Karl Marx History Economic Ideas Summary

Karl Marx and His Critique of Classical Economics

Karl Marx History, Karl Marx Economic Ideas

The career of Karl Marx (1818-1883)—an economist, but also a philosopher, sociologist, prophet, and revolutionist—is proof of the importance of eco­nomic ideas. His writing inspired generations of economic thinkers, and in his name entire societies were transformed. Beginning in the 1990s, however, many of the societies began to abandon Marxian ideology and to experiment with a transition to "capitalism." Many, though not all, of these transitions remain rocky and marked with turmoil; others of these societies are searching for a middle way. It remains important for us, therefore, to examine the ideas of such a singularly influential man as Karl Marx.

An Overview Of Marx

Marx was first and foremost a philosopher who felt that his job was not merely to interpret and analyze society but also to promote the changes in society that he considered desirable. As a partisan advocate of change, he does not differ from Smith, Ricardo, or J. S. Mill. In contrast to the classical economists, however, Marx advocated a fundamental revolution in the society and economy, not small, marginal changes. Because Marx is popularly associated with the economic systems of socialism and communism, people often assume that he wrote about these systems. Nothing could be further from the truth. Marx studied what he called capitalism—his major work is titled Das Kapital, or Capital. In all the vast literature produced by Marx and his collaborator, Friedrich Engels (1820-1895), there is little reference to how a socialist or communist economy is to be organized, other than a short list of items charac­terizing the nature of communism that appeared in The Communist Manifesto (1848).

Marx's economic theory is an application of his theory of history to the capitalist economy. He wanted to lay bare the laws of the dynamics of capitalism. Whereas other classical economists focused on the static equilibrium of the economy, Marx focused on the dynamic process of change. Paul M. Sweezy, an important American Marxist economist, has suggested that Marxian economics is the economics of capitalism and that capitalist economics is the economics of socialism. In other words, Marxian economics helps one to understand the forces underlying the market, whereas the standard classical analysis is useful in organizing and operating a socialist economy.

The late Oskar Lange, a Marxist who taught in the United States and later returned to his native Poland to become an economic planner, reiterated that view. He contended that Marxian and orthodox economic analysis should be looked upon as complementary rather than mutually exclusive. Whereas an understanding of the everyday operation of the market can be achieved by using orthodox neoclassical theory, an understanding of the evolutionary development of capitalism, Lange said, is possible only within the Marxian framework.

In discussing growth, Marx emphasized the deterministic role of technology and increasing returns. He argued that firms would get bigger and bigger for technological reasons. In this emphasis he anticipated work by modern endog­enous growth theorists, who have returned modern economics to a focus on growth and increasing returns. While Marx's discussion was broader and more far-reaching than this modern work, it focused on the same issues—the impor­tance of technology in determining the working of the economy, and the implications of increasing returns.

Intellectual Sources of Marx's Ideas

A study of Marx's life discloses the intellectual sources of his system. Born into a Jewish family that turned to Christianity, the young Marx began studying law but soon became interested in philosophy. Early in his studies he was attracted by the intellectual framework of G. W F. Hegel, another German writer. That framework, as we shall see, became an important element in Marx's system. After receiving his doctorate in philosophy, Marx was unable to find an academic appointment because of his radical views, so he turned to journalism. His political views, radical for the Germany of his time but still not socialistic, caused him to be expelled from Germany. In Paris and Brussels he began to study French socialist thought and classical political economy. Marx had tremendous intellec­tual powers coupled with a strong drive to read and study. After being expelled from Paris and Brussels, he moved to London and spent the last thirty-three years of his life reading and writing in one of the world's great libraries, the British Museum.