Karl Marx Flashcards
Marx and the Labour Theory of Value
Labour is source of all value
capital was created by labour and is “stored up labour”
Marx says value correspond to quantity of Labour
Labour isn’t homogenous:
one day’s skilled work produces more value than unskilled which is a problem for all classical economists but Marx pointed out that labour IS largely homogeneous as:
- competition leads to division of labour and so de-skilling
- Large impersonal labour force replaces ‘feudal bargains’ i.e labour power now bought and sold like anything else
Value of labour power
Labour power has:
- exchange value (wage)
- use value (value of goods it can produce)
all commodities have these 2 forms of value e.g table has exchange value (price) and use value (put things on)
but labour power is unique its exchange value is systematically less than its use value
Why is labour power’s exchange value less than its use value according to Marx?
Labour has a weak bargaining position:
- sell now or starve
- technical innovation means large ‘industrial reserve army’ of unemployed so need only pay subsistence wage
Result of subsistence wage
10 hour day: produce £1 worth of goods (use-value)
- paid 50p (exchange value - subsistence)
- 5 hours paid: 5 hours unpaid
- last 5 hours producing surplus value
e. g computer has a value of £500 - labour contributes £150 paid, £150 unpaid
- capital contributes £200 (its own cost i.e depreciation)
Only labour gives surplus value…
no surplus value to be made out of capital
why not?
because if I make surplus value out of the machine I buy from you, then I’m exploiting you (capitalist won’t be exploited)
Marx: Value and Profit
value of total product = capital cost + wage cost (paid labour) + surplus value (unpaid labour)
total surplus value = total profit
Law of falling rate of profit
Rate of profit = surplus value/wage cost
divided by capital cost/wage cost +1
firms push up the ratio of capital cost/wage cost: ie replace labour to cut costs (with capital)
but as this ratio rises, rate of profit falls
the paradox is that firms set out to cut cost to make bigger profit but end up cutting their profits
if investment (more capital cost) brings down profits, why invest?
because investment is profitable individually - in fact necessary for survival - but not collectively (prices fall dye to higher output)
Counteracting tendencies to falling rate of profit (solutions)
- Find cheaper raw materials abroad
- Profitable markets opened up abroad
- . Concentration/monopoly
- Capital saving investment (saving capital cost reduces the ratio between c/wage cost so raise rate of profit
- Capitalist might counteract capital cost/wage cost by raising surplus value/wage cost (ie longer working day)
- Rising capital cost/wage cost might cause rising surplus value/wage cost via shorter paid working day
But Marx thought that rising surplus value/wage cost could entirely counteract rising capital cost/wage cost as he claimed surplus value couldn’t rise as fast as capital cost
Is capital saving investment more than just another counteracting tendency?
Mark Blaug: yes it’s intrinsic part of laws of motion of capitalism as labour saving investment leads to fall in demand for labour, thus cheaper labour, thus incentive to save capital and so there’s capital saving investment
Prediction is that technical progress is neutral between labour-saving and capital-saving
Marx and business cycles
Investment profitable so “burst of accumulation of capital”
this leads to demand for labour and and wages up so profits go down and thus investment down (inadequate returns)
this leads to a slump, bankruptcies and unemployment
conditions for profitable accumulation restored
this is because as wages down, interest rates fall (no one wants to borrow) and thus survivors buy up bankrupt stock cheaply but with fewer capitalists
Marx’ moral critique of capitalism
it causes production to be unpleasant and soul-destroying, especially in relation to alienation of worker from product
“all the means for developing production are transformed into means of domination over and exploitation of the producer”
all this adds up to lack of self-realisation
Socialism
Paid according to your product (no longer exploited but still scarcity)
thus a shorter working day: still need to support capital accumulation but not the capitalist
Communism
no scarcity: “from each according to his strength to his strength, to each according to his need”
Questions arisen:
- Does need mean anything you want or reasonable needs?
- What about type who don’t want to work? (Marx says people will want to work
Marx - What ends capitalism?
- Monopoly - very few capitalists left
- “Socialisation of labour” - working in larger and larger units leads to solidarity
- Condition of the working class (revolution)
(1,2,3 all subjective - all lead to increased will to or diminished resistance to revolution)
- Forces of production outgrow capital relations (objective - in line with Marx’s philosophy of history)
Elster says conditions don’t coincide as 4. implies a rich economy and 3 a poor one
What if Elster’s right?
ie you don’y get subjective and objective conditions at the same time
But its only the subjective conditions that matter (e.g condition of the working class)
would explain why revolutions occur in wrong places from Marxist point of view e.g Russia went communist at start of capitalist phase
Marx changes his mind
had thought that capitalism would only end with forcible overthrow of ruling class
but in 1870s started talking about “English exceptionalism”
1872 at Hague congress of the first international:
“were workers may achieve their aims by peaceful means” - speaking of different countries
