Tru Boldt Karl Marx History of Economic Thought Econ 403/503 October 13, 2011

KARL MARX

Looking back at the history of economics, many economists many come to mind, Adam Smith, John Keynes, Milton Friedman, but one seems to come to my mind that has made a significant contribution. Karl Marx was a socialist thinker who influenced other scholars long after his death in 1883. Marx had an everlasting interested in philosophy, anthropology and economics. By combining all of these they helped Marx to developed philosophy anthropology, which is the study of human beings. Karl Marx was born into a middle class family in Moselle, Germany on May 5th, 1818. His father, Hirschel Marx, was a lawyer in Trier, Germany. He was a strong willed Jewish man but in order to escape anti-Semitism he converted to Protestantism. Karl Marx was privately educated until 1830, when he was enrolled at Trier High School (Wheen). When Karl Marx was seventeen he enrolled in the Faculty of Law at the University of Bonn. Within the next year he became engaged in philosophy and subsequently enrolled in a more serious institution at the University of Berlin (Kreis). While at the University of Berlin Marx was influenced by one of his professors Bruno Bauer. Bauer was well known for his atheist views and radical opinions which continually got him into trouble (Kreis). He introduced Marx to the literature of G.W.F. Hegel, which was based on the thought that a thing or thought could not be separated from its opposite (Karl Marx History Economic Ideas). Hegel argued that unity would eventually be achieved by the equalizing of all opposites (Spartacus Educational).

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After the death of his father in 1838, Marx was forced to get a real job to support himself. After completing his doctorate at University of Jena he wanted to become a university professor, but unable to find a teaching position. He decided to abandoned that idea and tried his hand in journalism, but much like his mentor his ideals were too radical and editors were reluctant to publish his articles (Spartacus Educational). During this time period Marx decided to stray away from the idea of Romanticism and became a believer in the idea of Hegelianism, which developed a radical critique of Christianity and opposition of Prussian autocracy. During this movement, Marx became editor of Rheinische Zeitung, which was a liberal newspaper and was backed by the industrialists. Marx wrote extreme articles, which forced the Prussian government to close the newspaper in 1843 (Kreis). After the Prussian government closed the paper, Marx migrated to France. During his time in France he worked closely with Ludwig Feuerbach whose radical ideas about religion and society were the equivalent to Marx. Feuerbach believed that humans had created God out of a projection of their own ideals. He continued on saying that if God were abolished, this would help humans to overcome their alienation (Singer). In Economic and Philosophic Manuscripts of 1844 Marx took Feurerbachs ideas and applied them to the study of human beings, by writing that he believed that humans were not able to work to better the good of their entire species, but were only able to work for their own personal good (Spartacus Educational). Economic and Philosophical Manuscripts of 1884, were not found until the 20th century when scholars found the unpublished study by Marx. This study gained such prominence because it formulated Marx Theory of Alienation, which is considered philosophical underpinning for his later critique of capitalist as an economic system. Marx writes about the workers in communism society and how they were suffering from four different types of labor.

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When the product that a particular worker creates is immediately taken away from them this is the first type of alienation. Secondly, work they do is experienced as a form of torture. The third alienation is awareness of what workers can accomplish and with their human power and what they are actually allowed to do. Fourthly, the need of having human relationships that are being replace by the exchange of products (Frostburg Forum). Marx, in these writings, attempts to categorize the basics of economic thought into a Hegelian deduction of categories. Marx believed that all categories: wage, exchange, rent, etc. were of middle-class economics that were derived from the thought of economic alienation. (Marx) After his work on the on the Economic and Philosophic Manuscripts of 1844, Karl Marx was banished from Paris where he decided to move to Brussels in 1845 and then to London in 1847 (Kreis). While in London, Marx worked with Freurich Engels, who was also a Hegelian. Together they co-authored different articles and the well know book The German Ideology (Wolff) In this book, Marx and Engles contrast their new materialist method with the idealism which had characterized preceding German thought. They start by setting out the premises of the materialist method, by stating that real human beings must produce their means of subsistence in order to satisfy their material needs. They continue to state that material life determines ones social life; so the primary direction of social explanation is from material production to social forms. The satisfaction of needs stimulates new material and social needs; from this realization forms. As the material means of production develop, modes of cooperation or economic structures rise and fall, and eventually communism will become a real possibility once the plight of the workers and their awareness of an alternative motivates them sufficiently to become revolutionaries (Stanford Encyclopedia of Philosophy).

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Together in February of 1848 they published The Communist Manifesto. Unlike most of Marx work this was an account of communist ideology. It summarized the forthcoming revolution and the nature of the communist society that would be established. Marx argued that if one is to understand history then they must not see it as a story of individuals and their struggles and conflicts with the state but as story of social classs struggles with each other (Hall). Marx talked about how over time how social classes had evolved and changed. The most important class in the 19th century was the bourgeoisie which according to Marx meant the owners of the factories and the raw materials which are processed in them. The other class that Marx mentions was the proletariat whose members owned very little and were forced to sell their labor to the capitalists. He believed that not only were these classes different in wealth status but that they both have different interests. He wrote about how he thought that the conflicts between the two would eventually lead to a revolution by the proletariat, who would eventually be victorious; causing the bourgeoisie class to cease to exist. Which would form a new social class that would be a communist (Spartacus Educational). After The Communist Manifesto was published in 1848, as Marx had projected in the book, an outbreak of revolutions occurred across Europe. He decided to move back to Cologne to focus on studying and developing his theories about social and economic history. Marx wrote extensively about the economic causes of this process in Das Kapital (Capital), volume one was published in 1867 and the latter two volumes, heavily edited by Engels, published in 1885 and 1894. Probably the best formula for characterizing Marxs economic theory would be to call it an endeavor to explain the social economy. This would be true in a double sense. For Marx, there are no eternal economic laws, valid in every epoch of human prehistory and history. Each mode of production has its own specific economic laws, which lose their relevance once the general

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social framework has fundamentally changed. (Mandel). In the first edition, Marx explained the idea of commodity production and his in-depth analysis of that idea. A commodity is defined as a useful external object, produced for exchange on a market. He believed that commodities had two values: exchange-value and use-value to be understood as their price. Of the two Marx says that use-value can be easily understood but exchange-value is more difficult to understand. Marx explanation is in terms of labor input required to produce the commodity. So the labor theory of value states that the value of a commodity is determined by the quantity of socially necessary labor time required to produce it. Stage one argues that if two objects can be compared in the sense of being put on either side of an equals sign, then there must be a third thing of identical magnitude in both of them to which they are both reducible. Since commodities can be exchanged against each other, Marx viewed as labor as the third thing. (Stanford Encyclopedia of Philosophy.) Marx argues that capitalism is distinctive; it not only involves the exchange of commodities but the advancement of capital in the form of money. Which purpose is to generate a profit through the purchase of commodities and converting them into other commodities which yield a higher price and thus produce more profit. Marx believed that his theory of capitalism was unique because no other previous theorist had been able to explain how capitalism is able to make a profit. In this theory the cost of a commodity is determined the same way as the cost of every other, in terms of social necessary labor required producing it. For example if a commodity takes six hours to produce the first six hours of the wording day spent on producing value is equivalent to the value of wages that the worker will be paid, which is termed necessary labor. Anything above this is surplus, which according to Marx is the source of profit because it is the point where the commodity is able to produce more value than it is actually worth. This excess

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worth is formed by the worker putting in credit that is extra then what it takes to create the value of the workers wages. This description is the definition of the theory of the surplus value of profit. In Das Capital (Capital) Volume 3 Marx does make the prediction that the rate of profit will fall over time, which is one of the factors that leads to the downfall of capitalism. Marx predicts that the downfall of capitalism will be when the profit rate will eventually falls over time. With every theory there are always problems. With this theory one of the problems that is pointed out by Marx is that theoretically companies that use intensive labor should have a higher rate of profit than those who use less labor. This idea has been proven false and was said to be theoretically unacceptable (Clever). Marx also had the idea of the transformation problem. The transformation problem is the problem of finding a general rule to transform the "values" of commodities (based on socially necessary labor content according to his labor theory of value) into the "competitive prices" of the marketplace. Marxs theory of labor has been discredited since his creation of the idea, but there are still ideas and elements of his in the theory of labor that are worth discussing. Economists feel there are two main aspects that are worth discussing. The first idea was Marx idea that the common belief that capitalism is a society that involves harmony between the worker and capitalist, this is false. Capitalism is a struggle between worker and capitalist for better wages and working conditions compared to the profits of the capitalist. The second idea of Marxs that is worth mentioning was Marx denial that there is a long-run tendency to equilibrium in the market, and his descriptions of mechanisms which underlie the trade-cycle of boom and bust. Each aspect provides a useful corrective to aspects of orthodox economic theory (Kries).

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Being able to lay down a basic application was Marx basic goal of his economic theory, he wanted for others to understand capitalism and how it works. By doing this he was also focusing on the process of change instead of other economist who mainly focused on the static equilibrium. Marx analysis was directed to help individuals understand the basic market and what drives it. Mark Blaugh writes Marx was an incredibly intelligent and incredible economist, and his hard work of 20 extensive years on Capital shows the large amount of education and knowledge that led up to it (Karl Marx). The contribution that Marx has provided to society has been matched by few others. Although some of his expectations about the future course of the revolutionary movement have yet to materialize; his stress on the economic factor in society and his analyses and theories have had an influence on history, sociology, and study of human culture. Karl Marxs extensive work in economics helped pave the way for the theories and education that many of us now live by every day.

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Works Cited Hall, Raymond. "Darwin's Impact - The Bloodstained Legacy of Evolution." 1:1. Creation, 2005. Web. 7 Oct. 2011. <http://www.answersingenesis.org/creation/v27/i2/darwin.asp>. Karl Marx: Economist or Revolutionary?. Harry Clever. 1986 Aug. 22. University of Colorado. 10 Oct. 2011. Web https://webspace.utexas.edu/hcleaver/www/MarxEcoorRev.html "Karl Marx History Economic Ideas." Scarlett. 2010. Web. 29 Sep. 2010. <http://www.economictheories.org/2008/07/karl-marx-history-economic-ideas.html>. "Karl Marx." Karl Marx. N.p., 2010. Web. 29 Sep 2011. <http://www.crawfordsworld.com/rob/ape/APEArticles/marx.htm>. "Karl Marx." Stanford Encyclopedia of Philosophy. Stanford Encyclopedia of Philosophy, 14 06 2010. Web. 9 Oct. 2011. <entries/marx/#2.3>.http://plato.stanford.edu/ Kreis, Steven. "Karl Marx, 1818-1883." The History Guide, 30 01 2008. .Web.29 Sep. 2011. <http://www.historyguide.org/intellect/marx.html>. Mandel, Ernest. "Basic Theories of Karl Marx." International Viewpoint. International Viewpoint, 2010. Web. 24 Nov 2010. <http://www.internationalviewpoint.org/spip.php?article283>. Marx: Capitalism and Alienation. Frostburg Forum. Frostburg State University.2010. 29 Sep. 2011. Web.http://faculty. frostburg.edu/phil/forum/Marx.htm Spartacus Educational. Simkin,John. September, 1997. 27 September 2011 http://www.sparta cus.schoolnet.co.uk/TUmarx.htm Singer, Peter. Marx: A Very Short Introduction. Oxford: Oxford University Press, 2006. Print. Wheen, Francis. Karl Marx: A Life. New York: Norton, 2000. Print. Wolff, Robert Paul. Understanding Marx. Princeton, NJ: Princeton University Press.1984.