Marx theory of economics growth

Marxist Theory

Marx is regarded as the father of history (scientific socialism) who prophesied the decline of capitalism and the advent of socialism. He is considered a great thinker of history. His famous book ‘Das Kapital’ is known as the Bible of socialism (1867). He presented the process of growth and collapse of the capitalist economy. He expected capitalistic change to break down because of sociological reasons and not due to economic stagnation and only after a very high degree of development is attained.

“Marxism is a religion. To an orthodox Marxist, an opponent is not merely in error but in sin”.

-Prof. Schumpeter wrote,

According to Marx, human civilization has manifested itself in a series of organizational structures, each determined by its primary mode of production, particularly the division of labor that dominates in each stage. In Marxian theory, production means the generation of value. Thus economic development is the process of more value-generating, and labor generates value.

Marxian Economic theory of growth is based on certain Assumptions:-

1. There are two principal classes in society. (a)Bourgeoisie (b) Proletariat. 

2. Wages of the workers are determined at a subsistence level of living. 

3. Labour theory of value holds good. Thus labor is the main source of value generation. 

4. Factors of production are owned by capitalists. 

5. Capital is of two types: (a) constant capital and (b) variable capital. 

6. Capitalists exploit the workers. 

7. Labour is homogenous and perfectly mobile. 

8. Perfect competition in the economy. 

9. National income is distributed in terms of wages and profits.

Marks stage of economic growth is classified into five stages which are as follows

                             

STAGE 1 – PRIMITIVE COMMUNISM

This is the first stage in which men performed the same economic functions i.e. – hunter-gathering. They worked together in order to survive. There was no private property and there were no classes existing in society. Eventually, the most successful hunter-gatherers gained power and control over the others and this leads to the next stage which is imperialism.

STAGE 2 – IMPERIALISM

The strong man ruled. He began by owning all the land but when threatened by outsiders, he would grant land to others in return for military service. A new land-owning aristocracy was therefore created. In this stage, people start having private property rights.

STAGE 3 – FEUDALISM

The land was owned by the aristocracy who exploited the peasantry who worked it. There was a surplus of food which the aristocracy sold to others creating a class of merchants and capitalists who wanted to share political power.

STAGE 4 – CAPITALISM

The wealthy merchants and factory owners (bourgeoisie) obtained political power and exploited the workers (proletariat).In such a society, the proletariat is fooled into believing that she/he is free because she/he is paid for his/her labor. In fact, the transformation of labor into an abstract quantity that can be bought and sold on the market leads to the exploitation of the proletariat, benefitting a small percentage of the population in control of the capital. The working class thus experiences alienation since the members of this class feel they are not in control of the forces driving them into a given job. The reason for this situation is that someone else owns the means of production, which are treated as private property. As the proletariat became politically aware they would rise up and overthrow the bourgeois government. All this because of the eventual growth of commerce (and of human populations), feudal society began to accumulate capital, which, along with the increased debt incurred by the aristocracy, eventually led to the English Revolution of 1640 and the French Revolution of 1789 both of which opened the way for the establishment of a society structured around commodities and profit (i.e. capitalism). Human society's entrance into capitalism occurred because of a transformation in the understanding of exchange value and labor.

STAGE 5 – SOCIALISM OR COMMUNISM

There would be a dictatorship of the proletariat as workers’ organizations re-distributed food, goods, and services fairly according to need, and profits were shared by all. The middle classes would come to understand that equality was superior to private ownership. Everyone would join together for the common good. Money and government would no longer be needed and society would be classless. As all countries reached this stage the world would become stateless and competition and wars would cease and more capital accumulation and technological improvement. At the start, growth under capitalism, generation of value, and accumulation of capital underwent at a high rate. After reaching its peak, there is a concentration of capital associated with a falling rate of profit. In turn, it reduces the rate of investment and as such a rate of economic growth. Unemployment increases. Class conflicts increase. Labor conflicts start and there is a class revolt. Ultimately, there is a downfall of capitalism and the rise of socialism.

Gist Of Theory 

STAGES OF HISTORY AND CLASS CONFLICT AT EACH STAGE
STAGE	OPPRESSING CLASS	OPPRESSED CLASS
Primitive communism	No classes	No conflict
Slavery	Slave owners	Slaves
Feudalism	Landowners	Serfs
Capitalism	Bourgeoisie	Proletariat
Socialism	State managers	Workers
Communism	No classes	No conflict

                    

Source:

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