Marxist economics

When the 1929 Crash broke out it affected the Italian economy dramatically. Italy had just been through a serious monetary crisis, from which it had not yet recovered when the world crisis broke out. In this situation the capitalists desperately turned to the State for help.

The classical view of how capitalism develops is that within feudal society a class emerges made up of merchants, bankers, early industrialists, i.e. the bourgeoisie, and that for this class to be able to develop its full potential a bourgeois revolution is required to break the limits imposed by the landed feudal aristocracy. That is how things developed, more or less, in countries like France and England, but not in Japan.

Inflation was persistently high throughout 2010, with an average RPI of 4.6% - the highest since 1991. Meanwhile, the CPI has been above 3% for the last 15 months, a whole percentage point above the Bank of England’s 2% target, prompting Mervyn King, the governor of the Bank of England, to write a total of four letters to George Osborne, the Chancellor of the Exchequer, explaining the causes for such consistently high inflation.

“Now we must expect the opposite: profound, long, and painful crises, while the upward movements are weak and short-lived. If the old cycles were the mechanism of a broad upward movement, the new ones can only be the mechanism of capitalist decay.” Written almost 80 years ago, but extremely relevant to today’s situation.

Before we examine the economic theories of comrade Dieterich, we will attempt to provide the reader with a brief summary of the basic economic laws of capitalism, which Marx explained long ago.

Marxists approach economics from a particular perspective. We have to accept that wealth is concentrated in the hands of a very small number of people, the capitalist class. The overwhelming majority of people have no wealth. All in essence they have is themselves and their ability to work, which they have to sell on the open market. Marx called these people the proletariat. Steve Jones, of the Socialist Appeal editorial board, talks on the basics of Marxists economics.

At a Youth School of the Socialist Appeal late last year Mick Brooks introduced a discussion on 'What is money?'. Given the current financial turmoil many are asking what is behind the jargon given by economic commentators today. This serves as a useful introduction to the idea and concept of money.

In the 1980s there was a debate within the Marxist tendency about productive and unproductive labour. Here we provide a contribution to that debate by Mick Brooks. Although this is archive material, we believe it will help today’s generation to better understand capitalism in order to overthrow it.

We are publishing two old documents on the tendency of the rate of profit to fall, which were part of a debate in the early 1980s within the then Militant Tendency. Marx had predicted a tendency for the rate of profit to fall as a result of what he called the rising organic composition of capital. In his document, AG disagreed with Marx. He saw the fall in profits as being fundamentally caused by rising real wages biting into the surplus. This had serious implications as it led him to cast doubts on Marx’s theory. MB’s reply is mainly concerned with pointing out that Marx’s theory was fundamentally correct and that it is still a useful guide to understanding reality.

In his document, AG disagreed with Marx. He saw the fall in profits as being fundamentally caused by rising real wages biting into the surplus. This had serious implications as it led him to cast doubts on Marx’s theory. MB’s reply is mainly concerned with pointing out that Marx’s theory was fundamentally correct and that it is still a useful guide to understanding reality.

One of the basic ideas of Karl Marx that is constantly being denied by bourgeois economists is his theory of value. This is understandable because from this very theory flow all the other conclusions of Marx, in particular that of the need to overthrow capitalism if we are to put an end to all the contradictions of this unjust system which condemns millions of human beings to abject poverty, mass unemployment, periodic economic crises and wars. In this article (divided into two parts) Mick Brooks, using up to date facts and figures, shows how the Marxist Labour Theory of Value is still valid today.

The capitalist system moves in a never-ending cycle of booms and slumps. That has been the case for the last two hundred years. The cycle of booms and slumps, however, does not have a fixed and regular character. To begin with, the length of the cycle has always been somewhat flexible. In Marx's day it was an average of 10 years, but in the years of upswing after the second world war it was considerably less, something like 5-6 years, or even less. The exact length of the cycle is therefore not a principled question for Marxists. What is necessary is to analyse concretely the nature of the cycle, and try to establish how it will most likely evolve. 

We are reproducing a slightly edited version of What is Marxism? by Rob Sewell and Alan Woods, last published in 1983 to celebrate the centenary of the death of Karl Marx. The three articles on the fundamental aspects of Marxism, Marxist Economics, Dialectical Materialism and Historical Materialism were originally published separately in the 1970s. These articles are a good, brief introduction to the basic methods of Marxism and can serve as a first approach to the ideas developed by Marx and Engels.