There are a few Marxists around these days who appear to be somewhat knowledgeable. I’m not an expert in Marxian political economy, but I’ve spoken to many Marxians and some of my professors were Marxian/Ricardian. I’m going to lay out the core of Marx’s framework, and if a Marxian finds my analysis problematic, feel free to correct me. I’m not really interested in a debate per se, I just want to be sure that I fully (or at least adequately) understand the position I am attacking.
First, Marx does not intend to explain the formation of market prices. He considers it to be far too chaotic, and as such, only attempts to explain the fundamental aspects of the “capitalist mode of production” which is inherently exploitative and ultimately doomed (internal contradiction of capital accumulation). Next, Marx is all about societal forces that are entirely independent of any individual (laws of motion); he entirely rejects methodological individualism (calls it the “vulgar method”).
At the very core of his framework is the distinction between use-value, on the one hand, and exchange value on the other. The former has to do with subjective demand conditions, while the latter deals with the social needs for various commodities and the degree of socially necessary labor embodied within them, as well as the division of labor itself (alienation). But Marx differentiates between different kinds of labor: there is (a) complex labor (highly productive) and (b) abstract labor (which aggregates different degrees of productive labor–the commodification of labor). Again, all labor must be “socially necessary” if it is to effect relative price formation, that is, simply producing a product does not automatically mean that it will have value and therefore a price. Also, the fact that I value good “a” by “x” amount and you value good “a” by “y” amount is entirely immaterial. The needs of society will determine the allocation of socially necessary labor towards the production of commodities thereby determining prices.
So, essentially, market phenomena is value, which is, again, entirely objective (there seems to be a confusion of causality here–I don’t entirely understand this). Next, capital goods are “embodied” or “dead labor.” Their value is determined by the amount of socially necessary labor that went into them and the labor that went into the capital goods that produced them. But capital goods do not yield “surplus value” (interest/profit) because they cannot be exploited. Laborers, according to Marxists, do not have the bargaining power of capitalists who (a) force them to worker harder and longer for the same wages (absolute surplus value) and (b) can replace laborers for capital goods (decreasing the “organic composition of value” – or the ratio of constant capital to variable capital/living capital). So this (exploitation) is the source of profit (denoted by production circuit m-c…c’-m’, where ’ is exploitation) and is ultimately the cause of economic crises. As the capitalists reduce their organic composition of value (become more capital intensive–expand the division of labor) they reduce their source of surplus value, which forces additional exploitation, which, again, reduces their source of surplus value. There is mass unemployment (labor reserve armies) where individuals do not have the income to purchase the goods that are produced and profit collapses. When factor prices fall enough, the bust ends, and the next boom is underway.
Marx also talks about how finance and credit expansion (fictitious capital) accelerates this process (the post-Keynesians love this crap). It actually sounds somewhat Austrian. Also, Marx, like the Austrians, believed there is a uniform rate of profit (average rate of exploitation), that is, one true interest rate (but he ignored the element of time). So, the end-game, for the Marxists, is the elimination of capitalism in favor of socialism. Socialism is the final epoch of human history where the laws of value are eliminated (no more exchange value). Individuals produce for use rather than exchange.
) Would you (or any reader) know of any good, yet fairly short, books on the subject? Being a PhD student is somewhat time consuming, so reading Das Kapital is out of the question…