Philosophy of Society

Philosophy of Economics (Economic Theory)

Marxist Economic Theory

Marxist economic theory was shaped by the German philosophers and economists Karl Marx (1818-1883) and Friedrich Engels (1820-1895). They posited that the entirety of human history can be understood as the interplay between two fundamental factors: productive forces and relations of production. Productive forces encompass the individuals engaged in labor and the creation of goods, while relations of production refer to the laws, customs, and established orders within which these productive forces operate. Once primitive humans acquired their initial capital, their society bifurcated into those who distributed goods and those who depended upon them. Thus, classes emerged, and class struggle became a defining characteristic of all subsequent history. Productive forces continuously evolve, accumulating skills and knowledge, yet relations of production tend to remain static. Eventually, a point is reached where productive forces can no longer thrive within the confines of existing relations of production. The most fervent dissent against these obsolete relations arises from the oppressed classes, as they are the victims of exploitation. However, the ruling classes that exploit the subjugated resist any alterations to the production framework. Ultimately, class struggle intensifies to such a degree that revolution ensues, dismantling the existing relations of production and establishing new ones. Yet, even these new relations will, in time, be outgrown by the progressive forces. Such processes have historically led to the transformation of social relations: from primitive communal societies to slave societies, from feudalism to capitalism. In each of these formations (excluding the primitive communal stage), a dominant class exploits the subjugated majority. To eradicate class struggle and ensure universal happiness, the elimination of classes is imperative. Classes exist as a result of capital; the division into classes occurs based on capital ownership: those who possess capital dominate, while those who lack it must work for the capitalists. Thus, to abolish class struggle, capital itself must be dismantled. Marx envisioned a grand revolution that would confiscate private ownership of the means of production. Once private capital ceases to exist, class distinctions within society will dissolve, leading humanity to its ultimate formation: communism.

In a nation building communism, all means of production are owned by the state, which also possesses all products of that production. In such a state, all economic decisions are made by the government. This economic model, where the state owns all means of production and makes all decisions (regarding pricing, production planning, etc.), is termed a planned economy. It stands in stark contrast to a market economy, the foundations of which were laid by the classical theorists. In the twentieth century, Marxist adherents overthrew existing regimes to establish planned economies. The most notable example of a planned economy was the USSR. This economic experiment proved not only unsuccessful but also wrought immense tragedy upon humanity. Private property is deemed natural; thus, the confiscation of assets and imposition of communist ideology were accompanied by unprecedented terror. In every country where communists came to power, rivers of blood were spilled, moral values were distorted, and the economy collapsed. All nations that pursued communism remain impoverished and economically unviable. Even those that have rid themselves of this flawed economic theory (such as Ukraine) struggle to escape poverty and establish a viable economy.

Nevertheless, not all of Marx's followers interpreted his ideas as literally as the architects of the Soviet state did. In the late nineteenth and early twentieth centuries, philosophical and economic thought was enriched by several thinkers who, while drawing on Marx's concepts of class struggle, arrived at conclusions worthy of attention within the philosophical-economic discourse. Adopting certain aspects of Marx's teachings, they nonetheless critiqued his views as unscientific and insufficiently substantiated.

The foremost critic of Marx's ideas among German socialists was Edward Bernstein (1852-1932). His critique targeted Marxist dialectics as fictional principles devoid of practical efficacy. Bernstein argued that Marx erred in reducing the conditions of economic activity solely to relations of production. In reality, factors such as religion, culture, customs, environmental conditions, and demographic situations also exert influence on the economy. Neglecting these elements renders economic analysis flawed.

Karl Johann Kautsky (1854-1938) concurred with Marx on his theory of imperialism, which posits that wealthy nations subjugate poorer ones, hindering their economic development and forcing them into imperial economic systems. However, unlike Marx, Kautsky did not perceive this as tragic. He viewed imperialism merely as a pathway to ultra-imperialism—a situation in which the global economy would coalesce into a singular organism. This transformation would arise from a new policy fostering peaceful cooperation toward shared objectives. Kautsky rejected the notion of revolution and the violent overthrow of existing relations of production, deeming such radical actions unnecessary, as capitalism is not a static system but one capable of evolution. Gradually, capitalism would transition into socialism, wherein goods would be distributed justly. To prevent the formation of monopolies and achieve equitable economics, control over enterprises was necessary, yet this control should be exercised not by the state, but by trade unions and civic organizations. Kautsky referred to this interplay between politics and economics as economic democracy, which he considered an ideal. Therefore, the development of the economy would autonomously resolve social contradictions.