ECON 4270 Distributive Justice Lecture 9: Marxism. · ECON 4270 Distributive Justice Lecture 9:...

ECON 4270 Distributive Justice Lecture 9: Marxism.

ECON 4270 Distributive JusticeLecture 9: Marxism.

Hilde Bojerwww.folk.uio.no/hbojer

[email protected]

April 17, 2012


Marxism

Labour theory of value

Exploitation of the workers

Productive and unproductive labour


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.


Marxism

4As you know, enormously influentialMany political parties and movementsand ruling parties


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.


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


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.


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




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?)




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



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 )




12Formally:

V = ` + aV

solution

V =`

1 − a

The labour value of corn depends on theproductivity of labourand the productivity of seed corn



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



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.



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???



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.



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



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



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



20Non-productive labour:public serviceshouseworkchild careMarx and his followers concede that non-productive labour can beuseful



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?)

ECON 4270 Distributive Justice Lecture 9: Marxism. · ECON 4270 Distributive Justice Lecture 9:...

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