Economic Theory Deep Thoughts

¶ … Economics

One of the most fascinating aspects of Chapter 4 is how the Marxists theories provide insights into how tightly economic, geopolitical and societal forces interact to redefine the foundational definition of value in a society. What's most fascinating about Marxism relative to capitalism is that fact that the former tends to see economic ecosystems as manageable and even predictable. Capitalism shows that economic ecosystems, while defined through constructs and frameworks at the macro- and micro-level, is best managed with a laissez-faire based approach to orchestrating commerce. To the Marxist, laissez-faire economic systems seem fertile for exploitation and the monopolistic aggregation of entire industries. To the capitalist, Marist economies lack the freedom to allow resources to flow to and fund innovation and needed products that a turbulently changing market require. The dichotomy of egalitarianism relative to free market dynamics is a fascinating one, and it's clear that the dividing lines of these two forms of philosophical thought could and do lead to global conflict.

Given these dichotomies, one of the most challenging aspects of the reading to understand was just how a Marxist-led economy can survive if it ignores or at best attempts to plan the unplannable. There is no way of knowing what demand will be for specific products, services that span the spectrum of price elasticity. Factor in product and service obsolescence and the entire level of complexity accelerates. It is difficult to see why a Marxist-led economy would ethnocentrically believe that their approaches to planning an economy to ensure egalitarianism ironically creates the same class-based economic structure with even less mobility than a capitalistic one. Equally challenging to understand is why centrally planned economies don't see the value of venture capital or the role of private and foreign direct investment (FDI) in economic growth. Infusion of capital from outside their economic system could provide the capital needed to significantly improve and fuel the development of entirely new industries. Yet Marxists confuse the infusion of FDI with the proselyting of ideologies. It is ironic again that their focus on ideological performance overshadows the actual economic performance of their approach to managing resources.