It’s basically a term coined by Karl Marx in mid-to-late 19th century. It is a method of socio-economic analysis that keeps a track of class relations and societal conflicts using a materialist interpretation of and a dialectical view of social transformation.
Karl Marx was a highly controversial figure even after his death. He had a strong view against capitalism and promised of a future where everyone lived in harmony. He inspired a lot of people which led to a revolution of globally. By the time of Bolshevik revolution in Russia and the spread of communism throughout Eastern Europe, Marxists had taken a firm root during the first half 20th century.
Marxist economics uses arguments and theories about a socialized country against the middle class economics theories common during those times. Marx wanted to promote the social class and remove capitalism and replace it with socialism and communism. According to Marx, socialism would help in disappearance of state differences and communism would help to make a city where goods and services would be distributed to each in accordance to their need and ability.
But, as to what actually happened is quite opposite. That dream of Marx didn’t come true and came to an end before the end of the twentieth century as the people of Poland, Hungary, Czechoslovakia, East Germany, Romania, Yugoslavia, Bulgaria, Albania and thee USSR rejected the idea and entered in a state of condition towards the private property sector and supported the market exchange system which is still available and going strong in today’s world.
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Marx wanted to have a society where the economy worked to bring financial equality. Marx in order to strengthen the labor class established a labor theory of value. It simply meant that the value of commodity produced by the labor was entirely depended on the work or amount of hours the labor had put in. An example to understand this, if a shirt takes longer than the manufacturing of pants then the shirt has more value in it than the pants no matter how many contents are put in the making of the pants. But because the amount of hard work by the labor is more on the shirt than the amount of time put in the pants, the value of the shirt will be more than the value of the pants.
He termed the time and energy given by the labors in making a commodity determines the value of the product as “Labor power”.
Labor power according to Karl Marx can be described as the capacity and capability of a worker to produce goods and services. He argued that the labor wage should depend and be decided entirely on the amount of hours the labor has put in making and providing the goods. Marx explained that the value of labor power should be awarded with the same amount of wages so that the workers could have a decent lifestyle and could work in a better way. For example, if it takes 5 hours of labor to feed, shelter and clothe a laborer so that they can work properly the next day, then the laborer should gat 5 dollars a day as wage.
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Marx asked the then government that whether the goods and services are sold at their true value?
And if yes, then how come the capitalists are able to gain more from its total revenue and total cost?
Marx explained that the capitalists are addicted to a certain lifestyle and have a privileged position as the owner of the production unit. So as they are the owner of the unit, they are able to ruthlessly exploit the workers. They make them work beyond their capabilities and pay less wages than they actually need. He said, that the workers were paid 5 dollars a day but were told to work for 12 hours a day. So if we take one dollar which is equal to one hour of the workers, then they should actually get 12 dollars a day. But they don’t as the surplus amount is taken by the capitalists.
Even though Karl Marx was true about the wages, still his idea of socialism came to an end. The mainstream economists believed that capitalists don’t earn their profits by exploiting workers but by investing and using their knowledge to expand and promote their business so that they get higher sales because with the revenue coming in profit, the owners would be able to give their employees or laborers a better wage or salary and give them a better lifestyle.
Today’s economists have a proven claim that the capitalists or owners of a company don’t exploit the workers but, earn their profits by the production and selling process. The profit earning depends on the amount of sale made. The sale made brings in the total revenue out of which the total cost incurred (which is the cost of production) is separated and then the salary or wages are given to the workers according to the revenue and then the amount remaining is the profit which the owners enjoy. Sometimes, when the company is earning profits, or if there is a festival coming up, the employees or workers get bonus also.
Thus, we see ho Karl Marx was the founding father of Marxism theory. We learned about the arguments both the sides of economics put forward. We also learned how Marx’s theory was inspiring to the laborer’s point. But did not succeed as it was not entirely practical and true that the owners or capitalists were earning solely by exploiting the workers.
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