Marxian economics
Marxian economics refers to economic
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 theories on the functioning of capitalism based on the works of Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...

. Adherents of Marxian economics, particularly in academia, distinguish it from Marxism
Marxism is an economic and sociopolitical worldview and method of socioeconomic inquiry that centers upon a materialist interpretation of history, a dialectical view of social change, and an analysis and critique of the development of capitalism. Marxism was pioneered in the early to mid 19th...

 as a political ideology and sociological theory
Marxist sociology
Marxist sociology refers to the conduct of sociology from a Marxist perspective. Marxism itself can be recognized as both a political philosophy and a sociology, particularly to the extent it attempts to remain scientific, systematic and objective rather than purely normative and prescriptive....

, arguing that Marx's approach to understanding the economy is intellectually independent of his advocacy of revolution
A revolution is a fundamental change in power or organizational structures that takes place in a relatively short period of time.Aristotle described two types of political revolution:...

ary socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...

 or his support of proletarian
The proletariat is a term used to identify a lower social class, usually the working class; a member of such a class is proletarian...

 revolution. Adherents consider Marx's economic theories to be the basis of a viable analytic framework, and an alternative to more conventional neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

. Marxian economists do not lean entirely upon the works of Marx and other widely-known Marxists; they draw from a range of Marxist and non-Marxist sources.

Marx's major work on political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

 was Capital: A Critique of Political Economy (better known by its German title Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...

), a three-volume work, of which only the first volume was published in his lifetime (the others were published by Friedrich Engels
Friedrich Engels
Friedrich Engels was a German industrialist, social scientist, author, political theorist, philosopher, and father of Marxist theory, alongside Karl Marx. In 1845 he published The Condition of the Working Class in England, based on personal observations and research...

 from Marx's notes). One of Marx's early works, Critique of Political Economy, was mostly incorporated into Capital, especially the beginning of Volume I. Marx's notes made in preparation for writing Capital were published years later under the title Grundrisse
The Grundrisse der Kritik der Politischen Ökonomie is a lengthy manuscript by the German philosopher Karl Marx, completed in 1858. However, as it existed primarily as a collection of unedited notes, the work remained unpublished until 1939...


Marx's response to classical economics

Marx's economics took as its starting point the work of the best-known economists of his day, the British classical economists. Among these economists were Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...

, Thomas Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

, and David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...


Smith, in The Wealth of Nations
The Wealth of Nations
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith...

, argued that the most important characteristic of a market economy was that it permitted a rapid growth in productive abilities. Smith claimed that a growing market stimulated a greater "division of labor" (i.e., specialization of businesses and/or workers) and this, in turn, led to greater productivity. Although Smith generally said little about laborers, he did note that an increased division of labor could at some point cause harm to those whose jobs became narrower and narrower as the division of labor expanded. Smith maintained that a laissez-faire economy would naturally correct itself over time.

Marx followed Smith by claiming that the most important beneficial economic consequence of capitalism was a rapid growth in productivity abilities. Marx also expanded greatly on the notion that laborers could come to harm as capitalism became more productive. Additionally, in Theories of Surplus Value, Marx noted, "We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital. In their view, it is only one definite kind of concrete labour—agricultural labour —that creates surplus-value....But to Adam Smith, it is general social labour—no matter in what use-values it manifests itself—the mere quantity of necessary labour, which creates value. Surplus-value, whether it takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labour, appropriated by the owners of the material conditions of labour in the exchange with living labour."

Malthus' claim, in "An Essay on the Principle of Population
An Essay on the Principle of Population
The book An Essay on the Principle of Population was first published anonymously in 1798 through J. Johnson . The author was soon identified as The Reverend Thomas Robert Malthus. While it was not the first book on population, it has been acknowledged as the most influential work of its era...

", that population growth was the primary cause of subsistence level wages for laborers provoked Marx to develop an alternative theory of wage determination. Whereas Malthus presented an ahistorical theory of population growth, Marx offered a theory of how a relative surplus population in capitalism tended to push wages to subsistence levels. Marx saw this relative surplus population as coming from economic causes and not from biological causes (as in Malthus). This economic-based theory of surplus population is often labeled as Marx's theory of the reserve army of labour
Reserve army of labour
Reserve army of labour is a concept in Karl Marx's critique of political economy. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for...


Ricardo developed a theory of distribution within capitalism, that is, a theory of how the output of society is distributed to classes within society. The most mature version of this theory, presented in On the Principles of Political Economy and Taxation
On the Principles of Political Economy and Taxation
On the Principles of Political Economy and Taxation is a book by David Ricardo on economics. The book concludes that land rent grows as population increases...

, was based on a labour theory of value in which the value of any produced object is equal to the labor embodied in the object. (Adam Smith also presented a labor theory of value but it was only incompletely realized.) Also notable in Ricardo's economic theory was that profit was a deduction from society's output and that wages and profit were inversely related: an increase in profit came at the expense of a reduction in wages. Marx built much of the formal economic analysis found in Capital on Ricardo's theory of the economy.

Marx's theory

Marx employed a labour theory of value, which holds that the value of a commodity is the socially necessary labour time
Socially necessary labour time
Socially necessary labour time in Marx's critique of political economy is what regulates the exchange value of commodities in trade and consequently guides producers in their attempt to economise on labour....

 invested in it. Capitalists
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

, however, do not pay workers the full value of the commodities they produce, but compensate the worker for the necessary labor only (the worker's wage, which cover only the necessary means of subsistence in order to maintain him working in the present and his family in the future as a group -(the working class)- absolutely necessary for the existence of the capital-labor relation, the essence of the capitalist mode of production). This necessary labor is, in fact, only a fraction of a full working day, and the rest, the surplus-labor, is, in fact, pocketed by the capitalist. Marx theorized that the gap between the value a worker produces and his wage is a form of unpaid labour, known as surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...

. Moreover, Marx notes that markets tend to obscure the social relationships and processes of production, a phenomenon he termed commodity fetishism
Commodity fetishism
In Marx's critique of political economy, commodity fetishism denotes the mystification of human relations said to arise out of the growth of market trade, when social relationships between people are expressed as, mediated by and transformed into, objectified relationships between things .The...

. People are highly aware of commodities, and usually don't think about the relationships and labour they represent.


Marx used dialectics, a method that he adapted from the works of Georg Wilhelm Friedrich Hegel
Georg Wilhelm Friedrich Hegel
Georg Wilhelm Friedrich Hegel was a German philosopher, one of the creators of German Idealism. His historicist and idealist account of reality as a whole revolutionized European philosophy and was an important precursor to Continental philosophy and Marxism.Hegel developed a comprehensive...

. Dialectics focuses on relation and change, and tries to avoid seeing the universe as composed of separate objects, each with essentially stable unchanging characteristics. One component of dialectics is abstraction
Abstraction is a process by which higher concepts are derived from the usage and classification of literal concepts, first principles, or other methods....

; out of an undifferentiated mass of data or system conceived of as an organic whole, one abstracts portions to think about or to refer to. One may abstract objects, but also — and more typically — relations, and processes of change. An abstraction may be extensive or narrow, may focus on generalities or specifics, and may be made from various points of view. For example, a sale may be abstracted from a buyer's or a seller's point of view, and one may abstract a particular sale or sales in general. Another component is the dialectical deduction of categories. Marx uses Hegel's notion of categories, which are forms, for economics: The commodity form, the money form, the capital form etc. have to be systematically deduced instead of being grasped in an outward way as done by the bourgeois economists. This corresponds to Hegel's critique of Kant's transcendental philosophy.

Marx regarded history
History is the discovery, collection, organization, and presentation of information about past events. History can also mean the period of time after writing was invented. Scholars who write about history are called historians...

 as having passed through several stages. The details of his periodisation vary somewhat through his works, but it essentially is: Primitive Communism
Primitive communism
Primitive communism is a term used by Karl Marx and Friedrich Engels to describe what they interpreted as early forms of communism: As a model, primitive communism is usually used to describe early hunter-gatherer societies, that had no hierarchical social class structures or capital accumulation...

 -- Slave
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...

 societies -- Feudalism
Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...

 -- Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

 -- Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...

 -- Communism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...

 (capitalism being the present stage and communism the future). Marx occupied himself primarily with describing capitalism. Historians place the beginning of capitalism some time between about 1450 (Sombart) and some time in the 17th century (Hobsbawm). A distinguishing feature of capitalism is that most of the products of human labour are produced for sale, rather than consumed by the producers or appropriated, essentially by force, by a ruling elite as in feudalism or slavery. (For example in feudalism, most agricultural produce was either consumed by the peasants who grew it, or appropriated by feudal masters. It almost never was sold for money.) Marx defines a commodity
Commodity (Marxism)
In classical political economy and especially Karl Marx's critique of political economy, a commodity is any good or service produced by human labour and offered as a product for general sale on the market. Some other priced goods are also treated as commodities, e.g...

 as a product of human labour that is produced for sale in a market. Thus in capitalism, most of the products of human labour are commodities. Marx began his major work on economics, Capital, with a discussion of commodities; Chapter One is called "Commodities".


"The wealth of those societies in which the capitalist mode of production
Mode of production
In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...

 prevails, presents itself as 'an immense accumulation of commodities,' its unit being a single commodity." (First sentence of Capital, Volume I.)

"The common substance that manifests itself in the exchange value of commodities whenever they are exchanged, is their value." (Capital, I, Chap I, section 1.)

The worth of a commodity can be conceived of in two different ways, which Marx calls use-value and value. A commodity's use-value is its usefulness for fulfilling some practical purpose; for example, the use-value of a piece of food is that it provides nourishment and pleasurable taste; the use value of a hammer, that it can drive nails. Value is, on the other hand, a measure of a commodity's worth in comparison to other commodities. It is closely related to exchange-value, the ratio at which commodities should be traded for one another, but not identical: value is at a more general level of abstraction; exchange-value is a realisation or form of it.

Marx argued that if value is a property common to all commodities, then whatever it is derived from, whatever determines it, must be common to all commodities. The only relevant thing that is, in Marx's view, common to all commodities is human labour: they are all produced by human labour.

"This common 'something' cannot be either a geometrical, a chemical, or any other natural property of commodities. . . . If then we leave out of consideration the use-value of commodities, they have only one common property left, that of being products of labour." (Capital I, I, 1.)

Marx concluded that the value of a commodity is simply the amount of human labour required to produce it. Thus Marx adopted a labour theory of value, as had his predecessors Ricardo and MacCulloch; Marx himself traced the existence of the theory at least as far back as an anonymous work, Some Thoughts on the Interest of Money in General, and Particularly the Publick Funds, &c., published in London around 1739 or 1740.
Marx placed some restrictions on the validity of his value theory: he said that in order for it to hold, the commodity must not be a useless item; and it is not the actual amount of labour that went into producing a particular individual commodity that determines its value, but the amount of labour that a worker of average energy and ability, working with average intensity, using the prevailing techniques of the day, would need to produce it. A formal statement of the law is: the value of a commodity is equal to the average socially necessary labour time required for its production. (Capital, I, I—p 39 in Progress Publishers, Moscow, ed'n.)

Marx's contention was that commodities tend, at a fairly general level of abstraction, to exchange at value; that is, if Commodity A, whose value is "V", is traded for Commodity B, it will tend to fetch an amount of Commodity B whose value is the same, "V". Particular circumstances will cause divergence from this rule, however.


"Paper money is a token representing gold or money." (Capital, I, Chap III, section 2, part c.)

Marx held that metallic money, such as gold, is a commodity, and its value is the labour time necessary to produce it (mine it, smelt it, etc.). Gold and silver are conventionally used as money because they embody a large amount of labour in a small, durable, form, which is convenient. Paper money is a representation of gold or silver, almost without value of its own but held in circulation by state decree.


"If, on the other hand, the subject of labour has, so to say, been filtered through previous labour, we call it raw material. . . ." (Capital, I, Chap VII, section 1.)

Marx lists the elementary factors of production as:
  1. labour, "the personal activity of man." (Capital, I, VII, 1.)
  2. the subject of labour: the thing worked on.
  3. the instruments of labour: tools, labouring domestic animals like horses, chemicals used in modifying the subject, etc.

Some subjects of labour are available directly from Nature: uncaught fish, unmined coal, etc. Others are results of a previous stage of production; these are known as raw materials, such as flour or yarn. Workshops, canals, and roads are considered instruments of labour. (Capital, I, VII, 1.)
Coal for boilers, oil for wheels, and hay for draft horses is considered raw material, not instruments of labour. The subjects of labour and instruments of labour together are called the means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

Relations of production
Relations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...

 are the relations human beings adopt toward each other as part of the production process. In capitalism, wage labour
Wage labour
Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells their labour under a formal or informal employment contract. These transactions usually occur in a labour market where wages are market determined...

 and private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...

 are part of the relations of production.
Calculation of value of a product:
If labour is performed directly on Nature and with instruments of negligible value, the value of the product is simply the labour time. If labour is performed on something that is itself the product of previous labour (that is, on a raw material), using instruments that have some value, the value of the product is the value of the raw material, plus depreciation on the instruments, plus the labour time. Depreciation may be figured simply by dividing the value of the instruments by their working life; eg. if a lathe worth £1,000 lasts in use 10 years it imparts value to the product at a rate of £100 per year.

value   =   mp  +  lt
Where:    value
is the value of the product;

is the value of the means of production;

is the labour time.


At least, in a fully capitalist society almost all labour is wage labour. In present Western society homemaking is clearly still a huge area of un-waged labour; however it is becoming increasingly commodified as women enter the workforce (that is not to say that women should not be empowered in this way). Convenience foods, day care, hired cleaners, replacing clothes versus mending them, disposable household products generally—all represent subsumption of this formerly non-capitalist area of production into capitalism.

Labour in precapitalist societies is either performed to fulfill one's own or one's family's wants directly (e.g. subsistence labour), or some form of forced labour, such as slavery or serfdom; only rarely is labour performed for a wage. In capitalist society it is the reverse: almost all labour is wage labour.

Since most labour in a capitalist society is labour exchanged by the worker in return for a price (his wage), it has the form of a commodity: something sold on the market for a price. Therefore Marx held that labour in a capitalist society is a commodity. Like any commodity it has a use-value and a value. Its use value—the useful thing it provides—is the actual accomplishing of some task: spinning, weaving, shovelling, babysitting, or whatever. Its value is determined by the same criterion as is the value of any commodity: its value is the amount of socially necessary labour time needed to create it. This is the amount of socially necessary labour time needed to create the food, housing, clothes, etc. needed to keep the worker alive and able to work: his means of subsistence. This amount must also include something to provide for the raising of the worker's children who will someday be needed to replace his. Marx noted that what is "necessary" for a worker is not merely determined by biological requirements; it is also socially determined: society creates some needs for the worker. For example, some clothing even in warm weather, and some furniture, are not biological necessities, but, in many societies, are necessities in the present sense.

(Technically, Marx contended that what is sold on the market is labour-power, the ability or capacity of a person to do work. The term labour in Marx, is the actual doing of some work. Whether the distinction is essential is debatable. In what follows we will write labour (-power) where Marx would have written labour-power. The reader can choose whether to read this as "labour" or "labour-power".)

Labour(-power) is unique among commodities in that it is the only commodity that both has value and creates value: all commodities have value, only labour(-power) creates value.

The value created by labour(-power) is simply the time during which it was exerted. This follows from the labour theory of value's definition of value as embodied labour time.
Suppose I spend three hours creating some product; and suppose also that in the process I consume means of production that sometime in the past required two hours to produce – i.e., they have a value of two hours. The value of my product will be:

mp + lt   =   2 + 3   =   5     (in units of hours.)

It is apparent that I have increased the value that previously existed by 3 units; I have created 3 units of value. (This is assuming that my labour is of average quality, but more or less efficient labour can be accounted for simply by pro-rating the time: e.g., if I work only two-thirds as fast as the average person, we could say that in 3 hours I create a value of only 2.)

The unique fact about labour(-power)–that it both has value and creates value–is of paramount importance because those two quantities are in general not equal. The difference between them is the source of profit to employers of labour and it is what drives the capitalist system. An employer (a capitalist) buys labour(-power) at its value (or tends to, at least). He receives from it the value it creates. If the latter is greater than the former—if the value created by labour is greater than the wage—the capitalist gains by using that labour. This difference between values, which the capitalist keeps, Marx called surplus value. The income statement (or Profit and Loss account) of the capitalist is this:
=  mp + lv      where lv is the value of the labour(-power).

=  value of product
=  mp + lt

=  lt - lv
=  surplus value

There is a large moral element in Marx's treatment of surplus value because surplus value is unearned. It may be that the capitalist does some work in the production of the product—in an accounting capacity perhaps—but in this capacity he is merely functioning as part of the work force and his labour contribution may be treated like any other. In particular, the time during which he labours himself on the product must be figured into its value, so the income becomes:
=  value of product
=  mp  +  lt (other workers)  +  lt (capitalist while he works)

He still makes money on the difference between lt (other workers) and lv (other workers).

Besides looking at surplus-value creation from the point of view of value, Marx sometimes looked at it from the point of view of time. This leads to the same process being described in alternate terminology, as explained in the remainder of this paragraph. The worker creates value continuously during the time he is working; the longer he works, the more value he creates. Suppose he is paid by the day. At some point during the day he has created enough value for the capitalist to pay his wage; the time he works beyond that point is time during which he creates value that the capitalist gets to keep—surplus value. Marx thus divided the working day conceptually into two portions: the first portion, during which the worker creates enough value to just cover his wages (the value of his means of subsistence, if labour is paid at value) he called "necessary labour time"; and the rest, during which he creates surplus value for the capitalist, he called "surplus labour time".

Marx called the portion of capital spent on means of production constant capital, and that spent on labour(-power) variable capital. His reasoning for this was as follows. Recall the equations for the capitalist's expenditure and income:
Expenditure   =   mp + lv

Value of product   =   mp + lt

According to these two equations, the value of the means of production (mp) is simply transferred to the value of the product without alteration; the same term mp appears in the expenditure and the value of the product. Marx thus called capital spent on mp "constant" -- because the labour process doesn't change it. On the other hand, capital spent on labour(-power) "expands" during production because  lt > lv  . Marx therefore called it "variable".

The ratio between the wages [the value of the labour(-power)] and the surplus value—or, alternatively speaking, the ratio between the necessary and surplus labour time—Marx called the rate of surplus value.

s′  =  s / V  =  st / lt
Where:    s′   
is the rate of surplus value

is the surplus value;

is the variable capital (the wages);

is the surplus labour time;

is the necessary labour time;

Marx held that the rate of surplus-value is determined by struggle between the working class and the capitalist class. The workers attempt to increase necessary labour time (by demanding higher wages) and/or decrease surplus labour time. Two of their main weapons are trade union activity and getting legislation passed to limit the length of the working day. The capitalists attempt to do the opposite, their main lever being the fact that a worker will starve if the capitalists refuse to hire him. Marx presents considerable amounts of data in Capital (e.g. Volume I, Chap's X, XV) on wages and working conditions in England up to the late 1860s, and on the struggle via the Factory Acts to achieve legislated limits on the length of the working day for women and children. (Ca. 1833: limited to 12 hours for children, eight hours for those under 13; 1844: 12 hours for women, 6½ or seven hours for children; 1848: 10 hours for women and young persons.) These applied at first only to parts of the textile industry; between 1845 and 1863 several other industries, notably baking, were brought under the purview of these acts.

Effect of technical progress

According to Marx, the amount of actual product (i.e. use-value) that a typical worker produces in a given amount of time is the productivity of labour. It has tended to increase under capitalism. This is due to increase in the scale of enterprise, to specialisation of labour, and to the introduction of machinery. The immediate result of this is that the value of a given item tends to decrease, because the labour time necessary to produce it becomes less. In a given amount of time, labour produces more items, but each unit has less value; the total value created per time remains the same. This means that the means of subsistence become cheaper; therefore the value of labour power or necessary labour time becomes less. If the length of the working day remains the same, this results in an increase in the surplus labour time and the rate of surplus value.

Technological advancement tends to increase the amount of capital needed to start a business, and it tends to result in an increasing preponderance of capital being spent on means of production (constant capital) as opposed to labour (variable capital). Marx called the ratio of these two kinds of capital the composition of capital.

Current theorizing in Marxian economics

Marxian economics has been built upon by many others, beginning almost at the moment of Marx's death. The second and third volumes of Das Kapital were edited by his close associate Friedrich Engels
Friedrich Engels
Friedrich Engels was a German industrialist, social scientist, author, political theorist, philosopher, and father of Marxist theory, alongside Karl Marx. In 1845 he published The Condition of the Working Class in England, based on personal observations and research...

, based on Marx's notes. Marx's Theories of Surplus value was edited by Karl Kautsky
Karl Kautsky
Karl Johann Kautsky was a Czech-German philosopher, journalist, and Marxist theoretician. Kautsky was recognized as among the most authoritative promulgators of Orthodox Marxism after the death of Friedrich Engels in 1895 until the coming of World War I in 1914 and was called by some the "Pope of...

. The Marxian value theory and the Perron-Frobenius theorem on the positive eigenvector of a positive matrix  are fundamental to mathematical treatments of Marxist economics.

Universities offering one or more courses in Marxian economics, or teach one or more economics courses on other topics from a perspective that they designate as Marxian or Marxist, include Colorado State University
Colorado State University
Colorado State University is a public research university located in Fort Collins, Colorado. The university is the state's land grant university, and the flagship university of the Colorado State University System.The enrollment is approximately 29,932 students, including resident and...

, New School for Social Research, School of Oriental and African Studies
School of Oriental and African Studies
The School of Oriental and African Studies is a public research university located in London, United Kingdom and a constituent college of the University of London...

, Universiteit Maastricht
Universiteit Maastricht
Maastricht University is a public university in Maastricht, the Netherlands. Founded in 1976, the university is the second youngest in the Netherlands. The university's founding name was Rijksuniversiteit Limburg and was changed into Universiteit Maastricht in 1996...

, University of Bremen
University of Bremen
The University of Bremen is a university of approximately 23,500 people from 126 countries that are studying, teaching, researching, and working in Bremen, Germany...

, University of California at Riverside, University of Leeds
University of Leeds
The University of Leeds is a British Redbrick university located in the city of Leeds, West Yorkshire, England...

, University of Maine
University of Maine
The University of Maine is a public research university located in Orono, Maine, United States. The university was established in 1865 as a land grant college and is referred to as the flagship university of the University of Maine System...

, University of Manchester
University of Manchester
The University of Manchester is a public research university located in Manchester, United Kingdom. It is a "red brick" university and a member of the Russell Group of research-intensive British universities and the N8 Group...

, University of Massachusetts-Amherst, University of Massachusetts-Boston, University of Missouri–Kansas City
University of Missouri–Kansas City
The University of Missouri–Kansas City is a public university located in Kansas City, Missouri, USA. It is a branch of the University of Missouri System. Its main campus is in Kansas City's Rockhill neighborhood east of the Country Club Plaza...

, University of Sheffield
University of Sheffield
The University of Sheffield is a research university based in the city of Sheffield in South Yorkshire, England. It is one of the original 'red brick' universities and is a member of the Russell Group of leading research intensive universities...

, University of Utah
University of Utah
The University of Utah, also known as the U or the U of U, is a public, coeducational research university in Salt Lake City, Utah, United States. The university was established in 1850 as the University of Deseret by the General Assembly of the provisional State of Deseret, making it Utah's oldest...

, and York University (Toronto).

English-language journals include Capital & Class
Capital & Class
Capital & Class is the journal of the Conference of Socialist Economists .The journal aims to provide a critique of global capitalism in the Marxist tradition, reaching out into the labour, trade union, and other radical movements, such as anti-racism, environmentalism, and feminism.The journal has...

Historical Materialism
Historical Materialism (journal)
Historical Materialism is an interdisciplinary academic journal published quarterly. It covers research on the critical and explanatory potential of Marxist theory...

Monthly Review
Monthly Review
Monthly Review is an independent Marxist journal published 11 times per year in New York City.-History:The publication was founded by Harvard University economics instructor Paul Sweezy, who became the first editor...

Rethinking Marxism
Rethinking Marxism
Rethinking Marxism is a Marxist quarterly journal of economics, culture and society. It was launched in 1988 and since 2003 it has been published by Taylor and Francis....

Review of Radical Political Economics
Review of Radical Political Economics
The Review of Radical Political Economics is the quarterly journal of the Union for Radical Political Economics Launched in 1968, it is a leading venue for scholarly articles on radical political economics, including Marxist, feminist, lnstitutional, ecological, and post-Keynesian...

and Studies in Political Economy.


Much of the critique of classical Marxian economics came from Marxian economists that revised Marx's original theory, or by the Austrian school
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

 of economics. V. K. Dmitriev, writing in 1898, Ladislaus von Bortkiewicz
Ladislaus Bortkiewicz
Ladislaus Josephovich Bortkiewicz , August 7, 1868 – July 15, 1931) was a Russian economist and statistician of Polish descent, who lived most of his professional life in Germany, where he taught at Strassburg University and Berlin University...

, writing in 1906-07, and subsequent critics have alleged that Marx's value theory
Value theory
Value theory encompasses a range of approaches to understanding how, why and to what degree people should value things; whether the thing is a person, idea, object, or anything else. This investigation began in ancient philosophy, where it is called axiology or ethics. Early philosophical...

 and law of the tendency of the rate of profit to fall
Tendency of the rate of profit to fall
The tendency of the rate of profit to fall is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Das Kapital Vol. 3. It was generally accepted in the 19th century...

 are internally inconsistent. In other words, the critics allege that Marx drew conclusions that actually do not follow from his theoretical premises. Once these alleged errors are corrected, his conclusion that aggregate price and profit are determined by, and equal to, aggregate value and surplus value no longer holds true. This result calls into question his theory that the exploitation of workers is the sole source of profit.

Whether the rate of profit in capitalism has, as Marx predicted, tended to fall is a subject of debate. N. Okishio, in 1961, devised a theorem (Okishio's theorem
Okishio's theorem
Okishio's theorem is a mathematical theorem formulated by Japanese economist Nobuo Okishio. It has had a major impact on debates about Marx's theory of value...

) showing that if capitalists pursue cost-cutting techniques and if the real wage does not rise, the rate of profit must rise.

The inconsistency allegations have been a prominent feature of Marxian economics and the debate surrounding it since the 1970s. Andrew Kliman
Andrew Kliman
Andrew Kliman is a professor of economics at Pace University and author of several publications on Marxian economics, including the book Reclaiming Marx’s “Capital”, which defends the Temporal Single System Interpretation of Marx's labor theory against various claims of its inconsistency from...

 argues that, since internally inconsistent theories cannot possibly be right, the inconsistency charges serve to legitimate the suppression of Marx's critique of political economy and current-day research based upon it, as well as the correction of Marx's alleged inconsistencies.

Critics who have alleged that Marx has been proved internally inconsistent include former and current Marxian and/or Sraffian economists, such as Paul Sweezy
Paul Sweezy
Paul Marlor Sweezy was a Marxist economist, political activist, publisher, and founding editor of the long-running magazine Monthly Review...

, Nobuo Okishio
Nobuo Okishio
was a Japanese Marxian economist and emeritus professor of Kobe University. In 1979, He was elected President of Japan Association of Economics and Econometrics, which is now Japanese Economic Association....

, Ian Steedman
Ian Steedman
Ian Steedman was for many years a Professor of economics at the University of Manchester before moving down the road to Manchester Metropolitan University...

, John Roemer
John Roemer
John E. Roemer is an American economist and political scientist. He is currently the Elizabeth S. and A. Varick Stout Professor of Political Science and Economics at Yale University. Prior to joining Yale, he was on the economics faculty at the University of California, Davis, and before entering...

, Gary Mongiovi, and David Laibman
David Laibman
David Laibman is Professor of Economics at Brooklyn College and the Graduate Center, City University of New York. He received a Ph.D. in Economics in 1973 at the Graduate Faculty of the New School for Social Research in New York...

, who propose that the field be grounded in their correct versions of Marxian economics instead of in Marx's critique of political economy in the original form in which he presented and developed it in Capital.

Proponents of the Temporal Single System Interpretation (TSSI) of Marx's value theory claim that the supposed inconsistencies are actually the result of misinterpretation; they argue that when Marx's theory is understood as "temporal" and "single-system," the alleged internal inconsistencies disappear. In a recent survey of the debate, a proponent of the TSSI concludes that "the proofs of inconsistency are no longer defended; the entire case against Marx has been reduced to the interpretive issue."

Relevance to economics

Marxist economics was assessed in 1988 by Robert M. Solow:
"Economists working in the Marxian-Sraffian tradition represent a small minority of modern economists, and that their writings have virtually no impact upon the professional work of most economists in major English-language universities", according to George Stigler
George Stigler
George Joseph Stigler was a U.S. economist. He won the Nobel Memorial Prize in Economic Sciences in 1982, and was a key leader of the Chicago School of Economics, along with his close friend Milton Friedman....


See also

  • Capitalist mode of production
    Capitalist mode of production
    In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...

  • List of Marxian economists
  • Capital accumulation
    Capital accumulation
    The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...

  • Surplus product
    Surplus product
    Surplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...

  • Surplus labour
    Surplus labour
    Surplus labour is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker . According to Marxian economics, surplus labour is usually "unpaid labour"...

  • Labour power
    Labor power
    Labour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...

  • Law of value
    Law of value
    -General:The law of value is a central concept in Karl Marx's critique of political economy, first expounded in his polemic The Poverty of Philosophy against Pierre-Joseph Proudhon, with reference to David Ricardo's economics...

  • Unequal exchange
    Unequal exchange
    Unequal exchange is a much disputed concept which is used primarily in Marxist economics, but also in ecological economics, to denote forms of exploitation hidden in or underwriting trade...

  • Value product
    Value product
    The value product is an economic concept formulated by Karl Marx in his critique of political economy during the 1860s, and used in Marxian social accounting theory for capitalist economies...

  • Productive and unproductive labour
    Productive and unproductive labour
    Productive and unproductive labour were concepts used in classical political economy mainly in the 18th and 19th century, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis...

  • Unproductive labour in economic theory
    Unproductive labour in economic theory
    Unproductive labour is labour which does not further the end of the system. Therefore this concept has sense only with reference to a determined system. In classical economics the end is growth and development, in Marxian economics the end is capitalistic profit and in business the end is to place...

  • Socialist economics
    Socialist economics
    Socialist economics are the economic theories and practices of hypothetical and existing socialist economic systems.A socialist economy is based on public ownership or independent cooperative ownership of the means of production, wherein production is carried out to directly produce use-value,...

  • The Accumulation of Capital
    The Accumulation of Capital
    The Accumulation of Capital is the principal book length work of Rosa Luxemburg first published in 1913.It is in three sections as described below :# The Problem of Reproduction#...

  • Material product
    Material product
    Material product is a category in Marxian economics and Soviet social accounting referring to the produced output of tangible material goods, including energy supplies and goods-transport. It contrasts with services and activities such as administration that do not themselves result in any tangible...

Further reading

  • Althusser, Louis and Balibar, Étienne. Reading Capital. London: Verso, 2009.
  • Bottomore, Tom, ed. A Dictionary of Marxist Thought. Oxford: Blackwell, 1998.
  • Fine, Ben
    Ben Fine
    For the New York Times reporter see Benjamin FineBen Fine is Professor of Economics at the University of London's School of Oriental and African Studies. He is the author of a number of works in the broad tradition of Marxist economics, and has made contributions on economic imperialism and social...

    . Marx's Capital. 5th ed. London: Pluto, 2010.
  • Harvey, David. A Companion to Marx's Capital. London: Verso, 2010.
  • Harvey, David. The Limits of Capital. London: Verso, 2006.
  • Mandel, Ernest
    Ernest Mandel
    Ernest Ezra Mandel, also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter , was a revolutionary Marxist theorist.-Life:...

    . Marxist Economic Theory. New York: Monthly Review Press, 1970.
  • Mandel, Ernest
    Ernest Mandel
    Ernest Ezra Mandel, also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter , was a revolutionary Marxist theorist.-Life:...

    . The Formation of the Economic Thought of Karl Marx. New York: Monthly Review Press, 1977.
  • Morishima, Michio
    Michio Morishima
    was a Japanese economist, mathematician and econometrician, who was a faculty member at the London School of Economics from 1970-88 as the Sir John Hicks Professor of Economics...

    . Marx's Economics: A Dual Theory of Value and Growth. Cambridge: Cambridge University Press, 1973.
  • Postone, Moishe. Time, Labor, and Social Domination: A Reinterpretation of Marx's Critical Theory. Cambridge [England]: Cambridge University Press, 1993.
  • Saad-Filho, Alfredo
    Alfredo Saad-Filho
    Professor Alfredo Saad-Filho BSc, MSc PhD has degrees in Economics from Universidade de Brasília and the University of London , and has taught and researched in universities in Brazil and Mozambique as well as the UK...

    . The Value of Marx: Political Economy for Contemporary Capitalism. London: Routledge, 2002.

External links

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