Marx's Theory of Economic Crisis

CliffBowman
5 May 200909:13
EducationalLearning
32 Likes 10 Comments

TLDRThe video script discusses the resurgence of interest in Karl Marx's 'Das Capital', highlighting Marx's deep analysis of capitalism rather than communism. It explains Marx's labor theory of value, the concept of surplus value as the source of profit, and the tendency of the rate of profit to fall due to increased constant capital. The script suggests that current economic issues make Marx's theories relevant, as credit expansion has only delayed the monetary expression of falling profit rates, leading to a crisis that can be resolved through industry consolidation and wage suppression, resetting the cycle of capital accumulation.

Takeaways
  • 📚 The German publisher of Marx's 'Das Capital' has sold 10 times more copies this year compared to last year, indicating renewed interest in his theories.
  • 🧐 People are interested in Marx not because of communism, but because of his analysis of capitalism and its inherent problems.
  • 💡 Marx's work is relevant today due to the current economic issues, suggesting that his theories are pertinent to modern capitalism.
  • 👷 The labor theory of value, which Marx inherited from classical economists like Ricardo and Smith, states that only human labor can create value.
  • 🕒 The working day is divided into variable capital (time to pay for wages) and surplus value (time creating profit).
  • 📈 Surplus value is the source of profit, and any increase in this can lead to a higher rate of profit.
  • 🔄 Marx's theory of crisis is based on the law of the tendency of the rate of profit to fall over a business cycle.
  • 🛠️ Technical improvements and increased machinery can lead to a higher organic composition of capital, which can affect the rate of profit.
  • 💹 The rate of profit can fall due to an increase in constant capital relative to variable capital, which is a key factor in Marx's crisis theory.
  • 🔄 Counteracting influences, such as productivity improvements in wage goods industries, can delay the falling rate of profit.
  • 🌐 Globalization and foreign trade are among the factors that can mitigate the tendency of the rate of profit to fall.
  • 💔 The crisis leads to business bankruptcies and industry consolidations, which can temporarily restore the rate of profit by reducing constant capital and variable capital.
  • 🔄 The cycle of accumulation can resume after a crisis, potentially leading to another period of economic growth followed by a downturn.
Q & A

  • Why has the German publisher of Marx's 'Das Capital' sold ten times more copies this year compared to last year?

    -The surge in sales could be attributed to a renewed interest in Marx's analysis of capitalism, which many find pertinent given the current economic problems and crises.

  • What is the common misconception about Marx's work?

    -A common misconception is that Marx wrote primarily about communism, whereas the vast majority of his work was an analysis of capitalism.

  • What is the labor theory of value?

    -The labor theory of value, not invented by Marx but built upon the ideas of classical economists like Ricardo and Smith, posits that only human labor creates value, while machines and materials only have use value.

  • How does Marx define 'variable capital' and 'surplus value'?

    -Variable capital refers to the portion of the working day where labor creates enough value to cover the cost of their wages. Surplus value is the value created by labor during the rest of the working day, which is the source of profit.

  • What is the rate of surplus value?

    -The rate of surplus value is the ratio of surplus value to variable capital, indicating how much surplus value is generated relative to the labor cost.

  • What is the significance of the rate of profit in Marx's theory?

    -The rate of profit, which is surplus value over variable capital, is a crucial measure in Marx's theory as it reflects the profitability and health of a capitalist economy.

  • What does Marx mean by the 'law of the tendency of the rate of profit to fall'?

    -This law suggests that due to competition and the need for reinvestment in technology to maintain competitiveness, the rate of profit tends to fall over a business cycle because the increase in constant capital (machinery) relative to variable capital (wages) leads to a decrease in the rate of profit.

  • What is the 'organic composition of capital'?

    -The organic composition of capital refers to the ratio of constant capital (machinery, materials) to variable capital (wages). Marx argues that this ratio increases over time as capitalists invest in technology, leading to a tendency for the rate of profit to fall.

  • What are some counteracting influences that can delay the falling rate of profit?

    -Counteracting influences include improvements in productivity, especially in industries that produce wage goods, speeding up production lines, and extending the working day to increase surplus value.

  • How does Marx explain economic crises in terms of his theory?

    -Economic crises occur when the falling rate of profit leads to businesses going bust and industry consolidation. This results in a reduction of constant capital and an increase in the reserve army of unemployed labor, which can put downward pressure on wages and restore the rate of profit, starting another cycle of accumulation.

  • Why might people today be looking to buy 'Das Capital'?

    -People might be seeking to understand Marx's critique of capitalism and his theories on economic crises, especially in the context of contemporary economic challenges and to gain insights into the underlying structures of the economy.

Outlines
00:00
📚 Resurgence of Marx's Das Capital

This paragraph discusses the unexpected increase in sales of Marx's 'Das Capital' in Germany, highlighting a renewed interest in his theories, particularly his analysis of capitalism. The speaker clarifies that Marx's work is not about communism but rather a critique of capitalism. The speaker offers to delve into Marx's theory of crisis, which is relevant to contemporary economic issues. The summary of Marx's labor theory of value is provided, explaining how value is created by human labor and not by machines, which only have use value. The concept of variable capital, which represents the portion of the workday that compensates workers' wages, and surplus value, which generates profit for capitalists, is introduced. The rate of surplus value and its importance in Marx's crisis theory are also outlined.

05:03
📉 Marx's Theory of Crisis and the Tendency of Profit to Fall

The second paragraph delves into Marx's theory of crisis, focusing on the tendency of the rate of profit to fall over a business cycle. This theory is based on the law of the tendency of the rate of profit to decline due to increased competition and the reinvestment of surplus value for business protection and growth. The speaker explains the concept of constant capital, which refers to machinery and materials used in production, and how its value does not change, contrasting it with variable capital, which funds wages. The organic composition of capital, the ratio of constant to variable capital, is said to increase over time due to technological advancements and reinvestment. This increase leads to a potential decrease in the rate of profit unless the rate of surplus value increases at a faster pace. The paragraph also discusses counteracting factors that can delay the falling rate of profit, such as productivity improvements and globalization. The speaker concludes with the impact of a crisis on businesses and the economy, including bankruptcies, industry consolidations, and the effect on the workforce and wages, which can eventually restore the rate of profit and initiate a new cycle of accumulation.

Mindmap
Keywords
💡Das Capital
Das Capital is a foundational text in political economy by Karl Marx. It is a comprehensive critique of capitalist production. In the script, it is mentioned that the German publisher of Marx's Das Capital has sold significantly more copies this year, indicating a resurgence of interest in his theories, particularly in the context of contemporary economic issues.
💡Marxism
Marxism is a social, political, and economic theory originating from the works of Karl Marx and Friedrich Engels. It focuses on the struggle between social classes and the historical materialist interpretation of societal development. The script discusses the renewed interest in Marx's analysis of capitalism, which is central to Marxist thought.
💡Labor Theory of Value
The Labor Theory of Value is an economic theory that states the value of a good or service is determined by the amount of labor required to produce it. In the script, this theory is attributed to classical economists like Ricardo and Smith and is used by Marx to explain the creation of value in a capitalist system.
💡Variable Capital
Variable Capital, in Marxist theory, refers to the part of the capital invested in wages. It is called 'variable' because it can create more value than the laborer's wages. The script explains that the value created by the laborer between 9:00 and 2:00 pays for their wages, while the rest of the day's work creates surplus value.
💡Surplus Value
Surplus Value is the value created by labor beyond the amount necessary to pay the laborer's wages. It is the source of profit in a capitalist system. The script describes how surplus value is generated during the latter part of the working day and is a key concept in Marx's critique of capitalism.
💡Rate of Surplus Value
The Rate of Surplus Value is the ratio of surplus value to the variable capital invested in wages. It measures the extent to which labor creates value beyond its own cost. The script uses this concept to explain the dynamics of profit generation in capitalism.
💡Constant Capital
Constant Capital, in Marxist economic theory, refers to the capital invested in machinery, materials, and other means of production whose value does not change during the production process. The script discusses how the value of constant capital remains constant, unlike the variable capital, which can produce surplus value.
💡Organic Composition of Capital
The Organic Composition of Capital is the ratio of constant capital to variable capital. It reflects the degree to which machinery and other non-labor inputs are used in the production process compared to labor. The script mentions that this ratio tends to increase over time due to technological advancements and investment in machinery.
💡Law of the Tendency of the Rate of Profit to Fall
This law in Marxian economics suggests that the rate of profit in a capitalist economy tends to fall over time due to increasing investment in constant capital and the resulting decrease in the rate of surplus value. The script explains this concept as the core of Marx's theory of crisis.
💡Counteracting Influences
Counteracting Influences are factors that can temporarily reverse or delay the falling rate of profit. The script mentions improvements in productivity and the extension of the working day as examples of such influences that can affect the rate of profit.
💡Crisis
In the context of the script, a crisis refers to the economic downturns that occur as a result of the falling rate of profit. It is a central part of Marx's theory of capitalist cycles and is related to the restructuring of industries and the increase in unemployment.
Highlights

German publisher of Marx's 'Das Capital' has sold 10 times more copies this year compared to last year.

Marx is often misunderstood as solely writing about communism, but the majority of his work is an analysis of capitalism.

Interest in Marx is attributed to his unique perspective on capitalism and its relevance to current societal issues.

Marx's theory of crisis is central to understanding his views on capitalism.

The labor theory of value, not invented by Marx but foundational to his work, posits that value is created by human labor.

The working day is divided into variable capital, which covers wages, and surplus value, which is the source of profit.

The rate of surplus value is a crucial measure in Marx's analysis, representing the ratio of surplus value to variable capital.

Constant capital refers to machinery and materials, whose value does not change, unlike variable capital which funds wages.

Marx's theory of crisis is based on the tendency of the rate of profit to fall over a business cycle.

Competition drives capitalists to reinvest surplus value for protection and to outpace competitors.

Technical improvements and increased productivity lead to a higher organic composition of capital, with more machinery relative to labor.

The organic composition of capital's increase can lead to a fall in the rate of profit, according to Marx.

Counteracting influences like productivity improvements in wage goods industries can delay the falling rate of profit.

The expansion of credit can delay the monetary expression of falling rates of profit but does not change the underlying economic structure.

Crisis leads to business failures and consolidations, which can reduce the constant capital in the system.

An increase in the reserve army of unemployed can put downward pressure on wages, potentially restoring the rate of profit.

Marx's theory suggests that business cycles of accumulation can be restored after a crisis, though the duration is unpredictable.

Transcripts

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Marx TheoryCapitalism AnalysisLabor ValueProfit RateEconomic CrisisSurplus ValueClassical EconomicsMarket CompetitionEconomic CyclesGlobal Economy