History Of Economic Thought Essay

Length: 8 pages Sources: 4 Subject: Economics Type: Essay Paper: #79839236 Related Topics: Economic Theory, Economic Problems, Economic History, Socialism
Excerpt from Essay :

¶ … socialist economic thought and that of Marx

Socialist Economic Theories

In order to develop the different theories of socialist economic thought and that of Marx, we look at a description of the contributions by different socialists in the field of economics. These socialists include Sismondi, Proudhon, Godwin, Owen, and Ricard. We also look further into Marx's economic thoughts and his contributions to the history of economic thought.

Sismondi and Proudhon

The socialists made significant contributions to shaping the history of economic thought in the former half of the 19th century. They developed a set of fairly similar doctrines, despite a diversity of cultural backgrounds and approaches to economics. The element that unified these authors was the Ricardian economic thought that was felt, at diverse levels and in diverse ways, by all of the socialist economists belonging to the age, from Sismondi, Owen, and Rodbertus to Proudhon and the economists labeled as 'Ricardian socialists'.

A theoretician of the capitalist production anarchy, Jean-Charles-Leonard Simonde de Sismondi criticized the Say's law of markets, believing that its failure to work correctly was a consequence of unequal income distribution. Sismondi considered laissez-faire to be a weapon of the capitalist system against workers, who were compelled to accept nothing but subsistence wages leading to their progressive impoverishment due to technical progress and competition. He pointed out that the low level of consumption by workers hindered the achievement of surplus. Sismondi was the first socialist economist who developed a model of under-consumption on the basis of unequal income distribution. This is analogous to the argument put forth by Malthus. However, Sismondi proposed to resolve this problem by the redistribution of wealth from capitalists to workers, rather than from capitalists to landowners; this goal could have earned fulfillment by way of intervention from the State. Sismondi's socialism, without encouraging violent revolutions or demanding private property abolition, aimed at constructing a society which was governed by small craft and agricultural producers, with the industry sharing its profits with workers as well, division of land into small sections, extensive and efficient system of social security and steeply progressive death duties. Sismondi is thus considered to be the founding economist of the wave of thought known today by the term 'social economy' (Screpanti and Zamagi).

Pierre-Joseph Proudhon followed a similar course some few years down the line. His theory was closer to Fourier's than to that of Saint-Simon's. He advocated the abolition of the excesses of private property, not private property itself. Further, he promoted liberty of individuals against any type of control by the State. His socialist theory assumed the capability of people to organize themselves spontaneously; he aspired to construct an economy that was comprised of industrial and artisan cooperatives. He spurned class struggle, suggesting free credit to be the key instrument in constructing socialism -- in this manner, workers would have the ability to amass capital for themselves (Screpanti and Zamagi).

Godwin and Owen

The division between organicists and libertarian socialists in England can be understood from the divergent positions of Godwin and Owen. In his 1793 work, 'An Enquiry Concerning Political Justice', William Godwin attempted to create a socialist theoretical structure based on utilitarianism. He reached a criticism of the justification made by Locke with regards to private property, using similar arguments as those that Rousseau had employed to criticize the natural-law notion of the seventeenth century. Godwin is of the view that every individual only has the right to possess those goods that are essential for his personal satisfaction, and that no individual possesses the right of maximization of his personal satisfaction by impairing others' satisfaction. To the extent that private property contradicts the law of justice, it is considered unlawful. This idea is based solely on the right of property and its sanction by the government. Godwin claimed that social justice and individual liberty are like the two faces of a single coin. He was of the opinion that individuals can be liberated from oppression through abolishing both the State and private property. Godwin assumed that individuals are basically good and rational, possessing the means to realize their objectives by means of


He failed to acknowledge a natural aspiration for liberty in individuals. On the contrary, he assumed that an individual's character could be molded simply by an alteration to his living conditions (Screpanti and Zamagi)

Marx's thought

Marx was of the opinion that the history of economic thought came to a significant crossroads after 1830. The moment the social group termed as 'industrial bourgeoisie' rose to power by virtue of proletariat assistance in France and England, it attempted to change its alliances away from the proletariat. At that point in time, the class conflict against the proletariat was deemed more important, while the struggles against landowners came to a halt. The bourgeoisie now needed to prove that the enlightened dream of an economic society where all citizens were free had finally reached its realization -- that oppression and exploitation were no longer present in the society, that every citizen received in accordance with what he/she gave, and class conflicts, or rather classes themselves, no longer needed to exist. At this juncture, a theory based on classes and class conflicts served no longer; the more beneficial theories would be those of harmonization of interests and collaborating productive factors. Therefore, since the 'bourgeois economists' had betrayed the scientific inheritance of the classical economy, this inheritance was handed to socialist economists. The interests of the working class were then represented as being coincident with the interests of the collective whole. This marks the beginning of socialists' cognitive interests in penetration of the bourgeois society's physiology. It was believed by Marx that, while waiting to take over the world, the proletariat took over science from the bourgeoisie (Screpanti and Zamagi).

This explains capital's standing in the history of economic thought. As per Marx's view, this defined his capability to identify the boundaries of political economy. It should not be forgotten that Marx's theory was, in fact, a 'criticism of political economy'. Marx differs from classical economists in that his philosophical background is not based on empiricism, utilitarianism or natural-law. As far as political economy's ontological foundations are concerned, Marx's thought cannot be simplified as neo-classical and classical individualism, or as institutionalist and historicist holism. It was, in fact, argued by Marx with regards to the defining of individual drives that -- whether individuals seem to be egoist or selfless, the question was actually quite subordinate, and related to definite periods of history regarding specific individuals.

Marx developed an ontology of the social individual as a substitute for the ontology that was the foundation of the political economy during his Age. This ontology (the metaphysics of the nature of being) exalted the roles of culture, institutions and the material conditions of production in the development of 'human nature'. Marx vehemently refused to view individuals as social atoms or wheel cogs; he deemed human nature to be simultaneously autopoietic and malleable. For Marx, the malleability of human nature was due to the needs, interests, tastes, ideas and endowments of individuals as formed by their social contexts and history, and not through 'nature'. Thus, these factors cannot be used as 'exogenous data' by economists. Rather, human nature must be determined endogenously by the political economy, in connection with the economic structure being studied. Marx felt that human nature had autopoiesis due to the situations in which individuals act, governed by their own actions and desired ends. Economic action, in Marx's viewpoint, is always deliberate. This is true even when ideologies cause a distortion of the individual assessment of the participating interests, as ideologies by themselves serve to catalyze social action. Theory aids practice; science aids social revolution. According to Marxian thought, the dream of Communists to build a society of equal and free citizens could only be realized through the collective action and conscious intention of those involved in creating it (Screpanti and Zamagi).

What is the significance of Ricardo's "curious effect" and how does it relate to his critique of Smith?

In order to explain the significance of Ricardo's "curious effect" and its relation to his criticism of Smith, we must first begin with a brief narration of Ricardo's theory of value. We then go on to explain Ricardo's "curious effect." Finally, we discuss his criticism of Smith's commanded labor theory of value.

Beginning with a theory of profit stated in terms of output (corn, for instance) and moving on to a broader, more universal structure, Ricardo was faced with the theoretical obligation to construct a theory of value that was internally consistent. Ricardo discovered in 1815, while penning his Essay on Profit, that the "curious effect" of increasing wages on industrial products required large fixed capital amounts. This position was reached after considering Adam Smith's theories in his book, 'The Wealth of Nations'. It was, specifically, a result of the…

Sources Used in Documents:


Medema, Steven and Samuels, Warren, Eds. The History of Economic Thought: A Reader. 2nd Edition. London: Routledge, 2013. Retrieved from: https://books.google.com/books?id=Kac2ipOWHk8C&pg=RA1-PT1078&dq=Medema,+Steven+and+Warren+Samuels.&hl=en&sa=X&ei=dpAxVceuD8bboATDwoHgDg&ved=0CB0Q6AEwAA#v=onepage&q=Medema%2C%20Steven%20and%20Warren%20Samuels.&f=false

Screpanti, Ernesto and Stefano Zamagi. An Outline of the History of Economic Thought . Oxford: Oxford University Press, 2005. Print.

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press, 1976, Vol. I. 50. Print.

Takenaga, Susumu. Structure of the Theory of Value of David Ricardo. Tokyo: University of Daitobunka, n.d. Retrieved from: http://www.bing.com/search?q=Takenaga%2C+Susumu.+Structure+of+the+Theory+of+Value+of+David+Ricardo.&form=U303DF&pc=U303

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