Week 3: Economic Thinkers Karl Marx Flashcards
Karl Marx: His belief
His belief: He is a critic of free market capitalism (AGAINST it). Innovation is risky. Easier to extract value surplus. He believes it will inevitably destroy itself. Oppressed workers would become alienated and ultimately overthrow the owners to take control = classless society
Value Surplus
Amount of value produced by workers over and above the cost of their wages.
o Labor vs labor power
o Incomplete vs complete contracts
How to extract surplus value:
1) Surveillance and monitoring
2) Control work pace
3) Minimize class consciousness
- align the interest of workers with management not peers
- To get average workers to WANT to make the company profit there are 2 methods: the carrot (job ladders) and the stick (limited contracts, fire people).
What are other ways firms can cut costs to increase profits?
- Use cheaper labor
- Make the planet absorb costs of production.
- Tax evasion
- Lobby politicians to reduce regulations
Results of intense competition to increase profits:
- Increasing concentration of capital
- Alienation of the worker
- Repeating the same boring tasks robs humans of their creativity and imagination.
Reserve army of unemployed
The “Reserve army of unemployed” gives capitalists more power than workers.
Where do we see Marx’s ideas today?
- Unions
- Full employment economy
- Worker cooperatives
What does he think about competition?
He thinks increasing competition would not produce better goods for consumers but would lead to bankruptcies and the rise of monopolies.
Karl Marx Summary:
- Critic of free market capitalism
- “Accumulate, Accumulate that is Moses and the Prophets!”
- Capitalist profits come the extraction of surplus value (exploitation) and the division of labor (alienation)
- This creates a class conflict between workers and capitalists
