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Marxian Economics



Definition

Marxian Economics refers to a school of economic thought that is based on the works of 19th-century economist and philosopher Karl Marx. It largely focuses on the critique of capitalism, specifically the exploitation of labor and the dynamics of capitalist economy. This theory maintains that profit derived from any economic enterprise is produced by the labor force, which is unfairly distributed to the ruling capitalist class.

Phonetic

The phonetics of the keyword “Marxian Economics” is: “mahrk-see-uhn ih-kah-nuh-miks”

Key Takeaways

Sure, here you go:

  1. Surplus Value and Exploitation: According to Marxian economics, capitalistic economies operate on the principle of surplus value derived from exploiting the labor of workers. Workers are often paid less than the value they produce, resulting in a surplus value or profit for the owners.
  2. Class Struggle: Marxian economics states that societies are divided into different classes with conflicting interests. The ruling class controls the means of production, and extending this control leads to the oppression of the working class, engendering a class struggle.
  3. The Labor Theory of Value: This theory proposes that the value of a commodity is determined by the amount of socially necessary labor time invested in its production. In other words, the labor of workers is the source of all value in an economy. This is a fundamental principle in Marxian economics.

Importance

Marxian Economics is important because it provides a different perspective on the nature and purpose of economic activities. Rooted in the work of Karl Marx, it challenges the fundamental principles of capitalism, placing emphasis on labor as the principal source of economic value. The value of a good or service, according to Marxian economics, is determined by the labor involved in its production, rather than by supply and demand dynamics. This theory scrutinizes the implications of wage labor, commodity production, and the development of economic classes, revealing inherent issues such as exploitation and social inequality. In essence, Marxian Economics gives us the tools to critique and question traditional economic models, offering a robust framework for understanding economic systems beyond a purely capitalist context.

Explanation

Marxian Economics, based on the writings and theories of Karl Marx and Friedrich Engels, serves as a critique of capitalism and expresses the purpose of examining, from a radical standpoint, the dynamics and contradictions within a capitalist society. The central purpose behind Marxian Economics is to understand and predict the societal changes stimulated by the capitalist mode of production and subsequently develop a roadmap towards a post-capitalist, socialist society. To do so, it delves into the examination of capital, labour, and their interrelation, as well as the distribution of wealth within the economic system. Marxian Economics is used for examining the exploitation of labor and the instabilities inherent in capitalism based on Marx’s theory of surplus value, which argues that the unpaid labor of workers is the real source of profit for capitalists. It also focuses on the underlying conflict between capital (the owners of the means of production) and labor (the workers). This analysis is used for promoting societal change and advocating for economic policy aimed at mitigating these inequities, pushing towards a more egalitarian economic system. Thus, Marxian Economics acts as a framework for challenging prevailing economic practices and formulating alternatives aimed at social justice.

Examples

1. Cuban Economy: Considered as one of the primary examples of Marxian economics in operation, the economy of Cuba is based on the socialist principles brought forward by Karl Marx. The government in Cuba owns and operates most industries, and provides education, healthcare, and other public utilities free of cost for its citizens, which aligns with Marx’s vision of a classless society.2. Former Soviet Union: Marxian economics were essentially the foundation of the Soviet Union’s economic system. Virtually all resources were owned by the state, and production and distribution were centrally planned by the government. It was an attempt to translate Marx’s ideas into a real-world system for an entire country.3. China’s Planned Economy: Though now moving more towards a mixed economy model, for many years following the Communist party’s ascension to power in 1949, China strictly adhered to principles of Marxian economics. The government controlled all major sectors of economy, and aimed at a classless society where wealth was equally distributed among all citizens. It pursued planned economic policies through a series of Five-Year Plans, which dictated the course of Chinese industry and agriculture.

Frequently Asked Questions(FAQ)

What is Marxian Economics?

Marxian Economics is a school of economic thought based on the work of 19th-century economist and philosopher Karl Marx. It centers on the labor theory of value and what Marx considered the exploitation of labor by capital.

How does Marxian Economics differ from classical economics?

Marxian Economics differs from classical economics primarily in that it focuses on the labor theory of value and the assertion that labor is the source of all value. It emphasizes economic disparity and social class relationships, unlike classical economics which focuses more on supply and demand factors.

What is the Labor Theory of Value in Marxian Economics?

The Labor Theory of Value is a major concept in Marxian Economics, which states that the value of a commodity can be objectively measured by the average number of labor hours required to produce that commodity.

Who are the main contributors to Marxian Economics?

The main contributor to Marxian Economics is Karl Marx himself, along with Friedrich Engels. Later, economists and philosophers like Rosa Luxemburg, Vladimir Lenin, and Antonio Gramsci contributed to the development of Marxian Economics.

How does Marxian Economics view capitalism?

Marxian Economics views capitalism as a historical stage in economic development characterized by inherent contradictions, which ultimately leads to its downfall. It highlights issues like the exploitation of labor, class struggle, and economic crises under capitalism.

What is the concept of ‘Surplus Value’ in Marxian Economics?

‘Surplus Value’ refers to the extra value created by workers’ labor which is appropriated by employers as profits. Marx argued that it was a form of exploitation.

Why is Marxian Economics criticized?

Critics argue that Marxian Economics fails to account for individuals’ motivation to work beyond basic needs, over-simplifies market operations, and that its labor theory of value doesn’t consider the subjective nature of value. There’s also criticism for its perceived lack of applicability in contemporary markets.

How does Marxian Economics propose change?

Marxian Economics aims for a society where production is organized by a free association of laborers, also known as communism. It proposes revolutionary changes to achieve that, such as the overthrow of capitalism and elimination of private ownership of means of production.

Is Marxian Economics still relevant today?

While the global economic system has evolved substantially since Marx’s time, many principles of Marxian Economics remain relevant. Issues like income disparity, economic inequality, and the critique of unrestrained capitalism continue to be subjects of contemporary debates.

Related Finance Terms

  • Means of Production
  • Surplus Value
  • Capitalism
  • Class Struggle
  • Labour Theory of Value

Sources for More Information


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