1. Marx 200
Marx’s economics

2. From young, to mature, to old

3. Young Marx: the radical

4. Becomes a Communist
"A spectre is haunting Europe—the spectre of communism. ”

5. Exile: and the British Library

6. Finally in 1867….

7. The great discovery
“Marx also discovered the special law of motion governing the present-day capitalist mode of production, and the bourgeois society that this mode of production has created. The discovery of surplus value suddenly threw light on the problem, in trying to solve which all previous investigations, of both bourgeois economists and socialist critics, had been groping in the dark.” Engels

8. Three laws of motion
The basis of Marx’s economic analysis is his three laws of motion of capitalism.
They are:
the law of value
the law of capitalist accumulation
the law of profitability (or more accurately, the law of the tendency of the rate of profit to fall).

9. The law of value
“Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs require different and quantitatively determined masses of the total labor of society….  Science consists precisely in demonstrating how the law of value asserts itself.”  Marx to Kugelmann 1868

10. Where does profit come from then?
Not from fair exchange

11. Unfair exchange?

12. Marx: from the process of capitalist production
M- C- P- C’- M’

13. M to C
In capitalist production, the capitalist starts not with produce, but with money.
The capitalist buys things or services with that money for him or her personally to use but to make a product or deliver a service for sale on a market.
The capitalist buys means of production: a factory or office; computers and other technology; raw materials required for the particular production
And the capitalist must buy the services of a workforce.
Thus M becomes C

14. C to C’
Here’s the money trick that converts C into C’. It is during the process of production, P
Total cost for four hours:
Raw materials: £3
Wear and tear: £2
Wages: £5 is equivalent to four hours of labour
Total: £10
Total cost after eight hours:
Raw materials: £6
Wear and tear: £4
Wages: £5
Total cost = £15
BUT value of labour in eight hours: £10.
Total value = £6 + £4 + £10 = £20
Profit = £20 less £15 = £5

15. C’ to M’
The enigma is solved, the possibility of profits explained. Money has been transformed into capital.
M - C – P – C’ – M’

16. Value and price
“You would be altogether mistaken in fancying that the value of any commodity is fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises or sinks below its value, but they can never account for the value itself”.

17. Value or price? But how many hours of work?
$450m November 2017
$39.9 million. March Now $74m.
How much is a print of Van Gogh’s picture? £30

18. Value into price? Auction: Beijing, May 21, 2018. $523,000
1,250 pages of notes Marx made in London from September 1850 to August 1853, based on which he wrote the first draft of "Capital
Article Engels wrote for newspaper Allgemeine Militärzeitung in November 1862.

19. Prices diverge from values
Does this mean the labour theory of value is wrong?
No, because there is no change in total value when all the hours are added up, just a redistribution of that value by competition in the economy as a whole.
The total value measured in socially necessary labour time equals total prices of all commodities.

20. Prices are close to values

21. The law of value
The labour theory of value is intuitively the best explanation of the prices of commodities in capitalist production.
It explains where and how profit comes from and why capitalist production is just another method of exploitation of labour (those without property) by those with the means of production (property).
And it is empirically provable and proven

22. The law of accumulation
Competition among capitalists forces them to continue to expand their production in order to accumulate more profit or be driven out of business by others.
So the law of capitalist accumulation says that competition drives each individual capitalist to increase the productivity of labour ie lower their costs of production.

23. More means of production
The trend is for the proportion of the economy devoted to investment in the means of production (machinery, plant, offices, raw materials) to rise.

24. Constant capital
Investment in means of production, Marx calls ‘constant capital’ because means of production (a machine or raw material) cannot create new value on its own. So the value previously created to produce the machine is now constant and cannot be increased.

25. Variable capital
New value requires human beings going to work and turning on the machines and using up the raw materials. Only human labour power creates new value. To distinguish that, Marx calls the investment in human labour power, variable capital, because the value in that type of capital can vary (deliver new value).

26. Rising organic composition
The law of accumulation is that, as capitalists spend more of their profits on means of production, the ratio of the value of means of production compared to the value of the labour power employed would tend to rise.
This ratio Marx called (rather oddly) the organic composition of capital.
It is a law in capitalist economic expansion that the organic composition of capital will rise.

27. Rising organic composition

28. The reserve army of labour
This increase in the organic composition of the total social capital tends to reduce the relative demand for the labour power of workers by capitalists and can lead to increased unemployment as human labour is replaced by machines and technology.
Thus there will appear an ‘industrial reserve army’, a layer of unemployed available to work but not being used.
So the ‘general law’ of capitalist accumulation is that the capitalist mode of production tends to produce both increasing wealth in the hands of capitalists (machines, factories, cash etc) and increasing poverty suffered by workers (low wages and recurring unemployment).

29. Dual nature of accumulation
Tendency to increased unemployment from technology.
Rising productivity of labour
New technology creates new jobs
Cyclical and uneven employment:
“the general movement of wages is exclusively regulated by the expansion and contraction of the industrial reserve army and this corresponds to the periodic alternations of the industrial cycle”

30. Creating inequality
The paradox of this law is that developments such as the rise in productivity of labour, which ought in a rational world to benefit the labouring class as a whole, in fact “distort the worker into a fragment of a man”.. degrade him to the level of an appendage of a machine” and “alienate from him the intellectual potentialities of the labour process… Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery…at the opposite pole”.

31. Technology and jobs
If you substitute platforms for textile mills, machine learning for steam engines, Twitter for the telegraph, you have exactly the same dynamics as existed 150 years ago  when Karl Marx was scribbling the Communist Manifesto.” Canadian Mark Carney governor of the Bank of England

32. Concentration and centralisation
 A “super-entity” of 147 tightly knit companies – all of their ownership was held by other members of the super-entity – control 40 per cent of total corporate assets globally.
1318 companies appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing 80 per cent of global revenues.
Swiss Institute of Technology.

33. Law of accumulation
C/V rises over time. This means increased centralisation and concentration of capital.
Rising C/V creates a reserve army of labour: technological unemployment.
The size of reserve army will vary cyclically with the strength of accumulation.
The law can be empirically verified and has been by many studies

34. Law of the tendency of the rate of profit to fall
“in every respect the most important law of modern political economy and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law, which despite its simplicity, has never before been grasped and even less consciously articulated.”
Marx Grundrisse

35. The simple formula: s/c+v
The capitalist starts with money to invest in: Means of production (fixed capital) and raw materials (circulating capital) = constant capital (c) Labour force to produce the commodities paid in wages. But the labour force produces more value than it is paid in wages so it is variable capital (v). The labour force produce commodities that contain surplus value over and above its own value in wages paid = surplus value (s)

36. Two assumptions
The first two laws of motion lead to the third law: the law of the tendency of the rate of profit to fall.
The first law says that only labour creates value.
The second says that capitalists will accumulate more capital over time and this will take the form of a faster rise in the value of the means of production over the value of labour power i.e. a rising organic composition of capital.

37. Marx’s law of profitability
ROP = S/C+V
Here’s the trick!
ROP falls if C/V rises faster than S/V
s/v/ c/v+1
C/V rises faster (tendency) BUT there are times when S/V rises faster (countertendency)

38. Tendencies and countertendencies
Tendency (the law as such): a rising organic composition of capital will outstrip any rise in the rate of exploitation or surplus value
Counter-tendencies:
Sometimes the rate of surplus value will outstrip the rise in the organic composition of capital – but not forever
Sometimes the cheapening in cost of new technology will lead to a fall in the organic composition of capital (the value composition will fall) – but not most of the time

39. Secular and cyclical
Is the law of the tendency of the rate of profit to fall just a long-term secular tendency?
Is the law of the tendency of the rate of profit to fall solely an explanation of crises and booms and slumps?
IT IS BOTH

40. The evidence

41. Crises and capitalism
It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part, not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production.
“And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”
The Communist Manifesto 1848

42. Theory of crises
“The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone and to give room to a higher state of social production”

43. Marx’s predictions Inequality growing
Concentration and centralisation of capital
Machine age: robots, AI
Climate change and global warming
Recurring crises and class struggle

44. 1% own 50% of all

45. Concentration and centralisation
a dominant core of 147 firms through interlocking stakes in others together control 40% of the wealth in the GLOBAL network.  A total of 737 companies control 80% of it all.   This is the inequality that matters for the functioning of capitalism – the concentrated power of capital.
The Swiss Federal Institute of Technology

46. Heating up fast

47. More robots than humans
TO KRUGMAN

48. Who will rule?

49. The global proletariat

50. Marx before his last haircut

51. Marx 200