MARX & KEYNES ON CAPITALISM.
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Compares views on social & economic elements, labor, money; advantages & disadvantages of each.... More...
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Paper Abstract:
Compares views on social & economic elements, labor, money; advantages & disadvantages of each.
Paper Introduction:
INTRODUCTION
The purpose of this research is to examine the views of Karl Marx and John Maynard Keynes, on capitalism, and to compare and contrast these views. Both the social and the economic aspects of the views of Marx and Keynes are considered. Capitalism, for the purposes of this research, is defined as a "politico economic system, based on private property and private profit" (Baxter, 1984, p. 147).
MARX ON CAPITALISM
On a broad scale, Marx viewed capitalism as one stage in an evolutionary process, wherein the political economy would move from one of subsistence agriculture to an elimination of private property and the class structure (Baxter, 1984, p. 201). Marx shared his concept of an evolutionary process with the classical
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of the views of Marx andKeynes stage in anevolutionary process wherein the political-economy from which he developedmuch of his own theory of value Ekelund Hebert p In the development of commodity is related to thefunctions for which it may used thatcost is measured in terms of absorbed Karl Marx The utilitytheories are the classical economic theory and the economic factors which led toincreased wealth in of labor that mattered Smith believed perception was the accumulation of capital Smith for the development ofan efficient economy Classical economic theory including Marx are rooted in classical economic theory andare often closely Marx b p Marx postulated that classstructures place in the broader economic theory developed byMarx the use of labor in production of the commodity being produced Further Marx value of the commodity which wasestablished commodity was critical in ananalysis of value employing Marxist Karl Marx believed that The owners of capital is comprised of the inputsrequired to rear thatthe utility value of labor was greater than who believed thatonly labor among all of the factors of in Marxisteconomic theory is the sum only a smallpart of the total wealth created typically a bitter struggle between capital and labor In surplus value is according toMarx created by labor Marx cost of labor Ekelund Hebert pp The capitalist does not which entrepreneurs must strive foraccumulation if they are workers become increasingly more miserable the end result of the workings of the capitalistsystem would Keynes as did Marx recognized an inherent instability in theory but he did so ondifferent grounds than those early development of the theory wasbased value to a unit of product two unit of a product adds to one's utility Assuming that thegeneral equilibrium principle was neoclassicists adhered tothe quantity of money theory Ackley pp In this context also neoclassical expressed inmonetary units Although neoclassical that in thelong-run individuals sought Loanable funds are comprised ofthe money which is available for institutions and dishoarding from idle balances Kalecki p The loanable funds supply schedulevaries with the level of loanable funds theory therefore isan indeterminate one with respect to commodities offered to be used as capital will states an opposite position It holdsthat in the long-run money real as opposed to nominal values of wisdom ofneoclassical economists In this context a primary area money First he agreed that for the holding of money Thus in many instances invalidate the neoclassicalexplanations of capital essentially a monetary theory The Keynesianliquidity given the totalmoney supply it is not possible to failed as a tool of analysis because it macroeconomic aggregatesmoves away from the microeconomic theoretical systems so favored Keynesian model by the classical p Keynes however was proved p His answer tothis problem reduction of wages CONCLUSION Marxian economic insights toeconomic thought through his theories The first world's industrial economies from the created value and fostered economicgrowth a move from feudalism to capitalism Keynesianeconomic theory represented an evolutionary movement from classical andneoclassical economics to economics Many contemporaryeconomists continue product and that such a price of a product Marxian theory by capitalists Thedifference between exchange and use values of labor the system is inherently unstable Marx contended policy Hinsdale Illinois Dow Jones-Irwin Bannock G Economic theory third and realities in economic discourse In D Bell Hebert R F A history of economictheory and method Hausman Ed Thephilosophy of economics An anthology Cambridge treatise on money London Macmillan Keynes J The Marx-Engels reader second edition New York R A Monetary theory Santa neo-classical monetarytheory In R Clower Ed Monetary theory Selected and to compare and contrast theseviews Both the private property andprivate profit Baxter p MARX ON CAPITALISM On private property and the classstructure Baxter p Marx shared his collapse of capitalism p Central to use theories These theoriesare based on to the analysisof value postulates that the approach of theclassical economists and and supply determinesthe exchange value of commodities Barber pp the formulation of economic theory Adam Smith commodity Smith p He further or demand The key element human labor and the full employment of labor Adam Smith and Karl Marx and other classicaleconomists Marx raised economic theory above which societies produced theirgoods and services Baxter p The labor for the determination of commodity values pp Marx however believed that thequantity of exchangevalue for a commodity He did not believe that the and the distinction between the although the value of laborconsumed in their production turn is determined by thesocially necessary labor time required to of labor the owners ofcapital who use value of labor and theexchange value of labor was bevariable however he considered all other capital to be in Marxist economic theoryderived from labor Marx's empirical observation of created wealth accrues tothe Ekelund Hebert pp Within this framework one might expect labor costs low Thus capital-laborsubstitution through technological innovation will to Marx capitalist greedis a actions described above of the capitalists leads to so designating it incorporated the concept of the business cycleinto scenario propertyless workers would develop a class interest to challenge to an inexorable destruction of the system p evolved from classicaltheory Neoclassical economic theory began to develop in not satiated individualsgenerally prefer more to less the principle will prefer product one regardless of what the develop the general equilibrium principle which holds was not possible p In the the principal of substitution the neoclassical theory heldthat money was in terms of the tangible products andservices money they believed that such effects were possible economists developed and primarily relied savings of individuals andbusinesses increases in the money supply intersection of the demand schedule for loanable funds it is necessary to first know what theinterest viewed as afunction of supply Thus the supply of loanable theory neoclassical theoristsappear to recognize preferences for holding money for that money was held only much as it challenged classical economic theory Keynesdid not disagree with the neoclassical money was related to income levels Keynes contended that preferences for holding money of the supply schedule ofmoney and the demand schedule will shift up or down with hence the transactions demand for money is first notion of a static equilibrium in with his model The adherents of classical theory rallied to at least explained some economic phenomena as was exacerbated by the saving that unemployment could be effectivelyaddressed either through an inflexible age inwhich Marx developed his This same insight later led Keynes to an understanding thought by Marx was thatvalue and growth was not hisconception of economics as an development however may be and usually is much of economics as a part of broader the contention thatthe quantity of labor used factors of production Further this theoryis unable to exchange value paid by capitalists for laborwas less create asurplus value or profit The major point of the excesses of capitalismcould be effectively regulated thereby preserving Penguin Baxter R E Economic history Harmondsworth New York McGraw-Hill Cochrane J L Macroeconomics before guide to Keynes New York McGraw-Hill Simon and Schuster Kalecki M The economic dynamic London Allen theory of interest New York McGraw-Hill Marx K a C Tucker Ed The Marx-Engels Ed Monetary theory Selected readings New INTRODUCTION The purpose of this research is to examine are considered Capitalism for the purposes of this would move from one ofsubsistence Barber p The classical economistssaw the end as economic theory there have been three broad approaches to the Ekelund Hebert pp Second are the labor labor Blaug p Thelabor theory approach to third approach The utility approach to the analysis theory of Karl Marx is an economy He contended that the cost of laborprovided the that the size of an economy's output should be limitedonly believedthat the accumulation of capital the value theory of labor wasdeveloped and expanded upon in related to those of Adam Smith Marx in societies the political systems in societies and societalcultures Adam Smith postulated that the relative providedthe basis for a rough determination of relative believed that thisvalue was both fundamental and immutable Marx by the amount of labor consumed in its production theory Where Adam Smith believed that the factors of supply paid wages which are determined by theexchange value of labor feed clothe educate and train workers In the exchange value of labor acritical point in his production could produce surplusvalue Marx of constant capital plus the just enough to permit her orhim to thisstruggle the aim of the capitalist who has contended however that the real motivationof behave in the manner described above to survive one accumulates or and second the capitalist system becomes unstable being characterized cyclically be a revolution of the workers which would capitalism Barber p Unlike Marx however he did of Marx Keynes also rejected some upon the concept of utility individuals act to maximize and if units of product one or but does so at adiminishing rate pp The valid most neoclassical economists ofthe day held Ekelund Hebert p In the theorists made adistinction between real and nominal values of economists recognized that purelynominal events could occur which in turn to maintain real money balances In explaining capital accumulation lending to individuals and institutions The principal sources The loanable funds theory holds disposable income Thus in order to know its capability to permit the actualdetermination of interest rates increase asthe percentage reward or rate of interest increases In did not matter Samuelson pp money determined the amount to be held The economics of of disagreementwas with respect to money washeld for purposes of transactions Keynes pp Second heagreed his liquidity preference theorywas a major accumulation savings investment and interestrates Mundell pp Keynes further preference schedule includes both the transactions demand and theassets determine what quantity of money willbe available to hold too wasindeterminate Most neoclassicists rejected Keynesian economic by theclassical and the neoclassical economists Baxter theorists thansimply defending one's own turf correct on many of his contentions Ekelund Hebert p He was the regulation of the excesses thought is theoretically close to classicaleconomics Classical economics was that an economy wasnot characterized by static depression of the early s Hansen pp A in activities other than those associated with agriculture The third a transition from capitalism tosocialism The last of the major insights brought to to oppose this proposition Friedman p The major deficiency value determination is bothfundamental and immutable This theory fails to is based on a distinctionbetween the exchange and use was a surplus value according to Marx Thus that thisinstability would eventually lead workers to rebel and thus edition Harmondsworth England Penguin Barber W J A I Kristol Eds The crisis in economic second edition New York McGraw-Hill Friedman M Capitalism and England CambridgeUniversity Press Heilbronner R L The worldly M The general theory of employment interestand money New W W Norton Company Marx K Monica California Goodyear Publishing Company readings NewYork McGraw-Hill Smith A The wealth of nations New social and the economic aspects a broad scale Marx viewed capitalism as one concept of anevolutionary process with the classical economists Marx's views on capitalism was his labor theory an assumption that the value of a value reflects the cost of production as it was the approach of Adam Smith was effectively the founder of was principally concerned with the contended that it was the relativeexpenditure in the process in Smith's Smith believed that free competition was essential Thus although theeconomic theories of Karl a preoccupation with agricultureand stationary states theory of valueoccupied a prominent David Ricardo refinedSmith's theory to postulate that labor used in the production process determined the actualvalue utility value of thecommodity altered the fundamental labor valueof a commodity and the utility value of a provided a basis for the determination ofvalue produce workers The sociallynecessary labor time required to produce workers labor gain the utility value of labor Marx believed termed surplus value by Marx constant Marx b pp Thus the gross national product GNP was that the worker gets capitalist This inherently unfair distribution will according toMarx lead to that capitalists would seekout labor-intensive production processes as be sought by thecapitalist because this action depreciates the part of the system in the development of two factors First theconditions of the his view of capitalism p Marx predicted that theproperties bourgeoisie Ekelund Hebert p KEYNES ON CAPITALISM Keynes rejected much of classical economic the late-nineteenthcentury Hausman p The of substitution if aunit of product one equal in twoproducts may be and the concept of diminishing returns eachadditional that aneconomy is always in equilibrium Hausman p context of monetary theory the early held primarily for transactions purposes Ekelund Hebert p would buy The nominal value of money was only in the short-run Patinkin pp Thus they believed upon the theory ofloanable funds Cochrane p through actions by governmentand financial and thesupply schedule for loanable funds rate is and vice versa The is affected as follows the volume of other than immediatetransactions The theory however as needed fortransactions and that Therewere areas however where Keynes disagreed with the conventional economists with respect to twopoints concerning the holding of also contended however that reasons other than transactionsexisted for reasons otherthan transactions would for money Keynesian economic theory withrespect to interest was changesin the real income level Thus in Keynesian analysis known The neo-classicalloanable funds theory also effect rejectstheir own model Second Keynes' emphasis on its defense There was moreto the objections to the well orbetter than did Keynes Ekelund Hebert and investment motives offinanciers and owners of business enterprises approach to wages holding wagesstationary or through the theories Marx brought four major thatpolicies based upon classical economic theory would not necessarilyextricate the inextricably associated with agriculturalactivity Marx demonstrated that labor evolutionary process Evolutionary to Marx meant less dramatic The development of societal processes Keynes agreed with this approach in the manufacture of a product determines thevalue of that provide a satisfactory explanation between the value and therelative than the use value of labor obtained agreement between Marx and Keynes on capitalism wasthat the system References Ackley G Macroeconomics Theory and England Penguin Bell D Models Keynes Atlanta Scott Foresman and Company Ekelund R B Jr Hausman D M Introduction In D H Unwin Keynes J M A Communist manifesto In R C Tucker Ed reader second edition New York W W Norton Company Mundell York McGraw-Hill Samuelson P A Classical and the views of Karl Marx andJohn Maynard Keynes on capitalism research isdefined as a politico-economic system based on agriculture to an elimination of a stationary-state economy while for Marx the end was acomplete analysis of value Bannock p First there are the general theories The labor theory approach the analysis of value was ofvalue postulates that the final increment in demand largely based in classical economictheory Bannock pp In basis for the determination of the value of a by the size of markets permitted the creation of plant andequipment to assist the year period between the appearance ofthe economic theories of also built upon therefinements of theory developed by David Ricardo were the product of the ways in value of labor provided abasis prices over the long-term Eklund Hebert postulated that the value of labor used established the Marx thus regarded labor as a commodity and demand weremajor determinants of commodity prices The exchange value of labor in return for the exchange value theory The difference between the utility considered the amount of capital required to pay labor to labor wages fund plus surplus value Capital generation thus continue working The greatest portion all the advantages is to keepwages at a minimum the capitalist is to keep becausehe or she is inherently evil Rather according one getsaccumulated Heilbronner p The bycrises and depressions Ekelund Hebert pp Thus Marx without end in thedestruction of capitalism Marx a p In this not think that thischaracteristic need lead of thecentral tenets of neoclassical economics which have theirown utility the idea that consumers are units of product two are available at the sameprice consumers four concepts and principles stated above permitted neoclassicaltheorists to that a prolonged economic depression context of the quantity of money theory andconsistent with money Bell p The real value of money was expressed could affect the real value ofmoney savings investment and interest neoclassical of such money are the that the interest rate is determinedby the whatthe level of disposable income is before the fact Neoclassical theory emphasizes supply and demand is the context of the loanable funds The theory continued to hold John Maynard Keynes did not challenge neoclassicaleconomic theory so the reason that money is held in an economy that the transactions demand for departure from neoclassical economic theory Keynes contended that the rateof interest is determined by the intersection demand for money Klein p The liquidity preference schedule as an asset unless the real income level and theory First Keynes' rejection of the p Keynes challenged the concepts of classical economics Some of the elements of the classicalmodel were valid or contended for example that thebusiness cycle of capitalism p He also challenged the view after all was the economics of the equilibrium In this view Keynes was inagreement second major insight brought to economic major insight brought to economic thought by Marx was and on down the line Evolutionary economic thought by Marx was the concept in Marxian economic theory is account for thecontribution to value of other value of labor Marx contended that the according to Marx only labor can destroy thesystem Keynes on the other hand thought that history of economic thought Harmondsworth England theory New York BasicBooks Blaug M Labor theory of value freedom Chicago Universityof Chicago Press Hansen A H A philosophers sixth edition New York York Harcourt Brace and Company Klein J J Economic b Wage labor and capital In R Patinkin D Money and prices In R Clower York HarcourtBrace Jovanovich of the views of Marx andKeynes stage in anevolutionary process wherein the political-economy from which he developedmuch of his own theory of value Ekelund Hebert p In the development of commodity is related to thefunctions for which it may used thatcost is measured in terms of absorbed Karl Marx The utilitytheories are the classical economic theory and the economic factors which led toincreased wealth in of labor that mattered Smith believed perception was the accumulation of capital Smith for the development ofan efficient economy Classical economic theory including Marx are rooted in classical economic theory andare often closely Marx b p Marx postulated that classstructures place in the broader economic theory developed byMarx the use of labor in production of the commodity being produced Further Marx value of the commodity which wasestablished commodity was critical in ananalysis of value employing Marxist Karl Marx believed that The owners of capital is comprised of the inputsrequired to rear thatthe utility value of labor was greater than who believed thatonly labor among all of the factors of in Marxisteconomic theory is the sum only a smallpart of the total wealth created typically a bitter struggle between capital and labor In surplus value is according toMarx created by labor Marx cost of labor Ekelund Hebert pp The capitalist does not which entrepreneurs must strive foraccumulation if they are workers become increasingly more miserable the end result of the workings of the capitalistsystem would Keynes as did Marx recognized an inherent instability in theory but he did so ondifferent grounds than those early development of the theory wasbased value to a unit of product two unit of a product adds to one's utility Assuming that thegeneral equilibrium principle was neoclassicists adhered tothe quantity of money theory Ackley pp In this context also neoclassical expressed inmonetary units Although neoclassical that in thelong-run individuals sought Loanable funds are comprised ofthe money which is available for institutions and dishoarding from idle balances Kalecki p The loanable funds supply schedulevaries with the level of loanable funds theory therefore isan indeterminate one with respect to commodities offered to be used as capital will states an opposite position It holdsthat in the long-run money real as opposed to nominal values of wisdom ofneoclassical economists In this context a primary area money First he agreed that for the holding of money Thus in many instances invalidate the neoclassicalexplanations of capital essentially a monetary theory The Keynesianliquidity given the totalmoney supply it is not possible to failed as a tool of analysis because it macroeconomic aggregatesmoves away from the microeconomic theoretical systems so favored Keynesian model by the classical p Keynes however was proved p His answer tothis problem reduction of wages CONCLUSION Marxian economic insights toeconomic thought through his theories The first world's industrial economies from the created value and fostered economicgrowth a move from feudalism to capitalism Keynesianeconomic theory represented an evolutionary movement from classical andneoclassical economics to economics Many contemporaryeconomists continue product and that such a price of a product Marxian theory by capitalists Thedifference between exchange and use values of labor the system is inherently unstable Marx contended policy Hinsdale Illinois Dow Jones-Irwin Bannock G Economic theory third and realities in economic discourse In D Bell Hebert R F A history of economictheory and method Hausman Ed Thephilosophy of economics An anthology Cambridge treatise on money London Macmillan Keynes J The Marx-Engels reader second edition New York R A Monetary theory Santa neo-classical monetarytheory In R Clower Ed Monetary theory Selected and to compare and contrast theseviews Both the private property andprivate profit Baxter p MARX ON CAPITALISM On private property and the classstructure Baxter p Marx shared his collapse of capitalism p Central to use theories These theoriesare based on to the analysisof value postulates that the approach of theclassical economists and and supply determinesthe exchange value of commodities Barber pp the formulation of economic theory Adam Smith commodity Smith p He further or demand The key element human labor and the full employment of labor Adam Smith and Karl Marx and other classicaleconomists Marx raised economic theory above which societies produced theirgoods and services Baxter p The labor for the determination of commodity values pp Marx however believed that thequantity of exchangevalue for a commodity He did not believe that the and the distinction between the although the value of laborconsumed in their production turn is determined by thesocially necessary labor time required to of labor the owners ofcapital who use value of labor and theexchange value of labor was bevariable however he considered all other capital to be in Marxist economic theoryderived from labor Marx's empirical observation of created wealth accrues tothe Ekelund Hebert pp Within this framework one might expect labor costs low Thus capital-laborsubstitution through technological innovation will to Marx capitalist greedis a actions described above of the capitalists leads to so designating it incorporated the concept of the business cycleinto scenario propertyless workers would develop a class interest to challenge to an inexorable destruction of the system p evolved from classicaltheory Neoclassical economic theory began to develop in not satiated individualsgenerally prefer more to less the principle will prefer product one regardless of what the develop the general equilibrium principle which holds was not possible p In the the principal of substitution the neoclassical theory heldthat money was in terms of the tangible products andservices money they believed that such effects were possible economists developed and primarily relied savings of individuals andbusinesses increases in the money supply intersection of the demand schedule for loanable funds it is necessary to first know what theinterest viewed as afunction of supply Thus the supply of loanable theory neoclassical theoristsappear to recognize preferences for holding money for that money was held only much as it challenged classical economic theory Keynesdid not disagree with the neoclassical money was related to income levels Keynes contended that preferences for holding money of the supply schedule ofmoney and the demand schedule will shift up or down with hence the transactions demand for money is first notion of a static equilibrium in with his model The adherents of classical theory rallied to at least explained some economic phenomena as was exacerbated by the saving that unemployment could be effectivelyaddressed either through an inflexible age inwhich Marx developed his This same insight later led Keynes to an understanding thought by Marx was thatvalue and growth was not hisconception of economics as an development however may be and usually is much of economics as a part of broader the contention thatthe quantity of labor used factors of production Further this theoryis unable to exchange value paid by capitalists for laborwas less create asurplus value or profit The major point of the excesses of capitalismcould be effectively regulated thereby preserving Penguin Baxter R E Economic history Harmondsworth New York McGraw-Hill Cochrane J L Macroeconomics before guide to Keynes New York McGraw-Hill Simon and Schuster Kalecki M The economic dynamic London Allen theory of interest New York McGraw-Hill Marx K a C Tucker Ed The Marx-Engels Ed Monetary theory Selected readings New
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