The Marxian Critique of Classical Political Economy
The Marxian Critique of Classical Political Economy
Classical political economy, a positive science, focuses on studying the functioning of markets in the production of capital. However, it is criticized for overlooking the alienated labor of the proletariat. It tends to treat economic laws as if they were natural and immutable. In reality, economic laws are historically contingent; the capitalist mode of production originated at a specific point in history and will eventually cease to exist. It primarily analyzes the relationship between man and the production of capital. The periodic crises of the capitalist system highlight the inherent contradiction between the logic of production and the relations of production, a contradiction that will ultimately lead to the system’s demise.
Labor as the Basis of Value
Labor is the foundation of value. All goods acquire social value through the labor invested in their production. This value manifests in two forms: exchange value, determined by the market, and use value, reflecting the utility of the good. Goods are exchanged using money as a medium. The value of a commodity is determined by the cost of labor required for its production, as well as market forces and its use value. Commodity exchange is essentially an exchange of the labor power needed to produce them, regulated by prices.
Work is quantified by the time required to produce a commodity. We can distinguish five types of work:
- Abstract labor: The human energy expended in producing a good.
- Concrete labor: The specific way in which abstract labor is applied, such as chopping wood.
- Simple labor: Labor that requires minimal training or skill.
- Complex labor: Labor that necessitates specialized knowledge or skills.
- Socially necessary labor: The average time required to produce a commodity in a given society, influenced by technology, customs, and worker skills. It is calculated by dividing the total time spent by producers on a commodity by the number of units produced.
Forms of Value and Money
The inherent nature of goods necessitates a universal form of value. The value of a commodity represents the amount of simple labor required to produce it. Marx identifies three forms of value:
- Simple form: A good’s value is measured relative to other goods for which it can be exchanged. For instance, a quart of milk could be compared to a kilogram of apples.
- Total or expanded form: A good’s value is measured against all other exchangeable goods. This involves comparing a commodity to a collection of other commodities with an equivalent total value. For example, a liter of milk might be equivalent in value to half a kilogram of apples, two loaves of bread, and so on.
- General form of value: All goods are expressed in terms of a single commodity that serves as the universal equivalent of value. In capitalism, money fulfills this role. The general form of value is referred to as “money.”
Fetishism refers to the power that commodities or money wield over individuals. Money fetishism, in particular, is the obsessive pursuit of money for its own sake. Fetishism dissipates when the relations of production are rectified, liberating workers from alienated labor.
Marx does not condemn money itself; the problem arises when money transforms into capital, becoming an end in itself rather than a means to an end. Instead of representing value, it becomes the ultimate objective.
Surplus Value in Capitalist Economics
From the capitalist’s perspective, exchange commences with a monetary investment in goods. The goal is to sell these goods for a profit, known as surplus value. Labor power is the sole source of wealth creation.
- Origin of surplus value: Surplus value originates from the difference between the value produced by labor and the value of labor power itself, which is determined by factors such as the means of production, education, family upkeep, and cultural standards.
- Necessary labor time: The duration during which the worker produces value equivalent to their own labor power.
- Surplus labor time: The period during which the worker generates surplus value for the capitalist.
The Rate of Surplus Value or Exploitation
- Constant capital: The portion of capital invested in means of production (raw materials, tools, etc.) that does not change its value during the labor process. It does not generate any surplus value.
- Variable capital: The capital invested in labor power. Unlike constant capital, it increases in value during the production process, creating surplus value.
The degree of labor alienation or worker exploitation can be measured by the rate of surplus value, which is the ratio of surplus value (or surplus labor time) to variable capital (or necessary labor time). The rate of surplus value can be augmented through:
- Absolute surplus value: Achieved by extending the workday.
- Relative surplus value: Attained by intensifying the pace of work, thereby reducing the time required for production.
Wages and Surplus Value
Capitalists often propagate the misconception that wages represent the entirety of the worker’s labor during the workday. They have a vested interest in maintaining this illusion because it obscures the reality of surplus value extraction. Workers exchange their labor power for a predetermined wage, creating the impression of a fair exchange. However, the capitalist profits from the surplus value generated beyond the wage.
Factors influencing wages: Wages, the monetary compensation for labor, are determined by the value of labor power and the dynamics of supply and demand in the labor market, which are influenced by broader industry and economic conditions.
Marx posits that the emancipation of the working class can only be achieved through the dismantling of the capitalist system and the transition to a society free from alienated labor.
The Capitalist Rate of Profit
The capitalist’s primary objective is to maximize the rate of profit, which is achieved by increasing surplus value and/or reducing the amount of capital invested. The rate of profit is influenced by the ratio of constant capital to variable capital.
- Fixed capital: Investments in buildings and machinery.
- Circulating capital: Investments in raw materials and labor that are directly incorporated into the produced goods.
Relationship between the rate of exploitation and the rate of profit: The rate of profit is inherently linked to the rate of surplus value or exploitation. An increase in the rate of exploitation leads to a higher rate of profit. Both rates tend to rise with technological advancements.
Capitalism as a Historical Mode of Production
Marx argues that capitalism’s recurring crises foreshadow its eventual collapse. The laws that point to the demise of capitalism include:
- The law of the tendency of the rate of profit to fall: Capitalism’s insatiable pursuit of profit, which hinges on surplus value extraction, will ultimately lead to its downfall. As the system approaches its limits, it becomes incapable of generating sufficient profit. Market competition compels capitalists to invest heavily in means of production to remain competitive. However, the rate of exploitation is inherently constrained by the physical limitations of workers. When capitalists are forced to invest all their capital, their productive activity becomes unsustainable, leading to collapse.
- The law of the increasing proletarianization: Technological progress and mechanization reduce the demand for labor, resulting in growing unemployment. Market competition favors larger, more powerful companies, driving smaller enterprises out of business. This process leads to a concentration of capital in the hands of a few and an expanding proletariat. As the supply of labor surpasses demand, wages decline. To prevent the overaccumulation of commodities and falling prices, capitalists resort to destroying products.
Marx’s Vision of the End of Capitalism
Marx interpreted the crises of capitalism as symptoms of its impending collapse. He believed that the capitalist class, through its exploitation of the proletariat, was sowing the seeds of its own destruction. The intensification of capitalist crises would, in turn, strengthen the proletariat and fuel revolutionary aspirations. Marx envisioned a transitional period characterized by the dictatorship of the proletariat, during which the state and the means of production would be seized.