Karl Marx Economic Theory Economics

Karl Marx Economic Theory, Marx EConomics

Karl Marx Economic Theories; Marx's system is a mixture of philosophical, sociological, and economic analysis; therefore, it is somewhat of an injustice to separate the purely economic theories from the rest. Convinced of the inevitable collapse of capitalism, Marx applied his theory of history to the society of his time as he searched for contradictions between the forces and relations of production. He maintained that these contradictions would be made manifest in a class struggle, because, as he stated in The Communist Manifesto, the history of all societies is a history of class struggles. The fundamental determinant of the relations of production and thus of the institutional structure of a society will be the forces of production. With the hand mill the appropriate institutional structure is feudalism, Marx asserted, and with the steam mill it is capitalism. The logic of the technological process creates the conditions and forces that enable the steam mill to evolve out of the hand mill; and as the forces of production change, the old relations of production must give way to more appropriate institutional forms. Thus, Marx saw the present as part of the historical unfolding of the dialectic.

Marx's Methodology, Marx's Model

Marx's approach to the study of the economy is unconventional. Modern economic theory, particularly microeconomic theory, attempts to understand the whole of the economy through an examination of its parts: households, firms, and prices in markets, for instance. Marx, on the other hand, started at the level of the total society and economy and analyzed them by examining their influence on their components. Thus, in modern methodology the major causation runs from the parts to the whole, whereas in the Marxian scheme the whole determines the parts. This description of the different approaches of Marxian theory and modern economic theory is an oversimplification, because both allow for an interaction between the parts and the whole, but it does clarify a basic difference in orientation.