Dmitriev, writing in ,  Ladislaus von Bortkiewicz , writing in —07,  and subsequent critics claimed that Marx's value theory and law of the tendency of the rate of profit to fall 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. Okishio, in , devised a theorem Okishio's theorem showing that if capitalists pursue cost-cutting techniques and if the real wage does not rise, the rate of profit must rise.
Marx's Concept of the Alternative to Capitalism | brill
The inconsistency allegations have been a prominent feature of Marxian economics and the debate surrounding it since the s. 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.
Large part of the criticism of the Marxian economics comes from contradictions observed in countries declaring allegiance to the Marxist economical and political doctrine in the 20th century. Dembinsky pointed out at inconsistent approach of Marx to determining "labor value", a central concept in the labor theory of value, which led to significant decline of effectiveness of these economies.
Marxist economics was assessed as lacking relevance in by Robert M. Solow , who criticized the New Palgrave Dictionary of Economics for over-sampling articles on Marxist themes, giving a "false impression of the state of play" in the economics profession. Solow stated that "Marx was an important and influential thinker, and Marxism has been a doctrine with intellectual and practical influence. The fact is, however, that most serious English-speaking economists regard Marxist economics as an irrelevant dead end. The terms Neo-Marxian , Post-Marxian , and Radical Political Economics were first used to refer to a distinct tradition of economic thought in the s and s.
In industrial economics , the Neo-Marxian approach stresses the monopolistic rather than the competitive nature of capitalism. Baran and Paul Sweezy. From Wikipedia, the free encyclopedia. This article includes a list of references , but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. August Learn how and when to remove this template message. Capital controversy Crisis theory Economic determinism Immiseration thesis Historical materialism Okishio's theorem Overaccumulation Overdetermination Overproduction Kondratiev wave Technological determinism Technological unemployment Temporal single-system interpretation.
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Sweezy, , The Theory of Capitalist Development , p. New York: Modern Reader Paperbacks. London: New Left Books. There seems to be no hope for a theory of the falling rate of profit within the strict confines of the environment that Marx suggested as relevant. Press, Review of Radical Political Economics.
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Edward C. Sargent Paul Krugman N. Gregory Mankiw. Macroeconomic model Publications in macroeconomics Economics Applied Microeconomics Political economy Mathematical economics. Categories : Marxian economics Schools of economic thought. In this context, understanding of the key ideas of Karl Marx is essential. Kieran Allen's new book provides this in an impressively accessible way. It gives a Marxist explanation of the contradictions of capitalism, including complex issues such as alienation and the dominant ideology of the ruling class. All this is broken down and explained clearly, and Marx's ideas are placed in a contemporary context.
Allen explains that the current crisis is a consequence of a system driven to grab short-term profits. At times this can place the longer-term needs of the system in jeopardy, increasing the likelihood and severity of an economic crisis. In striving to protect profits, capitalists cut workers' wages, which leads to workers borrowing more to maintain their living standards.
At the same time the banks strive for greater profits by lending more money than people can ever afford to pay back. This leads to huge levels of debt and paves the way for a crisis. Allen places these developments in the context of deeper contradictions in the system - in particular the long-term tendency of the rate of profit to fall.
This is a crucial feature of capitalism which Marx identified, the effects of which are very evident today.
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By placing the role of class as central to capitalist society, Allen shows how exploitation is maintained, but also how it can be challenged. Some influential academics - such as Eric Hobsbawm in his latest book, How to Change the World - accept that capitalism is a deeply flawed system, but argue that the Marxist alternative has failed. Hobsbawm's pessimism is based on illusions he had in the Soviet Union, a society marked by class divisions and subject to the competitive logic of the global system.