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ECON 4270 Distributive Justice Lecture 9: Marxism.
ECON 4270 Distributive JusticeLecture 9: Marxism.
Hilde Bojerwww.folk.uio.no/hbojer
April 17, 2012
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
Labour theory of value
Exploitation of the workers
Productive and unproductive labour
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
Marxism
3Karl Marx (1818 – 1883)Philosopher, economist, economic historian, general social scientistMain works:Das Kapital (Capital) 3 volumes, 1867and 1885, 1894 posthumouslyThe Communist Manifesto (Co-author: Friedrich Engels) 1848And many, many others.Manuscripts and rough drafts have been published,and they are not easy reading.
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
4As you know, enormously influentialMany political parties and movementsand ruling parties
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
5Marxism is considered an egalitarian ideologyBut Marx has no real theory of justice in distributionFamous slogan:‘From each according to ability, to each according to need’.From the Communist ManifestoThis ideal can, according to Marx, only be realised in a communistsociety.
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
6Connected with his view of history:Capitalism would develop ‘forces of production’to their highest level.At the same time, internal contradictions:crises, falling rate of profitwould lead to an end of capitalismthrough a proletarian revolutionWhen the fetters of capitalism were thrown offthere would be abundanceenough for everyone
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
Exploitation of the working class
7Meanwhile, under capitalism, workers produce all value, but receiveonly part of it in return.Capitalists earn profit without contributing to production.Therefore: workers are exploited by the capitalist class and thelandowners.
ECON 4270 Distributive Justice Lecture 9: Marxism.
Marxism
Marx and the classical economist
8Marx based his analysis on concepts taken from the classicaleconomists:
I Three classes: landowners, capitalists, workers (proletariat)defined by their place in production
I Three corresponding kinds of income: land rent, profit,earnings (wage income)
I Labour theory of value
I Productive and unproductive labour
ECON 4270 Distributive Justice Lecture 9: Marxism.
Labour theory of value
Labour theory of value
9Marx’s theory of exploitation is based on the labour theory of value,which he shared with Adam Smith and David Ricardo.Well explained verbally in Kymlicka.More formal analysis:Valid for any number of products and inputsAssume a corn economy: corn is produced using labour and corn(seed)To produce 1 kg corn we need a kg seed corn and ` units of labour.Clearly, a < 1 (Why?)
ECON 4270 Distributive Justice Lecture 9: Marxism.
Labour theory of value
Labour theory of value
10Original formulation: the value of the corn consists of direct labourplus indirect labour:the labour needed to produce the seed cornThe seed corn is produced by labour and seed cornetc etcthe beginning is lost in timeMarx’s solution: the value of the seed corn equals the value of thecorn produced
ECON 4270 Distributive Justice Lecture 9: Marxism.
Labour theory of value
11Let the labour value of 1 kg corn = V .The (labour) value of 1 kg corn equals the number ofwork hours needed to produce it (`)plus the value of the seed corn ( aV )
ECON 4270 Distributive Justice Lecture 9: Marxism.
Labour theory of value
Labour theory of value
12Formally:
V = ` + aV
solution
V =`
1 − a
The labour value of corn depends on theproductivity of labourand the productivity of seed corn
ECON 4270 Distributive Justice Lecture 9: Marxism.
Exploitation of the workers
Exploitation
13The economy produces X kg corn usingaX kilo seed cornand`X = L hours of labourThe net product is X − aX = (1 − a)XThe value of the net product is:
V (1 − a)X =`
1 − a(1 − a)X = `X = L
ECON 4270 Distributive Justice Lecture 9: Marxism.
Exploitation of the workers
Exploitation
14The total value of the net product equals the number of hoursworkedThe net product is divided between the workers and the capitalistsThe workers produce value LOf this, the capitalists keep back profits of value m (German,Norwegian), s (English)the workers receive L− s < LThey produce more value than they receive.This is the Marxian theory of exploitation.
ECON 4270 Distributive Justice Lecture 9: Marxism.
Exploitation of the workers
Exploitation
15What does the theory imply?prove?One possible conclusion:no exploitation in the just societythe workers receive the whole productBut Marx protests strongly against this conclusionin Critique of the Gotha programmePart of the product must go to the non-workingthe old, children etcand to investmentSo what is the just distribution???
ECON 4270 Distributive Justice Lecture 9: Marxism.
Exploitation of the workers
16In Capital vol 3, Marx himself proved that prices in a competitiveeconomy could not be proportional to labour values.By that time, however, the labour theory of value had beendiscarded by economists for other reasons, to be replaced by theneoclassical theory of value.
ECON 4270 Distributive Justice Lecture 9: Marxism.
Productive and unproductive labour
Productive labour
17An outdated concept in academic economicsat least as understood by the clssical economistsRent seekingStill alive as folklore and sloganGoes back to the French physiocrats (18th century)(who founded economic analysis before Smith)Quesnay: Tableau economique (1758)The only productive activity was agricultureOther sectors (manufacture, services) were in a sense parasitic onagriculture
ECON 4270 Distributive Justice Lecture 9: Marxism.
Productive and unproductive labour
Productive labour
18The classical economists Smith (and Ricardo)inherited the distinction between productive and unproductivelabourSmith: Only the production of physical objectsproduces valueServices are unproductiveMarx: Several different definitions
ECON 4270 Distributive Justice Lecture 9: Marxism.
Productive and unproductive labour
Productive labour
19One definition: the same as SmithAnother definition:productive labour is labour producing value for capitalists(private sector)Only productive labour produces valuehence: all value is produced in the private sector
ECON 4270 Distributive Justice Lecture 9: Marxism.
Productive and unproductive labour
20Non-productive labour:public serviceshouseworkchild careMarx and his followers concede that non-productive labour can beuseful
ECON 4270 Distributive Justice Lecture 9: Marxism.
Productive and unproductive labour
21Still aliveas the concept that all value is produced by private firmsthe public sector i parasitic on the private (and should be as smallas possible?)