Political Economy I, Fall 2014
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1 Political Economy I, Fall 2014 Professor David Kotz Thompson Office Hours: Tuesdays 10 AM to 12 noon Information on Index Cards Your name Address Telephone address Department/program/year Previous related courses taken 1
2 Course Website Address on handout: Posted on course website: syllabus paper assignments & exams readings thought questions slides after use Readings page is password-protected. Getting access to Readings page: Username: Econ708 Password: Fall2014 2
3 Subject Matter and Prerequisites Subject Matter: Marxian economic theory and related nonmainstream economic theory. Student Background (not required but helpful): 1. Some previous study of Marxian economics. 2. Intermediate mainstream micro and macro theory. 3. Linear algebra 4. Courses in other social sciences and history 5. Comfort with abstract models 3
4 Subjects Covered 1. Historical Materialism: Theory of human societies & how they are structured, reproduced, and change over time. 2. Value and Surplus Value: Theory of relations of production and exchange under capitalism. 3. Accumulation and Crisis: Process of economic expansion under capitalism and barriers to expansion. 4. Stages and Forms of Capitalism: Theory of institutional forms of capitalism. 5. Imperialism: Theory of international economic and political relations in the capitalist era. 4
5 Marxism Mid-19th Century Europe 1. Full flowering of capitalist development 2. New great wealth alongside new extreme poverty 3. Revolutionary upheaval 5
6 Marxism Question: What is Marxism? 1. A method of Analysis a) Method of analyzing any subject b) Method of analyzing human societies 2. A specific set of theories about a) Class societies is general b) Capitalism 6
7 Marxism Marxian Method 1. Emphasis on relations among aspects of society 2. Focus on change and development 3. Focus on classes and class relations 4. Reality assumed to be hidden beneath appearance 5. Critical stance toward class society including capitalism 6. Particular method of developing theories: a. Abstract from reality b. Use reason to derive laws of motion/principles of behavior c. Add detail back in and determine modifications of laws of motion 7
8 Marxism Marxian Economics: Analysis of the economic aspect of society. Economic aspect of society: How people produce and distribute the means of subsistence. 8
9 Marxism Antecedents 1. German philosophy 2. French socialist thought 3. British classical political economy 9
10 Development and Evolution of Western Marxism Pre-World War I Period 1. Marxism arises, wins following among intellectuals and in workers' movement in Europe. 2. Central and Eastern Europe become center of Marxism. 3. International Marxist intellectual and political community develops. 4. Marxist intellectuals are active in working class movement. 10
11 Development and Evolution of Western Marxism Birth of Western Marxism, Center of Marxist intellectual development in Europe shifts to West/Central Europe (Italy, France, Germany). 2. Marxist intelligentsia begins to separate from the working class movement in Europe. 3. Marxism spreads to Asia, Africa, and Latin America. 11
12 Development and Evolution of Western Marxism (cont.) Full Development of Western Marxism, Complete separation from working class movement. 2. Increasingly based in universities. 3. Increasingly divided by discipline (economics, history, etc.) 4. Increasingly in debate with non-marxist thought. 5. Focus shifts to increasingly esoteric subjects. 12
13 Development and Evolution of Western Marxism (cont.) Rebirth of Western Marxism, s: 1. Outpouring of Marxist intellectual work. 2. Reconnection to political activism (not mainly working class movement). 3. Advances in traditional main areas of study: value theory, crisis theory. 4. Advances in topics less developed in past: race, gender, imperialism, underdevelopment. 13
14 Development and Evolution of Western Marxism (cont.) Demise of Communist Party Ruled Regimes Puts Western Marxism on the Defensive, Many formerly Marxist intellectuals redefine their approach and renounce Marxist label. 2. Effort to redefine socialism. 3. Reappearance of certain pre-1930s features of capitalism promote revival of interest in Marxism. 14
15 Development and Evolution of Western Marxism (cont.) Economic Crisis Leads to Renewed Interest in Marxism around the World, 2008 to Present 1. Dominant economic theories lose legitimacy. 2. Support for capitalism weakens. 3. Anti-capitalist protests develop. 4. Events seem to fit the Marxist view of capitalism (a Marx moment ). 15
16 Marxian Economics and Other Approaches Classical Political Economy Smith, Ricardo Neoclassical Marshall Marxian Marx Keynesian Keynes Institutionalist Veblen Neoliberal Post-Keynesian Radical NKS New Institutionalist 16
17 Marxian Economics and Other Approaches (cont.) Smith: Division of labor and economic progress; market system Ricardo: Distribution of income among classes; evolution of capitalism Marshall: Price determination, efficiency Marx: Capital-labor relation, accumulation and crisis, evolution of capitalism Keynes: Insufficient aggregate demand and economic crisis Veblen: Institutions and economic change Neoliberal: optimality of unregulated market system Neoclassical-Keynesian Synthesis: Neoclassical micro plus pseudo- Keynesian macro Post-Keynesians: Uncertainty, financial problems, instability New Institutionalist: Game theory and agent-based modeling of individuals and institutions Radical (or heterodox): Variety of non-mainstream approaches influenced by Marxist, institutionalist, and Keynesian approaches. 17
18 Main Trends in Revival of Anglo-American Marxian Economics 1. Monopoly Capital School Focus on monopolization of capitalism Underconsumption key cause of crisis Value theory de-emphasized 2. Fundamentalist Marxism Centrality of Marxian value theory Rising organic composition of capital is key cause of crisis Emphasis on Hegelian roots of Marxism 3. Traditional Marxism Emphasis on materialism Stress on class and class conflict in historical analysis and crisis theory Emphasis on historical analysis 4. Overdeterminationist Marxism No objective truths or general laws Anti-essentialism and overdetermination are key concepts Centrality of class process 18
19 Main Trends in Contemporary Anglo-American Marxian Economics (cont.) 5. New Left Marxism Stress domination by race, gender, nationality as well as class Stress effects of resistance to domination Introduction of elements of liberal democratic theory Emphasis on debate with non-marxian economics 6. Analytical Marxism Denies distinctive methodology for Marxism Introduction of methodologies from contemporary Western philosophy and social science 7. Sraffian Marxism Offers alternative value theory to traditional Marxian value theory and neoclassical value theory 19
20 Contending Schools of Thought Scientific method: Decide between contending schools of thought and their different theories by empirical testing to determine which is supported by the evidence. 20
21 Contending Schools of Thought (con t) Problems with Appeal to Empirical Testing for Deciding between Schools of Thought 1. Empirical methods for testing theories in economics have serious shortcomings. 2. Different schools of thought focus on different problems or questions. 3. Different schools of thought embody different values. 21
22 Contending Schools of Thought (con t) My View Empirical testing cannot decide between schools of thought in economics power decides. Within a school of thought, there can be progress through theoretical and empirical analysis: 1) Develop theory based on careful observation 2) Careful development of the analytical basis of theoretical models. 3) Comparing theory and empirical evidence: a) statistical testing b) historical analysis c) case studies and comparative analysis 22
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