What is Marxian Economics
Marxian economics is a school of economic thought based on of the work of 19th-century economist and philosopher Karl Marx. Marxian economics focuses on the role of labor in the development of an economy and is critical of the classical approach to wages and productivity developed by Adam Smith. Marxian economics argues that the specialization of the labor force, coupled with a growing population, pushes wages down and that the value placed on goods and services does not accurately account for the true cost of labor.
BREAKING DOWN Marxian Economics
Much of Marxian economics is drawn from Karl Marx's seminal work "Das Kapital," his magnum opus first published in 1867. In the book, Marx described his theory of the capitalist system, its dynamism, and its tendencies toward self-destruction. Much of Das Kapital spells out Marx’s concept of the “surplus value” of labor and its consequences for capitalism. According to Marx, it was not the pressure of labor pools that drove wages to the subsistence level but rather the existence of a large army of unemployed, which he blamed on capitalists. He maintained that within the capitalist system, labor was a mere commodity that could gain only subsistence wages. Capitalists, however, could force workers to spend more time on the job than was necessary to earn their subsistence and then appropriate the excess product, or surplus value, created by the workers.
Marxian economics is considered separate but related to ideology found in Marxism, but it differs in that it focuses less on social and political matters. More broadly, Marxian economic principles clash with the virtues of capitalist pursuits. In contrast to classical approaches to economic theory, Marx’s take favored promises of an inevitable and harmonious socialist future inspired by revolutions of global proportions. During the first half of the twentieth century, with the Bolshevik revolution in Russia and the spread of communism throughout Eastern Europe - it seemed the Marxist dream had finally and firmly taken root.
However, that dream collapsed before the century had ended. The people of Poland, Hungary, Czechoslovakia, East Germany, Romania, Yugoslavia, Bulgaria, Albania and the USSR rejected Marxist ideology and entered a remarkable transition toward private property rights and a market-exchange based system.