10. Marx's Theory of Capitalism

The paragraph introduces the comparison between Marxism and the utilitarian tradition, highlighting that both have micro and macro stories. The micro story of utilitarianism is exemplified by the Pareto principle, focusing on individual transactions, while the macro story emphasizes the efficiency of free transactions in achieving utilitarian outcomes. Adam Smith's concept of the invisible hand is discussed, along with Marx's similar but contrasting micro and macro stories and his own version of the invisible hand theory, which suggests that capitalism's dynamics lead to a benevolent then malevolent outcome over time. The paragraph also touches on Marx's views on freedom and his materialist conception of history, which posits that historical development is driven by economic interests and class conflicts.

This paragraph delves into Marx's critique of the division of labor, arguing that it leads to a loss of freedom and alienation from one's true self. Marx's vision of a communist society is presented, where the absence of a division of labor allows individuals to freely pursue various activities without being confined to a single role. The paragraph also discusses the role of capitalism in creating the wealth necessary for this communist ideal and introduces the concept of 'class-in-itself' and 'class-for-itself,' emphasizing the importance of understanding one's objective position in the division of labor.

The paragraph focuses on Marx's definition of class based on the relationship between individuals and the means of production. It clarifies that being working class is determined by the necessity to sell one's labor power to live, not by the actual act of selling labor. The distinction between 'class-in-itself' and 'class-for-itself' is further explored, with the former representing the objective class position and the latter the subjective perception of one's class position. The paragraph suggests that historical change is driven by the 'class-in-itself,' regardless of individuals' subjective understanding of their social position.

This paragraph introduces Marx's labor theory of value, which posits that the value of commodities is determined by the socially necessary labor time required to produce them. The concept of 'socially necessary labor time' is explained, emphasizing that it accounts for the average skill and intensity of labor and the use of available technologies. The paragraph also presents the idea that living human labor power is the sole source of new value, contrasting with other commodities whose consumption does not create additional value. The discussion then transitions into the labor theory of surplus value, highlighting the distinction between necessary and surplus labor and the concept of exploitation.

The paragraph discusses the impact of technological innovation on the rate of exploitation and the dynamics of capitalism. It explains how capitalists strive to increase productivity through technology to reduce the necessary labor time and increase surplus labor, thereby boosting profits. The concept of 'constant capital' and 'variable capital' is introduced, with the latter being wages and the former being all other expenses. The paragraph also touches on the idea that as production becomes more capital-intensive, the rate of profit tends to decline due to the increased investment in constant capital, which does not produce new value. The tension between short-term profits and long-term rate of profit is highlighted, along with the pressure for continuous technological innovation in capitalism.

In this paragraph, the discussion shifts to the normative aspects of exploitation and the concept of other-referential comparisons. It challenges the notion of comparing one's well-being solely to past conditions and introduces Marx's idea that workers compare their situations to those of others, particularly capitalists. The paragraph presents the argument that workers may perceive a situation with higher exploitation rates as worse, even if it offers more absolute value, because of the increased disparity between workers and capitalists. It also touches on the psychological and social aspects of workers' perceptions of their well-being in relation to others and sets the stage for further exploration of these ideas in the subsequent lecture.