1. Classical Theories of Accumulation and Growth SmithSmith: specialization  virtuous circle RicardoRicardo: diminishing returns  misery MillMill: enlightened intervention  progress MarxMarx: contradictions  crises  revolution Accumulate, accumulate! This is Moses and the Prophets. This is Moses and the Prophets. continuously expand his capital in order to preserve it Capitalist must continuously expand his capital in order to preserve it.

2. St. Joan’s Put-downs Cambridge England v. Cambridge Massachusetts Fundamental differences between orthodox & Marxian economics: Capitalism as part of the eternal order of Nature vs. Capitalism as a passing phase Harmony of interests vs. Conflict between owners who do not work & workers who do not own …The academics did not even pretend to understand Marx [whose] metaphysical habits of thought are alien to a generation brought up to inquire into the meaning of meaning. …the questions [Marx] posed are still relevant today, while the academics continue to erect elegant elaborations on trivial topics…[T]he development of abstract argument has run far ahead of any possibility of empirical verification. …The orthodox economists…identified themselves with the system and assumed the role of its apologists, while Marx set out to understand…capitalism in order to hasten its overthrow. …they preach only the gloomy doctrine that all is for the best in the best of all possible worlds. Joan Robinson, An Essay on Marxian Economics

3. Manchester's Factory Children Committee, 1836 Campaign for the Ten-Hour Day http://www.rhapsody.com/peteseeger/greatesthits/talkingunion/lyrics.html

4. Karl Marx, 1818 – 1883 Workers of the world unite! You have nothing to lose but your chains. Manifesto of the Communist Party, 1848 Das Kapital, volume 1, 1868 Das Kapital, volumes 2 and 3, 1893, 1894 Theories of Surplus Value, 1905 - 1910 The boss won’t listen if one guy squaws, But he’s gotta listen if the union talks. Frederick Engels, 1820 – 1895 Karl Kautsky, 1854 – 1938

5. Marx’s Biography Law  Philosophy Ph.D. (Jena by mail)  Hegelian Left  Unemployed  Editor, Rheinische Zeitung  Unemployed Marrried Jenny von Westphalen  7 children/4 survived Paris/Brussels revolutionary  1848 Communist Manifesto  1849 London exile British Museum Library/Das Kapital Engels collaboration and support Communist politics/feuds In the Communist Manifesto, Marx and Engels put forth a bold proposition about the inexorable collapse of capitalism. As ideology, the Manifesto was brilliant. As economics, it fell far short of scientific analysis. Marx needed to provide a scientific proof for what he and Engels had so boldly proclaimed. His response was Das Kapital (3 volumes, 2,100 pages). Jürg Niehans, A History of Economic Theory

6. The Communist Manifesto, 1848 A spectre is haunting Europe — the spectre of communism. class strugglesThe history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another… The bourgeoisie need of a constantly expanding market rapid improvement of all instruments of production agglomerated population, centralised the means of production, and has concentrated property in a few hands.The bourgeoisie, historically, has played a most revolutionary part … The bourgeoisie cannot exist without constantly revolutionising the instruments of production …The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe …The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation …The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities… It has agglomerated population, centralised the means of production, and has concentrated property in a few hands.

7. The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam- navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam- navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour? Modern bourgeois society…is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.Modern bourgeois society…is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. The essential conditions for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage-labour. The advance of industry…replaces the isolation of the labourers… What the bourgeoisie therefore produces… are its own grave-diggers.The essential conditions for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage-labour. The advance of industry…replaces the isolation of the labourers… What the bourgeoisie therefore produces… are its own grave-diggers.

8. Some Marxian Vocabulary Historical materialism Dialectic: thesis, antithesis, synthesis Productive forces Surplus value Transformation problem Mode of production Ideological superstructure Inherent contradictions …As for the technical jargon of the Communists, it is as far removed from common speech as the language of a mathematical textbook. George Orwell The Road to Wigan Pier

9. Historical Materialism: Progress and Revolution History as sequence of economic revolutions Ideological Superstructure Government, Laws Religion Culture Productive Forces Technology, Resources Initial Economic System (Mode of Production) Class structure Property rights Distribution of income Ownership of capital Revolution!  New Economic System Internal Contradictions  Tension and Revolution Schumpeter: Innovation/Cycles Olson: Vested Interests Kuhn: Scientific Revolution/ Paradigm Shifts Perpetuate ruling class dominance. Suppress change!

10. Some Marxian Vocabulary Historical materialism Dialectic: thesis, antithesis, synthesis Productive forces Surplus Value Transformation problem Mode of production Ideological superstructure Inherent contradictions Class struggle Bourgeoisie Proletariat Capitalism: M – C – M’ Profit maximization rules Rate of exploitation Rate of profit Reserve army of unemployed Accumulation Immiserization Liquidation crisis (hoard SV) Realization crises Underconsumption crisis Overproduction crisis Disproportion crisis Organic composition Debts to Quesnay…balanced growth Smith…growth dynamics Ricardo…labor theory of value … but not diminishing returns

11. Flavors of Crisis Invention Investment Capital Widening Capital Deepening Increased Employment Decreased Employment Rising Wages Decreased Wage Bill Profit Squeeze Overproduction Crisis Too much capital Underconsumption Crisis Too little demand Reserve Army Decreased Demand Increased Organic Composition Falling Rate of Profit Expropriators are expropriated Equilibrium Cycles Worker-capitalist ecosystem Contradiction & Collapse

12. A Summation (Jürg Niehans, A History of Economic Theory) As a prophet, Marx was a failure…The predictions of the immiserization of the working class, of the progressive deepening of economic crises (?), and of the imminent collapse of capitalism were patently falsified by events…capitalism appears to be capable of virtually infinite development, transformation, and variation without a revolutionary collapse. The dialectic model of history has failed. Marx did make a contribution to [economic science] that was mediocre. His most fundamental contribution was the clear formulation of the question of how political and social institutions interact with economic processes. For example, how does legislation affect income distribution and how do the consequent changes in income distribution, in turn, affect legislation? »{Smith, Lectures on Jurisprudence, has precedence} Marx’s foremost contribution to economic theory was his model of (balanced) growth…His exposition was clumsy, fragmentary, and almost unintelligible but the basic notions are there. The sad truth was that his training had not equipped him for effective scientific research and he was constantly frustrated by his propensity to pose ambitious problems that he could not solve.