Theory: Marxist economics

Marxist economics

The economic system we live under today is capitalism: based on competition, private ownership and the production for profit. Karl Marx revolutionised our understanding of the capitalist system. With his vast collection of economic writings – including the three volumes of Capital – Marx stripped away the mysticism surrounding capitalism, uncovering and explaining its inner processes, emergent laws, and intrinsic contradictions.

Marx built upon the work of his ‘classical’ predecessors – in particular the British economists Adam Smith and David Ricardo. These enlightenment thinkers had attempted to examine capitalism on a scientific basis. In doing so, they hit upon the idea that labour was the source of all new value within society.

By developing this ‘labour theory of value’, Marx was able to explain an enigma that had eluded the classical economists: that of profit. This, Marx demonstrated, arises from exploitation – that is, from the surplus value produced by the working class. Simply put, the capitalists’ profits are obtained from the unpaid labour of the workers.

But this fact, in turn, led Marx to an even more shattering conclusion: that the capitalist system is inherently prone to periodic crisis of overproduction – crises that break out and paralyse the entirely of society, as the forces of production crash up against the narrow limits of the market.

This is the picture we find ourselves in today, as workers and youth are forced to pay for the crisis of capitalism. Armed with the ideas of Marxism, we can see that there is no way out of this crisis within the confines of capitalism. The only solution is socialist revolution.

Value, Price and Profit was produced at a time when the labour theory of value had already matured in Marx’s brain. It was first delivered as a speech delivered by Marx to the International Working Men's Association (The First International) in June 1865, while he was working on the first volume of Capital that was published two years later.

The Preface of the Critique contains the first connected account of one of Marx's main theories: the materialist conception of history. The participants in history may not always be aware of what motives drive them, seeking instead to rationalise them in one way or another, but those motives exist and have a basis in the real world.

Wage Labour and Capital is based on lectures delivered by Marx at the German Workingmen’s Club of Brussels in 1847, that is, before the Communist Manifesto and at a time when Marx had not yet fully developed his theories of political economy. Although it is an early work, Wage Labour and Capital contains the outline of the Labour Theory of Value and many important insights into the workings of the capitalist system and the way in which workers are exploited.