essay on marxian economics

Marxian Economics: Definition, Theories, Vs. Classical Economics

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

What Is Marxian Economics?

Marxian economics is a school of economic thought based on the work of 19th-century economist and philosopher  Karl Marx .

Marxian economics, or Marxist economics, focuses on the role of labor in the development of an economy and is critical of the classical approach to wages and productivity developed by  Adam Smith . Marx argued that the specialization of the labor force, coupled with a growing population, pushes wages down, adding that the value placed on goods and services does not accurately account for the true cost of labor.

Key Takeaways

• Marxian economics is a school of economic thought based on the work of 19th-century economist and philosopher Karl Marx.
• Marx claimed there are two major flaws in capitalism that lead to exploitation: the chaotic nature of the free market and surplus labor.
• He argued that the specialization of the labor force, coupled with a growing population, pushes wages down, adding that the value placed on goods and services does not accurately account for the true cost of labor.
• Eventually, he predicted that capitalism will lead more people to get relegated to worker status, sparking a revolution and production being turned over to the state.

Understanding Marxian Economics

Much of Marxian economics is drawn from Karl Marx's seminal work "Das Kapital," his magnum opus first published in 1867. In the book, Marx described his theory of the capitalist system, its dynamism, and its tendencies toward self-destruction.

Much of Das Kapital spells out Marx’s concept of the “surplus value” of labor and its consequences for capitalism. According to Marx, it was not the pressure of labor pools that drove wages to the subsistence level but rather the existence of a large army of unemployed, which he blamed on capitalists. He maintained that within the capitalist system, labor was a mere commodity that could gain only subsistence wages.

Capitalists, however, could force workers to spend more time on the job than was necessary to earn their subsistence and then appropriate the excess product, or surplus value, created by the workers. In other words, Marx argued that workers create value through their labor but are not properly compensated. Their hard work, he said, is exploited by the ruling classes, who generate profits not by selling their products at a higher price but by paying staff less than the value of their labor.

Marx claimed there are two major flaws inherent in capitalism that lead to exploitation: the chaotic nature of the free market and surplus labor.

Marxian Economics vs. Classical Economics

Marxian economics is a rejection of the classical view of economics developed by economists such as Adam Smith. Smith and his peers believed that the free market, an economic system powered by supply and demand with little or no government control, and an onus on maximizing profit, automatically benefits society.

Marx disagreed, arguing that capitalism consistently only benefits a select few. Under this economic model, he argued that the ruling class becomes richer by extracting value out of cheap labor provided by the working class.

In contrast to classical approaches to economic theory, Marx’s favored government intervention. Economic decisions, he said, should not be made by producers and consumers and instead ought to be carefully managed by the state to ensure that everyone benefits.

He predicted that capitalism would eventually destroy itself as more people get relegated to worker status, leading to a revolution and production being turned over to the state.

Special Considerations

Marxian economics is considered separate from Marxism , even if the two ideologies are closely related. Where it differs is that it focuses less on social and political matters. More broadly, Marxian economic principles clash with the virtues of capitalist pursuits.

During the first half of the twentieth century, with the Bolshevik revolution in Russia and the spread of communism throughout Eastern Europe, it seemed the Marxist dream had finally and firmly taken root.

However, that dream collapsed before the century had ended. The people of Poland, Hungary, Czechoslovakia, East Germany, Romania, Yugoslavia, Bulgaria, Albania, and the USSR rejected Marxist ideology and entered a remarkable transition toward private property rights and a market-exchange based system.

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Marxist Economics

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By Marxist economics we mean the work of those later economists who based their methodology and approach on the work of Karl Marx. Excluded from discussion here is the enormous body of exegetical literature seeking to amplify the genesis of and development of Marx’s own thinking (Rosdolsky 1968). Before discussing three areas where the contribution of Marxists has been most striking and important, it is helpful to bear in mind certain general features of their approach which could be said to separate them off from other traditions in economic theory.

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Crucible of Doubt

Posted 29/05/2024 by NURPRT Forum

The following post by Austin Benedetto, an undergraduate student at Northwestern University, is the sixth in the series of posts highlighting exemplary work by undergraduates with interests in Russian Philosophy, Literature,  and Religious Thought. The NURPRT Forum welcomes any undergraduate student to  submit academic writing related to these fields to be considered for publication.

In Capitalism in America , Alan Greenspan attempts to explain the United States’ fading dynamism. He provides a few reasons, but the most important is rising entitlements (e.g., Social Security, Medicare, and Medicaid). [1] These programs, to simplify, lower domestic savings and thus put at risk forward-looking investments that may yield long-term rewards. The more foundational problem, however, is that entitlements are hard to roll back. Once someone has something, it is really difficult to take it away. Economists Richard Thaler and Daniel Kahneman have extensively studied the “endowment effect,” but the idea can be traced back to Aristotle. In Nicomachean Ethics , he writes:

For most things are differently valued by those who have them and by those who wish to get them: what belongs to us, and what we give away, always seems very precious to us. [2]

This tendency, I submit, applies to more than just material goods. People similarly feel entitled to their respective ideologies. Consequently, they often leave their opinions unexamined.  When someone steps into a college classroom and vehemently declares that their political or economic system is the correct one, there is rarely any doubt in their voice. It is even more troublesome when these same people equate criticism with personal disrespect. They see other viewpoints as not only incorrect but morally inferior. In such cases, pedagogy morphs into fundamentalism and indoctrination.

All of this goes back to the idea of entitlement. People often feel that, simply by existing, they have the “right” to hold strong opinions on all subjects. While this is not necessarily consequential when it comes to something like rating movies, ideology is a different matter. We should be very careful with what philosophies we adopt. This is not to say all entitlements are bad – people have the right to their own opinions – but social and political philosophies ought to be open to careful examination and reconsideration, rather than treated as an inviolable personal possession.

Russian literature helps us to better understand this feeling of entitlement, whether economic or ideological. Surrounded by Russian utopists and nihilists, Dostoevsky observed hotheaded people who never suspected their own philosophies. Dostoevsky, on the other hand, was filled with doubt over even his most essential belief: God. In one of his letters, he wrote: “the main question is the very one I have struggled with consciously and unconsciously all my life—the existence of God.” [3] Despite proclaiming his faith, he greatly struggled with it. This conflict is best exemplified in the Brothers Karamazov where, through Ivan and the Grand Inquisitor, he gives one of the best rebuttals to Christianity. This makes clear that he did not believe in Christ “like a child”; instead, his belief “passed through a great furnace of doubt.” [4]

But is doubt really edifying? Surely it is – and this is where the power of the realist novel comes into play. In the essay “Art as Device,” Viktor Shklovsky describes the purpose of art as the “’enstrangement’ of things and the complication of the form.” [5] In other words, art interrupts thoughtless habit and allows the reader to see objectively as a third party. Shklovsky commends Tolstoy as the master of this form. His method, Shklovsky continues, “consists in not calling a thing or event by its name but describing it as if seen for the first time, as if happening for the first time.” [6]

Shklovsky gives many examples, but a relevant one comes from Stiva in Anna Karenina . Stiva is inattentive, and while “science, art, and politics had no special interest for him, he firmly held those views on all these subjects which were held by the majority and by his paper.” [7] This seems ridiculous to anyone who reads it, of course, but people habitually do this every day. I have read countless Op-Eds nodding in agreement without ever considering the other side. It is only when I read passages like this one from Tolstoy that the routine appears as foolish as it truly is.

Given the obvious absurdity of thoughtless agreement and oversimplification, why do we do it? Joseph Schumpeter, a famous economist, describes this phenomenon in relation to Karl Marx’s appeal. Much of economics is about individual technical insights, while Marx gives a fully packaged synthesis. On this, Schumpeter writes:

From the students who are taught to see only individual trees we hear discontented clamor for the forest. They fail to realize however… that the synthetic forest may look uncommonly like an intellectual concentration camp. [8]

We desire philosophies that purport to explain everything, but life is far more complicated than these theories can capture. By trying to limit the richness and endless variety of experience, we indirectly imprison ourselves. Moreover, in explaining everything simply through environmental or economic conditions, we may “solve” the issue but only tautologically.

To elucidate this point, Gary Saul Morson tells a story about two kids playing around on a sunny day. One child asks: “why is the sky blue?” The other responds: “because God wills it.” This certainly is an answer, but by explaining every phenomenon it in fact explains nothing. This type of totalistic explanation is also what creates that dangerous certitude which so reviles all other possible viewpoints.

We might find a better approach by starting with Berlin’s essay The Hedgehog and the Fox . Investigating Archilochus’s proverb, “The fox knows many things, but the hedgehog knows one big thing,” Berlin imagines two types of thinkers. Hedgehogs, like Karl Marx and Plato, have one big idea through which they view the world. Foxes, on the other hand, believe that recognizing life’s infinite complexity is truer to reality than any one “big idea.” This dichotomy may seem unfair to hedgehogs, but it is important to remember that hedgehogs have had a profound (sometimes baneful) impact on intellectual history.

The question now becomes: what does a “fox” look like? Evidently, we need to consciously criticize our habits and ideologies – but is there something more? I submit there is: dutiful and active awareness. This can be best understood by looking at the three Karamazov brothers.

Alyosha, the youngest of the brothers, is religious and arguably dutiful from the beginning – but he believes like a hedgehog. His faith is built upon his respect for the Elder Zosima (a spiritual man) and his belief in miracles. When Alyosha examines his brother Ivan’s motivations, he does not actually stop and think; instead, he merely copies Zosima’s diagnosis. To which his interlocuter interjects, “That’s plagiarism.” [9] Alyosha’s credulity, like Stiva’s, is exactly what needs to be avoided.

Yet, Alyosha soon experiences a reckoning. The miracle he expected doesn’t happen, and great doubt disrupts his religious base. Feeling aimless, he is goaded into the den of a women whom many see as debauched. But this woman, Grushenka, does not act as expected. She is warm and tells a story about a wicked woman who has the possibility for redemption solely because she did one good act: giving an onion to a poor beggar. These small deeds, both the onion and the telling of the story, are not miracles in the conventional sense. They are mundane acts which anyone can do. Yet, they offer a much stronger basis for belief because they are at once ordinary and extraordinary. No longer does Alyosha’s religious faith rest on an oversimplified belief in divine interventions. In other words, like a fox, he becomes aware of the individual trees that compose the forest of faith.

No one explains this phenomenon better than the Elder Zosima. When a woman confides to him that she is troubled by a crisis of faith, he does not dissimulate or give a ready-made proof for God. All the Elder does is prescribe a dutiful way of life: “there’s no proving it, though you can be convinced of it… By the experience of active love. Strive to love your neighbor actively and indefatigably” [10] This is hard-earned belief. Instead of blind faith or simplified ideology, one works for their principles and is thus better prepared to face the world’s contingencies.

Ivan, the middle Karamazov brother, undergoes a transformation like Alyosha, but one that, in its ambiguity, is possibly more revealing. From the onset, Ivan is described as “paradoxical.” [11] He struggles to square the possibility of a caring God in a cruel world. The Elder assesses Ivan’s anguish, saying the “idea [of morality] is still unresolved in [Ivan’s] heart and torments it.” [12] While Ivan is commendable for examining his belief system, he does so with detachment. By signing his writings as “The Observer,” he impersonally remains a step away from truly working through his ideas. In this way, he fails in the active part of ideological examination.

Unlike Alyosha, Ivan does not find definitive redemption. Still, by the end, it can be said that he takes a step in the right direction. After slowly grappling with his guilt over a crime of passivity, Ivan realizes that though contemplation is necessary, reflection, by itself, is not sufficient for assessing value systems.

This change can be seen through Ivan’s encounter with a peasant. Running over to see Smerdyakov, his quasi-accomplice in crime, Ivan overhears a peasant singing a song that is eerily reminiscent of his transgression. He knocks the peasant over and runs away, once again hiding and neglecting active duty. But after conversing with Smerdyakov for the third and final time, Ivan fully realizes his guilt – and on his return, Ivan goes over to the peasant and brings him to the hospital. For the first time, “something like a joy was springing in” the almost always gloomy Ivan. [13]

By taking action, Ivan begins to reconcile with the irreducible complexity of life he had abandoned for solipsistic thinking. All of this leads to a final encounter with his interior demon – an actual devil. Ivan’s devil famously exemplifies the ordinariness of evil, but more interestingly for this discussion, he elucidates the necessity of opposing viewpoints:

Without criticism, it would be nothing but one ‘hosannah.’ But nothing but hosannah is not enough for life, the hosannah must be tried in the crucible of doubt. [14]

Not only would life be less interesting were everything clear, but would belief even mean anything if it was so easily begotten? No, people value something more when it is achieved than when it is freely obtained.

Doubting your core beliefs is not easy, however. As Nobel laureate Svetlana Alexievich wrote: “Courage in war and courage of thought are two different things. I used to think they were the same.” [15] (WSJ). It requires immense personal suffering to speak against the prevailing ideology – maybe even more than when fighting in battle. All of this raises the question: how does one endure throughout the discovery process? Dmitri, the eldest Karamazov, provides a good resolution. After being arrested for a crime he did not commit, Dmitri exclaims he “could stand anything, any suffering, only to be able to say and to repeat to myself every moment, ‘I exist’” [16] By cultivating respect and perhaps even love for life’s complexity, one can better withstand its indispensable uncertainties.

Image: Aleksandr Ivanov, Study: Two Heads, Turning of the Head of the Doubter 1835-39

[1] Alan Greenspan and Adrian Wooldridge, Capitalism in America: A History . (New York: Random House, 2008), 404.

[2] Aristotle, The Nicomachean Ethics , Translated by F.H. Peters. (London: Kegal Paul, Trench, Truebner &Co, 1983), 206.

[3] Fyodor Dostoevsky and Susan Reynolds, The Brothers Karamazov: A Revised Translation . Translated by Constance Garnett. (New York: W.W. Norton & Co: 2011), 654.

[4] Dostoevsky, Brothers Karamazov , 667.

[5] Viktor Sklovsky, Art as Device , Translated by Alexandra Berlina. (Duke University Press, 2015): https://warwick.ac.uk/fac/arts/english/currentstudents/undergraduate/modules/fulllist/first/en122/lecturelist2017-18/art_as_device_2015.pdf

[6] Shklovsky, Art as Device .

[7] Leo Tolstoy, Anna Karenina , Translated by Constance Garnett. (New York: Modern Library, 1950), 9.

[8] Joseph Schumpeter, Capitalism, Socialism, and Democracy . (New York: Harper & Row, 1962), 46.

[9] Dostoevsky, Brothers Karamazov , 75.

[10] Dostoevsky, Brothers Karamazov , 54.

[11] Dostoevsky, Brothers Karamazov , 65.

[12] Dostoevsky, Brothers Karamazov , 65.

[13] Dostoevsky, Brothers Karamazov , 532.

[14] Dostoevsky, Brothers Karamazov , 539.

[15] Gary Saul Morson, “What Pilate Learns.” First Things , March 2023, https://www.firstthings.com/article/2023/03/what-pilate-learns

[16] Dostoevsky, Brothers Karamazov , 500.

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Tags: Dostoevsky , Russian literature , Undergraduate

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