An In-depth Exploration of Political Economy

Is Marx’s understanding of capitalism problematic?

The political economy refers to a social science interdisciplinary branch which is focused on the interrelationships among government, individuals as well as public policy (Dobb, 2012). Various categories in the economy stick to various theories on how to develop economies since the political economy is a complicated sector that has huge political interests (Ollman et al., 2016). Moreover, the political economics is subdivided into modern and the classical political economy; the classical political economy examines theories and studies by Karl Marx, Adam Smith, as well as Machiavelli (Cutler et al., 2013). On the other hand, the modern political economies examine the studies by economists, philosophers as well as political scientists like Friedrich Hayek as well as Milton Freidman. One of the most important theorists in the political economy is Karl Marx. He was a politician, social as well as an economic philosophy who mostly examined the impact of capitalism on productivity, economic development, and labour (Veblen, 2015). Marxism reveals that, the conflict of interest between social classes, specifically between capitalism and employees. He later revealed that the economic relations in a capitalist economy would result in revolutionary communism. This paper critically discusses the understanding of Marx's understanding of capitalism and understanding related issues.

In the time of Marx, capitalism enabled workers to treat their labour as their property. In his theory, Marx view capitalism as a phase in the economic system’s historical progression which follow one another in a natural sequence and which is driven by huge histological impersonal forces and which is impacted by the conflict and behaviour between social classes (Veblen, 2015). Based on Marx, societies are categorized into many social classes and its members have similar characteristics. In the capitalist platform, Marx suggested that, the society comprised of two classes, the business owners or the bourgeoisie and who had control over production means. Moreover, as mentioned earlier, the other group is the workers or the proletariat whose labour transformed the raw commodities economic products. This meant that the bourgeoisie had power over the proletariat (Lane & Lane, 2019). This allowed them to control the power of the workers in production and obtaining what they need to survive. Besides, in his understanding, Marx believed that capitalism was based on commodities- products which are bought and sold therefore, workers' labour was a form of the end product. Though, with ordinary employees failed to own production means like buildings, factories, and materials, Marx associated them with little power (Lane & Lane, 2019). Besides, workers were also replaceable especially in times of high unemployment hence further devaluing their perceived value. Also, Marx suggests that to maximize profits, the owners of the business hand to exploit the workers with less payment/ lowest wages possible.

Further, Marx in his theory reveals that, to retain their position of privilege and power business owners employed social institutions as a strategy against the proletariat. The government was also suggested to enforce the bourgeoisie will by physical coercion to promote ownership of private property rights and labour legislation concerning production (Schumpeter, 2010). Organized religion also came into place to convince the proletariat to submit and accept the exploitation as per the fictional divine sanction, "the opium of the masses”, as defined by Marx (Laibman, 2016). The philosopher also felt that capitalism developed an unfair imbalance between employees and capitalists in the whole production. This, therefore, forced the working class to view their employment as a survival mean. Due to the decreased personal stake goods production, the theorist suggested that employees become alienated and resentful toward the business owner. Nevertheless, as per Marx, economic relationships and factors between social classes were interrelated. The inherent exploitation and inequalities in the capitalist economy would lastly result in a revolution where capitalism would be abolished (Laibman, 2016). The theorist also revealed that, based on his understanding, while employees were concerned about their survival, owners of the business were only convened on making profits and acquiring more finances. The polarity in the economy would ultimately develop social problems that would last forever in the economic and social revolution. From this idea, Marx believed that the capitalist system had seeds of its destruction since the exploitation and alienation of the workers would inevitably drive the employees to rebel against the bourgeoisie and try to seize control of the production means (Smart, 2013). As per the theorist, the revolution was to be started by the enlightened leaders who have knowledge of the class structure of the community which would lead to the unity of the employees hence promoting class consciousness and awareness. This resulted in the prediction that private production ownership would be replaced by ownership which is collective under socialism.

However, based on my understanding as well as the contribution of other scholars, Marx’s theory was problematic. Studies suggest that Marx’s capitalist understanding has attracted a lot of criticism from various perspectives since a long time ago (Lane & Lane, 2019). These critics range from individuals who oppose its principles in its entirety, to people who disagree with particular capitalism’s outcomes.

To start with, the theory and understanding were problematic in that Karl Marx never appreciated the role of capitalists in the economy. As per Marx, capitalism was a progressive historical stage which would ultimately stagnate due to internal contradictions and which would be replaced by socialism. As per Marxists, capital is an economic- social relation between business owners and employees rather than between things and people (Cocks, 2012). This sense, therefore, seeks to do away with capital. Moreover, as mentioned earlier, Marxism believed that capitalism enriches capitalists- who owned capital at the expense of workers. This, therefore, created the belief that the owners and their production means were exploitive to the workforce. The theorist only incarnated all the evils of the capitalist platform which shows that he fully misunderstood the role played by the business owners. Studies suggest that Marx fully ignores that the capitalists preserved and pre-financed the economy’s capital structure (Cocks, 2012). Moreover, Marx failed to understand that, for one to be capitalist, an individual was forced to abstain from using an individual’s consumption potential fully and utilize their resources to finance the processes of production until the produced goods reach the final client. Additionally, scalar also suggests that Marx's understanding is problematic in that, he fails to consider that each product underwent a lengthy process of production to reach the consumers (Parekh, 2015). This process of production started with the planning process of the various processing phases until the commodities reached ultimately the consumer. Marx only overlooked the sale of the final good which he suggested that the business owners exploited the employee without considering the other associated processes. This perspective indicates the gap in the Marxist understanding of capitalism.

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Additionally, Marx failed to consider the loss of probabilities and entrepreneurship skills within capitalism. The theorist failed to consider that, the working class were also legible to start their own business and be business owners (Johnston, 2015). Scalars suggested that, once capitalists received income from the ultimate client, there was a lot of time in between and this process was risky and uncertain. This is an indication that the capitalists received their reward due to their patience and of the bearing of uncertainties and risks. At this time of the uncurtaining and risks, the employees were already receiving their remuneration and wages regularly long before the product was sold to the final consumer. Moreover, socialists perceived capitalism as a "profit economy." (Johnston, 2015). This indicates that they only perceived profit-making as the only prime secular sin. On the other hand, they failed to consider loss as a counterpart of profit; the socialist therefore had unfair ground and misjudge the role played by profit in an economy. Studies indicate that loss and profit arise from the variation between cost and sales and reveal the profitability of a venture to the owner (Greenberg, 2010). Without loss and profit, a business has no indicator of how well production serves the consumers (Greenberg, 2010). Lacking these signals, production is only by happenstance and may be costly than the end product. Also, Marxism suggests that production in private ownership would be replaced by socialism which embraces collective ownership. However, with the above understanding of loss and profit and how businesses operate, the claim of ‘exploitation' of human labour, which is heavily blamed on capitalism, will still exist under socialism. This is an indication that, as long as a business is being run, the perceived "exploitation of employees" as depicted by Marx will always exist.

Marx ignored inequality in the market. Studies suggest that equity refers to fairness and considered to be an economic objective (Greenberg, 2010). However, some economist refutes this claim and suggest that equity is related to the opportunity and fairly income which are distributed between various groups in society (Greenberg, 2010). As per Marx, wealth and income created inequality in capitalism and is perceived as injustice and is one of the grounds of the accusation of the socialists. Besides, Marx, as suggested, ignored the economy market inequality. The theorist failed to appreciate that the processes of the market develop inequality due to the failed projects vanish. Other studies have suggested that Marx ignores the capitalist process in eliminating the processes which root out unsuccessful entrepreneurs in the economy and market (Ritzer, 2015). Theorist suggests that, in a real competitive market economy, ‘successful entrepreneur’ forces businessmen who are unsuccessful to leave and makes room for entrepreneurs who have skills and who serve those clients well. The competition in the markets operates as a simultaneous process of error correction. In the market competitions, entrepreneurs who are successful and who satisfy the needs of the client remain in operation hence unsuccessful entrepreneurs must vacate the market. Moreover, bankruptcies made capitalism productive which is a sign of functionality of the market. Marxist in his ideology created a 'capitalist class' which in a real sense did not exist since each member of the community must struggle for his membership to the capitalist class and under free capitalism, both the exit and entry are possible (Greenberg, 2010). This failure to consider the struggle of the capitalists and the approach of the free-market economy is a failure and a problem with the understanding.

It’s also appreciable that Marx was right on many things about capitalism and his critique of capitalism is useful. He revealed that industrialization would create social systems and upheld the exiting classes. However, on the other hand, scholars suggest that Marx made a lot of assumptions and made wrong conclusions (Greenberg, 2010). For instance, he assumed that the nature of humans was malleable and plastic which has the ability to assume any form given the right conditions. The theorist also believed that history had a discernible direction towards humanity and the free market in that, it dictated the progression toward a classless utopia.

To conclude, the political economy refers to a social science interdisciplinary branch which is focused on the interrelationships among government, individuals as well as public policy. One of the most prominent theorists was Marx whose understanding has been critical in the political economy. As per the theorist, the move from capitalism to socialism and communism and later social classes in society is inevitable. Capitalism as per Marx's understanding contains a lot of many fatal flaws. Marx believes that communist society is the last form of human society. In reality, Marx's platform is responsible for the destruction of millions of people at the hands of its dictators and political parties. Moreover, it is notable that, the understanding of Karl Marx is problematic in that, it never appreciated the role of capitalists in the economy, and it failed to consider the loss probabilities and entrepreneurship skills within capitalism. Additionally, Marx ignored the concept of inequality in a market economy.

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