Marxist Political Economy Explained

In this thought piece, an understanding of the Marxian concept of political economy (MPE) will be conveyed in an easily digestible manner so as to pervade its core principles and contexts. The MPE’s approach of intersectional analysis is in line with the RE Network’s focus on pluralist and heterodox schools of thought.

This Marxist approach to political economy derives its core ideas and values from the eminent thinker’s analysis of class struggle. Contextualised within an interrelated conflict of capital and labour within a capitalistic society, the founder of communism understood class struggle to be one that was predicated upon a vying for economic means of production (capital) between the bourgeoisie (middle class) and the proletariat (working class). As the class that had the materialistic upper handheld power and dominated the economically worse-off section of society, the resulting struggle was envisioned to break out in the form of an all-out conflict between the two classes. Keeping in mind this interdependent structure of economy, society and politics, the theory of MPE was borne.

The resulting market-driven understanding of the antagonism and conflict between capital and labour goes beyond a tussle between the economic modes of production and exploited labour class. Although orthodox economics would focus readers’ lens onto simply the quantitative level of exploitation, there are more layers of discrimination that the working class have to face. One such struggle is the concept of alienation, where the producer of specific goods, within a manufacturing/labour supplying process that is characterised by differentiated and specialised producing pathways, is alienated or disconnected from the final product. Take, for example, an automobile manufacturing plant in today’s economy. Within this market, the supply of labour is minimal but the few labourers that are present are completely and wholly detached from the final outcome of the car. Resulting in a loss of self-worth and detachment from one’s productive output, this passiveness in the chain of production is also reflected in other spheres of life. Commercialisation of social relations that end up forming a transactional basis of all such interactions is one such example of the commodification of other spheres of society. This intersectional analysis is vital as the MPE stretches its purview beyond just market-driven logic to explain the rationale of societal and political happenings. An example of this phenomenon would be that of identity politics. It is the realm and basis of a political approach that is defined by socio-political groupings of identifying factors such as caste, race, ethnicity moving together to form alliances and other political structures. In a society that is overrun by division, such an acute and perceptive analysis truly explain the events of the world and permits for a more inclusive and heterodox discourse.

Two more central tenets of MPE would be discussed. These are the historical perspectives brought forth by its paradigm of thought as well as the concept of exchange versus use value in the entire commodification and production process. Rather than observing the economy as a neutral platform of exchange between agents for capital and labour, the Marxist thought espouses one to look at an economy as an amalgamation of social, political and economic perspectives, incentives, logic and histories. This primal and vital historical perspective is what compels and drives the central unit of analysis of MPE — that of classes. Individuals and their motives are collectively defined by this mode of grouping. While individualism might be lost out on, the principle around which the neo-classical approach constructs itself, the MPE school of thought believes that persons are located within certain superstructures that compel them to behave in a certain manner. The resulting kind and level of analysis then seek to describe, explain and influence not only collective behaviour but also personal and individual actions. Thus, MPE gives credence and importance to the impact of dynamic and forever-changing processes as also the context of players in an economy, whether they be an individual or institution.

When a good or commodity is produced utilising capitalist modes of production, in which the human labour is exploited, there are principally two kinds of value generated. One is the use value, or the potential benefits derived from consuming the good by the populace. The other is the exchange value or the returns on investment that would be collected from further realising the value of the good produced in a different market setting (a financial derivative, for example). Within a capitalist society, the value of the exchange worth of commodities is much higher compared to the use value generated by such goods. As such, the labour class is exploited as they are not paid more than the wages they require to reproduce their labour supply, despite the final good ending up generating more value (exchange value) than the wages paid. This surplus value is then appropriated by investors and reinvested into more similar profit-making ventures, adding to the cyclical and intergenerational features of inequality. The clearest example of such an event has been the 2007–08 global financial crisis, wherein excessive trading in subprime mortgage-backed assets gave way to an asset bubble that eventually torpedoed the economy. Over-accumulation of capital in fictitious capital (capital not employed in productive, material activities) investments over the past 30–40 years is due to higher profits being realised in such ventures as opposed to industrial or employment-generating production. Analysing such trends through an MPE lens enables us to view the inequity and also advocate for a more just and pluralist society.

Moving beyond the rigid and monochromatic lens of erstwhile economics, MPE provides a toolkit to analyse happenings at and provide just solutions to the neoclassical intersection of the political and economy, while keeping in mind the historical, social, political, and economic aspects to conventionally market-driven scenarios.

For a thorough, resource-rich primer on MPE, do read this insightful piece.

Yash Budhwar is an Ashoka University and Indian School of Public Policy graduate with an avid interest in policy, research and community building. He works with the communications, events and partnerships teams at Rethinking Economics India Newtwork.

Endnotes

1. Dimmelmeier, A., Pürckhauer, A., & Shah, A. (2016, December 18). Marxian Political Economy. Retrieved October 08, 2020, from https://www.exploring-economics.org/en/orientation/marxist-political-economy/

2. Dimmelmeier, A., Pürckhauer, A., & Shah, A. (2016, December 18). Marxian Political Economy. Retrieved October 08, 2020, from https://www.exploring-economics.org/en/orientation/marxist-political-economy/

3. Dimmelmeier, A., Pürckhauer, A., & Shah, A. (2016, December 18). Marxian Political Economy. Retrieved October 08, 2020, from https://www.exploring-economics.org/en/orientation/marxist-political-economy/

4. Dimmelmeier, A., Pürckhauer, A., & Shah, A. (2016, December 18). Marxian Political Economy. Retrieved October 08, 2020, from https://www.exploring-economics.org/en/orientation/marxist-political-economy/

5. Dimmelmeier, A., Pürckhauer, A., & Shah, A. (2016, December 18). Marxian Political Economy. Retrieved October 08, 2020, from https://www.exploring-economics.org/en/orientation/marxist-political-economy/

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