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13 of 13 people found the following review helpful:
4.0 out of 5 stars
valuable, although somewhat dated, July 18, 2008
"Economics: Marxian versus Neoclassical" is meant to introduce readers to Marxian economic reasoning by comparing it to neoclassical economics. Since this book was written over twenty years ago, it is inevitably somewhat dated. However, it still achieves its main goal very well. Anyone willing to learn about this important tradition should find this book valuable.
The book has four chapters. Chapter 1 provides the context for the comparison, Chapter 2 deals with neoclassical theory, Chapter 3 presents Marxian theory, and finally, Chapter 4 wraps it all up by discussing the importance of theoretical differences. Quite predictably, most of the action happens in chapters 2 and 3 while the rest only fulfills an ancillary function.
In Chapter 2 the authors assume basic familiarity with neoclassical economics and go on to discuss the logical structure of this particular theory: its entry points, its logic and how it links the entry points to everything else. According to Wolff and Resnick, neoclassical theory has three main entry points: preferences, resource endowments and technology. Moreover, its logic is determinist with clear causes and effects. The authors proceed using this determinist logic to show how neoclassical entry points (or "essences") lead to certain outcomes in factor (labour, capital) and commodity markets. This discussion of neoclassical theory serves as a backdrop for the later discussion of Marxian theory. The chapter also provides a very brief section with criticisms of neoclassical theory and a section on "the challenge of Keynes". This is easily the weakest part of the book. It is less accessible than the rest as well as visibly dated: as a result of the Keynes section, rational expectations school occupies the only Appendix of this chapter. Needless to say, much has happened since, including the New Keynesian response to rational expectations.
Chapter 3 starts by assuming no familiarity with Marxian theory and goes on to cover its logical structure and its applications. The authors emphasize that there are many Marxian theories and that the one presented in this book is just the one that they found the most persuasive. Its entry point is class - a process during which surplus product of laborers is appropriated by someone else. The logic of this particular Marxian theory is overdeterminist meaning that various processes (cultural, economic, political, natural) are both cause and effect at the same time and continually influence each other. That means that class is not an "essence" like neoclassical entry points, i.e. it does not cause other things. Choice of class as an entry point is justified by saying it has been overlooked in social analysis. This chapter is brilliant. Youtube features an hour long interview with one of the authors - Richard Wolff. In that interview, Wolff often stresses the importance of pedagogy and commitment to teaching. This chapter illustrates his personal position very well - although it is full of technical theoretical language, the exposition remains lucid and engaging.
Long story short, "Economics: Marxian versus Neoclassical" is a good way to get acquainted with Marxian analysis.
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2 of 2 people found the following review helpful:
5.0 out of 5 stars
A good primer, November 23, 2009
First of all, let me briefly say where I am coming from: while not a Marxist, I would say that I adhere somewhat more to a class perspective than to a market perspective, although mainly just because I feel that the class perspective is so vastly underappreciated where I live (I live in the U.S.). I believe the class perspective is systematically underappreciated both in terms of its empirical utility and its social value. In my view, these two perspectives represent two competing angles of attack in their attempts to understand and conceptualize capitalism. They each have value, and are actually in a sense quite complementary.
As for myself, I am above all a humanist, and don't adhere to any formula, but look for the system which gives the best outcome in each situation. But I lean strongly toward social democracy, which I believe holds the most promise for one day finding the correct balance between individual freedom on the one hand, and social solidarity and security on the other.
As I said, I believe Marxist and Neoclassical economic theories are complementary. The main reason for this is that at almost every juncture in the study of human economic activity and organization, they take a different focus. Let me outline the main differences in focus that I found between Marxist and Neoclassical economics as I read this book.
Needs vs. Wants:
Marx's economics was overwhelmingly concerned with how individuals and societies organize themselves to meet their basic needs. That is paramount, because ensuring your own survival is a prerequisite for literally anything else you might do. Marx wrote at a time when economists were relentlessly attacking the right of subsistence on various grounds. Most of them merely made the moral assertion that no man had the right to demand anything more from society than he could get for his labor, and that if he was not able to find labor quickly and frequently enough, that he should be at risk of starvation. Malthus, the most extreme (and vulgar) of these economists, gained quite a bit of popularity in upper-class circles by his attempt to naturalize poverty and starvation, asserting (with no solid empirical basis) that it was downright impossible to engineer any form of social organization which would guarantee survival and freedom from starvation for all its citizens, regardless whether this took the form of full employment or of public assistance for the unemployed--both were equally impossible. This attack by economists on the right of subsistence was rightly perceived as mainly an attack on the nascent working class (landowners and factory owners were in no danger of needing public assistance to survive!). So-called "radical" and working-class economists sprang up to respond to this ideological onslaught. William Godwin, for instance, wrote against Malthus. Others, like Robert Owen, ingratiated themselves to Parliament and other social elites in an attempt to secure reform legislation (predictably, this largely failed), and also attempted to build cooperative movements (which succeeded if only for a short time). But Marx's reply, by far the most theoretical of the lot, was to fomulate his theory of Historical Materialism: that every form of social organization must figure out how to procure or produce its own basic means of subsistence first and foremost. Capitalism, as a social organization, had at first spectacularly succeeded in doing this by the great increase it had brought about in the productive capacity of society. But at the same time, its distributive function--market exchange--had led to the ironic situtation in that those whose labor mainly produced these goods, that is the working class, lived in perpetual fear of unemployment and consequent starvation. This resulted in a situation of profound insecurity for the majority of society: risk of starvation in a land of plenty.
Neoclassical economics, on the other hand, focuses almost entirely on wants. It accepts a priori that the market distribution mechanism is the best possible distribution mechanism for every kind of goods; as a result, it treats all things (even food, clothing, shelter, medicine) as "wants". While it is certainly true that a great amount of what we as a society produce and consume can be reduced to inessentials, it is at the same time not true that there are no essentials--there is a bare minimum requirement to survive. So, for a majority of the types of economic goods/commodities out there in existence, the neoclassical assumption that people can always just "go without" holds true; and the number of these items which consumers "want" but don't truly "need" is endless. However, that does not mean that there isn't a finite list of true essentials--things without which no person can survive. These too, however, says the pure Neoclassical theory, are to be treated as mere wants. It cites in support of this assertion the fact that there is personal preference even in the type of food, shelter, and basic clothing that people consume. The Neoclassical perspective is quite uncompromising: there can be no distinction between "wants" and "needs" (even though it is a biological fact that some "wants" are necessary for survival.)
You can find some traces of the Malthusian perspective in today's global trend of Neoliberalism, which generally says that all elements of public ownership should be privatized (including some infrastructure, witness the trend of publicly owned freeways being sold off as toll roads) as well as all social safety nets (witness George W. Bush's push to privatize social security in the United States; he was only bringing to the U.S. what the U.S. had already imposed upon Iraq through force, and on much of the rest of the third world through unequal trade agreements, loan conditions, and the IMF). For more on the modern Malthusianism found in the ideology of Neoliberalism (which I believe is now on the downswing), see David Harvey's excellent book, "A Brief History of Neoliberalism".
Labor vs. Natural Resources:
Marx was concerned with how to organize scarce human labor to best meet finite human needs. Neoclassical theory is concerned with how to organize scarce factors of production (of which labor is just one) to meet infinite human wants.
From the Marxist perspective, labor is required for much more than the Neoclassical economists are willing to admit; indeed, it is everything. With the sole exception of things like water, air, and ready-to-eat-wild-berries which you happen to stumble upon while out for a walk, all things require human labor to make them consumable in some form. Trees require labor to turn them into a bed, or a house; seeds require labor to turn them into crops; silicon, metal and plastic require human labor to turn them into a computer (and no, I'm not just talking about the "mental labor" of the engineers!). Virtually all useful things must undergo a manufacturing process at some point. This is where human labor is added to them to make them useful.
Neoclassical economics is, again, quite uncompromising on this point. The Neoclassical view treats labor as JUST another commodity. The value of this perspective on human labor is questionable; if it is true that an hour of a person's labor is not different from an apple, then one wonders why apples do not combine into unions, go on strike, and organize boycotts in order to keep the price of apples above a certain level. It would seem that, if laboring humans are simply another commodity, that they are the only commodity which actively resists its own complete commodification.
Labor, asserts the orthodox Neoclassical economist, is no different than any other factor of production, be it capital (machines, factories, in a word--means of production), or non-living raw materials (copper, wood, steel, etc.).
Marxists reply that without human labor, capital and raw materials simply sit there, or perhaps start to decay. Human labor is ESSENTIAL to put them into motion making useful things for human consumption.
At this point of the debate--where the Marxist says that capital by itself makes no contribution to production (it is, after all, just "accumulated labor"), and the Neoclassical economist responds that labor is nothing without capital (today's humans still, after all, have only the same two hands to labor with that used to produce with MUCH less efficiency in bygone eras of a lower level of techological development)--it really comes down to a debate over the determination of value.
Marx believed that all value was determined by labor, whereas Neoclassical economists believe it is determined by the balance between supply and demand. I don't want to get into this too much on an Amazon review, but my own belief is that the two theories of value are not mutually exclusive as they are often portrayed as being, for the simple reason that they do not refer to the same thing when they speak of "value". Subjective Utility value theory uses the word "value" to refer to usefulness/utility. But the Labor ToV does not refer to this by using the word "value", instead it introduces a new category to refer to utility: the category of "use-value". On the other hand, "value", as the word is used in the Labor ToV, is (as closely as I can tell) not just asserted to be, but is actually defined as, "embodied socially necessary labor-time". Furthermore, the Labor ToV does NOT claim to be a method for determining prices, as some of its ideological detractors sometimes dishonestly say that it claims. At best, it could be used to calculate prices when supply and demand are in perfect equilibrium (which they never are, or are only in passing), though even this is subject to significant debate. Even socialists sometimes make the...
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by Duncan K. Foley
by John Bellamy Foster
by David Harvey
