Immiseration thesis

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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 school of economic thought

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.

Marxs theory of alienation

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.

Contents

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.

Marx

Concerning the evolution of the worker's living conditions, Marx argued that:

Karl Marx Revolutionary socialist

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.

Karl Marx, Das Kapital: Kritik der politischen Ökonomie , Volume One, Chapter 25, Section 4. 1867. [1] Wikisource-logo.svg Text on Wikisource

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.

Diverging views

Frankfurt School

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:

Frankfurt School school of neo-Marxist interdisciplinary social theory

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 German philosopher and sociologist

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 economic policy perspective favoring government intervention in the market process

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. [2]

See also

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Marxism economic and sociopolitical worldview based on the works of Karl Marx

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Marxs method

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References

  1. Cf. Marx, Karl (2007): Capital: A Critique of Political Economy: The Process of Capitalist Production. Volume I, part 2. Cosimo Inc., pp. 708-709
  2. Horkheimer, Max and Theodor Adorno. (2002). Dialectic of Enlightenment, p. 38.