I just found a Marxist view of economics that makes some good points. Karl Marx on Financial Bubbles: Much Keener Insights than Contemporary Economists.
An excerpt:
Policy implications of this theory in terms of what really sustains an economy are enormous, as it can readily alert policy makers to the dangers of an impending economic crisis when deviations of monetary magnitudes from real-value magnitudes tend to become too big and, therefore, unsustainable.
This stands in sharp contrast to the mainstream/neoclassical economic theory that, instead of human labor, views ownership and/or management as sources of profits, or economic surplus. Accordingly, there are no systemic limits to the amounts of income/profits made by “smart” capitalist managers and financial “experts”: it all depends on how creative they are, including all sorts of clever “financial innovations” that could create paper or electronic wealth out of thin air, without being limited by any underlying real values.
Not surprisingly, most mainstream economists did not see a problem with the astronomical growth of fictitious capital (relative to industrial capital) in the immediate period preceding the 2008 financial implosion. Indeed, not long before the market crash, these economists were cheerfully predicting that there would be no more major crisis of capitalism because “creative financial innovations” had essentially insured the market against risk, uncertainty and crash.
The Marxian theory of financial instability (and of economic crisis in general) goes beyond simply blaming either the “irrational behavior of economic agents,” as neoliberal economists do, or “insufficient government regulations,” as Keynesian economists do. Instead, it focuses on the built-in dynamics of the capitalist system that fosters both the behavior of the market agents and the policies of governments. It views, for example, the 2008 financial meltdown as the logical outcome of the over-accumulation of the fictitious finance capital, relative to the aggregate amount of surplus value produced by labor in the process of production.
Other than the labor theory of value (IMO value is created by production and demand or desire) the analysis is pretty good.
Don’t forget Marx lived in another time of a Kondratieff Bottom. Capitalism had temporarily run out of steam. Profits were hard to come by. Marx’s error in that regard was to envision the events of his time as a permanent condition.
By decoupling finance from demand we are exacerbating the current difficulties. Such a decoupling is not a bad idea in an era of rising profits. It can be sustained by innovation. But when the innovation well temporarily runs dry it is a recipe for disaster.
Comments
7 responses to “Marxist Economics? This Is Interesting”
karl marx one of the marx brothers was very good at observing the problems of capitalism his solution to the problem was worse then the problem. non exploitive capitalism works much better. as henry david thoreau said of the new capitalist railroads being built when a neighbor ask him what he thought of it. “I observe a few ride but most are run over!” same with unrestrained capitalism. that is why our free elections are not so free as we observe this year.
Capitalist societies have occasional depressions. Communist societies hit bottom and stay there. But the propaganda posters are first rate.
Contrasting Marxian analysis to Keynsian analysis doesn’t explain much, Keynsianism is soc1a!ism lite. Try the Austrian analysis:
https://en.wikipedia.org/wiki/Austrian_business_cycle_theory#cite_note-Woods.2C_Jr._2007_174.E2.80.93179-2
“The Austrian business cycle theory (ABCT) is an economic theory developed by the Austrian School of economics about how business cycles occur. The theory views business cycles as the consequence of excessive growth in bank credit, due to artificially low interest rates set by a central bank or fractional reserve banks.[1] The Austrian business cycle theory originated in the work of Austrian School economists Ludwig von Mises and Friedrich Hayek. Hayek won the Nobel Prize in economics in 1974 (shared with Gunnar Myrdal) in part for his work on this theory.[2][3]
Jerry Pournelle is always claiming that unrestricted capitalism will lead to human flesh being sold in the market. Any moral dimension depends how said human flesh originates. Vat-grown genetically engineered cloned flesh doesn’t seem too morally objectionable. And I’ll take a pound of Kaley Cuoco rump roast, please. A Modest Proposal scenarios may be different. I think any civilized society will have enough moral infrastructure to prevent such a thing, but in any case, it seems to be a legitimate function of government to prevent outrages.
unrestricted capitalism won’t work and needs the very government it says gets in the way to protect it free trade needs democrat super delegates and republican donor class to forestall the will of the voters along with other forms of voter suppression. in u.k. the exit vote cost pm his job. the ruling class was upset with exit vote outcome.
Danny Elfman explains it:
https://www.youtube.com/watch?v=xqXAW2snGMI
Captain – the problem with government is cronies. And every system gets these leaches.
Smaller government – fewer leeches.
MMM,
If you read the full article you will see that it is in essence an Austrian school analysis.
What Marx missed (besides the origin of demand and the labor theory of value) was the cyclic nature of capitalism. But he didn’t have enough data. We have added two more cycles since his day. And Kondratieff was another 70 years in the future.
But I liked the article for its discussion of pre-bank finance.
I don’t know how you fix it. The desire for profit almost always overcomes prudence. Gold does not fix human nature.
A zero debt system is good in theory. But it limits the advances possible when conditions are right.
The labor theory of value originates with David Ricardo. It’s both wrong, and not original to Marx. Marx’ most original contribution was class logic and class warfare. Possibly the most evil idea since Antisemitism, with hundreds of millions dead. Prior to Marx the political alignment in England was Whigs vs Torys. The whigs represented both the factory owners and the workers, who saw themselves in opposition to the landed gentry. After Marx the Whigs fell apart, the workers went to Labour and the owners to the Conservatives.
The workers were supposed to be ground under the heels of the capitalists, growing ever poorer, living in cardboard boxes and eating gruel. Didn’t really happen, as Tom Wolfe put it [Land of the Roccoco Marxists] the reason you can’t find your plumber is he’s on a two week cruise of the Caribbean with his third wife. Recent history exempted, and I don’t think Marx mentioned crony capitalism, which isn’t really capitalist at all.