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Karl Marx’s Economic Philosophy Essay

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Updated: Apr 27th, 2021

Karl Marx was one of the famous political economists in the early nineteenth century. On the other hand, he remains to be one of the most controversial scholars in the Western world’s history. It was because he continuously criticized capitalism by suggesting that socialism is an inevitable and harmonious economic and political trend for the future. Marxism deeply penetrated Eastern Europe and parts of Asia in the early twentieth century through the spread of communism. However, the idea of having socialism as the main political and economic policy in those regions failed before the century ended. The powerful revolutionary force that came with the Marxism and its eventual collapse is based on characteristics of the ideology.

One of the main aspects of Marxism can be viewed in terms of the labor theory of value. For instance, if a commodity-A takes twice as long to produce as a commodity-B, then commodity-A is twice as valuable as commodity B. The competitive price of the commodity-A, in the end, will be twice the price of the commodity-B irrespective of the physical input values1. Even though the labor theory of value seems impractical, it was dominant among the early economists up to the mid-nineteenth century2.

For example, Adam Smith applied the theory in his argument for capitalism. Besides, Ricardo systematically developed the concept in the early nineteenth century3. Marx would the earlier ideas to develop a model aimed at changing the economic views and trends in Europe and the rest of the Western world.

Marx also used the earlier principles and concepts to explain his idea of labor power. He argues that the labor power is determined by the average hours a worker requires to develop the essential capacity that meets the specific standards. According to this new idea of the labor standard, a person has the labor capacity if the number of hours spent working is enough to pay for food, clothes, and accommodation.

In other words, the wages given to the workers are determined by the time in hours spent during the production of a given commodity4. For instance, six hours of working might be for the worker to sustain the basic need and have the ability to work the next day. The idea was developed to have ideal working hours, which are not to be surpassed. The intention was to criticize the bourgeois and their idea of extending the working hours.

Marx deemed it impractical for the capitalists to justify their comfort life while they were not engaged in working directly. In this context, Marx observed that a capitalistic economy sells all its goods and services at prices and wages, which reflect their actual value and labor. In this regard, he poses a challenge by asking why the capitalists enjoy profits under such circumstances. He could not understand how the capitalists receive profits after deducting the total costs from the total revenue. The two challenging scenarios formed the foundation of Marxism and objection to capitalism5. Because capitalists own the production means and products, Marx argues that they use ruthless means to enjoy profits6.

Marx agrees with the idea that capitalists are paying workers the right wages. Nevertheless, this is not the case because capitalists extend working time with more hours than required to create their labor power. For instance, if workers were needed to work for six hours a day; capitalists would extend it by about 4 hours. Capitalists only pay the standard eight hours but take the wages of the extra hours. What happens is that capitalists take the surplus labor value from the workers. Besides, they enjoy the profits accrued from the total revenues mainly because they controlled all factors of production including human resource7

Marx made an effort to use the theory of value as a critical tool against capitalism. The claim developed by Marx that economists who came before him failed to explain the way capitalists benefited was right. However, he could not defend his claims as well because economics scholars would later reject the labor theory of value8. Economists asserted that capitalists do not have to exploit the working class to earn profits and enjoy economic gains. Instead, they suggested that capitalists sacrifice the present gains, put their resources in risky ventures, and shape production processes to influence profits.

By using the idea of alienation, Marx created an impressive idea of historical and social variations in the world. He uses the theory to develop a strong criticism of capitalism. Marx identified humans as creatures who need the freedom to think in a creative way9. The two aspects give them the potential to change the world10. However, he witnessed that contemporary knowledge and technology gives humans the limited ability to control. Marx criticized the free market because it is not governed but instead promotes anarchy11.

Marx criticized capitalism because he viewed it as an alien aimed at oppressing the masses. He puts several reasoning to portray capitalism as a bad political and economic ideology. Workers produce products and services supplied to the market. However, the market forces control the prices of the products and not workers. Capitalists must have labor resources if they must continue to have control over economic resources. Consequently, he argues that work becomes a degrading and monotonous aspect of the economy12.

Capitalists give little concern to workers based on their human worth and fundamental needs. They control the activities of the workers as if they are nonhuman resources. Employees predetermine workers’ activities without consulting them. Theirs is to work without questions and wait for their wages13. Therefore, Marx concludes that capitalism inhibits the capacity to realize its human ability.

The earlier socialists had a dream of an ideal society in the future without understanding the way the society works. Scientific socialism combines his economics and philosophical ideas as well as the theory of value and alienation. Throughout human history, a struggle has occurred between those who have and those who do not have. Marx argues that capitalism has a world of created a war between the bourgeois and the proletariat14. While the bourgeois owns the production means, the proletariat survives at the mercy of the bourgeois.

On the other hand, the competition among the capitalists would increase fiercely. The situation would make many capitalists bankrupt. Consequently, there will only be a few monopolists controlling the entire means of production. According to Marx, a scenario such as that contradicts the primary ideals of capitalism, which promotes competition. Instead, it facilitates the creation of better products at lower prices, which results in a monopoly in the end. The former capitalists would become the proletariat and increase the labor supply15. Accordingly, the wages would decrease and create a scenario that Marx refers to as the increase in the reserve of the unemployed in the economy.

In conclusion, Marx was a renowned political economist who had supporters across the world. He claimed that capitalism is irrational, in other words, contradictory. One might highlight the following key points of his theory: first, capitalism is intrinsically unstable and prone to economic crises; second, the profits of capitalist enterprises are the result of the exploitation of the workers, who receive a wage less than they produce; third, with the development of the capitalism, the workers are more and more aware of their situation and become more and more determined to overthrow capitalism by force; and, finally, fourthly, a society that will replace capitalism is the socialist and democratic in its economic and political organization. Therefore, the paramount of capitalism was to preserve the system that serves the interests of the minority at the expense of the lives of most.

Nevertheless, his arguments would later be reversed by new ideas. The actual wages have been rising and the profits have never been declined. The government does not necessarily cause a scenario of depression or recession in an economy16. Marx suggested that socialism would occur as a revolutionary approach to destroying even the highly advanced capitalism. Although socialist revolutions occurred in many countries across the world, it did not reach Marx’s predicted proportion.

Bibliography

Anievas, Alexander. Marxism and World Politics: Contesting Global Capitalism. London: Routledge, 2010.

Ledwith, Margaret. “Critical Education against Global Capitalism: Karl Marx and Revolutionary Critical Education.” Community Development Journal 37, no. 4 (2002): 375-377.

Morris, Rosalind. “Dialect and Dialectic in “The Working Day” of Marx’s Capital.” Boundary 2 43, no. 1 (2016): 219-248.

Skousen, Mark. The Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes. New York: M.E. Sharpe, 2007.

Streeck, Wolfgang, Craig Calhoun, Polly Toynbee, and Amitai Etzioni. “Does Capitalism Have a Future?” Choice Reviews Online 51, no. 11 (2014): 163-183.

Footnotes

  1. Margaret Ledwith, “Critical Education against Global Capitalism: Karl Marx and Revolutionary Critical Education,” Community Development Journal 37.4 (2002): 375.
  2. Wolfgang Streeck, Calhoun Craig, Toynbee Polly, and Amitai Etzioni, “Does Capitalism Have a Future?” Choice Reviews Online 51, no. 11 (2014): 163.
  3. Alexander Anievas, Marxism and World Politics: Contesting Global Capitalism (London: Routledge, 2010), 56.
  4. Political Economics Notes,” (2015).
  5. Rosalind Morris, “Dialect and Dialectic in “The Working Day” of Marx’s Capital,” Boundary 2 43, no. 1 (2016): 224.
  6. Ibid., 166.
  7. Ibid., 173.
  8. Ibid., 376.
  9. Ibid., 227.
  10. Ibid., 168
  11. Ibid., 97.
  12. Mark Skousen, The Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes (New York: M.E. Sharpe, 2007), 10.
  13. Ibid., 233.
  14. Ibid., 377.
  15. Ibid., 176
  16. Ibid., 128.
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