Marxist Economics

Labor Theory of Value

Price is determined by the amount of labor that goes into making the product, other things being equal. That is, the more work hours that go into making a product, the more expensive it is.

The capitalist pays the worker as little as possible and sells the product for as much as possible.

                    Price of product

          minus  Workers' wages

          minus  Other expenses

                = Profit (Surplus value)

Since profit is usually reinvested, it becomes capital.


The Materialist Conception of History

Economic factors (substructure) underlie all human social, cultural, religious, and intellectual manifestations (superstructure). All social changes (e.g., changes to institutions such as churches, schools, prisons, hospitals, libraries, legal systems, gender roles) and political revolutions (e.g., wars) are caused by changes in modes of production and exchange.


Feudal and Bourgeois Means of Production and Exchange Compared

Feudal Bourgeois
Instruments of labor are small, so one worker can use tools alone Instruments of labor are big -- too big for a single worker
Petty (small) industry Huge industry
Production expensive -- no economies of scale "Mighty productive forces" -- economies of scale for big customers
Workers own means of production Bourgeois owns means of production
Wage labor unusual; craftsmen work for themselves Wage labor the norm
Workers take pride in their work Workers have no pride in their work
Workers own and exercise creative control over the products of their labor Capitalists own and control the products of workers' labor
Work expresses workers' selves, their creativity and values Work has nothing to do with personality of the worker

Not much surplus value (profit); no manipulation of markets by large-scale advertising

Lots of surplus value (profit) that is put to work to make even more profit, by being lent or invested. If lent, capitalist collects interest (a sinful practice in Islam). If invested, capitalist manipulates markets, e.g., though advertising, to ensure that whatever is manufactured will be bought, at a profit; and the cycle begins anew.
Social bonds among workers Workers must compete
Not much unemployment Deliberately induced unemployment so there's always an "industrial reserve army" to threaten workers and keep wages down
Static classes; some polarization Dramatic and ever-increasing class polarization; more and more workers sink to "prole" status
Boundaries of kingdoms, nations matter No boundaries; "globalization"






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