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What does it mean to be a left wing economist today? |
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Page 8 of 38
Marx tried to show that the capitalist accumulation process could not go on forever. Capitalism had to come to an end because the dynamic that moved it, the accumulation of surplus value, had to come to an end. The historical trend had to be in the direction of socialism, as the logical outcome of the development of capitalism, for reasons Marx thought of as inherent in concepts connected with the diagram above. The piling up of profits in the pockets of a few would lead to social tension. That social tension would be aggravated by a competitive labor market, which would continually drive the price of labor down to the cost of production of labor, i.e. to subsistence. (This concept was not original with Marx. The classical economists Adam Smith and David Ricardo had already stated it. Ricardo had advocated repealing the English “corn laws” [i.e. protective tariffs charged on imported grains for the benefit of English farm owners] on the grounds that repealing the tariffs would make food cheaper, which would lower the cost of production of labor, i.e. the cost of subsistence, which would lower wages, which would lower production costs for English manufacturers, which would give English manufacturers a competitive edge when exporting their products.) Further, since only the money invested in buying labor (what Marx called “variable capital”) had the peculiar quality of producing surplus value as profit for the capitalist, the rate of profit was bound to fall over time. This was so because to remain competitive capitalists had to invest more and more in non-labor inputs to production (which Marx called “constant capital”), such as advanced technologies. Since variable capital yielded profits, and constant capital did not, and since the proportion of capital invested in constant capital would go up over time, while the proportion invested in variable capital would go down, the rate of profit would go down.
The same competitive process would weed out the less efficient capitalists, leading over time to monopolistic tendencies as the losers went out of business and the winners got bigger. As firms became fewer and larger, it became easier to organize workers, since workers tended more and more to be gathered together in larger numbers in fewer places. Capitalism´s inherent tendency to concentrate the ownership of the means of production would prepare the way for socializing it.
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