Marxian Economics

  

If you ever thought, “Why am I paying these taxes?! I didn’t sign up for this…” that’s how Karl Marx feels about the entire capitalist system. Sure, if you don’t like your job, you can go sell your labor elsewhere, just like you can move and go pay taxes elsewhere...but you still have to get a job (and pay taxes) and work if you want to survive. You don’t have a choice, unless you’re a capitalist...that is, you’re the one doing the hiring and controlling the “means of production." Basically, you own the factories and what-not, deciding worker’s wages and where profits go and how much you keep for yourself.

The foundational theory of Marxian economics is the labor theory of value, which says that capitalists don’t pay workers for the full value they're providing as workers, keeping the surplus for themselves instead of spreading the love to the workers who created the value. Over time, this creates the growing inequality between capitalist and workers, i.e. the bourgeoisie and the proletariat.

Marx saw workers working hard, yet their wages didn’t reflect the value they provided, because all that extra value was pocketed by their bosses. He believed that, as capitalists get wealthier and wealthier from this surplus, and workers get poorer and poorer, the poor will eventually say “I’ve had enough of this,” and there’ll be a worldwide revolution of workers against capitalism (it can’t be just a small group), which accumulates the majority of wealth into the hands of a few.

Marx thinks it’s just a matter of time...and that when wealthy people are philanthropic in the meantime, it’s really just capitalists giving concessions to the workers to keep them content enough to not revolt, so the capitalists can keep their power (and their money). Instead of the “Wow, look how nice that billionaire is for starting a fund to feed the poor” reaction, Marx would say something like “Wait, why does one person have all that money in the first place? And why are those poor people so poor in the first place? Oh right, capitalism.”

The way Marx saw capitalism and technology growing, he felt that capitalism would eventually shoot itself in the foot, since it’s not really sustainable to have inequality continuously...grow. Yep...a lot of ideas coming out of that beard of his.

Find other enlightening terms in Shmoop Finance Genius Bar(f)