Karl marxs life and work Despite the decline of Marxist-inspired economies around the world today, his

s system of thought remain fascinating Marx above all is economist

5 4 hope the bourgeoisie will remember my carbuncles all the rest of their lives6 ortrayed as sullen, brooding genius

Overview of the Marxian system Ability to weave together the philosophical, political, and economist ( sets him apart to other economist) Born in trier russia, !"!" #on of middle class $ewish who latter converted to %hristianity & yrs' (ld ) university of bonn as a law student' *is studies suffered with youth distraction' Attended school rarely, showing a taste in good times and high $in+s of college life' *e did not progress his first year' *is father withdrew him to bonn and enrolled him to university of Berlin Hegel, Feuerbach, and German hiloso hy 7heory of historical processes - based on material and economic forces and culminating in social and economic change of the existing order' Marx thoughts @ philosophy( step in but not a part of the 1erman tradition), history and economics( step in but not a part of the British classical tradition)

1eorge *egel (!&&A-!"?!) Dominant figure in 1erman philosophy 7heory of progress *istory holds the +ey to the science of society *istory is not a se>uence of accidental occurrences or a collection of disconnected stories' 4t is an organic process guided by the human spirit rogress obtain when one force is confronted by its opposite' 4n the struggle, both are annihilated and are transcended by a ?rd force' #o called dialectic - ( thesis, antithesis and synthesis o ,hen idea (thesis) confronted by an opposing idea (antithesis), neither one remains intact, but both are synthesi0ed into a third' 7his is how general +nowledge advances'

Marx was influence by hegel and feuebach at univ' of Berlin' ,ho-s ideas help him shape his views of history, religion and society %ompleted his *d' At university of $ena in !"!., marx move bac+ to bonn to teach !"./, he abandoned his teaching career and became editor in chief of the rheinische 0eitung, 1erman newspaper' ,here he can air his unorthodox ideas' #trict censorship of rheinische 0eitung, led to his resignation *e moved to aris his 2une wedding with his childhood sweetheart ($enny von westphalen)' 3ndertoo+ the founding of a new $ournal ) deutsch fran0osische $arbucher' *e write most on theoretical studies 4t was in paris where he began to write about systematic study of economics *e studies materialistic philosophers !".., wrote numerous manuscript and publiched as 5 economic and philosophic manuscript6 !".., 7he russian government declared him guilty of treason for his article of $arbucher' 8ramce also expelled him' 8led to Brussels' 7heses on 8euerbach !".9,7he 1erman ideology !".:,7he poverty of philosophy !".& were published ,age labor capital !".; !".",7he communist manifesto !".; marx and his family settled on <ondon' Most of his were for writing and studying economics !"9! contribute to new =or+ daily newspaper !"9&, prepared a lengthy criti>ue of political economy' #erve as a output for his magnum opus (grundrisse) ) undiscovered and unpublished until ,,44 period' !":?, criti>ue of political economy and theories of surplus value !":&, first vol' of labour and capital were published

Marx critici0es *egel but nevertheless adopted *egelian dialect' Modified it however, in light of <udwig 8euerbach doctrine of materialistic

<udwig 8euerbach Doctrine of materialism Bssence of %hristianity ) written !A yrs after *egel-s death' Bxtended *egel-s concept of 5self alienation6 Materialism ) human are not only species beings , *egel-s asserted, but also sensuous being and that sense of perception must therefore become basis of all science' All history is the process of preparing humans to become the ob$ect of conscious activity' Celigion@ mere pro$ection of ideali0ed human attributes onto an otherworldly ob$ects(i'e' 1od) #upernatural ob$ects@ worshipped by humans' As all powerful, +nowing and perfect #elf proclaimed realist, considered religion unreal' roclaimed attributes of divinity as an ideali0ed attributes of humans' Celigion ma+es life bearable *umans are willing to accept their imperfect, earthly existence only because

!""?, marx died !";., /nd and ?rd vol' of capital published'

they unconsciously promise themselves perfection in another world' Celigion is such a universal phenomenon

1reat mass of humanity must be rendered property less while being confronted with world of wealth and culture' (4ncrease productive power and high degree of its development') under capitalism' 3niversal productive forces' - %lass must be of worldwide proportions' (therwise revolution and communism could exist only as local events not as universal'

Celigion as a form of alienation ) converting the products of individual and social activity into them' 8euerbach@ *umans alienate themselves in religion and in philosophy' *egel@ applied the concept to all manner of political and economic activity, including capitalism' Marx@ state $oins hand in 1od as an alien being' 4t derives its power and its existence from the fact that confronting are either incapable or unwilling with one another'

!tatic versus dynamic forces in society 8orces of production@ dynamic' %onsist of land, labor, capital and technology each is constantly changing in >uantity and >uality' As a result in population, discovery, innovation, education etch'

Marxs economic inter retation of history 8euerbach, materialism and *egel-s dialectic D Marx-s 5 dialectical materialism6 %onsidered the prime mover of history to be the way in which individuals ma+e a living, that is, the way they satisfy material needs' 3nless material needs are satisfied, human beings would cease to exist' 5 men must be able to live in order to ma+e history6 therefore 5 the fisrt historical asc is the production of the means to satisfy these needs, the production of material life itself6

7he 5rule of capitalist game6@ static *umans enter into certain 5definite relation that is indispensable and independent of their will' 7he 5rule of capitalist game6 is static and consists of ro erty relation and human relation' o #um total@ constitute the economic structure of society and upon which is superimposed a legal and political superstructure corresponding to definite forms of social structure' 4nstitution exists in order to ma+e humans conform to the relation of production'

3ni>ueness of Marx@ he understood and appreciated the interrelation between economics and history roduction as a focal and driving force among mutually conditioning forces of production, distribution, exchange and consumption' Are what distinguished his own economics' Earl Marx-s economics @ science of production #ocial force insofar as it channels hu&man activity into useful ends Methods of production help to shape human nature itself' Development of productive forces depends upon the degree to which division of labor is carried' #aw conflict of interest as the logical outcome of the progressive division of labor' o D(< leads to separation of industrial and commercial labor form agri' <abor' 4ndividual interest contradicts community interests, each wor+er become chained to a specific $ob' *uman power becomes alien power, opposed to them and enslaving them' %onflict between community and individual interest@ saw the emergence of state as an independent power' A power divorced from the real interest of individual and community interest' 7he state owes its being to the social classes- det' By D(<' Bach class in power see+s to promote its own interest as the general community interest'

7heory of society #ocial super structure (religion, law, gov-t) Celations of production (private property, wage system) 8orces of production (land, labor, capital)

D(< is pushed to its logical conclusion, labor becomes fragmented 4ssuance of interest is aggravated to private property which splits up capital to different owners and thus division bet' <abor and capital' %onflict bet' Dynamic forces of production and static relations of production, tumbles the pyramid from top to bottom'

Marxs early writing on ca italist roduction

57he economic and philosophical manuscripts of !"..6 %ritical study of political economy !".. completed several manuscript 7he boo+ was never materiali0ed' 7he manuscript lay unpublished for "A yrs' %entral theme@ history, under modern capitalism, is the saga of alienation in people-s lives as producers and the communism, achieved through a revolution against private property, is the final escape of alienation <abor is the source of all wealth

#ituation become intolerable if @

,or+ers gets only a small part of wealth barely enough to continue wor+ <ion-s share@ capitalist, and this lead to bitter struggle between labor and capital

*is view, of course, was that production ta+e place within a social context and can be underta+en only by social individual at a certain stage of social development' Bvery production creates its own legal relation and a form of government'

Aim of capitalist@ +eep wages to a minimum <abor become more li+e a commodity under capitalist, and all human relation are soon reduced to money relation %apitalist inevitably is enriched at the expense of the wor+er, who live in the subsistence'

7rue nature of capitalist@ study of labor a basic to production, analysis of the historical bases of capitalist production, and examination of the fundamental conflict between bourgeoisie and proletariat' erfected labor theory of valueands the theory of surplus value and of money' Develop a thesis@ conflict between development of the productive forces and the relations of production provide a driving force of social revolution' !":A@ marx-s crowning achievement was set' 8irst volume in !":&'

Monopoly concentration of capital into fewer and fewer hands 4ncrease in profit and increase in the misery of the wor+ing class

Do not contain penetrating analysis of the real contradiction of capitalism' But they do contain a fairly mature statement of methodological criticism aimed at political economy' Marx critici0es economists for not explaining the underlying causes of capitalism' (ne must +now how the mar+et mechanism came about and where it was going' o 7he connection between priv' property, avarice, and the separation between labor, capital and landed property' Between exchanges and competition, value and devaluation of men, monopoly and competition' %onnection between this and the money system'

"ature of ca italism %lear cut ob$ective in mind about writing capital@ !' #how how the community form of mar+et exchanges leads to class conflict and exploitation of labor force *ow commodity system will eventually fail to operate because of its own inherent contradiction ,hy the class conflict under capitalism, unli+e class conflict under earlier economic system, should ultimately result in rule by the formerly exploited class rather than by a new ruling class'

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%ritici0ed political economy on the basis of real contradiction' 7he wor+er becomes all the poorer the m ore wealth they produced' %ommodities@ once completed they have no control over or ownership of-alien thing, a power independent of its producer' <abor@ externali0ing of a human capacity

%apitalism to be an economic system in which people ma+e a living by buying and selling thing (commodities)' 3seful roduced by human labor (ffered to sale in the mar+et #eparable from the producer

%ritici0ed economics for concealing alienation' Fot considering the direct relation between the wor+er and the production'

#abor theory of value <abor as the essence of all value' Galue as an ob$ective property of each and every commodity' 4t must be rooted on something more substantial than the superficial mar+et forces of supply and demand' Materialist@ material relation alone determines value prior to the determination of prices' #o that price relation merely a value caused by purely ob$ective element common to all commodities-labor'

57he 1rundrisse (!"9&-!"9")6 Cepresent an initial foray into economic criticism' Marx perfected the tools of analysis that he inherent from the classical economists' (nly recently brought to light and published during ,,44 Ceveal some things that are not included in the capital' Discussion of the precapitalist systems and a study of interrelation of the component parts of capitalism' ( pro', cons', consums' )

%ontradiction in classical value theory 7wo theory of exchange #C determination of price by supply and demand. <C theory of natural price or cost of production'

%ritici0ed his predessors in economics for their ahistorical view of production' *e sought to relate the process of production to the stage of social development in society' 7oo+ issue on mill-s position that production- as opposed to distribution- is sub$ect to immutable laws indepent of history

rice is invariant in the long run' Mar+et prices fluctuates constantly Dialectic materialism theory collapses'

4n wage labour and capital@ 5 it is solely in the course of these fluctuation that prices are determined by the cost of production6 3nder competition mar+et prices do not fluctuate at random but revolve around a definite point' 4f the selling price falls below the cost of production, producer is forced out of business' 7he great contradiction rice fluctuates at cost of production ) labor cost' *e saw value not determine by laws of mar+et but by production itself'

<abor not machines (congealed labor) creates surpluses' Machines e>ual to the cost of production 7his denies the fact that machines are productive in them and should be value in excess of the labor'

,olfson@ mar+et prices are ideal estimates of the ratios of exchange by potential buyers and sellers' But competition forces these ideal estimates to conform to the material reality by the labour consumed in their production' 4deal valuation to the ob$ective exchange ratio'

4f the exchange value of commodity is determine by the labor time they contain, how can this be reconciled with the empirically observe fact that the mar+et prices of these commodities fre>uently differ from their labor valuesH Marxian theory of value( labor alone creates surplus value) <abor should be higher in labor intensive industries' #ince, capitalIlabor differ while the rate of profit remains uniform, it cannot be true' 7he value is determine by payments to labor alone roblem is solve by the theory of the competition of capitals, which asserts the comp' between firms and industries will tend to establish a uniform rate of profit' Average profit J cost of production, the individual deviation of mar+et price tend to cancel out'

#cientific explanation must be from material to ideal' <abor theory was extinguished because it was rooted in materialistic philosophy'

,ages and capital Problems 4f labor is the essence of exchange value, what id the exchange value of labor ( theory of wages) *ow is the value of goods produced by machinery determinedH( theory of capital)

#ome Marxian definition

7heory of wages Galue of labor power may be divided to the amount necessary for the subsistence of labor and amount over (socially necessary labor - determines the exchange value of labor itself, its wage) and above (surplus value ) appropriate to capitalist) that' %apitalist could not exist unless wor+er produced a value greater than his subsistence #urplus arises at production not on exchange' %apitalist@ get surpluses value ( exploitation of labor) #urpluses arise because he produces more than he is worth' #urplus value , sum of non labor shares of income( rent, interest and profit) rinciple of surplus@ main achievement

%onstant capital (c ) - charges on fixed capital ( depreciation plus the cost of raw material input) Gariable capital ( v) ) total wages paid to labors (utlay (+) ) cost of production( excluding profit) of cJv #urplus value (s) - contribution of wor+ers for which they are not paid or excess of gross receipts over the sum of constant and variable capital' Cate of surplus value (s-) ) ratio of surplus value to outlay, or sI(c J v) (rganic compound of capital ( o) ratio of capital to labor employ in production'

$ransformation roblem

7heory of capital

Ma$or assumption@ Different commodities are produced with different organic compound of capital and use up constant capital at different rates in production' 8or convenience, the rate of surplus value is to be ta+en !AA percent %ompetition will tend to e>uali0e rate of profit among industries at the 5 average rate6 (ratio between A# and AD) (rganic compound of capital will depend on the technical relation of labor power to other means of production' #ee table !A-!

7wo classes with one 8orced to sell labor power to others in order to earn a living 7ransform labor into a commodity alien of wor+er'

,ithout the diff' bet' #ubsistence and value of labor output, capitalist will have no interest in buying labor power' Ceason for social conflict is inherent in capitalism- alienation and polari0ation of classes' Cicardo@ labor as the best measure of value but not cause of value Marx@ labor as measure of value and causes of value

Aggregate value is the true source of value Marx-s solution still denies that machinery id unproductive over and above the amount of labor congealed'

 $he laws of ca italist motion Death +nell of capitalism' 7echnological advancesIchanges as the driving force of his social dynamics' Adam smith@ progress in term of human behavior Cicardo@ economic problem was agriculture

7he wor+er became the slave of the trader *igh mortality rate of children and moral degradation of women Machine becomes the most powerful means for prolonging the wor+day, so that there will be more surpluses' #peciali0ed and costly Machineries became idle for short period because it is expensive to capitalist, so they strive the length of idle time machine time' <onger wor+ days and intensification of wor+, less leisure time and more misery to laborer

7he law of accumulation and the falling rate of profit 3nder capitalism, all business people try to ac>uire more surplus value in order to increase profit #urpluses derive from labor' %apitalist see+ for labor intensive production methods to maximi0e their profit' %apitalist can substitute capital for labor because it ta+es time to ad$ust to new methods of production' <abor saving machinery@ capitalist will be able to reducedK costs and yet sell at a price determined in the mar+et by the prevalence of less mechani0ed firms' Fot at all true Ceason why rate of profits fall 4ntroduction of machinery, (J) (rg' comp of capital' #urplus value falls so does average rate of profit' ,or+ers may push higher wage rate' 7his will drive up production costs'

<aw of crises and depression Business cycles to investment spending %apitalists will invests more at some times than at other (J) unemployed and (-) wages, capitalist will tent to hire more laborer and invest less in machinery and capital' (J) wages, capitalist substitute machinery to laborer' , bringing unemployment and depressed wor+ers' 7hins causes periodic crises' %rises theory, use to demonstrate the increasing misery doctrine' *ad also shown capitalism-s susceptibility to crises of increasing severity' 5 the never-ending drive of capitalist for accumulation6 4ncreasing misery - capital accumulation of capitalist,overproduction of capital' %apital at such proportion compared with laborer (have grown at the maximum), smaller surpluses produced than it was before the over accumulation of capital' (J) capital, (-) additional profit, (-) average profit due to a change in composition of capital' 8alling of average profit, signal impending crisis' Become more sever in time' ,ould affect more people' A tendency to a permanent depression because the industrial reserve army get larger as crises become more sever' (utcome is social revolution' Bventually proletariat must unite, throw off their chains and ta+e over the means of production'

7he law of a growing industrial reserve army %hanges in technological innovation and capital labor substitution have drastic effect on the wor+ing class ) unemployment' #howed D(< as a curse #elf expansion of capital by mean of machinery D no' of labors ,or+er sells his labor power as a commodity D(<, the labor power become speciali0ed, is reduced in s+ill in handling a particular tools' As soon this handling of tool become the wor+ of the machine, the value of labor disappears wor+ers become unsalable'

Displacement of wor+er by the machine@ creates a 5growing industrial army of unemployed6' 7echnological unemployment( substitution of machinery to labor) %yclical unemployment( overproduction, which in turn cause to increased in concentration and centrali0ation)

7he law of increasing misery of proletariat

%apitalist see+s to offset a falling rate of profit by lowering wages, imposing longer wor+days' Bffect of widespread use of machinery@ 4ntroducing female and child labor( for slight muscular strength fort handling machinery) ,or+er is forced to sell the labor of his wife and children'