Academic journal article Global Virtue Ethics Review

Social Analysis, Social Justice, and the Welfare State: Post Great Recession Social Welfare Policy

Academic journal article Global Virtue Ethics Review

Social Analysis, Social Justice, and the Welfare State: Post Great Recession Social Welfare Policy

Article excerpt

Abstract

This article points out the underlying value of progressive economic thought is not the individual but rather all the people in society and the need to have an active government intervention to bring about social change that benefits the whole of society rather than the only the wealthy. This value is articulated as the "labor theory of value." It is built on the notion that capitalism in its pure form is essentially a theory permitting and facilitating exploration of those who labor for their income.

Introduction

Marx bases his economic analysis, not on individuals, but on the social relations between them, so that his ultimate concerns are people in society and the process of social change. Humans differ from animals in that they change their environment which is not solely determined by nature. Labor is the means whereby natural conditions are transformed; initially it focuses upon the provision of subsistence, while in industrial economies more hours are worked than are necessary for survival. The basis of material progress is the surplus time beyond that required for subsistence, which can be used in leisure or to generate additional production. These considerations suggest that labor is the active creator of wealth and that its allocation is crucial for development. Consequently, Marx believes that the purpose of economics is to explore the relations under which the surplus is produced and its use controlled and how this very economic substructure influences societal superstructures. A reformulated labor theory of value is the foundation of his attempt to uncover these relations. This is also true for Marx's theories of exploitation, capital accumulation, and monopoly. Marx utilizes other analytic concepts such as the falling rate of profit, the reserve army of labor, the immiseration of the proletariat, alienation, underconsumption, the iron law of wages, and the trade cycle - as a critique of capitalism. The focus of this article, however, will primarily be on Marx's labor theory of value, exploitation, capital accumulation, and monopoly, with a brief reference to Marx's theory of immiseration. I believe these are the four most important concepts upon which to focus since they are the ones that seem to be, arguably, affecting our economy the most. Nonetheless, all of the analytic concepts have the potential to be helpful tools in attempting to address some of the complexities and asymmetries of a capitalistic society, such as the increasing social and economic distance between the haves and have-nots (Skocpol & Jacobs, 2005). Finally, the significance of a welfare state and outline for social justice will be discussed.

Labor Theory of Value

Most eighteenth- and early nineteenth-century economists in Britain held some views of the labor theory of value. Ricardo argued that the value of a given commodity is proportional to the amount of labor produced to create the commodity. Here Ricardo uses the term "value" and "price" in the same manner and thought that commodities should be exchanged at prices which reflect the relative amounts of labor based on the effort to produce them. But capitalists make economic decisions based on costs rather than labor output and time. Consequently, profit maximization does not necessarily correspond to labor time minimization. Ricardo was aware of this difficulty, but nevertheless made an arbitrary assumption that embodied labor time was the key element in price determination. Marx, however, sought to determine a more precise hypothesis of price determination by abandoning Ricardo's labor theory of value and arguing that prices are set by transformed quantities of socially necessary labor time. This means that labor translates into the actual physical and/or technological expertise required to produce a given article in the quantity demanded.

Unlike Ricardo, Marx does not state that commodities exchange at prices proportional to the amounts of labor embodied in them. …

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