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In Marxist theory and Marxian economics, the immiseration thesis (also referred to as emiseration thesis) is derived from Karl Marx's analysis of economic development in capitalism, implying that the nature of capitalist production stabilizes real wages, reducing wage growth relative to total value creation in the economy, leading to worsening alienation in the workplace.
Marxian economics, or the Marxian school of economics, is a heterodox school of economic thought. Its foundations can be traced back to the critique of classical political economy in the research by Karl Marx and Friedrich Engels. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other, and in many cases Marxian analysis is used to complement or supplement other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage rather than being synonymous. They share a semantic field while also allowing connotative and denotative differences.
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.
Karl Marx's theory of alienation describes the estrangement (Entfremdung) of people from aspects of their Gattungswesen ("species-essence") as a consequence of living in a society of stratified social classes. The alienation from the self is a consequence of being a mechanistic part of a social class, the condition of which estranges a person from their humanity.
The immiseration thesis is related to Marx's analysis of the rising organic composition of capital and reduced demand for labor relative to capital equipment as technology develops.
The organic composition of capital (OCC) is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. It is normally defined as the ratio of constant capital to variable capital. The concept does not apply to all capital assets, only to capital invested in production. The neoclassical concept most similar to the increasing organic composition of capital is capital deepening.
Concerning the evolution of the worker's living conditions, Marx argued that:
Karl Marx was a German philosopher, economist, historian, sociologist, political theorist, journalist and socialist revolutionary.
Within the capitalist system all methods for raising the social productivity of labour are put into effect at the cost of the individual worker [...] All means for the development of production undergo a dialectical inversion so that they become a means of domination and exploitation of the producers; they distort the worker into a fragment of a man, they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by turning it into a torment, they alienate from him the intellectual potentialities of the labour process [...], they transform his life into working-time, and drag his wife and child beneath the wheels of the juggernaut of capital. But all methods of the production of surplus-value are at the same time methods of accumulation, and every extension of accumulation becomes, conversely, a means for the development of these methods. It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse.
Dialectic or dialectics, also known as the dialectical method, is at base a discourse between two or more people holding different points of view about a subject but wishing to establish the truth through reasoned arguments. Dialectic resembles debate, but the concept excludes subjective elements such as emotional appeal and the modern pejorative sense of rhetoric. Dialectic may be contrasted with the didactic method, wherein one side of the conversation teaches the other. Dialectic is alternatively known as minor logic, as opposed to major logic or critique.
In Marxian economics, the rate of exploitation is the ratio of surplus value to variable capital.
Surplus value is a central concept in Karl Marx's critique of political economy. "Surplus value" is a translation of the German word "Mehrwert", which simply means value added, and is cognate to English "more worth". Surplus-value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power. Conventionally, value-added is equal to the sum of gross wage income and gross profit income. However, Marx uses the term Mehrwert to describe the yield, profit or return on production capital invested, i.e. the amount of the increase in the value of capital. Hence, Marx's use of Mehrwert has always been translated as "surplus value", distinguishing it from "value-added". According to Marx's theory, surplus value is equal to the new value created by workers in excess of their own labor-cost, which is appropriated by the capitalist as profit when products are sold.
Marx argued that, in accordance with the labour theory of value, capitalist competition would necessitate the gradual replacement of workers with machines, allowing an increase in productivity, but with less overall value for each product produced, as more products can be made in a given amount of time, meaning that economic output would increase, but real wages would stay stable, because the input of human labour stays the same.
Marx also noted that this movement is not merely an abstract relation, but that it is a result of class struggle, and it could be temporarily stopped should wages dip below an amount that the proletariat deem acceptable.
The immiseration thesis was equally questioned by later theorists, notably by early members of the Frankfurt School. For Adorno and Horkheimer, state intervention in the economy had effectively abolished the tension in capitalism between the "relations of production" and "material productive forces of society"—a tension which, according to traditional Marxist theory, constituted the primary contradiction within capitalism. The previously "free" market (as an "unconscious" mechanism for the distribution of goods) and "irrevocable" private property of Marx's epoch have gradually been replaced by the centralized state planning and socialized ownership of the means of production in contemporary Western societies. The dialectic through which Marx predicted the emancipation of modern society is thus suppressed, effectively being subjugated to a positivist rationality of domination:
The Frankfurt School is a school of social theory and critical philosophy associated with the Institute for Social Research, at Goethe University Frankfurt. Founded in the Weimar Republic (1918–33), during the European interwar period (1918–39), the Frankfurt School comprised intellectuals, academics, and political dissidents who were ill-fitted to the contemporary socio-economic systems of the 1930s. The Frankfurt theorists proposed that social theory was inadequate for explaining the turbulent political factionalism and reactionary politics occurring in ostensibly liberal capitalist societies in the 20th century. Critical of capitalism and of Marxism–Leninism as philosophically inflexible systems of social organisation, the School's critical theory research indicated alternative paths to realising the social development of a society and a nation.
Max Horkheimer was a German philosopher and sociologist who was famous for his work in critical theory as a member of the 'Frankfurt School' of social research. Horkheimer addressed authoritarianism, militarism, economic disruption, environmental crisis, and the poverty of mass culture using the philosophy of history as a framework. This became the foundation of critical theory. His most important works include Eclipse of Reason (1947), Between Philosophy and Social Science (1930–1938) and, in collaboration with Theodor Adorno, Dialectic of Enlightenment (1947). Through the Frankfurt School, Horkheimer planned, supported and made other significant works possible.
Economic interventionism is an economic policy perspective favoring government intervention in the market process to correct the market failures and promote the general welfare of the people. An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods. Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting income equality, managing the money supply and interest rates, increasing profits, or addressing market failures.
[G]one are the objective laws of the market which ruled in the actions of the entrepreneurs and tended toward catastrophe. Instead the conscious decision of the managing directors executes as results (which are more obligatory than the blindest price-mechanisms) the old law of value and hence the destiny of capitalism.
Anti-capitalism encompasses a wide variety of movements, ideas and attitudes that oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to replace capitalism with another type of economic system.
The term culture industry was coined by the critical theorists Theodor Adorno (1903–1969) and Max Horkheimer (1895–1973), and was presented as critical vocabulary in the chapter "The Culture Industry: Enlightenment as Mass Deception", of the book Dialectic of Enlightenment (1944), wherein they proposed that popular culture is akin to a factory producing standardized cultural goods—films, radio programmes, magazines, etc.—that are used to manipulate mass society into passivity. Consumption of the easy pleasures of popular culture, made available by the mass communications media, renders people docile and content, no matter how difficult their economic circumstances. The inherent danger of the culture industry is the cultivation of false psychological needs that can only be met and satisfied by the products of capitalism; thus Adorno and Horkheimer especially perceived mass-produced culture as dangerous to the more technically and intellectually difficult high arts. In contrast, true psychological needs are freedom, creativity, and genuine happiness, which refer to an earlier demarcation of human needs, established by Herbert Marcuse..
Labour power is a key concept used by Karl Marx in his critique of capitalist political economy. Marx distinguished between the capacity to do work, labour power, from the physical act of working, labour. Labour power exists in any kind of society, but on what terms it is traded or combined with means of production to produce goods and services has historically varied greatly.
Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells their labour power under a formal or informal employment contract. These transactions usually occur in a labour market where wages or salaries are market-determined.
Dialectic of Enlightenment is a work of philosophy and social criticism written by Frankfurt School philosophers Max Horkheimer and Theodor W. Adorno and first published in 1944. A revised version appeared in 1947.
Marxism is a theory and method of working-class self-emancipation. As a theory, it relies on a method of socioeconomic analysis that views class relations and social conflict using a materialist interpretation of historical development and takes a dialectical view of social transformation. It originates from the works of 19th-century German philosophers Karl Marx and Friedrich Engels.
In Marxist economics and preceding theories, the problem of primitive accumulation of capital concerns the origin of capital, and therefore of how class distinctions between possessors and non-possessors came to be.
Capital, Volume III, subtitled The Process of Capitalist Production as a Whole, is the third volume of Capital: Critique of Political Economy. It was prepared by Friedrich Engels from notes left by Karl Marx and published in 1894.
Marxian class theory asserts that an individual’s position within a class hierarchy is determined by their role in the production process, and argues that political and ideological consciousness is determined by class position. A class is those who share common economic interests, are conscious of those interests, and engage in collective action which advances those interests. Within Marxian class theory, the structure of the production process forms the basis of class construction.
The labour process theory is a late Marxist theory of the organization of work under capitalism. According to Karl Marx, labour process refers to the process whereby labour is materialized or objectified in use values. Labour is here an interaction between the person who works and the natural world such that elements of the latter are consciously altered in a purposive manner. Hence, the elements of labour process are three-fold: first, the work itself, a purposive productive activity; second the object(s) on which that work is performed; and third, the instruments which facilitate the process of work.
Exploitation of labour is the act of treating one's workers unfairly for one's own benefit. It is a social relationship based on an asymmetry in a power relationship between workers and their employers. When speaking about exploitation, there is a direct affiliation with consumption in social theory and traditionally this would label exploitation as unfairly taking advantage of another person because of his or her inferior position, giving the exploiter the power.
In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.
In Marxist theory, the socialist mode of production, also referred to as lower-stage of communism or simply socialism as Karl Marx and Friedrich Engels used the terms socialism and communism interchangeably, refers to a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism. The Marxist definition of socialism is an economic transition where the sole criterion for production is use-value and therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning while distribution of products is based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management so that social surplus goes to the working class and hence society as a whole.
Das Kapital, also called Capital. A Critique of Political Economy by Karl Marx is a foundational theoretical text in materialist philosophy, economics and politics. Marx aimed to reveal the economic patterns underpinning the capitalist mode of production in contrast to classical political economists such as Adam Smith, Jean-Baptiste Say, David Ricardo and John Stuart Mill. While Marx did not live to publish the planned second and third parts, they were both completed from his notes and published after his death by his colleague Friedrich Engels. Das Kapital is the most cited book in the social sciences published before 1950.
The proletariat is the class of wage-earners in an economic society whose only possession of significant material value is their labour-power. A member of such a class is a proletarian.
Various Marxist authors have focused on Marx's method of analysis and presentation as key factors both in understanding the range and incisiveness of Karl Marx's theoretical writing in general and Das Kapital in particular. One of the clearest and most instructive examples of this is his discussion of the value-form, which acts as a primary guide or key to understanding the logical argument as it develops throughout the volumes of Das Kapital.
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.