6. An outline of Marxist economics¶
Core Argument¶
The bedrock of Marxist economics is the Labour Theory of Value, which Marx refined to reveal the hidden laws regulating capitalism. This theory holds that a commodity’s value is determined by the socially necessary labour time required for its production, with prices constantly fluctuating around this value through the interplay of supply and demand. Marx’s crucial discovery was the dual character of labour power. The worker, a free wage-labourer, sells this commodity—the capacity to work—at its full value, determined by the labour-time needed for subsistence and reproduction, including a historical and moral element. However, the capitalist then compels the worker to labour longer than is necessary to reproduce the value of wages, thereby creating surplus value, which the capitalist appropriates. Exploitation thus occurs in production, not exchange.
This refutes the claims of theorists like Heinz Dieterich and Arno Peters, who argue that capitalist profit arises from “unequal exchange” or swindling. Marx demonstrated that profit cannot arise from exchange alone, as a gain as seller is a loss as buyer. Capitalism is not based on such marginal practices. The law of value operates behind producers’ backs, established by competition; values are only manifest as a norm through prices, which constantly deviate from them. Dieterich’s proposed “equivalent economy,” where prices equal values, is a regression to pre-Marxist utopian socialism. It fails because value is a social average including accumulated labour in means of production, and because eliminating the law of value while retaining capitalism is as impossible as abolishing gravity. Exploitation is rooted in production relations; profits only disappear by changing these relations, not by enforcing equivalent exchange.
The class struggle is fundamentally a struggle over surplus value. Competition between capitals tends to equalise the rate of profit, though monopolies distort this. Machinery, rather than shortening the working day, lengthens it under capitalism, as capitalists must run it continuously to extract absolute and relative surplus value. This intensifies exploitation and unemployment, blocking the potential for a shorter working week. Crises of overproduction arise because the conditions of exploitation and realisation diverge: production is limited only by productive power, but realisation is limited by society’s consuming power based on effective demand. This is unique to capitalism—people starve because too much is produced. The system breaks down at the point of sale, where surplus value must be realised as money. A socialist alternative requires abolishing commodity production and private property, not calculating labour times. In a transitional workers’ state, wage differentials would tend to disappear, and the bourgeois state apparatus would be replaced by elected officials subject to recall, paid no more than a skilled worker’s wage.