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Marxian economic theory applicability, true or false?

Marxian economic theory applicability, true or false? Marx has always been an arguable economist as well as person since first known by the world. Lots of commentators have discussed about Mar’s work. Here I will focus on the two of those economists, Mark Beluga and Fred Mosey. Generally speaking, the two of them have opposite thoughts over the validity of Mar’s work: Beluga mostly holds negative critiques about the theory while Mosey considers himself as a Marxist and disagrees. In Fred Moseys Heterodox Economic Theories: True or False?

Mosey starts with his critiques in response to some of Belugas work regarding Marx. He goes on and records Belugas response back to him. The conversation goes back and forth. It seems that the two economists largely interpreted the ideas in a way that would fit into their existing point of view. Although the core thought remains for both of them: Beluga doesn’t approve of the validity of Mar’s theory and Mosey believes in the opposite, the debate does seem to make an effort for both of them to view Marx in a broader way.

Mosey bases his critique on Belugas general appraisal of the empirical validity of Mar’s theory. According to Mosey, Beluga

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approaches the question of validity with two questions. The first question is: “does Mar’s theory provide definite predictions which follow as logical deductions from the premises of the theory, so that the theory can in principle be falsified by contrary empirical evidence? ” (Mosey, Mar’s economic theory: true or false? P. 89) and the second one is: how well do Mar’s conclusions correspond to the empirical evidence?

Beluga in his appraisal holds opinions against both questions. Summary of Belugas appraisal In Moseys paper, he summarizes that Beluga breaks down the first question with a people of separate points, mainly the falling rate of profit and the impoverishment of workers. Other than these two points, Beluga also has some arguments about increasing severity of unemployment, increasing concentration of capital, and percentage of labor force that are wage-laborers. Mar’s prediction about periodic depressions happening in capitalist society is also mentioned as a part of an answer for the first question.

Beluga starts his criticism of Mar’s falling rate of profit theory by saying that Marx misses clarifications for him to develop this law. Beluga also has two there criticisms that were widely spread and goes further from them: the composition of capital isn’t proved to increase because of technological improvement; there is no proof from Marx that composition of capital increase faster than surplus value. And base of this, he argues that value rate of profit should be separated with price rate of profit, and might have different fate.

He thus states that the explanation given by Marx for the falling rate of profit is “simply untenable” and Marx doesn’t provide a definite prediction concerning the trend of the price rate of profit (Mosey, Mar’s economic theory: true or false? P. 90) Although listed as one important component of Moseys opinion, Beluga doesn’t seem to talk much about the impoverishment of workers. The ambiguity of absolute verses relative impoverishment acts as the main critique here in his paper. In the following Marxian economic theory applicability, true or false? By yang predictions Marx has made.

Basically, Beluga seems to be discrediting Marx for giving intuitive definite predictions on inherent technological changes and conflicts between capitalists and workers. As for the second question, “Beluga argues that most f Mar’s conclusions not only do not follow logically from his premises, but also have been contradicted by the empirical evidence. ” “Beluga also suggests that later Marxist have repeatedly reformulated Mar’s theory in order to Justify its continued acceptance in spite of contradictory evidence. ” (Mosey, Mar’s economic theory: true or false? P. 1-92) Finally, beyond those two main questions, Beluga interprets Mar’s criterion for the validity of social theories as to be Judged by “the success or failure of a proletarian revolution to overthrow capitalism in advanced capitalist entry’ (Mosey, Mar’s economic theory: true or false? P. 93) Summary of MouseKey’s response After stating Belugas main points from his appraisal, Mosey starts to move on to his thoughts regarding to Beluga, and more importantly, to Marx. Rate of profit He agrees with Beluga that Mar’s theory doesn’t have a definite prediction concerning the trend in the rate of profit.

However, he thinks “that Mar’s theory does provide a substantial theory of the effects of technological change on these two determinants of the rate of profits and provides more of a theory of the trend in the rate of profit Han any other economic theory, especially neoclassical theories of profit”(Mosey, Mar’s economic theory: true or false? P. 95). He also refutes the point Beluga raised with respect to the separation of price verses value rate of profit. He refers to Khaki’s argument that the two rates of profit are similar due to the stable departments in the composition of capital.

The difference is limited. Mosey further suggests that since Marx doesn’t provide a definite prediction over the topic, “the estimates of the rate of profit and its determinants do not provide a conclusive test of he labor theory of value, the fundamental assumption on which Mar’s theory is based. ” (Mosey, Mar’s economic theory: true or false? P. 95) For empirical evidence for Mar’s theory, Mosey focuses on three points to analyze the situation: 1 . Mosey assigns a time period to Mar’s falling rate of profit theory, namely, 30-40 years.

He suggests that with interpreting the theory as one that’s long-term, the empirical data would be more supportive of Mar’s theory. 2. He also argues that Mar’s important theoretical distinction between productive labor and unproductive labor should be taken into account. Therefore, data from Wooziness and Wolff are not so rigorous as estimate of the Marxian variables. The revised estimates are consistent with Mar’s theory. 3. Mosey notes that Mar’s theory of the trend of the rate of profit focuses on the effect of technological change on the rate of profit.

Although other factors like the real wage of workers, the distribution on capital, and the circulation of capital, makes it hard to isolate the effects of technological change, Mosey states that he analyzed these factors in Mosey (1992, PIP-75, 79). And his findings are more consistent with Mar’s theory. Together with these three main points Mosey concludes that “the empirical evidence related to Mar’s theory of the falling rate of profit lends much more support to Mar’s theory than Beluga suggests” (Mosey, Mar’s economic theory: true or false?

P. 98). Impoverishment Although briefly mentioned by Beluga, the interpretation of Marx on impoverishment although Mar’s theory of relative impoverishment refers only to productive labor, he agrees with Beluga that no definite prediction regarding the trend in the relative income of productive workers is provided by Marx. However, he thinks that it is accessory to mark that the downward pressure on the real wage and the technological change has an effort on the productivity of productive labor and thus affects the rate of surplus-value.

And again, without a definite prediction from Marx, no conclusive test of the assumption made by Marx can be provided. Mosey argues for the empirical evidence that corresponds with the increasing rate of surplus-value as well as the increasing impoverishment of productive labors, that neoclassical theorists don’t have rigorous estimates since they don’t separate productive labors with the unproductive ones. Once revised, Mar’s theory is supported. Other conclusions a.

Technological change As mentioned before, Beluga doesn’t give Marx much credit for making the prediction of the inherent technological change though he implies the agreement with Mar’s idea on this matter. Mosey on the other hand raises detailed interpretation over this issue and states that technology mentioned by Marx should be viewed as labor- saving. He then provides straight forward historical evidence that supports this definite prediction. B. Conflicts between Capitalists and labor The technological trend leads to further discussion about the conflict between capitalists and labors.

Mosey discusses the logic behind this prediction: since surplus-value is produced only by productive labor, any means that would increase the productivity of the productive labor would be favored by the capitalists. Therefore, labor-saving technology, longer working day, and more intense work pace would be preferred by the capitalists while disliked by the labor. Mosey here mentions that Beluga argues in UTTER that Mar’s prediction of conflict over the intensity of labor is “based on Mar’s remarkable sociological insights concerning the ‘despotism of the workplace’ (p. 43). ” But Mosey sees it follows right with the deduction from the labor theory of value and surplus-value, as do technological change and the conflict over the working day. C. Severity of depression and unemployment Mosey argues contrary to Beluga that Marx is saying depression and high unemployment would get worse, he instead, suggests that if following Mar’s theory of falling rate of profit, “the development of capitalism would be characterized by periodic depressions” (Mosey, Mar’s economic theory: true or false? P. 106) d.

Others mentioned by Beluga Mosey explains with logical deduction of following definite predictions mentioned UT not analyzed by Beluga: increasing concentration of capital, increasing percentage of the labor force that are wage-labors, and increasing popularization of society. He also provides empirical evidence for each of them. Mosey specifically mentions in his paper about Belugas interpretation of Mar’s criterion for the validity of Mar’s social theories. He says that the revolution between capitalists and working class should be a separated question.

It is political instead of economical and he thus shall not be analyzing it. E. Necessity of money commodity society. Beluga does not mention this point in his appraisal at all. Mosey tastes that in Section 3 of Chapter 1 of Capital, Marx explains that a third neutral commodity is needed to represent the common property of any two goods. Beluga’s Beluga softens his tone on Mar’s work after reading Moseys paper. But I think he remains disapproved with a certain number of Moseys response. I don’t think Belugas core belief of the economic system lies within Marx.

To me Beluga seems to use Marx as only one block of his own interpretation for economics although this block is an unambiguously important one. From his response I can see that he integrates Moseys ideas but there is one thing noticeable from the language of the paper. Lots of times he accepts Moseys defense of Marx with a statement saying that it works with the acceptance of the Marxian system. He seems to be implying that he merely agrees with the logical deduction from Mosey and he is approving the possibility of Marxian theories being externally valid while he believes Marx could be understood differently.

My opinion From my point of view, the main points debated between Beluga and Mosey broadly would be how or even whether Mar’s theory does provide a. Explanation for economic phenomenon that we have been through and b. Prediction of where we re heading to in the field of economics. The question specifically involves different interpretation of Mar’s work. Marx holds a labor theory of value while the neoclassical economists hold basically a utility theory of value. But they are equally incomputable to me.

Mosey argues that Mar’s theory is a long term theory while the neoclassical theory mainly gives short-term explanation. This could be one reason that the interpretation of Marx varies this much from each economist. The thing about Mar’s theory is that there are concepts like time period and severity that could be understood in varies ways. He never specifies how long is “long-term”, it could be over 50 years as possible as 100 years. The empirical evidence would appear very differently with the two different time frames.

There is also no detail about “severity’, and therefore any economic disaster being either long lasting, or wide spread, or perhaps Just devastating in limited people or region could be considered sever. The ambiguity of the wording makes it hard as well as easy to fit any empirical evidence into some of the predictions. And there are concepts specifically used and interpreted in Mar’s system like surplus value and productive abort. Marx doesn’t necessarily create these concepts but he definitely assigns his own definitions to them and they largely appear to be too conceptual and hard to measure.

Therefore although stated a bit sour, there is one point I do agree with Beluga: Mar’s theory is believable because it can’t be firmly proven wrong. I want to specifically note another disagreement between Beluga and Mosey. Mosey treats Mar’s theory separated into the economic part and the political part. He states that he merely focuses on the economic part and thus doesn’t talk about the revolution against capitalism in his paper. Beluga on the other hand thinks that this revolutionary movement described by Marx is one of the important economic predictions that set the criteria for the validity of Mar’s theory.

I agree with Mosey that Mar’s predictions about the society could be classified into economic part and tied up with the current government structure and a nation’s cultural status. But I do think that Beluga isn’t coming up with his point out of thin air. First of all, although Marx is primarily writing about the economic system capitalism, his major arguments are about the conflicts between the working class and the capitalists which he does indicates would lead to an outbreak between the two classes. Secondly economics makes a huge part in politic.

The wealth status of a society has big enough impact on the political side of a nation that it is simply impossible to talk about one without the other. Therefore, I find it reasonable to see the revolution between classes as an economic outcome predicted by Marx. But Beluga goes further and states that because Mar’s theory provides dynamic trends of the development of capitalist society, it is therefore incomparable with the neoclassical theory of economics. I disagree with this rather too assertive argument. Both theories deal with the nature of capitalism.

Just because Marx gives more than Just economic theory doesn’t mean that he doesn’t have economic predictions that are comparable with neoclassical theories. In fact Mar’s broad predictions over political situation are exactly derived from his analysis about capital itself. In general, I think that Marx raises great questions about the capitalist system with his distinct interpretation of surplus value and labor. And I think his points are worth taken for a potential model system that has solutions to problems we encounter in the capitalist system.

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