Turning Marxian

As someone who would like to believe that I had at least a partial role in the exhilarating protests of ’89 (my part consisting mainly in having been born; well, and looking cute on my dad’s shoulders), I was the last person to think I could ever feel some attraction for Marx’s ideas. In fact I remember being openly, hmmm disrespectful on several occasions when, upon mentioning that I am studying economics, my granddad suggested I should take a look at the Capital.

Now, after spending a large chunk of this semester learning about the history of economic theories with one of the coolest professors I’ve had, I notice a radical shift in my attitudes.

So, since for the past couple of weeks I’ve been pouring most of my words in a paper on the theory of Mr. Marx, I decided to kill two birds with one stone and blog it out.

To Marx now. It is incredible that despite that Marx is one of the best-known economists, his theory remains largely misunderstood and superficially examined. I have read enough articles claiming to address his theory and containing more references to The Communist Manifesto than Capital. And while public misunderstanding is to be expected due to the connotations of Marxism, the bias in academia surprised me.

But, to the point: Why do I think Marx is cool?

• His theory of profits is the nucleus of his theory of capitalism (yes, his theory in fact was about capitalism, not communism) Profit is a question that classical economics never answered and neoclassical has never asked! And since capitalism is all about profit, somebody needs to explain it, right?
• Marx’s theory of profits in a nutshell: profit is generated through the exploitation of workers, i.e. by their unpaid labor.
• From this theory of profit follow other conclusions, which have been historically proved correct:
• conflicts between employers and workers over the length of the work day, salaries, labor intensity, you name it..
• And the most impressive prediction of all, technological progress is inherent to capitalism! The argument basically goes like this: within regulated length of the work day, the only way for capitalists to generate more surplus labor, i.e. increase profits, is to reduce the need for labor. Hence, the need for higher efficiency which comes through technology!

In comparison, all other economic theories don’t explain technology, but take it as constant (obviously not true) or assume it came from outer space (well, they put it as exogenous, same thing..) And this is a pretty grave shortcoming, considering technological change is one of the most significant phenomena which we have been observing.

Pfu, enough theory! My point is, Marxian theory explains a lot more than it is given credit for. And despite its problems, it is certainly a good idea to look more into it instead of discard it as something expired…

P.S. I am trying to convince Daniel to start a Marxian, well heterodox really, club in LBS; he’s pretending to not take my remarks seriously; I think he’s worried they’ll kick him out ;)