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Critique of Marxian Economics

Critique of Marxian Economics


Jon Elster concluded his Making Sense of Marx with the claim that ‘It is not possible today, morally or intellectually, to be a Marxist in the traditional sense’ (1985, p.531). Acceptance of this statement depends, of course, on what is meant by traditional Marxism. Elster makes it clear that what he means by traditional Marxism is that ‘intellectually bankrupt’ and ‘non-scientific’ economic theory associated with the labor theory of value, the theory of the falling rate of profit, and ‘the most important part of historical materialism’, the ‘theory of productive forces and relations of production’ (1986, p.188-194). In place of these redundancies, Elster proposes a new Marxism founded upon logically consistent microfoundations (1982). To achieve this reconstruction, he explicitly favours the tools of neoclassical analysis; a ‘truly scientific’ methodology that posits the existence of economic institutions (for example, prices and markets), then attempts to show that they are compatible with the actions of individual agents who engage in rational calculated satisfaction-maximizing exchanges.



Defending a position very similar to Elster’s, Roemer (1989a, p.384) provides the following summary of Marx’s economic theory and its late twentieth century reconstruction:



Marx thought that the easiest way to explain how the surplus was produced was to assume a labor theory of value - that is, that prices of commodities were proportional to the amount of labor embodied in them. Exploitation took the form of workers producing goods embodying more of their labour than was embodied in the wage goods that they received in return, that surplus labour became monetized through the price system in a simple way because prices were assumed to be just proportional to the amounts of labor embodied in commodities. But it has long been known that equilibrium prices in a market economy are not proportional to the amount of labor embodied in goods; it was therefore necessary to ask whether the Marxist theory of accumulation could be made more precise even though the labor theory of value was wrong. This has been done during the last twenty years, by applying techniques of input-output analysis and general equilibrium theory, by Michio Morishima and others. It is, in my view, a winning point for Marxism that its theory of capitalist accumulation can be liberated from the false labor theory of value. Some Marxists, however, persist in viewing this reconstruction as heretical, dispensing as it does with the labor theory of...

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