1. Marxian Economics A Basic Outline On The Theories Proposed By:- Viju Thomas Varghese ASB: PGPM 07-09 (03-12-2007) Karl Marx (1818-1883)

2. Karl Marx Karl Marx (1818-1883) is best known not as a philosopher but as a revolutionary communist, whose works inspired the foundation of many communist regimes in the twentieth century Often called the father of communism, Marx was both a scholar and a political activist. He argued that his analysis of capitalism revealed that the contradictions within capitalism would bring about its own end, giving way to communism Marx turned away from philosophy in his mid- twenties, towards economics and politics

3. Introduction:- Marxism is not a theory of socialism by studying which we are able to inform ourselves about socialistic economy. His theory deals mainly with capitalism,historical character of capitalism as a social system that follows feudalism and precedes socialism. He tried to show how capitalism having fulfilled its mission to accumulate capital and develop new productive techniques into a basket of production, in turn results in a social revolution out of which socialism emerges by necessity.

4. - Why Should we study Marxian Theories..? - Concept Of Bourgeoisie & Proletariat

5. Theories And Concepts That Marx Introduced Into His School Of Thought 1.The Labour Theory Of Value:- Commodities are products of human labour produced for the market. When two commodities are exchanged they have only this in common. They are both products of the same amount of abstract labour. 2. Socially Necessary Labour:- In determining the exchange value of a commodity only socially necessary labour is considered. Labour is socially necessary when - It is of average skill - Uses modern machines for production - And produces a commodity in demand Not only present labour but past labour (labour necessary to produce the raw materials and machines) is also considered.

6. 3. The Value Of Labour Power:- Is defined by Marx as in case of every other commodity, by the labour time necessary for the production of an commodity which gives him enough wage for his sustenance. 4. Surplus Value:- A labourer sells his labour power to the capitalist who pays a wage equal to the value of labour power. Eg: A capitalist pays his labourer the value of six labour hour, if 6 labour hours of work should be done by him to earn his wage for a daily sustenance. But the capitalist has bought the whole days labour power (say 12 hours). Here for the commodities that the labourer produces the capitalist will charged with the whole days labour value ie.12 hours of labour value. Here we can see that the labourer since he had to work the whole day produced six hours worth more of commodities. This extra six hours worth of labour value is called the surplus value which the capitalist keeps for himself Surplus value= M* - M where M*= S+V+C = (S+V+C)-(V+C) M = V+C

7. 5. Constant Capital & Variable Capital:- Value of a commodity= Constant capital (c) + Variable capital (v)+ Surplus value (s). Constant capital remains constant and does not bring any surplus value into the product. Variable capital is amount of labour power used this only gives the commodity the surplus value. 6. Rate Of Surplus Value:- Also known as the Rate Of exploitation is determined by - Length of the working day - Time required to produce the means of sustenance for the labour. Mathematically given as a ratio of surplus value to the variable capital RSV= S/V Machinery plays an important role in helping the capitalist increasing the rate of exploitation. > Reserve army of Labourers.

8. 7.Organic Composition Of Capital:- Mathematically given as a ratio of Constant capital to variable capital. OCC= C/V Owing to the constant technological changes the organic composition of capital changes continuously in favour constant capital. 8. Rate Of Profits:- Is the ratio of Surplus Value to the Total capital Rate of Profit = S/(C+V) Here the increase in surplus value is determined by the variable capital. Hence higher the rate of exploitations higher will be the rate of profit. > Role of Organic composition of capital in rate of profits.

9. Conclusion:- Marx in his theories, studies mainly the change in the society from a capitalistic to a communistic society. This period of transition is referred to as socialism. From his theories he concludes that during this phase the state is in the hand of a revolutionary proletariat dictator. Socialism in contrast to communism is characterized by the fact that labourer is still rewarded in proportion to his contribution, he is no longer exploited but receives an income in proportion to the labour rendered and since different labourers contribute different quantities of socially necessary labour incomes will differ.

10. References:- - Economic Systems- A Comparative Analysis: By: George N. Halm -Economic Systems 2nd Edition: By Gregory Grossman -http://plato.stanford.edu/entries/marx/#Othhttp://plato.stanford.edu/entries/marx/#Oth -http://www.historyguide.org/intellect/marx.htmlhttp://www.historyguide.org/intellect/marx.html