Hi
Are there any concepts in mainstream economics today that can be said to have come from Karl Marx directly? I look forward to your feedback.
davidmich
Marx didn’t invent the word Capitalism, but the modern usage of the word derives from him.
Marx is considered the last of the classical economists: his work makes no use of marginal analysis, or the application of calculus to economics. My brief and rough answer to the OP is, “Well, not very much but then again we’re discussing the 1860s.” The economic historian Brad DeLong gives a longer answer. He delineates Marx the prophet, Marx the political activist (with 3 big ideas), and Marx the economist (with 6 big ideas, 3 good and 3 bad).
Here’s an excerpt from the blog post. Click through for the longer argument. http://boards.straightdope.com/sdmb/showpost.php?p=18075328&postcount=219
Marx rarely used the word “captitalism.” He referred to the “capitalist mode of production” instead, because 1) that made it clear that “capitalism” was just one of the many ways throughout history people had organized their economies, that it was a historical and contingent, not an eternal, inevitable way of doing things
and 2) if you’re in favour of socialism, you’re a socialist, but believing in capitalism doesn’t make you a capitalist, that is, someone who uses capital to employ wage workers and profit from their labour.
DeLong describes himself as a neo-liberal economist. The neo-liberalism program of the past few decades wrecked the economies of Latin America in the 80s and brought the West to its present situation. Their “theories” are completely bankrupt and are increasingly rejected, especially since the Great Recession of 2008 and the stagnation which has followed.
Relevance?
Mainstream economics rejects Marx’s main arguments and has always done so. This is not so difficult to understand. Marx argued that in any society, its social and political institutions reflected the interests of the dominant class, the class which owns the means of production. For Marx, the rise of the capitalist class, the bourgeoisie, represented a completely new development in history. He was awestruck, writing of this class with Engels in the Communist Manifesto in 1848 that “It [the bourgeoisie] has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals”. Everywhere it destroyed the old classes of feudalism, and later the peasantry, the petty bourgeoisie, i.e., small businesspeople, independent craftspeople, and CREATED the modern working class, until eventually most people are employees (Hello!) in a system where the bourgeoisie own almost all the means of production. He said this situation would result in a constant struggle over division of the pie, essentially between wages and profits and must eventually lead to the last great revolution in human affairs, the socialist revolution, as he political and economic structures of capitalism become increasingly obsolete.
Marx was writing in the third quarter of the 19th century. He never claimed to be clairvoyant, and since change is a constant, later developments could not be addressed. In the first two decades of the 20th century, however, the work of V. I. Lenin discovered a fundamental change in the nature of capitalism. Whereas previously capitalism was dominated by industrial capital and the export of manufactured goods, the power of finance capital had become dominant in the leading world powers, which became the imperialist powers, with Great Britain as the most powerful. These powers literally divided up the world. Lenin called this the era of imperialism. This situation was very unstable, as rising powers such as Germany-especially Germany-, the US, and Japan, arrived late at the party and felt they deserved a larger slice of the world pie. It was understood in the late 19th and early 20th century that this would lead to a intra-imperialist war, which of course erupted in 1914.
Why is this important? It is important because Lenin realized that finance, the shuffling of money, rather than production, created a rentier class, the finance capitalist class, which, unlike the previously dominant industrial capitalist class, has no interest in production, since its income is not derived from profits in what we call the “real economy”. In that sense, this class is parasitical and has more in common with the feudal aristocracy which derived its income from land rents. With this development, Lenin saw that the revolutionary capitalism which had transformed the world had morphed into what he called “moribund capitalism”, and its final state. Society was stuck. The era of imperialism was therefore the eve of the socialist revolution.
Establishment scholars, economist, politicians, and media in the West completely reject this view of history, but it has been a force driving everything from the anti colonial movement in the post-WWI period, the New Deal, the rise of the labor movement and its demise and the tangle of contradictions the West in now unable to solve.
Meanwhile, today’s most dynamic society, China, proclaims in its Constitution, that Marxism-Leninism is the bedrock principle of its world view. No university in the West actually treats ML in any honest fashion. Any scholarship exists solely to “prove” its falsity. Therefore, the Western intelligentsia fails to understand China because it has no knowledge of the founding principles of the People’s Republic. Instead, it has a cartoon understanding of this extremely deep and insightful interpretation of the forces determining the course of history.
It is relevant because someone whose theories are complete failures has no credibility.
I hold shares of the iShares Dow Jones China Offshore 50 ETF which has been doing quite nicely as of late. If this Marxism-Leninism thing works for them, I’m OK with it.
Some of the issues of credibility were discussed in the Great Debates link that I provided upthread. The OP inquired about influence.
If Marxists had anything timely to say about the housing bubble, subprime loans and derivatives in the run up to the 2008 financial crisis, I am unaware of it.
According to Jim Cramer, “The only guy who really called this right was Karl Marx.”
But anybody who predicts there will be a financial crisis will, sooner or later, be correct. It’s the timing that’s the tricky part.
It has been established wisdom for the past several decades that with the establishment of the Federal Reserve and similar central banks and after a learning period which has already occurred (they didn’t quite understand what to do during the Great Depression) that financial crises are a thing of the past.
Lyndon LaRouche called it as well: he predicts crisis every year after all. (Also, Jim Cramer isn’t a serious guy, IHMO.)
Nouriel Roubini got it basically right in the particulars. Lots of people saw the housing bubble. Lots of people knew that derivatives were inflating risks. Fewer had the intellectual courage to perceive that the bursting of the housing bubble would result in more than a garden variety downturn.
Well it had been established wisdom and Bernanke said pretty much that c. 2002. (Nitpick: financial crises were understood to be a recurring feature (see S&L crisis, LTCM), but it was thought that monetary policy would be sufficient to prevent a Great Depression or lost decade.) We were wrong.
ETA: Karl Marx did understand that capitalism was prone to periodic crises, which was a legitimate insight. Mainstream economists believe that these crises can be cured by prudent governmental policy: fiscal, monetary and regulatory policy are sufficient. You don’t need to have GM, GE, Walmart and Apple controlled and owned by the state.
Put me down as a “No” on this question.
For a survey of the most common graduate textbooks, Marx is absolutely nowhere to be found. He doesn’t manage to make the index in Romer’s Advanced Macroeconomics, Stokey and Lucas’s Recursive Methods in Economic Dynamics, Ljungqvist and Sargent’s Recursive Macroeconomic Theory, nor in MWG’s Microeconomic Theory, Varian’s Microeconomic Analysis, or Jehle and Reny’s Advanced Microeconomic Theory. That’s a pretty decent look at the foundations of modern mainstream thought. He does rate a single mention in the second undergrad textbook I started looking through, Landsburg’s Price Theory and Applications. But the purpose of bringing him up is not to endorse one of his ideas but to criticize it. It’s a very short criticism of the labor theory of value.
Any influence from Marx in mainstream economic thought today will necessarily be indirect if he’s not even mentioned.
Marx did predict accurately that mainstream, or bourgeois, economists would no longer be interested in the questions he asked or the answers he found:
“In France and in England the bourgeoisie had conquered political power…It sounded the knell of scientific bourgeois economy. It was thenceforth no longer a question, whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. In place of disinterested inquirers, there were hired prize fighters; in place of genuine scientific research, the bad conscience and the evil intent of apologetic.”
Thus the dismissal of the labour theory of value, which has little to do with prices and everything to do with explaining how profits are made by workers, not owners.
DeLong is certainly liberal, in the sense of willing to work within established structures and not being a radical socialist, but his preferred response to the 2008 depression was and is very very different than the semi-disasterous austerity that actually happened.
I mean, if you think anyone except a card-carrying Young Socialist Worker is an untrustworthy running dog of the Capitalist Swine, then I guess, yeah, you wouldn’t look to DeLong for a decent semi-objective view of Marx. And I guess you could talk yourself into blaming him for the post-2008 depression even though doing what he called for (in writing, at the time) would have been tremendously better than what was done.
But if you can see the difference between ‘squarely within and maybe left edge of the Democratic Party’ and ‘pushing tax cuts for the rich as the solution to any and all economic issues’, then DeLong is probably a decent place to start for a historical view of Marx.
Yeah, it’s always been a lot easier to insult the motives of others rather than engage their arguments directly. You do a valuable service by bringing up an example of this from the 19th century.
I imagine we won’t have to look very far to find more examples.
The original labor theory of value predates Marx and goes back at least as far as Adam Smith, and it was fact about prices despite what Marx did to it later. Now, I doubt the textbook author is conversant enough in Marx to engage the Marxist LTV. I doubt he even knows the difference. Most people don’t, including most economists and even most Marxists. You username might mark you as a somewhat different class of thinker but you also show no particular sensitivity to the pre-Marxist LTV in your own post.
More broadly: If people want to know why mainstream economists dismiss the Marxist LTV (or would dismiss it, if they gave it any thought), they might be better off actually asking an economist. It stands to reason. They could ask an anarchist instead, but an anarchist could be at risk of attributing base motives or putting false words in their mouths. Better to go directly to the source to find out if mainstream economists are really uninterested in the questions Marx asked or the “answers” that he is supposed to have found.
Of course that would quickly lead off topic. The factual question from the OP has, I think, been answered sufficiently.
See post #3 on Marx as last of classical economists.
Outside economics, much of Marx’ work informs studies of law and other humanities fields. Related theories are generally called “critical studies”. For example, critical legal theory treats the legal system as one set up by and for the benefit of the wealthy, or at least for the benefit of entrenched power interests. It’s not mainstream in the sense that it is the primary method of analysis, but it’s not considered a crackpot idea, either; it is at least mentioned in law school.
Radical economics is a thing and it’s not crackpot stuff. It is however fringy. Marx himself isn’t considered a crackpot so much as a classical economist with a conceptual framework that was made largely obsolete by marginal analysis. You can study class and income inequality without getting bogged down in surplus value.
Oh yeah. Class. That’s a concept used by economists that was shaped by Marx. Here’s an example from mainstream economic commentator Matt Yglassias: Stop using income as a guide to economic class.
For indirect effects on economic thought, I’ll consult the text Economics: Principles of Political Economy by Daniel Fusfeld (1985). This political economy text has a leftie bent.
Wikipedia’s entry on business cycles discusses economists who addressed this concept before and after Marx. I don’t know the extent to which Marx influenced Minsky; I doubt whether he had a great effect on Keynes or Hicks. I don’t really agree with Fusfeld, though I’d be happy to be corrected.
Marx is occasionally used as a foil or motivator for certain presentations. “Marx said inequality inevitably increased, but we can see it go up and down. …or so we thought! Marx thought that wages would inevitably be driven down to subsidence levels, but look what happened! The opposite!”