Karl Heinrich Marx

1
Karl Heinrich Marx

• May 5, 1818
• March 14, 1883
• Economic Theory

2
The Works of Marx

• He was a prolific writer, despite his personal
  life tragedies.
• Here is a brief list of works by Karl Marx
• 1844
• A Contribution to the Critique of Hegel's
  Philosophy of Right. Introduction
• Outlines of a Critique of Political Economy
• Critical Notes on "The King of Prussia"
• Economic and Philosophic Manuscript
• 1845 Theses on Feuerbach

3
Additional Works by Marx

• He also wrote many articles with F. Engels
• Communist League (1847)
• The Communist Manifesto (1848)
• England's 17th c. Revolution (1850)
• The Alleged Splits in the International (1872)
• Reformists in Germany's Social-Democratic party
  (1879)

4
DAS KAPITAL

• The most important work by Karl Marx is clearly
  Das Kapital which appeared in three volumes.
  Only volume I appeared while he was alive.
  Volumes II and III were edited by Engels and
  appeared after Karl Marxs death in 1883

5
Georg Hegel 1770-1831

• Hegelian Philosophy

Thesis
Anti-thesis
Synthesis
6
Ludwig Feuerbach

• Doctrine of Materialism
• Man is object of conscious rather than
  unconscious
• For instance, paintings of GOD in the image of
  Man
• Alienation process and result of converting the
  product of the individual as a social activity
  into something that is part of themselves -both
  independent and dominant

7
Dialectic Materialism

• Marx agreed with Adam Smith on the importance of
  the division of labor to economic evolution.
• He saw conflict will arise as a result from the
  division of labor
• Recall, Adam Smith had similar concerns in that
  he saw
• Social disadvantage - workers dehumanized by
  repetitive, monotonous tasks

8
Conflicts due to division of Labor

• Next, industry from commerce
• Then, conflict among the different types of labor
• Eventually individual conflicts with society as
  workers become enslaved to their trade
• Eventually, humans labor becomes an alien power,
  opposed to them and enslaving them.
• Resulting into socialism and communism

9
Dialectic MaterialismThe Conflicts

• For instance, Industry and commerce separate from
  agriculture with resulting
• conflict between city and rural areas
• In general, Marx viewed with concern the opposing
  (conflicting) scenarios brough about by dialectic
  materialism
• Rural vs. Urban
• Worker vs. Owner
• Innovation vs. Status Quo

10
Static vs. Dynamic
Religion, Law, Government
Social Superstructure
Static
Relations of Production
Private Property, Wage System
Dynamic
Factors of Production
Land, Labor, Capital, and Technology
11
Economic and Philosophic Manuscripts of
1844(published in 1932)

• Appears his thoughts were more consistent between
  early writings and Das Kapital than at first
  thought. Among the points
• Criticized political economist for only
  explaining the workings of the economy rather
  than the causes
• Contradiction in that more wealth the worker
  produces the poorer they became

12
5 Laws of Capitalist Motion

• LAW I Law of Accumulation and Failing Rate of
  Profit
• K é ð L ê ð p ê
• LAW II due to p ê in Law I then
• Law of Concentration and Centralization of
  Industry
• ð Concentration only way to keep p high

13
Laws of Accumulation (cont.)

• LAW III
• Because of the existence of Laws I and II there
  will result
• The Law of a Growing Industrial Reserve Army
• UNEMPLOYMENT

14
Laws of Accumulation (cont.)

• As a consequence of increased unemployment then
• LAW IV The Law of Increasing Misery of the
  Proletariat
• LAW V The Law of Crisis and Depressions

15
Communist Manifesto

• Written in 1848 it was
  commissioned to Marx and
  Engels at the second
  Congress of the League of Communists
  in London

16
Communist Manifesto (cont.)

• ... the first step in the revolution by the
  working class is to raise the proletariat to the
  position of ruling class to win the battle of
  democracy
• The proletariat will use its political supremacy
  to wrest, by degree, all capital from the
  bourgeoisie, to centralize all instruments of
  production in the hands of the state,

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Communist Manifesto (cont.)

• 10 Points which, in general, will be needed for
  the proletariat to take over
• 1. Abolition of property in land and
  application of all rents of land to public
  purposes.
• 2. A heavy progressive or graduated income tax.
  
• 3. Abolition of all rights of inheritance.

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Communist Manifesto (cont.)

• 4. Confiscation of the property of all
  emigrants and rebels.
• 5. Centralization of credit in the banks of the
  state, by means of a national bank with state
  capital and an exclusive monopoly
• 6. Centralization of the means of communication
  and transport in the hands of the state.

19
Communist Manifesto (cont.)

• 7. Extension of factories and instruments of
  production owned by the state the bringing into
  cultivation of waste lands, and the improvement
  of the soil generally in accordance with a common
  plan.
• 8. Equal obligation of all to work.
  Establishment of industrial armies, especially
  for agriculture.

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Communist Manifesto (cont.)

• 9. Combination of agriculture with manufacturing
  industries gradual abolition of all the
  distinction between town and country by a more
  equable distribution of the populace over the
  country.
• 10. Free education for all children in public
  schools. Abolition of children's factory labor
  in its present form. Combination of education
  with industrial production, etc.

21
The Great Contradiction

• If the Exchange value of commodities is
  determined by the labor time they contain, how
  can these commodities frequently differ from
  their labor values?
• In other words Competition is supposed to
  produce equal profits across industries
• Yet capital/labor ratios differ between industries

22
The Great Contradiction (cont.)

• Thus, according to Marx since labor is the sole
  source of surplus it must be that labor intensive
  industries should have the largest possible
  profits
• In order to argue against the critics, he used
  the following formulas

23
The Great Contradiction (cont.)

• Definitions
• Constant Capital (c) º charges on fixed capital
• (i.e. depreciation plus the cost of raw
  materials)
• Variable Capital (v) º total wages paid to labor
• Outlay (k) º cost of production
• (excluding profits) or c v
• Surplus Value º Total Revenues - (cv)
• or Total Revenues - k

24
The Great Contradiction (cont.)

• Rate of surplus value (s) º s/v
• Rate of profit (p)
  º s/ k
• Organic composition of capital (O) º ratio of
  capital to labor
• In contemporary terms
• GNP c v s k s
• NNP v s

25
The Great Contradiction (cont.)

• ASSUMPTIONS
• Different commodities are produced at different
  organic composition of capital
• rate of surplus is taken to be 100 (for
  simplicity)
• Competition will equalize the average profit

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Transformation of Values to Prices
27
Explanation of Table

• Column 1 represents five different commodities
• Column 2 capital/labor ratios with outlay being
  a 100 per industry and 500 for entire economy
• Column 3 Amount of constant capital (c) used

28
Transformation of Values to Prices
29
Explanation of Table (cont.)

• Column 4 Cost of product (cv)
• Column 5 Surplus value (since a 100 is
  assumed that implies that sv
• Column 6 TRUE value of product according to
  Marx (4)(5)

30
Transformation of Values to Prices
31
Explanation of Table (cont.)

• Column 7 Average profits
  (recall that p s/ k or 110/500.22)
• Column 8 Sale price (4) (7)
• Column 9 Deviation of Price from Value (8)-(6)

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Transformation of Values to Prices
On average the difference is zero
33
Those who used Marx

• Vladmir Ilyich Lenin
• Indicated that the
  movement towards
  communism could be
  shortened in order to be
  applicable in Russia

34
Lenin on How to Achieve Communism

• ... during the transition from capitalism to
  communism suppression is still necessary, but it
  is now the suppression of the exploiting minority
  by the exploited majority...

35
A special apparatus, a special machine for
suppression, the "state", is still necessary, but
this is now a transitional state. It is no longer
a state in the proper sense of the word for the
suppression of the minority of exploiters by the
majority of the wage slaves of yesterday is
comparatively so easy, simple and natural a task
that it will entail far less bloodshed than the
oppression of the rising of slaves, serfs or
wage-laborers, and it will cost mankind far less.
36
Why Russia needs to be ready for War

• the victory of socialism in one country does not
  at one stroke eliminate all wars in general. On
  the contrary, it presupposes wars. The
  development of capitalism proceeds extremely
  unevenly in different countries. It cannot be
  otherwise under commodity production. From this
  it follows irrefutably that socialism cannot
  achieve victory simultaneously in all countries.

37
It will achieve victory first in one or several
countries, while the others will for some time
remain bourgeois or pre-bourgeois. This is bound
to create not only friction, but a direct attempt
on the part of the bourgeoisie of other countries
to crush the socialist state's victorious
proletariat. In such cases, a war on our part
would be a legitimate and just war
38
Leon Trotsky

• Leader of the Russian
  Revolution.
• Architect of the Red Army. Commissar of
  foreign affairs
  between 1917-1924.
• In 1929, deported from
  the USSR by Stalinists.
• In 1940,murdered by
  assassin.

39
MAO TSE-TUNG

• 1893 - 1976

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MAO TSE-TUNG

• The transition to communism is based on
• the numerous types of state system in the world
  can be reduced to three basic kinds according to
  the class character of their political power
• (1) republics under bourgeois dictatorship
• (2) republics under the dictatorship of the
  proletariat and
• (3) republics under the joint dictatorship of
  several revolutionary classes.

41
MAO TSE-TUNG

• The first kind comprises the old democratic
  states
• The second kind exists in the Soviet Union, and
  the conditions for its birth are ripening in
  capitalist countries. In the future, it will be
  the dominant form throughout the world for a
  certain period.

42
MAO TSE-TUNG

• The third kind is the transitional form of state
  to be adopted in the revolutions of the colonial
  and semi-colonial countries. Each of these
  revolutions will necessarily have specific
  characteristics of its own, but these will be
  minor variations on a general theme

43
On why democracy is not needed to evolve to
Communism

• The so-called democratic system in modern states
  is usually monopolized by the bourgeoisie and has
  become simply an instrument for oppressing the
  common people. On the other hand, the
  Kuomintang's Principle of Democracy means a
  democratic system shared by all the common people
  and not privately owned by the few.