Karl Marx - The Revolutionary Economist

There are few economists who have become both so reviled, and admired as Marx. Indeed some would even question whether Marx deserves to be called an economist; others would prefer terms like 'bungling and failed revolutionary'. However, there are certainly few economists who read so widely and wrote so much as Marx. Whether you love or loathe Marx, we cannot deny his writings had profound influence on the twentieth century.

What Did Marx Believe?

Marx believed society was an evolving struggle. He believed Capitalism was an evolving structure. However, unlike Adam Smith, Marx did not believe this evolution was always smooth, nor did he believe it evolved for the best. In fact Marx, predicted the collapse of Capitalism.

Marx placed great value on economic forces for explaining social structures. He argued that institutions such as church, education and the state evolved to support the capitalist class. But, Marx, was revolutionary in placing so much emphasis on the power of economic forces to influence society.

Marxist Critique of Capitalism.

Marx examined society and argued that the wealth of capitalists was based on paying labour less than their true labour value (underpaid labour). This difference between the true labour value and the wages paid led to the accumulation of money capital.

Marx argued that Capitalism was inherently unstable because:

• Workers were abused and disenfranchised. As capitalism developed, Marx predicted, workers would become increasingly alienated and seek to overthrow the capitalist class.
• Capitalists could make bad decisions about what to produce
• Growth was not guaranteed but could become volatile leading to periods of economic slump. Marxists certainly point to the Great Depression of a vindication of how capitalism can fail.

Failings of Marxism

The proletariat mostly became better off. Economic growth did enable Capitalists to make more profit, but, ultimately, workers benefited from real wage rises. In the nineteenth and twentieth century, labour was often exploited with poor conditions and low wages. But, workers have become better off. After all, it is in the interests of Capitalists to have a workforce who can afford to buy their goods.

The elusive 'dictatorship of the Proletariat' in practice tended to be more about 'dictatorship' and less about the proletariat. In some ways Marx was a democrat. He was criticising a system which did not extend the vote to large sways of the working class; he wanted these disenfranchised workers to be enfranchised. But, in practise, Marxism is indelibly linked to the totalitarian state of the Soviet Union.

Why Mention Marxism - Surely it is all History?

I can imagine some readers (especially in America) thinking why even mention Marx? Surely, he was hopelessly flawed and the inspiration behind the despotic Stalinist regime? It is worth mentioning what John Maynard Keynes says on Marxism (1931)

"How can I accept the [Communist] doctrine, which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values."[13]

Why Marx is Important

• Marx was a revolutionary, he enabled a powerful critique of capitalism. This was perhaps essential for more informed criticism to emerge over time. We do not have to agree with a revolutionary to acknowledge that they bring new issues into a different perspective. I do not agree with Plato, but, at the time his work was important for the development for Western thought.
• Marx never lived to see the Russian Revolution. I imagine he would have generally supported Lenin and Trotsky, but would have been disgusted with Stalin who was only a Communist out of convenience to achieve his goal of absolute power.
• Whether we like it or not, the ideals of the Communist Manifesto did inspire many. At a time of vast inequality and widespread poverty, it is hardly surprising that many were excited by a vision of a society based on equality and fairness rather than the abject poverty and inequality prevalent in nineteenth century society.

Others in Great Economists Series

• Part 1 John Maynard Keynes


• Karl Marx Biography