyse economic relationships in terms of any one (or all three) of these domains. The domains have been described by Junankar (1982, p 16) in the following manner:

The commodity domain is observable and consists of analysing economic rrelations in terms of heterogeneous commodities. In this domain we would study, for example, technological relationships between inputs and outputs (the 'production function'). Units of measurement would differ from commodity to commodity, e.g., tons of iron, yards of linen, etc. Marx analyses economic relationships mainly in the value domain. By using the LTV he aggregates heterogeneous commodities in terms of labour embodied. The value domain is purely an analytic construct and is unobservable. All commodities can be reduced to 'abstract labour' and economic relationships can be analysed in terms of values to go beyond the 'appearances' to the 'essence' or 'reality' of things. The units of measurement are units of abstract labour time. The price domain consists of market relations where the cash nexus reduces everything to money terms: units of measurement are (say) pounds sterling (£). This is at a level where we can observe the relations between people and things. (Marx argues that the price domain is 'superficial' and this is one of the defects of bourgeois economic analysis.) Thus in the price domain we would study 'prices of production', profits, wages, etc.


Notes

  1. John Harrison (1978, p 11): "Marx's central concerns were political. While that is hardly news to anyone, it does raise the question of why he chose to spend the best years of his life, as he put it, writing about the economic workings of capitalism. ... The answer is that his economics had a political purpose." That Marx thoght a bad understanding of economics can produce revolutionary weakness is clear from his polemics against fellow socialist and revolutionary Pierre-Joseph Proudhon. Marx believed that Proudhon's failure to see that commodity production inevitably implies the development of capitalist relations and exploitation had led him to to adopt the disasterous policy of calling for a modified, fairer (impossible) commodity economy as the revolutionary objective. Also Marx believed that another economics mistake of Proudhon's, his failure to see that commodity production is historically a transient phenomenon, which has not always existed and need not exist in the future, was implicated because it had prevented Proudhon from seeing the full range of future possibilities, including a commodity-less socialism. Although Marx admired Proudhon's unselfishness and dedication, publicly he denounced Proudhonism in the strongest language. (Harrison, pp 13-15.)

Further reading

Asterisk (*) denotes works used as a direct source in writing this article.

  • Duménil, G. and Foley, D. 2008. `Marx's analysis of capitalist production', in The New Palgrave Dictionary of Economics, London. A short entry that hits all the main points briefly. The article is viewable free on Duménil's website
  • * Harrison, John, 1978. Marxist Economics for Socialists. London, England: Pluto Press.
  • * Jununkar, P N, 1982. Marx's Economics. Oxford, England.
  • Rubin, I, 1928. Essays on marx's Theory of Value. Detroit, Michigan, USA: Black and Red, 1972. This work is very often cited in Marxist writings on value theory.