Viewing the Great Recession through Radical Economics: Social Class, Inequality, and the Social Safety Net

By Martin, Edward J.; Pimentel, Matthew S. | Global Virtue Ethics Review, January 1, 2014 | Go to article overview

Viewing the Great Recession through Radical Economics: Social Class, Inequality, and the Social Safety Net


Martin, Edward J., Pimentel, Matthew S., Global Virtue Ethics Review


Abstract

The major contributor to Radical Economics was Karl Marx. This article makes the case that Marx should be appreciated for his contribution and the values he brought to today's macroeconomic debate.

Introduction

Karl Marx is the central figure in the history of socialism. It is less easy to establish a consensus as to why he is pre-eminent and it is notoriously impossible to obtain agreement about the significance of his form of social analysis. But his methods, nonetheless, endure today and have the potential to provide insights that could arguably help provide a blueprint to remedy the dysfunctions of the present day economy. Marx's philosophical system as a fusion of three intellectual traditions: German Idealism, the French Enlightenment, and British classical economics (liberalism). He blended these three traditions into a coherent theoretical structure, which provided the emerging socialist movement with an intellectual basis for analysis. This social construct provided a critique of capitalism and the dominant nineteenth-century philosophy of liberalism (Singer, 2000). The re-presentation here of Marxist analysis is intended to provide a model for better understanding the causes and effects of the Great Recession. Over time, and through a series of class antagonisms, Marx argued that the successor to capitalism will be communism, where class formations based on ownership of the means of production are eliminated. Class and the possibility of class conflict will be abolished so that no antithesis to communism arises. In this state the human person will finally control the economic forces affecting all aspects of her/his existence, and thus, be truly free.

The development of capitalist relations of production has been long and complex. It matured in Britain for over two centuries before the industrial revolution and had two transitional phases (Weber, 1946; Hook, 1955). Firstly, the small producers became emancipated from feudal bonds, and, secondly, they were separated from ownership of the means of production. A number of factors were crucial to this transformation, including growth of population, indebtedness, market development and production, the prevalence of monetary exchange, and a series of technical inventions harnessing mechanical power. In the late eighteenth century a population increase plus recruits from surplus agricultural labor supply furnished a proletariat to work with the accumulating capital. In such specific historical circumstances Marxism attempted to provide a systematic analysis of these definitive changes in the economic life of a civilization. What is apparent to some is that alterative models of economic organization were needed then and now today, especially with the devastation of the economy with the Great Recession of 2008. Some are urging, as those in the past, a more democratic grass roots economy, to be seriously considered in policy discussions (Max-Neef, 1991; Max-Neef, Elizade, & Hopenhayn, 1991; Max-Neef & Ekins, 1992).

Economic Historicism

Marx envisages three broad phases of human history. The first phase is defined by Marx as the natural economy phase in which economic production was largely agricultural and conducted through the institutions of slavery and feudalism. Thus social relations were based on dependence. The second stage began with the first widespread development of productive forces, such as, subsistence farming and livestock production, to ensure a consistent food supply. During this phase, goods were produced for sale, initially on an artisan basis, but later under capitalist relations. People no longer simply produced food for direct use, but rather specialized in making a single commodity for sale. This phase, commodity production, ended personal dependency and was later consolidated during the industrial revolution. Finally, the third broad phase of human history, communism, occurs when dependence upon the market is replaced by collective control of production by producers or workers. …

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